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S1001.......................................by COMMERCE AND HUMAN RESOURCES
PUBLIC EMPLOYEE RETIREMENT SYSTEM - Amends existing law relating to the
Public Employee Retirement System to reference the ability to purchase
membership service related to certain active duty service in the armed
forces; to revise the date applicable to eligibility for disability
retirement; to clarify separation of service for retired members; to
clarify separation from employment for inactive members; and to provide for
the purchase of membership service relating to a member's active duty
service.
01/12 Senate intro - 1st rdg - to printing
01/15 Rpt prt - to Com/HuRes
02/14 Rpt out - rec d/p - to 2nd rdg
02/15 2nd rdg - to 3rd rdg
02/19 3rd rdg - PASSED - 35-0-0
AYES -- Andreason, Bair, Bastian, Bilyeu, Broadsword, Burkett,
Cameron, Coiner, Corder, Darrington, Davis, Fulcher, Gannon, Geddes,
Goedde, Hammond, Heinrich, Hill, Jorgenson, Kelly, Keough, Langhorst,
Little, Lodge, Malepeai, McGee, McKague, McKenzie, Pearce,
Richardson, Schroeder, Siddoway, Stegner, Stennett, Werk
NAYS -- None
Absent and excused -- None
Floor Sponsor - Davis
Title apvd - to House
02/20 House intro - 1st rdg - to Com/HuRes
03/01 Rpt out - rec d/p - to 2nd rdg
03/02 2nd rdg - to 3rd rdg
03/06 3rd rdg - PASSED - 65-0-5
AYES -- Anderson, Andrus, Barrett, Bayer, Bedke, Bell, Bilbao, Black,
Block, Bock, Boe, Bolz, Brackett, Bradford, Chadderdon, Chavez, Chew,
Clark, Collins, Durst, Edmunson, Eskridge, Hagedorn, Hart, Harwood,
Henbest, Henderson, Jaquet, Killen, King, Kren, Lake, LeFavour,
Loertscher, Luker, Marriott, Mathews, Mortimer, Moyle, Nielsen,
Nonini, Pasley-Stuart, Patrick, Pence, Raybould, Ring, Ringo, Ruchti,
Rusche, Sayler, Shepherd(2), Shepherd(8), Shirley, Shively,
Smith(30), Smith(24), Snodgrass, Stevenson, Thayn, Trail, Vander
Woude, Wills, Wood(27), Wood(35), Mr. Speaker
NAYS -- None
Absent and excused -- Crane, Labrador, McGeachin, Roberts, Schaefer
Floor Sponsor - Bradford
Title apvd - to Senate
03/07 To enrol
03/08 Rpt enrol - Pres signed - Sp signed
03/09 To Governor
03/12 Governor signed
Session Law Chapter 44
Effective: 07/01/07
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-ninth Legislature First Regular Session - 2007
IN THE SENATE
SENATE BILL NO. 1001
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 REFERENCE THE ABILITY TO PURCHASE MEMBERSHIP SERVICE
4 RELATED TO CERTAIN ACTIVE DUTY SERVICE IN THE ARMED FORCES; AMENDING SEC-
5 TION 59-1352, IDAHO CODE, TO REVISE THE DATE APPLICABLE TO ELIGIBILITY FOR
6 DISABILITY RETIREMENT; AMENDING SECTION 59-1356, IDAHO CODE, TO CLARIFY
7 SEPARATION OF SERVICE FOR RETIRED MEMBERS; AMENDING SECTION 59-1359, IDAHO
8 CODE, TO CLARIFY SEPARATION FROM EMPLOYMENT FOR INACTIVE MEMBERS; AMENDING
9 SECTION 59-1362, IDAHO CODE, TO PROVIDE FOR THE PURCHASE OF MEMBERSHIP
10 SERVICE RELATING TO A MEMBER'S ACTIVE DUTY SERVICE; AND AMENDING SECTION
11 59-1363, IDAHO CODE, TO REMOVE LANGUAGE REFERENCING THE PURCHASE OF OTHER
12 MEMBERSHIP SERVICE.
13 Be It Enacted by the Legislature of the State of Idaho:
14 SECTION 1. That Section 59-1302, Idaho Code, be, and the same is hereby
15 amended to read as follows:
16 59-1302. DEFINITIONS. (1) As used in this chapter, each of the terms
17 defined in this section shall have the meaning given in this section unless a
18 different meaning is clearly required by the context.
