Bay City |
Code of Ordinances |
Chapter 2. ADMINISTRATION |
Article XI. POLICE AND FIRE PENSION PLAN AND RETIREMENT SYSTEM |
§ 2-512. Limitations on benefits and contributions.
The amount of annual benefits and contributions credited a member in any given year shall be subject to the following limitations:
(1)
Defined benefit plans. The maximum permissible annual pension benefit with respect to any member shall be in accordance with IRC § 415(b) which provides that such annual pension benefit shall not exceed $90,000.00, as adjusted for inflation, which for 2002 is $160,000 (the "dollar limit").
a.
Special dollar limitations. If the benefit is payable prior to age 62, the dollar limitation shall be reduced to the actuarial equivalent of a benefit commencing at age 62. In the case of any full-time police or fire employee, who is a qualified participant as defined in IRC § 415(b)(2)(G), there is no reduction in the dollar limitation. If the benefit is not payable until after age 65, the dollar limitation shall be increased to the actuarial equivalent of a benefit commencing at age 65.
b.
In the case of an employee who has less than ten years of participation in the plan, the dollar limitation shall be reduced by 1/10 for each year of participation in accordance with IRC § 415(b)(5).
(2)
Defined contribution plans.
a.
For limitation years beginning after December 31, 1986, the term "annual addition" means, for purposes of this section, the sum credited to a participant's account for any limitation year, of:
1.
Employer contribution;
2.
Employee contribution; and
3.
Forfeitures.
b.
Annual additions that may be contributed or allocated to a participant's account for a limitation year will not exceed the lesser of:
1.
100 percent of participant's compensation, within the meaning of IRC § 415(c)(3), or
2.
$40,000.00, as adjusted for increases in the cost of living pursuant to IRC § 415(d).
c.
Valuation of investments. Investments of the plan shall be valued as of the last day of each plan year in accordance with the methods consistently followed and uniformly applied to determine fair market value and in accordance with the requirements of Revenue Ruling 80-155. Contributions to the plan, along with earnings thereon, shall be distributed in accordance with the terms of the plan.
(3)
Excess benefit payment. The retirement system shall not pay any benefit that would exceed the benefit limitations for governmental plans as set forth in IRC § 415 and regulations, as amended.
(4)
Compensation. As defined by IRC § 415(c)(3)(D) and Treas. Reg. § 1.415-2(d)(2)(i), compensation means amounts actually paid to the employee during the limitation year, including: wages, salary, professional fees, percentage of profits, commissions, tips and bonuses paid or made available to the member during the limitation year for personal services actually rendered in the course of employment, any elective deferral, and any amount which is contributed or deferred by the employer at the election of the employee and which is not includible in the gross income of the employee by reason of IRC § § 125 or 457.
(Ord. No. 2002-8, § 2, 5-20-02)