§ 18-581. Deferred Retirement Option Plan (DROP).

(a)

Definitions. As used in this division:

The term "member" shall mean an active employee in the classified service of the city's fire department, as defined in C.R.S., section 31-30.5-102(4), who was hired before April 8, 1978, and who has not elected to become covered under the provisions of the statewide plan pursuant to C.R.S., section 31-31-701(2).

The term "board" shall mean the board of trustees created by C.R.S., section 31-30.5-202(3)(a).

(b)

Eligibility. The enter the deferred retirement option plan, a member must have completed at least twenty-five (25) years of active service, must have attained at least the age of fifty (50) years, and must be eligible to retire pursuant to C.R.S., section 31-30.5-604.

(c)

Member's decision to enter DROP; members decision regarding length of participation in the DROP. The decision to enter the deferred retirement option plan shall be each member's decision and responsibility. The decision regarding how long the member will participate in the DROP shall also be each member's decision and responsibility, provided no member shall be in the DROP more than five years and no member may participate in the DROP more than once. However, members who filed an agreement prior to the extension of the plan to five (5) years and who have not yet separated from employment shall be allowed to file an agreement amending their date of termination to no later than the fifth anniversary of their participation in DROP.

(d)

Agreement with board. To enter the DROP, a member must execute an irrevocable agreement with the board. The agreement shall require the member to terminate employment no later than the date declared by the member. The date shall be no later than the fifth anniversary of participation in DROP. The agreement shall also acknowledge that no disbursement of DROP funds shall occur absent the separation or death of the member.

(e)

Members who enter DROP are retired; pension payments. The members who enter the DROP shall continue to be active members of the Denver fire department for the duration of the period specified in their agreements with the board. Upon commencement of participation in the DROP, the retirement benefit, the rank escalator benefit, and the employee contribution shall be paid into the deferred retirement option plan account on behalf of the employee. In no case shall the employer contribution be used to fund the DROP. As is the case with the employee contributions made to the plan before a member participates in DROP, the employee contribution to the DROP account shall be deposited by the employer in lieu of contributions by employees in accordance with Internal Revenue Code section 414(h)(2).

(f)

Interruptions in service while in DROP. For interruptions in service while in DROP that occur on or after August 26, 1998, if a member's service with the department is interrupted for any reason, the date of his or her termination of employment shall remain the date set forth in his or her agreement. For interruptions in service while in DROP that occur before August 26, 1998, if the member's participation in the DROP is interrupted by military service or job-related disability, upon reestablishment of membership, provided the member has not received any distribution from his DROP account, the member shall be immediately eligible for resumption of participation for the balance of the period specified in the irrevocable agreement. Other than the above-described types of interruptions, the period specified in the irrevocable agreement shall continue to run in all other cases for interruptions in service while in DROP that occur before August 26, 1998.

(g)

Employee status while in DROP. Upon commencement of participation in DROP, the member shall continue to be considered to be an employee eligible to receive promotions, subject to department and civil service rules and regulations; the member shall receive all benefits and seniority just as any other active employee.

(h)

Retirement benefit established at time of entry into DROP. DROP participants shall have full voting rights on the retirement system. DROP participants shall earn no additional service credit or additional benefits, and the rank escalator benefit shall be established and calculated by utilizing the rank and grade held by a member at the time of the member's commencement of participation in DROP.

(i)

Investment of DROP funds. The DROP assets shall be held in trust for investment purposes as part of the member's self-directed investments fund. The FPPA shall be authorized to charge each account a reasonable fee approved by the FPPA for the administration of DROP. The FPPA is authorized to adopt rules and regulations governing DROP, so long as they are not in conflict with this division or the Charter. The FPPA shall not charge the city for any costs in connection with the DROP.

(j)

No charges on DROP account. The deferred retirement option plan account shall not be subject to any fees or charges of any kind for any purpose, except as provided in subsection 18-581(i).

(k)

Termination of participation in DROP.

(1)

A member of the DROP who terminates employment or reaches the limit for participation as established by the irrevocable agreement with the board shall become a retiree. For a member who becomes a retiree more than thirty (30) days before July 5, 2000, (the effective date of the expanded distribution options in subsections 18-581(k)(1)(a) through 18-581(k)(1)(f) below) the retiree shall receive, at the retiree's option, (1) a lump sum payment from the retiree's individual DROP account balance equal to its balance plus any accrued earnings or losses or (2) equal monthly installment payments from the retiree's individual DROP account balance over a period of no more than ten (10) years. At the end of the ten-year period, a final disbursement of remaining funds in the account shall be made. Beginning on July 5, 2000, an active or inactive member, including a retiree, shall be entitled to elect, within thirty (30) days prior to retirement or anytime during retirement, one (1) of the following distribution methods by executing, in writing, a DROP distribution payment option selection form as prescribed by the board and the FPPA.

a.

