Oklahoma Police Pension and Retirement System : unofficial Oklahoma statutes and administrative rules as amended pertaining to Oklahoma Police Pension and Retirement System as of ...

              OKLAHOMA
POLICE PENSION
AND
RETIREMENT SYSTEM
2011
UNOFFICIAL
OKLAHOMA STATUTES
AND ADMINISTRATIVE RULES AS AMENDED PERTAINING TO OKLAHOMA POLICE PENSION AND RETIREMENT SYSTEM
AS OF JULY 1, 2011 i
OKLAHOMA POLICE PENSION AND RETIREMENT SYSTEM
1001 N.W. 63rd Street, Suite 305
Oklahoma City, Oklahoma 73116-7335
Telephone (405) 840-3555 • FAX (405) 840-8465
1-800-347-6552
www.opprs.ok.gov
BOARD MEMBERS – JULY 2011
The Oklahoma Police Pension and Retirement Board is a thirteen (13) member Board. Seven Board members are elected by members of the System (six are active police officers, and one is a retired member). One Board member is appointed by the Governor, one by the Speaker of the House, one by the President Pro Tempore of the Senate, and one by the President of the Oklahoma Municipal League. The two remaining Board members are the State Insurance Commissioner or the Commissioner's designee and the Director of State Finance or the Director's designee. (See 11 O.S. § 50-103.1)
CHAIRMAN, Charles Kerr
VICE CHAIRMAN, Tom Custer
State Board District 1 Tom Custer, Edmond
State Board District 2 Craig Akard, Lawton
State Board District 3 Rick Smith, Broken Arrow
State Board District 4 Jim Keesee, Norman
State Board District 5 Jeff Cealka, Tulsa
State Board District 6 Randy Scott, Oklahoma City
State Board District 7 W. B. Smith, Retired
Governor Appointee Andy McPherson
Speaker of the House Appointee Charles Kerr
Senate President Pro Tempore Appointee Susan Knight
Oklahoma Municipal League Appointee Tony Davenport
State Insurance Commissioner John Doak
Frank Stone, Designee
Director of State Finance Preston L. Doerflinger
Brandy Manek, Designee
ADMINISTRATION
EXECUTIVE DIRECTOR, Steven K. Snyder
This publication, printed by DPS Printing, is issued by the Oklahoma Police Pension and Retirement System as authorized by Steven K. Snyder, Executive Director. One thousand five hundred (1,500) copies have been printed at a cost of $3905.00. Copies have been deposited with the Publications Clearinghouse of the Oklahoma Department of Libraries. ii
The following legislation passed during the 1st Session of the 53rd Legislature (2011) amended statutes pertaining to the Oklahoma Police Pension and Retirement System:
Senate Bill 347
Senate Bill 577
House Bill 2132
NOTE: See the APPENDIX for a copy of the section(s) of the above listed bill which pertain to the Oklahoma Police Pension and Retirement System.
iii
OKLAHOMA STATUTES
REGARDING THE OKLAHOMA POLICE PENSION
AND RETIREMENT SYSTEM
11 § 50-101 Definitions........................................................................... 1
11 § 50-102.1 Police Pension and Retirement System—Creation—
Status—Powers and duties ................................................. 5
11 § 50-103.1 Police Pension and Retirement Board—Composition
—Areas of representation—Terms—Vacancies—
Selection criteria—Officers .................................................. 5
11 § 50-104.1 Meetings of State Board—Special meetings—
Notice—Quorum—Travel expenses .................................... 7
11 § 50-104.2 Office facilities—Record of proceedings—
Financial statement—Audits ................................................ 8
11 § 50-105.1 Executive Director—Employees—Acceptance
of gifts or gratuities—Actuary—Legal services ..................... 8
11 § 50-105.2 Administration of System—Rules and regulations
—Accounts and records—Open meetings—
Actuarial tables—Decisions of Board—Actions .................... 9
11 § 50-105.3 Certified estimate of rate of contribution required,
accumulated contributions and other assets of System ......... 9
11 § 50-105.4 Duties of Board—Investments—Liability insurance—
Investment managers—Custodial services—Reports ......... 10
11 § 50-105.5 Duties of fiduciaries ........................................................... 12
11 § 50-105.6 Deposit of contributions and dedicated
revenues—Warrants and vouchers .................................... 13
11 § 50-106 General powers of State Board .......................................... 13
11 § 50-106.3 Joining System—Application for affiliation—Con-
solidation of systems���Election to participate ..................... 14
11 § 50-107 Custody and disbursement of pension funds ...................... 15
11 § 50-109 Appropriation of percentage of annual salary of
member of System ............................................................ 15
11 § 50-110 Contributions by members of System—Picked up
contributions ..................................................................... 16
11 § 50-111.1 Termination of service before normal retirement date
—Refund of accumulated contributions—Election of
vested benefit—Monthly retirement annuity—Rejoining
System—Death without named beneficiary ........................ 17
11 § 50-111.2 Transfer of credited service from or to other
retirement system ............................................................. 18
11 § 50-111.2A Purchase of service credit for time served with
Department of Defense or military ..................................... 18
11 § 50-111.3 Deferred option plans ........................................................ 19
11 § 50-111.4 Transferred credited service—Computation of
purchase price ................................................................. 21 iv
11 § 50-111.5 Written election—Employer and employee
contributions and accrued earnings—Service .................... 22
11 § 50-112 Participation in system required—Eligibility ...................... 23
11 § 50-113 Purposes of pension fund—Limitation on payments .......... 24
11 § 50-114 Service pension to members of System—Amount—
Eligibility—Delay of distribution—Death of member
—Review of requests—Disability benefits in lieu of
pensions ........................................................................... 25
11 § 50-114.1 Limitations on benefits relating to section 415 of
Internal Revenue Code of 1986 ........................................ 27
11 § 50-114.2 Direct rollover distributions ............................................... 37
11 § 50-114.3 Trustee-to-trustee transfer—Treatment of trust—Rules ..... 40
11 § 50-114.4 Direct Payments for qualified health insurance
Premiums—Definitions—Rules ......................................... 40
11 § 50-115 Disability benefit—Eligibility—Award—Evidence
of disability—Continuance of salary .................................. 41
11 § 50-115.2 Death benefit ................................................................... 43
11 § 50-116.1 Sickness or temporary disability—Continuance of
salary .............................................................................. 43
11 § 50-117 Payment of pension to beneficiary of member—
Amount—Eligibility—Limitations—
Commencement and cessation of benefits ........................ 44
11 § 50-118 Member retired for disability—Physical
examination—Emergency duty ......................................... 45
11 § 50-119 Forfeiture of benefits—Grounds ........................................ 45
11 § 50-121 Ordinances to accomplish purpose of article ..................... 45
11 § 50-122 Computation of pensions—Leaves of absence—
Military leaves of absence or credits for military
service exempted .............................................................. 46
11 § 50-123 Discharge of member—Board of review—
Grounds—Appeals ........................................................... 46
11 § 50-124 Exemption of System funds from legal process—
Assignment or transfer void—Exception of
qualified domestic orders—Offset for offenses
involving the System ........................................................ 47
11 § 50-127 Limitation on withdrawal from System ............................... 48
11 § 50-128 Credit for military service .................................................. 48
11 § 50-129 Appeals ........................................................................... 50
11 § 50-130 Police Pension and Retirement Fund ................................ 51
11 § 50-131 Transfer of assets to State Board ..................................... 51
11 § 50-132 Assets of Fund—Contents—Right to assets—Valuation ..... 51
11 § 50-133 Costs and expenses of operation, administration
of management of System—Equipment and supplies ........ 52
11 § 50-134 Operation, administration and management of System
—Responsibilities ............................................................ 52
11 § 50-134.1 Confidentiality of records ................................................... 53 v
11 § 50-135 Forfeiture of Motor Fuel Excise Tax revenues .................... 53
11 § 50-136 Increase in pension benefits ............................................. 53
11 § 50-136.1 Increase in benefits—Repealed Section 50-120 ................ 53
11 § 50-136.2 Additional retirement benefit ............................................ 53
11 § 50-136.3 Benefit adjustment—Restoration of Initial COLA Benefit ..... 54
11 § 50-136.4 Benefit increase—Offset ................................................... 55
11 § 50-136.5 Increase in benefits—July 1, 2002—Offset ......................... 55
11 § 50-136.6 Increase in benefits—July 1, 2004—Offset ......................... 55
11 § 50-136.7 Increase in benefits—July 1, 2006—Offset ......................... 55
11 § 50-136.8 Increase in benefits—July 1, 2008—Offset ......................... 55
REPEALED STATE STATUTES........................................ 57
OTHER STATE STATUTES PERTAINING TO .................. 58
CONSTITUTIONAL PROVISIONS PERTAINING TO ......... 78
ADMINISTRATIVE RULES ............................................... 79
APPENDIX ..................................................................... 1051
OKLAHOMA POLICE PENSION AND RETIREMENT SYSTEM
11 § 50-101. Definitions
As used in this article:
1. "System" means the Oklahoma Police Pension and Retirement System and all predecessor municipal Police Pension and Retirement Systems;
2. "Article" means Article 50 of this title;
3. "State Board" means the Oklahoma Police Pension and Retirement Board;
4. "Fund" means the Oklahoma Police Pension and Retirement Fund;
5. "Officer" means any duly appointed and sworn full-time officer of the regular police department of a municipality whose duties are to preserve the public peace, protect life and property, prevent crime, serve warrants, enforce all laws and municipal ordinances of this state, and any political subdivision thereof, and who is authorized to bear arms in the execution of such duties;
6. "Member" means all eligible officers of a participating municipality and any person hired by a participating municipality who is undergoing police training to become a permanent police officer of the municipality. Effective July 1, 1987, a member does not include a "leased employee" as defined under Section 414(n)(2) of the Internal Revenue Code of 1986, as amended. Effective July 1, 1999, any individual who agrees with the participating municipality that the individual’s services are to be performed as a leased employee or an independent contractor shall not be a member regardless of any classification as a common law employee by the Internal Revenue Service or any other governmental agency, or any court of competent jurisdiction. A member shall include eligible commissioned officers of the Oklahoma State Bureau of Narcotics and Dangerous Drugs Control, the Oklahoma State Bureau of Investigation, and the Alcoholic Beverage Laws Enforcement Commission who elect to participate in the System pursuant to Section 50-111.5 of this title;
7. "Normal retirement date" means the date at which the member is eligible to receive the unreduced payments of the member's accrued retirement benefit. Such date shall be the first day of the month coinciding with or following the date the member completes twenty (20) years of credited service. If the member's employment continues past the normal retirement date of the member, the actual retirement date of the member shall be the first day of the month after the member terminates employment with more than twenty (20) years of credited service;
8. "Credited service" means the period of service used to determine the eligibility for and the amount of benefits payable to a member. Credited service shall consist of the period during which the member participated in the System or the predecessor municipal systems as an active employee in an eligible membership classification, plus any service prior to the establishment of the predecessor municipal systems which was credited under the predecessor municipal systems or credited service granted by the State Board;
9. "Participating municipality" means a municipality which is making contributions to the System on behalf of its officers. The Oklahoma State Bureau 2
of Narcotics and Dangerous Drugs Control, the Oklahoma State Bureau of Investigation, and the Alcoholic Beverage Laws Enforcement Commission shall be treated in the same manner as a participating municipality only regarding those members who elect to participate in the System pursuant to Section 50-111.5 of this title;
10. "Permanent total disability" means incapacity due to accidental injury or occupational disease, to earn any wages in the employment for which the member is physically suited and reasonably fitted through education, training or experience. Further, the member must be declared one hundred percent (100%) impaired as defined by the "American Medical Association's Guides to the Evaluation of Permanent Impairment" on the basis of a physical medical examination by a physician licensed to practice medicine in this state, as selected by the State Board;
11. "Permanent partial disability" means permanent disability which is less than permanent total disability as defined in this section. The member must be declared no greater than ninety-nine percent (99%) impaired as defined by the "American Medical Association's Guides to the Evaluation of Permanent Impairment" on the basis of a physical medical examination by a physician licensed to practice medicine in this state, as selected by the State Board;
12. "Permanent in-line disability" means incapacity to earn any wages as a certified, commissioned police officer due to accidental injury or occupational disease, incurred while in, and in consequence of, the performance of duty as an officer;
13. "Beneficiary" means a member's surviving spouse or any surviving children, including biological and adopted children, at the time of the member's death. The surviving spouse must have been married to the member for the thirty (30) continuous months immediately preceding the member's death, provided a surviving spouse of a member who died while in, and as a consequence of, the performance of the member's duty for a participating municipality, shall not be subject to the thirty-month marriage requirement for survivor benefits. A surviving child of a member shall be a beneficiary until reaching eighteen (18) years of age or twenty-two (22) years of age if the child is enrolled full time and regularly attending a public or private school or any institution of higher education. Any child adopted by a member after the member's retirement shall be a beneficiary only if the child is adopted by the member for the thirty (30) continuous months preceding the member's death. Any child who is adopted by a member after the member's retirement and such member dies accidentally or as a consequence of the performance of the member's duty as a police officer shall not be subject to the thirty-month adoption requirement. This definition of beneficiary shall be in addition to any other requirement set forth in this article;
14. "Executive Director" means the managing officer of the System employed by the State Board;
15. "Eligible employer" means any municipality with a municipal police department;
16. "Entry date" means the date as of which an eligible employer joins the System. The first entry date pursuant to this article shall be January 1, 1981; 3
17. "Final average salary" means the average paid base salary of the member for normally scheduled hours over the highest salaried thirty (30) consecutive months of the last sixty (60) months of credited service.
