# Montgomery County Code — Part II. Local Laws, Ordinances, Resolutions, Etc. ## Chapter 33. Personnel and Human Resources. ### Article III. Employee's Retirement System. #### Division 4. Administration. **Sec. 33-47. Administration.** (a) Responsibility for administration. Except as otherwise provided in this chapter, the Chief Administrative Officer has the exclusive authority to manage and administer the eligibility for benefits, mandatory financial reporting, and calculation and distribution of benefits under the retirement system. (b) Regulations for administration. The County Executive must establish regulations, adopted under method (1) of Section 2A-15 of this Code, for the administration of the retirement system, within the limitations of this Article. However, the County Executive must establish regulations, adopted under method (3) of Section 2A-15, for the administration of the elected officials’ plan. (c) Reserved. (d) Powers and duties of the Chief Administrative Officer. The Chief Administrative Officer has, but is not limited to, the following powers and duties: (1) interpret the provisions of the retirement system; (2) decide the eligibility of any employee and the rights of any member or beneficiary to receive benefits; (3) compute the amount of benefits payable to any member or beneficiary; (4) authorize disbursements of benefits; (5) keep records; (6) consider the recommendation of the actuary for the retirement system on contributions the County makes under this article; (7) incur expenses as necessary for the Chief Administrative Officer to administer the retirement system; (8) disclose the reports prepared under Section 33-51; (9) prepare and file reports that are required by law; (10) in connection with the participation or withdrawal of an agency as a participating agency in the retirement system: (A) obtain any data and require any documentation that the Chief Administrative Officer finds necessary; (B) retain an independent actuary not otherwise under contract to the system to compute the valuation of the accrued benefit of any member or group of members upon withdrawal from the retirement system by a formula set out in regulations adopted under subsection (b); and (C) authorize the transfer of accrued benefits to another retirement system qualified under the Internal Revenue Code; (11) authorize the refund of member contributions, and earnings thereon, to correct any contribution or withholding error; and (12) delegate any power or duty under this Section. (e) Payment of expenses and contributions. (1) The County must pay contributions of the County to the retirement system from appropriations approved by the County Council. (2) The board must pay: (A) operating expenses of the integrated retirement plan, the optional retirement plan, and the guaranteed retirement income plan from the assets of these plans; and (B) operating expenses of the elected officials’ plan from plan assets or from County government assets, at the direction of the Chief Administrative Officer. (f) Exemption. Chapter 11B does not apply to procurement of goods and services for the retirement system by the chief administrative officer. **Sec. 33-48. Reserved.** In adopting chapter 49 of the Laws of Montgomery County (Bill 54-84), it was not the legislative intent that the disability retirement hearing board and any medical review committee cease to function immediately. It was the legislative intent that the board and committees continue to function until a final decision is made on all disability retirement applications filed before the date on which the disability benefits program under article VI of chapter 33 takes effect. Any action taken by the disability hearing board and any medical review committee since August 11, 1985, are to be given the same force and effect as if this act had been in effect when the actions were taken.” **Sec. 33-49. Reserved.** **Sec. 33-50. Reserved.** **Sec. 33-51. Reports and audits.** (a) Annual and quarterly reports. (1) By February 15 of each year, the chief administrative officer must submit to the county council and county executive an annual report on the status of the retirement system for the preceding fiscal year. The chief administrative officer must make the report available to all interested county officials, each member of the retirement system, and the public. (2) The chief administrative officer must submit to the council a proposed format of the first annual report that includes the investment performance report of the board. The council must approve or disapprove the format and may request the chief administrator officer to provide additional information in the report. If the council does not act on the format within forty-five (45) days after the chief administrative officer submits the format, the format is automatically approved. The council may extend the time to consider the format for an additional forty-five (45) days. (3) The council may request the chief administrative officer or the board to provide additional information in the annual report or in additional reports. The chief administrative officer and the board must provide the additional information. (4) The chief administrative officer must submit to the council quarterly reports on the status of the retirement system. In a quarterly report the chief administrative officer may summarize information provided in an annual report. (5) By March 31 of each year, the Chief Administrative Officer must submit to the Council and the Executive an annual report on the disability retirement system for the preceding calendar year that includes the number of disability retirement applications, awards, appeals, and re-examinations of retirees for each retirement group. The Council may request the Chief Administrative Officer to provide additional information in the annual report or in additional reports. The Chief Administrative Officer must provide the additional information. (b) Annual report of member contributions and credited interest. Except for the elected officials' participant contributions to the elected officials' plan, the Board must give each member by December 1 of each year a report on the member's contributions with credited interest as of June 30 of the preceding fiscal year. The Board must give each elected officials' participant a report on the elected officials' participant contributions on a quarterly basis. (c) Independent audit of the retirement system. A complete independent audit of the retirement system shall be made at least annually by the firm of certified public accountants under contract by the county council for the purpose of implementing the provisions of article III, section 315, of the charter of the county. The complete audit shall be filed with the county council and copies thereof shall be made available to the public and open to public inspection. **Sec. 33-52. Payment of benefits.** (a) Pension payment. A member's pension will be paid in advance each month during retirement, beginning on the retirement date elected. In the event of the member's death before the end of the month, advanced retirement pension for such month is not returnable. The full monthly amount of each payment will equal one-twelfth of the yearly amount of pension for the member. Payments for less than one (1) full month must be prorated on a daily basis. When pension payments begin, the chief administrative officer must send the member a notice showing the amount and terms of payment. If the payee for any payment is a minor or an incompetent person, the chief administrative officer may authorize payments be made to the person legally responsible for the payee. (b) Discontinuance of pension payments. A member must not receive pension payments while serving in an appointed or elected County office that receives any compensation paid by the County. A member appointed to a full-time County position must become a member of the retirement system or the Retirement Savings Plan under Sections 33-37 and 33-115 and make member contributions until later separation under Article III or Article VIII. The retirement benefit of an employee who resumes membership in the optional or integrated plan must be recalculated when the employee later separates from service. The retirement benefit under the integrated or optional plans of Article III of an employee who becomes a member of the Retirement Savings Plan or the guaranteed retirement income plan must resume when the employee later separates from service. (c) Exemption from claims. All pension payments under the system are non-assignable and are exempt from the