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HomeMy WebLinkAbout~Master - Retroactive Amendments to the Ames Municipal Utility Retirement System ORDINANCE NO. 3563 AN ORDINANCE TO MAKE RETROACTIVE AMENDMENTS TO THE AMES MUNICIPAL UTILITY RETIREMENT SYSTEM Be it ordained, by the City Council of Ames, Iowa, that: Section One. Ordinance No. 3458 enacted August 26, 1997, is amended by redesignating Section One as Section Two. Section Two. Ordinance No. 3458 enacted August 26, 1997, is amended by adding new Section One as follows: Section One. The Municipal Code of the City of Ames, Iowa is amended by adding Sec. 28.438 through Sec. 28.441, and adding at the end of Sec. 28.402(5), Sec. 28.402(3) and Sec. 28.439 the following: Sec. 28.438 Direct Rollovers This Section applies to distributions made on or after January 1, 1993. Notwithstanding any provision of the plan to the contrary that would otherwise limit a distributee's election under this part, a distributee may elect, at the time and in the manner prescribed by the plan administrator, to have any portion of an eligible rollover distribution that is equal to at least $500 paid directly to an eligible retirement plan specified by the distributee in a direct rollover. (a) 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 does not include: 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 years or more; any distribution to the extent such distribution is required under section 401(a)(9) of the Internal Revenue Code; and the portion of any distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities); and any other distribution(s) that is reasonably expected to total less than $200 during the year. (b) 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 plan 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. (c) Distributee: A distributee includes an employee or former employee. In addition, the employee's or former employee's surviving spouse and the employee's or former employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Code, are distributees with regard to the interest of the spouse or former spouse. (d) Direct Rollover: A direct rollover is a payment by the plan to the eligible retirement plan specified by the distributee. Section 28.439 Limitation on Benefits Effective for years beginning after December 31, 1975, the annual benefit that would otherwise be payable to a member at any time will not exceed the maximum permissible amount. If the benefit the member would otherwise accrue in a limitation year would produce an annual benefit in excess of the Maximum Permissible Amount, the rate of accrual will be reduced so that the annual benefit will equal the Maximum Permissible Amount. Maximum Permissible Amount: (a) The lesser of the defined benefit dollar limitation or 100 percent of the member's highest average compensation. (b) If the member has less than 10 years of membership in the plan, the defined benefit dollar limitation shall be multiplied by a fraction—(i) the numerator of which is the number of years (or part thereof) of membership in the plan, and (ii) the denominator of which is 10. In the case of a member who has less than ten years of service with the employer, the compensation limitation shall be multiplied by a fraction—(i) the numerator of which is the number of years (or part thereof) of service with the employer, and (ii) the denominator of which is 10. (c) If the annual benefit of the member commences before the member's social security retirement age, but on or after age 62, the defined benefit dollar limitation as reduced in (b) above, if necessary shall be determined as follows: (i.) If a member's social security retirement age is 65, the dollar limitation for benefits commencing on or after age 62 is determined by reducing the defined benefit dollar limitation by 5/9 of one percent for each month by which benefits commence before the month in which the member attains age 65. (ii.) If a member's social security retirement age is greater than 65, the dollar limitation for benefits commencing on or after age 62 is determined by reducing the defined benefit dollar limitation by 5/9 of one percent for each of the first 36 months and 5/12 of one percent for each of the additional months (up to 24 months) by which the benefits commence before the month of the member's social security retirement age. (d) If the benefit of a member commences prior to age 62, the defined benefit dollar limitation shall be an annual benefit that is the actuarial equivalent of the defined benefit dollar limitation for age 62, as determined above, reduced for each month by which benefits commence before the month in which the member attains age 62. The annual benefit beginning prior to age 62 shall be determined as the lesser of the equivalent annual benefit computed using the interest rate and mortality table (or other tabular factor) equivalence for early retirement benefits, and the equivalent annual benefit computed using a 5 percent interest rate and the applicable mortality table as defined in Section 28.441 of the plan. Any decrease in the adjusted defined benefit dollar limitation determined in accordance with this provision (d) shall not reflect any mortality decrement to the extent that benefits will not be forfeited upon the death of the