Chapter 26

Retirement Benefits

Chapter 26

Overview

Retirement Benefits

Retirement system applicable to District employees first hired prior to October 1, 1987, and defined Contribution Pension Plan for District employees first hired after September 30, 1987.

Chapter 26

Active Issuances

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Retirement Benefits Standard Operating Procedure
Effective: Jan. 13, 2020

The Retirement Benefits Standard Operating Procedure (SOP) provides procedural guidance on determining eligibility for the various retirement systems, social security, and Medicare taxes....

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457(b) Deferred Compensation Plan
Effective: Aug. 23, 2019

The District is committed to helping employees build retirement wealth and security. The 457(b) Deferred Compensation Plan (457(b) Plan) is designed to supplement an employee's retirement savings. On ...

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Creditable Service – Summer Youth Employment Program
Effective: Aug. 4, 2015

The Department of Human Resources received an inquiry concerning whether participants in the Summer Youth Employment Program (SYEP) are considered employees of the District government and whether thei...

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Issuance of New Retirement Computation Annuity Form for Civil Service Retirement
Effective: July 10, 2014

The purpose of this E-DPM instruction is to inform and distribute to agencies the newly developed retirement computation annuity form developed by the Department of Human Resources (DCHR). The D.C. St...

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Policies on the Elimination of Annuity Offset and Reemployment of District Government Civil Service Retirement System (CSRS) Retirees (Annuitants) - REVISED
Effective: April 25, 2011

NOTE: This Electronic-District Personnel Manual (E-DPM) instruction supersedes E-DPM Instruction No. 26A-9, Implementation of the Policies Relating to the Eliminationof the Annuity Offset and Reemploy...

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Changes to the Vesting Provisions of the District Government’s Defined Contribution Plan (401(a) Plan)
Effective: Jan. 12, 2010

The purpose of this Electronic-District Personnel Manual (e-DPM) instruction is to inform District government employees of an important change to the vesting provisions of the District government's De...

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The District of Columbia Retirement Benefit System
Effective: Dec. 15, 2003

NOTE: This instruction supersedes DPM Instruction No. 26C-4, dated July 29, 2003. The purpose of this instruction is to provide updated information about the District of Columbia Employees'; Retire...

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Chapter 26

Provisions

Retirement Benefits


2601     District Retirement Benefits Program


2601.1    The District retirement benefits program (“Program”) consists of:

  1. A defined contribution plan pursuant to § 401(a) of the Internal Revenue Code (“IRC”);
  2. A deferred compensation plan benefit, as provided in § 457(b) of the IRC; and
  3. Social Security, as provided in Chapter 7 of Title 42 of the U.S. Code

2601.2    Except for positions excluded by § 2603.10, the following employees who were first employed in the District government (“District”) after September 30, 1987, are eligible to participate in the Program:

  1. All full-time permanent employees;
  2. Part-time permanent employees who work at least thirty (30) hours per week; and
  3. Term appointees of more than twelve (12) months.

2601.3    This chapter and the Program shall be implemented consistent with controlling provisions in the IRC and regulations issued to implement the IRC (federal regulations”). If any provision in this chapter conflicts with the IRC and federal regulations, the IRC and federal regulations shall control.


2602     District of Columbia Defined Contribution Plan


2602.1    The District of Columbia Defined Contribution Plan (“401(a) Plan”) is designed to comply with the requirements §§ 401(a) and 501(a) of the IRC and the District of Columbia Government Comprehensive Merit Personnel Act of 1978, effective March 3, 1979 (D.C. Law 2-139; D.C. Official Code § 1-626.01 et seq.) (the “Act”).

2602.2    There shall be established an irrevocable trust called the § 401(a) Trust (“Trust”), that shall be managed so as to be exempt from income tax under § 501(a) of the IRC. The funds contributed by the District under the 401(a) Plan shall be placed in the Trust. The assets of the Trust shall be administered by the Mayor.

2602.3    Contributions made to the Trust by the District are for the purpose of distributing the Trust’s principal and income to employees in accordance with the 401(a) Plan.

2602.4    The 401(a) Plan shall be maintained for the exclusive benefit of employees or their beneficiaries covered under the Trust. There shall be no part of the principal or income of the Trust used for any other purpose before the satisfaction of 401(a) Plan liabilities.

2602.5    With the consent of the Administrator, the Trustee, or the Trustee’s designee may accept rollover contributions to be held for the benefit of any participant in accordance with the 401(a) Plan Document.


2603     Participation in the Plan


2603.1    Eligible employees (employees who are first employed in the District after September 30, 1987, in a benefit-eligible position in a covered employment as defined in § 2699 and who are not excluded from participation by law or regulation) are covered under the 401(a) Plan.

2603.2    The personnel authority shall enroll each eligible employee into the 401(a) Plan as a participant at the beginning of the first pay period immediately following the employee’s completion of one (1) year of creditable service, provided the employee first completes the 401(a) Plan enrollment forms.

