Effective July 1, 1996, instead of a member’s retiring from service and commencing a service retirement allowance under <cite data-path="|22|§34|(a)">§ 34(a) of this subtitle</cite> or a member’s remaining a member of this system and continuing to earn service credit, a member may elect to become a participant in the Deferred Retirement Option Plan (“DROP”) and defer the commencement of the member’s retirement benefit, subject to the following provisions. Any active employee who becomes a member of this system on or before June 30, 2003, and who has acquired at least 20 years of service as of December 31, 2009, is eligible to participate in the DROP provided by this § 36B by making an election in the manner prescribed in paragraph (iii) of this subsection. Any active employee who becomes a member of this system on or after July 1, 2003, and who, in addition to having acquired at least 20 years of service as of December 31, 2009, has acquired at least 10 years of service as a contributing member of this system as of December 31, 2009, is eligible to participate in the DROP by making an election in the manner prescribed in paragraph (iii) of this subsection. An eligible member may elect to participate in the DROP by filing a written application on a form approved by the Board of Trustees, stating the date, not less than 30 days nor more than 90 days after the application is filed, the member desires the election to take effect. The effective date of the DROP participation period for a member is always on the first of the month. Any member in service who terminates employment, retires, or dies becomes ineligible to elect to participate or to continue participation in the DROP. The election to participate in the DROP and the election to claim any benefit under this § 36B must be made on forms provided for that purpose by the Board of Trustees and filed with the Board. The application requirements of <cite data-path="|22|§34">§ 34 of this subtitle</cite> apply to the applicable service and disability retirement and death benefits provided by this section. Any member who does not meet the eligibility requirements of this § 36B as of December 31, 2009, will not be entitled to the benefits of this section effective January 1, 2010. A member’s DROP participation period shall be a single term of 3 consecutive years commencing from the effective date provided in subsection (a), provided that a member’s DROP participation period shall terminate if a member becomes ineligible to participate or to continue participation in the DROP under subsection (a) or elects to discontinue participation in the DROP under subsection (c)(2). Notwithstanding any other provision of this subtitle to the contrary, a member shall remain a member of the System during the DROP participation period, provided, however, that the member shall not be credited with service during such period, and that, except with regard to the calculation of a member’s intermediate DROP retirement benefit under subsection (f)(2), compensation, pay or salary earned during that period shall be disregarded in calculating the member’s average final compensation. A member who becomes a participant in the DROP shall continue to make the contributions that are required under <cite data-path="|22|§36|(h)">§ 36(h) of this subtitle</cite> for members earning service credit. These contributions shall be accumulated in a subaccount within the Annuity Savings Reserve, but shall be credited with interest compounded annually in the same manner and at the same interest rate as though the contributions had been accumulated in the member’s DROP account as provided under subsection (d). Contributions that are required under <cite data-path="|22|§36|(h)">§ 36(h) of this subtitle</cite> of any member entitled to protection of retirement benefits and credits on account of military service under <cite data-path="|22|§32|(e)">§ 32(e) of this subtitle</cite>, shall be paid by the system into the member’s subaccount on his or her behalf for the duration of his or her absence from employment on account of military service. The contributions described in the preceding paragraph shall be treated as being “picked up” by the City of Baltimore within the meaning of § 414(h)(2) of the Internal Revenue Code of 1986, as amended. The contributions described in the preceding paragraph shall not be considered “accumulated contributions”, as defined in <cite data-path="|22|§30|(10)">§ 30(10) of this subtitle</cite>. Any member who becomes a participant in the DROP may retire or terminate service, and thereby discontinue participation in the DROP, at any time during the DROP participation period or may retire or terminate service at the conclusion of that period. A member may elect to discontinue participation in the DROP and resume earning service credit in the system only as of the 1^st or 2^nd anniversary of the effective date of the member’s DROP participation period. The election to discontinue participation shall be made on forms provided for that purpose by the Board of Trustees and shall be filed with the Board no less than 30 days not more than 90 days before the effective date of the discontinuance of participation. The additional accrual rate (recovery rate) provided by subsection (f)(2) or (g)(2) of this section may only be applied to the member’s completed years of DROP participation. A member who continues employment at the conclusion of a full, 3-year DROP participation period shall resume earning service credit in the system. A member who becomes ineligible to participate in the DROP pursuant to subsection (a) or who elects to discontinue participation in the DROP pursuant to this subsection (c)(2) may not elect to again participate in the