claims of creditors to the maximum extent permitted by law. (d) Advanced quarterly payments. Quarterly payments may be made in advance, or with the consent of the payee, a single sum payment in an actuarially equivalent amount may be made, if the amount of any monthly payment payable to any payee would be less than twenty-five dollars ($25.00). (e) Seven-year limitation. There will be no obligation to make any payment to a payee hereunder unless the payor has received proof that the payee was living on the due date of the payment. If such proof is not received within seven (7) years after the due date of the payment, and if no proof of death of the payee is received during such seven-year period, the obligations of the payor as to the payment will be the same as if the payee had died immediately before the due date of the payment. (f) Lost Participants in the Elected Officials’ Plan or Guaranteed Retirement Income Plan. The Chief Administrative Officer must use all reasonable resources to locate or communicate with a former participant or a beneficiary in order to make and process required minimum distributions as required by Internal Revenue Code Section 401(a)(9). If such efforts fail, the Chief Administrative Officer, or a third party holding these amounts, must distribute the former participant’s or beneficiary’s unprocessed required minimum distributions to the State under the unclaimed property laws. No amounts will be due to a former participant or beneficiary once paid to the State. The former participant or beneficiary must claim the distributed amounts directly from the State. **Sec. 33-53. Protection against fraud.** Any person who shall knowingly make any false statement or shall falsify or permit to be falsified any record or records of this retirement system in any attempt to defraud such system as a result of such act, shall be charged with a misdemeanor, and may be punishable under the laws of the county and the state. Should any change or error in the records result in any member or beneficiary receiving from the retirement system more or less than entitled to receive had the records been correct, the error shall be corrected and as far as practicable the payment shall be adjusted in such manner that the actuarial equivalent of the benefit to which such member or beneficiary was correctly entitled will be paid. Any member or beneficiary who has received payment from the retirement system of any monies to which not entitled under the provisions of this act, shall be required to refund such monies to the system. **Sec. 33-54. Exemption from execution, garnishment, or attachment.** The right of a person to pension, the return of member contributions with credited interest, any pension payment option, death benefit, or any other right accrued or accruing to any person under this Article, and the money used to fund the retirement system created by this Article are not subject to execution, garnishment, attachment or any other process, and are not assignable, except as provided in this Article, or when an employee is indebted to the County or the Montgomery County Employees' Federal Credit Union. Despite any other provision in this Section, a benefit is payable to an alternate payee under a domestic relations order, as defined in Section 414(p)(1)(B) of the Internal Revenue Code, if the order is considered a qualified domestic relations order under Section 414(p)(11) of the Internal Revenue Code. The Chief Administrative Officer must authorize forms and procedures to determine whether a domestic relations order is qualified, and must determine the form and timing of distributions under a qualified order. **Sec. 33-55. Filing of retirement system plan and contract.** (a) Filing of plan. The plan of the employees' retirement system of the county shall be filed with the Insurance Department of the State of Maryland and the Internal Revenue Service, United States Treasury Department. (b) Filing of contract. The contract entered into between the county and the funding agent shall be filed with the Insurance Department of the State of Maryland and the Internal Revenue Service, United States Treasury Department. **Sec. 33-55A. Qualification contingency for elected officials' plan.** (a) In the event it is determined that the elected officials' plan is not a qualified plan within the meaning of section 401(a) of the Internal Revenue Code, then the provisions of this chapter regarding the elected officials' plan are repealed as of the date of the determination. The repeal dates back to the original effective date of this act. (b) Any account balance with respect to county elected officials' contributions must be returned to the county as soon as administratively possible after the repeal. (c) Any account balance with respect to required elected officials' participant contributions or account balance with respect to voluntary elected officials' participant contributions, including any amount picked up by the county pursuant to section 33-39(a)(3), must, as soon as administratively possible following a repeal under this section 33-55A, be returned to the elected officials' participant who made them. (d) (1) (e) Following a repeal under this section 33-55A, an elected officials' participant who does not make the election provided for in subsection 33-55A(e) may choose to become a participant in a retirement plan of the retirement system in which that individual would have been eligible to participate if the elected officials' plan had never existed. (2) Benefits and vesting under a plan in which the individual becomes a participant under paragraph (d)(1) must be determined based only on credited service earned or purchased after the individual becomes a participant in the plans, plus any credited service earned or purchased prior to the individual's becoming an elected officials' participant, except as otherwise provided in paragraph (d)(3). (3) Credited service earned while an elected officials' participant must be counted in determining benefits and vesting under a plan in which the individual becomes a participant under paragraph (d)(1) if the individual so chooses. An individual making that choice must contribute to the plan, in a single lump-sum cash payment, the total nonvoluntary employee contributions that the employee would have been required to make under the plan for the period during which that individual was an elected officials' participant if the individual had participated in the plan instead of the elected officials' plan. The county must also make, on behalf of any individual making the choice and contribution, contributions to the plan in the amount the county would have made on behalf of that individual for the period during which that individual was an elected officials' participant if the individual had participated in the plan instead of the elected officials' plan. (e) Following a repeal under this section 33-55A, an individual who was an elected officials' participant may choose to have the county establish on that individual's behalf a nonqualified deferred compensation arrangement within the meaning of section 457 of the Internal Revenue Code. The arrangement must provide for deferral of compensation, beginning as of the first day of the month following the month in which the arrangement is entered into, until the individual's normal retirement date, in amounts that are sufficient to provide for a benefit comparable to the benefit the individual would have received under the elected officials' plan from the county elected officials' contributions account of the individual, assuming for purposes of the arrangement that the elected officials' plan would have continued to the individual's date of distribution and that all county elected officials' contributions would have been made to the elected officials' plan on the individual's behalf up to that date and that the account balance in the county elected officials' contributions account as of the date of repeal under this section 33-55A, and all subsequent contributions, would have earned interest, from and after the date of repeal under this section 33-55A, at the rate of six (6) percent per year. The regular earnings of such elected official must be increased as of the first day of the month following the month in which such arrangement is entered into by an amount equal to the amount to be deferred each month under such arrangement. **Sec. 33-56. Interpretations.