[Ord. 432, 12/28/1973; as amended by Ord. 652, 12/7/1998]
1. The Borough
of Nazareth hereby establishes a money purchase plan (sometimes herein
called "the plan") and trust effective the first day of January 1974,
in accordance with the provisions of this Part 1A.
2. Effective
January 1, 1998 the money purchase plan maintained by the Borough
of Nazareth is amended to be a profit sharing plan for purposes of
Section 401(a) of the Internal Revenue Code of 1986, as amended (the
“Code”), and related provisions (the “Plan”).
Nonetheless, the employer may make contributions to the plan as a
profit sharing plan without regard to the fact it is a tax-exempt
organization and without regard to the fact that it has no current
or accumulated earnings and profits since it is a tax-exempt organization,
all as provided in Code Section 401(a)(27).
[Ord. 432, 12/28/1973; as amended by Ord. 556, 1/4/1988]
1. Assignment
of Administrative Authority. The employer shall appoint a Chief Administrative
Officer by resolution at its annual reorganization meeting, who shall
be primarily responsible for the execution of the administrative affairs
of the plan. He shall submit to Council, on or before the last business
day in September, a report containing the financial requirements of
the pension plan and the Borough's minimum obligation to the pension
plan. He shall also provide to Council a cost estimate of any benefit
modification prior to its adoption.
2. Assignment
of Plan Administrator. The employer shall appoint a committee to be
known as the "Pension Committee," hereinafter referred to as the "Committee"
to implement the plan. This Committee shall consist of individuals
who shall serve at the pleasure of the employer. Any member may resign
by delivering his written resignation to the employer and to the Committee.
Vacancies in the Committee arising by resignation, death, removal
or otherwise, shall be filled by the employer.
3. Powers and Duties. The Committee shall implement the plan in accordance with its terms and shall have all powers necessary to carry out the provisions of the plan, including the right to direct or delegate investment of the trust fund. Provided, however, that the administrative authority required under Act 205 is reserved to the Chief Administrative Officer appointed in §
1-602, Subsection
1, above, the Committee shall interpret the plan and shall determine all questions arising in the implementation, interpretation and application of the plan. Any such determination by the Committee shall be conclusive and binding on all persons.
4. Discrimination.
The Committee, in the exercise of any discretionary powers given in
this agreement, shall not exercise that discretion so as to discriminate
in favor of any employees.
[Ord. 432, 12/28/1973; as amended by Ord. 619, 9/6/1994]
1. Conditions
of Eligibility. Any full-time employee of the employer shall be eligible
to participate hereunder, except policemen who are presently covered
by the State of Pennsylvania Pension Plan, and other police-allied
employees, such as meter maids.
2. Definition
of “Employee” “Employee" means any person employed
by the Borough of Nazareth who is an employee of the Borough and whose
customary employment is for more than 20 hours per week and for more
than five months per year.
3. Application
for Participation. In order to become a participant hereunder, each
eligible employee shall make application to the Committee for participation
in the plan, to become effective as of the date on which said employee
is eligible to participate in said plan. Each eligible employee shall
also execute a written statement, on a form or forms to be furnished
by the Committee, in which he shall:
A. Designate
a beneficiary or beneficiaries to receive the death benefit from any
life insurance policy;
B. Agree
to execute such application and to take such physical examination
and to supply truthfully and completely such information as may be
required by the insurer in connection with the issuance of any insurance
or annuity policy; and,
C. Consent
to be bound by all of the terms of this Part 6A, with all amendments
hereto.
4. Definition
of "Continuous Service". "Continuous service" means the most recent
period of uninterrupted employment for the Borough of Nazareth. In
the event that any employee having once qualified to participate in
the plan, shall for any reason sever his or her employment with the
Borough, but thereafter becomes re-employed, said person shall be
considered as a new employee. However, the following situations shall
not be considered as severance of employment with the Borough:
A. Absence
due to illness or disability not to exceed a period of two years followed
by resumption of employment within 90 days of the termination of such
illness or disability.
B. Service
in the armed forces of the United States followed by resumption of
employment within the period after the date of discharge in which
his re-employment rights are guaranteed by law.
C. The employer
shall treat all employees uniformly in like situations.
5. Determination
of Eligibility. The Committee shall determine the eligibility of each
employee for participation in the plan. Such determination shall be
conclusive and binding upon all persons.
[Ord. 432, 12/28/1973; as amended by Ord. 487, 3/2/1981; by Ord. 643, 8/4/1997; and by Ord.
652, 12/7/1998]
1. Employer's
Contributions. The employer hereby agrees to make, for the current
plan year (calendar year) of the employer, and for each plan year
thereafter, no later than 2 1/2 months after the end of such plan
year or such later date as may be permitted by law, a contribution
to the trust fund in such percentage of each participant's compensation
for that year as the employer shall in its discretion determine. "Compensation"
shall mean total compensation, including salaries and wages and bonuses,
paid by employer and reported as such on Form W-2 or similar form
filed with the Internal Revenue Service; provided, however, that:
A. The annual
compensation of any participant other than an eligible participant
for any plan year beginning on or after January 1, 1996, shall not
exceed $150,000, as adjusted by the Commissioner of Internal Revenue
for increases in the cost of living in accordance with Code Section
401(a)(17)(B): and
B. The annual compensation of any participant who is an eligible participant shall not exceed, for any plan year, the greater of: (i) the limit under §
1-604, Subsection
1A; or (ii) the annual compensation allowed to be taken into account under the plan as in effect on July 1, 1993.
For purposes of § 1-604, Subsection 1A and B, an eligible participant is an individual who first became a participant in the plan during a plan year beginning before January 1, 1996.
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Forfeitures and the amount of any credits, dividends or refunds
that are received from any insurance company under any annuity or
insurance contract may not be applied to increase benefits otherwise
provided under this plan, but shall be applied as a credit toward
the contributions of the employer.
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2. Voluntary Contributions. Subject to §
1-604, Subsection
5, in addition to the employer contributions, participants may contribute up to 10% of their normal annual compensation (as defined in, and limited by, §
1-604, Subsection
1) to the plan in each plan year. Employer contributions shall be made to the participant's account regardless of whether or not the participant makes a voluntary contribution under this subsection.
3. Determination
of Contribution.
A. The Borough
shall determine the amount of any contribution to be made by it to
the trust fund under the terms of this plan. The Borough's determination
of such contributions shall be binding on all participants and the
Borough.
B. The trustee
shall have no right or duty to inquire into the amount of the Borough's
annual contribution or the method used in determining the amount of
the Borough's contribution but shall be accountable only for funds
actually received.
4. Time of
Payment of Contribution. The Borough shall pay to the trustee its
contribution for each plan year no later than 2 1/2 months after the
end of such plan year or such later date as may be permitted by law,
or if borough shall operate on a cash basis accounting, before the
end of the plan year for which the contribution is made.
5. Limitations
on Contributions. Effective January 1, 1976, the following provisions
shall apply:
A. Notwithstanding
any other provision of the plan, the “annual addition”
to a participant’s account for any limitation year (calendar
year) shall in no event exceed the amount permitted under Code Section
415(c)(1).
The “annual addition” to a participant’s account
for any limitation year shall be the sum, for such year, of:
(4) Amounts
described in Code Sections 415(1)(1) and 419A(d)(2).
B. If a participant
in this plan is, or was at any time, also a participant in a defined
benefit plan qualified under Code Section 401(a) maintained by the
employer, the annual addition of such participant shall be reduced
to the extent necessary to satisfy the combined plan limitation of
Section 415(e) with respect to any limitation year beginning before
January 1, 2000.
C. For purposes of applying the limitations of §
1-604, Subsection
5, applicable to a participant for a particular limitation year:
(1) All
tax-qualified defined benefit plans ever maintained by the employer
shall be treated as one defined benefit plan, and all tax-qualified
defined contribution plans ever maintained by the employer shall be
treated as one defined contribution plan; and
(2) Any
tax qualified defined benefit plan or tax-qualified defined contribution
plan maintained by any entity required to be aggregated with the employer
under Code Section 414(b), (c), (m) or (o) shall be deemed to be maintained
by the employer.
D. If, as a result of a reasonable error in estimating a participant’s annual compensation or other limited facts and circumstances that the Commissioner of Internal Revenue finds justify the availability of the rules set forth in this section, the annual additions under the terms of the plan for a particular participant would cause the limitations of §
1-604, Subsection
5, applicable to that participant for the limitation year to be exceeded, the excess amounts shall not be deemed to be annual additions in that limitation year, provided that excess amounts in the participant’s accounts shall be used to reduce the contributions required to be made by the employer to the plan on behalf of the participant for the next limitation year, if necessary. If the participant is not covered by the plan at the end of the limitation year, any remaining excess amount shall be unallocated in a suspense account for the limitation year and shall be applied to reduce future contributions required to be made by the employer to the plan for all remaining participants in the next limitation year and each succeeding limitation year, if necessary.
[Ord. 432, 12/28/1973]
1. Participant's Accounts. The Committee shall establish and maintain an account in the name of each participant to which the Committee shall credit the Borough's contributions pursuant to the provisions of §
1-605, Subsection
2, and all amounts allocated to each such participant pursuant to the provisions of §
1-605, Subsection
3. The trustee shall maintain separate records of each employee participating in the fund. The Committee shall from time to time supply the trustee with the record of each employee participating in the plan and of his proportionate interest in the fund. Trustee shall be fully protected in relying upon such information and shall not be required to question or verify the same at any time.
2. Allocation of Annual Borough Contributions. The Committee, as of the last day of each plan year for which the Borough shall make a contribution, shall allocate such contribution to the account of each participant in accordance with the contribution for each participant as established in §
1-604, Subsection
1, of this Part.
3. Valuation
of the Trust Fund and Accounts. The trustee, as of the last day of
each plan year (and at such other time or times as the Committee shall
direct), shall determine the net worth of the assets of the trust
fund and report such value to the Committee in writing. In determining
such net worth, the trustee shall evaluate the assets of the trust
fund at their fair market value as of such valuation date and shall
deduct all expenses for which the trustee has not yet obtained reimbursement
from the Borough or from the fund. Such valuation shall not include
any contribution made by the Borough as of such valuation date. The
Committee shall adjust all participants' accounts, upward or downward,
pro rata, so that the total of said accounts will equal the net worth
of the trust fund as of the day of such adjustment.
[Ord. 432, 12/28/1973; as amended by Ord. 467, 12/3/1979; by Ord. 563, 8/1/1988; by Ord. 601, 6/1/1992; by Ord. 619, 9/6/1994; and by Ord.
652, 12/7/1998]
1. Distribution
Upon Retirement.
A. The normal
retirement date shall be the first day of the month after the 65th
birthday of the participant. Early retirement is permissible provided
the participant has attained age 55 and completed 20 years of service.
If the employment of the participant continues beyond his normal retirement
date, no payment shall be made to such participant so long as such
participant continues in the employment of the Borough, so that a
participant continuing in the employment of the Borough, after reaching
retirement age, shall receive distribution from the fund only after
his actual retirement from the employment of the Borough.
B. Upon retirement of the participant, the entire amount then credited to such participant's account shall immediately become vested and his participation hereunder shall cease. The Committee, in accordance with the provisions of §
1-606, Subsection
6, shall direct the trustees to distribute to such participant the then value of such account.
2. Distribution
Upon Death.
A. Upon the
death of any participant, the amounts due under any contracts purchased
for his benefit and the amount credited to the participant's account
shall be paid to any person or persons whom the participant has designated
as direct or contingent beneficiary.
B. Any portion of the amounts payable under this subsection, which are not disposed of because of the participant's, or former participant's, failure to designate a beneficiary or because all or some of the designated beneficiaries have predeceased him shall be paid to his spouse, if living; if not living, to his surviving issue, per stirpes, in equal shares; if not any surviving issue, to his surviving parent or parents; if no surviving parent, to his surviving brothers and sisters, and if none of these survive, to his estate. Payment shall be made in accordance with the provisions of §
1-606, Subsection
6.
C. If the Committee determines that any person entitled to payments under §
1-606, Subsection
2, is a minor or incompetent by reason of physical or mental disability, the Committee may make all such payments to any other person for the use or benefit of the minor or incompetent without responsibility to follow the application of the amounts so paid. Payments made pursuant to this Section shall completely discharge the Committee and the Borough.
D. Each participant
may file with the Committee a written designation of his beneficiary
with the right thereafter to change same by writing signed by him
and lodged with the Committee. The Committee may require such proper
proof of death and such evidence of the right of any person to receive
payment of the vested account of a deceased participant or former
participant, as the Committee may deem desirable. The Committee's
determination of death and of the right of any person to receive payment
shall be conclusive.
3. Distribution in Event of Disability. In the event of total and permanent disability occurring before normal retirement age, a participant's account shall be 100% vested. “Disability” shall mean total and permanent incapacity of any employee to perform the usual duties of his employment with the Borough as evidenced by the receipt by the member of a total and permanent disability benefit under the Federal Social Security Act. In determining the eligibility of the participants for such benefits, the Committee shall act uniformly in like situations. Such disabled participant shall be entitled to receive the entire amount credited to the participant's account and the Committee, in accordance with the provisions of §
1-606, Subsection
6, shall direct the trustee to distribute to such participant the then value of such account in full satisfaction of all rights under this plan.
4. Vesting
and Distribution upon Termination of Employment.
A. Upon termination of a participant's employment for any reason other than retirement, death, or total and permanent disability, the Committee, in accordance with the provisions of §
1-606, Subsection
6, shall direct the trustee to distribute to such participant the then vested value of his account as of the last valuation date preceding the time of the termination of participant's employment. That portion of the account, which has not vested, shall be applied in accordance with §
1-604, Subsection
1, of this Part.
B. Each participant's
interest in his voluntary participant's contribution account shall
be 100% vested at all times. The interest of each participant shall
vest according to the following schedule:
Completed Years of Participation
|
Percentage of Amounts Vested
|
---|
Less than 2
|
0%
|
2
|
25%
|
3
|
50%
|
4
|
75%
|
5
|
100%
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C. If an
individual ceases to be a participant through his own dishonesty or
through any willful act in the course of his employment to the injury
of his employer or his fellow workers, then, regardless of how near
he may be to his retirement date, he shall forfeit all benefits under
the terms of this trust attributable to Borough contributions. The
Committee shall make any determination that the provisions of this
Section are operative within 20 days after a person ceases to be a
participant and shall notify him by registered mail addressed to his
last known address. He shall be given a period of 20 days following
the mailing of such notice in which to appeal and if he does not appeal
within such period, in writing addressed and delivered to the Committee,
the judgment of the Committee shall be final.
D. If he
files notice of appeal within 20 days after the mailing of the notice
by the Committee, he shall simultaneously with filing notice of appeal,
name an arbitrator from among the employees of the Borough, regardless
of whether the person so designated is a participant under this trust.
The Committee shall name a second arbitrator and both such arbitrators
shall select a third arbitrator. In spite of such notice of appeal,
the Committee shall proceed as if the Committee's judgment were final,
but if their judgment shall be appealed, they shall hold in escrow
any funds received by them for final disposition in accordance with
the judgment of the board of arbitrators. The decision of a majority
of the arbitrators shall be binding upon such former participant,
the Committee, the trustee, the Borough and all other interested persons
and shall be enforceable in any court of competent jurisdiction.
E. Notwithstanding
the foregoing, no person shall be entitled to receive any benefit
(other than a return of voluntary participant contributions without
interest but less any voluntary participant contributions previously
paid to the participant pursuant to the terms of the plan) under the
plan, if it is determined that such person has been convicted of,
or has pleaded guilty or no contest to, any crime related to public
office or public employment, all as provided in the Pennsylvania Public
Employees Pension Forfeiture Act, 43 PA Cons. Stat. § 1311 et
seq.
F. All forfeitures under §
1-606, Subsection
4, shall be used to reduce future employer contributions to the plan.
5. Method
and Medium of Payment. The distribution provided hereunder shall be
made in such one or more of the following methods as the participant
may elect:
A. The purchase
of or conversion of any policy to, or exercise of any policy option
equivalent to, an annuity, or a variable annuity contract, providing
level payments, or later payments less than initial payments, commencing
with the participant's normal retirement date and extending no longer
than the joint lifetimes of the participant and his spouse.
B. Payments
in level monthly, quarterly, semi-annual or annual installments, over
a period not exceeding 10 years, after first having segregated the
aggregate amount thereof in a special account.
C. Payments
in lump sum of the entire balance.
Payments and distributions shall be made, at the election of the participant, either immediately, on normal retirement date, on actual retirement, or on any intervening date. In the event that benefits payable hereunder are unclaimed for three years and the whereabouts of the participant is unknown to the Committee, such benefits will be forfeited and applied under § 1-604, Subsection 1, of this Part.
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6. Special Account. The term “special account" as utilized in this plan in §
1-606, Subsection
5B, shall mean an account separate and segregated from all other funds and assets held by the trustee hereunder. Such an account shall be an interest-bearing or invested account, and the accumulations, appreciation or depreciation shall be added to or subtracted from such account. A systematic withdrawal mutual fund investment account may be used. The amount held in such special account and forfeited under §
1-606, Subsection
4, shall be applied under §
1-604, Subsection
1, of this Part.
7. Required Distributions. Effective January 1, 1987, notwithstanding any other provision of this plan, all benefit distributions under §
1-606 shall be subject to the following requirements:
A. The distribution
of benefits to each participant who is entitled to a benefit under
the plan shall commence not later than April 1 of the calendar year
following the later of the calendar year in which he attains age 70
1/2 or the calendar year in which he terminates employment with the
employer.
