HB 1393

1	A bill to be entitled
2	An act relating to the City of West Palm Beach, Palm Beach
3	County; amending chapter 24981, Laws of Florida, 1947, as
4	amended; revising provisions relating to the West Palm
5	Beach Firefighters Pension Fund; revising definition of
6	the term "salary"; removing provisions for lump-sum
7	payments of small retirement income; revising provisions
8	relating to the purchase of permissive service; providing
9	an effective date.
10
11	Be It Enacted by the Legislature of the State of Florida:
12
13	Section 1.  Subsections (17) through (24) of section 17 of
14	chapter 24981, Laws of Florida, 1947, as amended by chapter
15	2005-303, Laws of Florida, are renumbered as subsections (16)
16	through (23), respectively, and paragraph (a) of subsection (1),
17	paragraphs (a), (k), and (l) of subsection (5), and present
18	subsections (16) and (24) of that section are amended, to read:
19	Section 17.  West Palm Beach Firefighters Pension Fund.--
20	(1)  Creation of fund.--There is hereby created a special
21	fund for the Fire Department of the City of West Palm Beach to
22	be known as the West Palm Beach Firefighters Pension Fund. All
23	assets of every description held in the name of the West Palm
24	Beach Firemen's Relief and Pension Fund and in the name of the
25	West Palm Beach Firefighters Pension Fund have been and shall
26	continue to be combined.
27	(a)  Definitions.--The following words or phrases, as used
28	in this act, shall have the following meanings, unless a
29	different meaning is clearly indicated by the context:
30	1.  "Actuarial equivalent value," "actuarial equivalence,"
31	or "single sum value" means the stated determination using an
32	interest rate of 8.25 percent per year and the 1983 Group
33	Annuity Mortality Table for males.
34	2.  "Beneficiary" means any person who is not at retirement
35	but who is entitled to receive a benefit from the West Palm
36	Beach Firefighters Pension Fund or the West Palm Beach Firemen's
37	Relief and Pension Fund, as applicable.
38	3.  "Board of Trustees" or "Board" means the Board of
39	Trustees provided for in this act.
40	4.  "City" means the City of West Palm Beach, Florida.
41	5.  "Department" means the Fire Department of the City.
42	6.  "Enrolled actuary" means an actuary who is enrolled
43	under Subtitle C of Title III of the Employee Retirement Income
44	Security Act of 1974 and who is a member of the Society of
45	Actuaries or the American Academy of Actuaries.
46	7.  "Final average salary" means the average of the monthly
47	salary paid a member in the 2 best years of employment, paid in
48	and prior to the 23rd year of credited service. No active
49	nonDROP member shall have any salary amounts paid prior to
50	October 1, 2000, used in the calculation of final average
51	salary. Those members whose final average salary would include
52	salary amounts paid prior to October 1, 2000, shall use salary
53	paid during the period from October 1, 2000, through September
54	30, 2001, to replace any salary amounts paid prior to October 1,
55	2000. The replacement salary from October 1, 2000, through
56	September 30, 2001, may range anywhere between 2 weeks and 104
57	weeks, but shall only be enough salary as is sufficient to
58	replace the salary paid prior to October 1, 2000. The
59	replacement salary amounts from October 1, 2000, to September
60	30, 2001, shall be prorated based upon an annual salary.
61	8.  "Firefighter" means any person employed in the
62	Department who is certified as a firefighter as a condition of
63	employment in accordance with the provisions of section 633.35,
64	Florida Statutes.
65	9.  "Fund" or "Pension Fund" means the West Palm Beach
66	Firefighters Pension Fund or the West Palm Beach Firemen's
67	Relief and Pension Fund, as applicable.
68	10.  "Member" means any person who is included in the
69	membership of the Fund in accordance with paragraph (h).
70	11.  "Pension" means a monthly amount payable from the Fund
71	throughout the future life of a person, or for a limited period
72	of time, as provided in this act.
