Agenda Item 15
March 6, 2012
Introduction
MEMORANDUM
March 2,2012
TO:
FROM:
SUBJECT:
County Council
Robert
H.
Drummer, Senior Legislative
Attome~v
n
Introduction:
Expedited Bill 8-12, Retirement Savings Plan - Amendments
Expedited Bill 8-12, Retirement Savings Plan - Amendments, sponsored by the Council
President at the request of the County Executive, is scheduled to be introduced on March 6,
2012. A public hearing is tentatively scheduled for March 27 at 1:30 p.m.
Bill 8-12 would amend the Retirement Savings Plan to make changes requested by the
Internal Revenue Service in order to obtain a favorable determination letter that the Plan remains
tax qualified. The IRS requested the following changes: (a) delete outdated references to
Internal Revenue Code Section 415, which limits contributions and benefits; (b) insert a
provision relating to the definition of compensation in Internal Revenue Code Section 415; and
(c) provide the definition of an "eligible retirement plan" for rollover purposes rather than
incorporate by reference. The Bill would make these technical changes to the Code provisions
establishing the Retirement Savings Plan as requested by the IRS during the review process.
This packet contains:
Expedited Bill 8-12
Legislative Request Report
Memo from County Executive
F:ILAWIBILLS\1208 Retirement Savings Planlintro Memo.Doc
Circle #
1
5
6
 PDF to HTML - Convert PDF files to HTML files
Expedited Bill No. ....;8:::..-..!.!12=--_ _
-=--_
Concerning: Retirement Savings Plan ­
Amendments
Revised: March 1,2012 Draft No.
Introduced:
March 6, 2012
Expires:
September 6, 2013
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date:
....!N..!.!o~n~e
_ _ _ _ __
ChI _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Council President at the Request of the County Executive
AN EXPEDITED ACT
to:
(1)
amend the Retirement Savings Plan to remain tax qualified under the Internal
Revenue Code; and
(2)
generally amend the law regarding the employees' retirement system.
By amending
Montgomery County Code
Chapter 33, Personnel and Human Resources
Sections 33-118 and 33-120
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law
by
original
bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
 PDF to HTML - Convert PDF files to HTML files
Expedited Bill No. 8-12
1
Sec.
1.
Sections 33-118 and 33-120 are amended as follows:
33-118.
Maximum annual contribution.
2
3
4
5
(
a)
Annual Contribution Limitation
*
[(4)
*
*
County contributions that would be allocated to County
contributions accounts of participants but for the limitations of
this Section must be carried over to subsequent years and
allocated in order of time to the County contributions accounts
that would have received the contributions but for the
limitations in this Section.
However, if a participant whose
6
7
8
9
10
11
12
County contributions are carried over is not a participant in the
subsequent years, that portion of the carryover contributions
attributable to the participant must be allocated to the County
contribution accounts of all participants. Amounts carried over
must be allocated to a suspense account that must be invested in
a fund deemed prudent by the Board.
Any earnings of the
13
14
15
16
17
18
19
20
21
22
suspense account must be allocated ratably among the County
contributions accounts of all the participants except as
otherwise provided in this Section.]
(5)]
ill
[(6)]
ill
*
*
*
*
*
*
~
1£1
Effective July
L
2007, all contributions made to
participant's
23
24
account within 2'i'2 months after termination of employment or within
the limitation year that contains the termination from employment
must be considered compensation for purposes of Internal Revenue
Code Section
415,
as amended.
25
26
27
33-120.
Distribution of Benefit
F:\LAW\BILLS\1208 Retirement Sav.ings Plan\Bill 2.Doc
 PDF to HTML - Convert PDF files to HTML files
Expedited Bill No. 8-12
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
*
(g)
*
*
Direct rollover distributions.
Notwithstanding any provision of this
Division that would otherwise limit a participant's election under this
Section, a participant or beneficiary may elect in any manner
prescribed by the Chief Administrative Officer at any time to have
any portion of an eligible rollover distribution [(as defined in the
Internal Revenue Code)] paid directly to an eligible retirement plan
[(as defined in the Internal Revenue Code)] specified by the
participant in a direct rollover. [For purposes of]
As used in this subsection[,t
ill
direct rollover
[is] means a payment from the retirement
savings plan to the eligible retirement plan specified by the
participant.