19 (2) "Active member" means any employee who is not establishing the right
20 to receive benefits through his or her employer's participation in any other
21 retirement system established for Idaho public employees, if such participa-
22 tion is mandated by applicable Idaho statutes other than this chapter. In no
23 case will an employee be entitled to any benefit under this chapter for public
24 service if such employee is establishing retirement benefit entitlements by
25 other Idaho statutes or federal statutes other than military service or social
26 security for that same service.
27 (3) "Accumulated contributions" means the sum of amounts contributed by a
28 member of the system, together with regular interest credit thereon.
29 (4) "Actuarial equivalent" means a benefit equal in value to another ben-
30 efit, when computed upon the basis of the actuarial tables in use by the sys-
31 tem.
32 (5) "Actuarial tables" means such tables as shall have been adopted by
33 the board in accordance with recommendations of the actuary.
34 (5A) "Alternate payee" means a spouse or former spouse of a member who is
35 recognized by an approved domestic retirement order as having a right to all
36 or a portion of the accrued benefits in the retirement system with respect to
37 such member.
38 (5B) "Approved domestic retirement order" means a domestic retirement
39 order which creates or recognizes the existence of an alternate payee's right
40 or assigns to an alternate payee the right to all or a portion of the accrued
41 benefits of a member under the retirement system, which directs the system to
42 establish a segregated account or disburse benefits to an alternate payee, and
43 which the executive director of the retirement system has determined meets the
2
1 requirements of sections 59-1319 and 59-1320, Idaho Code.
2 (5C) "Average monthly salary" means the member's average salary during the
3 base period as calculated pursuant to rules adopted by the retirement board.
4 (5D) (a) "Base period" means the period of fifty-four (54) consecutive
5 calendar months during which the member earned:
6 (i) The highest average salary; and
7 (ii) Membership service of at least one-half (1/2) the number of
8 months in the period, excluding months of service attributable to:
9 A. Military service;
10 B. Service qualifying as minimum benefit pursuant to section
11 59-1342(5), Idaho Code; and
12 C. Worker's compensation income benefits.
13 (b) Effective October 1, 1993, the consecutive calendar months shall be
14 forty-eight (48). Effective October 1, 1994, the consecutive calendar
15 months shall be forty-two (42).
16 (c) Entitlement to a base period shall not vest until the effective date
17 of that base period. The retirement benefits shall be calculated on the
18 amounts, terms and conditions in effect at the date of the final contribu-
19 tion by the member.
20 (d) If no base period exists for a member, the member's average monthly
21 salary shall be determined by the board, using standards not inconsistent
22 with those established in this subsection.
23 (e) To assure equitable treatment for all members, salary increments
24 inconsistent with usual compensation patterns may be disallowed by the
25 board in determining average monthly salary and base period.
26 (6) "Beneficiary" means the person who is nominated by the written desig-
27 nation of a member, duly executed and filed with the board, to receive the
28 death benefit.
29 (7) "Calendar year" means twelve (12) calendar months commencing on the
30 first day of January.
31 (7A) "Contingent annuitant" means the person designated by a member under
32 certain retirement options to receive benefit payments upon the death of the
33 member. The person so designated must be born and living on the effective date
34 of retirement.
