(a) It is the purpose of this subchapter to establish a financially sound and equitable program of employee retirement benefits. With respect to retirement systems, the Council recognizes that existing programs, including the program administered by the federal government, are not now financed on an actuarially sound basis. Furthermore, the rights and benefits conferred by these systems and the financial implications for participation by employees vary significantly among systems.
(b) The responsibility for creating an actuarially sound financial plan for existing retirement systems cannot and should not be borne solely by the District government. The Council therefore fully endorses the proposition that the federal government must assist the District government in establishing and maintain the necessary financial base for all existing retirement systems.
§ 1–626.02. Retirement systems.
Existing retirement systems, which include the Civil Service Retirement System (Chapter 83 of Title 5 of the United States Code), Teachers’ Retirement System, Police and Fire Retirement System, Teachers’ Insurance and Annuity Association programs, and the Judges’ Retirement System, shall continue to be applicable to all employees except that the Civil Service Retirement System pursuant to 5 U.S.C. § 8331 shall not be applicable to employees first employed after September 30, 1987.
§ 1–626.03. District retirement benefits.
The District shall provide retirement benefits to all employees first employed after September 30, 1987, who would otherwise have been covered under the Civil Service Retirement System pursuant to 5 U.S.C. § 8331 except those specifically excluded by law or by rule.
(1)(A) “Creditable service” means the period of employment to be recognized for purposes of eligibility for retirement benefits, which shall be set forth in rules promulgated by the Mayor pursuant to § 1-626.08.
(B) For purposes of vesting pursuant to § 1-626.10(b), creditable service for employees whose participation in the District Defined Contribution Plan ceases as a result of the implementation of the National Capital Revitalization and Self-Government Improvement Act of 1997, approved August 5, 1997 (Pub.L. No. 105-33), shall also include continuous service performed by nonjudicial employees of the District of Columbia courts after September 30, 1997, or service performed for a successor employer that provides the services previously performed by the District government toward the vesting requirement of the Defined Contribution Plan.
(C)(i) For purposes of vesting pursuant to § 1-626.10(b), and notwithstanding any other provision of law or any prior agreement with the Public Defender Service for the District of Columbia, creditable service with the District for employees of the Public Defender Service of the District of Columbia hired on or after October 1, 1987 and before September 16, 1991 shall be calculated to include service beginning as of the commencement of employment.
(ii) This subparagraph shall apply as of October 1, 1987.
(2) “Detention officer” means an employee who is not covered by the Police and Fire Retirement System, whose duties are primarily the investigation, apprehension, or detention of individuals suspected or convicted of offenses against, or violation of, the laws of the United States or the District and whose duties may require frequent contact, supervision, inspection, training, employment, care, transportation, or rehabilitation of individuals in detention. The term “detention officer” includes:
(A) Employees engaged in the activities listed above who are transferred to a supervisory or administrative position;
(B) Employees of the District of Columbia Department of Corrections, its industries, and utilities who are engaged in the activities listed above;
(C) Employees of the Department of Human Services who are engaged in the activities listed above; and
(D) Members of the Board of Parole, parole officers, and probation officers who are engaged in the activities listed above.
(3) “Employee” means an individual first employed by the government of the District after September 30, 1987, who would have been covered by the Civil Service Retirement System pursuant to 5 U.S.C. § 8331 had the employee been first employed prior to October 1, 1987.
(4) “Internal Revenue Code” means the Internal Revenue Code of 1986, approved October 22, 1986 (100 Stat. 2085; 26 U.S.C. § 1 et seq.).
(5)(A) “Fiduciary” means, except as otherwise provided in subparagraph (B) of this paragraph, any individual who, with respect to the District retirement benefits program:
(i) Exercises any discretionary authority or discretionary control respecting management of the Section 401(a) Trust established by § 1-626.11 or exercises any discretionary authority or discretionary control respecting management of the Trust’s assets;
(ii) Renders investment advice for a fee or other compensation, direct or indirect, with respect to any monies or other property of the Trust, or has any authority or responsibility to do so; or
(iii) Has any discretionary authority or discretionary responsibility in the administration of the Trust.
(B) If any money or other property of the Trust is invested in securities issued by an investment company registered under An Act to provide for the registration and regulation of investment companies and investment advisers, and for other purposes (15 U.S.C. § 80a-1 et seq.), that investment shall not by itself cause the investment company or the investment company’s adviser or principal underwriter to be deemed a fiduciary or a party in interest as those terms are defined in this chapter. Nothing contained in this subparagraph shall limit the duties imposed on that investment company, investment adviser, or principal underwriter by any other law.
