City of Hagerstown, MD
Washington County
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Table of Contents
Table of Contents
Except as otherwise provided in §§ 38-28 through 38-36, a participant shall retire on his or her normal retirement date. A participant who retires on his or her normal retirement date shall be entitled to receive a monthly retirement income, beginning with the first day of the month coincident with or otherwise next following the participant's normal retirement date and continuing for the remainder of his or her life. Subject to § 38-8D, and subject to the adjustment set forth in § 38-17 and the limitations set forth in § 38-33, the amount of the monthly retirement income shall be determined as follows:
A. 
With respect to a participant who retires between July 1, 1998, and June 30, 1999, his or her accrued benefit under the Maryland State Retirement System as of June 30, 1998.
B. 
With respect to a participant who retires between July 1, 1999, and June 30, 2000, 1.4% multiplied by the participant's average compensation and multiplied by the number of years (and fractional years) in his or her years of credited service, not to exceed 60% of average compensation.
C. 
With respect to a participant who retires between July 1, 2000, and June 30, 2001, 1.7% multiplied by the participant's average compensation and multiplied by the number of years (and fractional years) in his or her years of credited service, not to exceed 60% of average compensation.
D. 
With respect to a participant who retires after June 30, 2001, 2.0% multiplied by the participant's average compensation and multiplied by the number of years (and fractional years) in his or her years of credited service, not to exceed 60% of average compensation.
A. 
Early retirement date. A participant may elect to retire on any date on or after the first date which qualifies as an early retirement date, in which case the date of retirement shall be deemed to be his or her early retirement date and the participant shall be entitled to a monthly early retirement benefit equal to the benefit computed pursuant to § 38-28 (based upon the participant's actual years of credited service and average compensation at his or her early retirement date), but subject to the appropriate actuarial reduction, if any.
B. 
Commencement of early retirement benefits. Early retirement benefits shall commence on the first day of the month coincident with or otherwise next following the participant's normal retirement date, unless the participant elects to have the benefits commence on the first day of any prior month coincident with or following his or her early retirement date.
C. 
Form of payment. Except as otherwise provided in § 38-43D, the benefits payable pursuant to this section shall be payable in the normal form provided by § 38-28, unless an optional form of payment has been elected pursuant to § 38-42.
In the event a participant remains a covered employee after his or her normal retirement date, then, subject to the limitations set forth in § 38-33, and except as otherwise provided in § 38-43, the participant shall be entitled to receive, commencing on the first day of the month coincident with or otherwise next following his or her termination date, the benefit to which the participant would have been entitled pursuant to § 38-28 if he or she had retired at his or her normal retirement date, but adjusted by including any additional years of credited service which have accrued since his or her normal retirement date (up to the maximum percentage of average compensation described in § 38-28), and (notwithstanding any provision in the definition of average compensation to the contrary) by taking into account any increases in average compensation which may be generated by increases in compensation earned since his or her normal retirement date.
The plan shall pay disability benefits determined in accordance with the following provisions:
A. 
Ordinary disability. If a participant reaches a termination date by reason of total and permanent disability, the participant shall be entitled to receive a monthly disability benefit equal to the greater of the amounts determined in accordance with Subsection A(1) or (2), as follows:
(1) 
If the participant is credited with at least five years of eligibility service, the monthly benefit payable pursuant to this Subsection A(1) shall be 20% of the participant's average compensation.
(2) 
If the participant is credited with at least five years of eligibility service, the monthly benefit payable pursuant to this Subsection A(2) shall be the participant's accrued benefit (based upon the participant's actual years of credited service and average compensation at his or her termination date), without actuarial reduction and, notwithstanding the provisions of Subsection C below hereof, without reduction for any benefits payable under the Workers' Compensation Law of Maryland.
B. 
Line of duty disability.
(1) 
Except as provided in Subsection A(2) of this section, a participant (regardless of his or her length of service) who terminates employment by reason of total and permanent disability, which, as determined in accordance with rules established by the Administrator, is incurred as a result of an accident or injury which has been sustained as an active covered employee and which has been ruled compensable under the Workers' Compensation Law of Maryland, shall be entitled to receive a monthly benefit equal to the greater of:
(a) 
The benefit determined pursuant to Subsection A above; or
(b) 
If the line of duty disability is a catastrophic disability, as defined in Subsection B(2) below, the greater of:
[1] 
A monthly benefit equal to the greater 66 2/3% of the participant's compensation; or
[2] 
The participant's employee contributions benefit; or
(c) 
If the line of duty disability is a non-catastrophic disability, as defined in Subsection B(2) below, the greater of:
[1] 
A monthly benefit equal to the greater 33 1/3% of the participant's compensation; or
[2] 
The participant's employee contributions benefit.
