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HOUSE BILL 26-1026
BY REPRESENTATIVE(S) Marshall and Hamrick, Camacho, Carter,
Clifford, Goldstein, GonzalezR., Joseph, Lieder, Lindsay, Nguyen, Phillips,
Rutinel, Titone, Valdez, Bacon, Duran, Mauro, McCluskie;
also SENATOR(S) Kolker, Amabile, Cutter, Danielson, Kipp, Snyder,
Coleman.
CONCERNING AN EXPANSION OF PLAN OPTIONS FOR THE PUBLIC EMPLOYEES'
RETIREMENT ASSOCIATION.
Be it enacted by the General Assembly of the State of Colorado:
SECTION 1. In Colorado Revised Statutes, 24-51-101, add (33 .3),
(33.5), and (37.5) as follows:
24-51-101. Definitions.
As used in this article 51, unless the context otherwise requires and
except as otherwise defined in part 17 of this article 51 :
(33.3) "NONCOVEREDTIME" MEANS TIME DURING WHICH A MEMBER
WAS NOT EARNING SERVICE CREDIT FROM THE ASSOCIATION.
Capital letters or bold & italic numbers indicate new material added to existing law; dashes
through words or numbers indicate deletions from existing law and such material is not part of
the act.
(33.5) "NONQUALIFIED SERVICE" MEANS NONCOVERED TIME THAT
IS NONQUALIFIED SERVICE CREDIT PURSUANT TO SECTION 415 (n)(3 )(C) OF
THE FEDERAL "INTERNAL REVENUE CODE OF 1986".
(37.5) "QUALIFIEDSERVICE"MEANSNONCOVEREDTIMETHATISNOT
NONQUALIFIEDSERVICECREDITPURSUANTTOSECTION415 (n)(3)(C)OFTHE
FEDERAL "INTERNAL REVENUE CODE OF 1986".
SECTION 2. In Colorado Revised Statutes, 24-51-208, amend (1)
introductory portion, (l)(t), and (l)(f.5) as follows:
24-51-208. Allocation of money.
( 1) The money of the association shalt MUST be divided into several
trust funds, including, but not limited to:
(t) The health care trust fund, created pursuant to the provisions of
section 24-51-1201 ( 1 ), which consists of a portion of the employer
contributions equal to one and two one-hundredths percent of member
salaries; a portion of the amount paid by members to purchase service credit
relating to noncovered employment TIME as determined pursuant to section
24-51-505 (7); thirty percent of the amount of any reduction in the employer
contribution rates as determined in section 24-51-408.5 (5) to amortize any
overfunding in each division's trust fund; deductions of premium amounts
from monthly benefits of participating benefit recipients; premiums paid
directly to the trust fund by participating benefit recipients, members, and
dependents; monthly payments made by employers on behalf of
participating benefit recipients, members, and dependents; and interest; in
addition to a proportional share of investment income earned thereon;
(f.5) The Denver public schools division health care trust fund,
created pursuant to the provisions of section 24-51-1201 (2), which consists
of a portion of the employer contributions equal to two-tenths of one
percent of member salaries; a portion of the amount paid by members to
purchase service credit relating to noncovered employment TIME as
determined pursuant to section 24-51-505 (7); deductions of premium
amounts from monthly benefits of participating benefit recipients;
premiums paid directly to the trust fund by participating benefit recipients,
members, and dependents; monthly payments made by employers on behalf
of participating benefit recipients, members, and dependents; and interest;
PAGE 2-HOUSE BILL 26-1026
in addition to a proportional share of investment income earned thereon;
SECTION 3. In Colorado Revised Statutes, 24-51-501, amend ( 6)
as follows:
24-51-501. Earned service credit.
(6) Service credit of DPS members prior to or on December 31,
2009, shall be IS governed by section 24-51-1710. Beginning January 1,
2010, DPS members shall earn service credit pursuant to this section and
shall MAY purchase service credit relating to a refunded member
contribution account and noncovered emplo,ment TIME pursuant to this part
5; except that purchases by DPS members that are ongoing as of January 1,
2010, shall be ARE governed by section 24-51-1705.
