§ 13-24.3. Deferred retirement option plan.

(a)

Definitions.

(1)

DROP. The city general employees' pension plan deferred retirement option plan.

(2)

DROP account. The account established for each DROP participant under subsection (c).

(3)

Total return of the assets. For purposes of calculating earnings on a member's DROP account pursuant to subsection (c)(2)b.2., for each fiscal year quarter, the percentage increase (or decrease) in the interest and dividends earned on investments, including realized and unrealized gains (or losses), of the total plan assets.

(b)

Participation.

(1)

Eligibility to participate . In lieu of terminating employment as a general employee, any member who is eligible for normal retirement under the system may elect to defer receipt of such service retirement pension and to participate in the DROP.

(2)

Election to participate . A member's election to participate in the DROP must be in writing in a time and manner determined by the board and shall be effective on the first day of the first calendar month which is at least fifteen (15) business days after it is received by the board.

(3)

Period of participation . A member who elects to participate in the DROP under subsection (b)(2), shall participate in the DROP for a period of not more than sixty (60) months beginning at the time the member's election to participate in the DROP first becomes effective. An election to participate in the DROP shall constitute an irrevocable election to resign from the service of the city not later than the date provided for in the previous sentence. A member may participate only once.

(4)

Termination of participation.

a.

A member's participation in the DROP shall cease at the earlier of:

1.

The end of his permissible period of participation in the DROP as determined in subsection (b)(3); or

2.

Termination of employment as a general employee.

b.

Upon the member's termination of participation in the DROP, pursuant to subsection (a)(1) above, all amounts provided for in subsection (c)(2), including monthly benefit and investment earnings and losses of interest, shall cease to be transferred from the system to the member's DROP account. Any amounts remaining in the member's DROP account shall be paid to the member in accordance with the provisions of subsection (d) when the member terminates his employment as a general employee.

c.

A member who terminates participation in the DROP under subsection (b)(4) shall not be permitted again to become a participant in the DROP.

(5)

Effect of DROP participation on the system .

a.

A member's credited service and accrued benefit under the system shall be determined on the date a member's election to participate in the DROP first becomes effective. For purposes of determining the accrued benefit, the member's salary for the purposes of calculating average final compensation shall include any lump sum payments or portion thereof, paid to the member and included as salary as defined herein, which amounts shall be paid by the city upon the member's entry into the DROP. The member shall not accrue any additional credited service or any additional benefits under the system (except for any additional benefits provided under any cost-of-living adjustment for retirees in the system) while a participant in the DROP. After a member commences participation, the member shall not be permitted to again contribute to the system nor shall the member be eligible for disability or pre-retirement death benefits except as provided for in section 13-24.4, reemployment after retirement.

b.

No amounts shall be paid to a member from the system while the member is a participant in the DROP. Unless otherwise specified in the system, if a member's participation in the DROP is terminated other than for terminating employment as a general employee, no amounts shall be paid from the system until the member terminates his employment as a general employee. Unless otherwise specified in the system, amounts transferred from the system to the member's DROP account shall be paid directly to the member only on or after the first day of the month coincident with or next following the later of the termination of the member's participation in the DROP or the termination of the member's employment as a general employee.

(c)

Funding.

(1)

Establishment of DROP account . A DROP account shall be established for each member participating in the DROP. A member's DROP account shall consist of amounts transferred to the DROP under subsection (c)(2), and earnings of interest on those amounts.

(2)

Transfers from retirement system .

a.

As of the first day of each month of a member's period of participation in the DROP, the monthly retirement benefit the member would have received under the system had the member terminated employment as a general employee and elected to receive monthly benefit payments thereunder shall be transferred to the member's DROP account except as provided in subsection (b)(4)b. A member's period of participation in the DROP shall be determined in accordance with the provisions of subsections (b)(3) and (4), but in no event shall it continue past the date the member terminates employment as a general employee.

b.

Except as otherwise provided in subsection (b)(4)b., a member's DROP account under this subsection (c)(2) shall be debited or credited with either:

1.

