Title 7. Pensions
Article 160
APPLICABLE PROVISIONS OF THE INTERNAL REVENUE CODE
Sections:
160.02 Leased employees and independent contractors.
160.04 Maximum annual benefit.
160.05 Limit on annual additions.
160.07 Minimum required distributions.
160.08 Approved domestic relations orders.
160.09 Credit for qualified military service.
160.10 Vesting upon plan termination.
160.11 Consent for lump-sum distributions.
160.14 Pension fund for exclusive benefit of participants.
160.15 No reversion to employer.
160.16 Heroes Earnings Assistance Tax Relief Act of 2008 (HEART Act).
160.17 Vesting at normal retirement age.
160.01 Definitions.
(a) The following definitions apply for purposes of this article only:
(i) “Leased employee” shall mean, effective as of January 1, 1997, any person (other than an employee of the recipient) who pursuant to an agreement between the recipient and any other person (“leasing organization”) has performed services for the recipient (or for the recipient and related persons determined in accordance with IRC Section 414(n)(6)) on a substantially full-time basis for a period of at least one year, and such services are performed under primary direction or control by the recipient.
(ii) “Limitation year” shall mean the plan year. (Ord. 3655 § 1, 2008)
160.02 Leased employees and independent contractors.
(a) Leased employees and independent contractors are not eligible to participate in this plan. Any person whom the council does not regard as being an employee shall not be eligible to participate. (Ord. 3655 § 1, 2008)
160.03 Limit on compensation.
(a) Compensation is subject to the limitation under IRC Section 401(a)(17), which is $230,000 for the plan year beginning in 2008. The limit is automatically adjusted periodically, without formal amendment, for changes in the law and cost-of-living adjustments under IRC Section 401(a)(17). (Ord. 3655 § 1, 2008)
160.04 Maximum annual benefit.
(a) General Rule. Except as otherwise provided, this plan shall at all times comply with the provisions of IRC Section 415 and the regulations thereunder, the terms of which are specifically incorporated herein by reference. If a benefit payable to a participant under this plan would otherwise exceed the limit under IRC Section 415, the benefit will be reduced to the maximum permissible benefit.
(b) Effective Date. If there is more than one permissible effective date for any required change in the IRC Section 415(b) provisions, then the change shall be effective as of the latest permissible effective date; however, any adjustment in the dollar limit under IRC Section 415(b)(1)(A), whether required or permissible, shall take effect automatically as of the earliest permissible effective date. The “applicable mortality table” in Rev. Rul. 2001-62 is effective from December 31, 2002, through December 31, 2007. Effective as of January 1, 2008, the “applicable mortality table” and “applicable interest rate” are found in Rev. Rul. 2007-67.
(c) No Reduction in Accrued Benefits. Notwithstanding the above, no change in the limits under this article shall reduce the benefit of any participant.
(d) Multiple Plans. If a participant also participates in one or more other plans that are required to be aggregated with this plan for purposes of determining the limits under IRC Section 415(b) or (e), and if the aggregated benefits would otherwise exceed the limit under IRC Section 415(b) or (e), then benefits shall be reduced first under this plan. [Historical Note: IRC Section 415(e) applied for limitation years beginning prior to 2000.]
(e) Mandatory Contributions. Participant contributions are annual additions, and any benefit attributable to participant contributions is not included in the benefit subject to the limits of IRC Section 415(b) or (e). This subsection does not apply to contributions “picked up” in accordance with IRC Section 414(h) including contributions to the City of Meadville city employees retirement and pension fund which are treated as pick-up contributions under IRC Section 414(h).
(f) Permissive Service Credit. Effective as of January 1, 1998, if a participant makes a purchase of permissive service credit (within the meaning of IRC Section 415(n)) under the plan, the benefit derived from the contributions made to purchase the service credit shall be treated as part of the benefit subject to the limitations under this section.
(g) To the extent applicable, the above provisions and limitations shall be subject to IRC Section 415(b)(2)(G). (Ord. 3741 § 1 (Exh. A), 2015; Ord. 3655 § 1, 2008)
160.05 Limit on annual additions.
(a) Annual Additions. Except as otherwise provided, annual additions (which include participant contributions) under this plan shall at all times comply with the provisions of IRC Section 415(c) and the regulations thereunder, the terms of which are specifically incorporated herein by reference. If an annual addition would otherwise exceed the limit under IRC Section 415(c), the excess annual addition will be eliminated in accordance with methods permitted under Rev. Proc. 2008-50 (Rev. Proc. 2006-27 prior to 2009) or its successor.
(b) Multiple Plans. If a participant also participates in one or more other plans that are required to be aggregated with this plan for purposes of determining the limits under IRC Section 415(c), and if the annual additions would otherwise exceed the limit under IRC Section 415(c), annual additions will first be reduced under the other plan. If there is more than one other plan, annual additions will first be reduced under the plan with the greatest amount of annual additions.
