AN ACT relating to designating a special needs trust to receive state-administered retirement benefits.

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AN ACT relating to designating a special needs trust to receive state -administered 1
retirement benefits. 2
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 3
Section 1. KRS 16.505 is amended to read as follows: 4
As used in KRS 16.505 to 16.652, unless the context otherwise requires: 5
(1) "System" means the State Police Retirement System created by KRS 16.505 to 6
16.652; 7
(2) "Board" means the board of trustees of the Kentucky Retirement Systems; 8
(3) "Employer" or "State Police" means the Department of Kentucky State Police, or its 9
successor; 10
(4) "Current service" means the number of years and completed months of employment 11
as an employee subsequent to July 1, 1958, for which creditable compensation wa s 12
paid by the employer and employee contributions deducted except as otherwise 13
provided; 14
(5) "Prior service" means the number of years and completed months of employment as 15
an employee prior to July 1, 1958, for which creditable compensation was paid to 16
the employee by the Commonwealth. Twelve (12) months of current service in the 17
system are required to validate prior service; 18
(6) "Service" means the total of current service and prior service; 19
(7) "Accumulated contributions" at any time means the sum of all amounts deducted 20
from the compensation of a member and credited to his or her individual account in 21
the member's account, including employee contributions picked up after August 1, 22
1982, pursuant to KRS 16.545(4), together with interest credited on such a mounts 23
as provided in KRS 16.505 to 16.652, and any other amounts the member shall 24
have contributed, including interest credited. For members who begin participating 25
on or after September 1, 2008, "accumulated contributions" shall not include 26
employee contributions that are deposited into accounts established pursuant to 26 27
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U.S.C. sec. 401(h) within the funds established in KRS 16.510 and 61.515, as 1
prescribed by KRS 61.702(3)(b); 2
(8) "Creditable compensation": 3
(a) Except as provided by paragraph (b) or (c) of this subsection, means all salary 4
and wages, including payments for compensatory time, paid to the employee 5
as a result of services performed for the employer or for time during which the 6
member is on paid leave, which are includable on the member's fe deral form 7
W-2 wage and tax statement under the heading "wages, tips, other 8
compensation," including employee contributions picked up after August 1, 9
1982, pursuant to KRS 16.545(4); 10
(b) Includes: 11
1. Lump-sum bonuses, severance pay, or employer -provided payments for 12
purchase of service credit, which shall be averaged over the employee's 13
total service with the system in which it is recorded if it is equal to or 14
greater than one thousand dollars ($1,000); 15
2. Lump-sum payments for creditable compensation paid as a result of an 16
order of a court of competent jurisdiction, the Personnel Board, or the 17
Kentucky Commission on Human Rights, or for any creditable 18
compensation paid in anticipation of settlement of an action before a 19
court of competent jurisdiction, the Personnel Board, or the Kentucky 20
Commission on Human Rights, including notices of violations of state 21
or federal wage and hour statutes or violations of state or federal 22
discrimination statutes, which shall be credited to the fiscal year during 23
which the wages were earned or should have been paid by the employer. 24
This subparagraph shall also include lump -sum payments for reinstated 25
wages pursuant to KRS 61.569, which shall be credited to the period 26
during which the wages were earned or should have been paid by the 27
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employer; 1
3. Amounts which are not includable in the member's gross income by 2
virtue of the member having taken a voluntary salary reduction provided 3
for under applicable provisions of the Internal Revenue Code; and 4
4. Elective amounts for qualifie d transportation fringes paid or made 5
available on or after January 1, 2001, for calendar years on or after 6
January 1, 2001, that are not includable in the gross income of the 7
employee by reason of 26 U.S.C. sec. 132(f)(4); and 8
(c) Excludes: 9
1. Living allo wances, expense reimbursements, lump -sum payments for 10
accrued vacation leave, and other items determined by the board; 11
2. For employees who begin participating on or after September 1, 2008, 12
lump-sum payments for compensatory time; and 13
3. Any salary or wag es paid to an employee for services as a Kentucky 14
State Police school resource officer as defined by KRS 158.441; 15
(9) "Final compensation" means: 16
(a) For a member who begins participating before September 1, 2008, the 17
creditable compensation of a member du ring the three (3) fiscal years he or 18
she was paid at the highest average monthly rate divided by the number of 19
months of service credit during the three (3) year period, multiplied by twelve 20
(12); the three (3) years may be fractional and need not be cons ecutive. If the 21
number of months of service credit during the three (3) year period is less than 22
twenty-four (24), one (1) or more additional fiscal years shall be used; or 23
(b) For a member who begins participating on or after September 1, 2008, but 24
prior to January 1, 2014, the creditable compensation of the member during 25
the three (3) complete fiscal years he or she was paid at the highest average 26
monthly rate divided by three (3). Each fiscal year used to determine final 27
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compensation must contain twelve (12) months of service credit. If the 1
member does not have three (3) complete fiscal years that each contain twelve 2
(12) months of service credit, then one (1) or more additional fiscal years, 3
which may contain less than twelve (12) months of service credi t, shall be 4
added until the number of months in the final compensation calculation is at 5
least thirty-six (36) months; 6
(10) "Final rate of pay" means the actual rate upon which earnings of a member were 7
calculated during the twelve (12) month period immedi ately preceding the 8
member's effective retirement date, including employee contributions picked up 9
after August 1, 1982, pursuant to KRS 16.545(4). The rate shall be certified to the 10
system by the employer and the following equivalents shall be used to con vert the 11
rate to an annual rate: two thousand eighty (2,080) hours for eight (8) hour 12
workdays, one thousand nine hundred fifty (1,950) hours for seven and one -half (7-13
1/2) hour workdays, two hundred sixty (260) days, fifty -two (52) weeks, twelve 14
(12) months, or one (1) year; 15
(11) "Retired member" means any former member receiving a retirement allowance or 16
any former member who has filed the necessary documents for retirement benefits 17
and is no longer contributing to the retirement system; 18
(12) "Retirement allowance" means the retirement payments to which a retired member 19
is entitled; 20
(13) "Actuarial equivalent" means a benefit of equal value when computed upon the 21
basis of actuarial tables adopted by the board. In cases of disability retirement, the 22
options authorized by KRS 61.635 shall be computed by adding ten (10) years to 23
the age of the member, unless the member has chosen the Social Security 24
adjustment option as provided for in KRS 61.635(8), in which case the member's 25
actual age shall be used. For mem bers who began participating in the system prior 26
to January 1, 2014, no disability retirement option shall be less than the same option 27
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computed under early retirement; 1
(14) "Authorized leave of absence" means any time during which a person is absent 2
from employment but retained in the status of an employee in accordance with the 3
personnel policy of the Department of Kentucky State Police; 4
(15) "Normal retirement date" means: 5
(a) For a member who begins participating before September 1, 2008, the first 6
day of the month following a member's fifty -fifth birthday, except that for 7
members over age fifty -five (55) on July 1, 1958, it shall mean January 1, 8
1959; or 9
(b) For a member who begins participating on or after September 1, 2008, the 10
first day of the month following a member's sixtieth birthday; 11
(16) "Disability retirement date" means the first day of the month following the last day 12
of paid employment; 13
(17) "Dependent child" means a child in the womb and a natural or legally adopted child 14
of the member who has neither attained age eighteen (18) nor married or who is an 15
unmarried full-time student who has not attained age twenty -two (22). Solely in the 16
cases where a member dies as a direct result of an act in line of duty as defined in 17
this section, dies as a result of a duty -related injury as defined in KRS 61.621, 18
becomes totally and permanently disabled as a direct result of an act in line of duty 19
as defined in this section, or becomes disabled as a result of a duty -related injury as 20
defined in KRS 61.621 and is eligible for the benefits provided by KRS 21
61.621(5)(a), "dependent child" also means a naturally or legally adopted disabled 22
child of the member, reg ardless of the child's age, if the child has been determined 23
to be eligible for federal Social Security disability benefits or is being claimed as a 24
qualifying child for tax purposes due to the child's total and permanent disability; 25
(18) "Optional allowan ce" means an actuarially equivalent benefit elected by the 26
member in lieu of all other benefits provided by KRS 16.505 to 16.652; 27
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(19) "Act in line of duty" means: 1
(a) A single act occurring or a single thing done, which, as determined by the 2
board, was required in the performance of the duties specified in KRS 16.060; 3
(b) For employees in hazardous positions under KRS 61.592, a single act 4
occurring which was required in the performance of the principal duties of the 5
position as defined by the job description; or 6
(c) For employees participating in the State Police Retirement System and for 7
employees who are in hazardous positions under KRS 61.592, a single act of 8
violence committed against the employee that is found to be related to his or 9
her job duties, whether or not it occurs at his or her job site; 10
(20) "Early retirement date" means: 11
(a) For a member who begins participating before September 1, 2008, the 12
retirement date declared by a member who is not less than fifty (50) years of 13
age and has fifteen (15) years of service; or 14
(b) For a member who begins participating on or after September 1, 2008, but 15
prior to January 1, 2014, the retirement date declared by a member who is not 16
less than fifty (50) years of age and has fifteen (15) years of service credit ed 17
under KRS 16.543(1) or 61.543(1) or another state -administered retirement 18
system; 19
(21) "Member" means any officer included in the membership of the system as provided 20
under KRS 16.520 whose membership has not been terminated under KRS 61.535; 21
(22) "Regular full-time officers" means the occupants of positions as set forth in KRS 22
16.010; 23
(23) "Hazardous disability" as used in KRS 16.505 to 16.652 means a disability which 24
results in an employee's total incapacity to continue as an employee in a hazardous 25
position, but the employee is not necessarily deemed to be totally and permanently 26
disabled to engage in other occupations for remuneration or profit; 27
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(24) "Current rate of pay" means the member's actual hourly, daily, weekly, biweekly, 1
monthly, or yearly rate of pay converted to an annual rate as defined in final rate of 2
pay. The rate shall be certified by the employer; 3
(25) "Beneficiary" means the person, persons, estate, trust, special needs trust, or trustee 4
designated by the member in accordance with KRS 61.542 or 61.705 to receive any 5
available benefits in the event of the member's death. As used in KRS 61.702, 6
"beneficiary" does not mean an estate, trust, or trustee; 7
(26) "Recipient" means the retired member, the person or persons designated as 8
beneficiary by the member and drawing a retirement allowance as a result of the 9
member's death, or a dependent child drawing a retirement allowance. An alternate 10
payee of a qualified domestic relations order shall not be considered a recipient, 11
except for purposes of KRS 61.623; 12
(27) "Person" means a natural person; 13
(28) "Retirement office" means the Kentucky Public Pensions Authority office building 14
in Frankfort, unless otherwise designated by the Kentucky Public Pensions 15
Authority; 16
(29) "Vested" for purposes of d etermining eligibility for purchasing service credit under 17
KRS 61.552 means the employee has at least forty -eight (48) months of service if 18
age sixty-five (65) or older or at least sixty (60) months of service if under the age 19
of sixty-five (65). For purpo ses of this subsection, "service" means service in the 20
systems administered by the Kentucky Retirement Systems and County Employees 21
Retirement Systems; 22
(30) "Last day of paid employment" means the last date employer and employee 23
contributions are required to be reported in accordance with KRS 16.543 or 61.543 24
to the retirement office in order for the employee to receive current service credit 25
for the month. Last day of paid employment does not mean a date the employee 26
receives payment for accrued leave, whe ther by lump sum or otherwise, if that date 27
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occurs twenty-four (24) or more months after previous contributions; 1
(31) "Objective medical evidence" means reports of examinations or treatments; medical 2
signs which are anatomical, physiological, or psychologi cal abnormalities that can 3
be observed; psychiatric signs which are medically demonstrable phenomena 4
indicating specific abnormalities of behavior, affect, thought, memory, orientation, 5
or contact with reality; or laboratory findings which are anatomical, physiological, 6
or psychological phenomena that can be shown by medically acceptable laboratory 7
diagnostic techniques, including but not limited to chemical tests, 8
electrocardiograms, electroencephalograms, X-rays, and psychological tests; 9
(32) "Fiscal year" of the system means the twelve (12) months from July 1 through the 10
following June 30, which shall also be the plan year. The "fiscal year" shall be the 11
limitation year used to determine contribution and benefit limits established by 26 12
U.S.C. sec. 415; 13
(33) "Participating" means an employee is currently earning service credit in the system 14
as provided in KRS 16.543; 15
(34) "Month" means a calendar month; 16
(35) "Membership date" means the date upon which the member began participating in 17
the system as provided by KRS 16.543; 18
(36) "Participant" means a member, as defined by subsection (21) of this section, or a 19
retired member, as defined by subsection (11) of this section; 20
(37) "Qualified domestic relations order" means any judgment, decree, or order, 21
including approval of a property settlement agreement, that: 22
(a) Is issued by a court or administrative agency; and 23
(b) Relates to the provision of child support, alimony payments, or marital 24
property rights to an alternate payee; 25
(38) "Alternate payee" means a spouse, former spouse, child, or other dependent of a 26
participant, who is designated to be paid retirement benefit s in a qualified domestic 27
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relations order; 1
(39) "Accumulated employer credit" means the employer pay credit deposited to the 2
member's account and interest credited on such amounts as provided by KRS 3
16.583; 4
(40) "Accumulated account balance" means: 5
(a) For members who began participating in the system prior to January 1, 2014, 6
the member's accumulated contributions; or 7
(b) For members who began participating in the system on or after January 1, 8
2014, in the hybrid cash balance plan as provided by KRS 16.583 , the 9
combined sum of the member's accumulated contributions and the member's 10
accumulated employer pay credit;[ and] 11
(41) "Monthly average pay" means: 12
(a) In the case of a member who dies as a direct result of an act in line of duty as 13
