Ordinance 18-2014 RetirementORDINANCE NO. 18-2014
AN ORDINANCE OF THE TOWN COUNCIL OF THE TOWN OF PALM
BEACH, PALM BEACH COUNTY, FLORIDA, AMENDING CHAPTER
82 OF THE TOWN CODE OF ORDINANCES RELATING TO
PERSONNEL, AT ARTICLE II, EMPLOYEE BENEFITS, DIVISION 2,
RETIREMENT SYSTEM, AMENDING SUBDIVISION I, IN GENERAL,
BY AMENDING SECTION 82-54, CREDITED SERVICE; LOSS OF
CREDITED SERVICE; REINSTATEMENT OF CREDITED SERVICE;
BY AMENDING SECTION 82-55, UNIFORMED SERVICES
EMPLOYMENT AND REEMPLOYMENT; BY AMENDING SECTION
82-72, ROLLOVER DISTRIBUTIONS; BY AMENDING SECTION 82-98,
CHAPTER 175 SHARE ACCOUNTS; BY AMENDING SECTION 82-99,
DEFERRED RETIREMENT OPTION PROGRAM FOR FIREFIGHTERS;
BY AMENDING SECTION 82-119, DEFERRED RETIREMENT OPTION
PROGRAM FOR POLICE OFFICERS; BY AMENDING SECTION 82-
127, POLICE SHARE PLAN; BY AMENDING SECTION 82-139,
DEFERRED RETIREMENT OPTION PROGRAMFOR MEMBERS OF
BENEFIT GROUP GENERAL AND BENEFIT GROUP LIFEGUARD;
PROVIDING FOR SEVERABILITY; PROVIDING FOR REPEAL OF
ORDINANCES IN CONFLICT; PROVIDING FOR CODIFICATION;
PROVIDING AN EFFECTIVE DATE.
BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF PALM BEACH,
PALM BEACH COUNTY, FLORIDA, AS FOLLOWS:
Section 1. The Code of Ordinances of the Town of Palm Beach is hereby amended at
Chapter 82, Personnel; Article II, Employee Benefits; Division 2, Retirement System;
Subdivision I, In General; Section 82-54, to read as follows:
"Sec. 82-54. Credited Service; loss of credited service; reinstatement of credited service.
(a) Service rendered by a member shall be credited to the member's individual credited
service account in accordance with rules the board of trustees shall from time to time prescribe.
In no case shall more than one year of credited service be credited on account of all service
rendered by a member in any one year, nor shall less than 85 hours of service in a calendar
month be credited as 1/12 year of credited service. Service shall be credited to the nearest 1/12
year.
(b) Except as provided in section 82-80, credited service shall be forfeited and no longer in
force if an individual has a break in town employment of more than 12 months or if an
individual's accumulated member contributions are withdrawn from the reserve for employee
contributions and paid to the individual or a beneficiary (including an estate).
(c) A member may have forfeited credited service restored upon satisfaction of each of the
following conditions:
(1) The break in town employment is not more than 12 months; and
00422759-1
(2) The retirement system is paid the total amount of accumulated member contributions
previously withdrawn, plus interest from the date of withdrawal to the date of repayment.
Repayment shall be made in accordance with rules the board shall from time to time prescribe.
Repayment must be completed within one year of recommencement of membership.
(d) Unless otherwise prohibited by law, a vested member who has not purchased service
credit under section 82-64, may purchase years or fractional parts of years of service to be added
to years of credited service provided that:
(1) The member contributes to the retirement system the sum that would have been
contributed, based on the applicable employee contribution rate in effect at the time that the
credited service is requested for the years or fractional parts of years for which the credit is
requested, plus payment of costs for all professional services rendered to the board in connection
with the purchase of years of credited service, plus the amount actuarially determined so that the
crediting of service does not result in any costs to the retirement system.
(2) Payment by the member of the required amount may be made within six months of the
request for credit and in one lump sum payment, or over a period equal to the length of time
being purchased or five years, whichever is less, at an interest rate which is equal to the interest
rate determined under section 82-65. No credit shall be given for any service until all years of
service which are to be purchased, have been purchased.
(3) The credited service purchased under this section shall count for all purposes except
vesting. No more than five years of credited service may be purchased.
(4) If a member who is in the process of purchasing service terminates before completing the
purchase, the unpaid purchase price due from the former member may be set-off against benefits
payable to the former member.
(5) A purchase of service may be made no more than three times during the course of
employment and no purchase may be made until any previous purchase is fully paid.
(6) Purchases of service by members of benefit group firefighter may only be based upon
actual prior service as a firefighter or service in the military and purchases of service by a
member of benefit group police officer may only be based upon actual prior service as a police
officer or service in the military.
(7) Rollovers from qualff ed plans. A member may roll over all or part of his or her assets in
another qualified plan, that constitutes an eligible rollover distribution, to purchase service under
this section, provided all of the following requirements are met:
(a) Some or all of the amount distributed from the other plan is rolled over to this plan no
later than the 60th day after distribution was made from such plan.
(b) The amount rolled over to this plan does not include any amounts contributed by the
member to such plan on a post -tax basis.
(c) The rollover is made in cash.
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(d) The member certifies that the distribution is eligible for a rollover,
(e) Amounts which are accepted as a rollover to this retirement system shall be fully vested
at all times.
(8) The rollover may also be made from individual retirement accounts qualified under
Internal Revenue Code section 408.
(9) Amounts rolled over may be segregated from other retirement plan assets,
(10) In addition, the retirement system may accept the direct transfer of a member's account
from another qualified retirement plan to purchase service. The retirement system shall account
for direct transfers in the same manner as a rollover and shall obtain certification from the
member that the amounts are eligible for a rollover or direct transfer to this retirement system."
Section 2. The Code of Ordinances of the Town of Palm Beach is hereby amended at
Chapter 82, Personnel; Article II, Employee Benefits; Division 2, Retirement System;
Subdivision I, In General; Section 82-55, to read as follows:
"Sec. 82-55. Uniformed services employment and reemployment.
A member shall be eligible for up to five additional years of credited service under the retirement
system for service in the uniformed services of the United States as provided in the Uniformed
Services Employment and Reemployment Rights Act of 1994 (28 U.S.C. §§ 4301 et seq), as
amended, provided that the member:
(1) Was employed by the town when he or she entered the uniformed services;
(2) Is reemployed by the town within the time specified in such Act; and
(3) Members of the general and benefit group lifeguard deposit into the fund within a period
that does not exceed the period of uniformed service the member contributions that would have
been required to have been made by members during the period of such service based on the
members' town compensation prior to entering uniformed service, for each month of credited
service, together with interest equal to the overall rate of return on fund investments from the
date of reemployment to the date of deposit.
This section is intended to comply with all applicable provisions of the Uniformed Services
Employment and Reemployment Rights Act of 1994 (28 U.S.C. §§ 4301 et seq.), as amended,
and in the event of any conflict or inconsistency with such Act, the provisions of the Act shall be
controlling."
Section 3. The Code of Ordinances of the Town of Palm Beach is hereby amended at
Chapter 82, Personnel; Article Il, Employee Benefits; Division 2, Retirement System;
Subdivision 1, In General; Section 82-72, to read as follows:
"Sec. 82®72 Rollover distributions.
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(a) General. Notwithstanding any provision of the plan to the contrary that would otherwise
limit a distributee's election under this subsection, a distributee may elect, at the time and in the
manner prescribed by the board, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in a direct rollover.
(b) Definitions.
