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2013-10 ORDINANCE NO. 2013-10 AN ORDINANCE OF THE CITY OF AVENTURA AMENDING PROVISIONS OF THE POLICE OFFICERS' RETIREMENT PLAN; PROVIDING FOR COMPLIANCE WITH THE INTERNAL REVENUE CODE; PROVIDING FOR AN AMENDMENT TO THE DEFINITION OF "ACTUARIAL EQUIVALENT"; PROVIDING FOR A REPEALER; PROVIDING FOR SEVERABILITY; PROVIDING FOR CODIFICATION; PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, on January 14, 2011 an application was filed with the Internal Revenue Service for a Favorable Determination Letter regarding the qualified status of the Plan under Section 401(a) of the Internal Revenue Code; and WHEREAS, on February 7, 2013, the Internal Revenue Service issued a Favorable Determination Letter, finding that the Plan complies with all qualification requirements; and WHEREAS, the Favorable Determination Letter is subject to the timely adoption of the amendments provided herein, and WHEREAS, the Board's actuary has advised that it would be appropriate to amend the definition of"Actuarial Equivalent"; and WHEREAS, the trustees of the City of Aventura Police Officers' Retirement Plan have requested and approved such amendments as being in the best interests of the participants and beneficiaries as well as improving the administration of the plan, and WHEREAS, the City Commission has received, reviewed and considered an actuarial impact statement describing the actual impact of the amendments provided for herein. Ordinance No. 2013-10 Page 2 NOW THEREFORE, BE IT ORDAINED by the City Commission of the City of Aventura, Florida: Section 1. The foregoing WHEREAS clauses are hereby ratified and confirmed as being true and correct and are hereby made a specific part of this Ordinance upon adoption hereof. Section 2. That Section 36-22, Definitions, of the Retirement Plan, of the Municipal Code of Ordinances be amended as follows: Sec. 36-22. - Definitions. Actuarial equivalent shall mean that any benefit payable under the terms of this system other than the normal form of benefit shall have the same actuarial present value on the date the payment commences as the normal form of benefit. For purposes of establishing the actuarial present value of any form of benefit, other than a lump sum distribution, all future payments shall be discounted for interest and mortality using the interest rate and mortality tabled specified by the Board of Trustees based upon the advice of the Board's Actuary. In the case of a lump sum distribution, the actuarial present value shall be determined on the basis of the same mortality rates as set forth in this section. Eamable compensation shall mean a member's base pay for regular hours worked as an employee, overtime pay, amounts paid for administrative leave, bereavement leave, compensatory time paid in lieu of regular wages, court time, Garcia days for K-9 service, holiday leave taken in lieu of regular pay, job basis leave, jury duty, light duty, paid military leave, personal leave taken in lieu of regular pay, storm leave, storm/hurricane pay, suspension with pay, pay for time off due on the job injury, vacation leave taken in lieu of regular pay, and workers' compensation paid by the City; Page 2 of 19 Ordinance No. 2013-10 Page 3 and, excluding pay received for off-duty details for third parties, whether or not the payment is made through the City. Earnable compensation shall not include payouts of accumulated leave taken as cash upon separation from service. Retroactive payments shall be credited to the calendar year in which such payments would have been received had they been timely paid. Pursuant to F.S. § 440.21, pension contributions shall not be deducted from a member's workers' compensation award. For the purpose of any elective deferral (as defined in Codc Section 102(g)(3) of the - - - - - - • - - - , • I - - - - " applying the limitations described in Section 36 31 hereof, Revenue Code. Section 3. That Section 36-26(a), Service retirement benefit, of the Municipal Code of Ordinances be amended as follows: Sec. 36-26. - Service retirement benefit. (a) A member may retire on the first day of the month coincident with or next following the earlier of: the date upon which the member completes 25 years of credited service, regardless of age; or the date upon which the member attains age 55 with ten years of credited service. There shall be no mandatory retirement age. Any provision of this plan to the contrary notwithstanding, a Member's accrued benefit shall become 