2022-059 - Approving and Agreement Regarding Freeze of Fire Pension Fund & Authorizing the Mayor to Execute Same RESOLUTION N0. 2022-059
A RESOLUTIOIV OF THE CITY COUIVCIL OF THE CITY OF PARIS, TEXAS
APPROVING AlV AGREEMENT REGARDING FREEZE OF FIRE PENSION
FUND AND AUTHORIZING THE MAYOR TO EXECUTE SAME ON BEHALF OF
THE CITY;MAKING OTHER FINDINGS AND PROVISIOIVS RELATED TO THE
SUBJECT;AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, City records indicate that the Paris Firefighters' Relief and Retirement
Fund, a public retirement system and a municipal retirement plan (the "Fund" or the
"Plan") was created in 1941 and the Fund continues to operate pursuant to the authority
of Vernon's Ann.Texas Civ.St. Art. 6243e, as amended, also known as the Texas Local Fire
Fighters Retirement Act; and
WHEREAS, the Fund was amended and restated as of January 1, 2019 (the "2019
Plan); and
WHEREAS,the City Council has authorized the City to issue its City of Paris, Texas,
General Obligation Pension Bonds,Ta�cable Series 2022 (the "Bonds") pursuant to Chapter
107 of the Texas Local Government Code ("Chapter 107") for the purpose of funding all or
any part of the unfunded, accrued liability of the City to the Fund, as determined by
actuarial analysis (the "Unfunded Liability"); and
WHEREAS,at present,the beneficiaries of the Fund are the City's Firefighters,their
Spouses (as such terms are defined in the Plan) and such other persons who are entitled
to benefits by the terms of the Plan as of the Effective Date (collectively the "2022 Fund
Beneficiaries"); and
WHEREAS,upon the issuance of the Bonds,both the City and the Board of Trustees
(the "Board") of the fund desire to preserve the vested rights solely of and for the 2022
Fund Beneficiaries in the Fund, but to simultaneously transition all current and future
Firefighters into the Texas Municipal Retirement System ("TMRS") for participation
thereafter in TMRS on the same basis as all other City employees who participate in TMRS;
and
WHEREAS, to effectuate the immediately preceding recital, the Board has revised
the Plan to implement said objective,and the amended and restated Plan (the"2022 Plan")
has been approved by a vote of the City Firefighters as required by Section 7 of Vernon's
Ann.Texas Civ.St. 6243e, as amended, the Texas Local Fire Fighters Retirement Act (the
"Act") and all prerequisites of the Act for the Board to amend the Plan to change the
benefits or eligibility requirements for benefits payable from the Plan have been met,
including the approval of the 2022 Plan by Definiti LLC,which is eligible actuary pursuant
to the Act selected by the Board; and
WHEREAS, the 2022 Plan provides that it shall be effective only upon the funding
by the City of the Unfunded Liability; and
WHEREAS, pursuant to City Ordinance No. adopted on August 8, 2022, the
Council has approved the 2022 Plan and provided for it to be implemented only upon the
funding by the Ciry of the Unfunded Liability; and
WHEREAS, in order to effectuate the intent of the Plan and the movement of the
Plan's beneficiaries to TMRS, it is necessary that the Fund be frozen and no further changes
in benefits be approved thereunder; and
WHEREAS, the City Council, in furtherance of the above, finds that it is in the best
interest of the City, the Fund, and its beneficiaries to enter into the Agreement Regarding
Freezing of the Fire Pension Fund ("Agreement") attached hereto as Exhibit A with the
Board.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
PARIS,TEXAS:
Section 1. That the findings set out in the preamble to this resolution are hereby in
all things approved.
Section 2. That the Agreement attached hereto as Exhibit A and incorporated herein
by reference is hereby approved.
Section 3. That the Mayor is hereby authorized to execute said Agreement on behalf
of the City.
Section 3. That this resolution shall be effective from and after its date of passage.
PASSED AND APPROVED this 8th day of August, 2022.
Paula Portugal, Mayo
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APPROVED AS TO FORM:
Ste anie H. Harris, City Attorney
AGREEMENT REGARDING FREEZE OF FIRE PENSION FUND
This AGREEMENT REGARDING FREEZE OF FIRE PENSION FUND (this
("Agreement")is entered into by and between the City Council (the "Council") of the City of Paris,
Texas (the "City") and the Board of Trustees (the "Board") of the Paris Firefighters' Relief and
Retirement Fund, a public retirement system and a municipal retirement plan (the "Fund" or the
"Plan") created by the City, and will be effective for all purposes as of the date this Agreement is
signed by the latter party to do so below("Effective Date").
WHEREAS, City records indicate that the Fund was created in 1941 and the Fund
continues to operate pursuant to the authority of Vernon's Ann.Texas Civ.St. Art. 6243e, as
amended, also known as the Texas Local Fire Fighters Retirement Act; and
WHEREAS, the Fund as currently constituted was amended and restated as of January 1,
2019 (the "2019 Plan); and
WHEREAS,the Council has authorized the City to issue its City of Paris, Texas, General
Obligation Pension Bonds,Ta�cable Series 2022(the"Bonds")pursuant to Chapter 107 of the Texas
Local Government Code("Chapter 107")for the purpose of funding all or any part of the unfunded,
accrued liability of the City to the Fund, as determined by actuarial analysis (the "Unfunded
Liability"); and
WHEREAS, at present, the beneficiaries of the Fund are the City's Firefighters, their
Spouses (as such terms are defined in the Plan)and such other persons who are entitled to benefits
by the terms of the Plan as of the Effective Date (collectively the"2022 Fund Beneficiaries"); and
WHEREAS,upon the issuance of the Bonds,both the City and the Board desire to preserve
the vested rights solely of and for the 2022 Fund Beneficiaries in the Fund, but to simultaneously
transition all current and future Firefighters into the Texas Municipal Retirement System
("TMRS")for participation thereafter in TMRS on the same basis as all other City employees who
participate in TMRS; and
WHEREAS, to effectuate the immediately preceding recital, the Board has revised the
Plan to implement said objective, and the amended and restated Plan (the "2022 Plan") has been
approved by a vote of the City Firefighters as required by Section 7 of Vernon's Ann.Texas Civ.St.
6243e, as amended,the Texas Local Fire Fighters Retirement Act(the"Act")and all prerequisites
of the Act for the Board to amend the Plan to change the benefits or eligibility requirements for
benefits payable from the Plan have been met, including the approval of the 2022 Plan by Definiti
LLC, which is eligible actuary pursuant to the Act selected by the Board; and
WHEREAS, the 2022 Plan provides that it shall be effective only upon the funding by the
City of the Unfunded Liability; and
WHEREAS, pursuant to City Ordinance No. adopted on August 8, 2022, the
Council has approved the 2022 Plan and provided for it to be implemented only upon the funding
by the City of the Unfunded Liability; and
WHEREAS, in furtherance of the issuance of the Bonds, the parties have entered into an
Agreement Regarding City Pension Obligation Bonds concurrently herewith, a copy of which is
attached hereto as Exhibit A.
NOW THEREFORE, the Council and the Board enter into this Agreement pursuant to
Section 107.003, as follows:
1. The recitals and terms of the Agreement Regarding City Pension Obligation Funds attached
hereto as Exhibit A, are incorporated into this Agreement as if set forth in full herein.
2. The City acknowledges and agrees that:
(a) upon the issuance of the Bonds and the funding of the 2022 UAAL, the City will
move all current Firefighters into the TMRS retirement program while preserving
the vested rights in the Fund of the 2022 Fund Beneficiaries:
(b) following the events described in Section 2(a) above, the City will (i) continue to
honor its funding obligations pursuant to the requirements of the Fund to the 2022
Fund Beneficiaries and (ii) make provision for all current and future Firefighters to
participate in TMRS on the same basis as other City employees who participate in
TMRS; and
(c) the City will issue the Bonds and provide for the payment of the debt service on the
Bonds.
3. The Board acknowledges and agrees that:
(a) following the events described in Section 2(a) above, the Plan effective as of
October l, 2022 provides only the 2022 Fund Beneficiaries shall be entitled to any
portion of the benefits of the Fund, in effect"freezing"the Fund for the 2022 Fund
Beneficiaries and foreclosing the Fund to any new participants not already provided
for under the Fund; and
(b) no further increases or substantive changes may be made to the Fund because the
Texas Local Fire Fighters Retirement Act,Article 6243e of Vernon's Civil Statutes
requires any change in benefit be approved by a majority of participating members
of the Fund and after the effective date of 2022 Plan there will be no participating
members; and
(c) upon final payout to the last person qualifying as a 2022 Fund Beneficiary, any
remaining amounts in the Fund shall be allocated in accordance with applicable State
law.
4. This Agreement may be amended only by a written instrument executed by the parties
hereto. This Agreement may be executed in one or more counterparts, each of which will
be deemed an original, but all of which together will constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date(s) set
forth opposite the signatures of their authorized representatives to be effective for all purposes on
the Effective Date.