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 order,
24 including approval of a property settlement agreement which relates to the
25 provision of marital property rights to a spouse or former spouse of a member,
26 and is made pursuant to a domestic relations law, including the community
27 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 professional-
52 technical program at and employed by a state college, university, commu-
53 nity college or professional-technical center when such employment is
54 predicated 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; or
10 (h) A person in a position that (i) is eligible for participation in an
11 optional retirement program established under section 33-107A or 33-107B,
12 Idaho Code, or (ii) would be eligible for participation in an optional
13 retirement program established under section 33-107A or 33-107B, Idaho
14 Code, if the person was not working less than half-time or less than
15 twenty (20) hours per week.
16 (15) "Employer" means the state of Idaho, or any political subdivision or
17 governmental entity, provided such subdivision or entity has elected to come
18 into the system. Governmental entity means any organization composed of units
19 of government of Idaho or organizations funded only by government or employee
20 contributions or organizations who discharge governmental responsibilities or
21 proprietary responsibilities that would otherwise be performed by government.
22 All governmental entities are deemed to be political subdivisions for the pur-
23 pose of this chapter.
24 (15A) "Final contribution" means the final contribution made by a member
25 pursuant to sections 59-1331 through 59-1334, Idaho Code.
26 (16) "Firefighter" means an employee, including paid firefighters hired on
27 or after October 1, 1980, whose primary occupation is that of preventing and
28 extinguishing fires as determined by the rules of the board.
29 (17) "Fiscal year" means the period beginning on July 1 in any year and
30 ending on June 30 of the next succeeding year.
31 (18) "Fund" means the public employee retirement fund established by this
32 chapter.
33 (19) "Funding agent" means any bank or banks, trust company or trust com-
34 panies, legal reserve life insurance company or legal reserve life insurance
35 companies, or combinations thereof, any thrift institution or credit union or
36 any investment management firm or individual investment manager selected by
37 the board to hold and/or invest the employers' and members' contributions and
38 pay certain benefits granted under this chapter.
39 (20) "Inactive member" means a former active member who is not an employee
40 and is not receiving any form of retirement allowance, but for whom a separa-
41 tion benefit has not become payable.
42 (20A) "Lifetime annuity" means periodic monthly payments of income by the
43 retirement system to an alternate payee.
44 (20B) "Lump sum distribution" means a payment by the retirement system of
45 the entire balance in the alternate payee's segregated account, together with
46 regular interest credited thereon.
47 (21) "Member" means an active member, inactive member or a retired member.
48 (22) "Membership service" means military service which occurs after the
49 commencement of contributions payable under sections 59-1331 through 59-1334,
50 Idaho Code, and service with respect to which contributions are payable under
51 sections 59-1331 through 59-1334, Idaho Code, which, except for benefit calcu-
52 lations described in sections 59-1342 and 59-1353, Idaho Code, includes ser-
53 vice transferred to a segregated account under an approved domestic retirement
54 order.
55 (23) "Military service" means any period of active duty service in the
5
1 armed forces of the United States including the national guard and reserves,
2 under the provisions of title 10, title 32, and title 37, United States code,
3 which commences less than ninety (90) days after the person ceases to be an
4 employee and ends less than ninety (90) days before the person again becomes
5 an employee. Provided, if a member fails to again become an employee due to
6 being killed while in active duty service, the member shall be entitled to
7 military service through the date of death. In no event shall military service
8 include:
9 (a) Any period ended by dishonorable discharge or during which termina-
10 tion of such service is available but not accepted; or
11 (b) Any active duty service in excess of five (5) years if at the conve-
12 nience of the United States government, or in excess of four (4) years if
13 not at the convenience of the United States government, provided addi-
14 tional membership service may be purchased as provided in section 59-1362,
15 Idaho Code.
16 (24) (a) "Police officer" for retirement purposes shall be as defined in
17 section 59-1303, Idaho Code.
18 (b) "POST" means the Idaho peace officer standards and training council
19 established in chapter 51, title 19, Idaho Code.
