HF 4899

as introduced - 93rd Legislature (2023 - 2024) Posted on 03/13/2024 12:18pm

A bill for an act
relating to retirement; Public Employees Retirement Association; public employees
defined contribution plan; modifying requirements for electing to participate in
the plan; amending Minnesota Statutes 2022, sections 353.028, subdivisions 1, 2,
3; 353D.02, as amended; Minnesota Statutes 2023 Supplement, section 353D.01,
subdivision 2; repealing Minnesota Statutes 2022, sections 353.028, subdivisions
4, 5; 353D.071.

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

Section 1.

Minnesota Statutes 2022, section 353.028, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) For purposes of this section, each of the terms in this
subdivision has the meaning indicated.

(b) "City manager" means:

(1) a person who is duly appointed to and is holding the position of city manager in a
Plan B statutory city or in a home rule city operating under the "council-manager" form of
government,; or

(2) a person who is appointed to and is holding the position of chief administrative officer
of a home rule charter city or a statutory city under a charter provision, ordinance, or
resolution establishing such a position and prescribing its duties and responsibilities.

(c) "Governing body" means the city council of the city employing the city manager.

(d) "Election" means the election described in subdivision 2.

(e) "First employed" means a city manager employed by a city who, prior to employment
as a city manager, has not been an employee in any position covered by any retirement plan
administered by the association or by any supplemental pension or deferred compensation
plan under section 356.24 sponsored by the city.

Sec. 2.

Minnesota Statutes 2022, section 353.028, subdivision 2, is amended to read:

Subd. 2.

Election.

(a) A city manager first employed by a city may elect make a onetime,
irrevocable election to be excluded from membership in the general employees retirement
plan of the Public Employees Retirement association. The election of exclusion must be
made within six months 30 days following the commencement of employment, must be
made in writing on a form prescribed by the executive director, and must be approved by
a resolution adopted by the governing body of the city. The election of exclusion is not
effective until it is filed with the executive director. Membership of a city manager in the
general employees retirement plan ceases on the date the written election is received by the
executive director or upon a later date specified. Employee and employer contributions
made during the first 30 days of employment on behalf of a person exercising the option to
be excluded from membership under this section paragraph must be refunded or credited
in accordance with section 353.27, subdivision 7.

(b) A city manager who has elected exclusion under this subdivision may elect to revoke
that action by filing a written notice with the executive director. The notice must be on a
form prescribed by the executive director and must be approved by a resolution of the
governing body of the city. Membership of the city manager in the association resumes
prospectively from the date of the first day of the pay period for which contributions were
deducted or, if pay period coverage dates are not provided, the date on which the notice of
revocation or contributions are received in the office of the association, provided that the
notice of revocation is received by the association within 60 days of the receipt of
contributions previously been an employee in any position covered by any retirement plan
administered by the association or by any supplemental pension or deferred compensation
plan under section 356.24 sponsored by the city is not eligible to make the election under
paragraph (a).

(c) An election under paragraph (b) is irrevocable. Any election under paragraph (a) or
(b) must include a statement that the individual will not seek authorization to purchase
service credit for any period of excluded service.

Sec. 3.

Minnesota Statutes 2022, section 353.028, subdivision 3, is amended to read:

Subd. 3.

Deferred compensation; city contribution.

(a) If an election of exclusion
under subdivision 2 is made, and if the city manager and the governing body of the city
additionally agree in writing that the additional compensation is to be deferred and is to be
contributed on behalf of the city manager to a deferred compensation program which that
meets the requirements of section 457 of the Internal Revenue Code of 1986, as amended,
and section 356.24, the governing body may compensate the city manager, in addition to
the salary allowed under any limitation imposed on salaries by law or charter, in an amount
equal to the employer contribution which that would be required by section 353.27,
subdivision 3, if the city manager were a member of the general employees retirement plan.

(b) Alternatively, if an election of exclusion under subdivision 2 is made, the city manager
and the governing body of the city may agree in writing that the equivalent employer
contribution to the contribution under section 353.27, subdivision 3, be contributed by the
city to the defined contribution plan of the Public Employees Retirement Association under
chapter 353D. Any agreement under this paragraph must be entered into within 30 days
following the commencement of employment.

