1.1                          A bill for an act 
  1.2             relating to retirement; employer contributions to 
  1.3             tax-sheltered annuities; expanding qualified 
  1.4             tax-sheltered annuity vendors; amending Minnesota 
  1.5             Statutes 1998, section 356.24, subdivision 1. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 1998, section 356.24, 
  1.8   subdivision 1, is amended to read: 
  1.9      Subdivision 1.  [RESTRICTION; EXCEPTIONS.] (a) It is 
  1.10  unlawful for a school district or other governmental subdivision 
  1.11  or state agency to levy taxes for, or to contribute public funds 
  1.12  to a supplemental pension or deferred compensation plan that is 
  1.13  established, maintained, and operated in addition to a primary 
  1.14  pension program for the benefit of the governmental subdivision 
  1.15  employees other than: 
  1.16     (1) to a supplemental pension plan that was established, 
  1.17  maintained, and operated before May 6, 1971; 
  1.18     (2) to a plan that provides solely for group health, 
  1.19  hospital, disability, or death benefits; 
  1.20     (3) to the individual retirement account plan established 
  1.21  by chapter 354B; 
  1.22     (4) to a plan that provides solely for severance pay under 
  1.23  section 465.72 to a retiring or terminating employee; 
  1.24     (5) for employees other than personnel employed by the 
  1.25  state university board or the community college board and 
  2.1   covered by the board of trustees of the Minnesota state colleges 
  2.2   and universities supplemental retirement plan under chapter 
  2.3   354C, if provided for in a personnel policy of the public 
  2.4   employer or in the collective bargaining agreement between the 
  2.5   public employer and the exclusive representative of public 
  2.6   employees in an appropriate unit, in an amount matching employee 
  2.7   contributions on a dollar for dollar basis, but not to exceed an 
  2.8   employer contribution of $2,000 a year per employee; 
  2.9      (i) to the state of Minnesota deferred compensation plan 
  2.10  under section 352.96; or 
  2.11     (ii) in payment of the applicable portion of the premium on 
  2.12  a tax-sheltered annuity contract qualified under section 403(b) 
  2.13  of the Internal Revenue Code, if purchased from a qualified 
  2.14  insurance company as defined in subdivision 1a, if purchased 
  2.15  under an arrangement utilizing a third-party administrator who 
  2.16  is capable of performing any Internal Revenue Code compliance 
  2.17  calculations, or if purchased from an investment organization 
  2.18  that is approved by the applicable employer that has the 
  2.19  in-house capability of performing any Internal Revenue Code 
  2.20  compliance calculations, and if the employing unit has complied 
  2.21  with any applicable pension plan provisions of the Internal 
  2.22  Revenue Code with respect to the tax-sheltered annuity program 
  2.23  during the preceding calendar year; or 
  2.24     (6) for personnel employed by the state university board or 
  2.25  the community college board and not covered by clause (5), to 
  2.26  the supplemental retirement plan under chapter 354C, if provided 
  2.27  for in a personnel policy or in the collective bargaining 
  2.28  agreement of the public employer with the exclusive 
  2.29  representative of the covered employees in an appropriate unit, 
  2.30  in an amount matching employee contributions on a dollar for 
  2.31  dollar basis, but not to exceed an employer contribution of 
  2.32  $2,000 a year for each employee.  
  2.33     (b) Subd. 1a.  [QUALIFIED INSURANCE COMPANY; 
  2.34  DEFINITION.] (a) A qualified insurance company is a company that:
  2.35     (1) meets the definition in section 60A.02, subdivision 4; 
  2.36     (2) is licensed to engage in life insurance or annuity 
  3.1   business in the state; and 
  3.2      (3) is determined by the commissioner of commerce to have a 
  3.3   rating within the top two rating categories by a recognized 
  3.4   national rating agency or organization that regularly rates 
  3.5   insurance companies; and 
  3.6      (4) is determined by the state board of investment to be 
  3.7   among the ten applicant insurance companies with competitive 
  3.8   options and investment returns on annuity products.  The state 
  3.9   board of investment determination must be made on or before 
  3.10  January 1, 1993, and must be reviewed periodically.  The state 
  3.11  board of investment may retain actuarial services to assist it 
  3.12  in this determination and in its periodic review.  The state 
  3.13  board of investment may annually establish a budget for its 
  3.14  costs in any determination and periodic review processes.  The 
  3.15  state board of investment may charge a proportional share of all 
  3.16  costs related to the periodic review to those companies 
  3.17  currently under contract and may charge a proportional share of 
  3.18  all costs related to soliciting and evaluating bids in a 
  3.19  determination process to each company selected by the state 
  3.20  board of investment.  All contracts must be approved before 
  3.21  execution by the state board of investment.  The state board of 
  3.22  investment shall establish policies and procedures under section 
  3.23  11A.04, clause (2), to carry out this paragraph. acknowledges, 
  3.24  in writing, the following: 
  3.25     (i) that, other than the payment of a payroll premium or 
  3.26  contribution, the insurance contract has no provision that 
  3.27  requires the public employer to take any action; 
  3.28     (ii) that the insurance contract has no provision under 
  3.29  which any action or instruction of the employer is a condition 
  3.30  to any performance required of the insurance company; 
  3.31     (iii) that the public employer is either a party to or is 
  3.32  an intended third-party beneficiary of each Internal Revenue 
  3.33  Code, section 403(b), insurance contract; 
  3.34     (iv) that it or its duly appointed agent will calculate for 
  3.35  each Internal Revenue Code, section 403(b), participant for whom 
  3.36  a section 403(b) premium or contribution is paid to the 
  4.1   insurance company based on information furnished by the 
  4.2   participant, the participant's contribution limit including the 
  4.3   Internal Revenue Code, section 403(b)(2), exclusion, additions, 
  4.4   and the Internal Revenue Code, section 402(g), elective deferral 
  4.5   limit; 
  4.6      (v) that the insurance company shall pay the penalties and 
  4.7   interest assessed by the United States Internal Revenue Service 
  4.8   or state or local taxing authorities against the public employer 
  4.9   or the participant as a result of any mistaken contribution to 
  4.10  an insurance contract issued by the insurance company as a 
  4.11  result of the insurance company's incorrect calculation; and 
  4.12     (vi) that it has adopted written procedures designed to 
  4.13  cause its employees and its agents to perform every service 
  4.14  required under each Internal Revenue Code, section 403(b), 
  4.15  contract available to a public employer in a manner consistent 
  4.16  with the provisions of the contract. 
  4.17     (c) Subd. 1b.  [VENDOR RESTRICTIONS.] A personnel policy 
  4.18  for unrepresented employees or a collective bargaining agreement 
  4.19  may establish limits on the number of vendors under paragraph 
  4.20  (b), clause (5) subdivision 1, that it will utilize and 
  4.21  conditions under which the vendors may contact employees both 
  4.22  during working hours and after working hours. 
  4.23     Sec. 2.  [EFFECTIVE DATE.] 
  4.24     Section 1 is effective on July 1, 1999.