1     
RETIREMENT SYSTEMS AMENDMENTS

2     
2016 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Todd Weiler

5     
House Sponsor: Kraig Powell

6     

7     LONG TITLE
8     General Description:
9          This bill modifies the Utah State Retirement and Insurance Benefit Act by amending
10     certain retirement provisions.
11     Highlighted Provisions:
12          This bill:
13          ▸     clarifies retiree reporting provisions to the Utah State Retirement Office on the
14     status of the reemployment;
15          ▸     allows Utah Retirement Systems to make payments to a deceased member's
16     beneficiaries 30 days instead of three months after the date of death;
17          ▸     amends the definition of "final average salary" to specify that its basis is contract
18     year for educational institutions, state fiscal year for judges, and calendar year for all
19     other participating employers;
20          ▸     clarifies that a public safety employee who is transferred or promoted to an
21     administration position within the same department primarily to manage or
22     supervise public safety service employees will continue to earn public safety service
23     credit;
24          ▸     addresses references to death or disability;
25          ▸     provides that a person's retirement date is among the circumstances in which a
26     person qualified for a monthly disability benefit will no longer receive the benefit;
27          ▸     provides that for an elected official under Tier II retirement, the total amount
28     contributed by the participating employer and the total amount contributed by the
29     elected official vests immediately;

30          ▸     clarifies four-year vesting provisions for Tier II defined contribution benefits;
31          ▸     repeals provisions that require the Utah State Retirement Office to include accrued
32     earnings in Unused Sick Leave Retirement Program II; and
33          ▸     makes technical changes.
34     Money Appropriated in this Bill:
35          None
36     Other Special Clauses:
37          None
38     Utah Code Sections Affected:
39     AMENDS:
40          49-11-505, as last amended by Laws of Utah 2015, Chapters 243 and 256
41          49-11-609, as last amended by Laws of Utah 2005, Chapter 116
42          49-12-102, as last amended by Laws of Utah 2015, Chapter 243
43          49-13-102, as last amended by Laws of Utah 2014, Chapter 15
44          49-14-102, as last amended by Laws of Utah 2015, Chapter 463
45          49-14-201, as last amended by Laws of Utah 2015, Chapters 100 and 463
46          49-15-102, as last amended by Laws of Utah 2015, Chapter 463
47          49-15-201, as last amended by Laws of Utah 2015, Chapters 100 and 463
48          49-16-102, as last amended by Laws of Utah 2015, Chapter 254
49          49-17-102, as last amended by Laws of Utah 2008, Chapter 3
50          49-18-102, as last amended by Laws of Utah 2008, Chapter 3
51          49-21-403, as last amended by Laws of Utah 2013, Chapter 316
52          49-22-102, as last amended by Laws of Utah 2013, Chapters 109 and 127
53          49-22-201, as last amended by Laws of Utah 2015, Chapter 315
54          49-22-205, as enacted by Laws of Utah 2015, Chapter 315
55          49-22-303, as last amended by Laws of Utah 2015, Chapter 315
56          49-22-401, as last amended by Laws of Utah 2015, Chapter 315
57          49-23-102, as last amended by Laws of Utah 2015, Chapters 254 and 463

58          49-23-302, as last amended by Laws of Utah 2011, Chapter 439
59          49-23-401, as last amended by Laws of Utah 2015, Chapter 315
60          67-19-14.4, as last amended by Laws of Utah 2013, Chapter 277
61     

62     Be it enacted by the Legislature of the state of Utah:
63          Section 1. Section 49-11-505 is amended to read:
64          49-11-505. Reemployment of a retiree -- Restrictions.
65          (1) (a) For purposes of this section, "retiree":
66          (i) means a person who:
67          (A) retired from a participating employer; and
68          (B) begins reemployment on or after July 1, 2010, with a participating employer;
69          (ii) does not include a person:
70          (A) who was reemployed by a participating employer before July 1, 2010; and
71          (B) whose participating employer that reemployed the person under Subsection
72     (1)(a)(ii)(A) was dissolved, consolidated, merged, or structurally changed in accordance with
73     Section 49-11-621 after July 1, 2010; and
74          (iii) does not include a person who is reemployed as an active senior judge or an active
75     senior justice court judge as described by Utah State Court Rules, appointed to hear cases by
76     the Utah Supreme Court in accordance with Article VIII, Section 4, Utah Constitution.
77          (b) (i) This section does not apply to employment as an elected official if the elected
78     official's position is not full time as certified by the participating employer.
79          (ii) The provisions of this section apply to an elected official whose elected position is
80     full time as certified by the participating employer.
81          (c) (i) This section does not apply to employment as a part-time appointed board
82     member who does not receive any remuneration, stipend, or other benefit for the part-time
83     appointed board member's service.
84          (ii) For purposes of this Subsection (1)(c), remuneration, stipend, or other benefit does
85     not include receipt of per diem and travel expenses up to the amounts established by the

86     Division of Finance in:
87          (A) Section 63A-3-106;
88          (B) Section 63A-3-107; and
89          (C) rules made by the Division of Finance according to Sections 63A-3-106 and
90     63A-3-107.
91          (d) (i) For purposes of this Subsection (1)(d), "affiliated emergency services worker"
92     means a person who is employed by a participating employer and who performs emergency
93     services for another participating employer that is a different agency in which the person:
94          (A) has been trained in techniques and skills required for the service the person
95     provides to the participating employer;
96          (B) continues to receive regular training required for the service;
97          (C) is on the rolls as a trained affiliated emergency services worker of the participating
98     employer; and
99          (D) provides ongoing service for a participating employer, which service may include
100     service as a volunteer firefighter, reserve law enforcement officer, search and rescue personnel,
101     emergency medical technician, ambulance personnel, park ranger, or public utilities worker.
102          (ii) A person who performs work or service but does not meet the requirements of
103     Subsection (1)(d)(i) is not an affiliated emergency services worker for purposes of this
104     Subsection (1)(d).
105          (iii) The office may not cancel the retirement allowance of a retiree who is employed as
106     an affiliated emergency services worker within one year of the retiree's retirement date if the
107     affiliated emergency services worker does not receive any compensation, except for:
108          (A) a nominal fee, stipend, discount, tax credit, voucher, or other fixed sum of money
109     or cash equivalent payment not tied to productivity and paid periodically for services;
110          (B) a length-of-service award;
111          (C) insurance policy premiums paid by the participating employer in the event of death
112     of an affiliated emergency services worker or a line-of-duty accidental death or disability; or
113          (D) reimbursement of expenses incurred in the performance of duties.

114          (iv) For purposes of Subsections (1)(d)(iii)(A) and (B), the total amount of any
115     discounts, tax credits, vouchers, and payments to a volunteer may not exceed $500 per month.
116          (v) Beginning January 1, 2016, the board shall adjust the amount under Subsection
117     (1)(d)(iv) by the annual change in the Consumer Price Index during the previous calendar year
118     as measured by a United States Bureau of Labor Statistics Consumer Price Index average as
119     determined by the board.
120          (vi) The office shall cancel the retirement allowance of a retiree for the remainder of
121     the calendar year if employment as an affiliated emergency services worker with a participating
122     employer exceeds the limitation under Subsection (1)(d)(iv).
123          (vii) If a retiree is employed as an affiliated emergency services worker under the
124     provisions of Subsection (1)(d), the termination date of the employment as an affiliated
125     emergency services worker, as confirmed in writing by the participating employer, is
126     considered the retiree's retirement date for the purpose of calculating the separation
127     requirement under Subsection (3)(a).
128          (2) A retiree may not for the same period of reemployment:
129          (a) (i) earn additional service credit; or
130          (ii) receive any retirement related contribution from a participating employer; and
131          (b) receive a retirement allowance.
132          (3) (a) Except as provided under Subsection (3)(b) or (10), the office shall cancel the
133     retirement allowance of a retiree if the reemployment with a participating employer begins
134     within one year of the retiree's retirement date.
135          (b) The office may not cancel the retirement allowance of a retiree who is reemployed
136     with a participating employer within one year of the retiree's retirement date if:
137          (i) the retiree is not reemployed by a participating employer for a period of at least 60
138     days from the retiree's retirement date;
139          (ii) upon reemployment after the break in service under Subsection (3)(b)(i), the retiree
140     does not receive any employer provided benefits, including:
141          (A) medical benefits;

142          (B) dental benefits;
143          (C) other insurance benefits except for workers' compensation as provided under Title
144     34A, Chapter 2, Workers' Compensation Act, and withholdings required by federal or state law
145     for Social Security, Medicare, and unemployment insurance; or
146          (D) paid time off, including sick, annual, or other type of leave; and
147          (iii) (A) the retiree does not earn in any calendar year of reemployment an amount in
148     excess of the lesser of $15,000 or one-half of the retiree's final average salary upon which the
149     retiree's retirement allowance is based; or
150          (B) the retiree is reemployed as a judge as defined under Section 78A-11-102.
151          (c) Beginning January 1, 2013, the board shall adjust the amounts under Subsection
152     (3)(b)(iii)(A) by the annual change in the Consumer Price Index during the previous calendar
153     year as measured by a United States Bureau of Labor Statistics Consumer Price Index average
154     as determined by the board.
155          (d) The office shall cancel the retirement allowance of a retiree for the remainder of the
156     calendar year if the reemployment with a participating employer exceeds the limitation under
157     Subsection (3)(b)(iii)(A).
158          (e) If a retiree is reemployed under the provisions of Subsection (3)(b), the termination
159     date of the reemployment, as confirmed in writing by the participating employer, is considered
160     the retiree's retirement date for the purpose of calculating the separation requirement under
161     Subsection (3)(a).
162          (f) If a retiree received a retirement allowance in error, due to reemployment in
163     violation of this section:
164          (i) the office shall cancel the retiree's retirement allowance; and
165          (ii) if the retiree applies for a future benefit, the office shall recover any overpayment in
166     accordance with the provisions of Section 49-11-607.
167          (4) If a reemployed retiree has completed the one-year separation from employment
168     with a participating employer required under Subsection (3)(a), the retiree may elect to:
169          (a) earn additional service credit in accordance with this title and cancel the retiree's

170     retirement allowance; or
171          (b) continue to receive the retiree's retirement allowance and forfeit any retirement
172     related contribution from the participating employer who reemployed the retiree.
173          (5) (a) As used in this Subsection (5), "amortization rate" means the amortization rate,
174     as defined in Section 49-11-102, to be applied to the system that would have covered the retiree
175     if the retiree's reemployed position were deemed to be an eligible, full-time position within that
176     system.
177          (b) A participating employer who reemploys a retiree shall contribute to the office the
178     amortization rate if the reemployed retiree:
179          (i) has completed the one-year separation from employment with a participating
180     employer required under Subsection (3)(a); and
181          (ii) makes an election under Subsection (4)(b) to continue to receive a retirement
182     allowance while reemployed.
183          (6) (a) A participating employer shall immediately notify the office:
184          (i) if the participating employer reemploys a retiree;
185          (ii) whether the reemployment is subject to Subsection (3)(b) or (4) of this section; and
186          (iii) of any election by the retiree under Subsection (4).
187          (b) A participating employer shall certify to the office whether the position of an
188     elected official is or is not full time.
189          (c) A participating employer is liable to the office for a payment or failure to make a
190     payment in violation of this section.
191          (d) If a participating employer fails to notify the office in accordance with this section,
192     the participating employer is immediately subject to a compliance audit by the office.
193          (7) (a) The office shall immediately cancel the retirement allowance of a retiree in
194     accordance with Subsection (7)(b) if the office receives notice or learns of:
195          (i) the reemployment of a retiree in violation of Subsection (3); or
196          (ii) the election of a reemployed retiree under Subsection (4)(a).
197          (b) If the retiree is eligible for retirement coverage in the reemployed position, the

198     office shall cancel the allowance of a retiree subject to Subsection (7)(a), and reinstate the
199     retiree to active member status on the first day of the month following the date of:
200          (i) reemployment if the retiree is subject to Subsection (3); or
201          (ii) an election by an employee under Subsection (4)(a).
202          (c) If the retiree is not otherwise eligible for retirement coverage in the reemployed
203     position:
204          (i) the office shall cancel the allowance of a retiree subject to Subsection (7)(a)(i); and
205          (ii) the participating employer shall pay the amortization rate to the office on behalf of
206     the retiree.
207          (8) (a) A retiree subject to Subsection (7)(b) who retires within two years from the date
208     of reemployment:
209          (i) is not entitled to a recalculated retirement benefit; and
210          (ii) will resume the allowance that was being paid at the time of cancellation.
211          (b) Subject to Subsection (2), a retiree who is reinstated to active membership under
212     Subsection (7) and who retires two or more years after the date of reinstatement to active
213     membership shall:
214          (i) resume receiving the allowance that was being paid at the time of cancellation; and
215          (ii) receive an additional allowance based on the formula in effect at the date of the
216     subsequent retirement for all service credit accrued between the first and subsequent retirement
217     dates.
218          (9) (a) A retiree subject to this section shall report to the office the status of the
219     reemployment under Subsection (1)(d), (3), or (4).
220          (b) If the retiree fails to inform the office of an election under Subsection (4), the office
221     shall withhold one month's benefit for each month the retiree fails to inform the office under
222     Subsection (9)(a).
223          (10) A retiree shall be considered as having completed the one-year separation from
224     employment with a participating employer required under Subsection (3)(a), if the retiree:
225          (a) before retiring:

226          (i) was employed with a participating employer as a public safety service employee as
227     defined in Section 49-14-102, 49-15-102, or 49-23-102;
228          (ii) and during the employment under Subsection (10)(a)(i), suffered a physical injury
229     resulting from external force or violence while performing the duties of the employment, and
230     for which injury the retiree would have been approved for total disability in accordance with
231     the provisions under Title 49, Chapter 21, Public Employees' Long-Term Disability Act, if
232     years of service are not considered;
233          (iii) had less than 30 years of service credit but had sufficient service credit to retire,
234     with an unreduced allowance making the public safety service employee ineligible for
235     long-term disability payments under Title 49, Chapter 21, Public Employees' Long-Term
236     Disability Act, or a substantially similar long-term disability program; and
237          (iv) does not receive any long-term disability benefits from any participating employer;
238     and
239          (b) is reemployed by a different participating employer.
240          (11) The board may make rules to implement this section.
241          Section 2. Section 49-11-609 is amended to read:
242          49-11-609. Beneficiary designations -- Revocation of beneficiary designation --
243     Procedure -- Beneficiary not designated -- Payment to survivors in order established
244     under the Uniform Probate Code -- Restrictions on payment -- Payment of deceased's
245     expenses.
246          (1) As used in this section, "member" includes a member, retiree, participant, covered
247     individual, a spouse of a retiree participating in the insurance benefits created by Sections
248     49-12-404 and 49-13-404, or an alternate payee under a domestic relations order dividing a
249     defined contribution account.
250          (2) The most recent beneficiary designations signed by the member and filed with the
251     office, including electronic records, at the time of the member's death are binding in the
252     payment of any benefits due under this title.
253          (3) (a) Except where an optional continuing benefit is chosen, or the law makes a

254     specific benefit designation to a dependent spouse, a member may revoke a beneficiary
255     designation at any time and may execute and file a different beneficiary designation with the
256     office.
257          (b) A change of beneficiary designation shall be completed on forms provided by the
258     office.
259          (4) (a) All benefits payable by the office may be paid or applied to the benefit of the
260     surviving next of kin of the deceased in the order of precedence established under Title 75,
261     Chapter 2, Intestate Succession and Wills, if:
262          (i) no beneficiary is designated or if all designated beneficiaries have predeceased the
263     member;
264          (ii) the location of the beneficiary or secondary beneficiaries cannot be ascertained by
265     the office within 12 months of the date a reasonable attempt is made by the office to locate the
266     beneficiaries; or
267          (iii) the beneficiary has not completed the forms necessary to pay the benefits within
268     six months of the date that beneficiary forms are sent to the beneficiary's last-known address.
269          (b) (i) A payment may not be made to a person included in any of the groups referred
270     to in Subsection (4)(a) if at the date of payment there is a living person in any of the groups
271     preceding it.
272          (ii) Payment to a person in any group based upon receipt from the person of an
273     affidavit in a form satisfactory to the office that:
274          (A) there are no living individuals in the group preceding it;
275          (B) the probate of the estate of the deceased has not been commenced; and
276          (C) more than [three months] 30 days have elapsed since the date of death of the
277     decedent.
278          (5) Benefits paid under this section shall be:
279          (a) a full satisfaction and discharge of all claims for benefits under this title; and
280          (b) payable by reason of the death of the decedent.
281          Section 3. Section 49-12-102 is amended to read:

282          49-12-102. Definitions.
283          As used in this chapter:
284          (1) "Benefits normally provided":
285          (a) means a benefit offered by an employer, including:
286          (i) a leave benefit of any kind;
287          (ii) insurance coverage of any kind if the employer pays some or all of the premium for
288     the coverage;
289          (iii) employer contributions to a health savings account, health reimbursement account,
290     health reimbursement arrangement, or medical expense reimbursement plan; and
291          (iv) a retirement benefit of any kind if the employer pays some or all of the cost of the
292     benefit; and
293          (b) does not include:
294          (i) a payment for Social Security;
295          (ii) workers' compensation insurance;
296          (iii) unemployment insurance;
297          (iv) a payment for Medicare;
298          (v) a payment or insurance required by federal or state law that is similar to a payment
299     or insurance listed in Subsection (1)(b)(i), (ii), (iii), or (iv);
300          (vi) any other benefit that state or federal law requires an employer to provide an
301     employee who would not otherwise be eligible to receive the benefit; or
302          (vii) any benefit that an employer provides an employee in order to avoid a penalty or
303     tax under the Patient Protection and Affordable Care Act, Pub. L. No. 111-148 and the Health
304     Care Education Reconciliation Act of 2010, Pub. L. No. 111-152, and related federal
305     regulations, including a penalty imposed by Internal Revenue Code, Section 4980H.
306          (2) (a) "Compensation" means, except as provided in Subsection (2)(c), the total
307     amount of payments made by a participating employer to a member of this system for services
308     rendered to the participating employer, including:
309          (i) bonuses;

310          (ii) cost-of-living adjustments;
311          (iii) other payments currently includable in gross income and that are subject to Social
312     Security deductions, including any payments in excess of the maximum amount subject to
313     deduction under Social Security law;
314          (iv) amounts that the member authorizes to be deducted or reduced for salary deferral
315     or other benefits authorized by federal law; and
316          (v) member contributions.
317          (b) "Compensation" for purposes of this chapter may not exceed the amount allowed
318     under Internal Revenue Code, Section 401(a)(17).
319          (c) "Compensation" does not include:
320          (i) the monetary value of remuneration paid in kind, including a residence or use of
321     equipment;
322          (ii) the cost of any employment benefits paid for by the participating employer;
323          (iii) compensation paid to a temporary employee, an exempt employee, or an employee
324     otherwise ineligible for service credit;
325          (iv) any payments upon termination, including accumulated vacation, sick leave
326     payments, severance payments, compensatory time payments, or any other special payments; or
327          (v) any allowances or payments to a member for costs or expenses paid by the
328     participating employer, including automobile costs, uniform costs, travel costs, tuition costs,
329     housing costs, insurance costs, equipment costs, and dependent care costs.
330          (d) The executive director may determine if a payment not listed under this Subsection
331     (2) falls within the definition of compensation.
332          (3) "Final average salary" means the amount [computed] calculated by averaging the
333     highest five years of annual compensation preceding retirement subject to Subsections (3)(a),
334     (b), (c), [and] (d), and (e).
335          (a) Except as provided in Subsection (3)(b), the percentage increase in annual
336     compensation in any one of the years used may not exceed the previous year's compensation by
337     more than 10% plus a cost-of-living adjustment equal to the decrease in the purchasing power

338     of the dollar during the previous year, as measured by a United States Bureau of Labor
339     Statistics Consumer Price Index average as determined by the board.
340          (b) In cases where the participating employer provides acceptable documentation to the
341     office, the limitation in Subsection (3)(a) may be exceeded if:
342          (i) the member has transferred from another agency; or
343          (ii) the member has been promoted to a new position.
344          (c) If the member retires more than six months from the date of termination of
345     employment, the member is considered to have been in service at the member's last rate of pay
346     from the date of the termination of employment to the effective date of retirement for purposes
347     of computing the member's final average salary only.
348          (d) If the member has less than five years of service credit in this system, final average
349     salary means the average annual compensation paid to the member during the full period of
350     service credit.
351          (e) The annual compensation used to calculate final average salary shall be based on:
352          (i) a calendar year for a member employed by a participating employer that is not an
353     educational institution; or
354          (ii) a contract year for a member employed by an educational institution.
355          (4) "Participating employer" means an employer which meets the participation
356     requirements of Sections 49-12-201 and 49-12-202.
357          (5) (a) "Regular full-time employee" means an employee whose term of employment
358     for a participating employer contemplates continued employment during a fiscal or calendar
359     year and whose employment normally requires an average of 20 hours or more per week,
360     except as modified by the board, and who receives benefits normally provided by the
361     participating employer.
362          (b) "Regular full-time employee" includes:
363          (i) a teacher whose term of employment for a participating employer contemplates
364     continued employment during a school year and who teaches half-time or more;
365          (ii) a classified school employee:

366          (A) who is hired before July 1, 2013; and
367          (B) whose employment normally requires an average of 20 hours per week or more for
368     a participating employer, regardless of benefits provided;
369          (iii) an officer, elective or appointive, who earns $500 or more per month, indexed as
370     of January 1, 1990, as provided in Section 49-12-407;
371          (iv) a faculty member or employee of an institution of higher education who is
372     considered full-time by that institution of higher education; and
373          (v) an individual who otherwise meets the definition of this Subsection (5) who
374     performs services for a participating employer through a professional employer organization or
375     similar arrangement.
376          (c) "Regular full-time employee" does not include a classified school employee:
377          (i) (A) who is hired on or after July 1, 2013; and
378          (B) who does not receive benefits normally provided by the participating employer
379     even if the employment normally requires an average of 20 hours per week or more for a
380     participating employer; or
381          (ii) (A) who is hired before July 1, 2013;
382          (B) who did not qualify as a regular full-time employee before July 1, 2013;
383          (C) who does not receive benefits normally provided by the participating employer;
384     and
385          (D) whose employment hours are increased on or after July 1, 2013, to require an
386     average of 20 hours per week or more for a participating employer.
387          (6) "System" means the Public Employees' Contributory Retirement System created
388     under this chapter.
389          (7) "Years of service credit" means:
390          (a) a period consisting of 12 full months as determined by the board;
391          (b) a period determined by the board, whether consecutive or not, during which a
392     regular full-time employee performed services for a participating employer, including any time
393     the regular full-time employee was absent on a paid leave of absence granted by a participating

394     employer or was absent in the service of the United States government on military duty as
395     provided by this chapter; or
396          (c) the regular school year consisting of not less than eight months of full-time service
397     for a regular full-time employee of an educational institution.
398          Section 4. Section 49-13-102 is amended to read:
399          49-13-102. Definitions.
400          As used in this chapter:
401          (1) "Benefits normally provided" has the same meaning as defined in Section
402     49-12-102.
403          (2) (a) Except as provided in Subsection (2)(c), "compensation" means the total
404     amount of payments made by a participating employer to a member of this system for services
405     rendered to the participating employer, including:
406          (i) bonuses;
407          (ii) cost-of-living adjustments;
408          (iii) other payments currently includable in gross income and that are subject to Social
409     Security deductions, including any payments in excess of the maximum amount subject to
410     deduction under Social Security law; and
411          (iv) amounts that the member authorizes to be deducted or reduced for salary deferral
412     or other benefits authorized by federal law.
413          (b) "Compensation" for purposes of this chapter may not exceed the amount allowed
414     under Internal Revenue Code, Section 401(a)(17).
415          (c) "Compensation" does not include:
416          (i) the monetary value of remuneration paid in kind, including a residence or use of
417     equipment;
418          (ii) the cost of any employment benefits paid for by the participating employer;
419          (iii) compensation paid to a temporary employee, an exempt employee, or an employee
420     otherwise ineligible for service credit;
421          (iv) any payments upon termination, including accumulated vacation, sick leave

422     payments, severance payments, compensatory time payments, or any other special payments; or
423          (v) any allowances or payments to a member for costs or expenses paid by the
424     participating employer, including automobile costs, uniform costs, travel costs, tuition costs,
425     housing costs, insurance costs, equipment costs, and dependent care costs.
426          (d) The executive director may determine if a payment not listed under this Subsection
427     (2) falls within the definition of compensation.
428          (3) "Final average salary" means the amount [computed] calculated by averaging the
429     highest three years of annual compensation preceding retirement subject to [the following:]
430     Subsections (3)(a), (b), (c), and (d).
431          (a) Except as provided in Subsection (3)(b), the percentage increase in annual
432     compensation in any one of the years used may not exceed the previous year's compensation by
433     more than 10% plus a cost-of-living adjustment equal to the decrease in the purchasing power
434     of the dollar during the previous year, as measured by a United States Bureau of Labor
435     Statistics Consumer Price Index average as determined by the board.
436          (b) In cases where the participating employer provides acceptable documentation to the
437     office, the limitation in Subsection (3)(a) may be exceeded if:
438          (i) the member has transferred from another agency; or
439          (ii) the member has been promoted to a new position.
440          (c) If the member retires more than six months from the date of termination of
441     employment and for purposes of computing the member's final average salary only, the
442     member is considered to have been in service at the member's last rate of pay from the date of
443     the termination of employment to the effective date of retirement.
444          (d) The annual compensation used to calculate final average salary shall be based on:
445          (i) a calendar year for a member employed by a participating employer that is not an
446     educational institution; or
447          (ii) a contract year for a member employed by an educational institution.
448          (4) "Participating employer" means an employer which meets the participation
449     requirements of Sections 49-13-201 and 49-13-202.

