00 SENATE BILL NO. 123 01 "An Act relating to the public employees' and teachers' defined benefit retirement 02 plans; relating to the public employees' and teachers' defined contribution retirement 03 plans; relating to the judicial retirement system; relating to the health reimbursement 04 arrangement plan for certain teachers and public employees; relating to the 05 supplemental employee benefit program; relating to the public employees' deferred 06 compensation program; relating to group insurance for public employees and retirees; 07 making conforming amendments; and providing for an effective date." 08 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 09  * Section 1. AS 14.25.065(b) is amended to read: 10 (b) The contributions of employers under AS 14.25.070 must be transmitted to 11 the plan for deposit in the retirement fund and the Alaska retiree health care trust at 12 the close of each pay period. If the contributions are not submitted within the  13 prescribed time limit [15 DAYS OF THE CLOSE OF EACH PAYROLL PERIOD], 01 interest must be assessed on the outstanding contributions at one and one-half times 02 the most recent actuarially determined rate of earnings for the plan from the date that 03 contributions were originally due. In addition, the amount of [THE] contributions and 04 interest due may be claimed by the administrator from [DEDUCTED BY] the 05 Department of Education and Early Development from the state funds due the school 06 district [AND THE AMOUNT SO DEDUCTED TRANSMITTED TO THE PLAN 07 FOR DEPOSIT IN THE RETIREMENT FUND]. Amounts due from an employer 08 [THE UNIVERSITY OF ALASKA] and interest as prescribed in this section may be 09 claimed [DEDUCTED] by the administrator [COMMISSIONER OF 10 ADMINISTRATION] from any agency of the state or political subdivision that has  11 in its possession funds of the employer or that is authorized to disburse funds to  12 the employer that are not restricted by statute or appropriation to a specific  13 purpose. The amount claimed shall be certified by the administrator as sufficient  14 to pay the contributions and interest due from the employer. The amount  15 claimed shall be submitted to the administrator for deposit in the retirement fund  16 and the Alaska retiree health care trust [STATE FUNDS DUE THE UNIVERSITY 17 OF ALASKA AND THE AMOUNT DEDUCTED TRANSMITTED TO THE 18 ADMINISTRATOR FOR DEPOSIT IN THE RETIREMENT FUND]. 19  * Sec. 2. AS 14.25.070(a) is amended to read: 20 (a) An employer shall make contributions to the plan in accordance with this  21 section and as approved by the board in an amount sufficient, after subtracting 22 member contributions, to provide the benefits of AS 14.25.009 - 14.25.220. The 23 amount shall be calculated by applying the sum of the employer normal cost rate  24 and the past service rate to the sum total of the base salaries paid to members in  25 the system [AN EMPLOYER CONTRIBUTION RATE, CERTIFIED BY THE 26 BOARD, AGAINST THE SUM TOTAL OF THE BASE SALARIES PAID TO 27 MEMBERS], including any adjustments to contributions required by AS 14.25.173(a). 28 The employer shall remit this amount to the administrator in accordance with  29 AS 14.25.065. 30  * Sec. 3. AS 14.25.070 is amended by adding new subsections to read: 31 (d) Employer contributions shall be separately computed for benefits provided 01 by AS 14.25.168, and shall be deposited in the Alaska retiree health care trust 02 established under AS 39.30.097(a). 03 (e) In (a) of this section, 04 (1) "employer normal cost rate" means the percentage of compensation 05 of all active members in the system that, when combined with the member 06 contribution rate of active members in the plan, is sufficient to provide the benefits 07 that are expected to be credited with respect to service during the year beginning after 08 the last valuation date; this percentage is uniformly determined for all employers and 09 is applicable to each employer; 10 (2) "past service rate" means the percentage of compensation of all 11 active members in the system necessary to provide the annual amount required to 12 amortize the unfunded obligations of the employers for benefits earned by members in 13 the plan as of the date of the last actuarial valuation over a period not to exceed the 14 maximum period allowed by generally accepted accounting principles of the 15 Governmental Accounting Standards Board; this percentage is uniformly determined 16 for all employers and is applicable to each employer. 17  * Sec. 4. AS 14.25.075(f) is amended to read: 18 (f) The administrator may accept rollover contributions from a member, and 19 direct transfers as described in this subsection, for the purchase, in whole or in part, of 20 forfeited credited service under this section for the reinstatement, in whole or in part, 21 of forfeited credited service under AS 14.25.062. Contributions made under this 22 subsection may not be applied to purchase service being paid under (b) of this section. 23 A rollover contribution or transfer as described in this subsection shall be treated as 24 employer contributions for the purpose of determining tax treatment under the Internal 25 Revenue Code and may be made by any one or a combination of the following 26 methods: 27 (1) subject to the limitations prescribed in 26 U.S.C. 402(c), accepting 28 eligible rollover distributions directly from one or more eligible retirement plans as  29 defined by 26 U.S.C. 402(c)(8)(B) [PROGRAMS OF ANOTHER EMPLOYER 30 THAT ARE QUALIFIED UNDER 26 U.S.C. 401(a) OR ACCEPTING 31 ROLLOVERS DIRECTLY FROM A MEMBER]; 01 (2) [SUBJECT TO THE LIMITATIONS PRESCRIBED IN 26 U.S.C. 02 408(d)(3)(A)(ii), ACCEPTING FROM A MEMBER CONDUIT ROLLOVER 03 CONTRIBUTIONS THAT ARE RECEIVED BY THE MEMBER FROM ONE OR 04 MORE CONDUIT ROLLOVER INDIVIDUAL RETIREMENT ACCOUNTS 05 PREVIOUSLY ESTABLISHED BY THE MEMBER; 06 (3)] subject to the limitations prescribed in 26 U.S.C. 403(b)(13), 07 accepting direct trustee-to-trustee transfers of all or a portion of the accounts of the 08 member, on or after January 1, 2002, from a tax sheltered annuity described in 26 09 U.S.C. 403(b); 10 (3) [(4)] subject to the limitations prescribed in 26 U.S.C. 457(e)(17), 11 accepting direct trustee-to-trustee transfers of all or a portion of the accounts of the 12 member, on or after January 1, 2002, from an eligible deferred compensation plan of a 13 tax-exempt organization or a state or local government described in 26 U.S.C. 457(b); 14 (4) [(5)] accepting direct trustee-to-trustee transfer from an account 15 established for the benefit of the member in AS 39.30.150 - 39.30.180 (Alaska 16 Supplemental Annuity Plan). 17  * Sec. 5. AS 14.25.075(f) is amended to read: 18 (f) The administrator may accept rollover contributions from a member [, 19 AND DIRECT TRANSFERS AS DESCRIBED IN THIS SUBSECTION, FOR THE 20 PURCHASE, IN WHOLE OR IN PART, OF FORFEITED CREDITED SERVICE 21 UNDER THIS SECTION FOR THE REINSTATEMENT, IN WHOLE OR IN PART, 22 OF FORFEITED CREDITED SERVICE UNDER AS 14.25.062]. Contributions made 23 under this subsection may not be applied to purchase service being paid under (b) of 24 this section. A rollover contribution [OR TRANSFER] as described in this subsection 25 shall be treated as employer contributions for the purpose of determining tax treatment 26 under the Internal Revenue Code and may be made by any one or a combination of the 27 following methods: 28 (1) subject to the limitations prescribed in 26 U.S.C. 402(c), accepting 29 eligible rollover distributions directly from one or more eligible retirement plans as 30 defined by 26 U.S.C. 402(c)(8)(B); 31 (2) subject to the limitations prescribed in 26 U.S.C. 403(b)(13), 01 accepting direct trustee-to-trustee transfers of all or a portion of the accounts of the 02 member, on or after January 1, 2002, from a tax sheltered annuity described in 26 03 U.S.C. 403(b); 04 (3) subject to the limitations prescribed in 26 U.S.C. 457(e)(17), 05 accepting direct trustee-to-trustee transfers of all or a portion of the accounts of the 06 member, on or after January 1, 2002, from an eligible deferred compensation plan of a 07 tax-exempt organization or a state or local government described in 26 U.S.C. 457(b); 08 (4) accepting direct trustee-to-trustee transfer from an account 09 established for the benefit of the member in AS 39.30.150 - 39.30.180 (Alaska 10 Supplemental Annuity Plan). 11  * Sec. 6. AS 14.25.125(c) is amended to read: 12 (c) Membership service for which contributions were refunded is not 13 creditable under this section [UNLESS THE REFUNDED CONTRIBUTIONS HAVE 14 BEEN REPAID. FOR PURPOSES OF THIS SECTION, A MEMBER OR FORMER 15 MEMBER DOES NOT HAVE TO BE REEMPLOYED UNDER THIS PLAN IN 16 ORDER TO REPAY REFUNDED CONTRIBUTIONS. COMPOUND INTEREST 17 AT THE RATE PRESCRIBED BY REGULATION MUST BE ADDED TO THE 18 REINSTATEMENT INDEBTEDNESS FROM THE DATE OF THE REFUND TO 19 THE DATE OF REPAYMENT]. 20  * Sec. 7. AS 14.25.163(b) is amended to read: 21 (b) Except as provided by AS 14.25.075(f) [AS 14.25.075(f)(5)], the plan does 22 not accept contributions of eligible rollover distributions. 23  * Sec. 8. AS 14.25.163(c)(2) is amended to read: 24 (2) "distributee" means a member or a beneficiary who is the surviving 25 spouse of the member or an alternate payee; 26  * Sec. 9. AS 14.25.163(c)(3) is amended to read: 27 (3) "eligible retirement plan" 28 [(A)] means 29 (A) [(i)] an individual retirement account described in 26 30 U.S.C. 408(a); 31 (B) [(ii)] an individual retirement annuity defined in 26 U.S.C. 01 408(b); 02 (C) [(iii)] an annuity plan described in 26 U.S.C. 403(a); 03 (D) [(iv)] a qualified trust described in 26 U.S.C. 401(a); 04 (E) [(v)] on and after January 1, 2002, an annuity plan 05 described in 26 U.S.C. 403(b); [OR] 06 (F) [(vi)] on or after January 1, 2002, a governmental plan 07 described in 26 U.S.C. 457(b); or 08 (G) on or after January 1, 2008, a Roth IRA described in 26  09 U.S.C. 408A [AND 10 (B) NOTWITHSTANDING (A) OF THIS PARAGRAPH, 11 MEANS, WITH RESPECT TO DISTRIBUTIONS MADE BEFORE 12 JANUARY 1, 2002, AN INDIVIDUAL RETIREMENT ACCOUNT OR AN 13 INDIVIDUAL RETIREMENT ANNUITY ACCOUNT DESCRIBED OR 14 DEFINED IN 26 U.S.C. 408 IN THE CASE OF AN ELIGIBLE ROLLOVER 15 DISTRIBUTION TO A BENEFICIARY WHO IS THE SURVIVING 16 SPOUSE OF A MEMBER]; 17  * Sec. 10. AS 14.25.163(c)(4) is amended to read: 18 (4) "eligible rollover distribution" means a distribution of all or part of 19 a total account to a distributee, except for 20 (A) a distribution that is one of a series of substantially equal 21 installments payable not less frequently than annually over the life expectancy 22 of the distributee or the joint and last survivor life expectancy of the distributee 23 and the distributee's designated beneficiary, as defined in 26 U.S.C. 401(a)(9); 24 (B) a distribution that is one of a series of substantially equal 25 installments payable not less frequently than annually over a specified period 26 of 10 years or more; 27 (C) a distribution that is required under 26 U.S.C. 401(a)(9); 28 (D) the portion of any distribution that is not includable in 29 gross income; however, such portion may be transferred only to an  30 individual retirement account or annuity described in 26 U.S.C. 408(a) or  31 (b), to a qualified plan described in 26 U.S.C. 401(a) or 403(a), or to an  01 annuity contract described in 26 U.S.C. 403(b), that agrees to separately  02 account for amounts so transferred, including separately accounting for  03 the portion of the distribution that is includable in gross income and the  04 portion of the distribution that is not so includable; and  05 (E) [A DISTRIBUTION MADE ON OR AFTER JANUARY 06 1, 2002, THAT IS ON ACCOUNT OF HARDSHIP; AND 07 (F)] other distributions that are reasonably expected to total less 08 than $200 during a year. 09  * Sec. 11. AS 14.25.168 is amended by adding a new subsection to read: 10 (f) On and after July 1, 2007, benefits under this section shall be provided in 11 part by the Alaska retiree health care trust established under AS 39.30.097(a). 12  * Sec. 12. AS 14.25.181(b) is amended to read: 13 (b) If, upon termination of the plan, all liabilities are satisfied, any excess 14 assets [ARISING FROM ERRONEOUS ACTUARIAL COMPUTATION] shall 15 revert to the employers as determined by the administrator subject to the approval  16 of the termination by the Internal Revenue Service [ON A PRO RATA BASIS]. 17  * Sec. 13. AS 14.25.181 is amended by adding new subsections to read: 18 (c) The administrator shall use forfeitures that arise for any reason, including 19 from termination of employment or death, to reduce employer contributions. 20 Forfeitures may not be applied to increase the benefits of any member. 21 (d) The administrator shall determine the amount of any benefit that is 22 determined on the basis of actuarial tables using assumptions approved by the 23 commissioner. The amount of benefits is not subject to employer discretion. 24 (e) Employee contributions paid to, and retirement benefits paid from, the plan 25 may not exceed the annual limits on contributions and benefits, respectively, allowed 26 by 26 U.S.C. 415. Notwithstanding any contrary provision of law, the administrator 27 may modify a request by a member to make a contribution to the plan if the amount of 28 the contribution would exceed the limits provided in 26 U.S.C. 415 by using the 29 following methods: 30 (1) if the law requires a lump sum payment for the purchase of service 31 credit, the administrator may establish a periodic payment plan for the member to 01 avoid a contribution in excess of the limits under 26 U.S.C. 415(c) or (n); 02 (2) if a periodic payment plan under (1) of this subsection will not 03 avoid a contribution in excess of the limits imposed by 26 U.S.C. 415(c), the 04 administrator may either reduce the member's contribution to an amount within the 05 limits of that section or refuse the member's contribution. 