Ord 25-06
ORDINANCE NO. 25-06
AN ORDINANCE OF THE CITY COMMISSION OF THE
CITY OF DELRA Y BEACH, FLORIDA, AMENDING
CHAPTER 33, "POLICE AND FIRE DEPARTMENTS",
SUBHEADING "PENSIONS", OF THE CODE OF
ORDINANCES OF THE CITY OF DELRA Y BEACH,
FLORIDA, BY AMENDING SECTION 33.62, "BENEFIT
AMOUNTS AND ELIGIBILITY", AND SECTION 33.67
"OTHER PROVISIONS", 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 SAVINGS CLAUSE;
AND AN EFFECTIVE DATE.
NOW THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF
THE CITY OF DELRA Y BEACH AS FOllOWS:
Section 1. That Chapter 33, "Police and Fire Departments", subheading, "Pensions",
of the Code of Ordinances of the City of Dekay Beach is hereby amended by amending Section
33.662 "BENEFIT AMOUNTS AND ELIGIBILITY", subsection (G), "Vesting", to read as
follows:
(G) Vesting.
(1) If a member terminates his employment with the Police or Fire Departments, either voluntarily
or by lawful discharge, and is not eligible for any other benefits under this system, he shall be
entided to the following:
(a) Effective September 1, 1999, with less than ten (10) years of continuous service, refund
of member contributions with a noncompounded simple interest rate of three (3) percent per year
applied to the principal balance of the participant's contribution as accrued on December 31 of each
year, per year. In the event the amount of member contributions with interest exceeds one
thousand dollars ($1.000.00). the refund of member contributions and interest shall be made only
upon the written request of a member or designated beneficiat:y.
(b) With ten (10) or more years of continuous service:
(1) The pension benefit accrued to his date of termination, payable commencing on
the date which would have been his earliest normal retirement date had he remained in employment,
provided he does not elect to withdraw his member contributions; or
I
\,
(2) Effective September 1, 1999, refund of member contributions with a
noncompounded simple interest rate of five (5) percent per year applied to the principal balance of
the participant's contribution as accrued on December 31 of each year.
(2) Any member of this system who, for whatever reason, has his employment with the City as a
police officer or firefighter terminated, but who remains with or was previously employed by the
City in some other capacity so that his total period of employment with the City is ten (10) years or
more, shall have all benefits accrued under this system preserved, provided he does not elect to
withdraw his member contributions. These accrued benefits shall be payable at his otherwise normal
retirement date, in accordance with the provisions of this system. For purposes of determining
normal retirement date under this vesting provision, continuous service shall include all continuous
employment with the City as an employee as herein defined as well as the period of time subsequent
to termination as a member of this system; however, benefits shall not be payable under this system
during any period of continued employment by the City. Upon the written election of the Police
Chief or Fire Chief not to participate in the system, the employment of the Police Chief or Fire
Chief shall be deemed terminated for the purpose of applying the provisions of this system. A Police
Chief or Fire Chief who terminates his participation in this system shall not thereafter be eligible to
receive benefits through this system while actively employed by the City.
Section 2. That Chapter 33, "Police and Fire Departments", subheading,
"Pensions", of the Code of Ordinances of the City of Delray Beach is hereby amended by amending
Section 33.67 "OTHER PROVISIONS", to add a new subsection (H), "Lump-Sum Distributions in
Excess of $1000", to read as follows:
(H) Lum,p-Sum Distributions in Excess qf 31000. Notwithstanding an.y provision of the System to
the contraJ;y. 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
req,uest of a member or desigp.ated beneficiat:y.
Section 3. That all ordinances or parts of ordinances in conflict herewith be,
and the same are hereby repealed.
Section 4. 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 affect the validity of the remainder hereof as a whole or part thereof
other than the part declared to be invalid.
Section 5. That this ordinance shall become effective immediately upon its passage
on second and final reading.
2
Ordinance No. 25-06
(
\
PASSED AND ADOPTED in regular session on second and final reading on this
the ~ day of (l1~ ,2006.
!J~ z LA
R ~
ATTEST:
~~~
~~City Clerk
First Reading c4/18/~/a
SecondReading ~~d~l.a
3
Ordinance No. 25-06
MEMORANDUM
SUBJECT:
MAYOR AND CITY COMMISSIONERS
CITYMANAGER~
AGENDA ITEM # ,OD - REGULAR MEETING OF MAY 2,2006
ORDINANCE NO. 25-06
TO:
FROM:
DATE:
APRIL 28, 2006
This ordinance is before Commission for second reading and public hearing to amend Chapter 33,
"Police and Fire Departments", Subheading "Pensions" of the Code of Ordinances by amending
Section 33.62, "Benefit Amounts and Eligibility", 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. 25-06.
