Amended in Senate May 13, 2013

Amended in Senate March 21, 2013

Senate BillNo. 277


Introduced by Senator Beall

February 14, 2013


An act to amend Sections 22960.99,begin insert 22970.10, 22970.19,end insert22970.58,begin delete andend deletebegin insert 22970.60, 22970.62,end insert 22970.855begin insert, and 22970.89end insert of, to add Section 22960.4 to, and to repeal Section 22960.100 of, the Government Code, relating to public employees’ retirement, and making an appropriation therefor.

LEGISLATIVE COUNSEL’S DIGEST

SB 277, as amended, Beall. State Peace Officers’ and Firefighters’ Defined Contribution Plan.

Existing law establishes the State Peace Officers’ and Firefighters’ Defined Contribution Plan for state peace officer/firefighter members in State Bargaining Unit 6, the California Correctional Peace Officers Association, and others as specified. Under existing law, the plan applies to state peace officer and firefighter members in State Bargaining Unit 8 who have become subject by a memorandum of understanding. Existing law authorizes the plan to be provided to state peace officers or firefighters who meet stated criteria, if the Department of Human Resources has approved their inclusion for coverage. The moneys in the State Peace Officers’ and Firefighters’ Defined Contribution Plan Fund are continuously appropriated. Existing law entitles a participant in the plan to a lump-sum distribution of the balance of his or her account, or installment payments if he or she is entitled to $5,000 or more, upon separation from all service for the employer for any reason other than death, disability, or retirement.

Existing law requires the Board of Administration of the Public Employees’ Retirement System to administer the Supplemental Contributions Program and requires contributions by eligible employees, as defined, participating in the program to be deposited in the Supplemental Contributions Program Fund, a continuously appropriated fund.

This bill would require that contributions to the State Peace Officers’ and Firefighters’ Defined Contribution Plan cease, prohibit new members from participating in the plan, and would require that the plan be terminated as prescribed. The bill would repeal those provisions extending plan coverage to State Bargaining Unit 8 and certain state peace officers or firefighters. The bill would require all moneys in the State Peace Officers’ and Firefighters’ Defined Contribution Plan Fund to be distributed, as specified, including requiring that, if not elected otherwise, amounts that become payable from the fund be rolled over under existing federal law to the Supplemental Contributions Program. The bill would provide for rollover contributions to separate rollover contribution accounts in the Supplemental Contributions Program, as specified, and would provide for the distribution of amounts held in the participant’s account.begin insert The bill would authorize participants to elect investment fund options, as specified, in the Supplemental Contributions Program. The bill would require that certain rollover contributions be invested in the applicable target retirement date fund investment fund option available until the participant elects another investment fund option. The bill would also make various clarifying and technical changes in the Supplemental Contributions Program.end insert By changing the circumstances under which moneys in the State Peace Officers’ and Firefighters’ Defined Contribution Fund would be distributed, and by providing for an increase in contributions to the Supplemental Contributions Program, this bill would make an appropriation.

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

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

P2    1

SECTION 1.  

Section 22960.4 is added to the Government
2Code
, to read:

3

22960.4.  

(a) The Legislature finds and declares that an
4agreement between the exclusive representative of state peace
5officer and firefighter members in State Bargaining Unit 6 and the
P3    1employer has eliminated the employer contributions to the plan
2provided in Section 22960.60.

3(b) The following shall occur:

4(1) All contributions to the plan shall cease.

5(2) New participants shall be prohibited from participating in
6the plan.

7(3) The plan shall be terminated on the later of January 1, 2014,
8or upon obtaining appropriate approvals from the Internal Revenue
9Service, including a favorable determination letter on plan
10termination from the Internal Revenue Service.

11(4) Subject to paragraph (3), all moneys in the fund shall be
12distributed in accordance with this part and federal law. If not
13elected otherwise, amounts that become payable from the fund
14under this section shall be rolled over under Section 401(a)(31) of
15Title 26 of the United States Code to the Supplemental
16Contributions Program established in accordance with Section
1722970.

18

SEC. 2.  

