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HomeMy WebLinkAbout2006 02 27 Regular Item 302 Resolution 2006-13 Benefit Pension Plan COMMISSION AGENDA ITEM 302 Regular X February 27, 2006 Regular Meeting MGR. /DEPT. Authorization REQUEST: City Manager requesting the City Commission to approve Resolution No. 2006-13, amending the City of Winter Springs Defined Benefit Pension Plan to provide for a voluntary election of distributions from the plan where the present value does not exceed $3,500. PURPOSE: To obtain Commission approval of Resolution No. 2006-13, amending the City of Winter Springs Defined Benefit Pension Plan to provide for a voluntary election of distributions from the plan where the present value does not exceed $3,500. CONSIDERATIONS: On January 31, 2006 the Board of Trustees voted to recommend the City Commission approve an amendment to the City of Winter Springs Defined Benefit Pension Plan regarding mandatory plan distributions. This amendment was necessary in order to bring the plan in compliance with IRS regulations on mandatory distributions. In 2005, the Internal Revenue Service issued Notice 2005-5 relating to the automatic rollover provisions in section 401(a)(31)(B) ofthe Internal Revenue Code. This section requires that mandatory distributions of more than $1,000 from a qualified retirement plan be paid in a direct rollover to an individual retirement account (IRA) at a designated financial institution, if the distributee does not make an election to have the distribution paid in another manner. The plan administrator is required to notify each participant to whom a mandatory distribution is going to be made that, unless the participant makes an affirmative election, the distribution will automatically be paid to an IRA in a direct rollover. This means that if a participant does not submit an election or cannot be located, the plan administrator must set up an IRA in the participant's name at a bank or other financial - institution. To avoid the automatic IRA requirements of section 401(a)(31) and associated administrative burden, staff and the Pension Attorney recommend that all mandatory distributions in excess of $1,000 be replaced with voluntary elections. In this manner, the participant or beneficiary would have to elect to receive a lump sum distribution, and ifhe or she does not make such an election, the benefit would be paid in monthly installments at normal or early retirement age. The proposed plan amendment implements this recommendation for all mandatory distributions that are greater than $1,000 but do not exceed $3,500. FUNDING: Distributions would be funded from contributions to the Pension Fund. RECOMMENDATION: The City Manager recommends the Commission take the following action: Approve Resolution 2006-13 amending the City of Winter Springs Defined Benefit Pension Plan to provide for a voluntary election of distributions where the present value does not exceed $3,500. ATTACHMENTS: 1. Memo from James W. Linn, Lewis, Longman & Walker, P.A. 2. Resolution 2006-13. COMMISSION ACTION: LEWIS,LONGMAN & WALKER, PA ATTORNEYS AT LAW "HELPING SHAPE FLORIDA'S FUTURE@ REPLY To: TALLAHASSEE www.llw-Iaw.com MEMORANDUM TO: Ronald W. McLemore, City Manager City of Winter Springs FROM: James W. Linn DATE: February 2,2006 RE: Defined Benefit Retirement Plan -- Amendment to Comply with IRS Regulations on Mandatory Distributions Background: In 2005, the U.S. Internal Revenue Service issued Notice 2005-5 relating to the automatic rollover provisions in section 401(a)(31)(B) of the Internal Revenue Code (IRC). This section requires that mandatory distributions of more than $1,000 from a qualified retirement plan be paid in a direct rollover to an individual retirement account (IRA) at a designated financial institution -- if the distributee does not make an election to have the distribution paid in another manner. The plan administrator is required to notify each participant to whom a mandatory distribution is going to be made that, unless the participant makes an affirmative election, the distribution will automatically be paid to an IRA in a direct rollover. The term "mandatory distribution" refers to any distribution that is made without the participant's consent and before the participant attains the later of age 62 or normal retirement age. A distribution to a surviving spouse or alternative payee is not a mandatory distribution for purposes of the automatic rollover requirements of ~401(a)(31)(B). Sections 411(a)(1l) and 417(e) of the Code permit qualified plans to include provisions allowing for the immediate distribution of a separating participant's benefit without the consent of the participant where the present value of the nonforfeitable accrued benefit is less than $5,000. The City of Winter Springs defined benefit plan provides for a mandatory distribution