Ord 24-06
ORDINANCE NO. 24-06
AN ORDINANCE OF THE CI1Y COMMISSION OF THE
CI1Y OF DELRA Y BEACH, FLORIDA, AMENDING
CHAPTER 35, "EMPLOYEE POLICIES AND BENEFITS",
SUBHEADING "RETIREMENT PLAN", OF THE CODE OF
ORDINANCES OF THE CI1Y OF DELRA Y BEACH,
FLORIDA, BY AMENDING SECTION 35.097, "RETIREMENT
INCOME; BASIS, AMOUNT AND PAYMENT', TO PROVIDE
FOR PAYMENT OF LUMP-SUM DISTRIBUTIONS IN EXCESS
OF $1,000.00 ONLY UPON THE WRITTEN ELECTION OF A
MEMBER OR DESIGNATED BENEFICIARY; PROVIDING A
GENERAL REPEALER CLAUSE; A V ALIDI1Y CLAUSE; AND
AN EFFECTIVE DATE.
NOW THEREFORE, BE IT ORDAINED BY THE CI1Y COMMISSION OF THE
CI1Y OF DELRA Y BEACH AS FOllOWS:
Section 1. That Chapter 35, "Employee Policies and Benefits", subheading, "Retirement Plan", of
the Code of Ordinances of the City of Delray Beach is hereby amended by amending subsection (F)
of section 35.097, "Lump-Sum payment of Small Retirement Income", and adding a new subsection
(0) to section 35.097, "Lump-Sum Distributions in Excess of $1000", to read as follows:
Section 35.097 RETIREMENT INCOME: BASIS. AMOUNT. AND PAYMENT.
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*
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(F) Lump-Sum Pt!)ment of SmoU Retirement Income. Notwithstanding any provision of the plan to
the contrary, if the monthly retirement income payable to any person entided to any benefit
hereunder is less than fifty dollars ($50.00), the Retirement Committee may, in the exercise of its
discretion, specify that the actuarial equivalent of the retirement income be paid in a lump sum or in
monthly installments for a period certain of not more than sixty (60) months; provided. if the
aChlarial equivalent of the monthly retirement income is w:eater than one thousand dollars
($1.000.00). payment of the benefit in a lump sum shall be made only upon the written request of a
member or designated benefic.iat:y.
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(0) Lump-Sum Distributions in Excess of 11000. Notwithstanding any provision of the plan to the
contrary. and only to the extent a lump sum distribution is expressly authorized. a lump sum
distribution in excess of one thousand dollars ($1.000.00) shall be made only upon the written
request of a member or designated beneficiary.
(
'-
Section 2. That all ordinances or parts of ordinances in conflict herewith be, and the same are
hereby repealed.
Section 3. That should any section or provision of this ordinance or any portion thereof, any
paragraph, sentence, or word be declared by a court of competent jurisdiction to be invalid, such
decision shall not operate to invalidate the remainder hereof.
Section 4. That this ordinance shall become effective immediately upon its passage on second and
final reading.
01 PASSED AND ADOPTED in regular session on second and final reading on this the
~dayof moO ,2006.
8~MA~oA
ATTEST:
- \~LJh;~~
~~ City Clerk
First Reading 0-4/'1 ~P> no to
Second Reading a~ao/ ~m 10
2
Ordinance No. 24-06
MEMORANDUM
TO:
MAYOR AND CI1Y COMMISSIONERS
CI1Y MANAGER vr1
AGENDA ITEM # \ ~ - REGULAR MEETING OF MAY 2.2006
ORDINANCE NO. 24-06
FROM:
SUBJECT:
DATE:
APRIL 28, 2006
This ordinance is before Commission for second reading and public hearing to amend Chapter 35,
"Employees Policies and Benefits", of the Code of Ordinances by amending Section 35.097,
"Retirement Income; Basis, Amount, and Payment", to provide for payment of Lump-Sum
Distributions in excess of $1,000.00.
At the first reading on April 18, 2006, the Commission passed Ordinance No. 24-06.
Recommend approval of Ordinance No. 24-06 on second and final reading.
