May 25, 2007, Introduced by Senator KUIPERS and referred to the Committee on Education.
A bill to amend 1980 PA 300, entitled
"The public school employees retirement act of 1979,"
by amending sections 43a, 43b, 69, 69c, 69f, 75, 91, and 108 (MCL
38.1343a, 38.1343b, 38.1369, 38.1369c, 38.1369f, 38.1375,
38.1391, and 38.1408), sections 43a and 108 as amended by 2002 PA
94, sections 43b, 69, 69c, and 75 as amended and section 69f as
added by 1989 PA 194, and section 91 as amended by 2004 PA 117.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 43a. (1) The contributions of a member who contributes
2 to the member investment plan shall be deducted by the employer
3 and remitted as employer contributions to the retirement system
4 pursuant to section 42. A member who contributes to the member
5 investment plan is entitled to the benefits provided in sections
6 43b and 43c.
1 (2) Until December 31, 1989, a member who first became a
2 member on or before December 31, 1989, and who elected or elects
3 on or before December 31, 1989 to contribute to the member
4 investment plan shall contribute 4% of the member's compensation
5 to the member investment plan and beginning January 1, 1990 shall
6 contribute 3.9% of the member's compensation to the member
7 investment plan.
8 (3) On or before January 1, 1993, a member who first became
9 a member on or before December 31, 1989, except as otherwise
10 provided in subsection (4), and who did not elect to make
11 contributions to the member investment plan, may irrevocably
12 elect to make the contributions described in subsection (2). In
13 addition to making the contributions required under subsection
14 (2), a member who elects to make contributions to the member
15 investment plan under this subsection shall make a contribution
16 of 4% of the compensation received on or after January 1, 1987 to
17 December 31, 1989, and 3.9% of the compensation received on or
18 after January 1, 1990 to the date of the election, plus an amount
19 equal to the compound interest that would have accumulated on
20 those contributions as described in section 33, plus an amount
21 equal to the net actuarial cost of the additional benefits
22 attributable to service credited before January 1, 1987, as
23 determined by the retirement board. The method and timing of
24 payment by a member under this subsection shall be determined by
25 the retirement board. The contributions made under this
26 subsection shall be deposited into the reserve for employee
27 contributions.
1 (4) Except as otherwise provided in subsection (8) (9), a
2 member who first became a member on or before December 31, 1986
3 but did not perform membership service between December 31, 1986
4 and January 1, 1990, and who returns to membership service on or
5 after January 1, 1990 and before July 1, 2008 shall make the
6 contributions described in subsection (7).
7 (5) Except as otherwise provided in subsection (8) (9), a
8 member who first became a member on or after January 1, 1990 and
9 before July 1, 2008 shall make the contributions described in
10 subsection (7).
11 (6) A member who first became a member on or after January
12 1, 1987 but before January 1, 1990 shall have 30 days from his or
13 her first date of employment to irrevocably elect to make the
14 contributions described in subsection (2).
15 (7) Except as otherwise provided in subsection (8) (9), a
16 member who first became a member on or after January 1, 1990 and
17 before July 1, 2008 shall contribute the following amounts to the
18 member investment plan:
19 Member's annual school fiscal Amount payable to the member
20 year earned compensation investment plan
21 Not over $5,000.00 3% of member's compensation
22 Over $5,000.00 but not over $150.00, plus 3.6% of the
23 $15,000.00 excess over $5,000.00
24 Over $15,000.00 $510.00, plus 4.3% of the
25 excess over $15,000.00
26 (8) Except as otherwise provided in subsection (9), a member
27 who first became a member on or after July 1, 2008 shall
1 contribute the following amounts to the member investment plan:
2 Member's annual school Amount payable to the member
3 fiscal year earned compensation investment plan
4 Not over $5,000.00 3% of member's compensation
5 Over $5,000.00 but not over $150.00, plus 3.6% of excess
6 $15,000.00 over $5,000.00
7 Over $15,000.00 $510.00, plus 6.4% of the
8 excess over $15,000.00
9 (9) (8) This
section and sections 43b and 43c shall not
10 apply until the department receives notification from the United
11 States internal revenue service that contributions under this
12 section picked up by the employer pursuant to section 42 shall
13 not be included as gross income of the member until they are
14 distributed or made available to the member, retirant, retirement
15 allowance beneficiary, or refund beneficiary.