73	12.  "Qualified health professional" means a person duly
74	and regularly engaged in the practice of his or her profession
75	who holds a professional degree from a university or college and
76	has had special professional training or skill regarding the
77	physical or mental condition, disability, or lack thereof, upon
78	which he or she is to present evidence to the Board.
79	13.  "Qualified public depository" means any bank or
80	savings association organized and existing under the laws of
81	Florida and any bank or savings association organized under the
82	laws of the United States that has its principal place of
83	business in Florida, or has a branch office which is authorized
84	under the laws of Florida or the United States to receive
85	deposits in Florida, that meets all of the requirements of
86	chapter 280, Florida Statutes, and that has been designated by
87	the Treasurer of the State of Florida as a qualified public
88	depository.
89	14.  "Retirant" or "retiree" means any member who retires
90	with a pension payable from the Fund.
91	15.  "Retirement" means a member's withdrawal from City
92	employment with a pension payable from the Fund.
93	16.  "Salary" means:
94	a.  The fixed monthly compensation paid to a firefighter
95	and shall include those items that have been included as
96	compensation in accordance with past practice. However, the term
97	shall not be construed to include lump sum payments for
98	accumulated leave.
99	a.b.  On and after October 1, 2001, "salary," for the
100	purpose of pension contributions and benefit calculations, shall
101	mean be defined as payments made to a firefighter by the City
102	for: regular hours worked; step-up pay; longevity pay; all
103	authorized leave time, which includes compensatory time used,
104	earned personal leave used, emergency leave used, sick leave
105	used, sick leave pay bank used, vacation time used, holiday time
106	used, emergency leave, bereavement leave, and administrative
107	leave; certification pay, which includes paramedic, hazardous
108	material technician, special operations, dive rescue, fire
109	service instructor, fire inspector, and SWAT certification pay;
110	fire inspector standby pay; educational bonus incentive; pay
111	received from the City during military training; and sick leave
112	conversion when such leave is converted during the course of
113	active employment. The definition of "salary" specifically
114	excludes any lump sum payments for accumulated leave such as
115	that received upon final payoff. Employees who are specifically
116	excluded from bargaining unit recognition as set forth in
117	Article 2, but who are members of the West Palm Beach
118	Firefighters Pension Fund, shall continue to make contributions
119	on management incentive benefits. This definition of
120	compensation shall not include any duty employment that is
121	performed for other than the City of West Palm Beach per Article
122	31, Salary Plan.
123	b.  On and after January 1, 2007, "salary," for the purpose
124	of pension contributions and benefit calculations, shall mean
125	total cash remuneration paid by the City to a firefighter for
126	services rendered, excluding payments for overtime and any lump-
127	sum payments for accumulated leave such as accrued vacation
128	leave, accrued sick leave, and accrued personal leave. Employees
129	who are specifically excluded from bargaining unit recognition
130	as set forth in Article 2, but who are members of the West Palm
131	Beach Firefighters Pension Fund, shall continue to make
132	contributions on management incentive benefits. This definition
133	of compensation shall not include any duty employment that is
134	performed for other than the City of West Palm Beach per Article
135	31, Salary Plan.
136	17.  "Service," "credited service," or "service credit"
137	means the total number of years, and fractional parts of years,
138	of employment of any member in the employ of the Department,
139	omitting intervening years and fractional parts of years of
140	service when the member was not employed by the City. However,
141	no member shall receive credit for years, or fractional parts of
142	years, of service for which the member has withdrawn his or her
143	contributions to the Fund, unless the member repays into the
144	Fund the contributions withdrawn, with interest, within 60
145	months after reemployment. Further, a member may voluntarily
146	leave his or her contributions in the Fund for a period of 5
147	years after leaving the employ of the Department, pending the
148	possibility of his or her being rehired by the Department and
149	remaining employed for a period of not less than 3 years,
150	without losing credit for the time he or she has participated
151	actively as a firefighter. If he or she does not remain employed
152	for a period of at least 3 years as a firefighter with the
153	Department upon reemployment, within 5 years his or her
154	contributions shall be returned without interest in accordance
155	with paragraph (5)(i). In determining the aggregate number of
156	years of service of any member, the time spent in the military
157	service of the United States or United States Merchant Marine by
158	the member on leave of absence from the Department for such
159	reason shall be added to the years of service, provided such
160	time shall not exceed 5 years. Further, to receive credit for
161	such service the member must return to employment as a
162	firefighter of the City within 1 year after the date of release
163	from such active service.
