                                 CODE OF VIRGINIA

PROCEDURE WHEN EMPLOYER REQUIRED TO WITHDRAW FUNDS (§ 51.1-124.12)

A. As used in this section, unless the context clearly shows otherwise, the
following definitions shall apply.
			&#8220;Replacement employer&#8221; means an employer as defined in &#xA7;
51.1-124.3 who enters into a written agreement with the Retirement System to
assume all liabilities for retirement benefits, as provided herein due to a
member or beneficiary whose coverage under the Retirement System is affected by
the withdrawal of the withdrawing employer, that are attributable to service
with and creditable compensation from the withdrawing employer.
			&#8220;Termination date&#8221; means the effective date of a change in an
employer&#8217;s status from an agency or political subdivision of the
Commonwealth or the termination of the employer&#8217;s existence that shall
cause an employer participating in the Retirement System to become a withdrawing
employer. If such date is in question or if the advance notification required by
subsection C is not given, the termination date shall be the date determined by
the Board.
			&#8220;Termination event&#8221; means an event that results in an employer
which participates in the Retirement System ceasing to be an agency or political
subdivision of the Commonwealth.
			&#8220;Withdrawing employer&#8221; means an employer that is required to
withdraw from the Retirement System under subsection B.

B. Any employer participating in the Retirement System which ceases to be an
agency or political subdivision of the Commonwealth or which permanently ceases
operations shall withdraw from the Retirement System as of the termination date.
All benefit accrual for members employed by a withdrawing employer shall
automatically cease as of the termination date.

C. A withdrawing employer shall provide written notification to the Board of its
termination date. Notification shall be in the form of a certified copy of an
ordinance or resolution adopted by the governing body of the employer and shall
be provided to the Board at least 90 days prior to the termination date. Upon
receipt of notification or upon the Board&#8217;s determination that a
termination event has occurred or will occur within 90 days, the Retirement
System shall request its actuary to determine the present value of the
Retirement System&#8217;s liability to each member, retired member, or
beneficiary attributable to service with, and creditable compensation from, the
withdrawing employer. For members, such calculation shall be determined based on
the liability resulting from the present value of a service retirement allowance
beginning at his normal retirement date. Such determination shall be based on
actuarial principles and assumptions consistent with those used in the most
recent actuarial valuation and financial report for the Retirement System. The
expenses incurred by the Board for such actuarial determination report shall be
the liability of the withdrawing employer.

D. If (i) no qualified retirement plan, as that term is defined in § 401(a) of
the Internal Revenue Code, is established by the withdrawing employer, to which
the assets and liabilities relating to members employed by such employer are
transferred, as described in subsection E, or (ii) if no replacement employer
has come forth within 90 days of the termination date, or within such other
reasonable time as may be agreed to by the Board, benefits shall be determined
as follows:

   1. Each member or beneficiary whose coverage under the Retirement System is
   affected by the withdrawal of the employer shall become fully vested, as of
   the termination date, in his service retirement allowance attributable to
   creditable service with the withdrawing employer regardless of employment
   status or length of service with the withdrawing employer.

   2. Each member, retired member or beneficiary shall be entitled to a
   distribution of the greater of (i) the balance in his member contribution
   account established pursuant to &#xA7; 51.1-147 or (ii) the present value of
   his service retirement allowance attributable to creditable service and
   compensation with the withdrawing employer to which such member, retired
   member or beneficiary would have been entitled immediately prior to the
   termination event (plus additional amounts, if any, which the withdrawing
   employer may direct pursuant to subdivision 4 of this subsection). Such
   members, retired members, and beneficiaries may elect to receive such benefit
   either in the form of (i) a lump sum payment, subject to the eligible rollover
   distribution rules and withholding requirements of the Internal Revenue Code
   or (ii) an annuity equal to the service retirement benefit at normal
   retirement. The annuity shall be purchased from a private insurance company or
   companies as selected by the Board. The Board shall establish reasonable
   notice and election periods for the distribution made pursuant to this
   subsection. The distribution provided for in this subdivision shall be in the
   form of a lump sum, subject to applicable withholding requirements, upon the
   failure of a member, retired member or beneficiary to make an election.

   3. If the assets held in the members&#8217; contribution account established
   pursuant to &#xA7; 51.1-147 and in the retirement allowance account
   established for withdrawing employer pursuant to &#xA7; 51.1-148 are less than
   the amount needed to pay the benefits to which all affected members, retired
   members, and beneficiaries are entitled, the withdrawing employer shall make a
   contribution to the retirement allowance account in the amount necessary to
   make up any insufficiency in assets required to provide all benefits payable
   under this section. If the withdrawing employer fails to make the required
   contribution, assets held in the members&#8217; contribution account
   established pursuant to &#xA7; 51.1-147 and in the retirement allowance
   account established for the withdrawing employer pursuant to &#xA7; 51.1-148
   shall be distributed to members, retired members and beneficiaries in the
   manner described in &#xA7; 51.1-139.

