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     Committee Note:
9          The Retirement and Independent Entities Interim Committee recommended this bill.
10     General Description:
11          This bill modifies the Utah State Retirement and Insurance Benefit Act by amending
12     certain retirement provisions.
13     Highlighted Provisions:
14          This bill:
15          ▸     clarifies retiree reporting provisions to the Utah State Retirement Office on the
16     status of the reemployment;
17          ▸     allows Utah Retirement Systems to make payments to a deceased member's
18     beneficiaries 30 days instead of three months after the date of death;
19          ▸     amends the definition of "final average salary" to specify that its basis is contract
20     year for educational institutions, state fiscal year for judges, and calendar year for all
21     other participating employers;
22          ▸     clarifies that a public safety employee who is transferred or promoted to an
23     administration position within the same department primarily to manage or
24     supervise public safety service employees will continue to earn public safety service
25     credit;
26          ▸     addresses references to death or disability;
27          ▸     provides that a person's retirement date is among the circumstances in which a

28     person qualified for a monthly disability benefit will no longer receive the benefit;
29          ▸     provides that for an elected official under Tier II retirement, the total amount
30     contributed by the participating employer and the total amount contributed by the
31     elected official vests immediately;
32          ▸     clarifies four-year vesting provisions for Tier II defined contribution benefits;
33          ▸     repeals provisions that require the Utah State Retirement Office to include accrued
34     earnings in Unused Sick Leave Retirement Program II; and
35          ▸     makes technical changes.
36     Money Appropriated in this Bill:
37          None
38     Other Special Clauses:
39          None
40     Utah Code Sections Affected:
41     AMENDS:
42          49-11-505, as last amended by Laws of Utah 2015, Chapters 243 and 256
43          49-11-609, as last amended by Laws of Utah 2005, Chapter 116
44          49-12-102, as last amended by Laws of Utah 2015, Chapter 243
45          49-13-102, as last amended by Laws of Utah 2014, Chapter 15
46          49-14-102, as last amended by Laws of Utah 2015, Chapter 463
47          49-14-201, as last amended by Laws of Utah 2015, Chapters 100 and 463
48          49-15-102, as last amended by Laws of Utah 2015, Chapter 463
49          49-15-201, as last amended by Laws of Utah 2015, Chapters 100 and 463
50          49-16-102, as last amended by Laws of Utah 2015, Chapter 254
51          49-17-102, as last amended by Laws of Utah 2008, Chapter 3
52          49-18-102, as last amended by Laws of Utah 2008, Chapter 3
53          49-21-403, as last amended by Laws of Utah 2013, Chapter 316
54          49-22-102, as last amended by Laws of Utah 2013, Chapters 109 and 127
55          49-22-201, as last amended by Laws of Utah 2015, Chapter 315
56          49-22-205, as enacted by Laws of Utah 2015, Chapter 315
57          49-22-303, as last amended by Laws of Utah 2015, Chapter 315
58          49-22-401, as last amended by Laws of Utah 2015, Chapter 315

59          49-23-102, as last amended by Laws of Utah 2015, Chapters 254 and 463
60          49-23-302, as last amended by Laws of Utah 2011, Chapter 439
61          49-23-401, as last amended by Laws of Utah 2015, Chapter 315
62          67-19-14.4, as last amended by Laws of Utah 2013, Chapter 277
63     

64     Be it enacted by the Legislature of the state of Utah:
65          Section 1. Section 49-11-505 is amended to read:
66          49-11-505. Reemployment of a retiree -- Restrictions.
67          (1) (a) For purposes of this section, "retiree":
68          (i) means a person who:
69          (A) retired from a participating employer; and
70          (B) begins reemployment on or after July 1, 2010, with a participating employer;
71          (ii) does not include a person:
72          (A) who was reemployed by a participating employer before July 1, 2010; and
73          (B) whose participating employer that reemployed the person under Subsection
74     (1)(a)(ii)(A) was dissolved, consolidated, merged, or structurally changed in accordance with
75     Section 49-11-621 after July 1, 2010; and
76          (iii) does not include a person who is reemployed as an active senior judge or an active
77     senior justice court judge as described by Utah State Court Rules, appointed to hear cases by
78     the Utah Supreme Court in accordance with Article VIII, Section 4, Utah Constitution.
79          (b) (i) This section does not apply to employment as an elected official if the elected
80     official's position is not full time as certified by the participating employer.
81          (ii) The provisions of this section apply to an elected official whose elected position is
82     full time as certified by the participating employer.
83          (c) (i) This section does not apply to employment as a part-time appointed board
84     member who does not receive any remuneration, stipend, or other benefit for the part-time
85     appointed board member's service.
86          (ii) For purposes of this Subsection (1)(c), remuneration, stipend, or other benefit does
87     not include receipt of per diem and travel expenses up to the amounts established by the
88     Division of Finance in:
89          (A) Section 63A-3-106;

90          (B) Section 63A-3-107; and
91          (C) rules made by the Division of Finance according to Sections 63A-3-106 and
92     63A-3-107.
93          (d) (i) For purposes of this Subsection (1)(d), "affiliated emergency services worker"
94     means a person who is employed by a participating employer and who performs emergency
95     services for another participating employer that is a different agency in which the person:
96          (A) has been trained in techniques and skills required for the service the person
97     provides to the participating employer;
98          (B) continues to receive regular training required for the service;
99          (C) is on the rolls as a trained affiliated emergency services worker of the participating
100     employer; and
101          (D) provides ongoing service for a participating employer, which service may include
102     service as a volunteer firefighter, reserve law enforcement officer, search and rescue personnel,
103     emergency medical technician, ambulance personnel, park ranger, or public utilities worker.
104          (ii) A person who performs work or service but does not meet the requirements of
105     Subsection (1)(d)(i) is not an affiliated emergency services worker for purposes of this
106     Subsection (1)(d).
107          (iii) The office may not cancel the retirement allowance of a retiree who is employed as
108     an affiliated emergency services worker within one year of the retiree's retirement date if the
109     affiliated emergency services worker does not receive any compensation, except for:
110          (A) a nominal fee, stipend, discount, tax credit, voucher, or other fixed sum of money
111     or cash equivalent payment not tied to productivity and paid periodically for services;
112          (B) a length-of-service award;
113          (C) insurance policy premiums paid by the participating employer in the event of death
114     of an affiliated emergency services worker or a line-of-duty accidental death or disability; or
115          (D) reimbursement of expenses incurred in the performance of duties.
116          (iv) For purposes of Subsections (1)(d)(iii)(A) and (B), the total amount of any
117     discounts, tax credits, vouchers, and payments to a volunteer may not exceed $500 per month.
118          (v) Beginning January 1, 2016, the board shall adjust the amount under Subsection
119     (1)(d)(iv) by the annual change in the Consumer Price Index during the previous calendar year
120     as measured by a United States Bureau of Labor Statistics Consumer Price Index average as

121     determined by the board.
122          (vi) The office shall cancel the retirement allowance of a retiree for the remainder of
123     the calendar year if employment as an affiliated emergency services worker with a participating
124     employer exceeds the limitation under Subsection (1)(d)(iv).
125          (vii) If a retiree is employed as an affiliated emergency services worker under the
126     provisions of Subsection (1)(d), the termination date of the employment as an affiliated
127     emergency services worker, as confirmed in writing by the participating employer, is
128     considered the retiree's retirement date for the purpose of calculating the separation
129     requirement under Subsection (3)(a).
130          (2) A retiree may not for the same period of reemployment:
131          (a) (i) earn additional service credit; or
132          (ii) receive any retirement related contribution from a participating employer; and
133          (b) receive a retirement allowance.
134          (3) (a) Except as provided under Subsection (3)(b) or (10), the office shall cancel the
135     retirement allowance of a retiree if the reemployment with a participating employer begins
136     within one year of the retiree's retirement date.
137          (b) The office may not cancel the retirement allowance of a retiree who is reemployed
138     with a participating employer within one year of the retiree's retirement date if:
139          (i) the retiree is not reemployed by a participating employer for a period of at least 60
140     days from the retiree's retirement date;
141          (ii) upon reemployment after the break in service under Subsection (3)(b)(i), the retiree
142     does not receive any employer provided benefits, including:
143          (A) medical benefits;
144          (B) dental benefits;
145          (C) other insurance benefits except for workers' compensation as provided under Title
146     34A, Chapter 2, Workers' Compensation Act, and withholdings required by federal or state law
147     for Social Security, Medicare, and unemployment insurance; or
148          (D) paid time off, including sick, annual, or other type of leave; and
149          (iii) (A) the retiree does not earn in any calendar year of reemployment an amount in
150     excess of the lesser of $15,000 or one-half of the retiree's final average salary upon which the
151     retiree's retirement allowance is based; or

152          (B) the retiree is reemployed as a judge as defined under Section 78A-11-102.
153          (c) Beginning January 1, 2013, the board shall adjust the amounts under Subsection
154     (3)(b)(iii)(A) by the annual change in the Consumer Price Index during the previous calendar
155     year as measured by a United States Bureau of Labor Statistics Consumer Price Index average
156     as determined by the board.
157          (d) The office shall cancel the retirement allowance of a retiree for the remainder of the
158     calendar year if the reemployment with a participating employer exceeds the limitation under
159     Subsection (3)(b)(iii)(A).
160          (e) If a retiree is reemployed under the provisions of Subsection (3)(b), the termination
161     date of the reemployment, as confirmed in writing by the participating employer, is considered
162     the retiree's retirement date for the purpose of calculating the separation requirement under
163     Subsection (3)(a).
164          (f) If a retiree received a retirement allowance in error, due to reemployment in
165     violation of this section:
166          (i) the office shall cancel the retiree's retirement allowance; and
167          (ii) if the retiree applies for a future benefit, the office shall recover any overpayment in
168     accordance with the provisions of Section 49-11-607.
169          (4) If a reemployed retiree has completed the one-year separation from employment
170     with a participating employer required under Subsection (3)(a), the retiree may elect to:
171          (a) earn additional service credit in accordance with this title and cancel the retiree's
172     retirement allowance; or
173          (b) continue to receive the retiree's retirement allowance and forfeit any retirement
174     related contribution from the participating employer who reemployed the retiree.
175          (5) (a) As used in this Subsection (5), "amortization rate" means the amortization rate,
176     as defined in Section 49-11-102, to be applied to the system that would have covered the retiree
177     if the retiree's reemployed position were deemed to be an eligible, full-time position within that
178     system.
179          (b) A participating employer who reemploys a retiree shall contribute to the office the
180     amortization rate if the reemployed retiree:
181          (i) has completed the one-year separation from employment with a participating
182     employer required under Subsection (3)(a); and

183          (ii) makes an election under Subsection (4)(b) to continue to receive a retirement
184     allowance while reemployed.
185          (6) (a) A participating employer shall immediately notify the office:
186          (i) if the participating employer reemploys a retiree;
187          (ii) whether the reemployment is subject to Subsection (3)(b) or (4) of this section; and
188          (iii) of any election by the retiree under Subsection (4).
189          (b) A participating employer shall certify to the office whether the position of an
190     elected official is or is not full time.
191          (c) A participating employer is liable to the office for a payment or failure to make a
192     payment in violation of this section.
193          (d) If a participating employer fails to notify the office in accordance with this section,
194     the participating employer is immediately subject to a compliance audit by the office.
195          (7) (a) The office shall immediately cancel the retirement allowance of a retiree in
196     accordance with Subsection (7)(b) if the office receives notice or learns of:
197          (i) the reemployment of a retiree in violation of Subsection (3); or
198          (ii) the election of a reemployed retiree under Subsection (4)(a).
199          (b) If the retiree is eligible for retirement coverage in the reemployed position, the
200     office shall cancel the allowance of a retiree subject to Subsection (7)(a), and reinstate the
201     retiree to active member status on the first day of the month following the date of:
202          (i) reemployment if the retiree is subject to Subsection (3); or
203          (ii) an election by an employee under Subsection (4)(a).
204          (c) If the retiree is not otherwise eligible for retirement coverage in the reemployed
205     position:
206          (i) the office shall cancel the allowance of a retiree subject to Subsection (7)(a)(i); and
207          (ii) the participating employer shall pay the amortization rate to the office on behalf of
208     the retiree.
209          (8) (a) A retiree subject to Subsection (7)(b) who retires within two years from the date
210     of reemployment:
211          (i) is not entitled to a recalculated retirement benefit; and
212          (ii) will resume the allowance that was being paid at the time of cancellation.
213          (b) Subject to Subsection (2), a retiree who is reinstated to active membership under