100% vested upon the attainment of the Normal Retirement Date. Section 4. That Section 36-30, Death benefits, of the Municipal Code of Ordinances be amended by adding a subsection (d) as follows: Page 3 of 19 Ordinance No. 2013-10 Page 4 Sec. 36-30. - Death benefits. (a) In the event of a member's death in the line of duty, the benefit, which shall be payable commencing on the first day of the month coincident with or next following the death of the member, shall be the greater of 30 percent of the member's compensation at the time of death or the member's accrued benefit. (b) In the event of the death of a member from non-duty related causes prior to the time of eligibility for early or normal retirement, the member's designated beneficiary shall be paid from the fund an amount equal to the member's accumulated contributions. In the event of the death of a member who has completed ten or more years of credited service, the member's designated beneficiaries shall be entitled to the benefits otherwise payable at the early or normal retirement date. (c) In the event of the death of a retiree, death benefits, if any, shall be paid in accordance with the optional form of benefit chosen at the time of retirement. (d) Death while performing USERRA-qualified active military service. In the case of a Member who dies on or after January 1, 2007 while performing "Qualified Military Service" under Title 38, United States Code, Chapter 43, Uniformed Services Employment and Reemployment Rights Act ("USERRA") within the meaning of Section 414(u) of the Internal Revenue Code, any "additional benefits" (as defined by Section 401(a)(37) of the Internal Revenue Code) provided under the Plan that are contingent upon a Member's termination of employment due to death shall be determined as though the Member had resumed employment immediately prior to his death. With respect to any such "additional benefits," for vesting purposes only, credit shall be given for the period of the Member's absence from covered employment during "Qualified Military Service". Section 5 That Section 36-31(a), Compliance with the Internal Revenue Code, of the Municipal Code of Ordinances be repealed/deleted in its entirety and replaced with the following language: Sec. 36-31. - Compliance with the Internal Revenue Code. Page 4 of 19 Ordinance No. 2013-10 Page 5 It is the intention of the City and of the Board that the plan remain at all times a qualified plan, as that term is defined under the Internal Revenue Code. (a) Maximum amount of retirement income. (1) The limitations of this Subsection (a) shall apply in limitation years beginning on or after July 1, 2007, except as otherwise provided herein, and are intended to comply with the requirements of the Pension Protection Act of 2006 and shall be construed in accordance with said Act and guidance issued thereunder. The provisions of this Subsection (a) shall supersede any provision of the Plan to the extent such provision is inconsistent with this Subsection. The Annual Pension as defined in Paragraph (2) below otherwise payable to a Member at any time shall not exceed the Dollar Limitation for the Member multiplied by a fraction whose value cannot exceed one, the numerator of which is the Member's number of years (or part thereof, but not less than one year) of service with the City and the denominator of which is 10. For this purpose, no more than one year of service may be credited for any Plan Year. If the benefit the Member would otherwise accrue in a limitation year would produce an Annual Pension in excess of the Dollar Limitation, the benefit shall be limited (or the rate of accrual reduced) to a benefit that does not exceed the Dollar Limitation. (2) "Annual Pension" means the sum of all annual benefits, payable in the form of a straight life annuity. Benefits payable in any other form shall be adjusted to the larger of: (A) For limitation years beginning on or after July 1, 2007 (I) the straight life annuity (if any) payable to the Member under the Plan Page 5 of 19 Ordinance No. 2013-10 Page 6 commencing at the same Annuity Starting Date as the Member's form of benefit, or (II) the actuarially equivalent straight life annuity commencing at the same Annuity Starting Date, computed using a 5.00% interest rate and the mortality basis prescribed in Code Section 415(b)(2)(E)(v). (B) For limitation years beginning before July 1, 2007 (I) the actuarially equivalent straight life annuity commencing at the same Annuity Starting Date, computed using