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Sec. 22-38(a). Purpose. The end of service program allows retirement eligible members to earn lump sum benefits in addition to the members' retirement benefit, in exchange for a waiver of up to twelve (12) months of additional benefit accruals under the system. The end of service program is entirely voluntary.
Sec. 22-38(b). Eligibility for end of service program. Any member eligible for normal retirement may elect to participate in the end of service program by entering into a participation agreement in accordance with section 22-38(c) and accepting the terms and conditions of the end of service program. Participation in the end of service program shall remain open only until December 31, 2010, and no members shall be permitted to enroll in the end of service program after that date.
Sec. 22-38(c). Irrevocable agreement to participate. A member's agreement to participate in the end of service program is (1) a voluntary agreement to forego benefit accruals under the retirement provisions of the system, (2) a voluntary election to terminate from employment with the city before or upon completion of the end of service program participation period and (3) a retirement application for purposes of section 22-37(e). The member's participation election shall be evidenced by the member's execution of the board's end of service program agreement and shall include the member's proposed effective date of participation. The member's effective date of participation in the end of service program shall be the later of the first day of the month following the board's ratification of the member's end of service participation agreement or the participation date selected by the member and approved by the system administrator. The system administrator may, in its discretion, adopt reasonable and uniform procedures governing the deadlines for submission of end of service participation agreements and the acceleration of end of service participation dates. A member's agreement to participate in the end of service program shall be irrevocable upon ratification by the board.
Sec. 22-38(d). Cessation of benefit accrual. On the date the member begins to participate in the end of service program, mandatory member contributions to the system cease and all benefit accruals under the system terminate. A member's final average monthly compensation and credited service are determined as of the member's end of service participation date and shall not increase or decrease thereafter. The member also is not entitled to receive any retirement benefit increases implemented during the end of service participation period.
Sec. 22-38(e). Accumulation of end of service benefits. End of service program benefits will be credited to an end of service program account established under the system and shall be paid to the member following the member's termination date at the same time and in the same manner as otherwise prescribed in this article. A member's end of service program participation account shall be credited with the following:
(1) An amount, credited monthly, that is computed in the same manner as a normal retirement benefit using the member's credited service, average final monthly compensation and retirement benefit payment elections as of the member's effective date of end of service program participation.
(2) An amount, credited monthly, that represents assumed earnings at a rate determined by the board, annually at the beginning of the plan year. As of the effective date of the end of service program, the earnings rate credited pursuant to this section is the ninety-day treasury bill rate.
Sec. 22-38(f). Termination of end of service program participation. Participation in the end of service program terminates on the first occurrence of either of the following: (1) twelve (12) months from the date of entry; or (2) the member's termination date. If a member's participation in the end of service program is terminated as a result of the city's just cause termination of the member's employment and such just cause is later reversed, a member's participation in the end of service program, minus any benefits previously distributed pursuant to this article, shall be reinstated for the duration of the original end of service program participation period designated by the member on the appropriate end of service program participation form. Upon termination of the member's end of service program participation, the retirement benefit payable to any member who fails to terminate in connection with the end of service program shall commence in accordance with the retirement provisions of this article. Notwithstanding the foregoing, if a member fails to terminate from employment with the city at the end of the member's end of service program participation period, the member shall forfeit all rights to any end of service benefits and assumed earnings and shall not accrue any additional credited service during the end of service participation period.
Sec. 22-38(g) Payment of end of service program benefits. Following termination of the member's participation, a member is entitled to receive a lump sum distribution of all amounts credited to the member's end of service program participation account. The end of service program distribution shall be processed in accordance with section 22-43(g). The member also shall commence receipt of retirement benefits, calculated and paid in accordance with the retirement provisions of the system. If a member dies during the end of service program participation period, all amounts in the member's end of service program participation account shall be paid to the member's beneficiary. If the beneficiary(ies) predecease the member, all distributions pursuant to the end of service program shall be paid to the member's spouse, if the member was married at death, or to the legal representative of the member's estate, if the member is not married at death.
(Ord. No. 10657, § 2, 4-28-09, eff. 7-1-09)
Sec. 22-39(a). Qualification. If a member is not yet eligible for normal retirement, the member may apply for disability retirement benefits. To be eligible to receive disability retirement benefits, the member must (1) apply for disability retirement benefits within twelve (12) months of the date of termination from employment; (2) be credited with ten (10) or more years of accrued service, inclusive of accrued vacation and sick leave; (3) establish that he or she terminated from employment with the city as a result of disabling mental or physical impairment; and (4) be determined, in accordance with applicable rules, to have a total and permanent disability.
Sec. 22-39(b). Application process. An application for disability retirement benefits may be filed by the member in accordance with the policies and procedures of the system administrator. Unless waived by the board in light of a Social Security Administration determination of total and permanent disability, the board's physician shall examine the member and certify in a written report to the board whether the member suffers from a total and permanent disability. The report shall also state when the member should be reexamined. If the board determines that the member should receive disability retirement benefits, the disability retirement benefits shall commence as of the date determined by the board in its discretion. Disability retirement benefits shall not be paid for periods the member elects to receive sick and vacation leave pay.
