Regular Session 2015-2016 House Bill 0414 P.N. 2545

SENATE AMENDED

PRIOR PRINTER'S NOS. 449, 1837

PRINTER'S NO. 2545

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

414

Session of

2015

INTRODUCED BY BRIGGS, THOMAS, GODSHALL, COHEN AND BARBIN,

FEBRUARY 9, 2015

SENATOR EICHELBERGER, FINANCE, IN SENATE, AS AMENDED,

NOVEMBER 18, 2015

AN ACT

Amending the act of December 18, 1984 (P.L.1005, No.205),

entitled, as amended, "An act mandating actuarial funding

standards for all municipal pension systems; establishing a

recovery program for municipal pension systems determined to

be financially distressed; providing for the distribution of

the tax on the premiums of foreign fire insurance companies;

and making repeals," in standards for municipal pension

systems, further providing for definitions and providing for

special procedures for certain professional services

contracts AND FOR SPECIAL PROVISIONS TO STABILIZE MUNICIPAL

RETIREMENT PLANS.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. The definition of "professional service contract"

in section 701-A of the act of December 18, 1984 (P.L.1005,

No.205), known as the Municipal Pension Plan Funding Standard

and Recovery Act, added September 18, 2009 (P.L.396, No.44), is

amended to read:

Section 701-A. Definitions.

The following words and phrases when used in this chapter

shall have the meanings given to them in this section unless the

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context clearly indicates otherwise:

* * *

"Professional services contract." A contract to which [the]

a municipal pension system having 100 or more active members is

a party that is:

(1) for the purchase or provision of professional

services, including investment services, legal services, real

estate services and other consulting services; and

(2) not subject to a requirement that the lowest bid be

accepted.

Section 2. The act is amended by adding a section to read:

Section 702.1-A. Special procedures for certain professional

services contracts.

The governing body of each municipal pension plan system,

having less than 100 active members, shall select the most

qualified person to enter into a contract to administer, manage

or service the municipal pension plan. To ensure that the

availability of a contract to administer, manage or service a

municipal pension plan is provided to potential participants,

the governing body shall:

(1) Announce at two consecutive regularly scheduled

public meetings the availability of the contract.

(2) Post the availability of the contract on the

official Internet website of the municipality, if any, for a

period of no less than two weeks.

SECTION 3. THE ACT IS AMENDED BY ADDING A CHAPTER TO READ:

CHAPTER 12

SPECIAL PROVISIONS TO STABILIZE

MUNICIPAL RETIREMENT PLANS

SUBCHAPTER A

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PRELIMINARY PROVISIONS

SECTION 1201. LEGISLATIVE FINDINGS AND PURPOSES.

THE GENERAL ASSEMBLY FINDS AND DECLARES THAT:

(1) LOCAL GOVERNMENTS ARE FACING SEVERE CHALLENGES THAT

THREATEN THE FINANCIAL SECURITY AND STABILITY OF OUR

COMMUNITIES.

(2) OUR PUBLIC SAFETY EMPLOYEES ARE FOUNDATIONAL IN

HAVING A STRONG AND SECURE COMMUNITY.

(3) OUR COMMUNITIES ARE MOST VIABLE WHEN OUR PUBLIC

SAFETY DEPARTMENTS ARE STRONG.

(4) THIS COMMONWEALTH HAS SEEN A STARTLING DECREASE

RECENTLY IN LOCAL PUBLIC SAFETY EMPLOYEES THAT HAS DAMAGED

THE SECURITY OF OUR COMMUNITIES.

(5) A MAIN REASON FOR THE DECREASE IN OUR PUBLIC SAFETY

EMPLOYEES IS THE RISING COSTS OUR TAXPAYERS ARE FORCED TO

PAY.

(6) THE INCREASE IN COSTS FOR MUNICIPALITIES IS LARGELY

DRIVEN BY GROWING PENSION LIABILITIES.

(7) THIS GROWTH IN PENSION LIABILITIES IS DEMONSTRATED

BY THE AUDITOR GENERAL'S REPORT FROM JANUARY 2015 WHICH

SHOWED THAT 562 MUNICIPALITIES ADMINISTERED DISTRESSED

PENSION PLANS AMOUNTING TO AN UNFUNDED LIABILITY OF $7.7

BILLION. THIS REPORT REVEALED A $1 BILLION GROWTH IN THE

UNFUNDED LIABILITY OF PENNSYLVANIA'S MUNICIPAL PENSIONS IN

TWO SHORT YEARS.

(8) IN ORDER TO ADDRESS THE PROBLEM OF UNFUNDED

LIABILITIES, THE GOVERNOR CREATED A TASK FORCE ON MUNICIPAL

PENSIONS, WHICH WAS CHAIRED BY THE AUDITOR GENERAL.

(9) ON JUNE 30, 2015, THE AUDITOR GENERAL RELEASED A

SERIES OF RECOMMENDATIONS FROM THE GOVERNOR'S TASK FORCE ON

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MUNICIPAL PENSIONS TO REFORM OUR MUNICIPAL PENSION SYSTEM,

WHICH ARE CONTAINED WITHIN THIS SUBCHAPTER.

(10) BY ADOPTING A MAJORITY OF THE RECOMMENDATIONS, THE

GENERAL ASSEMBLY WILL HELP SUSTAIN MUNICIPALITIES FACING

DIFFICULT FINANCIAL CHOICES BECAUSE OF THEIR GROWING PENSION

COSTS.

(11) INCREASING THE SUSTAINABILITY OF OUR MUNICIPAL

FINANCES IN TURN WOULD LEAD TO INCREASED HIRING OF MORE

PUBLIC SAFETY EMPLOYEES THAT MAKE OUR COMMUNITIES STRONGER

AND SAFER.

(12) THEREFORE, BY PROVIDING PENSION REFORM, OUR

MUNICIPALITIES CAN GROW THEIR MIDDLE CLASS AND INCREASE THEIR

PUBLIC SAFETY OFFICIALS WHILE HAVING SUSTAINABLE FINANCES.

SECTION 1202. DEFINITIONS.

THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS CHAPTER

SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE

CONTEXT CLEARLY INDICATES OTHERWISE:

"BOARD." THE PENNSYLVANIA MUNICIPAL RETIREMENT BOARD

ESTABLISHED BY THE PENNSYLVANIA MUNICIPAL RETIREMENT LAW.

"CASH BALANCE PENSION PLAN." THE DEFINED BENEFIT PLAN

ESTABLISHED IN SUBCHAPTER C.

"DEFINED CONTRIBUTION RETIREMENT PLAN." THE DEFINED

CONTRIBUTION RETIREMENT PLAN ESTABLISHED IN SUBCHAPTER D.

"EMPLOYER." A CITY, BOROUGH, INCORPORATED TOWN, TOWNSHIP,

HOME RULE MUNICIPALITY OR AN ASSOCIATION OF MUNICIPALITIES

COOPERATING TO FORM A REGIONAL POLICE OR REGIONAL FIRE

DEPARTMENT UNDER THE FORMER ACT OF JULY 12, 1972 (P.L.762,

NO.180), REFERRED TO AS THE INTERGOVERNMENTAL COOPERATION LAW,

OR 53 PA.C.S. CH. 23 SUBCH. A (RELATING TO INTERGOVERNMENTAL

COOPERATION).

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"FIRST CLASS CITY PENSION PLAN." A RETIREMENT PLAN

ESTABLISHED BY A CITY OF THE FIRST CLASS UNDER THE ACT OF MAY

20, 1915 (P.L.566, NO.242), ENTITLED "AN ACT REQUIRING CITIES OF

THE FIRST CLASS TO ESTABLISH A PENSION FUND FOR EMPLOYES OF SAID

CITIES, AND ALL COUNTY OR OTHER PUBLIC EMPLOYES, IF ANY, PAID BY

APPROPRIATION OF THE CITY COUNCILS THEREOF, AND OUT OF THE

TREASURY OF SAID CITIES; AND REGULATING THE ADMINISTRATION AND

THE PAYMENT OF SUCH PENSIONS," OR OTHERWISE SUBJECT TO SECTION

1002.

"IRC." THE INTERNAL REVENUE CODE OF 1986 (PUBLIC LAW 99-514,

26 U.S.C. § 1 ET SEQ.).

"MUNICIPAL PENSION PLAN." A FIRST CLASS CITY PENSION PLAN OR

A RETIREMENT PLAN CREATED BY A MUNICIPALITY FOR ITS POLICE

OFFICERS OR FIREFIGHTERS UNDER ANY OF THE FOLLOWING:

(1) THE ACT OF MAY 28, 1915 (P.L.596, NO.259), REFERRED

TO AS THE SECOND CLASS CITY EMPLOYE PENSION LAW .

(2) THE ACT OF JUNE 23, 1931 (P.L.932, NO.317), KNOWN AS

THE THIRD CLASS CITY CODE.

(3) THE ACT OF MAY 29, 1956 (1955 P.L.1804, NO.600),

REFERRED TO AS THE MUNICIPAL POLICE PENSION LAW.

(4) THE ACT OF SEPTEMBER 23, 1959 (P.L.970, NO.400),

REFERRED TO AS THE SECOND CLASS A CITY EMPLOYE PENSION LAW .

(5) OTHER LEGAL AUTHORITY, EXCLUDING THE PENNSYLVANIA

MUNICIPAL RETIREMENT LAW.

"MUNICIPAL POLICE PENSION LAW." THE ACT OF MAY 29, 1956

(1955 P.L.1804, NO.600), REFERRED TO AS THE MUNICIPAL POLICE

PENSION LAW.

"MUNICIPALITY." A CITY, BOROUGH, INCORPORATED TOWN, TOWNSHIP

OR REGIONAL POLICE OR FIRE DEPARTMENT.

"PENNSYLVANIA MUNICIPAL RETIREMENT LAW." THE ACT OF FEBRUARY

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1, 1974 (P.L.34, NO.15), KNOWN AS THE PENNSYLVANIA MUNICIPAL

RETIREMENT LAW.

"PLAN DOCUMENT." THE LAW, ORDINANCE, RESOLUTION OR RELATED

DOCUMENTS THAT GOVERN THE RETIREMENT COVERAGE PROVIDED BY AN

EMPLOYER TO ITS EMPLOYEES, INCLUDING RETIREMENT PAYMENTS AND

BENEFITS, ADMINISTRATION AND FUNDING.

"REGULAR FULL-TIME POLICE OFFICER OR FIREFIGHTER." A POLICE

OFFICER OR FIREFIGHTER EMPLOYED BY A MUNICIPALITY AND SCHEDULED

TO WORK AN AVERAGE OF AT LEAST 1,000 HOURS PER CALENDAR YEAR.

"SECOND CLASS A CITY EMPLOYE PENSION LAW." THE ACT OF

SEPTEMBER 23, 1959 (P.L.970, NO.400), REFERRED TO AS THE SECOND

CLASS A CITY EMPLOYE PENSION LAW.

"THIRD CLASS CITY CODE." THE ACT OF JUNE 23, 1931 (P.L.932,

NO.317), KNOWN AS THE THIRD CLASS CITY CODE AND ITS SUCCESSOR.

SUBCHAPTER B

STANDARDS REQUIRED FOR STABILIZATION

SECTION 1211. SCOPE OF SUBCHAPTER.

(A) SCOPE.--T HE PROVISIONS OF THIS SUBCHAPTER SHALL APPLY TO

ALL MUNICIPAL PENSION PLANS EXCEPT AS OTHERWISE PROVIDED IN THIS

ACT.

(B) ALTERATION OF PROVISIONS.--NO ACTION BY A MUNICIPALITY

OR COLLECTIVE BARGAINING AGREEMENT NOR ANY ARBITRATION AWARD OR

SETTLEMENT BETWEEN THE MUNICIPALITY AND ITS EMPLOYEES MAY ALTER

ANY OF THE PROVISIONS OF THIS SUBCHAPTER NOR REQUIRE THE

MUNICIPALITY TO ADMINISTER PENSION BENEFITS NOT SET FORTH IN

THIS CHAPTER.

SECTION 1212. DEFINITIONS.

THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS SUBCHAPTER

SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE

CONTEXT CLEARLY INDICATES OTHERWISE:

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"FUNDING RATIO." THE RATIO OF THE ACTUARIAL VALUE OF ASSETS

TO THE ACTUARIAL ACCRUED LIABILITY, EXPRESSED AS A PERCENTAGE,

AS CALCULATED BY THE COMMISSION UNDER SECTION 503(B).

"STATE AID." MONEY PROVIDED TO A MUNICIPALITY UNDER THE

GENERAL MUNICIPAL PENSION SYSTEM STATE AID PROGRAM ESTABLISHED

UNDER SECTION 402.

"UNFUNDED LIABILITY." THE EXCESS OF THE ACTUARIAL ACCRUED

LIABILITY OVER THE ACTUARIAL VALUE OF ASSETS.

SECTION 1213. USE OF STATE AID.

NO MUNICIPAL PENSION PLAN THAT IS SUBJECT TO THE PROVISIONS

OF THIS SUBCHAPTER MAY USE STATE AID FOR ANY PURPOSE OTHER THAN

ITS REQUIRED OBLIGATION TOWARDS THE MUNICIPAL PENSION PLAN AS

SPECIFIED IN SECTION 302. THE FUNDS MAY NOT BE USED FOR

ADMINISTRATIVE EXPENSES OR COSTS.

SECTION 1214. ACTUARIAL ASSUMPTIONS.

(A) ASSUMED RATE OF RETURN.--IN ALL MUNICIPAL PENSION PLANS

SUBJECT TO THIS SUBCHAPTER, THE ASSUMED RATE OF RETURN ON

INVESTMENTS SHALL NOT EXCEED THE REGULAR INTEREST RATE AS SET BY

THE BOARD TO DETERMINE THE ALLOCATION TO MEMBER ACCOUNTS OF

EARNINGS ON INVESTMENTS UNDER THE PENNSYLVANIA MUNICIPAL

RETIREMENT LAW, PLUS ONE PERCENTAGE POINT.

(B) DECREASING ASSUMED RATE OF RETURN.--IN A PLAN WHERE THE

ASSUMED RATE OF RETURN EXCEEDS THE REGULAR INTEREST RATE SET BY

THE BOARD PLUS ONE PERCENTAGE POINT, A MUNICIPALITY SHALL

DECREASE ITS ASSUMED RATE OF RETURN TO COMPLY WITH SUBSECTION

(A). A MUNICIPALITY MAY DECREASE ITS ASSUMED RATE OF RETURN IN

SUCH INCREMENTS AS IT DETERMINES NECESSARY SO LONG AS COMPLIANCE

WITH SUBSECTION (A) IS ACHIEVED WITHIN 10 YEARS OR LESS FROM THE

EFFECTIVE DATE OF THIS SECTION.

SECTION 1215. CONSIDERATION OF OVERTIME COMPENSATION AND

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ACCUMULATED LEAVE.

(A) DETERMINATION OF COMPENSATION.--FOR PURPOSES OF

DETERMINING MEMBER COMPENSATION IN A MUNICIPAL PENSION PLAN

SUBJECT TO THIS SUBCHAPTER, COMPENSATION SHALL INCLUDE NO MORE

THAN THE FOLLOWING:

(1) A MEMBER'S BASE SALARY OR WAGES PAID BY THE

EMPLOYING MUNICIPALITY, INCLUDING OVERTIME PAYMENTS TO A

MEMBER UP TO AN AMOUNT NO GREATER THAN 10% OF THE MEMBER'S

BASE SALARY; AND

(2) DISABILITY PAY PAID BY THE EMPLOYING MUNICIPALITY AS

A RESULT OF A SERVICE-BASED DISABILITY.

(B) EXCLUSIONS.--OVERTIME PAID IN THE FORM OF COMPENSATORY

TIME MAY NOT BE CONSIDERED SALARY, REGARDLESS OF WHETHER THE 10%

CAP ON THE INCLUSION OF OVERTIME IS MET. COMPENSATION ALSO MAY

NOT INCLUDE REIMBURSEMENTS, BONUSES OR PAYOUTS OF ACCRUED SICK

OR VACATION PAY, NOR ANY OTHER FORM OF USED OR UNUSED PAID TIME

OFF. IN NO EVENT MAY A MEMBER'S COMPENSATION FOR A CALENDAR YEAR

EXCEED THE LIMIT PRESCRIBED BY SECTION 401(A)(17) OF THE IRC.

SECTION 1215.1. FINAL AVERAGE SALARY.

(A) COMPUTATION.--NOTWITHSTANDING SECTION 5(C) OF THE

MUNICIPAL POLICE PENSION LAW OR ANY OTHER LAW TO THE CONTRARY,

IN ALL MUNICIPAL PENSION PLANS THE MONTHLY AVERAGE SALARY OR

FINAL AVERAGE SALARY TO COMPUTE RETIREMENT BENEFITS SHALL

CONSIST OF THE HIGHEST AVERAGE MONTHLY COMPENSATION RECEIVED

DURING THE 60-MONTH PERIOD IMMEDIATELY PRECEDING RETIREMENT, OR

IN THE EVENT A MEMBER HAS NOT SERVED 60 MONTHS, THE TOTAL SALARY

RECEIVED DIVIDED BY THE NUMBER OF MONTHS SERVED.

