S.B. 63

1

NEW PUBLIC EMPLOYEES' TIER II
2 CONTRIBUTORY RETIREMENT ACT
3 2010 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: Daniel R. Liljenquist
6 House Sponsor: ____________
7
8 LONG TITLE
9 General Description:
10 This bill modifies the Utah State Retirement and Insurance Benefit Act to provide for
11 modified retirement benefits for new public employees.
12 Highlighted Provisions:
13 This bill:
14 . defines terms;
15 . provides for a "Tier I" system or plan for which an employee is eligible to
16 participate if the employee initially enters regular full-time employment before July
17 1, 2011;
18 . creates a "Tier II" retirement system and plan for which an employee is eligible to
19 participate, if the employee initially enters regular full-time employment on or after
20 July 1, 2011 and which includes a:
21 . New Public Employees' Tier II Hybrid Retirement System; and
22 . New Public Employees' Tier II Defined Contribution Plan;
23 . provides that all new public employees including public safety, firefighters, judges,
24 governors, and legislators may only participate in a Tier II retirement system or
25 plan;
26 . provides that new employees may choose between the Tier II hybrid system or the
27 Tier II DC plan except governors and legislators are only eligible for the Tier II DC

28 plan;
29 . provides that the retirement benefits for Tier II hybrid system employees include:
30 . full retirement benefits after 35 years of service credit;
31 . 2.5% cost-of-living adjustments on the retirement allowance;
32 . a 1% multiplier for each year of service;
33 . a 401(k) employer contribution;
34 . a death benefit; and
35 . a disability benefit;
36 . provides that the participating employer shall contribute for Tier II employees the
37 percentage of employee's compensation equal to the corresponding Tier I system
38 amortization rate plus 8%;
39 . provides that the total Tier II contribution credited specifically on behalf of a Tier II
40 employee is 8% of the employee's salary;
41 . closes for employees who initially enter employment beginning on or after July 1,
42 2011, the:
43 . Public Employees' Contributory Retirement System;
44 . Public Employees' Noncontributory Retirement System;
45 . Public Safety Contributory Retirement System;
46 . Public Safety Noncontributory Retirement Act ;
47 . Firefighters' Retirement System;
48 . Judges' Contributory Retirement System;
49 . Judges' Noncontributory Retirement System; and
50 . Utah Governors' and Legislators' Retirement System;
51 . provides for certain exclusions from membership in the Tier II DC plan; and
52 . makes technical changes.
53 Monies Appropriated in this Bill:
54 None
55 Other Special Clauses:
56 This bill takes effect on July 1, 2010.
57 Utah Code Sections Affected:
58 AMENDS:

59 49-11-102, as last amended by Laws of Utah 2009, Chapter 101
60 49-11-401, as last amended by Laws of Utah 2005, Chapter 116
61 49-11-403, as last amended by Laws of Utah 2006, Chapter 260
62 49-11-404, as last amended by Laws of Utah 2008, Chapter 252
63 49-11-801, as last amended by Laws of Utah 2008, Chapter 335
64 49-11-1001, as enacted by Laws of Utah 2006, Chapter 305
65 49-12-201, as renumbered and amended by Laws of Utah 2002, Chapter 250
66 49-13-201, as renumbered and amended by Laws of Utah 2002, Chapter 250
67 49-14-201, as last amended by Laws of Utah 2008, Chapter 382
68 49-14-202, as renumbered and amended by Laws of Utah 2002, Chapter 250
69 49-15-201, as last amended by Laws of Utah 2008, Chapter 382
70 49-15-202, as renumbered and amended by Laws of Utah 2002, Chapter 250
71 49-16-201, as last amended by Laws of Utah 2004, Chapter 118
72 49-16-202, as last amended by Laws of Utah 2009, Chapter 101
73 49-17-201, as renumbered and amended by Laws of Utah 2002, Chapter 250
74 49-18-201, as renumbered and amended by Laws of Utah 2002, Chapter 250
75 49-19-201, as renumbered and amended by Laws of Utah 2002, Chapter 250
76 49-21-403, as last amended by Laws of Utah 2008, Chapter 252
77 53A-1a-512, as last amended by Laws of Utah 2009, Chapter 165
78 ENACTS:
79 49-22-101, Utah Code Annotated 1953
80 49-22-102, Utah Code Annotated 1953
81 49-22-103, Utah Code Annotated 1953
82 49-22-104, Utah Code Annotated 1953
83 49-22-201, Utah Code Annotated 1953
84 49-22-202, Utah Code Annotated 1953
85 49-22-203, Utah Code Annotated 1953
86 49-22-204, Utah Code Annotated 1953
87 49-22-301, Utah Code Annotated 1953
88 49-22-302, Utah Code Annotated 1953
89 49-22-303, Utah Code Annotated 1953

90 49-22-304, Utah Code Annotated 1953
91 49-22-305, Utah Code Annotated 1953
92 49-22-306, Utah Code Annotated 1953
93 49-22-307, Utah Code Annotated 1953
94 49-22-308, Utah Code Annotated 1953
95 49-22-309, Utah Code Annotated 1953
96 49-22-310, Utah Code Annotated 1953
97 49-22-401, Utah Code Annotated 1953
98 49-22-402, Utah Code Annotated 1953
99 49-22-501, Utah Code Annotated 1953
100 49-22-701, Utah Code Annotated 1953
101
102 Be it enacted by the Legislature of the state of Utah:
103 Section 1. Section 49-11-102 is amended to read:
104 49-11-102. Definitions.
105 As used in this title:
106 (1) (a) "Active member" means a member who is employed or who has been employed
107 by a participating employer within the previous 120 days.
108 (b) "Active member" does not include retirees.
109 (2) "Actuarial equivalent" means a benefit of equal value when computed upon the
110 basis of mortality tables as recommended by the actuary and adopted by the executive director,
111 including regular interest.
112 (3) "Actuarial interest rate" means the interest rate as recommended by the actuary and
113 adopted by the board upon which the funding of system costs and benefits are computed.
114 (4) (a) "Agency" means:
115 (i) a department, division, agency, office, authority, commission, board, institution, or
116 hospital of the state;
117 (ii) a county, municipality, school district, local district, or special service district;
118 (iii) a state college or university; or
119 (iv) any other participating employer.
120 (b) "Agency" does not include an entity listed under Subsection (4)(a)(i) that is a

121 subdivision of another entity listed under Subsection (4)(a).
122 (5) "Allowance" or "retirement allowance" means the pension plus the annuity,
123 including any cost of living or other authorized adjustments to the pension and annuity.
124 (6) "Alternate payee" means a member's former spouse or family member eligible to
125 receive payments under a Domestic Relations Order in compliance with Section 49-11-612 .
126 (7) "Amortization rate" means the board certified percent of salary required to amortize
127 the unfunded actuarial accrued liability in accordance with policies established by the board
128 upon the advice of the actuary.
129 [(7)] (8) "Annuity" means monthly payments derived from member contributions.
130 [(8)] (9) "Appointive officer" means an employee appointed to a position for a definite
131 and fixed term of office by official and duly recorded action of a participating employer whose
132 appointed position is designated in the participating employer's charter, creation document, or
133 similar document, and who earns during the first full month of the term of office $500 or more,
134 indexed as of January 1, 1990, as provided in Section 49-12-407 .
135 [(9)] (10) (a) "At-will employee" means a person who is employed by a participating
136 employer and:
137 (i) who is not entitled to merit or civil service protection and is generally considered
138 exempt from a participating employer's merit or career service personnel systems;
139 (ii) whose on-going employment status is entirely at the discretion of the person's
140 employer; or
141 (iii) who may be terminated without cause by a designated supervisor, manager, or
142 director.
143 (b) "At-will employee" does not include a career employee who has obtained a
144 reasonable expectation of continued employment based on inclusion in a participating
145 employer's merit system, civil service protection system, or career service personnel systems,
146 policies, or plans.
147 [(10)] (11) "Beneficiary" means any person entitled to receive a payment under this
148 title through a relationship with or designated by a member, participant, covered individual, or
149 alternate payee of a defined contribution plan.
150 [(11)] (12) "Board" means the Utah State Retirement Board established under Section
151 49-11-202 .

152 [(12)] (13) "Board member" means a person serving on the Utah State Retirement
153 Board as established under Section 49-11-202 .
154 (14) "Certified contribution rate" means the board certified percent of salary paid on
155 behalf of an active member to the office to maintain the system on a financially and actuarially
156 sound basis.
157 [(13)] (15) "Contributions" means the total amount paid by the participating employer
158 and the member into a system or to the Utah Governors' and Legislators' Retirement Plan under
159 Chapter 19, Utah Governors' and Legislators' Retirement Act.
160 [(14)] (16) "Council member" means a person serving on the Membership Council
161 established under Section 49-11-202 .
162 [(15)] (17) "Covered individual" means any individual covered under Chapter 20,
163 Public Employees' Benefit and Insurance Program Act.
164 [(16)] (18) "Current service" means covered service as defined in Chapters 12, 13, 14,
165 15, 16, 17, 18, and 19.
166 [(17)] (19) "Defined benefit" or "defined benefit plan" or "defined benefit system"
167 means a system or plan offered under this title to provide a specified allowance to a retiree or a
168 retiree's spouse after retirement that is based on a set formula involving one or more of the
169 following factors:
170 (a) years of service;
171 (b) final average monthly salary; or
172 (c) a retirement multiplier.
173 [(18)] (20) "Defined contribution" or "defined contribution plan" means any defined
174 contribution plan or deferred compensation plan authorized under the Internal Revenue Code
175 and administered by the board.
176 [(19)] (21) "Educational institution" means a political subdivision or instrumentality of
177 the state or a combination thereof primarily engaged in educational activities or the
178 administration or servicing of educational activities, including:
179 (a) the State Board of Education and its instrumentalities;
180 (b) any institution of higher education and its branches;
181 (c) any school district and its instrumentalities;
182 (d) any vocational and technical school; and

183 (e) any entity arising out of a consolidation agreement between entities described under
184 this Subsection [(19)] (21).
185 [(20)] (22) (a) "Employer" means any department, educational institution, or political
186 subdivision of the state eligible to participate in a government-sponsored retirement system
187 under federal law.
188 (b) "Employer” may also include an agency financed in whole or in part by public
189 funds.
190 [(21)] (23) "Exempt employee" means an employee working for a participating
191 employer:
192 (a) who is not eligible for service credit under Section 49-12-203 , 49-13-203 ,
193 49-14-203 , 49-15-203 , or 49-16-203 ; and
194 (b) for whom a participating employer is not required to pay contributions or
195 nonelective contributions.
196 [(22)] (24) "Final average monthly salary" means the amount computed by dividing the
197 compensation received during the final average salary period under each system by the number
198 of months in the final average salary period.
199 [(23)] (25) "Fund” means any fund created under this title for the purpose of paying
200 benefits or costs of administering a system, plan, or program.
201 [(24)] (26) (a) "Inactive member" means a member who has not been employed by a
202 participating employer for a period of at least 120 days.
203 (b) "Inactive member" does not include retirees.
204 (27) (a) "Initially entering" means hired, appointed, or elected for the first time, in
205 current service as a member with any participating employer.
206 (b) "Initially entering" does not include a person who has any prior service credit on
207 file with the office.
208 [(25)] (28) (a) "Member" means a person, except a retiree, with contributions on
209 deposit with a system, the Utah Governors' and Legislators' Retirement Plan under Chapter 19,
210 Utah Governors' and Legislators' Retirement Act, or with a terminated system.
211 (b) "Member" also includes leased employees within the meaning of Section 414(n)(2)
212 of the Internal Revenue Code, if the employees have contributions on deposit with the office.
213 If leased employees constitute less than 20% of the participating employer's work force that is

