(2) Upon participation in the DROP, the member shall be deemed a 'qualified member' as defined in Section 121.102 (e)(2).
(3) The beginning date of the DROP period shall be the first full bi-weekly pay period after the first day of January, April, July or October subsequent to the date of election to participate, or as soon as administratively practical thereafter, and shall not exceed the DROP participation period as provided in (b)(1), above.
(4) Upon electing to participate in the DROP , the Member shall submit on forms prescribed and required by the Board:
(i) A written election to participate in the DROP;
(ii) Selection of the DROP participation and retirement dates, which satisfy the limitation stated in subsection (b)(1) of this Section. Such retirement date shall be in a binding application for retirement with the employer establishing a deferred retirement date. The member may change the deferred retirement date within the limitations of subsection (b)(1) of this Section on forms required by the Board;
(iii) A written notification advising the member's employer of the date on which the DROP shall begin for the member;
(iv) A properly completed DROP application for service retirement as provided in this Section; and
(v) Any other forms required by the Board.
(5) The DROP participant shall be a retiree under the Pension Plan for calculation of increased pension benefits, unless otherwise prescribed herein, but not for the purposes of employment with the City, and the availability of employee benefits and programs related thereto. DROP participants shall additionally continue to be eligible to vote for their respective members of the Advisory Committee and the Board of Pension Trustee.
(6) Except as provided by subsection (g) of this Section with respect to elected or appointed officials, election to participate in the DROP, once approved by the Board, is irrevocable.
(c) Benefits payable under the DROP.
(1) Effective with the date of DROP participation, the member's initial normal retirement benefit, including creditable service and average compensation, as provided in Section 121.201 (a) and the effective date of retirement shall be fixed. Such normal retirement benefits, together with annual cost of living adjustments as provided in Section 121.201 (d), and interest, shall accrue monthly in the fund for the benefit of the DROP participant. Such interest shall produce an annual rate of return of 8.40 percent. Interest calculations shall be administered in accordance with rules prescribed by the Board and interest distributions shall be credited using the 30 day month/360 day year method of calculation.
(2) The normal retirement benefit and interest thereon shall continue to accrue in the DROP until the established termination date of the DROP, or until the participant terminates employment or dies prior to such date. Although individual DROP accounts shall not be established, a separate accounting of each participant's accrued benefits under the DROP shall be calculated and provided to participants annually by the Board.
(3) At the conclusion of the participant's DROP and termination of employment with the City, the Board shall distribute the participant's total accumulated DROP benefits, as soon as administratively practical, subject to the following provisions:
(i) The Board shall receive written verification by the participant's employer that such participant has terminated employment as provided in subsection (b)(4)(ii) of this Section.
(ii) The terminated DROP participant or if deceased, such participant's surviving spouse or representative, shall elect on forms provided by the Board to receive payment of the DROP benefits in accordance with one of the options listed below. For a DROP participant who fails to elect a method of payment within 30 days of termination of the DROP, the Board will pay a lump sum as provided in subsection (a), below, as soon as administratively practical. For a surviving spouse of a current or former DROP participant who fails to elect a method of payment within 90 days of the date of death of the current or former DROP participant, the Board will pay a lump sum as provided in subsection (a), below, as soon as administratively practical.
a. Lump Sum. All accrued DROP benefits, plus interest, less withholding taxes remitted to the Internal Revenue Service, shall be paid to the DROP participant or surviving spouse.
b. Direct Rollover. All accrued DROP benefits, plus interest, shall be paid from the DROP directly to the custodian of an eligible retirement plan as defined in Section 402(c)(8)(B) of the Internal Revenue Code. However, in the case of an eligible rollover distribution to the surviving spouse of the deceased participant, an eligible retirement plan is an individual retirement account or an individual retirement annuity as described in Section 402(c)(9) of the Internal Revenue Code. For purpose of this subsection, an eligible retirement plan shall also mean an annuity contract described in Section 403(b) of the Internal Revenue Code and an eligible plan under Section 457(b) of the Internal Revenue Code which is maintained by a state, political subdivision of a state, or an agency or instrumentality of a state or political subdivision of a state which accept rollovers and which agrees to separately account for amounts transferred into such plan from this plan. However, in the case of an eligible rollover distribution to the surviving spouse of the deceased participant, an eligible retirement plan is an individual retirement account or an individual retirement annuity as described in Section 402 (c)(9) of the Internal Revenue Code.
c. Partial lump sum. A portion of the accrued DROP benefits shall be paid to the DROP participant or surviving spouse, less withholding taxes remitted to the Internal Revenue Service, and the remaining DROP benefits shall be transferred directly to the custodian of an eligible retirement plan as defined in Section 402(c)(8)(B) of the Internal Revenue Code. However, in the case of an eligible rollover distribution to the surviving spouse of a deceased participant, an eligible retirement plan is an individual retirement account or an individual retirement annuity as described in Section 402(c)(9) of the Internal Revenue Code. The proportions shall be specified by the DROP participant or surviving spouse.
