HomeMy WebLinkAboutO-2012-023 Amending Section 18-29 Pensions ORDINANCE NO. 2012-023
AN ORDINANCE OF THE CITY COMMISSION OF THE CITY OF DANIA
BEACH, FLORIDA, AMENDING CHAPTER 18, "PENSIONS AND
RETIREMENT", OF THE CITY CODE OF ORDINANCES TO PROVIDE FOR
COMPLIANCE WITH THE UNITED STATES INTERNAL REVENUE
CODE; PROVIDING FOR SEVERABILITY; PROVIDING FOR CONFLICTS;
FURTHER, PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, on January 20, 2011, an application was filed by counsel for the Dania
Beach General Employees' Pension Plan with the Internal Revenue Service for a Favorable
Determination Letter regarding the qualified status of the Plan under Section 401(a) of the
Internal Revenue Code; and
WHEREAS, on May 30, 2012, the Internal Revenue Service issued a Favorable
Determination Letter, finding that the Plan complies with all qualification requirements; and
WHEREAS, the Favorable Determination Letter is subject to the timely adoption of
amendments provided in this Ordinance,and
WHEREAS, the trustees of the City of Dania Beach General Employees' Retirement
Plan have requested and approved such amendments as being in the best interests of the
participants and beneficiaries, as well as improving the administration of the plan,and
WHEREAS, the City Commission has received, reviewed and considered an actuarial
impact statement describing the actual impact of the amendments provided for in this Ordinance;
NOW THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF THE
CITY OF DANIA BEACH,FLORIDA:
Section 1. Sec. 18-290) of the Dania Beach Code is amended to read as follows:
Sec. 18-29. Definitions.
(j) Earnings means a member's basic rate of pay from the city, exclusive of
all overtime pay, bonuses, travel or expense allowances and any other
extraordinary compensation. Earnings shall include a member's longevity pay.
This provision shall not apply to any member whose employment termination
date precedes April 8, 1986. Fef the puMese of applying the limitations set
in Seetions 401(a)17) and 415 e€the latemed Revenue Code, salu , sm ; elude
my eleetiie de€ef defined in C-ode-Seerien 402(g)(3) of the intef a
at the eleetien ef the Member- and whieh is net ineludible in the gross ineeme ef
the Member- by reason r +
-e�eet�eus�3�r457�e�ke m�- emW nevea,,a Gede Fef
limi� tien years--begi -ad-a y 1,inn�,. puTeses the of
'PPr7ing the4ifait—Aties3'ddeSeiibed in See+cien 18 29.14 f this Chapte E gs
paid or-faade available dwifing sueh limitatieft years shall ineltide eleefive ameufAs
Section 2. Sec. 18-29.14 (a) is deleted in its entirety and replaced with the following:
Sec. 18-29.14. Internal Revenue Code Comyliance.
(aa,) MAXIMUM AMOUNT OF RETIREMENT INCOME
(1) The limitations of this Subsection (a s) hall apply in limitation years
beginning on or after July 1, 2007, except as otherwise provided in this Section,
and are intended to comply with the requirements of the Pension Protection Act of
2006 and shall be construed in accordance with said Act and guidance issued
thereunder. The provisions of this Subsection(a) shall supersede any provision of
the Plan to the extent such provision is inconsistent with this Subsection. The
Annual Pension as defined in Parag aph(2)below otherwise payable to a Member
at any time shall not exceed the Dollar Limitation for the Member multiplied by a
fraction whose value cannot exceed one, the numerator of which is the Member's
number of years (or part thereof, but not less than one year) of service with the
City and the denominator of which is 10. For this purpose, no more than one year
of service may be credited for any Plan Year. If the benefit the Member would
otherwise accrue in a limitation year would produce an Annual Pension in excess
of the Dollar Limitation, the benefit shall be limited (or the rate of accrual
reduced)to a benefit that does not exceed the Dollar Limitation.
(2) "Annual Pension" means the sum of all annual benefits, payable in the
form of a straight life annuity. Benefits payable in any other form shall be
adjusted to the larger of:
(A) For limitation years beginning on or after July 1, 2007:
2 ORDINANCE#2012-023
(I) the straight life annuity (if any) payable to the Member
under the Plan commencing at the same Annui S� tarting Date as
the Member's form of benefit, or
(II) the actuarially equivalent straight life annuity commencing
at the same Annuity Starting Date, computed using a 5.00%
interest rate and the mortality basis prescribed in Code Section
415(b)(2)(E)(v).
