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7 LONG TITLE
8 Committee Note:
9 The Retirement and Independent Entities Interim Committee recommended this bill.
10 General Description:
11 This bill modifies the Utah State Retirement and Insurance Benefit Act by amending
12 provisions relating to the Utah Retirement Systems.
13 Highlighted Provisions:
14 This bill:
15 ▸ clarifies that the maximum number of positions that a municipality, county, or
16 political subdivision may exempt from participation with the Utah Retirement
17 Systems applies to the total number of exempted positions for employees covered
18 under both the Tier I and Tier II retirement systems;
19 ▸ specifies additional positions covered under the Tier II retirement system that are
20 eligible to file for an exemption from participation in the Utah Retirement Systems;
21 ▸ amends the applicability of contribution vesting periods and the effect of system
22 elections for individuals who elect to be exempt from participation in the Tier II
23 Utah Retirement Systems;
24 ▸ provides that a full-time elected official or legislator initially entering office on or
25 after July 1, 2011, who has service credit accrued in a Tier I retirement system or a
26 Tier II hybrid retirement system before July 1, 2011, shall continue in the Tier I or
27 Tier II system for which the full-time elected official or legislator is eligible;
28 ▸ provides that if an active member dies, employer nonelective contributions made on
29 behalf of the employee to a defined contribution plan are exempt from the vesting
30 requirements and vest to the member upon death; and
31 ▸ makes technical corrections.
32 Money Appropriated in this Bill:
33 None
34 Other Special Clauses:
35 None
36 Utah Code Sections Affected:
37 AMENDS:
38 49-12-203, as last amended by Laws of Utah 2014, Chapters 15, 201, and 365
39 49-13-203, as last amended by Laws of Utah 2014, Chapters 15 and 365
40 49-22-201, as last amended by Laws of Utah 2014, Chapter 15
41 49-22-203, as last amended by Laws of Utah 2014, Chapters 15 and 365
42 49-22-303, as last amended by Laws of Utah 2011, Chapter 439
43 49-22-401, as last amended by Laws of Utah 2013, Chapters 310 and 316
44 49-23-201, as last amended by Laws of Utah 2014, Chapter 15
45 49-23-401, as last amended by Laws of Utah 2013, Chapter 316
46 ENACTS:
47 49-22-205, Utah Code Annotated 1953
48 49-22-503, Utah Code Annotated 1953
49 49-23-203, Utah Code Annotated 1953
50 49-23-504, Utah Code Annotated 1953
51
52 Be it enacted by the Legislature of the state of Utah:
53 Section 1. Section 49-12-203 is amended to read:
54 49-12-203. Exclusions from membership in system.
55 (1) The following employees are not eligible for service credit in this system:
56 (a) subject to the requirements of Subsection (2), an employee whose employment
57 status is temporary in nature due to the nature or the type of work to be performed;
58 (b) except as provided under Subsection (3)(a), an employee of an institution of higher
59 education who participates in a retirement system with a public or private retirement system,
60 organization, or company designated by the State Board of Regents during any period in which
61 required contributions based on compensation have been paid on behalf of the employee by the
62 employer;
63 (c) an employee serving as an exchange employee from outside the state;
64 (d) an executive department head of the state, a member of the State Tax Commission,
65 the Public Service Commission, and a member of a full-time or part-time board or commission
66 who files a formal request for exemption;
67 (e) an employee of the Department of Workforce Services who is covered under
68 another retirement system allowed under Title 35A, Chapter 4, Employment Security Act;
69 (f) an employee who is employed on or after July 1, 2009, with an employer that has
70 elected, prior to July 1, 2009, to be excluded from participation in this system under Subsection
71 49-12-202(2)(c);
72 (g) an employee who is employed on or after July 1, 2014, with an employer that has
73 elected, prior to July 1, 2014, to be excluded from participation in this system under Subsection
74 49-12-202(2)(d); or
75 (h) an employee who is employed with a withdrawing entity that has elected, prior to
76 January 1, 2017, to exclude new employees from participation in this system under Subsection
77 49-11-623(3).
78 (2) If an employee whose status is temporary in nature due to the nature of type of
79 work to be performed:
80 (a) is employed for a term that exceeds six months and the employee otherwise
81 qualifies for service credit in this system, the participating employer shall report and certify to
82 the office that the employee is a regular full-time employee effective the beginning of the
83 seventh month of employment; or
84 (b) was previously terminated prior to being eligible for service credit in this system
85 and is reemployed within three months of termination by the same participating employer, the
86 participating employer shall report and certify that the member is a regular full-time employee
87 when the total of the periods of employment equals six months and the employee otherwise
88 qualifies for service credits in this system.
