Bill Summary – FastDemocracy

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                            _____________ BILL NO. _____________
                                  (Primary Sponsor)
                     INTRODUCED BY _________________________________________________
                  BY REQUEST OF THE PUBLIC EMPLOYEES' RETIREMENT BOARD
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 A BILL FOR AN ACT ENTITLED: “AN ACT GENERALLY REVISING LAWS RELATED TO THE PUBLIC
 EMPLOYEE RETIREMENT SYSTEMS ADMINISTERED BY THE PUBLIC EMPLOYEES' RETIREMENT
 BOARD; PROVIDING FOR RETIREMENT FROM NONLEGISLATIVE EMPLOYMENT; REVISING THE POST-
 TERMINATION DEADLINE TO APPLY FOR DISABILITY RETIREMENT; PROVIDING THAT DUTY-RELATED
 DISABILITY RETIREMENT BENEFITS DO NOT CONVERT TO NORMAL RETIREMENT ON REACHING
 NORMAL RETIREMENT AGE; ASSESSING INTEREST ON PAYROLL REPORTING ERRORS THAT
 REQUIRE RETROACTIVE CONTRIBUTIONS; PRORATING SERVICE PURCHASES WHEN A MEMBER
 STOPS MAKING INSTALLMENT PAYMENTS; REMOVING THE PROVISION ALLOWING THE
 RENOUNCEMENT OF BENEFITS; CLARIFYING THAT DISABILITY RETIREMENT BENEFITS CANNOT
 BEGIN PRIOR TO THE COMPLETION OF AN APPLICATION; CLARIFYING THE APPLICATION OF EXCESS
 EARNINGS FOR CALCULATION OF HIGHEST AND FINAL AVERAGE COMPENSATION; REVISING
 REQUIRED MINIMUM DISTRIBUTION AND INHERITED ACCOUNT REQUIREMENTS TO COMPLY WITH
 FEDERAL LAW; DEFINING "ALLOWANCE"; REVISING THE DEFINITION OF "COMPENSATION";
 EXEMPTING RETIRED MEMBERS UNDER SUBPOENA IN LEGAL PROCEEDINGS RELATED TO PRIOR
 EMPLOYMENT FROM WORKING RETIREE PROVISIONS; REVISING THE EXCLUSION OF BONUSES
 FROM COMPENSATION IN THE JUDGES' RETIREMENT SYSTEM, THE HIGHWAY PATROL OFFICERS'
 RETIREMENT SYSTEM, THE GAME WARDENS' AND PEACE OFFICERS' RETIREMENT SYSTEM, THE
 MUNICIPAL POLICE OFFICERS' RETIREMENT SYSTEM, AND THE FIREFIGHTERS' UNIFIED
 RETIREMENT SYSTEM; ALIGNING WORKING RETIREE LIMITS IN THE SHERIFFS' RETIREMENT
 SYSTEM WITH SIMILAR PROVISIONS IN OTHER RETIREMENT SYSTEMS; CLARIFYING THAT
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 TERMINATION OF SERVICE IS NECESSARY PRIOR TO RETIREMENT FROM THE GAME WARDEN'S
 AND PEACE OFFICERS' RETIREMENT SYSTEM; CLARIFYING THE SURVIVORSHIP BENEFIT TO
 BENEFICIARIES OF INACTIVE MEMBERS OF THE FIREFIGHTERS' UNIFIED RETIREMENT SYSTEM
 WITH LESS THAN 20 YEARS OF SERVICE; PROVIDING RULEMAKING AUTHORITY; AMENDING
 SECTIONS 5-2-304, 19-2-303, 19-2-406, 19-2-506, 19-2-704, 19-2-801, 19-2-908, 19-2-1005, 19-2-1007, 19-3-
 108, 19-3-412, 19-3-505, 19-3-1103, 19-3-1106, 19-5-101, 19-5-802, 19-6-101, 19-7-101, 19-7-1101, 19-8-101,
 19-8-601, 19-8-1003, 19-9-104, 19-9-1101, 19-13-104, AND 19-13-902, MCA; AND PROVIDING EFFECTIVE
 DATES.”
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 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
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         Section 1. Section 5-2-304, MCA, is amended to read:
         "5-2-304.   Participation in public retirement systems. (1) The purpose of this section is to allow a
 person who is elected or appointed to the Montana legislature and who is also a member of a retirement
 system provided for in Title 19, chapter 3, 5, 6, 7, 8, 9, 13, 20, or 21, by virtue of the person's nonlegislative
 employment to continue the person's participation in the public retirement system of which the person is a
 member.
         (2)      This section is not intended to provide duplicate credit for the same service in two retirement
 systems supported wholly or in part by public funds. This section does not affect contribution rates or benefit
 payments specifically provided for in the laws governing the operation of individual retirement systems.