(B) For limitation years beginning before July 1, 2007:
(I) the actuarially equivalent straight life annuity commencing
at the same Annuity Starting Date, computed using the interest rate
and mortality basis specified in Section 1.1(A)(2) used for
Actuarial Equivalence for the particular form of payment under the
Plan or
(II) the actuarially equivalent straight life annuity commencing
at the same Annuity Starting Date, computed using a 5.00%
interest rate and the mortality basis prescribed in Code Section
415(b)(2)(E)(v).
No actuarial adjustment to the benefit shall be made for benefits that are
not directly related to retirement benefits (such as a qualified disability
benefit, preretirement incidental death benefits, and postretirement
medical benefits); or the inclusion in the form of benefit of an automatic
benefit increase feature, provided the form of benefit is not subject to
§417(e)(3) of the Internal Revenue Code (the "Code") and would
otherwise satisfy the limitations of this Subsection (a), and the amount
payable under the form of benefit in any Limitation Year shall not exceed
the limits of this Subsection (a)Mlicable at the annufty starting date, as
increased in subsequent ,years pursuant to § 415(d) of the Code. For this
purpose, an automatic benefit increase feature is included in a form of
benefit if the form of benefit provides for automatic, periodic increases to
the benefits paid in that form.
(3) "Dollar Limitation" means, effective for the first limitation year beginning
after January 1, 2001, $160,000.00, automatically adjusted under Code Section
415(d), effective January 1 of each year, as published in the Internal Revenue
Bulletin, and payable in the form of a straight life annuity. The new limitation
shall apply to limitation years ending with or within the calendar year of the date
of the adjustment, but a Member's benefits shall not reflect the adjusted limit
prior to January 1 of that calendar year. The Dollar Limitation shall be further
adjusted based on the age of the Member when the benefit begins as follows:
3 ORDINANCE#2012-023
(A) For Annuity Starting Dates in limitation years beginning on or
after July 1, 2007:
(I) If the Annuity Starting Date for the Member's benefit is
after age 65:
(i) If the Plan does not have an immediately
commencing straight life annuity payable at both age 65
and the age of benefit commencement:
The Dollar Limitation at the Member's Annuity Starting
Date is the annual amount of a benefit payable in the form
of a straight life annuity commencing at the Member's
Annuity Starting Date that is the actuarial equivalent of the
Dollar Limitation with actuarial equivalence computed
using a 5.00% interest rate assumption and the mortality
basis prescribed in Code Section 415(b)(2)(E)(v) for that
Annuity Starting Date (and expressing the Member's age
based on completed calendar months as of the Annuity
Starting Date).
(ii) If the Plan does have an immediately commencing
straight life annuity payable at both age 65 and the age of
benefit commencement:
The Dollar Limitation at the Member's Annuity Starting
Date is the lesser of (aa) the Dollar Limitation multiplied
by the ratio of the annual amount of the adjusted
immediately commencing straight life annuity under the
Plan at the Member's Annuity Starting Date to the annual
amount of the adjusted immediately commencingstraight
life annuity under the Plan at age 65, both determined
without applying the limitations of this Subsection (a), and
(bb) the limitation determined under Subparagraph
(3)(A)(12(i) of this Subsection(a). For this purpose, the
adjusted immediately commencing straight life annuity
under the Plan at the Member's Annuity Starting Date is
the annual amount of such annuityDayable to the Member,
computed disregarding the Member's accruals after age 65
but including actuarial adjustments even if those actuarial
adjustments are used to offset accruals; and the adjusted
immediately commencing straight life annuity under the
Plan at age 65 is the annual amount of such annuity
would be payable under the Plan to a hypothetical Member
4 ORDINANCE#2012-023
who is age 65 and has the same Accrued Benefit as the
Member.
