HB 254: "An Act relating to the teachers' retirement system, the judicial retirement system, and the public employees' retirement system and to the tax qualification under the Internal Revenue Code of those systems; amending the definition of 'actuarial adjustment' in the teachers' retirement system and the public employees' retirement system; repealing certain provisions of the teachers' retirement system and the public employees' retirement system; and providing for an effective date."
00 HOUSE BILL NO. 254 01 "An Act relating to the teachers' retirement system, the judicial retirement system, and 02 the public employees' retirement system and to the tax qualification under the Internal 03 Revenue Code of those systems; amending the definition of 'actuarial adjustment' in the 04 teachers' retirement system and the public employees' retirement system; repealing 05 certain provisions of the teachers' retirement system and the public employees' 06 retirement system; and providing for an effective date." 07 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 08 * Section 1. AS 14.25.010 is amended by adding a new subsection to read: 09 (b) The retirement system established by this chapter is intended to qualify 10 under 26 U.S.C. 401(a) and 414(d) (Internal Revenue Code) as a qualified retirement 11 plan established and maintained by the state for its employees, for the employees of 12 school districts and regional educational attendance areas in the state, and for the 13 employees of other employers whose participation is authorized by this chapter and
01 who participate in this system. 02 * Sec. 2. AS 14.25.030 is amended to read: 03 Sec. 14.25.030. Duties of the administrator. The administrator shall 04 (1) establish and maintain an adequate system of accounts for the 05 system; 06 (2) approve or disapprove claims for retirement benefits; 07 (3) serve as secretary of the Alaska Teachers' Retirement Board and 08 keep an official record of all proceedings; 09 (4) publish annually a report showing the financial condition of the 10 system; [AND] 11 (5) publish an information handbook for the system at intervals as 12 the administrator considers appropriate; and 13 (6) do whatever else may be necessary to carry out the purposes of this 14 chapter. 15 * Sec. 3. AS 14.25.050(a) is amended to read: 16 (a) Except as provided in (c) of this section, beginning January 1, 1991, each 17 teacher shall contribute to the system an amount equal to 8.65 percent of the teacher's 18 base salary accrued from July 1 to the following June 30. The employer shall deduct 19 the contribution from the teacher's salary at the end of each payroll period. The 20 contributions shall be deducted from employee compensation before the computation 21 of applicable federal taxes and shall be treated as employer contributions under 26 22 U.S.C. 414(h)(2); this provision is subject to a ruling by the Internal Revenue 23 Service that these contributions will be treated as employer contributions under 24 26 U.S.C. 414(h), and that these picked-up contributions will not be treated as 25 annual additions for purposes of 26 U.S.C. 415(a) and, therefore, will not be 26 subject to the provisions of AS 14.25.110(k). A member may not have the option 27 of receiving the payroll deduction directly instead of having the contribution 28 picked up by the employer. 29 * Sec. 4. AS 14.25.070 is amended to read: 30 Sec. 14.25.070. Contributions by employer. An employer shall contribute to 31 the system an amount equal to the percentage, as certified by the administrator, of the
01 sum total of the base salaries of all teachers that is required in addition to teacher 02 contributions to provide the benefits of this chapter times the sum total of the base 03 salaries paid to teachers, including any adjustments to contributions required by 04 AS 14.25.173(a), by the employer. 05 * Sec. 5. AS 14.25.110 is amended by adding new subsections to read: 06 (k) Notwithstanding any other provisions of this chapter, the projected annual 07 benefit provided by this chapter and the benefit from all other defined benefit plans 08 required to be aggregated with the benefits from this system under the provisions of 26 09 U.S.C. 415 may not increase to an amount in excess of the amount permitted under 26 10 U.S.C. 415 at any time. In the event that any projected annual benefit of a member 11 exceeds the limitation of 26 U.S.C. 415 for a limitation year, the system shall take any 12 necessary remedial action to correct an excess accrued benefit. The provisions of 26 13 U.S.C. 415, and the regulations adopted under that statute, as applied to qualified 14 defined benefit plans of governmental employers are incorporated as part of the terms 15 and conditions of the system. This subsection applies to any member of this system. 16 (l) Notwithstanding (d) of this section, for the system fiscal years beginning 17 on or after January 1, 1996, the base salary of a member who joined the system after 18 the first day of the first system fiscal year beginning after December 31, 1995, that is 19 used to calculate the member's average base salary may not exceed $150,000, as 20 adjusted for the cost of living in accordance with 26 U.S.C. 401(a)(17)(B). 21 (m) Notwithstanding the definition of "base salary" in AS 14.25.220, in (l) of 22 this section, for system fiscal years beginning on or after January 1, 1998, and for 23 purposes of 26 U.S.C. 415(b)(3) and the regulations adopted under that statute, 24 (1) "base salary" 25 (A) includes any amount that is contributed by the employer 26 under a salary reduction agreement and that is not includable in the member's 27 gross income under 26 U.S.C. 125, 132(f)(4), 402(e)(3), 402(h), or 403(b); and 28 (B) is limited to compensation that is actually paid to a member 29 during the determination period; 30 (2) "determination period" means the system fiscal year. 31 * Sec. 6. AS 14.25 is amended by adding a new section to read:
