Rep. Norm Thurston — Voting Record

Bill

Number

S.B. 11 (2015GS)

Sponsor

Sen. Weiler, T.

Final action

Governor Signed 3/30/2015

Outcome

Became law — signed by Gov. Gary R. Herbert

Summary

What it does

• This bill:
• clarifies that the maximum number of positions that a municipality, county, or political subdivision may exempt from participation with the Utah Retirement Systems applies to the total number of exempted positions for employees covered under both the Tier I and Tier II retirement systems;
• specifies additional positions covered under the Tier II retirement system that are eligible to file for an exemption from participation in the Utah Retirement Systems;
• amends the applicability of contribution vesting periods and the effect of system elections for individuals who elect to be exempt from participation in the Tier II Utah Retirement Systems;
• provides that a full-time elected official or legislator initially entering office on or after July 1, 2011, who has service credit accrued in a Tier I retirement system or a Tier II hybrid retirement system before July 1, 2011, shall continue in the Tier I or Tier II system for which the full-time elected official or legislator is eligible;
• provides that if an active member dies, employer nonelective contributions made on behalf of the employee to a defined contribution plan are exempt from the vesting requirements and vest to the member upon death; and
• makes technical corrections.

Every vote on this bill

Bill text

UTAH RETIREMENT SYSTEMS REVISIONS
GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Todd Weiler
House Sponsor: 
 Kraig Powell
LONG TITLE
Committee Note:
The Retirement and Independent Entities Interim Committee recommended this bill.
General Description:
This bill modifies the Utah State Retirement and Insurance Benefit Act by amending
provisions relating to the Utah Retirement Systems.
Highlighted Provisions:
This bill:
▸ clarifies that the maximum number of positions that a municipality, county, or
political subdivision may exempt from participation with the Utah Retirement
Systems applies to the total number of exempted positions for employees covered
under both the Tier I and Tier II retirement systems;
▸ specifies additional positions covered under the Tier II retirement system that are
eligible to file for an exemption from participation in the Utah Retirement Systems;
▸ amends the applicability of contribution vesting periods and the effect of system
elections for individuals who elect to be exempt from participation in the Tier II
Utah Retirement Systems;
▸ provides that a full-time elected official or legislator initially entering office on or
after July 1, 2011, who has service credit accrued in a Tier I retirement system or a
Tier II hybrid retirement system before July 1, 2011, shall continue in the Tier I or
Tier II system for which the full-time elected official or legislator is eligible;
▸ provides that if an active member dies, employer nonelective contributions made on
behalf of the employee to a defined contribution plan are exempt from the vesting
requirements and vest to the member upon death; and
▸ makes technical corrections.
Money Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
AMENDS:
49-12-203
, as last amended by Laws of Utah 2014, Chapters 15, 201, and 365
49-13-203
, as last amended by Laws of Utah 2014, Chapters 15 and 365
49-22-201
, as last amended by Laws of Utah 2014, Chapter 15
49-22-203
, as last amended by Laws of Utah 2014, Chapters 15 and 365
49-22-303
, as last amended by Laws of Utah 2011, Chapter 439
49-22-401
, as last amended by Laws of Utah 2013, Chapters 310 and 316
49-23-201
, as last amended by Laws of Utah 2014, Chapter 15
49-23-401
, as last amended by Laws of Utah 2013, Chapter 316
ENACTS:
49-22-205
, Utah Code Annotated 1953
49-22-503
, Utah Code Annotated 1953
49-23-203
, Utah Code Annotated 1953
49-23-504
, Utah Code Annotated 1953
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 
49-12-203
 is amended to read:
49-12-203.
Exclusions from membership in system.
(1) The following employees are not eligible for service credit in this system:
(a) subject to the requirements of Subsection (2), an employee whose employment
status is temporary in nature due to the nature or the type of work to be performed;
(b) except as provided under Subsection (3)(a), an employee of an institution of higher
education who participates in a retirement system with a public or private retirement system,
organization, or company designated by the State Board of Regents during any period in which
required contributions based on compensation have been paid on behalf of the employee by the
employer;
(c) an employee serving as an exchange employee from outside the state;
(d) an executive department head of the state, a member of the State Tax Commission,
the Public Service Commission, and a member of a full-time or part-time board or commission
who files a formal request for exemption;
(e) an employee of the Department of Workforce Services who is covered under
another retirement system allowed under Title 35A, Chapter 4, Employment Security Act;
(f) an employee who is employed on or after July 1, 2009, with an employer that has
elected, prior to July 1, 2009, to be excluded from participation in this system under Subsection
49-12-202
(2)(c);
(g) an employee who is employed on or after July 1, 2014, with an employer that has
elected, prior to July 1, 2014, to be excluded from participation in this system under Subsection
49-12-202
(2)(d); or
(h) an employee who is employed with a withdrawing entity that has elected, prior to
January 1, 2017, to exclude new employees from participation in this system under Subsection
49-11-623
(3).
(2) If an employee whose status is temporary in nature due to the nature of type of
work to be performed:
(a) is employed for a term that exceeds six months and the employee otherwise
qualifies for service credit in this system, the participating employer shall report and certify to
the office that the employee is a regular full-time employee effective the beginning of the
