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)