S:\City Clerk\agenda memos\Ord. No. 24-06 Chapter 35 Lump Sum Distrib 050206
LEWIS, LONGMAN &WALKER, P.A
ATTORNEYS AT LAW
2)/\
mJ1
, ELPING SHAPE
FLORIDA'S FUTURE@
REPLY To: TALLAHASSEE
www.llw-law.com
MEMORANDUM
TO:
Susan A. Ruby, City Attorney
City of Delray Beach
FROM:
Jim Linn
DATE:
April 14, 2006
RE:
City Retirement Plans -- Amendments to Comply with IRS Regulations
on Mandatory Distributions
Background: In 2005, the U.S. Internal Revenue Service issued Notice 2005-5 relating to the
automatic rollover provisions in section 401(a)(31)(B) of the Internal Revenue Code (IRC). This
section requires that mandatory distributions of more than $1,000 from a qualified retirement
plan be paid in a direct rollover to an individual retirement account (IRA) at a designated
financial institution -- if the distributee does not make an election to have the distribution paid in
another manner. The plan administrator is required to notify each participant to whom a
mandatory distribution is going to be made that, unless the participant makes an affirmative
election, the distribution will automatically be paid to an IRA in a direct rollover.
The term "mandatory distribution" refers to any distribution that is made without the
participant's consent and before the participant attains the later of age 62 or normal retirement
age. A distribution to a surviving spouse or alternative payee is not a mandatory distribution for
purposes of the automatic rollover requirements of ~401(a)(31)(B). Sections 411(a)(1l) and
417(e) of the Code permit qualified plans to include provisions allowing for the immediate
distribution of a separating participant's benefit without the consent of the participant where the
present value of the nonforfeitable accrued benefit is less than $5,000.
Notice 2005-5 states that the automatic rollover requirements of ~ 401 (a)(3I) do apply to state or
local government plans, including defined benefit plans established under ~ 401(a) and deferred
compensation plans established under ~ 457(b). Consequently, to the extent that a government
plan provides for mandatory distribution of benefit amounts below a specified amount, or a
mandatory refund of pre-tax member contributions upon separation prior to vesting, such
distribution would be subject to the automatic rollover provisions of ~ 401(a)(31)(B). This
means that if a participant does not submit an election or cannot be located, the plan
Bradenton
1001 3rd Avenue West
Suite 670
Bradenton, FL 34205
(941) 708-4040
Fax: (941) 708-4024
Jacksonville
9428 Baymeadows Road
Suite 625
Jacksonville, FL 32256
(904) 737-2020
Fax: (904) 737-3221
Tal/.a!&assee
Post Office Box 10788 (32302)
125 South Gadsden Street, Suite 300
Tallahassee, FL 32301
(850) 222-5702
Fax: (850) 224-9242
West Palm Beael,
1700 Palm Beach Lakes Blvd.
Suite 1000
West Palm Beach, FL 33401
(561) 640-0820 \ "" ('\
Fax: (561) 640-8202 ~
April 14, 2006
Page 2
administrator must set up an IRA in the participant's name at a bank or other financial
institution.
Provisions of City Retirement Plan that Could Result in Mandatory Distributions of More
than $1,000:
Section 35.097(F) of the General Employees' Retirement Plan authorizes the pension board to
make a lump sum payment of the actuarial value of a member's benefit if the monthly benefit is
less than $50.00. This could result in a mandatory distribution of more than $1,000.
Section 33.62 of the Police and Firefighters Retirement System provides for a mandatory refund
of employee contributions, plus interest, to a member who terminates City employment with less
than 10 years of service. This could result in a mandatory distribution of more than $1,000.
Plan Amendments: To avoid the automatic IRA requirements of section 40I(a)(31), many
pension experts recommend (and we concur) that all mandatory distributions in excess of$I,OOO
be replaced with voluntary elections. In this manner, a member would have to elect to receive a
lump sum distribution, and ifhe or she does not make such an election, the benefit would be paid
to a vested member in monthly installments in accordance with the plan; and in the case of a
non-vested member, the member's contributions would continue to accrue interest until the
member elects to receive.
The attached plan amendments implement this recommendation for all mandatory distributions
that are greater than $1,000.
Please call me if you have any questions concerning these matters.