(2) 
In Subsection B(1) of this subsection the following terms have the meanings indicated:
CATASTROPHIC DISABILITY
A line of duty disability by reason of which the participant will be permanently prevented from engaging in any substantial gainful employment; or which severely limits one or more major life activities. "Substantial gainful employment" means the ability to perform a moderate amount of work with reasonable regularity, without reference to the type of work performed by the participant before his or her termination date. "Major life activities" include caring for one's self, walking, seeing, hearing, speaking, breathing or learning.
LINE OF DUTY DISABILITY
A total and permanent disability incurred as a result of an accident or injury which has been sustained as a result of service as an active covered employee and which has been ruled compensable under the Workers' Compensation Law of Maryland.
NON-CATASTROPHIC DISABILITY
A line of duty disability which is not a catastrophic disability.
C. 
Payments considered in the nature of Workers' Compensation payments. Any payments made to police and fire employees for injuries received in the line of duty pursuant to any retirement disability provisions of this plan shall be considered to be in the nature of Worker's Compensation payments made pursuant to Title 9 of the Labor and Employment Article of the Annotated Code of Maryland.
D. 
Adjustments to compensation. For purposes of Subsection B above, "compensation" includes adjustments to the base annual salary for employees in the same position classification as the participant at the time of the onset of the participant's disability through the date the participant's disability benefits commence.
E. 
General provisions relating to disability.
(1) 
Commencement of disability benefits. Disability benefits shall commence on the first day of the month coincident with or otherwise next following the determination of disability by the City; provided, however, that benefits payable pursuant to this section shall be reduced by any benefits payable from workers' compensation.
(2) 
Forms of benefit. The benefits payable pursuant to this section shall be payable in the normal form provided by § 38-28, unless an optional form of payment has been elected pursuant to § 38-42.
(3) 
Definition.
(a) 
"Total and permanent disability" shall mean a medically determinable physical or mental impairment which can be expected to be permanent or result in death, and by reason of which the participant will be prevented from performing the usual duties of his or her position with the City as required by the City Code.
(b) 
Such total and permanent disability must be evidenced by a certificate of a physician selected or approved by the City.
(c) 
However, total and permanent disability shall not include any injury or disease which:
[1] 
Resulted from or consists of chronic alcoholism or addiction to narcotics;
[2] 
Was contracted, suffered or incurred while the participant was engaged in, or resulted from his or her having engaged in, a criminal enterprise;
[3] 
Was intentionally self-inflicted; or
[4] 
Arose as a result of willful misconduct on the part of the participant.
(4) 
Continuing disability.
(a) 
Until a participant who has reached a termination date by reason of disability attains his or her normal retirement date, the continuation of the participant's right to receive disability benefits shall depend on the participant's continued disability, and the case shall be subject to periodic review in accordance with rules established by the City to determine the participant's health and employment status, including the requirement that the participant furnish to the City a copy of his or her federal income tax return each year.
(b) 
In the event a disabled participant ceases to submit to such review, prior to his or her normal retirement date, the disability benefits payable pursuant to this section shall cease.
(5) 
Death of disabled participant. In the event of the death of a disabled participant, no benefits with respect to the participant shall be payable except as otherwise provided in §§ 38-39 and 38-40.
A. 
Amount of termination benefit. If a participant reaches a termination date for any reason other than death, retirement or disability, the participant shall be entitled to a monthly termination benefit equal to a vested percentage (determined as set forth below) of the benefit computed pursuant to § 38-28 (based upon the participant's actual years of credited service and average compensation at his or her termination date).
B. 
Commencement of termination benefits. Benefits payable pursuant to this § 38-32 shall commence on the first day of the month coincident with or otherwise next following the earliest of the participant's early retirement date or attainment of age 62, unless the participant elects to receive a cash-out of his or her employee contributions benefit, as provided in § 38-42, in which case, such cash-out may be made at any time following the termination date, at the election of the participant.
C. 
