West Palm Beach |
Code of Ordinances |
Chapter 62. PERSONNEL AND RETIREMENT |
Article III. PENSIONS AND RETIREMENT |
Division 3. DEFINED CONTRIBUTION RETIREMENT SYSTEM |
§ 62-136. Distribution of accounts upon termination of employment.
(a)
Forms of distribution. Upon a participant's retirement, disability or termination of employment with the city for any other reason, distribution of his accounts shall be made in a cash lump sum unless the participant elects, in such manner as the administrative committee and service provider shall prescribe, to receive an optional form of benefit as follows:
(1)
Payments in approximately equal monthly, quarterly, semiannual or annual installments over a period, designated by the participant, not to exceed the life expectancy of the participant and his beneficiary or a split distribution of a partial cash lump sum and payments in approximately equal monthly, quarterly, semiannual or annual installments over a period designated by the participant, not to exceed the life expectancy of the participant and his beneficiary.
(2)
The purchase of a non-forfeitable fixed annuity, provided that if a participant who elects this option is married on his annuity starting date, and if he has not elected otherwise, the benefit shall be in the form of a qualified joint and survivor annuity. A participant who elects this option shall be subject to the remaining provisions of this subsection (a)(2). During the 90-day period preceding his annuity starting date and after receiving the notice described in subsection (a)(2) of this section, a participant may elect not to take the qualified joint and survivor annuity and to take instead another form of annuity. Elections under this subsection (a)(2) shall be in writing and shall be subject to receipt by the administrative committee and service provider of spousal consent to that election. A participant may revoke his election and make a new election from time to time and at any time during the applicable election period. If the annuity form selected is not a qualified joint and survivor annuity with the participant's spouse as the beneficiary, the annuity payable to the participant and thereafter to his beneficiary shall be subject to the incidental death benefit rule as described in section 401(a)(9)(G) of the code and its applicable regulations.
a.
The administrative committee shall furnish each participant no less than 30 days nor more than 90 days before his annuity starting date a written explanation of the qualified joint and survivor annuity in accordance with applicable law. A participant's annuity starting date may not occur less than 30 days after receipt of the notice. Notwithstanding the foregoing, a participant may, after having received the notice, affirmatively elect to have his benefit commence sooner than 30 days following his receipt of the notice, provided all of the waiver requirements set forth in subsection (h) of this section are met.
b.
The following definitions apply to the terms used in this subsection (a)(2):
1.
Annuity starting date means the first day of the first period for which an amount is paid following the participant's retirement or other termination of employment.
2.
Qualified joint and survivor annuity means an annuity payable for the life of a participant and, after his death, an annuity payable to the participant's spouse for life at a rate equal to 50 percent of the amount payable to the participant.
3.
Spousal consent means the written consent of a participant's spouse to the participant's designation of a specified beneficiary. The spouse's consent must be witnessed by a plan representative or a notary public. The consent of the spouse shall also acknowledge the effect on the spouse of the participant's election. The requirement for spousal consent may be waived by the administrative committee if it believes there is no spouse or the spouse can not be located or because of such other circumstance as may be established by applicable law.
(b)
Commencement of payments. Distribution of a participant's accounts shall commence as soon as administratively practicable following the later of (i) the participant's termination of employment; or (ii) the 65 th anniversary of the participant's date of birth, but not more than 60 days after the close of the plan year in which the later of (i) or (ii) occurs. However, a participant may, in accordance with such procedures as the administrative committee shall prescribe, elect to have the distribution of his accounts commence as of any accounting date coincident with or following his termination of employment which is before the date described in clause (i) or (ii) of this subsection (b).
(c)
Small benefits. Notwithstanding any provision of this division to the contrary, a lump sum payment shall be made if the value of the participant's accounts as of his termination of employment amounts to $1,000.00 or less. The lump sum payment shall automatically be made as soon as administratively practicable following the participant's termination of employment.
(d)
Status of accounts pending distribution. Until completely distributed under subsections (b) or (c) of this section, the accounts of a participant who is entitled to a distribution shall continue to be invested as part of the funds of the plan. The participant shall retain the right to direct the investment of his accounts as described in section 62-135(d) during the deferral period. However, loans shall not be permitted during the deferral period except to the extent required by law.
(e)
Proof of death and right of beneficiary or other person and death benefits. The administrative committee 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 the accounts of a deceased participant as the administrative committee may deem proper and its determination of the right of that beneficiary or other person to receive payment shall be conclusive.
