HF 5040

as introduced - 93rd Legislature (2023 - 2024) Posted on 03/20/2024 11:22am

A bill for an act
relating to retirement; authorizing eligible employees of the Minnesota State
Colleges and Universities who are members of the higher education individual
retirement account plan to elect coverage by the Teachers Retirement Association
and purchase past service credit; requiring an annual report; appropriating money
for offsetting the cost of service credit purchases; amending Minnesota Statutes
2022, section 354B.20, subdivision 18, by adding subdivisions; proposing coding
for new law in Minnesota Statutes, chapter 354B.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2022, section 354B.20, is amended by adding a subdivision
to read:

new text begin Subd. 10a. new text end

new text begin IRAP to TRA transfer account. new text end

new text begin "IRAP to TRA transfer account" means
the account established under section 354B.215, subdivision 11.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2025.
new text end

Sec. 2.

Minnesota Statutes 2022, section 354B.20, is amended by adding a subdivision to
read:

new text begin Subd. 11a. new text end

new text begin Offset amount. new text end

new text begin "Offset amount" means the lesser of $10,000 or 25 percent
of the cost to purchase the maximum past service credit by an eligible person under section
354B.215, subdivision 6, except that, if the eligible person elects to purchase, under section
354B.215, subdivision 6, paragraph (c), less than the maximum past service credit, the offset
amount must not exceed the cost to purchase the amount of past service credit elected.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2025.
new text end

Sec. 3.

Minnesota Statutes 2022, section 354B.20, subdivision 18, is amended to read:

Subd. 18.

Teachers Retirement deleted text begin plan deleted text end new text begin Association new text end .

"Teachers Retirement deleted text begin plan deleted text end new text begin
Association new text end " means the retirement plan established by chapter 354.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 4.

new text begin [354B.215] TEACHERS RETIREMENT ASSOCIATION COVERAGE FOR
EMPLOYEES WHO DID NOT RECEIVE ELECTION TO TRANSFER.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the terms defined in this
subdivision have the meanings given them, unless the context clearly indicates another
meaning is intended.
new text end

new text begin (b) "Executive director" means the executive director of the Teachers Retirement
Association.
new text end

new text begin (c) "Individual retirement account plan" means the individual retirement account plan
governed by chapter 354B.
new text end

new text begin (d) "Maximum past service credit" means service credit for the period beginning with
the date the eligible person was first covered by the individual retirement account plan to
the transfer date.
new text end

new text begin (e) "Minnesota State" means the Minnesota State Colleges and Universities.
new text end

new text begin (f) "Transfer date" means the date selected by the executive director under subdivision
5 for the purpose of preparing the estimates required by subdivision 5.
new text end

new text begin Subd. 2. new text end

new text begin Authority to transfer coverage. new text end

new text begin Notwithstanding any provision of law to the
contrary, an eligible person described in subdivision 3 is authorized to become a member
of the Teachers Retirement Association and purchase service credit upon making an election
under subdivision 6.
new text end

new text begin Subd. 3. new text end

new text begin Eligible person. new text end

new text begin (a) An eligible person is a person who:
new text end

new text begin (1) is employed by Minnesota State;
new text end

new text begin (2) has an account in the individual retirement account plan; and
new text end

new text begin (3) satisfies paragraph (b).
new text end

new text begin (b) A person satisfies this paragraph if Minnesota State is not able to produce at least
one of the following items by the end of the 60-day period under subdivision 4, paragraph
(b):
new text end

new text begin (1) a record indicating that the person received notice regarding the person's eligibility
to elect prospective coverage by the Teachers Retirement Association within the election
period under section 354B.211, subdivision 4 or 6, or its predecessor;
new text end

new text begin (2) a record that the person elected retirement coverage by the individual retirement
account plan; or
new text end

new text begin (3) other credible documentation demonstrating that the person was aware of the person's
right to elect retirement coverage by the Teachers Retirement Association.
new text end

new text begin Subd. 4. new text end

new text begin Eligible person application; information required from Minnesota State. new text end

new text begin (a)
To elect coverage by the Teachers Retirement Association, an eligible person must submit
a written application to the chancellor on a form provided by Minnesota State. The application
must include:
new text end

