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SENATE BILL No. 64
AN A CT concerning retirement and pensions; relating to the Kansas public employees
retirement system; adjusting certain internal references; extending the time for filing
administrative appeals; updating provisions relating to compliance with the federal
internal revenue code; amending K.S.A. 74-4902 and 74-4904 and K.S.A. 2024
Supp. 74-49,123 and repealing the existing sections.
Be it enacted by the Legislature of the State of Kansas:
Section 1. K.S.A. 74-4902 is hereby amended to read as follows:
74-4902. As used in articles 49 and 49a of chapter 74 of the Kansas
Statutes Annotated, and amendments thereto, unless otherwise provided
or the context otherwise requires:
(1) "Accumulated contributions" means the sum of all
contributions by a member to the system which are credited to the
member's account, with interest allowed thereon;
(2) "acts" means the provisions of articles 49 and 49a of the
Kansas Statutes Annotated, and amendments thereto;
(3) "actuarial equivalent" means an annuity or benefit of equal
value to the accumulated contributions, annuity or benefit, when
computed upon the basis of the actuarial tables in use by the system.
Whenever the amount of any benefit is to be determined on the basis of
actuarial assumptions, the assumptions shall be specified in a way that
precludes employer discretion;
(4) "actuarial tables" means the actuarial tables approved and in
use by the board at any given time;
(5) "actuary" means the actuary or firm of actuaries employed or
retained by the board at any given time;
(6) "agent" means the individual designated by each participating
employer through whom system transactions and communication are
directed;
(7) "beneficiary" means, subject to the provisions of K.S.A. 74-
4927, and amendments thereto, any natural person or persons, estate or
trust, or any combination thereof, named by a member to receive any
benefits as provided for by this act. Designations of beneficiaries by a
member who is a member of more than one retirement system made on
or after July 1, 1987, shall be the basis of any benefits payable under all
systems unless otherwise provided by law. Except as otherwise
provided by subsection (33) of this section (32), if there is no named
beneficiary living at the time of the member's death, any benefits
provided for by this act shall be paid to: (A) The member's surviving
spouse; (B) the member's dependent child or children; (C) the member's
dependent parent or parents; (D) the member's nondependent child or
children; (E) the member's nondependent parent or parents; or (F) the
estate of the deceased member; in the order of preference as specified
in this subsection;
(8) "board of trustees," "board" or "trustees" means the managing
body of the system which is known as the Kansas public employees
retirement system board of trustees;
(9) "compensation" means, except as otherwise provided, all
salary, wages and other remuneration payable to a member for personal
services performed for a participating employer, including maintenance
or any allowance in lieu thereof provided a member as part of
compensation, but not including reimbursement for travel or moving
expenses or on and after July 1, 1994, payment pursuant to an early
retirement incentive program made prior to the retirement of the
member. Beginning with the employer's fiscal year which that begins in
calendar year 1991 or for employers other than the state of Kansas,
beginning with the fiscal year which that begins in calendar year 1992,
when the compensation of a member who remains in substantially the
same position during any two consecutive years of participating service
used in calculating final average salary is increased by an amount
SENATE BILL No. 64—page 2
which exceeds 15%, then the amount of such increase which exceeds
15% shall not be included in compensation, except that: (A) Any
amount of compensation for accumulated sick leave or vacation or
annual leave paid to the member; (B) any increase in compensation for
any member due to a reclassification or reallocation of such member's
position or a reassignment of such member's job classification to a
higher range or level; and (C) any increase in compensation as provided
in any contract entered into prior to January 1, 1991, and still in force
on the effective date of this act, pursuant to an early retirement
incentive program as provided in K.S.A. 72-5395 et seq., and
amendments thereto, shall be included in the amount of compensation
of such member used in determining such member's final average
salary and shall not be subject to the 15% limitation provided in this
subsection. Any contributions by such member on the amount of such
increase which exceeds 15% which is not included in compensation
shall be returned to the member. Unless otherwise provided by law,
beginning with the employer's fiscal year coinciding with or following
July 1, 1985, compensation shall include any amounts for tax sheltered
annuities or deferred compensation plans. Beginning with the
employer's fiscal year which that begins in calendar year 1991,
compensation shall include amounts under sections 403b, 457 and 125
of the federal internal revenue code of 1986 and, as the board deems
appropriate, any other section of the federal internal revenue code of
1986 which defers or excludes amounts from inclusion in income. For
purposes of applying limits under the federal internal revenue code
"compensation" shall have the meaning as provided in K.S.A. 74-
49,123, and amendments thereto. For purposes of this subsection and
application to the provisions of subsection (4) of K.S.A. 74-4927 (4),
and amendments thereto, "compensation" shall not include any
payments made by the state board of regents pursuant to the provisions
of subsection (5) of K.S.A. 74-4927a(5), and amendments thereto, to a
member of the faculty or other person defined in subsection (1)(a) of
K.S.A. 74-4925(1)(a), and amendments thereto;
(10) "credited service" means the sum of participating service and
prior service and in no event shall credited service include any service
which that is credited under another retirement plan authorized under
any law of this state;
(11) "dependent" means a parent or child of a member who is
dependent upon the member for at least 1/2 of such parent or child's
support;
(12) "effective date" means the date upon which the system
becomes effective by operation of law;
(13) "eligible employer" means the state of Kansas, and any
county, city, township, special district or any instrumentality of any one
or several of the aforementioned or any noncommercial public
television or radio station located in this state which that receives state
funds allocated by the Kansas public broadcasting commission whose
employees are covered by social security. If a class or several classes of
employees of any above defined employer are not covered by social
security, such employer shall be deemed an eligible employer only with
respect to such class or those classes of employees who are covered by
social security;
(14) "employee" means any appointed or elective officer or
employee of a participating employer whose employment is not
seasonal or temporary and whose employment requires at least 1,000
hours of work per year, and any such officer or employee who is
