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HomeMy WebLinkAboutItem 15 First Reading of Ordinance Amending and Restating in Full the City of Ocoee Municipal General Employees’ Retirement Trust Fund oco e florid. AGENDA ITEM COVER SHEET Meeting Date: Dec. 3, 2019 Item # 15 Reviewed By: Contact Name: Gequita Cowan, Department Director: Chairperson GERB Contact Number: 407-905-3111 City Manager: Subject: First Reading of Ordinance Amending and Restating in full the City of Ocoee Municipal General Employees' Retirement Trust Fund Background Summary: At their meeting held on November 6, 2019, the General Employees' Retirement Board reviewed and approved the proposed ordinance which deals primarily with definition changes for compliance with the Internal Revenue Code (IRC), clarify certain language and restate all previous Ordinances amendments of the Plan into one document. The following proposed amendments are as follows: • Section 1, Definitions, clarifying the definition of"Spouse" and move the definition of"Credited Service" to Section 8, Vesting, regarding the rights of employees who terminate service prior to retirement. • Section 2, Membership, to limit those individuals eligible to opt-out of the system, to comply with present Internal Revenue Code Treasury Regulation requirements. • Section 8, Vesting, clarifying the rights of vested and non-vested employees who terminate service prior to retirement. • Section 14, Maximum Pension, Subsection 8, the limitation mirrors the language in the Internal Revenue Code. • Section 16, Miscellaneous Provisions, add Subsection 9, Missing Benefit Recipients. This provision is in accordance to IRS Programs Compliance Memorandum. • Section 24, Reemployment After Retirement, to comply with the Internal Revenue Code qualification requirements and clarify reemployment after receipt of early retirement benefits. • Section 25, Deferred Retirement Option Plan, remove Subsection 6.H, clarifying that once a member participates in the DROP program, no changes to his/her form of benefit is permitted, and clarify members whose participation commenced on or after September 18, 2012, will be credited on a monthly basis. Issue: Should the Honorable Mayor and City Commissioners adopt an Ordinance amending and restating the City of Ocoee Municipal General Employees Retirement Trust Fund with revisions to be in compliance with the IRC, clarifying and restating previously adopted amendments into one Ordinance. Recommendations: The Ocoee General Employees' Retirement Board respectfully recommends that the Mayor and City Commission adopt the attached Ordinance amending and restating the City of Ocoee Municipal General Employees Retirement Trust Fund. Attachments: • Ordinance Amending Ordinance No. 2009-20 • Foster& Foster Impact Letter Dated November 19, 2019 • Foster & Foster Impact Letter Dated November 21, 2019 • • Sugarman & Susskin, P.A. Dated November 20, 2019 Financial Impact: None. Type of Item: (please mark with an "x") Public Hearing For Clerk's Dept Use: X Ordinance First Reading Consent Agenda Ordinance Second Reading Public Hearing Resolution Regular Agenda Commission Approval Discussion& Direction Original Document/Contract Attached for Execution by City Clerk Original Document/Contract Held by Department for Execution Reviewed by City Attorney N/A Reviewed by Finance Dept. N/A Reviewed by N/A 2 SUGARMAN & SUSSKIND PROFESSIONAL ASSOCIATION ATTORNEYS AT LAW Robert A.Sugarman♦ 100 Miracle Mile Howard S.Susskind Suite 300 Kenneth R.Harrison,Sr. Coral Gables,Florida 33134 D.Marcus Braswell,Jr. (305)529-2801 Pedro A.Herrera Broward 327-2878 David Robinson Toll Free 1-800-329-2122 Ivelisse Berio LeBeau Facsimile(305)447-8115 *Board Certified Labor &Employment Lawyer November 20, 2019 Via Email:Kim.KilgoreWoster foster.com Board of Trustees City of Ocoee Municipal General Employees' Retirement Trust Fund do Kim Kilgore, Plan Administrator Foster& Foster 2503 Del Prado Blvd. S. Suite 502 Cape Coral, FL 33904 Re: City of Ocoee Municipal General Employees'Retirement Trust Fund Proposed Ordinance Amendment Dear Trustees: As previously discussed with the Board, enclosed please find a proposed ordinance amending the City of Ocoee Municipal General Employees' Retirement Trust Fund. The amendment is intended to clarify the plan by incorporating recent interpretations adopted by the Board, and to update certain provisions in accordance with the Internal Revenue Code. Specifically,the following amendments to the pension plan are proposed: 1. Section 1, Definitions, is being amended by moving from the definition of Credited Service to Section 8, Vesting, the language regarding the rights of employees who terminate service prior to retirement; and amended to clarify the definition of Spouse in accordance with the applicable US Supreme Court ruling; 2. Section 2, Membership, is being amended to limit those individuals eligible to opt-out of the system,to comply with recent IRC Treasury Regulation requirements,to remove other obsolete language. 3. Section 8, Vesting, is being amended to clarify the rights of vested and non-vested employees who terminate service prior to retirement. The new text makes clear,among other things, that a non-vested member who terminates employment and leaves his or her contributions in the plan for more than five years, is not entitled to credited service, Board of Trustees City of Ocoee Municipal General Employees' Retirement Trust Fund c/o Kim Kilgore, Plan Administrator November 20, 2019 Pane 12 notwithstanding the fact that he or she has not yet requested and received a refund of his or her contributions; 4. Section 14, Maximum Pension, is being amended by amending subsection (8) so that the limitation mirrors the language in the Internal Revenue Code. 5. Section 16, Miscellaneous Provisions, is being amended to add subsection 9., Missing Benefit Recipients. This provision is in accordance with a recent IRS Programs Compliance Memorandum. 6. Section 24, Reemployment After Retirement, is being amended to make several changes in accordance with the Internal Revenue Code to satisfy the qualification requirements applicable to the reemployment of a disability retiree. Additional changes have been made to clarify reemployment after receipt of early retirement benefits. 