Ordinance 34-2017 Retirement ORDINANCE NO. 34-2017
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 82-67, UNITED STATES INTERNAL
REVENUE CODE QUALIFICATION; 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 82-67, to read as follows:
"Sec. 82-67. - United States Internal Revenue Code qualifications.
(a) The town intends the retirement system to be a qualified pension plan under section 401 of
the United States Internal Revenue Code, as amended, or successor provisions of law, and
that the trust be an exempt organization under section 501 of the United States Internal
Revenue Code. The board of trustees may adopt such additional provisions to the retirement
system as are necessary to fulfill this intent.
(b) In accordance with section 415 of the United States Internal Revenue Code, as amended,
the following limitations on benefits are adopted:
(1) Except as provided in the remainder of this subsection, the annual benefit as described
by section 415(b)(2) of the United States Internal Revenue Code provided by the
retirement system shall not exceed the lesser of $160,000.00, or 100 percent of the
retirant's average compensation for his highest three years of compensation while
employed.
(2) If the annual benefit under the plan begins before age 62, or after age 65, the limit set
forth in subsection (b)(1) above shall be reduced or increased so that such limitation
equals an annual benefit which is equivalent to a$160,000.00 annual benefit beginning
at age 62, or age 65, respectively, as set forth in regulations prescribed by the United
States Secretary of the Treasury.
(3) All definitions, limitations and exceptions set forth in or incorporated in section 415
of the United States Internal Revenue Code are applicable to this section.
(4) The provisions of this division notwithstanding, the board of trustees shall at all times
administer the retirement system in compliance with the provisions of section 415 of
the United States Internal Revenue Code which are applicable to public employee
retirement plans who have not elected the grandfather provision.
(5) Employee-elective salary reductions or deferrals to any salary reduction, deferred
compensation, or tax-sheltered annuity program authorized under the rules of the
Internal Revenue Code shall be included in compensation for retirement purposes.
Compensation in excess of the limitations set forth in section 401(a)(17) of the code,
adjusted in accordance with U.S. Treasury Department regulations, shall be
disregarded.
(c) Adjustments to Basic 415(b) Limitation for Form of Benefit. If the benefit under the plan is
other than the form specified below, then the benefit shall be adjusted so that it is the equivalent
of the annual benefit, using factors prescribed in Treasury Regulations.
(6) If the form of benefit without regard to the automatic benefit increase feature is
not a straight life annuity or a qualified joint and survivor annuity, then the preceding
sentence is applied by either reducing the section 415(b)of the Internal Revenue Code limit
applicable at the annuity starting date or adjusting the form of benefit to an actuarially
equivalent amount [determined using the assumptions specified in Treasury Regulation
section 1.415(b)-I(c)(2)(ii)] that takes into account the additional benefits under the form
of benefit in subsections below.
(7) For a benefit paid in a form to which section 417(e)(3) of the Internal Revenue
Code does not apply (generally, a monthly benefit), the actuarially equivalent straight life
annuity benefit that is the greater of:
(A) The annual amount of the straight life annuity (if any) payable to
the member under the plan commencing at the same annuity starting date as the form
of benefit to the member, or
(B) The annual amount of the straight life annuity commencing at the
same annuity starting date that has the same actuarial present value as the form of
benefit payable to the member, computed using a 5% interest assumption (or the
applicable statutory interest assumption) and (i) for years prior to January 1, 2009,
the applicable mortality tables described in Treasury Regulation section 1.417(e)-
1(d)(2) (Revenue Ruling 2001-62 or any subsequent Revenue Ruling modifying the
applicable provisions of Revenue Ruling 2001-62), and(ii) for years after December
31, 2008, the applicable mortality tables described in section 417(e)(3)(B) of the
Internal Revenue Code(Notice 2008-85 or any subsequent Internal Revenue Service
guidance implementing section 417(e)(3)(B) of the Internal Revenue Code);or
(8) For a benefit paid in a form to which section 417(e)(3) of the Internal Revenue