concurrently employed performing similar or related tasks by two or
more participating employers, who each remit employer and employee
contributions on behalf of such officer or employee to the system, and
SENATE BILL No. 64—page 3
whose combined employment is not seasonal or temporary, and whose
combined employment requires at least 1,000 hours of work per year,
but not including: (A) Any employee who is a contributing member of
the United States civil service retirement system; (B) any employee
who is a contributing member of the federal employees retirement
system; (C) any employee who is a leased employee as provided in
section 414 of the federal internal revenue code of a participating
employer; and (D) any employee or class of employees specifically
exempted by law. After June 30, 1975, no person who is otherwise
eligible for membership in the Kansas public employees retirement
system shall be barred from such membership by reason of coverage
by, eligibility for or future eligibility for a retirement annuity under the
provisions of K.S.A. 74-4925, and amendments thereto, except that no
person shall receive service credit under the Kansas public employees
retirement system for any period of service for which benefits accrue or
are granted under a retirement annuity plan under the provisions of
K.S.A. 74-4925, and amendments thereto. After June 30, 1982, no
person who is otherwise eligible for membership in the Kansas public
employees retirement system shall be barred from such membership by
reason of coverage by, eligibility for or future eligibility for any benefit
under another retirement plan authorized under any law of this state,
except that no such person shall receive service credit under the Kansas
public employees retirement system for any period of service for which
any benefit accrues or is granted under any such retirement plan.
Employee shall include persons who are in training at or employed by,
or both, a sheltered workshop for the blind operated by the secretary for
children and families. The entry date for such persons shall be the
beginning of the first pay period of the fiscal year commencing in
calendar year 1986. Such persons shall be granted prior service credit
in accordance with K.S.A. 74-4913, and amendments thereto. However,
such persons classified as home industry employees shall not be
covered by the retirement system. Employees shall include any member
of a board of county commissioners of any county and any council
member or commissioner of a city whose compensation is equal to or
exceeds $5,000 per year;
(15) "entry date" means the date as of which an eligible employer
joins the system. The first entry date pursuant to this act is January 1,
1962;
(16) "executive director" means the managing officer of the
system employed by the board under this act;
(17) "final average salary" means in the case of a member who
retires prior to January 1, 1977, and in the case of a member who retires
after January 1, 1977, and who has less than five years of participating
service after January 1, 1967, the average highest annual compensation
paid to such member for any five years of the last 10 years of
participating service immediately preceding retirement or termination
of employment, or in the case of a member who retires on or after
January 1, 1977, and who has five or more years of participating
service after January 1, 1967, the average highest annual compensation
paid to such member on or after January 1, 1967, for any five years of
participating service preceding retirement or termination of
employment, or, in any case, if participating service is less than five
years, then the average annual compensation paid to the member during
the full period of participating service, or, in any case, if the member
has less than one calendar year of participating service such member's
final average salary shall be computed by multiplying such member's
highest monthly salary received in that year by 12; in the case of a
member who became a member under subsection (3) of K.S.A. 74-
4925(3), and amendments thereto, or who became a member with a
SENATE BILL No. 64—page 4
participating employer as defined in subsection (3) of K.S.A. 74-
4931(3), and amendments thereto, and who elects to have
compensation paid in other than 12 equal installments, such
compensation shall be annualized as if the member had elected to
receive 12 equal installments for any such periods preceding
retirement; in the case of a member who retires after July 1, 1987, the
average highest annual compensation paid to such member for any four
years of participating service preceding retirement or termination of
employment; in the case of a member who retires on or after July 1,
1993, whose date of membership in the system is prior to July 1, 1993,
and any member who is in such member's membership waiting period
on July 1, 1993, and whose date of membership in the system is on or
after July 1, 1993, the average highest annual compensation, as defined
in subsection (9), paid to such member for any four years of
participating service preceding retirement or termination of
employment or the average highest annual salary, as defined in
subsection (34) (33) , paid to such member for any three years of
participating service preceding retirement or termination of
employment, whichever is greater; and in the case of a member who
retires on or after July 1, 1993, and whose date of membership in the
system is on or after July 1, 1993, the average highest annual salary, as
defined in subsection (34) (33) , paid to such member for any three
years of participating service preceding retirement or termination of
employment. Final average salary shall not include any purchase of
participating service credit by a member as provided in subsection (2)
of K.S.A. 74-4919h (2), and amendments thereto, which is completed
within five years of retirement. For any application to purchase or
repurchase service credit for a certain period of service as provided by
law received by the system after May 17, 1994, for any member who
will have contributions deducted from such member's compensation at
a percentage rate equal to two or three times the employee's rate of
contribution or will begin paying to the system a lump-sum amount for
such member's purchase or repurchase and such deductions or lump-
sum payment commences after the commencement of the first payroll
period in the third quarter, "final average salary" shall not include any
amount of compensation or salary which is based on such member's
purchase or repurchase. Any application to purchase or repurchase
multiple periods of service shall be treated as multiple applications. For
purposes of this subsection, the date that such member is first hired as
an employee for members who are employees of employers that elected
to participate in the system on or after January 1, 1994, shall be the date
that such employee's employer elected to participate in the system. In
the case of any former member who was eligible for assistance
pursuant to K.S.A. 74-4925, and amendments thereto, prior to July 1,
1998, for the purpose of calculating final average salary of such
member, such member's final average salary shall be based on such
member's salary while a member of the system or while eligible for
assistance pursuant to K.S.A. 74-4925, and amendments thereto,
whichever is greater;