214     Subsection (7) and who retires two or more years after the date of reinstatement to active
215     membership shall:
216          (i) resume receiving the allowance that was being paid at the time of cancellation; and
217          (ii) receive an additional allowance based on the formula in effect at the date of the
218     subsequent retirement for all service credit accrued between the first and subsequent retirement
219     dates.
220          (9) (a) A retiree subject to this section shall report to the office the status of the
221     reemployment under Subsection (1)(d), (3), or (4).
222          (b) If the retiree fails to inform the office of an election under Subsection (4), the office
223     shall withhold one month's benefit for each month the retiree fails to inform the office under
224     Subsection (9)(a).
225          (10) A retiree shall be considered as having completed the one-year separation from
226     employment with a participating employer required under Subsection (3)(a), if the retiree:
227          (a) before retiring:
228          (i) was employed with a participating employer as a public safety service employee as
229     defined in Section 49-14-102, 49-15-102, or 49-23-102;
230          (ii) and during the employment under Subsection (10)(a)(i), suffered a physical injury
231     resulting from external force or violence while performing the duties of the employment, and
232     for which injury the retiree would have been approved for total disability in accordance with
233     the provisions under Title 49, Chapter 21, Public Employees' Long-Term Disability Act, if
234     years of service are not considered;
235          (iii) had less than 30 years of service credit but had sufficient service credit to retire,
236     with an unreduced allowance making the public safety service employee ineligible for
237     long-term disability payments under Title 49, Chapter 21, Public Employees' Long-Term
238     Disability Act, or a substantially similar long-term disability program; and
239          (iv) does not receive any long-term disability benefits from any participating employer;
240     and
241          (b) is reemployed by a different participating employer.
242          (11) The board may make rules to implement this section.
243          Section 2. Section 49-11-609 is amended to read:
244          49-11-609. Beneficiary designations -- Revocation of beneficiary designation --

245     Procedure -- Beneficiary not designated -- Payment to survivors in order established
246     under the Uniform Probate Code -- Restrictions on payment -- Payment of deceased's
247     expenses.
248          (1) As used in this section, "member" includes a member, retiree, participant, covered
249     individual, a spouse of a retiree participating in the insurance benefits created by Sections
250     49-12-404 and 49-13-404, or an alternate payee under a domestic relations order dividing a
251     defined contribution account.
252          (2) The most recent beneficiary designations signed by the member and filed with the
253     office, including electronic records, at the time of the member's death are binding in the
254     payment of any benefits due under this title.
255          (3) (a) Except where an optional continuing benefit is chosen, or the law makes a
256     specific benefit designation to a dependent spouse, a member may revoke a beneficiary
257     designation at any time and may execute and file a different beneficiary designation with the
258     office.
259          (b) A change of beneficiary designation shall be completed on forms provided by the
260     office.
261          (4) (a) All benefits payable by the office may be paid or applied to the benefit of the
262     surviving next of kin of the deceased in the order of precedence established under Title 75,
263     Chapter 2, Intestate Succession and Wills, if:
264          (i) no beneficiary is designated or if all designated beneficiaries have predeceased the
265     member;
266          (ii) the location of the beneficiary or secondary beneficiaries cannot be ascertained by
267     the office within 12 months of the date a reasonable attempt is made by the office to locate the
268     beneficiaries; or
269          (iii) the beneficiary has not completed the forms necessary to pay the benefits within
270     six months of the date that beneficiary forms are sent to the beneficiary's last-known address.
271          (b) (i) A payment may not be made to a person included in any of the groups referred
272     to in Subsection (4)(a) if at the date of payment there is a living person in any of the groups
273     preceding it.
274          (ii) Payment to a person in any group based upon receipt from the person of an
275     affidavit in a form satisfactory to the office that:

276          (A) there are no living individuals in the group preceding it;
277          (B) the probate of the estate of the deceased has not been commenced; and
278          (C) more than [three months] 30 days have elapsed since the date of death of the
279     decedent.
280          (5) Benefits paid under this section shall be:
281          (a) a full satisfaction and discharge of all claims for benefits under this title; and
282          (b) payable by reason of the death of the decedent.
283          Section 3. Section 49-12-102 is amended to read:
284          49-12-102. Definitions.
285          As used in this chapter:
286          (1) "Benefits normally provided":
287          (a) means a benefit offered by an employer, including:
288          (i) a leave benefit of any kind;
289          (ii) insurance coverage of any kind if the employer pays some or all of the premium for
290     the coverage;
291          (iii) employer contributions to a health savings account, health reimbursement account,
292     health reimbursement arrangement, or medical expense reimbursement plan; and
293          (iv) a retirement benefit of any kind if the employer pays some or all of the cost of the
294     benefit; and
295          (b) does not include:
296          (i) a payment for Social Security;
297          (ii) workers' compensation insurance;
298          (iii) unemployment insurance;
299          (iv) a payment for Medicare;
300          (v) a payment or insurance required by federal or state law that is similar to a payment
301     or insurance listed in Subsection (1)(b)(i), (ii), (iii), or (iv);
302          (vi) any other benefit that state or federal law requires an employer to provide an
303     employee who would not otherwise be eligible to receive the benefit; or
304          (vii) any benefit that an employer provides an employee in order to avoid a penalty or
305     tax under the Patient Protection and Affordable Care Act, Pub. L. No. 111-148 and the Health
306     Care Education Reconciliation Act of 2010, Pub. L. No. 111-152, and related federal

307     regulations, including a penalty imposed by Internal Revenue Code, Section 4980H.
308          (2) (a) "Compensation" means, except as provided in Subsection (2)(c), the total
309     amount of payments made by a participating employer to a member of this system for services
310     rendered to the participating employer, including:
311          (i) bonuses;
312          (ii) cost-of-living adjustments;
313          (iii) other payments currently includable in gross income and that are subject to Social
314     Security deductions, including any payments in excess of the maximum amount subject to
315     deduction under Social Security law;
316          (iv) amounts that the member authorizes to be deducted or reduced for salary deferral
317     or other benefits authorized by federal law; and
318          (v) member contributions.
319          (b) "Compensation" for purposes of this chapter may not exceed the amount allowed
320     under Internal Revenue Code, Section 401(a)(17).
321          (c) "Compensation" does not include:
322          (i) the monetary value of remuneration paid in kind, including a residence or use of
323     equipment;
324          (ii) the cost of any employment benefits paid for by the participating employer;
325          (iii) compensation paid to a temporary employee, an exempt employee, or an employee
326     otherwise ineligible for service credit;
327          (iv) any payments upon termination, including accumulated vacation, sick leave
328     payments, severance payments, compensatory time payments, or any other special payments; or
329          (v) any allowances or payments to a member for costs or expenses paid by the
330     participating employer, including automobile costs, uniform costs, travel costs, tuition costs,
331     housing costs, insurance costs, equipment costs, and dependent care costs.
332          (d) The executive director may determine if a payment not listed under this Subsection
333     (2) falls within the definition of compensation.
334          (3) "Final average salary" means the amount [computed] calculated by averaging the
335     highest five years of annual compensation preceding retirement subject to Subsections (3)(a),
336     (b), (c), [and] (d), and (e).
337          (a) Except as provided in Subsection (3)(b), the percentage increase in annual

338     compensation in any one of the years used may not exceed the previous year's compensation by
339     more than 10% plus a cost-of-living adjustment equal to the decrease in the purchasing power
340     of the dollar during the previous year, as measured by a United States Bureau of Labor
341     Statistics Consumer Price Index average as determined by the board.
342          (b) In cases where the participating employer provides acceptable documentation to the
343     office, the limitation in Subsection (3)(a) may be exceeded if:
344          (i) the member has transferred from another agency; or
345          (ii) the member has been promoted to a new position.
346          (c) If the member retires more than six months from the date of termination of
347     employment, the member is considered to have been in service at the member's last rate of pay
348     from the date of the termination of employment to the effective date of retirement for purposes
349     of computing the member's final average salary only.
350          (d) If the member has less than five years of service credit in this system, final average
351     salary means the average annual compensation paid to the member during the full period of
352     service credit.
353          (e) The annual compensation used to calculate final average salary shall be based on:
354          (i) a calendar year for a member employed by a participating employer that is not an
355     educational institution; or
356          (ii) a contract year for a member employed by an educational institution.
357          (4) "Participating employer" means an employer which meets the participation
358     requirements of Sections 49-12-201 and 49-12-202.
359          (5) (a) "Regular full-time employee" means an employee whose term of employment
360     for a participating employer contemplates continued employment during a fiscal or calendar
361     year and whose employment normally requires an average of 20 hours or more per week,
362     except as modified by the board, and who receives benefits normally provided by the
363     participating employer.
364          (b) "Regular full-time employee" includes:
365          (i) a teacher whose term of employment for a participating employer contemplates
366     continued employment during a school year and who teaches half-time or more;
367          (ii) a classified school employee:
368          (A) who is hired before July 1, 2013; and

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

400          Section 4. Section 49-13-102 is amended to read:
401          49-13-102. Definitions.
402          As used in this chapter:
403          (1) "Benefits normally provided" has the same meaning as defined in Section
404     49-12-102.
405          (2) (a) Except as provided in Subsection (2)(c), "compensation" means the total
406     amount of payments made by a participating employer to a member of this system for services
407     rendered to the participating employer, including:
408          (i) bonuses;
409          (ii) cost-of-living adjustments;
410          (iii) other payments currently includable in gross income and that are subject to Social
411     Security deductions, including any payments in excess of the maximum amount subject to
412     deduction under Social Security law; and
413          (iv) amounts that the member authorizes to be deducted or reduced for salary deferral
414     or other benefits authorized by federal law.
415          (b) "Compensation" for purposes of this chapter may not exceed the amount allowed
416     under Internal Revenue Code, Section 401(a)(17).
417          (c) "Compensation" does not include:
418          (i) the monetary value of remuneration paid in kind, including a residence or use of
419     equipment;
420          (ii) the cost of any employment benefits paid for by the participating employer;
421          (iii) compensation paid to a temporary employee, an exempt employee, or an employee
422     otherwise ineligible for service credit;
423          (iv) any payments upon termination, including accumulated vacation, sick leave
424     payments, severance payments, compensatory time payments, or any other special payments; or
425          (v) any allowances or payments to a member for costs or expenses paid by the
426     participating employer, including automobile costs, uniform costs, travel costs, tuition costs,
427     housing costs, insurance costs, equipment costs, and dependent care costs.
428          (d) The executive director may determine if a payment not listed under this Subsection
429     (2) falls within the definition of compensation.
430          (3) "Final average salary" means the amount [computed] calculated by averaging the

431     highest three years of annual compensation preceding retirement subject to [the following:]
432     Subsections (3)(a), (b), (c), and (d).
433          (a) Except as provided in Subsection (3)(b), the percentage increase in annual
434     compensation in any one of the years used may not exceed the previous year's compensation by
435     more than 10% plus a cost-of-living adjustment equal to the decrease in the purchasing power
436     of the dollar during the previous year, as measured by a United States Bureau of Labor
437     Statistics Consumer Price Index average as determined by the board.
438          (b) In cases where the participating employer provides acceptable documentation to the
439     office, the limitation in Subsection (3)(a) may be exceeded if:
440          (i) the member has transferred from another agency; or
441          (ii) the member has been promoted to a new position.
442          (c) If the member retires more than six months from the date of termination of
443     employment and for purposes of computing the member's final average salary only, the
444     member is considered to have been in service at the member's last rate of pay from the date of
445     the termination of employment to the effective date of retirement.
446          (d) The annual compensation used to calculate final average salary shall be based on:
447          (i) a calendar year for a member employed by a participating employer that is not an
448     educational institution; or
449          (ii) a contract year for a member employed by an educational institution.
450          (4) "Participating employer" means an employer which meets the participation
451     requirements of Sections 49-13-201 and 49-13-202.
452          (5) (a) "Regular full-time employee" means an employee whose term of employment
453     for a participating employer contemplates continued employment during a fiscal or calendar
454     year and whose employment normally requires an average of 20 hours or more per week,
455     except as modified by the board, and who receives benefits normally provided by the
456     participating employer.
457          (b) "Regular full-time employee" includes:
458          (i) a teacher whose term of employment for a participating employer contemplates
459     continued employment during a school year and who teaches half time or more;
460          (ii) a classified school employee:
461          (A) who is hired before July 1, 2013; and

