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HomeMy WebLinkAbout08428ORDINANCE NO. 8428 AN ORDINANCE AMENDING CHAPTER 2 OF TITLE II OF THE PUEBLO MUNICIPAL CODE RELATING TO OLD- HIRE FIREMEN’S PENSION FUND AND CONFORMING SAME TO REQUIREMENTS OF FEDERAL LAW WHEREAS, the City of Pueblo, Colorado (“City”) maintains the Pueblo Firemen’s Pension Fund (“Plan”) for employees of the City Fire Department hired prior to April 8, 1978; WHEREAS, the City has amended the Plan various times to make technical amendments to the Plan as necessary to maintain the tax qualified status of the Plan; and WHEREAS, the City wishes to amend the Plan to accommodate technical changes in compliance with federal law, including but not limited to: (a) Internal Revenue Code Section 408, and (b) Section 824 of the Pension Protection Act of 2006. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF PUEBLO, that: (brackets indicate matter being deleted, underscoring indicates new matter being added) SECTION 1. Subsection 2-2-20(d)(3) of Chapter 2, Title II of the Pueblo Municipal Code, as amended, is hereby amended to read as follows: Sec. 2-2-20. Additional provisions applicable to plan (tax qualification). . . . . . . (d) For purposes of applying this Subsection, the following definitions shall apply: . . . (3) Eligible retirement plan: An eligible retirement plan is 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 or a qualified trust described in Section 401(a) of the Code that accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity. Effective January 1, 2002, an eligible retirement plan shall also mean an annuity contract described in Code Section 403(b) and an eligible plan under Code Section 457(b) which is maintained by a state, political subdivision of a state, or 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 this Plan. 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 relation order, as defined in Code Section 414(p). Effective January 1, 2008, an shall also mean eligible retirement plan a Roth IRA described in section 408A(b) of the Code, subject to any applicable limitations described in section 408A(c) of the Code. SECTION 2. This Ordinance shall become effective upon final passage and approval; provided, however, that notwithstanding the foregoing, this Ordinance shall not become effective until the Board of Directors of the Fire and Police Pension Association established pursuant to Section 31-31-201(1), C.R.S. ("FPPA") shall decide to permit said modifications pursuant to Section 31-30.5-210(2), C.R.S.; and upon its becoming effective, this Ordinance is intended to apply to and modify the Plan nunc pro tunc, as of January 1, 2008. For such purpose, on its effective date, this Ordinance shall constitute and be construed to be a request by the City to FPPA to permit said modifications to the Plan. INTRODUCED December 12, 2011 BY: Leroy Garcia COUNCILPERSON PASSED AND APPROVED: December 27, 2011 Background Paper for Proposed ORDINANCE DATE: AGENDA ITEM # R-6 December 12, 2011 DEPARTMENT: Law Department Thomas J. Florczak, City Attorney Board of Trustees of the Pueblo Firemen’s Pension Fund TITLE: AN ORDINANCE AMENDING CHAPTER 2 OF TITLE II OF THE PUEBLO MUNICIPAL CODE RELATING TO OLD-HIRE FIREMEN’S PENSION FUND AND CONFORMING SAME TO REQUIREMENTS OF FEDERAL LAW ISSUE: Should Council adopt an amendment to the old-hire Firemen’s Pension Fund (“Plan”) to conform the Plan to Internal Revenue Service (“IRS”) regulations? RECOMMENDATION: Council should adopt the Ordinance. BACKGROUND: The enclosed Ordinance amends the so-called "old-hire" Firemen’s Pension Fund for City Fire Department employees hired before April 8, 1978. The amendment does little to substantially modify the Plan terms and requirements, but is necessary to comply with federal law. IRS guidelines require that this amendment be adopted no later than December 31, 2011. The enclosed Ordinance should satisfy that requirement. Failure to adopt the Ordinance by December 31, 2011 could subject the Plan to IRS penalties. Pursuant to C.R.S. section 31-30.5-210(2), these modifications to the Plan do not require approval by the active and retired old hire members. FINANCIAL IMPACT: None anticipated. However, failure to comply with instruction from the IRS can result in revocation of the tax-deferred status of the Plan which would result in immediate tax consequences for employees covered under the Plan.