99-32168. Federal Benefit Payments Under Certain District of Columbia Retirement Plans

[Federal Register Volume 64, Number 238 (Monday, December 13, 1999)]
[Proposed Rules]
[Pages 69432-69446]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-32168]


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DEPARTMENT OF THE TREASURY

31 CFR Part 28


Federal Benefit Payments Under Certain District of Columbia 
Retirement Plans

AGENCY: Department of the Treasury, Departmental Offices.

ACTION: Proposed rule.

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SUMMARY: The Department of the Treasury, Departmental Offices, is 
issuing proposed regulations to implement the provisions of the 
Balanced Budget Act of 1997, as amended (Act). The Act assigns the

[[Page 69433]]

Secretary of the Treasury responsibility for payment of benefits under 
the District of Columbia (District) retirement plans for police and 
firefighters, and teachers for benefits based on credit for service 
accrued as of June 30, 1997, and under the District retirement plan for 
judges. The proposed regulations would establish the general rules for 
the Department of the Treasury's administration of its program 
responsibilities and the methodology for determining the amount of 
Federal Benefit Payments.

DATES: Comments must be received on or before February 11, 2000.

ADDRESSES: Send comments to Ronald A. Glaser, Director, Office of 
Personnel Policy, Department of the Treasury, Annex Building, Room 
4161, Pennsylvania Avenue and Madison Place, NW, Washington, DC 20220. 
Comments may also be submitted by electronic mail to 
[e-mail].

FOR FURTHER INFORMATION CONTACT:
    Harold L. Siegelman, [phone], Department of the Treasury, 
Annex Building, Room 4005, Pennsylvania Avenue and Madison Place, NW, 
Washington, DC 20220.

SUPPLEMENTARY INFORMATION: Title XI of the Balanced Budget Act of 1997, 
Pub. L. 105-33, 111 Stat. 251, 712-731, 756-759, enacted August 5, 
1997, as amended by the Omnibus Consolidated and Emergency Supplemental 
Appropriations Act for Fiscal Year 1999, Pub. L. 105-277, 112 Stat. 
2681, 2681-530 through 538, 2681-552, transferred certain unfunded 
pension liabilities from the District of Columbia government to the 
Federal Government. The Act requires the Federal Government to assume 
responsibility for payment of certain benefits that accrued on or 
before June 30, 1997, under the retirement plans for District of 
Columbia teachers (Teachers Plan), police and firefighters (Police and 
Firefighters Plan), and for past and future benefits under the 
retirement plan for judges (Judges Plan). The Act also required the 
District of Columbia government to establish replacement retirement 
plans that will provide retirement benefits for service after June 30, 
1997, for current and future teachers, police, and firefighters.

1. Federal Government's Responsibilities

    The Department of the Treasury has determined that its function, 
with respect to the payment of benefits under District retirement 
plans, is to calculate and fund the gross amount of Federal Benefit 
Payments. The Department will not allocate amounts attributable to 
withholdings and disbursements from individual gross benefit amounts 
for Federal and other taxes, health and life insurance premiums and 
other purposes between the Federal Benefit Payment and amounts payable 
under a District replacement plan. The Department will provide 
oversight of continuing deductions to assure proper withholdings and 
disbursements. It will not compute a gross-to-net spread for each 
Federal Benefit Payment. To do otherwise would produce an accounting 
anomaly that is inefficient and expensive.
    Approximately 13,000 people were on the annuity rolls of the Police 
and Firefighters Plan and the Teachers Plan at the time the Department 
of the Treasury assumed liability for payments under these plans (June 
30, 1997). In each of these cases, the total annuity payable is a 
Federal Benefit Payment. Subsequent retirements (i.e., during the 
interim administration period under section 11041 of the Balanced 
Budget Act of 1997, as amended) have to date produced about 1300 
additional cases for which nearly all of each total benefit will be a 
Federal Benefit Payment.
    The Department of the Treasury does not plan to review the accuracy 
of the annuity computation made initially by the District of Columbia 
in each of the initial 13,000 cases for which the entire benefit is a 
Federal Benefit Payment. If the Department examines any of the cases 
because of a future event, such as an administrative or other review, 
and in that examination discovers an error, it will take appropriate 
steps to correct the error. Procedures for such correction will be 
established in a later issuance, as will procedures for collection and 
waiver of overpayments. In each of the cases in which the employee 
retired after June 30, 1997, the Department has determined that it must 
determine the amount of Federal Benefit Payments.

2. Proposed Regulations

    The Department of the Treasury is issuing proposed regulations 
necessary for the administration of Federal Benefit Payments under the 
Balanced Budget of 1997, as amended. The Department plans future 
issuances relating to specific aspects of the program, such as 
financial management issues. Subpart A contains provisions that are 
applicable throughout the regulations.
    Section 28.102 provides information on related regulations 
affecting recipients' Federal Benefit Payments. This is a reference 
tool for readers. Paragraph (a) lists the subparts that make up this 
part to help readers narrow their search for specific information. 
Paragraphs (b) through (e) provide cross references to the regulations 
applicable to related programs not administered by the Department of 
the Treasury.
    Section 28.103 defines terms for use throughout the part. This 
establishes uniform definitions for frequently used terms that will 
appear in multiple subparts.
    Section 28.104 establishes a uniform payment schedule for Federal 
Benefit Payments. Federal Benefit Payments are payable on the first 
business day of the month after they accrue. This rule is statutory for 
the Police and Firefighters Plan under section 4-629(a) of the D.C. 
Code (1997). It is consistent with current practice of the Teachers 
Plan and the Judges Plan. It also conforms to the statutory rule 
established for other Federal retirement plans, such as the Civil 
Service Retirement System under section 8345(a) of title 5, United 
States Code, and the Federal Employees Retirement System under section 
8463 of title 5, United States Code.
    Section 28.105 establishes general rules for computing periods of 
time throughout the part. Paragraph (a) establishes the rule applicable 
to filing documents. We have adopted the regulatory language for 
filings under the Civil Service Retirement System under section 831.107 
of Title 5, Code of Federal Regulations, and the Federal Employees 
Retirement System under section 841.109 of Title 5, Code of Federal 
Regulations.
    Paragraph (b) establishes the methodology for computing benefit 
accruals. The methodology is adopted from section 831.701(f) of Title 
5, Code of Federal Regulations, applicable to the Civil Service 
Retirement System, and is consistent with the past practices of the 
Plans.
    Paragraph (c) establishes the methodology for counting the amount 
of service credit attributable to unused sick leave creditable in 
retirement computations under the Police and Firefighters Plan and the 
Teachers Plan. Since firefighters work a 42-hour workweek, their sick 
leave usage is based on a non-8-hour schedule. See examples 2 and 3B in 
appendix A to subpart C of the proposed regulations. Judges are not 
under a formal leave system and do not receive sick leave credit. 
Current practice under each plan is continued.
    Paragraph (d) states the statutory rules for the amount of leave 
without pay that is creditable toward retirement. Up to 6 months credit 
is permitted in a year in each plan, but the plans differ in the 
measurement of a year. The Police and Firefighters Plan uses calendar 
years,

[[Page 69434]]

but the Teachers Plan uses fiscal years. Paragraph (d)(2)(ii) addresses 
a one-time problem created when the starting date of the fiscal years 
was changed in 1976 from July 1 to October 1.
    Section 28.106 authorizes payment of Federal Benefit Payments to 
representative payees to the same extent that the District government 
had been authorized to make similar payments under each plan. For 
example, section 4-629(b) of the D.C. Code (1997) authorizes such 
payments for benefits under the Police and Firefighters Plan for 
benefit ``due a minor, or an individual mentally incompetent or other 
legal disability.'' The regulation is intended to clarify that the 
representative payee rules and procedures under each plan are not 
changed as a result of the benefit changing from a District payment to 
a Federal Benefit Payment.
    At this time, the Department of the Treasury is proposing to issue 
subpart B solely to designate the District government's agent for 
receipt of legal process (court and administrative documents that may 
affect payments) as the Department's agent for receipt of legal process 
affecting Federal Benefit Payments in three specific situations. For 
service of garnishment orders for alimony or child support under part 
581 of Title 5, Code of Federal Regulations, legal process affecting 
Federal Benefit Payments under these regulations should be served on 
the agent listed in appendix A to part 581 for the District of 
Columbia, not the agent for the Department of the Treasury, 
Departmental Offices. For service of domestic relations orders or 
similar court orders that award a portion of Federal Benefit Payments 
under these regulations (including survivor annuity awards), service 
should be made upon the District government's agent for the appropriate 
plan. Documents served must include any documentation required by the 
plan. Similarly, to request a representative payee for Federal Benefit 
Payments of payees who are incompetent or under a legal disability, 
application or legal process should be served upon the District 
government's agent for the Judges Plan, the Police and Firefighters 
Plan, or the Teachers Plan, as appropriate. In all other situations, 
that is, litigation arising under Title XI, subtitle A, chapter 8 of 
the Balanced Budget Act, as amended, service of process affecting 
Federal Benefit Payments must be made upon the United States and the 
Department of the Treasury in the usual manner for litigation 
originating in the United States District Court for the District of 
Columbia.
    The Department of the Treasury is proposing to issue subpart C to 
address the issues arising under section 11012(a) and (b) of the 
Balanced Budget Act of 1997, as amended, under which each Federal 
Benefit Payment will be ``in such amount and under such terms and 
conditions as may apply under [the retirement program applicable to the 
employee on June 29, 1997],'' but without credit for service performed 
after June 30, 1997. The statute creates a situation in which some 
retirees under the Police and Firefighters Retirement Plan and the 
Teachers Retirement Plan will receive Federal Benefit Payments as a 
portion of their total retirement benefit as well as additional 
payments from the District of Columbia for their service after June 30, 
1997. Benefits partially paid by the Department of the Treasury and 
partially paid by the District of Columbia are designated as ``split 
benefits.'' Subpart C describes how the Department of the Treasury 
determines Federal Benefit Payments, that is, the proportionate share 
of liability that the law requires the Federal Government to assume in 
order to defray costs for an individual benefit.
    Subpart C also covers the Federal payment for disability benefits 
and for certain death benefits as provided under section 11012(c) and 
(d) of the Act and certain other special service credit situations not 
addressed in the Act. These special situations include: Federal Benefit 
Payments for early voluntary retirement; credit for sick leave; 
military service; service for which a deposit or redeposit must be paid 
in order for the service to be creditable under the provisions of the 
retirement plan; the method for applying cost-of-living adjustments to 
Federal Benefit Payments; and the method for applying reductions for 
survivor benefits to Federal Benefit Payments.
    To these ends, the proposed regulations establish three general 
principles that are applied to determine the amount of service 
creditable for Federal Benefit Payments. These general rules are stated 
in sections 28.311 through 28.313 of the proposed regulations. The 
remainder of subpart C illustrates the application of the general 
principles to a variety of issues that affect the computation of 
Federal Benefit Payments.
    Principle 1 addresses service performed after June 30, 1997. Such 
service is never credited toward Federal Benefit Payments. As a general 
rule, the amount of Federal Benefit Payments is computed based on 
retirement eligibility and average pay as of the separation date, and 
service creditable as of June 30, 1997. This follows directly from 
section 11012(a) and (b) of the Balanced Budget Act of 1997, as 
amended. Section 11012 (a) defines a ``Federal Benefit Payment'' as 
``any benefit payment to which an individual is entitled under a 
District Retirement Plan in such amount and under such terms and 
conditions as may apply under the Program.'' In general, the Balanced 
Budget Act, as amended, assigns the Federal Government responsibility 
for paying the proportionate amount of a total benefit that is based on 
service accrued through the freeze date, which the law states is June 
30, 1997. Further, section 11012 (b) expressly excludes service after 
the freeze date for purposes of determining Federal Benefit Payments. 
Accordingly, the Federal Government is responsible for paying benefits 
based on both the service credit earned up to and including the freeze 
date, and average pay provisions of the plans, and is not authorized to 
pay for service that is credited after June 30, 1997.
    This general principle must be applied to individual service 
histories in order to determine the amount of Federal Benefit Payments. 
If a participant's total entitlement is based on service credited prior 
to July 1, 1997, the total benefit payment for that individual is the 
responsibility of the Federal Government. If a participant's 
entitlement is based on service through the June 30, 1997, freeze date 
and later, only that portion of the benefit that is calculated using 
service credited through June 30, 1997, will be paid by the Federal 
Government. In the case of a participant whose total benefit is based 
on service that is credited after June 30, 1997, no amount of the 
benefit is payable by the Federal Government.
    In addition, length of service for a Federal Benefit Payment is 
calculated using whole 30-day months and dropping odd days as provided 
in section 28.105(b) of these regulations. This has been a standard 
practice in annuity calculations performed by the District of Columbia 
government. The Department of the Treasury proposes to continue that 
practice in the computation of Federal Benefit Payments.
    Principle 2 addresses how the Department of the Treasury determines 
whether any particular period of service is creditable as of June 30, 
1997. Service is counted toward Federal Benefit Payments (that is, as 
occurring as of June 30, 1997) only if all requirements for the service 
to be creditable are satisfied as of June 30, 1997. In determining 
whether service occurred after June 30, 1997, and thus is excluded from 
the computation of Federal Benefit

