Agenda Item 4A
May 6,2014
Introduction
MEMORANDUM
May 2,2014
TO:
FROM:
SUBJECT:
County Council
Robert H. Drummer, Senior Legislative Attorney
N
(v1.AJ
Introduction:
Expedited Bill 23-14, Retirement Plans - Definitions ­
Administration
Expedited Bill 23-14, Retirement Plans - Definitions - Administration - Amendments,
sponsored by the Council President at the request of the County Executive, is scheduled to be
introduced on May 6. A public hearing is tentatively scheduled for June 10 at 1:30 p.m.
The County submitted the Employees' Retirement System (ERS) to the Internal Revenue
Service (IRS) in order to receive a determination letter that the ERS remains
tax
qualified. The
Bill would delete outdated references to Internal Revenue Code §415 and define "direct rollover"
and "eligible retirement plan" as requested by the IRS. In addition, the Bill would make other
amendments to clarify administrative practices in areas where the Montgomery County Code
does not provide guidance. Bill 23-14 would amend the retirement plans to:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
provide that sick leave is used for vesting purposes in the Employees' Retirement
Plan;
provide that months of service are included for vesting purposes in the Guaranteed
Retirement Income Plan and the Retirement Savings Plan;
permit the Chief Administrative Officer to authorize a designee to receive a
beneficiary form;
clarify that a participant continues to participate in the same retirement plan after
changing employment from the County directly to a participating agency or from a
participating agency directly to the County;
clarify that a part-time employee hired before 1994 who
has
not participated in
either the Retirement Savings Plan or the Guaranteed Retirement Income Plan may
elect to participate in either plan;
clarify that a DRSPIDROP account balance must not
be
distributed until the fmal
decision on a disability application;
delete outdated references to Internal Revenue Code Section 415, which limits
contributions and benefits;
delete the requirement that the Disability Panel meet to review applications; and
define a "direct rollover" and an "eligible retirement plan."
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This packet contains:
Bi1123-14
Circle
#
1
13
15
17
Legislative Request Report
Executive's Memo
Fiscal and Economic Impact statement
F:\LAW\BILLS\1423 Retirement Plans-Definitions-Administration\lntro Memo.Doc
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Expedited Bill No.
23-14
Concerning: Retirement
Plans
Definitions
Administration
Amendments
Revised: April 16, 2014 Draft No.
~
Introduced:
May 6, 2014
Expires:
November 6, 2015
Enacted:
[date]
Executive:
[date signed]
Effective:
[date takes effect]
Sunset Date:
-!..!.No~n.!!::e~
_ _ _ __
Ch.
~.
Laws of Mont. Co.
[Year]
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Council President at the Request ofthe County Executive
AN EXPEDITED ACT
to:
(1)
provide that sick leave is
used
for vesting purposes in the Employees' Retirement
Plan;
(2)
provide that months of service are included for vesting purposes in the Guaranteed
Retirement Income Plan and the Retirement Savings Plan;
(3)
permit the Chief Administrative Officer to authorize a designee to receive a
beneficiary form;
(4)
clarify that a participant continues to participate in the same retirement plan after
changing employment from the County directly to a participating agency or from a
participating agency directly to the County;
(5)
clarify that a part-time employee hired before 1994 who has not participated in either
the Retirement Savings Plan or the Guaranteed Retirement Income Plan may elect to
participate in either plan;
(6)
clarify that a DRSPIDROP account balance must not be distributed until the final
decision on a disability application;
(7)
delete outdated references to Internal Revenue Code Section 415, which limits
contributions and benefits;
(8)
delete the requirement that the Disability Panel meet to review applications;
(9)
defme a "direct rollover" and an "eligible retirement plan"; and
(10) generally amend the law regarding the Employees' Retirement System and the
Retirement Savings Plan.
By amending
Montgomery County Code
Chapter 33, Personnel and Human Resources
Sections 33-37, 33-38A, 33-41, 33-42, 33-43, 33-44, 33-46, 33-115, 33-119, 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 WUJjJected by bill.
