Introduced Version
House Bill 4562 History
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Key: Green = existing Code. Red = new code to be enacted
H. B. 4562
(By Delegate Campbell)
[Introduced
February 20, 2004
; referred to the
Committee on Pensions and Retirement then Finance.]
A BILL to amend and reenact §18-7B-7, §18-7B-9, §18-7B-11 and
§18-7B-16 of the code of West Virginia, 1931; and to amend
said code by adding thereto a new section, designated
§18-7B-20, all relating to the rights of members of the
teachers' defined contribution retirement system to make a
technical correction to clarify membership; permitting
periodic payment distributions; prohibiting involuntary
distributions; clarifying service credit for vesting and
suspense account and clarifying forfeiture money payment.
Be it enacted by the Legislature of West Virginia:
That §18-7B-7, §18-7B-9, §18-7B-11 and §18-7B-16 of the code
of West Virginia, 1931, be amended and reenacted; and that said
code be amended by adding thereto a new section, designated §18-7B-
20, all to read as follows:
ARTICLE 7B. TEACHERS' DEFINED CONTRIBUTION RETIREMENT SYSTEM.
§18-7B-7. Participation in teachers' defined contribution
retirement system; limiting participation in
existing teachers retirement system.
(a) Beginning the first day of July, one thousand nine hundred
ninety-one, and except as provided for in this section, the
teachers' defined contribution system shall be the single
retirement program for all new employees whose employment commences
on or after that date and all new employees are required to
participate as a condition of employment. No additional new
employees except as may be provided for in this section may be
admitted to the existing teachers retirement system.
(b) Members of the existing teachers retirement system whose
employment continues beyond the first day of July, one thousand
nine hundred ninety-one, and those whose employment was terminated
after the thirtieth day of June, one thousand nine hundred
ninety-one, under a reduction in force are not affected by
subsection (a) of this section and shall continue to contribute to
and participate in the existing teachers retirement system without
a change in plan provisions or benefits.
(c) Any person who was previously a member of the teachers
retirement system and who left participating employment before the
creation of the defined contribution system on the first day of
July, one thousand nine hundred ninety-one, and who later returned to participating employment after the effective date of this
section has the right to elect to return to the existing teachers
retirement system or to elect to participate in the defined
contribution system. The election shall be made at the time of his
or her reemployment, is irrevocable and shall be made upon forms
approved by and filed with the West Virginia consolidated public
retirement board.
(d) Any person who was, prior to the first day of July, one
thousand nine hundred ninety-one, a member of the existing teachers
retirement system who left participating employment before the
creation of the teachers' defined contribution system on the first
day of July, one thousand nine hundred ninety-one, and who later
returned to participating employment after that date and who was
precluded from returning to the existing teachers retirement system
as a result of prior provisions of this section, may elect,
pursuant to the provisions of this section, readmission to the
existing teachers retirement system: Provided, That persons who
are eligible to, and who make the election to, terminate their
participation in the defined contribution system and to return to
participation in the existing teachers retirement system as
provided for in this section shall make the election, on a form
approved by and filed with the West Virginia consolidated public
retirement board on or before the thirtieth day of June, two thousand two: Provided, however, That as a condition of the right
of readmission to the existing teachers retirement system, persons
making the election provided for in this section whose defined
contribution account had not, prior to such election, been divided
by a qualified domestic relations order, shall pay an additional
contribution to the existing teachers retirement system equal to
one and one-half percent of his or her annual gross compensation
earned for each year during which he or she participated in the
defined contribution system and shall consent and agree to the
transfer of his or her total account balance in the defined
contribution system as of the most recent plan valuation
immediately preceding his or her transfer to the existing teachers
retirement system. For persons making the election provided for in
this section whose defined contribution account had, prior to such
election, previously been divided by a qualified domestic relations
order, the cost to such person to transfer to the existing teachers
retirement system shall be actuarially determined by the
consolidated public retirement board. Upon verification of that
person's eligibility to return to participation in the existing
teachers retirement system and the tender and transfer of funds as
provided for in this subsection, persons making this election shall
receive service credit for the time the member participated in the
defined contribution system as if his or her participation had been
in the existing teachers retirement system: Provided further, That the right to terminate participation in the defined contribution
system and to resume participation in the existing teachers
retirement system as provided for in this section is irrevocable
and shall not apply to any person who, while members of the
teachers retirement system, voluntarily elected to terminate his or
her membership in the teachers retirement system and to become a
participant in the defined contribution system pursuant to section
eight of this article.