[[Page 69435]]

Payments, the controlling factor is whether all requirements for the 
service to be creditable were satisfied as of June 30, 1997. If any 
requirement was not satisfied as of June 30, 1997, the service is not 
used in the computation of the employee's Federal Benefit Payment. 
Service does not become creditable service until all of the statutory 
requirements for it to become creditable are satisfied. This principle 
resolves several questionable situations in a manner consistent with 
the Memorandums of Understanding Concerning Interim Administration of 
Retirement Programs dated September 29, 1997, and April 2, 1999, 
between the Department of the Treasury and the District of Columbia.
    Section 28.332 of these proposed regulations addresses application 
of this principle to determine the extent that credit for sick leave 
may be allowed in computing Federal Benefit Payments. Unused sick leave 
is not creditable for any retirement purpose until the employee 
separates from service. Consequently, though sick leave may have been 
accrued prior to the freeze date, unless the participant also separated 
prior to that date, the accrued sick leave cannot be included in a 
Federal Benefit Payment. Thus, in cases of retirements through June 30, 
1997, creditable sick leave is calculated in Federal Benefit Payments. 
However, for retirements after June 30, 1997, sick leave will not be 
included in Federal Benefit Payments, even though a portion of it may 
have been earned before that date.
    Section 28.333 of these proposed regulations addresses application 
of this principle to determine the extent that credit for military 
service may be allowed in computing Federal Benefit Payments. Prior 
military service generally becomes creditable at the time of entry on 
duty in a covered position. Accordingly, for persons whose entry on 
duty occurred prior to June 30, 1997, and whose military service was 
performed prior to that date, credit for military service is included 
in Federal Benefit Payments. For persons whose entry on duty occurs 
after June 30, 1997, military service is not creditable toward Federal 
Benefit Payments, even if performed before June 30, 1997. Finally, for 
persons whose entry on duty occurred prior to June 30, 1997, but whose 
military service is performed after that date, credit for the military 
service is not included in Federal Benefit Payments.
    Section 28.334 of these proposed regulations addresses application 
of this principle to determine the extent that credit for deposit and 
refunded service may be allowed in computing Federal Benefit Payments. 
Under the retirement plans, in order to receive credit at the time of 
retirement, a period of service for which no contributions were paid 
(deposit service) or a period of service for which contributions were 
paid, but later refunded, must be fully paid or repaid, with interest. 
Consequently, Federal Benefit Payments will include credit for any 
period of deposit or refunded service performed and paid (or repaid), 
and thus credited, as of June 30, 1997. However, no Federal Benefit 
Payment will be made for a period of deposit or refunded service that 
is not paid as of June 30, 1997, even though it may have been performed 
as of that date.
    Service paid by installment payments is not creditable under the 
plans until the full amount of interest and principal has been paid. 
Thus, service paid by installment payments is not considered to be 
creditable for purposes of Federal Benefit Payments until the entire 
amount of principal and interest has been paid. Accordingly, if payment 
in a series of installments has not been completed as of the freeze 
date, no Federal Benefit Payment may be paid for the service, even 
though it may have been performed before the freeze date.
    Paragraph (b) implements the requirement under section 4-607(15) of 
the D.C. Code (1997) that ``governmental service'' for the Police and 
Firefighter Plan includes only United States Government and certain 
other service ``for which retirement deductions, other than social 
security deductions, were made.'' This provision does not preclude 
credit for periods of service that should have been subject to 
retirement deductions, but for which due to agency error deductions 
were not withheld. If the service is in a position covered by the Civil 
Service Retirement System, the Federal Employees Retirement System, or 
another contributory retirement system (other than social security) for 
employees of the United States Government, Gallaudet College or the 
municipal government of the District of Columbia, the service may be 
credited as governmental service. However, service that is excluded 
from coverage under such systems, such as service under a temporary 
appointment, which is excluded from coverage under Civil Service 
Retirement System or the Federal Employees Retirement System, does not 
qualify as governmental service upon payment of a deposit.
    Principle 3 provides that the separation date is controlling for 
issues other than the amount of service credit allowable, such as 
commencing date of Federal Benefit Payments based on eligibility for 
immediate or deferred annuity and the average salary to be used in the 
computation. The proposed regulations at sections 28.341 and following 
provide the methodology for computing the amount of Federal Benefit 
Payments based on retirement eligibility as of the separation date and 
service creditable as of June 30, 1997.
    Section 28.341 states the general rule for the calculation of 
Federal Benefit Payments. Two special statutory exceptions apply. One 
exception is disability retirements after June 30, 1997, as discussed, 
infra, in connection with section 28.342. The other exception is for 
certain death benefits based on deaths after June 30, 1997. The 
statutory rule for these benefits is discussed, infra, in connection 
with section 28.343. In all other cases in which some service becomes 
creditable on or before June 30, 1997, and some service becomes 
creditable after June 30, 1997, Federal Benefit Payments are computed 
under the rules of the applicable plan as though: (1) The employee were 
eligible to retire as of June 30, 1997, under the same conditions as 
the actual retirement (that is, using the annuity computation formula 
that applies under the plan in effect on June 29, 1997, and the actual 
retirement age, including any applicable age reduction, based on the 
age at actual retirement); (2) The service that became creditable after 
June 30, 1997, did not exist; and (3) The average salary is the average 
salary at separation.
    Section 28.342 states the special rule applicable to the 
computation of Federal Benefit Payments if the employee retires for 
disability. Section 11012(c) of the Balanced Budget Act of 1997, as 
amended, mandates a special rule for benefits paid as the result of a 
determination of disability made after the freeze date. In such cases, 
the law provides that Federal Benefit Payments are in the amount equal 
to the deferred retirement benefit, or the optional retirement benefit 
the individual would receive if he or she left service on the day 
before commencement of the disability retirement. When an individual is 
eligible for optional retirement at the time of separation, Federal 
Benefit Payments are payable immediately and are calculated based on 
the general rule discussed above. That is, Federal Benefit Payments 
consist of the service credited under the plan rules as of June 30, 
1997, and average pay at the time of separation on retirement. However, 
if the individual is not eligible for optional retirement at the time 
of separation for disability retirement, Federal Benefit Payments

[[Page 69436]]

become payable only when the individual reaches the age at which he or 
she would be eligible for a deferred benefit. Then, Federal Benefit 
Payments are calculated as if the individual retired on a deferred 
annuity, with service credited through June 30, 1997, and the average 
pay at the time of separation for retirement.
    Section 28.343 states the special rule applicable to computing 
Federal Benefit Payments for certain death benefits. Section 11012(d) 
of the Balanced Budget Act, as amended, contains a special rule 
regarding death benefits for survivors, when the benefits are not paid 
based on length of service. The special rule provides a formula for 
computing Federal Benefit Payments as a pro rata amount of the total 
benefits. In such cases, Federal Benefit Payments are equal to the 
number of months of the employees' (or former employees') service 
through the freeze date, divided by the total number of months of 
service. To determine the dollar amount of the Federal Benefit Payment 
in any case, multiply the fraction described in the previous sentence 
by the total benefit to which the survivor is entitled. This proration 
formula applies to lump-sum benefits as well as survivor annuities 
based on a guaranteed minimum rate or a base designated at retirement.
    Section 28.344 establishes that cost-of-living increases are 
applied directly to Federal Benefit Payments, rather than computed on 
the total benefit and then prorated. Example 14 in appendix A to 
subpart C illustrates this calculation.
    Section 28.345 establishes the methodology for applying reductions 
to provide survivor annuities to Federal Benefit Payments. If a retiree 
designates a base for a survivor annuity that is greater than or equal 
to the unreduced Federal Benefit Payment, the applicable plan's annuity 
reduction formula is applied to the unreduced Federal Benefit Payment 
to determine the reduced Federal Benefit Payment. This is illustrated 
in example 10 in appendix A to subpart C.
    The only practical alternative to the proposed approach in sections 
28.344 and 28.345 would be to calculate the total benefit and then 
prorate it. However, proration is not an acceptable option. The 
examples formulated during the drafting of the statute clearly show 
that independent application of each plan's benefits calculation 
formula as of June 30, 1997, rather than proration, was intended.
    The examples in appendix A to subpart C illustrate the methodology 
application in a few additional situations that are not separately 
addressed in the regulatory text. In each of these situations the three 
general principles control the outcome.
    Example 11 illustrates the special Federal Benefit Payments 
calculation when an individual retires early based on an involuntary 
separation from service, or retires early based an administrative 
decision by the District of Columbia to permit early retirement. In the 
case of an involuntary separation as the result of which an individual 
would be eligible for benefit payments under his or her retirement 
plan, Federal Benefit Payments are calculated as if the individual had 
retired on optional retirement on the date of separation. However, when 
an individual retires early based on an administrative decision by the 
District of Columbia to permit early voluntary retirement, no Federal 
Benefit Payments are payable until the individual reaches eligibility 
for a deferred benefit. Thus, an early voluntary retirement is treated 
similarly to a disability retirement that occurs prior to eligibility 
for regular optional retirement because the District's administrative 
determination creates eligibility for a voluntary retirement.
    Both situations also are treated differently with respect to 
reduction of benefits for age. In cases of involuntary retirement, the 
age reduction formula prescribed by the retirement plan (if applicable) 
is applied to Federal Benefit Payments. However, in cases of early 
voluntary retirement, no age reduction is applied to Federal Benefit 
Payments because they are calculated under the plans' deferred benefit 
provisions.

