Chapter 4.24 POLICE EMPLOYEES’ RETIREMENT PLAN

A. Plan Established. The City establishes a pension plan for certain certified police officers of the City by the adoption of this document entitled “The City of Takoma Park Police Employees’ Retirement Plan,” as amended from time to time.

B. Legal Authority To Withdraw From the Pension System for Employees of the State of Maryland. Pursuant to the provisions of Section 31-302 of the State Personnel and Pensions chapter of the Annotated Code of Maryland, the City Council has passed an ordinance dated June 18th, 2001 authorizing:

1. The withdrawal of certain law enforcement personnel from 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 allocable to the withdrawing members from the Pension System for Employees of the State of Maryland to the City of Takoma Park Police Employees’ Retirement Plan. (Ord. 2001-20, § 1)

4.24.020 Short title.

This Plan may be referred to as the “City of Takoma Park Police Employees’ Retirement Plan.”

(Ord. 2001-20, § 2)

4.24.030 Qualifying under Internal Revenue Code.

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 Pick-Up Contributions Under Internal Revenue Code. The

City also intends that, effective for the pay period beginning July 1, 2001, the contributions made by Plan participants pursuant to Section 26(a)(l) through payroll deductions be characterized as “pick-up” contributions, as described in Section 414(h)(2) of the Internal Revenue Code. (Ord. 2001-20, § 3)

4.24.040 Applicability.

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 on or after the effective date. (Ord. 2001-20, § 4)

4.24.050 Construction of terms.

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 individuals, receivers, trustees, guardians, fiduciaries, corporations, partnerships, associations, 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. (Ord. 2001-20, § 5)

4.24.060 Definitions.

The following terms, as used herein, unless a different meaning is clearly implied by the context, shall have the following meanings:

“Accrued benefit” means the benefit to which a participant is entitled, pursuant to the provisions of Sections 4.24.220 through 4.24.240, expressed as the normal form of monthly benefit commencing at normal retirement date or the actuarial equivalent thereof.

1. The accrued benefit as of any date preceding the participant’s normal retirement date, but expressed as aforesaid, shall be the monthly benefit computed pursuant to Sections 4.24.230, 4.24.250 or 4.24.260.

2. In no event, however, shall the accrued benefit exceed the maximum limitation determined, as of the date of computation, pursuant to Section 4.24.270.

3. a. The portion of the participant’s accrued benefit attributable to his or her contributions made pursuant to Sections 4.24.200 and 4.24.210 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.

b. The portion of the participant’s accrued benefit attributable to City contributions shall be the remainder, if any, of the accrued benefit.

4. 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 provided under Section 4.24.290.

“Actuarial equivalent” means a form of benefit differing in the period or manner of payment from a specific benefit provided under the Plan but having the same value when computed based upon the following:

1. a. Pre-retirement and post-retirement.

i. The applicable mortality table prescribed under Section 417(c)(3) of the Internal Revenue Code;

ii. 8% per annum interest rate;

iii. 3% cost of living adjustment.

b. 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.

c. 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 Section 4.24.220, the value of the normal form of benefit shall include the value of the cost of living adjustments made pursuant to Section 4.24.290.

“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.

No reduction pursuant to this subsection shall apply to a participant who retires after completing at least 25 years of eligibility service.

“Average compensation” means the average monthly rate of a participant’s compensation, equal to 1/36th of the total amount of a participant’s compensation for the 36 consecutive full calendar months of the participant’s employment which produce the highest average.

If the participant’s employment does not provide 36 consecutive full calendar months 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.

“Beneficiary” means any person entitled to death benefits in accordance with the provisions of Sections 4.24.360 and 4.24.370.

“Benefit commencement date” means the day on which the sole payment is made or the first day of the period for which the first in a series of payments constituting the distribution of an accrued benefit is made.

“Cash-out” means a distribution in settlement of a benefit otherwise payable under the Plan, and which is equal to the employee contributions benefit.

“City” means the City of Takoma Park, a municipal corporation existing under the laws of the State of Maryland.

“C/L increase” means 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.

“Committee” means the Retirement Plan Committee designated in accordance with the provisions of Section 4.24.430 to administer and operate the Plan.

“Compensation” means the monthly equivalent of the participant’s base annual salary rate or wages in effect on the first day of the month, determined without regard to:

1. Overtime, bonuses and other extra remuneration;

2. Amounts in excess of one-twelfth of the applicable dollar limit in effect as of the first day of the plan year under Section 401(a)(l7) 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 40l(a)(17)(b) of the Internal Revenue Code;

3. Contributions, credits or benefits under this Plan or under any other retirement, deferred compensation, fringe benefit or employee welfare benefit plan; or

4. 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 pick-up contribution under Section 4.4, or a salary reduction under any plan described in Section 132(f), 414(h)(2), 457(b) or 125 of the Internal Revenue Code.

Effective July 1, 2009, “compensation” shall include differential wage payments.

“Coordinator” means the City’s Human Resources Manager to whom certain administrative duties may be delegated by the Plan Administrator pursuant to Section 4.24.420(D).

Except as otherwise provided in Section 4.24.040, “covered employee” means any employee who is employed by the City on a full-time basis and is classified as a “certified police officer.” The term “covered employee” does not include a person during any period that he or she qualifies as an excluded employee.

“Differential wage payments” mean differential wage payments as defined in Section 3401(h) of the Internal Revenue Code. A differential wage payment generally refers to an employer payment to an employee called to military service for more than 30 days that represents all or a portion of the compensation he would have received from the employer if he were performing services for the employer.

“Domestic partner” means a participant’s domestic partner: (1) as of the date of a participant’s death as listed on the Domestic Partnership Registry of the City and as determined in accordance with the laws and regulations of the City, and (2) which domestic partner has been listed as the participant’s domestic partner on the domestic partnership registry for at least one year prior to the date of the participant’s death.

“Early retirement date” means any date occurring on or after the first date on which a participant both reaches age 55 and has completed 15 years of eligibility service.

“Effective date” means the effective date of the Plan, which shall be July 1, 2001.

“Employee” means any person employed by the City and includes a person receiving differential wage payments on or after July 1, 2009.

“Employee contributions benefit” means the sum of the following amounts (net of any previous distributions):

1. The contributions made by the participant through salary reduction and “picked up” by the City, as described in Section 4.24.200; plus

2. The contributions made by the participant pursuant to Section 4.24.210 which are not picked up by the City; plus

3. Interest on the amounts described in subdivisions (1) and (2) above computed on June 30th of each year as follows and compounded annually:

a. 2.5% of the amount contributed during the current plan year,

b. 5.0% of any amount contributed or transferred prior to the current plan year.

“Employment commencement date” means the date on which the employee first performs an hour of service.

“Excluded employee” means any person employed by the City during any period that he or she qualifies under any of the following subdivisions:

1. The person is classified as in a part-time position;

2. The person is classified as a contractual or appointed employee who is not granted the right to participate in this Plan by the express terms of his or her employment contract or appointment, respectively;

3. The person is classified as a casual, emergency, seasonal, substitute, summer or temporary employee;

4. The person did not elect to participate in this Plan effective July 1, 2001 pursuant to Section 4.24.070 and thereby remained a participant in the Maryland State Retirement System; or

5. The person’s conditions of employment are determined by a collective bargaining agreement which does not specifically provide for participation in this Plan, unless and until a mutually satisfactory agreement shall have been reached with respect to the person’s coverage under this Plan.

“Hour of service” means 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.

“Internal Revenue Code” means 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.

“Leave of absence” means an authorized absence from active service, under conditions described in Section 4.24.110, which does not constitute a termination of employment, and during which the employee completes no hours of service.

“Maryland employer” means the State of Maryland and any municipality or political subdivision within the State of Maryland.

“Military service” means service in the uniformed services within the meaning of the Uniformed Services Employment and Reemployment Rights Act of 1994.

“Normal retirement date” means the earlier of:

1. The first day of the month on or following the date on which the participant completes 25 years of eligibility service; or

2. The first day of the month on or following the date on which the participant attains age 62 and completes 5 years of eligibility service.

“Participant” means 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. Effective July 1, 2007, “participant” shall include any employee on a leave of absence for military service.

“Period of severance” means the continuous period beginning with an employee’s termination date and ending with the employee’s reemployment commencement date, if any.

“Plan” means the City of Takoma Park Police Employees’ Retirement Plan set forth herein and as amended from time to time.

“Plan Administrator” means the Retirement Plan Committee designated in accordance with the provisions of Section 4.24.430 to administer and operate the Plan.

“Plan year” means the 12-month period ending on the last day of the month of June.

“Reemployment commencement date” means the date on which an employee first performs an hour of service after a period of severance.

“Termination date” means the date of the first to occur of:

1. A termination of employment by reason of resignation, discharge, mutual agreement, total and permanent disability, retirement or death;

2. The date on which a leave of absence expires without a return to active employment; or

3. The date on which the individual ceases to be a covered employee.

“Trust” means 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.

“Trustees” means, 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.

“Year of credited service” means a year of service for purposes of calculating a participant’s accrued benefit, his or her retirement allowance pursuant to Section 4.24.220, and other specified benefits under Sections 4.24.230 through 4.24.300. The rules for calculating a participant’s years of credited service are set forth in Sections 4.24.100 through 4.24.150 with reference to the continuous period beginning with the employee’s employment commencement date or reemployment commencement date and ending with the employee’s termination date, excluding any period during which the employee was not a covered employee, but including any periods for which service for the Maryland State Retirement System has been credited as described in Section 4.24.130, periods for which pre-employment military service has been credited as described in Section 4.24.140 and periods for which unused sick leave has been credited as described in Section 4.24.220(B).

“Year of eligibility service” means a year of service for purposes of calculating a participant’s eligibility for specified benefits under the Plan. The rules for calculating a participant’s years of eligibility service are set forth in Sections 4.24.100 through 4.24.150 with reference to the continuous period beginning with the employee’s employment commencement date or reemployment commencement date and ending with the employee’s termination date, excluding any period during which the employee is not a covered employee, including any periods for which service for the Maryland State Retirement System has been credited as described in Section 4.24.130 and excluding periods for which pre-employment military service has been credited as described in Section 4.24.140. (Ord. 2021-1 § 1, 2021/Ord. 2012-24 §§ 1—5, 2012/Ord. 2003-34 § 1, 2003/Ord. 2001-20 § 6, 2001/prior code § 6)

4.24.070 Participation requirements.

Except as otherwise provided below, a covered employee’s participation in this Plan, and the agreement to make contributions hereunder, as described in Section 4.24.200, is mandatory as a condition of employment with the City:

A. Irrevocable Participation. Every individual who is a covered employee as of June 30, 2001, may elect to participate in the Plan effective July 1, 2001, 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 an agreement to make, as a condition of his or her employment with the City, participant contributions as provided in Section 4.24.200. If an employee who is otherwise eligible to participate fails to return the completed application to the City on or before June 8, 2001, he or she shall cease to be a covered employee as of July 1, 2001.

B. Mandatory Participation. Every other individual who becomes a covered employee on or after July 1, 2001, shall become a participant on the date he or she first performs an hour of service as a covered employee. (Ord. 2001-20, § 7)

4.24.080 Reemployment.

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, 2001, the employee shall become a participant in accordance with the provisions of Section 4.24.070. If the reemployed employee was a participant prior to such termination, or the individual’s reemployment commencement date occurs after June 30, 2001, 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) of this section, 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 his or her reemployment commencement date, 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:

a. The participant receives a cash-out of his or her employee contributions benefit, and

b. The participant resumes status as a covered employee;

Then, notwithstanding the crediting of additional years of credited service and years of eligibility service, 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 participant’s eligibility to receive, the amount of, and vested percentage of, the participant’s accrued benefit.

2. However, if the participant:

a. Resumes status as a covered employee, and

b. Within 90 days of his or her reemployment commencement 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). (Ord. 2001-20, § 8)

4.24.090 Enrollment.

Participation hereunder shall be automatic when the requirements of Section 4.24.070 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. (Ord. 2001-20, § 9)

Article 2. Credited Service

4.24.100 Credit for service with City.

Except as otherwise provided in Sections 4.24.070 through 4.24.090 and in this article, a participant will receive credit only for years of credited service and years of eligibility service for his or her actual service with the City as a covered employee on or after July 1, 2001. (Ord. 2001-20, § 13)

4.24.110 Leaves of absence.

A. Temporary Absence is not a Termination of Employment. A covered employee’s employment will not be deemed to have terminated though it is interrupted by a temporary absence from active service, extending for not more than 24 months, under conditions which arc not treated by the City as a termination of employment. The performance of an hour of service after a leave of absence has commenced will constitute an expiration of the leave of absence.

