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Municipal Employees' Retirement System of Michigan Plan Document (Inclusive of last revision of May 13, 2009) MUNICIPAL EMPLOYEES' RETIREMENT SYSTEM OF MICHIGAN PLAN DOCUMENT (Current and up-to-date. All changes since adoption of Plan in l996 noted at the end of each section.) A resolution to establish the retirement system provisions available to municipalities and courts within the State of Michigan who elect to participate in the Municipal Employees’ Retirement System as the retirement program for their employees and the financing mechanism. Compiler’s Statement: The Plan Document in a number of instances reflect non-substantive editorial changes for uniformity and ease of reference. At the end of each section, the History states the origin of the section, and any Note reflects Plan changes made by the Retirement Board. These technical changes are intended to produce a more uniform and readable Plan Document. See Index of Changes to MERS Plan Document for each calendar year beginning in 2002 on next page. The entire Plan Document is available in an electronic version at http://www.mersofmich.com/ under “Legal and Legislation.” . INDEX TO BOARD APPROVED PLAN DOCUMENT CHANGES APPROVED CHANGES IN 2002* (Consult Note at end of each section amended for further detail.) (1) Section 2A(9)-(10) revised May 8, 2002, and August 14, 2002, to reflect changes in the Internal Revenue Code made by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). (2) Section 5(2)(a)(ii) (second paragraph) revised February 13, 2002. (3) Section 7(3) revised November 13, 2002. (4) Section 26(3)(c) revised May 8, 2002. (5) Section 55 revised May 8, 2002, and August 14, 2002, to reflect changes in the Internal Revenue Code made by EGTRRA. APPROVED CHANGES IN 2003* (Consult Note at end of each section amended for further detail.) (1) Section 46B repealed by Board action of March 12, 2003. (2) Section 55A added March 12, 2003. (3) Section 2C(7) amended May 14, 2003. (4) Section 10(6) added May 14, 2003. (5) Section 11(1)(p) and (2)(e) added May 14, 2003. (6) Section 31(1) amended May 14, 2003. (7) Section 34 amended May 14, 2003. (8) Section 4(6) revised September 30, 2003. APPROVED CHANGES IN 2004* (Consult Note at end of each section amended for further detail.) (1) Section 55 amended by Board action of March 10, 2004. (2) Section 3(3) repealed May 12, 2004. (3) Section 31(1) amended May 12, 2004. (4) Section 23, subsection (9), added August 11, 2004. (5) Plan Amendment Procedure revised September 21, 2004. (6) Sections 60-64 of Article VIII added November 10, 2004. (7) Section 2A(4), (5) and (15), Section 2B, and Section 36 amended effective December 27, 2004, to comply with amendments made by 2004 PA 490, amending the Municipal Employees’ Retirement Act of 1984, Sections 2A, 2B and 36; MCLA 38.1502a, 38.1502b, and 38.1536. *All changes have immediate effect unless otherwise stated. MERS Plan Doc: Revised as of May 13, 2009 1 . APPROVED CHANGES IN 2005* (Consult Note at end of each section amended for further detail.) (1) Plan Amendment Procedure revised March 8, 2005. (2) Section 55(7) amended September 20, 2005. (Second sentence added pursuant to June 15, 2005 IRS Letter of Favorable Determination.) (3) Section 10(6)(c) amended November 8, 2005. (Final clause concerning temporary DROP+ benefits deleted.) APPROVED CHANGES IN 2006* (Consult Note at end of each section amended for further detail.) (1) Section 2C(3)(b) amended March 14, 2006. (2) Section 43C added March 14, 2006, effective July 1, 2006. (3) Benefit Program “H” (Hybrid), Section 19B (and numerous amendments noted at the end of Section 19B) added March 14, 2006. (4) Section 19B(1) amended May 18, 2006, to be effective March 14, 2006. (5) Section 19A amended September 19, 2006, to be effective October 1, 2006. APPROVED CHANGES IN 2007* (Consult Note at end of each section amended for further detail.) (1) Section 3(2) amended March 13, 2007. (2) Section 2C amended September 18, 2007, to be effective January 1, 2008. (3) Section 43C amended September 18, 2007, to be effective January 1, 2008. APPROVED CHANGES IN 2009* (Consult Note at end of each section amended for further detail.) (1) Section 2A(9) amended January 14, 2009. (2) Section 32(1) amended January 14, 2009. (3) Section 41(3) amended January 14, 2009. (4) Section 41A(3) amended January 14, 2009. (5) Section 4 amended March 11, 2009. (6) Section 43C(1) and (4) amended March 11, 2009. (7) Section 23 amended May 13, 2009, to be effective July 1, 2009. (8) Section 23B added May 13, 2009, to be effective July 1, 2009. (9) Section 26 amended, with immediate effect and retroactive to January 1, 2007. *All changes have immediate effect unless otherwise stated. MERS Plan Doc: Revised as of May 13, 2009 2 . TABLE OF CONTENTS Preface ................................................................................................................................................... 1-1 ARTICLE I. GENERAL PROVISIONS ................................................................................ 1-1 to 1-10 Section 1: Short Title [MCL 38.1501] ........................................................................................................... 1-1 Section 2: Meanings of Words and Phrases [MCL 38.1502]......................................................................... 1-1 Section 2A: Definitions; A through L [MCL 38.1502a.]....................................................................... 1-1 to 1-4 Section 2B: Definitions; M through O [MCL 38.1502b.] ..................................................................... 1-5 to 1-7 Section 2C: Definitions; P through Z [MCL 38.1502c.] ....................................................................... 1-7 to 1-8 Section 3: Membership ..................................................................................................................... 1-9 to 1-10 ARTICLE II. SERVICE CREDIT............................................................................................ 2-1 to 2-6 Section 4: Credited Service; Forfeiture; Reinstatement ...................................................................... 2-1 to 2-2 Section 5: Combining Credited Service .............................................................................................. 2-2 to 2-3 Section 6: Credit for Certain Qualifying Service; Conditions; Crediting Payment Under Subsection (1)(c) ...................................................................................... 2-3 to 2-4 Section 7: Credited Service: Election to Purchase Not More Than 5 Years of Credited Service ........................................................................................................................ 2-5 Section 8: Election to Come Under Reciprocal Retirement Act .................................................................... 2-6 Section 9: Credited Service for Periods of Active Duty; Conditions ............................................................. 2-6 ARTICLE III. RETIREMENT REQUIREMENTS AND BENEFIT PROGRAM ........... 3-1 to 3-34 Section 10: Retirement; Requirements; Allowance; Benefit Programs ................................................ 3-1 to 3-4 Section 11: Adoption for Temporary Period of Benefit Programs or Combination of Benefit Programs; Contents of Resolution or Administrative Order; Retirement Under Section 10 During Temporary Period; Limitation ................................ 3-4 to 3-5 Section 12: Vested Former Member; Requirements ............................................................................. 3-5 to 3-6 Section 13: Benefit Program A; Retirement Allowance .................................................................................. 3-6 Section 14: Benefit Program B; Retirement Allowance ....................................................................... 3-6 to 3-7 Section 15: Benefit Program B-1; Retirement Allowance ............................................................................... 3-7 Section 16: Benefit Program B-2; Retirement Allowance ............................................................................... 3-7 Section 16A: Benefit Program B-3; Retirement Allowance ............................................................................... 3-7 Section 16B: Amount of Retirement Allowance Under Benefit Program B-4 ........................................ 3-7 to 3-8 Section 17: Benefit Program C-New and C-Old; Retirement Allowance ........................................................ 3-8 Section 18: Benefit Program C-1 New and C-1 Old; Retirement Allowance .................................................. 3-8 Section 19: Benefit Program C-2; Adoption; Retirement Allowance .............................................................. 3-9 MERS Plan Doc: Revised as of May 13, 2009 i . Section 19A: Restated Benefit Program DC; Adoption; Contribution; Distribution ............................. 3-9 to 3-13 Section 19B: Benefit Program H; Adoption; Contribution; Distribution ............................................ 3-13 to 3-18 Section 20: Benefit Program E; Adoption or Readoption; Effective Date; Adjustment Date; Adjustment Factor; Prohibition......................................................... 3-18 to 3-19 Section 21: Benefit Program E-1; Adoption or Readoption; Effective Date; Applicability; Adjustment Dates; Maximum Cumulative Adjustment Limitation; Base Amount of Retirement Allowance; Adjustment Factor ...................... 3-19 to 3-20 Section 22: Benefit Program E-2; Adoption; Effective Date; Applicability; Adjustment Dates; Maximum Cumulative Adjustment Limitation; Base Amount of Retirement Allowance; Adjustment Factor ......................................... 3-20 to 3-21 Section 23: Forms of Payment; Election; Naming of Survivor Beneficiary; Failure to Make Timely Election; Amount of Retirement Allowance; Election if Member Married at Retirement Allowance Effective Date; Signature of Spouse; Effect on Election if Retirant Divorced From Spouse Named as Survivor Beneficiary ............................................... 3-21 to 3-24 Section 23A: Adoption of Benefit Program RS50%; Specifying Effective Date of Change in Coverage; Duration and Amount of Payment to Surviving Spouse; “Surviving Spouse” Defined ..................................................................... 3-24 Section 23B: Adoption of Benefit Program PRO (Post-Retirement Option); Changing Form of Payment or Survivor Beneficiary Designation After Retirement; Effective July 1, 2009 ........................................................................... 3-25-3-26 Section 24: Retirement of Incapacitated Member; Conditions; Medical Examinations; Effective Date of Disability Retirement; Amount of Disability Retirement Allowance; Exceptions ............................................. 3-26 to 3-27 Section 25: Disability Retirant Under Age 60; Periodic Medical Examination; Suspension, Revocation, or Discontinuance of Disability Pension; Conditions to Restoration of Terminated Disability Retirant’s Actual Credited Service; Service Not Credited for Period of Disability; Terminated Disability Retirant as Vested Former Member ........................................... 3-27 to 3-28 Section 26: Conditions to Payment of Retirement Allowance for Life to Surviving Spouse; Commencement and Amount of Payment; Conditions to Payment of Retirement Allowance to Surviving Child, Restriction; Termination and Amount of Surviving Child’s Retirement Allowance; Presumptions .............................................. 3-28 to 3-29 Section 27: Death Resulting From Injury or Disease Arising Out of and in Course of Duty; Additional Provision Applicable to Section 26 .................................................... 3-29 to 3-30 Section 27A: Remarriage of Surviving Spouse ................................................................................................ 3-30 Section 28: Contingent Survivor Beneficiary ................................................................................... 3-30 to 3-31 Section 29: Provisions Applicable During Period Between Effective Date of Disability Retirement Allowance and Date Disability Retirant Attains Age 60 or Where Adopted by Resolution, the Age for Age and Service Retirement ................................ 3-32 to 3-33 Section 30: Commencement, Termination, and Change in Retirement Allowance ....................................... 3-33 Section 31: Employment by Participating Municipality or Court; Special Conditions ................................. 3-34 MERS Plan Doc: Revised as of May 13, 2009 ii . ARTICLE IV. CONTRIBUTIONS .................................................................................................... 4-1 to 4-3 Section 32: Contribution Programs .................................................................................................................. 4-1 Section 33: Contribution Program P ..................................................................................................... 4-1 to 4-2 Section 34: Difference Between Retirant’s Accumulated Contributions and Aggregate Amount of Retirement Allowance Payments Made; Payment ...................................................... 4-2 Section 35: Payment of Accumulated Contributions ....................................................................................... 4-3 ARTICLE V. RETIREMENT BOARD ADMINISTRATION ............................................ 5-1 to 5-13 Section 36: Retirement Board; Creation; Board as Public Corporation; Powers and Duties; Administrative Functions; Membership; Rules of Procedure; Record of Proceedings; Quorum; Voting; Term of Office; Oath; Expenses; Absence of Member from Work; Vacancy; Chairperson and Chairperson Pro tem; Chief Executive Officer [MCL 38.1536] ............................................................ 5-1 to 5-4 Section 36A: Denial of Benefits; Hearing Process; Appeal to Retirement Board .............................................. 5-4 Section 36B: Indemnification ............................................................................................................................. 5-4 Section 37: Audit Report................................................................................................................................. 5-5 Section 38: Experience Tables; Data and Information; Actuarial Operation and Investigations ............................................................................................................................... 5-5 Section 39: Retirement Board as Trustee of Money and Other Assets; Investments; Counsel; Purpose of Investments; Discretionary Authority [MCL 38.1539] ............................... 5-5 Section 40: Prohibited Conduct [MCL 38.1540] ............................................................................................. 5-6 Section 41: Election to Become Participating Municipality; Vote; Specifying Effective Date of Participation and Applicable Benefit and Contribution Programs; Establishment of Benefit and Contribution Program Coverage Classifications; Certifications of Participation; Conditions to Participation .......................................................... 5-6 Section 41A: Election to Become Participating Court; Administrative Order; Resolution; Specifying Effective Date of Participation and Applicable Benefit and Contribution Programs; Classifications; Certification of Participation; Conditions to Participation ............................................................................................................ 5-7 Section 42: Actuarial Determination of Contribution Requirements ............................................................... 5-7 Section 43: Election to Change Benefit and Contribution Programs; Vote; Specifying Effective Date of Change in Coverage and Applicable Benefit and Contribution Programs; Coverage Classification and Certification Conditions; Accrued Benefit Not Reduced by Change; Certification of Determination; Actuarial Determination of Contribution Requirements ........................................................................................................... 5-8 Section 43A: Election of Participating Court to Change Benefit and Contributions Programs; Administrative Order; Resolution; Specifying Effective Date of Change in Coverage and Applicable Benefit and Contribution Programs; Coverage Classification and Certification Conditions; Accrued Benefit Not Reduced by Change; Certification of Determination; Actuarial Determination of Contribution Requirements ...................... 5-8 to 5-9 Section 43B: Collective Bargaining Agreements; Benefit Modifications; Extension of Modified Benefits to Non-Bargaining Groups ......................................................................... 5-9 MERS Plan Doc: Revised as of May 13, 2009 iii . Section 43C: Fiscal Responsibility: Benefit Adoption Eligibility Requirements Eff. July 1, 2006 ...... 5-9 to 5-10 Section 44: Election to Terminate Participation; Vote; Certification of Determination; Effective Date of Termination of Participation; Effect of Termination; Disposition of Balance in Reserve ................................................................................. 5-10 to 5-11 Section 44A: Election of Participating Court to Terminate Participation; Vote, Certification of Determination; Effective Date of Termination of Participation; Effect of Termination; Disposition of Balance in Reserve ............................................ 5-11 to 5-12 Section 45: Annual Meeting; Selection of Members to Retirement Board; Transaction of Business; Notice of Meeting; Certification of Delegates; Conduct of Election; Nominating Procedures; Referendum [MCL 38.1545].................................................. 5-12 to 5-13 ARTICLE VI. FUNDING AND RESERVES .......................................................................... 6-1 to 6-5 Section 45A: Funding Objective of Retirement System; Contribution Requirement; Notice and Payment of Contribution Obligation; Interest and Penalty Charge ........................................ 6-1 Section 46: Reserve for Employee Contributions; Subaccounts; Deduction of Contributions from Compensation of Member; Consent and Agreement to Deduction; Discharge and Acquittance of Claims and Demands; Certification of Compensation Paid; Payment of Aggregate Amount of Contributions to Retirement System; Remittance of Member Contributions; Interest and Penalty Charge..................................................... 6-1 to 6-2 Section 46A: Reserve For Defined Contribution Plan ........................................................................................ 6-2 Section 46B: Transfers of Excess Assets to Reserve for Defined Contribution Plan ......................................... 6-2 Section 47: Reserve for Employer Contributions and Benefit Payments; Subaccounts .................................. 6-3 Section 48: Reserve for Retired Benefit Payments, Subaccounts .................................................................... 6-3 Section 49: Reserve for Excess Casualty Experience; Transfers; Stop Loss Program ......................... 6-3 to 6-4 Section 50: Reserve for Expenses and Undistributed Income; Transfer; Contingency Reserves ................................................................................................................... 6-4 Section 51: Expenses for Administration of Retirement System; Payment ........................................................................................................................................ 6-5 Section 52: Allocation of Undistributed Investment Income ........................................................................... 6-5 ARTICLE VII. MISCELLANEOUS ........................................................................................ 7-1 to 7-6 Section 53: Rights Neither Subject to Process of Law Nor Assignable; Exceptions; Limitation; Right of Setoff; Transfers of Money and Assets to Another Retirement System ......................... 7-1 Section 54: Correction of Errors in Records; Recovery of Overpayments; Making up Underpayments ............................................................................................................................. 7-1 Section 55: Intent; Retirement System as Qualified Pension Plan and Trust as Exempt Organization; etc. ............................................................................................................... 7-2 to 7-5 Section 55A: Qualified Excess Benefit Arrangement............................................................................... 7.5 to 7-6 Section 56: Severability .................................................................................................................................. 7-6 Section 57: Repeal .......................................................................................................................................... 7-6 MERS Plan Doc: Revised as of May 13, 2009 iv . ARTICLE VIII. ESTABLISHMENT OF 401(h) ACCOUNT FOR MERS PARTICIPATING EMPLOYERS ........................................................................................................ 8-1 to 8-6 Section 60: Authorization and Establishment ........................................................................................... 8-1 Section 61: Defined Terms ....................................................................................................................... 8-1 Section 62: Section 401(h) Account Participation .................................................................................... 8-1 Section 63: Mandatory Terms......................................................................................................... 8-2 to 8-4 Section 64: Optional Terms ............................................................................................................ 8-4 to 8-6 APPENDIX Procedure for Review of Formal Requests for Changes to MERS Plan Document .............................................. A-1 Former Section 38.1506 ........................................................................................................................................ B-1 Former Section 38.1509 ........................................................................................................................................ B-2 Former Section 19A ................................................................................................................................... B-3 to B-5 -END - MERS Plan Doc: Revised as of May 13, 2009 v . MUNICIPAL EMPLOYEES' RETIREMENT SYSTEM OF MICHIGAN PLAN DOCUMENT PA 220 of 1996 provided the Municipal Employees’ Retirement System with the power to establish additional retirement system provisions including, but not limited to, defined benefit and defined contribution programs for its participating municipalities and participating courts. The Board of the Municipal Employees’ Retirement System of Michigan approves: ARTICLE I. GENERAL PROVISIONS. Sec. 1. Short Title. [MCL 38.1501] This act [1984 PA 427, as amended by 2004 PA 490] shall be known and may be cited as the “municipal employees retirement act of 1984.” [This Plan Document shall be known and may be cited as the "Municipal Employees’ Retirement System Plan Document of 1996." The Plan shall be effective commencing October 1, 1996. This Plan includes all defined benefit provisions in effect as of 12:01 a.m. on August 15, 1996 pursuant to 1996 PA 220, sec. 36(2)(a), sec. 38.1536 (2)(a) of the Michigan Compiled Laws.] History: 1984 PA 427, Eff. Jan. 2, 1985, and 1996 PA 220, Eff. Aug. 15, 1996, and Plan Document of 1996. Note 1: 1996 PA 220, enacting section 2, repealed effective August 15, 1996, the majority of the provisions of the Municipal Employees Retirement Act of 1984, except for 9 sections: section 1, MCL 38.1501; sections 2-2c, MCL 38.1502-1502c; section 36, MCL 38.1536; section 39, MCL 38.1539; section 40, MCL 38.1540; and section 45, MCL 38.1545. Note 2: Bracketed text added. Note 3: On July 8, 1997, the Internal Revenue Service issued its Letter of Favorable Determination that the Plan Document of 1996 conforms to the provisions of the Internal Revenue Code applicable to governmental plans. . Note 4: On June 15, 2005, IRS issued its Letter of Favorable Determination, which applies to all Plan amendments made by the Board through November 10, 2004. Sec. 2. Meanings of Words and Phrases. [MCL 38.1502] For the purposes of this Act [and Plan], the words and phrases defined in sections 2A through 2C have the meanings ascribed to them in those sections. History: 1984 PA 427, Eff. Jan. 2, 1985, and Plan Document of 1996; see Sec. 1, Note 1 of this Plan. Sec. 2A. Definitions; A through L. [MCL 38.1502a.] (1) "Accumulated balance" means the total balance in a member's, vested former member's, or beneficiary's individual account under Benefit Program DC or the defined contribution component of Benefit Program H. MERS Plan Doc: Revised as of May 13, 2009 1-1 . (2) "Accumulated contributions" means the sum of all amounts credited to a member's individual account in the reserve for employee contributions. (3) "Beneficiary" means an individual who is being paid or who has entitlement to the future payment of a retirement allowance or a return of contributions on account of a reason other than the individual's membership in the retirement system. (4) "Certification date" means August 15, 1996. (5) "Chief judge" means the chief judge of a judicial circuit court, a judicial district court, or a judicial probate court as provided in the Revised Judicature Act of 1961, 1961 PA 236, MCL 600.101 to 600.9948. (6) "Compensation" means the salary or wages paid a member for personal services rendered the member's participating municipality or participating court while a member of the retirement system. Salary and wages shall include longevity pay, overtime pay, shift differentials; pay for periods of absence from work by reason of vacation, holiday, and sickness; deferred compensation amounts under deferred compensation programs recognized by the board, including premiums for annuities and permanent life insurance policies that are transferred to the ownership of the member upon retirement; worker's compensation weekly benefits if the participating municipality or participating court reports the worker's compensation benefit to the retirement system; and items of a similar nature that are recognized as compensation by the board. Compensation does not include any remuneration or reimbursement not specifically described in this subsection or recognized by the board, such as allowances for clothing, equipment, cleaning, and travel; reimbursement of expenses, bonuses; termination pay; severance pay; payments in consideration of unused sick leave; the value of fringe benefits; and items of remuneration that are the basis of a potential or actual benefit from another retirement program. If the participating municipality or participating court has adopted Benefit Program DC, compensation equals the Medicare taxable wages as reported by the employer on the member's federal form W-2, wage and tax statement. (7) "Direct rollover" means a payment by the retirement system to the eligible retirement plan specified by the distributee. (8) "Distributee" includes a member or vested former member. Distributee also includes the member's or vested former member's surviving spouse or the member's or vested former member's spouse or former spouse under an eligible domestic relations order, with regard to the interest of the spouse or former spouse. (9) Beginning January 1, 2002, except as otherwise provided in this subsection, "eligible retirement plan" means the following types of plans established under the listed sections of the Internal Revenue Code: (a) a qualified trust described in section 401(a); (b) an annuity plan described in section 403(a); (c) a tax-sheltered annuity described in section 403(b); (d) an individual retirement account described in section 408(a); (e) an individual retirement annuity described in section 408(b); MERS Plan Doc: Revised as of May 13, 2009 1-2 . (f) a Roth IRA individual retirement account described in section 408A; and (g) a deferred compensation plan under section 457(b) that is maintained by a state, or an agency or instrumentality of a state, a political subdivision of a state, or an agency or instrumentality of a political subdivision of a state, that accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution to a surviving spouse on or before December 31, 2001, an eligible retirement plan means an individual retirement account or an individual retirement annuity). (10) Beginning January 1, 2002, "eligible rollover distribution" means a distribution of all or any portion of the balance to the credit of the distributee. Eligible rollover distribution does not include any of the following: (a) A distribution made for the life or life expectancy of the distributee or the joint lives or joint life expectancies of the distributee and the distributee's designated beneficiary. (b) A distribution for a specified period of 10 years or more. (c) A distribution to the extent that the distribution is required under section 401(a)(9) of the Internal Revenue Code. (d) The portion of any distribution that is not includable in federal gross income, determined without regard to the exclusion for net unrealized appreciation with respect to employer securities; provided, that any portion of a distribution that is not included in federal gross income may be an eligible rollover distribution for purposes of a rollover to (1) an eligible retirement plan listed in subsection (9)(a) or (b) provided that the plan is a defined contribution plan that will separately account for the distribution, including the taxable and non-taxable portions of the distribution, and that the rollover is a direct trustee-to-trustee transfer, or (2) an eligible retirement plan listed in subsection 9(d) or (e). (11) "Final average compensation" means any of the following: (a) One-fifth of the aggregate amount of compensation paid a member during the period of 5 consecutive years of the member's credited service in which the aggregate amount of compensation paid is highest, known as FAC-5. If the member has less than 5 years of credited service, final average compensation means the aggregate amount of compensation paid the member divided by the member's credited service. A member who has credited service in force with more than 1 participating municipality or participating court shall have a separate final average compensation computed based on the member's compensation record with each participating municipality and participating court. (b) If the participating municipality or participating court has adopted benefit program FAC-3, l/3 of the aggregate amount of compensation paid a member during the period of 3 consecutive years of the member's credited service in which the aggregate amount of compensation paid is highest. If the member has less than 3 years of credited service, final average compensation means the aggregate amount of compensation paid the member divided by the member's credited service. A member who has credited service in force with more than 1 participating municipality or participating court shall have a separate final average compensation computed based on the member's compensation record with each participating municipality or participating court. MERS Plan Doc: Revised as of May 13, 2009 1-3 . (c) For a member who is a judge of the district court, the recorder's court of the city of Detroit, or the circuit court, and has converted a portion or all of his or her state salary standardization payment as provided for in section 504 of the Judges Retirement Act of 1992, Act No. 234 of the Public Acts of 1992, being section 38.2504 of the Michigan Compiled Laws, as an addition to his or her state base salary under Act No. 234 of the Public Acts of 1992, being sections 38.2101 to 38.2670 of the Michigan Compiled Laws, the difference between the figure that would otherwise be used under subdivision (a) or (b) to compute the member's retirement benefits, and the amount of the state salary standardization payment converted. (12) "Governing body" means the representative legislative body of a municipality, or the administrative board or commission of a public corporation or instrumentality that does not have a representative legislative body. (13) "Internal Revenue Code" means the United States Internal Revenue Code of 1986. (14) "Judicial circuit court" means a judicial circuit of the circuit court as provided in section 11 of article VI of the state constitution of 1963. (15) "Judicial district court" means a judicial district of the district court as provided in section 8101 of the Revised Judicature Act of 1961, 1961 PA 236, MCL 600.8101. (16) “Judicial employee" means an individual who is paid compensation for personal service rendered for a participating court. Judicial employee does not include anyone who is a municipal employee under section 2B(3) or anyone who is specifically excluded as a municipal employee under section 2B(3). (17) "Judicial probate court" means a county probate court or probate court district as provided in section 15 of article VI of the state constitution of 1963. History: 1996 PA 220, Eff. Aug. 15, 1996, and Plan Document of 1996; see Sec.1, Note 1 of this Plan. Note 1: The 1996 PA 220 amendments are reflected in text of subsections (4), (5), (12), (14), (15) and (17). Bracketed text in (4) added. Note 2: Bold text in subsections (9) and (10) to comply with federal law changes (the Economic Growth and Tax Relief Reconciliation Act of 2001); by Board action of May 8, 2002, with retroactive effective date of January 1, 2002. Note 3: Changes in subsection (9) (language deleted) and (10) (changes underlined) reflect Board amendments on August 14, 2002, effective January 1, 2002, pursuant to the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001. Note 4: Bold text changes in subsections (4), (5) and (15) pursuant to 2004 PA 490, which took immediate effect December 27, 2004, amending this section 2A (and sections 2B and 36). Note 5: Bold text in subsection (1) added March 14, 2006, with immediate effect: all provisions then amended create the Hybrid Plan, Benefit Program H, and include: sections 2A(1), 2C(7), 6(1), 7(1), 10(1), 11(4), 12(1)(d) and (2), 19B added, 20(5), 21(8), 22(8), 23(2)(a), 23A(5), 24(5), 26(2) and (5)(a) and (6), 27(4), 28(3), (3)(a) and (4), 30(1), 32(5), 39(1), 44(2)(b), 44A(2)(b), 46(1), 46A(1), and 47(1)(a). Note 6: In subsection (9), insertion of italicized new language in subsection (f), and former (f) re-lettered as (g), by Board action of January 14, 2009 with immediate effect. MERS Plan Doc: Revised as of May 13, 2009 1-4 . Sec. 2B. Definitions; M through O. [MCL 38.1502b.] (1) "Member" means an individual [municipal employee or judicial employee] who is included in the membership of the retirement system as determined by the Retirement Board. (2) "Membership service" means personal service rendered a participating municipality or participating court while a member of the retirement system. (3) "Municipal employee" means an individual who is paid compensation for personal services rendered for a participating municipality. Payment of compensation by a hospital, board, commission, public corporation, or instrumentality created by a municipality is considered payment by the municipality. Municipal employee does not include any of the following: (a) The mayor, village president, or a member of the governing body of a participating municipality, unless the individual files a written application for membership with the retirement system. By written election in the form prescribed by MERS, and signed by the member’s spouse, a member whose membership exists by virtue of having filed an application for membership under this subsection (3)(a) may irrevocably elect to be excluded from membership (and any membership rights or benefits arising from service under this subsection) under the following conditions: (i) The election is made while the member occupies a position under this subsection (3)(a). (ii) For the period in which the member has occupied a position under this subsection (3)(a), the member shall be paid the member’s accumulated contributions, if any, and all credited service for the period shall be forfeited in all cases. (iii) The individual shall not again become a member of the retirement system on account of occupying a position under this subsection (3)(a) for the same municipality. (iv) The individual’s forfeited credited service and any service rendered the participating municipality during any time the individual was excluded from membership shall never be reinstated or credited to the individual under Sections 4 or 6, or for any other purpose under the Plan Document. (b) An individual who is employed on a basis that exempts the participating municipality from the withholding provisions of the internal revenue code. (c) An individual, except a county elected official, who is wholly paid on a fee basis. (d) An individual who is an active member as of January 1, 1983, of the State of Michigan probate judges retirement system created by the former Probate Judges Retirement Act, former Act No. 165 of the Public Acts of 1954, being former sections 38.901 to 38.933 of the Michigan Compiled Laws and who continued in service as a probate judge under the successor act, the Judges' Retirement Act of 1992, 1992 PA 234, sections 38.2101 to 38.2670 of the Michigan Compiled Laws. (e) A person, not regularly employed by the participating municipality, who is employed by the municipality through participation in a program established pursuant to the Job Training Partnership Act, Public Law 97-300, 96 Stat. 1322. In addition, a person MERS