[Adopted 5-7-2007 by Ord. No. 1551]
The following words and phrases, when used in this article, shall have the meanings given to them in this section only, unless the context clearly indicates otherwise:
DROP
The deferred retirement option plan created as an optional form of benefit under the plan and being operated by the Borough of Dormont.
DROP PARTICIPANT
Any retired participant of the Borough of Dormont Police Pension Plan who is eligible to participate in a DROP under § 48-83 and who has elected to participate in a DROP under § 48-84.
DROP PARTICIPANT ACCOUNT
The participant's pension trust fund ledger account created to accumulate the DROP pension benefit for a DROP participant.
NORMAL RETIREMENT BENEFIT
The retirement benefit payable to a participant of a defined benefit pension plan at the point in time when the participant satisfies the age and service requirements for full, unreduced retirement benefits.
An employee of the Borough of Dormont Police Association bargaining unit that has not retired prior to the implementation of the DROP may enter into the DROP on the first day of any month following the attainment of age 52 and the completion of 26 or more years of aggregate service with the Borough of Dormont by filing a written application with the retirement Plan Administrator at least 30 days prior to the employee's effective date of retirement.
An eligible participant may elect to participate in this DROP for a period not to exceed three years. Upon deciding to participate in the DROP, a participant must submit, on forms provided by the Borough, all of the following:
A. 
A binding and irrevocable letter of resignation from regular employment with the Borough of Dormont which discloses the participant's intent to retire and specifies the retirement date.
B. 
A DROP election form, prepared by the Borough Manager and/or the Plan Administrator, which is an irrevocable written election to participate in the DROP, which must specify the effective date of DROP participation that shall be one day after the participant's specified retirement date, specify the DROP termination date which satisfies the limitation in § 48-86, be signed by the participant and the chief administrative officer of the plan, detail a DROP participant's rights and obligations under the DROP and include an agreement to forego:
(1) 
Active membership in the plan.
(2) 
Any growth in the salary base used for calculating the normal retirement benefit.
(3) 
Any additional benefit accrual for retirement purposes.
C. 
The DROP participant shall be required to provide any other information required by the Borough.
A retired participant's effective date of participation in the DROP shall begin on the day following the effective date of the participant's regular retirement, and a retired participant's participation in the DROP shall end on the last day of the participation period as specified pursuant to § 48-84B.
A DROP participant may change the DROP termination date to an earlier date within the limitations of § 48-84, but may not change it to a later date than elected at the time of initial DROP participation. No penalty shall be imposed for early termination of DROP participation. Upon either early or regular termination of DROP participation, the DROP participant shall be separated from employment by the Borough of Dormont, and the plan shall pay the balance in the DROP participant's DROP participant account to the terminating participant as provided in § 48-90. The DROP participant shall be ineligible to reenroll in the DROP thereafter even if the former DROP participant is reemployed by the Borough of Dormont with renewed active membership in the Borough of Dormont Police Pension Plan.
Once an employee enters the DROP, contributions to the plan by both the participant and the Borough shall cease during the participant's DROP participation period.
A. 
Effective with the date of retirement, which must be the day before the effective date of DROP participation, the participant's monthly, late retirement benefit as calculated under § 48-28 of the plan, the participant's effective date of retirement and the participant's effective dates of beginning and terminating participation in the DROP shall be fixed. There shall be no further retirement benefit accruals, including, but not limited to, service increments, after the participant's effective date of retirement.
B. 
By participating in the DROP, the participating officer understands and acknowledges that he or she must obtain his or her own professional legal and/or tax advice to determine and to analyze the propriety and impact of the participant's desired disposition of the DROP participant account balance under state, federal and local tax laws and participation in the DROP program itself.
The retired participant's monthly retirement benefit, including any applicable service increment benefit pursuant to § 48-29 for years of aggregate service completed prior to participation in the DROP and any cost-of-living adjustment pursuant to § 48-30, and any interest earned thereon, shall be credited to the DROP participant's DROP participant account on the first day of each month. The account balance of a participant's DROP participant account shall be invested in an interest-bearing account in which there is no guaranteed rate of return; however, the DROP participant shall be entitled to all interest earned on the balance in their DROP participant account. A separate accounting of the DROP participant's accrued benefit accumulation under the DROP shall be calculated annually and provided to the participant.
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 plan shall calculate and pay to the participant the participant's total accumulated DROP benefits in the DROP participant's DROP participant account, subject to the following provisions:
A. 
The terminating DROP participant or, if the participant is deceased, the participant's named beneficiary shall elect on a form provided by the Plan Administrator to receive payment of the DROP benefits in accordance with one of the following options:
(1) 
The balance in the DROP participant's DROP participant account, less withholding taxes, if any, remitted to the Internal Revenue Service, shall be paid in cash within 30 days of the receipt of the election form by the plan from the account to the DROP participant or surviving beneficiary.
(2) 
The balance in the DROP participant's DROP participant account shall be paid within 30 days of the receipt of the election form by the plan 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 or, in the case of an eligible rollover distribution to the surviving spouse of a deceased participant, to an eligible retirement plan which is an individual retirement account or an individual retirement annuity as described in Section 402(c)(9) of the Internal Revenue Code of 1986. If the participant selects the rollover option, he or she must also submit the appropriate paperwork from the individual retirement account (IRA) custodian within 20 days following termination of employment with the Borough as a DROP participant.