B. The distribution
of benefit payments to each participant shall be made at least as
rapidly as would be required by the following methods:
(1) In
accordance with regulations prescribed by the Secretary of the Treasury,
over the life of the participant, or over the lives of the participant
and his designated beneficiary: or
(2) In
accordance with such regulations, over a period not extending beyond
the life expectancy of the participant or the life expectancy of the
participant and his designated beneficiary, provided that life expectancies
shall not be redetermined.
C. If a participant dies after distribution of his benefit has commenced in accordance with a method of distribution under §
1-606, Subsection
7B, the remaining portion of such benefit shall be distributed at least as rapidly as such benefit would have been distributed under such method as of the date of the participant’s death.
D. If a participant
dies before distribution of his benefit has commenced, and if any
portion of the participant’s interest is payable to (or for
the benefit of) his designated beneficiary, distribution may be made,
in accordance with regulations prescribed by the Secretary of the
Treasury, over the life of such designated beneficiary or over a period
not extending beyond the life expectancy of such designated beneficiary:
provided that such distribution shall commence not later than the
later of:
(1) The
end of the calendar year following the calendar year in which the
participant dies; or
(2) If the participant’s designated beneficiary is his surviving spouse, the end of the calendar year in which the participant would have attained age 70 1/2; provided that if the spouse dies before benefit payments begin, §
1-606, Subsection
7D, shall be applied as if the spouse were the participant
In any other case, the entire benefit of the participant shall
be distributed by the end of the fifth calendar year following the
date of his death.
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E. All benefit
distributions under the plan shall be made in accordance with the
regulations under Code Section 401(a)(9), including the minimum distribution
incidental benefit requirements of Code Section 401(a)(G) and proposed
Treas. Reg. Section 1.401(a)-2, or any successor regulations.
8. Direct
Rollovers. The following provisions shall apply to distributions made
on or after January 1, 1993.
A. Notwithstanding any other provision of the plan to the contrary that would otherwise limit a distributee’s election under §
1-606, Subsection
8, a distributed may elect, at the time and in the manner prescribed by the Committee, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributed in a direct rollover.
B. The following definitions shall apply for purposes of §
1-606, Subsection
8:
(1) “Eligible
rollover distribution” shall mean any distribution of all or
any portion of the balance to the credit of the distributes, except
that an eligible rollover distribution shall not include:
(a) Any distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or
life expectancy) of the distributed or the joint lives (or joint life
expectancies) of the distributed and the distributee’s designated
beneficiary, of for a specified period of 10 years or more;
(b) Any distribution to the extent such distribution is required under
Code Section 401(a)(9); and
(c) The portion of any distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized appreciation
with respect to employer securities).
(2) “Eligible
retirement plan” shall mean an individual retirement account
described in Code Section 408(a), an individual retirement annuity
described in Code Section 408(b), an annuity plan described in Code
Section 403(a), or a qualified trust described in Code Section 401(a),
that accepts the distributee’s eligible rollover distribution.
However, in the case of an eligible rollover distribution to the surviving
spouse, an eligible retirement plan shall be an individual retirement
account or individual retirement annuity.
(3) “Distributee”
shall include an employee or former employee. In addition, the employee’s
or former employee’s surviving spouse and the employee’s
or former employee’s spouse or former spouse who is alternate
payee under a qualified domestic relations order [as defined in Code
Section 414(p)] shall be distributees with regard to the interest
of the spouse or former spouse.
(4) “Direct
rollover” shall mean a payment by the plan to the eligible retirement
plan specified by the distributes.
[Ord. 432, 12/28/1973]
If this Borough be merged or consolidated with any other governmental
body, or if any other governmental body acquires substantially all
the assets of this Borough, such surviving or purchasing entity may
elect to continue this plan, in which event those employees who accept
a position with such surviving or purchasing entity shall continue
as participants of this plan without break in participation or employment.
[Ord. 432, 12/28/1973]
The Borough reserves the right to amend or terminate this plan at any time provided, however, that no amendment or termination shall deprive any participant of his vested equity nor revest in the Borough any assets of the trust, except as provided in §
1-610 of this Part. Notwithstanding the preceding sentence, the Borough reserves the right to make any amendment whatsoever, including amendments adjusting participants' accounts, prior to securing, or in order to secure, the approval of this plan by the Internal Revenue Service as a qualified tax-exempt profit sharing plan under the Internal Revenue Code.
[Ord. 432, 12/28/1973]
If the Borough, by ordinance, makes no further contribution under this plan, the full amount in each participant's account shall immediately vest and shall be retained by the trustee until such time as the participant shall become entitled to such amount under the provisions of §
1-606 hereof and the Borough shall not be entitled to any of the assets of the trust. Upon complete discontinuance of the Borough's contribution hereunder, the right of each employee to the amount credited to his account at such time will become nonforfeitable.
[Ord. 432, 12/28/1973; as amended by Ord. 652, 12/7/1998]
If the employer, by ordinance, terminates this plan, the full amount in each participants account shall immediately vest and be paid to him forthwith by whichever of the methods described in §
1-606, Subsection
5, as the Committee shall designate, and the Borough shall not be entitled to any of the assets of the trust.
[Ord. 432, 12/28/1973]
The plan herein established is for the benefit and protection
of the participants and beneficiaries herein named and the rights,
privileges and benefits herein conferred shall not be pledged, sold,
assigned or transferred, or in any manner anticipated or encumbered
and neither shall the same be subject to the claims of creditors of
such participants or beneficiaries, nor shall the same be subject
to levy, attachment, garnishment or other legal process but shall
be held and administered as herein provided for the use and benefit
of said participants and beneficiaries.
[Ord. 432, 12/28/1973]
Nothing in this plan or any amendment hereto shall give any participant, beneficiary, employee or any other person any right unless such right is specifically provided herein or in such amendment or accorded by the Borough or the Committee pursuant thereto. The fact that amounts have been allocated or credited to a participant's account shall not vest any right, title or interest in the assets in such participant except as provided in §
1-606, Subsection
1. Furthermore, nothing in this plan or any amendment hereto shall be construed as giving any participant, employee or other person the right to be retained in the service or employ of the Borough, but all such persons shall remain subject to discharge at any time to the same extent as if this plan had not been adopted.
[Ord. 432, 12/28/1973]
For the purposes of the plan, terms in the masculine shall be
deemed to include the feminine, and terms in the singular shall be
deemed to include the plural and vice versa wherever the context so
admits or requires.
[Ord. 432, 12/28/1973]
Construction of this plan shall be governed by the law of Pennsylvania.
However, it is the intent of the Borough that this plan is a qualified
money purchase pension plan under the provisions of the Internal Revenue
Code and any ambiguities in construction shall be interpreted in order
to effectuate such intent.
[Ord. 432, 12/28/1973]
The trustee shall receive and invest such sums as are paid to
it by the Borough, and pursuant to the investment instructions of
the Committee. The trustee shall be under no duty to compute the amount
to be paid to it by the Borough or to collect such amount or to compute
the amount which participants are entitled to pay to it. The trustee
hereby accepts the trust created hereunder and agrees to perform the
duties under this plan on its part to be performed.
[Ord. 432, 12/28/1973; as amended by Ord. 619, 9/6/1994; and by Ord. 652, 12/7/1998]
The trustee shall have the following powers with respect to
the trust hereunder to be exercised at the direction of the Committee
or if the Committee vests full investment in the trustee, then to
be exercised by the trustee in its discretion, as it determines to
be in the best interests of the participants in the plan:
1. The trustee
may invest the trust fund, or any part ~hereof, in a contract or contracts
issued by an insurer.
2. Ordinary
life insurance may be purchased on the lives of participants who are
insurable. Annuity contracts may be purchased on the lives of participants
who are uninsurable. The face amount of contracts purchased shall
be in even multiples of $100 and no contract shall be purchased when
the amount available for premium will not provide a face amount of
at least $1,000.
3. The following
rules shall be applicable to the acquisition, handling, and disposition
of such contracts:
A. All contracts
shall be in form and content as nearly uniform as regards basic options,
cash surrender values and other material features as may be from time
to time obtainable;
B. Annual
premiums falling due upon such contracts shall be paid from the fund
and charged to the accounts of the participants for whose benefit
they are held; and
C. Any dividends,
refunds, reimbursements or proceeds of any other nature received under
any such contract, shall be paid into the fund and credited to the
account of the participant for whose benefit the contract is held.
4. All contracts
shall be purchased by the trustee from such legal reserve life insurance
company as may be approved by the trustee. Application therefore shall
be signed by the trustee and the trustee shall be the owner thereof.
The trustee shall use less than 1/2 of the aggregate contributions
allocated to a participant in the purchase of ordinary life insurance
contracts.
5. The trustee
shall also convert the entire value of any life insurance contract
at or before retirement so that no portion of such value may be used
to continue life insurance beyond retirement.
6. In the
event that the Committee grants investment authority to the trustee,
the trustee shall invest and reinvest the same in accordance with
sound investment and business practices, but shall not be limited
to what are known as "legal investments" for trustee under the laws
of the Commonwealth of Pennsylvania. In the administration of the
trust fund, the trustee shall have authority, in addition to, and
not in limitation of, any authority given to it by law, to exercise
the following powers:
A. To purchase,
own, and hold any property, real or personal, and to lease the same.
B. With any
cash at any time held by the trustee, to purchase or subscribe for
any authorized investment, and to retain such investment in trust.
C. To sell
for cash or on credit, convert, redeem, exchange for another investment,
or otherwise dispose of, any investment at any time held by the trustee.
D. To retain
uninvested and unproductive income of all or any part of the fund.
E. To join
in or dissent from any plan or lease, merger or consolidation, exchange,
reorganization or foreclosure of any corporation in which the trustee
may hold stocks or bonds, or other securities under any such plan.
F. To exercise
an option, to accept in exchange, or to subscribe for additional stocks
or bonds or certificates or other instruments in the nature thereof
which may be given to the trustee as the holder of stocks or bonds
or other instruments belonging to the fund, and to make any and all
necessary payments therefore.
G. To vote,
or not to vote, with respect to all securities and property in person
or by proxy and generally to exercise all rights of ownership and
disposition over all the fund.
H. To compromise
and settle any debt or obligations to or from the fund and to reduce
the rate of interest on, extend or otherwise modify, foreclose upon
default or otherwise enforce or refrain from the enforcement of any
such debt or obligation, to abandon any property which the trustee
may deem advisable, and generally to do all acts and things which
the trustee may consider for the best interest of the fund.
I. To apply
for, purchase, hold or transfer any life insurance retirement income,
endowment or annuity contracts by which any benefit contemplated by
the plan may be provided.
J. Generally
to have full power and authority to otherwise deal with and dispose
of this trust, without any liability or duty except to exercise the
judgment and care under the circumstances then prevailing which men
of prudence, discretion and intelligence exercise in the management
of their own affairs, not in regard to speculation, but in regard
to the permanent disposition, considering the probable income, as
well as the probable safety of their capital.
K. To employ
investment counsel, advisors or agents to act in behalf of the trustee
and to delegate to such investment counsel, advisors or agents discretionary
powers.
7. If, on
any occasion, the trustee purchases a life insurance retirement income,
endowment or annuity contract from any insurance company, no such
insurance company will be deemed a party to this agreement. A certification
in writing by the trustee as to the occurrence of any event contemplated
in and by this agreement, shall constitute conclusive evidence of
such occurrence, and any insurance company shall be fully protected
in accepting and relying upon certification and shall incur no liability
or responsibility for so doing.
8. With respect
to any action under any contract, the insurance company may deal with
the trustee as the sole owner of such contract and shall not be responsible
to see that any action of the trustee is authorized by the terms of
this agreement. Any change made or action taken by any insurance company
upon the written direction of the trustee shall fully discharge such
insurance company from all liability with respect thereto, and no
insurance company shall be obligated to see to the distribution or
further application of any moneys paid by it to the trustee, or paid
in accordance with the written direction of the trustee.
9. Trustee
shall keep accurate and detailed accounts of all investments, receipts
and disbursements and other transactions hereunder and such other
specific records as shall be agreed upon in writing by the Committee
and trustee. All accounts, books and records shall be open to inspection
and audit by any person or persons designated by Committee at all
reasonable times. Following the close of each fiscal year, trustee
shall file with Committee a written report for the fund setting forth
all investments, receipts and disbursements for the period covered
by the report, and the cash securities and other property held at
the end of such period.
10. In addition
to the foregoing powers, the trustee shall also have all the powers,
rights and privileges conferred upon the trustee by the law of Pennsylvania,
and the trustee shall have all other powers, rights and privileges
necessary for the performance of their duties hereunder.
11. The plan
and trust hereby created are purely voluntary on the part of the Borough.
Neither the establishment of the trust nor any modification thereof,
nor the creation of any fund or account, nor the payment of any benefits,
shall be construed as giving any participant or any other person any
legal or equitable right against the Borough or the trustee, unless
the same shall be specifically provided for in this trust, or as giving
any participant the right to be retained in the service of the Borough.
All participants shall remain subject to discharge from employment
to the same extent as if the trust had never been established. It
is an express condition of the trust that it shall be impossible for
any part of the corpus or income of the trust to be used for or diverted
to, purposes other than for the exclusive benefit of the eligible
participants or their beneficiaries. Each eligible participant, by
joining in the execution of a form to be provided by the trustee,
thereby, for himself, his heirs, executors and administrators, approves
and agrees to be bound by each and every provision hereof, and releases
the Borough from any and all liability for any loss or damage whatever
in connection with trust except willful misconduct.
[Ord. 432, 12/28/1973]
The Borough shall indemnify the trustee against any liability
to a participant or beneficiary for any action taken or omitted by
the trustee pursuant to any written direction to the trustee signed
by a majority of the Committee.
[Ord. 432, 12/28/1973]
Any trustee may be removed by the Borough at any time upon 30
days' notice in writing to such trustee. Any trustee may resign at
any time upon 60 days' notice in writing to the Borough. In the event
of any such resignation or removal, the parties thereto may by written
instrument waive such notice of resignation or removal as may be provided
hereunder. In the event of a vacancy in the office of trustee arising
by death, removal, resignation, refusal to act, or inability to act
of any trustee, the Borough may appoint a successor trustee who, upon
acceptance of such appointment, shall have the same powers and duties
as those conferred upon the original trustee under the provisions
of this Part 6A; and the title to all of the funds and properties
constituting the trust fund shall vest jointly in those who shall
from time to time be the trustee hereunder.
[Ord. 432, 12/28/1973]
1. If, pursuant to §
1-607 of this Part, a governmental body with which the Borough is merged or consolidated, or any other governmental body which acquires substantially all of the assets of the Borough, elects to continue this plan, such surviving or purchasing entity may notify the trustee, in writing, and thereafter, every reference to the Borough herein shall be treated as a reference to such surviving or purchasing entity.
2. If the
Borough is liquidated or merged or consolidated with another governmental
body and this plan is not continued, then the Committee shall succeed
to the functions of the Borough of Nazareth under the plan and trust,
including the function of naming new Committee members.
[Ord. 432, 12/28/1973; as amended by Ord. 652, 12/7/1998]
The validity, construction and effect of this Part 6A and of
the trust created hereunder and its enforcement shall be determined
by the laws of the Commonwealth of Pennsylvania. However, it is the
intent of the parties that this trust be a tax-exempt trust under
the provisions of the Internal Revenue Code and any ambiguities in
construction shall be interpreted in order to effectuate such intent.
1. References.
A. Act 205
means the Municipal Pension Plan Funding Standard and Recovery Act,
Act of December 18, 1984, P.L. 1005 No. 205, as amended, 53 P.S. §
895.101 et seq., as enacted by the Commonwealth of Pennsylvania.
B. Act 600
means the Police Pension Fund Act, Act of May 29, 1956, P.L. 1804
No. 600, as amended, 53 P.S. § 761 et seq., as enacted by the
Commonwealth of Pennsylvania. Cites herein to this Act shall use the
Purdons Statute instead of the section number.
C. ERISA
means the Employee Retirement Income Security Act of 1974, as amended.
D. IRC means
the Internal Revenue Code of 1986, as it may be amended from time
to time.
2. Actuarial
Equivalent.
A. The present
value of any benefit under the terms of this plan will be the actuarial
equivalent of the accrued benefit in the normal form of benefit commencing
at normal retirement date.
B. In compliance
with Act 600, this Plan does not provide optional forms of benefit
payment; therefore, no actuarial equivalence for determining optional
forms need be determined.
C. Limitations
on Benefits. For the purpose of implementing the limitations on benefits
of IRC Section 415, actuarial equivalence shall be determined based
on the following mortality and interest assumptions:
Mortality table:
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UP-1984 (-2)
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Interest rate:
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5.00% per annum compounded annually [except as limited under § 1-651, Subsection 1E(13)]
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For the purpose of implementing the limitations on benefits
of IRC Section 415 for limitation years beginning on or after January
1, 1995, the IRC Section 417 mortality table is the mortality table
prescribed by the Secretary of the United States Treasury under Revenue
Ruling 95-6 or subsequent guidance. Such table shall be based on the
prevailing commissioners' standard table used to determine reserves
for group annuity contracts issued on the date as of which the present
value is being determined.
Notwithstanding the preceding, effective for the purpose of implementing the limitations on benefits of IRC Section 415 for limitation years beginning on or after December 31, 2002, the reference in §
1-651, Subsection
2C, to the mortality table prescribed in Revenue Ruling 2001-62 for all purposes under the plan.
3. Compensation/Average
Monthly Compensation.