164	(5)  Service pension.--
165	(a)  Normal retirement.--
166	1.  Any member who is actively employed on and after
167	October 1, 2003, excluding members in the DROP, who has attained
168	age 50 years and who has acquired 15 or more years of service
169	credit; who has attained age 55 years and who has acquired 10 or
170	more years of service credit; or who has acquired 26 years of
171	service credit without regard to age shall, upon application
172	filed with the Board, be retired and shall be entitled to a
173	monthly pension for the remainder of his or her life equal to
174	the greater of the following:
175	a.  Four percent of final average salary times credited
176	service subject to a maximum of 92 percent of final average
177	salary. However, in all cases, members shall be entitled to at
178	least 2 percent per year of credited service; or
179	b.  The sum of the following:
180	(I)  Two and one-half percent of final average salary
181	multiplied by the number of years, and fraction of a year, of
182	service credit to a maximum of 26 years of service, and 2
183	percent of his or her final average salary multiplied by the
184	number of years, and fraction of a year, in excess of 26 years
185	of service, for all years of service earned through September
186	30, 1988; and
187	(II)  Two percent of final average salary multiplied by the
188	number of years, and fraction of a year, of service credit
189	earned on and after October 1, 1988.
190	2.  Any member who is actively employed by the Department
191	on and after October 1, 2003, and who is a member of the DROP on
192	or after that date, may elect one of the following transition
193	benefits by making a written election within 45 days after the
194	effective date of this special act on a form provided by the
195	Board of Trustees. The right to elect the transition benefits
196	contained in sub-subparagraph b. shall terminate if no written
197	election is made within 45 days after the effective date of this
198	act. In the event a member does not submit a timely written
199	election, the member shall be deemed to have elected the
200	transition benefits contained in sub-subparagraph a. below:
201	a.  Retain member's original monthly retirement benefit,
202	DROP account balance, and share account balance. DROP members
203	who select this transition benefit may continue to participate
204	in the DROP until the end of the original DROP term. Additional
205	allocations to the share account shall be made in accordance
206	with the provisions of paragraph (j).
207	b.  Convert the member's original monthly benefit and DROP
208	balance to a new monthly benefit and BackDROP. In order to be
209	entitled to this benefit, the member must cease membership in
210	the DROP program. The new converted benefits will not be paid
211	until the member has terminated employment. The conversion of
212	the member's benefits shall be based on the following:
213	(I)  Original monthly benefit conversion: A DROP member is
214	entitled to a conversion of the original monthly benefit in an
215	amount equal to 4 percent for each year of credited service
216	excluding the BackDROP period with a 2-year final average
217	salary. The 2-year final average salary shall be determined
218	based on a 24-month period with the highest average prior to the
219	number of full years of BackDROP (selected by the member in
220	accordance with sub-sub-subparagraph II). No final average
221	salary shall be included in a monthly benefit calculation for
222	which a member has received a BackDROP payment.
223	(II)  BackDROP conversion: The DROP member is entitled to a
224	lump sum payment equal to the new monthly benefit annualized
225	times a period of whole years as selected by the member up to a
226	maximum of 5. The BackDROP benefit will be paid interest at the
227	rate of 8.25 percent less expenses, compounded annually.