214 not highly compensated within the meaning of Section 414(n)(5)(c)(ii), Internal Revenue Code,
215 "member" does not include leased employees covered by a plan described in Section 414(n)(5)
216 of the federal Internal Revenue Code.
217 [(26)] (29) "Member contributions" means the sum of the contributions paid to a
218 system or the Utah Governors' and Legislators' Retirement Plan, including refund interest if
219 allowed by a system, and which are made by:
220 (a) the member; and
221 (b) the participating employer on the member's behalf under Section 414(h) of the
222 Internal Revenue Code.
223 [(27)] (30) "Nonelective contribution" means an amount contributed by a participating
224 employer into a participant's defined contribution account.
225 [(28)] (31) "Office" means the Utah State Retirement Office.
226 [(29)] (32) "Participant" means an individual with voluntary deferrals or nonelective
227 contributions on deposit with the defined contribution plans administered under this title.
228 [(30)] (33) "Participating employer" means a participating employer, as defined by
229 Chapters 12, 13, 14, 15, 16, 17, and 18, or an agency financed in whole or in part by public
230 funds which is participating in a system or plan as of January 1, 2002.
231 [(31)] (34) "Pension" means monthly payments derived from participating employer
232 contributions.
233 [(32)] (35) "Plan" means the Utah Governors' and Legislators' Retirement Plan created
234 by Chapter 19, Utah Governors' and Legislators' Retirement Act, the New Public Employees'
235 Tier II Defined Contribution Plan created by Chapter 22, Part 4, Tier II Defined Contribution
236 Plan, or the defined contribution plans created under Section 49-11-801 .
237 [(33)] (36) (a) "Political subdivision" means any local government entity, including
238 cities, towns, counties, and school districts, but only if the subdivision is a juristic entity that is
239 legally separate and distinct from the state and only if its employees are not by virtue of their
240 relationship to the entity employees of the state.
241 (b) "Political subdivision" includes local districts, special service districts, or
242 authorities created by the Legislature or by local governments, including the office.
243 (c) "Political subdivision" does not include a project entity created under Title 11,
244 Chapter 13, Interlocal Cooperation Act, that was formed prior to July 1, 1987.

245 [(34)] (37) "Program" means the Public Employees' Insurance Program created under
246 Chapter 20, Public Employees' Benefit and Insurance Program Act, or the Public Employees'
247 Long-Term Disability program created under Chapter 21, Public Employees' Long-Term
248 Disability Act.
249 [(35)] (38) "Public funds" means those funds derived, either directly or indirectly, from
250 public taxes or public revenue, dues or contributions paid or donated by the membership of the
251 organization, used to finance an activity whose objective is to improve, on a nonprofit basis,
252 the governmental, educational, and social programs and systems of the state or its political
253 subdivisions.
254 [(36)] (39) "Qualified defined contribution plan" means a defined contribution plan
255 that meets the requirements of Section 401(k) or Section 403(b) of the Internal Revenue Code.
256 [(37)] (40) "Refund interest" means the amount accrued on member contributions at a
257 rate adopted by the board.
258 [(38)] (41) "Retiree" means an individual who has qualified for an allowance under this
259 title.
260 [(39)] (42) "Retirement" means the status of an individual who has become eligible,
261 applies for, and is entitled to receive an allowance under this title.
262 [(40)] (43) "Retirement date" means the date selected by the member on which the
263 member's retirement becomes effective with the office.
264 [(41)] (44) "Service credit" means:
265 (a) the period during which an employee is employed and compensated by a
266 participating employer and meets the eligibility requirements for membership in a system or the
267 Utah Governors' and Legislators' Retirement Plan, provided that any required contributions are
268 paid to the office; and
269 (b) periods of time otherwise purchasable under this title.
270 [(42)] (45) "System" means the individual retirement systems created by Chapter 12,
271 Public Employees' Contributory Retirement Act, Chapter 13, Public Employees'
272 Noncontributory Retirement Act, Chapter 14, Public Safety Contributory Retirement Act,
273 Chapter 15, Public Safety Noncontributory Retirement Act, Chapter 16, Firefighters'
274 Retirement Act, Chapter 17, Judges' Contributory Retirement Act, Chapter 18, Judges'
275 Noncontributory Retirement Act, and Chapter 19, Utah Governors' and Legislators' Retirement

276 Act[.], and the defined benefit portion of the Tier II Hybrid Retirement System under Chapter
277 22, Part 3, Tier II Hybrid Retirement System.
278 (46) "Tier I" means a system or plan under this title for which an employee is eligible
279 to participate if the employee initially enters regular full-time employment before July 1, 2011.
280 (47) (a) "Tier II" means a system or plan under this title provided in lieu of a Tier I
281 system or plan for which an employee is eligible to participate, if the employee initially enters
282 regular full-time employment on or after July 1, 2011.
283 (b) "Tier II" includes:
284 (i) Tier II hybrid system established under Title 49, Chapter 22, Part 3, Tier II Hybrid
285 Retirement System; and
286 (ii) Tier II Defined Contribution Plan (Tier II DC Plan) established under Title 49,
287 Chapter 22, Part 4, Tier II Defined Contribution Plan.
288 (48) "Unfunded actuarial accrued liability" or "UAAL":
289 (a) is determined by the system's actuary; and
290 (b) means the excess, if any, of the accrued liability of a retirement system over the
291 actuarial value of its assets.
292 [(43)] (49) "Voluntary deferrals" means an amount contributed by a participant into
293 that participant's defined contribution account.
294 Section 2. Section 49-11-401 is amended to read:
295 49-11-401. Transfer of service credit -- Eligibility for service credit --
296 Computation of service credit -- Retirement from most recent system.
297 (1) (a) The office shall make the transfer of service credit, together with related
298 member and participating employer contributions, from one system to another upon terms and
299 conditions established by the board.
300 (b) The terms and conditions may not result in a loss of accrued benefits.
301 (2) Transfer of employment from a position covered by one system to a position
302 covered by another system does not cause the employee to lose active member status.
303 (3) In the accrual of service credit, the following provisions apply:
304 (a) A person employed and compensated by a participating employer who meets the
305 eligibility requirements for membership in a system or the Utah Governors' and Legislators'
306 Retirement Plan shall receive service credit for the term of the employment provided that all

307 required contributions are paid to the office.
308 (b) An allowance or other benefit may not accrue under this title which is based upon
309 the same period of employment as has been the basis for any retirement benefits under some
310 other public retirement system.
311 (c) The board shall fix the minimum time per day, per month, and per year upon the
312 basis of which one year of service and proportionate parts of a year shall be credited toward
313 qualification for retirement. Service may be computed on a fiscal or calendar year basis and
314 portions of years served shall be accumulated and counted as service. In any event, all of the
315 service rendered in any one fiscal or calendar year may not count for more than one year.
316 (d) Service credit shall be accrued on a fiscal or calendar year basis as determined by
317 the participating employer.
318 (e) A member may not accrue more than one year of service credit per fiscal or
319 calendar year as determined by the office.
320 (f) Fractions of years of service credit shall be accumulated and counted in proportion
321 to the work performed.
322 (4) The office may estimate the amount of service credit, compensation, or age of any
323 member, participant, or alternate payee, if information is not contained in the records.
324 (5) A member shall retire from the system which most recently covered the member.
325 (6) (a) Under no circumstances may service credit earned by a member under Chapter
326 22, New Public Employees' Tier II Contributory Retirement Act, be transferable to any other
327 system or plan under this title.
328 (b) Under no circumstances may service credit earned by a member under one of the
329 following systems be transferable to the system created under Chapter 22, New Public
330 Employees' Tier II Contributory Retirement Act:
331 (i) Chapter 12, Public Employees' Contributory Retirement Act;
332 (ii) Chapter 13, Public Employees' Noncontributory Retirement Act;
333 (iii) Chapter 14, Public Safety Contributory Retirement Act;
334 (iv) Chapter 15, Public Safety Noncontributory Retirement Act;
335 (v) Chapter 16, Firefighters' Retirement Act;
336 (vi) Chapter 17, Judges' Contributory Retirement Act;
337 (vii) Chapter 18, Judges' Noncontributory Retirement Act; or

338 (viii) Chapter 19, Utah Governors' and Legislators' Retirement Act.
339 Section 3. Section 49-11-403 is amended to read:
340 49-11-403. Purchase of public service credit not otherwise qualifying for benefit.
341 (1) A member, a participating employer, or a member and a participating employer
342 jointly may purchase service credit equal to the period of the member's employment in the
343 following:
344 (a) United States federal employment;
345 (b) employment in a private school based in the United States, if the member received
346 an employer paid retirement benefit for the employment;
347 (c) public employment in another state or territory of the United States which qualifies
348 the member for membership in the public plan or system covering the employment, but only if
349 the member does not qualify for any retirement benefits based on the employment;
350 (d) forfeited service credit in this state if the member does not qualify for an allowance
351 based on the service credit;
352 (e) full-time public service while on an approved leave of absence;
353 (f) the period of time for which disability benefits were paid if:
354 (i) the member was receiving:
355 (A) long-term disability benefits;
356 (B) short-term disability benefits; or
357 (C) worker's compensation disability benefits; and
358 (ii) the member's employer had not entered into a benefit protection contract under
359 Section 49-11-404 during the period the member was disabled due to sickness or accident; or
360 (g) employment covered by a Teachers Insurance and Annuity Association of America
361 retirement plan if the member forfeits any retirement benefit from that retirement plan for the
362 period of employment to be purchased under this Subsection (1)(g).
363 (2) A member shall have:
364 (a) at least four years of service credit before a purchase can be made under this
365 section; and
366 (b) forfeited service credit under any other retirement system or plan based on the
367 employment for which service credit is being purchased.
368 (3) (a) To purchase credit under this section, the member, a participating employer, or a

369 member and a participating employer jointly shall make payment to the system under which the
370 member is currently covered.
371 (b) The amount of the payment shall be determined by the office based on a formula
372 that is:
373 (i) recommended by the actuary; and
374 (ii) adopted by the board.
375 (4) The purchase may be made through payroll deductions or through a lump sum
376 deposit based upon the present value of future payments.
377 (5) Total payment must be completed prior to the member's effective date of retirement
378 or service credit will be prorated in accordance with the amount paid.
379 (6) (a) If any of the factors used to determine the cost of a service credit purchase
380 change at or before the member's retirement date, the cost of the purchase shall be recalculated
381 at the time of retirement.
382 (b) If the recalculated cost exceeds the amount paid for the purchase, the member, a
383 participating employer, or a member and a participating employer jointly may:
384 (i) pay the increased cost, plus interest, to receive the full amount of service credit; or
385 (ii) not pay the increased cost and have the purchased service credit prorated.
386 (7) If the recalculated cost under Subsection (6) is less than the amount paid for the
387 purchase, the office shall refund the excess payment to the member or participating employer
388 who paid for the purchase.
389 (8) (a) The board may adopt rules under which a member may make the necessary
390 payments to the office for purchases under this title as permitted by federal law.
391 (b) The office may reject any payments if the office determines the tax status of the
392 system, plans, or programs would be jeopardized by allowing the payment.
393 (9) Account balances created under Section 49-22-303 or 49-22-401 may not be used
394 to purchase service credit for a benefit under Sections 49-22-304 and 49-22-305 .
395 Section 4. Section 49-11-404 is amended to read:
396 49-11-404. Benefit protection contract authorized -- Annual report required.
397 (1) (a) A participating employer may establish a salary protection program under which
398 its employees are paid during periods of disability.
399 (b) If a salary protection program is established, a participating employer may enter