7. Section 25, Deferred Retirement Option Plan, to clarify that once a member commences participation in the DROP, no changes to his or her form of benefit is permitted; and further amended to clarify that, in accordance with Ordinance 2018- 046,the DROP accounts of members whose participation in the DROP commenced on or after September 18, 2012 will be credited on a monthly basis, as is the case already for members who entered the DROP prior to that date. Please do not hesitate to reach out to us should you require any additional information. • E. ROBI DER/jd Enclosure r; FOSTER & FOSTER ACTUARIES AND CONSULTANTS November 21,2019 VIA EMAIL Kim Kilgore,Plan Administrator City of Ocoee Municipal General Employees' Trust Fund 2503 Del Prado Blvd. S. Suite 502 Cape Coral,FL 33904 Re: City of Ocoee Municipal General Employees' Retirement Trust Fund Dear Kim: In response to a letter from David Robinson dated November 20,2019,we have reviewed the proposed Ordinance attached to that letter and have determined that the adoption of the proposed changes will have no impact on the assumptions used in determining the funding requirements of the program.Because the changes do not result in a change in the valuation results, it is our opinion that a formal Actuarial Impact Statement is not required in support of its adoption.However, since the Division of Retirement must be aware of the current provisions of all public pension programs, it is recommended that you send a copy of this letter and a copy of the fully executed Ordinance to the following office: Mr.Keith Brinkman Bureau of Local Retirement Systems Division of Retirement P.O. Box 9000 Tallahassee, FL 32315-9000 The undersigned is familiar with the immediate and long-term aspects of pension valuations,and meets the Qualification Standards of the American Academy of Actuaries necessary to render the actuarial opinions contained herein. If you have any questions,please let me know. 42,4"............. Sincerely, ()44 Douglas H. Lozen,EA,MAAA enclosures cc with enclosures via email: David Robinson, Plan Attorney Gequita Cowan, Executive Assistant to the City Manager 13420 Parker Commons Blvd.,Suite 104 Fort Myers, FL 33912•(239)433-5500• Fax(239)481-0634•www.foster-foster.com ORDINANCE NO. 2019- AN ORDINANCE OF THE CITY OF OCOEE, FLORIDA, RELATING TO THE CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES' RETIREMENT TRUST FUND, ADOPTED BY ORDINANCE NUMBER 2009-020; AS SUBSEQUENTLY AMENDED; AMENDING SECTION 1, "DEFINITIONS" BY AMENDING THE DEFINITION OF "CREDITED SERVICE" AND "SPOUSE"; AMENDING SECTION 2, "MEMBERSHIP"; AMENDING SECTION 14, "MAXIMUM PENSION"; AMENDING SECTION 16, "MISCELLANEOUS PROVISIONS"; AMENDING SECTION 24, "REEMPLOYMENT AFTER RETIREMENT"; AMENDING SECTION 25, "DEFERRED RETIREMENT OPTION PLAN"; PROVIDING FOR SEVERABILITY OF PROVISIONS; REPEALING ALL ORDINANCES IN CONFLICT HEREWITH AND PROVIDING AN EFFECTIVE DATE. SECTION 1: Authority. The City Commission of the City of Ocoee has the authority to adopt this ordinance pursuant to Article VIII of the Constitution of the State of Florida and Chapter 166, Florida Statutes. SECTION 2: That the City of Ocoee Municipal General Employees' Retirement Trust Fund adopted by Ordinance No. 2009-020, as subsequently amended, is hereby further amended by amending Section 1, Definitions, by amending the definition of "credited service" and "Spouse", to read as follows: * * * Credited Service means the total number of years and fractional parts of years of service as a General Employee with Member contributions, when required, or effective October 1, 2006 as a Mayor or a Commissioner, omitting intervening years or fractional parts of years when such Member was not employed by the City as a General Employee or an elected official. ac a General Employee with the City of Ocoee within five (5) yea-r-s, his or - - • - • - ,9 ! 9.11 - Page 11 five (5) years, his or her Accumulated Contributions, if morc than one . . . . . - - • - •• - - - - her rights and benefits under the System are forfeited and terminated. the City of Ocoee prior to October 1, 1991. The years or parts of a year that a member performs "Qualified Military Service" consisting of voluntary or involuntary "service in the uniformed services" as defined in the Uniformed Services Employment and Reemployment Rights Act (USERRA) (P.L.103-353), after separation from employment as a General Employee to perform training or service, shall be added to his or her years of Credited Service for all purposes, including vesting, provided that: A. The Member is entitled to reemployment under the provisions of USERRA. B. The Member returns to his or her employment as a General Employee within one (1) year following the earlier of the date of his or her military discharge or his or her release from service, unless otherwise required by USERRA. C. The Member deposits into the Fund the same sum that the Member would have contributed, if any, if he or she had remained a General Employee during his or her absence. The maximum credit for military service pursuant to this subdivision shall be five (5) years. The Member must deposit all missed contributions within a period equal to three times the period of military service, but not more than five (5) years, following re-employment or he or she will forfeit the right to receive credited service for his or her military service pursuant to this paragraph. D. This paragraph is intended to satisfy the minimum requirements of USERRA. To the extent that this paragraph does not meet the minimum standards of USERRA, as it may be amended from time to time, the minimum standards shall apply. Page 12 In the event a Member dies on or after January 1, 2007, while performing USERRA Qualified Military Service, the beneficiaries of the Member are entitled to any benefits (other than benefit accruals relating to the period of qualified military service) as if the Member had resumed employment and then died while employed. Beginning January 1, 2009, to the extent required by Section 414(u)(12) of the Code, an individual receiving differential wage payments (as defined