[Adopted 3-5-2013 by Ord. No. 350]
As used in this article, the following terms shall have the
meanings indicated:
Deferred Retirement Option Plan.
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%.
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.
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:
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)
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.