(1) Eligible rollover distribution. 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: 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 ten years or more; any distribution to the
extent such distribution is required under section 401(a)(9) of the Internal Revenue Code
("code"); and the portion of any distribution that is not includible in gross income. Any portion
of any distribution which would be includible in gross income will be an eligible rollover
distribution if the distribution is made to an individual retirement account described in code
section 408(a), to an individual retirement annuity described in code section 408(b) or to a
qualified defined contribution plan described in code section 401(a) or 403(a) that agrees to
separately account for amounts so transferred, including separately accounting for the portion of
such distribution which is not so includible.
(2) Eligible retirement plan. An eligible retirement plan is an individual retirement account
described in section 408(a) of the code, an individual retirement annuity described in section
408(b) of the code, an annuity plan described in section 403(a) of the code, an eligible deferred
compensation plan described in section 457(b) of the code which is maintained by an eligible
employer described in section 457(e)(1)(A) of the code and which agrees to separately account
for amounts transferred into such plan from this plan, an annuity contract described in section
403(b) of the code, or a qualified trust described in section 401(a) of the code, that accepts the
distributee's eligible rollover distribution. This definition shall also apply in the case of an
eligible rollover distribution to a surviving spouse or former spouse. For a named beneficiary
who is not a spouse or former spouse, an eligible retirement plan is solely an individual
retirement account or annuity as described in section 402(c)(11) of the United States Internal
Revenue Code.
(3) Distributee. A distributee includes a member or former member. In addition, the
member's or former member's surviving spouse is a distributee with regard to the interest of the
spouse.
(4) Direct rollover. A direct rollover is a payment by the plan to the eligible retirement plan
specified by the distributee, or a payment to the plan from an eligible retirement plan for the
purchase of credited service under the plan."
Section 4. The Code of Ordinances of the Town of Palm Beach is hereby amended at
Chapter 82, Personnel; Article Il, Employee Benefits; Division 2, Retirement System;
Subdivision I, In General; Section 82-98, to read as follows:
"Sec. 82-98. Chapter 175 share accounts.
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(a) Individual member accounts. A separate individual member account shall be established
and maintained in each group firefighter member's name effective on or after October 1, 1998.
Firefighter DROP participants shall participate or continue to participate in this supplemental
plan and the accounts for such participants shall be treated as individual member accounts under
this section 82-98.
(b) Share account funding.
(1) Each individual member account shall be credited with a share in accordance with the
formula set forth in subsection (c) below of all available tax revenues received from F.S. ch. 175,
from October 1, 1998, and thereafter.
(2) Available tax revenues shall be those moneys received pursuant to F.S. ch. 175, which,
according to the board actuary, have not been otherwise committed for benefits for members.
Notwithstanding any other provision of this section 82-98, in the event there are no available tax
revenues or no monies received pursuant to F.S. ch. 175 after May 1, 2012, the then -existing
member share accounts shall be administered by the board in accordance with this section 82-98,
except that there shall be no annual allocations of ch. 175 tax revenues to the existing member
accounts. No new member accounts shall be established on or after May 1, 2012.
(3) In addition, any forfeitures as provided in subsection (e) below shall be credited to the
individual member accounts in like manner.
(c) Annual allocation of accounts.
(1) Moneys shall be credited to each individual member account in an amount directly
proportionate to the number of pay periods for which the member or DROP participant was paid
compared to the total number of pay periods for which all members and DROP participants were
paid, counting the pay periods in the calendar year preceding the date for which F.S. ch. 175, tax
revenues were received.
(2) Upon receipt of the annual disbursement of tax revenues from F.S. ch. 175 each
individual member account shall be adjusted to reflect the earnings or losses resulting from
investment, as well as reflecting costs, fees and expenses of administration.
(3) Until a member becomes vested, the investment earnings or losses credited to or debited
from the individual member accounts shall be calculated under the system investment method
less administrative expenses, unless the board dedicates a separate investment portfolio for F.S.
ch. 175, share accounts, in which case the investment earnings or losses shall be measured by the
investment earnings or losses of the separate investment portfolio. Once vested, the share
account assets will automatically continue to be invested in the system investment method,
unless the member elected to have amounts in their share account moved to a self-directed
investment method on or before December 31, 2014 as described below;
The system investment method. The share accounts shall accrue in the retirement system on
behalf of the member, plus or minus interest based on the actual rate of return of the retirement
system which, as of January 1, 2015, will be averaged over a trailing five-year period, to be
applied quarterly. Share account assets are commingled with the pension fund assets for
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investment purposes and are subject to payment of pro -rata share of the fund's administrative
expenses.
Effective January 1, 2015, for participants with a share account balance on December 31, 2014,
all assets previously held in the share account will be invested under the system investment
method except for those amounts the member selected to have moved to a self-directed method
on or before December 31, 2014.
The self-directed investment method. For members who are vested in the share account benefit
on or after May 12, 2009, who elected to have their share account in whole or part in the
self-directed investment method on or before December 31, 2014, the member shall have an
individual investment account to which his or her share account benefits shall be invested. The
board may select a third -party administrator or provider for this purpose. After such selection,
each member shall direct the manner in which the amounts in his or her individual investment
account shall be invested from an array of options selected by the board. The assets invested in
the self-directed method are subject to the administrative and investment management fees
assessed by the third -party administrator or provider.
(4) Costs, fees, and expenses of administration shall be debited from the individual member
accounts on a proportionate basis, taking the cost, fees, and expenses of administration of the
retirement system for firefighter members as a whole, multiplied by a fraction, the numerator of
which is the total assets in all individual member accounts and the denominator of which is the
total assets of the fund as a whole. The proportionate share of the costs, fees, and expenses shall
be debited from each individual member account on a pro rata basis in the same manner as set
forth in subsection (3)a.
(5) If the entire balance of an individual member account is withdrawn before September 30
of any year, there will be no adjustment made to that individual member account to reflect either
investment earnings, losses, costs, fees, or expenses of administration.
(d) Eligibility for benefits. Any member or DROP participant who terminates employment
shall, upon application filed with the board, be entitled to be paid 100 percent of the value of his
individual member account, provided the member meets any of the following criteria:
(1) The member is eligible to receive a pension; or
(2) The member has ten or more years of credited service and is eligible to receive either:
a. A disability pension as provided in section 82-100; or
b. A duty disability pension as provided in section 82-101.
(e) Forfeitures. Any member who has less than ten years of credited service and who is not
eligible for payment of benefits after termination of employment credited service shall forfeit his
or her individual member account. The amounts credited to said individual member account shall
be redistributed to the other individual member accounts as set forth in subsection (c)(1) above.
(f) Payment of benefits. The normal form of benefit payment shall be a lump sum payment
of the entire balance of the individual member account: or, upon the written election of the
00422759-1 Ordinance No. 18-2014 Page 6 of 26
member or DROP participant, upon a form prescribed by the board, payment may be made either
over three years in annual installments or in the form of a monthly annuity.
(g) Death of a member. If a member or DROP participant dies and is eligible for benefits
from the individual member account, the entire balance of the individual member account shall
be paid in a lump sum to the member's beneficiaries.
(h) Administration and interpretation. The share accounts shall be administered by the board.
(i) Share accounts upon termination of employment.
(1) Interest for the system investment method shall continue to accrue on the share account
until a terminated member reaches age 60, at which time interest and earnings shall cease.
(2) Forms of Payment for Full Distribution — At retirement and frill separation from service,
a member has the following options from his or her share account:
a. single cash lump -sum distribution;
b. direct rollover to an eligible retirement plan; or
C. partial cash single lump -sum distribution and a partial rollover to an eligible retirement
plan.