a. Base salary shall not include payment for accumulated sick and annual leave upon termination of employment, severance pay or any uniform allowances. Provided, for purposes of determining the normal disability benefit, final average salary shall be based on the member's total service if less than thirty (30) months. Base salary shall include any amount of elective salary reduction under Section 457 of the Internal Revenue Code of 1986, as amended, and any amount of nonelective salary reduction under Section 414(h) of the Internal Revenue Code of 1986, as amended. Effective January 1, 1988, base salary shall include any amount of elective salary reduction under Section 125 of the Internal Revenue Code of 1986, as amended. Effective July 1, 1998, gross salary shall include any amount of elective salary reduction not includable in the gross income of the member under Section 132(f)(4) of the Internal Revenue Code of 1986, as amended. Only salary on which required contributions have been made may be used in computing the final average salary.
b. In addition to other applicable limitations, and notwithstanding any other provision to the contrary, for plan years beginning on or after July 1, 2002, the annual compensation of each "Noneligible Member" taken into account under the System shall not exceed the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) annual compensation limit. The EGTRRA annual compensation limit is Two Hundred Thousand Dollars ($200,000.00), as adjusted by the Commissioner for increases in the cost of living in accordance with Section 401(a)(17)(B) of the Internal Revenue Code of 1986, as amended. The annual compensation limit in effect for a calendar year applies to any period, not exceeding twelve (12) months, over which compensation is determined ("determination period") beginning in such calendar year. If a determination period consists of fewer than twelve (12) months, the EGTRRA annual compensation limit will be multiplied by a fraction, the numerator of which is the number of months in the determination period, and the denominator of which is twelve (12). For purposes of this section, a "Noneligible Member" is any member who first became a member during a plan year commencing on or after July 1, 1996.
c. For plan years beginning on or after July 1, 2002, any reference in the System to the annual compensation limit under Section 401(a)(17) of the Internal Revenue Code of 1986, as amended, shall mean the EGTRRA annual compensation limit set forth in this provision;
d. Effective January 1, 2008, base salary shall also include base salary, as described above for services, but paid by the later of two and one-half (2 1/2) months after a member’s severance from employment or the end of the calendar year that includes the date the member terminated employment, if it is a payment that, absent 4
a severance from employment, would have been paid to the member while the member continued in employment with the participating municipality.
e. Effective January 1, 2008, any payments not described above shall not be considered base salary if paid after severance from employment, even if they are paid by the later of two and one-half (2 1/2) months after the date of severance from employment or the end of the calendar year that includes the date of severance from employment, except payments to an individual who does not currently perform services for the participating municipality by reason of qualified military service within the meaning of Section 414(u)(5) of the Internal Revenue Code of 1986, as amended, to the extent these payments do not exceed the amounts the individual would have received if the individual had continued to perform services for the participating municipality rather than entering qualified military service.
f. Effective January 1, 2008, back pay, within the meaning of Section 1.415(c)-2(g)(8) of the Income Tax Regulations, shall be treated as base salary for the limitation year to which the back pay relates to the extent the back pay represents wages and compensation that would otherwise be included in this definition.
g. Effective for years beginning after December 31, 2008, base salary shall also include differential wage payments under Section 414(u)(12) of the Internal Revenue Code of 1986, as amended;
18. "Accrued retirement benefit" means two and one-half percent (2 1/2%) of the member's final average salary multiplied by the member's years of credited service not to exceed thirty (30) years;
19. "Normal disability benefit" means two and one-half percent (2 1/2%) of the member's final average salary multiplied by twenty (20) years;
20. "Limitation year" means the year used in applying the limitations of Section 415 of the Internal Revenue Code of 1986, as amended, which year shall be the calendar year;
21. "Paid base salary" means, effective May 1, 2002, all compensation that shall include longevity, educational allowances, and normal compensation paid on a regularly scheduled pay period of which said pay period shall include holidays, annual leave and sick leave. Paid base salary shall not include overtime, shall not include payment for accumulated sick and annual leave upon termination of employment, and shall not include any uniform allowance or any other compensation for reimbursement of out-of-pocket expenses; and
22. “Actuarial equivalent” means equality in value of the aggregate amounts expected to be received based on interest rate and mortality assumptions set by the State Board, in a manner that precludes employer discretion, and based upon recommendations from independent professional advisors, and which shall be published annually in the actuarial report.
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11 § 50-102.1 Police Pension and Retirement System—Creation—Status–—Powers and duties
There is created the Oklahoma Police Pension and Retirement System which shall be a body corporate and an instrumentality of this state. The System shall be vested with the powers and duties specified in this act and such other powers as may be necessary to enable it and its officers and employees to carry out fully and effectively the purposes and intent of this article. All assets of the System shall be held in trust for the exclusive purpose of providing benefits for the members and beneficiaries of the System, including defraying reasonable expenses of administering the System, and shall not be encumbered for or diverted to any other purpose. This System shall be the responsibility of the state and not that of the participating municipalities.
11 § 50-103.1 Police Pension and Retirement Board—Composition—Areas of representation—Terms—Vacancies—Selection criteria—Officers
A. There shall be an Oklahoma Police Pension and Retirement Board which shall be composed of thirteen (13) members as follows:
1. Seven members shall be elected as follows:
a. One member shall be elected to represent State Board District 1. State Board District 1 shall include that area of the state, except for any area comprising Oklahoma City, that is north of Interstate Highway 40 and west of Interstate Highway 35;
b. One member shall be elected to represent State Board District 2. State Board District 2 shall include that area of the state, except for any area comprising Oklahoma City, that is south of Interstate Highway 40 and west of Interstate Highway 35;
c. One member shall be elected to represent State Board District 3. State Board District 3 shall include that area of the state, except for any area comprising Oklahoma City or Tulsa, that is north of Interstate Highway 40 and east of Interstate Highway 35;
d. One member shall be elected to represent State Board District 4. State Board District 4 shall include that area of the state, except for any area comprising Oklahoma City, that is south of Interstate Highway 40 and east of Interstate Highway 35;
e. One member shall be elected to represent State Board District 5. State Board District 5 shall include that area of the state comprising the City of Tulsa;
f. One member shall be elected to represent State Board District 6. State Board District 6 shall include that area of the state comprising the City of Oklahoma City; and
g. One member shall be elected to represent State Board District 7. State Board District 7 shall include the entire area of the state.
The members elected to represent State Board Districts 1 through 6 shall be active members of the System and work for a participating municipality whose police department is physically located within the State Board District. The member elected to represent State Board District 7 shall be a retired member of the System. Elections for the State Board Districts shall be held within six (6) 6
months of the date of the expiration of the term of office of a member or of the date a vacancy occurs on such dates that are set by the State Board. The initial term of office for State Board Districts 2, 5 and 7 shall begin on July 1, 1989. The initial term of office for State Board Districts 3 and 6 shall begin on July 1, 1990. The initial term of office for State Board Districts 1 and 4 shall begin on July 1, 1991. The term of office of the elected members shall be three (3) years. Only members of the System working for a participating municipality whose police department is physically located within the respective State Board Districts may participate in the election process for State Board Districts 1 through 6. Only retired members of the System may participate in the election process for State Board District 7.
2. One member shall be appointed by the Speaker of the House of Representatives;
3. One member shall be appointed by the President Pro Tempore of the Senate;
4. One member shall be appointed by the Governor;
5. One member shall be appointed by the President of the Oklahoma Municipal League;
6. One member shall be the State Insurance Commissioner or the Commissioner’s designee; and
7. One member shall be the Director of State Finance or the Director’s designee.
B. 1. The term of office of the member appointed to the State Board by the Speaker of the House of Representatives and the term of office of the member appointed to the State Board by the President Pro Tempore of the Senate who are members of the State Board on the operative date of this act, shall expire on January 3, 1989. The members thereafter appointed by the Speaker of the House of Representatives and by the President Pro Tempore of the Senate shall serve terms of office of four (4) years.
2. The term of office of the member appointed by the Governor who is a member of the State Board on the operative date of this act shall expire on January 14, 1991. The members thereafter appointed by the Governor shall serve a term of office of four (4) years which is coterminous with the term of office of the office of the appointing authority.
3. The initial term of office of the member appointed by the President of the Oklahoma Municipal League shall expire on July 1, 1990. The members thereafter appointed by the President of the Oklahoma Municipal League shall serve terms of office of four (4) years.
4. Any vacancy that occurs shall be filled for the unexpired term in the same manner as the office was previously filled.
C. The members appointed to the State Board by the Speaker of the House of Representatives, the President Pro Tempore of the Senate, the Governor and the President of the Oklahoma Municipal League or who are designees of an ex officio member of the State Board shall: 7
1. Have demonstrated professional experience in investment or funds management, public funds management, public or private pension fund management or retirement system management;
2. Have demonstrated experience in the banking profession and have demonstrated professional experience in investment or funds management;
3. Be licensed to practice law in this state and have demonstrated professional experience in commercial matters; or
4. Be licensed by the Oklahoma Accountancy Board to practice in this state as a public accountant or a certified public accountant.
The appointing authorities, in making appointments that conform to the requirements of this subsection, shall give due consideration to balancing the appointments among the criteria specified in paragraphs 1 through 4 of this subsection.
D. No member of the State Board shall be a lobbyist registered in this state as provided by law.
E. Notwithstanding any of the provisions of this section to the contrary, any person serving as an appointed member of the State Board on the operative date of this act shall be eligible for reappointment when the term of office of the member expires.
F. The State Board shall elect one of its members as Chairman at its annual meeting. The Chairman shall preside over meetings of the State Board and perform such other duties as may be required by the State Board. The State Board shall also elect another member to serve as Vice Chairman, and the Vice Chairman shall perform duties of Chairman in the absence of the latter or upon the Chairman's inability or refusal to act.
11 § 50-104.1 Meetings of State Board—Special meetings—Notice— Quorum—Travel expenses
A. The State Board shall hold regular meetings in Oklahoma City at least once each quarter, the dates, time, and place thereof to be fixed by the State Board. The State Board shall hold a regular meeting in July of each year which meeting shall be the annual meeting at which it shall elect its Chairman. Special meetings may be called upon written call of the Chairman or by agreement of any eight (8) members of the State Board. Notice of a special meeting shall be mailed to all State Board members not less than seven (7) days prior to the date fixed for the meeting; provided, however, that notice of such meeting may be waived by any member either before or after such meeting and attendance at such meeting shall constitute a waiver of notice of such meeting, unless a member participates therein solely to object to the transaction of any business because the meeting has not been legally called or convened.