400 into benefit protection contracts with the office.
401 (c) A salary protection program shall:
402 (i) pay benefits based on the disabled member's rate of compensation at the time of
403 disability;
404 (ii) be substantially equivalent to the long-term disability programs offered under
405 Chapter 21, Public Employees' Long-Term Disability Act; and
406 (iii) comply with requirements adopted by the board.
407 (2) A benefit protection contract shall allow:
408 (a) the disabled member to be considered an active member in a system and continue to
409 accrue service credit and salary credit based on the member's rate of pay in effect at the time
410 disability commences;
411 (b) the office to require participating employer contributions to be paid before granting
412 service credit and salary credit to the member;
413 (c) the disabled member to remain eligible during the contract period for any benefits
414 provided by the system that covers the member; and
415 (d) the benefit for the disabled member to be improved by the annual cost-of-living
416 increase factor applied to retired members of the system that covered the member on the date
417 the member is eligible to receive benefits under a benefit protection contract.
418 (3) (a) The office shall establish the manner and times when employer contributions
419 are paid.
420 (b) A failure to make the required payments is cause for the office to cancel a contract.
421 (c) Service credit and salary credit granted and accrued up to the time of cancellation
422 may not be forfeited.
423 (4) For an employee covered under Chapter 22, New Public Employees' Tier II
424 Contributory Retirement Act, a benefit protection contract shall allow:
425 (a) for the defined benefit portion for a member covered under Chapter 22, Part 3, Tier
426 II Hybrid Retirement System:
427 (i) the disabled member to be considered an active member in a system and continue to
428 accrue service credit and salary credit based on the member's rate of pay in effect at the time
429 disability commences;
430 (ii) the office to require participating employer contributions to be paid before granting

431 service credit and salary credit to the member;
432 (iii) the disabled member to remain eligible during the contract period for any benefits
433 provided by the system that covers the member; and
434 (iv) the benefit for the disabled member to be improved by the annual cost-of-living
435 increase factor applied to retired members of the system that covered the member on the date
436 the member is eligible to receive benefits under a benefit protection contract; and
437 (b) for the defined contribution portion for a member covered under Chapter 22, Part 3,
438 Tier II Hybrid Retirement System or for a participant covered under Chapter 22, Part 4, Tier II
439 Defined Contribution Plan, the office shall require participating employers to continue making
440 the nonelective contributions on behalf of the disabled member or participant in the amounts
441 specified in Subsection 49-22-303 (1)(a) or 49-22-401 (1).
442 [(4)] (5) A participating employer that has entered into a benefit protection contract
443 under this section shall submit an annual report to the office which identifies:
444 (a) the employees receiving long-term disability benefits under policies initiated by the
445 participating employer and approved under the benefit protection contract;
446 (b) the employees that have applied for long-term disability benefits and who are
447 waiting approval; and
448 (c) the insurance carriers that are actively providing long-term disability benefits.
449 [(5)] (6) If an employer fails to provide the annual report required under Subsection
450 [(4)] (5), the benefits that would have accrued under the benefit protection contract shall be
451 forfeited.
452 [(6)] (7) The board may adopt rules to implement and administer this section.
453 Section 5. Section 49-11-801 is amended to read:
454 49-11-801. Defined contribution plans authorized -- Subject to federal and state
455 laws -- Rules to implement this provision -- Costs of administration -- Limitations on
456 eligibility -- Protection of tax status.
457 (1) (a) The board shall establish and administer defined contribution plans established
458 under the Internal Revenue Code.
459 (b) Voluntary deferrals and nonelective contributions shall be permitted according to
460 the provisions of these plans as established by the board.
461 (c) [The] Except as provided in Subsections 49-22-303 (2)(a) and 49-22-401 (3)(a), the

462 defined contribution account balance is vested in the participant.
463 (2) (a) Voluntary deferrals and nonelective contributions shall be posted to the
464 participant's account.
465 (b) [Participants] Except as provided in Subsections 49-22-303 (3) and 49-22-401 (4),
466 participants may direct the investment of their account in the investment options established by
467 the board and in accordance with federal and state law.
468 (3) (a) The board may make rules and create plan documents to implement and
469 administer this section.
470 (b) The board may adopt rules under which a participant may put money into a defined
471 contribution plan as permitted by federal law.
472 (c) The office may reject any payments if the office determines the tax status of the
473 systems, plans, or programs would be jeopardized by allowing the payment.
474 (d) Costs of administration shall be paid as established by the board.
475 (4) Voluntary deferrals and nonelective contributions may be invested separately or in
476 conjunction with the Utah State Retirement Investment Fund.
477 (5) The board or office may take actions necessary to protect the tax qualified status of
478 the systems, plans, and programs under its control, including the movement of individuals from
479 defined contribution plans to defined benefit systems or the creation of excess benefit plans
480 authorized by federal law.
481 (6) The office may, at its sole discretion, correct errors made in the administration of
482 its defined contribution plans.
483 Section 6. Section 49-11-1001 is amended to read:
484 49-11-1001. Partial lump-sum payment option.
485 (1) [At] Except as provided in Subsection (5), at the time of application for retirement,
486 a member may elect to receive a lump-sum payment of a portion of the member's retirement
487 allowance equal to 12 or 24 months of the member's allowance to be paid upon retirement.
488 (2) The member's allowance shall be reduced to reflect the actuarial value of the
489 lump-sum received under Subsection (1).
490 (3) A member who has received a lump-sum payment under this section is not eligible
491 for another lump-sum payment under this section.
492 (4) The board may make rules to implement this section.

493 (5) A member or participant of a system or plan under Chapter 22, New Public
494 Employees' Tier II Contributory Retirement Act, is not eligible to make an election under this
495 section.
496 Section 7. Section 49-12-201 is amended to read:
497 49-12-201. System membership -- Eligibility.
498 (1) A regular full-time employee of a participating employer is eligible for service
499 credit in this system upon the later of:
500 (a) the date on which the participating employer began participating in this system; or
501 (b) the effective date of employment of the regular full-time employee with the
502 participating employer.
503 (2) Beginning July 1, 1986, a person entering employment with the state and its
504 educational institutions may not participate in this system.
505 (3) Notwithstanding the provisions of Subsection (1), a person initially entering
506 employment with a participating employer on or after July 1, 2011, may not participate in this
507 system.
508 Section 8. Section 49-13-201 is amended to read:
509 49-13-201. System membership -- Eligibility.
510 (1) Beginning July 1, 1986, the state and its educational institutions shall participate in
511 this system.
512 (a) A person entering regular full-time employment with the state or its educational
513 institutions after July 1, 1986, but before July 1, 2011, is eligible for service credit in this
514 system.
515 (b) A regular full-time employee of the state or its educational institutions prior to July
516 1, 1986, may either become eligible for service credit in this system or remain eligible for
517 service in the system established under Chapter 12, Public Employees' Contributory Retirement
518 Act, by following the procedures established by the board in accordance with this chapter.
519 (2) An employer, other than the state and its educational institutions, may participate in
520 this system except that once an employer elects to participate in this system, that election is
521 irrevocable and the election must be made before July 1, 2011.
522 (a) [A] Until June 30, 2011, a person initially entering regular full-time employment
523 with a participating employer which elects to participate in this system is eligible for service

524 credit in this system.
525 (b) A person in regular full-time employment with a participating employer prior to
526 the participating employer's election to participate in this system may either become eligible for
527 service credit in this system or remain eligible for service in the system established under
528 Chapter 12, Public Employees' Contributory Retirement Act, by following the procedures
529 established by the board in accordance with this chapter.
530 (3) Notwithstanding the provisions of Subsections (1) and (2), a person initially
531 entering employment with a participating employer on or after July 1, 2011, may not participate
532 in this system.
533 Section 9. Section 49-14-201 is amended to read:
534 49-14-201. System membership -- Eligibility.
535 (1) Except as provided in Section 49-15-201 , a public safety service employee of a
536 participating employer participating in this system is eligible for service credit in this system at
537 the earliest of:
538 (a) July 1, 1969, if the public safety service employee was employed by the
539 participating employer on July 1, 1969, and the participating employer was participating in this
540 system on that date;
541 (b) the date the participating employer begins participating in this system if the public
542 safety service employee was employed by the participating employer on that date; or
543 (c) the date the public safety service employee is employed by the participating
544 employer and is eligible to perform public safety service, except that a public safety service
545 employee initially entering employment with a participating employer on or after July 1, 2011,
546 may not participate in this system.
547 (2) (a) (i) A participating employer that has public safety service and firefighter service
548 employees that require cross-training and duty shall enroll those dual purpose employees in the
549 system in which the greatest amount of time is actually worked.
550 (ii) The employees shall either be full-time public safety service or full-time firefighter
551 service employees of the participating employer.
552 (b) (i) Prior to transferring a dual purpose employee from one system to another, the
553 participating employer shall receive written permission from the office.
554 (ii) The office may request documentation to verify the appropriateness of the transfer.

555 (3) The board may combine or segregate the actuarial experience of participating
556 employers in this system for the purpose of setting contribution rates.
557 (4) (a) (i) Each participating employer participating in this system shall annually
558 submit to the office a schedule indicating the positions to be covered under this system in
559 accordance with this chapter.
560 (ii) The office may require documentation to justify the inclusion of any position under
561 this system.
562 (b) If there is a dispute between the office and a participating employer or employee
563 over any position to be covered, the disputed position shall be submitted to the Peace Officer
564 Standards and Training Council established under Section 53-6-106 for determination.
565 (c) (i) The Peace Officer Standards and Training Council's authority to decide
566 eligibility for public safety service credit is limited to claims for coverage under this system for
567 time periods after July 1, 1989.
568 (ii) A decision of the Peace Officer Standards and Training Council may not be applied
569 to service credit earned in another system prior to July 1, 1989.
570 (iii) Except as provided under Subsection (4)(c)(iv), a decision of the Peace Officer
571 Standards and Training Council granting a position coverage under this system may only be
572 applied prospectively from the date of that decision.
573 (iv) A decision of the Peace Officer Standards and Training Council granting a position
574 coverage under this system may be applied retroactively only if:
575 (A) the participating employer covered other similarly situated positions under this
576 system during the time period in question; and
577 (B) the position otherwise meets all eligibility requirements for receiving service credit
578 in this system during the period for which service credit is to be granted.
579 (5) The Peace Officer Standards and Training Council may use a subcommittee to
580 provide a recommendation to the council in determining disputes between the office and a
581 participating employer or employee over a position to be covered under this system.
582 (6) The Peace Officer Standards and Training Council shall comply with Title 63G,
583 Chapter 4, Administrative Procedures Act, in resolving coverage disputes in this system.
584 (7) A public safety employee who is transferred or promoted to an administration
585 position not covered by this system shall continue to earn public safety service credit in this