(18) "fiscal year" means, for the Kansas public employees
retirement system, the period commencing July 1 of any year and
ending June 30 of the next;
(19) "Kansas public employees retirement fund" means the fund
created by this act for payment of expenses and benefits under the
system and referred to as the fund;
(20) "leave of absence" means a period of absence from
employment without pay, authorized and approved by the employer,
and which after the effective date does not exceed one year;
(21) "member" means an eligible employee who is in the system
SENATE BILL No. 64—page 5
and is making the required employee contributions; any former
employee who has made the required contributions to the system and
has not received a refund if such member is within five years of
termination of employment with a participating employer; or any
former employee who has made the required contributions to the
system, has not yet received a refund and has been granted a vested
benefit;
(22) "military service" means service in the uniformed forces of
the United States, for which retirement benefit credit must be given
under the provisions of USERRA or service in the armed forces of the
United States or in the commissioned corps of the United States public
health service, which service is immediately preceded by a period of
employment as an employee or by entering into an employment
contract with a participating employer and is followed by return to
employment as an employee with the same or another participating
employer within 12 months immediately following discharge from such
military service, except that if the board determines that such return
within 12 months was made impossible by reason of a service-
connected disability, the period within which the employee must return
to employment with a participating employer shall be extended not
more than two years from the date of discharge or separation from
military service;
(23) "normal retirement date" means the date on or after which a
member may retire with full retirement benefits pursuant to K.S.A. 74-
4914, and amendments thereto;
(24) "participating employer" means an eligible employer who has
agreed to make contributions to the system on behalf of its employees;
(25) "participating service" means the period of employment after
the entry date for which credit is granted a member;
(26) "prior service" means the period of employment of a member
prior to the entry date for which credit is granted a member under this
act;
(27) "prior service annual salary" means the highest annual salary,
not including any amounts received as payment for overtime or as
reimbursement for travel or moving expense, received for personal
services by the member from the current employer in any one of the
three calendar years immediately preceding January 1, 1962, or the
entry date of the employer, whichever is later, except that if a member
entered the employment of the state during the calendar year 1961, the
prior service annual salary shall be computed by multiplying such
member's highest monthly salary received in that year by 12;
(28) "retirant" means a member who has retired under this system;
(29) "retirement benefit" means a monthly income or the actuarial
equivalent thereof paid in such manner as specified by the member
pursuant to this act or as otherwise allowed to be paid at the discretion
of the board, with benefits accruing from the first day of the month
coinciding with or following retirement and ending on the last day of
the month in which death occurs. Upon proper identification a
surviving spouse may negotiate the warrant issued in the name of the
retirant. If there is no surviving spouse, the last warrant shall be
payable to the designated beneficiary;
(30) "retirement system" or "system" means the Kansas public
employees retirement system as established by this act and as it may be
amended;
(31) "social security" means the old age, survivors and disability
insurance section of the federal social security act;
(32) "trust" means an express trust, created by a trust instrument,
including a will, designated by a member to receive payment of the
insured death benefit under K.S.A. 74-4927, and amendments thereto,
SENATE BILL No. 64—page 6
and payment of the member's accumulated contributions under
subsection (1) of K.S.A. 74-4916 (1), and amendments thereto. A
designation of a trust shall be filed with the board. If no will is admitted
to probate within six months after the death of the member or no trustee
qualifies within such six months or if the designated trust fails, for any
reason whatsoever, the insured death benefit under K.S.A. 74-4927, and
amendments thereto, and the member's accumulated contributions
under subsection (1) of K.S.A. 74-4916(1), and amendments thereto,
shall be paid in accordance with the provisions of subsection (7) of this
section as in other cases where there is no named beneficiary living at
the time of the member's death and any payments so made shall be a
full discharge and release to the system from any further claims;
(33) "salary" means all salary and wages payable to a member for
personal services performed for a participating employer, including
maintenance or any allowance in lieu thereof provided a member as
part of salary. Salary shall not include reimbursement for travel or
moving expenses, payment for accumulated sick leave or vacation or
annual leave, severance pay or any other payments to the member
determined by the board to not be payments for personal services
performed for a participating employer constituting salary or on and
after July 1, 1994, payment pursuant to an early retirement incentive
program made prior to the retirement of the member. When the salary
of a member who remains in substantially the same position during any
two consecutive years of participating service used in calculating final
average salary is increased by an amount which exceeds 15%, then the
amount of such increase which exceeds 15% shall not be included in
salary. Any contributions by such member on the amount of such
increase which exceeds 15% which is not included in compensation
shall be returned to the member. Unless otherwise provided by law,
salary shall include any amounts for tax sheltered annuities or deferred
compensation plans. Salary shall include amounts under sections 403b,
457 and 125 of the federal internal revenue code of 1986 and, as the
board deems appropriate, any other section of the federal internal
revenue code of 1986 which that defers or excludes amounts from
inclusion in income. For purposes of applying limits under the federal
internal revenue code "salary" shall have the meaning as provided in
K.S.A. 74-49,123, and amendments thereto. In any case, if participating
service is less than three years, then the average annual salary paid to
the member during the full period of participating service, or, in any
case, if the member has less than one calendar year of participating
service such member's final average salary shall be computed by
multiplying such member's highest monthly salary received in that year
by 12;
(34) "federal internal revenue code" means the federal internal
revenue code of 1954 or 1986, as in effect on July 1, 2008, and as
applicable to a governmental plan; and
(35) "USERRA" means the federal uniformed services
employment and reemployment rights act of 1994 as in effect on July 1,
2008.