462          (B) whose employment normally requires an average of 20 hours per week or more for
463     a participating employer, regardless of benefits provided;
464          (iii) an officer, elective or appointive, who earns $500 or more per month, indexed as
465     of January 1, 1990, as provided in Section 49-13-407;
466          (iv) a faculty member or employee of an institution of higher education who is
467     considered full time by that institution of higher education; and
468          (v) an individual who otherwise meets the definition of this Subsection (5) who
469     performs services for a participating employer through a professional employer organization or
470     similar arrangement.
471          (c) "Regular full-time employee" does not include a classified school employee:
472          (i) (A) who is hired on or after July 1, 2013; and
473          (B) who does not receive benefits normally provided by the participating employer
474     even if the employment normally requires an average of 20 hours per week or more for a
475     participating employer; or
476          (ii) (A) who is hired before July 1, 2013;
477          (B) who did not qualify as a regular full-time employee before July 1, 2013;
478          (C) who does not receive benefits normally provided by the participating employer;
479     and
480          (D) whose employment hours are increased on or after July 1, 2013, to require an
481     average of 20 hours per week or more for a participating employer.
482          (6) "System" means the Public Employees' Noncontributory Retirement System.
483          (7) "Years of service credit" means:
484          (a) a period consisting of 12 full months as determined by the board;
485          (b) a period determined by the board, whether consecutive or not, during which a
486     regular full-time employee performed services for a participating employer, including any time
487     the regular full-time employee was absent on a paid leave of absence granted by a participating
488     employer or was absent in the service of the United States government on military duty as
489     provided by this chapter; or
490          (c) the regular school year consisting of not less than eight months of full-time service
491     for a regular full-time employee of an educational institution.
492          Section 5. Section 49-14-102 is amended to read:

493          49-14-102. Definitions.
494          As used in this chapter:
495          (1) (a) "Compensation" means the total amount of payments that are includable in
496     gross income which are received by a public safety service employee as base income for the
497     regularly scheduled work period. The participating employer shall establish the regularly
498     scheduled work period. Base income shall be determined prior to the deduction of member
499     contributions or any amounts the public safety service employee authorizes to be deducted for
500     salary deferral or other benefits authorized by federal law.
501          (b) "Compensation" includes performance-based bonuses and cost-of-living
502     adjustments.
503          (c) "Compensation" does not include:
504          (i) overtime;
505          (ii) sick pay incentives;
506          (iii) retirement pay incentives;
507          (iv) the monetary value of remuneration paid in kind, including a residence, use of
508     equipment or uniform, travel, or similar payments;
509          (v) a lump-sum payment or special payments covering accumulated leave; and
510          (vi) all contributions made by a participating employer under this system or under any
511     other employee benefit system or plan maintained by a participating employer for the benefit of
512     a member or participant.
513          (d) "Compensation" for purposes of this chapter may not exceed the amount allowed
514     under Internal Revenue Code Section 401(a)(17).
515          (2) "Dispatcher" means the same as that term is defined in Section 53-6-102.
516          (3) "Final average salary" means the amount [computed] calculated by averaging the
517     highest three years of annual compensation preceding retirement subject to Subsections (3)(a)
518     [and], (b), and (c).
519          (a) Except as provided in Subsection (3)(b), the percentage increase in annual
520     compensation in any one of the years used may not exceed the previous year's compensation by
521     more than 10% plus a cost-of-living adjustment equal to the decrease in the purchasing power
522     of the dollar during the previous year, as measured by a United States Bureau of Labor
523     Statistics Consumer Price Index average as determined by the board.

524          (b) In cases where the participating employer provides acceptable documentation to the
525     office, the limitation in Subsection (3)(a) may be exceeded if:
526          (i) the public safety service employee has transferred from another agency; or
527          (ii) the public safety service employee has been promoted to a new position.
528          (c) The annual compensation used to calculate final average salary shall be based on:
529          (i) a calendar year for a member employed by a participating employer that is not an
530     educational institution; or
531          (ii) a contract year for a member employed by an educational institution.
532          (4) (a) "Line-of-duty death" means a death resulting from:
533          (i) external force, violence, or disease occasioned by an act of duty as a public safety
534     service employee; or
535          (ii) strenuous activity, including a heart attack or stroke, that occurs during strenuous
536     training or another strenuous activity required as an act of duty as a public safety service
537     employee.
538          (b) "Line-of-duty death" does not include a death that:
539          (i) occurs during an activity that is required as an act of duty as a public safety service
540     employee if the activity is not a strenuous activity, including an activity that is clerical,
541     administrative, or of a nonmanual nature;
542          (ii) occurs during the commission of a crime committed by the employee;
543          (iii) the employee's intoxication or use of alcohol or drugs, whether prescribed or
544     nonprescribed, contributes to the employee's death; or
545          (iv) occurs in a manner other than as described in Subsection (4)(a).
546          (5) "Participating employer" means an employer which meets the participation
547     requirements of Section 49-14-201.
548          (6) (a) "Public safety service" means employment normally requiring an average of
549     2,080 hours of regularly scheduled employment per year rendered by a member who is a:
550          (i) law enforcement officer in accordance with Section 53-13-103;
551          (ii) correctional officer in accordance with Section 53-13-104;
552          (iii) special function officer approved in accordance with Sections 49-14-201 and
553     53-13-105;
554          (iv) dispatcher who is certified in accordance with Section 53-6-303; or

555          (v) full-time member of the Board of Pardons and Parole created under Section
556     77-27-2.
557          (b) Except as provided under Subsections (6)(a)(iv) and (v), "public safety service"
558     also requires that in the course of employment the employee's life or personal safety is at risk.
559          (c) Except for the minimum hour requirement, Subsections (6)(a) and (b) do not apply
560     to any person who was eligible for service credit in this system before January 1, 1984.
561          (7) "Public safety service employee" means an employee of a participating employer
562     who performs public safety service under this chapter.
563          (8) (a) "Strenuous activity" means engagement involving a difficult, stressful, or
564     vigorous fire suppression, rescue, hazardous material response, emergency medical service,
565     physical law enforcement, prison security, disaster relief, or other emergency response activity.
566          (b) "Strenuous activity" includes participating in a participating employer sanctioned
567     and funded training exercise that involves difficult, stressful, or vigorous physical activity.
568          (9) "System" means the Public Safety Contributory Retirement System created under
569     this chapter.
570          (10) "Years of service credit" means the number of periods, each to consist of 12 full
571     months as determined by the board, whether consecutive or not, during which a public safety
572     service employee was employed by a participating employer, including time the public safety
573     service employee was absent in the service of the United States government on military duty.
574          Section 6. Section 49-14-201 is amended to read:
575          49-14-201. System membership -- Eligibility.
576          (1) Except as provided in Section 49-15-201, a public safety service employee of a
577     participating employer participating in this system is eligible for service credit in this system at
578     the earliest of:
579          (a) July 1, 1969, if the public safety service employee was employed by the
580     participating employer on July 1, 1969, and the participating employer was participating in this
581     system on that date;
582          (b) the date the participating employer begins participating in this system if the public
583     safety service employee was employed by the participating employer on that date; or
584          (c) the date the public safety service employee is employed by the participating
585     employer and is eligible to perform public safety service, except that a public safety service

586     employee initially entering employment with a participating employer on or after July 1, 2011,
587     who does not have service credit accrued before July 1, 2011, in a Tier I system or plan
588     administered by the board, may not participate in this system.
589          (2) (a) (i) A participating employer that has public safety service and firefighter service
590     employees that require cross-training and duty shall enroll those dual purpose employees in the
591     system in which the greatest amount of time is actually worked.
592          (ii) The employees shall either be full-time public safety service or full-time firefighter
593     service employees of the participating employer.
594          (b) (i) Prior to transferring a dual purpose employee from one system to another, the
595     participating employer shall receive written permission from the office.
596          (ii) The office may request documentation to verify the appropriateness of the transfer.
597          (3) The board may combine or segregate the actuarial experience of participating
598     employers in this system for the purpose of setting contribution rates.
599          (4) (a) (i) Each participating employer participating in this system shall annually
600     submit to the office a schedule indicating the positions to be covered under this system in
601     accordance with this chapter.
602          (ii) The office may require documentation to justify the inclusion of any position under
603     this system.
604          (b) If there is a dispute between the office and a participating employer or employee
605     over any position to be covered, the disputed position shall be submitted to the Peace Officer
606     Standards and Training Council established under Section 53-6-106 for determination.
607          (c) (i) The Peace Officer Standards and Training Council's authority to decide
608     eligibility for public safety service credit is limited to claims for coverage under this system for
609     time periods after July 1, 1989.
610          (ii) A decision of the Peace Officer Standards and Training Council may not be applied
611     to service credit earned in another system prior to July 1, 1989.
612          (iii) Except as provided under Subsection (4)(c)(iv), a decision of the Peace Officer
613     Standards and Training Council granting a position coverage under this system may only be
614     applied prospectively from the date of that decision.
615          (iv) A decision of the Peace Officer Standards and Training Council granting a position
616     coverage under this system may be applied retroactively only if:

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

648     53-13-105.
649          (b) If a position satisfies the requirements of Subsection (10)(a), the office and the
650     Peace Officer Standards and Training Council shall consider whether or not the position
651     requires the employee to:
652          (i) perform duties that consist primarily of actively preventing or detecting crime and
653     enforcing criminal statutes or ordinances of this state or any of its political subdivisions;
654          (ii) perform duties that consist primarily of providing community protection; and
655          (iii) respond to situations involving threats to public safety and make emergency
656     decisions affecting the lives and health of others.
657          (11) If a subcommittee is used to recommend the determination of disputes to the
658     Peace Officer Standards and Training Council, the subcommittee shall comply with the
659     requirements of Subsection (10) in making its recommendation.
660          (12) A final order of the Peace Officer Standards and Training Council regarding a
661     dispute is a final agency action for purposes of Title 63G, Chapter 4, Administrative
662     Procedures Act.
663          (13) Except as provided under Subsection (14), if a participating employer's public
664     safety service employees are not covered by this system or under Chapter 15, Public Safety
665     Noncontributory Retirement Act, as of January 1, 1998, those public safety service employees
666     who may otherwise qualify for membership in this system shall, at the discretion of the
667     participating employer, remain in their current retirement system.
668          (14) (a) A public safety service employee employed by an airport police department,
669     which elects to cover its public safety service employees under the Public Safety
670     Noncontributory Retirement System under Subsection (13), may elect to remain in the public
671     safety service employee's current retirement system.
672          (b) The public safety service employee's election to remain in the current retirement
673     system under Subsection (14)(a):
674          (i) shall be made at the time the employer elects to move its public safety service
675     employees to a public safety retirement system;
676          (ii) documented by written notice to the participating employer; and
677          (iii) is irrevocable.
678          (15) (a) Subject to Subsection (16), beginning July 1, 2015, a public safety service

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

710     equipment or uniform, travel, or similar payments;
711          (v) a lump-sum payment or special payment covering accumulated leave; and
712          (vi) all contributions made by a participating employer under this system or under any
713     other employee benefit system or plan maintained by a participating employer for the benefit of
714     a member or participant.
715          (d) "Compensation" for purposes of this chapter may not exceed the amount allowed
716     under Internal Revenue Code Section 401(a)(17).
717          (2) "Dispatcher" means the same as that term is defined in Section 53-6-102.
718          (3) "Final average salary" means the amount [computed] calculated by averaging the
719     highest three years of annual compensation preceding retirement subject to Subsections (3)(a)
720     [and], (b), and (c).
721          (a) Except as provided in Subsection (3)(b), the percentage increase in annual
722     compensation in any one of the years used may not exceed the previous year's compensation by
723     more than 10% plus a cost-of-living adjustment equal to the decrease in the purchasing power
724     of the dollar during the previous year, as measured by a United States Bureau of Labor
725     Statistics Consumer Price Index average as determined by the board.
726          (b) In cases where the participating employer provides acceptable documentation to the
727     office, the limitation in Subsection (3)(a) may be exceeded if:
728          (i) the public safety service employee has transferred from another agency; or
729          (ii) the public safety service employee has been promoted to a new position.
730          (c) The annual compensation used to calculate final average salary shall be based on:
731          (i) a calendar year for a member employed by a participating employer that is not an
732     educational institution; or
733          (ii) a contract year for a member employed by an educational institution.
734          (4) (a) "Line-of-duty death" means a death resulting from:
735          (i) external force, violence, or disease occasioned by an act of duty as a public safety
736     service employee; or
737          (ii) strenuous activity, including a heart attack or stroke, that occurs during strenuous
738     training or another strenuous activity required as an act of duty as a public safety service
739     employee.
740          (b) "Line-of-duty death" does not include a death that:

741          (i) occurs during an activity that is required as an act of duty as a public safety service
742     employee if the activity is not a strenuous activity, including an activity that is clerical,
743     administrative, or of a nonmanual nature;
744          (ii) occurs during the commission of a crime committed by the employee;
745          (iii) the employee's intoxication or use of alcohol or drugs, whether prescribed or
746     nonprescribed, contributes to the employee's death; or
747          (iv) occurs in a manner other than as described in Subsection (4)(a).
748          (5) "Participating employer" means an employer which meets the participation
749     requirements of Section 49-15-201.
750          (6) (a) "Public safety service" means employment normally requiring an average of
751     2,080 hours of regularly scheduled employment per year rendered by a member who is a:
752          (i) law enforcement officer in accordance with Section 53-13-103;
753          (ii) correctional officer in accordance with Section 53-13-104;
754          (iii) special function officer approved in accordance with Sections 49-15-201 and
755     53-13-105;
756          (iv) dispatcher who is certified in accordance with Section 53-6-303; or
757          (v) full-time member of the Board of Pardons and Parole created under Section
758     77-27-2.
759          (b) Except as provided under Subsections (6)(a)(iv) and (v), "public safety service"
760     also requires that in the course of employment the employee's life or personal safety is at risk.
761          (7) "Public safety service employee" means an employee of a participating employer
762     who performs public safety service under this chapter.
763          (8) (a) "Strenuous activity" means engagement involving a difficult, stressful, or
764     vigorous fire suppression, rescue, hazardous material response, emergency medical service,
765     physical law enforcement, prison security, disaster relief, or other emergency response activity.
766          (b) "Strenuous activity" includes participating in a participating employer sanctioned
767     and funded training exercise that involves difficult, stressful, or vigorous physical activity.
768          (9) "System" means the Public Safety Noncontributory Retirement System created
769     under this chapter.
770          (10) "Years of service credit" means the number of periods, each to consist of 12 full
771     months as determined by the board, whether consecutive or not, during which a public safety

772     service employee was employed by a participating employer, including time the public safety
773     service employee was absent in the service of the United States government on military duty.
774          Section 8. Section 49-15-201 is amended to read:
775          49-15-201. System membership -- Eligibility.
776          (1) (a) A public safety service employee employed by the state after July 1, 1989, but
777     before July 1, 2011, is eligible for service credit in this system.
778          (b) A public safety service employee employed by the state prior to July 1, 1989, may
779     either elect to receive service credit in this system or continue to receive service credit under
780     the system established under Chapter 14, Public Safety Contributory Retirement Act, by
781     following the procedures established by the board under this chapter.
782          (2) (a) Public safety service employees of a participating employer other than the state
783     that elected on or before July 1, 1989, to remain in the Public Safety Contributory Retirement
784     System shall be eligible only for service credit in that system.
785          (b) (i) A participating employer other than the state that elected on or before July 1,
786     1989, to participate in this system shall, have allowed, prior to July 1, 1989, a public safety
787     service employee to elect to participate in either this system or the Public Safety Contributory
788     Retirement System.
789          (ii) Except as expressly allowed by this title, the election of the public safety service
790     employee is final and may not be changed.
791          (c) A public safety service employee hired by a participating employer other than the
792     state after July 1, 1989, but before July 1, 2011, shall become a member in this system.
793          (d) A public safety service employee of a participating employer other than the state
794     who began participation in this system after July 1, 1989, but before July 1, 2011, is only
795     eligible for service credit in this system.
796          (e) A person initially entering employment with a participating employer on or after
797     July 1, 2011, who does not have service credit accrued before July 1, 2011, in a Tier I system
798     or plan administered by the board, may not participate in this system.
799          (3) (a) (i) A participating employer that has public safety service and firefighter service
800     employees that require cross-training and duty shall enroll those dual purpose employees in the
801     system in which the greatest amount of time is actually worked.
802          (ii) The employees shall either be full-time public safety service or full-time firefighter

803     service employees of the participating employer.
804          (b) (i) Prior to transferring a dual purpose employee from one system to another, the
805     participating employer shall receive written permission from the office.
806          (ii) The office may request documentation to verify the appropriateness of the transfer.
807          (4) The board may combine or segregate the actuarial experience of participating
808     employers in this system for the purpose of setting contribution rates.
809          (5) (a) (i) Each participating employer participating in this system shall annually
810     submit to the office a schedule indicating the positions to be covered under this system in
811     accordance with this chapter.
812          (ii) The office may require documentation to justify the inclusion of any position under
813     this system.
814          (b) If there is a dispute between the office and a participating employer or employee
815     over any position to be covered, the disputed position shall be submitted to the Peace Officer
816     Standards and Training Council established under Section 53-6-106 for determination.
817          (c) (i) The Peace Officer Standards and Training Council's authority to decide
818     eligibility for public safety service credit is limited to claims for coverage under this system for
819     time periods after July 1, 1989.
820          (ii) A decision of the Peace Officer Standards and Training Council may not be applied
821     to service credit earned in another system prior to July 1, 1989.
822          (iii) Except as provided under Subsection (5)(c)(iv), a decision of the Peace Officer
823     Standards and Training Council granting a position coverage under this system may only be
824     applied prospectively from the date of that decision.
825          (iv) A decision of the Peace Officer Standards and Training Council granting a position
826     coverage under this system may be applied retroactively only if:
827          (A) the participating employer covered other similarly situated positions under this
828     system during the time period in question; and
829          (B) the position otherwise meets all eligibility requirements for receiving service credit
830     in this system during the period for which service credit is to be granted.
831          (6) The Peace Officer Standards and Training Council may use a subcommittee to
832     provide a recommendation to the council in determining disputes between the office and a
833     participating employer or employee over a position to be covered under this system.

834          (7) The Peace Officer Standards and Training Council shall comply with Title 63G,
835     Chapter 4, Administrative Procedures Act, in resolving coverage disputes in this system.
836          (8) A public safety service employee who is transferred or promoted to an
837     administration position [not covered by this system] requiring the performance of duties that
838     consist primarily of management or supervision of public safety service employees shall
839     continue to earn public safety service credit in this system as long as the employee remains
840     employed in the same department.
841          (9) An employee of the Department of Corrections shall continue to earn public safety
842     service credit in this system if:
843          (a) the employee's position is no longer covered under this system for new employees
844     hired on or after July 1, 2015; and
845          (b) the employee:
846          (i) remains employed by the Department of Corrections;
847          (ii) meets the eligibility requirements of this system;
848          (iii) was hired into a position covered by this system prior to July 1, 2015; and
849          (iv) has not had a break in service on or after July 1, 2015.
850          (10) Any employee who is reassigned to the Department of Technology Services or to
851     the Department of Human Resource Management, and who was a member in this system, shall
852     be entitled to remain a member in this system.
853          (11) (a) To determine that a position is covered under this system, the office and, if a
854     coverage dispute arises, the Peace Officer Standards and Training Council shall find that the
855     position requires the employee to:
856          (i) except for a dispatcher, place the employee's life or personal safety at risk; and
857          (ii) complete training as provided in Section 53-6-303, 53-13-103, 53-13-104, or
858     53-13-105.
859          (b) If a position satisfies the requirements of Subsection (11)(a), the office and Peace
860     Officer Standards and Training Council shall consider whether the position requires the
861     employee to:
862          (i) perform duties that consist primarily of actively preventing or detecting crime and
863     enforcing criminal statutes or ordinances of this state or any of its political subdivisions;
864          (ii) perform duties that consist primarily of providing community protection; and

865          (iii) respond to situations involving threats to public safety and make emergency
866     decisions affecting the lives and health of others.
867          (12) If a subcommittee is used to recommend the determination of disputes to the
868     Peace Officer Standards and Training Council, the subcommittee shall comply with the
869     requirements of Subsection (11) in making its recommendation.
870          (13) A final order of the Peace Officer Standards and Training Council regarding a
871     dispute is a final agency action for purposes of Title 63G, Chapter 4, Administrative
872     Procedures Act.
873          (14) Except as provided under Subsection (15), if a participating employer's public
874     safety service employees are not covered by this system or under Chapter 14, Public Safety
875     Contributory Retirement Act, as of January 1, 1998, those public safety service employees who
876     may otherwise qualify for membership in this system shall, at the discretion of the participating
877     employer, remain in their current retirement system.
878          (15) (a) A public safety service employee employed by an airport police department,
879     which elects to cover its public safety service employees under the Public Safety
880     Noncontributory Retirement System under Subsection (14), may elect to remain in the public
881     safety service employee's current retirement system.
882          (b) The public safety service employee's election to remain in the current retirement
883     system under Subsection (15)(a):
884          (i) shall be made at the time the employer elects to move its public safety service
885     employees to a public safety retirement system;
886          (ii) shall be documented by written notice to the participating employer; and
887          (iii) is irrevocable.
888          (16) (a) Subject to Subsection (17), beginning July 1, 2015, a public safety service
889     employee who is a dispatcher employed by:
890          (i) the state shall be eligible for service credit in this system; and
891          (ii) a participating employer other than the state shall be eligible for service credit in
892     this system if the dispatcher's participating employer elects to cover its dispatchers under this
893     system.
894          (b) A participating employer's election to cover its dispatchers under this system under
895     Subsection (16)(a)(ii) is irrevocable and shall be documented by a resolution adopted by the

896     governing body of the participating employer in accordance with rules made by the office.
897          (c) A dispatcher's service before July 1, 2015, or before a date specified by resolution
898     of a participating employer under Subsection (16)(b), is not eligible for service credit in this
899     system.
900          (17) Notwithstanding any other provision of this section, a person initially entering
901     employment with a participating employer on or after July 1, 2011, who does not have service
902     credit accrued before July 1, 2011, in a Tier I system or plan administered by the board, may
903     not participate in this system.
904          Section 9. Section 49-16-102 is amended to read:
905          49-16-102. Definitions.
906          As used in this chapter:
907          (1) (a) "Compensation" means the total amount of payments that are includable as
908     gross income which are received by a firefighter service employee as base income for the
909     regularly scheduled work period. The participating employer shall establish the regularly
910     scheduled work period. Base income shall be determined prior to the deduction of member
911     contributions or any amounts the firefighter service employee authorizes to be deducted for
912     salary deferral or other benefits authorized by federal law.
913          (b) "Compensation" includes performance-based bonuses and cost-of-living
914     adjustments.
915          (c) "Compensation" does not include:
916          (i) overtime;
917          (ii) sick pay incentives;
918          (iii) retirement pay incentives;
919          (iv) remuneration paid in kind such as a residence, use of equipment, uniforms, travel,
920     or similar payments;
921          (v) a lump-sum payment or special payments covering accumulated leave; and
922          (vi) all contributions made by a participating employer under this system or under any
923     other employee benefit system or plan maintained by a participating employer for the benefit of
924     a member or participant.
925          (d) "Compensation" for purposes of this chapter may not exceed the amount allowed
926     under Section 401(a)(17), Internal Revenue Code.