A. Compensation.
(1) Compensation
means any earnings reportable as W-2 wages for federal income tax
withholding purposes, plus elective contributions, for the applicable
period. Elective contributions are amounts excludable from the employee's
gross income and contributed by the employer, at the employee's election
to:
(a) A cafeteria plan (excludable under IRC Section 125 and as provided
in Section 7.1(e)(3));
(b) A tax sheltered annuity (excludable under IRC Section 403(b)); or
(c) A deferred compensation plan (excludable under IRC Section 4571).
Any reference in this plan to compensation shall be a reference to the definition in § 1-651, Subsection 3, unless the plan reference specifies a modification to this definition. The plan administrator shall take into account only compensation actually paid by the employer for the relevant period. A compensation payment includes compensation by the employer through another person under the common paymaster provisions in IRC Sections 3121 and 3306. Compensation from a related employer that is not a participating employer under this plan shall be excluded.
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(2) Exclusions From Compensation. Notwithstanding the provisions of §
1-651, Subsection
3A(1), the following types of remuneration shall be excluded from the participant's compensation:
(a) Unused vacation, personal day, and sick pay paid on account of termination
of employment.
(b) Any lump sum payment made upon termination of employment.
B. Limitations
on Compensation. For any plan year beginning after December 31, 2001,
the plan administrator shall take into account only the first $200,000
(or beginning January 1, 2003, such larger amount as the Commissioner
of Internal Revenue may prescribe) of any participant's compensation
for determining all benefits provided under the plan. For any plan
year beginning after December 31, 1995, but before January 1, 2002,
the plan administrator shall take into account only the first $150,000
(or, for plan years beginning after December 31, 1996, but before
January 1, 2002, such larger amount as the Commissioner of Internal
Revenue may prescribe) of any participant's compensation for determining
all benefits provided under the plan for a determination period. The
compensation dollar limitation for a plan year shall be the limitation
amount in effect on January 1 of the calendar year in which the plan
year begins. If the plan should determine compensation on a period
of time that contains less than 12 calendar months (such as for a
short plan year), the annual compensation dollar limitation shall
be an amount equal to the compensation dollar limitation for the plan
year multiplied by the ratio obtained by dividing the number of full
months in the period by 12.
Notwithstanding the preceding, in the case of an eligible participant,
the annual compensation dollar limitation shall not apply to the extent
that the application of the limitation would reduce the amount of
compensation that is allowed to be taken into account under the plan
below the amount that was allowed to be taken into account under this
plan as in effect on July 1, 1993. For this purpose, an eligible participant
is an individual who first became a participant in the plan during
a plan year prior to the first day of the first plan year beginning
after December 31, 1995.
C. Average
Monthly Compensation means the average of a participant's monthly
compensation over the thirty-six-consecutive-month period ending on
the date of employment termination. If a participant's entire period
of service for the employer is less than the specified period, compensation
shall be averaged on a monthly basis over the participant's entire
period of service.
If compensation for any plan year beginning prior to January 1, 1996, is taken into account in determining average annual compensation for any plan year beginning after December 31, 1993, such compensation shall be subject to the $150,000 compensation dollar limitation, but only to the extent described in §
1-651, Subsection
3B.
4. Dates/Years.
A. Accounting
Date means the last day of the plan year.
B. The Effective
Date of the plan is December 9, 1957.
The effective date of this amendment and restatement is January
1, 2001; provided, however that the plan provisions required to comply
with the Tax Reform Act of 1986 (TRA '86), the Omnibus Budget Reconciliation
Act of 1986 (OBRA '86), the Omnibus Budget Reconciliation Act of 1987
(OBRA '87), and the Technical and Miscellaneous Revenue Act of 1988
(TAMRA) shall generally be effective on the first day of the plan
year beginning after December 31, 1988, except as specified otherwise
in this plan or in IRA '86, OBRA '86, OBRA '87 or TAMRA for a government
sponsored plan. The plan provisions required to comply with the 1989
Revenue Reconciliation Act shall generally be effective on the first
day of the plan year beginning after December 31, 1989, except as
specified otherwise in this plan or in said Act. The plan provisions
required to comply with the Unemployment Compensation Amendments of
1992 shall be effective on January 1, 1993, except as specified otherwise
for a government sponsored plan. The plan provisions required to comply
with the Omnibus Budget Reconciliation Act of 1993 shall generally
be effective on the first day of the plan year beginning after December
31, 1993, except as specified otherwise in said Act.
The plan provision required to comply with the Family and Medical
Leave Act shall be effective August 5, 1993, the plan provisions required
to comply with the Uniformed Services Employment and Re-Employment
Rights Act of 1994 shall be effective December 12, 1994, the plan
provisions required to comply with the Retirement Protection Act of
1994 shall generally be effective on the first day of the first limitation
year beginning after December 31, 1994, the plan provisions required
to comply with the Small Business Job Protection Act of 1996 shall
generally be effective on the first day of the plan year beginning
after December 31, 1996, the plan provisions required to comply with
the Taxpayer Relief Act of 1997 shall generally be effective on the
first day of the plan year beginning after August 5, 1997, and the
plan provisions required to comply with the Economic Growth and Tax
Relief Reconciliation Act of 2001 shall generally be effective on
the first day of the plan year beginning after December 31, 2001,
except as specified otherwise in this plan or in said Acts for a government
sponsored plan.
C. Plan Entry Date means the participation date(s) specified in §
1-653.
D. Plan Year
means the twelve-consecutive-month period beginning on January 1 and
ending on December 31.
E. Limitation
Year means the plan year.
5. Employee.
A. Employee means any person employed by the employer. The term employee shall include any employee of the employer maintaining the plan or of any other employer required to be aggregated with such employer under IRC Section 414(b), (c), (m) or (o), as such provisions may be interpreted to apply to a governmental entity by the Internal Revenue Service. The term employee shall also include any leased employee deemed to be an employee of any such employer as provided in IRC Section 414(n) or (o) and as defined in §
1-651, Subsection
5B.
B. Leased Employee means an individual (who otherwise is not an employee of the employer) who, pursuant to a leasing agreement between the employer and any other person, has performed services for the employer (or for the employer and any persons related to the employer within the meaning of IRC Section 414(n)(6) on a substantially full time basis for at least one year and such services are performed under the primary direction or control of the employer. If a leased employee is treated as an employee by reason of §
1-651, Subsection
5B, compensation from the leasing organization that is attributable to services performed for the employer shall be considered as compensation under the plan. Contributions or benefits provided a leased employee by the leasing organization that are attributable to services performed for the employer shall be treated as provided by the employer.
6. Employer.
Employer means Borough of Nazareth, a political subdivision of the
Commonwealth of Pennsylvania, or any successor entity that may assume
the obligations of this plan with respect to its employees by becoming
a party to this plan.
7. Fiduciaries.
A. Chief Administrative Officer means the person appointed by the employer or the pension board as described in §
1-658, Subsection
2, who has primary responsibility for the execution of the administrative affairs of the plan
B. Plan Administrator
means the Chief Administrative Officer.
C. Investment
Manager means a person or corporation other than a trustee appointed
for the investment of plan assets.
8. Participant/Beneficiary.
A. Participant means an eligible employee of the employer who becomes a member of the plan pursuant to the provisions of §
1-652, or a former employee who has an accrued benefit under the plan.
B. Beneficiary
means a person designated by a participant who is or may become entitled
to a benefit under the plan. The beneficiary may be someone other
than the participant's spouse, but only to the extent that this plan
provides for a benefit to be payable to a non-spouse beneficiary.
A beneficiary who becomes entitled to a benefit under the plan remains
a beneficiary under the plan until the trustee has fully distributed
his benefit to him. A beneficiary's right to (and the plan administrator’s,
or a trustee's duty to provide to the beneficiary) information or
data concerning the plan shall not arise until he first becomes entitled
to receive a benefit under the plan.
9. Plan. Plan
means Borough of Nazareth Police Pension Plan as set forth herein
and as it may be amended from time to time.
10. Service.
A. Service
means any period of time the employee is in the employ of the employer,
including any period the employee is absent due to vacation, holidays,
or sickness or on an unpaid leave of absence authorized by the employer.
Separation from service means that the employee no longer has an employment
relationship with the employer.
B. Hour
of Service means each hour for which an employee is paid or entitled
to payment for performance of duties for the employer.
C. Break
in Service means any period of severance.
D. Period
of Severance means a continuous period of time during which the employee
is not employed by the employer and is not credited with an hour of
service. Such period begins on the date the employee retires, terminates
service, or if earlier, the date on which the employee was otherwise
first absent from service.
E. Credit
for Military Service. Any employee employed as a member of the police
force who bas been a regularly appointed employee for a period of
at least six months and who thereafter enters into the military service
of the United States shall receive credit for all such military service,
if he returns to employment with the employer within six months after
his separation from military service.
Notwithstanding the preceding effective December 12, 1994, contributions,
benefits, and service credit with respect to qualified military service
will be provided in accordance with IRC Section 414(u).
No service shall be credited under §
1-651, Subsection
10E, if the employee is entitled to receive retirement benefits for such service under a retirement system administered and wholly or partially paid for by any other governmental agency with the exception of an employee eligible to receive military retirement pay earned by a combination of active duty and non-active duty with a reserve or national guard component of the armed forces which retirement pay is payable only upon attainment of a specified age and period of service under 10 U.S.C. Ch. 67 (relating to retired pay for non-regular service).
F. Other
Service Credited. If the employer is a member of an affiliated service
group under IRC Section 414(m) or a controlled group of corporations
under IRC Section 414(b), or any other entity required to be aggregated
with the employer pursuant to IRC Section 414(o) as these Internal
Revenue Code provisions are applied to a governmental entity, service
shall be credited for any employment for any period of time for any
other member of such group. Service shall also be credited for any
leased employee who is considered an employee for purposes of this
plan under IRC Section 414(n) or (o).
G. Year
of Service means 12 months of service, excluding any breaks in service.
For purposes of determining an employee's initial year of service
upon his employment, the initial year of service commence on the employee's
first day of employment. The first day of employment is the first
day the employee performs an hour of service. The first day of re-employment
is the first day the employee performs an hour of service following
a break in service. An initial year of service shall end on the day
immediately preceding the first anniversary of the employee's date
of hire or rehire. Any subsequent year of service shall commence on
the day following the completion of the immediately preceding year
of service.
(1) Crediting Years of Service. Service may be credited for the purpose
of eligibility to participate, vesting, benefit accrual or determining
the benefit payable under the normal retirement benefit formula. Generally,
no service shall be credited for periods during which the employee
performs no services for the employer. Further, no more than one year
of service will he credited for any twelve-consecutive-month period.
(2) Predecessor Service. If the employer maintains the plan of a predecessor
employer, service with such predecessor employer shall be treated
as service for the employer. If the employer does not maintain the
plan of a predecessor employer, then service as an employee of a predecessor
employer shall not be considered as service under the plan. The plan
may be amended to provide for the crediting of service performed for
a disbanded police force under an intermunicipal agreement pursuant
to the Intergovernmental Cooperation Law as provided in 53 P.S. §
770(e) and (f).
11. Trust.
A. Trust
means the qualified trust created under the employer's plan. The trust
shall be known as the Borough of Nazareth Police Pension Fund.
B. Trustee
means the person or persons appointed by the employer to be the trustee
of the trust, or any duly appointed successor trustee.
1. Plan Participation.
A. Eligibility. An employee who is a member of the eligible class of employees shall be eligible for plan participation provided that he agrees to make the mandatory contributions as set forth in §
1-656, Subsection
2.
B. Eligible
Class of Employees. Employees of the employer who are employed as
police officers on a regularly scheduled, full-time basis shall be
eligible to be covered under the plan. Any police officer employed
as a temporary, special, part-time or permanent part-time officer
of the employer shall not be considered a member of the eligible class
of employees.
C. Entry
Date. An eligible employee shall participate in the plan on the first
day he performs one hour of service.
2. Termination
of Participation. A participant shall continue to be an active participant
of the plan so long as he is a member of the eligible class of employees.
He shall become an inactive participant immediately if he ceases to
be a member of the eligible class of employees or terminates employment.
He shall cease participation completely upon the later of his receipt
of a total distribution of his nonforfeitable accrued benefit under
the plan or the forfeiture of the nonvested portion of the accrued
benefit.
3. Re-Participation.
A. If a participant
becomes an inactive participant, because he is no longer a member
of the eligible class of employees, such inactive participant shall
become an active participant immediately upon returning to the eligible
class of employees. In the event an employee who is not a member of
an eligible class of employees becomes a member of an eligible class,
such employee shall participate immediately.
B. If a participant
incurs a break in service, he shall become an active participant immediately
upon returning to employment.
1. Service
Rules.
A. Year of
Vesting Service.
(1) For
purposes of determining the nonforfeitable interest in the participant’s
accrued benefit, the participant shall receive credit for the aggregate
of all time periods commencing with the participant's first day of
employment or re-employment and ending or the date a break in service
begins, except for periods of service disregarded below. The first
day of employment or re-employment is the first day the participant
performs an hour of service. Fractional periods or a year will be
expressed in terms of days. One year of vesting service shall be credited
for each 365-day period.
(2) Break
in Service Rules.
(a) Vested Participant. A former participant who had a nonforfeitable
right to all or a portion of his accrued benefit derived from employer
contributions at the time of his termination from service and who
did not receive a distribution of his accumulated contributions shall
retain credit for all years of vesting service prior to a break in
service.
(b) Nonvested Participant. In the case of a former participant who did not have any nonforfeitable right to his accrued benefit derived from employer contributions at the time of his termination from service or who received a distribution of his accumulated contributions, years of vesting service before a break in service shall not be taken into account in computing service, except as provided in §
1-655, Subsection
3.
B. Year of Benefit Service. For the purpose of determining the participant's benefit under the pension benefit formula, the participant shall receive credit for the aggregate of all time periods commencing with the participant’s first day of active participation or active reparticipation and ending on the date a break in service begins or the participant is no longer a member of an eligible class of employees, except for periods of service disregarded herein. One year of benefit service shall be credited for each 365-day period. Any years of service disregarded under §
1-655, Subsection
3, Cashout Distributions and Restoration, shall be disregarded for this purpose.
2. Normal
Retirement.
A. Normal
Retirement Date. The normal retirement date of each participant shall
be the day on which he satisfied both of the following requirements:
(2) He
completes 25 years of vesting service.
A participant’s right to his normal retirement benefit
shall be 100% vested and nonforfeitable upon attainment of the normal
retirement date, notwithstanding the plan’s vesting schedule.
If the employer enforces a mandatory retirement age, the normal retirement
age shall be the lesser of the mandatory age or the age specified
herein.
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Retired participants shall be subject to service, from time
to time, as a police reserve, in cases of riot, tumult, or preservation
or public peace until unfitted for such service, when they may be
finally discharged by reason of age or disability.
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B. Normal
Retirement Benefit.
(1) The
normal retirement benefit of each participant shall not be less than
the largest periodic benefit that would nave been payable to the participant
upon separation from service at or prior to his normal retirement
date under the plan exclusive of social security supplements, premiums
on disability or term insurance, and the value of disability benefits
not in excess of the normal retirement benefit, but taking into account
any decrease in average monthly compensation and any offset as of
the participant's Social Security retirement age for the participant’s
Social Security old-age insurance benefit.
(2) Normal
Form of Payment. The normal form of retirement benefit for each participant
shall be a level monthly pension payable during the participant's
lifetime, with payments commencing on the first day of the month coincident
with or next following his normal retirement date, and ceasing upon
the participant's death.
C. Pension
Benefit Formula. Each eligible participant shall receive a monthly
benefit payable at his normal retirement date equal to 50% of average
monthly compensation.
D. Service
Increment Benefit. Each eligible participant shall receive $100 per
year ($8.33 per month) for each completed year of benefit service
in excess of 25. The total service increment benefit shall not exceed
$100 per month. This benefit shall be payable in addition to the monthly
benefit payable under the pension benefit formula, provided the participant
is eligible.
E. IRC Section 415 Limitations and Conditions. Notwithstanding the benefits set forth in this section, the annual benefit otherwise payable to a participant at any time shall be limited or modified to the extent required to comply with the provisions of §
1-657, Subsection (limitations on benefits under IRC Section 415 and related employer provisions under IRC Section 414).
In any limitation year commencing before January 1, 2000, in
which the accrued benefit of one or more participants would be in
excess of the limitations on annual benefits under IRS section 415,
the annual benefits under any other plan that the employer also sponsors
will be reduced to the extent necessary to comply with such limitations
first. If any further reduction is required, the annual benefits under
this plan will then be reduced with respect to such participants.
If any reduction is required in any limitation year commencing
on or after January 1, 2000, the annual benefits under any other defined
benefit plan that the employer sponsors will be reduced to the extent
necessary to comply with such limitations first. If any further reduction
is required, the annual benefits under this plan will then be reduced
with respect to such participants.
F. Adjustments for Former Employees. Accruals under the current benefit formula shall be increased by the following cost-of-living adjustment. The benefit adjustment shall occur (1) initially as of the first accounting date of the plan that is at least 12 months after the later of the termination of the participant's employment or his retirement date; and (2) thereafter as of each subsequent accounting date. The annual adjustment shall not cause the benefit payable to exceed the maximum permissible defined benefit dollar limit as described in §
1-657, Subsection
1, for the calendar year. No cost of living increase shall be granted which would impair the actuarial soundness of the police pension fund.
The adjusted retirement benefit payable each month for a plan
year shall equal monthly retirement benefit multiplied by a fraction:
(1) The
numerator of which is the monthly Consumer Price Index (All Urban
Consumers) issued by the U. S. Bureau of Labor Statistics for the
December 31 coincident with the plan accounting date on which the
adjustment is effective; and
(2) The
denominator of which is the index for the immediately prior December
31.
