HB 191: "An Act relating to defined contribution systems for members of the teachers' retirement system and the public employees' retirement system; and providing for an effective date."
00 HOUSE BILL NO. 191 01 "An Act relating to defined contribution systems for members of the teachers' 02 retirement system and the public employees' retirement system; and providing for an 03 effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 14.25 is amended by adding a new section to read: 06 Article 1. Teachers First Hired before July 1, 2005. 07 Sec. 14.25.005. Applicability of AS 14.25.005 - 14.25.012, 14.25.040 - 08 14.25.169, 14.25.173, 14.25.175, and 14.25.220. The provisions of AS 14.25.005 - 09 14.25.012, 14.25.040 - 14.25.169, 14.25.173, 14.25.175, and 14.25.220 apply only to 10 members first hired before July 1, 2005. 11 * Sec. 2. AS 14.25 is amended by adding new sections to read: 12 Article 2. Teachers First Hired on or after July 1, 2005. 13 Sec. 14.25.310. Applicability of AS 14.25.310 - 14.25.495. The provisions of 14 AS 14.25.310 - 14.25.495 apply only to members first hired on or after July 1, 2005.
01 Sec. 14.25.320. Defined contribution retirement system established; 02 federal qualification requirements. (a) A defined contribution retirement system 03 for teachers of the state is created. 04 (b) The retirement system established by AS 14.25.310 - 14.25.495 is intended 05 to qualify under 26 U.S.C. 401(a) and 414(d) (Internal Revenue Code) as a qualified 06 retirement plan established and maintained by the state for its employees, for the 07 employees of school districts and regional educational attendance areas in the state, 08 and for the employees of other employers whose participation is authorized by 09 AS 14.25.310 - 14.25.495 and who participate in this system. 10 (c) An amendment to AS 14.25.310 - 14.25.495 does not provide a person 11 with a vested right to a benefit if the Internal Revenue Service determines that the 12 amendment will result in disqualification of the plan under the Internal Revenue Code. 13 Sec. 14.25.330. Purpose and effective date. (a) The purpose of 14 AS 14.25.310 - 14.25.495 is to encourage qualified teachers to enter and remain in 15 service with participating employers by establishing a defined contribution retirement 16 system on behalf of the members. 17 (b) All eligible employees first hired on or after July 1, 2005, shall participate 18 in the system set out in AS 14.25.310 - 14.25.495 in which retirement and death 19 benefits are provided through the purchase of annuity contracts, either fixed, variable, 20 or a combination of fixed and variable. 21 Sec. 14.25.340. Contributions by members. Each member shall contribute 22 to the system an amount equal to 10 percent of the member's base salary accrued from 23 July 1 to the following June 30. The employer shall deduct the contribution from the 24 member's salary at the end of each payroll period, and the contribution shall be 25 credited by the system to the member contribution account. The contributions shall be 26 deducted from employee compensation before the computation of applicable federal 27 taxes and shall be treated as employer contributions under 26 U.S.C. 414(h)(2). A 28 member may not have the option of making the payroll deduction directly in cash 29 instead of having the contribution picked up by the employer. 30 Sec. 14.25.350 Contributions by employer. (a) An employer shall 31 contribute to the system a percentage of each member's base salary accrued from
01 July 1 to the following June 30, including any adjustments to contributions required by 02 AS 14.25.440(a). The employer contribution to the system as a percentage of a 03 member's base salary for employees during the member's 04 (1) first year of service with the employer is zero percent; 05 (2) second year of service with the employer is 25 percent of the 06 maximum employer contribution rate; 07 (3) third year of service with the employer is 50 percent of the 08 maximum employer contribution rate; 09 (4) fourth year of service with the employer is 75 percent of the 10 maximum employer contribution rate; 11 (5) fifth and all subsequent years of service with the employer is 100 12 percent of the maximum employer contribution rate. 13 (b) The maximum employer contribution rate is eight percent of each 14 member's base salary accrued from July 1 to the following June 30 for the defined 15 contribution plan. 16 (c) For purposes of this section, "year of service" has the meaning given in 17 AS 14.25.220, except part-time service shall be credited on a pro rata basis only if the 18 part-time service was for regular employment that is at least 50 percent of full-time 19 service. 20 Sec. 14.25.360. Transmittal of contributions. (a) All contributions 21 deducted in accordance with AS 14.25.340 shall be transmitted to the system for 22 deposit in the retirement fund not later than 15 days following the close of the payroll 23 period, with the final contributions due for any school year transmitted not later than 24 July 15. 25 (b) The contributions of employers under AS 14.25.350 must be transmitted to 26 the system for deposit in the retirement fund at the close of each pay period. If the 27 contributions are not submitted within 15 days after the close of each payroll period, 28 interest must be assessed on the outstanding contributions at one and one-half times 29 the most recent actuarially determined rate of earnings for the system from the date 30 that contributions were originally due. In addition, the amount of the contributions 31 and interest may be deducted by the Department of Education and Early Development
01 from the state funds due the school district and the amount so deducted transmitted to 02 the system for deposit in the retirement fund. Amounts due from the University of 03 Alaska and interest as prescribed in this section may be deducted by the commissioner 04 of administration from any state funds due the University of Alaska and the amount 05 deducted transmitted to the administrator for deposit in the retirement fund. 06 Sec. 14.25.370. Retirement benefits and vesting. A participating member is 07 immediately and fully vested in that member's contributions and in the employer 08 contributions made on that member's behalf to an account under AS 14.25.310 - 09 14.25.495. 10 Sec. 14.25.380. Distributions. (a) A participating member is eligible to 11 receive distribution of that person's accumulated balance in the plan upon becoming a 12 former participating member. 