CITY COUNCIL BOARD OF TRUSTEES
OF THE CITY OF PARIS, TEXAS OF THE PARIS FIREFIGHTERS' RELIEF
AND RETIREMENT FUND
By: By:
Name: Paula Portugal Name: Bob Rast
Title: Mayor Title: Chairman
Date: August 8, 2022 Date: August 8, 2022
PARIS FIREFIGHTERS' RELIEF
AND RETIREMENT FUND
Plan Document Effective
October 1, 2022
Paris Firefighters' Relief and Retirement Fund
Plan Document Effective October i, 2022
Table of Contents Paae
Section 1 - Definitions 1
Section 2 - Frozen Benefits 3
Section 3 - Disability Benefits 4
Section 4 - Reserved 6
Section 5 - Optional Forms of Retirement Income 7
Section 6 - Death Benefits 9
Section 7 - Return of Firefighter's Own Contributions 11
Section 8 - Contributions 12
Section 9 - Maximum Benefit 13
Section 10 - Distribution of Benefits 22
Section 11 - Amendment and Termination 26
Section 12 - Board of Trustees 27
Section 13 - Miscellaneous Provisions Applicable to the Fund 29
PARIS FIREFIGHTERS' RELIEF AND RETIREMENT FUND
This Adoption agreement is adopted by the Board of Trustees as follows:
WITNESSETH:
WHEREAS, the Board of Trustees, has heretofore adopted the Paris Firefighters' Relief and Retirement
Fund herein referred to as the"Plan"or the"Fund"pursuant to Vernon's Annotated Civil Statute, Article
6243e, the Texas Local Fire Fighters Retirement Act; and
WHEREAS, the Board of Trustees now desires to amend and restate the Plan.
NOW, THEREFORE, to carry such amendment and restatement into effect, the Board of Trustees does
hereby adopt the amended and restated Paris Firefighters' Relief and Retirement Fund, the terms and
conditions of which are fully set out in the attached Sections 1 through 13, which are incorporated by
reference.
Except as otherwise specifically designated in the Plan, the effective date of the Plan as hereby amended
and restated is the latest of the following: (a) the adoption of an ordinance authorizing the issuance of
the City of Paris, Texas Pension Bonds, Taxable Series 2022; (b) the execution of the Agreement
Regarding City Pension Obligation Bonds by the Mayor and the Chairman of the Fund; (c) the deposit
by the City of Paris, Texas of a City contribution to the Fund of an amount equal to the proceeds from
the issuance of the City of Paris, Texas Pension Bonds; or (d) October 1, 2022 (the Effective Date).
The provisions of the Plan set out below shall be applicabie to ali Firefighters of the Paris Firefighters'
Relief and Retirement Fund who are active Firefighters of the Fund as of the Effective Date, and to those
who become Firefighters on or after that date. The benefits of each Firefighter who had retired, become
disabled, or terminated, as weil as each beneficiary whose benefits had already been determined as of
the Effective Date, shall be as specified under the Fund provisions in effect prior to this amendment.
Signed this day of , 2022.
TRUSTEES OF THE PARIS FIREFIGHTERS' RELIEF AND RETIREMENT FUND
Section 1
Definitions
The following terms used in this document shall have the meanings stated below unless a
different meaning is clearly required by the context.
1.01 "Act"shall mean the Texas Local Fire Fighters Retirement Act, Vernon's Annotated Civil
Statutes, Article 6243e.
1.02 "Board" or"Trustees" shall mean the Board of Trustees of the Paris Firefighters' Relief
and Retirement Fund. The Board of Trustees shall be the plan administrator.
1.03 "City" shall mean the City of Paris, a political subdivision established within the state
of Texas.
1.04 "Code" shall mean the Internal Revenue Code of 1986 as amended from time to time.
1.05 `�Compensation"shall mean regular salary pay, overtime pay, longevity pay, certificate
pay, step up pay, vacation pay, sick pay, holiday pay and administrative leave pay.
Compensation specifically excludes accumulated sick leave paid at the time of
retirement or termination of employment and amounts paid by the City as a benefit
(such as clothing allowances, social security match, health insurance premiums and
workers compensation premiums). Compensation also specifically excludes lump sum
payments made at any time for unused accrued vacation, sick leave, holiday pay,
administrative leave and compensatory leave time. The annual compensation of each
Firefighter taken into account under the Plan for any year shall not exceed the
limitations of Code §401(a)(17). In determining benefit accruals in plan years
beginning after December 31, 2001, the annual compensation limit for determination
periods before January 1, 2002, shall be $200,000. For plan years beginning on or
after ]anuary 1, 2002, Compensation in excess of $200,000 shall be disregarded for
all purposes. Such amount shall be adjusted by the Commissioner for increases in the
cost-of-living in accordance with Code §401(a)(17(B). The cost-of-living adjustment
in effect for a calendar year applies to any determination period beginning with or
within such calendar year. If a determination period consists of fewer than twelve (12)
months, the $200,000 annual compensation limit will be multiplied by a fraction, the
numerator of which is the number of months in the determination period and the
denominator of which is twelve (12). Effective for plan years beginning on or after
January 1, 2001, "Compensation" shall include elective amount that are not included
in the gross income of the Firefighter under Code §132(f)(4). For years beginning after
December 31, 2008: (i) an individual receiving a differential wage payment, as defined
by Code §3401(h)(2), is treated as an employee of the employer making the payment;
and (ii) the differential wage payment is treated as Compensation.
1.06 "Firefighter" shall mean all members of the Fund as of September 30, 2022 with a
Frozen Benefit. No other person employed with the City Fire Department on or after
the Effective Date shall be eligible to become a member of the Fund.
1.07 '�Fund" or"Plan" shall mean the Paris Firefighters' Relief and Retirement Fund.
1.08 RESERVED
1.09 "Normal Retirement Date" shall mean the date on which the Firefighter has attained
age 55. "Early Retirement Date" shall mean the date on which the sum of the
Firefighter's age and years of Service first equals 80, provided, he has completed
twenty (20) years of Service before the Effective Date. In determining a Firefighter's
Early Retirement Date, both age and Service shall be calculated in completed months.
1.10 "Plan Year" shall mean the twelve month period ending December 31st of each year.
1.11 "Service," for purposes of determining Early Retirement Date and the Frozen Benefit,
is credited by the Fund for each month for which a Firefighter makes contributions to
the Plan. Service shall be computed in completed months. No additional Service wili
be credited on or after the Effective Date.
1.12 "Spouse" shall mean the lawful wife or husband of a Firefighter.
1.13 "Termination of Service" or to "Terminate Service credited by the Fund", shali require
a Firefighter to terminate employment from the City Fire Department and from any
position of employment with the City in an emergency, medical or fire department-
related capacity. The Board of Trustees shall have the sole power and discretion to
determine whether any position of employment with the City is in an emergency,
medical or fire department-related capacity. The Board of Trustees shall have the sole
power and discretion to determine if a Firefighter has Terminated Service and shall
determine all questions arising in connection with the interpretation of whether a
Firefighter has Terminated Service.
2
Section 2
Frozen Benefit
2.01 Eligibility for Frozen Benefit. A Firefighter will be eligible for a frozen benefit on or after
his Normal Retirement Date or Early Retirement Date.
2.02 Amount of Frozen Benefit. The monthiy benefit payable to a Firefighter who was
credited with Service prior to the Effective Date, on or after his Normal Retirement
Date or Early Retirement Date shall be an amount equal to $94.00 multiplied by the
Firefighter's total years of Service as of the Effective Date.
2.03 Normal Form of Benefit. Unless the Firefighter elects an optional form of payment
under Section 5, the benefit under this section shall be paid through the date of the
Firefighter's death. In the event the Firefighter's death precedes that of his Spouse,
two thirds of such frozen benefit shall be continued after the Firefighter's death to an
Eligible Surviving Spouse for the Spouse's lifetime. An Eligible Surviving Spouse of a
retired, disabled or terminated Firefighter must have been married to the Firefighter
at the time of the earlier of (a) the Firefighter's Termination of Service, or (b) the
commencement of benefits to the Firefighter, and remained continuously married to
such Firefighter until the time of his death.
3
Section 3
Disability Benefits
3.01 Eligibility for Disability Benefit. Effective for active Firefighters who are determined to
be disabled on or after the Effective Date, an active Firefighter will qualify for a
disability allowance if he becomes disabled for either physical or mental reasons
(except as the result of a condition the Firefighter had on the date he became an
employee Firefighter) before the Firefighter attains Normal Retirement Date. The
Firefighter need only be disabled to the extent of being unable to perform the duties
of his occupation to be entitled to benefits; however, he will not be entitled to receive
any disability allowance if the disability is a result of:
a. Excessive and habitual use by the Firefighter of drugs, intoxicants, or narcotics;
b. Injury or disease sustained by the Firefighter while willfully and illegally
participating in fights, riots, civil insurrections, or while committing a criminal
act;
c. Injury or disease sustained by the Firefighter while serving in any armed forces;
d. Injury or disease sustained by the Firefighter diagnosed or discovered
subsequent to the date his employment has terminated;
e. Injury or disease sustained by the Firefighter as a result of an act of war,
whether or not such act arises from a formally declared state of war; or
f. Any attempt at suicide while sane or insane, or by injuries intentionally self-
inflicted.