Recommend approval of Ordinance No. 25-06 on second and final reading.
S:\City Clerk\agenda memos\Ord. No. 25-06 Chapter 33 Police Fire Lump Sum Distrib 050206
LEWIS, LONGMAN &WALKER, P.A
ATTORNEYS AT LAW
v.f\
mJf
. ELPING SHAPE .
FLORIDA'S FUTURE@
REPLY To: TALLAHASSEE
www.lIw-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 40I(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 s401(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 ofthe nonforfeitable accrued benefit is less than $5,000.
Notice 2005-5 states that the automatic rollover requirements of S 401(a)(31) do apply to state or
local government plans, including defined benefit plans established under S 401(a) and deferred
compensation plans established under S 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 S 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
Tallahassee
Post Office Box 10788 (32302)
125 South Gadsden Street. Suite 300
Tallahassee, FL 32301
(850) 222-5702
Fax: (850) 224-9242
West Palm Beach
1700 Palm Beach Lakes Blvd.
Suite 1000
West Palm Beach, FL 33401
(561) 640-0820 \ "'"'\ r'\.
Fax: (561) 640-8202 c:::J-4J
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 401(a)(31), many
pension experts recommend (and we concur) that all mandatory distributions in excess of $1,000
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
Draft 4
ORDINANCE NO. 25-06
AN ORDINANCE OF THE CITY COMMISSION OF THE
CITY OF DELRA Y BEACH, FLORIDA, AMENDING
CHAPTER 33, "POLICE AND FIRE DEPARTMENTS",
SUBHEADING "PENSIONS", OF THE CODE OF
ORDINANCES OF THE CITY OF DELRA Y BEACH,
FLORIDA, BY AMENDING SECTION 33.62, "BENEFIT
AMOUNTS AND ELIGffiILITY", AND SECTION 33.67
"OTHER PROVISIONS", 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 SAVINGS CLAUSE;
AND AN EFFECTIVE DATE.
NOW THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF
THE CITY OF DELRA Y BEACH AS FOLLOWS:
Section 1. That Chapter 33, "Police and Fire Departments", subheading,
"Pensions", of the Code of Ordinances of the City of Delray Beach is hereby amended by
amending Section 33.662 "BENEFIT AMOUNTS AND ELIGffiILITY", subsection (G),
"Vesting", to read as follows:
(G) Vesting.
(I) If a member terminates his employment with the Police or Fire Departments, either
voluntarily or by lawful discharge, and is not eligible for any other benefits under this system, he
shall be entitled to the following:
(a) Effective September 1, 1999, with less than ten (10) years of continuous service,
refund of member contributions with a noncompounded simple interest rate of three (3) percent
per year applied to the principal balance of the participant's contribution as accrued on December
31 of each year, per year. In the event the amount of member contributions with interest exceeds
one thousand dollars ($1,000.00), the refund of member contributions and interest shall be made
only upon the written request of a member or designated beneficiary.
(b) With ten (10) or more years of continuous service:
1
4-19-06
Draft 4
(1) The pension benefit accrued to his date of termination, payable commencing
on the date which would have been his earliest normal retirement date had he remained in
employment, provided he does not elect to withdraw his member contributions; or
(2) Effective September 1, 1999, refund of member contributions with a
noncompounded simple interest rate of five (5) percent per year applied to the principal balance
of the participant's contribution as accrued on December 31 of each year.
(2) Any member of this system who, for whatever reason, has his employment with the City
as a police officer or firefighter terminated, but who remains with or was previously employed by
the City in some other capacity so that his total period of employment with the City is ten (10)
years or more, shall have all benefits accrued under this system preserved, provided he does not
elect to withdraw his member contributions. These accrued benefits shall be payable at his
otherwise normal retirement date, in accordance with the provisions of this system. For purposes
of determining normal retirement date under this vesting provision, continuous service shall
include all continuous employment with the City as an employee as herein defined as well as the
period of time subsequent to termination as a member of this system; however, benefits shall not
be payable under this system during any period of continued employment by the City. Upon the
written election of the Police Chief or Fire Chief not to participate in the system, the employment
of the Police Chief or Fire Chief shall be deemed terminated for the purpose of applying the
provisions of this system. A Police Chief or Fire Chief who terminates his participation in this
system shall not thereafter be eligible to receive benefits through this system while actively
employed by the City.
