1. 1 EMS/Fire Department Consolidation Treatment of Pension and Service Under the Police/Fire, CSRS, and 401(a) Plans

2. 2 Treatment of CSRS Service If Already Eligible to Retire or Within 31 Days of Eligibility (OPM Rule): Must Stay in CSRS Plan If Not Yet Eligible to Retire: May Stay in CSRS Plan May Choose to Join Police/Fire Plan

3. 3 If Already Eligible to Retire Will Continue to Make Contributions to the CSRS Plan Will Retire Under CSRS Plan Provisions Will be Eligible For Federal Post Retirement Health and Life Benefits

4. 4 If Not Yet Eligible to Retire May Choose to Stay in CSRS Plan Treatment Described in Slide #3 May Choose to Join Police/Fire Plan Will Begin Contributions to Police/Fire Plan Will Retire Under Police/Fire Plan Must Join Police/Fire Plan Before Becoming Eligible to Retire Under the CSRS Plan Cannot Rejoin the CSRS Plan at a Later Date Will Retain Federal Health and Life Benefits

5. 5 Cost to Join the Police/Fire Plan Directly From CSRS To Join the Police/Fire Plan, CSRS Participants Are Required to: Contact OPM and Request a Refund of Their Contributions to the CSRS Plan. Deposit the CSRS Contributions into the Police/Fire Plan (Must Be Completed Before Retiring). Pay Interest From the Date of Participation in the CSRS Plan Ends to the Date the Refund is Deposited into the Police/Fire Plan.

6. 6 Sample Calculation – Direct Participation CSRS Contribution Balance as of July 1 = $75,000 Assume Effective Date of Joining Police/Fire Plan is July 1 Assume Funds are Deposited into Police/Fire Plan on September 1 Amount due = $75,850 ($75,000 + $850 interest for 2 months)

7. 7 Cost to Join the Police/Fire Plan With Prior CSRS Service EMS or Fire Employees Who Left the CSRS Plan Previously and Either Left Their Contributions in That Plan or Withdrew Them Would be Required to Deposit an Amount in the Police/Fire Plan That is Equal to: The Amount of the Contributions, plus Interest Equal to the Average Rate of Return on Investment For the Police/Fire Retirement Fund From the First Day of the First Month After the End of the CSRS Service to the Last Day of the Month During Which the Deposit is Made [§ 5-704(e)(2)(a)].

8. 8 Sample Calculation – Prior CSRS Service - Scenario 1: Balance Left in CSRS Plan - Amount Due From Member = $53,000* *Amount Payable To Police/Fire Plan is $63,000 ($10,000+ $53,000) - Scenario 2: Account Withdrawn in 1987 - Amount Due From Member = $63,000 - Prior Period of Employment 1982- 1987; Contributions = $10,000 - Interest from 1987 to 2007 = $53,000

9. 9 CSRS Plan Provisions Defined Benefit Plan Formula: 1.5% x Average Pay x First Five Years of Service, Plus 1.75% x Average Pay x Years 6 – 10, Plus 2.0% x Average Pay x Years After 10. Average Pay: Highest Consecutive 36 Months of Pay.

10. 10 CSRS Plan Provisions (Continued) Member Contributions: 7.5% Vesting Service: 5 Years Maximum Benefit: 80% of Average Pay (Plus Unused Sick Leave) Normal Retirement Age: 62, With 5 Years of Service 60, With 20 Years of Service 55, With 30 years of Service

11. 11 CSRS Plan Provisions (Continued) Early Retirement: Age 50, With 20 Years of Service Any Age, With 25 Years of Service Benefit Reduction if Under Age 55 Annual Cost of Living Adjustments

12. 12 Police/Fire Plan Provisions Defined Benefit Plan Formula (Tier 3): 2.5% x Average Pay x All Years of Creditable Service Average Pay: Highest Consecutive 36 Months of Pay Member Contributions: 8%

