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Item 7C- Ordinance No. 58-17-41Agenda Item 7C April 24, 2017 ORDINANCE NO. 58-17-41 AN ORDINANCE OF THE CITY OF ATLANTIC BEACH, AMENDING CHAPTER 2, ADMINISTRATION, ARTICLE VI, EMPLOYEE BENEFITS, DIVISION 3, GENERAL EMPLOYEES' RETIREMENT SYSTEM, OF THE CODE OF ORDINANCES OF THE CITY OF ATLANTIC BEACH; AMENDING SECTION 2-261, DEFINITIONS; AMENDING SECTION 2-264, FINANCES AND FUND MANAGEMENT; AMENDING SECTION 2-266, BENEFIT AMOUNTS AND ELIGIBILITY; AMENDING SECTION 2-274, MAXIMUM PENSION; AMENDING SECTION 2-275, MINIMUM DISTRIBUTION OF BENEFITS; AMENDING SECTION 2- 284, PRIOR GOVERNMENT SERVICE; AMENDING SECTION 2-285, REEMPLOYMENT AFTER RETIREMENT; AMENDING SECTION 2-286, DEFERRED RETIREMENT OPTION PLAN; PROVIDING FOR CODIFICATION; PROVIDING FOR SEVERABILITY OF PROVISIONS; REPEALING ALL ORDINANCES IN CONFLICT HEREWITH AND PROVIDING AN EFFECTIVE DATE. BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF ATLANTIC BEACH, FLORIDA; SECTION 1: That Chapter 2, Administration, Article VI, Employee Benefits, Division 3, General Employees' Retirement Plan, ofthe Code of Ordinances of the City of Atlantic Beach, is hereby amended by amending Section 2-261, Definitions, to amend the definitions of"Credited Service", "Effective Date", and "Spouse", to read as follows: * * * * * Credited Service means the total number of years and fractional pmts of years of service as a general employee with member contributions, when required, omitting intervening years or fractional pmts of years when such member was not employed by the city as a general employee. If a vested member leaves the employ of the city, his accumulated contributions will be returned only upon his w1itten request. If a member who is not vested is not reemployed as a general employee with the city within five (5) yem·s, his accumulated contributions, if one thousand dollars ($1,000.00) or less, shall be returned. If a member who is not vested is not reemployed within five (5) years, his accumulated contributions, if more than one-thousand dollm·s ($1,000.00), will be returned only upon the w1itten request of the member and upon completion of a written election to receive a cash lump sum or to rollover the lump sum amount on forms designated by the board. Upon return of a member's accumulated contributions, all of his rights and benefits under the system are fmieited and terminated. The years or pmts of a year that a member pelimms "Qualified Military Service" consisting of voluntary or involuntary "service in the uniformed services" as defined in the Uniformed Services Employment and Reemployment Rights Act (USERRA) (P.L.l03-353), after separation from employment as a general employee to pe1iorm training or service, shall be added to his years of credited service for all purposes, including vesting, provided that: (1) The member is entitled to reemployment under the provisions of USERRA. (2) The member returns to his employment as a general employee within the time frame as allowed by USERRA following the earlier of the date of his military discharge or his release from service, unless otherwise required by USERRA. Agenda Item 7C April 24, 2017 employment as a general employee to perform training or service, shall be added to his years of credited service for all purposes, including vesting, provided that: (1) The member is entitled to reemployment under the provisions ofUSERRA. (2) The member returns to his employment as a general employee within the time frame as allowed by USERRA following the earlier of the date of his military discharge or his release from service, unless otherwise required by USERRA. (3) The member deposits into the :fund the same sum that the member would have contributed, if any, if he had remained a general employee during his absence. The maximrnn credit for military service pursuant to this subdivision shall be five (5) years. The member must deposit all missed contributions within a period equal to three tin1es the period of military service, but not more than five (5) years, following re-employment or he will forfeit the right to receive credited service for his military service pursuant to this paragraph. (4) This paragraph is intended to satiszy the rninin1urn requirements ofUSERRA. To the extent that this paragraph does not meet the minimum standards ofUSERRA, as it may be amended from tin1e to time, the rninin1um standards shall apply. In the event a member dies on or after January 1, 2007, while perfonning USERRA Qualified Military Service, the beneficiaries of the member are entitled to any benefits (other than benefit accmals relating to the period of qualified military service) as if the member had resumed employment and then died while empbyed. Beginning January 1, 2009, to the extent required by IRC section 414(u)(12), an individual receiving diffurential wage payments (as defined under IRC section 3401(h)(2)) from an employer shall be treated as employed by that employer, and the differential wage payment shall be treated as compensation for purposes of applying the limits on annual additions under IRC section 