[Adopted 9-23-2013 by Ord. No. 767, approved 9-23-2013]
The following words and phrases, when used in this article, shall have the meanings given to them in this section unless the context clearly indicates otherwise:
DROP
A deferred retirement option plan that provides for the commencement and accumulation of retirement benefit payments for active employees with disbursement of the accumulated payments and interest earnings as a lump sum upon termination of employment.
DROP PARTICIPANT
A retired member of a local government defined benefit pension plan who is eligible to participate in a drop under § 38-39, who has elected to participate in a drop under § 38-40 and who is not an elected official.
DROP PARTICIPANT ACCOUNT
A pension trust fund ledger account established under § 38-44.
NORMAL RETIREMENT BENEFIT
The retirement benefit payable to a member of a defined benefit pension plan on or after the date on which the member first satisfies the age and service requirements for full, unreduced retirement benefits, including supplemental amounts provided to the member after retirement as cost-of-living increases.
SUBSIDIARY DROP PARTICIPANT ACCOUNT
The separate, interest-bearing, subsidiary DROP participant account established for a DROP participant under § 38-44.
Participation in a DROP does not guarantee the DROP participant's employment by the Borough during the specified period of the DROP.
An active member of the Borough of Wilson Police Pension Plan who is eligible for a normal retirement benefit under the pension plan or will be eligible for a normal retirement benefit under the pension plan prior to participation in the DROP and who is not an elected official is eligible to participate in the DROP by filing a written application with the Borough Secretary at least 30 days before the member's effective date of retirement.
A. 
Election. An eligible active member may elect to participate in a DROP for a period of no longer than one year.
B. 
DROP participation election. Upon deciding to participate in a DROP, a member shall submit on forms provided and required by the retirement system:
(1) 
A binding and irrevocable letter of resignation from regular employment with the Borough of Wilson 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 A.
C. 
DROP termination.
(1) 
A DROP participant may change the DROP termination date to an earlier date within the limitations of Subsection A. No penalty shall be imposed for early termination of DROP participation.
(2) 
Upon either early or regular termination of DROP participation:
(a) 
The DROP participant shall be separated from employment by the Borough of Wilson.
(b) 
The retirement system shall pay the balance in the DROP participant's subsidiary DROP participant account to the terminating DROP participant as provided in § 38-41D.
(c) 
The DROP participant shall be ineligible to re-enroll in the DROP thereafter even if the former DROP participant is reemployed by the Borough of Wilson with renewed active membership in the retirement system.
A. 
Fixing retirement benefit, retirement date, retirement benefits and DROP dates. Effective with the date of retirement, which shall be the day before the effective date of DROP participation, the member's effective date of retirement and the member's effective dates of beginning and terminating employment as a DROP participant shall be fixed.
B. 
Effective dates.
(1) 
A retired member's effective date of participation in a DROP shall begin the day following the effective date of the member's regular retirement.
(2) 
A retired member's participation in a DROP shall end on the last day of the participation period specified in the ordinance establishing the DROP that is in effect on the effective date of the retired member's participation in the DROP.
C. 
Benefit payments and accruals. All of the retired members' monthly, normal retirement benefit and interest thereon at the assigned rate shall be credited to the DROP participant's subsidiary DROP participant account in the pension trust fund and a separate accounting of the DROP participant's accrued benefits accumulation under the DROP shall be calculated annually and provided to the DROP participant.
D. 
Payment. On the effective date of a DROP participant's termination of employment with the Borough of Wilson as 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:
(1) 
Except as provided in Subsection D(2), the terminating DROP participant or, if deceased, the participant's survivor as provided by the Police Pension Plan 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:
(a) 
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.
(b) 
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 [Public Law 99-514, 26 U.S.C. § 402(c)(8)(B)], or, in the case of 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.
(2) 
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 D(1).
(3) 
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.
E. 
Taxation, attachment and assignment.
(1) 
Except as provided in Subsection E(2), (3) and (4), 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.
(2) 
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 Pensions Forfeiture Act.[1] 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 article.
[1]
Editor's Note: See 43 P.S. § 1311 et seq.
(3) 
Rights under this article shall be subject to attachment in favor of an alternate payee as set forth in a qualified domestic relations order.
(4) 
Direct rollover.
(a) 
Under Subsection D(1)(b), a distributee may elect to have an eligible rollover distribution paid directly to an eligible retirement plan by way of a direct rollover.
(b) 
For purposes of this subsection, a "distributee" includes a DROP participant, a DROP participant's survivor as provided by the Police Pension Plan 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.
(c) 
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, 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.
F. 
Disability. If a DROP participant becomes eligible for a disability pension benefit and terminates employment, the monthly normal retirement benefit of the DROP participant shall terminate. Notwithstanding anything to the contrary in Article I, Police Pension Plan, if a DROP participant becomes eligible for a disability pension benefit, the amount of the monthly disability pension payment shall not exceed the amount of the monthly normal retirement benefit under the pension plan the DROP participant would receive under § 38-41A.
G. 
Eligibility. Except for those benefits specified under § 38-40B(2)(b) as forgone by the member, a DROP participant shall be eligible for any employee benefits provided to active employees before retirement as set forth in this article.
H. 
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:
(1) 
The act of June 2, 1915 (P.L. 736, No. 338) known as the "Worker's Compensation Act";
(2) 
The act of June 28, 1935 (P.L. 477, No. 193), referred to as the "Enforcement Officer Disability Benefits Law";
(3) 
The act of December 5, 1936 (2nd Sp.Sess., 1937 P.L. 2897, No. 1) known as the "Unemployment Compensation Law";
(4) 
The act of June 24, 1976 (P.L. 424, No. 101) referred to as the "Emergency and Law Enforcement Personnel Death Benefits Act"; and
(5) 
The Public Safety Officers' Benefit Act of 1976 (Public Law 94-430, 42 U.S.C. § 90, Stat. 1347).
A. 
Named beneficiary. If a DROP participant dies, the DROP participant's named beneficiary shall be entitled to apply for and receive benefits accrued in the DROP participant's subsidiary DROP participant account as provided in § 38-41D.
B. 
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.
C. 
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's accruable for the month has accrued in the DROP participant's subsidiary DROP participant account, the Borough of Wilson 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.
D. 
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.
E. 
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.
After both the termination of a DROP participant's employment as a DROP participant by the Borough of Wilson and the expiration of the DROP participation period, a former DROP participant shall be subject to such reemployment limitations as other retired members and shall be eligible for renewed membership as an active member in the Borough of Wilson employees' retirement system.
A. 
General rule. The Borough of Wilson shall establish a DROP participant account as an interest-bearing ledger account in its pension trust fund. The account balance shall be accounted for separately but need not be physically segregated from other pension trust fund assets.
B. 
Subsidiary 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 DROP participant, the member's monthly, normal retirement benefit and interest thereon shall be credited to the DROP participant's subsidiary DROP participant account under § 38-41C. 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%.
C. 
Termination of employment. When a DROP participant terminates employment with the Borough of Wilson 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 under § 38-41D(2).
D. 
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.
Any and all costs or fees associated with the management or administration of the DROP program and the individual DROP participant accounts shall be paid directly from the Police Pension Fund and not by the Borough of Wilson.