Code applies(generally, a lump sum benefit),the actuarially equivalent straight life annuity
benefit that is the greatest of:
(A) The annual amount of the straight life annuity commencing at the annuity
starting date that has the same actuarial present value as the particular form of benefit
payable, computed using the interest rate and mortality table, or tabular factor,
specified in the plan for actuarial experience;
(B) The annual amount of the straight life annuity commencing at the annuity
starting date that has the same actuarial present value as the particular form of benefit
payable, computed using a 5.5 percent interest assumption (or the applicable
statutory interest assumption) and (i) for years prior to January 1, 2009, the
applicable mortality tables for the distribution under Treasury Regulation section
Ordinance No.34-2017 Page 2 of 6
1.417(e)-1(d)(2) (the mortality table specified in Revenue Ruling 2001-62 or any
subsequent Revenue Ruling modifying the applicable provisions of Revenue Ruling
2001-62), and (ii) for years after December 31, 2008, the applicable mortality tables
described in section 417(e)(3)(B) of the Internal Revenue Code (Notice 2008-85 or
any subsequent Internal Revenue Service guidance implementing section
417(e)(3)(B) of the Internal Revenue Code); or
The annual amount of the straight life annuity commencing at the annuity starting
date that has the same actuarial present value as the particular form of benefit
payable (computed using the applicable interest rate for the distribution under
Treasury Regulation section 1.417(e)-1(d)(3) (prior to January 1, 2009, using the
rate in effect for the month prior to retirement, and on and after January 1, 2009,
using the rate in effect for the first day of the plan year with a one-year stabilization
period and (i) for years prior to January 1, 2009, the applicable mortality tables for
the distribution under Treasury Regulation section 1.417(e)- 1(d)(2) (the mortality
table specified in Revenue Ruling 2001-62 or any subsequent Revenue Ruling
modifying the applicable provisions of Revenue Ruling 2001-62), and (ii) for years
after December 31, 2008, the applicable mortality tables described in section
417(e)(3)(B) of the Internal Revenue Code (Notice 2008-85 or any subsequent
Internal Revenue Service guidance implementing section 417(e)(3)(B) of the
Internal Revenue Code),divided by 1.05.
(c) Other Adjustments in 415(b)Limitation.
(1) In the event the member's retirement benefits become payable before age
sixty-two (62), the limit prescribed by this section for the member's annuity starting date
shall be equal to the lesser of(i) the annual amount of a benefit payable in the form of a
straight life annuity commencing at the member's annuity starting date that is the
actuarial equivalent of the one hundred sixty thousand dollar($160,000)annual limit(as
adjusted under section 415(d) of the Internal Revenue Code and, if required, for years
of participation less than ten (10)), with actuarial equivalence computed using a five
percent (5%) interest rate assumption and the applicable mortality table for the annuity
starting date as defined in the plan (expressing the member's age based on completed
calendar months as of the annuity starting date), and (ii) the one hundred sixty thousand
dollar($160,000) annual limit(as adjusted under section 415(d) of the Internal Revenue
Code and,if required, for years of participation less than ten(10))multiplied by the ratio
of the annual amount of the immediately commencing straight life annuity under the
plan at the member's annuity starting date to the annual amount of the immediately
commencing straight life annuity under the plan at age sixty-two (62), both determined
without applying the limitations of this section.
(2) In the event the member's benefit is based on at least fifteen (15) years of
service as a full-time employee of any police or fire department or on fifteen (15) years
of military service, the adjustments provided for in (I) above shall not apply.
(3) The reductions provided for in (1) above shall not be applicable to pre-
retirement disability benefits or pre-retirement death benefits.
Ordinance No.34-2017 Page 3 of 6
(d) Effect of a Lump Sum Component on 415(b) Testing. With respect to a member
who receives a portion of the member's annual benefit in a lump sum, a member's applicable
Limit shall be applied taking into consideration both the portion of the member's benefit subject
to section 417(e)(3) of the Internal Revenue Code and the portion not subject to section
417(e)(3) of the Internal Revenue Code, as required by section 415(b) of the Internal Revenue
Code and applicable Treasury Regulations.
