HB-5653, As Passed House, March 21, 2018
SUBSTITUTE FOR
HOUSE BILL NO. 5653
A bill to amend 1943 PA 240, entitled
"State employees' retirement act,"
by amending section 49 (MCL 38.49), as amended by 2011 PA 264.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec.
49. (1) This section is enacted pursuant to under section
401(a)
of the internal revenue code, 26 USC 401, that which imposes
certain administrative requirements and benefit limitations for
qualified governmental plans. This state intends that the
retirement system be a qualified pension plan created in trust
under section 401 of the internal revenue code, 26 USC 401, and
that
the trust be an exempt organization exempt from taxation under
section 501 of the internal revenue code, 26 USC 501. The
department shall administer the retirement system to fulfill this
intent.
(2) The retirement system shall be administered in compliance
with
the provisions of section 415 of the internal revenue code, 26
USC 415, and regulations under that section that are applicable to
governmental plans and, beginning January 1, 2010, applicable
provisions
of the final regulations issued by the internal revenue
service
Internal Revenue Service on April 5, 2007. Employer-
financed benefits provided by the retirement system under this act
shall
must not exceed the applicable limitations set forth in
section 415 of the internal revenue code, 26 USC 415, as adjusted
by the commissioner of internal revenue under section 415(d) of the
internal revenue code, 26 USC 415, to reflect cost-of-living
increases, and the retirement system shall adjust the benefits,
including benefits payable to retirants and retirement allowance
beneficiaries, subject to the limitation each calendar year to
conform with the adjusted limitation. For purposes of section
415(b) of the internal revenue code, 26 USC 415, the applicable
limitation
shall apply applies to aggregated benefits received from
all qualified pension plans for which the office of retirement
services coordinates administration of that limitation. If there is
a conflict between this section and another section of this act,
this section prevails.
(3)
The assets of the retirement system shall must be held in
trust and invested for the sole purpose of meeting the legitimate
obligations
of the retirement system and shall must not be used for
any
other purpose. The assets shall must
not be used for or
diverted to a purpose other than for the exclusive benefit of the
members, vested former members, retirants, and retirement allowance
beneficiaries before satisfaction of all retirement system
liabilities.
(4) The retirement system shall return post-tax member
contributions made by a member and received by the retirement
system
to a member upon on retirement, pursuant to internal revenue
service
under Internal Revenue
Service regulations and approved
internal
revenue service Internal
Revenue Service exclusion ratio
tables.
(5) The required beginning date for retirement allowances and
other
distributions shall must not be later than April 1 of the
calendar year following the calendar year in which the employee
attains age 70-1/2 or April 1 of the calendar year following the
calendar year in which the employee retires. The required minimum
distribution requirements imposed by section 401(a)(9) of the
internal
revenue code, 26 USC 401, shall apply to this act and must
be administered in accordance with a reasonable and good faith
interpretation of the required minimum distribution requirements
for all years to which the required minimum distribution
requirements apply to the retirement system.
(6) If the retirement system is terminated, the interest of
the members, vested former members, retirants, and retirement
allowance beneficiaries in the retirement system is nonforfeitable
to the extent funded as described in section 411(d)(3) of the
internal
revenue code, 26 USC 411, and related internal revenue
service
Internal Revenue Service regulations applicable to
governmental plans.
(7) Notwithstanding any other provision of this act to the
contrary that would limit a distributee's election under this act,
a distributee may elect, at the time and in the manner prescribed
by the retirement board, to have any portion of an eligible
rollover distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover. This subsection
applies
to distributions made on or after January 1, 1993. December
31, 1992. Beginning October 1, 2010, a nonspouse beneficiary may
elect to have any portion of an amount payable under this act that
is an eligible rollover distribution treated as a direct rollover
that will be paid in a direct trustee-to-trustee transfer to an
individual retirement account or individual retirement annuity
described in section 408(a) or (b) of the internal revenue code, 26
USC 408, that is established for the purpose of receiving a
distribution on behalf of the beneficiary and that will be treated
as an inherited individual retirement account or individual
retirement
annuity pursuant to under section 402(c)(11) of the
internal revenue code, 26 USC 402.
(8) For purposes of determining actuarial equivalent
retirement
allowances under sections 31(1)(a) and (b) 31(1) and
20(2),
the actuarially assumed interest rate shall must be
8% with
utilization
of the 1983 group annuity and mortality
table.determined by the director of the department of
technology,
management, and budget and the retirement board in consultation
with the actuary using the mortality tables adopted by the
department of technology, management, and budget and the retirement
board.
(9) Notwithstanding any other provision of this act to the
contrary, the compensation of a member of the retirement system
shall
must be taken into account for any year under the
retirement
system only to the extent that it does not exceed the compensation
limit established in section 401(a)(17) of the internal revenue
code, 26 USC 401, as adjusted by the commissioner of internal
revenue.
This subsection applies to any person an individual who
first
becomes a member of the retirement system on or after October
1,
September 30, 1996.
(10) Notwithstanding any other provision of this act to the
contrary, contributions, benefits, and service credit with respect
to
qualified military service will must
be provided under the
retirement system in accordance with section 414(u) of the internal
revenue code, 26 USC 414. This subsection applies to all qualified
military
service on or after December 12, 11, 1994. Beginning on
January 1, 2007, in accordance with section 401(a)(37) of the
internal revenue code, 26 USC 401, if a member dies while
performing qualified military service for purposes of determining
death
benefits payable under this act, the member shall be is
treated as having resumed and then terminated employment because of
death.