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S1356.......................................by COMMERCE AND HUMAN RESOURCES
PUBLIC EMPLOYEE RETIREMENT SYSTEM - Amends and adds to existing law
relating to the Public Employee Retirement System to provide for a domestic
retirement order and establishment of a separate account for alternate
payees named in the order.
01/28 Senate intro - 1st rdg - to printing
01/29 Rpt prt - to Com/HuRes
02/06 Rpt out - rec d/p - to 2nd rdg
02/09 2nd rdg - to 3rd rdg
02/12 3rd rdg - PASSED - 35-0-0
AYES--Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron,
Crow, Danielson, Darrington, Deide, Dunklin, Frasure, Geddes, Hansen,
Hawkins, Ingram, Ipsen, Keough, King, Lee, McLaughlin, Noh, Parry,
Richardson, Riggs, Risch, Sandy, Schroeder, Sorensen, Stennett,
Sweeney, Thorne, Twiggs, Wheeler, Whitworth
NAYS--None
Absent and excused--None
Floor Sponsor - King
Title apvd - to House
02/13 House intro - 1st rdg - to HuRes
02/24 Rpt out - rec d/p - to 2nd rdg
02/25 2nd rdg - to 3rd rdg
02/27 3rd rdg - PASSED - 62-1-7
AYES -- Alltus, Barraclough, Barrett, Bell, Bieter, Bivens,
Black(15), Black(23), Boe, Bruneel, Chase, Clark, Crane, Crow, Cuddy,
Denney, Ellsworth, Field(13), Field(20), Gagner, Gould, Hadley,
Hansen, Henbest, Jaquet, Jones(9), Jones(20), Judd, Kellogg, Kempton,
Kendell, Kjellander, Kunz, Lake, Linford, Loertscher, Mader, Marley,
McKague, Meyer, Miller, Newcomb, Pischner, Pomeroy, Reynolds,
Richman, Ridinger, Robison, Sali, Schaefer, Stevenson, Stoicheff,
Stone, Stubbs, Taylor, Tilman, Tippets, Trail, Watson, Wheeler, Wood,
Zimmermann
NAYS -- Hornbeck
Absent and excused -- Callister, Campbell, Deal, Geddes, Jones(22),
Mortensen, Mr Speaker
Floor Sponsor - Bieter
Title apvd - to Senate
03/02 To enrol
03/03 Rpt enrol - Pres signed
03/04 Sp signed
03/05 To Governor
03/06 Governor signed
Session Law Chapter 22
Effective: 07/01/98
S1356|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fourth Legislature Second Regular Session - 1998IN THE SENATE SENATE BILL NO. 1356 BY COMMERCE AND HUMAN RESOURCES COMMITTEE 1 AN ACT 2 RELATING TO THE PUBLIC EMPLOYEE RETIREMENT SYSTEM; AMENDING SECTION 59-1302, 3 IDAHO CODE, TO CLARIFY THE DEFINITION OF "CREDITED SERVICE" AND TO PROVIDE 4 ADDITIONAL DEFINITIONS RELATED TO APPROVED DOMESTIC RETIREMENT ORDERS; 5 AMENDING SECTION 59-1317, IDAHO CODE, TO AUTHORIZE THE PUBLIC EMPLOYEE 6 RETIREMENT SYSTEM TO ACCEPT DOMESTIC RETIREMENT ORDERS; AMENDING CHAPTER 7 13, TITLE 59, IDAHO CODE, BY THE ADDITION OF A NEW SECTION 59-1319, IDAHO 8 CODE, TO SET FORTH THE REQUIREMENTS FOR APPROVED DOMESTIC RETIREMENT 9 ORDERS; AND AMENDING CHAPTER 13, TITLE 59, IDAHO CODE, BY THE ADDITION OF 10 A NEW SECTION 59-1320, IDAHO CODE, TO ADDRESS THE EFFECT OF APPROVED 11 DOMESTIC RETIREMENT ORDERS AND TO GIVE THE EXECUTIVE DIRECTOR OF THE PUB- 12 LIC EMPLOYEE RETIREMENT SYSTEM THE EXCLUSIVE AUTHORITY TO DETERMINE 13 WHETHER A DOMESTIC RETIREMENT ORDER IS AN APPROVED DOMESTIC RETIREMENT 14 ORDER. 15 Be It Enacted by the Legislature of the State of Idaho: 16 SECTION 1. That Section 59-1302, Idaho Code, be, and the same is hereby 17 amended to read as follows: 18 59-1302. DEFINITIONS. (1) As used in this chapter, each of the terms 19 defined in this section shall have the meaning given in this section unless a 20 different meaning is clearly required by the context. 21 (2) "Active member" means any employee who is not establishing the right 22 to receive benefits through his or her employer's participation in any other 23 retirement system established for Idaho public employees, if such participa- 24 tion is mandated by applicable Idaho statutes other than this chapter. In no 25 case will an employee be entitled to any benefit under this chapter for public 26 service if such employee is establishing retirement benefit entitlements by 27 other Idaho statutes or federal statutes other than military service or social 28 security for that same service. 29 (3) "Accumulated contributions" means the sum of amounts contributed by a 30 member of the system, together with regular interest credit thereon. 31 (4) "Actuarial equivalent" means a benefit equal in value to another ben- 32 efit, when computed upon the basis of the actuarial tables in use by the sys- 33 tem. 34 (5) "Actuarial tables" means such tables as shall have been adopted by 35 the board in accordance with recommendations of the actuary. 