Interest at an effective rate of six and one-half (6.5) percent per annum compounded monthly determined on the last business day of the prior month's ending balance and credited to the member's DROP account as of such date to be applicable to all current and future DROP participants); or

2.

Earnings, to be credited or debited to the member's DROP account, determined as of the last business day of each fiscal year quarter and debited or credited as of such date, determined as follows:

The average daily balance in a member's DROP account shall be credited or debited at a rate equal to the next investment return realized by the system for that quarter. "Net investment return" for the purpose of this paragraph is the total return of the assets in which the member's DROP account is invested by the board net of brokerage commissions, transaction costs, and management fees.

For purposes of calculating earnings on a member's DROP account pursuant to this subsection (c)(2)b.2., brokerage commissions, transaction costs, and management fees shall be determined for each quarter by the investment consultant pursuant to contracts with fund managers as reported in the custodial statement. The investment consultant shall report these quarterly contractual fees to the board. The investment consultant shall also report the net investment return for each manager and the net investment return for the total plan assets.

Upon electing participation in the DROP, the member shall elect to receive either earnings or interest on account to be determined as provided above. The member may, in writing, elect to change the election once each year during the member's DROP participation. An election to change must be made prior to and shall be effective beginning the next October 1.

c.

A member's DROP account shall only be credited or debited with earnings or interest and monthly benefits while the member is a participant in the DROP. A member's final DROP account value for distribution to the member upon termination of participation in the DROP shall be the value of the account at the end of the quarter immediately preceding termination of participation for participants electing the net plan return and at the end of the month immediately preceding termination of participation for participants electing the flat interest rate return, plus any monthly periodic additions made to the DROP account subsequent to the end of the previous quarter or month, as applicable, and prior to distribution. If a member fails to terminate employment after participating in DROP for the permissible period of DROP participation, then beginning with the member's first month of employment following the last month of the permissible period of DROP participation, the member's DROP account will no longer be credited or debited with earnings or interest, nor will monthly benefits be transferred to the DROP account. All such nontransferred amounts shall be forfeited and continue to be forfeited while the member is employed by the city. A member employed by the city after the permissible period of DROP participation will still not be eligible for pre-retirement death or disability benefits, nor will the member accrue additional credited service.

(d)

Distribution of DROP accounts on termination of employment .

(1)

Eligibility for benefits . A member shall receive the balance in the member's DROP account in accordance with the provisions of this subsection (d) upon termination of employment as a general employee. Except as provided in subsection (d)(5), no amounts shall be paid to a member from the DROP prior to the member's termination of employment as a general employee.

(2)

Form of distribution .

a.

Unless the member elects otherwise, distribution of his DROP account shall be made in a cash lump sum. A member may elect, in such time and manner as the board shall prescribe, to receive an optional form of benefit described below.

1.

Payments in approximately equal quarterly or annual installments over a period, designated by the member, not to exceed the life expectancy of the last survivor of the member and his beneficiary. In the event that the member dies before all installments have been paid, the remaining balance in the member's DROP account shall be paid in an immediate cash lump sum to the member's beneficiary.

2.

The purchase of a nonforfeitable fixed annuity payable in such form as the member may elect. Elections under this clause 2, shall be in writing and shall be made in such time or manner as the board shall determine.

b.

If a member dies before the member's benefit is paid, the member's DROP account shall be paid to the member's beneficiary in such optional form as the member's beneficiary may select. If no beneficiary designation is made, the DROP account shall be distributed to the member's estate.

(3)

Date of payment of distribution . Except as otherwise provided in this subsection (d), distribution of a member's DROP account shall be made as soon as administratively practicable following the member's termination of employment. Distribution of the amount in a member's DROP account will be made unless the member completes a written request for distribution and a written election, on forms designated by the board, to either receive a cash lump sum or a rollover of the lump sum amount.

(4)

Proof of death and right of beneficiary or other person . The board may require and rely upon such proof of death and such evidence of the right of any beneficiary or other person to receive the value of a deceased member's DROP account as the board may deem proper and its determination of the right of that beneficiary or other person to receive payment shall be conclusive.

