AN AMENDED DEFERRED RETIREMENT OPTION PLAN, DROP II, FOR THE MEMBERS OF THE DENVER EMPLOYEES RETIREMENT PLAN

Denver Revised Municipal Code ch. 18, art. XII, div. 4

in effect

Denver Revised Municipal Code § 18-430 Generally.

Sec. 18-430. - Generally. (a) Subject to the conditions and provisions stated in this article, effective May 1, 2003, in lieu of immediate termination of employment and receipt of a normal retirement benefit, a member may elect to become a participant in the new five-year deferred retirement option plan (DROP II). The member may continue employment up to five (5) years and participate in the DROP II and have the member's retirement benefit paid into the DROP II account. As a condition of entry into the DROP II the member shall irrevocably agree to terminate employment with the employer at the end of the participation in DROP II. (b) The board of trustees of the Denver Employees Retirement Plan shall develop and establish DROP II for eligible members of the Denver Employees Retirement Plan. The board may develop, adopt, and establish rules, regulations and procedures to efficiently facilitate the administration of DROP II. (c) DROP II permits active members who have never received a retirement benefit under the plan provisions and who are eligible for a normal retirement benefit under the plan to continue active employment (but not be an active member of the plan for the DROP II period) and participate in DROP II. A member who has participated in DROP under division 3, article XII, and chapter 18 shall be ineligible to participate in DROP II set forth under this section. (d) A participant of DROP II shall continue to be an active employee for all other purposes but shall not be an active member of the plan for the period in DROP II (and shall not directly or constructively receive any retirement benefits, which shall include any and all benefits provided under division 2 of this article). Further, the participant shall earn no additional service credits or benefits under the plan during the member's participation in DROP II. (Ord. No. 960-05, § 1, 12-19-05)

Denver Revised Municipal Code § 18-430.1 Definitions.

Sec. 18-430.1. - Definitions. (a) Definitions and terms used in this division are elaborated below: (1) Active employment shall mean the period when a person is employed part-time or full-time but shall exclude any person employed on a seasonal, contractual, or on-call basis or any person who is retired from the plan and is rehired by the employer. Active employment shall also mean the period when a person is on an approved paid leave of absence. (2) Beneficiary shall mean the person or persons designated in writing by the DROP II participant (if no one is designated, then the estate of the participant). (3) Board shall mean the retirement board, which serves as the board of trustees for the Denver Employees Retirement Plan as described in division 2 of this article. (4) DROP II account shall mean the participant's individual new five-year deferred-retirement-option-plan account designed under this division and administered by the plan. (5) FMLA shall mean the Family and Medical Leave Act of 1993. (6) Internal Revenue Code shall mean the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder. (7) Member shall mean an active member of the Denver Employees Retirement Plan as described in division 2 of this article. It shall exclude a retired member who is receiving any retirement benefit under the plan provisions. It shall also exclude any group of employees who may be re-employed and receiving a retirement benefit. (8) Normal retirement shall mean retirement at the earlier of the age of sixty-five (65) or the first day of any calendar month after which a member has attained his or her fifty-fifth (55th) birthday and where the member's age and credited service, while an active member, are or were equal to the sum of seventy-five (75). The rule of 75 means that age after which the member has attained his or her fifty-fifth (55th) birthday where he or she can retire without a reduction in his/her retirement benefit as would have been required for an early retirement. The rule of 75 is determined by adding the age of the employee while employed with the employer to the years of service as an employee with the employer. If the total equals or exceeds the sum of seventy-five (75) then the requirements for the rule of 75 have been met. The rule of 75 must be attained by the member prior to termination of employment. (9) Participant shall mean a person enrolled in DROP II and having a DROP II account. (10) Plan or retirement plan shall mean the Denver Employees Retirement Plan as described in division 2 of this article. (11) Retiree shall mean a participant who terminates DROP under either division 3 of this article or DROP II and is eligible for a distribution of retirement benefits under the plan, DROP, or DROP II. (12) Retirement benefit or benefits shall mean any benefit payment to retired members, qualified spouses, beneficiaries, or dependents as provided under the plan according to division 2 of this article. (13) USERRA shall mean Uniformed Services Employment and Re-Employment Rights Act of 1994. (b) Any other phrase or term not defined or elaborated above shall be explained or interpreted by the board in its rules, regulations, policies and procedures adopted to administer DROP II. The plan administrators shall maintain discretionary authority to interpret ambiguous terms and make factual determinations regarding the administration of DROP II. (Ord. No. 960-05, § 1, 12-19-05)

