Amended in Senate May 14, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 989

Introduced by Assembly Member Mullin

February 22, 2013

An act to amend begin delete Section 22309 of end delete begin insert Sections 22309, 22661, 22662, 22663, 22801, 23104, 23203, and 26214 of, and to add Section 22337 to, end insert the Education Code, relating to state teachers’ retirement.

LEGISLATIVE COUNSEL’S DIGEST

AB 989, as amended, Mullin. State teachers’ retirement: account statements.

The State Teachers’ Retirement Law creates the State Teachers’ Retirement System (STRS) for the purpose of providing retirement benefits to teachers and other people employed in connection with the schools. STRS is administrated by the Teachers’ Retirement Board, which is required to issue each active and inactive member, no less frequently than annually, as specified, a statement of the member’s individual Defined Benefit Program and Defined Benefit Supplement begin insert Program end insert accounts, if the system has the member’s mailing address. Existing law permits the board to make the account statement available by secured access through the system’s Web site. begin insert Existing law creates the Cash Balance Benefit Program, also referred to as the cash balance plan, administrated by the Teachers’ Retirement Board, to provide a retirement plan for teachers working less than half time. Existing law requires the board, in connection with the cash balance plan, to provide each participant a statement regarding the balance of his or her account with the plan at the close of the year, as specified. end insert

This bill would begin delete require end delete begin insert permit end insert the board to make an electronic begin delete copy of the account statement available to each active and inactive member end delete begin insert delivery of the account statements described above, subject to specified requirements end insert . The bill would permit the board, by resolution, to make the electronic begin delete copy end delete begin insert delivery end insert of the account begin delete statement end delete begin insert statements end insert the default method by which active and inactive members begin insert and participants end insert receive the information in the begin delete statement end delete begin insert statements end insert . The bill would require the board, if it makes this resolution, to notify each member that he or she has the right to request that a copy of the individual account statement be mailed and to provide the statement by mail if requested, as specified. begin insert The bill would provide that, until this resolution is made, the delivery by mail is the default delivery method. The bill would apply similar authorizations and requirements regarding electronic delivery of communications and other actions to provisions regarding refund of retirement contributions, redeposit of retirement contributions, and the purchase of service credit. If specified provisions mandate that actions be taken within a certain number of days of a mailing date and electronic delivery has been substituted for mail, the bill would require that date of electronic delivery be substituted for mailing date for purposes of measuring when those actions are to be taken. end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

begin delete

SECTION 1.  

Section 22309 of the Education Code is amended
to read:

22309.  

(a) The board shall issue to each active and inactive
member, no less frequently than annually after the close of the
school year, a statement of the member’s individual Defined
Benefit Program and Defined Benefit Supplement accounts.

(b) (1) The board shall make an electronic copy of the individual
account statement described in subdivision (a) available to each
active and inactive member.

(2) The board may, by resolution, make the electronic copy of
the individual account statement the default method by which
active and inactive members receive the information provided in
the individual account statement. If the board makes this resolution,
then the board shall notify each active and inactive member that
he or she has the right to request that a copy of the individual
account statement be mailed. The board shall mail a copy of the
individual account statement if the system has received the
member’s request to do so in the manner specified by the board.

(3) Until the board makes the resolution described in paragraph
(2), the board shall mail a copy of the member’s statement of the
member’s individual Defined Benefit Program and Defined Benefit
Supplement accounts, provided the employer or member has
informed the system of the member’s current United States Postal
Service mailing address. If the member indicates that he or she
prefers to receive that annual statement through the Web site of
the system, the board may, in lieu of mailing, issue the annual
statement by secured access through the Web site of the system.

(c) The board shall periodically make a good faith effort to
locate inactive members to provide these members with information
concerning any benefit for which they may be eligible.

end delete

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 22309 of the end insert begin insert Education Code end insert begin insert is amended
to read: end insert

22309.  

(a)  begin delete The end delete begin insert Except as provided in subdivision (c), the end insert board
shall issue to each active and inactive member, no less frequently
than annually after the close of the school year, a statement of the
member’s individual Defined Benefit Program and Defined Benefit
Supplement accounts, provided the employer or member has
informed the system of the member’s current United States Postal
Service mailing address. If the member indicates that he or she
prefers to receive that annual statement through the Web site of
the system, the board may, in lieu of mailing, issue the annual
statement by secured access through the Web site of the system.