2603.3    A participant shall have a vested interest in his or her benefits in the 401(a) Plan as outlined in § 2605.1.

2603.4    A participant who ceases to be an eligible employee but remains employed with the District, shall resume participation in the 401(a) Plan on the first day of the first pay period that commences after he or she resumes service as an eligible employee.

2603.5    The Administrator shall suspend the participation in the 401(a) Plan of any participant who separates from service for more than three (3) workdays in accordance with the 401(a) Plan Document. The participant shall resume participation in the 401(a) Plan if reinstated, restored to duty or reemployed by the District in accordance with §§ 2603.7, 2603.8, or 2603.9. If a participant is not reemployed with the District within one (1) year of separation, except as provided in 2603.8 and 2603.9, he or she shall be terminated from participation in the 401(a) Plan pursuant to 2603.6 and his or her inactive account shall be forfeited and disposed of pursuant to 2606.8.

2603.6    The Administrator shall terminate the participation in the 401(a) Plan for:

  1. Each participant who does not have a vested interest in his or her benefits in accordance with § 2605.1 and who is separated from service for more than one (1) year, unless the participant is reemployed by the District in accordance with §§ 2603.8 or 2603.9; and
  2. Each participant or former participant who has a vested interest in his or her benefits in accordance with § 2605.1, or his or her beneficiary, upon receipt of all benefits in his or her active or inactive account.

2603.7    A participant in the Plan who is removed or suspended without pay and later reinstated or restored to duty on the grounds that the removal or suspension was unwarranted or unjustified, shall be entitled to immediately resume accruing creditable service for purposes of vesting in the 401(a) Plan, or to resume participation in the 401(a) Plan, whichever is applicable, and to receive any creditable service which otherwise would have been credited pursuant to §§ 2604.1, 2604.2, and 2604.3. Appropriate increases shall be made in the Trust to reflect the District contributions that would have been made had the employee not been removed or suspended.

2603.8    A former employee who is reemployed by the District within one (1) year of the date of separation shall resume participation in the 401(a) Plan immediately, without a loss of prior creditable service or forfeiture of any contributions and income allocated to his or her basic contribution account, during that period of separation from service. If a vested participant receives any or all his or her benefits during the separation from service, then he or she shall be vested only for the following amounts upon reemployment:

  1. Any remaining benefits in his or her basic contribution account;
  2. Any income allocated to his or her basic contribution account during the period of separation; and
  3. Any contributions and income allocated to his or her basic contribution account after the reemployment.

2603.9    Except as provided in § 2603.7, a participant, whether or not his or her interest in benefits has vested, who is reemployed by the District after a separation from service for more than one (1) year, must satisfy the requirements of §§ 2603.1 and 2603.2 to become eligible to participate in the 401(a) Plan, and must also satisfy the requirements of § 2605.1 to become vested in the 401(a) Plan with respect to any contributions and income allocated to his or her basic contribution account after such reemployment. If an employee has met the vesting schedule requirements in accordance with § 2605.1 prior to the separation from service, then he or she shall remain vested as to any remaining benefits, and income thereon, in his or her basic contribution account at the time of such reemployment.

2603.10    The following types of employment are “non-covered employment” for purposes of the 401(a) Plan:

  1. Any position when the employee serves under an appointment of one (1) year or less, except when the appointment follows service in a covered position by a break in service of three (3) days or less;
  2. Any position when the employee serves without an assigned tour of duty;
  3. Any position held by a summer youth employee;
  4. Any position that is not paid according to a District pay schedule and that is held by a patient or a resident in a hospital, home, or penal or mental institution of the District;
  5. Any position when the employee is paid on a contract or fee basis;
  6. Any student-employee who receives a stipend and is assigned or attached primarily for training purposes to a hospital, clinic, or laboratory operated by the District;
  7. A police officer or firefighter who is covered under the D.C. Police and Firefighters’ Retirement Plan pursuant to D.C. Official Code § 5-701(1)(A) (2012 Repl.);
  8. An employee who is covered under the D.C. Teachers’ Retirement Plan as specified in D.C. Official Code § 38-2021.13 (2012 Repl.);
  9. An employee at the University of the District of Columbia (University) who is covered under the University’s IRC § 403(b) savings plan;
  10. A substitute or evening school teacher, pursuant to D.C. Official Code § 38-2021.13 (2016 Repl.);
  11. A judge or Executive Officer employed at the District of Columbia Court of Appeals or the Superior Court, or the former Juvenile Court of the District of Columbia, District of Columbia Tax Court, Police Court, Municipal Court, Municipal Court of Appeals, or District of Columbia Court of General Sessions; and
  12. Any other service performed in a position deemed to be non-covered employment pursuant to the Act, this chapter, or the 401(a) Plan Document.