586 system as long as the employee remains employed in the same department.
587 (8) Any employee who is reassigned to the Department of Technology Services or to
588 the Department of Human Resource Management, and who was a member of this system, shall
589 be entitled to remain a member of this system.
590 (9) (a) To determine that a position is covered under this system, the office and, if a
591 coverage dispute arises, the Peace Officer Standards and Training Council shall find that the
592 position requires the employee to:
593 (i) place the employee's life or personal safety at risk; and
594 (ii) complete training as provided in Section 53-13-103 , 53-13-104 , or 53-13-105 .
595 (b) If a position satisfies the requirements of Subsection (9)(a), the office and the Peace
596 Officer Standards and Training Council shall consider whether or not the position requires the
597 employee to:
598 (i) perform duties that consist primarily of actively preventing or detecting crime and
599 enforcing criminal statutes or ordinances of this state or any of its political subdivisions;
600 (ii) perform duties that consist primarily of providing community protection; and
601 (iii) respond to situations involving threats to public safety and make emergency
602 decisions affecting the lives and health of others.
603 (10) If a subcommittee is used to recommend the determination of disputes to the
604 Peace Officer Standards and Training Council, the subcommittee shall comply with the
605 requirements of Subsection (9) in making its recommendation.
606 (11) A final order of the Peace Officer Standards and Training Council regarding a
607 dispute is a final agency action for purposes of Title 63G, Chapter 4, Administrative
608 Procedures Act.
609 (12) Except as provided under Subsection (13), if a participating employer's public
610 safety service employees are not covered by this system or under Chapter 15, Public Safety
611 Noncontributory Retirement Act, as of January 1, 1998, those public safety service employees
612 who may otherwise qualify for membership in this system shall, at the discretion of the
613 participating employer, remain in their current retirement system.
614 (13) (a) A public safety service employee employed by an airport police department,
615 which elects to cover its public safety service employees under the Public Safety
616 Noncontributory Retirement System under Subsection (12), may elect to remain in the public

617 safety service employee's current retirement system.
618 (b) The public safety service employee's election to remain in the current retirement
619 system under Subsection (13)(a):
620 (i) shall be made at the time the employer elects to move its public safety service
621 employees to a public safety retirement system;
622 (ii) documented by written notice to the participating employer; and
623 (iii) is irrevocable.
624 (14) Notwithstanding any other provision of this section, a person initially entering
625 employment with a participating employer on or after July 1, 2011, may not participate in this
626 system.
627 Section 10. Section 49-14-202 is amended to read:
628 49-14-202. Participation of employers -- Requirements -- Supplemental programs
629 -- Full participation in system.
630 (1) An employer that employs public safety service employees and is required by
631 Section 49-12-202 or 49-13-202 to be a participating employer in the Public Employees'
632 Contributory Retirement System or the Public Employees' Noncontributory Retirement System
633 shall cover all its public safety service employees under one of the following systems or plans:
634 (a) Chapter 12, Public Employees' Contributory Retirement Act;
635 (b) Chapter 13, Public Employees' Noncontributory Retirement Act;
636 (c) Chapter 14, Public Safety Contributory Retirement Act; [or]
637 (d) Chapter 15, Public Safety Noncontributory Retirement Act[.]; or
638 (e) Chapter 22, New Public Employees' Tier II Contributory Retirement Act.
639 (2) An employer that covers its public safety service employees under Subsection
640 (1)(c) is a participating employer in this system.
641 (3) If a participating employer under Subsection (1) covers any of its public safety
642 service employees under the Public Safety Contributory Retirement System or the Public
643 Safety Noncontributory Retirement System, that participating employer shall cover all of its
644 public safety service employees under one of those systems, except for a public safety service
645 employee initially entering employment with a participating employer on or after July 1, 2011.
646 (4) A participating employer may not withdraw from this system.
647 (5) In addition to their participation in the system, participating employers may provide

648 or participate in any additional public or private retirement, supplemental or defined
649 contribution plan, either directly or indirectly, for their employees.
650 (6) An employer may not elect to participate in this system after July 1, 1989.
651 Section 11. Section 49-15-201 is amended to read:
652 49-15-201. System membership -- Eligibility.
653 (1) (a) A public safety service employee employed by the state after July 1, 1989, but
654 before July 1, 2011, is eligible for service credit in this system.
655 (b) A public safety service employee employed by the state prior to July 1, 1989, may
656 either elect to receive service credit in this system or continue to receive service credit under
657 the system established under Chapter 14, Public Safety Contributory Retirement Act, by
658 following the procedures established by the board under this chapter.
659 (2) (a) Public safety service employees of a participating employer other than the state
660 that elected on or before July 1, 1989, to remain in the Public Safety Contributory Retirement
661 System shall be eligible only for service credit in that system.
662 (b) (i) A participating employer other than the state that elected on or before July 1,
663 1989, to participate in this system shall, have allowed, prior to July 1, 1989, a public safety
664 service employee to elect to participate in either this system or the Public Safety Contributory
665 Retirement System.
666 (ii) Except as expressly allowed by this title, the election of the public safety service
667 employee is final and may not be changed.
668 (c) A public safety service employee hired by a participating employer other than the
669 state after July 1, 1989, but before July 1, 2011, shall become a member in this system.
670 (d) A public safety service employee of a participating employer other than the state
671 who began participation in this system after July 1, 1989, but before July 1, 2011, is only
672 eligible for service credit in this system.
673 (e) A person initially entering employment with a participating employer on or after
674 July 1, 2011, may not participate in this system.
675 (3) (a) (i) A participating employer that has public safety service and firefighter service
676 employees that require cross-training and duty shall enroll those dual purpose employees in the
677 system in which the greatest amount of time is actually worked.
678 (ii) The employees shall either be full-time public safety service or full-time firefighter

679 service employees of the participating employer.
680 (b) (i) Prior to transferring a dual purpose employee from one system to another, the
681 participating employer shall receive written permission from the office.
682 (ii) The office may request documentation to verify the appropriateness of the transfer.
683 (4) The board may combine or segregate the actuarial experience of participating
684 employers in this system for the purpose of setting contribution rates.
685 (5) (a) (i) Each participating employer participating in this system shall annually
686 submit to the office a schedule indicating the positions to be covered under this system in
687 accordance with this chapter.
688 (ii) The office may require documentation to justify the inclusion of any position under
689 this system.
690 (b) If there is a dispute between the office and a participating employer or employee
691 over any position to be covered, the disputed position shall be submitted to the Peace Officer
692 Standards and Training Council established under Section 53-6-106 for determination.
693 (c) (i) The Peace Officer Standards and Training Council's authority to decide
694 eligibility for public safety service credit is limited to claims for coverage under this system for
695 time periods after July 1, 1989.
696 (ii) A decision of the Peace Officer Standards and Training Council may not be applied
697 to service credit earned in another system prior to July 1, 1989.
698 (iii) Except as provided under Subsection (5)(c)(iv), a decision of the Peace Officer
699 Standards and Training Council granting a position coverage under this system may only be
700 applied prospectively from the date of that decision.
701 (iv) A decision of the Peace Officer Standards and Training Council granting a position
702 coverage under this system may be applied retroactively only if:
703 (A) the participating employer covered other similarly situated positions under this
704 system during the time period in question; and
705 (B) the position otherwise meets all eligibility requirements for receiving service credit
706 in this system during the period for which service credit is to be granted.
707 (6) The Peace Officer Standards and Training Council may use a subcommittee to
708 provide a recommendation to the council in determining disputes between the office and a
709 participating employer or employee over a position to be covered under this system.

710 (7) The Peace Officer Standards and Training Council shall comply with Title 63G,
711 Chapter 4, Administrative Procedures Act, in resolving coverage disputes in this system.
712 (8) A public safety service employee who is transferred or promoted to an
713 administration position not covered by this system shall continue to earn public safety service
714 credit in this system as long as the employee remains employed in the same department.
715 (9) Any employee who is reassigned to the Department of Technology Services or to
716 the Department of Human Resource Management, and who was a member in this system, shall
717 be entitled to remain a member in this system.
718 (10) (a) To determine that a position is covered under this system, the office and, if a
719 coverage dispute arises, the Peace Officer Standards and Training Council shall find that the
720 position requires the employee to:
721 (i) place the employee's life or personal safety at risk; and
722 (ii) complete training as provided in Section 53-13-103 , 53-13-104 , or 53-13-105 .
723 (b) If a position satisfies the requirements of Subsection (10)(a), the office and Peace
724 Officer Standards and Training Council shall consider whether the position requires the
725 employee to:
726 (i) perform duties that consist primarily of actively preventing or detecting crime and
727 enforcing criminal statutes or ordinances of this state or any of its political subdivisions;
728 (ii) perform duties that consist primarily of providing community protection; and
729 (iii) respond to situations involving threats to public safety and make emergency
730 decisions affecting the lives and health of others.
731 (11) If a subcommittee is used to recommend the determination of disputes to the
732 Peace Officer Standards and Training Council, the subcommittee shall comply with the
733 requirements of Subsection (10) in making its recommendation.
734 (12) A final order of the Peace Officer Standards and Training Council regarding a
735 dispute is a final agency action for purposes of Title 63G, Chapter 4, Administrative
736 Procedures Act.
737 (13) Except as provided under Subsection (14), if a participating employer's public
738 safety service employees are not covered by this system under Chapter 14, Public Safety
739 Contributory Retirement Act, as of January 1, 1998, those public safety service employees who
740 may otherwise qualify for membership in this system shall, at the discretion of the participating

741 employer, remain in their current retirement system.
742 (14) (a) A public safety service employee employed by an airport police department,
743 which elects to cover its public safety service employees under the Public Safety
744 Noncontributory Retirement System under Subsection (13), may elect to remain in the public
745 safety service employee's current retirement system.
746 (b) The public safety service employee's election to remain in the current retirement
747 system under Subsection (14)(a):
748 (i) shall be made at the time the employer elects to move its public safety service
749 employees to a public safety retirement system;
750 (ii) documented by written notice to the participating employer; and
751 (iii) is irrevocable.
752 (15) Notwithstanding any other provision of this section, a person initially entering
753 employment with a participating employer on or after July 1, 2011, may not participate in this
754 system.
755 Section 12. Section 49-15-202 is amended to read:
756 49-15-202. Participation of employers -- Requirements -- Admission -- Full
757 participation in system -- Supplemental programs authorized.
758 (1) An employer that employs public safety service employees and is required by
759 Section 49-12-202 or 49-13-202 to be a participating employer in the Public Employees'
760 Contributory Retirement System or the Public Employees' Noncontributory Retirement System
761 shall cover all its public safety service employees under one of the following systems or plans:
762 (a) Chapter 12, Public Employees' Contributory Retirement Act;
763 (b) Chapter 13, Public Employees' Noncontributory Retirement Act;
764 (c) Chapter 14, Public Safety Contributory Retirement Act; [or]
765 (d) Chapter 15, Public Safety Noncontributory Retirement Act[.]; or
766 (e) Chapter 22, New Public Employees' Tier II Contributory Retirement Act.
767 (2) An employer that covers its public safety employees under Subsection (1)(d) is a
768 participating employer in this system.
769 (3) If a participating employer under Subsection (1) covers any of its public safety
770 service employees under the Public Safety Contributory Retirement System or the Public
771 Safety Noncontributory Retirement System, that participating employer shall cover all of its

