Chapter 742-9 Accrued Liability

742-9-01 Authorization to charge employer for requested detail on accrued liability.

When a municipality specifically requests a further breakdown of its gross accrued liability, the executive secretary of the pension fund shall be authorized to ask the actuary to provide such information as the actuary deems appropriate, at the expense of the municipality making such request for information.

Five Year Review (FYR) Dates: 10/24/2014 and 10/24/2019
Promulgated Under: 111.15
Statutory Authority: 742.10
Rule Amplifies: 742.30
Prior Effective Dates: 1/1/77, 10/22/04

742-9-02 Payment dates for employer accrued liability.

Payment of an employer's accrued liability shall be according to the payment schedule provided by section 742.30 of the Revised Code and the date of all payments shall be due and payable on the dates set forth below:

(A) Not less than one-half of the annual amount due shall be due and payable on May fifteenth; and

(B) The other half or the remaining balance due for that year shall be due and payable on November fifteenth.

Five Year Review (FYR) Dates: 10/24/2014 and 10/24/2019
Promulgated Under: 111.15
Statutory Authority: 742.10
Rule Amplifies: 742.30
Prior Effective Dates: 1/1/77, 6/12/99, 10/22/04

742-9-03 Delinquent accrued liability payments.

For purposes of the certification required under section 742.301 of the Revised Code, the executive director and/or the administrative staff shall provide any certifications for any unpaid accrued liability that has not been paid in accordance with the terms of section 742.30 of the Revised Code and rule 742-9-02 of the Administrative Code and all penalties and interest provided for in section 742.30 1 of the Revised Code.

Five Year Review (FYR) Dates: 10/24/2014 and 10/24/2019
Promulgated Under: 111.15
Statutory Authority: 742.10
Rule Amplifies: 742.30, 742.301
Prior Effective Dates: 1/1/77, 6/12/99, 8/5/2004

742-9-04 Payment dates for employer accrued liability on PERS transfers.

Pursuant to the authority vested in the board of trustees by. section 742.51 of the Revised Code, the payments due from an employer for accrued liability resulting from any ember who transfers from the Ohio public employees' retirement system ("OPERS") to the Ohio police and fire and pension fund ("OP& F") shall be paid according to the payment schedule provided by section 742.51 of the Revised Code and the date of the payments provided therein shall be due and payable on the dates set forth below:

(A) Not less than one-half the amount due and payable for each calendar year shall be paid on on May fifteenth; and

(B) The other half or the balance remaining due for that year shall be due and payable on November fifteenth.

Five Year Review (FYR) Dates: 10/24/2014 and 10/24/2019
Promulgated Under: 111.15
Statutory Authority: 742.10
Rule Amplifies: 742.51
Prior Effective Dates: 1/1/77, 6/12/99, 10/22/04

742-9-09 [Rescinded] Billing and penalties for pending employer contributions.

Effective: 12/21/2017
Five Year Review (FYR) Dates: 10/5/2017
Promulgated Under: 111.15
Statutory Authority: 742.10
Rule Amplifies: 742.32, 742.352, 742.35
Prior Effective Dates: 05/27/1999, 02/05/2000, 02/11/2002 (Emer.), 04/29/2002, 05/17/2007, 07/19/2012

742-9-10 Employer reporting requirements.

(A) For purposes of this rule, "required penalties" shall mean the penalties prescribed by section 742.352 of the Revised Code, as modified by rule 742-8-07 of the Administrative Code.

(B) For purposes of section 742.32 of the Revised Code, the "report of employeee deductions" that employers must transmit to Ohio police & fire pension fund ("OP&F") shall be on the report of retirement deductions form provided by OP&F and found on OP&F's website, www.op-f.org, and shall be consistent with the requirements outlined in this rule.

(C) For purposes of section 742.32 of the Revised Code, the term "employee" shall refer to a "member", as such term is defined in divisions (A)(2)(a) and (B)(2)(a) of section 742.01 of the Revised Code.

(D) For purposes of section 742.32 of the Revised Code, the deduction shall be taken on "salary" paid by the employer to the employee for the month covered in that report, pursuant to the terms of division (L) of section 742.01 of the Revised Code and the rules of the Administrative Code adopted pursuant to that section.