** (a) The Chief Administrative Officer is responsible for deciding questions arising under this Article. Any member of the County's retirement system and any retiree or designated beneficiary eligible to receive benefits from the retirement system, may request, in writing, a decision on questions arising under this Article from the Chief Administrative Officer, who must respond in writing to such request within 60 days. The response must include a statement of appeal rights. (b) The Chief Administrative Officer's decision on a disability application under Section 33- 43 may be appealed under subsection 33-43. (c) Any other decision by the Chief Administrative Officer may be appealed within 15 days to the Merit System Protection Board under procedures established by the Board. The decision of the Board is final. **Sec. 33-57. Records.** (a) Records generally. The chief administrative officer must prescribe the form, the scope, and the maintenance of records. The records of the retirement system must be maintained on the basis of the plan year. (b) Decision of chief administrative officer on records. The decision of the chief administrative officer relating to the confidentiality, use, maintenance and disposition of all records and materials relating to the employees' retirement system of the county, and as to whether any information contained therein may be disclosed, shall be final. (c) Time limit records are to be kept. The chief administrative officer, when not in conflict with state or county law, shall determine the time limit that retirement system records shall be kept on file and the final disposition of such records. **Sec. 33-58. Trust established-Trust fund.** (a) The county establishes a trust, which is part of the retirement system, for the benefit of the members of the retirement system. The trust consists of the money and property of the retirement system on the day before the day all the trustees have accepted the trust in writing, and any earnings, profits, increments, appreciation, and other additions that accrue. (b) All of the money and property, all investments made with that money and property, and all earnings, profits, increments, and other additions, less the payments previously made by the board, are to be referred to as the trust fund. (c) The board has legal title to all cash and other property of the retirement system, but may delegate some or all incidents of ownership as provided in this article. **Sec. 33-59. Board of investment trustees.** (a) Established. (1) The Board of Investment Trustees is established to manage the trust under this Article. (2) The Board continues until abolished by law. (b) Membership. (1) The Board has 13 trustees. (2) The County Executive must appoint 4 voting, ex officio members of the Board, subject to County Council confirmation as members, who serve indefinitely while each holds the respective office. These ex officio trustees should be: (A) the Director of Management and Budget; (B) the Director of Finance; (C) the Chief Labor Relations Officer; and (D) the Executive Director of the Office of the County Council. (3) The County Executive must appoint 3 voting certified employee organization representatives, subject to County Council confirmation, as members of the Board, who serve indefinitely while each remains the designee of the certified employee representative. These trustees must not vote on any matter involving the County deferred compensation plan. These trustees should be: (A) one representative nominated by the employee organizations certified as the representative of the Office, Professional, and Technical (OPT) and Service, Labor and Trades (SLT) bargaining units; and (B) one representative nominated by the employee organization certified as the representative for the fire and rescue employee unit; and (C) one representative nominated by the employee organization certified as the representative for the police employee bargaining unit under Article V. (4) The following 6 trustees must be appointed by the Executive and confirmed by the Council: (A) An active County employee who is a vested member of the retirement system and the Merit System, and not a member of a collective bargaining unit. A 3-year term for this trustee ends on March 1 of every third year after the trustee is confirmed by the Council. (B) A retired County employee who is a member of the retirement system. Before appointing this trustee, the Executive must consider, and should select from, a list of 3 to 5 individuals recommended by the Montgomery County Retired Employees’ Association. The Executive must notify the Council when nominating an individual not recommended by the Association. A 3-year term for this trustee ends on March 1 of every third year after the trustee is confirmed by the Council. (C) Two persons recommended by the Council who are knowledgeable in pensions, investments, or financial matters. A 3-year term for these trustees ends on March 1 of every third year after each trustee is confirmed by the Council. (D) Two individuals knowledgeable in pensions, investments, or financial matters. Before nominating these trustees, the Executive must consider, and should select from, individuals recommended by citizens or countywide citizens’ groups. An individual recommended by a citizens’ group need not be a member of the group. The Executive must notify the Council when nominating an individual not recommended by a citizens’ group. A 3-year term for these trustees ends on March 1 of every third year after each trustee is confirmed by the Council. (5) A trustee appointed under paragraph (4) continues to serve after the trustee’s term ends until the Council confirms a successor, but the term for each position is not affected by any holdover. A trustee who, after appointment and before the end of a term, is no longer qualified for the trustee’s position is removed from the Board by operation of law. (6) The Executive must not appoint as a trustee any person who furnishes, or is employed by a firm that furnishes, to pension funds and other institutional investors the kind of investment services purchased by the Board. (c) Vacancies. (1) A trustee may be automatically removed for missing meetings as described in Section 2-148(b). (2) A vacancy on the Board must be filled for the unexpired term in the same manner as the previous trustee was appointed. (d) Compensation. The trustees must serve without compensation from any source for service rendered to the Board, except that an active employee trustee may receive administrative leave to serve on the Board. The Board must reimburse trustees for any expense approved by the Board. A trustee must not receive reimbursement for expenses from any other source. (e) Acceptance of trust. Within 10 days after the Council confirms a trustee, the trustee must certify in writing to the Chief Administrative Officer that the trustee accepts the trust and will administer the affairs of the trust with care, skill, prudence, and diligence. (f) Written policies. (1) The Board must establish written policies to administer and invest the funds created by this Article and to transact the business of the trust and the retirement system. (2) The Board must apply the policies to all members and beneficiaries of the retirement system and must not discriminate in favor of or against any member or beneficiary of the retirement system. (3) Any delegation of duties by the Board under Section 33-60, 33-125, or 33-145 must be specified in written policies and procedures. (g) Officers. The Board must select a chair, vice chair, and secretary from the Board’s members. (1) The chair must preside at meetings of the Board and may take administrative action on behalf of the Board. (2) The vice chair must perform the duties and exercise the powers of the chair when the chair is unavailable, or the Board determines is otherwise unable to perform the duties of the chair. (3) The secretary must record the proceedings and actions of the Board and may certify a document or action of the Board. A person may rely in good faith on the secretary’s certification as proof of the document or action. (h) Meetings and actions. (1) The Board must meet at least once during each calendar quarter. The chair, or 7 members of the Board, may call a meeting of the Board, in the manner and at times and places provided under the policies of the Board. The Board is a public body under the State Open Meetings Act. (2) A. Seven trustees constitute a quorum. B. Each trustee has one vote. C. Seven trustees must agree for the Board to act. (3) The Board may act without a meeting. All of the trustees must concur in writing for the Board to approve any action the Board takes without a meeting. (4) The Board may adopt procedures consistent with this Section. (i) Records. (1) The Board must keep investment accounts and records necessary to calculate the value of each retirement system fund and evaluate the experience and performance of the retirement system. (2) The Board may designate a person to maintain the records. (3) Accounts and records are subject to State law on public records. (j) Removal of trustee. With the Council’s approval, the County Executive may remove a trustee for violating this Article or other good cause. (k) Legal adviser. The County Attorney is the legal adviser to the Board. (l) In this Section, “retirement system” means the Employees’ Retirement System, the Retirement Savings Plan, or the Deferred Compensation Plan under Article IX. **Sec. 33-60. The board of investment trustees-Powers and duties.