Plan Doc: Revised as of May 13, 2009 1-5 . described in this subdivision shall not receive service credit for the employment described in this subdivision even though the person subsequently becomes or has been a member of the retirement system. (f) A person, not regularly employed by the participating municipality, who is employed by the municipality through participation in a program established pursuant to the Michigan opportunity and skills training program first provided for under sections 12 to 23 of Act No. 259 of the Public Acts of 1983. In addition, a person described in this subdivision shall not receive service credit for the employment described in this subdivision even though the person subsequently becomes or has been a member of this retirement system. (g) A person, not regularly employed by the participating municipality, who is employed by the municipality through participation in a program established pursuant to the Michigan community service corps program first provided for under sections 25 to 35 of Act No. 246 of the Public Acts of 1984. In addition, a person described in this subdivision shall not receive service credit for the employment described in this subdivision even though the person subsequently becomes or has been a member of this retirement system. (h) A person, not regularly employed by the participating municipality, who is employed by the municipality to administer a program described in subdivision (e), (f), or (g) shall not be a member of this retirement system. (i) An individual who is, on the effective date of the municipality's or court's participation under this Plan or the predecessor Act, a member of another retirement system that is sponsored by the participating municipality or participating court if that individual remains as a member of the other retirement system. (4) "Municipality" means 1 or more of the following: (a) A county, county road commission, city, village, or township. (b) A public corporation or instrumentality established by 1 or more counties, cities, villages, or townships. (c) A public corporation or instrumentality charged by law with the performance of a governmental function and whose jurisdiction is coextensive with 1 or more counties, cities, villages, or townships. (d) A political subdivision located in this state or located in this and another adjacent state of the United States including, but not limited to, the entities named in subdivision (a), (b), or (c), or any combination of these units. (e) A political subdivision located in this state and a metropolitan government borough, or other political subdivision of the province of Ontario, an agency of the United States, or a similar entity of adjacent states of the United States and the province of Ontario. (f) A state university, community college, or junior college whose employees are not public school employees who are members under the public school employees retirement act of 1979, 1980 PA 300, MCL 38.1301 to 38.1408. MERS Plan Doc: Revised as of May 13, 2009 1-6 . (g) Any municipal corporation as defined in section 1(a) of 1951 PA 35, MCL 124.1, or other governmental entity that is eligible to join the retirement system and participate in any program under this act, as determined by the retirement board. History: 1996 PA 220, Eff. Aug. 15, 1996, and Plan Document of 1996; see Sec. 1, Note 1 of this Plan. Note 1: The 1996 PA 220 amendments are reflected in text of subsections (1) and (4). Bracketed text in (1) added. Note 2: Bold text in subparagraph 3(a) added by Board action of February 25, 1998, with immediate effect. Note 3: Bold text changes in subsections (4) pursuant to 2004 PA 490, which took immediate effect December 27, 2004, amending this section 2B (and sections 2A and 36). Sec. 2C. Definitions; P through Z. [MCL 38.1502c.] (1) "Participating court" means a judicial circuit court, a judicial district court, or a judicial probate court that has elected to be governed by the provisions of this [Plan or the predecessor] Act. (2) "Participating municipality" means a municipality that has elected to be governed by the provisions of: [(a) this Plan; or (b)] this Act [1984 PA 427, or its predecessor 1945 PA 135]. Two or more municipalities may enter into an agreement with each other and the retirement system to participate as a combined unit. (3) "Prior service" means certified personal service rendered a municipality or a judicial circuit court, judicial district court, or judicial probate court by a member prior to the date the municipality or judicial circuit court, judicial district court, or judicial probate court became a participating municipality or participating court. The participating municipality or participating court shall certify to the retirement system, in writing, the amount of prior service to be credited each member in its employ. The participating municipality or participating court may limit the period of certified prior service to either a percentage of the member's total period of prior service or a stated number of years. Certification of prior service shall be made prior to the retirement of a member, in the form and at the time prescribed by the Retirement Board. Prior service credit shall not be recognized for the purpose of calculating a retirement allowance under this Plan unless all of the following requirements are met: (a) The municipality or court transfers to the retirement system assets from the preceding qualified plan and/or other source equal to at least fifty percent (50%) of prior service accrued liabilities (as determined under MERS assumptions). Should assets actually transferred be less than fifty percent (50%) of such liabilities, then all prior service recognized shall be in strict proportion to the assets transferred. (b) Unfunded actuarial accrued liabilities, if any, arising from prior service shall be funded over a 30-year amortization schedule, for initial actuarial valuations requested before January 1, 2007. Unfunded actuarial accrued liabilities, if any, arising from prior service shall be funded over a 25-year amortization schedule for initial actuarial valuations requested on or after January 1, 2007. Commencing January 1, 2011, the 25-year amortization schedule shall become 20-year amortization. (c) In the event any alteration of this section 2C(3) is made or occurs, under section 43B of the Plan Document concerning collective bargaining or under any other plan provision or law, MERS prior service shall not be recognized, other than in accordance with this section. MERS Plan Doc: Revised as of May 13, 2009 1-7 . (4) "Public corporation" means the retirement system on and after the certification date, which corporation is an instrumentality of the participating municipalities and participating courts. (5) "Retirant" means an individual who is being paid a retirement allowance on account of the individual's membership in the retirement system. (6) "Retirement allowance" means an annual amount payable in monthly installments by the retirement system, whether payable for a temporary period or throughout the future life of a retirant or beneficiary. (7) "Retirement benefit" means a retirement allowance, refund of accumulated contributions, or amounts paid to a distributee. The term includes distributions under section 19A, Benefit Program DC, distributions under section 19B, Benefit Program H, and distributions under section 10(6), Benefit Program DROP+. The term does not include any post-retirement or other ancillary benefit or payment, which may become available under the Plan Document or the retirement system. (8) "Retirement board" means the retirement board provided for in section 36 to administer the retirement system. (9) "Retirement system" or "system" means the municipal employees retirement system established by former Act No. 135 of the Public Acts of 1945, and continued and restated by this Act [1984 PA 427 and the Plan Document on and after the certification date]. (10) "Vested former member" means a person who meets the requirements of section 12. History: 1996 PA 220, Eff. Aug. 15, 1996, and Plan Document of 1996; see Sec. 1, Note 1 of this Plan. Note 1: The 1996 PA 220 amendments are reflected in text of subsections (1), (2), (4), (8) and (9). Bracketed text in (1) and (2) and (9) added. Note 2 Former text at end of section 5(1) inserted verbatim in subsection (3) as last full sentence preceding (3)(a), and (3)(a)-(b), per Board action of May 20, 1998, with immediate effect. Note 3: Bold text in subsection (3)(a)-(b) revised, and (3)(c) added, by Board action of September 28, 1999, to be effective January 1, 2000. Note 4: Bold text in subsection (7) added by Board action of May 14, 2003, with immediate effect, along with companion amendments to section 31(1) and 34, and addition of: section 10(6), section 11(1)(p) and 11(2)(e). Note 5: Bold underlined text in subsection (3)(b) added by Board action of March 14, 2006, with immediate effect. See Section 43C(4), also approved on March 14, 2006. Note 6: Bold underlined text in subsection (7) added March 14, 2006, with immediate effect: all provisions then amended create the Hybrid Plan, Benefit Program H, and include: sections 2A(1), 2C(7), 6(1), 7(1), 10(1), 11(4), 12(1)(d) and (2), 19B added, 20(5), 21(8), 22(8), 23(2)(a), 23A(5), 24(5), 26(2) and (5)(a) and (6), 27(4), 28(3), (3)(a) and (4), 30(1), 32(5), 39(1), 44(2)(b), 44A(2)(b), 46(1), 46A(1), and 47(1)(a). Note 7: Italicized third sentence added to section 2C(3)(b), as companion amendment to section 43C, both by Board action of September 18, 2007, to take effect January 1, 2008. MERS Plan Doc: Revised as of May 13, 2009 1-8 . Sec. 3. Membership. (1) Each municipal employee of a participating municipality and each judicial employee of a participating court, who is employed in a position regularly requiring at least 10 days or a specified number of hours of work in a calendar month, shall be a member of the retirement system unless excluded from membership in accordance with subsection (2). A day of work or the specified number of hours of work in a calendar month shall be defined by resolution of the governing body of each participating municipality or by administrative order of the chief judge of each participating court. The resolution or administrative order shall be uniformly applicable to all members employed by the participating municipality or participating court who are covered by the same benefit program coverage classification. Benefit program coverage classification shall be those established by the Retirement Board pursuant to the provisions of sections 41 and 41A. A certified copy of the resolution or administrative order shall be filed with the Retirement Board within 10 days after adoption or issuance. (2) A participating municipality or participating court may exclude temporary municipal employees or judicial employees from membership in the retirement system. The participating municipality or participating court shall notify, in writing, each temporary municipal employee or judicial employee excluded from membership. A municipal employee or judicial employee shall not be designated a temporary municipal employee or judicial employee if employed in a position normally requiring at least 6 or more whole months not to exceed 12 whole months of work. Exclusion of a temporary municipal employee or judicial employee from membership shall be by resolution of the governing body of the participating municipality or by administrative order of the chief judge of the participating court. A certified copy of the resolution or administrative order shall be filed with the Retirement Board within 10 days after adoption or issuance. (3) A municipal employee or judicial employee who is an active member of another retirement system shall be a member only for the portion of the member's compensation that is not considered compensation under the other retirement system. (4) A municipal employee or judicial employee shall cease to be a member upon termination of employment by a participating municipality or participating court, or upon ceasing to be employed in a position regularly requiring at least 10 days or a specified number of hours of work in a calendar month, as provided in subsection (1), or upon being designated a temporary municipal employee or judicial employee, except as provided in subsection (5). A member who has been laid off by a participating municipality or participating court and whose layoff status continues for a period of at least 30 days may make written request to the retirement system for a return of the member's accumulated contributions. Payment of the accumulated contributions shall constitute termination of membership in the retirement system. (5) A member who is transferred to the employ of the state, another municipality, or another judicial circuit court, judicial district court, or judicial probate court by reason of a function of the member's participating municipality or participating court being transferred to the state, the other municipality, or the other judicial circuit court, judicial district court, or judicial probate court shall remain a member of the retirement system, notwithstanding subsection (4), subject to the following conditions: (a) Service rendered the state, the other municipality, or the other judicial circuit court, judicial district court, or judicial probate court subsequent to the transfer and standing to the member's credit in a retirement system of the state, the other municipality, or the other judicial circuit court, judicial district court, or judicial probate court may be combined with the member’s credited service in this retirement system. The combined MERS Plan Doc: Revised as of May 13, 2009 1-9 . credited service may be used only to meet the retirement or survivor benefit credited service requirements of this retirement system. (b) The amount of a retirement allowance that may become payable by this retirement system shall be computed on the basis of the member's credited service and final average compensation, and the benefit program applicable to the member, at the time of the member's transfer of employment. (c) The member may not retire prior to termination of all employment with the state, the other municipality, or the other judicial circuit court, judicial district court, or judicial probate court. (6) A member who is concurrently employed by 2 or more participating municipalities or participating courts shall remain a member upon termination of employment with 1 or more of the participating municipalities or participating courts if the remaining employment with 1 or more participating municipalities or participating courts satisfies the conditions of this section with regard to membership. Membership with respect to the participating municipalities or participating court, with whom the member terminated employment shall terminate. The member shall have the rights of a terminated member in all respects with regard to service rendered the participating municipalities or participating court, with whom employment has terminated. (7) A member who is in receipt of worker's compensation weekly benefits on account of an employment-related injury shall continue to be a member and receive credited service until the earliest of termination of employment, retirement or death. History: 1988 PA 500, Eff. Dec. 29, 1988, and Plan Document of 1996. Note 1: Former subsection (3), which permitted the chief executive officer of a participating municipality to be excluded from MERS membership, was repealed, and subsections (4)—(8) renumbered as (3)—(7), on May 12, 2004, with immediate effect. Note 2: Bold language in subsection (2) added by Board action of March 13, 2007, with immediate effect. End of Article I. MERS Plan Doc: Revised as of May 13, 2009 1-10 . ARTICLE II. SERVICE CREDIT. Sec. 4. Credited Service; Forfeiture; Reinstatement. (1) Prior service and membership service to which a member is entitled, including periods during which a member is in receipt of worker's compensation weekly benefits, shall be credited to the member's individual service account. Service shall be credited in years and twelfths of a year. Not more than 1 year of credited service shall be credited a member on account of all service rendered to a participating municipality or participating court in any period of 12 consecutive months. Not more than 1/12 of a year of credited service shall be credited a member on account of all service rendered to a participating municipality or participating court in a calendar month. Credited service shall not be credited for any calendar month during which a member acquires less than 10 days or a specified number of hours of work, as defined by the member's participating municipality or participating court pursuant to section 3(1). Credited service shall not be credited to a member for any calendar month during which the member is covered by Benefit Program DC, except that periods of at least 12 months in which a participating municipality or participating court has made employer contributions on behalf of a member under MERS Benefit Program DC shall be counted towards satisfying the applicable vesting or service requirement under sections 10(1)(b) and 10(4). (2) All or a portion of an individuals' credited service shall be forfeited under the following conditions: (a) All credited service shall be forfeited if the individual incurs a break in membership of more than 240 consecutive months and is not a vested former member pursuant to section 12. (b) Credited service for which the individual has made member contributions shall be forfeited if the individual's accumulated contributions are paid to the individual, the individual's designated beneficiary, or the individual's legal representative. (3) Credited service forfeited for a reason other than a break in membership of more than 240 consecutive months shall be reinstated in the member's service account if all of the following conditions are satisfied: (a) The forfeited credited service was acquired while the member was in the employ of the same participating municipality or participating court. (b) The member pays to the retirement system all accumulated contributions previously paid to the member plus compound interest from the date of payment to the member to the date of repayment to the retirement system. Payment shall be made within 5 years after the date the member reacquires membership in the retirement system on account of employment by, and prior to termination of employment with, the same participating municipality or participating court. However, a participating municipality may by resolution of its governing body, or a participating court may by administrative order of its chief judge, establish a written policy to extend beyond 5 years the period for payment required under this subdivision. The policy shall be uniformly applicable to all members employed by the participating municipality or participating court who are covered by the same benefit program coverage classification. Benefit coverage classifications are those established by the Retirement Board under section 41 or 41A. MERS Plan Doc: Revised as of May 13, 2009 2-1 . (4) The rates of compound interest applicable to repayment of accumulated contributions shall be as determined by the Retirement Board. (5) Forfeited credited service acquired while a member was in the employ of another participating municipality or participating court shall not be reinstated under this section but shall be creditable subject to the requirements of section 6. (6) A participating municipality or court may provide for the conversion of service credit earned by part-time employees to the full-time equivalent upon a member’s promotion to full-time employment. The governing body must adopt the Uniform Resolution Defining Hours Per Month for Part-Time Employees and Service Credit Conversion Upon Promotion to Full-Time Status, the terms of which shall not be modified or altered as an express condition of its effectiveness. History: 1992 PA 63, Eff. May 22, 1992, and Plan Document of 1996. Note 1: Addition of subsection (6) by Board action of May 20, 1997, effective January 1, 1998. Note 2: Text of subparagraph (6)(a) revised by Board action of May 20, 1998, with immediate effect. Note 3: Bold text at end of subsection (1) added by Board action of August 23, 2000, with immediate effect as of October 1, 2000. See companion amendment to sections 10(1), 10(4), and 19A(12). Note 4: Former subsection (6) revised in its entirety by Board action of September 30, 2003, with immediate effect. Note 5: Bold text in subsection (2)(a) and (3), changing 180 months (15 years) to 240 months (20 years), to correspond with amendments made to sections 4 and 5 of the Reciprocal Retirement Act (1961 PA 88) by 2008 PA 502; and addition of bold text to subsection (3)(b); by Board action of March 11, 2009, all with immediate effect. Sec. 5. Combining Credited Service. (1) A member who has acquired credited service with more than 1 participating municipality or participating court, other than concurrently, may combine the separate amounts of credited service for the sole purpose of satisfying the retirement or survivor benefit service credit requirements of the retirement system. Credited service concurrently acquired in more than 1 participating municipality or participating court may not be combined. Credited service of less than 1 year with a participating municipality or participating court may not be combined. [See Note 2 at end of this section]. (2) (a) A member who has acquired credited service for concurrent employment with more than 1 participating municipality or participating court may consolidate the member's credited service and compensation history under a single participating municipality or participating court if each of the following conditions is met: (i) Each of the affected participating municipalities files with the Retirement Board a resolution of its governing body and each of the affected participating courts files with the Retirement Board an administrative order of its chief judge outlining the terms of the credited service and compensation consolidation, including the transfer amounts, if any, between the affected participating municipalities' and participating courts' accounts in the reserve for employer contributions. (ii) Amounts to be transferred shall not be greater than the larger of (a) the accumulated contributions of the member whose credited service is being transferred; or (b) the actuarial present value of the retirement allowance MERS Plan Doc: Revised as of May 13, 2009 2-2 . otherwise payable by the transferring participating municipality or participating court on the regular retirement date should the transfer not occur. The actuarial present value of the accrued benefit shall be determined based on the rate of return on the investment of present and future assets utilized by the Retirement Board at the time of such valuation (presently 8% as of December 31, 2001), and the pre- and post-retirement life expectancies of participants based on the 1994 Group Annuity Mortality Table. (iii) Periods of concurrent credited service shall not result in more than one month of credited service for any one calendar month. (iv) After the consolidation of credited service and compensation, the member will no longer have credited service in force with the participating municipalities or participating courts which transferred credited service and compensation histories to another participating municipality or participating court. (b) If a member's periods of concurrent employment are consolidated, the member's compensation histories shall be combined, in order to calculate final average compensation and member contributions. (c) If a member's periods of concurrent employment are consolidated, the member's retirement or survivor benefits and member contributions shall be determined based on the benefit programs and member contribution programs adopted by the participating municipality or participating court which agrees to accept responsibility for the consolidated employment. (d) Each participating municipality or participating court utilizing this section shall establish a written policy to implement the provisions of this section to provide for its uniform application to all employees and former employees within the membership of the retirement system. This section shall not be applicable to any former member (or beneficiary of such member) in receipt of a retirement allowance based on the same credited service rendered for the participating municipality or participating court for which transfer is requested. History: 1993 PA 50, Eff. June 1, 1993, and Plan Document of 1996. Note 1: Bracketed text in subparagraph (2)(a)(ii) added to reflect Board action in 1994. Note 2: Language formerly found at end of subsection (1) concerning prior service and based on 1993 PA 50, section 58, inserted verbatim as separate subparagraph in 2C(3) per Board action of May 20, 1998, with immediate effect. Note 3: Subsection (2)(a)(ii) (second paragraph) as amended by Board action of February 13, 2002, with immediate effect. See also section 55, note 2. Sec. 6. Credit for Certain Qualifying Service; Conditions; Crediting Payment under Subsection (1)(c). (1) The Retirement Board shall credit a member other than a member covered by Benefit Program DC, or Benefit Program H for qualifying service in the employ of the United States government, a state, or a political subdivision of a state, if all of the following conditions are satisfied. (a) The governing body of the participating municipality that employs the member adopts a resolution, or the chief judge of the participating court that employs the member issues an administrative order, requesting the Retirement Board to credit the member with a specific period of qualifying service and files a certified copy of the resolution or MERS Plan Doc: Revised as of May 13, 2009 2-3 . administrative order with the retirement system within 10 days after the adoption or issuance. The resolution of the governing body or the administrative order of the chief judge shall be made or issued pursuant to a previously adopted written policy which provides for uniform applicability of the provisions of this section to all members employed by the participating municipality or participating court who are covered by the same benefit program coverage classification. Benefit program coverage classification shall be those established by the Retirement Board pursuant to the provision of section 41 or 41A. (b) The qualifying governmental service was not rendered prior to any break of 180 or more months in the member's employment by the United States government, a state, or a political subdivision of a state. (c) The member pays to the retirement system the amount the participating municipality or participating court may require of the member in consideration for the crediting of qualifying governmental service; any payment shall be credited to the member’s individual account in the reserve for employee contributions. The required payment, if any, shall not exceed the difference between the actuarial present value of potential benefits after crediting the specified period of qualifying service and the actuarial present value of potential benefits prior to crediting the specified period of qualifying service. The actuarial present value of potential benefits shall be calculated using the earliest retirement date assumption and experience assumptions used for the annual actuarial valuation. (2) For purposes of this section, service is qualifying if it is not and will not be recognized for the purpose of obtaining or increasing a benefit under another retirement system. A member may qualify service by making an irrevocable forfeiture of all rights in and to the actual or potential benefit from the other retirement system. (3) Service purchased under this section shall not be: (a) Credited until the member attains the vesting requirement in effect for the participating municipality or court; or (b) Used to satisfy the minimum years of credited service required to be a vested former member in the event of termination of membership. (4) For a member employed by a participating municipality or court as of July 1, 1997, who has service rendered before that date that was covered service under former sections 6 and 9 of the Municipal Employees’ Retirement Act of 1984, former MCL 38.1506 and 38.1509 as in effect on August 15, 1996, those provisions shall continue to apply to such members for covered service rendered before July 1, 1997. History: 1996 PA 220, Eff. August 15, 1996, and Plan Document of 1996. Note 1: Bold text in subparagraph (1)(c) inserted from former (4); added text in new (3), with (b) inserted from former (5); text of former (4) deleted; language in revised (4) modification of former (5) reflecting Board Plan interpretation of April 23, 1997; all changes by Board action of May 20, 1998, with immediate effect. Note 2: The former sections 6 and 9 referred to in subsection (4) are found in the Appendix to Plan Document following Article VII. Former section 6 is found at B-1, and former section 9 at B-2. Note 3: Bold text in subsection (1) added March 14, 2006, with immediate effect: all provisions then amended create the Hybrid Plan, Benefit Program H, and include: sections 2A(1), 2C(7), 6(1), 7(1), 10(1), 11(4), 12(1)(d) and (2), 19B added, 20(5), 21(8), 22(8), 23(2)(a), 23A(5), 24(5), 26(2) and (5)(a) and (6), 27(4), 28(3), (3)(a) and (4), 30(1), 32(5), 39(1), 44(2)(b), 44A(2)(b), 46(1), 46A(1), and 47(1)(a). MERS Plan Doc: Revised as of May 13, 2009 2-4 . Sec. 7. Credited Service: Election to Purchase Not More Than 5 Years of Credited Service. (1) The Retirement Board shall credit a member (other than a member covered by Benefit Program DC or Benefit Program H) with not more than 5 years of credited service, if each of the following conditions is satisfied: (a) The governing body of the participating municipality that employs the member adopts a resolution, or the chief judge of the participating court that employs the member issues an administrative order, requesting the Retirement Board to credit the member with a specific amount of credited service and files a certified copy of the resolution or administrative order with the retirement system within 10 days after adoption or issuance. The resolution of the governing body or the administrative order of the chief judge shall be made or issued pursuant to a previously adopted written policy which provides for uniform applicability of the provisions of this section to all members employed by the participating municipality or participating court who are covered by the same benefit program coverage classification. Benefit program coverage classifications shall be those established by the Retirement Board pursuant to the provisions of section 41 and 41A. (b) The member pays to the retirement system the amount the participating municipality or participating court may require of the member in consideration for the crediting of service; any payment shall be credited to the member's individual account in the reserve for employee contributions. The required payment, if any, shall not exceed the difference between the actuarial present value of potential benefits after crediting the specified amount of credited service and the actuarial present value of potential benefits prior to crediting the specified amount of credited service. The actuarial present value of potential benefits shall be calculated using the earliest retirement date assumption and the experience assumptions used for the annual actuarial valuation. (2) Service purchased under this section shall not be: (a) Credited until the member attains the vesting requirement in effect for the participating municipality or court; or (b) Used to satisfy the minimum years of credited service required to be a vested former member in the event of termination of membership. (3) The total credited service acquired by a member under this section, from all participating municipalities and participating courts, shall not exceed 5 years. History: 1996 PA 220, Eff. Aug. 15, 1996, and Plan Document of 1996. Note 1: Bold text in subparagraph (1)(b) inserted from former (2); added text in new (2), with (b) inserted from former (3); and former (4) and (5) renumbered as (3) and (4) respectively; by Board action of May 20, 1998, with immediate effect. Note 2: Deletion of former subsection (3), and renumbering of former (4) as (3), by Board action of November 13, 2002, with immediate effect. Note 3: Bold text in subsection (1) added March 14, 2006, with immediate effect: all provisions then amended create the Hybrid Plan, Benefit Program H, and include: sections 2A(1), 2C(7), 6(1), 7(1), 10(1), 11(4), 12(1)(d) and (2), 19B added, 20(5), 21(8), 22(8), 23(2)(a), 23A(5), 24(5), 26(2) and (5)(a) and (6), 27(4), 28(3), (3)(a) and (4), 30(1), 32(5), 39(1), 44(2)(b), 44A(2)(b), 46(1), 46A(1), and 47(1)(a) MERS Plan Doc: Revised as of May 13, 2009 2-5 . Sec. 8. Election to Come Under Reciprocal Retirement Act. A participating municipality or participating court which has elected to come under the provisions of the Reciprocal Retirement Act, Act No. 88 of the Public Acts of 1961, being sections 38.1101 to 38.1106 of the Michigan Compiled Laws, by resolution of its governing body, may make such provisions applicable to former members who left the employ of the participating municipality or participating court before the date the participating municipality or participating court elected to come under such provisions. Service shall not be recognized unless the member pays the retirement system withdrawn accumulated contributions applicable to such service, plus regular interest as provided by the Retirement Board from the date of withdrawal to the date of repayment. The amount shall be repaid within 2 years after the participating municipality or participating court has elected to come under the provisions of Act No. 88 of the Public Acts of 1961. History: 1984 PA 427, Eff. Jan. 2, 1985, and Plan Document of 1996. Sec. 9. Credited Service for Periods of Active Duty; Conditions. A member who leaves or left the employ of a participating municipality or participating court to enter any armed service of the United States shall be entitled to credited service for periods of active duty subject to the following conditions: (1) The member is reemployed by the same participating municipality or participating court within 6 months after the date of termination of the minimum period of active duty required of the member, and the member is not covered by Benefit Program DC by virtue of employment with the same participating municipality or participating court. (2) The member pays the retirement system the total amount of accumulated contributions withdrawn at the time of, or subsequent to, leaving employment by the participating municipality or participating court to enter armed service, plus regular interest as provided by the Retirement Board, from the date of withdrawal to the date of repayment. (3) Not more than 6 years of credited service shall be granted a member under this section. (4) Credited service shall not be granted for periods of armed service that are or could be used for obtaining or increasing a benefit from another retirement system. History: 1988 PA 500, Eff. Dec. 29, 1988, and Plan Document of 1996. End of Article II. MERS Plan Doc: Revised as of May 13, 2009 2-6 . ARTICLE III. RETIREMENT REQUIREMENTS AND BENEFIT PROGRAM. Sec. 10. Retirement; Requirements; Allowance; Benefit Programs. (1) A member or a vested former member (other than a member or vested former member covered by Benefit Program DC or Benefit Program H) may retire upon satisfaction of all of the following requirements: (a) A written application for retirement, on a form established by the retirement system, has been filed with the retirement system. The Retirement Board may establish required time periods, preceding or surrounding the date of retirement, for the filing of an application for retirement. (b) One of the following applies: (i) The member or vested former member has attained age 50 years or older and has 25 or more years of credited service. (ii) The member or vested former member has attained age 55 years or older and has 15 or more years of credited service. (iii) The member or vested former member has attained age 60 years or older and has 10 or more years of credited service. (iv) The member or vested former member has attained age 60 years or older and has 8 or more years of credited service if the member's participating municipality or participating court adopts the termination of membership vesting Benefit Program V-8 for the member. (v) The member or vested former member has attained age 60 years or older and has 6 or more years of credited service if the member's participating municipality or participating court adopts the termination of membership vesting Benefit Program V-6 for the member. (vi) The participating municipality or participating court has adopted Benefit Program F(N) and the member or vested former member has the specified period of credited service required for retirement. (c) The member terminates membership before the date of retirement. Periods of at least 12 months in which a participating municipality or participating court has made employer contributions on behalf of a member under MERS Benefit Program DC shall be counted towards satisfying the applicable vesting or service requirements in this subsection (1), but not in the calculation of the retirement allowance. (2) Upon retirement the member or vested former member shall be paid a retirement allowance computed under the benefit programs that are applicable to the member's or vested former member's credited service and the provisions of subsection (3). The benefit programs applicable to a vested former member shall be determined as of the date of termination of membership and shall not be affected by any subsequent change in benefit programs that is applicable to the classifications held by the vested former member. (3) If the date of retirement precedes the date the member or vested former member attains the full retirement allowance age as determined under subsection (4) or (5), the amount of retirement MERS Plan Doc: Revised as of May 13, 2009 3-1 . allowance shall be reduced. The amount of reduction shall be 1/2 of 1% of the retirement allowance multiplied by the number of months, rounded to the next higher number of months and not less than zero, by which the date of retirement precedes the date the member or vested former member attains the full retirement allowance age. The reduction called for in this subsection shall not be applied to benefit component (I) under Benefit Program B, as provided in section 14. (4) A participating municipality or participating court may adopt Benefit Program F(N), Benefit Program F50, or Benefit Program F55, or a combination thereof. Under Benefit Program F(N), the full retirement allowance age shall be any age with the required period of credited service. The required period of credited service shall be either 20, 21, 22, 23, 24, 25, 26, 27, 28, 29 or 30 years, as specified pursuant to subsection (5). Under Benefit Program F50, the full retirement allowance age shall be age 50 years with a required period of credited service of either 25 or 30 years. Under Benefit Program F55, the full retirement allowance age shall be age 55 years with a required period of credited service of 15 years, 20 years, 25 years, or 30 years. Periods of at least 12 months in which a participating municipality or participating court has made employer contributions on behalf of a member under MERS Benefit Program DC shall be counted toward satisfying the service requirement in this subsection (4), but not in the calculation of the retirement allowance. (5) Full retirement allowance age shall be age 60 years, unless the participating municipality or participating court has adopted Benefit Program F(N), Benefit Program F50 or Benefit Program F55, or a combination thereof, and the member or vested former member has the required period of credited service. The governing body of the participating municipality or chief judge of the participating court shall specify, at the time Benefit Program F(N), Benefit Program F50 or Benefit Program F55, or a combination thereof, are adopted, the required period of credited service which shall be applicable to the benefit program. (6) Subject to sections 43 and 43A, a participating municipality or participating court may adopt Benefit Program DROP+ if, on the date of the resolution adopting Benefit Program DROP+, the total percent funded for the entire municipality or court, based on the ratio of valuation assets to actuarial accrued liabilities as of the most recent annual actuarial valuation report for the municipality or court, is at least sixty percent (60%). In the adoption resolution, the participating municipality or participating court shall specify the DROP+ Percentage, which shall be one of the following whole number percentages: 4%, 5%, 6%, 7%, or 8%. Upon retirement under this section, a member who is covered under Benefit Program DROP+ may elect to receive a portion of the member’s retirement allowance in a lump sum distribution, and the balance as a reduced retirement allowance. The following conditions apply: (a) The election of a lump sum distribution and the selection of the amount of the lump sum distribution shall be in writing and filed with the Retirement Board on or after the date of filing of the application for retirement but before the date the first retirement allowance payment is made. (b) Subject to the conditions in paragraph (c) of this subsection, the amount of the lump sum distribution shall be a multiple of 12, 24, 36, 48, or 60 times the member’s monthly retirement allowance provided under subsections (2) and (3) of this section; however, if the member is covered under Benefit Program C-2, as provided in section 19, the amount of the lump sum distribution shall be a multiple of 12, 24, 36, 48, or 60 times the monthly retirement allowance averaged over the first 120 months of retirement, excluding any retirement allowance increases under Benefit Program E, as provided in section 20, or Benefit Program E-1, as provided in section 21, or Benefit Program E-2, as provided in section 22. MERS Plan Doc: Revised as of May 13, 2009 3-2 . (c) The number of months of retirement allowance included in the lump sum distribution shall not exceed the number of complete calendar months between the date the member first attained full retirement age as determined under subsection (4) or (5) of this section, and the date of retirement; provided that the date of attainment of full retirement age shall be based on benefit programs in effect on the date of retirement and credited service imputed from the credited service at retirement using the assumption that one month of credited service is acquired each calendar month before retirement. (d) The reduced retirement allowance shall be equal to the member’s retirement allowance provided under subsections (2) and (3) of this section reduced by one of the following percentages: (i) The DROP+ Percentage, if the lump sum distribution includes 12 months of benefits. (ii) Two (2) times the DROP+ Percentage, if the lump sum distribution includes 24 months of benefits. (iii) Three (3) times the DROP+ Percentage, if the lump sum distribution includes 36 months of benefits. (iv) Four (4) times the DROP+ Percentage, if the lump sum distribution includes 48 months of benefits. (v) Five (5) times the DROP+ Percentage, if the lump sum distribution includes 60 months of benefits. (e) The member shall elect 1 or a combination of the following methods of distribution of the lump sum distribution, to the extent allowed by federal law and subject to procedures established by the Retirement Board: (i) Payment of the lump sum distribution to the member. (ii) To the extent allowed by federal law and subject to procedures established by the Retirement Board, the lump sum distribution shall be considered an eligible rollover distribution. (f) In the event any alteration of this subsection (6) is made or occurs, under section 43B of the Plan Document concerning collective bargaining or under any other plan provision or law, adoption of DROP+ shall not be recognized, other than in accordance with this subsection. History: 1989 PA 51, Eff. June 12, 1989, and Plan Document of 1996. Note 1: Bold text paragraph following subsection (1)(c), and bold text in last sentence of subsection (4), added by Board action of August 23, 2000, with immediate effect as of October 1, 2000. See companion amendment to sections 4(1) and section 19A(12). Note 2: Subsection (6) added by Board action of May 14, 2003, with immediate effect, along with companion amendments to sections 2C(7), 31(1) and 34; and addition of section 11(1)(p) and 11(2)(e). Note 3: Former final clause in subparagraph (6)(c) concerning temporary DROP+ benefits under section 11, deleted by Board action of November 8, 2005, with immediate effect. MERS Plan Doc: Revised as of May 13, 2009 3-3 . Note 4: Bold text in subsection (1) added March 14, 2006, with immediate effect: all provisions then amended create the Hybrid Plan, Benefit Program H, and include: sections 2A(1), 2C(7), 6(1), 7(1), 10(1), 11(4), 12(1)(d) and (2), 19B added, 20(5), 21(8), 22(8), 23(2)(a), 23A(5), 24(5), 26(2) and (5)(a) and (6), 27(4), 28(3), (3)(a) and (4), 30(1), 32(5), 39(1), 44(2)(b), 44A(2)(b), 46(1), 46A(1), and 47(1)(a). Important Comment: As a continuing condition of MERS tax-qualified “governmental plan” status under Section 401(a) of the Internal Revenue Code, MERS Plan Document Section 55(1) provides: “The Retirement Board intends that the retirement system be a qualified pension plan under section 401 of the Internal Revenue Code and that the trust be an exempt organization under section 501 of the Internal Revenue Code. The Retirement Board shall administer the retirement system to fulfill this intent.” A retirant is a person who has had a “bona fide termination of employment in which the employer/employee relationship is completely severed” (IRS Information Letter 2000-0245 (September 6, 2000); Revenue Ruling 74-254, 1974-1 CB 91); and where the person is currently receiving an accrued pension benefit payment immediately. Accordingly, to clearly show “complete severance,” the employer should establish a minimum period following termination of employment of not less than 30 days before any formal actions necessary for new employment occur. Where there has been a bona fide severance of employment for at least 30 days, payment of a pension benefit during new employment is consistent with Plan Section 55(1). Where there is no bona fide termination of employment of at least 30 days before hiring, payment of a pension benefit would not be consistent with Section 55(1), could imperil MERS qualified plan status, and the rehired individual’s receipt of benefits while reemployed subject to suspension by MERS. See also Michigan Attorney General Opinion #7167 (December 29, 2004). Source: MERS Legal Department February 2, 2005. Sec. 11. Adoption for Temporary Period of Benefit Programs or Combination of Benefit Programs; Contents of Resolution or Administrative Order; Retirement Under Section 10 During Temporary Period; Limitation. (1) Subject to sections 43 and 43A, a participating municipality may by resolution of its governing body, or a participating court may by administrative order of its chief judge adopt for a temporary period any of the following benefit programs or any legitimate combination of the following benefit programs: (a) Benefit Program E-2 under section 22. (b) Benefit Program FAC-3 under section 2A(11)(b). (c) Benefit Program F50 under section 10(4). (d) Benefit Program F55 under section 10(4). (e) Benefit Program B-1 under section 15. (f) Benefit Program B-2 under section 16. (g) Benefit Program B-3 under section 16A. (h) Benefit Program B-4 under section 16B. (i) Benefit Program C-New and C-Old under section 17. (j) Benefit Program C-1 New and C-1 Old under section 18. (k) Benefit Program C-2 under section 19. (l) Benefit Program RS50% under section 23A. (m) Benefit Program V-8 under section 10. (n) Benefit Program V-6 under section 10. (o) Benefit Program F(N) under section 10. (p) Benefit Program DROP+ under section 10. (2) The resolution or administrative order shall contain all of the following that are applicable: MERS Plan Doc: Revised as of May 13, 2009 3-4 . (a) The benefit program or combination of benefit programs adopted under subsection (1). (b) The beginning and ending dates of the temporary period selected under subsection (1). The temporary period selected shall be for not less than 60 days and not more than 180 days. (c) The classification of members covered by the benefit program or combination of benefit programs for the temporary period under subsection (1). (d) If Benefit Program F50, F55 or F(N) is adopted for a temporary period under subsection (1), the required period of credited service applicable to the benefit program. (e) If Benefit Program DROP+ is adopted for a temporary period under subsection (1) of this section, the DROP+ Percentage, which shall be one of the following whole number percentages: 4%, 5%, 6%, 7%, or 8%. (3) A member who is in the classification of members covered under the benefit program or combination of benefit programs for the temporary period under this section and who retires under section 10 during the temporary period shall receive a retirement allowance computed pursuant to the benefit program or combination of benefit programs adopted for the temporary period. (4) A participating municipality or a participating court shall not adopt a temporary period under this section for the same classification of members on more than two (2) occasions in any period of five (5) consecutive calendar years. A participating municipality or a participating court shall not adopt a temporary period under this section for members covered by Benefit Program DC or Benefit Program H. History: 1995 PA 191, Eff. Nov. 7, 1995, and Plan Document of 1996. Note 1: Subparagraphs (1)(m) and (n) added by Board action of August 20, 1998, with immediate effect. Note 2: Subparagraph (1)(o) and bold text in 2(d) added by Board action of November 19, 1998, with immediate effect. Note 3: Bold text in subparagraphs 1(p) and 2(e) added by Board action of May 14, 2003, with immediate effect, along with companion amendments to sections 2C(7), 31(1) and 34; and addition of section 10(6). Note 4: Bold text in subsection (4) added March 14, 2006, with immediate effect: all provisions then amended create the Hybrid Plan, Benefit Program H, and include: sections 2A(1), 2C(7), 6(1), 7(1), 10(1), 11(4), 12(1)(d) and (2), 19B added, 20(5), 21(8), 22(8), 23(2)(a), 23A(5), 24(5), 26(2) and (5)(a) and (6), 27(4), 28(3), (3)(a) and (4), 30(1), 32(5), 39(1), 44(2)(b), 44A(2)(b), 46(1), 46A(1), and 47(1)(a) Sec. 12. Vested Former Member; Requirements. (1) A member who ceases to be a member, for a reason other than retirement or death, is a vested former member if one (1) of the following requirements is met. (a) The member has 10 or more years of credited service at the time the membership terminates. (b) The member has 8 or more years of credited service and is covered under the termination of membership vesting Benefit Program V-8 at the time the membership terminates. MERS Plan Doc: Revised as of May 13, 2009 3-5 . (c) The member has 6 or more years of credited service and is covered under the termination of membership vesting Benefit Program V-6 at the time the membership terminates. (d) The member is covered under Benefit Program DC or Benefit Program H at the time the membership terminates; however, a member covered under Benefit Program H must have 6 or more years of credited service at the time the membership terminates in order to receive any benefits under the defined benefit component of Benefit Program H. (2) A vested former member may retire upon satisfaction of the requirements of section 10 or section 19B. The benefit programs applicable to a vested former member shall be determined as of the date of termination of membership and shall not be affected by a subsequent change in benefit programs applicable to the classifications held by the vested former member. History: 1989 PA 51, Eff. June 12, 1989, and Plan Document of 1996. Note: Bold text in subsection (1)(d) and (2) revised March 14, 2006, with immediate effect: all provisions then amended create the Hybrid Plan, Benefit Program H, and include: sections 2A(1), 2C(7), 6(1), 7(1), 10(1), 11(4), 12(1)(d) and (2), 19B added, 20(5), 21(8), 22(8), 23(2)(a), 23A(5), 24(5), 26(2) and (5)(a) and (6), 27(4), 28(3), (3)(a) and (4), 30(1), 32(5), 39(1), 44(2)(b), 44A(2)(b), 46(1), 46A(1), and 47(1)(a). Sec. 13. Benefit Program A; Retirement Allowance. The amount of retirement allowance under Benefit Program A shall be 1% of the member's or former vested member's final average compensation multiplied by the member's credited service. This benefit program shall cease to be available for selection after January 2, 1986. History: 1984 PA 427, Eff. Jan 2, 1985, and Plan Document of 1996. Sec. 14. Benefit Program B; Retirement Allowance. (1) The amount of a retirement allowance under Benefit Program B shall be the sum of benefit components (i), (ii), (iii), and (iv), described as follows: (a) Benefit component (i) is the amount of retirement allowance which has the same actuarial present value as the member's accumulated contributions as of the date of retirement. (b) Benefit component (ii) is $120.00. (c) Benefit component (iii) is 0.84% of the member's final average compensation multiplied by the member's membership service. (d) Benefit component (iv) is 1.13% of the member's final average compensation multiplied by the member's prior service. (2) Benefit component (ii) shall be the obligation of the last participating municipality to cover the member under Benefit Program B. (3) Benefit Program B shall cease to be available for selection after January 2, 1986. MERS Plan Doc: Revised as of May 13, 2009 3-6 . (4) For purposes of this section, "member" includes vested former member. History: 1984 PA 427, Eff. Jan. 2, 1985, and Plan Document of 1996. Sec. 15. Benefit Program B-1; Retirement Allowance. (1) The amount of a retirement allowance under Benefit Program B-1 shall be 1.7% of the member's final average compensation multiplied by the member's credited service. (2) The amount of retirement allowance shall not be less than the amount of retirement allowance computed according to Benefit Program B if the participating municipality previously covered the member under Benefit Program B. (3) For purposes of this section, "member" includes vested former member. History: 1984 PA 427, Eff. Jan. 2, 1985, and Plan Document of 1996. Sec. 16. Benefit Program B-2; Retirement Allowance. (1) The amount of a retirement allowance under Benefit Program B-2 shall be 2% of the member's final average compensation multiplied by the member's credited service. . (2) For purposes of this section, "member" includes vested former member. History: 1986 PA 291, Eff. Dec. 22, 1986, and Plan Document of 1996. Sec. 16A. Benefit Program B-3; Retirement Allowance. (1) The amount of a retirement allowance under Benefit Program B-3 shall be 2.25% of the member's final average compensation multiplied by the member's credited service, subject to the maximum stated in subsection (2). (2) The amount of retirement allowance under Benefit Program B-3 shall not exceed 80% of the member's final average compensation, or the amount of retirement allowance the member would have been entitled to had the member continued to be covered by the benefit program in effect immediately before coverage by Benefit Program B-3, whichever is greater. (3) For purposes of this section, "member" includes vested former member. History: 1986 PA 291, Eff. Dec. 22, 1986, and Plan Document of 1996. Sec. 16B. Amount of Retirement Allowance Under Benefit Program B-4. (1) The amount of a retirement allowance under Benefit Program B-4 shall be 2.5% of the member's final average compensation multiplied by the member's credited service, subject to the maximum stated in subsection (2). (2) The amount of retirement allowance under Benefit Program B-4 shall not exceed 80% of the member's final average compensation, or the amount of retirement allowance the member MERS Plan Doc: Revised as of May 13, 2009 3-7 . would have been entitled to had the member continued to be covered by the benefit program in effect immediately before coverage by Benefit Program B-4, whichever is greater. (3) For purposes of this section, "member” includes vested former member. History: 1990 PA 99, Eff. June 7, 1990, and Plan Document of 1996. Sec. 17. Benefit Program C-New and C-Old; Retirement Allowance. (1) The amount of retirement allowance under Benefit Program C-New shall be 1.3% of the member's final average compensation multiplied by the member's credited service. (2) The amount of retirement allowance under Benefit Program C-Old shall be the sum of benefit components (a) and (b), described as follows: (a) 1% of the first $4,200.00 of the member's final average compensation multiplied by the member's credited service. (b) 1.5% of the portion, if any, of the member's final average compensation in excess of $4,200.00 multiplied by the member's credited service. (3) Benefit Program C-Old shall cease to be available for selection after January 2, 1986. (4) For purposes of this section, "member" includes vested former member. History: 1984 PA 427, Eff. Jan. 2, 1985, and Plan Document of 1996. Sec. 18. Benefit Program C-1 New and C-1 Old; Retirement Allowance. (1) The amount of retirement allowance under Benefit Program C-1 New shall be 1.5% of the member's final average compensation multiplied by the member's credited service. (2) The amount of retirement allowance under Benefit Program C-1 Old shall be the sum of benefit components (a) and (b): (a) 1.2% of the first $4,200.00 of the member's final average compensation multiplied by the member's credited service; and (b) 1.7% of the portion, if any, of the member's final average compensation in excess of $4,200.00 multiplied by the member's credited service. (3) Benefit Program C-1 Old shall cease to be available for selection after January 2, 1986. (4) For purposes of this section, "member" includes vested former member. History: 1984 PA 427, Eff. Jan. 2, 1985, and Plan Document of 1996. MERS Plan Doc: Revised as of May 13, 2009 3-8 . Sec. 19. Benefit Program C-2; Adoption; Retirement Allowance. (1) Benefit Program C-2 shall be adopted only as a supplement to Benefit Programs A, C, C-1 and B-1. The amount of retirement allowance under Benefit Program C-2 shall be the amount which, when added to the amount of the Benefit Program A, C, C-1, or B-1 retirement allowance, will produce a total retirement allowance of 2% of the member's final average compensation multiplied by the member's credited service. (2) A Benefit Program C-2 retirement allowance shall be paid only for periods during which 1 of the following conditions exists: (a) The retirement allowance is being paid pursuant to section 10 and the member has not attained the age at which an unreduced social security old age benefit is available. (b) The retirement allowance is being paid pursuant to section 24 and the member is not being paid a monthly social security disability benefit. (c) The retirement allowance is being paid pursuant to section 26, 27 or 28 on account of the member's death and the recipient beneficiary is not being paid a monthly social security survivor benefit. The recipient beneficiary's monthly social security survivor benefit shall be presumed payable not later than the beneficiary's attainment of the age at which an unreduced social security survivor benefit would be available in the absence of the beneficiary's own earnings related social security old age benefit. (3) For purposes of this section, "member" includes vested former member. History: 1984 PA 427, Eff. Jan. 2, 1985, and Plan Document of 1996. Sec. 19A. Restated Benefit Program DC; Adoption; Contribution; Distribution. (1) This restated section 19A applies to a member covered exclusively by Benefit Program DC. This section as restated repeals and replaces predecessor section 19A. The entirety of former section 19A as in effect on the day of repeal shall be placed in the Appendix to Plan Document. (2) In the resolution adopting Benefit Program DC, the member's participating municipality or participating court shall provide for the contribution of a percentage of the member's compensation to the retirement system. The participating municipality or participating court shall choose the percentage from the available contribution programs. The contribution programs available for selection are any percentage of compensation allowed by federal law. The participating municipality or participating court shall choose the same contribution rate for all members in the same benefit program coverage classification. The Retirement Board shall determine the timing and mechanism for the remittance of employer contributions. The Retirement Board may establish a program for making transfers from the reserve for employer contributions to the reserve for defined contribution plan for the purpose of meeting all or a part of the participating municipality's or participating court's contribution under this subsection. (3) Member Contributions. A member may voluntarily contribute additional amounts to his or her individual account in the reserve for defined contribution plan to the extent allowed by federal law and subject to procedures established by the Retirement Board. A member may roll over qualified distributions from other qualified retirement plans into this retirement system, to the extent allowed by federal law. A member is immediately 100% vested in the member's accumulated balance. MERS Plan Doc: Revised as of May 13, 2009 3-9 . (4) Employer Contributions. A member vests in employer contributions as provided in the vesting schedule adopted by the employer, subject to subparagraph (13). The vesting schedule may provide for one of the following: (a) Immediate Vesting upon Participation; or (b) 100% Vesting after Stated Year (participant is 100% Vested after not to exceed maximum 5 Years of Service (“cliff” vesting)); or Stated Year: 1 2 3 4 5 _________________ (c) Graded Vesting Percentage Per Year of Service (not to exceed maximum 6 Years of Service for 100% Vesting, nor be less than stated minimums below) % after 1 Year of Service. % after 2 Years of Service. % (not less than 25%) after 3 Years of Service. % (not less than 50%) after 4 Years of Service. % (not less than 75%) after 5 Years of Service. % (not less than 100%) after 6 Years of Service. (5) The Retirement Board may contract with private investment managers to invest the assets in the reserve for defined contribution plan. A member, vested former member, and beneficiary may direct the investment of the individual's accumulated balance to 1 or more of the available categories of investment provided by the investment managers. At least 3 categories of investment shall be made available to members, vested former members, and beneficiaries. (a) Short-term securities. (b) Fixed income securities. (c) Equity securities. (6) The Retirement Board shall determine the investment category for the accumulated balance of a member, vested former member, or beneficiary, if that individual does not choose to direct his or her own investments under subsection (5). (7) (a) Upon the death of a member or vested former member, the accumulated balance of the deceased member or deceased vested former member is considered to belong to the beneficiary or beneficiaries, if any, nominated by the deceased member or deceased vested former member. (b) To nominate a beneficiary or beneficiaries, a member shall file a written nomination with the Retirement Board, based on procedures established by the Retirement Board. Written consent by the member’s spouse to the beneficiary named is required unless the spouse is beneficiary to 100% of the balance; this requirement may be waived by the Retirement Board if the signature of the member’s spouse cannot be obtained because of extenuating circumstances. MERS Plan Doc: Revised as of May 13, 2009 3-10 . (8) Upon termination of membership, a vested former member or a beneficiary, as applicable, shall elect 1 or a combination of several of the following methods of distribution of the vested former member's or beneficiary's accumulated balance, to the extent allowed by federal law and subject to subsection (7)(b) and procedures established by the Retirement Board: (a) Lump sum distribution to the vested former member or beneficiary. (b) Lump sum direct rollover to another eligible retirement plan, to the extent allowed by federal law. (c) Annuity for the life of the vested former member or beneficiary, or optional forms of annuity as determined by the Retirement Board. (d) No distribution, in which case the accumulated balance shall remain in the retirement system, to the extent allowed by federal law. (9) In the resolution adopting the Benefit Program DC, the participating municipality or participating court may provide an opportunity for current members of the retirement system to elect coverage under Benefit Program DC if each of the following conditions are met: (a) The member's participating municipality or participating court elects under Section 43 or 43A to change the benefit program from a benefit program other than Benefit Program DC to Benefit Program DC, for members in a benefit program coverage classification who are first hired after the effective date of the change. (b) On the effective date of the change to Benefit Program DC, the member is a member of the retirement system and is in the benefit program coverage classification described in subdivision (a). (c) On the date of the resolution adopting Benefit Program DC, the total funded percent of aggregate accrued liabilities and valuation assets of all reserves and for the member’s benefit program coverage classification as specified in Table 13 (or successor table) of the most recent annual actuarial valuation report for the municipality or court shall be at least sixty percent (60%). The participating municipality or participating court may make additional contributions to the retirement system or reallocate assets among benefit program coverage classifications in order to meet the conditions of this subsection. In the resolution adopting Benefit Program DC, the participating municipality or participating court may require all current members of the retirement system to elect coverage under Benefit Program DC if the conditions (a), (b) and (c) of this subsection are met. (10) The retirement system shall offer 1 opportunity for a member who satisfies the conditions of subsection (9) to elect coverage under Benefit Program DC, and once made, the election is irrevocable. The member shall make the election under this subsection in writing, based on procedures established by the Retirement Board. The Retirement Board shall begin accepting written elections from members on and after the effective date of the change of benefit program pursuant to subsection (9), and shall not accept written elections from members: (a) Earlier than the end of the third month following the month in which the resolution is adopted and received by MERS; and (b) Later than the first day of the first calendar month that is at least 6 months after MERS receipt of the resolution. MERS Plan Doc: Revised as of May 13, 2009 3-11 . If the member is married at the time of election, the election is not effective unless the election is signed by the member's spouse, except that this requirement may be waived by the Retirement Board if the signature of the member's spouse cannot be obtained because of extenuating circumstances. (11) A member who makes a written election under subsection (10) shall elect to do all of the following: (a) Cease to be covered by the previous benefit program effective 12:01 a.m. on the first day of the first calendar month that is at least 6 months after the effective date of the change of benefit program. (b) Become covered by Benefit Program DC effective 12:01 a.m. on the first day of the first calendar month that is at least 6 months after the effective date of the change of benefit program. (c) Except as provided in subsection (12), waive all of his or her rights to a retirement allowance or any other benefit provided under the previous benefit program. (12) For each member who, under subsection (10), elects coverage under Benefit Program DC, the Retirement Board shall transfer the following amounts from the reserve for employee contributions and the reserve for employer contributions to the reserve for defined contribution plan: (a) The member's accumulated contributions, if any, as of 12:01 a.m. on the day the member becomes covered by Benefit Program DC shall be transferred from the reserve for employee contributions to the reserve for defined contribution plan. (b) Pursuant to procedures established by the Retirement Board, the excess, if any, of the actuarial present value of the accrued benefit associated with the member's coverage under the previous benefit program, over the amount specified in subdivision (a), based upon the funded level percentage selected by the governing body in the MERS Uniform DC Program Resolution (which shall not exceed 100% funded level percentage in any case), shall be transferred from the reserve for employer contributions to the reserve for defined contribution plan. For purposes of this sub-paragraph: (i) The actuarial present value shall be computed as of 12:01 a.m. on the day the member becomes covered by Benefit Program DC and shall be based on the actuarial assumptions adopted by the Retirement Board. (ii) In determining final average compensation there shall not be included any accrued annual leave. (iii) The earliest retirement date (for an unreduced benefit) assumption under the benefit program in effect on the effective date of the change of the benefit program shall be utilized. (iv) For purposes of the actuarial present value calculation, any future benefit otherwise payable under Benefit Program E or E-1 shall be disregarded. (13) Where a member has previously acquired in the employ of any participating municipality or participating court: (a) not less than 1 year of defined benefit service in force with a participating municipality or participating court; MERS Plan Doc: Revised as of May 13, 2009 3-12 . (b) eligible credited service where the participating municipality or participating court has adopted the Reciprocal Retirement Act, 1961 PA 88; (c) at least 12 months in which employer contributions by a participating municipality or participating court have been made on behalf of the member under Benefit Program DC, such service shall be applied toward satisfying the vesting schedule for employer contributions. History: 1996 PA 220, Eff. Aug. 15, 1996, and Plan Document of 1996. Section 19A was enacted as part of the Plan Document of 1996, effective October 1, 1996. Section 19A became legally operative on July 8, 1997, the date on which the Internal Revenue Service issued its first Letter of Favorable Determination that the Plan Document conforms to all provisions of the Internal Revenue Code as a tax exempt governmental pension trust. The current IRS Favorable Determination Letter issued June 15, 2005, embracing all Plan Document provisions through November, 2004. Note: The entirety of former section 19A with History and Notes was repealed by Board action of September 19, 2006, and Restated Section 19A approved, all with immediate effect as of October 1, 2006. The language, History and Notes of section 19A at the time of repeal appears in the Appendix to Plan Document. Sec. 19B. Benefit Program H; Adoption; Contribution; Distribution. [available for adoption beginning October 1, 2006] (1) This section applies only to a member covered by Benefit Program H. Benefit Program H includes both a defined benefit component and a defined contribution component. (a) The defined benefit component shall be determined as provided in subsections (2) through (4), and shall be funded exclusively by the participating municipality or participating court with no member contributions permitted. (b) The defined contribution component shall be determined as provided in subsections (5) through (16), and contributions shall be made by the member and the participating municipality or participating court as provided by bargaining agreement or personnel policy applicable to the same benefit program coverage classification. Unless specifically restricted by this Plan or the Retirement Board, a participating municipality or participating court is authorized to offer any rights, benefits, or features authorized for defined contribution plans under the Internal Revenue Code of 1986, as amended. (2) In the resolution adopting Benefit Program H, the member’s participating municipality or participating court shall specify the defined benefit formula multiplier to be one of the following: (a) 1.0 % (b) 1.25% (d) 1.5 % The specified multiplier determines the defined benefit retirement allowance. The multiplier selected at the time of initial adoption shall be an irrevocable action and may not be subsequently changed. MERS Plan Doc: Revised as of May 13, 2009 3-13 . (3) A member or a vested former member covered by Benefit Program H may retire upon satisfaction of all of the following requirements: (a) A written application for retirement, on a form established by the retirement system, has been filed with the retirement system. The Retirement Board may establish required time periods, preceding or surrounding the date of retirement, for the filing of an application for retirement. (b) The member or vested former member has attained age 60 years or older and has 6 or more years of credited service. (c) The member terminates membership before the date of retirement. Periods of at least 12 months in which a participating municipality or participating court has made employer contributions on behalf of a member under MERS Benefit Program DC shall be counted towards satisfying the applicable vesting or service requirements in this subsection (3), but not in the calculation of the retirement allowance. (4) Upon retirement under subsection (3) the member or vested former member covered by Benefit Program H shall be paid a retirement allowance computed under the multiplier adopted in subsection (2), being either 1.0%, 1.25%, or 1.5% of the member's or vested former member’s final average compensation based on FAC-3, multiplied by the member's or vested former member’s credited service. This retirement allowance is in addition to amounts payable to the member or vested former member under the defined contribution component of Benefit Program H. (5) In the resolution adopting Benefit Program H, the member's participating municipality or participating court shall provide for the contribution under the defined contribution component of Benefit Program H of a percentage of the member's compensation to the retirement system. The participating municipality or participating court shall choose the percentage from the available contribution programs. The contribution programs available for selection are any percentage of compensation allowed by federal law. The participating municipality or participating court shall choose