ill
eligible retirement plan
means:
CA)
an individual retirement account described in Internal
Revenue Code Section 408Ca), as amended;
.cru
«J
ill}
an individual retirement annuity described in Internal
Revenue Code Section 408(b), as amended, C
other than
an endowment contract);
.§:
qualified trust;
an annuity plan described in Internal Revenue Code
Section 403(a), as amended;
LID
an eligible deferred compensation plan described in
Internal Revenue Code Section 457(b), as amended,
which is maintained
Qy
an eligible employer described in
Internal
Revenue
Code
Section
457(e)(1)(A),
as
amended; and
F;\LA\\<,\81LLS\1208 Retirement Savings Plan\BiII 2.Doc
 PDF to HTML - Convert PDF files to HTML files
Expedited Bill No. 8-12
55
56
57
58
59
ill
an annuity contract described in Internal Revenue Code
Section 403(b), as amended.
ill
eligible rollover distribution
means any distribution to
S!
participant of all or any portion of the participant's account
balance; except:
60
61
®
any distribution which is one of
S!
series of substantially
equal periodic payments (not less frequently than
annually) made:
62
63
ill
for the life (or life expectancy) of the employee or
the joint lives (or joint life expectancies) of the
employee
and
the
employee's
designated
64
65
66
67
68
beneficiary; or
(ii)
for
S!
specified period of lQ years or more; or
an
any distribution to the extent such distribution is required
under Internal Revenue Code Section 401 (a)(9), as
amended.
69
70
71
72
*
Sec. 3. Effective Date.
*
*
73
74
75
The Council declares that this legislation is necessary for the immediate
protection of the public interest. This Act takes effect on the date on which it
becomes law .. The amendments to Section 33-118 in Section 1 are effective on
July 1, 2007.
Approved:
76
77
78
79
80
Roger Berliner, President, County Council
Date
F:\LA \V\BILLS\1208 Retirement Savings Plan\Bill2.Doc
 PDF to HTML - Convert PDF files to HTML files
LEGISLATIVE REQUEST REPORT
Expedited Bill 8-12
Retirement Savings Plan Amendments
DESCRIPTION:
The COlUlty submitted the Retirement Savings Plan (RSP) to the
IRS in order to receive a determination letter that the RSP remains
tax qualified.
In connection with the determination letter request, the IRS
requested several technical changes. The IRS requested that the
RSP be amended to include and delete specific provisions of the
Internal Revenue Code.
The IRS requested the following changes: (a) delete outdated
references to Internal Revenue Code Section 415, which limits
contributions and benefits; (b) insert a provision relating to the
definition of compensation in Internal Revenue Code Section 415;
and (c) provide the definition of an "eligible retirement plan" for
rollover purposes rather than incorporate by reference.
PROBLEM:
GOALS AND
OBJECTIVES:
To amend the Retirement Savings Plan as requested by the IRS in
connection with receiving a favorable IRS determination letter.
COORDINATION:
Office of Human Resources, COlUlty Attorney
FISCAL IMPACT:
Office of Management and Budget
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
Office of Management and Budget
N/A
N/A
SOURCE OF
INFORMATION:
Joseph Adler, Office of Human Resources
Amy Moskowitz, Office of the County Attorney
APPLICATION
WITHIN
MUNICIP
ALITIES:NIA
PENALTIES:
N/A
F:\LA W\BILLS\1208 Retirement Savings Plan\LRR.Doc
 PDF to HTML - Convert PDF files to HTML files
OFFICE OF THE COUNTY EXECUTIVE
Isiah Leggett
County Executive
ROCKVILLF~
MARYLAND 20850
MEMORANDUM
January 30, 2012
TO:
FROM:
SUBJECT:
Roger Berliner, President, County
CounCi~
lsiah
Leggett,
COWlty
Executive
~
--R
~r.rJ--­
Legislation relating to Retirement Savings Plan
I am transmitting for Council introduction a bill to update the Retirement Savings
Plan (RSP), as well as the Legislative Request Report and Fiscal and Economic Impact
Statement for the hill. In order for Montgomery County to receive a determination letter from
the Internal Revenue Service (IRS) that the RSP remains
tax
qualified, the County must make
several technical amendments to the RSP.
In a recent letter, the IRS requested the following changes:
(l)
delete outdated
references to Internal Revenue Code Section 415, which limits contributions and benefits; (2)
insert a provision relating to the definition of compensation in Internal Revenue Code Section
415; and (3) provide the definition of an "eligible retirement plan" for rollover purposes rather
than incorporate
by
reference. The attached
bill
makes all of these changes.
Thank: you for your consideration of this matter.
Attachments: (Determination letter from the IRS)
(Draft legislation with technical changes to the RSP)
c:
Joe Adler, Director, ORR
Joe Beach, Director, Finance
Marc Hansen, County Attorney
Jennifer Hughes, Director, OMB
 PDF to HTML - Convert PDF files to HTML files
Agenda Item 15
March 6, 2012
Introduction
MEMORANDUM
March 2,2012
TO:
FROM:
SUBJECT:
County Council
Robert
H.