DROP. Notwithstanding <cite data-path="|22|§31|(1)">§ 31(1) of this subtitle</cite>, if a member retires and begins receiving a DROP retirement benefit under subsection (e), (f), or (g), and is then reemployed, all retirement benefit payments to the reemployed member shall be suspended until the member’s subsequent retirement. Upon subsequent retirement or death, the member shall be eligible to receive benefits under subsection (l). A separate DROP account shall be maintained in the Pension Accumulation Fund for the benefit of each member who becomes a participant in the DROP. The member’s DROP account shall consist of:for each full year of a member’s DROP participation period, an amount equal to the annual service retirement allowance the member would have received under § 34(a) and (b) had the member retired from service and commenced receiving the maximum retirement allowance under the service retirement provisions of this subtitle on the effective date of the DROP participation period; for each partial year of a member’s DROP participation period, an amount equal to a member’s prorated annual service retirement allowance; and interest compounded annually at a rate equal to 8.25% from the effective date of the DROP participation period through a member’s termination of service. Notwithstanding a member’s failure to properly apply for preemployment military service credit under <cite data-path="|22|§32|(f)">§ 32(f) of this subtitle</cite>, calculation of “service retirement allowance” as used in this subsection (d) shall include a member’s preemployment military service credit benefit. Notwithstanding <cite data-path="|22|§34|(b)">§ 34(b) of this subtitle</cite>, any member who retires during or at the conclusion of a DROP participation period shall receive“a basic DROP retirement benefit” equal to:the service retirement allowance the member would have received under § 34(b) had the member retired from service and commenced a service retirement allowance on the effective date of the DROP participation period; the balance in the member’s DROP account at the time of retirement, payable pursuant to the member’s election under subsection (n) of this section; and the balance in the member’s Annuity Savings Reserve subaccount accumulated under subsection (c) of this section, payable pursuant to the member’s election under subsection (n) of this section. Notwithstanding <cite data-path="|22|§34|(b)">§ 34(b) of this subtitle</cite>, any member who resumes earning credit for service following the end of a DROP participation period and who retires less than 18 months later shall receive an “intermediate DROP retirement benefit” equal to:the amount described in subsection (e)(1) of this section; 3.5% of the member’s “average final compensation” (as defined in <cite data-path="|22|§30|(11)">§ 30(11) of this subtitle</cite>) for each year of service credit, not to exceed 18 months, earned by the member through continuous employment immediately following the end of the DROP participation period. For purposes of this subsection (f)(2) and consistent with the 1^st paragraph of subsection (c)(1) of this section, “average final compensation” includes compensation earned during the DROP participation period; 2% of the member’s “average final compensation” for each year of service not already included in the calculation of the member’s service retirement allowance under paragraph (1) or (2) of this subsection (f), such as for service purchased or transferred to this system during or after the DROP participation period; and the sum of paragraphs (2) and (3) of subsection (e) of this section, payable pursuant to the member’s election under subsection (n) of this section. For purposes of calculating this “intermediate DROP retirement benefit”, partial years of service credit are prorated. Notwithstanding <cite data-path="|22|§34|(b)">§ 34(b) of this subtitle</cite>, any member who resumes earning credit for service following the end of a DROP participation period and who retires 18 or more months later shall receive a “full DROP retirement benefit” equal to:the full service retirement allowance, as of the member’s actual date of retirement, available to the member under <cite data-path="|22|§34|(b)">§ 34(b) of this subtitle</cite>, excluding from the calculation of this retirement allowance the member’s service while a participant in the DROP; 1.5% of the member’s “average final compensation” (as defined in <cite data-path="|22|§30|(11)">§ 30(11) of this subtitle</cite>) for each year of service credit, not to exceed 4 years, earned by the member through continuous employment immediately following the end of the DROP participation period; and the sum of paragraphs (2) and (3) of subsection (e) of this section, payable pursuant to the member’s election under subsection (n) of this section. For purposes of calculating this “full DROP retirement benefit”, partial years of service credit are prorated. Notwithstanding <cite data-path="|22|§34|(d)">§ 34(d) of this subtitle</cite>, any member who retires on account of non-line-of-duty disability:during or at the conclusion of a DROP participation period, shall receive a non-line-of-duty disability benefit equal to the “basic DROP retirement benefit” provided under subsection (e) of this section; less than 18 months following the conclusion of a DROP participation period, shall receive a non-line-of-duty disability benefit equal to the “intermediate DROP retirement benefit” provided under subsection (f) of this section; and 18 or more months following the conclusion of a DROP participation period, shall receive a non-line-of-duty disability benefit equal to the “full DROP retirement benefit” provided under subsection (g) of this section. Any member who