B. Seven (7) State Board members shall constitute a quorum for the transaction of business, but any official action of the State Board shall be based upon a favorable vote by at least seven (7) State Board members at a regular, special, or emergency meeting of the State Board.
C. State Board members shall be reimbursed for necessary travel expenses pursuant to the State Travel Reimbursement Act. 8
11 § 50-104.2 Office facilities—Record of proceedings—Financial statement—Audits
A. The principal office of the System shall be in Oklahoma City, Oklahoma. The State Board is hereby authorized to contract for necessary office space in suitable quarters.
B. The State Board shall keep a record of all of its proceedings, which shall be open for inspection at all reasonable hours. A report including such information as the operation of the System for the past fiscal year, including income, disbursements, and the financial condition of the fund at the end of each fiscal year and showing the valuation of its assets, investments, and liabilities, shall be delivered to the Governor after the end of each fiscal year but prior to October 1 of the next fiscal year and made available to the members and participating municipalities.
C. The State Auditor and Inspector shall make an annual audit of the accounts of the System. The audit shall be filed as soon after the close of the fiscal year as practicable, in accordance with the requirements for financial statement audits in Section 212A of Title 74 of the Oklahoma Statutes.
11 § 50-105.1 Executive Director—Employees—Acceptance of gifts or gratuities—Actuary—Legal services
A. The State Board shall appoint an Executive Director. Subject to the policy direction of the State Board, the Executive Director shall be the managing and administrative officer of the System and as such shall have charge of the office, records, and supervision and direction of the employees of the System.
B. The Executive Director shall recommend to the State Board the administrative organization, the number and qualifications of employees necessary to carry out the intent of this article, and the policy direction of the State Board. Upon approval of the organizational plan by the State Board, the Executive Director may employ such persons as are deemed necessary to administer this article.
C. The members of the State Board, the Executive Director and the employees of the System shall not accept gifts or gratuities from an individual organization with a value in excess of the amount per year permitted by the Ethics Commission for all state officials and employees. The provisions of this section shall not be construed to prevent the members of the State Board, the Executive Director or the employees of the System from attending educational seminars, conferences, meetings or similar functions which are paid for, directly or indirectly, by more than one organization.
D. The State Board may select and retain a qualified actuary who shall serve at its pleasure as its technical advisor or consultant on matters regarding the operation of the System. The actuary may at the direction of the State Board:
1. Make an annual valuation of the liabilities and reserves of the System, and a determination of the contributions required by the System to discharge its liabilities and administrative costs under this article, and recommend to the State Board rates of employer contributions required to establish and maintain the System on an adequate reserve basis;
2. As deemed necessary by the State Board, make a general investigation of the actuarial experience under the System, including mortality, retirement, 9
employment turnover, and interest, and recommend actuarial tables for use in valuations and in calculating actuarial equivalent values based on such investigation; and
3. Perform such other duties as may be assigned by the State Board.
E. The State Board may retain an attorney licensed to practice law in this state. The attorney shall serve at the pleasure of the State Board for such compensation as set by the State Board. The Attorney General shall furnish such legal services as may be requested by the State Board.
11 § 50-105.2 Administration of System—Rules and regulations—Accounts and records—Open meetings—Actuarial tables—Decisions of Board— Actions
A. The State Board shall be responsible for the policies and rules for the general administration of the System, subject to the provisions of this article.
B. The State Board shall establish rules and regulations for the administration of the System and for the transaction of its business consistent with law, which rules and regulations shall be filed with the Secretary of State.
C. The State Board shall be responsible for the installation or provision of a complete and adequate system of accounts and records.
D. All meetings of the State Board shall be open to the public. The State Board shall keep a record of its proceedings.
E. The State Board may adopt all necessary actuarial tables to be used in the operation of the System as recommended by the actuary and may compile such additional data as may be necessary for required actuarial valuation calculations.
F. All decisions of the State Board as to questions of fact shall be final and conclusive on all persons except for the right of review as provided by law and except for fraud or such gross mistake of fact as to have effect equivalent to fraud.
G. The State Board shall take all necessary action upon applications for pensions, disability benefits, refund of accumulated contributions and shall take action on all other matters deemed necessary by the State Board.
11 § 50-105.3 Certified estimate of rate of contribution required, accumulated contributions and other assets of System
The State Board shall certify to the Director of State Finance, the Speaker of the House of Representatives, and the President Pro Tempore of the Senate, on or before November 1 of each year, an actuarially determined estimate of the rate of contribution which will be required, together with all accumulated contributions and other assets of the System to pay by level-dollar payments all liabilities which shall exist or accrue pursuant to the provisions of the System, including amortization of the unfunded accrued liability over a period of not to exceed thirty (30) years beginning July 1, 1988.
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11 § 50-105.4 Duties of Board—Investments—Liability insurance—Investment managers—Custodial services—Reports
A. The Oklahoma Police Pension and Retirement Board shall discharge their duties with respect to the System solely in the interest of the participants and beneficiaries and:
1. For the exclusive purpose of:
a. providing benefits to participants and their beneficiaries, and
b. defraying reasonable expenses of administering the System;
2. With the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims;
3. By diversifying the investments of the System so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and
4. In accordance with the laws, documents and instruments governing the System.
B. The State Board may procure insurance indemnifying the members of the State Board from personal loss or accountability from liability resulting from a member's action or inaction as a member of the State Board.
C. The State Board may establish an investment committee. The investment committee shall be composed of not more than five (5) members of the State Board appointed by the chairman of the State Board. The committee shall make recommendations to the full State Board on all matters related to the choice of custodians and managers of the assets of the System, on the establishment of investment and fund management guidelines, and in planning future investment policy. The committee shall have no authority to act on behalf of the State Board in any circumstances whatsoever. No recommendation of the committee shall have effect as an action of the State Board nor take effect without the approval of the State Board as provided by law.
D. The State Board shall retain qualified investment managers to provide for the investment of the monies of the System. The investment managers shall be chosen by a solicitation of proposals on a competitive bid basis pursuant to standards set by the State Board unless the State Board deems it necessary and prudent to do otherwise to fulfill its fiduciary responsibility. Subject to the overall investment guidelines set by the State Board, the investment managers shall have full discretion in the management of those monies of the System allocated to the investment managers. The State Board shall manage those monies not specifically allocated to the investment managers. The monies of the System allocated to the investment managers shall be actively managed by the investment managers, which may include selling investments and realizing losses if such action is considered advantageous to longer term return maximization. Because of the total return objective, no distinction shall be made for management and performance evaluation purposes between realized and unrealized capital gains and losses. 11
E. Funds and revenues for investment by the investment managers or the State Board shall be placed with a custodian selected by the State Board. The custodian shall be a bank or trust company offering pension fund master trustee and master custodial services. The custodian shall be chosen by a solicitation of proposals on a competitive basis pursuant to standards set by the State Board. In compliance with the investment policy guidelines of the State Board, the custodian bank or trust company shall be contractually responsible for ensuring that all monies of the System are invested in income-producing investment vehicles at all times. If a custodian bank or trust company has not received direction from the investment managers of the System as to the investment of the monies of the System in specific investment vehicles, the custodian bank or trust company shall be contractually responsible to the State Board for investing the monies in appropriately collateralized short-term interest-bearing investment vehicles.
F. By November 1, 1988, and prior to August 1 of each year thereafter, the State Board shall develop a written investment plan for the System.
G. After July 1 and before November 1 of each year, the State Board shall publish widely an annual report presented in simple and easily understood language pursuant to uniform reporting standards prescribed by the Oklahoma State Pension Commission for all state retirement systems. The report shall be submitted to the Governor, the Speaker of the House of Representatives, the President Pro Tempore of the Senate, the Oklahoma State Pension Commission and the members of the System. The annual report shall cover the operation of the System during the past fiscal year, including income, disbursements, and the financial condition of the System at the end of the fiscal year. The annual report shall also contain a summary of the results of the most recent actuarial valuation to include total assets, total liabilities, unfunded liability or over funded status, contributions and any other information deemed relevant by the State Board. The annual report shall be written in such a manner as to permit a readily understandable means for analyzing the financial condition and performances of the System for the fiscal year. In order to standardize the information and analysis of the financial condition of the System, the Board shall provide information regarding the financial and actuarial condition of the System using assumptions or requirements as hereinafter required for the report stating the condition of the System as of July 1, 2002, and for each subsequent reporting date, which information shall be contained in an appendix or addendum to the annual report. For purposes other than the reporting requirements contained in the appendix or addendum, all actuarial and economic assumptions shall be those assumptions adopted by the System in its annual actuarial valuation. The appendix or addendum shall contain a statement of the financial condition of the System:
1. Using an assumed rate of return of seven and one-half percent (7.5%), net of investment expenses, per annum, compounded annually;
2. Using an actuarial assumption regarding cost-of-living adjustments for the System of two percent (2%) annually;
3. That relies upon the use of appropriate preretirement, postretirement and disability retirement information using generational projections taken from the RP-2000 Mortality Tables, published by the Society of Actuaries; 12
4. Which accurately and completely summarizes all sources of system assets, other than employee contributions, which shall include, but not be limited to, the total of all employer contributions, any dedicated tax or fee revenue of whatever kind or however denominated, and the total amount of any other source of revenue which accrues to the System, other than return on investments, such as federal monies used for the purpose of making employer contributions; and
5. Using an assumption that the unfunded actuarial accrued liabilities of the System are amortized over a period of thirty (30) years, in a manner consistent with the Governmental Accounting Standards Board Statement Number 25.
H. The State Board shall adopt a cost of living adjustment actuarial assumption in its annual actuarial valuation report.
11 § 50-105.5 Duties of fiduciaries
A. A fiduciary with respect to the Oklahoma Police Pension and Retirement System shall not cause the System to engage in a transaction if the fiduciary knows or should know that such transaction constitutes a direct or indirect:
1. sale or exchange, or leasing of any property from the System to a party in interest for less than adequate consideration or from a party in interest to the System for more than adequate consideration;
2. lending of money or other extension of credit from the System to a party in interest without the receipt of adequate security and a reasonable rate of interest, or from a party in interest to the System with provision of excessive security or an unreasonably high rate of interest;
3. furnishing of goods, services or facilities from the System to a party in interest for less than adequate consideration, or from a party in interest to the System for more than adequate consideration; or
4. transfer to, or use by or for the benefit of, a party in interest of any assets of the System for less than adequate consideration.
B. A fiduciary with respect to the Oklahoma Police Pension and Retirement System shall not:
1. deal with the assets of the System in the fiduciary's own interest or for the fiduciary's own account;
2. in the fiduciary's individual or any other capacity act in any transaction involving the System on behalf of a party whose interests are adverse to the interests of the System or the interests of its participants or beneficiaries; or
3. receive any consideration for the fiduciary's own personal account from any party dealing with the System in connection with a transaction involving the assets of the System.
C. A fiduciary with respect to the Oklahoma Police Pension and Retirement System may:
1. invest all or part of the assets of the System in deposits which bear a reasonable interest rate in a bank or similar financial institution supervised by the United States or a state, if such bank or other institution is a fiduciary of such plan; or 13
2. Provide any ancillary service by a bank or similar financial institution supervised by the United States or a state, if such bank or other institution is a fiduciary of such plan.
D. A person or a financial institution is a fiduciary with respect to the Oklahoma Police Pension and Retirement System to the extent that the person or the financial institution:
1. exercises any discretionary authority or discretionary control respecting management of the Oklahoma Police Pension and Retirement System or exercises any authority or control respecting management or disposition of the assets of the System;
2. renders investment advice for a fee or other compensation, direct or indirect, with respect to any monies or other property of the System, or has any authority or responsibility to do so; or
3. has any discretionary authority or discretionary responsibility in the administration of the System.
