HB 126: "An Act relating to new defined benefit tiers in the public employees' retirement system and the teachers' retirement system; providing certain employees an opportunity to choose between the defined benefit and defined contribution plans of the public employees' retirement system and the teachers' retirement system; and providing for an effective date."
00 HOUSE BILL NO. 126 01 "An Act relating to new defined benefit tiers in the public employees' retirement system 02 and the teachers' retirement system; providing certain employees an opportunity to 03 choose between the defined benefit and defined contribution plans of the public 04 employees' retirement system and the teachers' retirement system; and providing for an 05 effective date." 06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 07 * Section 1. AS 14.25.009 is repealed and reenacted to read: 08 Sec. 14.25.009. Applicability of AS 14.25.009 - 14.25.220. (a) The provisions 09 of AS 14.25.009 - 14.25.220 apply to teachers who are eligible to be members of the 10 teachers' retirement system under AS 14.25.009 - 14.25.220 and are not members of 11 the defined contribution retirement plan under AS 14.25.310 - 14.25.590. 12 (b) An employer that participates in the plan shall also participate in the 13 defined contribution retirement plan under AS 14.25.310 - 14.25.590.
01 * Sec. 2. AS 14.25.040(a) is amended to read: 02 (a) Unless a teacher or member participates in a university retirement program 03 under AS 14.40.661 - 14.40.799 or has elected under AS 14.25.330 or former 04 AS 14.25.540 to participate in the plan established in AS 14.25.310 - 14.25.590, a 05 teacher or member contracting for service with a participating employer is subject to 06 AS 14.25.009 - 14.25.220. 07 * Sec. 3. AS 14.25.050(a) is amended to read: 08 (a) Except as provided in (c) and (e) of this section, beginning January 1, 09 1991, each member shall contribute to the plan an amount equal to 8.65 percent of the 10 member's base salary accrued from July 1 to the following June 30. [THE 11 EMPLOYER SHALL DEDUCT THE CONTRIBUTION FROM THE MEMBER'S 12 SALARY AT THE END OF EACH PAYROLL PERIOD, AND THE 13 CONTRIBUTION SHALL BE CREDITED BY THE PLAN TO THE MEMBER 14 CONTRIBUTION ACCOUNT. THE CONTRIBUTIONS SHALL BE DEDUCTED 15 FROM EMPLOYEE COMPENSATION BEFORE THE COMPUTATION OF 16 APPLICABLE FEDERAL TAXES AND SHALL BE TREATED AS EMPLOYER 17 CONTRIBUTIONS UNDER 26 U.S.C. 414(h)(2). A MEMBER MAY NOT HAVE 18 THE OPTION OF MAKING THE PAYROLL DEDUCTION DIRECTLY IN CASH 19 INSTEAD OF HAVING THE CONTRIBUTION PICKED UP BY THE 20 EMPLOYER.] 21 * Sec. 4. AS 14.25.050 is amended by adding new subsections to read: 22 (e) Except as provided in (a) and (c) of this section, a member who first 23 participates in the plan after June 30, 2006, shall contribute to the plan an amount 24 equal to eight percent of the employee's base salary accrued from July 1 to the 25 following June 30. 26 (f) The employer shall deduct the contributions under (a) and (e) of this 27 section from the member's salary at the end of each payroll period, and the 28 contributions shall be credited by the plan to the member contribution account. The 29 contributions shall be deducted from employee compensation before the computation 30 of applicable federal taxes and shall be treated as employer contributions under 26 31 U.S.C. 414(h)(2). A member may not have the option of making the payroll deduction
01 directly in cash instead of having the contribution picked up by the employer. 02 * Sec. 5. AS 14.25.130(c) is amended to read: 03 (c) Once each year during the first five years following appointment to 04 disability under this section, and once every three-year period thereafter, the 05 administrator may require a disabled member who first became a member before 06 July 1, 2006, and who has not attained eligibility for normal retirement to undergo a 07 medical or mental examination by a competent physician. The administrator shall 08 suspend any disability benefit for a disabled member who refuses to undergo a 09 physical or mental examination when requested under this section. 10 * Sec. 6. AS 14.25.130 is amended by adding new subsections to read: 11 (g) A person who first becomes a member after June 30, 2006, and who is 12 receiving a benefit under this section shall undergo a medical examination as often as 13 the administrator considers advisable, but not more frequently than once each year. 14 The administrator shall determine the place of the examination and engage the 15 physician or physicians. If, in the judgment of the administrator, the examination 16 indicates that the disabled member is no longer incapacitated because of a total and 17 apparently permanent occupational disability, the administrator may not issue further 18 disability benefits to the member. 