228
229	The 4-percent benefit accrual factor in sub-subparagraph 1.a. is
230	contingent on and subject to the adoption and maintenance of the
231	assumptions set forth in subsection (22) (23). If such
232	assumptions are modified by legislative, judicial, or
233	administrative agency action, and the modification results in
234	increased City contributions to the Pension Fund, the 4-percent
235	accrual factor in sub-subparagraph 1.a. shall be automatically
236	decreased prospectively, from the date of the action, to
237	completely offset the increase in City contributions. However,
238	in no event shall the benefit accrual factor in sub-subparagraph
239	1.a. be adjusted below 3.5 percent. To the extent that the
240	benefit accrual factor is less than 4 percent, the supplemental
241	pension distribution calculation under paragraph (d) shall be
242	adjusted for employees who retire on or after October 1, 1998,
243	and those employees who were members of the DROP on October 1,
244	1998. The adjustment shall be to decrease the minimum return of
245	8.25 percent needed to afford the supplemental pension
246	distribution, when the amount of the reduction is zero if an
247	employee has been credited with 16 or more years with the 3-
248	percent benefit accrual factor or 1.25 percent if an employee
249	has been credited with no more than a 2.5-percent benefit
250	accrual factor. If an employee has been credited with less than
251	16 years at the 3-percent benefit accrual factor, then the
252	accumulated amount over 2.5 percent for each year of service
253	divided by .5 percent divided by 16 subtracted from 1 multiplied
254	by 1.25 percent is the reduction from 8.25 percent. An example
255	of the calculation of the minimum return for supplemental
256	pension distribution as described above is set forth in Appendix
257	B to the collective bargaining agreement between the City of
258	West Palm Beach and the West Palm Beach Association of
259	Firefighters, Local 727-IAFF, October 1, 2003-September 30,
260	2006.
261	(k)  Deferred Retirement Option Plan (DROP).--Effective
262	upon the ratification of the collective bargaining agreement
263	between the City of West Palm Beach and the West Palm Beach
264	Association of Firefighters, Local 727-IAFF, October 1, 2003-
265	September 30, 2006, no new members may enter into the DROP.
266	Existing DROP members on the ratification date shall have the
267	option to remain in the DROP for the remainder of their
268	individual 5-year terms in accordance with the provisions of
269	subparagraph (5)(a)2.
270	1.  Eligibility to participate in the DROP.--
271	a.  Any member who is eligible to receive an early or
272	normal retirement pension may participate in the DROP. Members
273	shall elect to participate by applying to the Board of Trustees
274	on a form provided for that purpose.
275	b.  Election to participate shall be forfeited if not
276	exercised within the first 35 years of combined credited
277	service.
278	c.  A member shall not participate in the DROP beyond the
279	time of attaining 37 years of service and the total years of
280	participation in the DROP shall not exceed 5 years. For example:
281	(I)  Members with 32 years of credited service at the time
282	of entry shall participate for only 5 years.
283	(II)  Members with 33 years of credited service at the time
284	of entry shall participate for only 4 years.
285	(III)  Members with 34 years of credited service at the
286	time of entry shall participate for only 3 years.
287	(IV)  Members with 35 years of credited service at the time
288	of entry shall participate for only 2 years.
289	d.  Upon a member's election to participate in the DROP, he
290	or she shall cease to be a member and shall no longer accrue any
291	benefits under the Pension Fund, except for the benefits
292	provided under paragraph (j) of this subsection, chapter 175,
293	Florida Statutes, share accounts. For all Fund purposes, the
294	member becomes a retirant, except that a DROP participant shall
295	continue to receive shares of the chapter 175, Florida Statutes,
296	money in accordance with paragraph (j), chapter 175, Florida
297	Statutes, share accounts. The amount of credited service and
298	final average salary shall freeze as of the date of entry into
299	the DROP.
300	2.  Amounts payable upon election to participate in the
301	DROP.--
302	a.  Monthly retirement benefits that would have been
303	payable had the member terminated employment with the Department
304	and elected to receive monthly pension payments shall be paid
305	into the DROP and credited to the retirant. Payments into the
306	DROP shall be made monthly over the period the retirant
307	participates in the DROP, up to a maximum of 60 months.