Notwithstanding the above, the total cost-of-living adjustment
shall not exceed the percentage increase in the Consumer Price Index
from the plan year in which the former participant last performed
service as a full-time employee. No adjustment shall result in a total
retirement benefit in excess of 75% of the former participant's average
monthly compensation. Further, the total cost-of-living adjustment
to a participant shall not exceed 30%.
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3. Accrued
Benefit.
A. A participant's accrued benefit at any time equals: (a) the product of the normal retirement benefit determined in accordance with §
1-653, Subsection 3C, multiplied by a fraction, the numerator of which is the number of years of benefit service at such date, and the denominator of which is the number of years of benefit service the participant would have as of the year containing his normal retirement date if he continues to work until such date; plus (b) any service increment benefit.
B. If a participant begins receiving benefits at a time other than his normal retirement date, the participant’s benefit will be determined in accordance with §
1-653, Subsection
4, if benefits commence after his normal retirement date and in accordance with §
1-653, Subsection
5, benefits commence before his normal retirement date.
4. Late Retirement.
A. Nonforfeitability.
If a participant remains employed after his normal retirement date,
his benefits shall remain 100% vested and nonforfeitable. Payment
of benefits shall not commence until his actual retirement date.
B. Suspension
of Benefits Until Payment. Payment of normal retirement benefits shall
be suspended for each calendar month during which the participant
remains employed after his normal retirement date. The amount of benefits
that are paid later than his normal retirement date shall be computed
under the pension, benefit formula, and shall be increased by any
service benefit increment the participant's pension benefit shall
be determined on the basis of the participant's years of service for
benefit accrual completed before and during the period of suspension;
and the participant's compensation with the employer during the period
of suspension shall be included in any relevant determination of average
monthly compensation.
5. Early Retirement.
An early retirement benefit shall be provided to a member of the police
force with 20 or more years of vesting service who terminates employment
prior to the completion of normal retirement age and service requirements
and who files a written application for an early retirement benefit
with the Borough Secretary. The early retirement benefit shall become
effective as of the date the application is filed with the Borough
Secretary or the date designated on the application, whichever is
later, and shall be the actuarial equivalent of the accrued benefit
calculated as follows:
A. The accrued benefit shall be determined under §
1-653, Subsection
3.
B. The actuarial
equivalent of the accrued benefit shall be determined by actuarially
reducing the accrued benefit to reflect that it will commence on the
effective date of the early retirement rather than on the date on
which the member would have completed normal retirement age and service
requirements. The actuarial reduction shall be calculated using the
actuarial assumptions reported in the last actuarial valuation report
filed with the Public Employee Retirement Commission under Act 205.
6. Disability
Retirement.
A. If an
actively employed participant suffers a service-connected disability
and is unable to perform his normal duties prior to his normal retirement
date, he may receive a disability benefit under the plan. Such disabled
participant shall be entitled to a monthly disability benefit equal
to 50% of the participant’s monthly salary at the time the disability
was incurred.
B. Disability benefit payments shall cease upon death or upon recovery from disability prior to the date on which the disabled participant would have reached his normal retirement date if he had continued as an active participant under the plan. If disability benefits cease due to death before the participant’s attainment of his normal retirement date, the death benefit payable shall be the survivor’s benefit (if any) described in §
1-654, Subsection
2B, without any reduction with respect to disability payments that have been made. For the purpose of determining whether there has been a recovery, the plan administrator may require evidence of continued disability. Such evidence may include examination by a doctor selected by the plan administrator. The participant's refusal to submit medical examinations shall render him ineligible for disability benefits.
C. If disability
continues until attainment of normal retirement date, the disability
benefit shall continue until death.
D. Disability
means inability to engage in any substantial gainful activity for
which the participant is reasonably fitted through training, education
and experience by reason of any medically determinable physical or
mental impairment for a period of six weeks, and that can be expected
to result in death or that has lasted or can be expected to last for
a continuous period of not less than 12 months and that is the result
of the performance of police services for the employer.
E. The permanence
and degree of the impairment shall be supported by medical evidence.
The plan administrator shall determine whether the participant is
disabled as defined hereunder after consultation with a physician
chosen by the plan administrator. The physician shall examine the
participant at the participant’s place of residence or at a
place mutually agreed upon. In the administration of this Section,
all employees shall be treated in a uniform manner in similar circumstances.
7. Benefit
Distribution.
A. Commencement
of Benefits. Subject to the limitations of this plan, the benefit
distribution shall commence as soon as administratively feasible after
the later of the participant's termination of employment or his satisfaction
of the normal retirement date requirements, provided that he files
a written application for the retirement benefit.
B. Form of
Payment. A participant shall receive distribution of his accrued benefit
as a monthly pension payable as long as the participant lives.
C. General
Payment Provisions.
(1) If
any person entitled to receive benefits hereunder is physically or
mentally incapable of receiving or acknowledging receipt thereof,
and if a legal representative has been appointed for him, the plan
administrator may direct the benefit payment to be made to such legal
representative.
(2) At
the direction of the plan administrator, the trustee may make pension
payments directly from the fund or may take such steps as may be required
to purchase an annuity contract from an insurance company for the
participant, provided that the annuity contract purchased on behalf
of such participant shall be sufficient to provide the benefits to
which the participant is entitled. The ownership of the annuity contract
shall remain with the trustee, unless the plan administrator determines
otherwise. Any annuity contract distributed herefrom shall be non-transferable.
The application and directions to the insurance company for such annuity
contract shall be made by the plan administrator. The terms of any
such annuity contract purchased by the plan shall comply with the
requirements of this plan. Any dividend, refund or recovery on an
annuity contract shall be used to reduce subsequent employer contributions.
(3) The
benefits due any participant on account of his most recent period
of employment shall not duplicate any benefits due the same participant
under this plan on account of previous employment with the employer.
8. Suspension
of Benefits. Under this plan, normal retirement benefits in pay status
shall be suspended if a participant returns to employment; however,
there shall be no suspension if the participant is required to perform
services for the employer from time to time as a police reserve in
compliance with 53 P.S. § 769. If the participant accrues an
additional benefit, the plan shall offset the actuarial value of the
distributions made to the participant by the last day of the preceding
plan year against the benefit accrual for the current plan year.
9. Domestic
Relations Orders.
A. Nothing
contained in this plan prevents the trustee, in accordance with the
direction of the plan administrator, from complying with the provisions
of an acceptable domestic relations order that creates or recognizes
the existence of an alternate payee's right to, or assigns to an alternate
payee the right to receive all or a portion of the benefits payable
with respect to a participant under the plan.
B. A distribution
under an acceptable domestic relations order will not be made to an
alternate payee until the participant is entitled to a distribution
under this plan and commences such distribution. Nothing in this Section
permits the alternate payee to receive a form of payment not otherwise
permitted under the plan.
C. The plan
administrator shall establish reasonable procedures to determine the
acceptability of a domestic relations order in accordance with IRC
Section 414(p). Upon receiving a domestic relations order, the plan
administrator promptly will notify the participant and any alternate
payee named in the order, in writing, of the receipt of the order
and the plan's procedures for determining the acceptability of the
order. Within a reasonable period of time after receiving the domestic
relations order, the plan administrator shall determine the acceptability
of the order and shall notify the participant and each alternate payee,
in writing, of its determination. The plan administrator shall provide
notice under this paragraph by mailing to the individual's address
specified in the domestic relations order.
D. If any
portion of the participant's nonforfeitable accrued benefit is payable
during the period the plan administrator is making its determination
of the acceptability of the domestic relations order, the plan administrator
shall make a separate accounting of the amounts payable. If the plan
administrator determines the order is an acceptable domestic relations
order within 18 months of the date amounts first are payable following
receipt of the order, it shall direct the trustee to distribute the
payable amounts in accordance with the order. If the plan administrator
does not make its determination of the acceptability of the order
within the eighteen-month determination period, it shall direct the
trustee to distribute the payable amounts in the manner the plan would
distribute if the order did not exist and will apply the order prospectively
if it later determines the order is an acceptable domestic relations
order.
[Ord. 779, 4/2/2012]
1. Death Benefit
With Respect to Employee Contributions.
A. Benefit Payable. Effective April 17, 2002, if no death benefit is payable under §
1-654, Subsection
2, an amount equal to the participant's accumulated contributions as determined under §
1-656, Subsection
2, shall be payable to the participant's named beneficiary designated under §
1-654, Subsection
1B, in one lump sum. If there is no named beneficiary, then the benefit shall be payable to the participant’s surviving spouse. If there is neither a named beneficiary nor a surviving spouse, then the benefit shall be payable to any child (or children) of the participant who is under the age of 18 or, if attending college, who is under or attaining the age of 23. For this purpose, attending college shall mean being registered at an accredited institution of higher learning and carrying a minimum course load of seven credit hours per semester. In the case of multiple eligible children, the benefit payable shall be divided equally among the children. Child shall include adopted child of the participant.
B. Beneficiary Designation. The participant shall have the right to designate his beneficiaries, including a contingent beneficiary, and shall have the right at any time to change such beneficiaries for the purpose of specifying the recipient of any benefits payable under §
1-654, Subsection
1A. The designation shall be made in writing on a form supplied by the plan administrator. No designation shall be effective until filed with the plan administrator. If the participant fails to designate a beneficiary and no benefit is otherwise payable under §
1-654, Subsection
1A, "beneficiary" shall mean the estate of the participant. However, in the event that no letters have been taken out on the estate within six months after death and the death benefit payable is less than $100, the death benefit shall be paid to the undertaker or any person or municipality that paid the claim of the undertaker.
2. Service-Connected
Death Benefit and Survivor Benefit.
A. Service-Connected
Death Benefit. Effective with respect to deaths occurring on or after
October 9, 2009, the service-connected death benefit shall no longer
be payable under this plan or by the employer.
B. Survivor Benefit. If a retired or disabled participant who is receiving a pension benefit dies or if a participant dies after satisfying the requirements for retirement whether or not he had previously terminated employment, the participant’s surviving spouse or eligible child (if any and as further described in §
1-654, Subsection
1A) shall receive a benefit equal to 50% of the retirement benefit that the participant was receiving or would have been receiving if the participant had been retired on the date of death.
C. Payment
shall be in the form of a pension (without actuarial adjustment with
respect to the age of the beneficiary) and shall commence as of the
first day of the month following the date of death. Payment to the
surviving spouse shall cease upon the death.
Effective April 17, 2002, if there is no surviving spouse or
if the surviving spouse dies (thereby ceasing to be the surviving
spouse of the participant), then the benefit shall be payable to any
child (or children) of the participant who is under the age of 18
or, if attending college, who is under or attaining the age of 23.
For this purpose, attending college shall mean being registered at
an accredited institution of higher learning and carrying a minimum
course load of seven credit hours per semester. In the case of multiple
eligible children, the benefit payable shall be divided equally among
the children. Payment shall cease upon the earlier of death or the
attainment of age 18 (or the attainment of age 23 if attending college).
Child shall include adopted child of the participant.
The participant's spouse cannot waive receipt of this benefit. If there is an acceptable domestic relations order in force with respect to the participant, the alternate payee shall receive a portion of the death benefit otherwise payable with respect to any actual surviving spouse or eligible child to the extent provided in the order, but only if the alternate payee has not died. However, no order shall be accepted if it provides that the alternate payee shall be the surviving spouse creating a right to a death benefit under §
1-654, Subsection
2, as the death benefit payable hereunder is only payable with respect to a surviving spouse or an eligible child.
1. Vesting. If a participant separates from the service of the employer other than by retirement, disability, or death, he shall forfeit any benefit accrued under §
1-653, Subsection
2, unless he has been credited with 12 years of vesting service. A participant who has been credited with 12 years of vesting service shall be entitled to a vested deferred pension if he files with the plan administrator a written notice of his intention to vest within 90 days of the date he terminates employment or ceases to be a member of the eligible class of employees. Such vested deferred pension shall be equal to the benefit accrued to the date of termination.
2. Payment
of Benefits.
A. Payment as of Normal Retirement Date. If the participant terminates his employment on or before his normal retirement date, payment of the vested accrued pension may begin at his normal retirement date. If payments do not commence until after his normal retirement date, distribution must begin by the required beginning date for minimum required distributions and the amount of the benefit payable shall be determined as provided in §
1-653, Subsection
4.
B. Payment Prior to Normal Retirement Date. No accrued benefit is payable before the normal retirement date, except in the event of death or disability. Nevertheless, if the participant is not eligible to receive his benefit accrued under §
1-655, Subsection
3, at the time of his termination of employment (either due to his years of vesting service or his failure to file a written notice under §
1-655, Subsection
1), he shall receive an amount equal to his accumulated contributions as soon as administratively possible after severance of employment as provided in §
1-656, Subsection
2.
C. Death Before Retirement. If a participant terminates employment and dies before beginning to receive retirement benefits, a pre-retirement death benefit may be payable, to the extent provided under §
1-654.
3. Cashout
Distributions and Restoration.
A. Cashout Distribution. If an employee receives a distribution of his accumulated contributions under §
1-656, Subsection
2, the present value of the employee’s vested accrued benefit shall be zero. In determining the participant’s accrued benefit after the occurrence of such a distribution, the plan shall disregard all years of benefit service performed by such employee before the date of distribution.
B. Restoration. If a participant receives a distribution pursuant to this Section and if he resumes covered employment under the plan, he shall have the right to restore his accrued benefit under §
1-653, Subsection
2, upon the repayment to the plan of the full amount of the distribution plus interest, compounded annually from the date of distribution at the rate set forth in §
1-656, Subsection
2C. In order to make a total or partial repayment, the employee may transfer to the plan the account balance of the individual retirement account or annuity to which the distribution being repaid was transferred, provided that the employee has made no other contribution to the account or annuity and both transfers are accomplished in compliance with IRC Section 408(d). Such repayment must be made within five years after the participant returns to active participation.
If a participant is eligible to restore his accrued benefit,
but such restoration has not been made; then, for the purpose of determining
years of benefit service and years of vesting service, years of service
before the employee’s break-in-service shall be disregarded.
1. Contributions
Other Than Employee Contributions.
A. Application
of Certain Receipts.
(1) The
amounts of the payments made by the Treasurer of the Commonwealth
from the monies received from taxes paid upon premiums by foreign
casualty insurance companies and foreign fire insurance companies,
that are determined by the employer to be deposited in the fund, shall
be applied as follows:
(a) To pay expenses incurred for the administration of the fund and the
plan.
(b) To reduce any unfunded liability. Unfunded liability means the present
value of the liability of the fund on account of retirement benefits
payable under this plan that accrued prior to the date as of which
mandatory employee contributions were first required, offset by the
value of any assets in the fund.
(c) After the unfunded liability has been funded, to apply against the
annual obligation of the employer for future service cost. Future
service cost means the amount of money required to be contributed
annually into the fund on account of benefits payable under the plan
with respect to years of service credited after the establishment
of the plan.
(d) To the extent that the payments may be in excess of such obligation,
to reduce mandatory employee contributions hereunder.
(2) Any
other monies paid into the fund including gifts, grants, devises or
bequests granted to the trust fund pursuant to 53 P.S. § 768
shall be applied equally against the participant mandatory employee
contribution obligation and the employer obligation for future service
cost.
B. Employer Contributions. The Chief Administrative Officer of the plan shall determine the financial requirements of the plan on the basis of the most recent actuarial report and shall determine the minimum obligation of the employer with respect to funding the plan for any given plan year. The Chief Administrative Officer shall submit the financial requirements of the plan and the minimum obligation of the employer to the employer (or its governing body) annually and shall certify the accuracy of such calculations and their conformance with Act 205. To the extent that the payments received under §
1-658, Subsection
4A(2) do not exceed the employer’s annual obligation for future service cost, as determined by the actuary in accordance with Act 205, the employer shall be obligated to make such contribution to the trust by annual appropriations.
2. Mandatory
Employee Contributions.
A. Mandatory
Contribution Amount. As a condition of participation in this plan,
each active participant must contribute, on an after-tax basis, a
percentage of his compensation as established each year. In general,
this mandatory contribution shall be 5.00% of the participant’s
compensation.
Effective April 17, 2002, the employer may reduce or eliminate
the contribution required provided that any reduction or elimination
of contributions is authorized on an annual basis by an ordinance
or resolution by the employer.
B. Employee
Contributions. The employer shall remit employee contributions to
the trust of the plan as soon as administratively feasible.
C. Determination
of Accumulated Contributions. The participant’s accumulated
contributions shall be equal to his mandatory employee contributions,
with interest credited at the rate of 2.500% per annum. Such interest
shall be credited annually in the form of a compound interest rate.
A participant shall be 100% vested in his accumulated contributions.
D. Withdrawal of Accumulated Contributions. Upon termination of employment, a participant who is not vested in his benefit accrued under §
1-653, Subsection
2, shall receive an amount that is equal to his total accumulated contributions. The withdrawal shall be payable in one lump sum. Thereafter, the former participant shall have no further right to any benefit under this plan.
In no event may any amount be withdrawn or distributed until
the participant's retirement, disability, death or termination of
employment, regardless of the income tax accounting treatment required
by IRC Section 72(e)(8)(D).
(1) Eligible
Rollover Distribution. Effective for distributions made on or after
January 1, 1993, a distributee may elect, at any time and in the manner
prescribed by the plan administrator, to have any eligible portion
of a lump sum distribution paid directly to an eligible retirement
plan specified by the distributee in a direct rollover payment.
