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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.