1997 Minnesota Statutes

CHAPTER 354B. Individual retirement account plan

  354B.01 Repealed, 1995 c 141 art 4 s 31 

  354B.015 Repealed, 1995 c 141 art 4 s 31 

  354B.02 Repealed, 1995 c 141 art 4 s 31 

  354B.03 Repealed, 1989 c 319 art 18 s 12 

  354B.035 Repealed, 1995 c 141 art 4 s 31 

  354B.04 Repealed, 1995 c 141 art 4 s 31 

  354B.045 Repealed, 1995 c 141 art 4 s 31 

  354B.06 Repealed, 1995 c 141 art 4 s 31 

  354B.085 Repealed, 1995 c 141 art 4 s 31 

  354B.09 Repealed, 1995 c 141 art 4 s 31 

  354B.15 Repealed, 1995 c 141 art 4 s 31 

     354B.20 Definitions. 

    Subdivision 1.    In general.  Unless the content or 
 subject matter indicates otherwise, as used in this chapter the 
 terms in this section have the meanings given them. 

    Subd. 2.    Board.  "Board" means the board of trustees 
 of the Minnesota state colleges and universities. 

    Subd. 3.    Chancellor.  "Chancellor" means the 
 chancellor of the board. 

    Subd. 4.    Covered employment.  (a) "Covered employment"
 means employment by a person eligible for coverage by this 
 retirement program under section 354B.21 in a faculty position 
 or in an eligible unclassified administrative position. 

    (b) "Covered employment" does not mean employment specified 
 in paragraph (a) by a faculty member employed in a state 
 university or a community college if the person's initial 
 appointment is specified as constituting less than 25 percent of 
 a full academic year, exclusive of summer session, for the 
 applicable institution. 

    Subd. 5.    Covered salary.  (a) "Covered salary" means 
 the periodic compensation paid to the participant before 
 deductions for deferred compensation, supplemental retirement 
 coverage, or other voluntary salary reduction program. 

    (b) "Covered salary" does not mean lump sum sick leave 
 payments, severance payments, payments in lieu of employer-paid 
 group insurance coverage, payments based on differences between 
 single employer-paid group insurance coverage and insurance 
 coverage including dependents, or workers' compensation payment. 

    Subd. 6.    Eligible unclassified administrative position. 
  "Eligible unclassified administrative position" means the 
 following: 

    (1) the chancellor of the board; 

    (2) a president of a state college or university; or 

    (3) an excluded administrator employed in a state 
 university or college, by the board, or by the higher education 
 services office. 

    Subd. 7.    Employing unit.  "Employing unit," if the 
 agency employs any persons covered by the individual retirement 
 account plan under section 354B.21, means: 

    (1) the board; 

    (2) the higher education services office; and 

    (3) the higher education facilities authority. 

    Subd. 8.    Faculty.  "Faculty" means an employment 
 position that meets the definition of either section 354.05, 
 subdivision 2, or 354A.011, subdivision 27. 

    Subd. 9.    First class city teacher retirement fund 
 association.  "First class city teacher retirement fund 
 association" means a retirement plan, fund, and plan 
 administration established under chapter 354A. 

    Subd. 10.    General state employees retirement plan.  
 "General state employees retirement plan" means the retirement 
 plan administered by the Minnesota state retirement system and 
 governed by sections 352.01 to 352.72. 

    Subd. 11.    Board of trustees of the Minnesota state 
 colleges and universities.  "Board of trustees of the 
 Minnesota state colleges and universities" means the governing 
 board for the state universities, the community colleges, and 
 the technical colleges established by section 136F.02. 

    Subd. 12.    Participant.  "Participant" means a person 
 who is employed in covered employment by the board and who 
 elects coverage by the plan under section 354B.21. 

    Subd. 13.    Plan.  "Plan" means the individual 
 retirement account plan established by this chapter. 

    Subd. 14.    Plan administrator.  "Plan administrator" 
 means the board employee or an independent contract agent 
 designated by the board to perform the primary administrative 
 functions relating to the plan. 

    Subd. 15.    Sabbatical leave.  "Sabbatical leave" means 
 a sabbatical leave as specified in the applicable collective 
 bargaining agreement or personnel policy of the board for its 
 employees. 