20 (25) "Prior service" means any period prior to July 1, 1965, of military
21 service or of employment for the state of Idaho or any political subdivision
22 or other employer of each employee who is an active member or in military ser-
23 vice or on leave of absence on the date of establishment, provided, however,
24 an employee who was not an active member or in military service or on leave of
25 absence on the date of establishment shall receive credit for the member's
26 service prior to July 1, 1965, on the basis of recognizing two (2) months of
27 such service for each month of membership service. For the purpose of comput-
28 ing such service, no deduction shall be made for any continuous period of
29 absence from service or military service of six (6) months or less.
30 (26) "Regular interest" means interest at the rate set from time to time
31 by the board.
32 (27) "Retired member" means a former active member receiving a retirement
33 allowance.
34 (28) "Retirement" means the acceptance of a retirement allowance under
35 this chapter upon termination of employment.
36 (29) "Retirement board" or "board" means the board provided for in sec-
37 tions 59-1304 and 59-1305, Idaho Code, to administer the retirement system.
38 (30) "Retirement system" or "system" means the public employee retirement
39 system of Idaho.
40 (31) (A) "Salary" means:
41 (a) The total salary or wages paid to a person who meets the definition
42 of employee by an employer for personal services performed and reported
43 by the employer for income tax purposes, including the cash value of all
44 remuneration in any medium other than cash.
45 (b) The total amount of any voluntary reduction in salary agreed to by
46 the member and employer where the reduction is used as an alternative form
47 of remuneration to the member.
48 (B) Salary in excess of the compensation limitations set forth in section
49 401(a)(17) of the Internal Revenue Code shall be disregarded for any person
50 who becomes a member of the system on or after July 1, 1996. The system had no
51 limitations on compensation in effect on July 1, 1993. The compensation limi-
52 tations set forth in section 401(a)(17) of the Internal Revenue Code shall not
53 apply for an "eligible employee." For purposes of this subsection, "eligible
54 employee" is an individual who was a member of the system before July 1, 1996.
55 (C) "Salary" does not include:
6
1 (a) Contributions by employers to employee held medical savings accounts,
2 as those accounts are defined in section 63-3022K, Idaho Code.
3 (b) Lump sum payments inconsistent with usual compensation patterns made
4 by the employer to the employee only upon termination from service includ-
5 ing, but not limited to, vacation payoffs, sick leave payoffs, early
6 retirement incentive payments and bonuses.
7 (31A) "Segregated account" means the account established by the retirement
8 system for the alternate payee of a member who is not a retired member. It
9 shall include the months of credited service and accumulated contributions
10 transferred from the member's account.
11 (32) "Separation benefit" means the amount, if any, payable upon or subse-
12 quent to separation from service.
13 (33) "Service" means being shown on an employer's payroll as an employee
14 receiving a salary. For each calendar month, service is credited only when a
15 member is an employee as defined in subsection (14)(A) of this section and is
16 employed for fifteen (15) days or more during the calendar month. Employment
17 of fourteen (14) days or less during any calendar month shall not be credited.
18 No more than one (1) month of service shall be credited for all service in any
19 month.
20 (34) "Service retirement allowance" means the periodic payment becoming
21 payable upon an active member's ceasing to be an employee while eligible for
22 service retirement.
23 (35) "State" means the state of Idaho.
24 (36) "Vested member" means an active or inactive member who has at least
25 five (5) years of credited service, except that a member, who at the time of
26 his separation from service:
27 (a) Held an office to which he had been elected by popular vote or having
28 a term fixed by the constitution, statute or charter or was appointed to
29 such office by an elected official; or
30 (b) Was the head or director of a department, division, agency, statutory
31 section or bureau of the state; or
32 (c) Was employed on or after July 1, 1965, by an elected official of the
33 state of Idaho and occupied a position exempt from the provisions of chap-
34 ter 53, title 67, Idaho Code; and
35 (d) Was not covered by a merit system for employees of the state of
36 Idaho,
37 is vested without regard to the length of credited service.