seventh month of employment; or
(b) was previously terminated prior to being eligible for service credit in this system
and is reemployed within three months of termination by the same participating employer, the
participating employer shall report and certify that the member is a regular full-time employee
when the total of the periods of employment equals six months and the employee otherwise
qualifies for service credits in this system.
(3) (a) Upon cessation of the participating employer contributions, an employee under
Subsection (1)(b) is eligible for service credit in this system.
(b) Notwithstanding the provisions of Subsection (1)(f), any eligibility for service
credit earned by an employee under this chapter before July 1, 2009 is not affected under
Subsection (1)(f).
(c) Notwithstanding the provisions of Subsection (1)(g), any eligibility for service
credit earned by an employee under this chapter before July 1, 2014, is not affected under
Subsection (1)(g).
(4) Upon filing a written request for exemption with the office, the following
employees shall be exempt from coverage under this system:
(a) a full-time student or the spouse of a full-time student and individuals employed in
a trainee relationship;
(b) an elected official;
(c) an executive department head of the state, a member of the State Tax Commission,
a member of the Public Service Commission, and a member of a full-time or part-time board or
commission;
(d) an employee of the Governor's Office of Management and Budget;
(e) an employee of the Governor's Office of Economic Development;
(f) an employee of the Commission on Criminal and Juvenile Justice;
(g) an employee of the Governor's Office;
(h) an employee of the State Auditor's Office;
(i) an employee of the State Treasurer's Office;
(j) any other member who is permitted to make an election under Section 
49-11-406
;
(k) a person appointed as a city manager or chief city administrator or another person
employed by a municipality, county, or other political subdivision, who is an at-will employee;
and
(l) an employee of an interlocal cooperative agency created under Title 11, Chapter 13,
Interlocal Cooperation Act, who is engaged in a specialized trade customarily provided through
membership in a labor organization that provides retirement benefits to its members.
(5) (a) Each participating employer shall prepare a list designating those positions
eligible for exemption under Subsection (4).
(b) An employee may not be exempted unless the employee is employed in an
exempted position designated by the participating employer.
(6) (a) In accordance with this section, 
Section 
49-13-203
, and Section 
49-22-205
,
 a
municipality, county, or political subdivision may not exempt 
a total of
 more than 50 positions
or a number equal to 10% of the employees of the municipality, county, or political
subdivision
,
 whichever is [
lesser
] 
less
.
(b) A municipality, county, or political subdivision may exempt at least one regular
full-time employee.
(7) Each participating employer shall:
(a) file employee exemptions annually with the office; and
(b) update the employee exemptions in the event of any change.
(8) The office may make rules to implement this section.
Section 2. Section 
49-13-203
 is amended to read:
49-13-203.
Exclusions from membership in system.
(1) The following employees are not eligible for service credit in this system:
(a) subject to the requirements of Subsection (2), an employee whose employment
status is temporary in nature due to the nature or the type of work to be performed;
(b) except as provided under Subsection (3)(a), an employee of an institution of higher
education who participates in a retirement system with a public or private retirement system,
organization, or company designated by the State Board of Regents during any period in which
required contributions based on compensation have been paid on behalf of the employee by the
employer;
(c) an employee serving as an exchange employee from outside the state;
(d) an executive department head of the state or a legislative director, senior executive
employed by the governor's office, a member of the State Tax Commission, a member of the
Public Service Commission, and a member of a full-time or part-time board or commission
who files a formal request for exemption;
(e) an employee of the Department of Workforce Services who is covered under
another retirement system allowed under Title 35A, Chapter 4, Employment Security Act;
(f) an employee who is employed with an employer that has elected to be excluded
from participation in this system under Subsection 
49-13-202
(5), effective on or after the date
of the employer's election under Subsection 
49-13-202
(5); or
(g) an employee who is employed with a withdrawing entity that has elected, prior to
January 1, 2017, to exclude new employees from participation in this system under Subsection
49-11-623
(3).
(2) If an employee whose status is temporary in nature due to the nature of type of
work to be performed:
(a) is employed for a term that exceeds six months and the employee otherwise
qualifies for service credit in this system, the participating employer shall report and certify to
the office that the employee is a regular full-time employee effective the beginning of the
seventh month of employment; or
(b) was previously terminated prior to being eligible for service credit in this system
and is reemployed within three months of termination by the same participating employer, the
participating employer shall report and certify that the member is a regular full-time employee
when the total of the periods of employment equals six months and the employee otherwise
qualifies for service credits in this system.
(3) (a) Upon cessation of the participating employer contributions, an employee under
Subsection (1)(b) is eligible for service credit in this system.
(b) Notwithstanding the provisions of Subsection (1)(f), any eligibility for service
credit earned by an employee under this chapter before the date of the election under
Subsection 
49-13-202
(5) is not affected under Subsection (1)(f).