06  * Sec. 14. AS 14.25.220(10) is amended to read: 07 (10) "compensation" means the total remuneration paid under contract 08 to a member for services rendered during a school year, including cost-of-living 09 differentials, payments for leave that is actually used by the member, the amount by 10 which the member's wages are reduced under AS 39.30.150(c), an amount that is  11 contributed by the employer under a salary reduction agreement and that is not  12 includable in the gross income of the employee under 26 U.S.C. 125 or 132(f)(4), 13 and the amount deferred under an employer-sponsored deferred compensation plan or 14 the tax shelter annuity plan approved by the Department of Education and Early 15 Development, but does not include retirement benefits, welfare benefits, per diem, 16 expense allowances, workers' compensation payments, or payments for leave not used 17 by the member, whether those leave payments are scheduled payments, lump-sum 18 payments, donations, or cash-ins; for purposes of AS 14.25.050, compensation paid 19 includes any payment made after June 30 of a school year for services rendered before 20 the end of the school year;  21  * Sec. 15. AS 14.25.220(16) is amended to read: 22 (16) "employer" means a public school district, the Board of Regents 23 of the University of Alaska, the Department of Education and Early Development, 24 [THE NATIONAL EDUCATION ASSOCIATION OF ALASKA,] the Regional 25 Resource Centers, or the state legislature with respect to a state legislator who elects 26 membership under AS 14.25.040(b); 27  * Sec. 16. AS 14.25.310 is amended to read: 28 Sec. 14.25.310. Applicability of AS 14.25.310 - 14.25.590. The provisions of 29 AS 14.25.310 -14.25.590 apply only to teachers who first become members on or after 30 July 1, 2006, members who are employed by employers that do not participate in  31 the defined benefit retirement plan established under AS 14.25.009 - 14.25.220, or 01 to members who transfer into the defined contribution retirement plan under 02 AS 14.25.540. 03  * Sec. 17. AS 14.25.310 is amended to read: 04 Sec. 14.25.310. Applicability of AS 14.25.310 - 14.25.590. The provisions of 05 AS 14.25.310 -14.25.590 apply only to teachers who first become members on or after 06 July 1, 2006, members who are employed by employers that do not participate in the 07 defined benefit retirement plan established under AS 14.25.009 - 14.25.220, former  08 members under AS 14.25.220, or to members who transfer into the defined 09 contribution retirement plan under AS 14.25.540. 10  * Sec. 18. AS 14.25.320(c) is amended to read: 11 (c) The defined contribution retirement plan is intended to qualify under 26 12 U.S.C. 401(a), [AND] 414(d), and 414(k) (Internal Revenue Code) as a qualified 13 retirement plan established and maintained by the state for its employees and for the 14 employees of school districts and regional educational attendance areas in the state. 15 Benefits under AS 14.25.480 are not provided by the defined contribution  16 retirement plan.  17  * Sec. 19. AS 14.25.350(b) is amended to read: 18 (b) An employer shall also contribute an amount equal to a percentage, as 19 approved [CERTIFIED] by the board, of each member's compensation from July 1 to 20 the following June 30 to pay for retiree major medical insurance. This contribution 21 shall be paid into the Alaska retiree health care trust [GROUP HEALTH AND 22 LIFE BENEFITS FUND] established by the commissioner of administration under 23 AS 39.30.097(b) [AS 39.30.095] and shall be accounted for in accordance with 24 regulations adopted [ESTABLISHED] by the commissioner. 25  * Sec. 20. AS 14.25.350 is amended by adding a new subsection to read: 26 (e) An employer shall make annual contributions to a trust account in the plan, 27 applied as a percentage of each member's compensation from July 1 to the following 28 June 30, in an amount determined by the board to be actuarially required to fully fund 29 the cost of providing occupational disability and occupational death benefits under 30 AS 14.25.310 - 14.25.590. 31  * Sec. 21. AS 14.25.360(d)(3) is amended to read: 01 (3) "eligible retirement plan" means 02 (A) an [A CONDUIT] individual retirement account described 03 in 26 U.S.C. 408(d)(3)(A); 04 (B) an annuity plan described in 26 U.S.C. 403(a); 05 (C) a qualified trust described in 26 U.S.C. 401(a); 06 (D) an annuity plan described in 26 U.S.C. 403(b); [OR] 07 (E) a governmental plan described in 26 U.S.C. 457(b); 08 (F) an individual retirement annuity described in 26 U.S.C.  09 408(b); or  10 (G) on or after January 1, 2008, a Roth IRA described in 26  11 U.S.C. 408A;  12  * Sec. 22. AS 14.25.360(d)(4) is amended to read: 13 (4) "eligible rollover distribution" means a distribution of all or part of 14 a total account to a distributee, except for 15 (A) a distribution that is one of a series of substantially equal 16 installments payable not less frequently than annually over the life expectancy 17 of the distributee or the joint and last survivor life expectancy of the distributee 18 and the distributee's designated beneficiary, as defined in 26 U.S.C. 401(a)(9); 19 (B) a distribution that is one of a series of substantially equal 20 installments payable not less frequently than annually over a specified period 21 of 10 years or more; 22 (C) a distribution that is required under 26 U.S.C. 401(a)(9); 23 (D) the portion of any distribution that is not includable in 24 gross income; however, such portion may be transferred only to an  25 individual retirement account or annuity described in 26 U.S.C. 408(a) or  26 (b), to a qualified plan described in 26 U.S.C. 401(a) or 403(a), or to an  27 annuity contract described in 26 U.S.C. 403(b), that agrees to separately  28 account for amounts so transferred, including separately accounting for  29 the portion of the distribution that is includable in gross income and the  30 portion of the distribution that is not so includable; and 31 (E) [A DISTRIBUTION THAT IS ON ACCOUNT OF 01 HARDSHIP; AND 02 (F)] other distributions that are reasonably expected to total less 03 than $200 during a year.  04  * Sec. 23. AS 14.25.370 is amended to read: 05 Sec. 14.25.370. Transmittal of contributions. All contributions deducted in 06 accordance with AS 14.25.310 - 14.25.590 shall be transmitted to the plan for deposit 07 in the appropriate account or trusts [TRUST FUND] as soon as administratively 08 feasible, but in no event later than 15 days following the close of the payroll period,  09 with the final contributions due for any school year transmitted no later than  10 July 15. 11  * Sec. 24. AS 14.25.370 is amended by adding new subsections to read: 12 (b) If contributions are not transmitted within the prescribed time limit, 13 interest shall be assessed on the outstanding contributions at the rate established under 14 AS 14.25.065 from the date that contributions were originally due. In addition, the 15 amount of contributions and interest due may be claimed by the administrator from the 16 Department of Education and Early Development from the state funds due the school 17 district. Amounts due from an employer and interest as prescribed in this subsection 18 may be claimed by the administrator from any agency of the state or political 19 subdivision that has in its possession funds of the employer or that is authorized to 20 disburse funds to the employer that are not restricted by statute or appropriation to a 21 specific purpose. The amount claimed shall be certified by the administrator as 22 sufficient to pay the contributions and interest due from the employer. The amount 23 claimed shall be submitted to the administrator for deposit in the appropriate account 24 or trusts. 25 (c) Employers are responsible for administrative fees, investment fees, and 26 investment losses charged to accounts established under AS 14.25.340 resulting from 27 contribution adjustments due to employers enrolling members in the plan before the 28 members are eligible for membership. Contributions made by employees shall be 29 returned to the employer by reducing future employee contributions due. 30 Contributions, net of fees and investment losses, made by employers shall be used to 31 reduce future employer contributions due. 01  * Sec. 25. AS 14.25.380 is amended to read: 02 Sec. 14.25.380. Limitations on contributions and benefits. Notwithstanding 03 any other provisions of this plan, the annual additions to each member's individual 04 account under this plan and under all defined contribution plans of the employer 05 required to be aggregated with the contributions from this plan under the provisions of 06 26 U.S.C. 415 may not exceed, for any limitation year, the amount permitted under 26  07 U.S.C. 415(c) [26 U.S.C. 415] at any time. If the amount of a member's individual  08 account [DEFINED CONTRIBUTION PLAN] contributions exceeds the limitation of 09 26 U.S.C. 415(c) for any limitation year, the administrator shall take any necessary 10 remedial action to correct an excess contribution. A fixed benefit provided under  11 this plan may not exceed, for or during a limitation year, the amount permitted  12 under 26 U.S.C. 415(b). If a fixed benefit provided under this plan exceeds, for or  13 during a limitation year, the amount permitted under 26 U.S.C. 415(b), the  14 administrator shall take remedial action necessary to comply with the limits on  15 the benefit amount in 26 U.S.C. 415(b). The provisions of 26 U.S.C. 415, and the 16 regulations adopted under that statute, as applied to qualified [DEFINED 17 CONTRIBUTION] plans of governmental employers [EMPLOYEES] are 18 incorporated as part of the terms and conditions of the plan. 19  * Sec. 26. AS 14.25.485(b) is amended to read: 20 (b) The occupational disability benefits accrue beginning the first day of the 21 month following termination of employment as a result of the disability and are 22 payable the last day of the month. If a final determination granting the benefit is not 23 made in time to pay the benefit when due, a retroactive payment shall be made to 24 cover the period of deferment. The last payment shall be for the first month in which 25 the disabled member 26 (1) dies; 27 (2) recovers from the disability; 28 (3) fails to meet the requirements under (f), [OR] (h), or (j) of this 29 section; or 30 (4) reaches normal retirement age. 31  * Sec. 27. AS 14.25.485(d) is amended to read: 01 (d) The monthly amount of an occupational disability benefit is 40 percent of 02 the disabled member's gross monthly compensation at the time of termination due to 03 disability. Notwithstanding AS 14.25.390(b), at the time a member is appointed to  04 disability, the member becomes fully vested in the employer contributions made  05 under AS 14.25.350(a). A disabled member is fully vested in the contributions to  06 the member's individual account made under this subsection. A member is not  07 entitled to elect distributions from the member's individual contribution account  08 under AS 14.25.410 while the member is receiving disability benefits under this  09 section. While a member is receiving disability benefits, based on the disabled 10 member's gross monthly compensation at the time of termination due to disability, the 11 employer shall make contributions to the 12 (1) member's individual account under AS 14.25.340 on behalf of the 13 member, without deduction from the member's disability payments; and 14 (2) appropriate accounts and funds on behalf of the member under 15 AS 14.25.350. 16  * Sec. 28. AS 14.25.485(g) is amended to read: 17 (g) A disabled member's occupational disability benefit terminates the last  18 day of the month in which [WHEN] the disabled member first qualifies [ATTAINS 19 ELIGIBILITY] for normal retirement. At that time, the member's retirement benefit 20 shall be determined under the provisions of AS 14.25.420 - 14.25.440, 14.25.470, and 21 14.25.480. A member whose occupational disability benefit terminates under this  22 subsection [RECEIVING DISABILITY BENEFITS UP UNTIL ELIGIBILITY FOR 23 RETIREMENT] shall be considered to have retired directly from the plan. 24  * Sec. 29. AS 14.25.485(i) is amended to read: 25 (i) Upon the death of a disabled member who is receiving or is entitled to 26 receive an occupational disability benefit, the administrator shall pay the surviving 27 spouse a surviving spouse's pension, equal to 40 percent of the member's monthly 28 compensation at the time of termination of employment because of occupational 29 disability. If there is no surviving spouse, the administrator shall pay the survivor's 30 pension in equal parts to the dependent children of the member. While the monthly  31 survivor's pension is being paid, the survivor is not entitled to elect distributions  01 from the employee's individual contribution account under AS 14.25.410. The 02 first payment of the surviving spouse's pension or of a dependent child's pension shall 03 accrue from the first day of the month following the member's death and is payable the 04 last day of the month. The last payment shall be made the last day of [FOR] the last 05 month in which there is an eligible surviving spouse or dependent child, or the last  06 day of the month in which the member would have first qualified for normal  07 retirement if the member had survived, whichever day comes sooner. A  08 retirement benefit shall be determined under the provisions of AS 14.25.420 -  09 14.25.440, 14.25.470, and 14.25.480 based on [. ON] the date the member would  10 have first qualified for normal retirement [OF THE MEMBER WOULD HAVE 11 OCCURRED] if the member had survived. In addition to the payment of the  12 member's individual account, the surviving spouse or, if there is no surviving  13 spouse, the surviving dependent children of the member, shall receive an  14 additional benefit in an amount equal to the accumulated contributions that  15 would have been made to the deceased member's individual account under  16 AS 14.25.340(a) and 14.25.350(a), based on the deceased member's gross monthly  17 compensation at the time of occupational disability, from the time of the  18 member's death to the date the member would have first qualified for normal  19 retirement if the member had survived. Earnings shall be allocated to the  20 additional benefit calculated under this subsection based on the actual rate of  21 return, net of expenses, of the trust account established under AS 14.25.350(e)  22 over the period that the contributions would have been made. This additional  23 amount and allocated earnings shall be paid in the same manner as determined  24 for the member's individual account under AS 14.25.420 - 14.25.460 to the extent  25 permitted by the Internal Revenue Service. For the purpose of determining  26 eligibility of a survivor who is receiving a benefit under this subsection for  27 medical benefits under AS 14.25.470 and 14.25.480, a [LIVED, THE 28 RETIREMENT BENEFIT SHALL BE DETERMINED UNDER THE PROVISIONS 29 OF AS 14.25.420 - 14.25.440, 14.25.470, AND 14.25.480. A] member who died 30 while receiving disability benefits shall be considered to have retired directly from the 31 plan on the date the member would have first qualified for normal retirement [OF 01 THE MEMBER WOULD HAVE OCCURRED] if the member had survived. The  02 period during which the member was eligible for a disability benefit and the  03 period during which a survivor's pension is paid to a survivor under this  04 subsection each constitute membership service for the purposes of determining  05 eligibility for medical benefits under this chapter and AS 39.30.300 - 39.30.495  06 [LIVED]. 