E.O. 12866, Regulatory Review

    Because this proposed rule is not a significant regulatory action 
for purposes E.O. 12866 a regulatory assessment is not required.

Regulatory Flexibility Act

    It is hereby certified that this regulation will not have a 
significant economic impact on a substantial number of small entities. 
The regulation will only affect the determination of the Federal 
portion of retirement benefits to certain former employees of the 
District of Columbia. Accordingly, a regulatory flexibility analysis is 
not required by the Regulatory Flexibility Act (5 U.S.C. 601 et seq.).

List of Subjects in 31 CFR Part 28

    Administrative practice and procedure, Claims, Disability benefits, 
Firefighters, Government employees, Intergovernmental relations, Law 
enforcement officers, Pensions, Retirement.

    Department of the Treasury.
Nancy Killefer,
Assistant Secretary of the Treasury.
    Accordingly, the Department of the Treasury, is amending Title 31 
of the Code of Federal Regulations to add part 28 to read as follows:

PART 28--FEDERAL BENEFIT PAYMENTS UNDER CERTAIN DISTRICT RETIREMENT 
PROGRAMS

Subpart A--General Provisions

Sec.
28.101  Purpose and scope.
28.102  Related regulations.
28.103  Definitions.
28.104  Schedule for Federal Benefit Payments.
28.105  Computation of time.
28.106  Representative payees.

Subpart B--Coordination With the District Government

28.201  Purpose and scope.
28.202  Definitions. [Reserved]
28.203  Service of Process.

Subpart C--Split Benefits

28.301  Purpose and scope.
28.302  Definitions.

General Principles for Determining Service Credit To Calculate Federal 
Benefit Payments

28.311  Credit only for service performed on or before June 30, 
1997.
28.312  All requirements for credit must be satisfied by June 30, 
1997.
28.313  Federal Benefit Payments are computed based on retirement 
eligibility as of the separation date and service creditable as of 
June 30, 1997.

Service Performed After June 30, 1997

28.321  General principle.
28.322  Disability benefits.

All Requirements for Credit Must Be Satisfied by June 30, 1997

28.331  General principle.
28.332  Unused sick leave.
28.333  Military service.
28.334  Deposit service.
28.335  Refunded service.

Calculation of the Amount of Federal Benefit Payments

28.341  General principle.
28.342  Computed annuity exceeds the statutory maximum.
28.343  Disability benefits.
28.344  Survivor benefits.
28.345  Cost-of-living adjustments.
28.346  Reduction for survivor benefits.

Appendix A to Subpart C--Examples

    Authority: Sections 11083 and 11251(a) of Pub. L. 105-33, 111 
Stat. 730 and 756, as amended by Pub. L. 105-277, 112 Stat. 2681-530 
through 538.

[[Page 69437]]

Subpart A--General Provisions


Sec. 28.101  Purpose and scope.

    (a) This part contains the Department's regulations implementing 
Title XI of the Balanced Budget Act of 1997, Pub. L. 105-33, 111 Stat. 
251, enacted August 5, 1997, as amended.
    (b) This subpart contains general information to assist in the use 
of this part including--
    (1) Information about related regulations,
    (2) Definitions of terms used in more than one subpart of this 
part, and
    (3) The Department's general rules and procedures, which usually 
apply to all three plans, that concern to the general administration of 
Federal Benefit Payments (other than claims processing, debt 
collection, and financial management).
    (c) This part applies to all Federal Benefit Payments made on or 
after October 1, 1997.


Sec. 28.102  Related regulations.

    (a) This part contains the following subparts:
    (1) General Provisions (Subpart A);
    (2) Coordination With the District Government (Subpart B); and
    (3) Split Benefits (Subpart C).
    (b) Part 581 of Title 5, Code of Federal Regulations, contains 
information about garnishment of certain Federal payments to enforce 
awards of alimony or child support.
    (c) Part 831 of Title 5, Code of Federal Regulations, contains 
information about benefits under the Civil Service Retirement System.
    (d) Part 870 of Title 5, Code of Federal Regulations, contains 
information about benefits under the Federal Employees Group Life 
Insurance Program.
    (e) Part 890 of Title 5, Code of Federal Regulations, contains 
information about benefits under the Federal Employees Health Benefits 
Program.


Sec. 28.103  Definitions.

    (a) In this part--
    District government means the government of the District of 
Columbia.
    Department means the United States Department of the Treasury.
    Federal Benefit Payment means a payment for which the Department is 
responsible under Title XI of the Balanced Budget Act of 1997 (Pub. L. 
105-33, 111 Stat. 251), as amended, to which an individual is entitled 
under the Judges Plan, Police and Firefighters Plan, or the Teachers 
Plan, in such amount and under such terms and conditions as may apply 
under such plan.
    Judges Plan means the retirement program (under subchapter III of 
chapter 15 of title 11 of the D.C. Code) for judges of the District of 
Columbia Court of Appeals or Superior Court or with prior judicial 
service with 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.
    OPM means the United States Office of Personnel Management.
    Police and Firefighters Plan means any of the retirement programs 
(under chapter 6 of title 4 of the D.C. Code) for members of the 
Metropolitan Police Force and Fire Department in effect on June 29, 
1997.
    Secretary means the Secretary of the United States Department of 
the Treasury or his or her designee.
    Teachers Plan means any of the retirement programs for teachers 
(under chapter 12 of title 31 of the D.C. Code) in effect on June 29, 
1997.
    (b) In this subpart--
    Legal process means--
    (1) Any document that qualifies as legal process as defined in 
Sec. 581.103 of Title 5, Code of Federal Regulations, or
    (2) Any court order that Federal or District of Columbia law 
permits to cause all or any portion of a payment under the Judges Plan, 
the Police and Firefighters Plan, or the Teachers Plan to be made to a 
former spouse under chapter 30 of title 1 of the D.C. Code (1997).
    Representative payee means a fiduciary to whom a payment under the 
Judges Plan, the Police and Firefighters Plan, or the Teachers Plan is 
made for the benefit of a plan participant or a survivor.


Sec. 28.104  Schedule for Federal Benefit Payments.

    Federal Benefit Payments are payable on the first business day of 
the month following the month in which the benefit accrues. (See 
Sec. 28.105(b).)


Sec. 28.105  Computation of time.

    (a) For filing documents. In computing the number of days allowed 
for filing a document, the first day counted is the day after the 
action or event from which the period begins to run. If the date that 
ordinarily would be the last day for filing falls on a Saturday, a 
Sunday or a Federal holiday, the period runs until the end of the next 
day that is not a Saturday, a Sunday or a Federal holiday.
    (b) For benefit accrual. (1) Annuity accrues on a daily basis; one-
thirtieth of the monthly rate constitutes the daily rate.
    (2) Annuity does not accrue on the 31st day of any month except 
that annuity accrues on the 31st day of the initial month if the 
employee's annuity commences on the 31st day of a 31-day month.
    (3) For accrual purposes the last day of a 28-day month counts as 3 
days and the last day of a 29-day month counts as 2 days.
    (c) For counting unused sick leave. (1) For annuity computation 
purposes, the service of a participant under the Police and 
Firefighters Plan or the Teachers Plan who retires on an immediate 
annuity or dies leaving a survivor entitled to an annuity is increased 
by the number of days of unused sick leave to the participant's credit 
under a formal leave system.
    (2) In general, 8 hours of unused sick leave increases total 
service by 1 day. In cases where more or less than 8 hours of sick 
leave would be charged for a day's absence, total service is increased 
by the number of days in the period between the date of separation and 
the date that the unused sick leave would have expired had the employee 
used it (except that holidays falling within the period are treated as 
work days, and no additional leave credit is earned for that period).
    (3) If an employee's tour of duty changes from part time to full 
time or full time to part time within 180 days before retirement, the 
credit for unused sick leave is computed as though no change had 
occurred.
    (d) For counting leave without pay (LWOP) that is creditable 
service. (1) Under the Police and Firefighters Plan, credit is allowed 
for no more than 6 months of LWOP in each calendar year.
    (2)(i) Under the Teachers Plan credit is allowed for no more than 6 
months of LWOP in each fiscal year.
    (ii)(A) For years prior to fiscal year 1976, each fiscal year 
started on July 1 and ended on the following June 30.
    (B) Fiscal year 1976 started on July 1, 1975 and ended on September 
30, 1976.
    (C) For years starting in fiscal year 1977, each fiscal year starts 
on October 1 and ends on the following September 30.


Sec. 28.106  Representative payees.

    For Federal Benefit Payments, representative payees will be 
authorized to the same extent and under the same circumstances as each 
plan permits for non-Federal Benefit Payments under the plan. (See 
e.g., section 4-629(b) of the D.C. Code (1997).)

Subpart B--Coordination With the District Government


Sec. 28.201  Purpose and scope.

    This subpart contains information concerning the relationship 
between the

[[Page 69438]]

Department and the District government in the administration of Title 
XI of the Balanced Budget Act of 1997, as amended, and the functions of 
each in the administration of that Act.