(II) Except with respect to a Member who is a "Qualified
Member" as defined in Section 415(b)(2)(H) of the Code, for
benefits except survivor and disability benefits as defined in Section
415(b (�) of the Code), if the Annuity Starting Date for the
Member's benefit is before age 62:
(i) If the Plan does not have an immediately
commencing straight life annuity payable at both age 62
and the age of benefit commencement:
The Dollar Limitation at the Member's Annuity Starting
Date is the annual amount of a benefit payable in the form
of a straight life annuity commencing at the Member's
Annuity Starting Date that is the actuarial equivalent of the
Dollar Limitation with actuarial equivalence computed
using a 5.00% interest rate assumption and the mortality
basis prescribed in Code Section 415(b)(2)(E)(v) for that
Annuity Starting Date (and expressing the Member's age
based on completed calendar months as of the Annuity
Starting Date
(ii) If the Plan does have an immediately commencing
straight life annuity payable at both age 62 and the age of
benefit commencement:
The Dollar Limitation at the Member's Annuity Starting
Date is the lesser of (aa) the Dollar Limitation multiplied
by the ratio of the annual amount of the adjusted
immediately commencing straight life annuity under the
Plan at the Member's Annuity Starting Date to the annual
amount of the adjusted immediately commencing straight
life annuity under the Plan at age 62, both determined
without applying the limitations of this Subsection (a), and
(bb) the limitation determined under Subparagraph
(3)(A)(II)(i)of this Subsection(a).
(B) For Annuity Starting Dates in limitation years beginningbefore
efore
July 1, 2007:
5 ORDINANCE#2012-023
_Age as of Annuity
Starting Date: Adiustment of Dollar Limitation:
Over 65 The smaller of: a the actuarial equivalent of the limitation
O a
for age 65, computed using the interest
rate and mortality basis specified in the
definition of Actuarial Equivalence
herein, or
(b) the actuarial equivalent of the
limitation for age 65, computed using a
5.00% interest rate and the mortality
basis prescribed in Code Section
415(b)(2)(E)(v).
Any increase in the Dollar Limitation determined in
accordance with this paragraph shall not reflect a mortality
decrement between age 65 and the age at which benefits
commence if benefits are not forfeited upon the death of the
Member. If any benefits are forfeited upon death, the full
mortality decrement is taken into account.
62 to 65 No adjustment.
Less than 62 The smaller of (a) the actuarial equivalent of the limitation
for age 62, computed using the interest
rate and mortality basis specified in the
definition of Actuarial Equivalence
herein, or
(b) the actuarial equivalent of the
limitation for age 62, computed using a
5.00% interest rate and the mortality
basis prescribed in Code Section
415(b (2)Z (E)(v).
This adjustment shall not apply to any "Qualified Member" as
defined in Section 415(b)(2)(H), nor to survivor and disability
benefits as defined in Section 415(b)(2)(1) of the Code.
(4) With respect to clause (3)(A)(I (i), clause (3)(A)(II)(i) and Paragraph
(3)B) above, no adjustment shall be made to the Dollar Limitation to reflect the
probability of a Member's death between the Annuity Starting Date and age 62, or
between age 65 and the Annuity Starting Date, as applicable, if benefits are not
forfeited upon the death of the Member prior to the Annui , Starting Date. To the
extent benefits are forfeited upon death before the Annuily Starting Date, such an
6 ORDINANCE#2012-023
adjustment shall be made. For this purpose, no forfeiture shall be treated as
occurring u on the Members death if the Plan does not charge Members for
P g
providing a qualified preretirement survivor annuity, as defined in Code Section
417(c),gpon the Member's death.
(5) The term "limitation year" is the 12 month period which is used for
implication of the limitations under Code Section 415 and shall be the calendar
year.
(6) The limitations set forth in this Subsection (a) shall not apply if the Annual
Pension does not exceed $10,000.00 provided the Member has never participated in
a Defined Contribution Plan maintained by the City.
(7) Cost-of-living adjustments in the Dollar Limitation for benefits shall be
limited to scheduled annual increases determined by the Secretary of the Treasury
under Section Subsection 415(d)of the Code.
(8) In the case of a Member who has fewer than ten(10) years of participation
in the Plan, the Dollar Limitation set forth in Paragraph (3) of this Subsection (a)
shall be multiplied by a fraction: (i)the numerator of which is the number of,years
(or part thereof) participation in the Plan, and (ii) the denominator of which is
ten(10).
(9)AU portion of a Member's benefit that is attributable to mandatory
Member contributions (unless picked-up by the City) or rollover contributions,
shall be taken into account in the manner prescribed in the regulations under
Section 415 of the Code.
(10) Should any Member participate in more than one defined benefit plan
maintained by the CLty, in any case in which the Member's benefits under all such
defined benefit plans (determined as of the same age) would exceed the Dollar
Limitation applicable at that age, the accrual of the Member's benefit under this
Plan shall be reduced so that the Member's combined benefits will equal the
Dollar Limitation.