Sec. 2. K.S.A. 74-4904 is hereby amended to read as follows: 74-
4904. (1) The system may sue and be sued in its official name, but its
trustees, officers, employees and agents shall not be personally liable
for acts of the system unless such person acted with willful, wanton or
fraudulent misconduct or intentionally tortious conduct. Any agreement
in settlement of litigation involving the system and the investment of
moneys of the fund is a public record as provided in K.S.A. 45-215 et
seq., and amendments thereto, and subject to the provisions of that act.
The service of all legal process and of all notices which may be
required to be in writing, whether legal proceedings or otherwise, shall
SENATE BILL No. 64—page 7
be had on the executive director at such executive director's office. All
actions or proceedings directly or indirectly against the system shall be
brought in Shawnee county.
(2) Any person aggrieved by any order or decision of the board
made without a hearing, may, within 30 60 days after notice of the
order or decision of the board make written request to the board for a
hearing thereon. The board shall hear such party or parties in
accordance with the provisions of the Kansas administrative procedure
act at its next regular meeting or at a special meeting within 60 days
after receipt of such request. For the purpose of any hearing under this
section, the board may appoint the executive director or use a presiding
officer from the office of administrative hearings. The board shall
review an initial order resulting from a hearing under this section. The
board is hereby authorized to enter into a contract with the office of
administrative hearings and to provide for reimbursement for actual and
necessary expenses and compensation for such person serving as a
presiding officer.
Sec. 3. K.S.A. 2024 Supp. 74-49,123 is hereby amended to read as
follows: 74-49,123. (a) This section applies to the Kansas public
employees retirement system and to all other public retirement plans
administered by the board of trustees.
(b) As used in this section:
(1) "Federal internal revenue code" means the federal internal
revenue code of 1954 or 1986, as amended and as applicable to a
governmental plan as in effect on July 1, 2008; and
(2) "retirement plan" includes the Kansas public employees
retirement system and all other Kansas public retirement plans and
benefit structures, which are administered by the board.
(c) In addition to the federal internal revenue code provisions
otherwise noted in each retirement plan's law, and in order to satisfy the
applicable requirements under the federal internal revenue code, the
retirement plans shall be subject to the following provisions,
notwithstanding any other provision of the retirement plan's law:
(1) The board shall distribute the corpus and income of the
retirement plan to the members and their beneficiaries in accordance
with the retirement plan's law. At no time prior to the satisfaction of all
liabilities with respect to members and their beneficiaries shall any part
of the corpus and income be used for, or diverted to, purposes other
than the exclusive benefit of the members and their beneficiaries.
(2) Forfeitures arising from severance of employment, death or for
any other reason may not be applied to increase the benefits any
member would otherwise receive under the retirement plan's law.
However, forfeitures may be used to reduce an employer's contribution.
(3) All benefits paid from the retirement plan shall be distributed
in accordance with a good faith interpretation of the requirements of
section 401(a)(9) of the federal internal revenue code and the
regulations under that section. Notwithstanding any other provision of
these rules and regulations, effective on and after January 1, 2003, the
retirement plan is subject to the following provisions:
(A) Benefits must begin by the required beginning date, which is
the later of April 1 of the calendar year following the calendar year in
which the member reaches 72 years of age, or 70 1/2 years of age if the
member was born before July 1, 1949, the applicable age or April 1 of
the calendar year following the calendar year in which the member
terminates employment. If a member fails to apply for retirement
benefits by April 1 of the calendar year following the calendar year in
which such member reaches 72 years of age, or 70 1/2 years of age if the
member was born before July 1, 1949, the applicable age or April 1 of
the calendar year following the calendar year in which such member
SENATE BILL No. 64—page 8
terminates employment, whichever is later, the board will begin
distributing the benefit as required by this section. For purposes of this
section, the applicable age is 70 1/2 if the member was born before July
1, 1949, age 72 if the member was born on or after July 1, 1949, but
before January 1, 1951, age 73 if the member was born on or after
January 1, 1951, but before January 1, 1959, and age 75 if the member
was born on or after January 1, 1960.
(B) The member's entire interest must be distributed over the
member's life or the lives of the member and a designated beneficiary,
or over a period not extending beyond the life expectancy of the
member or of the member and a designated beneficiary. Death benefits
must be distributed in accordance with section 401(a)(9) of the federal
internal revenue code, including the incidental death benefit
requirement in section 401(a)(9)(G) of the federal internal revenue
code, and the regulations implementing that section.
