STATE OF OKLAHOMA

1st Session of the 53rd Legislature (2011)

SENATE BILL 892	By:	Mazzei

AS INTRODUCED

An Act relating to retirement plans for newly hired education employees; creating the New Education Employees’ Contributory Retirement Act; providing short title; defining terms; creating certain retirement systems; specifying membership; designating the Teachers’ Retirement System and the Board of Trustees of the System to assume certain roles; creating the New Education Employees’ Contributory Retirement System Trust Fund; specifying content of the trust fund; requiring certain employers to participate in the New Education Employee’s Contributory Retirement System; specifying eligibility for membership; requiring certain election to be made by certain persons; prohibiting an employer from withdrawing from the System; authorizing purchase of certain service credit; providing that certain employees are not eligible for service credit; requiring payment of certain contribution rates; specifying amount of such rates; providing procedures related to certain contributions; specifying when certain benefit increases may be granted; requiring certain employers to make a nonelective contribution in a specified amount; specifying types of plans in which contributions may be made; specifying investment options of such plans; prohibiting certain loans or hardship contributions from being made from certain contributions; providing procedures relating to the contributions of members who terminate employment; requires the establishment of a forfeiture account; authorizing the System to take certain actions; authorizing a member to receive an allowance from the System under certain conditions; allowing a retiree to choose from one of six retirement options; specifying provisions of each option; allowing lump-sum payment in certain circumstances; authorizing election for certain lump sum payment; authorizing the purchase of certain service credit; stating eligibility requirements in order to purchase such credit; requiring the employer to make certain contribution to a member’s defined contribution plan; specifying amounts of such contribution; providng procedures related to such contribution; specifying types of plans in which contributions may be made; specifying investment options of such plans; prohibiting certain loans or hardship contributions from being made from certain contributions; providing procedures relating to the contributions of members who terminate employment; requires the establishment of a forfeiture account; authorizing the System to take certain actions; authorizing distributions from the defined contributions for certain members receiving disability payments; providing for a death benefit; requiring the System to promulgate certain rules relating to the death benefit; specifying when the death benefit is payable; defining term; allowing for certain retirement option for certain deceased members; providing procedures relating to such retirement benefit; providing for codification; and providing an effective date.

BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 17-301 of Title 70, unless there is created a duplication in numbering, reads as follows:
This act shall be known and may be cited as the “New Education Employees’ Contributory Retirement Act”.
SECTION 2.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 17-302 of Title 70, unless there is created a duplication in numbering, reads as follows:
As used in the New Education Employees’ Contributory Retirement Act:
1.  “Compensation” means the total amount of payments made by a participating employer to a member of this system for services rendered to the participating employer, including:
a.	bonuses,
b.	cost-of-living adjustments,
c.	other payments currently includable in gross income and that are subject to Social Security deductions, including any payments in excess of the maximum amount subject to deduction under Social Security law,
d.	amounts that the member authorizes to be deducted or reduced for salary deferral or other benefits authorized by federal law, and
e.	member contributions.
“Compensation” may not exceed the amount allowed under Internal Revenue Code, Section 401(a)17).
“Compensation” does not include:
a.	the monetary value of remuneration paid in kind, including a residence or use of equipment,
b.	the cost of any employment benefits paid for by the participating employer,
c.	compensation paid to a temporary employee or an employee otherwise ineligible for service credit,
d.	any payments upon termination, including accumulated vacation, sick leave payments, severance payments, compensatory time payments, or any other special payments, or
e.	any allowances or payments to a member for costs or expenses paid by the participating employer, including automobile costs, uniform costs, travel costs, tuition costs, housing costs, insurance costs, equipment costs, and dependent care costs.