2603.11    Each participant’s account shall be charged with its proportionate share of any expenses paid from the 401(a) Plan and shall also include any functional subaccounts as may be established by the Administrator from time to time. To the extent that the Administrator determines that a functional subaccount no longer needs to be maintained, such functional subaccount may be combined with another functional subaccount. The functional subaccounts are as follows: (1) Basic Contribution Account or (2) Rollover Contribution Account.


2604     Creditable Service


2604.1    Creditable service shall be measured for an eligible employee from the date the employee’s eligible service under § 2601.2 begins until the date of the employee’s separation from that eligible service.

2604.2    Eligibility and vesting in the 401(a) Plan shall be based on a participant’s total number of years and months of creditable service, including any fractional parts of a calendar month. With respect to any fractional parts of a calendar month, thirty (30) calendar days shall equal one (1) calendar month.

2604.3    Service in any covered employment for less than twelve (12) months shall be counted as creditable service towards satisfying the one (1) year of creditable service for participation in the 401(a) Plan if the employee is placed in another position that qualifies as eligible service under § 2601.2 within three (3) workdays of terminating service in the previous covered position.

2604.4    An employee shall accrue creditable service for all the following purposes:

  1. To qualify for 401(a) Plan participation, in accordance with §§ 2603.1 and 2603.2;
  2. To determine when the interest of an employee in his or her account shall vest in accordance with § 2605.1; and
  3. To determine when contributions are to be paid to the Trust on behalf of an employee in accordance with §§ 2603.1 and 2606.1.

2604.5    Creditable service shall not include any of the following:

  1. When an employee is removed or suspended from service or is in an unauthorized leave without pay status for a period that exceeds thirty (30) workdays in a calendar year, except as specified in § 2603.7;
  2. Any portion of an authorized leave of absence without pay that exceeds two (2) years, except for military leave or furlough as authorized under applicable law or regulations;
  3. Any service performed in non-covered employment, as defined by § 2603.10;
  4. Any prior service of an employee who was employed less than one (1) year if the employee was separated from service for more than three (3) workdays, except as provided in §§ 2603.7 and 2603.8;
  5. Any prior service of an employee participant reemployed by the District after a separation from service of more than one (1) year, except as provided for in § 2603.9;
  6. Any annual or sick leave accrued by an employee prior to his or her separation from service; and
  7. Any service otherwise excluded from creditable service by law, regulations, or the 401(a) Plan Document.


2605     Vesting Requirements


2605.1    A participant shall become fully vested in his or her benefits in the 401(a) Plan when the employee:

  1. Attains age sixty-five (65) and separates prior to meeting the vesting requirement;
  2. Becomes entitled to disability benefits under the Social Security Act;
  3. Dies while employed with the District; or
  4. Prior to December 8, 2009, completes five (5) years of creditable service in covered employment.

2605.2    Effective December 8, 2009, a participant who is not vested in the 401(a) Plan under the terms set out in § 2605.1, shall become partially and fully vested in his or her benefits in the Plan according to the following schedule:

Years of Creditable Service Vested Percentage
Less than 2 0%
2 20%
3 40%
4 60%
5 or more 100%


2606     District Contributions to the Trust


2606.1    The District shall make contributions on no less than a quarterly basis to the Trust in an amount equal to the sum of the amounts calculated in accordance with §§ 2606.2 and 2606.3, which shall be allocated to the active account of each participant subject to the limitations on contributions as established by 26 U.S.C. § 415.

2606.2    The District shall contribute to the Trust an amount equal to five percent (5%) of the base salary of each employee participating in the 401(a) Plan, except in the case of detention officers, the District shall contribute no less than five and a half percent (5.5%) of the base salary of each participant.

2606.3    The District shall only make contributions that are consistent with the Act, this chapter, and the 401(a) Plan Document. The District shall not make contributions for any of the following:

  1. Employees who have not attained one (1) year of creditable service;
  2. Any period when the participant performs service in non-covered employment, as defined by § 2603.10;
  3. Any period when a participant is in a non-pay status;
  4. Any period when a participant has been removed or suspended from service without pay, except as provided for in § 2603.7;
  5. Any period when the participant is separated from service in excess of three (3) workdays, except as provided in §§ 2603.7 and 2603.8; and
  6. Any participant whose is not eligible to participate in the 401(a) Plan pursuant to the Act, this chapter, or 401(a) Plan Document.

2606.4    A participant is neither required nor permitted to make payments to the Trust.

2606.5    A participant shall have no right to any contributions or income allocated to his or her active account, until the participant becomes vested in accordance with § 2605.

2606.6    If a participant separates from the District prior to attaining the vesting requirements of § 2605, no contributions shall be allocated to his or her active account during the period of separation, and all contributions and income previously allocated to his or her active account shall be transferred to an inactive account during the period of separation.

2606.7    If the former participant is reemployed with the District in accordance with § 2603.7 or § 2603.8, all contributions and income transferred to an inactive account shall be reinstated to the participant and transferred back to an active account.