SECTION 4. In Colorado Revised Statutes, 24-51-505, amend ( 1 ),
(2), (3), (6), and (7) as follows:
24-51-505. Purchase of service credit relating to noncovered
time.
( 1) A MEMBER MAY PURCHASE service credit may be pm chased for
any period of previous employment with any public or private employe1 in
the United States, its tenitories, or any foreign country NONCOVEREDTIME
subject to the following conditions:
(a) If the service credit to be purchased is f-ot noncoveted
employment vfith. ttn: employer ttffilittted with. th.e ttssoeitttion:, th.e member
must h.ttve A MEMBER MA y PURCHASE SERVICE CREDIT FOR QUALIFIED
SERVICE IF THE MEMBER:
(I) HAS AT LEAST one year of earned service credit with the
association at the time of the purchase; If the set vice credit to be pm chased
is for pt e v ious employment with a nonaffiliated employ et, the member must
have one y eat of eat ned set vice ct edit with the association at the tiine of the
pm chase, except that, if the pte~ious employment f-ot which the set vice
ct edit is to be put chased is nonqualified set vice, as defined in section 415
(n)(J)(C) of the federal "Internal Revenue Code of 1986", as amended, and
the member fir st became a n1embe1 of the association on 01 after January 1,
1999, the membet must ha~e five years of earned service ct edit with the
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assoeiation at the time of the purchase. AND
(II) PROVIDES THE ASSOCIATION WITH DOCUMENTATION OF THE
DATES OF EMPLOYMENT AND A RECORD OF SALARY RECEIVED.
(a.3) A MEMBER WHO BECAME A MEMBER OF THE ASSOCIATION
BEFORE JANUARY 1, 1999, MAY PURCHASE SERVICE CREDIT FOR
NONQUALIFIED SERVICE IF THE MEMBER HAS AT LEAST ONE YEAR OF EARNED
SERVICE CREDIT WITH THE ASSOCIATION AT THE TIME OF THE PURCHASE.
(a.5) A MEMBER WHO BECAME A MEMBER OF THE ASSOCIATION ON
OR AFTER JANUARY 1, 1999, MAY PURCHASE SERVICE CREDIT FOR
NONQUALIFIED SERVICE IF THE MEMBER HAS AT LEAST FIVE YEARS OF
EARNED SERVICE CREDIT WITH THE ASSOCIATION AT THE TIME OF THE
PURCHASE.
( a. 7) A MEMBER MAY NOT PURCHASE SER VICE CREDIT FOR
NONCOVERED TIME DURING WHICH THE MEMBER WAS NOT EMPLOYED AND
WAS UNDER TWENTY-ONE YEARS OLD. A MEMBER MAY PURCHASE SERVICE
CREDIT FOR NON COVERED TIME DURING WHICH THE MEMBER WAS EMPLOYED
AND WAS UNDER TWENTY-ONE YEARS OLD IF THE MEMBER PROVIDES THE
ASSOCIATION WITH DOCUMENTATION OF THE DATES OF EMPLOYMENT AND
A RECORD OF SALARY RECEIVED.
(b) The menrber must pm v ide documentation of the dates of
employment and a record of salary received.
( c) !fhe A member must provide certification from any retirement
program covering such THE MEMBER'S employment that the service credit
to be purchased has not vested with that program, DOES NOT CAUSE A
MEMBER TO RECEIVE A RETIREMENT BENEFIT FOR THE SAME SERVICE UNDER
MORE THAN ONE PLAN, except to the extent otherwise required by federal
law.