the same contribution rate for all members in the same benefit program coverage classification. The Retirement Board shall determine the timing and mechanism for the remittance of employer contributions. The Retirement Board may establish a program for making transfers from the reserve for employer contributions to the reserve for defined contribution plan for the purpose of meeting all or a part of the participating municipality's or participating court's contribution under this subsection. (6) (a) Member Contributions. A member may voluntarily contribute additional amounts to his or her individual account in the reserve for defined contribution plan to the extent allowed by federal law and subject to procedures established by the Retirement Board. A member may roll over qualified distributions from another eligible retirement plan into this retirement system, to the extent allowed by federal law. A member is immediately 100% vested in the member's accumulated balance. (b) Employer Contributions. A member vests in employer contributions as provided in the vesting schedule adopted by the employer. The vesting schedule may provide for one of the following: (i) Immediate vesting upon participation; or (ii) 100% vesting after stated year (participant is 100% vested after not to exceed MERS Plan Doc: Revised as of May 13, 2009 3-14 . maximum 5 years of service (“cliff” vesting)); or (iii) Graded vesting percentage per year of service (not to exceed maximum 6 years of service for 100% vesting, nor be less than stated minimums below) % after 1 year of service. % after 2 years of service. % (not less than 25%) after 3 years of service. ______ % (not less than 50%) after 4 years of service. ______ % (not less than 75%) after 5 years of service. % (not less than 100%) after 6 years of service. (7) The Retirement Board may contract with private investment managers to invest the assets in the reserve for defined contribution plan. A member, vested former member, and beneficiary may direct the investment of the individual's accumulated balance to 1 or more of the available categories of investment provided by the investment managers. At least 3 categories of investment shall be made available to members, vested former members, and beneficiaries as follows: (d) Short-term securities. (e) Fixed income securities. (f) Equity securities. (8) The Retirement Board shall determine the investment category for the accumulated balance of a member, vested former member, or beneficiary, if that individual does not choose to direct his or her own investments under subsection (7). (9) (a) Upon the death of a member or vested former member, the accumulated balance of the deceased member or deceased vested former member is considered to belong to the beneficiary or beneficiaries, if any, nominated by the deceased member or deceased vested former member. (b) To nominate a beneficiary or beneficiaries, a member shall file a written nomination with the Retirement Board, based on procedures established by the Retirement Board. Written consent by the member’s spouse to the beneficiary named is required unless the spouse is beneficiary to 100% of the balance; this requirement may be waived by the Retirement Board if the signature of the member’s spouse cannot be obtained because of extenuating circumstances. (10) Upon termination of membership, a vested former member or a beneficiary, as applicable, shall elect 1 or a combination of several of the following methods of distribution of the vested former member's or beneficiary's accumulated balance, to the extent allowed by federal law and subject to subsection (9)(b) and procedures established by the Retirement Board: (a) Lump sum distribution to the vested former member or beneficiary. (b) Lump sum direct rollover to another eligible retirement plan, to the extent allowed by federal law. MERS Plan Doc: Revised as of May 13, 2009 3-15 . (c) Annuity for the life of the vested former member or beneficiary, or optional forms of annuity as determined by the Retirement Board. (d) No distribution, in which case the accumulated balance shall remain in the retirement system, to the extent allowed by federal law. (11) In the resolution adopting Benefit Program H, the participating municipality or participating court may provide an opportunity for current members of the retirement system to elect coverage under Benefit Program H if each of the following conditions are met: (a) The member's participating municipality or participating court elects under Section 43 or 43A to change the benefit program from a benefit program other than Benefit Program H to Benefit Program H, for members in a benefit program coverage classification who are first hired after the effective date of the change. (b) On the effective date of the change to Benefit Program H, the member is a member of the retirement system and is in the benefit program coverage classification described in subdivision (a). (c) On the date of the Resolution adopting Benefit Program H, the total funded percent of aggregate accrued liabilities and valuation assets of all reserves and for the member’s benefit program coverage classification as specified in Table 13 (or successor table) of the most recent annual actuarial valuation report for the municipality or court shall be at least sixty percent (60%). This condition does not apply if the current benefit program is Benefit Program DC. The participating municipality or participating court may make additional contributions to the retirement system or reallocate assets among benefit program coverage classifications in order to meet the conditions of this subsection. In the resolution adopting Benefit Program H, the participating municipality or participating court may require all current members of the retirement system to elect coverage under Benefit Program H if the conditions (a), (b) and (c) of this subsection are met. (12) The retirement system shall offer 1 opportunity for a member who satisfies the conditions of subsection (11) to elect coverage under Benefit Program H, and once made, the election is irrevocable. The member shall make the election under this subsection in writing, based on procedures established by the Retirement Board. The Retirement Board shall begin accepting written elections from members on and after the effective date of the change of benefit program pursuant to subsection (11), and shall not accept written elections from members: (a) Earlier than the end of the third month following the month in which the resolution is adopted and received by MERS; and (b) Later than the first day of the first calendar month that is at least 6 months after MERS receipt of the resolution. If the member is married at the time of election, the election is not effective unless the election is signed by the member's spouse, except that this requirement may be waived by the Retirement Board if the signature of the member's spouse cannot be obtained because of extenuating circumstances. (13) A member who makes a written election under subsection (12) shall elect to do all of the following: MERS Plan Doc: Revised as of May 13, 2009 3-16 . (a) Cease to be covered by the previous benefit program effective 12:01 a.m. on the first day of the first calendar month that is at least 6 months after the effective date of the change of benefit program. (b) Become covered by Benefit Program H effective 12:01 a.m. on the first day of the first calendar month that is at least 6 months after the effective date of the change of benefit program. (c) Except as provided in subsections (14) and (15), waive all of his or her rights to a retirement allowance or any other benefit provided under the previous benefit program. (14) For each member who is covered by a Benefit Program other than Benefit Program DC and who, under subsection (12), elects coverage under Benefit Program H, the Retirement Board shall transfer the following amounts from the reserve for employee contributions and the reserve for employer contributions to the reserve for defined contribution plan: (a) The member's accumulated contributions, if any, as of 12:01 a.m. on the day the member becomes covered by Benefit Program H shall be transferred from the reserve for employee contributions to the reserve for defined contribution plan. (b) Pursuant to procedures established by the Retirement Board, the funded excess present value shall be computed as the excess, if any, of the actuarial present value of the accrued benefit associated with the member's coverage under the previous benefit program, over the actuarial present value of the accrued benefit associated with the member’s coverage under the defined benefit component of Benefit Program H, after such excess is multiplied by the funded level percentage selected by the governing body in the MERS Uniform Hybrid Program Resolution (which shall not exceed 100% funded level percentage in any case). The excess, if any, of the funded excess present value over the amount specified in sub-paragraph (a) shall be transferred from the reserve for employer contributions to the reserve for defined contribution plan. For purposes of this sub-paragraph: (i) The actuarial present values shall be computed as of 12:01 a.m. on the day the member becomes covered by Benefit Program H and shall be based on the actuarial assumptions adopted by the Retirement Board. (ii) On the effective date of the change of the benefit program the member’s credited service under Benefit Program H shall be equal to the member’s credited service under the previous benefit program. (iii) In determining final average compensations there shall not be included any accrued annual leave. (iv) The earliest retirement date (for an unreduced benefit) assumption under the benefit program in effect on the effective date of the change of the benefit program shall be utilized. Likewise the earliest retirement date assumption under Benefit Program H shall be utilized. (v) For purposes of the actuarial present value calculation, any future benefit otherwise payable under Benefit Program E or E-1 shall be disregarded. (15) For each member who is covered by Benefit Program DC and who, under subsection (12), elects coverage under Benefit Program H: MERS Plan Doc: Revised as of May 13, 2009 3-17 . (a) The accumulated balance in the reserve for defined contribution plan under Benefit Program DC, if any, as of 12:01 a.m. on the day the member becomes covered by Benefit Program H shall be transferred to the reserve for defined contribution plan under Benefit Program H. (b) For purposes of calculating benefit amounts under the defined benefit component of Benefit Program H, only credited service earned after 12:01 a.m. on the day the member becomes covered by Benefit Program H shall be recognized. (16) Where a member has previously acquired in the employ of any participating municipality or participating court: (a) not less than 1 year of defined benefit service in force with a participating municipality or participating court; (b) eligible credited service where the participating municipality or participating court has adopted the Reciprocal Retirement Act, 1961 PA 88; (c) at least 12 months in which employer contributions by a participating municipality or participating court have been made on behalf of the member under Benefit Program DC; such service shall be applied toward satisfying the vesting schedule for employer contributions under Benefit Program H. (17) In the event any alteration of any provision of this section 19B, or other sections of the Plan Document related to the provisions of Benefit Program H, is made or occurs, under section 43B of the Plan Document concerning collective bargaining or under any other plan provision or law, adoption of Benefit Program H shall not be recognized, other than in accordance with this section and other sections of the Plan Document related to the provisions of Benefit Program H. Note 1: Section 19B added March 14, 2006, with immediate effect: all provisions then amended create the Hybrid Plan, Benefit Program H, and include: sections 2A(1), 2C(7), 6(1), 7(1), 10(1), 11(4), 12(1)(d) and (2), 19B added, 20(5), 21(8), 22(8), 23(2)(a), 23A(5), 24(5), 26(2) and (5)(a) and (6), 27(4), 28(3), (3)(a) and (4), 30(1), 32(5), 39(1), 44(2)(b), 44A(2)(b), 46(1), 46A(1), and 47(1)(a). Note 2: Bold language added to subsection (1) May 18, 2006, with immediate effect as of March 14, 2006. Sec. 20. Benefit Program E; Adoption or Readoption; Effective Date; Adjustment Date; Adjustment Factor; Prohibition. (1) A participating municipality may by resolution of its governing body or a participating court may by administrative order of its chief judge adopt or readopt Benefit Program E. The resolution or administrative order shall specify: (a) the effective date(s) of retirement for the eligible retirants and beneficiaries; and (b) either (i) a percentage adjustment factor; or (ii) a fixed dollar amount. The adjustment factor or fixed dollar amount shall specify its application to all retirees, or each retirement allowance in effect for the date(s) specified. MERS Plan Doc: Revised as of May 13, 2009 3-18 . (2) The adjustment date under Benefit Program E shall be the first January 1 coincident with or subsequent to the effective date of the change in coverage and which is also at least 30 days after the adoption or readoption of Benefit Program E. (3) The amount of the retirement allowance of a retirant or beneficiary whose participating municipality or participating court has adopted or readopted Benefit Program E shall be adjusted on the adjustment date. The amount of adjustment shall be added to the amount of retirement allowance payable immediately prior to the adjustment date. (4) Benefit Program E shall not be applied to a retirement allowance that is subject to adjustment under the provision of Benefit Program E-1 or Benefit Program E-2. (5) A participating municipality or a participating court shall not adopt Benefit Program E under this section for retirement allowances payable under Benefit Program H. History: 1988 PA 500, Eff. Dec. 29, 1988, and Plan Document of 1996. Note 1: Relocation of text from former subsection (4) (added by Board action of May 20, 1997) to subparagraph 1(b) along with following sentence; per Board action of October 22, 1998, with immediate effect. Note 2: Bold text in subsection (1) added, and (b) and remaining text inserted from former (4); (3) revised; former (4) (6) deleted; and former (7) renumbered as (4); by Board action of October 22, 1998, with immediate effect. Note 3: Bold text in subsection (5) added March 14, 2006, with immediate effect: all provisions then amended create the Hybrid Plan, Benefit Program H, and include: sections 2A(1), 2C(7), 6(1), 7(1), 10(1), 11(4), 12(1)(d) and (2), 19B added, 20(5), 21(8), 22(8), 23(2)(a), 23A(5), 24(5), 26(2) and (5)(a) and (6), 27(4), 28(3), (3)(a) and (4), 30(1), 32(5), 39(1), 44(2)(b), 44A(2)(b), 46(1), 46A(1), and 47(1)(a). Sec. 21. Benefit Program E-1; Adoption or Readoption; Effective Date; Applicability; Adjustment Dates; Maximum Cumulative Adjustment Limitation; Base Amount of Retirement Allowance; Adjustment Factor. (1) A participating municipality may by resolution of its governing body or a participating court may by administrative order of its chief judge adopt or readopt Benefit Program E-1. The resolution or administrative order shall specify the effective date of the change in coverage. Benefit Program E-1 shall apply to each retirement allowance that has an effective date prior to the effective date of the change in coverage and is not subject to adjustment under Benefit Program E-2. (2) The first adjustment date under Benefit Program E-1 shall be the first January 1 coincident with or subsequent to the effective date of change in coverage and which is also at least 30 days after the adoption of Benefit Program E-1. Subsequent adjustment dates shall occur on each January 1 after the first adjustment date. (3) The amount of the retirement allowance of a retirant whose participating municipality or participating court has adopted or readopted Benefit Program E-1 shall be adjusted on each adjustment date except the adjustment date, if any, that is less than 6 months after the effective date of the retirement allowance. The amount of adjustment, subject to application of the maximum cumulative adjustment limitation, shall be equal to the adjustment factor multiplied by the amount of base retirement allowance. (4) Effective January 1, 1987, the maximum cumulative adjustment limitation is 100% of the percentage increase, if any, in the average consumer price index monthly values from the base index period to the current index period. The base index period is the 12-month period ending MERS Plan Doc: Revised as of May 13, 2009 3-19 . on the September 30 that is 15 months before the first adjustment date. The current index period is the 12-month period ending on the September 30 that is immediately before the current adjustment date. The limitation shall be applied to the base amount of retirement allowance. For purposes of this subsection, "consumer price index" means the consumer price index for all urban consumers, as published by the United States department of labor. If this index is discontinued or restructured after 1983 in a manner materially changing its character, the Retirement Board shall select the alternative index that most closely preserves the intent implied in the selection of the specified index. The Retirement Board shall select the index most closely resembling the specified index for application to periods for which the specified index was not published. (5) The base amount of retirement allowance is the amount that would be payable if the retirement allowance had never been adjusted under the provisions of Benefit Program E-1. (6) The adjustment factor shall be 2.5%. (7) Effective for annual adjustment dates commencing on and after January 1, 1999, all adoptions or readoptions of Benefit Program E-1 under subsection (1) shall provide for an annual, automatic non-compounded adjustment amount of 2.5% of the base amount of retirement allowance, without application of the last sentence of subsection (3) and subsection (4) in its entirety. (8) A participating municipality or a participating court shall not adopt Benefit Program E-1 under this section for retirement allowances payable under Benefit Program H. History: 1989 PA 51, Eff. June 12, 1989, and Plan Document of 1996. Note 1: Subsection (7) added by Board action of November 19, 1998, with immediate effect as of November 1, 1998. Note 2: Bold text in subsection (8) added March 14, 2006, with immediate effect: all provisions then amended create the Hybrid Plan, Benefit Program H, and include: sections 2A(1), 2C(7), 6(1), 7(1), 10(1), 11(4), 12(1)(d) and (2), 19B added, 20(5), 21(8), 22(8), 23(2)(a), 23A(5), 24(5), 26(2) and (5)(a) and (6), 27(4), 28(3), (3)(a) and (4), 30(1), 32(5), 39(1), 44(2)(b), 44A(2)(b), 46(1), 46A(1), and 47(1)(a). Sec. 22. Benefit Program E-2; Adoption; Effective Date; Applicability; Adjustment Dates; Maximum Cumulative Adjustment Limitation; Base Amount of Retirement Allowance; Adjustment Factor. (1) A participating municipality may by resolution of its governing body or a participating court may by administrative order of its chief judge adopt Benefit Program E-2. The resolution shall specify the effective date of the change in coverage. Benefit Program E-2 shall apply to each retirement allowance that has an effective date on or after the effective date of the change in coverage. (2) The first adjustment date under Benefit Program E-2 shall be the first January 1 coincident with or subsequent to the effective date of the change in coverage and which is also at least 30 days after the adoption of Benefit Program E-2. Subsequent adjustment dates shall occur on each January 1 after the first adjustment date. (3) The amount of a retirement allowance shall be adjusted on each adjustment date except the adjustment date, if any, that is less than 6 months after the effective date of the retirement allowance. The amount of adjustment, subject to application of the maximum cumulative adjustment limitation, shall be equal to the adjustment factor multiplied by the amount of base retirement allowance. MERS Plan Doc: Revised as of May 13, 2009 3-20 . (4) Effective January 1, 1987, the maximum cumulative adjustment limitation is 100% of the percentage increase, if any, in the average consumer price index monthly values from the base index period to the current index period. The base index period is the 12-month period ending on the September 30 that is 15 months before the first adjustment date. The current index period is the 12-month period ending on the September 30 that is immediately before the current adjustment date. The limitation shall be applied to the base amount of retirement allowance. For purpose of this subsection, "consumer price index" means the consumer price index for all urban consumers, as published by the United States department of labor. If this index is discontinued or restructured subsequent to 1983 in a manner materially changing its character, the Retirement Board shall select the alternative index that most closely preserves the intent implied in the selection of the specified index. The Retirement Board shall select the index most closely resembling the specified index for application to periods for which the specified index was not published. (5) The base amount of retirement allowance is the amount that would be payable if the retirement allowance had never been adjusted under the provisions of Benefit Program E-2. (6) The adjustment factor shall be 2.5%. (7) Effective for annual adjustment dates commencing on and after January 1, 1999, all adoptions of Benefit Program E-2 under subsection (1) and all readoptions shall provide for an annual, automatic non-compounded adjustment amount of 2.5% of the base amount of retirement allowance, without application of the last sentence of subsection (3) and subsection (4) in its entirety. (8) A participating municipality or a participating court shall not adopt Benefit Program E-2 under this section for retirement allowances payable under Benefit Program H. History: 1989 PA 51, Eff. June 12, 1989, and Plan Document of 1996. Note 1: Subsection (7) added by Board action of November 19, 1998, with immediate effect as of November 1, 1998. Note 2: Bold text in subsection (8) added March 14, 2006, with immediate effect: all provisions then amended create the Hybrid Plan, Benefit Program H, and include: sections 2A(1), 2C(7), 6(1), 7(1), 10(1), 11(4), 12(1)(d) and (2), 19B added, 20(5), 21(8), 22(8), 23(2)(a), 23A(5), 24(5), 26(2) and (5)(a) and (6), 27(4), 28(3), (3)(a) and (4), 30(1), 32(5), 39(1), 44(2)(b), 44A(2)(b), 46(1), 46A(1), and 47(1)(a). Sec. 23. Forms of Payment; Election; Naming of Survivor Beneficiary; Failure to Make Timely Election; Amount of Retirement Allowance; Election if Member Married at Retirement Allowance Effective Date; Signature of Spouse; Effect on Election if Retirant Divorced From Spouse Named as Survivor Beneficiary. (1) A member or a vested former member may elect to have retirement allowance payments made under 1 of the forms of payment described in subsection (2), and may name a survivor beneficiary. The election of a form of payment and the naming of a survivor beneficiary shall be in writing and filed with the Retirement Board before the date the first retirement allowance payment is made. Except as otherwise provided in section 23B, an election of form of payment shall not be changed on or after the date the first retirement allowance payment is made. A named survivor beneficiary shall not be changed on or after the date the first retirement allowance payment is made if form of payment II or III is elected. A named survivor beneficiary may be more than 1 person if form of payment IV is elected. A named survivor MERS Plan Doc: Revised as of May 13, 2009 3-21 . beneficiary shall have an insurable interest in the life of the member or vested former member at the time of naming. (2) The member or vested former member may elect 1 of the following forms of payment: (a) Form of Payment SL - Straight Life Retirement Allowance. Except as otherwise provided in section 23B, under form of payment SL the retirant is paid a retirement allowance for life. The amount shall be determined as provided in section 10 or section 19B. (b) Form of Payment II - Life With Full Continuation to Survivor Beneficiary. Under form of payment II the retirant is paid a reduced retirement allowance until either the retirant or the named survivor beneficiary dies. Except as otherwise provided in section 23B, upon the death of the named survivor beneficiary, the retirant is paid the form of payment SL retirement allowance over the retirant's remaining life. Upon the death of the retirant during the lifetime of the named survivor beneficiary, the named survivor beneficiary is paid the full amount of the reduced form of payment II retirement allowance over the named survivor beneficiary's remaining life. (c) Form of Payment IIA - Life With 3/4 Continuation to Survivor Beneficiary. Under form of payment IIA the retirant is paid a reduced retirement allowance until either the retirant or the named survivor beneficiary dies. Except as otherwise provided in section 23B, upon the death of the named survivor beneficiary, the retirant is paid the form of payment SL retirement allowance over the retirant's remaining life. Upon the death of the retirant during the lifetime of the named survivor beneficiary, the named survivor beneficiary is paid 3/4 of the amount of the reduced form of payment IIA retirement allowance over the named survivor Beneficiary's remaining life. (d) Form of Payment III - Life With l/2 Continuation to Survivor Beneficiary. Under form of payment III the retirant is paid a reduced retirement allowance until either the retirant or the named survivor beneficiary dies. Except as otherwise provided in section 23B, upon the death of the named survivor beneficiary, the retirant is paid the form of payment SL retirement allowance over the retirant's remaining life. Upon the death of the retirant during the lifetime of the named survivor beneficiary, the named survivor beneficiary is paid ½ of the amount of the reduced form of payment III retirement allowance over the named survivor beneficiary's remaining life. (e) Form of Payment IV - Life With Period Certain Guarantee. Under form of payment IV the retirant is paid a reduced retirement allowance for life. Upon the death of the retirant during the guaranteed period, the named survivor beneficiary is paid the full amount of the reduced form of payment IV retirement allowance for the remainder of the guaranteed period. The guaranteed period shall be selected by the retirant at the time of election of form of payment IV and shall be either 60 months, 120 months, 180 months, or 240 months but the guaranteed period shall not exceed the retirant's life expectancy as of the date of the retirement. The actuarial present value of remaining guaranteed retirement allowance payments shall be paid to the legal representative of the retirant or the named survivor beneficiary, whichever survives the longest if both the retirant and named survivor beneficiary die during the guaranteed period. (f) Form of Payment V - Life with Accelerated Payment. Under form of payment V the retirant is paid a retirement allowance for life. The amount of retirement allowance is increased over the amount under form of payment SL until the retirant attains the adjustment age specified by the board and is reduced from the amount under form of MERS Plan Doc: Revised as of May 13, 2009 3-22 . payment SL after the retirant attains the adjustment age. The amount of increase and reduction shall be determined pursuant to procedures adopted by the Retirement Board. Form of payment V shall not be elected with respect to a retirement allowance computed under Benefit Program C-2 as provided in section 19. This form of payment shall cease to be available for selection after June 25, 1998. (3) Payment shall be made under form of payment SL if there is not a timely election of form of payment, except as otherwise provided in subsection (5) (4) The amount of retirement allowance under forms of payment II, IIA, III, IV, and V shall have the same actuarial present value as the amount of retirement allowance under form of payment SL, computed as of the date of retirement. (5) If a retiring member or vested former member is married at the retirement allowance effective date, an election under subsection (2), other than an election under subsection (2)(b), (c), or (d) naming the spouse as survivor beneficiary, is not effective unless the election is signed by the spouse, except that this requirement may be waived by the Retirement Board if the signature of a spouse cannot be obtained because of extenuating circumstances. (6) If a retirant receiving a reduced retirement allowance under subsection (2)(b) to (e) is divorced from the spouse who had been named the retirant's survivor beneficiary under subsection (2)(b) to (e), the election of a reduced retirement allowance form of payment shall be considered void by the retirement system if the judgment of divorce or award or order of the court, or an amended judgment of divorce or award or order of the court, described in section 53 and dated after [June 27, 1991] the effective date of [1991 PA 50] that added this subsection [(6)] provides that the election of a reduced retirement allowance form of payment under subsection (2)(b) to (e) is to be considered void by the retirement system and the retirant provides a certified copy of the judgment of divorce or award or order of the court, or an amended judgment of divorce or award or order of the court, to the retirement system. If the election of a reduced retirement allowance form of payment under subsection (2)(b) to (e) is considered void by the retirement system under this subsection, the retirant's retirement allowance shall revert to a straight life retirement allowance, including post-retirement adjustments, if any, subject to an award or order of the court as described in section 53. The retirement allowance shall revert to a straight life retirement allowance under this subsection effective the first of the month after the date the retirement system receives a certified copy of the judgment of divorce or award or order of the court. This subsection does not supersede a judgment of divorce or award or order of the court in effect on the effective date of the amendatory act that added this subsection. This subsection does not require the retirement system to distribute or pay retirement assets on behalf of a retirant in an amount that exceeds the actuarially determined amount that would otherwise become payable if a judgment of divorce had not been rendered. (7) A retirement allowance payable under a form of payment provided in this section is subject to an eligible domestic relations order under the Eligible Domestic Relations Order Act. (8) Each member or vested former member who applies for retirement shall be given a written explanation, prior to retirement, of the optional forms of payment provided in section 23. The explanation shall be written in simple language. (9) Pursuant to 26 CFR §1.401(a)(9)-6, Q&A-16, the Board has determined that this Section 23, as in effect on April 17, 2002, contains distribution options that satisfy 26 U.S.C. §401(a)(9) based upon the Board's reasonable and good faith interpretation of the provisions of that section. Any additions or amendments to this section, or to any other provisions of this plan dealing with distribution options, after April 17, 2002, must meet the requirements of U.S.C. §401(a)(9) and MERS Plan Doc: Revised as of May 13, 2009 3-23 . 26 CFR §1.401(a)(9), except to the extent that U.S.C. §401(a)(9) provides specific rules or exceptions for governmental plans. History: 1991 PA 50, Eff. June 27, 1991, and Plan Document of 1996. Note 1: Bracketed explanatory text added to subsection (6). Note 2: Bold text in subparagraph (2)(f) added by Board action of June 25, 1998, with immediate effect. Note 3: Subsection (9) added on August 11, 2004, with immediate effect. Note 4: Bold text in subsection (2)(a) added March 14, 2006, with immediate effect: all provisions then amended create the Hybrid Plan, Benefit Program H, and include: sections 2A(1), 2C(7), 6(1), 7(1), 10(1), 11(4), 12(1)(d) and (2), 19B added, 20(5), 21(8), 22(8), 23(2)(a), 23A(5), 24(5), 26(2) and (5)(a) and (6), 27(4), 28(3), (3)(a) and (4), 30(1), 32(5), 39(1), 44(2)(b), 44A(2)(b), 46(1), 46A(1), and 47(1)(a). Note 5: Underlined text in subsection (1) and (2)(a)-(d) added by Board action of May 13, 2009, effective July 1, 2009. Sec. 23A. Adoption of Benefit Program RS50%; Specifying Effective Date of Change in Coverage; Duration and Amount of Payment to Surviving Spouse; "Surviving Spouse" Defined. (1) A participating municipality may by resolution of its governing body or a participating court may by administrative order of its chief judge adopt Benefit Program RS50%. The resolution or administrative order shall specify the effective date of the change in coverage. (2) Under Benefit Program RS50%, a surviving spouse of a deceased retirant shall be paid a retirement allowance for life if both of the following conditions are met: (a) The deceased retirant's retirement allowance effective date was on or after the effective date of the change in coverage. (b) All payments of the deceased retirant's retirement allowance were made pursuant to form of payment SL as prescribed in section 23(2)(a). (3) The amount of the retirement allowance payable to a surviving spouse under Benefit Program RS50% is 50% of the retirement allowance payable to the deceased retirant at the time of his or her death. (4) As used in this section, "surviving spouse" means a person who meets both of the following requirements: (a) He or she was married to the deceased retirant during the period beginning 1 year before the deceased retirant's retirement allowance effective date and ending on the retirement allowance effective date. (b) He or she was married to the deceased retirant on the date of the deceased retirant’s death. (5) A participating municipality or a participating court shall not adopt Benefit Program RS50% under this section for retirement allowances payable under Benefit Program H. History: 1990 PA 99, Eff. June 7, 1990, and Plan Document of 1996. Note: Bold text in subsection (5) added March 14, 2006, with immediate effect: all provisions then amended create the Hybrid Plan, Benefit Program H, and include: sections 2A(1), 2C(7), 6(1), 7(1), 10(1), 11(4), 12(1)(d) and (2), 19B added, 20(5), 21(8), 22(8), 23(2)(a), 23A(5), 24(5), 26(2) and (5)(a) and (6), 27(4), 28(3), (3)(a) and (4), 30(1), 32(5), 39(1), 44(2)(b), 44A(2)(b), 46(1), 46A(1), and 47(1)(a). MERS Plan Doc: Revised as of May 13, 2009 3-24 . Sec. 23B. Adoption of Benefit Program PRO (Post-Retirement Option); Changing Form of Payment or Survivor Beneficiary Designation after Retirement; Effective July 1, 2009. (1) A participating municipality may by resolution of its governing body or a participating court may by administrative order of its chief judge adopt Benefit Program PRO, commencing July 1, 2009. The resolution or administrative order shall specify the effective date of the change in coverage, which shall not be earlier than the actual date of adoption. The resolution of the governing body or the administrative order of the chief judge shall be uniformly applicable to all members employed by the participating municipality or court. (2) Under benefit program PRO, a retirant who was not married on his or her retirement allowance effective date and who elected form of payment SL under section 23(2)(a), or a retirant whose retirement allowance has reverted to a straight life retirement allowance pursuant to section 23(6), may change the form of payment and name a survivor beneficiary under section 23(2)(b), (c), or (d), if all of the following apply: (a) The retirant marries on or after the actual date of adoption, and after the date the first retirement allowance payment is made. (b) The named survivor beneficiary is the retirant’s spouse. (c) The retirant files a written request with the Retirement Board to name his or her spouse as the survivor beneficiary not earlier than one year and not later than 2 years after the marriage of the retirant and the spouse. (3) A retirant who elected a form of payment under section 23(2)(b), (c), or (d), may change the survivor beneficiary if all of the following apply: (a) The named survivor beneficiary predeceases the retirant on or after the actual date of adoption, and after the date the first retirement allowance payment is made. (b) The new survivor beneficiary is the retirant’s spouse. (c) The retirant files a written request with the Retirement Board to name his or her spouse as the survivor beneficiary not earlier than one year and not later than 2 years after the later of: (i) The death of the named survivor beneficiary; and (ii) The marriage of the retirant and the spouse. (4) The retirement allowance of the retirant who makes an election under subsection (2) or (3) shall not be greater than the actuarial equivalent of the retirement allowance as determined by the Retirement Board that the retirant would otherwise be entitled to under section 23(2)(a), form of payment SL, as determined and effective as of the first day of the month the recomputed benefit is paid following the filing of the written request with the Retirement Board. (5) If the retirant dies no later than 12 months after the effective date of his or her election under subsection (2) or (3), the retirement allowance for the surviving beneficiary established under subsection (2) or (3) shall terminate 12 months after the death of the retirant. (6) All provisions of Section 43C, except for the requirement of supplemental valuation, shall apply as preconditions to the adoption of Benefit Program PRO, and MERS implementation, including but not limited to: MERS Plan Doc: Revised as of May 13, 2009 3-25 . (a) The employer must be current in the payment of all required employer and employee contributions. (b) The employer must satisfy the minimum funded level requirement set forth in section 43C(2) and (3). (7) In the event any alteration of this section 23B is made or occurs, under section 43B of the Plan Document concerning collective bargaining or under any other plan provision or law, MERS shall not recognize such action, other than in accordance with this section. Note: Section 23B added May 13, 2009 (with companion amendment to Section 23(1) and (2)(a)-(d)), effective July 1, 2009. Sec. 24. Retirement of Incapacitated Member; Conditions; Medical Examinations; Effective Date of Disability Retirement; Amount of Disability Retirement Allowance; Exceptions. (1) The Retirement Board may retire a member, other than a member covered by Benefit Program DC, who becomes incapacitated for continued employment by the member's participating municipality or participating court if each of the following conditions is met: (a) Application for disability retirement is filed with the retirement system by either the member or the member's participating municipality or participating court within 1 year after the date the member ceases to be paid by the participating municipality or participating court. (b) The member has the minimum years of credited service required to be a vested former member in the event of termination of membership. (c) The member undergoes the medical examinations and tests ordered by the retirement system. (d) The medical adviser certifies all of the following to the Retirement Board: (i) The member is mentally or physically incapacitated for any continued employment by the participating municipality or participating court. (ii) The incapacity is likely to be permanent. (iii) The member should be retired. (2) Medical examination shall be made by or under the direction of a medical adviser selected by the Retirement Board. The effective date of a disability retirement shall not predate either of the following: (a) The date of the disability. (b) The date the member ceases to be paid by the participating municipality or participating court. (3) The amount of a disability retirement allowance shall be computed in accordance with the benefit programs that are applicable to the disability retirant's credited service. The early retirement reduction provisions of section 10(3) shall not be applied. MERS Plan Doc: Revised as of May 13, 2009 3-26 . (4) The following exceptions to the provisions of subsections (1) to (3) shall apply if the Retirement Board finds that the member's disability was the natural and proximate result of a personal injury or disease arising out of and in the course of the member's actual performance of duty in the employ of the participating municipality or participating court. (a) The credited service requirement of subsection (1)(b) shall be waived. (b) The amount of retirement allowance shall not be less than 25% of the member's final average compensation. (5) A participating municipality or participating court may adopt Benefit Program D-2 but may not for members covered under Benefit Program H. Under Benefit Program D-2, the following exceptions to the provisions of subsections (1) to (3) shall apply if the Retirement Board finds that the member's disability was the natural and proximate result of a personal injury or disease arising out of and in the course of the member's actual performance of duty in the employ of the participating municipality or participating court: (a) The credited service requirement of subsection (1)(b) shall be waived. (b) There shall be paid a retirement allowance in an amount which is the greater of: (i) 25% of the member's final average compensation; or (ii) 10 years of credited service in addition to the member's actual period of credited service provided that the total years of credited service may not exceed the greater of 30 years or the member's actual period of credited service. In all cases where the retirement allowance Benefit Program in effect imposes a limitation on the maximum amount of retirement allowance payable, including but not limited to Benefit Programs B-3 and B-4, then the Benefit Program D-2 allowance shall not exceed such limitation. History: 1988 PA 500, Eff. Dec. 29, 1988, and Plan Document of 1996. Note 1: Bold text in last sentence of subparagraph (5)(b)(ii) added by Board action of November 19, 1998, with immediate effect. Note 2: Bold text in subsection (5) revised March 14, 2006, with immediate effect: all provisions then amended create the Hybrid Plan, Benefit Program H, and include: sections 2A(1), 2C(7), 6(1), 7(1), 10(1), 11(4), 12(1)(d) and (2), 19B added, 20(5), 21(8), 22(8), 23(2)(a), 23A(5), 24(5), 26(2) and (5)(a) and (6), 27(4), 28(3), (3)(a) and (4), 30(1), 32(5), 39(1), 44(2)(b), 44A(2)(b), 46(1), 46A(1), and 47(1)(a). Sec. 25. Disability Retirant Under Age 60; Periodic Medical Examination; Suspension, Revocation, or Discontinuance of Disability Pension; Conditions to Restoration of Terminated Disability Retirant's Actual Credited Service; Service Not Credited for Period of Disability; Terminated Disability Retirant as Vested Former Member. (1) The Retirement Board may require a disability retirant who has not attained age 60 years to undergo periodic medical examination by or under the direction of a medical adviser selected by the Retirement Board. If a disability retirant refuses to submit to a medical examination, payment of the retirement allowance may be suspended by the Retirement Board until withdrawal of the refusal. If the refusal continues for 1 year, all of the disability retirant's rights in and to a disability pension may be revoked by the Retirement Board. A disability retirement allowance shall be discontinued if following the medical examination the medical adviser certifies that the disability retirant is mentally and physically able and capable of resuming MERS Plan Doc: Revised as of May 13, 2009 3-27 . gainful employment with the participating municipality or participating court from which retired, and the Retirement Board concurs in the certification of the medical adviser. (2) The membership status of a terminated disability retirant who is subsequently employed by a participating municipality or participating court shall be governed by the provisions of section 3. The terminated disability retirant's actual credited service at the time of disability retirement shall be restored upon again acquiring membership if both of the following conditions are satisfied: (a) Membership is on account of employment with the same participating municipality or participating court from which the member previously retired. (b) Membership is reacquired within 5 years from the date of termination of the disability retirement allowance. (3) Service shall not be credited for the period a disability retirant is being paid a disability retirement allowance. (4) A terminated disability retirant who does not again become a member with restoration of credited service pursuant to subsection (2) shall become a vested former member. History: 1988 PA 500, Eff. Dec. 29, 1988, and Plan Document of 1996. Sec. 26. Conditions to Payment of Retirement Allowance for Life to Surviving Spouse; Commencement and Amount of Payment; Conditions to Payment of Retirement Allowance to Surviving Child; Restriction; Termination and Amount of Surviving Child's Retirement Allowance; Presumptions. (1) A retirement allowance shall be paid for life to the surviving spouse of a deceased member or a deceased vested former member, other than a member or vested former member covered by Benefit Program DC, if each of the following conditions is met: (a) The member or vested former member has the minimum years of credited service required to be a vested former member in the event of termination of membership. (b) The member or vested former member was married to the surviving spouse at the time of death. (c) The member or vested former member does not have a section 28 named contingent survivor beneficiary at the time of death. (2) Payment of a retirement allowance to the surviving spouse of a deceased vested former member shall not commence before the date the member would have first satisfied age and service requirements for retirement under section 10 (without regard to section 10(3)) or section 19B. The amount of a surviving spouse's retirement allowance shall be 85% of the deceased member's or deceased vested former member's accrued retirement allowance, except that the amount shall not be less than the amount that would be paid under section 28 if the spouse had been named the contingent survivor beneficiary of the deceased member or deceased vested former member. (3) A retirement allowance shall be paid to each surviving child of a deceased member or a deceased vested former member, other than a member or vested former member covered by Benefit Program DC, if each of the following conditions is met: MERS Plan Doc: Revised as of May 13, 2009 3-28 . (a) The member or vested former member has the minimum years of credited service required to be a vested former member in the event of termination of membership. (b) The child is unmarried and has not attained age 21 years. (c) The member or vested former member does not have a section 28 named contingent survivor beneficiary other than the member’s spouse at the time of death. (4) Payment of a retirement allowance to a surviving child shall not be made for any month for which a surviving spouse is paid a retirement allowance. A surviving child's retirement allowance shall terminate upon the child's twenty-first birthday or upon the prior marriage or death of the child. The amount of a surviving child's retirement allowance shall be an equal share of 50% of the deceased member's or the deceased vested former member's accrued retirement allowance. A child's share shall be recomputed each time there is a change in the number of surviving children eligible for payment of a retirement allowance. (5) A deceased member's or a deceased vested former member's accrued retirement allowance shall be computed under the following presumptions: (a) The deceased member or deceased vested former member shall be presumed to have retired under the provisions of section 10 (without regard to section 10(3)) or section 19B, on the day preceding death. (b) The deceased member shall be presumed to have elected form of payment SL. (6) The presumptions of retiring and election of form of payment shall be effective notwithstanding the failure to satisfy the specific requirements of sections 10, 19B and 23 with regard to such activities. (7) In the case of a member who dies while performing qualified military service as defined in section 414(u) of the Internal Revenue Code, the survivors of the deceased member who died on or after January 1, 2007 shall be entitled to any additional benefits, other than benefit accruals relating to the period of qualified military service, provided under the plan had the member resumed and then terminated employment on account of death. History: 1986 PA 291, Eff. Dec. 22, 1986, and Plan Document of 1996. Note 1: Subsection (3)(c) as amended by Board action of May 8, 2002, with immediate effect. Note 2: Bold text in subsections (2), (5)(a), and (6) as amended March 14, 2006, with immediate effect: all provisions then amended create the Hybrid Plan, Benefit Program H, and include: sections 2A(1), 2C(7), 6(1), 7(1), 10(1), 11(4), 12(1)(d) and (2), 19B added, 20(5), 21(8), 22(8), 23(2)(a), 23A(5), 24(5), 26(2) and (5)(a) and (6), 27(4), 28(3), (3)(a) and (4), 30(1), 32(5), 39(1), 44(2)(b), 44A(2)(b), 46(1), 46A(1), and 47(1)(a). Note 3: Subsection (7) added May 13, 2009, with immediate effect and retroactive to January 1, 2007, pursuant to Section 104(a) of the Heroes Earnings Assistance and Relief Act of 2008. Sec. 27. Death Resulting From Injury or Disease Arising Out of and in Course of Duty; Additional Provision Applicable to Section 26. If the death of a member is found by the Retirement Board to be the natural and proximate result, independent of all other causes, of a personal injury or disease arising out of and in the course of the member's MERS Plan Doc: Revised as of May 13, 2009 3-29 . actual performance of duty with a participating municipality or participating court, the following additional provisions shall apply to section 26. (1) The credited service requirement specified in section 26 shall be waived. (2) The amount of retirement allowance paid a surviving spouse shall not be less than 25% of the deceased member's final average compensation. (3) The amount of retirement allowance paid a surviving child shall not be less than an equal share of 25% of the deceased member's final average compensation. (4) If the participating municipality or participating court has adopted Benefit Program D-2, the amount of retirement allowance paid a surviving spouse or surviving child shall not be less than the amount computed as if the member had acquired 10 years of credited service in addition to the member's actual period of credited service, provided that the total years of credited service may not exceed the greater of 30 years or the member's actual period of credited service. In all cases where the retirement allowance Benefit Program in effect imposes a limitation on the maximum amount of retirement allowance payable, including but not limited to Benefit Programs B-3 and B-4, then the Benefit Program D-2 allowance shall not exceed such limitation. A participating municipality or a participating court shall not adopt Benefit Program D-2 for members covered under Benefit Program H. History: 1988 PA 500, Eff. Dec. 29, 1988, and Plan Document of 1996. Note 1: Bold text in subsection (4) added by Board action of November 19, 1998, with immediate effect. Note 2: Bold underlined text in last sentence of subsection (4) added March 14, 2006, with immediate effect: all provisions then amended create the Hybrid Plan, Benefit Program H, and include: sections 2A(1), 2C(7), 6(1), 7(1), 10(1), 11(4), 12(1)(d) and (2), 19B added, 20(5), 21(8), 22(8), 23(2)(a), 23A(5), 24(5), 26(2) and (5)(a) and (6), 27(4), 28(3), (3)(a) and (4), 30(1), 32(5), 39(1), 44(2)(b), 44A(2)(b), 46(1), 46A(1), and 47(1)(a). Sec. 27A. Remarriage of Surviving Spouse. The remarriage of a surviving spouse shall not render the surviving spouse ineligible to receive the pension or retirement allowance provided for in section 51a or 58 of former Act No. 135 of the Public Act of 1945, or in the predecessor sections to section 51a or 58 of former Act No. 135 of the Public Acts of 1945. A surviving spouse whose pension or retirement allowance under section 51a or 58 of former Act No. 135 of the Public Acts of 1945 or under a predecessor section to section 51a or 58 of former Act No. 135 of the Public Acts of 1945 was terminated due to the surviving spouse's remarriage shall be eligible to receive that pension or allowance beginning on the first day of the month following the month in which written application for reinstatement is filed with the board, but shall not be eligible to receive the pension or allowance attributable to any month beginning before the effective date of reinstatement under this section. This section shall apply to a participating municipality upon approval by resolution of the participating municipality. History: 1986 PA 26, Eff. Mar. 10, 1986, and Plan Document of 1996. Sec. 28. Contingent Survivor Beneficiary. (1) A member or a vested former member other than a member covered by Benefit Program DC may name a contingent survivor beneficiary for the exclusive purpose of being paid a retirement allowance under this section. The naming of a contingent survivor beneficiary shall be in writing and filed with the retirement system. The contingent survivor beneficiary of a member MERS Plan Doc: Revised as of May 13, 2009 3-30 . may be revoked or changed at any time before termination of membership. The contingent survivor beneficiary of a vested former member may be revoked or changed at any time prior to the effective date of retirement. (2) A retirement allowance shall be paid to the contingent survivor beneficiary for life, if each of the following conditions is met: (a) The member dies while still a member employed by a participating municipality or participating court or the vested former member dies prior to the effective date of retirement. (b) The member at time of death has the minimum years of credited service required to be a vested former member in the event of termination of membership. (c) The contingent survivor beneficiary is found by the Retirement Board to have an insurable interest in the life of the deceased member or deceased vested former member. (d) A spouse, if married to the member or vested former member at the time of the election, has agreed in writing to the naming of the contingent survivor beneficiary if that beneficiary is a person other than the spouse. (3) Payment of a retirement allowance to the contingent survivor beneficiary of a deceased vested former member shall not commence prior to the date the vested former member would have first satisfied age and service requirements for retirement under section 10 (without regard to section 10(3) or section 19B. The amount of retirement allowance payable to a contingent survivor beneficiary shall be computed under the following presumptions: (a) The deceased member shall be presumed to have retired under section 10 (without regard to section 10(3)) or section 19B, on the day preceding the member's death. The deceased vested former member shall be presumed to have retired under section 10 or section 19B on the date the vested former member would have first satisfied age and service requirements for retirement under section 10 (without regard to section 10(3) or section 19B. (b) The deceased member or deceased vested former member shall be presumed to have elected form of payment II and named the contingent survivor beneficiary as survivor beneficiary. (c) If the contingent survivor beneficiary is the spouse of the deceased member or deceased vested former member, the amount of retirement allowance payable to the contingent survivor beneficiary shall not be less than the amount that would have been payable under section 26 if there had been no named contingent survivor beneficiary. (4) The presumptions of retiring, election of form of payment, and naming of survivor beneficiary shall be effective notwithstanding the failure to satisfy the specific requirements of sections 10, 19B and 23 with regard to such activities. History: 1988 PA 500, Eff. Dec. 29, 1988, and Plan Document of 1996. Note: Bold text in subsections (3), (3)(a), and (4) as amended March 14, 2006, with immediate effect: all provisions then amended create the Hybrid Plan, Benefit Program H, and include: sections 2A(1), 2C(7), 6(1), 7(1), 10(1), 11(4), 12(1)(d) and (2), 19B added, 20(5), 21(8), 22(8), 23(2)(a), 23A(5), 24(5), 26(2) and (5)(a) and (6), 27(4), 28(3), (3)(a) and (4), 30(1), 32(5), 39(1), 44(2)(b), 44A(2)(b), 46(1), 46A(1), and 47(1)(a). MERS Plan Doc: Revised as of May 13, 2009 3-31 . Sec. 29. Provisions Applicable During Period Between Effective Date of Disability Retirement Allowance and Date Disability Retirant Attains Age 60, or Where Adopted by Resolution, the Age for Age and Service Retirement. (1) This section shall apply during the period between the effective date of retirement allowance arising from disability retirement under section 24 and the date the disability retirant attains age 60 years. As an alternative to age 60, where provided for by Resolution of the governing body of the participating municipality or by administrative order of the chief judge of a participating court filed with the Retirement Board, there may be adopted instead for all current and future disability retirants the age required for age and service retirement under the benefit program in effect on the date the disability retirant ceased to be paid so long as the service requirement was met on such date. Application of the limitation shall be to the amount of retirement allowance under form of payment SL. The effect of an election of any other form of payment shall be taken into account after application of this section. (2) The amount of a retirement allowance shall not exceed the difference between: (a) One hundred percent of the retired member's final average compensation. (b) The amount of the retired member's considered income. (3) A retired member's considered income is the annual sum of income from the following sources: (a) Remuneration for personal services rendered in any gainful employment. Gainful employment existing at the time of disability retirement, other than with the participating municipality or participating court from which retired, shall not be considered to the extent of the amount of remuneration in the last calendar year preceding retirement. (b) Worker's compensation weekly benefits, redemptions, and settlements, on account of the same disability for which retired. Worker's compensation benefits for bona fide medical expenses shall not be considered. (c) Payments from any program of salary continuance, sickness and accident insurance, disability insurance, or program of similar purpose, financed in whole or in part by a participating municipality or participating court. (d) Payments received by the member from the federal social security old-age, survivors, disability and health insurance program. Payments received by dependents from the federal social security old-age, survivors, disability and health insurance program are not considered income under this subsection. (4) Cost of living increases in the amount of considered income from worker's compensation and federal social security shall be disregarded for the purposes of this section. (5) The retirement system shall compute the initial amount of retirement allowance on the presumption that the retirant is receiving social security disability benefits and worker's compensation weekly benefits. The presumed amounts shall be determined on the basis of the retirant's final average compensation and the single person statutory benefits. The retirant may, at any time, submit evidence of receipt of a lesser amount of social security and worker's compensation. The retirement system shall adjust the amount of retirement allowance to reflect the actual amount of social security and worker's compensation being received if it finds the submitted evidence substantiates the retirant's claim. (6) A disability retirant may submit an affidavit declaring that applications for social security and worker's compensation benefits have not and will not be made to avoid application of the MERS Plan Doc: Revised as of May 13, 2009 3-32 . presumption of receipt. The affidavit shall also contain the promise that the disability retirant will immediately notify the retirement system if an application for social security or worker's compensation benefits is filed at a later date. (7) The retirement system shall periodically request substantiated income information from retirants subject to this section. Failure to provide requested information within 90 days of the request shall cause suspension of payment of the retirement allowance until the information is received. History: 1988 PA 500, Eff. Dec. 29, 1988, and Plan Document of 1996. Note: Bold text in subsection (1) added by Board action of February 25, 1998, with immediate effect. Sec. 30. Commencement, Termination, and Change in Retirement Allowance. (1) A service or disability retirement allowance under section 10, 19B or 24 shall commence the first day of the calendar month coincident with or next following the member's or vested former member's date of retirement. A pre-retirement survivor retirement allowance under section 26 or 28 shall commence the first day of the calendar month in which occurs the event causing payment of the retirement allowance. (2) Termination of a retirement allowance shall occur at the end of the month in which occurs the event causing termination. Payment shall be made for the full month of termination. (3) A change in the amount of a retirement allowance shall occur on the first day of the calendar month next following the month in which occurs the event causing the change. History: 1984 PA 427, Eff. Jan. 2, 1985, and Plan Document of 1996. Note: Bold text in subsection (1) added March 14, 2006, with immediate effect: all provisions then amended create the Hybrid Plan, Benefit Program H, and include: sections 2A(1), 2C(7), 6(1), 7(1), 10(1), 11(4), 12(1)(d) and (2), 19B added, 20(5), 21(8), 22(8), 23(2)(a), 23A(5), 24(5), 26(2) and (5)(a) and (6), 27(4), 28(3), (3)(a) and (4), 30(1), 32(5), 39(1), 44(2)(b), 44A(2)(b), 46(1), 46A(1), and 47(1)(a). Sec. 31. Employment by Participating Municipality or Court; Special Conditions. The following special conditions shall apply if a retirant becomes employed by a participating municipality or participating court: (1) If a retirant becomes employed by the participating municipality or participating court from which the person retired, the retirant shall not be a member during the period of employment. (2) Payment of the retirant's retirement benefit shall continue, without change in amount or conditions by reason of the employment, if the retirant becomes employed by a participating municipality or participating court other than the participating municipality or participating court from which the retirant retired. The retirant shall be considered, for the purposes of membership and potential benefit entitlement, in the same manner as an individual with no previous record of employment by a participating municipality or participating court. History: 1992 PA 63, Eff. May 22, 1992, and Plan Document of 1996. MERS Plan Doc: Revised as of May 13, 2009 3-33 . Note 1: Bold text in subsection (1) reflects Board action of August 9, 2001, effective January 1, 2002. The prior earnings limit (effective January 1, 1998) was $10,000 until age 70. The 2001 amendment increased the earnings limit to $15,000, and decreased the age limit to age 65. Note 2: On May 12, 2004, the Board repealed (with immediate effect) the former annual earnings limitation language in subsection (1). The repealed language stated that where a retiree was employed by the same participating municipality or court the person retired from, the MERS pension was suspended when annual earnings reached $15,000 (or age 65 attained). Subsection (1) as amended reaffirms the prohibition against MERS membership. Important Comment: As a continuing condition of MERS tax-qualified “governmental plan” status under Section 401(a) of the Internal Revenue Code, MERS Plan Document Section 55(1) provides: “The Retirement Board intends that the retirement system be a qualified pension plan under section 401 of the Internal Revenue Code and that the trust be an exempt organization under section 501 of the Internal Revenue Code. The Retirement Board shall administer the retirement system to fulfill this intent.” A retirant is a person who has had a “bona fide termination of employment in which the employer/employee relationship is completely severed” (IRS Information Letter 2000-0245 (September 6, 2000); Revenue Ruling 74-254, 1974-1 CB 91); and where the person is currently receiving an accrued pension benefit payment immediately. Accordingly, to clearly show “complete severance,” the employer should establish a minimum period following termination of employment of not less than 30 days before any formal actions necessary for new employment occur. Where there has been a bona fide severance of employment for at least 30 days, payment of a pension benefit during new employment is consistent with Plan Section 55(1). Where there is no bona fide termination of employment of at least 30 days before hiring, payment of a pension benefit would not be consistent with Section 55(1), could imperil MERS qualified plan status, and the rehired individual’s receipt of benefits while reemployed subject to suspension by MERS. See also Michigan Attorney General Opinion #7167 (December 29, 2004). Source: MERS Legal Department February 2, 2005. End of Article III. MERS Plan Doc: Revised as of May 13, 2009 3-34 . ARTICLE IV. CONTRIBUTIONS. Sec. 32. Contribution Programs. (1) A member shall contribute the percentage of compensation selected by the participating municipality or participating court from the available contribution programs. The contribution programs available for selection are any percentage of compensation from 0% to 10% in increments of 0.1%, subject to modification under Plan Section 43B. (2) Contribution programs selected before January 2, 1985 under former Act No. 135 of the Public Acts of 1945 shall continue to be applicable until a different contribution or benefit program is selected. (3) A participating municipality or participating court may select contribution program P as provided in section 33 in conjunction with any of the above contribution programs except the 0% contribution program and contribution programs continued under subsection (2). (4) Contribution Program DC is governed by section 19A. (5) Contribution Program H is governed by section 19B. History: 1990 PA 99, Eff. June 7, 1990, and Plan Document of 1996. Note 1: Bold text in subsection (2) added by Board action of November 8, 2000, with immediate effect as of and retroactive to January 2, 1985. Note 2: Bold text in subsection (5) added March 14, 2006, with immediate effect: all provisions then amended create the Hybrid Plan, Benefit Program H, and include: sections 2A(1), 2C(7), 6(1), 7(1), 10(1), 11(4), 12(1)(d) and (2), 19B added, 20(5), 21(8), 22(8), 23(2)(a), 23A(5), 24(5), 26(2) and (5)(a) and (6), 27(4), 28(3), (3)(a) and (4), 30(1), 32(5), 39(1), 44(2)(b), 44A(2)(b), 46(1), 46A(1), and 47(1)(a). Note 3: Bold text at end of subsection (1) added by Board action on January 14, 2009, with immediate effect, pursuant to OAG, No. 6678 (March 27, 1991). Sec. 33. Contribution Program P. (1) A participating municipality or participating court that requires, on May 22, 1992, member contributions on account of compensation earned, by resolution of the governing body of the participating municipality or by administrative order of the chief judge of the participating court, shall adopt Contribution Program P before January 1, 1993. The resolution or administrative order adopting Contribution Program P shall allow each member of the retirement system of the participating municipality or participating court to elect whether the participating municipality or participating court shall pick up that member's required contributions on account of compensation earned after the effective date of Contribution Program P. The participating municipality or participating court shall provide for the election within 30 days of the date of the resolution or administrative order. For each member who elects to have his or her contributions picked up under Contribution Program P, the program shall become effective on the date of the resolution or the administrative order, or on the date the retirement system receives notification from the United States Internal Revenue Service of approval of this program, whichever occurs later. For each member who elects to not have his or her contributions picked up under Contribution Program P, the program shall not become effective. A member who is employed by the participating municipality or participating court MERS Plan Doc: Revised as of May 13, 2009 4-1 . after the date of the resolution or administrative order adopting Contribution Program P shall have his or her required contributions picked up under Contribution Program P. (2) A participating municipality or court that first requires member contributions on account of compensation earned after May 22, 1992 shall pick up member contributions. (3) The picked up contributions shall be treated as participating municipality or participating court contributions for the purpose of determining tax treatment under the Internal Revenue Code. The participating municipality or participating court shall pay contributions picked up under Contribution Program P from the same source of funds that are used for paying compensation to the member. (4) A participating municipality or participating court shall pick up member contributions by a reduction in the member's cash salary or an offset against a future salary increase, or both. The participating municipality or participating court shall designate contributions that are picked up and paid to the retirement system as employer contributions in lieu of employee contributions to the retirement system. The members who participate in Contribution Program P shall not have the option of receiving the contributed amounts directly instead of having those amounts paid to the retirement system. History: 1993 PA 50, Eff. June 1, 1993, and Plan Document of 1996. Note 1: The 1993 amendments reflected language necessary to conform to the Internal Revenue Service’s notification of October 22, 1991, granting conditional pick-up approval subject to amendments. Initial conforming language was contained in 1992 PA 63, which took immediate effect on May 22, 1992. Note 2: Obsolete language in subsections (2) and (4) deleted by Board action of November 19, 1998, with immediate effect. Sec. 34. Difference Between Retirant's Accumulated Contributions and Aggregate Amount of Retirement Allowance Payments Made; Payment. If all retirement allowance payments terminate before there has been paid an aggregate amount, including any lump sum distribution under Benefit Program DROP+ provided in section 10, equal to the retirant's accumulated contributions at the date retirement was effective, the difference between the retirant's accumulated contributions and the aggregate amount of retirement allowance payments made and any lump sum distribution made under Benefit Program DROP+ shall be paid to such individual or individuals as the retirant shall have designated in writing and filed with the board. Written consent by the member’s spouse to the beneficiary named is required unless the spouse is beneficiary to 100% of the balance; this requirement may be waived by the Retirement Board if the signature of the member’s spouse cannot be obtained because of extenuating circumstances. If there is no such individual surviving the retirant, the difference shall be paid to the deceased individual's estate. History: 1984 PA 427, Eff. Jan. 2, 1985, and Plan Document of 1996. Note: Bold text added by Board action of May 14, 2003, with immediate effect, along with companion amendments to sections 2C(7) and 31(1); and addition of section 10(6), 11(1)(p) and 11(2)(e). MERS Plan Doc: Revised as of May 13, 2009 4-2 . Sec. 35. Payment of Accumulated Contributions. (1) The accumulated contributions of a former member whether vested or not shall be paid to the member upon satisfaction of each of the following conditions: (a) The former member files a written application for payment with the Retirement Board. (b) The break in membership is at least 30 days or the request is made as a result of being laid off for at least 30 days as provided in section 3. (c) The member’s spouse has consented in writing to the payment. This requirement may be waived by the Retirement Board if the signature of the member’s spouse cannot be obtained because of extenuating circumstances. (2) If a member or former member dies and no retirement allowance becomes payable by the retirement system on account of the death, the deceased individual's accumulated contributions shall be paid to such individual or individuals as the deceased individual shall have designated in writing and filed with the Retirement Board. Written consent by the member’s spouse to the beneficiary named is required unless the spouse is beneficiary to 100% of the balance; this requirement may be waived by the Retirement Board if the signature of the member's spouse cannot be obtained because of extenuating circumstances. If there is no such named individual surviving the deceased individual, the accumulated contributions shall be paid to the deceased individuals' estate. (3) Payment of accumulated contributions as provided in this section may be made in installments. (4) The accumulated contributions of a former member or a deceased member or a deceased former member which remain on deposit in the reserve for employee contributions shall be transferred from the reserve for employee contributions to the reserve for employer contributions of the former employer(s) if each of the following conditions is met. (a) No retirement allowance is payable or will become payable on account of the service for which member contributions were made. (b) One year and eleven months has passed since the latter of the former member's termination of employment or the former member's or deceased member's death. History: 1984 PA 427, Eff. Jan. 2, 1985, and Plan Document of 1996. Note: Bold text added to subsection (1) and (1)(c) by Board action of August 20, 1998, with immediate effect. End of Article IV. MERS Plan Doc: Revised as of May 13, 2009 4-3 . ARTICLE V. RETIREMENT BOARD ADMINISTRATION. Sec. 36. Retirement Board; Creation; Board as Public Corporation; Powers and Duties; Administrative Functions; Membership; Rules of Procedure; Record of Proceedings; Quorum; Voting; Term of Office; Oath; Expenses; Absence of Member from Work; Vacancy; Chairperson and Chairperson Pro tem; Chief Executive Officer. [MCL 38.1536] (1) A Retirement Board is created