ENGROSSED SENATE
BILL NO. 1071 	By:	Barrington of the Senate

			and

		Armes of the House

An Act relating to retirement; amending 11 O.S. 2001, Sections 49-100.1, as last amended by Section 1, Chapter 128, O.S.L. 2003, 49-106, as last amended by Section 1, Chapter 345, O.S.L. 2007, 49-106.2, as last amended by Section 2, Chapter 177, O.S.L. 2008, Section 3, Chapter 345, O.S.L. 2007, 49-109, as last amended by Section 5, Chapter 345, O.S.L. 2007 and 49-138, as last amended by Section 4, Chapter 203, O.S.L. 2005 (11 O.S. Supp. 2008, Sections 49-100.1, 49-106, 49-106.2, 49-106.4, 49-109 and 49-138), which relate to the Oklahoma Firefighters Pension and Retirement System; modifying definition, updating statutory citation; specifying that certain limitation is not applicable to certain members; clarifying requirements for certain accounts or annuities; updating statutory citation; allowing certain survivors to be entitled to certain additional benefits; and declaring an emergency.

BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1.     AMENDATORY     11 O.S. 2001, Section 49-100.1, as last amended by Section 1, Chapter 128, O.S.L. 2003 (11 O.S. Supp. 2008, Section 49-100.1), is amended to read as follows:
Section 49-100.1  As used in this article:
1.  "System" means the Oklahoma Firefighters Pension and Retirement System and all predecessor municipal firefighters pension and retirement systems;
2.  "Article" means Article 49 of this title;
3.  "State Board" means the Oklahoma Firefighters Pension and Retirement Board;
4.  "Local board" means the local firefighters pension and retirement boards;
5.  "Fund" means the Oklahoma Firefighters Pension and Retirement Fund;
6.  "Member" means all eligible firefighters of a participating municipality or a fire protection district who perform the essential functions of fire suppression, prevention, and life safety duties in a fire department.  The term “member” shall include but not be limited to the person serving as fire chief of any participating municipality, provided that a person serving as fire chief of a participating municipality shall meet the age, agility, physical and other eligibility requirements required by law at the time said person becomes a member of the System.  Effective July 1, 1987, a member does not include a “leased employee”.  The term “leased employee” means any person (other than an employee of the recipient) who pursuant to an agreement between the recipient and any other person (“leasing organization”) has performed services for the recipient (or for the recipient and related persons determined in accordance with Section 414(n)(6) of the Internal Revenue Code of 1986, as amended) on a substantially full-time basis for a period of at least one year, and such services are performed under primary direction or control by the recipient.  Contributions or benefits provided a leased employee by the leasing organization which are attributable to services performed for the recipient employer shall be treated as provided by the recipient employer.  A leased employee shall not be considered an employee of the recipient if the requirements of the safe harbor provisions of Section 414(n)(5) of the Internal Revenue Code of 1986, as amended, are satisfied.  Effective July 1, 1999, any individual who agrees with the participating municipality that the individual’s services are to be performed as a leased employee or an independent contractor shall not be a member regardless of any classification as a common law employee by the Internal Revenue Service or any other governmental agency, or any court of competent jurisdiction;
7.  "Normal retirement date" means the date at which the member is eligible to receive the unreduced payments of the member's accrued retirement benefit.  Such date shall be the first day following the date the member completes twenty (20) years of credited service.  If the member's employment continues past the normal retirement date of the member, the actual retirement date of the member shall be the first day following the date the member terminates employment with more than twenty (20) years of credited service;
8.  "Credited service" means the period of service used to determine the eligibility for and the amount of benefits payable to a member.  Credited service shall consist of the period during which the member participated in the System or the predecessor municipal systems as an active employee in an eligible membership classification, plus any service prior to the establishment of the predecessor municipal systems which was credited under the predecessor municipal systems; provided however, "credited service" for members from a fire protection district shall not begin accruing before July 1, 1982;
9.  "Participating municipality" means a municipality, county fire department organized pursuant to subsection D of Section 351 of Title 19 of the Oklahoma Statutes, or fire protection district which is making contributions to the System on behalf of its firefighters;
10.  "Disability" means the complete inability of the firefighter to perform any and every duty of his regular occupation; provided further, that once benefits have been paid for twenty-four (24) months the provisions of Section 49-110 of this title shall apply to the firefighter;
11.  "Executive Director" means the managing officer of the System employed by the State Board;
12.  "Eligible employer" means any municipality with a municipal fire department or a fire protection district with an organized fire department;
13.  "Entry date" means the date as of which an eligible employer joins the System.  The first entry date pursuant to this article shall be January 1, 1981;
14.  "Final average salary" means the average paid gross salary of the firefighter for normally scheduled hours over the highest salaried thirty (30) consecutive months of the last sixty (60) months of credited service.  Gross salary shall not include payment for accumulated sick or annual leave upon termination of employment, any uniform allowances or any other compensation for reimbursement of out-of-pocket expenses.  Only salary on which the required contributions have been made may be used in computing the final average salary.  Effective January 1, 1988, gross salary shall include any amount of elective salary reduction under Section 125 of the Internal Revenue Code of 1986, as amended.  Gross salary shall include any amount of elective salary reduction under Section 457 of the Internal Revenue Code of 1986, as amended, and any amount of nonelective salary reduction under Section 414(h) of the Internal Revenue Code of 1986, as amended.  Effective July 1, 1998, for purposes of determining a member’s compensation, any contribution by the member to reduce his regular cash remuneration under 132(f)(4) of the Internal Revenue Code of 1986, as amended, shall be treated as if the member did not make such an election.  Only salary on which required contributions have been made may be used in computing final average salary.
In addition to other applicable limitations, and notwithstanding any other provision to the contrary, for plan years beginning on or after July 1, 2002, the annual gross salary of each “Noneligible Member” taken into account under the System shall not exceed the Economic Growth and Tax Relief Reconciliation Act of 2001(“EGTRRA”) annual salary limit.  The EGTRRA annual salary limit is Two Hundred Thousand Dollars ($200,000.00), as adjusted by the Commissioner for increases in the cost of living in accordance with Section 401(a)(17)(B) of the Internal Revenue Code of 1986, as amended.  The annual salary limit in effect for a calendar year applies to any period, not exceeding twelve (12) months, over which salary is determined (“determination period”) beginning in such calendar year.  If a determination period consists of fewer than twelve (12) months, the EGTRRA salary limit will be multiplied by a fraction, the numerator of which is the number of months in the determination period, and the denominator of which is twelve (12).  For purposes of this subsection, a “Noneligible Member” is any member who first became a member during a plan year commencing on or after July 1, 1996.
For plan years beginning on or after July 1, 2002, any reference to the annual salary limit under Section 401(a)(17) of the Internal Revenue Code of 1986, as amended, shall mean the EGTRRA salary limit set forth in this subsection.
Effective January 1, 2008, gross salary shall also include gross salary, as described above, but paid by the later of two and one-half (2 1/2) months after a firefighter’s severance from employment or the end of the plan year that includes the date the firefighter terminated employment, if it is a payment that, absent a severance from employment, would have been paid to the firefighter while the firefighter continued in employment with the participating municipality.  Effective January 1, 2008, any payments not described above shall not be considered gross salary if paid after severance from employment, even if they are paid by the later of two and one-half (2 1/2) months after the date of severance from employment or the end of the plan year that includes the date of severance from employment.  Effective January 1, 2008, back pay, within the meaning of Section 1.415 (c)-2(g)(8) of the Income Tax Regulations, shall be treated as gross salary for the plan year to which the back pay relates to the extent the back pay represents wages and compensation that would otherwise be included in this definition.  Effective for years beginning after December 31, 2008, gross salary shall also include differential wage payments under Section 414(u)(12) of the Internal Revenue Code of 1986, as amended;
15.  "Accrued retirement benefit" means two and one-half percent (2 1/2%) of the firefighter's final average salary multiplied by the member's years of credited service not to exceed thirty (30) years;
16.  "Beneficiary" means a member's surviving spouse or any surviving children, including biological and adopted children, at the time of the member's death.  The surviving spouse must have been married to the firefighter for the thirty (30) continuous months preceding the firefighter's death provided a surviving spouse of a member who died while in, or as a consequence of, the performance of the member's duty for a participating municipality, shall not be subject to the marriage limitation for survivor benefits.  A surviving child of a member shall be a beneficiary until reaching eighteen (18) years of age or twenty-two (22) years of age if the child is enrolled full time and regularly attending a public or private school or any institution of higher education.  Any child adopted by a member after the member's retirement shall be a beneficiary only if the child is adopted by the member for the thirty (30) continuous months preceding the member's death.  Any child who is adopted by a member after the member's retirement and such member dies accidentally or as a consequence of the performance of the member's duty as a firefighter shall not be subject to the thirty-month adoption requirement.  This definition of beneficiary shall be in addition to any other requirement set forth in this article;
17.  "Accumulated contributions" means the sum of all contributions made by a member to the System and includes both contributions deducted from the compensation of a member and contributions of a member picked up and paid by the participating municipality of the member.  Accumulated contributions shall not include any interest on the contributions of the member, interest on any amount contributed by the municipality or state and any amount contributed by the municipality or state; and
18.  "Limitation year" means the year used in applying the limitations of Section 415 of the Internal Revenue Code of 1986, which year shall be the calendar year.
SECTION 2.     AMENDATORY     11 O.S. 2001, Section 49-106, as last amended by Section 1, Chapter 345, O.S.L. 2007 (11 O.S. Supp. 2008, Section 49-106), is amended to read as follows:
Section 49-106.  A.  Any firefighter who reaches the firefighter’s normal retirement date shall be entitled, upon written request, to retire from such service and be paid from the System a monthly pension equal to the member’s accrued retirement benefit; provided, that the pension shall cease during any period of time the member may thereafter serve for compensation in any municipal fire department in the state.  If such a member is reemployed by a participating municipality in a position which is not covered by the System, retirement shall also include receipt by such member of in-service distributions from the System.
B.  With respect to distributions under the System made for calendar years beginning on or after January 1, 2005, the System shall apply the minimum distribution incidental benefit requirements, incidental benefit requirements, and minimum distribution requirements of Section 401(a)(9) of the Internal Revenue Code of 1986, as amended, in accordance with the final regulations under Section 401(a)(9) of the Internal Revenue Code of 1986, as amended, which were issued in April 2002 and June 2004, notwithstanding any provision of the System to the contrary.  With respect to distributions under the System made for calendar years beginning on or after January 1, 2001 through December 31, 2004, the System shall apply the minimum distribution requirements and incidental benefit requirements of Section 401(a)(9) of the Internal Revenue Code of 1986, as amended, in accordance with the regulations under Section 401(a)(9) of the Internal Revenue Code of 1986, as amended, which were proposed in January 2001, notwithstanding any provision of the System to the contrary.  Effective July 1, 1989, notwithstanding any other provision contained herein to the contrary, in no event shall commencement of distribution of the accrued retirement benefit of a member be delayed beyond April 1 of the calendar year following the later of:
1.  The calendar year in which the member reaches seventy and one-half (70 1/2) years of age; or
2.  The actual retirement date of the member.
C.  Any member or beneficiary eligible to receive a monthly benefit from the System may make an election to waive all or a portion of monthly benefits.
D.  If the requirements of Section 4 49-106.5 of this act title are satisfied, a member who, by reason of attainment of normal retirement date or age, is separated from service as a public safety officer with the member’s participating municipality, may elect to have payment made directly to the provider for qualified health insurance premiums by deduction from his or her monthly pension payment, after December 31, 2006, in accordance with Section 402(1) of the Internal Revenue Code of 1986, as amended.
SECTION 3.     AMENDATORY     11 O.S. 2001, Section 49-106.2, as last amended by Section 2, Chapter 177, O.S.L. 2008 (11 O.S. Supp. 2008, Section 49-106.2), is amended to read as follows:
Section 49-106.2  A.  Notwithstanding any other provision contained herein to the contrary, the benefits payable to a member from the System provided by employer contributions (including contributions picked up by the employer under Section 414(h) of the Internal Revenue Code of 1986, as amended) shall be subject to the limitations of Section 415 of the Internal Revenue Code of 1986, as amended, in accordance with the provisions of this section.  The limitations of this section shall apply in limitation years beginning on or after July 1, 2007, except as otherwise provided below.
B.  Except as provided below, effective for limitation years ending after December 31, 2001, any accrued retirement benefit payable to a member as an annual benefit as described below shall not exceed One Hundred Sixty Thousand Dollars ($160,000.00), automatically adjusted under Section 415(d) of the Internal Revenue Code of 1986, as amended, for increases in the cost of living, as prescribed by the Secretary of the Treasury or his delegate, effective January 1 of each calendar year and applicable to the limitation year ending with or within such calendar year.  The automatic annual adjustment of the dollar limitation in this subsection under Section 415(d) of the Internal Revenue Code of 1986, as amended, shall apply to a member who has had a separation from employment.
1.  The member’s annual benefit is a benefit that is payable annually in the form of a straight life annuity.  Except as provided below, where a benefit is payable in a form other than a straight life annuity, the benefit shall be adjusted to an actuarially equivalent straight life annuity that begins at the same time as such other form of benefit and is payable on the first day of each month, before applying the limitations of this section.  For a member who has or will have distributions commencing at more than one annuity starting date, the annual benefit shall be determined as of each such annuity starting date (and shall satisfy the limitations of this section as of each such date), actuarially adjusting for past and future distributions of benefits commencing at the other annuity starting dates.  For this purpose, the determination of whether a new starting date has occurred shall be made without regard to Section 1.401(a)-20, Q&A 10(d), and with regard to Section 1.415(b)-1(b)(1)(iii)(B) and (C) of the Income Tax Regulations.
2.  No actuarial adjustment to the benefit shall be made for:
a.	survivor benefits payable to a surviving spouse under a qualified joint and survivor annuity to the extent such benefits would not be payable if the member’s benefit were paid in another form,
b.	benefits that are not directly related to retirement benefits such as a qualified disability benefit, preretirement incidental death benefits, and postretirement medical benefits, or
c.	the inclusion in the form of a benefit of an automatic benefit increase feature, provided, the form of benefit is not subject to Section 417(e)(3) of the Internal Revenue Code of 1986, as amended, and would otherwise satisfy the limitations of this section, and the System provides that the amount payable under the form of benefit in any limitation year shall not exceed the limits of this section applicable at the annuity starting date, as increased in subsequent years pursuant to Section 415(d) of the Internal Revenue Code of 1986, as amended.  For this purpose, an automatic benefit increase feature is included in a form of benefit if the form of benefit provides for automatic, periodic increases to the benefits paid in that form.
3.  The determination of the annual benefit shall take into account Social Security supplements described in Section 411(a)(9) of the Internal Revenue Code of 1986, as amended, and benefits transferred from another defined benefit plan, other than transfers of distributable benefits pursuant to Section 1.411(d)-4, Q&A-3(c), of the Income Tax Regulations, but shall disregard benefits attributable to employee contributions or rollover contributions.
4.  Effective for distributions in plan years beginning after December 31, 2003, the determination of actuarial equivalence of forms of benefit other than a straight life annuity shall be made in accordance with paragraph 5 or paragraph 6 of this subsection.
5.  Benefit Forms Not Subject to Section 417(e)(3) of the Internal Revenue Code of 1986, as amended:  The straight life annuity that is actuarially equivalent to the member’s form of benefit shall be determined under this paragraph if the form of the member’s benefit is either:
a.	a nondecreasing annuity (other than a straight life annuity) payable for a period of not less than the life of the member (or, in the case of a qualified preretirement survivor annuity, the life of the surviving spouse), or
b.	an annuity that decreases during the life of the member merely because of:
(1)	the death of the survivor annuitant, but only if the reduction is not below fifty percent (50%) of the benefit payable before the death of the survivor annuitant, or
(2)	the cessation or reduction of Social Security supplements or qualified disability payments as defined in Section 401(a)(11) of the Internal Revenue Code of 1986, as amended.
c.	Limitation Year Beginning Before July 1, 2007.  For limitation years beginning before July 1, 2007, the actuarially equivalent straight life annuity is equal to the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the member’s form of benefit computed using whichever of the following produces the greater annual amount:
(1)	the interest rate and the mortality table or other tabular factor, each as set forth in subsection H of Section 49-100.9 of this title for adjusting benefits in the same form, and
(2)	a five percent (5%) interest rate assumption and the applicable mortality table described in Revenue Ruling 2001-62 for that annuity starting date, or
d.	Limitation Years Beginning On or After July 1, 2007.  For limitation years beginning on or after July 1, 2007, the actuarially equivalent straight life annuity is equal to the greater of:
(1)	the annual amount of the straight life annuity, if any, payable to the member under the System commencing at the same annuity starting date as the member’s form of benefit, and
(2)	the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the member’s form of benefit, computed using a five percent (5%) interest rate assumption and the applicable mortality table described in Revenue Ruling 2001-62 for that annuity starting date.
6.  Benefit Forms Subject to Section 417 (e)(3) of the Internal Revenue Code of 1986, as amended:  The straight life annuity that is actuarially equivalent to the member’s form of benefit shall be determined under this paragraph 6 if the form of the member’s benefit is other than a benefit form described in paragraph 5 of this subsection.  In this case, the actuarially equivalent straight life annuity shall be determined as follows:
a.	Annuity Starting Date in Plan Years Beginning After 2005.  If the annuity starting date of the member’s form of benefit is in a plan year beginning after 2005, the actuarially equivalent straight life annuity is equal to the greatest of:
(1)	the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the member’s form of benefit, computed using the interest rate and the mortality table or other tabular factor each as set forth in subsection H of Section 49-100.9 of this title for adjusting benefits in the same form,
(2)	the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the member’s form of benefit, computed using a five and one-half percent (5.5%) interest rate assumption and the applicable mortality table described in Revenue Ruling 2001-62, and
(3)	the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the member’s form of benefit, computed using:
(a)	the rate of interest on thirty-year Treasury securities as specified by the Commissioner for the lookback month for the stability period specified below.  The lookback month applicable to the stability period is the fourth calendar month preceding the first day of the stability period, as specified below.  The stability period is the successive period of one plan year which contains the annuity starting date for the distribution and for which the applicable interest rate remains constant, and
(b)	the applicable mortality table described in Revenue Ruling 2001-62,
divided by one and five one-hundredths (1.05).
b.	Annuity Starting Date in Plan Years Beginning in 2004 or 2005.
(1)	If the annuity starting date of the member’s form of benefit is in a plan year beginning in 2004 or 2005, the actuarially equivalent straight life annuity is equal to the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the member’s form of benefit, computed using whichever of the following produces the greater annual amount:
(a)	the interest rate and the mortality table or other tabular factor, each as set forth in subsection H of Section 49-100.9 of this title for adjusting benefits in the same form, and
(b)	a five and one-half percent (5.5%) interest rate assumption and the applicable mortality table described in Revenue Ruling 2001-62.
(2)	If the annuity starting date of the member’s benefit is on or after the first day of the first plan year beginning in 2004 and before December 31, 2004, the application of this subparagraph b shall not cause the amount payable under the member’s form of benefit to be less than the benefit calculated under the System, taking into account the limitations of this section, except that the actuarially equivalent straight life annuity is equal to the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the member’s form of benefit, computed using whichever of the following produces the greatest annual amount:
(a)	the interest rate and mortality table or other tabular factor, each as set forth in subsection H of Section 49-100.9 of this title for adjusting benefits in the same form,
(b)	i.	the rate of interest on thirty-year Treasury securities as specified by the Commissioner for the lookback month for the stability period specified below.  The lookback month applicable to the stability period is the fourth calendar month preceding the first day of the stability period, as specified below.  The stability period is the successive period of one plan year which contains the annuity starting date for the distribution and for which the applicable interest rate remains constant, and
ii.	the applicable mortality table described in Revenue Ruling 2001-62, and
(c)	i.	the rate of interest on thirty-year Treasury securities as specified by the Commissioner for the lookback month for the stability period specified below.  The lookback month applicable to the stability period is the fourth calendar month preceding the first day of the stability period, as specified below.  The stability period is the successive period of one plan year which contains the annuity starting date for the distribution and for which the applicable interest rate remains constant (as in effect on the last day of the last plan year beginning before January 1, 2004, under provisions of the System then adopted and in effect), and
ii.	the applicable mortality table described in Revenue Ruling 2001-62.
7.  The foregoing limitation shall not be applicable with respect to any member whose annual benefits from the System and under all other defined benefit plans of the participating municipality are less than Ten Thousand Dollars ($10,000.00) for the year or from any prior year, if such member has not at any time participated in any defined contribution plan maintained by the participating municipality.
C.  If a member has less than ten (10) years of participation in the System and all predecessor municipal firefighter pension and retirement systems, the dollar limitation otherwise applicable under subsection B of this section shall be multiplied by a fraction, the numerator of which is the number of the years of participation in the System of the member, but never less than one (1), and the denominator of which is ten (10).
D.  Adjustment of Dollar Limitation for Benefit Commencement Before Sixty-two (62) Years of Age or After Sixty-five (65) Years of Age:  Effective for benefits commencing in limitation years ending after December 31, 2001, the dollar limitation under subsection B of this section shall be adjusted if the annuity starting date of the member’s benefit is before sixty-two (62) years of age or after sixty-five (65) years of age.  If the annuity starting date is before sixty-two (62) years of age, the dollar limitation under subsection B of this section shall be adjusted under paragraph 1 of this subsection, as modified by paragraph 3 of this subsection, but subject to paragraph 4 of this subsection.  If the annuity starting date is after sixty-five (65) years of age, the dollar limitation under subsection B of this section shall be adjusted under paragraph 2 of this subsection, as modified by paragraph 3 of this subsection.
1.  Adjustment of Defined Benefit Dollar Limitation for Benefit Commencement Before Sixty-two (62) Years of Age:
a.	Limitation Years Beginning Before July 1, 2007.  If the annuity starting date for the member’s benefit is prior to sixty-two (62) years of age and occurs in a limitation year beginning before July 1, 2007, the dollar limitation for the member’s annuity starting date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the member’s annuity starting date that is the actuarial equivalent of the dollar limitation under subsection B of this section (adjusted under subsection C of this section for years of participation less than ten (10), if required) with actuarial equivalence computed using whichever of the following produces the smaller annual amount:
(1)	the interest rate and the mortality table or other tabular factor, each as set forth in subsection H of Section 49-100.9 of this title, or
(2)	a five percent (5%) interest rate assumption and the applicable mortality table as described in Revenue Ruling 2001-62.
b.	Limitation Years Beginning On Or After July 1, 2007.
(1)	System Does Not Have Immediately Commencing Straight Life Annuity Payable at Both Sixty-two (62) Years of Age and the Age of Benefit Commencement.  If the annuity starting date for the member’s benefit is prior to sixty-two (62) years of age and occurs in a limitation year beginning on or after July 1, 2007, and the System does not have an immediately commencing straight life annuity payable at both sixty-two (62) years of age and the age of benefit commencement, the dollar limitation for the member’s annuity starting date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the member’s annuity starting date that is the actuarial equivalent of the dollar limitation under subsection B of this section (adjusted under subsection C of this section for years of participation less than ten (10), if required) with actuarial equivalence computed using a five percent (5%) interest rate assumption and the applicable mortality table for the annuity starting date as described in Revenue Ruling 2001-62 (and expressing the member’s age based on completed calendar months as of the annuity starting date).
(2)	System Has Immediately Commencing Straight Life Annuity Payable at Both Sixty-two (62) Years of Age and the Age of Benefit Commencement.  If the annuity starting date for the member’s benefit is prior to sixty-two (62) years of age and occurs in a limitation year beginning on or after July 1, 2007, and the System has an immediately commencing straight life annuity payable at both sixty-two (62) years of age and the age of benefit commencement, the dollar limitation for the member’s annuity starting date is the lesser of the limitation determined under division (1) of this subparagraph b of this paragraph and the dollar limitation under subsection B of this section (adjusted under subsection C of this section for years of participation less than ten (10), if required) multiplied by the ratio of the annual amount of the immediately commencing straight life annuity under the System at the member’s annuity starting date to the annual amount of the immediately commencing straight life annuity under the System at sixty-two (62) years of age, both determined without applying the limitation of this section.
2.  Adjustment of Defined Benefit Dollar Limitation for Benefit Commencement After Sixty-five (65) Years of Age:
a.	Limitation Years Beginning Before July 1, 2007.  If the annuity starting date for the member’s benefit is after sixty-five (65) years of age and occurs in a limitation year beginning before July 1, 2007, the dollar limitation for the member’s annuity starting date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the member’s annuity starting date that is the actuarial equivalent of the dollar limitation under subsection B of this section (adjusted under subsection C of this section for years of participation less than ten (10), if required) with actuarial equivalence computed using whichever of the following produces the smaller annual amount:
(1)	the interest rate and the mortality table or other tabular factor, each as set forth in subsection H of Section 49-100.9 of this title, or
(2)	a five percent (5%) interest rate assumption and the applicable mortality table as described in Revenue Ruling 2001-62.
b.	Limitation Years Beginning On Or After July 1, 2007.
(1)	System Does Not Have Immediately Commencing Straight Life Annuity Payable at Both Sixty-five (65) Years of Age and the Age of Benefit Commencement.  If the annuity starting date for the member’s benefit is after sixty-five (65) years of age and occurs in a limitation year beginning on or after July 1, 2007, and the System does not have an immediately commencing straight life annuity payable at both sixty-five (65) years of age and the age of benefit commencement, the dollar limitation at the member’s annuity starting date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the member’s annuity starting date that is the actuarial equivalent of the dollar limitation under subsection B of this section (adjusted under subsection C of this section for years of participation less than ten (10), if required) with actuarial equivalence computed using a five percent (5%) interest rate assumption and the applicable mortality table for the annuity starting date as described in Revenue Ruling 2001-62 (and expressing the member’s age based on completed calendar months as of the annuity starting date).
(2)	System Has Immediately Commencing Straight Life Annuity Payable at Both Sixty-five (65) Years of Age and Age of Benefit Commencement.  If the annuity starting date for the member’s benefit is after sixty-five (65) years of age and occurs in a limitation year beginning on or after July 1, 2007, and the System has an immediately commencing straight life annuity payable at both sixty-five (65) years of age and the age of benefit commencement, the dollar limitation at the member’s annuity starting date is the lesser of the limitation determined under division (1) of subparagraph b of this paragraph and the dollar limitation under subsection B of this section (adjusted under subsection C of this section for years of participation less than ten (10), if required) multiplied by the ratio of the annual amount of the adjusted immediately commencing straight life annuity under the System at the member’s annuity starting date to the annual amount of the adjusted immediately commencing straight life annuity under the System at sixty-five (65) years of age, both determined without applying the limitations of this section.  For this purpose, the adjusted immediately commencing straight life annuity under the System at the member’s annuity starting date is the annual amount of such annuity payable to the member, computed disregarding the member’s accruals after sixty-five (65) years of age but including actuarial adjustments even if those actuarial adjustments are used to offset accruals; and the adjusted immediately commencing straight life annuity under the System at sixty-five (65) years of age is the annual amount of such annuity that would be payable under the System to a hypothetical member who is sixty-five (65) years of age and has the same accrued benefit as the member.
3.  Notwithstanding the other requirements of this subsection, no adjustment shall be made to the dollar limitation under subsection B of this section to reflect the probability of a member’s death between the annuity starting date and sixty-two (62) years of age, or between sixty-five (65) years of age and the annuity starting date, as applicable, if benefits are not forfeited upon the death of the member prior to the annuity starting date.  To the extent benefits are forfeited upon death before the annuity starting date, such an adjustment shall be made.  For this purpose, no forfeiture shall be treated as occurring upon the member’s death if the System does not charge members for providing a qualified preretirement survivor annuity, as defined in Section 417(c) of the Internal Revenue Code of 1986, as amended, upon the member’s death.
4.  Notwithstanding any other provision to the contrary, for limitation years beginning on or after January 1, 1997, if payment begins before the member reaches sixty-two (62) years of age, the reductions in the limitations in this subsection shall not apply to a member who is a “qualified participant” as defined in Section 415(b)(2)(H) of the Internal Revenue Code of 1986, as amended.
E.  Minimum Benefit Permitted:  Notwithstanding anything else in this section to the contrary, the benefit otherwise accrued or payable to a member under this System shall be deemed not to exceed the maximum permissible benefit if:
1.  The retirement benefits payable for a limitation year under any form of benefit with respect to such member under this System and under all other defined benefit plans (without regard to whether a plan has been terminated) ever maintained by a participating municipality do not exceed Ten Thousand Dollars ($10,000.00) multiplied by a fraction:
a.	the numerator of which is the member’s number of credited years (or part thereof, but not less than one (1) year) of service (not to exceed ten (10)) with the participating municipality, and
b.	the denominator of which is ten (10); and
2.  The participating municipality (or a predecessor employer) has not at any time maintained a defined contribution plan in which the member participated (for this purpose, mandatory employee contributions under a defined benefit plan, individual medical accounts under Section 401(h) of the Internal Revenue Code of 1986, as amended, and accounts for postretirement medical benefits established under Section 419A(d)(1) of the Internal Revenue Code of 1986, as amended, are not considered a separate defined contribution plan).
F.  In no event shall the maximum annual accrued retirement benefit of a member allowable under this section be less than the annual amount of such accrued retirement benefit, including early pension and qualified joint and survivor annuity amounts, duly accrued by the member as of the last day of the limitation year beginning in 1982, or as of the last day of the limitation year beginning in 1986, whichever is greater, disregarding any plan changes or cost‑of‑living adjustments occurring after July 1, 1982, as to the 1982 accrued amount, and May 5, 1986, as to the 1986 accrued amount.
G.  For limitation years beginning on or after January 1, 1995, subsection C of this section, paragraph 1 of subsection D of this section, and the proration provided under subparagraphs a and b of paragraph 1 of subsection E of this section, shall not apply to a benefit paid under the System as a result of the member becoming disabled by reason of personal injuries or sickness, or amounts received by the beneficiaries, survivors or estate of the member as a result of the death of the member.
H.  Effective for years beginning after December 31, 1997, if a member purchases service under Sections 49-117.2 and 49-117.3 of this title, which qualifies as “permissive service credit” pursuant to Section 415(n) of the Internal Revenue Code of 1986, as amended, the limitations of Section 415 of the Internal Revenue Code of 1986, as amended, may be met by either:
1.  Treating the accrued benefit derived from such contributions as an annual benefit under subsection B of this section; or
2.  Treating all such contributions as annual additions for purposes of Section 415(c) of the Internal Revenue Code of 1986, as amended.
I.  Effective for years beginning after December 31, 1997, if a member repays to the System any amounts received because of the member’s prior termination pursuant to Section 49-117.1 of this title, such repayment shall not be taken into account for purposes of Section 415 of the Internal Revenue Code of 1986, as amended, pursuant to Section 415(k)(3) of the Internal Revenue Code of 1986, as amended.
J.  For distributions made in limitation years beginning on or after January 1, 2000, the combined limit of repealed Section 415(e) of the Internal Revenue Code of 1986, as amended, shall not apply.
K.  The State Board is hereby authorized to revoke the special election previously made on June 21, 1991, under Internal Revenue Code Section 415(b)(10).
SECTION 4.     AMENDATORY     Section 3, Chapter 345, O.S.L. 2007 (11 O.S. Supp. 2008, Section 49-106.4), is amended to read as follows:
Section 49-106.4  A.  An individual who has been designated, pursuant to Section 401(a)(9)(E) of the Internal Revenue Code of 1986, as amended, as the beneficiary of a deceased member and who is not the surviving spouse of the member, may elect, in accordance with Section 402(c)(11) of the Internal Revenue Code of 1986, as amended, and at the time and in the manner prescribed by the Oklahoma Firefighters Pension and Retirement Board, to have a direct trustee-to-trustee transfer of any portion of such beneficiary’s lump–sum distribution from the Oklahoma Firefighters Pension and Retirement System after December 31, 2006, made to an individual retirement account or individual retirement annuity (other than an endowment contract) described in Section 408(a) or (b) of the Internal Revenue Code of 1986, as amended (IRA), that is established on behalf of such designated individual.  If such transfer is made then:
1.  The transfer is treated as an eligible rollover distribution for purposes of Section 402(c)(11) of the Internal Revenue Code of 1986, as amended;
2.  The transferee IRA is treated as an inherited individual retirement account or an inherited individual retirement annuity (within the meaning of Section 408(d)(3)(C) of the Internal Revenue Code of 1986, as amended), and must be titled in the name of the deceased member, for the benefit of the beneficiary; and
3.  The required minimum distribution rules of Section 401(a)(9)(B) (other than clause iv thereof) of the Internal Revenue Code of 1986, as amended, apply to the transferee IRA.
B.  A trust maintained for the benefit of one or more designated beneficiaries shall be treated in the same manner as a trust designated beneficiary.
C.  The Oklahoma Firefighters Pension and Retirement Board shall promulgate such rules as are necessary to implement the provisions of this section.
SECTION 5.     AMENDATORY     11 O.S. 2001, Section 49-109, as last amended by Section 5, Chapter 345, O.S.L. 2007 (11 O.S. Supp. 2008, Section 49-109), is amended to read as follows:
Section 49-109.  A.  Whenever any firefighter serving in any capacity in a regularly constituted fire department of a municipality shall become so physically or mentally disabled while in, or in consequence of, the performance of the firefighter’s duty as to prevent the effective performance of the firefighter’s duties, the State Board may, upon the firefighter’s written request, or without such request if the State Board deems it for the good of the department, retire the firefighter from active service, and if so retired, shall direct that the firefighter be paid from the System a monthly pension equal to the greater of:
1.  Fifty percent (50%) of the average monthly salary which was paid to the firefighter during the last thirty (30) months of the firefighter’s service; or
2.  Two and one-half percent (2 1/2%) of the firefighter’s final average salary multiplied by the member’s years of credited service, not to exceed thirty (30) years, provided such firefighter has completed twenty (20) or more years of credited service.
B.  If the disability ceases within two (2) years from the date of the firefighter’s disability retirement and before the firefighter’s normal retirement date, the formerly disabled person shall be restored to active service at the salary attached to the rank the firefighter held at the time of the firefighter’s disability retirement provided the firefighter is capable of performing the duties of a firefighter.  Whenever such disability shall cease, such disability pension provided pursuant to paragraph 1 of subsection A of this section shall cease.  If a firefighter participates in the Oklahoma Firefighters Deferred Option Plan pursuant to Section 49-106.1 of this title, the firefighter’s disability pension provided pursuant to this subsection shall be reduced to account for the firefighter’s participation in the Oklahoma Firefighters Deferred Option Plan.
C.  Whenever any firefighter, who has served in any capacity in a regularly constituted fire department of a municipality of the state, and who has served less than the firefighter’s normal retirement date, shall become so physically or mentally disabled from causes not arising in the line of duty as to prevent the effective performance of the firefighter’s duties, the firefighter shall be entitled to a pension during the continuance of said disability based upon the firefighter’s service period which shall be fifty percent (50%) of the average monthly salary which was paid to the firefighter during the last sixty (60) months of the firefighter’s service.
D.  No firefighter shall accrue additional service time while receiving a disability pension; provided further, that nothing herein contained shall affect the eligibility of any firefighter to apply for and receive a retirement pension after the firefighter’s normal retirement date; provided further, that no firefighter shall receive retirement benefits from the System during the time the firefighter is receiving disability benefits from the System.  Any member or beneficiary eligible to receive a monthly benefit pursuant to this section may make an election to waive all or a portion of monthly benefits.
E.  If the requirements of Section 4 49-106.5 of this act title are satisfied, a member who, by reason of disability, is separated from service as a public safety officer with the member’s participating municipality, may elect to have payment made directly to the provider for qualified health insurance premiums by deduction from his or her monthly disability benefit, after December 31, 2006, in accordance with Section 402(1) of the Internal Revenue Code of 1986, as amended.
SECTION 6.     AMENDATORY     11 O.S. 2001, Section 49-138, as last amended by Section 4, Chapter 203, O.S.L. 2005 (11 O.S. Supp. 2008, Section 49-138), is amended to read as follows:
Section 49-138.  A.  Any member of a regularly constituted fire department of any municipality who is now serving or may hereafter serve in the Armed Forces of the United States whether such service is voluntary or involuntary, who shall have been a member of such fire department at the time of entering such service, shall be entitled to have the whole of the time of such service applied under the provisions of Section 49-106 of this title, so far as the same applies to a service pension; provided further, that the municipality shall continue its payment into said pension fund, to the same force and effect as though the member were in the actual service of such fire department; provided, that any person who is eligible for such service but who shall have volunteered for military or naval service for a period not to exceed five (5) years shall likewise be entitled to all of the benefits of Sections 49-138 through 49-142 of this title for the full period of such service or enlistment; provided further, that only one such period of voluntary service shall be considered hereunder.  If such person shall reenlist, unless he is required to do so by law, he shall not thereafter be entitled to the provisions of this subsection.  The provisions of this subsection shall not apply where any such person dies during the period of said service or enlistment, and shall not entitle the surviving spouse or children to any benefits, and shall not apply to any member who shall have served on active duty (including initial active duty) for training purposes only and/or inactive duty training.
