1 STATE OF OKLAHOMA
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2 1st Session of the 59th Legislature (2023)
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3 SENATE BILL 630 By: Montgomery
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6 AS INTRODUCED
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7 An Act relating to state retirement systems; amending
7 11 O.S. 2021, Sections 49-106, 49-106.1, as amended
8 by Section 5, Chapter 232, O.S.L. 2022, 49-106.5, 49-
8 109, 50-114, as amended by Section 1, Chapter 228,
9 O.S.L. 2022, 50-114.4, and 50-115, as amended by
9 Section 3, Chapter 306, O.S.L. 2022, (11 O.S. Supp.
10 2022, Section 49-106.1, 50-114, and 50-115), which
10 relate to the Oklahoma Firefighters Pension and
11 Retirement System and the Oklahoma Police Pension and
11 Retirement System; updating statutory compliance with
12 federal regulations; conforming language; amending 47
12 O.S. 2021, Sections 2-300, 2-305, as amended by
13 Section 2, Chapter 255, O.S.L. 2022, and 2-305.1C (47
13 O.S. Supp. 2022, Section 2-305), which relate to the
14 Oklahoma Law Enforcement Retirement System; updating
14 statutory compliance with federal regulations;
15 conforming language; and declaring an emergency.
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18 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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19 SECTION 1. AMENDATORY 11 O.S. 2021, Section 49-106, is
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20 amended to read as follows:
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21 Section 49-106. A. Any firefighter who reaches the
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22 firefighter's normal retirement date shall be entitled, upon written
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23 request, to retire from such service and be paid from the System a
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24 monthly pension equal to the member's accrued retirement benefit;
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 1 provided, that the pension shall cease during any period of time the
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2 member may thereafter serve for compensation in any municipal fire
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3 department in the state. If such a member is reemployed by a
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4 participating municipality in a position which is not covered by the
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5 System, retirement shall also include receipt by such member of in-
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6 service distributions from the System.
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7 B. With respect to distributions under the System made for
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8 calendar years beginning on or after January 1, 2005, the System
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9 shall apply the minimum distribution incidental benefit
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10 requirements, incidental benefit requirements, and minimum
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11 distribution requirements of Section 401(a)(9) of the Internal
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12 Revenue Code of 1986, as amended, in accordance with the final
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13 regulations under Section 401(a)(9) of the Internal Revenue Code of
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14 1986, as amended, including Treasury Regulations Sections
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15 1.401(a)(9)-1 through 1.401(a)(9)-9; provided, however, that for
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16 distributions required to be made after December 31, 2019, for
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17 individuals who attain seventy and one-half (70 1/2) years of age
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18 after December 31, 2019, but before January 1, 2023, such
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19 distributions shall take into account that age 70 1/2 was stricken
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20 and age 72 was inserted in Section 401(a)(9)(B)(iv)(I), Section
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21 401(a)(9)(C)(i)(I) and Section 401(a)(9)(C)(ii)(I) of the Internal
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22 Revenue Code of 1986, as amended, and, provided further, that for
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23 individuals who attain seventy-two (72) years of age after December
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24 31, 2022, such distributions shall take into account that "age 72"
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 1 was stricken and "the applicable age", as defined in Section
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2 401(a)(9)(v) of the Internal Revenue Code of 1986, as amended, was
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3 inserted in Section 401(a)(9)(B)(iv)(I), Section 401(a)(9)(C)(i)(I)
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4 and Section 401(a)(9)(C)(ii)(I) of the Internal Revenue Code of
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5 1986, as amended, in all cases notwithstanding any provision of the
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6 System to the contrary. With respect to distributions under the
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7 System made for calendar years beginning on or after January 1,
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8 2001, through December 31, 2004, the System shall apply the minimum
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9 distribution requirements and incidental benefit requirements of
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10 Section 401(a)(9) of the Internal Revenue Code of 1986, as amended,
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11 in accordance with the regulations under Section 401(a)(9) of the
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12 Internal Revenue Code of 1986, as amended, which were proposed in
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13 January 2001, notwithstanding any provision of the System to the
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14 contrary. Effective July 1, 1989, notwithstanding any other
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15 provision contained herein to the contrary, in no event shall
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16 commencement of distribution of the accrued retirement benefit of a
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17 member be delayed beyond April 1 of the calendar year following the
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18 later of:
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19 1. The calendar year in which the member reaches seventy and
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20 one-half (70 1/2) years of age for a member who attains age seventy
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21 and one-half (70 1/2) before January 1, 2020, or effective for
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22 distributions required to be made after December 31, 2019, but
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23 before January 1, 2023, the calendar year in which the member
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24 reaches seventy-two (72) years of age for an individual who attains
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 1 age seventy and one-half (70 1/2) after December 31, 2019, or
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2 effective for distributions required to be made after December 31,
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3 2022, the calendar year in which the member reaches seventy-three
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4 (73) years of age for an individual who attains age seventy-two (72)
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5 after December 31, 2022, or "the applicable age", as defined in
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6 Section 401(a)(9)(v) of the Internal Revenue Code of 1986, as
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7 amended, if later; or
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8 2. The actual retirement date of the member.