13 (b) Upon the death of a participating member or former participating member, 14 the accumulated balance of that deceased participant is considered to belong to the 15 refund beneficiary, if any, of that deceased participant. If a valid nomination of refund 16 beneficiary is not on file with the board, the board, in a lump sum distribution, shall 17 distribute the accumulated balance to a legal representative, if any, of the deceased 18 participant's estate. 19 (c) A former participating member or refund beneficiary may elect one or a 20 combination of several of the following methods of distribution of the accumulated 21 balance: 22 (1) a lump sum distribution to the recipient; 23 (2) a lump sum direct rollover to another qualified plan, to the extent 24 allowed by federal law; 25 (3) periodic distributions, as authorized by the board; 26 (4) no current distribution, in which case the accumulated balance 27 must remain in the plan until the former participating member or refund beneficiary 28 elects a method or methods of distribution under this section, to the extent allowed by 29 federal law. 30 (d) If the former participating member's vested account balance is less than 31 $5,000, the board shall automatically refund the member's vested account balance
01 upon termination of employment. The member may waive the refund if the member 02 submits a written statement to the board, within 120 days after termination, requesting 03 that the member's vested account balance remain in the plan. 04 Sec. 14.25.390. Refund upon termination. (a) Except as provided in (b) of 05 this section, a terminated member is entitled to a refund of the balance of the member 06 contribution account. 07 (b) A member who is terminated and who is married at the time of application 08 for a refund or whose rights to a refund are subject to a qualified domestic relations 09 order is entitled to receive a refund of the balance of the member contribution account 10 only if the member's present spouse and each person entitled under the order consent 11 to the refund in writing on a form provided by the administrator. The administrator 12 may waive written consent from the person entitled under the order if the 13 administrator determines that the person cannot be located or for other reasons 14 established by regulation. The administrator may waive written consent from the 15 spouse if the administrator determines that 16 (1) the member was not married to the spouse during any period of the 17 member's employment with an employer; 18 (2) the spouse has no rights to benefits under AS 14.25.310 - 19 14.25.495 because of the terms of a qualified domestic relations order; 20 (3) the spouse cannot be located; 21 (4) the member and spouse have been married for less than two years 22 and the member establishes that they are not cohabiting; or 23 (5) another reason established by regulation exists. 24 Sec. 14.25.400. Rights under qualified domestic relations order. A former 25 spouse shall be treated as a spouse or surviving spouse under AS 14.25.310 - 26 14.25.495 to the extent required by a qualified domestic relations order. Rights under 27 the order do not take effect until the order is filed with the administrator. 28 Sec. 14.25.410. Rollover distributions and rollover contributions. (a) A 29 distributee may elect, at the time and in the manner prescribed by the administrator, to 30 have all or part of an eligible rollover distribution paid directly to an eligible 31 retirement plan specified by the distributee in the direct rollover.
01 (b) The system does not accept contributions of eligible rollover distributions. 02 (c) In this section, 03 (1) "direct rollover" means the payment of an eligible rollover 04 distribution by the system to an eligible retirement plan specified by a distributee who 05 is eligible to elect a direct rollover; 06 (2) "distributee" means a member or a beneficiary who is the surviving 07 spouse of the member; 08 (3) "eligible retirement plan" means 09 (A) an individual retirement account described in 26 U.S.C. 10 408(a); 11 (B) an individual retirement annuity defined in 26 U.S.C. 12 408(b); 13 (C) an annuity plan described in 26 U.S.C. 403(a); 14 (D) a qualified trust described in 26 U.S.C. 401(a); 15 (E) an annuity plan described in 26 U.S.C. 403(b); or 16 (F) a governmental plan described in 26 U.S.C. 457(b); 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; 29 (E) a distribution that is on account of hardship; and 30 (F) other distributions that are reasonably expected to total less 31 than $200 during a year.
01 Sec. 14.25.420. Distribution requirements. (a) The entire interest of a 02 member must be distributed or must begin to be distributed not later than the member's 03 required beginning date. 04 (b) If a member dies after the distribution of the member's interest has begun 05 but before the distribution has been completed, the remaining portion of the interest 06 shall continue to be distributed at least as rapidly as under the method of distribution 07 being used before the member's death. 08 (c) If a member has made a distribution election and dies before the 09 distribution of the member's interest begins, distribution of the member's entire interest 10 shall be completed by December 31 of the calendar year containing the fifth 11 anniversary of the member's death. However, if any portion of the member's interest 12 is payable to a designated beneficiary, distributions may be made over the life of the 13 designated beneficiary or over a period certain not greater than the life expectancy of 14 the designated beneficiary, commencing on or before December 31 of the calendar 15 year immediately following the calendar year in which the member died, and, if the 16 designated beneficiary is the member's surviving spouse, the date distributions are 17 required to begin may not be earlier than the later of December 31 of the calendar year 18 (1) immediately following the calendar year in which the member died, or (2) in which 19 the member would have attained 70 1/2 years of age, whichever is earlier. If the 20 surviving spouse dies after the member but before payments to the spouse have begun, 21 the provisions of this subsection apply as if the surviving spouse were the member. 22 An amount paid to a child of the member will be treated as if it were paid to the 23 surviving spouse if the amount becomes payable to the surviving spouse when the 24 child reaches the age of majority. 25 (d) If a member has not made a distribution election before the member's 26 death, the member's designated beneficiary must elect the method of distribution not 27 later than December 31 of the calendar year (1) in which distributions would be 28 required to begin under this section, or (2) that contains the fifth anniversary of the 29 date of death of the member, whichever is earlier. If the member does not have a 30 designated beneficiary or if the designated beneficiary does not elect a method of 31 distribution, distribution of the member's entire interest must be completed by