(4) Upon filing a written request for exemption with the office, the following
employees shall be exempt from coverage under this system:
(a) a full-time student or the spouse of a full-time student and individuals employed in
a trainee relationship;
(b) an elected official;
(c) an executive department head of the state, a member of the State Tax Commission,
a member of the Public Service Commission, and a member of a full-time or part-time board or
commission;
(d) an employee of the Governor's Office of Management and Budget;
(e) an employee of the Governor's Office of Economic Development;
(f) an employee of the Commission on Criminal and Juvenile Justice;
(g) an employee of the Governor's Office;
(h) an employee of the State Auditor's Office;
(i) an employee of the State Treasurer's Office;
(j) any other member who is permitted to make an election under Section 
49-11-406
;
(k) a person appointed as a city manager or chief city administrator or another person
employed by a municipality, county, or other political subdivision, who is an at-will employee;
(l) an employee of an interlocal cooperative agency created under Title 11, Chapter 13,
Interlocal Cooperation Act, who is engaged in a specialized trade customarily provided through
membership in a labor organization that provides retirement benefits to its members; and
(m) an employee of the Utah Science Technology and Research Initiative created under
Title 63M, Chapter 2, Utah Science Technology and Research Governing Authority Act.
(5) (a) Each participating employer shall prepare a list designating those positions
eligible for exemption under Subsection (4).
(b) An employee may not be exempted unless the employee is employed in a position
designated by the participating employer.
(6) (a) In accordance with this section, 
Section 
49-12-203
, and Section 
49-22-205
,
 a
municipality, county, or political subdivision may not exempt 
a total of
 more than 50 positions
or a number equal to 10% of the employees of the municipality, county, or political
subdivision, whichever is [
lesser
] 
less
.
(b) A municipality, county, or political subdivision may exempt at least one regular
full-time employee.
(7) Each participating employer shall:
(a) file employee exemptions annually with the office; and
(b) update the employee exemptions in the event of any change.
(8) The office may make rules to implement this section.
Section 3. Section 
49-22-201
 is amended to read:
49-22-201.
System membership -- Eligibility.
(1) Beginning July 1, 2011, a participating employer shall participate in this system.
(2) (a) A person initially entering regular full-time employment with a participating
employer on or after July 1, 2011, who does not have service credit accrued before July 1,
2011, in a Tier I system or plan administered by the board, is eligible:
(i) as a member for service credit and defined contributions under the Tier II hybrid
retirement system established by Part 3, Tier II Hybrid Retirement System; or
(ii) as a participant for defined contributions under the Tier II defined contribution plan
established by Part 4, Tier II Defined Contribution Plan.
(b) A person initially entering regular full-time employment with a participating
employer on or after July 1, 2011, shall:
(i) make an election to participate in the system created under this chapter [
within 30
days from the date of eligibility for accrual of benefits
]:
(A) as a member for service credit and defined contributions under the Tier II hybrid
retirement system established by Part 3, Tier II Hybrid Retirement System; or
(B) as a participant for defined contributions under the Tier II defined contribution plan
established by Part 4, Tier II Defined Contribution Plan; and
(ii) electronically submit to the office notification of the member's election under
Subsection (2)(b)(i) in a manner approved by the office.
(c) An election made by a person initially entering regular full-time employment with a
participating employer under this Subsection (2) is irrevocable beginning one year from the
date of eligibility for accrual of benefits.
(d) If no election is made under Subsection (2)(b)(i), the person shall become a
member eligible for service credit and defined contributions under the Tier II hybrid retirement
system established by Part 3, Tier II Hybrid Retirement System.
(3) Notwithstanding the provisions of this section 
and except as provided in Subsection
(4)
, an elected official initially entering office on or after July 1, 2011:
(a) is only eligible to participate in the Tier II defined contribution plan established
under [
Chapter 22,
] Part 4, Tier II Defined Contribution Plan; and
(b) is not eligible to participate in the Tier II hybrid retirement system established
under [
Chapter 22,
] Part 3, Tier II Hybrid Retirement System.
(4) Notwithstanding the provisions of Subsection (3), a legislator or full-time elected
official initially entering office on or after July 1, 2011, who has service credit accrued before
July 1, 2011:
(a) in a Tier I retirement system or plan administered by the board shall continue in the
Tier I system or plan for which the legislator or full-time elected official is eligible; or
(b) in a Tier II hybrid retirement system shall continue in the Tier II system for which
the legislator or full-time elected official is eligible.
Section 4. Section 
49-22-203
 is amended to read:
49-22-203.
Exclusions from membership in system.
(1) The following employees are not eligible for service credit in this system:
(a) subject to the requirements of Subsection (2), an employee whose employment
status is temporary in nature due to the nature or the type of work to be performed;
(b) except as provided under Subsection (3), an employee of an institution of higher
education who participates in a retirement system with a public or private retirement system,
organization, or company designated by the State Board of Regents during any period in which
required contributions based on compensation have been paid on behalf of the employee by the
employer;
(c) an employee serving as an exchange employee from outside the state;
