Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO:
KRS
61.510,
61.522,
61.546,
61.552,
61.555,
61.565,
61.590,
61.598,
61.625,
61.637,
61.675,
78.510
- 78.852,
26 U.S.C.
401
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
61.645(9)(e) requires the
Board of Trustees of Kentucky Retirement Systems to promulgate administrative
regulations necessary or proper in order to carry out the provisions of
KRS
61.510 to
61.705,
and
78.510
to
78.852.
KRS
61.522 authorizes the Board of Trustees of
Kentucky Retirement Systems to involuntarily terminate participation of
employers in the Kentucky Employees Retirement System and the County Employees
Retirement System determined by the board to no longer qualify to participate
in a governmental plan or to be noncompliant with the provisions of
KRS
61.510 to
61.705
or
78.510
to
78.852.
The Board of Trustees of Kentucky Retirement Systems shall require lump sum
payment of the full actuarial cost of benefits accrued by its current and
former employees for those involuntarily ceased employers.
KRS
61.522(8) requires the board
to promulgate administrative regulations to administer the provisions of the
statute. This administrative regulation establishes the procedures and
requirements for involuntary cessation from participation in the Kentucky
Employees Retirement System and the County Employees Retirement System.
Section 1. Definitions.
(1) "Ceased employer" means an employer who
the Board of Trustees has determined must involuntarily cease
participation.
(2) "Involuntary
cessation date" means the date established by the Board of Trustees when
approving the employer's involuntary cessation from participation in the
Kentucky Employees Retirement System or County Employees Retirement
System.
Section 2. Upon
determination by the Board of Trustees, an employer shall be required to
involuntarily cease participation from the Kentucky Employees Retirement System
or the County Employees Retirement System.
(1)
The Board of Trustees shall provide written notice to the employer of its
intention to involuntarily cease participation. The notice shall be sent by
certified mail to the employer's designated reporting official on file at
Kentucky Retirement Systems.
(2)
The notice shall provide an explanation of the board's decision for involuntary
cessation, including whether:
(a) The board
has determined that the employer is no longer qualified to participate in a
governmental plan; or
(b) The board
has determined that the employer has failed to comply with the requirements of
KRS
61.510 to
61.705
or
78.510
to
78.852.
(3) The notice shall provide the
employer with the opportunity to fully resolve its noncompliance within sixty
(60) days of the date the notice was issued by Kentucky Retirement Systems. The
board may extend this time if provided a written statement from the employer
ensuring full resolution but requiring additional time due to factors outside
the employer's control preventing the employer from fully resolving its
noncompliance within sixty (60) days of the date of the notice.
(a) Upon expiration of this time, the board
shall determine whether the employer fully resolved its noncompliance and shall
remain a participant of the Kentucky Employees Retirement System or County
Employees Retirement System or that the employer failed to fully resolve its
noncompliance and to proceed with involuntary cessation.
(b) If the board determines that the employer
fully resolved its noncompliance, then the employer shall be informed that the
involuntary cessation process shall be suspended contingent upon continued
compliance.
(4) If the
board determines involuntary cessation should proceed, the employer shall be
provided with written notice indicating:
(a)
That the employer shall pay the full actuarial cost of the benefits accrued by
its current and former employees;
(b) That the employer shall be responsible
for all fees incurred by Kentucky Retirement Systems for use of external
professional services including the administrative costs of an actuarial study
performed by Kentucky Retirement Systems' consulting actuary;
(c) That the employer shall be responsible
for reimbursing Kentucky Retirement Systems for the cost of compensation and
benefits of Kentucky Retirement Systems' employees computed on an hourly basis
as well as the costs of postage, printing, and other expenses incurred by
Kentucky Retirement Systems;
(d)
That the involuntary cessation of participation applies to all of the
employer's current and former employees; and
(e) An involuntary cessation date.
(5) The employer shall submit in
an encrypted electronic file a list of each current and former full-time
employee as defined by
KRS
61.510(21) and
78.510(21)
who were employed during any time period the employer participated in Kentucky
Employees Retirement System or County Employees Retirement System, containing:
(a) Full name;
(b) Last known address;
(c) Date of birth;
(d) Social Security number or Kentucky
Retirement Systems member identification number;
(e) Beginning date of employment;
(f) Date employment ended, if
applicable;
(g) Sick leave
balance;
(h) Beginning and ending
dates of any active duty military service when the employee was not employed by
the employer; and
(i) Beginning and
ending dates of any active duty military service when the employee was employed
by the employer.
(j) If the
employer refuses or fails to submit the requested information, Kentucky
Retirement Systems shall make reasonable efforts to issue a notice to the last
known address on file to those current and former employees of the employer
that involuntary cessation has been initiated. Kentucky Retirement Systems will
provide an involuntary cessation date and notification that the employee will
no longer earn service credit while employed with the employer after that
date.
(6) Upon receipt
of the actuarial study, Kentucky Retirement Systems shall:
(a) Issue an invoice to the employer for the
full actuarial cost of cessation as determined in the actuarial study and the
total administrative costs for administering the involuntary cessation;
and
(b) Require the employer to pay
the invoice by lump sum within thirty (30) days of its issuance by Kentucky
Retirement Systems.
Section
3.
(1)
(a) Former employees of the ceased employer
who are currently employed with a different employer participating in the State
Police Retirement System, County Employees Retirement System, or Kentucky
Employees Retirement System shall not be eligible to take a refund of their
accumulated account balance until terminating employment with the participating
employer.
(b) Current employees of
the ceased employer who are also employed by another employer participating in
the State Police Retirement System, County Employees Retirement System, or
Kentucky Employees Retirement System shall not be eligible to take a refund of
their accumulated account balance unless they terminate all employment with
participating employers.
(2) Current employees of a ceased employer
shall terminate employment with the ceased employer and all employers
participating in the State Police Retirement System, County Employees
Retirement System, and Kentucky Employees Retirement System prior to retiring
pursuant to
KRS
61.590 or taking a refund pursuant to
KRS
61.625.
(3) Employees of a ceased employer shall
comply with
KRS
61.637 and
105
KAR 1:390 after retirement.
(4) Employees of a ceased employer shall have
sixty (60) days from the involuntary cessation date to pay in full any
outstanding balance on an installment purchase agreement pursuant to
KRS
61.552(14) and
105 KAR
1:150.
(5)
(a) The four (4) percent employer pay credit
and applicable interest accrued while employed with a ceased employer shall
vest as of the involuntary cessation date for those employees who began
participating on or after January 1, 2014.
(b) Employees of the ceased employer who
began participating on or after January 1, 2014, shall not be vested in the
four (4) percent employer pay credit or applicable interest attributable to a
time of employment with an employer other than the ceased employer.
(6) Employees of the ceased
employer shall receive service credit for sick leave accrued pursuant to
KRS
61.546 or
78.616
as of the involuntary cessation date.
(a) If
the employer participates in a sick leave program established in
KRS
61.546 or
78.616,
the employer shall report to Kentucky Retirement Systems the number of hours of
each employee's accumulated sick leave as of the involuntary cessation
date.
(b) Kentucky Retirement
Systems shall credit the months of sick leave service reported pursuant to this
section to the employee's total service credit to determine the employer's full
actuarial cost.
(c) If the employer
refuses or fails to certify an employee's unused sick leave, Kentucky
Retirement Systems shall credit the months of sick leave last reported to the
employee's file with Kentucky Retirement Systems as of the employer's
involuntary cessation date.
(7) Kentucky Retirement Systems shall credit
the months of military service pursuant to
KRS 61.555(1) and
(2) reported prior to the employer's
involuntary cessation date to determine the employer's full actuarial
cost.
(8) Kentucky Retirement
Systems shall use the employer's involuntary cessation date as the member's
last day of paid employment pursuant to
KRS
61.510(32) for any member
who files for disability retirement benefits that has not established a last
day of paid employment prior to the involuntary cessation date.
Section 4. If the employer fails
to timely remit the full actuarial cost and Kentucky Retirement Systems' total
administrative costs attributable to involuntary cessation, the Board of
Trustees may file an action in the Franklin Circuit Court to enforce the
provisions of
KRS
61.522 and this administrative regulation to
recover the full actuarial cost.
Section
5.
(1) A person eligible to
purchase service credit pursuant to
KRS
61.552 related to employment with the ceasing
employer, must either complete the purchase or enter into a service purchase
agreement with Kentucky Retirement Systems no later than the employer's
involuntary cessation date.
(2)
Pursuant to
KRS
61.552, current and former employees shall
not be eligible to purchase service credit related to employment with a ceased
employer after the employer's involuntary cessation date.
(3) A person may purchase service credit
pursuant to
KRS
61.552(20) if the service is
not related to employment with the ceased employer.
(4) A former employee of a ceased employer
who becomes employed with a participating employer after terminating employment
with the ceased employer may purchase service credit pursuant to
KRS
61.552 that is not related to employment with
a ceased employer.
Section
6. If an employer files legal action against Kentucky Retirement
Systems regarding the provisions of
KRS
61.522 or this administrative regulation, the
employer shall pay all administrative costs and legal fees incurred by Kentucky
Retirement Systems if the employer's legal action against Kentucky Retirement
Systems is unsuccessful or is dismissed for any reason other than by the
agreement of the parties.
Section
7. If any due date or time period deadline provided in
KRS
61.522 or this administrative regulation
falls on a Saturday, Sunday, or day that Kentucky Retirement Systems is closed
due to state holiday, the due date or time period deadline shall extend to the
close of business of the next business day.
STATUTORY AUTHORITY:
KRS
61.522(9),
61.645(9)(e)