16 Sec. 43b. A member who contributes to the member investment
17 plan shall have the eligibility requirements of section 81 except
18 as follows:
19 (a) The age 55 requirement of section 81(1)(a) shall not
20 apply.
21 (b) The For
members who became members on or before June 30,
22 2008, the 10 years of credited service requirement of section
23 81(1)(b) shall be 5 years if the member is working as a public
24 school employee and the member received credited service in each
25 of the 5 school fiscal years immediately preceding the retirement
26 allowance effective date.
1 Sec. 69. (1) As a condition for granting membership or prior
2 service credit under this act for out of system public education
3 service, a member shall pay to the retirement system an amount
4 equal to the amount the member would have contributed pursuant to
5 the schedule governing member contributions in effect at the time
6 of that service had the service been performed under this act or
7 former Act No. 136 of the Public Acts of 1945 1945 PA 136,
8 together with regular interest from the end of the school fiscal
9 year in which service was performed to the semiannual anniversary
10 of the date following the payment, and shall have 5 years of
11 reporting unit service credit under this act or former Act No.
12 136 of the Public Acts of 1945 1945 PA 136, following the
out of
13 system public education service.
14 (2) A member shall not be entitled to a retirement allowance
15 based on out of system public education service that was
16 performed after July 1, 1974, until the member pays into the
17 retirement system for that service an amount equal to 5% of the
18 member's full-time or equated full-time compensation earned in
19 the school fiscal year before the school fiscal year in which the
20 application to purchase and payment for the service credit is
21 made, multiplied by the years of that service the member elects
22 to purchase and unless, for a member who becomes a member before
23 July 1, 2008, that service is followed by 5 years of reporting
24 unit service credit under this act. A member who becomes a member
25 on or after July 1, 2008 and who purchases service credit under
26 this section shall follow the purchase of service credit by 10
27 years of reporting unit service under this act.
1 (3) For the purposes of computing payment under this
2 section, the compensation amount used shall not be less than the
3 highest school fiscal year compensation previously earned by the
4 member. If the compensation amount used for computing payment
5 under this section exceeds the member's final average
6 compensation determined at the time of retirement, the payment
7 required under this section shall be recomputed using the
8 member's final average compensation and a refund shall be made
9 based upon the recomputation. Credit provided by this section
10 shall not be used in satisfying the minimum of 10 years of
11 service credit required under this act for a retirement
12 allowance. A person who had employment with a community mental
13 health service program as described in section 6(2) shall not be
14 subject to the minimum of 10 years of service credit, if the
15 other requirements of this section are met.
16 (4) A member shall not receive more than 15 years of out of
17 system public education service. A member shall not receive more
18 out of system public education service than service performed
19 under this act or former Act No. 136 of the Public Acts of 1945
20 1945 PA 136, unless, before July 1, 1974, the member applied for
21 out of system public education service credit based upon payment
22 of contributions for that service credit as required under former
23 Act No. 136 of the Public Acts of 1945 1945 PA 136. The total out
24 of system public education service credited shall be used to
25 compute the member's retirement allowance if the minimum service
26 requirements performed under this act or former Act No. 136 of
27 the Public Acts of 1945 1945
PA 136 are met.
1 (5) If a member who made payment for out of system public
2 education service dies and a retirement allowance beneficiary has
3 not been designated, or if the member withdraws from service
4 before his or her retirement becomes effective, the payment made
5 by the member shall be refunded to the member or to the member's
6 refund beneficiary upon request.
7 (6) Out of system public education service shall not be
8 creditable toward retirement under this act if the member is or
9 will be receiving a retirement allowance for the same service
10 from another retirement system.
