§ 24.1408 — Compliance with Applicable Provisions of the Internal Revenue Code

§24.1408 Compliance with Applicable Provisions of the Internal Revenue Code

(a) DROP is not intended to jeopardize the tax-qualified status of the Retirement System under the rules and regulations of the Internal Revenue Service. The Board has the authority under Division 9 of this Article to adopt rules and regulations to assure that DROP complies with applicable Federal laws and regulations. The Board’s rules and regulations will have the same force and effect as a duly enacted ordinance. (b) Despite any other provision in this Article, benefits provided under this Division are subject to the requirements of the Internal Revenue Code and regulations issued thereunder for the Retirement System to remain a tax qualified retirement plan, including the following: (1) The limitations of Section 415 of the Code relating to the amount of benefits that can be paid. In this regard, the interest rate that will be used for testing benefits under the limits of Section 415 and DROP benefits will be the greater of the following: (A) 5%, or (B) the interest rate the Board is using to credit DROP Participation Accounts on the date the Member is first eligible to receive distributions from his or her DROP Participation Account. (2) The limitations of Section 401(a)(17) of the Code relating to the amount of compensation that can be taken into account for benefit accrual. (3) The limitations of Section 401(a)(9) relating to the time that benefit payments must begin. (4) The rules of Section 401(a)(31) relating to the rollover of benefits. (5) The limitations of Section 401(a)(25) relating to “definitely determinable” benefits.

(Amended 6–18–2002 by O–19071 N.S.)