(e) The retirement system shall pay all benefits in accordance with a good faith
interpretation of the requirements of section 401(a)(9) of the Internal Revenue Code and the
regulations in effect under that section as applicable to a governmental plan within the meaning
of section 414(d) of the Internal Revenue Code. The retirement system is subject to the
following provisions:
(1) Distribution of a member's benefit must begin by the required beginning date,
which is the later of the April 1 following the calendar year in which the member attains
age 70 1/2 or April 1 of the year following the calendar year in which the member
terminates. If a member fails to apply for retirement benefits by the later of either of
those dates, the Retirement Board shall begin distribution of the monthly benefit as
required by this rule in the form provided in Ordinance Sections 82-95 and 82-115.
(2) The member's entire interest must be distributed over the member's life or the
lives of the member and a designated beneficiary, or over a period not extending beyond
the life expectancy of the member or of the member and a designated beneficiary.
(3) The retirement system pursuant to a qualified domestic relations order may
establish separate benefits for a member and nonmember.
(4) If a member dies after the required distribution of benefits has begun, the
remaining portion of the member's interest must be distributed at least as rapidly as under
the method of distribution before the member's death.
(5) If a member dies before required distribution of the member's benefits has begun,
the member's entire interest must be distributed within five (5) years of his death, unless
it is to be distributed in accordance with the following rules:
a. If the member's surviving spouse is the sole designated beneficiary,the member's
remaining interest in the plan is distributed or begins to be distributed by
December 31 of the calendar year immediately following the calendar year in
which the member died or by December 31 of the calendar year in which the
member would have attained age 70 1/2, if later, and if the surviving spouse dies
before the distribution to the surviving spouse begins, this section shall be
applied as if the surviving spouse were the plan member; or
Ordinance No.34-2017 Page 4 of 6
b. If the member's surviving spouse is not the sole designated beneficiary, the
member's remaining interest is to be distributed over the life of the designated
beneficiary or over a period not extending beyond the life expectancy of the
designated beneficiary; and such distribution begins no later than December 31 of
the calendar year immediately following the calendar year of the member's death.
(6) The amount of an annuity paid to a member's beneficiary may not exceed the
maximum determined under the incidental death benefit requirement of section
401(a)(9)(G) of the Internal Revenue Code, and the minimum distribution incidental
benefit rule under Treasury Regulation Section 1.401(a)(9)-6,Q&A-2.
(7) The death and disability benefits provided by the retirement system are limited by
the incidental benefit rule set forth in section 401(a)(9)(G) of the Internal Revenue Code
and Treasury Regulation Section 1.401-1(b)(1)(i) or any successor regulation thereto. As a
result, the total death or disability benefits payable may not exceed 25% of the cost for all
of the members' benefits received from the retirement system.
(8) Notwithstanding the other provisions of this rule or the provisions of the Treasury
Regulations, benefit options may continue so long as the option satisfies section 401(a)(9)
of the Internal Revenue Code based on a reasonable and good faith interpretation of that
section.
(d) The trust fund must not revert, and no contributions shall be permitted to be returned, to
the employer, except due to a mistake of fact as permitted by Revenue Ruling 91-4.
Section 2., 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 3. 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 4. Codification.
This Ordinance shall be codified and made a part of the official Code of Ordinances of the
Town of Palm Beach.
Section 5. Effective Date.
This Ordinance shall take effect immediately upon its passage and approval, as provided
by law.
Ordinance No.34-2017 Page 5 of 6
PASSED AND ADOPTED in a regular, adjourned session of the Town Council of the
Town of Palm Beach on first reading this 12th day of December, 2017, and for second and final
reading on this 9th day of January, 2018.
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G.; L. Coni:o, Mayor / Richard M. Kleid, Town Council President
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Danielle H. Moore, President Pro Tern
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ATTEST: Julie Xraskog,Town CounciPMember
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Ordinance No.34-2017 Page 6 of 6
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