whenever the present value of the benefit is less the $3,500. Notice 2005-5 states that the automatic rollover requirements of ~ 401(a)(31) do apply to state or local government plans, including defined benefit plans established under ~ 401(a) and deferred compensation plans established under ~ 457(b). Consequently, to the extent that a government plan provides for mandatory distribution of benefit amounts below a specified amount, or a mandatory refund of pre-tax member contributions upon separation prior to vesting, such distribution would be subject to the automatic rollover provisions of ~ 401(a)(31)(B). This Bradenton 1001 3rd Avenue West Suite 670 Bradenton, FL 34205 (941) 708-4040 Fax: (941) 708-4024 Jacksonville 9428 Baymeadows Road Suite 625 Jacksonville, FL 32256 (904) 737-2020 Fax: (904) 737-3221 Tallahassee Post Office Box 10788 (32302) 125 South Gadsden Street, Suite 300 Tallahassee, FL 32301 (850) 222-5702 Fax: (850) 224-9242 West Palm Beach 1700 Palm Beach Lakes Blvd. Suite 1000 West Palm Beach, FL 33401 (561) 640-0820 Fax: (561) 640-8202 February 2,2006 Page 2 means that if a participant does not submit an election or cannot be located, the plan administrator must set up an IRA in the participant's name at a bank or other financial institution. Plan Amendment - To avoid the automatic IRA requirements of section 401(a)(31), many pension experts recommend that all mandatory distributions in excess of $1 ,000 be replaced with voluntary elections. In this manner, the participant or beneficiary would have to elect to receive a lump sum distribution, and if he or she does not make such an election, the benefit would be paid in monthly installments at normal or early retirement age. The proposed plan amendment implements this recommendation for all mandatory distributions that are greater than $1,000 but do not exceed $3,500. Please call me if you have any questions concerning these matters. JWL/es RESOLUTION NO. 2006-13 A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF WINTER SPRINGS, FLORIDA, AMENDING THE DEFINED BENEFIT PLAN AND TRUST FOR EMPLOYEES OF THE CITY OF WINTER SPRINGS; AMENDING ARTICLE V, SECTIONS 6.02, 8.03, 9.01, 10.01, 10.02, AND 10.03, TO PROVIDE FOR A VOLUNTARY ELECTION OF DISTRIBUTIONS WHERE THE PRESENT VALUE DOES NOT EXCEED $3,500; PROVIDING FOR CONFLICTS; PROVIDING FOR SEVERABILITY; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City's retirement program for employees contains several provisions that provide for the automatic payment of distributions where the present value does not exceed $3,500; and WHEREAS, the U.S. Treasury Department has adopted regulations concernmg mandatory distributions in excess of$l,OOO; and WHEREAS, certain amendments to the City's retirement program are needed to comply with the U.S. Treasury Department has adopted regulations; NOW, THEREFORE, BE IT RESOLVED by the City Commission of Winter Springs as follows: Section 1. Article V, Section 6.02, of the Defined Benefit Plan and Trust for Employees of the City of Winter Springs is hereby amended to read as follows: 6.02 Payment of Early Retirement Pension. (A) If the present value of the Participant's early retirement pension does not exceed $1 ,OOO~, the Trustee will automatically pay the early retirement pension in lump sum, as soon as administratively practicable after the Participant's Separation from Service or, if later, after the Participant satisfies the eligibility requirements for an early retirement pension. If the present value of the Participant's early retirement pension is greater than $1,000 but does not exceed $3500, the Trustee, upon receipt of the Participant's written election to receive a lump sum distribution. will pay the early retirement pension in lump sum. as soon as administratively practicable after the Participant's Separation from Service or. if later. after the Participant satisfies the eligibility requirements for an early retirement pension. City of Winter Springs Resolution 2006-13 Page 1 of5 (B) If the present value of the Participant's early retirement pension exceeds $3,500, the Trustee will pay the early retirement pension in the form and as of the date elected by the Participant. A participant may elect to commence his early retirement pension as of the first day of any month during the period he is eligible for the early retirement pension and after he has separated from Service. If the Participant fails to designate a distribution date, then the Trustee will commence payment of the early retirement pension in accordance with Article X. Section 2. Article V, Section 8.03, of the Defined Benefit Plan and Trust for Employees of the City of Winter Springs is hereby amended to read as follows: 8.03 Payment of Deferred Vested Pension. (A) If the present value of the Participant's deferred vested pension does not exceed $1,000~, the