H.B. 319

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PUBLIC EMPLOYEE AND PUBLIC SAFETY
2 RETIREMENT AMENDMENTS
3 1998 GENERAL SESSION
4 STATE OF UTAH
5 Sponsor: Orville D. Carnahan
6 AN ACT RELATING TO RETIREMENT; AUTHORIZING AND AMENDING EMPLOYER
7 CONTRIBUTIONS TO CERTAIN EMPLOYEES' SUPPLEMENTAL BENEFITS; AND
8 PROVIDING AN EFFECTIVE DATE.
9 This act affects sections of Utah Code Annotated 1953 as follows:
10 AMENDS:
11 49-3-302, as last amended by Chapter 157, Laws of Utah 1992
12 ENACTS:
13 49-4a-302, Utah Code Annotated 1953
14 Be it enacted by the Legislature of the state of Utah:
15 Section 1. Section 49-3-302 is amended to read:
16 49-3-302. Supplemental benefit established -- Deferred compensation plan options
17 -- Contribution by employer and employee -- Immediate vesting of contributions -- Plans to
18 be separate -- Tax-qualified status of plans.
19 (1) There is established a supplemental deferred compensation benefit for members of this
20 system.
21 (a) (i) For members of level A under Section 49-3-301, which are participating educational
22 institutions or participating employers whose activities are associated with participating
23 educational institutions, the employer shall contribute on behalf of each of its employees [1.5%]
24 2.5% of the employee's salary to a deferred compensation plan qualified under Section 401(k) of
25 the Internal Revenue Code which is selected by the employee and which is sponsored by the board,
26 by that level A employer, or by a group of similar level A employers and which has been
27 grandfathered under Section 1116 of the Federal Tax Reform Act of 1986.

1 (ii) For all other members of level A under Section 49-3-301, the employer shall contribute
2 on behalf of each of its employees [1.5%] 2.5% of the employee's salary to the deferred
3 compensation plan qualified under Section 401(k) of the Internal Revenue Code which is
4 sponsored by the board.
5 (iii) The employee may also make elective contributions to either the qualified 401(k) plan
6 which receives the [1.5%] 2.5% employer contribution described in Subsection (1)(a)(i), or to any
7 other deferred compensation plan qualified under Section 401(k) of the Internal Revenue Code
8 which is selected by the employee and sponsored by the board, that level A employer, or a group
9 of similar level A employers, and which has been grandfathered under Section 1116 of the Federal
10 Tax Reform Act of 1986, but only up to an amount permitted by federal law.
11 (b) (i) For members of level B under Section 49-3-301, the participating employer may
12 contribute on behalf of each of its employees any amount to the deferred compensation plan
13 qualified under Section 401(k) of the Internal Revenue Code which is sponsored by the board.
14 (ii) The employee may also contribute to the same qualified 401(k) plan which the
15 employee selected to receive the employer contribution described in Subsection (1)(b)(i), but only
16 up to an amount permitted by federal law.
17 (c) The employee may not make elective contributions to any other qualified 401(k) plan
18 sponsored by a state or local government.
19 (2) The total amount contributed by the employer under Subsection (1)(a) or (b) vests to
20 the employee's benefit immediately and is nonforfeitable.
21 (3) Each qualified deferred compensation 401(k) plan is separate and distinct from any
22 other qualified deferred compensation 401(k) plan for all purposes including, but not limited to,
23 purposes of fiduciary liability and plan administration. The board may request from any other
24 qualified 401(k) plan under Subsection (1)(a)(iii) any relevant information pertaining to the
25 maintenance of its tax qualification under the Internal Revenue Code and may request
26 indemnification from such other plan to the extent it performs testing functions for that plan.
27 (4) Prior to January 1 of each calendar year, each employee of an employing unit specified
28 in Subsection (1)(a)(i) shall notify the employing unit which qualified deferred compensation
29 401(k) plan the employee has selected to receive the employer and employee contributions
30 described in Subsections (1)(a) and (b) for that calendar year. This election may be changed only
31 in accordance with procedures established by the employing unit. Notwithstanding this section,

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1 the board may take any action which in its judgment is necessary to maintain the tax-qualified
2 status of its 401(k) deferred compensation plan pursuant to federal law. The board shall submit
3 findings of fact and its conclusions prior to taking any such action.
4 Section 2. Section 49-4a-302 is enacted to read:
5 49-4a-302. Supplemental benefit established -- Deferred compensation plan --
6 Contribution by employer and employee -- Immediate vesting of contributions.
7 (1) There is established a supplemental deferred compensation benefit for members of this
8 system.
9 (a) (i) For public safety employees of the state and state institutions of higher education,
10 the employer shall contribute on behalf of each of its employees 1% of the employee's salary to
11 the deferred compensation plan qualified under Section 401(k) of the Internal Revenue Code
12 which is sponsored by the board.
13 (ii) The employee may also make elective contributions to the qualified 401(k) plan which
14 receives the 1% employer contribution described in Subsection (1)(a)(i), but only up to an amount
15 permitted by federal law.
16 (b) (i) For all other members of this system not described under Subsection (1)(a), the
17 participating employer may contribute on behalf of each of its employees any amount to the
18 deferred compensation plan qualified under Section 401(k) of the Internal Revenue Code which
19 is sponsored by the board.
20 (ii) The employee may also make elective contributions to the qualified 401(k) plan which
21 receives the 1% employer contribution described in Subsection (1)(b)(i), but only up to an amount
22 permitted by federal law.
23 (c) The employee may not make elective contributions to any other qualified 401(k) plan
24 sponsored by a state or local government.
25 (2) The total amount contributed by the employer under Subsection (1)(a) or (b) vests to
26 the employee's benefit immediately and is nonforfeitable.
27 Section 3. Effective date.
28 This act takes effect on July 1, 1998.


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Legislative Review Note
as of 1-23-98 8:23 AM

A limited legal review of this bill raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel

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