(B) APPLICABILITY.-THE PROVISIONS OF SUBSECTION (A) SHALL

APPLY TO ALL MEMBERS OF A MUNICIPAL PENSION PLAN WHO ARE HIRED

ON OR AFTER THE EFFECTIVE DATE OF THIS SECTION.

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SECTION 1216. DROP OPTIONS.

NOTWITHSTANDING ANY OTHER LAW, AFTER THE EFFECTIVE DATE OF

THIS SECTION NO MUNICIPAL PENSION PLAN SUBJECT TO THE PROVISIONS

OF THIS SUBCHAPTER MAY IMPLEMENT A DROP OR OTHER SIMILAR

DEFERRED RETIREMENT OPTION PLAN.

SECTION 1217. FUTURE PLAN DESIGNS.

(A) GENERAL RULE.--

(1) EXCEPT AS PROVIDED UNDER PARAGRAPH (2), NO ORDINANCE

OR RESOLUTION ENACTED BY A MUNICIPALITY SHALL ALTER THE

PROVISIONS OF A MUNICIPAL PENSION PLAN AND THE BENEFITS TO BE

PROVIDED BY A MUNICIPAL PENSION PLAN MAY NOT BE ALTERED BY

ANY SUBSEQUENT COLLECTIVE BARGAINING AGREEMENT, SETTLEMENT OR

AWARD OF AN ARBITRATOR UNDER THE ACT OF JUNE 24, 1968

(P.L.237, NO.111), REFERRED TO AS THE POLICEMEN AND FIREMEN

COLLECTIVE BARGAINING ACT.

(2) A PLAN ADMINISTRATOR MAY AMEND A MUNICIPAL PENSION

PLAN AS NECESSARY TO MAINTAIN THE QUALIFIED STATUS OF THE

PLAN UNDER SECTION 401(A) OF THE IRC (26 U.S.C. § 401(A)) OR

TO FACILITATE THE ADMINISTRATION OR OPERATION OF THE

MUNICIPAL PENSION PLAN TO THE EXTENT THE AMENDMENT WOULD NOT

MATERIALLY INCREASE THE COST OF THE MUNICIPAL PENSION PLAN OR

SIGNIFICANTLY ALTER THE BENEFITS PAYABLE UNDER THE MUNICIPAL

PENSION PLAN.

(B) PLANS WITH FUNDING RATIO OF NO MORE THAN 50%.--

(1) A MUNICIPALITY THAT MAINTAINS A MUNICIPAL PENSION

PLAN, AS TO WHICH THE RATIO OF ACTUARIAL VALUE OF ASSETS TO

ACTUARIAL ACCRUED LIABILITY IS NO MORE THAN 50% AS CALCULATED

BY THE COMMISSION UNDER SECTION 503(B) FOR THE PRECEDING TWO-

YEAR PERIOD, SHALL COMPLY WITH ALL OF THE FOLLOWING:

(I) THE MUNICIPALITY SHALL ENTER INTO A CONTRACT

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WITH THE BOARD, SUBJECT TO THE PROVISIONS OF ARTICLE IV

OF THE ACT OF FEBRUARY 1, 1974 (P.L.34, NO.15), KNOWN AS

THE PENNSYLVANIA MUNICIPAL RETIREMENT LAW, WHICH

EXPRESSES THE PROVISIONS OF THE MUNICIPAL PENSION PLAN

AND TRANSFERS THE RESPONSIBILITY TO ADMINISTER THE

MUNICIPAL PENSION PLAN TO THE BOARD. A MUNICIPALITY SHALL

HAVE 180 DAYS FROM THE DATE OF THE MOST RECENT COMMISSION

REPORT EVIDENCING ACTUARIAL VALUE OF ASSETS TO ACTUARIAL

ACCRUED LIABILITY OF NO MORE THAN 50% TO COMPLETE THE

TRANSFER REQUIRED UNDER THIS PARAGRAPH.

(II) THE CONTRACT SHALL COMPLY WITH THE EXISTING

PROVISIONS OF THE MUNICIPAL PENSION PLAN AS MAY BE

EVIDENCED BY STATUTORY PROVISIONS, MUNICIPAL CHARTERS,

ORDINANCES OR RESOLUTIONS, COLLECTIVE BARGAINING

AGREEMENTS, ARBITRATION AWARDS AND OTHER WRITTEN

DOCUMENTATION IN FULL FORCE AND EFFECT AS OF THE DATE OF

TRANSFER TO THE BOARD. ALL EXISTING PLAN DOCUMENTS SHALL

BE PROVIDED TO THE BOARD WITHIN 30 DAYS OF THE DATE OF

THE MOST RECENT CALCULATION BY THE COMMISSION. THE BOARD

SHALL THEN PREPARE AND PROVIDE TO THE MUNICIPALITY A

CONTRACT THAT CONTAINS ALL RETIREMENT BENEFITS AND

OBLIGATIONS TO BE ADMINISTERED BY THE BOARD.

(III) IF A MUNICIPALITY FAILS TO PROVIDE THE

NECESSARY PLAN DOCUMENTS WITHIN THE 30-DAY PERIOD

REQUIRED UNDER PARAGRAPH (2), THE BOARD SHALL PREPARE A

CONTRACT IN ACCORDANCE WITH THE BENEFITS STATED IN THE

MOST RECENTLY FILED VALUATION REPORT UNDER THIS ACT.

(IV) THE ADMINISTRATION OF THE CONTRACT SHALL BE

SUBJECT TO THE APPLICABLE PROVISIONS OF THE PENNSYLVANIA

MUNICIPAL RETIREMENT LAW AND FEDERAL AND STATE LAWS

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RELATING TO TAX QUALIFIED PENSION PROGRAMS. IF ANY

PROVISION OF THE EXISTING MUNICIPAL PENSION PLAN IS NOT

IN COMPLIANCE WITH THE PENNSYLVANIA MUNICIPAL RETIREMENT

LAW AND FEDERAL AND STATE LAWS RELATING TO TAX QUALIFIED

PENSION PROGRAMS, THE BOARD MAY ELECT TO PURSUE ANY

REMEDIAL MEASURES IT DEEMS APPROPRIATE, THE COST OF WHICH

SHALL BE PAID BY THE MUNICIPALITY. UNTIL THE REMEDIAL

MEASURES CAN BE IMPLEMENTED OR IF REMEDIAL MEASURES

CANNOT BE IMPLEMENTED, THE PROVISION MAY NOT BE

ADMINISTERED BY THE BOARD AND SHALL REMAIN THE OBLIGATION

OF THE MUNICIPALITY.

(V) WITHIN 30 DAYS FROM THE DATE THE CONTRACT WAS

MAILED TO THE MUNICIPALITY, THE MUNICIPALITY SHALL

EXECUTE THE CONTRACT OR FILE AN APPEAL AND REQUEST FOR AN

ADMINISTRATIVE HEARING BEFORE THE BOARD. NOTWITHSTANDING

ANY OTHER PROVISION OF LAW, THE EXCLUSIVE REMEDY OF ANY

MUNICIPALITY AGGRIEVED BY FINALIZING THE TERMS OF THE

CONTRACT SHALL BE THE RIGHT TO AN ADJUDICATION BY THE

BOARD IN ACCORDANCE WITH 2 PA.C.S. CH. 5 (RELATING TO

PRACTICE AND PROCEDURE) AND AN APPEAL TO THE COMMONWEALTH

COURT UNDER 2 PA.C.S. CH. 7 (RELATING TO JUDICIAL REVIEW)

AND 42 PA.C.S. § 763(A)(1) (RELATING TO DIRECT APPEALS

FROM GOVERNMENT AGENCIES). IF AN APPEAL IS NOT FILED

WITHIN THE PRESCRIBED TIME, THE CONTRACT SHALL BE DEEMED

A FINAL AND BINDING CONTRACT BETWEEN THE BOARD AND THE

MUNICIPALITY FOR THE ADMINISTRATION OF THE BENEFIT

STRUCTURE PROVIDED IN THE CONTRACT.

(VI) NO STATUTE, ORDINANCE, CONTRACT, COLLECTIVE

BARGAINING AGREEMENT, SETTLEMENT OR ARBITRATION AWARD MAY

PERMIT OR AUTHORIZE ANY DEVIATION FROM, OR ALTERATION OF,

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THE TERMS OF THE CONTRACT BY WHICH THE MUNICIPAL PENSION

PLAN IS ADMINISTERED BY THE BOARD.

(2) A MUNICIPALITY THAT MAINTAINS A MUNICIPAL PENSION

PLAN, AS TO WHICH THE RATIO OF ACTUARIAL VALUE OF ASSETS TO

ACTUARIAL ACCRUED LIABILITY IS NO MORE THAN 50% AS CALCULATED

BY THE COMMISSION UNDER SECTION 503(B) FOR THE PRECEDING TWO-

YEAR PERIOD, SHALL ESTABLISH A CASH BALANCE PLAN UNDER THE

PENNSYLVANIA MUNICIPAL RETIREMENT LAW FOR REGULAR, FULL-TIME

MUNICIPAL POLICE OFFICERS OR FIREFIGHTERS HIRED ON OR AFTER

THE EFFECTIVE DATE OF THIS SUBCHAPTER IN WHICH ALL OR A

PORTION OF EXCESS INTEREST IS USED TO REDUCE UNFUNDED

LIABILITIES OF THE PLAN.

90%.--A MUNICIPALITY THAT MAINTAINS A MUNICIPAL PENSION PLAN, AS

TO WHICH THE RATIO OF ACTUARIAL VALUE OF ASSETS TO ACTUARIAL

ACCRUED LIABILITY IS MORE THAN 50% BUT LESS THAN 90% AS

CALCULATED BY THE COMMISSION UNDER SECTION 503(B) FOR THE

PRECEDING TWO-YEAR PERIOD, SHALL ESTABLISH A PENSION PLAN UNDER

EITHER SUBCHAPTER C OR SUBCHAPTER D FOR REGULAR, FULL-TIME

MUNICIPAL POLICE OFFICERS OR FIREFIGHTERS HIRED ON OR AFTER THE

EFFECTIVE DATE OF THIS SUBCHAPTER.

(D) PLANS WITH FUNDING RATIO OF 90% OR MORE.--A MUNICIPALITY

THAT MAINTAINS A MUNICIPAL PENSION PLAN, AS TO WHICH THE RATIO

OF ACTUARIAL VALUE OF ASSETS TO ACTUARIAL ACCRUED LIABILITY IS

90% OR MORE AS CALCULATED BY THE COMMISSION UNDER SECTION 503(B)

FOR THE PRECEDING TWO-YEAR PERIOD, MAY ESTABLISH A PENSION PLAN

UNDER EITHER SUBCHAPTER C OR SUBCHAPTER D FOR REGULAR, FULL-TIME

MUNICIPAL POLICE OFFICERS OR FIREFIGHTERS HIRED ON OR AFTER THE

EFFECTIVE DATE OF THIS SUBCHAPTER.

SECTION 1218. REPORTING.

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(A) COMPLIANCE WITH SUBCHAPTER.--IN ADDITION TO THE

REQUIREMENTS OF CHAPTER 2, A MUNICIPAL PENSION PLAN SUBJECT TO

THIS CHAPTER SHALL PROVIDE INFORMATION IN ITS BIANNUAL REPORT TO

THE COMMISSION PERTAINING TO ITS COMPLIANCE WITH THE PROVISIONS

OF THIS CHAPTER. REPORTS FILED WITH THE COMMISSION SHALL FOLLOW

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND COMPLY WITH THE

STANDARDS ADOPTED BY THE GOVERNMENTAL ACCOUNTING STANDARDS

BOARD.

(B) ADDITIONAL INFORMATION.--A MUNICIPAL PENSION PLAN SHALL

INCLUDE IN ITS ANNUAL REPORT TO THE COMMISSION INFORMATION WITH

REGARD TO FEES PAID TO INVESTMENT MANAGERS, PERFORMANCE OF THE

FUNDS MANAGED BY THOSE INVESTMENT MANAGERS COMPARED TO AN

APPROPRIATE BENCHMARK, ADMINISTRATIVE EXPENSES OF THE PLAN AND

OUTSTANDING PENSION LIABILITIES.

(1) IF THE COMMISSION IS OF THE OPINION THAT A

MUNICIPALITY HAS NOT PERFORMED A DUTY IMPOSED UPON IT BY THE

PROVISIONS OF THIS SUBCHAPTER, THE COMMISSION SHALL HAVE THE

POWER TO ORDER COMPLIANCE BY THE MUNICIPALITY WITH THAT DUTY.

IF IN TWO CONSECUTIVE REPORTS THE COMMISSION FINDS THAT A

MUNICIPALITY HAS NOT COMPLIED WITH THE PROVISIONS OF THIS

SUBCHAPTER, THE EXECUTIVE DIRECTOR OF THE COMMISSION SHALL

NOTIFY THE MUNICIPALITY AND THE AUDITOR GENERAL OF THE

FAILURE TO COMPLY AND MAY RECOMMEND FUTURE ACTION TO BRING

THE MUNICIPAL PENSION PLAN INTO COMPLIANCE.

(2) THE COMMISSION SHALL NOTIFY THE AUDITOR GENERAL OF

ANY MUNICIPALITY THAT DOES NOT MAKE ITS MINIMUM MUNICIPAL

OBLIGATION UNDER SECTION 304.

(D) PUBLIC POSTING.--A MUNICIPALITY SHALL POST THE REPORT ON

ITS PUBLICLY ACCESSIBLE INTERNET WEBSITE, IF THE MUNICIPALITY

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MAINTAINS SUCH A WEBSITE.

SECTION 1219. ENFORCEMENT BY AUDITOR GENERAL.

(A) ACTIONS BY AUDITOR GENERAL.--UPON NOTIFICATION BY THE

COMMISSION OF A MUNICIPAL PLAN NOT IN COMPLIANCE WITH THIS

SUBCHAPTER, THE AUDITOR GENERAL MAY PETITION THE COMMONWEALTH

COURT TO ISSUE A WRIT OF MANDAMUS UPON ANY ELECTED OR APPOINTED

OFFICIAL OF THE MUNICIPALITY TO SECURE COMPLIANCE WITH THE

PROVISIONS OF THIS SUBCHAPTER. THE AUDITOR GENERAL SHALL BE

AUTHORIZED TO ENTER INTO A CONSENT AGREEMENT WITH THE

MUNICIPALITY TO STAY FURTHER LEGAL PROCEEDINGS. THE CONSENT

AGREEMENT SHALL CONSIST OF A PLAN DESIGNED TO BRING THE PENSION

PLAN INTO COMPLIANCE.

(B) LOSS OF STATE AID.--UPON NOTIFICATION BY THE COMMISSION

OF A MUNICIPALITY'S FAILURE TO PAY ITS MINIMUM MUNICIPAL

OBLIGATION FOR A PENSION PLAN UNDER SECTION 304, THE AUDITOR

GENERAL MAY DIRECT THE COMMONWEALTH TO SUSPEND ANY STATE AID

THAT THE MUNICIPALITY RECEIVES FOR THE PLAN.

SECTION 1220. PROCEEDINGS ON PETITION FILED BY AUDITOR GENERAL.

(A) HEARING.--THE COMMONWEALTH COURT SHALL CONDUCT A HEARING

WITHIN 15 DAYS OF RECEIPT OF THE AUDITOR GENERAL'S PETITION FOR

A WRIT OF MANDAMUS.

(B) DETERMINATION.--NO LATER THAN 60 DAYS FOLLOWING THE

FILING OF A PETITION UNDER THIS SECTION, THE COMMONWEALTH COURT

MAY ISSUE AN ORDER IF IT FINDS BY A PREPONDERANCE OF THE

EVIDENCE THAT THERE HAS BEEN A FAILURE BY THE MUNICIPALITY TO

COMPLY WITH THIS SUBCHAPTER OR TO IMPLEMENT A CONSENT AGREEMENT

ENTERED INTO WITH THE AUDITOR GENERAL.

SUBCHAPTER C

CASH BALANCE PLAN

SECTION 1221. DEFINITIONS.

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THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS SUBCHAPTER

SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE

CONTEXT CLEARLY INDICATES OTHERWISE:

"COMPENSATION." A MEMBER'S BASE SALARY OR WAGES AS

DETERMINED UNDER SECTION 1224.

"EMPLOYER CREDIT." THE PRODUCT OF THE EMPLOYER CREDITING

RATE TIMES THE ANNUAL COMPENSATION OF A MEMBER, WHICH AMOUNT

SHALL BE CREDITED TO THE MEMBER'S SAVINGS ACCOUNT.