Sec. 22-39(c). Disability benefit. Disability retirement benefits are calculated in the same manner as normal retirement benefits, with no reduction for early commencement.
Sec. 22-39(d). Termination of disability benefit. A disability retirement benefit shall be terminated by the board upon a determination that the member no longer suffers from a total and permanent disability or upon the member’s reemployment with the city. If the member reenters city service, any credited service included in the calculation of the disability retirement benefit shall be restored to the member’s credit; but the member’s accrued benefit shall be subject to an actuarial reduction at the time of retirement based on the number of months that the member received disability retirement benefits. The excess, if any, of the member’s accumulated contributions as of the date of total and permanent disability over the aggregate of the disability retirement benefits received by the member shall be credited to the member’s accumulated contributions account.
Sec. 22-39(e). Requirements to maintain disability benefit. The member shall provide to the system administrator no later than May 31 of each calendar year all information requested by the system administrator regarding the member’s total and permanent disability. The board may suspend disability retirement benefits if the member fails to provide any of the required information. Following the retirement of a member as the result of a total and permanent disability, the board may require the member, prior to the member’s eligibility for normal retirement and no more frequently than annually, to undergo a medical examination by a licensed physician, as directed by the system administrator. Should the member refuse, the member’s disability retirement benefit shall be discontinued until such time as they submit to the required examination. Should the refusal continue for one (1) year, all rights to any further disability retirement benefits shall cease. Upon the member attaining the age required for a normal retirement, no further medical exams will be required.
Sec. 22-39(f). Prior requirements to maintain disability benefit. Any member who qualified for a disability retirement prior to July 1, 2009, is subject to the benefit limitations and disability verification requirements of this subsection, as well as the nondiscriminatory policies and procedures of the system administrator.
(1) Disability verification requirements. Not later than May 31 of each calendar year, the member shall provide to the system administrator all information requested by the system administrator regarding the member’s earned income (wages and self-employment income) for the previous calendar year. The board may suspend disability retirement benefits if the member fails to provide any of the required information. Following the disability retirement of a member, the board may require the member to undergo a medical examination by a licensed physician. Should the member refuse, the disability retirement benefit shall be discontinued until such time as the member submits to the required examination. Should the refusal continue for one (1) year, all rights to any further disability retirement benefits shall cease. Upon the member’s attainment of the age required for receipt of a normal retirement benefit, no further medical exams or information relating to earned income will be required.
(2) Disability benefit adjustments.
(A) Earned income based adjustment. Based on the verification procedures described above, the disability retirement benefit may be subject to annual adjustment in accordance with this section. If the member’s earned income for the preceding calendar year exceeded fifty (50) percent of the member’s adjusted income base for that calendar year, then the member’s disability retirement benefit will be reduced during the twelve-month period commencing on the effective date of the system administrator’s adjustment (the “adjustment period”) as follows. The monthly disability retirement benefit payable in the adjustment period will be reduced by one-twelfth (1/12) of the excess of the member’s earned income for the preceding calendar year over fifty (50) percent of the member’s adjusted income base. If the adjustment required by the preceding sentence would reduce the monthly disability retirement benefit to a negative amount, the disability retirement benefit shall be suspended for the adjustment period and any excess amount not offset by the disability retirement benefit suspension shall be taken into account in the next annual adjustment procedure. From time to time, the board also may increase or decrease the member’s disability retirement benefit to recapture overpayments or to restore any deficiencies in payments to the member which may have accrued prior to the board’s receipt of information under the disability verification procedures. When a member becomes eligible for a normal retirement benefit, no further adjustments shall be made.
(B) Earned income and/or worker’s compensation benefits. In the event a disabled member receives earned income and/or worker’s compensation benefits during the calendar year, that member’s disability retirement benefit may be adjusted so that the member’s total income received from employer provided benefits does not exceed 100% of the members’ adjusted income base. Any adjustment made shall only be up to the amount of the full disability retirement benefit paid by TSRS. For purposes of this paragraph, employer provided benefits means social security benefits, worker’s compensation payments, TSRS pension benefits or long term disability payments.
(Ord. No. 10657, § 2, 4-28-09, eff. 7-1-09; Ord. No. 10696, § 3, 8-5-09, eff. 7-1-09; Ord. No. 10775, § 2, 4-6-10, eff. 7-1-10; Ord. No. 11327, §§ 10, 11, 12-8-15, eff. 1-1-16)
Sec. 22-40(a). Generally.