38 (37) The masculine pronoun, wherever used, shall include the feminine pro-
39 noun.
40 SECTION 2. That Section 59-1352, Idaho Code, be, and the same is hereby
41 amended to read as follows:
42 59-1352. ELIGIBILITY FOR DISABILITY RETIREMENT. (1) An active member is
43 eligible for disability retirement if the member becomes disabled after at
44 least five (5) years of membership service.
45 (2) A police officer member, general member, or a paid firefighter hired
46 on or after July 1, 1993, who is not eligible for service retirement is eligi-
47 ble for disability retirement if the member becomes disabled, as provided in
48 section 59-1302(12), Idaho Code, on or after the first day of employment as a
49 result of bodily injury or disease from an occupational cause.
50 (3) Only active members, and inactive members whose date of last day
51 physically on the job contribution as an active member was less than one (1)
52 year prior to the date of application, are eligible to apply for disability
53 retirement.
7
1 SECTION 3. That Section 59-1356, Idaho Code, be, and the same is hereby
2 amended to read as follows:
3 59-1356. REEMPLOYMENT OF RETIRED MEMBERS. (1) If an early retired member
4 is reemployed with the same employer within ninety (90) days from retiring, or
5 the early retired member is guaranteed reemployment with the same employer the
6 member shall be considered to have continued in the status of an employee and
7 not to have separated from service. Any retirement allowance payments received
8 by the retired member shall be repaid to the system and the retirement shall
9 be negated. The month of last contribution prior to the negated retirement and
10 the month of initial contribution upon return to reemployment shall be consid-
11 ered consecutive months of contributions in the determination of an appropri-
12 ate salary base period upon subsequent retirement. A retired member is not
13 considered to have separated from service if he continues performing services
14 for the same employer in any capacity including, but not limited to, indepen-
15 dent contractor, leased employee, or temporary services.
16 (2) Except as provided in subsection (3) of this section, when a retired
17 member meets the definition of an employee as defined in section
18 59-1302(14)(A)(a), Idaho Code, any benefit payable on behalf of such member
19 shall be suspended and any contributions payable by such member under sections
20 59-1331 through 59-1334, Idaho Code, shall again commence. The suspended bene-
21 fit, as adjusted pursuant to section 59-1355, Idaho Code, shall resume upon
22 subsequent retirement, along with a separate allowance computed with respect
23 to only that salary and service credited during the period of reemployment.
24 Any death benefit that becomes payable under the suspended benefit shall be
25 payable under section 59-1361(2), Idaho Code. Any death benefit that becomes
26 payable with respect to salary and service accrued during the period of reem-
27 ployment shall be payable under section 59-1361(3), Idaho Code, if the member
28 dies during the period of reemployment.
29 (3) If a retired member, who is receiving a benefit that is not reduced
30 under section 59-1346, Idaho Code, and who has been retired for more than six
31 (6) months, again becomes employed as defined in this section and section
32 59-1302(14)(A)(b), Idaho Code, as a result of being elected to a public office
33 other than an office held prior to retirement, the retired member may elect to
34 continue receiving benefits and not accrue additional service, in which event
35 no contributions shall be made by the member or employer during such reemploy-
36 ment and any benefit payable on behalf of such member shall continue.
37 (4) For purposes of this section, "same employer" means the employer for
38 which the retired member last worked prior to retirement.
39 SECTION 4. That Section 59-1359, Idaho Code, be, and the same is hereby
40 amended to read as follows:
41 59-1359. SEPARATION BENEFITS. (a) The separation benefit, if any, shall
42 become payable upon the written request of an inactive member who has been
43 separated from employment. If the person who received a separation benefit is
44 reemployed or reinstated by the same employer within ninety (90) days or is
45 guaranteed a right to employment or reinstatement with the same employer, the
46 person shall repay to the system any separation benefit paid.