Trustee will automatically pay the deferred vested pension in lump sum, as soon as administratively practicable following the Participant's Separation from Service. If the present value of the Participant's deferred vested pension is greater than $1,000 but does not exceed $3,500, the Trustee, upon receipt of the Participant's written election to receive a lump sum distribution, will pay the deferred vested pension in lump sum, as soon as administratively practicable after the Participant's Separation from Service. In no event may the distribution occur later than the 60th day following the close of the Plan Year in which the Participant attains Normal Retirement Age. (B) If the present value of the Participant's deferred vested pension exceeds $3,500, the Trustee will pay the deferred vested pension in the form elected by the Participant. A Participant may elect to commence his deferred vested pension after the Participant's Normal Retirement Date. If the Participant fails to elect a distribution date, then the Trustee will commence payment of the deferred vested pension in accordance with Article X. Section 3. Article V, Section 10.01, ofthe Defined Benefit Plan and Trust for Employees of the City of Winter Springs is hereby amended to read as follows: 10.01 Form of Benefit. Subject to the requirements of Section 10.02, the Retirement Committee will direct the Trustee to pay a Participant his Nonforfeitable Accrued Benefit in a form permitted under Section 10.05. Annuity payments will continue until the last scheduled payment coincident with or immediately preceding the date of the Participant's death or, if applicable, the date of his survivor's death. (A) Consent. A Participant must consent, in writing, to any distribution described in this Article X if the present value of the Participant's Nonforfeitable Accrued Benefit exceeds $1 ,OOO~, and the distribution commences prior to the Participant's attaining Normal Retirement Age. Furthermore, the Participant's spouse also must consent, in writing, to any distribution for which Section 10.02 requires the spouse's consent. For purposes of the consent requirements under this Article X, if the present value of the Participant's Nonforfeitable Accrued Benefit, at the time of any distribution, exceeds $1 ,OOO~, the Retirement Committee will treat that present value as exceeding $1 ,OOO~ for purposes of all subsequent Plan distributions to the Participant. City of Winter Springs Resolution 2006-13 Page 2 of 5 Section 4. Article V, Section 10.02, of the Defined Benefit Plan and Trust for Employees of the City of Winter Springs is hereby amended to read as follows: 10.02 Qualified Joint and Survivor Annuity. (A) Payment of Annuity Form. The Retirement Committee must direct the Trustee to distribute a married or unmarried Participant's Nonforfeitable Accrued Benefit in the form of a qualified joint and survivor annuity, unless the Participant makes a valid waiver election (described in Section 10.04) prior to the annuity starting date. If, as of the annuity starting date, the Participant is married, a qualified joint and survivor annuity is an immediate annuity payable for the life of the Participant and a survivor annuity payable for the remaining life of the Participant's surviving spouse which is 50% of the amount of the annuity payable during the life of the Participant. If, as of the annuity starting date, the Participant is not married, a qualified joint and survivor annuity is an immediate life annuity for the Participant. The qualified joint and survivor annuity will be the Actuarial Equivalent of the Participant's Nonforfeitable Accrued Benefit and will provide monthly payments. The Participant may elect to have annuity payments less frequently than monthly, but not less frequently than annually. (B) Present Value Not Greater Than $3,500. If the present value of the Participant's Accrued Benefit is not greater than $1.000~, the Trustee will automatically pay the Participant's pension in a lump sum, in lieu of a qualified joint and survivor annuity. If the present value of the Participant's Accrued Benefit is greater than $1,000 but does not exceed $3,500, the Trustee, upon receipt of the Participant's written election to receive a lump sum distribution, will pay the Participant's pension in lump sum, in lieu of a qualified ioint and survivor annuity. The distribution must occur on or before the annuity starting date. The consent requirements of this Article X do not apply to a Participant subject to this paragraph. Section 5. Article V, Section 10.03, of the Defined Benefit Plan and Trust for Employees of the City of Winter Springs is hereby amended to read as follows: 10.03 Commencement of Benefits. The Retirement Committee must direct the Trustee to commence distribution of benefits in accordance with this Section 10.03, subject to the