** (a) General. (1) Except as otherwise provided in this chapter, the board of investment trustees has the exclusive authority to manage and administer the investments of the assets of the retirement system. However, the powers and duties of the board must not become effective until all of the trustees have accepted the trust in writing. (2) (A) (c) (1) The board must invest and reinvest, or cause to be invested or reinvested, as authorized in subsection (c)(1), the principal and income of the retirement system and keep the same invested without distinction between principal and income. The board has the exclusive authority to manage the assets of the retirement system. However, any investment of the retirement system in existence on the day before all members have accepted the trust may remain as an investment until the earlier of: (i) Its maturity date, if any; or (ii) The date it is liquidated under the investment policy of the board. The board must hold the annuities purchased under the Amendment, Settlement and Transfer agreement under Group Annuity Contract #1920 until Aetna Life Insurance Company has completed its performance under that agreement. (B) At any time the board is selecting a new investment manager, the board may have fewer than 3 investment managers. (3) Chapter 11B does not apply to procurement of goods and services for the retirement system by the board. (b) Agents for transfer of property. (1) The board may register any securities or other property in its own name or in the name of a nominee. The board may hold any security in bearer form. However, the board or its agent must keep records that show that the investments are part of the trust fund. (2) The board may form a partnership under the laws of Maryland for the purpose of holding or transferring securities as the nominee of the board. (3) The board may designate in writing a trustee to hold or transfer securities as nominee of the board. (4) The board must provide that trustees or a partnership that the board designates must act only as agents of the board. The board may set other conditions that the board considers prudent. (5) The trustees of a partnership the board designates may agree with a bank or other financial institution to: a. Guarantee the signatures made as nominee of the board; and b. Conduct settlements and transfers through participation in central security depositories. (c) Authorized investments. (1) The board may invest or permit an investment manager to invest the assets of the retirement system fund in any investment it considers prudent within the policies set by the board. The board must use an investment manager except when investing in any pooled investment vehicle, including any combined, common or commingled trust fund, retirement or annuity contract, mutual fund, investment company, association, or business trust. The board also may authorize the Executive Director to make investments in pooled investment vehicles and transition assets from one investment manager to another investment manager as the board specifies. (2) If an investment through any combined, common or commingled trust fund exists, the declaration of trust of that fund is a part of the retirement system trust under this Article. (d) Trustee powers. Subject to the limitations under subsection (a)(2) of this section, the board has the power to: (1) select and retain the actuary for the retirement system; (2) after consultation with the actuary for the retirement system, determine the actuarial cost method, and the mortality, turnover, interest rates, and other assumptions to be used in actuarial and other computations for the retirement system; (3) with any cash, purchase or subscribe for any investment, at a premium or discount, and retain the investment; (4) sell, exchange, convey, transfer, lease for any period, pledge, mortgage, grant options, contract with respect to, or otherwise encumber or dispose, at public or private sale, for cash or credit or both, any part of the retirement system; (5) except as provided in Section 33-61A(h)(2), sue, defend, compromise, arbitrate, compound, and settle any debt, obligation, claim, suit, or legal proceeding involving the retirement system, and reduce the rate of interest on, extent or otherwise modify, foreclose upon default or otherwise enforce any debt, obligation, or claim; (6) retain uninvested that part of the retirement system fund described in subsection (f) without being liable for the payment of interest; (7) exercise any option on any investment for conversion into another investment, exercise any rights to subscribe for additional investments, and make all necessary payments; (8) join in, consent to, dissent from, oppose, or deposit in connection with the reorganization, recapitalization, consolidation, sale, merger, foreclosure, or readjustment of the finances of any corporation or property in which the assets of the retirement system are invested, or the sale, mortgage, pledge, or lease of that property or the property of any such corporation upon such terms and conditions that the board considers prudent; exercise any options, make any agreements or subscriptions, pay any expenses, assessments, or subscriptions, and take any other action in connection with these transactions that the board considers prudent; and accept and hold any investment that may be issued in or as a result of any such proceeding; (9) vote, in person or by any proxy, at any election of any corporation in whose stock the assets of the retirement system are invested, and exercise, personally or by any power of attorney, any right appurtenant to any investment held in the retirement system; and give general or specific proxies or powers of attorney with or without power of substitution; (10) sell, either at public or private sale, option to sell, mortgage, lease for a term of years less than or continuing beyond the possible date of the termination of the trust, partition or exchange any real property for such prices and upon such terms as the board considers prudent, and execute and deliver deeds of conveyance and all assignments, transfers, and other legal instruments for passing the ownership to the purchaser, free and discharged of all liens; (11) renew or extend any mortgage, upon such terms that the board considers prudent, and increase or reduce the rate of interest on any mortgage or modify the terms of any mortgage or of any guarantee as the board considers prudent to protect the retirement system or preserve the value of the investment; waive any default or enforce any default in a manner that the board considers prudent; exercise and enforce any right of foreclosure, bid on property in foreclosure, take a deed in lieu of foreclosure with or without paying a consideration, and release the obligation on the bond secured by the mortgage; and exercise and enforce in any action, suit, or proceeding at law or in equity any rights or remedies in respect to any mortgage or guarantee; (12) form a corporation or corporations under the laws of any jurisdiction or acquire an interest in or otherwise make use of any corporation already formed to invest in and hold title to any property; (13) for the purpose of investing in and holding title to real or personal property or part interests therein, as described in subsection (c)(1)h., including equipment pertaining thereto, leaseholds, and mortgages, to take any action it considers prudent; (14) incur and pay expenses for agents, financial advisors, actuaries, accountants, and counsel, if those expenses are incurred solely to perform the board’s duties under this Article; (15) borrow, raise, or lend moneys, for the purposes of the retirement system, in such amounts and upon such terms and conditions as the board in its discretion considers prudent; for any money borrowed, issue a promissory