415(c). This provision shall be applied to all similarly situated individuals in a reasonably equivalent manner. Leave conversions of unused accrued paid tin1e off shall not be permitted to be applied toward the accmal of credited service either during each plan year of a member's employment with the City or in the plan year in which the member terminates employment. Effective date means the date on which this otdinanee becomes effuctivc June 10, 2013. * * * * * Spouse means the lawful wifC 01 htJsband of a membct ot tctiree member's or retiree's spouse under applicable law at the tin1e benefits become payable. * * * * * SECTION 2: That Chapter 2, Administration, Article VI, Employee Benefits, Division 3, General Employees' Retirement Plan, of the Code of Ordinances of the City of Atlantic Beach, is hereby amended by amending Section 2-264, Finances and Fund Management, subsection (:1)(2)c., to read as follows: (:1)(2) c. * * * * * In addition, the board may, upon recommendation by the board's investment consultant, make investments in group trusts meeting the requirements of Intemal Revenue Service Revenue Ruling 81-100,_ and Revenue Ruling 2011- -2- Agenda Item 7C April 24, 2017 1, IRS Notice 2012-6 and Revenue Ruling 2014-24 or successor rulings or guidance of similar import, and operated or maintained exclusively for the connningling and collective investment of monies, provided that the funds in the group ttust consist exclusively of ttust assets held under plans qualified under IRC section 401(a), individual retirement accounts that are exempt under IRC section 408(e), eligible governmental plans that meet the requirements of IRC section 457(b), and governmental plans under IRC section 401(a)(24). For this purpose, a ttust includes a custodial account or a separate tax fuvored account maintained by an insurance company that is treated as a ttust under IRC section 401(±) or under IRC section 457(g)(3). While any portion of the assets of the fund are invested in such a group ttust, such group ttust is itself adopted as a part of the system or plan . .L Any collective or common group ttust to which assets of the fund are tt·ansfetred pursuant to subsection c. shall be adopted by the board as pmt of the plan by executing appropriate participation, adoption agreements, and/or ttust agreements with the group ttust's trustee. 2. The separate account maintained by the group ttust for the plan pursuant to subsection c. shall not be used for, or diverted to, any purpose other than for the exclusive benefit of the members and beneficiaries of the plan. 3. For purposes of valuation, the value of the separate account maintained by the group ttust for the plan shall be the fuir market value of the portion of the group trust held for the plan, determined in accordance with generally recognized valuation procedures. * * * * * SECTION 3: That Chapter 2, Administration, Article VI, Employee Benefits, Division 3, General Employees' Retirement Plan, of the Code of Ordinances of the City of Atlantic Beach, is hereby amended by amending Section 2-266, Benefit Anxmnts and Eligtbility, subsection (a), N omJal Retirement Date, to read as follows: * * * * * (a) Normal retirement age and date. A rnembe:t's nommlret:itement date shall be the first day of the month coincident with; or next rollo~Ving the atta:itmJent of age sixty (60) and the eon1plerion of :five (5) years of credited set vice. A rocmber l'l:'la)' retire on his normal retirement date or on the first day of any month the:teafte:t, and each member shall become one ht:mdred percent (1 00%) vested in his aecwed benefit on the member's n01nnl retirement date. Normal retirement tmdcr the system is 1etitement :fiom employment ~Vith the City on or after the normal retirement date. A member's normal retirement age is the attainment of age sixty (60) and the completion of five (5) years of credited service. Each member shall become one hundred percent (100%) vested in his accmed benefit at normal retirement age. A member's nonnal retirement date shall be the first day of the month coi1cident with or next follown1g the date the member retires from the City after attaining normal retirement age. * * * * * SECTION 4: Timt ClJapter 2, Administration, A1ticle VI, Employee Benefits, Division 3, General Employees' Retirement Plan, of the Code of Ordinances of the City of Atlantic Beach, is hereby amended by amending Section 2-274, Maxin1um Pension, subsections (h), (1)(2), and by adding subsection (m), to read as follows: -3- Agenda Item 7C April 24, 2017 * * * * * (h) Ten Thousand Dollar ($1 0, 000) Lim it; Less Than Ten Years of Service. Notwithstanding anything in this section 2-274, the retirement benefit payable with respect to a member shall be deemed not to exceed the limit set forth in this subsection (h) of section 2-274 if the benefits payable, with respect to such member under this system and under all other qualified defined benefit pension plans to which the City contributes, do not exceed ten thousand dollars ($10,000) for the applicable limitation year and or for any prior limitation year, and the City has not at any