3.02 Payment of Disability Allowance. The disability benefit will commence after expiration
of all of the Firefighter's annual leave and sick leave. The disability benefit will continue
thereafter for as long as the Firefighter remains disabled as defined above.
3.03 Amount of Disability Allowance. The monthly disability allowance of a Firefighter will
be equal to $100 per month.
3.04 Termination, Reduction or Reinstatement of Disability Benefit. The Board of Trustees
shall have the power to continue, to terminate, to reduce or to reinstate a Firefighter's
disability benefits subject to the following constraints:
a. During the first one and one-half (1'/z) years, the Board of Trustees may
terminate the Firefighter's disability benefit if the Firefighter recovers to the
extent that he is able to perform the duties of his job as a Firefighter;
b. After the disabled Firefighter has received disability benefits from the Plan for
at least one and one-half (lYz) years, the Board of Trustees may review the
situation of the disabled Firefighter to determine the status of his disability. If
the Firefighter has recovered to the extent he is able to perform the duties of
any occupation for which he is reasonably suited by education, training and
experience;
c. The Board of Trustees shall have the power to reinstate any disability benefit
which has been previously terminated or reduced provided the disabled
4
Firefighter's condition has worsened due to the same cause for which he was
originally disabled; or
d. The Board of Trustees established under the Act may require periodic medical
examinations of, periodic vocationai rehabilitation examinations of, or periodic
financial information from disability retirees to determine whether the retiree
remains eligible to receive disability retirement benefits as provided herein. A
failure by a retiree to comply with a request by the Board of Trustees may result
in the suspension and/or termination of disability retirement benefits.
3.05 Recovery from Disability. If a disabled Firefighter recovers to the extent that his
disability allowance is terminated, the Firefighter shall be entitled to the following:
a. if the Firefighter has not attained his Normal Retirement Date, the recovered
Firefighter will be eligible to receive a Frozen Benefit described in Section 2.02,
to commence as of: (i) the date on which the Firefighter has attained age 55;
or (ii) the date on which the Firefighter's age and years of Service first equals
80, provided he has completed twenty (20) years of Service; or
b. if the recovered Firefighter has attained his Normal Retirement Date or Early
Retirement Date, he will be eligible to receive the Frozen Benefit described in
Section 2.02 above.
5
Section 4
RESERVED
6
Section 5
Optional Forms of Retirement Income
5.01 General Rules. A Firefighter eligible to receive a benefit under the Plan may elect to
receive his retirement income under any of the options listed below. Option Three, the
DROP, may be combined with any other optional form of payment; however, a member
may elect only one of the optional forms of payments available under Options One or
Two. A Firefighter who has not been credited with twenty (20) years of Service before
the Effective Date, may elect to receive his retirement income only under Option One
or Two. If a Firefighter elects an optional form of payment and then dies prior to the
date his payments commence, the election of the optional form of payment shall be
null and void, and the survivor's benefits payable under the Fund shall be paid as if no
optional form of payment had ever been elected.
5.02 Option One - Joint and 100% Spouse Annuity. A Firefighter who elects Option One will
receive the monthly Frozen Benefit payable for the Firefighter's lifetime with the
provision that upon his death, one hundred percent (100%) of the same monthly
Frozen Benefit shall be paid to his Eligible Surviving Spouse. The monthly benefit
payable under Option One will equal the benefit calculated under Section 2, multiplied
by the Conversion Factor specified in Exhibit A, based upon the ages of the Firefighter
and the Firefighter's Spouse at the date monthly payments commence
5.03 Option Two - Straight Life Annuity. A Firefighter who elects Option Two will receive a
monthly retirement benefit payable for his lifetime and which ceases upon his death.
If Option Two is elected by a Firefighter who is married at the time of the earlier of (i)
Termination of Service, or (ii) the commencement of benefits, then it is available only
after the Board of Trustees receives written consent of the spouse for election of this
option. The monthly benefit payable under Option Two will equal the benefit calculated
under Section 2, multiplied by the Conversion Factor specified below, based upon the
Firefighter's age at the date monthly payments commence.
Conversion Factors from Normal Form of Benefit
to Strai ht Life Annuit
Firefighter's Age Conversion Firefighter's Age Conversion
Nearest Birthda Factor Nearest Birthda Factor
45 1.04914 56 1.09820
46 1.05238 57 1.10437
47 1.05584 58 1.11083
48 1.05952 59 1.11757
49 1.06343 60 1.12461
50 1.06758 61 1.13193
51 1.07199 62 1.13953
52 1.07666 63 1.14736
53 1.08160 64 1.15537
54 1.08682 65 1.16352
55 1.09234
5.04 Option Three - DROP. A Firefighter may elect to have his benefit calculated as if he
had Terminated Service on his DROP Eligibility Date.
a. A Firefighter's DROP Eligibility Date is the later of (A) the earlier of Firefighter's
Normal Retirement Date or Early Retirement Date, or (B) the date two years
prior to the date the Firefighter elects to receive benefits. A Firefighter may
elect to have his monthly pension and DROP payment calculated using a date
7
which is later than his DROP Eligibility Date as long as such date is prior to his
actual retirement date and as long as such date results in an integer number
of months between his DROP Eligibility Date and his actual date of retirement.
b. The monthiy benefit of a Firefighter who elects to receive his benefits under the
DROP will be based on his years of Service as of his DROP Eligibility Date (or
such later date selected by the Firefighter in accordance with Section 5.04.a.
c. In addition to his monthly retirement benefit a Firefighter who makes an
election under the DROP will also be entitled to receive a lump sum amount
(the"DROP payment"). The DROP payment will equal the sum of i and ii, below,
where:
i. is the Firefighter's monthly retirement benefit as of his DROP Eligibility
Date (or such later date selected by the Firefighter in accordance with
Section 5.04a) calculated without regard to any optional form of
payment as set forth in Section 5.02 or 5.03, multiplied by the number
of months, including fractional parts of a month, between the
Firefighter's DROP Eligibility Date and the date the Firefighter elects to
receive benefits; and
ii. is equal to (A) minus (B), where (A) equals the amount of the
Firefighter's accumulated contributions as of the date the Firefighter
elects to receive benefits, and (B) equals the amount of the Firefighter's
accumulated contributions as of his DROP Eligibility Date.
d. In calculating the monthly benefit for a Firefighter who elects Option One or
Option Two in addition to the DROP, the Firefighter's monthly benefit shall first
be calculated under the DROP. Next, the appropriate factor for Option One or
Option Two shall be applied to the Firefighter's monthly benefit under the DROP,
based on the Firefighter's attained age at his actual date of retirement.
e. General Rules for DROP Elections:
1. Election of a DROP is in lieu of Frozen Benefits.
2. If a Firefighter dies after electing a DROP but prior to the date his
payments commence, the DROP election shall be null and void, and no
DROP payment shall be made.
f. Forms of Payment of DROP Benefits. A Firefighter who elects to receive benefits
under a DROP shall receive the DROP payment in a single installment.
8
Section 6
Death Benefits
6.01 Benefits Payable to Eligible Surviving Spouse. In the event of a Firefighter's death, the
Firefighter's Eligible Surviving Spouse will receive a monthly benefit in the following
amount:
a. if the Firefighter was receiving the Frozen Benefit at the time of his
death, the amount of death benefits as determined in accordance with the
Normal Form of Benefit or the optional form of payment the Firefighter was
receiving at the time of his death, whichever is applicable; or
b. if the Firefighter was entitled to a Benefit under Section 2 and his death
occurred prior to the commencement of such income, two-thirds of the
income that he would have received at commencement of such income; or
c. if the Firefighter was employed and not receiving the Frozen Benefit at
the time of his death, two-thirds of his Frozen Benefit as defined in Section
2.02 above.
d. An Eligible Surviving Spouse of a retired, disabled, or terminated Firefighter
must have been married to the Firefighter at the time of the earlier of his
Termination of Service or commencement of benefits and remained
continuously married to that same spouse until the time of his death. In order
for the Eligible Surviving Spouse of an actively employed Firefighter to qualify
for the benefit, he or she must have been married to the Firefighter at the time
of his death.
e. Benefits shall not be curtailed by reason of the remarriage of an Eligible
Surviving Spouse. However, no person may receive benefits on account of more
than one Firefighter. In the event an Eligible Surviving Spouse becomes eligible
for benefits on account of the death of more than one Firefighter, the only
benefit payable shall be the greatest of the benefits to which such Eligible
Surviving Spouse was otherwise entitled.
6.02 Benefits Payable to Children. Each unmarried surviving child of the deceased
Firefighter less than 18 years of age shall receive or have paid on his or her behalf a
monthly benefit. The amount of such benefit shall equal a divided by b where:
a. equals the Frozen Benefit provided under the Fund, and
b. equals 7.5.
c. If the Firefighter's Eligible Surviving Spouse dies after receiving benefits
pursuant to Section 6.01 or if there is no Eligible Surviving Spouse, the monthly
benefit that each unmarried child receives will equal two times the benefit
specified in Section 6.02.
