SCS CSSSHB 254(RLS): "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; relating to the teachers' retirement system; relating to the public employees' retirement system in regard to temporary legislative employees and peace officers and fire fighters; and providing for an effective date."
00 SENATE CS FOR CS FOR SS FOR HOUSE BILL NO. 254(RLS) 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; relating to the teachers' retirement system; relating to 09 the public employees' retirement system in regard to temporary legislative employees 10 and peace officers and fire fighters; and providing for an effective date." 11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 12 * Section 1. AS 14.25.010 is amended by adding a new subsection to read:
01 (b) The retirement system established by this chapter is intended to qualify 02 under 26 U.S.C. 401(a) and 414(d) (Internal Revenue Code) as a qualified retirement 03 plan established and maintained by the state for its employees, for the employees of 04 school districts and regional educational attendance areas in the state, and for the 05 employees of other employers whose participation is authorized by this chapter and 06 who participate in this system. 07 * Sec. 2. AS 14.25.030 is amended to read: 08 Sec. 14.25.030. Duties of the administrator. The administrator shall 09 (1) establish and maintain an adequate system of accounts for the 10 system; 11 (2) approve or disapprove claims for retirement benefits; 12 (3) serve as secretary of the Alaska Teachers' Retirement Board and 13 keep an official record of all proceedings; 14 (4) publish annually a report showing the financial condition of the 15 system; [AND] 16 (5) publish an information handbook for the system at intervals as 17 the administrator considers appropriate; and 18 (6) do whatever else may be necessary to carry out the purposes of this 19 chapter. 20 * Sec. 3. AS 14.25.050(a) is amended to read: 21 (a) Except as provided in (c) of this section, beginning January 1, 1991, each 22 teacher shall contribute to the system an amount equal to 8.65 percent of the teacher's 23 base salary accrued from July 1 to the following June 30. The employer shall deduct 24 the contribution from the teacher's salary at the end of each payroll period. The 25 contributions shall be deducted from employee compensation before the computation 26 of applicable federal taxes and shall be treated as employer contributions under 26 27 U.S.C. 414(h)(2). A member may not have the option of making the payroll 28 deduction directly in cash instead of having the contribution picked up by the 29 employer. 30 * Sec. 4. AS 14.25.070 is amended to read: 31 Sec. 14.25.070. Contributions by employer. An employer shall contribute to
01 the system an amount equal to the percentage, as certified by the administrator, of the 02 sum total of the base salaries of all teachers that is required in addition to teacher 03 contributions to provide the benefits of this chapter times the sum total of the base 04 salaries paid to teachers, including any adjustments to contributions required by 05 AS 14.25.173(a), by the employer. 06 * Sec. 5. AS 14.25 is amended by adding a new section to read: 07 Sec. 14.25.075. Purchase of credited service. (a) An employee who is 08 eligible to purchase credited service under AS 14.25.047 or 14.25.048, a member who 09 is eligible to purchase credited service under AS 14.25.060, 14.25.061, or 14.25.100, 10 or a teacher who is eligible to purchase credited service under AS 14.20.345, 11 AS 14.25.050, or 14.25.105 is a member for purposes of this section. A member, in 12 lieu of making payments directly to the system, may elect to have the member's 13 employer make payments as provided in this section. 14 (b) A member may elect to have the employer make payments for all or any 15 portion of the amounts payable for the member's purchase of credited service through 16 a salary reduction program as follows: 17 (1) the amounts paid under a salary reduction program are in lieu of 18 contributions by the member making the election; the electing member's salary or 19 other compensation shall be reduced by the amount paid by the employer under this 20 section; 21 (2) the member shall make an election under this section to purchase 22 credited service as permitted in AS 14.20.345, AS 14.25.047, 14.25.048, 14.25.050, 23 14.25.060, 14.25.061, 14.25.100, or 14.25.105 before the member's termination of 24 employment; the election must specify the number of payroll periods that deductions 25 will be made from the member's compensation and the dollar amount of deductions 26 for each payroll period during the specified number of payroll periods; 27 (3) a member who makes an election under this section to have the 28 employer make payments for less than all of the amounts payable for the member's 29 purchase of credited service may subsequently elect to have the employer make 30 payments for all or any portion of the remaining amounts payable for the member's 31 purchase of credited service;
01 (4) amounts paid by an employer under this section shall be treated as 02 employer contributions for the purpose of determining tax treatment under 26 U.S.C. 03 (Internal Revenue Code); the amounts paid by the employer under this section may not 04 be included in the member's gross income for income tax purposes until those amounts 05 are distributed by refund or retirement benefit payments. 06 (c) Unless otherwise provided, member contributions paid by the employer 07 under this section are treated for all other purposes under the system in the same 08 manner and to the same extent as member contributions that are not paid by an 09 employer under this section and AS 14.25.050. The system may assess interest or 10 administrative charges attributable to any salary reduction election made under this 11 section. The interest or administrative charges shall be added to the contribution that 12 is made to the system by the member each payroll period, and that is paid by the 13 employer. The interest or administrative charges may not be treated as member 14 contributions for any purposes under this chapter, and a member or a member's 15 beneficiary does not have a right to the return of the interest or administrative charges 16 under any other provision of this section. Interest assessed under this section shall be 17 at the rate specified by regulations adopted by the board. 18 (d) For system fiscal years beginning on or after July 1, 2001, the 19 requirements of AS 14.25.110(k) may not be applied to reduce the amount of credited 20 service that may be purchased under this section by a member who first becomes an 21 employee of the system before July 1, 2001, to an amount that is less than the amount 22 of credited service allowed to be purchased with the application of any of the limits 23 prescribed in 26 U.S.C. 415. 24 (e) Contributions to the system to purchase credited service under this section 25 do not qualify for treatment under this section if recognition of that service would 26 cause a member to receive a retirement benefit for the same service from the system 27 and from one or more other retirement plans or systems of the state. 28 (f) To the extent that a payment under this section does not alter, amend, or 29 revoke any one or more currently effective elections made by the employee, the board 30 may accept employee contributions, which shall also be treated as employer 31 contributions for the purpose of determining tax treatment under the Internal Revenue
