Subtitle 5 – Contributions

The contributions described in this section are intended to be treated as being “picked up” by the participating employer within the meaning of IRC § 414(h)(2).

The amount of each mandatory employee contribution is paid by the employer in lieu of contributions by members, and members may not receive those amounts directly. Because the mandatory employee contributions are paid by the employer, they must be treated as employer contributions in determining their federal income tax treatment.

As soon as administratively practicable after enactment of <cite data-path="|22A">this article</cite>, the City will request a private letter ruling from the Internal Revenue Service to the effect that the contributions so picked up by the employer on behalf of members will be treated as employer contributions under IRC § 414(h)(2) and will not be includible in the member’s gross income for federal income tax purposes for the year in which they are contributed.

If the Internal Revenue Service rules that the pick up of contributions does not satisfy the requirements of IRC § 414(h)(2), or if IRC § 414(h)(2) is repealed, the contributions required under this section will remain in effect, but the contributions may no longer be treated as picked up and instead will be treated as paid directly by the member.

For purposes of paragraphs (2) and (3) of this subsection, the Class D funded status for a payroll period is the ratio described in subparagraph (ii) of this paragraph as of June 30 of the calendar year immediately preceding the calendar year in which the payroll period begins.

Except as provided in subparagraph (iii) of the paragraph, the Class D funded status as of each June 30 is the ratio that the Employees’ Retirement System’s assets attributable to Class D members on that date, determined on an “adjusted market value basis”, bears to the Employees’ Retirement System’s liabilities attributable to Class D members on that date. The ratio will be determined by the actuary of the Employees’ Retirement System, using a methodology approved jointly by the Boards of this Plan and of the Employees’ Retirement System.

Notwithstanding subparagraph (ii) of this paragraph, the Class D funded status for payroll periods beginning in calendar years 2014 and 2015 is 100%.

an “eligible rollover distribution” as defined in IRC § 402(f)(2)(A), including eligible distributions of designated Roth contributions described in IRC § 402a(c)(3); or

eligible for rollover treatment under IRC § 408(d)(3), including eligible distribution from a Roth IRA described in IRC § 408(a) eligible for rollover treatment under IRC § 408(d)(3), including eligible distributions from a Roth IRA described in IRC § 408(a).

a qualified plan under IRC § 401(a) or §403(a), except that amounts rolled over may not include nondeductible or after-tax contributions;

a tax-sheltered annuity under IRC § 403(b);

an eligible plan under IRC § 457(b) that is maintained by a state, a political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state; or

an individual retirement account under IRC § 408(a) or an individual retirement annuity under IRC § 408(b), except that amounts rolled over may not include nondeductible or after-tax contributions; and

To the extent required by USERRA, a non-hybrid member returning from an unpaid leave of absence on account of military service may make a 1-time irrevocable election to make up all or part of the mandatory employee contributions the member would have been required to make under <cite data-path="|22A|§5-2">§ 5-2 {“Mandatory contributions by non-hybrid members”} of this subtitle</cite> had he or she remained actively employed by a participating employer.

The non-hybrid member’s makeup contribution is based on what the member’s earnable compensation would have been had the member remained actively employed.

be made by filing with the Board of Trustees in the form required by the Board; and

include the amount of mandatory employee contributions that the non-hybrid member wishes to make up and the period (not to exceed the lesser of 3 times the length of the leave of absence or 5 years) over which the contributions will be made.

As soon as administratively practicable after the Board receives the non-hybrid member’s election, the Department of Finance will cause the amount of makeup contributions to be deducted from the member’s earnable compensation pro-rata for each payroll period during the period elected (but not beyond the last full payroll period ending on or before the member’s termination of employment with an employer).

As soon as administratively practicable after each amount is deducted, the amount will be credited to the member’s Mandatory Employee Contribution Sub-Account.

“Annual additions” means the sum of the following amounts credited to a member’s account for the Limitation Year:

“Annual additions” includes makeup contributions made under <cite data-path="|22A|§5-5">§ 5-5 {“Makeup contributions after military leave”} of this subtitle</cite> for the limitation year to which the contributions relate (not for the limitation year in which the contributions are made).

“Annual additions” does not include rollover contributions made under <cite data-path="|22A|§5-4">§ 5-4 {“Rollover contributions”} of this subtitle</cite>.

“Section 415 compensation” includes the following amounts paid after an employee’s severance from employment with a participating employer, if those amounts would have been included in subparagraph (i) of this paragraph had they been paid before severance and if those amounts are paid to the employee before the later of 2½ months after severance or the end of the calendar year in which the severance becomes effective:

“Section 415 compensation” for a limitation year does not include compensation in excess of the compensation limit applicable to that limitation year under IRC § 401(a)(17).