(E) The form of the employer's report of employee deductions shall be deemed properly filed with OP&F if all of the following occurs:

(1) The completed form of the report that is filed with OP&F by the statutory deadline is consistent with the report of retirement deductions form and meets all the following requirements:

(a) A separate report for the report of deductions for firefighter members and a separate report for the report of deductions for police officer members;

(b) For electronic filings, it meets the technical specifications provided to the employers by OP&F , as may be amended from time to time with prior notice to the employer;

(c) The reporting of "salary" is consistent with the requirements outlined in this rule ; and

(d) The reporting of picked-up contributions, whether done through a salary reduction or paid on behalf of the member, must be consistent with the requirements outlined in rule 742-7-14 of the Administrative Code.

(2) The report and/or payment is accompanied by a completed OP&F recap form as referenced in rule 742-9-17 of the Administrative Code, and is received by OP&F by the statutory deadline. It is OP&F's preference that the recap form is sent along with the payment, rather than the report. For electronic filers, the recap form must still be received by OP&F by the statutory deadline.

(3) The contributions due under section 742.32 of the Revised Code must be paid to OP&F by the statutory deadline, must match the amount outlined in the recap form referenced in rule 742-9-17 of the Administrative Code, and must match the total amount reported on the report referenced in paragraph (E)(1)(a) of this rule. As referenced in paragraph (E)(2) of this rule, it is OP&F's preference that the recap form accompany this payment.

(4) For newly hired members, the report and payment is accompanied by a completed OP&F personal history record in the form provided by OP&F and documentation showing the member's appointment to a full-time position as a police officer or firefighter to the extent that it exists.

(F) In order to verify the reporting of "salary" consistent with the provisions of division (L) of section 742.01 of the Revised Code and section 742.32 of the Revised Code and the corresponding rules of the Administrative Code, OP&F may request detailed pay records involving the member's wages and/or service credit from the employer at any time.

(G) For purposes of assessing the required penalties for all filings due OP&F under section 742.32 of the Revised Code , OP&F shall take the following course of action:

(1) No report/no payment. If the required payment prescribed by section 742.32 of the Revised Code is not made in accordance with the deadline outlined in such section and no report of employee deductions is filed with OP&F in accordance with the deadline outlined in such section, which includes the recap form, OP&F shall assess the required penalties .

(2) Report/no payment. If the required report of employee deductions prescribed by section 742.32 of the Revised Code and more fully outlined in this rule is filed with OP&F in accordance with the deadline outlined in such section, but the proper payment is not paid to OP&F in accordance with the deadline outlined in such section, OP&F shall assess the required penalties .

(3) No report/payment. If the required report of employee deductions prescribed by section 742.32 of the Revised Code and more fully outlined in this rule is not filed with OP&F in accordance with the deadline outlined in such section, but a payment is made with OP&F in accordance with the deadline outlined in such section, OP&F shall assess the required penalties .

(4) All other cases, the following shall apply:

(a) Non-conforming payroll report. OP&F shall give notice to the employer of the non-conforming nature of the report and allow the employer to have an opportunity to take corrective actions to cure such deficiencies within thirty days of OP&F's notice of deficiency (referred to herein as the "cure period"), and the following shall apply:

(i) If the employer files a correct report of employee deductions in OP&F's approved format and such report is received by OP&F on or before the expiration of the cure period, no penalties will be assessed by OP&F against the employer.

(ii) If OP&F does not receive from the employer the proper report of employee deductions on or before the expiration of such cure period, then OP&F will assess the required penalties beginning the day after the expiration of the cure period.

(b) In all other situations, OP&F will notify the employer of the employer's failure to comply with the provisions of section 742.32 of the Revised Code and shall allow the employer to still have an opportunity to take the corrective actions identified in the notice from OP&F within thirty days of OP&F's notice (referred to herein as the "cure period"), and the following shall apply:

(i) If the employer files a correct report of employee deductions in OP&F's approved format and such report is received by OP&F on or before the expiration of the cure period, no penalties will be assessed by OP&F against the employer.

(ii) If OP&F does not receive from the employer the proper report of employee deductions on or before the expiration of such cure period, then OP&F will assess the required penalties , beginning the day after the expiration of the cure period.

