Alternate forms of payment options—Traditional Retirement Plan.
Ann Arbor City Code § 1:559
in effect1:559. - Alternate forms of payment options—Traditional Retirement Plan.
(1) Prior to the effective date of the Member's Normal, Early, Disability, or Deferred Vested Retirement, but not thereafter, a Member may, in lieu of being paid a straight life Retirement Allowance for his/her life pursuant to section 1:557(1), elect to receive the Actuarial Equivalent of the straight life Retirement Allowance, computed as of the effective date of his Retirement, in the form of a reduced Retirement Allowance Payment Option as described under Options I, II, III, IV or V below.
Option I—Modified Cash Refund. A Retirant shall be paid a reduced Retirement Allowance for life with the provision that upon the Retirant's death, the difference, if any, between the Retirant's Accumulated Contributions at the time of Retirement and the aggregate amount of cash refund annuity payments (as defined below) made shall be paid to such person or persons as he/she shall have nominated by written designation duly executed and filed with the Board. If no such designated person survives the Retirant, then such difference, if any, shall be paid to his or her legal representatives. As used in this Option, the term "annuity payments" means the portion of the Retirant's Retirement Allowance derived from the Retirant's Accumulated Contributions at the time of Retirement, as determined by the actuary.
Option II—100% Survivor. A Retirant shall be paid a reduced Retirement Allowance for life with the provision that upon the death of a Retirant, the reduced Retirement Allowance shall be continued throughout the life of and paid to such person as the Retirant shall have nominated by written designation duly executed and filed with the Board prior to the effective date of Retirement. If the nominated survivor Beneficiary dies prior to the Retirant, the amount of the Retirant's monthly Retirement Allowance shall revert to the straight life Retirement Allowance amount described in (1) above and shall be paid to the Retirant for the remainder of his life. If both the Retirant and Beneficiary die before receiving an aggregate amount of Retirement Allowance payments equal to the Member's Accumulated Contributions at Retirement, as reduced by any payment under section 1:559(2), the difference, if any, between said Retirant's Accumulated Contributions and the aggregate amount of Retirement Allowance paid, shall be paid from the Pension Reserve Fund to the legal representative of the Retirant or Beneficiary, whomever died last.
Option III—50% Survivor. A Retirant shall be paid a reduced Retirement Allowance for life with the provision that upon the death of a Retirant, ½ the reduced Retirement Allowance shall be continued throughout the life of and paid to such person as the Retirant shall have nominated by written designation duly executed and filed with the Board prior to the effective date of Retirement. If the nominated survivor Beneficiary dies prior to the Retirant, the amount of the Retirant's monthly Retirement Allowance shall revert to the straight life Retirement Allowance amount described in (1) above and shall be paid to the Retirant for the remainder of his life. If both the Retirant and Beneficiary die before receiving an aggregate amount of Retirement Allowance payments equal to the Member's Accumulated Contributions at Retirement, as reduced by any payment under section 1:559(2), the difference, if any, between said Retirant's Accumulated Contributions and the aggregate amount of Retirement Allowance paid, shall be paid from the Pension Reserve Fund to the legal representative of the Retirant or Beneficiary, whomever died last.
Option IV—Period Certain of 60, 120 or 180 Monthly Payments. This provision shall apply to Members of the Retirement System who commence to receive a Retirement Allowance on or after February 1, 2011. A Retirant shall be paid a reduced Retirement Allowance payable for life with the provision that upon the Retirant's death before receiving 60, 120 or 180 monthly Retirement Allowance payments as so elected by the Retirant, the monthly payment shall be continued to the Beneficiary or Beneficiaries in equal shares (including any contingent Beneficiary or Beneficiaries after the death of the first named survivor Beneficiary) as the Retirant shall have designated on a form and filed with the Board of Trustees until a total of 60, 120 or 180 monthly payments have been made. Should the death of the Retirant and all designated Beneficiaries occur before the period certain number of payments elected by the Retirant have been made, the actuarial present value of the remaining period certain payments shall be paid in a lump sum to the legal representative of the last to survive of the Retirant and the named Beneficiary, or if there shall be no such legal representative duly appointed and qualified within 6 months of the date of death of such last survivor, then such persons as, at the date of death of such last survivor, would be entitled to share in the distribution of such last survivor's estate under the provisions of the statute governing intestate succession, then in force and effect in the State of Michigan.