11 § 50-105.6 Deposit of contributions and dedicated revenues— Warrants and vouchers
A. All employee and employer contributions and dedicated revenues shall be deposited in the Oklahoma Police Pension and Retirement Fund in the State Treasury. The State Board shall have the responsibility for the management of the Oklahoma Police Pension and Retirement Fund, and may transfer monies used for investment purposes by the Oklahoma Police Pension and Retirement System from the Oklahoma Police Pension and Retirement Fund in the State Treasury to the custodian bank or trust company of the System.
B. All benefits payable pursuant to the provisions of the Oklahoma Police Pension and Retirement System, refunds of contribution and overpayments, and all administrative expenses in connection with the System shall be paid from the Oklahoma Police Pension and Retirement Fund upon warrants or vouchers signed by two persons designated by the State Board. The State Board may transfer monies from the custodian bank or trust company of the System to the Oklahoma Police Pension and Retirement Fund in the State Treasury for the purposes specified in this subsection.
11 § 50-106. General powers of State Board
The State Board shall, in addition to other powers herein granted, have power to:
1. Compel witnesses to attend and testify before it upon all matters connected with the operations of this article or ordinances enacted by any municipality relative to the System, and in the same manner as is or may be provided by law for the taking of testimony before notaries public; and its Chairman or any member of the State Board may administer oaths to such witnesses;
2. Provide for the payment of all its necessary expenses, and pay for actuarial, legal and such other services as shall be required to transact the business of the System; 14
3. Provide all rules and regulations necessary for its guidance in conformity with the provisions of this article including the physical requirements for eligibility for initial membership in the System;
4. For the purpose of meeting disbursements for pensions and other payments, to keep on deposit in one or more banks, trust companies or savings and loan associations, to the extent that such deposit is insured, what it considers an adequate amount of cash. No trustee or employee of the State Board shall, directly or indirectly, for himself or as an agent, in any manner use the assets of the System, except to make such current and necessary payments as are authorized by the State Board, nor shall any trustee or employee of the State Board become an endorser or surety or become in any manner an obligor for monies loaned by or borrowed from the State Board; and
5. Effective July 1, 1999, do all acts and things necessary and proper to carry out the purpose of the System and to make the least costly amendments and changes, if any, as may be necessary to qualify the System under the applicable sections of the Internal Revenue Code of 1986, as amended.
11 § 50-106.3. Joining System—Application for affiliation—Consolidation of systems—Election to participate
A. An eligible employer may join the System on the first day of any month. Application for affiliation shall be in the form of a resolution approved by the governing body of the eligible employer or by any other body or officer authorized by law or recognized by the State Board to approve such resolution or action. Upon the filing of a certified copy of such resolution with the State Board, such election shall be irrevocable and the eligible municipality shall become a participating municipality on the first day of the month immediately following the filing of such election with the State Board. Participating municipalities shall be required to provide all documentation requested by the System relating to the administration of the System.
B. The State Board shall have final authority in determining eligibility for membership in the System, pursuant to the provisions of this article. A member claiming credit for prior municipal police service in Oklahoma shall file an application with the State Board. The date of filing such application shall be not more than ninety (90) days after the municipality's entry date. Any credit for such prior service shall not exceed five (5) years. Upon a favorable determination of the eligibility for and the amount of service credit under this section, the member shall pay the amount determined by the State Board pursuant to Section 50-111.4 of this title.
C. Any municipality that has a municipal police pension and retirement system prior to July 1, 1980, shall consolidate its system with the state System and become a participating municipality on the first entry date as provided in this article.
D. Any eligible employer of a municipality which is a participating employer in the Oklahoma Public Employees Retirement System on July 1, 1996, may become a participating municipality of the Oklahoma Police Pension and Retirement System if and only if a certified copy of a resolution approved by the governing body of the eligible employer or by any other body or officer authorized by law or recognized by the Board to approve such a resolution, is filed with the Board. Such election shall be irrevocable. 15
1. All eligible officers who are initially employed in such a position on or after the date when the municipality becomes a participating municipality shall be members of the Oklahoma Police Pension and Retirement System and shall have no right to participate in the Oklahoma Public Employees Retirement System.
2. All eligible officers who were employed in such a position prior to the date when the municipality becomes a participating municipality shall have the right to make a one-time election on or before six (6) months following the date that the municipality became a participating municipality to participate in the Oklahoma Police Pension and Retirement System. Any such employee who fails to make the election provided in this paragraph shall remain in the Oklahoma Public Employees Retirement System.
a. Eligible officers electing to participate in the Oklahoma Police Pension and Retirement System shall be allowed to withdraw their accumulated contributions or elect a vested benefit in the Oklahoma Public Employees Retirement System as provided in Section 917 of Title 74 of the Oklahoma Statutes.
b. Eligible officers electing to participate in the Oklahoma Police Pension and Retirement System may file a claim for prior municipal police service in Oklahoma with the State Board and may receive the prior service credit, not to exceed five (5) years, upon payment for the service at the actuarial cost as determined by the State Board. In no event, however, shall any eligible officer electing to participate in the Oklahoma Police Pension and Retirement System be allowed to receive credit or benefits in the Oklahoma Police Pension and Retirement System for years of service for which the officer is already receiving or eligible to receive retirement credit or benefits in the Oklahoma Public Employees Retirement System.
11 § 50-107. Custody and disbursement of pension funds
All monies provided for the Fund of the System by this article, or by appropriation by any municipality, or by contribution from members, shall be paid over to and received by the State Board for the use and benefit of the System to be disbursed and handled as provided in this article. Should any error in any records of the Oklahoma Police Pension and Retirement System result in any payee receiving more or less than the payee would have been entitled had the records been correct, the State Board shall correct such error and shall pay any underpayments or recover any overpayments. An error does not include a member’s failure to submit required documents, including proof of military service, prior to the effective date of retirement, which date includes the member’s entry into the Oklahoma Police Deferred Option Plan. If a member submits documents after the effective date of retirement, no adjustment in retirement benefits shall be made.
11 § 50-109. Appropriation of percentage of annual salary of member of System
Any municipality participating in the System shall appropriate funds, for the use and benefit of the System, as provided in the following schedule:
1. Prior to July 1, 1991, a minimum of ten percent (10%) of the actual paid base salary of each member of the System employed by the municipality; 16
2. Beginning July 1, 1991, a minimum of ten and one-half percent (10 1/2%) of the actual paid base salary of each member of the System employed by the municipality;
3. Beginning July 1, 1992, a minimum of eleven percent (11%) of the actual paid base salary of each member of the System employed by the municipality;
4. Beginning July 1, 1993, a minimum of eleven and one-half percent (11 1/2%) of the actual paid base salary of each member of the System employed by the municipality;
5. Beginning July 1, 1994, a minimum of twelve percent (12%) of the actual paid base salary of each member of the System employed by the municipality;
6. Beginning July 1, 1995, a minimum of twelve and one-half percent (12 1/2%) of the actual paid base salary of each member of the System employed by the municipality; and
7. Beginning July 1, 1996, a minimum of thirteen percent (13%) of the actual paid base salary of each member of the System employed by the municipality.
The sum appropriated shall be paid to the System within ten (10) days following the payroll period on which the contribution is based.
The state shall make such appropriation as is necessary to assure the retirement benefits provided by the article.
11 § 50-110. Contributions by members of System—Picked up contributions
A. Each member in the System shall contribute to the System a minimum of eight percent (8%) of the member's actual paid base salary.
At the option of the participating municipality, the participating municipality may pay all or any part of the member's required contribution. The sums contributed shall be paid to the System as provided in this article within ten (10) days following the payroll period on which the contributions are based. Amounts deducted from the salary of a member and not paid to the System after thirty (30) days from each ending payroll date shall be subject to a monthly late charge of one and one-half percent (1 1/2%) of the unpaid balance to be paid by the municipality to the System. All funds received by a participating municipality for police retirement purposes shall be forwarded to the State Board for credit to the Fund.
B. Each municipality shall pick up under the provisions of Section 414(h)(2) of the Internal Revenue Code of 1986 and pay the contribution which the member is required by law to make to the System for all compensation earned after December 31, 1988. Although the contributions so picked up are designated as member contributions, such contributions shall be treated as contributions being paid by the municipality in lieu of contributions by the member in determining tax treatment under the Internal Revenue Code of 1986 and such picked up contributions shall not be includable in the gross income of the member until such amounts are distributed or made available to the member or the beneficiary of the member. The member, by the terms of this System, shall 17
not have any option to choose to receive the contributions so picked up directly and the picked up contributions must be paid by the municipality to the System.
Member contributions which are picked up shall be treated in the same manner and to the same extent as member contributions made prior to the date on which member contributions were picked up by the municipality. Member contributions so picked up shall be included in gross salary for purposes of determining benefits and contributions under the System.
The municipality shall pay the member contributions from the same source of funds used in paying salary to the member, by effecting an equal cash reduction in gross salary of the member.
11 § 50-111.1. Termination of service before normal retirement date—Refund of accumulated contributions—Election of vested benefit—Monthly retirement annuity—Rejoining System—Death without named beneficiary
A. A member who terminates service before normal retirement date, other than by death or disability shall, upon application filed with the State Board, be refunded from the Fund an amount equal to the accumulated contributions the member has made to the Fund, but excluding any interest or any amount contributed by the municipality or state. If a member withdraws the member’s accumulated contributions, such member shall not have any recourse against the System for any type of additional benefits including, but not limited to, disability benefits. If a member has completed ten (10) years of credited service at the date of termination, the member may elect a vested benefit in lieu of receiving the member's accumulated contributions.
If the member who has completed ten (10) or more years of credited service elects the vested benefit, the member shall be entitled to a monthly retirement annuity commencing on the date the member reaches fifty (50) years of age or the date the member would have had twenty (20) years of credited service had the member's employment continued uninterrupted, whichever is later. The annual amount of such retirement annuity shall be equal to two and one-half percent (2 1/2%) of final average salary multiplied by the number of years of credited service.
If a terminated member has elected a vested benefit and subsequently returns to work as a police officer of a participating municipality, their vested benefit will be set aside and prior credited service will be reinstated.
B. If a member who terminates employment and elects a vested benefit dies prior to being eligible to receive benefits, the member's beneficiary shall be entitled to the member's normal monthly accrued retirement benefits on the date the deceased member would have been eligible to receive the benefit.
C. Whenever a member has terminated or hereafter terminates covered employment and has withdrawn or hereafter withdraws the member's accumulated contributions and has rejoined or hereafter rejoins the System, the member, upon proper application and approval by the Board, may pay to the System the sum of the accumulated contributions the member has withdrawn or hereafter withdraws plus ten percent (10%) annual interest from the date of withdrawal and shall receive the same benefits as if the member had never withdrawn the contributions. Effective July 1, 2003, a lump-sum payment for repayment of any amounts received because of a member’s prior termination may be repaid by trustee-to-trustee transfers from a Section 403(b) annuity, an 18
eligible Section 457(b) plan, and/or a Section 401(a) qualified plan. Those members who at the time of termination of employment could not withdraw any of their accumulated contributions shall receive credited service for the time employed as an officer prior to any such termination upon proper application and approval by the Board. To receive credit for such service, all required contributions and interest shall be paid within ninety (90) days of Board approval of the application. The provisions of this subsection shall not apply to any member who is receiving benefits from the System as of July 1, 1987.
D. If an active member dies and does not leave a beneficiary, the accumulated contributions made to the System by the member shall be paid to the estate of the member.
