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AB-3064 State Teachers’ Retirement System: benefits.(1993-1994)



Current Version: 07/21/94 - Chaptered

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AB3064:v94#DOCUMENT

Assembly Bill No. 3064
CHAPTER 291

An act to add Chapter 36 (commencing with Section 24950) to Part 13 of, and to repeal Sections 22331, 22332, 22333, and 22957 of, the Education Code, relating to teachers’ retirement.

[ Filed with Secretary of State  July 21, 1994. Approved by Governor  July 20, 1994. ]

LEGISLATIVE COUNSEL'S DIGEST


AB 3064, Morrow. State Teachers’ Retirement System: benefits.
The existing State Teachers’ Retirement Law authorizes the system to offer a tax-sheltered annuity plan operated either directly or through one or more 3rd-party carriers, and prohibits the system from utilizing its member mailing list for transmitting information dedicated solely to advertising or marketing the program.
This bill would delete those provisions and, instead, require the system to offer an annuity contract and custodial account for not less than 5 years, authorize the contract and account to be administered by a qualified 3rd-party administrator, and require the board to determine the investment options.

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


SECTION 1.

 Section 22331 of the Education Code is repealed.

SEC. 2.

 Section 22332 of the Education Code is repealed.

SEC. 3.

 Section 22333 of the Education Code is repealed.

SEC. 4.

 Section 22957 of the Education Code is repealed.

SEC. 5.

 Chapter 36 (commencing with Section 24950) is added to Part 13 of the Education Code, to read:
CHAPTER  36. Annuity Contract and Custodial Accounts

24950.
 An annuity contract and custodial account as described in Section 403(b) of the Internal Revenue Code of 1986 shall be offered to all employees of any state agency who are members of the system or any employee of a local public agency or political subdivision of this state that employs persons in positions requiring or allowing membership in the system. The following criteria shall apply to that annuity contract and custodial account:
(a)  The annuity contract and custodial account shall be offered for not less than five years.
(b)  The annuity contract and custodial account may be administered by a qualified third-party administrator that shall, under agreement with the system, provide custodial, investment, recordkeeping, or administrative services, or any combination thereof. The third-party administrator shall not provide investment options.
(c)  The investment options offered shall be determined by the board consistent with those annuity contract and custodial accounts described in Section 403(b) of the Internal Revenue Code of 1986.
(d)  The system’s investment staff shall make recommendations to the board as to the appropriate investment options. At a minimum, the board shall offer at least three investment options. The board shall have sole responsibility for the selection of service providers.
(e)  All contributions made by participants shall be remitted directly to the administrator and held by the administrator under custody. Any investment gains or losses shall be credited to participant accounts. The forms of payment and disbursement procedure shall be consistent with those generally offered by similar annuity contracts and custodial accounts and applicable federal and state statutes governing those contracts and accounts.
(f)  Any employer, other than the state, may elect to make contributions to the employee’s annuity contract and custodial account on behalf of the employee. The employer shall take whatever action is necessary to implement this section, including the adoption of an annuity contract and custodial account, or provide the appropriate authorization in accordance with the provision of Section 403(b) of the Internal Revenue Code of 1986. Contributions made by an employer under this section are excluded from the definition of “compensation” and “salary” as provided in Section 22114.
(g)  The design and administration of the annuity contract and custodial account shall comply with the applicable provisions of the Internal Revenue Code of 1986 and the Revenue and Taxation Code. Section 770.3 of the Insurance Code shall not be applicable.

24951.
 If the rate of participation in the annuity contract and custodial account is less than 2 percent of the system’s active membership upon the completion of the initial five years of administration, the board may elect to terminate the offering of the annuity contract and custodial account as described in Section 403(b) of the Internal Revenue Code of 1986. The board shall provide two years’ notice to the annuity contract and custodial account participants of its intention to terminate.

24952.
 (a)  Any annuity contract and custodial account advertised, promoted, or offered through one or more third-party service providers, shall provide for recovery of all costs and expenses of its own administration, including, but not limited to, advertising, promotion, legal, accounting, recordkeeping, and investment costs and expenses.
(b)  Any annuity contract and custodial account administered by the system shall provide for the recovery of all costs and expenses of its administration.
(c)  The system may promote and advertise an annuity contract and custodial account administered directly by the system or by a third-party administrator.