(b) The board shall periodically make a good faith effort to
locate inactive members to provide these members with information
concerning any benefit for which they may be eligible.

begin insert

(c) The mode of issuance described subdivision (a) is subject
to Section 22337.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 22337 is added to the end insert begin insert Education Code end insert begin insert , to read: end insert

begin insert

begin insert 22337. end insert   

(a) The requirements and procedures described in this
section shall apply, to the extent that they are applicable, to the
following sections:

(1) Section 22309.

(2) Section 22661.

(3) Section 22662.

(4) Section 22663.

(5) Section 22801.

(6) Section 23104.

(7) Section 23203.

(8) Section 26214.

(b) A communication or other action described in a section
listed in subdivision (a) may be made by electronic delivery
pursuant to the requirements of this section. The board may, by
resolution, make electronic delivery the default method of
communication or other action with regard to these sections. If
the board makes this resolution, then the board shall notify each
party affected by the resolution that he or she has the right to
request delivery by mail and that, unless the affected party elects
to continue delivery by mail within 60 days, delivery shall be
provided electronically. The option to elect delivery by mail shall
be provided by mail unless the affected party has indicated that
he or she prefers to receive communications in another manner,
in which case the option to elect shall be provided by the method
that the party has selected.

(c) Until the board makes the resolution described in subdivision
(b), mail shall continue to be the default method of communication
unless a different preferred method of communication has been
selected by the member, nonmember spouse, participant,
nonparticipant spouse, or beneficiary.

(d) If a provision in a section listed in subdivision (a) requires
that action be taken within a specified number of days of a mailing
date, and electronic delivery has been substituted for delivery by
mail, date of electronic delivery shall substitute for date of mailing
for purposes of measuring the number of days within which an
action is to be taken.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 22661 of the end insert begin insert Education Code end insert begin insert is amended to
read: end insert

22661.  

(a) The nonmember spouse who is awarded a separate
account under this part shall have the right to a refund of the
accumulated retirement contributions in the account under the
Defined Benefit Program, and a return of the Defined Benefit
Supplement account balance, of the nonmember spouse under this
part.

(b) The nonmember spouse shall file an application on a form
provided by the system to obtain a refund or lump-sum payment.

(c)  begin delete The end delete begin insert Except as provided in subdivision (i), the end insert refund of
accumulated retirement contributions in the account under the
Defined Benefit Program and the return of the accumulated Defined
Benefit Supplement account balance under this part are effective
when the system deposits in the United States mail an initial
warrant drawn in favor of the nonmember spouse and addressed
to the latest address for the nonmember spouse on file with the
system.

(d)  begin delete If end delete begin insert Except as provided in subdivision (i), if end insert the nonmember
spouse has elected on a form provided by the system to transfer
all or a specified portion of the accumulated retirement
contributions or accumulated Defined Benefit Supplement account
balance that are eligible for direct trustee-to-trustee transfer to the
trustee of a qualified plan under Section 402 of the Internal
Revenue Code of 1986 (26 begin delete U.S.C.A. end delete begin insert U.S.C. end insert Sec. 402), deposit in
the United States mail of a notice that the requested transfer has
been made constitutes a refund of the nonmember spouse’s
accumulated retirement contributions as defined in Section 22161.5
or the return of the accumulated Defined Benefit Supplement
account balance. This subdivision shall not apply to a nonmember
domestic partner, consistent with Section 402 of the Internal
Revenue Code.

(e) The nonmember spouse is deemed to have permanently
waived all rights and benefits pertaining to the service credit,
accumulated retirement contributions, and accumulated Defined
Benefit Supplement account balance under this part when the
refund and lump-sum payment become effective.

(f) The nonmember spouse may not cancel a refund or lump-sum
payment under this part after it is effective.

