Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO:
KRS
61.520,
61.522,
61.565,
61.645,
61.675,
61.685,
212.132
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
61.645(9)(e) authorizes the
Board of Trustees of the Kentucky Retirement Systems to promulgate all
administrative regulations necessary or proper in order to carry out the
provisions of KRS
16.505 to
16.652 and
61.510 to
61.705, and to conform to
federal statutes and regulations. As required by
KRS
61.565(1)(d) 4., this
administrative regulation establishes the procedures and requirements for the
process of assigning actuarially accrued liability contributions for a Kentucky
Employees Retirement System employer that, on or after March 23, 2021, merges
with another employer or entity, forms a new or separate employer or entity, or
splits or separates operations into multiple employers or entities.
Section 1. Definitions.
(1) "Actuarially accrued liability" means a
prorated annual dollar contribution amount for employers with employees that
have participated in or are participating in the system on or after July 1,
2021, that is based on the individual employer's percentage of the system's
total actuarially accrued liability as of June 30, 2019, and determined
pursuant to KRS
61.565(1)(d) 1.
(2) "Assign" means the transfer of legal and
financial responsibility for paying the actuarially accrued liability to
another participating or non-participating employer.
(3) "Inactive employer" means a participating
employer that ceases to have any employees in a regular full-time position
participating in the system.
(4)
"Merged employer" means one (1) or more participating employers with an
actuarially accrued liability that have merged or have plans to merge with one
(1) or more participating or non-participating employers into a new single
entity or under the name of one (1) of the participating or non-participating
employers that are part of the merger.
(5) "New or separate employer" means:
(a) A participating employer with an
actuarially accrued liability that forms, becomes, or is bought out by a
non-participating employer; or
(b)
A participating employer with an actuarially accrued liability that dissolves
or becomes an inactive employer and one (1) or more distinct entities assumes
responsibility for a portion or all of the business of the inactive employer or
participating employer that has dissolved.
(6) "Non-participating employer" means an
entity that does not participate in the system.
(7) "Participating employer" means an
employer that participates in the system.
(8) "Split or separated employer" means a
participating employer with an actuarially accrued liability that divides into
two (2) or more distinct entities.
(9) "Submit" means an employer required form,
documentation, report, or payment has been received by the retirement office
via mail, fax, electronic mail, the Employer Self Service Web site, or other
mode specifically detailed in this administrative regulation.
(10) "System" means the Kentucky Employees
Retirement System.
Section
2. Retroactive Effective Date of Application. This administrative
regulation applies to the actuarially accrued liability of any participating
employer that on or after March 23, 2021 pursuant to
KRS
61.565(1)(d) 4., merges with
another employer or entity, forms a new or separate employer or entity, or
splits or separates operations into multiple employers or entities.
Section 3. Actuarially Accrued Liability
Assignment.
(1)
(a) Except as provided in paragraphs (b) and
(c) of this subsection, if, on or after March 23, 2021, a participating
employer that has an actuarially accrued liability becomes a merged employer,
new or separate employer, or split or separated employer, the agency shall have
full authority to assign a portion or all of the total actuarially accrued
liability of the participating employer to:
1.
The merged, new, split, separate, or separated participating employer or the
merged non-participating employer; or
2. Another participating employer that
voluntarily requests assignment of a portion or all of the total actuarially
accrued liability of the participating employer under Section 8(2)(c) of this
administrative regulation.
(b) Employers that pay the costs to cease
participation in the system as provided by
KRS
61.522 are not subject to the provisions of
paragraph (a) of this subsection.
(c) If a district health department ceases to
operate or has a county or counties that withdraw from the district health
department, the agency shall assign the total actuarially accrued liability
contribution based upon the proportion of taxable property of each county as
certified by the Department for Public Health in the Cabinet for Health and
Family Services in accordance with
KRS
212.132.
(2) The effective date of the new assignment
of actuarially accrued liability shall be the latter of:
(a) The first day of the month following the
completion of the merger, split, separation, or formation of a new
participating employer; or
(b)
March 23, 2021.
(3) If a
merged, new, split, separate, or separated participating employer or the merged
non-participating employer fails to pay in full an actuarially accrued
liability assigned to it pursuant to this administrative regulation and
KRS
61.565, the agency may pursue all available
remedies, includingactions such as those set forth in
KRS
61.675(4), and civil
payments, legal fees, and costs in accordance with
KRS
61.685(3).
Section 4. Notification of Merge,
Split, Separating, or New Entity.
(1)
(a) Prior to beginning the formal process or
merging, splitting, separating, or becoming a new entity, a participating
employer that has an actuarially accrued liability shall submit a written
notification of the participating employer's intended merger, split,
separation, or formation of a new entity. The written notification shall be on
the participating employer's official letterhead.
(b) Following receipt of the notification
required by paragraph (a) of this subsection, the agency shall make the
relevant determination under Sections 5 through 9 of this administrative
regulation.
(2) If the
agency becomes aware, through any means, that a participating employer that has
an actuarially accrued liability has merged, split, separated, or become a new
or separate entity, and the participating employer failed to submit a written
notification in compliance with subsection (1)(a) of this section, the agency
shall make the relevant determination under Sections 5 through 9 of this
administrative regulation.
Section
5. Merged Employers.
(1) The
agency shall determine whether two (2) or more participating employers, or one
(1) or more participating employer and one (1) or more non-participating
employer, have become a merged employer on or after March 23, 2021.
(2) If two (2) or more participating
employers with an actuarially accrued liability combine into a new single
merged employer, then:
(a) The merged employer
shall take the necessary steps to participate in the system in accordance with
KRS
61.520; and
(b) The entire actuarially accrued liability
shall be assigned to the merged employer.
(3)
(a) If
one (1) or more participating employers with an actuarially accrued liability
combines with one (1) or more non-participating employer into a new single
merged employer, then:
1. The merged employer
may be required to take the necessary steps to participate in the system in
accordance with KRS
61.520, as determined by the agency;
and
2. The entire actuarially
accrued liability shall be assigned to the merged employer.
(b) The agency shall have the
authority to determine whether a merged employer as described in paragraph (a)
of this subsection shall be required to take the necessary steps to participate
in the system in accordance with
KRS
61.520.
Section 6. New or Separate Employers.
(1) The agency shall determine whether one
(1) or more new or separate employers have been created on or after March 23,
2021.
(2)
(a) Except as provided in paragraph (b) of
this subsection, the entire actuarially accrued liability of the original
participating employer that becomes the new or separate employer shall be
assigned to the new or separate employer.
(b) If multiple new or separate employers
have been created on or after March 23, 2021, the actuarially accrued liability
calculated for the original participating employer shall be divided by the
number of new or separate employers and an equal portion of the actuarially
accrued liability shall be assigned to each new or separate employer.
(3) The agency shall have the
authority to determine whether each new or separate employer as described in
subsection (1) of this section shall be required to or may take the necessary
steps to participate in the system in accordance with
KRS
61.520.
Section 7. Split or Separated Employers.
(1) The agency shall determine whether split
or separated employers have been created on or after March 23, 2021.
(2) Split or separated employers shall be
required to take the necessary steps to participate in the system in accordance
with KRS
61.520.
(3) Each split or separated employer shall be
assigned a share of the actuarially accrued liability calculated for the
original participating employer based on the percentage of participating
employees of each split or separated employer.
Section 8. Inactive Employers.
(1) The agency shall determine whether a
participating employer is an inactive employer.
(2) Except as provided in paragraphs (a)
through (c) of this subsection, the actuarially accrued liability calculated
for the inactive employer shall remain assigned to the inactive employer.
(a) If the inactive employer becomes part of
a merged employer on or after March 23, 2021, the actuarially accrued liability
of the inactive employer shall be assigned as described in Section 5 of this
administrative regulation.
(b) If,
relevant to the inactive employer, a new or separate employer is created on or
after March 23, 2021, the actuarially accrued liability of the inactive
employer shall be assigned as described in Section 6 of this administrative
regulation.
(c) If one (1) or more
other entities voluntarily requests that the agency assign it all or part of
the actuarially accrued liability of the inactive employer, the actuarially
accrued liability of the inactive employer shall be assigned by the agency to
the other entities.
Section 9. Other Similar Circumstances.
Employers whose circumstances do not fit exactly into merged, new, split,
separate, or separated participating employer, or merged non-participating
employer as identified in Sections (5) through (8) of this administrative
regulation, but have similar circumstances, shall be individually evaluated by
the agency. The agency shall determine which section of this administrative
regulation closest matches the employer circumstances and shall administer in
accordance with the identified section.
Section
10. Enforcement. Any participating employer or non-participating
employer that has been assigned an actuarially accrued liability pursuant to
this administrative regulation shall be subject to
KRS
61.675(4) for the purposes
of the actuarially accrued liability.
STATUTORY AUTHORITY:
KRS
61.565(1)(d) 4.,
61.645(9)(e)