01 Sec. 14.25.163. Rollover distributions and rollover contributions. (a) A 02 distributee may elect, at the time and in the manner prescribed by the administrator, to 03 have all or part of an eligible rollover distribution paid directly to an eligible 04 retirement plan specified by the distributee in the direct rollover. 05 (b) The system does not accept contributions of eligible rollover distributions. 06 (c) In this section, 07 (1) "direct rollover" means the payment of an eligible rollover 08 distribution by the system to an eligible retirement plan specified by a distributee who 09 is eligible to elect a direct rollover; 10 (2) "distributee" means a member or a beneficiary who is the surviving 11 spouse of the member; 12 (3) "eligible retirement plan" means an individual retirement account, 13 described in 26 U.S.C. 408(a); an individual retirement annuity, defined in 26 U.S.C. 14 408(b); an annuity plan, described in 26 U.S.C. 403(a); or a qualified trust, described 15 in 26 U.S.C. 401(a), that accepts the eligible rollover distribution; however, in the case 16 of an eligible rollover distribution to a beneficiary who is the surviving spouse of a 17 member, "eligible retirement plan" means only an individual retirement account or an 18 individual retirement annuity described or defined in 26 U.S.C. 408; 19 (4) "eligible rollover distribution" means a distribution of all or part of 20 a total account to a distributee, except for 21 (A) a distribution that is one of a series of substantially equal 22 installments payable not less frequently than annually over the life expectancy 23 of the distributee or the joint and last survivor life expectancy of the distributee 24 and the distributee's designated beneficiary, as defined in 26 U.S.C. 401(a)(9); 25 (B) a distribution that is one of a series of substantially equal 26 installments payable not less frequently than annually over a specified period 27 of 10 years or more; 28 (C) a distribution that is required under 26 U.S.C. 401(a)(9); 29 (D) the portion of any distribution that is not includable in 30 gross income; and 31 (E) other distributions that are reasonably expected to total less
01 than $200 during a year. 02 * Sec. 7. AS 14.25 is amended by adding a new section to read: 03 Sec. 14.25.165. Distribution requirements. (a) The entire interest of a 04 member must be distributed or must begin to be distributed not later than the member's 05 required beginning date. 06 (b) If a member dies after the distribution of the member's interest has begun 07 but before the distribution has been completed, the remaining portion of the interest 08 shall continue to be distributed at least as rapidly as under the method of distribution 09 being used before the member's death. 10 (c) If a member has made a distribution election and dies before the 11 distribution of the member's interest begins, distribution of the member's entire interest 12 shall be completed by December 31 of the calendar year containing the fifth 13 anniversary of the member's death. However, if any portion of the member's interest 14 is payable to a designated beneficiary, distributions may be made over the life of the 15 designated beneficiary or over a period certain not greater than the life expectancy of 16 the designated beneficiary, commencing on or before December 31 of the calendar 17 year immediately following the calendar year in which the member died, and, if the 18 designated beneficiary is the member's surviving spouse, the date distributions are 19 required to begin may not be earlier than the later of December 31 of the calendar year 20 (1) immediately following the calendar year in which the member died, or (2) in which 21 the member would have attained 70 1/2 years of age, whichever is earlier. If the 22 surviving spouse dies after the member but before payments to the spouse have begun, 23 the provisions of this subsection apply as if the surviving spouse were the member. 24 An amount paid to a child of the member will be treated as if it were paid to the 25 surviving spouse if the amount becomes payable to the surviving spouse when the 26 child reaches the age of majority. 27 (d) If a member has not made a distribution election before the member's 28 death, the member's designated beneficiary must elect the method of distribution not 29 later than December 31 of the calendar year (1) in which distributions would be 30 required to begin under this section, or (2) that contains the fifth anniversary of the 31 date of death of the member, whichever is earlier. If the member does not have a
01 designated beneficiary or if the designated beneficiary does not elect a method of 02 distribution, distribution of the member's entire interest must be completed by 03 December 31 of the calendar year containing the fifth anniversary of the member's 04 death. 05 (e) For purposes of (c) of this section, distribution of a member's interest is 06 considered to begin (1) on the member's required beginning date, or (2) if the 07 designated beneficiary is the member's surviving spouse and the surviving spouse dies 08 after the member but before payments to the spouse have begun, on the date 09 distribution is required to begin to the surviving spouse. If distribution in the form of 10 an annuity irrevocably commences to the member before the required beginning date, 11 the date distribution is considered to begin is the date that the distribution actually 12 commences. 