HomeMy WebLinkAboutO-92-03ORDINANCE NO.: 0-92-03
AN ORDINANCE OF THE CITY OF SEBASTIAN, INDIAN
RIVER COUNTY, FLORIDA, AMENDING ARTICLE VI OF
CHAPTER 2 OF THE CODE OF ORDINANCES OF THE CITY
OF SEBASTIAN, PERTAINING TO THE POLICE
OFFICERS' RETIREMENT SYSTEM; PROVIDING A
DEFINITION OF FULL TIME FOR THE PURPOSES OF
DETERMINING ELIGIBILITY~ PROVIDING A NEW
DEFINITION OF MEMBERS' CONTRIBUTIONS; PROVIDING
THAT DISTRIBUTIONS TO EACH MEMBER SHALL NOT
COMMENCE LATER THAN THE MEMBER'S REQUIRED
BEGINNING DATE; PROVIDING REGULATIONS~OVERNING
DISTRIBUTIONS UPON THE DEATH OF A MEMBER;
PROVIDING LIMITATIONS WITH RESPECT TO
INCIDENTAL DEATH BENEFITS PAYABLE UNDER THE
SYSTEM; PROVIDING LIMITATIONS ON ANNUAL
BENEFITS PAYABLE UNDER THE SYSTEM; CLARIFYING
WHAT CONSTITUTES MEMBER CONTRIBUTIONS UNDER THE
SYSTEM; PROVIDING THAT NO PART OF THE CORPUS
OR INCOME OF THE FUND MAINTAINED UNDER THE
SYSTEM MAY BE USED FOR OR DIVERTED TO PURPOSES
OTHER THAN FOR THE EXCLUSIVE BENEFIT OF MEMBERS
AND THEIR BENEFICIARIES; PROVIDING LIMITATIONS
ON BENEFITS PAYABLE UNDER THE SYSTEM ON EARLY
TERMINATION OF THE SYSTEM; PROVIDING FOR THE
REPEAL OF ORDINANCES OR PARTS OF ORDINANCES IN
CONFLICT HEREWITH; PROVIDING FOR INCLUSION IN
THE CODE OF ORDINANCES OF THE CITY OF
SEBASTIAN; PROVIDING FOR SEVERABILITY; AND
PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, the City of Sebastian, Indian River County, Florida,
adopted the Police Officers' Retirement System (the "System") in
Ordinance No. 0-89-15; and
WHEREAS, the City Council has requested a determination from
the Internal Revenue Service that the System qualifies as tax
exempt under Section 401(a) of the Internal Revenue Code; and
WHEREAS, the Internal Revenue Service has requested that
certain amendments be made to the System as a condition to issuing
a favorable determination letter.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF SEBASTIAN, INDIAN RIVER COUNTY, FLORIDA, as follows:
Section 1. The following sentence shall be added to the
definition of "employee or police officer" contained in Section 2-
120 of the Code of Ordinances of the City of Sebastian:
"For purposes of this definition, 'full time'
means an average of forty (40) or more hours
per week, or at least two thousand eighty
(2,080) hours during any consecutive twelve
(12) month period."
Section 2. Section 2-120 of the Code of Ordinances of the
City of Sebastian is hereby amended by deleting the definition of
"members' contributions" and inserting the following definition in
lieu thereof:
"'Members' contributions' means amounts
deducted from a member's compensation on and
after October 1, 1989, pursuant to Section 2-
124(a) of this article, plus interest at the
rate of five and one-half percent (5%%) per
year, compounded annually."
Section 3. Subparagraph (d)(2) of Section 2-122 of the Code
of Ordinances of the City of Sebastian is hereby amended by
deleting said subparagraph in its entirety and inserting the
following provision in lieu thereof:
" (2) After becoming eligible for
retirement.. The designated beneficiary of any
member who dies after becoming eligible for
retirement shall be entitled to the benefits
otherwise payable to the deceased member at
early or normal retirement age. Such amount
shall be payable to said beneficiary on a
monthly basis for ten (10) years, or on such
other actuarial equivalent basis as provided
by the board."
Section 4. A new paragraph (d)(3) of Section 2-122 of the
Code of Ordinances of the City of Sebastian is hereby created to
read as follows:
" (3) Limitations. In the event the board
purchases life insurance contracts to provide
all or part of the death benefit provided
herein, the death benefit payable under any
such contract shall not exceed:
a. One hundred (100) times the
estimated normal monthly retirement income,
based on the assumption that the present rate
of compensation continues without change to
normal retirement date; or
b. Twice the annual rate of
compensation as of the deceased member's date
of death, or the single-sum value of the
accrued deferred retirement income (beginning
at normal retirement date) at the deceased
member's date of death, whichever is greatest.