"EMPLOYER CREDITING RATE." THE EMPLOYER CREDITING RATE

ESTABLISHED UNDER THIS SUBCHAPTER.

"INTEREST CREDIT." THE PRODUCT OF THE INTEREST CREDITING

RATE TIMES THE BALANCE OF A MEMBER SAVINGS ACCOUNT AT THE END OF

THE IMMEDIATELY PRECEDING CALENDAR MONTH, WHICH AMOUNT SHALL BE

CREDITED TO THE MEMBER'S SAVINGS ACCOUNT.

"INTEREST CREDITING RATE." THE INTEREST CREDITING RATE

ESTABLISHED UNDER THIS SUBCHAPTER.

"MEMBER." A PERSON WHO IS EMPLOYED BY AN EMPLOYER AND

ELIGIBLE TO PARTICIPATE IN A CASH BALANCE PENSION PLAN.

"MEMBER ACCUMULATED CONTRIBUTIONS." THE SUM OF THE MEMBER

CREDITS TOGETHER WITH INTEREST CREDITED THEREON, AT THE INTEREST

CREDITING RATE, UNTIL THE DATE OF TERMINATION OF SERVICE WITH

THE EMPLOYER. IN THE CASE OF A VESTED MEMBER, INTEREST SHALL BE

CREDITED UNTIL THE LATER OF SUPERANNUATION AGE OR THE

DETERMINATION DATE.

"MEMBER CONTRIBUTION RATE." THE MANDATORY MEMBER

CONTRIBUTION RATE ESTABLISHED UNDER THIS SUBCHAPTER.

"MEMBER CREDIT." THE PRODUCT OF THE MEMBER CONTRIBUTION RATE

TIMES THE ANNUAL COMPENSATION OF A MEMBER, WHICH AMOUNT SHALL BE

CREDITED TO THE MEMBER'S SAVINGS ACCOUNT.

"MEMBER SAVINGS ACCOUNT." THE INDIVIDUAL LEDGER ACCOUNT

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ESTABLISHED AND MAINTAINED FOR A MEMBER SOLELY FOR PURPOSES OF

REFLECTING THE ACCUMULATION OF HIS MEMBER CREDITS, EMPLOYER

CREDITS AND INTEREST CREDITS.

"PENSION FUND." THE ENTITY THAT IS THE REPOSITORY FOR THE

ASSETS OF A CASH BALANCE PENSION PLAN AND RESERVED FOR PRESENT

AND FUTURE RETIREMENT PAYMENTS AND BENEFITS OF ACTIVE AND

RETIRED MEMBERS OF THE CASH BALANCE PENSION PLAN.

"SUPERANNUATION AGE." THE DATE ON WHICH A MEMBER WITH A

VESTED BENEFIT UNDER A CASH BALANCE PENSION PLAN ATTAINS AGE 55

AND HAS OR WOULD HAVE COMPLETED 25 YEARS OF SERVICE WITH THE

EMPLOYER.

SECTION 1222. ESTABLISHMENT OF CASH BALANCE PENSION PLAN.

A MUNICIPALITY MAY BY ORDINANCE ESTABLISH A CASH BALANCE

PENSION PLAN. THE CASH BALANCE PENSION PLAN SHALL BE

ADMINISTERED AS AN ADDITIONAL BENEFIT TIER WITHIN A

MUNICIPALITY'S EXISTING DEFINED BENEFIT PLAN STRUCTURE.

SECTION 1223. ELIGIBILITY TO PARTICIPATE IN CASH BALANCE

PENSION PLAN.

IF A MUNICIPALITY ELECTS TO ESTABLISH A CASH BALANCE PENSION

PLAN, THE FOLLOWING EMPLOYEES SHALL BE ELIGIBLE FOR AND SHALL

PARTICIPATE IN THE CASH BALANCE PENSION PLAN ADMINISTERED BY THE

PENSION FUND:

(1) A REGULAR, FULL-TIME POLICE OFFICER WHO IS EMPLOYED

BY A BOROUGH, TOWN, TOWNSHIP OR REGIONAL POLICE DEPARTMENT

MAINTAINING A POLICE FORCE OF THREE OR MORE FULL-TIME MEMBERS

AND WHO WAS FIRST HIRED ON OR AFTER THE EFFECTIVE DATE OF THE

CASH BALANCE PENSION PLAN ESTABLISHED UNDER SECTION 1222.

(2) A REGULAR, FULL-TIME POLICE OFFICER WHO IS EMPLOYED

BY A CITY OF THE FIRST CLASS, SECOND CLASS, SECOND CLASS A OR

THIRD CLASS AND WHO WAS FIRST HIRED ON OR AFTER THE EFFECTIVE

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DATE OF THE CASH BALANCE PENSION PLAN ESTABLISHED UNDER

SECTION 1222.

(3) A REGULAR, FULL-TIME FIREFIGHTER WHO IS EMPLOYED BY

A BOROUGH, TOWN, TOWNSHIP OR REGIONAL FIRE DEPARTMENT

MAINTAINING A FORCE OF THREE OR MORE FULL-TIME MEMBERS AND

WHO WAS FIRST HIRED ON OR AFTER THE EFFECTIVE DATE OF THE

CASH BALANCE PENSION PLAN ESTABLISHED UNDER SECTION 1222.

(4) A REGULAR, FULL-TIME FIREFIGHTER WHO IS EMPLOYED BY

A CITY OF THE FIRST CLASS, SECOND CLASS, SECOND CLASS A OR

THIRD CLASS AND WHO WAS FIRST HIRED ON OR AFTER THE EFFECTIVE

DATE OF THE CASH BALANCE PENSION PLAN ESTABLISHED UNDER

SECTION 1222.

SECTION 1224. APPLICABLE CREDITING RATES AND DETERMINATION OF

COMPENSATION.

(A) MEMBER CONTRIBUTION RATE.--THE MANDATORY MEMBER

CONTRIBUTION RATE SHALL BE 6% FOR A MEMBER WHO PARTICIPATES IN

SOCIAL SECURITY AND 9% FOR A MEMBER WHO DOES NOT PARTICIPATE IN

SOCIAL SECURITY.

(B) EMPLOYER CREDITING RATE.--THE EMPLOYER CREDITING RATE

SHALL BE 4.5%.

(1) THE INTEREST CREDITING RATE FOR ANY CALENDAR MONTH

WITHIN A GIVEN CALENDAR YEAR SHALL BE ONE-TWELFTH OF THE 30-

YEAR YIELD ON UNITED STATES TREASURY SECURITIES FOR THE LAST

BUSINESS DAY OF THE PRECEDING CALENDAR YEAR.

(2) THE MINIMUM INTEREST CREDITING RATE FOR ANY CALENDAR

MONTH SHALL BE 0%, AND THE MAXIMUM INTEREST CREDITING RATE

FOR ANY CALENDAR MONTH SHALL BE 0.375%.

(3) INTEREST CREDITS CONTINUE UNTIL BENEFITS COMMENCE TO

BE PAID FROM THE CASH BALANCE PENSION PLAN.

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(D) COMPENSATION.--

(1) FOR PURPOSES OF DETERMINING MEMBER CREDITS AND

EMPLOYER CREDITS UNDER A CASH BALANCE PENSION PLAN,

COMPENSATION SHALL INCLUDE ONLY THE FOLLOWING:

(I) A MEMBER'S BASE SALARY OR WAGES PAID BY AN

EMPLOYER, INCLUDING OVERTIME PAYMENTS TO A MEMBER UP TO

AN AMOUNT NO GREATER THAN 10% OF THE MEMBER'S BASE

SALARY.

(II) DISABILITY PAY PAID BY AN EMPLOYER AS A RESULT

OF A SERVICE-BASED DISABILITY.

(2) COMPENSATION DOES NOT INCLUDE THE FOLLOWING:

(I) OVERTIME PAID IN THE FORM OF COMPENSATORY TIME,

REGARDLESS OF WHETHER THE 10% CAP ON THE INCLUSION OF

OVERTIME, IS MET.

(II) REIMBURSEMENTS, BONUSES, OVERTIME PAYMENTS IN

EXCESS OF 10% OF BASE SALARY, PAYOUTS OF ACCRUED SICK OR

VACATION PAY OR ANY OTHER FORM OF USED OR UNUSED PAID

TIME OFF.

(3) A MEMBER'S COMPENSATION FOR A CALENDAR YEAR SHALL

NOT EXCEED THE LIMIT PRESCRIBED BY SECTION 401(A)(17) OF THE

IRC.

SECTION 1225. MEMBER SAVINGS ACCOUNT.

(A) CREDITS TO ACCOUNT.--

(1) THE MEMBER SAVINGS ACCOUNT SHALL BE THE LEDGER

ACCOUNT TO WHICH SHALL BE CREDITED MEMBER CREDITS, EMPLOYER

CREDITS AND INTEREST CREDITS.

(2) MEMBER CREDITS AND EMPLOYER CREDITS SHALL BE

ALLOCATED TO THE MEMBER SAVINGS ACCOUNTS EACH PAYROLL PERIOD,

OR ON SUCH OTHER FREQUENCY AS THE EMPLOYER SHALL DETERMINE

WITH THE APPROVAL OF THE PENSION FUND, BUT NOT LESS

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FREQUENTLY THAN ANNUALLY.

(3) INTEREST CREDITS SHALL BE ALLOCATED TO MEMBER

SAVINGS ACCOUNTS ON A MONTHLY BASIS.

(B) CHARGES TO ACCOUNT.--

(1) UPON THE PAYMENT TO A MEMBER, OR HIS DESIGNATED

BENEFICIARY, OF A BENEFIT FROM THE CASH BALANCE PENSION PLAN,

THE PAYMENT SHALL BE CHARGED TO THE MEMBER'S SAVINGS ACCOUNT.

(2) UPON THE ELECTION OF A MEMBER TO WITHDRAW HIS MEMBER

ACCUMULATED CONTRIBUTIONS IN LIEU OF RECEIVING A PENSION FROM

THE CASH BALANCE PENSION PLAN, THE ENTIRE BALANCE OF THE

MEMBER'S SAVINGS ACCOUNT SHALL BE DEEMED FORFEITED AND

CHARGED TO THE MEMBER'S SAVINGS ACCOUNT.

SECTION 1226. EXCESS INTEREST CREDIT.

(A) USE TOWARD UNFUNDED LIABILITY.--ANY EXCESS INTEREST

CREDIT EARNED IN THE CASH BALANCE PORTION SHALL BE USED TO PAY

DOWN THE UNFUNDED LIABILITY OF THE PENSION PLAN UNTIL THE PLAN

ACHIEVES A FUNDING RATIO OF 100% FOR TWO CONSECUTIVE ACTUARIAL

VALUATIONS.

(B) CREDITED BACK TO MEMBERS.--AT SUCH TIME AS THE PENSION

PLAN ACHIEVES A FUNDING RATIO OF 100% FOR TWO CONSECUTIVE

ACTUARIAL VALUATIONS UNDER SUBSECTION (A), ANY EXCESS INTEREST

CREDIT EARNED ON THE CASH BALANCE PORTION SHALL BE CREDITED TO

MEMBER CASH BALANCE SAVINGS ACCOUNTS.

SECTION 1227. RETURN OF MEMBER ACCUMULATED CONTRIBUTIONS.

(A) GENERAL RULE.--A MEMBER WHOSE EMPLOYMENT TERMINATES WITH

LESS THAN EIGHT YEARS OF CREDITED SERVICE SHALL RECEIVE HIS

MEMBER ACCUMULATED CONTRIBUTIONS IN A LUMP SUM.

(B) MEMBERS WHO MAY ELECT.--A MEMBER MAY ELECT TO RECEIVE

HIS MEMBER ACCUMULATED CONTRIBUTIONS UPON TERMINATION OF SERVICE

IN LIEU OF ANY BENEFIT TO WHICH THE MEMBER IS ENTITLED UNDER THE

20150HB0414PN2545 - 19 -

CASH BALANCE PENSION PLAN.

SECTION 1228. VESTING.

(A) GENERAL RULE.--A MEMBER WITH 12 OR MORE YEARS OF

CREDITED SERVICE SHALL HAVE A 100% VESTED INTEREST IN HIS MEMBER

SAVINGS ACCOUNT.

(B) PARTIAL VESTING.--A MEMBER WITH EIGHT OR MORE, BUT LESS

THAN 12, YEARS OF CREDITED SERVICE SHALL HAVE A 50% VESTED

INTEREST IN HIS MEMBER SAVINGS ACCOUNT.

SUBSECTIONS (A) AND (B), A MEMBER SHALL ALWAYS BE 100% VESTED IN

HIS MEMBER ACCUMULATED CONTRIBUTIONS.

SECTION 1229. BENEFIT OPTIONS.

(A) GENERAL RULE.--VESTED BENEFITS UNDER THE CASH BALANCE

PENSION PLAN SHALL BE PAYABLE TO A MEMBER WHO HAS TERMINATED

SERVICE WITH THE EMPLOYER AS OF THE FIRST DAY OF THE MONTH

COINCIDENT WITH OR NEXT FOLLOWING THE MEMBER'S ATTAINMENT OF

SUPERANNUATION AGE OR, IF LATER, THE DATE OF HIS TERMINATION OF

SERVICE WITH THE EMPLOYER, IN AN ANNUITY THAT IS ACTUARIALLY

EQUIVALENT TO THE BALANCE OF THE MEMBER'S SAVINGS ACCOUNT.

(B) ANNUITY OPTIONS.--ANNUITY OPTIONS SHALL BE ESTABLISHED

BY THE CASH BALANCE PENSION PLAN AND SHALL INCLUDE SINGLE AND

JOINT AND SURVIVOR LIFE ANNUITY FORMS.

BE USED TO CONVERT ACCRUED BENEFITS UNDER THE CASH BALANCE

PENSION PLAN INTO ANNUITY AND OTHER OPTIONAL FORMS OF BENEFITS

SHALL BE PUBLISHED BY THE PENSION FUND.

(D) LUMP SUM PAYMENTS.--IN LIEU OF AN ANNUITY FORM OF

BENEFIT, A MEMBER MAY ELECT TO RECEIVE HIS BENEFIT UNDER THE

CASH BALANCE PENSION PLAN AS A LUMP SUM PAYMENT EQUAL TO THE

BALANCE OF THE MEMBER'S SAVINGS ACCOUNT.

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SECTION 1230. ELECTION UPON TERMINATION OF SERVICE.

(A) GENERAL RULE.--A MEMBER WHO TERMINATES SERVICE WITH THE

EMPLOYER PRIOR TO ATTAINMENT OF SUPERANNUATION AGE MAY ELECT, ON

THE FORM PRESCRIBED BY THE PENSION FUND AND DULY ATTESTED BY THE

MEMBER OR THE MEMBER'S LEGALLY CONSTITUTED REPRESENTATIVE, TO:

(1) WITHDRAW HIS MEMBER ACCUMULATED CONTRIBUTIONS IN

ACCORDANCE WITH SECTION 305; OR

(2) IF VESTED, RECEIVE A BENEFIT IN THE FORM OF A LUMP

SUM PAYMENT OR AN ANNUITY.

(B) TIMING OF PAYMENT.--THE WITHDRAWAL, LUMP SUM BENEFIT OR

ANNUITY SHALL BE PAID, OR COMMENCE TO BE PAID, AS SOON AS

PRACTICABLE AFTER THE PENSION FUND'S RECEIPT OF THE ELECTION,

BUT IN NO EVENT LATER THAN THE FIRST DAY OF THE MONTH COINCIDENT

WITH OR NEXT FOLLOWING THE MEMBER'S ATTAINMENT OF SUPERANNUATION

AGE.

ACCUMULATED CONTRIBUTIONS OR RECEIVES A BENEFIT IN THE FORM OF A

LUMP SUM PAYMENT, THE MEMBER SHALL BE PERMITTED TO DIRECTLY

ROLLOVER THE AMOUNT DISTRIBUTED TO AN ELIGIBLE RETIREMENT PLAN,

INCLUDING ANOTHER CASH BALANCE PENSION PLAN ESTABLISHED UNDER

SECTION 1222. DIRECT ROLLOVERS SHALL BE IN CONFORMANCE WITH

SECTION 901 AND THE APPLICABLE PROVISIONS OF THE IRC.

SECTION 1231. PRERETIREMENT SURVIVING SPOUSE BENEFITS.

