WHEREAS, the Metropolitan Government of Nashville and Davidson County, Tennessee Employee Defined Benefit Pension Plan (the “Plan”) is sponsored by the Metropolitan Government of Nashville and Davidson County, Tennessee (Metro) for the benefit of its employees, and

WHEREAS, the Metropolitan Government desires to amend the Plan to reflect certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and Rev. Rul. 2001-62, and

WHEREAS, this amendment is intended as good faith compliance with the requirements of EGTRRA and Rev. Rul. 2001-62 and is to be construed in accordance with EGTRRA, Rev. Rul. 2001-62 and guidance issued thereunder; and

WHEREAS, the actuaries employed by the Metropolitan Employee Benefit Board have determined that the required amendments to the pension plan will have a negligible impact on the required annual funding and the ultimate cost of the benefits provided by the pension plan; and

WHEREAS, this amendment shall supersede the provisions of Title 3 of the Metropolitan Code of laws relative to employee benefits to the extent those provisions are inconsistent with the provisions of this amendment.

NOW, THEREFORE, BE IT ENACTED BY THE COUNCIL OF THE METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY:

SECTION 1. That Chapter 3.30 is hereby amended by adding a new Section 3.30.120 as follows:

3.30.120 EGTRRA Requirements

A. Limitations of Benefits

1. Effective date. This subsection shall be effective for limitation years ending after December 31, 2001.

2. Effect on members. Benefit increases resulting from the increase in the limitations of section 415(b) of the Code shall be provided to all employees participating in the plan who have one Hour of Service on or after the first day of the first limitation year ending after December 31, 2001.

3. Defined benefit dollar limitation. The “defined benefit dollar limitation” is $160,000, as adjusted, effective January 1 of each year, under section 415(d) of the Code in such manner as the Secretary of the Treasury shall prescribe, and payable in the form of a straight life annuity. A limitation as adjusted under section 415(d) will apply to limitation years ending with or within the calendar year for which the adjustment applies.

4. Maximum permissible benefit. Except The “maximum permissible benefit” is the defined benefit dollar limitation adjusted where required, as provided in a. and, if applicable, in b. or c. below.

a. If the member has fewer than 10 years of participation in the plan, the defined benefit dollar limitation shall be multiplied by a fraction, (i) the numerator of which is the number of Years (or part thereof) of participation in the Plan and (ii) the denominator of which is 10.

b. If the benefit of a member begins prior to age sixty-two, the defined benefit dollar limitation applicable to the member at such earlier age is an annual benefit payable in the form of a straight life annuity beginning at the earlier age that is the actuarial equivalent of the defined benefit dollar limitation applicable to the Participant at age sixty-two (adjusted under a. above, if required). The defined benefit dollar limitation applicable at an age prior to age sixty-two is determined as the lesser of (i) the actuarial equivalent (at such age) of the defined benefit dollar limitation computed using the interest rate specified in Section 3.30.040 and the mortality table (or other tabular factor) specified in Section 3.30.020 and (ii) the actuarial equivalent (at such age) of the defined benefit dollar limitation computed using a five percent interest rate and the mortality table specified in Section 3.30.020. Any decrease in the defined benefit dollar limitation determined in accordance with this paragraph shall not reflect a mortality decrement if benefits are not forfeited upon the death of the member. If any benefits are forfeited upon death, the full mortality decrement is taken into account. Notwithstanding the foregoing, the adjustment described in this paragraph shall not apply to certain police and firefighters as provided in Code section 415(b)(2)(G).

c. If the benefit of a member begins after the member attains age sixty-five, the defined benefit dollar limitation applicable to the member at the later age is the annual benefit payable in the form of a straight life annuity beginning at the later age that is actuarially equivalent to the defined benefit dollar limitation applicable to the member at age sixty-five (adjusted under a. above, if required). The actuarial equivalent of the defined benefit dollar limitation applicable at an age after age sixty-five is determined as (i) the lesser of the actuarial equivalent (at such age) of the defined benefit dollar limitation computed using the interest rate specified in Section 3.30.040 and the mortality table (or other tabular factor) specified in Section 3.30.020 and (ii) the actuarial equivalent (at such age) of the defined benefit dollar limitation computed using a five percent interest rate assumption and the mortality table specified in Section 3.30.020. For these purposes, mortality between age sixty-five and the age at which benefits commence shall be ignored.

