§ 2-77.2. Commencement of benefits.

(a)

Payment of an employee's accrued benefit shall begin no later than the 60th day of the plan year following the plan year in which the employee's normal retirement date, or, if later, the employee's late retirement date, occurs. In all cases, distributions shall commence no later than the employee's required beginning date. An employee's required beginning date is the later of the April 1 of the calendar year following the calendar year in which an employee attains age seventy and one-half (70½), or the April 1 of the calendar year following the calendar year in which the employee retires.

(b)

Notwithstanding the death benefit provisions of section 2-75, the requirements of this section shall apply to any distribution of an employee's interest and will take precedence over any inconsistent provisions of this division. All distributions required under this section shall be determined and made in accordance with the proposed regulations under Section 401(a)(9) of the code, including the minimum distribution incidental benefit requirement of Section 1.401(a)(9)-2 of the proposed regulations of the code. Annuity distributions under the plan shall satisfy the following requirements:

(1)

The annuity distributions must be paid in periodic payments at intervals not longer than one (1) year.

(2)

The distribution period must be over the employee's life (or the lives of the employee and a beneficiary) or over a period not longer than the employee's life expectancy (or joint life and last survivor expectancy of the employee and a beneficiary) determined under Section 401(a)(9)(A)(ii) or Section 401(a)(9)(B)(iii) of the code, whichever is applicable;

(3)

Once payments have begun over a period certain, the period certain may not be lengthened even if the period certain is shorter than the maximum permitted;

(4)

If the annuity is a life annuity, the amount which must be distributed on or before the employee's required beginning date shall be the payment which is required for one payment interval. The second payment need not be made until the end of the next payment interval even if that payment interval ends in the next calendar year. Payment intervals are the periods for which payments are received, e.g., bimonthly, monthly, semi-annually or annually.

(5)

If the employee's interest is being distributed in the form of a joint and survivor annuity for the joint lives of the employee and a nonspouse beneficiary, annuity payments to be made on or after the employee's required beginning date to the designated beneficiary after the employee's death must not at any time exceed the applicable percentage of the annuity payment for such period that would have been payable to the employee using the table set forth in Q&A A-6 of Section 1.401(a)(9)-2 of the proposed regulations of the code.

Any additional benefits accruing to the employee after his or her required beginning date shall be distributed as a separate and identifiable component of the annuity beginning with the first payment interval ending in the calendar year immediately following the calendar year in which such amount accrues.

(c)

Any amount paid to a child of the employee will be treated as if it had been paid to the surviving spouse if the amount becomes payable upon the child reaching the age of majority (or other designated event permitted under the code).

(d)

Effective January 1, 1999, the city shall furnish each employee, no less than thirty (30) days and no more than ninety (90) days prior to the date such employee will receive a distribution which is not paid in the form of an annuity or in installments over a period of more than ten (10) years with a written explanation of his right to elect a direct rollover and the withholding consequences of not making such election. An employee may waive the thirty-day time period set forth above.

(1)

Unless an employee elects a direct rollover, as defined in subsection (2), twenty (20) percent of the amount of the taxable portion of any applicable distribution shall be subject to Internal Revenue Service income tax withholding. If the taxable portion of an employee's distribution does not exceed two hundred dollars ($200.00) (or such other amount as prescribed by the Internal Revenue Service), the foregoing withholding requirement shall not apply.

(2)

A "direct rollover" is an eligible rollover distribution (as defined in Treasury Regulations issued pursuant to Sections 401(a)(31) and 402(c) of the code) that is paid directly to a qualified defined contribution or defined benefit plan; a 457 plan; a 403(b) annuity, or an individual retirement account. An employee may elect to have a portion of an eligible rollover distribution distributed to him and a portion distributed as a direct rollover. A direct rollover of an employee's benefit or a portion thereof may only be made to a single recipient plan. An employee may not elect a direct rollover of a distribution that does not exceed two hundred dollars ($200.00) (five hundred dollars ($500.00) if the employee is electing a direct rollover of only a portion of his benefit). An employee electing a direct rollover shall be required to furnish the city with adequate information with respect to the recipient plan, including, but not limited to, the name of the recipient plan and a representation that the recipient plan is an eligible plan and that it will accept the employee's direct rollover.

If an employee fails to elect a direct rollover or provide the city with adequate information in order to make a direct rollover prior to the date distribution is to be made to such employee, such employee shall be deemed not to have elected a direct rollover.

(3)

The foregoing requirements of this section shall apply to distributions made to the spouse of an employee as a result of the death of the employee; provided, however, that if a distribution to a spouse is made as a result of the death of the employee, such spouse may only elect to have such distribution paid directly to the spouse or paid directly to an IRA, or effective for distributions occurring after December 31, 2001, an eligible retirement plan as defined in subsection (d)(2) above.

(Ord. of 1-14-03)