LB35 LB35
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LEGISLATURE OF NEBRASKA
ONE HUNDRED SIXTH LEGISLATURE
FIRST SESSION
LEGISLATIVE BILL 35
Introduced by Kolterman, 24.
Read first time January 10, 2019
Committee: Nebraska Retirement Systems
1 A BILL FOR AN ACT relating to retirement; to amend sections 23-2320 and
2 84-1322, Reissue Revised Statutes of Nebraska, and sections 23-2306
3 and 84-1307, Revised Statutes Cumulative Supplement, 2018; to change
4 provisions relating to reemployment, reinstatement, repayment, and
5 age eligibility regarding certain retirement system members under
6 the County Employees Retirement Act and State Employees Retirement
7 Act; to provide an operative date; and to repeal the original
8 sections.
9 Be it enacted by the people of the State of Nebraska,
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1 Section 1. Section 23-2306, Revised Statutes Cumulative Supplement,
2 2018, is amended to read:
3 23-2306 (1) The membership of the retirement system shall be
4 composed of all persons who are or were employed by member counties and
5 who maintain an account balance with the retirement system.
6 (2) The following employees of member counties are authorized to
7 participate in the retirement system: (a) All permanent full-time
8 employees who have attained the age of eighteen years shall begin
9 participation in the retirement system upon employment and full-time
10 elected officials shall begin participation in the retirement system upon
11 taking office, (b) all permanent part-time employees who have attained
12 the age of eighteen years may exercise the option to begin participation
13 in the retirement system within the first thirty days of employment, and
14 (c) all part-time elected officials may exercise the option to begin
15 participation in the retirement system within thirty days after taking
16 office. An employee who exercises the option to begin participation in
17 the retirement system shall remain in the system until termination or
18 retirement, regardless of any change of status as a permanent or
19 temporary employee.
20 (3) On and after July 1, 2010, no employee of a member county shall
21 be authorized to participate in the retirement system provided for in the
22 County Employees Retirement Act unless the employee (a) is a United
23 States citizen or (b) is a qualified alien under the federal Immigration
24 and Nationality Act, 8 U.S.C. 1101 et seq., as such act existed on
25 January 1, 2009, and is lawfully present in the United States.
26 (4)(a) The board may determine that a governmental entity currently
27 participating in the retirement system no longer qualifies, in whole or
28 in part, under section 414(d) of the Internal Revenue Code as a
29 participating employer in a governmental plan.
30 (b)(i) To aid governmental entities in their business decisionmaking
31 process, any governmental entity currently participating in the
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1 retirement system contemplating a business transaction that may result in
2 such entity no longer qualifying, in whole or in part, under section
3 414(d) of the Internal Revenue Code may notify the board in writing as
4 soon as reasonably practicable, but no later than one hundred eighty days
5 before the transaction is to occur.
6 (ii) The board when timely notified shall, as soon as is reasonably
7 practicable, obtain from its contracted actuary the cost of any actuarial
8 study necessary to determine the potential funding obligation. The board
9 shall notify the entity of such cost.
10 (iii) If such entity pays the board's contracted actuary pursuant to
11 subdivision (4)(c)(vi) of this section for any actuarial study necessary
12 to determine the potential funding obligation, the board shall, as soon
13 as reasonably practicable following its receipt of the actuarial study,
14 (A) determine whether the entity's contemplated business transaction will
15 cause the entity to no longer qualify under section 414(d) of the
16 Internal Revenue Code, (B) determine whether the contemplated business
17 transaction constitutes a plan termination by the entity, (C) determine
18 the potential funding obligation, (D) determine the administrative costs
19 that will be incurred by the board or the Nebraska Public Employees
20 Retirement Systems in connection with the entity's removal from the
21 retirement system, and (E) notify the entity of such determinations.
22 (iv) Failure to timely notify the board pursuant to subdivision (4)
23 (b)(i) of this section may result in the entity being treated as though
24 the board made a decision pursuant to subdivision (4)(a) of this section.