2606.8    If a participant separates from the District prior to attaining the vesting requirements of § 2605 and is not reemployed in the District in accordance with §§ 2603.7 or § 2603.8, then his or her contributions and income that were transferred to an inactive account shall be forfeited.

2606.9    The Trustee shall return to the District contributions that were made to the Trust, and any income thereon, if:

  1. The 401(a) Plan does not qualify under IRC §§ 401(a) and 501(a);
  2. The contributions or income have been allocated to any active or inactive account under a mistake of fact; or
  3. Any funds remain in the Trust after the 401(a) Plan has terminated and all liabilities of the Trust have been satisfied.

2606.10    No contributions to the Trust, nor any income earned thereon, shall be used for or diverted for purposes other than the exclusive benefit of the participants, former participants, and their beneficiaries, prior to the satisfaction of all liabilities to the participants, former participants, and beneficiaries.


2607     Distribution and Forfeiture of Benefits Under the 401(a) Plan


2607.1    Except as provided in subsection 2607.2, a participant who has separated from the District and who has not met the two (2) years of creditable service required for vesting in a 401(a) Plan account under § 2605, shall have those contributions forfeited and shall not receive a distribution of benefits. The contributions shall be restored if the participant is rehired within one (1) year after the date of separation, as provided in § 2603.8.

2607.2    A participant who has separated from the District and who has not met the two (2) years of creditable service required for vesting in a 401(a) Plan account under § 2605, but who has attained age sixty-five (65) prior to separating from the District, separated from the District due to disability, or has separated from the District due to the participant’s death, shall become fully vested as a participant.

2607.3    Upon written request, a vested participant or former participant, or beneficiary, who separates from service, becomes disabled, or dies shall receive vested 401(a) Plan benefits distributed in a lump sum payment unless a different distribution option is elected pursuant to § 2607.5. The lump sum payment shall be made as soon as administratively feasible after satisfactory proof has been submitted, but in no more than sixty (60) days after the end of the quarter during which the separation from service, disability, or death occurs.

2607.4    If a participant dies prior to the commencement of a distribution of benefits, the benefits shall be distributed to the beneficiary in accordance with the 401(a) Plan Document

2607.5    A vested participant, former participant, or beneficiary, may elect to have vested 401(a) Plan benefits distributed, as provided by the 401(a) Plan, pursuant to the limitations set forth in IRC § 401(a)(9), in one or a combination of the following:

  1. Single life annuity;
  2. Joint and survivor annuity made over the joint lives of the participant and a beneficiary;
  3. Periodic annuity for a certain number of years without a life contingency;
  4. Installments of substantially equal amounts for a specific period, not to 10 exceed the life expectancy of the employee or beneficiary; or
  5. A lump sum.

2607.6    Notwithstanding any other provisions of the 401(a) Plan Document, distributions under § 2607.5 shall be in accordance with § 2607.3 and IRC § 401(a)(9).

2607.7    A vested participant, former participant, or beneficiary of a 401(a) Plan account (excluding rollover contribution) of one thousand dollars ($1,000) or more, must submit a written request for distribution of benefits. A 401(a) Plan account of less than one thousand dollars ($1,000) (excluding rollover contributions) may be paid out without the participant’s or beneficiary’s consent.

2607.8    In no event shall the distribution of benefits to a participant or former participant, commence later than April 1 of the calendar year following the year in which he or she retires or terminates employment, or attains the age of seventy and one-half (70½), or by such other age, if any, that the Internal Revenue Service (IRS) may establish which is applicable to qualified plans under IRC § 401(a).

2607.9    Prior to any distribution of benefits from the 401(a) Plan to a former employee, the former participant must attest to his or her employment status with the District government and his or her marital or domestic partnership status and, if married or in a domestic partnership, submit written consent, witnessed by a notary public, from his or her spouse or domestic partner, to any distribution of benefits, unless it is established to the satisfaction of the Administrator that this consent cannot be obtained due to incompetence, incapacitation, or unavailability of the spouse or domestic partner.

2607.10    If a participant, former participant, or beneficiary elects to have benefits distributed in accordance with § 2607.5, his or her active account shall be transferred to an inactive account during the period for which benefits are to be distributed.

2607.11    If a former participant dies after the commencement of a distribution of benefits, distribution of any remaining benefits shall be to the beneficiary of the former participant in accordance with the 401(a) Plan Document.

2607.12    If a participant becomes disabled prior to a separation from service, benefits shall be distributed to the employee in accordance with the 401(a) Plan Document.

2607.13    If a participant or former participant dies without designating a beneficiary, distribution of any remaining benefits shall be in accordance with the 401(a) Plan Document.

2607.14    A participant or former participant who is married or in a domestic partnership may only designate a beneficiary other than his or her spouse or domestic partner upon the written attested consent of the spouse or domestic partner, unless it is established to the satisfaction of the Administrator that this consent cannot be obtained due to incompetence, incapacitation, or unavailability of the spouse or domestic partner.

