Title
An Ordinance to Amend the Code of the City of Ann Arbor by Repeal of Chapter 18, Employees Retirement System, Title I, of the Code and Adding a New Chapter 18, Employees Retirement System, Title I of Said Code (Ordinance No. ORD-11-01)
Memorandum
Attached is the proposed ordinance revision of Chapter 18 of the City Code which states the provisions of the City of Ann Arbor Retirement System (hereafter the “Ordinance” or “Retirement System”). It reflects changes required by federal tax law and suggested by Michigan law. Additionally, it reflects input from many sources, including proposed amendments prepared by the Pension Board of Trustees and its counsel, suggestions from City personnel, input from Pension Board members, and input from employee member union groups (and respective legal counsel), obtained in several union meetings.
The Ordinance is intended to meet tax-qualification requirements of the Internal Revenue Code. The standard practice for assuring that the Ordinance as constituted meets tax law requirements is to apply for a ruling letter from the Internal Revenue Service (“IRS”). The Ordinance has a ruling, but it is out of date and fails to reflect current tax requirements. The deadline for seeking a current ruling is January 31, 2011, after which time the IRS ruling request cycle for a governmental retirement plan closes. Failure to file a ruling request by then would make it impossible to obtain a ruling until February 1, 2013. It would be too late to get a ruling on a number of current tax law requirements, some of which the Ordinance is already past-due in meeting. Accordingly, City personnel, the Pension Board members and various employee group representatives have worked diligently to present the Ordinance for approval by City Council in order to meet the January 31, 2011 filing deadline.
In addition to the federal tax law issues, the Ordinance as configured was vague, and imprecise, often with respect to critical component...
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