Section 22960.99 of the Government Code is amended
19to read:

20

22960.99.  

(a) The plan’s obligations to a participant,
21beneficiary, or nonparticipant spouse who has applied for a
22lump-sum benefit cease upon distribution of the lump-sum benefit.

23(1) Deposit in the United States mail of a warrant drawn in favor
24of the participant, beneficiary, or nonparticipant spouse and
25addressed to the latest address on file for that person constitutes
26distribution of the benefit.

27(2) Deposit in the United States mail of a notice that the
28requested electronic funds transfer has been made as directed by
29the participant, beneficiary, or nonparticipant spouse constitutes
30distribution of the benefit.

31(3) If the participant, beneficiary, or nonparticipant spouse has
32elected on a form prescribed by the board to transfer all or a
33specific portion of the account that is eligible for a direct
34trustee-to-trustee transfer under Section 401(a)(31) of Title 26 of
35the United States Code, deposit in the United States mail of a notice
36that the requested transfer has been made constitutes distribution
37of the benefit.

38(b) The plan’s obligations to a participant, beneficiary, or
39nonparticipant spouse who elected to receive a benefit in the form
P4    1of installment payments or an annuity cease upon distribution of
2the final payment.

3(1) Deposit in the United States mail of a warrant drawn in favor
4of the participant, beneficiary, or nonparticipant spouse and
5addressed to the latest address on file for that person constitutes
6distribution of the benefit.

7(2) Deposit in the United States mail of a notice that the
8requested electronic funds transfer has been made as directed by
9the participant, beneficiary, or nonparticipant spouse constitutes
10distribution of the benefit.

11(c) Distribution under paragraph (1), (2), or (3) of subdivision
12(a) or paragraph (1) or (2) of subdivision (b) pursuant to the board’s
13determination in good faith of the existence, identity, or other facts
14relating to entitlement of persons constitutes a complete discharge
15and release of the board, system, and plan from liability for
16payments.

17(d) Distribution under paragraph (4) of subdivision (b) of Section
1822960.4 constitutes a complete discharge and release of the board,
19system, and plan from liability for payments, and the board and
20system shall not be treated as fiduciaries with respect to a transfer
21of funds from the plan to the Supplemental Contributions Program
22in accordance with Section 22970.

23

SEC. 3.  

Section 22960.100 of the Government Code is
24repealed.

25begin insert

begin insertSEC. 4.end insert  

end insert

begin insertSection 22970.10 of the end insertbegin insertGovernment Codeend insertbegin insert is amended
26to read:end insert

27

22970.10.  

“Account” means the account maintained with
28respect to the participant that reflects the aggregate value of the
29following amounts credited to the participant:

30(a) Employee after-tax contributions to the plan.

31(b) Net earnings of the Supplemental Contributions Program
32allocable to the participant.

33(c) Any amount credited to the participant’s account by reason
34of a transferbegin insert or a rolloverend insert from another plan or arrangement in
35accordance with applicable laws.

36begin insert

begin insertSEC. 5.end insert  

end insert

begin insertSection 22970.19 of the end insertbegin insertGovernment Codeend insertbegin insert is amended
37to read:end insert

38

22970.19.  

“Net earnings” means the income earned, or losses
39incurred,begin insert after asset management fees,end insert on thebegin insert applicable investment
P5    1fund options offered under theend insert
Supplemental Contributions
2Programbegin delete Fundend delete, less the costs of administering the plan.

3

begin deleteSEC. 4.end delete
4begin insertSEC. 6.end insert  

Section 22970.58 of the Government Code is amended
5to read:

6

22970.58.  

