Part 23

PLAN-APPROVED DOMESTIC RELATIONS ORDERS

Sections:

• 3.28.2620 "Domestic relations order" defined.

• 3.28.2630 "Participant" and "alternate payee" defined.

• 3.28.2640 "Nonmember spouse" and "nonmember domestic partner" defined.

• 3.28.2650 "Plan-approved domestic relations order" defined.

• 3.28.2660 Dissolution or legal separation before the participant has separated from city service.

• A. The purpose of this Part 23 is to set forth the requirements for plan-approved domestic relations orders that may be awarded by a court in a dissolution of marriage, a legal separation action, or a termination of a registered domestic partnership with respect to community property rights in benefits provided by this plan.

• B. This part shall apply only in those dissolution of marriage, legal separation or termination of domestic partnership proceedings which meet one of the following requirements:

  1. The proceedings are instituted on or after October 14, 2005; or

  2. The proceedings are pending on October 14, 2005, and the court has not yet awarded the benefits; or

  3. The court has reserved jurisdiction over the retirement benefits or has not yet awarded the benefits; or

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4. The court issues a supplemental order with respect to the division of the community property rights in benefits provided by this plan.

• C. If benefits are payable pursuant to a qualified domestic relations order that meets the requirements of a domestic relations order as defined in Section 414(p) of the Internal Revenue Code, then the applicable requirements of Section 414(p) of the Internal Revenue Code shall be followed by the retirement plan.

• (Ords. 27521, 28885.)

The board of administration shall comply only with domestic relations orders that are plan-approved domestic relations orders pursuant to this part. The board shall not authorize payments to a nonmember spouse or nonmember domestic partner pursuant to any order which does not meet the requirements of a plan-approved domestic relations order. (Ord. 27521.)

"Domestic relations order" or "DRO" means any judgment, decree or order (including court approval of a property settlement agreement) which relates to marital property rights in the case of a marital dissolution, termination of a registered domestic partnership, legal separation, and which is made pursuant to a state domestic relations law. (Ord. 27521.)

• A. "Participant" means a member of this plan, a retired member of this plan, or a former member of this plan who separated from city service but left his or her accumulated contributions on deposit with the plan.

• B. "Alternate payee" means a nonmember spouse or nonmember domestic partner as defined in Section 3.28.2640.

• (Ord. 27521.)

• A. "Nonmember spouse" means the spouse or former spouse of a participant of this plan who, as a result of petitioning a court of competent jurisdiction for the division of community property, has been awarded an interest in the benefits payable to a participant in this plan. A spouse or former spouse who is awarded an interest in such benefits shall not be or become a participant of this plan by virtue of such award or the payment of such benefits.

• B. "Nonmember domestic partner" means the registered domestic partner or former registered domestic partner of a participant of this plan who, as a result of petitioning a court of competent jurisdiction for the division of community property, has been awarded an interest in the benefits payable to a participant in this plan. "Registered" means the parties established a domestic partnership pursuant to Division 2.5 of the California Family Code or formed a legal union other than a marriage in a jurisdiction other than California and such union is recognized as a domestic partnership pursuant to California Family Code Section 299.2. A nonmember domestic partner who is awarded an interest in such benefits shall not be or become a participant of this plan by virtue of such award or the payment of such benefits.

• (Ord. 27521.)

• A. "Plan-approved domestic relations order" means a domestic relations order which:

  1. Sets forth an alternate payee's right to receive a portion of the benefits payable to a participant of this plan;

  2. Pursuant to Section 2610 of the California Family Code, orders the division of the community interest in the benefits payable to a participant; and

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3. Meets the requirements of this part.

• B. A DRO is a plan-approved domestic relations order only if the plan has been joined in the dissolution of marriage, termination of domestic partnership, or legal separation action pursuant to Chapter 6 (commencing with Section 2060) of Part 1 of Division 6 of the California Family Code.

• C. A DRO is a plan-approved domestic relations order only if the order clearly specifies that it:

  1. Does not require the plan to provide any type or form of benefit, or any option, not otherwise provided under the plan; and

  2. Does not require the plan to provide benefits (determined on the basis of actuarial value) in excess of those provided by the plan.

• D. A DRO is not a plan-approved domestic relations order if it provides for any of the following:

  1. Payment from this plan to an alternate payee at any time prior to the date the participant has both separated from city service and begun to receive payments from this plan, except as provided in Section 3.28.2700, Section 3.28.2720, or Section 3.28.2730.

