§ 54-172. Deferred retirement option program.

(a)

A deferred retirement option program (DROP) is established for participants who are employed by the city on March 1, 2007, and who meet the eligibility requirements for the DROP as set forth in subsection (b), below, on or after that date. The DROP shall be administered by the retirement committee in accordance with this section.

(b)

A participant with 25 or more years of credited service may elect to enter the DROP on the first day of the participant's pay period immediately following the first day of any month following the attainment of age 55, and a participant with more than ten years of credited service may elect to enter the DROP on the first day of the participant's pay period immediately following the first day of any month following the attainment of age 65.

(c)

A participant must submit a written election to participate in the DROP on a form provided by the city at least 30 days before DROP participation begins. A participant's election to enter the DROP shall be irrevocable.

(d)

The maximum period of participation in the DROP shall not exceed five years. Participation in the DROP will end upon the participant's separation from city employment, if such separation occurs prior to five years of participation in the DROP.

(e)

A participant may participate in the DROP only once, and after entering the DROP a participant shall not be eligible to become a contributing participant of the plan during the DROP period.

(f)

Upon the effective date of entering the DROP, a participant shall not accrue additional credited service or benefits under the plan, nor shall the participant make any further participant contributions to the plan. A participant's average monthly compensation and credited service shall be fixed as they existed on the effective date of entry into the DROP.

(g)

During the DROP period, a monthly retirement income shall be credited to the participant's DROP account in accordance with the DROP benefit formula provided in this subsection. The DROP benefit formula shall be equal to the greater of:

(1)

The unreduced guaranteed 25- or 30-year early retirement benefit, reduced as follows based on the participant's age on his DROP election date: three percent for every year prior to age 65 with a maximum of five years; or

(2)

The participant's accrued benefit reduced by the early retirement reduction factor defined in section 54-146 based on the participant's age on his DROP election date; or

(3)

The unreduced normal retirement benefit computed in accordance with section 54-150, if the participant attained normal retirement date prior to entry in the DROP.

Additionally, the participant's supplemental retirement income will be equal to the supplemental retirement income he would have received on his DROP election date (this amount already includes a reduction for early retirement).

(h)

The DROP shall provide for participant self-directed investment options. The retirement committee shall approve an administrator for purposes of administering the self-directed DROP. Each participant's DROP account shall be credited with earnings or debited with losses in accordance with the investments selected by the participant. Investments, and the fees for managing investments and administering the DROP, shall be the responsibility of the participant in accordance with the investment options selected by the participant. The DROP investment options shall be established consistent with the requirements of the Internal Revenue Code. Neither the city, the trust fund nor the retirement committee shall have any responsibility or liability for the DROP investments selected by a participant.

(i)

Upon termination of employment, a participant's DROP account shall be distributed to the participant in a lump sum, or the participant may elect to have all or a portion of the DROP account rolled over to an individual retirement account or other qualified plan.

(j)

Following termination of employment, a participant in the DROP shall receive the same monthly retirement income that was being paid into the DROP account during the DROP period, paid directly to the participant in accordance with the plan.

(k)

If a participant dies during the period of participation in the DROP, a lump-sum payment equal to his or her DROP account balance shall be paid to the participant's designated beneficiary, or, if none, to his or her estate; in addition, any form of monthly payments selected by the participant prior to entering the DROP shall be payable in accordance with the plan.

(l)

If a participant does not terminate city employment at the end of the DROP period, payments into the DROP account shall cease for the duration of employment. The amount in the DROP account and the monthly retirement income shall not be payable to the participant until he or she terminates city employment.

(m)

If a DROP participant dies after the maximum period of participation in the DROP but is still employed by the city, a lump-sum payment equal to his or her DROP account balance shall be paid to the participant's designated beneficiary or, if none, to his or her estate; and, in addition, any form of monthly payments selected by the participant prior to entering the DROP shall be payable in accordance with the plan.

(Ord. No. 2007-6, § 5, 2-27-07; Ord. No. 2009-1, § 11, 2-17-09)