11 (7) Out of system public education service shall not be
12 creditable under this act unless similar service performed in a
13 reporting unit would be creditable.
14 (8) Before January 31, 1991, a member may elect to purchase
15 service credit as an elementary or secondary teacher at a United
16 States armed forces military base in the United States or a
17 foreign country upon payment to the retirement board of the
18 actuarial cost.
19 Sec. 69c. (1) A member may elect to purchase service credit
20 for service performed as an employee in a nonpublic elementary or
21 secondary educational institution or a nonpublic 2- or 4-year
22 institution of higher education in this state, in other states of
23 the United States, or in the territorial possessions of the
24 United States upon request and presentation of documentation of
25 the employment rendered that is verifiable from official
26 employment or payroll records or other acceptable documentation
27 as determined by the retirement board, and upon payment to the
1 retirement system of the actuarial cost.
2 (2) Before January 31, 1991, a member may elect to purchase
3 service credit for service performed as an employee in a foreign
4 country at a school for United States personnel or dependents of
5 the United States military or United States department of state
6 personnel; service performed as a full-time teacher with the job
7 corps created pursuant to section 422 of part B of title IV of
8 the job training partnership act, Public Law 97-300, 29 U.S.C.
9 USC 1692; service performed as a teacher in a trust territory or
10 former trust territory of the United States; or service performed
11 as a teacher on an Indian reservation in this country; upon
12 request and presentation of documentation of the employment
13 rendered that is verifiable from official employment or payroll
14 records or other acceptable documentation as determined by the
15 retirement board, and upon payment to the retirement system of
16 the actuarial cost.
17 (3) Service For
a member who becomes a member before July 1,
18 2008, service shall not be credited under this section unless the
19 service being purchased is followed by at least 5 years of
20 reporting unit service credit under this act or former Act No.
21 136 of the Public Acts of 1945 1945 PA 136. For a member who
22 becomes a member on or after July 1, 2008, service shall not be
23 credited under this section unless the service being purchased is
24 followed by at least 10 years of reporting unit service under
25 this act. Service purchased under this section shall not be used
26 to satisfy the minimum of 10 years of service credit required to
27 receive a retirement allowance under this act. The total service
1 credited under subsections (1) and (2) shall not exceed 5 years.
2 (4) If a member who made payment for service under this
3 section dies and a retirement allowance beneficiary has not been
4 designated, or if the member withdraws from service before his or
5 her retirement becomes effective, the payment made by the member
6 shall be refunded to the member or to the member's refund
7 beneficiary upon request.
8 (5) Service shall not be credited under this section if the
9 member is or will be receiving a pension or annuity for the same
10 service from another retirement system.
11 (6) A person who became a retirant with a retirement
12 allowance effective date on or after January 1, 1988 and on or
13 before December 21, 1988 shall be entitled to purchase service
14 credit for service performed as an employee in a nonpublic
15 elementary or secondary educational institution or a nonpublic 2-
16 or 4-year institution of higher education as provided by this
17 section. Service credit purchased pursuant to this subsection
18 shall be purchased before July 1, 1989, or the expiration of 6
19 months after December 21, 1988, whichever is later. The monthly
20 retirement allowance of a retirant entitled to purchase service
21 credit under this subsection shall be recomputed based upon the
22 additional service credit. The recomputed monthly amount shall be
23 payable beginning on the first day of the month following the
24 month in which payment is received by the retirement system.
25 (7) As used in this section:
26 (a) "Nonpublic elementary or secondary educational
27 institution" means an institution that offers or provides an
1 organized course of academic study primarily oriented toward the
2 awarding of high school diplomas. Nonpublic elementary or
3 secondary educational institution does not include a proprietary
4 school.
5 (b) "Nonpublic 2- or 4-year institution of higher education"
6 means an institution that offers an organized course of academic
7 study primarily oriented toward the awarding of associate,
8 baccalaureate, master's, doctoral, or other academic degrees.
