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H. B. 2703
(By Delegate Spencer)
[Passed April 7, 2009; in effect ninety days from passage.]
AN ACT to amend and reenact §18-7A-3, §18-7A-13, §18-7A-14,
§18-7A-23, §18-7A-28c and §18-7A-34 of the Code of West
Virginia, 1931, as amended, all relating to State Teachers
Retirement System; making technical changes; modifying
definitions; specifying cessation of membership; clarifying
loan offsets at time of withdrawal; specifying procedures for
the correction of errors; permitting rollovers of any dollar
amount; and permitting loan borrowers to receive retirement
income or disability payments when outstanding loan balance is
deducted from the actuarial reserve of accrued benefit.
Be it enacted by the Legislature of West Virginia:
That §18-7A-3, §18-7A-13, §18-7A-14, §18-7A-23, §18-7A-28c and
§18-7A-34 of the Code of West Virginia, 1931, as amended, be
amended and reenacted, all to read as follows:
ARTICLE 7A. STATE TEACHERS RETIREMENT SYSTEM.
As used in this article, unless the context clearly require a
(1) "Accumulated contributions" means all deposits and all
deductions from the gross salary of a contributor plus regular
(2) "Accumulated net benefit" means the aggregate amount of
all benefits paid to or on behalf of a retired member;
(3) "Annuities" means the annual retirement payments for life
granted beneficiaries in accordance with this article.
(4) "Average final salary" means the average of the five
highest fiscal year salaries earned as a member within the last
fifteen fiscal years of total service credit, including military
service as provided in this article, or if total service is less
than fifteen years, the average annual salary for the period on
which contributions were made.
(5) "Beneficiary" means the recipient of annuity payments made
under the retirement system.
(6) "Contributor" means a member of the retirement system who
has an account in the Teachers Accumulation Fund.
(7) "Deposit" means a voluntary payment to his or her account
by a member.
(8) "Employer" means the agency of and within the state which
has employed or employs a member.
(9) "Employer error" means an omission, misrepresentation, or
violation of relevant provisions of the West Virginia Code or of the West Virginia Code of State Regulations or the relevant
provisions of both the West Virginia Code and of the West Virginia
Code of State Regulations by the participating public employer that
has resulted in an underpayment or overpayment of contributions
required. A deliberate act contrary to the provisions of this
section by a participating public employer does not constitute
(10) "Employment term" means employment for at least ten
months, a month being defined as twenty employment days.
(11) "Gross salary" means the fixed annual or periodic cash
wages paid by a participating public employer to a member for
performing duties for the participating public employer for which
the member was hired. Gross salary also includes retroactive
payments made to a member to correct a clerical error, or made
pursuant to a court order or final order of an administrative
agency charged with enforcing federal or state law pertaining to
the member's rights to employment or wages, with all retroactive
salary payments to be allocated to and considered paid in the
periods in which the work was or would have been done. Gross
salary does not include lump sum payments for bonuses, early
retirement incentives, severance pay, or any other fringe benefit
of any kind including, but not limited to, transportation
allowances, automobiles or automobile allowances, or lump sum
payments for unused, accrued leave of any type or character.
(12) "Internal Revenue Code" means the Internal Revenue Code of 1986, as it has been amended.
(13) "Member" means any person who has accumulated
contributions standing to his or her credit in the Teachers
Retirement System. A member shall remain a member until the
benefits to which he or she is entitled under this article are paid
or forfeited, or until cessation of membership pursuant to section
thirteen of this article.
(14) "Members of the administrative staff of the public
schools" means deans of instruction, deans of men, deans of women,
and financial and administrative secretaries.
(15) "Members of the extension staff of the public schools"
means every agricultural agent, boys' and girls' club agent and
every member of the agricultural extension staff whose work is not
primarily stenographic, clerical or secretarial.
(16) "New entrant" means a teacher who is not a present
(17) "Nonteaching member" means any person, except a teacher
member, who is regularly employed for full-time service by: (A) Any
county board of education, (B) the State Board of Education, (C)
the Higher Education Policy Commission, (D) the West Virginia
Council for Community and Technical College Education, or (E) a
governing board, as defined in section two, article one, chapter
eighteen-b of this code: Provided,
That any person whose
employment with the Higher Education Policy Commission, the West
Virginia Council for Community and Technical College Education or a governing board commences on or after July 1, 1991, is not
considered a nonteaching member.
(18) "Plan year" means the twelve-month period commencing on
July 1 and ending the following June 30 of any designated year.
(19) "Present member" means a present teacher who is a member
of the retirement system.