36 (5A) "Alternate payee" means a spouse or former spouse of a member 37 who is recognized by an approved domestic retirement order as having a right 38 to all or a portion of the accrued benefits in the retirement system with 39 respect to such member. 40 (5B) "Approved domestic retirement order" means a domestic retirement 41 order which creates or recognizes the existence of an alternate payee's right 42 or assigns to an alternate payee the right to all or a portion of the accrued 43 benefits of a member under the retirement system, which directs the system to 2 1 establish a segregated account or disburse benefits to an alternate payee, and 2 which the executive director of the retirement system has determined meets the 3 requirements of sections 59-1319 and 59-1320, Idaho Code. 4 (5C) "Average monthly salary" means the member's average 5 salary during the base period as calculated pursuant to rules adopted by the 6 retirement board. 7 (5BD ) (a) "Base period" means the period of 8 fifty-four (54) consecutive calendar months during which the member 9 earned: 10 (i) The highest average salary; and 11 (ii) Membership service of at least one-half (1/2) the number of 12 months in the period, excluding months of service attributable to: 13 A. Military service; 14 B. Service qualifying as minimum benefit pursuant to section 15 59-1342(5), Idaho Code; and 16 C. Worker's compensation income benefits. 17 (b) Effective October 1, 1993, the consecutive calendar months shall be 18 forty-eight (48). Effective October 1, 1994, the consecutive calendar 19 months shall be forty-two (42). 20 (c) Entitlement to a base period shall not vest until the effective date 21 of that base period. The retirement benefits shall be calculated on the 22 amounts, terms and conditions in effect at the date of the final contribu- 23 tion by the member. 24 (d) If no base period exists for a member, the member's average monthly 25 salary shall be determined by the board, using standards not inconsistent 26 with those established in this subsection. 27 (e) To assure equitable treatment for all members, salary increments 28 inconsistent with usual compensation patterns may be disallowed by the 29 board in determining average monthly salary and base period. 30 (6) "Beneficiary" means the person who is nominated by the written desig- 31 nation of a member, duly executed and filed with the board, to receive the 32 death benefit. 33 (7) "Calendar year" means twelve (12) calendar months commencing on the 34 first day of January. 35 (8) "Credited service" means the aggregate of membership service, prior 36 service and disabled service. 37 (9) "Date of establishment" means July 1, 1965, or a later date estab- 38 lished by the board or statute. 39 (10) "Death benefit" means the amount, if any, payable upon the death of a 40 member. 41 (11) "Disability retirement allowance" means the periodic payment becoming 42 payable upon an active member's ceasing to be an employee while eligible for 43 disability retirement. 44 (12) "Disabled" means: 45 (a) That the member is prevented from engaging in any occupation or 46 employment for remuneration or profit as a result of bodily injury or dis- 47 ease, either occupational or nonoccupational in cause, but excluding dis- 48 abilities resulting from service in the armed forces of any country, or 49 from an intentionally self-inflicted injury; and 50 (b) That the member will likely remain so disabled permanently and con- 51 tinuously during the remainder of the member's life. 52 It is not necessary that a person be absolutely helpless or entirely unable to 53 do anything worthy of compensation to be considered disabled. If the person is 54 so disabled that substantially all the avenues of employment are reasonably 55 closed to the person, that condition is within the meaning of "disabled." In 3 1 evaluating whether a person is disabled, medical factors and nonmedical fac- 2 tors including, but not limited to, education, economic and social environ- 3 ment, training and usable skills may be considered. 4 Refusal to submit to a medical examination ordered by the board before the 5 commencement of a disability retirement allowance or at any reasonable time 6 thereafter shall constitute proof that the member is not disabled. The board 7 shall be empowered to select for such medical examination one (1) or more phy- 8 sicians or surgeons who are licensed to practice medicine and perform surgery. 