01 December 31 of the calendar year containing the fifth anniversary of the member's 02 death. 03 (e) For purposes of (c) of this section, distribution of a member's interest is 04 considered to begin (1) on the member's required beginning date, or (2) if the 05 designated beneficiary is the member's surviving spouse and the surviving spouse dies 06 after the member but before payments to the spouse have begun, on the date 07 distribution is required to begin to the surviving spouse. If distribution in the form of 08 an annuity irrevocably commences to the member before the required beginning date, 09 the date distribution is considered to begin is the date that the distribution actually 10 commences. 11 (f) Notwithstanding any contrary provisions of AS 14.25.310 - 14.25.495, the 12 requirements of this section apply to all distributions of a member's interest and take 13 precedence over any inconsistent provisions of AS 14.25.310 - 14.25.495. 14 (g) All distributions required under this section are determined and made in 15 accordance with 26 U.S.C. 401(a)(9) and regulations adopted under that statute, 16 including any minimum distribution incidental benefit requirement. 17 (h) In this section, 18 (1) "designated beneficiary" means the individual who is designated as 19 the beneficiary under the system in accordance with 26 U.S.C. 401(a)(9) and 20 regulations adopted under that statute; 21 (2) "required beginning date" means the first day of April of the 22 calendar year following the calendar year in which the member either attains 70 1/2 23 years of age or actually retires, whichever is later. 24 Sec. 14.25.430. Designation of beneficiary. (a) Each member shall 25 designate the beneficiary or beneficiaries to whom the administrator shall distribute 26 benefits payable under AS 14.25.310 - 14.25.495 as a consequence of the member's 27 death. Notwithstanding a previous designation of beneficiary, a person who is the 28 spouse of a member at the time of the member's death automatically becomes the 29 designated beneficiary if the spouse was married to the member during part of the 30 member's employment for an employer 31 (1) except to the extent a qualified domestic relations order filed with
01 the administrator provides for payment to a former spouse or other dependent of the 02 member; or 03 (2) unless the member filed a revocation of beneficiary accompanied 04 by a written consent to the revocation from the present spouse and each person entitled 05 under the order; however, consent of the present spouse is not required if the member 06 and the present spouse had been married for less than two years on the date of the 07 member's death and if the member established when filing the revocation that the 08 member and the present spouse were not cohabiting. 09 (b) Except as provided in (a) of this section, the member may change or 10 revoke the designation without notice to the beneficiary or beneficiaries at any time. 11 If a member designates more than one beneficiary, each shares equally unless the 12 member specifies a different allocation or preference. The designation of a 13 beneficiary, a change or revocation of a beneficiary, and a consent to revocation of a 14 beneficiary shall be made on a form provided by the administrator and is not effective 15 until filed with the administrator. 16 (c) If a member fails to designate a beneficiary, or if no designated beneficiary 17 survives the member, the death benefit shall be paid 18 (1) to the surviving spouse or, if there is none surviving; 19 (2) to the surviving children in equal parts or, if there are none 20 surviving; 21 (3) to the surviving parents in equal parts or, if there are none 22 surviving; 23 (4) to the estate. 24 (d) A person claiming entitlement to benefits payable under AS 14.25.310 - 25 14.25.495 as a consequence of a member's death shall provide the administrator with a 26 marriage certificate, divorce or dissolution judgment, or other evidence of entitlement. 27 Documents establishing entitlement may be filed with the administrator immediately 28 after a change in the member's marital status. If the administrator does not receive 29 notification of a claim before the date 10 days after the member's death, the person 30 claiming entitlement is not entitled to receive from the division of retirement and 31 benefits any benefit already paid by the administrator.
01 Sec. 14.25.440. Adjustments. (a) When a change or error is made in the 02 records maintained by the system or in the contributions made on behalf of an 03 employee or an error is made in computing a benefit, and, as a result, a teacher or 04 member or beneficiary is entitled to receive from the system more or less than the 05 teacher or member or beneficiary would have been entitled to receive had the records 06 or contributions been correct or had the error not been made, the records, 07 contributions, or error shall be corrected. An adjustment to contributions shall be 08 picked up by the employer in accordance with AS 14.25.360 or treated as an 09 adjustment to the employer's contributions in accordance with this section, depending 10 upon the nature of the adjustment. If no future benefit payments are due, a person 11 who was paid any amount to which the person was not entitled is liable for repayment 12 of that amount, and a person who was not paid the full amount to which the person 13 was entitled shall be paid that amount. 14 (b) An adjustment that requires the recovery of benefits may not be made 15 under this section if 16 (1) the incorrect benefit was first paid two years or more before the 17 member or beneficiary was notified of the error; 18 (2) the error was not the result of erroneous information supplied by 19 the member or beneficiary; and 20 (3) the member or beneficiary did not have reasonable grounds to 21 believe that the amount of the benefit was in error. 22 (c) At each regularly scheduled meeting of the Alaska Teachers' Retirement 23 Board, the administrator shall report to the board on all situations since the 24 administrator's last report in which an adjustment has been prohibited under (b) of this 25 section. If the board finds that there is reason to believe that one or more of the 26 conditions set out in (b) of this section have not been met, the administrator shall 27 notify the member or beneficiary that an adjustment will be made to recover the 28 overpayment. A member or beneficiary who receives notice of adjustment under this 29 subsection may appeal to the board for a waiver of the adjustment under 30 AS 14.25.450. An adjustment that requires the repayment of benefits may not be 31 required while the appeal is pending.