9 Nonpublic 2- or 4-year institution of higher education does not
10 include a proprietary school.
11 (c) "Proprietary school" means a school that uses a certain
12 plan or method to teach a trade, occupation, or vocation for a
13 consideration, reward, or promise. Proprietary school includes,
14 but is not limited to, a private business, trade, or home study
15 school.
16 Sec. 69f. (1) A member may elect to purchase not more than 5
17 years of service credit less the number of years of service
18 credit purchased under sections 6(2)(c), (d), (e), and (f),
19 64(3), (4), and (5), 69a, 69b, 69c(2), 69d, 69e, 74a, 74b, 77,
20 and 78, upon request and payment to the retirement system of the
21 actuarial cost.
22 (2) Service credit purchased under this section may not be
23 used to satisfy the minimum of 10 years of service credit
24 required to receive a retirement allowance under this act.
25 (3) Service credit purchased under this section shall not be
26 used to satisfy the service credit requirement set forth in
27 section 81(1)(a) for a retirement allowance paid prior to age 46
1 as provided by section 43b(a).
2 (4) If a member who made payment for service under this
3 section dies and a retirement allowance is not payable, or if the
4 member withdraws from service and a retirement allowance is not
5 payable, the payment made by the member shall be refunded to the
6 member or to the member's refund beneficiary upon request.
7 (5) Service purchased under this section shall not be
8 credited to a member who becomes a member on or after July 1,
9 2008 unless the member follows the purchase of service credit
10 under this section with 10 years of reporting unit service under
11 this act.
12 Sec. 75. (1) A member who left or leaves service as a public
13 school employee for purposes of maternity or paternity or child
14 rearing, and returns to service as a public school employee, or a
15 person performing out of system public education service who
16 leaves that service for purposes of maternity, paternity, or
17 child rearing and who subsequently becomes a member of this
18 retirement system, without other intervening employment of more
19 than 20 hours per week for each week for which service credit is
20 claimed, may purchase service credit for the time period or
21 periods during which the person was separated from service as a
22 public school employee or during which the person was separated
23 from performing out of system public education service because of
24 maternity or paternity or child rearing, upon request and payment
25 to the retirement system of the actuarial cost. The total service
26 credited under this section shall not exceed 5 years. A member
27 requesting purchase of service credit under this section shall
1 certify to the board the purpose for which the member took leave
2 and was separated from service as a public school employee.
3 (2) Service credit purchased under this section may shall
4 not be used to satisfy the minimum of 10 years of service credit
5 required to receive a retirement allowance under this act.
6 (3) If a member who made payment under this section dies and
7 a retirement allowance beneficiary has not been designated, or if
8 the member leaves reporting unit service before his or her
9 retirement becomes effective, the payment made by the member
10 shall be refunded upon request to the member or to the member's
11 refund beneficiary.
12 (4) A member who reduces hours of employment with a
13 reporting unit for purposes of maternity, paternity, or child
14 rearing or a person who reduces hours of out of system public
15 education service for purposes of maternity, paternity, or child
16 rearing and who subsequently becomes a member of this retirement
17 system may purchase service credit for those hours by which
18 employment was reduced if all other requirements of this section
19 are met.
20 (5) Service purchased under this section shall not be
21 credited to a member who becomes a member on or after July 1,
22 2008 unless the member has at least 10 years of reporting unit
23 service under this act.
24 Sec. 91. (1) The retirement system shall pay the entire
25 monthly premium or membership or subscription fee for hospital,
26 medical-surgical, and sick care benefits for the benefit of a
27 retirant or retirement allowance beneficiary who elects coverage
1 in the plan authorized by the retirement board and the
2 department. This subsection does not apply to a retirant who
3 first becomes a member after June 30, 2008.