89 (3) (a) Upon cessation of the participating employer contributions, an employee under
90 Subsection (1)(b) is eligible for service credit in this system.
91 (b) Notwithstanding the provisions of Subsection (1)(f), any eligibility for service
92 credit earned by an employee under this chapter before July 1, 2009 is not affected under
93 Subsection (1)(f).
94 (c) Notwithstanding the provisions of Subsection (1)(g), any eligibility for service
95 credit earned by an employee under this chapter before July 1, 2014, is not affected under
96 Subsection (1)(g).
97 (4) Upon filing a written request for exemption with the office, the following
98 employees shall be exempt from coverage under this system:
99 (a) a full-time student or the spouse of a full-time student and individuals employed in
100 a trainee relationship;
101 (b) an elected official;
102 (c) an executive department head of the state, a member of the State Tax Commission,
103 a member of the Public Service Commission, and a member of a full-time or part-time board or
104 commission;
105 (d) an employee of the Governor's Office of Management and Budget;
106 (e) an employee of the Governor's Office of Economic Development;
107 (f) an employee of the Commission on Criminal and Juvenile Justice;
108 (g) an employee of the Governor's Office;
109 (h) an employee of the State Auditor's Office;
110 (i) an employee of the State Treasurer's Office;
111 (j) any other member who is permitted to make an election under Section 49-11-406;
112 (k) a person appointed as a city manager or chief city administrator or another person
113 employed by a municipality, county, or other political subdivision, who is an at-will employee;
114 and
115 (l) an employee of an interlocal cooperative agency created under Title 11, Chapter 13,
116 Interlocal Cooperation Act, who is engaged in a specialized trade customarily provided through
117 membership in a labor organization that provides retirement benefits to its members.
118 (5) (a) Each participating employer shall prepare a list designating those positions
119 eligible for exemption under Subsection (4).
120 (b) An employee may not be exempted unless the employee is employed in an
121 exempted position designated by the participating employer.
122 (6) (a) In accordance with this section, Section 49-13-203, and Section 49-22-205, a
123 municipality, county, or political subdivision may not exempt a total of more than 50 positions
124 or a number equal to 10% of the employees of the municipality, county, or political
125 subdivision, whichever is [
126 (b) A municipality, county, or political subdivision may exempt at least one regular
127 full-time employee.
128 (7) Each participating employer shall:
129 (a) file employee exemptions annually with the office; and
130 (b) update the employee exemptions in the event of any change.
131 (8) The office may make rules to implement this section.
132 Section 2. Section 49-13-203 is amended to read:
133 49-13-203. Exclusions from membership in system.
134 (1) The following employees are not eligible for service credit in this system:
135 (a) subject to the requirements of Subsection (2), an employee whose employment
136 status is temporary in nature due to the nature or the type of work to be performed;
137 (b) except as provided under Subsection (3)(a), an employee of an institution of higher
138 education who participates in a retirement system with a public or private retirement system,
139 organization, or company designated by the State Board of Regents during any period in which
140 required contributions based on compensation have been paid on behalf of the employee by the
141 employer;
142 (c) an employee serving as an exchange employee from outside the state;
143 (d) an executive department head of the state or a legislative director, senior executive
144 employed by the governor's office, a member of the State Tax Commission, a member of the
145 Public Service Commission, and a member of a full-time or part-time board or commission
146 who files a formal request for exemption;
147 (e) an employee of the Department of Workforce Services who is covered under
148 another retirement system allowed under Title 35A, Chapter 4, Employment Security Act;
149 (f) an employee who is employed with an employer that has elected to be excluded
150 from participation in this system under Subsection 49-13-202(5), effective on or after the date
151 of the employer's election under Subsection 49-13-202(5); or
152 (g) an employee who is employed with a withdrawing entity that has elected, prior to
153 January 1, 2017, to exclude new employees from participation in this system under Subsection
154 49-11-623(3).
155 (2) If an employee whose status is temporary in nature due to the nature of type of
156 work to be performed:
157 (a) is employed for a term that exceeds six months and the employee otherwise
158 qualifies for service credit in this system, the participating employer shall report and certify to
159 the office that the employee is a regular full-time employee effective the beginning of the
160 seventh month of employment; or
161 (b) was previously terminated prior to being eligible for service credit in this system
162 and is reemployed within three months of termination by the same participating employer, the
163 participating employer shall report and certify that the member is a regular full-time employee
164 when the total of the periods of employment equals six months and the employee otherwise
165 qualifies for service credits in this system.