note and secure the repayment of this note by pledging or mortgaging all or any part of the retirement system; (16) hold, buy, transfer, surrender, and exercise all other incidents of ownership of any annuity contract; (17) if payments to a member or beneficiary are to be made in the form of an annuity based upon one or more lives or life expectancies, buy from any legal reserve life insurance company a single premium, nontransferable annuity contract providing for the payment of the benefits; (18) pool all or any of the assets of the trust, from time to time, with assets belonging to any other retirement plan trust or retiree health benefit trust created by the County, and any subtrust thereof, and commingle such assets and make joint or common investments and carry joint accounts on behalf of this trust, such other trust or trusts, or subtrusts, allocating undivided shares or interests in such investments or accounts or in any pooled assets to the two or more trusts or subtrusts in accordance with their respective interests. Any such trusts or subtrusts may be unitized for investment purposes. Consistent with its investment authority in this Article, the Board or its delegate may also buy or sell any assets or undivided interests in this trust or in any other trust with which the assets of this trust may be pooled, to or from this trust or such other trusts at such prices or valuations as the Board or its delegate may determine in reasonable good faith. For the avoidance of doubt, the Board must determine that it is consistent with its fiduciary duties to participate in a pooled investment that permits the sale or purchase of its units as an investment option under another retirement plan or retiree health benefit trust created by the County; (19) do all acts which it considers necessary and exercise any and all powers of this article with respect to the management of the retirement system, and in general, exercise all powers in the management of the assets which an individual could exercise in the management of property owned in the individual’s own right except for making an individual investment selection; and (20) appoint, supervise, and remove an Executive Director under Section 33-60C. (e) Prohibited transactions. The board must not engage in any transaction between the trust and the county or any entity controlled by the county in which the board: (1) Lends any part of its income or corpus, without receiving adequate security and a reasonable rate of interest; (2) Pays any compensation, more than a reasonable allowance for salaries or other compensation or personal services actually rendered; (3) Makes any part of its services available on a preferential basis; (4) Makes any substantial purchase of securities or other property, for more than adequate consideration which, for avoidance of doubt, does not include a transfer conducted on the terms described in Section 33-170(i) between employee benefit plan trusts or a subtrust; (5) Sells any substantial part of its securities or other property, for less than adequate consideration which, for avoidance of doubt, does not include a transfer conducted on the terms described in Section 33-170(i) between employee benefit plan trusts or a subtrust; or (6) Engages in any transaction which results in a substantial diversion of its income or corpus. (f) Available cash. The board may keep cash available in an amount it considers prudent to pay benefits, expenses and other payments. The board may keep cash on deposit in one (1) or more banks or trust companies organized under the laws of any state, or of the United States, but the sum on deposit in any one (1) bank or trust company must not exceed twenty-five (25) percent of the paid-in capital and surplus of that bank or trust company. (g) Investment management agreements. (1) Appointment of investment manager. Except as permitted under subsection (c)(1), the board must appoint investment managers to manage, acquire, or dispose of all or some of the assets of the retirement system. The board may dismiss any manager the board appoints. The fees charged by any manager are expenses of the retirement system. (2) Investment contract. Any contract must provide that when the investment manager is making individual investment selections, the investment manager must make the individual investment selections subject to the written policies of the board. In any contract, the board must identify the assets that are the subject to the contract. In any contract, the board may give an investment manager the right to invest the assets of the retirement system specified in the contract without prior notice to or approval by the board. In any contract, the board may limit the investment of a specified portion of the retirement system to a certain type of property, such as but not limited to common stocks, bonds, or real estate. If a contract only applies to a portion of the assets of the retirement system and specifies the type of property to be invested in, the manager must achieve diversification within the specified category of property, but is not responsible for diversification of investments of the entire retirement system. In any contract, the board may delegate to the investment manager any power or discretion conferred on the board under this Article and may provide that the investment manager must have custody and control of certain assets of the retirement system. (3) Monitoring of investment manager. The board must monitor the performance of the managers and may terminate any appointment. Monitoring may include any tests or analyses that the board considers prudent in the circumstances to ensure the stability and growth of the retirement system. (h) (1) (d) (14) Except as provided in subsection (d)(14), the board must pay all benefits and expenses of the retirement system as directed by the chief administrative officer. (2) If the board approves a contract for delegation of the custodial functions as provided in section 33-61, the board must coordinate the payment of benefits and must monitor the timeliness and accuracy of such benefit payments. (3) The board is entitled to rely on the decision of the chief administrative officer as to the proper recipient of benefit payments. (i) Delegation of duties. The Board may delegate its duties to the Executive Director or a similarly situated County employee as it deems appropriate and consistent with its fiduciary duties in a written policy and procedure. If the Board has prudently delegated its duties and monitored the delegation, the trustees must not be liable for an act or omission made by its delegate. **Sec. 33-60A. Sudan Investments—Restrictions** (a) Definitions. In this Section, the following words have the meanings indicated: Actively managed separate account means assets held in a separate account by an investment manager hired by the Board. Actively managed separate account does not include an indexed fund, private equity fund, real estate fund, mutual fund, or other commingled or passively managed fund. Board means the Board of Investment Trustees established by Section 33-59. Company means any sole proprietorship, organization, association, corporation, partnership, joint venture, limited partnership, limited liability partnership, limited liability company, or other entity or business association, including any wholly-owned subsidiary, majority-owned subsidiary, and parent company of any of them, or business association, that exists for profit-making purposes. Divestment action means selling, redeeming, transferring, exchanging, or otherwise disposing of, and refraining from further buying of, certain investments. Doing or does business in Sudan means maintaining equipment, facilities, personnel, or other apparatus of business or commerce in Sudan, including ownership of real or personal property in Sudan: (1) for the purpose of: (A) engaging in any business activity with the Government of Sudan; or (B) conducting business with any company in which the Government of Sudan has a direct or indirect equity share; or (C) participating in a Government of Sudan-commissioned consortium or project; and (2) if the business operation includes: (A) supplying military equipment in Sudan; or (B) oil-related activities constituting more than 10% of the entity’s operations in Sudan; or (C) mineral extraction activities constituting more than 10% of the entity’s operation in Sudan; or (D) power production activities constituting more than 10% of the entity’s operations in Sudan. Government of Sudan means the government in Khartoum, Sudan, led by the National Congress Party (formerly known as the National Islamic Front), or any successor government formed on or after October 13, 2006 (including the coalition National Unity Government agreed upon in the Comprehensive Peace Agreement for Sudan). Government of Sudan does not include the regional government of southern Sudan. Marginalized populations of Sudan means adversely affected groups in regions authorized to receive assistance under section 8(c) of the Darfur Peace and Accountability Act (Public Law 109-344) or areas in Northern Sudan described in section 4(9) of that Act. Military equipment means: (1) weapons, arms, military supplies, and equipment that readily may be used for military purposes, including radar systems or military-grade transport vehicles; or (2) supplies or services sold or provided directly or indirectly to any force actively participating in armed conflict in Sudan. Mineral extraction activity means exploring, extracting, processing, transporting, or wholesale selling or trading any elemental mineral or associated metal alloy or oxide (ore), including gold, copper, chromium, chromite, diamonds, iron, iron ore, silver, tungsten, uranium, and zinc. Oil-related activity means exporting, extracting, producing, refining, processing, exploring for, transporting, selling, or trading oil; or constructing, maintaining, or operating a pipeline, refinery, or other oilfield infrastructure. Oil-related activity does not include the retail sale of gasoline or related consumer products in Sudan or leasing or owning rights to an oil block in Sudan. Power production activity means any business operation that involves a project commissioned by the National Electricity Corporation of Sudan or any similar Government of Sudan entity whose purpose is to facilitate power generation and delivery, including establishing any power-generating plant or hydroelectric dam, selling or installing components of any such plant or dam, or providing service contracts related to installing or maintaining any such plant or dam. Substantial action means: (1) adopting, publicizing, and implementing a formal plan to cease business operations in Sudan within one year and to refrain from any such new business operations; (2) undertaking significant humanitarian efforts in conjunction with an international organization, the Government of Sudan, the regional government of southern Sudan, or a non-profit entity that is evaluated and certified by an independent third party to be substantial in relationship to the company’s business operations in Sudan and of benefit to one or more marginalized populations of Sudan; or (3) engaging the Government of Sudan for the purpose of materially improving conditions for the victimized populations in Darfur. Trust funds means the assets held for the Employees’ Retirement System and the assets held for the Retiree Health Benefits Trust. (b) Review of investments. The Board must review the investment holdings in each actively managed separate account of the trust funds and identify each investment in any company that does business in Sudan. The Board must review its investment holdings in these accounts periodically and update the list of companies doing business in Sudan at least every 6 months. (c) Divestment. The Board: (1) must take divestment action with regard to investments in any company doing business in Sudan within 12 months after the Board finds that the company is doing business in Sudan; and (2) must not make any new investments in an actively managed separate account in any company that does business in Sudan. (d) Research. In determining if any company does business in Sudan, the Board may: (1) retain a professional consultant; and (2) review publicly available information regarding companies doing business in Sudan, including information provided by a non-profit organization, research firm, international organization, or government. (e) Exemption. The divestment or investment prohibition under this Section must not apply to a company that can demonstrate that its business operations in Sudan: (1) are conducted under contract directly and exclusively with the regional government of southern Sudan; (2) are conducted under a license from the federal Office of Foreign Assets Control, or are expressly exempted under Federal law from the requirement to be conducted under such a license; (3) consist of providing goods or services to marginalized populations of Sudan for at least 75% of its business operations in Sudan; (4) consist of providing goods or services to an internationally recognized peacekeeping force or humanitarian organization; (5) consist of providing goods or services that are used only to promote health or education; or (6) have been voluntarily suspended. (f) Notice. The Board: (1) before taking any divestment action under this Section, must provide written notice and an opportunity to comment in writing to each company subject to the action; (2) must not take the divestment action until 90 days after written notice is provided to the company; and (3) must not take the divestment action if the company shows that it: (A) is not doing business in Sudan; (B) has taken substantial action, as defined in subsection (a); or (C) is exempt from divestment under subsection (e). (g) Report. The Board must report annually to the Council and Executive on the operation of and compliance with this Section. The report must: (1) identify each investment in a company doing business in Sudan held in an actively managed separate account of the trust funds; (2) list each divestment action taken under this Section; and (3) calculate the administrative cost of compliance. (h) Sunset. This Section expires 30 days after the President of the United States certifies to Congress that the government of Sudan has honored its commitments to: (1) abide by United Nations Security Council Resolution 1769 (2007); (2) cease attacks on civilians; (3) demobilize and demilitarize the Janjaweed and associated militias; (4) grant free and unfettered access for delivery of humanitarian assistance; and (5) allow for the safe and voluntary return of refugees and internally displaced persons. **Sec. 33-60B. Emerging Investment Managers.** (a) Legislative findings. (1) Emerging investment managers, including businesses owned by women, minorities and disabled individuals, should receive an equal opportunity to provide investment management services to the Board of Investment Trustees. (2) The Board of Investment Trustees has adopted a policy requiring its staff to identify qualified emerging investment managers to participate in an investment manager search, including regular monitoring of investment managers. (3) Expanding opportunities for emerging investment managers will increase competition. (b) Definitions. As used in this Section: Assets means total client assets managed by an investment manager. Emerging investment manager means: (1) an investment manager with assets or product assets below the 75th percentile of their respective peer group; or (2) a new or developing investment manager. New or developing investment manager means an investment manager: (1) raising its first or second private institutional investment fund; or (2) creating its first institutional product. Product Assets means client assets managed by an investment manager in a single strategy. (c) Consistent with the fiduciary duties established in Section 33-61C, the Board must make a good faith effort to remove any barriers that limit participation by qualified emerging investment managers to manage funds for the Employees’ Retirement System. (d) The Board must adopt guidelines to identify and evaluate qualified emerging investment managers. The guidelines must include procedures for: (1) identifying possible firms; (2) reviewing, evaluating and interviewing emerging investment managers on an ongoing basis; and (3) maintaining research files on emerging investment managers. (e) The Board must report annually to the Council and the Executive on compliance with this Section on or before September 1 for the prior fiscal year. The report must: (1) identify each emerging investment manager used during the fiscal year; (2) list the percentage and dollar value of the assets of the trust fund, by investment sector, managed by each emerging investment manager; and (3) describe the good faith effort made to include qualified emerging investment managers in the procurement process during the fiscal year. **Sec. 33-60C. Executive Director.