6.03 If no Eligible Surviving Spouse or child is entitled to benefits, at the time of the
Firefighter's death, the amount the eligible surviving spouse would have received will
be paid to the Firefighter's dependent parent(s). For this purpose, a dependent parent
is the parent of the deceased Firefighter which the Firefighter was entitled to treat as
a dependent for federal income tax purposes for either (a) the calendar year preceding
the Firefighter's death, or (b) the calendar year of the Firefighter's death.
9
6.04 Death benefits are payable oniy in the event that there is an Eligible Surviving Spouse, ,
children, or dependent parent(s) of the Firefighter. Should a Firefighter die with no
eligible surviving spouse, children, or dependent parent(s), then the total of his
contributions (which have not otherwise been distributed to the Firefighter), without
interest, shall be payable to his estate but no other benefits will be payable.
6.05 The monthly death benefits described in Sections 6.01, 6.02 or 6.03 shalt commence
on the date of the Firefighter's date of death.
6.06 No monthly benefit paid as a result of the death of a Firefighter or a Firefighter's Eligible
Surviving Spouse will be paid to a person convicted of causing the death of such
Firefighter or such Firefighter's Eligible Surviving Spouse but instead such benefit will
be payable to a person who would be entitled to the benefit had the convicted person
predeceased the Firefighter or the Firefighter's Eligible Surviving Spouse. If no person
would be entitled to the benefit, the benefit is payable to the Firefighter's estate. The
fund may delay payment of a benefit payable on the death of a Firefighter or the death
of the Firefighter's Eligible Surviving Spouse pending the results of a criminal
investigation and the legal proceedings relating to the cause of death. A person has
been convicted of causing the death of a Firefighter or a Firefighter's Eligible Surviving
Spouse if the person has pleaded guilty or nolo contendere to or has been found guilty
by a court of an offense at the trial of which it is established that the person's
intentional knowing or reckless act or omission resulted in the death of a Firefighter or
a Firefighter's Eligible Surviving Spouse, regardless of whether sentence is imposed or
probated and has no appeal of the conviction pending and the time provided to appeal
has expired.
10
Section 7
Return of Firefighter's Own Contribution
A Firefighter who Terminates Service may elect to receive, at the time of his Termination of
Service or attainment of Normal Retirement Age, the excess of his own contributions to the
Fund over the amount of any benefits he has received from the Fund. Such election must be
made prior to the date his monthly benefits commence. In making such an election, the
Firefighter will forfeit his rights to receive all other benefits which he would have otherwise
been entitled to receive. The amount refunded shall not include any interest accumulated on
account of the Firefighter's contributions.
11
Section 8
Contributions
8.01 Effective as of the Effective Date, no Firefighter may make contributions to the Plan.
8.02 Effective as of the Effective Date, the City will make contributions at the recommended
contribution determined by actuarial valuations required pursuant to Section 802.101
of the Texas Government Code.
8.03 All contributions shall be held in and administered in accordance with the Fund. All
contributions for each Plan Year shall be paid deposited into the Fund within the period
as may be established by law.
8.04 This Plan shall be funded by one or more separate trusts. If more than one trust is
used, each trust shall be designated by the name of this Plan followed by a number
assigned by the Board of Trustees at the time the trust is established. Each trust is a
part of this Plan. Ali rights or benefits which accrue to a person under this shall be
subject also to the terms of the agreements creating the trust or trusts and any
amendments to them which are not in direct conflict with this Plan.
8.05 All benefits under the Plan shall be provided solely from the Fund.
12
Section 9
Maximum Benefit
9.01 Annual Benefit.
a. Effective date. The limitations of this Section apply in '�Limitation Years"
beginning on or after July 1, 2007, except as otherwise provided herein.
b. Annual Benefit. The "Annual Benefit" otherwise payable to a Firefighter under
the Fund at any time shall not exceed the ��Defined Benefit Dollar Limitation".
c. Adjustment if in two defined benefit plans. If the Firefighter is, or has ever
been, a participant in another qualified defined benefit plan (without regard to
whether the plan has been terminated) maintained by the City, the sum of the
Firefighter's"Annual Benefits"from all such plans may not exceed the'�Defined
Benefit Dollar Limitation". Where the Firefighter's employer-provided benefits
under all such defined benefit plans (determined as of the same age) would
exceed the "Defined Benefit Dollar Limitation" applicable at that age, the
Firefighter's benefit shall be limited in accordance with the terms of the plans.
d. Other rules applicable. The limitations of this Section shall be determined and
applied taking into account the rules in Section 9.03.
9.02 Definitions. For purposes of this Section, the following definitions apply.
a. Annual Benefit. "Annual Benefit" means a benefit that is payable annually in
the form of a "Straight Life Annuity". Except as provided below, where a benefit
is payable in a form other than a '�Straight Life Annuity", the benefit shall be
adjusted to an actuarially equivalent "Straight Life Annuity" that begins at the
same time as such other form of benefit and is payable on the first day of each
month, before applying the limitations of this Section. For a Firefighter who has
or will have distributions commencing at more than one annuity starting date,
the '�Annual Benefit" shall be determined as of each such annuity starting date
(and shall satisfy the limitations of this Section as of each such date), actuarially
adjusting for past and future distributions of benefits commencing at the other
annuity starting dates. For this purpose, the determination of whether a new
annuity starting date has occurred shall be made without regard to Regulations
§1.401(a)-20, Q&A 10(d), and with regard to Regulations §1.415(b)-
1(b)(1)(iii)(B) and (C).
No actuarial adjustment to the benefit shall be made for (a) survivor benefits
payable to a surviving spouse under a qualified joint and survivor annuity to
the extent such benefits would not be payable if the Firefighter's benefit were
paid in another form; (b) benefits that are not directly related to retirement
benefits (such as a qualified disability benefit, preretirement incidental death
benefits, and postretirement medical benefits); or (c) the inclusion in the form
of benefit of an automatic benefit increase feature, provided the form of benefit
is not subject to Code §417(e)(3) and would otherwise satisfy the limitations
of this Section, and the Fund provides that the amount payable under the form
of benefit in any "Limitation Year" shall not exceed the limits of this Section
applicable at the annuity starting date, as increased in subsequent years
pursuant to Code §415(d). For this purpose, an automatic benefit increase
feature is included in a form of benefit if the form of benefit provides for
automatic, periodic increases to the benefits paid in that form.
13
The determination of the ��Annual Benefit" shall take into account Social
Security supplements described in Code §411(a)(9) and benefits transferred
from another defined benefit plan, other than transfers of distributable benefits
pursuant Regulations §1.411(d)-4, Q&A-3(c), but shall disregard benefits
attributable to Employee contributions or rollover contributions.
Effective for distributions in Plan Years beginning after December 31, 2003, the
determination of actuarial equivalence of forms of benefit other than a "Straight
Life Annuity" shall be made in accordance with (1) or (2):
(1) Benefit Forms not Subject to Code §417(e)(3).
(i) For Limitation Years beginning before July 1, 2007, the "Straight
Life Annuity" which is actuarially equivalent to the Firefighter's
form of benefit shall be determined under this subsection (i) for
all forms of benefit other than a "Straight Life Annuity". The
actuarially equivalent "Straight Life Annuity" is equal to the
annual amount of the"Straight Life Annuity" commencing at the
same annuity starting date which has the same actuarial present
value as the Firefighter's form of benefit computed using
whichever of the following produces the greater annual amount:
(I) the interest rate and mortality table (or other tabular factor)
specified in the Fund for adjusting benefits in the same form; and
(II) 5% interest rate assumption and the applicable mortality
table defined in Section 9.02.g.
(ii) For Limitation Years beginning on or after July 1, 2007, the
"Straight Life Annuity" which is actuarially equivalent to the
Firefighter's form of benefit shall be determined under this
subsection (ii) if the form of the Firefighter's benefit is either (a)
a non-decreasing annuity (other than a "Straight Life Annuity")
payable for a period of not less than the life of the Firefighter, or
(b) an annuity which decreases during the life of the Firefighter
because of(i) the death of the survivor annuitant (but only if the
reduction is not below 50% of the benefit payable before the
death of the survivor annuitant), or (ii) the cessation or reduction
of Social Security supplements or qualified disability payments
(as defined in Code §401(a)(11)). The actuarially equivalent
"Straight Life Annuity" is equal to the greater of (I) the annual
amount of the "Straight Life Annuity" (if any) payable to the
Firefighter under the Fund commencing at the same annuity
starting date as the Firefighter's form of benefit; and (II) the
annual amount of the "Straight Life Annuity" commencing at the
same annuity starting date which has the same actuarial present
value as the Firefighter's form of benefit, computed using a 5%
interest rate assumption and the applicable mortality table
defined in Section 9.02.g.
14
(2) Benefit Forms Subject to Code §417(e)(3).