retires on account of line-of-duty disability under § 34(e-1) or (f-1) of this subtitle during or after a DROP participation period shall receive the line-of-duty disability benefits provided under § 34(e-1) or (f-1)in place of any DROP benefits provided by this § 36B (including any balance in the member’s DROP account and Annuity Savings Reserve subaccount), as though the member had never participated in the DROP. Notwithstanding <cite data-path="|22|§34|(h)">§ 34(h) of this subtitle</cite>, the non-line-of-duty death benefit payable on the death of a member who dies during or after a DROP participation period shall equal the non-line-of-duty death benefit provided in § 34(h), plus the balance of the member’s DROP account and Annuity Savings Reserve subaccount at the time of death, subject to the following:for a member who dies during or at the conclusion of a DROP participation period, § 34(h)(3) shall be applied by assuming that the member had elected to have a service retirement allowance calculated under subsection (e)(1) of this section paid under Option 3 of <cite data-path="|22|§34|(k)|(1)">§ 34(k)(1) of this subtitle</cite>; for a member who dies less than 18 months following the conclusion of a DROP participation period, § 34(h)(3) shall be applied by assuming that the member had elected to have a service retirement allowance calculated under subsection (f)(1), (2), and (3) of this section paid under Option 3 of <cite data-path="|22|§34|(k)|(1)">§ 34(k)(1) of this subtitle</cite>; for a member who dies 18 or more months following the conclusion of his DROP participation period, § 34(h)(3) shall be applied by assuming that the member had elected to have a service retirement allowance calculated under subsection (g)(1) and (2) of this section paid under Option 3 of <cite data-path="|22|§34|(k)|(1)">§ 34(k)(1) of this subtitle</cite>; for a recipient electing to receive non-line-of-duty death benefits under § 34(h)(1) and (2) of this subtitle, the balance of the deceased member’s DROP account and Annuity Savings Reserve subaccount shall be payable in one lump sum; for a recipient electing to receive non-line-of-duty death benefits under <cite data-path="|22|§34|(h)|(3)">§ 34(h)(3) of this subtitle</cite>, the balance of the deceased member’s DROP account and Annuity Savings Reserve subaccount shall be payable pursuant to the election of the recipient under subsection (n) of this section; and for a recipient electing to receive non-line-of-duty death benefits under <cite data-path="|22|§34|(h)|(4)">§ 34(h)(4) of this subtitle</cite>, the balance of the deceased member’s DROP account and Annuity Savings Reserve subaccount shall be payable pursuant to the election of the recipient under subsection (n) of this section. This subsection applies only to an individual:who dies while a member of this System, during, at the conclusion of, or following a DROP participation period; and whose death has been determined by a hearing examiner, as provided in <cite data-path="|22|§33|(l)">§ 33(l) of this subtitle</cite>, to have arisen:out of and in the course of the actual performance of duty; and without willful negligence on the part of the member. On the receipt of a written application, proper proof of death, and an award by a hearing examiner of a line-of-duty death benefit as provided for in paragraph (1) of this subsection, the Board of Trustees shall pay either:the death benefit payable on the death of a member under subsection (j) of this section; or the line-of-duty death benefit payable under § 34(i) in lieu of any DROP benefits provided by this section, including any balance in the member’s DROP account and Annuity Savings Reserve subaccount, as though the member had never participated in the DROP. The election to receive a line-of-duty death benefit under either paragraph (2)(A) or (B) of this subsection shall be made:by the member’s surviving spouse; if there is no surviving spouse, by the legal guardian of the member’s minor child or children; if there is no surviving spouse or minor children, by either or both of the member’s surviving dependent parents who are designated beneficiaries; if there is no surviving spouse or minor children and if the deceased member did not designate a surviving parent as beneficiary, by either or both of the member’s surviving dependent parents (as that term is defined in § 34(i)(2)(B)); or if there is no surviving spouse, minor children, or dependent parents, by the member’s designated beneficiary or beneficiaries. Notwithstanding § 34(b), (d), (e-2), and (f-2) of this subtitle, if a member receives retirement benefits under subsection (e), (f), or (g) of this section, is subsequently reemployed in a position covered by this subtitle, and subsequently retires on account of service or disability, the member shall resume receiving the benefits under subsection (e), (f), or (g) that had been suspended at the time of the member’s reemployment, plus 2% of the member’s average final compensation for each year of service credit earned by the member during the period of reemployment. For purposes of this paragraph (1), if a member retires less than 18 months after his or her reemployment, “average final compensation” includes compensation earned immediately prior to his or her initial retirement. This retirement benefit shall also apply to a member who is disabled as a result of an injury in the line of duty. Notwithstanding § 34(h) and (i) of this subtitle, if a member receives benefits under subsection (e), (f), or (g) of this section, is subsequently reemployed in a position covered by this subtitle, and subsequently dies, the death benefit payable upon the death of the member shall equal the death benefit payable under § 34(h), except that § 34(h)(3) shall be applied by calculating the member’s service retirement allowance under paragraph (1) of this subsection paid under Option 3 of § 34 (k)(1) of this subtitle. This death benefit shall also apply to a member whose death arose in the line of duty. For a member who retires during or at the conclusion of a DROP participation period, the member’s DROP participation period shall be counted toward the eligibility requirement for post-retirement benefit increases under <cite data-path="|22|§36A">§ 36A of this subtitle</cite>. However, if a member resumes earning service credit following the conclusion of a DROP participation period, then the DROP participation period shall not be counted toward the eligibility requirement for post-retirement increases. Post-retirement benefit increases for former DROP participants shall be applied prospectively only (i.e., no increase shall be provided to make up for any post-retirement benefit increases that the member would have received if the member had retired from service in lieu of electing to participate in the DROP). If a member elects under subsection (n) to receive the balance of his or her DROP account in the form of periodic payments, those payments shall be eligible for post-retirement benefit increases under <cite data-path="|22|§36A">§ 36A of this subtitle</cite>, upon satisfaction by the member of the eligibility requirements of § 36A(a), as modified by this subsection (m). The election of the form of payment of the DROP account balance shall be made on forms provided by the Board of Trustees and shall be filed with the Board. A member or a beneficiary, if entitled to benefits payable under subsection (j) of this section, may elect to receive his or her DROP account balance and Annuity Savings Reserve subaccount in either:a lump sum, which can be:transferred in total or in part to 1 or more financial institutions or pension plans in accordance with <cite data-path="|22|§34|(w)">§ 34(w) of this subtitle</cite>, or paid in total or in part directly to the member or beneficiary; or an annuity, to increase the member’s retirement benefit, which is the actuarial equivalent of the DROP account and the Annuity Savings Reserve subaccount and which shall be:paid in the same form of periodic payments that the member or beneficiary elected for the receipt of the retirement or death benefit; and paid in the same manner as the member’s Annuity Savings Reserve subaccount, on the death of the retired DROP participant. If a lump sum payment is elected under paragraph (2)(i) of this subsection, that payment shall be made as soon as administratively feasible after the member’s retirement, termination, or death. Any benefit payment made directly to the member, the member’s beneficiary, or an alternate payee (as defined in <cite data-path="|22|§38|(d)">§ 38(d) of this subtitle</cite>) shall be subject to Federal and Maryland state income tax withholding if applicable. If an alternate payee is entitled to receive a portion of the member’s DROP account and Annuity Savings Reserve subaccount, the alternate payee must file an application with the System for his or her share. Distribution of the DROP account and Annuity Savings Reserve subaccount shall be made in the same form of payment as that elected by the member or beneficiary. In the event of conflicting death benefit elections under this subtitle, an election for line-of-duty death benefits made by an eligible surviving spouse overrides an election for non-line-of-duty death benefits made by a designated beneficiary. During the fiscal year beginning July 1, 2004, the Board of Trustees shall determine the past and future cost of the DROP using the actuarial assumptions in effect on June 30, 1995. The past and future cost of the DROP shall be calculated by the enrolled actuary retained by the Retirement System, in consultation with the enrolled actuary retained for that purpose by the members, acting through their elected representatives. To the extent that the past and future cost of DROP, as determined during fiscal year 2005, exceeds the unallocated interest surplus as of June 30, 1995, available to fund the DROP for active members as of July 1, 1996, plus accrued interest thereon, plus actuarial gains, net of actuarial losses, arising from experience in variance from actuarial assumptions in effect on July 1, 1995, then the City of Baltimore shall have the option of enacting legislation to reduce such excess cost, but only with respect to members eligible to enter the DROP after the effective of such legislation, and not with respect to members who are participating in the DROP as of the effective date of any such legislation. Any such legislation enacted to reduce the excess cost of the DROP shall have no effect on any other benefit payable under the Retirement System apart from the DROP. If, after fiscal year 2005, the City of Baltimore shall enact legislation in order to reduce excess cost of the DROP, then such cost reduction legislation shall not be considered to be in violation of § 37 or § 42. § 37 and § 42 to the contrary notwithstanding, the City of Baltimore does not guaranty the payment of DROP benefits to members entering the DROP after July 1, 2004, if the actuarial calculation in fiscal year 2005 determines that there is excess cost in providing DROP benefits. In the event of any conflict between § 37 or § 42 and this section, the terms of this section shall prevail. If the actuarial calculation made in fiscal year 2005 confirms that there is no excess cost to the DROP, then this subsection shall automatically become null and void, and of no further effect. City Code 1976/83, art. 22, §36B Ord. 96-042 Ord. 97-164 Ord. 00-049 Ord. 03-576 Ord. 09-209 Ord. 11-520