2607.15    A participant who dies while performing qualified military service (as defined in 26 U.S.C. § 414(u)(5)) on or after January 1, 2007, shall be treated as if the participant resumed employment the day before death and terminated employment on the actual date of death. The account shall be payable to designated beneficiary.

2607.16    An employee of the Fire and Emergency Medical Services Department holding a valid certificate as a paramedic, serving as an emergency medical technician, or serving as a hazards or emergency medical services specialist, who is appointed to serve as a uniformed firefighter position may elect to transfer his or her 401(a) Plan account to the D.C. Police Officers’ and Firefighters’ Retirement Fund.

2607.17    A participant who is at least age seventy and a half (70½) years may request a nonhardship withdrawal from his or her 401(a) Plan account as follows:

  1. The withdrawal request may be made at any time;
  2. A minimum amount of one hundred dollars ($100.00) may be withdrawn; unless the amount available is less than $100.00; and
  3. The amount withdrawn shall be distributed from the participant’s investment funds designated by the participant, provided that the designated investment funds hold a balance as of the withdrawal date sufficient to pay the full amount of the withdrawal request.


2608     Defined Contribution Plan Administration


The 401(a) Plan is administered by the Chief Financial Officer for the District of Columbia (CFO). The Plan Document is available online at https://www.icmarc.org/dc/forms-and-publications/publications.html and contains the official summary description of the plan, its terms, and conditions.


2609     Miscellaneous Provisions


2609.1    Any payment of, or right to, benefits shall be non-assignable and non-alienable, except as provided in the 401(a) Plan Document or in § 2609.2.

2609.2    The payment of, or right to, benefits under the 401(a) Plan may be assigned to a non-participant pursuant to a legally enforceable qualified domestic relations order.

2609.3    The liability of the 401(a) Plan to any employee, former employee, or beneficiary with respect to the distribution of benefits shall be limited to his or her active or inactive account balance on the date of separation from service, disability, or death, and including any interest earned on the account balance.

2609.4    The District may amend or terminate the 401(a) Plan, provided that any amendment or termination shall not impair the rights of a vested employee or former employee, or his or her beneficiary, to receive any contributions, or interest earned on the account balance, allocated to his or her active or inactive account prior to the date of the termination or amendment of the 401(a) Plan.

2609.5    No vested benefits of participants, former participants, or beneficiaries shall be forfeited upon the termination of the 401(a) Plan.

2609.6    Direct transfer of eligible rollover distributions shall be made in accordance with 26 U.S.C. § 401(a)(31).


2610     District of Columbia Deferred Compensation Plan


2610.1    The District established the District of Columbia Deferred Compensation Plan (“457(b) Plan”), which is an eligible deferred compensation plan under § 457(b) of the IRC.

2610.2    The 457(b) Plan is a tax-advantage retirement savings account that allows eligible employees to set aside a portion of their salary through payroll deductions on a pretax or after-tax basis into an account that is invested at the discretion of the employee in a manner approved by the District.


2611     Deferred Compensation - Eligibility


2611.1    Except for positions excluded in § 2611.2, the following employees are eligible to participate in the 457(b) Plan:

  1. All full-time permanent employees;
  2. Part-time permanent employees who work at least thirty (30) hours per week; and
  3. Term appointments of more than twelve (12) months.

2611.2    The following types of employees are in “non-covered employment” for purposes of the 457(b) Plan:

  1. Employees serving in a temporary appointment of one (1) year or less;
  2. Members of a board or commission whose pay is set under D.C. Official Code § 1-611.08;
  3. Judges and Executive Officers employed by the District of Columbia Court of Appeals or the Superior Court, or the former Juvenile Court of the District of Columbia, District of Columbia Tax Court, Police Court, Municipal Court, Municipal Court of Appeals, or District of Columbia Court of General Sessions;
  4. Summer youth employees;
  5. Student employees who receive a stipend and are assigned or attached primarily for training purposes to a hospital, clinic, or laboratory operated by the District government; and
  6. Employees and other individuals who are paid on a contract or fee basis.


2612     Automatic Enrollment


2612.1    All eligible employees newly hired or rehired (those employees who have had a break in service of three (3) consecutive workdays or more) on or after June 10, 2019, shall be automatically enrolled in the 457(b) Plan. All eligible employees hired or rehired before June 10, 2019, may elect to enroll in the 457(b) Plan as provided in § 2613.2.

2612.2    All participants who are automatically enrolled shall be deemed to have elected to defer five percent (5%) of their annual base salary, as pre-tax deferrals (“Default Deferrals”).

2612.3    Participants who are automatically enrolled may increase, reduce, or cease the amount of their deferrals to the 457(b) Plan at any time. An automatically enrolled participant who elects to cease deferrals during the first thirty (30) days of employment shall be entitled to a distribution under § 2612.6.