new text begin (1) an attestation that the person was not informed of the right to elect a transfer from
the individual retirement account plan to the Teachers Retirement Association and the person
was unaware of the right to elect such a transfer;
new text end

new text begin (2) the date on which the person first became a participant in the individual retirement
account plan;
new text end

new text begin (3) a signed release authorizing Minnesota State to provide employment and other
personnel information to the Teachers Retirement Association; and
new text end

new text begin (4) any other information that Minnesota State may require.
new text end

new text begin (b) No later than 60 days after receipt of the application under paragraph (a), Minnesota
State must verify the information provided by the person in the application, determine
whether the person is an eligible person under subdivision 3, and provide a written response
to the person regarding the determination of eligibility. If Minnesota State determines that
the person is not an eligible person, Minnesota State must include a copy of any
documentation identified in subdivision 3, paragraph (b), in its written response to the
person.
new text end

new text begin (c) If Minnesota State determines that the person is an eligible person under subdivision
3, Minnesota State must forward to the executive director:
new text end

new text begin (1) the application;
new text end

new text begin (2) confirmation or modification of the information provided by the eligible person in
the application;
new text end

new text begin (3) salary history for the eligible person;
new text end

new text begin (4) an estimate of the amount available for transfer from the eligible person's account
in the individual retirement account plan to the Teachers Retirement Association; and
new text end

new text begin (5) any other relevant information.
new text end

new text begin Subd. 5. new text end

new text begin Determination of service credit purchase amounts. new text end

new text begin (a) Upon receipt of the
application and information under subdivision 4, the executive director must prepare estimates
of the following as of a prospective transfer date selected by the executive director that is
no later than 90 days after receiving the application and information under subdivision 4:
new text end

new text begin (1) the purchase payment amount determined under section 356.551 to purchase the
maximum past service credit;
new text end

new text begin (2) the amount of service credit the eligible person would receive if the amount estimated
under subdivision 4, paragraph (c), clause (4), is transferred to the Teachers Retirement
Association and used to purchase service credit under section 356.551;
new text end

new text begin (3) the purchase payment amount for additional years of service credit, if any, not to
exceed the maximum past service credit; and
new text end

new text begin (4) the offset amount attributable to the eligible person.
new text end

new text begin (b) No later than 90 days after receiving the application and information under subdivision
4, the executive director must send a written communication to the eligible person with the
amounts determined in paragraph (a) and inform Minnesota State of the offset amount. The
executive director may charge the eligible person a reasonable fee to cover the costs of
calculating the amounts required by paragraph (a).
new text end

new text begin (c) Minnesota State must notify the eligible person and the executive director no later
than 30 days after receiving notice of the offset amount from the executive director under
paragraph (b) if there are sufficient funds in the IRAP to TRA transfer account to pay the
full offset amount or, if there are not sufficient funds, the portion of the offset amount, if
any, that will be paid.
new text end

new text begin Subd. 6. new text end

new text begin Election to transfer coverage and purchase of service credit. new text end

new text begin (a) No later
than 60 days after the executive director sends the written communication required by
subdivision 5, the eligible person may elect to transfer coverage from the individual
retirement account plan to the Teachers Retirement Association effective as of the transfer
date.
new text end

new text begin (b) If the eligible person elects to transfer coverage under paragraph (a), the available
balance in the eligible person's account in the individual retirement account plan must be
transferred to the Teachers Retirement Association, not to exceed the amount required by
the Teachers Retirement Association to purchase the maximum past service credit, as
adjusted for the offset amount, if any.
new text end

new text begin (c) If the available balance in the eligible person's account in the individual retirement
account plan plus the offset amount, if any, is less than the amount needed to cover the cost
to purchase the maximum past service credit, the eligible person must:
new text end

new text begin (1) direct the transfer of funds from the eligible person's account in the higher education
supplemental retirement plan established under chapter 354C, from a source specified in
section 356.441, subdivision 1, or from more than one of the foregoing sources in an amount,
in total, sufficient to cover the rest of the cost to purchase the maximum past service credit;
or
new text end

new text begin (2) elect fewer years or partial years of service credit corresponding to the amount of
service credit that may be purchased using the funds transferred from the individual
retirement account plan, the offset amount, and if directed by the eligible person, funds
from any of the sources described in clause (1).
new text end