(A) GENERAL RULE.--IN THE EVENT THAT A MEMBER WHO IS MARRIED

AND HAS A VESTED BENEFIT UNDER THE CASH BALANCE PLAN DIES PRIOR

TO RECEIVING, OR COMMENCING TO RECEIVE, HIS BENEFIT OR HIS

MEMBER ACCUMULATED CONTRIBUTIONS, THE VESTED PORTION OF THE

MEMBER'S SAVINGS ACCOUNT SHALL BE PAID TO THE MEMBER'S SURVIVING

SPOUSE IN AN ACTUARIALLY EQUIVALENT ANNUITY FOR THE LIFE OF THE

SURVIVING SPOUSE OR, AT THE SPOUSE'S ELECTION ON A FORM

20150HB0414PN2545 - 21 -

PRESCRIBED BY THE PENSION FUND, IN A LUMP SUM.

(B) TIMING OF PAYMENT.--THE PRERETIREMENT SURVIVING SPOUSE

BENEFIT SHALL BE PAID, OR COMMENCE TO BE PAID, AT THE SPOUSE'S

ELECTION ON THE FIRST DAY OF THE MONTH FOLLOWING THE MEMBER'S

DEATH OR THE FIRST DAY OF ANY MONTH THEREAFTER, BUT NOT LATER

THAN THE FIRST DAY OF THE MONTH COINCIDENT WITH OR NEXT

FOLLOWING THE MEMBER'S SUPERANNUATION AGE, UNLESS THE MEMBER

DIES AFTER SUPERANNUATION AGE.

SECTION 1232. INELIGIBILITY FOR OTHER DEFINED BENEFIT PENSION

PLAN BENEFITS.

(A) GENERAL RULE.--A MEMBER OF A CASH BALANCE PENSION PLAN

SHALL BE INELIGIBLE FOR THE PENSION BENEFITS PROVIDED TO

EMPLOYEES OF THE EMPLOYER WHO WERE HIRED BEFORE JANUARY 1, 2016,

UNDER ANY OTHER DEFINED BENEFIT PENSION PLAN MAINTAINED BY THE

EMPLOYER.

(B) CONSTRUCTION.--NOTHING IN THIS SECTION MAY BE CONSTRUED

AS PREVENTING OR LIMITING AN EMPLOYER'S ABILITY TO ESTABLISH OR

PARTICIPATE IN PROGRAMS THAT PROVIDE LONG-TERM DISABILITY

BENEFITS.

SECTION 1233. ELIGIBILITY FOR OTHER BENEFITS.

(A) GENERAL RULE.--A MEMBER SHALL BE ELIGIBLE FOR ALL

PRERETIREMENT BENEFITS FOR EMPLOYEES AS OTHERWISE PROVIDED BY

LAW, INCLUDING, BUT NOT LIMITED TO, BENEFITS UNDER:

(1) THE ACT OF JUNE 2, 1915 (P.L.736, NO.338), KNOWN AS

THE WORKERS' COMPENSATION ACT;

(2) THE ACT OF JUNE 28, 1935 (P.L.477, NO.193), REFERRED

TO AS THE ENFORCEMENT OFFICER DISABILITY BENEFITS LAW;

(3) THE ACT OF DECEMBER 5, 1936 (2ND SP.SESS., 1937

P.L.2897, NO.1), KNOWN AS THE UNEMPLOYMENT COMPENSATION LAW;

(4) THE ACT OF JUNE 24, 1976 (P.L.424, NO.101), REFERRED

20150HB0414PN2545 - 22 -

TO AS THE EMERGENCY AND LAW ENFORCEMENT PERSONNEL DEATH

BENEFITS ACT; AND

(5) THE PUBLIC SAFETY OFFICERS' BENEFIT ACT OF 1976

(PUBLIC LAW 94-430, 42 U.S.C. § 3796).

(B) SUPPLEMENTAL DEFERRED COMPENSATION PLANS.--EACH EMPLOYER

AUTHORIZED TO ESTABLISH A CASH BALANCE PENSION PLAN DESCRIBED IN

THIS SUBCHAPTER MAY ESTABLISH A SUPPLEMENTAL DEFERRED

COMPENSATION PLAN THAT SATISFIES THE REQUIREMENTS OF SECTION

457(B) OF THE IRC, PROVIDED THAT THE EMPLOYER SHALL NOT BE

REQUIRED TO MAKE EMPLOYER CONTRIBUTIONS TO THE SUPPLEMENTAL

DEFERRED COMPENSATION PLAN.

SECTION 1234. NO INCREASE OR DIMINISHMENT IN BENEFITS UNDER

EXISTING DEFINED BENEFIT PLANS.

(A) EMPLOYEES COVERED.--NOTHING IN THIS SUBCHAPTER MAY BE

CONSTRUED TO DIMINISH THE ESTABLISHED BENEFITS OF EMPLOYEES WHO

ARE MEMBERS OF AN EXISTING DEFINED BENEFIT PLAN ON THE EFFECTIVE

DATE OF THIS CHAPTER.

(B) INCREASED BENEFITS PROHIBITED.--THE BENEFITS ESTABLISHED

THROUGH THE EXISTING DEFINED BENEFIT PENSION PLANS APPLICABLE TO

EXISTING EMPLOYEES SHALL NOT BE INCREASED ON OR AFTER THE

EFFECTIVE DATE OF THIS SECTION.

CASH BALANCE PLAN OR AN ENABLING STATUTE FOR EITHER PLAN MAY BE

CONSTRUED AS IMPLYING AN OBLIGATION BY THE EMPLOYER TO MAINTAIN

OR PROVIDE THE KILLED IN SERVICE BENEFITS REQUIRED UNDER THE ACT

OF JUNE 24, 1976 (P.L.424, NO.101), REFERRED TO AS THE EMERGENCY

AND LAW ENFORCEMENT PERSONNEL DEATH BENEFITS ACT.

SECTION 1235. WORK-RELATED DISABILITY.

(A) BENEFITS.--A VESTED MEMBER WHO TERMINATES SERVICE WITH

THE EMPLOYER PRIOR TO ATTAINING SUPERANNUATION AGE DUE TO

20150HB0414PN2545 - 23 -

BECOMING UNABLE TO PERFORM THE DUTIES OF A POLICE OFFICER OR

FIREFIGHTER AS A DIRECT RESULT OF AN INJURY SUFFERED WHILE

PERFORMING THE DUTIES PRIOR TO THE MEMBER'S SUPERANNUATION DATE

SHALL ELECT TO RECEIVE A BENEFIT UNDER THE CASH BALANCE PENSION

PLAN IN ACCORDANCE WITH SECTION 1229, EXCEPT THAT THE DISABILITY

BENEFIT SHALL BECOME PAYABLE ON THE FIRST DAY OF THE MONTH NEXT

FOLLOWING THE DETERMINATION OF THE MEMBER'S PERMANENT DISABILITY

STATUS.

(B) OFFSETS.--THE DISABILITY BENEFIT UNDER SUBSECTION (A)

SHALL BE OFFSET BY A WORKERS' COMPENSATION OR SOCIAL SECURITY

DISABILITY BENEFIT FOR WHICH THE MEMBER MAY BE ELIGIBLE FOR THE

SAME INJURY AND BY ANOTHER DISABILITY BENEFIT OR INCOME

REPLACEMENT BENEFIT FOR WHICH THE MEMBER IS ELIGIBLE THAT WAS

FUNDED, IN WHOLE OR IN PART, BY THE EMPLOYER THAT IS PAID FOR

THE SAME INJURY. IF THE OTHER DISABILITY BENEFIT OR INCOME

REPLACEMENT BENEFIT IS PAID FOR ONLY IN PART BY THE EMPLOYER,

THE OFFSET TAKEN BY THE EMPLOYER SHALL BE PRORATED ACCORDING TO

THE EMPLOYER'S CONTRIBUTION. THE OFFSET SHALL CONTINUE UNTIL THE

MEMBER REACHES THE MEMBER'S SUPERANNUATION DATE, AT WHICH POINT

THE DISABILITY BENEFIT SHALL CEASE AND THE MEMBER SHALL BE

ENTITLED TO RECEIVE A VESTED BENEFIT IN ACCORDANCE WITH SECTION

1229 IN AN ANNUITY THAT IS ACTUARIALLY EQUIVALENT TO THE

REMAINING BALANCE OF THE MEMBER'S SAVINGS ACCOUNT AT THE TIME

WITHOUT THE OFFSETS UNDER THIS SUBSECTION.

SECTION 1236. DISABILITY INSURANCE.

(A) ELIGIBLE MEMBERS.--AN EMPLOYER MAY PROVIDE DISABILITY

INSURANCE FOR A MEMBER WHO TERMINATES SERVICE WITH THE EMPLOYER

PRIOR TO VESTING OR THE ATTAINMENT OF SUPERANNUATION AGE DUE TO

BECOMING UNABLE TO PERFORM THE DUTIES OF A POLICE OFFICER OR

FIREFIGHTER AS A DIRECT RESULT OF AN INJURY SUFFERED WHILE

20150HB0414PN2545 - 24 -

PERFORMING THE MEMBER'S DUTIES AS A POLICE OFFICER OR

FIREFIGHTER THAT PERMANENTLY PRECLUDE THE MEMBER FROM WORKING AS

A POLICE OFFICER OR FIREFIGHTER.

(B) INSURANCE CARRIER.--IF AN EMPLOYER OFFERS DISABILITY

INSURANCE UNDER SUBSECTION (A), THE BENEFIT SHALL BE PROVIDED

THROUGH THE DISABILITY INSURANCE CARRIER.

SHALL BE PROVIDED BY THE INSURANCE CARRIER.

(D) DURATION.--THE BENEFIT MAY BE PAID BY THE INSURANCE

CARRIER AND UNDER THE POLICY UNTIL THE MEMBER IS ABLE TO BE

GAINFULLY EMPLOYED IN ANOTHER OCCUPATION OR, IF THE MEMBER IS

NOT ABLE TO BE EMPLOYED IN OTHER GAINFUL EMPLOYMENT, UNTIL THE

MEMBER'S SUPERANNUATION DATE.

(E) CONDITIONS.--THE BENEFIT MAY ONLY BE PROVIDED BY THE

EMPLOYER SUBJECT TO THE FOLLOWING CONDITIONS:

(1) THE INCOME PROVIDED BY THE INSURANCE IS NOT GREATER

THAN 66.6% OF THE MEMBER'S BASE WAGE AS A POLICE OFFICER OR

FIREFIGHTER AT THE TIME OF THE INJURY.

(2) THE WORK-RELATED DISABILITY INSURANCE BENEFIT SHALL

BE SUBJECT TO THE FOLLOWING CONDITIONS AND OFFSETS THAT SHALL

BE NOTED IN THE APPLICABLE POLICY:

(I) AN OFFSET NEGOTIATED INTO THE DISABILITY

INSURANCE POLICY.

(II) ANOTHER DISABILITY BENEFIT OR INCOME

REPLACEMENT BENEFIT RECEIVED BY THE DISABLED MEMBER THAT

WAS PAID FOR, IN WHOLE OR IN PART, BY THE EMPLOYER OR

THAT THE MEMBER RECEIVED WITHOUT A FINANCIAL CONTRIBUTION

AS A RESULT OF THE MEMBER'S EMPLOYMENT OR DUE TO THE

INJURY OCCURRING IN THE PERFORMANCE OF THE MEMBER'S

DUTIES AS A POLICE OFFICER OR FIREFIGHTER, INCLUDING, BUT

20150HB0414PN2545 - 25 -

NOT LIMITED TO, SOCIAL SECURITY DISABILITY BENEFITS,

WORKERS' COMPENSATION BENEFITS AND A BENEFIT TO WHICH THE

DISABLED MEMBER MAY BE ELIGIBLE TO RECEIVE IN ACCORDANCE

WITH SECTION 1235 REGARDLESS OF WHETHER THE DISABLED

MEMBER IS RECEIVING THE BENEFIT. THE OFFSETS SHALL BE

REQUIRED REGARDLESS OF WHETHER SET FORTH IN THE

DISABILITY INSURANCE POLICY. IF THE OTHER DISABILITY

BENEFIT OR INCOME REPLACEMENT BENEFIT IS PAID FOR ONLY IN

PART BY THE EMPLOYER, THE OFFSET TAKEN BY THE EMPLOYER OR

INSURANCE CARRIER SHALL BE PRORATED ACCORDING TO THE

EMPLOYER'S CONTRIBUTION.

(III) THERE SHALL BE AN ELIMINATION PERIOD OF 180

DAYS THAT COMMENCES THE DAY FOLLOWING THE MEMBER

TERMINATING EMPLOYMENT DUE TO THE DISABILITY.

SUBCHAPTER D

DEFINED CONTRIBUTION RETIREMENT PLAN

SECTION 1241. DEFINITIONS.

THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS SUBCHAPTER

SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE

CONTEXT CLEARLY INDICATES OTHERWISE:

"ACCOUNT." THE ENTRIES MAINTAINED IN THE RECORDS OF THE

TRUSTEE WHICH REPRESENT THE MEMBER'S INTEREST IN THE TRUST.

"ALTERNATE PAYEE." A SPOUSE, FORMER SPOUSE, CHILD OR OTHER

DEPENDENT OF A MEMBER WHO IS RECOGNIZED BY A QUALIFIED DOMESTIC

RELATIONS ORDER AS HAVING A RIGHT TO RECEIVE ALL OR A PORTION OF

THE MEMBER'S VESTED ACCOUNT BALANCE.

"ANNUAL ADDITIONS." FOR ANY LIMITATION YEAR, THE SUM OF THE

FOLLOWING:

(1) THE AGGREGATE AFTER-TAX EMPLOYEE CONTRIBUTIONS THAT

THE MEMBER CONTRIBUTES DURING THE YEAR TO ALL QUALIFIED

20150HB0414PN2545 - 26 -

RETIREMENT PLANS MAINTAINED BY THE MUNICIPALITY;

(2) THE AMOUNT OF MUNICIPALITY CONTRIBUTIONS ALLOCATED

TO THE MEMBER'S MUNICIPALITY CONTRIBUTION ACCOUNT UNDER THIS

PLAN AS OF ANY DATE WITHIN THE YEAR; AND

(3) THE AMOUNT OF MUNICIPALITY CONTRIBUTIONS AND

FORFEITURES ALLOCATED TO THE MEMBER UNDER ANY QUALIFIED

DEFINED CONTRIBUTION PLAN THAT MAY BE MAINTAINED BY THE

MUNICIPALITY, OTHER THAN THIS PLAN, AS OF ANY DATE WITHIN THE

YEAR.

"BENEFIT COMMENCEMENT DATE." FOR ANY MEMBER OR DESIGNATED

BENEFICIARY, THE DATE THE FIRST BENEFIT PAYMENT, INCLUDING A

SINGLE SUM FROM THE MEMBER'S ACCOUNT, IS DUE, OTHER THAN

PURSUANT TO A WITHDRAWAL UNDER SECTION 1280.

"BREAK IN SERVICE." SHALL BE AS FOLLOWS:

(1) EXCEPT AS PROVIDED IN PARAGRAPH (2) OR (3), A PLAN

YEAR IN WHICH AN EMPLOYEE IS NOT CREDITED WITH MORE THAN 500

HOURS OF SERVICE.

(2) FOR THE PURPOSE OF CALCULATING A BREAK IN SERVICE,

AN EMPLOYEE SHALL RECEIVE CREDIT FOR AN HOUR OF SERVICE FOR

EACH HOUR OF SERVICE THAT THE EMPLOYEE WOULD HAVE EARNED HAD

THE EMPLOYEE CONTINUED TO BE ACTIVELY EMPLOYED DURING THE

PERIOD OF ABSENCE IF THE EMPLOYEE IS ABSENT FOR ONE OR MORE

OF THE FOLLOWING REASONS:

(I) LAYOFF FOR A PERIOD OF NOT MORE THAN ONE YEAR;

(II) LEAVE OF ABSENCE THAT IS PROTECTED UNDER THE

FAMILY AND MEDICAL LEAVE ACT OF 1993 (PUBLIC LAW 103-3,

29 U.S.C. § 2601 ET SEQ.); OR

(III) LEAVE OF ABSENCE FOR ANY OTHER REASON WITH THE

APPROVAL OF THE PLAN ADMINISTRATOR FOR A PERIOD OF NOT

MORE THAN ONE YEAR.

20150HB0414PN2545 - 27 -

(3) IF AN EMPLOYEE IS ABSENT FROM WORK BY REASON OF

PREGNANCY, CHILDBIRTH OR PLACEMENT IN CONNECTION WITH AN

ADOPTION, THE EMPLOYEE SHALL BE CREDITED WITH THE HOURS OF

SERVICE THAT THE EMPLOYEE WOULD HAVE RECEIVED BUT FOR THE

ABSENCE. IF THE HOURS OF SERVICE CANNOT BE DETERMINED, THE

EMPLOYEE SHALL RECEIVE EIGHT HOURS OF SERVICE PER NORMAL

WORKDAY. THE TOTAL NUMBER OF HOURS TO BE TREATED AS HOURS OF

SERVICE UNDER THIS PROVISION SHALL NOT EXCEED 501. THE HOURS

OF SERVICE DESCRIBED IN THIS PROVISION SHALL BE CREDITED TO

THE PLAN YEAR IN WHICH THE HOURS OF SERVICE WOULD HAVE

OTHERWISE OCCURRED.