(g) The nonmember spouse shall not have a right to elect to
redeposit the refunded accumulated retirement contributions under
this part after the refund is effective, to redeposit under Section
22662 or purchase additional service credit under Section 22663
after the refund becomes effective, or to redeposit the accumulated
Defined Benefit Supplement account balance after the lump-sum
payment becomes effective.

(h) If the total service credit in the separate account of the
nonmember spouse under the Defined Benefit Program, including
service credit purchased under Sections 22662 and 22663, is less
than two and one-half years, the board shall refund the accumulated
retirement contributions in the account.

begin insert

(i) The mode of deposit described in subdivision (c) and the
mode of notice described in subdivision (d) are subject to Section
22337.

end insert

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 22662 of the end insert begin insert Education Code end insert begin insert is amended to
read: end insert

22662.  

The nonmember spouse who is awarded a separate
account under the Defined Benefit Program may redeposit
accumulated retirement contributions previously refunded to the
member in accordance with the determination of the court pursuant
to Section 22652.

(a) The nonmember spouse may redeposit under the Defined
Benefit Program only those accumulated retirement contributions
that were previously refunded to the member and in which the
court has determined the nonmember spouse has a community
property interest.

(b) The nonmember spouse shall inform the system in writing
of his or her intent to redeposit within 180 days after the judgment
or court order that specifies the redeposit rights of the nonmember
spouse is entered. begin delete The end delete begin insert Except as provided in subdivision (g), the end insert
nonmember spouses’ election to redeposit shall be made on a form
provided by the system within 30 days after the system mails an
election form and the billing.

(c) If the nonmember spouse elects to redeposit under the
Defined Benefit Program, he or she shall repay all or a portion of
the member’s refunded accumulated retirement contributions that
were awarded to the nonmember spouse and shall pay regular
interest from the date of the refund to the date payment of the
redeposit is completed.

(d) All payments shall be received by the system before the
effective date of the nonmember spouse’s retirement under this
part. If any payment due because of the election is not received at
the system’s headquarters office, as established pursuant to Section
22375, within 120 days of its due date, the election shall be
canceled and any payments made under the election shall be
returned to the nonmember spouse.

(e) The right of the nonmember spouse to redeposit shall be
subject to Section 23203.

(f) The member shall not have a right to redeposit the share of
the nonmember spouse in the previously refunded accumulated
retirement contributions under this part whether or not the
nonmember spouse elects to redeposit. However, any accumulated
retirement contributions previously refunded under this part and
not explicitly awarded to the nonmember spouse under this part
by the judgment or court order shall be deemed the exclusive
property of the member.

begin insert

(g) The measurement of time within which the election to
redeposit described in subdivision (b) shall be made is subject to
Section 22337.

end insert

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 22663 of the end insert begin insert Education Code end insert begin insert is amended to
read: end insert

22663.  

The nonmember spouse who is awarded a separate
account under this part has the right to purchase additional service
credit in accordance with the determination of the court pursuant
to Section 22652.

(a) The nonmember spouse may purchase only the service credit
that the court, pursuant to Section 22652, has determined to be the
community property interest of the nonmember spouse.

(b) The nonmember spouse shall inform the system in writing
of his or her intent to purchase additional service credit within 180
days after the date the judgment or court order addressing the right
of the nonmember spouse to purchase additional service credit is
entered. begin delete The end delete begin insert Except as provided in subdivision (f), the end insert nonmember
spouse shall elect to purchase additional service credit on a form
provided by the system within 30 days after the system mails an
election form and billing.

(c) If the nonmember spouse elects to purchase additional
service credit, he or she shall pay, prior to retirement under this
part, all contributions with respect to the additional service at the
contribution rate for additional service credit in effect at the time
of election and regular interest from July 1 of the year following
the year upon which contributions are based.

(1) (A) The nonmember spouse shall purchase additional service
credit by paying the required contributions and interest in one lump
sum, or in not more than 120 monthly installments, provided that
no installment, except the final installment, is less than twenty-five
dollars ($25). Regular interest shall be charged on the monthly,
unpaid balance if the nonmember spouse pays in installments.

(B) If any payment due, because of the election, is not received
at the system’s headquarters office, as established pursuant to
Section 22375, within 120 days of its due date, the election shall
be canceled and any payments made under the election shall be
returned to the nonmember spouse.