01 Code, for the payment for credited service purchases made under this section in whole 02 or in part, by any one or a combination of the following methods: 03 (1) subject to the limitations prescribed in 26 U.S.C. 401(a)(3) and 26 04 U.S.C. 402(c), accepting eligible rollover distributions directly from one or more 05 retirement programs of another employer that are qualified under 26 U.S.C. 401(a) or 06 accepting rollovers directly from an employee; 07 (2) subject to the limitations prescribed in 26 U.S.C. 408(d)(3)(A)(ii), 08 accepting from an employee conduit rollover contributions that are received by the 09 employee from one or more conduit rollover individual retirement accounts previously 10 established by the employee; 11 (3) subject to the limitations prescribed in 26 U.S.C. 403(b)(13), 12 accepting direct trustee-to-trustee transfers of all or a portion of the accounts of the 13 employee, on and after January 1, 2002, from a tax sheltered annuity described in 26 14 U.S.C. 403(b); 15 (4) subject to the limitations prescribed in 26 U.S.C. 457(e)(17), 16 accepting direct trustee-to-trustee transfers of all or a portion of the accounts of the 17 employee, on and after January 1, 2002, from an eligible deferred compensation plan 18 of a tax-exempt organization or a state or local government described in 26 U.S.C. 19 457(b); 20 (5) accepting direct trustee-to-trustee transfer from an account 21 established for the benefit of the member in AS 39.30.150 - 39.30.180 (Alaska 22 Supplemental Annuity Plan). 23 (g) Payments made under this section shall be applied to reduce the member's 24 outstanding indebtedness described in AS 14.25.063 at the time that the contributions 25 are received by the system. 26 (h) If a member retires before all payments are made under this section, the 27 system shall calculate the member's benefits based only on the payments actually 28 made with respect to the credited service purchased. 29 (i) On satisfaction of the eligibility requirements of AS 14.20.345, 30 AS 14.25.047, 14.25.048, 14.25.050, 14.25.060, 14.25.061, 14.25.100, or 31 14.25.105, the requirements of this section, and the administrative filing requirements
01 specified by the board, the system shall adjust the member's credited service history 02 and add any additional service credits acquired. 03 (j) After an election is made under this section, the election is binding on and 04 irrevocable for the member and the member's employer during the member's 05 remaining period of current employment. After a member makes an irrevocable 06 election under this section, the member does not have the option of choosing to 07 receive the contributed amounts directly in cash. 08 * Sec. 6. AS 14.25.110 is amended by adding new subsections to read: 09 (k) Notwithstanding any other provision of this chapter, the projected annual 10 benefit provided by this chapter and the benefit from all other defined benefit plans 11 required to be aggregated with the benefits from this system under the provisions of 26 12 U.S.C. 415 may not increase to an amount in excess of the amount permitted under 26 13 U.S.C. 415 at any time. In the event that any projected annual benefit of a member 14 exceeds the limitation of 26 U.S.C. 415 for a limitation year, the system shall take any 15 necessary remedial action to correct an excess accrued benefit. The provisions of 26 16 U.S.C. 415, and the regulations adopted under that statute, as applied to qualified 17 defined benefit plans of governmental employers are incorporated as part of the terms 18 and conditions of the system. This subsection applies to any member of this system. 19 (l) Notwithstanding (d) of this section, 20 (1) for the system fiscal years beginning on or after January 1, 1996, 21 the base salary of a member who joined the system after the first day of the first 22 system fiscal year beginning after December 31, 1995, that is used to calculate the 23 member's average base salary may not exceed $150,000, as adjusted for the cost of 24 living in accordance with 26 U.S.C. 401(a)(17)(B); and 25 (2) for system fiscal years beginning on or after January 1, 2002, the 26 base salary of a member that is used to calculate the member's average base salary 27 may not exceed $200,000, as adjusted for the cost of living in accordance with 26 28 U.S.C. 401(a)(17)(B). 29 (m) Notwithstanding the definition of "base salary" in AS 14.25.220, in (l) of 30 this section, for system fiscal years beginning on or after January 1, 1998, and for 31 purposes of 26 U.S.C. 415(b)(3) and the regulations adopted under that statute,
01 (1) "base salary" 02 (A) includes any amount that is contributed by the employer 03 under a salary reduction agreement and that is not includable in the member's 04 gross income under 26 U.S.C. 125, 132(f)(4), 402(e)(3), 402(h), or 403(b); and 05 (B) is limited to compensation that is actually paid to a member 06 during the determination period; 07 (2) "determination period" means the system fiscal year. 08 * Sec. 7. AS 14.25.125(a) is amended to read: 09 (a) Subject to AS 14.25.167, a member is eligible for a normal retirement 10 salary at age 60 with at least; 11 (1) two years membership service if the member also is eligible for a 12 normal retirement benefit under the public employees' retirement system (AS 39.35); 13 or 14 (2) one year of membership service if the member is a retired 15 member of the public employees' retirement system. 16 * Sec. 8. AS 14.25.125(b) is amended to read: 17 (b) Subject to AS 14.25.167, a member is eligible for an early retirement 18 salary at age 55 with at least: 19 (1) two years of membership service if the member also is eligible for 20 an early retirement benefit under the public employees' retirement system (AS 39.35); 21 (2) one year of membership service if the member is a retired 22 member of the public employees' retirement system. 23 * Sec. 9. AS 14.25 is amended by adding a new section to read: 24 Sec. 14.25.163. Rollover distributions and rollover contributions. (a) A 25 distributee may elect, at the time and in the manner prescribed by the administrator, to 26 have all or part of an eligible rollover distribution paid directly to an eligible 27 retirement plan specified by the distributee in the direct rollover. 28 (b) Except as provided by AS 14.25.075(f)(5), the system does not accept 29 contributions of eligible rollover distributions. 30 (c) In this section, 31 (1) "direct rollover" means the payment of an eligible rollover
01 distribution by the system to an eligible retirement plan specified by a distributee who 02 is eligible to elect a direct rollover; 03 (2) "distributee" means a member or a beneficiary who is the surviving 04 spouse of the member; 05 (3) "eligible retirement plan" 06 (A) means 07 (i) an individual retirement account described in 26 08 U.S.C. 408(a); 09 (ii) an individual retirement annuity defined in 26 10 U.S.C. 408(b); 11 (iii) an annuity plan described in 26 U.S.C. 403(a); 12 (iv) a qualified trust described in 26 U.S.C. 401(a); 13 (v) on and after January 1, 2002, an annuity plan 14 described in 26 U.S.C. 403(b); or 15 (vi) on or after January 1, 2002, a governmental plan 16 described in 26 U.S.C. 457(b); and 17 (B) notwithstanding (A) of this paragraph, means, with respect 18 to distributions made before January 1, 2002, an individual retirement account 19 or an individual retirement annuity account described or defined in 26 U.S.C. 20 408 in the case of an eligible rollover distribution to a beneficiary who is the 21 surviving spouse of a member; 22 (4) "eligible rollover distribution" means a distribution of all or part of 23 a total account to a distributee, except for 24 (A) a distribution that is one of a series of substantially equal 25 installments payable not less frequently than annually over the life expectancy 26 of the distributee or the joint and last survivor life expectancy of the distributee 27 and the distributee's designated beneficiary, as defined in 26 U.S.C. 401(a)(9); 28 (B) a distribution that is one of a series of substantially equal 29 installments payable not less frequently than annually over a specified period 30 of 10 years or more; 31 (C) a distribution that is required under 26 U.S.C. 401(a)(9);
