2-9-23 Adopted MinutesMINUTES
Police Officers' Pension Board of Trustees
Meeting
Thursday, February 9, 2023 - 6:30 PM
Commission Chamber
Present: John Miller, P-PBOT Member
Tim Anderson, Member
Robert (Bob) Liggero, P-PBOT Chair
Absent: Chase Jamison, Member
Ed Peck, Member
Also Present: Melissa Bums, Director of Finance (DF)
1. CALL TO ORDER
2. COURTESY OF THE FLOOR TO VISITORS
3. APPROVAL OF MINUTES
A. Approve minutes of the (date) regular meeting of the Police Officers' Pension Board
of Trustees.
MOTION. Motion to approve minutes as written.
Motion: Robert (Bob) Liggero
Second. Tim Anderson
John Miller For
Tim Anderson (Seconded By) For
Robert (Bob) Liggero (Moved By) For
Motion passed 3 to 0.
4. REPORTS
A. Recap of investment performance for the period ended December 31, 2022
David Wheeler of Graystone Consulting presented the investment performance report
for the quarter ended December 31, 2022.
Quarter to Date (10/01/22-12/31/22) - 7.85%
Performance Since Inception (4/l/2010) - 6.97%
Mr. Wheeler presented recommendations for investments redistribution.
Police Officers' Pension Board of Trustees
February 9, 2023
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5.
6.
7.
8.
Attest:
Police Pension Fund Redistribution Recommendation
MOTION. Motion to approve recommendations as presented.
Motion: Robert (Bob) Liggero
Second: Tim Anderson
John Miller For
Tim Anderson (Seconded By) For
Robert (Bob) Liggero (Moved By) For
Motion passed 3 to 0.
B. Expenditure and Fund Balance reports for the period ended December 31, 2022.
Reports are for informational purposes only. No discussion occurred.
DISCUSSION WITH PENSION BOARD ATTORNEY
A. Attorney Herrera discussed the changed to the Secure Act which increases the age
for required minimum distribution to 73 or 75 years of age.
Special Report SECURE Act 2.0 (Feb 2023)
OLD BUSINESS
A. Discussion on changing the target rate of return
Tabled until next meeting.
NEW BUSINESS
None.
ADJOURNMENT
There being no further discussion, Chair Liggero declared the meeting adjourned at 7:30 p.m.
Melissa Burns, Plan Administrator
Robert Liggero, air
Police Officers' Pension Board of Trustees
February 9, 2023
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City of Adantic Beach Police Officers' Pension
Updated Values
As of February 3, 2023
Current Policy
Tmqpt Current Policy Range
JP Morgan - Equity Income $2,898,241 18.49%
Recommended
S Change
($25,000)
Resulting
%
18.33%
Fiscal YTD Return
Since 9 30 2022
Dollar Weighted. Net
15.0%
Columbia - Large Cap Growth $870,954 5.56%
($150,000)
4.60%
20.9%
Pioneer - Large Cap Growth $1,241,757 7.92%
($20,000)
7.79%
15.9%
Vanguard S&P 500 Index ETF $848,624 5.41%
($25,000)
5.25%
15.9%
Invesco - S&P 500 Equal Weight ETF $627,773 4.01%
4.01%
20.6%
Total Large Cap Equity $6,487,349 41.39% 33.00% 20.00 - 50.00%
$220,000
39.99%
Boston - SMID Value $1,390,509 8.87%
8.87%
22.6%
Riverbridge- SMID Growth $735.786 4.69%
($65,000)
4.28%
12.1%
Total Mid-, Small, or Smid- Cap Equity $2,126,295 13.57% 10.00% 5.00 - 20.00%
(S65,000)
13.15%
Lazard - International Strategic Equity $1,061,919 6.78%
$45,000
7.06%
23.5%
Vanguard Total International Stock ETF $957,578 6.11%
$40,000
6.36%
23.7%
Total International Equity $2,019,497 12.88% 15.00% 10.00 - 20.00%
$85,000
13.43%
BlackRock - PPM Short -Term Taxable Fixed Income $1,100,497 7.021/6
7.02%
1.5%
Sage - Fixed Income $2,474,392 15.79%
$200,000
17,06%
3.6%
Total Fixed Income $3,574,889 22.81% 30.00% 20.00 - 40.00%
$200,000
24.06%
Tortoise - MLP & Pipeline $850,512 5.43%
5.43%
13.3%
Principal - REIT $590.044 3.76%
3.76%
14.5%
Total Altemative Investments $1,440,557 9.19% 6.00% 1.00 - 15.00%
9.19%
CGA Cash $2,092 0.01%
0.01%
Deposits & Disbursements $23,400 0.15%
0.15%
Total Cash & Equivalent. $25.492 0.16% 6.00% 0.00 - 11.00%
0.16%
Total Fund $15.674.079 100.00%r
100.00%
14.0%;
Dollar -Weighted Returns
The portfolio returns are calculated on a dollar -weighted basis, accounting for deposits and cash flows upon receipt. The dollar -weighted or internal rate of return - IRR is the actual rate earned by the
Fund. The dollar -weighted return is the appropriate measurement to evaluate the fund's performance in relation to the statement of investment policy and guidelines.
