§ 2.28.240. Deferred retirement option plan (DROP) for Plan No. 2.  


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  • Employees may participate in the DROP under the following conditions:

    (a)

    An employee under Plan No. 2 who would be eligible upon termination to receive a retirement benefit may elect to remain in active service and participate in the DROP.

    (b)

    The employee may elect to participate for a maximum of five years. The period of participation elected shall be known as the DROP period. Only one such election can be made, and such election is irrevocable subject to subsections (k) and (l) of this section.

    (c)

    The employee must be eligible, but for the decision to continue in active service, to receive a service retirement benefit on the date of election to participate in the DROP and such election shall be made prior to such employee's receipt of any retirement benefit.

    (d)

    Accumulated, unused sick leave shall increase service, but shall not be used to meet minimum age requirements. Use of sick leave for DROP participation shall reduce the employee's accumulated, unused sick leave by the number of hours utilized for the retirement benefit calculation.

    (e)

    Beginning the month of the employee's DROP election and continuing only for the elected DROP period, additions to the employee's notational DROP account will consist of:

    (1)

    The calculated retirement benefit (may be net of distributions to any alternate payee under a QDRO);

    (2)

    Any post-retirement adjustments to be made when appropriate; and

    (3)

    Interest at the rate of five percent per year compounded monthly on (1) and (2) above.

    (f)

    At termination of employment, the employee may elect one of three options for the distribution of the DROP account:

    (1)

    A lump sum payment of the DROP account; or

    (2)

    A qualified plan-to-plan transfer or IRA rollover; or

    (3)

    A combination of (1) and (2) above.

    (g)

    Distribution of the DROP account will be made within ninety days of termination of employment.

    (h)

    Payment of the retirement benefit will be made to the retired employee following termination of employment.

    (i)

    Failure to complete the DROP period as a result of the employee's actions (e.g., voluntary resignation or termination with cause) would result in the loss of accrued interest under subsection (f) of this section.

    (j)

    Employee contributions to the fund shall continue during the DROP period. In the event the employee doe not terminate employment at the end of the DROP period, employee contributions to the fund shall continue until termination of employment.

    (k)

    This subsection applies after August 29, 2008, to an employee who is not participating in the DROP on August 29, 2008. An employee who elects a DROP period and then chooses to remain in active service beyond the DROP period shall be treated at retirement and termination of employment as if the member had never participated in DROP except that sick leave used to increase service will not be reinstated. The member's retirement benefit shall be calculated taking into consideration the member's entire period of service and final average salary during that service, but in any event the maximum annual retirement benefit shall not be more than seventy-five percent of final average salary.

    (l)

    This subsection applies after August 29, 2008, to an employee who is participating in the DROP on August 29, 2008. An employee who has elected a DROP period and then chooses to remain in active service beyond that DROP period (1) shall have his or her DROP account frozen as of the end of the elected DROP period and (2) shall only accrue additional service credit for the service that occurs after the DROP period (using the final average salary as of the commencement of the DROP period), but in any event the maximum annual retirement benefit, net of any applicable post retirement adjustments, shall not be more than seventy-five percent of the final average salary as of the commencement of the DROP period. In the event that the employee has already earned the maximum annual retirement benefit at his or her DROP election date, no additional service credit shall accrue. An employee covered by this subsection (l) may elect to be covered by subsection (k) of this section (in lieu of this subsection (l)) upon the employee's termination of employment.

(Ord. No. 44-812 § 25; Ord. No. 47-451, § 9, 3-27-07; Ord. No. 47-965, § 2, 8-26-08)