DEFERRED RETIREMENT OPTION PLAN FOR THE MEMBERS OF THE DENVER EMPLOYEES RETIREMENT PLAN

Denver Revised Municipal Code ch. 18, art. XII, div. 3

in effect

Denver Revised Municipal Code § 18-422 Generally.

Sec. 18-422. - Generally. (a) Effective January 1, 2001, in lieu of immediate termination of employment and receipt of a normal retirement benefit, a member may continue employment for four (4) years and have the member's normal retirement benefit paid into the deferred retirement option plan (DROP) account until the end of such period of the member's participation, at which time the participant may either terminate employment or continue to be employed and resume regular membership with the retirement plan. Subject to the conditions and provisions stated in this article, a member may elect to become a participant in the DROP and defer the commencement and receipt of the member's retirement benefit. (b) The board of trustees of the Denver Employees Retirement Plan shall develop and establish the DROP 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 this DROP. (c) The DROP permits active members who have never received a retirement benefit under the plan provisions and 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 period) and participate in the DROP. (d) A participant of the DROP shall continue to be an active employee for all intents and purposes but shall not be an active member of the plan for the period in the DROP (and shall not receive any retirement benefits which shall include any and all benefits provided under division 2 of this article). Nevertheless, the participant shall earn no additional service credits or benefits under the plan during the four-year period in the DROP. (Ord. No. 960-05, § 1, 12-19-05)

Denver Revised Municipal Code § 18-423 Definitions.

Sec. 18-423. - Definitions. (a) Definitions and terms used in this article are elaborated below: (1) Active employment shall mean 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 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 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 account shall mean the participant's individual deferred retirement option plan account designed under this division and administered by the plan. (5) FMLA shall be 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 used in division 2 of this article. It shall exclude a person or employee who has received 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 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 the DROP and having a DROP 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 the DROP and is eligible for a distribution of retirement benefits under either the DROP or the plan. (12) Retirement benefit or benefits shall mean any benefit payment to retired members, qualified spouses, beneficiaries or dependents provided under the plan according division 2 of this article. (13) USERRA shall mean Uniformed Services Employment and Re-Employment Rights Act of 1994. (b) Any other definition or term not described or elaborated above shall be explained or interpreted by the board in its rules, regulations, policies and procedures adopted to administer the DROP. The plan administrators shall maintain discretionary authority to interpret ambiguous terms and make factual determinations regarding the administration of the DROP. (Ord. No. 960-05, § 1, 12-19-05)

Denver Revised Municipal Code § 18-424 Provisions.

Sec. 18-424. - Provisions. (a) The duration of participation in the DROP shall be for a maximum of four (4) years. As a condition precedent to participation in the DROP, the participant shall irrevocably elect, in writing on a form prescribed by the board to enter the DROP. The participant shall also acknowledge that no disbursement of any DROP funds can occur absent the retirement, death or termination of employment of the participant. The plan shall provide a copy of such agreement to the employer. (b) The member's retirement benefit shall be calculated at the entry of the DROP. The DROP 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 account. (c) The participant's DROP account shall be credited with the member's monthly retirement benefit; Cost of Living Adjustments (COLAs) as authorized by the board (in compliance with the rules under division 2 of this article); and, until December 31, 2021, interest at a rate which shall be the plan's actuarial assumption rate for investment return. Beginning January 1, 2022, the participant's DROP account shall be credited with interest 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 30th of each year. The employer contribution to the trust established by section 18-403 of the Code, based on the participant's current salary, in accordance with requirements set forth in section 18-408(e) of the Code shall not be credited to the participant's DROP account. (d) At the DROP entry all calculations of vacation and sick payoff amounts shall be 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 exit of the DROP and/or the termination of employment the member shall be paid for the vacation and sick leave hours in compliance with sections 18-124 and 18-135, respectively, of the Code. At the end of the DROP term, if the participant continues employment, the provisions regarding the calculations of plan eligibility and credited service shall apply to the additional bridged service. (e) If the participant's active employment during the DROP period is interrupted by military service, a disability, 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 account, or received any retirement benefits under the plan), the employee shall immediately be eligible for participation in the DROP for the balance of the four-year period. Other than the above-mentioned types of interruptions of participation, the four-year period shall continue to run in all other cases. The participant must be an active employee in pay status for the DROP account to be credited with all 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 the DROP account. (f) A participant's election to enter the DROP is irrevocable and may be terminated only upon the death of the participant; termination of employment with the employer, or the end of the four-year DROP 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 account. The participant upon returning to active employment shall continue to participate in the DROP. However, if after the leave of absence, the participant terminates employment and applies for a retirement benefit, the participant may terminate the DROP agreement and after sixty (60) days receive a distribution from the DROP account. (h) The accumulated amounts of the member's normal retirement benefit calculated at the DROP entry, interest at the plan's actuarial assumption rate for investment return or other rate as set by the retirement board, and authorized cost of living adjustments (COLA) (if and when applicable) shall be credited to, and shall be the amount the member receives from the DROP account. The participant's normal retirement benefit amount shall cease being credited to the DROP account after the four-year DROP period. However, the plan's actuarial assumption rate for investment return or other rate as set by the retirement board shall be credited to the participant's DROP account until the entire balance is distributed. (i) The board is authorized to charge the DROP accounts for administrative costs and charges. (j) After terminating employment and exiting the DROP, a participant may be rehired by an employer. If rehired within sixty (60) days, a participant may choose, if the participant has not received a distribution from the DROP or a retirement benefit from the plan, to continue in the DROP for the balance of the four-year period or to continue in the covered service and accrue service credits as a member of the plan. (k) A participant may receive a distribution from the DROP only sixty (60) days after termination of employment. (l) At the end of the DROP term, a participant may continue employment with the employer and shall renew status as an active member of the plan. The plan provisions, the applicable ordinances and federal law shall apply to the member's bridged benefit. (Ord. No. 960-05, § 1, 12-19-05; Ord. No. 691-20, § 1, 7-19-21)