    Subd. 16.    State unclassified employees retirement 
 program.  "State unclassified employees retirement program" 
 means the retirement program established by chapter 352D. 

    Subd. 17.    Supplemental plan.  "Supplemental plan" 
 means the retirement program established by chapter 354C. 

    Subd. 18.    Teachers retirement plan.  "Teachers 
 retirement plan" means the retirement plan established by 
 chapter 354. 

    HIST: 1995 c 141 art 4 s 8; 1995 c 212 art 3 s 59; art 4 s 64; 
 1996 c 305 art 1 s 139 

     354B.21 Coverage. 

    Subdivision 1.    Eligibility.  The following persons 
 are eligible to have coverage by the individual retirement 
 account plan and to be participants in the plan: 

    (1) employees of the board who are employed as faculty in 
 an employment classification included in the state university 
 instructional unit, the community college instructional unit, or 
 the technical college instructional unit under section 179A.10, 
 subdivision 2; 

    (2) the chancellor and employees of the board in eligible 
 unclassified administrative positions; 

    (3) the employees in eligible unclassified administrative 
 positions in the state universities; 

    (4) the employees in eligible unclassified administrative 
 positions in the technical colleges; and 

    (5) the employees in eligible unclassified administrative 
 positions of the higher education services office or of the 
 community colleges. 

    Subd. 2.    Coverage; election.  (a) An eligible person 
 is entitled to elect coverage by the plan.  If the eligible 
 person does not make a timely election of coverage by the plan, 
 the person has the coverage specified in subdivision 3. 

    (b) For eligible persons who were employed by the former 
 state university system or the former community college system 
 before May 1, 1995, the person has the retirement coverage that 
 the person had for employment immediately before May 1, 1995. 

    (c) For all other eligible persons, the election of 
 coverage must be made within 90 days of May 10, 1995, or 90 days 
 of receiving notice from the employer of the options available 
 under this section, whichever occurs later. 

    Subd. 3.    Default coverage.  (a) If an eligible person 
 fails to elect coverage by the plan under subdivision 2 or if 
 the person fails to make a timely election, the following 
 retirement coverage applies: 

    (1) for employees of the board who are employed in faculty 
 positions in the technical colleges, in the state universities 
 or in the community colleges, the retirement coverage is by the 
 plan established by this chapter; 

    (2) for employees of the board who are employed in faculty 
 positions in the technical colleges, the retirement coverage is 
 by the plan established by this chapter unless on June 30, 1997, 
 the employee was a member of the teachers retirement association 
 established under chapter 354 and then the retirement coverage 
 is by the teachers retirement association, or, unless the 
 employee was a member of a first class city teacher retirement 
 fund established under chapter 354A on June 30, 1995, and then 
 the retirement coverage is by the Duluth teachers retirement 
 fund association if the person was a member of that plan on June 
 30, 1995, or the Minneapolis teachers retirement fund 
 association if the person was a member of that plan on June 30, 
 1995, or the St. Paul teachers retirement fund association if 
 the person was a member of that plan on June 30, 1995; and 

    (3) for employees of the board who are employed in eligible 
 unclassified administrative positions, the retirement coverage 
 is by the plan established by this chapter. 

    (b) If an employee fails to correctly certify prior 
 membership in the teachers retirement association to the 
 Minnesota state colleges and universities system, the system 
 shall not pay interest on employee contributions, employer 
 contributions, and additional employer contributions to the 
 teachers retirement association under section 354.52, 
 subdivision 4. 

    Subd. 3a.    Continuation of plan coverage in certain 
 instances.  For a person with retirement coverage by a first 
 class city teacher retirement fund association instead of the 
 individual retirement account plan under subdivision 3, clause 
 (2), coverage by the applicable retirement fund association 
 continues for the duration of the person's employment by the 
 board of trustees of the Minnesota state colleges and 
 universities unless, within 90 days of a change in employment 
 within the Minnesota state colleges and universities system, the 
 person elects the individual retirement account plan for all 
 future employment by the board of trustees of the Minnesota 
 state colleges and universities. 