mandatory distribution requirements of Section 10.06. (A) Distribution to Participant Who Separates from Service Before Normal Retirement Date. The Retirement Committee will direct the Trustee to commence distribution of the Participant's Nonforfeitable Accrued Benefit in accordance with Article VI, VII or VIII, whichever applies. (B) Distribution to Participant Who Separates from Service After Normal Retirement Date. The Retirement Committee will direct the Trustee to commence distribution to the Participant: (1) Present Value of Normal Retirement Pension Not Exceeding $1.000~. In lump sum, as soon as administratively practicable following the Participant's separation from Service, but not later than the 60th day following the close of the Plan Year in which that separation from Service occurs. City of Winter Springs Resolution 2006-13 Page 3 of5 (2) Present Value of Normal Retirement Pension Greater than $1,000 but Not in Excess of $3,500. In lump sum, as soon as administratively practicable following the receipt of the Participant's election to receive a lump sum distribution and separation from Service. (J.2) Present Value of Normal Retirement Pension Exceeds $3,500. In the form and at the time elected by the Participant, as permitted under this Article X. The Participant may elect to commence distribution as soon as administratively practicable following separation from Service or as of the first day of any subsequent month. (C) Failure of Participant To Make an Election. Where the Participant has the right to elect the form and timing of his pension, but has failed to make an election, the Retirement Committee will direct the Trustee to commence distribution of the Participant's pension, in the form prescribed by Section 10.02, as soon as administratively practicable following the later of: (1) the Participant's attainment of Normal Retirement Age; or (2) the Participant's separation from Service. If, pursuant to the Plan, the latest distribution date available to the Participant occurs earlier than the mandatory distribution date described in this Section 10.03(C), the Retirement Committee will satisfy this distribution requirement by purchasing, as soon as administratively practicable after the latest applicable distribution date, a deferred Nontransferable Annuity which will commence the Participant's pension at the mandatory distribution date. (D) Notice to Participant. At least 30 days before the Participant's annuity starting date, the Retirement Committee must provide a benefit notice to a Participant who is eligible to make a distribution election under the Plan. The benefit notice must explain the optional forms of benefit in the Plan, including the material features and relative values of those options, and the Participant's right to defer distribution until he attains Normal Retirement Age. (E) Death of the Participant. If the Participant had commenced distribution prior to his death, the Retirement Committee will direct the Trustee to make distribution to the Participant's Beneficiary in accordance with the distribution method in effect at the time of death. If the deceased Participant had not commenced distribution, the Retirement Committee will direct the Trustee to distribute the Participant's death benefit in accordance with paragraph (1) or paragraph (2), whichever applies, subject to the requirements of Article IX. (1) Present Value of Death Benefit Does Not Exceed $1,OOO~. In lump sum, as soon as administratively practicable following the date on which the Retirement Committee receives notification of or otherwise confirms the Participant's death. (2) Present Value of Death Benefit is Greater than $1,000 But Does Not Exceed $3,500. In lump sum, as soon as administratively practicable following the date on which the Retirement Committee receives notification of or otherwise confirms the Participant's death., and receives the Beneficiary's written election to receive a lump sum distribution. (J.2) Present Value of Death Benefit Exceeds $3,500. In the form and at the time elected by the Participant or, if applicable by the Beneficiary, as permitted under this Article X. Unless otherwise elected by the Participant and to the extent permitted under City of Winter Springs Resolution 2006-13 Page 4 of 5 Section 10.06, a Beneficiary may elect to commence distribution of the Participant's death benefit as of the first day of any month following the date the Retirement Committee receives notification of or otherwise confirms the Participant's death. In addition to the other forms of distribution available under this Article X, and to the extent permitted under Section 10.06, a Beneficiary may elect to receive the Participant's death benefit in monthly, quarterly or annual installments over a 5 year period, unless the Participant elected otherwise. In the absence of an election, the