9 The fees and expenses of such examination shall be paid from the administra- 10 tion account of the fund. No member shall be required to undergo such examina- 11 tion more often than once each year after he has received a disability retire- 12 ment allowance continuously for two (2) years. 13 (12A) "Disabled service" means the total number of months elapsing from 14 the first day of the month next succeeding the final contribution of a member 15 prior to receiving a disability retirement allowance to the first day of the 16 month following the date of termination of such disability retirement allow- 17 ance. During such period, the member shall remain classified in the membership 18 category held during the month of final contribution. The total number of 19 months of disabled service credited for a person first becoming disabled after 20 the effective date of this chapter shall not exceed the excess, if any, of 21 three hundred sixty (360) over the total number of months of prior service and 22 membership service. 23 (12B) "Domestic retirement order" means any judgment, decree, or 24 order, including approval of a property settlement agreement which relates to 25 the provision of marital property rights to a spouse or former spouse of a 26 member, and is made pursuant to a domestic relations law, including the commu- 27 nity property law of the state of Idaho or of another state. 28 (13) "Early retirement allowance" means the periodic payment becoming pay- 29 able upon an active member's ceasing to be an employee while eligible for 30 early retirement. 31 (14) (A) "Employee" means: 32 (a) Any person who normally works twenty (20) hours or more per week for 33 an employer or a school teacher who works half-time or more for an 34 employer and who receives salary for services rendered for such employer; 35 or 36 (b) Elected officials or appointed officials of an employer who receive a 37 salary; or 38 (c) A person who is separated from service with less than five (5) con- 39 secutive months of employment and who is reemployed or reinstated by the 40 same employer within thirty (30) days. 41 (B) "Employee" does not include employment as: 42 (a) A person rendering service to an employer in the capacity of an inde- 43 pendent business, trade or profession; or 44 (b) A person whose employment with any employer does not total five (5) 45 consecutive months; or 46 (c) A person provided sheltered employment or made-work by a public 47 employer in an employment or industries program maintained for the benefit 48 of such person; or 49 (d) An inmate of a state institution, whether or not receiving compensa- 50 tion for services performed for the institution; or 51 (e) A student enrolled in an undergraduate, graduate, or vocational- 52 technical program at and employed by a state college, university, commu- 53 nity college or vocational-technical center when such employment is predi- 54 cated on student status; or 55 (f) A person making contributions to the United States civil service com- 4 1 mission under the United States Civil Service System Retirement Act except 2 that a person who receives separate remuneration for work currently per- 3 formed for an employer and the United States government may elect to be a 4 member of the retirement system in accordance with rules of the board; or 5 (g) A person occupying a position that does not exceed eight (8) consecu- 6 tive months in a calendar year with a city or county when the city or 7 county has certified, in writing to the system, the position is (i) sea- 8 sonal or casual; and (ii) affected by weather and the growing season, 9 including parks and golf course positions. 10 (15) "Employer" means the state of Idaho, or any political subdivision or 11 governmental entity, provided such subdivision or entity has elected to come 12 into the system. Governmental entity means any organization composed of units 13 of government of Idaho or organizations funded only by government or employee 14 contributions or organizations who discharge governmental responsibilities or 15 proprietary responsibilities that would otherwise be performed by government. 16 All governmental entities are deemed to be political subdivisions for the pur- 17 pose of this chapter. 