(1) If the member dies prior to the board's ratification of the member's application for retirement benefits, if any, the death benefit or survivor annuity payable as the result of the member's death shall be determined in accordance with this section. If the member dies after the board has ratified the member's application for retirement benefits, including an end of service participation agreement, any survivor benefits payable as a result of the death of the member shall be determined in accordance with the member's retirement benefit payment election. Notwithstanding any other provision herein to the contrary, a member who satisfied the conditions for normal or early retirement and filed the appropriate paperwork with the system administrator to pre-select retirement benefits prior to July 1, 2009, shall be treated as a member whose application for retirement benefits has been ratified by the board for purposes of this paragraph.
(2) If a member dies while performing qualified military service on or after January 1, 2007, the member shall be treated as if he returned to employment with the city on the day before the date of death.
Sec. 22-40(b). Spouse as beneficiary. If the spouse is the member's beneficiary and the spouse dies before the death benefit is paid, the available death benefit shall be paid to the beneficiary of the spouse, and if none, then to the legal representative of the spouse's estate.
Sec. 22-40(c). Death before vested interest. Should a member with less than five (5) years of accrued service die, the member's accumulated contributions account balance, determined as of the member's date of death, shall be paid in a lump sum to the member's beneficiary. If the beneficiary(ies) predeceases the member, the member's accumulated contributions account balance shall be paid to the member's spouse, if the member was married at death, or to the legal representative of the member's estate, if the member is not married at death.
Sec. 22-40(d). Death after vested interest. If a member who is credited with five (5) or more years of accrued service dies before reaching normal or early retirement, a death benefit will be paid to the member's beneficiary(ies). If the beneficiary(ies) predeceases the member, the death benefit shall be paid to the member's spouse, if the member was married at death, or to the legal representative of the member's estate, if the member is not married at death.
Sec. 22-40(e). Death while eligible for retirement. If a vested member dies after attaining normal or early retirement eligibility (determined in accordance with sections 22-37(a)(1)(A) or (B), as applicable) but prior to the board's ratification of the member's application for retirement benefits, a death benefit or survivor annuity will be paid as follows:
(1) Default for spouse. If the member's spouse is the beneficiary (and except as set forth in paragraph (3) below), a survivor annuity will be paid to the spouse and will equal the benefit the spouse would have received if the member had retired on the day before death and had elected to receive a joint and 100% survivor annuity. In determining the amount of the survivor annuity, the retirement benefit payable on account of the member's presumed retirement shall be calculated in accordance with the early retirement reduction provisions of section 22-37(b), if applicable. The survivor annuity described in this paragraph is payable only to a spouse of a deceased member.
(2) Default for single non-spouse beneficiary. If the member has designated a single individual person other than a spouse as the beneficiary, a survivor annuity will be paid to the beneficiary and will equal the benefit the beneficiary would have received if the member had retired on the day before death and had elected to receive an annuity certain and for life with a period certain of one hundred eighty (180) months, commencing in the month following the date of the member's death and paid until the end of the period certain. If the beneficiary dies prior to the completion of the period certain, a one-time lump sum payment equal to the present value of the remaining period certain payments to the estate of the beneficiary. In determining the amount of the survivor annuity, the retirement benefit payable on account of the member's presumed retirement shall be calculated in accordance with the early retirement reduction provisions of section 22-37(b), if applicable.
(3) Default for multiple beneficiaries, trusts and estates. The survivor annuities described in paragraphs (1) and (2) above are payable only to a spouse or single person designated as a beneficiary. If the member has designated multiple beneficiaries, a death benefit will be paid to the multiple beneficiaries in accordance with the member's designation, regardless of whether the spouse is named as one of the multiple beneficiaries. If the member has designated a trust or an estate as a beneficiary, or an estate is the default beneficiary under the terms of section 22-33(f), the trust or estate shall be entitled to receive a death benefit only, and shall not receive a survivor annuity, regardless of whether the member's spouse is a beneficiary of the trust and regardless of whether the trust or estate has only one beneficiary.
(4) Death benefit election. A spouse or single beneficiary entitled to receive a survivor annuity under paragraph (1) and (2) above may elect, in his or her discretion, to waive the survivor annuity and receive a death benefit. To make the death benefit election, the spouse or beneficiary shall sign a statement acknowledging that the survivor annuity and death benefit options have been satisfactorily explained and shall make a written election to receive the death benefit, all in accordance with the policies and procedures of the system administrator.
Sec. 22-40(f). Refund guarantee. A member who elects a single life annuity pursuant to section 22-42(b) or a joint and survivor annuity pursuant to section 22-42(c) shall be guaranteed a refund if the named recipients on the selected annuity die before the monthly retirement benefits paid equal or exceed two (2) times the value of the member's accumulated contributions with interest at time of retirement. The amount of the refund shall equal two (2) times the value of the member's accumulated contributions account at the time of retirement, reduced by the retirement benefits paid to date (the "refund amount"). If the member elected a single life annuity and the member dies, or the member elected a joint and survivor annuity and both the member and the named survivor die, the member's beneficiary (or the member's estate, if the beneficiary is not then living) will receive the refund amount.