to administer this Act. Before the certification date, the Retirement Board shall operate within the department of management and budget. On and after the certification date, the retirement system shall become a public corporation and shall no longer operate within the executive branch of this state. (2) On and after the certification date, the Retirement Board has all of the following powers and duties: (a) The Retirement Board shall determine and establish all of the provisions of the retirement system affecting benefit eligibility, benefit programs, contribution amounts, and the election of municipalities, judicial circuit courts, judicial district courts and judicial probate courts to be governed by the provisions of the retirement system. The Retirement Board shall establish all retirement system provisions. As of 12:01 a.m. on the certification date, [the Retirement Board by action taken at a special meeting on August 1, 1996, affirmed by resolution that the] retirement system provisions shall not differ materially from the defined benefit provisions that are in effect under this Act at 11:59 p.m. on the day immediately before the certification date. This subdivision does not limit the Retirement Board's authority after the certification date to establish additional programs including but not limited to defined benefit, defined contribution, ancillary benefits, health and welfare benefits, and other postemployment benefit programs. [Effective September 24, 1996], [t]he Retirement Board [may] adopt[ed] the provisions of the Reciprocal Retirement Act, 1961 PA 88, MCL 38.1101 to 38.1106 on behalf of the employees of the Retirement Board. (b) The Retirement Board has the full and exclusive authority and full responsibility to employ and pay for all professional services including but not limited to actuarial, investment, legal, accounting, and any other services that the Retirement Board considers necessary for the proper operation of the retirement system. The power granted to the Retirement Board in this subdivision includes complete control of the procurement process. (c) The Retirement Board shall appoint a chief executive officer and any other employees for which the Retirement Board establishes positions. The Retirement Board shall establish the compensation of all persons appointed by the board. (d) The Retirement Board shall arrange for an annual actuarial valuation and report of the actuarial soundness of each participating municipality and court to be prepared by an independent actuary based upon data compiled and supplied by employees of the retirement system. The Retirement Board shall adopt actuarial tables, assumptions, and formulas after consultation with the actuary. (e) The Retirement Board shall arrange for annual audits of the records and accounts of the retirement system by a certified public accountant or by a firm of certified public accountants pursuant to generally accepted auditing standards and the Uniform Budgeting and Accounting Act, 1968 PA 2, MCL 141.421 to 141.440a. MERS Plan Doc: Revised as of May 13, 2009 5-1 . (f) The Retirement Board shall prepare an annual report for each fiscal year in compliance with generally accepted accounting principles. The report shall contain information regarding the financial, actuarial, and other activities of the retirement system during the fiscal year. The Retirement Board shall furnish a copy of the annual report to the governor and a copy in print or electronic format to each house of the legislature, each participating municipality, and each participating court. The Retirement Board shall make the report available to all members upon request. The report shall also contain a review of the actuarial valuation required under subdivision (d), if available. (g) The Retirement Board shall appoint an attorney to be the legal advisor of the board and to represent the board in all proceedings. (h) The Retirement Board shall appoint or employ custodians of the assets of the retirement system. The custodians shall perform all duties necessary and incidental to the custodial responsibility and make disbursements of authorized retirement system payments from the funds of the retirement system. (i) The Retirement Board shall perform other functions that are required for the execution of the provisions of this Act. (j) The Retirement Board shall establish the time and location of the meetings of the Retirement Board and the time and location of the annual meeting of the retirement system, consistent with the provisions of the Open Meetings Act, 1976 PA 267, MCL 15.261 to 15.275. (3) Before the certification date, the provisions of the Executive Organization Act of 1965, 1965 PA 380, MCL 16.101 to 16.608, and the Management and Budget Act, 1984 PA 431, MCL 18.1101 to 18.1594, shall govern the administrative functions of the retirement system. However, any provision of law in actual conflict with the provisions of the amendatory act that added this sentence [1996 PA 220] shall not apply. (4) On and after the certification date, the Retirement Board consists of the following nine (9) members, each of whom, excepting the retiree member and the Retirement Board appointees, shall be from a different county at the time of appointment: (a) Two (2) members appointed by the Retirement Board who have knowledge or experience in retirement systems, administration of retirement systems, or investment management or advisory services. (b) One (1) member who is a retiree of the system, appointed by the board. (c) Three (3) members of the retirement system who are officers of a participating municipality or court, who shall be designated as officer board members. (d) Three (3) employee members of the retirement system who are not officers of a participating municipality or court, who shall be designated as employee board members. MERS Plan Doc: Revised as of May 13, 2009 5-2 . (5) The Retirement Board shall adopt its own rules of procedure and shall keep a record of its proceedings. Five (5) members of the Retirement Board shall constitute a quorum at any meeting of the Retirement Board and at least five (5) concurring votes shall be necessary for any decision by the Retirement Board. Each member of the Retirement Board shall be entitled to one (1) vote on each question before the Retirement Board. (6) The regular term of office of members of the Retirement Board is three (3) years. Each member of the Retirement Board shall take an oath of office before assuming the duties of the position. Members of the Retirement Board shall serve without compensation with respect to their duties, but shall be reimbursed by the retirement system for their actual and necessary expenses incurred in the performance of their duties. A participating municipality or court employing a member of the Retirement Board shall treat absences from work on account of Retirement Board business in such a manner that the individual does not suffer loss of pay or benefits. (7) A vacancy shall occur on the Retirement Board upon the occurrence of any of the following events: (a) An officer board member ceases to be eligible for nomination as an officer board member. (b) An employee board member ceases to be eligible for nomination as an employee board member. (c) Failure to attend three (3) consecutive scheduled meetings of the Retirement Board, unless excused for cause by majority vote of the board members attending the meeting. (8) A vacancy occurring on the Retirement Board at least 120 days before the expiration of a term of office shall be filled by the Retirement Board. Board appointments under this subsection shall be for the period ending on the December 31 next following the date of the vacancy. For the officer board members and employee board members, a replacement for any further portion of the unexpired term shall be filled pursuant to section 45. For the 2 appointed board members and the retiree board member, a replacement for any further portion of the unexpired term shall be filled pursuant to subsection (4). (9) The Retirement Board shall select from its members a chairperson and a chairperson pro-tem. (10) The Retirement Board shall employ a chief executive officer. The chief executive officer shall do all of the following: (a) Manage and administer the retirement system under the supervision and direction of the Retirement Board. (b) Invest the assets of the retirement system, as directed by the Retirement Board, consistent with the public employee retirement system investment act, 1965 PA 314, MCL 38.1132 to 38.1140m, which act governs the investments of assets of public employee retirement systems. (c) Annually prepare and submit to the Retirement Board for review, amendment, and adoption an itemized budget showing the amount required to pay the retirement system's expenses for the following fiscal year. (d) Perform other duties as the Retirement Board, in its discretion, shall delegate to the chief executive officer. MERS Plan Doc: Revised as of May 13, 2009 5-3 . History: 1996 PA 220, Eff. Aug. 15, 1996, and Plan Document of 1996; see Sec. 1, Note 1 of this Plan. Note 1: Bracketed text in subparagraph (2)(a) and subsection (3) added. Note 2: Bold text changes pursuant to 2004 PA 490, which took immediate effect December 27, 2004, amending this section 36 (and sections 2A and 2B). Sec. 36A. Denial of Benefits; Hearing Process; Appeal to Retirement Board. (1) Where a claim for benefits is denied by the retirement system, the claimant shall be notified in writing with the reasons for denial. (2) Within 60 days of the date of mailing of the written denial, the claimant may appeal the denial, and request a hearing to be conducted by the Board's hearing officer. (3) Hearings shall be conducted in accordance with the provisions of Chapter IV of the Administrative Procedures Act, 1969 PA 306, sections 24.271-24.287 of the Michigan Compiled Laws. (4) At a hearing, the claimant may appear in person, by authorized agent or through counsel, and the retirement system may be represented by staff or through counsel. (5) Following issuance of a proposal for decision by the hearing officer and the opportunity to file exceptions, the Retirement Board shall review the proposal for decision and issue a final decision. History: 1996 PA 220, Eff. Aug. 15, 1996, and Plan Document of 1996. Sec. 36B. Indemnification. The Retirement Board shall indemnify to the extent authorized or permitted by law (and consistent with the Plan's favorable tax qualified status under section 401 of the Internal Revenue Code) any person, and such person's heirs and legal representatives, who is made or threatened to be made a party to any action, suit or proceeding (whether civil, criminal, administrative or investigative) whether brought by or in the right of the Retirement Board or system or otherwise, by reason of the fact that such person is or was a trustee, director, officer, employee or agent of the Retirement Board or system or such person served on any formally constituted advisory body or committee of the Retirement Board. There is no duty to indemnify where such person is judicially determined to have incurred liability due to fraud, gross neglect, or malfeasance in the exercise and performance of their duties. History: 1996 PA 220, Eff. Aug. 15, 1996, and Plan Document of 1996. MERS Plan Doc: Revised as of May 13, 2009 5-4 . Sec. 37. Audit Report. The reports provided for under section 36(2)(e) and (f) shall be submitted to the Retirement Board not later than the end of the fifth (5th) month that follows the end of the fiscal year. History: 1989 PA 51, Eff. June 12, 1989, and Plan Document of 1996. Note 1: Section 37 revised by Board action of August 20, 1998, with immediate effect. Note 2: Per Board action of March 12, 1997, the Retirement System’s fiscal year was changed from the prior State fiscal year (October 1–September 30) to January 1 to December 31, effective January 1, 1998. Sec. 38. Experience Tables; Data and Information; Actuarial Operation and Investigations. The Retirement Board shall adopt the experience tables which are necessary for the operation of the retirement system on the actuarial basis determined as provided in section 45A. Sufficient data and information shall be kept by the retirement system to facilitate the actuarial investigations of the actual experience of the retirement system. History: 1984 PA 427, Eff. Jan. 2, 1985, and Plan Document of 1996. Sec. 39. Retirement Board as Trustees of Money and Other Assets; Investments; Investments Counsel; Purpose of Investments; Discretionary Authority. [MCL 38.1539] (1) The Retirement Board shall be the trustees of the money and other assets of the retirement system, except as otherwise provided in section 19A and section 19B. The Board shall have full power and authority to invest and reinvest the money and other assets of the retirement system subject to all terms, conditions, limitations, and restrictions imposed on the investment of assets of public employee retirement systems by Act No. 314 of the Public Acts of 1965, being sections 38.1132 et seq. of the Michigan Compiled Laws as amended. The Retirement Board may employ outside investment counsel to advise the Board in the making and disposition of investments. (2) All money and other assets of the retirement system shall be held and invested for the sole purpose of meeting disbursements authorized under this act and shall be used for no other purpose. In exercising its discretionary authority with respect to the management of the money and other assets of the retirement system, the Retirement Board shall exercise the care, skill, prudence and diligence under the circumstances then prevailing, that a person of prudence, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of like character with like aims. History: 1988 PA 500, Eff. Dec. 29, 1988, and 1996 PA 220, and Plan Document of 1996; see Sec. 1, Note 1 of this Plan. Note: Bold text in subsection (1) added March 14, 2006, with immediate effect: all provisions then amended create the Hybrid Plan, Benefit Program H, and include: sections 2A(1), 2C(7), 6(1), 7(1), 10(1), 11(4), 12(1)(d) and (2), 19B added, 20(5), 21(8), 22(8), 23(2)(a), 23A(5), 24(5), 26(2) and (5)(a) and (6), 27(4), 28(3), (3)(a) and (4), 30(1), 32(5), 39(1), 44(2)(b), 44A(2)(b), 46(1), 46A(1), and 47(1)(a). MERS Plan Doc: Revised as of May 13, 2009 5-5 . Sec. 40. Prohibited Conduct. [MCL 38.1540] Members of the Retirement Board and employees of the retirement system are prohibited from: (1) Having any beneficial interest, direct or indirect, in any investment of the retirement system. (2) Being an endorser or obligor, or providing surety, for any money loaned to or borrowed from the retirement system. (3) Borrowing any of the money or other assets of the retirement system. (4) Receiving any pay or emolument from any individual or organization, other than compensation paid by the retirement system, with respect to investments of the retirement system. History: 1984 PA 427, Eff. Jan. 2, 1985, and 1996 PA 220, and Plan Document of 1996; see Sec. 1, Note 1 of this Plan. Sec. 41. Election to Become Participating Municipality; Vote; Specifying Effective Date of Participation and Applicable Benefit and Contribution Programs; Establishment of Benefit and Contribution Program Coverage Classifications; Certification of Participation; Conditions to Participation. (1) A municipality may elect to become a participating municipality by either an affirmative vote by a majority of the members on the municipality's governing body, or an affirmative vote by the qualified electors of the municipality. The municipality's governing body shall specify the effective date of participation and the benefit programs and member contribution programs that shall apply to the employees of the municipality. The Retirement Board shall establish benefit program coverage classifications and member contribution program coverage classifications. All employees of a municipality who are in the same benefit program coverage classification shall be covered by the same benefit program. All employees of a municipality who are in the same member contribution program classification shall be covered by the same member contribution program. (2) The clerk or secretary of the municipality shall certify to the retirement system, in the manner and form prescribed by the Retirement Board, the determination of the municipality to participate in the retirement system. The certification shall be made within 10 days from the date of the vote by the governing body or the date of the canvass of votes of the qualified electors. (3) A municipality (or bargaining unit or non-bargaining group) shall not participate under this Plan unless on the effective date of participation 10% or more of all employees of the municipality (or bargaining unit or non-bargaining group) are included as members of the retirement system. However, a municipality that includes less than 10% of all municipal employees as members (or bargaining unit or non-bargaining group) of a retirement system under this Plan may participate if the municipality has elected to include [only] all individuals first hired after the effective date of the municipality's participation. History: 1989 PA 51, Eff. June 12, 1989, and Plan Document of 1996. Note: Subsection (3) amended by bold text added and [bracketed] language deleted, by Board action of January 14, 2009, with immediate effect. The added language reflects MERS longstanding interpretation since 1989. MERS Plan Doc: Revised as of May 13, 2009 5-6 . Sec. 41A. Election to Become Participating Court; Administrative Order; Resolution; Specifying Effective Date of Participation and Applicable Benefit and Contribution Programs; Classifications; Certification of Participation; Conditions to Participation. (1) A judicial circuit court, judicial district court, or judicial probate court may elect to become a participating court by administrative order of the court's chief judge that is concurred in by resolution of the governing bodies of the municipalities that are required by law to fund the judicial circuit court, judicial district court, or judicial probate court, or by resolution of the joint board or commission of the municipalities that are required by law to fund the judicial circuit court, judicial district or judicial probate court if those municipalities have entered into a contract to transfer functions and responsibilities pursuant to Act No. 8 of the Public Acts of the Extra Session of 1967, being sections 124.531 to 124.536 of the Michigan Compiled Laws. The chief judge, in the administrative order, shall specify the effective date of participation and the benefit programs and member contribution programs that shall apply to the employees of the court. The Retirement Board shall establish benefit program coverage classification and member contribution program coverage classifications. All employees of a court who are in the same benefit program coverage classification shall be covered by the same benefit program. All employees of a court who are in the same member contribution program coverage classification shall be covered by the same member contribution program. (2) The chief judge of the judicial circuit court, judicial district court, or judicial probate court shall certify to the retirement system, in the manner and form prescribed by the Retirement Board, the determination of the court to participate in the retirement system. The certification shall be made within 10 days after the date of concurrence of the governing bodies of the municipalities that are required by law to fund the court or the joint board or commission of the municipalities that are required by law to fund the court. (3) A court (or bargaining unit or non-bargaining group) shall not participate under this Plan unless on the effective date of participation 10% or more of all employees of the court (or bargaining unit or non-bargaining group) are included as members of the retirement system. However, a court that includes less than 10% of all judicial employees (or bargaining unit or non-bargaining group) as members of a retirement system under this Plan may participate if the court has elected to include [only] all individuals first hired after the effective date of the court's participation. History: 1989 PA 51, Eff. June 12, 1989, and Plan Document of 1996. Note: Subsection (3) amended by bold text added and [bracketed] language deleted, by Board action of January 14, 2009, with immediate effect. The added language reflects MERS longstanding interpretation since 1989. Sec. 42. Actuarial Determination of Contribution Requirements. A municipality, a judicial circuit court, a judicial district court, or a judicial probate court or the retirement system may request the system's actuary to make an actuarial determination of the contribution requirements that would be associated with the municipality's or court's participation in the retirement system. The municipality or court shall furnish the employee information needed for the actuarial determination, as specified by the Retirement Board. The cost of this actuarial determination shall be paid as determined by the Retirement Board. History: 1988 PA 500, Eff. Dec. 29, 1988, and Plan Document of 1996. MERS Plan Doc: Revised as of May 13, 2009 5-7 . Sec. 43. Election to Change Benefit and Contribution Programs; Vote; Specifying Effective Date of Change in Coverage and Applicable Benefit and Contribution Programs; Coverage Classification and Certification Conditions; Accrued Benefit Not Reduced by Change; Certification of Determination; Actuarial Determination of Contribution Requirements. (1) A participating municipality may elect to change the benefit programs and member contribution programs which apply to the employees of the participating municipality by an affirmative vote by a majority of the members of the participating municipality's governing body. The participating municipality shall specify the effective date of the change in coverage and the benefit programs and member contribution programs which shall apply to the employees of the participating municipality from the effective date of the change. The effective date of the change in coverage shall be the first day of a calendar month. The coverage classification and certification conditions imposed by section 41 shall apply to a change in coverage under this section. A change in benefit program or member contribution program shall not reduce the accrued benefit of any member. (2) The clerk or secretary of the municipality shall certify to the retirement system, in the manner and form prescribed by the Retirement Board, the determination of the participating municipality. The certification shall be made within 10 days after the date of the vote by the governing body. (3) The participating municipality or the board may request the actuary to make an actuarial determination of the participating municipality's contribution requirements associated with a change in coverage. The cost of the actuarial determination shall be paid by the participating municipality in either case. History: 1984 PA 427, Eff. Jan. 2, 1985, and Plan Document of 1996. Sec. 43A. Election of Participating Court to Change Benefit and Contribution Programs; Administrative Order; Resolution; Specifying Effective Date of Change in Coverage and Applicable Benefit and Contribution Programs; Coverage Classification and Certification Conditions; Accrued Benefit Not Reduced by Change; Certification of Determination; Actuarial Determination of Contribution Requirements. (1) A participating court may elect to change the benefit programs and member contribution programs that apply to the employees of the participating court by administrative order of the chief judge that is concurred in by resolution of the governing bodies of the municipalities that are required by law to fund the court or by resolution of the joint board or commission of the municipalities that are required by law to fund the court if those municipalities have entered into a contract to transfer functions and responsibilities pursuant to Act No. 8 of the Public Acts of the Extra Session of 1967, being sections 124.531 to 124.536 of the Michigan Compiled Laws. The chief judge, in the administrative order shall specify the effective date of the change in coverage and the benefit programs and member contribution programs that shall apply to the employees of the participating court from the effective date of the change. The effective date of the change in coverage shall be the first day of a calendar month. The coverage classification and certification conditions imposed by section 41A shall apply to a change in coverage under this section. A change in benefit program or member contribution program shall not reduce the accrued benefit of any member. (2) The chief judge of the participating court shall certify to the retirement system, in the manner and form prescribed by the Retirement Board, the determination of the participating court under subsection (1). The certification shall be made within 10 days after the date of the concurrence MERS Plan Doc: Revised as of May 13, 2009 5-8 . of the governing bodies of the municipalities that are required by law to fund the court or the joint board or commission of the municipalities that are required by law to fund the court. (3) The participating court or the board may request the actuary to make an actuarial determination of the participating court’s contribution requirements associated with a change in coverage. The cost of the actuarial determination shall be paid by the participating court. History: 1988 PA 500, Eff. Dec. 29, 1988, and Plan Document of 1996. Sec. 43B. Collective Bargaining Agreements; Benefit Modifications; Extension of Modified Benefits to Non-Bargaining Groups. (1) Pursuant to a collective bargaining agreement entered into pursuant to 1947 PA 336, being sections 423.201 et seq. of the Michigan Compiled Laws, a participating municipality or participating court may provide for retirement benefits which are modifications of standard retirement benefits otherwise included in the plan. (2) In the manner provided in section 43 or section 43A, the participating municipality or participating court may extend such collectively bargained retirement benefit modifications to other employees of the participating municipality or participating court. (3) As a condition of the retirement system administering retirement benefit modifications under this section 43B, the participating municipality or participating court shall agree to compensate the system for all reasonable and necessary additional costs of administering such benefit modifications. History: 1996 PA 220, Eff. Aug. 15, 1996, and Plan Document of 1996. Sec. 43C. Fiscal Responsibility: Benefit Adoption Eligibility Requirements Effective July 1, 2006. The Board administers the plan and the benefit promises made by participating municipalities and courts to their employees, for the exclusive benefit of the members, vested former members, retirees and beneficiaries. Benefit changes have a substantial financial impact on long-term contribution requirements for each participating entity that must finance the constitutionally protected benefit promises made to employees under the Michigan Constitution, article 9, section 24. The adverse impact of benefit changes on plans that are actuarially funded at low levels, which the Board determines to be less than 50% funded prior to January 1, 2008, and 60% funded commencing January 1, 2008, requires remedial action. To further safeguard the long- term actuarial and financial integrity of the retirement system and its individual member plans, and to promote understanding of the impact that benefit changes have on plan integrity and taxpayer-financed employer contributions to fund benefit obligations, the Board enacts this section in the exercise of its duties as fiduciary and trustee for the retirement system, and for each participating municipality and court, and all MERS trust assets, as provided in MCLA 38.1536(2)(a) and 38.1539(1); Plan sections 36(2)(a) and 39(1) (1) At the time a supplemental actuarial valuation is requested under sections 11, 20, 21, 43 or 43A, and at the time a new benefit provision is adopted, the employer must be current in the payment of all required employer and member contributions. (2) Both the requesting division and the participating municipality or court must be not less than 60% funded commencing January 1, 2008, on an actuarial basis as of the last December 31 valuation date, based on the actual benefit provisions in effect when the supplemental valuation is requested or completed. The governing body may make a cash contribution, or transfer employer assets from a different division, or both, in order to meet the 60% requirement. If the MERS Plan Doc: Revised as of May 13, 2009 5-9 . requirement is not met, MERS and its actuary will not complete the requested supplemental valuation. (3) The proposed benefit provisions may not be adopted if the results of the supplemental valuation disclose there would be a funded percentage less than 60% on an actuarial basis (using the same valuation date as in subsection (2)) commencing January 1, 2008, for either the division or the entire municipality or court. The governing body may make a cash contribution, or transfer employer assets from a different division, or both, in order to meet the 60% requirement. (4) Beginning with the December 31, 2006 annual actuarial valuations, the 30-year maximum amortization period for unfunded accrued liability shall be reduced each following valuation year by one year, to a 20-year maximum amortization period: December 31, 2005 Valuation: 30 years December 31, 2006 Valuation: 29 years December 31, 2007, 2008, 2009 Valuations: 28 years December 31, 2010 Valuation: 27 years December 31, 2011 Valuation: 26 years December 31, 2012 Valuation: 25 years December 31, 2013 Valuation: 24 years December 31, 2014 Valuation: 23 years December 31, 2015 Valuation: 22 years December 31, 2016 Valuation: 21 years December 31, 2017 Valuation: 20 years (5) The provisions of this section constitute Board action in its exclusive capacity of fiduciary and trustee for the retirement system, the participating municipalities and courts, and all MERS trust assets, as provided in MCLA 38.1536(2)(a) and 38.1539(1); Plan sections 36(2)(a) and 39(1). In the event any alteration of this section 43C is made or occurs, under section 43B of the Plan Document concerning collective bargaining or under any other plan provision or law, MERS shall not recognize such action, other than in accordance with this section. History: Note 1: Section 43C added by Board action of March 14, 2006, with an effective date of July 1, 2006. The language of subsection (2) is based on Requirements to Foster Fiscal Responsibility for Participating Municipalities with Respect to Benefit Increases, adopted by the Board on September 22, 2005, and effective October 1, 2005. To further implement subsection (4), section 2C(3)(b) was also amended March 14, 2006. Note 2: Bold language added September 18, 2007, increasing minimum funded percentage from 50% to 60%, and declining the amortization schedule five more years from 25 to 20 years, with an effective date of January 1, 2008. Companion amendment was simultaneously made to Plan section 2C(3)(b). Note 3: Underlined language in subsection (1) added, and subsection (4) revised, with immediate effect, by Board action of March 11, 2009 Sec. 44. Election to Terminate Participation; Vote; Certification of Determination; Effective Date of Termination of Participation; Effect of Termination; Disposition of Balance in Reserve. (1) A participating municipality may elect to terminate participation by an affirmative vote by the qualified electors of the participating municipality. The clerk or secretary of the participating municipality shall certify to the retirement system, in the manner and form prescribed by the Retirement Board, the determination of the participating municipality to terminate participation. The certification shall be made within 10 days after the canvass of votes of the qualified MERS Plan Doc: Revised as of May 13, 2009 5-10 . electors. The effective date of termination of participation shall be the first day of the participating municipality's fiscal year that is at least 6 months after the date of the vote by the qualified electors. Termination of participation shall preclude a municipality from again becoming a participating municipality during the 5-year period immediately following the effective date of the termination of participation. (2) The disposition of balances in the reserve for employee contributions, the reserve for defined contribution plan and the reserve for employer contributions when a participating municipality terminates participation in the retirement system pursuant to subsection (1) shall be as follows: (a) The balance standing to each person's credit in the reserve for employee contributions shall be distributed to the person in the form of either a single sum payment or an annuity which is the actuarial equivalent of the single sum payment, as determined by the Retirement Board. (b) The balance standing to each person's credit in the reserve for defined contribution plan shall be distributed to the person as provided in section 19A and section 19B. (c) The Retirement Board shall adjust the balance in the reserve for employer contributions to a market value basis for the purpose of determining the amount of an insufficiency or the amount of an overage under this subdivision. The adjusted balance in the reserve for employer contributions shall be periodically compared to the actuarial accrued liabilities, including a margin for experience fluctuation, for accrued pensions payable and to be paid persons on account of the municipality's participation in the retirement system. If at the time of a comparison the adjusted balance is insufficient to fully cover the actuarial accrued liabilities, the insufficiency shall be an obligation of the municipality and shall be liquidated as determined by the Retirement Board. If at the time of a comparison the adjusted balance is more than sufficient to fully cover the actuarial accrued liabilities, the overage shall be returned to the municipality in a single sum or, at the request of the municipality, transferred to another retirement plan covering the employees of the municipality. History: 1984 PA 427, Eff. Jan. 2, 1985, and Plan Document of 1996. Note: Bold text in subsection (2)(b) added March 14, 2006, with immediate effect: all provisions then amended create the Hybrid Plan, Benefit Program H, and include: sections 2A(1), 2C(7), 6(1), 7(1), 10(1), 11(4), 12(1)(d) and (2), 19B added, 20(5), 21(8), 22(8), 23(2)(a), 23A(5), 24(5), 26(2) and (5)(a) and (6), 27(4), 28(3), (3)(a) and (4), 30(1), 32(5), 39(1), 44(2)(b), 44A(2)(b), 46(1), 46A(1), and 47(1)(a). Sec. 44A. Election of Participating Court to Terminate Participation; Vote, Certification of Determination; Effective Date of Termination of Participation; Effect of Termination; Disposition of Balance in Reserve. (1) A participating court may elect to terminate participation by an affirmative vote by the qualified electors of the municipalities that are required by law to fund the court. The chief judge of the participating court shall certify to the retirement system, in the manner and form prescribed by the Retirement Board, the determination of the participating court to terminate participation. The certification shall be made within 10 days after the canvass of votes of the qualified electors. The effective date of termination of participation shall be the first day of the participating court's fiscal year that is at least 6 months after the date of the vote by the qualified electors. Termination of participation shall preclude a court from again becoming a participating court during the 5-year period immediately following the effective date of the termination of participation. MERS Plan Doc: Revised as of May 13, 2009 5-11 . (2) The disposition of balances in the reserve for employee contributions, the reserve for defined contributions and the reserve for employer contributions when a participating court terminates participation in the retirement system pursuant to subsection (1) shall be as follows: (a) The balance standing to each person's credit in the reserve for employee contributions shall be distributed to the person in the form of either a single sum payment or an annuity that is the actuarial equivalent of the single sum payment, as determined by the Retirement Board. (b) The balance standing to each person's credit in the reserve for defined contribution plan shall be distributed to the person as provided in section 19A and section 19B. (c) The Retirement Board shall adjust the balance in the reserve for employer contributions to a market value basis for the purpose of determining the amount of an insufficiency or the amount of an overage under this subdivision. The adjusted balance in the reserve for employer contributions shall be periodically compared to the actuarial accrued liabilities, including a margin for experience fluctuation for accrued pensions payable and to be paid persons on account of the court's participation in the retirement system. If at the time of a comparison the adjusted balance is insufficient to fully cover the actuarial accrued liabilities, the insufficiency shall be an obligation of the court and shall be liquidated as determined by the Retirement Board. If at the time of a comparison the adjusted balance is more than sufficient to fully cover the actuarial accrued liabilities, the overage shall be returned to the court in a single sum or, at the request of the chief judge of the court, transferred to another retirement plan covering the employees