(3) One-time Partial Distribution Option — At or after retirement and full separation from
service, but prior to the date of the required minimum distribution and/or the full distribution
described in subsection (2) above, a member has the option to make an election for a one-time
partial distribution from his or her share account under one of the following options:
a. single cash lump -sum distribution;
b. direct rollover to an eligible retirement plan; or
C. partial cash single lump -sum distribution and a partial rollover to an eligible retirement
plan."
Section 5. The Code of Ordinances of the Town of Palm Beach is hereby amended at
Chapter 82, Personnel; Article II, Employee Benefits; Division 2, Retirement System;
Subdivision I, In General; Section 82-99, to read as follows:
"Sec. 82-99. Deferred retirement option program for firefighters.
(a) Generally. In general, and subject to the provisions of this section, the deferred retirement
option program, hereinafter referred to as the DROP, is a program under which an eligible
firefighter may elect a retirement date, participate, and defer receipt of retirement benefits while
continuing employment. For members who are DROP participants, effective January 1, 2015, a
member's DROP account assets will automatically be invested in the system investment method.
However, for members who retired, separated from service, or died prior to January 1, 2015, and
elected to have amounts in their DROP account moved to a self-directed investment method on
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or before December 31, 2014, those amounts shall be invested in the self-directed investment
method only.
(1) The system investment method. The deferred monthly benefits of a DROP participant
shall accrue in the retirement system on behalf of the DROP participant, plus or minus interest
based on the actual rate of return of the retirement system, which as of January 1, 2015, will be
averaged over a trailing five-year period, to be applied quarterly. DROP assets are commingled
with the pension fund assets for investment purposes and are subject to payment of pro -rata share
of the fund's administrative expenses. Effective January 1, 2015, for participants with a DROP
account balance on December 31, 2014, all assets previously held in the DROP account will be
invested under the system investment method except for the amounts of those members who
retired, separated from service, or died prior to January 1, 2015, and elected to have amounts in
their DROP account moved to a self-directed investment method on or before December 31,
2014, Effective January 1, 2015, new DROP account assets will automatically be invested under
the system investment method.
(2) The self-directed investment method. For members entering the DROP after May 12,
2009, who retired, separated from service, or died prior to January 1, 2015, and elected to have
amounts in their DROP account moved to a self-directed investment method on or before
December 31, 2014, the participant may choose to have a self-directed individual investment
account to which his or her monthly benefits shall be transferred. The board may select a
third -party administrator or provider for this purpose. After such selection, each participant shall
direct the manner in which the amounts in his or her self-directed individual investment account
shall be invested from an array of options selected by the board. DROP assets invested under the
self-directed investment method shall receive DROP statements. The assets invested in the
self-directed investment method are subject to the administrative and investment management
fees assessed by any third -party administrator or provider.
(3) During the period of DROP participation, neither the town nor the DROP participant is
obligated to make additional contributions to the retirement system on behalf of the DROP
participant, and the DROP participant will not earn any credited service while participating in the
DROP. Upon termination of employment and participation in the DROP, the DROP participant
shall receive his or her total DROP benefits and begin to receive his or her previously determined
normal retirement benefits. Employment while participating in the DROP does not guarantee
employment for any specified period.
(b) Eligibility of member to participate in the DROP. Retirement system members are
eligible to elect participation in the DROP provided that they elect to retire as of a date certain
and provided that:
(1) Election to participate may be made when the member first reaches normal retirement
date or age, as follows:
a. Members who were employed by the town and not participating in the DROP on May 1,
2012 shall be eligible to participate in the DROP upon attaining age 50; or the date on which the
member's age to last completed month plus credited service totals 65 years or more; or 20 years
of credited service regardless of age. Upon entry into the DROP the benefit payable to such
member's DROP account shall be the frozen accrued benefit based on credited service prior to
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May 1, 2012. The accrued benefit based on credited service on and after May 1, 2012 shall be
payable to the member's DROP account, or directly to the member if DROP participation has
ceased, upon attaining age 65. Such member who fails to make an election within 84 months
after the member has 20 years of credited service shall forfeit all rights to participate in the
DROP.
b. Members hired on or after May 1, 2012 shall be eligible to participate in the DROP upon
attaining age 65 with ten or more years of service.
(2) There is no break in service to the town between the member's last working day prior to
DROP participation and the member's first day as a DROP participant.
(c) Participation in the DROP.
(1) The date on which participation in the DROP must terminate is within 120 months of the
commencement of the election period provided in subsection (b)(1) of this section. Participation
in the DROP may not exceed a maximum of 60 months. No DROP participant may continue to
be eligible to participate in the DROP for more than 60 months or for any time after 120 months
following the date on which the member first reaches normal retirement age or date, unless the
member first reached normal retirement age or date prior to the effective date of the ordinance
from which this section derives.
(2) Submission of required information. Upon electing to participate in the DROP, the
member shall submit on forms required by the retirement system:
a. A written election to retire effective no more than 60 months after entering participation
in the DROP;
b. A written election to participate in the DROP;
C. An irrevocable resignation from service to the town and withdrawal from the DROP, both
effective after no more than 60 months participation in the DROP;
d. A properly completed DROP application for service retirement as provided in this
section; and
e. Any other information required by the retirement system.
(3) Re-employed retirants. Re-employed retirants of the town's retirement system are not
eligible to participate in DROP.
(d) Compensation fore work per formed while participating in the DROP. Starting pay shall be
at the base pay rate in effect on the employee's last working day of employment, prior to
participation in the DROP. Job performance will be evaluated under the town's pay for
performance system, and performance pay increases will be permitted as established by town
policy. General pay increases shall also be awarded, as approved by the town council and the
town manager. Performance pay increases and general pay increases awarded to DROP
participants will be reflected in their salary but will not be reflected in pension payments made to
DROP accounts or made after DROP participation.
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(1) Effective with the date of DROP participation, the member's initial normal monthly
pension benefit, calculated in accordance with section 82-95 and based on creditable service and
average final compensation and the effective date of retirement, shall be fixed. Retirement
system amendments which become effective after the establishment date of participation in the
DROP will not be applicable to the DROP participant, unless so stated by the amendment. The
monthly pension benefit (minus any reduction as determined by the board of trustees as provided
by subsection (h) of this section), cost of living adjustments, interest and earnings thereon, if any,
shall accrue monthly in the retirement system. Interest under the system investment method only
shall accrue at an effective quarterly rate to be determined hereunder as set forth in subsection
(h) of this section, and will be compounded quarterly, on the prior quarter's accumulated ending
balance, up to the end of the quarter coincident with/or immediately following the DROP or
death.
(2) The monthly pension benefits calculated upon entry into the DROP (minus any reduction
as determined by the board of trustees as provided by subsection (h)) and interest thereon, if any,
shall continue to accrue in the DROP until the established termination date of the DROP, or until
the DROP participant terminates employment or dies prior to such date, but not to exceed 60
months.
(3) Employee benefits, other than benefits under the retirement system, which are normally
granted to employees, will be provided to DROP participants. Such DROP participants are
members of the retirement system.
(4) At the conclusion of the participant's DROP, any credits made to a DROP participant's
account will cease. Membership in the DROP will automatically terminate 60 months after the
effective date of participation in the DROP, except as provided in subsection (c)(1) above.
DROP participants may elect to discontinue membership in the DROP at any time, provided a
two-week written notice of termination of employment has been submitted to the town and
notice has been submitted to the plan administrator.