4 (2) The retirement system may pay up to the maximum of the
5 amount payable under subsection (1) toward the monthly premium
6 for hospital, medical-surgical, and sick care benefits for the
7 benefit of a retirant or retirement allowance beneficiary
8 enrolled in a group health insurance or prepaid service plan not
9 authorized by the retirement board and the department, if
10 enrolled before June 1, 1975, for whom the retirement system on
11 July 18, 1983 was making a payment towards his or her monthly
12 premium.
13 (3) A retirant or retirement allowance beneficiary receiving
14 hospital, medical-surgical, and sick care benefits coverage under
15 subsection (1) or (2), until eligible for medicare, shall have an
16 amount equal to the cost chargeable to a medicare recipient for
17 part B of medicare deducted from his or her retirement allowance.
18 (4) The retirement system shall pay 90% of the monthly
19 premium or membership or subscription fee for dental, vision, and
20 hearing benefits for the benefit of a retirant or retirement
21 allowance beneficiary who elects coverage in the plan authorized
22 by the retirement board and the department. Payments shall begin
23 under this subsection upon approval by the retirement board and
24 the department of plan coverage and a plan provider. This
25 subsection does not apply to a retirant who first becomes a
26 member after June 30, 2008.
27 (5) The retirement system shall pay up to 90% of the maximum
1 of the amount payable under subsection (1) toward the monthly
2 premium or membership or subscription fee for hospital, medical-
3 surgical, and sick care benefits coverage described in
4 subsections (1) and (2) for each health insurance dependent of a
5 retirant receiving benefits under subsection (1) or (2). Payment
6 shall not exceed 90% of the actual monthly premium or membership
7 or subscription fee. The retirement system shall pay 90% of the
8 monthly premium or membership or subscription fee for dental,
9 vision, and hearing benefits described in subsection (4) for the
10 benefit of each health insurance dependent of a retirant
11 receiving benefits under subsection (4). Payment for health
12 benefits coverage for a health insurance dependent of a retirant
13 shall not be made after the retirant's death, unless the retirant
14 designated a retirement allowance beneficiary as provided in
15 section 85 and the dependent was covered or eligible for coverage
16 as a health insurance dependent of the retirant on the retirant's
17 date of death. Payment for health benefits coverage shall not be
18 made for a health insurance dependent after the later of the
19 retirant's death or the retirement allowance beneficiary's death.
20 Payment under this subsection and subsection (6) began October 1,
21 1985 for health insurance dependents who on July 10, 1985 were
22 covered by the hospital, medical-surgical, and sick care benefits
23 plan authorized by the retirement board and the department.
24 Payment under this subsection and subsection (6) for other health
25 insurance dependents shall not begin before January 1, 1986. This
26 subsection does not apply to a retirant who first becomes a
27 member after June 30, 2008.
1 (6) The payment described in subsection (5) shall also be
2 made for each health insurance dependent of a deceased member or
3 deceased duty disability retirant if a retirement allowance is
4 being paid to a retirement allowance beneficiary because of the
5 death of the member or duty disability retirant as provided in
6 section 43c(c), 89, or 90 or as otherwise provided in this act.
7 Payment for health benefits coverage for a health insurance
8 dependent shall not be made after the retirement allowance
9 beneficiary's death.
10 (7) The payments provided by this section shall not be made
11 on behalf of a retiring section 82 deferred member or health
12 insurance dependent of a deferred member having less than 21 full
13 years of attained credited service or the retiring deferred
14 member's retirement allowance beneficiary, and shall not be made
15 on behalf of a retirement allowance beneficiary of a deferred
16 member who dies before retiring. The retirement system shall pay,
17 on behalf of a retiring section 82 deferred member or health
18 insurance dependent of a deferred member or a retirement
19 allowance beneficiary of a deceased deferred member, either of
20 whose allowance is based upon not less than 21 years of attained
21 credited service, 10% of the payments provided by this section,
22 increased by 10% for each attained full year of credited service
23 beyond 21 years, not to exceed 100%. This subsection applies to
24 any member who first became a member on or before June 30, 2008
25 and attains deferred status under section 82 after October 31,
26 1980.