(1)
If the participant dies before he has begun to receive the benefits provided by subsection (a) of this section, the value of the participant's account shall be payable to the beneficiary commencing not later than December 31 of the year following the year of the participant's death. If the participant dies after he has begun to receive benefits, the remaining payments, if any, under the payment option elected by the participant, shall continue until the service provider receives notice of the participant's death. Upon notification of the participant's death, benefits shall be payable to the participant's beneficiary commencing not later than December 31 of the year following the year of the participant's death. In either event, the beneficiary may elect, in a time and manner determined by the plan administrator, to begin receiving benefits at any earlier date following the participant's death.
(2)
If the beneficiary has not attained age 80 at the time payments commence, he may elect to receive payments in a single lump sum payment or in equal or approximately equal monthly, quarterly, semiannual or annual payments continuing over a period not to exceed five years from the participant's death. The beneficiary also may elect to receive a partial lump sum payment followed by monthly, quarterly, semiannual or annual installments, provided that all payments are made within a period of five years from the participant's death. In the event that the beneficiary is age 80 or over or has not attained age 80 and has not elected a form of payment, the remaining balance in the participant's account will be paid to the beneficiary in a single lump sum.
(3)
If the beneficiary dies before the payment of death benefits has commenced or been completed, the remaining value of the participant's account shall be paid to the estate of the beneficiary in a lump sum. If the participant's estate is the beneficiary, payment shall be made to the estate in a lump sum.
(4)
Notwithstanding subsections (e)(1)—(3) of this section, if, pursuant to the participant's election, the participant has elected to receive payments pursuant to an annuity contract that has been acquired by the plan, then distribution to the beneficiary shall be made in accordance with the terms of that annuity contract.
(5)
Notwithstanding subsections (e)(1)—(4) of this section, no payment option may be selected by the beneficiary, or distribution otherwise made, under this subsection (e) unless it satisfies the requirements of section 401(a)(9) of the code.
(f)
Distribution limitation. No payment option may be selected by a participant under subsection (a)(1) of this section unless the amount of any monthly installment is at least $100.00; however, any installment of less than $250.00 monthly will be paid quarterly. Notwithstanding any other provision of this section, all distributions from this plan shall confirm to the regulations issued under section 401(a)(9) of the code, including the incidental death benefit provisions of section 401(a)(9)(G) of the code and such regulations shall override any plan provision that is inconsistent with section 401(a)(9) of the Code.
(g)
Direct rollover of certain distributions. Notwithstanding any provision of the plan to the contrary that would otherwise limit an eligible payee's election under this section, an eligible payee may elect, at the time and in the manner prescribed by the administrative committee, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the eligible payee in a direct rollover. The following definitions apply to the terms used in this section.
(1)
Eligible rollover distribution means any distribution of all or any portion of the balance to the credit of the eligible payee, except that an eligible rollover distribution 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 eligible payee or the joint lives, or joint life expectancies, of the eligible payee and the eligible payee's designated beneficiary, or for a specified period of ten years or more and any distribution to the extent such distribution is required under section 401(a)(9) of the code, including hardship distributions. For purposes of a direct rollover, 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 paid only to an individual retirement account or annuity described in code section 408(a) or (b) of the code, or to a qualified defined contribution plan described in 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 which is not so includible.
(2)
Eligible retirement plan means a plan described in section 62-134(f) that accepts the eligible payee's eligible rollover distribution.
(3)
Eligible payee means 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 eligible payees with regard to the interest of the spouse or former spouse.
(4)
Direct rollover means a payment by the plan to the eligible retirement plan specified by the eligible payee.
(h)
Waiver of notice period. Except as provided in this subsection (h), if the value of a participant's accounts exceeds $1,000.00, an election by the participant to receive a distribution prior to age 65 shall not be valid unless the written election is made (i) after the participant has received the notice required under sections 1.411(a)-11(c) of the income tax regulations; and (ii) within a reasonable time before the effective date of the commencement of the distribution as prescribed by such regulations. Such distribution may commence less than 30 days after the notice required under sections 1.411(a)-11(c) of the income tax regulations is given, provided that:
(1)
The administrative committee clearly informs the participant that he has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution, and, if applicable, a particular distribution option; and
(2)
The participant, after receiving notice, affirmatively elects a distribution.
(i)
Annuity contracts. Where benefits are to be paid in the form of an annuity pursuant to the terms of this section, a nontransferable annuity contract shall be purchased from a life insurance company and distributed to the participant or surviving spouse, as applicable. The terms of any annuity contract purchased and distributed by the plan shall comply with the requirements of this plan and applicable law.
(j)
Should the participant be subject to an involuntary mandatory distribution of a non-forfeitable account balance that is under $5,001.00 but is more than $1,000.00, then the assets shall be rolled over to an individual retirement plan of a designated trustee or issuer. If the present value of a vested benefit exceeds $5,000.00, then the benefit may only be paid out with the participant's consent.
(Ord. No. 4306-10, § 1, 2-22-2011)