A.
Plan established. There is hereby established a City
of Hagerstown Police and Fire Employees' Retirement Plan.
B.
Legal authority to withdraw from the Maryland Employees
Retirement System of the State of Maryland and/or the Pension System
for Employees of the State of Maryland. Pursuant to the provisions
of § 31-302 of the State Personnel and Pensions Article
of the Annotated Code of Maryland, the City Council has passed a resolution
dated April 7, 1998, authorizing:
(1)
The withdrawal of certain firefighters and law enforcement
personnel from the Employees Retirement System of the State of Maryland
and/or the Pension System for Employees of the State of Maryland;
(2)
The crediting of each withdrawing member's accumulated
contributions to the individual member; and
(3)
The transfer of total reserves resulting from previous
contributions by the City of Hagerstown allocable to the withdrawing
members from the Maryland State Retirement and Pension Systems to
the City of Hagerstown Police and Fire Employees' Plan.
This plan may be referred to as the "City of
Hagerstown Police and Fire Employees' Retirement Plan."
A.
Qualification of plan under Internal Revenue Code. The plan is intended to be a pension plan that will qualify under Section 401(a) of the Internal Revenue Code, and the trust established under the plan is intended to be exempt from tax under Section 501 of the Internal Revenue Code.
B.
Qualification of pickup contributions under Internal Revenue Code. The City also intends that, effective for the pay period beginning July 5, 1998, the contributions made by plan participants pursuant to § 38-26A(1) through payroll deductions be characterized as "pickup" contributions, as described in Section 414(h)(2) of the Internal Revenue Code.
The provisions of the plan shall apply only
to an individual who meets the definition of covered employee set
forth herein and whose employment with the City terminates after the
effective date.
For all purposes of the plan, where the context
admits, the singular shall include the plural, and the plural shall
include the singular, and references to persons shall include corporations,
partnerships, estates and trusts. Headings of articles, sections,
subsections and paragraphs are inserted only for convenience of reference
and are not to be considered in the construction of the plan.
The following terms, as used herein, unless
a different meaning is clearly implied by the context, shall have
the following meanings:
In no event, however, shall the accrued benefit exceed the maximum limitation determined, as of the date of computation, pursuant to § 38-33.
The portion of the participant's accrued benefit attributable to his or her contributions made pursuant to §§ 38-26 and 38-27 shall be equal to the actuarial equivalent of the participant's employee contributions benefit, expressed as the normal form of monthly benefit commencing at normal retirement date.
The portion of the participant's accrued benefit
attributable to City contributions shall be the remainder, if any,
of the accrued benefit.
Accrued benefit computations made for the purpose
of reflecting a benefit commencement date prior to normal retirement
date shall be made without regard to the cost of living adjustment,
should the plan, in the future, provide for such adjustments.
"Actuarial equivalent" means a form of benefit
differing in time, period or manner of payment from a specific benefit
provided under the plan but having the same value when computed based
upon the following:
[Amended 5-22-2018 by Ord. No. O-18-12]
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Pre-Retirement and Post-Retirement:
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|---|---|
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Unisex Pension (UP) (1984) Table
8% per annum interest rate.
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The foregoing factors, to the extent applicable,
shall be utilized (whether or not there is a specific reference to
this definition) whenever in the administration of the plan a calculation
of actuarial equivalence is to be made.
However, in determining the actuarial equivalence of a lump sum or any other optional form of benefit to the normal form of monthly retirement income payable pursuant to § 38-28, on or after July 1, 2003, the value of the normal form of benefit shall include the value of the cost of living adjustments, if any, that would have been made pursuant to any valid amendment to § 38-35 had the participant retired thereunder and lived his or her anticipated life span.
"Actuarial reduction" means a reduction which
will cause a benefit with a starting date which precedes a participant's
normal retirement date to be the actuarial equivalent of the benefit
which would otherwise have been payable at normal retirement date.
However, notwithstanding any factors set forth in the definition
of actuarial equivalent, the reduction shall be equal to 0.50% of
the benefit for each month preceding the participant's 62nd birthday
until the participant's 55th birthday and 0.33% of the benefit for
each month preceding the participant's 55th birthday.
[Amended 5-22-2018 by Ord. No. O-18-12]
No reduction pursuant to this definition shall
apply to a participant who retires after completing at least 25 years
of eligibility service.
The Administrator shall be an employee of the City who has direct responsibility or oversight responsibility for Human Resources and to whom the City Council has delegated the administrative responsibilities for the plan, as set forth in § 38-54.
[Amended 4-25-2017 by Ord. No. O-17-04]
[Amended 5-22-2018 by Ord. No. O-18-12]
For plan years beginning before July 1, 2019, the average monthly
rate of a participant's compensation, equal to 1/36 of the total amount
of a participant's compensation for the three plan years of the participant's
employment which produce the highest average;
For the plan year beginning on July 1, 2019, the average monthly
rate of a participant's compensation, equal to 1/48 of the total amount
of a participant's compensation for the four plan years of the participant's
employment which produce the highest average; or
For plan years beginning after July 1, 2019, the average monthly
rate of a participant's compensation, equal to 1/60 of the total amount
of a participant's compensation for the five plan years of the participant's
employment which produce the highest average.
