BILL ANALYSIS AB 1354 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 1354 (Fong) As Amended June 24, 2010 Majority vote ----------------------------------------------------------------- |ASSEMBLY: |73-0 |(May 14, 2009) |SENATE: |33-0 |(August 2, | | | | | | |2010) | ----------------------------------------------------------------- Original Committee Reference: P.E.,R. & S.S. SUMMARY : Brings the County Employees' Retirement Law of 1937 ('37 Act) into conformity with federal laws regarding public employees who die while serving on active military duty, and make other clarifying changes to bring the statutes into conformity with provisions of the federal Internal Revenue Code (IRC). The Senate amendments add the following provisions to the bill: 1)Specify that the survivors of an employee who dies while on active military duty will receive the benefits that would have been due had the employee reinstated, following the military duty, into active service and then died from non-work related causes. 2)Specify that the above death benefits will not include benefit accruals occurring during the period of military service, but that the military service time will be credited for purposes of vesting. 3)Clarify that this provision is effective for deaths occurring on or after January 1, 2007, the effective date of the federal Heroes Earnings Assistance and Relief Tax Act (HEART Act). EXISTING FEDERAL LAW , as contained in the HEART Act, requires that the survivors of a public employee who is killed while on active military service must receive whatever benefits would have been paid had the employee died from non-industrial causes while actively employed. EXISTING STATE LAW : 1)Requires the board of retirement of a '37 Act retirement AB 1354 Page 2 system to adjust the payment of benefits from the system to members as necessary in order to maximize the benefits available to members who are subject to the IRC Section 415 limits. Those adjustments include, but are not limited to, cost-of-living adjustments, cost-of-living banks, temporary annuities, or survivor continuance benefits. 2)Provides death benefits for active employees who die prior to retirement and while in active service that are based on factors such as years of service, and age and compensation at the time of death. AS PASSED BY THE ASSEMBLY, prohibited the amount payable, including cost-of-living adjustments, to a member of a county retirement system being operated under the '37 Act from exceeding the IRC Section 415 limits, as specified, and specifies that adjustments to the IRC Section 415 limits continue to apply after a member's severance from employment or annuity starting date. FISCAL EFFECT : None COMMENTS : According to the author, the State Association of County Retirement Systems is in the process of reviewing the '37 Act body of law for areas where the '37 Act may not comply precisely with the IRC or Internal Revenue Service (IRS) regulations. This bill conforms to IRS rules for compliance with IRC Section 415 distributions and conforms to the HEART Act with regard to public employees who die while on leave to perform active military duty. Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916) 319-3957 FN: 0005114