Retirement Committee will direct the Trustee to distribute the Participant's death benefit in five annual installment payments commencing as soon as administratively practicable following the end of the Plan Year that the Retirement Committee receives notification of or otherwise confirms the Participant's death. Section 6. That this resolution shall supersede any and all conflicting provisions of any previously adopted resolutions. Section 7. That should any section or prOVISIOn of this resolution or any portion thereof, any paragraph, sentence, or word be declared by a court of competent jurisdiction to be invalid, such decision shall not affect the validity of the remainder hereof as a whole or part thereof other than the part declared to be invalid. Section 8. That this resolution shall take effect upon adoption. PASSED and ADOPTED this 27 day of February, 2006. John F. Bush, Mayor ATTEST: Andrea Lorenzo-Luaces, City Clerk City of Winter Springs Resolution 2006-13 Page 5 of 5 RESOLUTION NUMBER 2006-13 A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF WINTER SPRINGS, FLORIDA, AMENDING THE DEFINED BENEFIT PLAN AND TRUST FOR EMPLOYEES OF THE CITY OF WINTER SPRINGS; AMENDING ARTICLE V, SECTIONS 6.02, 8.03, 9.01, 10.01, 10.02, AND 10.03, TO PROVIDE FOR A VOLUNTARY ELECTION OF DISTRIBUTIONS WHERE THE PRESENT VALUE DOES NOT EXCEED $3,500; PROVIDING FOR CONFLICTS; PROVIDING FOR SEVERABILITY; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City's retirement program for employees contains several provisions that provide for the automatic payment of distributions where the present value does not exceed $3,500; and WHEREAS, the u.s. Treasury Department has adopted regulations concernmg mandatory distributions in excess of $1 ,000; and WHEREAS, certain amendments to the City's retirement program are needed to comply with the u.s. Treasury Department has adopted regulations; NOW, THEREFORE, BE IT RESOLVED by the City Commission of Winter Springs as follows: Section 1. Article V, Section 6.02, of the Defined Benefit Plan and Trust for Employees of the City of Winter Springs is hereby amended to read as follows: 6.02 Payment of Early Retirement Pension. (A) If the present value of the Participant's early retirement pension does not exceed $1,000, the Trustee will automatically pay the early retirement pension in lump sum, as soon as administratively practicable after the Participant's Separation from Service or, if later, after the Participant satisfies the eligibility requirements for an early retirement pension. If the present value of the Participant's early retirement pension is greater than $1,000 but does not exceed $3,500, the Trustee, upon receipt of the Participant's written election to receive a lump sum distribution, will pay the early retirement pension in lump sum, as soon as administratively practicable after the Participant's Separation from Service or, if later, after the Participant satisfies the eligibility requirements for an early retirement pension. City of Winter Springs Resolution 2006-13 Page 10f5 (B) If the present value of the Participant's early retirement pension exceeds $3,500, the Trustee will pay the early retirement pension in the form and as of the date elected by the Participant. A participant may elect to commence his early retirement pension as of the first day of any month during the period he is eligible for the early retirement pension and after he has separated from Service. If the Participant fails to designate a distribution date, then the Trustee will commence payment of the early retirement pension in accordance with Article X. Section 2. Article V, Section 8.03, of the Defined Benefit Plan and Trust for Employees of the City of Winter Springs is hereby amended to read as follows: 8.03 Payment of Deferred Vested Pension. (A) If the present value of the Participant's deferred vested pension does not exceed $1,000, the Trustee will automatically pay the deferred vested pension in lump sum, as soon as administratively practicable following the Participant's Separation from Service. If the present value of the Participant's deferred vested pension is greater than $1,000 but does not exceed $3,500, the Trustee, upon receipt of the Participant's written election to receive a lump sum distribution, will pay the deferred vested pension in lump sum, as soon as administratively practicable after the Participant's Separation from Service. In no event may the distribution occur later than the 60th day following the close of the Plan Year in which the Participant attains Normal Retirement Age. (B) If the present value of the Participant's deferred vested pension exceeds $3,500, the Trustee will pay the deferred vested pension in the form elected by the Participant. A Participant may elect to commence his deferred vested pension after the Participant's Normal