Form of benefits. Except as otherwise provided in § 38-43, the benefits payable pursuant to this section shall be payable in the normal form provided by § 38-28, unless an optional form of payment has been elected pursuant to § 38-42.
D. 
Vested percent of the accrued benefit. Subject to § 38-8, the vested percentage of the accrued benefit to which the participant is entitled shall be equal to the greater of:
(1) 
100% of the participant's employee contributions benefit; or
(2) 
A percentage of the participant's accrued benefit, determined on the basis of the number of whole years in the participant's years of eligibility service and in accordance with the following schedule:
Whole Years in Total
Years of Eligibility Service
Percentage Vested
Less than 5
0%
5 or more
100%
[Amended 8-26-2003 by Ord. No. 2003-27; 8-27-2002 by Ord. No. 2002-22; 11-24-2009 by Ord. No. O-09-16; 12-20-2011 by Ord. No. O-11-24]
Notwithstanding any plan provisions to the contrary:
A. 
Maximum benefit. To the extent necessary to prevent disqualification under Section 415 of the Internal Revenue Code, and subject to the remainder of this section, the maximum monthly benefit to which any participant may be entitled at any time (the "maximum benefit") shall be equal to 1/12th of the amount set forth in Section 415(b)(1)(A) of the Internal Revenue Code, as adjusted by C/L increases, (the "monthly dollar limit"). The rate of benefit accrual shall be frozen or reduced accordingly to comply with the limitations.
B. 
Actuarial adjustment of monthly dollar limit. The monthly dollar limit shall be subject to actuarial adjustment as follows:
(1) 
Benefit payment.
(a) 
If the benefit is payable in any form other than a single life annuity or a qualified joint and survivor annuity (as defined for purposes of Section 415 of the Internal Revenue Code), the maximum benefit shall be reduced so that it is the actuarial equivalent of the single life annuity.
(b) 
For purpose adjusting the form of benefit payment under this plan to a single life annuity under this Subsection B(1), if the benefit is paid in any optional form of benefit other than an optional form of benefit that is subject to Internal Revenue Code Section 417(e)(3), then the equivalent annual benefit shall be the greater of:
[1] 
The equivalent annual benefit computed using the plan interest rate and plan mortality table set forth in § 38-6; and
[2] 
The equivalent annual benefit computed using five percent and the applicable mortality table designated by the Secretary of the Treasury from time to time pursuant to Internal Revenue Code Section 417(e)(3).
(c) 
For purpose adjusting the form of benefit payment under this plan to a single life annuity under this Subsection B(1), if the benefit is paid in any optional form of benefit that is subject to Internal Revenue Code Section 417(e)(3), then the equivalent annual benefit shall be the greater of:
[1] 
The equivalent annual benefit computed using the plan interest rate and plan mortality table set forth in § 38-6; and
[2] 
The equivalent annual benefit computed using the applicable mortality table designated by the Secretary of the Treasury from time to time pursuant to Internal Revenue Code Section 417(e)(3) and the GATT interest rate for plan years beginning before 2004, 5.5% for plan years beginning in 2004 and 2005, and the greatest of the following for plan years beginning in and after 2006: 5.5%; the plan interest rate; and the rate that provides a benefit of not more than 105% of the benefit that would be provided if the GATT interest rate were used.
(d) 
Notwithstanding the provisions of Subsection B(1)(a), effective as of January 1, 2008, no actuarial adjustment shall be made to the monthly dollar limit to the extent provided under IRS Regulations 1.415(b)-1(c)(4) and 1.415(b)-1(c)(5).
(2) 
Benefits beginning before age 62.
(a) 
With respect to a benefit beginning before age 62, the monthly dollar limit shall be reduced to the actuarial equivalent of a monthly benefit in the amount of the monthly dollar limit beginning at age 62. The actuarial equivalent for this purpose shall be calculated using the applicable mortality table designated by the Secretary of the Treasury from time to time pursuant to Internal Revenue Code Section 417(e)(3) and an interest rate that is no less than the greater of the plan interest rate set forth in § 38-6 and 5%.
(b) 
Notwithstanding the foregoing, however, in no event shall the monthly dollar limit applicable to benefits beginning before age 62 be reduced, but only with respect to:
[1] 
Participants who have been credited with at least 15 years of credited service as a covered employee, including military service; and
[2] 
Death or disability benefits to the extent provided in IRS Regulations 1.415(b)-1(d)(4).