The
County Council for Montgomery County, Maryland approves the following Act:
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ExPEDITED BILL
No. 23-14
1
2
Sec.
1.
Sections 33-37, 33-38A, 33-41, 33-42, 33-43, 33-44, 33-46, 33-115,
33-119 and 33-120 are amended as follows:
33-37. Membership requirements and membership groups.
3
4
*
*
*
5
6
7
8
9
(k)
Election to join the guaranteed retirement income plan.
*
*
*
(4)
An
eligible part time [or temporary] employee [hired on or after
October 1, 1994] who does not participate in the retirement
savings plan may make a one-time irrevocable election to
participate in the guaranteed retirement income plan after the
employee completes at least 150 days of employment.
Participation must begin on the first full pay period beginning
30 days after the employee makes the election.
10
11
12
13
14
15
*
government to
~ency
*
*
~
(7)
An
individual who changes employment from the County
~
16
17
participating agency or from
participating
to the County government must continue to participate
in
18
his or her retirement plan and is not eligible to make an election.
19
20
21
*
33-38A.
*
*
*
*
*
Deferred Retirement Option Plans.
*
*
22
23
24
(a)
DROP Plan for Group F members.
*
(7) Disability retirement.
An
employee may apply for disability
25
26
retirement prior to the termination of the employee's
participation in the program.
27
*
*
*
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ExPEDITED
Bill
No. 23-14
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32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
33-41.
(C)
If
!!
DRSP participant ends participation in the program
before
!!
final decision is made on the disability
retirement application, the DRSP account must not be
distributed until
!!
final decision is made.
*
(b)
*
*
*
*
*
*
DROP Planfor Group
G
members.
*
(7)
Disability retirement.
*
(E)
If
!!
DROP participant ends participation in the program
before
!!
final decision is made on the disability
retirement application, the DROP account must not be
distributed until
!!
fmal decision is made.
*
Credited service.
*
*
*
*
(t)
*
Use ofsick leave for credited service.
An employee must receive credit
toward retirement for any accumulated sick leave, up to a maximum of
4,224 hours. Each 176 hours of accumulated sick leave is equal to 1
month of credited service. Accumulated sick leave totaling less than 11
days must not be credited for retirement purposes. Accumulated sick
leave totaling 11 to 22 days must be credited as 1 month of service for
retirement purposes.
A member must have sick leave credited for
vesting purposes under Section 33-45. An employee who transfers to
the Retirement Savings Plan must' receive credit toward retirement
under the optional plan or integrated plan under Section 33-37(i) for the
employee's accumulated sick leave.
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EXPEDITED
Bu No. 23-14
55
56
*
(q)
*
*
For the guaranteed retirement income plan, subsections (a)-(o) do not
apply and credited service must be detennined only under this
subsection.
(1)
57
58
59
Credited servIce includes the total County servIce the
participant rendered under the guaranteed retirement income
plan, the retirement savings plan, the optional retirement plan,
the integrated plan, and the elected officials' plan.
Each
60
61
62
63
64
65
participant must receive one year of credited service for each
year of County service and one month of credited service for
each month of County service [while participating in one of the
County's retirement plans.] during which the participant
contributed to
~
66
67
68
County retirement plan. Each year of County
service ends on the anniversary of the participant's date of
participation.
69
70
71
*
*
(g)
*
*
*
*
33-42. Amount of pension at normal retirement date or early retirement date.
72
73
74
75
76
77
*
*
Maximum annual contribution to elected officials
I
plan.
*
(2)
comprised of:
(A)
(B)
For purposes of this subsection (g), the annual addition must be
County elected officials' contributions; [and]
required elected officials' participant contributions; [The
lesser of:
(i)
One-half of the total of required and voluntary
elected officials' participant contributions allocated
78
79
80
81
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1423 retirement plans-definitions-administration\bill 5.doc
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ExPEDITED Bill
No. 23-14
82
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to the elected officials' participant's required and
voluntary
elected
officials'
. participant
contributions accounts; or
(ii)
All of the required and voluntary elected officials'
participant contributions allocated to the required
and
voluntary
elected
officials'
participant
86
87
88
contributions accounts in excess of six (6) percent
of
the
elected
officials'
participant's
89
90
91
compensation. ]
voluntary elected officials' participant contributions; and
forfeitures used to reduce the County elected officials'
contributions in accordance with Section 33-40Cd)(2)(D).