(C) Except as allowed under section 401(a)(9) of the federal
internal revenue code and applicable regulations thereunder, the life
expectancy of a member, the member's spouse or the member's
beneficiary may not be recalculated after the initial determination for
purposes of determining benefits.
(D) If a member dies after the required distribution of benefits has
begun, the remaining portion of the member's interest must be
distributed at least as rapidly as under the method of distribution before
the member's death and no longer than the remaining period over which
distributions commenced.
(E) If a member dies before required distribution of the member's
benefits has begun, the member's entire interest must be either:
(i) In accordance with federal regulations, distributed over the life
or life expectancy of the designated beneficiary, with the distributions
beginning no later than December 31 of the calendar year immediately
following the calendar year of the member's death; or
(ii) distributed by December 31 of the calendar year containing the
fifth anniversary of the member's death.
(F) The amount of an annuity paid to a member's beneficiary may
not exceed the maximum determined under the incidental death benefit
requirement of the federal internal revenue code.
(G) The death and disability benefits provided by a retirement
plan are limited by the incidental benefit rule set forth in section 401(a)
(9)(G) of the federal internal revenue code and applicable treasury
regulation 1.401-1(b)(l)(i) regulations.
(H) Distributions from a defined contribution or deferred
compensation plan shall be made in accordance with the rules under
section 401(a)(9) of the federal internal revenue code that are specific
to such plans.
(4) Distributions from the retirement plans may be made only
upon retirement, separation from service, disability or death.
(5) The board or its designee may not:
(A) Determine eligibility for benefits;
(B) compute rates of contribution; or
(C) compute benefits of members or beneficiaries, in a manner
that discriminates in favor of members who are considered officers,
supervisors or highly compensated, as prohibited under section 401(a)
(4) of the federal internal revenue code.
(6) Subject to the provisions of this subsection, benefits paid from,
and employee contributions made to, the retirement plans shall not
exceed the maximum benefits and the maximum annual additions,
respectively, permissible under section 415 of the federal internal
revenue code.
(A) Before January 1, 1995, a member may not receive an annual
SENATE BILL No. 64—page 9
benefit that exceeds the limits specified in section 415(b) of the federal
internal revenue code, subject to the applicable adjustments in that
section. Beginning January 1, 1995, a participant may not receive an
annual benefit that exceeds the dollar amount specified in section
415(b)(1)(A) of the federal internal revenue code, subject to the
applicable adjustments in section 415 of the federal internal revenue
code.
(B) Notwithstanding any other provision of law to the contrary,
the board may modify a request by a participant to make a contribution
to the retirement plans if the amount of the contribution would exceed
the limits under section 415(c) or 415(n) of the federal internal revenue
code subject to the following:
(i) Where the retirement plan's law requires a lump-sum payment,
for the purchase of service credit, the board may establish a periodic
payment plan in order to avoid a contribution in excess of the limits
under section 415(c) or 415(n) of the federal internal revenue code.
(ii) If the board's option under clause (i) will not avoid a
contribution in excess of the limits under section 415(c) or 415(n) of
the federal internal revenue code, the board shall reduce or deny the
contribution.
(C) Effective for permissive service credit contributions made in
limitation years beginning after December 31, 1997, if an active
member makes one or more contributions to purchase permissive
service credit under a retirement plan, then the requirements of this
section shall be treated as met only if:
(i) The requirements of section 415(b) of the federal internal
revenue code are met, determined by treating the accrued benefit
derived from all such contributions as an annual benefit for purposes of
such section; or
(ii) the requirements of section 415(c) of the federal internal
revenue code are met, determined by treating all such contributions as
annual additions for purposes of such section. For purposes of applying
clause (i) a retirement plan shall not fail to meet the reduced limit under
section 415(b)(2)(C) of the federal internal revenue code solely by
reason of this subparagraph (C), and for purposes of applying clause
(ii), a retirement plan shall not fail to meet the percentage limitation
under section 415(c)(1) (B) of the federal internal revenue code solely
by reason of this paragraph.
(iii) For purposes of this clause, the term "permissive service
credit" means service credit:
(a) Specifically recognized by a retirement plan's law for purposes
of calculating a member's benefit under that retirement plan;
(b) that such member has not received under a retirement plan;
and
(c) that such member may receive under a retirement plan's law
only by making a voluntary additional contribution, in an amount
determined under the retirement plan's law and procedures established
by the board, that does not exceed the amount necessary to fund the
benefit attributable to such service credit.
(iv) A retirement plan shall fail to meet the requirements of this
clause if the retirement plan's law specifically provides for a purchase
of nonqualified service purchase, and if:
(a) More than five years of nonqualified service credit are taken
into account for purposes of this subclause; or
(b) any nonqualified service credit is taken into account under this
subclause before the member has at least five years of participation
under a retirement plan. For purposes of this subclause, effective for
permissive service credit contributions made in limitation years
beginning after December 31, 1997, the term "nonqualified service
SENATE BILL No. 64—page 10
credit" means the same as provided in section 415(n)(3)(C) of the
federal internal revenue code.