(i) Except as provided in (ii), for Limitation Years beginning on and
after July 1, 2007, the "Straight Life Annuity" which is actuarially
equivalent to the Firefighter's form of benefit shall be determined
under this subsection (2) if the form of the Firefighter's benefit
is other than a benefit form described in Section 9.02.a(1)(ii)
above. The actuarially equivalent "Straight Life Annuity" is equal
to the greatest of (I) the annual amount of the "Straight Life
Annuity" commencing at the same annuity starting date which
has the same actuarial present value as the Firefighter's form of
benefit, computed using the interest rate and mortality table (or
other tabular factor) specified in the Fund for adjusting benefits
in the same form; (II) the annual amount of the "Straight Life
Annuity" commencing at the same annuity starting date which
has the same actuarial present value as the Firefighter's form of
benefit, computed using a 5.5 percent interest rate assumption
and the applicable mortality table defined in Section 9.02.g; and
(III) the annual amount of the '�Straight Life Annuity"
commencing at the same annuity starting date which has the
same actuarial present value as the Firefighter's form of benefit,
computed using the applicable interest rate defined in Section
9.02.g and applicable mortality table defined in Section 9.02.g,
divided by 1.05.
(ii) If the annuity starting date of the Firefighter's form of benefit is
in a Plan Year beginning in or after 2009, and if the Fund is
maintained by an eligible employer as defined in IRC
§408(p)(2)(C)(i), the actuarially equivalent Straight Life Annuity
is equal to the greatest of (I) the annual amount of the Straight
Life Annuity commencing at the same annuity starting date which
has the same actuarial present value as the Firefighter's form of
benefit, computed using the interest rate and the mortality table
(or other tabular factor) specified as the Fund for adjusting
benefits in the same form, or (II) the annual amount of the
Straight Life Annuity commencing at the same annuity starting
date which has the same actuarial present value as the
Firefighter's form of benefit computed using a 5.5 percent
interest rate assumption and the applicable mortality table
defined in Section 9.02.g.
b. Defined Benefit Dollar Limitation. "Defined Benefit Dollar Limitation" means,
effective for "Limitation Years" ending after December 31, 2001, $160,000,
automatically adjusted under Code §415(d), effective )anuary 1 of each year,
as published in the Internal Revenue Bulletin, and payable in the form of a
"Straight Life Annuity". The new limitation shall apply to "Limitation Years"
ending with or within the calendar year of the date of the adjustment, but a
Firefighter's benefits shall not reflect the adjusted limit prior to January 1 of
that calendar year. The automatic annual adjustment of the "Defined Benefit
Dollar Limitation" under Code §415(d) shall apply to Firefighters who have had
a separation from employment.
15
The "Defined Benefit Dollar Limitation" shall be adjusted as provided below:
(1) Adjustment for Less Than 10 Years of Participation or Service: If the
Firefighter has less than 10 years of participation in the Fund, the
"Defined Benefit Dollar Limitation" shall be multiplied by a fraction -- (i)
the numerator of which is the number of"Years of Participation" in the
Fund (or part thereof, but not less than one (1) year), and (ii) the
denominator of which is ten (10).
(2) Adjustment of ��Defined Benefit Dollar Limitation" for Benefit
Commencement Before Age 62 or after Age 65: Effective for benefits
commencing in "Limitation Years" ending after December 31, 2001, the
"Defined Benefit Dollar Limitation" shall be adjusted if the annuity
starting date of the Firefighter's benefit is before age 62 or after age 65.
If the annuity starting date is before age 62, the "Defined Benefit Dollar
Limitation"shall be adjusted under Section 9.02.b(2)(i), as modified by
Section 9.02.b(2)(iii). If the annuity starting date is after age 65, the
"Defined Benefit Dollar Limitation" shall be adjusted under Section
9.02.b(2)(ii), as modified by Section 9.02.b(2)(ii).
(i) Adjustment of "Defined Benefit Dollar Limitation" for benefit
commencement Before Age 62:
(I) "Limitation Years" Beginning Before ]uly 1, 2007. If the
annuity starting date for the Firefighter's benefit is prior
to age 62 and occurs in a "Limitation Year" beginning
before July 1, 2007, the "Defined Benefit Dollar
Limitation"for the Firefighter's annuity starting date is the
annual amount of a benefit payable in the form of a
'�Straight Life Annuity" commencing at the Firefighter's
annuity starting date that is the actuarial equivalent of
the "Defined Benefit Dollar Limitation" (adjusted under
Section 9.02.b(1) for years of participation less than ten
(10), if required) with actuarial equivalence computed
using whichever of the following produces the smaller
annual amount: (1) the interest rate and mortality table
(or other tabular factor) specified in the Fund; or (2) a
five percent (5%) interest rate assumption and the
applicable mortality table as defined in Section 9.02.g.
(II) "Limitation Years" Beginning on or After July 1, 2007. If
the annuity starting date for the Firefighter's benefit is
priorto age 62 and occurs in a"Limitation Year" beginning
on or after July 1, 2007, the "Defined Benefit Dollar
Limitation"for the Firefighter's annuity starting date is the
lesser of:
(A) the annual amount of a benefit payable in the form
of a "Straight Life Annuity" commencing at the
Firefighter's annuity starting date that is the
actuarial equivalent of the "Defined Benefit Dollar
Limitation" (adjusted under Section 9.02.b(1) for
years of participation less than ten (10), if
required) with actuarial equivalence computed
16
using a five percent (5%) interest rate assumption
and the applicable mortality table for the annuity
starting date as defined in Section 9.02.g (and
expressing the Firefighter's age based on
completed calendar months as of the annuity
starting date); or
(B) the '�Defined Benefit Dollar Limitation" (adjusted
under Section 9.02.b(1) for years of participation
less than ten (10), if required) multiplied by the
ratio of the annual amount of the immediately
commencing "Straight Life Annuity" under the
Fund at the Firefighter's annuity starting date to
the annual amount of the immediately
commencing "Straight Life Annuity" under the
Fund at age 62, both determined without applying
the limitations of this Section.
(ii) Adjustment of "Defined Benefit Dollar Limitation" for Benefit
Commencement After Age 65:
(I) "Limitation Years" Beginning Before July 1, 2007. If the
annuity starting date for the Firefighter's benefit is after
age 65 and occurs in a Limitation Year beginning before
July 1, 2007, the "Defined Benefit Dollar Limitation" for
the Firefighter's annuity starting date is the annual
amount of a benefit payable in the form of a "Straight Life
Annuity"commencing at the Firefighter's annuity starting
date that is the actuarial equivalent of the ��Defined
Benefit Dollar Limitation" (adjusted under Section
9.02.b(1) for years of participation less than ten (10), if
required) with actuarial equivalence computed using
whichever of the following produces the smaller annual
amount: (1) the interest rate and mortality table (or other
tabular factor) specified in the Fund; or (2) a five percent
(5%) interest rate assumption and the applicable
mortality table as defined in Section 9.02.g.
(II) "Limitation Years" Beginning After July 1, 2007. If the
annuity starting date for the Firefighter's benefit is after
age 65 and occurs in a "Limitation Year" beginning on or
after July 1, 2007, the "Defined Benefit Dollar Limitation"
at the Firefighter's annuity starting date is the lesser of:
(A) the annual amount of a benefit payable in the form
of a "Straight Life Annuity" commencing at the
Firefighter's annuity starting date that is the
actuarial equivalent of the "Defined Benefit Dollar
Limitation" (adjusted under Section 9.02.b(1)for
years of participation less than ten (10), if
required), with actuarial equivalence computed
using a five percent (5%) interest rate assumption
and the applicable mortality table for that annuity
starting date as defined in Section 9.02.g (and
17
expressing the Firefighter's age based on
completed calendar months as of the annuity
starting date); or
(B) the "Defined Benefit Dollar Limitation" (adjusted
under Section 9.02.b(1) for years of participation
less than ten (10), if required) multiplied by the
ratio of the annual amount of the adjusted
immediately commencing "Straight Life Annuity"
under the Fund at the Firefighter's annuity starting
date to the annual amount of the adjusted
immediately commencing "Straight Life Annuity"
under the Fund at age 65, both determined
without applying the limitations of this Section. For
this purpose, the adjusted immediately
commencing "Straight Life Annuity" under the
Fund at the Firefighter's annuity starting date is
the annuai amount of such annuity payable to the
Firefighter, computed disregarding the
Firefighter's accruals after age 65 but including
actuarial adjustments even if those actuarial
adjustments are used to offset accruals; and the
adjusted immediately commencing "Straight Life
Annuity" under the Fund at age 65 is the annual
amount of such annuity that would be payable
under the Fund to a hypothetical Firefighter who is
age 65 and has the same accrued benefit as the
Firefighter.
(iii) Notwithstanding the other requirements of this Section
9.02.b(2), no adjustment shall be made to the "Defined Benefit
Dollar Limitation"to reflect the probability of a Firefighter's death
between the annuity starting date and age 62, or between age
65 and the annuity starting date, as applicable, if benefits are
not forfeited upon the death of the Firefighter prior to the annuity
starting date. To the extent benefits are forfeited upon death
before the annuity starting date, such an adjustment shall be
made. For this purpose, no forfeiture shall be treated as
occurring upon the Firefighter's death if the Fund does not charge
Firefighters for providing a qualified preretirement survivor
annuity, as defined in Code §417(c), upon the Firefighter's death.