B.  Effective February 1, 1997, credited service received pursuant to this section or credited service for wartime military service received as otherwise provided by law shall be used in determining the member’s retirement benefit but shall not be used in determining years of service for retirement, vesting purposes or eligibility for participation in the Oklahoma Firefighters Deferred Option Plan.  For a member of the System hired on or after July 1, 2003, if the military service credit authorized by this section is used to compute the retirement benefit of the member and the member retires from the System, such military service credit shall not be used to compute the retirement benefit in any other retirement system created pursuant to the Oklahoma Statutes and the member may receive credit for such service only in the retirement system from which the member first retires.
C.  A member who retires or elects to participate in the Oklahoma Firefighters Deferred Option Plan on or after July 1, 1998, shall be entitled to prior service credit, not to exceed five (5) years, for those periods of military service on active duty prior to membership in the Oklahoma Firefighters Pension and Retirement System.
For purposes of this subsection, “military service” means service in the Armed Forces of the United States by honorably discharged persons during the following time periods, as reflected on such person’s Defense Department Form 214, as follows:
1.  During the following periods, including the beginning and ending dates, and only for the periods served, from:
a.	April 6, 1917, to November 11, 1918, commonly referred to as World War I,
b.	September 16, 1940, to December 7, 1941, for members of the 45th Division,
c.	December 7, 1941, to December 31, 1946, commonly referred to as World War II,
d.	June 27, 1950, to January 31, 1955, commonly referred to as the Korean Conflict or the Korean War,
e.	February 28, 1961, to May 7, 1975, commonly referred to as the Vietnam era, except that:
(1)	for the period from February 28, 1961, to August 4, 1964, military service shall only include service in the Republic of Vietnam during that period, and
(2)	for purposes of determining eligibility for education and training benefits, such period shall end on December 31, 1976, or
f.	August 1, 1990, to December 31, 1991, commonly referred to as the Gulf War, the Persian Gulf War, or Operation Desert Storm, but excluding any person who served on active duty for training only, unless discharged from such active duty for a service-connected disability;
2.  During a period of war or combat military operation other than a conflict, war or era listed in paragraph 1 of this subsection, beginning on the date of Congressional authorization, Congressional resolution, or Executive Order of the President of the United States, for the use of the Armed Forces of the United States in a war or combat military operation, if such war or combat military operation lasted for a period of ninety (90) days or more, for a person who served, and only for the period served, in the area of responsibility of the war or combat military operation, but excluding a person who served on active duty for training only, unless discharged from such active duty for a service-connected disability, and provided that the burden of proof of military service during this period shall be with the member, who must present appropriate documentation establishing such service.
D.  An eligible member pursuant to subsection C of this section shall include only those persons who shall have served during the times or in the areas prescribed in subsection C of this section, and only if such person provides appropriate documentation in such time and manner as required by the System to establish such military service prescribed in this section, or for service pursuant to division (1) of subparagraph e of paragraph 1 of subsection C of this section, those persons who were awarded service medals, as authorized by the United States Department of Defense as reflected in the veteran’s Defense Department Form 214, related to the Vietnam Conflict for service prior to August 5, 1964.  The provisions of subsection C of this section shall include military retirees, whose retirement was based only on active service, that have been rated as having twenty percent (20%) or greater service-connected disability by the Veterans Administration or the Armed Forces of the United States.  The provisions of subsection C of this section shall not apply to any person who shall have served on active duty for training purposes only unless discharged from active duty for a service-connected disability.
E.  Notwithstanding any provision herein to the contrary, contributions:
1.  Contributions, benefits and service credit with respect to qualified military service shall be provided in accordance with Section 414(u) of the Internal Revenue Code of 1986, which is in accordance with the Uniformed Services Employment and Reemployment Rights Act of 1994, (USERRA) as amended.  The municipality’s contributions to the System for a member covered by USERRA are due when such a member makes up his or her contributions that were missed due to his or her qualified military service; and
2.  Effective January 1, 2007, if any member dies while performing qualified military service, the survivors of the member are entitled to any additional benefits other than benefit accruals relating to the period of qualified military service provided under the System had the member resumed and then terminated employment on account of death.
F.  Members or beneficiaries shall make application to the System for credited service related to wartime military service.  Interest on additional benefits related to wartime military service owed by the System to a retired member or beneficiary as provided by law shall cease accruing one (1) year after the effective date the additional benefits are payable by the System or July 1, 2000, whichever is later, if the member has not applied to the System for credited service related to such wartime military service.
SECTION 7.  It being immediately necessary for the preservation of the public peace, health and safety, an emergency is hereby declared to exist, by reason whereof this act shall take effect and be in full force from and after its passage and approval.
Passed the Senate the 9th day of March, 2009.

	
Presiding Officer 	of the Senate

Passed the House of Representatives the ____ day of __________, 2009.

	
Presiding Officer	of the House
	of Representatives