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TECHNICAL EXPLANATION OF H.R. 6081, THE
"HEROES EARNINGS ASSISTANCE AND RELIEF TAX ACT OF 2008,"
AS SCHEDULED FOR CONSIDERATION BY
THE HOUSE OF REPRESENTATIVES ON MAY 20, 2008
Prepared by the Staff
of the
JOINT COMMITTEE ON TAXATION
May 20, 2008
JCX-44-08
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Sponsor: Rep. Charles Rangel [D-NY] show cosponsors (28)
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Bill Text: Summaries (CRS)
Full Text
Status O Introduced May 76, 2008
O Passed House (details] May zo, zoos
O Passed Senate May zz, zoos
O Signed by President Jun 17, zone
_. _ _ _ _
This bill has become law. (Last Updated Jul 5, a_ooaj
Last Action: Jun 17, 2008: Became Public Law No: 110-245.
Show All Related Votes
http://www. govtrack.us/congress/bill.xpd?bill=h 110-6081
7/15/2008
D. Survivor and Disability Payments with Respect to Qualified Military Service
(sec. 104 of the bill and secs. 401(a), 414(u), 403(b), and 457(g) of the Code)
Present Law
Under the Uniformed Services Employment and Reemployment Rights Act of 1994
("USERRA"),3 which revised and restated the Federal law protecting veterans' reemployment
rights, an employee who leaves a civilian job for qualified military service generally is entitled to
be reemployed by the civilian employer if the individual retains to employment within a
specified time period. In addition to reemployment rights, a returning veteran also is entitled to
the restoration of certain pension, profit sharing and similar benefits that would have accrued, but
for the employee's absence due to the qualified military service. The protections provided under
USERRA do not apply if the veteran is not reemployed by the veteran's civilian employer.
USERRA generally provides that for a reemployed veteran, service in the uniformed
services is considered service with the employer for retirement plan vesting and benefit accrual
purposes. The employer that reemploys the returning veteran is liable for funding any resulting
obligation. USERRA also provides that the reemployed veteran is entitled to any accnied
benefits that are contingent on the making of, or derived from, employee contributions or
elective deferrals only to the extent the reemployed veteran makes payment to the plan with
respect to such contributions or deferrals. No such payment may exceed the amount the
reemployed veteran would have been permitted or required to contribute had the person
remained continuously employed by the employer throughout the period of uniformed service.
Under USERRA, any such payment to the plan must be made during the period beginning with
the date of reemployment and whose duration is three times the reemployed veteran's period of
uniform service, not to exceed five years.
The Small Business Job Protection Act of 19964 added section 414(u) to the Code to
provide rules regarding the interaction of the USERRA protections with generally applicable
rules that govern tax qualified retirement plans. For example, section 414(u) provides that if any
make-up contribution is made by an employer or employee with respect to a reemployed veteran,
then such contribution is not subject to the otherwise applicable plan contribution and deduction
limits for the year in which the contribution is made (such as the section 402(g) annual limit on
elective deferrals, which is generally $15,500 in 2008). Such limits are instead applied for the
year to which the contribution relates had the individual continued to be employed by the
employer during the period of uniformed service.
Under section 414(u), a plan to which amake-up contribution is made on account of a
reemployed veteran is not treated as failing to meet the qualified plan nondiscrimination,
coverage, minimum participation, and top heavy rules5 by reason of the malting of such
3 Pub. L. No. 103-353.
a Pub. L: No. 1'04-188.
' These include Code sections 401(a)(4), 401(a)(26), 401(k)(3), 401(k)(i l), 401(k)(12), 401(m),
403(b)(12), 408(k)(3), 408(k)(6), 408(p), 410(b), and 416.
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contribution. Consequently, for purposes of applying the requirements and tests associated with
these rules, make-up contributions are not taken into account either for the year in which they are
made or for the year to which they relate.
In addition, section 414(u) provides for a special rule in the case of make-up
contributions of salary reduction, employer matching, and after-tax employee amounts. A plan
that provides for elective deferrals or employee contributions is treated as meeting the
requirements of USERRA if the employer permits reemployed veterans to make additional
elective deferrals or employee contributions under the plan during the period which begins on the
date of reemployment and has the same length as the lesser of (1) the period of the individual's
absence due to uniformed service multiplied by three or (2) five years. The employer is required
to match any additional elective deferrals or employee contributions at the same rate that would
have been required had the deferrals or contributions actually been made during the period of
uniformed service. Additional elective deferrals, employer matching contributions, and
employee contributions are treated as make-up contributions for purposes of the rule exempting
such contributions from qualified plan nondiscrimination, coverage, minimum participation, and
top heavy rules described above.
Explanation of Provision
The provision adds a new tax qualification requirement for retirement plans that are
qualified under section 401(a) of the Code (a "tax-qualified plan"). Under the new requirement,
atax-qualified plan must provide that, in the case of a participant who dies while performing
qualified military service, the survivors of the participant must be entitled to any additional
benefits (other than benefit accruals relating to the period of qualified military service) that
would be provided under the plan had the participant resumed employment with the employer
maintaining the plan and then terminated employment on account of death. Thus, if a plan
provides for accelerated vesting, ancillary life insurance benefits, or other survivor benefits that
are contingent upon a participant's termination of employment on account of death, the plan
must provide such benefits to the beneficiary of a participant who dies during qualified military
service.
Under the provision, conforming amendments apply the new tax qualification
requirement to section 403(b) tax-deferred annuities and eligible deferred compensation plans
(described in section 457(b)) maintained by State and local governments. The provision also
conditions the deduction timing rule of section 404(a)(2) (permitting contributions for the
purchase of erployee retirement annuities that meet certain requirements applicable to tax-
qualified retirement plans to be deducted in the year of payment) on satisfaction of the new
qualification requirement.
In addition, for benefit accnnal purposes, the provision permits a retirement plan to treat
an individual who ]eaves service with the plan's sponsoring employer for qualified military
service, and who camrot be reemployed on account of death or disability, as if the individual had
been rehired as of the day before death or disability (a "deemed rehired employee") and then had
terminated employment on the date of death or disability. In the case of a deemed rehired
employee, the plan is permitted to comply fully or partially with the benefit accrual restoration
provisions that would be required under section 414(u) had the individual actually been rehired.
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Subject to several conditions, if a plan complies fully or partially with the benefit accrual
requirements of section 414(u), the special section 414(u) rules regarding the interaction of
USERRA with the otherwise applicable benefit limitation and nondiscrimination rules apply.
The first condition is that all employees performing qualified military service of the employer
maiirtaining the plan who die or become disabled must be credited with benefits on a reasonably
equivalent basis. Thus, differences in credited benefits on account of different compensation
levels are permissible, but complying fully with the section 414(u) benefit accrual requirements
with respect to highly compensated employees and complying partially with respect to nonhighly
compensated employees is not permissible. The second condition is that if the plan credits
deemed rehired employees with benefits that are contingent on employee contributions or
elective contributions, the plan must determine the rate of employee contributions or elective
deferrals on the basis of the actual average contributions or deferrals made by the employee
during the 12-month period prior to military service (or if less, the average for the actual period
of service).
The provision provides rules regarding the date by which a plan must be amended to
comply with the provision. In general, a plan must be amended on or before the last day of the
plan year beginning on or after January 1, 2010.
Effective Date
The provision applies in the case of deaths and disabilities occumng on or after January
1, 2007.
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E. Treatment of Differential Military Pay as Wages
• (sec. 105 of the bill and secs. 3401 and 414(u) of the Code)
Present Law
In Qeneral
In the case of an employee who is called to active duty with the United States uniforn-red
services, some employers voluntarily agree to continue paying the level of compensation that the
service member would otherwise have received from the employer during the service member's
period of active duty. Such compensation is commonly referred to as "differential pay."
Wade withholding
Differential pay is not treated as wages for purposes of the Federal income tax
withholding rules that apply to an employer's payment of wages. This is because tl-re service
member is heated as terminating the employment relationship with the employer that pays the
differential pay upon being called for- active duty.b
Retirement plans
Section 415 imposes limitations on the benefits that maybe provided under a retirement
plan that is qualified under section 401(a) (a "qualified plan"). For a defined contribution plan,
section 415 limits the annual additions to a participant's account under the plan to the lesser of a
dollar amount ($46,000 in 2008) or 100 percent of the participant's compensation. In the case of
a defined benefit plan, section 415 generally limits the annual benefit payable under the plan to
the lesser of a dollar amount ($185,000 in 2008) or 100 percent of the participant's average
compensation for the participant's high three years-
Final regulations issued in 2007 generally pern-rit a plan to treat differential pay as
compensation for ~urposes of section 415.E The section 415 limitations also apply to tax
deferred annuities and simplified employee pensions ("SEPs"). The definition of compensation
in section 415 is used in limiting the amount that may be deferred under an eligible defen-ed
compensation plan (described in section 457(b)).
Limitation on in-service distributions
Under present law, certain types of contributions to a retirement plan are subject to
restrictions that generally limit distributions to a participant prior to the participant severing
6 See Rev. Rul. 69-136, 1969-1 C-B. 252.
~ Treas. Reg. sec. 1.415(c}-2(e)(4), 72 Fed. Reg. 16,878 (Apr. 5, 2007).
a Sec.403(b).
9 Sec. 408(k)
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employment with the employer that sponsors the plan. This limitation on in-service distributions
. applies to: (1) elective deferrals under a qualified cash or deferred compensation arrangement (a
"section 401(k) plan"); (2) amounts attributable to a salary reduction agreement under a section
403(b) tax-sheltered annuity; (3) amounts contributed to a custodial account described in section
403(b)(7); and (4) amounts defen-ed under an eligible deferred compensation plan (described in
section 457(b)).
USER.RA
Under the Unifornied Services Employment and Reemployment Rights Act of 1994
("USERRA"), which revised and restated the Federal law protecting veterans' reemployment
rights, an employee who leaves a civilian job for qualified military service generally is entitled to
be reemployed by the civilian employer if the individual retluns to employment within a
specified time period. In addition to reemployment rights, a returning veteran also is entitled to
the restoration of certain pension, profit sharing and similar benefits that would have accrued, belt
for the employee's absence due to die qualified military service. Section 414(u) provides special
rules that permit defined benefit plans and individual account plans to satisfy the requirements of
USERRA. An individual account plan for this purpose is any defined contribution plan (such as
a section 401(k) plan), and includes a section 403(b) tax sheltered annuity, a SEP, a qualified
salary reduction arrangement under section 408(p) ("SIMPLE"), and an eligible deferred
compensation plan (described in section 457(b)). Section 414(u} does not apply to a plan to
which Chapter 43 of Title 38 of the United States Code does not apply.
