Amended in Assembly June 18, 2013

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, 22970.10,begin delete 22970.19,22970.58,end deletebegin insert 22970.19, 22970.31, 22970.58,end insert 22970.60, 22970.62, 22970.855, and 22970.89 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 delete Theend delete

begin insertTheend insert bill would authorize participants to elect investment fund options, as specified, in the Supplemental Contributions Program.begin insert The bill would provide that a fiduciary of the program is not liable for losses resulting from investments in fund options selected by participants or provided to participants who fail to select an option.end insert 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. 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:

P3    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
6employer has eliminated the employer contributions to the plan
7provided in Section 22960.60.

8(b) The following shall occur:

9(1) All contributions to the plan shall cease.

10(2) New participants shall be prohibited from participating in
11the plan.

12(3) The plan shall be terminated on the later of January 1, 2014,
13or upon obtaining appropriate approvals from the Internal Revenue
14Service, including a favorable determination letter on plan
15termination from the Internal Revenue Service.

16(4) Subject to paragraph (3), all moneys in the fund shall be
17distributed in accordance with this part and federal law. If not
18elected otherwise, amounts that become payable from the fund
19under this section shall be rolled over under Section 401(a)(31) of
20Title 26 of the United States Code to the Supplemental
21Contributions Program established in accordance with Section
2222970.

23

SEC. 2.  

Section 22960.99 of the Government Code is amended
24to read:

25

22960.99.  

(a) The plan’s obligations to a participant,
26beneficiary, or nonparticipant spouse who has applied for a
27lump-sum benefit cease upon distribution of the lump-sum benefit.

28(1) Deposit in the United States mail of a warrant drawn in favor
29of the participant, beneficiary, or nonparticipant spouse and
30addressed to the latest address on file for that person constitutes
31distribution of the benefit.

32(2) Deposit in the United States mail of a notice that the
33requested electronic funds transfer has been made as directed by
34the participant, beneficiary, or nonparticipant spouse constitutes
35distribution of the benefit.

36(3) If the participant, beneficiary, or nonparticipant spouse has
37elected on a form prescribed by the board to transfer all or a
38specific portion of the account that is eligible for a direct
P4    1trustee-to-trustee transfer under Section 401(a)(31) of Title 26 of
2the United States Code, deposit in the United States mail of a notice
3that the requested transfer has been made constitutes distribution
4of the benefit.

5(b) The plan’s obligations to a participant, beneficiary, or
6nonparticipant spouse who elected to receive a benefit in the form
7of installment payments or an annuity cease upon distribution of
8the final payment.

9(1) Deposit in the United States mail of a warrant drawn in favor
10of the participant, beneficiary, or nonparticipant spouse and
11addressed to the latest address on file for that person constitutes
12distribution of the benefit.

13(2) Deposit in the United States mail of a notice that the
14requested electronic funds transfer has been made as directed by
15the participant, beneficiary, or nonparticipant spouse constitutes
16distribution of the benefit.

17(c) Distribution under paragraph (1), (2), or (3) of subdivision
18(a) or paragraph (1) or (2) of subdivision (b) pursuant to the board’s
19determination in good faith of the existence, identity, or other facts
20relating to entitlement of persons constitutes a complete discharge
21and release of the board, system, and plan from liability for
22payments.

23(d) Distribution under paragraph (4) of subdivision (b) of Section
2422960.4 constitutes a complete discharge and release of the board,
25system, and plan from liability for payments, and the board and
26system shall not be treated as fiduciaries with respect to a transfer
27of funds from the plan to the Supplemental Contributions Program
28in accordance with Section 22970.

29

SEC. 3.  

Section 22960.100 of the Government Code is
30repealed.

31

SEC. 4.  

Section 22970.10 of the Government Code is amended
32to read:

33

22970.10.  

“Account” means the account maintained with
34respect to the participant that reflects the aggregate value of the
35following amounts credited to the participant:

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

37(b) Net earnings of the Supplemental Contributions Program
38allocable to the participant.

P5    1(c) Any amount credited to the participant’s account by reason
2of a transfer or a rollover from another plan or arrangement in
3accordance with applicable laws.

4

SEC. 5.  

Section 22970.19 of the Government Code is amended
5to read:

6

22970.19.  

“Net earnings” means the income earned, or losses
7incurred, after asset management fees, on the applicable investment
8fund options offered under the Supplemental Contributions
9Program, less the costs of administering the plan.

10begin insert

begin insertSEC. 6.end insert  

end insert

begin insertSection 22970.31 of the end insertbegin insertGovernment Codeend insertbegin insert is amended
11to read:end insert

12

22970.31.  

(a) The board shall adopt a plan instrument
13embodying the material terms and conditions of the plan consistent
14with this part and the applicable provisions of Title 26 of the United
15States Code.

