Pension Plan Amendment - HEART Act Requirements and Plan, Year End Change
Staff recommends that the Mayor and Council approve the sixth pension plan amendment.
At the Retirement Board meeting held on November 16, 2012, staff notified the Board of a required Pension Plan amendment due to a new federal law called the HEART Act. The new law provides additional tax and pension benefits to individuals who are absent from work due to duty in the uniformed military service. See Attachment E for additional information on the HEART Act.
YEAR END CHANGE
On September 7, 2012, the Retirement Board agreed to recommend to the Mayor and Council that the Pension Plan year be changed from April 1 through March 31 to July 1 through June 30 to better align the Pension Plan year with the funding mechanism of the Plan, which is the City's fiscal year. This change, which was approved unanimously by the Board, should lead to less confusion in the future when discussing the City's Pension Plan and funding status of the Plan (Attachment D).
This modification will be accomplished by establishing a short fiscal year for the Plan, beginning on April 1, 2013 and ending on June 30, 2013. Thereafter, the Plan’s fiscal year will run from July 1 to June 30. Because the Plan will have a short year, certain IRS annual limitations on compensation and allocations must be adjusted on a pro rata basis. Also, interest crediting on employee contributions, which were calculated on a calendar year basis, will run on the new fiscal year of the Plan.
Mayor and Council History
This is the first time this item has been brought before the Mayor and Council.
Boards and Commissions Review
The City's Retirement Board discussed these two changes to the Plan at their meetings held on September 7, 2012 and November 16, 2012.
There could be a fiscal impact if the City has retirees with qualified military service.
Attachment A - Sixth Amendment
Attach A -SIXTH AMENDMENT TO THE CITY OF ROCKVILLE PENSION PLAN.pdf
Attachment B - Sixth Amendment - Redline version
Attach B -pension plan 6th amendment redline.pdf
Attachment C - Pension Plan including sixth amendment
Attach C-Rockville_ 2008 Pension Plan (with 1st, 2nd, 3rd, 4th, 5th and 6th Amend incorporated) CLEAN.pdf
Attachment D - ROCKERS Board Meeting Agenda September 7, 2012
Attach D-RB AGENDA Fiscal Year Plan Date.pdf
Attachment E - ROCKERS Board Meeting Agenda November 16, 2012
Attach E-RB AGENDA HEART ACT.pdf
Gavin Cohen, Chief Financial Officer
Approved on: 01/18/2013
Approved on: 01/24/2013