IRA contributions
. There are two ~eneral types of individual retirement arrangements ("IRAs"): traditional
IRAs and Roth IRAs. ~ Under section 219, the total amount that an individual may contribute to
one or more IRAs for a year is generally limited to the lesser of: (1) a dollar amount ($5,000 for
2008); or (2) the amount of the individual's compensation that is includible in gross income for
the year. In the case of a marred couple, contributions can be made up to die dollar limit for
each spouse if the combined compensation of the spouses that is includible in gross income is at
least equal to the contributed amount. For purposes of the IRA contribution limitations,
compensation includes an individual's net earnings from self employment.
Explanation of Provision
Wage withholc~ina
The provision amends the definition of wages for purposes of the Federal income tax
withholding rules applicable to an employer's payment of wages. The provision includes as
wages the employer's payment of any differential wage payment to the employee. Differential
wage payment is defined as any payment which: (1) is made by an employer to an individual
with respect to any period during which the individual is performing service in the uniformed
services while on active duty for a period of more than 30 days; and (2) represents all or a
10 Secs. 408 and 408A.
i 12
portion of the wages that the individual would have received from the employer if the individual
were performing services for the employer.
Retirement plans
The provision also provides rules relating to differential wage payments (as defined for
purposes of wage withholding) for purposes of a retirement plan that is subject to section 414(u).
Specifically, an individual receiving a differential wage payment is required to be treated as an
employee of the employer making the payment, and the differential wage payment is required to
be treated as compensation. In addition, a retirement plan that is subject to section 414(u) is not
treated as failing to meet certain requirements relating to minimum participation and
nondiscrimination standards ~ by reason of any contribution or benefit that is based on the
differential wage payment if all of the sponsoring employer's employees: (1) are entitled to
differential wage payments on reasonably equivalent terms; and (2) if all employees eligible to
participate in a retirement plan maintained by the employer are entitled to make contributions
based on such differential payments on reasonably equivalent terms.
Under the provision, an individual is treated as having been severed from employment
during any period the individual is performing service in the uniformed services while on active
duty for a period of more than 30 days for purposes of the limitation on in-service distributions
with respect to: { 1) elective deferrals under a section 401(k) plan; (2) amounts attributable to a
salary reduction agreement under a section 403(b) tax-sheltered annuity; (3) amounts contributed
to a custodial account described in section 403(b)(7); and (4) amounts deferred under an eligible
deferred compensation plan (described in section 457(b)). Thus, such individuals are not
prohibited from receiving distributions on account of not severing employment. However, if any
amounts are distributed on account of the foregoing rule, the individual is not permitted to make
elective deferrals or employee contributrons to the plan during the six-month period beginning
on the date of distribution.
IRAs
For purposes of the limitation on contributions to an IRA; the provision amends the tenor
"compensation" to include differential wage payments (as defined for purposes of wage
withholding).
" These standards include the following: section 401(a)(4) (prohibiting discrimination in
contributions or benefits provided under qualified plans); section 401(a)(26) (providing minimum
participation rules for qualified defined benefit plans); section 401(k)(3), (11), and (12) (providing non-
discrimination rules for elective deferrals under qualified cash or deferred arrangements); section 401(m)
(providing non-discrimination rules for employee contributions and employer matching contributions to
qualified plans); 403(b)(12) (providing non-discrimination rules for section 403(b) tax sheltered
annuities); section 40$(k)(3), (k)(6), and (p) (providing non-discrimination rules for SEPs and SIMPLEs);
section 410(b) (providing minimum coverage rules for qualified plans); and section 416 (requiring
minimum benefits in the case of top heavy qualified plans).
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P_ lan amendment timin
In general, the provision perniits a lan or annui contract
p ty to be retroactively amended to
comply with the provision provided that the amendment is made no later than the last day of the
first plan year beginning on or after January 1, 2010. Subject to certain conditions, a plan or
annuity contract is treated as being operated in accordance with its terms during the period prior
to amendment and, except as provided by the Secretary of the Treasury, the plan or annuity
contract does not fail to meet the requirements of the Code or the Employee Retirement Income
Security Act of 1974 by reason of the amendment.
Effective Date
For purposes of the wage withholding Hiles, the provision is effective with respect to
remuneration paid after December 31, 2008. Otherwise, the provision is effective with respect to
years beginning after December 31, 2008.
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G. Treatment of Distributions to Individuals Called
i to Active Duty for at Least 180 Days
! (sec. 107 of the bill and sec. 72(t) of the Code)
Present Law
Under present law, a taxpayer who receives a distribution from a qualified retirement
plan prior to age 59'/z, death, or disability generally is subject to a 10-percent early withdrawal
tax on the amount includible in income, unless an exception to the tax applies. Among other
exceptions, the early distribution tax does not apply to distributions made to an employee who
separates from service after age 55, or to distributions that are part of a series of substantially
equal periodic payments made for the life (or life expectancy) of the employee or the joint lives
(or life expectancies) of the employee and his or her beneficiary.
Certain amounts held in a qualified cash or deferred an~angement (a "section 401(k)
plan") or in atax-sheltered annuity (a "section 403(b) annuity") may not be dish-ibuted before
severance from employment, age 59'/z, death, disability, or financial hardship of the employee.
Pursuant to amendments to section 72(t) made by the Pension Protection Act of 2006,'2
the 10-percent early withdrawal tax does not apply to a qualified reservist distribution. A
qualified reservist distribution is a distribution (1) from an IRA or attributable to elective
deferrals under a section 401(k) plan, section 403(b) annuity, or certain similar arrangements,
(2) made to an individual who (by reason of being a member of a reserve component as defined
in section 101 of title 37 of the United States Code) was ordered or called to active duty for a
period in excess of 179 days or for an indefmite period, and (3) that is made during the period
beginning on the date of such order or call to duty and ending at the close of the active duty
period. A section 401 (k) plan or section 403(b) annuity does not violate the distribution
restrictions applicable to such plans by reason of making a qualified reservist distribution.
An individual who receives a qualified reservist distribution may, at any time during the
two-year period beginning on the day after the end of the active duty period, snake one or more
contributions to an IRA of such individual in an aggregate amount not to exceed the amount of
such distribution. The dollar limitations otherwise applicable to contributions to IRAs do not
apply to any contribution made pursuant to this special repayment nile. No deduction is allowed
for any contribution made under the special repayment rule.
The special Hiles applicable to a qualified reservist distribution apply to individuals
ordered or called to active duty after September 11, 2001, and before December 31, 2007.
Explanation of Provision
The provision makes permanent the Hiles applicable to qualified reservist distributions to
individuals ordered or called to active duty on or after December 31, 2007.
1z Pub. L. No. 109-280.
16
Effective Date
The provision is effective upon enactment.
•
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.7
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Notice of Development of Rulemaking
i DEPARTMENT OF MANAGEMENT SERVICES
Division of Retirement -Local Retirement
RULE NO: RULE TITLE
60T-1.001: Scope and Purpose
60T-1.002: Definitions
60T-1.003: Actuarial Reports
60T-1.004: Actuarial Impact Statements
60T-1.005: Review of Actuarial Reports and Actuarial Impact Statements
60T-1.006: Defined Contribution Plans
60T-1.007: Funding
60T-1.008: Additional Benefits Funded by Experience
60T-1.009: Additional Filing Requirements
PURPOSE AND EFFECT: Amend this chapter which sets forth the rules under which municipal and special district
units of government are to provide information on their retirement systems plans to the Department of Management
Services, Division of Retirement, (Bureau of Program Services) pursuant to Part VII of Chapter 112, Florida
Statutes (F.S.). The provisions of this chapter is applicable to all counties, municipal governments, and special
districts (or agencies and instrumentalities thereof); which state universities, community colleges and district schools
that operate or administer a retirement system or plan for public employees funded in whole or in part by public
funds.
SUBJECT AREA TO BE ADDRESSED: The participation of local governments in the Florida State Retirement
System, as provided in Part VII, Chapter 112, Florida Statutes.
SPECIFIC AUTHORITY: 112.665(1) FS.
LAW IMPLEMENTED: 112.661 9 , 112.61, 1.12.625, 112.63, 112.665, 112.64, l 12.661(9) FS.
IF REQUESTED IN WRITING AND NOT DEEMED UNNECESSARY BY THE AGENCY HEAD, A RULE
DEVELOPMENT WORKSHOP WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW:
DATE AND TIME: July 14, 2008, 9:00 a.m.
PLACE: Department of Management Services, Director's Conference Room Suite 208, 1317 Winewood Blvd.,
Building 8, Tallahassee, Florida 32399-1560, (850)488-5706
Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to
participate in this workshop/meeting is asked to advise the agency at ]east 48 hours before the workshop/meeting by
contacting: Richard Clifford at (850)488-5706, or Toll Free (877)377-1737. if you are hearing or speech impaired,
please contact the agency by calling (800)877-1 l 13. If you are hearing or speech impaired, please contact the
agency using the Florida Relay Service, 1(800)955-8771 (TDD) or l (800)955-8770 (Voice).
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE DEVELOPMENT AND A COPY
OF THE PRELIMINARY DRAFT IS: Garry Green, Operations and Management Consultant Manager, Department
of Management Services, Division of Retirement, 1317 Winewood Blvd., Bldg. 8, Tallahassee, FL 32399-1560,
(850)488-5706
THE PRELIMINARY TEXT OF THE PROPOSED RULE DEVELOPMENT IS:
60T-1.001 Scope and Purpose.