450          (5) (a) "Regular full-time employee" means an employee whose term of employment
451     for a participating employer contemplates continued employment during a fiscal or calendar
452     year and whose employment normally requires an average of 20 hours or more per week,
453     except as modified by the board, and who receives benefits normally provided by the
454     participating employer.
455          (b) "Regular full-time employee" includes:
456          (i) a teacher whose term of employment for a participating employer contemplates
457     continued employment during a school year and who teaches half time or more;
458          (ii) a classified school employee:
459          (A) who is hired before July 1, 2013; and
460          (B) whose employment normally requires an average of 20 hours per week or more for
461     a participating employer, regardless of benefits provided;
462          (iii) an officer, elective or appointive, who earns $500 or more per month, indexed as
463     of January 1, 1990, as provided in Section 49-13-407;
464          (iv) a faculty member or employee of an institution of higher education who is
465     considered full time by that institution of higher education; and
466          (v) an individual who otherwise meets the definition of this Subsection (5) who
467     performs services for a participating employer through a professional employer organization or
468     similar arrangement.
469          (c) "Regular full-time employee" does not include a classified school employee:
470          (i) (A) who is hired on or after July 1, 2013; and
471          (B) who does not receive benefits normally provided by the participating employer
472     even if the employment normally requires an average of 20 hours per week or more for a
473     participating employer; or
474          (ii) (A) who is hired before July 1, 2013;
475          (B) who did not qualify as a regular full-time employee before July 1, 2013;
476          (C) who does not receive benefits normally provided by the participating employer;
477     and

478          (D) whose employment hours are increased on or after July 1, 2013, to require an
479     average of 20 hours per week or more for a participating employer.
480          (6) "System" means the Public Employees' Noncontributory Retirement System.
481          (7) "Years of service credit" means:
482          (a) a period consisting of 12 full months as determined by the board;
483          (b) a period determined by the board, whether consecutive or not, during which a
484     regular full-time employee performed services for a participating employer, including any time
485     the regular full-time employee was absent on a paid leave of absence granted by a participating
486     employer or was absent in the service of the United States government on military duty as
487     provided by this chapter; or
488          (c) the regular school year consisting of not less than eight months of full-time service
489     for a regular full-time employee of an educational institution.
490          Section 5. Section 49-14-102 is amended to read:
491          49-14-102. Definitions.
492          As used in this chapter:
493          (1) (a) "Compensation" means the total amount of payments that are includable in
494     gross income which are received by a public safety service employee as base income for the
495     regularly scheduled work period. The participating employer shall establish the regularly
496     scheduled work period. Base income shall be determined prior to the deduction of member
497     contributions or any amounts the public safety service employee authorizes to be deducted for
498     salary deferral or other benefits authorized by federal law.
499          (b) "Compensation" includes performance-based bonuses and cost-of-living
500     adjustments.
501          (c) "Compensation" does not include:
502          (i) overtime;
503          (ii) sick pay incentives;
504          (iii) retirement pay incentives;
505          (iv) the monetary value of remuneration paid in kind, including a residence, use of

506     equipment or uniform, travel, or similar payments;
507          (v) a lump-sum payment or special payments covering accumulated leave; and
508          (vi) all contributions made by a participating employer under this system or under any
509     other employee benefit system or plan maintained by a participating employer for the benefit of
510     a member or participant.
511          (d) "Compensation" for purposes of this chapter may not exceed the amount allowed
512     under Internal Revenue Code Section 401(a)(17).
513          (2) "Dispatcher" means the same as that term is defined in Section 53-6-102.
514          (3) "Final average salary" means the amount [computed] calculated by averaging the
515     highest three years of annual compensation preceding retirement subject to Subsections (3)(a)
516     [and], (b), and (c).
517          (a) Except as provided in Subsection (3)(b), the percentage increase in annual
518     compensation in any one of the years used may not exceed the previous year's compensation by
519     more than 10% plus a cost-of-living adjustment equal to the decrease in the purchasing power
520     of the dollar during the previous year, as measured by a United States Bureau of Labor
521     Statistics Consumer Price Index average as determined by the board.
522          (b) In cases where the participating employer provides acceptable documentation to the
523     office, the limitation in Subsection (3)(a) may be exceeded if:
524          (i) the public safety service employee has transferred from another agency; or
525          (ii) the public safety service employee has been promoted to a new position.
526          (c) The annual compensation used to calculate final average salary shall be based on:
527          (i) a calendar year for a member employed by a participating employer that is not an
528     educational institution; or
529          (ii) a contract year for a member employed by an educational institution.
530          (4) (a) "Line-of-duty death" means a death resulting from:
531          (i) external force, violence, or disease occasioned by an act of duty as a public safety
532     service employee; or
533          (ii) strenuous activity, including a heart attack or stroke, that occurs during strenuous

534     training or another strenuous activity required as an act of duty as a public safety service
535     employee.
536          (b) "Line-of-duty death" does not include a death that:
537          (i) occurs during an activity that is required as an act of duty as a public safety service
538     employee if the activity is not a strenuous activity, including an activity that is clerical,
539     administrative, or of a nonmanual nature;
540          (ii) occurs during the commission of a crime committed by the employee;
541          (iii) the employee's intoxication or use of alcohol or drugs, whether prescribed or
542     nonprescribed, contributes to the employee's death; or
543          (iv) occurs in a manner other than as described in Subsection (4)(a).
544          (5) "Participating employer" means an employer which meets the participation
545     requirements of Section 49-14-201.
546          (6) (a) "Public safety service" means employment normally requiring an average of
547     2,080 hours of regularly scheduled employment per year rendered by a member who is a:
548          (i) law enforcement officer in accordance with Section 53-13-103;
549          (ii) correctional officer in accordance with Section 53-13-104;
550          (iii) special function officer approved in accordance with Sections 49-14-201 and
551     53-13-105;
552          (iv) dispatcher who is certified in accordance with Section 53-6-303; or
553          (v) full-time member of the Board of Pardons and Parole created under Section
554     77-27-2.
555          (b) Except as provided under Subsections (6)(a)(iv) and (v), "public safety service"
556     also requires that in the course of employment the employee's life or personal safety is at risk.
557          (c) Except for the minimum hour requirement, Subsections (6)(a) and (b) do not apply
558     to any person who was eligible for service credit in this system before January 1, 1984.
559          (7) "Public safety service employee" means an employee of a participating employer
560     who performs public safety service under this chapter.
561          (8) (a) "Strenuous activity" means engagement involving a difficult, stressful, or

562     vigorous fire suppression, rescue, hazardous material response, emergency medical service,
563     physical law enforcement, prison security, disaster relief, or other emergency response activity.
564          (b) "Strenuous activity" includes participating in a participating employer sanctioned
565     and funded training exercise that involves difficult, stressful, or vigorous physical activity.
566          (9) "System" means the Public Safety Contributory Retirement System created under
567     this chapter.
568          (10) "Years of service credit" means the number of periods, each to consist of 12 full
569     months as determined by the board, whether consecutive or not, during which a public safety
570     service employee was employed by a participating employer, including time the public safety
571     service employee was absent in the service of the United States government on military duty.
572          Section 6. Section 49-14-201 is amended to read:
573          49-14-201. System membership -- Eligibility.
574          (1) Except as provided in Section 49-15-201, a public safety service employee of a
575     participating employer participating in this system is eligible for service credit in this system at
576     the earliest of:
577          (a) July 1, 1969, if the public safety service employee was employed by the
578     participating employer on July 1, 1969, and the participating employer was participating in this
579     system on that date;
580          (b) the date the participating employer begins participating in this system if the public
581     safety service employee was employed by the participating employer on that date; or
582          (c) the date the public safety service employee is employed by the participating
583     employer and is eligible to perform public safety service, except that a public safety service
584     employee initially entering employment with a participating employer on or after July 1, 2011,
585     who does not have service credit accrued before July 1, 2011, in a Tier I system or plan
586     administered by the board, may not participate in this system.
587          (2) (a) (i) A participating employer that has public safety service and firefighter service
588     employees that require cross-training and duty shall enroll those dual purpose employees in the
589     system in which the greatest amount of time is actually worked.

590          (ii) The employees shall either be full-time public safety service or full-time firefighter
591     service employees of the participating employer.
592          (b) (i) Prior to transferring a dual purpose employee from one system to another, the
593     participating employer shall receive written permission from the office.
594          (ii) The office may request documentation to verify the appropriateness of the transfer.
595          (3) The board may combine or segregate the actuarial experience of participating
596     employers in this system for the purpose of setting contribution rates.
597          (4) (a) (i) Each participating employer participating in this system shall annually
598     submit to the office a schedule indicating the positions to be covered under this system in
599     accordance with this chapter.
600          (ii) The office may require documentation to justify the inclusion of any position under
601     this system.
602          (b) If there is a dispute between the office and a participating employer or employee
603     over any position to be covered, the disputed position shall be submitted to the Peace Officer
604     Standards and Training Council established under Section 53-6-106 for determination.
605          (c) (i) The Peace Officer Standards and Training Council's authority to decide
606     eligibility for public safety service credit is limited to claims for coverage under this system for
607     time periods after July 1, 1989.
608          (ii) A decision of the Peace Officer Standards and Training Council may not be applied
609     to service credit earned in another system prior to July 1, 1989.
610          (iii) Except as provided under Subsection (4)(c)(iv), a decision of the Peace Officer
611     Standards and Training Council granting a position coverage under this system may only be
612     applied prospectively from the date of that decision.
613          (iv) A decision of the Peace Officer Standards and Training Council granting a position
614     coverage under this system may be applied retroactively only if:
615          (A) the participating employer covered other similarly situated positions under this
616     system during the time period in question; and
617          (B) the position otherwise meets all eligibility requirements for receiving service credit

618     in this system during the period for which service credit is to be granted.
619          (5) The Peace Officer Standards and Training Council may use a subcommittee to
620     provide a recommendation to the council in determining disputes between the office and a
621     participating employer or employee over a position to be covered under this system.
622          (6) The Peace Officer Standards and Training Council shall comply with Title 63G,
623     Chapter 4, Administrative Procedures Act, in resolving coverage disputes in this system.
624          (7) A public safety employee who is transferred or promoted to an administration
625     position [not covered by this system] requiring the performance of duties that consist primarily
626     of management or supervision of public safety service employees shall continue to earn public
627     safety service credit in this system as long as the employee remains employed in the same
628     department.
629          (8) An employee of the Department of Corrections shall continue to earn public safety
630     service credit in this system if:
631          (a) the employee's position is no longer covered under this system for new employees
632     hired on or after July 1, 2015; and
633          (b) the employee:
634          (i) remains employed by the Department of Corrections;
635          (ii) meets the eligibility requirements of this system;
636          (iii) was hired into a position covered by this system prior to July 1, 2015; and
637          (iv) has not had a break in service on or after July 1, 2015.
638          (9) An employee who is reassigned to the Department of Technology Services or to the
639     Department of Human Resource Management, and who was a member of this system, is
640     entitled to remain a member of this system.
641          (10) (a) To determine that a position is covered under this system, the office and, if a
642     coverage dispute arises, the Peace Officer Standards and Training Council shall find that the
643     position requires the employee to:
644          (i) except for a dispatcher, place the employee's life or personal safety at risk; and
645          (ii) complete training as provided in Section 53-6-303, 53-13-103, 53-13-104, or

646     53-13-105.
647          (b) If a position satisfies the requirements of Subsection (10)(a), the office and the
648     Peace Officer Standards and Training Council shall consider whether or not the position
649     requires the employee to:
650          (i) perform duties that consist primarily of actively preventing or detecting crime and
651     enforcing criminal statutes or ordinances of this state or any of its political subdivisions;
652          (ii) perform duties that consist primarily of providing community protection; and
653          (iii) respond to situations involving threats to public safety and make emergency
654     decisions affecting the lives and health of others.
655          (11) If a subcommittee is used to recommend the determination of disputes to the
656     Peace Officer Standards and Training Council, the subcommittee shall comply with the
657     requirements of Subsection (10) in making its recommendation.
658          (12) A final order of the Peace Officer Standards and Training Council regarding a
659     dispute is a final agency action for purposes of Title 63G, Chapter 4, Administrative
660     Procedures Act.
661          (13) Except as provided under Subsection (14), if a participating employer's public
662     safety service employees are not covered by this system or under Chapter 15, Public Safety
663     Noncontributory Retirement Act, as of January 1, 1998, those public safety service employees
664     who may otherwise qualify for membership in this system shall, at the discretion of the
665     participating employer, remain in their current retirement system.
666          (14) (a) A public safety service employee employed by an airport police department,
667     which elects to cover its public safety service employees under the Public Safety
668     Noncontributory Retirement System under Subsection (13), may elect to remain in the public
669     safety service employee's current retirement system.
670          (b) The public safety service employee's election to remain in the current retirement
671     system under Subsection (14)(a):
672          (i) shall be made at the time the employer elects to move its public safety service
673     employees to a public safety retirement system;

674          (ii) documented by written notice to the participating employer; and
675          (iii) is irrevocable.
676          (15) (a) Subject to Subsection (16), beginning July 1, 2015, a public safety service
677     employee who is a dispatcher employed by:
678          (i) the state shall be eligible for service credit in this system; and
679          (ii) a participating employer other than the state shall be eligible for service credit in
680     this system if the dispatcher's participating employer elects to cover its dispatchers under this
681     system.
682          (b) A participating employer's election to cover its dispatchers under this system under
683     Subsection (15)(a)(ii) is irrevocable and shall be documented by a resolution adopted by the
684     governing body of the participating employer in accordance with rules made by the office.
685          (c) A dispatcher's service before July 1, 2015, or before a date specified by resolution
686     of a participating employer under Subsection (15)(b), is not eligible for service credit in this
687     system.
688          (16) Notwithstanding any other provision of this section, a person initially entering
689     employment with a participating employer on or after July 1, 2011, who does not have service
690     credit accrued before July 1, 2011, in a Tier I system or plan administered by the board, may
691     not participate in this system.
692          Section 7. Section 49-15-102 is amended to read:
693          49-15-102. Definitions.
694          As used in this chapter:
695          (1) (a) "Compensation" means the total amount of payments that are includable in
696     gross income received by a public safety service employee as base income for the regularly
697     scheduled work period. The participating employer shall establish the regularly scheduled
698     work period. Base income shall be determined prior to the deduction of any amounts the
699     public safety service employee authorizes to be deducted for salary deferral or other benefits
700     authorized by federal law.
701          (b) "Compensation" includes performance-based bonuses and cost-of-living

