HomeMy WebLinkAbout4591 Amend Police Officer's' Pension Section 66-76Ordinance No. 2021-4591
AN ORDINANCE OF THE CITY OF SANFORD, FLORIDA, AMENDING
CHAPTER 66, PENSIONS AND RETIREMENT, ARTICLE 11, POLICE
OFFICERS' RETIREMENT SYSTEM OF THE CODE OF ORDINANCES
OF THE CITY OF SANFORD; AMENDING SECTION 66-36, BENEFIT
AMOUNTS AND ELIGIBILITY, SUBSECTION (G), MINIMUM
DISTRIBUTION OF BENEFITS, TO PROVIDE FOR COMPLIANCE WITH
THE SECURE ACT; PROVIDING FOR LEGISLATIVE FINDINGS AND
INTENT; PROVIDING FOR CONFLICTS; PROVIDING FOR A SAVINGS
PROVISION; PROVIDING FOR CODIFICATION; PROVIDING FOR
SEVERABILITY AND PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, the Setting Every Community Up for Retirement Enhancement
("SECURE") Act, signed into law on December 20, 2019, amended the definition of
"Required Beginning Date" under Section 401(a)(9) of the Internal Revenue Code; and
WHEREAS, amendments to the Plan are necessary to conform the Retirement
System to the requirements of the SECURE Act; and
WHEREAS, the Board of Trustees of the City of Sanford Police Officers'
Retirement System has recommended an amendment to the Retirement System to
comply with the SECURE Act; and
WHEREAS, the trustees of the City of Sanford Police Officers' Retirement System
have requested and approved the amendments provided herein as being in the best
interests of the participants and beneficiaries and improving the administration of the
Fund, and
WHEREAS, the City Commission has received and reviewed an actuarial impact
statement related to this change and attached as such; and
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For the purposes of this Ordinance, underlined type shall constitute additions to the original text, * * * shall
constitute ellipses to the original text and strikethrouggh shall constitute deletions to the original text.
WHEREAS, the City Commission deems it to be in the public interest to provide
this change to the Retirement System for its Police Officers;
Be it Enacted by the People of the City of Sanford, Florida:
Section 1. Legislative findings and intent.
(a) The City Commission of the City of Sanford hereby adopts and incorporates
into this Ordinance the City staff report and City Commission agenda memorandum
relating to this ordinance.
(b) The City of Sanford has complied with all requirements and procedures of
Florida law in processing and advertising this Ordinance.
Section 2. Police Officers' Retirement System. Chapter 66, Article 11, Code
of Ordinances of the City of Sanford, is hereby amended to read as follows by amending
Section 66-36, Benefit amounts and eligibility, subsection (g), Minimum distribution of
benefits, sub -subsection (2), Time and manner of distribution, as follows:
66-36. — Benefit amounts and eligibility.
(g) Minimum distribution of benefits.
(2) Time and manner of distribution.
a. Required beginning date. The member's entire interest
will be distributed, or begin to be distributed, to the
member no later than:
1 With regard to distributions required to be made
to a member who reaches age 70 Y2 before
January 1, 2020: no lateF than the MeR;beF'6
reqUiFed b gi te wNGh -hall not be latef
2
For the purposes of this Ordinance, underlined type shall constitute additions to the original text, shall
constitute ellipses to the original text and strikethrout
yh shall constitute deletions to the original text,
than April 1 of the calendar year following the
later of the calendar year in which the member
attains age seventy and one-half (70'!x);, or 6p!2
1 of the calendar year in which the member
terminates employment with the district,,
whichever is later.
2. With regard to distributions required to be made
on or after January 1, 2020 to a participant who
reaches the age of 70 Y2 on or after said date:
April 1 of the calendar year that next follows the
calendar year in which the participant attains or
will attain the age of 72 years, or April 1 of the
calendar year that next follows the calendar
year in which the participant retires, whichever
is later.
Section 3. Savings. The prior actions of the City of Sanford relating to the
administration of the Police Officers' retirement system and related matters are hereby
ratified and affirmed.
Section 4. Conflicts. All Ordinances or parts of Ordinances in conflict with this
Ordinance are hereby repealed.
Section 5. Severability. If any section, sentence, phrase, word, or portion of
this ordinance is determined to be invalid, unlawful or unconstitutional, said determination
shall not be held to invalidate or impair the validity, force or effect of any other section,
sentence, phrase, word, or portion of this Ordinance not otherwise determined to be
invalid, unlawful, or unconstitutional.