  2. Payment from this plan because of the disability of the alternate payee.

  3. Payment from this plan of any premium, or portion thereof, for medical or dental insurance coverage for the alternate payee.

  4. Designation of the alternate payee as a surviving spouse or surviving domestic partner for the purpose of receiving any surviving spouse benefit, surviving domestic partner benefit, or death benefit provided under this plan on account of the death of the participant.

  5. The alternate payee to make any contributions to the plan or the retirement fund or to purchase service credit in the plan.

• (Ord. 27521.)

If marital dissolution, termination of domestic partnership, or legal separation occurs before the participant has separated from city service, and the court orders the division of the community interest in this plan pursuant to Section 2610 of the Family Code, then the DRO will be a plan-approved domestic relations order if, in addition to the requirements of Section 3.28.2650, it meets the requirements of Section 3.28.2680 or Section 3.28.2700.

(Ord. 27521.)

If the marital dissolution, termination of domestic partnership, or legal separation occurs after the participant has separated from city service, whether for retirement, resignation or any other reason, and the court orders the division of the community interest in this plan pursuant to Section 2610 of the Family Code, then:

• A. In order to be a plan-approved domestic relations order the DRO must satisfy the requirements of Section 3.28.2680.

• B. The separate account option set forth in Section 3.28.2700 shall not be available, and the DRO shall not order the establishment of a separate account for the alternate payee.

• C. The DRO shall not in any way change any election made by the participant at the time of retirement or other separation from city service.

(Ord. 27521.)

• A. If the court orders the division of the community interest in this plan pursuant to Section 2610 of the Family Code, the board will comply with a DRO which divides the community property interests of a participant and the

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participant's alternate payee, provided that the DRO meets all of the following requirements:

1. Is a plan-approved domestic relations order under Section 3.28.2650.

2. Includes the date of the marriage or date of establishing the domestic partnership and the date on which the parties separated.

3. Includes the last known mailing address of the alternate payee covered by the order.

4. Specifies the amount or percentage of the participant's monthly benefit, or the participant's accumulated contributions in the event the participant elects a withdrawal of accumulated contributions, which is to be paid to the alternate payee, or specifies the manner in which such amount or percentage is to be determined.

5. Subject to Sections 3.28.2750 and 3.28.2760, specifies the portion of the participant's monthly disability benefits which is to be paid to the alternate payee and the time when such payment to the alternate payee is to commence:

   • a. In the event the participant retires for disability after the date of the dissolution of marriage, termination of domestic partnership, or legal separation, but prior to the time the participant is eligible to retire for service; or

   • b. In the event the participant has already retired for disability as of the date of the dissolution of marriage, termination of domestic partnership, or legal separation.

6. Specifies that the plan shall pay the alternate payee's portion of the benefits to the alternate payee only at such time or times as the plan makes payments to the participant.

7. Specifies that, unless the alternate payee has elected a life annuity option pursuant

to Section 3.28.2690, payments by the plan to the alternate payee shall terminate when payments to the participant (or the participant's eligible surviving spouse or the participant's eligible surviving domestic partner) terminate.

8. Specifies that the alternate payee shall not be entitled to payment from the plan of any premium, or portion thereof, for medical or dental insurance coverage.

9. Specifies that the alternate payee shall not be deemed an eligible surviving spouse or eligible surviving domestic partner under the terms of the plan.

10. Specifies that the plan may offset any payments made by the plan to either party for any amounts to which the other party was entitled, but which were erroneously paid to the party against whom the offset is made.

• B. In addition to the requirements of subsection A., the DRO may address the rights of the alternate payee with respect to the following:

  1. In accordance with Section 3.28.2740, the right to designate a beneficiary.

2. The right to elect an alternate distribution option pursuant to Section 3.28.2690.

(Ord. 27521.)

• A. In the event the alternate payee is awarded a combined account, the alternate payee may elect an alternate distribution option as provided in this section by filing a written election with the retirement board on a form provided by the secretary to the board. The election must be filed no earlier than the time the participant files an application for retirement and no later than thirty days after the effective date of the participant's retirement.

• B. Any election made pursuant to the provisions of this section may be revoked by the alternate payee provided that the revocation is made in writing and is filed with the retirement board

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no later than thirty days after the effective date of the participant's retirement. If the election is not revoked within thirty days of the effective date of the participant's retirement, the election shall be irrevocable and benefits shall be paid in accordance with the election and the provisions of this plan.