Sec. 28.202  Definitions. [Reserved]


Sec. 28.203  Service of Process.

    To affect Federal Benefits Payments--
    (a) Service of legal process under part 581 of Title 5, Code of 
Federal Regulations, must be made upon the District Government under 
appendix A to part 581 of Title 5, Code of Federal Regulations.
    (b) Any qualifying court order under chapter 30 of title 1 of the 
D.C. Code (1997) must be served on the District Government in 
accordance with the rules of the plan.
    (c) Any request for or notice of appointment of a custodian, 
guardian, or other fiduciary to receive Federal Benefits Payments as 
representative payees under Sec. 28.106 must be served on the District 
government in accordance with the rules of the plan.

Subpart C--Split Benefits


Sec. 28.301  Purpose and scope.

    (a) The purpose of this subpart is to address the policy issues 
that affect the calculation of the Federal and District of Columbia 
portions of benefits under subtitle A of Title XI of the Balanced 
Budget Act of 1977, Pub. L. 105-33, 111 Stat. 251, 712-731, enacted 
August 5, 1997, as amended.
    (1) This subpart states general principles for the calculation of 
Federal Benefit Payments in cases in which the Department and the 
District government are both responsible for paying a portion of the 
employees' total retirement benefits under the Police and Firefighters 
Plan or the Teachers Plan.
    (2) This subpart provides illustrative examples of sample 
computations to show the application of the general principles to 
specific problems.
    (b)(1) This subpart applies only to benefits under the Police and 
Firefighters Plan or the Teachers Plan for individuals who have 
performed service creditable under these programs prior to July 1, 
1997.
    (2) This subpart addresses only those issues that affect the split 
of fiscal responsibility for retirement benefits (that is, the 
calculation of Federal Benefit Payments).
    (3) Issues relating to determination and review of eligibility and 
payments, and financial management, are beyond the scope of this 
subpart.


Sec. 28.302  Definitions.

    In this subpart (including appendix A)--
    Deferred retirement means retirement under section 4-623 of the 
D.C. Code (1997) (under the Police and Firefighters Plan) or section 
31-1231(a) of the D.C. Code (1997) (under the Teachers Plan).
    Deferred retirement age means the age at which a deferred annuity 
begins to accrue, that is, age 55 under the Police and Firefighters 
Plan and age 62 under the Teachers Plan.
    Department service or departmental service means any period of 
employment in a position covered by the Police and Firefighters Plan or 
Teachers Plan. Department service or departmental service may include 
certain periods of military service that interrupt a period of 
employment under the Police and Firefighters Plan or the Teachers Plan.
    Disability retirement means retirement under section 4-615 or 
section 4-616 of the D.C. Code (1997) (under the Police and 
Firefighters Plan) or section 31-1204 of the D.C. Code (1997) (under 
the Teachers Plan), regardless of whether the disability was incurred 
in the line of duty.
    Enter on duty means commencement of employment in a position 
covered by the Police and Firefighters Plan or the Teachers Plan.
    Excess leave without pay or excess LWOP means periods of time in a 
non-pay status that in any year is greater than the amount creditable 
as service under Sec. 28.105(d).
    Hire date means the date the employee entered on duty.
    Military service means--
    (a) For the Police and Firefighters Plan, military service as 
defined in section 4-607 of the D.C. Code (1997) that is creditable as 
other service under section 4-602 or section 4-610 of the D.C. Code 
(1997); and
    (b) For the Teachers Plan, military service as described in section 
31-1230(a)(4) of the D.C. Code (1997) for which any required deposit 
has been paid as of June 30, 1997.
    Optional retirement means regular longevity retirement under 
section 4-618 of the D.C. Code (1997) (under the Police and 
Firefighters Plan) or section 31-1224(a) of the D.C. Code (1997) (under 
the Teachers Plan).
    Other service means any period of creditable service other than 
departmental service or unused sick leave. Other service includes 
service that becomes creditable upon payment of a deposit, such as 
service in another school system under the Teachers Plan (under 31-1208 
of the D.C. Code (1997)); and service that is creditable without 
payment of a deposit, such as military service occurring prior to 
employment under the Police and Firefighters Plan.
    Pre-80 hire means an individual whose annuity is computed using the 
formula under the Police and Firefighters Plan applicable to 
individuals hired before February 15, 1980.
    Pre-96 hire means an individual whose annuity is computed using the 
formula under the Teachers Plan applicable to individuals hired before 
November 10, 1996.
    Sick leave means unused sick leave, which is creditable in a 
retirement computation, as calculated under Sec. 28.105(c).

General Principles for Determining Service Credit To Calculate 
Federal Benefit Payments


Sec. 28.311  Credit only for service performed on or before June 30, 
1997.

    Only service performed on or before June 30, 1997, is credited 
toward Federal Benefit Payments.


Sec. 28.312  All requirements for credit must be satisfied by June 30, 
1997.

    Service is counted toward Federal Benefit Payments only if all 
requirements for the service to be creditable are satisfied as of June 
30, 1997.


Sec. 28.313  Federal Benefit Payments are computed based on retirement 
eligibility as of the separation date and service creditable as of June 
30, 1997.

    Except as otherwise provided in this subpart, the amount of Federal 
Benefit Payments is computed based on retirement eligibility as of the 
separation date and service creditable as of June 30, 1997.

Service Performed After June 30, 1997


Sec. 28.321  General principle.

    Any service performed after June 30, 1997, may never be credited 
toward Federal Benefit Payments.


Sec. 28.322  Disability benefits.

    If an employee separates for disability retirement after June 30, 
1997, and, on the date of separation, the employee--
    (a) Satisfies the age and service requirements for optional 
retirement, the Federal Benefit Payment commences immediately. The 
Federal Benefit Payment is calculated as though the employee retired 
under optional retirement rules using only service through June 30, 
1997. (See examples 7A and 7B of appendix A of this subpart).
    (b) Does not satisfy the age and service requirements for optional

[[Page 69439]]

retirement, the Federal Benefit Payment begins when the disability 
retiree reaches deferred retirement age. (See Sec. 28.342.)

All Requirements for Credit Must Be Satisfied by June 30, 1997


Sec. 28.331  General principle.

    To determine whether service is creditable for the computation of 
Federal Benefit Payments under this subpart, the controlling factor is 
whether all requirements for the service to be creditable under the 
Police and Firefighters Plan or the Teachers Plan were satisfied as of 
June 30, 1997.


Sec. 28.332  Unused sick leave.

    (a) For employees separated for retirement as of June 30, 1997, 
Federal Benefit Payments include credit for any unused sick leave that 
is creditable under the applicable plan.
    (b) For employees separated for retirement after June 30, 1997, no 
unused sick leave is creditable toward Federal Benefit Payments.


Sec. 28.333  Military service.

    (a) For employees who entered on duty on or before June 30, 1997, 
and whose military service was performed prior to that date, credit for 
military service is included in Federal Benefit Payments under the 
terms and conditions applicable to each plan.
    (b) For employees who enter on duty after June 30, 1997, military 
service is not creditable toward Federal Benefit Payments, even if 
performed as of June 30, 1997.
    (c) For employees who entered on duty on or before June 30, 1997, 
but who perform military service after that date, the credit for 
military service is not included in Federal Benefit Payments.


Sec. 28.334  Deposit service.

    (a) Teachers Plan. (1) Periods of civilian service that were not 
subject to retirement deductions at the time they were performed are 
creditable for Federal Benefit Payments under the Teachers Plan if the 
deposit for the service was paid in full to the Teachers Plan as of 
June 30, 1997.
    (2) No credit is allowed for Federal Benefit Payments under the 
Teachers Plan for any period of civilian service that was not subject 
to retirement deductions at the time it was performed if the deposit 
for the service is not paid in full as of June 30, 1997.
    (b) Police and Firefighters Plan. No credit is allowed for Federal 
Benefit Payments under the Police and Firefighters Plan for any period 
of civilian service that was not subject to retirement deductions at 
the time that the service was performed. (See definition of 
``governmental service'' at D.C. Code Sec. 4-607(15) (1997).)


Sec. 28.335  Refunded service.

    (a) Periods of civilian service that were subject to retirement 
deductions but for which the deductions were refunded to the employee 
are creditable for Federal Benefit Payments if the redeposit for the 
service was paid in full to the District government as of June 30, 
1997.
    (b) No credit is allowed for Federal Benefit Payments for any 
period of civilian service that was subject to retirement deductions 
but for which the deductions were refunded to the employee if the 
redeposit for the service was not paid in full to the District 
government as of June 30, 1997.

Calculation of The Amount of Federal Benefit Payments


Sec. 28.341  General principle.

    Except for disability retirements after June 30, 1997, and certain 
death benefits based on deaths after June 30, 1997, for cases in which 
some service becomes creditable on or before June 30, 1997, and some 
service becomes creditable after June 30, 1997, Federal Benefit 
Payments are computed under the rules of the applicable plan as 
though--
    (a) The employee were eligible to retire effective July 1, 1997, 
under the same conditions as the actual retirement (that is, using the 
annuity computation formula that applies under the plan in effect on 
June 29, 1997, and the actual retirement age, including any applicable 
age reduction, based on the age at actual retirement);
    (b) The service that became creditable after June 30, 1997, did not 
exist; and
    (c) The average salary is the average salary at separation. (See 
examples 7B, 9, and 13 of appendix A of this subpart.)


Sec. 28.342  Computed annuity exceeds the statutory maximum.

    (a) In cases in which the computed annuity exceeds the statutory 
maximum:
    (1) Federal Benefit Payments may equal total benefits even if the 
employee had service after June 30, 1997.
    (2) If the employee had sufficient service as of June 30, 1997, to 
qualify for the maximum annuity under the plan, the Federal Benefit 
Payment is the maximum annuity under the plan. This will be the entire 
benefit except for any amount in excess of the normal maximum due to 
unused sick leave, which is the responsibility of the District. (See 
example 3, of appendix A of this subpart.)
    (b) If the employee did not perform sufficient service as of June 
30, 1997, to reach the statutory maximum benefit, but has sufficient 
service at actual retirement to exceed the statutory maximum, the 
Federal Benefit Payment is the amount earned through June 30, 1997. The 
non-Federal-Benefit-Payment portion of the total benefit consists of 
only the amount by which the total benefit payable exceeds the Federal 
Benefit Payment.


Sec. 28.343  Disability benefits.

