[Adopted 3-20-2014 by Ord. No. 165]
As used in this article, the following terms shall have the
meanings indicated:
The Deferred Retirement Option Plan created as an optional
form of benefit under the existing Kidder Township Police Pension
Plan.
A separate ledger account created to accumulate the DROP
pension benefit for a DROP participant.
A full-time Kidder Township police officer covered by the
Plan.
A member who is eligible for normal retirement and who has
elected to participate in the DROP program.
The Kidder Township Police Pension Plan adopted pursuant
to Act 600.
A.
Eligibility. An active member of the Kidder Township Police Pension
Plan who is eligible for a normal retirement benefit under the Pension
Plan or will be eligible for normal retirement benefits under the
Pension Plan prior to participation in the DROP is eligible to participate
in the DROP by filing a written application with the Township Manager
and/or Chairperson of the Board of Supervisors at least 30 days before
the member's effective date or retirement from regular employment.
B.
Participation in DROP.
(1)
Election. An eligible active member may elect to participate in a
DROP for a period of not less than one year nor longer than four years.
A participant may withdraw from DROP at any time without penalty.
(2)
DROP participation election. Upon deciding to participate in a DROP,
a member shall submit on forms provided and required by the retirement
system:
(a)
A binding and irrevocable letter of resignation from regular
employment with Kidder Township that discloses the member's intent
to retire and specifies the member's retirement date.
(3)
DROP termination.
(a)
A DROP participant may change the DROP termination date to an earlier date within the limitations of Subsection B(1). No penalty shall be imposed for early termination of DROP participation.
(b)
Upon either early or regular termination of DROP participation.
[1]
The DROP participant shall be separated from employment by the
Township of Kidder.
[2]
The retirement system shall pay the balance in the DROP participant's
subsidiary DROP participant account to the terminating DROP participant
as provided in section C(4).
[3]
The DROP participant shall be ineligible to reenroll in the
DROP thereafter even if the former DROP participant is reemployed
by the Township of Kidder with renewed active membership in the retirement
system.
C.
Benefits payable under DROP.
(1)
Fixing retirement benefit, retirement date, retirement benefits and
DROP dates. Effective with the date of retirement from regular employment,
which shall be the day before the effective date of DROP participation,
the member's monthly, normal retirement benefit under the pension
plan, 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.
(2)
Effective dates.
(a)
A retired member's effective date of participation in a
DROP shall begin the day following the effective date of the member's
retirement from regular employment.
(b)
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.
(3)
Benefit payments and accruals. All of the retired member's monthly,
normal retirement benefit and interest thereon at the assigned rate
shall be credited to the DROP participant's account in the pension
trust fund and a separate accounting of the DROP participant's
accrued benefit accumulation under the DROP shall be calculated annually
and provided to the DROP participant.
(4)
Payment. On the effective date of a DROP participant termination
of employment with the Township of Kidder 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 C(4)(b), 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:
[1]
The balance in the DROP participant's subsidiary DROP participant
account less withholding tax, 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 § 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
in § 402(c)(9) of the Internal Revenue Code of 1986.
(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 C(4)(b).
(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 C(5)(b), (c) and (d), the right of a DROP participant to any benefit or right accrued or accruing under the provisions hereof and the moneys in the DROP participant's subsidiary DROP participant account are exempt from state or municipal tax, levy and sale, garnishment, attachment, spouse's election or any other process whatsoever.
(b)
Rights hereunder 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.[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 the Police Pension Ordinance.
[1]
Editor's Note: See 43 P.S. § 1311 et seq.
(c)
Rights hereunder 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 C(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 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.
[3]
For purposes of subsection, "eligible rollover distribution"
has the meaning given the term by § 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 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 § 408(a) and (b) of the Internal
Revenue Code of 1986.
(6)
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 the ordinance establishing the Kidder Township Police Pension Plan, if a DROP participant becomes eligible for a disability pension benefit, the amount of the monthly disability pension shall not exceed the amount of the monthly normal retirement benefit under the pension plan the DROP participant would receive under Subsection C(1).
(7)
Eligibility. Except for those benefits specified under Subsection B(2)(b)[2] 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 the Police Pension Ordinance.
(8)
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.
(b)
The Act of June 28, 1935 (P.L. 477, No. 193), referred to as
the Enforcement Officer Disability Benefits Law.
(c)
The Act of December 5, 1936 (2nd Sp.Sess., 1937, P.L. 2897,
No. 1), known as the Unemployment Compensation Law.
(d)
The Act of June 24, 1976 (P.L. 424, No. 101), referred to as
the Emergency and Law Enforcement Personnel Death Benefits Act, and;
(e)
The Public Safety Officer's Benefit Act of 1976, (Public
Law 94-430, 42 U.S.C. § 90 Stat. 1347).
D.
Death benefits under DROP.
(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 in Subsection C(4).
(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 Township of Kidder 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.
E.
Subsequent employment. After both termination of a DROP participant's
employment as a DROP participant by the Township of Kidder and the
expiration of the DROP participation period, a former DROP participant
shall be subject to such reemployment and pension system death benefits
normally payable in the event of the death of a retired employee.
F.
Drop participant account.
(1)
General rule. The Township of Kidder 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.
(2)
Subsidiary DROP participant account. 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 under Subsection C(3). Interest shall be compounded and credited monthly at an annual rate of 0%. All interest credited to the DROP participant account shall be included in the final cash settlement.
(3)
Termination of Employment. When a DROP participant terminates employment
with the Township of Kidder 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 section
C(4)(b).
(4)
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 the beneficiaries of the members.
The effective date of the changes described in this article
is March 20, 2014; however, the implementation of the DROP program
will be as provided in this article.
The provisions of this article shall be severable, and if any of its provisions shall be held to be unconstitutional or illegal, the validity of any of the remaining provisions of this article shall not be affected thereby. It is hereby expressly declared as the intent of Kidder Township, Carbon County, Pennsylvania, that this article has been adopted as if such unconstitutional or illegal provision or provisions had not been included herein. In the event that the DROP provision is declared invalid or illegal by a court of competent jurisdiction or through an administrative determination of the Office of the Auditor General, the police officers shall have the right to bargain in accordance with Act 111 over deletion or modification of this benefit. The provisions of this article are written with the intent to comply with Chapter 11 of Act 44 of 2009.