(v) In the case of a trustee-to-trustee transfer after December 31,
2001, to which section 403(b)(13)(A) or 457(e)(17)(A) of the federal
internal revenue code applies, without regard to whether the transfer is
made between plans maintained by the same employer:
(a) The limitations of clause (iv) shall not apply in determining
whether the transfer is for the purchase of permissive service credit;
and
(b) the distribution rules applicable under federal law to a
retirement plan shall apply to such amounts and any benefits
attributable to such amounts.
(vi) For an eligible member, the limitation of section 415(c)(1) of
the federal internal revenue code shall not be applied to reduce the
amount of permissive service credit which may be purchased to an
amount less than the amount which was allowed to be purchased under
the terms of the statute as in effect on August 5, 1997. For purposes of
this clause, an eligible member is an individual who first became a
member in the retirement plan before January 1, 1998.
(D) Subject to approval by the internal revenue service, the board
shall maintain a qualified governmental excess benefit arrangement
under section 415(m) of the federal internal revenue code. The board
shall establish the necessary and appropriate procedures for the
administration of such benefit arrangement under the federal internal
revenue code. The amount of any annual benefit that would exceed the
limitations imposed by section 415 of the federal internal revenue code
shall be paid from this benefit arrangement. The amount of any
contribution that would exceed the limitations imposed by section 415
of the federal internal revenue code shall be credited to this benefit
arrangement. The qualified excess benefit arrangement shall be a
separate portion of the retirement plan. The qualified excess benefit
arrangement is subject to the following requirements:
(i) The benefit arrangement shall be maintained solely for the
purpose of providing to participants in the retirement plans that part of
the participant's annual benefit otherwise payable under the terms of the
act that exceeds the limitations on benefits imposed by section 415 of
the federal internal revenue code; and
(ii) participants do not have an election, directly or indirectly, to
defer compensation to the excess benefit arrangement.
(E) For purposes of applying these limits only and for no other
purpose, the definition of compensation where applicable shall be
compensation actually paid or made available during a limitation year,
except as noted below and as permitted by treasury regulation section
1.415(c)-2. Specifically, compensation shall be defined as wages within
the meaning of section 3401(a) of the federal internal revenue code and
all other payments of compensation to an employee by an employer for
which the employer is required to furnish the employee a written
statement under sections 6041(d), 6051(a)(3) and 6052 of the federal
internal revenue code. Compensation shall be determined without
regard to any rules under section 3401(a) of the federal internal revenue
code that limit the remuneration included in wages based on the nature
or location of the employment or the services performed, such as the
exception for agricultural labor in section 3401(a)(2) of the federal
internal revenue code.
(i) However, for limitation years beginning after December 31,
1997, compensation shall also include amounts that would otherwise be
included in compensation but for an election under sections 125(a),
402(e)(3), 402(h)(1)(B), 402(k) or 457(b) of the federal internal
revenue code. For limitation years beginning after December 30, 2000,
SENATE BILL No. 64—page 11
compensation shall also include any elective amounts that are not
includable in the gross income of the employee by reason of section
132(f)(4) of the federal internal revenue code.
(ii) The definition of compensation shall exclude employee
contributions picked up under section 414(h)(2) of the federal internal
revenue code.
(iii) For limitation years beginning on and after January 1, 2007,
compensation for the limitation year will also include compensation
paid by the later of two and a half months after an employee's
severance from employment or the end of the limitation year that
includes the date of the employee's severance from employment if:
(a) The payment is regular compensation for services during the
employee's regular working hours or compensation for services outside
the employee's regular working hours, such as overtime or shift
differential, commissions, bonuses or other similar payments, and
absent a severance from employment, the payments would have been
paid to the employee while the employee continues in employment
with the employer;
(b) the payment is for unused accrued bona fide sick, vacation or
other leave that the employee would have been able to use if
employment had continued; or
(c) for limitation years beginning on and after January 1, 2012, the
payment is made pursuant to a nonqualified unfunded deferred
compensation plan, but only if the payment would have been paid to
the member at the same time if the member had continued employment
with the employer and only to the extent that the payment is includable
in the member's gross income.
(iv) Any payments not described in clause (iii) are not considered
compensation if paid after severance from employment, even if they are
paid within two and a half months following severance from
employment, except for payments to the individual who does not
currently perform services for the employer by reason of qualified
military service, within the meaning of section 414(u)(1) of the federal
internal revenue code, to the extent these payments do not exceed the
amounts the individual would have received if the individual had
continued to perform services for the employer rather than entering
qualified military service.
(v) An employee who is in qualified military service, within the
meaning of section 414(u)(1) of the federal internal revenue code, shall
be treated as receiving compensation from the employer during such
period of qualified military service equal to: (a) The compensation the
employee would have received during such period if the employee
were not in qualified military service, determined based on the rate of
pay the employee would have received from the employer but for the
absence during the period of qualified military service; or (b) if the
compensation the employee would have received during such period
was not reasonably certain, the employee's average compensation from
the employer during the 12-month period immediately preceding the
qualified military service, or if shorter, the period of employment
immediately preceding the qualified military service.
(vi) Back pay, within the meaning of treasury regulation section
1.415(c)-2(g)(8), shall be treated as compensation for the limitation
year to which the back pay relates to the extent the back pay represents
wages and compensation that would otherwise be included under this
definition.