07  * Sec. 30. AS 14.25.485(j) is amended to read: 08 (j) In this section, "occupational disability" means a physical or mental  09 condition that the administrator determines presumably permanently prevents  10 an employee from satisfactorily performing the employee's usual duties or the  11 duties of another comparable position or job available to the employee and for  12 which the employee is qualified by training or education; however, the proximate  13 cause of the condition must be a bodily injury sustained, or a hazard undergone,  14 while in the performance and within the scope of the employee's duties and not  15 the proximate result of the willful negligence of the employee [HAS THE 16 MEANING GIVEN IN AS 39.35.680]. 17  * Sec. 31. AS 14.25.485 is amended by adding a new subsection to read: 18 (k) While a survivor under (i) of this section is receiving a survivor's pension, 19 the employer of the deceased member shall make contributions with respect to the 20 survivor based on the deceased member's gross monthly compensation at the time of 21 termination due to disability 22 (1) that would have been paid to the member's individual account 23 under AS 14.25.340 and 14.25.350(a), to the trust account established under 24 AS 14.25.350(e), without deduction from the survivor's pension; and 25 (2) to the appropriate accounts and funds under AS 14.25.350(b) - (e). 26  * Sec. 32. AS 14.25 is amended by adding a new section to read: 27 Sec. 14.25.486. Disability benefit adjustment. (a) Once each year, the 28 administrator shall increase disability benefits. The amount of the increase is a 29 percentage of the current disability benefit equal to the lesser of 75 percent of the 30 increase in the cost of living in the preceding calendar year or nine percent. 31 (b) If a disabled member was not receiving a benefit during the entire 01 preceding calendar year, the increase in the benefit under this section shall be adjusted 02 by multiplying it by a fraction, the numerator of which is the number of months for 03 which the benefit was received in the preceding calendar year and the denominator of 04 which is 12. 05 (c) An increase in benefit payments under this section is effective July 1 of 06 each year and is based on the percentage increase in the Consumer Price Index for 07 urban wage earners and clerical workers for Anchorage, Alaska, during the previous 08 calendar year, as determined by the United States Department of Labor, Bureau of 09 Labor Statistics. 10 (d) Benefit adjustments under this section shall terminate the last day of the 11 month following the date on which a disabled member is no longer receiving a 12 disability benefit under AS 14.25.485. 13  * Sec. 33. AS 14.25.487(b) is amended to read: 14 (b) The first payment of the surviving spouse's pension or of a dependent 15 child's pension shall be made for the month following the month in which the member 16 dies. Payments [, AND PAYMENT] shall cease on the last day of the month in  17 which there is no longer an eligible spouse or eligible dependent child, or the last  18 day of the month following the earliest date [TO BE MADE BEGINNING WITH 19 THE MONTH IN WHICH] the member would have first qualified for normal  20 retirement if the member had survived, whichever day is sooner. 21  * Sec. 34. AS 14.25.487(c) is amended to read: 22 (c) The monthly survivor's pension in (b) of this section for survivors of 23 members is 40 percent of the member's monthly compensation in the month in which 24 the member dies. While the monthly survivor's pension is being paid, the survivor  25 is not entitled to elect distributions from the member's individual contribution  26 account under AS 14.25.410, except as required by AS 14.25.440. While the 27 monthly survivor's pension is being paid, the employer shall make contributions with  28 respect to [ON BEHALF OF] the member's surviving spouse and member's  29 surviving dependent children [BENEFICIARIES] based on the deceased member's 30 gross monthly compensation at the time of occupational death 31 (1) that would have been paid to the member's individual account 01 under AS 14.25.340 and AS 14.25.350(a), to the trust account established under  02 AS 14.25.350(e), without deduction from the survivor's pension; and 03 (2) to the appropriate accounts and funds [ON BEHALF OF THE 04 MEMBER] under AS 14.25.350(b) - (e) [AS 14.25.350]. 05  * Sec. 35. AS 14.25.487(e) is amended to read: 06 (e) On the date the member would have first qualified for normal retirement 07 [OF THE MEMBER WOULD HAVE OCCURRED] if the member had survived  08 [LIVED], the retirement benefit shall be determined under the provisions of 09 AS 14.25.420 - 14.25.440, 14.25.470, and 14.25.480. In addition to payment of the  10 member's individual account, the surviving spouse or, if there is no surviving  11 spouse, the surviving dependent children of the member, shall receive an  12 additional benefit in an amount equal to the accumulated contributions that  13 would have been made to the deceased member's individual account under  14 AS 14.25.340(a) and 14.25.350(a), based on the deceased member's gross monthly  15 compensation at the time of the member's occupational death, from the time of  16 the member's death to the date the member would have first qualified for normal  17 retirement if the member had survived. Earnings shall be allocated to the  18 additional benefit calculated under this subsection based on the actual rate of  19 return, net of expenses, of the trust account established under AS 14.25.350(e)  20 over the period that the contributions would have been made. This additional  21 amount and allocated earnings shall be paid in the same manner as determined  22 for the member's individual account under AS 14.25.420 - 14.25.460 to the extent  23 permitted by the Internal Revenue Service. A member who died and whose 24 survivors receive occupational death benefits under this section shall be considered to 25 have retired directly from the plan on the date the [NORMAL RETIREMENT OF 26 THE] member would have first qualified for normal retirement [OCCURRED] if 27 the member had survived. The period of time during which a survivor's pension is  28 paid under this section constitutes membership service for the purposes of  29 determining vesting in employer contributions under AS 14.25.390(b) and  30 eligibility for medical benefits under this chapter and AS 39.30.300 - 39.30.495  31 [LIVED]. 01  * Sec. 36. AS 14.25 is amended by adding new sections to read: 02 Sec. 14.25.488. Survivors' pension adjustment. (a) Once each year, the 03 administrator shall increase payments to a person 60 years of age or older receiving a 04 survivor's pension under AS 14.25.485(i) or 14.25.487(c) and to a person who has 05 received a survivor's pension under AS 14.25.485(i) or 14.25.487(c) for at least eight 06 years, who is not otherwise eligible for an increase under this section. 07 (b) The amount of the increase is a percentage of the current survivor's 08 pension equal to the lesser of 50 percent of the increase in the cost of living in the 09 preceding calendar year or six percent. 10 (c) If a survivor was not receiving a pension during the entire preceding 11 calendar year, the increase in the survivor's pension under this section shall be 12 adjusted by multiplying it by a fraction, the numerator of which is the number of 13 months for which the pension was received in the preceding calendar year and the 14 denominator of which is 12. 15 (d) The administrator shall increase the initial survivor's pension paid to a 16 survivor of a member who died while receiving disability benefits by a percentage 17 equal to the total cumulative percentage that has been applied to the member's 18 disability benefit under AS 14.25.486. 19 (e) An increase in benefit payments under this section is effective July 1 of 20 each year and is based on the percentage increase in the Consumer Price Index for 21 urban wage earners and clerical workers for Anchorage, Alaska, during the previous 22 calendar year, as determined by the United States Department of Labor, Bureau of 23 Labor Statistics. 24 (f) Pension adjustments under this section shall terminate the last day of the 25 month following the date on which a survivor is no longer receiving a survivor's 26 pension under AS 14.25.485(i) or 14.25.487(c). 27 Sec. 14.25.489. Premiums for retiree major medical insurance coverage  28 upon termination of disability benefits or survivor's pension. The premium for 29 retiree major medical insurance coverage payable by a member whose disability 30 benefit is terminated under AS 14.25.485(g) or by an eligible survivor whose survivor 31 pension is terminated under AS 14.25.485(i) or 14.25.487(e) when the member would 01 have been eligible for normal retirement if the member had survived shall be 02 determined under AS 14.25.480(g)(2) as if the member or survivor were eligible for 03 Medicare. 04  * Sec. 37. AS 14.25.500 is amended by adding new subsections to read: 05 (d) The administrator shall use forfeitures in the fixed benefit account of the 06 plan that arise for any reason, including from termination of employment or death, to 07 reduce employer contributions. Forfeitures may not be applied to increase the benefits 08 of any member. 09 (e) The administrator shall determine the amount of any fixed benefit that is 10 determined on the basis of actuarial tables using assumptions approved by the 11 commissioner. The amount of benefits is not subject to employer discretion. 12  * Sec. 38. AS 14.25.510 is amended to read: 13 Sec. 14.25.510. Nonguarantee of returns, rates, or benefit amounts. The 14 plan created by AS 14.25.310 - 14.25.590 is, with respect to individual accounts,  15 treated as a defined contribution plan, and not a defined benefit plan. The amount of 16 money in the individual account of a participant depends on the amount of 17 contributions and the rate of return from investments of the account that varies over 18 time. If benefits are paid in the form of an annuity, the benefit amount payable is 19 dependent on the amount of money in the account and the interest rates applied and 20 service fees charged by the annuity payor at the time the annuity is purchased from  21 the carrier and benefits are first paid. Nothing in this plan guarantees a participant 22 (1) a rate of return or interest rate other than that actually earned by the 23 account of the participant, less applicable administrative expenses; or 24 (2) an annuity based on interest rates or service charges other than 25 interest rates available from and service charges by the annuity payor in effect at the 26 time the annuity is paid. 27  * Sec. 39. AS 14.25.540(c) is amended to read: 28 (c) Each eligible member who elects to participate in the defined contribution 29 retirement plan shall have transferred to a new account the member contribution 30 account balance held in trust for the member under the defined benefit retirement plan 31 of the teachers' retirement system. A matching employer contribution shall be made on 01 behalf of that employee to the new account. The employer shall make the matching 02 contribution from funds other than the trust funds of the defined benefit retirement 03 plan. The amount of the matching employer contribution is subject to, and may  04 not exceed, the limitation of 26 U.S.C. 415(c) during the applicable limitation  05 year as defined in AS 14.25.590. If the matching employer contribution would  06 exceed the limits during the limitation year in which the transfer occurs, the  07 remaining amount of the matching employer contribution shall be made in the  08 next limitation year, if the limits would not be exceeded. 09  * Sec. 40. AS 14.25.540(d) is amended to read: 10 (d) Upon a transfer, all membership service previously earned under the 11 defined benefit retirement plan shall be nullified for purposes of entitlement to a future 12 benefit under the defined benefit retirement plan but shall be credited for purposes of 13 determining vesting in employer contributions under AS 14.25.390(b) and  14 eligibility to elect medical benefits under AS 14.25.470. Membership service allowed 15 for credit toward medical benefits does not include any service credit purchased under 16 AS 14.25.075 for employment by an employer who is not a participating employer in 17 this chapter. 18  * Sec. 41. AS 14.25.540(h) is amended to read: 19 (h) A member who is eligible to elect transfer to the defined contribution  20 retirement plan must make the election not later than 12 months after the first  21 day of the month following the administrator's receipt of the notification that the  22 member's employer consents to transfers of its members under (i) of this section.  23 The election to participate in the defined contribution retirement plan must be made in 24 writing on forms and in the manner prescribed by the administrator. Before accepting 25 an election to participate in the defined contribution retirement plan, the administrator 26 must provide the employee planning on making an election to participate in the 27 defined contribution retirement plan with information, including calculations to 28 illustrate the effect of moving the employee's retirement plan from the defined benefit 29 retirement plan to the defined contribution retirement plan as well as other information 30 to clearly inform the employee of the potential consequences of the employee's 31 election. An election made under this subsection to participate in the defined 01 contribution retirement plan is irrevocable. Upon making the election, the participant 02 shall be enrolled as a member of the defined contribution retirement plan, the 03 member's participation in the plan shall be governed by the provisions of 04 AS 14.25.310 - 14.25.590, and the member's participation in the defined benefit 05 retirement plan under AS 14.25.009 - 14.25.220 shall terminate. The participant's 06 enrollment in the defined contribution retirement plan shall be effective the first day of 07 the month after the administrator receives the completed enrollment forms. An 08 election made by an eligible member who is married is not effective unless the 09 election is signed by the individual's spouse. 