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

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

989          (i) has been trained in firefighter techniques and skills;
990          (ii) continues to receive regular firefighter training; and
991          (iii) is on the rolls of a legally organized volunteer fire department which provides
992     ongoing training and serves a political subdivision of the state.
993          (b) An individual that volunteers assistance but does not meet the requirements of
994     Subsection (11)(a) is not a volunteer firefighter for purposes of this chapter.
995          (12) "Years of service credit" means the number of periods, each to consist of 12 full
996     months as determined by the board, whether consecutive or not, during which a firefighter
997     service employee was employed by a participating employer or received full-time pay while on
998     sick leave, including any time the firefighter service employee was absent in the service of the
999     United States on military duty.
1000          Section 10. Section 49-17-102 is amended to read:
1001          49-17-102. Definitions.
1002          As used in this chapter:
1003          (1) (a) "Compensation" means the total amount of payments which are currently
1004     includable in gross income made by a participating employer to a member of this system for
1005     services rendered to the participating employer.
1006          (b) "Compensation" includes:
1007          (i) performance-based bonuses;
1008          (ii) cost-of-living adjustments;
1009          (iii) payments subject to Social Security deductions;
1010          (iv) any payments in excess of the maximum amount subject to deduction under Social
1011     Security law;
1012          (v) amounts which the member authorizes to be deducted or reduced for salary deferral
1013     or other benefits authorized by federal law; and
1014          (vi) member contributions.
1015          (c) "Compensation" for purposes of this chapter may not exceed the amount allowed
1016     under Internal Revenue Code Section 401(a)(17).
1017          (d) "Compensation," does not include:
1018          (i) the monetary value of remuneration paid in kind, such as a residence or use of
1019     equipment;

1020          (ii) all contributions made by a participating employer under any system or plan for the
1021     benefit of a member or participant;
1022          (iii) salary paid to a temporary or exempt employee;
1023          (iv) payments upon termination or any other special payments including early
1024     retirement inducements; or
1025          (v) uniform, travel, or similar payments.
1026          (2) "Final average salary" means the amount [computed] calculated by averaging the
1027     highest two years of annual compensation preceding retirement, subject to Subsections (2)(a)
1028     [and], (b), and (c).
1029          (a) Except as provided in Subsection (2)(b), the percentage increase in annual
1030     compensation in any one of the years used may not exceed the previous year's compensation by
1031     more than 10% plus a cost-of-living adjustment equal to the decrease in the purchasing power
1032     of the dollar during the previous year, as measured by a United States Bureau of Labor
1033     Statistics Consumer Price Index average as determined by the board.
1034          (b) In cases where the participating employer provides acceptable documentation to the
1035     board, the limitation in Subsection (2)(a) may be exceeded if:
1036          (i) the member has transferred from another participating employer; or
1037          (ii) the member has been promoted to a new position.
1038          (c) The annual compensation used to calculate final average salary shall be based on
1039     the state's fiscal year.
1040          (3) "Judge" means a judge or justice of the courts of record as enumerated in Section
1041     78A-1-101.
1042          (4) "Participating employer" means the state.
1043          (5) "System" means the Judges' Contributory Retirement System created under this
1044     chapter.
1045          (6) "Years of service credit" means the number of periods, each to consist of 12 full
1046     months as determined by the board, whether consecutive or not, during which a judge was
1047     employed by a participating employer.
1048          Section 11. Section 49-18-102 is amended to read:
1049          49-18-102. Definitions.
1050          As used in this chapter:

1051          (1) (a) "Compensation" means the total amount of payments which are currently
1052     includable in gross income made by a participating employer to a member of this system for
1053     services rendered to the participating employer.
1054          (b) "Compensation" includes:
1055          (i) performance-based bonuses;
1056          (ii) cost-of-living adjustments;
1057          (iii) payments subject to Social Security deductions;
1058          (iv) any payments in excess of the maximum amount subject to deduction under Social
1059     Security law; and
1060          (v) amounts which the member authorizes to be deducted or reduced for salary deferral
1061     or other benefits authorized by federal law.
1062          (c) "Compensation" for purposes of this chapter may not exceed the amount allowed
1063     under Internal Revenue Code Section 401(a)(17).
1064          (d) "Compensation" does not include:
1065          (i) the monetary value of remuneration paid in kind, such as a residence or use of
1066     equipment;
1067          (ii) all contributions made by a participating employer under a system or plan for the
1068     benefit of a member or participant;
1069          (iii) salary paid to a temporary or exempt employee;
1070          (iv) payments upon termination or any other special payments including early
1071     retirement inducements; or
1072          (v) uniform, travel, or similar payments.
1073          (2) "Final average salary" means the amount [computed] calculated by averaging the
1074     highest two years of annual compensation preceding retirement, subject to Subsections (2)(a)
1075     [and], (b), and (c).
1076          (a) Except as provided in Subsection (2)(b), the percentage increase in annual
1077     compensation in any one of the years used may not exceed the previous year's compensation by
1078     more than 10% plus a cost-of-living adjustment equal to the decrease in the purchasing power
1079     of the dollar during the previous year, as measured by a United States Bureau of Labor
1080     Statistics Consumer Price Index average as determined by the board.
1081          (b) In cases where the participating employer provides acceptable documentation to the

1082     board, the limitation in Subsection (2)(a) may be exceeded if:
1083          (i) the member has transferred from another agency; or
1084          (ii) the member has been promoted to a new position.
1085          (c) The annual compensation used to calculate final average salary shall be based on
1086     the state's fiscal year.
1087          (3) "Judge" means a judge or justice of the courts of record as enumerated in Section
1088     78A-1-101.
1089          (4) "Participating employer" means the state.
1090          (5) "System" means the Judges' Noncontributory Retirement System created under this
1091     chapter.
1092          (6) "Years of service credit" means the number of periods, each to consist of 12 full
1093     months or as determined by the board, whether consecutive or not, during which a judge was
1094     employed by a participating employer.
1095          Section 12. Section 49-21-403 is amended to read:
1096          49-21-403. Termination of disability benefits -- Calculation of retirement benefit.
1097          (1) An eligible employee covered by this chapter and eligible for service credit under a
1098     system or plan, including an eligible employee who relinquishes rights to retirement benefits
1099     under Section 49-11-619, who applies and is qualified for a monthly disability benefit shall
1100     receive a monthly disability benefit until the earlier of:
1101          (a) the date of the eligible employee's death;
1102          (b) the date the eligible employee no longer has a disability;
1103          (c) the date the eligible employee has accumulated or would have accumulated, if the
1104     employee had not chosen the Title 49, Chapter 22, Part 4, Tier II Defined Contribution Plan,
1105     Title 49, Chapter 23, Part 4, Tier II Defined Contribution Plan, been a volunteer firefighter, or
1106     exempted from a retirement system or plan:
1107          (i) 20 years of service credit if the eligible employee is covered by Chapter 14, Public
1108     Safety Contributory Retirement Act, or Chapter 15, Public Safety Noncontributory Retirement
1109     Act;
1110          (ii) 25 years of service credit if the eligible employee is covered by Chapter 17, Judges'
1111     Contributory Retirement Act, or Chapter 18, Judges' Noncontributory Retirement Act;
1112          (iii) 30 years of service credit if the eligible employee is covered by Chapter 12, Public

1113     Employees' Contributory Retirement Act, or Chapter 13, Public Employees' Noncontributory
1114     Retirement Act;
1115          (iv) 35 years of service credit if the eligible employee is covered by the defined benefit
1116     portion under Chapter 22, Part 3, Tier II Hybrid Retirement System, or is covered by the
1117     defined contribution plan under Chapter 22, Part 4, Tier II Defined Contribution Plan; or
1118          (v) 25 years of service credit if the eligible employee is covered by the defined benefit
1119     portion under Chapter 23, Part 3, Tier II Hybrid Retirement System, or is covered by the
1120     defined contribution plan under Chapter 23, Part 4, Tier II Defined Contribution Plan; [or]
1121          (d) the date the eligible employee has received a monthly disability benefit for the
1122     following applicable time periods:
1123          (i) if the eligible employee is under age 60, the monthly disability benefit is payable
1124     until age 65;
1125          (ii) if the eligible employee is 60 or 61 years of age on the date of disability, the
1126     monthly disability benefit is payable for five years;
1127          (iii) if the eligible employee is 62 or 63 years of age on the date of disability, the
1128     monthly disability benefit is payable for four years;
1129          (iv) if the eligible employee is 64 or 65 years of age on the date of disability, the
1130     monthly disability benefit is payable for three years;
1131          (v) if the eligible employee is 66, 67, or 68 years of age on the date of disability, the
1132     monthly disability benefit is payable for two years; and
1133          (vi) if the eligible employee is 69 years of age or older on the date of disability, the
1134     monthly disability benefit is payable for one year[.]; or
1135          (e) the eligible employee's retirement date, set when the eligible employee retires from
1136     a system or from the Utah Governors' and Legislators' Retirement Plan.
1137          (2) (a) Upon termination of a monthly disability benefit, an eligible employee eligible
1138     for service credit under a system may retire under the requirements of the system which
1139     covered the eligible employee on the date of disability.
1140          (b) The final average salary used in the calculation of the allowance shall be based on
1141     the annual rate of pay on the date of disability, improved by the annual cost-of-living increase
1142     factor applied to retirees of the system which covered the eligible employee on the date of
1143     disability.

1144          (3) An eligible employee who is eligible for service credit in a system, but has
1145     relinquished rights to an allowance under Section 49-11-619, may receive the benefits the
1146     eligible employee would have received by being eligible for service credit in the system
1147     covering the eligible employee on the date of disability, except for the accrual of service credit,
1148     in accordance with this title.
1149          (4) An eligible employee receiving a monthly disability benefit who has service credit
1150     from two or more systems may not combine service credits under Section 49-11-405 in
1151     qualifying for retirement, unless the eligible employee would receive a greater allowance by
1152     combining the service credits.
1153          (5) An eligible employee covered by this chapter who is a participant in the Tier II
1154     Defined Contribution Plan, created in Chapter 22, Part 4, Tier II Defined Contribution Plan, or
1155     Chapter 23, Part 4, Tier II Defined Contribution Plan, who applies and is qualified for a
1156     monthly disability benefit, shall receive a monthly disability benefit until the earlier of:
1157          (a) the date of the eligible employee's death;
1158          (b) the date the eligible employee no longer has a disability;
1159          (c) (i) 35 years from the date the eligible employee began participation in the Tier II
1160     Defined Contribution Plan, created in Chapter 22, Part 4, Tier II Defined Contribution Plan; or
1161          (ii) 25 years from the date the eligible employee began participation in the Tier II
1162     Defined Contribution Plan created in Chapter 23, Part 4, Tier II Defined Contribution Plan; or
1163          (d) the date the eligible employee has received a monthly disability benefit for the
1164     following applicable time periods:
1165          (i) if the eligible employee is under age 60, the monthly disability benefit is payable
1166     until age 65;
1167          (ii) if the eligible employee is 60 or 61 years of age on the date of disability, the
1168     monthly disability benefit is payable for five years;
1169          (iii) if the eligible employee is 62 or 63 years of age on the date of disability, the
1170     monthly disability benefit is payable for four years;
1171          (iv) if the eligible employee is 64 or 65 years of age on the date of disability, the
1172     monthly disability benefit is payable for three years;
1173          (v) if the eligible employee is 66, 67, or 68 years of age on the date of disability, the
1174     monthly disability benefit is payable for two years; and

1175          (vi) if the eligible employee is 69 years of age or older on the date of disability, the
1176     monthly disability benefit is payable for one year.
1177          Section 13. Section 49-22-102 is amended to read:
1178          49-22-102. Definitions.
1179          As used in this chapter:
1180          (1) "Benefits normally provided" has the same meaning as defined in Section
1181     49-12-102.
1182          (2) (a) "Compensation" means, except as provided in Subsection (2)(c), the total
1183     amount of payments made by a participating employer to a member of this system for services
1184     rendered to the participating employer, including:
1185          (i) bonuses;
1186          (ii) cost-of-living adjustments;
1187          (iii) other payments currently includable in gross income and that are subject to Social
1188     Security deductions, including any payments in excess of the maximum amount subject to
1189     deduction under Social Security law;
1190          (iv) amounts that the member authorizes to be deducted or reduced for salary deferral
1191     or other benefits authorized by federal law; and
1192          (v) member contributions.
1193          (b) "Compensation" for purposes of this chapter may not exceed the amount allowed
1194     under Internal Revenue Code, Section 401(a)(17).
1195          (c) "Compensation" does not include:
1196          (i) the monetary value of remuneration paid in kind, including a residence or use of
1197     equipment;
1198          (ii) the cost of any employment benefits paid for by the participating employer;
1199          (iii) compensation paid to a temporary employee or an employee otherwise ineligible
1200     for service credit;
1201          (iv) any payments upon termination, including accumulated vacation, sick leave
1202     payments, severance payments, compensatory time payments, or any other special payments; or
1203          (v) any allowances or payments to a member for costs or expenses paid by the
1204     participating employer, including automobile costs, uniform costs, travel costs, tuition costs,
1205     housing costs, insurance costs, equipment costs, and dependent care costs.