47 (b) A separation benefit shall automatically be payable three (3) years
48 after a person becomes an inactive member if the inactive member is not a
49 vested member, has accumulated contributions of less than one thousand dol-
50 lars ($1,000), and has been separated from employment and is not reemployed or
51 reinstated by the same employer within ninety (90) days.
52 (c) For purposes of this section, "separated from employment" means the
8
1 inactive member terminated all employment with the employer. An inactive mem-
2 ber is not considered to have separated from employment if he continues per-
3 forming services for the same employer in any capacity including, but not lim-
4 ited to, independent contractor, leased employee, or temporary services. For
5 purposes of this section, "same employer" means the employer for which the
6 person last worked prior to being separated from employment.
7 (d) Any member may elect to have eligible rollover distributions paid
8 directly to a specified eligible retirement plan as required by 26 U.S.C. sec-
9 tion 401(a)(31).
10 SECTION 5. That Section 59-1362, Idaho Code, be, and the same is hereby
11 amended to read as follows:
12 59-1362. PURCHASE OF ACTIVE DUTY SERVICE IN THE ARMED FORCES. (1) Not-
13 withstanding any other provision of this chapter, an active or inactive member
14 who is vested may purchase membership service for active duty service in the
15 armed forces of the United States that does not qualify for "military service"
16 as defined in section 59-1302(23), Idaho Code. Provided, the combined amount
17 of membership service acquired under section 59-1302(23), Idaho Code, and pur-
18 chased under this section shall not exceed forty-eight (48) months If a member
19 is entitled to reemployment rights related to the member's active duty service
20 under the uniformed services employment and reemployment rights act of 1994
21 (USERRA), as amended, any period of that active duty service that is not eli-
22 gible to be credited as military service under section 59-1302(23), Idaho
23 Code, may be credited as membership service if the member pays employee con-
24 tributions for that period as required in this section.
25 (2) Purchases under this section are limited to active or inactive mem-
26 bers who provide, as required by the board, evidence of such active duty ser-
27 vice and who do not have a vested right to retirement benefits in any other
28 retirement system based in whole or in part upon the same active duty service
29 The member must pay employee contributions or enter into an agreement to do so
30 and begin making payments within ninety (90) days from the date of reemploy-
31 ment. If the member pays employee contributions or enters into an agreement to
32 do so, the employer will be responsible for paying employer contributions for
33 the same period within thirty (30) days thereafter. Both employee and employer
34 contributions will be based upon compensation the member would have received
35 but for the period of active duty service.
36 (3) The cost of purchases under this section shall be the full actuarial
37 costs of the service as determined by the board. The board may provide for
38 payment options, including periodic payments, but no service shall be credited
39 until payment has been made in full. The member shall be solely responsible
40 for the costs of such purchased service, except that an employer may partici-
41 pate in the costs at its option The member may have up to five (5) years to
42 repay employee contributions, with interest accruing only from the date of
43 return from active duty service. If the member terminates employment prior to
44 repaying all the employee contributions related to the eligible period as
45 agreed, membership service will be granted only for the period for which con-
46 tributions were paid.
47 (4) For purposes of this section, "active duty service in the armed
48 forces of the United States" means active duty, other than primarily for
49 training purposes, in the army, navy, air force, marine corps or coast guard,
50 concluding with other than a dishonorable discharge All periods of active duty
51 service that do not qualify as "military service" under section 59-1302(23),
52 Idaho Code, or for purchase of membership service under this section, must be
53 purchased under section 59-1363, Idaho Code.
9
1 SECTION 6. That Section 59-1363, Idaho Code, be, and the same is hereby
2 amended to read as follows:
3 59-1363. PURCHASE OF MEMBERSHIP SERVICE. (1) Notwithstanding any other
4 provision of this chapter, an active or inactive member who is vested may pur-
5 chase up to forty-eight (48) months of membership service.