Deferral of any payment(s) from the account until a specified date. If a deferral of payment(s) is selected, the member shall elect one (1) of the following distribution methods. However, all distributions must start no later than April 1 of the year in which the member attains the age of seventy and one-half (70½);

b.

A lump sum distribution of the entire account balance;

c.

Periodic monthly payments for a designated amount until the balance of the DROP account has been entirely distributed;

d.

Periodic monthly payments for a designated period of years. FPPA will calculate the dollar amount of the member's periodic payment, so that the entire balance in the member's DROP account will have been distributed to the member by the end of the period selected by the member. This amount will be recalculated annually during April;

e.

Initial minimum required distribution. FPPA will calculate the dollar amount of the member's periodic payment based on the member's current DROP account balance, and in accordance with subsection 18-581(k)(2), termination of participation in DROP section; or

f.

Combination of a lump sum and periodic payments by designating an initial lump sum payment of a specified amount and a balance to be paid in a specified number of monthly payments of a specified dollar amount until the balance of the DROP account has been entirely distributed to the member.

(2)

Regardless of the form of payment the member chooses, the minimum distribution amount will be determined and made in accordance with Internal Revenue Code section 401(a)(9) and the regulations thereunder. The minimum distribution is recalculated by FPPA annually on the bases of the life expectancy of the member and the member's designated beneficiary, if applicable.

(3)

If the member dies before July 5, 2000, the member dies during the period of the member's participation in the DROP, and the member's designated beneficiary is the member's surviving spouse to whom the member was legally married at the time of the member's death, then the member's designated beneficiary shall receive at the beneficiary's option, a lump sum payment from the member's individual DROP account balance plus any accrued earnings or loses, or equal monthly installment payments from the member's individual DROP account balance for a period of no more than ten (10) years. At the end of the ten-year period, a final disbursement of remaining funds in the account shall be made. If the member dies on or after July 5, 2000, the member dies during the period of the member's participation in the DROP, and the member's designated beneficiary is the member's surviving spouse to whom the member was legally married at the time of the member's death, then the member's designated beneficiary shall be entitled to select one (1) of the distribution methods set forth in subsection (k)(1) of this section 18-581, subject to the provisions of this termination of participation in DROP section. If no selection is made by the beneficiary within thirty (30) days of the member's death, the lump sum payment method shall be utilized. Payment of DROP account proceeds shall be in addition to normal survivor benefits payable to survivors of retirees.

(4)

If a member or surviving spouse chooses and was qualified to choose a distribution method involving periodic payments under subsections (k)(1)c., (k)(1)d. or (k)(1)f., he or she may make a change in payment once a year during April; provided, that the benefit recipient shall contact the FPPA and the board in writing no later than March 1 of the year in which he or she wishes to make the change.

(5)

If the member dies during the period of participation and the member's named beneficiary is someone other than the member's surviving spouse to whom the member was legally married at the time of the member's death, then the named beneficiary shall receive a lump sum payment equal to the member's individual DROP account balance, including accrued earnings or losses. Payment of DROP account proceeds shall be in addition to normal survivor benefits payable to survivors of retirees.

(6)

If the member dies during the period of participation and the named beneficiary has not survived the member, the member's estate shall receive a lump sum payment equal to the member's individual DROP account balance plus accrued earnings or losses. Payment of DROP account proceeds shall be in addition to normal survivor benefits payable to survivors of retirees.

(7)

Except for assignments for child support purposes and writs of garnishment that are the result of a judgment taken for arrearages for child support or for child support debt, and except for court-approved martial agreements complying with state law under section 14-10-113(6), C.R.S., no portion of the account, before or after its order shall be held, seized, taken subjected to, detained, or levied on by virtue of any attachment, execution, injunction, writ, interlocutory or other order or decree, or process or proceeding whatsoever issued out of or by any court of this state for the payment or satisfaction, in whole or in part, of any debt, damage, claim, demand, or judgment against the city, member, or the beneficiary of the fund.

(l)

Compliance with IRS requirements. The board shall take all necessary steps to insure that the DROP is administered in full compliance with all applicable IRS rules and regulations, and in compliance with all determinations issued specifically to the old-hire fire fighter's DROP plan.

(m)

Required Internal Revenue Service provisions:

(1)

The plan year is the calendar year.

(2)

The benefits payable from this plan are subject to the applicable limitations on benefits imposed by the Internal Revenue Code section 415(b), which are incorporated herein by reference. Deposits to the DROP account are not considered contributions to a defined contribution plan subject to the limits of Internal Revenue Code section 415(c).

(Ord. No. 1112-01, § 3, 12-17-01; Ord. No. 1020-02, § 1, 12-9-02; Ord. No. 1021-02, § 2, 12-9-02; Ord. No. 1113-02, § 1, 12-30-02; Ord. No. 395-10, § 1, 8-2-10)