(a) Effective for distributions made after December 31, 2001, any eligible
portion of a lump sum distribution shall include after-tax employee
contributions. A portion of a distribution shall not be an eligible
rollover distribution merely because the portion consists of after-tax
employee contributions which are not includible in gross income. However,
such portion may be transferred only to an individual retirement account
or annuity described in IRC Section 408(a) or (b) to a qualified defined
contribution plan described in IRC Section 401(a) or 403(a) that agrees
to separately account for amounts so transferred, including separately
accounting for the portion of such distribution which is includible
in gross income and the portion of such distribution which is not
so includible.
(b) An eligible retirement plan is an individual retirement account described
in IRC Section 408(a), an individual retirement annuity described
in IRC Section 408(b), an annuity plan described in IRC Section 403(a),
or a qualified trust described in IRC Section 401(a), that accepts
the distributee’s lump sum distribution. However, in the case
of an eligible rollover distribution to the surviving spouse, an eligible
retirement plan is an individual retirement account or individual
retirement annuity. Effective for distributions made after December
31, 2001, an eligible retirement plan shall also mean an annuity contract
described in IRC Section 403(b) and an eligible plan under IRC Section
457(b) which is maintained by a state, political subdivision of a
state, or any agency or instrumentality of a state or political subdivision
of a state and which agrees to separately account for amounts transferred
into such plan from this plan. The definition of eligible retirement
plan shall also apply in the case of a distribution to a surviving
spouse, or to a spouse or former spouse who is the alternate payee
under a qualified domestic relation order, as defined in IRC Section
414(p).
(c) A distributee includes an employee or former employee. In addition,
the employee's or former employee's surviving spouse and the employee's
or former employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in IRC
Section 414(p), are distributees with regard to the interest of the
spouse or former spouse.
(2) Special
Rule Relating to Time for Written Explanation. Effective for distributions
made on or after January 1, 1993, for any distribution in excess of
$5,200 that may be paid in the form of a lump sum, the plan administrator
shall give the participant written notice of his eligible rollover
distribution rights as required under IRC Section 402(f) no less than
30 days and no more than 90 days before the annuity starting date
with respect to the distribution. Effective for distributions made
on or after January 1, 1994, such distribution may commence less than
30 days after the notice is given, provided that:
(a) The participant is provided with information that clearly states
that the participant has a right to a period of at least 30 days after
receiving the written explanation and notice to consider the decision
of whether or not to elect a distribution;
(b) The participant, after receiving the written notice, affirmatively
elects a distribution.
E. Forfeiture. The death benefit payable under §
1-654 shall not be less than the participant’s accumulated contributions.
3. Rollover/Transfer
Contributions. Rollover and transfer contributions shall not be permitted
under this plan and there shall be no rollover transfer account.
1. Limitation
on Benefits Under IRC Section 415.
A. Single
Defined Benefit Plan Limitations.
(1) This §
1-657, Subsection
1, applies regardless of whether any participant is or has ever been a participant in another qualified plan maintained by the adopting employer. If any participant is or has ever been a participant in another qualified plan maintained by the employer, or a welfare benefit fund maintained by the employer (as defined in IRC Section 419(e)) under which amounts attributable to post-retirement medical benefits are allocated to separate accounts of key employees (as defined in IRC Section 419A(d)(3)), maintained by the employer, or an individual medical account (as defined in IRC Section 415(l)(2)) maintained by the employer, or a simplified employee pension (as defined in IRC Section 408(k)) maintained by the employer, that provides an annual addition as defined in §
1-657, Subsection
1E(1); §
1-657, Subsection
1C is also applicable to that participant’s benefits.
(2) The
annual benefit otherwise payable to a participant at any time shall
not exceed the maximum permissible benefit. If the benefit the participant
would otherwise accrue in a limitation year would produce an annual
benefit in excess of the maximum permissible benefit, the rate of
accrual shall be reduced so that the annual benefit will equal the
maximum permissible benefit.
B. Defined
Contribution Plan Limitations. If a participant has made mandatory
employee contributions (as defined in IRC Section 411(c)(2)(C)), under
the terms of this plan, the amount of such contributions shall be
treated as an annual addition to a qualified defined contribution
plan.
(1) The
amount of annual additions that may be credited to the participant’s
employee nondeductible contribution account for any limitation year
will not exceed the lesser of the maximum permissible amount or any
other limitation contained in this plan. If a contribution that would
otherwise be contributed to the participant's account would cause
the annual additions for the limitation year to exceed the maximum
permissible amount, the amount contributed will be reduced so that
the annual additions for the limitation year will equal the maximum
permissible amount.
(a) Prior to determining the participant’s actual compensation
for the limitation year, the employer may determine the maximum permissible
amount for a participant on the basis of a reasonable estimation of
the participant's compensation for the limitation year, uniformly
determined for all participants similarly situated.
(b) As soon as is administratively feasible after the end of the limitation
year, the maximum permissible amount for the limitation year will
be determined on the basis of the participant’s actual compensation
for the limitation year.
(c) If there is an excess amount, the mandatory employee contributions
shall be reduced.
(2) This §
1-657, Subsection
1B(2), shall apply if, in addition to this plan, the participant is covered under a plan maintained by the employer that is a qualified defined contribution plan, a welfare benefit fund, a simplified employee pension, or an individual medical account that provides an annual addition as defined in §
1-657, Subsection
1E(1), during any limitation year. The annual additions that may be credited to a participant's account under this plan for any such limitation year will not exceed the maximum permissible amount reduced by the annual additions credited to a participant’s account under the other plans and welfare benefit funds for the same limitation year. If the annual additions with respect to the participant under the defined contribution plans and welfare benefit funds maintained by the employer are less than the maximum permissible amount and the contribution that would otherwise be contributed to the participant’s employee nondeductible contribution account under this plan would cause the annual additions for the limitation year to exceed this limitation, the amount contributed will be reduced so that the annual additions under all such plans and funds for the limitation year will equal the maximum permissible amount. If the annual additions with respect to the participant under such defined contribution plans and welfare benefit funds in the aggregate are equal to or greater than the maximum permissible amount, no amount will be contributed to the participant's account under this plan for the limitation year.
(3) If, pursuant to §
1-657, Subsection
1B(1)(b), or as a result of the allocation of forfeitures under the other plans, a participant’s annual additions under this plan and such other plans would result in an excess amount for a limitation year, the excess amount will be deemed to consist of the annual additions last allocated, except that annual additions attributable to a welfare benefit fund or individual medical account will be deemed to have been allocated first regardless of the actual allocation date.
(4) If
an excess amount was contributed by a participant as of a date that
coincides with an allocation date of another plan, any excess amount
shall be disposed of in the manner provided under such other plan.
C. Combined
Limitations: Other Plans.
(1) This section applies if any participant is also a participant, or has ever participated in another plan maintained by the employer, including a qualified plan, a simplified employee pension, a welfare benefit fund (as defined in IRC Section 419(e)) under which amounts attributable to post-retirement medical benefits are allocated to separate accounts of key employees (as defined in IRC Section 419A(d)(3), or an individual medical account that provides an annual addition as described in §
1-657, Subsection
1E(1).
(2) If
a participant is, or has ever been, a participant in more than one
defined benefit plan maintained by the employer, the sum of the participant’s
annual benefits from all such plans may not exceed the maximum permissible
benefit. If the maximum permissible benefit is exceeded solely due
to the accrued benefit under a frozen or terminated defined benefit
plan, the benefit accrual under this plan shall be reduced until the
maximum permissible benefit is no longer exceeded.
(3) For limitation years beginning before January 1, 2000, if the employer maintains, or at any time maintained, one or more qualified defined contribution plans in which any participant in this plan participated, a welfare benefit fund maintained by the employer (as defined in IRC Section 419(e)) under which amounts attributable to post-retirement medical benefits are allocated to separate accounts of key employees (as defined in IRC Section 419A(d)(3), or an individual medical account, or a simplified employee pension, the sum of the participant’s defined contribution fraction and defined benefit fraction shall not exceed 1.0 in any limitation year and, where the sum exceeds 1.0 for a participant for a limitation year, any excess amount attributed to this plan will be disposed of in the manner described in §
1-657, Subsection
1B(1)(c).
Benefit increases resulting from the repeal of IRC Section 415(e)
shall be provided to all current and former participants (with benefits
limited by IRC Section 415(e)) who have an accrued benefit under the
plan immediately before the first day of the first limitation year
beginning in 2000.
(4) Where the participant’s employer-provided benefits under all defined benefit plans ever maintained by the employer (determined as of the same age) would exceed the maximum permissible benefit applicable at that age, the order in which the employer's sponsored plans will be reduced shall be as provided in §
1-653, Subsection
2F.
D. Protection of Accrued Benefit. In the case of an individual who was a participant in one or more defined benefit plans of the employer as of the first day of the first limitation year beginning after December 31, 1986, the application of the limitations of §
1-657, Subsection
1, shall not cause the maximum permissible benefit amount for such individual under all such defined benefit plans to be less than the individual’s Tax Reform Act of 1986 (TRA '86) accrued benefit. The preceding sentence applies only if all such defined benefit plans met the requirements of IRC Section 415, for all limitation years beginning before January 1, 1987.
E. Definitions
(IRC Section 415 Limitations).
(1) Annual
Additions. The sum of the following amounts credited to a participant’s
account for the limitation year: (A) employer contributions, (B) employee
contributions, (C) forfeitures, (D) allocations under a simplified
employee pension, and (E) amounts allocated, after March 31, 1984,
to an individual medical account that is part of a pension or annuity
plan maintained by the employer that are treated as annual additions
to a defined contribution plan. Also amounts derived from contributions
paid or accrued after December 31, 1985, in taxable years ending after
such date, that are attributable to post-retirement medical benefits,
allocated to the separate account of a key employee, as defined in
IRC Section 419A(d)(3), under a welfare benefit fund maintained by
the employer are treated as annual additions to a defined contribution
plan.
Picked-up contributions under IRC Section 414(h)(2) shall not
be included as an annual addition with respect to a participant.
(2) Annual Benefit. A benefit under the plan that is payable annually in the form of a straight life annuity. The annual benefit shall include any picked-up contributions made by the employer under IRC Section 414(h)(2). Except as provided below, a benefit payable in a form other than a straight life annuity must be adjusted to an actuarially equivalent straight life annuity before applying the limitations of §
1-657, Subsection
1. For limitation years beginning before January 1, 1995, where a participant's benefit must be adjusted to an actuarially equivalent straight life annuity, the actuarially equivalent straight life annuity shall be equal to the greater of the annuity benefit computed using the interest rate specified in §
1-651, Subsection
2, or 5%.
For limitation years beginning on or after January 1, 1995, where a participant’s benefit must be adjusted to an actuarially equivalent straight life annuity, the actuarially equivalent straight life annuity shall be equal to the greater of the annuity benefit computed using the actuarial assumptions specified in §
1-651, Subsection
2C, and the annuity benefit computed using a 5% interest rate assumption and the IRC Section 417 mortality table defined in §
1-651, Subsection
2C.
For limitation years beginning after December 31, 1994, in the case of a lump sum payment, the actuarially equivalent benefit shall be equal to the greater of the equivalent annual benefit computed using the interest rate and mortality table specified in §
1-651, Subsection
2C, and the equivalent annual benefit computed using a 5% interest rate assumption and the IRC Section 417 mortality table as defined in §
1-651, Subsection
2C. This determination of the actuarially equivalent benefit shall also apply in determining the actuarially equivalent straight life annuity for any benefit form other than (A) a nondecreasing annuity payable for a period of not less than the life of the participant (or, in the case of a pre-retirement survivor annuity, the life of the surviving spouse), or (B) an annuity that decreases during the life of the participant merely because of (I) the death of the survivor annuitant (but only if the reduction is not below 50% of the annual benefit payable before the death of the survivor annuitant), or (ii) the cessation or reduction of Social Security supplements or qualified disability payments (as defined in IRC Section 401(a)(11).
The annual benefit does not include any benefits attributable
to employee contributions or rollover contributions or the assets
transferred from a qualified plan that was not maintained by the employer.
No actuarial adjustment to the benefit is required for (A) the value
of a qualified joint and survivor annuity, (B) the value of benefits
that are not directly related to retirement benefits (such as a qualified
disability benefit, pre-retirement death benefits, and post-retirement
medical benefits), and (C) the value of post-retirement cost-of-living
increases made in accordance with IRC Section 415(d) and Regulation
section 1.415-3(c)(2)(iii).
(3) Compensation.
A participant's earned income and any earnings reportable as W-2 wages
for federal income tax withholding purposes. W-2 wages means wages
as defined in IRC Section 3401(a) but determined without regard to
any rules that limit the remuneration included in wages based on the
nature or location of the employment or the services performed. Picked-up
contributions under IRC Section 414(h)(2) shall not be included in
the participant's compensation.
For limitation years beginning after December 31, 1991, for purposes of applying the limitations of §
1-657, Subsection
1, compensation for a limitation year is the compensation actually paid or includible in gross income during such limitation year.
For limitation years beginning after December 31, 1997, compensation
shall include elective contributions. Elective contributions are amounts
excludable from the employee's gross income and contributed by the
employer, at the employee’s election to a cafeteria plan excludable
under IRC Section 125 or to a IRC Section 401(k) arrangement, a simplified
employee pension, a tax sheltered annuity excludable under IRC Section
402(g)(3), to a IRC Section 457 plan, or to a IRC Section 501(c)(18)
plan. Effective for limitation years beginning on or after January
1, 1998, compensation shall also include any elective amounts that
are not includible in gross income of the employee by reason of a
IRC Section 132(f)(4) qualified transportation fringe benefit plan.
Effective for limitation years beginning after December 31,
1997, elective contribution amounts under a cafeteria plan excludable
under IRC Section 125 include any amounts not available to a participant
in cash in lieu of group health coverage because the participant is
unable to certify that he has other health coverage. An amount will
be treated as an amount under IRC Section 125 only if the employer
does not request or collect information regarding the participant’s
other health coverage as part of the enrollment process for the health
plan.
(4) TRA
'86 Accrued Benefit. A participant’s accrued benefit under the
plan, determined as if the participant had separated from service
as of the close of the last limitation year beginning before January
1, 1987, when expressed as an annual benefit within the meaning of
IRC Section 415(b)(2). In determining the amount of a participant’s
TRA '86 accrued benefit, the following shall be disregarded:
(a) Any change in the terms and conditions of the plan after May 5, 1986;
and
(b) Any cost of living adjustments occurring after May 5, 1986.
(5) Defined
Benefit Dollar Limitation. $90,000 for limitation years beginning
before January 1, 2002. Effective January 1, 1988, and each January
thereafter, the $90,000 limitation above will be automatically adjusted
by multiplying such limit by the cost of living adjustment factor
prescribed by the Secretary of the Treasury under IRC Section 415(d)
in such manner as the Secretary shall prescribe, and payable in the
form of a straight life annuity. The new limitation will apply to
limitation years ending with or within the calendar year of the date
of the adjustment. The defined benefit dollar limitation shall be
$160,000 for limitation years beginning after January 1, 2001. Effective
January 1, 2002, and each January thereafter, the $160,000 limitation
above will be automatically adjusted by multiplying such limit by
the cost of living adjustment factor prescribed by the Secretary of
the Treasury under IRC Section 415(d) in such manner as the Secretary
shall prescribe, and payable in the form of a straight life annuity.
The new limitation will apply to limitation years ending with or within
the calendar year of the date of the adjustment.
(6) Defined
Contribution Dollar Limitation. $30,000, as adjusted under IRC Section
415(d) for limitation years beginning after December 31, 1994, and
not beginning before January 1, 2002. For limitation years beginning
after December 31, 2001, the defined contribution dollar limitation
shall be $40,000, as adjusted under IRC Section 415(d) for limitation
years beginning after December 31, 2002.
(7) Defined Benefit Fraction. A fraction, the numerator of which is the sum of the participant's projected annual benefits under all the defined benefit plans (whether or not terminated) maintained by the employer, and the denominator of which is 125% of the defined benefit dollar limitation applicable to the participant determined for the limitation year under IRC Sections 415(b)(1)(A) and (d) and in accordance with §
1-657, Subsection
1E(13), below.
However, for limitation years beginning before January 1, 1995, the denominator of this fraction will be the lesser of 125% of the defined benefit dollar limitation applicable to the participant determined for the limitation year under IRC Sections 415(b)(1)(A) and (d) and in accordance with §
1-657, Subsection
1E(13), below or 140% of the highest average compensation, including any adjustments under IRC Section 415(b)(5).
Notwithstanding the above, if the participant was a participant
as of the first day of the first limitation year beginning after December
31, 1986, in one or more defined benefit plans maintained by the employer
that were in existence on May 6, 1986, the denominator of this fraction
will not be less than 125% of the sum of the annual benefits under
such plans that the participant had accrued as of the close of the
last limitation year beginning before January 1, 1987, disregarding
any changes in the terms and conditions of the plan after May 5, 1986.
The preceding sentence applies only if the defined benefit plans individually
and in the aggregate satisfied the requirements of IRC Section 415
for all limitation years beginning before January 1, 1987.
(8) Defined
Contribution Fraction. A fraction, the numerator of which is the sum
of the annual additions to the participant's account under all the
defined contribution plans (whether or not terminated) maintained
by the employer for the current and all prior limitation years (including
the annual additions attributable to the participant's nondeductible
employee contributions to this and all other defined benefit plans,
whether or not terminated, maintained by the employer, and the annual
additions attributable to all simplified employee pensions, welfare
benefit funds maintained by the employer (as defined in IRC Section
419(e)) under which amounts attributable to post-retirement medical
benefits are allocated to separate accounts of key employees (as defined
in IRC Section 419A(d)(3), and individual medical accounts maintained
by the employer), and the denominator of which is the sum of the maximum
aggregate amounts for the current and all prior limitation years of
service with the employer (regardless of whether a defined contribution
plan was maintained by the employer). The maximum aggregate amount
in any limitation year is the lesser of 125% of the defined contribution
dollar limitation or 35% (1.4 x 25%) of the participant's compensation
for such year.