92
93
94
95
*
[(4)
*
*
County elected officials' contributions that would be allocated
to county elected officials' contributions accounts of elected
officials' participants but for the limitations of this subsection
(g), must be carried over to subsequent years and allocated in
order of time to the county elected officials' contributions
accounts which would have received such contributions but for
the limitations set forth in this subsection (g). Amounts carried
over must be allocated by the chief administrative officer to a
suspense account that must be invested in a fixed income fund.
Any earnings of the suspense account must be allocated ratably
among the county elected officials' contributions accounts of all
the elected officials' participants except as otherwise provided
in this subsection (g).]
96
97
98
99
100
101
102
103
104
105
106
107
108
[(5)]
ffi
*
*
*
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1423 retirement plans-definitions-administration\bill 5.doc
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ExPEDIlED BILL
No. 23-14
109
110
III
112
[(6)]
ill
*
*
*
*
*
*
*
33-43. Disability retirement.
*
(d)
*
*
113
114
Disability retirement procedures.
*
(4)
*
115
Before the Panel [meets to review] discusses an application for
a member other than a member of the FirefighterlRescuer
Bargaining Unit, the Panel must advise each party of the
deadline date for submitting infonnation to the Panel.
The
116
117
118
119
Panel must allow a reasonable amount of time for the parties to
submit additional infonnation, and may extend the deadline at
the request ofeither party for good cause shown.
120
121
122
123
124
125
126
127
*
(6)
*
*
The Panel must [meet in person, by telephone conference, or by
video conference, and] review and consider all evidence
submitted to it no later than 60 days after the application is
filed. A Panel must include either 2 or 3 members. At least 2
members must vote in favor of a decision to take
any
action
128
129
under this Section.
(7)
Within 30 calendar days after the Panel's [last meeting] final
discussion at which the application was considered, the Panel
must
issue
a
written
recommendation
to
the
Chief
l30
l31
l32
l33
l34
Administrative Officer regarding whether the applicant meets
the criteria for disability retirement benefits for non-service­
connected disability in accordance with subsections (e)(2), (3)
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ExPEDITED BILL
No. 23-14
135
136
137
138
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140
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142
143
144
and (4) or service-connected disability in accordance with
subsection (f).
*
*
(q)
*
*
*
*
33-44. Pension payment options and cost-or-living adjustments.
Direct rollover distributions.
A member or beneficiary may elect, in any
manner prescribed by the Chief Administrative Officer at any time, to
have any portion of 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 member in a
direct rollover. [For purposes of this subsection, a direct rollover is a
payment from the retirement system to the eligible retirement plan
specified by the member.] A member may not elect a direct rollover if
the eligible rollover distribution is less than $200.00. As used in this
subsection:
145
146
147
148
149
150
151
152
153
ill
ill
direct rollover
means
~
payment from the retirement system to
the eligible retirement plan specified
:by
the member; and
eligible retirement plan
means:
(A)
an individual retirement account described
in
Internal
Revenue Code Section 408(a);
154
155
156
157
158
159
160
161
[ID
an individual retirement annuity described in Internal
Revenue Code Section 408(b) (other than an endowment
contract);
(Q
~
qualified trust;
CD)
an annuity plan described
Section 403(a);
ill
Internal Revenue Code
.em
an eligible deferred compensation plan described
ill
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ExPEDITED BILL
No. 23-14
162
163
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168
169
170
171
172
173
174
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176
177
178
179
180
181
182
183
184
185
186
187
188.
Internal Revenue Code Section 457(b) which is maintained
by an eligible employer described in Internal Revenue
Code Section 457(e)(1)(A); or
®
an annuity contract described in Internal Revenue Code
Section 403(b).