(1) This chapter sets forth the rules under which municipal and special district units of government are to
provide information on their retirement tans systerxs to the Department of Management Services Division of
Retirement, (R~urti ^~D-^~-~-^~ c `pursuant to Part VII of Chapter 112, F_S. ~'^r~a° er.,,,,*°^. The provisions
of this chapter shall be applicable to all counties, municipal governments, a~ special districts (or agencies and
instrumentalities thereof), state universities, communi colleges and district schools that t operate or
administer a retirement ~r plan for public employees funded in whole or in part by public funds. This chapter
shall not apply to counties, municipalities, special districts, state universities, community colleges or district schools
er with respect to any of their employees which participate as a covered group in the Florida Retirement System,
except that this chapter shall apply to any defined benefit promise that may be offered by any Florida Retirement
System participating a ency which promise is not otherwise provided by the Florida Retirement System This
chapter shall apply to counties municipalities state universities communi colleges or district schools with
respect to any of their employees for whom early retirement annuities are provided pursuant to Section 121 l 82
1001.64(211, 1001.74(19), 1012.685 or 1012.87 F S
(1) The objectives of this chapter are to °~''^^^° ^^a ~„-a,°- clarify the intent of Part VII; of Chapter l 12, F_S.
so that governmental retirement plans are syv~s=.~aT~ managed, administered, operated, and
funded in such manner as to maximize the protection of public employee retirement benefits. Inherent in this intent
is the recognition that the pension liabilities attributable to the benefits promised public employees be fairly, orderly,
and equitably funded by the current, as well as future, taxpayers. Accordingly, except as herein provided, it is the
intent of these rules to prohibit the use of any procedure, methodology, or assumptions, the effect of which is to
transfer to futwe taxpayers any portion of the costs which may reasonably be expected to be paid by the current
taxpayers.
.Specific Authority ] ]2.66(1) FS. Law Implemented l ]2.6I FS. History New 5-6-81, Amended 9-19-83, Formerly 22D-1.01,
Amended 11-14-91, Formerly 22D-1.001, Amended
60T-].002 Definitions.
Whenever used in this chapter, unless otherwise expressly stated, or unless the context or subject matter requires a
different meaning, the following words and terms shall have the respective meaning indicated:
(1) "Actuarial Accrued Liability" means the portion of the actuarial present value of the projected benefits (and
expenses, if applicable) as determined under a particular actuarial cost method which is not provided for by future
normal costs.
(2) "Actuarial Asset Value" or "Statement Value" means the value of assets in accordance with Section
1]2.625(7)(1), F.S. Assets for which a fair market value is not provided shall be excluded from the assets used in the
determination of the annual funding cost.
(3) "Actuarial Experience" means the difference (i a "eain" or "loss") between expected and actual actuarial
liabilities in successive actuarial valuations exc]udin~ the differences attributable to changes in benefits
assumptions and actuarial methodologies (e ~ valuation cost-funding asset valuation and other "mechanical"
determinations).
~(~ "Actuarial Impact Statement" means a statement setting forth the actuarial liabilities and contribution
requirements of a proposed change in the provisions of a local retirement >~ systetn certified by an enrolled
actuary. The statement may be er prepared by an enrolled actuary, the plan administrator, or the plan sponsor.
~(~ "Actuarial Report" means a report prepared and certified by an enrolled actuary based on an actuarial
evaluation of a local retirement system-er plan.
(6) "Applicable Mortality Table" means a table of mortality rates that produces liability and cost fundin r~ esults
not less than the liability and cost-funding results that would be produced by use of the followin tag bles•
•
(a) For healthy active and retired members and beneficiaries the sex-distinct rates for healthy lives used by the
Pension Benefit Guaranty Corporation pursuant to ERISA Section 4044 for 2008 valuation dates (UP'94 projection
AA to 2018.)
(b) For disabled members: the table in paragraph (a) set forward 3 years
{c) The referenced tables in paragraphs (a) and (b) may be used on a static basis
~(~ "Benefit Increase" means a change or amendment in the retirement plan design or benefit structure that
.,,~ results in increased benefits or increased value of benefits for plan members or beneficiaries.
(8) "Board," "Board of Trustees " or "Named Fiduciary" means the person or persons so designated by the
terms of the legal enactments under which the retirement plan is operated
(9) "Cash Equivalents" means short-term highly liquid investments that are readily convertible to known
amounts of cash and that are not subject to a material risk of change in value Only those investments maturing
within one near of the actuarial valuation date may be included in this asset class
(10) "Closed Plan" means a retirement plan that effective with the applicable stated date as of which the plan is
"closed" and unless otherwise provided no longer accepts new members but all other plan provisions continue and
funding by the members and the plan sponsor continues
(11)(-0~ "Concurrent Funding" means payment of the required contributions to fund_
a The benefit changes that shall begin no later than the r,-^« -'^~- ^~'*~~ ^~ ~* fiscal year coincident with or next
followine the enactment date of the legal instrument providing the a~ benefits change.-, and
(b) A plan year, that are paid no later than the end of the one-year period immediately following the end of the
plan year.
12 (~j "Division" means the Department of Management Services Division of Retirement~f ~
~e~ises.
(l3) "DROP" is an acronym for a deferred retirement option program as defined by the applicable retirement
plan.
(14) "Enactment Date" means the date a legal instrument is adopted which date may or may not be the same as
any effective date stated in the instrument.
15 (-~ "Enrolled Actuary" means an actuary who is a member of the Society of Actuaries or the American
Academy of Actuaries, and who is em•olled under subtitle C of Title III of the Employee Retirement Income
Security Act of 1974.
(16) "Fiscal Year" means the ]2-month period in which the plan-sponsor contributions are to be paid for a plan
year. The fiscal and plan years may be coincident.
(17) "Frozen Plan" means a retirement plan that effective with the applicable stated date as of «~hich the plan is
"frozen" and unless otherwise provided does not accept new members does not~rovide any additional new
benefits. current plan members keep their accrued benefits which no longer increase service credits continue for
vesting and benefit elieibility and members no longer contribute but the ~1an sponsor funding continues
(18) "Fully Funded" means that 110% of the sum of the accrued liability and the normal cost is less than the
value of the retirement plan's present assets. For this purpose' the normal cost and the accrued liability are
determined accordine to the individual actuarial entry-age cost-funding method if such items cannot be directly
calculated under the funding method used for the plan the entry age is the member's current age reduced to reflect
the number of nears of credited prior service• the value of the plan's present assets is the lesser of the fair market
value and the value determined accordine to the plan's actuarial asset-valuation method- and all determinations
shall be as of the same date.
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19 ~-} "Governmental Entity" or "Local Government Entity" means the state, for the Florida Retirement
System, and the coon municipality, er special district,_state university board community colleoe board or district
school board that w#is13 is the employer of the member of a local retirement systetn-er plan.
(20) "Illiquid Investment" means an investment for which a eenerall recognized public market is not available
(e.Q., the New York Stock Exchange AMEX NASDAO) or for which there is no consistent or enerally accepted
pricine mechanism.
21 ~} "Local Retirement e„ Plan" means any employee pension or retirement benefit plan supported in
whole or in part by public funds that „~ is not specifically exempt by Section ] 12.625(1), F_S. ~'^^a^ e*~*~*~~
(22) "Material" or "Materially" means•
(a) A rate or other numerical result that when correctly and/or completely determined differs from the rate or
other numerical result disclosed in an actuarial valuation report actuarial impact statement and/or other statement of
information provided to the Division and such difference is at least one basis point (one hundredth of one percent)
and/or
(b) Any information necessary or required to satisfy Part VII of Chapter 112 F S Chapter 60T 1 F A C or
any additional information requested by the Division to complete its review of the actuarial valuation report
actuarial impact statement or other statement of information necessary to satisfy the Division's duties pursuant to
Section 112.665(1) F.S.
(23) "I~lormal Cost" means the portion of the cost of projected benefits established for a plan year It is
computed differently under different actuarial cost-funding methods
(24) "Pensionable Compensation" [Weans the total of al] items of allowance compensation earningsLgay
reimbursement and remuneration that are used to determine the pension benefit under the terms of the retirement
25 (~}j "Plan Administrator" means the person so designated by the terms of the instrument or instruments,
ordinance, or statute under which the retirement plan is operated; or the plan sponsor where no plan administrator is
designated.
26 (~-9) "Plan Sponsor" means the local governmental entity that ,_,~ has established or that v~h;
establish a local retirement system-er plan.
(27) "Plan Year" means the 12-month period for which an annual actuarial funding cast is determined The flan
and fiscal years may be coincident
(28) "Reserved Fund" means an amount of assets reserved for a special purpose
(~(~ "Significant Plan Amendment" means any change or changes in the retirement plan ~ the net
effect of which would require a current or potential increase or decrease in the annual fundin cost hot-isa--r-atp.
--
~ b
of thriT~~T
f30) "Terminated Plan" means a retirement plan that effective with the applicable stated date as of which the
plan is "terminated" and unless otherwise provided does not accept new members al] existing active members are
considered to be 100% vested in their accrued benefits that no ]on er increase and members no lop er contribute
but the plan sponsor funding continues
(31) "Unfunded Actuarial Accrued Liability" or "Unfunded Liability" or the acronym "UAAL" means the
excess, if any, of the actuarial accrued liability over the actuarial value of the assets
Specific Authority 112.665(1) FS. Law Implemented 112.61, ] 12.625 FS. History New 5-6-81; Amended 9-]9-83; Formerly
22D-].02, Amended 11-I4-91, Formerly 22D-].002, Amended
60T-1.003 Actuarial Deports.
(1) Each retirement plan sponsor shall on its own or through the administrator or *^*^•~ees~f the plan's board
have an actuarial report prepared for each of its defined benefit retirement plans e~ by an enrolled actuary at
least every three (3) yeazs commencing from the date of the last actuarial report of the plan or system on October 1,
1980, if no actuarial report has been issued within the three year period prior to October 1, 1979. In addition,
actuarial cost determinations reco~mnending the contribution amount, rate or other basis applicable to periods for
which an actuarial valuation has not been specifically prepared are to be also provided to the Division within 60
days of receipt by the plan administrator. No actuarial report is required for defined contribution retirement plans er
systex~s. However, the plan sponsor of each defined contribution plan shall provide such information ~~ia-}
°`.>~~; as is are necessary to gather, catalog, and maintain complete information on all public employee
retirement tans sys-terms to the Division upon its request.
(2) The results of each actuarial report shall be filed with the plan administrator within 60 days after completion
and certification by the actuary and made available for inspection upon request. Also, the retirement systen}-er plan
shall provide a copy of each actuarial report to the Division ^~ u~-~ro~n within 60 days of receipt from the
actuary.