B. Basis for Computing Compensation and/or Average Compensation. If, during a leave of absence, a participant is unpaid or the participant’s rate of basic pay is reduced, then, for purposes of computing plan benefits, the participant’s compensation and/or average compensation will be computed as if he or she were being paid at a rate equivalent to that in effect for his or her position at the end of the calendar month immediately preceding the month in which the leave of absence began.

C. Expiration of Leave of Absence. If any participant on leave of absence fails to answer an inquiry by the City as to the status of the leave of absence, or if the City is not notified of the death or disability of such participant, and the City has no actual knowledge thereof, the City may determine that the leave of absence had or has expired.

D. Crediting of Service During Paid Leaves of Absence. Service with respect to a leave of absence will be credited pursuant to the following:

1. Paid leaves of absence will constitute continuation of employment.

2. Service will be credited for the customary period of work during a paid leave of absence, and Section 4.24.200 contributions will continue to be made.

3. An individual on a leave of absence for reasons of illness will be deemed to be on a paid leave of absence so long as the individual’s rate of pay is not reduced and so long as he or she is paid directly by the City or through City-financed wage continuation insurance but the individual will not be considered to be on a paid leave of absence under circumstances where payments are made solely for the purpose of complying with workers’ compensation, unemployment insurance or disability insurance laws.

E. Crediting of Service During Unpaid Leave of Absence. A leave of absence where the participant’s rate of pay is reduced shall constitute an unpaid leave of absence. Service credit shall not be granted for an unpaid leave of absence (other than for military service or family leave, as described below).

F. Credit for Service During Unpaid Leave of Absence for Military Service. A participant will receive credit for service during an unpaid leave of absence for military service to the extent required by law. If a participant fails to again become an employee as a result of his death while in military service on or after July 1, 2007, the participant shall be entitled to credited service for such military service.

G. Credit for Service During Unpaid Leave of Absence for Family Leave. A participant will receive credit for service for that portion of an unpaid leave of absence during which the participant is deemed eligible for leave under the Family and Medical Leave Act of 1993 for a reason other than those covered in subsections (D) and (E) of this section. (Ord. 2012-24 § 6 (part), 2012/Ord. 2001-20, §14)

4.24.120 Fractional credit for service.

An individual shall receive partial or full credit for years of credited service and years of eligibility service, as follows:

A. Vesting. For purposes of determining the extent to which a participant is vested in his or her accrued benefit and for purposes of determining eligibility for early or normal retirement benefits, or for any other purpose under the plan except benefit accrual, the participant shall receive credit on the basis of the number of whole years of eligibility service. The participant shall receive fractional credit equal to 1/12th of a year of eligibility service for each calendar month during which he or she was a covered employee for the entire month, but shall receive no fractional credit with respect to any calendar month during which he or she was not a covered employee for the entire month.

B. Benefit Accrual. Except as otherwise provided in Sections 4.24.110 and 4.24.220, for purposes of determining the extent to which a participant shall accrue benefits, the participant shall receive fractional credit equal to 1/12th of a year of credited service for each calendar month during which he or she was a covered employee for the entire month, but shall receive no fractional credit with respect to any calendar month during which he or she was not a covered employee for the entire month. (Ord. 2001-20, § 15)

4.24.130 Transfer of credited service under Maryland State Retirement System.

A. Any employee who is a covered employee as of June 30, 2001 has the right to elect to receive credit for years of credited service and years of eligibility service for service recognized and performed under the Maryland State Retirement System. Such election is irrevocable and must be made prior to June 8, 2001. If such service is transferred and recognized under the Plan, the participant shall receive full credit under the Plan for all such service.

B. Except as otherwise provided under this Plan, no credit for years of credited service or years of eligibility service shall be given under this Plan for service credited under any other State or local retirement or pension system sponsored by a Maryland Employer. (Ord. 2001-20, § 16)

4.24.140 Credit for pre-employment military service.

A. Covered employees as of June 30, 2001.

1. Covered Employees Eligible for State System Credit for Pre-Employment Military Service. Employees who are covered employees as of June 30, 2001 who, in accordance with Section 38-104 of the State Personnel and Pensions Article of the Maryland Code, are eligible to receive years of eligibility service and years of credited service under the Maryland State Retirement System for service in the armed forces of the United States which precedes the employee’s employment commencement date, must apply for and receive this credit under the Maryland State Retirement System. An employee who is eligible for years of eligibility service and years of credited service under the Maryland State Retirement System in accordance with Section 38-104 of the State Personnel and Pensions Article of the Maryland Code and who does not receive such credit prior to July 1, 2001 will not receive years of eligibility service and years of credited service under the Plan for service in the armed forces of the United States which precedes the employee’s employment commencement date.

2. Covered Employees Ineligible for State System Credit for Pre-Employment Military Service. Employees who are covered employees as of June 30, 2001, and who do not have sufficient years of credited service to be eligible to receive credit for years of eligibility service and years of credited service under the Maryland State Retirement System in accordance with Section 38-104 of the State Personnel and Pensions Article of the Maryland Code, may apply for and receive credit for years of eligibility service and years of credited service from the Plan for service in the armed forces of the United States which precedes the employee’s employment commencement date upon the attainment of 10 years of credited service (determined without regard to his or her military service), if the participant:

a. Is not entitled to benefits from another retirement or pension plan on account of such service, other than a pension described in Chapter 1223 of Title 10 of the United States Code;

b. Was a covered employee as of June 30, 2001; and

c. Did not receive credit for such service pursuant to Section 4.24.130.

B. 5-Year Limitation. If a participant receives credit for years of eligibility service and years of credited service under both this section and Section 4.24.110(F), the total service credited shall not exceed the greater of 5 years or the amount of service credited pursuant to Section 4.24.110(F).

C. Participants Hired on or After July 1, 2001. Participants hired by the City on or after July 1, 2001, shall not receive credit for years of eligibility service for service in the armed forces of the United States which precedes the participant’s employment commencement date but, upon retirement, shall receive credit for up to three years of credited service for service in the armed forces of the United States which precedes the participant’s employment commencement date.

D. Timing for Purposes of Monthly Retirement Income Calculations. All years of credited service credited under this section shall be deemed to have been earned on or before June 30, 2000 for purposes of calculating the monthly retirement income under Section 4.24.220. (Ord. 2021-1 § 3, 2021/Ord. 2001-20, § 17)

4.24.150 Transfers of credited service to other plans.

If a participant terminates employment for the City as a covered employee, but either:

A. Remains an employee of the City; or

B. Ceases to be an employee, but becomes an employee of another Maryland employer, and becomes eligible to participate in a retirement plan sponsored by another Maryland employer; The participant may elect to transfer service earned under this Plan to the retirement plan sponsored by such other Maryland employer to the extent allowed by such other retirement plan. Notwithstanding any provision to the contrary herein or any provision of the retirement plan sponsored by such other Maryland employer, the Plan shall not be required to transfer to such other Maryland employer any accrued benefits with respect to the participant, other than the participant’s employee contributions benefit. (Ord. 2001-20, § 18)

4.24.160 Involuntary transfers of employment.

If a participant is involuntarily transferred to another State or local retirement or pension system because of an involuntary transfer of the participant’s employing unit to another employer, all of the City’s contributions on behalf of the participant and interest on those contributions shall be transferred to the new system. The amount to be transferred to the new system shall be determined by actuarial valuation. Notwithstanding the foregoing, this section shall be operative only to the extent required by Title 37 of the State Personnel and Pensions Article of the Annotated Code of Maryland, or any successor statute. (Ord. 2003-34 § 2, 2003: Ord. 2001-20 § 19, 2001)

Article 3. Funding of Benefits

4.24.170 Payment of contributions.

The funding of the Plan and payment of benefits hereunder shall be provided for through the medium of the Trust. The Trust shall accept transfer of funds from the Maryland State Retirement Systems, consistent with the elections made by participants pursuant to Section 4.24.130. The City, from time to time, shall make contributions to the Trust in amounts determined, in accordance with generally accepted actuarial principles, to be sufficient to support the contributions required under Section 4.24.200, and the contributions made pursuant to Section 4.24.210 and to fund the benefits provided by the Plan. (Ord. 2001-20, § 23)

4.24.180 Disposition of forfeiture.

Any forfeiture arising under the provisions of the Plan shall be used to reduce the then current or future costs of funding the benefits provided in the Plan. (Ord. 2001-20, § 24)

4.24.190 Actuarial examination.

The City shall, at least once every other Plan year, cause the liabilities of the Plan to be evaluated by an enrolled actuary who shall report to the City as to the soundness and solvency of the Trust in relation to the liabilities and the amount of the City’s contributions sufficient to meet the requirements of Section 4.24.170. (Ord. 2001-20, § 25)

4.24.200 Pick-up contributions.

Under limited circumstances described below, participant contributions may be accepted by the Plan.

A. City Pick-Up Contributions.

1. Effective for the pay period beginning July 1, 2001, and in accordance with rules established by the City, each participant shall make contributions to the Plan equal to 7.0% of his or her compensation.

2. The participant’s contributions referred to in subsection (A)(1) of this section shall be separately accounted for, but shall be made a part of the participant’s employee contributions benefit, which shall be part of the accrued benefit of the respective participant.

3. The participant contributions referred to in this subsection (A) of this section shall be:

a. Picked up by the City, as described in Section 414(h)(2) of the Internal Revenue Code;

b. Deducted from the pay of the contributing participants as salary reduction contributions; and

c. Paid by the City to the trustees with reasonable promptness after the total of such contributions during any month has been determined, and in army event by the end of the succeeding month.

4. The participant contributions referred to in subsection (A)(1) of this section, although designated as participant contributions, are being paid by the City in lieu of contributions by the participant pursuant to Section 414(h)(2) of the Internal Revenue Code.

B. Suspension of Contributions. A participant’s salary reduction contributions shall be automatically suspended for any payroll period during which the participant is not a covered employee or during which he or she is on an unpaid leave of absence.

C. Withdrawals of Pick-Up Contributions.

1. A participant who has reached his or her termination date may elect, at any time, to receive a cash-out of the employee contributions benefit, by filing a written notice of such election with the City.

2. Except as provided in paragraph 3 below, a participant who has reached his or her termination date before becoming 100% vested in his or her entire accrued benefit automatically will have a cash-out of the participant’s employee contributions benefit paid to him or her as soon as administratively feasible following the termination date.

3. Effective for distributions on or after March 28, 2005, paragraph 2 above shall apply only to distributions of $1,000.00 or less.

4. In any case, such cash-out shall constitute full payment of all benefits due to such participant under the Plan.

D. Forfeiture of Remaining Accrued Benefit. In the event of a cash-out to a participant pursuant to subsection (C) of this section, then, subject to restoration provided in Section 4.24.080, the participant shall forfeit the entire remaining portion of his or her accrued benefit.

E. Vesting of Pick-up Contributions. Notwithstanding any provisions of this plan to the contrary, participant contributions, picked up by the City and made to the plan, shall be fully vested at all times.

F. Payment of Benefits. Subject to the right of withdrawal described above, the benefits purchased from the participant’s contributions shall be payable at the same time, in the same manner, and, in the event of the participant’s death, to the same beneficiary or beneficiaries, as is the remainder of his or her accrued benefit.

G. Plan Termination. In the event of a termination of the Plan, distribution to each participant of the portion of the participant’s accrued benefit attributable to his or her contributions picked up by the City shall, notwithstanding any other provisions of Section 4.24.540, be treated as a priority distribution ahead of any other distribution to participants based upon the remainder of the Trust, other than those attributable to contributions made pursuant to Section 4.24.210. (Ord. 2008-54, 11-24-08/Ord. 2001-20 § 26)

4.24.210 Participant contributions.

Under limited circumstances, as described below, other participant contributions may be accepted by the Plan.

A. Characterization. The contributions made pursuant to this section shall be distinct from those made pursuant to Section 4.24.200 as to the character of such contributions. Whereas contributions made pursuant to Section 4.24.200 shall be classified as City contributions picked up from the pay of participants, contributions made pursuant to this section shall be after-tax contributions made directly by the participant.

B. Limitations. A participant may elect to make contributions pursuant to this section provided that a participant who elects to restore credit for service and benefits, as described in Section 4.24.080(D), shall pay over to the Plan the amount of any cash-out previously made to the participant, with interest thereon.

C. Procedures. All participant contributions made pursuant to this section shall be paid to the Trust.

D. Separate Accounting. Participant contributions as aforesaid, shall be accounted for separately but shall be made a part of the participant’s employee contributions benefit, which shall be a part of the accrued benefits of the respective participant.