(3) Notwithstanding anything else in this Section to the contrary, the benefit
otherwise payable to a Firefighter under this Fund shall be deemed not
to exceed the "Defined Benefit Dollar Limitation" if:
(i) the retirement benefits payable for a "Limitation Year" under any
form of benefit with respect to such Firefighter under this Fund
and under all other defined benefit plans (without regard to
whether a plan has been terminated) ever maintained by the City
do not exceed $10,000 multiplied by a fraction - (I) the
numerator of which is the Firefighter's number of Years (or part
thereof, but not less than one year) of Participation (not to
exceed ten (10)) with the City, and (II) the denominator of which
18
is ten (10); and the City has not at any time maintained a defined
contribution plan in which the Firefighter participated (for this
purpose, mandatory Employee contributions under a defined
benefit plan, individual medical accounts under Code §401(h),
and accounts for post-retirement medical benefits established
under Code §419A(d)(1) are not considered a separate defined
contribution plan); or
(ii) the retirement benefits are payable to a Firefighter whose period
of service taken into account in determining the benefit under
the Fund includes at least fifteen (15) years of service as a full-
time employee of any fire department which is organized and
operated by the City to provide firefighting services for any area
within the jurisdiction of the City; or
(iii) the benefits are payable as a pension, annuity or similar
allowance from the Fund as the result of the Firefighter becoming
disabled by reason of personal injuries or sickness; or
(iv) the benefits are payable from the Fund to a beneficiary as a
result of the death of the Firefighter.
c. City. "City"" means, for purposes of this Section, the City that has adopted the
Fund, and all Firefighters of a controlled group of corporations, as defined in
Code §414(b), as modified by Code §415(h), all commonly controlled trades or
businesses (as defined in Code §414(c), as modified, except in the case of a
brother-sister group of trades or businesses under common control, by Code
§415(h)), or affiliated service groups (as defined in Code §414(m)) of which
the City is a part, and any other entity required to be aggregated with the City
pursuant to Code §414(0). For the purposes of this Section, City also includes
with respect to a Firefighter, a former employer of such Firefighter if the City
maintains a plan that provides a benefit which the Firefighter accrued while
performing services for the former employer. A former entity that antedates
the City is a ��Predecessor Employer" with respect to a Firefighter if, under the
facts and circumstances, the City constitutes a continuation of all or a portion
of the trade or business of the former entity. For this purpose, the formerly
affiliated plan rules in Regulations §1.415(� 1(b)(2) apply as if the City and
"Predecessor Employer" constituted a single employer under the rules
described in Regulations §1.415(a) 1(�(1) and (2) immediately prior to the
cessation of affiliation (and as if they constituted two, unrelated employers
under the rules described in Regulations §1.415(a) 1(�(1) and (2) immediately
after the cessation of affiliation) and cessation of affiliation was the event that
gives rise to the "Predecessor Employer" relationship, such as a transfer of
benefits or plan sponsorship.
d. Limitation Year. "Limitation Year" means the twelve (12) month period ending
December 31st of each year. The ��Limitation Year" may only be changed by a
fund amendment. Furthermore, if the Fund is terminated effective as of a date
other than the last day of the Fund's"Limitation Year", then the Fund is treated
as if the Fund had been amended to change its "Limitation Year".
e. Straight Life Annuity. "Straight Life Annuity" means an annuity payable in equal
installments for the life of a Firefighter that terminates upon the Firefighter's
death.
19
f. Year of Participation. "Year of Participation" means, with respect to a
Firefighter, each accrual computation period (computed to fractional parts of a
year) for which the following conditions are met: (1) the Firefighter is credited
with at least the number of Hours of Service (or Period of Service if the Elapsed
Time Method is used) for benefit accrual purposes, required under the terms of
the Fund in order to accrue a benefit for the accrual computation period, and
(2) the Firefighter is included as a Firefighter under the eligibility provisions of
the Fund for at least one day of the accrual computation period. If these two
conditions are met, the portion of a '�Year of Participation" credited to the
Firefighter shall equal the amount of benefit accrual service credited to the
Firefighter for such accrual computation period. A Firefighter who is
permanently and totally disabled within the meaning of Code §415(c)(3)(C)(i)
for an accrual computation period shall receive a "Year of Participation" with
respect to that period.
In addition, for a Firefighter to receive a "Year of Participation" (or part thereof)
for an accrual computation period, the Fund must be established no later than
the last day of such accrual computation period. In no event shall more than
one "Year of Participation" be credited for any twelve (12) month period.
g. Applicable Actuarial Assumptions. The actuarial assumptions used to determine
Code §415 limits under the Fund shall be the interest rate specified in Section
13.03, and the applicable mortality table prescribed by the Secretary of the
Treasury under Code §415(b)(2)(E)(v). Effective for distributions with annuity
starting dates on or after December 31, 2002, the applicable mortality table
used for purposes of adjusting any benefit or limitation under Code
§415(b)(2)(B), (C) or (D) as set forth in the Fund is the table described in
Revenue Ruling 2001-62. Effective for distributions with annuity starting dates
on or after]anuary 1, 2008, the applicable mortality table used for purposes of
adjusting any benefit or limitation under Code §415(b)(2)(B),(C) or (D) as set
forth in the Fund, or any provision directly or indirectly prescribing the use of
the mortality table described in Revenue Ruling 2001-62 shall be amended to
prescribe the use of the applicable annual mortality table within the meaning
of Code §417(e)(3)(B), as initially described in Revenue Ruling 2007-67.
Effective for distributions with annuity starting dates on or after January 1,
2008, the applicable interest rate for the purposes of adjusting any benefit or
limitation under Section 9.02.a(2)(i) shall be the rate of interest described in
Code §417(e) after its amendment by the Pension Protection Act of 2006.
Specifically, the applicable interest rate shall be the adjusted first, second and
third segment rates applied under the rules similar to the rules of Code
§430(h)(2)(C) for the second calendar month (lookback month) before the first
day of the Plan Year in which the annuity starting date occurs (stability period).
For this purposes, the first, second and third segment rules are the first, second
and third segment rates which would be determined under Code §430(h)(2)(C)
if:
(1) Code §430(h)(2)(D) was applied by substituting the average yields for
the month described in the preceding paragraph for the average yields
for the 24-month period described in such section;
(2) Code §430(h)(2)(G)(i)(II) was applied by substituting "§417(e)(3)(A)
(ii)(II)" for��§412(b)(S)(B)(ii)(II)"; and
20
(3) The applicable percentage under Code §430(h)(2)(G) is treated as being
20 percent in 2008, 40 percent in 2009, 60 percent in 2010, and 80
percent in 2011.
9.03 Other rules:
a. Benefits under terminated plans. If a defined benefit plan maintained by the City has
terminated with sufficient assets for the payment of benefit liabilities of all plan
Firefighters and a Firefighter in the plan has not yet commenced benefits under the
plan, the benefits provided pursuant to the annuities purchased to provide the
Firefighter's benefits under the terminated plan at each possible annuity starting date
shall be taken into account in applying the limitations of this Section. If there are not
sufficient assets for the payment of all Firefighters' benefit liabilities, the benefits taken
into account shall be the benefits that are actually provided to the Firefighter under
the terminated plan.
b. Benefits transferred from the Fund. If a Firefighter's benefits under a defined benefit
plan maintained by the City are transferred to another defined benefit plan maintained
by the City and the transfer is not a transfer of distributable benefits pursuant
Regulations §1.411(d)-4, Q&A-3(c), then the transferred benefits are not treated as
being provided under the transferor plan (but are taken into account as benefits
provided under the transferee plan). If a Firefighter's benefits under a defined benefit
plan maintained by the City are transferred to another defined benefit plan that is not
maintained by the City and the transfer is not a transfer of distributable benefits
pursuant to Regulations §1.411(d)-4, Q&A-3(c), then the transferred benefits are
treated by the City's Fund as if such benefits were provided under annuities purchased
to provide benefits under a plan maintained by the City that terminated immediately
prior to the transfer with sufficient assets to pay all Firefighters' benefit liabilities under
the plan. If a Firefighter's benefits under a defined benefit plan maintained by the City
are transferred to another defined benefit plan in a transfer of distributable benefits
pursuant to Regulations §1.411(d)-4, Q&A-3(c), the amount transferred is treated as
a benefit paid from the transferor plan.
c. Plans of a "Predecessor Employer". If the City maintains a defined benefit plan that
provides benefits accrued by a Firefighter while performing services for a "Predecessor
Employer", then the Firefighter's benefits under a plan maintained by the"Predecessor
Employer"shall be treated as provided under a pfan maintained by the City. However,
for this purpose, the plan of the '�Predecessor Employer" shall be treated as if it had
terminated immediately prior to the event giving rise to the "Predecessor Employer"
relationship with sufficient assets to pay Firefighters' benefit liabilities under the plan,
and had purchased annuities to provide benefits; the City and the ��Predecessor
Emp�oyer"shall be treated as if they were a single employer immediately prior to such
event and as unrelated employers immediately after the event; and if the event giving
rise to the predecessor relationship is a benefit transfer, the transferred benefits shall
be excluded in determining the benefits provide under the plan of the "Predecessor
Employer".
d. Special rules. The limitations of this Section shall be determined and applied taking
into account the rules in Regulations §1.415(f�-1(d), (e) and (h).