time maintained a qualified defined contribution plan in which the member participated; provided, however, that ifthe member has completed less than ten (10) years of credited service with the City, the limit under tllis subsection (h) of section 2-274 shall be a reduced limit equal to ten thousand dollars ($10,000) multiplied by a fi·action, the numerator ofwhich is the number of the member's years of credited service and the denominator of which is ten (1 0). * * * * * (D(2) No member of the system shall be allowed to receive a retirement benefit or pension which is in part or in whole based upon any service with respect to which the member is akeady receiving, or will receive in the future, a retirement benefit or pension from a different employer's retirement system or plan This restriction does not apply to social security benefits or federal benefits under Chapter fff 1223, Title 10, U.S. Code. !!!!) Effect o(Direct Rollover on 415(b) Limit. If the plan accepts a direct rollover of an employee's or former employee's benefit from a defined contribution plan qualified under Code Section 401(a) which is maintained by the employer, any annuity resulting from the rollover amount that is determined using a more fuvorable actuarial basis than required under Code Section 417(e) shall be included in the annual benefit for purposes of the limit under Code Section 415(b ). SECTION 5: That Chapter 2, Administration, Article VI, Employee Benefits, Division 3, General Employees' Retirement Plan, of the Code of Ordinances of the C1ty of Atlantic Beach, is hereby amended by amending Section 2-27 5, Minimum Distribution of Benefits, subsection (b )(2)d., to read as follows: * * * * * d. If the member's surviving spouse is the member's sole designated beneficiary and the surviving spouse d1es after the member but before distnbutions to the surviving spouse begin, this subsection (b )(2), other than subsection (b )(2)a., will apply as if the surviving spouse were the member. For purposes of this subsection (b )(2). and subsection (c), distributions are considered to begin on the member's required beginning date or, if subsection (b )(2)d. applies, the date of distributions are required to begin to the surviving spouse under subsection (b )(2)a. If annuity payments irrevocably commence to the member before the member's required beginning date (or to the member's surviving spouse before the date distributions are required to begin to the surviving spouse under subsection (b )(2)a.) the date distributions are considered to begin is the date distributions actually commence. * * * * * -4- Agenda Item 7C April 24, 2017 SECTION 6: That Chapter 2, Administration, Article VI, Employee Benefits, Division 3, General Employees' Retirement Plan, of the Code of Ordinances of the City of Atlantic Beach, is hereby amended by amending Section 2-284, Prior Government Service, subsection (5), to read as follows: * * * * * (5) In no event, however, may credited service be purchased pursuant to this Section for prior service with any other governmental agency, if such prior service forms or will form the basis of a retirement benefit or pension from a different employers' retirement system or plan as set forth in Section 2-27 4, subsection Wtz7 .Qlill. * * * * * SECTION 7: That Chapter 2, Administration, Article VI, Employee Benefits, Division 3, General Employees' Retirement Plan, of the Code of Ordinances of the City of Atlantic Beach, is hereby amended by amending Section 2-285, Reemployment After Retirement, to read as follows: Sec. 2-285. Reemployment after retirement. (a) Any retiree who is retired under this system, except for disability retirement as previously provided for, may be reemployed by any public or private employer, except the city, and may receive compensation fi:om that employment without limiting or restricting in any way the retirement benefits payable under this system Reempbyment by the city shall be subject to the limitations set forth in this section. (b) After nonnal retirement. Any retiree who is retired under normal retirement pursuant to this system and who is reemployed by the city after that retirement shall be ineligible to participate in this system and shall, during the period of such reemployment, continue to receive retirement benefits previously earned if he is at least age sixty-two (62), otherwise the system shall discontinue receipt ofbenefits until he reaches age sixty-two ( 62) or terminates employment. (c) After early retirement. Any retiree who is retired under early retirement pursuant to this system and who subsequently becomes an employee of the city in any capacity shall be ineligible to participate in this system and shall discontinue receipt of benefits from the system Pension benefit payments shall be suspended for the petiod of any such reemployment, but shall be restored upon the earlier of termination of employment or such time as the reempbyed retiree reaches the date that he would have been eligible fur nouml retitenxnt tmdet trns system had he continued employment and not elected eady tetnement age sixty-two (62). Retirement pursuant