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HomeMy WebLinkAbout08549ORDINANCE NO. 8549 AN ORDINANCE AMENDING CHAPTER 2 OF TITLE II OF THE PUEBLO MUNICIPAL CODE RELATING TO THE 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; and 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 (a) Internal Revenue changes in compliance with federal law, including but not limited to: Code Section 414(u), and (b) the death benefit provisions of the Heroes Earnings Assistance and Relief Tax Act of 2008. 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(c) 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). . . . (c) Notwithstanding any provisions of this plan to the contrary, contributions, benefits and service credit with respect to qualified military service s 401(a)(37) and will be provided in accordance with Section 414(u) of the A member who returns to employment with the City Internal Revenue Code. from qualified military service during the period within which reemployment rights are guaranteed by law will receive service with respect to the member’s period of qualified military service in accordance with Section 414(u) of the Code and applicable regulations, and as set forth in subsections (1) and (2) below: (1) Service Necessary To Be Eligible for a Pension. A member's qualified military service counts toward the twenty (20) years of active service required to be eligible for a pension; and (2) Service for Purposes of Calculating Pension Amount. For purposes other than determining eligibility for a pension, a member's qualified military service counts as active service only to the extent the member elects to make contributions to the Plan for all or part of the period of qualified military service, as described below: a. A member who returns to employment with the City from qualified military service during the period within which reemployment rights are guaranteed by law may elect to contribute to the Plan all or a part of the contributions the member would have made to the Plan according to Subsection 2-2-7(3) if the member had remained continuously employed by the City throughout the period of the member's qualified military service. The amount of contributions the member may make according to this subection shall be determined on the basis of the member's compensation in effect immediately before the qualified military service and the terms of the Plan during the member's period of qualified military service. b. A member may make such contributions during a period beginning on the member's reemployment with the City and lasting for the shorter of five (5) years or three (3) times the member's period of qualified military service. To the extent the member makes contributions permitted by this Subsection, the member will receive active service credit for the period of qualified military service to which the contributions relate. Effective January 1, 2007, if a member dies while performing qualified military service (within the meaning of Section 414(u)(1) of the Code), the member shall be treated as having terminated employment with the City due to his death for purposes of any additional benefits (other than benefit accruals relating to the period of qualified military service) provided under the Plan. Effective January 1, 2009, for purposes of applying Code section 415(c) to member contributions to the DROP account, compensation includes any differential wage payments to a member. A differential wage payment is a payment which (1) is made by the City with respect to a period during which the member is on active military duty for a period of more than thirty (30) days and (2) represents all or a portion of the wages the member would have received from the City if the member were performing service for the City, all as defined by Section 3401(h)(2) 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 retroactively as of the dates required by Internal Revenue Code Sections 401(a)(37) and 414(u). 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: November 26, 2012 BY: Leroy Garcia COUNCIL PERSON PASSED AND APPROVED: December 10, 2012 Background Paper for Proposed ORDINANCE DATE:November 26, 2012 AGENDA ITEM # R-8 DEPARTMENT: Law Department Robert P. Jagger, Interim 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 THE 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 federal law? RECOMMENDATION: Approval of the Ordinance. BACKGROUND: The enclosed Ordinance amends the so-called "old-hire" Firemen’s Pension Fund for 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, 2012. Failure to adopt the Ordinance by December 31, 2012 could subject the Plan to IRS penalties. Pursuant to Section 31-30.5-210(2), C.R.S., 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.