19 (h) A person who first becomes a member after June 30, 2006, and who is 20 appointed to disability benefits shall apply to the division of vocational rehabilitation 21 in the Department of Labor and Workforce Development within 30 days after the date 22 disability benefits commence. The member shall be enrolled in a rehabilitation 23 program if the member meets the eligibility requirements of the division of vocational 24 rehabilitation. Unless the member demonstrates cause, benefits shall terminate at the 25 end of the first month in which a disabled member 26 (1) fails to report to the division of vocational rehabilitation; 27 (2) is certified by the division of vocational rehabilitation as failing to 28 cooperate in a vocational rehabilitation program; 29 (3) fails to interview for a job; or 30 (4) fails to accept a position offered. 31 * Sec. 7. AS 14.25.168(d) is amended to read:
01 (d) A benefit recipient who first becomes a member before July 1, 2006, or 02 the benefit recipient's surviving spouse may elect major medical insurance coverage 03 in accordance with regulations and under the following conditions: 04 (1) a benefit recipient [PERSON] who has less than 25 years of 05 membership service and who is younger than 60 years of age must pay an amount 06 equal to the full monthly group premium for retiree major medical insurance coverage; 07 (2) a disabled member, a disabled member who is appointed to normal 08 retirement, a person 60 years of age or older, or a person who has at least 25 years of 09 membership service is not required to make premium payments. 10 * Sec. 8. AS 14.25.168 is amended by adding new subsections to read: 11 (g) A benefit recipient, or the surviving spouse of a benefit recipient, who first 12 becomes a member after June 30, 2006, may elect major medical insurance coverage 13 in accordance with regulations and under the following conditions: 14 (1) if the participating member or surviving spouse is not eligible for 15 Medicare, the cost of a monthly premium for retiree major medical insurance coverage 16 elected under this section is equal to the full monthly group premium for retiree major 17 medical insurance coverage; 18 (2) if the participating member or surviving spouse is eligible for 19 Medicare, the cost of a monthly premium for retiree major medical insurance coverage 20 is a percentage of the full monthly group premium, as follows: 21 (A) 30 percent if the member had 10 or more, but less than 15, 22 years of service; 23 (B) 25 percent if the member had 15 or more, but less than 20, 24 years of service; 25 (C) 20 percent if the member had 20 or more, but less than 25, 26 years of service; 27 (3) the cost of a monthly premium paid by the member or the 28 member's surviving spouse for retiree major medical insurance coverage is 29 (A) 15 percent of the full monthly group premium if the 30 participating member has 25 or more, but less than 30, years of service; 31 (B) 10 percent of the full monthly group premium if the
01 participating member has 30 or more years of service; 02 (4) a disabled member or a disabled member who is appointed to 03 normal retirement is not required to make premium payments. 04 (h) On or after July 1, 2019, and every five years thereafter, the administrator 05 shall adjust the percentages under (g)(2) and (3) of this section as needed to maintain, 06 but not to exceed, over the succeeding five years, an employer normal cost rate for the 07 members and survivors who first became members after June 30, 2006, that does not 08 exceed the combined total of the rates under AS 14.25.350(a), (b), (d), and (e) minus 09 the employer normal cost rate attributable to the members who first became members 10 after June 30, 2006, for benefits under AS 14.25.009 - 14.25.167. An adjustment made 11 under this subsection shall remain in effect for five years. In making an adjustment 12 under this subsection, the administrator shall maintain the five percent differences 13 between (g)(2)(A), (B), and (C) of this section and the five percent differences 14 between (g)(3)(A) and (B) of this section. 15 (i) When a member is appointed to retirement, the member obtains a vested 16 right to the applicable percentage under (g)(2) or (3) of this section, as adjusted under 17 (h) of this section, that is in effect when the member is appointed to retirement. A 18 member does not obtain a vested right to a percentage under (g)(2) or (3) of this 19 section, as adjusted under (h) of this section, before the member is appointed to 20 retirement. 21 * Sec. 9. AS 14.25.310 is amended to read: 22 Sec. 14.25.310. Applicability of AS 14.25.310 - 14.25.590. The provisions of 23 AS 14.25.310 - 14.25.590 apply only to 24 (1) teachers who first become members on or after July 1, 2006, and 25 before the effective date of this section who do not transfer to a defined benefit 26 retirement plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 39.35.680; 27 (2) teachers described in AS 14.25.330 who elect under that section 28 to become [TO MEMBERS WHO ARE EMPLOYED BY EMPLOYERS THAT DO 29 NOT PARTICIPATE IN THE DEFINED BENEFIT RETIREMENT PLAN 30 ESTABLISHED UNDER AS 14.25.009 - 14.25.220, TO FORMER MEMBERS 31 UNDER AS 14.25.220, OR TO] members; and