Denver Revised Municipal Code § 18-430.2 Provisions.

Sec. 18-430.2. - Provisions. (a) The duration of participation in DROP II shall be for a maximum of five (5) years. As a condition precedent to participation in DROP II, the participant shall irrevocably elect in writing on a form prescribed by the board to enter DROP II. The participant shall also acknowledge that no disbursement of any DROP II funds can occur absent the retirement, death, or termination of employment of the participant. The plan shall provide a copy of such election to the employer. As a further condition to participation in DROP II, applicants must agree with the employer in writing to terminate their employment at the end of their participation in DROP II. Applicants shall provide a conformed copy of the agreement to the plan. The agreement shall be irrevocable and may not be amended, modified, or cancelled in the absence of an ordinance superseding this provision. (b) The member's retirement benefit shall be calculated at the entry of DROP II. The DROP II benefit shall be a monthly amount equal to the member's normal retirement benefit (based on the formula used in the calculation of a member's retirement benefit under division 2 of this article). This amount shall be credited monthly to the participant's DROP II account. (c) The participant's account shall be adjusted for any cost of living adjustments (COLAs) as authorized by the board (in compliance with the rules under division 2 of this article). Until December 31, 2021, the interest on the DROP II account shall accrue at the plan's investment earnings rate provided that it shall be not less than three (3) percent per annum and not more than the plan's then current annual, actuarial assumption for the rate of return. Beginning on January 1, 2022, interest on the DROP II account shall accrue at a rate set annually by the retirement board, with a minimum rate of one (1) percent, not to exceed three (3) percent, per annum, compounded annually as of June 30 of each year. Such accruals to the DROP II account shall continue until the entire balance of the DROP II account is distributed. (d) At DROP II entry all calculations of vacation and sick leave payoff amounts shall be made in compliance with sections 18-124 and 18-135, respectively, of the Code and in accordance with all other applicable ordinances, policies and rules of the employer. At the participant's exit of DROP II and termination of employment, the member shall be paid for the vacation and sick leave hours accrued during the DROP II period in compliance with sections 18-124 and 18-135, respectively, of the Code. (e) If the participant's active employment during DROP II period is interrupted by military service, a disability, leave under FMLA, or any other paid or unpaid leave of absences, or if a participant terminates employment, but within sixty (60) days, returns to a covered position, then upon returning to active employment (provided that the participant has not received any distribution from the DROP II account, or received any retirement benefits under the plan), the employee shall immediately be eligible for participation in the DROP II for the balance of the five-year period. Other than the above-mentioned types of interruptions of participation, the five-year period shall continue to run in all other cases. The participant must be an active employee in pay status for the DROP II account to be credited with the amounts mentioned in this section. In the case of an interruption due to a period of military service, USERRA and its provisions shall govern the participant's rights, eligibility and credits to DROP II account. (f) A participant's election to enter DROP II is irrevocable and may be terminated only upon the death of the participant, termination of employment with the employer, or the end of the five-year DROP II period. (g) If the participant is on a paid or unpaid leave of absence but maintains an employer-employee relationship, there can be no disbursement from the DROP II account. The participant upon returning to active employment shall continue to participate in DROP II. However, if after the leave of absence, the participant terminates employment and applies for a retirement benefit, the participant may terminate the DROP II agreement and after sixty (60) days receive a distribution from the DROP II account. (h) The total amount that constitutes the DROP II account and eligible for distribution shall be the accumulated sum of monthly credits of the member's normal retirement benefit as calculated at DROP II entry; authorized COLAs (if and when applicable); and the interest accrued on such amounts. The amount of the participant's normal retirement benefit shall cease being credited to DROP II account after the five-year DROP II period. However, interest on the account as described in (c) of this section shall continue to accrue to the participant's DROP II account until the entire balance is distributed. (i) The board is authorized to charge the DROP II accounts for administrative costs and charges. (j) After terminating employment and exiting DROP II, a participant may be rehired by the employer. If rehired within sixty (60) days, a participant may elect, if the participant has not received a distribution from the DROP II account or a retirement benefit from the plan, to continue in DROP II for the balance of the five-year period, or to continue in the covered service and accrue service credits as a member of the plan. (k) Distributions from DROP II accounts may commence after the death of the participant or sixty (60) days following termination of employment, whichever occurs first. (l) At the end of the DROP II period, the participant must terminate employment with the employer. (Ord. No. 960-05, § 1, 12-19-05; Ord. No. 691-20, § 2, 7-19-21)

