CSSSHB 254(FIN): "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; amending the statutory limitation on payment of warrants to make an exception for warrants making benefit payments or refunds under various state retirement and benefit programs; and providing for an effective date."
00 CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 254(FIN) 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; amending the statutory limitation on payment of warrants to make 07 an exception for warrants making benefit payments or refunds under various state 08 retirement and benefit programs; and providing for an effective date." 09 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 10 * Section 1. AS 14.25.010 is amended by adding a new subsection to read: 11 (b) The retirement system established by this chapter is intended to qualify 12 under 26 U.S.C. 401(a) and 414(d) (Internal Revenue Code) as a qualified retirement
01 plan established and maintained by the state for its employees, for the employees of 02 school districts and regional educational attendance areas in the state, and for the 03 employees of other employers whose participation is authorized by this chapter and 04 who participate in this system. 05 * Sec. 2. AS 14.25.030 is amended to read: 06 Sec. 14.25.030. Duties of the administrator. The administrator shall 07 (1) establish and maintain an adequate system of accounts for the 08 system; 09 (2) approve or disapprove claims for retirement benefits; 10 (3) serve as secretary of the Alaska Teachers' Retirement Board and 11 keep an official record of all proceedings; 12 (4) publish annually a report showing the financial condition of the 13 system; [AND] 14 (5) publish an information handbook for the system at intervals as 15 the administrator considers appropriate; and 16 (6) do whatever else may be necessary to carry out the purposes of this 17 chapter. 18 * Sec. 3. AS 14.25.050(a) is amended to read: 19 (a) Except as provided in (c) of this section, beginning January 1, 1991, each 20 teacher shall contribute to the system an amount equal to 8.65 percent of the teacher's 21 base salary accrued from July 1 to the following June 30. The employer shall deduct 22 the contribution from the teacher's salary at the end of each payroll period. The 23 contributions shall be deducted from employee compensation before the computation 24 of applicable federal taxes and shall be treated as employer contributions under 26 25 U.S.C. 414(h)(2). A member may not have the option of making the payroll 26 deduction directly in cash instead of having the contribution picked up by the 27 employer. 28 * Sec. 4. AS 14.25.070 is amended to read: 29 Sec. 14.25.070. Contributions by employer. An employer shall contribute to 30 the system an amount equal to the percentage, as certified by the administrator, of the 31 sum total of the base salaries of all teachers that is required in addition to teacher
01 contributions to provide the benefits of this chapter times the sum total of the base 02 salaries paid to teachers, including any adjustments to contributions required by 03 AS 14.25.173(a), by the employer. 04 * Sec. 5. AS 14.25 is amended by adding a new section to read: 05 Sec. 14.25.075. Purchase of credited service. (a) An employee who is 06 eligible to purchase credited service under AS 14.25.047 or 14.25.048, a member who 07 is eligible to purchase credited service under AS 14.25.060, 14.25.061, or 14.25.100, 08 or a teacher who is eligible to purchase credited service under AS 14.20.345, 09 AS 14.25.050, or 14.25.105 is a member for purposes of this section. A member, in 10 lieu of making payments directly to the system, may elect to have the member's 11 employer make payments as provided in this section. 12 (b) A member may elect to have the employer make payments for all or any 13 portion of the amounts payable for the member's purchase of credited service through 14 a salary reduction program as follows: 15 (1) the amounts paid under a salary reduction program are in lieu of 16 contributions by the member making the election; the electing member's salary or 17 other compensation shall be reduced by the amount paid by the employer under this 18 section; 19 (2) the member shall make an election under this section to purchase 20 credited service as permitted in AS 14.20.345, AS 14.25.047, 14.25.048, 14.25.050, 21 14.25.060, 14.25.061, 14.25.100, or 14.25.105 before the member's termination of 22 employment; the election must specify the number of payroll periods that deductions 23 will be made from the member's compensation and the dollar amount of deductions 24 for each payroll period during the specified number of payroll periods; 25 (3) a member who makes an election under this section to have the 26 employer make payments for less than all of the amounts payable for the member's 27 purchase of credited service may subsequently elect to have the employer make 28 payments for all or any portion of the remaining amounts payable for the member's 29 purchase of credited service; 30 (4) amounts paid by an employer under this section shall be treated as 31 employer contributions for the purpose of determining tax treatment under 26 U.S.C.
01 (Internal Revenue Code); the amounts paid by the employer under this section may not 02 be included in the member's gross income for income tax purposes until those amounts 03 are distributed by refund or retirement benefit payments. 04 (c) Unless otherwise provided, member contributions paid by the employer 05 under this section are treated for all other purposes under the system in the same 06 manner and to the same extent as member contributions that are not paid by an 07 employer under this section and AS 14.25.050. The system may assess interest or 08 administrative charges attributable to any salary reduction election made under this 09 section. The interest or administrative charges shall be added to the contribution that 10 is made to the system by the member each payroll period, and that is paid by the 11 employer. The interest or administrative charges may not be treated as member 12 contributions for any purposes under this chapter, and a member or a member's 13 beneficiary does not have a right to the return of the interest or administrative charges 14 under any other provision of this section. Interest assessed under this section shall be 15 at the rate specified by regulations adopted by the board. 16 (d) For system fiscal years beginning on or after July 1, 2001, the 17 requirements of AS 14.25.110(k) may not be applied to reduce the amount of credited 18 service that may be purchased under this section by a member who first becomes an 19 employee of the system before July 1, 2001, to an amount that is less than the amount 20 of credited service allowed to be purchased with the application of any of the limits 21 prescribed in 26 U.S.C. 415. 22 (e) Contributions to the system to purchase credited service under this section 23 do not qualify for treatment under this section if recognition of that service would 24 cause a member to receive a retirement benefit for the same service from the system 25 and from one or more other retirement plans or systems of the state. 26 (f) To the extent that a payment under this section does not alter, amend, or 27 revoke any one or more currently effective elections made by the member, the board 28 may accept member contributions, which shall also be treated as employer 29 contributions for the purpose of determining tax treatment under 26 U.S.C. (Internal 30 Revenue Code), for the payment for credited service purchases made under this 31 section in whole or in part, by any one or a combination of the following methods:
01 (1) subject to the limitations prescribed in 26 U.S.C. 403(b)(13), 02 accepting direct trustee-to-trustee transfers of all or a portion of the accounts of the 03 members, on and after January 1, 2002, from a tax sheltered annuity described in 26 04 U.S.C. 403(b); and 05 (2) subject to the limitations prescribed in 26 U.S.C. 457(e)(17), 06 accepting direct trustee-to-trustee transfers of all or a portion of the accounts of the 07 members, on and after January 1, 2002, from an eligible deferred compensation plan 08 of a tax-exempt organization or a state or local government described in 26 U.S.C. 09 457(b). 10 (g) Payments made under this section shall be applied to reduce the member's 11 outstanding indebtedness described in AS 14.25.063 at the time that the contributions 12 are received by the system. 13 (h) If a member retires before all payments are made under this section, the 14 system shall calculate the member's benefits based only on the payments actually 15 made with respect to the credited service purchased. 16 (i) On satisfaction of the eligibility requirements of AS 14.20.345, 17 AS 14.25.047, 14.25.048, 14.25.050, 14.25.060, 14.25.061, 14.25.100, or 18 14.25.105, the requirements of this section, and the administrative filing requirements 19 specified by the board, the system shall adjust the member's credited service history 20 and add any additional service credits acquired. 21 (j) After an election is made under this section, the election is binding on and 22 irrevocable for the member and the member's employer during the member's 23 remaining period of current employment. After a member makes an irrevocable 24 election under this section, the member does not have the option of choosing to 25 receive the contributed amounts directly in cash. 26 * Sec. 6. AS 14.25.110 is amended by adding new subsections to read: 27 (k) Notwithstanding any other provision of this chapter, the projected annual 28 benefit provided by this chapter and the benefit from all other defined benefit plans 29 required to be aggregated with the benefits from this system under the provisions of 26 30 U.S.C. 415 may not increase to an amount in excess of the amount permitted under 26 31 U.S.C. 415 at any time. In the event that any projected annual benefit of a member
01 exceeds the limitation of 26 U.S.C. 415 for a limitation year, the system shall take any 02 necessary remedial action to correct an excess accrued benefit. The provisions of 26 03 U.S.C. 415, and the regulations adopted under that statute, as applied to qualified 04 defined benefit plans of governmental employers are incorporated as part of the terms 05 and conditions of the system. This subsection applies to any member of this system. 06 (l) Notwithstanding (d) of this section, 07 (1) for the system fiscal years beginning on or after January 1, 1996, 08 the base salary of a member who joined the system after the first day of the first 09 system fiscal year beginning after December 31, 1995, that is used to calculate the 10 member's average base salary may not exceed $150,000, as adjusted for the cost of 11 living in accordance with 26 U.S.C. 401(a)(17)(B); and 12 (2) for system fiscal years beginning on or after January 1, 2002, the 13 base salary of a member that is used to calculate the member's average base salary 14 may not exceed $200,000, as adjusted for the cost of living in accordance with 26 15 U.S.C. 401(a)(17)(B). 16 (m) Notwithstanding the definition of "base salary" in AS 14.25.220, in (l) of 17 this section, for system fiscal years beginning on or after January 1, 1998, and for 18 purposes of 26 U.S.C. 415(b)(3) and the regulations adopted under that statute, 19 (1) "base salary" 20 (A) includes any amount that is contributed by the employer 21 under a salary reduction agreement and that is not includable in the member's 22 gross income under 26 U.S.C. 125, 132(f)(4), 402(e)(3), 402(h), or 403(b); and 23 (B) is limited to compensation that is actually paid to a member 24 during the determination period; 25 (2) "determination period" means the system fiscal year. 26 * Sec. 7. AS 14.25 is amended by adding a new section to read: 27 Sec. 14.25.163. Rollover distributions and rollover contributions. (a) A 28 distributee may elect, at the time and in the manner prescribed by the administrator, to 29 have all or part of an eligible rollover distribution paid directly to an eligible 30 retirement plan specified by the distributee in the direct rollover. 31 (b) The system does not accept contributions of eligible rollover distributions.
01 (c) In this section, 02 (1) "direct rollover" means the payment of an eligible rollover 03 distribution by the system to an eligible retirement plan specified by a distributee who 04 is eligible to elect a direct rollover; 05 (2) "distributee" means a member or a beneficiary who is the surviving 06 spouse of the member; 07 (3) "eligible retirement plan" 08 (A) means 09 (i) an individual retirement account described in 26 10 U.S.C. 408(a); 11 (ii) an individual retirement annuity defined in 26 12 U.S.C. 408(b); 13 (iii) an annuity plan described in 26 U.S.C. 403(a); 14 (iv) a qualified trust described in 26 U.S.C. 401(a); 15 (v) on and after January 1, 2002, an annuity plan 16 described in 26 U.S.C 403(b); or 17 (vi) on or after January 1, 2002, a governmental plan 18 described in 26 U.S.C 457(b); and 19 (B) notwithstanding (A) of this paragraph, means, with respect 20 to distributions made before January 1, 2002, an individual retirement account 21 or an individual retirement annuity account described or defined in 26 U.S.C. 22 408 in the case of an eligible rollover distribution to a beneficiary who is the 23 surviving spouse of a member; 24 (4) "eligible rollover distribution" means a distribution of all or part of 25 a total account to a distributee, except for 26 (A) a distribution that is one of a series of substantially equal 27 installments payable not less frequently than annually over the life expectancy 28 of the distributee or the joint and last survivor life expectancy of the distributee 29 and the distributee's designated beneficiary, as defined in 26 U.S.C. 401(a)(9); 30 (B) a distribution that is one of a series of substantially equal 31 installments payable not less frequently than annually over a specified period
01 of 10 years or more; 02 (C) a distribution that is required under 26 U.S.C. 401(a)(9); 03 (D) the portion of any distribution that is not includable in 04 gross income; 05 (E) a distribution made on or after January 1, 2002, that is on 06 account of hardship; and 07 (F) other distributions that are reasonably expected to total less 08 than $200 during a year. 09 * Sec. 8. AS 14.25 is amended by adding a new section to read: 10 Sec. 14.25.165. Distribution requirements. (a) The entire interest of a 11 member must be distributed or must begin to be distributed not later than the member's 12 required beginning date. 13 (b) If a member dies after the distribution of the member's interest has begun 14 but before the distribution has been completed, the remaining portion of the interest 15 shall continue to be distributed at least as rapidly as under the method of distribution 16 being used before the member's death. 17 (c) If a member has made a distribution election and dies before the 18 distribution of the member's interest begins, distribution of the member's entire interest 19 shall be completed by December 31 of the calendar year containing the fifth 20 anniversary of the member's death. However, if any portion of the member's interest 21 is payable to a designated beneficiary, distributions may be made over the life of the 22 designated beneficiary or over a period certain not greater than the life expectancy of 23 the designated beneficiary, commencing on or before December 31 of the calendar 24 year immediately following the calendar year in which the member died, and, if the 25 designated beneficiary is the member's surviving spouse, the date distributions are 26 required to begin may not be earlier than the later of December 31 of the calendar year 27 (1) immediately following the calendar year in which the member died, or (2) in which 28 the member would have attained 70 1/2 years of age, whichever is earlier. If the 29 surviving spouse dies after the member but before payments to the spouse have begun, 30 the provisions of this subsection apply as if the surviving spouse were the member. 31 An amount paid to a child of the member will be treated as if it were paid to the
