§ 4-20-1. Maximum benefit limitations.

A.

Application. Notwithstanding the following provisions of this section, the annual benefit shall be deemed not to exceed the basic limitation of this section if the annual benefit payable with respect to such participant under the plan does not exceed $10,000.00 (subject to the reduction under subsection D of this section) for the limitation year, or for any prior limitation year and the city has not at any time maintained a defined contribution plan in which the participant participated.

B.

Definitions. For purposes of this section:

1.

Average annual compensation means, for each participant, the average of the three consecutive calendar years (without regard to the plan year, if different) during which he or she was a participant and had the highest aggregate annual compensation;

2.

Limitation year means the plan year;

3.

Annual benefit means, for any participant for any limitation year, an annual benefit payable in the form of a single life annuity, determined under the plan, excluding employee contributions or roll-over contributions of whatever nature, if any; and

4.

Annual compensation means, for each employee for each limitation year, wages, salaries, fees for professional services and other amounts received for personal services actually rendered in the course of employment with the city (including, but not limited to, commissions paid to salesmen, compensation for services on the basis of a percentage of profits, commissions in insurance premiums, tips and bonuses and excluding those items listed in Treasury Regulations section 1.415-2(d)(2)).

C.

Basic limitation. The annual benefit accrued, up to any point in time for any participant, shall not exceed his or her basic limitation of the lesser of:

1.

$90,000.00 (as reduced in subsection D of this section, and as adjusted for inflation from time to time by the secretary of the treasury pursuant to code section 415(d)(1), effective as of January 1, of the plan year in which such adjustment is made) ("dollar limitation"); or

2.

100 percent of the average annual compensation, as defined in subsection (B)(1) of this section, as reduced in subsection D of this section ("compensation limitation").

D.

Reduction of basic limitation.

1.

If the benefit is payable to or on behalf of a participant under this plan before he or she has completed at least ten years of service, his or her compensation limitation as defined in subsection (C)(2) of this section (and the $10,000.00 amount in subsection A of this section) shall be reduced by multiplying it by a fraction, the numerator of which is the number of his or her years of service (including fractions of years) and the denominator of which is ten.

2.

If the benefit is payable to or on behalf of a participant under this plan before he or she has completed at least ten years of participation in this plan, his or her dollar limitation as defined in subsection (C)(1) of this section shall be reduced by multiplying it by a fraction, the numerator of which is the number of his or her years (including fractions of years) of participation and the denominator of which is ten.

3.

Neither the compensation limitation as defined in subsection (C)(2) of this section, the $10,000.00 amount in subsection A of this section, nor the dollar limitation as defined in subsection (C)(1) of this section shall be reduced to less than one-tenth of the original unreduced limitations by the provisions of this subsection.

4.

This subsection shall apply to each separate benefit structure of this plan.

E.

Adjustments for applying the basic limitation. For purposes of determining whether a participant's plan benefit exceeds his or her basic limitation under this section, the following adjustments shall be made:

1.

If the benefit payable to or on behalf of a participant is payable in any form other than a single life annuity, his or her benefit shall be the actuarial equivalent of a single life annuity.

2.

If payment of a benefit commences before a participant attains his or her Social Security retirement age but on or after the date he or she attains age 62, the dollar limitation as defined in subsection (C)(1) of this section shall be reduced to the equivalent of such dollar limitation as of his or her Social Security retirement age, consistent with the reduction for old-age insurance benefits for an individual under the Social Security Act in the manner prescribed in regulations by the secretary of the treasury. If payment of a benefit commences before a participant attains age 62, the reduced dollar limitation applicable at age 62 under this subdivision shall be further reduced to the actuarial equivalent of such reduced dollar limitation.

3.

If payment of a benefit commences after the participant attains his or her social security retirement age, the dollar limitation as defined in subsection (C)(1) of this section shall be increased to the actuarial equivalent of such dollar limitation commencing at his or her Social Security retirement age, except that a five percent annual interest rate shall be used.

F.

Aggregate limits. The sum of the defined benefit plan fraction and the defined contribution plan fraction may not exceed 1.0. If such sum exceeds 1.0, first contributions to defined contribution plans of the city and then benefits under the defined benefit plans of the city shall be reduced until such sum equals 1.0. For purposes of this subsection:

1.

Defined benefit plan means any plan maintained in accordance with code section 401(a) which is not a defined contribution plan.

2.

Defined benefit plan fraction means, for each limitation year for each participant, a fraction:

a.

The numerator of which is his or her projected annual benefit under this plan and any other defined benefit plan maintained by the city or otherwise required to be aggregated with this plan under code section 415(g) (determined as of the close of the limitation year); and

b.

The denominator of which is the lesser of:

i.

The product of 1.25 times his or her dollar limitation; or

ii.

The product of 1.4 times his or her compensation limitation.

3.

Defined contribution plan means any plan maintained in accordance with code section 401(a) which provides for an individual account for each participant and for benefits based solely on the amount contributed to the participant's account and any income, expenses, gains, and losses, and any forfeitures of accounts of other participants, which may be allocated to such participant's account.

4.

Defined contribution plan fraction means, for each participant for each limitation year, a fraction:

a.

The numerator of which is the sum of all "annual additions" (as defined in code section 415(c)(2)) in the form of employee contributions under this plan or employee contributions under any other defined benefit plans and to his or her account in any defined contribution plan maintained by the city and in any other defined contribution plan required to be aggregated with such plan under code section 415(g), as of the close of such limitation year; and

b.

The denominator of which is the sum of the lesser of the following amounts determined for such limitation year and for each prior limitation year during which the participant was an employee:

i.

The product of 1.25 times $30,000.00 (as adjusted for inflation from time to time by the secretary of the treasury pursuant to code section 415(d)(1), effective as of January 1 of the plan year in which such adjustment is made); or

ii.

The product of 1.4 times his or her 25 percent of the participant's annual compensation as defined in subsection (B)(4) of this section for each such limitation year.

G.

Aggregation. For purposes of applying the limitations of this section, all defined benefit plans (whether or not terminated) of the city are to be treated as one defined benefit plan, and all defined contribution plans (whether or not terminated) of the city, including the treatment of employee contributions under this plan as a separate defined contribution plan, are to be treated as one defined contribution plan. Any other employee contributions to any other defined benefit plans also shall be deemed to be made under a separate defined contribution plan.

(Code 1985, § 25-50; Ord. No. 3907, § 1, 12-5-1989)