166 (3) (a) Upon cessation of the participating employer contributions, an employee under
167 Subsection (1)(b) is eligible for service credit in this system.
168 (b) Notwithstanding the provisions of Subsection (1)(f), any eligibility for service
169 credit earned by an employee under this chapter before the date of the election under
170 Subsection 49-13-202(5) is not affected under Subsection (1)(f).
171 (4) Upon filing a written request for exemption with the office, the following
172 employees shall be exempt from coverage under this system:
173 (a) a full-time student or the spouse of a full-time student and individuals employed in
174 a trainee relationship;
175 (b) an elected official;
176 (c) an executive department head of the state, a member of the State Tax Commission,
177 a member of the Public Service Commission, and a member of a full-time or part-time board or
178 commission;
179 (d) an employee of the Governor's Office of Management and Budget;
180 (e) an employee of the Governor's Office of Economic Development;
181 (f) an employee of the Commission on Criminal and Juvenile Justice;
182 (g) an employee of the Governor's Office;
183 (h) an employee of the State Auditor's Office;
184 (i) an employee of the State Treasurer's Office;
185 (j) any other member who is permitted to make an election under Section 49-11-406;
186 (k) a person appointed as a city manager or chief city administrator or another person
187 employed by a municipality, county, or other political subdivision, who is an at-will employee;
188 (l) an employee of an interlocal cooperative agency created under Title 11, Chapter 13,
189 Interlocal Cooperation Act, who is engaged in a specialized trade customarily provided through
190 membership in a labor organization that provides retirement benefits to its members; and
191 (m) an employee of the Utah Science Technology and Research Initiative created under
192 Title 63M, Chapter 2, Utah Science Technology and Research Governing Authority Act.
193 (5) (a) Each participating employer shall prepare a list designating those positions
194 eligible for exemption under Subsection (4).
195 (b) An employee may not be exempted unless the employee is employed in a position
196 designated by the participating employer.
197 (6) (a) In accordance with this section, Section 49-12-203, and Section 49-22-205, a
198 municipality, county, or political subdivision may not exempt a total of more than 50 positions
199 or a number equal to 10% of the employees of the municipality, county, or political
200 subdivision, whichever is [
201 (b) A municipality, county, or political subdivision may exempt at least one regular
202 full-time employee.
203 (7) Each participating employer shall:
204 (a) file employee exemptions annually with the office; and
205 (b) update the employee exemptions in the event of any change.
206 (8) The office may make rules to implement this section.
207 Section 3. Section 49-22-201 is amended to read:
208 49-22-201. System membership -- Eligibility.
209 (1) Beginning July 1, 2011, a participating employer shall participate in this system.
210 (2) (a) A person initially entering regular full-time employment with a participating
211 employer on or after July 1, 2011, who does not have service credit accrued before July 1,
212 2011, in a Tier I system or plan administered by the board, is eligible:
213 (i) as a member for service credit and defined contributions under the Tier II hybrid
214 retirement system established by Part 3, Tier II Hybrid Retirement System; or
215 (ii) as a participant for defined contributions under the Tier II defined contribution plan
216 established by Part 4, Tier II Defined Contribution Plan.
217 (b) A person initially entering regular full-time employment with a participating
218 employer on or after July 1, 2011, shall:
219 (i) make an election to participate in the system created under this chapter [
220
221 (A) as a member for service credit and defined contributions under the Tier II hybrid
222 retirement system established by Part 3, Tier II Hybrid Retirement System; or
223 (B) as a participant for defined contributions under the Tier II defined contribution plan
224 established by Part 4, Tier II Defined Contribution Plan; and
225 (ii) electronically submit to the office notification of the member's election under
226 Subsection (2)(b)(i) in a manner approved by the office.
227 (c) An election made by a person initially entering regular full-time employment with a
228 participating employer under this Subsection (2) is irrevocable beginning one year from the
229 date of eligibility for accrual of benefits.
230 (d) If no election is made under Subsection (2)(b)(i), the person shall become a
231 member eligible for service credit and defined contributions under the Tier II hybrid retirement
232 system established by Part 3, Tier II Hybrid Retirement System.
233 (3) Notwithstanding the provisions of this section and except as provided in Subsection
234 (4), an elected official initially entering office on or after July 1, 2011:
235 (a) is only eligible to participate in the Tier II defined contribution plan established
236 under [
237 (b) is not eligible to participate in the Tier II hybrid retirement system established
238 under [
239 (4) Notwithstanding the provisions of Subsection (3), a legislator or full-time elected
240 official initially entering office on or after July 1, 2011, who has service credit accrued before
241 July 1, 2011:
242 (a) in a Tier I retirement system or plan administered by the board shall continue in the
243 Tier I system or plan for which the legislator or full-time elected official is eligible; or
244 (b) in a Tier II hybrid retirement system shall continue in the Tier II system for which
245 the legislator or full-time elected official is eligible.
