Chapters 175 185 Legislation and other updates

1. Chapters 175 & 185 Legislation and other updates Bonni S. Jensen The Law Offices of Perry & Jensen, LLC 400 Executive Center Drive, Suite 207 West Palm Beach, Florida 33401 561-686-6550

2. Legislative updates Florida Chapter 2009-97 Federal Laws GUST EGTRRA Health Insurance Deductions Lump Sums at age 50 HEART Normal Retirement Age New Special Tax Notice

3. Chapter 2009-97 CS/SB 538 Signed by Governor Crist Effective July 1, 2009

4. 175.032(4)(c) and 185.02(5)(c) Clarifies definition of credited service Credit may be given for federal, other state, service in the state of Florida, or county service Must be FF time recognized by Chapter 633 or meets definition of FF under 175.032(8)(a) Must be PO time recognized by Chapter 943 or meets definition of PO under 185.02(11) Can buy credit for fire service in fire plan or police service in police plan

5. 175.032(8)(a) Clarifies definition of Firefighter to include: Certified supervisory and Command personnel

6. 175.061(1)(a) & 185.05(1)(a) Allows Plan provisions to be amended to provide for 4 year terms If increased, term must be 4 years for all Trustees

7. 175.061(7) & 185.05(6) Amends Plans to allow retirees to request deductions from pension checks to pay for Insurance premiums: Premiums for accident, health and long term care insurance; Premiums for retiree and retiree’s spouse; and Plan is not liable for participation in the permissive program, if actions are taken in good faith.

8. 175.061(7) & 185.05(6) Other types of payments which a retiree may authorize : Benefits received from Governmental Entity; Payments to collective bargaining agent; or Payments for alimony or child support.

9. 175.071(1) & 185.06(1) Clarifies that investments of the Board are subject to the fiduciary standards of: 112.656 112.661 518.11 Code of Ethics in 112.311-112.3187

10. 175.071(1)(b) & 185.06(1)(b) Allows investments in foreign securities up to 25% This cap cannot be revised, amended, increased or repealed except as provided by general law.

11. 175.071(1)(c) & 185.06(1)(c) Clarifies that drafts on fund assets may also be signed by two individuals designated by the Board who are subject to the same fiduciary standards as the Board.

12. 175.071(8) & 185.06(7) New responsibility Requires identification and divestiture of scrutinized companies Reporting requirement

13. 175.071(8) & 185.06(7) Must divest from scrutinized companies defined by Florida Statutes 215.473 Companies with business operations with government of Sudan Companies complicit in Darfur genocide Companies that supply military equipment within Sudan Companies with business operations with government of Iran

14. 175.071(8) & 185.06(7) Board may comply by reliance on the Florida State Board of Administration scrutinized company list List is updated quarterly Available on the internet at : http://www.sbafla.com/fsb/ProtectingInvestmentsAct/tabid/402/Default.aspx

15. 175.071(8) & 185.06(7) Must identify holdings (direct or indirect) beginning January 1, 2010 Must divest of direct holdings by September 10, 2010 for police plans and by September 30, 2010 for fire plans If holdings are indirect Board must request manager to divest or offer scrutinized company free investment. If offered must move to scrutinized company free.

16. 175.101 Defines the area included in the boundaries of special fire control districts Includes annexed areas for a 4-year period defined in 171.093(4), or other agreed extension or if services are provided pursuant to an interlocal agreement.

17. 175.171(1)(c)4 & 185.161(1)(c) Clarifies that retirees may change their beneficiary up to two times after retiring Retiree may change beneficiary without providing proof of good health of beneficiary or proving that beneficiary being removed is still alive. Beneficiary change is allowed in accordance with 175.333/185.341

18. 175.171(1)(c)4 & 185.161(1)(c) 175.333 and 185.341 provides: Benefit shall be adjusted “By the application of actuarial tables and calculations developed to ensure that the benefit paid is the actuarial equivalent of the present value of the member's current benefit.” Plans may actuarially adjust benefits or offering options based upon sex, age, early retirement, or disability.

19. 175.361 & 185.37 Clarifies termination provisions to incorporate decision in Board of Trustees of the Town of Lake Park Pension Plan v. Town of Lake Park. Municipalities are responsible to fully fund all non-forfeitable benefits Board is to inform the municipality of the amount of additional assets that are required.

20. 175.361 & 185.37 The municipality is responsible to financially support the plan until all non-forfeitable benefits are paid. The actuarial single sum value of the member’s benefits cannot be less than the employee’s contributions less any benefits previously paid to the employee. Law makes provision for the payment of expenses incurred in termination.

21. Federal Laws Tax qualification Language should be reviewed with Plan Attorney IRS currently reviewing governmental plans for: 415 limits Rollover Language Required beginning dates 70 ½ required distributions

22. Health Insurance Deductions Public Safety Officers Exclude $3,000 from income from governmental pension If paid by Plan for qualified health insurance premiums Must be separated from service because reached normal retirement age or disability

23. Lump Sums not subject to 10% penalty Qualified Public Safety Employees Separation from Service in year that Public Safety Employee turns 50 (or later) Retired from Government Service Not subject to 10% penalty for early withdrawal

24. HEART Provides benefits to employees on active duty military service who die while gone Requires benefits to be provided as if the member returned to employment on day before death 175/185 would require providing benefits without need for contributions May provide same benefits to individuals who become disabled while on active duty military service

25. HEART Effective for deaths or disabilities after January 1, 2007 Differential wages must be included as pensionable wages Effective for wages paid after December 31, 2008

26. Normal Retirement Age New IRS provision allowing in-service distributions for participants at normal retirement age New regulations setting parameters for Normal Retirement Age Safe Harbor Normal Retirement Age Age 62 – Participant in General Age 55 – Governmental Employees Age 50 – Public safety

27. Normal Retirement Age Application to Governmental Plans is delayed until the first day of the first plan year beginning on or after January 1, 2011 Normal Retirement Ages do not have to change Normal Retirement Age which is less than safe harbor or service based can be called early unreduced retirement

28. Special Tax Notice IRS has issued new safe harbor rollover notices Attached as appendix