13. 13 Police/Fire Plan Provisions (Continued) Vesting Service: 5 Years Maximum Benefit: 80% of Final Salary (Plus Unused Sick Leave) Normal Retirement Age: 25 Years of Service (at Any Age) Early Retirement: No Such Provision Annual Cost of Living Adjustments (Capped at 3%)

14. 14 Sample CSRS Calculation Age 60 25 Years of Service* $60,000 Average Salary 1.5% x 5 Years x $60,000 = $ 4,500 1.75% x 5 Years x $60,000 = 5,250 2.0% x 15 Years x $60,000 = 18,000 Total Annual Benefit = $27,750 *can retire at age 60 with 20 years of service (amount would be $21,750).

15. 15 Sample Police/Fire Benefit Age 60 25 Years of Service $60,000 Average Salary 2.5% x 25 x $60,000 = $37,500

16. 16 Treatment of 401(a) Service Participants Can Choose To: Purchase Past Service, or Participate in the Police/Fire Plan From Date of Eligibility Forward Only EMS Service Will Be Recognized For Vesting and Retirement Eligibility Purposes, regardless of choice

17. 17 If Purchasing Past Service Members May Choose to Purchase the Entire Service or a Portion of it. Entire Service The Amount Would Be the Actuarial Present Value of the Annuity From Date of Participation Under the 401(a) Plan. The Member Would Be Responsible For the Entire Amount (Which Would Be Offset By The Member’s 401(a) Plan Balance).

18. 18 Sample Calculation For Purchase of All Service Age = 38, Service = 11 Years Current Pay = $50,000 401(a) Account Balance = $30,000 Actuarial Present Value of Service = $170,000 (service purchase amount) Member Owes $140,000 ($170,000 - $30,000)

19. 19 If Not Purchasing Past Service Member’s 401(a) Plan Balance Would Be Transferred Directly to the Police/Fire Plan. The Member Would Be Credited With Only the Amount of Benefit Service That the Existing 401(a) Plan Balance Would Buy. No Further Monies Would Be Required of the Member.

20. 20 Samples of Account Balance/Service Conversion Age = 38, Service = 11 Years Current Pay = $50,000 401(a) Account Balance = $30,000 Actuarial Present Value of Service = $170,000 (service purchase amount) Member Service Credit Equals 2 Years Account balance covers 2/11 of service purchase Full 11 Years Still Applies For Vesting and Retirement Eligibility

21. 21 Treatment of Everyone Going Forward Contributions of 8% of Pay Would Be Required Under the Police/Fire Plan Beginning With the First Payday Following Date of Participation. District Contributions Would Cease For the 401(a) Plan as of the Last Day Covered Under That Plan. 401(a) Plan Balances Would Be Transferred Directly to the Police/Fire Plan By the Current Recordkeeper.

22. 22 Treatment Going Forward (Continued) DCRB Will Maintain a Record of the 401(a) Balance Transferred to the Police/Fire Plan. Upon Termination or Retirement, a Vested Member May Choose to Receive An Annuity Under the Police/Fire Plan or a Refund of the 401(a) Plan Balance and Contributions Made to the Police/Fire Plan.

23. 23 Treatment Going Forward (Continued) If a Vested Member Dies in Active Service and Without a Survivor: The 401(a) Plan Balance Would Be Paid to His/Her Beneficiary, Along With Contributions Paid to the Police/Fire Plan.

24. 24 Treatment Going Forward (Continued) If a Non-Vested* Member Dies in Active Service: The 401(a) Balance Would Be Forfeited (As Required Under the 401(a) Plan). Contributions to the Police/Fire Plan Would Be Paid to the Designated Beneficiary. * Has Less Than 5 Years of Service.

25. 25 Treatment Going Forward (Continued) If a Member Dies After Retirement: Eligible Survivors Would Receive a Benefit Under the Police/Fire Plan. The Designated Beneficiary Would Be Paid the Amount By Which Employee Contributions Exceed Retirement Benefits Paid to the Member (if any).