25 (c) If the board makes a determination pursuant to subdivision (4)
26 (a) of this section, or if the entity engages in the contemplated
27 business transaction reviewed under subdivision (4)(b) of this section
28 that results in the entity no longer qualifying under section 414(d) of
29 the Internal Revenue Code:
30 (i) The board shall notify the entity that it no longer qualifies
31 under section 414(d) of the Internal Revenue Code within ten business
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1 days after the determination;
2 (ii) The affected plan members shall be immediately considered fully
3 vested;
4 (iii) The affected plan members shall become inactive within ninety
5 days after the board's determination;
6 (iv) The entity shall pay to the County Employees Retirement Fund an
7 amount equal to any funding obligation;
8 (v) The entity shall pay to the County Employees Cash Balance
9 Retirement Expense Fund an amount equal to any administrative costs
10 incurred by the board or the Nebraska Public Employees Retirement Systems
11 in connection with the entity's removal from the retirement system; and
12 (vi) The entity shall pay directly to the board's contracted actuary
13 an amount equal to the cost of any actuarial study necessary to aid the
14 board in determining the amount of such funding obligation, if not
15 previously paid.
16 (d) For purposes of this subsection:
17 (i) Business transaction means a merger; consolidation; sale of
18 assets, equipment, or facilities; termination of a division, department,
19 section, or subgroup of the entity; or any other business transaction
20 that results in termination of some or all of the entity's workforce; and
21 (ii) Funding obligation means the financial liability of the
22 retirement system to provide benefits for the affected plan members
23 incurred by the retirement system due to the entity's business
24 transaction calculated using the methodology and assumptions recommended
25 by the board's contracted actuary and approved by the board. The
26 methodology and assumptions used must be structured in a way that ensures
27 the entity is financially liable for all the costs of the entity's
28 business transaction, and the retirement system is not financially liable
29 for any of the cost of the entity's business transaction.
30 (e) The board may adopt and promulgate rules and regulations to
31 carry out this subsection including, but not limited to, the methods of
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1 notifying the board of pending business transactions, the acceptable
2 methods of payment, and the timing of such payment.
3 (5) Within the first one hundred eighty days of employment, a full-
4 time employee may apply to the board for vesting credit for years of
5 participation in another Nebraska governmental plan, as defined by
6 section 414(d) of the Internal Revenue Code. During the years of
7 participation in the other Nebraska governmental plan, the employee must
8 have been a full-time employee, as defined in the Nebraska governmental
9 plan in which the credit was earned. The board may adopt and promulgate
10 rules and regulations governing the assessment and granting of vesting
11 credit.
12 (6) Any employee who qualifies for membership in the retirement
13 system pursuant to this section may not be disqualified from membership
14 in the retirement system solely because such employee also maintains
15 separate employment which qualifies the employee for membership in
16 another public retirement system, nor may membership in this retirement
17 system disqualify such an employee from membership in another public
18 retirement system solely by reason of separate employment which qualifies
19 such employee for membership in this retirement system.
20 (7) A full-time or part-time employee of a city, village, or
21 township who becomes a county employee pursuant to a merger of services
22 shall receive vesting credit for his or her years of participation in a
23 Nebraska governmental plan, as defined by section 414(d) of the Internal
24 Revenue Code, of the city, village, or township.
25 (8) A full-time or part-time employee of a city, village, fire
26 protection district, or township who becomes a municipal county employee
27 shall receive credit for his or her years of employment with the city,
28 village, fire protection district, or township for purposes of the
29 vesting provisions of this section.
30 (9) A full-time or part-time employee of the state who becomes a
31 county employee pursuant to transfer of assessment function to a county
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1 shall not be deemed to have experienced a termination of employment and
2 shall receive vesting credit for his or her years of participation in the
3 State Employees Retirement System of the State of Nebraska.
4 (10) Counties shall ensure that employees authorized to participate
5 in the retirement system pursuant to this section shall enroll and make
6 required contributions to the retirement system immediately upon becoming
7 an employee. Information necessary to determine membership in the
8 retirement system shall be provided by the employer.