10  * Sec. 42. AS 14.25 is amended by adding a new section to read: 11 Sec. 14.25.582. Special rules for treatment of qualified military service.  12 Notwithstanding any contrary provisions of AS 14.25.310 - 14.25.590, with respect to 13 qualified military service, contributions shall be made and benefits and service credit 14 shall be provided in accordance with 26 U.S.C. 414(u). 15  * Sec. 43. AS 14.25.590(7) is amended to read: 16 (7) "compensation" 17 (A) means 18 (i) the total remuneration earned by an employee for 19 personal services rendered, including cost-of-living differentials, as 20 reported on the employee's Federal Income Tax Withholding Statement 21 (Form W-2) from the employer for the calendar year; 22 (ii) the member contribution to the teachers' retirement 23 system under AS 14.25.340; 24 (B) does not include retirement benefits, severance pay or other 25 separation bonuses, welfare benefits, per diem, expense allowances, workers' 26 compensation payments, payments for leave not used whether those leave 27 payments are scheduled payments, lump-sum payments, donations, or cash-ins, 28 any remuneration contributed by the employer for or on account of the 29 employee under this plan or under any other qualified or nonqualified 30 employee benefit plan, any remuneration not specifically included above that 31 would have been excluded under 26 U.S.C. 3121(a) (Internal Revenue Code) if 01 the employer had remained in the Federal Social Security System [, OR ANY 02 REMUNERATION PAID BY THE EMPLOYER IN EXCESS OF THE 03 SOCIAL SECURITY TAXABLE WAGE BASE FOR THE CALENDAR 04 YEAR]; 05 (C) notwithstanding (B) of this paragraph, includes any amount 06 that is contributed by the employer under a salary reduction agreement and that 07 is not includable in the gross income of the employee under 26 U.S.C. 125, 08 132(f)(4), 402(e)(3), 402(h)(1)(B), or 403(b) (Internal Revenue Code); the 09 annual compensation limitation for the member, which is so taken into account 10 for those purposes, may not exceed $200,000, as adjusted for the cost of living 11 in accordance with 26 U.S.C. 401(a)(17)(B) (Internal Revenue Code), with the 12 limitation for a fiscal year being the limitation in effect for the calendar year 13 within which the fiscal year begins;  14  * Sec. 44. AS 22.25.022(c)(2) is amended to read: 15 (2) "distributee" means a member or a beneficiary who is the surviving 16 spouse of the member or an alternate payee; 17  * Sec. 45. AS 22.25.022(c)(3) is amended to read: 18 (3) "eligible retirement plan" 19 [(A)] means 20 (A) [(i)] an individual retirement account described in 26 21 U.S.C. 408(a); 22 (B) [(ii)] an individual retirement annuity defined in 26 U.S.C. 23 408(b); 24 (C) [(iii)] an annuity plan described in 26 U.S.C. 403(a); 25 (D) [(iv)] a qualified trust described in 26 U.S.C. 401(a); 26 (E) [(v)] on and after January 1, 2002, an annuity plan 27 described in 26 U.S.C. 403(b); [OR] 28 (F) [(vi)] on or after January 1, 2002, a governmental plan 29 described in 26 U.S.C. 457(b); or 30 (G) on or after January 1, 2008, a Roth IRA described in 26  31 U.S.C. 408A [AND 01 (B) NOTWITHSTANDING (A) OF THIS PARAGRAPH, 02 MEANS, WITH RESPECT TO DISTRIBUTIONS MADE BEFORE 03 JANUARY 1, 2002, AN INDIVIDUAL RETIREMENT ACCOUNT OR AN 04 INDIVIDUAL RETIREMENT ANNUITY ACCOUNT DESCRIBED OR 05 DEFINED IN 26 U.S.C. 408 IN THE CASE OF AN ELIGIBLE ROLLOVER 06 DISTRIBUTION TO A BENEFICIARY WHO IS THE SURVIVING 07 SPOUSE OF A MEMBER]; 08  * Sec. 46. AS 22.25.022(c)(4) is amended to read: 09 (4) "eligible rollover distribution" means a distribution of all or part of 10 a total account to a distributee, except for 11 (A) a distribution that is one of a series of substantially equal 12 installments payable not less frequently than annually over the life expectancy 13 of the distributee or the joint and last survivor life expectancy of the distributee 14 and the distributee's designated beneficiary, as defined in 26 U.S.C. 401(a)(9); 15 (B) a distribution that is one of a series of substantially equal 16 installments payable not less frequently than annually over a specified period 17 of 10 years or more; 18 (C) a distribution that is required under 26 U.S.C. 401(a)(9); 19 (D) the portion of any distribution that is not includable in 20 gross income; however, such portion may be transferred only to an  21 individual retirement account or annuity described in 26 U.S.C. 408(a) or  22 (b), to a qualified plan described in 26 U.S.C. 401(a) or 403(a), or to an  23 annuity contract described in 26 U.S.C. 403(b), that agrees to separately  24 account for amounts so transferred, including separately accounting for  25 the portion of the distribution that is includable in gross income and the  26 portion of the distribution that is not so includable; and  27 (E) [A DISTRIBUTION MADE ON OR AFTER JANUARY 28 1, 2002, THAT IS ON ACCOUNT OF HARDSHIP; AND 29 (F)] other distributions that are reasonably expected to total less 30 than $200 during a year. 31  * Sec. 47. AS 22.25.046 is amended by adding a new subsection to read: 01 (c) Employer contributions shall be separately computed for benefits provided 02 by AS 22.25.090, and shall be deposited in the Alaska retiree health care trust 03 established under AS 39.30.097(a). 04  * Sec. 48. AS 22.25.090 is amended by adding a new subsection to read: 05 (f) On and after July 1, 2007, benefits under this section will be provided in 06 part by the Alaska retiree health care trust established under AS 39.30.097(a). 07  * Sec. 49. AS 37.10.210(a) is amended to read: 08 (a) The Alaska Retirement Management Board is established in the 09 Department of Revenue. The board's primary mission is to serve as the trustee of the 10 assets of the state's retirement systems, the State of Alaska Supplemental Annuity 11 Plan, [AND] the deferred compensation program for state employees, and the Alaska  12 retiree health care trusts established under AS 39.30.097. Consistent with 13 standards of prudence, the board has the fiduciary obligation to manage and invest 14 these assets in a manner that is sufficient to meet the liabilities and pension obligations 15 of the systems, plan, [AND] program, and trusts. The board may, with the approval 16 of the commissioner of revenue and upon agreement with the responsible fiduciary, 17 manage and invest other state funds so long as the activity does not interfere with the 18 board's primary mission. In making investments, the board shall exercise the powers 19 and duties of a fiduciary of a state fund under AS 37.10.071. 20  * Sec. 50. AS 39.30 is amended by adding new sections to read: 21 Sec. 39.30.097. Alaska retiree health care trusts. (a) The commissioner of 22 administration is authorized to prefund medical benefits provided by AS 14.25.168, 23 AS 22.25.090, and AS 39.35.535 by establishing an irrevocable trust that is exempt 24 from federal income tax under 26 U.S.C. 115 and subject to the applicable financial 25 reporting, disclosure and actuarial requirements of the Governmental Accounting 26 Standards Board. 27 (b) The commissioner of administration is authorized to prefund medical 28 benefits provided by AS 14.25.480, AS 39.30.300, and AS 39.35.880 by establishing 29 an irrevocable trust that is exempt from federal income tax under 26 U.S.C. 115 and 30 subject to the applicable financial reporting, disclosure and actuarial requirements of 31 the Governmental Accounting Standards Board. 01 (c) The plans and assets of the Alaska retiree health care trusts shall be under 02 the governance and investment authority of the Alaska Retirement Management 03 Board, which shall serve as trustee of the trust as provided in AS 37.10.210. The 04 commissioner of administration or the commissioner's designee shall serve as 05 administrator of the Alaska retiree health care trusts. 06 (d) All employer contributions, appropriations, earnings, and reserves for the 07 payment of retiree medical obligations shall be credited to the retiree health care 08 trusts. The prefunded amounts shall be available without fiscal year limitations for 09 retiree medical benefits and administration costs. The amounts remaining in the trusts, 10 if any, after retiree medical benefits and administration costs have been paid in any 11 year shall be retained in the trusts for future payments, until the satisfaction of all 12 employer liabilities under the trusts for retiree medical benefits. All prefunded 13 amounts shall be used solely for the payment of retiree medical benefits and 14 administration costs and for no other purpose. 15 (e) The assets of the Alaska retiree health care trusts may be pooled, for 16 investment purposes, with assets of the retirement systems, so long as such assets are 17 accounted for separately. 18 Sec. 39.30.098. Regulations. The commissioner of administration may adopt 19 regulations to implement AS 39.30.090 - 39.30.097. Regulations adopted by the 20 commissioner under this section relate to the internal management of state agencies 21 and their adoption is not subject to AS 44.62 (Administrative Procedure Act.). 22  * Sec. 51. AS 39.30.154 is amended to read: 23 Sec. 39.30.154. Powers and duties of the administrator. The administrator 24 has the same powers and duties with regard to the plan as those set out in 25 AS 14.25.003 and 14.25.004 [AS 14.25.004]. 26  * Sec. 52. AS 39.30.160(a) is amended to read: 27 (a) The Department of Administration shall, in accordance with policies 28 prescribed by regulations adopted by the commissioner [OF THE ALASKA 29 RETIREMENT MANAGEMENT BOARD], provide to employees for whom special 30 individual employee benefit accounts are established under AS 39.30.150(c) the 31 following benefit options: 01 (1) supplemental health benefits; 02 (2) supplemental death benefits; 03 (3) supplemental disability benefits; and 04 (4) supplemental dependent care benefits. 05  * Sec. 53. AS 39.30.160(e) is amended to read: 06 (e) Regulations adopted by the commissioner [BOARD] implementing 07 AS 39.30.150 and this section are not subject to AS 44.62 (Administrative Procedure 08 Act). 09  * Sec. 54. AS 39.30 is amended by adding a new section to read: 10 Sec. 39.30.165. Appeals. A final decision made under AS 39.30.150 - 11 39.30.180 is subject to appeal under AS 44.64. 12  * Sec. 55. AS 39.30 is amended by adding a new section to read: 13 Sec. 39.30.335. Appeals. A final decision made under AS 39.30.300 - 14 39.30.495 is subject to appeal under AS 44.64. 15  * Sec. 56. AS 39.30.340 is amended to read: 16 Sec. 39.30.340. Powers and duties of the administrator. The administrator 17 shall establish a teachers' and public employees' retiree health reimbursement 18 arrangement plan trust fund in which the assets of the plan shall be deposited and held. 19 The retiree health reimbursement arrangement plan trust fund may be a sub- 20 trust of the Alaska retiree health care trust established under AS 39.30.097(b).  21 The administrator has the same powers and duties with regard to the plan and the trust 22 fund as provided in AS 14.25.003 and 14.25.004 [AS 14.25.004]. 23  * Sec. 57. AS 39.30.370 is amended to read: 24 Sec. 39.30.370. Contributions by employers. For each member of the plan, 25 an employer shall contribute to the teachers' and public employees' retiree health 26 reimbursement arrangement plan trust fund an amount equal to three percent of the 27 average annual compensation of all employees of all employers in the teachers'  28 retirement system and public employees' retirement system [EMPLOYER'S 29 AVERAGE ANNUAL EMPLOYEE COMPENSATION]. The administrator shall 30 maintain a record for each member to account for employer contributions on behalf of 31 that member. The board shall establish by regulation the rate of interest to be applied 01 annually to the amount in a member's individual account. 02  * Sec. 58. AS 39.35.115 is amended by adding new subsections to read: 03 (d) The retirement plan established by AS 39.35.095 - 39.35.680 is a joint 04 contributory plan. 05 (e) If, upon termination of the plan, all liabilities are satisfied, any excess 06 assets shall revert to the employers as determined by the administrator, subject to the 07 approval of the termination by the Internal Revenue Service. 08  * Sec. 59. AS 39.35.165(f) is amended to read: 09 (f) The board may accept rollover contributions from a member and direct 10 transfers, as described in this subsection, for the purchase, in whole or in part, of 11 credited service for the reinstatement, in whole or in part, of forfeited credited service 12 under AS 39.35.350. A rollover contribution or transfer as described in this subsection 13 shall also be treated as employer contributions for the purpose of determining tax 14 treatment under the Internal Revenue Code and may be made by any one or a 15 combination of the following methods: 16 (1) subject to the limitations prescribed in 26 U.S.C. 401(a)(3) and 26 17 U.S.C. 402(c), accepting eligible rollover distributions directly from one or more 18 eligible retirement plans as defined by 26 U.S.C. 402(c)(8)(B) [PROGRAMS OF 19 ANOTHER EMPLOYER THAT ARE QUALIFIED UNDER 26 U.S.C. 401(a) OR 20 ACCEPTING ROLLOVERS DIRECTLY FROM A MEMBER]; 21 (2) [SUBJECT TO THE LIMITATIONS PRESCRIBED IN 26 U.S.C. 22 408(d)(3)(A)(ii), ACCEPTING FROM A MEMBER CONDUIT ROLLOVER 23 CONTRIBUTIONS THAT ARE RECEIVED BY THE EMPLOYEE FROM ONE 24 OR MORE CONDUIT ROLLOVER INDIVIDUAL RETIREMENT ACCOUNTS 25 PREVIOUSLY ESTABLISHED BY THE MEMBER; 26 (3)] subject to the limitations prescribed in 26 U.S.C. 403(b)(13), 27 accepting direct trustee-to-trustee transfers of all or a portion of the accounts of the 28 member, on or after January 1, 2002, from a tax sheltered annuity described in 26 29 U.S.C. 403(b); 30 (3) [(4)] subject to the limitations prescribed in 26 U.S.C. 457(e)(17), 31 accepting direct trustee-to-trustee transfers of all or a portion of the accounts of the 01 member, on or after January 1, 2002, from an eligible deferred compensation plan of a 02 tax-exempt organization or a state or local government described in 26 U.S.C. 457(b); 03 (4) [(5)] accepting direct trustee-to-trustee transfer from an account 04 established for the benefit of the member in AS 39.30.150 - 39.30.180 (Alaska 05 Supplemental Annuity Plan). 