16(b) The board may, as it deems necessary or appropriate, amend
17the plan consistent with this part and the applicable provisions of
18Title 26 of the United States Code.

begin insert

19(c) A fiduciary of the plan shall not be liable for any loss that
20results from the individual investment fund option selected by a
21participant or the plan’s designated default option for investment
22of contributions by participants who do not provide affirmative
23instruction on how to invest their contributions.

end insert
24

begin deleteSEC. 6.end delete
25begin insertSEC. 7.end insert  

Section 22970.58 of the Government Code is amended
26to read:

27

22970.58.  

The board may permit a participant to transfer funds,
28including eligible rollover contributions, from an eligible retirement
29plan into this plan to the extent that the transfers are allowed under
30applicable federal and state laws, and pursuant to the terms and
31conditions established by the board. The plan may accept rollover
32contributions made in accordance with paragraph (4) of subdivision
33(b) of Section 22960.4begin delete,end delete if the board establishes a separate rollover
34contribution account for each participant or beneficiary who makes
35such rollover contributions for the purpose of holding those
36contributions. Rollover contributions made in accordance with
37 paragraph (4) of subdivision (b) of Section 22960.4, shall be
38invested in the applicable target retirement date fund investment
39fund option available under the plan until the participant elects
P6    1another investment fund option available under the plan in
2accordance with the terms and conditions established by the board.

3

begin deleteSEC. 7.end delete
4begin insertSEC. 8.end insert  

Section 22970.60 of the Government Code is amended
5to read:

6

22970.60.  

(a) Contributions made to the plan by the participant
7shall be credited to the participant’s account.

8(b) Subject to the terms and conditions established by the board,
9a participant may elect to have all or a portion of the participant’s
10account in one or more investment fund options available under
11the plan.

12

begin deleteSEC. 8.end delete
13begin insertSEC. 9.end insert  

Section 22970.62 of the Government Code is amended
14to read:

15

22970.62.  

The net earnings of the applicable investment fund
16option available under the plan shall be allocated to the
17participant’s account as of each valuation date.

18

begin deleteSEC. 9.end delete
19begin insertSEC. 10.end insert  

Section 22970.855 of the Government Code is
20amended to read:

21

22970.855.  

The board may permit a participant to withdraw
22some or all of his or her after-tax contributions without requiring
23the participant to terminate from the plan to the extent that this
24in-service distribution is allowed under applicable federal and state
25laws, and pursuant to the terms and conditions established by the
26board. A participant may apply for a distribution of amounts held
27in the participant’s separate rollover contribution account
28established pursuant to Section 22970.58 at any time before that
29participant’s termination of employment, to the extent that an
30in-service distribution is allowed under applicable federal and state
31law, and pursuant to the terms and conditions established by the
32board.

33

begin deleteSEC. 10.end delete
34begin insertSEC. 11.end insert  

Section 22970.89 of the Government Code is amended
35to read:

36

22970.89.  

(a) The plan’s obligations to a participant,
37beneficiary, or nonparticipant spouse who elected a lump-sum
38distribution cease upon distribution of the lump-sum benefit.

39(1) Deposit in the United States mail of a warrant drawn in favor
40of the participant, beneficiary, or nonparticipant spouse and
P7    1addressed to the latest address on file for that person constitutes
2distribution of the benefit.

3(2) Deposit in the United States mail of a notice that the
4requested electronic funds transfer has been made as directed by
5the participant, beneficiary, or nonparticipant spouse constitutes
6distribution of the benefit.

7(3) If the participant, beneficiary, or nonparticipant spouse has
8elected on a form prescribed by the board to transfer all or a
9specific portion of the account that is eligible for a direct
10trustee-to-trustee transfer under Section 401(a)(31) of Title 26 of
11the United States Code to the trustee of an eligible retirement plan,
12deposit in the United States mail of a notice that the requested
13transfer has been made constitutes distribution of the benefit.

14(b) The plan’s obligations to a participant or beneficiary who
15elected to receive a benefit in the form of partial distributions cease
16upon distribution of the final payment.

17(1) Deposit in the United States mail of a warrant drawn in favor
18of the participant or beneficiary and addressed to the latest address
19on file for that person constitutes distribution of the benefit.

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

23(c) Distribution under paragraph (1), (2), or (3) of subdivision
24(a) or paragraph (1) or (2) of subdivision (b) pursuant to the board’s
25determination in good faith of the existence, identity, or other facts
26relating to entitlement of persons constitutes a complete discharge
27and release of the board, system, and plan from liability for
28payments.

29(d) This section shall not apply to a permissible in-service
30distribution pursuant to Section 22970.855 if the participant
31account is only partially distributed.



O

    96