Berkeley Municipal Code Art. 6 Method and Time of Distribution

Distribution under this plan shall, subject to Section 4.38.602, be made or commence after a reasonable administrative period following the occurrence of the event which occasions the distribution or a change in the method of receipt thereof, but no later than sixty days after the close of the plan year in which the participant reaches normal retirement date, or if the participant continues in employment beyond normal retirement date, the year in which such participant dies or retires. Distribution shall be made by the trustee in accordance with whichever of the following methods or combination thereof the participant, in their sole discretion, shall elect.

A. One lump sum payment;

B. Cash payments in approximately equal monthly, quarterly, semi-annual or annual installments over a period of years certain which period may be based on but not exceed the life expectancy of the participant or of the participant and the participant’s beneficiary, but shall, in any event, be subject to the following limitation:

If the amount to be distributed each year under subsection B is based upon the life expectancy of either the participant or the participant and the beneficiary, the amount to be distributed each year must at least be equal to the quotient obtained by dividing the participant’s account balance at the beginning of the year by the applicable life expectancy or expectancies. The life expectancies shall be determined from tables set forth in IRS Regulation 1.401(a)(9)-9, as now in effect and as amended from time to time.

Effective for distributions on and after January 1, 2002, the plan will apply the minimum distribution requirements of Section 401(a)(9) of the code in accordance with the final regulations under Section 401(a)(9), notwithstanding any other provision of the plan to the contrary.

If the participant makes no selection of the method and timing of distribution, the account balance shall be paid in one lump sum at their normal retirement date. (Ord. 7263-NS § 1, 2012)

Distribution of the account balance of a participant, whose participation hereunder has terminated other than by death, shall be made within a reasonable time after termination. In no event shall distribution commence later than 60 days after the close of the plan year in which occurs the participant’s normal retirement date, unless the participant requests a delay beyond that date. Effective January 1, 2003, if a participant requests a delay beyond that date distribution shall commence no later than the later of (1) the deferred retirement date or, (2) the April 1 following the calendar year in which such participant attains age 70½. (Ord. 7583-NS § 4, 2017)

A. If the participant dies before benefits have commenced and has designated a beneficiary in accordance with Section 4.36.506, the beneficiary may select a method of distribution in accordance with the provisions of Sections 4.36.601A or 4.36.601B and 4.36.602. If the beneficiary is not the spouse of the participant, payments shall commence within one year of the participant’s date of death or shall be paid in one lump sum within five years of the date of death.

B. If the participant dies after benefits have commenced, and was married at the date of death or had designated a beneficiary in accordance with Section 4.36.506, payments shall continue to the beneficiary as provided under the method of Section 4.36.601 which was selected by the participant.

C. If an unmarried participant dies at any time before such participant’s entire interest has been distributed, and no beneficiary has been designated under Section 4.36.506, the remaining interest shall be distributed in one lump sum within five years of the date of death.

Any death benefits payable under this section shall be paid to the beneficiary in accordance with Section 4.36.601A. or 4.36.601B., but over a period not exceeding the life expectancy of such beneficiary. (Ord. 6747-NS § 1, 2003)

For payments made on or after December 1, 2008, if, prior to commencement of benefits, a participant’s account is not greater than one thousand dollars (or such other amount as prescribed by the Secretary of Treasury), distribution shall be paid in one lump sum after a reasonable administrative period following the event which occasions the distribution in lieu of other forms of benefits provided in Sections 4.36.601 and 4.36.603. (Ord. 7263-NS § 2, 2012)

A. A distributee may elect, at the time and in the manner prescribed by the committee, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover.

B. Effective January 1, 2008, in addition to the election set forth in subsection A above, a distributee may elect, at the time and in the manner prescribed by the committee, to have any portion of an eligible rollover distribution paid directly to a Roth IRA specified by the distributee in a direct rollover in accordance with the provisions of Code section 408A(e). Any such distribution to a Roth IRA shall comply with the provisions of Code section 402(c). In addition, the limitation on adjusted gross income set forth in the following paragraph shall apply for distributions to a Roth IRA on or after January 1, 2008, and prior to January 1, 2010.

In accordance with Code section 408A(c)(3)(B) (as in effect and applicable to distributions after December 31, 2007 and to tax years beginning prior to January 1, 2010), a rollover to a Roth IRA shall only be allowed if, for the tax year of the distribution to which the rollover relates, the distributee’s adjusted gross income does not exceed $100,000 and the distributee is not a married individual filing a separate return. The limitation in the foregoing sentence shall not apply for distributions on or after January 1, 2010.

C. For purposes of this Section 4.36.605, the following definitions apply:

1. An "eligible rollover distribution" is any distribution of all or any portion of the balance to the credit of the distributee except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee’s beneficiary, or for a specified period of 10 years or more; any distribution to the extent such distribution is required under Code Section 401(a)(9); and the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities).

2. An "eligible retirement plan" is an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), an annuity plan described in Code Section 403(a), an annuity contract described in Code Section 403(b), and an eligible plan under Code Section 457(b) which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state or a qualified trust described in Code Section 401(a), that accepts the distributee’s eligible rollover distribution.

3. A "distributee" includes a participant or former participant, a participant’s or former participant’s surviving spouse and a participant’s or former participant’s spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Code Section 414(p).

Effective January 1, 2007, a "distributee" shall also include a nonspouse beneficiary. A nonspouse beneficiary may elect a direct trustee to trustee transfer to an individual retirement plan ("IRA") that is established for the purpose of receiving the distribution on behalf of a designated beneficiary who is a nonspouse beneficiary. The IRA must be established in a manner that identifies it as an IRA with respect to a deceased individual and also identifies the deceased individual and the beneficiary. Any such transfer by a nonspouse beneficiary shall be subject to all the conditions and restrictions specified in this Section 4.36.605. Such a transfer shall also comply with the rules of Code Section 402(c)(11) and with all other applicable rules and regulations governing such transfers that are issued by the Internal Revenue Service.

4. A "direct rollover" is a payment by the plan to the eligible retirement plan specified by the distributee. (Ord. 7263-NS § 3, 2012)