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HomeMy WebLinkAbout07957ORDINANCE NO. 7957 AN ORDINANCE AMENDING CHAPTER 3 OF TITLE II OF THE PUEBLO MUNICIPAL CODE RELATING TO OLD - HIRE POLICE PENSION PLAN 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 Police 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 -3 -39 of Chapter 3 of Title II of the Pueblo Municipal Code, as amended, is hereby amended to read as follows: Sec. 2 -3 -39. Benefits and distributions limitations. (a) Effective January 1, 1987, in any event, notwithstanding any provision of this plan to the contrary, pursuant to Section 401(a)(9) of the Internal Revenue Code, payment of benefit to any member shall commence not later than the later date of April 1 of the calendar year following the calendar year in which the member attains age seventy and one -half (702), or terminates employment. Benefit payments will be determined and made in accordance with Internal Revenue Code Section 401(a)(9) and the regulations thereunder, as applicable to governmental plans, including the minimum distribution incidental death benefit requirement. (b) This plan is subject to the limitations on benefits imposed by Internal Revenue Code Section 415(b) for government police pension plans, which are incorporated herein by this reference. The limitation year is the calendar year. This plan also incorporates by reference the final regulations interpreting Code Section 415, as applicable to this governmental continue to a after the member's severance from employment. (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. SECTION 3 Section 2 -3 -40 of Chapter 3, Title II of the Pueblo Municipal Code, as amended, is hereby amended by amending subsection (b)(4) thereof and by adding a new subsection (c) thereto to read as follows: Sec. 2 -3 -40. Eligible rollover distribution. (b) For purposes of this Section, the following terms shall have the following meaning: (4) Eligible rollover distribution means a 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 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 Internal Revenue Code; and C. The portion of any distribution that is not includible in gross income. For distributions on or after January 1, 2002, but 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 Section 408(a) or (b) of the Code, or to a qualified defined contribution plan described in Section 401(a) or 403(a) of the 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 is not so includible. For distributions made after December 31, 2007, 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 Code, or in a direct 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 Code, provided such trust or contract provides for separate accounting for amounts so transferred (and earnings thereon), 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. (c) 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)(B)(i) or (ii) of the Code that is established to receive the plan distribution on behalf of the beneficiary. For purposes of this Section 2-3- 40(c), a trust maintained for the benefit of one or more designated beneficiaries may be the beneficiary to the extent provided in rules prescribed by the Secretary of Treasury. If the member dies after the member's required beginning date as defined in Section 2-3-39(a), the required minimum distribution in the year of death may not be transferred according to this Section 2-3-40(c). The requirements of Code Section 402(c)(11) apply to distributions under this Section 2-3-40(c). SECTION 4. 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 Policemen's Retirement Plan. 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 PASSED AND APPROVED: January 12, 2009 ED Background Paper for Proposed ORDINANCE AGENDA ITEM # 18 DATE: December 22, 2008 DEPARTMENT: Law Department TITLE AN ORDINANCE AMENDING CHAPTER 3 OF TITLE II OF THE PUEBLO MUNICIPAL CODE RELATING TO OLD -HIRE POLICE PENSION PLAN AND CONFORMING SAME TO REQUIREMENTS OF FEDERAL LAW ISSUE Should Council adopt amendments to the old -hire Police pension plan to conform the plan to recent Treasury Department regulations for governmental plans? Council should adopt the Ordinance. BACKGROUND The enclosed Ordinance amends the so- called 'old- hire" Police Pension Plan for City police officers 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 1 415 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.