under Section 3401(h)(2) of the Code) from an employer shall be treated as employed by that employer, and the differential wage payment shall be treated as compensation for purposes of applying the limits on annual additions under Section 415(c) of the Code. This provision shall be applied to all similarly situated individuals in a reasonably equivalent manner. Leave conversions of unused accrued paid time off shall not be permitted to be applied toward the accrual of Credited Service either during each Plan Year of a Member's employment with the City or in the Plan Year in which the Member terminates employment. In the event that a Member (except a Mayor or Commissioner Member) of this System has also accumulated credited service in another pension system maintained by the City, or has a period or periods of previous employment as a General Employee, but is not eligible to receive Credited Service for this period or periods of previous employment for benefit calculation purposes, then such other credited service shall be used in determining vesting as provided for in Section 8, and for determining eligibility for early or normal retirement. Such other credited service will not be considered in determining benefits under this System. Unless otherwise provided herein, only his or her Credited Service and Salary under this System on or after his or her latest date of membership in this System will be considered for benefit calculation. In addition, any benefit calculation for a Member of this System who is or becomes eligible for a benefit from this System after he or she has become a member of another pension system maintained by the City, shall be based upon the Member's Average Final Compensation, Credited Service and benefit accrual rate as of the date the Member ceases to be a General Employee. Notwithstanding the foregoing, Tthose Members who terminated employment with the City of Ocoee prior to October 1, 1991 and who became or will become reemployed on or after October 1, 1991 shall be granted Credited Service for the total number of years and fractional parts of years of service as a General Employee with the City of Ocoee prior to October 1, 1991. Page 13 Spouse means the Member's or Retiree's spouse under applicable law at the time benefits become payable. SECTION 3: That the City of Ocoee Municipal General Employees' Retirement Trust Fund adopted by Ordinance No. 2009-020, as subsequently amended, is hereby further amended by amending Section 2, Membership, subsection 1., Conditions of Eligibility, to read as follows: 1. Conditions of Eligibility. Subject to A. of this subsection, all General Employees as of the Effective Date, and all future new General Employees, shall become Members of this System as a condition of employment. A. • - - . - - - - - - • - .. . - : - - - - - • - - his or her election not to be a member of the System. Thereupon, it shall be the duty of the Board of Trustees to refund, from the Fund, the full amount without interest, Fund. Thenceforward, except as provided for in - - - The following employees, as of the effective date, and all future new employees shall become members of this system as a condition of employment. Notwithstandinq the previous sentence, a new employee who is hired as the City Manager, Assistant City Manager or a Director may, upon employment as City Manager, Assistant City Manager or a Director, notify the board and the City, in writing, of his election to not be a member of the system. Current employees of the City who are selected to become City Manager, Assistant City Manager or Directors are not eligible for the opt-out provided for herein. In the event of any such election, the such person shall be barred from future membership in the system. Thereafter, contributions to the plan in accordance with Section 5, shall not be required, he shall not be eligible to be elected as a Page 14 member trustee on the board or vote for a member trustee, and he shall not be eligible for any other benefits from the plan. GB. Effective October 1, 2006, current and future Mayors and Commissioners, may elect to enter the System as non- contributory Members and receive Credited Service for those years, and fractional parts of years of service as an elected official with the City, determined as if they had been Members of the System on the date they took office. SECTION 4. That the City of Ocoee Municipal General Employees' Retirement Trust Fund adopted by Ordinance No. 2009-020, as subsequently amended, is hereby further amended by amending Section 8, Vesting, to read as follows: SECTION 8. VESTING. If a Member terminates his or her employment with the City, either 1. If the Member who became a Member prior to September 18, 2012 has less than five (5) years Credited Service upon deposited with the Fund. If the Member who became a {7) years Credited Service upon termination, the Member shall be entitled to a refund of his or her Accumulated 2. If the Member (except a Mage sioner Member) became a Member on or after September 18, 2012 has seven Page 15 (7) or more years of Credited Service or if a Mayor or and the benefit accrual rate as of the date of termination, otherwise normal or early retirement date, his or her designated Beneficiary shall be entitled to a benefit as Retirement under Pre Retirement Death. If the employment of a Member with the City terminates for any reason other than death or retirement, and the Member has not reached the aqe and service requirements for early or normal retirement, he or she shall be entitled to the following; 1. If the Member became a Member prior to September 18, 2012 and has fewer than five (5) years of Credited Service upon termination, or if the Member became a Member on or after September 18, 2012 and has fewer than seven (7) years of Credited Service upon termination, or if the Member is a Mayor or Commissioner Member with fewer than nine (9) years of Credited Services upon termination, the Member may make a written request for a refund of his or her Accumulated Contributions, or, pending the possibility of being re-employed by the City, the Member may leave his or her Accumulated contributions in the System for a period of up to five (5) years following the termination. The Member's Credited Service in the System shall be deemed nullified effective the date upon which the Member receives a refund of his or her Accumulated Contributions, or the date upon which the five- year period expires, whichever is earlier. The Member's Accumulated Contributions shall be refunded upon written request, or upon the expiration of the five-year period, whichever is earlier, provided that if the total of the Accumulated Contributions is greater than $1000, said contributions shall be refunded only upon the written request Page 16 of the Member, and upon the completion of a written election to receive a cash lump sum or to rollover the lump sum amount on forms designated by the Board. 