01 surviving spouse if the amount becomes payable to the surviving spouse when the 02 child reaches the age of majority. 03 (d) If a member has not made a distribution election before the member's 04 death, the member's designated beneficiary must elect the method of distribution not 05 later than December 31 of the calendar year (1) in which distributions would be 06 required to begin under this section, or (2) that contains the fifth anniversary of the 07 date of death of the member, whichever is earlier. If the member does not have a 08 designated beneficiary or if the designated beneficiary does not elect a method of 09 distribution, distribution of the member's entire interest must be completed by 10 December 31 of the calendar year containing the fifth anniversary of the member's 11 death. 12 (e) For purposes of (c) of this section, distribution of a member's interest is 13 considered to begin (1) on the member's required beginning date, or (2) if the 14 designated beneficiary is the member's surviving spouse and the surviving spouse dies 15 after the member but before payments to the spouse have begun, on the date 16 distribution is required to begin to the surviving spouse. If distribution in the form of 17 an annuity irrevocably commences to the member before the required beginning date, 18 the date distribution is considered to begin is the date that the distribution actually 19 commences. 20 (f) Notwithstanding any contrary provisions of this chapter, the requirements 21 of this section apply to all distributions of a member's interest and take precedence 22 over any inconsistent provisions of this chapter. 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) Unless otherwise specified, the provisions of this section apply to calendar 27 years beginning on or after January 1, 1989. 28 (i) In this section, 29 (1) "designated beneficiary" means the individual who is designated as 30 the beneficiary under the system in accordance with 26 U.S.C. 401(a)(9) and 31 regulations adopted under that statute;
01 (2) "required beginning date" means the first day of April of the 02 calendar year following the calendar year in which the member either attains 70 1/2 03 years of age or actually retires, whichever is later. 04 * Sec. 9. AS 14.25.173(a) is amended to read: 05 (a) When [IF] a change or error is made in the records maintained by the 06 system or in the contributions made on behalf of an employee or an error is made 07 in computing a benefit, and, as a result, a teacher or member or beneficiary is entitled 08 to receive [RECEIVES] from the system more or less than the teacher or member or 09 beneficiary would have been entitled to receive had the records or contributions been 10 correct or had the error not been made, (1) the records, contributions, or error shall be 11 corrected, and (2) [,] as far as practicable, future payments or benefit entitlement 12 shall be adjusted so that the actuarial equivalent of the pension or benefit to which the 13 teacher or member or beneficiary was correctly entitled will be paid. An adjustment 14 to contributions shall be picked up by the employer in accordance with 15 AS 14.25.050 or treated as an adjustment to the employer's contributions in 16 accordance with this section, depending upon the nature of the adjustment. If no 17 future benefit payments are due, a person who was paid any amount to which the 18 person was not entitled is liable for repayment of that amount, and a person who was 19 not paid the full amount to which the person was entitled shall be paid that amount. 20 * Sec. 10. AS 14.25 is amended by adding a new section to read: 21 Sec. 14.25.181. Exclusive benefit. (a) The corpus or income of the assets 22 held in trust as required by the system may not be diverted to or used for other than the 23 exclusive benefit of the members or their beneficiaries. 24 (b) If, upon termination of the system, all liabilities are satisfied, any excess 25 assets arising from erroneous actuarial computation shall revert to the employers on a 26 pro rata basis. 27 * Sec. 11. AS 14.25 is amended by adding a new section to read: 28 Sec. 14.25.195. Special rules for treatment of qualified military service. 29 Notwithstanding any contrary provisions of this chapter, with respect to qualified 30 military service, contributions shall be made and benefits and service credit shall be 31 provided in accordance with 26 U.S.C. 414(u).
01 * Sec. 12. AS 14.25.220(2) is amended to read: 02 (2) "actuarial adjustment" means the adjustment necessary to obtain 03 equality in value of the aggregate expected payments under two different forms of 04 pension payments, considering expected mortality and interest earnings on the basis of 05 tables referred to in the information handbook published under AS 14.25.030(5) 06 [ADOPTED FROM TIME TO TIME BY THE BOARD]; 07 * Sec. 13. AS 14.25.220(31) is amended to read: 08 (31) "qualified domestic relations order" means a divorce or 09 dissolution judgment under AS 25.24, including an order approving a property 10 settlement, that 11 (A) creates or recognizes the existence of an alternate payee's 12 right to, or assigns to an alternate payee the right to, receive all or a portion of 13 the member contribution account or benefits payable with respect to a member; 14 (B) sets out the name and last known mailing address, if any, of 15 the member and of each alternate payee covered by the order; 16 (C) sets out the amount or percentage of the member's benefit, 17 or of any survivor's benefit, to be paid to the alternate payee, or sets out the 18 manner in which that amount or percentage is to be determined; 19 (D) sets out the number of payments or period to which the 20 order applies; 21 (E) sets out the plan to which the order applies; 22 (F) does not require any type or form of benefit or any option 23 not otherwise provided by this chapter; 24 (G) [(F)] does not require an increase of benefits in excess of 25 the amount provided by this chapter, determined on the basis of actuarial 26 value; and 27 (H) [(G)] does not require the payment, to an alternate payee, 28 of benefits that are required to be paid to another alternate payee under another 29 order previously determined to be a qualified domestic relations order; 30 * Sec. 14. AS 14.25.220 is amended by adding new paragraphs to read: 31 (44) "Internal Revenue Code" means the Internal Revenue Code of
01 1986, as amended; 02 (45) "fiscal year" means the period beginning on July 1 and ending on 03 June 30 of the following calendar year. 04 * Sec. 15. AS 22.25.011 is amended to read: 05 Sec. 22.25.011. Contributions of judges and justices. Each justice and 06 judge appointed after July 1, 1978, shall contribute seven percent of the base annual 07 salary received by the justice or judge to the judicial retirement system. Contributions 08 shall be made for all creditable service under this chapter up to a maximum of 15 09 years. This contribution is made in the form of a deduction from compensation, at the 10 end of each payroll period, and is made even if the compensation paid in cash to the 11 justice or judge is reduced below the minimum prescribed by law. The contributions 12 shall be deducted from justice's or judge's compensation before the computation 13 of applicable federal taxes and shall be treated as employer contributions under 14 26 U.S.C. 414(h)(2). A member may not have the option of making the payroll 15 deduction directly in cash instead of having the contribution picked up by the 16 employer. Each justice and judge is considered to consent to the deduction from 17 compensation. Payment of compensation less the deduction constitutes a full 18 discharge of all claims and demands for the services rendered by the justice or judge 19 during the period covered by the payment, except as to the benefits provided for under 20 this chapter. The contributions shall be credited to the judicial retirement fund 21 established in accordance with AS 22.25.048. 22 * Sec. 16. AS 22.25.020 is amended to read: 23 Sec. 22.25.020. Retirement pay. Except as provided in AS 22.25.023(b), a 24 [A] retired justice or judge eligible for retirement pay shall receive from the date of 25 eligibility until death monthly retirement pay [COMPENSATION] equal to five 26 percent per year of service, to a maximum of 75 percent, of the monthly salary 27 authorized for justices and judges, respectively, at the time each retirement payment is 28 made. For a justice or judge who was first employed in this retirement system on or 29 after July 1, 1996, base annual salary does not include remuneration in excess of the 30 limitations set out in 26 U.S.C. 401(a)(17) (Internal Revenue Code). 31 * Sec. 17. AS 22.25 is amended by adding new sections to read:
01 Sec. 22.25.021. Distribution requirements. (a) The entire interest of a 02 member must be distributed or must begin to be distributed not later than the member's 03 required beginning date. 04 (b) If a member dies after the distribution of the member's interest has begun 05 but before the distribution has been completed, the remaining portion of the interest 06 shall continue to be distributed at least as rapidly as under the method of distribution 07 being used before the member's death. 08 (c) If a member has made a distribution election and dies before the 09 distribution of the member's interest begins, distribution of the member's entire interest 10 shall be completed by December 31 of the calendar year containing the fifth 11 anniversary of the member's death. However, if any portion of the member's interest 12 is payable to a designated beneficiary, distributions may be made over the life of the 13 designated beneficiary or over a period certain not greater than the life expectancy of 14 the designated beneficiary, commencing on or before December 31 of the calendar 15 year immediately following the calendar year in which the member died, and, if the 16 designated beneficiary is the member's surviving spouse, the date distributions are 17 required to begin may not be earlier than the later of December 31 of the calendar year 18 (1) immediately following the calendar year in which the member died, or (2) in which 19 the member would have attained 70 1/2 years of age, whichever is earlier. If the 20 surviving spouse dies after the member but before payments to the spouse have begun, 21 the provisions of this subsection apply as if the surviving spouse were the member. 22 An amount paid to a child of the member will be treated as if it were paid to the 23 surviving spouse if the amount becomes payable to the surviving spouse when the 24 child reaches the age of majority. 25 (d) If a member has not made a distribution election before the member's 26 death, the member's designated beneficiary must elect the method of distribution not 27 later than December 31 of the calendar year (1) in which distributions would be 28 required to begin under this section, or (2) that contains the fifth anniversary of the 29 date of death of the member, whichever is earlier. If the member does not have a 30 designated beneficiary or if the designated beneficiary does not elect a method of 31 distribution, distribution of the member's entire interest must be completed by
01 December 31 of the calendar year containing the fifth anniversary of the member's 02 death. 03 (e) For purposes of (c) of this section, distribution of a member's interest is 04 considered to begin (1) on the member's required beginning date, or (2) if the 05 designated beneficiary is the member's surviving spouse and the surviving spouse dies 06 after the member but before payments to the spouse have begun, on the date 07 distribution is required to begin to the surviving spouse. If distribution in the form of 08 an annuity irrevocably commences to the member before the required beginning date, 09 the date distribution is considered to begin is the date that the distribution actually 10 commences. 11 (f) Notwithstanding any contrary provisions of this chapter, the requirements 12 of this section apply to all distributions of a member's interest and take precedence 13 over any inconsistent provisions of this chapter. 14 (g) All distributions required under this section are determined and made in 15 accordance with 26 U.S.C. 401(a)(9) and regulations adopted under that statute, 16 including any minimum distribution incidental benefit requirement. 17 (h) Unless otherwise specified, the provisions of this section apply to calendar 18 years beginning on or after January 1, 1989. 19 (i) In this section, 20 (1) "designated beneficiary" means the individual who is designated as 21 the beneficiary under the system in accordance with 26 U.S.C. 401(a)(9) and 22 regulations adopted under that statute; 23 (2) "required beginning date" means the first day of April of the 24 calendar year following the calendar year in which the member either attains 70 1/2 25 years of age or actually retires, whichever is later. 26 Sec. 22.25.022. Rollover distributions and rollover contributions. (a) A 27 distributee may elect, at the time and in the manner prescribed by the administrator, to 28 have all or part of an eligible rollover distribution paid directly to an eligible 29 retirement plan specified by the distributee in the direct rollover. 30 (b) The system does not accept contributions of eligible rollover distributions. 31 (c) In this section,
01 (1) "direct rollover" means the payment of an eligible rollover 02 distribution by the system to an eligible retirement plan specified by a distributee who 03 is eligible to elect a direct rollover; 04 (2) "distributee" means a member or a beneficiary who is the surviving 05 spouse of the member; 06 (3) "eligible retirement plan" 07 (A) means 08 (i) an individual retirement account described in 26 09 U.S.C. 408(a); 10 (ii) an individual retirement annuity defined in 26 11 U.S.C. 408(b); 12 (iii) an annuity plan described in 26 U.S.C. 403(a); 13 (iv) a qualified trust described in 26 U.S.C. 401(a); 14 (v) on and after January 1, 2002, an annuity plan 15 described in 26 U.S.C 403(b); or 16 (vi) on or after January 1, 2002, a governmental plan 17 described in 26 U.S.C 457(b); and 18 (B) notwithstanding (A) of this paragraph, means, with respect 19 to distributions made before January 1, 2002, an individual retirement account 20 or an individual retirement annuity account described or defined in 26 U.S.C. 21 408 in the case of an eligible rollover distribution to a beneficiary who is the 22 surviving spouse of a member; 23 (4) "eligible rollover distribution" means a distribution of all or part of 24 a total account to a distributee, except for 25 (A) a distribution that is one of a series of substantially equal 26 installments payable not less frequently than annually over the life expectancy 27 of the distributee or the joint and last survivor life expectancy of the distributee 28 and the distributee's designated beneficiary, as defined in 26 U.S.C. 401(a)(9); 29 (B) a distribution that is one of a series of substantially equal 30 installments payable not less frequently than annually over a specified period 31 of 10 years or more;
01 (C) a distribution that is required under 26 U.S.C. 401(a)(9); 02 (D) the portion of any distribution that is not includable in 03 gross income; 04 (E) a distribution made on or after January 1, 2002, that is on 05 account of hardship; and 06 (F) other distributions that are reasonably expected to total less 07 than $200 during a year. 08 Sec. 22.25.023. Limitation on benefits; maximum annual compensation. 09 (a) Notwithstanding any other provisions of this chapter, the projected annual benefit 10 provided by this chapter and the benefit from all other defined benefit plans required 11 to be aggregated with the benefits from this system under the provisions of 26 U.S.C. 12 415 may not increase to an amount in excess of the amount permitted under 26 U.S.C. 13 415 at any time. In the event that any accrued benefit of a member exceeds the 14 limitation of 26 U.S.C. 415 for a limitation year, the system shall make any necessary 15 remedial action to correct an excess accrued benefit. The provisions of 26 U.S.C. 415, 16 and the regulations adopted under that statute, as applied to qualified defined benefit 17 plans of governmental employers are incorporated as part of the terms and conditions 18 of the system. This subsection shall apply to any member of this system. 19 (b) In this subsection, for system fiscal years beginning on or after January 1, 20 1998, and for purposes of 26 U.S.C. 415(b)(3) and the regulations adopted under that 21 statute, "salary" includes any amount that is contributed by the employer under a 22 salary reduction agreement and that is not includable in the member's gross income 23 under 26 U.S.C. 125, 132(f)(4), 402(e)(3), 402(h), or 403(b) and is limited to 24 compensation that is actually paid to a member during the determination period, which 25 is the fiscal year of the system. 26 * Sec. 18. AS 22.25.025 is amended to read: 27 Sec. 22.25.025. Administration. The commissioner of administration is 28 responsible for the administration of the judicial retirement system. The system is 29 intended to qualify as a governmental plan established and maintained by the 30 government of this state for the state's employees, as permitted under 26 U.S.C. 31 414(d). The commissioner shall publish an information handbook for the system