01 (D) the portion of any distribution that is not includable in 02 gross income; 03 (E) a distribution made on or after January 1, 2002, that is on 04 account of hardship; and 05 (F) other distributions that are reasonably expected to total less 06 than $200 during a year. 07 * Sec. 10. AS 14.25 is amended by adding a new section to read: 08 Sec. 14.25.165. 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 certain not greater than the life expectancy of 21 the designated beneficiary, commencing on or before December 31 of the calendar 22 year 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. 11. AS 14.25.173(a) is amended to read: 03 (a) When [IF] a change or error is made in the records maintained by the 04 system or in the contributions made on behalf of an employee or an error is made 05 in computing a benefit, and, as a result, a teacher or member or beneficiary is entitled 06 to receive [RECEIVES] from the system more or less than the teacher or member or 07 beneficiary would have been entitled to receive had the records or contributions been 08 correct or had the error not been made, (1) the records, contributions, or error shall be 09 corrected, and (2) [,] as far as practicable, future payments or benefit entitlement 10 shall be adjusted so that the actuarial equivalent of the pension or benefit to which the 11 teacher or member or beneficiary was correctly entitled will be paid. An adjustment 12 to contributions shall be picked up by the employer in accordance with 13 AS 14.25.050 or treated as an adjustment to the employer's contributions in 14 accordance with this section, depending upon the nature of the adjustment. If no 15 future benefit payments are due, a person who was paid any amount to which the 16 person was not entitled is liable for repayment of that amount, and a person who was 17 not paid the full amount to which the person was entitled shall be paid that amount. 18 * Sec. 12. AS 14.25 is amended by adding a new section to read: 19 Sec. 14.25.181. Exclusive benefit. (a) The corpus or income of the assets 20 held in trust as required by the system may not be diverted to or used for other than the 21 exclusive benefit of the members or their beneficiaries. 22 (b) If, upon termination of the system, all liabilities are satisfied, any excess 23 assets arising from erroneous actuarial computation shall revert to the employers on a 24 pro rata basis. 25 * Sec. 13. AS 14.25 is amended by adding a new section to read: 26 Sec. 14.25.195. Special rules for treatment of qualified military service. 27 Notwithstanding any contrary provisions of this chapter, with respect to qualified 28 military service, contributions shall be made and benefits and service credit shall be 29 provided in accordance with 26 U.S.C. 414(u). 30 * Sec. 14. AS 14.25.220(2) is amended to read: 31 (2) "actuarial adjustment" means the adjustment necessary to obtain
01 equality in value of the aggregate expected payments under two different forms of 02 pension payments, considering expected mortality and interest earnings on the basis of 03 tables referred to in the information handbook published under AS 14.25.030(5) 04 [ADOPTED FROM TIME TO TIME BY THE BOARD]; 05 * Sec. 15. AS 14.25.220(31) is amended to read: 06 (31) "qualified domestic relations order" means a divorce or 07 dissolution judgment under AS 25.24, including an order approving a property 08 settlement, that 09 (A) creates or recognizes the existence of an alternate payee's 10 right to, or assigns to an alternate payee the right to, receive all or a portion of 11 the member contribution account or benefits payable with respect to a member; 12 (B) sets out the name and last known mailing address, if any, of 13 the member and of each alternate payee covered by the order; 14 (C) sets out the amount or percentage of the member's benefit, 15 or of any survivor's benefit, to be paid to the alternate payee, or sets out the 16 manner in which that amount or percentage is to be determined; 17 (D) sets out the number of payments or period to which the 18 order applies; 19 (E) sets out the plan to which the order applies; 20 (F) does not require any type or form of benefit or any option 21 not otherwise provided by this chapter; 22 (G) [(F)] does not require an increase of benefits in excess of 23 the amount provided by this chapter, determined on the basis of actuarial 24 value; and 25 (H) [(G)] does not require the payment, to an alternate payee, 26 of benefits that are required to be paid to another alternate payee under another 27 order previously determined to be a qualified domestic relations order; 28 * Sec. 16. AS 14.25.220 is amended by adding new paragraphs to read: 29 (44) "Internal Revenue Code" means the Internal Revenue Code of 30 1986, as amended; 31 (45) "fiscal year" means the period beginning on July 1 and ending on
01 June 30 of the following calendar year. 02 * Sec. 17. AS 22.25.011 is amended to read: 03 Sec. 22.25.011. Contributions of judges and justices. Each justice and 04 judge appointed after July 1, 1978, shall contribute seven percent of the base annual 05 salary received by the justice or judge to the judicial retirement system. Contributions 06 shall be made for all creditable service under this chapter up to a maximum of 15 07 years. This contribution is made in the form of a deduction from compensation, at the 08 end of each payroll period, and is made even if the compensation paid in cash to the 09 justice or judge is reduced below the minimum prescribed by law. The contributions 10 shall be deducted from justice's or judge's compensation before the computation 11 of applicable federal taxes and shall be treated as employer contributions under 12 26 U.S.C. 414(h)(2). A member may not have the option of making the payroll 13 deduction directly in cash instead of having the contribution picked up by the 14 employer. Each justice and judge is considered to consent to the deduction from 15 compensation. Payment of compensation less the deduction constitutes a full 16 discharge of all claims and demands for the services rendered by the justice or judge 17 during the period covered by the payment, except as to the benefits provided for under 18 this chapter. The contributions shall be credited to the judicial retirement fund 19 established in accordance with AS 22.25.048. 20 * Sec. 18. AS 22.25.020 is amended to read: 21 Sec. 22.25.020. Retirement pay. Except as provided in AS 22.25.023(b), a 22 [A] retired justice or judge eligible for retirement pay shall receive from the date of 23 eligibility until death monthly retirement pay [COMPENSATION] equal to five 24 percent per year of service, to a maximum of 75 percent, of the monthly salary 25 authorized for justices and judges, respectively, at the time each retirement payment is 26 made. For a justice or judge who was first employed in this retirement system on or 27 after July 1, 1996, base annual salary does not include remuneration in excess of the 28 limitations set out in 26 U.S.C. 401(a)(17) (Internal Revenue Code). 29 * Sec. 19. AS 22.25 is amended by adding new sections to read: 30 Sec. 22.25.021. Distribution requirements. (a) The entire interest of a 31 member must be distributed or must begin to be distributed not later than the member's
01 required beginning date. 02 (b) If a member dies after the distribution of the member's interest has begun 03 but before the distribution has been completed, the remaining portion of the interest 04 shall continue to be distributed at least as rapidly as under the method of distribution 05 being used before the member's death. 06 (c) If a member has made a distribution election and dies before the 07 distribution of the member's interest begins, distribution of the member's entire interest 08 shall be completed by December 31 of the calendar year containing the fifth 09 anniversary of the member's death. However, if any portion of the member's interest 10 is payable to a designated beneficiary, distributions may be made over the life of the 11 designated beneficiary or over a period certain not greater than the life expectancy of 12 the designated beneficiary, commencing on or before December 31 of the calendar 13 year immediately following the calendar year in which the member died, and, if the 14 designated beneficiary is the member's surviving spouse, the date distributions are 15 required to begin may not be earlier than the later of December 31 of the calendar year 16 (1) immediately following the calendar year in which the member died, or (2) in which 17 the member would have attained 70 1/2 years of age, whichever is earlier. If the 18 surviving spouse dies after the member but before payments to the spouse have begun, 19 the provisions of this subsection apply as if the surviving spouse were the member. 20 An amount paid to a child of the member will be treated as if it were paid to the 21 surviving spouse if the amount becomes payable to the surviving spouse when the 22 child reaches the age of majority. 23 (d) If a member has not made a distribution election before the member's 24 death, the member's designated beneficiary must elect the method of distribution not 25 later than December 31 of the calendar year (1) in which distributions would be 26 required to begin under this section, or (2) that contains the fifth anniversary of the 27 date of death of the member, whichever is earlier. If the member does not have a 28 designated beneficiary or if the designated beneficiary does not elect a method of 29 distribution, distribution of the member's entire interest must be completed by 30 December 31 of the calendar year containing the fifth anniversary of the member's 31 death.