11 § 50-111.2 Transfer of credited service from or to other retirement system
A. A member of the Oklahoma Police Pension and Retirement System may receive up to five (5) years of credited service accumulated by the member while a member of the Oklahoma Firefighters Pension and Retirement System, the Oklahoma Law Enforcement Retirement System, the Teacher's Retirement System of Oklahoma, the Oklahoma Public Employees Retirement System or a county retirement system created pursuant to Section 951 of Title 19 of the Oklahoma Statutes or an Oklahoma municipal retirement system, if the member is not receiving or eligible to receive retirement credit or benefits from said service in any other public retirement system. The member shall decide the number of years of credited service, not to exceed five (5) years, to purchase. The State Board shall determine the amount for the purchase pursuant to Section 50-111.4 of this title. The amount may be paid through a trustee-to-trustee transfer to the Oklahoma Police Pension and Retirement System from another system designated in this section, and/or through payments made by the member. The transferred credited service of the member from another retirement system pursuant to this section shall not alter the member's normal retirement date or vesting requirements. The transferred credited service will be added after the member reaches normal retirement date or vesting date.
B. The Oklahoma Police Pension and Retirement System shall transfer credited service to another state retirement system upon request of former members. Upon transfer, the former member shall have forfeited all rights in the Oklahoma Police Pension and Retirement System. Employee and city contributions of the former municipal retirement systems prior to January 1, 1981, are not transferable.
11 § 50-111.2A Purchase of service credit for time served with Department of Defense or military
A. A member of the System who terminates employment for the purpose of performing service as a police officer on a contract basis for the United States Department of Defense or for the State Department of the United States in a war zone may purchase not to exceed one (1) year of service credit for the period of time during which the member performed services for either of such entities, or any branch of the United States military or other entity operating under authority of the Department of Defense or the State Department, by making payment of all required employer and employee contributions for the period of service during which the member was so privately employed. 19
B. The contributions required by this section shall be paid by the member within one (1) year of becoming reemployed by a participating employer of the System.
C. Service credit purchased according to the provisions of this section shall be counted for purposes of vesting, normal retirement date, eligibility to participate in the Deferred Option Retirement Plan and alternative to the Deferred Option Retirement Plan authorized by Section 50-111.3 of Title 11 of the Oklahoma Statutes and for purposes of computing the retirement benefit of the member.
11 § 50-111.3. Deferred option plans
A. In lieu of terminating employment and accepting a service retirement pension pursuant to Section 50-114 of this title, any member of the Oklahoma Police Pension and Retirement System who has not less than twenty (20) years of creditable service and who is eligible to receive a service retirement pension may make an irrevocable election to participate in the Oklahoma Police Deferred Option Plan and defer the receipts of benefits in accordance with the provisions of this section.
B. For purposes of this section, creditable service shall include service credit reciprocally recognized pursuant to Section 50-101 et seq. of this title but for eligibility purposes only.
C. The duration of participation in the Oklahoma Police Deferred Option Plan for a member shall not exceed five (5) years. Participation in the Oklahoma Police Deferred Option Plan must begin the first day of a month and end on the last day of a month. At the conclusion of a member's participation in the Oklahoma Police Deferred Option Plan, the member shall terminate employment with all participating municipalities as an officer, and shall start receiving the member's accrued monthly retirement benefit from the System. Such a member may receive in-service distributions of such member’s accrued monthly retirement benefit from the System if such member is reemployed by a participating municipality only if such reemployment is as a police chief or in a position not covered under the System.
D. When a member begins participation in the Oklahoma Police Deferred Option Plan, the contribution of the employee shall cease. The employer contributions shall continue to be paid in accordance with Section 50-109 of this title. Municipal contributions for employees who elect the Oklahoma Police Deferred Option Plan shall be credited equally to the Oklahoma Police Pension and Retirement System and to the Oklahoma Police Deferred Option Plan. The monthly retirement benefits that would have been payable had the member elected to cease employment and receive a service retirement shall be paid into the Oklahoma Police Deferred Option Plan account.
E. 1. A member who participates in this plan shall be eligible to receive cost of living increases.
2. A member who participates in this plan shall earn interest at a rate of two percentage points below the rate of return of the investment portfolio of the System, but no less than the actuarial assumed interest rate as certified by the actuary in the yearly evaluation report of the actuary. The interest shall be credited to the individual account balance of the member on an annual basis. 20
F. A participant in the Oklahoma Police Deferred Option Plan shall receive, at the option of the participant:
1. A lump sum payment from the account equal to the option account balance of the participant, payable to the participant;
2. A lump sum payment from the account equal to the option account balance of the participant, payable to the annuity provider which shall be selected by the participant as a result of the research and investigation of the participant; or
3. Any other method of payment if approved by the State Board. Notwithstanding any other provision contained herein to the contrary, commencement of distributions under the Oklahoma Police Deferred Option Plan shall be no later than the time as set forth in subsection C of Section 50-114 of this title.
G. If the participant dies during the period of participation in the Oklahoma Police Deferred Option Plan, a lump sum payment equal to the account balance of the participant shall be paid in accordance with Section 50-115.2 of this title.
H. In lieu of participating in the Oklahoma Police Deferred Option Plan pursuant to subsections A, B, C, D, E and F of this section, a member may make an irrevocable election to participate in the Oklahoma Police Deferred Option Plan pursuant to this subsection as follows:
1. For purposes of this subsection, the following definitions shall apply:
a. “back drop date” means the date selected by the member, which is up to five (5) years before the member elects to participate in the Oklahoma Police Deferred Option Plan, but not before the date at which the member completes twenty (20) years of credited service,
b. “termination date” means the date the member elects to participate in the Oklahoma Police Deferred Option Plan pursuant to this subsection, and the date the member terminates employment with all participating municipalities as an active police officer, such termination has at all times included reemployment of a member by a participating municipality only if such reemployment is as a police chief or in a position not covered under the System,
c. “earlier attained credited service” means the credited service earned by a member as of the back drop date, and earlier attained credited service cannot be reduced to less than twenty (20) years of credited service, and
d. “deferred benefit balance” means all monthly retirement benefits that would have been payable had the member elected to cease employment on the back drop date and receive a service retirement from the back drop date to the termination date, all of the member’s contributions and one-half (1/2) of the employer contributions from the back drop date to the termination date, with interest based on how the benefit would have accumulated as if the member had participated in the Oklahoma Police Deferred Option Plan pursuant to subsections A, B, C, D and E of this section from the back drop date to the termination date; 21
2. At the termination date, the monthly pension benefit shall be determined based on earlier attained credited service and on the final average salary as of the back drop date. The member’s individual deferred option account shall be credited with an amount equal to the deferred benefit balance; the member shall terminate employment with all participating municipalities as a police officer and shall start receiving the member’s accrued monthly retirement benefit from the System. The provisions of subsections B, C, E, F and G of this section shall apply to this subsection. A member shall not participate in the Oklahoma Police Deferred Option Plan pursuant to this subsection if the member has elected to participate in the Oklahoma Police Deferred Option Plan pursuant to subsections A, B, C, D, E and F of this section; and
3. If a member who has not less than twenty (20) years of creditable service and who is eligible to receive a service retirement pension dies prior to terminating employment, the surviving spouse shall be eligible to elect to receive a benefit determined as if the member had elected to participate in the Oklahoma Police Deferred Option Plan in accordance with this subsection on the day immediately preceding the death. The surviving spouse must have been married to the member for the thirty (30) continuous months preceding the member’s death; provided, the surviving spouse of a member who died while in, and as a consequence of, the performance of the member’s duty for a participating municipality shall not be subject to the thirty-month marriage requirement for this election.
11 § 50-111.4 Transferred credited service—Computation of purchase price
A. The State Board shall adopt rules for computation of the purchase price for transferred credited service. These rules shall base the purchase price for each year purchased on the actuarial cost of the incremental projected benefits to be purchased. The purchase price shall represent the present value of the incremental projected benefits discounted according to the member's age at the time of purchase. Incremental projected benefits shall be the difference between the projected benefit said member would receive without purchasing the transferred credited service and the projected benefit after purchase of the transferred credited service computed as of the earliest age at which the member would be able to retire. Said computation shall assume an unreduced benefit and be computed using interest and mortality assumptions consistent with the actuarial assumptions adopted by the Board of Trustees for purposes of preparing the annual actuarial evaluation.
B. In the event that the member is unable to pay the purchase price provided for in this section by the due date, the State Board shall permit the members to amortize the purchase price over a period not to exceed sixty (60) months. Said payments shall be made by payroll deductions unless the State Board permits an alternate payment source. The amortization shall include interest in an amount not to exceed the actuarially assumed interest rate adopted by the State Board for investment earnings each year. Any member who ceases to make payment, terminates, retires or dies before completing the payments provided for in this section shall receive prorated service credit for only those payments made, unless the unpaid balance is paid by said member, his or her estate or successor in interest within six (6) months after said member's death, termination of employment or retirement, provided no retirement benefits shall be payable until the unpaid balance is paid, unless said member or beneficiary affirmatively waives the additional six-month period in which to pay the unpaid balance. Notwithstanding anything herein to the contrary, lump-sum payments 22
for a transferred credited service purchase may be made by a trustee-to-trustee transfer from a Code Section 403(b) annuity or custodial account, an eligible deferred compensation plan described in Code Section 457(b) which is maintained by an eligible employer described in Code Section 457(e)(1)(A), and/or a Code Section 401(a) qualified plan; or a direct rollover of tax-deferred funds from a Code Section 403(b) annuity or custodial account, an eligible deferred compensation plan described in Code Section 457(b) which is maintained by an eligible employer described in Code Section 457(e)(1)(A), a Code Section 401(a) qualified plan, and/or a Code Section 408(a) or 408(b) traditional or conduit Individual Retirement Account or Annuity (IRA). Roth IRAs and Coverdell Education Savings Accounts shall not be used to purchase transferred credited service. A member making installment payments shall have the option of making a cash lump-sum payment for the balance of the actuarial purchase price with interest due through the date of payment by a trustee-to-trustee transfer from a Code Section 403(b) annuity or custodial account, an eligible deferred compensation plan described in Code Section 457(b) which is maintained by an eligible employer described in Code Section 457(e)(1)(A), and/or a Code Section 401(a) qualified plan; or a direct rollover of tax-deferred funds from a Code Section 403(b) annuity or custodial account, an eligible deferred compensation plan described in Code Section 457(b) which is maintained by an eligible employer described in Code Section 457(e)(1)(A), a Code Section 401(a) qualified plan, and/or a Code Section 408(a) or 408(b) traditional or conduit Individual Retirement Account or Annuity (IRA). Roth IRAs and Coverdell Education Savings Accounts shall not be used to purchase transferred credited service. The State Board shall promulgate such rules as are necessary to implement the provisions of this subsection.
11 § 50-111.5. Written election—Employer and employee contributions and accrued earnings—Service
A. Any individual who was a member with a vested benefit with the Oklahoma Police Pension and Retirement System on or after July 1, 1987, and who becomes appointed to a position in the Oklahoma State Bureau of Narcotics and Dangerous Drugs Control, the Oklahoma State Bureau of Investigation, or the Alcoholic Beverage Laws Enforcement Commission may, at the time the individual accepts such position, elect in writing to remain a member of the Oklahoma Police Pension and Retirement System as long as the individual has not begun receiving benefits from the Oklahoma Police Pension and Retirement System or the Oklahoma Law Enforcement Retirement System. The agency shall send a copy of the written election to the Oklahoma Police Pension and Retirement System and the Oklahoma Law Enforcement Retirement System within five (5) business days from its signing. If such eligible individual does not elect to remain in the Oklahoma Police Pension and Retirement System pursuant to this subsection, then the individual may elect to transfer at a later date pursuant to subsection B of this section.
B. Any individual who was a member with a vested benefit with the Oklahoma Police Pension and Retirement System on or after July 1, 1987, and who subsequently entered the Oklahoma Law Enforcement Retirement System because he or she was appointed to a position in the Oklahoma State Bureau of Narcotics and Dangerous Drugs Control, the Oklahoma State Bureau of Investigation, or the Alcoholic Beverage Laws Enforcement Commission may, at any time the member is an active employee of such agency and has not begun receiving benefits from the Oklahoma Police Pension and Retirement System or 23
the Oklahoma Law Enforcement Retirement System, elect in writing to reenter the Oklahoma Police Pension and Retirement System. Such written election shall be provided to the Oklahoma Police Pension and Retirement System. For purposes of this section, constructive receipt of the written election shall be the first day of the month following actual receipt.