(3) Actuarial reports shall minimally disclose all the data required by Section ] 12.63(1), F.S., and Chapter 60T-
1, F.A.C., as follows: ~^a^ ~*^*~•*° ~' ~• ~ ~ ~ r ••
~~
(a)1. The values of the present assets, as of the actuarial valuation date based on market value and actuarial
asset value. Disclosure by investment types is required only as follows if one or more but not all investment values
are established using an actuarial asset value method "^*°*°•r•°^+ ~ °°
a. Investments
i Cash
.:Cash equivalents
Contributions in collection (see items 2 & 3 below)
Bonds_ U.S. Government ^^a ~*^ ^
U. S. Government agencies
Other: Domestic
Fore~Qn
Total
E uities: Common ;jstocks: Domestic
Foreibn
Other fspecify)
Total
Other (specify)
Illiquid investments (list each)
Foreien investments other than Bonds and Equities
Total
b. Assets not available for fundin
Illiquid investments for which a fair market value is not available (list each)
Amounts payable (list each and describe) Includes benefit payments with a payment due date on or before the
end of the plan year but paid thereafter excluding any expense for which the payment date was not on o_r
. before the end of the plan year
Other (list each and describe)
Total
c. Assets available for fundine (A-B)
Not reserved funds
Reserved funds (list each)
Other
Total
2, If the assets include contributions paid after the end of the plan year complete and provide the following
exhibit:
•
For Plan Year Date Paid Amount Paid
Ended
Members Plan
Sponsor
Total (b~plan
ear
3. If the assets include contributions for a plan near prior to the plan year just ended that have not been
previously included in the assets complete and provide the following exhibit
Paid for Plan Paid by Member Paid by Sponsor
Year Ended Date Amount Date Amount
Total (by plan
ear
4. Disclose the derivation of the actuarial asset value used in determining the annual funding requirement.
(b) A plan to amortize any unfunded liability pursuant to Section 112.64, F_S. .
(c) A schedule illustrating the amortization of unfunded liabilities as they exist on the date of the valuation, on
an annual basis for the three years immediately following the current valuation date and the fma] year of the
amortization schedule must be disclosed, as well as a statement as to how the method was derived.
(d) A description of actions taken by the governmental entity to reduce the unfunded liability, especially those
taken since the last actuarial report.
(e) A description and explanation of all actuarial assumptions and methods.
1. Describe each assum tion and method than e since the immediate rior actuarial valuation re ort• if none so
state.
2. Describe completely the actuarial methodolosies for determining the benefit liabilities annual fundingcost
and asset values so that another actuary could using the same methods arrive at similar results Alternatively,
disclose the specific Internal Revenue Service provision (e g section example and/or parsgraph number and the
applicable IRS publication(s)) that exactly describe(s) the actuarial methodology used for determining each of the
benefit liabilities, the funding thereof including administrative expenses and the asset values Describe the
method(s) in use if not as exactly described in a current IRS publication
•
3. Describe completely the determination of the pensionable compensation amount used in the current
. valuation. Also state when the salary increase assumption commences (e ~ with the current valuation date one
ear later .
(f) A comparative review illustrating the rates of salary increases granted and investment return realized,
minimally, over the three-year period preceding the current actuarial report with the assumptions used.
1. The actual salary increase rate may be determined for the period between the immediately preceding actuarial
valuation date and the current valuation date; however, such rate shall be shown on an annualized basis. For each
geriod, the gate of actual salary increases shall be determined by using the aggregate of actual pensionable
compensation paid ~°'°^~ ~^^r~^~~~ --~-^^*^a, excluding new members e~a~s and terminations.
2. Inveshnent return rates shall be determined on both the market value and actuarial value bases for each year
and reported on a consistent basis for each year in t]le three-year period. Consistent use of either of the two
following methods should be considered. If a different method is used explain The:.. cl:c:aa alco'u„ ,.,, ~ ,ut,'~„
~nr~~.
of how the investment return rate was determined.
a. The investment return rate may be determined using the fonnu]a "i =2U(A+B-I)", where:
"i" is the return rate,
"I" is the total investment income (net of all investment related expenses if offset against investment
income
"A" is tl~e asset value at the beginning of the year and
"B" is the asset value at the end of the year.
b. Alternatively, the return rate may be determined wei hg ting deposits and disbursements by date On this basis
the report is to include an exhibit disclosing the deposits and disbursements for the year by date
3. All amounts included as a receivable for such year and excluded as a payable for such near are to be included
and excluded, respectively, in the return rate determination.
4. All assets owned by the retirement plan are to be included in the return rate determination
5. For valuations usine differing pre- and post- retirement interest rates or "segment" interest rates (as provided
in the Pension Protection Act of 2006), determine -and disclose the determination of -the effective annual interest
rate for the expected liability duration period.
{g) A statement by the enrolled actuary, in the form of a certification signed and dated by the actuary, as
follows:
Statement by Enrolled Actuary
"This actuarial valuation report and/or cost determination was prepared and completed by me or under my
duect supervision, and I acknowledge responsibility for the results. To the best of my knowledge, the results are
complete and accurate, and in my opinion, the techniques and assumptions used are reasonable and meet the
requirements and intent of Part VII, Chapter ] ]2, F_S. ~''^~~a^ c*^~~*^~.~and Chapter 60T-1 F.A.C. There is no
benefit provision or related expense to be provided by the retirement plan and/or paid from the plan's assets for
which liabilities or current costs have not been established or otherwise taken into account in the valuation. All
known events or trends that X13 may require a material increase in plan costs or required contribution rates have
been taken into account in the valuation."
Print or Type Name Signature
Enrollment Number Date
(4) Actuarial valuation reports shall, at a minimum, disclose such information that another actuary, unfamiliar
with the situation, would find the information sufficient to appraise the reports' conclusions and to arrive at
reasonably similar results. In order for the Division to determine the completeness, accuracy, and reasonableness of
the assumptions, such information shall, at a minimum, include the following items:
(a) The date as of which the valuation was prepared, and the beginning and ending dates of the periods for
which the recommended contributions are applicable; and the period(s) in which such contributions are to be paid.
(b) The overall valuation results, the adequacy of the retirement-plan sponsor en~le3~er and member e»}gleyae
contribution rates in meeting the levels of member en3pleyee-benefits provided in the ]man system and changes, if
any, needed. in such rates to achieve or preserve a level of funding deemed adequate to enable payment through the
indefinite future of the benefit amounts prescribed by the plan system.
(c) A brief summary of the retirement plan provisions. Additionally, disclose:
l.a. The components of pensionable compensation (e.c., W-2 remuneration, unused accrued compensator time
(e. c., vacation, sick-leave, overtime, other compensatory time), expense reimbursement).
b. The limit, if any, on the amounts of unused accrued compensatory time includable in pensionable
compensation.
c. How the payment for unused accnaed compensatory time, regardless of when paid is used in detennininc
benefits.
d. For contributory plans, the components of pensionable compensation on which the member does not
contribute; if none, so state.
2. The normal benefit payment form, and any differences based on type of benefit payable (e.c. normal
retirement, disability retirement).
3. All optional benefit-payment forms, includinc lump sum payments, the actuarial equivalence assumptions
and, based on the option, each different assumption.
4. If any amendment to an existin bg enefit~rovision or the addition of a new benefit provision applicable
thereafter to members who retire or who terminate with benefits deferred to commence at a later date that, pursuant
to an existine plan provision, automatically applies the beneft chance or addition to already retired members and
beneficiaries and/or members terminated with rights to benefits deferred to commence at a later date.
5. Those benefit provisions that are to be funded solely by additianal member contributions and the additional
member contribution rate.
6. The details applicable to a DROP including, but not limited to, eligibility requirements, duration interest and
payment options.
7. State if all plan members are covered by Social Security if not disclose the parameters describing the
members covered by Social Security, and those not covered.
8. All changes since the immediate prior report; if none, so state.
9. All legal instruments applicable to the flan adopted since the immediate prior report
(d) Revised actuarial valuation reports shall clearly indicate each changed item or include an appendix stating
each chanced item or a clear indication of the changed items. Provide a historical exhibit byplan year disclosing the
required plan sponsor contribution for such year for, separately normal cost administrative expense amortization of
unfunded liability adjustments to reflect the delay in payment or if applicable to a plan year beginning at a later
date, and the total. Also disclose the amount paid and the amount that would have been paid for such plan ,, ea~had
the plan sponsor contributed the amount determined by appl ink the recommended contribution rate to the
pensionable compensation during such plan near. Additionally disclose the members' contributions paid for such
plan year. b ~ ~
(e) For actuarial valuation reports that wl~ie-1} cover more than one employee group, benefit program, and/or
more than one plan, and the assets are accounted for separately, and t::e :auution~,~~^~~~~*~^^^ ^ ^~~ ^ ~~*^~~-
the applicable valuation results shall be disclosed separately.
(f) Disclosure of each any benefit provision and related expense to be provided by the plan and/or paid from the
plan's assets for which no liabilities or current costs have been established or otherwise provided ~, including an
explanation of the omission and the cost effect thereof.
(g) Disclosure of any event that ~ the actuary has not taken into account and any trend hat „,. ham, for
•
•
purposes of the actuarial assumptions used, was not assumed to continue in the future, but only if, to the best of the
actuary's knowledge, such event or trend may require a material increase in plan costs or required contribution rates.
(h) Disclosure, for each plan year, of the derivation of the current ars^~~~ ~~^,,;,;«.. ~UAAL~
from the amount established as of the immediately preceding valuation date. AALs
1}ab}li~ies are amortized by non-et~leyee member contributions in excess of normal cost and interest requirements.)