2. If Paragraph 1 does not apply to the Member, the Member shall be entitled to a monthly retirement benefit, determined in the same manner as for early or normal retirement and based upon the Member's Credited Service, Average Final Compensation and the benefit accrual rate as of the date of termination, payable to him or her commencing at the Member's otherwise early or normal retirement date, determined upon his or her actual years of Credited Service, provided he or she does not elect to withdraw his or her Accumulated Contributions and provided the Member survives to his or her otherwise early or normal retirement date. If the Member does not withdraw his or her Accumulated Contributions and does not survive to his or her otherwise early or normal retirement date, his or her Designated Beneficiary shall be entitled to a benefit as provided herein for a deceased Member, vested or eligible for retirement under Pre-Retirement Death. 3. Upon Re-employment, a Member who has received a refund of his or Accumulated Contributions may restore his or her Credited Service in the System for the years to which the. refund relates, if he or she repays to the System, within 90 days of the effective date of such re-employment, the full amount of the refunded Accumulated Contributions that he or she received, plus interest as determined by the Board. The benefits relating to the Credited Service thus restored shall be determined in accordance with the Average Final Compensation and the benefit accrual rate as of the date of termination. SECTION 5: That the City of Ocoee Municipal General Employees' Retirement Trust Fund adopted by Ordinance No. 2009-020, as subsequently amended, is hereby further amended by amending Section 14, Maximum Pension, subsections 8., Ten Thousand Dollar($10,000) Limit; Less Than Ten Years of Service, to read as follows: 8. Ten Thousand Dollar($10,000) Limit; Less Than Ten Years of Service. PageI7 Notwithstanding anything in this Section 14, the retirement benefit payable with respect to a Member shall be deemed not to exceed the limit set forth in this subsection 8. of Section 14 if the benefits payable, with respect to such Member under this System and under all other qualified defined benefit pension plans to which the City contributes, do not exceed ten thousand dollars ($10,000) for the applicable limitation year and or for any prior limitation year,. and the City has not at any time maintained a qualified defined contribution plan in which the Member participated; provided, however, that if the Member has completed less than ten (10) years of Credited Service with the City, the limit under this subsection 8. of Section 14 shall be a reduced limit equal to ten thousand dollars ($10,000) multiplied by a fraction, the numerator of which is the number of the Member's years of Credited Service and the denominator of which is ten (10). * * * SECTION 6: That the City of Ocoee Municipal General Employees' Retirement Trust Fund adopted by Ordinance No. 2009-020, as subsequently amended, is hereby further amended by amending Section 16., Miscellaneous Provisions, adding subsection 9, Missing Benefit Recipients, to read as follows: * * * 9. Missing Benefit Recipients. The System shall follow the procedures outlined in the IRS Employee Plans Compliance Resolution System (EPCRS) Program and other applicable IRS guidance to locate any missing individuals to whom a full unreduced benefit payment is due and if, at the conclusion of such efforts, the individual cannot be located, the existing procedure of cancelling payments otherwise due (provided that, if the individual is later located, the benefits due shall be paid) will apply. SECTION 7: That the City of Ocoee Municipal General Employees' Retirement Trust Fund adopted by Ordinance No. 2009-020, as subsequently amended, is hereby further amended by amending Section 24, Reemployment After Retirement, subsection 1., 4., and 6., to read as follows: SECTION 24. REEMPLOYMENT AFTER RETIREMENT. 1. Any Retiree who is retired under this System, except for - - • - • - •• - • - - - - - - - •- "e - , may be reemployed by any public or private employer, except the City, and may receive compensation Page 18 from that employment without limiting or restricting in any way the retirement benefits payable under this system. Notwithstanding the previous sentence, reemployment by the City shall be subject to the limitations set forth in this Section. * * * 4. After early or Disability retirement. Any Retiree who is retired under early or disability retirement pursuant to this System and who subsequently becomes an employee of the City in any capacity, shall discontinue receipt of benefits from the System until the earlier of termination of employment or such time as the reemployed Retiree reaches age sixty-two (62). A Retiree who returns to work under the provisions of this Section shall not be eligible for membership in the System, and, therefore, shall not accumulate additional Credited Service for subsequent periods of employment described in this section, shall not be required to make contributions to the system, nor shall he or she be eligible for any other benefit other than the Retiree's early retirement benefit when he or she again becomes eligible as provided herein. Retirement pursuant to an early retirement incentive program shall be deemed early retirement for purposes of this Section if the Member was permitted to retire prior to the customary