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AB-2722 Public retirement systems: supplemental member contributions program.(1993-1994)



Current Version: 09/16/94 - Chaptered

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AB2722:v93#DOCUMENT

Assembly Bill No. 2722
CHAPTER 576

An act to amend Section 9357.3 of, to add Article 9 (commencing with Section 9380) to Chapter 3.5 of Division 2 of Title 2 of, to add Chapter 5.5 (commencing with Section 20700) to Part 3 of Division 5 of Title 2 of, and to repeal Sections 20633, 20634, and 20635 of, the Government Code, relating to public retirement systems, and declaring the urgency thereof, to take effect immediately.

[ Filed with Secretary of State  September 16, 1994. Approved by Governor  September 15, 1994. ]

LEGISLATIVE COUNSEL'S DIGEST


AB 2722, Cannella. Public retirement systems: supplemental member contributions program.
The Public Employees’ Retirement Law closed the additional member contributions program to new participants from July 1, 1983, to January 1, 1994.
The bill would authorize members of the Legislators’ Retirement System and the Public Employees’ Retirement System to participate in newly created supplemental contributions programs. The bill would declare that it is to take effect immediately as an urgency statute.

The people of the State of California do enact as follows:


SECTION 1.

 Section 9357.3 of the Government Code is amended to read:

9357.3.
 If the membership of a member is terminated, except by death or retirement pursuant to this chapter, he or she shall be paid forthwith all of his or her accumulated contributions and accumulated supplemental contributions.

SEC. 2.

 Article 9 (commencing with Section 9380) is added to Chapter 3.5 of Division 2 of Title 2 of the Government Code, to read:
Article  9. Supplemental Contributions Program

9380.
 There is a member supplemental contributions program established within this system which is intended to be a defined contribution plan within the meaning of Section 414(i) of the Internal Revenue Code. The program shall operate solely at the option and expense of the members who elect to participate and shall in no way obligate the state for lifetime annuity payments to participating members or their beneficiaries. Any distribution arising from participation in the program shall be funded only by accumulated supplemental contributions.

9381.
 (a)  A member on whose behalf the state is obligated to pay contributions may elect, in a manner prescribed by the board, to participate in the program. A participating member may make supplemental contributions to the program, in excess of his or her contributions required under Article 5 (commencing with Section 9357), for the purpose of supplementing retirement benefits under this system. The supplemental contributions shall be made solely at the option and expense of the member and shall be attributable only to a defined contribution plan and not a defined benefit plan. The maximum amount of a member’s supplemental contributions shall be based on the member’s annual compensation, as defined in Section 414(s) of the Internal Revenue Code, and shall be subject to the limitations imposed by Sections 401(a)(17), 401(m), and 415 of the Internal Revenue Code, and any other applicable federal tax code requirements for maintaining the qualified plan status of this system. The cost of administering this article shall be paid solely by member accumulated supplemental contributions. The state shall not make any employer contributions or member supplemental contributions on behalf of a participating member.
(b)  For purposes of this article “supplemental contributions” shall mean contributions made by members in addition to their contributions required under Article 5 (commencing with Section 9357) and “accumulated supplemental contributions” shall mean the sum of all supplemental contributions standing to the credit of a member’s individual account and any earnings thereon, less administrative costs.
(c)  The board shall determine when this article shall be applicable to members.

9382.
 Accumulated supplemental contributions shall not be distributed to a participating member or his or her beneficiary, either by lump-sum or periodic payment, until the member has separated from membership in this system or has retired.

9383.
 A member may at any time, in writing, authorize the board to apply any or all accumulated supplemental contributions as payment of any contributions required of the member or payable at the member’s option pursuant to any provision of this chapter, except the contributions required in Article 5 (commencing with Section 9357). Any distribution made pursuant to this section shall comply with applicable Internal Revenue Service rules and regulations.

9384.
 Notwithstanding the rate of interest payable on member contributions pursuant to any other provision of this part, the board, after deducting the costs of administering this article, shall credit the accumulated supplemental contributions of a member with interest at the net earnings rate compounded at each June 30.