"COMPENSATION." SHALL BE AS FOLLOWS:

(1) FOR ANY PLAN YEAR, SUBJECT TO THE LIMITATIONS SET

FORTH BELOW, THE TOTAL WAGES AS REPORTED ON AN EMPLOYEE'S

FORM W-2 FROM THE MUNICIPALITY FOR THE PLAN YEAR, INCLUDING:

(I) BASIC CONTRIBUTIONS AND ELECTIVE CONTRIBUTIONS

THAT ARE NOT INCLUDED IN GROSS INCOME PURSUANT TO SECTION

125, 132(F), 402(E)(3), 402(H)(1)(B) OR 402(K) OF THE IRC

(26 U.S.C. § 125, 132(F), 402(E)(3), 402(H)(1)(B) OR

402(K)); AND

(II) COMPENSATION DEFERRED UNDER AN ELIGIBLE

DEFERRED COMPENSATION PLAN WITHIN THE MEANING OF SECTION

457(B) OF THE IRC (26 U.S.C. § 457(B)).

(2) IF AN EMPLOYEE IS SEVERED FROM EMPLOYMENT,

COMPENSATION MUST BE PAID OR MADE AVAILABLE TO AN EMPLOYEE

WITHIN THE LIMITATION YEAR AND MUST BE PAID OR TREATED AS

PAID TO THE EMPLOYEE PRIOR TO HIS OR HER SEVERANCE FROM

EMPLOYMENT. FOR PURPOSES OF CONTRIBUTIONS, COMPENSATION SHALL

ALSO INCLUDE COMPENSATION PAID BY THE LATER OF TWO AND ONE-

HALF MONTHS AFTER THE EMPLOYEE'S SEVERANCE FROM EMPLOYMENT OR

20150HB0414PN2545 - 28 -

THE END OF THE LIMITATION YEAR IN WHICH THE EMPLOYEE HAS A

SEVERANCE FROM EMPLOYMENT IF PAYMENT IS REGULAR COMPENSATION

FOR SERVICES DURING THE EMPLOYEE'S REGULAR WORKING HOURS, OR

COMPENSATION FOR SERVICES OUTSIDE THE EMPLOYEE'S REGULAR

WORKING HOURS, COMMISSIONS, BONUSES OR SIMILAR PAYMENTS, AND

THE PAYMENT WOULD HAVE BEEN MADE TO THE EMPLOYEE IF THE

EMPLOYEE HAD CONTINUED IN EMPLOYMENT WITH THE MUNICIPALITY,

OR THE PAYMENT IS FOR UNUSED ACCRUED BONA FIDE SICK, VACATION

OR OTHER LEAVE THAT THE EMPLOYEE WOULD HAVE BEEN ABLE TO USE

IF THE EMPLOYEE HAD CONTINUED IN EMPLOYMENT WITH THE

MUNICIPALITY.

(3) WITH RESPECT TO ANY PLAN YEAR, ONLY COMPENSATION NOT

IN EXCESS OF THE AMOUNT TO WHICH THE LIMIT OF SECTION 401(A)

(17) OF THE IRC (26 U.S.C. § 401(A)(17)) HAS BEEN INDEXED

SHALL BE TAKEN INTO ACCOUNT.

(4) FOR PURPOSES OF THIS DEFINITION, AMOUNTS UNDER

SECTION 125 OF THE IRC (26 U.S.C. § 125) SHALL INCLUDE ANY

AMOUNTS NOT AVAILABLE TO A MEMBER IN CASH IN LIEU OF HEALTH

COVERAGE BECAUSE THE MEMBER IS UNABLE TO CERTIFY THAT HE OR

SHE HAS OTHER HEALTH COVERAGE. AN AMOUNT WILL BE TREATED AS

AN AMOUNT UNDER SECTION 125 OF THE IRC ONLY IF THE

MUNICIPALITY DOES NOT OTHERWISE REQUEST OR COLLECT

INFORMATION REGARDING THE MEMBER'S OTHER HEALTH COVERAGE AS

PART OF THE ENROLLMENT PROCESS FOR THE HEALTH PLAN.

"DESIGNATED BENEFICIARY." THE PERSON OR PERSONS DESIGNATED

BY A MEMBER AS THE BENEFICIARY TO RECEIVE ANY DISTRIBUTION

PAYABLE UNDER THE PLAN IN THE EVENT OF THE MEMBER'S DEATH. THE

MEMBER MAY CHANGE THE DESIGNATION OF A BENEFICIARY FROM TIME TO

TIME IN ACCORDANCE WITH PROCEDURES ESTABLISHED BY THE PLAN

ADMINISTRATOR. ANY DESIGNATION OF A BENEFICIARY SHALL ONLY BE

20150HB0414PN2545 - 29 -

EFFECTIVE IF IT IS MADE IN WRITING ON THE FORM PRESCRIBED BY THE

PLAN ADMINISTRATOR AND IS RECEIVED BY THE PLAN ADMINISTRATOR

PRIOR TO THE MEMBER'S DEATH. IF THE MEMBER HAS NOT NAMED A

BENEFICIARY OR IF NONE OF THE NAMED BENEFICIARIES IS LIVING WHEN

A PAYMENT IS TO BE MADE, ONE OF THE FOLLOWING SHALL APPLY:

(1) THE SPOUSE OF THE DECEASED MEMBER SHALL BE THE

BENEFICIARY;

(2) IF THE MEMBER HAS NO SPOUSE LIVING AT THE TIME OF

THE PAYMENT, THE THEN-LIVING CHILDREN OF THE MEMBER SHALL BE

THE BENEFICIARIES IN EQUAL SHARES; OR

(3) IF THE MEMBER HAS NEITHER SPOUSE NOR CHILDREN LIVING

AT THE TIME OF THE PAYMENT, THE ESTATE OF THE MEMBER SHALL BE

THE BENEFICIARY.

"ELIGIBLE EMPLOYEE." EMPLOYEES OF A MUNICIPALITY WHO MEET

THE REQUIREMENTS OF SECTION 1249.

"ELIGIBLE MEMBER." A MEMBER, MEMBER'S SURVIVING SPOUSE,

MEMBER'S SPOUSE OR FORMER SPOUSE WHO IS AN ALTERNATE PAYEE UNDER

A QUALIFIED DOMESTIC RELATIONS ORDER OR MEMBER'S DESIGNATED

BENEFICIARY WHO IS NOT THE MEMBER'S SPOUSE.

"ELIGIBLE RETIREMENT PLAN." THE TERM INCLUDES:

(1) ANY OF THE FOLLOWING:

(I) AN INDIVIDUAL RETIREMENT ACCOUNT DESCRIBED IN

SECTION 408(A) OF THE IRC (26 U.S.C. § 408(A)).

(II) AN INDIVIDUAL RETIREMENT ANNUITY DESCRIBED IN

SECTION 408(B) OF THE IRC (26 U.S.C. § 408(B)).

(III) AN ANNUITY PLAN DESCRIBED IN SECTION 403(A) OF

THE IRC (26 U.S.C. § 403(A)).

(IV) A QUALIFIED TRUST DESCRIBED IN SECTION 401(A)

OF THE IRC (26 U.S.C. § 401(A)).

(V) AN ANNUITY CONTRACT DESCRIBED IN SECTION 403(B)

20150HB0414PN2545 - 30 -

OF THE IRC (26 U.S.C. § 403(B)).

(VI) A GOVERNMENTAL DEFERRED COMPENSATION PLAN UNDER

SECTION 457(B) OF THE IRC (26 U.S.C. § 457(B)).

(VII) A ROTH INDIVIDUAL RETIREMENT ACCOUNT DESCRIBED

IN SECTION 408A OF THE IRC (26 U.S.C. § 408A).

(2) WITH RESPECT TO A DESIGNATED BENEFICIARY WHO IS NOT

THE MEMBER'S SPOUSE, ANY OF THE FOLLOWING:

(I) AN INDIVIDUAL RETIREMENT ACCOUNT DESCRIBED IN

SECTION 408(A) OF THE IRC.

(II) A ROTH INDIVIDUAL RETIREMENT ACCOUNT DESCRIBED

IN SECTION 408A OF THE IRC.

(III) AN INDIVIDUAL RETIREMENT ANNUITY DESCRIBED IN

SECTION 408(B) OF THE IRC, OTHER THAN AN ENDOWMENT

CONTRACT, ESTABLISHED ON BEHALF OF THE DESIGNATED

BENEFICIARY AND TREATED AS AN INHERITED INDIVIDUAL

RETIREMENT ACCOUNT OR ANNUITY IN ACCORDANCE WITH SECTION

401(C)(11) OF THE IRC (26 U.S.C. § 401(C)(11)).

"ELIGIBLE ROLLOVER DISTRIBUTION." A DISTRIBUTION OF ALL OR

ANY PORTION OF A MEMBER'S ACCOUNT IF THE AMOUNT WAS NOT ROLLED

OVER TO AN ELIGIBLE RETIREMENT PLAN, EXCEPT THAT AN ELIGIBLE

ROLLOVER DISTRIBUTION DOES NOT INCLUDE:

(1) A DISTRIBUTION THAT IS ONE OF A SERIES OF

SUBSTANTIALLY EQUAL PERIODIC PAYMENTS, BUT NOT LESS

FREQUENTLY THAN ANNUALLY, MADE FOR THE LIFE OR LIFE

EXPECTANCY OF AN ELIGIBLE MEMBER OR THE JOINT LIVES OR JOINT

LIFE EXPECTANCIES OF THE ELIGIBLE MEMBER AND THE MEMBER'S

BENEFICIARY, OR FOR A SPECIFIED PERIOD OF 10 YEARS OR MORE.

(2) A DISTRIBUTION TO THE EXTENT SUCH DISTRIBUTION IS

REQUIRED UNDER SECTION 401(A)(9) OF THE IRC (26 U.S.C. §

401(A)(9)).

20150HB0414PN2545 - 31 -

"EMPLOYMENT COMMENCEMENT DATE." THE DATE ON WHICH AN

EMPLOYEE IS FIRST ENTITLED TO BE CREDITED WITH AN HOUR OF

SERVICE.

"HOUR OF SERVICE." SHALL BE AS FOLLOWS:

(1) IN ACCORDANCE WITH 29 CFR 2530.200B-2 (RELATING TO

HOUR OF SERVICE), AN HOUR OF SERVICE SHALL BE DEFINED AS:

(I) EACH HOUR THAT THE EMPLOYEE IS DIRECTLY OR

INDIRECTLY PAID OR ENTITLED TO PAYMENT BY THE

MUNICIPALITY FOR THE PERFORMANCE OF EMPLOYMENT DUTIES;

(II) EACH HOUR THE EMPLOYEE IS ENTITLED, EITHER BY

AWARD OR AGREEMENT, TO BACK PAY FROM THE MUNICIPALITY,

IRRESPECTIVE OF MITIGATION OF DAMAGES; AND

(III) EACH HOUR THE EMPLOYEE IS DIRECTLY OR

INDIRECTLY PAID OR ENTITLED TO PAYMENT BY THE

MUNICIPALITY ON ACCOUNT OF A PERIOD OF TIME DURING WHICH

NO DUTIES ARE PERFORMED DUE TO VACATION, HOLIDAY,

ILLNESS, INCAPACITY, INCLUDING DISABILITY, JURY DUTY,

LAYOFF, LEAVE OF ABSENCE OR MILITARY DUTY.

(2) THE FOLLOWING SHALL APPLY:

(I) NO HOURS OF SERVICE MAY BE CREDITED TO AN

EMPLOYEE FOR PAYMENTS MADE UNDER A PLAN MAINTAINED SOLELY

FOR THE PURPOSE OF COMPLYING WITH APPLICABLE WORKERS'

COMPENSATION, UNEMPLOYMENT COMPENSATION OR DISABILITY

INSURANCE LAWS.

(II) NO MORE THAN 501 HOURS OF SERVICE MAY BE

CREDITED TO AN EMPLOYEE UNDER PARAGRAPH (1)(III) FOR ANY

SINGLE CONTINUOUS PERIOD DURING WHICH NO DUTIES ARE

PERFORMED BY THE EMPLOYEE, EXCEPT TO THE EXTENT OTHERWISE

PROVIDED IN THE PLAN.

(III) NO HOUR OF SERVICE MAY BE CREDITED TO AN

20150HB0414PN2545 - 32 -

EMPLOYEE FOR PAYMENTS FOR MEDICAL OR MEDICAL-RELATED

EXPENSE REIMBURSEMENT.

(IV) NO HOUR OF SERVICE MAY BE CREDITED TWICE.

(V) HOURS OF SERVICE SHALL BE CREDITED AT LEAST AS

LIBERALLY AS SET FORTH BY THE PROVISIONS OF 29 CFR

2530.200B-2.

"INVESTMENT OPTION." AN INVESTMENT VEHICLE DESIGNATED BY A

PLAN ADMINISTRATOR.

"LIMITATION YEAR." THE 12-CONSECUTIVE-MONTH PERIOD THAT

BEGINS JANUARY 1 AND ENDS THE FOLLOWING DECEMBER 31 OF EACH

YEAR.

"MANDATORY MEMBER CONTRIBUTION ACCOUNT." THE INDIVIDUAL

INVESTMENT ACCOUNT ESTABLISHED BY THE MUNICIPALITY FOR EMPLOYEE

CONTRIBUTIONS MADE UNDER SECTION 1255, AS ADJUSTED FOR

WITHDRAWALS, DISTRIBUTIONS, EARNINGS, LOSSES AND EXPENSES.

"MANDATORY MEMBER CONTRIBUTIONS." FOR ANY MEMBER, THE

CONTRIBUTIONS MADE ON HIS OR HER BEHALF AS PROVIDED IN SECTION

1255.

"MEMBER." AN INDIVIDUAL WHO BECOMES A MEMBER UNDER THIS

CHAPTER AND FOR WHOM ONE OR MORE ACCOUNTS ARE MAINTAINED UNDER

THE PLAN.

"MUNICIPALITY CONTRIBUTION ACCOUNT." AN ACCOUNT ESTABLISHED

BY A MUNICIPALITY UNDER SECTION 1254.

"MUNICIPALITY CONTRIBUTIONS." A MUNICIPALITY CONTRIBUTION TO

A MEMBER UNDER SECTION 1256.

"NONUNIFORMED EMPLOYEE." AN EMPLOYEE OF A MUNICIPALITY WHO

DOES NOT MEET THE REQUIREMENTS OF SECTION 1249.

"NORMAL RETIREMENT AGE." THE DATE THAT AN EMPLOYEE BECOMES

55 YEARS OF AGE.

"PLAN." THE DEFINED CONTRIBUTION PLAN ADOPTED BY A

20150HB0414PN2545 - 33 -

MUNICIPALITY IN ACCORDANCE WITH THIS SUBCHAPTER AND THE TAX-

QUALIFICATION REQUIREMENTS OF SECTION 401(A) OF THE IRC (26

U.S.C. § 401(A)).

"PLAN ADMINISTRATOR." THE COMMITTEE OR INDIVIDUAL APPOINTED

BY THE MUNICIPALITY TO SUPERVISE THE ADMINISTRATION OF THE PLAN

UNDER SECTION 1243.

"PLAN YEAR." THE 12-CONSECUTIVE-MONTH PERIOD THAT BEGINS

JANUARY 1 AND ENDS THE FOLLOWING DECEMBER 31. A SHORT PLAN YEAR

MAY EXIST WHEN A MUNICIPALITY ADOPTS THE PLAN AFTER JANUARY 1 OF

THE PLAN YEAR.

"QUALIFIED DOMESTIC RELATIONS ORDER" OR "QDRO." A DOMESTIC

RELATIONS ORDER THAT CREATES OR RECOGNIZES AN ALTERNATE PAYEE'S

RIGHT, OR ASSIGNS TO AN ALTERNATE PAYEE THE RIGHT, TO RECEIVE

ALL OR A PORTION OF THE BENEFITS PAYABLE UNDER A PLAN, SO LONG

AS THE ORDER SATISFIES STATE DOMESTIC RELATIONS REQUIREMENTS AS

PROVIDED BY LAW.

"QUALIFIED MILITARY SERVICE." AN EMPLOYEE'S MILITARY SERVICE

IF THE EMPLOYEE IS ENTITLED TO REEMPLOYMENT WITH THE

MUNICIPALITY FOLLOWING THE EMPLOYEE'S MILITARY SERVICE.

"RETURNING VETERAN." AN EMPLOYEE WHO ON OR AFTER DECEMBER

12, 1994, RETURNS FROM QUALIFIED MILITARY SERVICE TO EMPLOYMENT

WITH A MUNICIPALITY WITHIN THE PERIOD OF TIME THAT THE

EMPLOYEE'S REEMPLOYMENT RIGHTS ARE PROTECTED BY LAW.