** (a) Under the merit system, including the personnel regulations under Section 33-7 and the administrative procedures under Section 33-8, the board of investment trustees must: (1) appoint an Executive Director of the retirement system from a list of qualified applicants identified under subsection (c); and (2) supervise the Executive Director, up to and including the removal the Executive Director. (b) The Executive Director is a County employee under the merit system. (c) Under the merit system, including the personnel regulations under Section 33-7 and the administrative procedures under Section 33-8, the Chief Administrative Officer must: (1) establish minimum qualifications for the position of Executive Director; (2) recruit applicants for the position; (3) evaluate the qualifications of applicants, including through the use of an interview panel that includes the chair of the board of trustees, or the chair’s designee, and the chair of the board of the Consolidated Retiree Health Benefits Trust, or the chair’s designee; and (4) identify for the board of investment trustees at least 2 applicants that meet the minimum qualifications for the position. (d) The board of investment trustees may delegate to the Chief Administrative Officer the responsibilities and duties of the board under subsection (a). **Sec. 33-61. Custodian.** (a) The director of finance is the custodian of the retirement system assets. The director must give bond with such surety and for such periods and in such amount as the board determines. All payments from the retirement system assets must be made by (i) the director of finance, (ii) a designee of the director of finance, or (iii) two (2) persons designated by the board, acting jointly. The board must file a duly attested copy of the resolution of the board designating the two (2) persons, with specimen signatures of those persons, with the director of finance to indicate their authority for making payments. (b) If the board approves, the director of finance may make written contracts with banks, trust companies, insurance companies or investment companies authorized to do business in any state for the safe custody of investments, banking services, the payment of benefits and expenses and any other function necessary for the management and safeguarding of the assets of the retirement system. The contract may provide that a bank, trust company, insurance company, or investment company may invest assets of the retirement system in: (1) Money market funds; (2) A short-term investment fund of a bank, trust company, or insurance company; or (3) Their substantial equivalent. As soon as possible after all members of the board have accepted the trust, the board must approve a written contract for the investment purposes described in this subsection. (c) If the board approves, the director of finance may direct the payment of benefits and expenses from a trust account of the board. (d) Chapter 11B does not apply to the procurement of goods and services for the retirement system by the director of finance. **Sec. 33-61A. Indemnification of trustees.** (a) Authorized. The County must indemnify every member of the Board who is or may become a party to any action, suit, or proceeding, including administrative and investigative proceedings, because of service as a member of the Board, including any action taken to comply with Section 33-60A, subject to the conditions stated in this section. (b) Standards for indemnification. (1) The county must indemnify a member of the board: a. With respect to civil matters, if the member acted in good faith and in a manner that the member reasonably believed to be in the best interest of the retirement system; and b. With respect to criminal matters, if the member had no reasonable cause to believe that the member's conduct was unlawful. (2) If the county must indemnify a member of the board under this article, the county must indemnify the member for expenses when the member incurs the expense, including but not limited to: a. Reasonably attorney fees; b. Judgments; c. Damages; d. Fines; and e. Settlements. (c) Effect of termination of any suit or proceeding. The termination of any suit or proceeding does not, by itself, create a presumption that a trustee did not act in good faith and in a manner reasonably believed to be in the best interest of the retirement system. The termination of a criminal action or proceeding does not, by itself, create a presumption that a trustee had reasonable cause to believe that the conduct was unlawful. (d) Exceptions to indemnification. The county must not indemnify any member of the board if: (1) The member of the board is found by a court or other tribunal to be liable for gross negligence or willful and wanton misconduct in the performance of a duty to the retirement system; or (2) Liability arises from action that occurred before the date on which all the trustees have accepted the trust in writing. (e) Recovery of payments. If the county attorney determines that indemnification payments have been made that are outside the scope of indemnification, the county attorney must take appropriate action, on behalf of the county, to recover the payments. (f) Insurance provided. The county must provide insurance for each member of the board against any liability asserted against or incurred by the member of the board with respect to service on the board. Premiums for any insurance must not be paid with assets of the retirement system. The county may self-insure for this purpose, wholly or partly. If the county does not provide adequate insurance coverage or indemnification under this section, a member of the board need not pay any amount attributable to liability incurred by serving on the board, and the county must pay any amount due. (g) Defenses. The county may assert the defense of governmental immunity, or any other defense available to the county, in suits or other actions brought against the county. (h) County attorney. (1) The county attorney must make the final determination of eligibility of a member of the board for indemnification with respect to a matter, and of the reasonableness of all fees, expenses, and settlements. (2) Unless the county attorney approves the settlement, a trustee must not use: a. County funds; b. Funds provided by a self-insurance program of the county; or c. Funds provided under a policy the county has with an insurance company; to settle a claim against the trustee. **Sec. 33-61B. Accounts and records of the board of investment trustees.** (a) Maintenance of records and accounts. The board must keep accurate and detailed accounts of all investments, receipts, disbursements, and other transactions, including any specific records that are required by law and any additional records it considers necessary. All accounts, books and records are subject to state law on public records. (b) Annual accounting by board. The fiscal year of the retirement system is the same as the fiscal year of the county. On or before January 1 of each year, the board must file with the chief administrative officer a written account, listing all investments, receipts, disbursements, and other transactions during the preceding fiscal year or during the period from the close of the last preceding fiscal year to any interim date that the board selects. This account must describe all securities and investments bought and sold, with the cost or net proceeds of each purchase or sale, and must list all cash, securities, and other property held at the end of that period. The account must include a list of the retirement system assets and the current fair market value of each asset at the end of that period. If a current fair market value is not available for a particular investment or is not applicable to a particular investment, the board must assign a value to that investment. The board must apply the investment valuation method on a consistent basis. If the board changes the investment valuation method, the board must notify the council of the change. (c) Reporting and disclosure. The board must prepare for the chief administrative officer any documents required by law. **Sec. 33-61C. Standard of care.** A fiduciary must discharge the fiduciary’s duties regarding the retirement systems: (a) only in the best interest of the participants and their beneficiaries; (b) only to provide benefits to the participants and their beneficiaries, and defray reasonable expenses of administering the retirement systems; (c) with the care, skill, prudence, and diligence under the circumstances that a prudent person acting in a similar capacity and familiar with the same matters would use to conduct a similar enterprise with similar purposes; (d) by diversifying the investments of the retirement systems to minimize the risk of large losses, unless it is clearly not prudent to diversify under the circumstances; (e) according to a good faith interpretation of the law governing the retirement systems; (f) according to a good faith interpretation of the documents and instruments governing the retirement systems, if they comply with this Article. **Sec. 33-61D. Ethics; conflict of interest.