(d) an employee of the Department of Workforce Services who is covered under
another retirement system allowed under Title 35A, Chapter 4, Employment Security Act; [
or
]
(e) an employee who is employed with a withdrawing entity that has elected, prior to
January 1, 2017, to exclude new employees from participation in this system under Subsection
49-11-623
(3)[
.
]
; or
(f) a person who files a written request for exemption with the office under Section
49-22-205
.
(2) If an employee whose status is temporary in nature due to the nature of type of
work to be performed:
(a) is employed for a term that exceeds six months and the employee otherwise
qualifies for service credit in this system, the participating employer shall report and certify to
the office that the employee is a regular full-time employee effective the beginning of the
seventh month of employment; or
(b) was previously terminated prior to being eligible for service credit in this system
and is reemployed within three months of termination by the same participating employer, the
participating employer shall report and certify that the member is a regular full-time employee
when the total of the periods of employment equals six months and the employee otherwise
qualifies for service credits in this system.
(3) Upon cessation of the participating employer contributions, an employee under
Subsection (1)(b) is eligible for service credit in this system.
Section 5. Section 
49-22-205
 is enacted to read:
 49-22-205.
Exemptions from participation in system.
(1) Upon filing a written request for exemption with the office, the following
employees are exempt from participation in the system as provided in this section:
(a) an elected official;
(b) an executive department head of the state;
(c) a member of the State Tax Commission;
(d) a member of the Public Service Commission;
(e) a member of a full-time or part-time board or commission;
(f) an employee of the Governor's Office of Management and Budget;
(g) an employee of the Governor's Office of Economic Development;
(h) an employee of the Commission on Criminal and Juvenile Justice;
(i) an employee of the Governor's Office;
(j) an employee of the State Auditor's Office;
(k) an employee of the State Treasurer's Office;
(l) any other member who is permitted to make an election under Section 
49-11-406
;
(m) a person appointed as a city manager or appointed as a city administrator or
another at-will employee of a municipality, county, or other political subdivision;
(n) an employee of an interlocal cooperative agency created under Title 11, Chapter 13,
Interlocal Cooperation Act, who is engaged in a specialized trade customarily provided through
membership in a labor organization that provides retirement benefits to its members; and
(o) an employee of the Utah Science Technology and Research Initiative created under
Title 63M, Chapter 2, Utah Science Technology and Research Governing Authority Act.
(2) (a) A participating employer shall prepare a list designating those positions eligible
for exemption under Subsection (1).
(b) An employee may not be exempted unless the employee is employed in a position
designated by the participating employer under Subsection (1).
(3) (a) In accordance with this section, Section 
49-12-203
, and Section 
49-13-203
, a
municipality, county, or political subdivision may not exempt a total of more than 50 positions
or a number equal to 10% of the employees of the municipality, county, or political
subdivision, whichever is less.
(b) A municipality, county, or political subdivision may exempt at least one regular
full-time employee.
(4) Each participating employer shall:
(a) file each employee exemption annually with the office; and
(b) update an employee exemption in the event of any change.
(5) Beginning on the effective date of the exemption for an employee who elects to be
exempt in accordance with Subsection (1):
(a) for a member of the Tier II defined contribution plan:
(i) the participating employer shall contribute the nonelective contribution and the
amortization rate described in Section 
49-22-401
, except that the nonelective contribution is
exempt from the vesting requirements of Subsection 
49-22-401
(3)(a); and
(ii) the member may make voluntary deferrals as provided in Section 
49-22-401
; and
(b) for a member of the Tier II hybrid retirement system:
(i) the participating employer shall contribute the nonelective contribution and the
amortization rate described in Section 
49-22-401
, except that the contribution is exempt from
the vesting requirements of Subsection 
49-22-401
(3)(a);
(ii) the member may make voluntary deferrals as provided in Section 
49-22-401
; and
(iii) the member is not eligible for additional service credit in the system.
(6) If an employee who is a member of the Tier II hybrid retirement system
subsequently revokes the election of exemption made under Subsection (1), the provisions
described in Subsection (5)(b) shall no longer be applicable and the coverage for the employee
shall be effective prospectively as provided in Part 3, Tier II Hybrid Retirement System.
(7) (a) All employer contributions made on behalf of an employee shall be invested in
accordance with Subsection 
49-22-303
(3)(a) or 
49-22-401
(4)(a) until the one-year election
period under Subsection 
49-22-201
(2)(c) is expired if the employee:
(i) elects to be exempt in accordance with Subsection (1); and
(ii) continues employment with the participating employer through the one-year
election period under Subsection 
49-22-201
(2)(c).
(b) An employee is entitled to receive a distribution of the employer contributions
made on behalf of the employee and all associated investment gains and losses if the employee:
(i) elects to be exempt in accordance with Subsection (1); and
(ii) terminates employment prior to the one-year election period under Subsection
49-22-201
(2)(c).
(8) (a) The office shall make rules to implement this section.
(b) The rules made under this Subsection (8) shall include provisions to allow the
exemption provided under Subsection (1) to apply to all contributions made beginning on or