(5) At the conclusion of the participant's DROP, the retirement system may distribute the
participant's total accumulated DROP benefits, subject to the following provisions;
a. The retirement system shall receive verification that such DROP participant has
terminated membership in the DROP.
b. The terminated DROP participant, or if deceased, such DROP participant's named
beneficiary, shall elect on forms provided by the retirement system to receive payment of the
DROP benefits in accordance with one of the options listed below.
1. Lump sum. All accrued DROP benefits, plus interest and earnings, if any, less
withholding taxes remitted to the United States Internal Revenue Service, shall be paid to the
DROP participant or surviving beneficiary.
2. Direct rollover. In the event there is an eligible rollover distribution to a member or a
member's spouse or former spouse, all such accrued DROP benefits, plus interest and earnings, if
any, elected to be rolled over, shall be paid from the DROP directly to the custodian of an
eligible retirement plan as defined in section 402(c)(8)(B) of the United States Internal Revenue
Code. However, in the event there is an eligible rollover distribution to a named beneficiary who
00422759-1 Ordinance No. 18-2014 Page 10 of 26
is not a spouse or former spouse of a deceased DROP participant payable under the terms of the
plan, an eligible retirement plan is an individual retirement account or an individual retirement
annuity as described in section 402(c)(11) of the United States Internal Revenue Code.
3. Partial lump sum. A portion of the accrued DROP benefits shall be paid to the DROP
participant or surviving spouse, less withholding taxes remitted to the United States Internal
Revenue Service, and the remaining DROP benefits shall be transferred directly to the custodian
of an eligible retirement plan as defined in section 402(c)(8)(B) of the United States Internal
Revenue Code. However, in the case of an eligible rollover distribution to the named beneficiary
who is not a spouse or former spouse of a deceased DROP participant, an eligible retirement plan
is an individual retirement account or an individual retirement annuity as described in section
402(c)(11) of the United States Internal Revenue Code. The proportions shall be specified by the
DROP participant or surviving beneficiary.
C. The form of payment selected by the DROP participant or surviving beneficiary complies
with the minimum distribution requirements of the United States Internal Revenue Code and
payments begin no later than the date on which the participant reaches age 70 years and six
months.
(6) The accrued benefits of any DROP participant, and any contributions accumulated under
such program, shall not be subject to assignment, execution, attachment, or to any legal process
whatsoever, except for income deduction orders and federal income tax levies.
(7) DROP participants shall not be eligible for disability retirement benefits as provided in
sections 82-100 or 82-101. In the event a DROP participant becomes incapacitated for
employment by the town as defined under sections 82-100 or 82-101, the DROP participation
will terminate, and the former DROP participant will elect one of the alternatives under
subsection (d)(5)b. of this section.
(8) The effective date of retirement for DROP calculation purposes and for determining
credited service of a DROP participant shall be the day selected by the member to begin
participation in the DROP.
(e) Death benefits under the DROP.
(1) Upon the death of a DROP participant, the named beneficiary shall be entitled to apply
for and receive the accrued benefits in the DROP as provided under subsection (d)(5)b. of this
section.
(2) The pension benefit paid to the DROP during the month of a DROP participant's death
shall be the final pension benefit accrued for such DROP participant.
(3) Eligibility to participate in the DROP terminates upon the death of a DROP participant. If
the DROP participant dies on or after the effective date of enrollment in the DROP, but prior to
the first monthly benefit being credited to the DROP, retirement system benefits shall be paid in
accordance with section 82-103.
(4) A DROP participant's survivor shall not be eligible for retirement system death benefits
as provided in section 82-104.
00422759-1 Ordinance No. 18-2014 Page 11 of 26
(f) Cost of living adjustment. The DROP participants' normal pension benefit shall be
increased as provided in subsection 82-63(b),
(g) Renewed membership. Contributions that normally would be made by the employee and
the town will not be paid into the retirement system upon an individual's election to participate in
the DROP,
(h) Administration of the program, The board of trustees shall make such rules as are
necessary for the effective and efficient administration of this subsection, The board of trustees
shall not be required to advise participants of the federal tax consequences of an election related
to the DROP but may advise participants to seek independent advice.
(1) The DROP will be cost -neutral to the town. To maintain the cost -neutral basis to the
town, the earnings (losses) and any reduction in the DROP participants' monthly pension benefits
payable to the DROP will be reviewed by the board of trustees from time to time as other
actuarial assumptions are reviewed. All costs of the DROP and any increase or decrease in the
cost of administering the DROP will be absorbed by:
a. A change of the or establishment of a reduction of the DROP participants' monthly
pension benefits calculated under the DROP as determined by the board of trustees with approval
by the town council; and/or
b. A change in the fees covering the cost of administering the DROP, as determined by the
board of trustees.
(2) Administrative expenses shall be debited from the individual member accounts on a
proportionate basis, taking the cost, fees, and expenses of administration of the fund as a whole,
multiplied by a fraction, the numerator of which is the total assets in all individual member
accounts and the denominator of which is the total assets of the fund as a whole.
(3) Notwithstanding any other provision of this section 82-99 or the code, a member who
receives any DROP benefits for the portion of their pension benefits earned on or after May 1,
2012 shall be an at -will employee for the entire DROP period.
(i) DROP accounts upon termination of employment.
(1) Interest under the system investment method shall continue to accrue on the DROP until
a terminated member reaches age 60, at which time interest and earnings shall cease,
(2) Forms of Payment for Full Distribution — At retirement and full separation from service,
a member has the following options from his or her DROP:
a. single cash lump -sum distribution;
b. direct rollover to an eligible retirement plan; or
C. partial cash single lump -sum distribution and a partial rollover to an eligible retirement
plan.
00422759-1 Ordinance No. 18-2014 Page 12 of 26
(3) One-time Partial Distribution Option — At retirement and full separation from service, but
prior to the date of the required minimum distribution and/or the full distribution described in
subsection (2) above, a member has the option to make a one-time partial distribution election
from his or her DROP under one of the following options;
a. single cash lump -sum distribution;
b, direct rollover to an eligible retirement plan; or
C. partial cash single lump -sum distribution and a partial rollover to an eligible retirement
plan."
Section 6. The Code of Ordinances of the Town of Palm Beach is hereby amended at
Chapter 82, Personnel; Article II, Employee Benefits; Division 2, Retirement System;
Subdivision I, In General; Section 82-119, to read as follows;
"Sec. 82-119. Deferred retirement option program for police officers.
(a) Generally. In general, and subject to the provisions of this section, the deferred retirement
option program, hereinafter referred to as the DROP, is a program under which an eligible police
officer may elect a retirement date, participate, and defer receipt of retirement benefits while
continuing employment.
(1) For members who are DROP participants, effective January 1, 2015, the DROP account
assets will automatically be invested in the system investment method. However, for members
who retired, separated from service, or died prior to January 1, 2015, and elected to have
amounts in their DROP account moved to a self-directed investment method on or before
December 31, 2014, those amounts shall be invested in the self-directed investment method only.
(2) The system investment method. The deferred monthly benefits of a DROP participant
shall accrue in the retirement system on behalf of the DROP participant, plus or minus interest
based on the actual rate of return of the retirement system, which as of January 1, 2015, will be
averaged over a trailing five-year period, to be applied quarterly. DROP assets are commingled
with the pension fiend assets for investment purposes and are subject to payment of pro -rata share
of the fund's administrative expenses. Effective January 1, 2015, for participants with a DROP
account balance on December 31, 2014, all assets previously held in the DROP account will be
invested under the system investment method except for the amounts of those members who
retired, separated from service, or died prior to January 1, 2015, and elected to have amounts in
their DROP account moved to a self-directed investment method on or before December 31,
2014, Effective January 1, 2015, new DROP account assets will automatically be invested under
the system investment method.