Sec. 22-40(g). Payment following death. Following the death of a member, the system administrator will notify the beneficiary(ies) or the surviving spouse, as applicable, regarding the right to receive a refund of member contributions, a death benefit or a survivor annuity. Any lump sum benefit available to a spouse or beneficiary(ies) under this article shall be paid in accordance with sections 22-43(f) and (g).
(Ord. No. 10657, § 2, 4-28-09, eff. 7-1-09; Ord. No. 10696, § 4, 8-5-09, eff. 7-1-09; Ord. No. 10711, § 3, 9-9-09, eff. 7-1-09; Ord. No. 10712, § 3, 9-9-09, eff. 7-1-09; Ord. No. 10915, § 6, 6-21-11, eff. 7-1-11; Ord. No. 11327, § 12, 12-8-15, eff. 1-1-16; Ord. No. 11595, § 5, 10-23-18)
Editor's note – Section 8 of Ord. No. 10915, adopted June 21, 2011, provides that the amendments made to Sec. 22-40(f) are effective retroactively to July 1, 2009.
Sec. 22-41(a). Member's request for refund. A member may request a refund of the member's accumulated contribution account following the member's termination date by filing the appropriate refund application with the system administrator. If the member was dismissed from city service, the member's application for a refund shall not be approved and disbursed until the member's separation from employment with the city becomes final and is no longer subject to any administrative or judicial review.
Sec. 22-41(b). Refund to Non-Vested Member. Any Member who terminates from City service prior to becoming a Vested Member shall cease to be a Member and shall be eligible to request a refund of his Accumulated Contributions Account as set forth in Section 22-33(c). The System Administrator shall contact the former Member as soon as reasonably possible following the Termination Date and shall provide information regarding the available refund. In the event that the former Member's termination is subject to administrative or judicial review, no refund shall be processed until such termination is final and binding. In the event the former Member does not consent to receipt of the refund of the Member's Accumulated Contributions Account within a reasonable period following notification by the System Administrator and the Member's Accumulated Contributions Account balance is more than one thousand dollars ($1,000.00), but does not exceed five thousand dollars ($5,000.00), the System Administrator may transfer the Accumulated Contributions Account balance to an individual retirement account established for the benefit of the Member in accordance with Code Section 401(a)(31)(B). If the Member's Accumulated Contributions Account balance equals one thousand dollars ($1,000.00) or less and the Member fails to consent to receipt of the refund, the System Administrator may, in its discretion, issue a refund check to the Member without the Member's consent. If the Member's Accumulated Contributions Account balance equals five thousand dollars ($5,000.00) or more and the former Member fails to consent to receipt of the refund, the System Administrator shall hold the Accumulated Contributions Account in the System for a period of three (3) years from the Termination Date, at which time the System Administrator shall escheat the Accumulated Contributions Account to the State of Arizona. The amount escheated to the State of Arizona shall not include Interest credited to the Accumulated Contributions Account after the Termination Date.
Sec. 22-41(c). Beneficiary's request for refund. Upon the death of a member, a beneficiary may request a refund of the member's accumulated contributions account or a death benefit. The beneficiary's right to receive a refund or a death benefit shall be determined in accordance with the provisions of this chapter and such determination shall take into account any retirement benefit payments made to the member prior to death, if any.
Sec. 22-41(d). Transfer to other Arizona Systems. Following a member's termination date and prior to the member's retirement or request for a refund of the member's accumulated contribution account, the member may request a transfer of the member's vested accrued benefit and/or the member's accumulated contributions account to a public retirement system maintained by the State of Arizona or any municipality of the State of Arizona, to be processed in accordance with Arizona Revised Statute Sections 38-730, 38-923 and 38-924, as amended. A transfer from the system shall not cause the system to incur any unfunded accrued liability, except in the case of a transfer to the Arizona State Retirement System in accordance with the reciprocity rules in effect with regard to transfers between the system and ASRS and which shall not cause any significant detriment to the funded status of the system.
Sec. 22-41(e). Forfeiture of credited service and tier I status. Any refund or transfer of a member's accumulated contributions account or a transfer of member's accrued benefit shall trigger an immediate forfeiture of all credited service earned by the member. In the case of a vested member, a refund or transfer under this section 22-41 and the related forfeiture of credited service will result in the loss of the member's (or beneficiary's) retirement pension rights under the system. If a former member requests a refund of the member's accumulated contributions account or a transfer of the member's accrued benefit, the former member shall forfeit any and all rights to tier I member status and, if the former member is rehired by the city, may reenter the system only as a tier II member, subject to all applicable participation requirements.