(20) "Present teacher" means any person who was a teacher
within the thirty-five years beginning July 1, 1934, and whose
membership in the retirement system is currently active.
(21) "Prior service" means all service as a teacher completed
prior to July 1, 1941, and all service of a present member who was
employed as a teacher, and did not contribute to a retirement
account because he or she was legally ineligible for membership
during the service.
(22) "Public schools" means all publicly supported schools,
including colleges and universities in this state.
(23) "Refund beneficiary" means the estate of a deceased
contributor or a person he or she has nominated as beneficiary of
his or her contributions by written designation duly executed and
filed with the retirement board.
(24) "Refund interest" means interest compounded, according to
the formula established in legislative rules, series seven of the
Consolidated Public Retirement Board, 162 CSR 7.
(25) "Regular interest" means interest at four percent compounded annually, or a higher earnable rate if set forth in the
formula established in legislative rules, series seven of the
Consolidated Public Retirement Board, 162 CSR 7.
(26) "Regularly employed for full-time service" means
employment in a regular position or job throughout the employment
term regardless of the number of hours worked or the method of pay.
(27)"Required beginning date" means April 1 of the calendar
year following the later of: (A) The calendar year in which the
member attains age seventy and one-half years; or (B) the calendar
year in which the member retires or ceases covered employment under
the system after having attained the age of seventy and one-half
(28) "Retirement system" means the State Teachers Retirement
System established by this article.
(29) "Teacher member" means the following persons, if
regularly employed for full-time service: (A) Any person employed
for instructional service in the public schools of West Virginia;
(B) principals; (C) public school librarians; (D) superintendents
of schools and assistant county superintendents of schools; (E) any
county school attendance director holding a West Virginia teacher's
certificate; (F) the executive director of the retirement board;
(G) members of the research, extension, administrative or library
staffs of the public schools; (H) the State Superintendent of
Schools, heads and assistant heads of the divisions under his or
her supervision, or any other employee under the State Superintendent performing services of an educational nature; (I)
employees of the state Board of Education who are performing
services of an educational nature; (J) any person employed in a
nonteaching capacity by the State Board of Education, any county
board of education, the State Department of Education or the
Teachers Retirement Board, if that person was formerly employed as
a teacher in the public schools; (K) all classroom teachers,
principals and educational administrators in schools under the
supervision of the Division of Corrections, the Division of Health
or the Division of Human Services; (L) an employee of the state
Board of School Finance, if that person was formerly employed as a
teacher in the public schools; and (M) any person designated as a
Century Learner Fellow pursuant to section eleven, article
three, chapter eighteen-a of this code who elects to remain a
member of the Teachers Retirement System provided in this article.
(30) "Total service" means all service as a teacher while a
member of the retirement system since last becoming a member and,
in addition thereto, credit for prior service, if any.
Age in excess of seventy years shall be considered to be
§18-7A-13. Membership in retirement system; cessation of
membership; reinstatement of withdrawn service.
The membership of the retirement system shall consist of the
(a) New entrants, whose membership in the system is compulsory upon employment as teachers and nonteachers.
(b) The membership of the retirement system shall not include
any person who is an active member of or who has been retired by
the West Virginia Public Employees Retirement System, the judge's
retirement system, or the retirement system of the West Virginia
State Police or the supplemental retirement system as provided in
section four-a, article twenty-three of this chapter. The
membership of any person in the retirement system ceases:
(1) Upon the withdrawal of accumulated contributions after the
cessation of service; or (2) upon effective retirement date; or (3)
at death; or (4) upon the date, if any, when after the cessation of
service, the outstanding balance of any loan obtained by the member
pursuant to section thirty-four of this article or section five,
article seven-d of this chapter, plus accrued interest, equals or
exceeds the member's accumulated contributions.
(c) Any former member of the retirement system who has
withdrawn accumulated contributions but subsequently reenters the
retirement system may repay to the retirement fund the amount
withdrawn, plus interest at a rate set by the board, compounded
annually from the date of withdrawal to the date of repayment:
That no repayment may be made until the former member has
completed two years of contributory service after reentry; and the
member shall be accorded all the rights to prior service and
experience as were held at the time of withdrawal of the
accumulated contributions: Provided, however,
That no withdrawn service may be reinstated that has been transferred to another
retirement system from which the member is currently or will in the
future draw benefits based on the same service. The interest paid
shall be deposited in the reserve fund.
(d) No member is eligible for prior service credit unless he
or she is eligible for prior service pension, as prescribed by
section twenty-two of this article; however, a new entrant who
becomes a present teacher as provided in this subdivision shall be
considered eligible for prior service pension upon retirement.
