City of Roseville, MI
Macomb County
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Table of Contents
Table of Contents
[HISTORY: Adopted by the City Council of the City of Roseville 9-24-2002 by Ord. No. 1171. (Section 1 of this ordinance provided for the following: Purpose. Any employee who is a member of the City of Roseville Employees Retirement System and is offered participation in the City of Roseville Deferred Retirement Option Plan (hereinafter DROP) pursuant to the terms of an applicable collective bargaining agreement, memorandum of understanding, or personal services contract, may at any time voluntarily elect to participate in the DROP after attaining the minimum requirements for regular retirement pension. Upon commencement of DROP participation, the Participant DROP benefit shall be the dollar amount of the employee's monthly pension benefit computed by using the contractual guidelines and formula(s) that are in effect on the DROP date. During participation in the DROP, the Participant continues with full employment status and receives all future promotions and benefits/wage increases. The Participant's DROP benefits shall be credited monthly to the Participant's DROP account, which shall be established within the defined benefit plan of the City of Roseville Employees Retirement System (the Retirement System or Plan). The Participant's DROP account shall be maintained and managed by the Board of Trustees of the Retirement System (the Retirement Board). Upon termination of employment, the retiree shall begin to receive payment(s) from his or her individual DROP account as described within this ordinance. The DROP payment(s) are in addition to all other contractual pension benefits. The Participant is solely responsible for analyzing his or her individual benefit and tax consequences of participation in the DROP.) Amendments noted where applicable.]
CHARTER REFERENCES
Compensation Commission — See Ch. 15.

§ 18-1 Eligibility.

A. 
The DROP program will be available only to those members of the retirement system to whom eligibility to participate in the program has been granted pursuant to the terms of an applicable collective bargaining agreement or personal services contract. "Collective bargaining agreement" means any written agreement, supplemental agreement, memorandum of understanding, final arbitrator's decision, judicial decision of any public board or agency, by and between applicable collective bargaining associations and the City. "Personal services contract" means any written agreement, or supplemental agreement between nonunion employees and the City as authorized by City Council.
B. 
Any member to whom DROP eligibility has been granted may voluntarily elect to participate in the DROP at any time after they have attained voluntary retirement age and ten or more years of credited services. The member's election to participate in the DROP shall not operate to change or in any way modify the retirement system's minimum requirement for voluntary retirement.

§ 18-2 Participation.

A. 
Any member to whom DROP eligibility has been granted may participate in the DROP on a year-to-year basis, subject to annual review and approval, for an aggregate period of no more than seven years. There is no minimum time period for participation. An employee must cease service with the City of Roseville at the time their DROP participation ceases. In no event shall participation in the DROP require a just-cause standard for termination of the employee in participating in the DROP, notwithstanding any agreement, collective bargaining agreement, personal services contract, Act 78 or any other writing governing the employment relationship between the participant and the City of Roseville. Annual DROP participation is at the sole discretion of the City of Roseville.
[Amended 7-11-2006 by Ord. No. 1203]
B. 
Upon termination of employment, the retiree shall commence receipt of the monthly retirement benefit previously credited to their DROP account, unless an optional form of benefit is elected pursuant to § 18-4. Failure to terminate employment at the expiration of the DROP participation period shall result in forfeiture of the participant's monthly pension benefit otherwise payable to their DROP account until termination of employment. Interest on the DROP account, however, will continue to accrue during such a forfeiture period.

§ 18-3 Election to participate.

A. 
Once commenced, participation in the DROP program is irrevocable, except as specifically provided in § 18-11. An employee who wishes to participate in the DROP shall complete and sign such application form or forms as shall be required by the Retirement Board not less than 30 days nor more than 90 days prior to their intended DROP date. The Retirement Board shall review the application within a reasonable time period and make a determination as to the employee's eligibility for participation in the DROP. On the employee's effective DROP date, he or she shall become a DROP participant and shall cease to be an active member of the retirement system. The amount of credited service, multiplier and final average compensation shall be fixed as of the participant's DROP date. Increases in compensation and accrual of additional service during DROP participation shall not be factored in the pension benefits of active or former DROP participants except as specifically provided in § 18-11. A participant's DROP date only applies to the employee's retirement benefit provisions as provided herein and not to any other contractual benefits or retiree medical benefits in effect or accruing after participant's DROP date.
B. 
Employees otherwise qualifying for DROP participation shall have a sixty-day-window period commencing April 2, 2003, through and including May 31, 2003, during which eligible employees may file a retroactive DROP election with the Retirement Board with an effective DROP date commencing no earlier than July 1, 2001. The employee must otherwise qualify for DROP participation on his or her effective DROP date. An employee electing retroactive DROP participation in accordance with this provision shall have DROP benefits based upon the retirement provisions and computation formula in effect on his or her effective DROP date and the employee's applicable wage and accumulated banks as of his or her effective DROP date.
[Added 5-20-2003 by Ord. No. 1179]
C. 
Upon expiration of said sixty-day-window period, employees electing DROP participation shall have an effective DROP date no less than thirty days or more than ninety days after the employee's date of application. Employees electing retroactive DROP participation shall receive a refund of their accumulated contributions in the retirement system which were credited after their effective DROP date. Said amount shall be treated as a lump-sum payment payable at DROP election with no reduction in the member's retirement or DROP benefit.
[Added 5-20-2003 by Ord. No. 1179]

§ 18-4 DROP Benefit.

