2001 Legislation
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HOUSE BILL NO. 38 – PERSI/supplemental plan/contribute


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H0038........................................................by MR. SPEAKER
         Requested by: Public Employee Retirement System of Idaho
PUBLIC EMPLOYEE RETIREMENT SYSTEM - Amends existing law to permit any
member of the Public Employee Retirement System to initiate voluntary
contributions into the supplemental plan immediately upon employment.
01/08    House intro - 1st rdg - to printing
    Rpt prt - to St Aff
01/11    Rpt out - to Com/HuRes
02/02    Rpt out - rec d/p - to 2nd rdg
02/05    2nd rdg - to 3rd rdg
02/07    3rd rdg - PASSED - 66-0-4
      AYES -- Barraclough, Barrett, Bedke, Bell, Black, Boe, Bolz,
      Bradford, Bruneel, Callister, Campbell, Chase, Clark, Collins, Deal,
      Denney, Ellis, Ellsworth, Eskridge, Field(13), Field(20), Gagner,
      Gould, Hadley, Hammond, Harwood, Henbest, Higgins, Hornbeck, Jaquet,
      Jones, Kellogg, Kendell, Kunz, Lake, Langford, Loertscher, Mader,
      Marley, McKague, Meyer, Montgomery, Mortensen, Moss, Moyle, Pearce,
      Pischner, Pomeroy, Raybould, Ridinger, Roberts, Robison, Sali,
      Schaefer, Sellman, Shepherd, Smith, Smylie, Stevenson, Stone, Swan,
      Tilman, Trail, Wheeler, Wood, Young
      NAYS -- None
      Absent and excused -- Bieter, Crow, Cuddy, Mr. Speaker
    Floor Sponsor -- Lake
    Title apvd - to Senate
02/08    Senate intro - 1st rdg - to Com/HuRes
03/07    Rpt out - rec d/p - to 2nd rdg
03/08    2nd rdg - to 3rd rdg
03/16    3rd rdg - PASSED - 34-0-1
      AYES -- Andreason, Boatright, Branch(Bartlett), Brandt, Bunderson,
      Burtenshaw, Cameron, Danielson, Darrington, Davis, Deide, Dunklin,
      Frasure, Geddes, Goedde, Hawkins, Ingram, Ipsen, Keough,
      King-Barrutia, Lee, Lodge, Noh, Richardson, Risch, Sandy, Schroeder,
      Sims, Sorensen, Stegner, Stennett, Thorne, Wheeler, Whitworth
      NAYS -- None
      Absent and excused -- Williams
    Floor Sponsors -- Bunderson & Lodge
    Title apvd - to House
03/19    To enrol
03/20    Rpt enrol - Sp signed
03/21    Pres signed - to Governor
03/22    Governor signed
         Session Law Chapter 89
         Effective: 03/22/01