new text begin (d) Minnesota State must promptly initiate the transfer of funds or work with the eligible
person to initiate the transfer of funds to the Teachers Retirement Association from the
eligible person's account in the individual retirement account plan and, if directed by the
eligible person under paragraph (c), from any other account over which Minnesota State
has the authority to initiate or approve transfers when directed by a participant.
new text end

new text begin (e) Unless the balance in the IRAP to TRA transfer account is zero, Minnesota State
must direct a transfer to the Teachers Retirement Association of an amount that is equal to
the offset amount attributable to the eligible person. If the balance in the IRAP to TRA
transfer account is less than the amount needed to transfer the offset amount, Minnesota
State must direct a transfer of the remaining balance in the IRAP to TRA transfer account
to the Teachers Retirement Association.
new text end

new text begin Subd. 7. new text end

new text begin Commencement of membership in the Teachers Retirement Association. new text end

new text begin (a)
Upon receipt by the Teachers Retirement Association of the transfer or transfers under
subdivision 6, the eligible person's membership in the Teachers Retirement Association
commences effective as of the transfer date and the executive director must grant past service
credit to the eligible person.
new text end

new text begin (b) The executive director may adjust the amount of past service credit granted to the
eligible person as necessary to ensure that the Teachers Retirement Association does not
receive less than required to cover the cost of the past service credit granted.
new text end

new text begin (c) Upon membership commencement, the eligible person ceases to be an active
participant in the individual retirement account plan.
new text end

new text begin (d) Upon membership commencement, the person's membership status is irrevocable.
Neither Minnesota State nor the Teachers Retirement Association may seek to revoke the
eligible person's membership status due to events, including but not limited to Minnesota
State producing documentation that would have previously disqualified the person as an
eligible person under subdivision 3.
new text end

new text begin Subd. 8. new text end

new text begin Service credit for vesting. new text end

new text begin The Teachers Retirement Association must grant
service credit to the eligible person for all years or partial years of service with Minnesota
State for the purpose of vesting in a retirement annuity under section 354.44 or in a retirement
benefit under section 354.46 or 354.48.
new text end

new text begin Subd. 9. new text end

new text begin Notice to employees. new text end

new text begin No later than March 31, 2025, and periodically thereafter,
Minnesota State must provide notice to all employees summarizing this section and offer
assistance to any eligible person who wishes to elect to transfer coverage from the individual
retirement account plan to the Teachers Retirement Association. Minnesota State must
designate personnel responsible for assisting employees with the requirements of this section.
The notice must identify these personnel and provide their contact information.
new text end

new text begin Subd. 10. new text end

new text begin Annual report required. new text end

new text begin The chancellor and the executive director must
submit an annual report to the Legislative Commission on Pensions and Retirement stating
the number of employees who elected a transfer during the prior calendar year. Without
identifying any eligible person, the report must include, for each eligible person, the cost
of the transfer to the eligible persons and Minnesota State, the offset amount, if any, and,
if applicable, the actuarial cost of the eligible person's pension benefit at the time of the
transfer as calculated by the Teachers Retirement Association. The report must be submitted
to the Legislative Commission on Pensions and Retirement no later than January 31 of each
year.
new text end

new text begin Subd. 11. new text end

new text begin IRAP to TRA transfer account created. new text end

new text begin (a) The IRAP to TRA transfer
account is created in the special revenue fund.
new text end

new text begin (b) Minnesota State must use the money in the IRAP to TRA transfer account established
under paragraph (a) to transfer amounts required by subdivision 6, paragraph (e), until the
balance in the account is zero.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2025.
new text end

Sec. 5. new text begin TRANSFER TO THE IRAP TO TRA TRANSFER ACCOUNT;
APPROPRIATION.
new text end

new text begin (a) $....... in fiscal year 2025 is transferred from the general fund to the IRAP to TRA
transfer account established under Minnesota Statutes, section 354B.215, subdivision 11.
new text end

new text begin (b) Money in the IRAP to TRA transfer account is appropriated to Minnesota State to
reduce the cost of service credit purchases by eligible persons who transfer coverage from
the individual retirement account plan to the Teachers Retirement Association under
Minnesota Statutes, section 354B.215.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2025.
new text end