   4. Any assets remaining in the retirement account established for the
   withdrawing employer pursuant to &#xA7; 51.1-148 after full satisfaction of
   liabilities to members, retired members and beneficiaries under this section
   shall be distributed on a pro rata basis (based on contributed funds within
   the immediately preceding 12 months) to any employers within the meaning of
   &#xA7; 51.1-124.3 who, within the 12 months immediately preceding the
   termination date of the withdrawing employer, directly or indirectly, by
   appointment of the governing body of the withdrawing employer, controlled the
   activities of the withdrawing employer and contributed funds or property to
   the withdrawing employer; provided, however, that if there is no such
   employer, any remaining assets shall be used to offset expenses incurred by
   the Retirement System in any manner permitted by the Internal Revenue Code.

   5. Upon completion of the distribution of assets held in the members&#8217;
   contribution account established pursuant to &#xA7; 51.1-147 and in the
   retirement allowance account established for the withdrawing employer pursuant
   to &#xA7; 51.1-148 as provided in the section, the Retirement System shall
   have no further liability for such accounts.

E. If the withdrawing employer establishes or has established a qualified
retirement plan, as that term is defined in &#xA7; 401(a) of the Internal
Revenue Code, which provides (i) for participation by members, retired members
and the beneficiaries of members and retired members, (ii) for the transfer to
the qualified retirement plan of all contributions and prior service
attributable to creditable service with the withdrawing employer, and (iii)
member benefits and vesting rights at least equal to those which each member
would have been entitled under the Retirement System immediately before the
termination of the employer&#8217;s affiliation with the Retirement System, the
Board shall transfer to such qualified retirement plan all balances in the
individual accounts of the members&#8217; contribution account established
pursuant to &#xA7; 51.1-147 and all balances in the retirement allowance account
established for such employer pursuant to &#xA7; 51.1-148 and attributable to
creditable service and compensation with such employer, including all earnings
through and including the date of the transfer, less the reasonable expenses
incurred by the Retirement System in connection with such transfer. Upon such
transfer, all liabilities of the Retirement System for benefits, to the extent
accrued as of the date of the transfer with respect to service with such
employer shall be assumed by such qualified retirement plan and all liabilities
of the Retirement System with respect thereto shall terminate.

F. If the withdrawing employer does not establish a qualified retirement plan,
as that term is defined in &#xA7; 401 (a) of the Internal Revenue Code and as
provided for in subsection E, but a replacement employer has come forth within
90 days of the termination date, or within such other reasonable time as may be
agreed to by the Board, the Board shall transfer to the retirement allowance
account of such replacement employer, all balances in the retirement allowance
account of the withdrawing employer, including all earnings through and
including the date of the transfer. The members&#8217; contribution account
established pursuant to &#xA7; 51.1-147 attributable to employees of the
withdrawing employer shall be credited to member contribution accounts with the
replacement employer. Notwithstanding however, if the balance of the retirement
allowance account and the member contribution accounts exceed the actuarial
present value of all liabilities with respect to employees of the withdrawing
employer (after allowance for reimbursement to the Retirement System for
reasonable expenses incurred in connection with such transfer), any amount in
excess of 105 percent of such present value (including expenses) shall be paid
on a pro rata basis (based on contributed funds within the immediately preceding
12 months) to any employers within the meaning of &#xA7; 51.1-124.3 who within
the 12 months immediately preceding the termination date of the withdrawing
employer (i) directly or indirectly by appointment of the governing body of the
withdrawing employer controlled the activities of the withdrawing employer and
(ii) contributed funds or property to the withdrawing employer.

G. If there is no replacement employer, creditable service attributable to
employment with a withdrawing employer shall be taken into consideration for
purposes of determining whether each employee of the withdrawing employer meets
the five or more year requirement to be entitled to a service allowance at
normal retirement from the employment of an employer other than the withdrawing
employer. If there is no replacement employer, neither creditable service nor
creditable compensation attributable to employment with a withdrawing employer
shall be taken into account for any other purpose under the Retirement System.

H. Notwithstanding any other provisions of this section or of any other law, if
the withdrawing employer is a city which reverts to town status or otherwise
loses its status as a city or is a town which loses its status as a town, then
the members, retired members, and beneficiaries of the former city or town shall
maintain all rights and privileges which they possess at the time of such change
in status to current or future benefits from the Retirement System.

HISTORY: 1999, c. 284; 2000, c. 344; 2003, c. 267.