01 at intervals as the commissioner considers appropriate. 02 * Sec. 19. AS 22.25.030(a) is amended to read: 03 (a) Upon the death of a justice or judge who has served for at least two years, 04 the surviving spouse is entitled to receive survivors' benefits [MONTHLY 05 COMPENSATION] equal to one-half of the monthly retirement pay the justice or 06 judge would thereafter have been entitled to receive if retired at the time of death. If 07 at death the justice or judge was not yet entitled to retirement pay, or was or would 08 have been entitled to less than 60 percent of the monthly salary authorized for the 09 office, the surviving spouse is entitled to monthly survivors' benefits 10 [COMPENSATION] equal to 30 percent of the salary authorized for justices or 11 judges, respectively, at the time each monthly payment is made. 12 * Sec. 20. AS 22.25.048(a) is amended to read: 13 (a) The commissioner of administration shall establish a judicial retirement 14 trust fund for the judicial retirement system in which the assets of the system are 15 deposited and held. The trust fund is subject to the restrictions of (h) of this 16 section. The commissioner shall maintain accounts and records for the system. 17 * Sec. 21. AS 22.25.048 is amended by adding new subsections to read: 18 (h) The corpus or income of the assets held in trust as required by the system 19 may not be diverted to or used for other than the exclusive benefit of the members or 20 their beneficiaries. 21 (i) If, upon termination of the system, all liabilities are satisfied, any excess 22 assets arising from erroneous actuarial computation shall revert to the employer. 23 * Sec. 22. AS 22.25 is amended by adding a new section to read: 24 Sec 22.25.110. Special rules for treatment of qualified military service. 25 Notwithstanding any contrary provisions of this chapter, with respect to qualified 26 military service, contributions shall be made and benefits and service credit shall be 27 provided in accordance with 26 U.S.C. 414(u). 28 * Sec. 23. AS 22.25.900 is repealed and reenacted to read: 29 Sec. 22.25.900. Definitions. In this chapter, unless the context otherwise 30 requires, 31 (1) "actuarial equivalent" means equality in value of the aggregate
01 expected payments under two different forms of pension payments, considering 02 expected mortality and interest earnings on the basis of tables referred to in the 03 information handbook published under AS 22.25.025; 04 (2) "judge" means a judge of the court of appeals, a superior court 05 judge, or a district court judge; 06 (3) "justice" means a supreme court justice; 07 (4) "member" means an administrative director of the Alaska Court 08 System who is eligible to participate in the system, a justice, or a judge; 09 (5) "qualified domestic relations order" means a divorce or dissolution 10 judgment under AS 25.24, including an order approving a property settlement, that 11 (A) creates or recognizes the existence of an alternate payee's 12 right to, or assigns to an alternate payee the right to, receive all or a portion of 13 the member contributions and interest or benefits payable with respect to a 14 justice or judge; 15 (B) sets out the name and last known mailing address, if any, of 16 the justice or judge and of each alternate payee covered by the order; 17 (C) sets out the amount or percentage of the justice's or judge's 18 benefit, or of any survivor's benefit, to be paid to the alternate payee, or sets 19 out the manner in which that amount or percentage is to be determined; 20 (D) sets out the number of payments or period to which the 21 order applies; 22 (E) sets out the plan to which the order applies; 23 (F) does not require any type or form of benefit or any option 24 not otherwise provided by this chapter; 25 (G) does not require an increase of benefits in excess of the 26 amount provided by this chapter, determined on the basis of actuarial value; 27 (H) does not require the payment, to an alternate payee, of 28 benefits that are required to be paid to another alternate payee under another 29 order previously determined to be a qualified domestic relations order. 30 * Sec. 24. AS 37.05.180 is amended to read: 31 Sec. 37.05.180. Two-year limitation on payment of warrants. A warrant
01 upon the state treasury may not be paid unless presented at the office of the 02 commissioner of revenue within two years of the date of its issuance. A warrant not 03 presented within that time is considered paid, and money held at the expiration of that 04 time in a special fund or account for the payment of the warrant shall be transferred to 05 the general fund, except where the warrant is for the payment of a permanent fund 06 dividend, a benefit payment or refund under AS 14.25, AS 22.25, AS 26.05, 07 AS 39.30, AS 39.35, AS 39.37, or AS 39.45, or where transfer is prohibited by the 08 federal government for state participation in a federal program. 09 * Sec. 25. AS 39.35.010 is repealed and reenacted to read: 10 Sec. 39.35.010. Purpose and effective date. (a) The purpose of this chapter 11 is to encourage qualified personnel to enter and remain in the service of the state or a 12 political subdivision or public organization of the state by establishing a system for the 13 payment of retirement, disability, and death benefits to or on behalf of the employees. 14 (b) The Public Employees' Retirement System of Alaska is hereby created. 15 The system created becomes effective as of January 1, 1961, at which time 16 contributions by the state and its employees begin. 17 (c) The retirement system established by this chapter is intended to qualify 18 under 26 U.S.C. 401(a) and 414(d) (Internal Revenue Code) as a qualified retirement 19 plan established and maintained by the state for its employees and for the employees 20 of political subdivisions, public corporations, and public organizations of the state, and 21 for the employees of other employers whose participation is authorized by this chapter 22 and who participate in this system. 23 * Sec. 26. AS 39.35 is amended by adding a new section to read: 24 Sec. 39.35.011. Exclusive benefit. The corpus or income of the assets held in 25 trust as required by the system may not be diverted to or used for other than the 26 exclusive benefit of the members or their beneficiaries. 27 * Sec. 27. AS 39.35.060 is amended to read: 28 Sec. 39.35.060. Duties of the administrator. The administrator shall 29 (1) with the assistance of a technical actuarial advisor, submit to the 30 board the required actuarial tables and the statistical data necessary for periodic 31 actuarial surveys of the operating experience of the system;