*
*
(h)
*
*
*
*
If a participant dies before
33-46. Death benefits and designation of beneficiaries.
Guaranteed retirement income plan.
Subsections (a)-(g) do not apply to
the guaranteed retirement income plan.
receiving the participant's guaranteed retirement income plan account,
the guaranteed retirement income plan account balance must be
distributed to the participant's designated beneficiary in a lump sum as
soon as pmcticable after the participant's death, but not later than the
December 31 st of the year containing the fifth anniversary of the
participant's death.
(1)
A participant may name a primary beneficiary or beneficiaries
and contingent beneficiary or beneficiaries on a designation of
beneficiaries form filed with the Office of [human] Human
Resources~
or designee of the Chief Administmtive Officer. If a
participant names 2 or more persons as beneficiaries, the persons
are considered co-beneficiaries and share the benefit equally
unless the participant specifies otherwise on the designation of
beneficiaries form.
A participant may change any named
beneficiary by completing a new designation of beneficiaries
form.
The consent of the beneficiary or beneficiaries is not
required to name or change a beneficiary. The designation is
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EXPEDITED BILL
No.
23-14
189
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199
200
201
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203
204
205
206
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208
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effective when the participant
SIgns
the form even if the
participant is not living when the Office.,. or designee of the Chief
Administrative Officer, receives the request, but without
prejudice for any payments made before the Office.,. or designee
of the Chief Administrative Officer, received the request.
...
...
...
33-115. Participant requirements and participant groups.
(a)
Participant Requirements.
*
(6)
An employee who
*
IS
*
not an active member of a County
retirement plan but is eligible for membership in the integrated
retirement plan may become a member of the Retirement Savings
Plan or the guaranteed retirement income plan. The employee
must remain a member of the Retirement Savings Plan or the
guaranteed retirement income plan until the employee becomes
ineligible for membership [in Group I or II].
(7)
Election to participate in the guaranteed retirement income plan.
(A)
A full time employee hired or rehired on or after July 1,
2009 and a part time and temporary employee who
becomes full time after July 1, 2009 may participate in the
guaranteed retirement income plan. An eligible employee
must make a one-time irrevocable election during the first
150 days of employment. If an eligible employee elects to
participate, participation must begin on the first pay period
after an employee has completed 180 days of full time
employment. A full time employee who does not elect to
participate in the guaranteed retirement income plan must
212
213
214
215
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ExPEDITED BILL
No. 23-14
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223
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participate in the retirement savings plan beginning on the
fIrst pay period after the employee has completed 180 days
of full time employment.
A participant who changes
§;
employment from the County directly to
agency or from
§;
participating
participating agency directly to the
County must continue to participate in his or her retirement
plan and is not eligible to make an election.
(B)
A part time [or temporary] employee [hired on or after
October 1, 1994] who is not a participant in the retirement
savings plan may make a one-time irrevocable election to
participate in the guaranteed retirement income plan any
time after the employee has completed 150 days of
employment.
(b)
Participants groups and eligibility.
(1)
Group
1.
Except as provided in the last sentence of Section 33­
37(e)(2), any full-time or career part-time employee meeting the
criteria in paragraphs (A) or (B) must participate in the retirement
savings plan ifthe employee begins, or returns to, County service
on or after October 1, 1994.
An
employee hired on or after July
1, 2009 must be employed on a full time or part time basis with
the County for 180 days before participating in the retirement
savings plan.
An
individual who changes employment from the
County government directly to
§;
participating agency or from
§;
participating agency directly to the County government must
continue to participate in the same retirement plan. Participation
must begin on the first payroll after an employee has completed
180 days of employment ifthe
~mployee:
.IiO\
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ExPEDITED BILL
No. 23-14
243
244
245
246
247
248
249
250
251
252
253
254
255
256
257
258
259
260
261
*
33-119. Credited service.
*
*
(a)
A participant's credited service is the total years and months of County
service the participant rendered under the Retirement Savings Plan, the
optional retirement plan, the integrated plan, and the guaranteed
retirement income plan. A participant must receive credited service for
any period when the participant was a part-time employee contributing
to an employer-supported savings program provided by a participating
agency.