01 (3) teachers who transferred [TRANSFER] into the defined 02 contribution retirement plan under former AS 14.25.540. 03 * Sec. 10. AS 14.25.310 is amended by adding a new subsection to read: 04 (b) An employer that participates in the plan shall also participate in the 05 defined benefit retirement plan under AS 14.25.009 - 14.25.220. 06 * Sec. 11. AS 14.25.330 is repealed and reenacted to read: 07 Sec. 14.25.330. Retirement plan election option. (a) A teacher who is first 08 hired on or after the effective date of this section may make a one-time election to 09 participate in the defined contribution retirement plan under AS 14.25.310 - 14.25.590 10 retroactive to the date of hire and may transfer to that plan employee contributions, if 11 any, and employer contributions, if any, that have been made to the defined benefit 12 retirement plan under AS 14.25.009 - 14.25.220. Before employer contributions are 13 transferred under this subsection, the administrator shall recalculate them under 14 AS 14.25.070. 15 (b) The election to participate in the defined contribution retirement plan 16 under (a) of this section must be made within 90 days after the date of hire and be 17 made in writing on a form and in the manner prescribed by the administrator. Before 18 accepting an election to participate in the defined contribution retirement plan, the 19 administrator shall, within 20 days after the administrator receives notification of the 20 teacher's date of hire, provide the teacher eligible to make an election to participate in 21 the defined contribution retirement plan under AS 14.25.310 - 14.25.590 with 22 (1) information, including calculations to illustrate the effect of 23 moving the teacher's retirement plan from the defined benefit retirement plan to the 24 defined contribution retirement plan; and 25 (2) other information to clearly inform the teacher of the potential 26 consequences of the teacher's election. 27 (c) An election made under (a) of this section to participate in the defined 28 contribution retirement plan is irrevocable. Retroactive to the date of hire, the teacher 29 shall be enrolled in the defined contribution retirement plan under AS 14.25.310 - 30 14.25.590, the teacher's participation in the plan shall be governed by the provisions 31 for the defined contribution retirement plan, and the teacher's participation in the
01 defined benefit retirement plan under AS 14.25.009 - 14.25.220 shall terminate. An 02 election made by an eligible teacher who is married is not effective unless the election 03 is signed by the teacher's spouse. 04 (d) When an eligible teacher makes an election under (a) of this section, the 05 administrator shall cause the total amount of the teacher's employee and employer 06 contributions, with investment earnings and losses through the final day of the 07 teacher's participation in the defined benefit retirement plan, to be actuarially 08 calculated and transferred to the teacher's designated account in the defined 09 contribution retirement plan. The administrator shall establish transfer procedures by 10 regulation, but the actual transfer may not be later than 30 days after the date the 11 administrator receives the teacher's completed election form under (b) of this section, 12 unless the major financial markets for securities available for a transfer are seriously 13 disrupted by an unforeseen event that also causes the suspension of trading on any 14 national securities exchange in the country where the securities were issued. In that 15 event, the 30-day period of time may be extended by a resolution of the board. 16 Transfers are not commissionable or subject to other fees and may be in the form of 17 securities or cash as determined by the board. Securities shall be valued on the date of 18 receipt in the teacher's account. 19 (e) An election under (a) of this section made by an eligible teacher who is 20 married is not effective unless the election is signed by the teacher's spouse. An 21 eligible teacher whose accounts are subject to a qualified domestic relations order may 22 not make an election to participate in the defined contribution retirement plan under 23 this section unless the qualified domestic relations order is amended or vacated and 24 court-certified copies of the order are received by the administrator. 25 * Sec. 12. AS 39.35.095 is repealed and reenacted to read: 26 Sec. 39.35.095. Applicability of AS 39.35.095 - 39.35.680. (a) The provisions 27 of AS 39.35.095 - 39.35.680 apply to public employees who are eligible to be 28 members of the public employees' retirement system under AS 39.35.095 - 39.35.680 29 and are not members of the defined contribution retirement plan under AS 39.35.700 - 30 39.35.990. 31 (b) A public organization or a municipality or other political subdivision of the