246 Section 4. Section 49-22-203 is amended to read:
247 49-22-203. Exclusions from membership in system.
248 (1) The following employees are not eligible for service credit in this system:
249 (a) subject to the requirements of Subsection (2), an employee whose employment
250 status is temporary in nature due to the nature or the type of work to be performed;
251 (b) except as provided under Subsection (3), an employee of an institution of higher
252 education who participates in a retirement system with a public or private retirement system,
253 organization, or company designated by the State Board of Regents during any period in which
254 required contributions based on compensation have been paid on behalf of the employee by the
255 employer;
256 (c) an employee serving as an exchange employee from outside the state;
257 (d) an employee of the Department of Workforce Services who is covered under
258 another retirement system allowed under Title 35A, Chapter 4, Employment Security Act; [
259 (e) an employee who is employed with a withdrawing entity that has elected, prior to
260 January 1, 2017, to exclude new employees from participation in this system under Subsection
261 49-11-623(3)[
262 (f) a person who files a written request for exemption with the office under Section
263 49-22-205.
264 (2) If an employee whose status is temporary in nature due to the nature of type of
265 work to be performed:
266 (a) is employed for a term that exceeds six months and the employee otherwise
267 qualifies for service credit in this system, the participating employer shall report and certify to
268 the office that the employee is a regular full-time employee effective the beginning of the
269 seventh month of employment; or
270 (b) was previously terminated prior to being eligible for service credit in this system
271 and is reemployed within three months of termination by the same participating employer, the
272 participating employer shall report and certify that the member is a regular full-time employee
273 when the total of the periods of employment equals six months and the employee otherwise
274 qualifies for service credits in this system.
275 (3) Upon cessation of the participating employer contributions, an employee under
276 Subsection (1)(b) is eligible for service credit in this system.
277 Section 5. Section 49-22-205 is enacted to read:
278 49-22-205. Exemptions from participation in system.
279 (1) Upon filing a written request for exemption with the office, the following
280 employees are exempt from participation in the system as provided in this section:
281 (a) an elected official;
282 (b) an executive department head of the state;
283 (c) a member of the State Tax Commission;
284 (d) a member of the Public Service Commission;
285 (e) a member of a full-time or part-time board or commission;
286 (f) an employee of the Governor's Office of Management and Budget;
287 (g) an employee of the Governor's Office of Economic Development;
288 (h) an employee of the Commission on Criminal and Juvenile Justice;
289 (i) an employee of the Governor's Office;
290 (j) an employee of the State Auditor's Office;
291 (k) an employee of the State Treasurer's Office;
292 (l) any other member who is permitted to make an election under Section 49-11-406;
293 (m) a person appointed as a city manager or appointed as a city administrator or
294 another at-will employee of a municipality, county, or other political subdivision;
295 (n) an employee of an interlocal cooperative agency created under Title 11, Chapter 13,
296 Interlocal Cooperation Act, who is engaged in a specialized trade customarily provided through
297 membership in a labor organization that provides retirement benefits to its members; and
298 (o) an employee of the Utah Science Technology and Research Initiative created under
299 Title 63M, Chapter 2, Utah Science Technology and Research Governing Authority Act.
300 (2) (a) A participating employer shall prepare a list designating those positions eligible
301 for exemption under Subsection (1).
302 (b) An employee may not be exempted unless the employee is employed in a position
303 designated by the participating employer under Subsection (1).
304 (3) (a) In accordance with this section, Section 49-12-203, and Section 49-13-203, a
305 municipality, county, or political subdivision may not exempt a total of more than 50 positions
306 or a number equal to 10% of the employees of the municipality, county, or political
307 subdivision, whichever is less.
308 (b) A municipality, county, or political subdivision may exempt at least one regular
309 full-time employee.
310 (4) Each participating employer shall:
311 (a) file each employee exemption annually with the office; and
312 (b) update an employee exemption in the event of any change.
313 (5) Beginning on the effective date of the exemption for an employee who elects to be
314 exempt in accordance with Subsection (1):
315 (a) for a member of the Tier II defined contribution plan:
316 (i) the participating employer shall contribute the nonelective contribution and the
317 amortization rate described in Section 49-22-401, except that the nonelective contribution is
318 exempt from the vesting requirements of Subsection 49-22-401(3)(a); and
319 (ii) the member may make voluntary deferrals as provided in Section 49-22-401; and
320 (b) for a member of the Tier II hybrid retirement system:
321 (i) the participating employer shall contribute the nonelective contribution and the
322 amortization rate described in Section 49-22-401, except that the contribution is exempt from
323 the vesting requirements of Subsection 49-22-401(3)(a);
324 (ii) the member may make voluntary deferrals as provided in Section 49-22-401; and
325 (iii) the member is not eligible for additional service credit in the system.