(11) For a Member who has or will have distributions commencing at more
than one annuity starting date, the Annual Benefit shall be determined as of each
such annui , starting date (and shall satisfy the limitations of this Section as of
each such date), actuarially adjusting for past and future distributions of benefits
commencing at the other annuity starting dates. For this purpose, the
determination of whether a new starting date has occurred shall be made without
regard § 1.401(a)-20, Q&A 10(d), and with regard to § 1.415(b)l(b)(1)(iii)(B)
and of the U.S. Treasury Income Tax Re lations the"Regulations").
(12) The determination of the Annual Pension under Paragraph (A)(1) of this
Subsection(a) shall take into account(in the manner prescribed by the regulations
7 ORDINANCE#2012-023
under Section 415 of the Code) social security supplements described in §
411(a)(9) of the Code and benefits transferred from another defined benefit plan,
other than transfers of distributable benefits pursuant § 1.411(d)-4, Q&A-3(c)o
the Regulations.
(13) The above limitations are intended to comply with the provisions of
Section 415 of the Code, as amended, so that the maximum benefits provided by
plans of the City shall be exactly equal to the maximum amounts allowed under
Section 415 of the Code and regulations thereunder. If there is any discrepancy
between the provisions of this Subsection (a) and the provisions of Section 415 of
the Code and regulations under it, such discrepancy shall be resolved in such a
way as to give full effect to the provisions of Section 415 of the Code. The value
of any benefits forfeited as a result of the application of this Subsection (a) shall
be used to decrease future employer contributions.
(14) For the purpose of applying the limitations set forth in Sections 401(a)(17)
and 415 of the Code, Compensation shall include any elective deferral (as defined
in Code Section 402(g)(3)), and any amount which is contributed or deferred by
the employer at the election of the Member and which is not includible in the
gross income of the Member by reason of Section 125 or 457 of the Code. For
limitation years beginning on and after January 1, 2001, for the purposes of
applying the limitations described in this Subsection (a), compensation paid or
made available during such limitation years shall include elective amounts that
are not includible in the gross income of the Member by reason of Section
132(f)(4) of the Code. For limitation years on or after July 1, 2007, compensation
shall include payments that otherwise qualify as compensation and that are made
by the later of: (a) 2 and '/2 (two and one-half) months after severance from
employment with the employer, and (b) the end of the limitation year that
includes the date of severance.
Section 3. That Subsection (c) of Section 18-29.14 of the City of Dania Beach Code
of Ordinances is amended to read as follows:
(c) Required minimum distributions
(3) Requirements for annuity distributions that commence during participant's
lifetime.
(A) Joint life annuities where the beneficiary is not the participant's
spouse. If the participant's interest is being distributed in the form of a
joint and survivor annuity for the joint lives of the participant and a
nonspousal beneficiary, annuity payments to be made on or after the
participant's required beginning date to the designated beneficiary after the
8 ORDINANCE#2012-023
participant's death must not at any time exceed the applicable percentage
of the annuity payment for such period that would have been payable to
the participant using the table set forth in Q&A-2 of Section 1.401(a)(9)-
6T of the United States Treasury regulations. If the form of distribution
combines a joint and survivor annuity for the joint lives of the participant
and a nonspousal beneficiary and a period certain annuity, the requirement
in the preceding sentence will apply to annuity payments to be made to the
designated beneficiary after the expiration of the period certain.
Section 4. That all sections or parts of sections of the Code of Ordinances, all
ordinances or parts of ordinances, all charter sections or parts of sections, and all resolutions or
parts of resolutions in conflict with this Ordinance are repealed to the extent of such conflict.
Section 5. If any word, phrase, clause, subsection, or section of this Ordinance be for
any reason held unconstitutional or invalid, the invalidity thereof shall not affect the validity of
any remaining portions of this Ordinance.
Section 6. This ordinance shall be effective on adoption.
PASSED on first reading on August 28, 2012.
PASSED AND ADOPTED on second reading on September 11, 2012.
ATTEST:
LOUISE STILSON, C PATRICIA A. FLU AY
CITY CLERK MAYOR
PRp'S FIIgST
APPROVED AS TO F RRECTNESS:
1
THOMAS J. ANS RO
CITY ATTORNEY
Oft
9 ORDINANCE#2012-023
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