(e) Any individual who is a leased employee is not eligible to
participate in the system. For purposes of this system, 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. If a question
arises regarding the status of an individual as a leased employee,
the board has final power to decide the question.
§18-7A-14. Contributions by members; contributions by employers;
correction of errors.
(a) At the end of each month every member of the retirement
system shall contribute six percent of that member's monthly gross
salary to the retirement board: Provided,
That any member employed
by a state institution of higher education shall contribute on the
member's full earnable compensation, unless otherwise provided in
section fourteen-a of this article. The sums are due the Teachers
Retirement System at the end of each calendar month in arrears and shall be paid not later than fifteen days following the end of the
calendar month. Each remittance shall be accompanied by a detailed
summary of the sums withheld from the compensation of each member
for that month on forms, either paper or electronic, provided by
the Teachers Retirement System for that purpose.
(b) Annually, the contributions of each member shall be
credited to the member's account in the Teachers' Retirement System
Fund. The contributions shall be deducted from the salaries of the
members as prescribed in this section, and every member shall be
considered to have given consent to the deductions. No deductions,
however, shall be made from the earnable compensation of any member
who retired because of age or service, and then resumed service
unless as provided in section thirteen-a of this article.
(c) The aggregate of employer contributions, due and payable
under this article, shall equal annually the total deductions from
the gross salary of members required by this section. Beginning
July 1, 1994, the rate shall be seven and one-half percent;
beginning July 1, 1995, the rate shall be nine percent; beginning
July 1, 1996, the rate shall be ten and one-half percent; beginning
July 1, 1997, the rate shall be twelve percent; beginning July 1,
1998, the rate shall be thirteen and one-half percent; and
beginning July 1, 1999, and thereafter, the rate shall be fifteen
That the rate shall be seven and one-half
percent for any individual who becomes a member of the Teachers
Retirement System for the first time on or after July 1, 2005, or any individual who becomes a member of the Teachers Retirement
System as a result of the voluntary transfer contemplated in
article seven-d of this chapter.
(d) Payment by an employer to a member of the sum specified in
the employment contract minus the amount of the employee's
deductions shall be considered to be a full discharge of the
employer's contractual obligation as to earnable compensation.
(e) Each contributor shall file with the retirement board or
with the employer to be forwarded to the retirement board an
enrollment form showing the contributor's date of birth and other
data needed by the retirement board.
(f) If any change or employer error in the records of any
participating public employer or the retirement system results in
any member receiving from the system more or less than he or she
would have been entitled to receive had the records been correct,
the board shall correct the error, and as far as is practicable
shall adjust the payment of the benefit in a manner that the
actuarial equivalent of the benefit to which the member was
correctly entitled shall be paid. Any employer error resulting in
an underpayment to the retirement system may be corrected by the
member remitting the required employee contribution and the
participating public employer remitting the required employer
contribution. Interest shall accumulate in accordance with the
Legislative Rule, Retirement Board Reinstatement Interest, 162 CSR
7, and any accumulating interest owed on the employee and employer contributions resulting from the employer error shall be the
responsibility of the participating public employer. The
participating public employer may remit total payment and the
employee reimburse the participating public employer through
payroll deduction over a period equivalent to the time period
during which the employer error occurred.
§18-7A-23. Withdrawal and death benefits.
(a) Benefits upon withdrawal from service prior to retirement
under the provisions of this article shall be as follows:
(1) A contributor who withdraws from service for any cause
other than death, disability or retirement shall, upon application,
be paid his or her accumulated contributions up to the end of the
fiscal year preceding the year in which application is made, after
offset of any outstanding loan balance, plus accrued interest,
pursuant to section thirty-four of this article, but in no event
shall interest be paid beyond the end of five years following the
year in which the last contribution was made: Provided,
contributor, at the time of application, is then no longer under
contract, verbal or otherwise, to serve as a teacher; or
(2) If the contributor has completed twenty years of total
service, he or she may elect to receive at retirement age an
annuity which shall be computed as provided in this article:
That if the contributor has completed at least five, but
fewer than twenty, years of total service in this state, he or she
may elect to receive at age sixty-two an annuity which shall be computed as provided in this article. The contributor must notify
the retirement board in writing concerning the election. If the
contributor has completed fewer than five years of service in this
state, he or she shall be subject to the provisions as outlined in
subdivision (1) of this subsection.