(6) The term “party in interest” means:
(A) Any person having fiduciary responsibilities to the Trust;
(B) Any person providing services to the Trust;
(C) The government of the District of Columbia;
(D) An employee organization recognized as an exclusive representative of any participants in the Trust for purposes of collective bargaining pursuant to § 1-617.10; and
(E) A spouse or domestic partner, ancestor, lineal descendant, or spouse or domestic partner of a lineal descendant of any individual described in subparagraph (A) or (B) of this paragraph.
(7) The term “Trust” shall mean the Section 401(a) Trust established by § 1-626.11.
§ 1–626.05. District retirement benefits program.
The retirement benefits program of the District shall consist of:
(1) A defined benefit plan, as provided in 42 U.S.C. § 301 et seq. (“Social Security Act”);
(2) An employee deferred compensation plan pursuant to § 457 of the Internal Revenue Code [26 U.S.C. § 457] governed by Chapter 36 of Title 47;
(3) A defined contribution plan pursuant to § 401(a) of theInternal Revenue Code [26 U.S.C. § 401], for employer contributions on behalf of an employee pursuant to § 1-626.09(c); and
(4) A defined contribution plan pursuant to section 401(a) of the Internal Revenue Code, for employer contributions on behalf of an employee pursuant to § 1-626.09(e).
§ 1–626.06. Contracting authority.
The Mayor may select 1 or more contractors to provide services as may be part of the defined contribution plan under § 1-626.05(3). Any contract under § 1-626.05(2) and (3) shall be in accordance with the provisions of Chapter 3 of Title 2.
§ 1–626.07. Eligibility.
(a) An employee is eligible to participate in the deferred compensation plan under § 1-626.05(2) upon commencement of employment with the District.
(b) An employee is eligible to participate in the defined contribution plan under § 1-626.05(3) upon the completion of 1 year of employment with the District.
§ 1–626.08. Rules; eligibility.
(a) In order to ensure proper implementation of the District retirement program under § 1-626.05 by October 1, 1987, the Mayor may issue temporary rules regarding the District retirement program that shall not be subject to Council review. These temporary rules shall remain in effect only until the proposed rules have been approved or been deemed approved by the Council in accordance with subsection (b) of this section.
(b) The Mayor shall, pursuant to subchapter I of Chapter 5 of Title 2, issue proposed rules to implement the provisions of this subchapter. The proposed rules shall be submitted to the Council for a 45-day period of review, excluding Saturdays, Sundays, legal holidays, and days of Council recess. If the Council does not approve or disapprove the proposed rules, in whole or in part, by resolution within this 45-day review period, the proposed rules shall be deemed approved.
(c) The proposed rules shall prescribe the time, manner, and conditions under which employees are eligible for coverage. The proposed rules may exclude employees on the basis of the nature and type of employment or conditions of employment such as short-term appointment, seasonal employment, intermittent or part-time employment, and employment of a similar nature, but shall not exclude an employee or group of employees solely on the basis of hazardous nature of employment.
§ 1–626.09. Contributions.
(a) The District and each employee shall contribute to the defined benefit plan under § 1-626.05(1) the social security amounts mandated by federal law.
(b) Each employee may voluntarily contribute to the deferred compensation plan under § 1-626.05(2) in amounts not exceeding the limits set by section 457 of the Internal Revenue Code.
(c) The District shall contribute an amount equal to not less than 5% of the base salary of each employee participating in the defined contribution plan under § 1-626.05(3). The District contribution shall be made not less frequently than quarterly and shall be placed in the Section 401(a) Trust established by § 1-626.11.
(d) In addition to the contribution under subsection (c) of this section, the District shall contribute no less than an additional .5% of a detention officer’s base salary to the Section 401(a) Trust established by § 1-626.11. The contribution shall be made not less frequently than quarterly.
(e) On behalf of each employee of the Council, the Office of the District of Columbia Auditor, and the Office of Advisory Neighborhood Commissions participating in the deferred compensation plan established by § 1-626.05(2), the District shall contribute to the defined contribution plan established by § 1-626.05(4) each pay period an amount equal to that employee's contribution pursuant to subsection (b) of this section for that pay period; provided, that the District's contribution pursuant to this subsection on behalf of an employee in any pay period shall not exceed 3% of the employee's base salary during that pay period.
§ 1–626.10. Vesting.
(a) The employee’s contribution to the deferred compensation plan under § 1-626.05(2) and the earnings on those contributions shall vest immediately.
(b) The District’s contributions to the defined contribution plan under § 1-626.05(3) and the earnings on the District’s contributions for each employee shall vest when the employee dies or becomes entitled to disability benefits under the Social Security Act, or in accordance with the following vesting schedule:
Years of Creditable Service
Vested Percentage
Less than 2
0%
2
20%
3
40%
4
60%
5 or more
100%.