1206          (d) The executive director may determine if a payment not listed under this Subsection
1207     (2) falls within the definition of compensation.
1208          (3) "Corresponding Tier I system" means the system or plan that would have covered
1209     the member if the member had initially entered employment before July 1, 2011.
1210          (4) "Final average salary" means the amount [computed] calculated by averaging the
1211     highest five years of annual compensation preceding retirement subject to Subsections (4)(a),
1212     (b), (c), [and] (d), and (e).
1213          (a) Except as provided in Subsection (4)(b), the percentage increase in annual
1214     compensation in any one of the years used may not exceed the previous year's compensation by
1215     more than 10% plus a cost-of-living adjustment equal to the decrease in the purchasing power
1216     of the dollar during the previous year, as measured by a United States Bureau of Labor
1217     Statistics Consumer Price Index average as determined by the board.
1218          (b) In cases where the participating employer provides acceptable documentation to the
1219     office, the limitation in Subsection (4)(a) may be exceeded if:
1220          (i) the member has transferred from another agency; or
1221          (ii) the member has been promoted to a new position.
1222          (c) If the member retires more than six months from the date of termination of
1223     employment, the member is considered to have been in service at the member's last rate of pay
1224     from the date of the termination of employment to the effective date of retirement for purposes
1225     of computing the member's final average salary only.
1226          (d) If the member has less than five years of service credit in this system, final average
1227     salary means the average annual compensation paid to the member during the full period of
1228     service credit.
1229          (e) The annual compensation used to calculate final average salary shall be based on:
1230          (i) a calendar year for a member employed by a participating employer that is not an
1231     educational institution; or
1232          (ii) a contract year for a member employed by an educational institution.
1233          (5) "Participating employer" means an employer which meets the participation
1234     requirements of:
1235          (a) Sections 49-12-201 and 49-12-202;
1236          (b) Sections 49-13-201 and 49-13-202;

1237          (c) Section 49-19-201; or
1238          (d) Section 49-22-201 or 49-22-202.
1239          (6) (a) "Regular full-time employee" means an employee whose term of employment
1240     for a participating employer contemplates continued employment during a fiscal or calendar
1241     year and whose employment normally requires an average of 20 hours or more per week,
1242     except as modified by the board, and who receives benefits normally provided by the
1243     participating employer.
1244          (b) "Regular full-time employee" includes:
1245          (i) a teacher whose term of employment for a participating employer contemplates
1246     continued employment during a school year and who teaches half time or more;
1247          (ii) a classified school employee:
1248          (A) who is hired before July 1, 2013; and
1249          (B) whose employment normally requires an average of 20 hours per week or more for
1250     a participating employer, regardless of benefits provided;
1251          (iii) an appointive officer whose appointed position is full time as certified by the
1252     participating employer;
1253          (iv) the governor, the lieutenant governor, the state auditor, the state treasurer, the
1254     attorney general, and a state legislator;
1255          (v) an elected official not included under Subsection (6)(b)(iv) whose elected position
1256     is full time as certified by the participating employer;
1257          (vi) a faculty member or employee of an institution of higher education who is
1258     considered full time by that institution of higher education; and
1259          (vii) an individual who otherwise meets the definition of this Subsection (6) who
1260     performs services for a participating employer through a professional employer organization or
1261     similar arrangement.
1262          (c) "Regular full-time employee" does not include:
1263          (i) a firefighter service employee as defined in Section 49-23-102;
1264          (ii) a public safety service employee as defined in Section 49-23-102;
1265          (iii) a classified school employee:
1266          (A) who is hired on or after July 1, 2013; and
1267          (B) who does not receive benefits normally provided by the participating employer

1268     even if the employment normally requires an average of 20 hours per week or more for a
1269     participating employer; or
1270          (iv) a classified school employee:
1271          (A) who is hired before July 1, 2013;
1272          (B) who did not qualify as a regular full-time employee before July 1, 2013;
1273          (C) who does not receive benefits normally provided by the participating employer;
1274     and
1275          (D) whose employment hours are increased on or after July 1, 2013, to require an
1276     average of 20 hours per week or more for a participating employer.
1277          (7) "System" means the New Public Employees' Tier II Contributory Retirement
1278     System created under this chapter.
1279          (8) "Years of service credit" means:
1280          (a) a period consisting of 12 full months as determined by the board;
1281          (b) a period determined by the board, whether consecutive or not, during which a
1282     regular full-time employee performed services for a participating employer, including any time
1283     the regular full-time employee was absent on a paid leave of absence granted by a participating
1284     employer or was absent in the service of the United States government on military duty as
1285     provided by this chapter; or
1286          (c) the regular school year consisting of not less than eight months of full-time service
1287     for a regular full-time employee of an educational institution.
1288          Section 14. Section 49-22-201 is amended to read:
1289          49-22-201. System membership -- Eligibility.
1290          (1) Beginning July 1, 2011, a participating employer shall participate in this system.
1291          (2) (a) A person initially entering regular full-time employment with a participating
1292     employer on or after July 1, 2011, who does not have service credit accrued before July 1,
1293     2011, in a Tier I system or plan administered by the board, is eligible:
1294          (i) as a member for service credit and defined contributions under the Tier II hybrid
1295     retirement system established by Part 3, Tier II Hybrid Retirement System; or
1296          (ii) as a participant for defined contributions under the Tier II defined contribution plan
1297     established by Part 4, Tier II Defined Contribution Plan.
1298          (b) A person initially entering regular full-time employment with a participating

1299     employer on or after July 1, 2011, shall:
1300          (i) make an election to participate in the system created under this chapter:
1301          (A) as a member for service credit and defined contributions under the Tier II hybrid
1302     retirement system established by Part 3, Tier II Hybrid Retirement System; or
1303          (B) as a participant for defined contributions under the Tier II defined contribution plan
1304     established by Part 4, Tier II Defined Contribution Plan; and
1305          (ii) electronically submit to the office notification of the member's election under
1306     Subsection (2)(b)(i) in a manner approved by the office.
1307          (c) An election made by a person initially entering regular full-time employment with a
1308     participating employer under this Subsection (2) is irrevocable beginning one year from the
1309     date of eligibility for accrual of benefits.
1310          (d) If no election is made under Subsection (2)(b)(i), the person shall become a
1311     member eligible for service credit and defined contributions under the Tier II hybrid retirement
1312     system established by Part 3, Tier II Hybrid Retirement System.
1313          (3) Notwithstanding the provisions of this section and except as provided in Subsection
1314     (4), an elected official initially entering office on or after July 1, 2011:
1315          (a) is only eligible to participate in the Tier II defined contribution plan established
1316     under Part 4, Tier II Defined Contribution Plan; [and]
1317          (b) is not eligible to participate in the Tier II hybrid retirement system established
1318     under Part 3, Tier II Hybrid Retirement System[.]; and
1319          (c) is vested immediately in the elected official's benefit and the benefit is
1320     nonforfeitable, including the total amount contributed by the participating employer and the
1321     total amount contributed by the member in the Tier II defined contribution plan.
1322          (4) Notwithstanding the provisions of Subsection (3), a legislator or full-time elected
1323     official initially entering office on or after July 1, 2011, who has service credit accrued before
1324     July 1, 2011:
1325          (a) in a Tier I retirement system or plan administered by the board shall continue in the
1326     Tier I system or plan for which the legislator or full-time elected official is eligible; or
1327          (b) in a Tier II hybrid retirement system shall continue in the Tier II system for which
1328     the legislator or full-time elected official is eligible.
1329          Section 15. Section 49-22-205 is amended to read:

1330          49-22-205. Exemptions from participation in system.
1331          (1) Upon filing a written request for exemption with the office, the following
1332     employees are exempt from participation in the system as provided in this section:
1333          (a) [an elected official; (b)] an executive department head of the state;
1334          [(c)] (b) a member of the State Tax Commission;
1335          [(d)] (c) a member of the Public Service Commission;
1336          [(e)] (d) a member of a full-time or part-time board or commission;
1337          [(f)] (e) an employee of the Governor's Office of Management and Budget;
1338          [(g)] (f) an employee of the Governor's Office of Economic Development;
1339          [(h)] (g) an employee of the Commission on Criminal and Juvenile Justice;
1340          [(i)] (h) an employee of the Governor's Office;
1341          [(j)] (i) an employee of the State Auditor's Office;
1342          [(k)] (j) an employee of the State Treasurer's Office;
1343          [(l)] (k) any other member who is permitted to make an election under Section
1344     49-11-406;
1345          [(m)] (l) a person appointed as a city manager or appointed as a city administrator or
1346     another at-will employee of a municipality, county, or other political subdivision;
1347          [(n)] (m) an employee of an interlocal cooperative agency created under Title 11,
1348     Chapter 13, Interlocal Cooperation Act, who is engaged in a specialized trade customarily
1349     provided through membership in a labor organization that provides retirement benefits to its
1350     members; and
1351          [(o)] (n) an employee of the Utah Science Technology and Research Initiative created
1352     under Title 63M, Chapter 2, Utah Science Technology and Research Governing Authority Act.
1353          (2) (a) A participating employer shall prepare a list designating those positions eligible
1354     for exemption under Subsection (1).
1355          (b) An employee may not be exempted unless the employee is employed in a position
1356     designated by the participating employer under Subsection (1).
1357          (3) (a) In accordance with this section, Section 49-12-203, and Section 49-13-203, a
1358     municipality, county, or political subdivision may not exempt a total of more than 50 positions
1359     or a number equal to 10% of the employees of the municipality, county, or political
1360     subdivision, whichever is less.

1361          (b) A municipality, county, or political subdivision may exempt at least one regular
1362     full-time employee.
1363          (4) Each participating employer shall:
1364          (a) file each employee exemption annually with the office; and
1365          (b) update an employee exemption in the event of any change.
1366          (5) Beginning on the effective date of the exemption for an employee who elects to be
1367     exempt in accordance with Subsection (1):
1368          (a) for a member of the Tier II defined contribution plan:
1369          (i) the participating employer shall contribute the nonelective contribution and the
1370     amortization rate described in Section 49-22-401, except that the nonelective contribution is
1371     exempt from the vesting requirements of Subsection 49-22-401(3)(a); and
1372          (ii) the member may make voluntary deferrals as provided in Section 49-22-401; and
1373          (b) for a member of the Tier II hybrid retirement system:
1374          (i) the participating employer shall contribute the nonelective contribution and the
1375     amortization rate described in Section 49-22-401, except that the contribution is exempt from
1376     the vesting requirements of Subsection 49-22-401(3)(a);
1377          (ii) the member may make voluntary deferrals as provided in Section 49-22-401; and
1378          (iii) the member is not eligible for additional service credit in the system.
1379          (6) If an employee who is a member of the Tier II hybrid retirement system
1380     subsequently revokes the election of exemption made under Subsection (1), the provisions
1381     described in Subsection (5)(b) shall no longer be applicable and the coverage for the employee
1382     shall be effective prospectively as provided in Part 3, Tier II Hybrid Retirement System.
1383          (7) (a) All employer contributions made on behalf of an employee shall be invested in
1384     accordance with Subsection 49-22-303(3)(a) or 49-22-401(4)(a) until the one-year election
1385     period under Subsection 49-22-201(2)(c) is expired if the employee:
1386          (i) elects to be exempt in accordance with Subsection (1); and
1387          (ii) continues employment with the participating employer through the one-year
1388     election period under Subsection 49-22-201(2)(c).
1389          (b) An employee is entitled to receive a distribution of the employer contributions
1390     made on behalf of the employee and all associated investment gains and losses if the employee:
1391          (i) elects to be exempt in accordance with Subsection (1); and

