HomeMy WebLinkAboutO-2015-007 PF Pension IRS Post Favorable Determination Compliance ORDINANCE NO. 2015-007
AN ORDINANCE OF THE CITY COMMISSION OF THE CITY OF DANIA
BEACH, FLORIDA, AMENDING CHAPTER 18, ENTITLED "PENSIONS
AND RETIREMENT" OF THE CITY CODE OF ORDINANCES RELATING
TO THE POLICE AND FIREFIGHTERS' RETIREMENT SYSTEM TO
PROVIDE FOR INTERNAL REVENUE CODE COMPLIANCE; PROVIDING
FOR SEVERABILITY; PROVIDING FOR CONFLICTS; FURTHER,
PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, on January 8, 2011, an application was filed by the Police and Firefighters'
Retirement System with the Internal Revenue Service for a Favorable Determination Letter
regarding the qualified status of the Police and Firefighters' Retirement System under Section
401(a) of the Internal Revenue Code; and
WHEREAS, on January 24, 2013, 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
certain amendments provided in this Ordinance, and
WHEREAS,the Trustees of the City of Dania Beach Police and Firefighters' Retirement
System have requested and approved such amendments, as being in the best interests of the
Plan's participants and beneficiaries, as well as providing improvements to 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. That the foregoing "WHEREAS" clauses are ratified and confirmed as
being true and correct and they are made a specific part of and incorporated into this Ordinance
by this reference.
Section 2. That Sec. 18-40(9) of the Dania Beach Code of Ordinances is amended to
read as follows:
Sec. 18-40. Definitions.
(9) EARNINGS means total cash compensation paid to a member for salary
(including incentive pay) and longevity in accordance with state law as follows:
Firefighter compensation or salary means the fixed monthly remuneration paid a
firefighter, where remuneration is based on actual services rendered, and includes
annual payment for unused leave, any salary reduction, deferred compensation, or
tax sheltered annuity authorized by the city and the Internal Revenue Code.
Police officer compensation or salary means the fixed monthly total remuneration
paid a police officer, including overtime up to three hundred (300) hours per
police officer per calendar year, where remuneration is based on actual services
rendered, and includes any salary reduction, deferred compensation, or tax
sheltered annuity authorized by the city and the Internal Revenue Code, excluding
any payments for extra duty or special detail work performed on behalf of a
second-party employer.
For- the pui-7pe l the limitations set f..tb, in co,.+;,ns 401(a)(1 7) an
A l c f+h T 1 D Cede, >~ shall elude � eleeti a de f ffa (as
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Section 3. That Sec. 18-42(4) of the Dania Beach Code of Ordinances is amended by
adding a subsection 4(d)to read as follows:
Sec. 18-42. Benefits amount and eligibility.
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(4) PRERETIREMENT DEATH.
(d) Death while per orming USERRA-qualified active military service In the
case of a Member who dies on or after January 1, 2007 while performing
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"Qualified Military Service" under Title 38 United States Code, Chapter
43 Uniformed Services Employment and Reemployment Rights Act
("USERRA") within the meanies of Section 414(u) of the Internal
Revenue Code any "additional benefits" (as defined by Section
401(a)(37) of the Internal Revenue Code) provided under the Plan that are
contingent upon a Member's termination of employment due to death shall
be determined as though the Member had resumed employment
immediately prior to his death. With reject to any such "additional
benefits," for vesting_purposes only, credit shall be given for the period of
the Member's absence from covered employment during "Qualified
Military Service".
Section 4. That Sec. 18-42(7)(a) of the Dania Beach Code of Ordinances is repealed
in its entirety and replaced with the following language:
Sec. 18-42.—Benefits amount and eligibility.
(7) INTERNAL REVENUE CODE COMPLIANCE
(a) Maximum amount of retirement income.
(1) The limitations of this Subsection(a) shall apply in limitation years
beginning on or after July 1, 2007, except as otherwise provided in
this Ordinance and are intended to comply with the requirements
of the Pension Protection Act of 2006 and shall be construed in
accordance with such 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
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Subsection.
The Annual Pension as defined in Paragraph (2) below otherwise
payable to a Member at any time shall not exceed the Dollar
Limitation for the Member multiplied by a fraction the value of
which cannot exceed one, the numerator of which is the Member's
number of years (or part of a year, 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
(A) For limitation years berg on or after July 1, 2007
(1) the straight life annuity (if any) payable to the
Member under the Plan commencing at the same
Annuity Starting Date as the Member's form of
benefit, or
(II) the actuarially eguuivalent straight life annuity
commencing at the same Annuity Starting
computed using a 5.00% interest rate and the
mortality basis prescribed in IRS Code Section
415(b)(2)(E)(v).
(B) For limitation years beginning before July 1, 2007
(1) the actuarially equivalent straight life annuity
commencing at the same Annuity Starting Date,
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computed using the interest rate and mortality basis
Vecified by the Board of Trustees for determining
Actuarial Equivalence under the Plan for the
particular form of payment, 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 IRS 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 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) applicable at the annuity starting date, as
increased in subsequent years pursuant to § 415(d) of the
IRS 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 IRS 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
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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 I of that calendar
year. The Dollar Limitation shall be further adjusted based on the
age of the Member when the benefit begins as follows:
(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 IRS Code
Section 415(b (2)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
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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
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)(I)(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
annuity payable 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 traight
life annuity under the Plan at age 65 is the annual
amount of such annuity that would be payable under
the Plan to a hypothetical Member 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 IRS Code, for benefits (except
survivor and disability benefits as defined in
Section 415(b)(2)(I) of the IRS Code), if the
Annuity Starting Date for the Member's benefit is
before age 62
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�) If the Plan does not have an immediately
commencing straight life annuity payable at
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both age 62 and the aize 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 IRS 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 Annui , Stag Date).