06  * Sec. 60. AS 39.35.165(f) is amended to read: 07 (f) The board may accept rollover contributions from a member [AND 08 DIRECT TRANSFERS, AS DESCRIBED IN THIS SUBSECTION, FOR THE 09 PURCHASE, IN WHOLE OR IN PART, OF CREDITED SERVICE FOR THE 10 REINSTATEMENT, IN WHOLE OR IN PART, OF FORFEITED CREDITED 11 SERVICE UNDER AS 39.35.350]. A rollover contribution [OR TRANSFER] as 12 described in this subsection shall also be treated as employer contributions for the 13 purpose of determining tax treatment under the Internal Revenue Code and may be 14 made by any one or a combination of the following methods: 15 (1) subject to the limitations prescribed in 26 U.S.C. 401(a)(3) and 26 16 U.S.C. 402(c), accepting eligible rollover distributions directly from one or more 17 eligible retirement plans as defined by 26 U.S.C. 402(c)(8)(B); 18 (2) subject to the limitations prescribed in 26 U.S.C. 403(b)(13), 19 accepting direct trustee-to-trustee transfers of all or a portion of the accounts of the 20 member, on or after January 1, 2002, from a tax sheltered annuity described in 26 21 U.S.C. 403(b); 22 (3) subject to the limitations prescribed in 26 U.S.C. 457(e)(17), 23 accepting direct trustee-to-trustee transfers of all or a portion of the accounts of the 24 member, on or after January 1, 2002, from an eligible deferred compensation plan of a 25 tax-exempt organization or a state or local government described in 26 U.S.C. 457(b); 26 (4) accepting direct trustee-to-trustee transfer from an account 27 established for the benefit of the member in AS 39.30.150 - 39.30.180 (Alaska 28 Supplemental Annuity Plan).  29  * Sec. 61. AS 39.35.195(b) is amended to read: 30 (b) Except as provided by AS 39.35.165(f) [AS 39.35.165(f)(5)], the plan does 31 not accept contributions of eligible rollover distributions. 01  * Sec. 62. AS 39.35.195(c)(2) is amended to read: 02 (2) "distributee" means a member or a beneficiary who is the surviving 03 spouse of the member or an alternate payee; 04  * Sec. 63. AS 39.35.195(c)(3) is amended to read: 05 (3) "eligible retirement plan" 06 [(A)] means 07 (A) [(i)] an individual retirement account described in 26 08 U.S.C. 408(a); 09 (B) [(ii)] an individual retirement annuity defined in 26 U.S.C. 10 408(b); 11 (C) [(iii)] an annuity plan described in 26 U.S.C. 403(a); 12 (D) [(iv)] a qualified trust described in 26 U.S.C. 401(a); 13 (E) [(v)] on and after January 1, 2002, an annuity plan 14 described in 26 U.S.C. 403(b); [OR] 15 (F) [(vi)] on or after January 1, 2002, a governmental plan 16 described in 26 U.S.C. 457(b); or 17 (G) on or after January 1, 2008, a Roth IRA described in 26  18 U.S.C. 408A [AND 19 (B) NOTWITHSTANDING (A) OF THIS PARAGRAPH, 20 MEANS, WITH RESPECT TO DISTRIBUTIONS MADE BEFORE 21 JANUARY 1, 2002, AN INDIVIDUAL RETIREMENT ACCOUNT OR AN 22 INDIVIDUAL RETIREMENT ANNUITY ACCOUNT DESCRIBED OR 23 DEFINED IN 26 U.S.C. 408 IN THE CASE OF AN ELIGIBLE ROLLOVER 24 DISTRIBUTION TO A BENEFICIARY WHO IS THE SURVIVING 25 SPOUSE OF A MEMBER]; 26  * Sec. 64. AS 39.35.195(c)(4) is amended to read: 27 (4) "eligible rollover distribution" means a distribution of all or part of 28 a total account to a distributee, except for 29 (A) a distribution that is one of a series of substantially equal 30 installments payable not less frequently than annually over the life expectancy 31 of the distributee or the joint and last survivor life expectancy of the distributee 01 and the distributee's designated beneficiary, as defined in 26 U.S.C. 401(a)(9); 02 (B) a distribution that is one of a series of substantially equal 03 installments payable not less frequently than annually over a specified period 04 of 10 years or more; 05 (C) a distribution that is required under 26 U.S.C. 401(a)(9); 06 (D) the portion of any distribution that is not includable in 07 gross income; however, such portion may be transferred only to an  08 individual retirement account or annuity described in 26 U.S.C. 408(a) or  09 (b), to a qualified plan described in 26 U.S.C. 401(a) or 403(a), or to an  10 annuity contract described in 26 U.S.C. 403(b), that agrees to separately  11 account for amounts so transferred, including separately accounting for  12 the portion of the distribution that is includable in gross income and the  13 portion of the distribution that is not so includable; and  14 (E) [A DISTRIBUTION MADE ON OR AFTER JANUARY 15 1, 2002, THAT IS ON ACCOUNT OF HARDSHIP; AND 16 (F)] other distributions that are reasonably expected to total less 17 than $200 during a year. 18  * Sec. 65. AS 39.35.250 is amended to read: 19 Sec. 39.35.250. Calculation of employer's contribution rate. (a) An 20 employer shall make contributions to the plan [IN AMOUNTS DETERMINED] in 21 accordance with this section. For the purposes of this section and AS 39.35.270, the 22 [PAST SERVICE DATE FOR EACH EMPLOYER IS THE ENTRY DATE OF THE 23 EMPLOYER OR DECEMBER 31, 1972, WHICHEVER IS LATER. AFTER 24 DECEMBER 31, 1972, IF AMENDMENTS TO AS 39.35.095 - 39.35.680 ARE 25 ENACTED THAT SUBSTANTIALLY AFFECT BENEFITS ACCRUED BEFORE 26 THE EFFECTIVE DATE OF THE AMENDMENT, THE PAST SERVICE DATE 27 WILL BE CHANGED TO DECEMBER 31 OF THE YEAR IMMEDIATELY 28 PRECEDING THAT IN WHICH THE AMENDMENT IS ENACTED. THE] 29 contribution rate is the sum of the consolidated employer normal cost rate and the 30 past service rate as approved by the board. 31 (b) In (a) of this section, "consolidated employer normal cost rate" means the 01 percentage of compensation of all active employees in the system [PLAN] which, [IF 02 PAID OVER THE PERIOD OF THEIR CREDITED SERVICE AFTER THEIR 03 PAST SERVICE DATE AND] when combined with all employee contributions to the  04 plan, is sufficient to provide the benefits earned during the year beginning after the  05 last valuation date [AFTER SUCH PAST SERVICE DATES]. This percentage is 06 [UNIFORMLY] determined at the plan level for all employers and is applicable to 07 each employer. 08 (c) In (a) of this section, "past service rate" means the percentage of 09 compensation of all active employees in the system [PLAN] necessary to provide the 10 annual amount required to amortize the unfunded obligations of the employer for 11 benefits earned by the employer's members in the plan as of [BEFORE] the date of  12 the last actuarial valuation [EMPLOYER'S PAST SERVICE DATE] over a period 13 not to exceed the maximum allowed by generally accepted accounting principles  14 of the Governmental Accounting Standards Board [40 YEARS. THE PERIOD OF 15 AMORTIZATION BEGINS AT THE PAST SERVICE DATE OF EACH 16 EMPLOYER]. The percentage is separately determined for each employer. 17  * Sec. 66. AS 39.35.250 is amended by adding a new subsection to read: 18 (d) Employer contributions shall be separately computed for benefits provided 19 by AS 39.35.535, and shall be deposited in the Alaska retiree health care trust 20 established under AS 39.30.097(a). 21  * Sec. 67. AS 39.35.270(a) is amended to read: 22 (a) The amount of each employer's contributions shall be determined by 23 applying the sum of the consolidated employer normal cost [EMPLOYER'S 24 CONTRIBUTION] rate and the employer's past service rate to the total  25 compensation paid to the employer's active employees in the system [, AS 26 CERTIFIED BY THE BOARD, TO THE TOTAL COMPENSATION PAID TO THE 27 ACTIVE EMPLOYEES OF THE EMPLOYER] for each payroll period, [AND BY] 28 including any adjustments to contributions required by AS 39.35.520(a). This amount 29 shall be remitted by the employer to the administrator in accordance with 30 AS 39.35.610. 31  * Sec. 68. AS 39.35.375(a) is amended to read: 01 (a) An active or inactive member who has never been vested in this plan or in 02 the teachers' retirement plan under AS 14.25.009 - 14.25.220, who has at least two 03 years of credited service in this plan, and who has membership service in the teachers' 04 retirement system may claim credited service in this plan in an amount equal to the 05 membership service the member has in the teachers' retirement system. The claimed 06 credited service may be added to service earned under AS 39.35.095 - 39.35.680 to 07 enable the member to qualify for a public service benefit under this section. The 08 member may not claim credited service for membership service for which the member 09 has received a refund under AS 14.25.150 [UNLESS THE MEMBER FULLY PAYS 10 THE INDEBTEDNESS AS ESTABLISHED UNDER AS 14.25.063]. The member 11 may not claim credited service in this plan based on unused sick leave under 12 AS 14.25.115. 13  * Sec. 69. AS 39.35.385(c) is amended to read: 14 (c) Credited service for which contributions were refunded is not creditable 15 under this section [UNLESS THE REFUNDED CONTRIBUTIONS HAVE BEEN 16 REPAID. FOR PURPOSES OF (a) AND (b) OF THIS SECTION, A MEMBER OR 17 FORMER MEMBER DOES NOT HAVE TO BE REEMPLOYED UNDER THIS 18 PLAN IN ORDER TO PAY REFUNDED CONTRIBUTIONS. COMPOUND 19 INTEREST AT THE RATE PRESCRIBED BY REGULATION SHALL BE ADDED 20 TO THE REINSTATEMENT INDEBTEDNESS FROM THE DATE OF THE 21 REFUND TO THE DATE OF REPAYMENT]. 22  * Sec. 70. AS 39.35.522(d) is amended to read: 23 (d) A decision of the [THE] commissioner of administration under this  24 section to deny a waiver under this section may be appealed to the office of  25 administrative hearings. The office of administrative hearings may reverse the  26 decision of the commissioner and may impose conditions on the granting of a waiver 27 which it considers equitable. These conditions may include requiring the member or 28 beneficiary to make additional contributions to the plan. 29  * Sec. 71. AS 39.35.535 is amended by adding a new subsection to read: 30 (f) On and after July 1, 2007, benefits under this section shall be provided in 31 part by the Alaska retiree health care trust established under AS 39.30.097(a). 01  * Sec. 72. AS 39.35.610 is amended by adding a new subsection to read: 02 (b) If contributions are not submitted within the prescribed time limit, the 03 amount of contributions and interest due may be claimed by the administrator from 04 any agency of the state or political subdivision that has in its possession funds of the 05 employer or that is authorized to disburse funds to the employer that are not restricted 06 by statute or appropriation to a specific purpose. The amount claimed shall be certified 07 by the administrator as sufficient to pay the contributions and interest due from the 08 employer. The amount claimed shall be submitted to the administrator for deposit in 09 the retirement fund and the Alaska retiree health care trust. 10  * Sec. 73. AS 39.35.615 is amended by adding new subsections to read: 11 (g) An employer terminating participation in the plan shall pay termination 12 costs determined by the administrator, or enter into a payment plan acceptable to the 13 administrator, within 60 days of the employer's receiving notice of its termination 14 costs from the administrator. Termination costs not paid within the prescribed time 15 limit or in accordance with the approved payment plan shall be collected by the 16 administrator in accordance with AS 39.35.610(b). Termination of participation by an 17 employer in the plan does not bar future participation by the employer under 18 AS 39.35.700 - 39.35.990 if the employer has paid in full its prior termination costs. 19 (h) A political subdivision or public organization considering or requesting 20 termination from the plan shall pay the cost associated with obtaining a termination 21 cost study associated with the employer's termination. 22  * Sec. 74. AS 39.35.620 is amended by adding new subsections to read: 23 (i) An employer terminating participation in the plan shall pay termination 24 costs determined by the administrator, or enter into a payment plan accepable to the 25 administrator, within 60 days of the employer's notice of such cost. Termination costs 26 not paid within the prescribed time limit or in accordance with the approved payment 27 plan shall be collected by the administrator in accordance with AS 39.35.610(b). 28 Termination of participation by an employer in the plan does not bar future 29 participation by the employer under AS 39.35.700 - 39.35.990 if the employer has 30 paid in full its prior termination costs. 31 (j) A political subdivision or public organization being terminated from the 01 plan shall pay the cost associated with obtaining a termination cost study associated 02 with the employer's termination. 03  * Sec. 75. AS 39.35.650 is amended to read: 04 Sec. 39.35.650. Refunds to employers. An employer may not receive an 05 amount from the plan, except as provided under AS 39.35.115(e), 39.35.615(e), or  06 [AS 39.35.615(e) AND] 39.35.620(g). 07  * Sec. 76. AS 39.35 is amended by adding a new section to read: 08 Sec. 39.35.678. Internal Revenue Code compliance. (a) The administrator 09 shall use forfeitures that arise for any reason, including from termination of 10 employment or death, to reduce employer contributions. Forfeitures may not be 11 applied to increase the benefits of any member. 12 (b) The administrator shall determine the amount of any benefit that is 13 determined on the basis of actuarial tables using assumptions approved by the 14 commissioner. The amount of benefits is not subject to employer discretion. 15 (c) Employee contributions paid to, and retirement benefits paid from, the plan 16 may not exceed the annual limits on contributions and benefits, respectively, allowed 17 by 26 U.S.C. 415. Notwithstanding any contrary provision of law, the administrator 18 may modify a request by a member to make a contribution to a plan if the amount of 19 the contribution would exceed the limits provided in 26 U.S.C. 415 by using the 20 following methods: 21 (1) if the law requires a lump sum payment for the purchase of service 22 credit, the administrator may establish a periodic payment plan for the member to 23 avoid a contribution in excess of the limits under 26 U.S.C. 415(c) or 415(n); 24 (2) if a periodic payment plan under (1) of this subsection will not 25 avoid a contribution in excess of the limits imposed by 26 U.S.C. 415(c), the 26 administrator may either reduce the member's contribution to an amount within the 27 limits of that section or refuse the member's contribution. 