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HomeMy WebLinkAbout2012-02-23 NEERB MINUTES• • • NONEMERGENCY EMPLOYEES RETIREMENT BOARD SPECIAL MEETING February 23 , 2012 Chairperson Hagan called the special meeting of the NonEmergency Employees Retirement Plan Board to order at I :07 p.m. in the City Council Conference Room of the Civic Center, 1000 Englewood Parkway, Englewood , Colorado . Members Present: Members Absent: Others Present : A quorum was present. Frank Gryglewicz, Director of Finance and Administrative Services Bradley Hagan , Chairperson , Employee Representative James Jordon , Council Appointee John Moore, Council Appointee (by phone) Mahendra Patel , Secretary, Employee Representative Bobbi Oxford , Council Appointee (with notice) Jim Woodward , Council Member (with notice) Diane Hunt, Gabriel Roeder Smith and Company (by phone) Mary Brauer, Reinhart Boener Yan Deuren Norris & Reiselbach, PC Daniel Brotzman, City Attorney * * * * * Discussion of Proposed Plan Document Amendments: Mandatory Employee Three Per cent Contribution Issues Ms . Brauer resumed presenting items three through six from her January 27, 2012 memo regarding Plan amendments. 3. Reemployment of Former Members (Section 3-4-16-2) Ms. Brauer explained that the Plan currently provides that a rehired emp lo yee may not receive benefits from the Plan after reemployment. The proposed amendment limits this rule to state that the rehired employee may not receive benefits from the Plan ifthe employee is eligible to participate in this Plan. The proposed amendment would allow Plan benefits to continue to a rehired employee who is not eligible to participate in this Plan . Discussion ensued related to the circumstances that are affected by this issue . The Board discussed Vested Members who are part-time employee and Retirees who are part-time or rehired by the City into another position that is eligible for another City retirement plan. Ms. Brauer stated that clear guidelines are necessary for the Plan because IRS rules require a bona fide separation from employment in order to commence pension payments (with possible exceptions for employees who work past age 62). The proposed amendment must not be interpreted as a way to pay Plan benefits before a bona fide separation from employment. She also explained that the IRS has provided in some circumstances that if a person retires, commences pension payments and returns to work, the retiree may not work more than twenty percent of what they were working before pension payments began. Mr. Patel asked why the IRS would be concerned about the separation from employment. Ms. Brauer explained that the IRS provides tax preferences to the Plan. In order to maintain the preferences , the IRS requires the Plan assets be used for bona fide retirement uses only. Any abuse could disqualify the Plan . The perception is that if a person quits for a day and gets a pension, then it is not a bona fide pension benefit. It is deemed to supplement the employee's income for a period of time. ·'-·, Chairperson Hagan inquired ifthere is a definition of part-time employee and Mr. Brotzman responded that the Plan document will be provided to Human Resources to insure a policy is written that runs parallel to the Plan. • Ms . Brauer will draft the amendment reflecting the Board 's intention as it relates to the Reemployment of a Former Member. 4. Payout of Employee Contributions Ms. Brauer explained that she drafted the proposed Plan amendments to provide that the mandatory employee contributions will be paid , with 3 .5% interest, to employees who terminate employment before completing the five years of Credited Service required to become vested. The proposed amendments provide that the former employee may elect to receive a payout (the Plan will not force the payout until age 65 ifthe payout amount exceeds $1 ,000). Accumulated contributions of less than $1 ,000 will be distributed as soon as administratively possible. Typically former employees request an immediate distribution or rollover of their contributions . Ms. Brauer outlined an alternative that permits the Plan to "clean out" its liability to former non vested employees by adding a provision requiring payout of amounts over $1 ,000 to an IRA if a former nonvested employee does not elect a payout or an IRA rollover. This alternative would require the City to contract with an IRA provider to receive and invest the rollovers. Notification would need to be made to the former employee, but this is a much more complex and time consuming process for the Plan administration . 5. Other Amendments to the Ordinance. Ms . Brauer reviewed the following amendments to the Plan document prepared with Ms . Wescoat that are included in the black lined draft : a. Add rules to satisfy tax law requirements that affect the mandatory employee contributions. b. Add a minimum death benefit equal to a return of accumulated employee contributions including interest at 3 .5%, the rate the Plan currently provides for pre-1976 employee contributions. c . Clarify service measurement rules for employees who leave employment and later return. d . Clarify that the Plan considers compensation for periods as a Member earning Credited Service , not just periods as an employee . This change is also intended to exclude retroactive pay for periods outside of the 36 consecutive months from the Plan benefit calculations of Final Average Compensation to avoid inflating benefits. e . Comply with tax laws governing military service . The Board discussed at length the rules required by USERRA for military service. The verbiage allows the required time frame to permit a Member the opportunity to repay the employee contributions that would have been made during the period of military leave . The repayment of the employee contribution will provide the Member service credits during the military leave. If the Member does not repay the missed employee contributions, the Member will not receive service credits only credit toward the vesting period. Other options were discussed by the Board. The Board agreed to comply with the required tax laws governing military service . f. Revise or remove incorrect tax law references. g. Add capitalization referring to defined terms . h. Correct and update references to effective dates. 6. Further Documentation. Ms. Brauer reviewed the additional documents that it will be necessary to review and update the Plan amendments ; this includes reviewing beneficiary forms and updating the employee booklet or handbook . Ms. Brauer and Ms. Wescoat will draft a simplified handbook and the Board will need to review and approve the handbook to insure that it is understandable and in laymen 's terms . The Board agreed to bring all Plan amendments to the next regular meeting, May 8 , 2012. Non Eme rgency Employees Retirement Board Meetin g 2 of 3 • • • • • Member Choice No items were discussed . The Board adjourned at I :50 p.m . ~~LJkq.(:~ Carol Wescoat Recording Secretary Non Eme rgency Empl oyees Retireme nt Board Meetin g 3 of 3