(Ord. No. 10657, § 2, 4-28-09, eff. 7-1-09; Ord. No. 10915, § 7, 6-21-11, eff. 7-1-11; Ord. No. 11020, § 3, 9-11-12, eff. 7-1-09)
Sec. 22-42(a). Explanation of benefit options. A member who is eligible to receive a retirement benefit may request from the system administrator information regarding the retirement benefit payment options available. No pension is automatically payable hereunder, except as provided in section 22-40, death benefits, and all eligible members must make appropriate retirement elections under the system. The member and spouse, if any, shall sign a statement acknowledging that the retirement benefit payment options have been satisfactorily explained and shall make a written election of one (1) of the retirement benefit payment options. All elections shall be made in accordance with the policies and procedures of the system administrator, and any spousal consent shall be provided in accordance with section 22-33(f)(1). The benefit election can be revoked or changed by the member by filing a written notice of revocation or change with the system administrator, subject to any applicable spousal acknowledgement requirements, any time prior to ratification of the retirement benefit by the board. The benefit election is irrevocable upon board ratification of the member's application for retirement benefits.
Sec. 22-42(b). Single life annuity. A member eligible for retirement may elect to receive his retirement benefit payable in a single life annuity, ending with the monthly payment made in the month of the member’s death. The single life annuity shall be the normal form of benefit for purposes of calculating the retirement benefits under the system. Any election of an alternative annuity option under the system shall result in the payment of an annuity which is the actuarial equivalent of the single life annuity payable to the member.
Sec. 22-42(c). Joint and survivor annuity. A member eligible for retirement may elect to receive his retirement benefit payable in a joint and survivor annuity which provides payments to the member for the remainder of the member's life and then provides payments to the surviving beneficiary for the remainder of the beneficiary's life. In making this election, the monthly benefit to be paid to the surviving beneficiary following the death of the member may be one hundred percent (100%), seventy-five percent (75%) or fifty percent (50%) of the monthly benefit the member had been receiving. All payments will cease upon the death of the member or the beneficiary, whichever shall occur last. The member's designation of a beneficiary to receive any survivor benefit payable under a joint and survivor annuity shall be subject to the requirements of section 22-43(f) and Code section 401(a)(9), including the limitations on non-spouse beneficiaries, any joint and survivor annuity election shall be adjusted as necessary for compliance with the Code.
Sec. 22-42(d). Annuity certain and for life. A member eligible for retirement may elect to receive his retirement benefit payable in an annuity for a term certain and for life. This benefit allows a member to ensure payment of a benefit over the member’s lifetime, and in the event of the member’s death before the end of a “period certain,” continuing payment of the benefit until the end of the “period certain” to a surviving beneficiary or contingent beneficiary. A member may elect to receive a term certain annuity with a guaranteed payment period of sixty (60) months, one hundred twenty (120) months or one hundred eighty (180) months. For purposes of the annuity for a term certain and for life, the guaranteed payment period shall begin with the earlier of the first monthly benefit payment made to the member or the first monthly end of service program accrual, if applicable. Should the member live beyond the period certain elected, no survivor benefits shall be paid to the member’s beneficiary(ies). Should the member, the beneficiary and any contingent beneficiary die before the expiration of the term certain, the board shall make a one-time lump sum payment equal to the present value of remaining period certain payments to the estate of the person last receiving a benefit under the annuity.
Sec. 22-42(e). Failure to elect benefit option or commencement date. Failure to elect a benefit option will result in the member receiving a single life annuity, assuming the member survives until the pension commencement date. Failure to elect a date on which payment begins will result in payments made in accordance with the minimum required distribution provisions of section 22-43(e) and Code Section 401(a)(9). Notwithstanding the foregoing, the provisions of section 22-40 apply when a vested member dies while eligible for retirement and prior to the board’s ratification of the member’s application for retirement benefits.
(Ord. No. 10657, § 2, 4-28-09, eff. 7-1-09; Ord. No. 10711, § 4, 9-9-09, eff. 7-1-09; Ord. No. 10712, § 4, 9-9-09, eff. 7-1-09; Ord. No. 11327, §§ 13, 14, 12-8-15, eff. 1-1-16; Ord. No. 11595, § 6, 10-23-18)
Sec. 22-43(a). Payment of small accounts. If the accrued benefit of a member, including any refund of an accumulated contributions account, has a present value of five thousand dollars ($5,000.00) or less at the time the benefit becomes payable, a lump sum distribution shall be paid to the member within thirty (30) days following their benefit election and the satisfaction of any applicable spousal consent requirements.
Sec. 22-43(b). Special rules for members with part-time employment. When a member has earned accrued service during part-time employment or both full-time and part-time employment, the monthly retirement benefit, in the form of benefit elected, will be computed using the following special rules.
(1) Special rules for computing average final monthly compensation for a member who had part-time or both full-time and part-time employment. Average final monthly compensation shall be determined by:
(A) For periods of full-time hours worked, the average of the highest thirty-six (36) consecutive months of compensation of the last one hundred twenty (120) consecutive months of compensation divided by thirty-six (36), or if the member has less than thirty-six (36) consecutive months of compensation divided by the actual number of months of compensation.
(B) For periods of part-time hours worked, the average of the highest annualized thirty-six (36) consecutive months of compensation of the last one hundred twenty (120) consecutive months of compensation divided by thirty-six (36), or if the member has less than thirty-six (36) consecutive months of compensation divided by the actual number of months of compensation.