If the participant's employment does not provide the full number
of plan years as aforesaid, compensation for the participant's actual
number of consecutive full calendar months of employment will be totaled
and divided by the number thereof.
The first day of the first period for which the sole payment
or the first in a series of payments constituting the distribution
of an accrued benefit is made.
A distribution in settlement of a benefit otherwise payable
under the plan, and which is equal to the employee contributions benefit.
The City of Hagerstown, a municipal corporation existing
under the laws of the State of Maryland.
An automatic increase (without necessity of plan amendment)
in a dollar value set forth or described in the plan, for the purpose
of reflecting increases in the cost of living to the extent prescribed
in or pursuant to regulations under Section 415(d) of the Internal
Revenue Code, but only to the extent permitted by the operative Internal
Revenue Code or regulatory provision specifically governing the dollar
value in question.
The monthly equivalent of the participant's base annual salary,
determined without regard to:
Overtime, bonuses and other extra Remuneration;
Amounts in excess of 1/12 of the applicable
dollar limit under Section 401(a)(17) of the Internal Revenue Code
and regulations promulgated thereunder, as adjusted by the Commissioner
of the Internal Revenue Service for increases in the cost of living
in accordance with Section 401(a)(17)(b) of the Internal Revenue Code;
Contributions, credits or benefits under this
Plan or under any other retirement, deferred compensation, fringe
benefit or employee welfare benefit plan; or
Direct reimbursement for expenses; provided, however, that compensation shall include any amount that would have qualified as compensation but for the fact that it constitutes a pickup contribution under § 38-26 or a salary reduction under any plan described in Section 132(f), 414(h)(2), 457(b) or 125 of the Internal Revenue Code.
[Amended 8-27-2002 by Ord. No. 2002-22]
Except as otherwise provided in § 38-4, "covered employee" means any employee who is classified by the City as full-time and who is employed by the City in one of the following job classifications:
[Amended 1-27-2009 by Ord. No. O-08-29; 11-24-2009 by Ord. No.
O-09-16; 2-26-2019 by Ord. No. O-19-01]
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Police officer
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Fire fighter
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Fire Apparatus Operator
|
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Police officer trainee
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Fire Captain
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Fire Public Safety Educator
|
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Police cadet
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Battalion Chief
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Fire Marshal
|
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Police Sergeant
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Deputy Chief
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Deputy Fire Marshal
|
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Police Lieutenant
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Fire Chief
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Fire Training Officer
|
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Police Captain
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Police Chief
|
Any date occurring on or after the first date on which a
participant both reaches age 50 and has completed years of eligibility
service totaling at least 20.
[Amended 5-22-2018 by Ord. No. O-18-12]
The effective date of the plan, which shall be July 1, 1998.
Any person employed by the City.
The sum of the following amounts (net of any previous distributions):
The contributions made by the participant pursuant to § 38-27 which are not picked up by the City; plus
The contributions, plus earnings previously credited on such contributions, made by the participant, pursuant to § 38-27, through transfer from another government employer retirement plan, which were not picked up by such government employer; plus
Contributions, plus earnings previously credited
on such contributions, made by the participant and picked up by another
government employer, all of which are thereafter transferred to the
plan; plus
The date on which the employee first performs an hour of
service.
The United States of America, the State of Maryland, any
political subdivision within the State of Maryland as well as any
state, commonwealth, municipality or political subdivision within
the United States of America.
Each hour, other than overtime hours, for which an individual,
in his or her capacity as an employee, is directly or indirectly paid,
or entitled to payment, for the performance of duties for the City.
The Internal Revenue Code of 1986, or any provision or section
thereof herein specifically referred to, as such Internal Revenue
Code, provision or section may from time to time be amended or replaced.
An authorized absence from active service, under conditions described in § 38-14, which does not constitute a termination of employment, and during which the employee completes no hours of service.
The earlier of:
The first day of the month on or following the
date on which the participant completes 25 years of eligibility service,
of which at least three years are completed as a covered employee;
or
The first day of the month on or following the
date on which the participant attains age 62 and completes three years
of eligibility service.
Any employee who is currently benefiting under the plan,
and, where appropriate according to the context of the plan, any former
employee who is or may become (or whose beneficiaries may become)
eligible to receive a benefit under the plan.
The continuous period beginning with an employee's termination
date and ending with the employee's reemployment commencement date,
if any.
The retirement plan set forth herein, as amended from time
to time.
The twelve-month period ending on the last day of the month
of June.
The date on which an employee first performs an hour of service
after a period of severance.