after July 1, 2011, on behalf of an exempted employee who began the employment before May
8, 2012.
Section 6. Section 
49-22-303
 is amended to read:
49-22-303.
Defined contribution benefit established -- Contribution by employer
and employee -- Vesting of contributions -- Plans to be separate -- Tax-qualified status of
plans.
(1) (a) A participating employer shall make a nonelective contribution on behalf of
each regular full-time employee who is a member of this system in an amount equal to 10%
minus the contribution rate paid by the employer pursuant to Subsection 
49-22-301
(2)(a) of the
member's compensation to a defined contribution plan qualified under Section 401(k) of the
Internal Revenue Code which:
(i) is sponsored by the board; and
(ii) has been grandfathered under Section 1116 of the Federal Tax Reform Act of 1986.
(b) The member may make voluntary deferrals to:
(i) the qualified 401(k) plan which receives the employer contribution described in this
Subsection (1); or
(ii) at the member's option, another defined contribution plan established by the
participating employer.
(2) (a) The total amount contributed by the participating employer under Subsection
(1)(a), including associated investment gains and losses, vests to the member upon accruing
four years of service credit under this title.
(b) The total amount contributed by the member under Subsection (1)(b) vests to the
member's benefit immediately and is nonforfeitable.
(3) (a) Contributions made by a participating employer under Subsection (1)(a) shall be
invested in a default option selected by the board until the member is vested in accordance with
Subsection (2)(a).
(b) A member may direct the investment of contributions made by a participating
employer under Subsection (1)(a) only after the contributions have vested in accordance with
Subsection (2)(a).
(c) A member may direct the investment of contributions made by the member under
Subsection (1)(b).
(4) No loans shall be available from contributions made by a participating employer
under Subsection (1)(a).
(5) No hardship distributions shall be available from contributions made by a
participating employer under Subsection (1)(a).
(6) (a) Except as provided in Subsection (6)(b) 
and Section 
49-22-205
, if a member
terminates employment with a participating employer prior to the vesting period described in
Subsection (2)(a), all contributions, including associated investment gains and losses, made by
a participating employer on behalf of the member under Subsection (1)(a) are subject to
forfeiture.
(b) If a member who terminates employment with a participating employer prior to the
vesting period described in Subsection (2)(a) subsequently enters employment with the same or
another participating employer within 10 years of the termination date of the previous
employment:
(i) all contributions made by the previous participating employer on behalf of the
member, including associated investment gains and losses, shall be reinstated upon
employment as a regular full-time employee; and
(ii) the length of time that the member worked with the previous employer shall be
included in determining whether the member has completed the vesting period under
Subsection (2)(a).
(c) The office shall establish a forfeiture account and shall specify the uses of the
forfeiture account, which may include an offset against administrative costs or employer
contributions made under this section.
(7) The office may request from any other qualified 401(k) plan under Subsection (1)
or (2) any relevant information pertaining to the maintenance of its tax qualification under the
Internal Revenue Code.
(8) The office may take any action which in its judgment is necessary to maintain the
tax-qualified status of its 401(k) defined contribution plan under federal law.
Section 7. Section 
49-22-401
 is amended to read:
49-22-401.
Contributions -- Rates.
(1) Up to the amount allowed by federal law, the participating employer shall make a
nonelective contribution of 10% of the participant's compensation to a defined contribution
plan.
(2) (a) The participating employer shall contribute the 10% nonelective contribution
described in Subsection (1) to a defined contribution plan qualified under Section 401(k) of the
Internal Revenue Code which:
(i) is sponsored by the board; and
(ii) has been grandfathered under Section 1116 of the Federal Tax Reform Act of 1986.
(b) The member may make voluntary deferrals to:
(i) the qualified 401(k) plan which receives the employer contribution described in this
Subsection (2); or
(ii) at the member's option, another defined contribution plan established by the
participating employer.
(c) In addition to the percent specified under Subsection (2)(a), the participating
employer shall pay the corresponding Tier I system amortization rate of the employee's
compensation to the office to be applied to the employer's corresponding Tier I system liability.
(3) (a) Except as provided under Subsection (3)(c), the total amount contributed by the
participating employer under Subsection (2)(a) vests to the member upon accruing four years
employment as a regular full-time employee under this title.
(b) The total amount contributed by the member under Subsection (2)(b) vests to the
member's benefit immediately and is nonforfeitable.
(c) Upon filing a written request for exemption with the office, [
the following
employees are
] 
an eligible employee is
 exempt from the vesting requirements of Subsection
(3)(a)[
:
] 
in accordance with Section 
49-22-205
.
[
(i) an executive department head of the state;
]
[
(ii) a member of the State Tax Commission;
]
[
(iii) a member of the Public Service Commission;
]
[
(iv) an employee of the Governor's Office of Management and Budget;
]
[
(v) an employee of the Governor's Office of Economic Development;
]
[
(vi) an employee of the Commission on Criminal and Juvenile Justice;
]
[
(vii) an employee of the Governor's Office;
]
[
(viii) an employee of the State Auditor's Office;
]
[
(ix) an employee of the State Treasurer's Office;
]
[