326 (6) If an employee who is a member of the Tier II hybrid retirement system
327 subsequently revokes the election of exemption made under Subsection (1), the provisions
328 described in Subsection (5)(b) shall no longer be applicable and the coverage for the employee
329 shall be effective prospectively as provided in Part 3, Tier II Hybrid Retirement System.
330 (7) (a) All employer contributions made on behalf of an employee shall be invested in
331 accordance with Subsection 49-22-303(3)(a) or 49-22-401(4)(a) until the one-year election
332 period under Subsection 49-22-201(2)(c) is expired if the employee:
333 (i) elects to be exempt in accordance with Subsection (1); and
334 (ii) continues employment with the participating employer through the one-year
335 election period under Subsection 49-22-201(2)(c).
336 (b) An employee is entitled to receive a distribution of the employer contributions
337 made on behalf of the employee and all associated investment gains and losses if the employee:
338 (i) elects to be exempt in accordance with Subsection (1); and
339 (ii) terminates employment prior to the one-year election period under Subsection
340 49-22-201(2)(c).
341 (8) (a) The office shall make rules to implement this section.
342 (b) The rules made under this Subsection (8) shall include provisions to allow the
343 exemption provided under Subsection (1) to apply to all contributions made beginning on or
344 after July 1, 2011, on behalf of an exempted employee who began the employment before May
345 8, 2012.
346 Section 6. Section 49-22-303 is amended to read:
347 49-22-303. Defined contribution benefit established -- Contribution by employer
348 and employee -- Vesting of contributions -- Plans to be separate -- Tax-qualified status of
349 plans.
350 (1) (a) A participating employer shall make a nonelective contribution on behalf of
351 each regular full-time employee who is a member of this system in an amount equal to 10%
352 minus the contribution rate paid by the employer pursuant to Subsection 49-22-301(2)(a) of the
353 member's compensation to a defined contribution plan qualified under Section 401(k) of the
354 Internal Revenue Code which:
355 (i) is sponsored by the board; and
356 (ii) has been grandfathered under Section 1116 of the Federal Tax Reform Act of 1986.
357 (b) The member may make voluntary deferrals to:
358 (i) the qualified 401(k) plan which receives the employer contribution described in this
359 Subsection (1); or
360 (ii) at the member's option, another defined contribution plan established by the
361 participating employer.
362 (2) (a) The total amount contributed by the participating employer under Subsection
363 (1)(a), including associated investment gains and losses, vests to the member upon accruing
364 four years of service credit under this title.
365 (b) The total amount contributed by the member under Subsection (1)(b) vests to the
366 member's benefit immediately and is nonforfeitable.
367 (3) (a) Contributions made by a participating employer under Subsection (1)(a) shall be
368 invested in a default option selected by the board until the member is vested in accordance with
369 Subsection (2)(a).
370 (b) A member may direct the investment of contributions made by a participating
371 employer under Subsection (1)(a) only after the contributions have vested in accordance with
372 Subsection (2)(a).
373 (c) A member may direct the investment of contributions made by the member under
374 Subsection (1)(b).
375 (4) No loans shall be available from contributions made by a participating employer
376 under Subsection (1)(a).
377 (5) No hardship distributions shall be available from contributions made by a
378 participating employer under Subsection (1)(a).
379 (6) (a) Except as provided in Subsection (6)(b) and Section 49-22-205, if a member
380 terminates employment with a participating employer prior to the vesting period described in
381 Subsection (2)(a), all contributions, including associated investment gains and losses, made by
382 a participating employer on behalf of the member under Subsection (1)(a) are subject to
383 forfeiture.
384 (b) If a member who terminates employment with a participating employer prior to the
385 vesting period described in Subsection (2)(a) subsequently enters employment with the same or
386 another participating employer within 10 years of the termination date of the previous
387 employment:
388 (i) all contributions made by the previous participating employer on behalf of the
389 member, including associated investment gains and losses, shall be reinstated upon
390 employment as a regular full-time employee; and
391 (ii) the length of time that the member worked with the previous employer shall be
392 included in determining whether the member has completed the vesting period under
393 Subsection (2)(a).
394 (c) The office shall establish a forfeiture account and shall specify the uses of the
395 forfeiture account, which may include an offset against administrative costs or employer
396 contributions made under this section.