"Refundable contributions benefit" means the
sum of the following amounts (net of any previous distributions) and
is applicable only to those participants who irrevocably elected to
transfer to the plan from the Maryland State Retirement System effective
as of July 1, 1998:
The contributions made prior to July 1, 1998,
by the participant and contributed to the Maryland State Retirement
System, which were classified by the Maryland State Retirement System
as "refundable contributions" and which would have provided an additional
benefit to the participant pursuant to the State Personnel and Pensions
Article of the Annotated Code of Maryland (1997), or a statutory provision
of comparable effect, if the participant had not transferred from
the Maryland State Retirement System, plus earnings previously credited
on such contributions, all of which are transferred to the plan; plus
Interest of 5% per annum, compounded annually,
on the amount of contributions described in Subsection A(1) hereof
transferred to the plan, computed on the participant's termination
date.
To the extent a participant is entitled to receive
a refundable contributions benefit, the participant shall at all times
be 100% vested in the refundable contributions benefit.
A participant's refundable contributions benefit
is payable following a participant's termination date in addition
to any employee contributions benefit the participant might otherwise
be entitled to receive under the terms of the plan.
A refundable contributions benefit is payable
only in the form of cash and in one lump sum distribution.
The trust shall accept a transfer of funds comprising
participants' refundable contributions benefits from the Maryland
State Retirement Systems.
The participant's wages, salaries, professional service fees
and other amounts received for personal services actually rendered
in the course of employment with the City, but not including:
The date of the first to occur of:
The trust fund established pursuant to the plan, maintained
in accordance with the terms of the trust agreement, as from time
to time amended, between the City and the Trustees, which trust agreement
constitutes a part of the plan; where appropriate according to the
context, the term "trust" shall also refer to the trust agreement.
Collectively, the Trustee or Trustees named in the trust
and such successor and/or additional Trustees as may be named pursuant
to the terms of the trust.
Except as otherwise provided below, a covered employee's participation in this plan, and the agreement to make contributions hereunder, as described in § 38-26, is mandatory as a condition of employment with the City:
A.
Irrevocable participation. Every individual who is a covered employee as of June 30, 1998, may elect to participate in the plan effective July 1, 1998, and continuing until his or her termination date. Such election shall be irrevocable, shall be made on a written application supplied by the City and shall contain agreement to make, as a condition of his or her employment with the City, participant contributions as provided in § 38-26. If an employee who is otherwise eligible to participate fails to return the completed application to the City on or before June 5, 1998, he or she shall cease to be a covered employee as of July 1, 1998.
B.
Mandatory participation. Every other individual who
becomes a covered employee on or after July 1, 1998, shall become
a participant on the date he or she first performs an hour of service
as a covered employee.
If an employee or participant who reaches a
termination date is subsequently reemployed as a covered employee,
his or her status with respect to the plan shall be governed by the
following:
A.
Eligibility for participation. If the reemployed employee was not a participant prior to his or her termination date, or the employee's reemployment commencement date occurs prior to July 1, 1998, the employee shall become a participant in accordance with the provisions of § 38-7A. If the reemployed employee was a participant prior to such termination, or the individual's reemployment commencement date occurs after June 30, 1998, his or her participation shall commence immediately upon the resumption of status as a covered employee.
B.
Vesting and benefit accrual. Subject to Subsection D below, if the reemployed employee was a participant prior to his or her termination, that employee's prior years of credited service and years of eligibility service shall be aggregated with years of credited service and years of eligibility service performed after his or her reemployment commencement date for purposes of determining eligibility to receive, the vested percentage of, and amount of, his or her accrued benefit (with respect to the periods before and after the period of severance).
C.
Benefit payments. If, at the time of reemployment,
the participant is receiving benefits under the plan, such benefits
(other than those previously funded through individual or non-pooled
group insurance annuity arrangements) shall cease until such time
as they may be paid in conjunction with the benefits accrued with
respect to the participant's subsequent employment. In any event,
any benefits payable with respect to the participant's subsequent
employment shall be reduced or offset if and as necessary to avoid
duplication of any benefits payable or paid with respect to his or
her prior employment.
D.
Cash-out.
(1)
If, after his or her termination date the participant
receives a cash-out of his or her employee contributions benefit;
and the participant resumes status as a covered employee, then, notwithstanding
the covered employee's reemployment, the years of credited service
and years of eligibility service with respect to which the distribution
was received shall be disregarded in subsequent determinations of
the amount of, and vested percentage of, the participant's accrued
benefit.
(2)
However, if the participant resumes status as a covered employee
and, at any time after the resumption of such status and prior to
reaching a termination date, repays to the trust the full amount of
the cash-out, plus interest from date of distribution to date of repayment
at the rate of 5% per annum compounded annually, his or her accrued
benefit will be determined taking into account the participant's years
of credited service and his or her vested percentage will be determined
taking into account years of eligibility service before as well as
after the termination date (subject to the other provisions of this
chapter).
[Amended 5-16-2017 by Ord. No. O-17-06]
Participation hereunder shall be automatic when the requirements of § 38-7 have been met; provided, however, that the City may, in its discretion, require each covered employee to execute a written application containing such items as may be desired by the City including, but not limited to, the employee's consent to be bound by all the terms and conditions of the plan and all amendments thereto.