27 (8) For a member or deferred member who first becomes a
1 member after June 30, 2008, the retirement system shall pay up to
2 90% of the monthly premium or membership or subscription fee for
3 the hospital, medical-surgical, and sick care benefits plan, the
4 dental plan, vision plan, or hearing plan, or any combination of
5 the plans for the benefit of the retirant and his or her health
6 insurance beneficiaries, or for the benefit of the retirant's or
7 deceased member's retirement allowance beneficiary if the
8 retirant or deceased member has 30 years or more of service
9 credit or employment with a reporting unit or units under this
10 act, and the retirant or deceased member was at least 60 years of
11 age at the time of application for benefits under this section.
12 If a retirant or deceased member described in this subsection has
13 10 or more but less than 30 years of service credit or employment
14 with a reporting unit or units under this act and the retirant
15 was at least 60 years of age at the time of application for
16 benefits under this section, the retirement system shall pay a
17 portion of the monthly premium or membership or subscription fee
18 for the plans or combination of plans equal to the product of 3%
19 and the retirant's or deceased member's years of service.
20 (9) The retirement system shall not pay the premiums or
21 membership or subscription fees under subsection (8) until the
22 retirant or retirement allowance beneficiary requests enrollment
23 in the plans or combination of plans in writing in the manner
24 prescribed by the retirement system. Subsection (8) does not
25 apply to a member who receives a disability retirement allowance
26 under section 86 or 87 or to a deceased member's retirement
27 allowance beneficiary under section 90.
1 (10) (8) Any retirant or retirement allowance
beneficiary
2 excluded from payments under this section may participate in the
3 hospital, medical-surgical, and sick care benefits plan, the
4 dental plan, vision plan, or hearing plan, or any combination of
5 the plans described in this section in the manner prescribed by
6 the retirement system at his or her own cost.
7 (11) (9) The hospital, medical-surgical, and sick
care
8 benefits plan, dental plan, vision plan, and hearing plan that
9 covers retirants, retirement allowance beneficiaries, and health
10 insurance dependents pursuant to this section shall contain a
11 coordination of benefits provision that provides all of the
12 following:
13 (a) If the person covered under the hospital, medical-
14 surgical, and sick care benefits plan is also eligible for
15 medicare or medicaid, or both, then the benefits under medicare
16 or medicaid, or both, shall be determined before the benefits of
17 the hospital, medical-surgical, and sick care benefits plan
18 provided pursuant to this section.
19 (b) If the person covered under any of the plans provided by
20 this section is also covered under another plan that contains a
21 coordination of benefits provision, the benefits shall be
22 coordinated as provided by the coordination of benefits act, 1984
23 PA 64, MCL 550.251 to 550.255.
24 (c) If the person covered under any of the plans provided by
25 this section is also covered under another plan that does not
26 contain a coordination of benefits provision, the benefits under
27 the other plan shall be determined before the benefits of the
1 plan provided pursuant to this section.
2 (12) (10) For purposes of this section:
3 (a) "Health insurance dependent" means any of the following:
4 (i) The spouse of the retirant or the surviving spouse to
5 whom the retirant or deceased member was married at the time of
6 the retirant's or deceased member's death.
7 (ii) An unmarried child, by birth or adoption, of the
8 retirant or deceased member, until December 31 of the calendar
9 year in which the child becomes 19 years of age.
10 (iii) An unmarried child, by birth or adoption, of the
11 retirant or deceased member, until December 31 of the calendar
12 year in which the child becomes 25 years of age, who is enrolled
13 as a full-time student, and who is or was at the time of the
14 retirant's or deceased member's death a dependent of the retirant
15 or deceased member as defined in section 152 of the internal
16 revenue code.
17 (iv) An unmarried child, by birth or adoption, of the
18 retirant or deceased member who is incapable of self-sustaining
19 employment because of mental or physical disability, and who is
20 or was at the time of the retirant's or deceased member's death a
21 dependent of the retirant or deceased member as defined in
22 section 152 of the internal revenue code.