(5) Even with the cure period, the employer will still be assessed any statutory fines for late filings and/or payments, as the case may be under the applicable statutory provision.

(6) This rule shall apply once the payment and/or report has been filed with OP&F and shall not limit any other remedies available to OP&F by law.

(H) The provisions of this rule will not change the amounts of the required penaltied.

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Effective: 12/12/2013
R.C. 119.032 review dates: 09/25/2013 and 12/12/2018
Promulgated Under: 111.15
Statutory Authority: 742.10
Rule Amplifies: 742.32, 742.352
Prior Effective Dates: 11/18/1999 (Emer.), 03/16/00, 08/31/00 (Emer.), 11/23/00, 02/11/02 (Emer.), 04/29/02, 05/30/02 (Emer.), 08/22/02, 11/17/05 (Emer.), 02/16/2006, 06/04/2006, 07/19/2007, 05/22/2008, 09/22/2008

742-9-11 Penalties for employer's failure to file the report of employee deductions in a format approved by OP& F.

For purposes of determining whether the employer has timely transmitted the reports and/or payments required by section 742.32 or 742.35 of the Revised Code, as the case may be under the applicable statutory provision, OP& F will rely on its books and records as of the close of business on the due date, except that in the case of electronic reports filed with OP& F, the "close of business" shall mean midnight on the statutory due date. (For example, for contributions withheld in April, the report and payments are due to OP& F by the close of business on May thirty-first, which is the due date. If OP& F receives a report in the proper format and the requested payment by the close of business on May thirty-first, then no penalties and interest would apply.) Thus, paper reports must be received by OP& F's close of business on the statutory due date and electronically filed reports must be received before midnight on the statutory due date.

In no event would this rule impact the penalties that would apply in cases where the report was filed by the statutory due date, but was not in proper format, as outlined in rule 742-9-10 of the Administrative Code.

Five Year Review (FYR) Dates: 7/12/2018 and 06/05/2023
Promulgated Under: 111.15
Statutory Authority: 742.10
Rule Amplifies: 742.32, 742.352
Prior Effective Dates: 11/18/1999 (Emer.), 03/16/2000, 08/08/2000 (Emer.), 10/23/2000, 02/11/2002 (Emer.), 04/29/2002, 06/18/2007, 07/24/2008

742-9-12 Employer's compliance.

For purposes of determining whether an employer has met the requirements set forth in sections 742.32 and 742.33 of the Revised Code, as more fully described in Chapter 742-7, 742-8 and 742-9 of the administrative code, OP& F may conclusively rely upon its books and records.

Five Year Review (FYR) Dates: 01/22/2016 and 01/22/2021
Promulgated Under: 111.15
Statutory Authority: 742.10
Rule Amplifies: 742.32, 742.33
Prior Effective Dates: 2/5/2000, 5/18/06

742-9-13 Thirty-year amortization plan. [Rescinded].

Rescinded eff 6-15-06

742-9-14 Reliance on records for purposes of determining taxability.

In furtherance of the policy adopted by the board of trustees of the Ohio police and fire pension fund ("OP& F"), the information used in determining the taxability of benefits payable to those members outlined in OP& F'S policy will be based on OP& F'S books and records as of the date the form 1099 is issued, as such information is provided to OP& F by the employers, members, and benefit recipients.

Five Year Review (FYR) Dates: 01/22/2016 and 01/22/2021
Promulgated Under: 111.15
Statutory Authority: 742.10
Rule Amplifies: 742.10 , 742.32, 742.37, 742.63
Prior Effective Dates: 3/9/01 (Emer.), 5/24/01

742-9-15 Calculation of penalties/interest.

For purposes of applying the penalties provided for under sections 742.352 and 742.353 of the Revised Code, the first date of the penalties will begin on the date that immediately follows the applicable due date, as defined in the applicable statutory provisions, and the last day of the penalty shall be the date on which OP& F received the corrected report and/or payment, as more fully outlined in the governing administrative rules.

Five Year Review (FYR) Dates: 05/26/2017 and 04/06/2022
Promulgated Under: 111.15
Statutory Authority: 742.10
Rule Amplifies: 742.352, 742.353
Prior Effective Dates: 02/11/02 (Emer.), 04/29/02, 05/17/2007

742-9-16 Federal tax compliance provisions.