B. Increase in Compensation Limit

1. Increase in limit. The annual compensation of each noneligible member taken into account in determining benefit accruals in any plan year beginning after December 31, 2001, shall not exceed $200,000. Annual compensation means compensation during the plan year or such other consecutive 12-month period over which compensation is otherwise determined under the Plan (the determination period). For purposes of determining benefit accruals in a plan year beginning after December 31, 2001, the annual compensation limit for noneligible members under this section for determination periods beginning before January 1, 2002, shall be $200,000. Notwithstanding the foregoing, in the case of an eligible member, the annual compensation limit of Code section 401(a)(17) shall not apply to the extent that the application of the limitation would reduce the amount of compensation that was allowed to be taken into account under the Plan as in effect on July 1, 1993. For these purposes, an eligible member is an individual who first became a member in the plan prior to the first day of the first plan year beginning after the earlier of (i) the last day of the plan year by which a Plan amendment to reflect the amendments made by section 13212 of the Omnibus Budget Reconciliation Act of 1993 is both adopted and effective, or (ii) December 31, 1995.

2. Cost-of-living adjustment. The $200,000 limit on annual compensation in subsection 1. above shall be adjusted for cost-of-living increases in accordance with section 401(a)(17)(B) of the Code. The cost-of-living adjustment in effect for a calendar year applies to annual compensation for the determination period that begins with or within such calendar year.

C. Direct Rollovers of Plan Distributions

1. Effective date. This section shall apply to distributions made after December 31, 2001.

2. Modification of definition of eligible retirement plan. For purposes of the direct rollover provisions in Section 3.30.060, an eligible retirement plan shall also mean an annuity contract described in section 403(b) of the Code and an eligible plan under section 457(b) of the Code 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 and which agrees to separately account for amounts transferred into such plan from this plan. The definition of eligible retirement plan shall also apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relation order, as defined in section 414(p) of the Code.

3. Modification of definition of eligible rollover distribution to include after-tax employee contributions. For purposes of the direct rollover provisions in Section 3.30.060, a portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions which are not includible in gross income. However, such portion may be paid only to an individual retirement account or annuity described in section 408(a) or (b) of the Code, or to a qualified defined contribution plan described in section 401(a) or 403(a) of the Code that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible.

SECTION 2. That Chapter 3.30 is hereby amended by adding a new Section 3.30.130 as follows:

3.30.130 Applicable Mortality Table Under Rev. Rul. 2001-62

A. Effective Date. This section shall apply to distributions with annuity starting dates on or after December 31, 2002.

B. Notwithstanding any other plan provisions to the contrary, the applicable mortality table used for purposes of adjusting any benefit under section 415(b)(2)(B), (C), or (D) of the Internal Revenue Code as set forth in Section 3.30.120 or limitation under section 415(b)(2)(B), (C), or (D) of the Internal Revenue Code as set forth in Section 3.30.120 is the table prescribed in Rev. Rul. 2001-62.

C. For any distribution with an annuity starting date on or after the effective date of this section and before the adoption date of this section, if application of the amendment as of the annuity starting date would have caused a reduction in the amount of any distribution, such reduction is not reflected in any payment made before the adoption date of this section. However, the amount of any such reduction that is required under Code section 415(b)(2)(B) must be reflected actuarially over any remaining payments to the member.

SECTION 3. This ordinance shall take effect from and after its passage, the welfare of The Metropolitan Government of Nashville and Davidson County requiring it.

Sponsored by: Michael Kerstetter, Brenda Gilmore

LEGISLATIVE HISTORY
Introduced:	October 21, 2003
Passed First Reading:	October 21, 2003
Referred to:	Personnel Committee Budget & Finance Committee
Passed Second Reading:	November 18, 2003
Passed Third Reading:	December 2, 2003
Approved:	December 3, 2003
By: