Delano Municipal Code Appendix B Required minimum

B.1

General Rules.

(a) Precedence and Effective Date. The requirements of this Section shall apply to any distribution of a Participant's interest and will take precedence over any inconsistent provisions of this Plan. Unless otherwise specified, the provisions of this Section apply to calendar years beginning after December 31, 2002.

(b) Requirements of Regulations Incorporated. All distributions required under this Section shall be determined and made in accordance with section 401(a)(9) of the Code, including the incidental death benefit requirement in section 401(a)(9)(G) of the Code, and the Treasury regulations thereunder.

(c) TEFRA § 242(b) Elections. Notwithstanding the other requirements of this Section to the contrary, distributions may be made under a designation made before January 1, 1984, in accordance with section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act.

B.2

Time and Manner of Distribution.

(a) Required Beginning Date. The Participant's entire interest must be distributed, or begin to be distributed, no later than the Participant's Required Beginning Date.

(b) Death of Participant Before Distributions Begin. If the Participant dies before distributions begin, the Participant's entire interest must be distributed, or begin to be distributed, no later than as follows:

(1) If the Participant's surviving Spouse is the Participant's sole Designated Beneficiary, then, except as provided in Section B.6 of this Appendix, distributions to the surviving Spouse must begin by December 31 of the calendar year immediately following the calendar year in which the Participant died, or by December 31 of the calendar year in which the Participant would have attained age 70½, if later.

(2) If the Participant's surviving Spouse is not the Participant's sole Designated Beneficiary, then, except as provided in Section B.6 of this Appendix, distributions to the Designated Beneficiary must begin by December 31 of the calendar year immediately following the calendar year in which the Participant died.

(3) If there is no Designated Beneficiary as of September 30 of the year following the year of the Participant's death, the Participant's entire interest must be distributed by December 31 of the calendar year containing the fifth anniversary of the Participant's death.

(4) If the Participant's surviving Spouse is the Participant's sole Designated Beneficiary and the surviving Spouse dies after the Participant but before distributions to the surviving Spouse are required to begin, this section B.2(b), other than section B.2(b)(1), will apply as if the surviving Spouse were the Participant.

For purposes of this section B.2(b) and section B.5, unless section B.2(b)(4) applies, distributions are considered to begin on the Participant's Required Beginning Date. If section B.2(b)(4) applies, distributions are considered to begin on the date distributions are required to begin to the surviving Spouse under section B.2(b)(1). If distributions under an annuity meeting the requirements of this Appendix commence to the Participant before the Participant's Required Beginning Date (or to the Participant's surviving Spouse before the date distributions are required to begin to the surviving Spouse under section B.2(b)(1)), the date distributions are considered to begin is the date distributions actually commence.

(c) Form of Distribution. Unless the Participant's interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the Required Beginning Date, as of the first Distribution Calendar Year distributions must be made in accordance with sections B.3, B.4 and B.5 of this Appendix. If the Participant's interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder must be made in accordance with the requirements of section 401(a)(9) of the Code and the Treasury regulations. Any part of the Participant's interest which is in the form of an individual account described in section 414(k) of the Code will be distributed in a manner satisfying the requirements of section 401(a)(9) of the Code and section 1.401(a)(9) of the Treasury regulations that apply to individual accounts.

B.3

Determination of Amount to be Distributed Each Year.

(a) General Annuity Requirements. If the Participant's interest is to be paid in the form of annuity distributions under the Plan, payments under the annuity must satisfy the following requirements:

(1) The annuity distributions must be paid in periodic payments made at uniform intervals not longer than one year;

(2) The distribution period must be over a life (or lives) or over a period certain not longer than the period described in section B.4 or B.5;

(3) Once payments have begun over a period, the period must not be changed except as otherwise permitted by the Plan in accordance with Q&A-13 of section 1.401(a)(9)-6 of the Treasury regulations;

(4) Payments will either be non-increasing or increase only as follows:

(A) By an annual percentage increase that does not exceed the annual percentage increase in a cost-of-living index that is based on prices of all items and issued by the Bureau of Labor Statistics;

(B) By a constant percentage of less than five percent per year, applied not less frequently than annually;