18 (15A) "Final contribution" means the final contribution made by a member 19 pursuant to sections 59-1331 through 59-1334, Idaho Code. 20 (16) "Firefighter" means an employee, including paid firefighters hired on 21 or after October 1, 1980, whose primary occupation is that of preventing and 22 extinguishing fires as determined by the rules of the board. 23 (17) "Fiscal year" means the period beginning on July 1 in any year and 24 ending on June 30 of the next succeeding year. 25 (18) "Fund" means the public employee retirement fund established by this 26 chapter. 27 (19) "Funding agent" means any bank or banks, trust company or trust com- 28 panies, legal reserve life insurance company or legal reserve life insurance 29 companies, or combinations thereof, any thrift institution or credit union or 30 any investment management firm or individual investment manager selected by 31 the board to hold and/or invest the employers' and members' contributions and 32 pay certain benefits granted under this chapter. 33 (20) "Inactive member" means a former active member who is not an employee 34 and is not receiving any form of retirement allowance, but for whom a separa- 35 tion benefit has not become payable. 36 (20A) "Lifetime annuity" means periodic monthly payments of income 37 by the retirement system to an alternate payee. 38 (20B) "Lump sum distribution" means a payment by the retirement system of 39 the entire balance in the alternate payee's segregated account, together with 40 regular interest credited thereon. 41 (21) "Member" means an active member, inactive member or a retired member. 42 (22) "Membership service" means military service which occurs after 43 the commencement of contributions payable under sections 59-1331 through 44 59-1334, Idaho Code, and service with respect to which contributions 45 are payable under sections 59-1331 through 59-1334, Idaho Code,and mil-46itary service which occurs after the commencement of such contributions47 which, except for benefit calculations described in sections 59-1342 and 48 59-1353, Idaho Code, includes service transferred to a segregated account 49 under an approved domestic retirement order . 50 (23) "Military service" means active duty service in the armed forces of 51 the United States including the national guard and reserves, under the provi- 52 sions of title 10, title 32, and title 37, United States code. Provided, how- 53 ever, for the purposes of this chapter, military service SHALL NOT include: 54 (a) Any period ended by dishonorable discharge or during which termina- 55 tion of such service is available but not accepted; 5 1 (b) Any period which commences more than ninety (90) days after the per- 2 son ceases to be an employee or ends more than ninety (90) days before the 3 person again becomes an employee unless such ninety (90) day requirements 4 are waived by the board due to circumstances beyond the employee's con- 5 trol; or 6 (c) Any active duty service in excess of five (5) years if at the conve- 7 nience of the United States government, or in excess of four (4) years if 8 not at the convenience of the United States government. 9 (24) (a) "Police officer" for retirement purposes shall be as defined in 10 section 59-1303, Idaho Code. 11 (b) "POST" means the Idaho peace officer standards and training council 12 established in chapter 51, title 19, Idaho Code. 13 (25) "Prior service" means any period prior to July 1, 1965, of military 14 service or of employment for the state of Idaho or any political subdivision 15 or other employer of each employee who is an active member or in military ser- 16 vice or on leave of absence on the date of establishment, provided, however, 17 an employee who was not an active member or in military service or on leave of 18 absence on the date of establishment shall receive credit for the member's 19 service prior to July 1, 1965, on the basis of recognizing two (2) months of 20 such service for each month of membership service. For the purpose of comput- 21 ing such service, no deduction shall be made for any continuous period of 22 absence from service or military service of six (6) months or less. 23 (26) "Regular interest" means interest at the rate set from time to time 24 by the board. 25 (27) "Retired member" means a former active member receiving a retirement 26 allowance. 27 (28) "Retirement" means the acceptance of a retirement allowance under 28 this chapter upon termination of employment. 