01 state that participates in the plan shall also participate in the defined contribution 02 retirement plan under AS 39.35.700 - 39.35.900. 03 * Sec. 13. AS 39.35 is amended by adding a new section to read: 04 Sec. 39.35.128. Participation of elected officials of political subdivisions. (a) 05 A person who is an elected official of a political subdivision of the state and who has 06 not participated in the plan or waived participation in the plan before July 1, 2014, is a 07 member of the plan if 08 (1) the political subdivision has elected under AS 39.35.600 - 09 39.35.650 to designate elected officials in the classifications of employees entitled to 10 participate in the plan; and 11 (2) the elected official receives compensation from the political 12 subdivision for services as an elected official in the amount of at least $2,001 a month. 13 (b) An elected official entitled to participate under this section, and who either 14 has no previous service under the system with the political subdivision or is retired 15 under the system, may file a waiver of participation in the plan with the administrator 16 within 30 days after the later of July 1, 2014, or the date that the elected official's term 17 of office begins. A waiver is irrevocable for the remainder of the elected official's 18 service as an elected official or employee of the political subdivision. 19 * Sec. 14. AS 39.35.160(a) is amended to read: 20 (a) Subject to (e) of this section, beginning [BEGINNING] January 1, 1987, 21 each peace officer or firefighter shall contribute to the plan an amount equal to seven 22 and one-half percent of the peace officer's or firefighter's compensation. Except as 23 provided in (d) and (e) of this section, beginning January 1, 1987, each other 24 employee shall contribute to the plan an amount equal to six and three-quarters percent 25 of the employee's compensation. [THE CONTRIBUTIONS SHALL BE DEDUCTED 26 BY THE EMPLOYER AT THE END OF EACH PAYROLL PERIOD. THE 27 CONTRIBUTIONS SHALL BE DEDUCTED FROM EMPLOYEE 28 COMPENSATION BEFORE COMPUTATION OF APPLICABLE FEDERAL 29 TAXES, AND THE CONTRIBUTIONS SHALL BE TREATED AS EMPLOYER 30 CONTRIBUTIONS UNDER 26 U.S.C. 414(h)(2). A MEMBER MAY NOT HAVE 31 THE OPTION OF MAKING THE PAYROLL DEDUCTION DIRECTLY INSTEAD
01 OF HAVING THE CONTRIBUTION PICKED UP BY THE EMPLOYER.] 02 * Sec. 15. AS 39.35.160 is amended by adding new subsections to read: 03 (e) Except as provided in (a) and (d) of this section, an employee, including a 04 peace officer or firefighter, who first participates in the plan after June 30, 2006, shall 05 contribute to the plan an amount equal to eight percent of the employee's 06 compensation. 07 (f) Contributions under (a) and (e) of this section shall be deducted by the 08 employer at the end of each payroll period. The contributions shall be deducted from 09 employee compensation before computation of applicable federal taxes, and the 10 contributions shall be treated as employer contributions under 26 U.S.C. 414(h)(2). A 11 member may not have the option of making the payroll deduction directly instead of 12 having the contribution picked up by the employer. 13 * Sec. 16. AS 39.35.410(g) is amended to read: 14 (g) A disabled employee who first became a member before July 1, 2006, 15 and who is receiving an occupational disability benefit shall undergo a medical 16 examination as often as the administrator considers advisable but not more frequently 17 than once each year. The administrator shall determine the place of the examination 18 and engage the physician or physicians. If, in the judgment of the administrator, the 19 examination indicates that the retired employee is no longer incapacitated because of a 20 total and apparently permanent occupational disability, the administrator may not issue 21 further disability benefits to the employee. 22 * Sec. 17. AS 39.35.410 is amended by adding a new subsection to read: 23 (k) A person who first becomes a member after June 30, 2006, and who is 24 appointed to disability benefits shall apply to the division of vocational rehabilitation 25 within 30 days after the date disability benefits commence. The employee shall be 26 enrolled in a rehabilitation program if the employee meets the eligibility requirements 27 of the division of vocational rehabilitation. Unless the employee demonstrates cause, 28 benefits shall terminate at the end of the first month in which a disabled employee 29 (1) fails to report to the division of vocational rehabilitation; 30 (2) is certified by the division of vocational rehabilitation as failing to 31 cooperate in a vocational rehabilitation program;