A. 
The participant's DROP benefit shall be the regular monthly retirement benefit to which the employee would have been entitled if the employee had actually retired on the DROP date less the annuity withdrawal reduction as set forth in § 18-5 and/or actuarial reductions as a result of the employee electing an optional form of benefit under the plan, if applicable. The calculation of the employee's final average compensation (FAC) shall be based upon the contract provisions in effect on the employee's DROP date and, to the extent applicable, shall include all monies which if the Employee had terminated employment on their DROP date, would have otherwise been included in calculating the employee's FAC.
B. 
The participant's DROP Benefit shall be credited monthly to the participant's individual DROP account. A DROP participant may, prior to their DROP date, or at the time of their termination of employment, elect to receive his or her benefit in the form of the plan's Option I, Option II, or Option III benefit and nominate a named beneficiary in accordance with the plan provisions. A participant's DROP benefit that is credited monthly into the participant's DROP account shall not change during the participant's DROP participation. A participant desiring to change his or her form of benefit at termination of employment must make such election prior to termination and will receive the actuarially computed revised benefit commencing on the employee's effective date of termination. The term "spouse," for purposes of survivorship benefit qualification of DROP participants, shall mean the person to whom the participant was legally married on the participant's date of death if such death occurs during DROP participation or the person to whom the retirant was legally married on both the effective date of termination of employment and the retirent's date of death, in the event such death occurs after termination of employment. The definition of "spouse" herein may be amended pursuant to an eligible domestic relations order entered pursuant to Michigan Public Act 46 of 1991, as amended (MCL § 38.1701 et seq.).

§ 18-5 Annuity withdrawal.

A. 
An employee who elects to participate in the DROP, and correspondingly ceases participation in the retirement system, may elect the annuity withdrawal option provided by the plan at the time of electing DROP participation. Such election shall be made commensurate with the participant's DROP election, but not thereafter, and will be utilized to compute the actuarial reduction of the participant's DROP benefit, as well as the employee's monthly retirement benefit from the retirement system after termination of employment. If the participant, pursuant to § 18-4, elects an optional form of benefit upon termination of employment, the annuity withdrawal reduction shall be redetermined and the retirant's monthly retirement benefit adjusted.
B. 
The annuity withdrawal amount (accumulated contributions) shall remain in the retirement system and shall not be subject to withdrawal from the retirement system until the time of the termination of employment. A DROP participant who has elected the annuity withdrawal option shall, as of his or her DROP date, continue to have regular interest credited to the member's accumulated balance in the annuity savings fund. All withdrawal provisions and options under the retirement system which are available to members shall be available to the DROP participant at such time as he or she terminates employment and becomes eligible for withdrawal of his or her contributions.
C. 
At the time of the annuity withdrawal election, if an employee is electing a straight life form of benefit with no qualifying spouse, the annuity withdrawal reduction computation is based in part upon the actuarial life expectancy of the employee rather than the life expectancies of both the employee and a qualified spouse. There shall be no adjustment to the benefits payable to the DROP participant/retiree upon the participant's subsequent marriage to a qualifying spouse unless the participant selects an optional form of benefit at termination of employment as provided in § 18-4. In the event such spouse (i.e., qualified after calculation of the annuity withdrawal election) subsequently qualifies for benefits payable by the plan, said benefits shall not be adjusted based upon the employee's annuity withdrawal election.

§ 18-6 DROP accounts.

[Amended 7-11-2006 by Ord. No. 1203]
For each DROP participant, an individual DROP account shall be created in which shall be accumulated at DROP interest the participant's DROP benefits. All individual DROP accounts shall be maintained for the benefit of each DROP participant and will be managed by the Retirement Board in the same manner as the primary pension fund. DROP interest for each DROP participant shall be at a fixed rate of 3.0% per annum with interest credited on the anniversary date that the participant entered into the DROP. The Retirement Board shall provide each participant with an annual statement of their account activity. The reference to individual DROP accounts shall be interpreted to refer to the accounting records of the retirement system and not to the actual segregation of monies in the funds of the retirement system.

§ 18-7 Contributions.

A. 
The employee's contributions to the retirement system shall cease as of the participant's DROP Date for each employee entering the DROP.
B. 
The payroll of DROP participants will be included in the covered compensation upon which regular City contributions to the retirement system are based. Employer contributions shall be credited to the retirement system and not to any individual's DROP Account.

§ 18-8 Distribution of DROP funds.

