§ 4.36.715 — Compliance with Internal Revenue Code

4.36.715 - Compliance with Internal Revenue Code

A. In general. This Chapter 4.36 shall be administered in a manner to comply with the applicable requirements of 26 U.S.C. § 401(a), and the Board is authorized to promulgate rules as it deems necessary to effectuate such compliance. B. Compliance with Code § 401(a)(2) - Exclusive benefit. See Section 4.36.705. C. Compliance with Code § 401(a)(9) - required minimum distributions 1. The requirements of this Section 4.36.715 will take precedence over any inconsistent provisions of this Chapter 4.36. 2. All benefits and distributions required under this Section 4.36.715 will be determined and paid in accordance with a reasonable and good faith interpretation of the requirements of Code § 401(a)(9) and the regulations thereunder, as applicable to a governmental plan within the meaning of Code § 414(d). 3. Distributions to a member and the member's beneficiaries under this Section 4.36.715 shall only be made in accordance with the incidental death benefit requirements of IRC § 401(a)(9)(G) and the Treasury Regulations thereunder. 4. The Board will begin distributions of a member's retirement benefits under this Chapter 4.36 no later than the member's "required beginning date." A member's "required beginning date" is the later of the April 1 following the close of the calendar year in which the member leaves City employment or the April 1 following the close of the calendar year in which the member attains the age of 70 1/2. 5. If the member dies before distributions begin, the member's retirement benefits must begin to be distributed, no later than as follows: i. If the member's surviving spouse is the member's sole designated beneficiary, then distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the member died, or by December 31 of the calendar year in which the member would have attained age 70 1/2 , if later. ii. If the member's surviving spouse is not the member's sole designated beneficiary, then distributions to the designated beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the member died. iii. If there is no designated beneficiary as of September 30 of the year following the year of the member's death, the member's entire interest will be distributed by December 31 of the calendar year containing the fifth anniversary of the member's death. iv. If the member's surviving spouse is the member's sole designated beneficiary and the surviving spouse dies after the member but before distributions to the surviving spouse begin, this subsection 4.36.715.C.5.iv (rather than subsection 4.36.715.C.5.i) will apply as if the surviving spouse were the member. For purposes of this subsection 4.36.715.C.5, unless this subsection 4.36.715.C.5.iv applies, distributions are considered to begin on the member's required beginning date. If this subsection 4.36.715.C.5.iv applies, distributions are considered to begin on the date distributions are required to begin to the surviving spouse under subsection 4.36.715.C.5.i. If distributions under an annuity purchased from an insurance company irrevocably commence to the member before the member's required beginning date or to the member's surviving spouse before the date distributions are required to begin to the surviving spouse, the date distributions are considered to begin is the date distributions actually commence. If the member's interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of Code § 401(a)(9) and the Treasury Regulations thereunder. D. Compliance with Code § 401(a)(17) - Compensation limit. The compensation limit is addressed under the definition of "Compensation" in Section 4.36.040. E. Compliance with Code § 401(a)(31) - Eligible rollover distributions. See Section 4.36.670. F. Compliance with Code § 414(p) - Qualified Domestic Relations Orders (QDRO). The treatment of QDROs under this Chapter 4.36 is described under Section 4.36.630. G. Compliance with Code § 415. See subsection 4.36.640.A. H. Compliance with the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) and the Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART Act) 1. HEART Act Death Benefits. In the case of a death occurring on or after January 1, 2007, if a member dies while performing qualified military service (as defined in Code § 414(u)(5)), the member's beneficiary is entitled to any additional benefits (other than benefit accruals relating to the period of qualified military service) provided under this Chapter 4.36 as if the member had resumed employment and then terminated employment on account of death. Moreover, the member's qualified military service will count as service for vesting purposes, as though the member had resumed employment under USERRA immediately prior to the member's death. 2. Effective January 1, 2009, to the extent required by Code §§ 414(u)(12) and 3401(h), any member receiving a differential wage payment (as defined under Code § 3401(h)(2)) from an employer will be treated as employed by that employer, and the differential wage payment will be treated as compensation for purposes of applying the limits on annual additions under Code § 415(c). This provision shall be applied to all similarly situated individuals in a reasonably equivalent manner.

(Ord. 125109, § 54, 2016; Ord. 124574, § 51, 2014; Ord. 124392, § 3, 2013; Ord. 119590 § 1, 1999: Ord. 117978 § 3, 1995.)