01 (3) fails to interview for a job; or 02 (4) fails to accept a position offered. 03 * Sec. 18. AS 39.35.535(c) is amended to read: 04 (c) A benefit recipient may elect major medical insurance coverage in 05 accordance with regulations and under the following conditions: 06 (1) a person who becomes a member before July 1, 2006, or the 07 surviving spouse of the person, other than a disabled member or a disabled member 08 who is appointed to normal retirement, must pay an amount equal to the full monthly 09 group premium for retiree major medical insurance coverage if the person is 10 (A) younger than 60 years of age and has less than 11 (i) 25 years of credited service as a peace officer under 12 AS 39.35.360 and 39.35.370; or 13 (ii) 30 years of credited service under AS 39.35.360 and 14 39.35.370 that is not service as a peace officer; or 15 (B) of any age and has less than 10 years of credited service; 16 (2) a person who becomes a member before July 1, 2006, or the 17 surviving spouse of the person is not required to make premium payments for retiree 18 major medical coverage if the person 19 (A) is a disabled member; 20 (B) is a disabled member who is appointed to normal 21 retirement; 22 (C) is 60 years of age or older and has at least 10 years of 23 credited service; or 24 (D) has at least 25 (i) 25 years of credited service as a peace officer under 26 AS 39.35.360 and 39.35.370; or 27 (ii) 30 years of credited service under AS 39.35.360 and 28 39.35.370 not as a peace officer; 29 (3) a benefit recipient who first becomes a member after June 30, 30 2006, or a benefit recipient who is the surviving spouse of a person who first 31 becomes a member after June 30, 2006, except as provided in (4) and (5) of this
01 subsection, shall pay an amount equal to the full monthly group premium for 02 retiree major medical insurance coverage; however, except as provided in (4) and 03 (5) of this subsection, if the benefit recipient is eligible for Medicare, the cost of a 04 monthly premium is a percentage of the full monthly group premium, as follows: 05 (A) 30 percent if the member has 10 or more, but less than 06 15, years of service; 07 (B) 25 percent if the member has 15 or more, but less than 08 20, years of service; 09 (C) 20 percent if the member has 20 or more, but less than 10 25, years of service; 11 (D) 15 percent if the member has 25 or more, but less than 12 30, years of service not as a peace officer; 13 (4) except as provided in (5) of this subsection, a benefit recipient 14 who first becomes a member after June 30, 2006, or a benefit recipient who is the 15 surviving spouse of a person who first becomes a member after June 30, 2006, 16 shall pay a monthly premium that is 17 (A) 15 percent of the cost of a full monthly group premium 18 if the member has 25 or more, but less than 30, years of service as a peace 19 officer; or 20 (B) 10 percent of the cost of a full monthly group premium 21 if the member has 30 or more years of service; 22 (5) a benefit recipient who first becomes a member after June 30, 23 2006, is not required to make premium payments for retiree major medical 24 coverage if the recipient 25 (A) is a disabled member; or 26 (B) is a disabled member who is appointed to normal 27 retirement; 28 (6) on or after July 1, 2019, and every five years thereafter, the 29 administrator shall adjust the percentages under (3) and (4) of this subsection as 30 needed to maintain, but not to exceed, over the succeeding five years, an 31 employer normal cost rate for the members and survivors who first became