1. A person who elects to transfer pursuant to this subsection shall have all of his or her employer and employee contributions made to the Oklahoma Law Enforcement Retirement System transferred to the Oklahoma Police Pension and Retirement System along with accrued earnings based upon the actuarial rate of return of the Oklahoma Law Enforcement Retirement System. Upon receiving the transfer of the employer and employee contributions and earnings, and notwithstanding the provisions of Section 50-111.4 of this title, the Oklahoma Police Pension and Retirement System shall treat the service that the member accrued in the Oklahoma Law Enforcement Retirement System as service in the Oklahoma Police Pension and Retirement System; and
2. Upon actual receipt of the written election pursuant to this subsection, the Oklahoma Police Pension and Retirement System shall notify the Oklahoma Law Enforcement Retirement System of the transfer election and shall send to the Oklahoma Law Enforcement Retirement System a copy of the election within five (5) business days. The Oklahoma Law Enforcement Retirement System shall transfer the employer and employee contributions and earnings of the transferring member to the Oklahoma Police Pension and Retirement System on or before the first day of the month following constructive receipt of the election. The transferring member shall then reenter the Oklahoma Police Pension and Retirement System beginning on the first day of the month following the month in which constructive receipt of the written election was made to the Oklahoma Police Pension and Retirement System. Any member who transfers to the Oklahoma Police Pension and Retirement System pursuant to this subsection shall have all service credit in the Oklahoma Law Enforcement Retirement System canceled.
C. Notwithstanding the provisions of Section 2-300 et seq. of Title 47 of the Oklahoma Statutes, the Oklahoma State Bureau of Narcotics and Dangerous Drugs Control, the Oklahoma State Bureau of Investigation, and the Alcoholic Beverage Laws Enforcement Commission shall make employer contributions to the Oklahoma Police Pension and Retirement System in the same manner as participating municipalities of the Oklahoma Police Pension and Retirement System for all members who either elect to remain in or elect to transfer to the Oklahoma Police Pension and Retirement System pursuant to this section. The electing member shall make employee contributions to the Oklahoma Police Pension and Retirement System as other participating members of the Oklahoma Police Pension and Retirement System.
11 § 50-112. Participation in System required—Eligibility
A. All persons employed as full-time duly appointed or elected officers who are paid for working more than twenty-five (25) hours per week or any person hired by a participating municipality who is undergoing police training to become a permanent police officer of the municipality shall participate in the System upon initial employment with a police department of a participating municipality. All such persons shall submit to a physical-medical examination pertaining to sight, hearing, agility and other conditions the requirements of which shall be established by the State Board. The person shall be required to complete this 24
physical-medical examination prior to the beginning of actual employment. This examination shall identify any preexisting conditions. Except as otherwise provided in this section, a police officer shall be not less than twenty-one (21) nor more than forty-five (45) years of age when accepted for membership in the System. However, if a municipality should be found to be in noncompliance with the provisions of Article 50 of this title, as determined by the State Board, then any current full-time active police officer employed by a municipality as of July 1, 2001, shall not be denied eligibility to participate in the Oklahoma Police Pension and Retirement System solely due to age. The State Board shall have authority to deny or revoke membership of any person submitting false information in such person's membership application. The State Board shall have final authority in determining eligibility for membership in the System, pursuant to the provisions of this article.
B. The police chief of any participating municipality may be exempt from membership in the System or may become a member provided the member is not a retired member and the requirements of this section are met at the time of employment.
C. A member of the System who has attained his or her normal retirement date may, if the member so elects, agree to terminate employment and retire as a member of the System and make an election to receive distributions from the System. If a retired member is reemployed by a participating municipality in the position of police chief or in a position which is not covered by the System, retirement shall include receipt by such retired member of in-service distributions from the System.
D. A former member of the System who terminates from covered employment and who has neither retired from the System nor entered the Oklahoma Police Deferred Option Plan and is later employed in a covered position with a participating municipality shall not be denied eligibility to become a member of the System because he or she is forty-five (45) years of age or older. If such member has withdrawn his or her contributions prior to re-entering the System and the member desires to receive credit for such prior service, then the member shall pay back such contributions and interest pursuant to Section 50-111.1 of this title.
E. Notwithstanding any other provision of law to the contrary, a municipality that employs two (2) or fewer full-time police officers may employ a police officer who is more than forty-five (45) years of age and who has never participated in the Oklahoma Police Pension and Retirement System, but such police officer shall not be eligible to participate in the System. Such police officer shall be counted in the limitation imposed by this subsection.
11 § 50-113. Purposes of pension fund—Limitation on payments
All the funds in the System shall be used only for the following purposes:
1. For investments as authorized by law;
2. For the payment of allowances to injured and disabled members of any participating municipality;
3. For the payment of pensions for long service to retired members of any participating municipality; 25
4. For the payment of a pension to any beneficiary of any member eligible for a pension;
5. For the payment of any professional services deemed necessary by the State Board;
6. For the payment of warrant deductions upon proper authorization given by the member to the Board from which the member or beneficiary is currently receiving retirement benefits for any insurance premium due an insurance organization for life, accident, and health insurance.
The System has no responsibility for the marketing, enrolling or administration of the products for which warrant deductions are authorized under this paragraph.
Approval of a warrant deduction for any insurance organization, line of coverage or policy shall not be construed as an assumption of liability, for the terms of the policy or the performance of the insurance organization by the Oklahoma Police Pension and Retirement System;
7. For the payment of membership dues in a statewide association limited to Oklahoma Police Pension and Retirement System members with a minimum membership of one thousand dues-paying members upon proper authorization given by the member; and
8. Any other purposes authorized by law.
Such payments in any event shall not exceed the limits provided in this article.
11 § 50-114. Service pension to members of System—Amount—Eligibility—Delay of distribution—Death of member—Review of requests— Disability benefits in lieu of pensions
A. The State Board is hereby authorized to pay out of funds in the System a monthly service pension to any member eligible as hereinafter provided, not exceeding in any event the amount of money in such funds and not exceeding in any event the accrued retirement benefit for such member, except as provided for herein. In order for a member to be eligible for such service pension the following requirements must be complied with:
1. The member's service with the police department for any participating municipality must have ceased; however, a member may be subsequently reemployed in the position of police chief pursuant to subsection C of Section 50-112 of this title;
2. The member must have reached the member's normal retirement date; and
3. The member must have complied with any agreement as to contributions by the member and other members to any funds of the System where said agreement has been made as provided by this article; provided, that should a retired member receive disability benefits as provided in this and other sections of this article, the time the retired member is receiving said disability benefits shall count as time on active service if the retired member should be recalled by the Chief of Police from said disability retirement. It shall be necessary before said time shall be counted toward retirement that the retired 26
member make the same contribution as the member would have otherwise made if on active service for the time the retired member was disabled.
B. Any member complying with all requirements of this article, who reaches normal retirement date, upon application, shall be retired at the accrued retirement benefit. When a member has served for the necessary number of years and is otherwise eligible, as provided in this article, if such member is discharged without cause by the participating municipality, the member shall be eligible for a pension.
C. Effective July 1, 1989, in no event shall commencement of distribution of the accrued retirement benefit of a member be delayed beyond April 1 of the calendar year following the later of:
1. The calendar year in which the member reaches seventy and one-half (70 1/2) years of age; or
2. The actual retirement date of the member.
For distributions made for calendar years beginning on or after January 1, 2001 through December 31, 2004, the System shall apply the minimum distribution requirements and incidental benefit requirements of Section 401(a)(9) of the Internal Revenue Code of 1986, as amended, in accordance with the regulations under Section 401(a)(9) of the Internal Revenue Code of 1986, as amended, which were proposed on January 17, 2001, notwithstanding any provision of the System to the contrary. For distributions made for calendar years beginning on or after January 1, 2005, the System shall apply the minimum distribution incidental benefit requirements, incidental benefit requirements, and minimum distribution requirements of Section 401(a)(9) of the Internal Revenue Code of 1986, as amended, in accordance with the final regulations under Section 401(a)(9) of the Internal Revenue Code of 1986, as amended, which were issued in April 2002 and June 2004, notwithstanding any provision of the System to the contrary. Effective January 1, 2009, with respect to the Oklahoma Police Deferred Option Plan, to the extent applicable, no minimum distribution is required for 2009 in accordance with section 401 (a) (9) (H) of the Internal Revenue Code of 1986, as amended.
Effective September 8, 2009, notwithstanding anything to the contrary of the System, the System which is a governmental plan (within the meaning of Section 414(d) of the Internal Revenue Code of 1986, as amended) is treated as having complied with Section 401(a)(9) of the Internal Revenue Code of 1986, as amended, for all years to which Section 401(a)(9) of the Internal Revenue Code of 1986, as amended,applies to the System if the System complies with a reasonable and good faith interpretation of Section 401(a)(9) of the Internal Revenue Code of 1986, as amended.
D. In the event of the death of any member who has been awarded a retirement benefit or is eligible therefor as provided in this section, such member's beneficiaries shall be paid such retirement benefit. The remaining portion of the member's retirement benefit shall be distributed to the beneficiaries at least as rapidly as under the method of distribution to the member. Effective March 1, 1997, if a member to whom a retirement benefit has been awarded or who is eligible therefor dies prior to the date as of which the total amount of retirement benefit paid equals the total amount of the employee contributions paid by or on behalf of the member and the member does not have a surviving 27
beneficiary, the total benefits paid as of the date of the member's death shall be subtracted from the accumulated employee contribution amount and the balance, if greater than zero (0), shall be paid to the member's estate.
E. The State Board may review and affirm a member's request for retirement benefits prior to the member's normal retirement date provided that no retirement benefits are paid prior to the normal retirement date.
F. A member retired under the provisions of this article may apply to the State Board to have the member's retirement benefits set aside and may make application for disability benefits. Upon approval of the disability benefits, the member would become subject to all provisions of this article pertaining to disability retirement.
G. Upon the death of a retired member or a beneficiary, the benefit payment for the month in which the retired member or beneficiary died, if not previously paid, shall be made to the beneficiary of the member or to the member's or beneficiary’s estate if there is no beneficiary. Such benefit payment shall be made in an amount equal to a full monthly benefit payment regardless of the day of the month in which the retired member or beneficiary died.
H. If the requirements of Section 50-114.4 of this title are satisfied, a member who, by reason of attainment of normal retirement date or age, is separated from service as a public safety officer with the member’s participating municipality, may elect to have payment made directly to the provider for qualified health insurance premiums by deduction from his or her monthly pension payment, after December 31, 2006, in accordance with Section 402(l) of the Internal Revenue Code of 1986, as amended.
11 § 50-114.1 Limitations on benefits relating to section 415 of Internal Revenue Code of 1986
A. For limitation years prior to July 1, 2007, the limitations of Section 415 of the Internal Revenue Code of 1986, as amended, shall be computed in accordance with the applicable provisions of the System in effect at that time and, to the extent applicable, Revenue Ruling 98-1 and Revenue Ruling 2001-51, except as provided below. Notwithstanding any other provision contained herein to the contrary, the benefits payable to a member from the System provided by employer contributions (including contributions picked up by the employer under Section 414(h) of the Internal Revenue Code of 1986, as amended) shall be subject to the limitations of Section 415 of the Internal Revenue Code of 1986, as amended, in accordance with the provisions of this section. The limitations of this section shall apply in limitation years beginning on or after July 1, 2007, except as otherwise provided below.