Sec. 4.

Minnesota Statutes 2023 Supplement, section 353D.01, subdivision 2, is amended
to read:

Subd. 2.

Eligibility.

(a) Eligibility to participate in the plan is available to:

(1) any elected or appointed local government official of a governmental subdivision
who elects to participate in the plan under section 353D.02, subdivision 1, and who, for the
service rendered to a governmental subdivision, is not a member of the association within
the meaning of section 353.01, subdivision 7;

(2) physicians who, if they did not elect to participate in the plan under section 353D.02,
subdivision 2, would meet the definition of member under section 353.01, subdivision 7;

(3) basic and advanced life-support emergency medical service personnel who are
employed by any public ambulance service that elects to participate under section 353D.02,
subdivision 3;

(4) members of a municipal rescue squad associated with the city of Litchfield in Meeker
County, or of a county rescue squad associated with Kandiyohi County, if an independent
nonprofit rescue squad corporation, incorporated under chapter 317A, performing emergency
management services, and if not affiliated with a fire department or ambulance service and
if its members are not eligible for membership in that fire department's or ambulance service's
relief association or comparable pension plan;

(5) employees of the Port Authority of the city of St. Paul who elect to participate in the
plan under section 353D.02, subdivision 5, and who are not members of the association
under section 353.01, subdivision 7;

(6) city managers who elected to be excluded from the general employees retirement
plan of the association under section 353.028 and who elected to participate in the public
employees defined contribution plan under section 353.028, subdivision 3, paragraph (b);

(7) volunteer or emergency on-call firefighters serving in a municipal fire department
or an independent nonprofit firefighting corporation who are not covered by the police and
fire retirement plan and who are not covered by a volunteer firefighters relief association
and who elect to participate in the public employees defined contribution plan;

(8) any elected county sheriffs sheriff who are is a former members member of the police
and fire plan and who are, is receiving a retirement annuity as provided under section
353.651, who does not have previous employment with the county, and is for the first time
eligible to participate in any retirement plan administered by the association or in any
supplemental pension or deferred compensation plan under section 356.24 sponsored by
the county; and

(9) persons appointed to serve on a board or commission of a governmental subdivision
or an instrumentality thereof.

(b) Individuals otherwise eligible to participate in the plan under this subdivision who
are currently covered by a public or private pension plan because of their employment or
provision of services are not eligible to participate in the public employees defined
contribution plan.

(c) A former participant is a person who has terminated eligible employment or service
and has not withdrawn the value of the person's individual account.

Sec. 5.

Minnesota Statutes 2022, section 353D.02, as amended by Laws 2023, chapter 47,
article 3, section 3, is amended to read:

353D.02 ELECTION OF COVERAGE.

Subdivision 1.

Local government officials.

Eligible elected or appointed local
government officials may elect to participate in the defined contribution plan after within
the first 30 days of being elected or appointed to public office by filing a membership
application on a form prescribed by the executive director of the association authorizing
contributions to be deducted from the official's salary. Participation begins on the first day
of the pay period for which the contributions were deducted or, if pay period coverage dates
are not provided, the date on which the membership application or contributions are received
in the office of the association, whichever is received first, provided further that the
membership application is received by the association within 60 days of the receipt of the
contributions. An election to participate in the plan is revocable during incumbency
irrevocable.

Subd. 2.

Eligible physician.

Eligible physicians may elect to participate in the defined
contribution plan within 90 the first 30 days of commencing employment with a government
subdivision under section 353.01, subdivision 6, by filing a membership application on a
form prescribed by the executive director of the association authorizing contributions to be
deducted from the physician's salary. Participation begins on the first day of the pay period
for which the contributions were deducted. An election to participate in the defined
contribution plan is irrevocable.

Subd. 3.

Eligible ambulance service personnel.

Each public ambulance service with
eligible personnel may elect to participate in the plan. If a service elects to participate, its
eligible personnel may elect to participate or to decline to participate. An individual's election
must be made within 30 days of the service's election to participate or within 30 days of the
date on which the individual was employed by began employment with the service or began
to provide service for it, whichever date is later. An election by a service or an individual
is revocable irrevocable.