(7) On and after January 1, 2009, for purposes of applying the
limits under section 415(b) of the federal internal revenue code, the
following shall apply:
(A) A member's applicable limit shall be applied to the member's
SENATE BILL No. 64—page 12
annual benefit in the first limitation year without regard to any
automatic cost-of-living increases;
(B) to the extent the member's annual benefit equals or exceeds
such limit, the member shall no longer be eligible for cost-of-living
increases until such time as the benefit plus the accumulated increases
are less than such limit;
(C) thereafter, in any subsequent limitation year, the member's
annual benefit including any automatic cost-of-living increase
applicable shall be tested under the then applicable benefit limit
including any adjustment to the dollar limit under section 415(b)(1)(A)
or 415(d) of the federal internal revenue code and the regulations
thereunder; and
(D) in no event shall a member's annual benefit payable from a
retirement plan in any limitation year be greater than the limit
applicable at the annuity starting date, as increased in subsequent years
pursuant to section 415(d) of the federal internal revenue code and the
regulations thereunder. If the form of benefit without regard to the
automatic benefit increase feature is not a straight life annuity, then the
preceding sentence is applied by reducing the limit under section
415(b) of the federal internal revenue code applicable at the annuity
starting date to an actuarially equivalent amount determined using the
assumptions specified in treasury regulation section 1.415(b)-1(c)(2)(ii)
that take into account the death benefits under the form of benefit. This
subsection applies to distributions made on and after January 1, 1993. A
distributee may elect to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by the
distributee in a transfer made from the retirement system.
(i) An eligible rollover distribution is any distribution of all or any
portion of the balance to the credit of the distributee, except that an
eligible rollover distribution does not include: (a) Any distribution that
is one of a series of substantially equal periodic payments, not less
frequently than annually, made for the life or the life expectancy of the
distributee or the joint lives or joint life expectancies of the distributee
and the distributee's designated beneficiary or for a specified period of
10 years or more; (b) any distribution to the extent such distribution is
required under section 401(a)(9) of the federal internal revenue code;
(c) the portion of any distribution that is not includable in gross
income; and (d) any other distribution that is reasonably expected to
total less than $200 during the year. Effective January 1, 2002, a
portion of a distribution shall not fail to be an eligible rollover
distribution merely because the portion consists of after-tax employee
contributions that are not includable in gross income. However, such
portion may be transferred only to an individual retirement account or
annuity described in section 408(a) or (b) of the federal internal
revenue code, or to a qualified defined contribution plan described in
section 401(a) of the federal internal revenue code or to a qualified plan
described in section 403(a) of the federal internal revenue code, that
agrees to separately account for amounts so transferred and earnings on
such amounts, including separately accounting for the portion of the
distribution that is includable in gross income and the portion of the
distribution that is not so includable, or on or after January 1, 2007, to a
qualified defined benefit plan described in section 401(a) of the federal
internal revenue code or to an annuity contract described in section
403(b) of the federal internal revenue code, that agrees to separately
account for amounts so transferred and earnings thereon, including
separately accounting for the portion of the distribution that is
includable in gross income and the portion of the distribution that is not
so includable.
(ii) An eligible retirement plan is any of the following that accepts
SENATE BILL No. 64—page 13
the distributee's eligible rollover distribution:
(a) An individual retirement account described in section 408(a) of
the federal internal revenue code;
(b) an individual retirement annuity described in section 408(b) of
the federal internal revenue code;
(c) an annuity plan described in section 403(a) of the federal
internal revenue code;
(d) a qualified trust described in section 401(a) of the federal
internal revenue code;
(e) effective January 1, 2002, an annuity contract described in
section 403(b) of the federal internal revenue code;
(f) effective January 1, 2002, a plan eligible under section 457(b)
of the federal internal revenue code that is maintained by a state,
political subdivision of a state or any agency or instrumentality of a
state or a political subdivision of a state that agrees to separately
account for amounts transferred into the plan from a retirement plan; or
(g) effective January 1, 2008, a roth IRA described in section
408(A) of the federal internal revenue code; or
(h) effective January 1, 2016, a SIMPLE IRA, as described in
section 408(p) of the federal internal revenue code, provided that the
rollover contribution is made after the two-year period described in
section 72(t)(6) of the federal internal revenue code.
(iii) Effective January 1, 2002, the definition of eligible rollover
distribution also includes a distribution to a surviving spouse, or to a
spouse or former spouse who is an alternate payee under a domestic
relations order, as defined in section 414(p) of the federal internal
revenue code.
(iv) A distributee includes an employee or former employee. It
also includes the employee's or former employee's surviving spouse
and the employee's or former employee's spouse or former spouse who
is the alternate payee under a qualified domestic relations order, as
defined in section 414(p) of the federal internal revenue code. Effective
July 1, 2007, a distributee further includes a nonspouse beneficiary who
is a designated beneficiary as defined by section 401(a)(9)(E) of the
federal internal revenue code. However, a nonspouse beneficiary may
rollover the distribution only to an individual retirement account or
individual retirement annuity established for the purpose of receiving
the distribution and the account or annuity will be treated as an
"inherited" individual retirement account or annuity.
(v) A direct rollover is a payment by the retirement system to the
eligible retirement plan specified by the distributee.