Option V—Social Security Adjustment Option. A General City Member who retires prior to the age the General City Member becomes entitled to full social security benefits may elect to be paid a straight life Retirement Allowance actuarially equated to provide an increased Retirement Allowance payable to the aforementioned age and a reduced Retirement Allowance thereafter. The Retirant's increased Retirement Allowance, payable to such age, shall approximate the sum of the reduced Retirement Allowance to be payable after that age, and the primary social security benefits to which the Retirant will be entitled.
If a Retirant receiving a reduced Retirement Allowance under Option II or Option III is subsequently divorced from the Spouse who is the designated survivor Beneficiary, the election of a reduced Retirement Allowance form of payment shall be considered void by the Retirement System if the judgment of divorce, award, or order of the court, or an amended judgment of divorce or award or order of the court provides that the election of a reduced Retirement Allowance form of payment under Option II or Option III is to be considered void by the Retirement System and the Retirant provides a certified copy of the judgment of divorce or award or order of the court, or an amended judgment of divorce or award or order of the court, to the Retirement System. If the Retirant's election of payment under Option II or Option III is considered void by the Retirement System under this paragraph, the Retirant's Retirement Allowance shall revert to a straight life Retirement Allowance effective the first of the month following the date the Retirement System receives a certified copy of the judgment of divorce, award, or order of the court. This paragraph does not supersede a judgment of divorce, award, or order of the court in effect on the effective date of the amendatory Ordinance that added this paragraph. This paragraph does not require the Retirement System to distribute or pay Retirement Assets on behalf of a Retirant in an amount that exceeds the actuarially determined amount that would otherwise become payable if a judgment of divorce had not been rendered.
If a Retirant receiving a reduced Retirement Allowance Payment Option II or Option III under section 1:559(1) is separated from the Retirant's named Beneficiary who, at the time of retirement, satisfied the City's "Other Qualified Adult" criteria as described in section 1:552.2(5), the Retirant's election of the reduced Retirement Allowance Payment Option II or Option III shall be considered void by the Retirement System provided that the Retirant files a sworn affidavit with the Board declaring that the named Beneficiary no longer satisfies the City's "Other Qualified Adult" criteria and requests that the reduced Retirement Allowance Payment Option II or Option III be considered void by the Retirement System. If the Retirant's form of benefit payment under Option II or Option III is considered void by the Retirement System under this paragraph, the Retirant's form of benefit payment shall revert to a straight life retirement allowance, effective the first of the month following the date the Board receives and files the sworn affidavit with the Retirement System. In no event shall this paragraph require the Retirement System to distribute or pay the Retirant retirement assets in an amount that exceeds the actuarially determined amount that would otherwise become payable if the affidavit had not been tendered to the Board. This paragraph shall apply only to Members of the AFSCME bargaining unit retiring on or after August 29, 2011, Members of the Ann Arbor Police Officers Association retiring on or after July 1, 2012, or Command Officers Association Members retiring on or after April 26, 2012.
(2) Annuity option.
(a) In addition to the options under subsection (1) above, a Member who:
(i) Has attained his Early Retirement under section 1:556(1) or Normal Retirement under section 1:556(2) while in City employment (or, in the case of former City Health Department and Ann Arbor Training and Employment Center employees, while in Washtenaw County employment) and who has elected to retire in accordance with section 1:556;
(ii) Has attained age 60 and is eligible for a Deferred Vested Retirement Allowance under section 1:558; or
(iii) Qualifies for a Disability Retirement under section 1:561 while in City employment, and who elects to retire in accordance with said section, may elect to be paid in a single payment 25%, 50%, 75% or 100% of the Member's Accumulated Contributions and thereafter shall be paid a reduced Retirement Allowance as provided at section 1:559(2)(c).
(b) The election by a Terminated Vested Member whose age and Service total at least 50 at the time of termination of employment to make a partial or 100% withdrawal of Accumulated Contributions as provided in section 1:559(2)(a) may generally be exercised only (i) at the time a Member terminates employment with the City, or (ii) when payment of a Retirement Allowance begins. An election by a Member to withdraw Accumulated Contributions other than at the times described in (i) or (ii), shall require that the Member withdraw 100% of the balance of the Member's Accumulated Contributions credited to the Member's individual account in lieu of any partial withdrawal option of 25%, 50%, or 75% of his Accumulated Contributions.
(c) Effective as of February 1, 2011, if a Member withdraws Accumulated Contributions pursuant to this section 1:559(2), the Member's straight life Retirement Allowance shall be reduced by the Actuarial Equivalent of the amounts withdrawn. For purposes of determining Actuarial Equivalency under this section 1:559(2), the following shall apply in lieu of any conflicting provisions of this chapter.