(A) The board shall distribute the funds established in Chapter 742. of the Revised Code to participants and their beneficiaries in accordance with the provisions of such chapter. No part of the corpus or income of these funds may be used for or diverted to any purpose other than the exclusive benefit of the participants and their beneficiaries.

(B) If there is a termination of the plan described in Chapter 742. of the Revised Code or a complete discontinuance of contributions to the plan, the rights of each affected member to the benefits accrued at the date of termination or discontinuance of contributions, to the extent then funded, are non-forfeitable.

(C) Employer contribution forfeitures of a member arising from severance of employment, death, or for any other reason shall not be applied to increase the benefits any member would otherwise receive under Chapter 742. of the Revised Code in accordance with section 401(a)(8) of the Internal Revenue Code or its successor provision and applicable regulations thereunder.

(D) Notwithstanding any provisions in OP& F rules or Chapter 742. of the Revised Code to the contrary, distributions to members and beneficiaries shall be made in accordance with section 401(a)(9) of the Internal Revenue Code or its successor provision and applicable regulations thereunder and with the following rules.

(1) The entire interest of a member shall be distributed to such member:

(a) No later than the required beginning date; or

(b) Beginning not later than the required beginning date, in accordance with applicable regulations, over the life of such member and a designated beneficiary within the meaning of section 401(a)(9) of the Internal Revenue Code or its successor provision.

(2) The required beginning date means April first of the calendar year following the later of:

(a) The calendar year in which the member attains age seventy and one-half years of age; or

(b) The calendar year in which the member retires.

(3) If distribution of a member's benefit has begun pursuant to the provisions of section 401(a)(9) of the Internal Revenue Code or its successor provision and the accompanying regulations, and the member dies, any survivor benefits will be distributed as reasonably practicable under the plan of payment selected under Chapter 742. of the Revised Code and effective as of the date following the member's death.

(4) If a member dies before the distribution of the member's interest has begun pursuant to the provisions of section 401(a)(9) of the Internal Revenue Code or its successor provision and the accompanying regulations, any remaining interest of the member will be distributed within five years after the death of such member. Notwithstanding the foregoing, if any benefit is payable to or for the benefit of a designated beneficiary within the meaning of section 401(a)(9) of the Internal Revenue Code or its successor provision, the benefit may be distributed (in accordance with applicable regulations) over the life of such beneficiary (or over a period not extending beyond the life expectancy of such beneficiary), provided that such distribution begin not later than one year after the date of the member's death. If the beneficiary is the surviving spouse of the member, distributions shall not be required, pursuant to this rule, to begin until the end of the calendar year in which the member would have attained the age of seventy and one-half and, if the spouse dies before the distribution to the spouse commences, then the spouse shall be treated as the member for purposes of this rule.

(5) Any death benefit amounts payable under Chapter 742. of the Revised Code must comply with the incidental death benefit requirements of section 401(a)(9)(G) of the Internal Revenue Code or its successor provision and regulations thereunder.

(E) Whenever the amount of the benefit is to be determined on the basis of actuarial assumptions, no employer discretion will be permitted.

(F) A member who is entitled to a distribution which qualifies as an eligible rollover distribution pursuant to sections 401(a)(31)(D) and 402(f)(2)(A) of the Internal Revenue Code, their regulations, or successor provisions may request that the distribution be paid in a direct rollover to another eligible retirement plan to the extent permitted by sections 401(a)(31)(A) and 408A of the Internal Revenue Code, their regulations, or successor provisions. A qualified non-spouse beneficiary of a deceased member may only rollover directly to an inherited individual retirement account or annuity to the extent permitted by section 402(c)(11) of the Internal Revenue Code.

(G) The annual compensation of each member taken into account in determining benefit accruals in any plan year beginning after December 31, 2001 shall not exceed two hundred thousand dollars. Annual compensation means "salary," as such term is defined in section 742.01 of the Revised Code and rule 742-3-2 of the Administrative Code during the plan year or such other consecutive twelve month period over which salary is otherwise determined under the plan (hereinafter referred to as the "Determination Period"). In determining benefit accruals in plan years beginning after December 31, 2001, the annual compensation limit for the determination period beginning before January 1, 2002 shall be two hundred thousand dollars. The two hundred thousand dollar limit on annual compensation in this paragraph shall be adjusted for cost-of-living increases in accordance with Internal Revenue Code section 401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year applies to annual "salary" for the determination period that begins with or within such calendar year.