21
Section 10
Distribution of Benefits
10.01 Required Minimum Distributions. The provisions of Code §401(a)(9) are hereby
incorporated in the Plan by reference. All distributions of benefits shall satisfy the
minimum distribution requirements of such Code §401(a)(9) if the Fund complies with
a reasonable and good faith interpretation of Code §401(a)(9).
10.02 Direct Transfers of Eligible Rollover Distributions:
a. This Section applies to distributions made on or after ]anuary 1, 1993.
Notwithstanding any provisions 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.
b. Definitions:
(1) Eligible rollover distribution: An eligible rollover distribution is any
distribution described in IRC §402(c)(4) and generally includes 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:
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 ten (10) years or more; any
distribution to the extent that such distribution is required under Code
§401(a)(9); and the portion of any distribution that is not includable in
gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities); any
distribution which is made upon hardship of distribution; and any other
distribution reasonably expected to total less than $200 during a year.
(2) Eligible retirement plan: An eligible retirement plan is an individual
retirement account described in Code §408(b), an annuity plan
described in Code §403(a), or a qualified trust described in Code
§401(a), that accepts the distributee's eligible rollover distribution.
However, in the case of an eligible rollover distribution to the surviving
spouse, an eligible retirement pfan is an individual retirement account
or individual retirement annuity.
(3) Distributee: A distributee includes an employee or former employee. In
addition, the employee's or former employee's surviving spouse and the
employee's or former employee's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as defined in
Code §414(p), 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.
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c. Firefighter notice: A Firefighter entitled to an "eligible rollover distribution"
must receive a written explanation of the right to a "direct rollover", the tax
consequences of not making a "direct roilover", and if applicable, any available
special income tax elections. The notice must be provided no less than thirty
(30) days and no more than one hundred eighty (180) days before the first day
on which the distribution is eligible to be made. The "direct rollover" notice
must be provided to alt Firefighters, unless the total amount the Firefighter will
receive as a distribution during the calendar year is expected to be less than
$200.
The provisions of this Section shall be effective ]anuary 1, 1993.
Effective for distributions made after December 31, 2001, for purposes of the
direct rollover provisions of the p►an, an eligible retirement plan shall also mean
an annuity contract described in Code §403(b) and an eligible plan under Code
§457(b) which is maintained by a state, political subdivision of a state, or any
agency or instrumentality of a state or political subdivision of a state and which
agrees to separately account for amounts transferred into such plan from this
plan. The definition of eligible retirement plan shall also apply in the case of a
distribution to a surviving spouse, or to a spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as defined in
Code §414(p).
If this plan contains after-tax employee contributions, then for purposes of the
direct rollover provisions of the plan, a portion of a distribution shall not fail to
be an eligible rollover distribution merely because the portion consists of after-
tax employee contributions which are not includible in gross income. However,
such portion may be paid only to an individual retirement account or annuity
described in Code §408(a) or (b), or to a qualified defined contribution plan
described in Code §401(a) or Code §403(a) that agrees to separate�y account
for amounts so transferred, including separately accounting for the portion of
such distribution which is includible in gross income and the portion of such
distribution which is not so includible. For taxable years beginning after
December 31, 2006, a Firefighter may elect to transfer employee after-tax
contributions by means of a direct rollover to a qualified plan or to a 403(b)
plan that agrees to account separately for amounts so transferred (including
interest thereon), including accounting separately for the portion of such
distribution which is includible in gross income and the portion of such
distribution which is not includible in gross income.
Effective for distributions made on or after March 28, 2005, in the event of a
distribution of an "eligible rollover distribution" greater than $1,000 that is
made in accordance with the provisions of the Plan, if the Firefighter does not
elect to have such distribution paid directly to an '�eligible retirement plan"
specified by the Participant in a direct rollover or to receive the distribution
directly, then the Board of Trustees shall pay the distribution in a direct rollover
to an individual retirement plan designated by the Board of Trustees.
10.03 For distributions after December 31, 2009, a non-spouse beneficiary, only as otherwise
permitted by the Fund who is a "designated beneficiary" under Code §401(a)(9)(E)
and the Regulations thereunder, by a direct trustee-to-trustee transfer ("direct
rollover"), may roll over all or any portion of his or her distribution to an Individual
Retirement Account (IRA) the beneficiary establishes for purposes of receiving the
23
distribution. In order to be able to roll over the distribution, the distribution otherwise
must satisfy the definition of an"eligible rollover distribution"under Code §401(a)(31).
The distribution is subject to the direct rollover requirements of Code §401(a)(31)
(including Code §401(a)(31)(B)), the notice requirements of Code §402(f) and the
mandatory withholding requirements of Code §3405(c). If a non-spouse beneficiary
receives a distribution from the Fund, the distribution is not eligible for a sixty (60)
day (non-direct) rollover.
If the Firefighter's named beneficiary is a trust, the Fund may make a direct rollover
to an IRA on behalf of the trust, provided the trust satisfies the requirements to be a
designated beneficiary within the meaning of Code §401(a)(9)(E).
A non-spouse beneficiary may not roll over an amount that is a required minimum
distribution, as determined under applicable Treasury Regulations and other Internal
Revenue Service guidance. If the Firefighter dies before his or her required beginning
date and the non-spouse beneficiary rolls over to an IRA the maximum amount eligible
for rollover, the beneficiary may elect to use either the five (5) year rule or the life
expectancy rule, pursuant to Treasury Regulations §1.401(a)(9)-3, A-4(c), in
determining the required minimum distributions from the IRA that receives the non-
spouse beneficiary's distribution.
10.04 For distributions made after December 31, 2007, a Firefighter or beneficiary may elect
to roll over directly an "eligible rollover distribution" to a Roth IRA described in Code
§408A(b). For this purpose, the term "eligible rollover distribution" includes employee
after-tax contributions, if applicable.
10.05 HELPS. Notwithstanding the foregoing and Section 5 of the Act, a Firefighter may elect
to direct the Fund to directly pay deductions from distributions to a provider of accident
or health plan or qualified long-term care insurance contract.
10.06 Facility of Payment. If the Board of Trustees receives satisfactory evidence that a
person entitled to receive a benefit is physically, mentally or legally incompetent to
receive the benefit and to give a valid receipt, that an individual or institution is
maintaining or has custody of the person and that no guardian, committee or other
representative of the estate of the person has been appointed, the Board of Trustees
may direct the payment to the individual or institution maintaining or having the
custody of the person. Receipt of that individual or institution shall be a valid and
complete discharge for the payment of the benefit. Also, a deposit to the credit of a
Firefighter or beneficiary in any bank or trust company shall be deemed payment to a
person.
10.07 Name and Address Changes. Each Firefighter, spouse, and beneficiary is responsible
to notify the Board of Trustees of any change in his name or address to which his
benefit checks and other communications are to be mailed. If any check in payment
of a benefit is mailed by regular United States mail to the last address of the payee as
shown on the Board of Trustees' records and is returned unclaimed, the Trustee shall
discontinue further payments until corrected information is given to the Board of
Trustees.
10.08 Release of Claims. All payments to Firefighters or former Firefighters or beneficiaries
shall, to the amount of the payments, be in full satisfaction of claims against the Plan.
The Board of Trustees may require the payee, as a condition precedent to payment,
to execute a receipt and release in a form approved by the Board of Trustees.
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10.09 Correction of Payment Error. If any error in payment of benefits occurs, including an
overpayment, the Fund shall correct such error and may adjust any future payment
so the correct benefit wiil be paid, except as provided in subsection c below, and the
Texas Government Code §802.1024(b). The adjustment for an overpayment or
underpayment may be made to one or more future payments at the discretion of the
Board and pursuant to Texas Government Code §§802.1024 and 802.1025. If no
future payments are due, the Board may recover an overpayment in any manner
permitted by Section 8 of the Act and Texas Government Code §§802.1024 and
802.1025. The Board must begin the adjustment of future payment to correct an
overpayment or recovery of an overpayment not later than the ninetieth (90th) day
after the date the notice described below is delivered or the date the second notice
described below is mailed
a. Notice. Upon discovery of an overpayment error but not later than ninety (90)
days after discovery, the Board of Trustees shall give written notice of the
overpayment error to the affected person by certified mail, return receipt
requested. If the Board does not receive a signed receipt evidencing delivery
on or before the thirtieth (30th) day after the date the notice is mailed, the
Board shall send the notice a second time, by certified mail, return receipt
requested.
b. The written notice will include:
(1) the amount of the correction;
(2) how the correction was calculated;
(3) an explanation of the reason for the correction;
(4) a statement that the affected person may file a written complaint with
the Fund if the affected person does not agree with the correction;
(5) instructions for filing a written complaint with the Fund; and
(6) a payment plan option if no future payments are due.
c. Any overpayment of benefits may not be corrected or recovered if:
(1) the overpayment was made more than three (3) years before the date
of the discovery of the overpayment; or
(2) if the Board does not adjust future payments or begin recovery within
the time prescribed above.
d. If the affected person files a written complaint, the Board will follow the
procedure as set out in Texas Government Code §802.1025.