13 (f) Notwithstanding any contrary provisions of this chapter, the requirements 14 of this section apply to all distributions of a member's interest and take precedence 15 over any inconsistent provisions of this chapter. Unless otherwise specified, the 16 provisions of this section apply to calendar years beginning after December 31, 1984. 17 (g) All distributions required under this section are determined and made in 18 accordance with 26 U.S.C. 401(a)(9) and regulations adopted under that statute, 19 including any minimum distribution incidental benefit requirement. 20 (h) In this section, 21 (1) "designated beneficiary" means the individual who is designated as 22 the beneficiary under the system in accordance with 26 U.S.C. 401(a)(9) and 23 regulations adopted under that statute; 24 (2) "required beginning date" means the first day of April of the 25 calendar year following the calendar year in which the member either attains 70 1/2 26 years of age or actually retires, whichever is later. 27 * Sec. 8. AS 14.25.173(a) is amended to read: 28 (a) When [IF] a change or error is made in the records maintained by the 29 system or in the contributions made on behalf of an employee or an error is made 30 in computing a benefit, and, as a result, a teacher or member or beneficiary is entitled 31 to receive [RECEIVES] from the system more or less than the teacher or member or
01 beneficiary would have been entitled to receive had the records or contributions been 02 correct or had the error not been made, (1) the records, contributions, or error shall be 03 corrected, and (2) [,] as far as practicable, future payments or benefit entitlement 04 shall be adjusted so that the actuarial equivalent of the pension or benefit to which the 05 teacher or member or beneficiary was correctly entitled will be paid. An adjustment 06 to contributions shall be picked up by the employer in accordance with 07 AS 14.25.050 or treated as an adjustment to the employer's contributions in 08 accordance with this section, depending upon the nature of the adjustment. If no 09 future benefit payments are due, a person who was paid any amount to which the 10 person was not entitled is liable for repayment of that amount, and a person who was 11 not paid the full amount to which the person was entitled shall be paid that amount. 12 * Sec. 9. AS 14.25 is amended by adding a new section to read: 13 Sec. 14.25.181. Exclusive benefit. (a) The corpus or income of the assets 14 held in trust as required by the system may not be diverted to or used for other than the 15 exclusive benefit of the members or their beneficiaries. 16 (b) If, upon termination of the system, all liabilities are satisfied, any excess 17 assets arising from erroneous actuarial computation shall revert to the employers on a 18 pro rata basis. 19 * Sec. 10. AS 14.25 is amended by adding a new section to read: 20 Sec. 14.25.195. Special rules for treatment of qualified military service. 21 Notwithstanding any contrary provisions of this chapter, with respect to qualified 22 military service, contributions shall be made and benefits and service credit shall be 23 provided in accordance with 26 U.S.C. 414(u). 24 * Sec. 11. AS 14.25.220(2) is amended to read: 25 (2) "actuarial adjustment" means the adjustment necessary to obtain 26 equality in value of the aggregate expected payments under two different forms of 27 pension payments, considering expected mortality and interest earnings on the basis of 28 tables set out in the information handbook published under AS 14.25.030(5) 29 [ADOPTED FROM TIME TO TIME BY THE BOARD]; 30 * Sec. 12. AS 22.25.020 is amended to read: 31 Sec. 22.25.020. Retirement pay. Except as provided in AS 22.25.023(b), a
01 [A] retired justice or judge eligible for retirement pay shall receive from the date of 02 eligibility until death monthly retirement pay [COMPENSATION] equal to five 03 percent per year of service, to a maximum of 75 percent, of the monthly salary 04 authorized for justices and judges, respectively, at the time each retirement payment is 05 made. For a justice or judge who was first employed in this retirement system on or 06 after July 1, 1996, base annual salary does not include remuneration in excess of the 07 limitations set out in 26 U.S.C. 401(a)(17) (Internal Revenue Code). 08 * Sec. 13. AS 22.25 is amended by adding new sections to read: 09 Sec. 22.25.021. Distribution requirements. (a) The entire interest of a 10 member must be distributed or must begin to be distributed not later than the member's 11 required beginning date. 12 (b) If a member dies after the distribution of the member's interest has begun 13 but before the distribution has been completed, the remaining portion of the interest 14 shall continue to be distributed at least as rapidly as under the method of distribution 15 being used before the member's death. 16 (c) If a member has made a distribution election and dies before the 17 distribution of the member's interest begins, distribution of the member's entire interest 18 shall be completed by December 31 of the calendar year containing the fifth 19 anniversary of the member's death. However, if any portion of the member's interest 20 is payable to a designated beneficiary, distributions may be made over the life of the 21 designated beneficiary or over a period certain not greater than the life expectancy of 22 the designated beneficiary, commencing on or before December 31 of the calendar 23 year immediately following the calendar year in which the member died, and, if the 24 designated beneficiary is the member's surviving spouse, the date distributions are 25 required to begin may not be earlier than the later of December 31 of the calendar year 26 (1) immediately following the calendar year in which the member died, or (2) in which 27 the member would have attained 70 1/2 years of age, whichever is earlier. If the 28 surviving spouse dies after the member but before payments to the spouse have begun, 29 the provisions of this subsection apply as if the surviving spouse were the member. 30 An amount paid to a child of the member will be treated as if it were paid to the 31 surviving spouse if the amount becomes payable to the surviving spouse when the