If the employee was a participant as of the end of the first
day of the first limitation year beginning after December 31, 1986,
in one or more defined contribution plans maintained by the employer
that were in existence on May 6, 1986, the numerator of this fraction
will be adjusted if the sum of this fraction and the defined benefit
fraction would otherwise exceed 1.0 under the terms of this plan.
Under the adjustment, an amount equal to the product of (1) the excess
of the sum of the fractions over 1.0 times (2) the denominator of
this fraction, will be permanently subtracted from the numerator of
this fraction. The adjustment is calculated using the fractions as
they would be computed as of the end of the last limitation year beginning
before January 1, 1987, and disregarding any changes in the terms
and conditions of the plan made after May 5, 1986, but using the IRC
Section 415 limitation applicable to the first limitation year beginning
on or after January 1, 1987.
The annual addition for any limitation year beginning before
January 1, 1987, shall not be recomputed to treat all employee contributions
as annual additions.
(9) Employer. For purposes of §
1-657, Subsection
1, employer shall mean the employer that adopts this plan and any entity required to be aggregated with the employer pursuant to regulations.
(10) Excess Amount. The excess of the participant’s annual additions
for the limitation year over the maximum permissible amount.
(11) Limitation Year. The twelve-consecutive-month period defined in §
1-651, Subsection
4E.
(12) Maximum Permissible Amount. The maximum annual addition that may
be contributed or allocated to a participant’s account under
a plan for any limitation year shall not exceed the lesser of:
(a) The defined contribution dollar limitation as defined in §
1-657, Subsection
1E(6); or
(b) 25% of the participant’s compensation for the limitation year
for limitation years beginning before January 1, 2002; 100% of the
participant’s compensation for the limitation year for limitation
years beginning after December 31, 2001.
The compensation limitation referred to in Subsection 1E(12)(b) shall not apply to any contribution for medical benefits (within the meaning of IRC Section 401(h) or IRC Section 419A(f)(2)) that is otherwise treated as an annual addition under IRC Section 415(1)(1) or 419A(d)(2).
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If a short limitation year is created because of an amendment
changing the limitation year to a different twelve-consecutive-month
period, the maximum permissible amount will not exceed the defined
contribution dollar limitation multiplied by the following fraction:
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Number of months in the short limitation year
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12
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(13) Maximum Permissible Benefit.
(a) The maximum permissible benefit is the defined benefit dollar limitation.
However, for limitation years beginning before January 1, 1995, the
maximum permissible benefit is the lesser of the defined benefit dollar
limitation or 100% of the participant's highest average compensation.
(b) If the participant has less than 10 years of participation in the
plan, the defined benefit dollar limitation shall be multiplied by
a fraction: (I) the numerator of which is the number of years (or
part thereof) of participation in the plan, and (ii) the denominator
of which is 10. In the case of a participant who has less than 10
years of service with the employer, defined benefit compensation limitation
shall be multiplied by a fraction: (I) the numerator of which is the
number of years (or part thereof) of service with the employer, and
(ii) the denominator of which is 10.
Where a defined benefit plan fraction is calculated, the adjustments of §
1-657, Subsection
1E(13)(b), shall be applied in the denominator of the fraction based upon years of service. For purposes of computing the defined benefit plan fraction only, years of service shall include future years of service (or part thereof) commencing before the participant’s normal retirement date. Such future years of service shall include the year that contains the date the participant reaches his normal retirement date, only if it can be reasonably anticipated that the participant will receive a year of service for such year, or the year in which the participant terminates employment, if earlier.
This §
1-657, Subsection
1E(13)(b), shall not apply to disability benefit paid in accordance with §
1-653, Subsection
6, or to benefits payable under §
1-654.
(c) Effective for distributions made in limitation years ending on or before December 31, 2001, if the annual benefit of the participant commences on or before age 65 but on or after age 62, the defined benefit dollar limitation shall be as determined in Subsection
1E(13)(a) and
(b) above. Effective for distributions made in limitation years ending after December 31, 2001, if the annual benefit of the participant commences on or before age 65, the defined benefit dollar limitation shall be as determined in Subsection
1E(13)(a) and
(b) above.
(d) Effective for distributions made in limitation years ending on or before December 31, 2001, if the benefit of a participant commences prior to age 62 but on or after age 55, the defined benefit dollar limitation applicable to the participant at such earlier age shall be the greater of: (a) $75,000, or (b) an annual benefit payable in the form of a straight life annuity that is the actuarial equivalent of the defined benefit dollar limitation for age 62, as determined above. The annual benefit beginning prior to age 62 but on or after age 55 shall be determined as the lesser of the actuarial equivalent benefit computer using the interest rate and mortality table specified in §
1-651, Subsection
2C.
This §
1-657, Subsection
1E(13)(d), shall not apply to disability benefit paid in accordance with §
1-653, Subsection
6, or to benefits payable under §
1-654.
(e) Effective for distributions made in limitation years ending on or before December 31, 2001, if the benefit of a participant commences prior to age 55, the defined dollar limitation applicable to the participant at such earlier age shall be the greater of: (a) the actuarial equivalent of a $75,000 annual benefit beginning at age 55; or (b) an annual benefit that is the actuarial equivalent of the defined benefit dollar limitation for age 62 that is equal to the defined benefit dollar imitation as determined in Subsection
1E(13)(a) or
(b) above. The annual benefit beginning prior to age 55 shall be determined as the lesser of the actuarial equivalent benefit computed using the interest rate and mortality table specified in §
1-651, Subsection
2C, and the equivalent amount computed using a 5% interest rate assumption and the IRC Section 417 mortality table as described in §
1-651, Subsection
2C.
This §
1-657, Subsection
1E(13)(e), shall not apply to disability benefit paid in accordance with §
1-653, Subsection
6, or to benefits payable under §
1-654.
(f) If the benefit of a participant commences after age 65, the defined benefit dollar limitation applicable to the participant at the later age shall be the annual benefit payable in the form of a straight life annuity commencing at the later age that is the actuarial equivalent of the defined benefit dollar limitation applicable to the participant (adjusted under Subsection
1E(13)(a) and
(b) above, if necessary) at age 65. The actuarial equivalent annual benefit beginning after age 65 shall be determined as the lesser of the equivalent amount computed using the interest rate and mortality table specified in §
1-651, Subsection
2C, and the equivalent amount computed using a 5% interest rate assumption and the IRC Section 417 mortality table as descried in §
1-651, Subsection
2C.
(g) Notwithstanding the provisions of §
1-657, Subsection
1E(13), in limitation years beginning before 1997 for participants who have 15 or more years of full-time service at retirement (including military service), the maximum annual straight life annuity shall not be reduced below $50,000 (as indexed pursuant to IRC Section 415(d)), regardless of the participant’s age at retirement.
(h) Minimum Benefit Permitted. Notwithstanding anything else in this
Section to the contrary, the benefit otherwise accrued or payable
to a participant under this plan shall be deemed not to exceed the
maximum permissible benefit if:
1) The retirement benefits payable for a plan year under any form of
benefit with respect to such participant under this plan and under
all other defined benefit plans (regardless of whether terminated)
ever maintained by the employer do not exceed $1,000 multiplied by
the participant’s number of years of service or parts thereof
(not to exceed 10) with the employer; and
2) The employer has not at any time maintained a defined contribution
plan, a welfare benefit fund under which amounts attributable to post-retirement
medical benefits are allocated to separate accounts of key employees
(as defined in IRC Section 419A(d)(3), or an individual medical account
in which the participant participated (for these purposes, employee
contributions, whether voluntary or involuntary, under a defined benefit
plan are not treated as a separate defined contribution plan).
(14) Projected Annual Benefit. The annual benefit as defined in §
1-657, Subsection
1E(2), to which the participant would be entitled under the terms of the plan assuming:
(a) The participant will continue employment until his normal retirement
date under the plan (or current age, if later); and
(b) The participant’s compensation for the current limitation year
and all other relevant factors used to determine benefits under the
plan will remain constant for all future limitation years.
(15) Year of Participation. For the purpose of §
1-657, Subsection
1, a participant shall be credited with a year of participation (computed to fractional parts of a year) for each accrual computation period for which the following conditions are met: (1) The participant is credited with at least the number of hours of service for benefit accrual purposes, required under the terms of the plan in order to accrue a benefit for the accrual computation period, and (2) the participant is included as a participant under the eligibility provisions of the plan for at least one day of the accrual computation period. If these two conditions are met, the portion of a year of participation credited to the participant shall equal the amount of benefit accrual service credited to the participant for such accrual computation period. A participant who is permanently and totally disabled within the meaning of IRC Section 415(c)(3)(C)(I) for an accrual computation period shall receive a year of participation with respect to that period. In addition, for a participant to receive a year of participation (or part thereof) for an accrual computation period, the plan must be established no later than the last day of such accrual computation period. In no event will more than one year of participation be credit for any twelve-month period.
2. Distribution
Requirements.
A. Applicability. The Requirements of §
1-657, Subsection
2, shall apply to any distribution of a participant’s interest. All distributions required under §
1-657, Subsection
2, shall be determined and made in accordance with the proposed regulations under IRC Section 401(a)(9), including the minimum distribution incidental benefit requirement of Proposed Treasury Regulation section 1.401(a)(9)-2.
With respect to distributions under the plan made for calendar
years beginning on or after January 1, 2002, the Plan will apply the
minimum distribution Requirements of IRC Section 401(a)(9) in accordance
with the regulations under section 401(a)(9) that were proposed in
January 2001, notwithstanding any provision of the plan to the contrary.
This preceding sentence shall continue in effect until the end of
the last calendar year beginning before the effective date of final
regulations under IRC Section 401(a)(9) or such other date specified
in guidance published by the Internal Revenue Service.
With respect to distributions under the Plan made on or after August 1, 2002, for calendar years beginning on or after January 1, 2002, the plan will apply the minimum distribution requirements of IRC Section 401(a)(9) in accordance with the regulations under section 401(a)(9) that were made final on April 17, 2002 (the 2002 Final Regulations) and the provisions of §
1-657, Subsection
2H, notwithstanding any provision of the Plan to the contrary. If the total amount of required minimum distributions made to a participant for 2002 prior to August 1, 2002, are equal to or greater than the amount of required minimum distributions determined under the 2002 Final Regulations, then no additional distributions are required for such participant for 2002 on or after such date. If the total amount of required minimum distributions made to a participant for 2002 prior to August 1, 2002, are less than the amount determined under the 2002 Final Regulations, then the amount of required minimum distributions for 2002 on or after such date will be determined so that the total amount of required minimum distributions for 2002 is the amount determined under the 2002 Final Regulations.
B. Required
Beginning Date. The entire interest of a participant must be distributed
or begin to be distributed no later than the participant’s required
beginning date.
C. Limits
on Distribution Periods. As of the first distribution calendar year,
distributions, if not made in a single sum, may only be made over
one of the following periods (or a combination thereof):
(1) The
life of the participant;
(2) The
life of the participant and a designated beneficiary;
(3) A
period certain not extending beyond the life expectancy of the participant,
or
(4) A
period certain not extending beyond the joint life and last survivor
expectancy of the participant and a designated beneficiary.
D. Determination
of Amount to be Distributed Each Year.
(1) If
the participant’s interest is to be paid in the form of annuity
distributions under the plan, payments under the annuity shall satisfy
the following Requirements:
(a) The annuity distribution must be paid in periodic payments made at
intervals not longer than one year;
(b) The distribution period must be over a life (or lives) or over a
period certain not longer than a life expectancy (or joint life and
last survivor expectancy) described in IRC Section 401(a)(9)(A)(ii)
or IRC Section 401(a)(9)(B)(iii), whichever is applicable;
(c) The life expectancy (or joint life and last survivor expectancy)
for purposes of determining the period certain shall be determined
without recalculation of life expectancy;
(d) Once payments have begun over a period certain, the period certain
may not be lengthened even if the period certain is shorter than the
maximum permitted;
(e) Payments must be either be nonincreasing or increase only as follows:
1) With any percentage increase in a specified and generally recognized
cost-of-living index;
2) To the extent of the reduction to the amount of the participant’s payments to provide for a survivor benefit upon death, but only if the beneficiary whose life was being used to determine the distribution period described in Subsection
2D(1)(c) above dies and the payments continue otherwise in accordance with that section over the life of the participant;
3) To provide cash refunds of employee contributions upon the participant’s
death; or
4) Because of an increase in benefits under the plan.
(f) If the annuity is a life annuity (or a life annuity with a period certain not exceeding 20 years), the amount that must be distributed on or before the participant’s required beginning date (or, in the case of distributions after the death of the participant, the date distributions are required to begin pursuant to §
1-657, Subsection
2E, below) shall be the payment that is required for one payment interval. The second payment need not be made until the end of the next payment interval even if that payment interval ends in the next calendar year. Payment intervals are the periods for which payments are received, e.g., bimonthly, monthly, semi-annually or annually.
If the annuity is a period certain annuity without a life contingency (or if a life annuity with a period certain exceeding 20 years), periodic payments for each distribution calendar year shall be combined and treated as an annual amount. The amount that must be distributed by the participant’s required beginning date (or, in the case of distributions after the death of the participant, the date distributions are required to begin pursuant to §
1-657, Subsection
2E, below) is the annual amount for the first distribution calendar year. The annual amount for other distribution calendar years, including the annual amount for the calendar year in which the participant’s required beginning date (or the date distributions are required to begin pursuant to §
1-657, Subsection
2E, below) occurs, must be distributed on or before December 31 of the calendar year for which the distribution is required.
(2) Annuities
purchased after December 31, 1988, are subject to the following additional
conditions:
(a) If the participant’s interest is being distributed in the form
of a life annuity with a period certain for the life of the participant,
the period certain as of the beginning of the first distribution calendar
year may not exceed the applicable period determined using the table
set forth in Proposed Treasury Regulation section 1.401(a)(9)-2, Q&A
A-4.
(b) Unless the participant’s spouse is the designated beneficiary,
if the participant’s interest is being distributed in the form
of a period certain annuity without a life contingency, the period
certain as of the beginning using the table set forth in Proposed
Treasury Regulation Section 1.401(a)(9)-2, Q&A A-5.
(c) If the participant’s interest is being distributed in the form
of a joint and survivor annuity for the joint lives of the participant
and a nonspouse beneficiary, annuity payments to be made on or after
the participant’s required beginning date to the designated
beneficiary after the participant’s death must not at any time
exceed the applicable percentage of the annuity payment for such period
that would have been payable to the participant using the table set
forth in Proposed Regulation Section 1.401(a)(9)-2, Q&A A-6.
(3) Transitional Rule. If payments under an annuity that complies with Subsection
2D(1) above began prior to January 1, 1989, the minimum distribution requirements in effect as of July 27, 1987, shall apply to such distributions from this plan, regardless of whether the annuity form of payment is irrevocable. This transitional rule also applies to deferred annuity contracts distributed to or owned by the employee prior to January 1, 1989, unless additional are made under the plan by the employer with respect to such contract.
(4) If the form of distribution is an annuity made in accordance with §
1-657, Subsection 2B(4), any additional benefits accruing to the participant after his or her required beginning date shall be distributed as a separate and identifiable component of the annuity beginning with the first payment interval ending in the calendar year immediately following the calendar year in which such amount accrues.
(5) Any
part of the participant’s interest that is in the form of an
individual account shall be distributed in a manner satisfying the
requirements of IRC Section 401(a)(9) and the proposed regulations
thereunder.
E. Death
Distribution Provisions.
(1) Distribution
Beginning Before Death. If the participant dies after distribution
of his interest has begun, the remaining portion of such interest
will continue to be distributed at least as rapidly as under the method
of distribution being used prior to the participant’s death.
(2) Distribution Beginning After Death. If the participant dies before distribution of his interest begins, distribution of the participant’s entire interest shall be completed by December 31 of the calendar year containing the fifth anniversary of the participant’s death except to the extent that an election is made to receive distributions in accordance with Subsection
E(2)(a) or
(b) below:
(a) If any portion of the participant’s interest is payable to
a designated beneficiary, distributions may be made over the life
or over a period certain not greater than the life expectancy of the
designated beneficiary commencing on or before December 31 of the
calendar year immediately following the calendar year in which the
participant died;
(b) If the designated beneficiary is the participant’s surviving spouse, the date distributions are required to begin in accordance with Subsection
E(2)(a) above shall not be earlier than the later of (i) December 31 of the calendar year immediately following the calendar year in which the participant died and (ii) December 31 of the calendar year in which the participant would have attained age 70 1/2.
If the participant has not made an election pursuant to § 1-657, Subsection 2, by the time of his death, the participant’s designated beneficiary must elect the method of distribution no later than the earlier of (1) December 31 of the calendar year in which distributions would be required to begin under § 1-657, Subsection 2E(2), or (2) December 31 of the calendar year that contains the fifth anniversary of the date of death of the participant.
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If the participant has no designated beneficiary, or if the
designated beneficiary does not elect a method of distribution, distribution
of the participant’s entire interest must be completed by December
31 of the calendar year containing the fifth anniversary of the participant’s
death. This provision shall not create a right to an installment payment
option providing installments over five or less calendar years.
