HB-6640, As Passed House, December 3, 2008
November 12, 2008, Introduced by Rep. Robert Jones and referred to the Committee on Senior Health, Security, and Retirement.
A bill to amend 1957 PA 261, entitled
"Michigan legislative retirement system act,"
by amending sections 8a and 59a (MCL 38.1008a and 38.1059a),
section 8a as amended by 2002 PA 97 and section 59a as amended by
2006 PA 614.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 8a. (1) Beginning January 1, 2002, except as otherwise
provided
in this subsection, "eligible retirement plan" means an 1
or more of the following:
(a) An individual retirement account described in section
408(a)
of the internal revenue code, an 26 USC 408.
(b) An individual retirement annuity described in section
408(b)
of the internal revenue code, an 26 USC 408.
(c) An annuity plan described in section 403(a) of the
internal
revenue code, or a 26 USC
403.
(d) A qualified trust described in section 401(a) of the
internal
revenue code, an 26 USC
401.
(e) An annuity contract described in section 403(b) of the
internal
revenue code, or an 26 USC
403.
(f) An eligible plan under section 457(b) of the internal
revenue code, 26 USC 457, that is maintained by a state, political
subdivision of a state, or an agency or instrumentality of a state
or political subdivision of a state and that agrees to separately
account for amounts transferred into the eligible plan under
section 457(b) of the internal revenue code, 26 USC 457, from this
retirement system, that accepts the distributee's eligible rollover
distribution.
However, in the case of an eligible rollover
distribution
to a surviving spouse on or before December 31, 2001,
an
eligible retirement plan means an individual retirement account
or
an individual retirement annuity described above.
(g) Beginning January 1, 2008, a Roth individual retirement
account as described in section 408A of the internal revenue code,
26 USC 408A, subject to the rules that apply to rollovers from a
traditional individual retirement account to a Roth individual
retirement account.
(2)
Beginning January 1, 2002 2007, "eligible rollover
distribution" means a distribution of all or any portion of the
balance to the credit of the distributee. Eligible rollover
distribution does not include any of the following:
(a) A distribution made for the life or life expectancy of the
distributee or the joint lives or joint life expectancies of the
distributee and the distributee's designated beneficiary.
(b) A distribution for a specified period of 10 years or more.
(c) A distribution to the extent that the distribution is
required under section 401(a)(9) of the internal revenue code.
(d)
The portion of any distribution that is not includable in
federal
gross income, determined without regard to the exclusion
for
net unrealized appreciation with respect to employer
securities,
except to the extent that the portion of the
distribution
that is not includable in federal gross income is paid
to
either of the following:
(i) An individual retirement account or annuity
described in
section
408(a) or (b) of the internal revenue code.
(ii) A qualified defined contribution plan as described
in
section
401(a) or 403(a) of the internal revenue code that agrees
to
separately account for amounts so transferred, including
separately
accounting for the portion of the distribution which is
includable
in gross income and the portion of such distribution
which
is not so includable.
(d) The portion of any distribution that is not includable in
federal gross income, except to the extent such portion of the
distribution is paid to either of the following:
(i) An individual retirement account or annuity described in
section 408(a) or 408(b) of the internal revenue code, 26 USC 408.
(ii) A qualified plan described in section 401(a) of the
internal revenue code, 26 USC 401, or an annuity contract described
in section 403(b) of the internal revenue code, 26 USC 403, and the
plan providers agree to separately account for the amounts paid,
including any portion of the distribution that is includable in
federal gross income, and the portion of the distribution which is
not so includable.
(3) "Internal revenue code" means the United States internal
revenue code of 1986.
Sec. 59a. (1) This section is enacted pursuant to section
401(a)
of the internal revenue code, 26 USC 401(a) 401,
that
imposes certain administrative requirements and benefit limitations
for qualified governmental plans. This state intends that the
retirement system be a qualified pension plan created in trust
under section 401 of the internal revenue code, 26 USC 401, and
that the trust be an exempt organization under section 501 of the
internal revenue code, 26 USC 501. The board of trustees shall
administer the retirement system to fulfill this intent.