Retirement Date. If the Participant fails to elect a distribution date, then the Trustee will commence payment of the deferred vested pension in accordance with Article X. Section 3. Article V, Section 10.01, of the Defined Benefit Plan and Trust for Employees of the City of Winter Springs is hereby amended to read as follows: 10.01 Form of Benefit. Subject to the requirements of Section 10.02, the Retirement Committee will direct the Trustee to pay a Participant his Nonforfeitable Accrued Benefit in a form permitted under Section 10.05. Annuity payments will continue until the last scheduled payment coincident with or immediately preceding the date of the Participant's death or, if applicable, the date of his survivor's death. (A) Consent. A Participant must consent, in writing, to any distribution described in this Article X if the present value of the Participant's Nonforfeitable Accrued Benefit exceeds $1,000, and the distribution commences prior to the Participant's attaining Normal Retirement Age. Furthermore, the Participant's spouse also must consent, in writing, to any distribution for which Section 10.02 requires the spouse's consent. For purposes of the consent requirements under this Article X, if the present value of the Participant's Nonforfeitable Accrued Benefit, at the time of any distribution, exceeds $1,000, the Retirement Committee will treat that present value as exceeding $1,000 for purposes of all subsequent Plan distributions to the Participant. City of Winter Springs Resolution 2006-13 Page 2 of5 Section 4. Article V, Section 10.02, of the Defined Benefit Plan and Trust for Employees of the City of Winter Springs is hereby amended to read as follows: 10.02 Qualified Joint and Survivor Annuity. (A) Payment of Annuity Form. The Retirement Committee must direct the Trustee to distribute a married or unmarried Participant's Nonforfeitable Accrued Benefit in the form of a qualified joint and survivor annuity, unless the Participant makes a valid waiver election (described in Section 10.04) prior to the annuity starting date. If, as of the annuity starting date, the Participant is married, a qualified joint and survivor annuity is an immediate annuity payable for the life of the Participant and a survivor annuity payable for the remaining life of the Participant's surviving spouse which is 50% of the amount of the annuity payable during the life of the Participant. If, as of the annuity starting date, the Participant is not married, a qualified joint and survivor annuity is an immediate life annuity for the Participant. The qualified joint and survivor annuity will be the Actuarial Equivalent of the Participant's Nonforfeitable Accrued Benefit and will provide monthly payments. The Participant may elect to have annuity payments less frequently than monthly, but not less frequently than annually. (B) Present Value Not Greater Than $3,500. If the present value ofthe Participant's Accrued Benefit is not greater than $1,000, the Trustee will automatically pay the Participant's pension in a lump sum, in lieu of a qualified joint and survivor annuity. If the present value of the Participant's Accrued Benefit is greater than $1,000 but does not exceed $3,500, the Trustee, upon receipt of the Participant's written election to receive a lump sum distribution, will pay the Participant's pension in lump sum, in lieu of a qualified joint and survivor annuity. The distribution must occur on or before the annuity starting date. The consent requirements of this Article X do not apply to a Participant subject to this paragraph. Section 5. Article V, Section 10.03, of the Defined Benefit Plan and Trust for Employees of the City of Winter Springs is hereby amended to read as follows: 10.03 Commencement of Benefits. The Retirement Committee must direct the Trustee to commence distribution of benefits in accordance with this Section 10.03, subject to the mandatory distribution requirements of Section 10.06. (A) Distribution to Participant Who Separates from Service Before Normal Retirement Date. The Retirement Committee will direct the Trustee to commence distribution of the Participant's Nonforfeitable Accrued Benefit in accordance with Article VI, VII or VIII, whichever applies. (B) Distribution to Participant Who Separates from Service After Normal Retirement Date. The Retirement Committee will direct the Trustee to commence distribution to the Participant: (1) Present Value of Normal Retirement Pension Not Exceeding $1,000. In lump sum, as soon as administratively practicable following the Participant's separation from Service, but not later than the 60th day following the close of the Plan Year in which that separation from Service occurs. City of Winter Springs Resolution 2006-13 Page 3 of5 (2) Present Value of Normal Retirement Pension Greater than $1,000 but Not in Excess of $3,500. In