§ 33.685. DEFERRED RETIREMENT OPTION PLAN.

(A)

Effective January 1, 1994, any employee with at least twenty (20) but not more than thirty (30) years of continuous service as a member of the system may elect to participate in the Deferred Retirement Option Plan in accordance with this Section.

(B)

An employee's election to participate in the Deferred Retirement Option Plan must be made in writing and shall become effective thirty (30) days following the date it is received by the Board of Trustees, or on a later date specified by the employee.

(C)

An employee who elects to participate in the Deferred Retirement Option Plan may participate in such plan for a maximum of sixty (60) continuous months. If upon the effective date of the employee's election there are less than sixty (60) months before the employee attains thirty (30) years of continuous service, the employee may participate in the Deferred Retirement Option Plan only until thirty (30) years of service is attained.

(D)

An employee's continuous service and accrued benefit under the system shall be determined on the effective date of the employee's election to participate in the Deferred Retirement Option Plan. An employee who elects to participate in the Deferred Retirement Option Plan shall not accrue any additional continuous service or benefits under the system, except for additional benefits provided under the retirement benefit enhancement, if applicable, while participating in the Deferred Retirement Option Plan. No amounts shall be paid to an employee from the system while the employee is a participant in the Deferred Retirement Option Plan.

(E)

A Deferred Retirement Option Plan account shall be established for each employee who elects to participate in the Deferred Retirement Option Plan in accordance with this Section. During the period of the employee's participation in the Deferred Retirement Option Plan, the employee's normal retirement benefit, calculated in accordance with Subsection 33.62(B) based on average monthly earnings and continuous service as of the effective date of the employee's election to participate in the Deferred Retirement Option Plan, shall be paid into the employee's Deferred Retirement Option Plan account. The employee's Deferred Retirement Option Plan account shall be invested by the Board of Trustees and credited with interest equal to the overall net rate of return on retirement fund assets during the period the employee participates in the Deferred Retirement Option Plan. Effective July 1, 2001, the Board of Trustees, in its sole discretion, may select a third-party administrator and establish a separate plan for DROP accounts to be invested by participating employees in accordance with an agreement between the participating employee and the third-party administrator. Employees who are participating in the DROP as of July 1, 2001, may elect to participate in the self-directed investment program. Employees who elect to participate in the DROP after July 1, 2001, shall be required to participate in the self-directed investment program as a condition of participating in the DROP. The Board of Trustees may adopt any necessary rules to administer the DROP in accordance with applicable provisions of the Internal Revenue Code and regulations adopted thereunder.

(F)

At the conclusion of the employee's participation in the Deferred Retirement Option Plan, and as a condition of participating in such plan, the employee will retire and terminate City employment. The employee will thereafter receive a normal retirement benefit calculated in accordance with Subsection 33.62(B) based on average monthly earnings and continuous service as of the effective date of the employee's election to participate in the Deferred Retirement Option Plan. The employee's Deferred Retirement Option Plan account will thereafter be distributed to the employee in a cash lump sum, unless the employee elects an alternative distribution as described below:

(1)

Payments in approximately equal monthly, quarterly or annual installments over a period designated by the employee, not to exceed the life expectancy of the employee or the joint life expectancy of the employee and the employee's designated beneficiary. In the event that the employee dies before all installments have been paid, the remaining balance in the employee's Deferred Retirement Option Plan account shall be paid in an immediate cash lump sum to the employee's designated beneficiary.

(2)

The purchase of a nonforfeitable fixed annuity payable in such form as the employee may elect. Elections under this Subsection (2) shall be in writing and shall be made in such time or manner as the Board of Trustees shall determine. If the annuity form selected is not a qualified joint and fifty (50) percent survivor annuity with the employee's spouse as the beneficiary, the annuity payable to the employee and thereafter to the employee's beneficiary shall be subject to the incidental death benefit rule as described in section 401(a)9g of the Internal Revenue Code and applicable regulations.

(G)

Notwithstanding the provisions of the foregoing paragraph (F), if an employee dies before distribution of the employee's Deferred Retirement Option Plan account commences, the account balance shall be paid to the employee's beneficiary in such optional form as the beneficiary may select.

(H)

Except as otherwise provided in this Section, distribution of an employee's Deferred Retirement Option Plan account shall begin as soon as administratively practicable following the employee's termination of employment. An employee may, in accordance with such procedures as the Board of Trustees may prescribe, elect to defer distribution of the Deferred Retirement Option Plan account until the first day of any month coincident with or following the employee's termination of City employment; provided, however, distribution shall be made before the distribution date elected by the employee to the extent necessary to comply with the internal revenue code and regulations thereunder. Any amounts in an employee's Deferred Retirement Option Plan account shall continue to be invested by the Board of Trustees and shall be credited with the net investment return on the Fund until the balance of the Deferred Retirement Option Plan account is fully distributed to the employee or the employee's beneficiary.

(I)

In no event shall the provisions of this Section operate so as to allow the distribution of an employee's Deferred Retirement Option Plan account to begin later than April 1 following the later of the calendar year in which the employee terminates city employment or attains age seventy and one-half (70½).

(J)

Notwithstanding any other provision of this Section, all distributions from employee Deferred Retirement Option Plan accounts shall conform to applicable provisions of the Internal Revenue Code and regulations issued thereunder.

(K)

Notwithstanding any provision of this Section to the contrary, an employee or beneficiary receiving distributions from a Deferred Retirement Option Plan account may elect, at the time and in the manner prescribed by the Board of Trustees, to have any portion of an eligible rollover distribution paid directly from the Deferred Retirement Option Plan account to an eligible retirement plan specified by the employee/beneficiary in a direct rollover. The following definitions apply to the terms used in this paragraph:

(1)

Eligible Rollover Distribution. Any distribution of all or any portion of the balance to the credit of the distributee under the Deferred Retirement Option Plan, except that an eligible rollover distribution does not include 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 distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of ten (10) years or more, any distribution to the extent such distribution is required under Section 401(a)9 of the Internal Revenue Code, and the portion of any distribution that is not includable in gross income.

(2)

Eligible Retirement Plan. An individual retirement account described in Section 408(a) of the Internal Revenue Code, an individual retirement annuity described in Section 408(b) of the Internal Revenue Code, an annuity plan described in Section 403(a) of the Internal Revenue Code, or a qualified trust described in Section 401(a) of the Internal Revenue Code, 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 is an individual retirement account or individual retirement annuity.

(3)

Distributee. An employee or former employee. In addition the employee's or former employee's surviving spouse is a distributee with regard to the interest of the spouse.

(4)

Direct Rollover. A payment by the Deferred Retirement Option Plan to the eligible retirement plan specified by the distributee. The direct rollover may be accomplished by any reasonable means determined by the Board of Trustees.

(Ord. No. 85-93, passed 1/25/94; Ord. No. 36-01, § 1, passed 6/19/01; Ord. No. 18-08, § 2, passed 4/1/08)