29 (29) "Retirement board" or "board" means the board provided for in sec- 30 tions 59-1304 and 59-1305, Idaho Code, to administer the retirement system. 31 (30) "Retirement system" or "system" means the public employee retirement 32 system of Idaho. 33 (31) (A) "Salary" means: 34 (a) The total salary or wages paid to a person who meets the definition 35 of employee by an employer for personal services performed and reported 36 by the employer for income tax purposes, including the cash value of all 37 remuneration in any medium other than cash. 38 (b) The total amount of any voluntary reduction in salary agreed to by 39 the member and employer where the reduction is used as an alternative form 40 of remuneration to the member. 41 (B) Salary in excess of the compensation limitations set forth in section 42 401(a)(17) of the Internal Revenue Code shall be disregarded for any person 43 who becomes a member of the system on or after July 1, 1996. The system had no 44 limitations on compensation in effect on July 1, 1993. The compensation limi- 45 tations set forth in section 401(1)(17) of the Internal Revenue Code shall not 46 apply for an "eligible employee." For purposes of this subsection, "eligible 47 employee" is an individual who was a member of the system before July 1, 1996. 48 (C) "Salary" does not include: 49 (a) Contributions by employers to employee held medical savings accounts, 50 as those accounts are defined in section 63-3022K, Idaho Code. 51 (b) Lump sum payments inconsistent with usual compensation patterns made 52 by the employer to the employee only upon termination from service includ- 53 ing, but not limited to, vacation payoffs, sick leave payoffs, early 54 retirement incentive payments and bonuses. 55 (31A) "Segregated account" means the account established by the 6 1 retirement system for the alternate payee of a member who is not a retired 2 member. It shall include the months of credited service and accumulated con- 3 tributions transferred from the member's account. 4 (32) "Separation benefit" means the amount, if any, payable upon or subse- 5 quent to separation from service. 6 (33) "Service" means being shown on an employer's payroll as an employee 7 receiving a salary. Service of fifteen (15) days or more during any calendar 8 month shall be credited as one (1) month of service. Service of fourteen (14) 9 days or less during any calendar month shall not be credited. No more than one 10 (1) month of service shall be credited for all service in any month. 11 (34) "Service retirement allowance" means the periodic payment becoming 12 payable upon an active member's ceasing to be an employee while eligible for 13 service retirement. 14 (35) "State" means the state of Idaho. 15 (36) "Vested retirement allowance" means the periodic payment becoming 16 payable upon an inactive member's becoming eligible for vested retirement. 17 (37) The masculine pronoun, wherever used, shall include the feminine pro- 18 noun. 19 SECTION 2. That Section 59-1317, Idaho Code, be, and the same is hereby 20 amended to read as follows: 21 59-1317. RIGHTS TO BENEFITS INALIENABLE. (1) The right of a 22 person to any benefits under this chapter and the money in any fund created by 23 this chapter shall not be assignable or subject to execution, garnishment or 24 attachment or to the operation of any bankruptcy or insolvency law . 25, except that26 (2) Notwithstanding subsection (1) of this section, the ben- 27 efits of a member or alternate payee shall be subject to garnish- 28 ment, execution, or wage withholding under chapter 12, title 7, Idaho Code, 29 for the enforcement of an order for the support of a minor child. 30 (3) Notwithstanding subsection (1) of this section, prior to July 31 1, 1998, sShould a court order direct distribution or par- 32 tial distribution of a member benefit defined in either chapter 13, title 59, 33 Idaho Code, or chapter 14, title 72, Idaho Code, be made to the member's 34 spouse or former spouse, that member's full benefit entitlement will be for- 35 warded to the court for distribution. 