(3) The self-directed investment method. For members entering the DROP after January 1,
2003, who retired, separated from service, or died prior to January 1, 2015, and elected to have
amounts in their DROP account moved to a self-directed investment method on or before
December 31, 2014, the participant may choose to have a self-directed individual investment
account to which his or her monthly benefits shall be transferred. The board may select a
third -party administrator or provider for this purpose. After such selection, each participant shall
direct the manner in which the amounts in his or her self-directed individual investment account
00422759-1 Ordinance No. 18-2014 Page 13 of 26
shall be invested from an array of options selected by the board. DROP assets invested under the
self-directed investment method shall receive DROP statements. The assets invested in the
self-directed investment method are subject to the administrative and investment management
fees assessed by any third -party administrator or provider.
(4) During the period of DROP participation, neither the town nor the DROP participant is
obligated to make additional contributions to the retirement system on behalf of the DROP
participant, and the DROP participant will not earn any credited service while participating in the
DROP. Upon termination of employment and participation in the DROP, the DROP participant
shall receive his or her total DROP benefits and begin to receive his or her previously determined
normal retirement benefits. Employment while participating in the DROP does not guarantee
employment for any specified period.
(b) Eligibility of member to participate in the DROP. Retirement system members are
eligible to elect participation in the DROP provided that they elect to retire as of a date certain
and provided that:
(1) Election to participate may be made when the member first reaches normal retirement
date or age as follows:
a. Members who were employed by the town and not participating in the DROP on May 1,
2012 shall be eligible to participate in the DROP upon attaining age 50; or the date on which the
member's age to last completed month plus credited service totals 65 years or more; or 20 years
of credited service regardless of age; and upon entry into the DROP the benefit payable to such
member's DROP account shall be the frozen accrued benefit based on credited service prior to
May 1, 2012. The accrued benefit based on credited service on and after May 1, 2012 shall be
payable to the member's DROP account, or directly to the member if DROP participation has
ceased, upon attaining age 65. Such member who fails to make an election within 84 months
after the member has 20 years of credited service shall forfeit all rights to participate in the
DROP.
b. Members hired on or after May 1, 2012 shall be eligible to participate in the DROP upon
attaining age 65 with ten or more years of service.
(2) There is no break in service to the town between the member's last working day prior to
DROP participation and the member's first day as a DROP participant.
(c) Participation in the DROP.
(1) The date on which participation in the DROP must terminate is within 120 months of the
commencement of the election period provided in subsection (b)(1) of this section. Participation
in the DROP may not exceed a maximum of 60 months. No DROP participant may continue to
be eligible to participate in the DROP for more than 60 months or for any time after 120 months
following the date on which the member first reaches normal retirement age or date, unless the
member first reached normal retirement age or date prior to the effective date of the ordinance
from which this section derives.
(2) Submission of required information. Upon electing to participate in the DROP, the
member shall submit on forms required by the retirement system:
00422759-1 Ordinance No. 18-2014 Page 14 of 26
a. A written election to retire, effective no more than 60 months after entering participation
in the DROP;
b. A written election to participate in the DROP;
C. An irrevocable resignation from service to the town and withdrawal from the DROP, both
effective after no more than 60 months participation in the DROP;
d. A properly completed DROP application for service retirement as provided in this
section; and
e. Any other information required by the retirement system.
(3) Re-employed retirants. Re-employed retirants of the town's retirement system are not
eligible to participate in DROP.
(d) Compensation for work performed while participating in the DROP. Starting pay shall be
at the base pay rate in effect on the employee's last working day of employment, prior to
participation in the DROP. Job performance will be evaluated under the town's pay for
performance system, and performance pay increases will be permitted as established by town
policy. General pay increases shall also be awarded, as approved by the town council and the
town manager. Performance pay increases and general pay increases awarded to DROP
participants will be reflected in their salary but will not be reflected in pension payments made to
DROP accounts or made after DROP participation.
(1) Effective with the date of DROP participation, the member's initial normal monthly
pension benefit, calculated in accordance with section 82-115 and based on creditable service
and average final compensation and the effective date of retirement, shall be fixed. Retirement
system amendments which become effective after the establishment date of participation in the
DROP will not be applicable to the DROP participant, unless so stated by the amendment. The
monthly pension benefit (minus any reduction as determined by the board of trustees as provided
by subsection (h) of this section), cost of living adjustments, interest and earnings thereon, if any,
shall accrue monthly in the retirement system. Interest under the system investment method only
shall accrue at an effective quarterly rate to be determined hereunder as set forth in subsection
(h) of this section, and will be compounded quarterly, on the prior quarter's accumulated ending
balance, up to the end of the quarter coincident with/or immediately following the DROP or
death.
(2) The monthly pension benefits calculated upon entry into the DROP (minus any reduction
as determined by the board of trustees as provided by subsection (h) of this section) and interest
thereon, if any, shall continue to accrue in the DROP until the established termination date of the
DROP, or until the DROP participant terminates employment or dies prior to such date, but not
to exceed 60 months. Although individual DROP accounts shall not be established under the
system investment method described above in subsection (a)(1), a separate accounting of each
DROP participant's accrued benefits under the DROP shall be calculated and provided to DROP
participants annually.
00422759-1 Ordinance No. 18-2014 Page 15 of 26
(3) Employee benefits, other than benefits under the retirement system, which are normally
granted to employees, will be provided to DROP participants. Such DROP participants are
members of the retirement system.
(4) At the conclusion of the participant's DROP, any credits made to a DROP participant's
account will cease. Membership in the DROP will automatically terminate 60 months after the
effective date of participation in the DROP, except as provided in subsection (c)(1) above.
DROP participants may elect to discontinue membership in the DROP at any time, provided a
two-week written notice of termination of employment has been submitted to the town, and
notice has been submitted to the plan administrator.
(5) At the conclusion of the participant's DROP, the retirement system may distribute the
participant's total accumulated DROP benefits, subject to the following provisions:
a. The retirement system shall receive verification that such DROP participant has
terminated membership in the DROP.
b. The terminated DROP participant, or if deceased, such DROP participant's named
beneficiary, shall elect on forms provided by the retirement system to receive payment of the
DROP benefits in accordance with one of the options listed below.
1. Lump sum. All accrued DROP benefits, plus interest and earnings, if any, less
withholding taxes remitted to the United States Internal Revenue Service, shall be paid to the
DROP participant or surviving beneficiary.
2. Direct rollover. In the event there is an eligible rollover distribution to a member or a
deceased member's spouse or former spouse, all such accrued DROP benefits, plus interest and
earnings, if any, shall be paid from the DROP directly to the custodian of an eligible retirement
plan as defined in section 402(c)(8)(B) of the United States Internal Revenue Code. However, in
the event there is an eligible rollover distribution to a named beneficiary who is not a spouse or
former spouse of a deceased DROP participant payable under the terms of the plan, an eligible
retirement plan is an individual retirement account or an individual retirement annuity as
described in section 402(c)(11) of the United States Internal Revenue Code.
3. Partial lump sum. A portion of the accrued DROP benefits shall be paid to the DROP
participant or surviving spouse, less withholding taxes remitted to the United States Internal
Revenue Service, and the remaining DROP benefits shall be transferred directly to the custodian
of an eligible retirement plan as defined in section 402(c)(8)(B) of the United States Internal
Revenue Code. However, in the case of an eligible rollover distribution to the named beneficiary
who is not a spouse or former spouse of a deceased DROP participant, an eligible retirement plan
is an individual retirement account or an individual retirement annuity as described in section
402(c)(11) of the United States Internal Revenue Code. The proportions shall be specified by the
DROP participant or surviving beneficiary.