Subd. 4.

Eligible rescue squad personnel.

The municipality or county, as applicable,
associated with a rescue squad under section 353D.01, subdivision 2, paragraph (a), clause
(4), may elect to participate in the plan. If the municipality or county, as applicable, elects
to participate, the eligible personnel may elect to participate or decline to participate. An
eligible individual's election must be made within 30 days of the service's election to
participate or within 30 days of the date on which the individual begins to provide service
to first began employment with the rescue squad, whichever is later. Elections under this
subdivision by a government unit or individual are irrevocable. The municipality or county,
as applicable, must specify by resolution eligibility requirements for rescue squad personnel
which must be satisfied if the individual is to be authorized to make the election under this
subdivision.

Subd. 5.

St. Paul Port Authority personnel.

Employees of the Port Authority of the
city of St. Paul who do not elect to participate in the general employees retirement plan may
elect within the first 30 days of commencing employment to participate in the plan by filing
a membership application on a form prescribed by the executive director of the association
authorizing contributions to be deducted from the employee's salary. Participation begins
on the first day of the pay period for which the contributions were deducted or, if pay period
coverage dates are not provided, the date on which the membership application or the
contributions are received in the office of the association, whichever is received first, if the
membership application is received by the association within 60 days of the receipt of the
contributions. An election to participate in the plan is irrevocable.

Subd. 6.

City managers.

City managers who elected to be excluded from the general
employees retirement plan of the Public Employees Retirement Association under section
353.028, and who elected to participate in the plan under section 353.028, subdivision 3,
paragraph (b), shall must file that election with the executive director within the first 30
days of commencing employment. Participation begins on the first day of the pay period
next following the date of the coverage election. An election to participate by a city manager
is revocable irrevocable.

Subd. 7.

Certain volunteer firefighters.

Volunteer or emergency on-call firefighters
who are serving as members of a municipal fire department or an independent nonprofit
firefighting corporation and who are not covered for that firefighting service by the public
employees police and fire retirement plan under sections 353.63 to 353.68 or, by the
applicable a volunteer firefighters relief association under chapter 424A, or by the statewide
volunteer firefighter retirement plan under chapter 353G may elect to participate in the plan
within the first 30 days of commencing service. An eligible firefighter's election is
irrevocable. No employer contribution is payable by the fire department or the firefighting
corporation unless the municipal governing body or the firefighting corporation governing
body, whichever applies, ratifies the election.

Subd. 8.

Election available only upon first hire and no prior retirement plan
eligibility.

Notwithstanding any other provisions under this section, an election under this
section is available to eligible participants only within the first 30 days of commencing
employment or service with the governmental subdivision. If the eligible participant has
previously been or is currently in a position covered by any retirement plan administered
by the association or by any supplemental pension or deferred compensation plan under
section 356.24 sponsored by the governmental subdivision, then the eligible participant
must not receive an election.

Sec. 6. ONETIME IRREVOCABLE ELECTION.

Subdivision 1.

City managers.

(a) A city manager hired by a city within six months
before the effective date of this act and who is currently participating in the general employee
retirement plan of the Public Employees Retirement Association may make a onetime
irrevocable election to be excluded from membership if the election is:

(1) in writing on a form prescribed by the executive director;

(2) approved by a resolution adopted by the governing body of the city; and

(3) received by the executive director between August 1, 2024, and August 31, 2024.

(b) Membership of a city manager in the general employees retirement plan ceases on
the date that the written election is received by the executive director. Employee and
employer contributions made on behalf of a person exercising the option to be excluded
from membership under this subdivision must be refunded or credited in accordance with
Minnesota Statutes, section 353.27, subdivision 7.

Subd. 2.

Local government officials.

A local government official elected or appointed
to public office in a city within six months before the effective date of this act may make a
onetime irrevocable election to participate in the public employees defined contribution
plan if the election is:

(1) in writing on a form prescribed by the executive director;

(2) approved by a resolution adopted by the governing body of the city; and

(3) received by the executive director between August 1, 2024, and August 31, 2024.

Subd. 3.

Public ambulance service personnel.

