Borough of Tullytown, PA Article III Police Officers Deferred Retirement Option Plan Program

[Adopted 3-5-2013 by Ord. No. 350]

§ 24-4 Definitions.

As used in this article, the following terms shall have the meanings indicated:

DROP

Deferred Retirement Option Plan.

DROP PARTICIPANT ACCOUNTS

A separate interest-bearing subsidiary DROP participant account shall be established for each DROP participant. While a retired member is employed as a DROP participant, the member's monthly, normal retirement benefit and interest thereon shall be credited to the DROP participant's subsidiary DROP participant account. The interest shall be compounded and credited monthly at the actual rate earned by the DROP participant account that shall not be less than 0% nor more than 4 1/2%.

§ 24-5 Terms of participation.

A. Eligibility. Any police officer who has fulfilled the age and service requirements for normal retirement, as set forth in Section V of the Borough of Tullytown Police Pension Plan, Ordinance No. 299,[1] shall be eligible to participate in DROP at his or her option in conformance with this article and after providing at least 30 days' written notice to the employer, the Borough of Tullytown.

[1] Editor's Note: Said plan is on file in the Borough offices.

B. Entry into DROP. Election to participate by an eligible police officer shall be made on any date within the length of the collective bargaining agreement terms and following the date on which the police officer fulfills the minimum age and service requirements for normal retirement under the pension plan. Once a police officer commences participation in DROP, he or she may not choose to end participation in DROP and resume contributions to the pension plan.

C. Request to enter and enrollment forms. Election to participate shall be made by completing the required request and enrollment forms, which shall show the entry date into DROP and the deferred retirement date for the term chosen by the police officer. The deferred retirement date shall not exceed 48 months from the date of enrollment and entry into DROP. The completed documents shall include:

(1) A binding and irrevocable letter of resignation from regular employment with the local government that discloses the member's intent to retire and specifies the member's retirement date.

(2) An irrevocable written election to participate in the DROP that:

(a) Details a DROP participant's rights and obligations under the DROP.

(b) Includes an agreement to forgo:

[1] Active membership in the retirement system.

[2] Any growth in the salary base used for calculating the regular retirement benefit.

[3] Any additional benefit accrual for retirement purposes, including length-of-service increments.

(c) Specifies the effective date of DROP participation that shall be the day after the specified retirement date.

(d) Specifies the DROP termination date that satisfies the limitation in Subsection D.

D. Length of DROP. The DROP term shall be for a period of no more than 48 months from the date of entry. Termination of participation in DROP shall take place:

(1) At the earlier of the end of the forty-eight-month period, or at any other time the police officer chooses to end his or her participation; or

(2) If the participant is terminated from employment for reasons set forth under applicable Pennsylvania law; or

(3) If the participant dies.

E. Retirement status and pension contribution. Once enrolled in DROP, the DROP participant shall be retired under the Borough of Tullytown Police Pension Plan for the purpose of calculating pension benefits, but not for the purpose of employment with the Borough of Tullytown Police Department. The DROP participant shall continue to receive all other employee benefits and programs as set forth in the collective bargaining agreement. Once a police officer enters DROP, he or she shall no longer be required to make contributions to the pension plan, nor shall he or she be eligible for any further pension benefits other than the pension benefit determined in Subsection F, Retirement rate.

F. Retirement rate. Monthly DROP credit to the DROP account will be made at the participant's normal retirement benefit amount, determined by Section VI of the Borough of Tullytown Police Pension, Ordinance No. 299,[2] at the date the police officer enters DROP.

[2] Editor's Note: Said plan is on file in the Borough offices.

G. Administration.

(1) Named beneficiary. If a DROP participant dies, the DROP participant's named beneficiary shall be entitled to apply for and receive the benefits accrued in the DROP participant's subsidiary DROP participant account as provided herein.

(2) Final benefit. The monthly retirement system benefit accrued in the DROP participant's subsidiary DROP participant account during the month of a DROP participant's death shall be the final monthly retirement system benefit credited for DROP participation.

(3) Termination of eligibility. A DROP participant's eligibility to participate in the DROP terminates upon the death of the DROP participant. If a DROP participant dies on or after the effective date of participation in the DROP but before the monthly retirement system benefit of the participant accruable for the month has accrued in the DROP participant's subsidiary DROP participant account, the local government shall pay the monthly retirement system benefits as though the participant had not elected DROP participation and had died after the member's effective date of retirement but before receipt of the retired member's first regular retirement benefit.

(4) Survivors ineligible for death benefit. Except for those benefits specifically payable as a result of death incurred in the course of performing a hazardous public duty, the survivors of a DROP participant who dies shall not be eligible to receive retirement system death benefits payable in the event of the death of an active member.

(5) Survivors eligible for retired member's death benefit. The DROP participant's survivor shall be eligible to receive retirement system death benefits normally payable in the event of the death of a retired employee.

H. DROP participant account.

(1) General rule. The DROP participant account shall be an interest-bearing ledger account in the pension trust fund. The account balance shall be accounted for separately but need not be physically segregated from other pension trust fund assets.

(2) Termination of employment. When a DROP participant terminates employment with the local government as a DROP participant, the DROP participant's total accumulated benefits shall be calculated, charged to the DROP participant account and paid out of the pension trust fund as directed herein.

(3) Account held in trust. A DROP participant account shall be held in trust for the exclusive benefit of DROP retired members who are or were DROP participants and for the beneficiaries of the members.