397 (7) The office may request from any other qualified 401(k) plan under Subsection (1)
398 or (2) any relevant information pertaining to the maintenance of its tax qualification under the
399 Internal Revenue Code.
400 (8) The office may take any action which in its judgment is necessary to maintain the
401 tax-qualified status of its 401(k) defined contribution plan under federal law.
402 Section 7. Section 49-22-401 is amended to read:
403 49-22-401. Contributions -- Rates.
404 (1) Up to the amount allowed by federal law, the participating employer shall make a
405 nonelective contribution of 10% of the participant's compensation to a defined contribution
406 plan.
407 (2) (a) The participating employer shall contribute the 10% nonelective contribution
408 described in Subsection (1) to a defined contribution plan qualified under Section 401(k) of the
409 Internal Revenue Code which:
410 (i) is sponsored by the board; and
411 (ii) has been grandfathered under Section 1116 of the Federal Tax Reform Act of 1986.
412 (b) The member may make voluntary deferrals to:
413 (i) the qualified 401(k) plan which receives the employer contribution described in this
414 Subsection (2); or
415 (ii) at the member's option, another defined contribution plan established by the
416 participating employer.
417 (c) In addition to the percent specified under Subsection (2)(a), the participating
418 employer shall pay the corresponding Tier I system amortization rate of the employee's
419 compensation to the office to be applied to the employer's corresponding Tier I system liability.
420 (3) (a) Except as provided under Subsection (3)(c), the total amount contributed by the
421 participating employer under Subsection (2)(a) vests to the member upon accruing four years
422 employment as a regular full-time employee under this title.
423 (b) The total amount contributed by the member under Subsection (2)(b) vests to the
424 member's benefit immediately and is nonforfeitable.
425 (c) Upon filing a written request for exemption with the office, [
426
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474 (4) (a) Contributions made by a participating employer under Subsection (2)(a) shall be
475 invested in a default option selected by the board until the member is vested in accordance with
476 Subsection (3)(a).
477 (b) A member may direct the investment of contributions including associated
478 investment gains and losses made by a participating employer under Subsection (2)(a) only
479 after the contributions have vested in accordance with Subsection (3)(a).
480 (c) A member may direct the investment of contributions made by the member under
481 Subsection (3)(b).
482 (5) No loans shall be available from contributions made by a participating employer
483 under Subsection (2)(a).
484 (6) No hardship distributions shall be available from contributions made by a
485 participating employer under Subsection (2)(a).
486 (7) (a) Except as provided in Subsection (7)(b), if a member terminates employment
487 with a participating employer prior to the vesting period described in Subsection (3)(a), all
488 contributions made by a participating employer on behalf of the member including associated
489 investment gains and losses under Subsection (2)(a) are subject to forfeiture.
490 (b) If a member who terminates employment with a participating employer prior to the
491 vesting period described in Subsection (3)(a) subsequently enters employment with the same or
492 another participating employer within 10 years of the termination date of the previous
493 employment:
494 (i) all contributions made by the previous participating employer on behalf of the
495 member including associated investment gains and losses shall be reinstated upon the member's
496 employment as a regular full-time employee; and
497 (ii) the length of time that the member worked with the previous employer shall be
498 included in determining whether the member has completed the vesting period under
499 Subsection (3)(a).
500 (c) The office shall establish a forfeiture account and shall specify the uses of the
501 forfeiture account, which may include an offset against administrative costs or employer
502 contributions made under this section.
503 (8) The office may request from any other qualified 401(k) plan under Subsection (2)
504 any relevant information pertaining to the maintenance of its tax qualification under the
505 Internal Revenue Code.
506 (9) The office may take any action which in its judgment is necessary to maintain the
507 tax-qualified status of its 401(k) defined contribution plan under federal law.
508 Section 8. Section 49-22-503 is enacted to read:
509 49-22-503. Death of members -- Exemption from vesting requirements for
510 employer nonelective contributions to defined contribution plan.
511 (1) (a) If an active member dies, employer nonelective contributions made on behalf of
512 the employee to a defined contribution plan under Section 49-22-303 or 49-22-401 are exempt
513 from the vesting requirements of Subsections 49-22-303(2)(a) and 49-22-401(3)(a).
514 (b) The total amount of nonelective contributions made by the participating employer
515 vests to the member upon death and the member's beneficiary is entitled to receive a
516 distribution of the employer contributions made on behalf of the employee and all associated
517 investment gains and losses.
518 (2) Employer contributions vested and distributed under this section are in addition to
519 and separate from the benefits payable under Sections 49-22-501 and 49-22-502.