01 members after June 30, 2006, that does not exceed the combined total of the rates 02 under AS 39.35.750(a), (b), (d), and (e) minus the employer normal cost rate 03 attributable to the members who first became members after June 30, 2006, for 04 benefits under AS 39.35.095 - 39.35.530; an adjustment made under this 05 paragraph shall remain in effect for five years; in making an adjustment under 06 this paragraph, the administrator shall maintain the five percent differences 07 between (3)(A), (B), (C), and (D) of this subsection and the five percent 08 differences between (4)(A) and (B) of this subsection; 09 (7) when a member is appointed to retirement, the member 10 obtains a vested right to the applicable percentage under (3) or (4) of this 11 subsection, as adjusted under (6) of this subsection, that is in effect when the 12 member is appointed to retirement; a member does not obtain a vested right to a 13 percentage under (3) or (4) of this subsection, as adjusted under (6) of this 14 subsection, before appointment to retirement. 15 * Sec. 19. AS 39.35.620(k) is amended to read: 16 (k) Termination of an employer's participation in the plan does not bar future 17 participation in the system by that employer if the employer is current with payments 18 on amounts due under AS 39.35.625. [IF A PREVIOUSLY TERMINATED 19 EMPLOYER RETURNS TO THE SYSTEM, THE EMPLOYER MAY ONLY 20 PARTICIPATE IN THE PLAN ESTABLISHED UNDER AS 39.35.700 - 39.35.990. 21 EMPLOYEES MAY BE CREDITED UNDER AS 39.35.700 - 39.35.990 ONLY 22 WITH SERVICE SUBSEQUENT TO THE DATE OF RETURN.] 23 * Sec. 20. AS 39.35.680(18) is amended to read: 24 (18) "employer" means 25 (A) the State of Alaska; 26 (B) a political subdivision or public organization of the state 27 that participates in the plan based on a resolution to participate in the plan that 28 was approved by the administrator [ON OR BEFORE JULY 1, 2006]; or 29 (C) a political subdivision or public organization of the state 30 that, as a result of consolidation or reorganization [THAT OCCURS ON OR 31 AFTER JULY 1, 2006], assumes liability under the plan of a political
01 subdivision or public organization described in (B) of this paragraph; 02 * Sec. 21. AS 39.35.700 is amended to read: 03 Sec. 39.35.700. Applicability of AS 39.35.700 - 39.35.990. The provisions of 04 AS 39.35.700 - 39.35.990 apply only to 05 (1) members first hired on or after July 1, 2006, and before the 06 effective date of this section who do not transfer to a defined benefit retirement 07 plan under AS 14.25.009 - 14.25.220 or AS 39.35.095 - 39.35.680; 08 (2) public employees described in AS 39.35.720 who elect under 09 that section to become [TO MEMBERS WHO ARE EMPLOYED BY 10 EMPLOYERS THAT DO NOT PARTICIPATE IN THE DEFINED BENEFIT 11 RETIREMENT PLAN ESTABLISHED UNDER AS 39.35.095 - 39.35.680, TO 12 FORMER MEMBERS AS DEFINED IN AS 39.35.680, OR TO] members; and 13 (3) members who transferred [TRANSFER] into the defined 14 contribution retirement plan under former AS 39.35.940. 15 * Sec. 22. AS 39.35.700 is amended by adding a new subsection to read: 16 (b) A public organization under AS 39.35.680 or a municipality or other 17 political subdivision of the state that participates in the plan shall also participate in 18 the defined benefit retirement plan under AS 39.35.095 - 39.35.680. 19 * Sec. 23. AS 39.35.720 is repealed and reenacted to read: 20 Sec. 39.35.720. Retirement plan election option. (a) A public employee who 21 is first hired on or after the effective date of this section may make a one-time election 22 to participate in the defined contribution retirement plan under AS 39.35.700 - 23 39.35.990 retroactive to the date of hire and may transfer to that plan employee 24 contributions, if any, and employer contributions, if any, that have been made to the 25 defined benefit retirement plan under AS 39.35.095 - 39.35.680. Before employer 26 contributions are transferred under this subsection, the administrator shall recalculate 27 them under AS 39.35.255. 28 (b) The election to participate in the defined contribution retirement plan 29 under (a) of this section must be made within 90 days after the date of hire and be 30 made in writing on a form and in the manner prescribed by the administrator. Before 31 accepting an election to participate in the defined contribution retirement plan under
01 AS 39.35.700 - 39.35.990, the administrator shall, within 20 days after the 02 administrator receives notice of the public employee's date of hire, provide the 03 employee eligible to make an election to participate in the defined contribution 04 retirement plan with 05 (1) information, including calculations to illustrate the effect of 06 moving the employee's retirement plan from the defined benefit retirement plan to the 07 defined contribution retirement plan; and 08 (2) other information to clearly inform the employee of the potential 09 consequences of the employee's election. 10 (c) An election made under (a) of this section to participate in the defined 11 contribution retirement plan is irrevocable. Retroactive to the date of hire, the 12 employee shall be enrolled in the defined contribution retirement plan under 13 AS 39.35.700 - 39.35.990, the employee's participation in the plan shall be governed 14 by the provisions for the defined contribution retirement plan, and the employee's 15 participation in the defined benefit retirement plan under AS 39.35.095 - 39.35.680 16 shall terminate. An election made by an eligible employee who is married is not 17 effective unless the election is signed by the employee's spouse. 