Section 6. Codification. Section 2 of this Ordinance shall become and be
made a part of the Code of Ordinances of the City of Sanford, Florida.
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For the purposes of this Ordinance, underlined type shall constitute additions to the original text, * * * shall
constitute ellipses to the original text and strikethrough shall constitute deletions to the original text.
Section 7. Effective Date. This Ordinance shall become effective upon
passage; however, the provisions of this Ordinance that are specified to take effect as of
a date certain shall take effect as of the date specified herein.
Passed and Adopted this 8th day of February, A.D. 2020.
City Commission
Sanford, Florida,
7—A o' rd "aYor
Attest:
MI I R IW.?��WKAWWWMW- M—MMENIQ U
LOU Fol A Ism kyj I kyj 101111111001 R
Approved as to form and legal sufficiency:
Wift-iam L. Colbert, City Attorney
V,
of the City of
For the purposes of this Ordinance, underlined type shall constitute additions to the original text, * * * shall
constitute ellipses to the original text and strikethroug-h shall constitute deletions to the original text.
Robert A. Sugarman♦
Howard S. Susskind
Kenneth R. Harrison, Sr.
D. Marcus Braswell, Jr.
Pedro A. Herrera
David Robinson
Ivelisse Berio LeBeau
♦Board Certified Labor
& Employment Lawyer
SUGARMAN & SUSSKIND
PROFESSIONAL ASSOCIATION
ATTORNEYS AT LAW
January 2020
SECURE ACT
and
100 Miracle Mile
Suite 300
Coral Gables, Florida 33134
(305) 529-2801
Toll Free (800) 329-2122
Facsimile (305) 447-8115
ANNUAL LIMITS UNDER THE INTERNAL REVENUE CODE
SECURE ACT
On December 20, 2019, President Trump signed into law an appropriations bill that contained
several amendments to the Internal Revenue Code, including some that were presented in a bill
entitled the SECURE ("Setting Every Community Up for Retirement Enhancement") Act.
While many of the amendments contained in the law do not affect governmental plans such as
yours, certain changes would require Board action.
SOME PARTICIPANTS CAN DEFER TAXES ON THEIR ACCRUED BENEFITS JUST A LITTLE BIT LONGER:
The most significant of the amendments that affect our governmental plan is the increase in age
at which Required Minimum Distributions ("RIVIDs") must begin.
Contained in Section 401(a)(9) of the Internal Revenue Code, the Required Minimum Distribution
rules limit the tax deferral of retirement benefits, by requiring that qualified plans begin to pay
benefits to participants (and thus that the participant begin to pay taxes on the benefits) by a
certain age. Prior to the Secure Act, that age was the later of 70 '%2 or the age at which the
participant retires. The Secure Act amended Section 401(a)(9) of the Internal Revenue Code by
raising the age at which benefits must commence to 72 (or the age at which the participant retires,
whichever is later).
The change is effective with respect to participants who reach the age of 701/2 on or after January
1, 2020. Participants affected by the change will thus be able to defer taxes on their accrued
benefit just a little bit longer.
We will review your plan document to determine whether an amendment to the plan is necessary
to provide for the increased RIVID age.
PARTICIPANTS CAN RECEIVE WORKING RETIREMENT BENEFITS EARLIER:
As a general rule, qualified plans must provide for the payment of benefits after retirement. Under
certain conditions, however, qualified plans may allow participants to begin to receive benefits
even before the person has stopped working for the employer that sponsors the plan. This is
commonly referred to as an "in-service distribution." Section 401(a)(36) of the Internal Revenue
Code provides one such exception to the general rule.
Prior to the Secure Act, plans were permitted to begin to pay benefits to a participant who was
still working for the employer that sponsored the plan once the participant reached the age of 62.
The Secure Act amended Section 401(a)(36) by lowering that age to 59 Y2. That means that a
plan may provide that a participant who is still working for the employer that sponsors the plan
may begin to receive benefits under the plan once the participant reaches the age of 59 Y2.
Qualified plans are still permitted to make payments to participants who are even younger than
591/2and who are still working for the plan sponsor, but additional conditions must be satisfied.
First, the participant must have reached the plan's normal retirement age. Second, the plan's
normal retirement age must not be unreasonably young. In other words, the normal retirement
age must reasonably represent the age at which employees in the relevant industry retire. On
January 27, 2016, the IRS promulgated proposed regulations with safe harbor guidelines to help
governmental plans establish a reasonable normal retirement age.