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9 Effective September 8, 2009, notwithstanding anything to the
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10 contrary of the System, the System, which is a governmental plan
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11 (within the meaning of Section 414(d) of the Internal Revenue Code
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12 of 1986, as amended) is treated as having complied with Section
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13 401(a)(9) of the Internal Revenue Code of 1986, as amended, for all
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14 years to which Section 401(a)(9) of the Internal Revenue Code of
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15 1986, as amended, applies to the System if the System complies with
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16 a reasonable and good-faith interpretation of Section 401(a)(9) of
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17 the Internal Revenue Code of 1986, as amended.
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18 C. Any member or beneficiary eligible to receive a monthly
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19 benefit from the System may make an election to waive all or a
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20 portion of monthly benefits.
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21 D. If the requirements of Section 49-106.5 of this title are
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22 satisfied, a member who, by reason of attainment of normal
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23 retirement date or age, is separated from service as a public safety
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24 officer with the member's participating municipality, may elect to
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 1 have payment made directly to the provider for qualified health
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2 insurance premiums by deduction from his or her monthly pension
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3 payment, after December 31, 2006, in accordance with Section 402(1)
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4 of the Internal Revenue Code of 1986, as amended. For distributions
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5 made after December 29, 2022, the election provided for under
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6 Section 402(l) of the Internal Revenue Code of 1986, as amended, may
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7 be made whether payment of the premiums is made directly to the
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8 provider of the accident or health plan or qualified long-term care
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9 insurance contract by deduction from a distribution from the System
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10 or is made to the member.
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11 SECTION 2. AMENDATORY 11 O.S. 2021, Section 49-106.1, as
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12 amended by Section 5, Chapter 232, O.S.L. 2022 (11 O.S. Supp. 2022,
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13 Section 49-106.1), is amended to read as follows:
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14 Section 49-106.1. A. In lieu of terminating employment and
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15 accepting a service retirement pension pursuant to Sections 49-101
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16 and 49-106 of this title, any member of the Oklahoma Firefighters
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17 Pension and Retirement System serving as an active firefighter in a
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18 fire department of a participating municipality who has not less
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19 than twenty (20) years of creditable service may elect to
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20 participate in the Oklahoma Firefighters Deferred Option Plan and
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21 defer the receipts of benefits in accordance with the provisions of
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22 this section.
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23 B. For purposes of this section, creditable service shall
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24 include service credit reciprocally recognized pursuant to Sections
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 1 49-100.1 through 49-100.8 and Sections 49-101, 49-101.1 and 49-101.2
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2 of this title but for eligibility purposes only.
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3 C. The duration of participation in the Oklahoma Firefighters
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4 Deferred Option Plan for active firefighters shall not exceed five
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5 (5) years. Participation in the Oklahoma Firefighters Deferred
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6 Option Plan must begin the first day of a month and end on the last
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7 day of a month. At the conclusion of a member's participation in
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8 the Oklahoma Firefighters Deferred Option Plan, the member shall
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9 terminate employment with all participating municipalities as a
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10 firefighter, and shall start receiving the member's accrued monthly
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11 retirement benefit from the System. Such a member may be reemployed
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12 by a participating municipality but only in a position not covered
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13 under the System, and receive in-service distributions of such
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14 member's accrued monthly retirement benefit from the System.
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15 D. When a member begins participation in the Oklahoma
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16 Firefighters Deferred Option Plan, the contribution of the member
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17 shall cease. The employer contributions shall continue to be paid
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18 in accordance with subsection B of Section 49-122 of this title.
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19 Employer contributions for members who elect the Oklahoma
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20 Firefighters Deferred Option Plan shall be credited equally to the
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21 Oklahoma Firefighters Pension and Retirement System and to the
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22 member's Oklahoma Firefighters Deferred Option Plan account. The
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23 monthly retirement benefits that would have been payable had the
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24 member elected to cease employment and receive a service retirement
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 1 shall be paid into the member's Oklahoma Firefighters Deferred
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2 Option Plan account.
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3 E. 1. A member who participates in this plan shall be eligible
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4 to receive cost-of-living increases.