(3) 
With respect to a benefit beginning after age 65, the dollar limit shall be increased so that it is the actuarial equivalent of a dollar limit applicable to a benefit beginning at age 65. The actuarial equivalent for this purpose shall be calculated using the applicable mortality table designated by the Secretary of the Treasury from time to time pursuant to Internal Revenue Code Section 417(e)(3) and an interest rate that is no greater than the lesser of the plan interest rate set forth in § 38-6 and 5%.
(4) 
Applicable mortality tables. Notwithstanding any other plan provisions to the contrary, the applicable mortality table designated by the Secretary of the Treasury pursuant to Internal Revenue Code Section 417(e)(3) for distributions with annuity starting dates on or after December 31, 2002 is the table prescribed in Revenue Ruling 2001-62.
(5) 
For any distribution with an annuity starting date on or after the effective date of this section and before the adoption date of this section, if application of the amendment as of the annuity starting date would have caused a reduction in the amount of any distribution, such reduction is not reflected in any payment made before the adoption date of this section. However, the amount of any such reduction that is required under Section 415(b)(2)(B) of the Internal Revenue Code must be reflected actuarially over any remaining payments to the participant.
C. 
Reducing dollar limit.
(1) 
The dollar limit shall be reduced (but not by more than 90%) by 1/10th for each year of credited service less than 10, considering only those years of credited service during any part of which the participant was participating in the plan (including those periods for which he or she elected to purchase or transfer service pursuant to §§ 38-16 through 18 of this plan).
(2) 
Notwithstanding Subsection C(1), however, in no event shall the monthly dollar limit be reduced in the case of death or disability benefits to the extent provided in IRS Regulations 1.415(b)-1(g)(3).
D. 
The City-provided annual retirement benefit payable to any participant shall not exceed the maximum benefit allowed under Section 415 of the Internal Revenue Code, as amended from time to time and which is specifically incorporated herein by reference. Notwithstanding the foregoing, if the participant is a participant in any other qualified defined benefit pension plan sponsored by the City, the participant's pension benefit under such other plan shall be aggregated with the projected benefit under this plan, and the benefit under this plan shall be reduced, to the extent necessary, so that the aggregate of such benefits does not exceed the limitations set forth in Section 415 of the Internal Revenue Code. Effective only for plan years ending prior to July 1, 2000, if the participant is a participant in one or more qualified defined contribution plans sponsored by the City, the participant's benefit under the plan shall be reduced, to the extent necessary, so that the sum of the defined benefit fraction and the defined contribution fraction does not exceed one. For this purpose, "defined benefit fraction" and "defined contribution fraction" shall be the fractions described in Section 415(e) of the Internal Revenue Code as in effect prior to July 1, 2000.
E. 
Other reductions in maximum benefit. In addition to the foregoing, the maximum benefit shall be reduced, and the rate of benefit accrual shall be frozen or reduced accordingly, to the extent necessary to prevent disqualification of the plan under Section 415 of the Internal Revenue Code, with respect to any participant who is also a participant in:
(1) 
Any other tax-qualified pension plan maintained by the City, including a defined benefit plan in which an individual medical benefit account (as described in Section 415(1) of the Internal Revenue Code) has been established for the participant;
(2) 
Any welfare plan maintained by the City in which a separate account [as described in Section 419A(d) of the Internal Revenue Code] has been established to provide post-retirement medical benefits for the participant; and/or
(3) 
Any retirement or welfare plan, as aforesaid, maintained by a related employer, as described in Section 414(b),(c), (m) or (o) of the Internal Revenue Code.
Any change in benefits provided for by amendment to the plan shall not apply to any participant whose termination date with the City occurred prior to the effective date of such amendment, except as otherwise specifically provided for in the plan or in such amendment.
Subject to the limitations set forth in § 38-34, the monthly retirement income of a participant who has reached his benefit commencement date, as otherwise computed pursuant to § 38-28, may be eligible for a cost of living adjustment. Such a cost of living adjustment shall be accomplished by amendment to this plan pursuant to § 38-65. The earliest effective date of any such amendment shall be July 1, 2003.
In addition to any other benefits payable under this plan, a participant who retires or otherwise reaches a termination date shall be entitled to receive a lump sum distribution of his or her refundable contributions benefit, if the participant is entitled to the benefit.