(H) For purposes of the limit established by section 415 of the Internal Revenue Code (as used in section 742.37, 742.3716, 742.3717, 742.3719 or 742.39 of the Revised Code), effective January 1, 1998, compensation shall include amounts excludable from the employee's gross income under sections 125, 132(f), 402(e)(3), 402(h), 403(b), or 457 of the Internal Revenue Code. Effective January 1, 2009, compensation shall include differential wage payments as defined in section 3401(h)(2) of the Internal Revenue Code of 1986, 26 U.S.C.A. 3401(h)(2).

(I)

(1) Effective for the limitation year beginning on January 1, 2012, the final regulations promulgated April 5, 2007 with respect to section 415 of the Internal Revenue Code are incorporated herein by reference, including any provisions of the pension funding equity act of 2004 that apply to governmental plans.

(2) "Limitation year" is the year used in determining whether the limits set forth in section 415 of the Internal Revenue Code (as used in section 742.37, 742.3716, 742.3717, 742.3719 or 742.39 of the Revised Code) have been exceeded with respect to a member or retirant in the plan described in Chapter 742. of the Revised Code. The limitation year for the plan is the calendar year.

(J)

(1) Within the Ohio police & fire pension fund ("OP& F") described in section 742.02 of the Revised Code, a separate account was established to comply with section 401(h) of the Internal Revenue Code known as the "401(h) account." The 401(h) account provided for the funding of health care benefits authorized under section 742.45 of the Revised Code and rule 742-7-13 of the Admistrative Code. Subsequently, as authorized by the board of trustees, and based on a report and advice of an actuary and tax counsel, on and after January 1, 2006, the 401(h) account shall be used to fund only the payment of medicare part B premiums under rules 742-7-13 and 742-7-09 of the Administrative Code. On and after January 1, 2006, the section 115 trust established by OP& F shall be used to fund all other health care benefits authorized in the Revised Code and the Administrative Code.

(2) The assets in the 401(h) account shall be accounted for separately from the other assets of the pension fund, but may be commingled with the other assets of the system for investment purposes. Investment earnings and expenses shall be allocated on a reasonable basis. All assets in the 401(h) account shall be held in trust for the exclusive benefit of eligible members of the fund, their spouses, and their eligible dependents.

(3) OP& F shall designate the amount of employer contributions, if any, that are to be allocated to the 401(h) account for any year. Any contributions shall be funded by employer contributions and shall include any employer contributions previously allocated by OP& F for health care benefits described in section 742.45 of the Revised Code and rule 742-7-13 of the Administrative Code, together with any earnings credited thereon, with respect to individuals participating in the pension fund. Contributions to the 401(h) account are subordinate to the contributions to the pension fund. At no time shall contributions to the 401(h) account be in excess of twenty-five per cent of the total aggregate actual contributions made to the pension fund since the inception of the 401(h) account, excluding contributions to fund past service credit. In any event, all contributions to the 401(h) account shall be reasonable and ascertainable.

(4) If any rights of an individual who was eligible to receive health care benefits as described above prior to or after January 1, 2006, and paid from the 401(h) account shall be forfeited, an amount equal to the amount of the forfeiture shall be applied as soon as administratively possible to reduce employer contributions allocated to the 401(h) account.

(5) At no time prior to the satisfaction of all liabilities under this rule, section 742.45 of the Revised Code, and rule 742-7-13 of the Administrative Code shall any assets in the 401(h) account be used for, or diverted to, any purpose other than as provided in paragraph (J)(1) of this rule and for the payment of administrative expenses relating to the 401(h) account. Assets in the 401(h) account may not be used for retirement, disability, or survivor benefits, or for any other purpose for which the other funds of the pension fund are used.

(6) Upon satisfaction of all liabilities under this rule, any assets in the 401(h) account, if any, that are not used as provided in paragraph (J)(1) of this rule shall be returned to the employers, as required by section 401(h)(5) of the Internal Revenue Code.