(c) The employee’s interest in the benefits in the defined contribution plan that has not vested in accordance with subsection (b) of this section shall be forfeited after separation from employment. An employee in a defined contribution plan under § 1-626.05(3) who is removed or suspended without pay and later reinstated or restored to duty on the grounds that the removal or suspension was unwarranted or unjustified shall be entitled to resume immediately participation in the defined contribution plan, with appropriate increases made in the Section 401(a) Trust to reflect the District contributions that would have been made had the employee not been removed or suspended. An employee who is otherwise separated from employment and is later reinstated to employment with the District within 1 year of separation shall be entitled to immediately resume participation in the defined contribution plan.
(d)(1) Notwithstanding subsections (b) and (c) of this section, the District’s contributions to the defined contribution plan under § 1-626.05(3) for Devon Brown, Director of the Department of Corrections (“Director Brown”), and the earnings on the District’s contributions shall vest when Director Brown completes 5 years of creditable service with the District, dies, or becomes entitled to disability benefits under the Social Security Act.
(2) Director Brown’s interest in the benefits in the defined contribution plan shall not be forfeited upon separation from employment if separation occurs prior to the completion of 5 years of creditable service as calculated pursuant to this subsection.
(3) For the purposes of this subsection, creditable service shall be calculated as either consecutive service or a combination of different periods of service as a District government employee.
(e) The District's contributions to the defined contribution plan under § 1-626.05(4) and the earnings on the District's contributions for each employee shall vest immediately.
§ 1–626.11. Establishment and administration of Section 401(a) Trust.
(a) There shall be established an irrevocable trust called the Section 401(a) Trust, that shall be managed so as to be exempt from income tax under § 501(a) of the Internal Revenue Code. The funds contributed by the District under the defined contribution plan of § 1-626.05(3) shall be placed in the Section 401(a) Trust. The assets of the Section 401(a) Trust shall be administered by the Mayor.
(b) The cost of any contract for provisions of services as may be part of the defined contribution plan under § 1-626.05(3) shall be paid solely from the assets of the Section 401(a) Trust or from a fund or funds established to administer the defined contribution plan.
(c) Repealed.
§ 1–626.12. Payment of benefits.
The payment of benefits under the retirement programs under § 1-626.05(2) and (3) shall be in accordance with the applicable provisions of §§ 401(a) and 457 of the Internal Revenue Code [26 U.S.C. §§ 401(a) and 457 ].
§ 1–626.13. Duties and liabilities of Trustee; exemptions; violations and sanctions.
(a) A fiduciary shall discharge his duties with respect to the Trust solely in the interest of the participants and beneficiaries and:
(1) For the exclusive purpose of providing benefits to participants and beneficiaries;
(2) With the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent individual acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims;
(3) By diversifying the investments of the Trust so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and
(4) In accordance with the provisions of law, documents, and instruments governing the retirement program to the extent that the documents and instruments are consistent with this chapter.
(b) In addition to any liability which he may have under any other provision of this section, a fiduciary with respect to the Trust shall be liable for a breach of fiduciary responsibility of another fiduciary with respect to the Trust:
(1) If he knowingly participates in, or knowingly undertakes to conceal, an act or omission of the other fiduciary, knowing the act or omission is a breach of fiduciary responsibility;
(2) If, by his failure to discharge the responsibilities which give rise to his status as a fiduciary, he has enabled the other fiduciary to commit a breach of fiduciary responsibility; or
(3) If he has knowledge of a breach of fiduciary responsibility by the other fiduciary, unless he makes reasonable efforts under the circumstances to remedy the breach.
(c) Except as provided in subsections (f), (g), and (h) of this section, a fiduciary with respect to the Trust shall not cause the Trust to engage in a transaction, if he knows or should know that the transaction constitutes a direct or indirect:
(1) Sale or exchange, or leasing, of any property between the Trust and a party in interest;
(2) Lending of money or other extension of credit between the Trust and a party in interest;
(3) Furnishing of goods, services, or facilities between the Trust and a party in interest;
(4) Transfer to, or use by or for the benefit of, a party in interest, of any assets of the Trust.
(d) Except as provided in subsection (h) of this section, a fiduciary with respect to the Trust shall not:
(1) Deal with the assets of the Trust in his own interest or for his own account;
(2) In his individual or in any other capacity act in any transaction involving the Trust on behalf of a party (or represent a party) whose interests are adverse to the interests of the Trust or the interests of its participants or beneficiaries; or
(3) Receive any consideration for his own personal account from any party dealing with the Trust in connection with a transaction involving the assets of the Trust.