    Subd. 3b.    Coverage of certain former technical college 
 faculty members.  A person who was employed as a teacher by a 
 technical college before July 1, 1995, and who subsequently is 
 reclassified into a different employment position while 
 continuing to perform the same or essentially the same 
 employment duties and consequently shifts from the technical 
 college instructional collective bargaining unit to another 
 state collective bargaining unit retains coverage by the 
 teachers retirement association or the applicable first class 
 city teachers retirement fund association, whichever applies. 

    Subd. 3c.    Election of TRA coverage in certain 
 instances.  (a) A person who was employed as a teacher by a 
 technical college before July 1, 1995, and who has retirement 
 coverage for that technical college teacher employment by a 
 first class city teacher retirement fund association under 
 chapter 354A may elect to have future higher education system 
 teacher employment retirement coverage by the teacher retirement 
 association governed by chapter 354. 

    (b) The election to transfer prospective retirement 
 coverage under paragraph (a) must be made by the technical 
 college teacher by October 1, 1995, or within 90 days of 
 initially being employed by the higher education system, 
 whichever is later.  The election must be made in writing on a 
 form prescribed by the executive director of the teachers 
 retirement association.  The election, once filed with the 
 executive director of the teachers retirement association, is 
 irrevocable. 

    (c) An election to transfer prospective retirement coverage 
 under paragraph (a) does not affect prior allowable service 
 credit under section 354A.011, subdivision 4.  The transfer of 
 prospective retirement coverage does not make the person 
 eligible for a refund of member contributions during the course 
 of the person's employment by the higher education system. 

    Subd. 4.    Coverage in the event of acting, interim, or 
 temporary appointments.  (a) A person previously employed by 
 the board and subsequently appointed by the board to an acting, 
 interim, or temporary faculty or eligible unclassified 
 administrative position by the board retains the retirement 
 coverage that the person had in the prior board position.  If 
 the participant's status becomes permanent, the participant has 
 the option to make an election of retirement coverage 
 appropriate to the retirement plan in which the employment 
 position should have retirement coverage consistent with 
 subdivision 2. 

    (b) A person who is appointed to an acting, interim, or 
 temporary faculty position by the board and who was not employed 
 in a faculty position by the board immediately before that 
 appointment must elect coverage as provided in subdivision 2. 

    Subd. 5.    Payment for certain prior uncovered service. 
  (a) A person employed in a faculty position by the board who 
 was initially excluded from participation in the individual 
 retirement account plan coverage, who was not covered by any 
 other Minnesota public pension plan for that service, and who is 
 subsequently eligible to participate in the individual 
 retirement account plan may make member contributions for that 
 period of prior uncovered teaching employment or eligible 
 unclassified administrative employment with the board. 

    (b) The member contributions for prior uncovered board 
 service are the amount that the person would have paid if the 
 prior service had been covered employment.  The payment must be 
 made to the individual retirement account plan administrator and 
 may be made only by payroll deduction.  The payment must be made 
 by the later of: 

    (1) 45 days of the start of covered employment; or 

    (2) the end of the fiscal year in which covered employment 
 began. 

    (c) The board must contribute an amount to match any 
 contribution made by a plan participant under this subdivision. 

    (d) Payments of contributions for prior uncovered board 
 service under this subdivision must be invested in the same 
 manner as the regular contributions made by or on behalf of the 
 plan participant. 

    Subd. 6.    Continuation of coverage.  Once a person is 
 employed in a position that qualifies for participation in the 
 individual retirement account plan and elects to participate in 
 the plan, all subsequent service by the person as a faculty 
 member employed by the board or other employing unit is covered 
 by the individual retirement account plan. 

    HIST: 1995 c 141 art 4 s 9; 1995 c 212 art 3 s 59; art 4 s 64; 1997 
 c 241 art 8 s 5 

     354B.22 IRAP coverage in addition to social security 
  coverage. 

    Subdivision 1.    Social security coverage.  (a) Any 
 employee of the board or other employing unit who elects 
 coverage by this chapter is a member of the teachers retirement 
 association solely for purposes of coverage by the federal old 
 age, survivors, disability and health insurance program, and is 
 covered by the agreement made under section 355.02. 

    (b) A person with federal social security coverage through 
 teachers retirement association membership under paragraph (a) 
 is not a member of the teachers retirement association for any 
 other purpose while employed as a teacher by the board, and 
 membership in the teachers retirement association for this 
 limited purpose conveys no rights or benefit entitlement under 
 chapter 354. 