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(3) For purposes of §
1-657, Subsection
2E(2), above, if the surviving spouse dies after the participant, but before payments to such spouse begin, the provisions of §
1-657, Subsection
2E(2), with the exception of §
1-657, Subsection
2E(2)(b), therein, shall be applied as if the surviving spouse were the participant.
(4) For purposes of §
1-657, Subsection
2E, any amount paid to a child of the participant will be treated as if it had been paid to the surviving spouse if the amount becomes payable to the surviving spouse when the child reaches the age of majority.
(5) For the purposes of §
1-657, Subsection
2E, distribution of a participant’s interest is considered to begin on the participant’s required beginning date (or, if §
1-657, Subsection
2E(3), above is applicable, the date distribution is required to begin to the surviving spouse pursuant to §
1-657, Subsection
2E(2)(b), above). If distribution in the form of an annuity described in §
1-657, Subsection
2D(1), irrevocably commences to the participant before the required beginning date, the date distribution is considered to begin is the date distribution actually commences.
F. Definitions
(IRC Section 401(a)(9) Requirements).
(1) Designated
Beneficiary. The individual who is designated as the beneficiary under
the plan in accordance with IRC Section 401(a)(9) and the proposed
regulations thereunder.
(2) Distribution Calendar Year. A calendar year for which a minimum distribution is required. For distributions beginning before the participant’s death, the first distribution calendar year is the calendar year immediately preceding the calendar year that contains the participant’s required beginning date. For distributions beginning after the participant’s death, the first distribution calendar year is the calendar year in which distributions are required to begin pursuant to §
1-657, Subsection
2E, above.
(3) Life
Expectancy. Life expectancy (or joint life and last survivor expectancy)
calculated using the attained age of the participant (or designated
beneficiary) as of the participant’s (or designated beneficiary’s)
birthday in the applicable calendar year. The applicable calendar
year shall be the first distribution calendar year. If annuity payments
commence before the required beginning date, the applicable calendar
year is the year such payments commence.
Life expectancy and joint and last survivor expectancy are computed
by use of the expected return multiples in Tables V and VI of Section
1.72-9 of the Income Tax Regulations.
(4) Required
Beginning Date. The required Beginning date of a participant is the
later of: (i) the first day of April of the calendar year following
the calendar year in which the participant attains age 70 1/2 and
(ii) the first day of April of the calendar year following the calendar
year in which the participant retires.
G. Transitional
Rule.
(1) Notwithstanding the other requirements of §
1-657, Subsection
2, distribution on behalf of any employee may be made in accordance with all of the following requirements (regardless of when such distribution commences).
(a) The distribution by the trust is one which would not have disqualified
such trust under IRC Section 401(a)(9) as in effect prior to amendment
by the Deficit Reduction Act of 1984.
(b) The distribution is in accordance with a method of distribution designated
by the employee whose interest in the trust is being distributed or,
if the employee is deceased, by a beneficiary of such employee.
(c) Such designation was in writing, was signed by the employee or the
beneficiary, and was made before January 1, 1984.
(d) The employee had accrued a benefit under the plan as of December
31, 1983.
(e) The method of distribution designated by the employee or the beneficiary
specifies at the time at which distribution will commence, the period
over which distributions will be made, and in the case of any distribution
upon the employee’s death, the beneficiaries of the employees
listed in order of priority.
A distribution upon death will not be covered by this transitional
rule unless the information in the designation contains the required
information described above with respect to the distributions to be
made upon the death of the employee.
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(2) For any distribution that commences before January 1, 1984, but continues after December 31, 1983, the employee, or the beneficiary, to whom such distribution is being made, will be presumed to have designated the method of distribution under which the distribution is being made if the method of distribution was specified in writing and the distribution satisfied the requirements in §
1-657, Subsection
2G.
(3) If
a designation is revoked any subsequent distribution must satisfy
the requirements of IRC Section 401(a)(9) and the proposed regulations
thereunder. If a designation is revoked subsequent to the date distributions
are required to begin, the trust must distribute by the end of the
calendar year following the calendar year in which the revocation
occurs the total mount not yet distributed that would have been required
to have been distributed to satisfy IRC Section 401(a)(9) and the
proposed regulations thereunder, but for the election made with respect
to section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act
of 1982. For calendar years beginning after December 31, 1988, such
distributions must meet the minimum distribution incidental benefit
requirements in Proposed Regulation section 1.401(a)(9)-2. Any changes
in the designation will be considered to be a revocation of the designation.
However, the mere substitution or addition of another beneficiary
(one not named in the designation) under the designation will not
be considered to be a revocation of the designation, so long as such
substitution or addition does not alter the period over which distributions
are to be made under the designation, directly or indirectly (for
example, by altering the relevant measuring life). In the case in
which an amount is transferred or rolled over form one plan to another
plan, the rules in Proposed Regulation section 1.401(a)(9)-1 Q&A
J-2 and Q&A J-3 shall apply.
H. Compliance With Final Regulations. The requirements of §
1-657, Subsection
2H, shall take precedence over any inconsistent provisions of the plan. All distributions required under §
1-657, Subsection
2, will be determined and made in accordance with the Treasury regulations under IRC Section 401(a)(9).
Notwithstanding the other provisions of §
1-657, Subsection
2, distributions may be made under a designation made before January 1, 1984, in accordance with Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) section 242(b)(2) and the provisions of the plan that relate to TEFRA section 242(b)(2).
(1) Time
and Manner of Distribution.
(a) Required Beginning Date. The participant's entire interest will be
distributed, or begin to be distributed, to the participant no later
than the participant's required beginning date.
(b) Death of Participant Before Distributions Begin. If the participant
dies before distributions begin, the participant's entire interest
will be distributed, or begin to be distributed, no later than as
follows:
1) If the participant's surviving spouse is the participant's sole designated
beneficiary, then distributions to the surviving spouse will begin
by December 31 of the calendar year immediately following the calendar
year in which the participant died, or by December 31 of the calendar
year in which the participant would have attained age 70 1/2, if later.
2) If the participant's surviving spouse is not the participant's sole
designated beneficiary, then distributions to the designated beneficiary
will begin by December 31 of the calendar year immediately following
the calendar year in which the participant died.
3) If there is no designated beneficiary as of September 30 of the year
following the year of the participant's death or if a lump sum death
benefit is otherwise payable, the participant's entire interest will
be distributed by December 31 of the calendar year containing the
fifth anniversary of the participant's death.
4) If the participant's surviving spouse is the participant's sole designated beneficiary and the surviving spouse dies after the participant but before distributions to the surviving spouse begin, this Subsection
H(1)(b), other than Subsection H(1)(b)1), will apply as if the surviving spouse were the participant.
For purposes of this Subsection H(1)(b) and H(4), distributions are considered to begin on the participant's required beginning date [or, if Subsection H(1)(b)4) applies, the date distributions are required to begin to the surviving spouse under Subsection H(1)(b)1)]. If annuity payments irrevocably commence to the participant before the participant's required beginning date (or to the participant's surviving spouse before the date distributions are required to begin to the surviving spouse under Subsection H(1)(b)1), the date distributions are considered to begin is the date distributions actually commence.
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(c) Forms of Distribution. Unless the participant's interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the required beginning date, as of the first distribution calendar year distributions will be made in accordance with Subsection
H(2),
(3) and
(4). If the participant's interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of IRC Section 401(a)(9) and the Treasury regulations. Any part of the participant's interest which is in the form of an individual account described in IRC Section 414(k) will be distributed in a manner satisfying the requirements of IRC Section 401(a)(9) and the Treasury regulations that apply to individual accounts.
(2) Determination
of Amount to be Distributed Each Year.
(a) General Annuity Requirements. If the participant's interest is paid
in the form of annuity distributions under the plan, payments under
the annuity will satisfy the following requirements:
1) The annuity distributions will be paid in periodic payments made
at intervals not longer than one year;
2) The distribution period will be over a life (or lives) or over a period certain not longer than the period described in Subsection
H(3) or
(4);
3) Once payments have begun over a period certain, the period certain
will not be changed even if the period certain is shorter than the
maximum permitted;
4)
Payments will either be non-increasing
or increase only as follows:
a) By an annual percentage increase that does not exceed the annual
percentage increase in a cost-of-living index that is based on prices
of all items and issued by the Bureau of Labor Statistics;
b) To the extent of the reduction in the amount of the participant's payments to provide for a survivor benefit upon death, but only if the beneficiary whose life was being used to determine the distribution period described in Subsection
H(3) dies or is no longer the participant's beneficiary pursuant to a qualified domestic relations order within the meaning of IRC Section 414(p);
c) To provide cash refunds of employee contributions upon the participant's
death; or
d) To pay increased benefits that result from a plan amendment.
(b) Amount Required to be Distributed by Required Beginning Date. The amount that must be distributed on or before the participant's required beginning date [or, if the participant dies before distributions begin, the date distributions are required to begin under Subsection
H(1)(a) or
(b) is the payment that is required for one payment interval. The second payment need not be made until the end of the next payment interval even if that payment interval ends in the next calendar year. Payment intervals are the periods for which payments are received, e.g., bimonthly, monthly, semi-annually or annually. All of the participant's benefit accruals as of the last day of the first distribution calendar year will be included in the calculation of the amount of the annuity payments for payment intervals ending on or after the participant's required beginning date.
(c) Additional Accruals After First Distribution Calendar Year. Any additional
benefits accruing to the participant in a calendar year after the
first distribution calendar year will be distributed beginning with
the first payment interval ending in the calendar year immediately
following the calendar year in which such amount accrues.
(3) Requirements For Annuity Distributions That Commence During Participant's Lifetime. The participant's interest cannot be distributed in the form of a joint and survivor annuity under the terms of this plan. Further, no death benefit can be paid in the form of a period certain annuity. Section
1-657, Subsection
2D(1)(f) shall not apply.
(4) Requirements
For Minimum Distributions Where Participant Dies Before Date Distributions
Begin.
(a) Participant Survived by Designated Beneficiary. If the participant
dies before the date distribution of his or her interest begins and
there is a designated beneficiary, the participant's entire interest
will be distributed, beginning no later than the time described in
Subsection H(1)(b)1) or 2), over the life of the designated beneficiary
or over a period certain not exceeding:
1) Unless the annuity starting date is before the first distribution
calendar year, the life expectancy of the designated beneficiary determined
using the beneficiary's age as of the beneficiary's birthday in the
calendar year immediately following the calendar year of the participant's
death; or
2) If the annuity starting date is before the first distribution calendar
year, the life expectancy of the designated beneficiary determined
using the beneficiary's age as of the beneficiary's birthday in the
calendar year that contains the annuity starting date.
(b) No Designated Beneficiary. If the participant dies before the date
distributions begin and there is no designated beneficiary as of September
30 of the year following the year of the participant's death, distribution
of the participant's entire interest will be completed by December
31 of the calendar year containing the fifth anniversary of the participant's
death.
(c) Death of Surviving Spouse Before Distributions to Surviving Spouse
Begin. If the participant dies before the date distribution of his
or her interest begins, the participant's surviving spouse is the
participant's sole designated beneficiary, and the surviving spouse
dies before distributions to the surviving spouse begin, this Subsection
H4 will apply as if the surviving spouse were the participant, except
that the time by which distributions must begin will be determined
without regard to Subsection H(1)(b)2).
(5) Definitions.
(a) Designated Beneficiary. The individual who is designated as the beneficiary under §
1-657, Subsection
2F(1), and is the designated beneficiary under IRC Section 401(a)(9) and Regulation section 1.401(a)(9)-1, Q&A-4.
(b) Distribution Calendar Year. A calendar year for which a minimum distribution is required. For distributions beginning before the participant's death, the first distribution calendar year is the calendar year immediately preceding the calendar year which contains the participant's required beginning date. For distributions beginning after the participant's death, the first distribution calendar year is the calendar year in which distributions are required to begin pursuant to Subsection
H(1)(b).
(c) Life Expectancy. Life expectancy as computed by use of the Single
Life Table in Regulation section 1.401(a)(9)-9.
(d) Required Beginning Date. The date specified in §
1-657, Subsection
2F(4).
1. Fiduciary
Responsibility.
A. Management
and Control of Plan Assets. The governing body of the employer shall
designate the persons responsible for the management and control of
plan assets. Such persons shall discharge their duties with respect
to the plan in accordance with the documents and instruments governing
the plan insofar as such documents and instruments are consistent
with the applicable provisions of the Internal Revenue Code.
B. A fiduciary
of this plan is required to exercise the judgment and care under the
circumstances then prevailing that men of prudence, discretion, and
intelligence exercise in the management of their own affairs, not
in regard to speculation but in regard to the permanent disposition
of their funds, considering the probable income as well as the probable
safety of their capital.
C. Allocation
of Responsibility.
(1) When
the plan administrator is required to follow the directions of the
trustee or the trustee is required to follow the directions of the
plan administrator, they shall not be deemed to share such responsibility.
Instead, the responsibility of the person giving the directions shall
be deemed to be his sole responsibility and the responsibility of
the person receiving directions shall be to follow those directions
insofar as such instructions on their face are proper under applicable
law.
(2) The
plan administrator or trustee under this plan may employ one or more
persons, including independent accountants, attorneys, and actuaries
to render advice with regard to any responsibility such person has
under the plan.
D. Liability
and Indemnification. Subject to Act 205, no past, present, or future
officer of the employer nor of any participating employer shall be
personally liable to any participant, beneficiary, or other person
under any provision of the plan or trust or any insurance policy or
contract issue pursuant thereto. No individual fiduciary shall be
liable for any act or omission of any other fiduciary. Unless resulting
from the gross negligence, willful misconduct or lack of good faith
on the part of the fiduciary, the employer shall indemnify and save
harmless such fiduciary from, against, for and in respect of any and
all damages, losses, obligations, liabilities, liens, deficiencies,
costs, and expenses, including without limitation, reasonable attorney's
fees and other costs and expenses incident to any suit, action, investigation,
claim or proceedings suffered in connection with his acting as a fiduciary
under the plan.
2. Administration
by Joint Pension Committee.
A. Establishment
of Joint Pension Committee. The governing body of the employer shall
establish a committee to be responsible for the administration of
the plan. The committee shall be known as the "Joint Pension Committee".
B. Composition
and Term. The Joint Pension Committee shall consist of four members
as follows: (1) two duly elected or appointed members of the governing
body of the employer serving in such position as selected by the governing
body of the employer; and (2) two police officers in the active employment
of the employer appointed by the Borough of Nazareth Police Association.
The Joint Pension Committee shall choose from its members a chairperson.
The term of office for members of the Joint Pension Committee shall
be two years.
A member who is a police officer shall cease to be a member
on the last day of his employment as a police officer of the employer.
A member who is also a member of the governing body of the employer
shall cease to be a member on the day he ceases to hold office. Members
may be reappointed or reelected. Vacancies shall be filled in the
same manner as the departing member was selected.
C. Secretary
for Joint Pension Committee. The duly appointed manager of the employer
shall serve as the secretary of the Joint Pension Committee and shall
keep minutes of the committee’s proceedings and all dates, records,
and documents pertaining to the committee’s administration of
the plan.
D. Appointment
of Chief Administrative Officer. The governing body of the employer
shall appoint the chief administrative officer and shall review at
regular intervals the performance of the person appointed to be the
chief administrative officer and shall re-evaluate the appointment
of such chief administrative officer. The Joint Pension Committee
may delegate such of its duties and powers to the chief administrative
officer as it determines to be appropriate.
E. Duties
and Powers of Joint Pension Committee. The Joint Pension Committee
shall have the following duties and discretionary powers and such
other duties and discretionary powers as relate to the administration
of the plan:
(1) To
determine in a non-discriminatory manner all questions relating to
the eligibility of employees to become participants.
(2) To
determine in a non-discriminatory manner eligibility for benefits
and to determine and certify the amount and kind of benefits payable
to participants.
(3) To
authorize all disbursements from the fund.
(4) To
appoint or employ, upon approval of the employer, any independent
person to perform necessary plan functions and to assist in the fulfillment
of administrative responsibilities as it deems advisable, including
the retention of a third party administrator, custodian, auditor,
accountant, actuary, or attorney.
(5) When
appropriate, to select an insurance company and annuity contracts
that, in its opinion, will best carry out the purposes of the plan.
(6) To
construe and interpret any ambiguities in the plan and to make, publish,
interpret, alter, amend or revoke rules for the regulation of the
plan that are consistent with the terms of the plan and with the applicable
provisions of the Internal Revenue Code.
(7) To
prepare and distribute, in such manner as determined to be appropriate,
information explaining the plan.
(8) To
make rules and regulations for the governance of the affairs of the
Joint Pension Committee to better enable it to carry out its powers
and duties imposed hereunder.
F. Miscellaneous
Provisions.
(1) Meetings.
The Joint Pension Committee shall meet at least once annually and
at other times at the call of the chairperson or the request of the
majority of its members.
(2) Joint
Pension Committee Actions. — The actions of the Joint Pension
Committee shall be determined by the vote or other affirmative expression
of a majority of its members. All actions of the committee shall be
certified by its chairperson and attested to by its secretary. A member
of the Joint Pension Committee who is a participant shall not vote
on any question relating specifically to himself. If the remaining
members of the Joint Pension Committee, by majority vote thereof,
are unable to come to a determination of any such question, the employer
shall appoint a substitute member who shall act as a member of the
Joint Pension Committee for the special vote.
(3) Expenses.
The members of the Joint Pension Committee shall serve without compensation
for service as such. All reasonable expenses of the Joint Pension
Committee shall be paid by the plan.
(4) Bonding.