defined in this sect ion or who dies as a result of a duty -related injury as 14
defined in KRS 61.621, the higher of the member's monthly final rate of pay 15
or the average monthly creditable compensation earned by the deceased 16
member during his or her last twelve (12) months of employment; or 17
(b) In the case where a member becomes totally and permanently disabled as a 18
direct result of an act in line of duty as defined in this section or becomes 19
disabled as a result of a duty -related injury as defined in KRS 61.621 and is 20
eligible f or the benefits provided by KRS 61.621(5)(a), the higher of the 21
member's monthly final rate of pay or the average monthly creditable 22
compensation earned by the disabled member during his or her last twelve 23
(12) months of employment prior to the date the ac t in line of duty or duty -24
related injury occurred; and 25
(42) "Special needs trust" means a trust described in 42 U.S.C. sec 1396p(d)(4)(A) or 26
(C) for the benefit of one (1) person. Any reference to a trust includes a special 27
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needs trust, unless the context otherwise requires. 1
Section 2. KRS 16.578 is amended to read as follows: 2
(1) If a member dies prior to the first day of the month in which the member would 3
have received his or her first retirement allowance, the member' s beneficiary shall 4
be eligible for the benefits provided by this section if the member had on file a 5
written designation of a beneficiary with the retirement office as provided by KRS 6
61.542 and the member met the following conditions at the date of his or her death: 7
(a) The member was eligible to retire under KRS 16.576, 16.577, or 16.583(6); 8
(b) The member was in active employment or on authorized leave of absence 9
with five (5) or more years of service credit and died prior to his or her normal 10
retirement date; or 11
(c) The member was not in active employment or on authorized leave of absence 12
with twelve (12) or more years of service credit and died prior to his or her 13
normal retirement date. 14
(2) If the beneficiary eligible for benefits as provided in subsection (1) of this section is 15
a single person or a special needs trust, then the beneficiary may elect to receive: 16
(a) A monthly benefit payable for the life of the beneficiary or the life of the 17
beneficiary of a special needs trust that is equal to the ben efit that would 18
have been paid had the member retired immediately prior to his or her date of 19
death and elected to receive benefits payable under the survivorship one 20
hundred percent (100%) option as provided in KRS 61.635(2); 21
(b) A monthly benefit payable for the life of the beneficiary or the life of the 22
beneficiary of a special needs trust under the beneficiary Social Security 23
adjustment option as provided in KRS 61.635(9) that is the actuarial 24
equivalent to the amount computed under paragraph (a) of this subsection; 25
(c) A monthly benefit payable for a period of sixty (60) months that is the 26
actuarial equivalent to the amount computed under paragraph (a) of this 27
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subsection; 1
(d) A monthly benefit payable for a period of one hundred twenty (120) months 2
that is the actuarial equivalent to the amount computed under paragraph (a) of 3
this subsection; 4
(e) If the member began participating in the system prior to January 1, 2014, a 5
monthly benefit payable for: 6
1. Sixty (60) months certain; 7
2. One hundred twenty (120) months certain; 8
3. The actuarial equivalent refund; or 9
4. The Social Security adjustment option; 10
that is equivalent to the benefit the member would have been entitled to 11
receive based on his or her years of service and final compensation at the date 12
of his or her death reduced by the survivorship fifty percent (50%) factor as 13
provided for in KRS 61.635(4), then reduced by fifty percent (50%), and that 14
is the actuarial equivalent to the amount computed under paragraph (a) of this 15
subsection; or 16
(f) The higher of a refund of the member's accumulated account balance and 17
interest as described in KRS 61.625(1) or a one (1) time lump -sum payment 18
which shall be the actuarial equivalent of the amount payable under paragraph 19
(a) of this subsection for a period of sixty (60) months. 20
(3) If the beneficiary eligible for benefits as provided in subsection (1) of this section 21
are multiple beneficiaries or a trust, other than a special needs trust, then the 22
multiple beneficiaries by consensus or the trustee may ele ct to receive the actuarial 23
equivalent amounts payable under subsection (2)(c), (d), (e), or (f) of this section 24
using the assumption that the beneficiary's age is the same as the member's age. 25
(4) If the beneficiary eligible for benefits as provided in subsection (1) of this section is 26
the member's estate, then the beneficiary shall receive the higher of a refund of the 27
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member's accumulated account balance and interest as described in KRS 61.625(1) 1
or the one (1) time lump -sum payment payable under subsect ion (2)(f) of this 2
section, using the assumption that the beneficiary's age is the same as the member's 3
age. 4
(5) Payments of taxable distributions made pursuant to this section shall be subject to 5
state and federal tax as appropriate. 6
Section 3. KRS 61.510 is amended to read as follows: 7
As used in KRS 61.510 to 61.705, unless the context otherwise requires: 8
(1) "System" means the Kentucky Employees Retirement System created by KRS 9
61.510 to 61.705; 10
(2) "Board" means the board of trustees of the system as provided in KRS 61.645; 11
(3) "Department" means any state department or board or agency participating in the 12
system in accordance with appropriate executive order, as provided in KRS 61.520. 13
For purposes of KRS 61.510 to 61.705, the members, officers, and employees of the 14
General Assembly and any other body, entity, or instrumentality designated by 15
executive order by the Governor, shall be deemed to be a department, 16
notwithstanding whether said body, entity, or instrumentali ty is an integral part of 17
state government; 18
(4) "Examiner" means the medical examiners as provided in KRS 61.665; 19
(5) "Employee" means the members, officers, and employees of the General Assembly 20
and every regular full -time, appointed or elective officer o r employee of a 21
participating department, including the Department of Military Affairs. The term 22
does not include persons engaged as independent contractors, seasonal, emergency, 23
temporary, interim, and part -time workers. In case of any doubt, the board sh all 24
determine if a person is an employee within the meaning of KRS 61.510 to 61.705; 25
(6) "Employer" means a department or any authority of a department having the power 26
to appoint or select an employee in the department, including the Senate and the 27
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House of Representatives, or any other entity, the employees of which are eligible 1
for membership in the system pursuant to KRS 61.525; 2
(7) "State" means the Commonwealth of Kentucky; 3
(8) "Member" means any employee who is included in the membership of the syste m 4
or any former employee whose membership has not been terminated under KRS 5
61.535; 6
(9) "Service" means the total of current service and prior service as defined in this 7
section; 8
(10) "Current service" means the number of years and months of employment as an 9
employee, on and after July 1, 1956, except that for members, officers, and 10
employees of the General Assembly this date shall be January 1, 1960, for which 11
creditable compensation is paid and employee contributions deducted, except as 12
otherwise provided , and each member, officer, and employee of the General 13
Assembly shall be credited with a month of current service for each month he or 14
she serves in the position; 15
(11) "Prior service" means the number of years and completed months, expressed as a 16
fraction of a year, of employment as an employee, prior to July 1, 1956, for which 17
creditable compensation was paid; except that for members, officers, and 18
employees of the General Assembly, this date shall be January 1, 1960. An 19
employee shall be credited with one (1) month of prior service only in those months 20
he or she received compensation for at least one hundred (100) hours of work; 21
provided, however, that each member, officer, and employee of the General 22
Assembly shall be credited with a month of prior servi ce for each month he or she 23
served in the position prior to January 1, 1960. Twelve (12) months of current 24
service in the system are required to validate prior service; 25
(12) "Accumulated contributions" at any time means the sum of all amounts deducted 26
from the compensation of a member and credited to his or her individual account in 27
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the members' account, including employee contributions picked up after August 1, 1
1982, pursuant to KRS 61.560(4), together with interest credited, on such amounts 2
and any other amounts the member shall have contributed thereto, including interest 3
credited thereon. For members who begin participating on or after September 1, 4
2008, "accumulated contributions" shall not include employee contributions that are 5
deposited into accounts established pursuant to 26 U.S.C. sec. 401(h) within the 6
funds established in KRS 16.510 and 61.515, as prescribed by KRS 61.702(3)(b); 7
(13) "Creditable compensation": 8
(a) Means all salary, wages, tips to the extent the tips are reported for income tax 9
purposes, and fees, including payments for compensatory time, paid to the 10
employee as a result of services performed for the employer or for time during 11
which the member is on paid leave, which are includable on the member's 12
federal form W -2 wage and tax sta tement under the heading "wages, tips, 13
other compensation," including employee contributions picked up after 14
August 1, 1982, pursuant to KRS 61.560(4). For members of the General 15
Assembly, it shall mean all amounts which are includable on the member's 16
federal form W -2 wage and tax statement under the heading "wages, tips, 17
other compensation," including employee contributions picked up after 18
August 1, 1982, pursuant to KRS 6.505(4) or 61.560(4); 19
(b) Includes: 20
1. Lump-sum bonuses, severance pay, or employer -provided payments for 21
purchase of service credit, which shall be averaged over the employee's 22
total service with the system in which it is recorded if it is equal to or 23
greater than one thousand dollars ($1,000); 24
2. Cases where compensation includes mainten ance and other perquisites, 25
but the board shall fix the value of that part of the compensation not paid 26
in money; 27
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3. Lump-sum payments for creditable compensation paid as a result of an 1
order of a court of competent jurisdiction, the Personnel Board, or th e 2
Kentucky Commission on Human Rights, or for any creditable 3
compensation paid in anticipation of settlement of an action before a 4
court of competent jurisdiction, the Personnel Board, or the Kentucky 5
Commission on Human Rights, including notices of violat ions of state 6
or federal wage and hour statutes or violations of state or federal 7
discrimination statutes, which shall be credited to the fiscal year during 8
which the wages were earned or should have been paid by the employer. 9
This subparagraph shall also include lump-sum payments for reinstated 10
wages pursuant to KRS 61.569, which shall be credited to the period 11
during which the wages were earned or should have been paid by the 12
employer; 13
4. Amounts which are not includable in the member's gross income by 14
virtue of the member having taken a voluntary salary reduction provided 15
for under applicable provisions of the Internal Revenue Code; and 16
5. Elective amounts for qualified transportation fringes paid or made 17
available on or after January 1, 2001, for calenda r years on or after 18
January 1, 2001, that are not includable in the gross income of the 19
employee by reason of 26 U.S.C. sec. 132(f)(4); and 20
(c) Excludes: 21
1. Living allowances, expense reimbursements, lump -sum payments for 22
accrued vacation leave, and other items determined by the board; 23
2. For employees who begin participating on or after September 1, 2008, 24
lump-sum payments for compensatory time; 25
3. For employ ees who begin participating on or after August 1, 2016, 26
nominal fees paid for services as a volunteer; and 27
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4. Any salary or wages paid to an employee for services as a Kentucky 1
State Police school resource officer as defined by KRS 158.441; 2
(14) "Final compensation" of a member means: 3
(a) For a member who begins participating before September 1, 2008, who is 4
employed in a nonhazardous position, the creditable compensation of the 5
member during the five (5) fiscal years he or she was paid at the highest 6
average monthly rate divided by the number of months of service credit 7
during that five (5) year period multiplied by twelve (12). The five (5) years 8
may be fractional and need not be consecutive. If the number of months of 9
service credit during the five (5) ye ar period is less than forty -eight (48), one 10
(1) or more additional fiscal years shall be used; 11
(b) For a member who is employed in a nonhazardous position, whose effective 12
retirement date is between August 1, 2001, and January 1, 2009, and whose 13
total service credit is at least twenty-seven (27) years and whose age and years 14
of service total at least seventy -five (75), final compensation means the 15
creditable compensation of the member during the three (3) fiscal years the 16
member was paid at the highest ave rage monthly rate divided by the number 17
of months of service credit during that three (3) years period multiplied by 18
twelve (12). The three (3) years may be fractional and need not be 19
consecutive. If the number of months of service credit during the three (3) 20
year period is less than twenty -four (24), one (1) or more additional fiscal 21
years shall be used. Notwithstanding the provision of KRS 61.565, the 22
funding for this paragraph shall be provided from existing funds of the 23
retirement allowance; 24
(c) For a m ember who begins participating before September 1, 2008, who is 25
employed in a hazardous position, as provided in KRS 61.592, the creditable 26
compensation of the member during the three (3) fiscal years he or she was 27
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paid at the highest average monthly rate divided by the number of months of 1
service credit during that three (3) year period multiplied by twelve (12). The 2
three (3) years may be fractional and need not be consecutive. If the number 3
of months of service credit during the three (3) year period is less than twenty-4
four (24), one (1) or more additional fiscal years shall be used; 5
(d) For a member who begins participating on or after September 1, 2008, but 6
prior to January 1, 2014, who is employed in a nonhazardous position, the 7
creditable compensatio n of the member during the five (5) complete fiscal 8
years immediately preceding retirement divided by five (5). Each fiscal year 9
used to determine final compensation must contain twelve (12) months of 10
service credit. If the member does not have five (5) co mplete fiscal years that 11
each contain twelve (12) months of service credit, then one (1) or more 12
additional fiscal years, which may contain less than twelve (12) months of 13
service credit, shall be added until the number of months in the final 14
compensation calculation is at least sixty (60) months; or 15
(e) For a member who begins participating on or after September 1, 2008, but 16
prior to January 1, 2014, who is employed in a hazardous position as provided 17
in KRS 61.592, the creditable compensation of the membe r during the three 18
(3) complete fiscal years he or she was paid at the highest average monthly 19
rate divided by three (3). Each fiscal year used to determine final 20
compensation must contain twelve (12) months of service credit. If the 21
member does not have three (3) complete fiscal years that each contain twelve 22
(12) months of service credit, then one (1) or more additional fiscal years, 23