of the court. History: 1988 PA 500, Eff. Dec. 29, 1988, and Plan Document of 1996. Note: Bold text in subsection (2)(b) added March 14, 2006, with immediate effect: all provisions then amended create the Hybrid Plan, Benefit Program H, and include: sections 2A(1), 2C(7), 6(1), 7(1), 10(1), 11(4), 12(1)(d) and (2), 19B added, 20(5), 21(8), 22(8), 23(2)(a), 23A(5), 24(5), 26(2) and (5)(a) and (6), 27(4), 28(3), (3)(a) and (4), 30(1), 32(5), 39(1), 44(2)(b), 44A(2)(b), 46(1), 46A(1), and 47(1)(a). Sec. 45. Annual Meeting; Selection of Members to Retirement Board; Transaction of Business; Notice of Meeting; Certification of Delegates; Conduct of Election; Nominating Procedures; Referendum. [MCL 38.1545] (1) The Retirement Board shall call an annual meeting of the retirement system for the purpose of selecting members of the Retirement Board and the transaction of such other business as the Retirement Board determines. Notice of the annual meeting shall be sent to each participating municipality and participating court, by registered mail, at least 30 days before the date of the meeting. Notice of the annual meeting shall be sent to each retiree at least 30 days before the date of the meeting. (2) The governing body of each participating municipality shall certify the names of 2 delegates to the annual meeting. One delegate shall be a member who is an officer of the participating municipality, selected by the governing body of the participating municipality. The other delegate shall be a member who is not an officer of the participating municipality, elected by the member employees of the participating municipality. The election shall be by secret ballot and shall be conducted by an officer of the participating municipality. The election shall be conducted in a manner that affords each member employee an opportunity to vote. MERS Plan Doc: Revised as of May 13, 2009 5-12 . (3) The chief judge of each participating court shall certify the names of 2 delegates to the annual meeting. One delegate shall be a member who is an officer of the participating court, selected by the chief judge of the participating court. The other delegate shall be a member who is not an officer of the participating court, elected by the member employees of the participating court. The election shall be by secret ballot and shall be conducted by an officer of the participating court. The election shall be conducted in a manner that affords each member employee an opportunity to vote. (4) The nomination of candidates for election to the Retirement Board shall be made pursuant to procedures established by the Retirement Board and adopted by the delegates to an annual meeting of the retirement system. A nomination for the position of officer board member shall be made by a member who is an officer of a participating municipality or of a participating court. A nomination for the position of employee board member shall be made by a member who is not an officer of a participating municipality or of a participating court. (5) The Retirement Board shall hold a referendum of the assembled delegates to elect members of the Retirement Board. The referendum shall be conducted pursuant to procedures established by the Retirement Board and adopted by the delegates to an annual meeting of the retirement system. An individual elected to the Retirement Board shall become a member of the Retirement Board on the January 1 immediately following the referendum. History: 1996 PA 220, Eff. Aug. 15, 1996, and Plan Document of 1996; see Sec. 1, Note 1 of this Plan. End of Article V. MERS Plan Doc: Revised as of May 13, 2009 5-13 . ARTICLE VI. FUNDING AND RESERVES. Sec. 45A. Funding Objective of Retirement System; Contribution Requirement; Notice and Payment of Contribution Obligation; Interest and Penalty Charge. (1) The funding objective of the retirement system is to establish and receive contributions during each fiscal year that are sufficient to fully cover the actuarial cost of benefits likely to be paid on account of service rendered by members during the fiscal year, the normal cost requirements of the retirement system, and amortize the unfunded actuarial costs of benefits likely to be paid on account of service rendered before the fiscal year, the unfunded actuarial accrued liability of the retirement system. Distinct contribution requirements shall be established for each participating municipality and participating court. (2) Contribution requirements shall be actuarially determined using experience assumptions and level percent of payroll actuarial cost methods adopted by the Retirement Board. (3) The retirement system shall annually inform each participating municipality and participating court of its contribution obligation for the fiscal year. The contribution requirement shall be paid to the retirement system pursuant to procedures and schedules established by the Retirement Board. The retirement system may assess an interest charge and a penalty charge on any payment not made within 15 days after its due date. History: 1996 PA 220, enacting section 2, Eff. Aug. 15, 1996, and Plan Document of 1996. Sec. 46. Reserve for Employee Contributions; Subaccounts; Deduction of Contributions from Compensation of Member; Consent and Agreement to Deduction; Discharge and Acquittance of Claims and Demands; Certification of Compensation Paid; Payment of Aggregate Amount of Contributions to Retirement System; Remittance of Member Contributions; Interest and Penalty Charge. (1) The reserve for employee contributions is the account in which member contributions, (other than the contributions of members covered by Benefit Program DC or Benefit Program H), are accumulated and from which shall be made refunds and transfers of accumulated member contributions. The retirement system shall maintain 1 or more separate individual accounts for each person having an interest in this reserve. (2) A participating municipality or participating court shall cause the applicable member contributions to be deducted from the compensation of each member in its employ. Continuation of employment by the member shall constitute consent and agreement to the deduction of the applicable member contribution. Payment of compensation less the deduction shall be a complete discharge of all claims for compensation for service rendered by the member to the participating municipality or participating court. (3) A participating municipality or participating court shall certify to the retirement system the amount of compensation paid a member employed by the participating municipality or participating court. A participating municipality or participating court shall pay to the retirement system the aggregate amount of member contributions collected. Remittance of member contributions shall be made in accordance with procedures and schedules established by the Retirement Board. The retirement system may assess an interest charge and a penalty charge on any payment not made within 15 days after its due date. MERS Plan Doc: Revised as of May 13, 2009 6-1 . (4) Accumulated member contributions shall be transferred from the reserve for employee contributions to the reserve for retired benefit payments upon the retirement or death of a member or vested former member. History: 1988 PA 500, Eff. Dec. 29, 1988, and Plan Document of 1996. Note: Bold text in subsection (1) added March 14, 2006, with immediate effect: all provisions then amended create the Hybrid Plan, Benefit Program H, and include: sections 2A(1), 2C(7), 6(1), 7(1), 10(1), 11(4), 12(1)(d) and (2), 19B added, 20(5), 21(8), 22(8), 23(2)(a), 23A(5), 24(5), 26(2) and (5)(a) and (6), 27(4), 28(3), (3)(a) and (4), 30(1), 32(5), 39(1), 44(2)(b), 44A(2)(b), 46(1), 46A(1), and 47(1)(a). Sec. 46A. Reserve for Defined Contribution Plan. (1) The reserve for defined contribution plan is the account to which member contributions and contributions by or on behalf of participating municipalities and participating courts for members covered by Benefit Program DC or the defined contribution component of Benefit Program H are credited, and to which investment income earned on the contributions is credited. The reserve for defined contribution plan is the account from which distributions of accumulated balances shall be made and from which transfers shall be made to the reserve for administrative expenses. The retirement system shall maintain 1 or more separate individual accounts for each person having an interest in this reserve. (2) A participating municipality or participating court shall cause the applicable member contributions to be deducted from the compensation of each member in its employ. Continuation of employment by the member shall constitute consent and agreement of the deduction of the applicable member contributions. Payment of compensation less the deduction shall be a complete discharge of all claims for compensation for service rendered by the member to the participating municipality or participating court. (3) A participating municipality or participating court shall certify to the retirement system the amount of compensation paid a member employed by the participating municipality or participating court. A participating municipality or participating court shall pay to the retirement system the aggregate amount of member contributions collected. Remittance of member contributions shall be made under procedures and schedules established by the Retirement Board. The retirement system may assess an interest charge and a penalty charge on any payment not made within 15 days after its due date. History: 1996 PA 220, Eff. Aug. 15, 1996, and Plan Document of 1996. Note: Bold text in subsection (1) added March 14, 2006, with immediate effect: all provisions then amended create the Hybrid Plan, Benefit Program H, and include: sections 2A(1), 2C(7), 6(1), 7(1), 10(1), 11(4), 12(1)(d) and (2), 19B added, 20(5), 21(8), 22(8), 23(2)(a), 23A(5), 24(5), 26(2) and (5)(a) and (6), 27(4), 28(3), (3)(a) and (4), 30(1), 32(5), 39(1), 44(2)(b), 44A(2)(b), 46(1), 46A(1), and 47(1)(a). [Sec. 46B. Transfers of Excess Assets to Reserve for Defined Contribution Plan.] * * * Note 1: Section 46B conditionally adopted, subject to IRS approval, by Board action of November 10, 1999. Note 2: Section 46B repealed by Board action of March 12, 2003. MERS Plan Doc: Revised as of May 13, 2009 6-2 . Sec. 47. Reserve for Employer Contributions and Benefit Payments; Subaccounts. (1) The reserve for employer contributions and benefit payments is the consolidated account: (a) to which contributions by or on behalf of participating municipalities and participating courts shall be credited, other than contributions made on account of members covered by Benefit Program DC or the defined contribution component of Benefit Program H; (b) from which shall be paid all retirement allowances and residual refunds of accumulated contributions. (2) The retirement system shall maintain a separate subaccount for each participating municipality and participating court. (3) Effective with the system’s fiscal year ending December 31, 1998, the reserve for employer contributions and the reserve for retired benefit payments shall be consolidated into the Section 47 Reserve for Employer Contributions and Benefit Payments. All references in this Plan to the reserve for employer contributions shall be deemed to be references to the consolidated Section 47 Reserve. History: 1988 PA 500, Eff. Dec. 29, 1988, and Plan Document of 1996. Note: Language in subparagraph (1)(a) from former section 47, and (1)(b) from section 48(1); language in subsection (2) from former sections 47 and 48(1); language in subsection (3) added; and revised section heading by Board action of October 22, 1998, with immediate effect. Note 2: Bold text in subsection (1)(a) added March 14, 2006, with immediate effect: all provisions then amended create the Hybrid Plan, Benefit Program H, and include: sections 2A(1), 2C(7), 6(1), 7(1), 10(1), 11(4), 12(1)(d) and (2), 19B added, 20(5), 21(8), 22(8), 23(2)(a), 23A(5), 24(5), 26(2) and (5)(a) and (6), 27(4), 28(3), (3)(a) and (4), 30(1), 32(5), 39(1), 44(2)(b), 44A(2)(b), 46(1), 46A(1), and 47(1)(a). Sec. 48. Reserve for Retired Benefit Payments, Subaccounts. Effective with the system’s fiscal year ending December 31, 1998, the reserve for retired benefit payments shall be consolidated into the Section 47 Reserve for Employer Contributions and Benefit Payments. All references in this Plan to the reserve for retired benefit payments shall be deemed to be references to the consolidated Section 47 Reserve. History: 1988 PA 500, Eff. Dec. 29, 1988, and Plan Document of 1996. Note: Language of former subsection 48 (1) incorporated into section 47(1)(b) and (2), and former section 48(2) deleted, by Board action of October 22, 1998, with immediate effect. Sec. 49. Reserve for Excess Casualty Experience; Transfers; Stop Loss Program. (1) The reserve for excess casualty experience is the account in which shall be accumulated contributions by participating municipalities and participating courts pursuant to an excess casualty experience stop loss program that the Retirement Board may implement from time to time. Excess casualty experience, determined in accordance with the stop loss program, shall be charged to the reserve for excess casualty experience by transfers to the affected participating municipality or participating court subaccounts in the reserve for retired benefit payments. This MERS Plan Doc: Revised as of May 13, 2009 6-3 . section shall not be construed as mandating the establishment and continuation of a stop loss program. (2) The following transfers shall be made on September 30, [1989]: (a) The liabilities for disability and survivor retirement allowance being paid shall be transferred to the reserve for retired benefit payments account and charged to the participating municipalities' or participating courts' subaccounts from which the retirants have retired. (b) The assets of the reserve for excess casualty experience account shall be transferred to the participating municipalities' or participating courts' subaccounts in the reserve for retired benefit payments account in proportion to the liabilities transferred in subdivision (a). History: 1988 PA 500, Imd. Eff. Dec. 29, 1988, and Plan Document of 1996. Note: Bracketed year in subsection (2) added. Sec. 50. Reserve for Expenses and Undistributed Income; Transfer; Contingency Reserves. (1) The reserve for expenses and undistributed income is the consolidated account which shall be credited with all interest, dividends, and other income from the investment of retirement system assets, other than assets in the reserve for defined contribution plan; all gifts and bequests received by the retirement system; all unclaimed accumulated contributions and retirement allowances; and all other money received by the retirement system, the disposition of which is not specifically provided. There shall be transferred from the reserve for expenses and undistributed income the section 52 allocations to the reserve for employer contributions and benefit payments, including all amounts required to credit interest to the reserve for employee contributions. If the Retirement Board determines the balance in the reserve for expenses and undistributed income is more than sufficient to cover current charges to the reserve, all of any part of the excess may be used to provide contingency reserves or to meet special requirements of the other reserve accounts of the retirement system. If the balance in the reserve for expenses and undistributed income is insufficient to meet the current charges to the account, the amount of the insufficiency shall be transferred from the reserve for employer contributions and benefit payments. (2) There shall be paid from the reserve the expenses for the administration of the retirement system. (3) Effective with the system’s fiscal year ending December 31, 1998, the reserve for undistributed investment income and the reserve for administrative expenses account shall be consolidated into the Section 50 Reserve for Expenses and Undistributed Income. All references in this Plan to the reserve for undistributed investment income shall be deemed to be references to the consolidated Section 50 Reserve. History: 1984 PA 427, Eff. Jan. 2, 1985, and Plan Document of 1996. Note: Language in subsection (1) from former section 50, as revised; language in (2) from former section 51, as revised; language in (3) added; and revised section heading by Board action of October 22, 1998, with immediate effect. MERS Plan Doc: Revised as of May 13, 2009 6-4 . Sec. 51. Expenses for Administration of Retirement System; Payment. Effective with the system’s fiscal year ending December 31, 1998, the reserve for administrative expenses account shall be consolidated into the Section 50 Reserve for Expenses and Undistributed Income. All references in this Plan to the reserve for administrative expenses account shall be deemed to be references to the consolidated Section 50 Reserve. History: 1984 PA 427, Eff. Jan. 2, 1985, and Plan Document of 1996. Note: Language from former section 51 incorporated into section 50(1)(b) as revised, by Board action of October 22, 1998, with immediate effect. Sec. 52. Allocation of Undistributed Investment Income. The retirement system shall at least annually allocate all or a portion of undistributed investment income to the reserve for employer contributions and benefit payments, including all amounts required to credit interest to the individual balances in the reserve for employee contributions, and on the aggregate balance in the reserve for excess casualty experience. The amounts allocated shall be charged to the reserve for expenses and undistributed investment income. The allocation rates shall be determined by the Retirement Board. Allocation rates may vary by reserve account but shall be uniformly applied to each subaccount within a reserve account. Allocations to the reserve for employer contributions and benefit payments shall apply only to subaccounts of participating municipalities and participating courts on the date the allocation is adopted by the Retirement Board. Before accumulated contributions are paid under section 35, the retirement system may allocate the portion of investment earnings attributable to the accumulated contributions for the number of complete months between the date that investment earnings were last allocated under this section and the date the accumulated contributions are paid. History: 1992 PA 63, Eff. May 22, 1992, and Plan Document of 1996. Note: Bold text added by Board action of October 22, 1998, with immediate effect, to conform to revisions in sections 47, 48, 50 and 51. End of Article VI. MERS Plan Doc: Revised as of May 13, 2009 6-5 . ARTICLE VII. MISCELLANEOUS. Sec. 53. Rights Neither Subject to Process of Law Nor Assignable; Exceptions; Limitation; Right of Setoff; Transfers of Money and Assets to Another Retirement System. (1) The right of an individual to a retirement allowance, to the return of accumulated contributions, the retirement allowance itself, any other right accrued or accruing to an individual under this Plan, and any money belonging to the retirement system is not subject to execution, garnishment, attachment, the operation of bankruptcy or insolvency law, or any other process of law whatsoever and is unassignable, except as is otherwise specifically provided in this Plan. (2) The right of an individual to a retirement allowance, to the return of accumulated contributions, the retirement allowance itself, or any other benefit under this Plan is subject to award by a court pursuant to section 18 of chapter 84 of the Revised Statutes of 1846, being section 552.18 of the Michigan Compiled Laws, and to any other order of a court pertaining to alimony or child support. The right of an individual to a retirement allowance, to the return of accumulated contributions, the retirement allowance itself, or any other benefit under this Plan is subject to an eligible domestic relations order under the Eligible Domestic Relations Order Act. However, this subsection does not permit or require a benefit to be paid or to be provided that is not otherwise available under the terms of this Plan. (3) If an award or order described in subsection (2) requires the retirement system to withhold payment of a pension, deferred pension, accumulated contributions, or other benefit from the person to whom it is due or requires the retirement system to make payment or requires the person to request that the retirement system make payment of a pension, deferred pension, accumulated contributions, or other benefit, for the purpose of meeting the person's obligations to a spouse, former spouse or child, as provided in subsection (2), the withholding or payment provisions of the award or order shall be effective only against such amounts as they become payable to the person receiving a retirement allowance unless otherwise provided in an eligible domestic relations order under the Eligible Domestic Relations Order Act. The limitations contained in this subsection do not apply to the accumulated contributions of a person who terminates employment before acquiring a vested member status. (4) The retirement system shall have the right of setoff to recover overpayments made by the retirement system and to satisfy any claim arising from embezzlement or fraud by a member, retirant, or beneficiary. A transfer of money and assets to another retirement system authorized by an affirmative vote by a majority of the members on the municipality's governing body is not a violation of this section. History: 1991 PA 50, Eff. June 27, 1991, and Plan Document of 1996. Sec. 54. Correction of Errors in Records; Recovery of Overpayments; Making up Underpayments. The retirement system shall correct errors in the records of the retirement system. The retirement system shall seek to recover any overpayments, and shall make up any underpayments, which have been made. The recovery of overpayments may be accomplished by reducing the amount of future payments so that the actuarial present value of actual payments to the recipient is equal to the actuarial present value of the payments to which the recipient was correctly entitled. History: 1984 PA 427, Eff. Jan. 2, 1985, and Plan Document of 1996. MERS Plan Doc: Revised as of May 13, 2009 7-1 . Sec. 55. Intent; Retirement System as Qualified Pension Plan and Trust as Exempt Organization; Administration; Employer-financed Benefit Limitations; Annual Adjustment; Use and Investment of Assets; Return of Post-Tax Member Contributions; Beginning Date of Distributions; Termination of Participation in Retirement System; Election to Rollover to Retirement Plan; Interest Rate; Compliance with Section 415 of Internal Revenue Code and Regulations. (1) This section is enacted pursuant to federal law that imposes certain administrative requirements and benefit limitations for qualified governmental plans. The Retirement Board intends that the retirement system be a qualified pension plan under section 401 of the Internal Revenue Code and that the trust be an exempt organization under section 501 of the Internal Revenue Code. The Retirement Board shall administer the retirement system to fulfill this intent. (2) Notwithstanding any other provision of this Plan, the retirement system shall be administered in compliance with the provisions of section 415 of the Internal Revenue Code and revenue service regulations under that section that are applicable to governmental plans. If there is a conflict between this section and another section of this Plan, this section prevails. (3) The annual benefit otherwise payable to a member at any time shall not exceed the maximum permissible amount under section 415(b) of the Internal Revenue Code. Except as otherwise provided in this section, benefits provided by the retirement system shall not exceed the dollar limit in effect under Section 415(b)(1)(A) of the Internal Revenue Code. This limitation is subject to the following conditions: (a) The dollar limit must be reduced where a member has fewer than ten (10) years of participation in the Plan, when retirement benefits under the Plan commence. This adjustment is made by multiplying the dollar limit by a fraction: (i) the numerator of which is the number of years (or part thereof) of participation in the Plan as of, and including, the current limitation year, and (ii) the denominator of which is 10. If the $10,000 minimum benefit under section 415(b)(4) is applicable, that dollar amount must be reduced where a member has fewer than ten (10) years of service with the employer at the time the member begins to receive retirement benefits under the Plan. This adjustment is made by multiplying the $10,000 minimum benefit by a fraction: (i) the numerator of which is the number of years (or part thereof) of service with the employer as of, and including the current limitation year, and (ii) the denominator of which is 10. (b) If benefits in any form other than a straight life annuity is selected (other than Form of Payment II, IIA, or III with a spouse as named survivor beneficiary) or if the benefit as determined includes after-tax employee contributions or rollovers, then the benefit to be tested under this Section must be adjusted to an actuarial equivalent straight life annuity, beginning at the same age. For limitation years beginning on or after January 1, 1995, the actuarially equivalent straight life annuity for purposes of applying the limitations under section 415(b) to benefits that are not subject to section 417(e)(3) is equal to the greater of (i) the equivalent annual benefit computed using the interest rate and mortality table, or tabular factor, specified in the Plan for actuarial equivalence for the particular form of benefit payable, or (ii) the equivalent annual benefit computed using a 5 percent interest rate assumptions and the applicable mortality table. The applicable mortality table is the mortality table described in Rev. Rul. 95-6. The annual benefit does not include any benefits attributable to employee contributions or rollover contributions, or assets transferred from a qualified plan that was not maintained by the employer. MERS Plan Doc: Revised as of May 13, 2009 7-2 . (c) For limitation years beginning on or after January 1, 1995, if the benefit of a member begins before age 62, the defined benefit dollar limitation applicable to the member at such earlier age is an annual benefit payable in the form of a straight life annuity beginning at the earlier age that is the actuarial equivalent of the defined benefit dollar limitation applicable to the member at age 62 (adjusted under (a) above, if required). The defined benefit dollar limitation applicable at an age prior to age 62 is determined as the lesser of (i) the equivalent amount computed using the interest rate and mortality table (or tabular factor) used in the Plan for actuarial equivalence for early retirement benefits, or (ii) the actuarial equivalent (at such age) of the defined benefit dollar limitation computed the actuarial equivalent (at such age) of the defined benefit dollar limitation computed using a 5 percent interest rate and the applicable mortality table. Any decrease in the defined benefit dollar limitation determined in accordance with this paragraph (c) shall not reflect a mortality decrement if benefits are not forfeited upon the death of the member. If any benefits are forfeited upon death, the full mortality decrement is taken into account. (d) If the benefit of a member begins after the member attains age 65, the defined benefit dollar limitation applicable to the member at the later age is the annual benefit payable in the form of a straight life annuity beginning at the later age that is actuarially equivalent to the defined benefit dollar limitation applicable to the member at age 65 (adjusted under (a) above, if required). The actuarial equivalent of the defined benefit dollar limitation applicable at an age after age 65 is determined as the lesser of (i) the equivalent amount computed using the interest rate and mortality table (or tabular factor) used in the Plan for actuarial equivalence for late retirement benefits, or (ii) the actuarial equivalent (at such age) of the defined benefit dollar limitation computed using a 5 percent interest rate assumption and the applicable mortality table. (4) Annual additions to any member’s account shall not exceed the limit specified in section 415(c). For years beginning on or before December 31, 2001 the limit is the lesser of 25% of the member’s compensation or $30,000, as adjusted for cost-of-living increases under subsection (5). For years beginning after December 31, 2001, the limit is the lesser of 100% of the member’s compensation or $40,000, as adjusted for cost-of-living increases under subsection (5). This limit subject to the following definitions and conditions: (a) For limitation years beginning after December 31, 1997, compensation paid or made available during such limitation year shall include any elective deferral (as defined in Code section 401(g)(3), and any amount which is contributed or deferred by the employer at the election of the member and which is not includible in gross income of the employee by reason of section 125 or 457. For Plan and limitation years beginning on and after January 1, 2001, compensation paid or made available during such plan and limitation years shall include elective amounts that are not includable in the gross income of the member by reason of section 132(f)(4) of the Internal Revenue Code. (b) All defined contribution plans of an employer shall be treated as one defined contribution plan for the purposes of the limitations under section 415(c). (c) “Annual Additions” are defined by Treasury Regulation Section 1.415-6(b). For defined benefit plan purposes, annual additions generally include after-tax mandatory and voluntary employee contributions. Excluded from the definition of annual additions are picked-up contributions to the defined benefit plan, repayments of refunded contributions, rollovers, and trustee-to-trustee transfers. MERS Plan Doc: Revised as of May 13, 2009 7-3 . (5) Section 415(d) of the Internal Revenue Code requires the Commissioner of Internal Revenue to adjust the dollar limit described in subsections (3) and (4) to reflect cost of living increases. These subsections shall be administered using the limitations applicable to each calendar year as adjusted by the Commissioner of Internal Revenue under section 415(d) of the Internal Revenue Code. The retirement system shall adjust the benefits subject to the limitation each year to conform with the adjusted limitation. (6) The assets of the retirement system shall be held and invested for the sole purpose of meeting the legitimate obligations of the retirement system and shall not be used for any other purpose. The assets shall not be used for or diverted to a purpose other than for the exclusive benefit of the members, vested former members, retirants, and beneficiaries before satisfaction of all retirement system liabilities. (7) The retirement system shall return post-tax member contributions made by a member and received by the retirement system to a member upon retirement, pursuant to internal revenue service regulations and approved internal revenue service exclusion ratio tables. For Benefit Program DROP+ authorized under section 10(6), the interest rate and mortality table used for calculating the portion of the lump sum attributable to a member's post-tax member contributions shall be as provided under subsection (11) of this section 55. (8) The required beginning date for retirement allowances and other distributions shall not be later than the later of (i) April 1 of the calendar year following the calendar year in which the employee attains age 70-l/2 or (ii) April 1 of the calendar year following the calendar year in which the employee retires. (9) If a participating municipality or participating court discontinues participation in the retirement system, or if the retirement system is terminated, the interest of the members, vested former members, retirants, and beneficiaries in the plan is nonforfeitable to the extent funded as described in section 411(d)(3) of the Internal Revenue Code and the related Internal Revenue Service regulations applicable to governmental plans. (10) Notwithstanding any other provision of this Plan to the contrary that would limit a distributee’s election under this Plan, a distributee may elect, at the time and in the 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. This subsection applies to distributions made on or after January 1, 1993. (11) For purposes of determining actuarial equivalent retirement allowances under section 23(2)(b) through (e), the actuarially assumed interest rate shall be 8% as of December 31, 2001, with utilization of the 1994 Group Annuity Mortality Table. (12) Any distribution made under the Plan shall be made in accordance with section 401(a)(9) of the Code and the regulations issued thereunder. (13) Notwithstanding any other provision of this Plan, the compensation of a member of the retirement system shall be taken into account for any year under the retirement system only to the extent that it does not exceed the compensation limit established in section 401(a)(17) of the Internal Revenue Code, as adjusted for cost-of-living increases in accordance with section 401(a)(17)(B) of the Internal Revenue Code. For purposes of determining benefit accruals in a plan year beginning after December 31, 2001, compensation for any prior determination period shall be limited to $200,000. This subsection applies only to any person who first becomes a member of the retirement system on or after October 1, 1996 (“noneligible participants”), and shall be effective for noneligible participants as of October 1, 1996. MERS Plan Doc: Revised as of May 13, 2009 7-4 . (14) Notwithstanding any other provision of this Plan, contributions, benefits, and service credit with respect to qualified military service will be provided under the retirement system in accordance with section 414(u) of the Internal Revenue Code. This subsection applies to all qualified military service on or after December 12, 1994. History: 1995 PA 191, Eff. Nov. 7, 1995, and Plan Document of 1996. Note 1: On July 8, 1997, the Internal Revenue Service issued its Letter of Favorable Determination that the Plan Document of 1996 conforms to the provisions of the Internal Revenue Code applicable to governmental plans. Note 2: Subsection (9) originally subsection (10) as amended by Board action of February 13, 2002, with immediate effect. See also Plan section 5, note 3. Note 3: Revisions to subsections (2)—(5), (10), (12) and (13); renumbering of former (4)—(12); and addition of subsections (14) and (15), to comply with federal law changes (the Economic Growth and Tax Relief Reconciliation Act of 2001); by Board action of May 8, 2002, with retroactive effective date of January 1, 2002. Note 4: The Board took the following action on August 14, 2002, to be effective January 1, 2002 (unless a different effective date is otherwise specified): combined in subsection (2) language formerly appearing in subsections (2)—(4), renumbered former subsection (5) as (3), and restated or added language in (2) and (3), pursuant to the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001; renumbered subsections (6) to (13) as subsections (4) to (11); and renumbered former subsection (14) as subsection (12), pursuant to the provisions of Omnibus Budget Reconciliation Act of 1993; renumbered former subsection (15) as subsection (13). Note 5: Pursuant to MERS’ 2002 IRS Favorable Determination Request, on March 10, 2004, the Board amended section 55, with immediate effect, as follows (new language in bold): subsection (2) contains language formerly in (11); in (3), formerly (2), language struck and language added throughout; (4) new language; (5), formerly (3) with revision noted; former subsections (4)—(10) renumbered as (6)—(12), with revisions in (8) and (11); and former (12)—(13) renumbered as (13)—(14). Note 6: Second sentence in subsection (7) added, pursuant to June 15, 2005 IRS Letter of Favorable Determination on MERS Plan Document (see note 5): by Board action of September 20, 2005, with immediate effect. Sec. 55A. Qualified Excess Benefit Arrangement. (1) This section is enacted pursuant to section 415(m) of the Internal Revenue Code and 2002 PA 100, the Michigan Public Employee Retirement Benefit Protection Act. (2) A qualified excess benefit arrangement (QEBA) is established. The arrangement shall be governed by a separate plan document and trust, executed by the Retirement Board. (3) The amount of any retirement allowance that would exceed the limitations imposed by section 415 of the Internal Revenue Code, as set forth in section 55 of the Plan, shall be paid from the QEBA in accordance with necessary and appropriate procedures established by the Retirement Board for the administration of the QEBA. (4) The QEBA shall be a separate portion of the Plan. The QEBA is subject to the following requirements: (a) The QEBA shall be maintained solely for the purpose of providing to retirants and beneficiaries that part of the retirant's or beneficiary's retirement allowance otherwise payable under the terms of the Plan, but which exceed the limitations imposed by section 415 of the Internal Revenue Code, as set forth in section 55 of the Plan; and MERS Plan Doc: Revised as of May 13, 2009 7-5 . (b) Retirants and beneficiaries do not have an election, directly or indirectly, to defer compensation to the QEBA. Note 1: Section 55A added by Board action of March 12, 2003, with immediate effect. Note 2. On December 15, 2003, the Internal Revenue Service issued its Private