    Subd. 2.    Public pension coverage as condition of 
 employment.  Coverage by a public pension plan under section 
 354B.21 is a condition of initial employment or continued 
 employment as a faculty member or eligible unclassified 
 administrative position by the board or other employing unit. 

    HIST: 1995 c 141 art 4 s 10 

     354B.23 Contributions. 

    Subdivision 1.    Member contribution rate.  (a) Except 
 as provided in paragraph (b), the member contribution rate for 
 participants in the individual retirement account plan is 4.5 
 percent of salary. 

    (b) For participants in the individual retirement account 
 plan who were otherwise eligible to elect retirement coverage in 
 the state unclassified employees retirement program, the member 
 contribution rate is the rate specified in section 352D.04, 
 subdivision 2, paragraph (a). 

    Subd. 2.    Member contribution method.  Member 
 contributions must be made by payroll deduction during each pay 
 period. 

    Subd. 3.    Employer contribution rate.  The employer 
 contribution rate on behalf of participants in the individual 
 retirement account plan is six percent of salary. 

    Subd. 4.    Employer contribution method.  The employer 
 contribution must be made by the employing unit of a plan 
 participant during each pay period.  The employer contribution 
 must be made from the available revenue sources of the employing 
 unit. 

    Subd. 5.    Omitted member deductions.  (a) If the 
 employing unit that employs a plan participant fails to deduct 
 the member contribution from the participant's salary and a 
 period of less than 60 days from the date on which the deduction 
 should have been made has elapsed, the employing unit must 
 obtain the omitted member deduction by an additional payroll 
 deduction during the pay period next following the discovery of 
 the omission. 

    (b) If the employing unit of a plan participant fails to 
 deduct the member contribution from the participant's salary and 
 that omission continues for at least 60 days from the date on 
 which the deduction should have been made, the employing unit 
 must pay the amount representing the omitted member 
 contribution, and the full required employer contribution, plus 
 compound interest at an annual rate of 8.5 percent.  The 
 contributions and any interest must be made within one year of 
 the date on which the omission was discovered. 

    Subd. 6.    Transfer of certain TRA member contribution 
 amounts to IRAP.  (a) Notwithstanding any provisions of 
 chapter 354 to the contrary, a former member of the teachers 
 retirement association who has less than three years of 
 allowable service credit under section 354.05, subdivision 13, 
 and who is a member of the individual retirement account plan 
 may elect to transfer to the plan an amount equal to the refund 
 that the person could have received under section 354.49, 
 subdivision 2, if the person had been eligible to receive a 
 refund. 

    (b) The transfer must be made from the teachers retirement 
 association directly to the individual retirement account plan 
 and credited to the appropriate account. 

    (c) No amount under this subdivision may be paid directly 
 to the former teachers retirement association member. 

    (d) The election of this transfer must be made on a form 
 prescribed by the executive director of the teachers retirement 
 association, after consultation with the plan administrator. 

    HIST: 1995 c 141 art 4 s 11 

     354B.24 Sabbatical leave. 

    Subdivision 1.    Continuation of coverage.  A person 
 who is a participant in the individual retirement plan, and who 
 goes on an approved sabbatical leave, must remain a participant 
 in the plan for any period during which the person receives a 
 salary from the board or during which the person makes an 
 optional contribution provided for in subdivision 3. 

    Subd. 2.    Mandatory contributions.  (a) From the 
 salary paid to the person during the course of an approved 
 sabbatical leave, the employing unit must deduct a member 
 contribution as required under section 354B.23, subdivision 1. 

    (b) The employing unit must make the employer contribution 
 on behalf of the plan participant as provided in section 
 354B.23, subdivision 3. 

    Subd. 3.    Optional additional contributions.  (a) A 
 plan participant on an approved sabbatical leave may make an 
 optional additional member contribution.  The optional 
 additional member may not exceed the applicable member 
 contribution rate specified in section 354B.23, subdivision 1, 
 applied to the difference between the amount of salary actually 
 received during the sabbatical leave and the amount of salary 
 actually received for a comparable period of an identical length 
 to the sabbatical leave that occurred during the fiscal year 
 immediately preceding the sabbatical leave. 