28  * Sec. 77. AS 39.35.680(3) is amended to read: 29 (3) "administrator" means [THE PERSON APPOINTED BY] the 30 commissioner of administration or the commissioner's designee appointed under 31 AS 39.35.003 [AS 39.35.050]; 01  * Sec. 78. AS 39.35.680(9) is amended to read: 02 (9) "compensation" means the remuneration earned by an employee 03 for personal services rendered to an employer, including employee contributions under 04 AS 39.35.160, cost-of-living differentials only as provided in AS 39.35.675, payments 05 for leave that is actually used by the employee, the amount by which the employee's 06 wages are reduced under AS 39.30.150(c), an amount that is contributed by the  07 employer under a salary reduction agreement and that is not includable in the  08 gross income of the employee under 26 U.S.C. 125 or 132(f)(4), and any amount 09 deferred under an employer-sponsored deferred compensation plan, but does not 10 include retirement benefits, severance pay or other separation bonuses, welfare 11 benefits, per diem, expense allowances, workers' compensation payments, or 12 payments for leave not used by the employee whether those leave payments are 13 scheduled payments, lump-sum payments, donations, or cash-ins; for a member first 14 hired on or after July 1, 1996, compensation does not include remuneration in excess 15 of the limitations set out in 26 U.S.C. 401(a)(17) (Internal Revenue Code);  16  * Sec. 79. AS 39.35.680(18) is amended to read: 17 (18) "employer" means 18 (A) the State of Alaska; [OR] 19 (B) a political subdivision or public organization of the state 20 that participates in the plan based on a resolution to participate in the plan  21 that was approved by the administrator on or before July 1, 2006; or  22 (C) a political subdivision or public organization of the  23 state that, as a result of consolidation or reorganization that occurs on or  24 after July 1, 2006, assumes liability under the plan of a political  25 subdivision or public organization described in (B) of this paragraph;  26  * Sec. 80. AS 39.35.700 is amended to read: 27 Sec. 39.35.700. Applicability of AS 39.35.700 - 39.35.990. The provisions of 28 AS 39.35.700 - 39.35.990 apply only to members first hired on or after July 1, 2006, 29 members who are employed by employers that do not participate in the defined  30 benefit retirement plan established under AS 39.35.095 - 39.35.680, or to members 31 who transfer into the defined contribution retirement plan under AS 39.35.940. 01  * Sec. 81. AS 39.35.700 is amended to read: 02 Sec. 39.35.700. Applicability of AS 39.35.700 - 39.35.990. The provisions of 03 AS 39.35.700 - 39.35.990 apply only to members first hired on or after July 1, 2006, 04 members who are employed by employers that do not participate in the defined benefit 05 retirement plan established under AS 39.35.095 - 39.35.680, former members as  06 defined in AS 39.35.680, or to members who transfer into the defined contribution 07 retirement plan under AS 39.35.940. 08  * Sec. 82. AS 39.35.710(c) is amended to read: 09 (c) The retirement plan established by AS 39.35.700 - 39.35.990 is intended to 10 qualify under 26 U.S.C. 401(a), [AND] 414(d), and 414(k) (Internal Revenue Code) 11 as a qualified retirement plan established and maintained by the state for its 12 employees, for the employees of political subdivisions, public corporations, and public 13 organizations of the state, and for the employees of other employers whose 14 participation is authorized by AS 39.35.700 - 39.35.990 and who participate in the 15 plan set out in AS 39.35.700 - 39.35.990. Benefits under AS 39.35.880 are not  16 provided by the defined contribution retirement plan.  17  * Sec. 83. AS 39.35.750(b) is amended to read: 18 (b) An employer shall also contribute an amount equal to a percentage, as 19 adopted [CERTIFIED] by the board, of each member's compensation from July 1 to 20 the following June 30 to pay for retiree major medical insurance. This contribution 21 shall be paid into the Alaska retiree health care trust [GROUP HEALTH AND 22 LIFE BENEFITS FUND] established by the commissioner of administration under 23 AS 39.30.097(b) [AS 39.30.095] and shall be accounted for in accordance with 24 regulations established by the commissioner. 25  * Sec. 84. AS 39.35.750(e) is amended to read: 26 (e) An employer shall make annual contributions to a trust account in the 27 plan, applied as a percentage of each member's compensation from July 1 to the  28 following June 30, in an amount determined by the board to be actuarially required to 29 fully fund the cost of providing occupational disability and occupational death benefits 30 under AS 39.35.700 - 39.35.990 and retirement benefits elected by disabled peace  31 officers and fire fighters under AS 39.35.890(h)(2) [AS 39.35.890 AND 39.35.892]. 01 The contribution required under this subsection for peace officers and fire fighters and 02 the contribution required under this subsection for other employees shall be separately 03 calculated based on the actuarially calculated costs for each group of employees. 04  * Sec. 85. AS 39.35.760(d)(3) is amended to read: 05 (3) "eligible retirement plan" means 06 (A) an [A CONDUIT] individual retirement account described 07 in 26 U.S.C. 408(d)(3)(A); 08 (B) an annuity plan described in 26 U.S.C. 403(a); 09 (C) a qualified trust described in 26 U.S.C. 401(a); 10 (D) an annuity plan described in 26 U.S.C. 403(b); [OR] 11 (E) a governmental plan described in 26 U.S.C. 457(b); 12 (F) an individual retirement annuity defined in 26 U.S.C.  13 408(b); or  14 (G) on or after January 1, 2008, a Roth IRA described in 26  15 U.S.C. 408A; 16  * Sec. 86. AS 39.35.760(d)(4) is amended to read: 17 (4) "eligible rollover distribution" means a distribution of all or part of 18 a total account to a distributee, except for 19 (A) a distribution that is one of a series of substantially equal 20 installments payable not less frequently than annually over the life expectancy 21 of the distributee or the joint and last survivor life expectancy of the distributee 22 and the distributee's designated beneficiary, as defined in 26 U.S.C. 401(a)(9); 23 (B) a distribution that is one of a series of substantially equal 24 installments payable not less frequently than annually over a specified period 25 of 10 years or more; 26 (C) a distribution that is required under 26 U.S.C. 401(a)(9); 27 (D) the portion of any distribution that is not includable in 28 gross income; however, such portion may be transferred only to an  29 individual retirement account or annuity described in 26 U.S.C. 408(a) or  30 (b), to a qualified plan described in 26 U.S.C. 401(a) or 403(a), or to an  31 annuity contract described in 26 U.S.C. 403(b), that agrees to separately  01 account for amounts so transferred, including separately accounting for  02 the portion of the distribution that is includable in gross income and the  03 portion of the distribution that is not so includable; and 04 (E) [A DISTRIBUTION THAT IS ON ACCOUNT OF 05 HARDSHIP; AND 06 (F)] other distributions that are reasonably expected to total less 07 than $200 during a year.  08  * Sec. 87. AS 39.35.770 is amended to read: 09 Sec. 39.35.770. Transmittal of contributions. All contributions deducted in 10 accordance with AS 39.35.700 - 39.35.990 shall be transmitted to the plan for deposit 11 in the appropriate account or trusts [TRUST FUND] as soon as administratively 12 feasible, but in no event later than 15 days following the close of the payroll period. 13  * Sec. 88. AS 39.35.770 is amended by adding new subsections to read: 14 (b) If contributions are not transmitted within the prescribed time limit, 15 interest shall be assessed on the outstanding contributions at the rate established under 16 AS 39.35.610 from the date that contributions were originally due. Amounts due from 17 an employer and interest as prescribed in this subsection may be claimed by the 18 administrator from any agency of the state or political subdivision that has in its 19 possession funds of the employer or that is authorized to disburse funds to the 20 employer that are not restricted by statute or appropriation to a specific purpose. The 21 amount claimed shall be certified by the administrator as sufficient to pay the 22 contributions and interest due from the employer. The amount claimed shall be 23 submitted to the administrator for deposit in the appropriate account or trusts. 24 (c) Employers are responsible for administrative fees, investment fees, and 25 investment losses charged to accounts established under AS 39.35.730 resulting from 26 contribution adjustments due to employers enrolling members in the plan before the 27 members are eligible for membership. Contributions made by employees shall be 28 returned to the employer by reducing future employee contributions due. 29 Contributions, net of fees and investment losses, made by employers shall be used to 30 reduce future employer contributions due. 31  * Sec. 89. AS 39.35.780 is amended to read: 01 Sec. 39.35.780. Limitations on contributions and benefits. Notwithstanding 02 any other provisions of this plan, the annual additions to each member's individual 03 account under this plan and under all defined contribution plans of the employer 04 required to be aggregated with the contributions from this plan under the provisions of 05 26 U.S.C. 415 may not exceed, for any limitation year, the amount permitted under 26  06 U.S.C. 415(c) [26 U.S.C. 415] at any time. If the amount of a member's individual  07 account [DEFINED CONTRIBUTION PLAN] contributions exceeds the limitation of 08 26 U.S.C. 415(c) for any limitation year, the administrator shall take any necessary 09 remedial action to correct an excess contribution. A fixed benefit provided under  10 this plan may not exceed, for or during a limitation year, the amount permitted  11 under 26 U.S.C. 415(b). If a fixed benefit provided under this plan exceeds, for or  12 during a limitation year, the amount permitted under 26 U.S.C. 415(b), the  13 administrator shall take remedial action necessary to comply with the limits on  14 the benefit amount in 26 U.S.C. 415(b). The provisions of 26 U.S.C. 415, and the 15 regulations adopted under that statute, as applied to qualified [DEFINED 16 CONTRIBUTION] plans of governmental employees are incorporated as part of the 17 terms and conditions of the plan. 18  * Sec. 90. AS 39.35.890(b) is amended to read: 19 (b) The occupational disability benefits accrue beginning the first day of the 20 month following termination of employment as a result of the disability and are 21 payable the last day of the month. If a final determination granting the benefit is not 22 made in time to pay the benefit when due, a retroactive payment shall be made to 23 cover the period of deferment. The last payment shall be for the first month in which 24 the disabled employee 25 (1) dies; 26 (2) recovers from the disability; 27 (3) fails to meet the requirements under (f), [OR] (j), or (l) of this 28 section; or 29 (4) reaches normal retirement age. 30  * Sec. 91. AS 39.35.890(d) is amended to read: 31 (d) The monthly amount of an occupational disability benefit is 40 percent of 01 the disabled employee's gross monthly compensation at the time of termination due to 02 disability. Notwithstanding AS 39.35.790(b), at the time a member is appointed to  03 disability, the member becomes fully vested in the employer contributions made  04 under AS 39.35.750(a). A disabled member is fully vested in the contributions to  05 the member's individual account made under this subsection. An employee is not  06 entitled to elect distributions from the employee's individual contribution  07 account under AS 39.35.810 while the employee is receiving disability benefits  08 under this section. While an employee is receiving disability benefits, based on the 09 disabled employee's gross monthly compensation at the time of termination due to 10 disability, the employer shall make contributions 11 (1) to the employee's individual account under AS 39.35.730 on behalf 12 of the employee, without deduction from the employee's disability payments; and 13 (2) on behalf of the employee under AS 39.35.750. 14  * Sec. 92. AS 39.35.890(g) is amended to read: 15 (g) A disabled employee's occupational disability benefit terminates the last  16 day of the month in which [WHEN] the disabled employee first qualifies  17 [ATTAINS ELIGIBILITY] for normal retirement. At that time, the employee's 18 retirement benefit shall be determined under the provisions of AS 39.35.820 - 19 39.35.840, 39.35.870, and 39.35.880. An employee whose occupational disability  20 benefit terminates under this subsection [RECEIVING DISABILITY BENEFITS 21 UP UNTIL ELIGIBILITY FOR RETIREMENT] shall be considered to have retired 22 directly from the plan. 23  * Sec. 93. AS 39.35.890(h) is amended to read: 24 (h) Notwithstanding (g) of this section, at the time a peace officer or fire 25 fighter receiving occupational disability benefits under this section first attains 26 eligibility for normal retirement, the employee shall irrevocably elect to receive 27 retirement benefits in the amount calculated as the 28 (1) employee's retirement benefit calculated under the provisions of 29 AS 39.35.820 - 39.35.840; or 30 (2) employee's retirement benefit calculated as if the provisions of 31 AS 39.35.370(c) were to apply; however, pension [RETIREMENT] benefits paid 01 under this paragraph must be paid first from the peace officer's or fire fighter's  02 individual contribution account, and the remaining benefits must be paid from  03 the trust account established under AS 39.35.750(e); the peace officer or fire  04 fighter may not elect other distributions from the peace officer's or fire fighter's  05 individual contribution account under AS 39.35.810 [MAY NOT BE MADE 06 FROM THE TRUST FUND OF THE PUBLIC EMPLOYEES' DEFINED BENEFIT 07 RETIREMENT PLAN]. 