36 (4) Notwithstanding subsection (1) of this section, on or after 37 July 1, 1998, should a court order direct distribution or partial distribution 38 of a member's benefit defined in either chapter 13, title 59, Idaho Code, or 39 chapter 14, title 72, Idaho Code, be made to the member's spouse or former 40 spouse, the court order must be an approved domestic retirement order and 41 shall comply with the requirements of sections 59-1319 and 59-1320, Idaho 42 Code. 43 (5) Notwithstanding subsection (1) of this section, sS44hould a court order establish a trust pursuant to section 15-5-409, 45 Idaho Code, the full benefit entitlement will be forwarded to the trustee, 46 naming the trustee as payee. 47 SECTION 3. That Chapter 13, Title 59, Idaho Code, be, and the same is 48 hereby amended by the addition thereto of a NEW SECTION , to be 49 known and designated as Section 59-1319, Idaho Code, and to read as follows: 50 59-1319. APPROVED DOMESTIC RETIREMENT ORDERS -- REQUIREMENTS. (1) An 51 approved domestic retirement order must meet the following requirements: 7 1 (a) Clearly specify that such order applies to the retirement system; 2 (b) Clearly specify the effective date of the order, the name, social 3 security number, date of birth, sex, and last known mailing address of the 4 member and the name, social security number, date of birth, sex, and last 5 known mailing address of the alternate payee covered by the order; 6 (c) Provide for a proportional reduction of the amount awarded to an 7 alternate payee in the event that benefits available to the member are 8 reduced by law; 9 (d) For benefits as defined in chapter 13, title 59, Idaho Code, for mem- 10 bers who are not retired members: (i) clearly specify the amount or per- 11 centage of the member's taxed and tax deferred accumulated contributions 12 which are to be credited to the segregated account or the manner in which 13 such amount or percentage is to be determined, and (ii) clearly specify 14 the member's months of credited service, either by specific amount or per- 15 centage, to be transferred by the retirement system to the segregated 16 account or the manner in which such amount or percentage is to be deter- 17 mined. The months of credited service transferred to the alternate payee 18 shall be proportional to the accumulated contributions attributable to 19 such months of credited service. Months of credited service transferred 20 shall be whole months and not partial months; 21 (e) For benefits as defined in chapter 13, title 59, Idaho Code, for 22 retired members, clearly specify the amount or percentage of the member's 23 benefit being paid that the retirement system is to pay to the alternate 24 payee, or the manner in which such amount or percentage is to be deter- 25 mined; and 26 (f) For benefits as defined in chapter 14, title 72, Idaho Code, clearly 27 specify the amount or percentage of the member's benefit paid at the time 28 of retirement which the retirement system is to pay to the alternate 29 payee, or the manner in which such percentage is to be determined. 30 (2) An approved domestic retirement order cannot: 31 (a) Require the retirement system to provide any type or form of benefit 32 or any option not otherwise provided under the retirement system; 33 (b) Require the retirement system to provide increased benefits deter- 34 mined on the basis of actuarial value; 35 (c) Require the payment of benefits to an alternate payee which are 36 required to be paid to another alternate payee under another order previ- 37 ously determined to be an approved domestic retirement order or a court 38 order entered prior to July 1, 1998; 39 (d) Require any action on the part of the retirement system contrary to 40 its governing statutes or rules other than the direct payment of the bene- 41 fit awarded to an alternate payee; 42 (e) Segregate or attempt to segregate the right to reinstate previous 43 credited service as provided in section 59-1360, Idaho Code, unless such 44 credited service has been fully reinstated by full payment of contribu- 45 tions and interest as provided in section 59-1360, Idaho Code; 46 (f) Purport to award to the alternate payee any future benefit increases 47 that are provided or required by the legislature, except as provided in 48 subsections (6) and (7) of section 59-1320, Idaho Code; or 49 (g) Require the payment of benefits to an alternate payee before the date 50 on which the alternate payee attains the earliest retirement age under the 51 retirement system. However, an alternate payee may take a lump sum distri- 52 bution any time prior to receiving a lifetime annuity payment. 