6 (2) The cost of purchases under this section shall be the full actuarial
7 costs of the service as determined by the board. The board may provide for
8 payment options, including periodic payments, but no service shall be credited
9 until payment has been made in full. The member shall be solely responsible
10 for the costs of such purchased service, except that an employer may partici-
11 pate in the costs at its option.
12 (3) In no event shall any member be allowed to purchase in the aggregate
13 more than forty-eight (48) months of membership service whether purchased
14 under this section. or any other provision authorizing purchase of membership
15 service.
STATEMENT OF PURPOSE
RS 16456C1
This bill contains technical corrections and IRS compliance
amendments as follows:
1. Sections 1, 5, and 6, of the bill implement changes required
by the Uniformed Services Employment and Re-Employment Rights Act
of 1994 (USERRA), as amended, and final regulations recently
issued by the IRS implementing the provisions of that Act. That
act essentially sets forth minimum standards for the treatment of
employees who are called into active duty service in the armed
forces. Employers may be more generous, but not less. One of the
requirements is that upon reemployment the employee is
essentially treated as if he didn t leave for purposes of any
retirement plan. If it is a contributory plan like PERSI, the
employee will receive service if he pays missed contributions.
The PERSI plan actually grants this service (known as military
service) in most cases without payment of any contributions, but
there are cases where a member s active duty service may be
eligible for reemployment rights under USERRA, but not eligible
to be credited as military service under PERSI. The new IRS
regulations make it clear that in these cases, the employer must
credit the additional service upon payment of the employee
contribution. The amendments to sections 59-1302(23), 59-1362,
and 59-1363, Idaho Code, coordinate the granting of military
service (free service), purchase of additional membership service
related to USERRA requirements (based on contributions), and the
purchase of all other service which is based on actuarial costs.
The existing section 59-1362, Idaho Code, is being replaced as it
became superfluous due to the subsequent enactment of section 59-
1363, which provided for purchase of service without underlying
military service based on actuarial costs.
2. Section 2 of the bill is a technical correction to section
59-1352, Idaho Code. Last year this section was amended to add
subsection 3 a time limitation after separating from service
for applying for disability retirement. As initially enacted, the
limitation period begins running "the last day physically on the
job." Using this date has proved to sometimes be problematic in
cases where the member is on worker s compensation or short-term
disability because the limitation period may expire before it is
determined that the member cannot return to work. By changing the
beginning date of the limitation period to "date of last
contribution as an active member," most of these problems will be
eliminated.
3. Sections 3 and 4 of the bill clarify what constitutes a
separation from service or employment consistent with recent
guidance from the IRS. One of the requirements of qualified plans
is that benefits generally cannot be paid until the member
separates from service. A member may separate from service by
death, disability, retiring, or simply terminating employment.
Some employers have permitted employees to change status from an
"employee" to a contractor, a leased employee or a temporary
services employee, in order to make the employee eligible for
retirement plan benefits. The IRS has now indicated that while an
employer may change the status of an employee, that change does
not constitute a "separation from service" for purposes of
receiving benefits under the plan. So, while the contractor,
leased employee or temporary services employee may no longer be
eligible to participate in the plan because of the change in
status, they also are not eligible to receive benefits from the
plan because they have not "separated from service." These
sections of the bill amend sections 59-1356 and 59-1359, Idaho
Code, to make it clear that this practice is not acceptable.
FISCAL NOTE
Changes in sections 1, 5, and 6 of bill implementing USERRA
compliance could result in employers paying additional
contributions, but since these contributions would only relate to
specific periods of active duty service not eligible to be
credited as military service under section 59-1302(23), Idaho
Code, it is likely that these circumstances would rarely occur,
and if they did, the periods of service would generally be
relatively short. So, the fiscal impact would be negligible, if
any.
The remaining sections of the bill would have no fiscal impact.
CONTACT
Name: Alan Winkle
Agency: PERSI
Phone: 334-2455
STATEMENT OF PURPOSE/FISCAL NOTE S 1001