lump sum, as soon as administratively practicable following the receipt of the Participant's election to receive a lump sum distribution and separation from Service. (3) Present Value of Normal Retirement Pension Exceeds $3,500. In the form and at the time elected by the Participant, as permitted under this Article X. The Participant may elect to commence distribution as soon as administratively practicable following separation from Service or as of the first day of any subsequent month. (C) Failure of Participant To Make an Election. Where the Participant has the right to elect the form and timing of his pension, but has failed to make an election, the Retirement Committee will direct the Trustee to commence distribution of the Participant's pension, in the form prescribed by Section 10.02, as soon as administratively practicable following the later of: (1) the Participant's attainment of Normal Retirement Age; or (2) the Participant's separation from Service. If, pursuant to the Plan, the latest distribution date available to the Participant occurs earlier than the mandatory distribution date described in this Section 10.03(C), the Retirement Committee will satisfy this distribution requirement by purchasing, as soon as administratively practicable after the latest applicable distribution date, a deferred Nontransferable Annuity which will commence the Participant's pension at the mandatory distribution date. (D) Notice to Participant. At least 30 days before the Participant's annuity starting date, the Retirement Committee must provide a benefit notice to a Participant who is eligible to make a distribution election under the Plan. The benefit notice must explain the optional forms of benefit in the Plan, including the material features and relative values of those options, and the Participant's right to defer distribution until he attains Normal Retirement Age. (E) Death of the Participant. If the Participant had commenced distribution prior to his death, the Retirement Committee will direct the Trustee to make distribution to the Participant's Beneficiary in accordance with the distribution method in effect at the time of death. If the deceased Participant had not commenced distribution, the Retirement Committee will direct the Trustee to distribute the Participant's death benefit in accordance with paragraph (1) or paragraph (2), whichever applies, subject to the requirements of Article IX. (1) Present Value of Death Benefit Does Not Exceed $1,000. In lump sum, as soon as administratively practicable following the date on which the Retirement Committee receives notification of or otherwise confirms the Participant's death. (2) Present Value of Death Benefit is Greater than $1,000 But Does Not Exceed $3,500. In lump sum, as soon as administratively practicable following the date on which the Retirement Committee receives notification of or otherwise confirms the Participant's death., and receives the Beneficiary's written election to receive a lump sum distribution. City of Winter Springs Resolution 2006-13 Page 4 of5 (3) Present Value of Death Benefit Exceeds $3,500. In the form and at the time elected by the Participant or, if applicable by the Beneficiary, as permitted under this Article X. Unless otherwise elected by the Participant and to the extent permitted under Section 10.06, a Beneficiary may elect to commence distribution of the Participant's death benefit as of the first day of any month following the date the Retirement Committee receives notification of or otherwise confirms the Participant's death. In addition to the other forms of distribution available under this Article X, and to the extent permitted under Section 10.06, a Beneficiary may elect to receive the Participant's death benefit in monthly, quarterly or annual installments over a 5 year period, unless the Participant elected otherwise. In the absence of an election, the Retirement Committee will direct the Trustee to distribute the Participant's death benefit in five annual installment payments commencing as soon as administratively practicable following the end of the Plan Year that the Retirement Committee receives notification of or otherwise confirms the Participant's death. Section 6. That this resolution shall supersede any and all conflicting provisions of any previously adopted resolutions. Section 7. That should any section or prOVlSlon of this resolution or any portion thereof, any paragraph, sentence, or word be declared by a court of competent jurisdiction to be invalid, such decision shall not affect the validity of the remainder hereof as a whole or part thereof other than the part declared to be invalid. Section 8. That this resolution shall take effect upon adoption. PASSED and ADOPTED this 27th day of February, 2006. /7 17 ;)(M~ . Bush, Mayor City of Winter Springs Resolution 2006-13 Page 5 of5