which may contain less than twelve (12) months of service credit, shall be 24
added until the number of months in the final co mpensation calculation is at 25
least thirty-six (36) months; 26
(15) "Final rate of pay" means the actual rate upon which earnings of an employee were 27
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calculated during the twelve (12) month period immediately preceding the 1
member's effective retirement date, i ncluding employee contributions picked up 2
after August 1, 1982, pursuant to KRS 61.560(4). The rate shall be certified to the 3
system by the employer and the following equivalents shall be used to convert the 4
rate to an annual rate: two thousand eighty (2,0 80) hours for eight (8) hour 5
workdays, nineteen hundred fifty (1,950) hours for seven and one -half (7-1/2) hour 6
workdays, two hundred sixty (260) days, fifty -two (52) weeks, twelve (12) months, 7
one (1) year; 8
(16) "Retirement allowance" means the retirement payments to which a member is 9
entitled; 10
(17) "Actuarial equivalent" means a benefit of equal value when computed upon the 11
basis of the actuarial tables that are adopted by the board. In cases of disability 12
retirement, the options authorized by KRS 61.635 shall be computed by adding ten 13
(10) years to the age of the member, unless the member has chosen the Social 14
Security adjustment option as provided for in KRS 61.635(8), in which case the 15
member's actual age shall be used. For members who began participati ng in the 16
system prior to January 1, 2014, no disability retirement option shall be less than 17
the same option computed under early retirement; 18
(18) "Normal retirement date" means the sixty -fifth birthday of a member, unless 19
otherwise provided in KRS 61.510 to 61.705; 20
(19) "Fiscal year" of the system means the twelve (12) months from July 1 through the 21
following June 30, which shall also be the plan year. The "fiscal year" shall be the 22
limitation year used to determine contribution and benefit limits as esta blished by 23
26 U.S.C. sec. 415; 24
(20) "Officers and employees of the General Assembly" means the occupants of those 25
positions enumerated in KRS 6.150. The term shall also apply to assistants who 26
were employed by the General Assembly for at least one (1) regu lar legislative 27
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session prior to July 13, 2004, who elect to participate in the retirement system, and 1
who serve for at least six (6) regular legislative sessions. Assistants hired after July 2
13, 2004, shall be designated as interim employees; 3
(21) "Regular full-time positions," as used in subsection (5) of this section, shall mean 4
all positions that average one hundred (100) or more hours per month determined 5
by using the number of months actually worked within a calendar or fiscal year, 6
including all positions except: 7
(a) Seasonal positions, which although temporary in duration, are positions which 8
coincide in duration with a particular season or seasons of the year and which 9
may recur regularly from year to year, the period of time shall not exceed nine 10
(9) months; 11
(b) Emergency positions which are positions utilized by the employer during: 12
1. An emergency as determined by the employer for a period not 13
exceeding thirty (30) working days and are nonrenewable; or 14
2. A state of emergency declared by the Presi dent of the United States or 15
the Governor of the Commonwealth of Kentucky that are created or 16
filled specifically for addressing the employer's needs during and as a 17
result of the declared emergency; 18
(c) Temporary positions which are positions of employmen t with a participating 19
department for a period of time not to exceed nine (9) months and are 20
nonrenewable; 21
(d) Part-time positions which are positions which may be permanent in duration, 22
but which require less than a calendar or fiscal year average of one hundred 23
(100) hours of work per month, determined by using the number of months 24
actually worked within a calendar or fiscal year, in the performance of duty; 25
and 26
(e) Interim positions which are positions established for a one -time or recurring 27
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need not to exceed nine (9) months; 1
(22) "Vested" for purposes of determining eligibility for purchasing service credit under 2
KRS 61.552 means the employee has at least forty -eight (48) months of service if 3
age sixty-five (65) or older or at least sixty (60) months of service if under the age 4
of sixty-five (65). For purposes of this subsection, "service" means service in the 5
systems administered by the Kentucky Retirement Systems and County Employees 6
Retirement System; 7
(23) "Parted employer" means a department, portio n of a department, board, or agency, 8
such as Outwood Hospital and School, which previously participated in the system, 9
but due to lease or other contractual arrangement is now operated by a publicly held 10
corporation or other similar organization, and there fore is no longer participating in 11
the system. The term "parted employer" shall not include a department, board, or 12
agency that ceased participation in the system pursuant to KRS 61.522; 13
(24) "Retired member" means any former member receiving a retirement allowance or 14
any former member who has filed the necessary documents for retirement benefits 15
and is no longer contributing to the retirement system; 16
(25) "Current rate of pay" means the member 's actual hourly, daily, weekly, biweekly, 17
monthly, or yearly rate of pay converted to an annual rate as defined in final rate of 18
pay. The rate shall be certified by the employer; 19
(26) "Beneficiary" means the person or persons ,[ or] estate,[ or] trust, spe cial needs 20
trust, or trustee designated by the member in accordance with KRS 61.542 or 21
61.705 to receive any available benefits in the event of the member's death. As used 22
in KRS 61.702, "beneficiary" does not mean an estate, trust, or trustee; 23
(27) "Recipient" means the retired member or the person or persons designated as 24
beneficiary by the member and drawing a retirement allowance as a result of the 25
member's death or a dependent child drawing a retirement allowance. An alternate 26
payee of a qualified dome stic relations order shall not be considered a recipient, 27
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except for purposes of KRS 61.623; 1
(28) "Level percentage of payroll amortization method" means a method of determining 2
the annual amortization payment on the unfunded actuarial accrued liability as 3
expressed as a percentage of payroll over a set period of years but that may be 4
converted to a dollar value for purposes of KRS 61.565(1)(d). Under this method, 5
the percentage of payroll shall be projected to remain constant for all years 6
remaining in the set period of time and the unfunded actuarially accrued liability 7
shall be projected to be fully amortized at the conclusion of the set period of years; 8
(29) "Increment" means twelve (12) months of service credit which are purchased. The 9
twelve (12) months need not be consecutive. The final increment may be less than 10
twelve (12) months; 11
(30) "Person" means a natural person; 12
(31) "Retirement office" means the Kentucky Public Pensions Authority's office 13
building in Frankfort, unless otherwise designated by t he Kentucky Public Pensions 14
Authority; 15
(32) "Last day of paid employment" means the last date employer and employee 16
contributions are required to be reported in accordance with KRS 16.543, 61.543, or 17
78.615 to the retirement office in order for the employe e to receive current service 18
credit for the month. Last day of paid employment does not mean a date the 19
employee receives payment for accrued leave, whether by lump sum or otherwise, 20
if that date occurs twenty-four (24) or more months after previous contributions; 21
(33) "Objective medical evidence" means reports of examinations or treatments; medical 22
signs which are anatomical, physiological, or psychological abnormalities that can 23
be observed; psychiatric signs which are medically demonstrable phenomena 24
indicating specific abnormalities of behavior, affect, thought, memory, orientation, 25
or contact with reality; or laboratory findings which are anatomical, physiological, 26
or psychological phenomena that can be shown by medically acceptable laboratory 27
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diagnostic techniques, including but not limited to chemical tests, 1
electrocardiograms, electroencephalograms, X-rays, and psychological tests; 2
(34) "Participating" means an employee is currently earning service credit in the system 3
as provided in KRS 61.543; 4
(35) "Month" means a calendar month; 5
(36) "Membership date" means: 6
(a) The date upon which the member began participating in the system as 7
provided in KRS 61.543; 8
(b) For a member electing to participate in the system pursuant to KRS 9
196.167(4) or 311A.022(2) who has not previously participated in the system 10
or the Kentucky Teachers' Retirement System, the date the member began 11
participating in a defined contribution plan that meets the requirements of 26 12
U.S.C. sec. 403(b); 13
(c) For members bound by an educati onal contract as a conditional employee to 14
the state of Kentucky prior to December 31, 2003, the date on which the 15
educational contract became effective; or 16
(d) For a member participating in the system pursuant to KRS 31.045, the earlier 17
of the date upon w hich the member began participating in the system under 18
paragraph (a) of this subsection or the date the member began employment 19
with the Louisville and Jefferson County Public Defender Corporation; 20
(37) "Participant" means a member, as defined by subsecti on (8) of this section, or a 21
retired member, as defined by subsection (24) of this section; 22
(38) "Qualified domestic relations order" means any judgment, decree, or order, 23
including approval of a property settlement agreement, that: 24
(a) Is issued by a court or administrative agency; and 25
(b) Relates to the provision of child support, alimony payments, or marital 26
property rights to an alternate payee; 27
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(39) "Alternate payee" means a spouse, former spouse, child, or other dependent of a 1
participant, who is designated to be paid retirement benefits in a qualified domestic 2
relations order; 3
(40) "Accumulated employer credit" mean the employer pay credit deposited to the 4
member's account and interest credited on such amounts as provided by KRS 5
16.583 and 61.597; 6
(41) "Accumulated account balance" means: 7
(a) For members who began participating in the system prior to January 1, 2014, 8
the member's accumulated contributions; or 9
(b) For members who began participating in the system on or after January 1, 10
2014, in the hybrid cash balance plan as provided by KRS 16.583 and 61.597, 11
the combined sum of the member's accumulated contributions and the 12
member's accumulated employer credit; 13
(42) "Volunteer" means an individual who: 14
(a) Freely and without pressure or coercion perfor ms hours of service for an 15
employer participating in one (1) of the systems administered by Kentucky 16
Retirement Systems without receipt of compensation for services rendered, 17
except for reimbursement of actual expenses, payment of a nominal fee to 18
offset the costs of performing the voluntary services, or both; and 19
(b) If a retired member, does not become an employee, leased employee, or 20
independent contractor of the employer for which he or she is performing 21
volunteer services for a period of at least twelve (12) months following the 22
retired member's most recent retirement date; 23
(43) "Nominal fee" means compensation earned for services as a volunteer that does not 24
exceed five hundred dollars ($500) per month with each participating employer. 25
Compensation earned for services as a volunteer from more than one (1) 26
participating employer during a month shall not be aggregated to determine whether 27
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the compensation exceeds the five hundred dollars ($500) per month maximum 1
provided by this subsection; 2
(44) "Nonhazardous position" means a position that does not meet the requireme nts of 3
KRS 61.592 or has not been approved by the board as a hazardous position; 4
(45) "Monthly average pay" means: 5
(a) In the case of a member who dies as a direct result of an act in line of duty as 6
defined in KRS 16.505 or who dies as a result of a duty -related injury as 7
defined in KRS 61.621, the higher of the member's monthly final rate of pay 8
or the average monthly creditable compensation earned by the deceased 9
member during his or her last twelve (12) months of employment; or 10
(b) In the case where a m ember becomes totally and permanently disabled as a 11
direct result of an act in line of duty as defined in KRS 16.505 or becomes 12
disabled as a result of a duty -related injury as defined in KRS 61.621 and is 13
eligible for the benefits provided by KRS 61.621(5 )(a), the higher of the 14
member's monthly final rate of pay or the average monthly creditable 15
compensation earned by the disabled member during his or her last twelve 16
(12) months of employment prior to the date the act in line of duty or duty -17
related injury occurred; 18
(46) "Authority" means the Kentucky Public Pensions Authority as provided by KRS 19
61.505; 20
(47) "Executive director" means the executive director of the Kentucky Public Pensions 21
Authority; 22
(48) "Instructional staff" means the employees of a state college or university 23
participating under KRS 61.520 who are: 24
(a) Faculty; 25
(b) Staff responsible for teaching; or 26
(c) Other individuals employed in an administrative position that is eligible for 27
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participation in the Teachers' Insurance and Annuity Associa tion (TIAA) of 1
the Teachers' Retirement System; 2
(49) "Agency reporting official" means the person designated by the participating 3
employer who shall be responsible for forwarding all employer and employee 4
contributions and a record of the contributions to the System and for performing 5
other administrative duties pursuant to KRS 61.510 to 61.705;[ and] 6
(50) "Gainful employment" means work in any capacity that is or may be performed 7
with regularity and is or may be usually done for pay, whether pay is receive d or 8
not received, including seasonal, volunteer, part-time, and on-call work; and 9
(51) "Special needs trust" means a trust described in 42 U.S.C. sec. 1396p(d)(4)(A) or 10
(C) for the benefit of one (1) person. Any reference to a trust includes a special 11
needs trust, unless the context otherwise requires. 12
Section 4. KRS 61.635 is amended to read as follows: 13
(1) Each member shall have the right to elect to have his or her retirement allowance 14
payable under any one (1) of the options set forth in this section in lieu of the 15
retirement allowance otherwise payable to the member upon retirement under any 16
of the provisions of KRS 16.505 to 16.652, 61.510 to 61.705, and 78.510 to 78.852. 17
The amount of any optional retirement allowa nce shall be actuarially equivalent to 18
the amount of retirement allowance otherwise payable to the member. 19
(2) Survivorship one hundred percent (100%). The member may elect to receive a 20
decreased retirement allowance during his or her lifetime and have the retirement 21
allowance continued after the member's death to his or her beneficiary during the 22
lifetime of the person. 23
(3) Survivorship sixty-six and two-thirds percent (66-2/3%). The member may elect to 24
receive a decreased retirement allowance during his o r her lifetime and have two -25
thirds (2/3) of the retirement allowance continue after the member's death to his or 26
her beneficiary during the lifetime of the person. 27
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(4) Survivorship fifty percent (50%). The member may elect to receive a decreased 1
retirement allowance during his or her lifetime and have one -half (1/2) of the 2
retirement allowance continued after the member's death to his or her beneficiary 3
during the lifetime of the person. 4
(5) Life with ten (10) years certain. The member less than age seventy -six (76) may 5
elect to receive a monthly retirement allowance during his or her lifetime which 6
shall guarantee payments for one hundred twenty (120) months. If the member dies 7
