§ 13-42. Same—Retirement dates and retirement benefits.

(a)

Normal retirement date.

(1)

A Police Officer may retire on the first day of the month coincident with or next following the earliest of the following dates:

a.

Attainment of age 55 and completion of ten years of Continuous Employment;

b.

Attainment of age 52 and completion of 25 years of Continuous Employment;

c.

Attainment of age 57, regardless of years of Continuous Employment; or

d.

Completion of 20 years of Continuous Employment, regardless of age.

(2)

A Dual Service Employee may retire on his normal retirement date, calculated in accordance with subsection 13-42(a)(1), taking into account all years of Continuous Employment for the Village, calculated under subsection 13-26 and subsection 13-40.

(3)

If a Participant terminates employment prior to satisfying any requirement for normal retirement provided in paragraph (1) of this subsection the term "normal retirement date" shall mean the date such normal retirement eligibility requirements would have otherwise been satisfied had the terminated Participant remained an employee of the Village.

(b)

Normal retirement benefit. The monthly retirement pension for a participant shall be calculated as a ten-year certain and life annuity based upon the following benefit percentage per year of service:

(1)

For Police Officers the monthly retirement benefit shall be an amount equal to three and one-half percent of Final Average Compensation times completed years and months of Continuous Employment. Notwithstanding the preceding sentence, effective September 21, 2015, the monthly retirement benefit for Participants who have not reached the normal retirement date shall be an amount equal to three and one-half percent of Final Average Compensation times completed years and months of Continuous Employment earned prior to September 21, 2015, and three percent of Final Average Compensation times completed years and months of Continuous Employment earned on or after September 21, 2015.

(2)

In any case, any person entitled to participate under this article shall receive a minimum retirement benefit of $25.00 per month.

(3)

For Dual Service Employees the following benefits shall apply:

a.

The monthly retirement benefit shall be an amount equal to the percent (calculated in accordance with subsection 13-42(b)(1)) of Final Average Compensation (calculated in accordance with subsection 13-40) times completed years and months of Continuous Employment (calculated in accordance with subsection 13-40)).

b.

Unless a Dual Service Employee is eligible for early or normal retirement, there shall be no death benefits or disability benefits, other than a return of contribution in accordance with subsection 13-45(c)(1).

c.

A two and one-half percent compounded annual cost of living adjustment ("COLA") will be added to the monthly retirement benefit in accordance with subsection 13-42(k). Notwithstanding the preceding sentence, effective September 21, 2015, for Participants who have not reached the normal retirement date on that date and who retire on or after that date, a one and one-quarter percent compounded annual COLA will be added to the monthly retirement benefit in accordance with subsection 13-42(k)

(c)

Early retirement date.

(1)

A Participant may retire on the first day of the month coincident with or next following the attainment of age 50 and the completion of ten years of Continuous Employment.

(2)

The early retirement date of a Dual Service Employee shall be calculated in accordance with subsection 13-42(c), taking into account all years of Continuous Employment for the Village, calculated under subsection 13-40 and subsection 13-26.

(d)

Early retirement benefit. A Participant retiring under this section on his or her early retirement date may receive either a deferred or an immediate monthly retirement benefit as follows:

(1)

A deferred monthly retirement benefit, which shall commence on his or her normal retirement date and shall be continued on the first day of each month thereafter during his or her lifetime, but payable in any event on a ten-year certain and life annuity basis. The amount of the benefit shall be determined and paid in the same manner as for retirement at his or her normal retirement date except that Final Average Compensation and Continuous Employment shall be determined as of his or her early retirement date; or

(2)

An immediate monthly retirement benefit, which shall commence on his or her early retirement date and shall be continued on the first day of each month thereafter during his or her lifetime, but payable in any event on a ten-year certain and life annuity basis. The benefit payable as determined in subsection (d)(1) of this section shall be reduced actuarially for each year, not to exceed three percent per year, by which the starting date of the benefit precedes normal retirement age.

(e)

Delayed retirement date. The delayed retirement date shall be that date following the normal retirement date on which a Participant actually retires.

(f)

Delayed retirement benefit. A Participant retiring under this section at his or her delayed retirement date shall receive a monthly retirement benefit which shall commence on the first day of the month coincident with or next following such delayed retirement date. The amount of each such monthly retirement benefit shall be determined in the same manner as for normal retirement, except that Final Average Compensation and Continuous Employment shall be determined as of the Participant's actual retirement date. The benefit shall be paid on a ten-year certain and life annuity basis in the same manner as for normal retirement unless another option has been selected in writing by the Participant prior to actual retirement.

(g)

Applicable benefit formula. The benefit formula applicable in all cases of retirement, whether normal, early or delayed, shall be that in effect on the Participant's retirement date.