"ROLLOVER CONTRIBUTION ACCOUNT." AN ACCOUNT CREDITED WITH A

MEMBER'S ROLLOVER CONTRIBUTIONS UNDER THE PLAN, ADJUSTED FOR

WITHDRAWALS AND DISTRIBUTIONS, EARNINGS, LOSSES AND EXPENSES.

"TRUST." THE ACCOUNT ESTABLISHED BY A MUNICIPALITY UNDER

SECTION 1281.

"TRUST AGREEMENT." AN AGREEMENT AND DECLARATION OF TRUST

EXECUTED UNDER THE PLAN.

20150HB0414PN2545 - 34 -

"TRUSTEE." THE CORPORATE TRUSTEE OR ONE OR MORE INDIVIDUALS

COLLECTIVELY APPOINTED AND ACTING AS TRUSTEE UNDER THE TRUST

AGREEMENT.

"UNIFORMED SERVICES." ACTIVE DUTY OR FULL-TIME SERVICE IN

ANY OF THE FOLLOWING:

(1) UNITED STATES ARMED FORCES.

(2) ARMY NATIONAL GUARD.

(3) AIR NATIONAL GUARD.

(4) COMMISSIONED CORPS OF THE PUBLIC HEALTH SERVICE.

(5) ANY OTHER CATEGORY OF PERSONS DESIGNATED BY THE

PRESIDENT OF THE UNITED STATES IN TIME OF WAR OR EMERGENCY.

"VALUATION DATE." THE LAST DAY OF EACH PLAN YEAR AND EACH

INTERIM DATE ON WHICH THE PLAN SPECIFIES THAT A VALUATION OF THE

TRUST SHALL BE MADE.

"YEAR OF VESTING SERVICE." FOR DETERMINING AN EMPLOYEE'S

VESTED STATUS UNDER THE PLAN, AN EMPLOYEE SHALL EARN ONE YEAR OF

VESTING SERVICE FOR EACH PLAN YEAR DURING WHICH THE EMPLOYEE IS

CREDITED WITH AT LEAST 1,000 HOURS OF SERVICE.

SECTION 1242. ESTABLISHMENT OF DEFINED CONTRIBUTION RETIREMENT

PLAN.

A MUNICIPALITY MAY BY ORDINANCE ESTABLISH A RETIREMENT PLAN

FOR ITS ELIGIBLE EMPLOYEES IN PLACE OF, AND AS AN ALTERNATIVE

TO, OTHER RETIREMENT PLANS AUTHORIZED UNDER LAW PRIOR TO THE

EFFECTIVE DATE OF THIS SECTION.

SECTION 1243. PLAN ADMINISTRATOR.

(A) RESPONSIBILITIES.--A MUNICIPALITY THAT ESTABLISHES A

PLAN UNDER SECTION 1242 MAY BE THE PLAN ADMINISTRATOR OR MAY

DELEGATE ADMINISTRATIVE RESPONSIBILITIES TO A THIRD PARTY. THE

ORDINANCE SHALL DESIGNATE A TRUSTEE TO HOLD THE REQUIRED

ACCOUNTS UNDER THE PLAN.

20150HB0414PN2545 - 35 -

(B) WRITTEN AGREEMENT.--A MUNICIPALITY MAY ENTER INTO AN

AGREEMENT WITH ONE OR MORE FINANCIAL INSTITUTIONS OR PENSION

MANAGEMENT ORGANIZATIONS TO ADMINISTER THE PLAN AND THE

INVESTMENT OF FUNDS HELD PURSUANT TO THE PLAN, WHICH MUST BE IN

WRITING. THE ADMINISTRATOR SHALL BE SELECTED IN ACCORDANCE WITH

THE FOLLOWING:

(1) THE MUNICIPALITY SHALL SOLICIT PROPOSALS FROM

FINANCIAL INSTITUTIONS AND PENSION MANAGEMENT ORGANIZATIONS;

AND

(2) PROPOSALS SHALL BE EVALUATED BASED ON SPECIFIC

CRITERIA ADOPTED BY THE MUNICIPALITY, WHICH SHALL INCLUDE

EXPERIENCE, CUSTOMER SERVICE HISTORY AND OTHER RELEVANT

CRITERIA.

SUB SECTION (A) SHALL BE REBID AT LEAST ONCE EVERY 10 YEARS.

SECTION 1244. POWERS AND DUTIES OF THE PLAN ADMINISTRATOR.

(A) GENERAL RULE.--

(1) THE PLAN ADMINISTRATOR SHALL PROMULGATE RULES AND

COMPUTATIONS AND SHALL TAKE OTHER ACTIONS NECESSARY FOR

ADMINISTERING THE PLAN.

(2) A PLAN ADMINISTRATOR'S RULES, INTERPRETATIONS,

COMPUTATIONS AND ACTIONS SHALL BE FINAL, CONCLUSIVE AND

BINDING.

(B) SPECIFIC POWERS AND DUTIES.--THE POWERS AND DUTIES OF

THE PLAN ADMINISTRATOR SHALL INCLUDE THE FOLLOWING:

(1) COMMINGLE OR POOL ASSETS WITH THE ASSETS OF THIRD

PARTIES.

(2) PAY ADMINISTRATIVE FEES, COSTS AND EXPENSES OF

MANAGING, INVESTING AND ADMINISTERING THE PLAN, TRUST AND

INDIVIDUAL INVESTMENT ACCOUNTS WITH FUNDS FROM THE BALANCE OF

20150HB0414PN2545 - 36 -

THE INDIVIDUAL INVESTMENT ACCOUNTS, EXCEPT AS FUNDS MAY BE

APPROPRIATED FROM THE GENERAL FUND.

(3) ESTABLISH INVESTMENT GUIDELINES AND LIMITS ON THE

TYPES OF INVESTMENTS THAT PARTICIPANTS MAY MAKE, CONSISTENT

WITH ITS FIDUCIARY OBLIGATIONS.

(4) CHANGE THE TERMS OF THE PLAN AS MAY BE NECESSARY TO

MAINTAIN THE TAX-QUALIFIED STATUS OF THE PLAN.

(5) ALLOW FOR ELIGIBLE ROLLOVERS AND TRANSFERS BETWEEN

TRUSTEES INTO THE TRUST FROM QUALIFIED PLANS OF OTHER

EMPLOYERS, REGARDLESS OF WHETHER THE EMPLOYERS ARE PRIVATE

EMPLOYERS OR PUBLIC EMPLOYERS.

(6) ESTABLISH PROCEDURES TO PROVIDE FOR THE LAWFUL

PAYMENT OF BENEFITS.

(7) ESTABLISH PROCEDURES FOR DISTRIBUTIONS OF SMALL

ACCOUNTS AS REQUIRED.

(8) ESTABLISH PROCEDURES OR PROMULGATE RULES AND

REGULATIONS AS NECESSARY FOR THE ADMINISTRATION AND

MANAGEMENT OF THE PLAN, INCLUDING, BUT NOT LIMITED TO,

ESTABLISHING:

(I) PROCEDURES FOR ELIGIBLE PARTICIPANTS TO CHANGE

VOLUNTARY CONTRIBUTION AMOUNTS OR THEIR INVESTMENT

CHOICES ON A PERIODIC BASIS OR MAKE OTHER ELECTIONS

REGARDING THEIR PARTICIPATION IN THE PLAN.

(II) PROCEDURES FOR DEDUCTING MANDATORY PICKUP

PARTICIPANT CONTRIBUTIONS AND VOLUNTARY CONTRIBUTIONS

FROM A PARTICIPANT'S COMPENSATION.

(III) PROCEDURES FOR ROLLOVERS AND TRANSFERS BETWEEN

TRUSTEES AS ALLOWED UNDER LAW AND PERMITTED BY THE PLAN.

(IV) STANDARDS AND CRITERIA FOR PROVIDING AT LEAST

SIX OPTIONS FROM THREE OR MORE PROVIDERS OF INVESTMENT

20150HB0414PN2545 - 37 -

OPTIONS TO ELIGIBLE INDIVIDUALS REGARDING THE INVESTMENT

OF AMOUNTS DEFERRED UNDER THE PLAN.

(V) STANDARDS AND CRITERIA FOR DISCLOSING TO THE

PARTICIPANTS THE ANTICIPATED AND ACTUAL INCOME

ATTRIBUTABLE TO AMOUNTS INVESTED, PROPERTY RIGHTS AND ANY

FEES, COSTS AND EXPENSES TO BE MADE AGAINST AMOUNTS

DEFERRED TO COVER THE COSTS AND EXPENSES OF ADMINISTERING

AND MANAGING THE PLAN OR TRUST.

(VI) PROCEDURES, STANDARDS AND CRITERIA FOR THE

MAKING OF DISTRIBUTIONS FROM THE PLAN UPON TERMINATION

FROM EMPLOYMENT OR DEATH OR OTHER CIRCUMSTANCES

CONSISTENT WITH THE PURPOSE OF THE PLAN.

SECTION 1245. PLAN ASSETS TO BE HELD IN TRUST.

(A) GENERAL RULE.--CONTRIBUTIONS TO THE PLAN SHALL BE HELD

IN TRUST BY A TRUSTEE FOR INVESTMENT AND REINVESTMENT AND AS

PROVIDED UNDER THE TERMS OF THE TRUST AGREEMENT AND THE PLAN.

THE MUNICIPALITY SHALL APPOINT THE INITIAL TRUSTEE OR TRUSTEES

UPON ESTABLISHMENT OF A PLAN UNDER SECTION 1242.

(B) PROHIBITIONS.--THE CORPUS AND INCOME OF THE TRUST OR

CUSTODIAL ACCOUNT MAY NOT BE DIVERTED TO OR USED FOR ANY PURPOSE

OTHER THAN THE EXCLUSIVE BENEFIT OF THE MEMBERS AND

BENEFICIARIES OF THE MEMBERS.

THROUGH THE DISTRIBUTION OF AN ANNUITY OR INSURANCE CONTRACT,

ANY REFUNDS OR CREDITS IN EXCESS OF PLAN BENEFITS SHALL BE PAID

TO THE TRUST OR CUSTODIAL ACCOUNT.

SECTION 1246. MANAGING PLAN ASSETS.

(A) FIDUCIARY.--THE PLAN ADMINISTRATOR IS THE NAMED

FIDUCIARY OF THE PLAN, AND FOLLOWING THE INITIAL APPOINTMENT OF

THE TRUSTEE BY THE MUNICIPALITY, THE PLAN ADMINISTRATOR MAY:

20150HB0414PN2545 - 38 -

(1) APPOINT ONE OR MORE TRUSTEES TO HOLD ALL ASSETS OF

THE PLAN AND MAY ENTER INTO A TRUST AGREEMENT WITH EACH

TRUSTEE APPOINTED BY THE PLAN ADMINISTRATOR.

(2) DESIGNATE AND MONITOR AN INVESTMENT MANAGER AND

DELEGATE FIDUCIARY RESPONSIBILITY FOR SELECTING AND

MONITORING INVESTMENT OPTIONS TO THE INVESTMENT MANAGER.

(3) DETERMINE WHETHER AN EXPENSE MAY BE PAID OUT OF PLAN

ASSETS AND, IF SO, HOW THE EXPENSE WILL BE DIVIDED AMONG

MEMBER AND BENEFICIARY ACCOUNTS.

(4) DETERMINE HOW REVENUE SHARE FUNDS WILL BE ALLOCATED

AMONG THE ACCOUNTS.

(B) POWER TO APPOINT AND REMOVE.--AFTER THE INITIAL

APPOINTMENT OF A TRUSTEE, THE PLAN ADMINISTRATOR SHALL HAVE THE

SOLE RESPONSIBILITY AND POWER TO APPOINT AND REMOVE ANY TRUSTEE

OR INVESTMENT MANAGER MANAGING ASSETS OF THE PLAN.

SECTION 1247. PLAN EXPENSES.

(A) PAYMENT.--ALL EXPENSES OF ADMINISTERING THE PLAN SHALL

BE PAID OUT OF PLAN ASSETS, EXCEPT FOR SUCH EXPENSES AS ARE PAID

BY THE MUNICIPALITY.

(B) DISCRETION OF THE PLAN ADMINISTRATOR.--THE PLAN

ADMINISTRATOR SHALL HAVE SOLE DISCRETION TO DETERMINE WHETHER A

PLAN EXPENSE SHALL BE PAID BY THE MUNICIPALITY, WHICH SHALL NOT

BE LIMITED BY A PRIOR DECISION OR PRACTICE REGARDING PAYMENT OF

PLAN EXPENSES.

WITH REVENUE SHARE FUNDS PAID TO THE PLAN. IF ANY REVENUE SHARE

FUNDS ARE REMAINING AFTER THE PAYMENT OF EXPENSES, THE FUNDS

SHALL BE ALLOCATED TO THE ACCOUNT OF EACH MEMBER, OR MEMBER

BENEFICIARY, WHO IS ENTITLED TO AN ALLOCATION OF MUNICIPALITY

CONTRIBUTIONS FOR THE PLAN YEAR IN WHICH THE REVENUE SHARE

20150HB0414PN2545 - 39 -

AMOUNT WAS PAID TO THE PLAN.

SECTION 1248. INDEMNIFICATION.

A MUNICIPALITY MAY PURCHASE A BOND AND LIABILITY INSURANCE TO

COVER ANY OF ITS POTENTIAL LIABILITIES REGARDING THE PLAN AND

TRUST ESTABLISHED BY THIS CHAPTER .

SECTION 1249. ELIGIBILITY.

THE FOLLOWING EMPLOYEES OF A MUNICIPALITY THAT HAS ADOPTED A

PLAN UNDER SECTION 1242 SHALL BE ELIGIBLE FOR MEMBERSHIP IN THE

PLAN:

(1) A REGULAR, FULL-TIME POLICE OFFICER EMPLOYED BY A

BOROUGH, TOWN, TOWNSHIP OR REGIONAL POLICE DEPARTMENT

MAINTAINING A POLICE FORCE OF THREE OR MORE REGULAR, FULL-

TIME POLICE OFFICERS WHO WERE FIRST HIRED ON OR AFTER THE

EFFECTIVE DATE OF THE PLAN ESTABLISHED UNDER SECTION 1242.

(2) A REGULAR, FULL-TIME POLICE OFFICER EMPLOYED BY A

CITY OF THE FIRST CLASS, SECOND CLASS, SECOND CLASS A OR

THIRD CLASS WHO WAS FIRST HIRED ON OR AFTER THE EFFECTIVE

DATE OF THE PLAN ESTABLISHED UNDER SECTION 1242.

(3) A REGULAR, FULL-TIME FIREFIGHTER EMPLOYED BY A

BOROUGH, TOWN, TOWNSHIP OR REGIONAL FIRE DEPARTMENT

MAINTAINING A FORCE OF THREE OR MORE REGULAR, FULL-TIME

MEMBERS WHO WERE FIRST HIRED ON OR AFTER THE EFFECTIVE DATE

OF THE PLAN ESTABLISHED UNDER SECTION 1242.

(4) A REGULAR, FULL-TIME FIREFIGHTER WHO IS EMPLOYED BY

A CITY OF THE FIRST CLASS, SECOND CLASS, SECOND CLASS A,

THIRD CLASS OR BOROUGH MAINTAINING A FIRE DEPARTMENT OF THREE

OR MORE REGULAR FULL-TIME FIREFIGHTERS, AND WHO WAS FIRST

HIRED ON OR AFTER THE EFFECTIVE DATE OF THE PLAN ESTABLISHED

UNDER SECTION 1242.

SECTION 1250. MEMBERSHIP.

20150HB0414PN2545 - 40 -

(A) IMMEDIATE MEMBERSHIP.--AN ELIGIBLE EMPLOYEE UNDER

SECTION 1249 SHALL BECOME A PLAN MEMBER ON THE FIRST DAY OF THE

PAYROLL CYCLE FOLLOWING THE EMPLOYEE'S EMPLOYMENT COMMENCEMENT

DATE.

(B) EXTENSION OF MEMBERSHIP.--NONUNIFORMED EMPLOYEES SHALL

NOT BE ELIGIBLE FOR INCLUSION IN THE PLAN. A MUNICIPALITY MAY

ESTABLISH A SEPARATE DEFINED CONTRIBUTION PLAN FOR ITS

NONUNIFORMED EMPLOYEES.

SECTION 1251. MEMBERSHIP UPON REEMPLOYMENT.

A FORMER MEMBER WHOSE EMPLOYMENT WITH A MUNICIPALITY WAS

TERMINATED SHALL BECOME A MEMBER UPON REEMPLOYMENT WITH THE

MUNICIPALITY IF THE EMPLOYEE IS AN ELIGIBLE EMPLOYEE UPON

REEMPLOYMENT.