E. Withdrawals of Participant Contributions.

2. Except as provided in paragraph 3 below, a participant who has reached his or her termination date before becoming l00% vested in his or her entire accrued benefit automatically will have a cash-out of the participant’s employee contributions benefit paid to him or her as soon as administratively feasible following the termination date.

3. Effective for distributions on or after March 28, 2005, paragraph 2 above shall apply only to distributions of $1,000.00 or less.

4. In any case, such cash-out shall constitute full payment of all benefits due to such participant under the Plan.

F. Forfeiture of Remaining Accrued Benefit. In the event of a cash-out to a participant pursuant to subsection (E) of this section, then, subject to restoration provided in Section 4.24.080(D), the participant shall forfeit the entire remaining portion of his or her accrued benefit.

G. Vesting of Participant Contributions. Notwithstanding any provisions of this Plan to the contrary, participant contributions made to the Plan shall be fully vested at all times.

H. Payment of Benefits. Subject to the right of withdrawal described above, the benefits purchased from the participant’s contributions shall be payable at the same time, in the same manner, and, in the event of his or her death, to the same beneficiary or beneficiaries, as is the remainder of his or her accrued benefit.

I. Plan Termination. In the event of a termination of the Plan, distribution to each participant of the portion of the accrued benefit attributable to his or her participant contributions shall, notwithstanding any other provision of Section 4.24.540, be treated as a priority distribution ahead of any other distribution to participants based upon the remainder of the Trust. (Ord. No. 2008-54, 11-24-08/Ord. 2001-20 § 27)

Article 4. Lifetime Benefits

4.24.220 Normal retirement.

Except as otherwise provided in Sections 4.24.220 through 4.24.290, a participant shall retire on his or her normal retirement date. A participant who retires on his or her normal retirement date shall be entitled to receive a monthly retirement income, beginning with the first day of the month coincident with or otherwise next following the participant’s normal retirement date and continuing for the remainder of his or her life.

A. Amount of Monthly Retirement Income. Subject to Section 4.24.080(D), and subject to the limitations set forth in Section 4.24.270, the amount of the monthly retirement income shall be determined as follows:

1. With respect to a participant who retires between July 1, 2001 and August 31, 2001:

a. 1.5% multiplied by the participant’s average compensation and multiplied by his or her years of credited service, earned on or before June 30, 2000, plus

b. 2.0% multiplied by the participant’s average compensation and multiplied by his or her years of credited service, earned between July 1, 2000 and August 31, 2001;

2. With respect to a participant who retires between September 1, 2001, and June 30, 2009:

a. 1.5% multiplied by the participant’s average compensation and multiplied by his or her years of credited service, earned on or before June 30, 2000, plus

b. 2.0% multiplied by the participant’s average compensation and multiplied by his or her years of credited service, earned after July 1, 2000,

c. In calculating the amount of monthly retirement income under subsection (A)(2) of this section, years of credited service in paragraphs a and b of this subsection shall not exceed 25 years of credited service. For purposes of applying this 25-year maximum, paragraph b shall be determined prior to paragraph a.

3. With respect to a participant who retires on or after July 1, 2009:

a. 2.0% multiplied by the participant’s average compensation and multiplied by his or her years of credited service.

b. In calculating the amount of monthly retirement income under subsection (A)(3) of this section, years of credited service shall not exceed 30 years of credited service.

4. The monthly benefit provided in subsections (A)(1), (2) and (3) of this section shall be increased by an amount equal to 2.0% of the participant’s average compensation multiplied by his or her years of credited service attributable to unused sick leave as calculated in accordance with subsection (B) of this section.

B. Additional Credit—Unused Sick Leave. Solely for purposes of determining the amount of the participant’s retirement benefit payable pursuant to Sections 4.24.220 through 4.24.260, the participant shall receive additional credit for years of credited service for unused sick leave. Such unused sick leave shall be credited at the rate of one additional month for each 22 days of unused sick time, plus, if at least 11 days remain at a participant’s termination date, one additional month. The additional retirement benefit attributable to years of credited service for unused sick leave shall be calculated under the applicable paragraph or subparagraph of this section, with the adjustment, if any, required by Section 4.24.060(C)(2). No more than 2 years of credited service shall be granted pursuant to this subsection. (Ord. 2009-29 § 1, 2009/Ord. 2001-20 § 28)

4.24.230 Early retirement.

A. Early Retirement Date. A participant may elect to retire on any date on or after the first date which qualifies as an early retirement date, in which case the date of retirement shall be deemed to be his or her early retirement date and the participant shall be entitled to a monthly early retirement benefit equal to the benefit computed pursuant to Section 4.24.220 (based upon the participant’s actual years of credited service and average compensation at his or her early retirement date), but subject to the appropriate actuarial reduction, if any.

B. Commencement of Early Retirement Benefits. Early retirement benefits shall commence on the first day of the month coincident with or otherwise next following the participant’s normal retirement date, unless the participant elects to have the benefits commence on the first day of any prior month coincident with or following his or her early retirement date.

C. Form of Payment. Except as otherwise provided in Section 4.24.340(D), the benefits payable pursuant to this section shall be payable in the normal form provided by Section 4.24.220, unless an optional form of payment has been elected pursuant to Section 4.24.330. (Ord. 2001-20 § 29)

4.24.240 Deferred retirement.

In the event a participant remains a covered employee after his or her normal retirement date, then, subject to the limitations set forth in Section 4.24.270, and except as otherwise provided in Section 4.24.340, the participant shall be entitled to receive, commencing on the first day of the month coincident with or otherwise next following his or her termination date, the benefit to which the participant would have been entitled pursuant to Section 4.24.220 if he or she had retired at his or her normal retirement date, but adjusted by including any additional years of credited service which have accrued since his or her normal retirement date (up to the maximum years of credited service described in Section 4.24.220), and (notwithstanding any provision in the definition of average compensation to the contrary) by taking into account any increases in average compensation which may be generated by increases in compensation earned since his or her normal retirement date. (Prior code § 30)

4.24.250 Disability benefits.

The Plan shall pay disability benefits determined in accordance with the following provisions:

A. Ordinary Disability. If a participant reaches a termination date by reason of total and permanent disability and if the participant is credited with at least five years of eligibility service, the participant shall be entitled to receive a monthly disability benefit equal to the participant’s accrued benefit (based upon the participant’s average compensation at his or her termination date and the years of credited service the participant would have been credited with had he or she earned 25 years of credited service or reached age 62, if sooner), without actuarial reduction and, notwithstanding the provisions of subsection (C) of this section, without reduction for any benefits payable under the Workers’ Compensation Law of Maryland. Military service that results in the participant’s disability shall count as eligibility service for purposes of this section. A participant who reaches a termination date by reason of a disability incurred during military service shall be eligible to apply for ordinary disability benefits under this subsection.

B. Line of Duty Disability.

1. Except as provided in subdivision 2 of this subsection, a participant (regardless of his or her length of service) who terminates employment by reason of total and permanent disability, which, as determined in accordance with rules established by the Plan Administrator, is incurred as a result of an accident or injury which has been sustained as an active covered employee and which has been ruled compensable under the Workers’ Compensation Law of Maryland, shall be entitled to receive a monthly benefit equal to:

a. For employees who are covered employees as of June 30, 2001, and who incur a disability described in subdivision 1 of this subsection (B) prior to July 1, 2009, the greater of:

i. The benefit determined pursuant to subsection (A) of this section; or

ii. The greater of: (A) a monthly benefit equal to the greater 66 and 2/3% of the participant’s compensation, or (B) the participant’s employee contributions benefit.

b. For employees who become covered employees on or after July 1, 2001, and incur a disability described in subdivision 1 of this subsection (B) at any time and for employees who became covered employees prior to July 1, 2001, who incur a disability described in subdivision 1 of this subsection (B) on or after July 1, 2009, the greater of:

i. The benefit determined pursuant to subsection (A) of this section; or

ii. If the line of duty disability is a catastrophic disability, as defined in subdivision (2)(b) of this subsection, the greater of: (A) a monthly benefit equal to the greater 66 and 2/3% of the participant’s compensation, or (B) the participant’s employee contributions benefit; or

iii. If the line of duty disability is a non-catastrophic disability, as defined in subdivision (2)(c) of this subsection, the greater of: (A) a monthly benefit equal to the greater 50% of the participant’s compensation, or (B) the participant’s employee contributions benefit.

2. In subdivision 1 of this subsection the following terms have the meanings indicated.

a. “Line of duty disability” means a total and permanent disability incurred as a result of an accident or injury which has been sustained as a result of service as an active covered employee and which has been ruled compensable under the Workers’ Compensation Law of Maryland.

b. “Catastrophic disability” means a line of duty disability:

i. By reason of which the participant will be permanently prevented from engaging in any substantial gainful employment; or

ii. Which severely limits one or more major life activities.

iii. For purposes of subdivision (2)(b), “substantial gainful employment,” means the ability to perform a moderate amount of work with reasonable regularity, without reference to the type of work performed by the participant before his or her termination date. “Major life activities” include caring for one’s self, walking, seeing, hearing, speaking, breathing or learning.

c. “Non-catastrophic disability” means a line of duty disability which is not a catastrophic disability.

C. Payments Considered in the Nature of Workers’ Compensation Payments. Any payments made to police employees for injuries received in the line of duty pursuant to any retirement disability provisions of this Plan shall be considered to be in the nature of Worker’s Compensation payments made pursuant to Title 9 of the Labor and Employment Article of the Annotated Code of Maryland.

D. Adjustments to Compensation. For purposes of subsection (B) of this section, “compensation” includes adjustments to the base annual salary for employees in the same position classification as the participant at the time of the onset of the participant’s disability through the date the participant’s disability benefits commence.

E. General Provisions Relating to Disability.

1. Commencement of Disability Benefits. Disability benefits shall commence on the first day of the month coincident with or otherwise next following the determination of disability by the City; provided, however, that benefits payable pursuant to this section shall be reduced by any benefits payable from workers’ compensation.

2. Forms of Benefit. The benefits payable pursuant to this section shall be payable in the normal form provided by Section 4.24.220, unless an optional form of payment has been elected pursuant to Section 4.24.330.

3. Definitions.

a. “Total and permanent disability” means a medically determinable physical or mental impairment which can be expected to be permanent or result in death, and by reason of which the participant will be prevented from performing the usual duties of his or her position with the City as required by the City Code or other established employment practices and requirements.

b. The total and permanent disability must be evidenced by a certificate of a physician selected or approved by the City.

c. Total and permanent disability shall not include any injury or disease which arose as a result of willful negligence by the participant.

4. Continuing Disability.

a. Until a participant who has reached a termination date by reason of disability attains his or her normal retirement date, the continuation of the participant’s right to receive disability benefits shall depend on the participant’s continued disability, and the case shall be subject to periodic review in accordance with the rules established by the City to determine the participant’s health and employment status, including the requirement that the participant furnish to the City a copy of his or her Federal income tax return each year.

b. In the event a disabled participant ceases to submit to such review, prior to his or her normal retirement date, the disability benefits payable pursuant to this section shall cease.

5. Death of Disabled Participant. In the event of the death of a participant who is receiving benefits pursuant to this section, no benefits with respect to the participant shall be payable except as otherwise provided in Sections 4.24.300 and 4.24.310.

6. A participant who reaches a termination date by reason of a disability incurred during military service shall be eligible to apply for ordinary disability benefits under subsection (A) of this section but shall not be eligible to apply for line-of-duty disability benefits under subsection (B) of this section. (Ord. 2012-24 §§ 7, 8 (part), 2012/Ord. 2009-29 § 2, 2009/Ord. 2001-20, § 31)

4.24.260 Other terminations of employment.

A. Amount of Termination Benefit. If a participant reaches a termination date for any reason other than death, retirement or disability, the participant shall be entitled to a monthly termination benefit equal to a vested percentage (determined as set forth below) of the benefit computed pursuant to Section 4.24.220 (based upon the participant’s actual years of credited service and average compensation at his or her termination date).

B. Commencement of Termination Benefits. Benefits payable pursuant to this section shall commence on the first day of the month coincident with or otherwise next following the earliest of the participant’s early retirement date or attainment of age 62.

C. Cash-Out Option. Notwithstanding the preceding provisions of this section:

1. A participant who reaches a termination date after having become 100% vested in his or her accrued benefit may elect to receive a cash-out of his or her employee contributions benefit, as provided in Section 4.24.330, in which case, such cash-out may be made at any time following the termination date, at the election of the participant; and

2. A participant who reaches a termination date before becoming 100% vested in his or her entire accrued benefit shall receive a cash-out of his or her employee contributions benefit as provided in Section 4.24.330, in which case such cash-out automatically shall be made as soon as administratively feasible following the termination date.