• C. The alternate distribution option consists of an election to have the actuarial equivalent of any allowance payable to the alternate payee from the combined account applied to provide a lesser monthly allowance to the alternate payee until the participant's death and, thereafter, to continue such lesser monthly allowance to the alternate payee for the life of the alternate payee.

• D. Any age factor used in the calculation of benefits payable under the alternate distribution option shall be based on the ages of the participant and the alternate payee as of the date benefits first become payable to the participant.

• (Ord. 27521.)

• A. If the court orders the division of the community interest in this plan pursuant to Section 2610 of the Family Code, and the participant has not separated from city service at the time of the entry of the DRO, the court may order that the accumulated employee contributions and service credit attributable to periods of the participant's service during the marriage shall be divided into two separate and distinct accounts in the name of the participant and the alternate payee, respectively.

• B. Any accumulated contributions or service credit that are not explicitly awarded by the DRO shall be deemed to be the exclusive property of the participant.

• C. The board will comply with a DRO which orders the establishment of separate accounts provided that the DRO meets all of the following requirements:

  1. Is a plan-approved domestic relations order under Section 3.28.2650.

  2. Includes the date of the marriage and the date on which the parties separated.

  3. Includes the last known mailing address of the alternate payee covered by the order.

  4. Specifies the amount or percentage of the accumulated contributions and service credit to be credited to the alternate payee's separate account or specifies the manner in which such amount or percentage is to be determined.

  5. Specifies the rights of the alternate payee with respect to the following:

     • a. In accordance with Section 3.28.2710, the right to a refund of accumulated employee contributions and interest.

     • b. In accordance with Section 3.28.2730, the right to receive a monthly allowance.

     • c. In accordance with Section 3.28.2740, the right to designate a beneficiary.

  6. Specifies that, in the capacity of alternate payee, the alternate payee shall not be entitled to any of the following:

     • a. Payment from the plan because of the disability of the alternate payee.

     • b. Payment from the plan of any death benefit or survivor's benefit payable because of the death of the participant.

     • c. Payment from the plan of any premium, or portion thereof, for medical or dental insurance coverage.

• (Ord. 27521.)

contributions in separate account.

• A. If the court orders the establishment of separate accounts pursuant to Section 3.28.2700 and, as of the date of entry of the DRO with the court, the participant is entitled to less than ten years of service credit in this plan, the alternate payee shall receive a distribution of

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the accumulated contributions and credited interest placed in the alternate payee's account.

• B. If, as of the date of entry of the DRO with the court, the participant is entitled to ten or more years of service credit in this plan, the alternate payee may elect to receive a distribution of the accumulated contributions and credited interest placed in the alternate payee's account.

  1. The alternate payee may make such election at any time after the establishment of the alternate payee's separate account.

  2. The alternate payee shall make such election by filing an application for distribution with the secretary to the board on a form provided by the secretary.

• C. Any distribution of accumulated contributions made to an alternate payee shall be effective when the plan deposits in the United States mail a warrant drawn in favor of the alternate payee and addressed to the latest address for the alternate payee on file with the plan, or to such other address as is specified in writing by the alternate payee.

• D. Once a distribution made pursuant to this section becomes effective:

  1. The alternate payee may not cancel the refund or revoke the election for distribution.

  2. The alternate payee shall be deemed to have permanently waived all rights in this plan and all rights to the payment of any other benefits pertaining to the service credit or accumulated contributions, or both, in the alternate payee's separate account; and

  3. The alternate payee shall have no right to redeposit the distributed accumulated contributions.

• (Ord. 27521.)

If an alternate payee receives a refund under Section 3.28.2710, the participant may elect to re-

deposit the accumulated contributions and interest refunded to the alternate payee and to receive credit for the service that had been allocated to the alternate payee.

• A. Such election shall be made within five (5) years after notice to the participant from the Secretary to the Board of the participant's option to redeposit the contributions.

• B. The participant shall make such election by filing a written statement of election with the Secretary to the Board on a form provided by the Secretary.

• C. Except as provided in paragraph 1. of subsection F. below, the participant shall not be entitled to receive credit for the service that had been allocated to the alternate payee unless, prior to the date the participant retires the participant redeposits:

  1. All contributions and interest distributed to the alternate payee; plus

  2. All additional interest which would have been earned on the distributed contributions and interest at the actual rate earned by the retirement fund, as of the date the participant elects to redeposit, if the contributions and interest had not been distributed to the alternate payee; plus

  3. Interest on the unpaid balance from the date the participant elects the redeposit to the date all such moneys and interest are fully redeposited into the retirement fund, at the actuarial rate in effect on the date the participant files the election; plus

  4. In the case of a Tier 2 member, such other cost associated with the redeposit so that the entire cost of the purchase is borne by the Tier 2 member. In this case, the entire cost is the actuarially determined amount that would result in the Tier 2 mem-

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ber paying any amounts that would otherwise result in an actuarial loss to the City.