JWL/es
Attachments
4-19-06
ORDINANCE NO. 24-06
AN ORDINANCE OF THE CITY COMMISSION OF
THE CITY OF DELRA Y BEACH, FLORIDA,
AMENDING CHAPTER 35, "EMPLOYEE POLICIES
AND BENEFITS", SUBHEADING "RETIREMENT
PLAN", OF THE CODE OF ORDINANCES OF THE
CITY OF DELRA Y BEACH, FLORIDA, BY
AMENDING SECTION 35.097, "RETIREMENT
INCOME; BASIS, AMOUNT AND PAYMENT", TO
PROVIDE FOR PAYMENT OF LUMP-SUM
DISTRIBUTIONS IN EXCESS OF $1,000.00 ONLY
UPON THE WRITTEN ELECTION OF A MEMBER OR
DESIGNATED BENEFICIARY; PROVIDING A
GENERAL REPEALER CLAUSE; A VALIDITY
CLAUSE; AND AN EFFECTNE DATE.
NOW THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF
THE CITY OF DELRA Y BEACH AS FOLLOWS:
Section 1. That Chapter 35, "Employee Policies and Benefits", subheading, "Retirement
Plan", of the Code of Ordinances of the City of Delray Beach is hereby amended by
amending subsection (F) of section 35.097, "Lump-Sum payment of Small Retirement
Income", and adding a new subsection (0) to section 35.097, "Lump-Sum Distributions
in Excess of $1000", to read as follows:
Section 35.097 RETIREMENT INCOME; BASIS. AMOUNT. AND PAYMENT.
*
*
*
(F) Lump-Sum Payment of Small Retirement Income. Notwithstanding any provision
of the plan to the contrary, if the monthly retirement income payable to any person
entitled to any benefit hereunder is less than fifty dollars ($50.00), the Retirement
Committee may, in the exercise of its discretion, specify that the actuarial equivalent of
the retirement income be paid in a lump sum or in monthly installments for a period
certain of not more than sixty (60) months; provided. if the actuarial eauivalent of the
monthly retirement income is greater than one thousand dollars ($1.000.00). payment of
the benefit in a lump sum shall be made onlv upon the written reauest of a member or
designated beneficiary.
.
.
.
(0) Lump-Sum Distributions in Excess of $1000. Notwithstanding any nrovision of
the plan to the contrary. and only to the extent a lump sum distribution is exnressly
authorized. a lumn sum distribution in excess of one thousand dollars ($1.000.00) shall be
made only upon the written reauest of a member or designated beneficiary.
Section 2. That all ordinances or parts of ordinances in conflict herewith be, and the
same are hereby repealed.
Section 3. That should any section or provision of this ordinance or any portion
thereof, any paragraph, sentence, or word be declared by a court of competent jurisdiction
to be invalid, such decision shall not operate to invalidate the remainder hereof.
Section 4. That this ordinance shall become effective immediately upon its passage on
second and final reading.
PASSED AND ADOPTED in regular session on second and final reading on this
the day of , 2006.
MAYOR
ATTEST:
City Clerk
First Reading
Second Reading
2
(J~'
8- '\- 'b\P
veer taw(~
Boca Raton/Delray Beach News - Friday/Saturday, April 21-22,2006 37
www.bocaneWs.CDm .
100 .
ANNOUNCEMENTS
101 Legal ;'\otices
CITY Of DELRAY BEACH,
FLORIDA
NOTICE OF PllBLlC HEARING
A PUBLIC HEARING wi! be held on
lhe following proposed ordinances at
7:00 p.m. on TUESDAY, MAY 2, 2006
{or at any cootiooation ot such meet-
ing which is set by the Commission}, in
the City Commission Chambers. 100
NW 1S1 Avenue. Delray Beach. FIor-
Kia, al which time the City Commission
wi" consider their adoption. The pro_
posed ordinances tNIf be inspected
at lhe OffICe oIlIie City Clerk at City
Hall 100 N.W. 1st Avenue, Oelray
Beach. Florida, between the hours of
8:00 a.m-. and.5:00 p.m.. Monday
through Friday, except holidays. All
interested parties are invited 10 attend
and be heard with respect to the pro-
posed ordinances.