before receiving payments for one hundred twenty (120) months, the member's 8
beneficiary shall receive the remaining payments monthly, for the duration of the 9
one hundred twenty (120) months' period. However, if the trust is designated as 10
beneficiary, the trustee of the trust may elect to receive a lump -sum payment which 11
shall be the actuarial equivalent to the remaining payments, or the trustee may elect 12
to continue the remaining monthly payments to the trust of the member. If the estate 13
is designated as beneficiary, the estate shall receive a lump -sum payment which 14
shall be the actuarial equivalent to the remaining payments. 15
(6) Life with fifteen (15) years certain. The member less than age sixty -eight (68) may 16
elect to receive a monthly retirement allowance during his or her lifetime which 17
shall guarantee payments for one hundred eigh ty (180) months. If the member dies 18
before receiving payments for one hundred eighty (180) months, the member's 19
beneficiary shall receive the remaining payments monthly for the duration of the 20
one hundred eighty (180) months' period. However, if the trust is designated as 21
beneficiary, the trustee of the trust may elect to receive a lump -sum payment which 22
shall be the actuarial equivalent to the remaining payments, or the trustee may elect 23
to continue the remaining payments to the trust of the member. If the estate is 24
designated as beneficiary, the estate shall receive a lump -sum payment which shall 25
be the actuarial equivalent to the remaining payments. 26
(7) Life with twenty (20) years certain. The member less than age sixty -two (62) may 27
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elect to receive a mon thly retirement allowance during his or her lifetime which 1
shall guarantee payments for two hundred forty (240) months. If the member dies 2
before receiving payments for two hundred forty (240) months, the member's 3
beneficiary shall receive the remaining pa yments for the duration of the two 4
hundred forty (240) months period. However, if the trust is beneficiary, the trustee 5
of the trust may elect to receive a lump -sum payment which shall be the actuarial 6
equivalent to the remaining payments, or the trustee m ay elect to continue the 7
remaining payments to the trust of the member. If the estate is designated as 8
beneficiary, the estate shall receive a lump -sum payment which shall be the 9
actuarial equivalent to the remaining payments. 10
(8) Social Security adjustment options. These options shall be available to any member 11
who has not attained age sixty-two (62) as follows: 12
(a) No survivor rights. The member may elect to receive an increased retirement 13
allowance from his or her effective retirement date through the mo nth he or 14
she attains age sixty -two (62) at which time his or her retirement allowance 15
shall be decreased for the remainder of his or her lifetime; 16
(b) Survivor rights. The member may elect to receive an increased retirement 17
allowance from his or her effec tive retirement date through the month he or 18
she attains age sixty -two (62) based on the option payable under subsection 19
(2) of this section, if the retirement allowance shall be decreased in the month 20
following the month he or she attains age sixty -two (6 2), or the month 21
following the month he or she would have attained age sixty -two (62), in 22
event of the member's death, and have the retirement allowance continue after 23
the member's death to his or her beneficiary during the lifetime of the person. 24
(9) Beneficiary Social Security adjustment option. This option is available to the 25
beneficiary of a deceased member if the beneficiary, who is a person, has not 26
attained age sixty (60), and is eligible to receive Social Security payments at age 27
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sixty (60). The ben eficiary may elect to receive during his or her lifetime an 1
increased retirement allowance based on his or her annual benefit payable for life. 2
The payment shall begin on his or her effective retirement date and continue 3
through the month he or she attains age sixty (60) at which time his or her 4
retirement allowance shall be decreased for the remainder of his or her lifetime. 5
(10) Pop-up option. The member may elect to receive a decreased retirement allowance 6
during his or her lifetime and have the retireme nt allowance continued after the 7
member's death to his or her beneficiary during the lifetime of the person. If the 8
beneficiary dies prior to the member, or if the beneficiary is the member's spouse 9
and they divorce, the member's retirement allowance shall increase to the amount 10
that would have been payable as a single life annuity. 11
(11) Actuarial equivalent refund. A member who began participating in the system prior 12
to January 1, 2014, may elect to receive a one (1) time lump -sum payment which 13
shall be the actuarial equivalent of the amount payable for a period of sixty (60) 14
months under KRS 61.595[ ](1). 15
(12) Partial lump-sum option. 16
(a) No survivor rights. A member may elect to receive a one -time lump -sum 17
payment equal to twelve (12), twenty -four (24), thirty -six (36), forty -eight 18
(48), or sixty (60) monthly retirement allowances payabl e under the 19
applicable retirement formula for the system and receive a reduced monthly 20
retirement allowance payable for his or her lifetime. The lump -sum payment 21
shall be paid in the month the first monthly retirement allowance is payable. 22
(b) Survivor rig hts. A member may elect to receive a one -time lump -sum 23
payment equal to twelve (12), twenty -four (24), thirty -six (36), forty -eight 24
(48), or sixty (60) monthly retirement allowances payable under subsection 25
(2) of this section and receive a reduced monthly retirement allowance 26
payable for his or her lifetime. The lump -sum payment shall be paid in the 27
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month the first monthly retirement allowance is payable. The reduced 1
retirement allowance shall be continued after the member's death to his or her 2
beneficiary during the lifetime of the person. 3
(c) In order to explain the partial lump -sum option to members, the Authority 4
shall: 5
1. Provide, for all retirement estimates that include the partial lump -sum 6
option, including estimates calculated by a member using an automatic 7
estimator available on the Authority's website, the additional months of 8
service a member would have to be employed in order to recoup the 9
actuarial reduction in his or her monthly retirement allowance from 10
selecting a partial lump-sum option at each payment level; and 11
2. Prepare and make available to all members and participating employers 12
in the form of a paper or electronic pamphlet or booklet a summary of 13
the partial lump-sum option, written in a manner that can be understood 14
by the average me mber and sufficiently accurate and comprehensive to 15
reasonably apprise them of the benefits and potential consequences, 16
including federal tax consequences, of taking a partial lump-sum option. 17
(13) The other provisions of this section notwithstanding, the beneficiary of a retired 18
member of the General Assembly shall, after the member's death, receive sixty -six 19
and two-thirds percent (66 -2/3%) of the member's retirement allowance during his 20
or her lifetime if the member of the General Assembly began particip ating in the 21
system prior to January 1, 2014, and has elected this option and has made 22
contributions in accordance with subsection (14) of this section and of KRS 61.560. 23
The retirement allowance of the retired member of the General Assembly shall not 24
be actuarially reduced to provide for this survivor benefit. 25
(14) A member of the General Assembly who began participating in the system prior to 26
January 1, 2014, who wishes to obtain the survivorship option specified in 27
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subsection (13) of this section shall s o notify the Kentucky Public Pensions 1
Authority: 2
(a) Within thirty (30) days after first becoming a member of the General 3
Assembly if he or she is not a member of the General Assembly on July 15, 4
1980; or 5
(b) Within thirty (30) days after July 15, 1980, if he or she is a member of the 6
General Assembly on July 15, 1980. 7
(15) The system shall forward to members of the General Assembly a form on which a 8
member who began participating in the system prior to January 1, 2014, may elect 9
the option provided for in subsections (13) and (14) of this section. 10
(16) (a) The options described in subsections (2), (3), (4), (8)(b), (10), (12)(b), and 11
(13) of this section shall be extended to the member only if the designated 12
beneficiary is a person or a special needs trust. 13
(b) If the beneficiary is a special needs trust, the following shall apply: 14
1. The age of the beneficiary of the special needs trust shall be used to 15
determine the relevant actuarial factors; 16
2. Upon the death of the retired member or beneficiary, the tru stee of 17
that trust shall notify the authority of the death of the retired member 18
or beneficiary; 19
3. Any retirement allowance payments made to a special needs trust that 20
are not properly payable to the special needs trust shall be returned to 21
the authority and shall not be subject to claims for reimbursement 22
from any state for Medicaid benefits paid on behalf of the beneficiary 23
of the special needs trust under any Medicaid payback provision; and 24
4. The authority may promulgate administrative regulations in 25
accordance with KRS Chapter 13A to administer this subsection. 26
Section 5. KRS 61.640 is amended to read as follows: 27
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(1) If a member dies prior to the first day of the month in which the member would 1
have received his or her first retirement allowance, the member's beneficiary shall 2
be eligible for the benefits provided by this section if the member had on file a 3
written designation of a beneficiary with the retirement office as provided by KRS 4
61.542 and the member met the following conditions at the date of his or her death: 5
(a) The member was eligible to retire under KRS 61.559(2) or (3), 61.5956(5)(a) 6
or (b), or 61.597(6)(a) or (b); 7
(b) The member was in active employment or on authorized leave of absence 8
with five (5) or more years of service credit and died prior to his or her normal 9
retirement date or was normal retirement age or older and had at least four (4) 10
years of service credit; or 11
(c) The member was not in active employment or on authorized leave of absence 12
with twelve (12) or more years of service credit and died prior to his or her 13
normal retirement date. 14
(2) If the beneficiary eligible for benefits as provided in subsection (1) of this section is 15
a single person or is a special needs trust, then the beneficiary may elect to receive: 16
(a) A monthly benefit payable for the life of the beneficiary or the life of the 17
beneficiary of the special needs trust that is eq ual to the benefit that would 18
have been paid had the member retired immediately prior to his or her date of 19
death and elected to receive benefits payable under the survivorship one 20
hundred percent (100%) option as provided in KRS 61.635(2); 21
(b) A monthly benefit payable for the life of the beneficiary or the life of the 22
beneficiary of the special needs trust under the beneficiary Social Security 23
adjustment option as provided in KRS 61.635(9) that is the actuarial 24
equivalent to the amount computed under paragraph (a) of this subsection; 25
(c) A monthly benefit payable for a period of sixty (60) months that is the 26
actuarial equivalent to the amount computed under paragraph (a) of this 27
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subsection; 1
(d) A monthly benefit payable for a period of one hundr ed twenty (120) months 2
that is the actuarial equivalent to the amount computed under paragraph (a) of 3
this subsection; 4
(e) If the member began participating in the system prior to January 1, 2014, a 5
monthly benefit payable for: 6
1. Sixty (60) months certain; 7
2. One hundred twenty (120) months certain; 8
3. The actuarial equivalent refund; or 9
4. The Social Security adjustment option; 10
that is equivalent to the benefit the member would have been entitled to 11
receive based on his or her years of service and final compensation at the date 12
of his or her death reduced by the survivorship fifty percent (50%) factor as 13
provided for in KRS 61.635(4), then reduced by fifty percent (50%), and that 14
is the actuarial equivalent to the amount computed under paragraph (a) of th is 15
subsection; or 16
(f) The higher of a refund of the member's accumulated account balance as 17
described in KRS 61.625(1) or one (1) time lump -sum payment which shall 18
be the actuarial equivalent of the amount payable under paragraph (a) of this 19
subsection for a period of sixty (60) months. 20
(3) If the beneficiary eligible for benefits as provided by subsection (1) of this section 21
are multiple beneficiaries or a trust, other than a special needs trust, then the 22
multiple beneficiaries by consensus or the trustee may elect to receive the actuarial 23
equivalent amounts payable under subsection (2)(c), (d), (e), or (f) of this section 24
using the assumption that the beneficiary's age is the same as the member's age. 25
(4) If the beneficiary eligible for benefits as provided in subsection (1) of this section is 26
the member's estate, then the beneficiary shall receive the higher of a refund of the 27
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member's accumulated account balance as described in KRS 61.625(1) or the one 1
(1) time lump -sum payment payable under subsection (2 )(f) of this section, using 2
the assumption that the beneficiary's age is the same as the member's age. 3
(5) Payments of taxable distributions made pursuant to this section shall be subject to 4
state and federal income tax as appropriate. 5
Section 6. KRS 61.690 is amended to read as follows: 6
(1) (a) Except as otherwise provided by this section and KRS 61.705(4), all 7
retirement allowances and other benefits accrued or accruing to any person 8
under the provisions of KRS 61.510 t o 61.705, 16.505 to 16.652, and 78.510 9
to 78.852, and the accumulated account balance and cash securities in the 10
funds created under KRS 61.510 to 61.705, 16.505 to 16.652, and 78.510 to 11
78.852, are hereby exempt from any state, county, or municipal tax, a nd shall 12
not be subject to execution, attachment, garnishment, or any other process, 13
and shall not be assigned. 14
(b) A recipient or their legal representative may direct that the recipient's 15
retirement benefits be paid to a trust that permits the recipient unrestricted 16
access to the amounts held in the trust or if the trust is for the sole benefit of 17
the recipient. The recipient's direction is not an assignment or transfer of 18
benefits. 19
(2) Notwithstanding the provisions of subsection (1) of this section, ret irement benefits 20
accrued or accruing to any person under the provisions of KRS 61.510 to 61.705, 21
16.505 to 16.652, and 78.510 to 78.852 on or after January 1, 1998, shall be subject 22
to the tax imposed by KRS 141.020, to the extent provided in KRS 141.010 a nd 23
141.0215. 24
(3) Qualified domestic relations orders issued by a court or administrative agency shall 25
be honored by the retirement system if: 26
(a) The benefits payable pursuant to the order meet the requirements of a 27
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qualified domestic relations order as pr ovided by 26 U.S.C. sec. 414(p). The 1
retirement system shall follow applicable provisions of 26 U.S.C. sec. 414(p) 2
in administering qualified domestic relations orders; 3
(b) The order meets the requirements established by the retirement system and by 4
subsections (3) to (11) of this section. The board of trustees of the retirement 5
system shall establish the requirements, procedures, and forms necessary for 6
the administration of qualified domestic relations orders by promulgation of 7
administrative regulations in accordance with KRS Chapter 13A; and 8
(c) The order is on the form established by the retirement system pursuant to the 9
retirement system's authority provided under paragraph (3)(b) of this 10
subsection. 11
(4) A qualified domestic relations order shall not: 12
(a) Require the retirement system to take any action not authorized under state or 13