member. (e) If the annual benefit of a member commences after the member's social security retirement age, the defined benefit dollar limitation as reduced in (b) above, if necessary, shall be adjusted so that it is the actuarial equivalent of an annual benefit of such dollar limitation beginning at the member's social security retirement age. The equivalent annual benefit beginning after social security retirement age shall be determined as the lesser of the equivalent annual benefit computed using the interest rate and mortality table (or other tabular factor) specified in the plan for purposes of determining actuarial equivalence for delayed retirement benefits, and the equivalent annual benefit computed using a 5 percent interest rate and the applicable mortality table as defined in section 28.441 of the plan. Defined Benefit Dollar Limitation: For any year, the maximum dollar amount permitted under Section 415(d) of the Code as amended and as adjusted by the Secretary from time-to-time. The new limitation will apply to limitation years ending within the calendar year of the date of the adjustment. Highest Average Compensation: For purposes of this section, the average compensation for the three consecutive plan years of service with the employer that produces the highest average. A year of service with the employer is the 12-consecutive month period beginning July 1. Compensation: For purposes of this section, compensation shall mean 415 safe harbor compensation. Compensation is defined as wages, salaries, and fees for professional services and other amounts received (without regard to whether an amount is paid in cash) for personal services actually rendered in the course of employment with the employer maintaining the plan to the extent that the amounts are includable in gross income (including, but not limited to, commissions paid salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips, bonuses, fringe benefits, and reimbursements, or other expense allowances under a nonaccountable plan (as described in 1.62-2(c )), and excluding the following: (a) Employer contributions to a plan of deferred compensation which are not includable in the employee's gross income for the taxable year in which contributed, or employer contributions under a simplified employee pension to the extent such contributions are deductible by the employee, or any distributions from a plan of deferred compensation; (b) Amounts realized from the exercise of a non-qualified stock option, or when restricted stock (or property) held by the employee either becomes freely transferable or is no longer subject to a substantial risk of forfeiture; (c) Amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option; and (d) Other amounts which received special tax benefits, or contributions made by the employer (whether or not under a salary reduction agreement) towards the purchase of an annuity contract described in section 403(b) of the Internal Revenue Code(whether or not the contributions are actually excludable from the gross income of the employee). Annual Benefit: A retirement benefit under the plan which is payable annually in the form of a straight life annuity. Except as provided below, a benefit payable in a form other than a straight life annuity must be adjusted to an actuarial equivalent straight life annuity before applying the limitations of this article. For limitation years beginning before January 1, 1995, such actuarially equivalent straight life annuity is equal to the greater of the annuity benefit computed using the interest rate specified in the plan for adjusting benefits in the same form of 5 percent. For limitation years beginning after December 31, 1994, the actuarially equivalent straight life annuity is equal to the greater of the annuity benefit computed using the interest rate and mortality table (or other tabular factor) specified in the plan for adjusting benefits in the same form, and the annuity benefit computed using a 5 percent interest rate assumption and the applicable mortality table defined in section 28.441 of the plan. In determining the actuarially equivalent straight life annuity for a benefit form other than a nondecreasing annuity payable for a period of not less than the life of the member(or, in the case of a qualified pre-retirement survivor annuity, the life of the surviving spouse), or decreases during the life of the member merely because of(a) the death of the survivor annuitant(but only if the reduction is not below 50% of the annual benefit payable before the death of the survivor annuitant), or(b) the cessation or reduction of Social Security supplements of qualified disability payments (as defined in §401(a)(11), "applicable interest rate", as defined in section 28.441 will be substituted for"a 5 percent interest rate assumption" in the preceding sentence. No actuarially adjustment to the benefit is required for(a) the value of a qualified joint and survivor annuity, (b) benefits that are not directly related to retirement benefits (such as the qualified disability benefit,pre-retirement death benefits, and post-retirement medical benefits), and (c) the value of post-retirement cost-of- living increases made in accordance with section 415(d) of the Internal Revenue Code and section 1.415-3(c)(2)(iii) of