The prices, quotes, and statistics contained herein have been obtained from sources believed to be reliable, however, the accuracy cannot be guaranteed.
SUGARMAN, SUSSKIND, BRASWELL & HERRERA
PROFESSIONAL ASSOCIATION
ATTORNEYS AT LAW
Robert A. Sugarman
Howard S. Susskind
D. Marcus Braswell, Jr.
Pedro A. Herrera
Kenneth R. Harrison, Sr.
Madison J. Levine
Jose Javier Rodriguez
David E. Robinson
Of Counsel
SPECIAL REPORT
February 2023
SECURE ACT 2.0
iso Alhambra Circle
Suite 725
Coral Gables, Florida 33134
(305)529-2801
Toll Free (800) 329-2122
Facsimile (305) 447-8115
♦ Board Certified Labor &
Employment Lawyer
President Biden signed the Secure 2.0 Act of 2022 ("the Act") into law on December 29,
2022 as part of the Consolidated Appropriations Act, 2023. The Act makes sweeping
changes to provisions of the Internal Revenue Code affecting qualified plans such as your
municipal plan.
Many of the provisions take effect immediately, while others will become effective in years
to come. For governmental plans such as yours amendments required by the Act must
be made to the plan by no later than the last day of the first plan year beginning on or
after January 1, 2027.
Below is a brief summary of the changes enacted. We will provide additional information
with regard to each of the new requirements on an on-going basis as corresponding
regulations or rules may be issued.
CHANGES THAT APPLY TO GOVERNMENTAL DEFINED BENEFIT PLANS
AND STAND-ALONE SHARE PLANS
Increase in Aaes for Reauired Minimum Distributions
Participants in tax -qualified pension plans are not taxed on the value of their retirement
benefits until they begin to receive benefits under the plan.
The deferral of taxes is limited by the Required Minimum Distribution rules in Section
401(a)(9) of the Code, which require that participants begin to receive benefits (and
therefore pay taxes) once they reach a certain age after retirement.
For many years, retirees were required to begin to receive benefits once they had retired
and reached age 70 1/. The first Secure Act, passed in 2019, raised that age to 72.
Page 5 of 9
Special Report re: SECURE Act 2.0
February 2023
Page 12
Section 107 of the Secure 2.0 Act of 2022 has further increased the tax deferral by again
raising the age by which retired participants must begin to receive benefits. The new
ages are as follows.-
a)
ollows:
a) For individuals who attain age 72 after December 31, 2022, and age 73
before January 1, 2033, the applicable age is 73;
b) For individuals who attain age 74 after December 31, 2032, the applicable
age is 75;
Reduction in penalty for failure to make Required Minimum Distributions (Effective
taxable years after December 29, 2022)
The Code currently provides for an excise tax for failure to take a required minimum
distribution equal to 50% of the amount of the missed distribution.
Section 302 of the Act reduces the tax generally to 25%, and provides that the tax shall
be further reduced to 10% if the failure is corrected in accordance with certain conditions.
Increase in the maximum amount of mandatory distributions (Effective January 1
2024)
Plans may currently provide that benefits of which the lump -sum value does not exceed
$5000 will be paid mandatorily in the form of a lump -sum. Section 304 of the Act raises
the limit, allowing plans to impose a lump -sum distribution for amounts up $7000.
Exclusion from Income of Certain Service -Related Disability Benefits for First
Responders (Effective for eligible amounts received after December 31, 2026)
Section 309 of the act allows certain first responders (law enforcement officers,
firefighters, paramedics, and emergency medical technicians) to exclude from gross
income certain service -related disability pension or annuity payments after they reach
retirement age.
Expansion of 72(t) Age Exemption for Qualified Public Safety Employees (Effective
Immediately)
Generally, the penalty on early withdrawals under Section 72(t) does not apply to
distributions made to an employee after separation from service after attainment of age
55. For qualified public safety employees, Section 72(t) replaces the age 55 exemption
with a more favorable, lower age exemption. Prior to the Act, the applicable age for
qualified public safety employees was 50, instead of 55. Section 329 of the Act further
expands the exemption for qualified public safety officers by adding 25 years of service
as a separate qualifying condition for the exemption, which now applies upon the earlier
of attainment of age 50 or 25 years of service.