federal law; 14
(b) Require the retirement system to provide any benefit, allowance, or other 15
payment not authorized under state or federal law; 16
(c) Grant or be construed to gr ant the alternate payee any separate right, title, or 17
interest in or to any retirement benefit other than to receive payments from the 18
participant's account in accordance with the administrative regulations 19
promulgated by the retirement system and as provi ded by subsections (3) to 20
(11) of this section; or 21
(d) Grant any separate interest to any person other than the participant. 22
(5) Any qualified domestic relations order submitted to the retirement system shall 23
specify the dollar amount or percentage amount of the participant's benefit to be 24
paid to the alternate payee. In calculating the amount to be paid to the alternate 25
payee, the court or administrative agency that is responsible for issuing the order 26
shall follow the requirements set forth in the administrative regulations promulgated 27
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by the board of trustees. Notwithstanding any other statute to the contrary, the 1
board shall not be required to honor a qualified domestic relations order that does 2
not follow the requirements set forth in the administrative regulations promulgated 3
by the board of trustees. 4
(6) If the qualified domestic relations order meets the requirements establish ed by the 5
system and by subsections (3) to (11) of this section, payments to the alternate 6
payee shall begin under the following conditions: 7
(a) If the participant is retired and is receiving a monthly retirement allowance, 8
the month following the date the retirement system receives a qualified 9
domestic relations order that complies with the administrative regulations 10
promulgated by the retirement system and subsections (3) to (11) of this 11
section; or 12
(b) If the participant is not retired, the month of the participant's effective 13
retirement date in which the first retirement allowance is payable to the 14
participant or the month in which the participant receives a refund of his or 15
her accumulated account balance as provided by KRS 61.625. 16
(7) An alternate paye e's benefits and rights under a qualified domestic relations order 17
shall terminate upon the earlier of: 18
(a) The death of the participant; 19
(b) The death of the alternate payee; or 20
(c) The termination of the participant's benefits under any of the provisions of 21
KRS 16.505 to 16.652, 61.510 to 61.705, and 78.510 to 78.852. 22
(8) An alternate payee shall not receive a monthly payment under a qualified domestic 23
relations order if the participant is not receiving a monthly retirement allowance. 24
(9) The cost of living adjustment provided to the participant pursuant to KRS 61.691 or 25
78.5518 shall be divided between the participant and alternate payee in a qualified 26
domestic relations order as follows: 27
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(a) If the order specifies the alternate payee is to receive a perc entage of the 1
participant's benefit, then the cost of living adjustment shall be divided 2
between the participant and the alternate payee based upon the percentage of 3
the total benefit each is receiving upon the participant's retirement or upon the 4
date the order is approved by the retirement system, whichever is later; or 5
(b) If the order specifies that the alternate payee is to receive a set dollar amount 6
of the participant's benefit, then the order shall specify that: 7
1. The cost of living adjustment shal l be divided between the participant 8
and the alternate payee based upon the percentage of the total benefit 9
each is receiving upon the participant's retirement or upon the date the 10
order is approved by the retirement system, whichever is later; or 11
2. The alternate payee shall receive no cost of living adjustment. 12
If the order does not specify the division of the cost of living adjustment as 13
required by this paragraph, then no cost of living adjustment shall be payable 14
to the alternate payee. If no cost of living adjustment is provided to the 15
alternate payee, then the participant shall receive the full cost of living 16
adjustment he or she would have received if the order had not been applied to 17
the participant's account. 18
(10) Except in cases involving child s upport payments, the retirement system may 19
charge reasonable and necessary fees and expenses to the recipient and the alternate 20
payee of a qualified domestic relations order for the administration of the qualified 21
domestic relations order by the retirement system. All fees and expenses shall be 22
established by administrative regulations promulgated by the board of trustees of 23
the retirement system. The qualified domestic relations order shall specify whether 24
the fees and expenses provided by this subsection shall be paid: 25
(a) Solely by the participant; 26
(b) Solely by the alternate payee; or 27
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(c) Equally shared by the participant and alternate payee. 1
(11) The retirement system shall honor a qualified domestic relations order issued prior 2
to July 15, 2010, if: 3
(a) The order was on file and approved by the retirement system prior to July 15, 4
2010. All benefits, including cost of living adjustments payable to the 5
alternate payee, for orders that meet the requirements of this paragraph shall 6
not be eliminated or reduced as a result of the provisions of subsections (3) to 7
(10) of this section and KRS 61.510(27) and 78.510(26); or 8
(b) The order or an amended version of the order meets the requirements 9
established by this section and the administrative regulations promul gated by 10
the retirement system. The order shall not apply to benefit payments issued by 11
the retirement system prior to the date the order was approved by the 12
retirement system. 13
Section 7. KRS 78.510 is amended to read as follows: 14
As used in KRS 78.510 to 78.852, unless the context otherwise requires: 15
(1) "System" means the County Employees Retirement System created by KRS 78.510 16
to 78.852; 17
(2) "Board" means the board of trustees of the system as provided in KRS 78.782; 18
(3) "County" means any county, or nonprofit organization created and governed by a 19
county, counties, or elected county officers, sheriff and his or her employees, 20
county clerk and his or her employees, circuit clerk and his or her deputies, former 21
circuit clerks or former circuit clerk deputies, or political subdivision or 22
instrumentality, including school boards, cities, charter county governments, urban -23
county governments, consolidated local governments, or unified local governments 24
participating in the system by order appropriate to its governmental structure, as 25
provided in KRS 78.530, and if the board is willing to accept the agency, 26
organization, or corporation, the board being hereby granted the authority to 27
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determine the eligibility of the agency to participate; 1
(4) "School board" means: 2
(a) Any board of education participating in the s ystem by order appropriate to its 3
governmental structure, as provided in KRS 78.530, and if the board is willing 4
to accept the agency or corporation, the board being hereby granted the 5
authority to determine the eligibility of the agency to participate; or 6
(b) A public charter school as defined in KRS 160.1590 if the public charter 7
school satisfies the criteria set by the Internal Revenue Service to participate 8
in a governmental retirement plan; 9
(5) "Examiner" means the medical examiners as provided in KRS 61.665; 10
(6) "Employee" means every regular full -time appointed or elective officer or 11
employee of a participating county and the coroner of a participating county, 12
whether or not he or she qualifies as a regular full -time officer. The term shall not 13
include persons engaged as independent contractors, seasonal, emergency, 14
temporary, and part-time workers. In case of any doubt, the board shall determine if 15
a person is an employee within the meaning of KRS 78.510 to 78.852; 16
(7) "Employer" means a county, as de fined in subsection (3) of this section, the elected 17
officials of a county, or any authority of the county having the power to appoint or 18
elect an employee to office or employment in the county; 19
(8) "Member" means any employee who is included in the member ship of the system 20
or any former employee whose membership has not ceased under KRS 78.535; 21
(9) "Service" means the total of current service and prior service as defined in this 22
section; 23
(10) "Current service" means the number of years and months of employ ment as an 24
employee, on and after July 1, 1958, for which creditable compensation is paid and 25
employee contributions deducted, except as otherwise provided; 26
(11) "Prior service" means the number of years and completed months, expressed as a 27
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fraction of a y ear, of employment as an employee, prior to July 1, 1958, for which 1
creditable compensation was paid. An employee shall be credited with one (1) 2
month of prior service only in those months he or she received compensation for at 3
least one hundred (100) hours of work. Twelve (12) months of current service in the 4
system shall be required to validate prior service; 5
(12) "Accumulated contributions" means the sum of all amounts deducted from the 6
compensation of a member and credited to his or her individual accou nt in the 7
members' account, including employee contributions picked up after August 1, 8
1982, pursuant to KRS 78.610(4), together with interest credited, on the amounts, 9
and any other amounts the member shall have contributed thereto, including interest 10
credited thereon. "Accumulated contributions" shall not include employee 11
contributions that are deposited into accounts established pursuant to 26 U.S.C. sec. 12
401(h) within the fund established in KRS 78.520, as prescribed by KRS 13
78.5536(3)(b); 14
(13) "Creditable compensation": 15
(a) Except as limited by paragraph (c) of this subsection, means all salary, wages, 16
and fees, including payments for compensatory time, paid to the employee as 17
a result of services performed for the employer or for time during which the 18
member is on paid leave, which are includable on the member's federal form 19
W-2 wage and tax statement under the heading "wages, tips, other 20
compensation", including employee contributions picked up after August 1, 21
1982, pursuant to KRS 78.610(4). The creditable compensation of fee officers 22
who receive salary, fees, maintenance, or other perquisites as a result of their 23
official duties is the gross amount received decreased by the cost of salary 24
paid deputies and clerks and the cost of office supplies and oth er official 25
expenses; 26
(b) Includes: 27
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1. Lump-sum bonuses, severance pay, or employer -provided payments for 1
purchase of service credit, which shall be averaged over the employee's 2
service with the system in which it is recorded if it is equal to or greater 3
than one thousand dollars ($1,000); 4
2. Cases where compensation includes maintenance and other perquisites, 5
but the board shall fix the value of that part of the compensation not paid 6
in money; 7
3. Lump-sum payments for creditable compensation paid as a resu lt of an 8
order of a court of competent jurisdiction, the Personnel Board, or the 9
Kentucky Commission on Human Rights, or for any creditable 10
compensation paid in anticipation of settlement of an action before a 11
court of competent jurisdiction, the Personnel Board, or the Kentucky 12
Commission on Human Rights, including notices of violations of state 13
or federal wage and hour statutes or violations of state or federal 14
discrimination statutes, which shall be credited to the fiscal year during 15
which the wages were earned or should have been paid by the employer. 16
This subparagraph shall also include lump -sum payments for reinstated 17
wages pursuant to KRS 61.569, which shall be credited to the period 18
during which the wages were earned or should have been paid by the 19
employer; 20
4. Amounts which are not includable in the member's gross income by 21
virtue of the member having taken a voluntary salary reduction provided 22
for under applicable provisions of the Internal Revenue Code; and 23
5. Elective amounts for qualified transpo rtation fringes paid or made 24
available on or after January 1, 2001, for calendar years on or after 25
January 1, 2001, that are not includable in the gross income of the 26
employee by reason of 26 U.S.C. sec. 132(f)(4); and 27
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(c) Excludes: 1
1. Living allowances, e xpense reimbursements, lump -sum payments for 2
accrued vacation leave, sick leave except as provided in KRS 78.616(5), 3
and other items determined by the board; 4
2. For employees who begin participating on or after September 1, 2008, 5
lump-sum payments for compensatory time; 6
3. Training incentive payments for city officers paid as set out in KRS 7
64.5277 to 64.5279; 8
4. For employees who begin p articipating on or after August 1, 2016, 9
nominal fees paid for services as a volunteer; and 10
5. Any salary or wages paid to an employee for services as a Kentucky 11
State Police school resource officer as defined by KRS 158.441; 12
(14) "Final compensation" means: 13
(a) For a member who begins participating before September 1, 2008, who is 14
employed in a nonhazardous position, the creditable compensation of the 15
member during the five (5) fiscal years he or she was paid at the highest 16
average monthly rate divided by the number of months of service credit 17
during that five (5) year period multiplied by twelve (12). The five (5) years 18
may be fractional and need not be consecutive. If the number of months of 19
service credit during the five (5) year period is less than fort y-eight (48), one 20
(1) or more additional fiscal years shall be used; 21
(b) For a member who is employed in a nonhazardous position, whose effective 22
retirement date is between August 1, 2001, and January 1, 2009, and whose 23
total service credit is at least twenty-seven (27) years and whose age and years 24
of service total at least seventy -five (75), final compensation means the 25
creditable compensation of the member during the three (3) fiscal years the 26
member was paid at the highest average monthly rate divided b y the number 27
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of months of service credit during that three (3) year period multiplied by 1
twelve (12). The three (3) years may be fractional and need not be 2
consecutive. If the number of months of service credit during the three (3) 3
year period is less than twenty-four (24), one (1) or more additional fiscal 4
years shall be used; 5
(c) For a member who begins participating before September 1, 2008, who is 6
employed in a hazardous position, as provided in KRS 78.5520, the creditable 7
compensation of the member dur ing the three (3) fiscal years he or she was 8
paid at the highest average monthly rate divided by the number of months of 9
service credit during that three (3) year period multiplied by twelve (12). The 10
three (3) years may be fractional and need not be conse cutive. If the number 11
of months of service credit during the three (3) year period is less than twenty-12
four (24), one (1) or more additional fiscal years, which may contain less than 13
twelve (12) months of service credit, shall be used; 14
(d) For a member who begins participating on or after September 1, 2008, but 15
prior to January 1, 2014, who is employed in a nonhazardous position, the 16
creditable compensation of the member during the five (5) complete fiscal 17
years immediately preceding retirement divided by f ive (5). Each fiscal year 18
used to determine final compensation must contain twelve (12) months of 19
service credit. If the member does not have five (5) complete fiscal years that 20
each contain twelve (12) months of service credit, then one (1) or more 21
additional fiscal years, which may contain less than twelve (12) months of 22
service credit, shall be added until the number of months in the final 23
compensation calculation is at least sixty (60) months; or 24
(e) For a member who begins participating on or after Sep tember 1, 2008, but 25
