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