Denver Revised Municipal Code § 18-430.3 Distributions.

Sec. 18-430.3. - Distributions. (a) A participant in DROP II shall be entitled to select one (1) of the following methods of distribution by executing in writing a DROP II selection form prescribed by the board: (1) Deferral of any payment(s) from the account. If a deferral of payment(s) is selected, the participant may select one (1) of the following distribution methods at any time. Distributions may start no earlier than sixty (60) days following employment termination and must start no later than April 1 following the year in which the participant attains the age of seventy and one half (70½). (2) A lump-sum distribution of the entire account balance. (3) Monthly payments of a designated amount until the entire balance of the DROP II account have been distributed. The designated monthly payment amount may be adjusted annually. (4) Monthly payments for a designated period of years. An amount shall be calculated for this periodic payment so that the entire balance in the participant's DROP II account will have been distributed by the end of the period selected by the participant. The designated number of payments may be recalculated annually. (5) Initial minimum required distribution. The amount calculated to be the participant's monthly payment shall be based on the participant's current DROP II account balance. This minimum distribution is based on the participant's life expectancy (and the life expectancy of the participant's designated beneficiary, if applicable). (6) Combination of a lump sum and monthly payments by designating an initial lump sum payment of a specified amount and a specified monthly amount until the balance of DROP II account has been entirely distributed to the participant. The specified monthly amount may be adjusted annually. (7) The participant may rollover all or certain portions of eligible rollover distributions, as defined in the Internal Revenue Code, from DROP II to an individual retirement account (IRA) that qualifies as an IRA under the Internal Revenue Code or to any other eligible retirement plan available to receive rollovers under the Internal Revenue Code as set forth in section 18-416 of this article. (8) Any other plan approved method of distribution that is consistent with the requirements of the Internal Revenue Code. (b) Regardless of the form of payment the participant chooses, the minimum distribution amount will be determined and payment made in accordance with section 401(a)(9) of the Internal Revenue Code and the corresponding regulations. If the retiree has not selected a distribution method prior to reaching the age of seventy and one half (70½), the retiree shall be deemed to have elected the lump-sum payment method. (Ord. No. 960-05, § 1, 12-19-05)

Denver Revised Municipal Code § 18-430.4 Beneficiary designations.

Sec. 18-430.4. - Beneficiary designations. (a) The participant shall designate one (1) individual as a beneficiary to receive benefits upon the death of the participant. The participant may designate multiple beneficiaries or a trust as beneficiary only to receive a lump-sum distribution of the entire DROP II account. If the participant designates multiple beneficiaries to receive a lump-sum distribution, the member's DROP II account shall cease being credited interest in accordance with subsection 18-430.2(c) upon the member's death. (b) If the participant dies with a DROP II account balance then, except as limited in (a) of this section, the designated beneficiary may receive the participant's DROP II distribution in accordance with any of the options under this division. If, however, the participant dies during DROP II and has not designated a beneficiary or the beneficiary predeceases the participant, the DROP II benefit shall be paid in one (1) lump sum to the participant's estate. (Ord. No. 960-05, § 1, 12-19-05; Ord. No. 350-11, § 15, 6-20-11)

Denver Revised Municipal Code § 18-430.5 Assignment, alienation, and legal process.

