BILL ANALYSIS
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: AB 1354
Lou Correa, Chair Hearing date: June 28, 2010
AB 1354 (Fong) as amended 6/24/10 FISCAL: NO
'37 ACT: MAXIMUM PAYMENTS TO RETIREES PURSUANT TO INTERNAL
REVENUE CODE SECTION 415
HISTORY :
Sponsor: State Association of County Retirement Systems
(SACRS)
Prior legislation: AB 1739 of 2010 (Lieu),
Senate Appropriations Committee
ASSEMBLY VOTES :
PER & SS 5-0 5/06/09
Assembly Floor 73-0 5/14/09
SUMMARY :
Would bring state laws governing 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 federal Internal
Revenue Code provisions.
BACKGROUND AND ANALYSIS :
1) Existing '37 Act law :
a) requires the board of retirement of a '37 Act
retirement 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;
b) provides that those adjustments include, but are not
limited to, cost-of-living adjustments, cost-of-living
banks, temporary annuities, or survivor continuance
benefits; and
c) provides death benefits for active employees who die
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Date: 6/24/10 Page 1
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.
2) Existing federal law :
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.
3) This bill :
a) prohibits the amount payable, including
cost-of-living adjustments, to a member of a county
retirement system being operated under the County
Employees' Retirement Law of 1937 ('37 Act) from
exceeding the Internal Revenue Code (IRC) Section 415
limits, as specified;
b) specifies that adjustments to the IRC Section 415
limits continue to apply after a member's severance
from employment or annuity starting date;
c) specifies that the survivors of an employee who dies
while on active military duty shall 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;
d) further specifies that the death benefits shall
not include benefit accruals occurring during the
period of military service, but that the military
service time will be credited for purposes of vesting;
and
e) clarifies that this provision is effective for
deaths occurring on or after January 1, 2007, the
effective date of the HEART Act.
FISCAL :
Unknown.
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Date: 6/24/10 Page 2
COMMENTS :
1) Arguments in Support
According to that author, SACRS is in the process of
reviewing the '37 Act body of law for areas where the '37 Act
may not comply precisely with the federal and Internal
Revenue Code laws.
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.
2) SUPPORT :
State Association of County Retirement Systems (SACRS),
(Sponsor)
American Federation of State, County and Municipal
Employees (AFSCME), AFL-CIO
Association for Los Angeles Deputy Sheriffs (ALADS)
Los Angeles Probation Officers' Union, AFSCME, Local 685
Orange County Professional Firefighters Association,
IAFF Local 3631
3) OPPOSITION :
None to date
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Date: 6/24/10 Page 3