01 (2) maintain records of the employees included in the system that are 02 necessary for the proper administration of the system and furnish information 03 requested by the actuary for preparing valuations and periodic experience analyses; 04 (3) attend meetings of the board and serve as secretary of the board; 05 (4) certify to the appropriate division of the Department of 06 Administration the payments made under this chapter; 07 (5) remit to the Department of Revenue, for deposit in the pension 08 fund, assets received for the account of the system; 09 (6) formulate and recommend to the board regulations to govern the 10 operation of the system; 11 (7) formulate and recommend to the board regulations to govern the 12 operation of the supplemental employee benefit program under AS 39.30.150 - 13 39.30.180; 14 (8) publish an information handbook for the system at intervals as 15 the administrator considers appropriate. 16 * Sec. 28. AS 39.35.160(a) is amended to read: 17 (a) Beginning January 1, 1987, each peace officer or fire fighter shall 18 contribute to the system an amount equal to seven and one-half percent of the peace 19 officer's or fire fighter's compensation. Except as provided in (d) of this section, 20 beginning January 1, 1987, each other employee shall contribute to the system an 21 amount equal to six and three-quarters percent of the employee's compensation. The 22 contributions shall be deducted by the employer at the end of each payroll period. The 23 contributions shall be deducted from employee compensation before computation of 24 applicable federal taxes, and the contributions shall be treated as employer 25 contributions under 26 U.S.C. 414(h)(2). A member may not have the option of 26 making the payroll deduction directly instead of having the contribution picked 27 up by the employer. 28 * Sec. 29. AS 39.35 is amended by adding a new section to read: 29 Sec. 39.35.165. Purchase of credited service. (a) An employee who is 30 eligible to purchase credited service under AS 39.35.310, 39.35.330, 39.35.340, 31 39.35.342, 39.35.345, 39.35.350, 39.35.360, 39.35.370, a member who is eligible to
01 purchase credited service under AS 39.35.375, or an elected public official who is 02 eligible to purchase credited service under AS 39.35.381 is an employee for purposes 03 of this section. An employee may, in lieu of making payments directly to the system, 04 elect to have the employee's employer make payments as provided in this section. 05 (b) An employee may elect to have the employer make payments for all or any 06 portion of the amounts payable for the employee's purchase of credited service 07 through a salary reduction program as follows: 08 (1) the amounts paid under a salary reduction program are in lieu of 09 contributions by the employee making the election; the electing employee's salary or 10 other compensation shall be reduced by the amount paid by the employer under this 11 subsection; 12 (2) the employee shall make an election under this section to purchase 13 credited service as permitted in AS 39.35.310, 39.35.330, 39.35.340, 39.35.342, 14 39.35.345, 39.35.350, 39.35.360, 39.35.370, 39.35.375, or 39.35.381 and before the 15 employee's termination of employment; the election must specify the number of 16 payroll periods that deductions will be made from the employee's compensation and 17 the dollar amount of deductions for each payroll period during the specified number of 18 payroll periods; 19 (3) an employee who makes an election under this section to have the 20 employer make payments for less than all of the amounts payable for the employee's 21 purchase of credited service may subsequently elect to have the employer make 22 payments for all or any portion of the remaining amounts payable for the employee's 23 purchase of credited service; 24 (4) amounts paid by an employer under this section shall be treated as 25 employer contributions for the purpose of determining tax treatment under the Internal 26 Revenue Code; the amounts paid by the employer under this section may not be 27 included in the member's gross income for income tax purposes until those amounts 28 are distributed by refund or retirement benefit payments. 29 (c) Unless otherwise provided, employee contributions paid by the employer 30 under this section are treated for all other purposes under the system in the same 31 manner and to the same extent as employee contributions that are not paid by an
01 employer under this section and AS 39.35.160. The system may assess interest or 02 administrative charges attributable to any salary reduction election made under this 03 section. The interest or administrative charges shall be added to the contribution that 04 is made to the system by the employee each payroll period, and that is paid by the 05 employer. The interest or administrative charges may not be treated as employee 06 contributions for any purposes under this chapter, and an employee or an employee's 07 beneficiary does not have a right to the return of the interest or administrative charges. 08 Interest assessed under this section shall be at the rate specified by regulations adopted 09 by the board. 10 (d) For system fiscal years beginning on or after July 1, 2001, the 11 requirements of AS 39.35.370(i) may not be applied to reduce the amount of credited 12 service that may be purchased, under this section by an employee who first becomes 13 an employee of the system before July 1, 2001, to an amount that is less than the 14 amount of credited service allowed to be purchased with the application of any of the 15 limits prescribed in 26 U.S.C. 415. 16 (e) Contributions to the system to purchase credited service do not qualify for 17 treatment under this section if recognition of that service would cause an employee to 18 receive a retirement benefit for the same service from the system and from one or 19 more other retirement plans or systems of the state. 20 (f) To the extent that a payment under this section does not alter, amend, or 21 revoke any one or more currently effective elections made by the employee, the board 22 may accept employee contributions, which shall also be treated as employer 23 contributions for the purpose of determining tax treatment under the Internal Revenue 24 Code, for the payment for credited service purchases made under this section in whole 25 or in part, by any one or a combination of the following methods: 26 (1) subject to the limitations prescribed in 26 U.S.C. 401(a)(3) and 26 27 U.S.C. 402(c), accepting eligible rollover distributions directly from one or more 28 retirement programs of another employer that are qualified under 26 U.S.C. 401(a) or 29 accepting rollovers directly from an employee; 30 (2) subject to the limitations prescribed in 26 U.S.C. 408(d)(3)(A)(ii), 31 accepting from an employee conduit rollover contributions that are received by the
01 employee from one or more conduit rollover individual retirement accounts previously 02 established by the employee; 03 (3) subject to the limitations prescribed in 26 U.S.C. 403(b)(13), 04 accepting direct trustee-to-trustee transfers of all or a portion of the accounts of the 05 employee, on and after January 1, 2002, from a tax sheltered annuity described in 26 06 U.S.C. 403(b); 07 (4) subject to the limitations prescribed in 26 U.S.C. 457(e)(17), 08 accepting direct trustee-to-trustee transfers of all or a portion of the accounts of the 09 employee, on and after January 1, 2002, from an eligible deferred compensation plan 10 of a tax-exempt organization or a state or local government described in 26 U.S.C. 11 457(b); 12 (5) accepting direct trustee-to-trustee transfer from an account 13 established for the benefit of the member in AS 39.30.150 - 39.30.180 (Alaska 14 Supplemental Annuity Plan). 15 (g) Payments made under this section shall be applied to reduce the 16 employee's outstanding indebtedness described in AS 39.35.310, 39.35.330, 17 39.30.340, 39.35.342, 39.35.345, 39.35.350, 39.35.360, 39.35.370, 39.35.375, or 18 39.35.381 at the time that the contributions are received by the system. 19 (h) If an employee retires before all payments are made under this section, the 20 system shall calculate the employee's benefits based only on the payments actually 21 made with respect to the credited service purchased. 22 (i) On satisfaction of the eligibility requirements of AS 39.35.310, 39.35.330, 23 39.35.340, 39.35.341, 39.35.345, 39.35.350, 39.35.360, 39.35.370, 39.35.375, or 24 39.35.381, the requirements of this section and the administrative filing requirements 25 specified by the board, the system shall adjust the employee's credited service history 26 and add any additional service credits acquired. 27 (j) After an election is made under this section, the election is binding on and 28 irrevocable for the employee and the employee's employer during the employee's 29 remaining period of current employment, and the employee does not have the option 30 of choosing to receive the contributed amounts directly in cash. 31 * Sec. 30. AS 39.35 is amended by adding a new section to read:
01 Sec. 39.35.195. 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) Except as provided by AS 39.35.165(f)(5), the system does not accept 06 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" 14 (A) means 15 (i) an individual retirement account described in 26 16 U.S.C. 408(a); 17 (ii) an individual retirement annuity defined in 26 18 U.S.C. 408(b); 19 (iii) an annuity plan described in 26 U.S.C. 403(a); 20 (iv) a qualified trust described in 26 U.S.C. 401(a); 21 (v) on and after January 1, 2002, an annuity plan 22 described in 26 U.S.C 403(b); or 23 (vi) on or after January 1, 2002, a governmental plan 24 described in 26 U.S.C 457(b); and 25 (B) notwithstanding (A) of this paragraph, means, with respect 26 to distributions made before January 1, 2002, an individual retirement account 27 or an individual retirement annuity account described or defined in 26 U.S.C. 28 408 in the case of an eligible rollover distribution to a beneficiary who is the 29 surviving spouse of a member; 30 (4) "eligible rollover distribution" means a distribution of all or part of 31 a total account to a distributee, except for
01 (A) a distribution that is one of a series of substantially equal 02 installments payable not less frequently than annually over the life expectancy 03 of the distributee or the joint and last survivor life expectancy of the distributee 04 and the distributee's designated beneficiary, as defined in 26 U.S.C. 401(a)(9); 05 (B) a distribution that is one of a series of substantially equal 06 installments payable not less frequently than annually over a specified period 07 of 10 years or more; 08 (C) a distribution that is required under 26 U.S.C. 401(a)(9); 09 (D) the portion of any distribution that is not includable in 10 gross income; 11 (E) a distribution made on or after January 1, 2002, that is on 12 account of hardship; and 13 (F) other distributions that are reasonably expected to total less 14 than $200 during a year. 15 * Sec. 31. AS 39.35.270 is amended to read: 16 Sec. 39.35.270. Amount of employer's contributions. The amount of each 17 employer's contributions shall be determined by applying the employer's contribution 18 rate to the total compensation paid to the active employees of the employer for each 19 payroll period and by including any adjustments to contributions required by 20 AS 39.35.520(a). This amount shall be remitted by the employer to the administrator 21 in accordance with AS 39.35.610. 22 * Sec. 32. AS 39.35.360 is amended by adding a new subsection to read: 23 (l) An administrative director of the Alaska Court System who withdraws 24 from the judicial retirement system under AS 22.25.012(b) is eligible for membership 25 in the public employees' retirement system and shall receive credited service in this 26 system for service rendered as administrative director. To be eligible for membership 27 in this system under this subsection, the administrative director must contribute to the 28 system 29 (1) the amount that would have been contributed if the administrative 30 director had been a member during the period of the membership in the judicial 31 retirement system; and
01 (2) any contributions for service as administrative director refunded 02 from the public employees' retirement system at the time the administrative director 03 became a member of the judicial retirement system. 04 * Sec. 33. AS 39.35.370 is amended by adding new subsections to read: 05 (i) Notwithstanding any other provision of this chapter, the projected annual 06 benefit provided by this chapter and the benefit from all other defined benefit plans 07 required to be aggregated with the benefits from this system under the provisions of 26 08 U.S.C. 415 may not increase to an amount in excess of the amount permitted under 26 09 U.S.C. 415 at any time. In the event that any projected annual benefit of a member 10 exceeds the limitation of 26 U.S.C. 415(g) for a limitation year, the system shall take 11 any necessary remedial action to correct an excess accrued benefit. The provisions of 12 26 U.S.C. 415, and the regulations adopted under that statute, as applied to qualified 13 defined benefit plans of governmental employers are incorporated as part of the terms 14 and conditions of the system. This subsection applies to any member of this system. 15 (j) Notwithstanding (c) of this section, 16 (1) for the system fiscal years beginning on or after January 1, 1996, 17 the annual compensation of a member who joined the system after the first day of the 18 first system fiscal year beginning after December 31, 1995, that is used to calculate the 19 member's average monthly compensation may not exceed $150,000, as adjusted for 20 the cost of living in accordance with 26 U.S.C. 401(a)(17)(B); and 21 (2) for the system fiscal years beginning on or after January 1, 2002, 22 the annual compensation limitation for such a member, which is so taken into account 23 for such a member which is so taken into account for such purposes, may not exceed 24 $200,000, as adjusted for the cost of living in accordance with 26 U.S.C. 25 401(a)(17)(B). 26 (3) the cost of living adjustment in effect for a calendar year applies in 27 this subsection to a determination period beginning in the calendar year. 28 (k) Notwithstanding the definition of "compensation" in AS 39.35.680, in (j) 29 of this section, for system fiscal years beginning on or after January 1, 1998, and for 30 purposes of 26 U.S.C. 415(b)(3) and the regulations adopted under that statute, 31 (1) "annual compensation"
01 (A) includes any amount that is contributed by the employer 02 under a salary reduction agreement and that is not includable in the member's 03 gross income under 26 U.S.C. 125, 132(f)(4), 402(e)(3), 402(h), or 403(b); and 04 (B) is limited to compensation that is actually paid to a member 05 during the determination period; 06 (2) "determination period" means the system fiscal year. 07 * Sec. 34. AS 39.35 is amended by adding a new section to read: 08 Sec. 39.35.371. Distribution requirements. (a) The entire interest of a 09 member must be distributed or must begin to be distributed not later than the member's 10 required beginning date. 11 (b) If a member dies after the distribution of the member's interest has begun 12 but before the distribution has been completed, the remaining portion of the interest 13 shall continue to be distributed at least as rapidly as under the method of distribution 14 being used before the member's death. 15 (c) If a member has made a distribution election and dies before the 16 distribution of the member's interest begins, distribution of the member's entire interest 17 shall be completed by December 31 of the calendar year containing the fifth 18 anniversary of the member's death. However, if any portion of the member's interest 19 is payable to a designated beneficiary, distributions may be made over the life of the 20 designated beneficiary or over a period not greater than the life expectancy of the 21 designated beneficiary, commencing on or before December 31 of the calendar year 22 immediately following the calendar year in which the member died; and if the 23 designated beneficiary is the member's surviving spouse, the date distributions are 24 required to begin may not be earlier than the later of December 31 of the calendar year 25 (1) immediately following the calendar year in which the member died, or (2) in which 26 the member would have attained 70 1/2 years of age, whichever is earlier. If the 27 surviving spouse dies after the member but before payments to the spouse have begun, 28 the provisions of this subsection apply as if the surviving spouse were the member. 29 An amount paid to a child of the member will be treated as if it were paid to the 30 surviving spouse if the amount becomes payable to the surviving spouse when the 31 child reaches the age of majority.