702     adjustments.
703          (c) "Compensation" does not include:
704          (i) overtime;
705          (ii) sick pay incentives;
706          (iii) retirement pay incentives;
707          (iv) the monetary value of remuneration paid in kind, as in a residence, use of
708     equipment or uniform, travel, or similar payments;
709          (v) a lump-sum payment or special payment covering accumulated leave; and
710          (vi) all contributions made by a participating employer under this system or under any
711     other employee benefit system or plan maintained by a participating employer for the benefit of
712     a member or participant.
713          (d) "Compensation" for purposes of this chapter may not exceed the amount allowed
714     under Internal Revenue Code Section 401(a)(17).
715          (2) "Dispatcher" means the same as that term is defined in Section 53-6-102.
716          (3) "Final average salary" means the amount [computed] calculated by averaging the
717     highest three years of annual compensation preceding retirement subject to Subsections (3)(a)
718     [and], (b), and (c).
719          (a) Except as provided in Subsection (3)(b), the percentage increase in annual
720     compensation in any one of the years used may not exceed the previous year's compensation by
721     more than 10% plus a cost-of-living adjustment equal to the decrease in the purchasing power
722     of the dollar during the previous year, as measured by a United States Bureau of Labor
723     Statistics Consumer Price Index average as determined by the board.
724          (b) In cases where the participating employer provides acceptable documentation to the
725     office, the limitation in Subsection (3)(a) may be exceeded if:
726          (i) the public safety service employee has transferred from another agency; or
727          (ii) the public safety service employee has been promoted to a new position.
728          (c) The annual compensation used to calculate final average salary shall be based on:
729          (i) a calendar year for a member employed by a participating employer that is not an

730     educational institution; or
731          (ii) a contract year for a member employed by an educational institution.
732          (4) (a) "Line-of-duty death" means a death resulting from:
733          (i) external force, violence, or disease occasioned by an act of duty as a public safety
734     service employee; or
735          (ii) strenuous activity, including a heart attack or stroke, that occurs during strenuous
736     training or another strenuous activity required as an act of duty as a public safety service
737     employee.
738          (b) "Line-of-duty death" does not include a death that:
739          (i) occurs during an activity that is required as an act of duty as a public safety service
740     employee if the activity is not a strenuous activity, including an activity that is clerical,
741     administrative, or of a nonmanual nature;
742          (ii) occurs during the commission of a crime committed by the employee;
743          (iii) the employee's intoxication or use of alcohol or drugs, whether prescribed or
744     nonprescribed, contributes to the employee's death; or
745          (iv) occurs in a manner other than as described in Subsection (4)(a).
746          (5) "Participating employer" means an employer which meets the participation
747     requirements of Section 49-15-201.
748          (6) (a) "Public safety service" means employment normally requiring an average of
749     2,080 hours of regularly scheduled employment per year rendered by a member who is a:
750          (i) law enforcement officer in accordance with Section 53-13-103;
751          (ii) correctional officer in accordance with Section 53-13-104;
752          (iii) special function officer approved in accordance with Sections 49-15-201 and
753     53-13-105;
754          (iv) dispatcher who is certified in accordance with Section 53-6-303; or
755          (v) full-time member of the Board of Pardons and Parole created under Section
756     77-27-2.
757          (b) Except as provided under Subsections (6)(a)(iv) and (v), "public safety service"

758     also requires that in the course of employment the employee's life or personal safety is at risk.
759          (7) "Public safety service employee" means an employee of a participating employer
760     who performs public safety service under this chapter.
761          (8) (a) "Strenuous activity" means engagement involving a difficult, stressful, or
762     vigorous fire suppression, rescue, hazardous material response, emergency medical service,
763     physical law enforcement, prison security, disaster relief, or other emergency response activity.
764          (b) "Strenuous activity" includes participating in a participating employer sanctioned
765     and funded training exercise that involves difficult, stressful, or vigorous physical activity.
766          (9) "System" means the Public Safety Noncontributory Retirement System created
767     under this chapter.
768          (10) "Years of service credit" means the number of periods, each to consist of 12 full
769     months as determined by the board, whether consecutive or not, during which a public safety
770     service employee was employed by a participating employer, including time the public safety
771     service employee was absent in the service of the United States government on military duty.
772          Section 8. Section 49-15-201 is amended to read:
773          49-15-201. System membership -- Eligibility.
774          (1) (a) A public safety service employee employed by the state after July 1, 1989, but
775     before July 1, 2011, is eligible for service credit in this system.
776          (b) A public safety service employee employed by the state prior to July 1, 1989, may
777     either elect to receive service credit in this system or continue to receive service credit under
778     the system established under Chapter 14, Public Safety Contributory Retirement Act, by
779     following the procedures established by the board under this chapter.
780          (2) (a) Public safety service employees of a participating employer other than the state
781     that elected on or before July 1, 1989, to remain in the Public Safety Contributory Retirement
782     System shall be eligible only for service credit in that system.
783          (b) (i) A participating employer other than the state that elected on or before July 1,
784     1989, to participate in this system shall, have allowed, prior to July 1, 1989, a public safety
785     service employee to elect to participate in either this system or the Public Safety Contributory

786     Retirement System.
787          (ii) Except as expressly allowed by this title, the election of the public safety service
788     employee is final and may not be changed.
789          (c) A public safety service employee hired by a participating employer other than the
790     state after July 1, 1989, but before July 1, 2011, shall become a member in this system.
791          (d) A public safety service employee of a participating employer other than the state
792     who began participation in this system after July 1, 1989, but before July 1, 2011, is only
793     eligible for service credit in this system.
794          (e) A person initially entering employment with a participating employer on or after
795     July 1, 2011, who does not have service credit accrued before July 1, 2011, in a Tier I system
796     or plan administered by the board, may not participate in this system.
797          (3) (a) (i) A participating employer that has public safety service and firefighter service
798     employees that require cross-training and duty shall enroll those dual purpose employees in the
799     system in which the greatest amount of time is actually worked.
800          (ii) The employees shall either be full-time public safety service or full-time firefighter
801     service employees of the participating employer.
802          (b) (i) Prior to transferring a dual purpose employee from one system to another, the
803     participating employer shall receive written permission from the office.
804          (ii) The office may request documentation to verify the appropriateness of the transfer.
805          (4) The board may combine or segregate the actuarial experience of participating
806     employers in this system for the purpose of setting contribution rates.
807          (5) (a) (i) Each participating employer participating in this system shall annually
808     submit to the office a schedule indicating the positions to be covered under this system in
809     accordance with this chapter.
810          (ii) The office may require documentation to justify the inclusion of any position under
811     this system.
812          (b) If there is a dispute between the office and a participating employer or employee
813     over any position to be covered, the disputed position shall be submitted to the Peace Officer

814     Standards and Training Council established under Section 53-6-106 for determination.
815          (c) (i) The Peace Officer Standards and Training Council's authority to decide
816     eligibility for public safety service credit is limited to claims for coverage under this system for
817     time periods after July 1, 1989.
818          (ii) A decision of the Peace Officer Standards and Training Council may not be applied
819     to service credit earned in another system prior to July 1, 1989.
820          (iii) Except as provided under Subsection (5)(c)(iv), a decision of the Peace Officer
821     Standards and Training Council granting a position coverage under this system may only be
822     applied prospectively from the date of that decision.
823          (iv) A decision of the Peace Officer Standards and Training Council granting a position
824     coverage under this system may be applied retroactively only if:
825          (A) the participating employer covered other similarly situated positions under this
826     system during the time period in question; and
827          (B) the position otherwise meets all eligibility requirements for receiving service credit
828     in this system during the period for which service credit is to be granted.
829          (6) The Peace Officer Standards and Training Council may use a subcommittee to
830     provide a recommendation to the council in determining disputes between the office and a
831     participating employer or employee over a position to be covered under this system.
832          (7) The Peace Officer Standards and Training Council shall comply with Title 63G,
833     Chapter 4, Administrative Procedures Act, in resolving coverage disputes in this system.
834          (8) A public safety service employee who is transferred or promoted to an
835     administration position [not covered by this system] requiring the performance of duties that
836     consist primarily of management or supervision of public safety service employees shall
837     continue to earn public safety service credit in this system as long as the employee remains
838     employed in the same department.
839          (9) An employee of the Department of Corrections shall continue to earn public safety
840     service credit in this system if:
841          (a) the employee's position is no longer covered under this system for new employees

842     hired on or after July 1, 2015; and
843          (b) the employee:
844          (i) remains employed by the Department of Corrections;
845          (ii) meets the eligibility requirements of this system;
846          (iii) was hired into a position covered by this system prior to July 1, 2015; and
847          (iv) has not had a break in service on or after July 1, 2015.
848          (10) Any employee who is reassigned to the Department of Technology Services or to
849     the Department of Human Resource Management, and who was a member in this system, shall
850     be entitled to remain a member in this system.
851          (11) (a) To determine that a position is covered under this system, the office and, if a
852     coverage dispute arises, the Peace Officer Standards and Training Council shall find that the
853     position requires the employee to:
854          (i) except for a dispatcher, place the employee's life or personal safety at risk; and
855          (ii) complete training as provided in Section 53-6-303, 53-13-103, 53-13-104, or
856     53-13-105.
857          (b) If a position satisfies the requirements of Subsection (11)(a), the office and Peace
858     Officer Standards and Training Council shall consider whether the position requires the
859     employee to:
860          (i) perform duties that consist primarily of actively preventing or detecting crime and
861     enforcing criminal statutes or ordinances of this state or any of its political subdivisions;
862          (ii) perform duties that consist primarily of providing community protection; and
863          (iii) respond to situations involving threats to public safety and make emergency
864     decisions affecting the lives and health of others.
865          (12) If a subcommittee is used to recommend the determination of disputes to the
866     Peace Officer Standards and Training Council, the subcommittee shall comply with the
867     requirements of Subsection (11) in making its recommendation.
868          (13) A final order of the Peace Officer Standards and Training Council regarding a
869     dispute is a final agency action for purposes of Title 63G, Chapter 4, Administrative

870     Procedures Act.
871          (14) Except as provided under Subsection (15), if a participating employer's public
872     safety service employees are not covered by this system or under Chapter 14, Public Safety
873     Contributory Retirement Act, as of January 1, 1998, those public safety service employees who
874     may otherwise qualify for membership in this system shall, at the discretion of the participating
875     employer, remain in their current retirement system.
876          (15) (a) A public safety service employee employed by an airport police department,
877     which elects to cover its public safety service employees under the Public Safety
878     Noncontributory Retirement System under Subsection (14), may elect to remain in the public
879     safety service employee's current retirement system.
880          (b) The public safety service employee's election to remain in the current retirement
881     system under Subsection (15)(a):
882          (i) shall be made at the time the employer elects to move its public safety service
883     employees to a public safety retirement system;
884          (ii) shall be documented by written notice to the participating employer; and
885          (iii) is irrevocable.
886          (16) (a) Subject to Subsection (17), beginning July 1, 2015, a public safety service
887     employee who is a dispatcher employed by:
888          (i) the state shall be eligible for service credit in this system; and
889          (ii) a participating employer other than the state shall be eligible for service credit in
890     this system if the dispatcher's participating employer elects to cover its dispatchers under this
891     system.
892          (b) A participating employer's election to cover its dispatchers under this system under
893     Subsection (16)(a)(ii) is irrevocable and shall be documented by a resolution adopted by the
894     governing body of the participating employer in accordance with rules made by the office.
895          (c) A dispatcher's service before July 1, 2015, or before a date specified by resolution
896     of a participating employer under Subsection (16)(b), is not eligible for service credit in this
897     system.