the interest rate and mortality basis specified by the Board of Trustees for determining Actuarial Equivalence under the Plan for the particular form of payment, or (II) the actuarially equivalent straight life annuity commencing at the same Annuity Starting Date, computed using a 5.00% interest rate and the mortality basis prescribed in Code Section 415(b)(2)(E)(v). No actuarial adjustment to the benefit shall be made for benefits that are not directly related to retirement benefits (such as a qualified disability benefit, preretirement incidental death benefits, and postretirement medical benefits); or the inclusion in the form of benefit of an automatic benefit increase feature, provided the form of benefit is not subject to §417(e)(3) of the Internal Revenue Code and would otherwise satisfy the limitations of this Subsection (a), and the amount payable under the form of benefit in any Limitation Year shall not exceed the limits of this Subsection (a) applicable at the annuity starting date, as increased in subsequent years pursuant to 415(d) of the Code. For this purpose, an automatic Page 6 of 19 4 Ordinance No. 2013-10 Page 7 benefit increase feature is included in a form of benefit if the form of benefit provides for automatic, periodic increases to the benefits paid in that form. (3) "Dollar Limitation" means, effective for the first limitation year beginning after January 1, 2001, $160,000, automatically adiusted under Code Section 415(d), effective January 1 of each year, as published in the Internal Revenue Bulletin, and payable in the form of a straight life annuity. The new limitation shall apply to limitation years ending with or within the calendar year of the date of the adjustment, but a Member's benefits shall not reflect the adjusted limit prior to January 1 of that calendar year. The Dollar Limitation shall be further adjusted based on the age of the Member when the benefit begins as follows: (A) For Annuity Starting Dates in limitation years beginning on or after July 1, 2007 (I) If the Annuity Starting Date for the Member's benefit is after age 65 (i) If the Plan does not have an immediately commencing straight life annuity payable at both age 65 and the aqe of benefit commencement The Dollar Limitation at the Member's Annuity Starting Date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the Member's Annuity Starting Date that is the actuarial equivalent of the Dollar Limitation with actuarial equivalence computed using a 5.00% interest rate assumption and the mortality basis prescribed in Code Section 415(b)(2)(E)(v) for that Annuity Starting Date (and expressing the Member's aqe based on completed Page 7 of 19 Ordinance No. 2013-10 Page 8 calendar months as of the Annuity Starting Date). (ii) If the Plan does have an immediately commencing straight life annuity payable at both age 65 and the age of benefit commencement The Dollar Limitation at the Member's Annuity Starting Date is the lesser of (aa) the Dollar Limitation multiplied by the ratio of the annual amount of the adiusted immediately commencing straight life annuity under the Plan at the Member's Annuity Starting Date to the annual amount of the adjusted immediately commencing straight life annuity under the Plan at age 65, both determined without applying the limitations of this Subsection (a), and (bb) the limitation determined under Subparagraph (3)(A)(I)(i) of this Subsection(a). For this purpose, the adjusted immediately commencing straight life annuity under the Plan at the Member's Annuity Starting Date is the annual amount of such annuity payable to the Member, computed disregarding the Member's accruals after age 65 but including actuarial adjustments even if those actuarial adjustments are used to offset accruals; and the adjusted immediately commencing straight life annuity under the Plan at age 65 is the annual amount of such annuity that would be payable under the Plan to a hypothetical Page 8of19 Ordinance No. 2013-10 Page 9 Member who is age 65 and has the same Accrued Benefit as the Member. (II) Except with respect to a Member who is a "Qualified Member" as defined in Section 415(b)(2)(H) of the Code, for benefits (except survivor and disability benefits as defined in Section 415(b)(2)(I) of the Code), if the Annuity Starting Date for the Member's benefit is before age 62 (i) If the Plan does not have an immediately commencing straight life annuity payable at both aqe 62 and the age of benefit commencement The Dollar Limitation at the Member's Annuity