(2) The contributions shall be based on the member’s
compensation earnable in the most recent school year during which
the member was employed, preceding the date of separation
established by the court pursuant to Section 22652.

(3) All payments of contributions and interest shall be received
by the system before the effective date of the retirement of the
nonmember spouse.

(d) The nonmember spouse does not have a right to purchase
additional service credit under this part after the effective date of
a refund of the accumulated retirement contributions in the separate
account of the nonmember spouse.

(e) The member does not have a right to purchase the community
property interest of the nonmember spouse of additional service
credit under this part whether or not the nonmember spouse elects
to purchase the additional service credit. However, any additional
service credit eligible for purchase that is not explicitly awarded
to the nonmember spouse by the judgment or court order shall be
deemed the exclusive property of the member.

begin insert

(f) The measurement of time within which the election to
purchase additional service credit described in subdivision (b)
shall be made is subject to Section 22337.

end insert

begin insert

begin insert SEC. 6. end insert   

end insert

begin insert Section 22801 of the end insert begin insert Education Code end insert begin insert is amended to
read: end insert

22801.  

(a) A member who requests to purchase additional
service credit as provided in this chapter and Chapter 14.2
(commencing with Section 22820) shall pay, prior to retirement,
all contributions with respect to that service at the contribution
rate for additional service credit, adopted by the board as a plan
amendment, in effect on the date of the request to purchase
additional service credit. If the system is unable to inform the
member or beneficiary of the amount required to purchase
additional service credit prior to the effective date of the applicable
allowance, the member or beneficiary may make the required
payment within 30 working days after the date of mailing of the
statement of contributions and interest required or the effective
date of the appropriate allowance, whichever is later begin insert , except as
provided in subdivision (i) end insert . The payment shall be paid in full before
a member or beneficiary receives any adjustment in the appropriate
allowance due because of that payment. Contributions shall be
made in a lump sum, or in not more than 120 monthly installments,
not to exceed ten years. No installment, except the final installment,
shall be less than twenty-five dollars ($25).

(b) If the member is employed to perform creditable service
subject to coverage by the Defined Benefit Program on the date
of the request to purchase additional service credit, the
contributions shall be based upon the compensation earnable in
the current school year or either of the two immediately preceding
school years, whichever is highest.

(c) If the member is not employed to perform creditable service
subject to coverage by the Defined Benefit Program on the date
of the request to purchase additional service credit, the
contributions shall be based upon the compensation earnable in
the last school year of credited service or either of the two
immediately preceding school years, whichever is highest, and
additional regular interest shall be added to the contributions from
July 1 of the subsequent year in which the member last performed
creditable service subject to coverage by the Defined Benefit
Program to 20 days after the date of the request.

(d) The employer may pay the amount required as employer
contributions for additional service credited under paragraphs (7),
(8), (9), and (10) of subdivision (a) of Section 22803.

(e) The Public Employees’ Retirement System shall transfer
the actuarial present value of the assets of a person who makes an
election pursuant to paragraph (11) of subdivision (a) of Section
22803.

(f) Regular interest shall be charged on the monthly unpaid
balance if the member pays in installments. Regular interest may
not be charged or be payable for the period of a delay caused by
the system’s inability or failure to determine and inform the
member or beneficiary of the amount of contributions and interest
that is payable. The period of delay shall commence on the 20th
day following the day on which the member or beneficiary who
wishes to make payment evidences in writing to the system that
he or she is ready, willing, and able to make payment to the system.
The period of delay shall cease on the first day of the month
following the mailing of notification of contributions and interest
payable.

(g) If the payment described in subdivision (a) is not received
at the system’s headquarters office, as described in Section 22375,
within 120 days of the due date, the election pursuant to this section
shall be canceled. The member shall receive credit for additional
service based on the payments that were made or the member may
request a return of his or her payments.

(h) If the election to purchase additional service credit is
canceled as described in subdivision (g), the member may, prior
to the effective date of his or her retirement, elect to purchase
additional service credit pursuant to this section.

begin insert

(i) The measurement of time within which the purchase of
additional service credit described in subdivision (a) shall be made
is subject to Section 22337.

end insert

begin insert

begin insert SEC. 7. end insert   

end insert

begin insert Section 23104 of the end insert begin insert Education Code end insert begin insert is amended to
read: end insert

23104.  