to an early retirement incentive program shall be deemed early retirement for purposes of this section if the member was permitted to retire prior to the customary retirement date provided for in the system at the time of retirement. (d) Reemployment of terminated vested persons. Reemployed tem1inated vested persons shall not be subject to the provisions of this section until such time as they begin to actually receive benefits. Upon receipt of benefits, terminated vested persons shall be treated as normal or early retirees for purposes of applying the provisions of this section and their status as an early or normal retiree shall be determined by the date they elect to begin to receive their benefit. (e) DROP participants. Members or retirees who are or were in the deferred retirement option plan shall, following termination of employment after DROP participation shall be subject to the above restrictions. -5- Agenda Item 7C April 24, 2017 SECTION 8: That Chapter 2, Administration, Article VI, Employee Benefits, Division 3, General Employees' Retirement Plan, of the Code of Ordinances of the City of Atlantic Beach, is hereby amended by amending Section 2-286, Defe1red Retirement Option Plan, to read as follows: Sec. 2-286. Deferred retirement option plan. (a) (1) (2) (b) (1) (2) (3) (4) Definitions. As used ill this Section 2-286, the followillg definitions apply: 'DROP" --The City of Atlantic Beach General Employees' Retirement System Deferred Retirement Option Plan 'DROP Account" --The account established for each DROP participant under subsection (c). "Total retum of the assets"--For purposes of calculating earnings on a member's DROP account pursuant to subsection (c)(2)b., for each fiscal year quarter, the percentage increase Cor decrease) in the interest and dividends earned on investments, illcluding realized and unrealized gains (or losses), of the total Plan assets. Participation. Eligibility to Participate. fu lieu of terminating his employment as a general employee, any member who is eligtble for normal or early retirement under the system may elect to defer receipt of such service retirement pension and to participate ill the DROP. Election to Participate. A member's election to participate ill the DROP must be made ill writing ill a time and manner detennined by the board and shall be effective on the first day of the first calendar month which is at least fifteen (15) busilless days after it is received by the board. Period of Participation. A member who elects to participate ill the DROP under subsection (b )(2), shall participate in the DROP for a period not to exceed sixty (60) months beginning at the time his election to participate in the DROP first becomes effective. An election to participate in the DROP shall constitute an irrevocable election to resigt1 from the service of the City not later than the date provided for in the previous sentence. A member may participate only once. Termination of Participation. a. A member's participation ill the DROP shall cease at the earlier of 1. the end of his permissible period of pmticipation in the DROP as determined under subsection (b )(3); or 2. termination ofhis employment as a general employee. b. Upon the member's temlination of participation in the DROP, pursuant to subsection a.l. above, all amounts provided for in subsection (c)(2), includillg monthly benefits and investment earnings and losses, shall cease to be transferred :fi·om the system to his DROP Account. Any amounts remaining in his DROP Account shall be paid to him in accordance with the provisions of subsection (d) when he terminates employment as a general employee. -6- Agenda Item 7C April 24, 2017 c. A member who terminates his part1c1pation in the DROP lll1der this subsection (b)( 4) shall not be permitted to again become a participant in the DROP. (5) Effect of DROP Participation on the System. a. A member's credited service and his accmed benefit lU1der the system shall be determined on the date his election to participate in the DROP first becomes effective. For purposes of determining the accmed benefit, the member's salary for the purposes of calculating his average final compensation shall include an amolll1t equal to any lump sum payments which would have been paid to the member and included as salary as defined herein, had the member retired lll1der normal or early retirement and not elected DROP participation. Member contnbutions attributable to any lump sums used in the benefit calculation and not actually received by the member shall be deducted from the first payments to the member's DROP Accolll1t. The member shall not accme any additional credited service or any additional benefits under the system (except for any additional benefits provided lll1der any cost-of-living adjustment for retirees in the system) while he is a participant in the DROP. After a member commences participation, he shall not be permitted to again conh1bute to the system nor shall he be eligible for disability or pre-retirement death benefits, except as provided for in Section 2-285, Reemployment After Retirement. b. No amolll1ts