         (3)      A person who is an active member of a retirement system provided for in Title 19, chapter 3, 5,
 6, 7, 8, 9, or 13, by virtue of the person's nonlegislative employment and who is receiving service credit in that
 system pursuant to subsection (4) may elect to retire from that system on termination of service from their
 nonlegislative employment, but the person shall make a one-time, irrevocable election to decline further
 participation in that system while continuing to be engaged in official duties as a legislator.
         (4)      (a) A person who is an inactive or retired member of a retirement system provided for in Title
 19, chapter 5, 6, 7, 8, 9, 13, 20, or 21, and who is elected or appointed to be a legislator may:
         (i)      return to active membership in the system of which the person is an inactive or retired member
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 under the requirements of that system; or
         (ii)     remain an inactive or retired member of the retirement system and become an active member
 of the public employees' retirement system pursuant to 19-3-413.
         (b)      A person who is an inactive or retired member of the public employees' retirement system
 provided for in Title 19, chapter 3, and who is elected or appointed to the legislature may return to active
 membership in the public employees' retirement system but cannot simultaneously be an inactive or retired
 member of the system as a result of prior covered terminated employment and an active member of the
 retirement system under 19-3-413 or this section.
         (5)      (a) A person who is an active member of a public retirement system governed by state law and
 who is elected or appointed to be a legislator may, but is not required to, continue the person's participation in
 that public retirement system while engaged in official duties as a legislator.
         (b)      To continue participation as an active member in the public retirement system, a legislator
 shall, within 90 days of taking office and in a manner prescribed by the appropriate board, file an irrevocable
 written election with the teachers' retirement board or the public employees' retirement board.
         (6)      A legislator who elects to continue participation as an active member as provided in subsection
 (4) subsection (5) shall continue the payments into the fund of the retirement system at the rate currently in
 effect in the system based on the legislator's monthly salary as a member of that system.
         (7)      The state contribution must be made by legislative appropriation. It must equal the appropriate
 employer contribution at the rate currently in effect in the system."
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         Section 2. Section 19-2-303, MCA, is amended to read:
         "19-2-303.    Definitions. Unless the context requires otherwise, for each of the retirement systems
 subject to this chapter, the following definitions apply:
         (1)      "Accumulated contributions" means the sum of all the regular and any additional contributions
 made by a member in a defined benefit plan, together with the regular interest on the contributions.
         (2)      "Active member" means a member who is a paid employee of an employer, is making the
 required contributions, and is properly reported to the board for the most current reporting period.
         (3)      "Actuarial cost" means the amount determined by the board in a uniform and nondiscriminatory
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 manner to represent the present value of the benefits to be derived from the additional service to be credited
 based on the most recent actuarial valuation for the system and the age, years until retirement, and current
 salary of the member.
           (4)    "Actuarial equivalent" means a benefit of equal value when computed upon the basis of the
 mortality table and interest rate assumptions adopted by the board.
           (5)    "Actuarial liabilities" means the excess of the present value of all benefits payable under a
 defined benefit retirement plan over the present value of future normal costs in that retirement plan.
           (6)    "Actuary" means the actuary retained by the board in accordance with 19-2-405.
           (7)    "Additional contributions" means contributions made by a member of a defined benefit plan to
 purchase various types of optional service credit as allowed by the applicable retirement plan.
           (8)    "Allowance" means predetermined remuneration from the employer to the employee for
 expenses incurred while rendering services or to defray higher than normal costs for necessities, such as
 housing or travel.
           (9)    "Annuity" means:
           (a)    in the case of a defined benefit plan, equal and fixed payments for life that are the actuarial
 equivalent of a lump-sum payment under a retirement plan and as such are not benefits paid by a retirement
 plan and are not subject to periodic or one-time increases; or
           (b)    in the case of the defined contribution plan, a payment of a fixed sum of money at regular
 intervals.
           (10)   "Banked holiday time" means the hours reported for work performed on a holiday that the
 employee may use for equivalent time off or that may be paid to the employee as specified by the employer's
 policy.
           (11)   "Benefit" means:
           (a)    the service retirement benefit, early retirement benefit, or disability retirement or survivorship
 benefit payment provided by a defined benefit retirement plan; or
           (b)    a payment or distribution under the defined contribution retirement plan, including a disability
 payment under 19-3-2141, for the exclusive benefit of a plan member or the member's beneficiary or an annuity
 purchased under 19-3-2124.
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         (12)     "Board" means the public employees' retirement board provided for in 2-15-1009.
         (13)     "Contingent annuitant" means:
         (a)      under option 2 or 3 provided for in 19-3-1501, one natural person designated to receive a
 continuing monthly benefit after the death of a retired member; or
         (b)      under option 4 provided for in 19-3-1501, a natural person, charitable organization, estate, or
 trust that may receive a continuing monthly benefit after the death of a retired member.
         (14)     "Covered employment" means employment in a covered position.