01 child reaches the age of majority. 02 (d) If a member has not made a distribution election before the member's 03 death, the member's designated beneficiary must elect the method of distribution not 04 later than December 31 of the calendar year (1) in which distributions would be 05 required to begin under this section, or (2) that contains the fifth anniversary of the 06 date of death of the member, whichever is earlier. If the member does not have a 07 designated beneficiary or if the designated beneficiary does not elect a method of 08 distribution, distribution of the member's entire interest must be completed by 09 December 31 of the calendar year containing the fifth anniversary of the member's 10 death. 11 (e) For purposes of (c) of this section, distribution of a member's interest is 12 considered to begin (1) on the member's required beginning date, or (2) if the 13 designated beneficiary is the member's surviving spouse and the surviving spouse dies 14 after the member but before payments to the spouse have begun, on the date 15 distribution is required to begin to the surviving spouse. If distribution in the form of 16 an annuity irrevocably commences to the member before the required beginning date, 17 the date distribution is considered to begin is the date that the distribution actually 18 commences. 19 (f) Notwithstanding any contrary provisions of this chapter, the requirements 20 of this section apply to all distributions of a member's interest and take precedence 21 over any inconsistent provisions of this chapter. Unless otherwise specified, the 22 provisions of this section apply to calendar years beginning after December 31, 1984. 23 (g) All distributions required under this section are determined and made in 24 accordance with 26 U.S.C. 401(a)(9) and regulations adopted under that statute, 25 including any minimum distribution incidental benefit requirement. 26 (h) In this section, 27 (1) "designated beneficiary" means the individual who is designated as 28 the beneficiary under the system in accordance with 26 U.S.C. 401(a)(9) and 29 regulations adopted under that statute; 30 (2) "required beginning date" means the first day of April of the 31 calendar year following the calendar year in which the member either attains 70 1/2
01 years of age or actually retires, whichever is later. 02 Sec. 22.25.022. Rollover distributions and rollover contributions. (a) A 03 distributee may elect, at the time and in the manner prescribed by the administrator, to 04 have all or part of an eligible rollover distribution paid directly to an eligible 05 retirement plan specified by the distributee in the direct rollover. 06 (b) The system does not accept contributions of eligible rollover distributions. 07 (c) In this section, 08 (1) "direct rollover" means the payment of an eligible rollover 09 distribution by the system to an eligible retirement plan specified by a distributee who 10 is eligible to elect a direct rollover; 11 (2) "distributee" means a member or a beneficiary who is the surviving 12 spouse of the member; 13 (3) "eligible retirement plan" means an individual retirement account, 14 described in 26 U.S.C. 408(a); an individual retirement annuity, defined in 26 U.S.C. 15 408(b); an annuity plan, described in 26 U.S.C. 403(a); or a qualified trust, described 16 in 26 U.S.C. 401(a), that accepts the eligible rollover distribution; however, in the case 17 of an eligible rollover distribution to a beneficiary who is the surviving spouse of a 18 member, "eligible retirement plan" means only an individual retirement account or an 19 individual retirement annuity described or defined in 26 U.S.C. 408; 20 (4) "eligible rollover distribution" means a distribution of all or part of 21 a total account to a distributee, except for 22 (A) a distribution that is one of a series of substantially equal 23 installments payable not less frequently than annually over the life expectancy 24 of the distributee or the joint and last survivor life expectancy of the distributee 25 and the distributee's designated beneficiary, as defined in 26 U.S.C. 401(a)(9); 26 (B) a distribution that is one of a series of substantially equal 27 installments payable not less frequently than annually over a specified period 28 of 10 years or more; 29 (C) a distribution that is required under 26 U.S.C. 401(a)(9); 30 (D) the portion of any distribution that is not includable in 31 gross income; and
01 (E) other distributions that are reasonably expected to total less 02 than $200 during a year. 03 Sec. 22.25.023. Limitation on benefits; maximum annual compensation. 04 (a) Notwithstanding any other provisions of this chapter, the projected annual benefit 05 provided by this chapter and the benefit from all other defined benefit plans required 06 to be aggregated with the benefits from this system under the provisions of 26 U.S.C. 07 415 may not increase to an amount in excess of the amount permitted under 26 U.S.C. 08 415 at any time. In the event that any accrued benefit of a member exceeds the 09 limitation of 26 U.S.C. 415 for a limitation year, the system shall make any necessary 10 remedial action to correct an excess accrued benefit. The provisions of 26 U.S.C. 415, 11 and the regulations adopted under that statute, as applied to qualified defined benefit 12 plans of governmental employers are incorporated as part of the terms and conditions 13 of the system. This subsection shall apply to any member of this system. 