76602751.1-124.12Virginia Decodedhttps://vacode.org2016Pensions, Benefits, And RetirementVirginia Retirement SystemGeneral ProvisionsProcedure when employer required to withdraw funds1999, c. 284; 2000, c. 344; 2003, c. 267.http://law.lis.virginia.gov/vacode/51.1-124.12/51.1-124.3Definitions/51.1-124.3/51.1-147Members' contribution account/51.1-147/51.1-148Retirement allowance account/51.1-148//51.1-124.12/51.1/1/1.1/51.1-124.12As used in this section, unless the context clearly shows otherwise, the following definitions shall apply.sectionAA1Any employer participating in the Retirement System which ceases to be an agency or political subdivision of the Commonwealth or which permanently ceases operations shall withdraw from the Retirement System as of the termination date. All benefit accrual for members employed by a withdrawing employer shall automatically cease as of the termination date.sectionBB1If (i) no qualified retirement plan, as that term is defined in § 401(a) of the Internal Revenue Code, is established by the withdrawing employer, to which the assets and liabilities relating to members employed by such employer are transferred, as described in subsection E, or (ii) if no replacement employer has come forth within 90 days of the termination date, or within such other reasonable time as may be agreed to by the Board, benefits shall be determined as follows:sectionDD1 Each member or beneficiary whose coverage under the Retirement System is affected by the withdrawal of the employer shall become fully vested, as of the termination date, in his service retirement allowance attributable to creditable service with the withdrawing employer regardless of employment status or length of service with the withdrawing employer.sectionD1D12 Each member, retired member or beneficiary shall be entitled to a distribution of the greater of (i) the balance in his member contribution account established pursuant to § 51.1-147 or (ii) the present value of his service retirement allowance attributable to creditable service and compensation with the withdrawing employer to which such member, retired member or beneficiary would have been entitled immediately prior to the termination event (plus additional amounts, if any, which the withdrawing employer may direct pursuant to subdivision 4 of this subsection). Such members, retired members, and beneficiaries may elect to receive such benefit either in the form of (i) a lump sum payment, subject to the eligible rollover distribution rules and withholding requirements of the Internal Revenue Code or (ii) an annuity equal to the service retirement benefit at normal retirement. The annuity shall be purchased from a private insurance company or companies as selected by the Board. The Board shall establish reasonable notice and election periods for the distribution made pursuant to this subsection. The distribution provided for in this subdivision shall be in the form of a lump sum, subject to applicable withholding requirements, upon the failure of a member, retired member or beneficiary to make an election.sectionD2D22 Any assets remaining in the retirement account established for the withdrawing employer pursuant to § 51.1-148 after full satisfaction of liabilities to members, retired members and beneficiaries under this section shall be distributed on a pro rata basis (based on contributed funds within the immediately preceding 12 months) to any employers within the meaning of § 51.1-124.3 who, within the 12 months immediately preceding the termination date of the withdrawing employer, directly or indirectly, by appointment of the governing body of the withdrawing employer, controlled the activities of the withdrawing employer and contributed funds or property to the withdrawing employer; provided, however, that if there is no such employer, any remaining assets shall be used to offset expenses incurred by the Retirement System in any manner permitted by the Internal Revenue Code.sectionD4D42If there is no replacement employer, creditable service attributable to employment with a withdrawing employer shall be taken into consideration for purposes of determining whether each employee of the withdrawing employer meets the five or more year requirement to be entitled to a service allowance at normal retirement from the employment of an employer other than the withdrawing employer. If there is no replacement employer, neither creditable service nor creditable compensation attributable to employment with a withdrawing employer shall be taken into account for any other purpose under the Retirement System.sectionGG1Notwithstanding any other provisions of this section or of any other law, if the withdrawing employer is a city which reverts to town status or otherwise loses its status as a city or is a town which loses its status as a town, then the members, retired members, and beneficiaries of the former city or town shall maintain all rights and privileges which they possess at the time of such change in status to current or future benefits from the Retirement System.sectionHH1