We will review your plan document to determine whether an amendment to the plan is necessary
and discuss any possible ramifications with the Board.
MISCELLANEOUS CHANGES THAT Do NOT DIRECTLY IMPACT GOVERNMENTAL DEFINED BENEFIT
PLANS SUCH As YOURS:
* -457 Plan Distributions
Also of interest to governmental employees—though not of direct impact on this plan—is
the lowering of the age at which employees may access their 457 plans unconditionally.
Under the new law, 457 account balances may be made available to the participant in the
calendar year in which the participant attains age 59 1/2. Prior to the amendment, the
minimum age was 70'/2
* Removal of 70 Y2 age limit on contributions to IRAs
Prior to the new law, contributions to traditional IRAs were no longer permitted beyond the
age of 70 Y2. Under the Act, employees may continue to contribute to an IRA as long as
they are working.
* Change in rules to Inherited IRAs
An individual who inherits an IRA (unless the individual inheriting the IRA is the spouse,
minor child or disabled beneficiary of the original owner, or is less than ten years younger
than the original IRA owner) must withdraw the assets of the IRA within ten years following
the date of death of the original IRA owner.
* Qualified Birth o[Adoption Distribution
Participants in defined contribution plans are permitted to withdraw up to $5.000 in
connection with the birth or adoption of a child.
ANNUAL INTERNAL REVENUE CODE LIMITS
Each year the Internal Revenue Service determines certain benefit and compensation limits
applicable to qualified plans. For 2020, the limits are as follows:
• The contribution limit for employees participating in 4010i' 457 and 403<b\ plans
increases from $19,000 to 819.500. By cOM1naot the |irnb on annual |F0\ contributions
nanoainm unchanged at $6,000. Ukexviee, the additional catch-up contribution limit for
individuals aged 5Oand over imalso unchanged at $1.000.
* The limitation on the annual benefit under a defined benefit (DB) plan under § 415(b)(1)(A)
increases from $225.00Oto$23D'OOO.
* The annual compensation limit under §8 401(@)(17). 404U\. 408(k)(3)/C)'
and4O8/N/G\(0)(ii)increases from $28O.00OtO$285.00.
* The limitation for defined contribution (C)C) plans under § 415(c)(1)/A) increases from
$56.000tn$57.000.
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WS u RM
Item No. I - P
CITY COMMISSION MEMORANDUM 21.044
FEBRUARY 8, 2021 AGENDA
To: Honorable Mayor and Members of the City Commission
PREPARED BY: Cynthia Lindsay, Finance Director
SUBMITTED BY: Norton N. Bonaparte, Jr., City Manage
SUBJECT: City of Police Officers' Retirement SystProposed Ordinance
, Z
STRATEGIC PRIORITIES:
❑ Unify Downtown & the Waterfront
❑ Promote the City's Distinct Culture
F] Update Regulatory Framework
F] Redevelop and Revitalize Disadvantaged Communities
SYNOPSIS:
An ordinance has been prepared amending Section 66-36 of the Police Officers' Retirement System
for the City Commission's consideration.
FISCAL/STAFFING STATEMENT:
The Police Pension Board's actuary, Foster & Foster, Inc., advised there is no cost associated with
the adoption of this ordinance.
I -= �., �.-o �29
At the November 5, 2020 Police Officers' Pension Board meeting, the board unanimously
recommended amending the following section of the Police Officers' Retirement System to comply
with changes per the "SECURE" Act.
Section 66-76, Benefit Amounts and Eligibility, subsection (g) Minimum distribution
of benefits, is being amended to change the minimum required distribution age from 70
V2 to 72 as requires per the "SECURE" Act.
LEGAL REVIEW:
The ordinance has been prepared by the Police Officers' Pension Board attorney.
The City Commission approved the first reading of Ordinance No. 4591 on January 25, 2021.
The City Clerk published notice of the 2°d Public Hearing in the Sanford Herald on February 7, 2021.
RECOMMENDATION:
The Police Officers' Pension Board recommends the City Commission Ordinance No.4591.
SUGGESTED MOTION:
"I move to adopt Ordinance No. 4591."
Attachments: Report from the Law Offices of Sugarman & Susskind
Actuarial Impact Letter from Foster & Foster Actuaries
Ordinance No. 4591
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