prior to January 1, 2014, who is employed in a hazardous position as provided 26
in KRS 78.5520, the creditable compensation of the member during the three 27
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(3) complete fiscal years he or she was paid at the highest average monthly 1
rate di vided by three (3). Each fiscal year used to determine final 2
compensation must contain twelve (12) months of service credit. If the 3
member does not have three (3) complete fiscal years that each contain twelve 4
(12) months of service credit, then one (1) or more additional fiscal years, 5
which may contain less than twelve (12) months of service credit, shall be 6
added until the number of months in the final compensation calculation is at 7
least thirty-six (36) months; 8
(15) "Final rate of pay" means the actual r ate upon which earnings of an employee were 9
calculated during the twelve (12) month period immediately preceding the 10
member's effective retirement date, and shall include employee contributions 11
picked up after August 1, 1982, pursuant to KRS 78.610(4). The rate shall be 12
certified to the system by the employer and the following equivalents shall be used 13
to convert the rate to an annual rate: two thousand eighty (2,080) hours for eight (8) 14
hour workdays, one thousand nine hundred fifty (1,950) hours for seven and one-15
half (7.5) hour workdays, two hundred sixty (260) days, fifty -two (52) weeks, 16
twelve (12) months, one (1) year; 17
(16) "Retirement allowance" means the retirement payments to which a member is 18
entitled; 19
(17) "Actuarial equivalent" means a benefit of equal value when computed upon the 20
basis of the actuarial tables adopted by the board. In cases of disability retirement, 21
the options authorized by KRS 61.635 shall be computed by adding ten (10) years 22
to the age of the member, unless the member has chose n the Social Security 23
adjustment option as provided for in KRS 61.635(8), in which case the member's 24
actual age shall be used. For members who begin participating in the system prior 25
to January 1, 2014, no disability retirement option shall be less than the same option 26
computed under early retirement; 27
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(18) "Normal retirement date", unless otherwise provided in KRS 78.510 to 78.852, 1
means: 2
(a) For a member with service in a nonhazardous position, the sixty -fifth birthday 3
of a member; 4
(b) For a member with se rvice in a hazardous position who begins participating 5
before September 1, 2008, the first day of the month following a member's 6
fifty-fifth birthday; or 7
(c) For a member with service in a hazardous position who begins participating 8
on or after September 1 , 2008, the first day of the month following a 9
member's sixtieth birthday; 10
(19) "Fiscal year" of the system means the twelve (12) months from July 1 through the 11
following June 30, which shall also be the plan year. The "fiscal year" shall be the 12
limitation year used to determine contribution and benefits limits as set out in 26 13
U.S.C. sec. 415; 14
(20) "Agency reporting official" means the person designated by the participating 15
employer who shall be responsible for forwarding all employer and employee 16
contributions and a record of the contributions to the system and for performing 17
other administrative duties pursuant to KRS 78.510 to 78.852; 18
(21) "Regular full-time positions," as used in subsection (6) of this section, shall mean 19
all positions that average one hundred (100) or more hours per month, determined 20
by using the number of hours actually worked in a calendar or fiscal year, or eighty 21
(80) or more hours per month in the case of noncertified employees of school 22
boards, determined by using the number of ho urs actually worked in a calendar or 23
school year, unless otherwise specified, except: 24
(a) Seasonal positions, which although temporary in duration, are positions which 25
coincide in duration with a particular season or seasons of the year and that 26
may recur regularly from year to year, in which case the period of time shall 27
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not exceed nine (9) months, except for employees of school boards, in which 1
case the period of time shall not exceed six (6) months; 2
(b) Emergency positions which are positions utilized by the employer during: 3
1. An emergency as determined by the employer for a period not 4
exceeding thirty (30) working days and are nonrenewable; or 5
2. A state of emergency declared by the President of the United States or 6
the Governor of the Commonwealth of K entucky that are created or 7
filled specifically for addressing the employer's needs during and as a 8
result of the declared emergency; 9
(c) Temporary positions that are positions of employment with a participating 10
agency for a period of time not to exceed tw elve (12) months and not 11
renewable; 12
(d) Probationary positions which are positions of employment with a participating 13
employer that do not exceed twelve (12) months and that are used uniformly 14
by the participating agency on new employees who would otherwis e be 15
eligible for participation in the system. Probationary positions shall not be 16
renewable by the participating employer for the same employee, unless the 17
employee has not been employed with the participating employer for a period 18
of at least twelve (12) months; or 19
(e) Part-time positions that are positions that may be permanent in duration, but 20
that require less than a calendar or fiscal year average of one hundred (100) 21
hours of work per month, determined by using the number of months actually 22
worked within a calendar or fiscal year, in the performance of duty, except in 23
case of noncertified employees of school boards, the school term average shall 24
be eighty (80) hours of work per month, determined by using the number of 25
months actually worked in a calen dar or school year, in the performance of 26
duty; 27
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(22) "Alternate participation plan" means a method of participation in the system as 1
provided for by KRS 78.530(3); 2
(23) "Retired member" means any former member receiving a retirement allowance or 3
any former member who has on file at the retirement office the necessary 4
documents for retirement benefits and is no longer contributing to the system; 5
(24) "Current rate of pay" means the member's actual hourly, daily, weekly, biweekly, 6
monthly, or yearly rate of pay converted to an annual rate as defined in final rate of 7
pay. The rate shall be certified by the employer; 8
(25) "Beneficiary" means the person, persons, estate, trust, special needs trust, or trustee 9
designated by the member in accordance with KRS 61.542 or 61.705 to receive any 10
available benefits in the event of the member's death. As used in KRS 78.5536, 11
beneficiary shall not mean an estate, trust, or trustee; 12
(26) "Recipient" means the retired member, the person or persons designated as 13
beneficiary by the member and drawing a retirement allowance as a result of the 14
member's death, or a dependent child drawing a retirement allowance. An alternate 15
payee of a qualified domestic relations order shall not be considered a recipient, 16
except for purposes of KRS 61.623; 17
(27) "Person" means a natural person; 18
(28) "School term or year" means the twelve (12) months from July 1 through the 19
following June 30; 20
(29) "Retirement office" means the Kentucky Public Pensions Authority office building 21
in Frankfort, unless otherwise designated by the Kentucky Public Pensions 22
Authority; 23
(30) "Vested" for purposes of determining eligibility for purchasing service credit un der 24
KRS 61.552 means the employee has at least forty -eight (48) months of service if 25
age sixty-five (65) or older or at least sixty (60) months of service if under the age 26
of sixty-five (65). For purposes of this subsection, "service" means service in the 27
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systems administered by the Kentucky Retirement Systems and County Employees 1
Retirement System; 2
(31) "Participating" means an employee is currently earning service credit in the system 3
as provided in KRS 78.615; 4
(32) "Month" means a calendar month; 5
(33) "Membership date" means the date upon which the member began participating in 6
the system as provided in KRS 78.615; 7
(34) "Participant" means a member, as defined by subsection (8) of this section, or a 8
retired member, as defined by subsection (23) of this section; 9
(35) "Qualified domestic relations order" means any judgment, decree, or order, 10
including approval of a property settlement agreement, that: 11
(a) Is issued by a court or administrative agency; and 12
(b) Relates to the provision of child support, alimon y payments, or marital 13
property rights to an alternate payee; 14
(36) "Alternate payee" means a spouse, former spouse, child, or other dependent of a 15
participant, who is designated to be paid retirement benefits in a qualified domestic 16
relations order; 17
(37) "Accumulated employer credit" means the employer pay credit deposited to the 18
member's account and interest credited on such amounts as provided by KRS 19
78.5512 and 78.5516; 20
(38) "Accumulated account balance" means: 21
(a) For members who began participating in the system prior to January 1, 2014, 22
the member's accumulated contributions; or 23
(b) For members who began participating in the system on or after January 1, 24
2014, in the hybrid cash balance plan as provided by KRS 78.5512 and 25
78.5516, the combined sum of t he member's accumulated contributions and 26
the member's accumulated employer credit; 27
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(39) "Volunteer" means an individual who: 1
(a) Freely and without pressure or coercion performs hours of service for an 2
employer participating in one (1) of the systems admi nistered by Kentucky 3
Retirement Systems or the County Employees Retirement System without 4
receipt of compensation for services rendered, except for reimbursement of 5
actual expenses, payment of a nominal fee to offset the costs of performing 6
the voluntary services, or both; and 7
(b) If a retired member, does not become an employee, leased employee, or 8
independent contractor of the employer for which he or she is performing 9
volunteer services for a period of at least twelve (12) months following the 10
retired member's most recent retirement date; 11
(40) "Nominal fee" means compensation earned for services as a volunteer that does not 12
exceed five hundred dollars ($500) per month with each participating employer. 13
Compensation earned for services as a volunteer from m ore than one (1) 14
participating employer during a month shall not be aggregated to determine whether 15
the compensation exceeds the five hundred dollars ($500) per month maximum 16
provided by this subsection; 17
(41) "Nonhazardous position" means a position that d oes not meet the requirements of 18
KRS 78.5520 or has not been approved by the board as a hazardous position; 19
(42) "Hazardous position" means a position that meets the requirements of KRS 78.5520 20
and has been approved by the board as hazardous; 21
(43) "Level-percentage-of-payroll amortization method" means a method of determining 22
the annual amortization payment on the unfunded actuarial accrued liability as 23
expressed as a percentage of payroll over a set period of years. Under this method, 24
the percentage of pay roll shall be projected to remain constant for all years 25
remaining in the set period and the unfunded actuarially accrued liability shall be 26
projected to be fully amortized at the conclusion of the set period; 27
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(44) "Increment" means twelve (12) months of s ervice credit which are purchased. The 1
twelve (12) months need not be consecutive. The final increment may be less than 2
twelve (12) months; 3
(45) "Last day of paid employment" means the last date employer and employee 4
contributions are required to be reported in accordance with KRS 16.543, 61.543, or 5
78.615 to the retirement office in order for the employee to receive current service 6
credit for the month. Last day of paid employment does not mean a date the 7
employee receives payment for accrued leave, whethe r by lump sum or otherwise, 8
if that date occurs twenty-four (24) or more months after previous contributions; 9
(46) "Objective medical evidence" means reports of examinations or treatments; medical 10
signs which are anatomical, physiological, or psychological abnormalities that can 11
be observed; psychiatric signs which are medically demonstrable phenomena 12
indicating specific abnormalities of behavior, affect, tho ught, memory, orientation, 13
or contact with reality; or laboratory findings which are anatomical, physiological, 14
or psychological phenomena that can be shown by medically acceptable laboratory 15
diagnostic techniques, including but not limited to chemical tes ts, 16
electrocardiograms, electroencephalograms, X-rays, and psychological tests; 17
(47) "Hazardous disability" as used in KRS 78.510 to 78.852 means a disability which 18
results in an employee's total incapacity to continue as an employee in a hazardous 19
position, but the employee is not necessarily deemed to be totally and permanently 20
disabled to engage in other occupations for remuneration or profit; 21
(48) "Act in line of duty" means, for employees in hazardous positions under KRS 22
78.5520: 23
(a) A single act occurring which was required in the performance of the principal 24
duties of the hazardous position as defined by the job description; or 25
(b) A single act of violence committed against the employee that is found to be 26
related to his or her job duties, whether or not it occurs at his or her job site; 27
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(49) "Dependent child" means a child in the womb and a natural or legally adopted child 1
of the member who has neither attained age eighteen (18) nor married or who is an 2
unmarried full-time student who has not attained age twenty-two (22). Solely in the 3
case of a member who dies as a direct result of an act in line of duty as defined in 4
this section, dies as a result of a duty -related injury as defined in KRS 61.621, 5
becomes totally and permanently disabled as a direct result of an act in the line of 6
duty as defined in this section, or becomes disabled as a result of a duty -related 7
injury as defined in KRS 61.621 and is eligible for the benefits provided by KRS 8
61.621(5)(a), "dependent child" also means a naturally or le gally adopted disabled 9
child of the member, regardless of the child's age, if the child has been determined 10
to be eligible for federal Social Security disability benefits or is being claimed as a 11
qualifying child for tax purposes due to the child's total and permanent disability; 12
(50) "Normal retirement age" means the age at which the member meets the 13
requirements for his or her normal retirement date as provided by subsection (18) of 14
this section; 15
(51) "Disability retirement date" means the first day of th e month following the last day 16
of paid employment; 17
(52) "Monthly average pay" means: 18
(a) In the case of a member who dies as a direct result of an act in line of duty as 19
defined in KRS 16.505 or who dies as a result of a duty -related injury as 20
defined in K RS 61.621, the higher of the member's monthly final rate of pay 21
or the average monthly creditable compensation earned by the deceased 22
member during his or her last twelve (12) months of employment; or 23
(b) In the case where a member becomes totally and perm anently disabled as a 24
direct result of an act in line of duty as defined in KRS 16.505 or becomes 25
disabled as a result of a duty -related injury as defined in KRS 61.621 and is 26
eligible for the benefits provided by KRS 61.621(5)(a), the higher of the 27
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member's monthly final rate of pay or the average monthly creditable 1
compensation earned by the disabled member during his or her last twelve 2
(12) months of employment prior to the date the act in line of duty or duty -3
related injury occurred; 4
(53) "Authority" me ans the Kentucky Public Pensions Authority as provided by KRS 5
61.505; 6
(54) "Executive director" means the executive director of the Kentucky Public Pensions 7
Authority;[ and] 8
(55) "Gainful employment" means work in any capacity that is or may be performed 9