(2) Special rules for computing annualized months of compensation for a member who had a part-time or both full-time and part-time employment.
(A) Determine the actual compensation paid to an employee during a two thousand eighty-hour (2,080) period in any consecutive twelve-month calendar period.
(B) Divide the actual number of hours for which an employee was compensated by two thousand eighty (2,080).
(C) Divide the result obtained in "A" by the result obtained in "B."
Annualized monthly compensation shall be the result obtained under "C" divided by twelve (12).
Sec. 22-43(c). Special rule for members with authorized leave without pay. When a member has taken authorized leave without pay, including periods of qualified military service, the member's average final monthly compensation shall be computed by imputing compensation for the authorized leave period, at the compensation rate in effect for the member immediately preceding the commencement of the leave period. For the period beginning on July 1, 2009, and ending on June 30, 2010, furlough periods shall be considered periods of authorized leave without pay for purposes of this section 22-43(c).
Sec. 22-43(d). Limitation on compensation. In no event may the compensation of a member considered under this system exceed the limit set forth in Section 401(a)(17) of the Code, as adjusted for cost-of-living increases in accordance with Code Section 401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year applies to any fiscal year period, not exceeding twelve (12) months, over which compensation is determined beginning in such calendar year.
Sec. 22-43(e). Maximum benefit allowable. Notwithstanding anything hereunder to the contrary, the annual benefit payable to a member in the form of a straight life annuity shall not exceed the annual dollar limitation in effect under Code Section 415(b), as adjusted in accordance with paragraph (1) below (the "annual dollar limitation"). For the 2009 Limitation Year, the annual dollar limitation is $195,000.00. If the benefit the member would otherwise accrue in a limitation year would produce an accrued benefit in excess of the annual dollar limitation, the benefit shall be limited (or the rate of accrual reduced) to a benefit that does not exceed the annual dollar limitation. For purposes of this section, the annual benefit shall not include the annual benefit attributable to either mandatory member contributions or rollover contributions.
(1) Cost of living adjustments. The annual dollar limitation shall be adjusted for each calendar year to take into account any cost-of-living increase adjustments for that calendar year allowable pursuant to applicable regulations or rulings of the United States Treasury Department under Section 415(d) of the Code. Any such adjustment shall be effective only as of the first day of the calendar year for which such adjustment is announced. Cost-of-living adjustments to the annual dollar limitation made after a member retires shall apply to that member, provided that in no event shall such cost-of-living adjusted amounts exceed the Code Section 401(a)(17) limitation on compensation for that member determined as of the member's termination of employment.
(2) Minimum benefits. Notwithstanding anything else in this section to the contrary, the benefit otherwise accrued or payable to a member under the system shall be deemed not to exceed the annual dollar limitation if:
(A) The benefits payable for a limitation year under any form of benefit with respect to such member do not exceed ten thousand dollars ($10,000.00) multiplied by a fraction: (i) the numerator of which is the member's number of years (or part thereof, but not less than one (1) year) of credited service (not to exceed ten (10)), and (ii) the denominator of which is ten (10); and
(B) The city has not at any time maintained a defined contribution system in which the member participated (for this purpose, mandatory employee contributions under a defined benefit system are not considered a separate defined contribution system).
(3) Service and participation reductions. If the member has less than ten (10) years of participation in the system, the annual dollar limitation shall be multiplied by a fraction: (1) the numerator of which is the number of years (or part thereof, but not less than one (1) year) of participation in the system, and (2) the denominator of which is ten (10).
(4) Early payment adjustments. The annual dollar limitation shall be adjusted if the member's benefit commencement date is before age sixty-two (62).
(A) Limitation Years Beginning on or after July 1, 2007. With regard to annuities commencing in Limitation Years beginning on or after July 1, 2007 and when the Member's benefit commencement date is before age 62, the Annual Dollar Limitation for the Member's benefit commencement date shall be the annual amount of a benefit payable in the form of a straight life annuity commencing at the Member's benefit commencement date that is the actuarial equivalent of the lesser of (i) the Annual Dollar Limitation (adjusted under Section 22-43(d)(3), if required) computed using a 5% interest rate and the applicable mortality table under Code Section 417(e)(3) and expressing the Member's age based on completed calendar months as of the benefit commencement date and (ii) the Annual Dollar Limitation (adjusted under Section 22-43(d)(3), if required) multiplied by the ratio of the annual amount of the immediately commencing straight life annuity under the System at the Member's benefit commencement date to the annual amount of the immediately commencing straight life annuity under the System at age 62.
(B) Limitation Years Beginning Before July 1, 2007. With regard to annuities commencing in Limitation Years beginning before July 1, 2007 and when the Member's benefit commencement date is before age 62, the annual amount of a benefit payable in the form of a straight life annuity commencing at the Member's benefit commencement date that is the actuarial equivalent of the Annual Dollar Limitation (adjusted under Section 22-43(d)(3), if required) computed using a 5% interest rate and the mortality table described in Rev. Rul. 2001-62.