01 (d) The system shall pay interest on amounts owed to a member or 02 beneficiary. Interest shall be charged on amounts owed to the system by a member or 03 beneficiary if the amount owed is the result of erroneous information supplied by the 04 member or beneficiary, or the member or beneficiary had reasonable grounds to 05 believe the amount of the benefit was in error. The interest paid under this subsection 06 is at the rate established by regulation for indebtedness contributions owed. Interest 07 accrues from the date on which the correct payment was due and continues until an 08 actuarial adjustment to the benefit is effective or the amount owed is paid. Accrued 09 interest for periods less than 60 days or in amounts less than the limit established in 10 regulation for writing off small indebtedness and refund balances may not be collected 11 or paid under this subsection. 12 Sec. 14.25.450. Waiver of adjustments. (a) Upon appeal by an affected 13 member or beneficiary under (b) of this section, the board may waive an adjustment or 14 a portion of an adjustment made under AS 14.25.440 if, in the opinion of the board, 15 (1) the adjustment or portion of the adjustment will cause undue 16 hardship to the member or beneficiary; 17 (2) the adjustment was not the result of erroneous information supplied 18 by the member or beneficiary; 19 (3) before the adjustment was made, the member or beneficiary 20 received confirmation from the administrator that the member's or beneficiary's 21 records were correct; and 22 (4) the member or beneficiary had no reasonable grounds to believe 23 the records were incorrect before the adjustment was made. 24 (b) In order to obtain consideration of a waiver under this section, the affected 25 member or beneficiary must appeal to the board in writing within 30 days after receipt 26 of notice that the records have been adjusted. The ruling of the board shall be in 27 writing. 28 (c) The board may conduct a hearing on an appeal under this section. 29 (d) The board may impose conditions on granting a waiver that it considers 30 equitable. These conditions may include requiring the member or beneficiary to make 31 additional contributions to the system.
01 (e) The board may reconsider a ruling under this section upon request of the 02 member or beneficiary or the administrator if the request is received within 30 days 03 after the initial ruling. Any modification of the initial ruling must be made within 30 04 days after receipt of a request for reconsideration. 05 Sec. 14.25.495. Definitions. In AS 14.25.310 - 14.25.495, unless the context 06 requires otherwise, 07 (1) "administrator" has the meaning given in AS 14.25.220; 08 (2) "base salary" has the meaning given in AS 14.25.220; 09 (3) "beneficiary" has the meaning given in AS 14.25.220; 10 (4) "board" has the meaning given in AS 14.25.220; 11 (5) "compensation" has the meaning given in AS 14.25.220; 12 (6) "employer" has the meaning given in AS 14.25.220; 13 (7) "former participating member" means a terminated member; 14 (8) "fund" means the assets of the system; 15 (9) "Internal Revenue Code" has the meaning given in AS 14.25.220; 16 (10) "member" has the meaning given "teacher" in AS 14.25.220; 17 (11) "member contribution account" means the total maintained by the 18 system of the member's mandatory contributions, employer contributions on behalf of 19 the employee, indebtedness principal and interest payments, interest credited to each 20 of those accounts, and adjustments to the account in accordance with AS 14.25.440; 21 (12) "military service" has the meaning given in AS 14.25.220; 22 (13) "qualified domestic relations order" has the meaning given in 23 AS 14.25.220; 24 (14) "retirement fund" or "fund" has the meaning given in 25 AS 14.25.220; 26 (15) "school year" has the meaning given in AS 14.25.220; 27 (16) "system" has the meaning given in AS 14.25.220; 28 (17) "teacher" has the meaning given in AS 14.25.220; 29 (18) "terminated" means a person no longer employed by an employer 30 participating in the system. 31 * Sec. 3. AS 14.40.671(e) is amended to read:
01 (e) An employee whose rights to transfer assets out of a state retirement 02 system are subject to a qualified domestic relations order is entitled to transfer assets 03 from the state retirement system to the program only if the requirements for receiving 04 a refund under AS 14.25.150(b), 14.25.390, [OR] AS 39.35.200(c), or 39.35.760, as 05 appropriate, are met. 06 * Sec. 4. AS 39.35 is amended by adding a new section to Article 1 to read: 07 Sec. 39.35.005. Applicability of AS 39.35.010 - 39.35.690 to employees first 08 hired before July 1, 2005. The following provisions of this chapter apply only to 09 members first hired before July 1, 2005: AS 39.35.010, 39.35.120 - 39.35.165, 10 39.35.180 - 39.35.650, and 39.35.675 - 39.35.680. 11 * Sec. 5. AS 39.35 is amended by adding new sections to read: 12 Article 9. Employees First Hired on or after July 1, 2005. 13 Sec. 39.35.700. Applicability of AS 39.35.700 - 39.35.895. The provisions of 14 AS 39.35.700 - 39.35.895 apply only to members first hired on or after July 1, 2005. 15 Sec. 39.35.710. Defined contribution retirement system established; 16 federal qualification requirements. (a) A defined contribution retirement system is 17 established for employees of the state or a political subdivision or public organization 18 of the state. All eligible employees first hired on or after July 1, 2005, must 19 participate in this system in which retirement and death benefits are provided through 20 the purchase of annuity contracts, either fixed, variable, or a combination of fixed and 21 variable. 22 (b) The purpose of AS 39.35.700 - 39.35.895 is to encourage qualified 23 personnel to enter and remain in the service of the state or a political subdivision or 24 public organization of the state by establishing a system for the payment of defined 25 contribution retirement benefits to or on behalf of the employees. 26 (c) The retirement system established by AS 39.35.700 - 39.35.895 is intended 27 to qualify under 26 U.S.C. 401(a) and 414(d) (Internal Revenue Code) as a qualified 28 retirement plan established and maintained by the state for its employees and for the 29 employees of political subdivisions, public corporations, and public organizations of 30 the state, and for the employees of other employers whose participation is authorized 31 by AS 39.35.700 - 39.35.895 and who participate in the system set out in
01 AS 39.35.700 - 39.35.895. 02 (d) An amendment to AS 39.35.700 - 39.35.895 does not provide a person 03 with a vested right to a benefit if the Internal Revenue Service determines that the 04 amendment will result in disqualification of the plan under the Internal Revenue Code. 05 Sec. 39.35.720. Contributions by members. Each peace officer or fire 06 fighter shall contribute to the system an amount equal to 8.5 percent of the peace 07 officer's or fire fighter's compensation. Each other employee shall contribute to the 08 system an amount equal to eight percent of the employee's compensation. The 09 contributions shall be deducted by the employer at the end of each payroll period. The 10 contributions shall be deducted from employee compensation before computation of 11 applicable federal taxes, and the contributions shall be treated as employer 12 contributions under 26 U.S.C. 414(h)(2). A member may not have the option of 13 making the payroll deduction directly instead of having the contribution picked up by 14 the employer. 15 Sec. 39.35.730. Contributions by employer. (a) An employer shall 16 contribute to the system a percentage of each member's base salary accrued from 17 July 1 to the following June 30, including any adjustments to contributions required by 18 AS 39.35.810. The employer contribution to the system as a percentage of an 19 employee's base salary for employees during the employee's 20 (1) first year of service with the employer is zero percent; 21 (2) second year of service with the employer is 25 percent of the 22 maximum employer contribution rate; 23 (3) third year of service with the employer is 50 percent of the 24 maximum employer contribution rate; 25 (4) fourth year of service with the employer is 75 percent of the 26 maximum employer contribution rate; 27 (5) fifth and all subsequent years of service with the employer is 100 28 percent of the maximum employer contribution rate. 29 (b) The maximum employer contribution rate is 8.75 percent of each 30 member's base salary accrued from July 1 to the following June 30 for the defined 31 contribution plan.