The disclosure shall, minimally, include the following:
1. UAAL at $
ae~e~-lia~li~y-f~ the immediately prior
actuarial valuation date (state date)
2. Plan sponsor normal cost expected for $
this plan year: a. + b.
a. For benefits $
b. For administrative
expense $
3. Interest accrued on 1. and 2 $
Disclose interest determination or
explain determination
4. Plan sponsor contributions for this $
plan year ~;,.^~„a;,,b ., „+~ a o^+o,~ +„ i,o
): a. + b.
a. Amounts paid durine such year
b. Amounts paid after such year
(discounted from the payment date to the
endive date of the fiscal year in which the
contribution was due to be paid using the
plan's valuation interest rate assumption
used for the active member liabilities)
5. Interest accrued on 4.a. $
6. Changes due to a. + b. + c. + d. $
a. assumptions $
b. actuarial ~g
•
methods $
c, plan amendments $
d. actuarial experience
gain/loss $
7. UAAL as of the current valuation $
date: T„~^~ ,. °„+,..,~,,,,~°a ..,.,,,^,-:^~
8. Pro_v_i_de_an exhibit of all. current unamortized UAAL amounts disclosing the amount, date and amortization
period at establishment, and the cause of the establislunent (i.e., new plan, amendment, assumption change actuarial
method change (identify if asset or other), and actuarial experience eain/loss). Disclose each UAAL amount as of
the immediate prior valuation date, the amortization payment credited to the immediate prior UAAL amount the
current unamortized UAAL amount, the remaining amortization period and the expected amortization payment.
including column totals
9. Disclose the determination of the amount available to amortize the UAALs.
(i) Provide dDemographic and fmancial data °+°*~ti~ on the active members, members'^~;~; terminated with
rights to deferred benefits, disabled, retired, retired in DROP, and beneficiaries] in the plan, as follows: ran
b
fi~ .,+°a , ,;+1, ~ °L,r~ r.. ,7°f r,-°a l,° °f:*~ .,.7 .-°tired ; ;~n;b"~1;; /., ,ate''..°°.,°f..;^r:°..\
1. For active members, an gee/service array, including compensation, usin ag ppropriate age and service
~~P~es.
2. For active members, complete the following termination experience exhibit for each plan year since the
immmediate prior actuarial report. Aees maybe individual or in the same 5-year age groups used for disclosing other
demographic and financial data.
Termination Experience
Age Death Disabili Termination Total
Expected Actual Expected Actual Expected Actual Expected Actual
Provide column totals
3. For active members, a retirement and DROP experience exhibit for each plan year since the immediate prior
actuarial valuation report. Depending on the plan's retirement provisions (e.g. by age years of service and/or age
and years of service) in separate iuxtaposed columns disclose: the number of members eligible for retirement' the
number expected to retire; the number of them electing to retire; and of the latter, the number eligible for DROP
and the number elective DROP.
4. A reconciliation between current demographic data and such data in the most recent prior actuarial valuation
report of those: active; terminated with deferred benefits; line-of--duty disabled. non-line-of--duty disabled- DROP.
retired; and beneficiaries. Add categories as needed dependin og n the Man's provisions. The reconciliation is to be
in the form of an array with the fore~oing_groups disclosing as applicable. the ending number from the immediate
rior report (if different from the beeinning number, enter difference). vested terminated. non-vested tenminated•
line-of--duty disabled; non-line-of--duty disabled; line-of--duty death; non-line-of--duty death- lump sum payment.
DROP; retired; transfers; corrections; new members; and ending number. Add other causes as applicable Provide
line and column totals.
•
•
•
5. For vested terminated members, retirees and beneficiaries provide the following exhibit
Annual Benefit Payab)e To
Disabled Vested DROP Retired Beneficiaries Total
Terminated
# Benefit # Beneft # Benefit # Benefit # Benefit # Benefit
Provide column totals
6. (A projection of emerging liabilities/cash flow needs for the next 10 - 15 years is recommended e
°.,~~1.3
7. A determination and disclosure of the actuarial gains and losses by source is recommended
(j) An annual reconciliation of the plan's assets from the balance determined as of the immediately preceding
valuation date to the balance as of the current valuation date on both the market and actuarial value bases. If the
reconciliation is done on a basis other than that used for annual funding requirements, the reconciliation shall show
the dollar relationship to the actuarial value of assets as used in determining the annual funding requirements. The
reconciliations shall sl3euld show separately, at a minimum:
Beginning balance (if different than immediate prior ending balance; explain and enter difference).
• Contributions by source (separately disclose special purpose contributions: eg_ "buy-back")
• Interest and dividends
• Realized gains (losses)
• Increase (decrease) in unrealized appreciation, if applicable (net)
• Pension payments other than lump sum payments
• Lump sum payments other than member conMbution refunds
• -Member contribution Oen#i~ien refunds
• Expenses: Administrative
• Investment related
• Other receipts (identify)
• Other disbursements (identify)
• Increase/decrease to reserve fund (list each and amount
• Ending balance
(k) The amount of active members accumulated contributions (with interest, if provided by plan).
(1) A comparative summary of principal valuation results, essentially in the following format:
COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS
(Not a required format to be used as a guide erily)
ctuaria] Valuation Prepared as of
Current Date Prior Date
1. P~ Member Data
Active members
Total annual pensionable payroll $ $
Pensionable compensation below assumed retirement $ $
Retired members °^-' h°^°f^~^^°^ (other than disabled and DROP)
•
•
•
Total annualized benefit $ $
Beneficiaries
Total annualized benefit
Total annualized benefit $ $
DROP #
Total annualized benefit $ $
Accumulated value $ $
Disabled members receiving benefits
Total annualized benefit $ $
Terminated vested members
Total annualized benefit $ $
2. Assets
Actuarial value of all assets $ $
Market value of all assets $ $
3. Liabilities $ $
a. Present value of all future expected benefit payments: $ $
Active members: $ $
Retirement benefits $ $
Vesting benefits $ $
Disability benefits $ $
Death benefits $ $
Return of contribution $ $
Total $ $
Inactive Members $ $
Terminated vested members $ $
DeF:«~.i .., .., 1. o.-~ .,,,.a L.o„oF; ..; ~,-; o..•
Retired members {other than disabled), DROP, and beneficiaries) $ $
Disabled members $ $
DROP (excluding accumulated balances) $ $
DROP accumulated balance $ $
Beneficiaries $ $
Total $ $
Total present value of all future expected benefit payments $ $
Liabilities due and unpaid $ $
Unfunded actuarial accrued liability $ $
Reserved funds (as applicable): $ $
DROP accumulated balance $
Excess plan sponsor contributions $
Actuarial experience for additional benefits $ $
Excess Ch. 175 and/or 185 assets required for Ch. 99-1 $ $
Other Ch. 175 and/or 185 assets not required for Ch.99-1 $ $
•
•
Other (add as needed) $ $
Total $ $
b. Actuarial accrued liability (required if an immediate-gain funding method
(see Revenue Rule 81-213) is used for any purpose in completing
report) $ $
_
Active members: $ $
Retirement benefits $ $
Vesting benefits $ $
Disability benefits $ $
Death benefits $ $
Return of contribution $ $
Total $ $
Inactive Members: Total from a. $ $
Total i*n o~ ..,. ~,. ,:.,w:,:+;e„ ...,+ ~,,,aoa ,,,, fi,.,...o .. ..~ ,.,.~+ ,.~„~ $ $
~
,;.,~..n~ ame~#~ed~
4. Actuarial present value of accrued benefits (to be determined in accordance with
a. and b. below)
Statement of actuarial present value of all accrued benefits
Vested accrued benefits
Inactive members and beneficiaries $ $
DROP accumulated balance $
Active members (includes non-forfeitable accumulated member contributions in
the amount of ~ $ $
Total value of al] vested accrued benefits $ $
Non-vested accrued benefits $ $
Total actuarial present value of all accrued benefits $ $
Statement of changes in total actuarial present value of all acct•ued benefits
Actuarial present value of accrued benefits at beginning of year $ $
Increase (decrease) during year attributable to (where applicable):
Plan amendment $ $
Changes in actuarial assumptions $ $
Increase for interest and probability of payment due to decrease in discount
period and benefits accrued $ $
Benefits paid $
Other changes (identify and state amount) $ $
Net increase (decrease) $ $
Actuarial present value of accrued benefits at end of year $ $
a. Accrued benefits are those future promised benefits that are determined in accordance with the plan's provisions based on the
service members have rendered to the actuarial valuation date. Accrued benefits are those payable under all applicable plan
circumstances retirement, death, disability, and termination of employment to the extent they are deemed attributable to
member service rendered to the valuation date. Benefits to be provided by insured contracts for which the plan sponsor has no
•
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•
future liability and which are excluded from plan assets are to be excluded from plan benefits.
b. Al] determinations are to be on a consistent basis. Any change is to be disclosed, together with an explanation. The exhibit
entries for the actuarial valuation date as of which a change is made shall show the entries on a before and after change basis.
5. Pension cost (specifyplan year and applicable funding period) $ $
a. Normal cost to be paid by plan sponsor (for immediate gain-funding methods, $ $
disclose shave cost for each benefit ;r ^^ ^'^~~'^'~~ and amount for administrative
expenses, if applicable; exclude interest)
Payment to amortize unfunded liability $
Expected plan sponsor contribution include i~g normal cost, amortization
payment, a>~ interest and salary increase / ~ayroll growth, as applicable) $
As % of payroll
Expected member contribution $ $
As % of payroll
b. If a different funding method is used for any other purpose with results provided
in the report that may affect the determination of the cast in a. (e. ., a spread-gain
method is used for establishing the annual funding cost and the individual entry-aye
method is used for full-funding determinations or other requirements), disclose the
method's normal cost for each benefit and amount for administrative expense, if
applicable; exclude interest.
6. Past contributions
For each plan year since last report:
Required plan-Spenser contribution by:
Plan sponsor $ $
Members $ $
Actual contributions made by:
Plan's sponsor $
1',4e>~ers $
Other (e.g., Chapters 175/ or 185, F.S.) $
Total $
Members $ $
7. Net actuarial experience gain (loss) (if applicable) $ $
8. Other disclosures (where applicable)
Present value of active member:
Future salaries
At attained age $ $
At entry age $
Future contributions
At attained age $
At entry age $
Present value of future contributions from other sources (identify) $ $
•
Present value of future expected benefit payments for active members at entry $ $
age
(5) Provide a historical exhibit b~plan near disclosin>; the charmed and credited plan-sponsor contributions
disclosine the followine: actuarial valuation date plan-year beginning date fiscal-year ending date normal cost
(includins; administrative expense if paid from the plan's assets) amortization cost interest on the charge items to
the end of the fiscal year total charges with interest amount paid by the plan sponsor allowable premium tax
refund, interest on all paid amounts to the end of the fiscal year total of all credits and the excess or deficiency of
the credit total less the charge total. Contributions paid after the end of the fiscal near are to be discounted from the
payment date to the immediately preceding fiscal-near endini; date The amount of any such discount is to be
disclosed in an additional column as an offset against the credits All interest determinations shall use the plan's
valuation interest assumption used for the active member liabilities
(6) Provide a historical exhibit by plan year similar to 5 above disclosing the plan-sponsor amount that is or
would have been paid for such plan year had the plan sponsor contributed the amount determined by apPl ing the
recommended contribution rate to the pensionable compensation durin such plan year Additionally disclose the
members' contributions paid for such plan year
(7) For Chapter 175/185 plans only please provide a historical exhibit b~plan year of all state premium tax
revenues received since t]Ie Chapter 99-] Laws of Florida base year distribution (1997) The exhibit should at a
minimum, include the information presented in Ex]iibit A that follows (Not a required format - to be used as a
guide only.)