D. Form of Benefits. Except as otherwise provided in Section 4.24.340, the benefits payable pursuant to this section shall be payable in the normal form provided by Section 4.24.220, unless an optional form of payment has been elected pursuant to Section 4.24.330.

E. Vested Percent of the Accrued Benefit. Subject to Section 4.24.080, the vested percentage of the accrued benefit to which the participant is entitled shall be equal to the greater of:

1. 100% of the participant’s employee contributions benefit; or

2. A percentage of the participant’s accrued benefit, determined on the basis of the participant’s years of eligibility service and in accordance with the following schedule:

Years of Eligibility Service	Percentage Vested
Less than 5	0%
5 or more	100%

(Ord. 2001-20 § 32)

4.24.270 Maximum limitation on benefits.

Notwithstanding any plan provisions to the contrary:

A. Maximum Benefit. To the extent necessary to prevent disqualification under Section 415 of the Internal Revenue Code, and subject to the remainder of this section, the maximum monthly benefit to which any participant may be entitled at any time (the “maximum benefit) shall be equal to one-twelfth (1/12) of the amount set forth in Section 415(b)(1)(A) of the Internal Revenue Code, as adjusted by C/L Increases, (the “Monthly Dollar Limit.”). The rate of benefit accrual shall be frozen or reduced accordingly to comply with the limitations.

B. Actuarial Adjustment of Monthly Dollar Limit. The Monthly Dollar Limit shall be subject to actuarial adjustment as follows:

1. If the benefit is payable in any form other than a single life annuity or a qualified joint and survivor annuity (as defined for purposes of Section 415 of the Internal Revenue Code), the Monthly Dollar Limit shall be reduced so that it is the actuarial equivalent of the single life annuity. For purposes of this paragraph 1, the Monthly Dollar Limit shall be the actuarial equivalent of the straight life annuity limit based on a 5% interest rate and the applicable mortality table under Treasury Regulation § 1.417(e)-1(d)(2) that is effective for the annuity starting date.

2 a. With respect to a benefit beginning before age 62, the Monthly Dollar Limit shall be reduced to the actuarial equivalent of a monthly benefit in the amount of the Monthly Dollar Limit beginning at age 62. For purposes of this paragraph 2, the Monthly Dollar Limit shall be the actuarial equivalent of the age 62 amount based on a 5% interest rate and the applicable mortality table under Treasury Regulation § 1.417(e)-1(d)(2) that is effective for the annuity starting date and (ii) the age 62 dollar amount multiplied by the ratio of the annual amount of the immediately commencing straight life annuity under the Plan to the annual amount of the straight life annuity under the Plan commencing at age 62.

b. Notwithstanding the foregoing, however, in no event shall the dollar limit applicable to benefits beginning before age 62 be reduced for Participants who have earned at least 15 Years of Eligibility Service as a Covered Employee, including Military Service.

3. With respect to a benefit beginning after age 65, the dollar limit shall be increased so that it is the actuarial equivalent of the Monthly Dollar Limit applicable to a benefit beginning at age 65.

C. Reducing Dollar Limit. The dollar limit shall be reduced (but not by more than 90%) by 1/10th for each year of credited service less than 10, considering only those years of credited service during any part of which the participant was participating in the Plan (including those periods for which he or she elected to transfer service pursuant to Section 4.24.130).

D. Limitation Year. The limitation year shall be defined as the calendar year, except as otherwise provided by adoption of a written resolution by the City.

E. Other Reductions in Maximum Benefit. In addition to the foregoing, the maximum benefit shall be reduced, and the rate of benefit accrual shall be frozen or reduced accordingly, to the extent necessary to prevent disqualification of the Plan under Section 415 of the Internal Revenue Code, with respect to any participant who is also a participant in:

1. Any other tax-qualified pension plan maintained by the City, including a defined benefit plan in which an individual medical benefit account (as described in Section 415(1) of the Internal Revenue Code) has been established for the participant;

2. Any welfare plan maintained by the City in which a separate account (as described in Section 419A(d) of the Internal Revenue Code) has been established to provide post-retirement medical benefits for the participant; and/or

3. Any retirement or welfare plan, as aforesaid, maintained by a related employer, as described in Section 414(b), (c), (m) or (o) of the Internal Revenue Code. (Ord. No. 2008-54, 11-24-08)

4.24.280 Post termination changes.

Any change in benefits provided for by amendment to the Plan shall not apply to any participant whose termination date with the City occurred prior to the effective date of such amendment, except as otherwise specifically provided for in the Plan or in such amendment. (Ord. 2001-20, § 34)

4.24.290 Cost of living adjustments.

A. Monthly Retirement Income Subject to Cost-of-Living Adjustment. Notwithstanding the foregoing, but subject to the limitations set forth in Section 4.24.280, the monthly retirement income, as otherwise computed pursuant to Section 4.24.220, of any participant shall be subject to the cost of living adjustment described in this section.

B. Computations of Cost-of-Living Adjustment.

1. As of each July 1st (hereafter referred to as the “valuation date”) which occurs during the period beginning on the first valuation date occurring at least 12 months subsequent to the participant’s benefit commencement date and ending on the date of death, the participant’s then monthly retirement income shall be multiplied by a fraction:

a. The numerator of which is the Consumer Price Index (as defined in subsection (C) of this section) as of such valuation date: and

b. The denominator of which is the Consumer Price Index (as defined in subsection (C) of this section) as of the immediately preceding valuation date.

2. Provided, however, no such cost-of-living adjustment shall cause a participant’s monthly retirement income to exceed an amount equal to the participant’s monthly retirement income as of his or her benefit commencement date compounded at the annual rate 3% as of each of the valuation dates (including the valuation date for which the adjustment is being made) which have occurred subsequent to his or her benefit commencement date.

C. Definition of Consumer Price Index.

1. The Consumer Price Index to be used is the index for all urban consumers (CPI-U, United State City average, all items), published by the Bureau of Labor Statistics; and the CPI-U as of any valuation date means the index reading on the las day of December preceding such valuation date.

2. In the event the Bureau of Labor Statistics abandons publication of the CPI-U, the City shall adopt any other index which, in its judgement, provides an accurate measure of cost-of-living changes.

D. Monthly Disability and Survivor Benefits Subject to Cost-of-Living Adjustments. All disability or survivor benefits payable pursuant to Section 4.24.250 and Section 4.24.300 (but only if payable in the form of a monthly income) shall be granted the cost of living adjustments provided in this section. (Ord. 2001-20, § 35)

(Ord. No. 2008-54, 11-24-08)

4.24.295 Deferred Retirement Option Program.

A. Definitions. In this section, the following words have the meanings indicated:

1. “DROP” means the Deferred Retirement Option Program established under this section, pursuant to which a participant agrees to delay receipt of retirement benefits while the participant continues to work.

2. “DROP participant” means a participant who participates in DROP.

3. “DROP participation period” means the three-year period during which a participant participates in DROP while actively employed by the City.

4. “DROP account” means the account established for a DROP participant in accordance with subsection (E) of this section to which monthly amounts are credited while the participant continues to work for the City.

5. “DROP effective date” means March 1, 2021.

6. “Applicable interest rate” means 5% per annum.

B. Eligibility.

1. A participant who has completed 25 years of eligibility service as of the DROP effective date shall be eligible to participate in DROP as of the DROP effective date.

2. A participant who has not completed 25 years of eligibility service as of the DROP effective date shall be eligible to participate in DROP on the date the participant has completed 25 years of service.

3. A participant who was otherwise eligible under subsection (B)(1) of this section, but could not apply due to administrative delays in implementing the application process, shall be eligible to apply from June 30, 2022, through July 31, 2022.

C. Limitation on Number of DROP Participants.

1. Initial Plan Year. During the plan year ending June 30, 2021, no more than three participants are permitted to participate in DROP.

2. Second Plan Year. During the plan year ending June 30, 2022, no more than six participants are permitted to participate in DROP.

3. Later Plan Years. Beginning with the plan year ending June 30, 2023, no more than 25% of eligible employees may participate in the DROP at any time.

4. Selection by Seniority. If the number of participants that apply for participation in DROP exceeds the number permitted under subsections (C)(1) through (3) of this section, participants shall be selected by seniority on the basis of the participants’ actual service with the City as a sworn police officer. The Coordinator will develop procedures to implement this subsection.

D. Application for DROP Participation. An eligible participant who elects to participate in DROP shall, within a reasonable time before the beginning of the DROP participation period or within the one-time eligibility period established by subsection (B)(3) of this section, complete and submit to the Coordinator the following:

1. A written application on a form approved by or acceptable to the Committee, stating the participant’s intention to participate in DROP;

2. An irrevocable election whether his or her retirement benefits shall be paid at the end of the DROP participation period in either the normal form described in Section 4.24.220 or one of the optional forms described in Section 4.24.330;

3. Such other information required by the Coordinator to implement the DROP selection process described in subsection (C)(4) of this section; and

4. Employees submitting the application pursuant to eligibility established under subsection (B)(3) of this section shall be required to submit the following additional materials:

a. An irrevocable election to participate in DROP retroactive to the DROP effective date or an irrevocable election to participate in DROP retroactive to the first day of any month between the DROP effective date and the first day of the one-time exception eligibility period established in subsection (B)(3) of this section; and

b. Any such other information required by the Coordinator to process applications submitted pursuant to subsection (B)(3) of this section.

E. DROP Account.

1. The Coordinator shall establish and maintain a DROP account for each DROP participant solely for purposes of accounting for the DROP participant’s benefit from the DROP. The trustee shall not segregate funds from the trust for participants’ DROP accounts.

2. During the DROP participation period, the Coordinator shall credit to the DROP participant’s DROP account:

a. An amount equal to the DROP participant’s normal monthly retirement income determined pursuant to Section 4.24.220, but without the adjustment for unused sick leave.

b. Interest at the applicable interest rate on the amount described in subsection (E)(2)(a) of this section in accordance with the following rules:

i. Interest compounded monthly, but with an applicable annual rate equal to the applicable interest rate, will be applied to the balance of the DROP account as of the last day of each month during the DROP participation period; and

ii. No interest will be applied to additions to the account made during the current calendar month.

3. At least once a year, the Coordinator shall provide to a DROP participant a statement of the account balance credited to the DROP account as described in subsections (E)(1) and (2) of this section.

F. Status During Participation in DROP. During the DROP participation period:

1. A DROP participant will remain an active participant in the plan;

2. A DROP participant will not accrue credit for years of creditable service;

3. A DROP participant’s compensation shall be subject to the City pick-up contributions provided for in Section 4.24.200;

4. A DROP participant’s compensation shall not be used to increase the DROP participant’s average compensation;

5. The normal monthly retirement income of DROP participants, which accumulates in their DROP accounts, will not be subject to cost of living adjustments under Section 4.24.290;

6. A DROP participant shall continue to be eligible to participate in any health and welfare plan or deferred compensation plan, and to receive any other benefits otherwise available to City employees who are sworn police officers; and

7. A DROP participant shall continue to be subject to the personnel laws, regulations and policies applicable to City employees who are sworn police officers.

G. Death of a DROP Participant. If, during the DROP participation period, the participant reaches a termination date by reason of death, the participant’s beneficiary will receive the balance of the participant’s DROP account in addition to the death benefit described in Section 4.24.300.

H. Disability During Participation.

1. Permitted. A DROP participant may apply for a disability pension pursuant to Section 4.24.250.

2. Effect of Disability Pension. If a DROP participant receives a disability pension, the disability benefit calculated under Section 4.24.250 shall be based upon the participant’s actual years of creditable service, if applicable, and average compensation earned through the termination date and calculated as if the DROP participant had not elected to participate in DROP. A DROP participant who receives a disability benefit will forfeit his or her DROP account.

I. Payment of DROP Account and Retirement Income at Termination Date.

1. DROP Account. Upon the termination of a DROP participant’s employment with the City at the end of the three-year DROP participation period:

a. The trustee shall pay to the participant the amount accrued in the participant’s DROP account, determined in accordance with subsection (E) of this section, in the form of: (i) an eligible rollover distribution, pursuant to Section 4.24.350; (ii) a lump sum distribution, reduced by any withholding taxes remitted to the Internal Revenue Service or other taxing authority; or (iii) an additional annuity in the form of monthly benefit elected by the DROP participant in accordance with subsection (D)(2) of this section.

b. The participant will begin receiving his or her monthly retirement income, determined in accordance with the participant’s irrevocable election, as of the first day of the month following the end of the DROP participation period. Retirement income shall include an adjustment for unused sick leave. The amount of the participant’s unused sick leave shall be determined as of the participant’s termination date.

2. Termination Prior to the End of the DROP Participation Period. If the DROP participant reaches a termination date, other than by reason of death or disability, prior to the end of the three-year DROP participation period without regard to whether the termination of employment is voluntary by the participant or involuntary and at the request of the City:

a. The participant will forfeit the balance of his or her DROP account; and

b. The participant’s monthly retirement income shall be determined in accordance with the election made during the application for participation in DROP and calculated as if the DROP participant did not participate in DROP.

J. Adjustment for Maximum Limitations on Benefits. The benefits payable pursuant to this section shall be adjusted, if necessary, to conform to the limitations on the accrual of benefits pursuant to Section 4.24.270. (Ord. 2022-12 § 1, 2022/Ord. 2021-1 § 2, 2021)

Article 5. Death Benefits

4.24.300 Death benefits.

The only benefits payable under the plan in the event of the death of a participant shall be paid to those persons designated in accordance with this section as follows:

A. Ordinary Death Benefit.

1. General Benefit. In the event of the death of a participant (including a participant who is on a leave of absence for military service) prior to his or her benefit commencement date, while not in the line of duty, the participant’s beneficiary shall be entitled to receive as a single lump sum the benefit described in subsection (A)(1)(a) of this section plus that described in subsection (A)(1)(b) of this section, where:

a. Is an amount equal to the participant’s employee contributions benefit; and

b. Is an amount equal to the participant’s annualized compensation determined as of the date of death; provided, however, that the benefit provided by this subsection shall be payable only if the participant had died while a covered employee and after completing at least one year of eligibility service. Effective January 1, 2007, military service that results in the participant’s death shall count as eligibility service under this section.

2. Surviving Spouse/Domestic Partner Annuity Benefit.

a. If all of the following conditions are met, then the surviving spouse or domestic partner of a deceased participant shall be entitled to receive a survivor annuity, in lieu of any other plan benefit:

i. The participant is married on the date of death, or the participant and his or her partner are validly listed as domestic partners on the City’s Domestic Partnership Registry on the date of death;

ii. The participant’s death occurs before the participant’s benefit commencement date;

iii. The participant has designated his or her surviving spouse or domestic partner as the participant’s only primary beneficiary;

iv. Either: (A) The participant would have been eligible to receive normal retirement benefits pursuant to Section 4.24.220 had the participant retired on the day before his or her death, or (B) the participant would have been eligible to receive early retirement benefits pursuant to Section 4.24.230 had the participant retired on the day before his or her death;

v. The participant has not died in the line of duty as described in subsection (B)(4) of this section; and

vi. The spouse or domestic partner does not elect to receive the benefit provided in subsection (A)(1) of this section.

b. For purposes of this subsection, a survivor annuity is a monthly income commencing in the month next following the participant’s death, and continuing for the remainder of the spouse’s or partner’s life, in an amount equal to the actuarial equivalent of the benefit the spouse or partner would have received under an immediate joint and survivor annuity pursuant to Section 4.24.330 (with a 100% survivor benefit) had the participant retired on the day before his or her death.

B. Line of Duty Death Benefit. In the event of the death of a participant, prior to the participant’s benefit commencement date, while in the line of duty (as defined below), the participant’s beneficiary shall be entitled to receive the benefits described in subsections (B)(1), (2) or (3) of this section, as applicable.

1. General Benefit. The beneficiary shall be entitled to receive as a single lump sum the benefit described in paragraph (a) of this subdivision plus that described in paragraph (b) of this subdivision, where:

a. Is an amount equal to the participant’s employee contributions benefit; and

b. Is an amount equal to the participant’s annualized compensation determined as of the date of death; provided, however, that the benefit provided by this paragraph shall be payable only if the participant had died while a covered employee.

2. Surviving Spouse/Domestic Partner Benefit.

a. If all of the following conditions are met, then the surviving spouse or domestic partner of a deceased participant shall be entitled to receive a survivor benefit, in lieu of any other Plan benefit:

ii. The participant’s death occurs before the benefit commencement date;

iii. The participant has designated the participant’s surviving spouse or domestic partner as his or her beneficiary;

iv. The participant has died in the line of duty as described in subsection (B)(4) of this section; and

v. Upon the death of the participant, the spouse or partner does not elect to receive the benefits provided in subsection (B)(1) of this section.

b. i. For purposes of this subdivision, the line of duty survivor benefit is a monthly income commencing in the month next following the participant’s death and continuing for the remainder of the spouse’s or partner’s life or earlier remarriage of the spouse, or marriage, remarriage or re-registry of the domestic partner, in an amount equal to 66 and 2/3% of the participant’s compensation determined as of the day before the participant’s death.

ii. In the event of the death or remarriage of the spouse, or marriage, remarriage or re-registry of the domestic partner, following the death of the participant, a monthly benefit equal to 50% of such compensation shall be paid, in the aggregate, to the participant’s surviving children who are named as contingent beneficiaries.

iii. The monthly benefits payable to any child of the participant pursuant to this subsection shall continue until the first day of the month preceding the earlier of:

(A) The death of the child; or

(B) The later of the child’s:

(1) Attainment of age 18, or

(2) Attainment of age 23, but only so long as the child remains a full-time student.

3. Surviving Children’s Benefit.

a. If all of the following conditions are met, then the surviving children of a deceased participant shall receive a survivor benefit, in lieu of any other plan benefit:

i. The participant’s death occurs before the benefit commencement date;

ii. The participant has designated one or more of the participant’s children as his or her only primary beneficiaries; and

iii. The participant has died in the line of duty as described in this subsection (B)(4) of this section.

b. i. For purposes of this subdivision, the line of duty survivor children’s benefit is a monthly income commencing in the month next following the participant’s death in an amount equal to 50% of the participant’s compensation determined as of the day before the participant’s death and paid, in the aggregate, to the participant’s surviving children who are named as primary beneficiaries.

ii. The monthly benefits payable to any child of the participant pursuant to this subsection shall continue until the first day of the month preceding the earlier of:

(A) The death of the child; or

(B) The later of the child’s:

(1) Attainment of age 18; or

(2) Attainment of age 23, but only so long as the child remains a full-time student.

4. Line of Duty Definition. For purposes of this section, the term “line of duty” means death from an injury or illness which has been sustained as an active covered employee and which has been ruled compensable under the Workers Compensation Law of Maryland. Any payments made on account of the death of a participant in the line of duty pursuant to any death benefit provisions of this Plan shall be considered to be in the nature of Workers’ Compensation payments made pursuant to Title 9 of the Labor and Employment Article of the Annotated Code of Maryland.

C. Benefits Payable After Benefit Commencement Date. If a participant dies after the participant’s benefit commencement date, the benefits, if any, to which his or her beneficiary shall be entitled shall depend upon the form in which the participant’s benefits were payable at the time of death, under the applicable form of benefit described in Sections 4.24.320 through 4.24.350.

D. Death of Terminated Vested Participant. If a participant reaches a termination date for any reason other than death, retirement or disability and dies before the benefit commencement date for his or her benefit under Section 4.24.260, then his or her designated beneficiary shall be entitled to receive as a single lump sum an amount equal to the employee contributions benefit. (Ord. 2012-24 § 9 (part), 2012/Ord. 2001-20, § 39)

4.24.310 Limitations on death benefits.

All death benefits payable pursuant to Section 4.24.300 shall be distributed only in accordance with a reasonable, good faith interpretation of Section 401(a)(9) of the Internal Revenue Code, as follows:

A. Lump Sum Benefit. All benefits payable under Section 4.24.300(A) or (D) shall be distributed in full not later than the last day of the calendar year containing the fifth anniversary of the death of the participant.

B. Surviving Spouse Annuity Benefit. If the participant’s beneficiary is the participant’s surviving spouse, then, unless the participant’s spouse elects to receive the lump sum benefit under Section 4.24.300(A), benefits payable under Section 4.24.300(B) to or for the benefit of the spouse, and which begin not later than the later of the last day of the calendar year containing the first anniversary of the participant’s death, or the last day of the calendar year in which the participant would have reached age 70-1/2, may be distributed over the life of the spouse or a period certain not extending beyond the life expectancy of the spouse, under a method of distribution which meets the requirements of Section 4.24.340(A). The life expectancy shall be based upon the spouse’s attained age as of the spouse’s birthday in the calendar year in which falls:

1. The date on which non-annuity benefits are required to commence pursuant to this subsection; or

2. If earlier, the date on which annuity benefits actually commence.

C. Surviving Spouse Dies Prior to Commencement of Benefits. If benefits are payable in accordance with subsection (B) of this section, and the surviving spouse dies after the participant but prior to:

1. The date on which non-annuity benefits are required to commence pursuant to subsection (B) of this section; or

2. The date on which annuity distributions meeting the requirements of subsection (B) of this section actually commence;

Then, in either case, the aforesaid 5-year limit, and the alternate limit set forth in subsection (A) of this section, are to be applied as if the spouse were the participant, so that such limits shall be measured from the death of the spouse.

D. When Annuity Benefits Commence before Participant’s Death. If annuity benefits meeting the requirements of Section 4.24.340 had commenced prior to the participant’s death, then, in either case, the death benefits payable pursuant to Sections 4.24.300 through 4.24.310 may be distributed without regard to the aforesaid 5-year limit, but must be distributed at least as rapidly as they would have been under the pre-death method of distribution. (Ord. 2001-20, § 40)

(Ord. No. 2008-54, 11-24-08)

4.24.320 Method of payment.

A. All benefit distributions shall be in cash (or in annuity contracts as provided herein).

B. The City shall determine, in its discretion, whether the distribution shall be funded through periodic payments made directly from the Trust, or through the purchase of annuity contracts, or whether a combination of such methods of distribution shall be used, and the City shall give to the trustees such directions and information as may be necessary for the trustees to carry out the decision of the City.

C. If the City shall determine that the whole or any part of the distribution is to be funded through the purchase of an annuity contract for a participant, the City shall select such form of contract (including a variable annuity) to be so purchased and shall direct the trustees to pay the premium of such contract to the issuing company.

D. The City shall direct that all right, title and interest in such contract shall remain in the trustees under the terms of the Plan and the participant shall have no right, title or interest therein except to receive the payments therefrom as provided therein, and to change the beneficiary from time to time.

E. Alternatively, the City may direct that the contract shall be purchased in the name of the participant and distributed to the participant free and clear of the Trust, in which case:

1. The contract shall be issued so as to be nontransferable;

2. It shall not contain a death benefit in excess of the greater of the reserve or the total premiums paid for annuity benefits; and

3. It shall not contain provisions that expand upon, change or eliminate any plan provisions applicable to distributions in annuity form. (Ord. 2001-20, § 41)

4.24.330 Optional forms of benefit.

A participant, subject to the conditions hereinafter set forth, may elect to receive, in lieu of the normal monthly form of retirement income described in Section 4.24.220, a benefit, which is its actuarial equivalent, payable in any of the following forms and in the form described in Section 4.24.350:

A. Joint and Survivor Option.

1. The joint and survivor option is a monthly income payable during the participant’s lifetime and continuing after the participant’s death at the rate of either 50% or 100% (as elected by the participant) to his or her beneficiary for the remainder of such beneficiary’s life.

2. If, before the participant’s benefit commencement date (whether before or after the participant’s termination date), the participant’s beneficiary dies, the election shall thereupon become void.

3. If, after the participant’s benefit commencement date but before the death of the participant, the participant’s beneficiary dies, or the participant becomes divorced from the beneficiary, the election shall remain effective and the participant shall continue to receive the reduced retirement income payable to him or her in accordance with the option.

B. Life Only Option. The life only option, which is the normal form of benefit under the Plan, is a monthly income payable during the participant’s lifetime, with no payments to be made after the last payment prior to the participant’s death.

C. Lump Sum Option. A participant may elect at any time after his or her termination date and before the benefit commencement date for the participant’s retirement benefits to receive a lump sum cash payment of the participant’s employee contributions benefit in lieu of all other benefits under the Plan and, upon payment of that lump sum cash payment, then, subject to restoration provided in Section 4.24.080(D), the entire remaining portion of his or her accrued benefit shall be forfeited by the participant.