Sec. 18-430.5. - Assignment, alienation, and legal process. Except as regarding plan approved domestic relations orders as more specifically set forth in section 18-418 of this article and except for law judicially determined to supersede this section, members of DROP II and their beneficiaries shall be restrained from selling, assigning, or otherwise alienating their benefit under DROP II. The benefits from DROP II shall not at any time be subject to the claims of creditors or subject to payment or execution upon judgment for the liabilities or torts of said participants and their beneficiaries. The DROP II benefits of participants and their beneficiaries shall not be liable or subject to attachment, garnishment, execution, qualified domestic relations orders, other domestic relations orders, or other legal process. This provision is hereby found, determined and declared to be a matter strictly of local and municipal concern to the city. (Ord. No. 960-05, § 1, 12-19-05)

Denver Revised Municipal Code § 18-430.6 Miscellaneous.

Sec. 18-430.6. - Miscellaneous. (a) Members of the board and the board, itself, shall not incur any liability, individually or on behalf of other individuals, for any act or omission made in good faith in relation to DROP II or funds of DROP II. (b) The DROP II established by this section is subject to a determination by the Internal Revenue Service that it is a qualified pension plan or part of such a plan. The provisions of the Internal Revenue Code and regulations promulgated thereunder shall supersede any inconsistent provisions of DROP II. (c) The plan year is the calendar year. (d) The benefits payable from DROP II accounts are subject to the applicable limitations on benefits imposed by the Internal Revenue Code section 415(b), which is incorporated herein by reference. Deposits to DROP II accounts are not considered contributions to a defined contribution plan subject to the limits of the Internal Revenue Code section 415(c). (e) The board may in its sole discretion, based on actuarial factors, recommend at any time to the employer that DROP II be terminated. But no participant or beneficiary of DROP II then currently enrolled shall be divested of any rights under DROP II if DROP II is terminated and this division is repealed. (f) Annually, the board shall seek a report from its actuary to ascertain the actuarial soundness of DROP II. Based on this annual report the board may recommend to the city council a termination or modification of DROP II by enactment of ordinance. (Ord. No. 960-05, § 1, 12-19-05)

Denver Revised Municipal Code § 18-430.7 Termination of DROP II.

Sec. 18-430.7. - Termination of DROP II. (a) Termination: Effective from and after September 1, 2003, no member shall enter the DROP II. However, those members who are eligible for a normal retirement benefit (under division 2 of this article) on or before August 31, 2003 shall be permitted to enter and participate in the DROP II if application is made before September 1, 2003. (b) Terms: Except as modified and amended under this section, the terms and conditions of the DROP II as set forth in division 4, article XII, chapter 18, of the Code shall remain and continue in effect. The participation, benefits, rights and privileges of the participants in the DROP II shall be governed in accordance with the terms and provisions set forth in this division. Unless amended further, those terms and conditions are hereby ratified. (c) Notice: Immediately following the enactment into law of this ordinance, the Denver Employees Retirement Plan shall provide to all active members of the plan, adequate and reasonable notice that there shall be no new entrants into the DROP II from and after September 1, 2003. (Ord. No. 960-05, § 1, 12-19-05)

Source: City and County of Denver, Revised Municipal Code and Charter (Municode Library, library.municode.com)URL: https://library.municode.com/co/denver/codes/code_of_ordinances?nodeId=TITIIREMUCO_CH18EMOFPABE_ARTXIIRE_DIV4ANAMDEREOPPLDRIIMEDEEMREPLFetched: 10/27/2026