(x) a person appointed as a city manager or appointed as a city administrator or
another at-will employee of a municipality, county, or other political subdivision;
]
[
(xi) an employee of an interlocal cooperative agency created under Title 11, Chapter
13, Interlocal Cooperation Act, who is engaged in a specialized trade customarily provided
through membership in a labor organization that provides retirement benefits to its members;
and
]
[
(xii) an employee of the Utah Science Technology and Research Initiative created
under Title 63M, Chapter 2, Utah Science Technology and Research Governing Authority Act.
]
[
(d) (i) A participating employer shall prepare a list designating those positions eligible
for exemption under Subsection (3)(c).
]
[
(ii) An employee may not be exempted unless the employee is employed in a position
designated by the participating employer under Subsection (3)(c).
]
[
(e) (i) All employer contributions made on behalf of an employee shall be invested in
accordance with Subsection 
49-22-303
(3)(a) until the one-year election period under
Subsection 
49-22-201
(2)(c) is expired if the employee:
]
[
(A) elects to be exempt in accordance with Subsection (3)(c); and
]
[
(B) continues employment with the participating employer through the one-year
election period under Subsection 
49-22-201
(2)(c).
]
[
(ii) An employee is entitled to receive a distribution of the employer contributions
made on behalf of the employee and all associated investment gains and losses if the
employee:
]
[
(A) elects to be exempt in accordance with Subsection (3)(c); and
]
[
(B) terminates employment prior to the one-year election period under Subsection
49-22-201
(2)(c).
]
[
(f) (i) In accordance with this section, a municipality, county, or political subdivision
may not exempt more than 50 positions or a number equal to 10% of the employees of the
municipality, county, or political subdivision, whichever is less.
]
[
(ii) A municipality, county, or political subdivision may exempt at least one regular
full-time employee.
]
[
(g) Each participating employer shall:
]
[
(i) file each employee exemption annually with the office; and
]
[
(ii) update an employee exemption in the event of any change.
]
[
(h) (i) The office shall make rules to implement this Subsection (3).
]
[
(ii) The rules made under Subsection (3)(h)(i) shall include provisions to allow the
exemption provided under Subsection (3)(c) to apply to all contributions made beginning on or
after July 1, 2011, on behalf of an exempted employee who began the employment before May
8, 2012.
]
(4) (a) Contributions made by a participating employer under Subsection (2)(a) shall be
invested in a default option selected by the board until the member is vested in accordance with
Subsection (3)(a).
(b) A member may direct the investment of contributions including associated
investment gains and losses made by a participating employer under Subsection (2)(a) only
after the contributions have vested in accordance with Subsection (3)(a).
(c) A member may direct the investment of contributions made by the member under
Subsection (3)(b).
(5) No loans shall be available from contributions made by a participating employer
under Subsection (2)(a).
(6) No hardship distributions shall be available from contributions made by a
participating employer under Subsection (2)(a).
(7) (a) Except as provided in Subsection (7)(b), if a member terminates employment
with a participating employer prior to the vesting period described in Subsection (3)(a), all
contributions made by a participating employer on behalf of the member including associated
investment gains and losses under Subsection (2)(a) are subject to forfeiture.
(b) If a member who terminates employment with a participating employer prior to the
vesting period described in Subsection (3)(a) subsequently enters employment with the same or
another participating employer within 10 years of the termination date of the previous
employment:
(i) all contributions made by the previous participating employer on behalf of the
member including associated investment gains and losses shall be reinstated upon the member's
employment as a regular full-time employee; and
(ii) the length of time that the member worked with the previous employer shall be
included in determining whether the member has completed the vesting period under
Subsection (3)(a).
(c) The office shall establish a forfeiture account and shall specify the uses of the
forfeiture account, which may include an offset against administrative costs or employer
contributions made under this section.
(8) The office may request from any other qualified 401(k) plan under Subsection (2)
any relevant information pertaining to the maintenance of its tax qualification under the
Internal Revenue Code.
(9) The office may take any action which in its judgment is necessary to maintain the
tax-qualified status of its 401(k) defined contribution plan under federal law.
Section 8. Section 
49-22-503
 is enacted to read:
 49-22-503.
Death of members -- Exemption from vesting requirements for
employer nonelective contributions to defined contribution plan.
(1) (a) If an active member dies, employer nonelective contributions made on behalf of
the employee to a defined contribution plan under Section 
49-22-303
 or 
49-22-401
 are exempt
from the vesting requirements of Subsections 
49-22-303
(2)(a) and 
49-22-401
(3)(a).
(b) The total amount of nonelective contributions made by the participating employer
vests to the member upon death and the member's beneficiary is entitled to receive a
distribution of the employer contributions made on behalf of the employee and all associated
investment gains and losses.
(2) Employer contributions vested and distributed under this section are in addition to
and separate from the benefits payable under Sections 
49-22-501
 and 
49-22-502
.
Section 9. Section 
49-23-201
 is amended to read:
49-23-201.
System membership -- Eligibility.
(1) Beginning July 1, 2011, a participating employer that employs public safety service
employees or firefighter service employees shall participate in this system.