shall be paid to a member :from the system while the member is a participant in the DROP. Unless otherwise specified in the system, if a member's participation in the DROP is terminated other than by terminating his employment as a general employee, no amolll1ts shall be paid to him from the system lll1til he terminates his employment as a general employee. Unless otherwise specified in the system, amounts transferred from the system to the member's DROP Accolll1t shall be paid directly to the member only on the termination ofhis employment as a general employee. (c) Funding. (1) Establishment of DROP Account. A DROP Account shall be established for each member participating in the DROP. A member's DROP Accolll1t shall consist of amolll1ts transferred to the DROP lll1der subsection (c )(2), and earnings or losses on those amolll1ts. (2) Transfers From Retirement System. a. As of the first day of each month of a member's period of participation in the DROP, the monthly retirement benefit he would have received lll1der the system had he terminated his employment as a general employee and elected to receive monthly benefit payments therelll1der shall be transfened to his DROP Accolll1t, except as othe1wise provided for in subsection (b)(4)b. A member's period of participation in the DROP shall be determined in accordance with the provisions of subsections (b)(3) and (b)(4), but in no event shall it continue past the date he terminates his employment as a general employee. b. Except as othe1wise provided in subsection (b)( 4)b., a n-:tember's DROP Accolll1t tmder this subsection (c)(2) shall be debited or credited after each -fueal year qmrter with eamings, to be credited or debited to the member's -7- Agenda Item 7C April 24, 2017 DROP account, determined as of the last business day of each fiscal year quarter and debited or credited as of such date, determined as fullows: The average daily balance in a member's DROP Account shall be credited or debited at a rate equal to the net investment return realized by the system fur that quarter. "Net investment return" for the purpose of this paragraph is the total return of the assets in which the Member's DROP Account is invested by the board net of brokerage commissions, transaction costs and management fees. For putposes of calculating earning? on a member's DROP account pmsuant to this subsection (c)(2)b., brokerage commissions, transaction costs, and management fees shall be determined for each quarter by the investment consultant pmsuant to contracts with fund managers as reported in the custodial statement. The investment consultant shall report these quarterly contractual fees to the board. The investment consultant shall also report the net investment return for each manager and the net investment return for the total plan assets. c. A member's DROP Account shall only be credited or debited with earnings or losses and monthly benefits while the member is a participant in the DROP. A member's final DROP account value for distribution to the member upon termination of participation in the DROP shall be the value of the account at the end of the quarter innnediately preceding termination of participation plns any monthly periodic additions made to the DROP account subsequent to the end of the previous quarter and prior to distribution. If a Member fuils to terminate employment after participating in the DROP for the permissible period of DROP participation, then beginning with the member's first month of employment following the last month of the permissible period of DROP participation, the member's DROP Account will no longer be credited or debited with earnings or losses, nor will monthly benefits be transferred to the DROP account. All such non-transfuned amounts shall be fmfeited and continue to be forfeited while the member is employed by the City. A member employed by the City after the pennissible period of DROP participation will still not be eligible for pre-retirement death and disability benefits, and will not accrue additional Credited Service except as provided for in Section Z=-Z-86 2-285, Reemployment After Retirement. (d) Distribution of DROP Accounts on Termination of Employment. (1) Eligibility for Benefits. A member shall receive the balance in his DROP Account in accordance with the provisions of this subsection (d) upon his te1mination of employment as a general employee. Except as provided in subsection (d)(5), no amounts shall be paid to a member fi·om the DROP prior to his termination of employment as a general employee. (2) Form of Distribution. a. Unless the member elects otherwise, distribution of his DROP Account shall be made in a lump SU111, subject to the direct rollover provisions set forth in subsection (d)(6). Elections under this paragraph shall be in writing and shall be made in such time or manner as the board shall dete1mine. b. Notwithstanding the preceding, if a member dies before his benefit is paid, his DROP Account shall be paid to his beneficimy in such optional fmm as his beneficiary may select. If no beneficiary desig11ation is made, the DROP Account shall be