Drummer, Senior Legislative
Attome~v
n
Introduction:
Expedited Bill 8-12, Retirement Savings Plan - Amendments
Expedited Bill 8-12, Retirement Savings Plan - Amendments, sponsored by the Council
President at the request of the County Executive, is scheduled to be introduced on March 6,
2012. A public hearing is tentatively scheduled for March 27 at 1:30 p.m.
Bill 8-12 would amend the Retirement Savings Plan to make changes requested by the
Internal Revenue Service in order to obtain a favorable determination letter that the Plan remains
tax qualified. The IRS requested the following changes: (a) delete outdated references to
Internal Revenue Code Section 415, which limits contributions and benefits; (b) insert a
provision relating to the definition of compensation in Internal Revenue Code Section 415; and
(c) provide the definition of an "eligible retirement plan" for rollover purposes rather than
incorporate by reference. The Bill would make these technical changes to the Code provisions
establishing the Retirement Savings Plan as requested by the IRS during the review process.
This packet contains:
Expedited Bill 8-12
Legislative Request Report
Memo from County Executive
F:ILAWIBILLS\1208 Retirement Savings Planlintro Memo.Doc
Circle #
1
5
6
 PDF to HTML - Convert PDF files to HTML files
Expedited Bill No. ....;8:::..-..!.!12=--_ _
-=--_
Concerning: Retirement Savings Plan ­
Amendments
Revised: March 1,2012 Draft No.
Introduced:
March 6, 2012
Expires:
September 6, 2013
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date:
....!N..!.!o~n~e
_ _ _ _ __
ChI _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Council President at the Request of the County Executive
AN EXPEDITED ACT
to:
(1)
amend the Retirement Savings Plan to remain tax qualified under the Internal
Revenue Code; and
(2)
generally amend the law regarding the employees' retirement system.
By amending
Montgomery County Code
Chapter 33, Personnel and Human Resources
Sections 33-118 and 33-120
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law
by
original
bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
 PDF to HTML - Convert PDF files to HTML files
Expedited Bill No. 8-12
1
Sec.
1.
Sections 33-118 and 33-120 are amended as follows:
33-118.
Maximum annual contribution.
2
3
4
5
(
a)
Annual Contribution Limitation
*
[(4)
*
*
County contributions that would be allocated to County
contributions accounts of participants but for the limitations of
this Section must be carried over to subsequent years and
allocated in order of time to the County contributions accounts
that would have received the contributions but for the
limitations in this Section.
However, if a participant whose
6
7
8
9
10
11
12
County contributions are carried over is not a participant in the
subsequent years, that portion of the carryover contributions
attributable to the participant must be allocated to the County
contribution accounts of all participants. Amounts carried over
must be allocated to a suspense account that must be invested in
a fund deemed prudent by the Board.
Any earnings of the
13
14
15
16
17
18
19
20
21
22
suspense account must be allocated ratably among the County
contributions accounts of all the participants except as
otherwise provided in this Section.]
(5)]
ill
[(6)]
ill
*
*
*
*
*
*
~
1£1
Effective July
L
2007, all contributions made to
participant's
23
24
account within 2'i'2 months after termination of employment or within
the limitation year that contains the termination from employment
must be considered compensation for purposes of Internal Revenue
Code Section
415,
as amended.
25
26
27
33-120.
Distribution of Benefit
F:\LAW\BILLS\1208 Retirement Sav.ings Plan\Bill 2.Doc
 PDF to HTML - Convert PDF files to HTML files
Expedited Bill No. 8-12
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
*
(g)
*
*
Direct rollover distributions.
Notwithstanding any provision of this
Division that would otherwise limit a participant's election under this
Section, a participant or beneficiary may elect in any manner
prescribed by the Chief Administrative Officer at any time to have
any portion of an eligible rollover distribution [(as defined in the
Internal Revenue Code)] paid directly to an eligible retirement plan
[(as defined in the Internal Revenue Code)] specified by the
participant in a direct rollover. [For purposes of]
As used in this subsection[,t
ill
direct rollover
[is] means a payment from the retirement
savings plan to the eligible retirement plan specified by the
participant.