18 (d) When an employee makes an election under (a) of this section, the 19 administrator shall cause the total amount of the employee's employee and employer 20 contributions, with investment earnings and losses through the final day of the 21 employee's participation in the defined benefit retirement plan, to be actuarially 22 calculated and transferred to the employee's designated account in the defined 23 contribution retirement plan. The administrator shall establish transfer procedures by 24 regulation, but the actual transfer may not be later than 30 days after the date the 25 administrator receives the employee's completed election form under (b) of this 26 section, unless the major financial markets for securities available for a transfer are 27 seriously disrupted by an unforeseen event that also causes the suspension of trading 28 on any national securities exchange in the country where the securities were issued. In 29 that event, the 30-day period of time may be extended by a resolution of the board. 30 Transfers are not commissionable or subject to other fees and may be in the form of 31 securities or cash as determined by the board. Securities shall be valued on the date of
01 receipt in the employee's account. 02 (e) An election made by an eligible employee who is married is not effective 03 unless the election is signed by the employee's spouse. An eligible employee whose 04 accounts are subject to a qualified domestic relations order may not make an election 05 to participate in the defined contribution retirement plan under this section unless the 06 qualified domestic relations order is amended or vacated and court-certified copies of 07 the order are received by the administrator. 08 * Sec. 24. AS 14.25.012(c), 14.25.540; AS 39.35.940, and 39.35.957(b) are repealed. 09 * Sec. 25. The uncodified law of the State of Alaska is amended by adding a new section to 10 read: 11 RETIREMENT PLAN ELECTION CHOICE. (a) A teacher who was first hired after 12 June 30, 2006, and before the effective date of this section and who is a member of the 13 defined contribution plan of the teachers' retirement system under AS 14.25.310 - 14.25.590 14 may make a one-time election, within 90 days after the effective date of this section, to 15 participate in the defined benefit retirement plan under AS 14.25.009 - 14.25.220 and to 16 transfer all contributions, including employer contributions, that have been made or should be 17 made to the defined contribution retirement plan for service the member completes before the 18 effective date of the member's participation in the defined benefit retirement plan. 19 (b) A public employee who was first hired after June 30, 2006, and before the 20 effective date of this section and who is a member of the defined contribution plan of the 21 public employees' retirement system under AS 39.35.700 - 39.35.990 may make a one-time 22 election, within 90 days after the effective date of this section, to participate in the defined 23 benefit retirement plan under AS 39.35.095 - 39.35.680 and to transfer all contributions, 24 including employer contributions, that have been made or should be made to the defined 25 contribution retirement plan for any service the member completes before the effective date of 26 the member's participation in the defined benefit retirement plan. 27 * Sec. 26. The uncodified law of the State of Alaska is amended by adding a new section to 28 read: 29 RETIREMENT PLAN ELECTION PROCEDURE; REGULATIONS REQUIRED. 30 (a) The election to participate in the defined benefit retirement plan under sec. 25 of this Act 31 must be made in writing on forms and in the manner prescribed by the administrator. Before
01 accepting an election to participate in the defined benefit retirement plan, the administrator 02 shall provide the employee planning on making an election to participate in the defined 03 benefit retirement plan with information, including calculations to illustrate the effect of 04 moving the employee's retirement plan from the defined contribution retirement plan to the 05 defined benefit retirement plan as well as other information to clearly inform the employee of 06 the potential consequences of the employee's election. 