B. Except as provided below, effective for limitation years ending after December 31, 2001, any accrued retirement benefit payable to a member as an annual benefit as described below shall not exceed One Hundred Sixty Thousand Dollars ($160,000.00), automatically adjusted under Section 415(d) of the Internal Revenue Code of 1986, as amended, for increases in the cost of living, as prescribed by the Secretary of the Treasury or the Secretary’s delegate, effective January 1 of each calendar year and applicable to the limitation year ending with or within such calendar year. The automatic annual adjustment of the dollar limitation in this subsection under Section 415(d) of the Internal Revenue Code of 1986, as amended, shall apply to a member who has had a severance from employment. 28
1. The member’s annual benefit is a benefit that is payable annually in the form of a straight life annuity. Except as provided below, where a benefit is payable in a form other than a straight life annuity, the benefit shall be adjusted to an actuarially equivalent straight life annuity that begins at the same time as such other form of benefit and is payable on the first day of each month, before applying the limitations of this section. For a member who has or will have distributions commencing at more than one annuity starting date, the annual benefit shall be determined as of each such annuity starting date (and shall satisfy the limitations of this section as of each such date), actuarially adjusting for past and future distributions of benefits commencing at the other annuity starting dates. For this purpose, the determination of whether a new starting date has occurred shall be made without regard to Section 1.401(a)-20, Q&A 10(d), and with regard to Section 1.415(b)-1(b)(1)(iii)(B) and (C) of the Income Tax Regulations.
2. No actuarial adjustment to the benefit shall be made for:
a. survivor benefits payable to a surviving spouse under a qualified joint and survivor annuity to the extent such benefits would not be payable if the member’s benefit were paid in another form,
b. benefits that are not directly related to retirement benefits (such as a qualified disability benefit, preretirement incidental death benefits, and postretirement medical benefits), or
c. the inclusion in the form of benefit of an automatic benefit increase feature, provided the form of benefit is not subject to Section 417(e)(3) of the Internal Revenue Code of 1986, as amended, and would otherwise satisfy the limitations of this section, and the System provides that the amount payable under the form of benefit in any limitation year shall not exceed the limits of this section applicable at the annuity starting date, as increased in subsequent years pursuant to Section 415(d) of the Internal Revenue Code of 1986, as amended. For this purpose, an automatic benefit increase feature is included in a form of benefit if the form of benefit provides for automatic, periodic increases to the benefits paid in that form.
3. The determination of the annual benefit shall take into account Social Security supplements described in Section 411(a)(9) of the Internal Revenue Code of 1986, as amended, and benefits transferred from another defined benefit plan, other than transfers of distributable benefits pursuant to Section 1.411(d)-4, Q&A-3(c), of the Income Tax Regulations, but shall disregard benefits attributable to employee contributions or rollover contributions.
4. Effective for distributions in plan years beginning after December 31, 2003, the determination of actuarial equivalence of forms of benefit other than a straight life annuity shall be made in accordance with paragraph 5 or paragraph 6 of this subsection.
5. Benefit Forms Not Subject to Section 417(e)(3) of the Internal Revenue Code of 1986, as amended: The straight life annuity that is actuarially equivalent to the member’s form of benefit shall be determined under this paragraph 5 if the form of the member’s benefit is either:
a. a nondecreasing annuity (other than a straight life annuity) payable for a period of not less than the life of the member (or, in the case 29
of a qualified preretirement survivor annuity, the life of the surviving spouse), or
b. an annuity that decreases during the life of the member merely because of:
(1) the death of the survivor annuitant (but only if the reduction is not below fifty percent (50%) of the benefit payable before the death of the survivor annuitant), or
(2) the cessation or reduction of Social Security supplements or qualified disability payments (as defined in Section 411(a) (9) of the Internal Revenue Code of 1986, as amended).
c. Limitation Years Beginning Before July 1, 2007. For limitation years beginning before July 1, 2007, the actuarially equivalent straight life annuity is equal to the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the member’s form of benefit computed using whichever of the following produces the greater annual amount:
(1) the interest rate and the mortality table (or other tabular factor), each as set forth in subsection G of Section 50-105.4 of this title for adjusting benefits in the same form; and
(2) a five percent (5%) interest rate assumption and the applicable mortality table described in Rev. Rul. 2001-62 (or its successor for these purposes, if applicable) for that annuity starting date.
d. Limitation Years Beginning On Or After July 1, 2007. For limitation years beginning on or after July 1, 2007, the actuarially equivalent straight life annuity is equal to the greater of:
(1) the annual amount of the straight life annuity (if any) payable to the member under the System commencing at the same annuity starting date as the member’s form of benefit, and
(2) the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the member’s form of benefit, computed using a five percent (5%) interest rate assumption and the applicable mortality table described in Rev. Rul. 2001-62 (or its successor for these purposes, if applicable) for that annuity starting date.
6. Benefit Forms Subject to Section 417(e)(3) of the Internal Revenue Code of 1986, as amended: The straight life annuity that is actuarially equivalent to the member’s form of benefit shall be determined under this paragraph 6 if the form of the member’s benefit is other than a benefit form described in paragraph 5 of this subsection. In this case, the actuarially equivalent straight life annuity shall be determined as follows:
a. Annuity Starting Date in Plan Years Beginning After December 31, 2007 (Plan Years beginning on or after July 1, 2008). If the annuity starting date of the member’s form of benefit is in a plan year beginning after December 31, 2007, the actuarially equivalent straight life annuity is equal to the greatest of (1), (2) or (3) below: 30
(1) the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the member’s form of benefit, computed using the interest rate and the mortality table (or other tabular factor) each as set forth in subsection G of Section 50-105.4 of this title for adjusting benefits in the same form,
(2) the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the member's form of benefit, computed using a five and one-half percent (5.5%) interest rate assumption and the applicable mortality table described in Rev. Rul. 2001-62 (or its successor for these purposes, if applicable), and
(3) the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the member's form of benefit, computed using:
(a) the adjusted first, second, and third segment rates under Section 417 (e) (3) (C) and (D) of the Internal Revenue Code of 1986, as amended, applied under rules similar to the rules of Section 430 (h) (2) (C) of the Internal Revenue Code of 1986, as amended, for the fourth calendar month preceding the plan year in which falls the annuity starting date for the distribution and the stability period is the successive period of one (1) plan year which contains the annuity starting date for the distribution and for which the applicable interest rate remains constant, or as otherwise provided in the applicable guidance in the first day of the first plan year beginning after December 31, 2007, does not coincide with the first day of the applicable stability period, and
(b) the applicable mortality table described in Rev. Rul. 2001-62 (or its successor for these purposes, if applicable),
divided by one and five one-hundredths (1.05).
b. Annuity Starting Date in Plan Years Beginning in 2006 or 2007. If the annuity starting date of the member’s form of benefit is in a Plan Year beginning in 2006 or 2007, the actuarially equivalent straight life annuity is equal to the greatest of (1), (2) or (3) below:
(1) the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the member’s form of benefit, computed using the interest rate and the mortality table (or other tabular factor) each as set forth in subsection G of Section 50-105.4 of this title for adjusting benefits in the same form,
(2) the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the member’s form of benefit, computed using a five and one-half percent (5.5%) interest rate assumption and 31
the applicable mortality table described in Rev. Rul. 2001-62 (or its successor for these purposes, if applicable), and
(3) the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the member’s form of benefit, computed using:
(a) the rate of interest on thirty-year Treasury securities as specified by the Commissioner for the lookback month for the stability period specified below. The lookback month applicable to the stability period is the fourth calendar month preceding the first day of the stability period, as specified below. The stability period is the successive period of one (1) plan year which contains the annuity starting date for the distribution and for which the applicable interest rate remains constant, and
(b) the applicable mortality table described in Rev. Rul 2001-62 (or its successor for these purposes, if applicable)
divided by one and five one-hundredths (1.05).
c. Annuity Starting Date in Plan Years Beginning in 2004 or 2005:
(1) If the annuity starting date of the member's form of benefit is in a plan year beginning in 2004 or 2005, the actuarially equivalent straight life annuity is equal to the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the member's form of benefit, computed using whichever of the following produces the greater annual amount:
(a) the interest rate and the mortality table (or other tabular factor) each as set forth in subsection G of Section 50-105.4 of this title for adjusting benefits in the same form, and
(b) a five and one-half percent (5.5%) interest rate assumption and the applicable mortality table described in Rev. Rul. 2001-62 (or its successor for these purposes, if applicable).
(2) If the annuity starting date of the member's benefit is on or after the first day of the first plan year beginning in 2004 and before December 31, 2004, the application of this subparagraph b shall not cause the amount payable under the member’s form of benefit to be less than the benefit calculated under the System, taking into account the limitations of this section, except that the actuarially equivalent straight life annuity is equal to the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the member’s form of benefit, computed using whichever of the following produces the greatest annual amount: 32
(a) the interest rate and mortality table (or other tabular factor) each as set forth in subsection G of Section 50-105.4 of this title for adjusting benefits in the same form,
(b) (i) the rate of interest on thirty-year Treasury securities as specified by the Commissioner for the lookback month for the stability period specified below. The lookback month applicable to the stability period is the fourth calendar month preceding the first day of the stability period, as specified below. The stability period is the successive period of one (1) plan year which contains the annuity starting date for the distribution and for which the applicable interest rate remains constant, and
(ii) the applicable mortality table described in Rev. Rul. 2001-62 (or its successor for these purposes, if applicable), and
(c) (i) the rate of interest on thirty-year Treasury securities as specified by the Commissioner for the lookback month for the stability period specified below. The lookback month applicable to the stability period is the fourth calendar month preceding the first day of the stability period, as specified below. The stability period is the successive period of one (1) plan year which contains the annuity starting date for the distribution and for which the applicable interest rate remains constant (as in effect on the last day of the last plan year beginning before January 1, 2004, under provisions of the System then adopted and in effect), and
(ii) the applicable mortality table described in Rev. Rul. 2001-62 (or its successor for these purposes, if applicable).
C. If a member has less than ten (10) years of participation in the System and all predecessor municipal police pension and retirement systems, the dollar limitation otherwise applicable under subsection B of this section shall be multiplied by a fraction, the numerator of which is the number of the years of participation in the System of the member, but never less than one (1), and the denominator of which is ten (10).
D. Adjustment of Dollar Limitation for Benefit Commencement Before Age Sixty-two (62) or After Age Sixty-five (65): Effective for benefits commencing in limitation years ending after December 31, 2001, the dollar limitation under subsection B of this section shall be adjusted if the annuity starting date of the member’s benefit is before age sixty-two (62) or after age sixty-five (65). If the annuity starting date is before age sixty-two (62), the dollar limitation under subsection B of this section shall be adjusted under paragraph 1 of this subsection, as modified by paragraph 3 of this subsection, but subject to paragraph 4 of this subsection. If the annuity starting date is after age sixty-five (65), the dollar limitation under subsection B of this section shall be adjusted 33
under paragraph 2 of this subsection, as modified by paragraph 3 of this subsection.
1. Adjustment of Defined Benefit Dollar Limitation for Benefit Commencement Before Age Sixty-two (62):
a. Limitation Years Beginning Before July 1, 2007. If the annuity starting date for the member’s benefit is prior to age sixty-two (62) and occurs in a limitation year beginning before July 1, 2007, the dollar limitation for the member’s annuity starting date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the member’s annuity starting date that is the actuarial equivalent of the dollar limitation under subsection B of this section (adjusted under subsection C of this section for years of participation less than ten (10), if required) with actuarial equivalence computed using whichever of the following produces the smaller annual amount:
(1) the interest rate and the mortality table (or other tabular factor) each as set forth in subsection G of Section 50-105.4 of this title, or
(2) a five-percent interest rate assumption and the applicable mortality table as described in Rev. Rul. 2001-62 (or its successor for these purposes, if applicable).
b. Limitation Years Beginning On Or After July 1, 2007.