C. The form of payment selected by the DROP participant or surviving beneficiary complies
with the minimum distribution requirements of the United States Internal Revenue Code and
payments begin no later than the date on which the participant reaches age 70 years and six
months.
00422759-1 Ordinance No. 18-2014 Page 16 of 26
(6) The accrued benefits of any DROP participant, and any contributions accumulated under
such program, shall not be subject to assignment, execution, attachment, or to any legal process
whatsoever, except for income deduction orders and federal income tax levies.
(7) DROP participants shall not be eligible for disability retirement benefits as provided in
section 82-120 or section 82-121. In the event a DROP participant becomes incapacitated for
employment by the town as defined under section 82-120 or section 82-121, the DROP
participation will terminate, and the former DROP participant will elect one of the alternatives
under subsection (d)(5)b. of this section.
(8) The effective date of retirement for DROP calculation purposes and for determining
credited service of a DROP participant shall be the day selected by the member to begin
participation in the DROP.
(e) Death benefits under the DROP.
(1) Upon the death of a DROP participant, the named beneficiary shall be entitled to apply
for and receive the accrued benefits in the DROP as provided under subsection (d)(5)b, of this
section.
(2) The pension benefit paid to the DROP during the month of a DROP participant's death
shall be the final pension benefit accrued for such DROP participant.
(3) Eligibility to participate in the DROP terminates upon the death of a DROP participant. If
the DROP participant dies on or after the effective date of enrollment in the DROP, but prior to
the first monthly benefit being credited to the DROP, retirement system benefits shall be paid in
accordance with section 82-123.
(4) A DROP participant's survivor shall not be eligible for retirement system death benefits
as provided in section 82-124.
(f) Cost of living adjustment. The DROP participants' normal pension benefit shall be
increased as provided in subsection 82-63(b).
(g) Renewed membership. Contributions that normally would be made by the employee and
the town will not be paid into the retirement system upon an individual's election to participate in
the DROP.
(h) Administration of the program. The board of trustees shall make such rules as are
necessary for the effective and efficient administration of this subsection. The board of trustees
shall not be required to advise participants of the federal tax consequences of an election related
to the DROP but may advise participants to seek independent advice.
(1) The DROP will be cost -neutral to the town. To maintain the cost -neutral basis to the
town, the credited interest rate and any reduction in the DROP participants' monthly pension
benefits payable to the DROP will be reviewed by the board of trustees from time to time as
other actuarial assumptions are reviewed. All costs of the DROP and any increase or decrease in
the cost of administering the DROP will be absorbed by:
00422759-1 Ordinance No. 18-2014 Page 17 of 26
a. A change of the or establishment of a reduction of the DROP participants' monthly
pension benefits calculated under the DROP and/or
b. A change in the fees covering the cost of administering the DROP, as determined by the
board of trustees.
(3) Notwithstanding any other provision of this section 82-119 or the code, a member who
receives any DROP benefits for the portion of their pension benefits earned on or after May 1,
2012 shall be an at -will employee for the entire DROP period.
(i) DROP accounts upon termination of employment.
(1) Interest under the system investment method shall continue to accrue on the DROP until
a terminated member reaches age 60, at which time interest and earnings shall cease.
(2) Forms of Payment for Full Distribution – At retirement and full separation from service,
a member has the following options from his or her DROP:
a, single cash lump -sum distribution;
b. direct rollover to an eligible retirement plan; or
C. partial cash single lump -sum distribution and a partial rollover to an eligible retirement
plan.
(3) One-time Partial Distribution Option – At or after retirement and full separation from
service, but prior to the date of the required minimum distribution and/or the full distribution
described in subsection (2) above, a member has the option to make an election for a one-time
partial distribution from his or her DROP under one of the following options:
a. single cash lump -sum distribution;
b. direct rollover to an eligible retirement plan; or
C. partial cash single lump -sum distribution and a partial rollover to an eligible retirement
plan."
Section 7. The Code of Ordinances of the Town of Palm Beach is hereby amended at
Chapter 82, Personnel; Article II, Employee Benefits; Division 2, Retirement System;
Subdivision I, In General; Section 82-127, to be deleted as follows:
"See. 82 127. Ponce sari plan.
• - .. .. -
- ineluding DROP partieipants, employed on i
ay 1, 2012. The
revem— received by the town pursuant to F.S. eh. 185. The total afnetint of pretnium tax
hefein is $141,579.00
00422759-1 OrdinanceNo. i of
1, h is the aeeumu1 a exeess premium to revenues in th"ension fund as of September 30
2012. i
(1) Grediiing of ex.— —11 tox r-evemfes-, No later than 120 days after the adeption o
this seetion, the share ieh aetive poliee offieer and DROP paffieipant on the town's
payfell as of May 0
2012 shall be eredited as follows. Haeh member- who was employed as a
poliee offieer en May 1, 2012 shall reeeive one share f6f eaeh eomplete month of efedit
§cr rrc�--rn d ffo� m-cdate of hirethrough April 30, 2012. The total number of shares +1,us
deteffnined shall be divided into total afnotipA of premium twE reventies to be alloec-Aed to
derive the value of eaeh m mbe f's share.
harp n nt alloel�ation and is employed by the town on the date of distribution shall feeeive
payment f+om the town equal to their share aeeount balanee, Employees who wish to defef taxes,
on theif share aeeount payment may defer an amount equal to their share aeeount payment4e-the
457 plan, and ill be able t«invest -the shafe"-Plan pree-eds in the investment options provided
thfough the 457 plan Tdomlers hr-eeeiveshare a,lt -A11oe t' and r otemployed-by
the town on the date of distribution shall reeeive their share aeeount balanee in a eash payment,
subjeet to withholding of applieable taxes and penalties in aeeordanee with federal law, or- may
eleet to roll over all or- a poftion of the distribution to an 1RA oF --ather qualified plan in
aeeor1anee with seetion 92 77
(b) Ef eetiye Oetebef 1, 2013, the member- n ntribetionn of online „ff;no, ml-.or�li_bo
iner-eased by n ontage of n mn nsation equal t the dollar amount of distributions made bFe
iz
nuuv
the town pursuant tv-s'dl'osc j-abvvti Immediately f6flowingthe in — ... -... embef
eontributions of poliee of ee f members, the fnem mar__ eontributionn o f n lino of eer Members
shall be r-edueed to the level in effeet pfior to the inerease, sueh that there is no ehange in the
member eontr-i-bution rate. The Feduetion in fflember- t 'l, t' of n lino offinor mwith the fesult that the oml.e�
town'sshall be funded by applieation of aeeumulated exeess premitim tax revenues in the pension
redueed by an afflount equal to the amount of aeetimulated . um tax r-evenues used to
f a the eduction ; mr, r ntr-ib ,tions of n lino offinor mem—b.—or—S. 11
Section 8. The Code of Ordinances of the Town of Palm Beach is hereby amended at
Chapter 82, Personnel; Article II, Employee Benefits; Division 2, Retirement System;
Subdivision V, General Employees and Lifeguards; Section 82-139, to read as follows;
"Sec. 82-139. Deferred retirement option program for members of benefit group general
and benefit group lifeguard.
(a) Generally. In general, and subject to the provisions of this section, the deferred retirement
option program, hereinafter referred to as the DROP, is a program under which an eligible
member of benefit group general and benefit group lifeguard may elect a retirement date,
participate and defer receipt of retirement benefits while continuing employment.