01 (e) For purposes of (c) of this section, distribution of a member's interest is 02 considered to begin (1) on the member's required beginning date, or (2) if the 03 designated beneficiary is the member's surviving spouse and the surviving spouse dies 04 after the member but before payments to the spouse have begun, on the date 05 distribution is required to begin to the surviving spouse. If distribution in the form of 06 an annuity irrevocably commences to the member before the required beginning date, 07 the date distribution is considered to begin is the date that the distribution actually 08 commences. 09 (f) Notwithstanding any contrary provisions of this chapter, the requirements 10 of this section apply to all distributions of a member's interest and take precedence 11 over any inconsistent provisions of this chapter. 12 (g) All distributions required under this section are determined and made in 13 accordance with 26 U.S.C. 401(a)(9) and regulations adopted under that statute, 14 including any minimum distribution incidental benefit requirement. 15 (h) Unless otherwise specified, the provisions of this section apply to calendar 16 years beginning on or after January 1, 1989. 17 (i) In this section, 18 (1) "designated beneficiary" means the individual who is designated as 19 the beneficiary under the system in accordance with 26 U.S.C. 401(a)(9) and 20 regulations adopted under that statute; 21 (2) "required beginning date" means the first day of April of the 22 calendar year following the calendar year in which the member either attains 70 1/2 23 years of age or actually retires, whichever is later. 24 Sec. 22.25.022. Rollover distributions and rollover contributions. (a) A 25 distributee may elect, at the time and in the manner prescribed by the administrator, to 26 have all or part of an eligible rollover distribution paid directly to an eligible 27 retirement plan specified by the distributee in the direct rollover. 28 (b) The system does not accept contributions of eligible rollover distributions. 29 (c) In this section, 30 (1) "direct rollover" means the payment of an eligible rollover 31 distribution by the system to an eligible retirement plan specified by a distributee who
01 is eligible to elect a direct rollover; 02 (2) "distributee" means a member or a beneficiary who is the surviving 03 spouse of the member; 04 (3) "eligible retirement plan" 05 (A) means 06 (i) an individual retirement account described in 26 07 U.S.C. 408(a); 08 (ii) an individual retirement annuity defined in 26 09 U.S.C. 408(b); 10 (iii) an annuity plan described in 26 U.S.C. 403(a); 11 (iv) a qualified trust described in 26 U.S.C. 401(a); 12 (v) on and after January 1, 2002, an annuity plan 13 described in 26 U.S.C. 403(b); or 14 (vi) on or after January 1, 2002, a governmental plan 15 described in 26 U.S.C. 457(b); and 16 (B) notwithstanding (A) of this paragraph, means, with respect 17 to distributions made before January 1, 2002, an individual retirement account 18 or an individual retirement annuity account described or defined in 26 U.S.C. 19 408 in the case of an eligible rollover distribution to a beneficiary who is the 20 surviving spouse of a member; 21 (4) "eligible rollover distribution" means a distribution of all or part of 22 a total account to a distributee, except for 23 (A) a distribution that is one of a series of substantially equal 24 installments payable not less frequently than annually over the life expectancy 25 of the distributee or the joint and last survivor life expectancy of the distributee 26 and the distributee's designated beneficiary, as defined in 26 U.S.C. 401(a)(9); 27 (B) a distribution that is one of a series of substantially equal 28 installments payable not less frequently than annually over a specified period 29 of 10 years or more; 30 (C) a distribution that is required under 26 U.S.C. 401(a)(9); 31 (D) the portion of any distribution that is not includable in
01 gross income; 02 (E) a distribution made on or after January 1, 2002, that is on 03 account of hardship; and 04 (F) other distributions that are reasonably expected to total less 05 than $200 during a year. 06 Sec. 22.25.023. Limitation on benefits; maximum annual compensation. 07 (a) Notwithstanding any other provisions of this chapter, the projected annual benefit 08 provided by this chapter and the benefit from all other defined benefit plans required 09 to be aggregated with the benefits from this system under the provisions of 26 U.S.C. 10 415 may not increase to an amount in excess of the amount permitted under 26 U.S.C. 11 415 at any time. In the event that any accrued benefit of a member exceeds the 12 limitation of 26 U.S.C. 415 for a limitation year, the system shall make any necessary 13 remedial action to correct an excess accrued benefit. The provisions of 26 U.S.C. 415, 14 and the regulations adopted under that statute, as applied to qualified defined benefit 15 plans of governmental employers are incorporated as part of the terms and conditions 16 of the system. This subsection shall apply to any member of this system. 17 (b) In this subsection, for system fiscal years beginning on or after January 1, 18 1998, and for purposes of 26 U.S.C. 415(b)(3) and the regulations adopted under that 19 statute, "salary" includes any amount that is contributed by the employer under a 20 salary reduction agreement and that is not includable in the member's gross income 21 under 26 U.S.C. 125, 132(f)(4), 402(e)(3), 402(h), or 403(b) and is limited to 22 compensation that is actually paid to a member during the determination period, which 23 is the fiscal year of the system. 24 * Sec. 20. AS 22.25.025 is amended to read: 25 Sec. 22.25.025. Administration. The commissioner of administration is 26 responsible for the administration of the judicial retirement system. The system is 27 intended to qualify as a governmental plan established and maintained by the 28 government of this state for the state's employees, as permitted under 26 U.S.C. 29 414(d). The commissioner shall publish an information handbook for the system 30 at intervals as the commissioner considers appropriate. 31 * Sec. 21. AS 22.25.030(a) is amended to read:
01 (a) Upon the death of a justice or judge who has served for at least two years, 02 the surviving spouse is entitled to receive survivors' benefits [MONTHLY 03 COMPENSATION] equal to one-half of the monthly retirement pay the justice or 04 judge would thereafter have been entitled to receive if retired at the time of death. If 05 at death the justice or judge was not yet entitled to retirement pay, or was or would 06 have been entitled to less than 60 percent of the monthly salary authorized for the 07 office, the surviving spouse is entitled to monthly survivors' benefits 08 [COMPENSATION] equal to 30 percent of the salary authorized for justices or 09 judges, respectively, at the time each monthly payment is made. 10 * Sec. 22. AS 22.25.048(a) is amended to read: 11 (a) The commissioner of administration shall establish a judicial retirement 12 trust fund for the judicial retirement system in which the assets of the system are 13 deposited and held. The trust fund is subject to the restrictions of (h) of this 14 section. The commissioner shall maintain accounts and records for the system. 15 * Sec. 23. AS 22.25.048 is amended by adding new subsections to read: 16 (h) The corpus or income of the assets held in trust as required by the system 17 may not be diverted to or used for other than the exclusive benefit of the members or 18 their beneficiaries. 19 (i) If, upon termination of the system, all liabilities are satisfied, any excess 20 assets arising from erroneous actuarial computation shall revert to the employer. 21 * Sec. 24. AS 22.25 is amended by adding a new section to read: 22 Sec 22.25.110. 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. 25. AS 22.25.900 is repealed and reenacted to read: 27 Sec. 22.25.900. Definitions. In this chapter, unless the context otherwise 28 requires, 29 (1) "actuarial equivalent" means equality in value of the aggregate 30 expected payments under two different forms of pension payments, considering 31 expected mortality and interest earnings on the basis of tables referred to in the