A. 
Methods of Distribution. Upon termination of employment, the DROP participant must choose one or a consistent combination of the following distribution methods to receive payment(s) from his or her individual DROP account:
(1) 
A total lump sum distribution to the recipient.
(2) 
A partial lump sum distribution to the recipient.
(3) 
A lump sum direct rollover to another qualified plan to the extent allowed by federal law and in accordance with the Retirement Board's rollover procedures.
(4) 
An annuity payable for the life of the recipient.
(5) 
An optional form of annuity as established by Public Act 345 of 1937, as amended.
(6) 
No distribution, in which case the accumulated balance shall remain in the plan to the extent allowed by federal law.
B. 
Changes in distribution. A former participant may change his/her distribution method as may be applicable no more than once per annum. All benefit payments under the plan shall be made, or commence, in the case of an annuity, as soon as practical after entitlement thereto, but in no event later than April 1 following the later of:
(1) 
The calendar year in which the member attains age 70 1/2; or
(2) 
The calendar year in which the participant's employment terminated.
C. 
Involuntary distribution. If the accumulated balance in any former participant's account becomes less than $5,000 (or such other amount as provided in the Internal Revenue Code Section 411[a][11][A]), then the Retirement Board, in its sole discretion, shall have the option of distributing the former participant's entire account, in the form of a lump sum to the former participant.
D. 
Distribution offsets. Any and all distributions from participant's DROP account shall not be subject to offset by any workers compensation wage loss payments received by the participant, including any redemption amounts.

§ 18-9 Death during DROP participation.

Except as otherwise provided in § 18-11, if an employee participating in the DROP dies either before full retirement (i.e., before termination of service) or during full retirement (i.e., after termination of service, but before the DROP account balance has been fully paid out, the participant's designated beneficiary(ies) shall receive the remaining balance in the participant's DROP account in the manner in which they elect from the distribution methods as provided in § 18-8. In the event the participant has failed to name a beneficiary, the account balance shall be payable to the participant's beneficiary of benefits from the retirement system. If there is no such beneficiary, the account balance shall be paid in a lump sum to the participant's estate. Benefits payable from the retirement system shall be determined as though the DROP participant had separated from service on the day prior to the participant's date of death.

§ 18-10 Disability during DROP participation.

Except as otherwise provided in § 18-11, in the event a DROP participant becomes totally and permanently disabled from further performance of duty in the employ of the City of Roseville in accordance with the provisions of the retirement system, the participant's participation in the DROP shall cease and the member shall receive such benefits as if the member had retired and terminated employment during the participation period. Application and determination of disability shall be conducted in accordance with the retirement system provisions; however, the participant shall not be eligible for disability benefits from the retirement system, except as specifically provided in § 18-11.

§ 18-11 Special provision for duty disability or duty death.

A DROP participant who is found by the Retirement Board, in accordance with retirement system provisions, to be totally and permanently incapacitated for duty by reason of a personal injury or disease occurring as the natural and proximate result of causes arising out of and in the course of the employee's employment with the City, may retroactively revoke the participant's DROP election if the revocation occurs before the payment of a distribution to the employee from the participant's DROP account or payment of disability or retirement benefits to the employee from the retirement system. If a DROP participant dies in the line of duty while in the employ of the City, the DROP participant's eligible survivors qualified under the retirement system provisions and/or the participant's applicable collective bargaining agreement, and the participant's eligible DROP beneficiary(ies) may, by unanimous agreement, retroactively revoke the participant's DROP election if the revocation occurs within 90 days of the participant's date of death and before payment of a distribution from the participant's DROP account or payment of benefits from the retirement system. If a DROP election revocation is made as prescribed by this section, the participant's DROP account is not distributed, and the participant or the participant's beneficiary(ies), as applicable, is entitled to all benefits provided by the retirement system as if a DROP election had not been made. In the event of revocation of DROP participation as provided herein, there shall be no requirement for retroactive payment of employee contributions which would otherwise have been paid by the employee to the retirement system, and the employee shall receive credit for all service rendered during the DROP participation or as otherwise provided in the applicable collective bargaining agreement.

§ 18-12 Internal Revenue Code compliance.

A. 
The DROP is intended to operate in accordance with Section 415 and other applicable laws and regulations contained within the Internal Revenue Code of the United States. Any provision of the DROP, or portion thereof, that is found by the Retirement Board to be in conflict with an applicable provision of the Internal Revenue Code of the United States is hereby declared null and void.
B. 
The City of Roseville Employees Retirement System consists of both defined benefit and defined contribution plans. The DROP account herein discussed shall be established as part of the defined benefit plan of the retirement system or such other plan as the Retirement Board and the City shall agree upon (i.e., IRC, Section 415[m], benefit plan) after consultation with appropriate legal council.

§ 18-13 Effective date.

[Added 4-1-2003 by Ord. No. 1174]
Ordinance No. 1171 of the City of Roseville Code of Ordinances, adopted September 24, 2002, and effective October 14, 2002, is hereby given retroactive effect to July 1, 2001.