(5)

Distribution limitation . Notwithstanding any other provisions of this subsection (d), all distributions from the DROP shall conform to the "minimum distribution of benefits" provisions as provided for herein.

(6)

Direct rollover of certain distributions . This subsection applies to distributions made on or after January 1, 2002. Notwithstanding any provision of the DROP to the contrary, a distributee may elect to have any portion of an eligible rollover distribution paid in a direct rollover as otherwise provided under the system in section 13-22.

(e)

Administration of DROP .

(1)

Board administers the DROP . The general administration of the DROP, the responsibility for carrying out the provisions of the DROP and the responsibility for overseeing the investment of the DROP's assets shall be placed on the board. The members of the board may appoint from their number such subcommittees with such powers as they shall determine; may adopt such administrative procedures and regulations as they deem desirable for the conduct of their affairs; may authorize one (1) or more of their number or any agent to execute or deliver any instrument or make any payment on their behalf, may retain counsel, employ agents and provide for such clerical, accounting, actuarial and consulting services as they may require in carrying out the provisions of the DROP, and may allocate among themselves or delegate to other persons all or such portion of their duties under the DROP, other than those granted to them as trustee under any trust agreement adopted for use in implementing the DROP, as they, in their sole discretion, shall decide. A trustee shall not vote on any question relating exclusively to the same trustee.

(2)

Individual accounts, records and reports . The board shall maintain records showing the operation and condition of the DROP, including records showing the individual balances in each member's DROP account, and the board shall keep in convenient form such data as may be necessary for the valuation of the assets and liabilities of the DROP. The board shall prepare and distribute to members participating in the DROP and other individuals or file with the appropriate governmental agencies, as the case may be, all necessary descriptions, reports, information returns, and data required to be distributed or filed for the DROP pursuant to the Code and any other applicable laws.

(3)

Establishment of rules . Subject to the limitations of the DROP, the board from time to time shall establish rules for the administration of the DROP and the transaction of its business. The board shall have discretionary authority to construe and interpret the DROP (including but not limited to determination of an individual's eligibility for DROP participation, the right and amount of any benefit payable under the DROP and the date on which any individual ceases to be a participant in the DROP). The determination of the board as to the interpretation of the DROP or its determination of any disputed questions shall be conclusive and final to the extent permitted by applicable law. The board shall also oversee the investment of the DROP's assets.

(4)

Limitation of liability .

a.

The trustees shall not incur any liability individually or on behalf of any other individuals for any act or failure to act, made in good faith in relation to the DROP or the funds of the DROP.

b.

Neither the Board no any trustee of the Board shall be responsible for any reports furnished by any expert retained or employed by the board, but they shall be entitled to rely thereon as well as on certificates furnished by an accountant or an actuary, and on all opinions of counsel. The board shall be fully protected with respect to any action taken or suffered by it in good faith in reliance upon such expert, accountant, actuary or counsel, and all actions taken or suffered in such reliance shall be conclusive upon any person with any interest in the DROP.

(5)

Expenses . To compensate the system for the expenses of administering and operating the DROP, each member's DROP account shall be charged an annual administrative fee which shall be reviewed and subject to increase or decrease annually. The initial expense charge of three-quarters of one (0.75) percent of the account balance, shall be deducted from the member's DROP account after each fiscal year quarter at the rate of 0.1875 percent of the account's average daily balance during that quarter.

(f)

General provisions.

(1)

The DROP is not a separate retirement plan . Instead, it is a program under which a member who is eligible for normal retirement under the system may elect to accrue future retirement benefits in the manner provided in this section 13-24.3 for the remainder of the member's employment, rather than in the normal manner provided under the plan. Upon termination of employment, a member is entitled to a lump sum distribution of the member's DROP account balance or may elect a rollover. The DROP account distribution is in addition to the member's monthly benefit.

(2)

Notional account. The DROP account established for such a member is a notional account, used only for the purpose of calculation of the DROP distribution amount. It is not a separate account in the system. There is no change in the system's assets, and there is no distribution available to the member until the member's termination from the DROP. The member has no control over the investment of the DROP account.