1392          (ii) terminates employment prior to the one-year election period under Subsection
1393     49-22-201(2)(c).
1394          (8) (a) The office shall make rules to implement this section.
1395          (b) The rules made under this Subsection (8) shall include provisions to allow the
1396     exemption provided under Subsection (1) to apply to all contributions made beginning on or
1397     after July 1, 2011, on behalf of an exempted employee who began the employment before May
1398     8, 2012.
1399          Section 16. Section 49-22-303 is amended to read:
1400          49-22-303. Defined contribution benefit established -- Contribution by employer
1401     and employee -- Vesting of contributions -- Plans to be separate -- Tax-qualified status of
1402     plans.
1403          (1) (a) A participating employer shall make a nonelective contribution on behalf of
1404     each regular full-time employee who is a member of this system in an amount equal to 10%
1405     minus the contribution rate paid by the employer [pursuant to] under Subsection
1406     49-22-301(2)(a) of the member's compensation to a defined contribution plan qualified under
1407     Section 401(k) of the Internal Revenue Code which:
1408          (i) is sponsored by the board; and
1409          (ii) has been grandfathered under Section 1116 of the Federal Tax Reform Act of 1986.
1410          (b) The member may make voluntary deferrals to:
1411          (i) the qualified 401(k) plan which receives the employer contribution described in this
1412     Subsection (1); or
1413          (ii) at the member's option, another defined contribution plan established by the
1414     participating employer.
1415          (2) (a) The total amount contributed by the participating employer under Subsection
1416     (1)(a), including associated investment gains and losses, vests to the member upon accruing
1417     four years of service credit under this title.
1418          (b) The total amount contributed by the member under Subsection (1)(b) vests to the
1419     member's benefit immediately and is nonforfeitable.
1420          (c) (i) Years of service credit under Subsection (2)(a) includes any fraction of a year to
1421     which the member may be entitled.
1422          (ii) At the time of vesting, if a member's years of service credit is within one-tenth of

1423     one year of the total years required for vesting, the member shall be considered to have the total
1424     years of service credit required for vesting.
1425          (3) (a) Contributions made by a participating employer under Subsection (1)(a) shall be
1426     invested in a default option selected by the board until the member is vested in accordance with
1427     Subsection (2)(a).
1428          (b) A member may direct the investment of contributions made by a participating
1429     employer under Subsection (1)(a) only after the contributions have vested in accordance with
1430     Subsection (2)(a).
1431          (c) A member may direct the investment of contributions made by the member under
1432     Subsection (1)(b).
1433          (4) No loans shall be available from contributions made by a participating employer
1434     under Subsection (1)(a).
1435          (5) No hardship distributions shall be available from contributions made by a
1436     participating employer under Subsection (1)(a).
1437          (6) (a) Except as provided in Subsection (6)(b) and Section 49-22-205, if a member
1438     terminates employment with a participating employer prior to the vesting period described in
1439     Subsection (2)(a), all contributions, including associated investment gains and losses, made by
1440     a participating employer on behalf of the member under Subsection (1)(a) are subject to
1441     forfeiture.
1442          (b) If a member who terminates employment with a participating employer prior to the
1443     vesting period described in Subsection (2)(a) subsequently enters employment with the same or
1444     another participating employer within 10 years of the termination date of the previous
1445     employment:
1446          (i) all contributions made by the previous participating employer on behalf of the
1447     member, including associated investment gains and losses, shall be reinstated upon
1448     employment as a regular full-time employee; and
1449          (ii) the length of time that the member worked with the previous employer shall be
1450     included in determining whether the member has completed the vesting period under
1451     Subsection (2)(a).
1452          (c) The office shall establish a forfeiture account and shall specify the uses of the
1453     forfeiture account, which may include an offset against administrative costs or employer

1454     contributions made under this section.
1455          (7) The office may request from any other qualified 401(k) plan under Subsection (1)
1456     or (2) any relevant information pertaining to the maintenance of its tax qualification under the
1457     Internal Revenue Code.
1458          (8) The office may take any action which in its judgment is necessary to maintain the
1459     tax-qualified status of its 401(k) defined contribution plan under federal law.
1460          Section 17. Section 49-22-401 is amended to read:
1461          49-22-401. Contributions -- Rates.
1462          (1) Up to the amount allowed by federal law, the participating employer shall make a
1463     nonelective contribution of 10% of the participant's compensation to a defined contribution
1464     plan.
1465          (2) (a) The participating employer shall contribute the 10% nonelective contribution
1466     described in Subsection (1) to a defined contribution plan qualified under Section 401(k) of the
1467     Internal Revenue Code which:
1468          (i) is sponsored by the board; and
1469          (ii) has been grandfathered under Section 1116 of the Federal Tax Reform Act of 1986.
1470          (b) The member may make voluntary deferrals to:
1471          (i) the qualified 401(k) plan which receives the employer contribution described in this
1472     Subsection (2); or
1473          (ii) at the member's option, another defined contribution plan established by the
1474     participating employer.
1475          (c) In addition to the percent specified under Subsection (2)(a), the participating
1476     employer shall pay the corresponding Tier I system amortization rate of the employee's
1477     compensation to the office to be applied to the employer's corresponding Tier I system liability.
1478          (3) (a) Except as provided under Subsection (3)(c), the total amount contributed by the
1479     participating employer under Subsection (2)(a) vests to the member upon accruing four years of
1480     employment as a regular full-time employee under this title.
1481          (b) The total amount contributed by the member under Subsection (2)(b) vests to the
1482     member's benefit immediately and is nonforfeitable.
1483          (c) Upon filing a written request for exemption with the office, an eligible employee is
1484     exempt from the vesting requirements of Subsection (3)(a) in accordance with Section

1485     49-22-205.
1486          (d) (i) Years of employment under Subsection (3)(a) includes any fraction of a year to
1487     which the member may be entitled.
1488          (ii) At the time of vesting, if a member's years of service credit is within one-tenth of
1489     one year of the total years required for vesting, the member shall be considered to have the total
1490     years of employment required for vesting.
1491          (4) (a) Contributions made by a participating employer under Subsection (2)(a) shall be
1492     invested in a default option selected by the board until the member is vested in accordance with
1493     Subsection (3)(a).
1494          (b) A member may direct the investment of contributions including associated
1495     investment gains and losses made by a participating employer under Subsection (2)(a) only
1496     after the contributions have vested in accordance with Subsection (3)(a).
1497          (c) A member may direct the investment of contributions made by the member under
1498     Subsection (3)(b).
1499          (5) No loans shall be available from contributions made by a participating employer
1500     under Subsection (2)(a).
1501          (6) No hardship distributions shall be available from contributions made by a
1502     participating employer under Subsection (2)(a).
1503          (7) (a) Except as provided in Subsection (7)(b), if a member terminates employment
1504     with a participating employer prior to the vesting period described in Subsection (3)(a), all
1505     contributions made by a participating employer on behalf of the member including associated
1506     investment gains and losses under Subsection (2)(a) are subject to forfeiture.
1507          (b) If a member who terminates employment with a participating employer prior to the
1508     vesting period described in Subsection (3)(a) subsequently enters employment with the same or
1509     another participating employer within 10 years of the termination date of the previous
1510     employment:
1511          (i) all contributions made by the previous participating employer on behalf of the
1512     member including associated investment gains and losses shall be reinstated upon the member's
1513     employment as a regular full-time employee; and
1514          (ii) the length of time that the member worked with the previous employer shall be
1515     included in determining whether the member has completed the vesting period under

1516     Subsection (3)(a).
1517          (c) The office shall establish a forfeiture account and shall specify the uses of the
1518     forfeiture account, which may include an offset against administrative costs or employer
1519     contributions made under this section.
1520          (8) The office may request from any other qualified 401(k) plan under Subsection (2)
1521     any relevant information pertaining to the maintenance of its tax qualification under the
1522     Internal Revenue Code.
1523          (9) The office may take any action which in its judgment is necessary to maintain the
1524     tax-qualified status of its 401(k) defined contribution plan under federal law.
1525          Section 18. Section 49-23-102 is amended to read:
1526          49-23-102. Definitions.
1527          As used in this chapter:
1528          (1) (a) "Compensation" means the total amount of payments that are includable in
1529     gross income received by a public safety service employee or a firefighter service employee as
1530     base income for the regularly scheduled work period. The participating employer shall
1531     establish the regularly scheduled work period. Base income shall be determined prior to the
1532     deduction of any amounts the public safety service employee or firefighter service employee
1533     authorizes to be deducted for salary deferral or other benefits authorized by federal law.
1534          (b) "Compensation" includes performance-based bonuses and cost-of-living
1535     adjustments.
1536          (c) "Compensation" does not include:
1537          (i) overtime;
1538          (ii) sick pay incentives;
1539          (iii) retirement pay incentives;
1540          (iv) the monetary value of remuneration paid in kind, as in a residence, use of
1541     equipment or uniform, travel, or similar payments;
1542          (v) a lump-sum payment or special payment covering accumulated leave; and
1543          (vi) all contributions made by a participating employer under this system or under any
1544     other employee benefit system or plan maintained by a participating employer for the benefit of
1545     a member or participant.
1546          (d) "Compensation" for purposes of this chapter may not exceed the amount allowed

1547     under Section 401(a)(17), Internal Revenue Code.
1548          (2) "Corresponding Tier I system" means the system or plan that would have covered
1549     the member if the member had initially entered employment before July 1, 2011.
1550          (3) "Dispatcher" means the same as that term is defined in Section 53-6-102.
1551          (4) "Final average salary" means the amount [computed] calculated by averaging the
1552     highest five years of annual compensation preceding retirement subject to Subsections (4)(a),
1553     (b), (c), [and] (d), and (e).
1554          (a) Except as provided in Subsection (4)(b), the percentage increase in annual
1555     compensation in any one of the years used may not exceed the previous year's compensation by
1556     more than 10% plus a cost-of-living adjustment equal to the decrease in the purchasing power
1557     of the dollar during the previous year, as measured by a United States Bureau of Labor
1558     Statistics Consumer Price Index average as determined by the board.
1559          (b) In cases where the participating employer provides acceptable documentation to the
1560     office, the limitation in Subsection (4)(a) may be exceeded if:
1561          (i) the member has transferred from another agency; or
1562          (ii) the member has been promoted to a new position.
1563          (c) If the member retires more than six months from the date of termination of
1564     employment, the member is considered to have been in service at the member's last rate of pay
1565     from the date of the termination of employment to the effective date of retirement for purposes
1566     of computing the member's final average salary only.
1567          (d) If the member has less than five years of service credit in this system, final average
1568     salary means the average annual compensation paid to the member during the full period of
1569     service credit.
1570          (e) The annual compensation used to calculate final average salary shall be based on:
1571          (i) a calendar year for a member employed by a participating employer that is not an
1572     educational institution; or
1573          (ii) a contract year for a member employed by an educational institution.
1574          (5) (a) "Firefighter service" means employment normally requiring an average of 2,080
1575     hours of regularly scheduled employment per year rendered by a member who is:
1576          (i) a firefighter service employee trained in firefighter techniques and assigned to a
1577     position of hazardous duty with a regularly constituted fire department; or

1578          (ii) the state fire marshal appointed under Section 53-7-103 or a deputy state fire
1579     marshal.
1580          (b) "Firefighter service" does not include secretarial staff or other similar employees.
1581          (6) "Firefighter service employee" means an employee of a participating employer who
1582     provides firefighter service under this chapter. An employee of a regularly constituted fire
1583     department who does not perform firefighter service is not a firefighter service employee.
1584          (7) (a) "Line-of-duty death" means a death resulting from:
1585          (i) external force, violence, or disease occasioned by an act of duty as a public safety
1586     service or firefighter service employee; or
1587          (ii) strenuous activity, including a heart attack or stroke, that occurs during strenuous
1588     training or another strenuous activity required as an act of duty as a public safety service or
1589     firefighter service employee.
1590          (b) "Line-of-duty death" does not include a death that:
1591          (i) occurs during an activity that is required as an act of duty as a public safety service
1592     or firefighter service employee if the activity is not a strenuous activity, including an activity
1593     that is clerical, administrative, or of a nonmanual nature;
1594          (ii) occurs during the commission of a crime committed by the employee;
1595          (iii) the employee's intoxication or use of alcohol or drugs, whether prescribed or
1596     nonprescribed, contributes to the employee's death; or
1597          (iv) occurs in a manner other than as described in Subsection (7)(a).
1598          (8) "Participating employer" means an employer which meets the participation
1599     requirements of:
1600          (a) Sections 49-14-201 and 49-14-202;
1601          (b) Sections 49-15-201 and 49-15-202;
1602          (c) Sections 49-16-201 and 49-16-202; or
1603          (d) Sections 49-23-201 and 49-23-202.
1604          (9) (a) "Public safety service" means employment normally requiring an average of
1605     2,080 hours of regularly scheduled employment per year rendered by a member who is a:
1606          (i) law enforcement officer in accordance with Section 53-13-103;
1607          (ii) correctional officer in accordance with Section 53-13-104;
1608          (iii) special function officer approved in accordance with Sections 49-15-201 and