         (15)     "Covered position" means a position in which the employee must be a member of the
 retirement system except as otherwise provided by law.
         (16)     "Defined benefit retirement plan" or "defined benefit plan" means a plan within the retirement
 systems provided for pursuant to 19-2-302 that is not the defined contribution retirement plan.
         (17)     "Defined contribution retirement plan" or "defined contribution plan" means the plan within the
 public employees' retirement system established in 19-3-103 that is provided for in chapter 3, part 21, of this
 title and that is not a defined benefit plan.
         (18)     "Department" means the department of administration.
         (19)     "Designated beneficiary" means the person, charitable organization, estate, or trust for the
 benefit of a natural person designated by a member or payment recipient to receive any survivorship benefits,
 lump-sum payments, or benefit from a retirement account upon the death of the member or payment recipient,
 including annuities derived from the benefits or payments.
         (20)     "Direct rollover" means a payment by the retirement plan to the eligible retirement plan
 specified by the distributee or a payment from an eligible retirement plan to the retirement plan specified by the
 distributee.
         (21)     "Disability" or "disabled" means a total inability of the member to perform the member's duties
 by reason of physical or mental incapacity. The disability must be incurred while the member is an active
 member and must be one of permanent duration or of extended and uncertain duration, as determined by the
 board on the basis of competent medical opinion.
         (22)     "Distributee" means:
         (a)      a member;
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          (b)      a member's surviving spouse;
          (c)      a member's spouse or former spouse who is the alternate payee under a family law order as
 defined in 19-2-907; or
          (d)      effective January 1, 2007, a member's nonspouse beneficiary who is a designated beneficiary
 as defined by section 401(a)(9)(E) of the Internal Revenue Code, 26 U.S.C. 401(a)(9)(E).
          (23)     "Early retirement benefit" means the retirement benefit payable to a member following early
 retirement and is the actuarial equivalent of the accrued portion of the member's service retirement benefit.
          (24)     "Eligible retirement plan" means any of the following that accepts the distributee's eligible
 rollover distribution:
          (a)      an individual retirement account described in section 408(a) of the Internal Revenue Code, 26
 U.S.C. 408(a);
          (b)      an individual retirement annuity described in section 408(b) of the Internal Revenue Code, 26
 U.S.C. 408(b);
          (c)      an annuity plan described in section 403(a) of the Internal Revenue Code, 26 U.S.C. 403(a);
          (d)      a qualified trust described in section 401(a) of the Internal Revenue Code, 26 U.S.C. 401(a);
          (e)      effective January 1, 2002, an annuity contract described in section 403(b) of the Internal
 Revenue Code, 26 U.S.C. 403(b);
          (f)      effective January 1, 2002, a plan eligible under section 457(b) of the Internal Revenue Code,
 26 U.S.C. 457(b), that is maintained by a state, a political subdivision of a state, or any agency or
 instrumentality of a state or a political subdivision of a state that agrees to separately account for amounts
 transferred into that plan from a plan under this title; or
          (g)      effective January 1, 2008, a Roth IRA described in section 408A of the Internal Revenue Code,
 26 U.S.C. 408A.
          (25)     "Eligible rollover distribution":
          (a)      means any distribution of all or any portion of the balance from a retirement plan to the credit of
 the distributee, as provided in 19-2-1011;
          (b)      effective January 1, 2002, includes a distribution to a surviving spouse or to a spouse or former
 spouse who is an alternate payee under a domestic relations order, as defined in section 414(p) of the Internal
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 Revenue Code, 26 U.S.C. 414(p).
         (26)     "Employee" means a person who is employed by an employer in any capacity and whose
 salary is being paid by the employer or a person for whom an interlocal governmental entity is responsible for
 paying retirement contributions pursuant to 7-11-105.
         (27)     "Employer" means a governmental agency participating in a retirement system enumerated in
 19-2-302 on behalf of its eligible employees. The term includes an interlocal governmental entity identified as
 responsible for paying retirement contributions pursuant to 7-11-105.
         (28)     "Essential elements of the position" means fundamental job duties. An element may be
 considered essential because of but not limited to the following factors:
         (a)      the position exists to perform the element;
         (b)      there are a limited number of employees to perform the element; or
         (c)      the element is highly specialized.
         (29)     "Excess earnings" means the difference, if any, between reported compensation and the limits
 provided in 19-2-1005(2) used to calculate a member's highest average compensation or final average
 compensation.
         (30)     "Fiscal year" means a plan year, which is any year commencing with July 1 and ending the
 following June 30.
         (31)     "Inactive member" means a member who terminates service and does not retire or take a
 refund of the member's accumulated contributions.
         (32)     "Internal Revenue Code" has the meaning provided in 15-30-2101.
         (33)     "Member" means either:
         (a)      a person with accumulated contributions and service credited with a defined benefit retirement
 plan or receiving a retirement benefit on account of the person's previous service credited in a retirement
 system; or