2612.4    Automatically enrolled participants shall be provided with written notification of the 457(b) Plan Automatic Enrollment policy by the effective date of their appointment. The notice shall explain:

  1. The employee’s rights under the 457(b) Plan to designate how deferrals and earnings will be invested;
  2. How, in the absence of an investment election by the employee, such deferrals and earnings will be invested;
  3. The percentage of the employee’s base salary that will be deferred to the program;
  4. The employee’s right to increase, reduce, or cease his or her deferrals to the program;
  5. How an employee may elect investments and change or cease deferral amounts under the 457(b) Plan; and
  6. The employee’s right to make a permissive withdrawal from the Default Deferrals, and the procedures governing such withdrawals.

2612.5    Each automatically enrolled participant shall sign an acknowledgement that he or she received the written policy as specified in § 2612.4 of this section. A legal guardian’s signature is needed if the eligible participant is under eighteen (18) years of age.

2612.6    Automatically enrolled participants may elect, within thirty (30) calendar days after the first day of employment, to withdraw the Default Deferrals (as adjusted for gains and losses to the date of distribution) made on his or her behalf to the 457(b) Plan. The withdrawal shall be processed, and any amounts owed shall be distributed to the participant, within sixty (60) calendar days after receipt of a request to withdraw the Default Deferrals. Any such withdrawal request will be treated as an affirmative election by the automatically enrolled participant to cease having Default Deferrals made on his or her behalf as of the date of the withdrawal request.

2612.7    Any deferrals, as adjusted for gains and losses, made by the District pursuant to § 2612.1 with respect to any Default Deferrals being withdrawn pursuant to § 2612.6 shall be forfeited.

2612.8    Default Deferrals made on behalf of automatically enrolled participants shall begin no later than the first pay period after the effective date of appointment.

 


2613     Elective Enrollment; Modifications to Enrollment


2613.1    An employee who opts out of automatic enrollment under § 2612 may elect to participate in the 457(b) Plan after the end of the thirty (30) calendar days after the first day of employment. An employee who was not automatically enrolled in the 457(b) Plan may elect to participate in the 457(b) Plan at any time after the employee’s date of hire.

2613.2    To participant, complete the Salary Deferral Agreement through the Employee Self-Service (ESS) in the PeopleSoft System. The agreement shall include:

  1. The option of selecting pre-tax deferrals or after-tax (Roth) deferrals;
  2. Amount of compensation to be deferred; and
  3. Investment elections.

2613.3    An employee enrolled in the 457(b) Plan may change his or her deferral amounts by completing the Salary Deferral Agreement. The change to the deferral amounts shall take effect not earlier than the first day of the first pay period following the date when the Salary Deferral Agreement is executed.

2613.4    Participants shall have the option of electing through payroll deduction to make either pre-tax deferrals that will reduce their taxable income for the year, or aftertax deferrals (Roth deferrals) that will not reduce their taxable income for the year.

2613.5    Participants may elect to defer a minimum of twenty dollars ($20) per pay period or forty-three dollars ($43) per month.

2613.6    The maximum amount of compensation that a participant may defer through pretax and Roth deferrals under the 457(b) Plan in any taxable year shall not exceed the lesser of:

  1. The applicable dollar amount under § 457(b)(2)(A) of the IRC, or
  2. One hundred percent (100%) of the participant’s base salary, as provided for in § 457(b)(2)(B) of the IRC.

2613.7    The 457(b) Plan special catch-up limitation allows a participant, for the last three (3) taxable years ending before a participant attains normal retirement age, to make contributions in excess of the limits set forth in § 2613.6. The maximum catch-up deferral amount shall be the lesser of:

  1. Twice the maximum deferral dollar amount in effect under § 2613.6, or
  2. An amount equal to:
    1. The aggregate § 2613.6 limitation for the current year, plus, and
    2. The portion of the primary limitation amount not utilized in prior taxable years in which the participant was eligible to participate in the 457(b) Plan. A participant may use a prior year only if the deferrals under the 457(b) Plan in existence during that year were subject to a maximum deferral amount.

2613.8    All participants who have attained age fifty (50) or over before the close of the 457(b) Plan year shall be eligible to make additional deferrals that exceed the maximum limitation for the 457(b) Plan year, in accordance with, and subject to the limitation of, 26 CFR § 1.414(v).

2613.9    Any deferrals to the 457(b) Plan account that exceed the amounts authorized by § 2613.6 shall be refunded to the participant in accordance with 26 CFR § 1.457-4(e).


2614     Voluntary Termination of Enrollment


2614.1    A participant may cancel his or her participation in the 457(b) Plan at any time. This participant shall provide notification of his or her cancellation through the Employee Self Service function in the PeopleSoft system. A participant’s cancellation shall take effect on the date of the request. An employee who previously cancelled his or her participation in the 457(b) Plan may subsequently recommence participation by completing the Salary Deferral Agreement through the Employee Self Service function in the PeopleSoft system


2615     District Matching Contribution


2615.1    For participants employed by the Council of the District of Columbia, Office of the District of Columbia Auditor, and the Office of Advisory Neighborhood Commissions, the District shall contribute an amount equal to an employee’s deferrals to the 401(a) Plan each pay period not to exceed three percent (3%) of his or her base salary. The District does not make matching contributions to the 401(a) Plan accounts of other employees.