01 (c) For purposes of this section, "year of service" means one full year of 02 membership service completed by an employee; part-time service shall be credited on 03 a pro rata basis only if the part-time service was for regular employment that is at least 04 50 percent of full-time service. 05 Sec. 39.35.740. Retirement benefits and vesting. A participating member is 06 immediately and fully vested in that member's contributions and in the employer 07 contributions made on that member's behalf to an account under AS 39.35.700 - 08 39.35.895. 09 Sec. 39.35.750. Distributions. (a) A participating member is eligible to 10 receive distribution of that person's accumulated balance in the plan upon becoming a 11 former participating member. 12 (b) Upon the death of a participating member or former participating member, 13 the accumulated balance of that deceased participant is considered to belong to the 14 refund beneficiary, if any, of that deceased participant. If a valid nomination of refund 15 beneficiary is not on file with the board, the board, in a lump sum distribution, shall 16 distribute the accumulated balance to a legal representative, if any, of the deceased 17 participant's estate. 18 (c) A former participating member or refund beneficiary may elect one or a 19 combination of several of the following methods of distribution of the accumulated 20 balance: 21 (1) lump sum distribution to the recipient; 22 (2) lump sum direct rollover to another qualified plan, to the extent 23 allowed by federal law; 24 (3) periodic distributions, as authorized by the board; 25 (4) no current distribution, in which case the accumulated balance 26 must remain in the plan until the former participating member or refund beneficiary 27 elects a method or methods of distribution under this section, to the extent allowed by 28 federal law. 29 (d) If the former participating member's vested account balance is less than 30 $5,000, the board shall automatically refund the member's vested account balance 31 upon termination of employment. The member may waive the refund if the member
01 submits a written statement to the board, within 120 days after termination, requesting 02 that the member's vested account balance remain in the plan. 03 Sec. 39.35.760. Refund upon termination. (a) Except as provided in (b) of 04 this section, a terminated member is entitled to a refund of the balance of the member 05 contribution account. 06 (b) A member who is terminated and who is married at the time of application 07 for a refund or whose rights to a refund are subject to a qualified domestic relations 08 order is entitled to receive a refund of the balance of the member contribution account 09 only if the member's present spouse and each person entitled under the order consent 10 to the refund in writing on a form provided by the administrator. The administrator 11 may waive written consent from the person entitled under the order if the 12 administrator determines that the person cannot be located or for other reasons 13 established by regulation. The administrator may waive written consent from the 14 spouse if the administrator determines that 15 (1) the member was not married to the spouse during any period of the 16 member's employment with an employer; 17 (2) the spouse has no rights to benefits under AS 39.35.700 - 18 39.35.895 because of the terms of a qualified domestic relations order; 19 (3) the spouse cannot be located; 20 (4) the member and spouse have been married for less than two years 21 and the member establishes that they are not cohabiting; or 22 (5) another reason established by regulation exists. 23 Sec. 39.35.770. Rights under qualified domestic relations order. A former 24 spouse shall be treated as a spouse or surviving spouse under AS 39.35.700 - 25 39.35.895 to the extent required by a qualified domestic relations order. Rights under 26 the order do not take effect until the order is filed with the administrator. 27 Sec. 39.35.780. Rollover distributions and rollover contributions. (a) A 28 distributee may elect, at the time and in the manner prescribed by the administrator, to 29 have all or part of an eligible rollover distribution paid directly to an eligible 30 retirement plan specified by the distributee in the direct rollover. 31 (b) The system does not accept contributions of eligible rollover distributions.