Section 2. That Chapter 33, "Police and Fire Departments", subheading,
"Pensions", of the Code of Ordinances of the City of Delray Beach is hereby amended by
amending Section 33.67 "OTHER PROVISIONS", to add a new subsection (H), "Lump-Sum
Distributions in Excess of$lOOO", to read as follows:
(H) Lump-Sum Distributions in Excess of $1000. Notwithstanding any provision of the
System 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 UDon the
written reauest of a member or desilplated beneficiary.
Section 3. That all ordinances or parts of ordinances in conflict herewith be,
and the same are hereby repealed.
Section 4. 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 affect the validity of the remainder hereof as a whole or part
thereof other than the part declared to be invalid.
2
4-19-06
Draft 4
Section 5. 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
3
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Boca RatonlDelray Beach News - friday/Saturday, April 21-22, 2006 37
www.bocanews-com .
100
ANNOUNCEMENTS
101 Legal \" otices
CITY Of DELRAY BEACH,
FLORIDA
NOTICE Of PUBlIC HEARING
A PUBliC HEARING will tie held on
the 1oRowing proposed ordinances at
7:00 p.m. 00 TUESDAY. MAY 2. 2006
(or at any COntinualfon of such meet-
ing I'/hich is set by the CornmissK>n). in
the C~y Commission Chambers, 100
NW 151 Avenue, Delray Beach, Flor-
ida, at which time the City Commission
wiM consideI their adoption. The pro-
posed ordinances may be inspec1ed
at Ihe OffICe of the City CIer1< at City
Hall 100 N.W. 1st Avenue. Defray
Beach. Florida, between the hours of
8:00 a.m. and-5:00 p.m., Monday
~hrough Friday, except holidays. All
Interested parties are invi1edla attend
and be heard with respect 10 the pro-
posed ordinances.
DRDlNANCE NO- 22-06
AN ORDINANCE Of THE CITY COM-
MISSION Of THE CITY OF DELRAY
BEACH, FLORIDA, AMENDING
CHAPTER 101, 'MUNICIPAL PARKS,
BEACHES AND OTHER RECREA-
TIONAL SITES', OF THE CODE OF
ORDINANCES OF THE CITY OF
DElRAY BEACH, BY AMENDING
SECTION 101.23, 'CRIMINAl TRES-
PASS', TO CLARIFY THAT BUILD-
INGS SHALL ~ClUDE BUT NOT BE .
LIMITED TO UFEGUARD TOWERS'
PROVIDING A GENERAL REPEALER
CLAUSE, A SAV!'IG CLAUSE, AND
AN EFFECTIVE DATE
ORDINANCE NO, 23-Cl6
AN ORDINANCE OF THE CITY COM'
MISSION Of THE CITY OF DELRAY
BEACH, FLORiDA, AMENDING
CHAPTER 36, 'FINANCE: CITY
PROPERTY TRANSACTIONS', OF
THE CODE OF .ORDINANCES OF
THE ClTY.Of DELRAY BEACH, BY
AMENDING SECTION 3601,
'COMPLlANCE WITH STANDARD
PRACTICE INSTRUCTIONS', TO
PROVIDE THAT INVITATIONS TO
NEGOTIATE ARE EXEMPT FROM
THE REOUIREMENTS Of CHAPTER
36: PROVIDING A GENERAL REL
PEALER CLAUSE,. A SAVING
CLAUSE, AND AN EFFECTIVE
DATE
ORDfNANcE NO. 24-06
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-IJ6
AN ORDINANCE OF THE CITY COM.
MISSION OF THE CITY OF OELRAY
BEACH, FLORiDA, AMENDING
CHAPTER 33, 'POLlCE 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 ad\lised that if a person de-
ci~s 10 appeal any decision made by
the City Commission. with respect 10
any maner considered at these hear-
ings. such person may need to ensure
thaI a verbatim record includes the
testimony and evidence upon which
the appeal is 10 be based. The City
does not' provide nor prepare such
record. Pursuant 10 FS.286.0105
CITY OF DELRAY BEACH
ChevelIe D. Nubin
CilyC~'"
PUBLISH' Fr~ay. AP<il21, 2006
Boca Raton! Delfay Beach News