An
employee hired before July 1,2009 must receive 1 year of
credited service for each year of County service. Each year of County
service ends on the anniversary of the date the participant [starting]
started working for the County. A participant must also receive one
month of credited service for each month during which the participant
worked at least one hour for the County.
An
employee hired on or after
July 1, 2009 must receive one year of credited service for each year of
participation in a Countr retirement plan and one month of credited
service for each month during which the employee participated in
~
County retirement plan. A person who transferred to the Retirement
Savings
Plan
under Section l1S(a)(3) or (4) must receive credit for
County service for creditable State service earned as a State employee
of the County Department of Social Services. A person who does not
transfer to the Retirement Savings Plan under Section l1S(a)(3) or (4)
must not receive credit for County service for this State service.
262
2'63
264
265
266
267
268
269
*
33-120. Distribution of Benefit.
*
*
Iil\
*
*
*
(c)
Death benefits.
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exPEDITED BILL
No. 23-14
270
271
272
273
274
275
276
277
278
279
280
281
282
283
284
285
286
287
288
*
(3)
*
*
A participant may name a primary beneficiary or beneficiaries
and contingent beneficiary or beneficiaries on a designation of
beneficiaries fonn filed with the Office of Human Resources.1 or
designee of the Chief Administrative Officer. If a participant
names 2 or more persons as beneficiaries, the persons are
considered co-beneficiaries and share the benefit equally unless
the participant specifies otherwise on the designation of
beneficiaries fonn.
A participant may change any named
beneficiary by completing a new designation of beneficiaries
fonn.
The consent of the beneficiary or beneficiaries is not
required to name or change a beneficiary. The designation is
effective when the participant signs the fonn even if the
participant is not alive when the Office,'). or designee of the Chief
Administrative Officer, receives the request, but without
prejudice for any payments made before the Officer,'). or designee
ofthe Chief Administrative Officer, received the request.
*
Sec. 2.
*
*
IS
Expedited Effective Date.
289
290
291
292
The Council declares that this legislation
necessary for the immediate
protection of the public interest. This Act takes effect on the date on which it
becomes law.
Approved:
293
Craig
L.
Rice, President, County Council
Date
-It2\­
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LEGISLATIVE REQUEST REPORT
Expedited Bill 23-14
Retirement Plans
-
Definitions
-
Administration
-
Amendments
DESCRIPTION:
The Bill would amend the retirement plans to:
(1)
provide that sick leave is used for vesting purposes in the
Employees' Retirement Plan;
(2)
provide that months of service are included for vesting purposes in
the Guaranteed Retirement Income Plan and the Retirement Savings
Plan;
(3)
permit the Chief Administrative Officer to authorize a designee to
receive a beneficiary form;
(4)
clarify that a participant continues to participate in the same
retirement plan after changing employment from the County directly
to a participating agency or from a participating agency directly to
the County;
(5)
clarify that a part-time employee hired before 1994 who has not
participated in either the Retirement Savings Plan or the Guaranteed
Retirement Income Plan may elect to participate in either plan;
(6)
clarify that a DRSPIDROP account balance must not be distributed
until the [mal decision on a disability application;
(7)
delete outdated references to Internal Revenue Code Section 415,
which limits contributions and benefits;
(8)
delete the requirement that the Disability Panel meet to review
applications; and
(9)
define a "direct rollover" and an "eligible retirement plan."
PROBLEM:
The County submitted the Employees' Retirement System (ERS) to the IRS
in order to receive a determination letter that the ERS remains tax qualified.
The Bill would delete outdated references
to
Internal Revenue Code §415
and define "direct rollover" and "eligible retirement plan" as requested by
the IRS. In addition, the Bill would make other amendments to clarify
administrative practices in areas where the Montgomery County Code
does not provide guidance.
GOALS AND
OBJECTIVES:
To amend the ERS as requested by the IRS in connection with receiving a
favorable IRS determination letter and to clarify administrative practices.
