HB521 Alabama 2011 Session

Summary

Primary Sponsor

Allen TreadawayRepresentative

Republican

Session

Regular Session 2011

Title

Birmingham, firefighters and police officers, pension system, supplemental, investments further provided for to comply with the Internal Revenue Code, Act 929, 1951 Reg. Sess.; Act 2006-339, 2006 Reg. Sess. am'd.

Summary

HB521 updates Birmingham’s firefighters’ and police officers’ retirement system to comply with federal tax rules, broadens investment powers, and adjusts how contributions, benefits, and distributions are calculated and managed.

What This Bill Does

It brings the Birmingham Retirement and Relief System into alignment with IRS code requirements and related rules. It expands the Board’s investment authority to include alternative investments and relaxes several restrictions on fixed income, international equity, and bond ratings. It also reforms how benefits are funded, calculated, and paid out (including contributions, minimum distributions, rollovers, and military/veteran protections) and updates actuarial and DROP-related provisions.

Who It Affects

• Participants and beneficiaries (police officers, firefighters, and retirees) whose contributions, benefit calculations (final average salary), distributions, rollover options, and survivor protections may change.
• The City of Birmingham (employer) which must fund the system at specified levels and follow the updated funding and governance rules.

Key Provisions

• expands investment powers to include alternative investments and removes restrictions: no longer required to keep at least 50% of fixed income in U.S. government bonds, international equity need not be ADRs, and bonds need not be rated investment grade by a rating agency
• final average salary calculation updated: uses the highest three years within the last ten, with overtime excluded and longevity included; includable compensation caps are set (initially $150,000, later $160,000) and adjusted for cost-of-living increases under Code sections 401(a)(17) and 415(c)
• participant and city funding requirement: participants must contribute 6% to 7% of actual monthly salary or the plan may reduce future accrued benefits to meet funding obligations determined by GASB Statements 25 and 27
• applies Code 401(a)(9)/401(a)(31) rules on required minimum distributions and direct rollovers: minimum distributions begin by April 1 after reaching age 70½ or retirement, and lump-sum distributions may be rolled over directly to eligible retirement plans
• minimum and maximum retirement benefits set under 415 limits: minimum $400 per month; maximum 75% of final average salary; benefits must comply with 415(b) limits and exclude post-severance compensation
• forfeitures may be used solely to reduce future costs of the system, per Code 401(a) rules
• DROP and lump-sum conversions: requires actuarial equivalence rules and minimum present value considerations per PFEA and 417(e)(3)
• HEART Act provisions: survivors of service members who die or become disabled in qualified military service receive additional plan benefits as if the member resumed and then terminated employment
• military service credits and Koreаn veteran provisions: city may pay into the fund double the participant’s pre-leaving contributions for reemployment periods, with offsets for disability and limitations on return of contributions
• actuarial assumptions updated: uses 417(e) rate methodology and related mortality and interest-rate assumptions, including lookback rules for funding
• investment governance and portfolio limits: board may invest in stocks, bonds, mortgages, mutual funds, real estate investment trusts, international equity (ADRs), fixed income, index funds, derivatives, and alternative investments; no more than 65% of fund value in common/preferred stock, at least 35% in fixed income, at least 50% of fixed income in U.S. government or government-guaranteed securities, up to 25% of fixed income in non-guaranteed agencies, and limits on single non-guaranteed agency holdings to 10% of fixed income

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Jefferson County