Bill Summary for H 359 (2013-2014)

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Summary date: 

Mar 20 2013

Bill Information:

View NCGA Bill Details2013-2014 Session
House Bill 359 (Public) Filed Tuesday, March 19, 2013
A BILL TO BE ENTITLED AN ACT TO MAKE CHANGES TO ADMINISTRATION OF THE STATE RETIREMENT SYSTEMS THAT WILL EXTEND THE TRANSFER BENEFIT OPTION TO PARTICIPANTS IN THE 403(B) SUPPLEMENTAL RETIREMENT PLAN, CLARIFY THE TIMING OF THE SOCIAL SECURITY OFFSET FOR LONG‑TERM DISABILITY BENEFITS, ESTABLISH A 415(M) BENEFITS PRESERVATION ARRANGEMENT AS ALLOWED UNDER FEDERAL LAW, AND PROVIDE THAT DOMESTIC RELATIONS ORDERS DIVIDING INTERESTS UNDER THE RETIREMENT SYSTEM MUST BE SUBMITTED ON APPROVED FORMS, AND TO CORRECT AN OVERSIGHT IN THE DISABILITY INCOME PLAN, AND TO AMEND THE PROVISIONS FOR ALLOWANCE OF RETROACTIVE MEMBERSHIP SERVICE IN THE TEACHERS' AND STATE EMPLOYEES' RETIREMENT SYSTEM AND THE LOCAL GOVERNMENTAL EMPLOYEES' RETIREMENT SYSTEM.
Intro. by Moffitt.

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Bill summary

Amends GS 135-5(m2), allowing members of the North Carolina Public School Teachers' and Professional Educators' Investment Plan at any time coincident with or following retirement to make a one‑time election to transfer any portion of the member's eligible accumulated contributions, not including any Roth after‑tax contributions or earnings to the Teachers' and State Employees' Retirement System and receive a special retirement allowance, based on the member's transferred balance (previously, the Teachers' and Professional Educators' Investment Plan was not included under these provisions). Makes conforming, clarifying, and technical changes.

Amends GS 135-106(b), making conforming and technical changes.

Amends GS 135, by creating a new Article, Article 7 (Qualified Excess Benefit Arrangement for Certain Plans Administered by the Department of State Treasurer).

Creates GS 135-150, (Definitions), adding the definitions for terms as they are to be applied to this section. Includes Board of Trustees, Internal Revenue Code, payee, Qualified Excess Benefit Arrangement, and retirement systems.

Creates GS 135-151 (Qualified Excess Benefit Arrangement) (QEBA). QEBA is established and is effective January 1, 2014, placed under the management of the Board of Trustees, to provide the part of a retirement allowance or benefit that would  otherwise have been payable by a Retirement System except for limitations under section 415(b) of the Internal Revenue Code (IRC). QEBA is intended to constitute a qualified excess benefit arrangement under section 415(m) of the IRC.

Eligibility to participate in the QEBA. Payees will participate in the QEBA effective as of January 1 , 2014, for any calendar year during which he or she receives retirement allowance or benefit  from one or more retirement systems that is reduced due to the application of the maximum benefit provision of section 415(b) of the IRC.

Supplemental benefit payable under the QEBA. Effective January 1, 2014, a payee will receive a monthly supplemental benefit equal to the difference between the amount of that payee's monthly retirement paid under the applicable system on or after January 1, 2014, and the amount that would have been payable if not for the reduction due to the application of section 415(b) of the IRC. The supplemental benefit will be computed and payable under the same terms, at the the same time, and to the same person as the related benefit payable under the applicable retirement system. Supplemental payments cannot be deferred.

Funding of the QEBA. The QEBA will be unfunded within the meaning of the federal tax law. No payee contributions or deferrals can be made or allowed.  The Board of Trustees, upon recommendation of the actuary engaged by the Board, will determine the employer contributions required to pay benefits due under the QEBA for each fiscal year. Required contributions will be paid by each employer with respect to which payee's benefit under QEBA is attributable. The required contributions will be deposited in a separate fund. The benefit liability of the QEBA will be determined each fiscal year and assets will not be accumulated to pay benefits in future fiscal years.

Treatment of unused assets. Assets of the QEBA plan not used to pay benefits in the current fiscal year will be used for payment of the administrative expenses of the QEBA for the current or future fiscal years or will be paid to the appropriate Retirement System as an additional employer contribution.

Assets subject to claims of creditor. A payee or payee's beneficiary or heirs have no right and no property interest in any assets held to support the liabilities under this Article. If any right to acquire and receive benefits under the QEBA exists, the right will be no greater than the right of any unsecured general creditor of the state of North Carolina or such other applicable employers.

Administration. The QEBA will be administered by the Board of Trustees. They will compile and maintain all records necessary for administration. They will have full discretionary authority to interpret, construe, and implement the QEBA and to adopt any rules or regulations necessary to implement the provisions of this section.

No assignment. Except as provided in other provisions or statutes, or court-ordered equitable distribution, supplemental benefits under this article will be exempt from levy and sale, garnishment, attachment, or any other process and will be unassignable, unless provided otherwise.

Reservation of power to change.  The General Assembly reserves the right to modify or amend the provisions of the QEBA. No member of the Retirement System covered by this Article and no beneficiary of such a member will be deemed to have acquired any vested right to any supplemental payment under this Article.

Effective January 1, 2014