01 (d) If a member has not made a distribution election before the member's 02 death, the member's designated beneficiary must elect the method of distribution not 03 later than December 31 of the calendar year (1) in which distributions would be 04 required to begin under this section, or (2) that contains the fifth anniversary of the 05 date of death of the member, whichever is earlier. If the member does not have a 06 designated beneficiary or if the designated beneficiary does not elect a method of 07 distribution, distribution of the member's entire interest must be completed by 08 December 31 of the calendar year containing the fifth anniversary of the member's 09 death. 10 (e) For purposes of (c) of this section, distribution of a member's interest is 11 considered to begin (1) on the member's required beginning date, or (2) if the 12 designated beneficiary is the member's surviving spouse and the surviving spouse dies 13 after the member but before payments to the spouse have begun, on the date 14 distribution is required to begin to the surviving spouse. If distribution in the form of 15 an annuity irrevocably commences to the member before the required beginning date, 16 the date distribution is considered to begin is the date that the distribution actually 17 commences. 18 (f) Notwithstanding any contrary provisions of this chapter, the requirements 19 of this section apply to all distributions of a member's interest and take precedence 20 over any inconsistent provisions of this chapter. 21 (g) All distributions required under this section are determined and made in 22 accordance with 26 U.S.C. 401(a)(9) and regulations adopted under that statute, 23 including any minimum distribution incidental benefit requirement. 24 (h) Unless otherwise specified, the provisions of this section apply to calendar 25 years beginning on or after January 1, 1989. 26 (i) 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. 35. AS 39.35.520(a) is amended to read: 03 (a) When a change or error is made in the records maintained by the system or 04 in the contributions made on behalf of an employee [,] or an error is made in 05 computing a benefit, and, as a result, an employee or beneficiary is entitled to receive 06 [RECEIVES] from the system more or less than the employee would have been 07 entitled to receive had the records or contributions been correct or had the error not 08 been made, (1) the records, contributions, or error shall be corrected, and (2) as far as 09 practicable, future payments or benefit entitlement shall be adjusted so that the 10 actuarial equivalent of the pension or benefit to which the employee or beneficiary 11 was correctly entitled shall be paid. An adjustment to contributions shall be picked 12 up by the employer under AS 39.35.160 or treated as an adjustment to the 13 employer's contributions under AS 39.35.270, depending upon the nature of the 14 adjustment. If no future payment is due, a person who was paid any amount to which 15 the person was not entitled is liable for repayment of that amount, and a person who 16 was not paid the full amount to which the person was entitled shall be paid the balance 17 of that amount. 18 * Sec. 36. AS 39.35.546 is amended by adding a new subsection to read: 19 (b) Benefits paid under this chapter may be subject to federal income taxes as 20 provided in 26 U.S.C. 72. 21 * Sec. 37. AS 39.35 is amended by adding a new section to read: 22 Sec 39.35.677. Special rules for treatment of qualified military service. 23 Notwithstanding any contrary provisions of this chapter, with respect to qualified 24 military service, contributions shall be made, and benefits and service credit shall be 25 provided in accordance with 26 U.S.C. 414(u). 26 * Sec. 38. AS 39.35.680(2) is amended to read: 27 (2) "actuarial adjustment" means the adjustment necessary to obtain 28 equality in value of the aggregate expected payments under two different forms of 29 pension payments, considering expected mortality and interest earnings on the basis of 30 tables referred to in the information handbook published under AS 39.35.060(8) 31 [ADOPTED FROM TIME TO TIME BY THE BOARD];
01 * Sec. 39. AS 39.35.680(34) is amended to read: 02 (34) "qualified domestic relations order" means a divorce or 03 dissolution judgment under AS 25.24, including an order approving a property 04 settlement, that 05 (A) creates or recognizes the existence of an alternate payee's 06 right to, or assigns to an alternate payee the right to, receive all or a portion of 07 employee contribution account or the benefits payable with respect to an 08 employee; 09 (B) sets out the name and last known mailing address, if any, of 10 the employee and of each alternate payee covered by the order; 11 (C) sets out the amount or percentage of the employee's benefit, 12 or of any survivor's benefit, to be paid to the alternate payee, or sets out the 13 manner in which that amount or percentage is to be determined; 14 (D) sets out the number of payments or period to which the 15 order applies; 16 (E) sets out the system to which the order applies; 17 (F) does not require any type or form of benefit or any option 18 not otherwise provided by this chapter; 19 (G) [(F)] does not require an increase of benefits in excess of 20 the amount provided by this chapter, determined on the basis of actuarial 21 value; and 22 (H) [(G)] 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. 40. AS 14.25.110(f), 14.25.110(g), and 14.25.110(h); AS 22.25.010(g); and 26 AS 39.35.451 are repealed. 27 * Sec. 41. The uncodified law of the State of Alaska is amended by adding a new section to 28 read: 29 APPLICABILITY OF CERTAIN CREDITED SERVICE PURCHASES UNDER 30 PUBLIC EMPLOYEES' AND TEACHERS' RETIREMENT SYSTEMS. (a) The provisions 31 of this Act listed below shall apply only after the Department of Administration receives
01 favorable rulings on each provision from the Internal Revenue Service that, under 26 U.S.C. 02 414(h)(2), the amounts paid by the employer will not be included in the member's gross 03 income for income tax purposes until those amounts are distributable by refund or retirement 04 benefit payment: 05 (1) the provisions of AS 14.25.075(b)(4), added by sec. 5 of this Act; 06 (2) the provisions of AS 39.35.165(b)(4), added by sec. 29 of this Act; 07 (3) the provisions of AS 39.35.165(f)(5), added by sec. 29 of this Act. 08 (b) The commissioner of administration shall promptly notify the revisor of statutes of 09 the dates that each of the rulings described in (a) of this section are received. 10 * Sec. 42. The uncodified law of the State of Alaska is amended by adding a new section to 11 read: 12 RETROACTIVITY. (a) The following provisions of this Act are retroactive to 13 January 1, 1989: 14 (1) AS 14.25.165, enacted by sec. 8 of this Act; 15 (2) AS 22.25.021, enacted by sec. 17 of this Act; 16 (3) AS 39.35.371, enacted by sec. 34 of this Act. 17 (b) The following provisions of this Act are retroactive to January 1, 1996: 18 (1) AS 14.25.110(l)(1), enacted by sec. 6 of this Act; 19 (2) AS 39.35.370(j)(1), enacted by sec. 33 of this Act. 20 (c) The following provisions of this Act are retroactive to January 1, 1998: 21 (1) AS 14.25.110(m), enacted by sec. 6 of this Act; 22 (2) AS 22.25.023(b), enacted by sec. 17 of this Act; 23 (3) AS 39.35.370(k), enacted by sec. 33 of this Act. 24 (d) The following provisions of this Act are retroactive to July 1, 2001: 25 (1) AS 14.25.075(d), enacted by sec. 5 of this Act; 26 (2) AS 39.35.165(d), enacted by sec. 29 of this Act. 27 (e) The following provisions of this Act are retroactive to January 1, 2002: 28 (1) AS 14.25.075(f), enacted by sec. 5 of this Act; 29 (2) AS 14.25.110(l)(2), enacted by sec. 6 of this Act; 30 (3) AS 39.35.165(f)(3) and (4), enacted by sec. 29 of this Act; 31 (4) AS 39.35.370(j)(2), enacted by sec. 33 of this Act.
01 * Sec. 43. This Act takes effect immediately under AS 01.10.070(c).