(3) 
If the DROP participant or beneficiary fails to elect a method of payment within 60 days after the participant's termination date, the plan shall pay the balance directly to the custodian of an eligible retirement plan as provided in Subsection A(2).
B. 
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.
C. 
The terminating DROP participant shall commence receipt of the monthly retirement benefit directly starting with the first day of the month coincident with or next following termination of employment with the Borough.
Except for those benefits specified in § 48-84B as forgone by the member, a DROP participant shall be eligible for any employee benefits provided to active employees before retirement by the Borough of Dormont and those otherwise provided by law, including, but not limited to, benefits under the Act of June 2, 1915 (P.L. 736, No. 338), known as the "Workers' Compensation Act"[1]; the Act of June 28, 1935 (P.L. 477, No. 193), referred to as the "Enforcement Officer Disability Benefits Law"[2]; the Act of December 5, 1936 (2nd Sp. Sess., 1937, P.L. 2897, No. 1), known as the "Unemployment Compensation Law"[3]; the Act of June 24, 1976 (P.L. 424, No. 101), referred to as the "Emergency and Law Enforcement Personnel Death Benefits Act"[4]; and the Public Safety Officers Benefit Act of 1976 (Public Law 94-430, 42 U.S.C. § 90, stat. 1347).[5]
[1]
Editor’s Note: See 77 P.S. § 1 et seq.
[2]
Editor’s Note: See 53 P.S. §§ 637 and 638.
[3]
Editor’s Note: See 43 P.S. § 751 et seq.
[4]
Editor’s Note: See 53 P.S. § 891 et seq.
[5]
Editor’s Note: See Title 42, Ch. 46, Subchapter XII, Public Safety Officers Death Benefits, of the United States Code.
If a DROP participant dies, the participant's designated beneficiary shall be entitled to apply for and receive the benefits accrued in the DROP participant's DROP participant account as provided in § 48-90.
The monthly retirement benefit in the DROP participant's DROP participant account during the month of a DROP participant's death shall be the final monthly retirement benefit credited for DROP participation.
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 initial monthly retirement benefit of the participant accruable for the month has accrued in the DROP participant's DROP participant account, the Borough of Dormont shall pay the monthly retirement benefit as though the participant had not elected DROP participation and had died after the employee's effective date of retirement, but before receipt of the retired participant's first normal retirement benefit.
If a DROP participant dies during the DROP period, the participant's designated beneficiary shall have the same rights as the member to withdraw the DROP participant account balance. The first month following the participant's death, any surviving spouse and/or dependent child(ren) of the participant shall receive the survivor benefit provided under the plan. In the event such a benefit becomes payable, the surviving spouse and/or dependent child(ren) shall receive the survivor benefit commencing as of the first day of the month coincident with or immediately following the date of death of the participant.
If a DROP participant dies during the DROP period, the participant's designated beneficiary shall have the same rights as the member to withdraw the DROP participant account balance. The first month following the participant's death, any surviving spouse and/or dependent child(ren) of a DROP participant who is killed in service shall be entitled to apply for and receive a recalculation for payment of the killed in service survivor benefit pursuant to the plan at 100% of the participant's salary at the time of death as fixed at the participant's date of retirement. In the event such a benefit becomes payable, the surviving spouse and/or dependent child(ren) of the participant shall receive the recalculated benefit commencing as of the first day of the month coincident with or immediately following the date of death of the participant.
After both the termination of the participant's employment as a DROP participant by the Borough of Dormont and the expiration of the DROP participation period, a former DROP participant shall be subject to such reemployment limitations as other retired employees and shall be eligible for renewed membership as an active participant in the plan, and the DROP participant shall be ineligible to reenroll in the DROP pursuant to § 48-86.
A. 
As the Borough of Dormont establishes a DROP, it shall establish a DROP participant account as a separate ledger account in its pension trust fund for each DROP participant. The account balance shall be accounted for separately but need not be physically segregated from other pension trust fund assets. A separate interest-bearing DROP participant account that has no guaranteed rate of return shall be established for each DROP participant.
B. 
While a retired participant is employed as a DROP participant, the participant's monthly retirement benefit and any interest earned on their benefit shall be credited to the DROP participant account under § 48-89. When a DROP participant terminates employment with the Borough as a DROP participant, the participant's total accumulated benefits shall be calculated, charged to the DROP participant account and paid out of the pension trust fund under § 48-90.
C. 
The balance in the DROP participant's account shall be excluded from actuarial valuation reports of the plan prepared and filed under this legislation. The DROP participant's account shall be held in trust for the exclusive benefit of DROP retired participants who are or were DROP participants and for the beneficiaries of these participants or an alternate payee pursuant to § 48-90.
Any amendments to this article shall be consistent with the provisions covering deferred retirement option plans as set forth in any applicable collective bargaining agreement or state or federal law and shall be binding upon all future participants and upon all participants who have balances in their DROP participant accounts.