(2) (a) A public safety service employee or a firefighter service employee initially
entering employment with a participating employer on or after July 1, 2011, who does not have
service credit accrued before July 1, 2011, in a Tier I system or plan administered by the board,
is eligible:
(i) as a member for service credit and defined contributions under the Tier II hybrid
retirement system established by Part 3, Tier II Hybrid Retirement System; or
(ii) as a participant for defined contributions under the Tier II defined contributions
plan established by Part 4, Tier II Defined Contribution Plan.
(b) A public safety service employee or a firefighter service employee initially entering
employment with a participating employer on or after July 1, 2011, shall:
(i) make an election to participate in the system created under this chapter [
within 30
days from the date of eligibility for accrual of benefits
]:
(A) as a member for service credit and defined contributions under the Tier II hybrid
retirement system established by Part 3, Tier II Hybrid Retirement System; or
(B) as a participant for defined contributions under the Tier II defined contribution plan
established by Part 4, Tier II Defined Contribution Plan; and
(ii) electronically submit to the office notification of the member's election under
Subsection (2)(b)(i) in a manner approved by the office.
(c) An election made by a public safety service employee or firefighter service
employee initially entering employment with a participating employer under this Subsection (2)
is irrevocable beginning one year from the date of eligibility for accrual of benefits.
(d) If no election is made under Subsection (2)(b)(i), the public safety service employee
or firefighter service employee shall become a member eligible for service credit and defined
contributions under the Tier II hybrid retirement system established by Part 3, Tier II Hybrid
Retirement System.
Section 10. Section 
49-23-203
 is enacted to read:
 49-23-203.
Exemptions from participation in system.
(1) Upon filing a written request for exemption with the office, the following
employees are exempt from participation in the system as provided in this section if the
employee is a public safety service employee and is:
(a) an executive department head of the state;
(b) an elected or appointed sheriff of a county; or
(c) an elected or appointed chief of police of a municipality.
(2) (a) A participating employer shall prepare a list designating those positions eligible
for exemption under Subsection (1).
(b) An employee may not be exempted unless the employee is employed in a position
designated by the participating employer under Subsection (1).
(3) Each participating employer shall:
(a) file each employee exemption annually with the office; and
(b) update an employee exemption in the event of any change.
(4) Beginning on the effective date of the exemption for an employee who elects to be
exempt in accordance with Subsection (1):
(a) for a member of the Tier II defined contribution plan:
(i) the participating employer shall contribute the nonelective contribution and the
amortization rate described in Section 
49-23-401
, except that the contribution is exempt from
the vesting requirements of Subsection 
49-23-401
(3)(a); and
(ii) the member may make voluntary deferrals as provided in Section 
49-23-401
; and
(b) for a member of the Tier II hybrid retirement system:
(i) the participating employer shall contribute the nonelective contribution and the
amortization rate described in Section 
49-23-401
, except that the contribution is exempt from
the vesting requirements of Subsection 
49-23-401
(3)(a);
(ii) the member may make voluntary deferrals as provided in Section 
49-23-401
; and
(iii) the member is not eligible for additional service credit in the system.
(5) If an employee who is a member of the Tier II hybrid retirement system
subsequently revokes the election of exemption made under Subsection (1), the provisions
described in Subsection (4)(b) shall no longer be applicable and the coverage for the employee
shall be effective prospectively as provided in Part 3, Tier II Hybrid Retirement System.
(6) (a) All employer contributions made on behalf of an employee shall be invested in
accordance with Subsection 
49-23-302
(3)(a) or 
49-23-401
(4)(a) until the one-year election
period under Subsection 
49-23-201
(2)(c) is expired if the employee:
(i) elects to be exempt in accordance with Subsection (1); and
(ii) continues employment with the participating employer through the one-year
election period under Subsection 
49-23-201
(2)(c).
(b) An employee is entitled to receive a distribution of the employer contributions
made on behalf of the employee and all associated investment gains and losses if the employee:
(i) elects to be exempt in accordance with Subsection (1); and
(ii) terminates employment prior to the one-year election period under Subsection
49-23-201
(2)(c).
(7) (a) The office shall make rules to implement this section.
(b) The rules made under this Subsection (7) shall include provisions to allow the
exemption provided under Subsection (1) to apply to all contributions made beginning on or
after July 1, 2011, on behalf of an exempted employee who began the employment before May
8, 2012.
Section 11. Section 
49-23-401
 is amended to read:
49-23-401.
Contributions -- Rates.
(1) Up to the amount allowed by federal law, the participating employer shall make a
nonelective contribution of 12% of the participant's compensation to a defined contribution
plan.
(2) (a) The participating employer shall contribute the 12% nonelective contribution
described in Subsection (1) to a defined contribution plan qualified under Section 401(k) of the
Internal Revenue Code which:
(i) is sponsored by the board; and
(ii) has been grandfathered under Section 1116 of the Federal Tax Reform Act of 1986.
(b) The member may make voluntary deferrals to:
(i) the qualified 401(k) plan which receives the employer contribution described in this
Subsection (2); or
(ii) at the member's option, another defined contribution plan established by the