07 (b) An election made under sec. 25 of this Act to participate in the defined benefit 08 retirement plan is irrevocable. On the effective date of the election, an eligible employee who 09 makes the election shall be enrolled as a member of the defined benefit retirement plan, the 10 employee's participation in the plan shall be governed by the provisions for the defined 11 benefit retirement plan, and the employee's participation in the defined contribution retirement 12 plan shall terminate. The employee's enrollment in the defined benefit retirement plan shall be 13 effective retroactive to the date of hire. An election made by an eligible employee who is 14 married is not effective unless the election is signed by the employee's spouse. 15 (c) When an eligible employee makes a one-time election under sec. 25 of this Act, 16 the administrator shall cause the total amount of the employee's employee and employer 17 contributions, with investment earnings and losses through the final day of the employee's 18 participation as a member in the defined contribution retirement plan, to be actuarially 19 calculated and, subject to (d) of this section, transferred to the pension fund in the defined 20 benefit retirement plan. On the effective date of the employee's participation in the defined 21 benefit retirement plan, the employee shall be credited with service in the defined benefit 22 retirement plan that is equal to the employee's service in years, including fractional years, 23 recognized for computing benefits that may be due from the defined contribution retirement 24 plan. The board shall establish transfer procedures by regulation, but the actual transfer may 25 not be later than 30 days after the date the administrator receives the employee's completed 26 election forms under (a) of this section, unless the major financial markets for securities 27 available for a transfer are seriously disrupted by an unforeseen event that also causes the 28 suspension of trading on any national securities exchange in the country where the securities 29 were issued. In that event, the 30-day period of time may be extended by a resolution of the 30 board. Transfers are not commissionable or subject to other fees and may be in the form of 31 securities or cash as determined by the board. Securities shall be valued on the date of receipt
01 in the employee's account. 02 (d) If the value actuarially calculated under (c) of this section is insufficient to pay for 03 a service credit equal to the employee's actual service, the administrator shall allow the 04 employee to create an indebtedness up to the amount needed to eliminate the insufficiency; 05 however, if that value exceeds the amount needed to pay for a service credit equal to the 06 employee's actual service, the administrator shall cause the excess to be paid to the employee 07 as a rollover transfer to either an individual employee annuity account in the Department of 08 Administration under the terms of AS 39.30.150 - 39.30.180 (Alaska Supplemental Annuity 09 Plan) or, if the employee's employer does not participate in the Alaska Supplemental Annuity 10 Plan, to an eligible retirement plan under AS 14.25.360(d) or AS 39.35.760(d). An excess 11 under this subsection may not be used to purchase service credit in a retirement plan 12 administered under AS 14.25 or AS 39.35. 13 (e) The provisions of this section are subject to the requirements of the Internal 14 Revenue Code and the limitations under AS 14.25.010, 14.25.320(c) and (d), 14.25.490, 15 AS 39.35.115, 39.35.678, 39.35.710(c) and (d), and 39.35.895. 16 (f) In this section, 17 (1) "administrator" means the commissioner of administration or the person 18 designated by the commissioner of administration under AS 39.35.003 for a public 19 employees' retirement plan and under AS 14.25.003 for a teachers' retirement plan; 20 (2) "board" means the Alaska Retirement Management Board established 21 under AS 37.10.210; 22 (3) "defined benefit retirement plan" means the retirement plan established 23 under 24 (A) AS 14.25.009 - 14.25.220 for a teacher; or 25 (B) AS 39.35.095 - 39.35.680 for a public employee; 26 (4) "defined contribution retirement plan" means the retirement plan 27 established under 28 (A) AS 14.25.310 - 14.25.590 for a teacher; or 29 (B) AS 39.35.700 - 39.35.990 for a public employee; 30 (5) "Internal Revenue Code" the meaning given in AS 39.35.990. 31 * Sec. 27. The uncodified law of the State of Alaska is amended by adding a new section to
01 read: 02 ADOPTION OF REGULATIONS. The commissioner of administration shall adopt 03 regulations necessary to implement the changes made by this Act. The regulations take effect 04 under AS 44.62 (Administrative Procedure Act), but not before the effective date of the law 05 implemented by the regulation. 06 * Sec. 28. Sections 26 and 27 of this Act take effect immediately under AS 01.10.070(c). 07 * Sec. 29. Except as provided in sec. 28 of this Act, this Act takes effect July 1, 2014.