Bill Text: MN HF2827 | 2013-2014 | 88th Legislature | Introduced
Bill Title: Minnesota State Retirement System and Teachers Retirement Association; interest rate specified for computing joint-and-survivor annuities; postretirement adjustment trigger procedures, annuity application time period, and reemployed annuitant benefit withholding procedures revised; Teachers Retirement Association medical adviser selection and resumption of teaching provision expanded and clarified; and technical revision made in a federal compliance provision.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2014-03-06 - Introduction and first reading, referred to Government Operations [HF2827 Detail]
Download: Minnesota-2013-HF2827-Introduced.html
1.2relating to retirement; Minnesota State Retirement System and Teachers
1.3Retirement Association; specifying the interest rate for computing
1.4joint-and-survivor annuities, revising postretirement adjustment trigger
1.5procedures, revising annuity application time period, and revising reemployed
1.6annuitant benefit withholding procedures in certain divorce situations in
1.7various Minnesota State Retirement System plans; expanding and clarifying the
1.8Teachers Retirement Association medical advisor selection and resumption of
1.9teaching provisions; and making a technical revision in a federal compliance
1.10provision;amending Minnesota Statutes 2012, sections 3A.01, subdivision
1.111a; 352.01, subdivision 12; 352.115, subdivisions 8, 10; 352B.08, subdivision
1.123; 354.44, subdivision 5; 354.48, subdivision 6a; 356.635, subdivision 6;
1.13490.121, subdivision 2a; Minnesota Statutes 2013 Supplement, sections 352.03,
1.14subdivision 4; 356.415, subdivisions 1a, 1e, 1f; proposing coding for new law in
1.15Minnesota Statutes, chapter 356.
1.16BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.20 Section 1. Minnesota Statutes 2012, section 3A.01, subdivision 1a, is amended to read:
1.21 Subd. 1a. Actuarial equivalent. (a) "Actuarial equivalent" means the condition of
1.22one allowance or benefit having an equal actuarial present value to another allowance or
1.23benefit, determined by the actuary retained under section356.214 as of a given date at a
1.24specified age with each actuarial present value based on the mortality table applicable for
1.25the plan and approved under section356.215, subdivision 18 , and using the applicable
1.26preretirement or postretirement interest rate assumption specified in section356.215,
1.27subdivision 8 .
2.1(b) For purposes of computing a joint and survivor annuity, the postretirement
2.2interest rate assumption specified in section 356.461 must be used, rather than the
2.3postretirement interest rate specified in section 356.215, subdivision 8.
2.4EFFECTIVE DATE.This section is effective July 1, 2014.
2.5 Sec. 2. Minnesota Statutes 2012, section 352.01, subdivision 12, is amended to read:
2.6 Subd. 12. Actuarial equivalent. (a) "Actuarial equivalent" means the condition
2.7of one annuity or benefit having an equal actuarial present value as another annuity or
2.8benefit, determined as of a given date at a specified age with each actuarial present value
2.9based on the appropriate mortality table adopted by the board of directors based on the
2.10experience of the fund as recommended by the actuary retained under section356.214 , and
2.11approved under section356.215, subdivision 18 , and using the applicable preretirement or
2.12postretirement interest rate assumption specified in section356.215, subdivision 8 .
2.13(b) For purposes of computing a joint and survivor annuity, the postretirement
2.14interest rate assumption specified in section 356.461 must be used, rather than the
2.15postretirement interest rate specified in section 356.215, subdivision 8.
2.16EFFECTIVE DATE.This section is effective July 1, 2014.
2.17 Sec. 3. Minnesota Statutes 2013 Supplement, section 352.03, subdivision 4, is
2.18amended to read:
2.19 Subd. 4. Duties and powers of board of directors. (a) The board shall:
2.20 (1) elect a chair;
2.21 (2) appoint an executive director;
2.22 (3) establish rules to administer this chapter and chapters 3A, 352B, 352C, 352D,
2.23and 490 and transact the business of the system, subject to the limitations of law;
2.24 (4) consider and dispose of, or take any other action the board of directors deems
2.25appropriate concerning, denials of applications for annuities or disability benefits under
2.26this chapter, chapter 3A, 352B, 352C, 352D, or 490, and complaints of employees and
2.27others pertaining to the retirement of employees and the operation of the system;
2.28 (5) oversee the administration of the deferred compensation plan established in
2.29section352.965 ;
2.30 (6) oversee the administration of the health care savings plan established in section;
2.31and
2.32 (7) approve early retirement and optional annuity factors for all plans administered
2.33by the system, including approving retirement annuity factors for the unclassified state
3.1employees program under chapter 352D, subject to review by the actuary retained by
3.2the Legislative Commission on Pensions and Retirement; establish the schedule for
3.3implementation of the approved factors; and notify the Legislative Commission on
3.4Pensions and Retirement of the implementation schedule.
3.5 (b) The board shall advise the director on any matters relating to the system and
3.6carrying out functions and purposes of this chapter. The board's advice shall control.
3.7EFFECTIVE DATE.This section is effective July 1, 2014.
3.8 Sec. 4. Minnesota Statutes 2012, section 352B.08, subdivision 3, is amended to read:
3.9 Subd. 3. Optional annuity forms. (a) In lieu of the single life annuity provided in
3.10subdivision 2, the member or former member may elect an optional annuity form. The
3.11board of the Minnesota state retirement system shall establish a joint and survivor annuity,
3.12payable to a designated beneficiary for life, adjusted to the actuarial equivalent value of
3.13the single life annuity. The board shall also establish an additional optional annuity with
3.14an actuarial equivalent value of the single life annuity in the form of a joint and survivor
3.15annuity which provides that the elected annuity be reinstated to the single life annuity
3.16provided in subdivision 2, if after commencing the elected joint and survivor annuity, the
3.17designated beneficiary dies before the member, which reinstatement is not retroactive but
3.18takes effect for the first full month occurring after the death of the designated beneficiary.
3.19The board may also establish other actuarial equivalent value optional annuity forms. In
3.20establishing actuarial equivalent value optional annuity forms, each optional annuity form
3.21shall have the same present value as a regular single life annuity using the mortality
3.22table adopted by the board and the interest assumption specified in section356.215,
3.23subdivision 8 , and.
3.24(b) For purposes of computing a joint and survivor annuity, the postretirement
3.25interest rate assumption specified in section 356.461 must be used, rather than the
3.26postretirement interest rate specified in section 356.215, subdivision 8.
3.27(c) The board shall obtain the written recommendation of the actuary retained under
3.28section356.214 . These recommendations shall be a part of the permanent records of
3.29the board.
3.30EFFECTIVE DATE.This section is effective July 1, 2014.
3.31 Sec. 5. [356.461] MINNESOTA STATE RETIREMENT SYSTEM; JOINT AND
3.32SURVIVOR ANNUITY COMPUTATION.
4.1 Subdivision 1. Joint and survivor annuity computation. Notwithstanding any
4.2provision of section 356.215, subdivision 8, to the contrary, for purposes of computing joint
4.3and survivor annuities, the applicable postretirement interest assumption is 6.5 percent.
4.4 Subd. 2. Covered plans. This section applies to the following retirement plans:
4.5(1) the legislators retirement plan, established under chapter 3A, including
4.6constitutional officers as specified in that chapter;
4.7(2) the correctional state employees retirement plan of the Minnesota State
4.8Retirement System, established under chapter 352;
4.9(3) the general state employees retirement plan of the Minnesota State Retirement
4.10System, established under chapter 352;
4.11(4) the State Patrol retirement plan, established under chapter 352B;
4.12(5) the unclassified state employees retirement program of the Minnesota State
4.13Retirement System, established under chapter 352D; and
4.14(6) the judges retirement plan, established under chapter 490.
4.15EFFECTIVE DATE.This section is effective July 1, 2014.
4.16 Sec. 6. Minnesota Statutes 2012, section 490.121, subdivision 2a, is amended to read:
4.17 Subd. 2a. Actuarial equivalent. (a) "Actuarial equivalent" means the condition
4.18of one annuity or benefit having an equal actuarial present value as another annuity or
4.19benefit, determined as of a given date with each actuarial present value based on the
4.20appropriate mortality table adopted by the board of directors of the Minnesota State
4.21Retirement System based on the experience of the fund as recommended by the actuary
4.22retained under section356.214 and approved under section
356.215 , subdivision 18, and
4.23using the applicable preretirement or postretirement interest rate assumption specified in
4.24section356.215 , subdivision 8.
4.25(b) For purposes of computing a joint and survivor annuity, the postretirement
4.26interest rate assumption specified in section 356.461 must be used, rather than the
4.27postretirement interest rate specified in section 356.215, subdivision 8.
4.28EFFECTIVE DATE.This section is effective July 1, 2014.
4.32 Section 1. Minnesota Statutes 2013 Supplement, section 356.415, subdivision 1a,
4.33is amended to read:
5.1 Subd. 1a. Annual postretirement adjustments; Minnesota State Retirement
5.2System plans other than State Patrol retirement plan. (a) Retirement annuity, disability
5.3benefit, or survivor benefit recipients of the legislators retirement plans, including
5.4constitutional officers as specified in chapter 3A, the general state employees retirement
5.5plan, the correctional state employees retirement plan, the unclassified state employees
5.6retirement program, and the judges retirement plan are entitled to a postretirement
5.7adjustment annually on January 1, as follows:
5.8(1) a postretirement increase of two percent must be applied each year, effective
5.9on January 1, to the monthly annuity or benefit of each annuitant or benefit recipient
5.10who has been receiving an annuity or a benefit for at least 18 full months before the
5.11January 1 increase; and
5.12(2) for each annuitant or benefit recipient who has been receiving an annuity or
5.13a benefit for at least six full months, an annual postretirement increase of 1/12 of two
5.14percent for each month that the person has been receiving an annuity or benefit must be
5.15applied, effective January 1, following the calendar year in which the person has been
5.16retired for at least six months, but has been retired for less than 18 months.
5.17(b) The increases provided by this subdivision commence on January 1, 2011.
5.18Increases under this subdivision for the general state employees retirement plan, the
5.19correctional state employees retirement plan, or the judges retirement plan terminate on
5.20December 31 of the calendar year in whichthe two prior consecutive actuarial valuation
5.21 valuations prepared by the approved actuary under sections356.214 and
356.215 and the
5.22standards for actuarial work promulgated by the Legislative Commission on Pensions
5.23and Retirement indicates that the market value of assets of the retirement plan equals or
5.24exceeds 90 percent of the actuarial accrued liability of the retirement plan and increases
5.25under subdivision 1 recommence after that date. Increases under this subdivision for
5.26the legislators retirement plan or the elected state officers retirement plan terminate
5.27on December 31 of the calendar year in which the actuarial valuation prepared by the
5.28approved actuary under sections356.214 and
356.215 and the standards for actuarial work
5.29promulgated by the Legislative Commission on Pensions and Retirement indicates that the
5.30market value of assets of the general state employees retirement plan equals or exceeds
5.3190 percent of the actuarial accrued liability of the retirement plan and increases under
5.32subdivision 1 recommence after that date.
5.33(c) An increase in annuity or benefit payments under this subdivision must be made
5.34automatically unless written notice is filed by the annuitant or benefit recipient with the
5.35executive director of the applicable covered retirement plan requesting that the increase
5.36not be made.
6.1EFFECTIVE DATE.This section is effective July 1, 2014.
6.2 Sec. 2. Minnesota Statutes 2013 Supplement, section 356.415, subdivision 1e, is
6.3amended to read:
6.4 Subd. 1e. Annual postretirement adjustments; State Patrol retirement plan.
6.5(a) Retirement annuity, disability benefit, or survivor benefit recipients of the State Patrol
6.6retirement plan are entitled to a postretirement adjustment annually on January 1, as
6.7follows:
6.8(1) a postretirement increase of one percent must be applied each year, effective on
6.9January 1, to the monthly annuity or benefit of each annuitant or benefit recipient who
6.10has been receiving an annuity or a benefit for at least 18 full months before the January 1
6.11increase; and
6.12(2) for each annuitant or benefit recipient who has been receiving an annuity or a
6.13benefit for at least six full months, an annual postretirement increase of 1/12 of one percent
6.14for each month that the person has been receiving an annuity or benefit must be applied,
6.15effective January 1, following the calendar year in which the person has been retired for at
6.16least six months, but has been retired for less than 18 months.
6.17(b) The increases provided by this subdivision commence on January 1, 2014.
6.18Increases under paragraph (a) for the State Patrol retirement plan terminate on December
6.1931 of the calendar year in whichthe two prior consecutive actuarial valuation valuations
6.20prepared by the approved actuary under sections356.214 and
356.215 and the standards
6.21for actuarial work promulgated by the Legislative Commission on Pensions and
6.22Retirement indicates that the market value of assets of the retirement plan equals or
6.23exceeds 85 percent of the actuarial accrued liability of the retirement plan and increases
6.24under paragraph (c) recommence after that date.
6.25(c) Retirement annuity, disability benefit, or survivor benefit recipients of the State
6.26Patrol retirement plan are entitled to a postretirement adjustment annually on January
6.271, as follows:
6.28(1) a postretirement increase of 1.5 percent must be applied each year, effective on
6.29January 1, to the monthly annuity or benefit of each annuitant or benefit recipient who
6.30has been receiving an annuity or a benefit for at least 18 full months before the January 1
6.31increase; and
6.32(2) for each annuitant or benefit recipient who has been receiving an annuity or a
6.33benefit for at least six full months, an annual postretirement increase of 1/12 of 1.5 percent
6.34for each month that the person has been receiving an annuity or benefit must be applied,
7.1effective January 1, following the calendar year in which the person has been retired for at
7.2least six months, but has been retired for less than 18 months.
7.3(d) Increases under paragraph (c) for the State Patrol retirement plan terminate on
7.4December 31 of the calendar year in whichthe two prior consecutive actuarial valuation
7.5 valuations prepared by the approved actuary under sections356.214 and
356.215 and
7.6the standards for actuarial work adopted by the Legislative Commission on Pensions
7.7and Retirement indicates that the market value of assets of the retirement plan equals or
7.8exceeds 90 percent of the actuarial accrued liability of the retirement plan and increases
7.9under subdivision 1 recommence after that date.
7.10(e) An increase in annuity or benefit payments under this subdivision must be made
7.11automatically unless written notice is filed by the annuitant or benefit recipient with the
7.12executive director of the applicable covered retirement plan requesting that the increase
7.13not be made.
7.14EFFECTIVE DATE.This section is effective July 1, 2014.
7.15 Sec. 3. Minnesota Statutes 2013 Supplement, section 356.415, subdivision 1f, is
7.16amended to read:
7.17 Subd. 1f. Annual postretirement adjustments; Minnesota State Retirement
7.18System judges retirement plan. (a) The increases provided under this subdivision begin
7.19on January 1, 2014, and are in lieu of increases under subdivision 1 or 1a for retirement
7.20annuity, disability benefit, or survivor benefit recipients of the judges retirement plan.
7.21(b) Retirement annuity, disability benefit, or survivor benefit recipients of the
7.22judges retirement plan are entitled to a postretirement adjustment annually on January
7.231, as follows:
7.24(1) a postretirement increase of 1.75 percent must be applied each year, effective
7.25on January 1, to the monthly annuity or benefit of each annuitant or benefit recipient
7.26who has been receiving an annuity or a benefit for at least 18 full months before the
7.27January 1 increase; and
7.28(2) for each annuitant or benefit recipient who has been receiving an annuity or a
7.29benefit for at least six full months, an annual postretirement increase of 1/12 of 1.75
7.30percent for each month that the person has been receiving an annuity or benefit must be
7.31applied, effective January 1, following the calendar year in which the person has been
7.32retired for at least six months, but has been retired for less than 18 months.
7.33(c) Increases under this subdivision terminate on December 31 of the calendar
7.34year in whichthe two prior consecutive actuarial valuation valuations prepared by the
7.35approved actuary under sections356.214 and
356.215 and the standards for actuarial work
8.1promulgated by the Legislative Commission on Pensions and Retirement indicates that
8.2the market value of assets of the judges retirement plan equals or exceeds 70 percent of
8.3the actuarial accrued liability of the retirement plan. Increases under subdivision 1 or 1a,
8.4whichever is applicable, begin on the January 1 next following that date.
8.5(d) An increase in annuity or benefit payments under this subdivision must be made
8.6automatically unless written notice is filed by the annuitant or benefit recipient with the
8.7executive director of the applicable covered retirement plan requesting that the increase
8.8not be made.
8.9EFFECTIVE DATE.This section is effective July 1, 2014.
8.12 Section 1. Minnesota Statutes 2012, section 352.115, subdivision 8, is amended to read:
8.13 Subd. 8. Accrual of annuity.State employees shall apply for an annuity. The
8.14application for an annuity must not be made more than90 60 days before the time the state
8.15employeeis eligible to retire by reason of both age and service requirements or former
8.16state employee elects to begin collecting a retirement annuity. If the director determines an
8.17applicant for annuity has fulfilled the legal requirements for an annuity, the director shall
8.18authorize the annuity payment in accordance with this chapter and payment must be made
8.19as authorized. An annuity shall begin to accrue no earlier than 180 days before the date the
8.20application is filed with the director, but not before the day following the termination of
8.21state service or before the day the employee is eligible to retire by reason of both age and
8.22service requirements. The retirement annuity shall cease with the last payment which had
8.23accrued during the lifetime of the retired employee unless an optional annuity provided in
8.24section352.116, subdivision 3 , had been selected and had become payable. The joint and
8.25last survivor annuity shall cease with the last payment received by the survivor during
8.26the lifetime of the survivor. If a retired employee had not selected an optional annuity, or
8.27a survivor annuity is not payable under the option, and a spouse survives, the spouse is
8.28entitled only to the annuity for the calendar month in which the retired employee died.
8.29If an optional annuity is payable after the death of the retired employee, the survivor is
8.30entitled to the annuity for the calendar month in which the retired employee died.
8.31EFFECTIVE DATE.This section is effective July 1, 2014.
8.32 Sec. 2. Minnesota Statutes 2012, section 352.115, subdivision 10, is amended to read:
9.1 Subd. 10. Reemployment of annuitant. (a) Except for salary or wages received
9.2as a temporary employee of the legislature during a legislative session, if any retired
9.3employee again becomes entitled to receive salary or wages from any employer who
9.4employs state employees as that term is defined in section352.01, subdivision 2 , in a
9.5position covered by this chapter, the annuity or retirement allowance must ceasewhen the
9.6first of the month following the month that the retired employee has earned an amount
9.7equal to the annual maximum earnings allowable for that age for the continued receipt of
9.8full benefit amounts monthly under the federal old age, survivors, and disability insurance
9.9program as set by the secretary of health and human services under United States Code,
9.10title 42, section 403, in any calendar year. If the retired employee has not yet reached the
9.11minimum age for the receipt of Social Security benefits, the maximum earnings for the
9.12retired employee are equal to the annual maximum earnings allowable for the minimum
9.13age for the receipt of Social Security benefits.
9.14(b) The balance of the annual retirement annuity after cessation must be handled or
9.15disposed of as provided in section356.47 .
9.16(c) The annuity must be resumedwhen the first of the month following the month
9.17that state service ends, or, if the retired employee is still employed at the beginning of the
9.18next calendar year, at the beginning of that calendar year, and payment must again end
9.19when the retired employee has earned the applicable reemployment earnings maximum
9.20specified in this subdivision. If the retired employee is granted a sick leave without pay,
9.21but not otherwise, the annuity or retirement allowance must be resumed during the period
9.22of sick leave.
9.23(d) No payroll deductions for the retirement fund may be made from the earnings of
9.24a reemployed retired employee.
9.25(e) No change may be made in the monthly amount of an annuity or retirement
9.26allowance because of the reemployment of an annuitant.
9.27(f) If a reemployed annuitant whose annuity is suspended under paragraph (a)
9.28is having insurance premium amounts withheld under section356.87, subdivision 2 ,
9.29insurance premium amounts must continue to be withheld and transferred from the
9.30suspended portion of the annuity. The balance of the annual retirement annuity after
9.31cessation, after deduction of the insurance premium amounts, must be treated as specified
9.32in paragraph (b).
9.33(g) If a reemployed annuitant whose annuity is suspended under paragraph (a)
9.34has a former spouse receiving a portion of the annuity allowable under section 518.58,
9.35subdivision 1, the portion payable to the former spouse must continue to be paid.
9.36EFFECTIVE DATE.This section is effective retroactively from January 1, 2014.
10.1 Sec. 3. Minnesota Statutes 2012, section 354.44, subdivision 5, is amended to read:
10.2 Subd. 5. Resumption of teaching service after retirement. (a) Any person who
10.3retired under the provisions of this chapter and has thereafter resumed teaching in any
10.4employer unit to which this chapter applies is eligible to continue to receive payments
10.5in accordance with the annuity except that all or a portion of the annuity payments must
10.6be deferred during the calendar year immediately following the fiscal year in which the
10.7person's salary from the teaching service is in an amount greater than $46,000. The
10.8amount of the annuity deferral is one-half of the salary amount in excess of $46,000 and
10.9must be deducted from the annuity payable for the calendar year immediately following
10.10the fiscal year in which the excess amount was earned.
10.11 (b) If the person is retired for only a fractional part of the fiscal year during the initial
10.12year of retirement, the maximum reemployment salary exempt from triggering a deferral
10.13as specified in this subdivision must be prorated for that fiscal year.
10.14 (c) After a person has reached the Social Security normal retirement age, no deferral
10.15requirement is applicable regardless of the amount of salary.
10.16 (d) The amount of the retirement annuity deferral must be handled or disposed
10.17of as provided in section356.47 .
10.18 (e) For the purpose of this subdivision, salary from teaching service includes all
10.19salary or income earned as a teacher as defined in section 354.05, subdivision 2, paragraph
10.20(a), clause (1). Salary from teaching service also includes, but is not limited to:
10.21 (1) all income for services performed as a consultantor an, independent contractor
10.22for, or third-party supplier, or as a employee of a consultant, independent contractor, or
10.23third-party supplier, to an employer unit covered by the provisions of this chapter; and
10.24 (2) the greater of either the income received or an amount based on the rate paid with
10.25respect to an administrative position, consultant,or independent contractor, or third-party
10.26supplier, or as an employee of a consultant, independent contractor, or third-party supplier,
10.27 in an employer unit with approximately the same number of pupils and at the same level
10.28as the position occupied by the person who resumes teaching service.
10.29EFFECTIVE DATE.This section is effective July 1, 2014.
10.30 Sec. 4. Minnesota Statutes 2012, section 354.48, subdivision 6a, is amended to read:
10.31 Subd. 6a. Medical adviser; duties.The state commissioner of health or a
10.32licensed physician on the staff of the Department of Health who is designated by the
10.33commissioner is the medical adviser of The executive director may contract with an
10.34accredited independent organization specializing in disability determinations, licensed
10.35physicians, or physicians on the staff of the commissioner of health as designated by the
11.1commissioner, to be the medical advisor to the executive director. The medical adviser
11.2shall designate licensed physicians, licensed chiropractors, or licensed psychologists with
11.3respect to a mental impairment, who shall examine applicants for disability benefits. The
11.4medical adviser shall pass upon all expert reports based on any examinations performed
11.5in order to determine whether a teacher is totally and permanently disabled as defined in
11.6section354.05, subdivision 14 . The medical adviser shall also investigate all health and
11.7medical statements and certificates by or on behalf of a teacher in connection with a
11.8disability benefit, and shall report in writing to the director setting forth any conclusions
11.9and recommendations on all matters referred to the medical adviser.
11.10EFFECTIVE DATE.This section is effective July 1, 2014.
11.11 Sec. 5. Minnesota Statutes 2012, section 356.635, subdivision 6, is amended to read:
11.12 Subd. 6. Eligible retirement plan. (a) An "eligible retirement plan" is:
11.13(1) an individual retirement account under section 408(a) or 408A of the federal
11.14Internal Revenue Code;
11.15(2) an individual retirement annuity plan under section 408(b) of the federal Internal
11.16Revenue Code;
11.17(3) an annuity plan under section 403(a) of the federal Internal Revenue Code;
11.18(4) a qualified trust plan under section 401(a) of the federal Internal Revenue Code
11.19that accepts the distributee's eligible rollover distribution;
11.20(5) an annuity contract under section 403(b) of the federal Internal Revenue Code;
11.21(6) an eligible deferred compensation plan under section 457(b) of the federal
11.22Internal Revenue Code, which is maintained by a state or local government and which
11.23agrees to separately account for the amounts transferred into the plan; or
11.24(7) in the case of an eligible rollover distribution to a nonspousal beneficiary, an
11.25individual account or annuity treated as an inherited individual retirement account under
11.26section 402(c)(11) of the federal Internal Revenue Code.
11.27(b) For distributions of after-tax contributions which are not includable in gross
11.28income, the after-tax portion may be transferred only to an individual retirement account
11.29or annuity described in section 408(a) or (b) of the federal Internal Revenue Code, to a
11.30Roth individual retirement account described in section 408A of the federal Internal
11.31Revenue Code, or to a qualified plan described in either section 401(a) of the federal
11.32Internal Revenue Code or403(a) to an annuity contract described in section 403(b) of
11.33the federal Internal Revenue Code, that agrees to separately account for the amounts
11.34transferred, including separately accounting for the portion of the distribution which is
11.35includable in gross income and the portion of the distribution which is not includable.
12.1EFFECTIVE DATE.This section is effective the day following final enactment.
1.3Retirement Association; specifying the interest rate for computing
1.4joint-and-survivor annuities, revising postretirement adjustment trigger
1.5procedures, revising annuity application time period, and revising reemployed
1.6annuitant benefit withholding procedures in certain divorce situations in
1.7various Minnesota State Retirement System plans; expanding and clarifying the
1.8Teachers Retirement Association medical advisor selection and resumption of
1.9teaching provisions; and making a technical revision in a federal compliance
1.10provision;amending Minnesota Statutes 2012, sections 3A.01, subdivision
1.111a; 352.01, subdivision 12; 352.115, subdivisions 8, 10; 352B.08, subdivision
1.123; 354.44, subdivision 5; 354.48, subdivision 6a; 356.635, subdivision 6;
1.13490.121, subdivision 2a; Minnesota Statutes 2013 Supplement, sections 352.03,
1.14subdivision 4; 356.415, subdivisions 1a, 1e, 1f; proposing coding for new law in
1.15Minnesota Statutes, chapter 356.
1.16BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.20 Section 1. Minnesota Statutes 2012, section 3A.01, subdivision 1a, is amended to read:
1.21 Subd. 1a. Actuarial equivalent. (a) "Actuarial equivalent" means the condition of
1.22one allowance or benefit having an equal actuarial present value to another allowance or
1.23benefit, determined by the actuary retained under section
1.24specified age with each actuarial present value based on the mortality table applicable for
1.25the plan and approved under section
1.26preretirement or postretirement interest rate assumption specified in section
1.27subdivision 8
2.1(b) For purposes of computing a joint and survivor annuity, the postretirement
2.2interest rate assumption specified in section 356.461 must be used, rather than the
2.3postretirement interest rate specified in section 356.215, subdivision 8.
2.4EFFECTIVE DATE.This section is effective July 1, 2014.
2.5 Sec. 2. Minnesota Statutes 2012, section 352.01, subdivision 12, is amended to read:
2.6 Subd. 12. Actuarial equivalent. (a) "Actuarial equivalent" means the condition
2.7of one annuity or benefit having an equal actuarial present value as another annuity or
2.8benefit, determined as of a given date at a specified age with each actuarial present value
2.9based on the appropriate mortality table adopted by the board of directors based on the
2.10experience of the fund as recommended by the actuary retained under section
2.11approved under section
2.12postretirement interest rate assumption specified in section
2.13(b) For purposes of computing a joint and survivor annuity, the postretirement
2.14interest rate assumption specified in section 356.461 must be used, rather than the
2.15postretirement interest rate specified in section 356.215, subdivision 8.
2.16EFFECTIVE DATE.This section is effective July 1, 2014.
2.17 Sec. 3. Minnesota Statutes 2013 Supplement, section 352.03, subdivision 4, is
2.18amended to read:
2.19 Subd. 4. Duties and powers of board of directors. (a) The board shall:
2.20 (1) elect a chair;
2.21 (2) appoint an executive director;
2.22 (3) establish rules to administer this chapter and chapters 3A, 352B, 352C, 352D,
2.23and 490 and transact the business of the system, subject to the limitations of law;
2.24 (4) consider and dispose of, or take any other action the board of directors deems
2.25appropriate concerning, denials of applications for annuities or disability benefits under
2.26this chapter, chapter 3A, 352B, 352C, 352D, or 490, and complaints of employees and
2.27others pertaining to the retirement of employees and the operation of the system;
2.28 (5) oversee the administration of the deferred compensation plan established in
2.29section
2.30 (6) oversee the administration of the health care savings plan established in section;
2.31and
2.32 (7) approve early retirement and optional annuity factors for all plans administered
2.33by the system, including approving retirement annuity factors for the unclassified state
3.1employees program under chapter 352D, subject to review by the actuary retained by
3.2the Legislative Commission on Pensions and Retirement; establish the schedule for
3.3implementation of the approved factors; and notify the Legislative Commission on
3.4Pensions and Retirement of the implementation schedule.
3.5 (b) The board shall advise the director on any matters relating to the system and
3.6carrying out functions and purposes of this chapter. The board's advice shall control.
3.7EFFECTIVE DATE.This section is effective July 1, 2014.
3.8 Sec. 4. Minnesota Statutes 2012, section 352B.08, subdivision 3, is amended to read:
3.9 Subd. 3. Optional annuity forms. (a) In lieu of the single life annuity provided in
3.10subdivision 2, the member or former member may elect an optional annuity form. The
3.11board of the Minnesota state retirement system shall establish a joint and survivor annuity,
3.12payable to a designated beneficiary for life, adjusted to the actuarial equivalent value of
3.13the single life annuity. The board shall also establish an additional optional annuity with
3.14an actuarial equivalent value of the single life annuity in the form of a joint and survivor
3.15annuity which provides that the elected annuity be reinstated to the single life annuity
3.16provided in subdivision 2, if after commencing the elected joint and survivor annuity, the
3.17designated beneficiary dies before the member, which reinstatement is not retroactive but
3.18takes effect for the first full month occurring after the death of the designated beneficiary.
3.19The board may also establish other actuarial equivalent value optional annuity forms. In
3.20establishing actuarial equivalent value optional annuity forms, each optional annuity form
3.21shall have the same present value as a regular single life annuity using the mortality
3.22table adopted by the board and the interest assumption specified in section
3.23subdivision 8
3.24(b) For purposes of computing a joint and survivor annuity, the postretirement
3.25interest rate assumption specified in section 356.461 must be used, rather than the
3.26postretirement interest rate specified in section 356.215, subdivision 8.
3.27(c) The board shall obtain the written recommendation of the actuary retained under
3.28section
3.29the board.
3.30EFFECTIVE DATE.This section is effective July 1, 2014.
3.31 Sec. 5. [356.461] MINNESOTA STATE RETIREMENT SYSTEM; JOINT AND
3.32SURVIVOR ANNUITY COMPUTATION.
4.1 Subdivision 1. Joint and survivor annuity computation. Notwithstanding any
4.2provision of section 356.215, subdivision 8, to the contrary, for purposes of computing joint
4.3and survivor annuities, the applicable postretirement interest assumption is 6.5 percent.
4.4 Subd. 2. Covered plans. This section applies to the following retirement plans:
4.5(1) the legislators retirement plan, established under chapter 3A, including
4.6constitutional officers as specified in that chapter;
4.7(2) the correctional state employees retirement plan of the Minnesota State
4.8Retirement System, established under chapter 352;
4.9(3) the general state employees retirement plan of the Minnesota State Retirement
4.10System, established under chapter 352;
4.11(4) the State Patrol retirement plan, established under chapter 352B;
4.12(5) the unclassified state employees retirement program of the Minnesota State
4.13Retirement System, established under chapter 352D; and
4.14(6) the judges retirement plan, established under chapter 490.
4.15EFFECTIVE DATE.This section is effective July 1, 2014.
4.16 Sec. 6. Minnesota Statutes 2012, section 490.121, subdivision 2a, is amended to read:
4.17 Subd. 2a. Actuarial equivalent. (a) "Actuarial equivalent" means the condition
4.18of one annuity or benefit having an equal actuarial present value as another annuity or
4.19benefit, determined as of a given date with each actuarial present value based on the
4.20appropriate mortality table adopted by the board of directors of the Minnesota State
4.21Retirement System based on the experience of the fund as recommended by the actuary
4.22retained under section
4.23using the applicable preretirement or postretirement interest rate assumption specified in
4.24section
4.25(b) For purposes of computing a joint and survivor annuity, the postretirement
4.26interest rate assumption specified in section 356.461 must be used, rather than the
4.27postretirement interest rate specified in section 356.215, subdivision 8.
4.28EFFECTIVE DATE.This section is effective July 1, 2014.
4.32 Section 1. Minnesota Statutes 2013 Supplement, section 356.415, subdivision 1a,
4.33is amended to read:
5.1 Subd. 1a. Annual postretirement adjustments; Minnesota State Retirement
5.2System plans other than State Patrol retirement plan. (a) Retirement annuity, disability
5.3benefit, or survivor benefit recipients of the legislators retirement plans, including
5.4constitutional officers as specified in chapter 3A, the general state employees retirement
5.5plan, the correctional state employees retirement plan, the unclassified state employees
5.6retirement program, and the judges retirement plan are entitled to a postretirement
5.7adjustment annually on January 1, as follows:
5.8(1) a postretirement increase of two percent must be applied each year, effective
5.9on January 1, to the monthly annuity or benefit of each annuitant or benefit recipient
5.10who has been receiving an annuity or a benefit for at least 18 full months before the
5.11January 1 increase; and
5.12(2) for each annuitant or benefit recipient who has been receiving an annuity or
5.13a benefit for at least six full months, an annual postretirement increase of 1/12 of two
5.14percent for each month that the person has been receiving an annuity or benefit must be
5.15applied, effective January 1, following the calendar year in which the person has been
5.16retired for at least six months, but has been retired for less than 18 months.
5.17(b) The increases provided by this subdivision commence on January 1, 2011.
5.18Increases under this subdivision for the general state employees retirement plan, the
5.19correctional state employees retirement plan, or the judges retirement plan terminate on
5.20December 31 of the calendar year in which
5.21 valuations prepared by the approved actuary under sections
5.22standards for actuarial work promulgated by the Legislative Commission on Pensions
5.23and Retirement indicates that the market value of assets of the retirement plan equals or
5.24exceeds 90 percent of the actuarial accrued liability of the retirement plan and increases
5.25under subdivision 1 recommence after that date. Increases under this subdivision for
5.26the legislators retirement plan or the elected state officers retirement plan terminate
5.27on December 31 of the calendar year in which the actuarial valuation prepared by the
5.28approved actuary under sections
5.29promulgated by the Legislative Commission on Pensions and Retirement indicates that the
5.30market value of assets of the general state employees retirement plan equals or exceeds
5.3190 percent of the actuarial accrued liability of the retirement plan and increases under
5.32subdivision 1 recommence after that date.
5.33(c) An increase in annuity or benefit payments under this subdivision must be made
5.34automatically unless written notice is filed by the annuitant or benefit recipient with the
5.35executive director of the applicable covered retirement plan requesting that the increase
5.36not be made.
6.1EFFECTIVE DATE.This section is effective July 1, 2014.
6.2 Sec. 2. Minnesota Statutes 2013 Supplement, section 356.415, subdivision 1e, is
6.3amended to read:
6.4 Subd. 1e. Annual postretirement adjustments; State Patrol retirement plan.
6.5(a) Retirement annuity, disability benefit, or survivor benefit recipients of the State Patrol
6.6retirement plan are entitled to a postretirement adjustment annually on January 1, as
6.7follows:
6.8(1) a postretirement increase of one percent must be applied each year, effective on
6.9January 1, to the monthly annuity or benefit of each annuitant or benefit recipient who
6.10has been receiving an annuity or a benefit for at least 18 full months before the January 1
6.11increase; and
6.12(2) for each annuitant or benefit recipient who has been receiving an annuity or a
6.13benefit for at least six full months, an annual postretirement increase of 1/12 of one percent
6.14for each month that the person has been receiving an annuity or benefit must be applied,
6.15effective January 1, following the calendar year in which the person has been retired for at
6.16least six months, but has been retired for less than 18 months.
6.17(b) The increases provided by this subdivision commence on January 1, 2014.
6.18Increases under paragraph (a) for the State Patrol retirement plan terminate on December
6.1931 of the calendar year in which
6.20prepared by the approved actuary under sections
6.21for actuarial work promulgated by the Legislative Commission on Pensions and
6.22Retirement indicates that the market value of assets of the retirement plan equals or
6.23exceeds 85 percent of the actuarial accrued liability of the retirement plan and increases
6.24under paragraph (c) recommence after that date.
6.25(c) Retirement annuity, disability benefit, or survivor benefit recipients of the State
6.26Patrol retirement plan are entitled to a postretirement adjustment annually on January
6.271, as follows:
6.28(1) a postretirement increase of 1.5 percent must be applied each year, effective on
6.29January 1, to the monthly annuity or benefit of each annuitant or benefit recipient who
6.30has been receiving an annuity or a benefit for at least 18 full months before the January 1
6.31increase; and
6.32(2) for each annuitant or benefit recipient who has been receiving an annuity or a
6.33benefit for at least six full months, an annual postretirement increase of 1/12 of 1.5 percent
6.34for each month that the person has been receiving an annuity or benefit must be applied,
7.1effective January 1, following the calendar year in which the person has been retired for at
7.2least six months, but has been retired for less than 18 months.
7.3(d) Increases under paragraph (c) for the State Patrol retirement plan terminate on
7.4December 31 of the calendar year in which
7.5 valuations prepared by the approved actuary under sections
7.6the standards for actuarial work adopted by the Legislative Commission on Pensions
7.7and Retirement indicates that the market value of assets of the retirement plan equals or
7.8exceeds 90 percent of the actuarial accrued liability of the retirement plan and increases
7.9under subdivision 1 recommence after that date.
7.10(e) An increase in annuity or benefit payments under this subdivision must be made
7.11automatically unless written notice is filed by the annuitant or benefit recipient with the
7.12executive director of the applicable covered retirement plan requesting that the increase
7.13not be made.
7.14EFFECTIVE DATE.This section is effective July 1, 2014.
7.15 Sec. 3. Minnesota Statutes 2013 Supplement, section 356.415, subdivision 1f, is
7.16amended to read:
7.17 Subd. 1f. Annual postretirement adjustments; Minnesota State Retirement
7.18System judges retirement plan. (a) The increases provided under this subdivision begin
7.19on January 1, 2014, and are in lieu of increases under subdivision 1 or 1a for retirement
7.20annuity, disability benefit, or survivor benefit recipients of the judges retirement plan.
7.21(b) Retirement annuity, disability benefit, or survivor benefit recipients of the
7.22judges retirement plan are entitled to a postretirement adjustment annually on January
7.231, as follows:
7.24(1) a postretirement increase of 1.75 percent must be applied each year, effective
7.25on January 1, to the monthly annuity or benefit of each annuitant or benefit recipient
7.26who has been receiving an annuity or a benefit for at least 18 full months before the
7.27January 1 increase; and
7.28(2) for each annuitant or benefit recipient who has been receiving an annuity or a
7.29benefit for at least six full months, an annual postretirement increase of 1/12 of 1.75
7.30percent for each month that the person has been receiving an annuity or benefit must be
7.31applied, effective January 1, following the calendar year in which the person has been
7.32retired for at least six months, but has been retired for less than 18 months.
7.33(c) Increases under this subdivision terminate on December 31 of the calendar
7.34year in which
7.35approved actuary under sections
8.1promulgated by the Legislative Commission on Pensions and Retirement indicates that
8.2the market value of assets of the judges retirement plan equals or exceeds 70 percent of
8.3the actuarial accrued liability of the retirement plan. Increases under subdivision 1 or 1a,
8.4whichever is applicable, begin on the January 1 next following that date.
8.5(d) An increase in annuity or benefit payments under this subdivision must be made
8.6automatically unless written notice is filed by the annuitant or benefit recipient with the
8.7executive director of the applicable covered retirement plan requesting that the increase
8.8not be made.
8.9EFFECTIVE DATE.This section is effective July 1, 2014.
8.12 Section 1. Minnesota Statutes 2012, section 352.115, subdivision 8, is amended to read:
8.13 Subd. 8. Accrual of annuity.
8.14application for an annuity must not be made more than
8.15employee
8.16state employee elects to begin collecting a retirement annuity. If the director determines an
8.17applicant for annuity has fulfilled the legal requirements for an annuity, the director shall
8.18authorize the annuity payment in accordance with this chapter and payment must be made
8.19as authorized. An annuity shall begin to accrue no earlier than 180 days before the date the
8.20application is filed with the director, but not before the day following the termination of
8.21state service or before the day the employee is eligible to retire by reason of both age and
8.22service requirements. The retirement annuity shall cease with the last payment which had
8.23accrued during the lifetime of the retired employee unless an optional annuity provided in
8.24section
8.25last survivor annuity shall cease with the last payment received by the survivor during
8.26the lifetime of the survivor. If a retired employee had not selected an optional annuity, or
8.27a survivor annuity is not payable under the option, and a spouse survives, the spouse is
8.28entitled only to the annuity for the calendar month in which the retired employee died.
8.29If an optional annuity is payable after the death of the retired employee, the survivor is
8.30entitled to the annuity for the calendar month in which the retired employee died.
8.31EFFECTIVE DATE.This section is effective July 1, 2014.
8.32 Sec. 2. Minnesota Statutes 2012, section 352.115, subdivision 10, is amended to read:
9.1 Subd. 10. Reemployment of annuitant. (a) Except for salary or wages received
9.2as a temporary employee of the legislature during a legislative session, if any retired
9.3employee again becomes entitled to receive salary or wages from any employer who
9.4employs state employees as that term is defined in section
9.5position covered by this chapter, the annuity or retirement allowance must cease
9.6first of the month following the month that the retired employee has earned an amount
9.7equal to the annual maximum earnings allowable for that age for the continued receipt of
9.8full benefit amounts monthly under the federal old age, survivors, and disability insurance
9.9program as set by the secretary of health and human services under United States Code,
9.10title 42, section 403, in any calendar year. If the retired employee has not yet reached the
9.11minimum age for the receipt of Social Security benefits, the maximum earnings for the
9.12retired employee are equal to the annual maximum earnings allowable for the minimum
9.13age for the receipt of Social Security benefits.
9.14(b) The balance of the annual retirement annuity after cessation must be handled or
9.15disposed of as provided in section
9.16(c) The annuity must be resumed
9.17that state service ends, or, if the retired employee is still employed at the beginning of the
9.18next calendar year, at the beginning of that calendar year, and payment must again end
9.19when the retired employee has earned the applicable reemployment earnings maximum
9.20specified in this subdivision. If the retired employee is granted a sick leave without pay,
9.21but not otherwise, the annuity or retirement allowance must be resumed during the period
9.22of sick leave.
9.23(d) No payroll deductions for the retirement fund may be made from the earnings of
9.24a reemployed retired employee.
9.25(e) No change may be made in the monthly amount of an annuity or retirement
9.26allowance because of the reemployment of an annuitant.
9.27(f) If a reemployed annuitant whose annuity is suspended under paragraph (a)
9.28is having insurance premium amounts withheld under section
9.29insurance premium amounts must continue to be withheld and transferred from the
9.30suspended portion of the annuity. The balance of the annual retirement annuity after
9.31cessation, after deduction of the insurance premium amounts, must be treated as specified
9.32in paragraph (b).
9.33(g) If a reemployed annuitant whose annuity is suspended under paragraph (a)
9.34has a former spouse receiving a portion of the annuity allowable under section 518.58,
9.35subdivision 1, the portion payable to the former spouse must continue to be paid.
9.36EFFECTIVE DATE.This section is effective retroactively from January 1, 2014.
10.1 Sec. 3. Minnesota Statutes 2012, section 354.44, subdivision 5, is amended to read:
10.2 Subd. 5. Resumption of teaching service after retirement. (a) Any person who
10.3retired under the provisions of this chapter and has thereafter resumed teaching in any
10.4employer unit to which this chapter applies is eligible to continue to receive payments
10.5in accordance with the annuity except that all or a portion of the annuity payments must
10.6be deferred during the calendar year immediately following the fiscal year in which the
10.7person's salary from the teaching service is in an amount greater than $46,000. The
10.8amount of the annuity deferral is one-half of the salary amount in excess of $46,000 and
10.9must be deducted from the annuity payable for the calendar year immediately following
10.10the fiscal year in which the excess amount was earned.
10.11 (b) If the person is retired for only a fractional part of the fiscal year during the initial
10.12year of retirement, the maximum reemployment salary exempt from triggering a deferral
10.13as specified in this subdivision must be prorated for that fiscal year.
10.14 (c) After a person has reached the Social Security normal retirement age, no deferral
10.15requirement is applicable regardless of the amount of salary.
10.16 (d) The amount of the retirement annuity deferral must be handled or disposed
10.17of as provided in section
10.18 (e) For the purpose of this subdivision, salary from teaching service includes all
10.19salary or income earned as a teacher as defined in section 354.05, subdivision 2, paragraph
10.20(a), clause (1). Salary from teaching service also includes, but is not limited to:
10.21 (1) all income for services performed as a consultant
10.22
10.23third-party supplier, to an employer unit covered by the provisions of this chapter; and
10.24 (2) the greater of either the income received or an amount based on the rate paid with
10.25respect to an administrative position, consultant,
10.26supplier, or as an employee of a consultant, independent contractor, or third-party supplier,
10.27 in an employer unit with approximately the same number of pupils and at the same level
10.28as the position occupied by the person who resumes teaching service.
10.29EFFECTIVE DATE.This section is effective July 1, 2014.
10.30 Sec. 4. Minnesota Statutes 2012, section 354.48, subdivision 6a, is amended to read:
10.31 Subd. 6a. Medical adviser; duties.
10.32
10.33
10.34accredited independent organization specializing in disability determinations, licensed
10.35physicians, or physicians on the staff of the commissioner of health as designated by the
11.1commissioner, to be the medical advisor to the executive director. The medical adviser
11.2shall designate licensed physicians, licensed chiropractors, or licensed psychologists with
11.3respect to a mental impairment, who shall examine applicants for disability benefits. The
11.4medical adviser shall pass upon all expert reports based on any examinations performed
11.5in order to determine whether a teacher is totally and permanently disabled as defined in
11.6section
11.7medical statements and certificates by or on behalf of a teacher in connection with a
11.8disability benefit, and shall report in writing to the director setting forth any conclusions
11.9and recommendations on all matters referred to the medical adviser.
11.10EFFECTIVE DATE.This section is effective July 1, 2014.
11.11 Sec. 5. Minnesota Statutes 2012, section 356.635, subdivision 6, is amended to read:
11.12 Subd. 6. Eligible retirement plan. (a) An "eligible retirement plan" is:
11.13(1) an individual retirement account under section 408(a) or 408A of the federal
11.14Internal Revenue Code;
11.15(2) an individual retirement annuity plan under section 408(b) of the federal Internal
11.16Revenue Code;
11.17(3) an annuity plan under section 403(a) of the federal Internal Revenue Code;
11.18(4) a qualified trust plan under section 401(a) of the federal Internal Revenue Code
11.19that accepts the distributee's eligible rollover distribution;
11.20(5) an annuity contract under section 403(b) of the federal Internal Revenue Code;
11.21(6) an eligible deferred compensation plan under section 457(b) of the federal
11.22Internal Revenue Code, which is maintained by a state or local government and which
11.23agrees to separately account for the amounts transferred into the plan; or
11.24(7) in the case of an eligible rollover distribution to a nonspousal beneficiary, an
11.25individual account or annuity treated as an inherited individual retirement account under
11.26section 402(c)(11) of the federal Internal Revenue Code.
11.27(b) For distributions of after-tax contributions which are not includable in gross
11.28income, the after-tax portion may be transferred only to an individual retirement account
11.29or annuity described in section 408(a) or (b) of the federal Internal Revenue Code, to a
11.30Roth individual retirement account described in section 408A of the federal Internal
11.31Revenue Code, or to a qualified plan described in either section 401(a) of the federal
11.32Internal Revenue Code or
11.33the federal Internal Revenue Code, that agrees to separately account for the amounts
11.34transferred, including separately accounting for the portion of the distribution which is
11.35includable in gross income and the portion of the distribution which is not includable.
12.1EFFECTIVE DATE.This section is effective the day following final enactment.