53 (3) In no event shall an approved domestic retirement order cause the 54 retirement system to pay any benefit or any amount of benefit greater than 55 would have been paid had the member's account not been segregated. 8 1 (4) A party to any domestic retirement order issued prior to July 1, 2 1998, which distributes benefits defined in either chapter 13, title 59, Idaho 3 Code, or chapter 14, title 72, Idaho Code, may move the court to modify such 4 order to comply with the requirements of this section and section 59-1320, 5 Idaho Code, provided that modifications be limited to issues related to the 6 distribution of benefits defined in either chapter 13, title 59, Idaho Code, 7 or chapter 14, title 72, Idaho Code, that the value of the distribution is not 8 materially changed and that such modified order be submitted and become an 9 approved domestic retirement order before July 1, 2000. 10 SECTION 4. That Chapter 13, Title 59, Idaho Code, be, and the same is 11 hereby amended by the addition thereto of a NEW SECTION , to be 12 known and designated as Section 59-1320, Idaho Code, and to read as follows: 13 59-1320. APPROVED DOMESTIC RETIREMENT ORDERS -- APPLICATION AND EFFECT. 14 (1) The executive director of the public employee retirement system or his 15 designee upon receipt of a copy of a domestic retirement order, shall deter- 16 mine whether the order is an approved domestic retirement order and shall 17 notify the member and the alternate payee of the determination within ninety 18 (90) days. Orders shall be applied prospectively only from the first day of 19 the month following the order being determined to be an approved domestic 20 retirement order. The retirement system shall then pay benefits or establish a 21 segregated account in accordance with the order. 22 (2) If the order is determined not to be an approved domestic retirement 23 order, or if no determination is issued within ninety (90) days, the member or 24 the alternate payee named in the order may move the court which issued the 25 order to amend the order so that it will be approved. The court that issued 26 the order or which would otherwise have jurisdiction over the matter has 27 jurisdiction to amend the order so that it will be qualified even though all 28 other matters incident to the action or proceeding have been fully and finally 29 adjudicated. 30 (3) The executive director of the retirement system to which a domestic 31 retirement order is submitted or his designee has exclusive authority to 32 determine whether a domestic retirement order is an approved domestic retire- 33 ment order. If it is determined that a domestic retirement order does not meet 34 the requirements for an approved domestic retirement order, both the issuing 35 court and the parties to the order shall be notified so action may be taken to 36 amend the order. 37 (4) Because an approved domestic retirement order cannot cause the 38 retirement system to pay any benefit or any amount of benefit greater than 39 would have been paid had the member's account not been segregated, disputes 40 related to benefits paid under an approved domestic retirement order shall be 41 resolved between the parties to the order by the court issuing that order. The 42 retirement system shall not be made a party to the action. Any cost, including 43 attorney's fees, incurred by the retirement system as a result of such actions 44 shall be distributed by the court among the parties and included in any 45 amended order issued. 46 (5) Unless the approved domestic retirement order specifies differently, 47 if the member has a right to a vested benefit as of the effective date of the 48 order, then both the member and the alternate payee shall have a right to a 49 vested benefit after the transfer of months of service even if the member or 50 the alternate payee has less than sixty (60) months of membership service. 