(2) Notwithstanding any other provision of this act, the
retirement system shall be administered in compliance with section
415 of the internal revenue code, 26 USC 415, and regulations under
that section that are applicable to governmental plans and
beginning January 1, 2010, applicable portions of the final
regulations issued by the internal revenue service on April 5,
2007. Employer-financed benefits provided by the retirement system
under this act shall not exceed the applicable limitations of
section 415 of the internal revenue code, 26 USC 415, as adjusted
by the commissioner of internal revenue under section 415(d) of the
internal
revenue code, 26 USC 415(d) 415, to reflect cost of living
increases, and the retirement system shall adjust the benefits,
including benefits payable to retirants and retirement allowance
survivors, subject to the limitation each calendar year to conform
with the adjusted limitation. For purposes of section 415(b) of the
internal
revenue code, 26 USC 415(b) 415, the applicable limitation
shall apply to aggregated benefits received from all qualified
pension plans for which the office of retirement services
coordinates administration of that limitation. If there is a
conflict between this section and another section of this act, this
section prevails.
(3) The assets of the retirement system shall be held in trust
and invested for the sole purpose of meeting the legitimate
obligations of the retirement system and shall not be used for any
other purpose. The assets shall not be used for or diverted to a
purpose other than for the exclusive benefit of the members, vested
former members, retirants, and retirement allowance beneficiaries
before satisfaction of all retirement system liabilities.
(4) The retirement system shall return post-tax member
contributions made by a member and received by the retirement
system to a member upon retirement, pursuant to internal revenue
service regulations and approved internal revenue service exclusion
ratio tables.
(5) The required beginning date for retirement allowances and
other distributions shall not be later than April 1 of the calendar
year following the calendar year in which the employee attains age
70-1/2 or April 1 of the calendar year following the calendar year
in which the employee retires. The required minimum distribution
requirements imposed by section 401(a)(9) of the internal revenue
code, 26 USC 401, shall apply to this act and be administered in
accordance with a reasonable and good faith interpretation of the
required minimum distribution requirements for all years to which
the required minimum distribution requirements apply to this act.
(6) If the retirement system is terminated, the interest of
the members, deferred vested members, retirants, and retirement
allowance beneficiaries in the retirement system is nonforfeitable
to the extent funded as described in section 411(d)(3) of the
internal revenue code, 26 USC 411(d)(3), and related internal
revenue service regulations applicable to governmental plans.
(7) Notwithstanding any other provision of this act to the
contrary that would limit a distributee's election under this act,
a distributee may elect, at the time and in the manner prescribed
by the board of trustees, to have any portion of an eligible
rollover distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover. This subsection
applies to distributions made on or after January 1, 1993.
(8) For purposes of determining actuarial equivalent
retirement allowances under this act, the actuarially assumed
interest rate shall be 7% with utilization of the 1971 group
annuity and mortality table.
(9) Notwithstanding any other provision of this act, the
compensation of a member of the retirement system shall be taken
into account for any year under the retirement system only to the
extent that it does not exceed the compensation limit established
in section 401(a)(17) of the internal revenue code, 26 USC
401(a)(17), as adjusted by the commissioner of internal revenue.
This subsection applies to any person who first becomes a member of
the retirement system on or after October 1, 1996.
(10) Notwithstanding any other provision of this act,
contributions, benefits, and service credit with respect to
qualified military service will be provided under the retirement
system in accordance with section 414(u) of the internal revenue
code, 26 USC 414(u). This subsection applies to all qualified
military service on or after December 12, 1994. Beginning January
1, 2007, in accordance with section 401(a)(37) of the internal
revenue code, 26 USC 401, if a member dies while performing
qualified military service, for purposes of determining any death
benefits payable under this act, the member will be treated as
having resumed and then terminated employment on account of death.