772 public safety service employees under one of those systems, except for a public safety service
773 employee initially entering employment with a participating employer beginning on or after
774 July 1, 2011.
775 (4) (a) [An] Until June 30, 2011, an employer that is not participating in this system
776 may by resolution of its governing body apply for coverage of its public safety service
777 employees by this system.
778 (b) Upon approval of the board, the employer shall become a participating employer in
779 this system subject to this title.
780 (5) If a participating employer purchases service credit on behalf of employees for
781 service rendered prior to the participating employer's admission to this system, the service
782 credit must be purchased in a nondiscriminatory manner on behalf of all current and former
783 employees who were eligible for service credit at the time service was rendered.
784 (6) A participating employer may not withdraw from this system.
785 (7) In addition to their participation in the system, participating employers may provide
786 or participate in any additional public or private retirement, supplemental or defined
787 contribution plan, either directly or indirectly, for their employees.
788 Section 13. Section 49-16-201 is amended to read:
789 49-16-201. System membership -- Eligibility.
790 (1) A firefighter service employee who performs firefighter service for an employer
791 participating in this system is eligible for service credit in this system upon the earliest of:
792 (a) July 1, 1971, if the firefighter service employee was employed by the participating
793 employer on July 1, 1971, and the participating employer was participating in this system on
794 that date;
795 (b) the date the participating employer begins participating in this system if the
796 firefighter service employee was employed by the participating employer on that date; or
797 (c) the date the firefighter service employee is hired to perform firefighter services for a
798 participating employer, if the firefighter initially enters employment before July 1, 2011.
799 (2) (a) (i) A participating employer that has public safety service and firefighter service
800 employees that require cross-training and duty shall enroll the dual purpose employees in the
801 system in which the greatest amount of time is actually worked.
802 (ii) The employees shall either be full-time public safety service or full-time firefighter

803 service employees of the participating employer.
804 (b) (i) Prior to transferring a dual purpose employee from one system to another, the
805 participating employer shall receive written permission from the office.
806 (ii) The office may request documentation to verify the appropriateness of the transfer.
807 (3) (a) A person hired by a regularly constituted fire department on or after July 1,
808 1971, who does not perform firefighter service is not eligible for service credit in this system.
809 (b) The nonfirefighter service employee shall become a member of the system for
810 which the nonfirefighter service employee qualifies for service credit.
811 (c) The service credit exclusion under this Subsection (3) may not be interpreted to
812 prohibit the assignment of a disabled or partially disabled firefighter to a nonfirefighter service
813 position.
814 (d) If Subsection (3)(c) applies, the firefighter service employee remains eligible for
815 service credit in this system.
816 (4) An allowance or other benefit may not be granted under this system that is based
817 upon the same service for benefits received under some other system.
818 (5) Service as a volunteer firefighter is not eligible for service credit in this system.
819 (6) An employer that maintains a regularly constituted fire department is eligible to
820 participate in this system.
821 (7) Beginning July 1, 2011, a person initially entering employment with a participating
822 employer may not participate in this system.
823 Section 14. Section 49-16-202 is amended to read:
824 49-16-202. Participation of employers -- Full participation in system --
825 Supplemental programs authorized.
826 (1) An employer that employs firefighter service employees and is required by Section
827 49-12-202 or 49-13-202 to be a participating employer in the Public Employees' Contributory
828 Retirement System or the Public Employees' Noncontributory Retirement System shall cover
829 all of its firefighter service employees under one of the following systems or plans:
830 (a) Chapter 12, Public Employees' Contributory Retirement Act;
831 (b) Chapter 13, Public Employees' Noncontributory Retirement Act; [or]
832 (c) Chapter 16, Firefighters' Retirement Act[.]; or
833 (d) Chapter 22, New Public Employees' Tier II Contributory Retirement Act.

834 (2) Any employer that covers its firefighter service employees under Subsection (1)(c)
835 is a participating employer in this system.
836 (3) If a participating employer under Subsection (1) covers any of its firefighter service
837 employees under the Firefighters' Retirement System, that participating employer shall cover
838 all of its firefighter service employees under that system, except for a firefighter service
839 employee initially entering employment with a participating employer on or after July 1, 2011.
840 (4) (a) [An] Until June 30, 2011, an employer that is not participating in this system
841 may, by resolution of its governing body submitted to the board, apply for coverage of its
842 firefighter service employees by this system.
843 (b) Upon approval of the board, the employer shall become a participating employer in
844 this system subject to this title.
845 (5) A participating employer may not withdraw from this system.
846 (6) In addition to their participation in the system, participating employers may provide
847 or participate in any additional public or private retirement, supplemental or defined
848 contribution plan, either directly or indirectly, for their firefighter service employees.
849 Section 15. Section 49-17-201 is amended to read:
850 49-17-201. System membership -- Eligibility.
851 (1) Except as provided in Subsection (2) and Section 49-18-201 , judges are members
852 of and are eligible for service credit in this system.
853 (2) A judge initially entering employment with a participating employer on or after July
854 1, 2011, may not participate in this system.
855 Section 16. Section 49-18-201 is amended to read:
856 49-18-201. System membership -- Eligibility.
857 (1) Judges appointed after July 1, 1997, but before July 1, 2011, are members of and
858 are eligible for service credit in this system.
859 (2) (a) Any judge appointed prior to July 1, 1997, may either become a member of the
860 Judges' Noncontributory Retirement System or remain a member of the Judges' Contributory
861 Retirement System established under Chapter 17, Judges' Contributory Retirement Act, by
862 following the procedures established by the board [pursuant to] under this chapter.
863 (b) Judges may only elect to participate in this system under this Subsection (2) prior to
864 January 1, 1998.

865 (3) A judge initially entering employment on or after July 1, 2011, may not participate
866 in this system.
867 Section 17. Section 49-19-201 is amended to read:
868 49-19-201. Plan participation -- Eligibility.
869 (1) Governors and legislators who enter office before July 1, 2011, are eligible for
870 service credit in this plan during their term of service in their elected position.
871 (2) A governor or legislator initially entering office on or after July 1, 2011:
872 (a) may not participate in this system;
873 (b) is only eligible to participate in the Tier II Defined Contribution Plan established
874 under Title 49, Chapter 22, Part 4, Tier II Defined Contribution Plan; and
875 (c) is not eligible to participate in the Tier II hybrid retirement system established under
876 Title 49, Chapter 22, Part 3, Tier II Hybrid Retirement System.
877 Section 18. Section 49-21-403 is amended to read:
878 49-21-403. Termination of disability benefits -- Calculation of retirement benefit.
879 (1) An eligible employee covered by this chapter and eligible for service credit under a
880 system, or a participant in the Tier II Defined Contribution Plan, created in Chapter 22, Part 4,
881 Tier II Defined Contribution Plan, including an eligible employee who relinquishes rights to
882 retirement benefits under Section 49-11-619 , who applies and is qualified for a monthly
883 disability benefit shall receive a monthly disability benefit until the earlier of:
884 (a) the date the eligible employee is no longer disabled;
885 (b) the date the eligible employee has accumulated:
886 (i) 20 years of service credit if the eligible employee is covered by Chapter 14, Public
887 Safety Contributory Retirement Act, or Chapter 15, Public Safety Noncontributory Retirement
888 Act;
889 (ii) 25 years of service credit if the eligible employee is covered by Chapter 17, Judges'
890 Contributory Retirement Act, or Chapter 18, Judges' Noncontributory Retirement Act; [or]
891 (iii) 30 years of service credit if the eligible employee is covered by Chapter 12, Public
892 Employees' Contributory Retirement Act, or Chapter 13, Public Employees' Noncontributory
893 Retirement Act; or
894 (iv) 35 years of service credit if the eligible employee is covered by the defined benefit
895 portion under Chapter 22, Part 3, Tier II Hybrid Retirement System; or

896 (c) the date the eligible employee has received a monthly disability benefit for the
897 following applicable time periods:
898 (i) if the eligible employee is under age 60, the monthly disability benefit is payable
899 until age 65;
900 (ii) if the eligible employee is 60 or 61 years of age on the date of disability, the
901 monthly disability benefit is payable for five years;
902 (iii) if the eligible employee is 62 or 63 years of age on the date of disability, the
903 monthly disability benefit is payable for four years;
904 (iv) if the eligible employee is 64 or 65 years of age on the date of disability, the
905 monthly disability benefit is payable for three years;
906 (v) if the eligible employee is 66, 67, or 68 years of age on the date of disability, the
907 monthly disability benefit is payable for two years; and
908 (vi) if the eligible employee is 69 years of age or older on the date of disability, the
909 monthly disability benefit is payable for one year.
910 (2) (a) Upon termination of a monthly disability benefit, an eligible employee eligible
911 for service credit under a system may retire under the requirements of the system which
912 covered the eligible employee on the date of disability.
913 (b) The final average salary used in the calculation of the allowance shall be based on
914 the annual rate of pay on the date of disability, improved by the annual cost-of-living increase
915 factor applied to retirees of the system which covered the eligible employee on the date of
916 disability.
917 (3) An eligible employee who is eligible for service credit in a system, but has
918 relinquished rights to an allowance under Section 49-11-619 , may receive the benefits the
919 eligible employee would have received by being eligible for service credit in the system
920 covering the eligible employee on the date of disability, except for the accrual of service credit,
921 in accordance with this title.
922 (4) An eligible employee receiving a monthly disability benefit who has service credit
923 from two or more systems may not combine service credits under Section 49-11-405 in
924 qualifying for retirement, unless the eligible employee would receive a greater allowance by
925 combining the service credits.
926 (5) A monthly disability benefit payable to an eligible employee who is not eligible for

927 service credit under a system shall terminate at the earliest of:
928 (a) the date the eligible employee would be eligible for an unreduced allowance;
929 (b) the date the eligible employee has received a monthly disability benefit for the
930 applicable time period as set forth in Subsection (1)(b); or
931 (c) the date the eligible employee receives a reduced allowance.
932 Section 19. Section 49-22-101 is enacted to read:
933 CHAPTER 22. NEW PUBLIC EMPLOYEES' TIER II CONTRIBUTORY
934 RETIREMENT ACT
935 Part 1. General Provisions
936 49-22-101. Title.
937 This chapter is known as the "New Public Employees' Tier II Contributory Retirement
938 Act."
939 Section 20. Section 49-22-102 is enacted to read:
940 49-22-102. Definitions.
941 As used in this chapter:
942 (1) (a) Except as provided in Subsection (1)(c), "compensation" means the total
943 amount of payments made by a participating employer to a member of this system for services
944 rendered to the participating employer, including:
945 (i) bonuses;
946 (ii) cost-of-living adjustments;
947 (iii) other payments currently includable in gross income and that are subject to Social
948 Security deductions, including any payments in excess of the maximum amount subject to
949 deduction under Social Security law;
950 (iv) amounts that the member authorizes to be deducted or reduced for salary deferral
951 or other benefits authorized by federal law; and
952 (v) member contributions.
953 (b) "Compensation" for purposes of this chapter may not exceed the amount allowed
954 under Internal Revenue Code, Section 401(a)(17).
955 (c) "Compensation" does not include:
956 (i) the monetary value of remuneration paid in kind, including a residence or use of
957 equipment;