retirement date provided for in the System at the time of retirement. * * * 6. DROP Participants. Retirees who are-or were in the Deferred Retirement Option Plan shall, following termination of employment after DROP participation, have the options provided for in this section for reemployment. * * * SECTION 8: That the City of Ocoee Municipal General Employees' Retirement Trust Fund adopted by Ordinance No. 2009-020, as subsequently amended, is hereby further amended by amending Section 25, Deferred Retirement Option Plan, to read as follows: SECTION 25. DEFERRED RETIREMENT OPTION PLAN. 1. Definitions. As used in this Section 25, the following definitions apply:" Page 19 A. "DROP" -- The Ocoee General Employees' Deferred Retirement Option Plan. B. "DROP Account" -- The account established for each DROP participant under subsection 3. C. "Total Return of the Assets" -- For purposes of calculating earnings on a Member's DROP Account pursuant to subsection 3.B.(2)(b)., for each fiscal year quarter, the percentage increase (or decrease) in the interest and dividends earned on investments, including realized and unrealized gains (or losses), of the total Plan assets. 2. Participation. A. Eligibility to Participate. In lieu of terminating his or her employment as a General Employee, any Member who became a Member prior to September 18, 2012 and who is eligible for normal retirement under the System may elect to defer receipt of such service retirement pension and to participate in the DROP. Any Member who became a Member on or after September 18, 2012 must have a minimum of ten (10)years Credited Service and be eligible for normal retirement. B. Election to Participate. A Member's election to participate in the DROP must be made in writing in a time and manner determined by the Board and shall be effective on the first day of the first calendar month which is at least fifteen (15) business days after it is received by the Board. C. Period of participation. A Member who became a Member prior to September 18, 2012 who elects to participate in the DROP under subsection 2.B., shall participate in the DROP for a period not to exceed eighty-four (84) months beginning on the date which the Member first becomes eligible for normal retirement. A Member who became a Member on and after September 18, 2012 who elects to participate in the DROP under section 2.B., shall participate in the DROP for a period not to exceed Page 110 sixty (60) months beginning on the date which the Member first becomes eligible for normal retirement. An election to participate in the DROP shall constitute an irrevocable election to resign from the service of the City at the time of election into the DROP. A Member may participate only once. D. Termination of Participation. (1) A Member's participation in the DROP shall cease at the earlier of: (a) the end of his or her permissible period of participation in the DROP as determined under subsection 2.C.; or (b) termination of his or her employment as a General Employee. (2) Upon the Member's termination of participation in the DROP, pursuant to subsection(a) above, all amounts provided for in subsection 3.B., including monthly benefits and investment earnings and losses or interest, shall cease to be transferred from the System to his or her DROP Account. Any amounts remaining in his or her DROP Account shall be paid to him or her in accordance with the provisions of subsection 4. when he or she terminates his or her employment as a General Employee. (3) A Member who terminates his or her participation in the DROP under this subsection 2.D. shall not be permitted to again become a participant in the DROP. E. Effect of DROP Participation on the System. (1) A Member's Credited Service and his or her accrued benefit under the System shall be determined on the date his or her election to participate in the DROP first becomes effective. For purposes of determining the accrued benefit, the Member's Salary for the purposes of calculating his or her Average Final Compensation shall include an amount equal to any lump sum payments which would have been paid to the Member and included as Salary as defined herein, had the Page 111 Member retired under normal retirement and not elected DROP participation. Member contributions attributable to any lump sums used in the benefit calculation and not actually received by the Member shall be deducted from the first payments to the Member's DROP Account. The Member shall not accrue any additional Credited Service or any additional benefits under the System (except for any additional benefits provided under any cost-of-living adjustment for Retirees in the System) while he or she is a participant in the DROP. After a Member commences participation, he or she shall not be permitted to again contribute to the System nor shall he or she be eligible for disability or pre-retirement death benefits, except as provided for in Section 24, Reemployment After Retirement. After a Member commences participation in the DROP, no changes to such Member's form of benefit election shall be permitted. (2) No amounts shall be paid to a Member from the System while the Member is a participant in the DROP. Unless otherwise specified in the System, if a Member's participation in the DROP is terminated other than by terminating his or her employment as a General Employee, no amounts shall be paid to him or her from the System until he or she terminates his or her employment as a General Employee. Unless otherwise specified in the System, amounts transferred from the System to the Member's DROP Account shall be paid directly to the Member only on the termination of his or her employment as a General Employee. 3. Funding. A. Establishment of DROP Account. A DROP Account shall be established for each Member participating in the DROP. A Member's whose DROP participation began prior to September 18, 2012 shall have a DROP Account consisting of amounts transferred to the DROP under subsection 3.B., and earnings or interest on those amounts. Page 112 A Member whose DROP participation began on or after September 18, 2012 shall have a DROP Account consisting of amounts transferred to the DROP under subsection 3.C. and interest on those amounts. B. Transfers From Retirement System. (1) As of the first day of each month of a Member's period of participation in the DROP, the monthly retirement benefit he or she would have received under the System had he or she terminated his or her employment as a General Employee and elected to receive monthly benefit payments thereunder shall be transferred to his or her DROP Account, except as otherwise provided for in subsection 2.D.