08  * Sec. 94. AS 39.35.890(k) is amended to read: 09 (k) Upon the death of a disabled employee who is receiving or is entitled to 10 receive an occupational disability benefit, the administrator shall pay the surviving 11 spouse a surviving spouse's pension, equal to 40 percent of the employee's monthly 12 compensation at the time of termination of employment because of occupational 13 disability. If there is no surviving spouse, the administrator shall pay the survivor's 14 pension in equal parts to the dependent children of the employee. While the monthly  15 survivor's pension is being paid, the survivor is not entitled to elect distributions  16 from the employee's individual contribution account under AS 39.35.810. The 17 first payment of the surviving spouse's pension or of a dependent child's pension shall 18 accrue from the first day of the month following the employee's death and is payable 19 the last day of the month. The last payment shall be made the last day of [FOR] the 20 last month in which there is an eligible surviving spouse or dependent child, or the  21 last day of the month in which the employee would have first qualified for normal  22 retirement if the employee had survived, whichever day comes sooner. A  23 retirement benefit shall be determined under the provisions of AS 39.35.820 -  24 39.35.840, 39.35.870, and 39.35.880 based on [. ON] the date the employee would  25 have first qualified for normal retirement [OF THE EMPLOYEE WOULD HAVE 26 OCCURRED] if the employee had survived. In addition to payment of the  27 member's individual account, the surviving spouse or, if there is no surviving  28 spouse, the surviving dependent children of the member, shall receive an  29 additional benefit in an amount equal to the accumulated contributions that  30 would have been made to the deceased member's individual account under  31 AS 39.35.730(a) and 39.35.750(a), based on the deceased member's gross monthly  01 compensation at the time of occupational disability, from the time of the  02 member's death to the date the member would have first qualified for normal  03 retirement if the member had survived. Earnings shall be allocated to the  04 additional benefit calculated under this subsection based on the actual rate of  05 return, net of expenses, of the trust account established under AS 39.35.750(e)  06 over the period that the contributions would have been made. This additional  07 amount and allocated earnings shall be paid in the same manner as determined  08 for the member's individual account under AS 39.35.820 - 39.35.860 to the extent  09 permitted by the Internal Revenue Service. For the purpose of determining  10 eligibility of an employee's survivor who is receiving a benefit under this  11 subsection for medical benefits under AS 39.35.870 - 39.35.880, an employee  12 [LIVED, THE RETIREMENT BENEFIT SHALL BE DETERMINED UNDER THE 13 PROVISIONS OF AS 39.35.820 - 39.35.840, 39.35.870, AND 39.35.880. AN 14 EMPLOYEE] who died while receiving disability benefits shall be considered to have 15 retired directly from the plan on the date the employee would have first qualified for  16 normal retirement if the employee had survived. The period during which the  17 employee was eligible for a disability benefit and the period during which a  18 survivor's pension is paid to a survivor under this subsection each constitute  19 membership service for the purposes of determining eligibility for medical  20 benefits under this chapter and AS 39.30.300 - 39.30.495 [NORMAL 21 RETIREMENT OF THE EMPLOYEE WOULD HAVE OCCURRED IF THE 22 EMPLOYEE HAD LIVED]. 23  * Sec. 95. AS 39.35.890(l) is amended to read: 24 (l) In this section, "occupational disability" means a physical or mental  25 condition that the administrator determines presumably permanently prevents  26 an employee from satisfactorily performing the employee's usual duties or the  27 duties of another comparable position or job available to the employee and for  28 which the employee is qualified by training or education; however, the proximate  29 cause of the condition must be a bodily injury sustained, or a hazard undergone,  30 while in the performance and within the scope of the employee's duties and not  31 the proximate result of the wilful negligence of the employee [HAS THE 01 MEANING GIVEN IN AS 39.35.680]. 02  * Sec. 96. AS 39.35.890 is amended by adding a new subsection to read: 03 (m) While a survivor under (k) of this section is receiving a survivor's 04 pension, the employer of the deceased employee shall make contributions with respect 05 to the survivor based on the deceased employee's gross monthly compensation at the 06 time of termination due to disability 07 (1) that would have been paid to the employee's individual account 08 under AS 39.35.730 and 39.35.750(a), to the trust account established under 09 AS 39.35.750(e), without deduction from the survivor's pension; and 10 (2) to the appropriate accounts and funds under AS 39.35.750(b) - (e). 11  * Sec. 97. AS 39.35 is amended by adding a new section to read: 12 Sec. 39.35.891. Disability benefit and disabled peace officer or fire fighter  13 retirement benefit adjustment. (a) Once each year, the administrator shall increase 14 disability benefits and retirement benefits elected by disabled peace officers or fire 15 fighters under AS 39.35.890(h)(2). The amount of the increase is a percentage of the 16 current disability benefit or retirement benefit equal to the lesser of 75 percent of the 17 increase in the cost of living in the preceding calendar year or nine percent. 18 (b) If a disabled member was not receiving a benefit during the entire 19 preceding calendar year, the increase in the benefit under this section shall be adjusted 20 by multiplying it by a fraction, the numerator of which is the number of months for 21 which the benefit was received in the preceding calendar year and the denominator of 22 which is 12. 23 (c) If a disabled peace officer or fire fighter elects to receive a retirement 24 benefit in the amount calculated under AS 39.35.890(h)(2), the administrator shall, at 25 the time the disabled peace officer or fire fighter is appointed to retirement, increase 26 the retirement benefit by a percentage equal to the total cumulative percentage that has 27 been applied to the disabled peace officer's or fire fighter's disability benefit under this 28 section. 29 (d) An increase in benefit payments under this section is effective July 1 of 30 each year and is based on the percentage increase in the Consumer Price Index for 31 urban wage earners and clerical workers for Anchorage, Alaska, during the previous 01 calendar year, as determined by the United States Department of Labor, Bureau of 02 Labor Statistics. 03 (e) Benefit adjustments under this section shall terminate the last day of the 04 month following the date on which a disabled member is no longer receiving a 05 disability benefit under AS 39.35.890, unless the member is a disabled peace officer or 06 fire fighter and has chosen a retirement benefit under AS 39.35.890(h)(2). 07  * Sec. 98. AS 39.35.892(b) is amended to read: 08 (b) The first payment of the surviving spouse's pension or of a dependent 09 child's pension shall be made for the month following the month in which the 10 employee dies. Payments [, AND PAYMENT] shall cease on the last day of the  11 month in which there is no longer an eligible spouse or eligible dependent child,  12 or the last day of the month following the earliest date [TO BE MADE 13 BEGINNING WITH THE MONTH IN WHICH] the employee would have first 14 qualified for normal retirement if the employee had survived, whichever day is  15 sooner. 16  * Sec. 99. AS 39.35.892(c) is amended to read: 17 (c) The monthly survivor's pension in (b) of this section for survivors of 18 employees who were not peace officers or fire fighters is 40 percent of the employee's 19 monthly compensation in the month in which the employee dies. The monthly 20 survivor's pension in (b) of this section for survivors of employees who were peace 21 officers or fire fighters is 50 percent of the monthly compensation in the month in 22 which the employee dies. While the monthly survivor's pension is being paid, the  23 survivor is not entitled to elect distributions from the employee's individual  24 contribution account under AS 39.35.810, except as required by AS 39.35.840.  25 While the monthly survivor's pension is being paid, the employer shall make 26 contributions with respect to [ON BEHALF OF] the employee's surviving spouse  27 and employee's surviving dependent children [BENEFICIARIES] based on the 28 deceased employee's gross monthly compensation at the time of occupational death 29 (1) that would have been paid to the employee's individual account 30 under AS 39.35.730 and 39.35.750(a), to the trust account established under  31 AS 39.35.750(e), without deduction from the survivor's pension; and 01 (2) to the appropriate accounts and funds under AS 39.35.750(b) - (e) 02 [AS 39.35.750]. 03  * Sec. 100. AS 39.35.892(e) is amended to read: 04 (e) On the date the employee would have first qualified for normal 05 retirement [OF THE EMPLOYEE WOULD HAVE OCCURRED] if the employee 06 had survived [LIVED], the retirement benefit shall be determined under the 07 provisions of AS 39.35.820 - 39.35.840, 39.35.870, and 39.35.880. In addition to  08 payment of the member's individual account, the surviving spouse or, if there is  09 no surviving spouse, the surviving dependent children of the member, shall  10 receive an additional benefit in an amount equal to the accumulated  11 contributions that would have been made to the deceased member's individual  12 account under AS 39.35.730(a) and 39.35.750(a), based on the deceased member's  13 gross monthly compensation at the time of occupational death, from the time of  14 the member's death to the date the member would have first qualified for normal  15 retirement if the member had survived. Earnings shall be allocated to the  16 additional benefit calculated under this subsection based on the actual rate of  17 return, net of expenses, of the trust account established under AS 39.35.750(e)  18 over the period that such contributions would have been made. This additional  19 amount and allocated earnings shall be paid in the same manner as determined  20 for the member's individual account under AS 39.35.820 - 39.35.860 to the extent  21 permitted by the Internal Revenue Service. An employee who died and whose 22 survivors receive occupational death benefits under this section shall be considered to 23 have retired directly from the plan on the date the [NORMAL RETIREMENT OF 24 THE] employee would have first qualified for normal retirement [OCCURRED] if 25 the employee had survived. The period of time during which a survivor's pension  26 is paid under this section constitutes membership service for the purpose of  27 determining vesting in employer contributions under AS 39.35.790(b) and  28 eligibility for medical benefits under this chapter and AS 39.30.300 - 39.30.495  29 [LIVED]. 30  * Sec. 101. AS 39.35 is amended by adding new sections to read: 31 Sec. 39.35.893. Survivor's pension adjustment. (a) Once each year, the 01 administrator shall increase payments to a person 60 years of age or older receiving a 02 survivor's pension under AS 39.35.890(k) or 39.35.892(c) and to a person who has 03 received a survivor's pension under AS 39.35.890(k) or 39.35.892(c) for at least five 04 years, who is not otherwise eligible for an increase under this section. 05 (b) The amount of the increase is a percentage of the current survivor's 06 pension equal to the lesser of 50 percent of the increase in the cost of living in the 07 preceding calendar year or six percent. 08 (c) If a survivor was not receiving a pension during the entire preceding 09 calendar year, the increase in the survivor's pension under this section shall be 10 adjusted by multiplying it by a fraction, the numerator of which is the number of 11 months for which the pension was received in the preceding calendar year and the 12 denominator of which is 12. 13 (d) The administrator shall increase the initial survivor's pension paid to a 14 survivor of a member who died while receiving disability benefits by a percentage 15 equal to the total cumulative percentage that has been applied to the member's 16 disability benefit under AS 39.35.891. 17 (e) An increase in benefit payments under this section is effective July 1 of 18 each year and is based on the percentage increase in the Consumer Price Index for 19 urban wage earners and clerical workers for Anchorage, Alaska, during the previous 20 calendar year, as determined by the United States Department of Labor, Bureau of 21 Labor Statistics. 22 (f) Pension adjustments under this section shall terminate the last day of the 23 month following the date on which a survivor is no longer receiving a survivor's 24 pension under AS 39.35.890(k) or 39.35.892(c). 25 Sec. 39.35.894. Premiums for retiree major medical insurance coverage  26 upon termination of disability benefits or survivor's pension. The premium for 27 retiree major medical insurance coverage payable by an employee whose disability 28 benefit is terminated under AS 39.35.890(g) or by an eligible survivor whose survivor 29 pension is terminated under AS 39.35.890(k) or 39.35.892(e) when the employee 30 would have been eligible for normal retirement if the employee had survived shall be 31 determined under AS 39.35.880(g)(2) as if the employee or survivor were eligible for 01 Medicare. 02  * Sec. 102. AS 39.35.900 is amended by adding new subsections to read: 03 (d) The administrator will use forfeitures in the fixed benefit account of the 04 plan that arise for any reason, including from termination of employment or death, to 05 reduce employer contributions. Forfeitures may not be applied to increase the benefits 06 of any member. 07 (e) The administrator will determine the amount of any fixed benefit that is 08 determined on the basis of actuarial tables using assumptions approved by the 09 commissioner. The amount of benefits is not subject to employer discretion. 10  * Sec. 103. AS 39.35.910 is amended to read: 11 Sec. 39.35.910. Nonguarantee of returns, rates, or benefit amounts. The 12 plan created by AS 39.35.700 - 39.35.990 is, with respect to individual accounts,  13 treated as a defined contribution plan, and not a defined benefit plan. The amount of 14 money in the individual account of a participant depends on the amount of 15 contributions and the rate of return from investments of the account that varies over 16 time. If benefits are paid in the form of an annuity, the benefit amount payable is 17 dependent on the amount of money in the account and the interest rates applied and 18 service fees charged by the annuity payor at the time the annuity is purchased from  19 the carrier and benefits are first paid. Nothing in this plan guarantees a participant 20 (1) a rate of return or interest rate other than that actually earned by the 21 account of the participant, less applicable administrative expenses; or 22 (2) an annuity based on interest rates or service charges other than 23 interest rates available from and service charges by the annuity payor in effect at the 24 time the annuity is paid. 25  * Sec. 104. AS 39.35.940(c) is amended to read: 26 (c) Each eligible member who elects to participate in the defined contribution 27 retirement plan shall have transferred to a new account the employee contribution 28 account balance held in trust for the member under the defined benefit retirement plan 29 of the public employees' retirement system. A matching employer contribution shall 30 be made on behalf of that employee to the new account. The employer shall make the 31 matching contribution from funds other than the trust funds of the defined benefit 01 retirement plan established under AS 39.35.095 - 39.35.680. The amount of the  02 matching employer contribution shall be subject to, and may not exceed, the  03 limitation of 26 U.S.C. 415(c) during the applicable limitation year as defined by  04 AS 39.35.990. If the matching employer contribution would exceed the limits  05 during the limitation year in which the transfer occurs, the remaining amount of  06 the matching employer contribution shall be made in the next limitation year, if  07 the limits would not be exceeded. 