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A bill for an act
relating to retirement; modifying process for firefighter relief associations to
terminate retirement plan; amending Minnesota Statutes 2024, section 424B.22,
subdivisions 5, 7, 8, 9.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2024, section 424B.22, subdivision 5, is amended to read:
Subd. 5.
Determination of assets and liabilities.
(a) The board of trustees
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shall
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must
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determine the following as of the date of termination of the retirement plan:
(1) the fair market value of the assets of the special fund;
(2)
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the present value of
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each participant's accrued benefit, taking into account full vesting
under subdivision 3 and any increased lump-sum or monthly benefit level approved under
subdivision 4;
(3)
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the present value of
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any benefit remaining to be paid to
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each
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any
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retiree in pay status
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,
if any
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and to any other benefit recipient
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; and
(4) administrative expenses incurred or reasonably anticipated to be incurred through
the date on which all retirement benefits have been distributed or transferred or, if later, the
effective date of the dissolution of the relief association.
(b) The board of trustees
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shall
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must
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compile a schedule that includes the following
information:
(1) the name of each participant, including each retiree in pay status
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,
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to whom
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a
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an
accrued
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benefit
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or pension
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is or will be owed;
(2) the name of each other benefit recipient to whom a benefit
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or pension
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is or will be
owed; and
(3) for each individual described in clauses (1) and (2), the amount of the benefit
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or
pension
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to which the individual is entitled under the bylaws of the relief association, taking
into account the changes required or permitted by this section
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,
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and
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the corresponding number
of years of service on which the benefit
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or pension
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is based
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, and the earliest date on which
the benefit or pension would have been payable under the bylaws of the relief association
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.
(c) If the relief association is dissolving, in addition to the determination under paragraph
(a) for the retirement plan, the board of trustees
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shall
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must
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determine, as of the effective
date of the dissolution of the relief association, the legal obligations of the general fund of
the relief association.
Sec. 2.
Minnesota Statutes 2024, section 424B.22, subdivision 7, is amended to read:
Subd. 7.
Allocation of surplus.
(a) If the retirement plan is a defined benefit plan and
if, after completing the determination of assets, liabilities, and administrative expenses under
subdivision 5,
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there is
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the retirement plan's assets exceed liabilities and administrative
expenses, resulting in
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a surplus, the board of trustees
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shall
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must
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transfer to the affiliated
municipality the lesser of (1) the amount of the surplus, or (2) the sum of all required
contributions, without investment earnings or interest thereon, made by the municipality to
the relief association during the year in which the termination of the retirement plan occurs
or during the preceding nine years.
(b) If the affiliated municipality did not make any required contributions to the relief
association during the current or preceding nine years or if, after the transfer described in
paragraph (a), there is surplus remaining, the relief association and the municipality will
mutually agree on an allocation between them of the remaining surplus.
(c) If, within 180 days
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of
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after
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the date of termination of the retirement plan, the
municipality and relief association have not reached an agreement on the allocation of the
surplus under paragraph (b), then 50 percent of the surplus
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shall
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must
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be retained by the
relief association and 50 percent of the surplus
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shall
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must
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be transferred to the affiliated
municipality.
(d) Any surplus retained by the relief association under paragraph (c)
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shall
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must
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be
allocated among all participants eligible to share in the surplus
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under paragraph (e)
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in the
same proportion that the
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present value of the
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accrued benefit for each eligible participant
bears to the total
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present value of the
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accrued benefits of all participants eligible to share
in the surplus, and each eligible participant's
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accrued
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benefit, as determined under subdivision
5, paragraph (a), clause (2),
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shall
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must
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be increased by the participant's share of the surplus.
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If a participant is receiving or has elected to receive a monthly pension, the participant's
accrued benefit for the purpose of allocating surplus is the lump sum present value of the
monthly pension benefit to which the participant is entitled to receive.
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(e)
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The board of trustees
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shall
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must
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determine eligibility to share in the surplus, which
may include all participants and any former participants who, within the last three years or
such other number of years as determined by the board of trustees, separated from active
service and received their retirement benefit. If the board of trustees decides to include
former participants in the allocation of the surplus, the board of trustees
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shall
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must
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modify
the method for allocating the surplus to take into account the former participants.
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(e)
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(f)
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Any amount of surplus transferred to the affiliated municipality under this
subdivision may only be used for the purposes described in section
424A.08
, paragraph (a)
or (b).
Sec. 3.
Minnesota Statutes 2024, section 424B.22, subdivision 8, is amended to read:
Subd. 8.
Immediate distribution of retirement benefits and payment of all other
obligations.
(a) The board of trustees
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shall
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must
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liquidate the assets of the special fund and
pay retirement benefits and administrative expenses under the retirement plan within 210
days after the effective date of the termination of the retirement plan.