Letter Ruling approving the QEBA established by Section 55A. Sec. 56. Severability. This Plan shall be governed by the laws of the state of Michigan. Wherever necessary, pronouns of any gender shall be deemed synonymous, as shall singular and plural pronouns. The table of contents and the hearings of sections and paragraphs are included solely for convenience and shall not affect, or be used in connection with, the interpretation of this Plan. If any section or part of a section of this Plan is for any reason held to be invalid or unconstitutional, such holding shall not be construed as affecting the validity of the remaining sections of the Plan or the Plan in its entirety. History: 1996 PA 220, Eff. Aug. 15, 1996, and Plan Document of 1996. Sec. 57. Repeal. This Plan Document shall repeal in its entirety, and replace, the MERS Plan as of August 15, 1996. Pursuant to 1996 PA 220, section 36(2)(a), MCL 38.1536(2)(a), the Municipal Employees' Retirement System Plan Document of 1996 contains retirement system provisions that do not differ materially from the defined benefit provisions that were in effect under 1984 PA 427, as amended, as of 11:59 p.m. on August 14, 1996 (the date preceding the certification date). This 1996 Plan Document establishes additional programs "including, but not limited to, defined benefit and defined contribution programs" as set forth in section 36 of 1996 PA 220. All resolutions and policies of the Retirement Board previously enacted which are inconsistent with the provisions of this 1996 Plan Document are hereby also repealed to the extent of such inconsistency. History: 1996 PA 220, Eff. Aug. 15, 1996, and Plan Document of 1996. End of Article VII. MERS Plan Doc: Revised as of May 13, 2009 7-6 . ARTICLE VIII. ESTABLISHMENT OF 401(h) ACCOUNT FOR MERS PARTICIPATING EMPLOYERS. Sec. 60. Authorization and Establishment. The Board is authorized by MCL 38.1536(2)(a) to establish additional programs within MERS, including ancillary benefits, health and welfare benefits, and other post-employment benefits. A 401(h) Account shall be established for each MERS Participating Employer that adopts a 401(h) Account Uniform Resolution and a 401(h) Account Participation Agreement specifying optional terms of the 401(h) Account. Each 401(h) Account shall be a separate account within the Trust Fund and shall be established pursuant to Internal Revenue Code Section 401(h). The assets held in each 401(h) Account shall be accounted for separately from all assets of the Trust Fund not held in any 401(h) Account. However, 401(h) Account assets may be commingled with other assets of the Trust Fund for investment purposes. Investment earnings and expenses will be allocated on a reasonable basis. The purpose of each such 401(h) Account shall be to provide a funding structure for the payment of certain Medical Care costs as provided in the applicable 401(h) Account Participation Agreement. Note: Section 60, Article VIII, added by Board action of November 10, 2004, with immediate effect. Sec. 61. Defined Terms. (1) “Covered Group” means any class or group of employees of a Participating Employer so designated by the Participating Employer in the Participation Agreement. (2) “Eligible Employee” means any employee of a Participating Employer so designated by the Participating Employer in the Participation Agreement. (3) “Medical Care” has the meaning set forth in Section 213(d)(1) of the Internal Revenue Code. (4) “Participant(s)” means any Eligible Employee of any Participating Employer, on whose behalf rights to benefits from the 401(h) Account become payable upon his or her receipt of a retirement benefit from the Participating Employer. (5) “Participating Employer” means any participating court or participating municipality which chooses to establish a 401(h) Account pursuant to this Article VIII. Note: Section 61, Article VIII, added by Board action of November 10, 2004, with immediate effect. Sec. 62. Section 401(h) Account Participation. Any Participating Employer may choose to establish a 401(h) Account pursuant to this Article. The Participating Employer shall adopt the 401(h) Account Uniform Resolution and 401(h) Account Participation Agreement and provide the same to MERS. A 401(h) Account shall not be established for any Participating Employer until MERS receives such duly adopted and executed 401(h) Account Uniform Resolution and 401(h) Account Participation Agreement. Note: Section 62, Article VIII, added by Board action of November 10, 2004, with immediate effect. MERS Plan Doc: Revised as of May 13, 2009 8-1 . Sec. 63. Mandatory Terms. Any 401(h) Account established under this section must comply with the following conditions: (1) Trust Status. (a) All assets held in the 401(h) Account, including all contributions received pursuant to the Plan Document and the Participation Agreement, all property and rights acquired or purchased with such amounts and all income attributable to such amounts, property or rights shall be held in trust for the exclusive benefit of Participants in the Participating Employer’s 401(h) Account. (b) To the extent required by Code Section 401(h), all contributions received pursuant to the Plan Document and the Participation Agreement, all property and rights acquired or purchased with such amounts and all income attributable to such amounts, property or rights held as part of the 401(h) Account shall be held, managed, invested and distributed as part of the Trust Fund in accordance with the provisions of the Plan Document and the Participation Agreement. (2) Discrimination. The 401(h) Account does not permit any condition for eligibility or benefits that would discriminate in favor of any class of Participants to the extent such discrimination is prohibited by applicable law. (3) Non-Diversion and Reversion Rules. (a) At no time prior to the satisfaction of all liabilities under the 401(h) Account or termination of the 401(h) Account shall any assets in the 401(h) Account be used for, or diverted to, any purpose other than the providing of the benefits under this Article VIII and the payment of administrative expenses. Assets in the 401(h) Account may not be used for retirement or disability benefits or any other purpose for which other assets held in the Trust Fund are used. (b) As provided by Code Section 401(h)(5), upon the satisfaction of all liabilities under law and the 401(h) Account, any remaining amounts shall returned to the Participating Employer. (4) Amendment for Qualification of Plan. It is the intent of the Board that the 401(h) Account shall be and remain a Code Section 401(h) account. The Plan Administrator shall promptly submit the Plan Document and the Participation Agreement to the Internal Revenue Service for approval under the Code, and all expenses incident thereto shall be borne by the 401(h) Account. The Board may make any modifications, alterations, or amendments to the Plan Document, Participation Agreement or Plan operations necessary to obtain and retain approval of the Secretary of the Treasury or the Secretary's delegate of the 401(h) Account as qualified under the provisions of the Code or other federal legislation, as now in effect or hereafter enacted, and the regulations issued thereunder. Any modification, alteration, or amendment of the Plan Document or the Participation Agreement, made in accordance with this Section, may be made retroactively, if necessary or appropriate. A certified copy of the resolution of the Board making such amendment shall be delivered to the Plan Administrator, and the Plan Document or Participation Agreement shall be amended in the manner and effective as of the date set forth in such resolution. The Board and the Participating Employer, Eligible Employees, Participants, their Spouses and Dependents, and all others having any interest under the 401(h) Account shall be bound thereby. MERS Plan Doc: Revised as of May 13, 2009 8-2 . (5) Coverage. Benefits from the 401(h) Account may only be paid to a Participant, a Participant’s Spouse (an individual to whom the Participant is married as determined under Michigan law) and Dependents (as defined in Code Section 152) for Medical Care specified in the applicable Participation Agreement. A Participant (and his or her Spouse and Dependents) has no rights to benefits from the 401(h) Account until he or she becomes a Retired Participant. (6) Benefits Payable from the 401(h) Account. (a) Benefits payable from a 401(h) Account shall include only payments or reimbursements for Medical Care (as defined in Code Section 213(d)(1). Benefits may be further limited by the terms of the Participation Agreement of a Participating Employer, which shall specify the specific benefits to be paid from a 401(h) Account. (b) The Board shall administer the DB Component, if any, of each 401(h) Account on an actuarially sound basis. (c) Medical Care payments shall only be paid pursuant to an application. (d) No refunds of contributions shall be made. All contributions remain in the 401(h) Account until used for Medical Care payments. (e) Reimbursements may not be made for any expense for which the Retired Participant or his or her Spouse or Dependents receive, or are eligible to receive, payment or reimbursement from another source. (f) In order to receive benefits from the 401(h) Account, the Retired Participant must agree to provide appropriate documentation of the expenditure, subject to the following conditions: (i) In the case of premiums for insurance provided by the Retired Participant’s employer, a certification of coverage by the employer is required before payments may be made directly to the insurance provider. (ii) For Medicare B premiums, the Retired Participant must provide evidence of coverage in order for direct payments to be made (iii) Other Medical Care reimbursements shall be made to the Retired Participant only upon receipt of verified claims or pursuant to the certification procedure. (7) Protection of Benefits. (a) A Retired Participant may assign the payment of benefits from the 401(h) Account in order to pay for Medical Care insurance if otherwise permitted by the applicable Participation Agreement. With this exception, no Eligible Employee or his or her Spouse or Dependent, or designee, may commute, sell, assign, transfer or otherwise convey the right to receive any payment under the 401(h) Account. (b) The rights of Eligible Employees or their Spouses or Dependents under this Article shall not be subject to the rights of their creditors, and shall be exempt from execution, attachment, prior assignment or any other judicial relief or order for the benefit of creditors or other third person, including a domestic relations order. (8) Subordination of Contributions. MERS Plan Doc: Revised as of May 13, 2009 8-3 . (a) Contributions to the 401(h) Account must be subordinate to the contributions to the System for retirement benefits. At no time shall contributions to the 401(h) Account be in excess of twenty-five percent (25%) of the total aggregate actual contributions made to the System Trust Fund (not including contributions to fund past service credits). The Plan Administrator shall annually determine whether the twenty-five percent (25%) test has been met. If at any time the 401(h) Account contributions would exceed the twenty-five percent (25%) test, the excess amount of contributions shall be directed first to the Pension Assets. (b) Forfeitures shall not be allocated to individual accounts under any Participating Employer’s 401(h) Account, but shall be used for account expenses. (9) Treatment of Contributions for 415(c) Purposes. Contributions shall be treated as an annual addition to a defined contribution plan for purposes of Code Section 415(c) in accordance with Code Section 415(l). Note: Section 63, Article VIII, added by Board action of November 10, 2004, with immediate effect. Sec. 64. Optional Terms. (1) DB Component. A Participating Employer may elect a defined benefit component. A Participating Employer which so elects shall be subject to the following provisions: (a) For each Participating Employer which so elects, the Board will establish in the 401(h) Account a sub-account to be known as the DB Component. The DB Component shall be credited with the contributions made by the Participating Employer, contributions made by Eligible Employees (which shall be deposited in individual accounts within the DB Component), and all investments, receipts, disbursements, and other transactions thereunder; which amounts shall be used solely for the payment of benefits, expenses and other charges properly allocable to the DB Component and shall not be used for the payment of benefits, expenses or other charges properly allocable to any other purpose. (b) As authorized by law, and if so elected in the Participation Agreement, the Board shall pay monthly to each Retired Participant who is eligible for medical insurance coverage under part B of "The Social Security Amendments of 1965," 79 Stat. 301, 42 U.S.C.A. 1395j, as amended, an amount established by Board rule that does not exceed the basic premium for such coverage. (c) As authorized by law, and if so elected in the Participation Agreement, the Board shall pay monthly to each Retired Participant an amount determined by the Participation Agreement for Medical Care as defined by the Participation Agreement. (2) DC Component. A Participating Employer may elect a defined contribution component. A Participating Employer which so elects shall be subject to the following provisions. (a) For each Participating Employer which so elects, the Board will establish in the 401(h) Account a sub-account to be known as the DC Component. (b) Within the DC Component, separate accounts shall be maintained reflecting the contributions made by each Participant and all investments, receipts, disbursements, and other transactions thereunder; which amounts shall be used solely for the payment MERS Plan Doc: Revised as of May 13, 2009 8-4 . of benefits, expenses and other charges properly allocable to each Participant and shall not be used for the payment of benefits, expenses or other charges properly allocable to any other purpose. (c) A Retired Participant’s DC Component account balance may be used for the purpose of funding any Medical Care costs specified in the Participation Agreement for a Retired Participant or his or her Spouse or Dependents. (d) The Board, in its sole discretion, may by Rule permit Participants participating in the DC Component to direct the investment of their DC Component Account among Investment Funds selected by the Board. The Board may by Rule establish one or more default options for a Participant that does not have a valid investment direction on file with the System. The Board may establish the default option based upon various factors, including but not limited to, market value, stability and rate of return. Any Rule adopted under this Section may provide for the setting and changing of administrative and investment fees. (3) Employee Contributions: DB Component or DC Component. (a) The Participation Agreement may require mandatory employee contributions and/or may establish a procedure for a one-time elective employee contribution. (b) Employee Contributions shall be made by payroll deduction from the Salary of the Participants, unless the Participant’s Employer elects to pay all or a portion of his or her contribution (c) The Participating Employer may elect to pick up all of the Participant's contributions in the Participation Agreement. The contributions so picked up shall be treated as Employer contributions pursuant to Internal Revenue Code Section 414(h)(2). The Employer shall pay these picked-up contributions directly to the System, instead of paying such amounts to the Participants, and such contributions shall be paid from the same funds that are used in paying salaries to the Participants. Such contributions, although designated as employee contributions, shall be paid by the Employer in lieu of contributions by Participants. Participants may not elect to receive such contributions directly instead of having them paid by the Participating Employer to the 401(h) Account. Employee contributions so picked up shall be treated for all purposes of the Plan Document and Michigan law, other than federal tax law, in the same manner as employee contributions made before the date picked up. (4) The Participation Agreement may provide for Employer Contributions. (5) A Participating Employer may identify Covered Groups in the Participation Agreement. (6) A Participating Employer may specify the types of Medical Care covered in the Participation Agreement. However, Medical Care must be payments or reimbursement for health benefits as defined by Code Section 213 and excludable from income under Code Sections 105 and 106, as amended from time to time. Medical Care excludes health benefits provided by Social Security, Medicaid, Medicare, or any other medical and health insurance contracts covering the Retired Participants, their Spouse and Dependents, and the reimbursements may not be made for items payable by any other insurance contract. The permissible types of Medical Care are: MERS Plan Doc: Revised as of May 13, 2009 8-5 . (a) To any Retired Participant who is eligible for medical insurance coverage under part B of “The Social Security Amendments of 1965,” 79 Stat. 301, 42 U.S.C.A. 1395j, as amended. (b) Premiums paid for any group health insurance plan provided by the Participating Employer. A “health insurance plan” means an individual or group accident or health insurance policy, but does not include dental or vision coverage. The term includes, but is not limited to, a hospital policy or certificate, a medical policy or certificate, a service policy or certificate, a hospital or medical service plan contract, a health maintenance organization, and a preferred provider organization. (c) Premiums paid for a health insurance plan for single, two-party, or family coverage for Medical Care for a Retired Participant. A “health insurance plan” means an individual or group accident or health insurance policy, and may include dental or vision coverage. The term includes, but is not limited to, a hospital policy or certificate, a medical policy or certificate, a service policy or certificate, a hospital or medical service plan contract, a health maintenance organization, and a preferred provider organization. (d) Payment or reimbursement of amounts (i) for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body, or (ii) for transportation primarily for and essential to medical care. Medical Care must be payments or reimbursement for health benefits as defined by Code Section 213 and excludable from income under Code Section 105 and 106, as amended from time to time. Medical Care excludes health benefits provided by Social Security, Medicaid, Medicare, or any other medical and health insurance contracts covering the Retired Participant, his Spouse and Dependents, and the reimbursements may not be made for any item covered by any other insurance contract. Note: Section 64, Article VIII, added by Board action of November 10, 2004, with immediate effect. End of Article VIII. MERS Plan Doc: Revised as of May 13, 2009 8-6 . APPENDIX TO PLAN DOCUMENT Page • Procedure for Review of Formal Requests for Changes to MERS Plan Document ................................................................................................................. A-1 • Former Section 38.1506 .................................................................................................... B-1 • Former Section 38.1509 .................................................................................................... B-2 • Former Section 19A .......................................................................................................... B-3 MERS Plan Doc: Revised as of May 13, 2009 . REVISED PROCEDURE FOR REVIEW OF FORMAL REQUESTS FOR CHANGES TO MERS PLAN DOCUMENT Approved by the Retirement Board March 8, 2005. (Adopted January 22, 1997, revised September 21, 2004) The purpose of this policy is to ensure a consistent pattern of handling the review of proposed changes to the Plan Document. With the enactment of PA 220 of 1996, the MERS Board now has the exclusive authority to determine the provisions of the retirement system affecting the following: benefit eligibility, benefit programs, contribution amounts, and the election of municipalities, judicial circuit courts, judicial district courts and judicial probate courts to be governed by the provisions of the retirement system. Since it will be necessary to review and make changes to the Plan Document, the Board has established the following guidelines for reviewing the Plan Document on a regular basis for such things as: legislative changes resulting in a need to comply with federal and/or state law, requests received from participating municipalities or courts, or a change or addition to Board policy. • Staff will review and make recommendations to the Board on any changes that need to be made to comply with legislative changes in Federal and State law. • Staff will review and the Chief Executive Officer will make recommendations to the Board on all requests received in the office from participating municipalities or courts. • Upon receipt of a request, staff will notify the requestor by letter of the date the request will be considered by the Board at its next scheduled meeting. The requestor will be advised that they have the opportunity to address the Board regarding their request. • Following Board review, staff will notify the requestor of Board action. • Following Board approval for Plan Document changes, notification will be sent to all member employers within the same month. For changes that the Board determines will likely have a substantial effect on the membership, a comment period of not less than ninety (90) days will be observed before implementation will take place. [Added March 8, 2005.] • Requests received and approved are to be normally implemented on the following January 1, unless there is need for more immediate action. MERS Plan Doc: Revised as of May 13, 2009 Appendix A-1 3-8-05 changepro . LANGUAGE OF FORMER SECTION 38.1506 Credit for certain qualifying service; conditions; crediting payment under subsection (1)(c). Sec. 6. (1) The retirement board shall credit a member for qualifying service in the employ of the United States government, a state, or a political subdivision of a state, if each of the following conditions is satisfied: (a) The governing body of the participating municipality that employs the member adopt a resolution, or the chief judge of the participating court that employs the member issues an administrative order, requesting the retirement board to credit the member with a specific period of qualifying service and files a certified copy of the resolution or administrative order with the retirement system within 10 days after adoption or issuance. (b) The qualifying governmental service was not rendered prior to any break of 180 or more months in the member's employment by the United States government, a state, or a political subdivision of a state. (c) The member pays to the retirement system the amount the participating municipality or participating court may require of the member in consideration for the crediting of qualifying governmental service. The required payment shall not exceed the larger of the following amounts multiplied by the period of qualifying governmental service to be credited the member: (i) Five percent of the member's annual compensation at time of payment. (ii) The member's annual compensation at time of payment multiplied by the percent specified under the member contribution program applicable to the member. (2) For purposes of this section, service is qualifying if it is not and will not be recognized for the purpose of obtaining or increasing a benefit under another retirement system. A member may, qualify service by making an irrevocable forfeiture of all rights in and to the actual or potential benefit from the other retirement system. (3) Service in the armed forces of the United States is not qualifying service and shall not be credited to a member under this section. (4) The payment under subsection (1)(c) shall be credited to the member's individual account in the reserve for employee contributions. Comment: The language above was section 6 of the Municipal Employees Retirement Act of 1984. This section, repealed on August 15, 1996 by 1996 PA 220, enacting section 2, had been last amended by 1989 PA 51. For application of the language of former MCL 38.1506, see Section 6(4) of the Plan Document, and accompanying Notes 1 and 2. MERS Plan Doc: Revised as of May 13, 2009 Appendix B-1 former lang . LANGUAGE OF FORMER SECTION 38.1509 Credited service for periods of continuous active duty lasting 30 or more days; conditions. Sec. 9. A member who enters or entered any armed service of the United States may acquire credited service for periods of continuous active duty lasting 30 or more days, subject to the following conditions: (a) The governing body of the member's participating municipality authorizes the acquisition of credited service under this section by an affirmative vote by a majority of its members or the chief judge of the member's participating court authorized the acquisition of credited service under this section by an administrative order. (b) The member has at least 10 years of credited service, not including any credited service acquired under this section and section 8 [former MCL 38.1508, now Plan Document Section 9]. (c) The member pays the retirement system 5% of the member's annual compensation multiplied by the period of credited service being claimed. Annual compensation, for the purpose of this condition, means the aggregate amount of compensation paid the member during the 4 most recent calendar quarters for each of which the member was credited 3/12 of a year of credited service. (d) Fractional months of armed service shall not be recognized for the purposes of this section. (e) Armed service credited a member under section 8 [now Plan Document Section 9] shall not be the basis of credited service under this section. (f) Armed service credited a member under this section shall not exceed either 5 years or the difference between 6 years and the armed service credited the member under section 8 [now Plan Document Section 9]. (g) Credited service shall not be granted for periods of armed service that are or could be used for obtaining or increasing a benefit from another retirement system. Comment: The language above was section 9 of the Municipal Employees Retirement Act of 1984. This section, repealed on August 15, 1996 by 1996 PA 220, enacting section 2, had been last amended by 1988 PA 500. For application of the language of former MCL 38.1509, see section 6(4) of the Plan Document, and accompanying notes 1 and 2. MERS Plan Doc: Revised as of May 13, 2009 Appendix B-2 former lang . LANGUAGE OF FORMER SECTION 19A Sec. 19A. Benefit Program DC; Adoption; Contribution; Distribution. (1) This section applies to a member covered by Benefit Program DC. Unless specifically restricted by this Plan or the Retirement Board, a participating municipality or participating court is authorized to offer any rights, benefits, or features authorized for defined contribution plans under the Internal Revenue Code of 1986, as amended. (2) In the resolution adopting Benefit Program DC, the member's participating municipality or participating court shall provide for the contribution of a percentage of the member's compensation to the retirement system. The participating municipality or participating court shall choose the percentage from the available contribution programs. The contribution programs available for selection are any percentage of compensation from 1% to the maximum percentage allowed by federal law, in increments of 0.1%. The participating municipality or participating court shall choose the same contribution rate for all members in the same benefit program coverage classification. The Retirement Board shall determine the timing and mechanism for the remittance of employer contributions. The Retirement Board may establish a program for making transfers from the reserve for employer contributions to the reserve for defined contribution plan for the purpose of meeting all or a part of the participating municipality's or participating court's contribution under this subsection. (3) A member may voluntarily contribute additional amounts to his or her individual account in the reserve for defined contribution plan to the extent allowed by federal law and subject to procedures established by the Retirement Board. A member may roll over qualified distributions from other qualified retirement plans into this retirement system, to the extent allowed by federal law. A member is immediately 100% vested in the member's accumulated balance. (4) The Retirement Board may contract with private investment managers to invest the assets in the reserve for defined contribution plan. A member, vested former member, and beneficiary may direct the investment of the individual's accumulated balance to 1 or more of the available categories of investment provided by the investment managers. At least 3 categories of investment shall be made available to members, vested former members, and beneficiaries as follows: (a) Short-term securities. (b) Fixed income securities. (c) Equity securities. (5) The Retirement Board shall determine the investment category for the accumulated balance of a member, vested former member, or beneficiary, if that individual does not choose to direct his or her own investments under subsection (4). (6) (a) Upon the death of a member or vested former member, the accumulated balance of the deceased member or deceased vested former member is considered to belong to the beneficiary or beneficiaries, if any, nominated by the deceased member or deceased vested former member. (b) To nominate a beneficiary or beneficiaries, a member shall file a written nomination with the Retirement Board, based on procedures established by the Retirement Board. Written consent by the member’s spouse to the beneficiary named is required unless the spouse is beneficiary to 100% of the balance; this requirement may be waived by the Retirement Board if the signature of the member’s spouse cannot be obtained because of extenuating circumstances. (7) Upon termination of membership, a vested former member or a beneficiary, as applicable, shall elect 1 or a combination of several of the following methods of distribution of the vested former member's or beneficiary's accumulated balance, to the extent allowed by federal law and subject to subsection 6(b) and procedures established by the Retirement Board: (a) Lump sum distribution to the vested former member or beneficiary. MERS Plan Doc: Revised as of May 13, 2009 Appendix B-3 former lang . (b) Lump sum direct rollover to another qualified retirement or pension plan, to the extent allowed by federal law. (c) Annuity for the life of the vested former member or beneficiary, or optional forms of annuity as determined by the Retirement Board. (d) No distribution, in which case the accumulated balance shall remain in the retirement system, to the extent allowed by federal law. (8) In the resolution adopting the Benefit Program DC, the participating municipality or participating court may provide an opportunity for current members of the retirement system to elect coverage under Benefit Program DC if each of the following conditions are met: (a) The member's participating municipality or participating court elects under Section 43 or 43A to change the benefit program from a benefit program other than Benefit Program DC to Benefit Program DC, for members in a benefit program coverage classification who are first hired after the effective date of the change. (b) On the effective date of the change to Benefit Program DC, the member is a member of the retirement system and is in the benefit program coverage classification described in subdivision (a). (c) On the date of the resolution adopting Benefit Program DC, the total funded percent of aggregate accrued liabilities and valuation assets of all reserves specified in Table 11 (or successor table [see Table 13]) of the most recent annual actuarial valuation report for the municipality or court is at least sixty percent (60%). (9) The retirement system shall offer 1 opportunity for a member who satisfies the conditions of subsection (8) to elect coverage under Benefit Program DC, and once made, the election is irrevocable. The member shall make the election under this subsection in writing, based on procedures established by the Retirement Board. The Retirement Board shall begin accepting written elections from members on and after the effective date of the change of benefit program pursuant to subsection (8), and shall not accept written elections from members: (a) Earlier than the end of the third month following the month in which the resolution is adopted and received by MERS; and (b) Later than the first day of the first calendar month that is at least 6 months after MERS receipt of the resolution. If the member is married at the time of election, the election is not effective unless the election is signed by the member's spouse, except that this requirement may be waived by the Retirement Board if the signature of the member's spouse cannot be obtained because of extenuating circumstances. (10) A member who makes a written election under subsection (9) shall elect to do all of the following: (a) Cease to be covered by the previous benefit program effective 12:01 a.m. on the first day of the first calendar month that is at least 6 months after the effective date of the change of benefit program. (b) Become covered by Benefit Program DC effective 12:01 a.m. on the first day of the first calendar month that is at least 6 months after the effective date of the change of benefit program. (c) Except as provided in subsection (11), waive all of his or her rights to a retirement allowance or any other benefit provided under the previous benefit program. (11) For each member who, under subsection (9), elects coverage under Benefit Program DC, the Retirement Board shall transfer the following amounts from the reserve for employee contributions and the reserve for employer contributions to the reserve for defined contribution plan: (a) The member's accumulated contributions, if any, as of 12:01 a.m. on the day the member becomes covered by Benefit Program DC shall be transferred from the reserve for employee contributions to the reserve for defined contribution plan. MERS Plan Doc: Revised as of May 13, 2009 Appendix B-4 former lang . (b) Pursuant to procedures established by the Retirement Board, the excess, if any, of the actuarial present value of the accrued benefit associated with the member's coverage under the previous benefit program, over the amount specified in subdivision (a), based upon the funded level percentage selected by the governing body in the MERS Uniform DC Program Resolution (which shall not exceed 100% funded level percentage in any case), shall be transferred from the reserve for employer contributions to the reserve for defined contribution plan. For purposes of this sub-paragraph: (i) The actuarial present value shall be computed as of 12:01 a.m. on the day the member becomes covered by Benefit Program DC and shall be based on the actuarial assumptions adopted by the Retirement Board. (ii) In determining final average compensation there shall not be included any accrued annual leave. (iii) The earliest retirement date (for an unreduced benefit) assumption under the benefit program in effect on the effective date of the change of the benefit program shall be utilized. (iv) For purposes of the actuarial present value calculation, any future benefit otherwise payable under Benefit Program E or E-1 shall be disregarded. (12) Where a member has previously acquired in the employ of any participating municipality or participating court: (a) not less than 1 year of defined benefit service in force with a participating municipality or participating court; (b) eligible credited service where the participating municipality or participating court has adopted the Reciprocal Retirement Act, 1961 PA 88; (c) at least 12 months in which employer contributions by a participating municipality or participating court have been made on behalf of the member under Benefit Program DC, such service shall on the member’s written request to the employer and MERS’ verification of such service be applied toward satisfying the vesting schedule for employer contributions. This requirement shall apply to all adoptions of Benefit Program DC on and after October 1, 2000; where previously adopted, the participating municipality or participating court may adopt this subsection (12) with full effectiveness as of the original defined contribution adoption date for the employer division involved. History: 1996 PA 220, Eff. Aug. 15, 1996, and Plan Document of 1996. Note 1: Subparagraph (8)(c) added by Board action of November 12, 1997, with immediate effect. Note 2: Bold text in subparagraph (11)(b) added by Board action of November 12, 1997, with immediate effect. Note 3: Deletion of prior reference to E-2 in subparagraph (11)(b)(4) by Board action of November 12, 1997, with immediate effect. Note 4: Addition of subsection (12) by Board action of August 23, 2000, with immediate effect. See companion amendments to sections 4(1), 10(1), and 10(4). Note 5: Subsection (8)(c), effective with the December 31, 2001 Annual Valuations, Table 13 contains data formerly found in Table 11. —END OF PLAN DOCUMENT— MERS Plan Doc: Revised as of May 13, 2009 Appendix B-5 former lang © 2000-2004 Manistique.org |