Eligible personnel hired by or providing
service to a participating public ambulance service within six months before the effective
date of this act may make a onetime irrevocable election to participate in the public
employees defined contribution plan if the election is:

(1) in writing on a form prescribed by the executive director; and

(2) received by the executive director between August 1, 2024, and August 31, 2024.

Sec. 7. REPEALER.

Minnesota Statutes 2022, sections 353.028, subdivisions 4 and 5; and 353D.071, are
repealed.

Sec. 8. EFFECTIVE DATE.

Sections 1 to 7 are effective the day following final enactment.

APPENDIX

Repealed Minnesota Statutes: 24-07716

353.028 CITY MANAGERS; ELECTION; DEFERRED COMPENSATION.

Subd. 4.

Refunds; deferred annuity.

A city manager who makes an election to be excluded from membership is entitled to a refund of accumulated deductions or, if otherwise qualified, a deferred annuity under section 353.34, at the option of the manager.

Subd. 5.

Election; other employment.

If a city manager who has made an election to be excluded subsequently accepts employment in another governmental subdivision or subsequently accepts employment other than as a city manager in the same city, the election is rescinded on the effective date of employment.

353D.071 FEDERAL COMPLIANCE.

Subdivision 1.

Definitions.

(a) For purposes of this section, the following terms have the meanings given them.

(b) "Designated beneficiary" means the person designated as the beneficiary under section 353D.07, subdivision 5, and who is the designated beneficiary under section 401(a)(9) of the Internal Revenue Code and section 1.401 (a)(9)-1, Q&A-4 of the Treasury regulations.

(c) "Distribution calendar year" means a calendar year for which a minimum distribution is required. For distributions beginning before the participant's death, the first distribution calendar year is the calendar year immediately preceding the calendar year which contains the participant's required beginning date. For distributions beginning after the participant's death, the first distribution calendar year is the calendar year in which distributions are required to begin under subdivision 2, paragraph (c). The required minimum distribution for the participant's first distribution calendar year shall be made on or before the participant's required beginning date.

(d) "Participant's account balance" means the account balance as of the last valuation date in the valuation calendar year increased by the amount of any contributions made and allocated to the account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date. The account balance for the valuation calendar year includes any amounts rolled over or transferred to the plan either in the valuation calendar year or in the distribution calendar year if distributed or transferred in the valuation calendar year.

(e) "Required beginning date" means the date a participant's retirement benefit must begin under section 356.635, subdivision 1, paragraph (a).

(f) "Valuation calendar year" means the calendar year immediately preceding the distribution calendar year.

Subd. 2.

Required minimum distributions.

(a) The provisions of this subdivision apply for purposes of determining required minimum distributions for calendar years and must take precedence over any inconsistent provisions of the plan. All distributions required under this section must be determined and made in accordance with the treasury regulations under section 401(a)(9) of the Internal Revenue Code, including regulations providing special rules for governmental plans, as defined under section 414(d) of the Internal Revenue Code, that comply with a reasonable good faith interpretation of the minimum distribution requirements.

(b) The participant's entire interest must be distributed or begin to be distributed no later than the participant's required beginning date.

(c) If the participant dies before the required minimum distribution is made or begins, the participant's account must be distributed in a lump sum no later than as follows:

(1) if the participant's surviving spouse is the participant's sole designated beneficiary, the distribution must be made by December 31 of the calendar year immediately following the calendar year in which the participant died, or by December 31 of the calendar year in which the participant would have attained the participant's required beginning date, whichever is later;

(2) if the participant's surviving spouse is not the participant's sole beneficiary, or if there is no designated beneficiary as of September 30 of the year following the year of the participant's death, the participant's account must be distributed by December 31 of the calendar year containing the fifth anniversary of the participant's death as directed under section 353D.07, subdivision 5; or

(3) if the participant's surviving spouse is the participant's sole designated beneficiary and the surviving spouse dies after the participant, but before the account balance is distributed to the surviving spouse, paragraph (c), clause (2), must apply as if the surviving spouse were the participant.

(d) For purposes of paragraph (c), unless clause (3) applies, distributions are considered to be made on the participant's required beginning date. If paragraph (c), clause (3), applies, distributions are considered to begin on the date distributions must be made to the surviving spouse under paragraph (c), clause (1).