D. Single Life Annuity—With Refund. The single life annuity with refund option is a monthly income payable during the participant’s lifetime, and, as soon as administratively feasible following the participant’s death, the participant’s beneficiary will receive a lump sum payment of an amount which is the unpaid balance of the present value of the participant’s employee contributions benefit.

E. Pop Up Option.

1. The pop up option is a monthly income payable during the participant’s lifetime and continuing after the participant’s death at either 50% or 100% (as elected by the participant) of the rate to his or her beneficiary for the remainder of the beneficiary’s life.

2. If the participant’s beneficiary dies before the date on which the participant’s benefits have commenced (whether before or after his or her termination date), the election shall thereupon become void.

3. If the participant’s beneficiary dies, or if the participant becomes divorced from the beneficiary, after the date on which the participant’s benefits have commenced, but before the death of the participant, the election shall likewise become void, and the participant shall receive, commencing on the first day of the month following the beneficiary’s death (or divorce), the monthly benefit which the participant would have received had his or her benefits originally been payable as a life only option, as described in subsection (B) of this section; and such benefit shall thereafter be payable as a life only option. (Ord. 2014-1 § 1, 2014/Ord. 2001-20, § 42)

4.24.340 General provisions applicable to options.

A. Minimum Distribution Requirements. Notwithstanding any other provision in the Plan to the contrary, distribution shall be made only in accordance with a reasonable, good faith interpretation of Section 401(a)(9) of the Internal Revenue Code. To the extent required thereby, distribution of benefits shall comply with the following limitations:

1. Except as otherwise provided below, distribution shall begin not later than the later of April 1st of the calendar year (hereinafter referred to as the “commencement year”) in which the participant retires or attains age 70-1/2, whichever occurs later.

i. Distribution shall be made:

(A) Over the life of the participant or the lives of the participant and the participant’s beneficiary; and/or

(B) Over a period certain not extending beyond the life expectancy of the participant or the joint life and last survivor expectancy of the participant and his or her beneficiary,

All as described in proposed treasury regulation Section 401 (a)(9) -l of the Internal Revenue Code, or, if shorter, the alternate period described in proposed treasury regulation Section 401(a)(9)-(2) of the Internal Revenue Code.

2. A required distribution shall be deemed to have been made during the commencement year if actually made by the following April 1st, but such delayed distribution shall not change the amount of such distribution, and the distribution otherwise required during the subsequent calendar year shall be calculated as if the first distribution had been made on the last day of the commencement year.

3. Benefits paid prior to the commencement year shall reduce the aggregate amount subject to (but shall not otherwise negate) the minimum distribution requirements described herein.

4. Nothing contained in this subsection shall prevent distribution of annuity benefits providing for non-increasing (except as otherwise permitted in proposed treasury regulation, Section 401(a)(9)-l of the Internal Revenue Code) payments beginning not later than the commencement year (except as provided in subsection (A)(3) of this section) and payable at least annually over a period permitted by this subsection (for which purpose, if benefit commencement under the annuity precedes the commencement year, each relevant life expectancy shall be based on the individual’s attained age as of his or her birthday occurring in the calendar year in which benefit commencement occurs).

B. Election Procedures. An election of any optional form of benefit described in Section 4.24.330, or any revocation or change of such election, must be made by a participant in writing, on a form supplied by or acceptable to the City. Upon the participant’s benefit commencement date, such election (including the designation of a beneficiary) shall be irrevocable.

C. Effect of Death. In the event of the death of a participant prior to his or her benefit commencement date, no benefits shall be payable to the participant’s spouse or other beneficiary except as provided in Section 4.24.300, regardless of whether or not the participant has elected an optional form of benefit pursuant to Section 4.24.330.

D. Timing of Benefit Commencement. Notwithstanding any other plan provision to the contrary, in no event (unless the participant otherwise elects pursuant to any elective provision which may be then present in the Plan) shall benefits begin later than the 60th day after the close of the plan year in which occurs the latest of:

1. The date on which the participant attains age 62 (or any earlier normal retirement age which may be then specified in the Plan); or

2. The termination of the participant’s employment with the City. (Ord. 2001-20, § 43)

(Ord. No. 2008-54, 11-24-08)

4.24.350 Eligible rollover distributions.

Notwithstanding any provision of the Plan to the contrary that would otherwise limit a Distributee’s election under this section, a Distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the Distributee in a direct rollover.

A. Definitions.

1. Eligible Rollover Distributions. An “eligible rollover distribution” is any distribution of all or any portion of the balance to the credit of the Distributee, except that an eligible rollover distribution does not include:

a. Any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Distributee or the joint lives (or joint life expectancies) of the Distributee and the Distributee’s designated beneficiary, or for a specified period of 10 years or more;

b. Any distribution to the extent such distribution is required under Section 401(a)(9) of the Internal Revenue Code in accordance with the regulations under Section 401(a)(9) that were proposed in January 2001; and

c. The portion of any distribution that is not includable in gross income.

2. Eligible Retirement Plan.

a. An “eligible retirement” plan is:

i. An individual retirement account described in Section 408(a) of the Internal Revenue Code;

ii. An individual retirement annuity described in Section 408(b) of the Internal Revenue Code; or

iii. A qualified Trust described in Section 401(a) of the Internal Revenue Code or

an annuity plan described in Section 403(a) of the Internal Revenue Code, that accepts the eligible rollover distribution.

b. For distributions made on or after December 31, 2001 an Eligible Retirement Plan also includes:

i. An annuity contract described in Section 403(b) of the Internal Revenue Code.

ii. An eligible plan under Section 457(b) of the Internal Revenue Code which is maintained by a state, a political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state which agrees to separately account for amounts transferred into such plan from this Plan.

c. For distributions made on or after December 31, 2007 an Eligible Retirement Plan also includes a Roth IRA described in Section 408A of the Internal Revenue Code.

d. However, in the case of an eligible rollover distribution to the surviving spouse of a participant or former participant, an eligible retirement plan is an individual retirement account or individual retirement annuity.

3. Distributee. A “Distributee” includes a participant or former participant. In addition, the participant’s or former participant’s surviving spouse and the participant’s or former participant’s spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Internal Revenue Code, are Distributees with regard to the interest of the spouse or former spouse.

4. Direct Rollover. A “direct rollover” is a payment by the Plan to the eligible retirement plan specified by the Distributee. (Ord. 2001-20, §44)

(Ord. No. 2008-54, 11-24-08)

4.24.355 Distributions to Non-Spouse Beneficiaries.

This Section applies to distributions made on or after July 1, 2008. Notwithstanding any provision of the Plan to the contrary that would otherwise limit the options of the Beneficiary of a deceased Participant who is not a Distributee (within the meaning of Section 4.24.350), the Administrator shall, upon the request of such a Beneficiary transfer a lump sum distribution to the trustee of an individual retirement account established under Section 408 of the Internal Revenue Code in accordance with the provisions of Section 402(e)(11). (Ord. No. 2008-54, 11-24-08)

Article 6. Administration

4.24.360 Designation of Beneficiaries.

A. Participant Designates Beneficiary. Each participant may designate a beneficiary or beneficiaries (who may be named contingently or successively) to receive such benefits as may be payable under the Plan upon or after the participant’s death, and, subject to the provisions of Sections 4.24.320 through 4.24.350, such designation may be changed from time to time by the participant by filing a new designation. Each designation will revoke prior designations by the same participant, shall be in form prescribed by the City, and will be effective only when filed in writing with the City prior to the participant’s benefit commencement date.

B. Absence of Valid Beneficiary Designation. In the absence of a valid beneficiary designation (except in conjunction with the election of a form of benefit payment which does not require the designation of a specific beneficiary), or if, at the time any benefit payment is due to a beneficiary, there is no living beneficiary validly named by the participant eligible to receive the payment, the City shall direct the trustees to distribute any such benefit payment to:

1. The participant’s spouse, if then living; otherwise to

2. The participant’s then living descendants, if any, per stirpes; otherwise to

3. The participant’s then living parent or parents, equally; otherwise to

4. The participant’s estate.

C. Question regarding Right of a Person to Receive a Benefit Payment. In determining the existence or identity of anyone entitled to a benefit payment, the City and the trustees may rely conclusively upon information supplied by the participant’s personal representative. In the event of a lack of adequate information being supplied to the City, or in the event that any question arises as to the right of any person to receive a benefit payment as aforesaid, or in the event that a dispute arises with respect to any such payment, then, not-withstanding the foregoing, the City, in its sole discretion, may, in complete discharge of the City and the trustees, and without liability for any tax or other consequences which might flow therefrom, direct the trustees to:

1. Distribute the payment to the participant’s estate;

2. Retain such payment, without liability for interest, until the rights thereto are determined; or

3. Deposit the payment into any court of competent jurisdiction. (Ord. 2001-20, § 48)

4.24.370 Location of participants and beneficiaries.

A. Notice to Last Post Office Address. Any communication, statement or notice addressed to a participant or beneficiary at his or her last post office address filed with the City, or if no such address was filed with the City, then at the individual’s last post office address as shown on the City’s records, shall be binding on the participant or beneficiary for all purposes of the Plan. Except for the City’s sending of a registered letter to the last known address, neither the trustees nor the City, shall be obliged to search for any participant or beneficiary.

B. Distribution to Next of Kin if Participant or Beneficiary Fails to Claim Amount. If the City notifies any participant or beneficiary that he or she is entitled to an amount under the Plan and the participant or beneficiary fails to claim such amount or make his or her location known to the City within 3 years thereafter, then, except as otherwise required by law, if the location of one or more of the next of kin of the participant, including the participant’s surviving spouse, is known to the City, it may direct distribution of such amount to any one or more or all of such next of kin, and in such proportions as the City determines.

C. If Location of Participant, Beneficiary, or Next of Kin Cannot be Determined. If the location of none of the foregoing persons can be determined, the City shall have the right to direct that the amount payable shall be deemed to be a forfeiture and treated in accordance with Section 4.24.180, except that the dollar amount of the forfeiture, unadjusted for gains or losses in the interim, shall be reinstated if a claim for the benefit is made by the participant or beneficiary to whom it was payable. If any benefit payable to an unlocated participant or beneficiary is subject to escheat pursuant to applicable State law, neither the trustees nor the City shall be liable to any person for any payment made in accordance with such law. (Ord. 2001-20, § 49)

4.24.380 Investment of funds.

A. All contributions under the Plan shall be paid to the trustees and deposited in the Trust.

B. Such contributions, all investments made therewith and proceeds thereof and all earnings and profits thereon, less the authorized disbursements therefrom, shall constitute the Trust, which Trust, and the agreement under which it is maintained, shall in all respects constitute a part of the Plan.

C. The City reserves the right to select, and from time to time to change, the trustees, to amend the Trust with the consent of

the trustees, or to adopt a different funding vehicle. (Ord. 2001-20, § 50)

4.24.390 Prohibition against diversion of funds.

It shall be impossible by operation of the Plan or Trust, by natural termination of either, by power of revocation or amendment, by the happening of any contingency, by collateral arrangement or by other means, for any part of the corpus or income of the Trust, or for any funds contributed thereto, to inure to the benefit of the City or otherwise be used for or diverted to purposes other than providing benefits to participants and beneficiaries and defraying reasonable expenses of administering the Plan, except as otherwise set forth in Section 4.24.540 (C)(5) and the Trust with respect to the conditions under which Trust assets may be returned to the City. (Ord. 2001-20, § 51)

4.24.400 Prohibition against assignment of benefits.

A. Except as provided below, no benefit payable at any time under this Plan may be anticipated, assigned (either at law or in equity), alienated or subject to attainment, garnishment, execution, levy or other legal and equitable process:

B. However, the prohibitions of the preceding sentence shall not apply to, and the trustees shall fully recognize the creation, assignment or recognition of a right to any benefit payable with respect to a participant pursuant to a qualified domestic relations order.