(e) Any employee whose employment with an employer was
suspended or terminated while he or she served as an officer with
a statewide professional teaching association is eligible for
readmission to the existing retirement system in which he or she
was a member.
(f) An employee whose employment with an employer or an
existing employer is suspended as a result of an approved leave of
absence, approved maternity or paternity break in service or any
other approved break in service authorized by the board is eligible
for readmission to the existing retirement system in which he or
she was a member.
(g) In all cases in which a question exists as to the right of
an employee to readmission to membership in the existing teachers
retirement system, the consolidated public retirement board shall
decide the question.
(h) Any individual who is not a "member" or "employee" as
defined by section two of this article and any individual who is a
leased employee is not eligible to participate in the teachers'
defined contribution system. For purposes of this section, a
"leased" employee means any individual who performs services as an
independent contractor or pursuant to an agreement with an employee
leasing organization or other similar organization. In all cases
in which a question exists as to whether an individual is eligible
for membership in this system, the consolidated public retirement
board shall decide the question.
§18-7B-9. Members' contributions; annuity account established.
Each employee who is a member of the defined contribution
system shall contribute four and one-half percent of his or her
gross compensation by salary reduction. Such salary reductions
shall be made by the employer at the normal payroll intervals and
shall be remitted within five working days to the private pension,
insurance, annuity, mutual fund, or other qualified company or
companies designated by the board to administer the day-to-day
operations of the system.
All member contributions shall be immediately deposited to an
account or accounts established in the name of the member and held
in trust for the benefit of the member. An account agreement shall
be issued to each member setting forth the terms and conditions under which contributions are received, and the investment and
retirement options available to the member. The board shall
promulgate by the thirtieth day of June, one thousand nine hundred
ninety-one, pursuant to section six of this article, rules defining
the minimum requirements for the investment and retirement options
to be provided to the members.
The consolidated public employees retirement board shall study
the feasibility of employees making personal contributions to the
defined contribution system in addition to those required by this
section and the impact of the United States Internal Revenue Code
of one thousand nine hundred eighty-six, as amended, upon such
contributions. The results of said study and recommendations for
legislation to authorize such additional payments shall be
presented to the committee on pensions and retirement of each house
of the Legislature on or before the first day of October, one
thousand nine hundred ninety-six.
Such rules, to the extent not inconsistent with the applicable
provisions of the Internal Revenue Code of the United States, shall
provide for varied retirement options including, but not limited
to:
(1) Lump sum or periodic payment distributions;
(2) Joint and survivor annuities;
(3) Other annuity forms in the discretion of the board;
(4) Variable annuities which gradually increase monthly
retirement payments: Provided, That said increased payments are
funded solely by the existing current value of the member's account
at the time the member's retirement payments commencement and not,
to any extent, in a manner which would require additional employer
or employee contributions to any member's account after retirement
or after the cessation of employment; and
(5) The instances in which, if any, distributions or loans can
be made to members from their annuity account balances prior to
having attained the age of fifty-five.
§18-7B-11. Termination of membership.
Any member whose employment with a participating employer
terminates after the completion of six complete years of employment
service shall be eligible to terminate his or her annuity account
and receive a distribution from the member's annuity account, in an
amount equal to the member's contribution plus one third of the
employer contributions and any earnings thereon. Any member whose
employment with a participating employer terminates after the
completion of nine complete years of employment service shall be
eligible to terminate his or her annuity account and receive a
distribution from the member's annuity account, in an amount equal
to the member's contribution plus two thirds of the employer's
contributions and any earnings thereon. Any member whose employment with a participating employer terminates after the
completion of twelve complete years of employment service shall be
eligible to terminate his or her annuity account and receive a
distribution of all funds contributed and accumulated in his or her
annuity account. Any member whose employment with a participating
employer terminates prior to the completion of six complete years
of employment service shall be eligible to terminate his or her
annuity account and receive a distribution from the member's
annuity account, in an amount equal to the member's contribution
plus any earnings thereon: Provided, That on the death or
permanent total disability of any member, that member shall be
eligible to terminate his or her annuity account and receive all
funds contributed by any source to or accumulated in his or her
annuity account.