(2). A Member's period of participation in the DROP shall be determined in accordance with the provisions of subsections 2.C. and 2.D., but in no event shall it continue past the date he or she terminates his or her employment as a General Employee. (2) Except as otherwise provided in subsection 2.D.(2), a Member's DROP Account under this subsection 3.B. shall be debited or credited with either: (a) Interest at an effective rate of six and one-half percent (6.5%) per annum compounded monthly determined on the last business day of the prior month's ending balance and credited to the Member's DROP Account as of such date (to be applicable to all current and future DROP participants); or (b) Earnings, to be credited or debited to the Member's DROP Account, determined as of the last business day of each fiscal year quarter and debited or credited as of such date, determined as follows: The average daily balance in a Member's DROP Account shall be credited or debited at a rate equal to the actual net rate of investment return realized by the System for that quarter. "Net investment return" for the purpose of this Page 113 paragraph is the total return of the assets in which the Member's DROP Account is invested by the Board net of brokerage commissions, transaction costs and management fees. For purposes of calculating earnings on a Member's DROP Account pursuant to this subsection 3.B.(2)(b)., brokerage commissions, transaction costs, and management fees shall be determined for each quarter by the investment consultant pursuant to contracts with fund managers as reported in the custodial statement. The investment consultant shall report these quarterly contractual fees to the Board. The investment consultant shall also report the net investment return for each manager and the net investment return for the total Plan assets. Upon electing participation in the DROP, the Member shall elect to receive either interest or earnings on his or her account to be determined as provided above. The Member may, in writing, elect to change his or her election only once during his or her DROP participation. An election to change must be made prior to the end of a quarter and shall be effective beginning the following quarter. (3) A Member's DROP Account shall only be credited or debited with earnings or interest and monthly benefits while the Member is a participant in the DROP. A Member's final DROP account value for distribution to the Member upon termination of participation in the DROP shall be the value of the account at the end of the quarter immediately preceding termination of participation for participants electing the net plan return and at the end of the month immediately preceding termination of participation for participants electing the flat interest rate return plus any monthly periodic additions made to the DROP account subsequent to the end of the previous quarter or month, as applicable, and prior to distribution. If a Member fails to terminate employment after participating in the DROP the permissible period of DROP participation, then Page 114 beginning with the Member's 1st month of employment following the last month of the permissible period of DROP participation, the Member's DROP Account will no longer be credited or debited with earnings or interest, nor will monthly benefits be transferred to the DROP account. All such non-transferred amounts shall be forfeited and continue to be forfeited while the Member is employed by the City, and not cost-of-living adjustments shall be applied to the Member's credit during such period of continued employment. A Member employed by the City after the permissible period of DROP participation will still not be eligible for pre-retirement death or disability benefits, nor will he or she accrue additional Credited Service, except as provided for Section 24, Reemployment After Retirement. C. Transfers From Retirement System. (1) As of the first day of each month of a Member's period of participation in the DROP, the monthly retirement benefit he or she would have received under the System had he or she terminated his or her employment as a General Employee and elected to receive monthly benefit payments thereunder shall be transferred to his or her DROP Account, except as otherwise provided for in subsection 2.D.(2). A Member's period of participation in the DROP shall be determined in accordance with the provisions of subsections 2.C. and 2.D., but in no event shall it continue past the date he or she terminates his or her employment as a General Employee. (2) Except as otherwise provided in subsection 2.D.(2), a Member's DROP Account under this subsection 3.C. shall be credited with interest at an effective rate of three percent (3%) per annum compounded monthly determined on the last business day of the prior month's ending balance. (3) A Member's DROP Account shall only be credited with interest and monthly benefits while the Member is a participant in the DROP. A Member's final DROP account value for distribution to the Member upon Page 115 termination of participation in the DROP shall be the value of the account at the end of the quartermonth immediately preceding termination of participation plus any monthly periodic additions made to the DROP account subsequent to the end of the previous quaftermonth and prior to distribution. If a Member fails to terminate employment after participating in the DROP the permissible period of DROP participation, then beginning with the Member's 1st month of employment following the last month of the permissible period of DROP participation, the Member's DROP Account will no longer be credited with interest, nor will monthly benefits be transferred to the DROP account. All such non-transferred amounts shall be forfeited and continue to be forfeited while the Member is employed by the City, and no cost-of-living adjustments shall be applied to the Member's credit during such period of continued employment. A Member employed by the City after the permissible period of DROP participation will still not be eligible for pre-retirement death or disability benefits, nor will he or she accrue additional Credited Service, except as provided for Section 24, Reemployment After Retirement. 