898          (17) Notwithstanding any other provision of this section, a person initially entering
899     employment with a participating employer on or after July 1, 2011, who does not have service
900     credit accrued before July 1, 2011, in a Tier I system or plan administered by the board, may
901     not participate in this system.
902          Section 9. Section 49-16-102 is amended to read:
903          49-16-102. Definitions.
904          As used in this chapter:
905          (1) (a) "Compensation" means the total amount of payments that are includable as
906     gross income which are received by a firefighter service employee as base income for the
907     regularly scheduled work period. The participating employer shall establish the regularly
908     scheduled work period. Base income shall be determined prior to the deduction of member
909     contributions or any amounts the firefighter service employee authorizes to be deducted for
910     salary deferral or other benefits authorized by federal law.
911          (b) "Compensation" includes performance-based bonuses and cost-of-living
912     adjustments.
913          (c) "Compensation" does not include:
914          (i) overtime;
915          (ii) sick pay incentives;
916          (iii) retirement pay incentives;
917          (iv) remuneration paid in kind such as a residence, use of equipment, uniforms, travel,
918     or similar payments;
919          (v) a lump-sum payment or special payments covering accumulated leave; and
920          (vi) all contributions made by a participating employer under this system or under any
921     other employee benefit system or plan maintained by a participating employer for the benefit of
922     a member or participant.
923          (d) "Compensation" for purposes of this chapter may not exceed the amount allowed
924     under Section 401(a)(17), Internal Revenue Code.
925          (2) (a) "Disability" means a physical or mental condition that, in the judgment of the

926     office, is total and presumably permanent, and prevents a member from performing firefighter
927     service.
928          (b) The determination of disability is based upon medical and other evidence
929     satisfactory to the office.
930          (3) "Final average salary" means the amount [computed] calculated by averaging the
931     highest three years of annual compensation preceding retirement subject to Subsections (3)(a)
932     [and], (b), and (c).
933          (a) Except as provided in Subsection (3)(b), the percentage increase in annual
934     compensation in any one of the years used may not exceed the previous year's compensation by
935     more than 10% plus a cost-of-living adjustment equal to the decrease in the purchasing power
936     of the dollar during the previous year, as measured by a United States Bureau of Labor
937     Statistics Consumer Price Index average as determined by the board.
938          (b) In cases where the participating employer provides acceptable documentation to the
939     office the limitation in Subsection (3)(a) may be exceeded if:
940          (i) the member has transferred from another agency; or
941          (ii) the member has been promoted to a new position.
942          (c) The annual compensation used to calculate final average salary shall be based on:
943          (i) a calendar year for a member employed by a participating employer that is not an
944     educational institution; or
945          (ii) a contract year for a member employed by an educational institution.
946          (4) (a) "Firefighter service" means employment normally requiring an average of 2,080
947     hours of regularly scheduled employment per year rendered by a member who is:
948          (i) a firefighter service employee trained in firefighter techniques and assigned to a
949     position of hazardous duty with a regularly constituted fire department; or
950          (ii) the state fire marshal appointed under Section 53-7-103 or a deputy state fire
951     marshal.
952          (b) "Firefighter service" does not include secretarial staff or other similar employees.
953          (5) "Firefighter service employee" means an employee of a participating employer who

954     provides firefighter service under this chapter. An employee of a regularly constituted fire
955     department who does not perform firefighter service is not a firefighter service employee.
956          (6) (a) "Line-of-duty death or disability" means a death or any physical or mental
957     disability resulting from:
958          (i) external force, violence, or disease directly resulting from firefighter service; or
959          (ii) strenuous activity, including a heart attack or stroke, that occurs during strenuous
960     training or another strenuous activity required as an act of duty as a firefighter service
961     employee.
962          (b) "Line-of-duty death or disability" does not include a death or any physical or mental
963     disability that:
964          (i) occurs during an activity that is required as an act of duty as a firefighter service
965     employee if the activity is not a strenuous activity, including an activity that is clerical,
966     administrative, or of a nonmanual nature;
967          (ii) occurs during the commission of a crime committed by the employee;
968          (iii) occurs when the employee's intoxication or use of alcohol or drugs, whether
969     prescribed or nonprescribed, contributes to the employee's death or disability; or
970          (iv) occurs in a manner other than as described in Subsection (6)(a).
971          (c) "Line-of-duty death or disability" includes the death or disability of a paid
972     firefighter resulting from heart disease, lung disease, or a respiratory tract condition if the paid
973     firefighter has five years of firefighter service credit.
974          (7) "Participating employer" means an employer which meets the participation
975     requirements of Section 49-16-201.
976          (8) "Regularly constituted fire department" means a fire department that employs a fire
977     chief who performs firefighter service for at least 2,080 hours of regularly scheduled paid
978     employment per year.
979          (9) (a) "Strenuous activity" means engagement involving a difficult, stressful, or
980     vigorous fire suppression, rescue, hazardous material response, emergency medical service,
981     physical law enforcement, prison security, disaster relief, or other emergency response activity.

982          (b) "Strenuous activity" includes participating in a participating employer sanctioned
983     and funded training exercise that involves difficult, stressful, or vigorous physical activity.
984          (10) "System" means the Firefighters' Retirement System created under this chapter.
985          (11) (a) "Volunteer firefighter" means any individual that is not regularly employed as
986     a firefighter service employee, but who:
987          (i) has been trained in firefighter techniques and skills;
988          (ii) continues to receive regular firefighter training; and
989          (iii) is on the rolls of a legally organized volunteer fire department which provides
990     ongoing training and serves a political subdivision of the state.
991          (b) An individual that volunteers assistance but does not meet the requirements of
992     Subsection (11)(a) is not a volunteer firefighter for purposes of this chapter.
993          (12) "Years of service credit" means the number of periods, each to consist of 12 full
994     months as determined by the board, whether consecutive or not, during which a firefighter
995     service employee was employed by a participating employer or received full-time pay while on
996     sick leave, including any time the firefighter service employee was absent in the service of the
997     United States on military duty.
998          Section 10. Section 49-17-102 is amended to read:
999          49-17-102. Definitions.
1000          As used in this chapter:
1001          (1) (a) "Compensation" means the total amount of payments which are currently
1002     includable in gross income made by a participating employer to a member of this system for
1003     services rendered to the participating employer.
1004          (b) "Compensation" includes:
1005          (i) performance-based bonuses;
1006          (ii) cost-of-living adjustments;
1007          (iii) payments subject to Social Security deductions;
1008          (iv) any payments in excess of the maximum amount subject to deduction under Social
1009     Security law;

1010          (v) amounts which the member authorizes to be deducted or reduced for salary deferral
1011     or other benefits authorized by federal law; and
1012          (vi) member contributions.
1013          (c) "Compensation" for purposes of this chapter may not exceed the amount allowed
1014     under Internal Revenue Code Section 401(a)(17).
1015          (d) "Compensation," does not include:
1016          (i) the monetary value of remuneration paid in kind, such as a residence or use of
1017     equipment;
1018          (ii) all contributions made by a participating employer under any system or plan for the
1019     benefit of a member or participant;
1020          (iii) salary paid to a temporary or exempt employee;
1021          (iv) payments upon termination or any other special payments including early
1022     retirement inducements; or
1023          (v) uniform, travel, or similar payments.
1024          (2) "Final average salary" means the amount [computed] calculated by averaging the
1025     highest two years of annual compensation preceding retirement, subject to Subsections (2)(a)
1026     [and], (b), and (c).
1027          (a) Except as provided in Subsection (2)(b), the percentage increase in annual
1028     compensation in any one of the years used may not exceed the previous year's compensation by
1029     more than 10% plus a cost-of-living adjustment equal to the decrease in the purchasing power
1030     of the dollar during the previous year, as measured by a United States Bureau of Labor
1031     Statistics Consumer Price Index average as determined by the board.
1032          (b) In cases where the participating employer provides acceptable documentation to the
1033     board, the limitation in Subsection (2)(a) may be exceeded if:
1034          (i) the member has transferred from another participating employer; or
1035          (ii) the member has been promoted to a new position.
1036          (c) The annual compensation used to calculate final average salary shall be based on
1037     the state's fiscal year.

1038          (3) "Judge" means a judge or justice of the courts of record as enumerated in Section
1039     78A-1-101.
1040          (4) "Participating employer" means the state.
1041          (5) "System" means the Judges' Contributory Retirement System created under this
1042     chapter.
1043          (6) "Years of service credit" means the number of periods, each to consist of 12 full
1044     months as determined by the board, whether consecutive or not, during which a judge was
1045     employed by a participating employer.
1046          Section 11. Section 49-18-102 is amended to read:
1047          49-18-102. Definitions.
1048          As used in this chapter:
1049          (1) (a) "Compensation" means the total amount of payments which are currently
1050     includable in gross income made by a participating employer to a member of this system for
1051     services rendered to the participating employer.
1052          (b) "Compensation" includes:
1053          (i) performance-based bonuses;
1054          (ii) cost-of-living adjustments;
1055          (iii) payments subject to Social Security deductions;
1056          (iv) any payments in excess of the maximum amount subject to deduction under Social
1057     Security law; and
1058          (v) amounts which the member authorizes to be deducted or reduced for salary deferral
1059     or other benefits authorized by federal law.
1060          (c) "Compensation" for purposes of this chapter may not exceed the amount allowed
1061     under Internal Revenue Code Section 401(a)(17).
1062          (d) "Compensation" does not include:
1063          (i) the monetary value of remuneration paid in kind, such as a residence or use of
1064     equipment;
1065          (ii) all contributions made by a participating employer under a system or plan for the

1066     benefit of a member or participant;
1067          (iii) salary paid to a temporary or exempt employee;
1068          (iv) payments upon termination or any other special payments including early
1069     retirement inducements; or
1070          (v) uniform, travel, or similar payments.
1071          (2) "Final average salary" means the amount [computed] calculated by averaging the
1072     highest two years of annual compensation preceding retirement, subject to Subsections (2)(a)
1073     [and], (b), and (c).
1074          (a) Except as provided in Subsection (2)(b), the percentage increase in annual
1075     compensation in any one of the years used may not exceed the previous year's compensation by
1076     more than 10% plus a cost-of-living adjustment equal to the decrease in the purchasing power
1077     of the dollar during the previous year, as measured by a United States Bureau of Labor
1078     Statistics Consumer Price Index average as determined by the board.
1079          (b) In cases where the participating employer provides acceptable documentation to the
1080     board, the limitation in Subsection (2)(a) may be exceeded if:
1081          (i) the member has transferred from another agency; or
1082          (ii) the member has been promoted to a new position.
1083          (c) The annual compensation used to calculate final average salary shall be based on
1084     the state's fiscal year.
1085          (3) "Judge" means a judge or justice of the courts of record as enumerated in Section
1086     78A-1-101.
1087          (4) "Participating employer" means the state.
1088          (5) "System" means the Judges' Noncontributory Retirement System created under this
1089     chapter.
1090          (6) "Years of service credit" means the number of periods, each to consist of 12 full
1091     months or as determined by the board, whether consecutive or not, during which a judge was
1092     employed by a participating employer.
1093          Section 12. Section 49-21-403 is amended to read:

1094          49-21-403. Termination of disability benefits -- Calculation of retirement benefit.
1095          (1) An eligible employee covered by this chapter and eligible for service credit under a
1096     system or plan, including an eligible employee who relinquishes rights to retirement benefits
1097     under Section 49-11-619, who applies and is qualified for a monthly disability benefit shall
1098     receive a monthly disability benefit until the earlier of:
1099          (a) the date of the eligible employee's death;
1100          (b) the date the eligible employee no longer has a disability;
1101          (c) the date the eligible employee has accumulated or would have accumulated, if the
1102     employee had not chosen the Title 49, Chapter 22, Part 4, Tier II Defined Contribution Plan,
1103     Title 49, Chapter 23, Part 4, Tier II Defined Contribution Plan, been a volunteer firefighter, or
1104     exempted from a retirement system or plan:
1105          (i) 20 years of service credit if the eligible employee is covered by Chapter 14, Public
1106     Safety Contributory Retirement Act, or Chapter 15, Public Safety Noncontributory Retirement
1107     Act;
1108          (ii) 25 years of service credit if the eligible employee is covered by Chapter 17, Judges'
1109     Contributory Retirement Act, or Chapter 18, Judges' Noncontributory Retirement Act;
1110          (iii) 30 years of service credit if the eligible employee is covered by Chapter 12, Public
1111     Employees' Contributory Retirement Act, or Chapter 13, Public Employees' Noncontributory
1112     Retirement Act;
1113          (iv) 35 years of service credit if the eligible employee is covered by the defined benefit
1114     portion under Chapter 22, Part 3, Tier II Hybrid Retirement System, or is covered by the
1115     defined contribution plan under Chapter 22, Part 4, Tier II Defined Contribution Plan; or
1116          (v) 25 years of service credit if the eligible employee is covered by the defined benefit
1117     portion under Chapter 23, Part 3, Tier II Hybrid Retirement System, or is covered by the
1118     defined contribution plan under Chapter 23, Part 4, Tier II Defined Contribution Plan; [or]
1119          (d) the date the eligible employee has received a monthly disability benefit for the
1120     following applicable time periods:
1121          (i) if the eligible employee is under age 60, the monthly disability benefit is payable

1122     until age 65;
1123          (ii) if the eligible employee is 60 or 61 years of age on the date of disability, the
1124     monthly disability benefit is payable for five years;
1125          (iii) if the eligible employee is 62 or 63 years of age on the date of disability, the
1126     monthly disability benefit is payable for four years;
1127          (iv) if the eligible employee is 64 or 65 years of age on the date of disability, the
1128     monthly disability benefit is payable for three years;
1129          (v) if the eligible employee is 66, 67, or 68 years of age on the date of disability, the
1130     monthly disability benefit is payable for two years; and
1131          (vi) if the eligible employee is 69 years of age or older on the date of disability, the
1132     monthly disability benefit is payable for one year[.]; or
1133          (e) the eligible employee's retirement date, set when the eligible employee retires from
1134     a system or from the Utah Governors' and Legislators' Retirement Plan.
1135          (2) (a) Upon termination of a monthly disability benefit, an eligible employee eligible
1136     for service credit under a system may retire under the requirements of the system which
1137     covered the eligible employee on the date of disability.
1138          (b) The final average salary used in the calculation of the allowance shall be based on
1139     the annual rate of pay on the date of disability, improved by the annual cost-of-living increase
1140     factor applied to retirees of the system which covered the eligible employee on the date of
1141     disability.
1142          (3) An eligible employee who is eligible for service credit in a system, but has
1143     relinquished rights to an allowance under Section 49-11-619, may receive the benefits the
1144     eligible employee would have received by being eligible for service credit in the system
1145     covering the eligible employee on the date of disability, except for the accrual of service credit,
1146     in accordance with this title.
1147          (4) An eligible employee receiving a monthly disability benefit who has service credit
1148     from two or more systems may not combine service credits under Section 49-11-405 in
1149     qualifying for retirement, unless the eligible employee would receive a greater allowance by