520 Section 9. Section 49-23-201 is amended to read:
521 49-23-201. System membership -- Eligibility.
522 (1) Beginning July 1, 2011, a participating employer that employs public safety service
523 employees or firefighter service employees shall participate in this system.
524 (2) (a) A public safety service employee or a firefighter service employee initially
525 entering employment with a participating employer on or after July 1, 2011, who does not have
526 service credit accrued before July 1, 2011, in a Tier I system or plan administered by the board,
527 is eligible:
528 (i) as a member for service credit and defined contributions under the Tier II hybrid
529 retirement system established by Part 3, Tier II Hybrid Retirement System; or
530 (ii) as a participant for defined contributions under the Tier II defined contributions
531 plan established by Part 4, Tier II Defined Contribution Plan.
532 (b) A public safety service employee or a firefighter service employee initially entering
533 employment with a participating employer on or after July 1, 2011, shall:
534 (i) make an election to participate in the system created under this chapter [
535
536 (A) as a member for service credit and defined contributions under the Tier II hybrid
537 retirement system established by Part 3, Tier II Hybrid Retirement System; or
538 (B) as a participant for defined contributions under the Tier II defined contribution plan
539 established by Part 4, Tier II Defined Contribution Plan; and
540 (ii) electronically submit to the office notification of the member's election under
541 Subsection (2)(b)(i) in a manner approved by the office.
542 (c) An election made by a public safety service employee or firefighter service
543 employee initially entering employment with a participating employer under this Subsection (2)
544 is irrevocable beginning one year from the date of eligibility for accrual of benefits.
545 (d) If no election is made under Subsection (2)(b)(i), the public safety service employee
546 or firefighter service employee shall become a member eligible for service credit and defined
547 contributions under the Tier II hybrid retirement system established by Part 3, Tier II Hybrid
548 Retirement System.
549 Section 10. Section 49-23-203 is enacted to read:
550 49-23-203. Exemptions from participation in system.
551 (1) Upon filing a written request for exemption with the office, the following
552 employees are exempt from participation in the system as provided in this section if the
553 employee is a public safety service employee and is:
554 (a) an executive department head of the state;
555 (b) an elected or appointed sheriff of a county; or
556 (c) an elected or appointed chief of police of a municipality.
557 (2) (a) A participating employer shall prepare a list designating those positions eligible
558 for exemption under Subsection (1).
559 (b) An employee may not be exempted unless the employee is employed in a position
560 designated by the participating employer under Subsection (1).
561 (3) Each participating employer shall:
562 (a) file each employee exemption annually with the office; and
563 (b) update an employee exemption in the event of any change.
564 (4) Beginning on the effective date of the exemption for an employee who elects to be
565 exempt in accordance with Subsection (1):
566 (a) for a member of the Tier II defined contribution plan:
567 (i) the participating employer shall contribute the nonelective contribution and the
568 amortization rate described in Section 49-23-401, except that the contribution is exempt from
569 the vesting requirements of Subsection 49-23-401(3)(a); and
570 (ii) the member may make voluntary deferrals as provided in Section 49-23-401; and
571 (b) for a member of the Tier II hybrid retirement system:
572 (i) the participating employer shall contribute the nonelective contribution and the
573 amortization rate described in Section 49-23-401, except that the contribution is exempt from
574 the vesting requirements of Subsection 49-23-401(3)(a);
575 (ii) the member may make voluntary deferrals as provided in Section 49-23-401; and
576 (iii) the member is not eligible for additional service credit in the system.
577 (5) If an employee who is a member of the Tier II hybrid retirement system
578 subsequently revokes the election of exemption made under Subsection (1), the provisions
579 described in Subsection (4)(b) shall no longer be applicable and the coverage for the employee
580 shall be effective prospectively as provided in Part 3, Tier II Hybrid Retirement System.
581 (6) (a) All employer contributions made on behalf of an employee shall be invested in
582 accordance with Subsection 49-23-302(3)(a) or 49-23-401(4)(a) until the one-year election
583 period under Subsection 49-23-201(2)(c) is expired if the employee:
584 (i) elects to be exempt in accordance with Subsection (1); and
585 (ii) continues employment with the participating employer through the one-year
586 election period under Subsection 49-23-201(2)(c).
587 (b) An employee is entitled to receive a distribution of the employer contributions
588 made on behalf of the employee and all associated investment gains and losses if the employee:
589 (i) elects to be exempt in accordance with Subsection (1); and
590 (ii) terminates employment prior to the one-year election period under Subsection
591 49-23-201(2)(c).
592 (7) (a) The office shall make rules to implement this section.