(e) A transfer of real or personal property by a party in interest shall be treated as a sale or exchange if the property is subject to a mortgage or similar lien which the Trust assumes or if it is subject to a mortgage or similar lien which a party in interest placed on the property within the 10-year period ending on the date of the transfer.
(f) The prohibitions provided in subsection (c) of this section shall not apply to any of the following transactions:
(1) Contracting or making reasonable arrangements with a party in interest for office space, or legal, accounting, or other services necessary for the establishment or operation of the Trust, if no more than reasonable compensation is paid for it;
(2) The investment of all or part of the Trust’s assets in deposits which bear a reasonable interest rate in a bank or similar financial institution supervised by the United States or a state (including the District), if such bank or other institution is a fiduciary of the Trust and if the investment is expressly authorized by the Mayor or by a fiduciary (other than the bank or institution or an affiliate) who is expressly empowered by the Mayor to make such investment;
(3) The providing of any ancillary service by a bank or similar financial institution supervised by the United States or any state (including the District) if the bank or other institution is a fiduciary of the Trust and if:
(A) The bank or similar financial institution has adopted adequate internal safeguards which assure that the providing of the ancillary service is consistent with sound banking and financial practice, as determined by federal or state supervisory authority; and
(B) The extent to which the ancillary service is provided is subject to specific guidelines issued by the bank or similar financial institution (as determined by the Mayor after consultation with federal and state supervisory authority), and adherence to the guidelines would reasonably preclude the bank or similar financial institution from providing the ancillary service (i) in an excessive and unreasonable manner, and (ii) in a manner that would be inconsistent with the best interests of participants and beneficiaries of the retirement program. The ancillary services shall not be provided for more than reasonable compensation;
(4) The exercise of a privilege to convert securities, but only if the Trust receives no less than adequate consideration pursuant to the conversion; or
(5) Any transaction between the Trust and a common or collective trust fund or pooled investment fund maintained by a party in interest which is a bank or trust company supervised by a state (including the District) or a federal agency, or a pooled investment fund of an insurance company qualified to do business in a state, if:
(A) The transaction is a sale or purchase of an interest in the Trust;
(B) The bank, trust company, or insurance company receives not more than reasonable compensation; and
(C) The transaction is expressly permitted by the Mayor, or by a fiduciary (other than the bank, trust company, insurance company, or any affiliate) who has authority to manage and control the assets of the Trust.
(g) Nothing in subsection (c) of this section shall be construed to prohibit any fiduciary from:
(1) Receiving any benefit to which he may be entitled as a participant or beneficiary in the retirement program, so long as the benefit is computed and paid on a basis which is consistent with the terms of the retirement program as applied to all other participants and beneficiaries;
(2) Receiving any reasonable compensation for services rendered, or for the reimbursement of expenses properly and actually incurred, in the performance of his duties with respect to the Trust; or
(3) Serving as a fiduciary in addition to being an officer, employee, agent, or other representative of a party in interest.
(h) The Mayor may submit to the Council for its approval by resolution proposed exemptions from all or part of the restrictions imposed by subsections (c) and (d) of this section. The Mayor shall only request exemptions that have been granted by the United States Secretary of Labor. Any proposed exemption submitted to the Council shall be accompanied by written findings by the Mayor that the proposed exemption is administratively feasible, in the best interests of the Trust and its participants and beneficiaries, and protective of the rights of participants and beneficiaries of the Trust.
(i)(1) Any person who is a fiduciary with respect to the Trust who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this section shall be personally liable to make good to the Trust any losses to the Trust resulting from each breach and to restore to the Trust any profits of the fiduciary which have been made through the use of assets of the Trust by the fiduciary and shall be subject to whatever other equitable or remedial relief the court may deem appropriate, including removal of the fiduciary.
(2) No fiduciary shall be liable with respect to a breach of fiduciary duty under this section if the breach was committed before he became a fiduciary or after he ceased to be a fiduciary.
(3) No action may be commenced under this chapter with respect to a fiduciary’s breach of any responsibility, duty, or obligation under this section later than 3 years from the date the plaintiff knew or should have known of the alleged breach, except that in the case of fraud or concealment, the action may be commenced not later than 6 years after the date of the plaintiff ’s discovery of the alleged breach or violation.
§ 1–626.14. Civil actions.
A civil action may be brought by a participant or a beneficiary of the Trust, or by the District, to enjoin any act or practice that violates any provision of this chapter or the terms of the retirement program, and for other appropriate legal and equitable relief. In any action under this chapter, the court in its discretion may allow the prevailing party, other than the District, a reasonable attorney fee and costs of action.