4. Distribution of DROP Accounts on Termination of Employment. A. Eligibility for Benefits. A Member shall receive the balance in his or her DROP Account in accordance with the provisions of this subsection 4. upon his or her termination of employment as a General Employee. Except as provided in subsection 4.E., no amounts shall be paid to a Member from the DROP prior to his or her termination of employment as a General Employee. B. Form of Distribution. (1) Unless the Member elects otherwise, distribution of his or her DROP Account shall be made in a cash lump sum, subject to the direct rollover provisions set forth in subsection 4.F. Elections under this paragraph shall be in writing and shall be made in such time or manner as the Board shall determine. Page I 16 (2) If a Member dies before his or her benefit is paid, his DROP Account shall be paid to his Beneficiary in such optional form as his or her Beneficiary may select. If no Beneficiary designation is made, the DROP Account shall be distributed to the Member's estate. C. Date of Payment of Distribution. Except as otherwise provided in this subsection 4., distribution of a Member's DROP Account shall be made as soon as administratively practicable following the Member's termination of employment. Distribution of the amount in a Member's DROP account will not be made unless the Member completes a written request for distribution and a written election, on forms designated by the Board, to either receive a cash lump sum or a rollover of the lump sum amount. D. Proof of Death and Right of Beneficiary or Other Person. The Board may require and rely upon such proof of death and such evidence of the right of any Beneficiary or other person to receive the value of a deceased Member's DROP Account as the Board may deem proper and its determination of the right of that Beneficiary or other person to receive payment shall be conclusive. E. Distribution Limitation. Notwithstanding any other provision of this subsection 4., all distributions from the DROP shall conform to the "Minimum Distribution of Benefits" provisions as provided for herein. F. Direct Rollover of Certain Distributions. This subsection applies to distributions made on or after January 1, 2002. Notwithstanding any provision of the DROP to the contrary, a distributee may elect to have any portion of an eligible rollover distribution paid in a direct rollover as otherwise provided under the System in Section 23. 5. Administration of DROP. A. Board Administers the DROP. Page 117 The general administration of the DROP, the responsibility for carrying out the provisions of the DROP and the responsibility of overseeing the investment of the DROP's assets shall be placed in the Board. The members of the Board may appoint from their number such subcommittees with such powers as they shall determine; may adopt such administrative procedures and regulations as they deem desirable for the conduct of their affairs; may authorize one or more of their number or any agent to execute or deliver any instrument or make any payment on their behalf; may retain counsel, employ agents and provide for such clerical, accounting, actuarial and consulting services as they may require in carrying out the provisions of the DROP; and may allocate among themselves or delegate to other persons all or such portion of their duties under the DROP, other than those granted to them as Trustee under any trust agreement adopted for use in implementing the DROP, as they, in their sole discretion, shall decide. A Trustee shall not vote on any question relating exclusively to himself. B. Individual Accounts, Records and Reports. The Board shall maintain, records showing the operation and condition of the DROP, including records showing the individual balances in each Member's DROP Account, and the Board shall keep, in convenient form such data as may be necessary for the valuation of the assets and liabilities of the DROP. The Board shall prepare and distribute to Members participating in the DROP and other individuals or filed with the appropriate governmental agencies, as the case may be, all necessary descriptions, reports, information returns, and data required to be distributed or filed for the DROP pursuant to the Code, the applicable portions of the Act and any other applicable laws. C. Establishment of Rules. Subject to the limitations of the DROP, the Board from time to time shall establish rules for the administration of the DROP and the transaction of its business. The Board shall have discretionary authority to construe and interpret the DROP (including but not limited to determination of an individual's eligibility for DROP participation, the right and amount of any benefit payable under the DROP and the date on which any Page 1 18 individual ceases to be a participant in the DROP). The determination of the Board as to the interpretation of the DROP or its determination of any disputed questions shall be conclusive and final to the extent permitted by applicable law. D. Limitation of Liability. (1) The Trustees shall not incur any liability individually or on behalf of any other individuals for any act or failure to act, made in good faith in relation to the DROP or the funds of the DROP. (2) Neither the Board nor any Trustee of the Board shall be responsible for any reports furnished by any expert retained or employed by the Board, but they shall be entitled to rely thereon as well as on certificates furnished by an accountant or an actuary, and on all opinions of counsel. The Board shall be fully protected with respect to any action taken or suffered by it in good faith in reliance upon such expert, accountant, actuary or counsel, and all actions taken or