(8) Notwithstanding any law to the contrary, the board may accept
a direct or indirect eligible rollover distributions for the purpose of the
purchase of service credit. In addition, the board may accept a direct
trustee to trustee transfer from a deferred compensation plan under
section 457(b) of the federal internal revenue code or a tax sheltered
annuity under section 403(b) of the federal internal revenue code for:
(A) The purchase of permissive service credit, as defined under section
415(n)(3)(A) of the federal internal revenue code; or (B) a repayment to
which section 415 of the federal internal revenue code does not apply
pursuant to section 415(k)(3) of the federal internal revenue code. Any
such transfer shall be allowed as provided in this subsection to the
extent permitted by law, subject to any conditions, proofs or acceptance
established or required by the board or the board's designee.
(9) Where required by the act, an employer shall pick up and pay
contributions that would otherwise be payable by members of a
retirement plan in accordance with section 414(h)(2) of the federal
internal revenue code as follows:
(A) The contributions, although designated as employee
SENATE BILL No. 64—page 14
contributions, are being paid by the employer in lieu of contributions
by the employee;
(B) the employee must not have been given the option of receiving
the amounts directly instead of having them paid to the retirement plan;
and
(C) the pickup shall apply to amounts that a member elects to
contribute to receive credit for prior or participating service if the
election is irrevocable and applies to amounts contributed before
retirement.
(10) (A) Notwithstanding any provision of this plan to the
contrary, contributions, benefits and service credit with respect to
qualified military service will be provided in accordance with section
414(u) of the federal internal revenue code and the uniformed services
employment and reemployment rights act of 1994.
(B) Effective with respect to deaths occurring on or after January
1, 2007, while a member is performing qualified military service, as
defined in chapter 43 of title 38, United States code, to the extent
required by section 401(a)(37) of the federal internal revenue code,
survivors of a member in the system, are entitled to any additional
benefits that the system would provide if the member had resumed
employment and then died, such as accelerated vesting or survivor
benefits that are contingent on the member's death while employed. A
deceased member's period of qualified military service must be counted
for vesting purposes.
(C) Effective with respect to deaths or disabilities, or both,
occurring on or after January 1, 2007, while a member is performing
qualified military service, as defined in chapter 43 of title 38, United
States code, to the extent permitted by section 414(u)(9) of the federal
internal revenue code, for the benefit accrual purposes and in the case
of death, for vesting purposes, the member will be treated as having
earned years of service for the period of qualified military service,
having returned to employment on the day before the death or
disability, or both, and then having terminated on the date of death or
disability. This provision shall be applied to all similarly situated
individuals in a reasonably equivalent manner.
(D) Beginning January 1, 2009, to the extent required by section
414(u)(12) of the federal internal revenue code, an individual receiving
differential wage payments, as defined under section 3401(h)(2) of the
federal internal revenue code, from an employer shall be treated as
employed by that employer, and the differential wage payment shall be
treated as compensation for purposes of applying the limits on annual
additions under section 415(c) of the federal internal revenue code.
This provision shall be applied to all similarly situated individuals in a
reasonably equivalent manner.
(11) Upon the complete or partial termination of a retirement plan,
the rights of members to benefits accrued to the date of termination, to
the extent funded, or to the amounts in their accounts are
nonforfeitable, and amounts in their accounts may be distributed to
them.
(d) The plan year for the retirement plan begins on July 1.
(e) The limitation year for purposes of section 415 of the federal
internal revenue code is the calendar year.
(f) The board may not engage in a transaction prohibited by
section 503(b) of the federal internal revenue code.
(g) (1) For purposes of determining an "actuarial equivalent" or of
an "actuarial computation" for members hired prior to July 1, 2009, the
board shall use the following:
(A) The applicable mortality table is specified in revenue ruling
2001-62 or revenue ruling 2007-67, as applicable; and
SENATE BILL No. 64—page 15
(B) the applicable interest factor is the actuarially assumed rate of
return established by the board.
(2) For purposes of determining an "actuarial equivalent" or an
"actuarial computation" for members hired on or after July 1, 2009, the
board shall use the following:
(A) The applicable mortality table is the 50/50 male/female blend of
the RP 2000 health annuitant mortality table, projected to 2025; and
(B) the applicable interest factor is the actuarially assumed rate of
return established by the board.
(3) For converting amounts payable under the partial lump sum
option, the board shall use the following:
(A) The applicable mortality table is a 50/50 male/female blend of
the 1983 group annuity mortality table; and
(B) the applicable interest factor is the actuarially assumed rate of
return established by the board.
(4) For benefit testing under section 415(b) of the federal internal
revenue code, the factors required by treasury regulations shall be used.
The applicable mortality table is specified in revenue ruling 2001-62
for years prior to January 1, 2009, and notice 2008-85 for years after
December 31, 2008.
Sec. 4. K.S.A. 74-4902 and 74-4904 and K.S.A. 2024 Supp. 74-
49,123 are hereby repealed.
Sec. 5. This act shall take effect and be in force from and after its
publication in the statute book.
I hereby certify that the above BILL originated in the
SENATE, and passed that body
__________________________
SENATE adopted
Conference Committee Report ________________
_________________________
President of the Senate.
_________________________
Secretary of the Senate.
Passed the HOUSE
as amended _________________________
HOUSE adopted
Conference Committee Report ________________
_________________________
Speaker of the House.
_________________________
Chief Clerk of the House.
APPROVED _____________________________
_________________________
Governor.