308	b.  Effective October 1, 2002, participants have the option
309	to select one of three methods to credit investment earnings to
310	their account. Investment earnings shall be credited on a
311	quarterly basis. The method may be changed each year effective
312	October 1; however, the method must be elected prior to October
313	1. The methods are:
314	(I)  Earnings using the rate of investment return earned on
315	Pension Fund assets as reported by the Fund's investment
316	monitor. DROP assets are commingled with the Pension Fund assets
317	for investment purposes;
318	(II)  A fixed rate of 8.25 percent; or
319	(III)  A percentage of the DROP account assets to be
320	credited with earnings or losses in accordance with sub-sub-
321	subparagraph (I) and a corresponding percentage of the DROP
322	account assets credited in accordance with sub-sub-subparagraph
323	(II). The combined total percentage invested under this sub-sub-
324	subparagraph must equal 100 percent.
325
326	However, if a member does not terminate employment at the end of
327	participation in the DROP, interest credit shall cease on the
328	balance.
329	c.  No payments shall be made from the DROP until the
330	member terminates employment with the Department.
331	d.  Upon termination of employment, participants in the
332	DROP shall receive the balance of the DROP account in accordance
333	with the following rules:
334	(I)  Members may elect to begin to receive payment upon
335	termination of employment or defer payment of the DROP until the
336	latest day under sub-sub-subparagraph (III).
337	(II)  Payments shall be made in either:
338	(A)  Lump sum.--The entire account balance shall be paid to
339	the retirant upon approval of the Board of Trustees.
340	(B)  Installments.--The account balance shall be paid out
341	to the retirant in three equal payments paid over 3 years, the
342	first payment to be made upon approval of the Board of Trustees.
343	(C)  Annuity.--The account balance shall be paid out in
344	monthly installments over the lifetime of the member or until
345	the entire balance is exhausted. Monthly amount paid will be
346	determined by the Fund's actuary in accordance with selections
347	made by the member in a form provided by the Board of Trustees.
348	(III)  Any form of payment selected by a member must comply
349	with the minimum distribution requirements of the IRC 401(A)(9),
350	and are subject to the requirements of subsection (18) (19).
351	(IV)  The beneficiary of the DROP participant who dies
352	before payments from DROP begin shall have the same right as the
353	participant in accordance with subsection (7).
354	e.  Costs, fees, and expenses of administration shall be
355	debited from the individual member accounts on a proportionate
356	basis, taking the cost, fees, and expenses of administration of
357	the Fund as a whole, multiplied by a fraction, the numerator of
358	which is the total assets in all individual member accounts and
359	the denominator of which is the total assets of the Fund as a
360	whole.
361	3.  Loans from the DROP.--
362	a.  Availability of loans.--
363	(I)  Loans are available to members only after termination
364	of employment, provided the member had participated in the DROP
365	for a period of 12 months.
366	(II)  Loans may only be made from a member's own account.
367	(III)  There may be no more than one loan at a time.
368	b.  Amount of loan.--
369	(I)  Loans may be made up to a maximum of 50 percent of
370	account balance.
371	(II)  The maximum dollar amount of a loan is $50,000,
372	reduced by the highest outstanding loan balance during the last
373	12 months.
374	(III)  The minimum amount of a loan is $5,000.
375	c.  Limitation on loans.--Loans shall be made from the
376	amounts paid into the DROP and earnings thereon.
377	d.  Term of loan.--
378	(I)  A loan must be for at least 1 year.
379	(II)  A loan shall be for no longer than 5 years.
380	e.  Loan interest rate.--
381	(I)  The interest rate shall be fixed at the time the loan
382	is originated for the entire term of the loan.
383	(II)  The interest rate shall be equal to the lowest prime
384	rate published by the Wall Street Journal on the last day of
385	each calendar quarter preceding the date of the loan
386	application.
387	f.  Defaults of loans.--
388	(I)  A loan shall be in default if 2 consecutive months of
389	repayments are missed or if a total of 4 months of repayments is
390	missed.
391	(II)  Upon default, the entire balance of the loan becomes
392	due and payable immediately.
393	(III)  If a loan in default is not repaid in full
394	immediately, the loan may be canceled and the outstanding
395	balance treated as a distribution, which may be taxable.