COORDINATION:
Montgomery County Employee Retirement Plans, Office of Human
Resources, County Attorney
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FISCAL IMPACT:
Office of Management and Budget
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
Department of Finance
N/A
N/A
SOURCE OF
INFORMATION:
Linda Herman, Montgomery County Employee Retirement Plans
Amy Moskowitz, Office of the County Attorney
APPLICATION
WITHIN
MUNICIPALITIES:
NI
A
PENALTIES:
NI
A
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OFFICE OF THE COUNTY EXECUTIVE
ROCKVILLE, MARYLAND 20850
Isiah Leggett
County Executive
MEMORANDUM
April 7. 2014
TO:
Craig
L.
Rice, President
Montgomery County Council
Isiah Leggett. County Executive
/ )
~
FROM:
SUBJECT:
---'<"
"""fl'---
~
Expedited Legislation to Amend Chapter 33. Personnel and Human Resources
I am attaching for the Council's consideration a bill that would amend the
County's retirement law to comply with the request received from the Internal Revenue Service
(IRS) to make technical amendments to the Employees' Retirement System (ERS) so that the
ERS remains tax qualified and the County receives a favorable determination letter from the IRS.
In addition, to
clarify
current administrative practices. we are also including other amendments.
The IRS has requested the following changes: (a) delete outdated references to
Internal Revenue Code Section 415, which limits contributions and benefits; and (b) provide the
definition of an "eligible retirement plan" for rollover purposes rather than incorporated by
reference.
In addition, in order to clarify administrative practices in areas where the
Montgomery County Code does not provide specific guidance, we are requesting amendments,
including: crediting sick leave for vesting purposes in the ERS; crediting months of service for
vesting purposes in the Retirement Savings Plan (RSP) and Guaranteed Retirement Income Plan
(GRIP); allowing participants to submit beneficiary forms to a designee of the Chief
Administrative Officer; providing that a participant continues participation in either the RSP or
GRIP if a participant transfers employment between the County and a participating agency;
permitting a part time employee hired before 1994 who has not participated in either the RSP or
the GRIP to elect to participate in either plan; clarifying that a DRSP/DROP account balance will
not be distributed
if
a disability application is pending; and deleting the requirement that the
Disability Panel meet to review applications.
Thank you for your consideration of this matter.
montgomerycountymd.gov/311
240-773-3556 TTY
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Craig L. Rice, President
April
7, 20 l4
Page 2
IL:lh
Attachments: Determination letter from the
IRS
Draft
legislation
cc:
Linda
Hennan,
Executive Director, MCERP
Jennifer
A.
Hughes, Director, OMB
Joseph
Adler,
Director, OHR
Joseph F. Beach, Director,
Finance
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Fiscal Impact Statement
Council BiD XX-14, Employees' Retirement System and Retirement Savings Plan
Amendments
1. Legislative Summary (Enter narrative that explains the purpose of the legislation).
Expedited Bill
##-14
makes changes to the Code required by the Internal Revenue
Service as a condition of receiving a favorable determination letter for the Employees'
Retirement System. In addition, the
Bill
clarifies current operational procedures and
processes involving the County's retirement plans.
2. An estimate ofchanges in County revenues and expenditures regardless of whether the
revenues or expenditures are assumed in the recommended or approved budget. Includes
source of information, assumptions, and methodologies used.
This bill
has
no impact to County revenues or expenditures.
3. Revenue and expenditure estimates covering at least the next 6 fiscal years.
This bill has no impact to County revenues or expenditures.
4. An actuarial analysis through the entire amortization period for each bill that would affect
retiree pensiQn or group insurance costs.
An actuarial analysis is not required since the bill has no material impact on the
Employees' Retirement System. but rather only changes administrative proce,dures.
5. Later actions that may affect future revenue and expenditures if the bill authorizes future
spending.
NIA
6. An estimate of the stafftime needed to implement the bill.
NIA
-
Bill is clarifying current procedures and processes.