958 (ii) the cost of any employment benefits paid for by the participating employer;
959 (iii) compensation paid to a temporary employee, an exempt employee, or an employee
960 otherwise ineligible for service credit;
961 (iv) any payments upon termination, including accumulated vacation, sick leave
962 payments, severance payments, compensatory time payments, or any other special payments; or
963 (v) any allowances or payments to a member for costs or expenses paid by the
964 participating employer, including automobile costs, uniform costs, travel costs, tuition costs,
965 housing costs, insurance costs, equipment costs, and dependent care costs.
966 (d) The executive director may determine if a payment not listed under this Subsection
967 (1) falls within the definition of compensation.
968 (2) "Corresponding Tier I system" means the system or plan that would have covered
969 the member if the member had initially entered employment before July 1, 2011.
970 (3) "Final average salary" means the amount computed by averaging the highest five
971 years of annual compensation preceding retirement subject to Subsections (3)(a), (b), (c), and
972 (d).
973 (a) Except as provided in Subsection (3)(b), the percentage increase in annual
974 compensation in any one of the years used may not exceed the previous year's compensation by
975 more than 10% plus a cost-of-living adjustment equal to the decrease in the purchasing power
976 of the dollar during the previous year, as measured by a United States Bureau of Labor
977 Statistics Consumer Price Index average as determined by the board.
978 (b) In cases where the participating employer provides acceptable documentation to the
979 office, the limitation in Subsection (3)(a) may be exceeded if:
980 (i) the member has transferred from another agency; or
981 (ii) the member has been promoted to a new position.
982 (c) If the member retires more than six months from the date of termination of
983 employment, the member is considered to have been in service at the member's last rate of pay
984 from the date of the termination of employment to the effective date of retirement for purposes
985 of computing the member's final average salary only.
986 (d) If the member has less than five years of service credit in this system, final average
987 salary means the average annual compensation paid to the member during the full period of
988 service credit.

989 (4) "Participating employer" means an employer which meets the participation
990 requirements of:
991 (a) Sections 49-12-201 and 49-12-202 ;
992 (b) Sections 49-13-201 and 49-13-202 ;
993 (c) Sections 49-14-201 and 49-14-202 ;
994 (d) Sections 49-15-201 and 49-15-202 ;
995 (e) Sections 49-16-201 and 49-16-202 ;
996 (f) Section 49-17-201 ;
997 (g) Section 49-18-201 ; or
998 (h) Section 49-19-201 .
999 (5) (a) "Regular full-time employee" means an employee whose term of employment
1000 for a participating employer contemplates continued employment during a fiscal or calendar
1001 year and whose employment normally requires an average of 20 hours or more per week,
1002 except as modified by the board, and who receives benefits normally provided by the
1003 participating employer.
1004 (b) "Regular full-time employee" includes:
1005 (i) a teacher whose term of employment for a participating employer contemplates
1006 continued employment during a school year and who teaches half-time or more;
1007 (ii) a classified school employee whose employment normally requires an average of
1008 20 hours per week or more for a participating employer, regardless of benefits provided;
1009 (iii) an officer, elective or appointive, who earns during the first full month of the term
1010 of office $500 or more, indexed as of January 1, 1990, as provided in Section 49-22-309 ;
1011 (iv) a faculty member or employee of an institution of higher education who is
1012 considered full-time by that institution of higher education; and
1013 (v) an individual who otherwise meets the definition of this Subsection (5) who
1014 performs services for a participating employer through a professional employer organization or
1015 similar arrangement.
1016 (6) "System" means the New Public Employees' Tier II Contributory Retirement
1017 System created under this chapter.
1018 (7) "Years of service credit" means:
1019 (a) a period, consisting of 12 full months as determined by the board;

1020 (b) a period determined by the board, whether consecutive or not, during which a
1021 regular full-time employee performed services for a participating employer, including any time
1022 the regular full-time employee was absent on a paid leave of absence granted by a participating
1023 employer or was absent in the service of the United States government on military duty as
1024 provided by this chapter; or
1025 (c) the regular school year consisting of not less than eight months of full-time service
1026 for a regular full-time employee of an educational institution.
1027 Section 21. Section 49-22-103 is enacted to read:
1028 49-22-103. Creation of system.
1029 (1) There is created for members employed by a participating employer the "New
1030 Public Employees' Tier II Contributory Retirement System."
1031 (2) The New Public Employees' Tier II Contributory Retirement System includes:
1032 (a) the Tier II hybrid retirement system created in Part 3, Tier II Hybrid Retirement
1033 System; and
1034 (b) the Tier II defined contribution plan created in Part 4, Tier II Defined Contribution
1035 Plan.
1036 Section 22. Section 49-22-104 is enacted to read:
1037 49-22-104. Creation of trust fund.
1038 (1) There is created the "New Public Employees' Tier II Contributory Retirement Trust
1039 Fund" for the purpose of paying the benefits and costs of administering the defined benefit
1040 portion of this system.
1041 (2) The fund shall consist of all money paid into it, including interest, in accordance
1042 with this chapter, whether in the form of cash, securities, or other assets, and of all money
1043 received from any other source.
1044 (3) Custody, management, and investment of the fund shall be governed by Chapter 11,
1045 Utah State Retirement Systems Administration.
1046 Section 23. Section 49-22-201 is enacted to read:
1047 Part 2. Membership Eligibility
1048 49-22-201. System membership -- Eligibility.
1049 (1) Beginning July 1, 2011, a participating employer shall participate in this system.
1050 (2) (a) A person entering regular full-time employment with a participating employer

1051 on or after July 1, 2011, is eligible:
1052 (i) as a member for service credit and defined contributions under the Tier II hybrid
1053 retirement system established by Part 3, Tier II Hybrid Retirement System; or
1054 (ii) as a participant for defined contributions under the Tier II defined contributions
1055 plan established by Part 4, Tier II Defined Contribution Plan.
1056 (b) A person entering full-time employment with a participating employer on or after
1057 July 1, 2011, shall:
1058 (i) make an election to participate in the system created under this chapter within 30
1059 days from the date of employment:
1060 (A) as a member for service credit and defined contributions under the Tier II Hybrid
1061 Retirement System established by Part 3, Tier II Hybrid Retirement System: or
1062 (B) as a participant for defined contributions under the Tier II defined contributions
1063 plan established by Part 4, Tier II Defined Contribution Plan; and
1064 (ii) submit to the office notification of the member's election under Subsection (2)(b) in
1065 a manner approved by the office.
1066 (c) An election made by a person entering full-time employment with a participating
1067 employer under this Subsection (2) is irrevocable.
1068 (d) If no election is made under Subsection (2)(b), the person shall become a member
1069 eligible for service credit and defined contributions under the Tier II Hybrid Retirement System
1070 established by Part 3, Tier II Hybrid Retirement System.
1071 (3) Notwithstanding the provisions of this section, a governor or legislator initially
1072 entering office on or after July 1, 2011:
1073 (a) is only eligible to participate in the Tier II defined contribution plan established
1074 under Title 49, Chapter 22, Part 4, Tier II Defined Contribution Plan; and
1075 (b) is not eligible to participate in the Tier II hybrid retirement system established
1076 under Title 49, Chapter 22, Part 3, Tier II Hybrid Retirement System.
1077 Section 24. Section 49-22-202 is enacted to read:
1078 49-22-202. Participation of employers -- Limitations -- Exclusions -- Admission
1079 requirements.
1080 (1) (a) Unless excluded under Subsection (2), an employer is a participating employer
1081 and may not withdraw from participation in this system.

1082 (b) In addition to their participation in this system, a participating employer may not
1083 provide or participate in any additional public or private retirement, supplemental or defined
1084 contribution plan, either directly or indirectly, for their employees unless the actuarial funded
1085 ratio of all the systems under this title reach 100%.
1086 (2) An employer that is a charter school sponsored by the State Board of Education or a
1087 school district may be excluded from participation in this system if the charter school makes an
1088 election of nonparticipation in accordance with Section 53A-1a-512 unless the charter school
1089 makes a one-time, irrevocable retraction of the election of nonparticipation in accordance with
1090 Subsection 53A-1a-512 (9).
1091 (3) (a) An employer may, by resolution of its governing body, apply for admission to
1092 this system.
1093 (b) Upon approval of the resolution by the board, the employer is a participating
1094 employer in this system and is subject to this title.
1095 (4) If a participating employer purchases service credit on behalf of regular full-time
1096 employees for service rendered prior to the participating employer's admission to this system,
1097 the service credit shall be purchased in a nondiscriminatory manner on behalf of all current and
1098 former regular full-time employees who were eligible for service credit at the time service was
1099 rendered.
1100 Section 25. Section 49-22-203 is enacted to read:
1101 49-22-203. Exclusions from membership in system.
1102 (1) The following employees are not eligible for service credit in this system:
1103 (a) An employee whose employment status is temporary in nature due to the nature or
1104 the type of work to be performed, provided that:
1105 (i) if the term of employment exceeds six months and the employee otherwise qualifies
1106 for service credit in this system, the participating employer shall report and certify to the office
1107 that the employee is a regular full-time employee effective the beginning of the seventh month
1108 of employment; and
1109 (ii) if an employee, previously terminated prior to becoming eligible for service credit
1110 in this system, is reemployed within three months of termination by the same participating
1111 employer, the participating employer shall report and certify to the office that the member is a
1112 regular full-time employee when the total of the periods of employment equals six months and

1113 the employee otherwise qualifies for service credit in this system.
1114 (b) (i) A current or future employee of a two-year or four-year college or university
1115 who holds, or is entitled to hold, under Section 49-22-204 , a retirement annuity contract with
1116 the Teachers' Insurance and Annuity Association of America or with any other public or private
1117 system, organization, or company during any period in which required contributions based on
1118 compensation have been paid on behalf of the employee by the employer.
1119 (ii) The employee, upon cessation of the participating employer contributions, shall
1120 immediately become eligible for service credit in this system.
1121 (c) An employee serving as an exchange employee from outside the state.
1122 (d) An executive department head of the state or a legislative director, senior executive
1123 employed by the governor's office, a member of the State Tax Commission, a member of the
1124 Public Service Commission, and a member of a full-time or part-time board or commission
1125 who files a formal request for exemption.
1126 (e) An employee of the Department of Workforce Services who is covered under
1127 another retirement system allowed under Title 35A, Chapter 4, Employment Security Act.
1128 Section 26. Section 49-22-204 is enacted to read:
1129 49-22-204. Higher education employees' eligibility requirements -- Election
1130 between different retirement plans -- Classification requirements -- Transfer between
1131 systems.
1132 (1) (a) Regular full-time employees of institutions of higher education who are eligible
1133 to participate in either this system or in a retirement annuity contract with the Teachers'
1134 Insurance and Annuity Association of America or with any other public or private system,
1135 organization, or company, designated by the Board of Regents, shall, not later than January 1,
1136 1979, elect to participate exclusively in this system or in an annuity contract allowed under this
1137 Subsection (1)(a).
1138 (b) The election is final, and no right exists to make any further election.
1139 (2) (a) A regular full-time employee hired by an institution of higher education after
1140 January 1, 1979, may participate only in the retirement plan which attaches to the person's
1141 employment classification.
1142 (b) Each institution of higher education shall prepare or amend existing employment
1143 classifications, under the direction of the Board of Regents, so that each classification is