51 (6) For benefits under chapter 13, title 59, Idaho Code, for members 52 other than retired members, if the domestic retirement order awards to the 53 alternate payee a portion of the member's accumulated contributions the alter- 9 1 nate payee shall be entitled to all the same benefits and rights an inactive 2 member has under chapter 13, title 59, Idaho Code. The alternate payee's bene- 3 fit calculation for a lifetime annuity shall use the member's average monthly 4 salary and base period as of the effective date of the order and the months of 5 credited service transferred to the alternate payee's segregated account. The 6 benefit calculation shall use the alternate payee's age with the appropriate 7 reduction factors based on the alternate payee's age at the time of payment of 8 the lifetime annuity. For the purpose of the lifetime annuity, the bridging 9 factor, as specified in section 59-1355, Idaho Code, shall be the bridging 10 factor between the effective date of the order or the last day of contribu- 11 tions by the member prior to the effective date of the order, whichever is 12 earliest, and the date of the first lifetime annuity payment to the alternate 13 payee. The alternate payee shall have the right to select any of the optional 14 retirement allowances provided in section 59-1351, Idaho Code. The alternate 15 payee shall have the right to name a beneficiary. 16 (7) For benefits defined under chapter 13, title 59, Idaho Code, for 17 retired members, and for benefits under chapter 14, title 72, Idaho Code, the 18 retirement system shall include in the alternate payee's amount or percentage 19 of the benefit, on a proportional basis, all future adjustments, including 20 postretirement increases that are granted by the retirement system, and any 21 death benefit. Furthermore, upon the death of the alternate payee, his/her 22 percentage of the benefit will revert to the person or persons, including the 23 member, who are entitled to the benefit under the system at the time of the 24 alternate payee's death. 25 (8) For benefits under chapter 13, title 59, Idaho Code, for retired mem- 26 bers, the form of payment previously elected by the member under section 27 59-1351, Idaho Code, cannot be changed by a domestic retirement order. Fur- 28 thermore, no segregated account will be established by the retirement system 29 for the alternate payee. 30 (9) For benefits defined under chapter 14, title 72, Idaho Code, the ben- 31 efit paid to the alternate payee shall start when the retirement system begins 32 paying benefits to the member, surviving spouse, or surviving children. Unless 33 otherwise ordered, in the event the member dies and leaves a surviving spouse, 34 during the surviving spouse's lifetime, the alternate payee shall be paid 35 his/her designated amount or percentage of the benefit. Unless otherwise 36 ordered, if there is no surviving spouse or the surviving spouse dies and 37 there is a surviving child or children of the member who are under eighteen 38 (18) years of age and unmarried, then the alternate payee shall be paid 39 his/her designated amount or percentage of the benefit until the child or 40 children reach the age of eighteen (18) years or marries, whichever occurs 41 first. 42 (10) The retirement system shall be authorized to issue any and all appro- 43 priate tax forms or reports for any payments made to the alternate payee. 44 (11) The retirement system, the retirement board, and officers and employ- 45 ees of the retirement system shall not be liable to any person for making pay- 46 ments of any benefits in accordance with an approved domestic retirement 47 order.
STATEMENT OF PURPOSE
RS07338C1
This bill is intended to resolve many of the problems currently faced by courts, PERSI, and
members and their spouses in addressing retirement benefits upon divorce. Currently, PERSI
benefits cannot be divided until a distribution event occurs. The member spouse generally
has some control over that event, and the matter must be monitored by PERSI and the court,
sometimes for many years. The methodology adopted by this bill is similar to that used under
federal law for private retirement plans. If a domestic retirement order meets the requirements
to be an approved domestic retirement order, the member's retirement account is
segregated at the time of divorce, providing a separate account for the member's spouse.
The member's spouse then has control over that account, eliminating the need for continued
monitoring by the courts and PERSI, and eliminating uncertainty for the member and the
member's spouse.
FISCAL IMPACT
None. Segregated benefits cannot exceed the value of benefits prior to segregation.
CONTACT
Name: Alan Winkle
Agency: Public Employee Retirement System of Idaho
Phone: 334-2455
Statement of Purpose/Fiscal Impact
S 1356