(c) Effective Date. The limits under which IRC Section 415(c) are adjusted periodically in accordance with changes in the law or cost-of-living adjustments without the need for a plan amendment. If there is more than one permissible effective date for any required change relating to IRC Section 415(c), then the change shall be effective as of the earliest permissible effective date. (Ord. 3741 § 1 (Exh. A), 2015; Ord. 3655 § 1, 2008)
160.06 Direct rollovers.
(a) Effective as of January 1, 1993, if a participant, a spousal beneficiary, or an alternate payee (who is a spouse or former spouse of a participant) is entitled (under other provisions of this plan) to receive an “eligible rollover distribution” of at least $200.00, the distributee may elect that the plan administrator transfer all or part (provided, that the part is at least $500.00) to any “eligible retirement plan” capable of accepting such a transfer.
(b) For purposes of this section, the following definitions shall apply:
(i) An “eligible rollover distribution” is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: (i) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee’s designated beneficiary, or for a specified period of 10 years or more; (ii) any distribution to the extent such distribution is required under IRC Section 401(a)(9); (iii) the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities), and (iv) effective as of January 1, 2002, any hardship distribution. Effective as of January 1, 2002, clause (iii) does not apply to any after tax participant contributions that are paid to an individual retirement account or annuity described in IRC Section 408(a) or (b), or to a qualified defined contribution plan described in IRC Section 401(a) or 403(a) or effective January 1, 2007, a 403(b) annuity contract that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible.
(ii) An “eligible retirement plan” is an individual retirement account described in IRC Section 408(a), an individual retirement annuity described in IRC Section 408(b), an annuity plan described in IRC Section 403(a), or a qualified trust described in IRC Section 401(a), that accepts the distributee’s eligible rollover distribution. However, in the case of an eligible rollover distribution to a surviving spouse, prior to January 1, 2002, an eligible retirement plan was an individual retirement account or individual retirement annuity. Effective as of January 1, 2002, an “eligible retirement plan” includes an annuity contract described in IRC Section 403(b) and an eligible plan under IRC Section 457(b) which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this plan. Effective January 1, 2008, an eligible retirement plan shall include a Roth IRA as that term is defined in IRC Section 408A(b) that agrees to separately account for amounts transferred from this plan.
(iii) A distributee includes an employee or former employee. In addition, the employee’s or former employee’s surviving spouse and the employee’s or former employee’s spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in IRC Section 414(p)(11), are distributees with regard to the interest of the spouse or former spouse.
(iv) Effective as of January 1, 2002, an employee may, in accordance with IRC Section 457(e)(17), make a trustee-to-trustee transfer from an eligible deferred compensation plan (as defined in IRC Section 457(b)) to this plan for the purpose of purchasing service credit (to the extent that such purchases are permitted under the terms of the plan) or repaying a cash-out of contributions refunded under the plan.
(v) Effective as of January 1, 2007, if a distribution to a non-spouse beneficiary would otherwise be an “eligible rollover distribution” the distribution may be transferred to an individual retirement account or individual retirement plan to the extent permitted by IRC Section 402(c)(11). (Ord. 3655 § 1, 2008)
160.07 Minimum required distributions.
(a) Notwithstanding any provision in this plan to the contrary, the distribution of a participant’s benefits shall be made in accordance with the requirements and conditions of and shall otherwise comply with IRC Section 401(a)(9). For purposes of complying with IRC Section 401(a)(9), life expectancies shall be determined in accordance with the 1987 proposed regulations prior to January 1, 2003, and with the final regulations (Section 1.401(a)(9)-1 through Section 1.401(a)(9)-9) on or after January 1, 2003.
(b) Effective as of January 1, 1997, distribution of a participant’s benefits shall begin not later than April 1st of the calendar year following the later of:
(1) The calendar year in which the participant attains age 70 and one-half; or
(2) The calendar year in which the participant retires.
Distributions must be made over a period not exceeding the life of the participant or the joint lives of a participant and his beneficiary.
(c) Distributions to a participant and his beneficiaries shall only be made in accordance with the incidental death benefit requirements of IRC Section 401(a)(9)(G) and the regulations thereunder.
(d) This section does not authorize the payment of any benefit in any form not permitted under another provision of the plan. (Ord. 3655 § 1, 2008)
160.08 Approved domestic relations orders.
(a) All rights and benefits, including elections, provided to a participant in this plan shall be subject to the rights afforded to any “alternate payee” under what is recognized pursuant to state law support provisions as an “approved domestic relations order.” (Ord. 3655 § 1, 2008)
160.09 Credit for qualified military service.
(a) Effective as of December 12, 1994, notwithstanding any provision of this plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with IRC Section 414(u). (Ord. 3655 § 1, 2008)
160.10 Vesting upon plan termination.
(a) Upon the termination of this plan, or complete discontinuance of contributions (within the meaning of pre-ERISA IRC Section 401(a)(7)) to this plan, each employee as of the date of such termination or discontinuance shall become vested to the extent that the plan is funded. (Ord. 3655 § 1, 2008)
160.11 Consent for lump-sum distributions.
(a) Effective January 1, 2006, notwithstanding any other provision of the plan, any distribution to a participant made prior to the earlier of age 62 or normal retirement age of an amount in excess of $1,000 that is an eligible rollover distribution as set forth in the plan and the IRC shall be made only upon consent of the participant. (Ord. 3655 § 1, 2008)
