Firefighter relief associations termination of retirement plan process modifications

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
deleted text begin
shall
deleted text end
new text begin
must
new text end

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)
deleted text begin
the present value of
deleted text end
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)
deleted text begin
the present value of
deleted text end
any benefit remaining to be paid to
deleted text begin
each
deleted text end
new text begin
any
new text end
retiree in pay status
deleted text begin
,

if any
deleted text end
new text begin
and to any other benefit recipient
new text end
; 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
deleted text begin
shall
deleted text end
new text begin
must
new text end
compile a schedule that includes the following

information:

(1) the name of each participant, including each retiree in pay status
new text begin
,
new text end
to whom
deleted text begin
a
deleted text end
new text begin
an

accrued
new text end
benefit
deleted text begin
or pension
deleted text end
is or will be owed;

(2) the name of each other benefit recipient to whom a benefit
deleted text begin
or pension
deleted text end
is or will be

owed; and

(3) for each individual described in clauses (1) and (2), the amount of the benefit
deleted text begin
or

pension
deleted text end
to which the individual is entitled under the bylaws of the relief association, taking

into account the changes required or permitted by this section
deleted text begin
,
deleted text end
new text begin
and
new text end
the corresponding number

of years of service on which the benefit
deleted text begin
or pension
deleted text end
is based
deleted text begin
, and the earliest date on which

the benefit or pension would have been payable under the bylaws of the relief association
deleted text end
.

(c) If the relief association is dissolving, in addition to the determination under paragraph

(a) for the retirement plan, the board of trustees
deleted text begin
shall
deleted text end
new text begin
must
new text end
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,
deleted text begin
there is
deleted text end
new text begin
the retirement plan's assets exceed liabilities and administrative

expenses, resulting in
new text end
a surplus, the board of trustees
deleted text begin
shall
deleted text end
new text begin
must
new text end
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
deleted text begin
of
deleted text end
new text begin
after
new text end
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
deleted text begin
shall
deleted text end
new text begin
must
new text end
be retained by the

relief association and 50 percent of the surplus
deleted text begin
shall
deleted text end
new text begin
must
new text end
be transferred to the affiliated

municipality.

(d) Any surplus retained by the relief association under paragraph (c)
deleted text begin
shall
deleted text end
new text begin
must
new text end
be

allocated among all participants eligible to share in the surplus
new text begin
under paragraph (e)
new text end
in the

same proportion that the
deleted text begin
present value of the
deleted text end
accrued benefit for each eligible participant

bears to the total
deleted text begin
present value of the
deleted text end
accrued benefits of all participants eligible to share

in the surplus, and each eligible participant's
new text begin
accrued
new text end
benefit, as determined under subdivision

5, paragraph (a), clause (2),
deleted text begin
shall
deleted text end
new text begin
must
new text end
be increased by the participant's share of the surplus.
new text begin

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.
new text end

new text begin

(e)
new text end
The board of trustees
deleted text begin
shall
deleted text end
new text begin
must
new text end
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
deleted text begin
shall
deleted text end
new text begin
must
new text end
modify

the method for allocating the surplus to take into account the former participants.

deleted text begin

(e)
deleted text end
new text begin
(f)
new text end
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
deleted text begin
shall
deleted text end
new text begin
must
new text end
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,
new text begin
the

board of trustees must offer
new text end
each participant and other benefit recipient
deleted text begin
shall be permitted
deleted text end
new text begin

the option
new text end
to elect an immediate distribution or a direct rollover of the
deleted text begin
participant's
deleted text end
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
deleted text begin
shall
deleted text end
new text begin
must
new text end
, 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
deleted text begin
shall
deleted text end
new text begin
must
new text end
provide for commencement at a date elected by the insured,

to be paid as an annuity for the life of the insured.
new text begin
The board of trustees must transfer
new text end
legal

title to the annuity contract
deleted text begin
shall be transferred
deleted text end
to the insured. If
new text begin
the participant or other

benefit recipient elects
new text end
a lump sum
deleted text begin
is elected
deleted text end
new text begin
amount
new text end
, the
new text begin
board of trustees must offer the

participant or other benefit recipient the
new text end
option under paragraph (b) to take an immediate

distribution or a direct rollover
deleted text begin
shall apply
deleted text end
.

(d) The board of trustees
deleted text begin
shall
deleted text end
new text begin
must
new text end
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
deleted text begin
unresponsive
deleted text end
new text begin

nonresponsive
new text end
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
new text begin
or nonresponsive
new text end
participants.

deleted text begin

(a) For purposes of this subdivision,

the terms defined in this subdivision have the meanings given them.

deleted text end

deleted text begin

(b) "Retirement benefit" means:

deleted text end

deleted text begin

(1) the participant's account balance if the retirement plan is a defined contribution plan;

deleted text end

deleted text begin

(2) the participant's lump-sum benefit if the retirement plan is a defined benefit plan that

pays a lump sum; or

deleted text end

deleted text begin

(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.

deleted text end

deleted text begin

(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.

deleted text end

deleted text begin

(d)
deleted text end
new text begin
(a)
new text end
If the board of trustees cannot locate a participant or other benefit recipient, the

board of trustees
deleted text begin
shall
deleted text end
new text begin
must
new text end
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.

deleted text begin

(e) the board of trustees shall
deleted text end

new text begin
(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:
new text end

new text begin

(1)
new text end
transfer the retirement benefit to an individual retirement account
new text begin
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;
new text end
or

new text begin

(2)
new text end
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
deleted text begin
, 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
deleted text end
.

new text begin

(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.

new text end

Sec. 5.
new text begin
EFFECTIVE DATE.
new text end

new text begin

Sections 1 to 4 are effective the day following final enactment.

new text end