396	(IV)  Upon default of a loan, a member shall not be
397	eligible for additional loans.
398	g.  Miscellaneous provisions.--
399	(I)  All loans must be evidenced by a written loan
400	agreement signed by the member and the Board of Trustees. The
401	agreement shall contain a promissory note.
402	(II)  A member's spouse must consent in writing to the
403	loan. The consent shall acknowledge the effect of the loan on
404	the member's account balance.
405	(III)  Loans shall be considered general assets of the
406	Fund.
407	(IV)  Loans shall be subject to administrative fees to be
408	set by the Board of Trustees.
409	4.  After-tax contributions to the DROP.--
410	a.  A member may make after-tax contributions to the DROP.
411	The maximum amount that may be contributed is the lesser of:
412	(I)  The IRS 415(c) limit.
413	(II)  The amount allowable under IRC 401(m).
414	b.  After-tax contributions to the DROP shall earn interest
415	in the same manner as set forth in sub-subparagraph 2.b.
416	c.  Distributions to members or their beneficiaries of
417	after-tax contributions may be withdrawn at any time on or after
418	termination of employment. However, payments must be made at
419	least as promptly as required under subsection (18) (19).
420	d.  Loans shall not be made against after-tax
421	contributions.
422	(l)  Backwards Deferred Retirement Option Plan
423	(BackDROP).--
424	1.  Eligibility to participate in the BackDROP.--
425	a.  Any member who has attained age 53 with 18 or more
426	years of service, who has attained age 58 with 13 or more years
427	of service, or who has acquired 26 years of service regardless
428	of age may participate in the BackDROP. Members shall elect to
429	participate by applying to the Board of Trustees on a form
430	provided for that purpose. A member may not participate in both
431	the DROP and the BackDROP.
432	b.  Election to participate shall be forfeited if not
433	exercised within the first 28 years of credited service.
434	However, a member who is actively employed by the Department on
435	October 1, 2003, may elect to participate in the BackDROP beyond
436	the 28th year as follows: the member may elect to participate in
437	the benefit for 3 full years in the 29th year of employment, for
438	1 full year in the 30th year of employment, and after the 30th
439	year of employment all elections to participate in the BackDROP
440	end.
441	c.  A member shall not be eligible to receive a BackDROP
442	benefit that is greater than an accumulation of 60 months of the
443	monthly retirement benefit. A member shall not be eligible to
444	receive a benefit which is less than an accumulation of 36
445	months of the monthly retirement benefit, except for the
446	reduction of benefits as defined in sub-subparagraph b.
447	d.  Member contributions shall continue throughout the
448	period of employment and are not refundable for the BackDROP
449	period.
450	e.  Members who elect to participate in the BackDROP must
451	retire and terminate employment to be eligible for payment of
452	the benefit.
453	f.  Any member who terminates employment by any means,
454	including death, prior to attaining age 53 with 18 or more years
455	of service or age 58 with 13 or more years of service or by
456	acquiring 26 years of service is not eligible to participate in
457	the BackDROP.
458	2.  Benefits payable upon election to participate in the
459	BackDROP.--
460	a.  Upon election to receive the BackDROP benefit, a
461	member's retirement benefits will be calculated as if the member
462	had chosen to retire and terminate employment at a date which is
463	more than 36 months but less than 60 months earlier. The number
464	of months to be applied is based upon the member's election. The
465	monthly pension amount shall be multiplied by the number of
466	months of BackDROP selected by the member, which shall be
467	between 36 and 60 months, inclusive. The BackDROP benefit shall
468	be calculated as a single sum, including interest at the rate of
469	8.25 percent less expenses, compounded annually for the period
470	of BackDROP.
471	b.  No payments shall be made from the BackDROP until the
472	member terminates employment with the Department.
473	c.  Upon termination of employment, participants in the
474	BackDROP shall receive the balance of the BackDROP account in
475	accordance with the following rules:
476	(I)  Members may elect to receive payment upon termination
477	of employment or defer payment of the BackDROP until the latest
478	day under sub-sub-subparagraph (III).
