Section 18-88 Benefits payable under the DROP.
Prior to the adoption of Ord. 21405 on 08/20/2012, Section 18-88 read as follows.
Effective with the date of DROP participation, the DROP member's initial normal
monthly benefit, including creditable service, optional form of payment, and highest average
salary, and the effective date of retirement shall be fixed. The beneficiary established in sections
18-47 or 18-72, respectively, shall be the beneficiary eligible to receive any DROP benefits
payable if the DROP member dies prior to the completion of the period of DROP participation.
In the event a joint annuitant predeceases the DROP member, the DROP member may name a
beneficiary to receive accumulated DROP benefits payable. Such retirement benefit, any annual
cost of living adjustments and interest shall accrue monthly in the trust fund. Such interest shall
accrue at an effective annual rate of four (4) percent
for DROP members with an effective DROP
date on or before September 1, 2012 and two (2) percent for DROP members with an effective
DROP date after September 1, 2012
compounded monthly, on the prior month's accumulated
ending balance, up to the month of the termination or date of death.
(b) The effective date of DROP participation
of a DROP member shall be the first day of the
month selected by the DROP member to begin participation in the DROP, provided such date is
properly established, with the written confirmation and the approval of the administrator, on
forms required by the administrator.
(c) Normal retirement benefits and interest
thereon shall continue to accrue in the DROP
until the established termination date of the DROP, or until the DROP member terminates
employment or dies prior to such date. Although individual DROP accounts shall not be
established, a separate accounting of each DROP members accrued benefits under the DROP
shall be calculated and provided periodically to DROP members.
(d) At the conclusion of the members
DROP, the administrator shall distribute the DROP
members total accumulated DROP benefits, subject to and in accordance with the following
(1) The administrator shall receive
written verification that such DROP member has
(2) The terminated DROP member or,
if deceased, such DROP members named beneficiary,
shall elect on forms provided by the administrator to receive payment of the DROP benefits in
accordance with one of the options listed below. For a DROP member or beneficiary who fails
to elect a method of payment within sixty (60) days of termination of the DROP, the
administrator will pay a lump sum as provided in subparagraph (I) below.
(I) Lump sum. All accrued DROP benefits, plus interest,
less withholding taxes remitted to the
Internal Revenue Service, shall be paid to the DROP member or surviving beneficiary.
(II) Direct rollover. All accrued DROP benefits, plus
interest, shall be paid from the DROP
directly to the custodian of an eligible retirement plan as defined in Section 402(c)(8)(B) of the
Internal Revenue Code.
(III) Partial lump sum. A portion of the accrued DROP
benefits, plus interest, shall be paid to
the DROP member or surviving spouse, less withholding taxes remitted to the Internal Revenue
Service, and the remaining DROP benefits shall be transferred directly to the custodian of an
eligible retirement plan as defined in Section 402(c)(8)(B) of the Internal Revenue Code. The
proportions shall be specified by the DROP member or surviving beneficiary.
(3) The form of payment selected by the DROP member or surviving
beneficiary shall comply
with the minimum distribution requirements of Section 401(a)(9) of the Internal Revenue Code.
(4) A DROP member who fails to terminate employment at the
conclusion of the DROP period
shall be deemed not to be retired, and the DROP election shall be null and void. The covered
employee shall be eligible to receive, upon termination of employment, his or her normal
retirement benefit determined immediately prior to the effective date of the DROP election,
including creditable service accumulated after the date of the DROP election, and using the
highest average salary as determined immediately prior to the effective date of the DROP
(e) The accrued benefits of any DROP
member, and any contributions accumulated under
the DROP, shall be subject to Sections 18-51 or 18-76, respectively.
(f) DROP members shall be eligible
for disability retirement benefits, as provided for in
Sections 18-43 or 18-68, respectively, and shall receive the DROP benefits, plus interest, accrued
to the date of disability in accordance with the election made under subsection (d)(2).
(g) A DROP member shall not be eligible
for refunds as provided for under Sections 18-50
(Ord. No. 19636, § 1, 8-20-07)