HB-5653, As Passed Senate, June 12, 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.