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S.B. 71

             1     

RETIREMENT DEFERRED COMPENSATION

             2     
EMPLOYER MATCH

             3     
2000 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Sponsor: Gene Davis

             6      AN ACT RELATING TO RETIREMENT; AMENDING EMPLOYER CONTRIBUTION TO
             7      CERTAIN EMPLOYEES' SUPPLEMENTAL BENEFITS; AND PROVIDING AN EFFECTIVE
             8      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      Be it enacted by the Legislature of the state of Utah:
             13          Section 1. Section 49-3-302 is amended to read:
             14           49-3-302. Supplemental benefit established -- Deferred compensation plan options
             15      -- Contribution by employer and employee -- Immediate vesting of contributions -- Plans to
             16      be separate -- Tax-qualified status of plans.
             17          (1) There is established a supplemental deferred compensation benefit for members of this
             18      system.
             19          (a) (i) For members of level A under Section 49-3-301 , which are participating educational
             20      institutions or participating employers whose activities are associated with participating
             21      educational institutions, the employer shall contribute on behalf of each of its employees 1.5% of
             22      the employee's salary to a deferred compensation plan qualified under Section 401(k) of the
             23      Internal Revenue Code which is selected by the employee and which is sponsored by the board,
             24      by that level A employer, or by a group of similar level A employers and which has been
             25      grandfathered under Section 1116 of the Federal Tax Reform Act of 1986.
             26          (ii) For all other members of level A under Section 49-3-301 , the employer shall contribute
             27      on behalf of each of its employees [1.5% of the employee's salary] to the deferred compensation


             28      plan qualified under Section 401(k) of the Internal Revenue Code which is sponsored by the
             29      board[.]:
             30          (A) 1.5% of the employee's salary; and
             31          (B) 1% of the employee's salary for each 1% of the employee's salary contributed by the
             32      employee up to a maximum employer participation of 4% under this Subsection (1)(a)(ii).
             33          (iii) The employee may also make elective contributions to either the qualified 401(k) plan
             34      which receives the [1.5%] employer contribution described in this Subsection [(i)] (1)(a), or to any
             35      other deferred compensation plan qualified under Section 401(k) of the Internal Revenue Code
             36      which is selected by the employee and sponsored by the board, that level A employer, or a group
             37      of similar level A employers, and which has been grandfathered under Section 1116 of the Federal
             38      Tax Reform Act of 1986, but only up to an amount permitted by federal law.
             39          (b) (i) For members of level B under Section 49-3-301 , the participating employer may
             40      contribute on behalf of each of its employees any amount to the deferred compensation plan
             41      qualified under Section 401(k) of the Internal Revenue Code which is sponsored by the board.
             42          (ii) The employee may also contribute to the same qualified 401(k) plan which the
             43      employee selected to receive the employer contribution described in Subsection (1)(b)(i), but only
             44      up to an amount permitted by federal law.
             45          (c) The employee may not make elective contributions to any other qualified 401(k) plan
             46      sponsored by a state or local government.
             47          (2) The total amount contributed by the employer under Subsection (1)(a) or (b) vests to
             48      the employee's benefit immediately and is nonforfeitable.
             49          (3) (a) Each qualified deferred compensation 401(k) plan is separate and distinct from any
             50      other qualified deferred compensation 401(k) plan for all purposes including, but not limited to,
             51      purposes of fiduciary liability and plan administration.
             52          (b) The board may request from any other qualified 401(k) plan under Subsection
             53      (1)(a)(iii) any relevant information pertaining to the maintenance of its tax qualification under the
             54      Internal Revenue Code and may request indemnification from such other plan to the extent it
             55      performs testing functions for that plan.
             56          (4) (a) Prior to January 1 of each calendar year, each employee of an employing unit
             57      specified in Subsection (1)(a)(i) shall notify the employing unit which qualified deferred
             58      compensation 401(k) plan the employee has selected to receive the employer and employee


             59      contributions described in Subsections (1)(a) and (b) for that calendar year.
             60          (b) This election may be changed only in accordance with procedures established by the
             61      employing unit.
             62          (c) Notwithstanding this section, the board may take any action which in its judgment is
             63      necessary to maintain the tax-qualified status of its 401(k) deferred compensation plan pursuant
             64      to federal law. The board shall submit findings of fact and its conclusions prior to taking any such
             65      action.
             66          Section 2. Effective date.
             67          This act takes effect on July 1, 2000.




Legislative Review Note
    as of 1-18-00 1:31 PM


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

Office of Legislative Research and General Counsel


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