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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 (b) Except as provided in section 82-80, credited service shall be forfeited and no longer in force if an individual has a break in town employment of more than 12 months or if an individual's accumulated member contributions are withdrawn from the reserve for employee contributions and paid to the individual or a beneficiary (including an estate).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. 00422759-1 Ordinance No. 18-2014 Page 2 of 26 (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. 00422759-1 Ordinance No. 18-2014 Page 3 of 26 (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. 00422759-1 Ordinance No. 18-2014 Page 4 of 26 (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 00422759-1 Ordinance No. 18-2014 Page 5 of 26 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 00422759-1 Ordinance No. 18-2014 Page 7 of 26 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 00422759-1 Ordinance No. 18-2014 Page 8 of 26 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. 00422759-1 Ordinance No. 18-2014 Page 9 of 26 (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