distnbuted to the member's estate. -8- Agenda Item 7C April 24, 2017 (3) Date of Payment of Distribution. Except as otherwise provided in this subsection (d), distnbution of a member's DROP Account shall be made as soon as administratively practicable following the member's termination of employment. Distnbution of the amount in a member's DROP account will not be made unless the member completes a written request for distnbution and a written election, on forms designated by the board, to either receive a cash lump sum or a rollover of the lump sumamotmt. (4) Proof of Death and Right of Beneficimy or Other Person. The board may require and rely upon such proof of death and such evidence of the right of any beneficiary or other person to receive the value of a deceased member's DROP Account as the board may deem proper and its determination of the right of that beneficiary or other person to receive payment shall be conclusive. (5) Distribution Limitation. Notwithstanding any other provision of subsection (d), all distnbutions from the DROP shall conform to the ''Minimum Distnbution Of Benefits" provisions as provided for herein. (6) Direct Rollover of Certain Distributions. This subsection applies to distributions made on or after Janumy 1, 2002. Notwithstanding any provision of the DROP to the contraty, a distnbutee may elect to have any portion of an eligtble rollover distnbution paid in a direct rollover as otherwise provided under the System in Section 2-281. (e) Administration of DROP. (1) Board Administers the DROP. The general administration of the DROP, the responsibility for carrying out the provisions of the DROP and the responsibility of overseeing the investment of the DROP's assets shall be placed in the board. The members of the board may appoint from their number such subcommittees with such powers as they shall determine; may adopt such administrative procedures and regulations as they deem desirable for the conduct oftheir affuirs; may authorize one or more of their number or any agent to execute or deliver any instrun-:tent or make any payment on their behalf; may retain counseL employ agents and provide for such clericaL accounting, actuarial and consulting services as they may require in canying out the provisions of the DROP; and may allocate among themselves or delegate to other persons all or such pmtion oftheir duties under the DROP, other than those granted to them as trustee under any trust agreement adopted for use in implementing the DROP, as they, in their sole discretion, shall decide. A trustee shall not vote on any question relating exclusively to himself (2) Individual Accounts, Records and Reports. The board shall maintain records showing the operation and condition of the DROP, including records showing the individual balances in each member's DROP Account, and the board shall keep in convenient form such data as may be necessary for the valuation of the assets and liabilities of the DROP. The board shall prepare and distnbute to members participating in the DROP and other individuals or :file with the appropriate governmental agencies, as the case may be, all necessary descriptions, repmis, information returns, and data required to be distributed or filed for the DROP pursuant to the IRC and any other applicable laws. (3) Establishment of Rules. Subject to the limitations of the DROP, the board fi:om tin1e to tin-:te shall establish rules for the administration of the DROP and the transaction of its business. The Board shall have discretionary authority to construe and interpret the DROP (including but not limited to detennination of an individuars eligtbility for DROP participation, the right and amount of any benefit payable under the DROP and the date on which any individual ceases to be a pmiicipant in the DROP). The -9- Agenda Item 7C April 24, 2017 determination of the board as to the interpretation of the DROP or its determination of any disputed questions shall be conclusive and final to the extent permitted by applicable law. (4) Limitation of Liability. a. The trustees shall not incm any liability individually or on behalf of any other individuals for any act or fuilure to act, made in good fuith in relation to the DROP or the funds ofthe DROP. b. Neither the board nor any trustee ofthe board shall be responsible for any reports furnished by any expert retained or employed by the board, but they shall be entitled to rely thereon as well as on certificates furnished by an accountant or an actuary, and on all opinions of counsel The board shall be fully protected with respect to any action taken or suffered by it in good fuith in reliance upon such expert, accountant, actuary or counse~ and all actions taken or suffered in such reliance shall be conclusive upon any person with any interest in the DROP. (f) General Provisions. ill The DROP is not a separate retirement plan. Instead, it is a program under which a member who is elimble for nmmal retirement under the system may elect to accrue futme retirement benefits in the manner provided in this Section 2-286 for the remainder of his employment, rather than in the