(2) (a) Except as otherwise provided in paragraph (b) of this
subsection (2) THIS SUBSECTION (2), one year of service credit may be
purchased for each year of noncovered employment TIME. ANY SERVICE
CREDIT PURCHASED FOR NONCOVERED TIME DURING WHICH A MEMBER WAS
EMPLOYED MUST BE determined pursuant to the provisions of section
24-51-501 (2) to ( 4) applicable to earned service credit.
PAGE 4-HOUSE BILL 26-1026
(b) Members A MEMBER who first became members A MEMBER on
or after January 1, 1999, may purchase no more than five years of service
credit for noncovered TIME employment that is nonqualified service. as
defined in section 415 (n)(3)(C) of the federal "lnte1nal Revenue Code of
1986", as aII'tended
(c) Membe1s A MEMBER who initiate INITIATES a purchase on or
after November 1, 2003, may not purchase service credit that would cause
the total years of noncovered se1 vice TIME purchased during their
membership to exceed ten years. This limit shall not apply to membe1s A
MEMBER who provide PROVIDED all required documentation of previous
service to the association by October 31, 2003, together with application to
purchase the service if the purchase is successfully completed pursuant to
the service credit purchase agreement resulting from said THE application.
( d) Members A MEMBER employed by a public entity affiliated with
the association pursuant to section 24-51-309 may purchase service credit
for years employed by the entity without limit, if the purchase is completed
before the member terminates employment with the entity, and any such
purchase for years employed by the entity in excess of ten years is
completed or installment payments initiated within three years after the date
the employer affiliates with the association or November 1, 2006,
whichever is later, UNLESS OTHERWISE RESTRICTED UNDER FEDERAL LA w.
(3) The cost to purchase service credit for noncovered employment
TIME shall be determined by the board and shall be sufficient to pay the
actuarial liability associated with the purchase.
(6) Service credit purchased pursuant to the provisions of this
section for periods of nonmembe1 ship shall NON COVERED TIME MUST not be
credited toward the earned service credit requirement for disability
retirement benefits OR SHORT-TERM DISABILITY PROGRAM PAYMENTS as
provided for in part 7 of this article ARTICLE 51 or TOWARD the earned
service credit requirement for survivor benefit coverage as provided for in
part 9 of this article ARTICLE 51.
(7) A portion of the amount paid by a member to purchase service
credit related to noncovered employment shall TIME MUST be trnnsfened
ALLOCATED to the APPLICABLE health care trust fund. on the effeeti v e date
of the rn:ember's 1etitement 01, in ease of death p1io1 to 1etitement, on the
PAGE 5-HOUSE BILL 26-1026
effective date of the survivor benefit The amount transferred shall be one
and h'v O one-hundredths percent of ALLOCATED TO THE APPLICABLE HEAL TH
CARE TRUST FUND MUST BE THE SAME PERCENTAGE OF THE MEMBER'S
SALARY PAID BY THE EMPLOYER CONTRIBUTION SPECIFIED IN SECTION
24-51-208 (l)(t) OR (l)(f.5), DETERMINED USING the member's highest
average salary at the time of the purchase. with interest at the rate specified
in section 24-51-101 (28)(a) ANY REFUND PURSUANT TO SECTION 24-51-506
(3) OR (4) WILL BE PAID FROM THE MEMBER'S APPLICABLE DIVISION TRUST
FUND AND WILL NOT BE PAID FROM THE HEALTH CARE TRUST FUND.
SECTION 5. In Colorado Revised Statutes, 24-51-1401, amend (2)
and (4); and repeal (3) as follows:
24-51-1401. Voluntary investment program established and
fund created -definitions.
(2) The voluntary investment program shalt ESTABLISHED PURSUANT
TO THIS SECTION MUST:
(a) Be available to all members DPS members, retirees, and DPS
retirees, and shall EMPLOYEES OF AN EMPLOYER;
(b) Be in addition to any other retirement or tax-deferred
compensation system established by the state or its political subdivisions;
AND
( c) INCLUDE OPTIONS FOR AN EMPLOYEE OF AN EMPLOYER TO MAKE
TAX-DEFERRED VOLUNTARY CONTRIBUTIONS AND ROTH VOLUNTARY
CONTRIBUTIONS TO THE VOLUNTARY INVESTMENT PROGRAM.