In the event the.death benefit paid by a life
insurance company exceeds the limits set forth
the above, the excess of the death benefit over
the limit shall be paid to the fund."
Section 5. A new paragraph (f) shall be added to Section 2-
122 of the Code of Ordinances of the City of Sebastian to read as
follows:
"(f) Required distributions.
(1) Notwithstanding any provision in this
article to the contrary, a member's benefits
shall be distributed to him not later than the
member's Required Beginning Date. A member's
Required Beginning Date is the April 1st
following the close of the calendar year in
which the member attains age seventy and one-
half (70%). Alternatively, distributions to
a member must begin no later than the April 1st
as determined under the preceding sentence and
must be made over the life of the member (or
the lives of the member and the member's
designated beneficiary) or, if benefits are
paid in the form of a joint and survivor
annuity, the life expectancy of the member (or
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the life expectancies of the member and his
designated beneficiary) in accordance with
Federal Income Tax Regulations.
(2) Notwithstanding any provision in this
article to the contrary, distributions upon
the death of a member shall be made in
accordance with the following requirements and
shall otherwise comply with Section 401(a)(9)
of the Code and the regulations thereunder.
a. If it is determined, pursuant
to regulations, that the distribution of a
member's interest has begun, and the member
dies before his entire interest has been
distributed to him, the remaining portion of
such interest shall be distributed at least as
rapidly as under the method of distribution
selected by the member as of his date of death.
b. If a member dies before he has
begun to receive any distributions of his
interest in the retirement system or before
distributions are deemed to have begun pursuant
regulations, then his death benefit shall be
distributed to his beneficiaries in accordance
with the following rules:
(i) The entire death benefit
shall be distributed to the member's
beneficiaries by December 31st of the calendar
year in which the fifth (5th) anniversary of
the member's death occurs;
(ii) The five (5) year
distribution requirement of (i) above shall not
apply to any portion of the deceased member's
interest which is payable to or for the benefit
of a designated beneficiary. In such event,
such portion shall be distributed over the life
of such designated beneficiary (or over a
period not extending beyond the life expectancy
of such designated beneficiaries), provided
such distribution begins not later than
December 31st of the calendar year immediately
following the calendar year in which the member
died;
(iii) Notwithstanding the above,
in the event the member's spouse (determined
as of the date of the member's death) is his
designated beneficiary, the provisions of (ii)
above shall apply except that the requirement
that distributions commence within one (1) year
of the member's death shall not apply. In lieu
thereof, distributions must commence on or
before the later of:
(A) December 31st of the
calendar year immediately following the
calendar year in which the member died; or
(B) December 31st of the
calendar year in which the member would have
attained age seventy and one-half (70%). If
the surviving spouse dies before distributions
to such spouse begin, then the five (5) year
distribution requirement of this section shall
apply as if the spouse was the member.
(3) Distributions to a member and his
beneficiaries shall only be made in accordance
with the incidental death benefit requirements
of Section 401(a)(9)(G) of the Code and the
regulations thereunder."
Section 6. A new paragraph (g) shall be added to Section 2-
122 of the Code of Ordinances of the City of Sebastian to read as
follows:
"(g) Limitation of Benefits.
(1) The annual benefit otherwise payable
to a member at any time will not exceed the
maximum permissible amount. If the benefit
the member would otherwise accrue in a
limitation year would produce an annual benefit
in excess of the maximum permissible amount,
the rate of accrual will be reduced so that
the annual benefit will equal the maximum
permissible amount.
(2) The limitation in paragraph (1) above
is deemed satisfied if the annual benefit
payable to a member is not more than One
Thousand and 001/00 Dollars ($1,000.00)
multiplied by the member's number of years of
service or parts thereof (not to exceed ten
(10)) with the city.
(3) If the city maintains, or at any
maintained, one (1) or more qualified defined
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contribution plans covering any member in this
system, a welfare benefit fund, as defined in
Section 419(e) of the Code, or an individual
medical account as defined in Section 415(1)(2)
of the Code, the sum of the member's defined
contribution fraction (as defined in Section
415(e)(3) of the Code) and defined benefit
fraction (as defined in Section 415(e)(2) of
the Code) will not exceed 1.0 in any limitation
year. To the extent necessary to satisfy this
limitation, the city will reduce the member's
projected annual benefit under the system.