ORDINANCE NO, 22-00
AN ORDINANCE OF THE CITY COM-
MISSION Of THE CITY Of DELRAY
BEACH. FLORIDA, AMENDING
CHAPTER 101. 'MUNICIPAL PARKS
BEACHES AND OTHER RECREA:
TlONAL SITES', OF THE CODE OF
ORDINANCES OF THE CITY OF
DHRAY BEACH, BY AMENDING
SECTION 101.23. 'CRIMINAL TRES-
PASS', TO CLARIFY THAT BUILD-
INGS SHAll. INCLUDE BUT NOT. BE .
LIMITED TO LIFEGUARD TOWERS'
PROVIDING A GENERAL REPEALEFi
CLAUSE, A SAVING 'CLAUSE, AND
AN EFFECTIVE DATE.
ORDINANCE NO, 2J.06
AN ORDINANCE Of THE CITY CoM:
MISSION OF THE CITY OF DaRAY
BEACH, FLORIDA, AMENDING
CHAPTER 36, 'FINANCE; CITY
PROPERTY TRANSACTIONS', OF
THE CODE OF ORDINANCES OF
THE CITY OF DELRAY BEACH, BY
AMENDING SECTION 36.01,
'.COMPLlANCE WITH STANDAllD
PRACTICE INSTRUCTIONS', TO
PROVIDE THAT INVITATIONS TO
NEGOTIATE ARE EXEMPT FROM
THE REOlJIREMENTS Of CHAPTER
36; PROVIDING A GENERAL RE'
PEALER CLAUSE,. A SAVING
CLAUSE, AND AN EFFECTIVE
DATE
ORDINANCE NO. 24-00
AN ORDINANCE OF THE CITY COM..
MISSION Of THE CITY Of DELRAY
BEACH, flORIDA, AMENDING
CHAPTER 35, 'EMPLOYEE POLI-
CIES AND BENEFITS', SUBHEAD-
ING 'RETIREMENT PLAN' OF THE
101 Legal
CODE Of ORDINANCES OF THE
CITY OF DELRAY BEACH, FLORIDA,
BY AMENDING SECTION 35.097
'RETIREMENT INCOME; BASIS.
AMOUNT AND PAYMENT", TO PRO-
VIDE FOR PAYMENT OF LUMP-SUM
DISTRIBUTIONS IN EXCESS OF
51,000.00 ONLY UPON THE WRIT-
TEN ELECTION OF A MEMBER OR
.DESIGNATED BENEFICIARY; PRO-
VIDING A GENERAL REPEALER
ClAUSE; A VALIDITY CLAUSE; AND
AN EFFECTIVE DATE.
ORDINANCE NO. 25.(J6
AN ORDINANCE OF THE CITY COM-
MISSION Of THE CITY OF DELAAY
BEACH, FLORIDA, AMENDING
CHAPTER 33, 'POLICE AND FIRE
DEPARTMENTS', SUBHEADING
'PENSIONS., OF THE CODE OF OR-
DINANCES Of THE CITY OF DEL-
RAY BEACH, FLORIDA. BY AMEND-
ING SECTION 33.62, 'BENEFIT
AMOUNTS AND ElIGIBILITY',AND
SECTION 33.67 .OTHER PROVI-
SIONS', TO PROVIDE FOR PAY-
MENT OF LUMP-SUM DISTRIBU-
TIONS IN EXCESS OF 51,000.00
ONLY UPON THE WRITTEN ELEC-
TION OF A MEMBER OR DESIG-
NATED BENEFICIARY; PROVIDING
A GENERAL REPEALER CLAUSE A
SAVING CLAUSE; AND AN EFFEC-
TIVE DATE.
Please be advised thai if a person de-
cides 10 appeal any decision made by
the City Commission with respect to
any matter considered al these hear.
ings. such person may need to ensure
that a verbatim record includes the
testimony and evidence upon which
tI'I~ appeal is ~o be based. The City
does not prOVIde nor prepare such
record. Pursuant 10 ES.286.0105
CITY OF DElAAT' BEACH
CI1ewIIe O. Hubin
CilyCJe'"
PUBLISH: Frida~ April 21, 2006
Boca Raton I Delray Beach News