01 information handbook published under AS 22.25.025; 02 (2) "judge" means a judge of the court of appeals, a superior court 03 judge, or a district court judge; 04 (3) "justice" means a supreme court justice; 05 (4) "member" means an administrative director of the Alaska Court 06 System who is eligible to participate in the system, a justice, or a judge; 07 (5) "qualified domestic relations order" means a divorce or dissolution 08 judgment under AS 25.24, including an order approving a property settlement, that 09 (A) creates or recognizes the existence of an alternate payee's 10 right to, or assigns to an alternate payee the right to, receive all or a portion of 11 the member contributions and interest or benefits payable with respect to a 12 justice or judge; 13 (B) sets out the name and last known mailing address, if any, of 14 the justice or judge and of each alternate payee covered by the order; 15 (C) sets out the amount or percentage of the justice's or judge's 16 benefit, or of any survivor's benefit, to be paid to the alternate payee, or sets 17 out the manner in which that amount or percentage is to be determined; 18 (D) sets out the number of payments or period to which the 19 order applies; 20 (E) sets out the plan to which the order applies; 21 (F) does not require any type or form of benefit or any option 22 not otherwise provided by this chapter; 23 (G) does not require an increase of benefits in excess of the 24 amount provided by this chapter, determined on the basis of actuarial value; 25 (H) does not require the payment, to an alternate payee, of 26 benefits that are required to be paid to another alternate payee under another 27 order previously determined to be a qualified domestic relations order. 28 * Sec. 26. AS 37.05.180 is amended to read: 29 Sec. 37.05.180. Two-year limitation on payment of warrants. A warrant 30 upon the state treasury may not be paid unless presented at the office of the 31 commissioner of revenue within two years of the date of its issuance. A warrant not
01 presented within that time is considered paid, and money held at the expiration of that 02 time in a special fund or account for the payment of the warrant shall be transferred to 03 the general fund, except where the warrant is for the payment of a permanent fund 04 dividend, a benefit payment or refund under AS 14.25, AS 22.25, AS 26.05, 05 AS 39.30, AS 39.35, AS 39.37, or AS 39.45, or where transfer is prohibited by the 06 federal government for state participation in a federal program. 07 * Sec. 27. AS 39.35.010 is repealed and reenacted to read: 08 Sec. 39.35.010. Purpose and effective date. (a) The purpose of this chapter 09 is to encourage qualified personnel to enter and remain in the service of the state or a 10 political subdivision or public organization of the state by establishing a system for the 11 payment of retirement, disability, and death benefits to or on behalf of the employees. 12 (b) The Public Employees' Retirement System of Alaska is hereby created. 13 The system created becomes effective as of January 1, 1961, at which time 14 contributions by the state and its employees begin. 15 (c) The retirement system established by this chapter is intended to qualify 16 under 26 U.S.C. 401(a) and 414(d) (Internal Revenue Code) as a qualified retirement 17 plan established and maintained by the state for its employees and for the employees 18 of political subdivisions, public corporations, and public organizations of the state, and 19 for the employees of other employers whose participation is authorized by this chapter 20 and who participate in this system. 21 * Sec. 28. AS 39.35 is amended by adding a new section to read: 22 Sec. 39.35.011. Exclusive benefit. The corpus or income of the assets held in 23 trust as required by the system may not be diverted to or used for other than the 24 exclusive benefit of the members or their beneficiaries. 25 * Sec. 29. AS 39.35.060 is amended to read: 26 Sec. 39.35.060. Duties of the administrator. The administrator shall 27 (1) with the assistance of a technical actuarial advisor, submit to the 28 board the required actuarial tables and the statistical data necessary for periodic 29 actuarial surveys of the operating experience of the system; 30 (2) maintain records of the employees included in the system that are 31 necessary for the proper administration of the system and furnish information
01 requested by the actuary for preparing valuations and periodic experience analyses; 02 (3) attend meetings of the board and serve as secretary of the board; 03 (4) certify to the appropriate division of the Department of 04 Administration the payments made under this chapter; 05 (5) remit to the Department of Revenue, for deposit in the pension 06 fund, assets received for the account of the system; 07 (6) formulate and recommend to the board regulations to govern the 08 operation of the system; 09 (7) formulate and recommend to the board regulations to govern the 10 operation of the supplemental employee benefit program under AS 39.30.150 - 11 39.30.180; 12 (8) publish an information handbook for the system at intervals as 13 the administrator considers appropriate. 14 * Sec. 30. AS 39.35.160(a) is amended to read: 15 (a) Beginning January 1, 1987, each peace officer or fire fighter shall 16 contribute to the system an amount equal to seven and one-half percent of the peace 17 officer's or fire fighter's compensation. Except as provided in (d) of this section, 18 beginning January 1, 1987, each other employee shall contribute to the system an 19 amount equal to six and three-quarters percent of the employee's compensation. The 20 contributions shall be deducted by the employer at the end of each payroll period. The 21 contributions shall be deducted from employee compensation before computation of 22 applicable federal taxes, and the contributions shall be treated as employer 23 contributions under 26 U.S.C. 414(h)(2). A member may not have the option of 24 making the payroll deduction directly instead of having the contribution picked 25 up by the employer. 26 * Sec. 31. AS 39.35 is amended by adding a new section to read: 27 Sec. 39.35.165. Purchase of credited service. (a) An employee who is 28 eligible to purchase credited service under AS 39.35.310, 39.35.330, 39.35.340, 29 39.35.342, 39.35.345, 39.35.350, 39.35.360, 39.35.370, a member who is eligible to 30 purchase credited service under AS 39.35.375, or an elected public official who is 31 eligible to purchase credited service under AS 39.35.381 is an employee for purposes
01 of this section. An employee may, in lieu of making payments directly to the system, 02 elect to have the employee's employer make payments as provided in this section. 03 (b) An employee may elect to have the employer make payments for all or any 04 portion of the amounts payable for the employee's purchase of credited service 05 through a salary reduction program as follows: 06 (1) the amounts paid under a salary reduction program are in lieu of 07 contributions by the employee making the election; the electing employee's salary or 08 other compensation shall be reduced by the amount paid by the employer under this 09 subsection; 10 (2) the employee shall make an election under this section to purchase 11 credited service as permitted in AS 39.35.310, 39.35.330, 39.35.340, 39.35.342, 12 39.35.345, 39.35.350, 39.35.360, 39.35.370, 39.35.375, or 39.35.381 and before the 13 employee's termination of employment; the election must specify the number of 14 payroll periods that deductions will be made from the employee's compensation and 15 the dollar amount of deductions for each payroll period during the specified number of 16 payroll periods; 17 (3) an employee who makes an election under this section to have the 18 employer make payments for less than all of the amounts payable for the employee's 19 purchase of credited service may subsequently elect to have the employer make 20 payments for all or any portion of the remaining amounts payable for the employee's 21 purchase of credited service; 22 (4) amounts paid by an employer under this section shall be treated as 23 employer contributions for the purpose of determining tax treatment under the Internal 24 Revenue Code; the amounts paid by the employer under this section may not be 25 included in the member's gross income for income tax purposes until those amounts 26 are distributed by refund or retirement benefit payments. 27 (c) Unless otherwise provided, employee contributions paid by the employer 28 under this section are treated for all other purposes under the system in the same 29 manner and to the same extent as employee contributions that are not paid by an 30 employer under this section and AS 39.35.160. The system may assess interest or 31 administrative charges attributable to any salary reduction election made under this