23 (v) The parents of the retirant or deceased member, or the
24 parents of his or her spouse, who are residing in the household
25 of the retirant or retirement allowance beneficiary.
26 (vi) An unmarried child who is not the child by birth or
27 adoption of the retirant or deceased member but who otherwise
1 qualifies to be a health insurance dependent under subparagraph
2 (ii), (iii), or (iv), if the retirant or deceased member is the legal
3 guardian of the unmarried child.
4 (b) "Medicaid" means benefits under the federal medicaid
5 program established under title XIX of the social security act,
6 chapter 531, 49 Stat. 620, 42 U.S.C. USC 1396
to 1396f, 1396g-1
7 to 1396r-6, and 1396r-8 to 1396v.
8 (c) "Medicare" means benefits under the federal medicare
9 program established under title XVIII of the social security act,
10 chapter 531, 49 Stat. 620, 42 U.S.C. USC 1395
to 1395b, 1395b-2,
11 1395b-6 to 1395b-7, 1395c to 1395i, 1395i-2 to 1395i-5, 1395j to
12 1395t, 1395u to 1395w, 1395w-2 to 1395w-4, 1395w-21 to 1395w-28,
13 1395x to 1395yy, and 1395bbb to 1395ggg.
14 Sec. 108. (1) This section is enacted pursuant to federal
15 law that imposes certain administrative requirements and benefit
16 limitations for qualified governmental plans. This state intends
17 that the retirement system be a qualified pension plan created in
18 trust under section 401 of the internal revenue code and that the
19 trust be an exempt organization under section 501 of the internal
20 revenue code. The department shall administer the retirement
21 system to fulfill this intent.
22 (2) Except as otherwise provided in this section, employer-
23 financed benefits provided by the retirement system under this
24 act shall not exceed $10,000.00 per year for a retirant who has
25 15 or more years of credited service at retirement.
26 (3) Employer-financed benefits provided by the retirement
27 system under this act shall not exceed the limitation under
1 subsection (2) unless application of this subsection results in a
2 higher limitation. The higher limitation of this subsection
3 applies to employer-financed benefits provided by the retirement
4 system and, for purposes of section 415(b) of the internal
5 revenue code, applies to aggregated benefits received from all
6 qualified pension plans administered by the department of
7 management and budget, office of retirement systems. Employer-
8 financed benefits provided by the retirement system shall not
9 exceed the lesser of the following:
10 (a) One of the following amounts that is applicable to the
11 member:
12 (i) If a
member retires at age 62 or older, $90,000.00 or the
13 adjusted amount described in subsection (4) per year.
14 (ii) If a
member retires at or after age 55 but before age
15 62, the actuarially reduced amount of the limitation prescribed
16 in subparagraph (i) per
year. The retirement system shall use an
17 interest rate of 5% per year compounded annually to calculate the
18 actuarial reduction in this subparagraph. However, the limitation
19 in this subparagraph shall not be actuarially reduced below
20 $75,000.00.
21 (iii) If
a member retires before age 55, the actuarially
22 reduced amount of the limitation prescribed in subparagraph (ii)
23 per year. The retirement system shall use an interest rate of 5%
24 per year compounded annually to calculate the actuarial reduction
25 in this subparagraph.
26 (b) 100% of the member's average compensation for high 3
27 years as described in section 415(b)(3) of the internal revenue
1 code.
2 (4) Section 415(d) of the internal revenue code requires the
3 secretary of the treasury or his or her delegate to annually
4 adjust the $10,000.00 limitation described in subsection (2) and
5 the $90,000.00 limitation described in subsection (3)(a)(i) for
6 increases in cost of living, beginning in 1988. This section
7 shall be administered using the limitations applicable to each
8 calendar year as adjusted by the secretary of the treasury or his
9 or her delegate under section 415(d) of the internal revenue
10 code. The retirement system shall adjust the benefits subject to
11 the limitation each year to conform with the adjusted limitation.