1144 assigned with either:
1145 (i) this system;
1146 (ii) the Teachers' Insurance and Annuity Association of America; or
1147 (iii) another public or private system, organization, or company designated by the
1148 Board of Regents.
1149 (3) A regular full-time employee hired by an institution of higher education on or after
1150 July 1, 2011, whose employment classification requires participation in this system may elect
1151 to continue participation in this system upon change to an employment classification which
1152 requires participation in:
1153 (a) an annuity plan with the Teachers' Insurance and Annuity Association of America;
1154 or
1155 (b) another public or private system, organization, or company designated by the Board
1156 of Regents.
1157 (4) A regular full-time employee hired by an institution of higher education on or after
1158 July 1, 2011, whose employment classification requires participation in this system shall
1159 participate in this system.
1160 Section 27. Section 49-22-301 is enacted to read:
1161 Part 3. Tier II Hybrid Retirement System
1162 49-22-301. Contributions.
1163 (1) Participating employers and members shall jointly pay the certified contribution
1164 rates to the office to maintain the defined benefit portion of this system on a financially and
1165 actuarially sound basis.
1166 (2) (a) A participating employer shall pay up to 8% of compensation toward the
1167 certified contribution rate to the office for the defined benefit portion of this system.
1168 (b) A member shall pay the amount, if any, of the certified contribution rate for the
1169 defined benefit portion of this system that exceeds 8% to the office.
1170 (c) In addition to the percent specified under Subsection (2)(a), the participating
1171 employer shall pay the corresponding Tier I system amortization rate of the employee's
1172 compensation to the office.
1173 (3) A participating employer may not elect to pay all or part of the required member
1174 contributions under Subsection (2)(b), in addition to the required participating employer

1175 contributions.
1176 (4) (a) All member contributions are credited by the office to the account of the
1177 individual member.
1178 (b) This amount, together with refund interest, is held in trust for the payment of
1179 benefits to the member or the member's beneficiaries.
1180 (c) All member contributions are vested and nonforfeitable.
1181 (5) (a) Each member is considered to consent to payroll deductions of member
1182 contributions.
1183 (b) The payment of compensation less these payroll deductions is considered full
1184 payment for services rendered by the member.
1185 Section 28. Section 49-22-302 is enacted to read:
1186 49-22-302. Purchase of service credit.
1187 Any member who works 20 or more hours per week for a participating employer
1188 participating in this system, but does not meet other eligibility requirements for service credit,
1189 may purchase such service credit in accordance with Section 49-11-403 .
1190 Section 29. Section 49-22-303 is enacted to read:
1191 49-22-303. Defined contribution benefit established -- Contribution by employer
1192 and employee -- Vesting of contributions -- Plans to be separate -- Tax-qualified status of
1193 plans.
1194 (1) (a) Participating employers shall make a nonelective contribution on behalf of each
1195 of its regular full-time employees who are members of this system in an amount equal to 8%
1196 minus the contribution rate paid by the employer pursuant to Subsection 49-22-301 (2)(a) of the
1197 member's compensation to a defined contribution plan qualified under Section 401(k) of the
1198 Internal Revenue Code which:
1199 (i) is sponsored by the board; and
1200 (ii) has been grandfathered under Section 1116 of the Federal Tax Reform Act of 1986.
1201 (b) The member may make additional payments to the qualified 401(k) plan which
1202 receives the employer contribution described in this Subsection (1).
1203 (2) (a) The total amount contributed by the participating employer under Subsection
1204 (1)(a) vests to the member's benefit four years from the date of employment.
1205 (b) The total amount contributed by the member under Subsection (1)(b) vests to the

1206 member's benefit immediately and is nonforfeitable.
1207 (3) (a) Contributions made by a participating employer under Subsection (1)(a) shall be
1208 invested in a default option selected by the board until the member is vested in accordance with
1209 Subsection (2)(a).
1210 (b) A member may direct the investment of contributions made by a participating
1211 employer under Subsection (1)(a) only after the contributions have vested in accordance with
1212 Subsection (2)(a).
1213 (c) A member may direct the investment of contributions made by the member under
1214 Subsection (1)(b).
1215 (4) No loans shall be available from contributions made by a participating employer
1216 under Subsection (1)(a).
1217 (5) No hardship distributions shall be available from contributions made by a
1218 participating employer under Subsection (1)(a).
1219 (6) (a) Except as provided in Subsection (6)(b), if a member terminates employment
1220 with a participating employer prior to the vesting period described in Subsection (2)(a), all
1221 contributions made by a participating employer on behalf of the member under Subsection
1222 (1)(a) are subject to forfeiture.
1223 (b) If a member who terminates employment with a participating employer prior to the
1224 vesting period described in Subsection (2)(a) subsequently enters employment with the same or
1225 another participating employer within five years of the termination date of the previous
1226 employment:
1227 (i) all contributions made by the previous participating employer on behalf of the
1228 member shall be reinstated upon the member's completion of the vesting period under
1229 Subsection (2)(a); and
1230 (ii) the length of time that the member worked with the previous employer shall be
1231 included in determining whether the member has completed the vesting period under
1232 Subsection (2)(a).
1233 (c) The board shall establish a forfeiture account and shall specify the uses of the
1234 forfeiture account, which may include an offset against employer contributions made under this
1235 section.
1236 (7) The board may request from any other qualified 401(k) plan under Subsection (1)

1237 or (2) any relevant information pertaining to the maintenance of its tax qualification under the
1238 Internal Revenue Code.
1239 (8) The board may take any action which in its judgment is necessary to maintain the
1240 tax-qualified status of its 401(k) defined contribution plan under federal law.
1241 Section 30. Section 49-22-304 is enacted to read:
1242 49-22-304. Defined benefit eligibility for an allowance -- Date of retirement --
1243 Qualifications.
1244 (1) A member is qualified to receive an allowance from this system when:
1245 (a) the member ceases actual work for a participating employer in this system before
1246 the member's retirement date and provides evidence of the termination;
1247 (b) the member has submitted to the office a notarized retirement application form that
1248 states the member's proposed retirement date; and
1249 (c) one of the following conditions is met as of the member's retirement date:
1250 (i) the member has accrued at least four years of service credit and has attained an age
1251 of 65 years;
1252 (ii) the member has accrued at least 10 years of service credit and has attained an age
1253 of 62 years;
1254 (iii) the member has accrued at least 20 years of service credit and has attained an age
1255 of 60 years; or
1256 (iv) the member has accrued at least 35 years of service credit.
1257 (2) (a) The member's retirement date:
1258 (i) shall be the 1st or the 16th day of the month, as selected by the member;
1259 (ii) shall be on or after the date of termination; and
1260 (iii) may not be more than 90 days before or after the date the application is received by
1261 the office.
1262 (b) A member may not be employed by a participating employer in the system
1263 established by this chapter on the retirement date selected under Subsection (2)(a)(i).
1264 Section 31. Section 49-22-305 is enacted to read:
1265 49-22-305. Defined benefit service retirement plans -- Calculation of retirement
1266 allowance -- Social Security limitations.
1267 (1) (a) The retirees of this system may choose from the six retirement options described

1268 in this section.
1269 (b) Options Two, Three, Four, Five, and Six are modifications of the Option One
1270 calculation.
1271 (2) The Option One benefit is an annual allowance calculated as follows:
1272 (a) If the retiree is at least 65 years of age or has accrued at least 35 years of service
1273 credit, the allowance is an amount equal to 1% of the retiree's final average salary multiplied by
1274 the number of years of service credit accrued on and after July 1, 2011.
1275 (b) If the retiree is less than 65 years of age, the allowance shall be reduced by the full
1276 actuarial amount for each year of retirement from age 60 to age 65, unless the member has 35
1277 or more years of accrued credit in which event no reduction is made to the allowance.
1278 (c) (i) Years of service includes any fractions of years of service to which the retiree
1279 may be entitled.
1280 (ii) At the time of retirement, if a retiree's combined years of actual, not purchased,
1281 service credit is within 1/10 of one year of the total years of service credit required for
1282 retirement, the retiree shall be considered to have the total years of service credit required for
1283 retirement.
1284 (d) An Option One allowance is only payable to the member during the member's
1285 lifetime.
1286 (3) The allowance payable under Options Two, Three, Four, Five, and Six is calculated
1287 by reducing an Option One benefit based on actuarial computations to provide the following:
1288 (a) Option Two is a reduced allowance paid to and throughout the lifetime of the
1289 retiree, and, if the retiree receives less in annuity payments than the amount of the retiree's
1290 member contributions, the remaining balance of the retiree's member contributions shall be
1291 paid in accordance with Sections 49-11-609 and 49-11-610 .
1292 (b) Option Three is a reduced allowance paid to and throughout the lifetime of the
1293 retiree, and, upon the death of the retiree, the same reduced allowance paid to and throughout
1294 the lifetime of the retiree's lawful spouse at the time of retirement.
1295 (c) Option Four is a reduced allowance paid to and throughout the lifetime of the
1296 retiree, and upon the death of the retiree, an amount equal to 1/2 of the retiree's allowance paid
1297 to and throughout the lifetime of the retiree's lawful spouse at the time of retirement.
1298 (d) Option Five is a modification of Option Three so that if the lawful spouse at the

1299 time of retirement predeceases the retiree, an allowance equivalent to the amount payable at the
1300 time of initial retirement under Option One shall be paid to the retiree for the remainder of the
1301 retiree's life, beginning on the last day of the month following the month in which the lawful
1302 spouse dies.
1303 (e) Option Six is a modification of Option Four so that if the lawful spouse at the time
1304 of retirement predeceases the retiree, an allowance equivalent to the amount payable at the time
1305 of initial retirement under Option One shall be paid to the retiree for the remainder of the
1306 retiree's life, beginning on the last day of the month following the month in which the lawful
1307 spouse dies.
1308 (4) Periods of employment which are exempt from this system under Subsection
1309 49-22-203 (1)(b), may be purchased by the member for the purpose of retirement only if all
1310 benefits from the Teachers' Insurance and Annuity Association of America or any other public
1311 or private system or organization based on this period of employment are forfeited.
1312 (5) (a) If a retiree under Option One dies within 90 days after the retiree's retirement
1313 date, the retirement is canceled and the death shall be considered as that of a member before
1314 retirement.
1315 (b) Any payments made to the retiree shall be deducted from the amounts due to the
1316 beneficiary.
1317 (6) If a retiree retires under either Option Five or Six and subsequently divorces, the
1318 retiree may elect to convert the benefit to an Option One benefit at the time of divorce, if there
1319 is no court order filed in the matter.
1320 Section 32. Section 49-22-306 is enacted to read:
1321 49-22-306. Allowance payable by lump-sum payment.
1322 (1) If a retiree's allowance, as computed under this chapter, amounts to $25 or less, the
1323 allowance may be settled by the office by making a lump-sum payment of an amount
1324 actuarially equivalent to the allowance.
1325 (2) A payment made under this section constitutes a full and complete settlement of the
1326 retiree's claim against this system.
1327 Section 33. Section 49-22-307 is enacted to read:
1328 49-22-307. Lump-sum death benefit for retiree and spouse.
1329 (1) (a) Upon retirement, a retiree may elect to have the office deduct an actuarially