C. For the purposes hereof, a “qualified domestic relations order” shall mean a judgment, decree or order made pursuant to a State domestic relations law which relates to the provision of child support, alimony payments or marital property rights and which clearly specifies:

1. The name, social security number, date of birth and last known mailing address of the participant and alternate payee covered by the order;

2. The amount or percentage of the participant’s benefits to be paid by the Plan to the alternate payee, or the manner in which such amount or percentage is to be determined;

3. The number of payments or period for which payments are to be made;

4. The name of the Plan and the Plan Administrator.

D. Notwithstanding subsection (C) of this section, an order will not be a qualified domestic relations order, if it:

1. Requires this Plan to provide any type or form of benefit or benefit option not otherwise provided under the Plan;

2. Requires this Plan to provide increased benefits (determined on the basis of actuarial value);

3. Requires the payment of benefits to an alternate payee which are required to be paid to another alternate payee;

4. Provides for payment of benefits to an alternate payee which commence before the commencement of benefit payments to the participant;

5. Provides for payment of benefits to an alternate payee over a period longer than the lifetime of the participant;

6. Allows an alternate payee to designate a beneficiary to receive payments following the death of the alternate payee;

7. Fails to specifically provide that, upon the death of the alternate payee while benefits are in pay status and prior to the death of the participant, the payments being made to the alternate payee will be paid to the participant;

8. Provides for the designation of the alternate payee as the surviving spouse for purposes of receipt of all or a portion of any surviving spouse annuity benefit payable upon the participant’s death;

9. Fails to specifically provide that no portion of any death benefit will be paid to the alternate payee upon the death of the participant prior to commencement of benefit payments if a surviving spouse annuity benefit is payable to the then-surviving spouse of the participant. (Ord. 2001-20, § 52)

4.24.410 Administrative authority.

A. Sole Responsibility and Control. Except as otherwise specifically provided herein, the City shall have the sole responsibility for and the sole control of the operation and administration of the Plan.

B. Powers, Duties and Responsibilities. The City shall have the power and authority to take all action and to make all decisions and interpretations which may be necessary or appropriate in order to administer and operate the Plan, including, without limiting the generality of the foregoing, the power, duty and responsibility to:

1. Resolve and determine all disputes or questions arising under the Plan, including the power to determine the rights of employees, participants and beneficiaries, and their respective benefits, and to remedy any ambiguities, inconsistencies or omissions;

2. Adopt such rules of procedure and regulations as in its opinion may be necessary for the proper and efficient administration of the Plan and as are consistent with the Plan;

3. Implement the Plan in accordance with its terms and such rules and regulations;

4. Direct the trustees with respect to the eligibility of any employee as a participant and the crediting and distribution of the Trust, which are to be made only upon the basis of instructions from the City pursuant to the terms of the Plan; and

5. Establish and carry out a funding policy and method consistent with the objectives of the Plan, pursuant to which the City shall determine the Plan’s liquidity and financial needs and communicate them to the trustees (or other fiduciaries who are charged with determining investment policy).

C. Act through Council of the City of Takoma Park. Subject to the power to delegate in the manner described in Section 4.24.420, the City shall act through the Council of the City of Takoma Park. (Ord. 2001-20, § 53)

4.24.420 City administration.

The Plan shall be operated and administered on behalf of the City by the Plan Administrator which shall be governed by the following:

A. Powers of the Plan Administrator. The Plan Administrator shall be the Retirement Plan Committee established pursuant to Section 4.24.430. Except as the City shall otherwise expressly determine, the Plan Administrator shall have the following powers:

1. To make and enforce rules and regulations as it shall deem necessary or proper for the efficient administration of the Plan;

2. To make and enforce procedures to be followed by employees in filing applications for benefits and for furnishing the evidence necessary to establish the employees’ right to benefits;

3. To make and enforce determinations concerning the rights of employees applying for or receiving benefits;

4. To make and enforce procedures which afford a mechanism for adjusting complaints of an employee dissatisfied with determinations of the Plan Administrator;

5. To make and enforce procedures for determining the service credit of employees which affords employees an opportunity to object, in writing, and to establish service credit in advance of retirement;

6. To make and enforce procedures for authorizing disbursements from the fund created under the Plan and to authorize disbursements from the trustees of the fund in accordance with the Plan documents;

7. To make and enforce procedures and standards and make determinations concerning total and permanent disability in accordance with the Plan documents;

8. To compute the amount of benefits that shall be payable to any person in accordance with the Plan documents;

9. To interpret the Plan;

10. To otherwise decide questions concerning the eligibility of any employee to participate in the Plan or to receive benefits from the Plan;

11. To employ or engage actuaries to make actuarial evaluations of the liabilities under the Plan, to recommend the mortality and other tables and interest rates to be used from time to time in actuarial and other computations for any purpose of the Plan, to recommend the amounts of contributions to be made by the City and to perform such other services as the Plan Administrator shall deem necessary or desirable in connection with the administration of the Plan;

12. To employ or engage accountants as it shall deem necessary or desirable in connection with the administration of the Plan;

13. To employ or engage legal counsel as it shall deem necessary or desirable in connection with the administration of the Plan;

14. To employ or engage any other experts as it shall deem necessary or desirable in connection with the administration of the Plan;

15. To determine the mortality and other tables and interest rates to be used from time to time in actuarial or other computations for any purpose of the Plan;

16. To recommend to the City the amounts of contributions to be made by the City, from time to time, under the provisions of the Plan; and

17. To act for the City before all persons in any matter directly pertaining to the Plan.

B. Limits on Power. The Plan Administrator shall have no power to:

1. Amend or terminate the Plan;

2. Determine City contributions; or

3. Affect the employer-employee relationship between the City and any employee; all of which powers are reserved to the City unless expressly granted to the Plan Administrator.

C. Fiduciary Powers, Duties and Responsibilities. Fiduciary duties, powers and responsibilities (other than those reserved to the trustees, with respect to management or control of Trust assets) may be allocated among the fiduciaries (if there be more than one) to whom such duties, powers and responsibilities have been delegated, so long as such allocation is pursuant to action of the City or by written agreement executed by the involved fiduciaries and approved by the City in which case, such fiduciary shall have any liability, with respect to any duties, powers or responsibilities not allocated to him, for the acts or omissions of any other fiduciary. Any person may serve in more than one fiduciary capacity under the Plan, including those of Plan Administrator and trustee.

D. Specialized Advice or Assistance.

1. Appoint Persons or Firms—Rely Upon Advice.

a. The Plan Administrator may appoint any persons or firms, or otherwise act to secure specialized advice or assistance, as it deems necessary or desirable in connection with the administration and operation of the Plan.

b. The Plan Administrator shall be entitled to rely conclusively upon, and shall be fully protected in any action or omission taken by it in good faith reliance upon, the advice or opinion of such firms or persons.

2. Delegate Duties, Powers or Responsibilities to City Employee.

a. The Plan Administrator shall have the power and authority to delegate from time to time by written instrument all or any part of its duties, powers or responsibilities under the Plan, both ministerial and discretionary, as it deems appropriate, to the specified employee of the City, who shall be the Human Resources Manager of the City or a person designated by the Human Resources Manager to assist the Plan Administrator (the “Coordinator”), and in the same manner to revoke any such delegation of duties, powers or responsibilities.

b. Any action of the Coordinator in the exercise of such delegated duties, powers or responsibilities shall have the same force and effect for all purposes hereunder as if such action had been taken by the Plan Administrator.

c. Further, the Plan Administrator may authorize the Coordinator to execute any certificate or document on behalf of the Plan Administrator, in which event any person notified by the Plan Administrator of such authorization shall be entitled to accept and conclusively rely upon any such certificate or document executed by such person as representing action by the Plan Administrator until such third person shall have been notified of the revocation of such authority.

d. The Plan Administrator shall not be liable for any act or omission of any person to whom the Plan Administrator’s duties, powers or responsibilities have been delegated, nor shall the Coordinator have any liabilities with respect to any duties, powers or responsibilities not delegated to him or her.

E. Liability. All representatives of the City and the Plan Administrator shall use ordinary care and diligence in the performance of their duties pertaining to the Plan, but no such individual shall incur any liability:

1. By virtue of any contract, agreement, bond or other instrument made or executed by the individual or on his or her behalf in the individual’s official capacity with respect to the Plan;

2. For any act or failure to act, or any mistake or judgment made, in his or her official capacity with respect to the Plan, unless resulting from the individual’s gross negligence or willful misconduct; or

3. For the neglect, omission or wrongdoing of any other person involved with the Plan.

The Plan shall indemnify and hold harmless each such individual from the effects and consequences of the individual’s acts, omissions and conduct in his or her official capacity with respect to the Plan, except to the extent that such effects and consequences shall result from the individual’s own willful misconduct or gross negligence; provided, however, that any person who shall claim the right to any payment or damage as a result of the actions of any individual in connection with the performance of their duties pertaining to the Plan, shall be entitled to look only to the Trust fund created by the Plan for payment. Such individual shall have no other right, claim or demand therefor against the City.

F. Liability Insurance.

1. The Plan shall purchase, using Plan assets and as an expense of the Plan, liability insurance for the Plan and/or for its fiduciaries to cover liability or losses occurring by reason of an act or omission of a fiduciary, provided such insurance contract permits recourse by the insurer against the fiduciary in the case of breach of fiduciary obligation by such fiduciary.

2. Any fiduciary may purchase, from and for his or her own account, insurance to protect the fiduciary in the event of a breach of fiduciary duty and the City may also purchase insurance to cover the potential liability of one or more persons who serve in a fiduciary capacity with regard to the Plan.

G. Fiduciary’s Benefits. Nothing in the Plan shall be construed so as to prevent any fiduciary from:

1. Receiving any benefit to which he or she may be entitled as a participant or beneficiary; or

2. Receiving any reasonable compensation for services rendered, or for the reimbursement of expenses properly incurred in the performance of his or her duties under the Plan (except that no person so serving who receives compensation as an employee shall receive compensation from the Plan, except for reimbursement of expenses properly incurred); or

3. Serving as a fiduciary in addition to being an officer, employee, agent, or other representative of the City or any related entity.

However, the fiduciary shall not be entitled to vote or act upon, or execute on behalf of the Plan, documents specifically relating to, his or her own participation in the Plan. (Ord. 2001-20, § 54)

4.24.430 Retirement Plan Committee.

The Retirement Plan Committee shall serve as Plan Administrator. Except to the extent that the City has retained any power or authority, or allocated duties and responsibilities to another fiduciary, said Committee shall have full power and authority to administer and operate the Plan in accordance with its terms and in particular the authority contained in Sections 4.24.410 through 4.24.490, and, in acting pursuant thereto, shall have full power and authority to deal with all persons in any matter directly connected with the Plan, including, but not limited to, the trustees, other fiduciaries, insurance companies, investment advisors, other advisors and specialists, participants, beneficiaries and their representatives, in accordance with the following provisions:

A. Individuals Serving on the Committee. The Committee shall consist of those individuals who hold the following positions:

1. City Administrator or his or her designee;

2. City Treasurer;

3. Chief of Police or his or her designee;

4. Representative of Local 400 of the United Food and Commercial Workers or his or her designee;

5. Representative of the City Police Department supervisory employees or his or her designee; and

6. Two citizens of the City who shall be appointed by the Council of the City.

The Committee shall elect its own chairperson and vice-chairperson annually.

B. Compensation, Acceptance of Duties and Responsibilities. Subject to his or her right to resign at any time, each member of the Committee shall serve without compensation at the pleasure of the City, and the City may appoint, and may revoke the appointment of, additional members to serve with the Committee as may be determined to be necessary or desirable from time to time. Each member of the Committee, by accepting appointment to the Committee, shall thereby be deemed to have accepted all of the duties and responsibilities of such appointment, and to have agreed to the faithful performance of his or her duties thereunder.

C. Organization—Voting.

1. The Committee shall adopt such formal organization and method of operation as it shall deem desirable for the conduct of its affairs.

2. The Committee shall act as a body, and the individual members of the Committee shall have no powers and duties as such, except as provided herein.

3. The Committee shall act by vote of a majority of its members at the time in office (other than those disqualified from voting pursuant to Section 4.24.420(G), either at a meeting or in writing without a meeting.