the Income Tax Regulations. The annual benefit does not include any benefits attributable to employee contributions or rollover contributions, or the assets transferred from a qualified plan that was not maintained by the employer. Section 28.440 Minimum Distributions Required Beginning Date. Effective for plan years beginning after December 31, 1983, the entire interest of a member must be distributed or begin to be distributed no later than the member's required beginning date. The required beginning date of a member is the April 1 of the calendar year following the calendar year in which the member attains age 70'/2. Limits on Distribution Periods: As of the first distribution calendar year, distributions, if not made in a single-sum, may only be made over a period that will not exceed— (a) the life of the member, (b) the life of the member and a designated beneficiary, (c) a period certain not extending beyond the life expectancy of the member, or (d) a period certain not extending beyond the joint and last survivor expectancy of the member and a designated beneficiary. Section 28.441 Mortality Table Effective for limitation years beginning after December 8. 1994, for purposes for adjusting an\ benefit or limitation under Code Sections 415(b)(2)(B),(C), or(D), the mortality table used shall be based upon a fixed blend of 50% of male mortality rates and 50% of female mortality rates from the 83 GAM or such other mortality table as shall be prescribed by the Commissioner of Internal Revenue. The following sections will be amended : Sec. 28.402(5) Earnings The following will be added to the end of this section.: For years beginning on or after January 1, 1989, and before January 1, 1994, the annual compensation of each member taken into account for determining all benefits provided under the plan for any plan year shall not exceed$200,000. This limitation shall be adjusted by the Secretary at the same time and in the same manner as under section 415(d) of the Internal Revenue Code, except that the dollar increase in effect on January 1 of any calendar year is effective for plan years beginning in such calendar year and the first adjustment to the $200,000 limitation is effective on January 1, 1990. For years beginning on or after January 1, 1994, the annual compensation limit of each member taken into account for determining all benefits provided under the plan for any determination period shall not exceed $150,000, as adjusted for the cost of living in accordance with section 401(a)(17)(B) of the Internal Revenue Code. The cost-of-living adjustment in effect for a calendar year applies to any determination period beginning in such calendar year. If a determination period consists of fewer than 12 months, the annual compensation limit is an amount equal to the otherwise applicable annual compensation limit multiplied by a fraction, the numerator of which is the number of months in the short determination period, and the denominator of which is 12. If compensation for any prior determination period is taken into account in determining a member's benefits for the current plan year, the compensation for such prior determination period is subject to the plan's applicable annual compensation limit in effect for that prior period. For this purpose, in determining benefits in plan years beginning on or after January 1, 1989, the annual compensation limit in effect for determination periods beginning before that date is $200,000. In addition, in determining benefits in plan years beginning on or after January 1, 1994, the annual compensation limit in effect for determination periods beginning before that date is $150,000. Sec. 28.402(3) Creditable Service will have the following provision added: Effective on and after December 12, 1994; notwithstanding any provisions 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 code. Sec. 28.439 Limitations on Benefits will have the following added effective for limitation years beginning after December 31, 1994 The annual benefit from the plan described in 28.439(a) may exceed 100% of a member's compensation. The annual dollar limitation on early retirement benefits provided by the plan shall not apply to amounts received as disability benefits or death benefits; and, Any benefits provided under a qualified governmental excess benefit arrangement described on Code Section 415(m) (3) shall be disregarded. Section Three. Former Section One of Ordinance No. 3458 enacted August 26, 1997 herein redesignated as Section Two is amended to reference Section 28.402 through and including Section 28.441. Section Four. Ordinance No. 3458 enacted August 26, 1997 is amended by redesignating Section Two as Section Three. Section Five. Ordinance No. 3458 enacted August 26, 1997 is amended by redesignating Section Three as Section Four. Section Six. Ordinance No. 3458 enacted August 26, 1997 is amended by redesignating Section Four as Section Five. Section Seven. The effective date and operative effect of Ordinance No. 3458 is not affected by the foregoing actions. Section Eight. This ordinance shall be in full force and retroactive effect as aforesaid from and after its passage and publication as required by law. Passed this 9th day of May 12000. hCt,w,.I R`Z4,1� Diane R. Voss, City Clerk Ted Tedesco, Mayor