Starting Date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the Member's Annuity Starting Date that is the actuarial equivalent of the Dollar Lim itation with actuarial equivalence computed using a 5.00% interest rate assumption and the mortality basis prescribed in Code Section 415(b)(2)(E)(v) for that Annuity Starting Date (and expressing the Member's age based on completed calendar months as of the Annuity Startinq Date). (ii) If the Plan does have an immediately commencing straight life annuity payable at both age 62 and the aqe of benefit commencement Page 9 of 19 Ordinance No. 2013-10 Page 10 The Dollar Limitation at the Member's Annuity Starting Date is the lesser of (aa) the Dollar Limitation multiplied by the ratio of the annual amount of the adjusted immediately commencing straight life annuity under the Plan at the Member's Annuity Starting Date to the annual amount of the adjusted immediately commencing straight life annuity under the Plan at age 62, both determined without applying the limitations of this Subsection (a), and (bb) the limitation determined under Subparagraph (3)(A)(II)(i) of this Subsection (a). (B) For Annuity Starting Dates in limitation years beginning before July 1, 2007 Page 10 of 19 Ordinance No. 2013-10 Page 11 Age as of Annuity Starting Date: Adjustment of Dollar Limitation: Over 65 The smaller of: (a) the actuarial equivalent of the limitation for age 65, computed using the interest rate and mortality basis specified by the Board of Trustees for determining actuarial equivalence under the Plan, or (b) the actuarial equivalent of the limitation for age 65, computed using a 5.00% interest rate and the mortality basis prescribed in Code Section 415(b)(2)(E)(v). Any increase in the Dollar Limitation determined in accordance with this paragraph shall not reflect a mortality decrement between age 65 and the age at which benefits commence if benefits are not forfeited upon the death of the Member. If any benefits are forfeited upon death, the full mortality decrement is taken into account. 62 to 65 No adjustment. Less than 62 The smaller of: (a) the actuarial equivalent of the limitation for age 62, computed using the interest rate and mortality basis specified by the Board of Trustees for determining actuarial equivalence under the Plan, or (b) the actuarial equivalent of the limitation for age 62, computed using a 5.00% interest rate and the mortality basis prescribed in Code Section 415(b)(2)(E)(v). This adjustment shall not apply to any "Qualified Member" as defined in Section 415(b)(2)(H), nor to survivor and disability benefits as defined in Section 415(b)(2)(I)of the Code. (4) With respect to clause (3)(A)(I)(i), clause (3)(A)(II)(i) and Paragraph (3)(B) above, no adiustment shall be made to the Dollar Limitation to reflect the probability of a Member's death between the Annuity Starting Date and age 62, or between age 65 and the Annuity Starting Date, as applicable, if benefits are not forfeited upon the death of the Member prior to the Page 11 of 19 Ordinance No. 2013-10 Page 12 Annuity Starting Date. To the extent benefits are forfeited upon death before the Annuity Starting Date, such an adjustment shall be made. For this purpose, no forfeiture shall be treated as occurring upon the Member's death if the Plan does not charqe Members for providing a qualified preretirement survivor annuity, as defined in Code Section 417(c), upon the Member's death. (5) The term "limitation year" is the 12 month period which is used for application of the limitations under Code Section 415 and shall be the calendar year. (6) The limitations set forth in this Subsection (a) shall not apply if the Annual Pension does not exceed $10,000 provided the Member has never participated in a Defined Contribution Plan maintained by the City. (7) Cost-of-livinq adjustments in the Dollar Limitation for benefits shall be limited to scheduled annual increases determined by the Secretary of the Treasury under Section Subsection 415(d) of the Code. (8) In the case of a Member who has fewer than 10 years of participation in the Plan, the Dollar Limitation set forth in Paragraph (3) of this Subsection (a) shall be multiplied by a fraction - (i) the numerator of which is the number of years (or part thereof) of participation in the Plan, and (ii) the denominator of which is 10. (9) Any portion of a Member's benefit that is attributable to mandatory Member contributions (unless picked-up by the City) or rollover contributions, shall be taken into account