D. Decisions Final. Except as set forth in Section 4.24.490, the determination of the Committee on any matter pertaining to the Plan within the powers and discretion granted to it shall be final and conclusive on the City, the trustees, all participants and beneficiaries and all those persons dealing in any way or capacity with the Plan. (Ord. 2001-20, § 55)

(Ord. No. 2008-54, 11-24-08)

4.24.440 Mutual exclusion of responsibility.

Neither the trustees nor the City shall be obliged to inquire into or be responsible for any act or failure to act, or the authority therefor, on the part of the other. (Ord. 2001-20, § 56)

4.24.450 Uniformity of discretionary acts.

Whenever in the administration or operation of the Plan discretionary actions by the City, the Committee or the trustees are required or permitted, such action shall be consistently and uniformly applied to all persons similarly situated, and no such action shall be taken which shall discriminate in favor of highly-compensated employees as defined in Section 414(q) of the Internal Revenue Code as an employee who: (1) was a 5-percent owner, as defined in Section 416(i)(l) of the Code, at any time during the Plan year; or (2) had compensation from the City for the preceding Plan year in excess of $80,000.00 and, if the City so elects in the Plan, was in the top-paid group for the preceding Plan year. The City does not intend to utilize the top-paid group election. (Ord. 2003-34 § 4, 2003: Ord. 2001-20 §§ 57, 2001)

4.24.460 Fiduciary standards.

The Plan Administrator and all other persons in any fiduciary capacity with respect to the Plan shall discharge their duties with respect to the Plan:

A. Solely in the interest of the participants and beneficiaries and for the exclusive purposes of providing benefits to participants and their beneficiaries and defraying reasonable expenses of administering and operating the Plan;

B. With the care, skill, prudence and diligence under the circumstances then prevailing that a prudent individual acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; and

C. In accordance with the documents and instruments governing the Plan. (Ord. 2001-20, § 58)

4.24.470 Litigation.

In any action or judicial proceeding affecting the Plan and/or the Trust, except as may be otherwise required by law, no participant or beneficiary shall be entitled to any notice or service of process, and any final judgment entered in such action shall be binding on all persons interested in, or claiming under, the Plan. (Ord. 2001-20, § 59)

4.24.480 Payment of administration expenses.

Expenses incurred in the administration and operation of the Plan shall be paid by the trustees out of the Trust unless the City, in its discretion, elects to pay them. (Ord. 2001-20, § 60)

4.24.490 Review procedure.

An employee aggrieved by a decision of the Plan Administrator may request that the Plan Administrator review its decision, and the Plan Administrator shall then review its decision. The decision of the Plan Administrator following such review upon request of an employee shall be final and conclusive. (Ord. 2001-20, § 61)

Article 7. Amendments—Termination of Plan

4.24.500 Right to amend.

A. Except as otherwise provided herein, all rights, benefits and obligations of officers or employees of the City with respect to pensions or retirement are provided under the terms of this Plan, and this Plan supersedes and prevails over the terms of any rules, regulation, resolution or ordinance concerning such matters.

B. The City shall have the right to amend the Plan, at any time, by ordinance and all parties claiming any interest under this Plan shall be bound thereby. Not withstanding any other provision of City law, no City resolution or ordinance which relates to the subject matter of the Plan or conflicts with, narrows, or expands any term of this Plan shall be effective unless the City acts by ordinance which specifically amends the provisions of this Plan. No amendment shall reduce a participant’s accrued benefit or deprive a participant of an already vested interest to the extent funded unless required by law. No amendment shall cause any assets of the Trust to revert to the City except that, if after the Plan is terminated there are assets remaining after all Plan liabilities have been provided for, such assets may be returned to the City. No amendment which affects the rights, duties, responsibilities or immunities of the trustees shall be binding upon the trustees in the absence of their consent thereto.

C. Notwithstanding the provisions of this section, the Plan and Trust may be amended at any time, by amendment to the Code of the City, retroactively if required, if found necessary in order to conform to the provisions and requirements of the Internal Revenue Code or any similar act or any amendments thereto or regulations promulgated thereunder, no such amendment shall be considered prejudicial to any interest of a participant or beneficiary hereunder. (Ord. 2001-20, § 65)

4.24.510 Right to terminate.

It is the present intention of the City to maintain the Plan throughout the City’s existence. Nevertheless, the City reserves the right, at any time, to permanently discontinue further contributions to the Trust or to terminate the entire Plan and Trust. Upon a termination or partial termination of this Plan or upon complete discontinuance of contributions to the Plan by the City, a participant’s right to his or her accrued benefit under the Plan as of such date shall be nonforfeitable to the extent funded. (Ord. 2003-34 § 5, 2003: Ord. 2001-20 §66, 2001)

4.24.520 Automatic termination of contributions.

The liability of the City to make contributions to the Trust shall automatically terminate upon liquidation of the City, upon its adjudication as a bankrupt or upon the making of a general assignment for the benefit or creditors. (Ord. 2001-20, § 67)

4.24.530 Allocation and distribution.

A. Causation.

1. This section shall become operative in any of the following events:

a. A complete termination of the City’s liability to make further contributions to the Trust;

b. A complete discontinuance of contributions by the City to the Trust; or

c. A complete termination of the Plan.

2. The provisions of this section shall also become operative in the event of a partial termination of the Plan, but only with respect to that portion of the Plan attributable to the participants to whom the termination is applicable.

B. Effective Date set by Ordinance of the City. The effective date of any termination or discontinuance of contributions shall be as set forth in an ordinance adopted by the City.

C. Actions Upon Termination or Discontinuance of Contributions.

1. Upon the effective date of any such event, then, notwithstanding any other provisions of the Plan, subject to the remainder of this section.

a. No persons who were not theretofore participants shall be eligible to become participants;

b. No further benefits shall accrue; and

c. The accrued benefits of all participants not theretofore vested, and not theretofore forfeited shall immediately become fully vested.

2. The accrued benefits of all participants and beneficiaries shall be determined and distributed to them, as soon as is practicable after such termination or discontinuance, in accordance with Sections 4.24.220 through 4.24.290 and Sections 4.24.320 through 4.24.350.

3. The assets in the Trust shall be allocated for the purposes set forth below and in the order set forth below, to the extent the assets are sufficient therefor. The allocations may be implemented by distribution of Trust assets, or by the purchase and distribution by the trustees of insurance company annuity contracts, or by a combination of these methods. (Ord. 2001-20, §68)

4.24.540 Priorities for allocation of Trust assets.

Upon termination of the Trust, the trustees shall liquidate all assets remaining in the Trust. After deduction of estimated expenses in liquidating and distributing the Trust, and any reasonable compensation for the trustees agreed upon with the City, the balance of the Trust assets shall be allocated so as to provide the accrued benefits otherwise payable under the Plan pursuant to the following order of priorities:

A. Participants in First Priorities. To provide accrued benefits for each participant who:

1. Had begun to receive benefits at least 3 years prior to the effective date of the termination of the Plan;

2. Would have begun to receive retirement or disability benefits at least 3 years prior to the effective date of the termination of the Plan but for the fact that commencement of benefits was deferred; or

3. Would have been eligible to receive retirement benefits at least 3 years prior to the effective date of the termination of the Plan but for the fact that the participant did not actually retire; and

B. Other Participants. To provide accrued benefits for all other participants, in the following order of preference:

1. For each participant who would have qualified under the priority described in subsection (A) of this section, but for the fact that the entitling event occurred or would have occurred within 3 years of the effective date of the termination of the Plan, and

2. For all other participants in the priority described in this subsection.

C. Trust Assets Utilized According to Priority.

1. Trust assets shall be utilized under a particular priority only after all accrued benefits set forth in all preceding priorities shall have been fully provided for.

2. For purposes of the allocation of funds within each priority, as set forth in this section, funds will be credited to each participant to provide the accrued benefits to which the participant is so entitled, but only to the extent that such accrued benefits have not been provided under a preceding priority.

3. Any reductions in accrued benefits within a particular priority (or within any particular preference set forth within a priority) as set forth above, due to insufficient Trust assets, shall be allocated pro-rata among the participants within that priority (or preference) on the basis of then present values of the respective accrued benefits described in that priority (or preference) for each such participant.

4. Any reference to accrued benefits payable to participants shall also be deemed to include accrued benefits payable to beneficiaries of deceased participants.

5. If any balance of Trust assets remains after all of the allocations described above, and after all liabilities with respect to participants and retired participants and their beneficiaries, if any, are satisfied, then the balance shall be returned to the City, and the Trust shall terminate. Upon making such distribution, the trustees shall be discharged from all obligations under the Trust and no participant shall have any further right or claim therein.

D. Death of Participant after Effective Date of Termination. Notwithstanding any provision to the contrary in Section 4.24.530 or this section, if a participant dies or otherwise terminates employment with the City during the interim between the effective date of termination and the distribution of Trust assets, and if the participant’s benefit commencement date had not yet occurred as of the effective date of termination, the amount distributable to the participant or to his or her beneficiary, and the timing thereof, shall be determined pursuant to Section 4.24.300. (Ord. 2001-20, §69)

4.24.550 Alternative to immediate distribution of the Trust.

A. Event Entitling Participant to Benefit. As an alternative to immediate distribution of the Trust, the City, in its discretion, and subject to its option at any time to require the complete distribution of the Trust to the then participants in accordance with Section 4.24.530, may defer commencement of benefits to each participant until such participant reaches an event which time would otherwise entitle him or her to benefit commencement pursuant to Sections 4.24.220 through 4.24.260, at which time provisions of Sections 4.24.320 through 4.24.350 shall become applicable.

B. Separate Account. During the interim period, there shall be established and maintained a separate account in the name of each participant, based upon the values established pursuant to Sections 4.24.530 through 4.24.560. The separate account shall thereafter define and measure the amount available for benefits distributable to the participant, and there shall be credited or charged thereto any income, expenses, gains or losses (whether or not realized, based upon fair market value of invested assets) attributable or allocable thereto as of each Trust valuation date (or the date of complete distribution of the Trust) with respect to the period since the last valuation date. (Ord. 2001-20, § 70)

4.24.560 Modification of allocation provisions.

The provisions set forth in Sections 4.24.530 through 4.24.560 shall be subject to such modification, retroactively if required, without necessity of formal amendment to the Plan, as may be necessary in order to cause the termination of the Plan and/or Trust, and any distributions made pursuant thereto and to conform to any requirements which may be imposed by the Internal Revenue Service to prevent disqualification of the Plan and/or Trust, and no such modification shall be deemed prejudicial to the interest of any participant or beneficiary. (Ord. 2001-20, § 71)

4.24.570 Plan combinations and transfers.

In the case of any merger or consolidation of the Plan with, or transfer of assets or liabilities of the Trust to, any other plan, the transaction shall be structured so that each participant in the Plan would (if the Plan then terminated) receive a benefit immediately after the transaction which is at least equal to the benefit the participant would have been entitled to receive immediately before the transaction (if the Plan had then terminated). (Ord. 2001-20 §, 72)

Article 8. Liability of City—Construction of Plan

4.24.580 Limitations on liability of City.

A. No Rights Except as Provided by Law, Plan, Provisions, or Terms of Insurance of Annuity Policy. Neither the establishment of the Plan or Trust, nor any modification thereof, nor the creation of any fund or account, nor the payment of any benefits, shall be construed as giving to any participant or other person any legal or equitable right against the City (or any person connected therewith) the trustees or any insurance company, except as provided by law, by any Plan provision or by the terms of any insurance or annuity policy.

B. City Does not Guarantee the Trust. The City does not in any way guarantee the Trust from loss or depreciation, nor does the City guarantee the payment of any money which may be or become due to any person from the Trust. Any person having a right or claim under the Plan shall look solely to the Trust assets, and in no event shall the City (or any person connected therewith) be liable to any person on account of any claim arising by reason of the provisions of the Plan or of any instrument or instruments implementing its provisions, or for the failure of any participant, beneficiary or other person to be entitled to any particular tax consequences with respect to the Plan, the Trust or any contribution thereto or distribution therefrom.

C. City not Liable for Failure to Make Contributions. The City shall not be liable to any person for failure on its part to make contributions as provided in Section 4.24.170 nor shall any action lie to compel the City to make such contributions.

D. City not Liable for Failure of Plan to Qualify Under Internal Revenue Code. The City (or any person connected therewith) shall not have any liability to any person by reason of the failure of the Plan to attain and/or maintain qualified status under Section 401(a) of the Internal Revenue Code, or the failure of the Trust to attain and/or maintain tax exempt status under Section 501(a) of the Internal Revenue Code, regardless of whether or not such failure is due to any act or omission (willful, negligent or otherwise) of the City (or any person connected therewith). (Ord. 2001-20, § 77)

4.24.590 Construction.

A. Intended to Comply with Requirements for Qualification Under Internal Revenue Code. The Plan is intended to comply with all requirements for qualification under Section 401(a) of the Internal Revenue Code and, if any provision of the Plan is subject to more than one interpretation or construction, such ambiguity shall be resolved in favor of that interpretation or construction which is consistent with the Plan being so qualified.

B. Severability. In case any provision of the Plan shall be held to be illegal or void, such illegality or invalidity shall not affect the remaining provisions of the Plan, but shall be fully severable, and the Plan shall be construed and enforced as if said illegal or invalid provisions had never been inserted herein.

C. Laws of State of Maryland Shall Govern. Except to the extent preempted by the laws of the United States of America, the laws of the State of Maryland shall govern, control and determine all questions arising with respect to the Plan and the interpretation and validity of its respective provisions. Participation under the Plan will not give any participant the right to be retained in the service of the City nor any right or claim to any benefit under the Plan unless such right or claim has specifically accrued hereunder. (Ord. 2001-20, § 78)