    (a) The general rule that Federal Benefit Payments are calculated 
under the applicable retirement plan as though the employees were 
eligible for optional retirement and separated on June 30, 1997, does 
not apply to disability benefits prior to optional retirement age.
    (b) In cases involving disability benefits prior to optional 
retirement age, no Federal Benefit Payment is payable until the retiree 
reaches the age of eligibility to receive a deferred annuity (age 55 
under the Police and Firefighters Plan and age 62 under the Teachers 
Plan). When the age for deferred annuity is reached, the Federal 
Benefit Payment is paid using creditable service accrued as of June 30, 
1997 and average salary (computed under the rules for the applicable 
plan) as of the date of separation. (See examples 6 and 7 of appendix A 
of this subpart.)


Sec. 28.344  Survivor benefits.

    (a) The general rule that Federal Benefit Payments are calculated 
under the applicable retirement plan as though the employees were 
eligible for optional retirement and separated on June 30, 1997, does 
not apply to death benefits that are not determined by length of 
service.
    (b) In cases in which the amount of death benefits is not 
determined by length of service, the amount of Federal Benefit Payments 
is calculated by multiplying the amount of the total benefit payable by 
the number of full months of service through June 30, 1997, and then 
dividing by the number of months of total service at retirement (for 
elected survivor benefits) or death (for guaranteed-minimum death-in-
service survivor benefits). (See example 13 of appendix A of this 
subpart.)


Sec. 28.345  Cost-of-living adjustments.

    Cost-of-living increases are applied directly to Federal Benefit 
Payments, rather than computed on the total benefit and then prorated. 
(See example 14 of appendix A of this subpart.)


Sec. 28.346  Reduction for survivor benefits.

    (a) If a retiree designates a base for a survivor annuity that is 
greater than or

[[Page 69440]]

equal to the unreduced Federal Benefit Payment, the applicable plan's 
annuity reduction formula is applied to the unreduced Federal Benefit 
Payment to determine the reduced Federal Benefit Payment. (See example 
10 of appendix A of this subpart.)
    (b) If a retiree designates a base for a survivor annuity that is 
less than the amount of the Federal Benefit Payment, the entire 
survivor reduction applies to the Federal Benefit Payment to determine 
the reduced Federal Benefit Payment.

Appendix A to Subpart C--Examples

    This appendix contains sample calculations of Federal Benefit 
Payments in a variety of situations.

Optional Retirement Examples

Example 1: No Unused Sick Leave

    A. In this example, an individual covered by the Police and 
Firefighters Plan hired before 1980 retires in October 1997. At 
retirement, he is age 51 with 20 years and 3 days of departmental 
service plus 3 years, 4 months, and 21 days of military service that 
preceded the departmental service. The Federal Benefit Payment 
begins at retirement. It is based on the 19 years, 8 months, and 22 
days of departmental service and 3 years, 4 months, and 21 days of 
military service performed as of June 30, 1997. Thus, the Federal 
Benefit Payment is based on 23 years and 1 month of service, all at 
the 2.5 percent accrual rate. The total annuity is based on 23 years 
and 4 months of service, all at the 2.5 percent accrual rate.

                      Example 1A.--Police Optional
                              [Pre-80 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 09/10/46
Hire date: 10/09/77
Separation date: 10/11/97
Department service: 20/00/03
Other service: 03/04/21
Sick leave:
.025 service: 23.333333
.03 service:
Average salary: $45,680.80
Total: $26,647.13
Total/month: $2,221.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 09/10/46
Hire date: 10/09/77
Separation date: 06/30/97
Department service: 19/08/22
Other service: 03/04/21
Sick leave:
.025 service: 23.083333
.03 service:
Average salary: $45,680.80
Total: $26,361.63
Total/month: $2,197.00
------------------------------------------------------------------------

    B. In this example, the individual covered by the Police and 
Firefighters Plan was hired earlier than in example 1A and thus 
performed more service as of both June 30, 1997, and retirement in 
October 1997. At retirement, he is age 51 with 21 years, 11 months 
and 29 days of departmental service plus 3 years, 4 months, and 21 
days of military service that preceded the departmental service. The 
Federal Benefit Payment begins at retirement. It is based on the 21 
years, 8 months, and 18 days of departmental service and 3 years, 4 
months, and 21 days of military service performed as of June 30, 
1997. Thus, the Federal Benefit Payment is based on 25 years and 1 
month of service, 1 year and 8 months at the 3.0 percent accrual 
rate and 23 years and 5 months at the 2.5 percent accrual rate 
(including 1 month consisting of 18 days of departmental service and 
21 days of other service). The total annuity is based on 25 years 
and 4 months of service, 1 year and 11 months at the 3.0 percent 
accrual rate and 23 years and 5 months at the 2.5 percent accrual 
rate (including 1 month consisting of 29 days of departmental 
service and 21 days of other service).

                      Example 1B.--Police Optional
                              [Pre-80 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 09/10/46
Hire date: 10/13/75
Separation date: 10/11/97
Department service: 21/11/29
Other service: 03/04/21
Sick leave:
.025 service: 23.416667
.03 service: 1.916667
Average salary: $45,680.80
Total: $29,368.95
Total/month: $2,447.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 09/10/46
Hire date: 10/13/75
Separation date: 06/30/97
Department service: 21/08/18
Other service: 03/04/21
Sick leave:
.025 service: 23.416667
.03 service: 1.666667
Average salary: $45,680.80
Total: $29,026.34
Total/month: $2,419.00
------------------------------------------------------------------------

Example 2: Unused Sick Leave Credit

    In this example, an individual covered by the Police and 
Firefighters Plan and hired before 1980 retires in March 1998. At 
retirement, she is age 48 with 24 years, 8 months, and 6 days of 
departmental service plus 6 months and 4 days of other service 
(deposit paid before June 30, 1997) and 11 months and 11 days of 
unused sick leave. For a police officer (or a non-firefighting 
division firefighter) such an amount of sick leave would be 1968 
hours (246 days, based on a 260-day year, times 8 hours per day). 
For a firefighting division firefighter, such an amount would be 
2069 hours (341 days divided by 360 days per year times 2184 hours 
per year). The Federal Benefit Payment begins at retirement. It is 
based on the 23 years, 11 months, and 23 days of departmental 
service performed as of June 30, 1997, and 6 months and 4 days of 
other service. Thus, the Federal Benefit Payment is based on 20 
years departmental and 6 months of other service at the 2.5 percent 
accrual rate and 3 years and 11 months of service at the 3.0 percent 
accrual rate. The total annuity is based on 20 years and 6 months of 
service at the 2.5 percent accrual rate and 5 years and 7 months of 
service at the 3 percent accrual rate.

                       Example 2.--Police Optional
                              [Pre-80 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 05/01/49
Hire date: 07/08/73
Separation date: 03/13/98
Department service: 24/08/06
Other service: 00/06/04
Sick leave: 00/11/11
.025 service: 20.5
.03 service: 5.583333
Average salary: $61,264.24
Total: $41,659.68
Total/month: $3,472.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 05/01/49
Hire date: 07/08/73
Separation date: 06/30/97
Department service: 23/11/23
Other service: 00/06/04
Sick leave:
.025 service: 20.5
.03 service: 3.916667
Average salary: $61,264.24
Total: $38,596.47
Total/month: $3,216.00
------------------------------------------------------------------------

Example 3: Calculated Benefit Exceeds Statutory Maximum

    A. In this example, an individual covered by the Police and 
Firefighters Plan hired before 1980 retires in March 1998. At 
retirement, he is age 55 with 32 years and 17 days of departmental 
service. The Federal Benefit Payment begins at retirement. It is 
based on the 31 years, 3 months, and 17 days of departmental service 
performed as of June 30, 1997. Thus, the Federal Benefit Payment is 
based on 20 years of service at the 2.5 percent accrual rate and 11 
years and 3 months of service at the 3.0 percent accrual rate. 
However, the annuity is limited to 80 percent of the basic salary at 
time of retirement. (This limitation does not apply to the unused 
sick leave credit.) The annuity computed as of June 30, 1997, equals 
the full benefit payable; therefore, the Federal Benefit Payment is 
the total benefit.

                      Example 3A.--Police Optional
                              [Pre-80 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 06/12/42
Hire date: 03/14/66
Separation date: 03/30/98

[[Page 69441]]

 
Department service: 32/00/17
Other service:
Sick leave:
.025 service: 20
.03 service: 12
Average salary: $75,328.30
Final salary: $77,180.00
Total: $64,782.34
Total/month: $5,399.00
Maximum: $61,744.00
  $5,145.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 06/12/42
Hire date: 03/14/66
Separation date: 06/30/97
Department service: 31/03/17
Other service:
Sick leave:
.025 service: 20
.03 service: 11.25
Average salary: $75,328.30
Final salary: $77,180.00
Total: $63,087.45
Total/month: $5,257.00
Maximum: $61,744.00
  $5,145.00
------------------------------------------------------------------------

    B. In this example, the individual in example 3B also has 6 
months of unused sick leave at retirement. The sick leave credit is 
not subject to the 80% limitation and does not become creditable 
service until the date of separation. For a police officer (or a 
non-firefighting division firefighter) such an amount of sick leave 
would be 1040 hours (130 days, based on a 260-day year, times 8 
hours per day). For a firefighting division firefighter, such an 
amount would be 1092 hours (180 days divided by 360 days per year 
times 2184 hours per year). Six months of unused sick leave 
increases the annual total benefit by 1.5 percent of the average 
salary, or in the example by $94 per month. The District is 
responsible for the portion of the annuity attributable to the 
unused sick leave because it became creditable at retirement, that 
is, after June 30, 1997.

                      Example 3B.--Police Optional
                              [Pre-80 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 06/12/42
Hire date: 03/14/66
Separation date: 03/30/98
Department service: 32/00/17
Other service:
Sick leave: 00/06/00
.025 service: 20
.03 service: 12
Average salary: $75,328.30
Final salary: $77,180.00
Total wo/sl credit: $64,782.34
Total/month: $5,399.00
Max wo/sl credit: $61,744.00
Max w/sl credit: $62,873.92
Monthly benefit: $5,239.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 06/12/42
Hire date: 03/14/66
Freeze date: 06/30/97
Department service: 31/03/17
Other service:
Sick leave: none
.025 service: 20
.03 service: 11.25
Average salary: $75,328.30
Final Salary: $77,180.00
Total: $63,087.45
Total/month: $5,257.00
Maximum: $61,744.00
Monthly benefit: $5,145.00
------------------------------------------------------------------------

Example 4: Excess Leave Without Pay

    In this example, an individual covered by the Teachers Plan 
hired before 1996 retires in February 1998. At retirement, she is 
age 64 with 27 years of departmental service and 6 years, 7 months, 
and 28 days of other service (creditable before June 30, 1997). 
However, only 6 months of leave in a fiscal year without pay may be 
credited toward retirement under the Teachers Plan. She had 3 months 
and 18 days of excess leave without pay as of June 30, 1997. Since 
the excess leave without pay occurred before June 30, 1997, the time 
attributable to the excess leave without pay is subtracted from the 
service used in both the Federal Benefit Payment and the total 
benefit computations. The Federal Benefit Payment begins at 
retirement. It is based on the 32 years and 8 months of service (32 
years, 11 months, and 28 days minus 3 months and 18 days and the 
partial month dropped); 5 years of service at the 1.5 percent 
accrual rate, 5 years of service at the 1.75 percent accrual rate, 
and 22 years and 8 months of service at the 2 percent accrual rate. 
The total annuity is based on 33 years and 4 months of service (33 
years, 7 months and 28 days minus 3 months and 18 days and the 
partial month dropped) 5 years of service at the 1.5 percent accrual 
rate, 5 years of service at the 1.75 percent accrual rate and 23 
years and 4 months of service at the 2 percent accrual rate.