The board maybegin delete amend the plan toend delete permit a participant
7to transfer fundsbegin insert, including eligible rollover contributions,end insert from
8an eligible retirement plan into this plan to the extent that the
9transfers are allowed under applicable federal and state laws, and
10pursuant to the terms and conditions established by the board. The
11plan may accept rollover contributions made in accordance with
12paragraph (4) of subdivision (b) of Section 22960.4, if the board
13establishes a separate rollover contribution account for each
14participant or beneficiary who makes such rollover contributions
15for the purpose of holding those contributions.begin insert Rollover
16contributions made in accordance with paragraph (4) of
17subdivision (b) of Section 22960.4, shall be invested in the
18applicable target retirement date fund investment fund option
19available under the plan until the participant elects another
20investment fund option available under the plan in accordance
21with the terms and conditions established by the board. end insert

22begin insert

begin insertSEC. 7.end insert  

end insert

begin insertSection 22970.60 of the end insertbegin insertGovernment Codeend insertbegin insert is amended
23to read:end insert

24

22970.60.  

begin insert(a)end insertbegin insertend insert Contributions made to the plan by the
25participant shall be credited to the participant’s account.

begin insert

26(b) Subject to the terms and conditions established by the board,
27a participant may elect to have all or a portion of the participant’s
28account in one or more investment fund options available under
29the plan.

end insert
30begin insert

begin insertSEC. 8.end insert  

end insert

begin insertSection 22970.62 of the end insertbegin insertGovernment Codeend insertbegin insert is amended
31to read:end insert

32

22970.62.  

The net earnings of thebegin insert applicable investmentend insert fund
33begin insert option available under the planend insert shall be allocated to the
34participant’s account as of each valuation date.

35

begin deleteSEC. 5.end delete
36begin insertSEC. 9.end insert  

Section 22970.855 of the Government Code is amended
37to read:

38

22970.855.  

The board maybegin delete amend the plan toend delete permit a
39participant to withdraw some or all of his or her after-tax
40contributions without requiring the participant to terminate from
P6    1the plan to the extent that this in-service distribution is allowed
2under applicable federal and state laws, and pursuant to the terms
3and conditions established by the board. A participant may apply
4for a distribution of amounts held in the participant’s separate
5rollover contribution account established pursuant to Section
622970.58 at any time before that participant’s termination of
7employment, to the extent that an in-service distribution is allowed
8under applicable federal and state law, and pursuant to the terms
9and conditions established by the board.

10begin insert

begin insertSEC. 10.end insert  

end insert

begin insertSection 22970.89 of the end insertbegin insertGovernment Codeend insertbegin insert is amended
11to read:end insert

12

22970.89.  

(a) The plan’s obligations to a participant,
13beneficiary, or nonparticipant spouse who elected a lump-sum
14distribution cease upon distribution of the lump-sum benefit.

15(1) Deposit in the United States mail of a warrant drawn in favor
16of the participant, beneficiary, or nonparticipant spouse and
17addressed to the latest address on file for that person constitutes
18distribution of the benefit.

19(2) Deposit in the United States mail of a notice that the
20requested electronic funds transfer has been made as directed by
21the participant, beneficiary, or nonparticipant spouse constitutes
22distribution of the benefit.

23(3) If the participant, beneficiary, or nonparticipant spouse has
24elected on a form prescribed by the board to transfer all or a
25specific portion of the account that is eligible for a direct
26trustee-to-trustee transfer under Section 401(a)(31) of Title 26 of
27the United States Code to the trustee of an eligible retirement plan,
28deposit in the United States mail of a notice that the requested
29transfer has been made constitutes distribution of the benefit.

30(b) The plan’s obligations to a participant or beneficiary who
31elected to receive a benefit in the form of partial distributions cease
32upon distribution of the final payment.

33(1) Deposit in the United States mail of a warrant drawn in favor
34of the participant or beneficiary and addressed to the latest address
35on file for that person constitutes distribution of the benefit.

36(2) Deposit in the United States mail of a notice that the
37requested electronic funds transfer has been made as directed by
38the participant or beneficiary constitutes distribution of the benefit.

39(c) Distribution under paragraph (1), (2), or (3) of subdivision
40(a) or paragraph (1) or (2) of subdivision (b) pursuant to the board’s
P7    1determination in good faith of the existence, identity, or other facts
2relating to entitlement of persons constitutes a complete discharge
3and release of the board, system, and plan from liability for
4payments.

5(d) This section shall not apply to a permissible in-service
6distribution pursuant to Section 22970.855begin insert if the participant
7account is only partially distributedend insert
.



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