(b) Benefits upon the death of a contributor prior to
retirement under the provisions of this article shall be paid as
(1) If the contributor was at least fifty years old and if his
or her total service as a teacher was at least twenty-five years at
the time of his or her death, then the surviving spouse of the
deceased, provided the spouse is designated as the sole refund
beneficiary, is eligible for an annuity computed as though the
deceased were actually a retired teacher at the time of death and
had selected a survivorship option which pays the spouse the same
monthly amount which would have been received by the deceased; or
(2) If the facts do not permit payment under subdivision (1)
of this subsection, then the following sum shall be paid to the
refund beneficiary of the contributor: The contributor's
accumulated contributions up to the year of his or her death plus
an amount equal to his or her employee contributions. The latter
sum shall emanate from the Employer's Accumulation Fund.
§18-7A-28c. Direct rollovers.
(a) This section applies to distributions made on or after
January 1, 1993. Notwithstanding any provision of this article to the contrary that would otherwise limit a distributee's election
under this system, a distributee may elect, at the time and in the
manner prescribed by the 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. For purposes of
this section, the following definitions apply:
(1) "Eligible rollover distribution" means any distribution of
all or any portion of the balance to the credit of the distributee,
except that an eligible rollover distribution does not include any
of the following: (A) Any distribution that is one of a series of
substantially equal periodic payments not less frequently than
annually made for the life or life expectancy of the distributee or
the joint lives or the joint life expectancies of the distributee
and the distributee's designated beneficiary, or for a specified
period of ten years or more; (B) any distribution to the extent the
distribution is required under Section 401(a)(9) of the Internal
Revenue Code; (C) the portion of any distribution that is not
includable in gross income determined without regard to the
exclusion for net unrealized appreciation with respect to employer
securities; and (D) any hardship distribution described in Section
401(k)(2)(B)(i)(iv) of the Internal Revenue Code. For
distributions after December 31, 2001, a portion of a distribution
shall not fail to be an eligible rollover distribution merely
because the portion consists of after-tax employee contributions
which are not includable in gross income. However, this portion may be paid only to an individual retirement account or annuity
described in Section 408(a) or (b) of the Internal Revenue Code, or
to a qualified defined contribution plan described in Section
401(a) or 403(a) of the Internal Revenue Code that agrees to
separately account for amounts transferred, including separately
accounting for the portion of the distribution which is includable
in gross income and the portion of the distribution which is not
(2) "Eligible retirement plan" means an individual retirement
account described in Section 408(a) of the Internal Revenue Code,
an individual retirement annuity described in Section 408(b) of the
Internal Revenue Code, an annuity plan described in Section 403(a)
of the Internal Revenue Code, or a qualified plan described in
Section 401(a) of the Internal Revenue Code, that accepts the
distributee's eligible rollover distribution: Provided,
the case of an eligible rollover distribution to the surviving
spouse, an eligible retirement plan is an individual retirement
account or individual retirement annuity. For distributions after
December 31, 2001, an eligible retirement plan also means an
annuity contract described in Section 403(b) of the Internal
Revenue Code and an eligible plan under Section 457(b) of the
Internal Revenue Code which is maintained by a state, political
subdivision of a state, or any agency or instrumentality of a state
or political subdivision of a state and which agrees to separately
account for amounts transferred into the plan from this system.
(3) "Distributee" means an employee or former employee. In
addition, the employee's or former employee's surviving spouse and
the employee's or former employee's spouse or former spouse who is
the alternate payee under a qualified domestic relations order, as
defined in Section 414(p) of the Internal Revenue Code, as
applicable to governmental plans, are distributees with regard to
the interest of the spouse or former spouse.
(4) "Direct rollover" means a payment by the system to the
eligible retirement plan.
(b) Nothing in this section may be construed as permitting
rollovers into this system or any other retirement system
administered by the board.
§18-7A-34. Loans to members.
(a) An actively contributing member of the retirement system
upon written application may borrow from his or her individual
account in the Teachers Retirement System, subject to these
(1) Loans shall be made in multiples of $10, the minimal loan
being $100 and the maximum being $8,000: Provided,
maximum amount of any loan when added to the outstanding balance of
all other loans granted under this section shall not exceed the
lesser of the following: (A) $8,000 reduced by the excess, if any,
of the highest outstanding balance of loans during the one-year
period ending on the day before the date on which the loan is made,
over the outstanding balance of loans to the member on the date on which the loan is made; or (B) fifty percent of the member's
contributions to his or her individual account in the Teachers
Retirement System: Provided, however,
That if the total amount of
loaned money outstanding exceeds $40 million, the maximum shall not
exceed $3,000 until the retirement board determines that loans
outstanding have been reduced to an extent that additional loan
amounts are again authorized: Provided further,
That the amount of
any loan made pursuant to article seven-d of this chapter is not
included for the purposes of determining if the $40 million
threshold has been exceeded.