01 (c) In this section, 02 (1) "direct rollover" means the payment of an eligible rollover 03 distribution by the system to an eligible retirement plan specified by a distributee who 04 is eligible to elect a direct rollover; 05 (2) "distributee" means a member or a beneficiary who is the surviving 06 spouse of the member; 07 (3) "eligible retirement plan" means 08 (A) an individual retirement account described in 26 U.S.C. 09 408(a); 10 (B) an individual retirement annuity defined in 26 U.S.C. 11 408(b); 12 (C) an annuity plan described in 26 U.S.C. 403(a); 13 (D) a qualified trust described in 26 U.S.C. 401(a); 14 (E) an annuity plan described in 26 U.S.C. 403(b); or 15 (F) a governmental plan described in 26 U.S.C. 457(b); 16 (4) "eligible rollover distribution" means a distribution of all or part of 17 a total account to a distributee, except for 18 (A) a distribution that is one of a series of substantially equal 19 installments payable not less frequently than annually over the life expectancy 20 of the distributee or the joint and last survivor life expectancy of the distributee 21 and the distributee's designated beneficiary, as defined in 26 U.S.C. 401(a)(9); 22 (B) a distribution that is one of a series of substantially equal 23 installments payable not less frequently than annually over a specified period 24 of 10 years or more; 25 (C) a distribution that is required under 26 U.S.C. 401(a)(9); 26 (D) the portion of any distribution that is not includable in 27 gross income; 28 (E) a distribution 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. 39.35.790. Distribution requirements. (a) The entire interest of a
01 member must be distributed or must begin to be distributed not later than the member's 02 required beginning date. 03 (b) If a member dies after the distribution of the member's interest has begun 04 but before the distribution has been completed, the remaining portion of the interest 05 shall continue to be distributed at least as rapidly as under the method of distribution 06 being used before the member's death. 07 (c) If a member has made a distribution election and dies before the 08 distribution of the member's interest begins, distribution of the member's entire interest 09 shall be completed by December 31 of the calendar year containing the fifth 10 anniversary of the member's death. However, if any portion of the member's interest 11 is payable to a designated beneficiary, distributions may be made over the life of the 12 designated beneficiary or over a period certain not greater than the life expectancy of 13 the designated beneficiary, commencing on or before December 31 of the calendar 14 year immediately following the calendar year in which the member died, and, if the 15 designated beneficiary is the member's surviving spouse, the date distributions are 16 required to begin may not be earlier than the later of December 31 of the calendar year 17 (1) immediately following the calendar year in which the member died, or (2) in which 18 the member would have attained 70 1/2 years of age, whichever is earlier. If the 19 surviving spouse dies after the member but before payments to the spouse have begun, 20 the provisions of this subsection apply as if the surviving spouse were the member. 21 An amount paid to a child of the member will be treated as if it were paid to the 22 surviving spouse if the amount becomes payable to the surviving spouse when the 23 child reaches the age of majority. 24 (d) If a member has not made a distribution election before the member's 25 death, the member's designated beneficiary must elect the method of distribution not 26 later than December 31 of the calendar year (1) in which distributions would be 27 required to begin under this section, or (2) that contains the fifth anniversary of the 28 date of death of the member, whichever is earlier. If the member does not have a 29 designated beneficiary or if the designated beneficiary does not elect a method of 30 distribution, distribution of the member's entire interest must be completed by 31 December 31 of the calendar year containing the fifth anniversary of the member's
01 death. 02 (e) For purposes of (c) of this section, distribution of a member's interest is 03 considered to begin (1) on the member's required beginning date, or (2) if the 04 designated beneficiary is the member's surviving spouse and the surviving spouse dies 05 after the member but before payments to the spouse have begun, on the date 06 distribution is required to begin to the surviving spouse. If distribution in the form of 07 an annuity irrevocably commences to the member before the required beginning date, 08 the date distribution is considered to begin is the date that the distribution actually 09 commences. 10 (f) Notwithstanding any contrary provisions of AS 39.35.700 - 39.35.895, the 11 requirements of this section apply to all distributions of a member's interest and take 12 precedence over any inconsistent provisions of AS 39.35.700 - 39.35.895. 13 (g) All distributions required under this section are determined and made in 14 accordance with 26 U.S.C. 401(a)(9) and regulations adopted under that statute, 15 including any minimum distribution incidental benefit requirement. 16 (h) In this section, 17 (1) "designated beneficiary" means the individual who is designated as 18 the beneficiary under the system in accordance with 26 U.S.C. 401(a)(9) and 19 regulations adopted under that statute; 20 (2) "required beginning date" means the first day of April of the 21 calendar year following the calendar year in which the member either attains 70 1/2 22 years of age or actually retires, whichever is later. 23 Sec. 39.35.800. Designation of beneficiary. (a) Each member shall designate 24 the beneficiary or beneficiaries to whom the administrator shall distribute benefits 25 payable under AS 39.35.700 - 39.35.895 as a consequence of the member's death. 26 Notwithstanding a previous designation of beneficiary, a person who is the spouse of a 27 member at the time of the member's death automatically becomes the designated 28 beneficiary if the spouse was married to the member during part of the member's 29 employment for an employer 30 (1) except to the extent a qualified domestic relations order filed with 31 the administrator provides for payment to a former spouse or other dependent of the