(3)

No employer discretion. The DROP benefit is determined pursuant to a specific formula which does not involve employer discretion.

(4)

IRC limit. The DROP account distribution, along with other benefits payable from the system, is subject to limitation under Internal Revenue Code Section 415(b).

(5)

Amendment of DROP. The DROP may be amended by an ordinance of the city at any time and from time to time, and retroactively if deemed necessary or appropriate, to amend in whole or in part any or all of the provisions of the DROP. However, except as otherwise provided by law, no amendment shall make it possible for any part of the DROP's funds to be used for, or diverted to, purposes other than for the exclusive benefit of persons entitled to benefits under the DROP. No amendment shall be made which has the effect of decreasing the balance of the DROP account of any member.

(6)

Facility of payment. If a member or other person entitled to a benefit under the DROP is unable to care for affairs because of illness or accident or is a minor, the board shall direct that any benefit due the member shall be made only to a duly appointed legal representative. Any payment so made shall be a complete discharge of the liabilities of the DROP for that benefit.

(7)

Information. Each member, beneficiary or other person entitled to a benefit, before any benefit shall be payable to the member or on the member's account under the DROP shall file with the board the information that it shall require to establish the member's rights and benefits under the DROP.

(8)

Prevention of escheat. If the board cannot ascertain the whereabouts of any person to whom a payment is due under the DROP, the board may, no earlier than three (3) years from the date such payment is due, mail a notice of such due and owing payment to the last known address of such person, as shown on the records of the board or the city. If such person has not made written claim therefor within three (3) months of the date of the mailing, the board may, if it so elects and upon receiving advice from counsel to the DROP, direct that such payment and all remaining payments otherwise due such person be canceled on the records of the DROP. Upon such cancellation, the DROP shall have no further liability therefor except that, in the event such person or the person's beneficiary later notifies the board of the person's whereabouts and requests the payment or payments due the person under the DROP, the amount so applied shall be paid to the person in accordance with the provisions of the DROP.

(9)

Written elections, notification.

a.

Any elections, notifications or designations made by a member pursuant to the provisions of the DROP shall be made in writing and filed with the Board in a time and manner determined by the Board under the rules uniformly applicable to all employees similarly situated. The Board reserves the right to change from time to time and manner for notifications, elections or designations by members under the DROP if it determines after due deliberation that such action is justified in that it improves the administration of the DROP. In the event of a conflict between the provisions for making an election, notification or designation set forth in the DROP and such new administrative procedures, those new administrative procedures shall prevail.

b.

Each member or retiree who has a DROP account shall be responsible for furnishing the Board with a current address and any subsequent changes in address. Any notice required to be given to a member or retiree hereunder shall be deemed given if directed to the member or retiree at the last such address given to the board and mailed by registered or certified United States mail. If any check mailed by registered or certified United States mail to such address is returned, mailing of checks will be suspended until such time as the member or retiree notifies the Board of Trustees.

(10)

Benefits not guaranteed. All benefits payable under the DROP shall be paid only from the assets of the DROP and neither the city nor the board shall have any duty or liability to furnish the DROP with any funds, securities or other assets except to the extent required by any applicable law.

(11)

Construction.

a.

The DROP shall be construed, regulated and administered under the laws of Florida, except where other applicable law controls.

b.

The titles and headings of the subsections in this section are for convenience only. In the case of ambiguity or inconsistency, the text rather than the titles or headings shall control.

(12)

Forfeiture of retirement benefits. Nothing in this section shall be construed to remove DROP participants from the application of any forfeiture provisions applicable to the system. DROP participants shall be subject to forfeiture of all retirement benefits, including DROP benefits.

(13)

Effect of DROP participation on employment. Participation in the DROP is not a guarantee of employment and DROP participants shall be subject to the same employment standards and policies that are applicable to employees who are not DROP participants.

(Ord. No. O-10-18, § 1, 7-26-10; Ord. No. O-17-25 , § 9, 10-23-17)