593 (b) The rules made under this Subsection (7) shall include provisions to allow the
594 exemption provided under Subsection (1) to apply to all contributions made beginning on or
595 after July 1, 2011, on behalf of an exempted employee who began the employment before May
596 8, 2012.
597 Section 11. Section 49-23-401 is amended to read:
598 49-23-401. Contributions -- Rates.
599 (1) Up to the amount allowed by federal law, the participating employer shall make a
600 nonelective contribution of 12% of the participant's compensation to a defined contribution
601 plan.
602 (2) (a) The participating employer shall contribute the 12% nonelective contribution
603 described in Subsection (1) to a defined contribution plan qualified under Section 401(k) of the
604 Internal Revenue Code which:
605 (i) is sponsored by the board; and
606 (ii) has been grandfathered under Section 1116 of the Federal Tax Reform Act of 1986.
607 (b) The member may make voluntary deferrals to:
608 (i) the qualified 401(k) plan which receives the employer contribution described in this
609 Subsection (2); or
610 (ii) at the member's option, another defined contribution plan established by the
611 participating employer.
612 (c) In addition to the percent specified under Subsection (2)(a), the participating
613 employer shall pay the corresponding Tier I system amortization rate of the employee's
614 compensation to the office to be applied to the employer's corresponding Tier I system liability.
615 (3) (a) Except as provided under Subsection (3)(c), the total amount contributed by the
616 participating employer under Subsection (2)(a) vests to the member upon accruing four years of
617 service credit under this title.
618 (b) The total amount contributed by the member under Subsection (2)(b) vests to the
619 member's benefit immediately and is nonforfeitable.
620 (c) Upon filing a written request for exemption with the office, [
621
622 (3)(a) [
623 49-23-203.
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651 (4) (a) Contributions made by a participating employer under Subsection (2)(a) shall be
652 invested in a default option selected by the board until the member is vested in accordance with
653 Subsection (3)(a).
654 (b) A member may direct the investment of contributions, including associated
655 investment gains and losses, made by a participating employer under Subsection (2)(a) only
656 after the contributions have vested in accordance with Subsection (3)(a).
657 (c) A member may direct the investment of contributions made by the member under
658 Subsection (3)(b).
659 (5) No loans shall be available from contributions made by a participating employer
660 under Subsection (2)(a).
661 (6) No hardship distributions shall be available from contributions made by a
662 participating employer under Subsection (2)(a).
663 (7) (a) Except as provided in Subsection (7)(b), if a member terminates employment
664 with a participating employer prior to the vesting period described in Subsection (3)(a), all
665 contributions made by a participating employer on behalf of the member under Subsection
666 (2)(a), including associated investment gains and losses are subject to forfeiture.
667 (b) If a member who terminates employment with a participating employer prior to the
668 vesting period described in Subsection (3)(a) subsequently enters employment with the same or
669 another participating employer within 10 years of the termination date of the previous
670 employment:
671 (i) all contributions made by the previous participating employer on behalf of the
672 member, including associated investment gains and losses, shall be reinstated upon the
673 member's employment as a regular full-time employee; and
674 (ii) the length of time that the member worked with the previous employer shall be
675 included in determining whether the member has completed the vesting period under
676 Subsection (3)(a).
677 (c) The office shall establish a forfeiture account and shall specify the uses of the
678 forfeiture account, which may include an offset against administrative costs of employer
679 contributions made under this section.
680 (8) The office may request from any other qualified 401(k) plan under Subsection (2)
681 any relevant information pertaining to the maintenance of its tax qualification under the
682 Internal Revenue Code.
683 (9) The office may take any action which in its judgment is necessary to maintain the
684 tax-qualified status of its 401(k) defined contribution plan under federal law.
685 Section 12. Section 49-23-504 is enacted to read:
686 49-23-504. Death of members -- Exemption from vesting requirements for
687 employer nonelective contributions to defined contribution plan.
688 (1) (a) If an active member dies, employer nonelective contributions made on behalf of
689 the employee to a defined contribution plan under Section 49-23-302 or 49-23-401 are exempt
690 from the vesting requirements of Subsections 49-23-302(2)(a) and 49-23-401(3)(a).
691 (b) The total amount of nonelective contributions made by the participating employer
692 vests to the member upon death and the member's beneficiary is entitled to receive a
693 distribution of the employer contributions made on behalf of the employee and all associated
694 investment gains and losses.
695 (2) Employer contributions vested and distributed under this section are in addition to
696 and separate from the benefits payable under Sections 49-23-501, 49-23-502, and 49-23-503.
Legislative Review Note
as of 11-13-14 2:20 PM
Office of Legislative Research and General Counsel