(h)

Optional forms of retirement benefit payments. Each Participant shall have the right at any time prior to his or her actual retirement or his or her early, normal or deferred retirement date to elect to have his or her retirement benefit payable under any of the options set forth in this subsection in lieu of the retirement benefits otherwise provided in this section, and to revoke any such elections and make a new election at any time prior to actual retirement. The value of optional retirement benefits shall be actuarially equivalent to the value of benefits otherwise payable. The Participant shall make such an election by written notice to the Retirement Board.

(1)

Option 1—Joint and last survivor option. A retiring Participant may elect to receive an equivalent retirement benefit during his or her lifetime and have such retirement benefit, or any designated fraction thereof, continued after his or her death to and during the lifetime of his or her spouse or a person other than his or her spouse. The election of Option 1 shall be null and void if the designated joint annuitant dies before the Participant's retirement.

(2)

Option 2—Life Annuity. A retiring Participant may elect to receive an increased retirement benefit payable during his or her remaining lifetime and ceasing upon his or her death.

(3)

Option 3—Other. In lieu of the other optional forms enumerated in this section, retirement benefits may be paid in any form so long as Actuarial Equivalence with the benefits otherwise payable is maintained, and provided further that any death benefits resulting may be no more than incidental.

(4)

Option 4—Lump Sum. In lieu of the normal and other optional forms of benefit payment enumerated in this section, a lump sum benefit payment shall be available to Participants as follows:

a.

Participants hired on or before January 29, 1985. Participants hired on or before January 29, 1985, are entitled to retirement benefits paid in the form of a lump sum upon written request and without approval of the Retirement Board. If the amount of any individual lump sum payment exceeds $50,000.00, the payment of such excess may, at the discretion of the Retirement Board, be deferred until a later date. The length of time such payment may be deferred shall not exceed the greater of six months from the date requested or the time until the next annual deposit of Village contributions.

b.

Participants hired after January 29, 1985. Participants hired after January 29, 1985, shall not be entitled to retirement benefits in the form of a lump sum unless the lump sum payment would not exceed $5,000.00. This lump sum limitation shall not apply to return of participant contributions as provided for in this chapter.

For purposes of this subsection (h), the amount of the lump sum payment due a Participant shall be the Actuarial Equivalent of the benefits otherwise payable to the Participant as described in this section.

(i)

Limitation on benefits. In no event shall a Participant's annual benefit following October 1, 1983, exceed the amounts set forth in internal Revenue Code Section 415. The Plan incorporates by reference the applicable provisions of Internal Revenue Code Section 415.

(j)

Required distributions. Commencing after December 31, 1983, the entire interest of a Participant shall either be distributed to him or her not later than the taxable year in which he or she attains age 70½ or retires, or in the alternative, distribution shall commence in such year and be payable over a period of time not exceeding the limitations set forth in the following provisions:

(1)

Distributions to Participants shall not extend beyond the life of the Participant or the lives of the Participant and his or her spouse, or over a period not extending beyond the life expectancy of the Participant and his or her spouse.

(2)

Provided further, if a Participant dies prior to receiving distribution of his or her entire interest, or if distribution has commenced to his or her surviving spouse and such-spouse dies prior to receiving distribution of the entire distributable interest, such entire interest or remainder thereof shall be distributed within five years after the death of the Participant or the surviving spouse as the case may be; however, the foregoing shall not apply if distribution has commenced and such distribution is for a term certain and within the limitations of paragraph (1) above.

(3)

Provided further, any method of distribution selected and made in writing by a Participant prior to January 1, 1984, and which is in compliance with the Village Code prior to said date, shall be permitted hereunder even though not otherwise in accordance with the above provisions as applied to distributions beginning after December 31, 1983.

In no event may a Participant's retirement benefit be delayed beyond the later of the April 1 following the calendar year in which the Participant attains age 70½ or the April 1 of the year following the calendar year in which the Participant retires. Distributions under this plan will be made in accordance with Regulations under Internal Revenue Code Section 401(a)(9). Provisions of Internal Revenue Code Section 401(a)(9) shall override any distribution options in the plan that may be inconsistent with such section.

Notwithstanding any other provision of this plan to the contrary, where a form of retirement income payment has commenced in accordance with the preceding paragraphs and the Participant dies before his entire interest in the plan has been distributed, the remaining portion of such interest in the plan shall be distributed no less rapidly than under the form of distribution in effect at the time of the Participant's death.