Chapty 60T-1.0030, Esttibit A
Chapter 175/185 Premiom Tax D'ucloaurc
•
dual Baee Year Inercaae
Distribution Dstributioa OverHaae
B C=A-II
(not < S
etual Hate Increase
Year
utribution Distribution Over
Base
D E F=D-E
(not < SO
dual Baee Increase
Year
utribution D~tribution Over
Bsae
H I=G-H
(not < SO)
urrent Year Cumulative Onc
Timt
ecurriog" Recurring Use Total
K=~]'s L M=K+
L ddidooal
rcmium
ax
coon
=C+F+
-M
Cumulative Additional Premium Ta: Rtvenun as of Actuarial Valuation Date
• For each benefit improvement enacted, please disclose the ordinance number and actuarial impact separately, in a sepamle exhibit, if necessary.
NOTE: Not all plans will receive police, fire and fire supplemental checks. Please omit any superfluous columns in your submissions.
b
~ b
.
'
..«.1.,., ..e „r:41, Ce..+;n., 1 17 ~A L'1 ',a., C+ fi 4
..... ,~..,,..~ .. ,..,, ._...., ~,,.., s i_. , '
b
b
' b
b o
(8) Each report shall include an annual reconciliation of each reserved fund starting with the endingbalance in
the immediate prior actuarial report disclosine each of the items of income disbursement interest credits and debits
other adjustments as applicable, and the ending balance
b
c.41,o a .ie+e e.i
(9) All. reconciliations (e.>?. UAAL asset reserved fund demographic data) al-e to start with the immediate
prior reported ending balance. b
inter ..+..,,.1/.. ~1~ .,+
(10) Please disclose:
(a) Plan administrator, address and phone number.
(b) Asset custodian(sl, with address(es) and phone number(s)
(c) Investment manager(s) with address(es) and phone number(s)
...,.., r,,,,,,,,,..,.,,,,, .,,,.,..,u v„-~.~,
Specific Authority 112.665(1) FS. Law Implemented 112.61, 112.63 FS. History-Ne~,v 5-6-81, Amended 9-]9-84, Formerly 22D-
1.03, Amended I 1-14-91, Formerly 22D-1.003, Amended 2-23-95.
60T-1.004 Actuarial Impact Statements.
(1) Regardless of funding source, no unit of local government shall agree to a proposed change in the retirement
benefits or liabilities of a local retirement plan system subsequent to October 1, 1980, unless the administrator of the
plan system, prior to adoption of the change by the governing body, has issued a statement of actuarial impact of the
proposedchange upon the plan lcc~rre*~r°^~°^* ^_~^*°=r prior to the last public hearing thereon and has furnished a
copy of such statement to the Division. Also, such statement shall incorporate by reference and Dave attached a copy
ofthe-proposed ordinance, amendment, resolution, collective bargaining agreement, insurance contract, or other
legal instrument necessary to implement the proposed change to the plan .The adoption of a new
plan shall require submission of an impact statement.
(2) The statement of actuarial impact may be based upon an actuarial valuation that has been prepared within 12
months of the proposed effective date for the amendments. The statement may be prepared by an enrolled actuary,
e:-,~ the plan administrator, or the plan sponsor or :_ °^T^~~°a ^^*__^^~. The plan administrator shall transmit such
statement to the Division along with the administrator's ~ statement that the prepared information reflects the
estimated costs of the proposed amendment(s).
(3) The statement of actuarial impact required by Section 112.63(3), F.S., should be in the form of a
certification signed and dated by the plan administrator including the administrator's typed or printed name and
contain the following information:
(a) The name of the local retirement plan
br(a) A description of the proposed amendment(s), identification of the applicable legal instrument necessary,
to implement the proposed amendment(s) the proposed effective date for the proposed amendment(sl and a
statement that the actuary was provided the information necessary to evaluate the proposed amendment;
~(-b-} An estimate of the cost of implementing the amendments ,signed and dated by an enrolled actuary, that
discloses, at a minimum, sufficient information on both the before and after amended ~t basis, so
that another actuary, unfamiliar with the situation, would be able to appraise the estimate. If any actuarial
assumptions, techniques or methods are also changed, additional information disclosing the effect of such actuarial
changes'must be provided separately; and
(d) A determination and disclosure of the cost effect of material favorable and/or unfavorable actuarial
experience is recommended.
~(sj A statement indicating whether the proposed change is in compliance with Part VII, Chapter 112, Florida
Statutes and Section 14, Article X of the State Constitution.
(4) Actuarial impact statements supporting benefit changes shall provide for contribution amount and
contribution rate changes to be effective as follows:
(a) For prospective or retroactive increases in the benefit formula of active or inactive members -not later than
the ~^°=n~ fiscal year next following the enactment date of the legal instrument providing the benefit
increase.
(b) For retroactive retiree benefit increases required by litigation or federal or state regulations -not later than
the ~^~ fiscal year next following the effective date of the order or the regulation.
(c) For retroactive retiree benefit increases not required by litigation or federal or state regulation -not later
than the f^^~ fiscal year next following the enactment date of the legal instrument providing the benefit
increase. A lump sum payment shall be required to fund the retroactive portion of the contribution increase from the
effective date of such increase to the date of the contribution rate change and shall also be paid no later than the €rrst
day-e€-the fiscal year next following such enactment date.
Specific Authority 112.665(1) FS. La~v Implemented l 12.61, 1]2.63(3), (4) FS. History New 5-6-81, Amended 8-I5-84,
• Formerly 22D-1.04, Amended 11-14-01, Formerly 22D-1.004, Amended 8-4-94,
60T-1.005 Review of Actuarial Reports and Actuarial Impact Statements.
/1\ ^!''TTT^DTAT DL'D/1D T'C'.
Vi(a) if the Division does not receive the actuarial valuation report required by Section 112.63(1), (2), F.S., the
statement of actuarial impact required by Section 1 l2 63(3) F_S. ~''^~~~'" ~*°* * , or, upon review, finds that the
report or statement submitted is not complete, accurate, or based on reasonable assumptions
and/or methods, or materially fails to satisfy Part VII of Chapter 112 F S or the Division requires additional
material information necessary to complete its review of the report statement or to satisfy its duties pursuant to
Section 112.665(] ), F.S., it shall notify the administrator of the affected retirement plan and the affected local
govermnental enti and request appropriate adjustment and the additional material information. The local
government shall, within 30 calendar 68 days from the receipt of the request_ make the appropriate adjustment;
provide the additional material ,information or the required report or statement• and/or notify the Division of its
progress or its refusal to make the requested adjushnent, provide the additional material information report or
statement. The Division may extend the response time if it determines that reasonable progress is being made.
(b) If, after such 30 calendar days the Division deternines that the requested report, statement, adjusnnents
"~
and/or additional material information has ~~*'~ ~ °^* *^ *'~ ~ ' ' '~,~ not or will not be made or
provided, it shall inform the administrator of the affected retirement plan and the affected ~overunental entity that
the consequences for failure to comply with the requirements of Section 1 ]2 63(4) F S require the Department of
Revenue and the Department of Financial Services be notified of such noncompliance in which case such
Departments shall withhold any funds not pledeed for satisfaction of bond debt service that are payable to the
affected governmental entity until the adiustment is made or the report statement or additional material
• information is provided to the Division peV1J Jv~ ~ ^'~~^~~^^ •~^-'°~ +r,° .._,...:";..,. ,.r ~.....:.._ , ~„ ~., ,., _ • , .,. .
b , ,
"nle="'''° '^^"' ^ * 1: ' d 4 .The withholdine of funds shall commence on the 31st calendar day
_- a_'. J
followine receipt by the Departments of such notification from the Division
(c) Within 21 days after receipt of the notice the affected governmental entity mawpetition for a hearing under
Sections 120.569 and 120.57, F.S., with the Division. If the administrative law judge recommends for the Division
the Division shall prepare an actuarial valuation report actuarial impact statement and/or collect the requested
material information, the cost of which shall be charged to the affected ~overunental entity of which the employees
are covered by the retirement plan If payment of such costs is not received by the Division within 60 calendar dam
after receipt by the affected eovernmenta] entity of the request for payment the Division shall certi to the
Department of Revenue and the Department of Financial Services the amount due and such Departments shall ~ay
such amount to the Division from any funds not pledeed for satisfaction of bond debt service which ac•e payable to
the affected eovenunental entity. If the administrative law judge recommends in favor of the affected governmental
entity and the Division prepares a report statement and/or collects the requested material information the cost
thereof shall be paid by the Division.
(2) In the case of an affected special district the Division shall also notify the Department of Community
Affairs. Upon receipt of such notification the Department of Community Affairs shall proceed pursuant to the
provisions of Section 189.421 F.S. with regard to the special district ^ nTT r ^ D T ^ T TT AD ^ ~T ~T„ Tr,, .~,-„T„
..~o-
Yha y °~ °ca~rc°"m'':r"na~iT~
• ~ b
• ~ ~
(3) Pursuant to Section 218.503(2) F.S. the Division shall notify the Governor the Commissioner of
Education, as appropriate, and the Legislative Auditing Co~runittee within 30 days after a determination that due to
lack of funds, one or more of the following conditions have occurred or will occur if action is not taken to assist the
county, municipality, special district or district school board failure to transfer at the appropriate time employer and
employee contributions for any pension, retirement or benefit plan of an employee or failure for one may period to
pay retirement benefits owed to former employees
Specific Authority ] 12.665(1)(e) FS. Law Implemented l 12.63 FS. History-New ~-6-91, Formerly 22D-].05, 22D-].005,
Amended
60T-1.006 Defined Contribution Plans.