01 section. The interest or administrative charges shall be added to the contribution that 02 is made to the system by the employee each payroll period, and that is paid by the 03 employer. The interest or administrative charges may not be treated as employee 04 contributions for any purposes under this chapter, and an employee or an employee's 05 beneficiary does not have a right to the return of the interest or administrative charges. 06 Interest assessed under this section shall be at the rate specified by regulations adopted 07 by the board. 08 (d) For system fiscal years beginning on or after July 1, 2001, the 09 requirements of AS 39.35.370(i) may not be applied to reduce the amount of credited 10 service that may be purchased, under this section by an employee who first becomes 11 an employee of the system before July 1, 2001, to an amount that is less than the 12 amount of credited service allowed to be purchased with the application of any of the 13 limits prescribed in 26 U.S.C. 415. 14 (e) Contributions to the system to purchase credited service do not qualify for 15 treatment under this section if recognition of that service would cause an employee to 16 receive a retirement benefit for the same service from the system and from one or 17 more other retirement plans or systems of the state. 18 (f) To the extent that a payment under this section does not alter, amend, or 19 revoke any one or more currently effective elections made by the employee, the board 20 may accept employee contributions, which shall also be treated as employer 21 contributions for the purpose of determining tax treatment under the Internal Revenue 22 Code, for the payment for credited service purchases made under this section in whole 23 or in part, by any one or a combination of the following methods: 24 (1) subject to the limitations prescribed in 26 U.S.C. 401(a)(3) and 26 25 U.S.C. 402(c), accepting eligible rollover distributions directly from one or more 26 retirement programs of another employer that are qualified under 26 U.S.C. 401(a) or 27 accepting rollovers directly from an employee; 28 (2) subject to the limitations prescribed in 26 U.S.C. 408(d)(3)(A)(ii), 29 accepting from an employee conduit rollover contributions that are received by the 30 employee from one or more conduit rollover individual retirement accounts previously 31 established by the employee;
01 (3) 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 employee, on and after January 1, 2002, from a tax sheltered annuity described in 26 04 U.S.C. 403(b); 05 (4) 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 employee, 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 (5) accepting direct trustee-to-trustee transfer from an account 11 established for the benefit of the member in AS 39.30.150 - 39.30.180 (Alaska 12 Supplemental Annuity Plan). 13 (g) Payments made under this section shall be applied to reduce the 14 employee's outstanding indebtedness described in AS 39.35.310, 39.35.330, 15 39.30.340, 39.35.342, 39.35.345, 39.35.350, 39.35.360, 39.35.370, 39.35.375, or 16 39.35.381 at the time that the contributions are received by the system. 17 (h) If an employee retires before all payments are made under this section, the 18 system shall calculate the employee's benefits based only on the payments actually 19 made with respect to the credited service purchased. 20 (i) On satisfaction of the eligibility requirements of AS 39.35.310, 39.35.330, 21 39.35.340, 39.35.341, 39.35.345, 39.35.350, 39.35.360, 39.35.370, 39.35.375, or 22 39.35.381, the requirements of this section and the administrative filing requirements 23 specified by the board, the system shall adjust the employee's credited service history 24 and add any additional service credits acquired. 25 (j) After an election is made under this section, the election is binding on and 26 irrevocable for the employee and the employee's employer during the employee's 27 remaining period of current employment, and the employee does not have the option 28 of choosing to receive the contributed amounts directly in cash. 29 * Sec. 32. AS 39.35 is amended by adding a new section to read: 30 Sec. 39.35.195. Rollover distributions and rollover contributions. (a) A 31 distributee may elect, at the time and in the manner prescribed by the administrator, to
01 have all or part of an eligible rollover distribution paid directly to an eligible 02 retirement plan specified by the distributee in the direct rollover. 03 (b) Except as provided by AS 39.35.165(f)(5), the system does not accept 04 contributions of eligible rollover distributions. 05 (c) In this section, 06 (1) "direct rollover" means the payment of an eligible rollover 07 distribution by the system to an eligible retirement plan specified by a distributee who 08 is eligible to elect a direct rollover; 09 (2) "distributee" means a member or a beneficiary who is the surviving 10 spouse of the member; 11 (3) "eligible retirement plan" 12 (A) means 13 (i) an individual retirement account described in 26 14 U.S.C. 408(a); 15 (ii) an individual retirement annuity defined in 26 16 U.S.C. 408(b); 17 (iii) an annuity plan described in 26 U.S.C. 403(a); 18 (iv) a qualified trust described in 26 U.S.C. 401(a); 19 (v) on and after January 1, 2002, an annuity plan 20 described in 26 U.S.C. 403(b); or 21 (vi) on or after January 1, 2002, a governmental plan 22 described in 26 U.S.C. 457(b); and 23 (B) notwithstanding (A) of this paragraph, means, with respect 24 to distributions made before January 1, 2002, an individual retirement account 25 or an individual retirement annuity account described or defined in 26 U.S.C. 26 408 in the case of an eligible rollover distribution to a beneficiary who is the 27 surviving spouse of a member; 28 (4) "eligible rollover distribution" means a distribution of all or part of 29 a total account to a distributee, except for 30 (A) a distribution that is one of a series of substantially equal 31 installments payable not less frequently than annually over the life expectancy
01 of the distributee or the joint and last survivor life expectancy of the distributee 02 and the distributee's designated beneficiary, as defined in 26 U.S.C. 401(a)(9); 03 (B) a distribution that is one of a series of substantially equal 04 installments payable not less frequently than annually over a specified period 05 of 10 years or more; 06 (C) a distribution that is required under 26 U.S.C. 401(a)(9); 07 (D) the portion of any distribution that is not includable in 08 gross income; 09 (E) a distribution made on or after January 1, 2002, that is on 10 account of hardship; and 11 (F) other distributions that are reasonably expected to total less 12 than $200 during a year. 13 * Sec. 33. AS 39.35.270 is amended to read: 14 Sec. 39.35.270. Amount of employer's contributions. The amount of each 15 employer's contributions shall be determined by applying the employer's contribution 16 rate to the total compensation paid to the active employees of the employer for each 17 payroll period and by including any adjustments to contributions required by 18 AS 39.35.520(a). This amount shall be remitted by the employer to the administrator 19 in accordance with AS 39.35.610. 20 * Sec. 34. AS 39.35.360(g) is amended to read: 21 (g) An employee is eligible to receive up to 10 years of credited service for 22 service rendered before July 1, 1979, as a temporary employee of the legislature of the 23 state or territory during legislative sessions. To receive retroactive credited service 24 under this subsection, an employee shall claim the service before July 1, 2003, or 25 before retiring, whichever occurs first [1980]. When the employee claims the 26 service, an indebtedness of the employee to the system shall be established. For 27 benefits that do not vary based on the [THE] amount of retroactive credited 28 service, the [THIS] indebtedness shall be established on the date [IS EQUAL TO 29 THE CONTRIBUTIONS] the employee claims the credit, with interest accruing on 30 the [WOULD HAVE MADE IF THE EMPLOYEE HAD BEEN ELIGIBLE FOR 31 MEMBERSHIP IN THE SYSTEM. THE RATE USED TO CALCULATE THESE