14 (b) In this subsection, for system fiscal years beginning on or after January 1, 15 1998, and for purposes of 26 U.S.C. 415(b)(3) and the regulations adopted under that 16 statute, "salary" includes any amount that is contributed by the employer under a 17 salary reduction agreement and that is not includable in the member's gross income 18 under 26 U.S.C. 125, 132(f)(4), 402(e)(3), 402(h), or 403(b) and is limited to 19 compensation that is actually paid to a member during the determination period, which 20 is the fiscal year of the system. 21 * Sec. 14. AS 22.25.025 is amended to read: 22 Sec. 22.25.025. Administration. The commissioner of administration is 23 responsible for the administration of the judicial retirement system. The system is 24 intended to qualify as a governmental plan established and maintained by the 25 government of this state for the state's employees, as permitted under 26 U.S.C. 26 414(d). The commissioner shall publish an information handbook for the system 27 at intervals as the commissioner considers appropriate. 28 * Sec. 15. AS 22.25.030(a) is amended to read: 29 (a) Upon the death of a justice or judge who has served for at least two years, 30 the surviving spouse is entitled to receive survivors' benefits [MONTHLY 31 COMPENSATION] equal to one-half of the monthly retirement pay the justice or
01 judge would thereafter have been entitled to receive if retired at the time of death. If 02 at death the justice or judge was not yet entitled to retirement pay, or was or would 03 have been entitled to less than 60 percent of the monthly salary authorized for the 04 office, the surviving spouse is entitled to monthly survivors' benefits 05 [COMPENSATION] equal to 30 percent of the salary authorized for justices or 06 judges, respectively, at the time each monthly payment is made. 07 * Sec. 16. AS 22.25.048(a) is amended to read: 08 (a) The commissioner of administration shall establish a judicial retirement 09 trust fund for the judicial retirement system in which the assets of the system are 10 deposited and held. The trust fund is subject to the restrictions of (h) of this 11 section. The commissioner shall maintain accounts and records for the system. 12 * Sec. 17. AS 22.25.048 is amended by adding new subsections to read: 13 (h) The corpus or income of the assets held in trust as required by the system 14 may not be diverted to or used for other than the exclusive benefit of the members or 15 their beneficiaries. 16 (i) If, upon termination of the system, all liabilities are satisfied, any excess 17 assets arising from erroneous actuarial computation shall revert to the employer. 18 * Sec. 18. AS 22.25 is amended by adding a new section to read: 19 Sec 22.25.110. Special rules for treatment of qualified military service. 20 Notwithstanding any contrary provisions of this chapter, with respect to qualified 21 military service, contributions shall be made and benefits and service credit shall be 22 provided in accordance with 26 U.S.C. 414(u). 23 * Sec. 19. AS 22.25.900 is repealed and reenacted to read: 24 Sec. 22.25.900. Definitions. In this chapter, unless the context otherwise 25 requires, 26 (1) "actuarial equivalent" means equality in value of the aggregate 27 expected payments under two different forms of pension payments, considering 28 expected mortality and interest earnings on the basis of tables set out in the 29 information handbook published under AS 22.25.025; 30 (2) "judge" means a judge of the court of appeals, a superior court 31 judge, or a district court judge;
01 (3) "justice" means a supreme court justice; 02 (4) "member" means an administrative director of the Alaska Court 03 System who is eligible to participate in the system, a justice, or a judge; 04 (5) "qualified domestic relations order" means a divorce or dissolution 05 judgment under AS 25.24, including an order approving a property settlement, that 06 (A) creates or recognizes the existence of an alternate payee's 07 right to, or assigns to an alternate payee the right to, receive all or a portion of 08 the member contributions and interest or benefits payable with respect to a 09 justice or judge; 10 (B) sets out the name and last known mailing address, if any, of 11 the justice or judge and of each alternate payee covered by the order; 12 (C) sets out the amount or percentage of the justice's or judge's 13 benefit, or of any survivor's benefit, to be paid to the alternate payee, or sets 14 out the manner in which that amount or percentage is to be determined; 15 (D) sets out the number of payments or period to which the 16 order applies; 17 (E) sets out the plan to which the order applies; 18 (F) does not require any type or form of benefit or any option 19 not otherwise provided by this chapter; 20 (G) does not require an increase of benefits in excess of the 21 amount provided by this chapter, determined on the basis of actuarial value; 22 (H) does not require the payment, to an alternate payee, of 23 benefits that are required to be paid to another alternate payee under another 24 order previously determined to be a qualified domestic relations order. 25 * Sec. 20. AS 39.35.010 is amended by adding a new subsection to read: 26 (c) The retirement system established by this chapter is intended to qualify 27 under 26 U.S.C. 401(a) and 414(d) (Internal Revenue Code) as a qualified retirement 28 plan established and maintained by the state for its employees and for the employees 29 of political subdivisions, public corporations, and public organizations of the state, and 30 for the employees of other employers whose participation is authorized by this chapter 31 and who participate in this system.