The Executive Director of the Teachers’ Retirement System of Oklahoma may determine if a payment not listed under this paragraph falls within the definition of compensation;
2.  “Final average salary” means the amount computed by averaging the highest five years of annual compensation preceding retirement subject to subparagraphs a, b, c, and d of this paragraph:
a.	except as provided in subparagraph b of this paragraph, the percentage increase in annual compensation in any one of the years used may not exceed the previous year's compensation by more than ten percent (10%) plus a cost-of-living adjustment equal to the decrease in the purchasing power of the dollar during the previous year, as measured by a United States Bureau of Labor Statistics Consumer Price Index average as determined by the board,
b.	in cases where the participating employer provides acceptable documentation to the office, the limitation in subparagraph a of this paragraph may be exceeded if:
(1)	the member has transferred from another agency, or
(2)	the member has been promoted to a new position,
c.	if the member retires more than six (6) months from the date of termination of employment, the member is considered to have been in service at the member's last rate of pay from the date of the termination of employment to the effective date of retirement for purposes of computing the member's final average salary only,
d.	if the member has less than five years of service credit in this System, final average salary means the average annual compensation paid to the member during the full period of service credit,
3.  “Member” means any teacher or other employee included in the membership of the Teachers’ Retirement System of Oklahoma as provided in Section 17-103 of Title 70 of the Oklahoma Statutes;
4.  “Participating employer” means an employer as defined in subsection (5) of Section 17-101 of Title 70 of the Oklahoma Statutes;
5.  “System” means the New Education Employees' Contributory Retirement System created pursuant to the New Education Employees Contributory Retirement Act; and
6.  “Teachers’ Retirement System of Oklahoma” means the system or plan that would have covered the member if the member had initially entered employment before July 1, 2012;
SECTION 3.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 17-303 of Title 70, unless there is created a duplication in numbering, reads as follows:
A.  There is created for members employed by a participating employer the “New Education Employees' Contributory Retirement System.”
B.  The New Education Employees' Contributory Retirement System includes:
1.  The New Education Employees’ Hybrid Retirement System created in the New Education Employees’ Contributory Retirement Act; and
2.  The New Education Employees’ defined contribution plan created in the New Education Employees’ Contributory Retirement Act.
C.  Members employed by a participating employer on or after July 1, 2012, who are not members of the Teachers’ Retirement System of Oklahoma shall be members of the New Education Employees’ Contributory Retirement System and shall not be members of the Teachers’ Retirement System of Oklahoma.
SECTION 4.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 17-304 of Title 70, unless there is created a duplication in numbering, reads as follows:
For purposes of the New Education Employees’ Contributory Retirement Act, the Teachers’ Retirement System of Oklahoma shall act as the New Education Employees’ Contributory Retirement System created pursuant to the New Education Employees’ Contributory Retirement Act.  The Board of Trustees of the Teachers’ Retirement System of Oklahoma shall act as the Board of Trustees of the New Education Employees’ Contributory Retirement System.
SECTION 5.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 17-305 of Title 70, unless there is created a duplication in numbering, reads as follows:
A.  There is created the "New Education Employees' Contributory Retirement System Trust Fund" for the purpose of paying the benefits and costs of administering the defined benefit portion of this System.
B.  The fund shall consist of all money paid into it, including interest, in accordance with the New Education Employees’ Contributory Retirement Act, whether in the form of cash, securities, or other assets, and of all money received from any other source.
C.  Custody, management, and investment of the fund shall be governed by the Board of Trustees for the New Education Employees Contributory Retirement System.
SECTION 6.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 17-306 of Title 70, unless there is created a duplication in numbering, reads as follows:
A.  Beginning July 1, 2012, a participating employer shall participate in the New Education Employees’ Contributory Retirement System.
B.  A person entering regular full-time employment with a participating employer on or after July 1, 2012, is eligible as a:
1.  Member for service credit and defined contributions under the New Education Employees’ Hybrid Retirement System established by the New Education Employees’ Contributory Retirement Act; or
2.  Participant for defined contributions under the New Education Employees’ defined contribution plan established by the New Education Employees’ Contributory Retirement Act.
C.  A person entering regular full-time employment with a participating employer on or after July 1, 2012, shall:
1.  Make an election to participate in the System created pursuant to the New Education Employees’ Contributory Retirement Act within thirty (30) days from the date of employment:
a.	as a member for service credit and defined contributions under the New Education Employees’ Hybrid Retirement System, or
b.	as a participant for defined contributions under the New Education Employees’ defined contribution plan; and
2.  Submit to the System notification of the member's election under paragraph 1 of this subsection in a manner approved by the System.
D.  An election made by a person entering regular full-time employment with a participating employer under subsection C of this section is irrevocable.
E.  If no election is made under paragraph 1 of subsection C of this section, the person shall become a member eligible for service credit and defined contributions under the New Education Employees’ Hybrid Retirement System.
SECTION 7.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 17-307 of Title 70, unless there is created a duplication in numbering, reads as follows:
A.  An employer is a participating employer and may not withdraw from participation in this System.
B.  If a participating employer purchases service credit on behalf of regular full-time employees for service rendered prior to the participating employer's admission to this System, the service credit shall be purchased in a nondiscriminatory manner on behalf of all current and former regular full-time employees who were eligible for service credit at the time service was rendered.
SECTION 8.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 17-308 of Title 70, unless there is created a duplication in numbering, reads as follows:
The following employees are not eligible for service credit in the New Education Employees Hybrid Retirement System:
1.  An employee whose employment status is temporary in nature due to the nature or the type of work to be performed, provided that:
a.	if the term of employment exceeds six (6) months and the employee otherwise qualifies for service credit in this System, the participating employer shall report and certify to the System that the employee is a regular full-time employee effective the beginning of the seventh month of employment, and
b.	if an employee, previously terminated prior to becoming eligible for service credit in this System, is reemployed within three months of termination by the same participating employer, the participating employer shall report and certify to the System that the member is a regular full-time employee when the total of the periods of employment equals six months and the employee otherwise qualifies for service credit in this System.
SECTION 9.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 17-309 of Title 70, unless there is created a duplication in numbering, reads as follows:
A.  Participating employers and members shall jointly pay the certified contribution rates to the New Education Employees’ Hybrid Retirement System to maintain the defined benefit portion of the System on a financially and actuarially sound basis.
B.  1.  A participating employer shall pay up to ten percent (10%) of compensation toward the certified contribution rate to the New Education Employees’ Contributory Retirement Act for the defined benefit portion of this System.
2.  A member shall pay the amount, if any, of the certified contribution rate for the defined benefit portion of this System that exceeds ten percent (10%) to the System.
3.  In addition to the percent specified under paragraph 1 of this subsection, the participating employer shall pay the corresponding Teachers’ Retirement System of Oklahoma amortization rate of the employee's compensation to the System to be applied to the employer's corresponding Teachers’ Retirement System of Oklahoma liability.
C.  A participating employer may not elect to pay all or part of the required member contributions under paragraph 2 of subsection B of this section, in addition to the required participating employer contributions.
D.  A member contribution is credited by the System to the account of the individual member.  This amount, together with refund interest, is held in trust for the payment of benefits to the member or the member's beneficiaries.  A member contribution is vested and nonforfeitable.
E.  Each member is considered to consent to payroll deductions of member contributions.  The payment of compensation less these payroll deductions is considered full payment for services rendered by the member.
F.  Benefits provided under the defined benefit portion of the New Education Employees’ Hybrid Retirement System may not be increased unless the actuarial funded ratio of the Teachers’ Retirement System of Oklahoma reaches one hundred percent (100%).
SECTION 10.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 17-310 of Title 70, unless there is created a duplication in numbering, reads as follows:
A.  1.  A participating employer shall make a nonelective contribution on behalf of each regular full-time employee who is a member of the New Employees Contributory Retirement System in an amount equal to ten percent (10%) minus the contribution rate paid by the employer pursuant to paragraph 1 of subsection B of Section 9 of this act of the member's compensation to a defined contribution plan qualified under Section 401(k) of the Internal Revenue Code which:
a.	is sponsored by the New Education Employees’ Contributory Retirement System, and
b.	has been grandfathered under Section 1116 of the Federal Tax Reform Act of 1986, as amended;
2.  The member may make additional payments to:
a.	the qualified 401(k) plan which receives the employer contribution described in subsection A of this section, or
b.	at the member's option, another defined contribution plan established by the participating employer.
B.  1.  The total amount contributed by the participating employer under paragraph 1 of subsection A of this section vests to the member's benefit after four (4) years of employment from the date of employment; and
2.  The total amount contributed by the member under sub paragraphs 1 and 2 of paragraph 2 of subsection A of this section vests to the member's benefit immediately and is nonforfeitable.
C.  1.  Contributions made by a participating employer under paragraph 1 of subsection A of this section shall be invested in a default option selected by the Board of Trustees of the Teachers’ Retirement System of Oklahoma until the member is vested in accordance with paragraph 1 of subsection B of this section;
2.  A member may direct the investment of contributions made by a participating employer under paragraph 1 of subsection A of this section only after the contributions have vested in accordance with paragraph 1 of subsection B of this section; and
3.  A member may direct the investment of contributions made by the member under paragraph 2 of subsection A of this section.
D.  No loans shall be available from contributions made by a participating employer under paragraph 2 of subsection A of this section.
E.  No hardship distributions shall be available from contributions made by a participating employer under paragraph 1 of subsection A of this section.
F.  1.  Except as provided in paragraph 2 of this subsection, if a member terminates employment with a participating employer prior to the vesting period described in paragraph 1 of subsection B of this section, all contributions made by a participating employer on behalf of the member under paragraph 1 of subsection A of this section are subject to forfeiture.
2.  If a member who terminates employment with a participating employer prior to the vesting period described in paragraph 1 of subsection B of this section subsequently enters employment with the same or another participating employer within ten (10) years of the termination date of the previous employment:
a.	all contributions made by the previous participating employer on behalf of the member shall be reinstated upon the member's completion of the vesting period under paragraph 1 of subsection B of this section, and
b.	the length of time that the member worked with the previous employer shall be included in determining whether the member has completed the vesting period under paragraph 1 of subsection B of this section.
3.  The System shall establish a forfeiture account and shall specify the uses of the forfeiture account, which may include an offset against employer contributions made under this section.
G.  The System may request from any other qualified 401(k) plan under subsection A and B of this section any relevant information pertaining to the maintenance of its tax qualification under the Internal Revenue Code.
H.  The System may take any action which in its judgment is necessary to maintain the tax-qualified status of its 401(k) defined contribution plan under federal law.
SECTION 11.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 17-311 of Title 70, unless there is created a duplication in numbering, reads as follows:
A.  A member is qualified to receive an allowance from the New Education Employees’ Hybrid Retirement System when:
1. Before the member's retirement date, the member ceases actual work for a participating employer in this System and provides evidence of the termination;
2. The member has submitted to the System a notarized retirement application form that states the member's proposed retirement date; and
3.  One of the following conditions is met as of the member's retirement date:
a.	the member has accrued at least four (4) years of service credit and has attained an age of sixty-five (65) years,
b.	the member has accrued at least ten (10) years of service credit and has attained an age of sixty-two (62) years,
c.	the member has accrued at least twenty (20) years of service credit and has attained an age of sixty (60) years, or
d.	the member has accrued at least thirty-five (35) years of service credit.
B.  1.  The member's retirement date:
a.	shall be the first or the sixteenth day of the month, as selected by the member,
b.	shall be on or after the date of termination, and
c.	may not be more than ninety (90) days before or after the date the application is received by the office; and
2.  A member may not be employed by a participating employer in the System established by this chapter on the retirement date selected under subparagraph 1 of paragraph 1 of this subsection.
SECTION 12.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 17-312 of Title 70, unless there is created a duplication in numbering, reads as follows:
A.  The retirees of the New Education Employees’ Hybrid Retirement System may choose from the six (6) retirement options described in this section.  Options Two, Three, Four, Five, and Six are modifications of the Option One calculation.
B.  1.  The Option One benefit is an annual allowance calculated as follows:
a.	if the retiree is at least sixty-five (65) years of age or has accrued at least thirty-five (35) years of service credit, the allowance is an amount equal to one and one-half percent (1.5%) of the retiree's final average salary multiplied by the number of years of service credit accrued on and after July 1, 2012, or
b.	if the retiree is less than sixty-five (65) years of age, the allowance shall be reduced by the full actuarial amount for each year of retirement from age sixty (60) to age sixty-five (65), unless the member has thirty-five (35) or more years of accrued credit in which event no reduction is made to the allowance.
2.  Years of service includes any fractions of years of service to which the retiree may be entitled.  At the time of retirement, if a retiree's combined years of actual, not purchased, service credit is within one-tenth (1/10) of one (1) year of the total years of service credit required for retirement, the retiree shall be considered to have the total years of service credit required for retirement.
3.  An Option One allowance is only payable to the member during the member's lifetime.
C.  The allowance payable under Options Two, Three, Four, Five, and Six is calculated by reducing an Option One benefit based on actuarial computations to provide the following:
1.  Option Two is a reduced allowance paid to and throughout the lifetime of the retiree, and, if the retiree receives less in annuity payments than the amount of the retiree's member contributions, the remaining balance of the retiree's member contributions shall be paid in accordance with the provisions of Section 101 et seq. of Title 70 of the Oklahoma Statutes.
2.  Option Three is a reduced allowance paid to and throughout the lifetime of the retiree, and, upon the death of the retiree, the same reduced allowance is paid to and throughout the lifetime of the retiree's lawful spouse at the time of retirement.
3.  Option Four is a reduced allowance paid to and throughout the lifetime of the retiree, and upon the death of the retiree, an amount equal to one-half (1/2) of the retiree's allowance is paid to and throughout the lifetime of the retiree's lawful spouse at the time of retirement.
4.  Option Five is a modification of Option Three so that if the lawful spouse at the time of retirement predeceases the retiree, an allowance equivalent to the amount payable at the time of initial retirement under Option One shall be paid to the retiree for the remainder of the retiree's life, beginning on the last day of the month following the month in which the lawful spouse dies.
5.  Option Six is a modification of Option Four so that if the lawful spouse at the time of retirement predeceases the retiree, an allowance equivalent to the amount payable at the time of initial retirement under Option One shall be paid to the retiree for the remainder of the retiree's life, beginning on the last day of the month following the month in which the lawful spouse dies.
D.  If a retiree under Option One dies within one hundred twenty (120) days after the retiree's retirement date, the retirement is canceled and the death shall be considered as that of a member before retirement.  Any payments made to the retiree shall be deducted from the amounts due to the beneficiary.
E.  If a retiree retires under either Option Five or Six and subsequently divorces, the retiree may elect to convert the benefit to an Option One benefit at the time of divorce, if there is no court order filed in the matter.
SECTION 13.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 17-313 of Title 70, unless there is created a duplication in numbering, reads as follows:
A.  If a retiree's allowance, as computed pursuant to the New Education Employees Contributory Retirement Act, amounts to Twenty-Five Dollars ($25.00) or less, the allowance may be settled by the New Education Employees’ Hybrid Retirement System by making a lump-sum payment of an amount actuarially equivalent to the allowance.
B.  A payment made under this section constitutes a full and complete settlement of the retiree's claim against this System.
SECTION 14.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 17-314 of Title 70, unless there is created a duplication in numbering, reads as follows:
A.  1.  Upon retirement, a retiree may elect to have the New Education Employees’ Hybrid Retirement System deduct an actuarially determined amount from the retiree's allowance to provide a lump-sum benefit payable to a beneficiary upon the death of the retiree;
2.  Upon retirement, a retiree may also elect to have an actuarially determined amount deducted from the retiree's allowance to provide a lump-sum death benefit payable to a beneficiary upon the death of the retiree's lawful spouse at the time of retirement; and
3.  The System may promulgate rules for the administration of this lump-sum death benefit.
B.  For a retiree who pays for a lump-sum death benefit under this section through a reduction of an allowance, benefits shall be paid in accordance with the provisions of Section 17-101 et seq. of Title 70 of the Oklahoma Statutes. If the retiree chooses Option Three, Four, Five, or Six, and a lump-sum death benefit is payable after the death of the retiree, the allowance shall be restored to its original amount.
C.  A retiree may elect to cancel the lump-sum death benefit under this section.  The cancellation allowed under this subsection is irrevocable.  Upon cancellation, the allowance shall be restored to its original amount and benefits under this section may not be paid.
SECTION 15.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 17-315 of Title 70, unless there is created a duplication in numbering, reads as follows:
A.  A member may purchase or a member and a participating employer may jointly purchase a maximum of five (5) years of service credit which cannot otherwise be purchased pursuant to the provisions of Section 17-101 et seq. of Title 70 of the Oklahoma Statutes.  At a minimum, the years of service credit purchased shall be sufficient to allow the member to meet the retirement eligibility requirements of this New Education Employees’ Contributory Retirement Act with no actuarial reduction.  The member's retirement date shall be immediately after the purchase of years of service credit.  The member shall pay at least five percent (5%) of the cost of the purchase.  To qualify for a purchase of service credit under this section, the member shall:
1.  Have at least five years of service credit; and
2.  Otherwise meet federal eligibility requirements.
B.  The purchase price for the years of service credit shall be calculated and paid for as provided in Section 17-116.8 of Title 70 of the Oklahoma Statutes.  Prior to making any purchase of years of service credit under this section, a participating employer shall adopt a purchase policy that includes nondiscriminatory participation standards for all regular full-time employees.
C.  Only members retiring from the New Education Employees’ Contributory Retirement System may purchase service credit under this section.
SECTION 16.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 17-316 of Title 70, unless there is created a duplication in numbering, reads as follows:
A.  Up to the amount allowed by federal law, the participating employer shall contribute ten percent (10%) of the participant's compensation to a defined contribution plan.
B.  1. The participating employer shall contribute the ten percent (10%) nonelective contribution described in subsection A of this section to a defined contribution plan qualified under Section 401(k) of the Internal Revenue Code which:
a.	is sponsored by the Board of Trustees of the Teachers’ Retirement System of Oklahoma, and
b.	has been grandfathered under Section 1116 of the Federal Tax Reform Act of 1986, as amended.
2.  The member may make additional payments to:
a.	the qualified 401(k) plan which receives the employer contribution described in this subsection, or
b.	at the member's option, another defined contribution plan established by the participating employer.
3.  In addition to the percent specified under paragraph 1 of subsection B of this section, the participating employer shall pay the corresponding Teachers’ Retirement System of Oklahoma amortization rate of the employee's compensation to the Teachers’ Retirement System of Oklahoma to be applied to the employer's corresponding Teachers’ Retirement System of Oklahoma liability.
C.  1.  The total amount contributed by the participating employer under paragraph 1 of subsection B of this section vests to the member's benefit after four years of employment from the date of employment.
2.  The total amount contributed by the member under paragraph 2 of subsection B of this section vests to the member's benefit immediately and is nonforfeitable.
D.  1.  Contributions made by a participating employer under paragraph 1 of subsection B of this section shall be invested in a default option selected by the New Education Employees’ Contributory Retirement System until the member is vested in accordance with paragraph 1 of subsection C of this section.
2.  A member may direct the investment of contributions made by a participating employer under paragraph 1 of subsection B of this section only after the contributions have vested in accordance with paragraph 1 of subsection C of this section.
3.  A member may direct the investment of contributions made by the member under paragraph 2 of subsection C of this section.
E.  No loans shall be available from contributions made by a participating employer under paragraph 1 of subsection B of this section.
F.  No hardship distributions shall be available from contributions made by a participating employer under paragraph 1 of subsection B of this section.
G.  1.  Except as provided in paragraph 2 of this subsection, if a member terminates employment with a participating employer prior to the vesting period described in paragraph 1 of subsection C of this section, all contributions made by a participating employer on behalf of the member under paragraph 1 of subsection B of this section) are subject to forfeiture.
2.  If a member who terminates employment with a participating employer prior to the vesting period described in paragraph 1 of subsection C of this section subsequently enters employment with the same or another participating employer within ten (10) years of the termination date of the previous employment:
a.	all contributions made by the previous participating employer on behalf of the member shall be reinstated upon the member's completion of the vesting period under paragraph 1 of subsection C of this section, and
b.	the length of time that the member worked with the previous employer shall be included in determining whether the member has completed the vesting period under paragraph 1 of subsection C of this section.
3.  The System shall establish a forfeiture account and shall specify the uses of the forfeiture account, which may include an offset against employer contributions made under this section.
H.  The System may request from any other qualified 401(k) plan under subsection B of this section any relevant information pertaining to the maintenance of its tax qualification under the Internal Revenue Code.
I.  The System may take any action which in its judgment is necessary to maintain the tax-qualified status of its 401(k) defined contribution plan under federal law.
SECTION 17.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 17-317 of Title 70, unless there is created a duplication in numbering, reads as follows:
For a person who is disabled and receives contributions under subsection (6) of Section 17-105 of Title 70 of the Oklahoma Statutes, the disabled member may begin receiving distributions from the defined contributions made by the participating employer on behalf of the disabled member when the person would have been eligible to retire if the person was covered by the defined benefit portion of the New Education Employees’ Hybrid Retirement System.