suffered in such reliance shall be conclusive upon any person with any interest in the DROP. 6. General Provisions. A. The DROP Is Not a Separate Retirement Plan. Instead, it is a program under which a Member who is eligible for normal retirement under the System may elect to accrue future retirement benefits in the manner provided in this section 25 for the remainder of his employment, rather than in the normal manner provided under the plan. Upon termination of employment, a Member is entitled to a lump sum distribution of his or her DROP Account balance or may elect a rollover. The DROP Account distribution is in addition to the Member's monthly benefit. B. Notional Account. The DROP Account established for such a Member is a notional account, used only for the purpose of calculation of the DROP distribution amount. It is not a separate account in the System. There is no change in the System's assets and Page 119 there is no distribution available to the Member until the Member's termination from the DROP. The Member has no control over the investment of the DROP Account. C. No Employer Discretion. The DROP benefit is determined pursuant to a specific formula which does not involve employer discretion. D. IRC Limit. The DROP account distribution, along with other benefits payable from the System, is subject to limitation under Internal Revenue Code Section 415(b). E. Amendment of DROP. The DROP may be amended by an ordinance of the City at any time and from time to time, and retroactively if deemed necessary or appropriate, to amend in whole or in part any or all of the provisions of the DROP. However, except as otherwise provided by law, no amendment shall make it possible for any part of the DROP's funds to be used for, or diverted to, purposes other than for the exclusive benefit of persons entitled to benefits under the DROP. No amendment shall be made which has the effect of decreasing the balance of the DROP Account of any Member. F. Facility of Payment. If a Member or other person entitled to a benefit under the DROP is unable to care for his or her affairs because of illness or accident or is a minor, the Board shall direct that any benefit due him or her shall be made. Any payment so made shall be a complete discharge of the liabilities of the DROP for that benefit. G. Information. Each Member, Beneficiary or other person entitled to a benefit, before any benefit shall be payable to him or her on his or her account under the DROP, shall file with the Board the information that it shall require to establish his or her rights and benefits under the DROP. Page 120 H. Prevention of Escheat. receiving advise-from-sou-mei to the System, direct that such or her under the DROP, the amount so applied shall be paid to him WI. Written Elections, Notification. (1) Any elections, notifications or designations made by a Member pursuant to the provisions of the DROP shall be made in writing and filed with the Board in a time and manner determined by the Board under rules uniformly applicable to all employees similarly situated. The Board reserves the right to change from the time and manner for making notifications, elections or designations by Members under the DROP if it determines after due deliberation that such action is justified in that it improves the administration of the DROP. In the event of a conflict between the provisions for making an election, notification or designation set forth in the DROP and such new administrative procedures, those new administrative procedures shall prevail. (2) Each Member or Retiree who has a DROP Account shall be responsible for furnishing the Board with his or her current address and any subsequent changes in his or her address. Any notice required to be given to a Member or Retiree hereunder shall be deemed given if directed to him or her at the last such address given to the Board and mailed by registered or certified United States mail. If any check mailed by registered or certified United States mail to such address is returned, mailing of checks will be suspended until such Page 121 time as the Member or Retiree notifies the Board of his or her address. JI. Benefits Not Guaranteed. All benefits payable to a Member from the DROP shall be paid only from the assets of the Member's DROP Account and neither the City nor the Board shall have any duty or liability to furnish the DROP with any funds, securities or other assets except to the extent required by any applicable law. KJ. Construction. (1) The DROP shall be construed, regulated and administered under the laws of Florida, except where other applicable law controls. (2) The titles and headings of the subsections in this Section 25 are for convenience only. In the case of ambiguity or inconsistency, the text rather than the titles or headings shall control. LK. Forfeiture of Retirement Benefits. Nothing in this Section shall be construed to remove DROP participants from the application of any forfeiture provisions applicable to the System. DROP participants shall be subject to forfeiture of all retirement benefits, including DROP benefits. ML. Effect of DROP Participation on Employment. Participation in the DROP is not a guarantee of employment and DROP participants shall be subject to the same employment standards and policies that are applicable to employees who are not DROP participants. SECTION 9. Severability. In the event any section, subsection, paragraph, sentence, clause, phrase or word of this ordinance shall be held invalid by a court of competent jurisdiction, then such invalidity shall not affect the remaining portions hereof. SECTION 10. Repeal of Ordinances. All ordinances or parts of ordinances in conflict herewith are hereby repealed. Page 122 SECTION 11. Effective Date. This ordinance shall be effective on the date of adoption. PASSED AND ADOPTED this day of , 2019. APPROVED: ATTEST: CITY OF OCOEE, FLORIDA By: City Clerk Mayor (SEAL) ADVERTISED , 2019 READ FIRST TIME , 2019 READ SECOND TIME AND ADOPTED , 2019 FOR USE AND RELIANCE ONLY BY THE CITY OF OCOEE, FLORIDA APPROVED AS TO FORM AND LEGALITY THIS day of , 2019 By APPROVED BY THE OCOEE CITY COMMISSION AT A MEETING HELD ON , 2019 UNDER AGENDA ITEM NO. Page 123