1330 determined amount from the retiree's allowance to provide a lump-sum benefit payable to a
1331 beneficiary upon the death of the retiree.
1332 (b) Upon retirement, a retiree may also elect to have an actuarially determined amount
1333 deducted from the retiree's allowance to provide a lump-sum death benefit payable to a
1334 beneficiary upon the death of the retiree's lawful spouse at the time of retirement.
1335 (c) The board may make rules for the administration of this lump-sum death benefit.
1336 (2) (a) For a retiree who pays for a lump-sum death benefit under this section through a
1337 reduction of an allowance, benefits shall be paid in accordance with Sections 49-11-609 and
1338 49-11-610 .
1339 (b) If the retiree chooses Option Three, Four, Five, or Six, and a lump-sum death
1340 benefit is payable after the death of the retiree, the allowance shall be restored to its original
1341 amount.
1342 (3) (a) A retiree may elect to cancel the lump-sum death benefit under this section.
1343 (b) The cancellation under this Subsection (3) is irrevocable.
1344 (c) Upon cancellation, the allowance shall be restored to its original amount and
1345 benefits under this section may not be paid.
1346 Section 34. Section 49-22-308 is enacted to read:
1347 49-22-308. Death of married members -- Service retirement benefits to surviving
1348 spouse.
1349 (1) As used in this section, "member's full allowance" means an Option Three
1350 allowance calculated under Section 49-22-305 without an actuarial reduction.
1351 (2) Upon the request of a deceased member's lawful spouse at the time of the member's
1352 death, the deceased member is considered to have retired under Option Three on the first day of
1353 the month following the month in which the member died if the following requirements are
1354 met:
1355 (a) the member has:
1356 (i) 15 or more years of service credit;
1357 (ii) attained age 62 with 10 or more years of service credit; or
1358 (iii) attained age 65 with four or more years of service credit; and
1359 (b) the member dies leaving a spouse to whom the member has been married at least
1360 six months immediately prior to the death date.

1361 (3) The spouse who requests a benefit under this section shall apply in writing to the
1362 office. The allowance shall begin on the first day of the month:
1363 (a) following the month in which the member died, if the application is received by the
1364 office within 90 days of the member's death; or
1365 (b) in which the application is received by the office.
1366 (4) The allowance payable to a surviving spouse under Subsection (2) is:
1367 (a) if the member has 25 or more years of service credit at the time of death, the
1368 surviving spouse shall receive the member's full allowance;
1369 (b) if the member has between 20-24 years of service credit and is not age 60 or older
1370 at the time of death, the surviving spouse shall receive 2/3 of the member's full allowance;
1371 (c) if the member has between 15-19 years of service credit and is not age 62 or older
1372 at the time of death, the surviving spouse shall receive 1/3 of the member's full allowance; or
1373 (d) if the member is age 60 or older with 20 or more years of service credit, age 62 or
1374 older with 10 or more years of service credit, or age 65 or older with four or more years of
1375 service credit at the time of death, the surviving spouse shall receive an Option Three benefit
1376 with actuarial reductions.
1377 (5) Except for a return of member contributions, benefits payable under this section are
1378 retirement benefits and shall be paid in addition to any other payments made under Section
1379 49-22-501 and shall constitute a full and final settlement of the claim of the spouse or any other
1380 beneficiary filing a claim for benefits under Section 49-22-501 .
1381 Section 35. Section 49-22-309 is enacted to read:
1382 49-22-309. Defined benefit annual cost-of-living adjustment.
1383 (1) The office shall make an annual cost-of-living adjustment to:
1384 (a) an original allowance paid under Section 49-22-305 , if the allowance has been paid
1385 for at least one year; and
1386 (b) an original payment made to an alternate payee under a domestic relations order, if
1387 the payment is to be paid as a percentage of the allowance rather than a specific dollar amount.
1388 (2) (a) The original allowance shall be increased by the annual increase in the
1389 Consumer Price Index up to a maximum of 2.5%.
1390 (b) Annual increases in the Consumer Price Index in excess of 2.5% shall be
1391 accumulated and used in subsequent adjustments when the annual increase in the Consumer

1392 Price Index is less than 2.5%.
1393 (3) The Consumer Price Index used in calculating adjustments shall be a United States
1394 Bureau of Labor Statistics Consumer Price Index average as determined by the board.
1395 (4) The cost-of-living adjustment made under this section may not decrease the
1396 allowance.
1397 Section 36. Section 49-22-310 is enacted to read:
1398 49-22-310. Purchase of service credit -- Conditions -- Cost -- Nondiscrimination
1399 policy.
1400 (1) (a) A member may purchase or a member and a participating employer may jointly
1401 purchase a maximum of five years of service credit which cannot otherwise be purchased under
1402 this title.
1403 (b) At a minimum, the years of service credit purchased shall be sufficient to allow the
1404 member to meet the retirement eligibility requirements of this system with no actuarial
1405 reduction.
1406 (c) The member's retirement date shall be immediately after the purchase of years of
1407 service credit.
1408 (d) The member shall pay at least 5% of the cost of the purchase.
1409 (e) To qualify for a purchase of service credit under this section, the member shall:
1410 (i) have at least five years of service credit; and
1411 (ii) otherwise meet federal eligibility requirements.
1412 (2) The purchase price for the years of service credit shall be calculated and paid for as
1413 provided in Section 49-11-403 .
1414 (3) Prior to making any purchase of years of service credit under this section, a
1415 participating employer shall adopt a purchase policy that includes nondiscriminatory
1416 participation standards for all regular full-time employees.
1417 (4) Only members retiring from this system may purchase service credit under this
1418 section.
1419 Section 37. Section 49-22-401 is enacted to read:
1420 Part 4. Tier II Defined Contribution Plan
1421 49-22-401. Contributions -- Rates.
1422 (1) Up to the amount allowed by federal law, the participating employer shall

1423 contribute 8% of the participant's compensation to a defined contribution plan.
1424 (2) (a) The participating employer shall contribute the 8% nonelective contribution
1425 described in Subsection (1) to a defined contribution plan qualified under Section 401(k) of the
1426 Internal Revenue Code which:
1427 (i) is sponsored by the board; and
1428 (ii) has been grandfathered under Section 1116 of the Federal Tax Reform Act of 1986.
1429 (b) The member may make additional payments to the qualified 401(k) plan which
1430 receives the employer contribution described in this Subsection (2).
1431 (c) In addition to the percent specified under Subsection (2)(a), the participating
1432 employer shall pay the corresponding Tier I system amortization rate of the employee's
1433 compensation to the office.
1434 (3) (a) The total amount contributed by the participating employer under Subsection
1435 (2)(a) vests to the member's benefit four years from the date of employment.
1436 (b) The total amount contributed by the member under Subsection (2)(b) vests to the
1437 member's benefit immediately and is nonforfeitable.
1438 (4) (a) Contributions made by a participating employer under Subsection (2)(a) shall be
1439 invested in a default option selected by the board until the member is vested in accordance with
1440 Subsection (3)(a).
1441 (b) A member may direct the investment of contributions made by a participating
1442 employer under Subsection (2)(a) only after the contributions have vested in accordance with
1443 Subsection (3)(a).
1444 (c) A member may direct the investment of contributions made by the member under
1445 Subsection (3)(b).
1446 (5) No loans shall be available from contributions made by a participating employer
1447 under Subsection (2)(a).
1448 (6) No hardship distributions shall be available from contributions made by a
1449 participating employer under Subsection (2)(a).
1450 (7) (a) Except as provided in Subsection (7)(b), if a member terminates employment
1451 with a participating employer prior to the vesting period described in Subsection (3)(a), all
1452 contributions made by a participating employer on behalf of the member under Subsection
1453 (2)(a) are subject to forfeiture.

1454 (b) If a member who terminates employment with a participating employer prior to the
1455 vesting period described in Subsection (3)(a) subsequently enters employment with the same or
1456 another participating employer within five years of the termination date of the previous
1457 employment:
1458 (i) all contributions made by the previous participating employer on behalf of the
1459 member shall be reinstated upon the member's completion of the vesting period under
1460 Subsection (3)(a); and
1461 (ii) the length of time that the member worked with the previous employer shall be
1462 included in determining whether the member has completed the vesting period under
1463 Subsection (3)(a).
1464 (c) The board shall establish a forfeiture account and shall specify the uses of the
1465 forfeiture account, which may include an offset against employer contributions made under this
1466 section.
1467 (8) The board may request from any other qualified 401(k) plan under Subsection (2)
1468 any relevant information pertaining to the maintenance of its tax qualification under the
1469 Internal Revenue Code.
1470 (9) The board may take any action which in its judgment is necessary to maintain the
1471 tax-qualified status of its 401(k) defined contribution plan under federal law.
1472 Section 38. Section 49-22-402 is enacted to read:
1473 49-22-402. Defined contribution distributions for disabled members.
1474 For a person who is disabled and receives contributions under Subsection
1475 49-11-404 (4)(b), the disabled member may begin receiving distributions from the defined
1476 contributions made by the participating employer on behalf of the disabled member when the
1477 person would have been eligible to retire if the person was covered by the defined benefit
1478 portion of the Tier II Hybrid Retirement System under Part 3, Tier II Hybrid Retirement
1479 System.
1480 Section 39. Section 49-22-501 is enacted to read:
1481 Part 5. Death Benefit
1482 49-22-501. Death benefit by means of group insurance policy -- Eligibility for
1483 death benefit -- Benefit calculation -- Payment of claim.
1484 (1) The office shall provide a death benefit through the purchase of a group insurance

1485 policy for members of this system.
1486 (2) The board shall make rules to administer the death benefit provided by this section
1487 and may, in accordance with federal law, establish:
1488 (a) benefit levels;
1489 (b) classes of members; and
1490 (c) a living benefit option.
1491 (3) This death benefit is payable when:
1492 (a) the member dies prior to the member's retirement date or dies under circumstances
1493 which Section 49-22-304 requires to be treated as the death of a member before retirement;
1494 (b) the office receives acceptable proof of death; and
1495 (c) benefits are not payable under Section 49-22-306 .
1496 (4) The death benefit payable to the beneficiary under this section is a lump-sum
1497 payment consisting of:
1498 (a) the return of any member contributions under this chapter; plus
1499 (b) a percentage of the final average salary of the member to be determined by the
1500 board.
1501 (5) Any amount of a living benefit option paid to the member prior to death shall be
1502 deducted from the benefit payable to the beneficiary.
1503 (6) The cost of the death benefit shall be paid by the participating employer in addition
1504 to the contribution rate established under Section 49-22-301 or 49-22-401 .
1505 (7) The portion of the death benefit provided under Subsection (4)(b), may not be paid
1506 to the beneficiary of an inactive member unless the death of the member occurs either:
1507 (a) within a period of 120 days after the last day of work for which the person received
1508 compensation; or
1509 (b) while the member is still physically or mentally incapacitated from performance of
1510 duties, if the incapacity has been continuous since the last day of work for which compensation
1511 was received.
1512 (8) The death benefit provided under Subsection (4)(b) shall be paid in accordance
1513 with Sections 49-11-609 and 49-11-610 .
1514 (9) The death benefit paid to the beneficiary of an inactive member, except as
1515 otherwise provided under Subsection (7), is a lump-sum return of the member's member

1516 contributions.
1517 (10) Payment of the death benefit by the office constitutes a full settlement of any
1518 beneficiary's claim against the office and the office is not liable for any further or additional
1519