d. Monthly distribution. The account balance shall be distributed in a monthly amount paid bi-weekly, until the DROP Account is depleted, over an annual period to be selected by the participant or the surviving spouse, less withholding taxes remitted to the Internal Revenue Service. Such selection once made, cannot be changed, unless changed to Option (a), or (b), above. The annual rate of interest to be factored into such distribution period shall be 8.40 percent. Notwithstanding the foregoing, in the event that the participant selected a payout period over the participant's life expectancy or over the joint life expectancies of the participant and the participant's spouse in order to avoid the application of the 10 percent additional tax on early distributions reflected in Section 72(t) of the Internal Revenue Code, such participant may shorten the number of bi-weekly payout periods originally selected by the participant, provided that the timing of such modification conforms to the standards described in Section 72(t)(4) of the Internal Revenue Code.
(iii) The form of payment selected by the DROP participant or surviving spouse shall comply with the minimum distribution requirements per Section 401(a)(9) of the Internal Revenue Code.
(iv) Subsequent to the month of termination or death, the accrual of interest on the accumulated DROP balance shall cease, provided however, that an interest factor shall be embedded in the distribution options described in (d) above, from the initial bi-weekly distribution which shall commence upon the execution of proper election forms by the DROP participant or the surviving spouse.
(4) The accrued benefits of any DROP participant and any contributions accumulated under such program, shall not be subject to assignment, execution, attachment, or to any legal process whatsoever, except for federal income tax levies.
(5) DROP participants shall not be eligible for the disability retirement benefits provided in Section 121.201 (b) of this Chapter.
(d) Death Benefits Under the DROP.
(1) The surviving spouse of DROP participants shall not be eligible for the calculation of pension benefits under Section 121.204(a) of this Chapter.
(2) Upon the death of a DROP participant, contributions to the DROP shall cease and the surviving spouse shall be entitled to apply for and receive the accrued benefits in the DROP as provided in subsection 121.209 (c)(2), and apply for surviving spouse benefits in accordance with the provision of Section 121.204 (b). If there is no surviving spouse, the accrued benefits in the DROP will be paid to the estate of the qualified member as provided by law.
(3) The normal retirement benefit accrued for the benefit of the DROP participant during the month of a participant's death, shall be the final monthly benefit credited for such DROP participant.
(4) The Single Member Death Benefit under Section 121.203 of this Chapter in the event of death during the DROP period will not be paid.
(5) Eligibility to participate in the DROP terminates upon the death of the participant. If the participant dies on or after the effective date of enrollment in the DROP, but prior to the first monthly benefit being credited to the DROP, retirement benefits shall be paid to the surviving spouse in accordance with the provisions of Section 121.204 (b) and (c).
(e) Cost of living adjustment. On the first full bi-weekly pay period after April 1, 2000 or as soon as administratively practical thereafter, and for the first full bi-weekly pay period after each succeeding April 1st, the deferred retirement benefit may be increased, under the provisions of Section 121.201 (d) (1), if applicable.
(f) Health Insurance Subsidy. DROP participants are not eligible for the health insurance subsidy as provided in Section 121.201 (d)(2) of this Chapter until termination of employment is effectuated.
(g) DROP recission for elected or appointed officials. The irrevocable nature of DROP participation shall not apply in the case of a DROP participant who becomes an elected or appointed official with such member being granted the option of rescinding DROP participation within one (1) calendar year of election or appointment. In such event of DROP recission, the elected or appointed official shall be granted pension service credit for DROP participation periods, the City shall be assessed the amount of City contributions that otherwise would have been remitted to the fund by the City during the DROP period, the member will be required to make the contributions in accordance with the provisions of Section 121.113, and the retirement leave account frozen and removed pursuant to Section 8 of Ordinance 97-1103-E shall be restored. All deposits plus interest into the DROP account will revert to the fund. Such appointed and elected officials shall be permitted to re-enroll into the DROP at a later date. However, members who were former DROP participants and who retired while in such status shall not be eligible to rejoin membership into the fund.
(h) Bonus check. DROP participants are not eligible to receive bonus check distributions that are periodically distributed to beneficiaries until termination of employment is effectuated. In addition, the initial bonus check to be distributed to a former DROP participant subsequent to such participant's termination of employment shall be prorated from the ending payroll date of DROP participation.
(i) Contributions and deductions.
(1) The employer contributions on the salary, as defined in Section 121.113 (a), of DROP participants shall be zero percent.
(2) A deduction of two percent per annum shall be made from all salaries (as defined in Section 121.113 (a)) of DROP participants as the contribution from the participant during the period of DROP participation, with such amount being credited to the Base Benefits Fund.