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5 2. A member who participates in this plan shall earn interest
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6 at a rate of two percentage points below the rate of return of the
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7 investment portfolio of the System, but no less than the actuarial
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8 assumed interest rate as certified by the actuary in the yearly
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9 evaluation report of the actuary. The interest shall be credited to
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10 the individual account balance of the member on an annual basis.
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11 3. Effective November 1, 2013, the Oklahoma Firefighters
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12 Deferred Option Plan account for a member whose first service with a
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13 participating municipality of the System occurs on or after November
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14 1, 2013, and who participates for the first time in the Oklahoma
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15 Firefighters Deferred Option Plan on or after November 1, 2013, and
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16 has completed active participation in the Oklahoma Firefighters
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17 Deferred Option Plan, shall earn interest at a rate equal to the
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18 actual rate of return of the investment portfolio of the System,
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19 less one (1) percentage point to offset administrative costs of the
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20 System as determined by the System.
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21 F. A member in the plan shall receive, at the option of the
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22 member, a lump-sum payment from the account equal to the payments to
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23 the account or an annuity based upon the account of the member or
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24 may elect any other method of payment if approved by the Board of
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 1 Trustees. If a member becomes so physically or mentally disabled
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2 while in, or in consequence of, the performance of his or her duty
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3 as to prevent the effective performance of his or her duties that
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4 the State Board approves an in-line-of-duty disability pension, the
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5 payment from the account shall be an in-line-of-duty disability
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6 payment. Notwithstanding any other provision contained herein to
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7 the contrary, commencement of distributions under the Oklahoma
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8 Firefighters Deferred Option Plan shall be no later than the time as
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9 set forth in subsection B of Section 49-106 of this title and a
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10 member whose first service with a participating municipality of the
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11 System occurs on or after November 1, 2013, and who participates for
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12 the first time in the Oklahoma Firefighters Deferred Option Plan on
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13 or after November 1, 2013, must receive a distribution of the entire
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14 remaining balance in the member's Oklahoma Firefighters Deferred
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15 Option Plan account no later than April 1 of the calendar year
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16 following the later of:
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17 1. The calendar year in which the member reaches seventy and
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18 one-half (70 1/2) years of age for a member who attains age seventy
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19 and one-half (70 1/2) before January 1, 2020, or effective for
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20 distributions required to be made after December 31, 2019, but
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21 before January 1, 2023, the calendar year in which the member
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22 reaches seventy-two (72) years of age for an individual who attains
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23 age seventy and one-half (70 1/2) after December 31, 2019; or
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 1 2. The actual retirement date of the member, or effective for
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2 distributions required to be made after December 31, 2022, the
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3 calendar year in which the member reaches seventy-three (73) years
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4 of age for an individual who attains age seventy-two (72) after
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5 December 31, 2022, or "the applicable age", as defined in Section
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6 401(a)(9)(v) of the Internal Revenue Code of 1986, as amended, if
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7 later.
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8 G. If a member dies while maintaining an account balance in the
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9 plan the System shall pay to the designated recipient or recipients
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10 of the member, or if there is no designated recipient or if the
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11 designated recipient predeceases the member, to the spouse of the
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12 member, or if there is no spouse or if the spouse predeceases the
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13 member, to the estate of the member a lump-sum payment equal to the
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14 account balance of the member. If such member was receiving, or
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15 eligible to receive, an in-line-of-duty disability pension at the
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16 time of his or her death, payment of the account balance shall be an
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17 in-line-of-duty disability payment. If a designated recipient is
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18 the surviving spouse of the member, the surviving spouse shall
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19 receive his or her portion of the account balance of the member
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20 pursuant to subsection F of this section. The surviving spouse,
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21 whether or not he or she is a designated recipient of the member,
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22 may elect to receive his or her portion of the account balance of
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23 the member in the same manner as was applicable to the member.
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 1 H. In lieu of participating in the Oklahoma Firefighters
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2 Deferred Option Plan pursuant to subsections A, B, C, D, E and F of
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3 this section, a member may elect to participate in the Oklahoma
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4 Firefighters Deferred Option Plan pursuant to this subsection as
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5 follows:
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6 1. For purposes of this subsection and subsection I of this
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7 section, the following definitions shall apply:
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8 a. "back drop date" means the member's normal retirement
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9 date or the date five (5) years before the member
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10 elects to participate in the Oklahoma Firefighters
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11 Deferred Option Plan, whichever date is later,
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12 b. "termination date" means the date the member elects to
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13 participate in the Oklahoma Firefighters Deferred
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14 Option Plan pursuant to this subsection, and the date
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15 the member terminates employment with all
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16 participating municipalities as an active firefighter,
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17 c. "earlier attained credited service" means the cre