SECTION 18.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 17-318 of Title 70, unless there is created a duplication in numbering, reads as follows:
A.  The New Education Employees’ Contributory Retirement System shall provide a death benefit through the purchase of a group insurance policy for members of this System.
B.  The System shall promulgate rules to administer the death benefit provided by this section and may, in accordance with federal law, establish:
1.  Benefit levels;
2.  Classes of members; and
3.  A living benefit option.
C.  This death benefit is payable when:
1.  The member dies prior to the member's retirement date or dies under circumstances which subsection E of Section 11 of this act requires to be treated as the death of a member before retirement;
2.  The office receives acceptable proof of death; and
3.  Benefits are not payable under Section 14 of this act.
D.  The death benefit payable to the beneficiary under this section is a lump-sum payment consisting of:
1.  The return of any member contributions under the New Education Employees’ Contributory Retirement Act; plus
2.  A percentage of the final average salary of the member to be determined by the System.
E.  Any amount of a living benefit option paid to the member prior to death shall be deducted from the benefit payable to the beneficiary.
F.  The cost of the death benefit shall be paid by the participating employer in addition to the contribution rate established under Sections 9 or 15 of this act.
G.  The portion of the death benefit provided under paragraph 2 of subsection D of this section may not be paid to the beneficiary of an inactive member unless the death of the member occurs either:
1.  Within a period of one hundred twenty (120) days after the last day of work for which the person received compensation; or
2.  While the member is still physically or mentally incapacitated from performance of duties, if the incapacity has been continuous since the last day of work for which compensation was received.
H.  The death benefit provided under paragraph 2 of subsection D of this section shall be paid in accordance with Section 17-105 of Title 70 of the Oklahoma Statutes.
I.  The death benefit paid to the beneficiary of an inactive member, except as otherwise provided under subsection G of this section, is a lump-sum return of the member's member contributions.
J.  Payment of the death benefit by the System constitutes a full settlement of any beneficiary's claim against the office and the office is not liable for any further or additional claims or assessments on behalf of the member.
K.  A death benefit under this section may not be paid on behalf of a retiree under this System.
SECTION 19.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 17-319 of Title 70, unless there is created a duplication in numbering, reads as follows:
A.  As used in this section, “member's full allowance” means an Option Three allowance calculated under Section 12 of this section without an actuarial reduction.
B.  Upon the request of a deceased member's lawful spouse at the time of the member's death, the deceased member is considered to have retired under Option Three on the first day of the month following the month in which the member died if the following requirements are met:
1.  The member has:
a.	fifteen (15) or more years of service credit,
b.	attained age sixty-two (62) with ten (10) or more years of service credit, or
c.	attained age sixty-five (65) with four or more years of service credit; and
2.  The member dies leaving a spouse to whom the member has been married at least six months immediately prior to the death date.
C.  The spouse who requests a benefit under this section shall apply in writing to the New Education Employees’ Contributory Retirement System.  The allowance shall begin on the first day of the month:
1.  Following the month in which the member died, if the application is received by the office within ninety (90) days of the member's death; or
2.  In which the application is received by the office.
D.  The allowance payable to a surviving spouse under subsection B of this section is as follows:
1.  If the member has twenty-five (25)or more years of service credit at the time of death, the surviving spouse shall receive the member's full allowance;
2.  If the member has between twenty to twenty-four (20-24) years of service credit and is not age sixty (60) or older at the time of death, the surviving spouse shall receive two-thirds (2/3) of the member's full allowance;
3.  If the member has between fifteen to nineteen (15-19) years of service credit and is not age sixty-two (62) or older at the time of death, the surviving spouse shall receive one-third (1/3) of the member's full allowance; or
4.  If the member is age sixty (60) or older with twenty (20) or more years of service credit, age sixty-two (62) or older with ten (10) or more years of service credit, or age sixty-five (65) or older with four or more years of service credit at the time of death, the surviving spouse shall receive an Option Three benefit with actuarial reductions.
E.  Except for a return of member contributions, benefits payable under this section are retirement benefits and shall be paid in addition to any other payments made under Section 18 of this act and shall constitute a full and final settlement of the claim of the spouse or any other beneficiary filing a claim for benefits under Section 18 of this act.
SECTION 20.  This act shall become effective July 1, 2012.

53-1-138	ARE	1/20/2011 3:56:48 PM