(b) If the retirement plan is a defined benefit plan that pays lump-sum benefits or a
defined contribution plan, without regard to whether the participant has attained age 50,
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the
board of trustees must offer
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each participant and other benefit recipient
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shall be permitted
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the option
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to elect an immediate distribution or a direct rollover of the
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participant's
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benefit
to an eligible retirement plan as permitted under section
356.633
, subdivisions 1 and 2, if
the benefit is an eligible rollover distribution as defined in section
356.633, subdivision 1
,
paragraph (d).
(c) If the retirement plan is a defined benefit plan that pays monthly pension benefits,
the board of trustees
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shall
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must
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, at the election of the participant or other benefit recipient,
purchase an annuity contract under section
424A.015, subdivision 3
, naming the participant
or other benefit recipient, as applicable, as the insured or distribute a lump-sum amount that
is equal to the present value of the monthly pension benefits to which the participant or
other benefit recipient is entitled. If an annuity is elected by the participant or other benefit
recipient, the annuity
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shall
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must
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provide for commencement at a date elected by the insured,
to be paid as an annuity for the life of the insured.
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The board of trustees must transfer
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legal
title to the annuity contract
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shall be transferred
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to the insured. If
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the participant or other
benefit recipient elects
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a lump sum
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is elected
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amount
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, the
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board of trustees must offer the
participant or other benefit recipient the
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option under paragraph (b) to take an immediate
distribution or a direct rollover
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shall apply
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.
(d) The board of trustees
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shall
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must
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complete the distribution of all assets of the special
fund by making any remaining distributions or transfers as required under subdivision 9 on
behalf of participants or other benefit recipients who cannot be located or are
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unresponsive
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nonresponsive
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and paying any remaining administrative expenses related to the termination
of the plan.
Sec. 4.
Minnesota Statutes 2024, section 424B.22, subdivision 9, is amended to read:
Subd. 9.
Missing
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or nonresponsive
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participants.
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(a) For purposes of this subdivision,
the terms defined in this subdivision have the meanings given them.
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(b) "Retirement benefit" means:
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(1) the participant's account balance if the retirement plan is a defined contribution plan;
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(2) the participant's lump-sum benefit if the retirement plan is a defined benefit plan that
pays a lump sum; or
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(3) an amount equal to the present value of the participant's benefit if the retirement plan
is a defined benefit plan that pays a monthly annuity.
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(c) "Individual retirement account" means an account that satisfies the requirements of
section 408(a) of the Internal Revenue Code which is established by an officer of the relief
association in the name of the participant or other benefit recipient at a federally insured
financial institution.
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(d)
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(a)
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If the board of trustees cannot locate a participant or other benefit recipient, the
board of trustees
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shall
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must
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make a diligent effort to obtain a current address or other contact
information as follows:
(1) send a notice to the address on file for the participant or other benefit recipient using
certified mail;
(2) check with the Minnesota State Fire Department Association, the municipality, and
any other employer of the participant;
(3) check with the participant's designated beneficiary on file with the relief association;
and
(4) use one or more of the Internet search tools that are free of charge.
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(e) the board of trustees shall
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(b) The board of trustees must dispose of the retirement
benefit of a participant or other benefit recipient under clause (1) or (2) if the board of
trustees is unable to locate the participant or other benefit recipient after taking the actions
described in paragraph (a) or the participant or other benefit recipient does not make an
election of a distribution or direct rollover under subdivision 8, paragraph (b), or an annuity
or lump sum distribution or direct rollover under subdivision 8, paragraph (c). The board
of trustees must:
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(1)
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transfer the retirement benefit to an individual retirement account
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that satisfies the
requirements of section 408(a) of the Internal Revenue Code and is established by an officer
of the relief association in the name of the participant or other benefit recipient at a federally
insured financial institution;
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or
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(2)
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consider the retirement benefit abandoned and deposit funds in the amount of the
retirement benefit with the commissioner of commerce under chapter 345, notwithstanding
any laws to the contrary, including section 345.381
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, if the board of trustees is unable to
locate the participant or other benefit recipient after taking the actions described in paragraph
(d) or the participant or other benefit recipient does not elect to receive or rollover a
retirement benefit to which the participant or other benefit recipient is entitled
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.
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(c) For the purpose of this subdivision, a retirement benefit that is a monthly pension or
annuity may be disposed of under paragraph (b) by converting the monthly pension or
annuity to a lump sum that is equal to the present value of the monthly pension or annuity
to which the participant or other benefit recipient is entitled.
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Sec. 5.
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EFFECTIVE DATE.
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Sections 1 to 4 are effective the day following final enactment.
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