(3) The board is hereby authorized to offer participation in the
voluntary investment prograrn. to all employees of employers that are
affiliated with the association, regardless of whether those employees are
members or retirees.
(4) For purposes of this part 14, members and retirees shall inelude
DPS metnbers and DPS retirees THE TERM "MEMBER" INCLUDES A DPS
MEMBER AND THE TERM "RETIREE" INCLUDES A DPS RETIREE.
SECTION 6. In Colorado Revised Statutes, 24-51-1402, amend
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(1), (3), and (4); and repeal (2) as follows:
24-51-1402. Contributions to the voluntary investment program.
( 1) An eligible employee pm suant to section 24-51-1401 OF AN
EMPLOYER may participate in the voluntary investment program authorized
in section 24-51-1401 by authorizing his 01 hex THEIR employer as defined
in section 24-51-101 (20), to contribute an amount by payroll deduction in
lieu of receiving such amount as salary or pay. The amount of such
contribution by a participant shall be IS subject to any limitations
established by federal law. These voluntary contributions, in addition to
investment eaxnings, shall be exempt frnm fcdexal and state income taxes
until the ultimate distribution of such contributions has been made to the
participant, membe1, fo1 me1 membe1, 01 beneficiary.
(2) The board may, at its discretion, allow participants in the
\i oluntary investment prngrnm to elect to make afte1 -tax \i oluntary
contributions to the voluntary investment p10gia1n by payrnll deduction.
Investment earnings on such contributions are exempt fi:om fedexal and
state inconre taxes until the ultimate distribution of such contributions has
been made to the participant, nrembe1, former menrber, m beneficiary.
(3) All voluntary contributions by a participating member shall OR
RETIREE MUST be included in the salary of such membeI THE MEMBER OR
RETIREE for the purpose of calculating member, WORKING RETIREE, and
employer contributions pursuant to the provisions of section 24-51-401. The
membe1 contribution prn vis ions of section 24-51-401 and the matching
employer contribution provisions of section 24-51-408.5 shall not apply to
any voluntary contribution made by a retiree.
(4) The employer shall deliver all voluntary contributions to the
VOLUNTARY INVESTMENT PROGRAM VIA THE ASSOCIATION, OR THE service
provider designated by the association, IF APPLICABLE, within five days after
the date that the participants are paid and consistent with the provisions of
section 24-51-401 (1.7)(c) and (l.7)(d).
SECTION 7. In Colorado Revised Statutes,24-51-1506, amend (2)
as follows:
24-51-1506. Additional choices within first five years.
PAGE 7-HOUSE BILL 26-1026
(2) A member who elects to join the defined benefit plan pursuant
to subsection (1) of this section may, upon meeting the requirements of
section 24-51-505, purchase service credit for the period of employment
covered by the defined contribution plan. The cost to purchase such service
shall be IS the same as the cost determined by the board for the purchase of
noncovered employment TIME. The member may elect to have any portion
of the member's account paid from the defined contribution plan to the
defined benefit plan to facilitate the purchase of service credit through a
direct rollover in accordance with section 401 (a)(31) of the federal
"Internal Revenue Code of 1986". as amended The member may not be
vested in the defined contribution plan upon purchasing service credit for
employment that was covered by the defined contribution plan.
SECTION 8. In Colorado Revised Statutes, amend 24-51-1602 as
follows:
24-51-1602. Affiliation with the deferred compensation plan.
( 1) An employee is not eligible to participate in the defer I ed
compensation plan authorized in sectiott 24-51-1601 unless his 01 her
ernploy et is affiliated with such plan.
(2) An EACH employer as defined in section 24-51-101 (20), may
SHALL affiliate with the deferred compensation plan. by making application
to the association. AH applications shall be subject to apprnval by the
association. Upon affiliation, employees of the employer are eligible to
begin deferring salary to the deferred compensation plan.