Upon termination of employment, regardless whether the member
has taken a distribution of all or of a portion of his or her
vested account, the remaining balance, if any, in the member's
employer account after the distribution that is not vested shall be
remitted and paid into a suspension account, hereby created, to be
administered by the board. The board shall promulgate rules
regarding the distribution of any balance in the special account
created by this section: Provided, That any funds in the account
shall may be used solely for the purpose of reducing employer contributions in future years.
Any account balances remitted to the suspension account herein
shall be maintained by the board in said suspension account in the
name of the terminated employee for a period of five years
following initial remittance to the suspension account the member's
termination of employment. For each said terminated employee at
the culmination of the aforesaid five-year period, the board shall
certify in writing to each contributing employer the amount of the
account balances plus earnings thereon attributable to each
separate contributing employers previously terminated employees'
accounts which have been irrevocably forfeited due to the elapse of
a five-year period since termination pursuant to section sixteen of
this article.
Upon certification to the several contributing employers of
the aggregate account balances plus earnings thereon which have
been irrevocably forfeited pursuant to this section, the several
contributing employers shall be permitted in the next succeeding
fiscal year or years to reduce their total aggregate contribution
requirements pursuant to section seventeen of this article, for the
then current fiscal year by an amount equal to the aggregate
amounts irrevocably forfeited and certified as such to each
contributing employer: Provided, That should the participating
employer no longer be contributing to the defined contribution system, any funds in the account shall be paid directly to the
employer.
Upon the utilization of the amounts irrevocably forfeited to
any contributing employer as a reduction in the then current fiscal
year contribution obligation and upon notification provided by the
several contributing employers to the board of their intention to
utilize irrevocably forfeited amounts, the board shall direct the
distribution of said irrevocably forfeited amounts from the
suspension account to be deposited on behalf of the contributing
employer to the member annuity accounts of its then current
employees pursuant to section seventeen of this article: Provided,
That notwithstanding any provision of this article to the contrary,
when a member is or has been elected to serve as a member of the
Legislature, and the proper discharge of his or her duties of
public office require that member to be absent from his or her
teaching, nonteaching or administrative duties, the time served in
discharge of his or her duties of the legislative office are
credited as time served for purposes of computing service credit,
regardless when this time was served: Provided, however, That the
board may not require any additional contributions from that member
in order for the board to credit him or her with the contributing
service credit earned while discharging official legislative
duties: Provided further, That nothing herein may be construed to relieve the employer from making the employer contribution at the
member's regular salary rate or rate of pay from that employer on
the contributing service credit earned while the member is
discharging his or her official legislative duties. These employer
payments shall commence as of the first day of July, two thousand
three: And provided further, That any member to which the
provisions of this subsection apply may elect to pay to the board
an amount equal to what his or her contribution would have been for
those periods of time he or she was serving in the Legislature.
§18-7B-16. Years of employment service.
A member of the defined contribution system who terminates
employment with a participating employer and does not remove any
funds from his or her annuity vested employee and employer account,
or who removes such funds and repays them within five years after
termination, and becomes reemployed with a participating employer
within five years shall retain his or her previous years of
employment service for purposes of the provisions of section eleven
of this article does not forfeit any amounts placed into the
suspension account pursuant to section eleven of this article, and
any such amounts shall be returned to his or her employer account.
All years of employment service, under all circumstances,
shall be counted for vesting purposes under section eleven of this
article.
§18-7B-20. Prohibition of involuntary cash-outs.
Notwithstanding any provision of this section or any
legislative rule contained in series three, involuntary cash-outs
to members may not be made after the thirtieth day of June, two
thousand four.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.
§18-7B-20 is new; therefore, strike-throughs and underscoring
have been omitted.