08  * Sec. 105. AS 39.35.940(d) is amended to read: 09 (d) Upon a transfer, all membership service previously earned under the 10 defined benefit retirement plan shall be nullified for purposes of entitlement to a future 11 benefit under the defined benefit retirement plan but shall be credited for purposes of 12 determining vesting in employer contributions under AS 39.35.790(b) and  13 eligibility to elect medical benefits under AS 39.35.870. Membership service allowed 14 for credit toward medical benefits does not include any service credit purchased for 15 employment by an employer who is not a participating employer in this chapter. 16  * Sec. 106. AS 39.35.940(h) is amended to read: 17 (h) An employee who is eligible to elect transfer to the defined  18 contribution retirement plan must make the election not later than 12 months  19 after the first day of the month following the administrator's receipt of the  20 notification that the employee's employer consents to transfers of its employees  21 under (i) of this section. The election to participate in the defined contribution 22 retirement plan must be made in writing on forms and in the manner prescribed by the 23 administrator. Before accepting an election to participate in the defined contribution 24 retirement plan, the administrator must provide the employee planning on making an 25 election to participate in the defined contribution retirement plan with information, 26 including calculations to illustrate the effect of moving the employee's retirement plan 27 from the defined benefit retirement plan to the defined contribution retirement plan as 28 well as other information to clearly inform the employee of the potential consequences 29 of the employee's election. An election made under this subsection to participate in the 30 defined contribution retirement plan is irrevocable. Upon making the election, the 31 participant shall be enrolled as a member of the defined contribution retirement plan, 01 the member's participation in the plan shall be governed by the provisions of 02 AS 39.35.700 - 39.35.990, and the member's participation in the defined benefit 03 retirement plan under AS 39.35.115 shall terminate. The participant's enrollment in the 04 defined contribution retirement plan shall be effective the first day of the month after 05 the administrator receives the completed enrollment forms. An election made by an 06 eligible member who is married is not effective unless the election is signed by the 07 individual's spouse. 08  * Sec. 107. AS 39.35 is amended by adding new sections to read: 09 Sec. 39.35.957. Designation of eligible employees, agreement to contribute,  10 and amendment of participation. (a) A political subdivision or public organization 11 participating in the defined contribution retirement plan under AS 39.35.700 - 12 39.35.990 shall designate the departments, groups, or other classifications of 13 employees eligible to participate in the plan and, by participating, shall legally be 14 presumed to have agreed to make contributions each year in the amounts required for 15 members of the plan under AS 39.35.750. 16 (b) If the employer does not participate in the defined benefit retirement plan 17 under AS 39.35.095 - 39.35.680, an employee who is eligible under (a) of this section 18 and who is a member of the defined benefit retirement plan under AS 39.35.095 - 19 39.35.680 does not accrue credited service or make contributions under that defined 20 benefit retirement plan, but shall be a member of the defined contribution retirement 21 plan under AS 39.35.700 - 39.35.990 and make contributions under that plan. 22 (c) An employer may request to amend its participation in the plan to add or 23 exclude departments, groups, or other classifications of employees by filing a 24 resolution as provided by AS 39.35.950 or 39.35.955 with the administrator. 25 Sec. 39.35.958. Termination of participation in the plan. (a) A political 26 subdivision or public organization may request that its participation in the plan be 27 terminated. The request may be made only after adoption of a resolution by the 28 legislative body of the political subdivision and approval of the resolution by the 29 person required by law to approve the resolution, or, in the case of a public 30 organization, after adoption of a resolution by the governing body of that public 31 organization. A certified copy of the resolution shall be filed with the administrator. 01 (b) If contributions are not transmitted to the plan within the prescribed time 02 limit, the administrator may grant an extension and shall assess interest on the 03 outstanding contributions at the rate established under AS 39.35.610. If the political 04 subdivision or public organization is in default at the end of the extension, 05 participation in the plan is terminated, and it shall be sent notice of termination. 06 (c) When an employer's participation in the plan is terminated, or when an 07 employer terminates coverage of a department, group, or other classification of 08 employees under AS 39.35.957(c), the administrator shall assess the employer a 09 termination cost that the administrator determines is actuarially required to fully fund 10 the costs to the plan for employees whose coverage is terminated, including the cost of 11 providing the employer's share of retiree health benefits under AS 39.35.880, 12 occupational disability and occupational death benefits under AS 39.35.890 and 13 39.35.892, and pension benefits elected under AS 39.35.890(h)(2). 14 (d) An employee whose coverage under the plan is terminated as a result of 15 termination of an employer's participation under this section or amendment of the 16 employer's agreement under AS 39.35.957(c) shall be considered fully vested in 17 employer contributions under AS 39.35.790(b) and in the individual account 18 established for the employee under AS 39.30.730. If the employee is later employed 19 with a participating employer, the employee's membership service earned under the 20 plan during employment with a terminated employer shall be credited for purposes of 21 determining vesting in employer contributions under AS 39.35.790(b) and eligibility 22 for medical benefits under this chapter and AS 39.30.300 - 39.30.495. 23 (e) An employer terminating participation in the plan shall pay termination 24 costs determined by the administrator, or enter into a payment plan acceptable to the 25 administrator, within 60 days of the employer's receiving notice of its termination 26 costs from the administrator. Termination costs not paid within the prescribed time 27 limit or in accordance with the approved payment plan shall be collected by the 28 administrator in accordance with AS 39.35.610(b). Termination of participation by an 29 employer in the plan does not bar future participation by the employer if the employer 30 has paid in full its prior termination costs. 31 (f) A political subdivision or public organization considering or requesting 01 termination from the plan shall pay the cost associated with obtaining a termination 02 cost study associated with the employer's termination. 03  * Sec. 108. AS 39.35 is amended by adding a new section to read: 04 Sec. 39.35.972. Special rules for treatment of qualified military service.  05 Notwithstanding any contrary provisions of AS 39.35.700 - 39.35.990, with respect to 06 qualified military service, contributions shall be made and benefits and service credit 07 shall be provided in accordance with 26 U.S.C. 414(u). 08  * Sec. 109. AS 39.35.990(7) is amended to read 09 (7) "compensation" 10 (A) means 11 (i) the total remuneration earned by an employee for 12 personal services rendered, including cost-of-living differentials, as 13 reported on the employee's Federal Income Tax Withholding Statement 14 (Form W-2) from the employer for the calendar year; 15 (ii) the member contribution to the public employees' 16 retirement system under AS 39.35.730, employee deferrals under 17 AS 39.45.010, the wage reduction amount contributed to the Alaska 18 Supplemental Annuity Plan under AS 39.30.150(a), and the wage 19 reduction amount contributed to the Alaska Supplemental Benefit Plan 20 under AS 39.30.150(c), as those statutes may be amended from time to 21 time; 22 (B) does not include retirement benefits, severance pay or other 23 separation bonuses, welfare benefits, per diem, expense allowances, workers' 24 compensation payments, payments for leave not used whether those leave 25 payments are scheduled payments, lump-sum payments, donations, or cash-ins, 26 any remuneration contributed by the employer for or on account of the 27 employee under this plan or under any other qualified or nonqualified 28 employee benefit plan, any remuneration not specifically included above 29 which would have been excluded under 26 U.S.C. 3121(a) (Internal Revenue 30 Code) if the employer had remained in the Federal Social Security System [, 31 OR ANY REMUNERATION PAID BY THE EMPLOYER IN EXCESS OF 01 THE SOCIAL SECURITY TAXABLE WAGE BASE FOR THE 02 CALENDAR YEAR]; 03 (C) notwithstanding (B) of this paragraph, includes any amount 04 that is contributed by the employer under a salary reduction agreement and that 05 is not includable in the gross income of the employee under 26 U.S.C. 125, 06 132(f)(4), 402(e)(3), 402(h)(1)(B), or 403(b) (Internal Revenue Code); the 07 annual compensation limitation for the member, which is so taken into account 08 for those purposes, may not exceed $200,000, as adjusted for the cost of living 09 in accordance with 26 U.S.C. 401(a)(17)(B) (Internal Revenue Code), with the 10 limitation for a fiscal year being the limitation in effect for the calendar year 11 within which the fiscal year begins; 12  * Sec. 110. AS 39.35.990(16) is amended to read: 13 (16) "member" or "employee" means a person who is eligible to  14 participate in the plan and who is covered by [AN EMPLOYEE OF AN 15 EMPLOYER OR FORMER EMPLOYEE OF AN EMPLOYER WHO RETAINS A 16 RIGHT TO BENEFITS UNDER] the plan, including the governor, the lieutenant  17 governor, and a member of the legislature, but does not include full-time or part- 18 time instructors of the Department of Labor and Workforce Development and the  19 Department of Education and Early Development in positions that require a  20 teaching certificate; 21  * Sec. 111. AS 39.35.990(20) is amended to read: 22 (20) "peace officer" or "fire fighter" means an employee occupying a  23 position as a peace officer, chief of police, regional public safety officer,  24 correctional officer, correctional superintendent, fire fighter, fire chief, or  25 probation officer, but does not include a village public safety officer employed by  26 a village public safety officer program established under AS 18.65.670 [HAS THE 27 MEANING GIVEN IN AS 39.35.680]; 28  * Sec. 112. AS 39.45.020 is amended by adding a new subsection to read: 29 (d) The administrator of a deferred compensation program under this chapter 30 has the powers and duties with regard to the program as set out in AS 14.25.003 and 31 14.25.004, as though those provisions applied to the program. 01  * Sec. 113. AS 39.45 is amended by adding a new section to read: 02 Sec. 39.45.055. Appeals. A final decision made under AS 39.45.010 - 03 39.45.060 is subject to appeal under AS 44.64. 04  * Sec. 114. AS 44.64.030(a) is amended by adding new paragraphs to read: 05 (35) AS 14.25.175 (waiver of adjustments under teachers' defined 06 benefit plan); 07 (36) AS 39.30.165 (supplemental benefits system); 08 (37) AS 39.30.335 (teachers' and public employees' health 09 reimbursement arrangement plan); 10 (38) AS 39.35.522 (waiver of adjustments under public employees' 11 defined benefit plan); 12 (39) AS 39.45.055 (public employees' deferred compensation 13 program). 14  * Sec. 115. (a) AS 14.25.045, 14.25.340(b), 14.25.570; AS 39.35.050(a), 39.35.370(k), 15 39.35.615(d), 39.35.615(f), 39.35.620(c), 39.35.620(f), 39.35.620(h), and 39.35.730(b) are 16 repealed. 17 (b) AS 39.35.375(f) is repealed. 18 (c) Sections 15 and 91, ch. 9, FSSLA 2005, are repealed. 19  * Sec. 116. The uncodified law of the State of Alaska is amended by adding a new section 20 to read: 21 EMPLOYER CONTRIBUTIONS FOR FISCAL YEAR 2008 FOR 22 OCCUPATIONAL DISABILITY AND OCCUPATIONAL DEATH BENEFITS IN THE 23 TEACHERS' DEFINED CONTRIBUTION RETIREMENT PLAN. Notwithstanding 24 AS 14.25.350(e), enacted by sec. 20 of this Act, for fiscal year 2008 the employer 25 contribution to fully finance the cost of providing occupational disability and occupational 26 death benefits under AS 14.25.485 and 14.25.487 shall be equal to 0.62 percent of the amount 27 of compensation paid to all teachers who work for the employer in that year and are members 28 of the teachers' defined contribution retirement plan. 29  * Sec. 117. The uncodified law of the State of Alaska is amended by adding a new section 30 to read: 31 TRANSFER OF FUNDS TO ALASKA RETIREE HEALTH CARE TRUSTS. The 01 commissioner of administration shall transfer to the Alaska retiree health care trusts 02 established under AS 39.30.097, enacted by sec. 50 of this Act, all funds for payment of 03 retiree health benefits that have been deposited in the group health and life benefits fund 04 under AS 39.30.095, including funds in the retiree health insurance fund, and all funds from 05 any fund or account into which funds for provision of retiree health benefits have been 06 deposited. The commissioner of administration shall make the transfer on July 1, 2007, or 07 immediately after July 1, 2007 when the funds become available to the commissioner for 08 transfer. 09 * Sec. 118. Sections 5, 6, 17, 60, 68, 69, 81, and 115(b) of this Act take effect July 1, 2010. 10  * Sec. 119. Except as provided in sec. 118 of this Act, this Act takes effect immediately 11 under AS 01.10.070(c).