with regularity and is or may be usually done for pay, whether pay is received or 10
not received, including seasonal, volunteer, part-time, and on-call work; and 11
(56) "Special needs trust" means a trust described in 42 U.S.C. sec. 1396p(d)(4)(A) or 12
(C) for th e benefit of one (1) person. Any reference to a trust includes a special 13
needs trust, unless the context otherwise requires. 14
Section 8. KRS 78.5532 is amended to read as follows: 15
(1) If a member dies prior to the first d ay of the month in which the member would 16
have received his or her first retirement allowance, the member's beneficiary shall 17
be eligible for the benefits provided by this section if the member had on file a 18
written designation of a beneficiary with the re tirement office as provided by KRS 19
61.542 and the member met the following conditions at the date of his or her death: 20
(a) 1. The member had service in a nonhazardous position and was eligible to 21
retire under KRS 78.5510(2) or (3) or 78.5512(6); or 22
2. The member had service in a hazardous position and was eligible to 23
retire under KRS 78.5514(2) or (3) or 78.5516(6); 24
(b) The member was in active employment or on authorized leave of absence 25
with five (5) or more years of service credit and died prior to his or her normal 26
retirement date or in the case of a nonhazardous member, was normal 27
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retirement age or older and had at least four (4) years of service credit; or 1
(c) The member was not in active employment or on authorized leave of absence 2
with twelve (12) or more years of service credit and died prior to his or her 3
normal retirement date. 4
(2) If the beneficiary eligible for benefits as provided in subsection (1) of this section is 5
a single person or a special needs trust, then the beneficiary may elect to receive: 6
(a) A monthly benefit payable for the life of the beneficiary or the life of the 7
beneficiary of the special needs trust that is equal to the benefit that would 8
have been paid had the member retired immediately prior to his or her date of 9
death and el ected to receive benefits payable under the survivorship one 10
hundred percent (100%) option as provided in KRS 61.635(2); 11
(b) A monthly benefit payable for the life of the beneficiary or the life of the 12
beneficiary of the special needs trust under the benef iciary Social Security 13
adjustment option as provided in KRS 61.635(9) that is the actuarial 14
equivalent to the amount computed under paragraph (a) of this subsection; 15
(c) A monthly benefit payable for a period of sixty (60) months that is the 16
actuarial equi valent to the amount computed under paragraph (a) of this 17
subsection; 18
(d) A monthly benefit payable for a period of one hundred twenty (120) months 19
that is the actuarial equivalent to the amount computed under paragraph (a) of 20
this subsection; 21
(e) If the member began participating prior to January 1, 2014, a monthly benefit 22
payable for a period of one hundred twenty (120) months that is equivalent to 23
the benefit the member would have been entitled to receive based on his or 24
her years of service and final compensation at the date of his or her death 25
reduced by the survivorship fifty percent (50%) factor as provided for in KRS 26
61.635(4), then reduced by fifty percent (50%), and that is the actuarial 27
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equivalent to the amount computed under paragraph (a) of this subsection; or 1
(f) The higher of a refund of the member's accumulated acc ount balance as 2
described in KRS 61.625(1) or one (1) time lump -sum payment which shall 3
be the actuarial equivalent of the amount payable under paragraph (a) of this 4
subsection for a period of sixty (60) months. 5
(3) If the beneficiary eligible for benefits as provided by subsection (1) of this section 6
is multiple beneficiaries or a trust, other than a special needs trust, then the 7
multiple beneficiaries by consensus or the trustee may elect to receive the actuarial 8
equivalent amounts payable under subsectio n (2)(c), (d), (e), or (f) of this section 9
using the assumption that the beneficiary's age is the same as the member's age. 10
(4) If the beneficiary eligible for benefits as provided in subsection (1) of this section is 11
the member's estate, then the benefici ary shall receive the higher of a refund of the 12
member's accumulated account balance as described in KRS 61.625(1) or the one 13
(1) time lump -sum payment payable under subsection (2)(f) of this section, using 14
the assumption that the beneficiary's age is the same as the member's age. 15
(5) Payments of taxable distributions made pursuant to this section shall be subject to 16
state and federal income tax as appropriate. 17
(6) (a) The beneficiary of a member with service in a nonhazardous position who 18
dies as a result of a duty-related injury may be eligible for benefits based upon 19
the definitions, criteria, and benefits specified by KRS 61.621. 20
(b) The beneficiary of a member with service in a hazardous position who dies as 21
a direct result of an act in line of duty may be eligible for benefits from the 22
system based upon the definitions, criteria, and benefits specified by KRS 23
78.5534. 24
Section 9. KRS 161.525 is amended to read as follows: 25
(1) Upon death of a member in active contributi ng status at the time of death, who was 26
eligible to retire by reason of service, the spouse, if named as the primary 27
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beneficiary of the member's retirement account, or in the absence of an eligible 1
spouse a legal dependent of the member, if named as the pr imary beneficiary, shall 2
be entitled to elect, in lieu of a refund of the member's accumulated account balance 3
or benefits provided in KRS 161.520, an annuity actuarially equivalent at the 4
attained age of the beneficiary to the annuity that would have been paid to the 5
deceased member had retirement been effective on the day immediately preceding 6
the member's death. Under the provisions of KRS 61.680, benefits shall be 7
processed as if the member retired for service. In exercising this right the spouse or 8
legal dependent shall be limited to selecting an option providing either a straight 9
life annuity with refundable balance or a term certain option. A spouse may receive 10
the annuity provided by this section at the same time as children are qualifying for 11
survivors' benefits under the provisions of KRS 161.520; however, a legal 12
dependent, other than a spouse, may not receive these payments if children have 13
qualified for benefits under that section. 14
(2) A spouse qualifying for an annuity under subsection (1) of th is section may defer 15
the payments in order to reduce the actuarial discounts to be applied due to age. 16
(3) Upon death of a member in active contributing status at the time of his or her death, 17
who had a minimum of twenty -seven (27) years of service, the sp ouse, if named as 18
the primary beneficiary of the member's account shall be entitled to a monthly 19
minimum allowance of three hundred dollars ($300) as the basic straight life 20
annuity. This provision applies to surviving spouses of members who were 21
receiving benefit payments under KRS 161.520 as of June 30, 1986, and to 22
surviving spouses of members who die on or after July 1, 1986. 23
(4) If the surviving spouse or legal dependent eligible for a benefit under subsection 24
(1) of this section is the sole beneficiar y of a special needs trust, the annuity 25
payments made under subsection (1) of this section shall be made payable to the 26
special needs trust. 27
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Section 10. KRS 161.640 is amended to read as follows: 1
(1) Retirement annuities shall be payable monthly. The first payment to an annuitant 2
shall be made at the payment date at the end of one (1) full payment period after his 3
retirement and shall consist of one (1) regular monthly payment. Retirement for a 4
member receiving one (1) fu ll year of service credit during a fiscal year shall be no 5
earlier than July 1 next following the end of such fiscal year. Notwithstanding any 6
other statutory provisions to the contrary, members filling positions that 7
customarily require twelve (12) months of service during a fiscal year cannot retire 8
prior to July 1 without a corresponding pro rata reduction in salary and service 9
credit. The board of trustees may determine which positions customarily require 10
twelve (12) months of service during a fiscal year. 11
(2) The board of trustees may enter into agreements with retired members for payroll 12
deductions when it is deemed in the best interest of the retired members and the 13
retirement system. 14
(3) (a) All new retirees, on or after July 1, 1998, shall receive t heir monthly annuity 15
checks by electronic fund transfer. All retiree, beneficiary, and survivor 16
monthly allowance payments, except as otherwise provided in paragraph (b) 17
or (c) of this subsection, shall be made by electronic fund transfer. Except as 18
provided in paragraph (b) or (c) of this subsection, all monthly payments shall 19
be made payable only to an account solely in the name of the retiree, 20
beneficiary, or survivor as an individual and natural person, or to a joint 21
account in the name of the retiree, beneficiary, or survivor as an individual 22
and natural person and another individual and natural person. 23
(b) If the retiree, beneficiary, or survivor is a resident of a nursing or assisted-care 24
home, monthly payments may be made to the order of the nursing or assisted-25
care home for the benefit of the retiree, beneficiary, or survivor by including 26
the retiree's, beneficiary's, or survivor's name. Monthly annuity checks so paid 27
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to a nursing or assisted -care home may be sent by mail rather than electronic 1
fund transfer. 2
(c) If the retiree, beneficiary, or survivor is the sole beneficiary of a special 3
needs trust: 4
1. Monthly payments shall be made to the order of the special needs 5
trust, and checks may be sent by mail to the special needs trust for the 6
benefit of the retiree, beneficiary, or survivor; 7
2. Upon the death of the retiree, beneficiary, or survivor of a special 8
needs trust, the trustee of that trust shall notify the Teachers' 9
Retirement System; 10
3. Any payments made to a special needs trust that are not properly 11
payable to the special needs trust shall be returned to the Teachers' 12
Retirement System and shall not be subject to claims for 13
reimbursement from any state for Medicaid benefits paid on behalf of 14
the beneficiary under any Medicaid payback provisi on, and any 15
overpayments of retirement allowance received by the special needs 16
trust shall be repaid to the Teachers' Retirement System; and 17
4. The Teachers' Retirement System may promulgate administrative 18
regulations in accordance with KRS Chapter 13A to administer this 19
paragraph. 20
Section 11. KRS 161.700 is amended to read as follows: 21
(1) Except as otherwise provided by this section and KRS 161.655(5), the right of a 22
member to a retirement allowance and to the return of contributions, any benefit or 23
right accrued or accruing to any person under KRS 161.220 to 161.716, and the 24
money in the v arious funds established pursuant to KRS 161.220 to 161.716 are 25
hereby exempt from any state or municipal tax, and shall not be subject to 26
execution, garnishment, attachment, or other process, and shall not be assigned. 27
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(2) Notwithstanding the provisions of subsection (1) of this section, retirement 1
allowances and other benefits accrued or accruing under KRS 161.220 to 161.716 2
to a person who is the beneficiary of a special needs trust may be assigned to the 3
trustee of that s pecial needs trust. Any retirement allowances or other benefits 4
assigned to a special needs trust under this subsection, or accrued or accruing 5
under KRS 161.220 to 161.716 to a person who is the beneficiary of a special 6
needs trust, shall cease upon the d eath of the beneficiary of the special needs 7
trust and shall not be subject to state reimbursement for Medicaid benefits paid 8
on behalf of the beneficiary under a Medicaid payback provision. 9
(3)[(2)] Notwithstanding subsection (1) of this section, retireme nt benefits accrued or 10
accruing to any person under this retirement system on or after January 1, 1998, 11
shall be subject to the tax imposed by KRS 141.020, to the extent provided in KRS 12
141.010 and 141.0215. 13
(4)[(3)] Retirement allowance, disability allowa nce, accumulated account balance, or 14
any other benefit under the retirement system shall not be classified as marital 15
property pursuant to KRS 403.190(1), except to the extent permitted under KRS 16
403.190(4). Retirement allowance, disability allowance, accu mulated contributions, 17
or any other benefit under the retirement system shall not be considered as an 18
economic circumstance during the division of marital property in an action for 19
dissolution of marriage pursuant to KRS 403.190(1)(d), except to the extent 20
permitted under KRS 403.190(4). 21
(5)[(4)] Qualified domestic relations orders issued by a court or administrative agency 22
shall be honored by the retirement system if: 23
(a) The benefits payable pursuant to the order meet the requirements of a 24
qualified domestic relations order as provided by 26 U.S.C. sec. 414(p). The 25
retirement system shall follow applicable provisions of 26 U.S.C. sec. 414(p) 26
in administering qualified domestic relations orders; 27
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(b) The order meets the requirements established by the retire ment system and by 1
subsections (5)[(4)] to (13)[(12)] of this section. The board of trustees of the 2
retirement system shall establish the requirements, procedures, and forms 3
necessary for the administration of qualified domestic relations order by 4
promulgation of administrative regulations in accordance with KRS Chapter 5
13A; and 6
(c) The order is on the form established by the retirement system pursuant to the 7
retirement system's authority provided under paragraph (b) of this subsection. 8
(6)[(5)] A qualified domestic relations order shall not: 9
(a) Require the retirement system to take any action not authorized under state or 10
federal law; 11
(b) Require the retirement system to provide any benefit, allowance, or other 12
payment not authorized under state or federal law; 13
(c) Grant or be construed to grant the alternate payee any separate right, title, or 14
interest in or to any retirement benefit other than to receive payments from the 15
participant's account in accordance with the administrative regulations 16
promulgated by the system and as provided by subsections (5)[(4)] to 17
(13)[(12)] of this section; or 18
(d) Grant any separate interest to any person other than the participant. 19
(7)[(6)] Any qualified domestic relations order submitted to the retirement system 20
shall specify the dollar amount or percentage amount of the participant's benefit to 21
be paid to the alternate payee. In calculating the amount to be paid to the alternate 22
payee, the court or administrative agency that is responsible for issuing the order 23
shall follow the requirements set forth in the administrative regulations promulgated 24
by the board of trustees. Notwithstanding any other statute to the contrary, the 25
board shall not be required to honor a qualified domestic relations order that does 26
not follow the re quirements set forth in the administrative regulations promulgated 27
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by the board of trustees. 1
(8)[(7)] If the qualified domestic relations order meets the requirements established by 2
the system and by subsections (5)[(4)] to (13)[(12)] of this section, payments to the 3
alternate payee shall be distributed under the following conditions: 4
(a) If the participant is retired and is receiving a monthly retirement allowance, 5
the month following the date the retirement system receives a qualified 6
domestic relations o rder that complies with the administrative regulations 7
promulgated by the retirement system and subsections (5)[(4)] to (13)[(12)] of 8
this section; or 9
(b) If the participant is not retired, the month of the participant's effective 10
retirement date in which the first retirement allowance is payable to the 11