ill
eligible retirement plan
means:
CA)
an individual retirement account described in Internal
Revenue Code Section 408Ca), as amended;
.cru
«J
ill}
an individual retirement annuity described in Internal
Revenue Code Section 408(b), as amended, C
other than
an endowment contract);
.§:
qualified trust;
an annuity plan described in Internal Revenue Code
Section 403(a), as amended;
LID
an eligible deferred compensation plan described in
Internal Revenue Code Section 457(b), as amended,
which is maintained
Qy
an eligible employer described in
Internal
Revenue
Code
Section
457(e)(1)(A),
as
amended; and
F;\LA\\<,\81LLS\1208 Retirement Savings Plan\BiII 2.Doc
 PDF to HTML - Convert PDF files to HTML files
Expedited Bill No. 8-12
55
56
57
58
59
ill
an annuity contract described in Internal Revenue Code
Section 403(b), as amended.
ill
eligible rollover distribution
means any distribution to
S!
participant of all or any portion of the participant's account
balance; except:
60
61
®
any distribution which is one of
S!
series of substantially
equal periodic payments (not less frequently than
annually) made:
62
63
ill
for the life (or life expectancy) of the employee or
the joint lives (or joint life expectancies) of the
employee
and
the
employee's
designated
64
65
66
67
68
beneficiary; or
(ii)
for
S!
specified period of lQ years or more; or
an
any distribution to the extent such distribution is required
under Internal Revenue Code Section 401 (a)(9), as
amended.
69
70
71
72
*
Sec. 3. Effective Date.
*
*
73
74
75
The Council declares that this legislation is necessary for the immediate
protection of the public interest. This Act takes effect on the date on which it
becomes law .. The amendments to Section 33-118 in Section 1 are effective on
July 1, 2007.
Approved:
76
77
78
79
80
Roger Berliner, President, County Council
Date
F:\LA \V\BILLS\1208 Retirement Savings Plan\Bill2.Doc
 PDF to HTML - Convert PDF files to HTML files
LEGISLATIVE REQUEST REPORT
Expedited Bill 8-12
Retirement Savings Plan Amendments
DESCRIPTION:
The COlUlty submitted the Retirement Savings Plan (RSP) to the
IRS in order to receive a determination letter that the RSP remains
tax qualified.
In connection with the determination letter request, the IRS
requested several technical changes. The IRS requested that the
RSP be amended to include and delete specific provisions of the
Internal Revenue Code.
The IRS requested the following changes: (a) delete outdated
references to Internal Revenue Code Section 415, which limits
contributions and benefits; (b) insert a provision relating to the
definition of compensation in Internal Revenue Code Section 415;
and (c) provide the definition of an "eligible retirement plan" for
rollover purposes rather than incorporate by reference.
PROBLEM:
GOALS AND
OBJECTIVES:
To amend the Retirement Savings Plan as requested by the IRS in
connection with receiving a favorable IRS determination letter.
COORDINATION:
Office of Human Resources, COlUlty Attorney
FISCAL IMPACT:
Office of Management and Budget
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
Office of Management and Budget
N/A
N/A
SOURCE OF
INFORMATION:
Joseph Adler, Office of Human Resources
Amy Moskowitz, Office of the County Attorney
APPLICATION
WITHIN
MUNICIP
ALITIES:NIA
PENALTIES:
N/A
F:\LA W\BILLS\1208 Retirement Savings Plan\LRR.Doc
 PDF to HTML - Convert PDF files to HTML files
OFFICE OF THE COUNTY EXECUTIVE
Isiah Leggett
County Executive
ROCKVILLF~
MARYLAND 20850
MEMORANDUM
January 30, 2012
TO:
FROM:
SUBJECT:
Roger Berliner, President, County
CounCi~
lsiah
Leggett,
COWlty
Executive
~
--R
~r.rJ--­
Legislation relating to Retirement Savings Plan
I am transmitting for Council introduction a bill to update the Retirement Savings
Plan (RSP), as well as the Legislative Request Report and Fiscal and Economic Impact
Statement for the hill. In order for Montgomery County to receive a determination letter from
the Internal Revenue Service (IRS) that the RSP remains
tax
qualified, the County must make
several technical amendments to the RSP.
In a recent letter, the IRS requested the following changes:
(l)
delete outdated
references to Internal Revenue Code Section 415, which limits contributions and benefits; (2)
insert a provision relating to the definition of compensation in Internal Revenue Code Section
415; and (3) provide the definition of an "eligible retirement plan" for rollover purposes rather
than incorporate
by
reference. The attached
bill
makes all of these changes.
Thank: you for your consideration of this matter.
Attachments: (Determination letter from the IRS)
(Draft legislation with technical changes to the RSP)
c:
Joe Adler, Director, ORR
Joe Beach, Director, Finance
Marc Hansen, County Attorney
Jennifer Hughes, Director, OMB