BILL NUMBER: AB 2456	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Wright
   (Coauthor: Senator Alarcon)

                        FEBRUARY 24, 2000

   An act to add Chapter 38 (commencing with Section 24980) to Part
13 of Division 1 of Title 1 of the Education Code, relating to state
teachers' retirement.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 2456, as introduced, R. Wright.  State teachers' retirement:
deferred retirement option program.
   The State Teachers' Retirement Law prescribes service and
disability retirement benefits for members of the Defined Benefit
Program of the State Teachers' Retirement System.
   This bill would establish the Deferred Retirement Option Program
as a supplemental benefit program in the Defined Benefit Program, as
specified. The bill would direct the board of administration of the
system to implement the program no later than January 1, 2002, except
as specified.
   Vote:  majority.  Appropriation:  no.  Fiscal committee:  yes.
State-mandated local program:  no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Chapter 38 (commencing with Section 24980) is added to
Part 13 of Division 1 of Title 1 of the Education Code, to read:

      CHAPTER 38.  DEFERRED RETIREMENT OPTION PROGRAM
      Article 1.  General Provisions

   24980.  This chapter shall be known and may be cited as the
"Deferred Retirement Option Program."
   24980.1.  The Deferred Retirement Option Program is hereby created
to add flexibility to the system.  It provides members who elect to
participate in the program access to a lump sum or additional monthly
payments for a specific period in addition to their normal monthly
retirement allowance.
   24980.2.  The design and administration of the Deferred Retirement
Option Program shall conform with the applicable provisions of Title
26 of the United States Code and the Revenue and Taxation Code.
   24980.3.  If any provision of this chapter or application thereof
to any person or circumstance is held invalid, that invalidity shall
not affect other provisions or applications of this chapter that can
be given effect without the invalid provision or application, and to
this end the provisions of this chapter are severable.
   24980.4.  The board shall implement the Deferred Retirement Option
Program pursuant to the provisions of this chapter no later than
January 1, 2002, unless the board determines, by resolution, that the
implementation tasks cannot be completed until a later date, in
which case the board shall implement the program pursuant to this
chapter no later than January 1, 2003.
   24980.5.  The board any adopt regulations to implement the
program.

      Article 2.  Definitions

   24982.1.  "Program" means the Deferred Retirement Option Program
established by this chapter.
   24982.2.  "Deferred retirement calculation date" means the date 36
months prior to the member's actual retirement date as of which the
allowance under the program shall be calculated as provided in
Chapter 26 (commencing with Section 24100) of this part or Chapter 27
(commencing with Section 24201) of this part.
   24982.3.  "Program payment" means the amount to be paid to the
member as a result of his or her participation in the program, as
calculated in Section 24984.

      Article 3.  Eligibility

   24983.1.  A member shall be eligible to elect to participate in
the program at any time after having met the minimum service
requirements applicable for a service retirement and reached normal
retirement age.
   24983.2.  A member who elects to participate in the program shall:

   (a) Make this election on a form prescribed and retained by the
board prior to retirement.
   (b) Designate his or her deferred retirement calculation date,
which date shall be equal to 36 months prior to the member's actual
date of retirement and shall be subsequent to the date on which the
member met the minimum service requirements for a service retirement
and achieved normal retirement age.
   (c) Receive benefits from the system upon retirement at the time
and in the manner provided in this chapter.
   24983.3.  The election to participate in the program shall be
irrevocable.
   24983.4.  Members who participate in the program may not
participate in the reduced worktime program, as provided in Section
22713.
   24983.5.  Members who participate in the program and reinstate
from retirement shall not be eligible to again participate in the
program upon subsequent retirement.

      Article 4.  Calculation of Benefits

   24984.  Upon the termination of employment and retirement of a
member who has elected to participate in the program, the system
shall calculate the following amounts:
   (a) (1) The member's monthly service retirement allowance as it
would have been had the member retired on the deferred retirement
calculation date in accordance with the optional settlement selected
by the member; or
   (2) The amount of service used to calculate a disability
retirement allowance shall be reduced by the deferred retirement
period.
   (b) The benefit improvement factors that would have been
applicable under Section 24402, assuming the deferred retirement
calculation date is the base year for the adjustment.
   (c) The member's program payment, which payment shall be the
amount calculated under subdivision (a), multiplied by 36, plus the
benefit improvement factor calculated under subdivision (b).  The
program payment shall be credited with interest.

      Article 5.  Distributions

   24985.1.  Upon the termination of employment and retirement under
the system, a member who has elected to participate in the program
shall:
   (a) Receive the member's program payment, as calculated pursuant
to subdivision (c) of Section 24984.
   (b) Begin receiving a monthly retirement allowance in the amount
calculated pursuant to subdivision (a) of Section 24984.
   24985.2.  The member shall select one of the following as the form
of distribution of the member's program payment:
   (a) A single lump-sum payment.
   (b) Installment payments for a period of years pursuant to Section
24985.3.
   24985.3.  (a) The member may elect to receive the actuarial
equivalent of the program payment in monthly installments over a
period established by the board.
   (b) The unpaid balance of the member's program payment shall be
credited with interest.
   (c) No benefit maintenance payment pursuant to Chapter 29
(commencing with Section 24400) of this part shall be made to the
monthly amount being paid pursuant to this section.
   24985.4.  Notwithstanding any other provision of this chapter, a
member, nonmember spouse, or beneficiary shall not be permitted to
elect a distribution under this chapter that does not satisfy the
requirements of Section 401(a)(9) of Title 26 of the United States
Code, including the incidental death benefit requirements of Section
401(a)(9)(G) of Title 26 of the United States Code and the
regulations thereunder.  The required beginning date of distributions
that reflect the entire interest of the member shall be as follows:

   (a) In the case of a lump-sum distribution to the member, the
lump-sum payment shall be made not later than April 1 of the calendar
year following the later of the calendar year in which the member
attains the age of 70 and one-half years or the calendar year in
which the member terminates all employment for the employer.
   (b) In the case of a distribution to the member in the form of
installment payments, payment shall begin not later than April 1 of
the calendar year following the later of the calendar year in which
the member attains the age of 70 and one-half years or the calendar
year in which the member terminates all employment subject to
coverage by the plan.
   (c) In the case of a benefit payable on account of the member's
death, distributions shall be paid no later than December 31 of the
calendar year in which the fifth anniversary of the member's date of
death occurs unless the beneficiary is the member's spouse in which
case distributions shall commence on or before the later of either:
   (1) December 31 of the calendar year immediately following the
calendar year in which the member dies.
   (2) December 31 of the calendar year in which the member would
have attained the age of 70 and one-half years.

      Article 6.  Beneficiaries

   24986.  The beneficiary or beneficiaries entitled to receive any
remaining balance of the monthly installments specified in Section
24985.3 shall be the same beneficiary or beneficiaries designated by
the member to receive the postretirement death benefit provided by
Chapter 24 (commencing with Section 23880) of this part.