(a) Deposit in the United States mail of an initial
warrant drawn as directed by the member as a refund of
contributions upon termination of employment, and addressed to
the address directed by the member, constitutes a return of the
member’s accumulated retirement contributions under this part.

(b)  begin delete If end delete begin insert Except as provided in subdivision (e), if end insert the member has
elected on a form provided by the system to transfer all or a
specified portion of the accumulated retirement contributions that
are eligible for direct trustee-to-trustee transfer to the trustee of a
qualified plan under Section 402 of the Internal Revenue Code of
1986 (26 U.S.C. Sec. 402), deposit in the United States mail of a
notice that the requested transfer has been made constitutes a return
of the member’s accumulated retirement contributions under this
part.

(c)  begin delete For end delete begin insert Except as provided in subdivision (e), for end insert refunds not
involving direct trustee-to-trustee transfers, if the member returns
the total gross distribution amount to the system’s headquarters
office, as established pursuant to Section 22375, within 30 days
from the mailing date, the refund shall be canceled and the person
shall be restored as a member of the Defined Benefit Program with
all the rights and privileges under this part restored.

(d)  begin delete For end delete begin insert Except as provided in subdivision (e), for end insert refunds
involving direct trustee-to-trustee transfers, if the member returns
the warrant drawn to the trustee of the qualified plan or the trustee
returns the amount of the qualified refund and, if applicable, any
additional amounts necessary to equal, but in no event to exceed,
the total gross distribution amount to the system’s headquarters
office, as established pursuant to Section 22375, within 30 days
from the mailing date, the refund shall be canceled and the person
shall be restored as a member of the Defined Benefit Program with
all the rights and privileges under this part restored.

begin insert

(e) The mode of notice described in subdivision (b) and the
measurement of time within which the return of total gross
distribution amounts described in subdivisions (c) and (d) shall
be made are subject to Section 22337.

end insert

begin insert

begin insert SEC. 8. end insert   

end insert

begin insert Section 23203 of the end insert begin insert Education Code end insert begin insert is amended to
read: end insert

23203.  

(a) A member who elects to redeposit refunded
accumulated retirement contributions shall pay, prior to retirement,
all contributions and interest as determined under Section 23200.

(b) If the system is unable to inform the member or beneficiary
of the amount required to redeposit the refunded accumulated
retirement contributions prior to the effective date of the applicable
allowance, the member or beneficiary may make the required
payment within 30 working days after the date of mailing of the
statement of contributions and interest required or the effective
date of the appropriate allowance, whichever is later begin insert , except as
provided in subdivision (d) end insert . The payment shall be paid in full
before a member or beneficiary receives any adjustment in the
appropriate allowance due because of that payment.

(c) Redeposit of refunded accumulated retirement contributions
shall be made in one sum, or in not more than 120 monthly
installments, not to exceed ten years, provided that no installment,
except the final installment, is less than twenty-five dollars ($25).

begin insert

(d) The measurement of time within which a redeposit described
in subdivision (b) shall be made is subject to Section 22337.

end insert

begin insert

begin insert SEC. 9. end insert   

end insert

begin insert Section 26214 of the end insert begin insert Education Code end insert begin insert is amended to
read: end insert

26214.  

begin delete The end delete begin insert (a) end insert begin insert   end insert begin insert Except as provided in subdivision (b), the end insert board
shall issue, after the end of the plan year, to each participant having
a balance in his or her employee account or employer account, a
statement setting forth the balance as of the close of the plan year
and amounts credited for the year, provided that the employer or
participant has informed the system of the participant’s current
United States Postal Service mailing address. If the participant
indicates that he or she prefers to receive that statement through
the Web site of the system, the board may, in lieu of mailing, issue
the statement by secured access through the Web site of the system.
The board shall prescribe the form and content of the account
statement.

begin insert

(b) The mode of issuance described subdivision (a) is subject
to Section 22337.

end insert