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,
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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 beginning
before July 1, 2007
Age as of Annuity
Starting Date: Adjustment of Dollar Limitation:
Over 65 The smaller of. (a) the actuarial equivalent of the limitation
for age 65, computed using the interest
rate and mortality basis specified by the
Board of Trustees for determining
actuarial equivalence under the Plan, or
(b) the actuarial equivalent of the limitation
for age 65, computed using a 5.00%
interest rate and the mortality basis
prescribed in IRS 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 by the
Board of Trustees for determining
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actuarial equivalence under the Plan, or
(b) the actuarial equivalent of the limitation
for age 62, computed using a 5.00%
interest rate and the mortalily basis
prescribed in IRS Code Section
415(b)(2)(E)(v).
This adjustment shall not apply to any "Qualified Member" as
defined in IRS Code Section 415(b)(2)(H), nor to survivor and
disability benefits as defined in Section 415(b)(2(1) of the IRS
Code.
(4) With respect to clause (3(A) 1)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
Annui Stag Date, as applicable, if benefits are not forfeited
Mon the death of the Member prior to the Annuity Starting Date.
To the extent benefits are forfeited upon death before the Annuity
Starting Date, such an adjustment shall be made. For this purpose,
no forfeiture shall be treated as occurring upon the Member's death
if the Plan does not charge Members for providing a qualified
preretirement survivor annuity, as defined in IRS Code Section
417(c), gpon the Member's death.
(5) The term"limitation year" is the 12 month period which is used for
application of the limitations under IRS 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.
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(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
IRS Code.
(8) In the case of a Member who has fewer than 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
part of a year) of participation in the Plan, and (ii) the denominator
of which is 10
(9) Any 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 IRS Code.
(10) Should any Member participate in more than one defined benefit
plan maintained by the City, 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 annuity 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 to § 1.401(a)-20, O&A 10(d), and with regard
to § 1.415(b)l(b)(1)(iii)(B)and (C) of the Income Tax Regulations.
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(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 under Section 415 of the IRS Code)
social security supplements described in § 411(a)(9) of the Internal
Revenue Code and benefits transferred from another defined
benefit plan other than transfers of distributable benefits pursuant
§ 1.411(d)-4 Q&A-3(c) of the Income Tax Regulations.
(13) The above limitations are intended to comply with the provisions
of Section 415 of the IRS 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 under it. If there is any discrepancy between the
provisions of this Subsection (a) and the provisions of Section 415
of the IRS 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 IRS 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 Internal Revenue Code, Compensation
shall include any elective deferral (as defined in Section 402(g)(3)
of the Internal Revenue Code), 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 Internal Revenue
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 Internal Revenue Code. For limitation years on or
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after July 1 2007 ensation shall include a ents that
.comp
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 5. That Sec. 18-42(7)(c) of the Dania Beach Code of Ordinances is amended
to read as follows:
Sec. 18-42.—Benefits amount and eligibility.
(7) INTERNAL REVENUE CODE COMPLIANCE
(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 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)-6-T of the Treasury regulations. If the form of
distribution combines a joint and survivor annuity for the
joint lives of the participant and a nonspousal beneficiary
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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.
(6) Definitions.
(A) Designated beneficiary. The individual who is designated
as the beneficiary under the Plan and is the designated
beneficiary under Section 401(a)(9) of the IRS Code and
Section 1.401(a)(9) I 1.401(a (�9)-4, Q&^ ^, of the
Treasury regulations.
Section 6. That Sec. 18-42(7)(d)(2) of the Dania Beach Code of Ordinances is
amended to read as follows:
Sec. 18-42.—Benefits amount and eligibility.
(7) INTERNAL REVENUE CODE•COMPLIANCE
(d) Rollover Distributions.
(2) Definitions.
The following definitions apply to this Section:
(A) 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
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distributee or the joint lives (or joint life expectancies) of
the distributee and the distributee's designated beneficiary,
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or for a specified period of 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 :s a hafdsWp
Cede which is made upon hardship of the Member; and
(iv) The portion of any distribution that is not includible
in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to
employer securities), provided that a portion of a
distribution shall not fail to be an eligible rollover
distribution merely because the portion consists of after-tax
employee contributions which are not includible in gross
income. However, such portion may be transferred only to
an individual retirement account or annuity described in
Section 408(a) or (b) of the Internal Revenue Code, or to a
qualified defined contribution plan described in Section
401(a) or 403(a) of the Internal Revenue 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.
Section 7. That Sec. 18-42(7) of the Dania Beach Code of Ordinances is amended by
adding a new subsection 7(h)to read as follows:
Sec. 18-42.—Benefits amount and eligibility.
(7) INTERNAL REVENUE CODE COMPLIANCE
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(h) Uniformed Services Employment and Reemployment Rights Act. The Plan
shall at all times be administered in accordance with the provisions of the
Uniformed Services Employment and Reemployment Rights Act, which
Act is incorporated by this reference.
Section 8. 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, be and the same are repealed to the extent of
such conflict.
Section 9. That 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 10. That this Ordinance shall become effective immediately upon its passage
and adoption.
PASSED AND ADOPTED on first reading on March 10, 2015.
PASSED AND ADOPTED on second and final reading on March 24, 2015.
ATTEST: �I s F� To�rs
D
LOUISE STILSON, CMC O A. SALVINO, SR.
CITY CLERK ® _ AYOR
APPROVED AS TO RM D CORRECTNESS:
1�
J
THOMAS J. SBRO
CITY ATTORNEY
16 ORDINANCE#2015-007