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Section l i
Amendment and Termination
11.01 The Board of Trustees reserves the right to amend or terminate the Fund, subject to
the provisions and requirements of the Act.
a. An amendment or other change adopted shall not deprive a Firefighter of the
Fund of a right to receive a vested benefit unless that Firefighter gives his
written consent or unless the reduction in benefits is made in accordance with
Section 16 of the Act.
b. All amendments to the Fund shall be made under the procedures prescribed by
the Act.
c. The Board has the power to make any amendment to the Fund to insure the
Fund is and remains qualified for purposes of Code §401 and to obtain a
favorable determination letter from the IRS.
d. In the event of termination of the Plan, the rights of ali Firefighters to the
benefits accrued to the date of such termination (to the extent funded as of
such date) shall be non-forfeitable. In such event, the Plan assets will be
allocated and paid in accordance with applicable law. No such termination shall
cause any part of the corpus or income of the Plan to be used for or diverted
to purposes other than the exclusive benefit of Firefighters or their
beneficiaries.
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Section 12
Board of Trustees
12.01 Appointment, Term of Service and Removal. The Board of Trustees shall administer
this Plan. The members shall serve until their resignation, death, removal, or their
term otherwise expires. Any member may resign at any time by mailing a written
resignation to the Board of Trustees. Any member may be removed in accordance with
the Act. Likewise, vacancies may be filled in accordance with the Act from time to time.
12.02 Members of the Board of Trustees. The members of the Board of Trustees shall consist
of the members as set forth in Section 19 of the Act. Effective as of the Effective Date
and thereafter, there will be no "participating members" of the Fund. The three
members of the Board of Trustees who were participating members shail continue to
serve out their term. Thereafter, the members of the board of trustees as provided by
Subdivisions (1) and (2) of subsection (a) of Section 19 of the Act shall appoint
additional board members. These board members will be members of the Fund.
12.03 Powers. The Board of Trustees is a fiduciary. It has the exclusive responsibility for the
general administration of the Fund, and has all powers necessary to accomplish that
purpose, including but not limited to the following rights, powers, and authorities:
a. To make rules for administering the Fund so long as they are not inconsistent
with the terms of the Fund;
b. To construe all provisions of the Fund and trust or trusts;
c. To correct any defect, supply any omission, or reconcile any inconsistency
which may appear in the Fund or trust or trusts;
d. To select, employ, and compensate at any time any consultants, actuaries,
accountants, attorneys, and other agents and employees the Board of Trustees
believes necessary or advisable for the proper administration of the Fund;
e. To determine all questions relating to eligibility, Service, Compensation and all
other matters relating to benefits;
f. To resolve all controversies relating to the administration of the Fund, including
but not limited to any differences of opinion arising between the Board of
Trustees and the City or a Firefighter, or any combination of them and any
questions it believes advisable for the proper administration of the Fund;
g. To direct or to appoint an investment manager or managers who can direct the
Board of Trustees in all matters relating to the investment, reinvestment and
management of the Fund; provided, however such investment of assets shall
be in accordance with Section 27 of the Act, as amended from time to time;
h. To direct the payment of Plan benefits;
i. To delegate any clerical or recordation duties as it believes is advisable to
properly administer the Fund; and
j. To take all other such actions that are not inconsistent with the Act and to
operate the Plan in accordance with the Act.
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12.04 Standard of Performance. The Board of Trustees and each of its members shall use
the care, skill, prudence and diligence under the circumstances then prevailing that a
prudent man, acting in a like capacity and familiar with such matters, would use in
conducting his business as the administrator of the P�an.
12.05 Liability of Board of Trustees and Liability Insurance. No member of the Board of
Trustees shall be liabie for any act or omission of any other member, any investment
manager appointed by the Board of Trustees or any other agent appointed by the
Board of Trustees.
12.06 Standard of ]udicia) Review of Board of Trustees' Actions. The Board of Trustee have
full and absolute discretion in the exercise of each and every aspect of its authority
under the Plan, including without limitation, the authority to determine any person's
right to benefits under the Plan, the correct amount and form of any benefits, the
authority to decide any appeal, the authority to review and correct the actions of any
prior administrative committee, and all of the right, powers, and authorities specified
in this Plan. Notwithstanding any provision of law or any explicit or implicit provision
of this document or, any action taken, or ruling or decision made by the Board of
Trustees in the exercise of any of its powers and authorities under the Plan, its actions
shall be final and conclusive as to all parties, including without limitation all Firefighters
and beneficiaries, regardless of whether the Board of Trustees or one or more of its
members may have an actual or potential conflict of interest with respect to the subject
matter of the action, ruling, or decision. No final action, ruling, or decision of the Board
of Trustees shall be subject to de novo review in any judicial proceeding; and no final
action, ruling, or decision of the Board of Trustees may be set aside unless it is held
to have been arbitrary and capricious by a final judgment of a court having jurisdiction
with respect to the issue.
12.07 Administrative Policies. The Board shall estabtish administrative procedures to be
utilized in processing claims or matters which affect the substantial rights of any
person, including Participants, retirees, beneficiaries or any person affected by a
decision of the Board.
12.08 Evidence Furnished Conclusive. Any person or persons involved in the administration
of the Plan shall be entitled to rely upon any representation made or evidence furnished
by a Firefighter or beneficiary with respect to his age or other facts required to be
determined under any of the provisions of the Plan and shall not be liable on account
of the payment of any monies in reliance on those representations. Any representation
or evidence shall be binding upon the Firefighter or beneficiary making or furnishing it
but not upon the City of Paris, the Board of Trustees or any other person or persons
involved in the administration of the Plan. Any of those parties may contest any
representation or evidence. Each Firefighter and beneficiary has a duty to submit
satisfactory proof of his age and other facts.
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Section 13
Miscellaneous Provisions Applicable to the Fund
13.01 Exclusive Benefit Requirement. It shall be impossibte under this Plan and trust, at any
time prior to the satisfaction of all liabilities with respect to Firefighters and their
beneficiaries under the Plan and trust for any part of the corpus or income to be used
for, or diverted to, purposes other than the exclusive benefit of Firefighters or their
beneficiaries. In the event of termination of the Plan or complete discontinuance of
contributions under the Plan, the rights of all Firefighters to benefits accrued to the
date of such termination or discontinuance (to the extent funded as of such date),
shall be nonforfeitable.
13.02 Forfeitures. Forfeitures shall not be applied to increase the benefits any Firefighter
would otherwise receive under the Plan.
13.03 Actuarial Equivalent. For the purposes of calculating actuarially equivalent benefits,
the following assumptions shall be used for all Plan participants unless other factors
are specified in the Plan:
Mortality: UP 1994 Mortality Table, Male Rates
Interest: Eight percent per annum, compounded annually
13.04 Spendthrift Provisions. The right of any Firefighter or beneficiary to any benefit or
payment under this Fund shall not be subject to voluntary or involuntary transfer,
alienation, or assignment;
a. All amounts in the Fund and all rights accruing or accrued under the Fund to
any Firefighter or beneficiary are exempt from garnishment, attachment,
execution, state and municipal taxation, sale, levy and any other process and
are unassignable;
b. The above prohibition shall also apply to the creation, assignment or recognition
of a right to any benefit payable pursuant to a domestic relations order, unless
such order is determined to be a Qualified Domestic Relations Order under
Subchapter A of Chapter 804 of the Texas Government Code.
c. Payments may be made to an alternate payee under a qualified domestic
relations order only if the Board of Trustees determines an order constitutes a
qualified domestic relations order (Qualified Domestic Relations Order) as
defined by Subchapter A of Chapter 804 of the Texas Government Code. A
Qualified Domestic Relations Order may not (i) require the Plan to provide any
type or form of benefits or any option that is not otherwise provided herein, (ii)
require the Plan to provide increased benefits, and (iii) require the payment of
benefits to an alternate payee which are required to be paid to another
alternate payee under another Qualified Domestic Relations Order.
13.05 Severable Provisions. If any provision of this Plan is held to be illegal or invalid, such
illegal or invalid provision shall not affect the remaining provisions of the Plan, and the
Plan shall be construed and enforced as if such illegal or invalid provision had never
been in the Plan.
13.06 Governing Law. Atl provisions of the Fund shall be administered under the laws of the
State of Texas unless superseded by federal law.
29
13.07 Qualified Domestic Relations Order. The Board of Trustees has adopted the provisions
of Subchapter A and Subchapter C of Chapter 804 of Texas Government Code. This
election is intended to comply with the provisions of §804.002 of the Texas
Government Code.
13.08 Duplication of Benefits. There is to be no duplication of pension, disability, termination
of employment or death benefits payable under the Plan for any reason.
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