2615.2    Within forty-five (45) days after the end of each pay period, the District shall contribute deferrals to the Trust.


2616     Investments


2616.1    Participants shall be given an opportunity to direct investment of their respective 457(b) Plan accounts in one (1) or more of the investment funds offered by the 457(b) Plan.

2616.2    When a participant makes deferrals to the 457(b) Plan and has not directed that those deferrals be invested in any specific fund(s), his or her deferrals shall be invested in the default fund selected by the 457(b) Plan provider until additional instructions are provided by the participant.


2617     Transferring Investments from Other Accounts


2617.1    Participants in the 457(b) Plan may transfer amounts from other eligible 457(b) plans or 401(k) plans into their 457(b) Plan account.


2618     Distribution of Benefits


2618.1    Participants may not withdraw funds from their account, except in the case of:

  1. Separation from the District;
  2. Death;
  3. Attainment of age seventy and one-half (70½); or
  4. A severe financial hardship, pursuant to § 2618.3.

2618.2    Roth deferrals and associated earnings can be withdrawn tax free if:

  1. Five (5) years have passed since January 1 of the year of the participant’s first Roth deferrals; and
  2. The participant is at least fifty-nine and one-half (59½) years old (or disabled or deceased).

2618.3    Participants may request a distribution due to a severe financial hardship by applying for an emergency withdrawal using the “District of Columbia 457(b) Deferred Compensation Plan, Application for Unforeseeable Emergency Withdrawal Form,” available at http://www.dcretire.com.

2618.4    Participants may elect the time when distributions under the 457(b) Plan will begin by designating the month and year the first distribution is to be made. The first distribution date that may be elected by the participant shall be the earlier of:

  1. Thirty-one (31) days after separation from the District, or
  2. The date the participant attains age seventy and a half (70½).

2618.5    Notwithstanding § 2618.4, a distribution of a participant’s account must be made no later than the first (1st) day of April following the calendar year in which the participant separates from the District or attains age seventy and a half (70½).

2618.6    Participants eligible to receive a distribution may choose from the following payment options:

  1. Lump sum payment;
  2. Installment payments for a designated period, including monthly, quarterly, semi-annual, and annual installment payments;
  3. Annuity payments; or
  4. Direct rollover to another employer-sponsored, eligible retirement plan or to a traditional IRA.

2618.7    If a participant dies before distribution of his or her account, then the beneficiary must submit a death certificate proving the death of the participant before distribution of the participant’s account pursuant to § 2618.6.


2619     Terminating Enrollment


2619.1    A person’s enrollment in the 457(b) Plan shall terminate when one (1) of the following occurs:

  1. The participant terminates employment with the District, or
  2. The participant ceases to be eligible to participate in the 457(b) Plan.

2619.2    A participant who ceases to be eligible to participate in the 457(b) Plan, but who remains an employee of the District, shall be entitled to withdraw all of the funds from his or her account upon termination of employment.


2620     District of Columbia Deferred Compensation Plan Administration


2620.1    The 457(b) Plan is jointly administered by the D.C. Department of Human Resources (DCHR) and the D.C. Office of the Chief Financial Officer, Office of Finance and Treasury (CFO).

2620.2    The 457(b) Plan Administrator provides for the administration of the plan, which includes but is not limited to:

  1. Enrollment of eligible employees as participants;
  2. The maintenance of accounts and other records;
  3. Periodic reports to participants; and
  4. The distribution of benefits to Participants.

2620.3    The 457(b) Plan Administrator shall serve as an agent of the District for purposes of providing direction to the custodian of any custodial account from time to time as to the investment of the funds held in the custodial account, and the transfer of assets to or from the custodial account.

2620.4    Each Participant’s account shall be charged with its proportionate share of any expenses paid from the 457(b) Plan and shall also include any functional subaccounts as may be established by the Administrator from time to time. To the extent that the Administrator determines that a functional subaccount no longer needs to be maintained, such functional subaccount may be combined with another functional subaccount. The functional subaccounts are as follows: (1) Basic Contribution Account or (2) Rollover Contribution Account.


2699     Definitions


As used in this chapter the following meanings apply –

Active account – the bookkeeping account maintained for each participant to record his or her allocable share of contributions and deferrals, and related income earned, and administrative expenses, which has not been designated as an inactive account.

Act – the District of Columbia Government Comprehensive Merit Personnel Act of 1978 (D.C. Law 2-139, D.C. Official Code § 1-601.01 et seq. (2016 Repl.)).

Administrative expenses – the costs of administering the 401(a) and 457(b) Plans, including but not limited to any Trust expenses.

Administrator – the Chief Financial Officer (CFO) or the employees of the CFO who have the power to act for the CFO with respect to the administration of the 401(a) or the 457 Plan, as the context requires.