(2.5) THE DEFERRED COMPENSATION PLAN ESTABLISHED PURSUANT
TO SECTION 24-51-1601 MUST:
(a) BE IN ADDITION TO ANY OTHER RETIREMENT OR TAX-DEFERRED
COMPENSATION SYSTEM ESTABLISHED BY THE STATE OR ITS POLITICAL
SUBDIVISIONS; AND
(b) INCLUDE OPTIONS FOR AN EMPLOYEE TO MAKE PRE-TAX
VOLUNTARY CONTRIBUTIONS AND ROTH VOLUNTARY CONTRIBUTIONS TO
THE DEFERRED COMPENSATION PLAN.
(3) NOTWITHSTANDING SUBSECTION (2) OF THIS SECTION, all
PAGE 8-HOUSE BILL 26-1026
employers that are affiliated with the deferred compensation plan prior to
July 1, 2009, including entities that are not affiliated employers of the
association, as employer is defined in section 24-51-101 (20), shall remain
affiliated and shall not have to apply to the association pursuant to
subsection (2) of this section WITH THE DEFERRED COMPENSATION PLAN.
(4) Any employee who is employed by an entity that is affiliated
with the deferred compensation plan shall be IS entitled to participate in the
plan regardless of whether that individual EMPLOYEE is a member or retiree
of the association.
SECTION 9. In Colorado Revised Statutes, amend 24-51-1603 as
follows:
24-51-1603. Contributions to the deferred compensation plan.
( 1) An employee of an employer affiliated with the deferred
compensation plan pursuant to section 24-51-1602 (2) or (3) may participate
in the deferred compensation plan authorized in section 24-51-1601 by
electing with his or her THEIR employer to defer receipt of salary by
specifying an amount contributed by payroll deduction. The amount of such
deferral by the employee shall be IS subject to any limitations established by
federal law. The amount defetted, including investment earnings, shall be
exempt ti om fedet al and state income taxes until the ultimate distribution
of such contt ibutions has been made to the participant, fut met participant,
ot beneficiary.
(2) All voluntary deferrals by a participating member shalt OR
RETIREE MUST be included in the salary of such membet THE MEMBER OR
RETIREE in accordance with section 24-51-101 ( 42) for the purpose of
calculating member, WORKING RETIREE, and employer contributions
pursuant to the provisions of section 24-51-401. The member contt ibution
prn vis ions of section 24-51-401 shall not apply to any defen al made by a
retiree.
(3) Consistent with the provisions of section 24-51-401 (l .7)(c) and
(l.7)(d), the AN employer shall deliver all deferred compensation
contributions to the trust fund via THE ASSOCIATION OR the service provider
designated by the association, if applicable, within five days after the date
the employees are paid.
PAGE 9-HOUSE BILL 26-1026
SECTION 10. Act subject to petition - effective date. This act
takes effect January I, 2027; except that, if a referendum petition is filed
pursuant to section 1 (3) of article V of the state constitution against this act
or an item, section, or part of this act within the ninety-day period after final
adjournment of the general assembly, then the act, item, section, or part will
not take effect unless approved by the people at the general election to be
held in November 2026 and, in such case, will take effect January 1, 2027,
or on the date of the official declaration of the vote thereon by the governor,
whichever is later.
J~
SPEAKER OF THE HOUSE
OF REPRESENTATIVES
v~~
Vanessa Reilly
CHIEF CLERK OF THE HOUSE
OF REPRESENTATIVES
James Rashad Coleman, Sr.
PRESIDENT OF
THE SENATE
Esther van Mourik
SECRETARY OF
THE SENATE
APPROVED on VYl ond'"d J" \kU, ls+ 2o2-<,, <>-± l r-OOttjy,
( ate and Time)
TATE OF COLORADO
PAGE 10-HOUSE BILL 26-"1026