(4) Payment. On the effective date of a DROP participant's termination of employment with the Borough as a DROP participant, participation in the DROP shall cease and the retirement system shall calculate and pay to the participant the participant's total accumulated DROP benefits in the DROP participant's subsidiary DROP participant account, subject to the following provisions:

(a) Except as provided in Subsection G(4)(b), the terminating DROP participant or, if deceased, the participant's survivor as provided by the enabling pension statute applicable to the appropriate class of employees of the municipality or, in lieu thereof, the participant's named beneficiary, shall elect on a form provided by the retirement system to receive payment of the DROP benefits in accordance with one of the following options:

[1] The balance in the DROP participant's subsidiary DROP participant account less withholding taxes, if any, remitted to the Internal Revenue Service shall be paid within 45 days by the retirement system from the account to the DROP participant or surviving beneficiary.

[2] The balance in the DROP participant's subsidiary DROP participant account shall be paid within 45 days by the retirement system from the account directly to the custodian of an eligible retirement plan as defined in Section 402(c)(8)(B) of the Internal Revenue Code of 1986, 26 U.S.C. § 403(c)(8)(B), or, in the case of an eligible rollover distribution to the surviving spouse of a deceased DROP participant, an eligible retirement plan that is an individual retirement account or an individual retirement annuity as described in Section 402(c)(9) of the Internal Revenue Code of 1986, 26 U.S.C. § 403(c)(9).

(b) If the DROP participant or beneficiary fails to elect a method of payment within 60 days after the participant's termination date, the retirement system shall pay the balance as a lump sum as provided in Subsection G(a)[1].

(c) The form of payment selected by the DROP participant or surviving beneficiary shall comply with the minimum distribution requirements of the Internal Revenue Code of 1986.

(5) Taxation, attachment and assignment.

(a) Except as provided in Subsection G(5)(b), (c) and (d), the right of a DROP participant to any benefit or right accrued or accruing under the provisions of this article and the moneys in the DROP participant's subsidiary DROP participant account are exempt from any state or municipal tax, levy and sale, garnishment, attachment, spouse's election or any other process whatsoever.

(b) Rights under this chapter shall be subject to forfeiture as provided by the act of July 8, 1978 (P.L. 752, No. 140), known as the "Public Employee Pension Forfeiture Act."[3] Forfeitures under this subsection or under any other provision of law may not be applied to increase the benefits that any DROP participant otherwise would receive under this chapter.

[3] Editor's Note: See 43 P.S. § 1311 et seq.

(c) Rights under this chapter shall be subject to attachment in favor of an alternate payee as set forth in a qualified domestic relations order.

(d) Eligible rollover distribution.

[1] Under Subsection G(4)(a)[2], a distributee may elect to have an eligible rollover distribution paid directly to an eligible retirement plan by way of a direct rollover.

[2] For purposes of this subsection, a "distributee" includes a DROP participant, a DROP participant's survivor as provided by the enabling pension statute applicable to the appropriate class of employees of the municipality or, in lieu thereof, the participant's designated beneficiary and a DROP participant's former spouse who is an alternate payee under a qualified domestic relations order.

[3] For purposes of this subsection, "eligible rollover distribution" has the meaning given the term by Section 402(f)(2)(a) of the Internal Revenue Code of 1986, 26 U.S.C. § 403(f)(2)(A), except that a qualified trust shall be considered an eligible retirement plan only if it accepts the distributee's eligible rollover distribution and, in the case of an eligible rollover distribution to a surviving spouse, an eligible retirement plan is an "individual retirement account" or an "individual retirement annuity" as those terms are defined in Section 408(a) and (b) of the Internal Revenue Code of 1986.

(6) Disability. If, while a police officer is enrolled in DROP, he or she is injured while on duty to the extent that he or she is permanently disabled from performing police work for the Borough of Tullytown, the police officer shall be retired. Participation in DROP shall terminate, and distribution of accumulated pension benefits shall be disbursed to the retiree in accordance with IRS regulations, as well as applicable state and federal laws. The retiree shall not be eligible for Police Pension Plan disability benefits, since his/her pension benefits have been finalized as per Subsections E and F above.

(7) Eligibility for other benefits. A DROP participant shall be eligible for all preretirement benefits for employees otherwise provided by law, including, but not limited to, benefits under:

(a) The act of June 2, 1915 (P.L. 736, No. 338), known as the "Workers' Compensation Act";[4]

[4] Editor's Note: See 77 P.S. § 1 et seq.

(b) The act of June 28, 1935 (P.L. 477, No. 193), referred to as the "Enforcement Officer Disability Benefits Law";[5]

[5] Editor's Note: See 53 P.S. §§ 637 and 638.

(c) The act of December 5, 1936 (2nd Sp.Sess., 1937 P.L. 2897, No. 1), known as the "Unemployment Compensation Law";[6]

[6] Editor's Note: See 43 P.S. § 751 et seq.

(d) The act of June 24, 1976 (P.L. 424, No. 101), referred to as the "Emergency and Law Enforcement Personnel Death Benefits Act";[7] and

[7] Editor's Note: See 53 P.S. § 891 et seq.

(e) The Public Safety Officers' Benefit Act of 1976 (Public Law 94-430, 42 U.S.C. § 90 1347).

I. Conflict with existing laws. If this article is held to be in conflict with Pennsylvania law, the Borough and the police shall meet within 30 days to bring DROP into compliance with the applicable law, if possible.