§ 35.127  TAX QUALIFICATION.
   (A)   Governmental plan. The Retirement System is intended to constitute a “governmental plan”, as defined in 26 U.S.C. § 414(d) which is qualified under 26 U.S.C. § 401(a). Consequently, the retirement system is intended to comply with those requirements of 26 U.S.C. § 401(a) and those provisions of the Tax Reform Act of 1986, the Uniformed Services Employment and Reemployment Rights Act of 1994, the Small Business Job Protection Act of 1996, the Taxpayer Relief Act of 1997, the Internal Revenue Service Restructuring and Reform Act of 1998, the Community Renewal Tax Relief Act of 2000, the Economic Growth and Tax Reconciliation and Relief Act of 2001, and subsequent legislation, which are applicable to a governmental plan.
   (B)   Exclusive benefit. All assets of the Retirement Fund, including investment income, shall be retained for the exclusive benefit of participants and their beneficiaries, and shall be used to pay benefits to such persons or to defray the reasonable expenses of administering the retirement system, and shall not revert to or inure to the benefit of the city, except that a contribution which was made by mistake of fact shall be returned to the city within one year after the payment of the contribution. In the event that the retirement system is terminated, after satisfaction of all benefit rights under the retirement system, if a surplus remains in the Retirement Fund due to “actuarial error”, the surplus may be returned to the city.
   (C)   Minimum distribution rules. All distributions under the retirement system shall be in accordance with 26 U.S.C. § 401(a)(9) and the regulations issued thereunder, including the requirement that distributions to a participant must commence no later than April 1 of the calendar year following the calendar year in which such participant attains age 70 ½ and the minimum distribution incidental benefit requirements, and the distribution provisions contained in the preceding sections of this ordinance are intended to comply with such regulations.
   (D)   Maximum benefits. The limitations of 26 U.S.C. § 415, to the extent applicable to a governmental plan (and, where applicable, to a plan maintained for public safety employees), regarding maximum annual pension benefits payable to any participant, are incorporated into the retirement system by reference. The annual benefit shall not exceed the annual dollar limit of 26 U.S.C. § 415(b), subject to adjustment in accordance with 26 U.S.C. § 415 and the regulations issued hereunder. In addition, the annual compensation taken into account by the retirement system shall not exceed the limitation of 26 U.S.C. § 401(a)(l 7).
   (E)   Application of forfeitures. The forfeiture of all or a portion of a participant’s accrued benefit shall not be applied to increase the benefits of any other participant, but may be anticipated in estimating retirement system costs.
   (F)   Vesting upon termination or partial termination. In the event of the termination or partial termination of the retirement system, or the complete discontinuance of city contributions hereto, benefits hereunder of affected participants will be fully vested, to the extent then funded.
   (G)   Direct rollover provisions.
      (1)   A distributee may elect, at the time and in the manner prescribed by the Board, to have any portion of an “eligible rollover distribution” from the Retirement System paid directly to an “eligible retirement plan” specified by the distributee in a “direct rollover”. An “eligible rollover distribution” is any distribution of all or any portion of the accrued benefit of the distributee, except that an eligible rollover distribution does not include any distribution that is:
         (a)   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 years or more; or
         (b)   Any distribution to the extent such distribution is required under 26 U.S.C. § 401(a)(9).
      (2)   A portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions that are not includable in gross income; however, the portion may be paid only to an individual retirement account or annuity described in 26 U.S.C. § 408(a) or (b), or to a qualified defined contribution plan described in 26 U.S.C. §§ 401 or 403(a) that agrees to separately account for amounts so transferred, including separately accounting for the portion of the distribution that is includible in gross income and the portion of the distribution that is not so includible.
      (3)   An “eligible retirement plan” is an individual retirement account described in 26 U.S.C. § 408(a), an individual retirement annuity described in 26 U.S.C. § 408(b), an annuity plan described in 26 U.S.C. § 403(a), or a qualified trust described in 26 U.S.C. § 401(a), that accepts the distributee’s eligible rollover distribution. An “eligible retirement plan” shall also include an annuity contract described in 26 U.S.C. § 403(b), an eligible deferred compensation plan described in 26 U.S.C. § 457(b) which is maintained by a state, political subdivision of a state, or any agency or instrumentality of the state or political subdivision thereof which agrees to separately account for amounts transferred into the plan from this retirement system. The definition of eligible retirement plan shall also apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relations order.
      (4)   A “direct rollover” is a payment by the retirement system to the eligible retirement plan specified by the distributee. A distributee includes a participant or former participant. In addition, the participant’s or former participant’s surviving spouse and the participant’s or former participant’s spouse or former spouse who is an alternate payee under a qualified domestic relations order, as defined in 26 U.S.C. § 414(p), are distributees with regard to the interest of the spouse or former spouse.
   (H)   Actuarial equivalence. Alternative forms of benefit, if they are provided by the retirement system, shall be of equivalent current value to the benefit which would otherwise have been provided to the participant, determined on the basis of the following actuarial assumptions:
      (1)   The interest assumption shall be 6%; and
      (2)   The mortality assumption shall be the 1994 GAR Mortality Table projected to 2002.
(Ord. passed 1-24-2011; Ord. passed 3-24-2014)