1150     combining the service credits.
1151          (5) An eligible employee covered by this chapter who is a participant in the Tier II
1152     Defined Contribution Plan, created in Chapter 22, Part 4, Tier II Defined Contribution Plan, or
1153     Chapter 23, Part 4, Tier II Defined Contribution Plan, who applies and is qualified for a
1154     monthly disability benefit, shall receive a monthly disability benefit until the earlier of:
1155          (a) the date of the eligible employee's death;
1156          (b) the date the eligible employee no longer has a disability;
1157          (c) (i) 35 years from the date the eligible employee began participation in the Tier II
1158     Defined Contribution Plan, created in Chapter 22, Part 4, Tier II Defined Contribution Plan; or
1159          (ii) 25 years from the date the eligible employee began participation in the Tier II
1160     Defined Contribution Plan created in Chapter 23, Part 4, Tier II Defined Contribution Plan; or
1161          (d) the date the eligible employee has received a monthly disability benefit for the
1162     following applicable time periods:
1163          (i) if the eligible employee is under age 60, the monthly disability benefit is payable
1164     until age 65;
1165          (ii) if the eligible employee is 60 or 61 years of age on the date of disability, the
1166     monthly disability benefit is payable for five years;
1167          (iii) if the eligible employee is 62 or 63 years of age on the date of disability, the
1168     monthly disability benefit is payable for four years;
1169          (iv) if the eligible employee is 64 or 65 years of age on the date of disability, the
1170     monthly disability benefit is payable for three years;
1171          (v) if the eligible employee is 66, 67, or 68 years of age on the date of disability, the
1172     monthly disability benefit is payable for two years; and
1173          (vi) if the eligible employee is 69 years of age or older on the date of disability, the
1174     monthly disability benefit is payable for one year.
1175          Section 13. Section 49-22-102 is amended to read:
1176          49-22-102. Definitions.
1177          As used in this chapter:

1178          (1) "Benefits normally provided" has the same meaning as defined in Section
1179     49-12-102.
1180          (2) (a) "Compensation" means, except as provided in Subsection (2)(c), the total
1181     amount of payments made by a participating employer to a member of this system for services
1182     rendered to the participating employer, including:
1183          (i) bonuses;
1184          (ii) cost-of-living adjustments;
1185          (iii) other payments currently includable in gross income and that are subject to Social
1186     Security deductions, including any payments in excess of the maximum amount subject to
1187     deduction under Social Security law;
1188          (iv) amounts that the member authorizes to be deducted or reduced for salary deferral
1189     or other benefits authorized by federal law; and
1190          (v) member contributions.
1191          (b) "Compensation" for purposes of this chapter may not exceed the amount allowed
1192     under Internal Revenue Code, Section 401(a)(17).
1193          (c) "Compensation" does not include:
1194          (i) the monetary value of remuneration paid in kind, including a residence or use of
1195     equipment;
1196          (ii) the cost of any employment benefits paid for by the participating employer;
1197          (iii) compensation paid to a temporary employee or an employee otherwise ineligible
1198     for service credit;
1199          (iv) any payments upon termination, including accumulated vacation, sick leave
1200     payments, severance payments, compensatory time payments, or any other special payments; or
1201          (v) any allowances or payments to a member for costs or expenses paid by the
1202     participating employer, including automobile costs, uniform costs, travel costs, tuition costs,
1203     housing costs, insurance costs, equipment costs, and dependent care costs.
1204          (d) The executive director may determine if a payment not listed under this Subsection
1205     (2) falls within the definition of compensation.

1206          (3) "Corresponding Tier I system" means the system or plan that would have covered
1207     the member if the member had initially entered employment before July 1, 2011.
1208          (4) "Final average salary" means the amount [computed] calculated by averaging the
1209     highest five years of annual compensation preceding retirement subject to Subsections (4)(a),
1210     (b), (c), [and] (d), and (e).
1211          (a) Except as provided in Subsection (4)(b), the percentage increase in annual
1212     compensation in any one of the years used may not exceed the previous year's compensation by
1213     more than 10% plus a cost-of-living adjustment equal to the decrease in the purchasing power
1214     of the dollar during the previous year, as measured by a United States Bureau of Labor
1215     Statistics Consumer Price Index average as determined by the board.
1216          (b) In cases where the participating employer provides acceptable documentation to the
1217     office, the limitation in Subsection (4)(a) may be exceeded if:
1218          (i) the member has transferred from another agency; or
1219          (ii) the member has been promoted to a new position.
1220          (c) If the member retires more than six months from the date of termination of
1221     employment, the member is considered to have been in service at the member's last rate of pay
1222     from the date of the termination of employment to the effective date of retirement for purposes
1223     of computing the member's final average salary only.
1224          (d) If the member has less than five years of service credit in this system, final average
1225     salary means the average annual compensation paid to the member during the full period of
1226     service credit.
1227          (e) The annual compensation used to calculate final average salary shall be based on:
1228          (i) a calendar year for a member employed by a participating employer that is not an
1229     educational institution; or
1230          (ii) a contract year for a member employed by an educational institution.
1231          (5) "Participating employer" means an employer which meets the participation
1232     requirements of:
1233          (a) Sections 49-12-201 and 49-12-202;

1234          (b) Sections 49-13-201 and 49-13-202;
1235          (c) Section 49-19-201; or
1236          (d) Section 49-22-201 or 49-22-202.
1237          (6) (a) "Regular full-time employee" means an employee whose term of employment
1238     for a participating employer contemplates continued employment during a fiscal or calendar
1239     year and whose employment normally requires an average of 20 hours or more per week,
1240     except as modified by the board, and who receives benefits normally provided by the
1241     participating employer.
1242          (b) "Regular full-time employee" includes:
1243          (i) a teacher whose term of employment for a participating employer contemplates
1244     continued employment during a school year and who teaches half time or more;
1245          (ii) a classified school employee:
1246          (A) who is hired before July 1, 2013; and
1247          (B) whose employment normally requires an average of 20 hours per week or more for
1248     a participating employer, regardless of benefits provided;
1249          (iii) an appointive officer whose appointed position is full time as certified by the
1250     participating employer;
1251          (iv) the governor, the lieutenant governor, the state auditor, the state treasurer, the
1252     attorney general, and a state legislator;
1253          (v) an elected official not included under Subsection (6)(b)(iv) whose elected position
1254     is full time as certified by the participating employer;
1255          (vi) a faculty member or employee of an institution of higher education who is
1256     considered full time by that institution of higher education; and
1257          (vii) an individual who otherwise meets the definition of this Subsection (6) who
1258     performs services for a participating employer through a professional employer organization or
1259     similar arrangement.
1260          (c) "Regular full-time employee" does not include:
1261          (i) a firefighter service employee as defined in Section 49-23-102;

1262          (ii) a public safety service employee as defined in Section 49-23-102;
1263          (iii) a classified school employee:
1264          (A) who is hired on or after July 1, 2013; and
1265          (B) who does not receive benefits normally provided by the participating employer
1266     even if the employment normally requires an average of 20 hours per week or more for a
1267     participating employer; or
1268          (iv) a classified school employee:
1269          (A) who is hired before July 1, 2013;
1270          (B) who did not qualify as a regular full-time employee before July 1, 2013;
1271          (C) who does not receive benefits normally provided by the participating employer;
1272     and
1273          (D) whose employment hours are increased on or after July 1, 2013, to require an
1274     average of 20 hours per week or more for a participating employer.
1275          (7) "System" means the New Public Employees' Tier II Contributory Retirement
1276     System created under this chapter.
1277          (8) "Years of service credit" means:
1278          (a) a period consisting of 12 full months as determined by the board;
1279          (b) a period determined by the board, whether consecutive or not, during which a
1280     regular full-time employee performed services for a participating employer, including any time
1281     the regular full-time employee was absent on a paid leave of absence granted by a participating
1282     employer or was absent in the service of the United States government on military duty as
1283     provided by this chapter; or
1284          (c) the regular school year consisting of not less than eight months of full-time service
1285     for a regular full-time employee of an educational institution.
1286          Section 14. Section 49-22-201 is amended to read:
1287          49-22-201. System membership -- Eligibility.
1288          (1) Beginning July 1, 2011, a participating employer shall participate in this system.
1289          (2) (a) A person initially entering regular full-time employment with a participating

1290     employer on or after July 1, 2011, who does not have service credit accrued before July 1,
1291     2011, in a Tier I system or plan administered by the board, is eligible:
1292          (i) as a member for service credit and defined contributions under the Tier II hybrid
1293     retirement system established by Part 3, Tier II Hybrid Retirement System; or
1294          (ii) as a participant for defined contributions under the Tier II defined contribution plan
1295     established by Part 4, Tier II Defined Contribution Plan.
1296          (b) A person initially entering regular full-time employment with a participating
1297     employer on or after July 1, 2011, shall:
1298          (i) make an election to participate in the system created under this chapter:
1299          (A) as a member for service credit and defined contributions under the Tier II hybrid
1300     retirement system established by Part 3, Tier II Hybrid Retirement System; or
1301          (B) as a participant for defined contributions under the Tier II defined contribution plan
1302     established by Part 4, Tier II Defined Contribution Plan; and
1303          (ii) electronically submit to the office notification of the member's election under
1304     Subsection (2)(b)(i) in a manner approved by the office.
1305          (c) An election made by a person initially entering regular full-time employment with a
1306     participating employer under this Subsection (2) is irrevocable beginning one year from the
1307     date of eligibility for accrual of benefits.
1308          (d) If no election is made under Subsection (2)(b)(i), the person shall become a
1309     member eligible for service credit and defined contributions under the Tier II hybrid retirement
1310     system established by Part 3, Tier II Hybrid Retirement System.
1311          (3) Notwithstanding the provisions of this section and except as provided in Subsection
1312     (4), an elected official initially entering office on or after July 1, 2011:
1313          (a) is only eligible to participate in the Tier II defined contribution plan established
1314     under Part 4, Tier II Defined Contribution Plan; [and]
1315          (b) is not eligible to participate in the Tier II hybrid retirement system established
1316     under Part 3, Tier II Hybrid Retirement System[.]; and
1317          (c) is vested immediately in the elected official's benefit and the benefit is

1318     nonforfeitable, including the total amount contributed by the participating employer and the
1319     total amount contributed by the member in the Tier II defined contribution plan.
1320          (4) Notwithstanding the provisions of Subsection (3), a legislator or full-time elected
1321     official initially entering office on or after July 1, 2011, who has service credit accrued before
1322     July 1, 2011:
1323          (a) in a Tier I retirement system or plan administered by the board shall continue in the
1324     Tier I system or plan for which the legislator or full-time elected official is eligible; or
1325          (b) in a Tier II hybrid retirement system shall continue in the Tier II system for which
1326     the legislator or full-time elected official is eligible.
1327          Section 15. Section 49-22-205 is amended to read:
1328          49-22-205. Exemptions from participation in system.
1329          (1) Upon filing a written request for exemption with the office, the following
1330     employees are exempt from participation in the system as provided in this section:
1331          (a) [an elected official; (b)] an executive department head of the state;
1332          [(c)] (b) a member of the State Tax Commission;
1333          [(d)] (c) a member of the Public Service Commission;
1334          [(e)] (d) a member of a full-time or part-time board or commission;
1335          [(f)] (e) an employee of the Governor's Office of Management and Budget;
1336          [(g)] (f) an employee of the Governor's Office of Economic Development;
1337          [(h)] (g) an employee of the Commission on Criminal and Juvenile Justice;
1338          [(i)] (h) an employee of the Governor's Office;
1339          [(j)] (i) an employee of the State Auditor's Office;
1340          [(k)] (j) an employee of the State Treasurer's Office;
1341          [(l)] (k) any other member who is permitted to make an election under Section
1342     49-11-406;
1343          [(m)] (l) a person appointed as a city manager or appointed as a city administrator or
1344     another at-will employee of a municipality, county, or other political subdivision;
1345          [(n)] (m) an employee of an interlocal cooperative agency created under Title 11,

1346     Chapter 13, Interlocal Cooperation Act, who is engaged in a specialized trade customarily
1347     provided through membership in a labor organization that provides retirement benefits to its
1348     members; and
1349          [(o)] (n) an employee of the Utah Science Technology and Research Initiative created
1350     under Title 63M, Chapter 2, Utah Science Technology and Research Governing Authority Act.
1351          (2) (a) A participating employer shall prepare a list designating those positions eligible
1352     for exemption under Subsection (1).
1353          (b) An employee may not be exempted unless the employee is employed in a position
1354     designated by the participating employer under Subsection (1).
1355          (3) (a) In accordance with this section, Section 49-12-203, and Section 49-13-203, a
1356     municipality, county, or political subdivision may not exempt a total of more than 50 positions
1357     or a number equal to 10% of the employees of the municipality, county, or political
1358     subdivision, whichever is less.
1359          (b) A municipality, county, or political subdivision may exempt at least one regular
1360     full-time employee.
1361          (4) Each participating employer shall:
1362          (a) file each employee exemption annually with the office; and
1363          (b) update an employee exemption in the event of any change.
1364          (5) Beginning on the effective date of the exemption for an employee who elects to be
1365     exempt in accordance with Subsection (1):
1366          (a) for a member of the Tier II defined contribution plan:
1367          (i) the participating employer shall contribute the nonelective contribution and the
1368     amortization rate described in Section 49-22-401, except that the nonelective contribution is
1369     exempt from the vesting requirements of Subsection 49-22-401(3)(a); and
1370          (ii) the member may make voluntary deferrals as provided in Section 49-22-401; and
1371          (b) for a member of the Tier II hybrid retirement system:
1372          (i) the participating employer shall contribute the nonelective contribution and the
1373     amortization rate described in Section 49-22-401, except that the contribution is exempt from