7. An explanation of how the addition of new staifresponsibilities would affect other duties.
NIA
8. An estimate of costs when an additional appropriation is needed.
NIA
9. A description ofany variable that could affect revenue and cost estimates.
NIA
10. Ranges of revenue or expenditures that are uncertain or difficult to project.
NIA
11. If a bill is likely to have no fiscal impact, why that is the case.
The Bill is making changes to the Code required by the IRS and also clarifies current
administrative procedures and processes.
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12. Other fiscal impacts or comments.
NIA
13. The
followir}.g contributed to and concurred
with
this analysis:
Linda Herman, MCERP
Amy Moskowitz, OCA
Corey Orlosky, OMB
Date
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Economic Impact Statement
Bill ##-14, Employees' Retirement System and
Retirement Savings Plan Amendments
Background:
This legislation would:
• Provide that sick leave is used for vesting purposes in the Employees' Retirement
Plan;
• Provide that months of service are included for vesting purposes in the
Guaranteed
Retirement Income Plan (GRIP) and the Retirement Savings Plan
(RSP);
• Permit participants to submit beneficiary forms to a designee of the Chief
Administrative Officer (CAD);
• ClarifY that a participant continues participation in either the RSP or GRIP
if
a
participant transfers employment between the County and a participating agency
and vice versa;
• ClarifY that a part-time employee hired before 1994 who
has
not participated in
either the RSP or GRIP may elect to participate in either plan;
• ClarifY that a Disability Retirement Savings Plan (DRSP)lDeferred Retirement
Option Plan (DROP) account balance
will
not be distributed until the
final
determination ofa disability application;
• Delete the requirement that the Disability Panel meet to review applications;
• Make revisions required by the Internal Revenue Service
as
a condition of
receiving a favorable determination letter; and
• Generally amend the law regarding the Employees' Retirement System and
Retirement Savings Plan.
The purpose of Bill ##-14 is to amend the Employees' Retirement System (BRS)
as
requested by the Internal Revenue Service (IRS) in connection with receiving a favorable
IRS determination letter and to clarify administrative practices.
1. The sonrces ofinfonnation, assumptions, and methodologies used.
Montgomery County Employee Retirement Plan (MCERP)
Based on information provided by (MCERP) in connection with the determination letter,
the IRS requested technical changes to the ERS by amending or deleting specific
provisions of the Internal Revenue Code. Those changes include:
• Delete outdated references to Internal Revenue Code Section 415, and
• Provide the definition ofan "eligible retirement plan".
Page 10f2
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Economic Im.pact Statement
Bill ##-14, Employees' Retirement System and
Retirement Savings
Plan
Amendments
To clarify administrative practices in order to provide guidance.
Bill
##-14 offers the
amendments
as
presented in the Background section.
2.
A description of any variable that could affect the economic impact estimates.
Bill ##-14
would limit the distribution ofa participant's DRSPIDROP account balance
until a decision
is
made related to their pending disability application. Currently, if the
participant receives
a:
distribution from their DRSPIDROP account prior to the disability
award being granted, the participant would be required
to
repay the amount ofthe
distribution resulting in tax implications for the Plan and the participant. Because the
number ofpeople impacted by this change is minimal.
Bill
##-14 would have no
economic impact.
Second, because the proposed legislation amends the Employees' Retirement System
(ERS)
as
requested by the htternal Revenue Service (IRS) and clarifies administrative
practices, those amendments would have no economic impact on employment, spending,
saving or other economic variables.
3.
The Bill's positive or negative effect,
if
any on employment, spending, saving,
investment, incomes,
and
property
values
in the County.
Not applicable. See #2 above. Bill ##-14 would have no economic impact.
4.
If
a
Billis likely to have
no
economic impact, why
is
that the case?
See #2 above. The proposed legislation clarifies administrative practices as requested by
the htternal Revenue Service. No economic impact results from these changes.
5. The following contributed to and concurred with this analysis: David Platt and
Rob Hagedoorn, Finance; Linda Herman, MCERP.
(Jr~d=
1-
Director
fJt-­
J
seph F.
Beach,
Department ofFinance
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