Berkeley Municipal Code Art. 6 Method and Time of Distribution

Distribution under this plan, shall, subject to Section 4.39.602, be made or commence after a reasonable administrative period following the occurrence of the event which occasions the distribution. 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 select:

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 paragraph 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.

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 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 or their deferred retirement date if they are still employed by the employer on their normal retirement date. (Ord. 6837-NS § 1 (part), 2005)

Distribution of the account balance of a participant, whose employment with the employer has terminated other than by death, shall be made within a reasonable time after termination. Except in the case of death of the participant, distribution shall commence within a reasonable time after the date specified by the participant (in accordance with procedures established by the committee). In no event shall distribution to such participant 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 (in accordance with procedures established by the committee). If a participant requests a delay beyond that date distribution shall commence no later than the participant’s required beginning date. (Ord. 6837-NS § 1 (part), 2005)

A. Death before required beginning date: if the participant dies before their required beginning date, the participant’s account balance shall be distributed to the participant’s beneficiary in accordance with the following rules:

1. To participant’s surviving spouse: if the participant’s surviving spouse is the participant’s designated beneficiary, distributions must begin on or before the later of the following: (i) the end of the calendar year following the calendar in which the participant died; or (ii) the end of the calendar year in which the participant would have attained age 70 1/2. Distribution may be made in a lump sum payment or in installments pursuant to Section 4.39.601.B that equal or exceed an annual amount determined by dividing the participant’s account balance by the spouse’s remaining life expectancy.

2. To participant’s other designated beneficiary: if the participant has designated a beneficiary who is not their surviving spouse, distributions must begin on or before the end of the calendar year following the calendar year in which the participant died. Distributions may be made in a lump sum payment or in installments pursuant to Section 4.39.601.B that equal or exceed an annual amount determined by dividing the participant’s account balance by the beneficiary’s remaining life expectancy.

3. If no designated beneficiary: if the participant has not designated a beneficiary, the participant’s entire account balance must be distributed by the end of the calendar year which contains the fifth anniversary of the date of the participant’s death.

B. Death on or after their required beginning date: if the participant dies on or after their required beginning date, the participant’s account balance shall be distributed beginning in the calendar year following the calendar year of the participant’s death in accordance with the following rules:

1. To participant’s surviving spouse: if the participant’s surviving spouse is the participant’s designated beneficiary, distributions may be made in a lump sum payment or in installments pursuant to Section 4.39.601.B that equal or exceed an annual amount determined by dividing the participant’s account balance by the longer of (i) the participant’s remaining life expectancy, or (ii) the spouse’s remaining life expectancy.

2. To participant’s designated beneficiary: if the participant has designated a beneficiary who is not their surviving spouse, distributions may be made in a lump sum payment or in installments pursuant to Section 4.39.601.B that equal or exceed an annual amount determined by dividing the participant’s account balance by the longer of (i) the participant’s remaining life, or (ii) the beneficiary’s remaining life expectancy.

3. If no designated beneficiary: if the participant has not designated a beneficiary, distributions may be made in a lump sum payment or in installments pursuant to Section 4.39.601.B that equal or exceed an annual amount determined by dividing the participant’s account by the participant’s remaining life expectancy.

4. All calculations made under this section shall be in accordance with applicable Treasury regulations. (Ord. 7585-NS § 3, 2017)

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 4.39.601 and 4.39.603. (Ord. 7265-NS § 1, 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 4.39.605, 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 4.39.605. 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. 7265-NS § 2, 2012)

Notwithstanding any provision of the Plan to the contrary, the Employer may permit a Participant whose retirement has not occurred pursuant to Sections 501 through 504 of this Chapter 4.39 to transfer as a direct plan to plan transfer, any portion of the Participant’s account to PERS, or any other defined benefit plan in which the Participant is eligible to participate and which accepts the transfer, for the purpose of purchasing service credits; provided, however, that prior to permitting such transfer, the Employer shall reasonably determine that PERS or such other defined benefit plan shall: (a) accept such a transfer; (b) subject such transferred amounts to withdrawal and distribution restrictions so that the Participant may not withdraw such transferred amounts prior to retirement, death, disability, or separation from service; and, (c) hold such transferred amounts for the benefit of the Participant as elective contributions on a fully vested and nonforfeitable basis and credit applicable interest to such transferred amounts. (Ord. 7265-NS § 3, 2012)