SECTION 1252. PARTICIPATION IN A DEFINED BENEFIT PENSION PLAN.

(A) INELIGIBILITY.--MEMBERS OF A PLAN ESTABLISHED UNDER THIS

SUBCHAPTER SHALL BE INELIGIBLE TO PARTICIPATE IN A DEFINED

BENEFIT PENSION PLAN SPONSORED BY THE EMPLOYEE'S MUNICIPALITY,

EXCEPT FOR A PENSION PLAN THAT THE EMPLOYEE PARTICIPATED IN

PRIOR TO THE ESTABLISHMENT OF THE PLAN.

(B) PREVIOUS PENSION PLANS.--IF AN EMPLOYEE PARTICIPATED IN

ANOTHER PENSION PLAN OFFERED BY THE MUNICIPALITY PRIOR TO THE

ESTABLISHMENT OF A PLAN UNDER THIS SUBCHAPTER, THE BENEFITS OF

THAT PENSION PLAN SHALL NOT BE INCREASED OR DECREASED.

PARTICIPATE IN A SUPPLEMENTAL DEFERRED COMPENSATION PLAN

ESTABLISHED BY THE EMPLOYEE'S MUNICIPALITY UNDER SECTION 457(B)

OF THE IRC (26 U.S.C. § 457(B)).

SECTION 1253. TERMINATION OF MEMBERSHIP.

MEMBERSHIP IN A PLAN SHALL TERMINATE AS OF THE LATER OF:

(1) THE DATE OF A MEMBER'S TERMINATION FROM EMPLOYMENT

20150HB0414PN2545 - 41 -

WITH THE SPONSORING MUNICIPALITY; OR

(2) THE DATE NO FURTHER BENEFITS ARE PAYABLE TO THE

MEMBER UNDER THE PLAN.

SECTION 1254. MUNICIPALITY CONTRIBUTION ACCOUNT.

A MUNICIPALITY SHALL ESTABLISH AN ACCOUNT INTO WHICH ARE

CREDITED THE MUNICIPALITY CONTRIBUTIONS ALLOCATED TO A MEMBER

UNDER THE PLAN, AS ADJUSTED FOR WITHDRAWALS, DISTRIBUTIONS,

EARNINGS, LOSSES AND EXPENSES.

SECTION 1255. MANDATORY MEMBER CONTRIBUTIONS.

(A) GENERAL RULE.--A MEMBER SHALL MAKE A MANDATORY

CONTRIBUTION TO THE PLAN EACH PAYROLL PERIOD AND THE FOLLOWING

SHALL APPLY:

(1) THE PLAN SHALL ESTABLISH IN THE TRUST AN INDIVIDUAL

INVESTMENT ACCOUNT FOR EACH MEMBER. ALL CONTRIBUTIONS BY A

MEMBER AND VESTED MUNICIPALITY CONTRIBUTIONS FOR OR ON BEHALF

OF A MEMBER SHALL BE CREDITED TO THE MEMBER'S INDIVIDUAL

INVESTMENT ACCOUNT, TOGETHER WITH ALL INTEREST AND INVESTMENT

EARNINGS AND LOSSES. INVESTMENT AND ADMINISTRATIVE FEES,

COSTS AND EXPENSES SHALL BE CHARGED TO THE MEMBER'S

INDIVIDUAL INVESTMENT ACCOUNTS. EMPLOYER DEFINED

CONTRIBUTIONS SHALL BE RECORDED AND ACCOUNTED FOR SEPARATELY

FROM PARTICIPANT CONTRIBUTIONS, BUT ALL INTEREST, INVESTMENT

EARNINGS AND LOSSES, AND INVESTMENT AND ADMINISTRATIVE FEES

AND COSTS AND EXPENSES SHALL BE ALLOCATED PROPORTIONATELY.

(2) THE ACCOUNT SHALL SEPARATELY TRACK PARTICIPANT

CONTRIBUTIONS, INCLUDING INVESTMENT GAINS AND LOSSES, AND

EMPLOYER CONTRIBUTIONS, INCLUDING INVESTMENT GAINS AND

LOSSES, BUT ALL INTEREST, INVESTMENT GAINS AND LOSSES AND

ADMINISTRATIVE FEES, COSTS AND EXPENSES SHALL BE ALLOCATED

PROPORTIONATELY.

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(B) AMOUNT OF CONTRIBUTION.--THE MANDATORY CONTRIBUTION

SHALL BE 6% OF THE TOTAL COMPENSATION FOR A MEMBER WHO PAYS INTO

SOCIAL SECURITY OR 9% OF THE TOTAL COMPENSATION FOR A MEMBER WHO

DOES NOT PAY INTO SOCIAL SECURITY.

SECTION 1256. PICK UP OF MEMBER CONTRIBUTIONS.

(A) GENERAL RULE.--THE MUNICIPALITY SHALL ADOPT AN ORDINANCE

TO "PICK UP" MANDATORY EMPLOYEE CONTRIBUTIONS UNDER SECTION

414(H) OF THE IRC (26 U.S.C. § 414(H)).

(B) DEDUCTIONS.--MANDATORY MEMBER CONTRIBUTIONS THAT ARE

PICKED UP BY THE SPONSORING MUNICIPALITY WILL BE DEDUCTED

THROUGH REGULAR PAYROLL DEDUCTIONS ON A PRETAX BASIS.

CONTRIBUTIONS THAT ARE PICKED UP BY THE MUNICIPALITY ARE TREATED

AS MUNICIPALITY CONTRIBUTIONS FOR FEDERAL INCOME TAX PURPOSES

AND SHALL NOT BE TREATED AS TAXABLE CONTRIBUTIONS TO THE MEMBER.

SECTION 1257. MUNICIPAL CONTRIBUTIONS.

(A) GENERAL RULE.--FOR EACH PLAN YEAR, A MUNICIPALITY THAT

HAS ESTABLISHED A PLAN UNDER SECTION 1242 SHALL MAKE A

CONTRIBUTION TO THE PLAN ON BEHALF OF EACH MEMBER.

(B) AMOUNT OF CONTRIBUTION.--THE CONTRIBUTION SHALL BE 4.5%

OF A MEMBER'S TOTAL COMPENSATION.

CREDITED TO A MEMBER ACCOUNT EACH PAYROLL PERIOD, OR ANY OTHER

FREQUENCY AS THE MUNICIPALITY DETERMINES APPROPRIATE, BUT NOT

LESS FREQUENTLY THAN ANNUALLY.

SECTION 1258. ROLLOVER CONTRIBUTIONS.

(A) GENERAL RULE.--SUBJECT TO THE PLAN ADMINISTRATOR'S

APPROVAL, A PLAN MAY ACCEPT ROLLOVERS FROM ELIGIBLE EMPLOYEES.

(B) QUALIFYING ROLLOVER ACCOUNTS.--A PLAN MAY ACCEPT

ROLLOVERS OF QUALIFYING DISTRIBUTIONS OF PRETAX CONTRIBUTIONS

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FROM PLANS DESCRIBED IN IRC SECTION S 401(A) AND (K) AND 403(A)

AND (B), GOVERNMENTAL IRC SECTION 457(B) PLANS AND TRADITIONAL

INDIVIDUAL RETIREMENT ACCOUNTS.

SECTION 1259. LIMITATION ON CONTRIBUTIONS.

(A) GENERAL RULE.--THE ANNUAL ADDITIONS ALLOCATED TO A

MEMBER'S ACCOUNTS FOR ANY LIMITATIONS YEAR MAY NOT EXCEED THE

LESSER OF THE FOLLOWING:

(1) FIFTY-THREE THOUSAND DOLLARS, AS ADJUSTED FOR

INCREASES IN THE COST-OF-LIVING INDEX UNDER SECTION 415(D) OF

THE IRC (26 U.S.C. § 415(D)); OR

(2) ONE HUNDRED PERCENT OF THE MEMBER'S COMPENSATION FOR

THE LIMITATIONS YEAR.

(B) EXCESS ADDITIONS.--IF A MEMBER'S ANNUAL ADDITIONS WOULD

EXCEED THE LIMITS UNDER SECTION 415 OF THE IRC (26 U.S.C. §

415), THE ANNUAL ADDITIONS SHALL BE REDUCED BY REDUCING THE

COMPONENTS OF THE ANNUAL ADDITION IN THE ORDER IN WHICH THEY ARE

LISTED IN THE DEFINITION OF "ANNUAL ADDITIONS" IN SECTION 1241.

SECTION 1260. CORRECTIONS.

IF THE LIMITATIONS UNDER SECTION 415 OF THE IRC (26 U.S.C. §

415) WOULD OTHERWISE FAIL TO BE SATISFIED, A CORRECTION MAY BE

MADE, AS DETERMINED BY THE PLAN ADMINISTRATOR.

SECTION 1261. MEMBER CONTRIBUTION ACCOUNT.

A MEMBER SHALL BECOME FULLY VESTED IN ALL CONTRIBUTIONS,

MANDATORY OR OTHERWISE, TO THE MEMBER'S INDIVIDUAL INVESTMENT

ACCOUNT IMMEDIATELY.

SECTION 1262. MUNICIPALITY CONTRIBUTION ACCOUNT.

A MEMBER SHALL BECOME VESTED IN THE MEMBER'S MUNICIPALITY

CONTRIBUTION ACCOUNT A CCORDING TO THE FOLLOWING SCHEDULE:

YEARS OF VESTING SERVICE PERCENTAGE VESTED

4 25%

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6 50%

8 75%

10 100%

SECTION 1263. NORMAL RETIREMENT AGE, DEATH OR DISABILITY.

NOTWITHSTANDING ANYTHING IN THIS CHAPTER TO THE CONTRARY, A

MEMBER SHALL BECOME FULLY VESTED IN A MEMBER CONTRIBUTION

ACCOUNT IF, PRIOR TO SEVERANCE FROM EMPLOYMENT, THE MEMBER

REACHES HIS NORMAL RETIREMENT AGE, HAS DIED OR HAS BECOME

DISABLED.

SECTION 1264. ROLLOVER CONTRIBUTION ACCOUNT.

A MEMBER SHALL BECOME FULLY VESTED IMMEDIATELY FOR ANY

AMOUNTS CREDITED TO THE MEMBER'S ROLLOVER CONTRIBUTION ACCOUNT.

SECTION 1265. FORFEITURES.

(A) GENERAL RULE.--A MEMBER WHO HAS A SEVERANCE FROM

EMPLOYMENT PRIOR TO COMPLETING THE VESTING REQUIREMENTS IN

SECTION 1262 SHALL FORFEIT THE UNVESTED PORTION OF THE

EMPLOYEE'S MUNICIPALITY CONTRIBUTION ACCOUNT.

(B) USE OF FORFEITED PLAN FUNDS.--A PLAN ADMINISTRATOR MAY

USE PLAN FORFEITURES TO PAY REASONABLE ADMINISTRATIVE EXPENSES

INCURRED BY THE PLAN. ANY FORFEITED AMOUNTS NOT USED TO PAY

REASONABLE ADMINISTRATIVE EXPENSES SHALL BE USED TO REDUCE

MUNICIPALITY CONTRIBUTIONS.

SECTION 1266. TERMINATION.

UPON TERMINATION OF THE PLAN, ALL MEMBERS SHALL BECOME FULLY

VESTED IN THEIR ACCOUNTS TO THE EXTENT FUNDED.

SECTION 1267. ACCOUNTS.

THE FOLLOWING ACCOUNTS, AS APPLICABLE, SHALL BE MAINTAINED BY

THE TRUSTEE FOR EACH MEMBER:

(1) MANDATORY MEMBER CONTRIBUTION ACCOUNT.

(2) MUNICIPALITY CONTRIBUTION ACCOUNT.

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(3) ROLLOVER CONTRIBUTION ACCOUNT.

SECTION 1268. VALUATION OF ACCOUNTS.

A MEMBER ACCOUNT SHALL BE VALUED AT FAIR MARKET VALUE AND

ADJUSTED AS OF EACH VALUATION DATE TO REFLECT INCOME, GAINS,

LOSSES, EXPENSES AND ALL OTHER TRANSACTIONS ASSOCIATED WITH THE

MEMBER'S ACCOUNT SINCE THE LAST VALUATION DATE.

SECTION 1269. TIME OF DISTRIBUTION.

(A) GENERAL RULE.--A MEMBER'S VESTED ACCOUNT BALANCE SHALL

BE DISTRIBUTABLE AS SOON AS PRACTICABLE FOLLOWING THE MEMBER'S

SEVERANCE FROM EMPLOYMENT WITH A MUNICIPALITY. IF THE

DISTRIBUTION IS TO COMMENCE PRIOR TO THE MEMBER'S ATTAINMENT OF

NORMAL RETIREMENT AGE, THE MEMBER MUST CONSENT IN WRITING TO THE

DISTRIBUTION. IF A MEMBER FAILS TO REQUEST A DISTRIBUTION OF HIS

ACCOUNT OR THERE WAS NO CONSENT TO AN EARLIER DISTRIBUTION, THE

MEMBER'S VESTED ACCOUNT BALANCE SHALL BE DISTRIBUTED NO LATER

THAN THE 60TH DAY FOLLOWING THE LATER OF:

(1) THE LAST DAY OF THE PLAN YEAR IN WHICH THE MEMBER

HAS A SEVERANCE FROM EMPLOYMENT WITH A MUNICIPALITY; OR

(2) THE LAST DAY OF THE PLAN YEAR IN WHICH THE MEMBER

ATTAINS NORMAL RETIREMENT AGE.

(B) EXCEPTION.--NOTWITHSTANDING THE PROVISIONS OF SUBSECTION

(A), A MEMBER'S VESTED ACCOUNT BALANCE SHALL BE PAID BY APRIL 1

OF THE CALENDAR YEAR FOLLOWING THE LATER OF:

(1) THE CALENDAR YEAR IN WHICH THE MEMBER ATTAINS 70.5

YEARS OF AGE; OR

(2) THE CALENDAR YEAR IN WHICH THE MEMBER RETIRES.

SECTION 1270. DISTRIBUTION AMOUNT.

UPON SEVERANCE FROM EMPLOYMENT, A MEMBER SHALL BE ENTITLED TO

HIS VESTED ACCOUNT BALANCE, WHICH SHALL BE THE VALUE AS OF THE

VALUATION DATE ON OR MOST RECENTLY PRECEDING THE DATE OF

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DISTRIBUTION.

SECTION 1271. FORM OF DISTRIBUTION.

BY FILING THE PRESCRIBED FORMS WITH THE PLAN ADMINISTRATOR

PRIOR TO THE COMMENCEMENT OF BENEFITS, A MEMBER MAY ELECT TO

HAVE HIS VESTED ACCOUNT BALANCE PAID IN ONE OF THE FOLLOWING

FORMS:

(1) SINGLE LUMP SUM.

(2) ANNUITY.

(3) SUBSTANTIALLY EQUAL INSTALLMENTS OCCURRING AT LEAST

ANNUALLY FOR A SPECIFIED NUMBER OF YEARS.

SECTION 1272. ELECTION OF ANNUITY BENEFIT.

(A) DEFAULT OPTION.--THE DEFAULT ANNUITY OPTION IS A

STRAIGHT LIFE ANNUITY.

(B) ELECTION OTHER THAN LIFE ANNUITY.--IF A MEMBER ELECTS TO

RECEIVE HIS BENEFIT AS AN ANNUITY THAT IS A FORM OTHER THAN A

STRAIGHT LIFE ANNUITY, THE MEMBER SHALL RECEIVE A BENEFIT THAT

IS THE ACTUARIAL EQUIVALENT OF THE STRAIGHT LIFE ANNUITY

BENEFIT.

PURCHASE AN ANNUITY CONTRACT FROM A THIRD-PARTY INSURANCE

COMPANY TO PROVIDE ANY ANNUITY BENEFIT SELECTED BY A MEMBER, AND

THE FOLLOWING SHALL APPLY:

(1) THE PLAN SHALL BE THE NAMED OWNER AND THE MEMBER

SHALL BE THE NAMED ANNUITANT OF THE ANNUITY CONTRACT.

(2) THE TERMS OF THE PLAN SHALL CONTROL WHERE THERE IS A

CONFLICT BETWEEN THE TERMS OF THE PLAN AND THE TERMS OF AN

ANNUITY CONTRACT.

SECTION 1273. DEFAULT FORM OF PAYMENT.

IF, BY THE DATE PAYMENT IS TO BE MADE, A MEMBER FAILS TO

ELECT THE FORM IN WHICH HIS VESTED ACCOUNT BALANCE IS TO BE

20150HB0414PN2545 - 47 -

PAID, THE MEMBER'S VESTED ACCOUNT BALANCE SHALL BE PAID TO THE

MEMBER AS FOLLOWS:

(1) FIFTY PERCENT IN A LUMP SUM; AND

(2) FIFTY PERCENT IN A STRAIGHT LIFE ANNUITY.