(4) For purposes of this Section, the
following terms shall have the following
meaning:
a. Annual benefit. A retirement
benefit under the system which is payable
annually in the form of a straight life
annui%y. Except as provided below, a benefit
payable in a form other than a straight life
annuity must be adjusted to an actuarial
equivalent straight life annuity before
applying the limitations of this paragraph.
The interest rate assumption used to determine
actuarial equivalents shall be the greater of
the interest rate specified in Section 2-120
of this article or five percent (5%). No
actuarial adjustment to the benefit is required
for:
(i) the value of a qualified
joint and survivor annuity,
(ii) the value of benefits that
are not directly related to retirement benefits
(such as the qualified disability benefit, pre-
retirement death benefits, and post-retirement
medical benefits), and
(iii) the value of post-
retirement cost of living increases made in
accordance with Section 415(d) of the Code and
Section 1.415-3(c)(2)(iii) of the Federal
Income Tax Regulations.
b. Compensation. Wages, salaries,
and fees for professional services and other
amounts received (without regard to whether or
not an amount is paid in cash) for personal
services actually rendered in the course of
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employment with the city to the extent that
the amounts are includable in gross income
(including, but not limited to, commissions
paid salesmen, compensation for services on
the basis of a percentage of profits, com-
missions on insurance premiums, tips, bonuses,
fringe benefits, reimbursements and expense
allowances) and excluding the following:
(i) city contributions to a plan
of deferred compensation which are not
includable in the member's gross income for
the taxable year in which contributed, or city
contributions under a simplified employee
pension plan to the extent such contributions
are deductible by the member, or any distri-
butions from a plan of deferred compensation;
(ii) amounts realized from the
exercise of a non-qualified stock option, or
when restricted stock (or property) held by a
member either becomes freely transferable or
is no longer subject to a substantial risk of
forfeiture;
(iii) amounts realized from the
sale, exchange, or other disposition of stock
acquired under a qualified stock option; and
(iv) other amounts which
received special tax benefits, or contribu-
tions made by the city (whether or not under
a salary reduction agreement) towards the
purchase of an annuity described in Section
403(b) of the Code (whether or not the amounts
are actually excludable from the gross income
of the member).
c. Defined benefit dollar
limitation. Ninety Thousand and 00/100 Dollars
($90,000.00). Effective on January 1, 1989,
and each January thereafter, the Ninety
Thousand and 00/100 Dollars ($90,000.00)
limitation above will be automatically adjusted
by multiplying such limit by the cost of living
adjustment factor prescribed by the Secretary
of the Treasury under Section 415(d) of the
Code in such manner as the Secretary shall
prescribe. The new limitation will apply to
limitation years ending within the calendar
year of the date of the adjustment.
d. Highest average compensation.
The average compensation for the three (3)
consecutive years of service with the city that
produces the highest average.
year.
Limitation year. The fiscal
Maximum .permissible amount.
(i) The lesser of the defined
benefit dollar limitation or 100 percent (100%)
of the member's highest average compensation.
(ii) If the member has less than
ten (10) years of employment with the city,
the defined benefit dollar limitation is
reduced by one-tenth (1/10) for each year of
employment (or part thereof) less than ten
(10). To the extent provided in regulations
or in other guidance issued by the Internal
Revenue Service, the preceding sentence shall
be applied separately with respect to each
change in the benefit structure of the system.
If a member has less than ten (10) years of
service with the city, the compensation
limitation is reduced by one-tenth (1/10) for
each year of service (or part thereof) less
than ten (10).
(iii) If the annual benefit of
the member commences before age sixty-two (62),
the defined benefit dollar limitation shall be
determined in accordance with regulations
prescribed by the Secretary of the Treasury,
by reducing the limitation so that such
limitation (as so reduced) equals an annual
benefit (beginning when such retirement benefit
begins) which is equivalent to the defined
benefit dollar limitation beginning at age
sixty-two (62). The interest rate assumption
used to determine actuarial equivalents shall
be the greater of the interest rate specified
in Section 2-120 of this article or five
percent (5%). The reduction under this
subparagraph shall not reduce the defined
benefit dollar limitation below the following:
(A) Seventy-Five Thousand
and 00/100 Dollars ($75,000.00) if the benefit
begins at or after age fifty-five (55), or
(B) If the benefit begins
before age fifty-five (55), the equivalent of
the Seventy-five Thousand and 00/100 Dollars
($75,000.00) limitation for age fifty-five
(55).
(iv) If the annual benefit of
a member commences after age sixty-five (65),
the defined benefit dollar limitation shall be
adjusted so that it is the actuarial equivalent
of an annual benefit of such dollar limitation
beginning at age sixty-five (65)."
Section 7. Paragraph (a) of Section 2-124 of the Code of
Ordinances of the City of Sebastian is hereby amended by deleting
paragraph (a) in its entirety and inserting the following provision
in lieu thereof:
"(a) Member contributions.
(1) Amount. Effective October 1, 1989,
the city shall deduct from the compensation of
each member an amount equal to five percent
(5%) of such member's compensation by way of
a payroll deduction which shall be collected
and deposited no less frequently than monthly.
Such deductions are hereby designated as mem-
bers' contributions; provided, however, that
although designated as members' contributions,
such contributions shall be paid by the city
through a reduction in each member's current
salary and members may not elect to receive
such contributions directly."
Section 8. A new paragraph (f) shall be added to Section 2-
127 of the Code of. Ordinances of the City of Sebastian to read as
follows:
"(f) Except as provided above and otherwise
specifically permitted by law, it shall be
impossible by operation of this article, by
termination, by power of revocation or
amendment, by the happening of any contingency,
by collateral arrangement or by any other
means, for any part of the corpus or income of
the fund maintained pursuant to this article
or any funds contributed thereto to be used
for, or diverted to, purposes other than the
exclusive benefit of members, retired members,
or their beneficiaries."
Section 9. A new paragraph (g) shall be added to Section
127 of the Code of Ordinances of the City of Sebastian to read as
follows:
"(g) Limitations of benefits on
termination.
early
(1) For fiscal years beginning before
January 1, 1991, city contributions on behalf
of any one of the twenty-five (25) highest paid
employees at the time the system is established
and whose anticipated annual benefit exceeds
Fifteen Hundred and 00/100 Dollars ($1,500.00)
will be restricted as provided in paragraph (2)
below upon the occurrence of the following
conditions:
a. The system is terminated within
ten (10) years after its establishment,
b. The benefits of such highest
paid employee become payable within ten (10)
years after the establishment of the system,
or
c. If Section 412 of the Code
(without regard to Section 412(h)(2)) does not
apply to this system, the benefits of such
employee become payable after the system has
been in effect for ten (10) years, and the full
current costs of the system for the first ten
(10) years have not been funded.
(2) City contributions which may be used
for the benefit of an employee described in
paragraph (1) above shall not exceed the
greater of Twenty Thousand and 00/100 Dollars
($20,000.00), or twenty percent (20%) of the
first Fifty Thousand and 00/100 Dollars
($50,000.00) of the employee's compensation
multiplied by the number of years between the
date of the establishment of the system and:
a. If (1)a applies, the date of
the termination of the system,
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b. If (1)b applies, the date the
benefits become payable,
c. If (1)c applies, the date of
the failure to meet the full current costs.
(3) If the system is amended so as to
increase the benefit actually payable in the
event of the subsequent termination of the
system, or the subsequent discontinuance of
contributions thereunder, then the provisions
of the above paragraphs shall be applied to the
system as so changed as if it were a new system
established on the date of the change. The
original group of twenty-five (25) employees
(as described in (1) above) will continue to
have the limitations in paragraph (2) apply as
if the system had not been changed. The
restrictions relating to the change of system
should apply to benefits or funds for each of
the twenty-five (25) highest paid employees on
the effective date of the change except that
such restrictions need not apply with respect
to any employee in this group for whom the
normal annual pension or annuity provided by
city contributions prior to that date and
during the ensuing ten (10) years, based on
his rate of compensation on that date, could
not exceed Fifteen Hundred and 00/100 Dollars
($1,500.00).
(4) The employer contributions which may
be used for the benefit of the new group of
twenty-five (25) employees will be limited to
the greater of:
a. City contributions (or funds
attributable thereto) which would have been
applied to provide the benefits for the
employee if the previous system had been
continued without change;
b. Twenty Thousand
Dollars ($20,000.00); or
and 00/100
c. The sum of
(i) City contributions (or
funds attributable thereto) which would have
been applied to provide benefits for the
employee under the previous system if it had
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been terminated the day before the effective
date of change, and
(ii) An amount computed by
multiplying the number of years for which the
current costs of the system after that date are
met by
(A) twenty percent (20%)
of his annual compensation, or
(B) Ten Thousand and 00/100
Dollars ($10,000.00), whichever is smaller.
(5) Notwithstanding the above
limitations, the following limitations will
apply if they would result in a greater amount
of city contributions to be used for the
benefit of the restricted employee:
a. In the case of a substantial
owner (as defined in Section 4022(b)(5) of
ERISA), a dollar amount which equals the
present value of the benefit guaranteed for
such employee under Section 4022 of ERISA, or
if the system has not terminated, the present
value of the benefit that would be guaranteed
if the system terminated on the date the
benefit commences, determined in accordance
with regulations of the Pension Benefit
Guaranty Corporation (PBGC); and
b. In the case of the other
restricted employees, a dollar amount which
equals the present value of the maximum benefit
described in Section 4022(b)(3)(B) of ERISA
(determined on the earlier of the date the
system terminates or the date benefits
commence, and determined in accordance with
regulations of the PBGC) without regard to any
other limitations in Section 4022 of ERISA.
(6) If, as of the date the system
terminates, the value of the fund is not less
than the present value of all accrued benefits
(whether or not non-forfeitable), distributions
of assets to each member equal to the present
value of that member's accrued benefit will not
be discriminatory if the formula for computing
benefits as of the date of termination is not
discriminatory. All present values and the
value of plan assets will be computed using an
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assumption satisfying Section 4044 of ERISA.
Upon the occurrence of the above situation,
the amount by which the value of the fund
exceeds the present value of accrued benefits
(whether or not non-forfeitable) will revert
to the general fund of the city.
(7) For fiscal years beginning on or
after January 1, 1991, benefits distributed to
any of the twenty-five (25) most highly
compensated active and former highly
compensated employees are restricted such that
the annual payments are no greater than an
amount equal to the payment that would be made
on behalf of the employee under a single life
annuity that is the actuarial equivalent of the
sum of the employee's accrued benefit and the
employee's other benefits under the plan. The
preceding provision shall not apply if:
a. After payment of the benefit to
an employee described in the preceding
provision, the value of the fund equals or
exceeds one hundred ten percent (110%) of the
value of current liabilities, as defined in
Section 412(1)(7) of the Code, or
(b) The value of the benefits for
an employee described above is less than one
percent (1%) of the value of current
liabilities.
(8) For purposes of this Section, benefit
includes loans in excess of the amount set
forth in Section 72(p)(2)(A) of the Code, any
periodic income, any withdrawal values payable
to a living employee, and any death benefits
not provided for by insurance on the employee's
life."
Section 10. CONFLICT. Ail ordinances or parts of ordinances
in conflict herewith are hereby repealed.
Section 11. CODIFICATION. It is the intention of the City
Council of the City of Sebastian, Indian River County, Florida,
and it is hereby provided that the provisions of this Ordinance
shall become and be made a part of the Code of Ordinances of the
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City of Sebastian, Florida; that the sections of this Ordinance may
be renumbered or relettered to accomplish such intention; and the
word "Ordinance" may be changed to "Section, .... Article" or other
appropriate designations.
Section 12. SEVERABILITY. In the event a court of competent
jurisdiction shall hold or determine that any part of this
Ordinance is invalid or unconstitutional, the remainder of the
Ordinance shall not be affected and it shall be presumed that the
City Council of the City of Sebastian did not intend to enact such
invalid or unconstitutional provision. It shall further be assumed
that the City Council would have enacted the remainder of this
Ordinance without such invalid and unconstitutional provision,
thereby causing said remainder to remain in full force and effect.
Section 13. EFFECTIVE DATE. This Ordinance shall become
effective immediately upon its adoption.
The foregoing Ordinance was moved for adoption by Councilman
. ~~~.~ The motion was seconded by Councilman
and, upon being put into a vote, the vote
was as follows:
Mayor W.E. Conyers
Vice-Mayor Frank Oberbeck
Councilman Peter R. Holyk
Councilman Lonnie R. Powell
Councilman George R. Reid
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adopted this /f~ day of
The Mayor thereupon declared this Ordinance duly passed and
~~ ,1992.
Kathryn ~. O'Hal~oran,
ACMC/AAE,'-'City Clerk
( SEAL )
I HEREBY CERTIFY that a notice of public hearing on this
Ordinance were published in the Vero Beach Press Journal as
required by State Statute, that the notice requirements of Section
166.041(3)(c)2. of Florida Statutes were complied with, that one
public nearing was held on this Ordinance at 7:00 p.m. on the
//~__-~ day of ~~ , 1992, and that following said
l~'c hearing this ~rdinance was passed by the City Council.
~athr~. O'Halloran,
CMC/~E, City Clerk
~_~~.~m
A and Content:
C~rles Ian Nash,
City Attorney
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