01 CONTRIBUTIONS MAY NOT BE LESS THAN THE RATE IN EFFECT ON 02 JANUARY 1, 1961. INTEREST AS PRESCRIBED BY REGULATION ACCRUES 03 ON THIS] indebtedness beginning July 1, 2003. For benefits that vary based on the 04 amount of retroactive credited service, the indebtedness shall be established on 05 the date the employee retires, with interest accruing on the indebtedness 06 beginning on the date of retirement [1980]. Any outstanding indebtedness that 07 exists at the time the employee retires requires an actuarial adjustment to the benefits 08 that are based upon retroactive credited service under this subsection. 09 * Sec. 35. AS 39.35.360 is amended by adding a new subsection to read: 10 (l) An administrative director of the Alaska Court System who withdraws 11 from the judicial retirement system under AS 22.25.012(b) is eligible for membership 12 in the public employees' retirement system and shall receive credited service in this 13 system for service rendered as administrative director. To be eligible for membership 14 in this system under this subsection, the administrative director must contribute to the 15 system 16 (1) the amount that would have been contributed if the administrative 17 director had been a member during the period of the membership in the judicial 18 retirement system; and 19 (2) any contributions for service as administrative director refunded 20 from the public employees' retirement system at the time the administrative director 21 became a member of the judicial retirement system. 22 * Sec. 36. AS 39.35.370 is amended by adding new subsections to read: 23 (i) Notwithstanding any other provision of this chapter, the projected annual 24 benefit provided by this chapter and the benefit from all other defined benefit plans 25 required to be aggregated with the benefits from this system under the provisions of 26 26 U.S.C. 415 may not increase to an amount in excess of the amount permitted under 26 27 U.S.C. 415 at any time. In the event that any projected annual benefit of a member 28 exceeds the limitation of 26 U.S.C. 415(g) for a limitation year, the system shall take 29 any necessary remedial action to correct an excess accrued benefit. The provisions of 30 26 U.S.C. 415, and the regulations adopted under that statute, as applied to qualified 31 defined benefit plans of governmental employers are incorporated as part of the terms
01 and conditions of the system. This subsection applies to any member of this system. 02 (j) Notwithstanding (c) of this section, 03 (1) for the system fiscal years beginning on or after January 1, 1996, 04 the annual compensation of a member who joined the system after the first day of the 05 first system fiscal year beginning after December 31, 1995, that is used to calculate the 06 member's average monthly compensation may not exceed $150,000, as adjusted for 07 the cost of living in accordance with 26 U.S.C. 401(a)(17)(B); and 08 (2) for the system fiscal years beginning on or after January 1, 2002, 09 the annual compensation limitation for such a member, which is so taken into account 10 for such a member which is so taken into account for such purposes, may not exceed 11 $200,000, as adjusted for the cost of living in accordance with 26 U.S.C. 12 401(a)(17)(B). 13 (3) the cost of living adjustment in effect for a calendar year applies in 14 this subsection to a determination period beginning in the calendar year. 15 (k) Notwithstanding the definition of "compensation" in AS 39.35.680, in (j) 16 of this section, for system fiscal years beginning on or after January 1, 1998, and for 17 purposes of 26 U.S.C. 415(b)(3) and the regulations adopted under that statute, 18 (1) "annual compensation" 19 (A) includes any amount that is contributed by the employer 20 under a salary reduction agreement and that is not includable in the member's 21 gross income under 26 U.S.C. 125, 132(f)(4), 402(e)(3), 402(h), or 403(b); and 22 (B) is limited to compensation that is actually paid to a member 23 during the determination period; 24 (2) "determination period" means the system fiscal year. 25 * Sec. 37. AS 39.35 is amended by adding a new section to read: 26 Sec. 39.35.371. Distribution requirements. (a) The entire interest of a 27 member must be distributed or must begin to be distributed not later than the member's 28 required beginning date. 29 (b) If a member dies after the distribution of the member's interest has begun 30 but before the distribution has been completed, the remaining portion of the interest 31 shall continue to be distributed at least as rapidly as under the method of distribution
01 being used before the member's death. 02 (c) If a member has made a distribution election and dies before the 03 distribution of the member's interest begins, distribution of the member's entire interest 04 shall be completed by December 31 of the calendar year containing the fifth 05 anniversary of the member's death. However, if any portion of the member's interest 06 is payable to a designated beneficiary, distributions may be made over the life of the 07 designated beneficiary or over a period not greater than the life expectancy of the 08 designated beneficiary, commencing on or before December 31 of the calendar year 09 immediately following the calendar year in which the member died; and if the 10 designated beneficiary is the member's surviving spouse, the date distributions are 11 required to begin may not be earlier than the later of December 31 of the calendar year 12 (1) immediately following the calendar year in which the member died, or (2) in which 13 the member would have attained 70 1/2 years of age, whichever is earlier. If the 14 surviving spouse dies after the member but before payments to the spouse have begun, 15 the provisions of this subsection apply as if the surviving spouse were the member. 16 An amount paid to a child of the member will be treated as if it were paid to the 17 surviving spouse if the amount becomes payable to the surviving spouse when the 18 child reaches the age of majority. 19 (d) If a member has not made a distribution election before the member's 20 death, the member's designated beneficiary must elect the method of distribution not 21 later than December 31 of the calendar year (1) in which distributions would be 22 required to begin under this section, or (2) that contains the fifth anniversary of the 23 date of death of the member, whichever is earlier. If the member does not have a 24 designated beneficiary or if the designated beneficiary does not elect a method of 25 distribution, distribution of the member's entire interest must be completed by 26 December 31 of the calendar year containing the fifth anniversary of the member's 27 death. 28 (e) For purposes of (c) of this section, distribution of a member's interest is 29 considered to begin (1) on the member's required beginning date, or (2) if the 30 designated beneficiary is the member's surviving spouse and the surviving spouse dies 31 after the member but before payments to the spouse have begun, on the date
01 distribution is required to begin to the surviving spouse. If distribution in the form of 02 an annuity irrevocably commences to the member before the required beginning date, 03 the date distribution is considered to begin is the date that the distribution actually 04 commences. 05 (f) Notwithstanding any contrary provisions of this chapter, the requirements 06 of this section apply to all distributions of a member's interest and take precedence 07 over any inconsistent provisions of this chapter. 08 (g) All distributions required under this section are determined and made in 09 accordance with 26 U.S.C. 401(a)(9) and regulations adopted under that statute, 10 including any minimum distribution incidental benefit requirement. 11 (h) Unless otherwise specified, the provisions of this section apply to calendar 12 years beginning on or after January 1, 1989. 13 (i) In this section, 14 (1) "designated beneficiary" means the individual who is designated as 15 the beneficiary under the system in accordance with 26 U.S.C. 401(a)(9) and 16 regulations adopted under that statute; 17 (2) "required beginning date" means the first day of April of the 18 calendar year following the calendar year in which the member either attains 70 1/2 19 years of age or actually retires, whichever is later. 20 * Sec. 38. AS 39.35.410 is amended by adding new subsections to read: 21 (i) Notwithstanding (h) of this section, at the time a peace officer or fire 22 fighter receiving occupational disability benefits under this section first attains 23 eligibility for normal retirement, the employee shall irrevocably elect to receive 24 retirement benefits in the amount calculated as the 25 (1) monthly occupational disability benefit calculated under (d) of this 26 section; or 27 (2) employee's retirement benefit calculated under the provisions of 28 AS 39.35.370(c). 29 (j) Notwithstanding (b)(3) of this section, a peace officer or fire fighter who 30 retires under (i) of this section is not subject to the requirements of (g) of this section 31 or AS 39.35.415 during retirement.