    Note: For the Teachers Plan, section 1230(a) of title 31 of the 
D.C. Code (1997) allows for 6 months leave without pay in any fiscal 
year. For the Police and Firefighters Plan, section 610(d) of title 
4 of the D.C. Code (1997) allows for 6 months leave without pay in 
any calendar year.

                      Example 4.--Teachers Optional
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 11/04/33
Hire date: 03/01/71
Separation date: 02/28/98
Department service: 27/00/00
Other service: 06/07/28
Excess LWOP: 00/03/18
.015 service: 5
.0175 service: 5
.02 service: 23.333333
Average salary: $53,121.00
Total: $33,421.96
Total/month: $2,785.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/04/33
Hire date: 03/01/71
Freeze date: 06/30/97
Department service: 26/04/00
Other service: 06/07/28
Excess LWOP: 00/03/18
.015 service: 5
.0175 service: 5
.02 service: 26.666667
Average salary: $53,121.00
Total: $32,713.68
Total/month: $2,726.00
------------------------------------------------------------------------

Example 5: Service Credit Deposits

    A. An individual covered by the Teachers Plan hired before 1996 
retires in October 1997. At retirement, he is age 61 with 30 years 
and 3 days of departmental service plus 3 years, 4 months, and 21 
days of other service that preceded the departmental service for 
which the deposit was fully paid on or before June 30, 1997. The 
Federal Benefit Payment begins at retirement. It is based on the 29 
years, 8 months, and 22 days of departmental service and 3 years, 4 
months, and 21 days of service performed as of June 30, 1997. Thus, 
the Federal Benefit Payment is based on 33 years and 1 month of 
service; 5 years of service at the 1.5 percent accrual rate, 5 years 
of service at the 1.75 percent accrual rate, and 23 years and 1 
month of service at the 2 percent accrual rate. The total annuity is 
based on 33 years and 4 months of service; 5 years of service at the 
1.5 percent accrual rate, 5 years of service at the 1.75 percent 
accrual rate and 23 years and 4 months of service at the 2 percent 
accrual rate.

                     Example 5A.--Teachers Optional
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 09/10/36
Hire date: 10/09/67
Separation date: 10/11/97
Department service: 30/00/03
Other service: 03/04/21
Deposit paid before freeze date
Other service credit allowed
Sick leave
.015 service: 5
.0175 service: 5
.02 service: 23.333333
Average salary: $45,680.80
Total: $28,740.84
Total/month: $2,395.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 09/10/36
Hire date: 10/09/67

[[Page 69442]]

 
Freeze date: 06/30/97
Department service: 29/30/22
Other service: 03/04/21
Deposit paid before freeze date
Other service credit allowed
Sick leave
.015 service: 5
.0175 service: 5
.02 service: 23.083333; 13 days dropped
Average salary: $45,680.80
Total: $28,512.43
Total/month: $2,376.00
------------------------------------------------------------------------

    B. In this example, the employee in example 5A did not pay any 
of the deposit to obtain credit for the 3 years, 4 months, and 21 
days of other service as of June 30, 1997.Thus, none of the other 
service is used in the computation of the Federal Benefit Payment.
    An individual covered by the Teachers Plan hired before 1996 
retires in October 1997. At retirement, he is age 61 with 30 years 
and 3 days of departmental service plus 3 years, 4 months, and 21 
days of other service that preceded the departmental service for 
which the deposit was paid in full in October 1997 (at retirement). 
The Federal Benefit Payment begins at retirement. It is based on 
only the 29 years, 8 months, and 22 days of departmental service 
performed as of June 30, 1997; 5 years of service at the 1.5 percent 
accrual rate, 5 years of service at the 1.75 percent accrual rate, 
and 19 years and 8 months of service at the 2 percent accrual rate. 
The total annuity is based on 33 years and 4 months of service; 5 
years of service at the 1.5 percent accrual rate, 5 years of service 
at the 1.75 percent accrual rate and 23 years and 4 months of 
service at the 2 percent accrual rate.

                     Example 5B.--Teachers Optional
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 09/10/36
Hire date: 10/09/67
Separation date: 10/11/97
Department service: 30/00/03
Other service: 03/04/21
Total deposit paid after: 6/30/97
Sick leave
.015 service: 5
.0175 service: 5
.02 service: 23.333333
Average salary:: $45,680.80
Total: $28,740.84
Total/month: $2,395.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 09/10/36
Hire date: 10/09/67
Freeze date: 06/30/97
Department service: 29/08/22
Other service: none
Total deposit paid after: 6/30/97
Sick leave:
.015 service: 5
.0175 service: 5
.02 service: 19.666667; 22 days dropped
Average salary:: $45,680.80
Total: $25,390.91
Total/month: $2,116.00
------------------------------------------------------------------------

    C. In this example, the employee in examples 5A and B began 
installment payments on the deposit to obtain credit for the 3 years, 4 
months, and 21 days of other service as of June 30, 1997, but did not 
complete the deposit until October 1997 (at retirement). The other 
service is not used in the computation of the Federal Benefit Payment 
because the payment was not completed as of June 30, 1997. Thus, the 
result is the same as in example 5B.

                     Example 5C.--Teachers Optional
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 09/10/36
Hire date: 10/09/67
Separation date: 10/11/97
Department service: 30/00/03
Other service: 03/04/21
Partial deposit paid as of: 6/30/97
Deposit completed after 6/30/97
Sick leave
.015 service: 5
.0175 service: 5
.02 service: 23.333333
Average salary:: $45,680.80
Total: $28,740.84
Total/month: $2,395.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 09/10/36
Hire date: 10/09/67
Freeze date: 06/30/97
Department service: 29/08/22
Other service: none
Partial deposit as of 6/30/97
Deposit completed after 6/30/97
Sick leave
.015 service: 5
.0175 service: 5
.02 service: 19.666667; 22 days dropped
Average salary:: $45,680.80
Total: $25,390.91
Total/month: $2,116.00
------------------------------------------------------------------------

Disability Retirement Examples

Example 6: Disability Occurs Before Eligibility for Optional Retirement

    A. In this example, an individual covered by the Police and 
Firefighters Plan hired before 1980 retires based on a disability in 
the line of duty in October 1997. At retirement, he is age 45 with 18 
years, 5 months, and 11 days of departmental service. Since he had 
performed less than 20 years of service and had not reached the age of 
eligibility for an optional retirement, the Federal Benefit Payment 
does not begin at retirement.
    When the disability annuitant reaches age 55, he satisfies the age 
and service requirements for deferred retirement. At that time (August 
20, 2007), the Federal Benefit Payment begins. It is based on the 18 
years, 1 month, and 17 days of departmental service performed as of 
June 30, 1997, all at the 2.5 percent accrual rate.

          Example 6A.--Police Disability in Line of Duty Age 45
                              [Pre-80 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 08/20/52
Hire date: 05/14/79
Separation date: 10/24/97
Department service: 18/05/11
Other service
Sick leave
.025 service: 18.416667
.03 service:
Average salary:: $47,788.64
Final salary: $50,938.00
Total: $22,002.69
Total/month: $1,834.00
2/3 of average pay: $31,859.09
Monthly: $2,655.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 08/20/52
Hire date: 05/14/79
Separation date: 06/30/97
Department service: 18/01/17
Other service
Sick leave
.025 service: 18.083333
.03 service:
Average salary:: $47,788.64
Final salary: $50,938.00
Total: $21,604.45
Total/month: $1,800.00; deferred
------------------------------------------------------------------------

    B. In this example, an individual covered by the Teachers Plan 
hired before 1996 retires based on a disability in December 1997. At 
retirement, she is age 49 with 27 years and 4 months of departmental 
service which includes 3 years, 3 months and 14 days of excess leave 
without pay (prior to June 30, 1997). Since she does not qualify for 
optional retirement at separation, the Federal Benefit Payment does 
not begin at separation.
    When the disability annuitant reaches age 62, she will satisfy 
the age and service requirements for deferred retirement. At that 
time (March 9, 2010), the Federal Benefit Payment begins. The time 
attributable to the excess leave without pay is subtracted from the 
service used to compute the Federal Benefit Payment. Since the 
excess leave without pay occurred before June 30, 1997, the deferred 
Federal Benefit Payment is based on the 23 years and 6 months of 
service; 5 years of service at the 1.5 percent accrual rate, 5 years 
of service at the 1.75 percent accrual rate, and 13 years and 6

[[Page 69443]]

months of service at the 2 percent accrual rate.

                 Example 68.--Teachers Disability Age 49
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 03/09/48
Hire date: 09/01/70
Separation date: 12/31/97
Department service: 27/04/00
Other service:
Excess LWOP: 03/03/14
.015 service: 5
.0175 service: 5
.02 service: 14
Average salary:: $53,121.00
Total: $23,506.04
Total/month: $1,959.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 03/09/48
Hire date: 09/01/70
Freeze date: 06/30/97
Department service: 26/10/00
Other service:
Excess LWOP: 03/03/14
.015 service: 5
.0175 service: 5
.02 service: 13.5
Average salary:: $53,121.00
Total: $22,974.83
Total/month: $1,915.00; deferred
------------------------------------------------------------------------

Example 7: Disability Occurs After Eligibility for Optional Retirement

    A. In this example, an individual covered by the Police and 
Firefighters Plan hired before 1980 retires based on a disability in 
the line of duty in October 1997. At retirement, she is age 55 with 
24 years, 5 months, and 11 days of departmental service. Since she 
was also eligible for optional retirement at the time of separation, 
the Federal Benefit Payment commences at retirement. It is based on 
the 24 years, 1 months, and 17 days of departmental service 
performed as of June 30, 1997. Thus, the Federal Benefit Payment is 
based on 20 years of service at the 2.5 percent accrual rate and 4 
years and 1 month of service at the 3 percent accrual rate. The 
total annuity is base don the disability formula and is equal to 
two-thirds of a average pay because that amount is higher than the 
63.25 percent payable based on total service.