12 (2) The retirement system shall be administered in
13 compliance with the provisions of section 415 of the internal
14 revenue code, 26 USC 415, and regulations under that section that
15 are applicable to governmental plans. Employer-financed benefits
16 provided by the retirement system under this act shall not exceed
17 the applicable limitations set forth in section 415 of the
18 internal revenue code, 26 USC 415, as adjusted by the
19 commissioner of internal revenue under section 415(d) of the
20 internal revenue code, 26 USC 415, to reflect cost-of-living
21 increases, and the retirement system shall adjust the benefits
22 subject to the limitation each calendar year to conform with the
23 adjusted limitation. For purposes of section 415(b) of the
24 internal revenue code, 26 USC 415, the applicable limitation
25 shall apply to aggregated benefits received from all qualified
26 pension plans for which the office of retirement services
27 coordinates administration of that limitation. If there is a
1 conflict between this section and another section of this act,
2 this section prevails.
3 (3) (5) The assets of the retirement system
shall be held in
4 trust and invested for the sole purpose of meeting the legitimate
5 obligations of the retirement system and shall not be used for
6 any other purpose. The assets shall not be used for or diverted
7 to a purpose other than for the exclusive benefit of the members,
8 deferred members, retirants, and retirement allowance
9 beneficiaries.
10 (4) (6) The retirement system shall return
post-tax member
11 contributions made by a member and received by the retirement
12 system to a member upon retirement, pursuant to internal revenue
13 service regulations and approved internal revenue service
14 exclusion ratio tables.
15 (5) (7) The required beginning date for
retirement
16 allowances and other distributions shall not be later than April
17 1 of the calendar year following the calendar year in which the
18 employee attains age 70-1/2 or April 1 of the calendar year
19 following the calendar year in which the employee retires.
20 (6) (8) If the retirement system is terminated,
the interest
21 of the members, deferred members, retirants, and retirement
22 allowance beneficiaries in the retirement system is
23 nonforfeitable to the extent funded as described in section
24 411(d)(3) of the internal revenue code and the related internal
25 revenue service regulations applicable to governmental plans.
26 (7) (9) Notwithstanding any other provision of
this act to
27 the contrary that would limit a distributee's election under this
1 act, a distributee may elect, at the time and in the manner
2 prescribed by the retirement board, to have any portion of an
3 eligible rollover distribution paid directly to an eligible
4 retirement plan specified by the distributee in a direct
5 rollover. This subsection applies to distributions made on or
6 after January 1, 1993.
7 (8) (10) For purposes of determining actuarial
equivalent
8 retirement allowances under sections 45 and 85(1)(b), (1)(c),
9 (1)(d), and (2), the actuarially assumed interest rate shall be
10 8% with utilization of the 1983 group annuity and mortality
11 table.
12 (11) Notwithstanding any other provision of this section,
13 the retirement system shall be administered in compliance with
14 the provisions of section 415 of the internal revenue code and
15 revenue service regulations under that section that are
16 applicable to governmental plans. If there is a conflict between
17 this section and another section of this or any other act of this
18 state, this section prevails.
19 (9) (12) Notwithstanding any other provision of
this act,
20 the compensation of a member of the retirement system shall be
21 taken into account for any year under the retirement system only
22 to the extent that it does not exceed the compensation limit
23 established in section 401(a)(17) of the internal revenue code,
24 as adjusted by the commissioner of internal revenue. This
25 subsection applies to any person who first becomes a member of
26 the retirement system on or after October 1, 1996.
27 (10) (13) Notwithstanding any other provision of
this act,
1 contributions, benefits, and service credit with respect to
2 qualified military service will be provided under the retirement
3 system in accordance with section 414(u) of the internal revenue
4 code. This subsection applies to all qualified military service
5 on or after December 12, 1994.
6 Enacting section 1. If any section or part of a section of
7 this act is for any reason held to be invalid or
8 unconstitutional, the holding does not affect the validity of the
9 remaining sections of this act or the act in its entirety.