160.12 Pick-up contributions.
All mandatory employee contributions made to the City of Meadville city employees pension fund on or after passage of an appropriate resolution by the employer shall be paid or “picked up” by the employer in lieu of contributions by the employees and thereafter treated as employer contributions for federal income taxation purposes within the meaning of Section 414(h)(2) of the Internal Revenue Code of 1986, as amended. The contributions may be paid or picked up by a reduction in the cash salary, by an offset against future salary increases or a combination of both. Affected employees shall not have the option of choosing to receive the picked up contributions directly in lieu of having them paid by the employer to the plans. Employee contributions made to the plan prior to the passage of an appropriate resolution by the employer shall not be affected by the pick up. Notwithstanding the foregoing, contributions so picked up shall continue to be treated as employee contributions for all purposes of state and local law in the same manner and to the same extent as employee contributions made prior to the date of the pick up; including, by way of illustration and not limitation, being treated as part of the affected employee’s compensation for both Pennsylvania and local income tax laws and for purposes of computing any benefits under the affected employee’s pension plan. (Ord. 3655 § 1, 2008)
160.13 PPA and HEART Act.
The following provisions are added to the plan. Any prior provisions that are inconsistent with the provisions in this amendment are hereby superseded.
(1) The purpose of these plan amendments is to comply with the Pension Protection Act of 2006 (PPA) and the Heroes Earnings Assistance Relief Tax Act (HEART Act). Notwithstanding anything in this plan to the contrary, this plan shall be interpreted so as to comply with the applicable required provisions of the PPA and the HEART Act.
(2) For the purposes of IRC Section 415(b)(1)(A), effective as of January 1, 2008, the “applicable mortality table” and “applicable interest rate” are found in Rev. Rul. 2007-67. The “applicable mortality table” in Rev. Rul. 2001-62 was effective from December 31, 2002, through December 31, 2007.
(3) 415(c) Compensation. For the purposes of this section, “compensation” includes only those items specified in Treas. Reg. Section 1.415(c)-2(b)1 or (2) and excludes all items listed in Treas. Reg. Section 1.415(c)-2(c), the terms of which are specifically incorporated herein by reference. Effective as of January 1, 2009, to the extent required by the Heroes Earnings Assistance Relief Tax Act of 2008 (HEART Act), differential wage payments shall be included in compensation.
(4) Effective as of January 1, 2007, an “eligible rollover distribution” shall include any eligible rollover distribution (including distributions containing after tax contributions) that is transferred in a direct trustee-to-trustee transfer to a 403(b) annuity contract or a qualified trust under IRC Section 401(a) that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible.
(5) Effective as of January 1, 2008, a Roth IRA is an “eligible retirement plan.”
(6) Nonspousal Rollover. Effective January 1, 2007, if a beneficiary who is not a surviving spouse is entitled to receive what would otherwise be an “eligible rollover distribution,” the beneficiary may, in accordance with IRC Section 402(c)(11), make a trustee-to-trustee transfer of that amount to an IRA or individual retirement annuity (other than an endowment contract); provided, that:
(a) The transfer is made not later than the end of the fourth year after the year of the participant’s death; and
(b) The account or annuity to which the amount is transferred is treated as an inherited IRA or individual retirement annuity in accordance with IRC Section 408(d)(3)(C).
(7) HEART Act. Effective for participant deaths occurring while performing qualified military service (as defined in IRC Section 414(u)) on or after January 1, 2007, the plan will provide retirement benefits and service credit to the extent required by the HEART Act. (Ord. 3693 § 1 (Exh. A), 2011)
160.14 Pension fund for exclusive benefit of participants.
Pension Fund for Sole Benefit of Participants. The income and principal of the pension fund are for the sole use and benefit of the participants and beneficiaries of this plan. (Ord. 3700 § 1, 2012)
160.15 No reversion to employer.
At no time shall it be possible for the plan assets to be used for, or diverted to, any purpose other than for the exclusive benefit of the participants and their beneficiaries, except that contributions made by the employer may be returned to the employer if:
(a) The contribution was made due to a mistake of fact and the contribution is returned within one year of the mistaken payment of the contribution; or
(b) The plan is terminated. (Ord. 3700 § 2, 2012)
160.16 Heroes Earnings Assistance Tax Relief Act of 2008 (HEART Act). 1
Except where otherwise specifically provided to the contrary in this plan, effective for deaths occurring on or after January 1, 2007, the plan will provide retirement benefits and service credit to the extent that the plan is required and mandated by the Heart Act to provide said benefits and/or service credit. (Ord. 3741 § 1 (Exh. A), 2015)
160.17 Vesting at normal retirement age.2
Upon attainment of normal retirement age a participant shall be 100 percent vested in his normal retirement benefit. (Ord. 3741 § 1 (Exh. A), 2015)
Code reviser’s note: Ordinance 3741 adds the provisions of this section as 160.13. The section has been editorially renumbered to prevent duplication of numbering.
Code reviser’s note: Ordinance 3741 adds the provisions of this section as 160.14. The section has been editorially renumbered to prevent duplication of numbering.