01 * Sec. 21. AS 39.35 is amended by adding a new section to read: 02 Sec. 39.35.011. Exclusive benefit. The corpus or income of the assets held in 03 trust as required by the system may not be diverted to or used for other than the 04 exclusive benefit of the members or their beneficiaries. 05 * Sec. 22. AS 39.35.060 is amended to read: 06 Sec. 39.35.060. Duties of the administrator. The administrator shall 07 (1) with the assistance of a technical actuarial advisor, submit to the 08 board the required actuarial tables and the statistical data necessary for periodic 09 actuarial surveys of the operating experience of the system; 10 (2) maintain records of the employees included in the system that are 11 necessary for the proper administration of the system and furnish information 12 requested by the actuary for preparing valuations and periodic experience analyses; 13 (3) attend meetings of the board and serve as secretary of the board; 14 (4) certify to the appropriate division of the Department of 15 Administration the payments made under this chapter; 16 (5) remit to the Department of Revenue, for deposit in the pension 17 fund, assets received for the account of the system; 18 (6) formulate and recommend to the board regulations to govern the 19 operation of the system; 20 (7) formulate and recommend to the board regulations to govern the 21 operation of the supplemental employee benefit program under AS 39.30.150 - 22 39.30.180; 23 (8) publish an information handbook for the system at intervals as 24 the administrator considers appropriate. 25 * Sec. 23. AS 39.35.160(a) is amended to read: 26 (a) Beginning January 1, 1987, each peace officer or fire fighter shall 27 contribute to the system an amount equal to seven and one-half percent of the peace 28 officer's or fire fighter's compensation. Except as provided in (d) of this section, 29 beginning January 1, 1987, each other employee shall contribute to the system an 30 amount equal to six and three-quarters percent of the employee's compensation. The 31 contributions shall be deducted by the employer at the end of each payroll period. The
01 contributions shall be deducted from employee compensation before computation of 02 applicable federal taxes, and the contributions shall be treated as employer 03 contributions under 26 U.S.C. 414(h)(2); this provision is subject to a ruling by the 04 Internal Revenue Service that these contributions will be treated as employer 05 contributions under 26 U.S.C. 414(h), and that these picked-up contributions will 06 not be treated as annual additions for purposes of 26 U.S.C. 415(a) and, 07 therefore, will not be subject to the provisions of AS 39.35.370(i). A member may 08 not have the option of receiving the payroll deduction directly instead of having 09 the contribution picked up by the employer. 10 * Sec. 24. AS 39.35 is amended by adding a new section to read: 11 Sec. 39.35.195. Rollover distributions and rollover contributions. (a) A 12 distributee may elect, at the time and in the manner prescribed by the administrator, to 13 have all or part of an eligible rollover distribution paid directly to an eligible 14 retirement plan specified by the distributee in the direct rollover. 15 (b) The system does not accept contributions of eligible rollover distributions. 16 (c) In this section, 17 (1) "direct rollover" means the payment of an eligible rollover 18 distribution by the system to an eligible retirement plan specified by a distributee who 19 is eligible to elect a direct rollover; 20 (2) "distributee" means a member or a beneficiary who is the surviving 21 spouse of the member; 22 (3) "eligible retirement plan" means an individual retirement account, 23 described in 26 U.S.C. 408(a); an individual retirement annuity, defined in 26 U.S.C. 24 408(b); and annuity plan, described in 26 U.S.C. 403(a); or a qualified trust, described 25 in 26 U.S.C. 401(a), that accepts the eligible rollover distribution; however, in the case 26 of an eligible rollover distribution to a beneficiary who is the surviving spouse of a 27 member, "eligible retirement plan" means only an individual retirement account or an 28 individual retirement annuity described or defined in 26 U.S.C. 408; 29 (4) "eligible rollover distribution" means a distribution of all or part of 30 a total account to a distributee, except for 31 (A) a distribution that is one of a series of substantially equal
01 installments payable not less frequently than annually over the life expectancy 02 of the distributee or the joint and last survivor life expectancy of the distributee 03 and the distributee's designated beneficiary, as defined in 26 U.S.C. 401(a)(9); 04 (B) a distribution that is one of a series of substantially equal 05 installments payable not less frequently than annually over a specified period 06 of 10 years or more; 07 (C) a distribution that is required under 26 U.S.C. 401(a)(9); 08 (D) the portion of any distribution that is not includable in 09 gross income; and 10 (E) other distributions that are reasonably expected to total less 11 than $200 during a year. 12 * Sec. 25. AS 39.35.270 is amended to read: 13 Sec. 39.35.270. Amount of employer's contributions. The amount of each 14 employer's contributions shall be determined by applying the employer's contribution 15 rate to the total compensation paid to the active employees of the employer for each 16 payroll period and by including any adjustments to contributions required by 17 AS 39.35.520(a). This amount shall be remitted by the employer to the administrator 18 in accordance with AS 39.35.610. 