(C) To the extent of the reduction in the amount of the Participant's payments to provide for a survivor benefit, but only if there is no longer a survivor benefit because the Beneficiary whose life was being used to determine the distribution period described in subsection D. dies or is no longer the Participant's Beneficiary pursuant to a qualified domestic relations order;

(D) To provide a final payment upon the Participant's death not greater than the excess of the actuarial present value of the Participant's accrued benefit (within the meaning of section 411(a)(7) of the Code) calculated as of the Annuity Starting Date using the Applicable Interest Rate defined in section 5.11(d) of the Plan and the Applicable Mortality Table defined in section 5.11(e) of the Plan (or, if greater, the total amount of employee contributions) over the total of payments before the Participant's death;

(E) To allow a Beneficiary to convert the survivor portion of a joint and survivor annuity into a single sum distribution upon the Participant's death; or

(F) To pay increased benefits that result from a Plan amendment.

(b) Amount Required to be Distributed by Required Beginning Date and Later Payment Intervals. The amount that must be distributed on or before the Participant's Required Beginning Date (or, if the Participant dies before distributions begin, the date distributions are required to begin under section B.2(b)(1) or (2)) is the payment that is required for one payment interval. The second payment need not be made until the end of the next payment interval even if that payment interval ends in the next calendar year. All of the Participant's benefit accruals as of the last day of the first Distribution Calendar Year will be included in the calculation of the amount of the annuity payments for payment intervals ending on or after the Participant's Required Beginning Date.

(c) Additional Accruals After First Distribution Calendar Year. Any additional benefits accruing to the Participant in a calendar year after the first Distribution Calendar Year will be distributed beginning with the first payment interval ending in the calendar year immediately following the calendar year in which such benefit accrues.

B.4

Requirements For Annuity Distributions That Commence During Participant's Lifetime.

(a) Joint Life Annuities Where the Beneficiary Is Not the Participant's Spouse. If the Participant's interest is being distributed in the form of a joint and survivor annuity for the joint lives of the Participant and a non-Spouse Beneficiary, annuity payments to be made on or after the Participant's Required Beginning Date to the Designated Beneficiary after the Participant's death must not at any time exceed the applicable percentage of the annuity payment for such period that would have been payable to the Participant using the table set forth in Q&A-2(c)(2) of section 1.401(a)(9)-6 of the Treasury regulations; provided, however, that if the Participant's Annuity Starting Date precedes the year in which the Participant attains age seventy, the Participant's and non-Spouse Designated Beneficiary's age difference must be adjusted as set forth in Q&A-2(c)(1) in order to determine the applicable percentage as provided in the table set forth in Q&A-2(c)(2). If the form of distribution combines a joint and survivor annuity for the joint lives of the Participant and a non-Spouse Beneficiary and a period certain annuity, the requirement in the preceding sentence will apply to annuity payments to be made to the Designated Beneficiary after the expiration of the period certain.

(b) Period Certain Annuities. Unless the Participant's Spouse is the sole Designated Beneficiary and the form of distribution is a period certain and no life annuity, the period certain for an annuity distribution commencing during the Participant's lifetime may not exceed the applicable distribution period for the Participant under the Uniform Lifetime Table set forth in Q&A-2 of section 1.401(a)(9)-9 of the Treasury regulations for the calendar year that contains the Annuity Starting Date. If the Annuity Starting Date precedes the year in which the Participant reaches age seventy, the applicable distribution period for the Participant is the distribution period for age seventy under the Uniform Lifetime Table set forth in Q&A-2 of section 1.401(a)(9)-9 of the Treasury regulations plus the excess of seventy over the age of the Participant as of the Participant's birthday in the year that contains the Annuity Starting Date. If the Participant's Spouse is the Participant's sole Designated Beneficiary and the form of distribution is a period certain and no life annuity, the period certain may not exceed the longer of the Participant's applicable distribution period, as determined under this section B.4(b), or the joint life and last survivor expectancy of the Participant and the Participant's Spouse as determined under the Joint and Last Survivor Table set forth in Q&A-3 of section 1.401(a)(9)-9 of the Treasury regulations using the Participant's and Spouse's attained ages as of the Participant's and Spouse's birthdays in the calendar year that contains the Annuity Starting Date.