(1) For members who are DROP participants, effective January 1, 2015, a member's DROP
account assets will automatically be invested in the system investment method. However, for
members who retired, separated from service, or died prior to January 1, 2015, and elected to
00422759-1 Ordinance No, 18-2014 Page 19 of 26
have amounts in their DROP account moved to a self-directed investment method on or before
December 31, 2014, those amounts shall be invested in the self-directed investment method only.
(2) The system investment method. The deferred monthly benefits of a DROP participant
shall accrue in the retirement system on behalf of the DROP participant plus or minus interest
based on the actual rate of return of the retirement system, which, as of January 1, 2015, will be
averaged over a trailing five-year period, to be applied quarterly. DROP assets are commingled
with the pension fund assets for investment purposes and are subject to payment of pro rata share
of the fund's administrative expenses based on the system investment method. Effective January
1, 2015, new DROP accounts will automatically be invested under the system investment
method.
(3) The self-directed investment method. For members entering the DROP after January 1,
2003, who retired, separated from service, or died prior to January 1, 2015, and elected to have
amounts in their DROP account moved to a self-directed investment method on or before
December 31, 2014, the participant may choose to have a self-directed individual investment
account to which his or her monthly benefits shall be transferred. The board may select a
third -party administrator or provider for this purpose. After such selection, each participant shall
direct the manner in which the amounts in his or her self-directed individual investment account
shall be invested from an array of options selected by the board. DROP assets invested under the
self-directed investment method shall receive DROP statements. The assets invested in the
self-directed investment method are subject to the administrative and investment management
fees assessed by any third -party administrator or provider.
(4) During the period of DROP participation, neither the town nor the DROP participant is
obligated to make additional contributions to the retirement system on behalf of the DROP
participant and the DROP participant will not earn any credited service while participating in the
DROP. Upon termination of employment and participation in the DROP, the DROP participant
shall receive his or her total DROP benefits and begin to receive his or her previously determined
normal retirement benefits. Employment while participating in the DROP does not guarantee
employment for any specified period.
(b) Eligibility of member to participate in the DROP. Retirement system members are
eligible to elect participation in the DROP provided that they elect to retire as of a date certain
and provided that;
(1) Election to participate may be within 84 months following the date on which the member
first reaches normal retirement date or age as follows;
a. Members of benefit group general who were employed by the town and not participating
in the DROP on May 1, 2012 shall be eligible to participate in the DROP upon attaining age 55
or upon completion of 30 years of credited service regardless of age. Such member who fails to
make an election within such 84 -month election period shall forfeit all rights to participate in the
DROP.
b. Members of benefit group lifeguard who were employed by the town and not
participating in the DROP on May 1, 2012 shall be eligible to participate in the DROP upon
attaining age 50 or the date on which the member's age to last completed month plus credited
00422759-1 Ordinance No. 18-2014 Page 20 of 26
service totals 65 years or more. The benefit payable to such member shall be the frozen accrued
benefit based on credited service prior to May 1, 2012. The accrued benefit based on credited
service on and after May 1, 2012 shall be payable to such member's DROP account, or directly
to the member if DROP participation has ceased, upon attaining age 65. Such member who fails
to make an election within such 84 -month election period shall forfeit all rights to participate in
the DROP.
C. Members of benefit group general and benefit group lifeguard hired on or after May 1,
2012 shall be eligible to participate in the DROP upon attaining age 65 with ten or more years of
service.
(1) The member is not utilizing an early retirement option.
(2) There is no break in service to the town between the member's last working day prior to
DROP participation and the member's first day as a DROP participant.
(c) Participation in the DROP.
(1) The date on which participation in the DROP must terminate is within 120 months of the
commencement of the election period provided in subsection (b)(1) of this section. Participation
in the DROP may not exceed a maximum of 60 months. No DROP participant may continue to
be eligible to participate in the DROP for more than 60 months or for any time after 120 months
following the date on which the member first reaches normal retirement age or date, unless the
member first reached normal retirement age or date prior to the effective date of the ordinance
from which this section derives.
(2) Submission of required information. Upon electing to participate in the DROP, the
member shall submit on forms required by the retirement system;
A written election to retire, effective no more than 60 months after entering participation
in the DROP;
b. A written election to participate in the DROP;
C. An irrevocable resignation from service to the town and withdrawal from the DROP, both
effective after no more than 60 months participation in the DROP;
d. A properly completed DROP application for service retirement as provided in this
section; and
Any other information required by the retirement system.
(3) Re-employed retirants. Re-employed retirants of the town's retirement system are not
eligible to participate in DROP.
(d) Compensation for work performed while participating in the DROP. Starting pay shall
be at the base pay rate in effect on the employee's last working day of employment, prior to
participation in the DROP. Job performance will be evaluated under the town's pay for
performance system, and performance pay increases will be permitted as established by town
policy. General pay increases shall also be awarded, as approved by the town council and the
00422759-1 Ordinance No. 18-2014 Page 21 of 26
town manager. Performance pay increases and general pay increases awarded to DROP
participants will be reflected in their salary but will not be reflected in pension payments made to
DROP accounts or made after DROP participation,
(1) Effective with the date of DROP participation, the member's initial normal monthly
pension benefit, calculated in accordance with section 82-135 and based on creditable service
and average final compensation and the effective date of retirement, shall be fixed. Retirement
system amendments which become effective after the establishment date of participation in the
DROP will not be applicable to the DROP participant, unless so stated by the amendment. The
monthly pension benefit (minus any reduction as determined by the board of trustees as provided
by subsection (h) of this section), cost of living adjustments, interest and earnings thereon, if any,
shall accrue monthly in the retirement system or the individual investment account as applicable.
Interest under the system investment method only shall accrue at an effective annual rate to be
determined hereunder as set forth in subsection (h) of this section, and will be compounded
monthly, on the prior month's accumulated ending balance, up to the month of termination of the
DROP or death. Provided, however the monthly pension benefit payable to members of benefit
group general or benefit group lifeguard who entered the DROP before May 1, 2012 or who
were employed on that date and attained normal retirement based on credited service as of
May 1, 2012, excluding credited service purchased pursuant to section 82-54, and who elect to
become DROP participants shall be reduced by two percent to fund the probability of increased
cost to the retirement system of members of such employment group electing to participate in
DROP, which reduced amount shall thereafter be such participants' normal retirement or pension
benefits, The monthly pension benefit payable to members of benefit group general or benefit
group lifeguard who did not attain normal retirement based on credited service as of May 1,
2012, excluding credited service purchased pursuant to section 82-54, and who enter the DROP
on or after May 1, 2012 shall not be reduced, The reduction in the DROP benefit provided in this
paragraph will be reviewed by the board of trustees from time to time as other actuarial
assumptions are reviewed and may be modified by the town council.
(2) The monthly pension benefits calculated upon entry into the DROP (minus any reduction
as determined by the board of trustees as provided by subsection (h) of this section) and interest
thereon, if any, shall continue to accrue in the DROP until the established termination date of the
DROP, or until the DROP participant terminates employment or dies prior to such date, but not
to exceed 60 months.
(3) Employee benefits, other than benefits under the retirement system, which are normally
granted to employees, will be provided to DROP participants. Such DROP participants are
members of the retirement system.
(4) At the conclusion of the participant's DROP, any credits made to a DROP participant's
account will cease. Membership in the DROP will automatically terminate 60 months after the
effective date of participation in the DROP, except as provided in subsection (c)(1)a. above.