nomml manner provided under the plan. Upon termination of employment, a member is entitled to a lump sum distribution ofhis or her DROP account balance or may elect a rollover. The DROP account distribution is in addition to the member's monthly benefit. ill Notional account. The DROP account established for such a member is a notional account, used only for the purpose of calculation of the DROP distribution amount. It is not a separate account in the system There is no change in the system's assets, and there is no distribution available to the member until the member's termination from the DROP. The member has no control over the investment of the DROP aCCOllllt. ill No employer discretion. The DROP benefit is determined pmsuant to a specific fommla which does not involve employer discretion. ill IRC limit. The DROP account distribution, along with other benefits payable from the system, is subject to limitation m1der Internal Revenue Code Section 415(b ). (t 2) Amendment of DROP. The DROP may be amended by an ordinance of the City at any tin1e and from time to time, and retroactively if deemed necessmy or appropriate, to amend in whole or in part any or all of the provisions of the DROP. However, except as othetwise provided by law, no amendment shall make it possible for any part of the DROP's funds to be used for, or diverted to, purposes other than for the exclusive benefit of persons entitled to benefits under the DROP. No amendment shall be made which has the effect of decreasing the balance of the DROP AccolUlt of any member. (Z. §.) Facility of Payment. If a member or other person entitled to a benefit lmder the DROP is m1able to care for his affuirs because of illness or accident or is a minor, the board shall direct that any benefit due him shall be made only to a duly appointed legal representative. Any payment so made shall be a complete disclmrge of the liabilities of the DROP for that benefit. -10- Agenda Item 7C April 24, 2017 (3-1) Infonnation. Each member, beneficiary or other person entitled to a benefit, before any benefit shall be payable to him or on his account under the DROP, shall file with the Board the information that it shall require to establish his rights and benefits under the DROP. (4-~) Prevention of Escheat. If the board cannot ascertain the whereabouts of any person to whom a payment is due under the DROP, the Board may, no earlier than three (3) years from the date such payment is due, mail a notice of such due and owing payment to the last known address of such person, as shown on the records of the board or the City. If such person has not made written claim therefor within three (3) months of the date of the mailing, the board may, if it so elects and upon receiving advice fi-om counsel to the system, direct that such payment and all remaining payments othetwise due such person be canceled on the records ofthe system Upon such cancellation, the system shall have no finther liability therefor except that, in the event such person or his beneficiary later notifies the board of his whereabouts and requests the payment or payments due to him under the DROP, the amount so applied shall be paid to him in accordance with the provisions of the DROP. (5-2) Written Elections, Notification. a. Any elections, notifications or designations made by a member pursuant to the provisions of the DROP shall be made in writing and filed with the board in a time and manner determined by the board under rules uniformly applicable to all employees similarly situated. The board reserves the right to change from time to time the manner for making notifications, elections or designations by members under the DROP if it determines after due dehberation that such action is justified in that it improves the administration of the DROP. In the event of a conflict between the provisions for making an election, notification or designation set forth in the DROP and such new administrative procedures, those new administrative procedures shall prevail b. Each member or retiree who has a DROP Account shall be responsible for :furnishing the Board with his current address and any subsequent changes in his address. Any notice required to be given to a member or retiree hereunder shall be deemed given if directed to him at the last such address given to the board and mailed by registered or cettified United States mail. If any check mailed by registered or cettified United States mail to such address is returned, mailing of checks, advices and direct deposit of funds will be suspended until such time as the member or retiree notifies the board of his address. (6 10) Benefits Not Guaranteed. All benefits payable to a Member fi·om the DROP shall be paid only from the assets of the member's DROP Account and neither the City nor the board shall have any duty or liability to :furnish the DROP with any funds, securities or other assets except to the extent required by any applicable law. (9-.li) Construction. a. TI1e DROP shall be construed, regulated and administered under the laws of Florida, except where other applicable law controls. b. The titles and headings