1374     the vesting requirements of Subsection 49-22-401(3)(a);
1375          (ii) the member may make voluntary deferrals as provided in Section 49-22-401; and
1376          (iii) the member is not eligible for additional service credit in the system.
1377          (6) If an employee who is a member of the Tier II hybrid retirement system
1378     subsequently revokes the election of exemption made under Subsection (1), the provisions
1379     described in Subsection (5)(b) shall no longer be applicable and the coverage for the employee
1380     shall be effective prospectively as provided in Part 3, Tier II Hybrid Retirement System.
1381          (7) (a) All employer contributions made on behalf of an employee shall be invested in
1382     accordance with Subsection 49-22-303(3)(a) or 49-22-401(4)(a) until the one-year election
1383     period under Subsection 49-22-201(2)(c) is expired if the employee:
1384          (i) elects to be exempt in accordance with Subsection (1); and
1385          (ii) continues employment with the participating employer through the one-year
1386     election period under Subsection 49-22-201(2)(c).
1387          (b) An employee is entitled to receive a distribution of the employer contributions
1388     made on behalf of the employee and all associated investment gains and losses if the employee:
1389          (i) elects to be exempt in accordance with Subsection (1); and
1390          (ii) terminates employment prior to the one-year election period under Subsection
1391     49-22-201(2)(c).
1392          (8) (a) The office shall make rules to implement this section.
1393          (b) The rules made under this Subsection (8) shall include provisions to allow the
1394     exemption provided under Subsection (1) to apply to all contributions made beginning on or
1395     after July 1, 2011, on behalf of an exempted employee who began the employment before May
1396     8, 2012.
1397          Section 16. Section 49-22-303 is amended to read:
1398          49-22-303. Defined contribution benefit established -- Contribution by employer
1399     and employee -- Vesting of contributions -- Plans to be separate -- Tax-qualified status of
1400     plans.
1401          (1) (a) A participating employer shall make a nonelective contribution on behalf of

1402     each regular full-time employee who is a member of this system in an amount equal to 10%
1403     minus the contribution rate paid by the employer [pursuant to] under Subsection
1404     49-22-301(2)(a) of the member's compensation to a defined contribution plan qualified under
1405     Section 401(k) of the Internal Revenue Code which:
1406          (i) is sponsored by the board; and
1407          (ii) has been grandfathered under Section 1116 of the Federal Tax Reform Act of 1986.
1408          (b) The member may make voluntary deferrals to:
1409          (i) the qualified 401(k) plan which receives the employer contribution described in this
1410     Subsection (1); or
1411          (ii) at the member's option, another defined contribution plan established by the
1412     participating employer.
1413          (2) (a) The total amount contributed by the participating employer under Subsection
1414     (1)(a), including associated investment gains and losses, vests to the member upon accruing
1415     four years of service credit under this title.
1416          (b) The total amount contributed by the member under Subsection (1)(b) vests to the
1417     member's benefit immediately and is nonforfeitable.
1418          (c) (i) Years of service credit under Subsection (2)(a) includes any fraction of a year to
1419     which the member may be entitled.
1420          (ii) At the time of vesting, if a member's years of service credit is within one-tenth of
1421     one year of the total years required for vesting, the member shall be considered to have the total
1422     years of service credit required for vesting.
1423          (3) (a) Contributions made by a participating employer under Subsection (1)(a) shall be
1424     invested in a default option selected by the board until the member is vested in accordance with
1425     Subsection (2)(a).
1426          (b) A member may direct the investment of contributions made by a participating
1427     employer under Subsection (1)(a) only after the contributions have vested in accordance with
1428     Subsection (2)(a).
1429          (c) A member may direct the investment of contributions made by the member under

1430     Subsection (1)(b).
1431          (4) No loans shall be available from contributions made by a participating employer
1432     under Subsection (1)(a).
1433          (5) No hardship distributions shall be available from contributions made by a
1434     participating employer under Subsection (1)(a).
1435          (6) (a) Except as provided in Subsection (6)(b) and Section 49-22-205, if a member
1436     terminates employment with a participating employer prior to the vesting period described in
1437     Subsection (2)(a), all contributions, including associated investment gains and losses, made by
1438     a participating employer on behalf of the member under Subsection (1)(a) are subject to
1439     forfeiture.
1440          (b) If a member who terminates employment with a participating employer prior to the
1441     vesting period described in Subsection (2)(a) subsequently enters employment with the same or
1442     another participating employer within 10 years of the termination date of the previous
1443     employment:
1444          (i) all contributions made by the previous participating employer on behalf of the
1445     member, including associated investment gains and losses, shall be reinstated upon
1446     employment as a regular full-time employee; and
1447          (ii) the length of time that the member worked with the previous employer shall be
1448     included in determining whether the member has completed the vesting period under
1449     Subsection (2)(a).
1450          (c) The office shall establish a forfeiture account and shall specify the uses of the
1451     forfeiture account, which may include an offset against administrative costs or employer
1452     contributions made under this section.
1453          (7) The office may request from any other qualified 401(k) plan under Subsection (1)
1454     or (2) any relevant information pertaining to the maintenance of its tax qualification under the
1455     Internal Revenue Code.
1456          (8) The office may take any action which in its judgment is necessary to maintain the
1457     tax-qualified status of its 401(k) defined contribution plan under federal law.

1458          Section 17. Section 49-22-401 is amended to read:
1459          49-22-401. Contributions -- Rates.
1460          (1) Up to the amount allowed by federal law, the participating employer shall make a
1461     nonelective contribution of 10% of the participant's compensation to a defined contribution
1462     plan.
1463          (2) (a) The participating employer shall contribute the 10% nonelective contribution
1464     described in Subsection (1) to a defined contribution plan qualified under Section 401(k) of the
1465     Internal Revenue Code which:
1466          (i) is sponsored by the board; and
1467          (ii) has been grandfathered under Section 1116 of the Federal Tax Reform Act of 1986.
1468          (b) The member may make voluntary deferrals to:
1469          (i) the qualified 401(k) plan which receives the employer contribution described in this
1470     Subsection (2); or
1471          (ii) at the member's option, another defined contribution plan established by the
1472     participating employer.
1473          (c) In addition to the percent specified under Subsection (2)(a), the participating
1474     employer shall pay the corresponding Tier I system amortization rate of the employee's
1475     compensation to the office to be applied to the employer's corresponding Tier I system liability.
1476          (3) (a) Except as provided under Subsection (3)(c), the total amount contributed by the
1477     participating employer under Subsection (2)(a) vests to the member upon accruing four years of
1478     employment as a regular full-time employee under this title.
1479          (b) The total amount contributed by the member under Subsection (2)(b) vests to the
1480     member's benefit immediately and is nonforfeitable.
1481          (c) Upon filing a written request for exemption with the office, an eligible employee is
1482     exempt from the vesting requirements of Subsection (3)(a) in accordance with Section
1483     49-22-205.
1484          (d) (i) Years of employment under Subsection (3)(a) includes any fraction of a year to
1485     which the member may be entitled.

1486          (ii) At the time of vesting, if a member's years of service credit is within one-tenth of
1487     one year of the total years required for vesting, the member shall be considered to have the total
1488     years of employment required for vesting.
1489          (4) (a) Contributions made by a participating employer under Subsection (2)(a) shall be
1490     invested in a default option selected by the board until the member is vested in accordance with
1491     Subsection (3)(a).
1492          (b) A member may direct the investment of contributions including associated
1493     investment gains and losses made by a participating employer under Subsection (2)(a) only
1494     after the contributions have vested in accordance with Subsection (3)(a).
1495          (c) A member may direct the investment of contributions made by the member under
1496     Subsection (3)(b).
1497          (5) No loans shall be available from contributions made by a participating employer
1498     under Subsection (2)(a).
1499          (6) No hardship distributions shall be available from contributions made by a
1500     participating employer under Subsection (2)(a).
1501          (7) (a) Except as provided in Subsection (7)(b), if a member terminates employment
1502     with a participating employer prior to the vesting period described in Subsection (3)(a), all
1503     contributions made by a participating employer on behalf of the member including associated
1504     investment gains and losses under Subsection (2)(a) are subject to forfeiture.
1505          (b) If a member who terminates employment with a participating employer prior to the
1506     vesting period described in Subsection (3)(a) subsequently enters employment with the same or
1507     another participating employer within 10 years of the termination date of the previous
1508     employment:
1509          (i) all contributions made by the previous participating employer on behalf of the
1510     member including associated investment gains and losses shall be reinstated upon the member's
1511     employment as a regular full-time employee; and
1512          (ii) the length of time that the member worked with the previous employer shall be
1513     included in determining whether the member has completed the vesting period under

1514     Subsection (3)(a).
1515          (c) The office shall establish a forfeiture account and shall specify the uses of the
1516     forfeiture account, which may include an offset against administrative costs or employer
1517     contributions made under this section.
1518          (8) The office may request from any other qualified 401(k) plan under Subsection (2)
1519     any relevant information pertaining to the maintenance of its tax qualification under the
1520     Internal Revenue Code.
1521          (9) The office may take any action which in its judgment is necessary to maintain the
1522     tax-qualified status of its 401(k) defined contribution plan under federal law.
1523          Section 18. Section 49-23-102 is amended to read:
1524          49-23-102. Definitions.
1525          As used in this chapter:
1526          (1) (a) "Compensation" means the total amount of payments that are includable in
1527     gross income received by a public safety service employee or a firefighter service employee as
1528     base income for the regularly scheduled work period. The participating employer shall
1529     establish the regularly scheduled work period. Base income shall be determined prior to the
1530     deduction of any amounts the public safety service employee or firefighter service employee
1531     authorizes to be deducted for salary deferral or other benefits authorized by federal law.
1532          (b) "Compensation" includes performance-based bonuses and cost-of-living
1533     adjustments.
1534          (c) "Compensation" does not include:
1535          (i) overtime;
1536          (ii) sick pay incentives;
1537          (iii) retirement pay incentives;
1538          (iv) the monetary value of remuneration paid in kind, as in a residence, use of
1539     equipment or uniform, travel, or similar payments;
1540          (v) a lump-sum payment or special payment covering accumulated leave; and
1541          (vi) all contributions made by a participating employer under this system or under any

1542     other employee benefit system or plan maintained by a participating employer for the benefit of
1543     a member or participant.
1544          (d) "Compensation" for purposes of this chapter may not exceed the amount allowed
1545     under Section 401(a)(17), Internal Revenue Code.
1546          (2) "Corresponding Tier I system" means the system or plan that would have covered
1547     the member if the member had initially entered employment before July 1, 2011.
1548          (3) "Dispatcher" means the same as that term is defined in Section 53-6-102.
1549          (4) "Final average salary" means the amount [computed] calculated by averaging the
1550     highest five years of annual compensation preceding retirement subject to Subsections (4)(a),
1551     (b), (c), [and] (d), and (e).
1552          (a) Except as provided in Subsection (4)(b), the percentage increase in annual
1553     compensation in any one of the years used may not exceed the previous year's compensation by
1554     more than 10% plus a cost-of-living adjustment equal to the decrease in the purchasing power
1555     of the dollar during the previous year, as measured by a United States Bureau of Labor
1556     Statistics Consumer Price Index average as determined by the board.
1557          (b) In cases where the participating employer provides acceptable documentation to the
1558     office, the limitation in Subsection (4)(a) may be exceeded if:
1559          (i) the member has transferred from another agency; or
1560          (ii) the member has been promoted to a new position.
1561          (c) If the member retires more than six months from the date of termination of
1562     employment, the member is considered to have been in service at the member's last rate of pay
1563     from the date of the termination of employment to the effective date of retirement for purposes
1564     of computing the member's final average salary only.
1565          (d) If the member has less than five years of service credit in this system, final average
1566     salary means the average annual compensation paid to the member during the full period of
1567     service credit.
1568          (e) The annual compensation used to calculate final average salary shall be based on:
1569          (i) a calendar year for a member employed by a participating employer that is not an