DROP participants may elect to discontinue membership in the DROP at any time, provided a
two-week written notice of termination has been submitted to the plan administrator.
(5) At the conclusion of the participant's DROP, the retirement system may distribute the
participant's total accumulated DROP benefits, subject to the following provisions:
00422759-1 Ordinance No. 18-2014 Page 22 of 26
a. The retirement system shall receive verification that such DROP participant has
terminated membership in the DROP.
b. The terminated DROP participant, or if deceased, such DROP participant's named
beneficiary, shall elect on forms provided by the retirement system to receive payment of the
DROP benefits in accordance with one of the options listed below.
1. Lump sum. All accrued DROP benefits, plus interest and earnings, if any, less
withholding taxes remitted to the United States Internal Revenue Service, shall be paid to the
DROP participant or surviving beneficiary.
2. Direct rollover. In the even there is an eligible rollover distribution to a member or a
member's spouse or former spouse, all such accrued DROP benefits, plus interest and earnings, if
any, elected to be rolled over, shall be paid from the DROP directly to the custodian of an
eligible retirement plan as defined in section 402(c)(8)(B) of the United States Internal Revenue
Code. However, in the event there is an eligible rollover distribution to a named beneficiary who
is not a spouse or former spouse of a deceased DROP participant payable under the terms of the
plan, an eligible retirement plan is an individual retirement account or an individual retirement
annuity as described in section 402(c)(I 1) of the United States Internal Revenue Code,
3. Partial lump sum. A portion of the accrued DROP benefits shall be paid to the DROP
participant or surviving spouse, less withholding taxes remitted to the United States Internal
Revenue Service, and the remaining DROP benefits shall be transferred directly to the custodian
of an eligible retirement plan as defined in section 402(c)(8)(B) of the United States Internal
Revenue Code. However, in the case of an eligible rollover distribution to the surviving spouse
of a deceased DROP participant, an eligible retirement plan is an individual retirement account
or an individual retirement annuity as described in section 402(c)(11) of the United States
Internal Revenue Code. The proportions shall be specified by the DROP participant or surviving
beneficiary.
c. The form of payment selected by the DROP participant or surviving beneficiary complies
with the minimum distribution requirements of the United States Internal Revenue Code and
payments begin no later than the date on which the participant reaches age 70 years and six
months.
(6) The accrued benefits of any DROP participant, and any contributions accumulated under
such program, shall not be subject to assignment, execution, attachment, or to any legal process
whatsoever, except for income deduction orders and federal income tax levies.
(7) DROP participants shall not be eligible for disability retirement benefits as provided in
section 82-140 or 82-141. In the event a DROP participant becomes incapacitated for
employment by the town as defined under section 82-140 or 82-141, the DROP participation will
terminate, and the former DROP participant will elect one of the alternatives under subsection
(d)(5)b. of this section.
(8) The effective date of retirement for DROP calculation purposes and for determining
credited service of a DROP participant shall be the day selected by the member to begin
participation in the DROP.
00422759-1 Ordinance No. 18-2014 Page 23 of 26
(e) Death benefits under the DROP.
(1) Upon the death of a DROP participant, the named beneficiary shall be entitled to apply
for and receive the accrued benefits in the DROP as provided under subsection (d)(5)b. of this
section.
(2) The normal pension benefit accrued to the DROP during the month of a DROP
participant's death shall be the final monthly pension benefit accrued for such DROP participant.
(3) Eligibility to participate in the DROP terminates upon the death of a DROP participant. If
the DROP participant dies on or after the effective date of enrollment in the DROP, but prior to
the first monthly benefit being credited to the DROP, retirement system benefits shall be paid in
accordance with section 82-143.
(4) A DROP participant's survivor shall not be eligible for retirement system death benefits
as provided in section 82-144.
(f) Cost of living adjustment. The DROP participants' normal pension benefit shall be
increased as provided in subsection 82-63(b).
(g) Reneged membership. Contributions that normally would be made by the employee and
the town will not be paid into the retirement system upon an individual's election to participate in
the DROP.
(h) Administration of the program. The board of trustees shall make such rules as are
necessary for the effective and efficient administration of this subsection. The board of trustees
shall not be required to advise participants of the federal tax consequences of an election related
to the DROP but may advise participants to seek independent advice.
(1) The DROP will be cost -neutral to the town. To maintain the cost -neutral basis to the
town, the credited interest rate and any reduction in the DROP participants' monthly pension
benefits payable to the DROP will be reviewed by the board of trustees from time to time as
other actuarial assumptions are reviewed. All costs of the DROP and any increase or decrease in
the cost of administering the DROP will be absorbed by;
a. A change of the or establishment of a reduction of the DROP participants' monthly
pension benefits calculated under the DROP; and/or
b. A change in the fees covering the cost of the administering the DROP, as determined by
the board of trustees as determined by the board of trustees with approval by the town council.
(2) For those participants under the system investment method, interest shall be calculated
based on the actual rate of return of the retirement system averaged over a trailing five-year
period, to be applied quarterly. Such interest rate shall be reviewed by the board of trustees from
time to time as other actuarial assumptions are reviewed and may be redetermined by the board
of trustees with approval by the town council.
(3) Notwithstanding any other provision of this section 82-139 or the code, a member who
receives any DROP benefits for the portion of their pension benefits earned on or after May 1,
2012 shall be an at -will employee for the entire DROP period.
00422759-1 Ordinance No. 18-2014 Page 24 of 26
(i) DROP accounts upon termination of employment.
(1) Interest under the system investment method shall continue to accrue on the DROP until
a terminated member reaches age 60, at which time interest and earnings shall cease.
(2) Forms of Payment for Full Distribution — At or after retirement and full separation from
service, a member has the following options from his or her DROP:
a. single cash lump -sum distribution;
b. direct rollover to an eligible retirement plan; or
C. partial cash single lump -sum distribution and a partial rollover to an eligible retirement
plan.
(3) One-time Partial Distribution Option — At retirement and full separation from service, but
prior to the date of the required minimum distribution and/or the full distribution described in
subsection (2) above, a member has the option to make an election for a one-time partial
distribution from his or her DROP under one of the following options:
a, single cash lump -sum distribution;
b. direct rollover to an eligible retirement plan; or
C. partial cash single lump -sum distribution and a partial rollover to an eligible retirement
plan."
Section 9. Severability.
If any provision of this Ordinance or the application thereof is held invalid, such
invalidity shall not affect the other provisions or applications of this Ordinance which can be
given effect without the invalid provisions or applications, and to this end the provisions of this
Ordinance are hereby declared severable.
Section 10. Repeal of Ordinances in Conflict.
All other ordinances of the Town of Palm Beach, Florida, or parts thereof which conflict
with this or any part of this Ordinance are hereby repealed.
Section 11. Codification.
This Ordinance shall be codified and made a part of the official Code of Ordinances of
the Town of Palm Beach,
Section 12. Effective Date.
This Ordinance shall take effect immediately upon its passage and approval, as provided
by law.
00422759-1 Ordinance No. 18-2014 Page 25 of 26
PASSED AND ADOPTED in a regular, adjourned session of the Town Council of the
Town of Palm Beach on first reading this 13th day of November 2014, and for second and final
reading on this 9th day of December, 2014.
ail L. Coniglio, May
ATTEST
'9a, 14.1
usan A. Owens, MMC, Town Cleric
jL
Richard M. Kleid, Town Council Member
`J. Pucill CouneRMember
DRownsend, Town Council Member
00422759-1 Ordinance No. 18-2014 Page 26 of 26