** (a) Members of the board are subject to the provisions of chapter 19A, "Ethics," of the Montgomery County Code. (b) Except as otherwise provided in this section, members and employees of the board must not: (1) Be a party to any transaction engaged in by the board or an investment manager involving the assets of the retirement system; (2) Use the gains or profits of the system for any purpose except to make investments or payments that are authorized by the board; (3) Deal with the assets of the retirement system for their own interest or account; (4) Act in any transaction involving the retirement system on behalf of a party whose interests are adverse to the interests of the retirement system or the interests of the members or beneficiaries of the retirement system; or (5) Become an endorser or surety, or in any manner an obligor, for moneys loaned to or borrowed from the board. (c) In this section, nothing prohibits a member or employee of the board from: (1) Being a member of the retirement system; (2) Receiving a benefit the member or employee of the board is entitled to as a member or beneficiary in the retirement system so long as the benefit is computed and paid on a basis that is consistent with the terms of the retirement system as applied to all other members or beneficiaries; or (3) Serving as a trustee or employee of the board in addition to being an officer, employee, agent, or other representative of a party in interest. **Sec. 33-61E. Qualification amendments to elected officials' plan.** The elected officials' plan and any related trust agreement, investment advisory agreement, custodial agreement, annuity contract, or similar agreement, may be amended by the county at any time, either prospectively or retroactively, to conform to the provisions of the Internal Revenue Code. However, if the Internal Revenue Service requires an amendment and the amendment reduces a benefit provided by the elected officials' plan, the required reduction must be paid as a separate benefit from a nonqualified supplemental plan to be established by the county. The benefit payable to a member from the elected officials' plan and the related benefit payable from the supplemental plan, when taken together, must equal the benefit promised under the elected officials' plan immediately before the benefit amendment required by the Internal Revenue Service. **Sec. 33-61F. Qualification amendments.** The retirement system and any related trust agreement, investment advisory agreement, custodial agreement, or similar agreement, may be amended by the county at any time, either prospectively or retroactively, to conform to the provisions of the Internal Revenue Code or similar act or amendment thereto or regulations promulgated thereunder. However, if the Internal Revenue Service requires an amendment and the amendment reduces a benefit provided by the retirement system, the required reduction must be paid as a separate benefit from a nonqualified supplemental plan to be established by the county. The benefit payable to a member from the retirement system and the related benefit payable from the supplemental plan, when taken together, must equal the benefit promised under the retirement system immediately before the amendment required by the Internal Revenue Service. **Sec. 33-61G. Termination and discontinuance of contributions.** (a) Rights upon termination or discontinuance of contributions. Full vesting of all accrued benefits must occur upon termination of the retirement system, or upon complete discontinuance of contributions thereto, to the extent that such accrued benefits are funded. (b) Provision for allocation of unallocated funds. Upon termination of the retirement system, or complete discontinuance of contributions thereto, any unallocated funds which are not necessary for the satisfaction of liabilities under the retirement system must be returned to the county. (c) Limitation on the use of certain dividends and credits. Credits or returns under any annuity contract, other than those arising from corrections of errors in records or computations (such as misstated ages or similar corrections), must not be paid to the county prior to permanent discontinuance of contributions or discontinuance of the retirement system. All dividends, experience rating credits, or employer surrender or cancellation credits ascertained prior to permanent discontinuance of contributions or termination of the retirement system must be applied regularly toward the premiums (or required contributions) next due for the purchase of any annuities. Any surrender or cancellation credits made available after discontinuance of contributions or termination of the retirement system, but before all retirement annuities with respect to service prior to such discontinuance or termination have been purchased, must be applied regularly as they are determined to purchase such retirement benefits so as not to discriminate in favor of officers and highly compensated persons. Any dividends, experience credits, surrender credits or cancellation credits made after permanent discontinuance of contributions or termination of the retirement system and after the satisfaction of all liabilities of the retirement system must be paid to the county. (d) Reversion of surplus assets upon termination of the retirement system or discontinuance of contributions thereto. Upon termination of the retirement system or complete discontinuance of contributions thereto, any assets which are not necessary for the satisfaction of liabilities under the retirement system, must be returned to the county. **Sec. 33-61H. Nonqualified supplemental retirement plan.** (a) The county executive must establish a nonqualified supplemental retirement plan if it is necessary to pay benefits to members of the employees' retirement system whose benefits were reduced so that the employees' retirement system would receive a favorable letter of determination from the Internal Revenue Service as to qualification under the Internal Revenue Code. The plan must be a nonqualified and unfunded retirement plan within the meaning of the Internal Revenue Code and the related United States Treasury Regulations and Revenue Rulings. However, the nonqualified supplemental retirement plan will not be an eligible or ineligible state deferred compensation plan within the meaning of section 457 of the Internal Revenue Code. The plan must not permit an employee to defer payment of an amount of the employee's basic or regular compensation, increases in compensation or supplements of compensation such as bonuses or overtime. (b) The benefits provided pursuant to the nonqualified supplemental retirement plan must be paid from the general assets of the county or through such funding vehicle as may be permitted by the Internal Revenue Service with respect to nonqualified supplement retirement plans. (c) If the nonqualified supplemental retirement plan is established, the county executive must obtain a private letter ruling from the Internal Revenue Service with respect to the plan. **Sec. 33-61I. Termination of participation by a participating agency.** If a participating agency decides to stop participating in any retirement system plan, it must give written notice to the Chief Administrative Officer. The Chief Administrative Officer and the withdrawing agency must agree on a date for the withdrawal, and, to the extent applicable to the plan at issue, comply with Section 33-47(d)(12). Any transfer of assets resulting from the withdrawal must comply with Section 414(l) of the Internal Revenue Code. No assets may revert to a withdrawing agency unless the Internal Revenue Service approves the reversion. **Sec. 33-61J. Transfer of assets between trust funds of the retirement system.** To the extent permitted by the Internal Revenue Code and applicable guidance under the Internal Revenue Code, the County may transfer assets of the retirement system relating to an account or accrued benefit of a participant in trust-to-trust transfers between the trusts of the Employees' Retirement System and the Retirement Savings Plan to correct operational failures relating to such accounts or accrued benefits.