(7) It is the intent of OP& F in adopting this rule to comply in all respects with sections 401(a) and 401(h) of the Internal Revenue Code and regulations interpreting those sections. In applying this rule, OP& F will apply the interpretation that achieves compliance with those sections and preserves the qualified status of the pension fund as a governmental plan under sections 401(a) and 414(d) of the Internal Revenue Code.

(8) This rule is intended to codify OP& F's past and current practices and procedures with respect to the funding and payment of health care coverage and does not confer any new rights to or create any vested interest in receiving health care coverage for members, retirees, survivors, beneficiaries, or their dependents.

(K) Effective January 1, 2007, notwithstanding any provision in Chapter 742. of the Revised Code to the contrary, the survivor of a member on a leave of absence to perform military service with reemployment rights described in section 414(u) of the Internal Revenue Code of 1986, 26 U.S.C.A. 414(u), where the member cannot return to employment on account of his or her death, shall be entitled to any additional benefits (other than benefit accrual relating to the period of qualified military service) that would be provided under Chapter 742. of the Revised Code had the member resumed employment and then terminated employment on account of death.

Five Year Review (FYR) Dates: 05/26/2017 and 04/06/2022
Promulgated Under: 111.15
Statutory Authority: 742.10
Rule Amplifies: 742.10
Prior Effective Dates: 6/26/02 (Emer.), 9/13/02, 1/2/03 (Emer.), 4/27/03, 1/22/09, 1/27/09 (Emer.), 4/19/09, 11/23/11 (Emer.), 02/09/2012, 1/7/2013 (Emer.), 03/24/2013

742-9-17 Summary of payment remittance information form (recap form).

(A) Payments and reports due OP&F under the following provisions shall be accompanied by a completed summary of payment remittance information form (i.e., the recap form) : section 742.32 of the Revised Code and rule 742-9-10 of the Administrative Code (member contributions), and section 742.56 of the Revised Code and rule 742-5-08 of the Administrative Code (payroll deduction purchases). The summary of payment remittance information form (i.e., the recap form), last modified July 5, 2016, can be found on OP&F's website, www.op-f.org.

(B) For purposes of prompt and efficient processing, employers are requested to submit a completed summary of payment remittance information form (i.e., the recap form) to OP&F with any payments due OP&F under the following provisions: sections 742.30 (accrued liability), 742.301 (penalties for accrued liability), 742.35 (employer contributions), 742.352 (penalties for failing to transmit certain payments or reports), and 742.521 (military leave granting) of the Revised Code.

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Effective: 9/28/2018
Five Year Review (FYR) Dates: 7/12/2018 and 07/12/2023
Promulgated Under: 111.15
Statutory Authority: 742.10
Rule Amplifies: 742.30, 742.32, 742.521, 742.352, 742.56
Prior Effective Dates: 05/22/2008

742-9-18 Overpayment of contributions by employer.

(A) For purposes of this rule, "member contributions" shall mean the employee contributions required by sections 742.31 and 742.32 of the Revised Code. "Employer contributions" shall mean the police officer employers' contribution and firefighter employers' contribution required by sections 742.33, 742.34, and 742.35 of the Revised Code.

(B) OP&F will not issue a refund of overpaid member contributions that is less than one hundred dollars per member or payroll. Rather, a credit will be applied to the employer's account for a balance due in the future. An overpayment of member contributions that is one hundred dollars or more may be refunded to the employer, provided that the employer makes a written request for the overpayment. Otherwise, a credit will be applied to the employer's account for a balance due in the future.

(C) Except as provided in this rule, OP&F will not issue a refund of overpaid employer contributions resulting from a correction or adjustment to a member or payroll. Rather, a credit will be applied to the employer's account for a balance due in the future. A refund may be issued if an employer duplicates an entire monthly payment.

(D) OP&F shall annually review balances and communicate with employers.

Effective: 2/25/2018
Five Year Review (FYR) Dates: 02/15/2023
Promulgated Under: 111.15
Statutory Authority: 742.10
Rule Amplifies: 742.31, 742.32, 742.33, 742.34, 742.35