Members of the Joint Pension Committee shall serve without bond.
(5) Examination
of Records. The Joint Pension Committee shall make available to any
participant for examination during business hours such of the plan
records as pertain only to the participant involved.
(6) Information
to the Joint Pension Committee. To enable the Joint Pension Committee
to perform the administrative functions, the employer shall supply
full and timely information to the Joint Pension Committee on all
participants as the Joint Pension Committee may require.
3. Claims
Procedure.
A. Notification.
The chief administrative officer shall notify each participant in
writing of his determination of benefits. If the chief administrative
officer denies any benefit, such written denial shall include:
(1) The
specific reasons for denial;
(2) Reference
to provisions on which the denial is based;
(3) A
description of and reason for any additional information needed to
process the claim; and
(4) An
explanation of the claims procedure.
B. Appeal.
The participant or his duly authorized representative may:
(1) Request
a review of the participant’s case in writing to the employer;
(2) Review
pertinent documents;
(3) Submit
issues and comments in writing.
The written request for review must be submitted no later than
60 days after receiving written notification of denial of benefits.
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C. Review.
The Joint Pension Committee must render a decision no later than 60
days after receiving the written request for review, unless circumstances
make it impossible to do so; but in no event shall the decision be
rendered later than 120 days after the request for review is received.
D. Limitation on Time Period for Litigation of a Benefit Claim. Following receipt of the written rendering of the employer’s decision under §
1-658, Subsection
3C, the participant shall have 365 days in which to file suit in the appropriate court. Thereafter, the right to contest the decision shall be waived.
4. Trust Fund.
A. Creation
and Maintenance of the Fund. The trust fund shall be created and maintained
in the following manner:
(1) All
funds on deposit and held for pension or retirement benefits of the
participants shall continue to be part of the trust fund created and
maintained hereby subject to any liabilities that may exist against
such fund.
(2) The
employer shall allocate to the fund the payments made by the Treasurer
of the Commonwealth of Pennsylvania from monies received from taxes
paid upon premiums by foreign casualty insurance companies and foreign
fire insurance companies pursuant to the General Municipal Pension
System State Aid Program.
(3) The
employer shall also allocate to the fund any mandatory employee contributions
received in accordance with the plan.
(4) The
fund shall accept and maintain any payments made by other gifts, grants,
devises, or bequests to the fund.
(5) The
employer shall contribute to the fund such other payments as may,
from time to time, be authorized to be made from the general revenue
of the employer.
All such payments received shall be part of the trust fund and
shall not be applied to any other account or disbursed in any manner
except as provided by this plan. Payments required under the plan
shall be a charge only upon the trust fund and not upon other monies
or funds of the employer.
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B. Appointment
of Trustee. The employer, or its designee, shall appoint a trustee
for the proper care and custody of all funds, securities and other
properties in the trust, and for investment of plan assets (or for
execution of such orders as it receives from an investment manager
appointed for investment of plan assets). The duties and powers of
the trustee shall be set forth in a trust agreement executed by the
employer, that is incorporated herein by reference. The employer shall
review at regular intervals the performance of the trustee and shall
re-evaluate the appointment of such trustee. After the employer has
appointed the trustee and has received a written notice of acceptance
of its responsibility, the responsibility with respect to the proper
care and custody of plan assets shall be considered as the responsibility
of the trustee. Unless otherwise allocated to an investment manager,
the responsibility with respect to investment of plan assets shall
likewise be considered as the responsibility of the trustee.
C. Appointment
of Corporate Custodian. The employer, or its designee, may appoint
a corporate custodian to hold and invest the fund. The corporate custodian
shall carry out its responsibilities in accordance with the terms
of the custodial agreement and the investment policy and guidance
as the employer shall, from time to time, provide. The employer shall
review at regular intervals no less frequently than annually, the
performance of such corporate custodian and shall re-evaluate the
appointment of such corporate custodian.
D. Appointment
of Investment Manager. The employer, or its designee, may appoint
an investment manager who is other than the trustee, which investment
manager may be a bank or an investment advisor registered with the
Securities and Exchange Commission under the Investment Advisors Act
of 1940. Such investment manager, if appointed, shall have sole discretion
in the investment of plan assets, subject to the funding policy. The
employer shall review at regular intervals unless frequently than
annually the performance of such investment manager and shall re-evaluate
the appointment of such investment manager. After the employer has
appointed an investment manager and has received a written notice
of acceptance of his responsibility, the responsibility with respect
to investment of plan assets shall be considered as the responsibility
of the investment manager.
E. Funding
Policy. The employer, or its designee, shall determine and communicate
in writing to the person responsible for investment of plan assets
the funding policy for the plan. The funding policy shall set forth
the plan's short-range and long-range financial needs, so that said
person may coordinate the investment of plan assets with the plan’s
financial needs.
F. Valuation
of the Fund. The fund shall be valued by the trustee on the accounting
date of each year and as of any interim accounting date determined
by the plan administrator. The valuation shall be made on the basis
of the current fair market value of all property in the fund.
5. Actuarial
Valuation and Funding.
A. Actuarial
Valuation. In compliance with Act 205, the actuarial valuation report
shall be prepared and filed under the supervision of the chief administrative
officer of the municipality or of the association of municipalities
cooperating pursuant to the Intergovernmental Cooperation Act and
named as the sponsoring employer of this plan. The actuary shall perform
an actuarial valuation at least biennially. Each biennial actuarial
valuation report shall be made as of the beginning of such plan year
and shall be prepared and certified by an approved actuary. An approved
actuary means a person who has at least five years of actuarial experience
with public pension plans and who is either enrolled as a member of
the American Academy of Actuaries or enrolled as an actuary pursuant
to ERISA.
If the employer is applying or has applied for Supplemental
State Assistance pursuant to Section 603 of the Act, the actuarial
valuation report shall be made annually.
B. Allowable
Administrative Expenses. The expenses attributable to the preparation
of any actuarial valuation report or investigation required by Act
205 or any other expense that is permissible under the terms of Act
205 and that are directly associated with administering the plan shall
be an allowable administrative expense payable from the assets of
the trust.
C. Benefit
Modifications. Prior to the adoption of any benefit plan modification
by the employer, the chief administrative officer shall provide to
the employer a cost estimate of the proposed benefit plan modification
prepared by an approved actuary. Such estimate shall disclose to the
employer the impact of the proposed benefit plan modification on the
future financial requirements of the plan and the future minimum obligation
of the employer with respect to the plan.
1. Right to
Discontinue and Amend. It is the expectation of the employer that
it will continue this plan indefinitely and make the payments of its
contributions hereunder, unless permitted to terminate under the provisions
of Act 600.
2. Amendments.
Except as herein limited, the employer shall have the right to amend
this plan at any time to any extent that it may deem advisable. Such
amendment shall be stated in writing and shall be by ordinance or
resolution of the governing body of the employer. The employer's right
to amend the plan shall be limited as follows:
A. No amendment
shall be adopted in violation of Act 600.
B. No amendments
shall have the effect of vesting in the employer any interest in or
control over any contracts issued pursuant hereto or any other property
in the fund.
C. No amendment
to the vesting schedule adopted by the employer hereunder shall deprive
a participant of his vested portion of his employer-derived accrued
benefit to the date of such amendment.
3. Protection
of Benefits in Case of Plan Merger. In the event of a merger or consolidation
with, or transfer of assets to any other plan, each participant will
receive a benefit immediately after such merger, consolidation or
transfer (if the plan then terminated) that is at least equal to the
benefit the participant was entitled to immediately before such merger,
consolidation or transfer (if the plan had terminated).
4. Termination
of Plan.
A. When Plan
Terminates. This plan shall terminate upon the legal dissolution of
the employer or the termination of the plan by the amendment action
of the employer. Subject to the provisions of the Municipal Pension
Plan Funding Standard and Recovery Act (P.L. 1005, Act 205 of 1984)
governing financially distressed municipalities, the liability of
the employer to make contributions to the plan shall automatically
terminate upon liquidation or dissolution of the employer, upon its
adjudication as a bankrupt, or upon the making of a general assignment
for the benefit of its creditors.
B. Allocation
of Assets. Upon termination or partial termination, the accrued benefit
of each affected participant who is an active participant or who is
not an active participant but has not incurred a one-year break in
service shall be 100% vested and nonforfeitable; however, no participant
or other individual shall have recourse towards the satisfaction of
any benefit accrued under the plan other than from the fund. The amount
of the fund assets shall be allocated to participants and beneficiaries
subject to provisions for expenses of administration of liquidation.
The allocation of assets shall be in accordance with the following
(to the extent assets are sufficient).
(1) There
shall be allocated an amount equal to that portion of each individual's
accrued benefit that is derived from the participant's voluntary contributions.
(2) There
shall be allocated an amount equal to that portion of each individual's
accrued benefit that is derived from the participant's mandatory contributions.
(3)
(a) There shall be allocated amounts sufficient to provide the pension
of each participant or beneficiary who was receiving such a benefit
three years before the date of termination.
(b) There shall likewise be allocated amounts sufficient to provide the
normal form of pension for each participant who was eligible to retire
three years before the date of termination but had not done so.
In both cases, the benefits shall be based upon the plan provisions
in effect during the five years before the date of termination under
which such benefits would be the least.
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(4) There
shall be allocated amounts sufficient to provide all vested benefits
due participants.
(5) There
shall be allocated amounts sufficient to provide all other benefits
of the plan.
If assets are insufficient to provide all benefits within any one of the above Subsections B(1) through (5), they shall be allocated pro rata among the participants or beneficiaries within that paragraph on the basis of the present value of such benefits.
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The allocation of assets, when determined by the actuary, may
be implemented through the continuation of the existing fund or through
the purchase of insurance company annuity contracts, or by a combination
of these media.
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C. Remaining
Fund Balance. Notwithstanding any provision in this plan to the contrary,
upon the termination of the plan, but only after all liabilities to
the participants and their respective beneficiaries have been satisfied,
the employer shall be entitled to any balance of the net assets of
the fund that shall remain by reason of erroneous actuarial computations
or overpayments during the life of the plan.
[Ord. 282, 12/9/1957; as amended by Ord. 361, 7/3/1967; by Ord. 442, 5/5/1975; by Ord. 457, 8/7/1978; by Ord. 497, 8/2/1982; by Ord. 513, 5/7/1984; by Ord. 520, 12/12/1984; by Ord.
610, 7/6/1993; by Ord. 642, 4/7/1997; by Ord. 719, 8/7/2006; and by Ord. 735, 6/4/2007]
1. Exclusive
Benefit – Non-Reversion.
The plan is created for the exclusive benefit of the employees
of the employer and shall be interpreted in a manner consistent with
its being a qualified plan as defined in IRC Section 401(a). The corpus
or income of the trust may not be diverted to or used for other than
the exclusive benefit of the participants or their beneficiaries.
Notwithstanding the above, any contribution made by the employer because of a mistake of fact must be returned to the employer within one year of the contribution. Further, a reversion to the employer is permissible upon plan termination in accordance with §
1-659, Subsection
4C.
2. Inalienability
of Benefits. No benefit or interest available hereunder including
any annuity contract distributed herefrom shall be subject to assignment
or alienation, either voluntarily or involuntarily. The preceding
sentence shall also apply to the creation, assignment, or recognition
of a right to any benefit payable with respect to a participant pursuant
to a domestic relations order, unless such order is determined to
be an acceptable domestic relations order as defined in IRC Section
414(p), or any domestic relations order entered before January 1,
1985.
3. Employer-Employee
Relationship. This plan is not to be construed as creating or changing
any contract of employment between the employer and its employees,
and the employer retains the right to deal with its employees in the
same manner as though this plan had not been created.
4. Binding
Agreement. This plan shall be binding on the heirs, executors, administrators,
successors and assigns as such terms may be applicable to any or all
parties hereto, and on any participants, present or future.
5. Inconsistency
or Conflict of Prior Ordinances or Resolutions. Any ordinance or resolution
with an effective date prior to the adoption date of this amendment
and restatement of the plan shall be of no effect.
6. Separability.
If any provision of this plan shall be held invalid or unenforceable,
such invalidity or unenforceability shall not affect any other provision
hereof and this plan shall be construed and enforced as if such provision
had not been included.
7. Construction.
The plan shall be construed in accordance with the laws of the Commonwealth
of Pennsylvania and with the applicable portions of the Internal Revenue
Code. It is intended that the plan comply with the interpretations
of P.L. 1804, as amended (53 P.S. § 767) (Act 600), issued by
the judicial and regulatory bodies of the Commonwealth of Pennsylvania.
8. Copies
of Plan. This plan may be executed in any number of counterparts,
each of which shall be deemed as an original, and said counterparts
shall constitute but one and the same instrument that may be sufficiently
evidenced by any one counterpart.
9. Interpretation.
Wherever appropriate, words used in this plan in the singular may
include the plural or the plural may be read as singular, and the
masculine may include the feminine.
[Ord. 282, 12/9/1957; as amended by Ord. 442, 5/5/1975; and by Ord. 520, 12/12/1984]
1. Borough Council shall employ an actuary and fix his compensation. The actuary shall determine the present liability on account of pensions payable under §
1-660 of this Part to original members for service prior to the date of the establishment of the fund, and shall offset the value of any assets transferred to the fund from a previous pension fund to determine the unfunded liability. The unfunded liability shall be paid entirely by the Borough, provided that it may be funded over a period not exceeding 25 years. The actuary shall also determine the amount, which shall be contributed annually to the fund for the service of members subsequent to the establishment of the fund.
2. The payments
to the Borough by the Commonwealth of Pennsylvania for purposes of
retirement or disability benefits for policemen shall be applied as
follows:
A. To reduce
the unfunded liability or, after such liability has been funded;
B. To apply
against the annual obligation of the Borough for future service cost
or, to the extent that the payment may be in excess of such obligation;
C. To reduce
member contributions.
3. Unless
otherwise specifically provided, any other monies paid into the fund
shall be applied equally against the member and the Borough portions
of the future service cost.
4. It shall
be the duty of Borough Council to apply the payments above enumerated
in accordance with the provisions of this Part 6B.
5. Except
as modified herein, the provisions of the said police pension fund
shall remain in full force and effect.
[Ord. 282, 12/9/1957; as amended by Ord. 595, 10/7/1991]
No person participating in the fund established pursuant to
the provisions of this Part 6B, who becomes entitled to receive a
benefit there from, shall be deprived of his right to an equal share
therein other than upon the basis upon which he first became entitled
thereto.
[Ord. 282, 12/9/1957]
Any member of the police force of the Borough who for any reason
whatsoever shall be unable to receive a pension after having contributed
any charge to the fund established pursuant to the provisions of this
Part 6B shall be entitled to a refund of all such moneys paid by him
into such fund immediately upon discontinuance of his employment as
a member of the police force, with interest at 2 1/2% compounded annually.
If such discontinuance is due to death, such moneys shall be paid
to his designated beneficiary or beneficiaries, or, in the absence
of such designation, to his personal representative.
[Ord. 282, 12/9/1957]
The pension payments herein provided for shall not be subject
to attachment, execution, levy, garnishment or other legal process
and shall be payable only to the member or his designated beneficiary
or beneficiaries, and shall not be subject to assignment or transfer.
[Ord. 282, 12/9/1957; as amended by Ord. 555, 1/4/1988]
The expenses of administration of the fund established by this
Part 6B, including the compensation of the actuary and the custodian
of the fund, exclusive of the payment of retirement or disability
benefits, shall be paid by the fund.
[Ord. 282, 12/9/1957; as added by Ord. 513, 5/7/1984]
The Borough hereby establishes a committee to be known as the
"Joint Pension Committee” consisting of two persons who shall
be appointed by the Borough Council and two persons who shall be appointed
by the Borough of Nazareth Police Association. All members shall be
appointed for a term of two years. Any member may resign by delivering
his or her written resignation to the Secretary of the Borough Council.
Vacancies in the Committee arising by resignation, death, removal
or otherwise shall be filled by Borough Council or the Association
depending upon which membership is vacant. The Joint Pension Committee
shall receive notice of all retirements and disability determinations
concerning police officers, all financial reports concerning the Police
Pension Fund, including information concerning investments, and the
periodic actuarial reports required by law. The Joint Pension Committee
may also make such recommendations to Borough Council from time to
time concerning the administration of the pension plan, as it may
deem appropriate.
[Ord. 714, 10/5/2005]
1. An early
retirement benefit shall be provided to a member of the police force
with 20 or more years of vesting service who terminates employment
prior to the completion of normal retirement age and service requirements
and who files a written application for an early retirement benefit
with the Borough Secretary. The early retirement benefit shall become
effective as of the date the application is filed with the Borough
Secretary or the date designated on the application, whichever is
later, and shall be the actuarial equivalent of the accrued benefit
calculated as follows:
A. The accrued benefit shall be determined under §
1-660, Subsection
1.
B. The actuarial
equivalent of the accrued benefit shall be determined by actuarially
reducing the accrued benefit to reflect that it will commence on the
effective date of the early retirement rather than on the date on
which the member would have completed normal retirement age and service
requirements. The actuarial reduction shall be calculated using the
actuarial assumptions reported in the last actuarial valuation report
filed with the Public Employee Retirement Commission under Act 205.
[Ord. 282, 12/9/1957; as amended by Ord. 513, 5/7/1984; and as amended by Ord.
714, 10/5/2005]
Insofar as the provisions of this Part 6B are the same as statutory
provisions, they shall be subject to change or repeal to comply with
any future statutory provisions, and the provisions of this Part may
be amended or repealed if statutory authority be granted therefore
or if statutory restrictions or mandates are eliminated and discretion
vested in the Borough.