1609     53-13-105;
1610          (iv) dispatcher who is certified in accordance with Section 53-6-303; and
1611          (v) full-time member of the Board of Pardons and Parole created under Section
1612     77-27-2.
1613          (b) Except as provided under Subsections (9)(a)(iv) and (v), "public safety service"
1614     also requires that in the course of employment the employee's life or personal safety is at risk.
1615          (10) "Public safety service employee" means an employee of a participating employer
1616     who performs public safety service under this chapter.
1617          (11) (a) "Strenuous activity" means engagement involving a difficult, stressful, or
1618     vigorous fire suppression, rescue, hazardous material response, emergency medical service,
1619     physical law enforcement, prison security, disaster relief, or other emergency response activity.
1620          (b) "Strenuous activity" includes participating in a participating employer sanctioned
1621     and funded training exercise that involves difficult, stressful, or vigorous physical activity.
1622          (12) "System" means the New Public Safety and Firefighter Tier II Contributory
1623     Retirement System created under this chapter.
1624          (13) (a) "Volunteer firefighter" means any individual that is not regularly employed as
1625     a firefighter service employee, but who:
1626          (i) has been trained in firefighter techniques and skills;
1627          (ii) continues to receive regular firefighter training; and
1628          (iii) is on the rolls of a legally organized volunteer fire department which provides
1629     ongoing training and serves a political subdivision of the state.
1630          (b) An individual that volunteers assistance but does not meet the requirements of
1631     Subsection (13)(a) is not a volunteer firefighter for purposes of this chapter.
1632          (14) "Years of service credit" means:
1633          (a) a period, consisting of 12 full months as determined by the board; or
1634          (b) a period determined by the board, whether consecutive or not, during which a
1635     regular full-time employee performed services for a participating employer, including any time
1636     the regular full-time employee was absent on a paid leave of absence granted by a participating
1637     employer or was absent in the service of the United States government on military duty as
1638     provided by this chapter.
1639          Section 19. Section 49-23-302 is amended to read:

1640          49-23-302. Defined contribution benefit established -- Contribution by employer
1641     and employee -- Vesting of contributions -- Plans to be separate -- Tax-qualified status of
1642     plans.
1643          (1) (a) A participating employer shall make a nonelective contribution on behalf of
1644     each public safety service employee or firefighter service employee who is a member of this
1645     system in an amount equal to 12% minus the contribution rate paid by the employer [pursuant
1646     to] under Subsection 49-23-301(2)(a) of the member's compensation to a defined contribution
1647     plan qualified under Section 401(k) of the Internal Revenue Code which:
1648          (i) is sponsored by the board; and
1649          (ii) has been grandfathered under Section 1116 of the Federal Tax Reform Act of 1986.
1650          (b) The member may make voluntary deferrals to:
1651          (i) the qualified 401(k) plan which receives the employer contribution described in this
1652     Subsection (1); or
1653          (ii) at the member's option, another defined contribution plan established by the
1654     participating employer.
1655          (2) (a) The total amount contributed by the participating employer under Subsection
1656     (1)(a), including associated investment gains and losses, vests to the member upon accruing
1657     four years of service credit under this title.
1658          (b) The total amount contributed by the member under Subsection (1)(b) vests to the
1659     member's benefit immediately and is nonforfeitable.
1660          (c) (i) Years of service credit under Subsection (2)(a) includes any fraction of a year to
1661     which the member may be entitled.
1662          (ii) At the time of vesting, if a member's years of service credit is within one-tenth of
1663     one year of the total years required for vesting, the member shall be considered to have the total
1664     years of service credit required for vesting.
1665          (3) (a) Contributions made by a participating employer under Subsection (1)(a) shall be
1666     invested in a default option selected by the board until the member is vested in accordance with
1667     Subsection (2)(a).
1668          (b) A member may direct the investment of contributions made by a participating
1669     employer under Subsection (1)(a) only after the contributions have vested in accordance with
1670     Subsection (2)(a).

1671          (c) A member may direct the investment of contributions made by the member under
1672     Subsection (1)(b).
1673          (4) No loans shall be available from contributions made by a participating employer
1674     under Subsection (1)(a).
1675          (5) No hardship distributions shall be available from contributions made by a
1676     participating employer under Subsection (1)(a).
1677          (6) (a) Except as provided in Subsection (6)(b), if a member terminates employment
1678     with a participating employer prior to the vesting period described in Subsection (2)(a), all
1679     contributions, including associated investment gains and losses, made by a participating
1680     employer on behalf of the member under Subsection (1)(a) are subject to forfeiture.
1681          (b) If a member who terminates employment with a participating employer prior to the
1682     vesting period described in Subsection (2)(a) subsequently enters employment with the same or
1683     another participating employer within 10 years of the termination date of the previous
1684     employment:
1685          (i) all contributions made by the previous participating employer on behalf of the
1686     member, including associated investment gains and losses, shall be reinstated upon the
1687     member's employment as a regular full-time employee; and
1688          (ii) the length of time that the member worked with the previous employer shall be
1689     included in determining whether the member has completed the vesting period under
1690     Subsection (2)(a).
1691          (c) The office shall establish a forfeiture account and shall specify the uses of the
1692     forfeiture account, which may include an offset against administrative costs or employer
1693     contributions made under this section.
1694          (7) The office may request from any other qualified 401(k) plan under Subsection (1)
1695     or (2) any relevant information pertaining to the maintenance of its tax qualification under the
1696     Internal Revenue Code.
1697          (8) The office may take any action which in its judgment is necessary to maintain the
1698     tax-qualified status of its 401(k) defined contribution plan under federal law.
1699          Section 20. Section 49-23-401 is amended to read:
1700          49-23-401. Contributions -- Rates.
1701          (1) Up to the amount allowed by federal law, the participating employer shall make a

1702     nonelective contribution of 12% of the participant's compensation to a defined contribution
1703     plan.
1704          (2) (a) The participating employer shall contribute the 12% nonelective contribution
1705     described in Subsection (1) to a defined contribution plan qualified under Section 401(k) of the
1706     Internal Revenue Code which:
1707          (i) is sponsored by the board; and
1708          (ii) has been grandfathered under Section 1116 of the Federal Tax Reform Act of 1986.
1709          (b) The member may make voluntary deferrals to:
1710          (i) the qualified 401(k) plan which receives the employer contribution described in this
1711     Subsection (2); or
1712          (ii) at the member's option, another defined contribution plan established by the
1713     participating employer.
1714          (c) In addition to the percent specified under Subsection (2)(a), the participating
1715     employer shall pay the corresponding Tier I system amortization rate of the employee's
1716     compensation to the office to be applied to the employer's corresponding Tier I system liability.
1717          (3) (a) Except as provided under Subsection (3)(c), the total amount contributed by the
1718     participating employer under Subsection (2)(a) vests to the member upon accruing four years of
1719     service credit under this title.
1720          (b) The total amount contributed by the member under Subsection (2)(b) vests to the
1721     member's benefit immediately and is nonforfeitable.
1722          (c) Upon filing a written request for exemption with the office, an eligible employee is
1723     exempt from the vesting requirements of Subsection (3)(a) in accordance with Section
1724     49-23-203.
1725          (d) (i) Years of service credit under Subsection (3)(a) includes any fraction of a year to
1726     which the member may be entitled.
1727          (ii) At the time of vesting, if a member's years of service credit is within one-tenth of
1728     one year of the total years required for vesting, the member shall be considered to have the total
1729     years of service credit required for vesting.
1730          (4) (a) Contributions made by a participating employer under Subsection (2)(a) shall be
1731     invested in a default option selected by the board until the member is vested in accordance with
1732     Subsection (3)(a).

1733          (b) A member may direct the investment of contributions, including associated
1734     investment gains and losses, made by a participating employer under Subsection (2)(a) only
1735     after the contributions have vested in accordance with Subsection (3)(a).
1736          (c) A member may direct the investment of contributions made by the member under
1737     Subsection (3)(b).
1738          (5) No loans shall be available from contributions made by a participating employer
1739     under Subsection (2)(a).
1740          (6) No hardship distributions shall be available from contributions made by a
1741     participating employer under Subsection (2)(a).
1742          (7) (a) Except as provided in Subsection (7)(b), if a member terminates employment
1743     with a participating employer prior to the vesting period described in Subsection (3)(a), all
1744     contributions made by a participating employer on behalf of the member under Subsection
1745     (2)(a), including associated investment gains and losses are subject to forfeiture.
1746          (b) If a member who terminates employment with a participating employer prior to the
1747     vesting period described in Subsection (3)(a) subsequently enters employment with the same or
1748     another participating employer within 10 years of the termination date of the previous
1749     employment:
1750          (i) all contributions made by the previous participating employer on behalf of the
1751     member, including associated investment gains and losses, shall be reinstated upon the
1752     member's employment as a regular full-time employee; and
1753          (ii) the length of time that the member worked with the previous employer shall be
1754     included in determining whether the member has completed the vesting period under
1755     Subsection (3)(a).
1756          (c) The office shall establish a forfeiture account and shall specify the uses of the
1757     forfeiture account, which may include an offset against administrative costs of employer
1758     contributions made under this section.
1759          (8) The office may request from any other qualified 401(k) plan under Subsection (2)
1760     any relevant information pertaining to the maintenance of its tax qualification under the
1761     Internal Revenue Code.
1762          (9) The office may take any action which in its judgment is necessary to maintain the
1763     tax-qualified status of its 401(k) defined contribution plan under federal law.

1764          Section 21. Section 67-19-14.4 is amended to read:
1765          67-19-14.4. Unused Sick Leave Retirement Program II -- Creation --
1766     Remuneration upon eligibility for allowance -- Medical expense account after retirement.
1767          (1) (a) There is created the "Unused Sick Leave Retirement Program II."
1768          (b) An agency shall offer the Unused Sick Leave Retirement Option Program II to an
1769     employee who is eligible to receive a retirement allowance in accordance with Title 49, Utah
1770     State Retirement and Insurance Benefit Act.
1771          (c) An employee who is participating in the Unused Sick Leave Retirement Program I
1772     under Section 67-19-14.2 may make a one-time and irrevocable election to transfer all unused
1773     sick leave hours which shall include all converted sick leave hours under Section 67-19-14.1
1774     for use under the Unused Sick Leave Retirement Program II under this section.
1775          (2) (a) The Unused Sick Leave Retirement Program II provides that upon becoming
1776     eligible to receive a retirement allowance an employee employed by the state between January
1777     1, 2006, and January 3, 2014, shall receive remuneration for the employee's unused
1778     accumulated sick leave and converted sick leave accrued between January 1, 2006, and January
1779     3, 2014, in accordance with this section as follows:
1780          (i) subject to federal requirements and limitations, a contribution at the employee's rate
1781     of pay at the time of retirement for 25% of the employee's unused accumulated sick leave and
1782     converted sick leave shall be transferred directly to the employee's defined contribution plan
1783     qualified under Section 401(k) of the Internal Revenue Code which is sponsored by the Utah
1784     State Retirement Board; and
1785          (ii) participation in a benefit plan that provides for reimbursement for medical
1786     expenses using money deposited at the employee's rate of pay at the time of retirement from
1787     remaining unused accumulated sick leave and converted sick leave balances.
1788          (b) If the amount calculated under Subsection (2)(a)(i) exceeds the federal contribution
1789     limitations, the amount representing the excess shall be deposited under Subsection (2)(a)(ii).
1790          (c) An employee's rate of pay at the time of retirement for purposes of Subsection
1791     (2)(a)(ii) may not be less than the average rate of pay of state employees who retired in the
1792     same retirement system under Title 49, Utah State Retirement and Insurance Benefit Act,
1793     during the previous calendar year.
1794          (3) The Utah State Retirement Office shall develop and maintain a program to provide

1795     a benefit plan that provides for reimbursement for medical expenses under Subsection (2)(a)(ii)
1796     with[: (a)] money deposited under Subsection (2)(a)(ii)[; and (b) accrued earnings].






Legislative Review Note
Office of Legislative Research and General Counsel