(C) Notwithstanding the other requirements of this Section, no adjustment shall be made to the Annual Dollar Limitation to reflect the probability of a Member's death between the Member's benefit commencement date and age 62 if benefits are not forfeited upon the death of the Member prior to the benefit commencement date. To the extent benefits are forfeited upon death before the benefit commencement date, such an adjustment shall be made.
(5) Alternative benefit payment options. Except as provided below, if a benefit is payable in a form other than a straight life annuity, the benefit shall be adjusted to an actuarially equivalent straight life annuity that begins at the same time as such other form of benefit and is payable on the first day of each month, before applying the limitations of this section.
(A) (i) Limitation Years Beginning on or After July 1, 2007. With regard to annuities commencing in Limitation Years beginning on or after July 1, 2007, the actuarially equivalent straight life annuity is equal to the greater of:
(a) the annual amount of the straight life annuity (if any) payable to the Member under the System commencing at the same benefit commencement date as the Member's form of benefit; and
(b) the annual amount of the straight life annuity commencing at the same benefit commencement date that has the same actuarial present value as the Member's form of benefit, computed using a 5% interest rate assumption and the applicable mortality table under Code Section 417(e)(3).
(ii) Limitation Years Beginning Prior to July 1, 2007. With regard to annuities commencing in Limitation Years beginning prior to July 1, 2007, the actuarial equivalent straight life annuity is equal to the greater of:
(a) the annual amount of a straight life annuity (if any) payable to the Member under the System commencing at the same benefit commencement date as the Member's form of benefit; and
(b) the annual amount of the straight life annuity commencing at the same benefit commencement date that has the same actuarial present value as the Member's form of benefit, computed using a 5% interest rate assumption and the mortality table described in Rev. Rul. 2001-62.
(6) Definitions. For purposes of this section, the term "limitation year" shall mean the calendar year beginning on January 1 and ending on December 31. The term "applicable mortality table" shall mean the mortality table prescribed by the Internal Revenue Service based on the actual experience of pension plans and projected trends in such experience.
(7) Incorporation by reference. The additional requirements of Code Section 415(b) and the treasury regulations promulgated there under, as applicable to governmental plans maintained in accordance with Code Section 414(d), are hereby incorporated by reference.
(8) Late Payment Adjustments. The Annual Dollar Limitation shall be adjusted if the Member's benefit commencement date is after age 65.
(A) Limitation Years Beginning on or after July 1, 2007. With regard to annuities commencing in Limitation Years beginning on or after July 1, 2007 and when the Member's benefit commencement date is after age 65, the Annual Dollar Limitation for the Member's benefit commencement date shall be the annual amount of a benefit payable in the form of a straight life annuity commencing at the Member's benefit commencement date that is the actuarial equivalent of the Annual Dollar Limitation (adjusted under Section 22-43(e)(3), if required), computed with a 5% interest rate and the applicable mortality table under Code Section 417(e)(3) (and expressing the Member's age based on completed calendar months as of the benefit commencement date).
(B) Limitation Years Beginning Before July 1, 2007. With regard to annuities commencing in Limitation Years beginning before July 1, 2007 and when the Member's benefit commencement date is after age 65, the Annual Dollar Limitation shall be the amount calculated in accordance with (A) above, but without adjusting the Member's age based on completed calendar months as of the benefit commencement date.
(C) Notwithstanding the other requirements of this Section, no adjustment shall be made to the Annual Dollar Limitation to reflect the probability of a Member's death between age 65 and the Member's benefit commencement date if benefits are not forfeited upon the death of the Member prior to the benefit commencement date. To the extent benefits are forfeited upon death before the benefit commencement date, such an adjustment shall be made.
Sec. 22-43(f). Minimum required distributions. The board and the system administrator shall make reasonable and good faith efforts to comply with the requirements of the treasury regulations promulgated pursuant to Code Section 401(a)(9), notwithstanding any provision herein to the contrary. The obligations of the board and the system administrator shall be interpreted and construed in a manner consistent with the relief afforded to governmental plans under Section 823 of the Pension Protection Act of 2006 and the Treasury Department's proposed regulations promulgated pursuant thereto, at Treas. Reg. Sec. 1.401(a)(9)-1, Q&A-2(d). When processing distributions required by Code Section 401(a)(9), the system administrator shall make reasonable and good faith efforts to begin the payment of such distributions no later than the April 1 of the calendar year following the later of the calendar year in which the member attains the age of 70½ or the calendar year containing the member's termination date. Death benefit distributions also shall be processed in accordance with a reasonable and good faith interpretation of the requirements of Code Section 401(a)(9).
Sec. 22-43(g). Eligible rollover distributions. Notwithstanding anything herein to the contrary, the member or distributee may elect to have any portion of an eligible rollover distribution received from the system paid directly to an eligible retirement plan. An eligible rollover distribution shall be made pursuant to the requirements of Code Section 401(a)(31) and Code Section 402, and the applicable regulations promulgated there under, and in the manner prescribed by the board.