    (b) Any optional additional member contribution must be 
 made before the last day of the fiscal year next following the 
 fiscal year in which the sabbatical leave terminates.  The 
 optional additional member contribution may not include interest.

    (c) When an optional additional member contribution is 
 made, the employing unit must make the employer contribution at 
 the rate set forth in section 354B.23, subdivision 3, on the 
 salary that was the basis for the optional additional member 
 contribution under paragraph (a). 

    (d) An employer contribution required under this section 
 must be made no later than 60 days after the date on which the 
 optional additional member contribution was made. 

    Subd. 4.    Reinstatement rights.  Notwithstanding the 
 provisions of any sabbatical leave agreements, regular and 
 optional additional member contributions and employer 
 contributions under this section are permissible only if the 
 plan participant retains the right to full reinstatement to an 
 employment position with the applicable employing unit both 
 during and at the conclusion of the sabbatical leave. 

    HIST: 1995 c 141 art 4 s 12 

     354B.25 Individual retirement account plan 
  administration. 

    Subdivision 1.    General governance.  The individual 
 retirement account plan is the administrative responsibility of 
 the board of trustees of the Minnesota state colleges and 
 universities.  The board of trustees of the Minnesota state 
 colleges and universities may administer the plan directly or 
 may contract out for administrative services with a qualified 
 third-party plan administrative entity. 

    Subd. 1a.    Advisory committee.  (a) A committee is 
 created to advise the state board of investment and the board of 
 trustees of the Minnesota state colleges and universities 
 concerning administration of the individual retirement account 
 plan and the supplemental retirement plan established in chapter 
 354C.  The exclusive representatives of the state university 
 instructional unit, the community college instructional unit, 
 and the technical college instructional unit shall each appoint 
 two members to the committee.  The exclusive representatives of 
 the general professional unit, the supervisory employees unit 
 and the state university administrative unit shall each appoint 
 one member to the committee.  The chancellor of the Minnesota 
 state colleges and universities shall appoint three members, at 
 least one of whom shall be a personnel administrator.  No member 
 of the committee shall be retired.  Members serve at the 
 pleasure of the applicable appointing authority, but no member 
 shall serve for more than a total of five years.  Members shall 
 be reimbursed from the administrative expense account of the 
 individual retirement account plan for expenses as provided in 
 section 15.059, subdivision 3. 

    (b) The committee shall: 

    (1) advise the board of trustees of the Minnesota state 
 colleges and universities on the structure and operation of the 
 individual retirement account plan and the supplemental 
 retirement plan; 

    (2) along with any other consultants selected by the board, 
 advise the state board of investment on selection of financial 
 institutions and on the type of investment products to be 
 offered by these institutions for the plans; 

    (3) advise the board of trustees of the Minnesota state 
 colleges and universities on administration of the plans, 
 including selection of a third-party plan administrator, if any, 
 for the individual retirement account plan. 

    (c) The board of trustees of the Minnesota state colleges 
 and universities shall provide the advisory committee with 
 meeting space and other administrative support.  

    (d) Expenses of the advisory committee are considered 
 administrative expenses of the plans under subdivision 5 and 
 section 354C.12, subdivision 4, and must be allocated between 
 the two plans in proportion to the market value of the total 
 assets of the plans as of the most recent prior audited annual 
 financial report. 

    Subd. 2.    Annuity contracts and custodial accounts.  
 (a) The plan administrator shall arrange for the purchase of 
 fixed annuity contracts, variable annuity contracts, a 
 combination of fixed and variable annuity contracts, or 
 custodial accounts from financial institutions which have been 
 selected by the state board of investment under subdivision 3, 
 as the investment vehicle for the retirement coverage of plan 
 participants and to provide retirement benefits to plan 
 participants.  Custodial accounts from financial institutions 
 shall include open-end investment companies registered under the 
 federal Investment Company Act of 1940, as amended. 

    (b) The annuity contracts or accounts must be purchased 
 with contributions under section 354B.23 or with money or assets 
 otherwise provided by law by authority of the board and deemed 
 acceptable by the applicable financial institution. 

    (c) In addition to contracts and accounts from financial 
 institutions, the Minnesota supplemental investment fund 
 established under section 11A.17 and administered by the state 
 board of investment is one of the investment options for the 
 individual retirement account plan. 