1570     educational institution; or
1571          (ii) a contract year for a member employed by an educational institution.
1572          (5) (a) "Firefighter service" means employment normally requiring an average of 2,080
1573     hours of regularly scheduled employment per year rendered by a member who is:
1574          (i) a firefighter service employee trained in firefighter techniques and assigned to a
1575     position of hazardous duty with a regularly constituted fire department; or
1576          (ii) the state fire marshal appointed under Section 53-7-103 or a deputy state fire
1577     marshal.
1578          (b) "Firefighter service" does not include secretarial staff or other similar employees.
1579          (6) "Firefighter service employee" means an employee of a participating employer who
1580     provides firefighter service under this chapter. An employee of a regularly constituted fire
1581     department who does not perform firefighter service is not a firefighter service employee.
1582          (7) (a) "Line-of-duty death" means a death resulting from:
1583          (i) external force, violence, or disease occasioned by an act of duty as a public safety
1584     service or firefighter service employee; or
1585          (ii) strenuous activity, including a heart attack or stroke, that occurs during strenuous
1586     training or another strenuous activity required as an act of duty as a public safety service or
1587     firefighter service employee.
1588          (b) "Line-of-duty death" does not include a death that:
1589          (i) occurs during an activity that is required as an act of duty as a public safety service
1590     or firefighter service employee if the activity is not a strenuous activity, including an activity
1591     that is clerical, administrative, or of a nonmanual nature;
1592          (ii) occurs during the commission of a crime committed by the employee;
1593          (iii) the employee's intoxication or use of alcohol or drugs, whether prescribed or
1594     nonprescribed, contributes to the employee's death; or
1595          (iv) occurs in a manner other than as described in Subsection (7)(a).
1596          (8) "Participating employer" means an employer which meets the participation
1597     requirements of:

1598          (a) Sections 49-14-201 and 49-14-202;
1599          (b) Sections 49-15-201 and 49-15-202;
1600          (c) Sections 49-16-201 and 49-16-202; or
1601          (d) Sections 49-23-201 and 49-23-202.
1602          (9) (a) "Public safety service" means employment normally requiring an average of
1603     2,080 hours of regularly scheduled employment per year rendered by a member who is a:
1604          (i) law enforcement officer in accordance with Section 53-13-103;
1605          (ii) correctional officer in accordance with Section 53-13-104;
1606          (iii) special function officer approved in accordance with Sections 49-15-201 and
1607     53-13-105;
1608          (iv) dispatcher who is certified in accordance with Section 53-6-303; and
1609          (v) full-time member of the Board of Pardons and Parole created under Section
1610     77-27-2.
1611          (b) Except as provided under Subsections (9)(a)(iv) and (v), "public safety service"
1612     also requires that in the course of employment the employee's life or personal safety is at risk.
1613          (10) "Public safety service employee" means an employee of a participating employer
1614     who performs public safety service under this chapter.
1615          (11) (a) "Strenuous activity" means engagement involving a difficult, stressful, or
1616     vigorous fire suppression, rescue, hazardous material response, emergency medical service,
1617     physical law enforcement, prison security, disaster relief, or other emergency response activity.
1618          (b) "Strenuous activity" includes participating in a participating employer sanctioned
1619     and funded training exercise that involves difficult, stressful, or vigorous physical activity.
1620          (12) "System" means the New Public Safety and Firefighter Tier II Contributory
1621     Retirement System created under this chapter.
1622          (13) (a) "Volunteer firefighter" means any individual that is not regularly employed as
1623     a firefighter service employee, but who:
1624          (i) has been trained in firefighter techniques and skills;
1625          (ii) continues to receive regular firefighter training; and

1626          (iii) is on the rolls of a legally organized volunteer fire department which provides
1627     ongoing training and serves a political subdivision of the state.
1628          (b) An individual that volunteers assistance but does not meet the requirements of
1629     Subsection (13)(a) is not a volunteer firefighter for purposes of this chapter.
1630          (14) "Years of service credit" means:
1631          (a) a period, consisting of 12 full months as determined by the board; or
1632          (b) a period determined by the board, whether consecutive or not, during which a
1633     regular full-time employee performed services for a participating employer, including any time
1634     the regular full-time employee was absent on a paid leave of absence granted by a participating
1635     employer or was absent in the service of the United States government on military duty as
1636     provided by this chapter.
1637          Section 19. Section 49-23-302 is amended to read:
1638          49-23-302. Defined contribution benefit established -- Contribution by employer
1639     and employee -- Vesting of contributions -- Plans to be separate -- Tax-qualified status of
1640     plans.
1641          (1) (a) A participating employer shall make a nonelective contribution on behalf of
1642     each public safety service employee or firefighter service employee who is a member of this
1643     system in an amount equal to 12% minus the contribution rate paid by the employer [pursuant
1644     to] under Subsection 49-23-301(2)(a) of the member's compensation to a defined contribution
1645     plan qualified under Section 401(k) of the Internal Revenue Code which:
1646          (i) is sponsored by the board; and
1647          (ii) has been grandfathered under Section 1116 of the Federal Tax Reform Act of 1986.
1648          (b) The member may make voluntary deferrals to:
1649          (i) the qualified 401(k) plan which receives the employer contribution described in this
1650     Subsection (1); or
1651          (ii) at the member's option, another defined contribution plan established by the
1652     participating employer.
1653          (2) (a) The total amount contributed by the participating employer under Subsection

1654     (1)(a), including associated investment gains and losses, vests to the member upon accruing
1655     four years of service credit under this title.
1656          (b) The total amount contributed by the member under Subsection (1)(b) vests to the
1657     member's benefit immediately and is nonforfeitable.
1658          (c) (i) Years of service credit under Subsection (2)(a) includes any fraction of a year to
1659     which the member may be entitled.
1660          (ii) At the time of vesting, if a member's years of service credit is within one-tenth of
1661     one year of the total years required for vesting, the member shall be considered to have the total
1662     years of service credit required for vesting.
1663          (3) (a) Contributions made by a participating employer under Subsection (1)(a) shall be
1664     invested in a default option selected by the board until the member is vested in accordance with
1665     Subsection (2)(a).
1666          (b) A member may direct the investment of contributions made by a participating
1667     employer under Subsection (1)(a) only after the contributions have vested in accordance with
1668     Subsection (2)(a).
1669          (c) A member may direct the investment of contributions made by the member under
1670     Subsection (1)(b).
1671          (4) No loans shall be available from contributions made by a participating employer
1672     under Subsection (1)(a).
1673          (5) No hardship distributions shall be available from contributions made by a
1674     participating employer under Subsection (1)(a).
1675          (6) (a) Except as provided in Subsection (6)(b), if a member terminates employment
1676     with a participating employer prior to the vesting period described in Subsection (2)(a), all
1677     contributions, including associated investment gains and losses, made by a participating
1678     employer on behalf of the member under Subsection (1)(a) are subject to forfeiture.
1679          (b) If a member who terminates employment with a participating employer prior to the
1680     vesting period described in Subsection (2)(a) subsequently enters employment with the same or
1681     another participating employer within 10 years of the termination date of the previous

1682     employment:
1683          (i) all contributions made by the previous participating employer on behalf of the
1684     member, including associated investment gains and losses, shall be reinstated upon the
1685     member's employment as a regular full-time employee; and
1686          (ii) the length of time that the member worked with the previous employer shall be
1687     included in determining whether the member has completed the vesting period under
1688     Subsection (2)(a).
1689          (c) The office shall establish a forfeiture account and shall specify the uses of the
1690     forfeiture account, which may include an offset against administrative costs or employer
1691     contributions made under this section.
1692          (7) The office may request from any other qualified 401(k) plan under Subsection (1)
1693     or (2) any relevant information pertaining to the maintenance of its tax qualification under the
1694     Internal Revenue Code.
1695          (8) The office may take any action which in its judgment is necessary to maintain the
1696     tax-qualified status of its 401(k) defined contribution plan under federal law.
1697          Section 20. Section 49-23-401 is amended to read:
1698          49-23-401. Contributions -- Rates.
1699          (1) Up to the amount allowed by federal law, the participating employer shall make a
1700     nonelective contribution of 12% of the participant's compensation to a defined contribution
1701     plan.
1702          (2) (a) The participating employer shall contribute the 12% nonelective contribution
1703     described in Subsection (1) to a defined contribution plan qualified under Section 401(k) of the
1704     Internal Revenue Code which:
1705          (i) is sponsored by the board; and
1706          (ii) has been grandfathered under Section 1116 of the Federal Tax Reform Act of 1986.
1707          (b) The member may make voluntary deferrals to:
1708          (i) the qualified 401(k) plan which receives the employer contribution described in this
1709     Subsection (2); or

1710          (ii) at the member's option, another defined contribution plan established by the
1711     participating employer.
1712          (c) In addition to the percent specified under Subsection (2)(a), the participating
1713     employer shall pay the corresponding Tier I system amortization rate of the employee's
1714     compensation to the office to be applied to the employer's corresponding Tier I system liability.
1715          (3) (a) Except as provided under Subsection (3)(c), the total amount contributed by the
1716     participating employer under Subsection (2)(a) vests to the member upon accruing four years of
1717     service credit under this title.
1718          (b) The total amount contributed by the member under Subsection (2)(b) vests to the
1719     member's benefit immediately and is nonforfeitable.
1720          (c) Upon filing a written request for exemption with the office, an eligible employee is
1721     exempt from the vesting requirements of Subsection (3)(a) in accordance with Section
1722     49-23-203.
1723          (d) (i) Years of service credit under Subsection (3)(a) includes any fraction of a year to
1724     which the member may be entitled.
1725          (ii) At the time of vesting, if a member's years of service credit is within one-tenth of
1726     one year of the total years required for vesting, the member shall be considered to have the total
1727     years of service credit required for vesting.
1728          (4) (a) Contributions made by a participating employer under Subsection (2)(a) shall be
1729     invested in a default option selected by the board until the member is vested in accordance with
1730     Subsection (3)(a).
1731          (b) A member may direct the investment of contributions, including associated
1732     investment gains and losses, made by a participating employer under Subsection (2)(a) only
1733     after the contributions have vested in accordance with Subsection (3)(a).
1734          (c) A member may direct the investment of contributions made by the member under
1735     Subsection (3)(b).
1736          (5) No loans shall be available from contributions made by a participating employer
1737     under Subsection (2)(a).

1738          (6) No hardship distributions shall be available from contributions made by a
1739     participating employer under Subsection (2)(a).
1740          (7) (a) Except as provided in Subsection (7)(b), if a member terminates employment
1741     with a participating employer prior to the vesting period described in Subsection (3)(a), all
1742     contributions made by a participating employer on behalf of the member under Subsection
1743     (2)(a), including associated investment gains and losses are subject to forfeiture.
1744          (b) If a member who terminates employment with a participating employer prior to the
1745     vesting period described in Subsection (3)(a) subsequently enters employment with the same or
1746     another participating employer within 10 years of the termination date of the previous
1747     employment:
1748          (i) all contributions made by the previous participating employer on behalf of the
1749     member, including associated investment gains and losses, shall be reinstated upon the
1750     member's employment as a regular full-time employee; and
1751          (ii) the length of time that the member worked with the previous employer shall be
1752     included in determining whether the member has completed the vesting period under
1753     Subsection (3)(a).
1754          (c) The office shall establish a forfeiture account and shall specify the uses of the
1755     forfeiture account, which may include an offset against administrative costs of employer
1756     contributions made under this section.
1757          (8) The office may request from any other qualified 401(k) plan under Subsection (2)
1758     any relevant information pertaining to the maintenance of its tax qualification under the
1759     Internal Revenue Code.
1760          (9) The office may take any action which in its judgment is necessary to maintain the
1761     tax-qualified status of its 401(k) defined contribution plan under federal law.
1762          Section 21. Section 67-19-14.4 is amended to read:
1763          67-19-14.4. Unused Sick Leave Retirement Program II -- Creation --
1764     Remuneration upon eligibility for allowance -- Medical expense account after retirement.
1765          (1) (a) There is created the "Unused Sick Leave Retirement Program II."

1766          (b) An agency shall offer the Unused Sick Leave Retirement Option Program II to an
1767     employee who is eligible to receive a retirement allowance in accordance with Title 49, Utah
1768     State Retirement and Insurance Benefit Act.
1769          (c) An employee who is participating in the Unused Sick Leave Retirement Program I
1770     under Section 67-19-14.2 may make a one-time and irrevocable election to transfer all unused
1771     sick leave hours which shall include all converted sick leave hours under Section 67-19-14.1
1772     for use under the Unused Sick Leave Retirement Program II under this section.
1773          (2) (a) The Unused Sick Leave Retirement Program II provides that upon becoming
1774     eligible to receive a retirement allowance an employee employed by the state between January
1775     1, 2006, and January 3, 2014, shall receive remuneration for the employee's unused
1776     accumulated sick leave and converted sick leave accrued between January 1, 2006, and January
1777     3, 2014, in accordance with this section as follows:
1778          (i) subject to federal requirements and limitations, a contribution at the employee's rate
1779     of pay at the time of retirement for 25% of the employee's unused accumulated sick leave and
1780     converted sick leave shall be transferred directly to the employee's defined contribution plan
1781     qualified under Section 401(k) of the Internal Revenue Code which is sponsored by the Utah
1782     State Retirement Board; and
1783          (ii) participation in a benefit plan that provides for reimbursement for medical
1784     expenses using money deposited at the employee's rate of pay at the time of retirement from
1785     remaining unused accumulated sick leave and converted sick leave balances.
1786          (b) If the amount calculated under Subsection (2)(a)(i) exceeds the federal contribution
1787     limitations, the amount representing the excess shall be deposited under Subsection (2)(a)(ii).
1788          (c) An employee's rate of pay at the time of retirement for purposes of Subsection
1789     (2)(a)(ii) may not be less than the average rate of pay of state employees who retired in the
1790     same retirement system under Title 49, Utah State Retirement and Insurance Benefit Act,
1791     during the previous calendar year.
1792          (3) The Utah State Retirement Office shall develop and maintain a program to provide
1793     a benefit plan that provides for reimbursement for medical expenses under Subsection (2)(a)(ii)

1794     with[: (a)] money deposited under Subsection (2)(a)(ii)[; and (b) accrued earnings].