9 Sec. 2. Section 23-2320, Reissue Revised Statutes of Nebraska, is
10 amended to read:
11 23-2320 (1) Prior to January 1, 2020, except Except as otherwise
12 provided in this section, a member of the retirement system who has a
13 five-year break in service shall upon reemployment be considered a new
14 employee with respect to the County Employees Retirement Act and shall
15 not receive credit for service prior to his or her reemployment date.
16 (2)(a) A member who ceases to be an employee before becoming
17 eligible for retirement under section 23-2315 and again becomes a
18 permanent full-time or permanent part-time county employee prior to
19 having a five-year break in service shall immediately be reenrolled in
20 the retirement system and resume making contributions. For purposes of
21 vesting employer contributions made prior to and after the reentry into
22 the retirement system under subsection (3) of section 23-2319, years of
23 participation include years of participation prior to such employee's
24 original termination. For a member who is not vested and has received a
25 termination benefit pursuant to section 23-2319, the years of
26 participation prior to such employee's original termination shall be
27 limited in a ratio equal to the amount that the member repays divided by
28 the termination benefit withdrawn pursuant to section 23-2319.
29 (b) The reemployed member may repay the value of, or a portion of
30 the value of, the termination benefit withdrawn pursuant to section
31 23-2319. A reemployed member who elects to repay all or a portion of the
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1 value of the termination benefit withdrawn pursuant to section 23-2319
2 shall repay the actual earnings on such value. Repayment of the
3 termination benefit shall commence within three years of reemployment and
4 shall be completed within five years of reemployment or prior to
5 termination of employment, whichever occurs first, through (i) direct
6 payments to the retirement system, (ii) installment payments made
7 pursuant to a binding irrevocable payroll deduction authorization made by
8 the member, (iii) an eligible rollover distribution as provided under the
9 Internal Revenue Code, or (iv) a direct rollover distribution made in
10 accordance with section 401(a)(31) of the Internal Revenue Code.
11 (c) The value of the member's forfeited employer account or employer
12 cash balance account, as of the date of forfeiture, shall be restored in
13 a ratio equal to the amount of the benefit that the member has repaid
14 divided by the termination benefit received. The employer account or
15 employer cash balance account shall be restored first out of the current
16 forfeiture amounts and then by additional employer contributions.
17 (3) For a member who retired pursuant to section 23-2315 and becomes
18 a permanent full-time employee or permanent part-time employee with a
19 county under the County Employees Retirement Act more than one hundred
20 twenty days after his or her retirement date, the member shall continue
21 receiving retirement benefits. Such a retired member or a retired member
22 who received a lump-sum distribution of his or her benefit shall be
23 considered a new employee as of the date of reemployment and shall not
24 receive credit for any service prior to the member's retirement for
25 purposes of the act.
26 (4) A member who is reinstated as an employee pursuant to a
27 grievance or appeal of his or her termination by the county shall be a
28 member upon reemployment and shall not be considered to have a break in
29 service for such period of time that the grievance or appeal was pending.
30 Following reinstatement, the member shall repay the value of the amount
31 received from his or her employee account or member cash balance account
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1 under subdivision (2)(b) of section 23-2319.01.
2 (5) Beginning January 1, 2020, if a contributing member of the
3 retirement system ceases to be an employee and returns to service in any
4 capacity with any county under the County Employees Retirement Act prior
5 to having a one-hundred-twenty-day break in service, the member:
6 (a) Shall not be deemed to have had a bona fide separation of
7 service;
8 (b) Shall be immediately reenrolled in:
9 (i) The defined contribution benefit if the member was contributing
10 to the defined contribution benefit prior to ceasing employment; or
11 (ii) The cash balance benefit in which the member was participating
12 prior to ceasing employment if the member was contributing to the cash
13 balance benefit prior to ceasing employment;
14 (c) Shall immediately resume making contributions;
15 (d) Shall make up any missed contributions based upon services
16 rendered and compensation received;
17 (e) Shall have all distributions from the retirement system
18 canceled; and
19 (f) Shall repay the gross distributions from the retirement system.
20 (6)(a) Beginning January 1, 2020, if a contributing member of the
21 retirement system ceases to be an employee and returns to permanent full-
22 time or permanent part-time service in any capacity with any county under
23 the County Employees Retirement Act after having a one-hundred-twenty-day