(i) The withdrawn Accumulated Contributions shall be credited with hypothetical interest at the Actuarial Equivalency Interest Rate set forth in section 1:552.1(4) from the date of withdrawal to the Member's Normal Retirement under section 1:556 (or if later, the date on which Retirement Allowance payments are to begin after Normal Retirement under section 1:556).
(ii) The resulting single sum shall be converted to an Actuarially Equivalent amount of straight life Normal Retirement Allowance using the 1971 group annuity mortality table for males set back (0 years for males and 5 years for females) blended 95% male and 5% female mortality table and 7% interest factors, provided that in the case of a withdrawal under section 1:559(2)(a)(iii) such conversion shall be performed using the 1971 group annuity mortality table for males, set forward 10 years for males and set back 5 years for females, blended 95% male and 5% female.
(d) The Actuarial Equivalency Interest Rate provision of section 1:559(2)(c) shall also apply to deferral periods on or after February 1, 2011 for Annuity withdrawals which occurred prior to that date. The interest rate applied to such withdrawals prior to February 1, 2011, shall be at the rates of Regular Interest as previously provided under the Ordinance and as determined by the Board through this date. For purposes of this subparagraph (d), the term "Regular Interest" shall mean that as previously provided under the prior Ordinance for the period through January 31, 2011.
(e) For the avoidance of doubt, if a Terminated Vested Member, whose age and Service do not total at least 50 at the time of termination of employment, elects to withdraw his Accumulated Contributions prior to benefit commencement, no Retirement Allowance shall be paid.
(3) Distributions for Health and Long-Term Care Insurance.
(a) Effective for distributions occurring after April 26, 2012, an individual who is an Eligible Retired Public Safety Officer ("ERPSO") may direct the Retirement System to pay directly to an insurer Qualified Health Insurance Premiums ("QHIP") from the Retirement System distribution otherwise payable to the ERPSO. The amount so paid to an insurer shall be subtracted from amounts otherwise payable under the Retirement System to the ERPSO.
(b) Special Rules.
(i) Direct Payment to Insurer Required. Section 1:559(3) shall only apply to a distribution if payment of the premiums is made directly from the Retirement System to the provider of the accident or health insurance plan or qualified long-term care insurance contract by reducing the ERPSO's distribution from the Retirement System.
(ii) Time of Election. For purpose of subparagraph (a) above, such election by the ERPSO shall be made only after separation of service with City and with respect to amounts not yet distributed from the Retirement System.
(iii) Related Plans Treated as One Plan. For purposes of this section 1:559(3), including, without limitation, for purposes of applying the exclusion limitation described in Code Section 402(l)(2), all Eligible Retirement Plans of the City shall be treated as a single plan.
(iv) Administrative Forms and Procedures. The directive described in section 1:559(3) and the operation of this section 1:559(3) shall be subject to such administrative forms and procedures as shall be prescribed by the Board from time to time. An ERPSO eligible under this section 1:559(3) shall provide such information as the Board shall reasonably request.
(c) Definitions. For purposes of this section 1:559(3), the following definitions shall apply:
(i) Eligible Retirement Plan. For purposes of section 1:559(3), the term "Eligible Retirement Plan" means a governmental plan (within the meaning of Section 414(d)) which is described in clause (iii), (iv), (v), or (vi) of Code Section 402(c)(8)(B).
(ii) Eligible Retired Public Safety Officer. The term "Eligible Retired Public Safety Officer" means an individual who, by reason of Disability Retirement under section 1:561, or attainment of Normal Retirement under section 1:556(2), is separated from service as a Public Safety Officer with the City who maintains the Eligible Retirement Plan from which distributions subject to section 1:559(3) are made.
(iii) Public Safety Officer. The term "Public Safety Officer" shall have the same meaning given such term of Section 1204(9)(A) of the Omnibus Crime Control and Safe Streets Act of 1968 (42 U.S.C. 3796b(9)(A)).
(iv) Qualified Health Insurance Premiums. The term "Qualified Health Insurance Premiums" means premiums for coverage for the Eligible Retired Public Safety Officer, his or her spouse, and dependents, by an accident or health insurance plan or qualified long-term care insurance contract as defined in Code section 7702B(b).
(Ord. No. 16-28, § 1, 1-3-17)
Source: City of Ann Arbor, Michigan, Code (Municode Library, library.municode.com)URL: https://library.municode.com/mi/ann_arbor/codes/code_of_ordinances?nodeId=TITIAD_CH18EMRESY_1_559ALFOPAOPRAREPLFetched: 11/8/2026