19 * Sec. 26. AS 39.35.370 is amended by adding new subsections to read: 20 (i) Notwithstanding any other provisions of this chapter, the projected annual 21 benefit provided by this chapter and the benefit from all other defined benefit plans 22 required to be aggregated with the benefits from this system under the provisions of 26 23 U.S.C. 415 may not increase to an amount in excess of the amount permitted under 26 24 U.S.C. 415 at any time. In the event that any projected annual benefit of a member 25 exceeds the limitation of 26 U.S.C. 415 for a limitation year, the system shall take any 26 necessary remedial action to correct an excess accrued benefit. The provisions of 26 27 U.S.C. 415, and the regulations adopted under that statute, as applied to qualified 28 defined benefit plans of governmental employers are incorporated as part of the terms 29 and conditions of the system. This subsection applies to any member of this system. 30 (j) Notwithstanding (c) of this section, for the system fiscal years beginning on 31 or after January 1, 1996, the annual compensation of a member who joined the system
01 after the first day of the first system fiscal year beginning after December 31, 1995, 02 that is used to calculate the member's average monthly compensation may not exceed 03 $150,000, as adjusted for the cost of living in accordance with 26 U.S.C. 04 401(a)(17)(B). The cost of living adjustment in effect for a calendar year applies to a 05 determination period beginning in the calendar year. 06 (k) Notwithstanding the definition of "compensation" in AS 39.35.680, in (j) 07 of this section, for system fiscal years beginning on or after January 1, 1998, and for 08 purposes of 26 U.S.C. 415(b)(3) and the regulations adopted under that statute, 09 (1) "annual compensation" 10 (A) includes any amount that is contributed by the employer 11 under a salary reduction agreement and that is not includable in the member's 12 gross income under 26 U.S.C. 125, 132(f)(4), 402(e)(3), 402(h), or 403(b); and 13 (B) is limited to compensation that is actually paid to a member 14 during the determination period; 15 (2) "determination period" means the system fiscal year. 16 * Sec. 27. AS 39.35 is amended by adding a new section to read: 17 Sec. 39.35.371. Distribution requirements. (a) The entire interest of a 18 member must be distributed or must begin to be distributed not later than the member's 19 required beginning date. 20 (b) If a member dies after the distribution of the member's interest has begun 21 but before the distribution has been completed, the remaining portion of the interest 22 shall continue to be distributed at least as rapidly as under the method of distribution 23 being used before the member's death. 24 (c) If a member has made a distribution election and dies before the 25 distribution of the member's interest begins, distribution of the member's entire interest 26 shall be completed by December 31 of the calendar year containing the fifth 27 anniversary of the member's death. However, if any portion of the member's interest 28 is payable to a designated beneficiary, distributions may be made over the life of the 29 designated beneficiary or over a period not greater than the life expectancy of the 30 designated beneficiary, commencing on or before December 31 of the calendar year 31 immediately following the calendar year in which the member died; and if the
01 designated beneficiary is the member's surviving spouse, the date distributions are 02 required to begin may not be earlier than the later of December 31 of the calendar year 03 (1) immediately following the calendar year in which the member died, or (2) in which 04 the member would have attained 70 1/2 years of age, whichever is earlier. If the 05 surviving spouse dies after the member but before payments to the spouse have begun, 06 the provisions of this subsection apply as if the surviving spouse were the member. 07 An amount paid to a child of the member will be treated as if it were paid to the 08 surviving spouse if the amount becomes payable to the surviving spouse when the 09 child reaches the age of majority. 10 (d) If a member has not made a distribution election before the member's 11 death, the member's designated beneficiary must elect the method of distribution not 12 later than December 31 of the calendar year (1) in which distributions would be 13 required to begin under this section, or (2) that contains the fifth anniversary of the 14 date of death of the member, whichever is earlier. If the member does not have a 15 designated beneficiary or if the designated beneficiary does not elect a method of 16 distribution, distribution of the member's entire interest must be completed by 17 December 31 of the calendar year containing the fifth anniversary of the member's 18 death. 19 (e) For purposes of (c) of this section, distribution of a member's interest is 20 considered to begin (1) on the member's required beginning date, or (2) if the 21 designated beneficiary is the member's surviving spouse and the surviving spouse dies 22 after the member but before payments to the spouse have begun, on the date 23 distribution is required to begin to the surviving spouse. If distribution in the form of 24 an annuity irrevocably commences to the member before the required beginning date, 25 the date distribution is considered to begin is the date that the distribution actually 26 commences. 27 (f) Notwithstanding any contrary provisions of this chapter, the requirements 28 of this section apply to all distributions of a member's interest and take precedence 29 over any inconsistent provisions of this chapter. Unless otherwise specified, the 30 provisions of this section apply to calendar years beginning after December 31, 1984. 31 (g) All distributions required under this section are determined and made in