Denver Revised Municipal Code § 18-425 Distributions.

Sec. 18-425. - Distributions. (a) A participant in the DROP shall be entitled to elect one (1) of the following distribution methods by executing in writing a DROP-distribution-payment-option selection form as 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) Periodic monthly payments of a designated amount until the balance of the DROP account has been entirely distributed. The monthly payments may be adjusted annually. (4) Periodic 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 account will have been distributed by the end of the period selected by the participant. The number of payments may be recalculated annually. (5) Initial minimum required distribution. The amount calculated to be the participant's periodic payment shall be based on the participant's current DROP 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 periodic payments by designating an initial lump sum payment of a specified amount and a specified monthly amount until the balance of the DROP account has been entirely distributed to the participant. The 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 the DROP 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 method of distribution that is consistent with the requirements of the Internal Revenue Code and approved by the plan. (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 § 18-426 Beneficiary designations.

Sec. 18-426. - Beneficiary designations. (a) The participant shall designate any one (1) person 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 DROP account. If the participant designates multiple beneficiaries to receive a lump-sum distribution, the member's DROP account shall cease being credited interest in accordance with subsection 18-424(h) upon the member's death. (b) If the participant dies with a DROP account balance then the designated beneficiary may receive the participant's DROP distribution in accordance with any of the options under this division. If, however, the participant dies during the DROP and has not designated a beneficiary or the beneficiary predeceases the participant, the DROP benefit shall be paid in one (1) lump sum to the participant's estate. Payment shall be made within sixty (60) days after the plan is notified of the participant's death. (Ord. No. 960-05, § 1, 12-19-05; Ord. No. 350-11, § 14, 6-20-11)

Denver Revised Municipal Code § 18-427 Assignment, alienation and legal process.

Sec. 18-427. - 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 and their beneficiaries of the DROP shall be restrained from selling, assigning or otherwise alienating their benefit under the DROP. The benefits from the DROP 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 participant's and their beneficiaries' DROP benefit shall not be liable or subject to attachment, garnishments, 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 § 18-428 Miscellaneous.

Sec. 18-428. - Miscellaneous. (a) The board shall not incur any liability individually or on behalf of other individuals for any act or omission, made in good faith in relation to the DROP or funds of the DROP. (b) The DROP established by this section is subject to approval by the Internal Revenue Service. The provisions of the Internal Revenue Code and regulations promulgated thereunder shall supersede any DROP provision if there is any inconsistency with the Internal Revenue Code or regulation. (c) The plan year is the calendar year. (d) The benefits payable from the DROP are subject to the applicable limitations on benefits imposed by the Internal Revenue Code section 415 which is incorporated herein by reference. Deposits to the DROP account are not considered contributions to a defined contribution plan subject to the limits of the Internal Revenue Code section 415(c). (e) The DROP described in this section is enacted as a test for a period of three (3) years. Within thirty (30) days of the third anniversary of the effective date of the ordinance that adds this division to provide for the test of DROP, the board shall seek an analysis from its actuary as to the experience of the DROP for the preceding three years and report the results of the analysis to the mayor and city council along with a recommendation to continue the DROP, discontinue the DROP, or modify the DROP. (Ord. No. 960-05, § 1, 12-19-05)

Denver Revised Municipal Code § 18-429 Entrance to and termination of DROP.

Sec. 18-429. - Entrance to and termination of DROP. (a) Entrance. No member shall enter the DROP after April 30, 2003. Members who enter the DROP on or before April 30, 2003 shall be allowed to serve the full four (4) years in the DROP program and receive the full rights and benefits of the DROP program. (b) Terms: Participants of the DROP under this division 3 shall not be eligible to enter the new five-year deferred retirement option plan (DROP II) set forth and described in division 4 of this article. Except as modified and amended under this section, the terms and conditions of the deferred retirement option plan as set forth in division 3, article XII, chapter 18, of the Code shall remain and continue in effect. The participation, benefits, rights and privileges of the new entrants and existing participants in the DROP 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 section, 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 from and after April 30, 2003.

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_DIV3DEREOPPLMEDEEMREPLFetched: 10/27/2026