of the subsections in this Section 2-286 are for convenience only. In the case of ambiguity or inconsistency, the text rather than the titles or headings shall control (8-12) F01feiture of Retirement Benefits. Nothing in this Section shall be construed to remove DROP participants :fi:om the application of any forfeiture provisions -11- Agenda Item 7C April 24, 2017 applicable to the system DROP participants shall be subject to forfeiture of all retirement benefits, including DROP benefits. (9]]) Effect of DROP Participation on Employment. Participation in the DROP is not a guarantee of employment and DROP participants shall be subject to the same employment standards and policies that are applicable to employees who are not DROP participants. SECTION 9: Specific authority is hereby granted to codifY and incorporate this Ordinance in the existing Code of Ordinances of the City of Atlantic Beach. SECTION 10: All Ordinances or parts of Ordinances in conflict herewith be and the same are hereby repealed. SECTION 11: If any section, subsection, sentence, clause, phrase ofthis ordinance, or the particular application thereof shall be held invalid by any court, administrative agency, or other body with appropriate jurisdiction, the remaining section, subsection, sentences, clauses, or phrases under application shall not be affected thereby. SECTION 12: That this Ordinance shall become effective upon its adoption. PASSED ON FIRST READING, this ___ day of _____ , 2017. PASSED AND ADOPTED ON SECOND READING, this ------' 2017. MAYOR ATTEST: CITY CLERK Approved as to form: CITY ATTORNEY dm'ab/gen/01-12-17.ord -12- day of Agenda Item 7C April 24, 2017 GRS February 6, 2017 Gabriel Roeder mith & Co mp any Co nsult anr s & Ac tu aric . Mr. Russell Caffey Plan Administrator One Ea. t Broward Blvd . Suite 505 Ft. La ud erd ale, FL 3330 1-1804 City of Atlantic Beach General Employees' Retirement System 800 Seminole Road Atlantic Beach, Florida 32233-5445 RE: City of Atlantic Beach General Employees' Retirement System Actuarial Impact Statement Dear Russell: 954 .52 7.1616 phon e 954.525 .0083 fax www.ga bricl rocdr r.com As requested by Scott Christiansen in his letter of May 2, 2016, please find enclosed an Actuarial Impact Statement for the proposed ordinance.(also enclosed). We have reviewed the proposed ordinance from an actuarial perspective. We were not requested to, nor did we review the ordinance from a legal or compliance perspective. The proposed ordinance would amend the City of Atlantic Beach General Employees' Retirement System as follows: • Amend Section 2-261 , Definitions, for IRC changes and requirements , to amend the definitions of: a . Actuarial Equivalent -to refer to the investment return used in the last actuarial valuation approved by the board and to specify the mmiality table unisex mix b. Credited Service -to clarify IRC regulations on leave conversions c. Effective Date -to clearly state the effective date of the plan d. Spouse -To clarify the definition in accordance with a recent US Supreme Court ruling • Amend Section 2-264 , Finances and Fund Management, to further incorporate recent IRC requirements with regard to investments in commingled funds. • Amend Section 2-266 , Benefit amounts and eligibility, to clarify the Normal Retirement Date to include IRC required language regarding Normal Retirement Age and Normal Retirement Date. • Amend Section 2-274 , Maximum Pension, to comply with IRC changes. • Amend Section 2-275 , Minimum Distribution of Benefits, for a reference clarification in subsection (b )(2)d. • Amend Section 2-284 , Prior Government Service, subsection (5), to correct a reference. • Amend Section 2-285, Reemployment After Retirement, to clearly reflect recent IRC guidance on the ability to continue to receive retirement benefits from the system upon reemployment after normal or early retirement. • Amend Section 2-286 , D eferred Retirement Option Plan , in accordance with recent di rection from the IRS in connection with the issuance of several recent Favorable Determination Letters to i) clarify investment returns on DROP accounts, ii) clarify when earnings are calculated and paid, and iii) add several sections clarifying the DROP provisions as required by the IRS . Agenda Item 7C April 24, 2017 Mr. Russell Caffey February 6, 2017 Page 2 It is our understanding that the purpose of this ordinance is to conform with IRS regulations and/or to clarify the definitions above. We have determined that the plan provisions in the ordinance would have no significant measurable cost effect to the plan benefits . Please sign the Actuarial Impact Statement as the Plan Administrator and forward the original, and one copy, along with a copy of the ordinance to the address below. Please file the Actuarial Impact statement prior to the second reading. Division ofRetirement Bureau of Local Retirement Systems Post Office Box 9000 Tallahassee, Florida 32315-9000 If you should have any questions, please give us a call. Sincerely, Piotr Krekora, ASA, MAAA Consultant & Actuary Enclosure cc: Mr. Scott R. Christiansen Gabriel Roeder Smith & Company