Page 6 of 9
Special Report re: SECURE Act 2.0
February 2023
Page 13
Expansion of Definition of Qualified Public Safety Employee for Purposes of 72(t)
Age Exemption (Effective Immediately)
Prior to the Act, for purposes of the favorable 72(t) exemption discussed above, the term
qualified public safety employee included governmental employees providing police
protection, firefighting services, and emergency medical services. Section 330 expands
the definition to include corrections officers, as well as forensic security employees
providing for the care, custody and control of forensic patients.
Repeal of Direct Payment Requirement for Health Insurance Premiums (Effective
Immediately)
Currently under Section 402(1) of the Code, Retired Public Safety Officers are permitted
to exclude from income up to $3,000 per taxable year in distributions from governmental
plans that are used to for the payment of qualified health insurance premiums. Prior to
the Act, payments were required to be made directly from the pension plan to the insurer.
Section 328 of the Act removes the direct payment requirement and now allows payment
to come directly from the member.
IL CHANGES THAT APPLY TO GOVERNMENTAL STAND-ALONE SHARE
PLANS BUT NOT TO GOVERNMENTAL DEFINED BENEFIT PLANS
Tax -Favored Withdrawals
The Act allows plans to provide for the following types of withdrawals with favorable tax
treatment (including exemption from any 72(t) penalty):
- Starting in 2024, up to $1,000 for participant -certified personal
and family emergencies;
- Starting in 2024, withdrawals up to the lesser of $10,000 or
50% of account balance, if a participant has been the victim
of domestic abuse;
- effective immediately withdrawals by participants who have
been diagnosed as terminally ill;
- With regard to federal disasters occurring on or after January
26, 2021, withdrawals by participants who live in the disaster
up to $22,000 within 180 months of the disaster. Also loans
related to federal disasters are allowed to be increased to the
lessor of $100,000 or 100% of the account balance,
- Plans are already permitted to provide for distributions for
qualified birth or adoption expenses. Currently, such
distributions may be paid back at any time. For withdrawals
after December 29, 2022, the repayment period is limited to
Page 7 of 9
Special Report re: SECURE Act 2.0
February 2023
Page 14
three years. For withdrawals that have already been taken,
the repayment period ends December 31, 2025,
- beginning on or after December 29, 2025, up to $2500
annually (adjustable for inflation) for long-term care insurance.
III. PROVISIONS OF THE ACT WITH REGARD TO PLAN CORRECTIONS
Changes to requirements reqardinq overpavments (effective immediatel
The IRS has on an on-going basis provided guidance to trustees regarding requirements
for recovering benefit overpayments to participants and beneficiaries.
Section 301 of the Act amends the Code to provide clearly defined rules relating to the
recovery of overpayments.
Principally, the Act provides that a plan is not necessarily obligated to pursue the recovery
of an overpayment.
We will prepare procedures for the trustees to adopt to ensure that future actions with
regard to overpayments comply with the new requirements.
Expanded Self -Correction Program (Effective upon guidance issued by IRS within
two years of December 29, 2022)
The IRS maintains several programs pursuant to which trustees may correct errors in the
operation of the plan and/or failures to amend the plan timely.
Under certain programs, a flat fee and/or penalties are required to be paid to the IRS to
resolve the error or failure. On the other hand, under the IRS' Self -Correction Program,
certain "non-significant" errors may be corrected without any notice or payment of fees or
penalties to the IRS.
The Act expands the type of errors and failures that may be resolved through Self -
Correction. The program is no longer limited to "non-significant" errors, and may be used
generally to correct any inadvertent error or failure, except those (1) that were identified
by the IRS before any good -faith corrective measures were taken, or (2) with respect to
which corrective measures were not timely taken.
The Act requires the IRS to issue new guidance in accordance with the expansion of the
self -correction program.
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Special Report re: SECURE Act 2.0
February 2023
Page 15
IV. FOR INFORMATIONAL PURPOSES (THE FOLLOWING INFORMATION
PRESENTS PROVISIONS OF THE ACT THAT DO NOT APPLY TO THIS PLAN
BUT THAT MAY BE OF INTEREST TO PUBLIC EMPLOYEES. THE
INFORMATION IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND
IS NOT INTENTED AND SHALL NOT BE CONSTRUED AS LEGAL ADVICE)
Section 308 of the Act extends to private sector firefighters. the favorable 72(t) age
exemption (50 or 25 Years of Service) that was previously limited to governmental public
safety employees.
Section 306 Changes rules relating to elections for 457 plans
Some of the tax -favored withdrawals that are permitted under the Act (See Section II
above) may also be available under 457 plans.
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