• D. Such redeposit shall be made within the time and in the manner provided by the Board.

• E. If the participant does not make the election within the time provided herein, the participant shall be deemed to have elected not to have such service credited to the participant.

• F. If the participant elects to redeposit contributions and interest refunded to the alternate payee but does not redeposit all required amounts plus interest within the time and in the manner provided by the Board, then:

  1. If the failure to complete the redeposit is because of the death of the participant, while a member of this Plan but prior to retirement, the participant shall be credited with the amount of service that is determined by the Board to be attributable to the amount of payments made as of the date of the participant's death.

  2. If the failure to complete the redeposit is for any reason other than the death of the participant prior to retirement, any payments made pursuant to the election shall be credited to the participant's accumulated contributions account but the participant shall receive no service credit that had been allocated to the alternate payee.

• (Ords. 27521, 29120, 29904.)

• A. An alternate payee who has been awarded a separate account shall be paid a monthly allowance from the retirement fund, for the life of the alternate payee, if all of the following conditions are satisfied:

  1. The alternate payee has not received a refund of accumulated contributions.

  2. Notwithstanding any service credit awarded to the alternate payee as of the date the alternate payee files an application for monthly benefits:

     • a. The participant is eligible to retire for service under provisions of this Plan; or

     • b. In the case where the participant retired for disability or died prior to becoming eligible for service retirement, the participant would have been eligible to retire for service had the participant continued working; or

     • c. In the case of a participant who left City service without retiring, the participant is eligible to receive a monthly allowance under Part 9 of this Chapter, or would have been eligible had the participant not elected a refund of his or her accumulated contributions.

  3. The alternate payee has attained at least fifty-five (55) years of age (sixty-two (62) years in the case of an alternate payee of a Tier 2 member).

  4. The alternate payee files a written application for monthly benefits with the Secretary to the Board on a form provided by the Secretary.

  5. The Board approves the payment of such monthly allowance.

• B. The monthly allowance to the alternate payee shall begin to accrue on the later of the date designated in the alternate payee's application or the day following the date of the court order dividing the community property of the participant and the alternate payee. In no event shall the monthly allowance begin to accrue earlier than the first day of the month in which the alternate payee's application is received by the Secretary to the Board.

• C. Subject to the provisions of Section 3.28.2750 and 3.28.2760 and subsection D. of this Section, the amount of the monthly allowance

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payable to the alternate payee other than the alternate payee of a Tier 2 member shall be two and one-half percent (2.5%) of the participant's final compensation for each year of service credit credited to the alternate payee's separate account. In the case of an alternate payee of a Tier 2 member, the amount of the monthly allowance shall be two percent (2.0%) of the Tier 2 member's final compensation for each year of service credit credited to the alternate payee's separate account; provided, however, such amount shall not exceed seventy percent (70%) of the Tier 2 member's final compensation.

• D. For the purposes of this Section:

  1. If the alternate payee elects to receive a monthly allowance prior to the date the participant retires, "final compensation" means the final compensation of the participant as of the effective date of the first payment of the alternate payee's allowance.

2. If the participant retired either for service or disability prior to the effective date of the payment of the alternate payee's allowance, "final compensation" means the final compensation used in calculating the participant's retirement allowance.

• E. Monthly allowances payable to the alternate payee shall be increased by cost-of-living adjustments in accordance with Chapter 3.44.

• (Ords. 27521, 29120, 29904.)

• A. If the court orders the establishment of separate accounts pursuant to Section 3.28.2700 and, as of the date the participant separates from service, the alternate payee has not received a distribution pursuant to Section 3.28.2710, then the monthly allowance payable to the participant upon the participant's eligibility for a monthly allowance shall be:

  1. The monthly allowance that would be payable to the participant if no separate account had been established; less

  2. The monthly allowance payable to the alternate payee pursuant to subsection C. of Section 3.28.2730.

• B. If the court orders the establishment of separate accounts pursuant to Section 3.28.2700 and, as of the date the participant separates from service, the alternate payee has received a distribution pursuant to Section 3.28.2710 but the participant has received credit pursuant to Section 3.28.2720 for the service that had been allocated to the alternate payee, then the monthly allowance payable to the participant upon the participant's eligibility for a monthly allowance shall be the monthly allowance that would be payable to the participant if no separate account had been established.