          Example 7A.--Police Disability in Line of Duty Age 55
                              [pre-80 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 10/01/42
Hire date: 05/14/73
Separation date:10/24/97
Deparment service: 24/05/11
Other service
Sick leave
.025 services: 20
.03 service: 4.416667
Average salary: $47,788.64
Final salary: $50,938.00
Total: $30,226.31
Total/month: $2,519.00
2/3 of average pay: $31,859.09
Monthly: $2,655.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 10/01/42
Hire date: 05/14/73
Freeze date: 06/30/97
Department service: 24/01/17
Other service
Sick leave
.025 service: 20
.03 service: 4.083333
Average salary: $47,788.64
Final salary: $50,938.00
Total: $29,748.43
Total/month: $2,479.00
------------------------------------------------------------------------

    B. In this example, an individual covered by the Teachers Plan 
hired before 1996 retires based on a disability in December 1997. At 
retirement, he is age 60 with 27 years and 4 months of departmental 
service which includes 3 years, 3 months and 14 days of excess leave 
without pay (prior to June 30, 1997). Since he qualifies for 
optional retirement at separation, the Federal Benefit Payment 
begins at retirement. Since the excess leave without pay occurred 
before June 30, 1997, and the total annuity is based on actual 
service (that is, exceeds the guaranteed disability minimum), the 
time attributable to the excess leave without pay is subtracted from 
the service used to compute the Federal Benefit Payment and total 
benefit. The Federal Benefit Payment is based on 23 years and 6 
months of service; 5 years of service at the 1.5 percent accrual 
rate, 5 years of service at the 1.75 percent accrual rate, and 13 
years and 6 months of service at the 2 percent accrual rate. The 
total annuity payable is based on 24 years of service; 5 years of 
service at the 1.5 percent accrual rate, 5 years of service at the 
1.75 percent accrual rate, and 14 years of service at the 2 percent 
accrual rate.

                 Example 7B.--Teachers Disability Age 60
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 03/09/37
Hire date: 09/01/70
Separation date: 12/31/97
Department service: 27/04/00
Other service
Excess LWOP03/03/14
.015 service: 5
.0175 service: 5
.02 service: 14
Average salary: $53,121.00
Total: $23,506.04
Total/month: $1,959.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 03/09/37
Hire date: 09/01/70
Freeze date: 06/30/97
Department service: 26/10/00
Other service
Excess LWOP03/03/14
.015 service: 5
.0175 service: 5
.02 service: 13.5
Average salary: $53,121.00
Total: $22,974.83
Total/month: $1,915.00
------------------------------------------------------------------------

Deferred Retirement Examples

Example 8: All Service Before June 30, 1997

    In this example, an individual covered by the Police and 
Firefighters Plan hired before 1980 separated in March 1986 with title 
to a deferred annuity. In November 1997, he reaches age 55 and becomes 
eligible for the deferred annuity based on his 15 years, 9 months, and 
8 days of departmental service, all at the 2.5 percent accrual rate. 
The total annuity is based on the same 15 years, 9 months, and 8 days 
of service all at the 2.5 percent accrual rate. Since all the service 
is creditable as of June 30, 1997, the Federal Benefit Payment equals 
the total annuity.

                       Example 8.--Police Deferred
                              [Pre-80 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 11/20/42
Hire date: 06/01/70
Separation date: 03/08/86
Department service: 15/09/08
Other service
Sick leave
.025 service: 15.75
.03 service: 0
Average salary: $30,427.14
Final salary: $45,415.00
Total: $11,980.69
Total/month: $998.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/20/42
Hire date: 06/01/70
Freeze date: 03/08/86
Department service: 15/09/08
Other service
Sick leave
.025 service: 15.75
.03 service: 0
Average salary: $30,427.14
Final salary: $45,415.00
Total: $11,980.69
Total/month: $998.00
------------------------------------------------------------------------


[[Page 69444]]

Example 9: Service Straddles June 30, 1997

    In this example, an individual covered by the Police and 
Firefighters Plan hired before 1980 separated in December 1997 with 
title to a deferred annuity. In November 2007, he will reach age 55 
and becomes eligible to receive a deferred annuity. At that time, 
the Federal Benefit Payment begins. It is based on the 18 years and 
1 month of departmental service performed as of June 30, 1997, all 
at the 2.5 percent accrual rate. The total annuity begins at the 
same time, based on his 18 years, 6 months, and 8 days of 
departmental service, all at the 2.5 percent accrual rate.

                       Example 9.--Police Deferred
                              [Pre-80 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 11/20/52
Hire date: 06/01/79
Separation date: 12/08/97
Department service: 18/06/08
Other service
Sick leave
.025 service: 18.5
.03 service: 0
Average salary: $30,427.14
Final salary: $45,415.00
Total: $14,072.55
Total/month: $1,173.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/20/52
Hire date: 06/01/79
Freeze date: 06/30/97
Department service: 18/01/00
other service:
Sick leave:
.025 service: 18.083333
.03 service: 0
Average salary: $30,427.14
Final Salary: $45,415.00
Total: $13,755.60
Total/month $1,146.00; deferred
------------------------------------------------------------------------

Reduction to Provide a Survivor Annuity Examples

Example 10: Survivor Reduction Calculations

    Both of the following examples involve a former teacher who 
elected a reduced annuity to provide a survivor benefit.
    A. In this example, the employee elected full survivor benefits. 
The Federal Benefit Payment is reduced by 2\1/2\ percent of the 
first $3600 and 10 percent of the balance. The total annuity is also 
reduced by 2\1/2\ percent of the first $3600 and 10 percent of the 
balance.

          Example 10A.--Teachers Optional w/Survivor Reduction
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 11/01/42
Hire date: 11/01/68
Separation date: 12/31/97
Department service: 29/02/00
Other service: 03/09/18
Military: 00/09/11
.015 service: 5
.0175 service: 5
.02 service: 23.666667
Average salary: $66,785.00
Total unreduced: $42,464.13
Reduction: $3,976.41
Total reduced: $38,487.72
Total/month: $3,207.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/01/42
Hire date: 11/01/68
Freeze date: 06/30/97
Department service: 28/08/00
Other service: 03/09/18
Military: 00/09/11
.015 service: 5
.0175 service: 5
.02 service: 23.166667
Average salary: $66,785.00
Total unreduced: $41,796.28
Reduction: $3,909.63
Total reduced: $37,886.65
Total/month: $3,157.00
------------------------------------------------------------------------
------------------------------------------------------------------------

    B. In this example, the employee elects to provide a partial 
survivor annuity based on $3600 per year. The Federal Benefit 
Payment is reduced by $90 per year. The total benefit is reduced by 
$90 per year.

          Example 10B.--Teachers Optional w/Survivor Reduction
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 11/01/42
Hire date: 11/01/68
Separation date: 12/31/97
Department service: 29/02/00
Other service: 03/09/18
Military: 00/09/11
.015 service: 5
.0175 service: 5
.02 service: 23.666667
Average salary: $66,785.00
Total unreduced: $42,464.13
Reduction: $90.00
Total reduced: $43,374.13
Total/month: $3,531.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/01/42
Hire date: 11/01/68
Freeze date: 06/30/97
Department service: 28/08/00
Other service: 03/09/18
Military: 00/09/11
.015 service: 5
.0175 service: 5
.02 service: 23.166667
Average salary: $66,785.00
Total unreduced: $41,796.28
Reduction: $90.00
Total reduced: $41,706.28
Total/month: $3,476.00
------------------------------------------------------------------------
------------------------------------------------------------------------

Early Optional or Involuntary Retirement Examples

Example 11: Early Optional With Age Reduction

    In this example, an individual covered by the Teachers Plan 
hired before 1996 retires voluntarily in February 1998, under a 
special program that allows early retirement with at least 20 years 
of service at age 50 older, or at least 25 years of service at any 
age. At retirement, she is 6 full months short of age 55. She has 25 
years and 5 months of departmental service; 6 years, 2 months, and 
19 days of other service (creditable before June 30, 1997); and 2 
months and 9 days of unused sick leave. Since she is not eligible 
for optional retirement and she is eligible to retire voluntarily 
only because of the District-approved special program, the Federal 
Benefit Payment is calculated similar to a disability retirement. It 
does not begin until she becomes eligible for a deferred annuity at 
age 62.
    When it commences the Federal Benefit Payment will be based on 
the service creditable as of June 30, 1997: 30 years and 11 months 
of service; 5 years of service at the 1.5 percent accrual rate, 5 
years of service at the 1.75 percent accrual rate, and 20 years and 
11 months of service at the 2 percent accrual rate. The total 
annuity is based on 5 years of service at the 1.5 percent accrual 
rate, 5 years of service at the 1.75 percent accrual rate and 21 
years and 9 months of service at the 2 percent accrual rate 
(including the unused sick leave). Because the Federal Benefit 
Payment is based on the deferred annuity, rather than the early 
voluntary retirement, it is not reduced by the age reduction factor 
used to compute the total benefit.

             Example 11.--Teachers Early out W/Age Reduction
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 09/20/43
Hire date: 10/01/72
Separation date: 02/28/98
Department service: 25/05/00
Other service: 06/02/19
Sick leave: 00/02/09
.015 service: 5
.0175 service: 5
.02 service: 21.75
Average salary: $69,281.14
Total unreduced: $41,395.48
Reduction factor: 0.990000
Total reduced: $40,981.53
Total month: $3,415.00
------------------------------------------------------------------------

[[Page 69445]]

 
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 09/20/43
Hire date: 10/01/72
Freeze date: 06/30/97
Department service: 24/09/00
Other service: 06/02/19
.015 service: 5
.0175 service: 5
.02 service: 20.916667
Average salary: $69,281.14
Total unreduced: $40,240.80
Reduction factor: 1.000000; no reduction
Total reduced: $40,240.80
Total/month: $3,353.00; deferred
------------------------------------------------------------------------

Example 12: Involuntary With Age Reduction

    In this example, an individual covered by the Teachers Plan 
hired before 1996 retires involuntarily in February 1998. At 
retirement, she is 6 full months short of age 55. She has 25 years 
and 5 months of departmental service; 6 years, 2 months, and 19 days 
of other service (creditable before June 30, 1997); and 2 months and 
9 days of unused sick leave. The Federal Benefit Payment begins at 
retirement. It is based on the 30 years and 11 months of service; 5 
years of service at the 1.5 percent accrual rate, 5 years of service 
at the 1.75 percent accrual rate, and 20 years and 11 months of 
service at the 2 percent accrual rate. The total annuity is based on 
5 years of service at the 1.5 percent accrual rate, 5 years of 
service at the 1.75 percent accrual rate and 21 years and 9 months 
of service at the 2 percent accrual rate (including the unused sick 
leave). Both the Federal Benefit Payment and the total benefit are 
reduced by the age reduction factor.