9385.
 (a)  Upon application for retirement, a member who makes supplemental contributions pursuant to this article may elect the distribution of his or her accumulated supplemental contributions in a lump sum, or in a periodic manner approved by the board. Any distribution made shall be in compliance with minimum distribution rules under Section 401(a)(9) of the Internal Revenue Code. The board shall furnish information concerning its approved manner of distribution.
(b)  The distribution of accumulated supplemental contributions to a participating member or his or her beneficiary shall be in a manner approved by the board and subject to the limitations imposed by Sections 401(a)(9) and 401(a)(31) of the Internal Revenue Code and any other applicable federal tax code requirements for maintaining the qualified plan status of this system.

SEC. 3.

 Section 20633 of the Government Code is repealed.

SEC. 4.

 Section 20634 of the Government Code is repealed.

SEC. 5.

 Section 20635 of the Government Code is repealed.

SEC. 6.

 Chapter 5.5 (commencing with Section 20700) is added to Part 3 of Division 5 of Title 2 of the Government Code, to read:
CHAPTER  5.5. Supplemental Contributions Program

20700.
 (a)  There is a member supplemental contributions program established within this system which is intended to be a defined contribution plan within the meaning of Section 414(i) of the Internal Revenue Code. The program shall operate solely at the option and expense of the members who elect to participate and shall in no way obligate employers for lifetime annuity payments to participating employees or their beneficiaries. Any distribution arising from participation in this program shall be funded only by accumulated supplemental contributions.
(b)  This chapter does not establish a new program, but rather recodifies, further defines, and retitles the additional contributions program established by Chapter 1321 of the Statutes of 1992 and Chapter 174 of the Statutes of 1993, to ensure full compliance with applicable Internal Revenue Service rules and regulations.

20701.
 (a)  Any member in the employ of the state, the university, a school employer, or a contracting agency may elect, in a manner prescribed by the board, to participate in the program. A participating member may make supplemental contributions to the program, in excess of normal contributions, for the purpose of supplementing retirement benefits under this system. The supplemental contributions shall be made solely at the option and expense of the member and shall be attributable only to a defined contribution plan and not a defined benefit plan. The maximum amount of a member’s supplemental contributions shall be based on the member’s annual compensation, as defined in Section 414(s) of the Internal Revenue Code, and shall be subject to the limitations imposed by Sections 401(a)(17), 401(m), and 415 of the Internal Revenue Code and any other applicable federal tax code requirements for maintaining the qualified plan status of this system. The cost of administering this chapter shall be paid solely by member accumulated supplemental contributions. The employer shall not make any employer contributions or member supplemental contributions on behalf of a participating member.
(b)  For purposes of this chapter, “supplemental contributions” shall mean contributions made by members in addition to their normal contributions and “accumulated supplemental contributions” shall mean the sum of all supplemental contributions standing to the credit of a member’s individual account and any earnings thereon, less administrative costs.
(c)  The board shall determine when this chapter shall be applicable to school members and local members.

20702.
 Accumulated supplemental contributions shall not be distributed to a participating member or his or her beneficiary, either by lump-sum or periodic payment, until the member has separated from membership in this system or has retired.

20703.
 Notwithstanding any other provision of this part, a member may at any time, in writing, authorize the board to apply any or all accumulated supplemental contributions as payment of any contributions required of the member or payable at the member’s option pursuant to any provision of this part, except the normal monthly contributions required in Article 1 (commencing with Section 20600) of Chapter 5. Any distribution made pursuant to this section shall comply with applicable Internal Revenue Service rules and regulations.

20704.
 Notwithstanding the rate of interest payable on member contributions pursuant to any other provision of this part, the board, after deducting the costs of administering this chapter, shall credit the accumulated supplemental contributions of a member with interest at the net earnings rate compounded at each June 30.

20705.
 (a)  Upon application for retirement, a member who makes supplemental contributions pursuant to this chapter may elect the distribution of his or her accumulated supplemental contributions in a lump sum, or in a periodic manner approved by the board. Any distribution made shall be in compliance with minimum distribution rules under Section 401(a)(9) of the Internal Revenue Code. The board shall furnish information concerning its approved manner of distribution.
(b)  The distribution of accumulated supplemental contributions to a participating member, or his or her beneficiary, shall be in a manner approved by the board and subject to the limitations imposed by Sections 401(a)(9) and 401(a)(31) of the Internal Revenue Code and any other applicable federal tax code requirements for maintaining the qualified plan status of this system.

SEC. 7.

 This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are:
In order to permit members to participate in newly created supplemental contributions programs in 1994, it is necessary that this act take effect immediately.