(1) Distributee. A "distributee" includes a member or former member. In addition, the member's or former member's surviving spouse and any alternate payee under a domestic relations order, are distributees with regard to the interest of the spouse or former spouse. A distributee also includes the member's non-spouse designated beneficiary. In the case of a non- spouse beneficiary, the direct rollover may be made only to an individual retirement account or annuity described in Section 409(a) or Section 408(b) of the Code that is established on behalf of the designated beneficiary and that will be treated as an inherited IRA pursuant to the provisions of Section 402(c)(11) of the Code. Section 402(c)(11) of the Code provides that a direct rollover of a distribution to a non-spouse beneficiary is a rollover of an eligible rollover distribution only for purposes of Section 402(c) of the Code. Accordingly, the distribution to a non-spouse beneficiary is not subject to the direct rollover requirements of Section 401(a)(31) of the Code, the notice requirements of Section 402(f) of the Code, or the mandatory withholding requirements of Section 3405(c) of the Code.
(2) Eligible retirement plan. An "eligible retirement plan" is an eligible plan under Section 457(b) of the Code which is maintained by a state, political subdivision of a state, or an agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from the system, an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity plan described in Section 403(a) of the Code, an annuity contract described in Section 403(b) of the Code, or a qualified plan described in Section 401(a) of the Code, that accepts the distributee's eligible rollover distribution. The definition of eligible retirement plan shall also apply in the case of a distribution to a surviving spouse, or to an alternate payee under a domestic relations order. An "eligible retirement plan" also is a Roth IRA described in Section 408A(b) of the Code, provided that any distribution to such Roth IRA is made in accordance with the provisions of Section 408A of the Code.
(3) Eligible rollover distribution. An "eligible rollover distribution" is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: (i) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of ten (10) years or more; (ii) any distribution to the extent such distribution is required under Section 401(a)(9) of the Code; (iii) the portion of any distribution that is not includible in gross income; and (iv) any other distribution that is reasonably expected to total less than two hundred dollars ($200.00) during a year. A portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax member contributions which are not includible in gross income. However, such portion may be transferred only to (1) an individual retirement account or annuity described in Section 408(a) or (b) of the Code, (2) to a qualified defined contribution plan described in Section 401(a) of 403(a) of the Code that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible, or (3) for taxable years beginning after December 31, 2006, to a qualified trust or to an annuity contract described in Section 403(b), if such trust or contract provides for separate accounting for amounts so transferred (including interest thereon), including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible.
Sec. 22-43(h). Assignments prohibited. Except as set forth in section 22-43.1, none of the money, pensions or other benefits payable by the system shall be assignable either in law or in equity or be subject to execution, levy, attachment, garnishment or other legal process.
(Ord. No. 10657, § 2, 4-28-09, eff. 7-1-09; Ord. No. 11020, § 4, 9-11-12, eff. 7-1-09)
Sec. 22-43.1.(a). Benefits subject to domestic relations orders. The right of a member to a retirement benefit, to the refund of a member's accumulated contributions account, or any other benefit under the provisions of the system shall be subject to award pursuant to a system approved domestic relations order.
Sec. 22-43.1(b). System administrator review and approval. The system administrator is responsible for the review and approval of any domestic relations order impacting benefits or rights of a member under this system and which is presented to the system administrator in a timely fashion. The system administrator shall determine whether the domestic relations order can be administered and benefits paid in accordance with the applicable requirements of the order, the system and the Code. Any domestic relations order accepted by the system administrator shall be referred to as a system approved domestic relations order. To the extent permitted by law, the system administrator's decision regarding a domestic relations order shall be final and binding. The city, the board, and the system administrator shall not be responsible for the payment of any system benefits in contravention of a domestic relations order when the domestic relations order is not timely presented to the system administrator for review. Additionally, upon ratification of a member's retirement application by the board, all benefit payment elections (including those filed by the member, ordered pursuant to a system approved domestic relations order or filed by an alternate payee) shall become irrevocable and no change in benefit options shall be permitted, regardless of any changes in the marital status of the member or the alternate payee.
Sec. 22-43.1(c). System approved domestic relations order. No domestic relations order shall be accepted by the system administrator if the order requires the system to provide any type, form or time of payment that is not provided under this Code, as determined by the system administrator in its discretion. Additionally, any system approved domestic relations order must reasonably identify the Tucson Supplemental Retirement System and specify all of the following: (1) the name and last known mailing address of the member; (2) the name and last known mailing address of each alternate payee covered by the order; (3) the method of determining the amount of the member's system benefits to be paid to each alternate payee covered by the order; (4) the number of payments or period to which the order applies; and (5) whether survivor benefits are payable to the alternate payee upon the death of the member.
(Ord. No. 10657, § 3, 4-28-09, eff. 7-1-09; Ord. No. 11327, § 15, 12-8-15, eff. 1-1-16)
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