            Example 12.--Teachers Involuntary W/Age Reduction
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 09/20/43
Hire date: 10/01/72
Separation date: 02/28/98
Department service: 25/05/00
Other service: 06/02/19
Sick leave: 00/02/09
.015 service: 5
.0175 service: 5
.02 service: 21.75
Average salary: $69,281.14
Total unreduced: $41,395.48
Age reduction factor: 0.990000
Total reduced: $40,981.53
Total month: $3,415.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 09/20/43
Hire date: 10/01/72
Freeze date: 06/30/97
Department service: 24/09/00
Other service: 06/02/19
.015 service: 5
.0175 service: 5
.02 service: 20.916667
Average salary: $69,281.14
Total unreduced: $40,240.80
Age reduction factor: 0.990000
Total reduced: $39,838.39
Total/month: $3,320.00
------------------------------------------------------------------------

Death Benefits Example

Example 13: Death Benefits Calculation

    Regardless of whether death occurs in service or after 
retirement, if the death benefit is not based on the length of 
service, the portion of a death benefit that is a Federal Benefit 
Payment is based on the ratio of the number of months of the 
deceased employee's service as of June 30, 1997, to the number of 
months of the deceased employee's total service. This proration will 
always apply to cases of death after retirement in which the 
survivor annuity is based on the reduction in the employee's annuity 
to provide the benefit. It also applies to lump-sum benefits and 
benefits computed under a guaranteed-minimum or a percentage-of-
disability-at-retirement formula.
    A. In this example, an individual covered by the Teachers Plan 
retires in April 1998 with 30 years of service and elects to provide 
a full survivor annuity. He dies in June 1998. The Federal Benefit 
Payment is 97\1/2\ percent (351 months/360 months) of the total 
survivor benefit.

                  Example 13A.--Teachers Death Benefits
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 04/01/46
Hire date: 04/01/68
Separation date: 04/01/98
Death date: 06/24/98
Department service: 30/00/00
Other service:
Sick leave:
Months: 360
Annual Benefit: $12,000.00
Monthly Benefit: $1,000.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 04/01/46
Hire date: 04/01/68
Freeze date: 06/30/97
Death date: 06/24/98
Department service: 29/03/00
Other service:
Months: 351
  $11,700.00
  $975.00
------------------------------------------------------------------------

    B. In this example, a teacher dies in service on June 30, 1998 
after 31 years of departmental service. Since the survivor annuity 
is based on actual service, the Federal Benefit Payment is based on 
the 30 years of service as of June 30, 1997. The total benefit is 
based on the 31 years of total service. No proration is appropriate.

                  Example 13B.--Teachers Death Benefits
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 07/01/39
Hire date: 07/01/67
Separation date: 06/30/98
Death date: 06/30/98
 
Department service: 31/00/00
Other service:
Sick leave:
 
Average sal: $38,787.88
Annual Benefit: $12,426.67
 
Monthly Benefit: $1,036.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 07/01/39
Hire date: 07/01/67
Freeze date: 06/30/97
Death date: 06/30/98
 
Department service: 30/00/00
Other service:
 
Average sal: $38,787/88
Annual Benefit: $12,000.00
Monthly Benefit: $1,000.00
------------------------------------------------------------------------

    C. In this example, a teacher dies in service on April 1,1998 
after 15 years of departmental service. Since the survivor annuity 
is based on the guaranteed minimum, the Federal Benefit Payment is a 
prorated portion of the total benefit. Since the teacher had 171 
months of service as of the freeze date and 180 months of service at 
death, the Federal Benefit Payment equals 171/180ths of the total 
benefit.

                  Example 13C.--Teachers Death Benefits
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 04/01/61
Hire date: 04/01/83
Separation date: 04/01/98
Death date: 04/01/98
 
Department service: 15/00/01
 
Average salary: $36,000.00
 
Months: 180
Annual Benefit: $7,920.00
Monthly Benefit: $660.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 04/01/61
Hire date: 04/01/83
Freeze date: 06/30/97
Death date: 04/01/98
 
Department service: 14/03/00
 
Average salary: $36,000.00
 
Months: 171
Ratio (171/180): 0.950000
Annual Benefit: $7,524.00
Monthly Benefit: $627.00
------------------------------------------------------------------------


[[Page 69446]]

Cost of Living Adjustment Examples

Example 14: Application of Cost of Living Adjustments

    Cost of living adjustments are applied directly to the Federal 
Benefit Payment to determine the new rate of the Federal Benefit 
Payment after a cost of living adjustment.
    A. In this example, the cost of living adjustment is the same 
for the Federal Benefit Payment and the non-Federal Benefit Payment 
portion of the total benefit. Effectively, the total cost of living 
adjustment is proportionally split between the Federal Benefit 
Payment and the non-Federal Benefit Payment.

            Example 14A.--Teachers Cost of Living Adjustment
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                   Benefit Computation (at retirement)
------------------------------------------------------------------------
Total annuity computation:
  Birth date: 11/04/48
  Hire date: 03/01/86
  Separation date: 02/28/2013
 
  Department service: 27/00/00
  Other service: 06/07/28
  Paid in 1995:
  Excess LWOP in 1990: 00/03/18
 
  .015 service: 5
  .0175 service: 5
  .02 service: 23.333333
 
  Average salary: $53,121.00
 
  Total: $33,421.96
  Total/month: $2,785.00
 
Federal Benefit Payment Computation:
  Birth date: 11/04/48
  Hire date: 03/01/86
  Freeze date: 06/30/1997
 
  Department service: 11/04/00
  Other service: 06/07/28
  Paid in 1995:
  Excess LWOP in 1990: 00/03/18
 
  .015 service: 5
  .0175 service: 5
  .02 service: 7.666667
 
  Average salary: $53,121.00
 
  Total: $16,777.38
  Total/month: $1,398.00
------------------------------------------------------------------------
                            COLA Computation
------------------------------------------------------------------------
DC COLA rate 4%
  Total COLA: 111
  New rate: 2896
Federal COLA rate: 4%
  Federal COLA: 56
  New rate: 1454
------------------------------------------------------------------------

    B. In this example, a new District plan applies a different cost 
of living adjustment than is provided for the Federal Benefit 
Payment. The Federal Benefit Payment will be unaffected by the new 
District plan. In such a case, the total cost of living adjustment 
is no longer proportionally split between the Federal Benefit 
Payment and the non-Federal Benefit Payment.

            Example 14B.--Teachers Cost of Living Adjustment
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                   Benefit Computation (at retirement)
------------------------------------------------------------------------
Total annuity computation:
  Birth date: 11/04/48
  Hire date: 03/01/86
  Separation date: 02/28/2013
  Department service: 27/00/00
  Other service: 06/07/28
  Paid in 1995:
  Excess LWOP in 1990: 00/03/18
  .015 service: 5
  .0175 service: 5
  .02 service: 23.333333
  Average salary: $53,121.00
  Total: $33,421.96
  Total/month: $2,785.00
Federal Benefit Payment computation:
  Birth date: 11/04/48
  Hire date: 03/01/86
  Freeze date: 06/30/1997
  Department service: 11/04/00
  Other service: 06/07/28
  Paid In 1995:
  Excess LWOP in 1990: 00/03/18
  .015 service: 5
  .0175 service: 5
  .02 service: 7.666667
  Average salary: $53,121.00
  Total: $16,777.38
  Total/month: $1,398.00
 
                       COLA Computation Variations
------------------------------------------------------------------------
                               Variation 1
------------------------------------------------------------------------
DC Cola rate 5% of total benefit
  Total COLA: $139.00
  New rate: $2,924.00
Federal COLA rate 4% of Federal Benefit Payment
  Federal COLA: $56.00
  New rate: $1,454.00
------------------------------------------------------------------------
                               Variation 2
------------------------------------------------------------------------
DC COLA rate 5% of DC Payment
  Total COLA: $125.00
  New rate: $2,910.00
             Federal COLA rate 4% of Federal Benefit Payment
  Federal COLA: $56.00
  New rate: $1,454.00
------------------------------------------------------------------------

Retroactive Payment of Accrued Annuity Example

Example 15: Accrual of Federal Benefit Payment

    The Federal Benefit Payment begins to accrue on the annuity 
commencing date, regardless of whether the employee is added to the 
annuity roll in time for the regular payment cycle. If the employee 
is due a retroactive payment of accrued annuity, the portion of the 
retroactive payment that would have been Federal Benefit Payment (if 
it were made in the regular payment cycle) is still Federal Benefit 
Payment.
    In this example, a teacher retired effective September 11, 1998. 
She was added to the retirement rolls on the pay date November 1, 
1998 (October 1 to October 31 accrual cycle). Her Federal Benefit 
Payment is $3000 per month and her total benefit payment is $3120 
per month. Her initial check is $5200 because it includes a prorated 
payment for 20 days (September 11 to September 30). The Federal 
Benefit Payment is $5000 of the initial check ($3000 for the October 
cycle and $2000 for the September cycle).

                  Example 15.--Teachers Accrued Benefit
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 11/01/42
Hire date: 09/01/66
Separation date: 09/10/98
Department service: 32/00/10
.015 service: 5
.0175 service: 5
.02 service: 22
Average salary: $62,150.00
Total: $37,445.38
Total/month: $3,120.00
------------------------------------------------------------------------
Sept 11-30: $2,080.00
Oct 1-31: $3,120.00
Nov 1-30: $3,120.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/01/42
Hire date: 09/01/66
Freeze date: 06/30/97
Department service: 30/10/00
.015 service: 5
.0175 service: 5
.02 service: 20.833333
Average salary: $62,150.00
Total: $35,995.21
Total/month: $3,000.00
Sept 11-30: $2,000.00
Oct 1-31: $3,000.00
Nov 1-30: $3,000.00
------------------------------------------------------------------------


[FR Doc. 99-32168 Filed 12-10-99; 8:45 am]
BILLING CODE 4810-25-P