HomeMy WebLinkAbout07956ORDINANCE NO. 7956
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
BE IT ORDAINED BY THE CITY COUNCIL OF PUEBLO, that: (brackets indicate
matter being deleted, underscoring indicates new matter being added)
SFrTinN 1
The Council finds and determines that the amendments made by this Ordinance
to the retirement plan for those uniformed employees of the City Fire Department hired
prior to April 8, 1978 are made for the sole purpose of compliance with federal law,
including but not limited to: (a) Internal Revenue Code (the "Code ") Section 415, (b)
final regulations contained in Treasury Reg. sections 1.415(b) and 1.415(c), (c) Code
section 402(c)(2) as amended by the Pension Protection Act of 2006, (d) Code section
402(c)(11) as added by the Pension Protection Act of 2006, and (e) Section 823 of the
Pension Protection Act of 2006.
SECTION 2
Section 2 -2 -20 of Chapter 2 of 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).
(a) The compensation of each member taken into account for
determining all contributions under the plan for any year shall not exceed any
applicable limit imposed by the Internal Revenue Code ( "Code "), including but
not limited to those set forth in Code Section 401(a)(17) to the extent such limits
apply to the plan or a particular member. The limits of Code Section 401(a)(17)
shall not apply to a member who first became a member in the plan before
January 1, 1996, or such later date as permitted by Treasury Regulations.
(b) [This plan, including the DROP feature, is subject to the limitations
on benefits imposed by Code Section 415(b) for government fire pension plans,
which are incorporated herein by this reference. Effective January 1, 1995, the
mortality table used to determine actuarial equivalence when such determination
is required for this plan under Code Section 415(b) shall be the mortality table
prescribed by the Secretary of the Treasury based on the Commissioner of the
Internal Revenue Service's standard table used to determine reserves for group
annuity contracts on the date as of which present value is being determined. The
limitation year shall be the plan year. For distributions with annuity starting dates
on or after December 31, 2002, the mortality table used for purposes of adjusting
any benefit or limitation under Code Section 415(b) is the table prescribed in
Rev. Rul. 2001 -62.] This plan incorporates by reference the requirements of
appncame to mis governmental retirement plan. i ne COST-OT-living
increase of Code Section 415(d) shall continue to apply to increase the
dollar benefit limit of Code section 415(b) after the member's severance
snail apply to memper contriputions tnat are maae to the UKL)P account, as
described in Section 2- 2- 19(i). The limitation year is the calendar year.
(c) Notwithstanding any provisions of this plan to the contrary,
contributions, benefits and service credit with respect to qualified military service
will be provided in accordance with Section 414(u) of the Internal Revenue Code.
(d) For distributions made on or after January 1, 1993, a distributee
may elect to have any portion of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a direct rollover. For
purposes of applying this Subsection, the following definitions shall apply:
(1) Direct rollover: A direct rollover is a payment by the plan to
the eligible retirement plan specified by the distributee.
(2) Distributee: A distributee includes a member or former
member. In addition, the member's or former member's surviving spouse
and the member's or former member's spouse are distributees with regard
to the interest of the spouse or former spouse.
(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
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).
(4) 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:
a. Any distribution that is one (1) 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
(10) years or more;
b. Any distribution to the extent such distribution is
required under Section 401(a)(9) of the Code; and
C. The portion of any distribution that is not includible in
gross income.
For distributions on or after January 1, 2002 and before January 1, 2008
a portion of 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
paid only to an individual retirement account or annuity described in Code
Section 408(a) or (b), or to a qualified defined contribution plan described
in Code Section 401(a) or 403(a) 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 is not so includible.
aistripution snau not tau to De an eua►d►e rouover a►str►dut►on mereiv
because the portion consists of after -tax employee contributions
which are not includible in gross income. However, such portion
or in a
trustee -to- trustee transfer to a qualified trust described in Section
401(a) of the Code which is exempt from tax under Section 501(a) of
the Code or to an annuity contract described in Section 403(b) of the
accounting Tor amounts so transferrea land earnings tnereonl,
including separate accounting for the portion of such distribution
which is includible in gross income and the portion of such
distribution which is not so includible.
(e) A member's non - spouse beneficiary may elect to have any
portion of an eligible plan distribution paid in a direct trustee -to- trustee
transfer to an individual retirement account or annuity described in Section
402(c)(8)(113)(i) or (ii) of the Code that is established to receive the plan
riktrihidinn nn hahalf of tha hPnPfiriary Fnr nurnnsas of this Rar_finn 2 -2-
me), a trust
maintainea
Tor the peneTlt
OT One Or more aesignatea
beneficiaries
may be the
beneficiary to
the extent provided in rules
prescribed by
the Secretary
of Treasury.
If the member dies after the
reauirea minimum aistribution In the vear OT aeatn may not De transterrea
according to this Section 2- 2- 20(e). The requirements of Code Section
402(c)(11) apply to distributions under this Section 2- 2- 20(e),
the requirements of regulations under Code Section 401(a)(9) as applicable
to governmental plans, including the minimum incidental death benefit
requirements and the required beginning date rule. The required beginning
mPmnPr affa
age 70 2 or terminates employment with the City, whichever occurs later.
SECTION 3
This Ordinance shall become effective upon final passage and approval;
provided, however, that notwithstanding the foregoing, this Ordinance shall not become
effective unless the Board of Directors of the Fire and Police Pension Association
established pursuant to Section 31 -31- 201(1), C.R.S. (2008) (the "Board ") shall decide
to permit said modifications pursuant to Section 31- 30.5- 210(2), C.R.S. (2008). For
such purpose, on its effective date, this Ordinance shall constitute and be construed to
be a request by City to the Board to permit said modifications to the Pueblo Firemen's
Pension Fund. Upon effectiveness of the Ordinance, as provided above, the
modifications shall apply to all actions, elections and distributions which occur, or have
occurred, on or after January 1, 2008.
INTRODUCED: December 22, 2008
BY: Randy Thurston
Councilperson
APPROVED 2L
PRESI@ENTuf City Council
PASSED AND APPROVED: January 12, 2009
ED
Background Paper for Proposed
ORDINANCE
AGENDA ITEM # 17
DATE: December 22, 2008
DEPARTMENT: Law Department
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 amendments to the old -hire Fire pension plan to conform the plan
to recent Treasury Department regulations for governmental plans?
RECOMMENDATION
Council should adopt the Ordinance.
. ilm xel CZe11J ki I V
The enclosed Ordinance amends the so- called "old- hire" Firemen's Pension Fund for
City firefighters hired on or before April 8, 1978 (the "plan "). The amendments do little
to substantially modify the plan terms and requirements, but are necessary to comply
with recent Treasury Department regulations implementing Internal Revenue Code
415 and provisions of the Pension Protection Act of 2006. These regulations
mandate, inter alia, that the Code requirements be either recited in the plan or expressly
incorporated by reference, and the enclosed Ordinance should satisfy that requirement.
Failure to adopt the Ordinance by January 31, 2009 could subject the plan to IRS
penalties.
The Ordinance is unlikely to affect any retired or active member of the plan.
Pursuant to C.R.S. 131- 30.5- 210(2), these modifications to the plan do not require
approval by the active and retired old hire members. The modifications will be
submitted to the Internal Revenue Service for approval, in accordance with applicable
regulations.
FINANCIAL IMPACT
None anticipated.