Bill Text

  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-sixth Legislature                  First Regular Session - 2001
                              IN THE HOUSE OF REPRESENTATIVES
                                     HOUSE BILL NO. 38
                                       BY MR. SPEAKER
                  Requested by: Public Employee Retirement System of Idaho
  1                                        AN ACT
  6        GENCY.
  7    Be It Enacted by the Legislature of the State of Idaho:
  8        SECTION 1.  That Section 59-1308, Idaho Code, be, and the same  is  hereby
  9    amended to read as follows:
 11    SUPPLEMENTAL BENEFIT PLAN -- INDEMNIFICATION. (1) The state shall sponsor  and
 12    the  board  shall  administer one (1) or more supplemental benefit plans to be
 13    used for allocation of extraordinary gains as  provided  in  section  59-1309,
 14    Idaho  Code, and for voluntary contributions of active members. The supplemen-
 15    tal plans may be established  under  the  qualified  requirements  of  section
 16    401(a)  of  the  Internal  Revenue Service Code and with the qualified cash or
 17    deferred arrangements under section 401(k) of  the  Internal  Revenue  Service
 18    Code  or  any  other  tax-deferred plan permitted by law, as determined by the
 19    retirement board. The board is authorized to secure such qualified  staff  and
 20    consultants as it determines necessary to establish and administer such plans.
 21    Employee and employer contributions shall be permitted according to the provi-
 22    sions of these plans as established by the board. For purposes of this section
 23    "employee"  shall  mean  a  participant as defined in the supplemental benefit
 24    plan documents or board rules.
 25        (2)  The board is authorized, but  not  required,  to  establish  separate
 26    trust funds to hold the assets of the supplemental benefit plans created under
 27    this  section.  The  investment  options  available under supplemental benefit
 28    plans shall be determined by the board, and may include, but are  not  limited
 29    to,  investment  in all or part of the public employee retirement fund and use
 30    of private vendor options.
 31        (3)  Supplemental benefit plans shall be available to all  active  members
 32    and  shall be in addition to any other retirement or tax-deferred compensation
 33    system established by the employer. The board may provide educational opportu-
 34    nities related to supplemental benefit plans and retirement savings, as deter-
 35    mined by the board.
 36        (4)  Accounts shall be established in supplemental benefit plans  for  all
 37    active  members  eligible  for  an  extraordinary gains transfer under section
 38    59-1309, Idaho Code. After receiving an the initial transfer of  extraordinary
 39    gains, transfer, any active member may make additional voluntary contributions
 40    to  his/her account, subject to applicable limitations, by authorizing his/her
 41    employer to contribute an amount by payroll deduction to the supplemental ben-
 42    efit plan in lieu of receiving such amount as salary. The amount of such  con-
 43    tributions shall be subject to any limitations established by the board, state
  1    or  federal  law.  The  employer  shall  provide coordination of contributions
  2    between multiple plans to assure that contribution limits  are  not  exceeded.
  3    Should  aggregate  contributions  to  multiple plans exceed applicable limits,
  4    excess contributions  shall be deemed to apply exclusively to plans  not  cre-
  5    ated  by this chapter. In the event a preexisting plan is used as a supplemen-
  6    tal plan, voluntary contributions may continue to be made to that plan despite
  7    the absence of extraordinary gains transfers.
  8        (5)  For purposes of this section the employer is authorized to make  such
  9    deductions  from salary for any employee who has authorized such deductions in
 10    writing. The employer shall forward all contributions under  this  section  to
 11    the  board by the fifth working day after each payroll, in addition to reports
 12    as directed by the board. Any costs incurred by the board, whether  direct  or
 13    indirect,  due  to an employer's failure to properly withhold, transfer, limit
 14    and report contributions, shall be the  responsibility  of  the  employer  and
 15    shall  be  immediately  due  and  payable  upon  notice  from  the board. This
 16    includes, but is not limited to, costs associated with plan corrections.  Such
 17    costs  shall  be  treated  as  delinquent contributions under section 59-1325,
 18    Idaho Code.
 19        (6)  The board may enter into agreements with employers or require partic-
 20    ipation to implement the supplemental benefit plans and the board  may  desig-
 21    nate  administrative  agents to execute all necessary agreements pertaining to
 22    the supplemental benefit plans.
 23        (7)  All contributions received from participants in the supplemental ben-
 24    efit plans shall be deposited with a trustee designated by the board. All such
 25    funds are hereby perpetually appropriated to the board, shall not be  included
 26    in  the department's budget, and may be invested or used to pay for investment
 27    and administrative expenses of the supplemental benefit plans.  Inactive  mem-
 28    bers may be required to transfer supplemental benefit plan account balances as
 29    determined by the board.
 30        (8)  The  board may establish rules to implement and administer supplemen-
 31    tal benefit plans. Costs of administration shall be appropriated by the legis-
 32    lature and may be paid from the interest earnings of the funds  accrued  as  a
 33    result of the deposits or as an assessment against each account, to be decided
 34    by the board. Investment related expenses are exempt from appropriation.
 35        (9)  Contributions  and investment earnings under the supplemental benefit
 36    plans shall be exempt from federal and state income taxes until  the  ultimate
 37    distribution  of such contributions. Distributions of funds held in supplemen-
 38    tal benefit plan accounts are subject to federal law  limitations.  The  board
 39    may provide for retirement disbursement options other than lump sum payments.
 40        (10) All  additional contributions made by the employee under this section
 41    shall continue to be included as regular compensation for the purpose of  com-
 42    puting the employer and employee retirement contributions and pension benefits
 43    earned  by  an employee under this chapter, but such sum shall not be included
 44    in the computation of any income taxes withheld on  behalf  of  any  employee.
 45    However,  funds  accrued  in  a supplemental benefit plan account shall not be
 46    considered in determining any other benefits under this chapter.
 47        (11) The provisions of sections 59-1316 and 59-1317(1), (2) and (5), Idaho
 48    Code, shall also apply to the supplemental benefit plans  created  under  this
 49    section.  Should  a  court order that an assignment be made to a participant's
 50    spouse or former spouse of all or part of an account created under  this  sec-
 51    tion,  the assignment shall be separate  and distinct from any approved domes-
 52    tic retirement order required by section 59-1317(4), Idaho Code.  Requirements
 53    for  assignments  of  supplemental  accounts may be set forth in rule or other
 54    plan documents.
 55        (12) Members of the retirement board or retirement system  staff,  jointly
  1    or  individually,  shall  be  indemnified from all claims, demands, judgments,
  2    costs, charges and expenses, including court costs and  attorney's  fees,  and
  3    against  all  liability  losses  and damages of any nature whatsoever that the
  4    retirement board or retirement system staff shall or may at any  time  sustain
  5    by  reason  of  any  decision made in the scope or performance of their duties
  6    pursuant to the provisions of this section, except as may  result  from  their
  7    willful  and  intentional  malfeasance.  The venue of all actions in which the
  8    retirement board or retirement staff is a party shall be in Ada county, Idaho.
  9        SECTION 2.  An emergency existing  therefor,  which  emergency  is  hereby
 10    declared to exist, this act shall be in full force and effect on and after its
 11    passage and approval.

Statement of Purpose / Fiscal Impact

                 STATEMENT OF PURPOSE
                      RS 10522C1

In 2000, section 59-1308, Idaho Code, was amended to 
accommodate gain-sharing allocations from the defined 
benefit plan. At that time, it was thought that the 
expense of creating and maintaining a supplemental plan 
account for voluntary contributions alone would be too 
expensive. As a result, subsection (4) provided for 
voluntary contributions only after a member had received 
a gain sharing transfer. 

As the plan has developed it has been determined that once 
the initial transfer of gain sharing takes place, providing 
members the option to make voluntary contributions immediately 
upon employment regardless of whether they personally received 
a gain sharing allocation, would be beneficial to members.  
This bill amends section 59-1308, Idaho Code, to eliminate the 
requirement that voluntary contributions cannot be initiated 
until a member has received a gain sharing transfer. 

In order to avoid any unnecessary  delay in permitting members to 
make voluntary contributions, an emergency clause is included in 
the bill. 
                     FISCAL IMPACT

There would be an incremental cost for record keeping services for 
each participant.  We estimate the total additional cost to be 
Name:  Alan Winkle, PERSI
Phone: 334-3365

STATEMENT OF PURPOSE/FISCAL NOTE                          H38