participating employer.
(c) In addition to the percent specified under Subsection (2)(a), the participating
employer shall pay the corresponding Tier I system amortization rate of the employee's
compensation to the office to be applied to the employer's corresponding Tier I system liability.
(3) (a) Except as provided under Subsection (3)(c), the total amount contributed by the
participating employer under Subsection (2)(a) vests to the member upon accruing four years of
service credit under this title.
(b) The total amount contributed by the member under Subsection (2)(b) vests to the
member's benefit immediately and is nonforfeitable.
(c) Upon filing a written request for exemption with the office, [
the following
employees are
] 
an eligible employee is
 exempt from the vesting requirements of Subsection
(3)(a) [
if the employee is a public safety service employee and is:
] 
in accordance with Section
49-23-203
.
[
(i) an executive department head of the state;
]
[
(ii) an elected or appointed sheriff of a county; or
]
[
(iii) an elected or appointed chief of police of a municipality.
]
[
(d) (i) A participating employer shall prepare a list designating those positions eligible
for exemption under Subsection (3)(c).
]
[
(ii) An employee may not be exempted unless the employee is employed in a position
designated by the participating employer under Subsection (3)(c).
]
[
(e) (i) All employer contributions made on behalf of an employee shall be invested in
accordance with Subsection 
49-23-302
(3)(a) until the one-year election period under
Subsection 
49-23-201
(2)(c) is expired if the employee:
]
[
(A) elects to be exempt in accordance with Subsection (3)(c); and
]
[
(B) continues employment with the participating employer through the one-year
election period under Subsection 
49-23-201
(2)(c).
]
[
(ii) An employee is entitled to receive a distribution of the employer contributions
made on behalf of the employee and all associated investment gains and losses if the
employee:
]
[
(A) elects to be exempt in accordance with Subsection (3)(c); and
]
[
(B) terminates employment prior to the one-year election period under Subsection
49-23-201
(2)(c).
]
[
(f) Each participating employer shall:
]
[
(i) file each employee exemption annually with the office; and
]
[
(ii) update an employee exemption in the event of any change.
]
[
(g) (i) The office shall make rules to implement this Subsection (3).
]
[
(ii) The rules made under Subsection (3)(g)(i) shall include provisions to allow the
exemption provided under Subsection (3)(c) to apply to all contributions made beginning on or
after July 1, 2011, on behalf of an exempted employee who began the employment before May
8, 2012.
]
(4) (a) Contributions made by a participating employer under Subsection (2)(a) shall be
invested in a default option selected by the board until the member is vested in accordance with
Subsection (3)(a).
(b) A member may direct the investment of contributions, including associated
investment gains and losses, made by a participating employer under Subsection (2)(a) only
after the contributions have vested in accordance with Subsection (3)(a).
(c) A member may direct the investment of contributions made by the member under
Subsection (3)(b).
(5) No loans shall be available from contributions made by a participating employer
under Subsection (2)(a).
(6) No hardship distributions shall be available from contributions made by a
participating employer under Subsection (2)(a).
(7) (a) Except as provided in Subsection (7)(b), if a member terminates employment
with a participating employer prior to the vesting period described in Subsection (3)(a), all
contributions made by a participating employer on behalf of the member under Subsection
(2)(a), including associated investment gains and losses are subject to forfeiture.
(b) If a member who terminates employment with a participating employer prior to the
vesting period described in Subsection (3)(a) subsequently enters employment with the same or
another participating employer within 10 years of the termination date of the previous
employment:
(i) all contributions made by the previous participating employer on behalf of the
member, including associated investment gains and losses, shall be reinstated upon the
member's employment as a regular full-time employee; and
(ii) the length of time that the member worked with the previous employer shall be
included in determining whether the member has completed the vesting period under
Subsection (3)(a).
(c) The office shall establish a forfeiture account and shall specify the uses of the
forfeiture account, which may include an offset against administrative costs of employer
contributions made under this section.
(8) The office may request from any other qualified 401(k) plan under Subsection (2)
any relevant information pertaining to the maintenance of its tax qualification under the
Internal Revenue Code.
(9) The office may take any action which in its judgment is necessary to maintain the
tax-qualified status of its 401(k) defined contribution plan under federal law.
Section 12. Section 
49-23-504
 is enacted to read:
 49-23-504.
Death of members -- Exemption from vesting requirements for
employer nonelective contributions to defined contribution plan.
(1) (a) If an active member dies, employer nonelective contributions made on behalf of
the employee to a defined contribution plan under Section 
49-23-302
 or 
49-23-401
 are exempt
from the vesting requirements of Subsections 
49-23-302
(2)(a) and 
49-23-401
(3)(a).
(b) The total amount of nonelective contributions made by the participating employer
vests to the member upon death and the member's beneficiary is entitled to receive a
distribution of the employer contributions made on behalf of the employee and all associated
investment gains and losses.
(2) Employer contributions vested and distributed under this section are in addition to
and separate from the benefits payable under Sections 
49-23-501
, 
49-23-502
, and 
49-23-503
.
Legislative Review Note
 as of 11-13-14 2:20 PM
Office of Legislative Research and General Counsel