479	(II)  Payments shall be made in either:
480	(A)  A lump sum.--The entire account balance shall be paid
481	to the retirant upon approval of the Board of Trustees.
482	(B)  Installments.--The account balance shall be paid out
483	to the retirant in three equal payments paid over 3 years, the
484	first payment to be made upon approval of the Board of Trustees.
485	(C)  Annuity.--The account balance shall be paid out in
486	monthly installments over the lifetime of the member or until
487	the entire balance is exhausted. The monthly amount paid shall
488	be determined by the Fund's actuary in accordance with
489	selections made by the member in a form provided by the Board of
490	Trustees.
491	(III)  Any form of payment selected by a member must comply
492	with the minimum distribution requirements of the IRC 401(A)(9),
493	and are subject to the requirements of subsection (18) (19).
494	(IV)  The beneficiary of the BackDROP member shall have the
495	same right as the participant in accordance with subsection (7).
496	3.  BackDROP earnings.--
497	a.  BackDROP members may select one of three methods to
498	credit investment earnings to their accounts. Investment
499	earnings shall be credited on a quarterly basis. The method may
500	be changed each year effective October 1; however, the method
501	must be elected prior to October 1. The methods are:
502	(I)  The BackDROP is credited with earnings and losses
503	using the rate of investment return earned on Pension Fund
504	assets as reported by the Fund's investment monitor. BackDROP
505	assets are commingled with the Pension Fund assets for
506	investment purposes;
507	(II)  A fixed rate of 8.25 percent; or
508	(III)  A percentage of the BackDROP account assets to be
509	credited with earnings or losses in accordance with sub-sub-
510	subparagraph (I) and a corresponding percentage of the BackDROP
511	account assets credited in accordance with sub-sub-subparagraph
512	(II). The combined total percentage invested under this sub-sub-
513	subparagraph must equal 100 percent.
514	b.  Costs, fees, and expenses of administration shall be
515	debited from the individual member BackDROP accounts on a
516	proportionate basis, taking the cost, fees, and expenses of
517	administration of the Fund as a whole, multiplied by a fraction,
518	the numerator of which is the total of assets in all individual
519	member accounts and the denominator of which is the total of
520	assets of the Fund as a whole.
521	4.  Loans from the BackDROP.--
522	a.  Availability of loans.--
523	(I)  Loans are available to members only after termination
524	of employment, provided the member had participated in the
525	BackDROP for a period of at least 12 months.
526	(II)  Loans may only be made from a member's own account.
527	(III)  There may be no more than one loan at a time.
528	b.  Amount of loan.--
529	(I)  Loans may be made up to a maximum of 50 percent of
530	account balance.
531	(II)  The maximum dollar amount of a loan is $50,000,
532	reduced by the highest outstanding loan balance during the last
533	12 months.
534	(III)  The minimum amount of a loan is $5,000.
535	c.  Limitation on loans.--Loans shall be made from the
536	amounts paid into the BackDROP and earnings thereon.
537	d.  Term of loan.--
538	(I)  A loan must be for at least 1 year.
539	(II)  A loan shall be for no longer than 5 years.
540	e.  Loan interest rate.--
541	(I)  The interest rate shall be fixed at the time a loan is
542	originated for the entire term of the loan.
543	(II)  The interest rate shall be equal to the lowest prime
544	rate published by the Wall Street Journal on the last day of
545	each calendar quarter preceding the date of the loan
546	application.
547	f.  Defaults of loans.--
548	(I)  A loan shall be in default if 2 consecutive months of
549	repayments are missed or if a total of 4 months of repayments is
550	missed.
551	(II)  Upon default of a loan, the entire balance of the
552	loan becomes due and payable immediately.
553	(III)  If a loan in default is not repaid in full
554	immediately, the loan may be canceled and the outstanding
555	balance treated as a distribution, which may be taxable.
556	(IV)  Upon default of a loan, a member shall not be
557	eligible for additional loans.