01 member; or 02 (2) unless the member filed a revocation of beneficiary accompanied 03 by a written consent to the revocation from the present spouse and each person entitled 04 under the order; however, consent of the present spouse is not required if the member 05 and the present spouse had been married for less than two years on the date of the 06 member's death and if the member established when filing the revocation that the 07 member and the present spouse were not cohabiting. 08 (b) Except as provided in (a) of this section, the member may change or 09 revoke the designation without notice to the beneficiary or beneficiaries at any time. 10 If a member designates more than one beneficiary, each shares equally unless the 11 member specifies a different allocation or preference. The designation of a 12 beneficiary, a change or revocation of a beneficiary, and a consent to revocation of a 13 beneficiary shall be made on a form provided by the administrator and is not effective 14 until filed with the administrator. 15 (c) If a member fails to designate a beneficiary, or if no designated beneficiary 16 survives the member, the death benefit shall be paid 17 (1) to the surviving spouse or, if there is none surviving; 18 (2) to the surviving children in equal parts or, if there are none 19 surviving; 20 (3) to the surviving parents in equal parts or, if there are none 21 surviving; 22 (4) to the estate. 23 (d) A person claiming entitlement to benefits payable under AS 39.35.700 - 24 39.35.895 as a consequence of a member's death shall provide the administrator with a 25 marriage certificate, divorce or dissolution judgment, or other evidence of entitlement. 26 Documents establishing entitlement may be filed with the administrator immediately 27 after a change in the member's marital status. If the administrator does not receive 28 notification of a claim before the date 10 days after the member's death, the person 29 claiming entitlement is not entitled to receive from the division of retirement and 30 benefits any benefit already paid by the administrator. 31 Sec. 39.35.810. Adjustments. (a) When a change or error is made in the
01 records maintained by the system or in the contributions made on behalf of an 02 employee or an error is made in computing a benefit, and, as a result, a member or 03 beneficiary is entitled to receive from the system more or less than the member or 04 beneficiary would have been entitled to receive had the records or contributions been 05 correct or had the error not been made, the records, contributions, or error shall be 06 corrected. An adjustment to contributions shall be picked up by the employer in 07 accordance with AS 39.35.720 or treated as an adjustment to the employer's 08 contributions in accordance with this section, depending upon the nature of the 09 adjustment. If no future benefit payments are due, a person who was paid any amount 10 to which the person was not entitled is liable for repayment of that amount, and a 11 person who was not paid the full amount to which the person was entitled shall be paid 12 that amount. 13 (b) An adjustment that requires the recovery of benefits may not be made 14 under this section if 15 (1) the incorrect benefit was first paid two years or more before the 16 member or beneficiary was notified of the error; 17 (2) the error was not the result of erroneous information supplied by 18 the member or beneficiary; and 19 (3) the member or beneficiary did not have reasonable grounds to 20 believe that the amount of the benefit was in error. 21 (c) At each regularly scheduled meeting of the Public Employees' Retirement 22 Board, the administrator shall report to the board on all situations since the 23 administrator's last report in which an adjustment has been prohibited under (b) of this 24 section. If the board finds that there is reason to believe that one or more of the 25 conditions set out in (b) of this section have not been met, the administrator shall 26 notify the member or beneficiary that an adjustment will be made to recover the 27 overpayment. A member or beneficiary who receives notice of adjustment under this 28 subsection may appeal to the board for a waiver of the adjustment under 29 AS 39.35.820. An adjustment that requires the repayment of benefits may not be 30 required while the appeal is pending. 31 (d) The system shall pay interest on amounts owed to a member or
01 beneficiary. Interest shall be charged on amounts owed to the system by a member or 02 beneficiary if the amount owed is the result of erroneous information supplied by the 03 member or beneficiary, or the member or beneficiary had reasonable grounds to 04 believe the amount of the benefit was in error. The interest paid under this subsection 05 is at the rate established by regulation for indebtedness contributions owed. Interest 06 accrues from the date on which the correct payment was due and continues until an 07 actuarial adjustment to the benefit is effective or the amount owed is paid. Accrued 08 interest for periods less than 60 days or in amounts less than the limit established in 09 regulation for writing off small indebtedness and refund balances may not be collected 10 or paid under this subsection. 11 Sec. 39.35.820. Waiver of adjustments. (a) Upon appeal by an affected 12 member or beneficiary under (b) of this section, the board may waive an adjustment or 13 a portion of an adjustment made under AS 39.35.810 if, in the opinion of the board, 14 (1) the adjustment or portion of the adjustment will cause undue 15 hardship to the member or beneficiary; 16 (2) the adjustment was not the result of erroneous information supplied 17 by the member or beneficiary; 18 (3) before the adjustment was made, the member or beneficiary 19 received confirmation from the administrator that the member's or beneficiary's 20 records were correct; and 21 (4) the member or beneficiary had no reasonable grounds to believe 22 the records were incorrect before the adjustment was made. 23 (b) In order to obtain consideration of a waiver under this section, the affected 24 member or beneficiary must appeal to the board in writing within 30 days after receipt 25 of notice that the records have been adjusted. The ruling of the board shall be in 26 writing. 27 (c) The board may conduct a hearing on an appeal under this section. 28 (d) The board may impose conditions on granting a waiver that it considers 29 equitable. These conditions may include requiring the member or beneficiary to make 30 additional contributions to the system. 31 (e) The board may reconsider a ruling under this section upon request of the