01 * Sec. 39. AS 39.35.430(b) is amended to read: 02 (b) If (1) the death of an employee occurs before the employee's retirement 03 and before the employee's normal retirement date, and (2) the proximate cause of 04 death is a bodily injury sustained or a hazard undergone while in the performance and 05 within the scope of the employee's duties, and (3) the injury or hazard is not the 06 proximate result of wilful negligence of the employee, a monthly survivor's pension 07 [EQUAL TO 40 PERCENT OF THE EMPLOYEE'S MONTHLY COMPENSATION 08 IN THE MONTH IN WHICH THE EMPLOYEE DIES] shall be paid to the surviving 09 spouse. If there is no surviving spouse or if the spouse later dies, the monthly 10 survivor's pension shall be paid in equal parts to the dependent children of the 11 employee. On the date the normal retirement of the employee would have occurred if 12 the employee had lived, monthly payments shall equal the monthly amount of the 13 normal retirement benefit to which the employee, had the employee lived and 14 continued employment until the employee's normal retirement date, would have been 15 entitled with an average monthly compensation as existed at death and the credited 16 service to which the employee would have been entitled. 17 * Sec. 40. AS 39.35.430 is amended by adding a new subsection to read: 18 (g) The monthly survivor's pension in (b) of this section for survivors of 19 employees who were not peace officers or fire fighters is 40 percent of the employee's 20 monthly compensation in the month in which the employee dies. The monthly 21 survivor's pension in (b) of this section for survivors of employees who were peace 22 officers or fire fighters is the greater of 23 (1) 50 percent of the monthly compensation in the month in which the 24 employee dies; or 25 (2) 75 percent of the employee's retirement benefit calculated under 26 the provisions of AS 39.35.370(c) if the employee had survived to normal retirement 27 age. 28 * Sec. 41. AS 39.35.520(a) is amended to read: 29 (a) When a change or error is made in the records maintained by the system or 30 in the contributions made on behalf of an employee [,] or an error is made in 31 computing a benefit, and, as a result, an employee or beneficiary is entitled to receive
01 [RECEIVES] from the system more or less than the employee would have been 02 entitled to receive had the records or contributions been correct or had the error not 03 been made, (1) the records, contributions, or error shall be corrected, and (2) as far as 04 practicable, future payments or benefit entitlement shall be adjusted so that the 05 actuarial equivalent of the pension or benefit to which the employee or beneficiary 06 was correctly entitled shall be paid. An adjustment to contributions shall be picked 07 up by the employer under AS 39.35.160 or treated as an adjustment to the 08 employer's contributions under AS 39.35.270, depending upon the nature of the 09 adjustment. If no future payment is due, a person who was paid any amount to which 10 the person was not entitled is liable for repayment of that amount, and a person who 11 was not paid the full amount to which the person was entitled shall be paid the balance 12 of that amount. 13 * Sec. 42. AS 39.35.546 is amended by adding a new subsection to read: 14 (b) Benefits paid under this chapter may be subject to federal income taxes as 15 provided in 26 U.S.C. 72. 16 * Sec. 43. AS 39.35 is amended by adding a new section to read: 17 Sec 39.35.677. Special rules for treatment of qualified military service. 18 Notwithstanding any contrary provisions of this chapter, with respect to qualified 19 military service, contributions shall be made, and benefits and service credit shall be 20 provided in accordance with 26 U.S.C. 414(u). 21 * Sec. 44. AS 39.35.680(2) is amended to read: 22 (2) "actuarial adjustment" means the adjustment necessary to obtain 23 equality in value of the aggregate expected payments under two different forms of 24 pension payments, considering expected mortality and interest earnings on the basis of 25 tables referred to in the information handbook published under AS 39.35.060(8) 26 [ADOPTED FROM TIME TO TIME BY THE BOARD]; 27 * Sec. 45. AS 39.35.680(4) is amended to read: 28 (4) "average monthly compensation" means the result obtained by 29 dividing the compensation earned by an employee during a considered period by the 30 number of months, including fractional months, for which compensation was earned; 31 an employee must have at least 115 days of credited service in the last payroll year in
01 order for that year to be used as part of the consecutive payroll years; the considered 02 period consists of 03 (A) for employees first hired before July 1, 1996, the three 04 consecutive payroll years during the period of credited service that yield the 05 highest average; 06 (B) for employees first hired on or after July 1, 1996, the five 07 consecutive payroll years during the period of credited service that yield the 08 highest average; 09 (C) if the employee does not have the number of consecutive 10 payroll years required by (A) or (B) of this paragraph, the actual number of 11 months, including fractional months, that the employee worked; 12 (D) for an employee who has made an election under 13 AS 39.35.300(c) or 39.35.310(c), the actual number of months, including 14 fractional months, that the employee worked; 15 (E) for a peace officer or fire fighter hired at any time, the 16 three consecutive payroll years during the period of credited service that 17 yield the highest average; 18 * Sec. 46. AS 39.35.680(34) is amended to read: 19 (34) "qualified domestic relations order" means a divorce or 20 dissolution judgment under AS 25.24, including an order approving a property 21 settlement, that 22 (A) creates or recognizes the existence of an alternate payee's 23 right to, or assigns to an alternate payee the right to, receive all or a portion of 24 employee contribution account or the benefits payable with respect to an 25 employee; 26 (B) sets out the name and last known mailing address, if any, of 27 the employee and of each alternate payee covered by the order; 28 (C) sets out the amount or percentage of the employee's benefit, 29 or of any survivor's benefit, to be paid to the alternate payee, or sets out the 30 manner in which that amount or percentage is to be determined; 31 (D) sets out the number of payments or period to which the
01 order applies; 02 (E) sets out the system to which the order applies; 03 (F) does not require any type or form of benefit or any option 04 not otherwise provided by this chapter; 05 (G) [(F)] does not require an increase of benefits in excess of 06 the amount provided by this chapter, determined on the basis of actuarial 07 value; and 08 (H) [(G)] does not require the payment to an alternate payee of 09 benefits that are required to be paid to another alternate payee under another 10 order previously determined to be a qualified domestic relations order; 11 * Sec. 47. AS 14.25.110(f), 14.25.110(g), and 14.25.110(h); AS 22.25.010(g); and 12 AS 39.35.451 are repealed. 13 * Sec. 48. The uncodified law of the State of Alaska is amended by adding a new section to 14 read: 15 APPLICABILITY OF CERTAIN CREDITED SERVICE PURCHASES UNDER 16 PUBLIC EMPLOYEES' AND TEACHERS' RETIREMENT SYSTEMS. (a) The provisions 17 of this Act listed below shall apply only after the Department of Administration receives 18 favorable rulings on each provision from the Internal Revenue Service that, under 26 U.S.C. 19 414(h)(2), the amounts paid by the employer will not be included in the member's gross 20 income for income tax purposes until those amounts are distributable by refund or retirement 21 benefit payment: 22 (1) the provisions of AS 14.25.075(b)(4), added by sec. 5 of this Act; 23 (2) the provisions of AS 39.35.165(b)(4), added by sec. 31 of this Act; 24 (3) the provisions of AS 39.35.165(f)(5), added by sec. 31 of this Act. 25 (b) The commissioner of administration shall promptly notify the revisor of statutes of 26 the dates that each of the rulings described in (a) of this section are received. 27 * Sec. 49. The uncodified law of the State of Alaska is amended by adding a new section to 28 read: 29 RETROACTIVITY. (a) The following provisions of this Act are retroactive to 30 January 1, 1989: 31 (1) AS 14.25.165, enacted by sec. 10 of this Act;
01 (2) AS 22.25.021, enacted by sec. 19 of this Act; 02 (3) AS 39.35.371, enacted by sec. 37 of this Act. 03 (b) The following provisions of this Act are retroactive to January 1, 1996: 04 (1) AS 14.25.110(l)(1), enacted by sec. 6 of this Act; 05 (2) AS 39.35.370(j)(1), enacted by sec. 36 of this Act. 06 (c) The following provisions of this Act are retroactive to January 1, 1998: 07 (1) AS 14.25.110(m), enacted by sec. 6 of this Act; 08 (2) AS 22.25.023(b), enacted by sec. 19 of this Act; 09 (3) AS 39.35.370(k), enacted by sec. 36 of this Act. 10 (d) The following provisions of this Act are retroactive to July 1, 2001: 11 (1) AS 14.25.075(d), enacted by sec. 5 of this Act; 12 (2) AS 39.35.165(d), enacted by sec. 31 of this Act. 13 (e) The following provisions of this Act are retroactive to January 1, 2002: 14 (1) AS 14.25.075(f)(3) and (4), enacted by sec. 5 of this Act; 15 (2) AS 14.25.110(l)(2), enacted by sec. 6 of this Act; 16 (3) AS 39.35.165(f)(3) and (4), enacted by sec. 31 of this Act; 17 (4) AS 39.35.370(j)(2), enacted by sec. 36 of this Act. 18 * Sec. 50. This Act takes effect immediately under AS 01.10.070(c).