B.5

Requirements For Minimum Distributions After the Participant's Death.

(a) Death After Distributions Begin. If the Participant dies after distribution of the Participant's interest begins in the form of an annuity meeting the requirements of this Appendix, the remaining portion of the Participant's interest will continue to be distributed over the remaining period over which distributions commenced.

(b) Death Before Distributions Begin.

(1) Participant Survived by Designated Beneficiary. Except as provided in Section B.6, if the Participant dies before the date distribution of the Participant's interest begins and there is a Designated Beneficiary, the Participant's entire interest will be distributed, beginning no later than the time described in sections B.2(b)(1) or (2), over the life of the Designated Beneficiary or over a period certain not exceeding:

(A) Unless the Annuity Starting Date is before the first Distribution Calendar Year, the Life Expectancy of the Designated Beneficiary determined using the Beneficiary's age as of the Beneficiary's birthday in the calendar year immediately following the calendar year of the Participant's death; or

(B) If the Annuity Starting Date is before the first Distribution Calendar Year, the Life Expectancy of the Designated Beneficiary determined using the Beneficiary's age as of the Beneficiary's birthday in the calendar year that contains the Annuity Starting Date.

(2) No Designated Beneficiary. If the Participant dies before the date distributions begin and there is no Designated Beneficiary as of September 30 of the year following the year of the Participant's death, distribution of the Participant's entire interest will be completed by December 31 of the calendar year containing the fifth anniversary of the Participant's death.

(3) Death of Surviving Spouse Before Distributions to Surviving Spouse Begin. If the Participant dies before the date distribution of the Participant's interest begins, the Participant's surviving Spouse is the Participant's sole Designated Beneficiary, and the surviving Spouse dies before distributions to the surviving Spouse begin, this Section B.5 will apply as if the surviving Spouse were the Participant, except that the time by which distributions must begin will be determined without regard to Section B.2(b)(1).

B.6

Election of Five-Year Rule. Participants and Beneficiaries may elect on an individual basis whether the five-year rule or the life expectancy rule in Sections B.2(b) and B.5(b) of this Appendix applies to distributions after the death of the Participant who has a Designated Beneficiary. The election must be made no later than the earlier of September 30 of the calendar year in which the distribution would be required to begin under Section B.2(b), or by September 30 of the calendar year which contains the fifth anniversary of the Participant's (or, if applicable, the surviving Spouse's) death. If neither the Participant, nor the Designated Beneficiary makes an election under this Section, distributions will be made in accordance with Sections B.2(b) and B.5(b) of this Appendix.

B.7

Definitions. The following words and phrases used in this Appendix B have the following meanings:

(a) Designated Beneficiary. "Designated Beneficiary" means the individual who is designated as the Beneficiary under the Plan and is the designated beneficiary under section 401(a)(9) of the Code and section 1.401(a)(9)-1, Q&A-4 of the Treasury regulations.

(b) Distribution Calendar Year. "Distribution Calendar Year" means a calendar year for which a minimum distribution is required. For distributions beginning before the Participant's death, the first Distribution Calendar Year is the calendar year immediately preceding the calendar year which contains the Participant's Required Beginning Date. For distributions beginning after the Participant's death, the first distribution calendar year is the calendar year in which distributions are required to begin pursuant to Section B.2(b) of this Appendix B.

(c) Life Expectancy. "Life Expectancy" means life expectancy as computed by use of the Single Life Table in section 1.401(a)(9)-9 of the Treasury regulations.

(d) Required Beginning Date. "Required Beginning Date" means April 1 of the calendar year following the later of: (i) the calendar year in which a Participant attains age seventy and one-half; or (ii) the calendar year in which a Participant terminates employment with the Employer.

(e) Spouse. "Spouse" means spouse as that term is defined for purposes of federal law in the Defense of Marriage Act.

(f) Other Capitalized Terms. All other capitalized terms used in this Section have the meanings set forth in Section 2.52.020, unless the context requires otherwise.

(Ord. No. 2011-1221, § 1(Exh. 1), 2-7-2011)