    Subd. 3.    Selection of financial institutions.  (a) 
 The financial institutions provided for under subdivision 2 must 
 be selected by the state board of investment.  Financial 
 institutions include open-end investment companies registered 
 under the federal Investment Company Act of 1940, as amended. 

    (b) The state board of investment may select up to five 
 financial institutions to provide annuity contracts, custodial 
 accounts, or a combination, as investment options for the 
 individual retirement account plan in addition to the Minnesota 
 supplemental investment fund.  In making its selection, at a 
 minimum, the state board of investment shall consider at least 
 the following: 

    (1) the experience and ability of the financial institution 
 to provide retirement and death benefits that are suited to meet 
 the needs of plan participants; 

    (2) the relationship of those retirement and death benefits 
 provided by the financial institution to their cost; and 

    (3) the financial strength and stability of the financial 
 institution. 

    (c) After selecting a financial institution, the state 
 board of investment must periodically review each financial 
 institution selected under paragraph (b).  The periodic review 
 must occur at least every three years.  In making its review, 
 the state board of investment may retain appropriate consulting 
 services to assist it in its periodic review, establish a budget 
 for the cost of the periodic review process, and charge a 
 proportional share of these costs to the reviewed financial 
 institution. 

    (d) Contracts with financial institutions under this 
 section must be executed by the board and must be approved by 
 the state board of investment before execution. 

    (e) The state board of investment shall also establish 
 policies and procedures under section 11A.04, clause (2), to 
 carry out the provisions of this subdivision. 

    Subd. 4.    Benefit ownership.  The retirement benefits 
 provided by the annuity contracts and custodial accounts of the 
 individual retirement account plan are held for the benefit of 
 plan participants and must be paid according to this chapter and 
 the plan document. 

    Subd. 5.    Individual retirement account plan 
 administrative expenses.  (a) The reasonable and necessary 
 administrative expenses of the individual retirement account 
 plan must be paid by plan participants in the following manner: 

    (1) from plan participants with amounts invested in the 
 Minnesota supplemental investment fund, the plan administrator 
 may charge an administrative expense assessment as provided in 
 section 11A.17, subdivisions 10a and 14; and 

    (2) from plan participants with amounts through annuity 
 contracts and custodial accounts purchased under subdivision 2, 
 paragraph (a), the plan administrator may charge an 
 administrative expense assessment of a designated amount, not to 
 exceed two percent of member and employer contributions, as 
 those contributions are made. 

    (b) Any administrative expense charge that is not actually 
 needed for the administrative expenses of the individual 
 retirement account plan must be refunded to member accounts. 

    (c) The board of trustees shall report annually, before 
 October 1, to the advisory committee created in subdivision 1a 
 on administrative expenses of the plan.  The report must include 
 a detailed accounting of charges for administrative expenses 
 collected from plan participants and expenditure of the 
 administrative expense charges.  The administrative expense 
 charges collected from plan participants must be kept in a 
 separate account from any other funds under control of the board 
 of trustees and may be used only for the necessary and 
 reasonable administrative expenses of the plan. 

    HIST: 1995 c 141 art 4 s 13; 1995 c 212 art 4 s 64; 1997 c 241 
 art 3 s 7,8 

     354B.26 Deferred annuity entitlement for certain former 
  TRA members. 

    Notwithstanding any provision of chapter 354 to the 
 contrary, a person covered by this chapter who had less than 
 three years of prior allowable service credit in the teachers 
 retirement association is entitled to a deferred annuity and 
 augmentation under section 354.55, subdivision 11. 

    HIST: 1995 c 141 art 4 s 14 

     354B.30 Prohibition on loans or pretermination 
  distributions. 

    (a) No participant may obtain a loan from the plan or 
 obtain any distribution from the plan at a time before the 
 participant terminates the employment that gave rise to plan 
 coverage. 

    (b) No amounts to the credit of the plan are assignable 
 either in law or in equity, are subject to state estate tax, or 
 are subject to execution, levy, attachment, garnishment, or 
 other legal process, except as provided in section 518.58, 
 518.581, or 518.6111.  

    HIST: 1995 c 141 art 4 s 15; 1997 c 203 art 6 s 92