01 accordance with 26 U.S.C. 401(a)(9) and regulations adopted under that statute, 02 including any minimum distribution incidental benefit requirement. 03 (h) In this section, 04 (1) "designated beneficiary" means the individual who is designated as 05 the beneficiary under the system in accordance with 26 U.S.C. 401(a)(9) and 06 regulations adopted under that statute; 07 (2) "required beginning date" means the first day of April of the 08 calendar year following the calendar year in which the member either attains 70 1/2 09 years of age or actually retires, whichever is later. 10 * Sec. 28. AS 39.35.520(a) is amended to read: 11 (a) When a change or error is made in the records maintained by the system or 12 in the contributions made on behalf of an employee [,] or an error is made in 13 computing a benefit, and, as a result, an employee or beneficiary is entitled to receive 14 [RECEIVES] from the system more or less than the employee would have been 15 entitled to receive had the records or contributions been correct or had the error not 16 been made, (1) the records, contributions, or error shall be corrected, and (2) as far as 17 practicable, future payments or benefit entitlement shall be adjusted so that the 18 actuarial equivalent of the pension or benefit to which the employee or beneficiary 19 was correctly entitled shall be paid. An adjustment to contributions shall be picked 20 up by the employer under AS 39.35.160 or treated as an adjustment to the 21 employer's contributions under AS 39.35.270, depending upon the nature of the 22 adjustment. If no future payment is due, a person who was paid any amount to which 23 the person was not entitled is liable for repayment of that amount, and a person who 24 was not paid the full amount to which the person was entitled shall be paid the balance 25 of that amount. 26 * Sec. 29. AS 39.35 is amended by adding a new section to read: 27 Sec 39.35.677. Special rules for treatment of qualified military service. 28 Notwithstanding any contrary provisions of this chapter, with respect to qualified 29 military service, contributions shall be made, and benefits and service credit shall be 30 provided in accordance with 26 U.S.C. 414(u). 31 * Sec. 30. AS 39.35.680(2) is amended to read:
01 (2) "actuarial adjustment" means the adjustment necessary to obtain 02 equality in value of the aggregate expected payments under two different forms of 03 pension payments, considering expected mortality and interest earnings on the basis of 04 tables set out in the information handbook published under AS 39.35.060(8) 05 [ADOPTED FROM TIME TO TIME BY THE BOARD]; 06 * Sec. 31. AS 39.35.680(8) is amended to read: 07 (8) "compensation" means the remuneration earned by an employee 08 for personal services rendered to an employer, including employee contributions under 09 AS 39.35.160, cost-of-living differentials only as provided in AS 39.35.675, payments 10 for leave that is actually used by the employee, the amount by which the employee's 11 wages are reduced under AS 39.30.150(c), and any amount deferred under an 12 employer-sponsored deferred compensation plan, but does not include retirement 13 benefits, severance pay or other separation bonuses, welfare benefits, per diem, 14 expense allowances, workers' compensation payments, or payments for leave not used 15 by the employee whether those leave payments are scheduled payments, lump-sum 16 payments, donations, or cash-ins; for a member first hired on or after July 1, 1989 17 [JULY 1, 1996], compensation does not include remuneration in excess of the 18 limitations set out in 26 U.S.C. 401(a)(17) (Internal Revenue Code); 19 * Sec. 32. AS 14.25.110(f), 14.25.110(g), and 14.25.110(h); AS 22.25.010(g); and 20 AS 39.35.451 are repealed. 21 * Sec. 33. The uncodified law of the State of Alaska is amended by adding a new section to 22 read: 23 RETROACTIVITY. (a) The following provisions of this Act are retroactive to 24 January 1, 1985: 25 (1) AS 22.25.021, enacted by sec. 13 of this Act; 26 (2) AS 39.35.371, enacted by sec. 27 of this Act. 27 (b) The following provision of this Act is retroactive to July 1, 1989: 28 AS 39.35.680(8), as amended by sec. 31 of this Act. 29 (c) The following provision of this Act is retroactive to January 1, 1995: 30 AS 14.25.165, enacted by sec. 7 of this Act. 31 (d) The following provisions of this Act are retroactive to January 1, 1996:
01 (1) AS 14.25.110(l), enacted by sec. 5 of this Act; 02 (2) AS 39.35.370(j), enacted by sec. 26 of this Act. 03 (e) The following provisions of this Act are retroactive to January 1, 1998: 04 (1) AS 14.25.110(m), enacted by sec. 5 of this Act; 05 (2) AS 22.25.023(b), enacted by sec. 13 of this Act; 06 (3) AS 39.35.370(k), enacted by sec. 26 of this Act. 07 * Sec. 34. This Act takes effect immediately under AS 01.10.070(c).