(1) Each plan sponsor of a local retirement s3~terrr-er plan defined as other than those requiring actuarial reports
shall provide, on an annual basis, that information necessary to gather, catalog and maintain complete information to
the Division.
(2).;The disclosure of information may be prepared as of the plan anniversary date or as of the plan sponsor's
fiscal. year ending date and shall minimally contain the following:
rn. 1„~., r,nnn.-:..+;n.. For the initial ~l report only):
a DTZimapvir~v'r
k Ta~svcr
2 TT n,~,,,nl ~n+:~n.., n..+ .l n+n
b
7 Din., n.i.,.,:,,:nF..nr,...
~ ~ b b b
• Copy of all legal instruments affecting member eli ibility, benefit provisions funding and administration.
• Summary plan description per Sections 112.66(1) 2 F.S.
• Disclose if all plan members are covered by Social Security; if not, disclose the parameters describing the
members covered by Social Security and those not covered.
• Plan sponsor address and phone number.
• Plan administrator address andphone number
• Asset custodian(s) with addresses and phone numbers.
Investment manager(s) with addresses and phone numbers.
~Dl.,r, Q.,.,,,~..~
'7 T--~cr~
~{-e-) A statement describing each change and/or amendment, if any, to the plan, since the last report, including
a copy of all applicable legal instruments ~,,7 TD c ~..^~^~,^~ io**e-
~(dj A signed and dated statement of the plan administrator (includine the administrator's tuned or printed
name verifying the completeness and accuracy of the report, including a statement that there has been no change
since the last report, if applicable.
Specific Authority 112.665(l)(e) FS. Law Implemented 112.b65 FS. History New 8-15-84, Formerly 22D-1.006, Amended 2-
23-95~
60T-1.007 Funding.
(1) Member ~e contributions shall be deposited into the retirement ~r plan not less frequently
than monthly.
(2) Employer contributions shall be deposited into the retirement ~ plan not less frequently than
quarterly. Consistent with the Leeislative intent in s. 112 61 F S and the concurrent funding requirement ins 14
.Art. X of the State Constitution, required contributions are to be paid not later than one year followine the end of the
plan ear for which such contributions are due
(3) Any payment for retroactive contribution rate increases shall be deposited into the retirement syst~n-er plan
on or before the date such payment is due.
(4) Any revenues received from any source by an employer for allocation to a retirement sys~-eF plan shall be
deposited into such system-er plan not later than 30 days from receipt by the employer.
(5) Administrative expenses, annual funding costs, and contribution rate increases shall be funded in accordance
with b ,Part VII of Chapter 112 F.S. and Chapter 60T-1
F.A.C.
(6) The actuarial cost methods utilized for establishing the amount of the annual actuarial normal cost to support
the promised benefits shall only be those methods approved in the Employee Retirement Income Security Act of
1974, and as permitted under the regulations prescribed by the Secretary of the Treasury Such methods shall
minimally provide a contribution sufficient to meet the normal cost administrative expense and to amortize the
unfunded liability, if any in accordance with Part VII of Chapter 11~ F S and Chapter 60T ] F A C All such
determinations shall use the applicable mortality tables
(7) In lieu of fair market value an actuarial asset-valuation method may be used to establish the asset value for
determinine annual fundine cost The method used must satisfy Federal ReQUlation 1 412(c)(2) l as modified
Revenue Procedure 2000-40 pursuant to s 9303(c) of P L 100-203 as in effect on AuQUSt 16 2006 The associated
corridor limits must be disclosed. Additionally each change in method or corridor limits must be of benefit to the
plan, and be approved bythe Dlan sponsor and by the plan's board
(8) Actuarial assumptions selected for the actuarial valuation report should reflect the actuary's best iudgment
of future events. They should take into account the actual experience of the covered group The actuary should
consider the impact of inflation on appropriate assumptions The preferred approach in se]ectin~ actuarial
assumptions is the use of explicit assumptions that represent the actuary's best estimate of anticipated plan
experience under each assumption Actuarial assumptions that consistently generate experience wins or losses are
prima facie indications of unreasonable actuarial assumptions
(9) Whenever an actuarial valuation is based on actuarial assumptions cost determination/funding methods or
benefit provisions different from those used in the preceding valuation the current valuation must clearly indicate
the effect on projected liabilities and costs resulting from the new assumptions cost determination/fundinemcthods
and/or benefit provisions. This can be accomplished b adding_additional columns as applicable to item (4)(]) Rule_
60T-1.003, F.A.C.
(l0) Administrative expenses paid from the funds being accwnulated to support the promised benefits shall be
paid on a current basis in addition to the annual funding costs otherwise determined A reasonable
assumption estimate of increase should be used to anticipate the expense amount for the current and/or future plan
year(s). Any invesrinent-related expense not netted against investment income is to be included in administrative
expense if such investment expense is not paid directly by the plan sponsor Disclose the assumption estimate
and/or methodology to accomplish this objective in item (3)(e) Rule 60T 1 003 F A C
(1 I)(a) Armual funding costs or cost contribution rates determined as of a valuation date but to be paid at a later
date or applicable to a period beginning at a later date are to be appropriately adjusted to reflect the intervenine time
interval. The adjustment shall provide for but not be limited to adjustments to account for interest and/or salary
increase/ payroll growth, as appropriate Disclose the assumptions and/or methodoloey to accomplish this objective
in item (3)(e), Rule 60T-1..003 F A C
(b) For plan years beginning after September 30 2009 the required dollar contributions for plan years
beginning with or subsequent to the actuarial valuation date shall be the product of the required contribution rate and
the payrolls during such plan nears The required contribution rate is the required dollar contribution amount for the
plan year beginning on the valuation date includin any adjustments for expected benefit changes and interest
divided,bv the compensation amount used to establish the required dollar contribution amount.
(13) Unless otherwise indicated or contrary to Part VII of Chapter 1 I2 F S or Chapter 60T 1 F A C all
actuarial procedures and determinations are to be in accordance with conunonly accepted procedures and
determinations. Internal Revenue Service publications should be used as the standard (12) Recommended chan es in
contributions or contribution rates determined as of a valuation date shall be effective not later than the fiscal ear
coincident with or nett following the valuation date
(14) A member in a DROP who is not accruing benefits is retired for all plan purposes
(15) An annual cost shall be determined and paid for each plan year except for a year for which the plan is
determined to be fully funded or for which there are no unfunded liabilities for promised benefits
(16) For closed, frozen and terminated plans annual funding contributions shall continue until these are no
remaining unfunded promised benefits consistent with the Legislative intent in Section 112 6I F S Liabilities for
an new or additional benefits enacted after the adoption date of the legal instrument by which a plan became
closed, frozen, or terminated, including the liabilities attributable to actuarial method and assumption chan es and
actuarial experience, are to be amortized over the lesser of 15 years and the average number of years of remaining
life expectancy.,
(I7) Changes in the actuarial liability and asset valuation methods and cost funding methods and
determinations must be consistent with the Le is]ative intent in Section ] 12.61 F.S. and of benefit to the ]an e. .
a chance solely to reduce annual funding cost due to unfavorable experience without also changing the assumptions
yielding such experience neither satisfies Section 1 l2 61 nor benefits the plan) All changes must be approved bathe
plan sponsor and by the plan's board
(18) The number of nears for amortizing actuarial experience wins and losses increases and decreases in
liabilities due to actuarial method and/or assumption changes and plan amendments must be consistently applied
(e.~., actuarial experience wins cannot be amortized over a lesser nwnber of nears than that used for losses)
Additionally, each change in the number of nears of amortization policy must be approved by the plan sponsor and
bLthe plan's board.
(19) If the amortization of the unfunded actuarial accrued liabilities commences with or is changed to the use of
the payroll-growth funding method in Section 112.64(5) F.S the payroll-growth rate used must satis the
requirements in such section, and each actuarial valuation report using such funding shall disclose the determination
of the 10-year average annual payroll-er'owth rate and the payroll-growth rate used in the valuation Additionally_
any change in amortization policy to include the use of this method the payroll-Growth rate used and any increase in
such rate must be of benefit to the plan and be approved by the plan sponsor and by the plan's board Only the
pensionable compensation of active members shall be used in determinine the 10-year average payroll-growth rate
Additionally, .such 10-year average is the tenth root of the ratio that the current pensionable compensation bears to
such compensation 10 nears earlier.
(20) The awarding of cost-of-living benefit increases continuallyprovided on an ad-hoc basis does not satisfy
the Legislative intent in Section 112.61, F.S. if the additional liabilities are then to be funded over future years If
such awards are to continue on an ad-hoc basis the benefit shall be fully paid for not later than the fiscal year next
following the enactment date of the legal instrument providing the benefit increase or such benefits are to be
anticipated and pre-funded the same as all the other Qension plan benefits to satisfy the Legislative intent in Section
112.61, F.S.
(21) The plan sponsor or the plan's board may revise actuarial reports and impact statements previously
provided to the Division to correct material errors or omissions Other changes may be made provided that such
revisions satisfy the Legislative intent in Section 1 ] 2 6l F.S. the other requirements of Part VII of Chapter 112
FS., and Chapter 60T-1, F.A.C., and is in the best interest of the plan and the funding of the plan's benefits as
determined by the Division.
(22) The annually required elan sponsor contribution may be limited to the amount equal to 110% of the excess
of the sum of the normal cost and accrued liability over the value of the plan's present assets For this purpose• the
normal cost and the accrued liability are determined according to the individual entry-age actuarial cost-funding
method if such items cannot be directly calculated under the funding method used for the plan' the entry age is the
member's current age reduced to reflect the number of nears of credited prior service• the value of the plan's present
assets is the lesser of the fair market value and if applicable the value determined according to the plan's actuarial
asset-valuation method; and all determinations shall be as of the same date
(23) The total required plan sponsor contribution for each plan year shall not be reduced to reflect member
contributions that exceed the member contribution amount determined when the plan sponsor required contribution
amount was established. Any such reduction is contrary to the Legislative intent in Section 112 61 F S
24)(a) For plans providine additional benefits to members satisfying specified requirements and who have the
option of electing such additional benefits the funding for such additional benefits shall commence not later than the
later of the fiscal year coincident with or next following the enactment date of the legal instrument providing the
additional benefits and, if applicable the earliest date the member eligible to elect such additional benefits could
have satisfied the applicable requirements to claim the additional benefits Such additional benefits shall be funded
by annual contributions that funds the benefits not later than the member's expected retirement date A lump sum
payment is required equal to the accumulated annual contributions with interest that would have been paid from
such earliest date the electing member could have satisfied the applicable requirements to the date when such
. requirements are satisfied, and shall be paid no later than the fiscal year next following such latter date.