SECTION 1274. ROLLOVERS FROM THE PLAN.

AN ELIGIBLE MEMBER MAY ELECT, AT THE TIME AND IN THE MANNER

PRESCRIBED BY THE PLAN ADMINISTRATOR, TO HAVE ANY PORTION OF AN

ELIGIBLE ROLLOVER DISTRIBUTION FROM THE PLAN PAID DIRECTLY TO AN

ELIGIBLE RETIREMENT PLAN IN A DIRECT ROLLOVER, AS DESCRIBED IN

SECTION 401(A)(31) OF THE IRC (26 U.S.C. § 401(A)(31)).

SECTION 1275. DISTRIBUTION UPON DEATH.

(A) DEATH BEFORE DISTRIBUTIONS BEGIN.--IF A MEMBER DIES

WHILE THE MEMBER IS STILL EMPLOYED WITH A MUNICIPALITY, THE

MEMBER'S DESIGNATED BENEFICIARY SHALL BE ENTITLED TO AN AMOUNT

EQUAL TO THE VALUE OF THE MEMBER'S ACCOUNT DETERMINED AS OF THE

VALUATION DATE ON OR MOST RECENTLY PRECEDING THE DATE OF

DISTRIBUTION.

(B) DEATH FOLLOWING SEVERANCE FROM EMPLOYMENT.--

(1) IF A MEMBER DIES AFTER HIS SEVERANCE FROM EMPLOYMENT

WITH THE MUNICIPALITY BUT BEFORE HIS VESTED ACCOUNT BALANCE

HAS BEEN FULLY DISTRIBUTED, THE MEMBER'S DESIGNATED

BENEFICIARY SHALL BE ENTITLED TO AN AMOUNT EQUAL TO THE VALUE

OF THE MEMBER'S ACCOUNT DETERMINED AS OF THE VALUATION DATE

ON OR MOST RECENTLY PRECEDING THE DATE OF DISTRIBUTION TO THE

BENEFICIARY.

(2) IF A DISTRIBUTION COMMENCED IN THE FORM OF

INSTALLMENTS PRIOR TO THE MEMBER'S DEATH, THE MEMBER'S

REMAINING ACCOUNT BALANCE SHALL BE PAID TO THE DESIGNATED

BENEFICIARY AT LEAST AS RAPIDLY AS THE METHOD IN EFFECT PRIOR

TO THE MEMBER'S DEATH.

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(3) IF A DISTRIBUTION COMMENCED IN THE FORM OF AN

ANNUITY PRIOR TO THE MEMBER'S DEATH, THE MEMBER'S REMAINING

ACCOUNT BALANCE SHALL BE PAID IN ACCORDANCE WITH THE METHOD

OF PAYMENT IN EFFECT.

(4) IF A MEMBER DIES AFTER HIS SEVERANCE FROM EMPLOYMENT

WITH THE MUNICIPALITY AND HAS RECEIVED A DISTRIBUTION OF HIS

ENTIRE ACCOUNT, NO FURTHER AMOUNT MAY BE PAID TO ANYONE.

(1) THE AMOUNT PAYABLE TO A DESIGNATED BENEFICIARY UNDER

SUB SECTIONS (A) AND (B) SHALL BE PAYABLE IN A SINGLE LUMP SUM

NO LATER THAN 12 MONTHS AFTER THE DATE OF THE MEMBER'S DEATH

EXCEPT, HOWEVER, IF ANNUITY OR INSTALLMENT PAYMENTS HAVE

BEGUN, THEY MAY CONTINUE TO BE PAID IN ACCORDANCE WITH THE

METHOD PAYMENT IN EFFECT.

(2) IF THE DECEASED MEMBER'S SPOUSE IS THE SOLE

DESIGNATED BENEFICIARY, THE SPOUSE MAY ELECT TO DELAY RECEIPT

OF THE MEMBER'S VESTED ACCOUNT BALANCE UNTIL A TIME THAT IS

NO LATER THAN DECEMBER 31 OF THE LATER OF THE CALENDAR YEAR

FOLLOWING THE CALENDAR YEAR IN WHICH THE MEMBER DIED OR THE

CALENDAR YEAR THE MEMBER WOULD HAVE ATTAINED 70.5 YEARS OF

AGE.

(3) IF THE SURVIVING SPOUSE DIES BEFORE DISTRIBUTIONS

BEGIN, THE DECEASED MEMBER'S VESTED ACCOUNT BALANCE SHALL BE

DISTRIBUTED AS IF THE SURVIVING SPOUSE WERE THE MEMBER.

SECTION 1276. REQUIRED MINIMUM DISTRIBUTIONS.

THE FOLLOWING SHALL APPLY:

(1) NOTWITHSTANDING ANY PROVISIONS OF THIS CHAPTER TO

THE CONTRARY, ALL DISTRIBUTIONS UNDER THE PLAN SHALL BE MADE

IN ACCORDANCE WITH A REASONABLE AND GOOD FAITH INTERPRETATION

OF SECTION 401(A)(9) OF THE IRC (26 U.S.C. § 401(A)(9)),

20150HB0414PN2545 - 49 -

INCLUDING THE INCIDENTAL DEATH BENEFIT REQUIREMENT OF SECTION

401(A)(9)(G), THE CORRESPONDING TREASURY REGULATION.

(2) THE PROVISIONS OF THE IRC AND TREASURY REGULATION

SPECIFIED IN PARAGRAPH (1) SHALL OVERRIDE ANY INCONSISTENT

DISTRIBUTION OPTIONS UNDER THE PLAN.

SECTION 1277. QUALIFIED MILITARY SERVICE.

(A) GENERAL RULE.--NOTWITHSTANDING ANY PROVISION OF THIS

PLAN TO THE CONTRARY, CONTRIBUTIONS, BENEFITS AND SERVICE CREDIT

WITH RESPECT TO QUALIFIED MILITARY SERVICE WILL BE PROVIDED IN

ACCORDANCE WITH SECTION 414(U) OF THE IRC (26 U.S.C. § 414(U)).

(B) MISSED MANDATORY EMPLOYEE CONTRIBUTIONS.--A RETURNING

VETERAN HAS UP TO THREE TIMES THE PERIOD OF MILITARY SERVICE,

BUT NOT TO EXCEED FIVE YEARS, TO MAKE UP ANY MISSED MANDATORY

EMPLOYEE CONTRIBUTIONS, AND THE FOLLOWING SHALL APPLY:

(1) THE CONTRIBUTIONS ARE SUBJECT TO THE LIMITS THAT

WOULD HAVE APPLIED DURING THE MILITARY SERVICE PERIOD.

(2) A MUNICIPALITY SHALL PICK UP THE CONTRIBUTIONS IF

THE CONTRIBUTIONS WOULD HAVE BEEN PICKED UP BY THE

MUNICIPALITY ABSENT THE PERIOD OF MILITARY SERVICE.

(1) FOR A MEMBER RETURNING FROM QUALIFIED MILITARY

LEAVE, A MUNICIPALITY SHALL CONTRIBUTE ANY MUNICIPALITY

CONTRIBUTIONS THAT WOULD HAVE BEEN MADE DURING THE MILITARY

SERVICE PERIOD.

(2) MUNICIPALITY CONTRIBUTIONS MADE UNDER PARAGRAPH (1)

SHALL BE CALCULATED BY USING THE SAME RATE OF COMPENSATION

THE REHIRED MEMBER WOULD HAVE RECEIVED DURING THE MILITARY

SERVICE PERIOD. IF THIS IS NOT REASONABLY CERTAIN, THE

MUNICIPALITY MAY USE THE EMPLOYEE'S AVERAGE COMPENSATION

DURING THE 12-MONTH PERIOD IMMEDIATELY PRECEDING THE

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QUALIFIED MILITARY SERVICE.

SECTION 1278. SURVIVOR BENEFITS.

THE SURVIVOR OF A MEMBER WHO HAS DIED WHILE PERFORMING

QUALIFIED MILITARY SERVICE SHALL BE ENTITLED TO ANY ADDITIONAL

BENEFITS THAT WOULD BE PROVIDED UNDER THE PLAN IF THE MEMBER HAD

RESUMED EMPLOYMENT AND THEN TERMINATED EMPLOYMENT ON ACCOUNT OF

DEATH.

SECTION 1279. GENERAL RULE.

EXCEPT AS PERMITTED UNDER SECTION 1280, A MEMBER MAY NOT

WITHDRAW ANY PORTION OF THE MEMBER'S VESTED ACCOUNT WHILE

EMPLOYED WITH A MUNICIPALITY.

SECTION 1280. RETIREMENT AGE.

UPON WRITTEN REQUEST TO THE PLAN ADMINISTRATOR ON THE FORMS

AS THE PLAN ADMINISTRATOR MAY REQUIRE, A MEMBER WHO HAS ATTAINED

59.5 YEARS OF AGE MAY REQUEST A WITHDRAWAL OF ALL OR A PORTION

OF THE EMPLOYEE'S VESTED ACCOUNT BALANCE.

SECTION 1281. PAYMENTS TO ALTERNATE EMPLOYEES UNDER A QDRO.

(A) DISTRIBUTIONS.--A DISTRIBUTION TO AN ALTERNATE PAYEE

PURSUANT TO A DOMESTIC RELATIONS ORDER, INCLUDING ANY INTEREST

IN A MEMBER'S ACCOUNT AWARDED TO AN ALTERNATE PAYEE BY A

DOMESTIC RELATIONS ORDER, SHALL BE MADE AS SOON AS PRACTICABLE

AFTER SUCH ORDER IS DETERMINED BY THE PLAN ADMINISTRATOR TO BE A

QDRO AND OTHERWISE ACCEPTABLE UNDER THE TERMS OF THE PLAN,

UNLESS THE QDRO HAS SPECIFIED A TIME OF DISTRIBUTION.

(B) ALTERNATE PAYEE ACCOUNTS.--IF DISTRIBUTIONS ARE NOT MADE

AS SOON AS PRACTICABLE UNDER SUB SECTION (A), ANY INTEREST IN A

MEMBER'S ACCOUNTS ASSIGNED OR MADE PAYABLE OR DISTRIBUTABLE TO

THE ALTERNATE PAYEE UNDER A QDRO SHALL BE TRANSFERRED TO A

SEPARATE ACCOUNT ESTABLISHED FOR THE ALTERNATE PAYEE. IF A

SINGLE AMOUNT OR A SINGLE PERCENTAGE OF THE VESTED PORTION OF

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THE MEMBER'S ACCOUNTS IS ASSIGNED OR MADE PAYABLE OR

DISTRIBUTABLE TO THE ALTERNATE PAYEE UNDER A QDRO, THE TRANSFERS

TO THE ALTERNATE PAYEE ACCOUNT SHALL BE MADE PRO RATA FROM THE

MEMBER'S ACCOUNTS, UNLESS OTHERWISE PROVIDED BY THE QDRO.

(1) AN ALTERNATE PAYEE MAY, ON THE FORM PRESCRIBED BY

AND FILED WITH THE PLAN ADMINISTRATOR, DESIGNATE A

BENEFICIARY TO RECEIVE THE BENEFITS ASSIGNED TO THE ALTERNATE

PAYEE BY A QDRO IN THE EVENT OF THE ALTERNATE PAYEE'S DEATH

PRIOR TO RECEIPT OF ALL OR ANY PORTION OF THE BENEFITS.

(2) IF THE ALTERNATE PAYEE HAS NOT DESIGNATED A

BENEFICIARY OR IF THE DESIGNATED BENEFICIARY IS NOT LIVING

WHEN A DISTRIBUTION IS SCHEDULED, THE BENEFITS SHALL BE PAID

TO THE ALTERNATE PAYEE'S ESTATE, EXCEPT AS A QDRO MAY

OTHERWISE PROVIDE.

(D) LATEST TIME OF DISTRIBUTION.--DISTRIBUTION TO AN

ALTERNATE PAYEE OF AN EMPLOYEE'S ALTERNATE PAYEE ACCOUNT SHALL

BE MADE AS OF THE DATE SPECIFIED IN THE QDRO, OR, IF EARLIER,

THE TIME DESCRIBED UNDER THIS SECTION IF THE ALTERNATE PAYEE SO

ELECTS. PAYMENT SHALL BE MADE NO LATER THAN THE DATE THE

MEMBER'S VESTED ACCOUNT BALANCE IS DISTRIBUTED OR IS SCHEDULED

TO BE DISTRIBUTED.

SECTION 1282. ALTERATIONS TO PLANS.

(A) GENERAL RULE.--IF A MUNICIPALITY ESTABLISHES A PLAN

UNDER SECTION 1242, THE PROVISIONS OF THIS CHAPTER SHALL

CONSTITUTE THE EXCLUSIVE BENEFITS TO BE PROVIDED TO EMPLOYEE

MEMBERS AND THE FOLLOWING SHALL APPLY:

(1) NO ORDINANCE OR RESOLUTION ENACT ED BY A MUNICIPALITY

AFTER ESTABLISHMENT OF A PLAN UNDER THIS CHAPTER SHALL ALTER

THE PROVISIONS OF THE PLAN , NOR SHALL THE BENEFITS TO BE

20150HB0414PN2545 - 52 -

PROVIDED BY A PLAN BE ALTERED BY ANY SUBSEQUENT AWARD OF AN

ARBITRATOR UNDER THE ACT OF JUNE 24, 1968 (P.L.237, NO.111),

REFERRED TO AS THE POLICEMEN AND FIREMEN COLLECTIVE

BARGAINING ACT.

(2) A PLAN ADMINISTRATOR SHALL HAVE THE AUTHORITY TO

AMEND THE PLAN AS NECESSARY OR DESIRABLE TO MAINTAIN THE

QUALIFIED STATUS OF THE PLAN UNDER SECTION S 401(A) OF THE IRC

(26 U.S.C. § 401(A)) OR TO FACILITATE THE ADMINISTRATION OR

OPERATION OF THE PLAN TO THE EXTENT THE AMENDMENT WOULD NOT

MATERIALLY INCREASE THE COST OF THE PLAN OR SIGNIFICANTLY

ALTER THE BENEFITS PAYABLE UNDER THE PLAN.

(B) LIMITATIONS.--NOTWITHSTANDING SUBSECTION (A)(2), A

MUNICIPALITY, TRUSTEE OR PLAN ADMINISTRATOR MAY NOT DIVERT ANY

PART OF THE ASSETS OF THE PLAN TO PURPOSES OTHER THAN THE

EXCLUSIVE PURPOSES OF PROVIDING BENEFITS TO MEMBERS AND THEIR

DESIGNATED BENEFICIARIES WHO HAVE AN INTEREST IN THE PLAN AND

DEFRAYING THE REASONABLE EXPENSES OF ADMINISTERING THE PLAN.

THE EFFECTIVE DATE OF THIS SECTION, NOTHING IN THIS SUBCHAPTER

MAY BE CONSTRUED TO DIMINISH THE ESTABLISHED BENEFITS FOR

EMPLOYEES WHO ARE MEMBERS OF THE PLAN ON THE EFFECTIVE DATE OF

THIS SECTION . ON AND AFTER THE EFFECTIVE DATE OF THIS SECTION,

IT SHALL BE UNLAWFUL FOR A MUNICIPALITY TO IMPROVE A BENEFIT

FORMULA OR TO ADD OR IMPROVE ANY FEATURE OF AN EXISTING PLAN

THAT WOULD RESULT IN ADDITIONAL COST TO THE MUNICIPALITY, NOR

SHALL THE BENEFITS PROVIDED BY AN EXISTING PLAN BE ALTERED BY

ANY SUBSEQUENT AWARD OF AN ARBITRATOR UNDER THE POLICEMEN AND

FIREMEN COLLECTIVE BARGAINING ACT.

(D) ASSIGNMENT OF A PLAN.--THE INTEREST AND RIGHTS OF ANY

PERSON IN THE PLAN, TRUST OR ANY DISTRIBUTION TO BE MADE UNDER

20150HB0414PN2545 - 53 -

THE PLAN SHALL NOT BE SUBJECT TO OPTION NOR BE ASSIGNABLE EITHER

BY VOLUNTARY OR INVOLUNTARY ASSIGNMENT OR BY OPERATION OF LAW,

INCLUDING, WITHOUT LIMITATION, BANKRUPTCY, WAGE GARNISHMENT,

ATTACHMENT OR OTHER CREDITOR'S PROCESS, AND THE FOLLOWING SHALL

APPLY:

(1) ANY ACTION IN VIOLATION OF THIS SECTION SHALL BE

VOID.

(2) PURSUANT TO A QDRO, THE ASSIGNMENT OF A MEMBER'S

ACCOUNT SHALL NOT CONSTITUTE A VIOLATION OF THIS SECTION AS

LONG AS THE ORDER IS APPROVED BY THE PLAN ADMINISTRATOR.

Section 3 4. This act shall take effect in 60 days.

20150HB0414PN2545 - 54 -

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