• C. If the court orders the establishment of separate accounts pursuant to Section 3.28.2700 and, as of the date the participant separates from service, the alternate payee has received a distribution pursuant to Section 3.28.2710 and the participant has not made a redeposit pursuant to Section 3.36.3620, then the monthly allowance payable to the participant upon the participant's eligibility for a monthly allowance shall be:

  1. The dollar amount of the monthly allowance that would be payable to the participant if no separate account had been established; less

2. The dollar amount of the monthly allowance that would have been payable to the alternate payee pursuant to subsection C. of Section 3.28.2730 if the alternate payee had not received a distribution.

(Ord. 27521.)

• A. The alternate payee who has been awarded a combined account may designate a beneficiary to receive amounts which would be payable to the alternate payee but for the death of the alternate payee.

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• B. The alternate payee who has been awarded a separate account may designate a beneficiary:

  1. To receive the accumulated contributions in the alternate payee's account in the case where the alternate payee dies prior to receipt of payment.

  2. To receive any accumulated contributions remaining in the alternate payee's separate account or to receive any unpaid allowance payable at the time of the alternate payee's death.

• C. The beneficiary shall be a natural person or persons. The designation may be by class, in which case the members of the class living at the time of the alternate payee's death shall be deemed to be the beneficiaries and shall take in equal shares unless otherwise specified by the alternate payee.

• D. A designation of a beneficiary shall be filed with the secretary to the board on a form provided by the secretary.

• E. The alternate payee may revoke or change the designation of a beneficiary at any time prior to the alternate payee's death. Any revocation or change of a designation of a beneficiary shall be in writing on a form provided by the secretary to the board, shall be notarized by a notary public, and shall be filed with the secretary.

• F. If the alternate payee does not designate a beneficiary or if all designated beneficiaries predecease the alternate payee:

  1. In the case of an alternate payee who has been awarded a combined account, any payments which would have been made to the alternate payee but for the death of the alternate payee shall be paid to the alternate payee's estate.

  2. In the case of an alternate payee who has been awarded a separate account, any accumulated contributions remaining in the alternate payee's separate account and any unpaid monthly allowance payable at the time of the alternate payee's death shall be paid to the alternate payee's estate.

• G. Nothing in this section shall be deemed to mean that any alternate distribution option elected by an alternate payee shall continue beyond the death of the alternate payee. Payments of any amounts under an alternate distribution option cease upon the death of the alternate payee. Payment of any such amount to the alternate payee's beneficiary or estate is expressly limited to the monthly allowance, or portion thereof, due but unpaid for the month in which the death of the alternate payee occurs.

• (Ord. 27521.)

• A. Under no circumstances shall the board or this plan be required to make payments in any manner that would result in an increase in the amount of benefits provided under this plan.

• B. All benefits payable from this plan shall be determined on the basis of the actuarial assumptions and interest rates that are specifically set forth in this plan, or the economic and demographic actuarial assumptions and interest rates adopted by the board in those instances where the board has such authority under the provisions of this plan.

• C. Any age factor used in calculation of benefits to the alternate payee shall be based on the age of the alternate payee at the time benefits commence or, in the case where the alternate payee elects an alternate distribution option pursuant to Section 3.28.2690, as of the date benefits first become payable to the participant.

• (Ord. 27521.)

• A. If the participant retires for disability, the combined benefit payments to both the participant and the alternate payee shall not exceed the amount that would otherwise have been paid to the participant alone.

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• B. In the case where the alternate payee has been awarded a separate account, no payment shall be made to the alternate payee until such time as the participant would have been eligible for a service retirement had the participant continued working.

Disability benefits shall be allocated between the participant and the alternate payee as follows:

1. Until the date the participant would have been eligible for a service retirement or the date the alternate payee applies to receive a monthly allowance, whichever date is later, disability retirement benefits shall be paid to the participant without regard to the service credit awarded to the alternate payee.

2. Once the participant would have been eligible for a service retirement had the participant continued working and the alternate payee applies to receive a monthly allowance from the retirement fund, the amount of the monthly allowance payable to each party shall be determined as though the participant had retired for service.

• (Ord. 27521.)