(b) Contributions are required for those retirement plan members who decline to participate in the plan and who
subsequently: of in the plan, or who withdraw from the plan and subsequently rejoin the plan. Consistent with the
Legislative intent in Section 112.61, F.S., if credit for pension purposes is awarded for all or any portion of prior
service, .the plan shall be paid the full actuarial cost for such service. Such cost and any accrued interest shall be paid
not later than the fiscal year coincident with or immediately following the date the member first becomes eli ibg le to
claim such service. If creditable service conunences upon the date of re-entry into the plan with no credit for pension
purposes for prior service, there is no additional cost for any prior service.
(251 Contributions are payable to the fund for those members who terminate from a DROP without terminating
employment and who receive credit for pension benefits as if never having_participated in the DROP. Such
contributions shall be the full actuarial cost for the service not credited during the DROP participation period. Such
contribution amounts may be offset by the accumulated DROP balance forfeited when the member terminated from
the DROP without terminatin@ employment. All such contributions and accrued interest shall be paid not later than
the fiscal year coincident with or immediateIy following the date the member terminates from the DROP.
(26) Pursuant to subsection bOT-1.007(8), F.A.C., actuarial assumptions that consistently_generate experience
wins or losses are prima facie indications of unreasonable actuarial assumptions. Additionally, Section 112.63(1)(e),
F.S., andparagraph 60T-1.003(3)(fl, F.A.C., require a comparative review of the actual salary increases granted and
the rate of investment return realized over, minimally, the 3-near period preceding the actuarial report with the
applicable assumptions used during such period. Also, except as otherwise provided in Part VII of Chapter 112, F.S.,
Section 112.61, F.S., Legislative intent, among other things, explicitly "prohibitfsl the use of anyprocedure,
methodology, or assumptions the effect of which is to transfer to future taxpayers any portion of the costs which
may reasonably have been expected to be paid by the current taxpayers." Accordingly, for each period of at least 3
years of unfavorable actuarial experience imtnediately_precedingthe actuarial report, if the actuary elects not to
appropriately change the assumption(s~generating such experience, then the actuary shall comment re ag rding the
efficacy of the applicable assumptions versus the experience, and justify how the continuation of such assumptions
satisfies the preceding standards, individually and collectively. In the absence of compelling evidence to support
such continuation, such report shall be determined to be not state accepted pursuant to Part VII of Chapter 112, F.S.
(27) As of any actuarial valuation date, all existing UAAL amounts ("charges" and "credits") may be combined
and have a single amortization payment, provided such payment is not less than the amount payable without the
combining, and such that the Legislative Intent in Section 112.61, F.S., is satisfied.
Specific Authority 112.665(1) FS. Law Implemented 112.61, 112.64 FS. History New I1-14-0], Formerly 22D-1.007, Amended
60T-1.008 Additional Benefits Funded by Experience.
(1) Actuarial experience may be used to fund additional benefits. The present value of such benefits currently
awarded or to be awarded shall not exceed the net favorable actuarial experience balance accumulated from all
sources of actuarial gains and losses.
L) Subject to the provisions of Part VII of Chapter 112, F.S., the determination and the payment of additional
benefits shall only be in accordance with the provisions of the legal instrument applicable to such benefits adopted
by the plan sponsor.
~) Actuarial experience is determinable under any actuarial cost-funding method For spread gain cost funding
methods (see IRS Revenue Rule 81-213) actuarial experience may be determined using a consistentl~pplied
individual entry-age cost-funding method, or consistently using the difference in annual normal-cost-funding rates
• based on the spread-gain-funding method in use. All such determinations are to be disclosed in the actuarial report.
~) The period for the measurement of net actuarial experience may commence with the effective date of the
additional benefits program funded by actuarial experience, or earlier. If earlier, the contribution requirements for
the affected prior years must be re-determined to account for the revised treatment of prior actuarial experience. A
revised actuarial report is required for each affected prior year.
(5) A net favorable cumulative actuarial experience balance may be reserved or amortized. If reserved, the
balance is to be identified and separately disclosed with the plan's other benefit liabilities. A net unfavorable
cumulative balance must be amortized. For immediate-gain funding methods, the amortization period must satisfy
Section 112.64(4), F.S., and be consistent with the amortization periods amortizing favorable and unfavorable
actuarial experience. For spread-gain funding methods, the balance is to be subsumed in the liabilities funded by the
funding method's normal cost. The resulting decrease (favorable balance) or increase (unfavorable balance) in the
normal cost is the amortization payment.
(6) An exhibit is to be included in each actuarial valuation report disclosing, on an annual basis, the
reconciliation of the immediate prior net accumulated actuarial experience balance to the current balance. The
reconciliation shall disclose the actuarial experience, the value of the additional benefits awarded or to be awarded,
~plicable interest adjustments, and as adjusted by any amortization payments.
Specific Authority l 12.665(1) FS. Law Implemented ] 12.61, 112.63, 1 ]2.64. History-New
60T-1.009 Additional Filing Requirements.
(1) Expected rates of return on invesrinents per Section 112.661(9), F.S.
~ For each actuarial valuation the retirement plan's board shall determine the total expected annual rate of
return on the plan's assets (including investment-related expenses) for the current e~parately for each of the
next three years, and for the long term thereafrer, and file such statement with the Division, theplan sponsor and
consultin ag ctuary. The statement shall disclose how such total expected rates of return are determined on the
market value basis for the plan's investments as of the current actuarial valuation date and reflect any expected
changes in such investments pursuant to the plan's investment policystatement, and shall include all applicable
supportingmaterials including the plan investment advisor's return rate determinations. The following information
shall be provided in a historical exhibit with each board's statement of total expected annual rates-of-retum. This
information will also assist the board in establishing the expected annual rates-of-return.
l .Determine the total reouired annual rate-of--return as the sum of the investment-related expense ("IRE") rate
and the plan's actuarial interest assumption. Determine the IRE rate as the difference beriveen the rates-of--return
including and excluding such expense using the formula in subparagraph bOT-] 003(3)(fl2 F A C (For example if
the rate-of--return is 7.83% including expenses, and 6.90% excluding expenses, then the IRE expense rate is 0.93%.
If such 0.93% expense rate is assumed to continue, and the plan's actuarial interest assumption is 8.00% then the
annually required total rate-of--return is 8.93%.)
2. Determine the weighted-average annual yield rate for the plan's fixed-income investments. This is the ratio
"a/b", where "a" is the sum of the expected annual fixed-income of all the fxed-income investments (not in default)
and "b" is the market value of all such investments. (For example, if $45,900 is the total expected annual fixed-
income on a $914,343 market-value fixed-income portfolio, then the weighted-average annualyield rate is 5.02%
($45,900/$914,343 ). )
3. Determine the armual yield rate for the total plan portfolio expected to be produced by the fixed-income
portion of the plan's portfolio This is the product of the fixed-income weighted-average yield rate and the percent
that t1~e fixed-income investments are of the total plan portfolio (For example if the fixed income portfolio is
32.2% of the plan's total portfolio• then the yield rate for the total plan portfolio expected to be produced by the
fixed-income portion of the portfolio is 1 62% (5 02% x 32 2%)) (Alternatively divide the $45 900 erected annual
fixed-income amount by the total plan portfolio ($2 839 575 in this example) )
4. Determine the total annual rate-of--return to be produced by the balance of the portfolio to achieve the
required total rate-of-return. (For example 7 31% (8 93%- 1 62%) is the required rate of return to be produced by
the remaining 67.8% (100.0% - 32.2%) of the non-fixed-income portion of the portfolio Thus such other assets,
specifically equities must produce 10 78% (7 31%/67 8%) )
5. The historical exhibit shall disclose the following information for each plan near Forplan near ended(date)•
expected and actual IRE rates expected and actual rates-of--return each on the fixed income and equityportions of
the total asset portfolio; and the assumed and actual actuarial rates-of--return For the immediately followingplan
year: total market value, expected IRE rate actuarial interest assumption and total expected rate of return• for the
fixed-income portfolio, its market value and percent of the total portfolio the expected annual fixed income amount
and such amount as a percent of the fixed-income portfolio and of the total portfolio• for the equity,portion of the
portfolio, its market value and percent of the tata] portfolio the excess by which the total expected rate of return
exceeds the expected rate-of--return on the fixed-income portfolio and the expected rate of return on the equity
portion of the portfolio required to achieve the total expected rate-of--return
(b) For each year, the plan's board shall also provide a statement explaining why the market value return rate is
more than 2% less than the assumed actuarial rate for such year and also state and explain the board's corrective
action.
~2) Illiquid investments pursuant to Section 112 661(17) F S
_ (a) For each actuarial valuation that includes illiquid investments in the assets used for establishing the plan's
annual funding cost, the board shall disclose
L The specific legal provision(s) permitting each such investment
2. Each such investment and how its fair market value was established.
3. Each valuator(s) of such investment and the valuator(s) qualifications
(b) For each actuarial valuation as of which date the plan did not own any illiquid investment or if owned but
the fair market value was not determined and that each such investment was excluded from the assets used to
establish the annual fundinE cost the board is to provide a signed statement so attestine
(3) Annual statement pursuant to Sections 112 661(9) and (17) F S The retirement plan's board shall aruiual~
provide to the Division the plan sponsor and the plan's actuary not later than two months followin the beginning of
each plan year the required disclosures in subsections 60T-1 009(1) and (2) F A C together with a statement in th_e
form of a certification signed and dated by each board member as follows
Statement by the Board of Trustees of the (name of plan)
(Pursuant to subsection 60T-1.009(3), F.A.C.)
The disclosures attached hereto are, to the best of my knowled a complete and accurate and satis , the
requirements of Sections 112.66 ] (9) and (17) F S Rule 60T-1 009 F A C and the Legislative intent in Section
112.61, F.S.
Print or Type Name Signature Date
Specific Authority 112.665(1) FS Law Implemented 112 661(91 FS Histo New
r~