Texas Vernon’s Civil Statutes
Sec. § 8.02
Excess Benefit Plan for Police Officers and Fire Fighters


The board may by rule establish and administer a separate qualified governmental excess benefit arrangement and associated trust for the arrangement in accordance with Section 415(m) of the code.
Sec. 8.03. CREDITS TO MEMBERS DROP ACCOUNT. Each month after a member makes an election to participate in the DROP and until the members retirement, the board of trustees shall cause an amount equal to the retirement annuity that the member would have received under Section 5.04 of this Act for that month if the member had left active service and been granted a retirement annuity on the effective date of the election under Section 8.02 of this Act to be credited to a separate DROP account maintained within the fund for the benefit of the member. The members contributions under Section 10.01(d) of this Act made after the effective date of the election to participate in the DROP shall also be credited to the members DROP account. Amounts held in a members DROP account shall be credited at the end of each calendar month with interest at a rate equal to one-twelfth of five percent until the members retirement.
Sec. 8.04. AMOUNT OF CREDITS TO MEMBERS DROP ACCOUNT. The amount credited monthly to the members DROP account:

(1)

shall be increased as a result of any increase in the formula used in computing service retirement benefits under Section 5.04 of this Act that occurs after the effective date of the members election to participate in the DROP but before the effective date of the members retirement;

(2)

shall be increased by any annual cost-of-living adjustments under Section 9.04 of this Act that occur between the effective date of the members election to participate in the DROP and the effective date of the members retirement but only as to amounts credited to the members DROP account after a cost-of-living adjustment; and

(3)

is subject to the limitations prescribed by Section 9.03 of this Act.
Sec. 8.05. DISTRIBUTIONS FROM MEMBERS DROP ACCOUNT. (a) On leaving active service as a firefighter and beginning to receive a retirement annuity, a member who participates in the DROP shall begin to receive the amount credited to the persons DROP account under either of the following methods of distribution selected by the member:

(1)

a single-payment distribution made at a time selected by the member but not later than April 1 of the year after the member attains 70-1/2 years of age; or

(2)

in not more than four payments, which may be equal or unequal as the member may determine, all of which must occur not later than April 1 of the year after the member attains 70-1/2 years of age.

(b)

The DROP account balance of a member shall be credited at the end of each calendar month with interest at a rate equal to one-twelfth of five percent.

(c)

A member may not receive a distribution from the members DROP account before termination of active service as a firefighter. A member shall notify the fund in writing, on a form that the board of trustees may prescribe, at least 30 days before each distribution made under this section.

(d)

The board of trustees may adopt rules that modify the availability of distributions under Subsection (a) of this section, provided that the modifications do not:

(1)

impair the distribution rights under that subsection; or

(2)

cause distributions to occur later than required under Section 401(a)(9), Internal Revenue Code of 1986.

(1)

"Excess benefit participant" means any member whose retirement benefits as determined on the basis of all qualified plans, without regard to the limitations of Section 5.10(a) of this Act and comparable provisions of other qualified plans, would exceed the maximum benefit under Section 415 of the code.

(2)

"Excess benefit plan" means the excess benefit plan created by this article for the benefit of eligible members.

(3)

"Maximum benefit" means the retirement benefit a member or the members spouse, dependent child, or dependent parent is entitled to receive from all qualified plans in any month after applying Section 5.10(a) of this Act and any similar provisions of any other qualified plans designed to conform to Section 415 of the code.

(4)

"Qualified plan" means the fund and any other plan that is maintained by the municipality for the exclusive benefit of some or all of the members of the fund and that has been found by the Internal Revenue Service to be qualified or has been treated by the municipality as a qualified plan under Section 401 of the code.

(5)

"Unrestricted benefit" means the monthly retirement benefit a member or the members spouse, dependent child, or dependent parent would have received under the terms of all qualified plans except for the restrictions of Section 5.10(a) of this Act and any similar provisions of any other qualified plans designed to conform to Section 415 of the code.
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Last accessed
Oct. 18, 2019