(1) System Does Not Have Immediately Commencing Straight Life Annuity Payable at Both Age Sixty-two (62) and the Age of Benefit Commencement. If the annuity starting date for the member’s benefit is prior to age sixty-two (62) and occurs in a limitation year beginning on or after July 1, 2007, and the System does not have an immediately commencing straight life annuity payable at both age sixty-two (62) and the age of benefit commencement, the dollar limitation for the member’s annuity starting date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the member’s annuity starting date that is the actuarial equivalent of the dollar limitation under subsection B of this section (adjusted under subsection C of this section for years of participation less than ten (10), if required) with actuarial equivalence computed using a five-percent interest rate assumption and the applicable mortality table for the annuity starting date as described in Rev. Rul. 2001-62(or its successor for these purposes, if applicable) (and expressing the member’s age based on completed calendar months as of the annuity starting date).
(2) System Has Immediately Commencing Straight Life Annuity Payable at Both Age Sixty-two (62) and the Age of Benefit Commencement. If the annuity starting date for the member’s benefit is prior to age sixty-two (62) and occurs in a limitation year beginning on or after July 1, 2007, and the System has an immediately commencing straight life annuity payable at both 34
age sixty-two (62) and the age of benefit commencement, the dollar limitation for the member’s annuity starting date is the lesser of the limitation determined under division (1) of subparagraph b of this paragraph and the dollar limitation under subsection B of this section (adjusted under subsection C of this section for years of participation less than ten (10), if required) multiplied by the ratio of the annual amount of the immediately commencing straight life annuity under the System at the member’s annuity starting date to the annual amount of the immediately commencing straight life annuity under the System at age sixty-two (62), both determined without applying the limitations of this section.
2. Adjustment of Defined Benefit Dollar Limitation for Benefit Commencement After Age Sixty-five (65):
a. Limitation Years Beginning Before July 1, 2007. If the annuity starting date for the member’s benefit is after age sixty-five (65) and occurs in a limitation year beginning before July 1, 2007, the dollar limitation for the member’s annuity starting date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the member’s annuity starting date that is the actuarial equivalent of the dollar limitation under subsection B of this section (adjusted under subsection C of this section for years of participation less than ten (10), if required) with actuarial equivalence computed using whichever of the following produces the smaller annual amount:
(1) the interest rate and the mortality table (or other tabular factor) each as set forth in subsection G of Section 50-105.4 of this title, or
(2) a five-percent interest rate assumption and the applicable mortality table as described in Rev. Rul. 2001-62 (or its successor for these purposes, if applicable).
b. Limitation Years Beginning On Or After July 1, 2007.
(1) System Does Not Have Immediately Commencing Straight Life Annuity Payable at Both Age Sixty-five (65) and the Age of Benefit Commencement. If the annuity starting date for the member’s benefit is after age sixty-five (65) and occurs in a limitation year beginning on or after July 1, 2007, and the System does not have an immediately commencing straight life annuity payable at both age sixty-five (65) and the age of benefit commencement, the dollar limitation at the member’s annuity starting date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the member’s annuity starting date that is the actuarial equivalent of the dollar limitation under subsection B of this section (adjusted under subsection C of this section for years of participation less than ten (10), if required) with actuarial equivalence computed using a five-percent interest rate assumption and the applicable mortality table for the annuity starting date as described in Rev. Rul. 2001-62(or its 35
successor for these purposes, if applicable) (and expressing the member’s age based on completed calendar months as of the annuity starting date).
(2) System Has Immediately Commencing Straight Life Annuity Payable at Both Age Sixty-five (65) and Age of Commencement. If the annuity starting date for the member’s benefit is after age sixty-five (65) and occurs in a limitation year beginning on or after July 1, 2007, and the System has an immediately commencing straight life annuity payable at both age sixty-five (65) and the age of benefit commencement, the dollar limitation at the member’s annuity starting date is the lesser of the limitation determined under division (1) of subparagraph b of this paragraph and the dollar limitation under subsection B of this section (adjusted under subsection C of this section for years of participation less than ten (10), if required) multiplied by the ratio of the annual amount of the adjusted immediately commencing straight life annuity under the System at the member’s annuity starting date to the annual amount of the adjusted immediately commencing straight life annuity under the System at age sixty-five (65), both determined without applying the limitations of this section. For this purpose, the adjusted immediately commencing straight life annuity under the System at the member’s annuity starting date is the annual amount of such annuity payable to the member, computed disregarding the member’s accruals after age sixty-five (65) but including actuarial adjustments even if those actuarial adjustments are used to offset accruals; and the adjusted immediately commencing straight life annuity under the System at age sixty-five (65) is the annual amount of such annuity that would be payable under the System to a hypothetical member who is age sixty-five (65) and has the same accrued benefit as the member.
3. Notwithstanding the other requirements of this subsection, no adjustment shall be made to the dollar limitation under subsection B of this section to reflect the probability of a member’s death between the annuity starting date and age sixty-two (62), or between age sixty-five (65) and the annuity starting date, as applicable, if benefits are not forfeited upon the death of the member prior to the annuity starting date. To the extent benefits are forfeited upon death before the annuity starting date, such an adjustment shall be made. For this purpose, no forfeiture shall be treated as occurring upon the member’s death if the System does not charge members for providing a qualified preretirement survivor annuity, as defined in Section 417(c) of the Internal Revenue Code of 1986, as amended, upon the member’s death.
4. Notwithstanding any other provision to the contrary, for limitation years beginning on or after January 1, 1997, if payment begins before the member reaches age sixty-two (62), the reductions in the limitations in this subsection shall not apply to a member who is a “qualified participant” as defined in Section 415(b)(2)(H) of the Internal Revenue Code of 1986, as amended. 36
E. Minimum Benefit Permitted: Notwithstanding anything else in this section to the contrary, the benefit otherwise accrued or payable to a member under this System shall be deemed not to exceed the maximum permissible benefit if:
1. The retirement benefits payable for a limitation year under any form of benefit with respect to such member under this System and under all other defined benefit plans (without regard to whether a plan has been terminated) ever maintained by a participating municipality do not exceed Ten Thousand Dollars ($10,000.00) multiplied by a fraction:
a. the numerator of which is the member’s number of credited years (or part thereof, but not less than one (1) year) of service (not to exceed ten (10) years) with the participating municipality, and
b. the denominator of which is ten (10); and
2. The participating municipality (or a predecessor employer) has not at any time maintained a defined contribution plan in which the member participated (for this purpose, mandatory employee contributions under a defined benefit plan, individual medical accounts under Section 401(h) of the Internal Revenue Code of 1986, as amended, and accounts for postretirement medical benefits established under Section 419A(d)(1) of the Internal Revenue Code of 1986, as amended, are not considered a separate defined contribution plan).
F. In no event shall the maximum annual accrued retirement benefit of a member allowable under this section be less than the annual amount of such accrued retirement benefit, including early pension and qualified joint and survivor annuity amounts, duly accrued by the member as of the last day of the limitation year beginning in 1982, or as of the last day of the limitation year beginning in 1986, whichever is greater, disregarding any plan changes or cost-of-living adjustments occurring after July 1, 1982, as to the 1982 accrued amount, and May 5, 1986, as to the 1986 accrued amount.
G. Effective for years beginning after December 31, 1997, if a member purchases service pursuant to Section 50-111.2 and Section 50-111.4 of this title, which qualifies as “permissive service credit” pursuant to Section 415(n) of the Internal Revenue Code of 1986, as amended, the limitations of Section 415 of the Internal Revenue Code of 1986, as amended, may be met by either:
1. Treating the accrued benefit derived from such contributions as an annual benefit under subsection B of this section, or
2. Treating all such contributions as annual additions for purposes of Section 415(c) of the Internal Revenue Code of 1986, as amended.
H. Effective for years beginning after December 31, 1997, if a member repays to the System any amounts received because of such member’s prior termination pursuant to subsection C of Section 50-111.1 of this title, such repayment shall not be taken into account for purposes of Section 415 of the Internal Revenue Code of 1986, as amended, pursuant to Section 415(k)(3) of the Internal Revenue Code of 1986, as amended.
I. For limitation years beginning on or after January 1, 1995, subsection C of this section, paragraph 1 of subsection D of this section, and the proration provided under subparagraphs a and b of paragraph 1 of subsection E of this section shall not apply to a benefit paid under the System as the result of the 37
member becoming disabled by reason of personal injuries or sickness, or amounts received by the beneficiaries, survivors or estate of the member as the result of the death of the member.
J. For distributions made in limitation years beginning on or after January 1, 2000, the combined limit of repealed Section 415(e) of the Internal Revenue Code of 1986, as amended, shall not apply.
K. The State Board is hereby authorized to revoke the special election previously made on June 19, 1991, under Section 415(b)(10) of the Internal Revenue Code of 1986, as amended.
11 § 50-114.2. Direct rollover distributions
A. This section applies to distributions made on or after January 1, 2002. Notwithstanding any provision of the System to the contrary that would otherwise limit a Distributee’s election hereunder, a Distributee, including a nonspouse designated beneficiary, to the extent permitted under paragraph 3 of subsection B of this section, may elect, at the time and in the manner prescribed by the State Board, to have any portion of an Eligible Rollover Distribution paid directly to:
1. An Eligible Retirement Plan; or
2. Effective for distributions after December 31, 2007, a Roth IRA described in Section 408A of the Internal Revenue Code of 1986, as amended, subject to any limitations described in Section 408A(c) of the Internal Revenue Code of 1986, as amended;
Specified by the Distributes in a Direct Rollover
B. For purposes of this section, the following definitions shall apply:
1. “Eligible Rollover Distribution” means any distribution of all or any portion of the balance to the credit of the Distributee, except that an Eligible Rollover Distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Distributee or the joint lives (or life expectancies) of the Distributee and the Distributee’s designated beneficiary, or for a specified period of ten (10) years or more; any distribution to the extent such distribution is required under Section 401(a)(9) of the Internal Revenue Code of 1986, as amended; and the portion of any distribution that is not includable in gross income. Effective January 1, 2002, a portion of a distribution shall not fail to be an Eligible Rollover Distribution merely because the portion consists of after-tax member contributions which are not includable in gross income. However, such portion may be transferred only:
a. from January 1, 2002, through December 31, 2006:
(1) to an individual retirement account or annuity described in Section 408(a) or (b) of the Internal Revenue Code of 1986, as amended, or
(2) in a direct trustee-to-trustee transfer, to a qualified trust which is part of a defined contribution plan that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is 38
includable in gross income and the portion of such distribution which is not so includable, and
b. on or after January 1, 2007:
(1) to an individual retirement account or annuity described in Section 408(a) or (b) of the Internal Revenue Code of 1986, as amended, or
(2) in a direct trustee-to-trustee transfer to a qualified trust or an annuity contract described in Section 403(b) of the Internal Revenue Code of 1986, as amended, and such trust or contract provides for separate accounting for amounts so transferred (and earnings thereon), including separately accounting for the portion of such distribution which is includable in gross income and the portion of such distribution which is not so includable.
Effective for distributions after December 31, 2007, such after-tax portion may also be directly transferred to a Roth IRA described in Section 408A of the Internal Revenue Code of 1986, as amended, subject to any limitations described in Section 408A(c) of the Internal Revenue Code of 1986, as amended, that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distributions which is not so includible in gross income and the portion of such distribution which is not so includible.
Notwithstanding the foregoing, effective January 1, 2009, to the extent applicable, if all or a portion of a distribution from the Oklahoma Police Deferred Option Plan during 2009 is treated as an Eligible Rollover Distribution pursuant to Section 402 (c) (4) of the Internal Revenue Code of 1986, as amended, but would not be so treated if the minimum distribution requirements under Section 401 (a) (9) of the Internal Revenue Code of 1986, as amended, had applied during 2009, such distribution shall not be treated as an Eligible Rollover Distribution for purposes of Section 401 (a) (31), Section 3405 (c) or Section 402 (f) of the Internal Revenue Code of 1986, as amended;
2. “Eligible Retirement Plan” means an individual retirement account described in Section 408(a) of the Internal Revenue Code of 1986, as amended, an individual retirement annuity described in Section 408(b) of the Internal Revenue Code of 1986, as amended, an annuity plan described in Section 403(a) of the Internal Revenue Code of 1986, as amended, or a qualified tru