Current through Register Vol. 50, No. 6, December 1, 2023
RELATES TO: KRS 16.505-16.652, 61.510-61.705, 78.510-78.852,
26 U.S.C.
401(a)(7), (8), (25),
414(d),(p),(u),
503(b),
Pub.L.
110-245
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
61.645(9)(e) requires the
Board of Trustees of the Kentucky Retirement Systems to promulgate
administrative regulations necessary or proper in order to carry out the
provisions of
KRS
16.505 to
16.652,
61.510
to
61.705,
and
78.510
to
78.852
and to conform to federal statutes and regulations. This administrative
regulation establishes Kentucky Retirement Systems' compliance with
26 U.S.C.
401(a),
26 U.S.C.
414,
Pub.L.
No. 110-245, and
26 U.S.C.
503(b) in order for Kentucky
Employees Retirement System, State Police Retirement System, and County
Employees Retirement System to maintain their tax qualified status as public
defined benefits plans.
Section 1.
Compliance with
26 U.S.C.
401(a)(7) and
401(a)(8)
for Vesting and Forfeitures.
(1) A plan
member shall be 100 percent vested in the member's accumulated contributions at
all times.
(2) In conformity with
26 U.S.C.
401(a)(8), any forfeitures
of benefits by members or former members of the plan shall not be used to pay
benefit increases. However, these forfeitures shall be used to reduce employer
contributions.
(3) Upon termination
or partial termination of an affected retirement system, or the complete
discontinuance of contributions, a member shall have a nonforfeitable interest
in his accrued benefit to the extent funded except as provided by
KRS
16.652,
61.692,
and
78.852.
Section 2. Compliance with
26 U.S.C.
414(p) for Qualified
Domestic Relations Orders. If benefits are payable pursuant to a qualified
domestic relations order that meets the requirements of a domestic relations
order as defined in
26 U.S.C.
414(p), then the applicable
requirements of
26 U.S.C.
414(p) shall be followed by
the retirement system.
Section 3.
Compliance with
26 U.S.C.
414(u),
26 U.S.C.
401(a)(37), and
Pub.L.
No. 110-245 for Reemployed Veterans.
(1) Effective December 12, 1994,
notwithstanding any other provision of the retirement system law;
contributions, benefits, and service credit with respect to qualified military
service shall be governed by
26 U.S.C.
414(u) and the Uniformed
Services Employment and Reemployment Rights Act of 1994.
(2) For deaths occurring on or after January
1, 2007, that occur while a member is performing qualified military service (as
defined in 38 U.S.C. 43) , to the extent required by
26 U.S.C.
401(a)(37), survivors of a
member in a state or local retirement or pension system are entitled to any
additional benefits that the system would provide if the member had resumed
employment and then died, such as accelerated vesting or survivor benefits that
are contingent on the member's qualified military service shall be counted for
vesting purposes.
(3) Beginning
January 1, 2009, to the extent required by
26 U.S.C.
414(u)(12), an individual
receiving differential wage payments as defined in
26
U.S.C. 3401(h)(2) from an
employer shall be treated as employed by that employer, and the differential
wage payment shall be treated as compensation for purposes of applying the
limits on annual additions under
26
U.S.C. 415(c). This
provision shall be applied to all similarly situated individuals in a
reasonably equivalent manner.
Section
4. Compliance with
26 U.S.C.
503(b) for Prohibited
Transactions. Effective as of July 1, 1989, the board shall not engage in a
transaction prohibited by
26 U.S.C.
503(b).
Section 5. Compliance with
26 U.S.C.
401(a)(25) for Actuarial
Assumptions. Kentucky Retirement Systems shall determine the amount of any
benefit that is determined on the basis of actuarial assumptions using
assumptions adopted by the board by rule; these benefits shall not be subject
to employer discretion.
Section 6.
(1) In addition to any other vesting
provisions under state law, except as provided in
KRS
61.535, the normal retirement benefit of a
member with nonhazardous service in the Kentucky Employees Retirement System or
the County Employees Retirement System shall be nonforfeitable upon the later
of:
(a) The attainment of age sixty-five
(65), which is the normal retirement age;
(b) For a member whose membership date is on
or before August 31, 2008, the completion of four (4) years of service;
or
(c) For a member whose
membership date is on or after September 1, 2008, five (5) years of service
earned pursuant to
KRS
16.543(1),
61.543(1),
or
78.615(1).
(2) In addition to any other
vesting provisions under state law, except as provided in
KRS
61.535, the normal retirement benefit of a
member of the State Police Retirement System and a member with hazardous
service in the Kentucky Employees Retirement System or the County Employees
Retirement System shall be nonforfeitable upon the later of:
(a) For a member whose membership date is on
or before August 31, 2008:
1. Attainment of
age fifty-five (55), which is the normal retirement age; or
2. The completion of five (5) years of
service; or
(b) For a
member whose membership date is on or after September 1, 2008:
1. Attainment of age sixty (60), which is the
normal retirement age; or
2. The
completion of five (5) years of service earned pursuant to
KRS
16.543(1),
61.543(1),
or
78.615(1).
35 Ky.R. 980;
1730; eff. 2-6-2009; 39 Ky.R. 74; 753; 10-24-2012; Crt eff.
6-28-2019.
STATUTORY AUTHORITY:
KRS
61.645(9)(e)