in the manner prescribed in the regulations under Section 415 of the Code. (10) Should any Member participate in more than one defined benefit plan maintained by the City, in any case in which the Member's benefits under all such defined benefit plans (determined as of the same age) would exceed the Dollar Limitation applicable at that age, the accrual of the Member's benefit under this Page 12 of 19 Ordinance No. 2013-10 Page 13 Plan shall be reduced so that the Member's combined benefits will equal the Dollar Limitation. (11) For a Member who has or will have distributions commencing at more than one annuity starting date, the Annual Benefit shall be determined as of each such annuity starting date (and shall satisfy the limitations of this Section as of each such date), actuarially adjusting for past and future distributions of benefits commencing at the other annuity starting dates. For this purpose, the determination of whether a new starting date has occurred shall be made without regard to § 1.401(a)-20, Q&A 10(d), and with regard to § 1.415(b)1(b)(1)(iii)(B) and (C) of the Income Tax Regulations. (12) The determination of the Annual Pension under Paragraph (A)(1) of this Subsection (a) shall take into account (in the manner prescribed by the regulations under Section 415 of the Code) social security supplements described in § 411(a)(9) of the Internal Revenue Code and benefits transferred from another defined benefit plan, other than transfers of distributable benefits pursuant § 1.411(d)-4, Q&A-3(c) of the Income Tax Regulations. (13) The above limitations are intended to comply with the provisions of Section 415 of the Code, as amended, so that the maximum benefits provided by plans of the City shall be exactly equal to the maximum amounts allowed under Section 415 of the Code and regulations thereunder. If there is any discrepancy between the provisions of this Subsection (a) and the provisions of Section 415 of the Code and regulations thereunder, such discrepancy shall be resolved in such a way as to give full effect to the provisions of Section 415 of the Code. The value of any benefits forfeited as a result of the application of this Subsection (a) shall be used to decrease future employer contributions. (14) For the purpose of applying the limitations set forth in Sections 401(a)(17) and 415 of the Internal Revenue Code, Compensation shall include any elective Page 13 of 19 Ordinance No. 2013-10 Page 14 deferral (as defined in Code Section 402(g)(3) of the Internal Revenue Code), and any amount which is contributed or deferred by the employer at the election of the Member and which is not includible in the gross income of the Member by reason of Section 125 or 457 of the Internal Revenue Code. For limitation years beginning on and after January 1, 2001, for the purposes of applying the limitations described in this Subsection (a), compensation paid or made available during such limitation years shall include elective amounts that are not includible in the gross income of the Member by reason of Section 132(f)(4) of the Internal Revenue Code. For limitation years on or after July 1, 2007, compensation shall include payments that otherwise qualify as compensation and that are made by the later of: (a) 2 and '/2 (two and one-half) months after severance from employment with the employer, and (b) the end of the limitation year that includes the date of severance. Section 6. That Section 36-31(c), Compliance with the Internal Revenue Code, paragraphs 3(A) and 6(A), of the Municipal Code of Ordinances be amended as follows: (c) Required Minimum Distributions. (3) Requirements For Annuity Distributions That Commence During participant's Lifetime. (A) Joint life annuities where the beneficiary is not the participant's spouse. If the participant's interest is being distributed in the form of a joint and survivor annuity for the joint lives of the participant and a nonspousal beneficiary, annuity payments to be made on or after the participant's required beginning date to the designated beneficiary after the participant's death Page 14 of 19 Ordinance No. 2013-10 Page 15 must not at any time exceed the applicable percentage of the annuity payment for such period that would have been payable to the participant using the table set forth in Q&A-2 of section 1.401(a)(9)-6T of the Treasury regulations. If the form of distribution combines a joint and survivor annuity for the joint lives of the participant and a nonspousal beneficiary and a period certain