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S.B. 94

             1     

SUPPLEMENTAL BENEFIT AMENDMENTS FOR

             2     
NONCONTRIBUTORY PUBLIC EMPLOYEES

             3     
2010 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: Daniel R. Liljenquist

             6     
House Sponsor: Brad L. Dee

             7     
             8      LONG TITLE
             9      General Description:
             10          This bill modifies the Public Employees' Noncontributory Retirement Act by amending
             11      provisions related to the supplemental defined contribution for certain employees.
             12      Highlighted Provisions:
             13          This bill:
             14          .    removes for employees that began full-time employment with the state or its
             15      educational institutions on or after July 1, 1986, the requirement that 1.5% of salary
             16      be paid into the 401(k) account of state and educational institution employees in the
             17      Public Employees' Noncontributory Retirement System;
             18          .    requires a participating employer to determine whether an employee is eligible to
             19      receive the 1.5% of salary nonelective contribution;
             20          .    provides a maximum 12 month look-back period to correct errors in the nonelective
             21      contribution; and
             22          .    makes technical changes.
             23      Monies Appropriated in this Bill:
             24          None
             25      Other Special Clauses:
             26          This bill takes effect on July 1, 2010.
             27      Utah Code Sections Affected:


             28      AMENDS:
             29          49-13-303, as renumbered and amended by Laws of Utah 2002, Chapter 250
             30     
             31      Be it enacted by the Legislature of the state of Utah:
             32          Section 1. Section 49-13-303 is amended to read:
             33           49-13-303. Supplemental benefit provided to certain employees -- Defined
             34      contribution plan options -- Contribution by employer and employee -- Immediate
             35      vesting of contributions -- Plans to be separate -- Tax-qualified status of plans.
             36          (1) (a) (i) [Participating employers] A participating employer in Level A under Section
             37      49-13-301 , [which are participating educational institutions or participating employers whose
             38      activities are associated with participating educational institutions,] shall make a nonelective
             39      contribution on behalf of each [of its] regular full-time [employees] employee who [are
             40      members]:
             41          (A) is a member of this system;
             42          (B) before July 1, 1986, began the employee's current regular full-time employment
             43      with:
             44          (I) the state;
             45          (II) an educational institution of the state; or
             46          (III) a participating employer whose activities are associated with participating
             47      educational institutions; and
             48          (C) has, since before July 1, 1986, continued the employment which began under
             49      Subsection (1)(a)(i)(B) without a break, interruption, transfer, termination, rehire, or change of
             50      the employing agency.
             51          (ii) The nonelective contribution shall be an amount equal to at least 1.5% of the
             52      member's compensation to a defined contribution plan [qualified under Section 401(k) of the
             53      Internal Revenue Code which is].
             54          (iii) The defined contribution plan shall be:
             55          (A) selected by the regular full-time employee [and which is];
             56          (B) sponsored by:
             57          (I) the board[, by that];
             58          (II) the Level A employer[,]; or [by]


             59          (III) a group of similar Level A employers[, and which has been]; and
             60          (C) qualified as grandfathered under Section 1116 of the Federal Tax Reform Act of
             61      1986.
             62          (b) [All other] (i) A Level A participating [employers] employer under Section
             63      49-13-301 that is not included under Subsection (1)(a), shall make a nonelective contribution
             64      on behalf of each [of its] regular full-time [employees] employee who [are members]:
             65          (A) is a member of this system; and
             66          (B) before July 1, 1986, began the employee's current regular full-time employment
             67      with:
             68          (I) the state; or
             69          (II) an educational institution of the state; and
             70          (C) has, since before July 1, 1986, continued the employment which began under
             71      Subsection (1)(a)(i)(B) without a break, interruption, transfer, termination, rehire, or change of
             72      the employing agency.
             73          (ii) The nonelective contribution shall be an amount equal to at least 1.5% of the
             74      member's compensation to the defined contribution plan [qualified under Section 401(k) of the
             75      Internal Revenue Code which is sponsored by the board].
             76          (c) The member or participating employer may make additional payments to [either the
             77      qualified 401(k) plan which receives the 1.5% employer contribution described in this
             78      Subsection (1), or to any other defined contribution plan qualified under Section 401(k) of the
             79      Internal Revenue Code which is selected by the member and sponsored by the board, that Level
             80      A employer, or a group of similar Level A employers, and which has been grandfathered under
             81      Section 1116 of the Federal Tax Reform Act of 1986] a qualified defined contribution plan
             82      described under this Subsection (1).
             83          (d) (i) A participating employer shall determine whether an employee is eligible to
             84      receive the nonelective contribution under Subsections (1)(a) and (b).
             85          (ii) The office shall provide information to assist the participating employer in the
             86      determination under Subsection (1)(d)(i).
             87          (e) If an error is made in a determination under Subsection (1)(d), the participating
             88      employer shall correct the error by:
             89          (i) making up unmade contributions on behalf of the employee for up to 12 months of


             90      any unmade contributions; or
             91          (ii) requiring the employee to refund up to 12 months of the contributions received in
             92      error.
             93          (2) (a) Participating employers in Level B under Section 49-13-301 may make
             94      nonelective contributions on behalf of each of its regular full-time employees who are members
             95      of this system to the 401(k) defined contribution plan sponsored by the board or to a qualified
             96      plan sponsored by the participating employer which has been grandfathered under Section
             97      1116 of the Federal Tax Reform Act of 1986.
             98          (b) The member may also make voluntary deferrals to the same 401(k) plan which the
             99      member selected to receive the employer contribution described in Subsection (2)(a).
             100          (3) Each qualified defined contribution 401(k) plan is separate and distinct from any
             101      other qualified defined contribution 401(k) plan for all purposes, including purposes of
             102      fiduciary liability and plan administration.
             103          (4) A member may not make voluntary deferrals to any other qualified 401(k) plan
             104      sponsored by a state or local government.
             105          (5) [The] Except as provided under Subsection (1)(e), the total amount contributed by
             106      the participating employer and the member under Subsection (1) or (2) vests to the member's
             107      benefit immediately and is nonforfeitable.
             108          (6) The board may request from any other qualified 401(k) plan under Subsection (1)
             109      or (2) any relevant information pertaining to the maintenance of its tax qualification under the
             110      Internal Revenue Code.
             111          (7) The board may take any action which in its judgment is necessary to maintain the
             112      tax-qualified status of its 401(k) defined contribution plan under federal law.
             113          Section 2. Effective date.
             114          This bill takes effect on July 1, 2010.




Legislative Review Note
    as of 1-14-10 2:48 PM


Office of Legislative Research and General Counsel


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