(k)

Cost-of-living adjustment. Retired Participants, except those who are eligible for a lump sum distribution and elect to take such distribution, will receive a two and one-half percent compounded annual COLA. This COLA shall commence on the one year anniversary of the Participant's retirement date and shall continue to be paid on the anniversary of the Participant's retirement each year thereafter. To receive this COLA, a Participant must be an active Participant on February 21, 2006, or become a Participant on or after February 21, 2006. For purposes of determining a Beneficiary's eligibility to receive a COLA under this section, the Participant's date of retirement shall govern. Notwithstanding the foregoing, effective September 21, 2015, for Participants who have not reached the normal retirement date on that date and who retire on or after that date, such Participants will receive a one and one-quarter percent compounded annual COLA commencing on the five-year anniversary of the Participant's retirement or entry into DROP, whichever occurs first, and continuing to be paid on the anniversary of the Participant's retirement each year thereafter.

(l)

Retiree Directed Payments.

(1)

The Board may, upon written request by a retiree, or by a dependent when authorized by either a retiree or the retiree's beneficiary, authorize the Board to withhold from the monthly retirement payment those funds that are necessary to pay for the benefits being received through the Village, to pay the certified bargaining agent of the governmental entity, and to make any payments for child support or alimony.

(2)

The Board may in its discretion, upon written request by a retiree, recognize elections made pursuant to Section 845 of the Pension Protection Act of 2006.

(m)

Notwithstanding any other provision of the Plan, in no event shall any Participant's annual retirement benefit be less than the Participant's accrued benefit earned as of September 21, 2015, determined in accordance with the provisions of the Plan in effect on the day before that date. Upon retirement from the Plan, Participants who elect to continue participating in the Plan in accordance with section 13-54(b) may elect to receive their accrued benefit as of September 21, 2015, or their benefit calculated on the date of retirement in accordance with the Plan provisions in effect on that date. Employees who have reached the normal retirement date on September 21, 2015, and who elect to continue participating in the Plan will continue to accrue benefits under the Plan in accordance with the benefits that existed on the day before September 21, 2015.

(n)

Rollover of Distributions . This section applies to distributions made on or after January 1, 1993. Notwithstanding any provision of the plan to the contrary that would otherwise limit a distributee's election under this section, a distributee may elect, at any time and in any manner prescribed by the Retirement Board, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. For the purposes of this section the following definitions shall apply:

(1)

Direct Rollover. Payment by the plan to the eligible retirement plan specified by the distributee. Effective as of January 1, 2008, a non-spouse Beneficiary may make a direct rollover only to an "inherited" individual retirement account as described in Section 408(b) of the Internal Revenue Code. If a non-spouse Beneficiary receives a distribution from the plan, the distribution is not eligible for a 60-day (non-direct) rollover.

(2)

Distributee. An employee or former employee. In addition, the employee's or former employee's surviving spouse is a distributee with regard to the interest of the spouse. Effective as of January 1, 2008, an Employee's or former Employee's non-spouse Beneficiary is a distributee with regard to the interest of the Employee or former Employee.

(3)

Eligible Retirement Plan. An individual retirement account described in Section 408(a) of the Internal Revenue Code, an individual retirement annuity account described in Section 408(b) of the Internal Revenue Code, an individual retirement plan described in Section 403(a) of the Internal Revenue Code, or a qualified trust described in § 401(a) of the IRC, that accepts the distributee's eligible rollover distribution. Effective for distributions made after December 31, 2001, an eligible retirement plan shall also mean an annuity contract described in Section 403(b) of the Internal Revenue Code and an eligible plan under Section 457(b) of the Internal Revenue Code which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this Plan.

(4)

Eligible Rollover Distribution. Any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) of the distributee and the distributee's designated beneficiary, for a specified period of ten years or more; any distribution to the extent such distribution is required under Section 401(a)(9) of the Internal Revenue Code; and, the portion of any distribution that is not includable in gross income.

(o)

Qualified Military Service.

(1)

Death Benefits. In the case of a death or disability occurring on or after January 1, 2007, if a participant dies while performing Qualified Military Service, the survivors of the participant are entitled to any additional benefits (other than benefit accruals relating to the period of Qualified Military Service) provided under the plan as if the participant had resumed and then terminated employment by the Village on account of death.

(2)

Differential Wage Payments. For years beginning after December 31, 2008:

a.

An individual receiving a differential wage payment, as defined in Section 3401(h)(2) of the Internal Revenue Code, shall be treated as an employee of the employer making the payment;

b.

The differential wage payment shall be treated as compensation; and

c.

The plan shall not be treated as failing to meet the requirements of any provision described in Section 414(u)(1)(C) of the Internal Revenue Code by reason of any contribution or benefit which is based on the differential wage payment.

(Ord. No. 447, § 1, 11-16-99; Ord. No. 474, § 1, 9-5-02; Ord. No. 505, 3, 2-21-06; Ord. No. 515, § 3, 4-13-07; Ord. No. 516, § 4, 4-13-07; Ord. No. 584, § 4, 10-20-15; Ord. No. 591, § 2, 12-20-16; Ord. No. 593, § 3, 3-21-17)