(2) Interest charged on the amount of the loan shall be six
percent per annum, or a higher rate as set by the board: Provided,
That interest charged shall be commercially reasonable in
accordance with the provisions of Section 72(p)(2) of the Internal
Revenue Code, and the federal regulations issued thereunder. If
repayable in installments, the interest shall not exceed the annual
rate so established upon the principal amount of the loan, for the
entire period of the loan, and the charge shall be added to the
principal amount of the loan. The minimal interest charge shall be
for six months.
(3) No member is eligible for more than one outstanding loan
at any time: Provided,
That the foregoing provision does not apply
to any loan made pursuant to article seven-d of this chapter. Upon
full payment of a loan, a member may apply for a subsequent loan
after sixty days beginning the first day of the month following receipt of final payment.
(4) If a refund of accumulated contributions is payable to the
borrower or his or her beneficiary before he or she repays the loan
with interest, the balance due with interest to date shall be
deducted from the refund. A member with an unpaid loan balance who
wishes to retire or becomes eligible to receive disability benefits
under any provision of this article may have the loan repaid in
full by accepting retirement income or disability payments reduced
by deducting from the actuarial reserve for the accrued benefit the
amount of the unpaid balance plus accrued interest, if any, and
then converting the remaining of the reserve to a monthly pension
or disability benefit payable in the form of the annuity desired by
(5) From his or her monthly salary as a teacher or a
nonteacher the member shall pay the loan and interest by deductions
which will pay the loan and interest in substantially level
payments in not more than sixty nor less than six months. Upon
notice of loan granted and payment due, the employer is responsible
for making the salary deductions and reporting them to the
retirement board. At the option of the board, loan deductions may
be collected as prescribed herein for the collection of members'
contribution, or may be collected through issuance of warrant by
employer. If the borrower is no longer employed as a teacher or
nonteaching member, the borrower must make monthly loan payments
directly to the Consolidated Public Retirement Board and the board must accept the payments.
(6) The entire unpaid balance of any loan, and interest due
thereon, shall, at the option of the board, become due and payable
without further notice or demand upon the occurrence with respect
to the borrowing member of any of the following events of default:
(A) Any payment of principal and accrued interest on a loan remains
unpaid after it becomes due and payable under the terms of the loan
or after the grace period established in the discretion of the
board; (B) the borrowing member attempts to make an assignment for
the benefit of creditors of his or her refund or benefit under the
retirement system; or (C) any other event of default set forth in
rules promulgated by the board in accordance with the authority
granted pursuant to section one, article ten-d, chapter five of
this code: Provided,
That any refund or offset of an unpaid loan
balance shall be made only at the time the member is entitled to
receive a distribution under the retirement system.
(7) Loans shall be evidenced by such form of obligations and
shall be made upon such additional terms as to default, prepayment,
security, and otherwise as the board determines.
(8) Notwithstanding anything herein to the contrary, the loan
program authorized by this section shall comply with the provisions
of Section 72(p)(2) and Section 401 of the Internal Revenue Code,
and the federal regulations issued thereunder, and accordingly, the
retirement board is authorized to: (A) Apply and construe the
provisions of this section and administer the plan loan program in such a manner as to comply with the provisions of Section 72(p)(2)
and Section 401 of the Internal Revenue Code and the federal
regulations issued thereunder; (B) adopt plan loan policies or
procedures consistent with these federal law provisions; and (C)
take such actions as it considers necessary or appropriate to
administer the plan loan program created hereunder in accordance
with these federal law provisions. The retirement board is further
authorized in connection with the plan loan program to take any
actions that may at any time be required by the Internal Revenue
Service regarding compliance with the requirements of Section
72(p)(2) or Section 401 of the Internal Revenue Code, and the
federal regulations issued thereunder, notwithstanding any
provision in this article to the contrary.
(b) Notwithstanding anything in this article to the contrary,
the loan program authorized by this section shall not be available
to any teacher or nonteacher who becomes a member of the Teachers
Retirement System on or after July 1, 2005: Provided,
member is eligible for a loan under article seven-d of this chapter
to pay all or part of the Actuarial Reserve, or if available in
accordance with the provisions of subsection (d), section six,
article seven-d of this chapter, the one and one-half percent
contribution for service in the Teachers' Defined Contribution
System for the purpose of receiving additional service credit in
the State Teachers Retirement System pursuant to section six,
article seven-d, of this chapter.
(c) A member who ceases service with an unpaid loan balance
will no longer be a member when the unpaid loan balance, plus
accrued interest, equals or exceeds the member's accumulated