participant or the month in which the participant receives a refund of his or 12
her accumulated account balance as provided by KRS 161.470(6). 13
(9)[(8)] An alternate payee's benefits and rights under a qualifie d domestic relations 14
order shall terminate upon the earlier of: 15
(a) The death of the participant; 16
(b) The death of the alternate payee; or 17
(c) The termination of benefits to the participant under any provision of KRS 18
161.220 to 161.716. 19
(10)[(9)] An altern ate payee shall not receive a monthly payment under a qualified 20
domestic relations order if the participant is not receiving a monthly retirement 21
allowance. 22
(11)[(10)] The cost of living adjustment provided to the participant pursuant to KRS 23
161.620 shall be divided between the participant and alternate payee in a qualified 24
domestic relations order as follows: 25
(a) If the order specifies the alternate payee is to receive a percentage of the 26
participant's benefit, then the cost of living adjustment shall be d ivided 27
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between the participant and the alternate payee based upon the percentage of 1
the total benefit each is receiving upon the participant's retirement or upon the 2
date the order is approved by the retirement system, whichever is later; or 3
(b) If the order specifies that the alternate payee is to receive a set dollar amount 4
of the participant's benefit, then the order shall specify that: 5
1. The cost of living adjustment shall be divided between the participant 6
and the alternate payee based upon the percen tage of the total benefit 7
each is receiving upon the participant's retirement or upon the date the 8
order is approved by the retirement system, whichever is later; or 9
2. The alternate payee shall receive no cost of living adjustment. 10
If the order does not specify the division of the cost of living adjustment as 11
required by this paragraph, then no cost of living adjustment shall be payable 12
to the alternate payee. If no cost of living adjustment is provided to the 13
alternate payee, then the participant shall r eceive the full cost of living 14
adjustment he or she would have received if the order had not been applied to 15
the participant's account. 16
(12)[(11)] Except in cases involving child support payments, the retirement system may 17
charge reasonable and necessary fees and expenses to the recipient and the alternate 18
payee of a qualified domestic relations order for the administration of the qualified 19
domestic relations order by retirement system. All fees and expenses shall be 20
established by the administrative regulations promulgated by the board of trustees 21
of the retirement system. The qualified domestic relations order shall specify 22
whether the fees and expenses provided by this subsection shall be paid: 23
(a) Solely by the participant; 24
(b) Solely by the alternate payee; or 25
(c) Equally shared by the participant and alternate payee. 26
(13)[(12)] The retirement system shall honor a qualified domestic relations orde r issued 27
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prior to July 15, 2010, for prospective benefit payments if the order or an amended 1
version of the order meets the requirements established by this section and the 2
administrative regulations promulgated by the retirement system. The order shall 3
not apply to benefit payments issued by the retirement system prior to the date the 4
order was approved by the retirement system. 5
Section 12. KRS 21.420 is amended to read as follows: 6
(1) After the death of a member who began participating in the Judicial Retirement 7
Plan prior to January 1, 2014, who at the time of his or her death was receiving a 8
service retirement allowance (other than an actuarially reduced allowance under 9
subsection (3) of KRS 21.400), or was receiving a disability retirement allowance, 10
his or her surviving spouse is entitled to receive during his or her lifetime a 11
monthly allowance equal to one-half (1/2) of that he or she was receiving. 12
(2) (a) If a member who began participating in the Judicial Retirement Plan prior to 13
January 1, 2014, dies before retirement and before reaching normal retirement 14
age, without regard to length of service, his or her surviving spouse is entitled 15
to receive during his or her lifetime a monthly allowance equal to one -half 16
(1/2) of the monthly allowance the member would have received commencing 17
at his or her normal retirement date if he or she had continued in service until 18
that date and had t hen retired, computed however on the basis of his or her 19
final compensation at time of death. 20
(b) If a member who began participating in the Judicial Retirement Plan prior to 21
January 1, 2014, dies before retirement and after reaching normal retirement 22
age, his or her surviving spouse is entitled to receive during his or her 23
lifetime a monthly allowance equal to one-half (1/2) of the monthly allowance 24
the member would have been entitled to, on the basis of his or her years of 25
service, had he or she retired on the date of his death. 26
(3) If a member who began participating in the Judicial Retirement Plan prior to 27
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January 1, 2014, dies after retirement and was at the time of his or her death 1
receiving an actuarially reduced allowance under subsection (3) of KRS 21.400, or 2
was not at the time of his or her death receiving a retirement allowance but had 3
acquired the vested right under subsection (2) of KRS 21.400 to have received an 4
allowance upon reaching normal retirement age, his or her surviving spouse is 5
entitled to receive during his or her lifetime a monthly allowance equal to one -half 6
(1/2) of the monthly allowance the member would have received when he or she 7
reached normal retirement age. 8
(4) A member, or a retiree who began participating in the plan prior to January 1, 2014, 9
who has not commenced drawing retirement benefits pursuant to KRS 21.400, and 10
who dies without a spouse or eligible children entitled to survivor's benefits, may 11
designate a beneficiary who shall receive the accumulated contributions o f the 12
member. A member, or a retiree who began participating in the plan on or after 13
January 1, 2014, who has not commenced drawing retirement benefits pursuant to 14
KRS 21.402, who dies without a spouse or eligible children entitled to survivor's 15
benefits, may designate a beneficiary who shall receive the accumulated account 16
balance of the member. A trust, including a special needs trust, may be designated 17
as a beneficiary. Absent a designation by the member or retiree, the accumulated 18
contributions or accum ulated account balance, as applicable based upon the 19
member's participation date, shall be paid to the member's estate. 20
(5) A member who began participating in the plan prior to January 1, 2014, who 21
commences drawing retirement benefits pursuant to KRS 21. 400 or 21.410, and 22
who dies without a spouse or eligible children entitled to survivor's benefits and 23
before the benefits received by the member equal the accumulated contributions of 24
the member, may designate a beneficiary who shall receive the balance of the 25
accumulated contributions of the member. A member who began participating in 26
the plan on or after January 1, 2014, who commences drawing retirement benefits 27
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pursuant to KRS 21.402 or 21.410, and who dies without a spouse or eligible 1
children entitled to survivor's benefits and before the benefits received by the 2
member equal the accumulated account balance of the member, may designate a 3
beneficiary who shall receive the balance of the accumulated account balance of the 4
member. A trust, including a spec ial needs trust, may be designated as a 5
beneficiary. Any benefits received shall be deducted from the accumulated 6
contributions or accumulated account balance. Absent a designation by the member, 7
the balance of the accumulated contributions or accumulated account balance, as 8
applicable based upon the member's participation date, shall be paid to the 9
member's estate. 10
(6) A member who begins participating in the Judicial Retirement Plan prior to January 11
1, 2014, may designate a beneficiary who shall receive t he balance of the 12
accumulated contributions of the member, in the event survivor's benefits are being 13
paid pursuant to subsection (1), (2), or (3) of this section, and the survivor dies prior 14
to receiving benefits equal to the member's contributions. In th is event, the 15
provisions of subsection (5) of this section shall apply as to offset and payment. 16
(7) A member who begins participating in the Judicial Retirement Plan prior to January 17
1, 2014, may, prior to the drawing of benefits, elect in writing to the executive 18
secretary of the Judicial Form Retirement System, to take an optional retirement 19
allowance which shall be actuarially equivalent to the amount of retirement 20
allowance otherwise payable to the member and the member's spouse. If the 21
member dies after retirement, the option chosen shall prevail over the provisions of 22
subsections (1) and (3) of this section. If the member dies prior to retirement, the 23
option chosen shall prevail over the provisions of subsection (2) of this section. The 24
options shall include: 25
(a) Survivorship one hundred percent (100%). The member may elect to receive a 26
decreased retirement allowance during the member's lifetime and have the 27
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retirement allowance continued after death to the spouse during the lifetime of 1
the spouse. 2
(b) Survivorship sixty -six and two -thirds percent (66 2/3%). The member may 3
elect to receive a decreased retirement allowance during the member's lifetime 4
and have two -thirds (2/3) of the retirement allowance continue after death to 5
the spouse during the lifetime of the spouse. 6
If a retiree, living or deceased, chose either of the optional retirement benefit 7
allowances specified in paragraphs (a) or (b) of this subsection from July 15, 1994, 8
to July 15, 1998, the optional allowance shall be adjusted according ly, and the new 9
benefit shall commence August 1, 1998. Each recipient of benefits from the plan, 10
who retired from July 15, 1994, to July 15, 1998, shall have a one -time opportunity 11
to select an optional retirement allowance. The election by the recipient s hall be 12
prior to August 1, 1998, at which time the new benefit shall commence. The option 13
chosen shall prevail, subsections (1), (2), and (3) of this section notwithstanding. 14
(8) For a member who begins participating in the Judicial Retirement Plan on or a fter 15
January 1, 2014: 16
(a) If the member dies prior to drawing a retirement allowance, then the surviving 17
spouse may elect to: 18
1. Take a refund of the member's accumulated account balance or 19
accumulated contributions as provided by KRS 21.402; or 20
2. If the member had at least five (5) years of service in the plan at the time 21
of his or her death, have the member's accumulated account balance 22
annuitized into a monthly benefit payable for life that is equal to the 23
benefit that would have been paid had the membe r retired immediately 24
prior to his or her date of death and elected to receive benefits payable 25
under the survivorship one hundred percent (100%) option as provided 26
by paragraph (b)1. of this subsection. 27
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In lieu of the benefits provided by this paragraph to the surviving spouse, the 1
member may elect to have the benefits payable under this paragraph paid to 2
an individual dependent child by completing the forms provided prescribed by 3
the Judicial Form Retirement System. If no surviving spouse or dependent 4
children are eligible to receive benefits, then the provisions of subsection (4) 5
of this section shall apply to the member. 6
(b) If a member dies on or after the date the member begins drawing a retirement 7
allowance, the benefits payable to the surviving spou se shall be based upon 8
whether or not the member elects prior to retirement to receive an optional 9
retirement allowance. The election shall be in writing on the forms prescribed 10
by the Judicial Form Retirement System and shall be actuarially equivalent to 11
the amount of retirement allowance otherwise payable to the member. The 12
optional retirement allowances shall include: 13
1. Survivorship one hundred percent (100%). The member may elect to 14
receive a decreased retirement allowance during the member's lifetime 15
and have the retirement allowance continued after death to the spouse 16
during the lifetime of the spouse; 17
2. Survivorship sixty -six and two -thirds percent (66 -2/3%). The member 18
may elect to receive a decreased retirement allowance during the 19
member's lifetime and have two-thirds (2/3) of the retirement allowance 20
continue after death to the spouse during the lifetime of the spouse; or 21
3. Survivorship fifty percent (50%). The member may elect to receive a 22
decreased retirement allowance during the member's lifetime and have 23
one-half (1/2) of the retirement allowance continue after death to the 24
spouse during the lifetime of the spouse. 25
In lieu of the benefits provided by this paragraph to the surviving spouse, the 26
member may elect prior to retirement to have the benefits payable under this 27
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paragraph paid to an individual dependent child or to a special needs trust by 1
completing the forms provided by the Judicial Form Retirement System. If no 2
surviving spouse or dependent children are eligible to receive benefits, then 3
the provisions of subsection (5) of this section shall apply to the member. 4
(c) For purposes of this section a "dependent child" shall mean a child who is less 5
than twenty-one (21) years of age or a disabled child who is eligible for Social 6
Security disability benefits. 7
(9) (a) As used in this section, "special needs trust" means a trust described in 42 8
U.S.C. sec. 1396p(d)(4)(A) or (C). 9
(b) In any circumstances in which a surviving spouse would be entitled to any 10
allowance under this section, the monthly allowance that the surviving 11
spouse was receiving or is entitled to receive may be paid to a special needs 12
trust for the benefit of the surviving spouse. 13
Section 13. KRS 21.425 is amended to read as follows: 14
(1) In any circumstances in which a surviving spouse would be entitled to any 15
allowance under KRS 21.420, but there is no surviving spouse o r the surviving 16
spouse subsequently dies, and there is a surviving child or children of the member 17
under the age of twenty -one (21), or there is a disabled child or children, the 18
monthly allowance that the surviving spouse would have received or was receiv ing 19
shall be continued, as follows: 20
(a) If the member does not have a disabled child or children, the benefit shall 21
continue until there are no children remaining under the age of twenty -one 22
(21); or 23
(b) If the member has a disabled child or children, the benefit shall continue until 24
the death of the last remaining disabled child. 25
(2) A member may designate his or her child or children under the age of twenty -one 26
(21), or his or her disabled child or children, or a special needs trust as defined by 27
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subsection (9) of Section 12 of this Act for the benefit of the disabled child, to 1
receive the death benefit payable under KRS 21.420 instead of his or her spouse, or 2
he or she may designate that his or her spouse shall receive a percentage of the 3
death benefit, and his or her child or children under the age of twenty -one (21), or 4
his or her disabled child or children, or a special needs trust as defined by 5
subsection (9) of Section 12 of this Act for the benefit of a disabled child, shall 6
receive the remainder. The member making such a choice shall designate his or her 7
beneficiary or beneficiaries in writing to the mana ger of the Judicial Form 8
Retirement System on a form provided by the manager. 9
(3) For purposes of this section, "disabled" means an individual determined by the 10
Social Security Administration to be entitled to total disability benefits. 11
(4) Subsections (1) to (3) of this section shall not apply to a member who begins 12
participating in the Judicial Retirement Plan on or after January 1, 2014. 13