01 member or beneficiary or the administrator if the request is received within 30 days 02 after the initial ruling. Any modification of the initial ruling must be made within 30 03 days after receipt of a request for reconsideration. 04 Sec. 39.35.830. Management and investment of fund. (a) The Alaska State 05 Pension Investment Board is the fiduciary of the fund. In managing the fund, the 06 Alaska State Pension Investment Board shall 07 (1) consider the status of the fund's investments and the system's 08 liabilities on both a current and a probable future basis; 09 (2) determine the appropriate investment objectives for the fund; 10 (3) establish investment policies aimed at achieving the objectives; and 11 (4) act only in regard to the best financial interests of the system's plan 12 and beneficiaries. 13 (b) The Alaska State Pension Investment Board may invest the fund on the 14 basis of probable total rate of return without regard to the distinction between principal 15 and income or to the generation of income. 16 (c) In carrying out investment duties under AS 39.35.700 - 39.35.895, the 17 Alaska State Pension Investment Board has the same powers and duties in regard to 18 the teacher's retirement trust fund as are provided in AS 37.10.071, except that the 19 standard of prudence that the board must obey under AS 37.10.071(c) shall be in 20 regard to the management of large trust investments rather than large investments. 21 Sec. 39.35.850. Special rules for treatment of qualified military service. 22 Notwithstanding any contrary provisions of AS 39.35.700 - 39.35.895, with respect to 23 qualified military service, contributions shall be made and benefits and service credit 24 shall be provided in accordance with 26 U.S.C. 414(u). 25 Sec. 39.35.860. Exemption from taxation and process. (a) Except as 26 provided in AS 29.45.030(a)(1) or in (c) of this section, member contributions and 27 other amounts held in the system on behalf of a member or other person who is or may 28 become eligible for benefits under the system are exempt from Alaska state and 29 municipal taxes and are not subject to anticipation, alienation, sale, transfer, 30 assignment, pledge, encumbrance, or charge of any kind, either voluntary or 31 involuntary, before they are received by the person entitled to the amount under the
01 terms of the system. Any attempt to anticipate, alienate, sell, transfer, assign, pledge, 02 encumber, charge, or otherwise dispose of any right to amounts accrued in the system 03 is void. However, a member's right to receive benefits or the member contribution 04 account may be assigned 05 (1) under a qualified domestic relations order; 06 (2) to a trust or similar legal device that meets the requirements for a 07 Medicaid-qualifying trust under AS 47.07.020(f) and 42 U.S.C. 1396p(d)(4); or 08 (3) as provided in (c) of this section. 09 (b) Member contributions and other amounts held in the system and benefits 10 payable under AS 39.35.700 - 39.35.895 are exempt from garnishment, execution, or 11 levy as provided in AS 09.38. 12 (c) An inactive member may elect to have the taxable portion of the member 13 contribution account transferred directly to another plan or an individual retirement 14 arrangement that is qualified under the federal Internal Revenue Code and that accepts 15 the transfer. 16 Sec. 39.35.870. Time limit for application. If an application for benefits or 17 for refund has not been filed with the administrator by July 1 following the date on 18 which an inactive member (except a member on leave of absence without pay) would 19 attain age 75, or if an application for benefits or for refund has not been filed with the 20 administrator within the 50 years following the most recent date on which the person 21 was an active member, benefits or refunds may not be paid under AS 39.35.700 - 22 39.35.895 and the member's records may be destroyed. 23 Sec. 39.35.880. Penalty for false statements. (a) A person who knowingly 24 makes a false statement, or falsifies or permits to be falsified any record of this 25 system, in an attempt to defraud this system, is guilty of a class A misdemeanor and 26 forfeits all rights under AS 39.35.700 - 39.35.895. 27 (b) In this section, "knowingly" has the meaning given in AS 11.81.900(a). 28 Sec. 39.35.895. Definitions. In AS 39.35.700 - 39.35.895, unless the context 29 requires otherwise, 30 (1) "active member" has the meaning given in AS 39.35.680; 31 (2) "actuarial adjustment" has the meaning given in AS 39.35.680;
01 (3) "administrator" has the meaning given in AS 39.35.680; 02 (4) "beneficiary" has the meaning given in AS 39.35.680; 03 (5) "board" has the meaning given in AS 39.35.680; 04 (6) "calendar year" has the meaning given in AS 39.35.680; 05 (7) "compensation" has the meaning given in AS 39.35.680; 06 (8) "employee contribution account" means the total maintained by the 07 system of the employer's contributions, employee's mandatory contributions, voluntary 08 contributions, indebtedness principal, and interest contributions, interest credited to 09 each of those accounts, and adjustments to the accounts in accordance with 10 AS 39.35.810; 11 (9) "employer" has the meaning given in AS 39.35.680; 12 (10) "former participating member" means a terminated member; 13 (11) "fund" means the assets of the system; 14 (12) "inactive member" has the meaning given in AS 39.35.680; 15 (13) "member" or "employee" has the meaning given in AS 39.35.680; 16 (14) "military service" has the meaning given in AS 39.35.680; 17 (15) "peace officer" or "fire fighter" has the meaning given in 18 AS 39.35.680; 19 (16) "public organization" has the meaning given in AS 39.35.680; 20 (17) "qualified domestic relations order" has the meaning given in 21 AS 39.35.680; 22 (18) "retired member" means an employee who is terminated, who has 23 not received a refund from the system, and who is receiving a retirement benefit from 24 the system; 25 (19) "retirement" means that period of time from the first day of the 26 month following (A) the date of termination, and (B) application for retirement, in 27 which a person is appointed to receive a retirement benefit; 28 (20) "surviving spouse" means the spouse of an employee who has 29 been married to the employee for at least one year at the time of the employee's death; 30 (21) "system" has the meaning given in AS 39.35.680; 31 (22) "terminated" means a person no longer employed by an employer
01 participating in the system. 02 * Sec. 6. The uncodified law of the State of Alaska is amended by adding a new section to 03 read: 04 REVISOR INSTRUCTION. (a) In the following statute sections, the revisor of 05 statutes shall substitute the spanned reference "AS 14.25.010 - 14.25.220" for references to 06 "this chapter": AS 14.25.010, 14.25.012, 14.25.040, 14.25.045, 14.25.047, 14.25.048, 07 14.25.061, 14.25.062, 14.25.063, 14.25.070, 14.25.075, 14.25.105, 14.25.107, 14.25.110, 08 14.25.142, 14.25.150, 14.25.153, 14.25.160, 14.25.165, 14.25.166, and 14.25.220. 09 (b) In the following statute sections, the revisor of statutes shall substitute the spanned 10 reference "AS 39.35.010 - 39.35.680" for references to "this chapter": AS 39.35.010, 11 39.35.165, 39.35.200, 39.35.250, 39.35.300, 39.35.340, 39.35.350, 39.35.360, 39.35.370, 12 39.35.371, 39.35.375, 39.35.381, 39.35.480, 39.35.490, 39.35.495, 39.35.505, 39.35.530, 13 39.35.546, 39.35.547, 39.35.615, 39.35.620, 39.35.675, 39.35.677, and 39.35.680. 14 * Sec. 7. This Act takes effect July 1, 2005.