558	g.  Miscellaneous provisions.--
559	(I)  All loans must be evidenced by a written loan
560	agreement signed by the member and the Board of Trustees. The
561	agreement shall contain a promissory note.
562	(II)  A member's spouse must consent in writing to the
563	loan. The consent shall acknowledge the effect of the loan on
564	the member's account balance.
565	(III)  Loans shall be considered general assets of the
566	Fund.
567	(IV)  Loans shall be subject to administrative fees to be
568	set by the Board of Trustees.
569	5.  After-tax contributions to the BackDROP.--
570	a.  A member may make after-tax contributions to the
571	BackDROP. The maximum amount that may be contributed is the
572	lesser of:
573	(I)  The IRS 415(c) limit.
574	(II)  The amount allowable under IRC 401(m).
575	b.  After-tax contributions to the BackDROP shall earn
576	interest in the same manner as set forth in sub-subparagraph
577	3.a.
578	c.  Distributions to members or their beneficiaries of
579	after-tax contributions may be withdrawn at any time on or after
580	termination of employment. However, payments must be made at
581	least as promptly as required under subsection (18) (19).
582	d.  Loans shall not be made against after-tax
583	contributions.
584	(16)  Lump sum payment of small retirement
585	income.--Notwithstanding any provision of the Fund to the
586	contrary, if the single sum value of the accrued retirement
587	income is less than $5,000 as of the date of retirement or
588	termination of service, whichever is applicable, the Board of
589	Trustees, in the exercise of its discretion, may specify that
590	the actuarial equivalent of such retirement income be paid in
591	lump sum.
592	(23)(24)  Prior firefighter service.--Unless otherwise
593	prohibited by law, the years, or fractional parts of years, that
594	a member previously served as a firefighter with the City during
595	a period of employment and for which accumulated contributions
596	were withdrawn from the fund, or the years, and fractional parts
597	of years, that a member served as a firefighter for this or any
598	other municipal, county, or state fire department or district or
599	any time served in the military service of the Armed Forces of
600	the United States shall be added to the years of credited
601	service, provided that the member contributes to the fund the
602	sum that would have been contributed, based on the member's
603	salary and the employee contribution rate in effect at the time
604	that the credited service is requested, had the member been a
605	member of this system for the years, or fractional parts of
606	years, for which the credit is requested, plus the amount
607	actuarially determined, such that the crediting of service does
608	not result in any cost to the fund, plus payment of costs for
609	all professional services rendered to the board in connection
610	with the purchase of years of credited service.
611	(a)  Payment by the member of the required amount may be
612	made within 6 months after the request for credit and in one
613	lump sum payment, or the member may buy back this time over a
614	period equal to the length of time being purchased or 5 years,
615	whichever is greater, at an interest rate which is equal to the
616	Fund's actuarial assumption. A member may request to purchase
617	some or all years of eligible service.
618	(b)  The credit purchased under this section shall count
619	for all purposes, except vesting.
620	(c)  In no event, however, may credited service be
621	purchased pursuant to this section for prior service with any
622	other municipal, county, or state fire department or district,
623	if such prior service forms or will form the basis of a
624	retirement benefit or pension from another retirement system or
625	plan.
626	(d)  In the event that a member who is in the process of
627	purchasing service suffers a disability and is awarded a benefit
628	from the plan, the member shall not be required to complete the
629	buyback. However, contributions made prior to the date the
630	disability payment begins will be retained by the Fund.
631	(e)  If a member who has either completed the purchase of
632	service or is in the process of purchasing service terminates
633	before vesting, the member's contributions shall be refunded,
634	including the buyback contributions.
635	(f)  A request to purchase service may be made at any time
636	during the course of employment; however, the buyback is a one-
637	time opportunity. A member may elect to purchase permissive
638	service more than one time; however, the maximum years of
639	service that may be purchased is 5 years.
640	(g)  There shall be no fiscal impact to the City, now or in
641	the future, as a result of the purchase of credit for prior
642	firefighter service or military service.
643	Section 2.  This act shall take effect upon becoming a law.

CODING: Words stricken are deletions; words underlined are additions.