Automatically Enrolled Participant – a participant in the 457(b) Plan who is first hired or rehired on or after June 10, 2019.

Base salary – the base rate of pay paid to a participant, as established by a District of Columbia salary schedule, by statute or by the Mayor, excluding overtime, holiday, Sunday, compensatory time, hazard pay, environmental, or night-shift differential pay, upon which contributions to the Plan shall be determined.

Beneficiary – the person(s) or legal entity or entities designated by the participant or former participant to receive any undistributed benefits that become payable in the event of the death of the participant or former participant.

Benefits – the amount in the active or inactive account of a vested participant or former participant, or his or her beneficiary, which is available for distribution upon separation from service, disability, or death.

Benefit commencement date – the date selected by the participant or beneficiary by designating the month and year during which the first distribution is to be made.

Contribution – the amount the District deposits into the Trust in accordance with § 2606.1 of this chapter.

Covered employment – service by any employee in any position, not specifically excluded as “non-covered employment,” pursuant to § 2603.10, which is:

  1. Under the personnel authority of the Mayor;
  2. Under the independent personnel authority of an executive agency that reports to the Mayor;
  3. Under the personnel authority of the District of Columbia Courts when such courts participate in the 401(a) and 457(b) Plans with the approval of the Mayor; or
  4. Under the personnel authority of an independent agency as defined in D.C. Official Code § 1-603.01 (2016 Repl.) when the independent agency participates in the 401(a) and 457(b) Plans with the approval of the Mayor.

Covered position – a permanent or term appointment of more than twelve (12) months position in the District government that includes benefits (i.e. health, life, retirement).

Creditable service – the period of employment to be recognized for purposes of eligibility for retirement benefits, as defined by § 2604.

Detention officer – an employee who is not covered by the Police and Fire Retirement System, whose duties are primarily the investigation, apprehension, or detention of individuals suspected or convicted of offenses against, or violation of, the laws of the United States or the District of Columbia, and whose duties may require frequent contact, supervision, inspection, training, employment, care, transportation, or rehabilitation of individuals in detention. The term includes:

  1. Employees engaged in the activities listed above whom are transferred to a supervisory or administrative position;
  2. Employees of the Department of Corrections, its industries, and utilities who are engaged in the activities listed above;
  3. Employees of the Department of Youth Rehabilitation Services who are engaged in the activities listed above; and
  4. Members of the Board of Parole, parole officers, and probation officers who are engaged in the activities listed above.

Deferral – the annual amount of compensation designated as a pre-tax deferral or after-tax (Roth) deferral that a participant elects to defer in the 457(b) Plan pursuant to a properly executed Salary Deferral Agreement.

Disabled – a condition which results in a participant being entitled to disability benefits within the meaning of the Social Security Act (42 U.S.C. §§ 416(i) and 423(d)).

District – the District government, including (a) subordinate agencies under the Mayor; (b) the District of Columbia Courts, and (c) any independent agency, if the courts or any independent agency duly accept 401(a) and/or 457(b) Plan(s), with the approval of the Mayor.

District of Columbia Deferred Compensation Plan – 457(b) Plan as provided pursuant to D.C. Official Code § 1-626.05(2) (2016 Repl.).

District of Columbia Defined Contribution Plan – 401(a) Plan as provided pursuant to D.C. Official Code § 1-626.05(3) (2016 Repl.).

Domestic partner – a person with whom an individual maintains a committed relationship as defined in D.C. Official Code § 32-702(a) (2012 Repl.).

Employee – an individual who performs a function of the District government and who receives compensation for the performance of such services.

Former employee – an employee who has separated from District government service.

Inactive account – the bookkeeping account maintained for each former participant for whom contributions and deferrals are no longer being made, and for each former participant or beneficiary who receives distributions, that records his or her allocable share of income and administrative expenses.

Income – the net increase or decrease of the Trust, as of each valuation date, resulting from realized and unrealized gains or losses, interest, dividends, and other investment earnings.

Internal Revenue Code or IRC - the Tax Reform Act of 1986, approved October 22, 1986 (100 Stat. 2085; 26 U.S.C. § 1 et seq.), as amended.

Plan account – a 401(a) or 457(b) account established and maintained for each participant to reflect the contributions and deferrals made by or for the benefit of the participant and the allocated or attributable income, gains and losses (whether or not realized).

Plan document – the 401(a) or 457(b) Plan document, as applicable, that outlines the process of how the District of Columbia Defined Contribution Plan or District of Columbia Deferred Compensation Plan is managed and maintained by the Administrator.

Section 401(a) Trust – a trust that qualifies under §§ 401(a) and 501(a) of the IRC, into which the District government’s contributions are deposited.

Separation from service – lawful termination of the employment relationship between an employee and the District government.

Trustee – the Chief Financial Officer (CFO), or any entity designated by the CFO to serve as trustee under the Trust. The term “Trustee” shall include custodian designated by the CFO under any custodial account.