annuity, the requirement in the preceding sentence will apply to annuity payments to be made to the designated beneficiary after the expiration of the period certain. (6) Definitions. (A) Designated beneficiary. The individual who is designated as the beneficiary under the Plan and is the designated beneficiary under Section 401(a)(9) of the Code and Section 1.101(a)(9) 1, Q&A 4, 1.401(a)(9)-4 of the Treasury regulations Section 7. That Section 36-31(d), Compliance with the Internal Revenue Code, of the Municipal Code of Ordinances be amended as follows: (d) Rollover distributions. (1) Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this Section, a distributee may elect, at the time and in the manner prescribed by the Administrator, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. (2) Definitions The following definitions apply to this Section: Page 15 of 19 Ordinance No. 2013-10 Page 16 (A) Eligible rollover distribution: An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: (i) 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 distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of 10 years or more; (ii) any distribution to the extent such distribution is required under Section 401(a)(9) of the Code; (iii) the portion of any distribution that is a hardship distribution described in Section '101(k)(2)(B)(i)(IV) of the Code which is made upon hardship of the Member; and (iv) the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities), provided that 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 transferred only to an individual retirement account or annuity described in Section 408(a) or (b) of the Code, or to a qualified defined contribution plan described in Section 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. Page 16 of 19 Ordinance No. 2013-10 Page 17 Section 8. That Section 36-31, Compliance with the Internal Revenue Code, of the Municipal Code of Ordinances be amended to add a subsection (h) as follows: (h) Uniformed Services Employment and Reemployment Rights Act. The Plan shall at all times be administered in accordance with the provisions of the Uniformed Services Employment and Reemployment Rights Act, which Act is hereby incorporated by reference. Section 9. All sections or parts of sections of the Code of Municipal Ordinances, all ordinances or parts of ordinances, and all resolutions or parts of resolutions in conflict herewith, be and the same are hereby repealed to the extent of such conflict. Section 10. Should any section or provision of this Ordinance, or any paragraph, sentence or word, be declared by a Court of competent jurisdiction to be invalid, such decision shall not affect the invalidity of the remainder hereof, as a whole or a part hereof, other than the part declared to be invalid. Section 11. It is the intention of the City Commission of the City of Aventura that the provisions of this Ordinance shall become and be made a part of the Code of Ordinances of the City of Aventura and that the sections of this Ordinance may be renumbered or relettered and the word "ordinance" may be changed to "Chapter", "Section", "Article", or such other appropriate word or phrase, the use of which shall accomplish the intentions herein expressed. Page 17 of 19 Ordinance No. 2013-10 Page 18 Section 12. This Ordinance shall take effect upon adoption on second reading. The foregoing Ordinance was offered by Commissioner Enbar Cohen, who moved its adoption on first reading. The motion was seconded by Commissioner Howard Weinberg and, upon being put to a vote, the vote was as follows: Commissioner Enbar Cohen yes Commissioner Teri Holzberg absent Commissioner Billy Joel yes Commissioner Howard Weinberg yes Commissioner Luz Urbaez Weinberg yes Vice Mayor Michael Stern yes Mayor Susan Gottlieb yes The foregoing Ordinance was offered by Commissioner Luz Weinberg, who moved its adoption on second reading. This motion was seconded by Commissioner Joel, and upon being put to a vote, the vote was as follows: Commissioner Enbar Cohen yes Commissioner Teri Holzberg absent Commissioner Billy Joel yes Commissioner Howard Weinberg yes Commissioner Luz Urbaez Weinberg yes Vice Mayor Michael Stern yes Mayor Susan Gottlieb yes PASSED AND ADOPTED on first reading this 3rd day of September, 2013. Page 18 of 19 Ordinance No. 2013-10 Page 19 PASSED AND ADOPTED on second reading this 18th day of September, 2013. •-41 i AN GOTTL B, MAYOR 'Q'ESA M. '4R1KA, MMC C CLERK APPROVED AS TO LEGAL SUFFICIENCY: L* 1 CITY ATTORNEY Page 19 of 19