2006 Minnesota Statutes

CHAPTER 353D. PUBLIC EMPLOYEES DEFINED CONTRIBUTION PLAN

353D.01 PUBLIC EMPLOYEES DEFINED CONTRIBUTION PLAN.
    Subdivision 1. Establishment. The public employees defined contribution plan is
administered by the Public Employees Retirement Association under supervision of the
association board of trustees. To assist it in governing the operations of the plan, the board may
appoint an advisory committee of not more than nine members who are representative of the
employers and employees who participate in the plan.
    Subd. 2. Eligibility. (a) Eligibility to participate in the defined contribution plan is available
to:
(1) elected local government officials of a governmental subdivision who elect to participate
in the plan under section 353D.02, subdivision 1, and who, for the elected service rendered to
a governmental subdivision, are not members of the Public Employees Retirement 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 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 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 Public Employees
Retirement Association under section 353.01, subdivision 7;
(6) 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 public employees defined contribution plan under section 353.028, subdivision
3, paragraph (b); and
(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 public employees 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.
(b) For purposes of this chapter, an elected local government official includes a person
appointed to fill a vacancy in an elective office. Service as an elected local government official
only includes service for the governmental subdivision for which the official was elected by the
public-at-large. Service as an elected local government official ceases and eligibility to participate
terminates when the person ceases to be an elected official. An elected local government official
does not include an elected county sheriff.
(c) 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.
(d) 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.
History: 1987 c 372 art 5 s 1; 1990 c 570 art 8 s 2; 1991 c 291 art 19 s 2,11; 1991 c 341 s
35; 1992 c 432 art 2 s 36; 1996 c 438 art 6 s 1; 1999 c 222 art 21 s 1; 1Sp2003 c 12 art 4
s 4; 2006 c 271 art 3 s 30

353D.02 ELECTION OF COVERAGE.
    Subdivision 1. Elected local government officials. Eligible elected local government
officials may elect to participate in the defined contribution plan after being elected or appointed
to elective 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 elected 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.
    Subd. 2. Eligible physician. Eligible physicians may elect to participate in the defined
contribution plan within 90 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 30 days of the date on which the
individual was employed by the service or began to provide service for it, whichever date is later.
An election by a service or an individual is revocable.
    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 30
days of the date on which the individual begins to provide service to 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 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 file that election with the executive director. 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.
    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 volunteer
firefighters relief association under chapter 424A may elect to participate in the plan. 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.
History: 1987 c 372 art 5 s 2; 1990 c 570 art 8 s 3; 1991 c 291 art 19 s 3,11; 1991 c 341 s
36; 1992 c 432 art 2 s 37; 1993 c 307 art 4 s 47; 1996 c 438 art 6 s 2; 1999 c 222 art 21 s 2;
1Sp2003 c 12 art 4 s 5; 2006 c 271 art 3 s 31-33

353D.021 [Never effective]

353D.03 FUNDING OF PLAN.
    Subdivision 1. Local government official contribution. An eligible elected local
government official who elects to participate in the public employees defined contribution plan
shall contribute an amount equal to five percent of salary as defined in section 353.01, subdivision
10 . A participating elected local government official's governmental subdivision shall contribute
a matching amount.
    Subd. 2. Physician contribution. An eligible physician who elects to participate in the plan
shall contribute an amount equal to five percent of salary as defined in section 353.01, subdivision
10 . The employer shall contribute a matching amount.
    Subd. 3. Ambulance service, rescue squad personnel contribution. A public ambulance
service or privately operated ambulance service that receives an operating subsidy from a
governmental entity that elects to participate in the plan shall fund benefits for its qualified
personnel who individually elect to participate. Personnel who are paid for their services may
elect to make member contributions in an amount not to exceed the service's contribution on
their behalf. Ambulance service contributions on behalf of salaried employees must be a fixed
percentage of salary. An ambulance service making contributions for volunteer or largely
uncompensated personnel, or a municipality or county making contributions on behalf of rescue
squad members who are volunteers or largely uncompensated personnel, may assign a unit value
for each call or each period of alert duty for the purpose of calculating ambulance service or
rescue squad service contributions, as applicable.
    Subd. 4. Payments by former eligible elected officials. Former eligible elected local
government officials in the defined contribution plan under this chapter shall not contribute to the
plan except under section 353D.12.
    Subd. 5. City managers. A city manager who elects to participate in the plan shall contribute
an amount equal to the contribution under section 353.27, subdivision 2. The applicable city shall
make a contribution equal to the contribution required under section 353.27, subdivision 3.
    Subd. 6. Volunteer firefighters. (a) Unless paragraph (b) applies, a volunteer or emergency
on-call firefighter who elects to participate in the plan shall contribute at least 7.5 percent of any
compensation received for firefighting services.
(b) If the municipality or the independent nonprofit firefighting corporation ratified the
election of plan coverage under section 353D.02, subdivision 6, the volunteer firefighter and
the employing unit shall contribute in total an amount equal at least to 7.5 percent of any
compensation received for firefighting services.
History: 1987 c 372 art 5 s 3; 1990 c 570 art 8 s 4; 1991 c 291 art 19 s 5,11; 1992 c 432 art
2 s 38; 1996 c 438 art 6 s 3; 1999 c 222 art 21 s 3; 2006 c 271 art 3 s 34,35

353D.031 [Never effective]

353D.04 CONTRIBUTIONS AND DEDUCTIONS IN ERROR.
    Subdivision 1. Crediting of account. Contributions made by or on behalf of a participating
elected local government official or physician must be remitted to the Public Employees
Retirement Association and credited to the individual account established for the participant.
Ambulance service contributions must be remitted on a regular basis to the association together
with any member contributions paid or withheld. Those contributions must be credited to the
individual account of each participating member.
    Subd. 2. Authority to adopt policies. The executive director may adopt policies and
procedures regarding deductions taken totally or partially in error by the employer from the
salary of an elected official.
History: 1987 c 372 art 5 s 4; 1990 c 570 art 8 s 5; 1991 c 341 s 37; 1992 c 432 art 2 s 39;
1993 c 307 art 4 s 48; 1996 c 438 art 6 s 4

353D.05 INVESTMENT OF FUNDS.
    Subdivision 1. Investment. Employing unit contributions, after the deduction of an amount
for administrative expenses, and individual participant contributions must be remitted to the State
Board of Investment for investment in the Minnesota supplemental investment fund established
by section 11A.17.
    Subd. 2. Investment options. (a) A participant may elect to purchase shares in the income
share account, the growth share account, the international share account, the money market
account, the bond market account, the fixed interest account, or the common stock index account
established by section 11A.17, or a combination of those accounts. The participant may elect to
purchase shares in a combination of those accounts by specifying the percentage of the total
contributions to be used to purchase shares in each of the accounts.
(b) A participant or a former participant may indicate in writing a choice of options for
subsequent purchases of shares. After a choice is made, until the participant or former participant
makes a different written indication, the executive director of the association shall purchase shares
in the supplemental investment account or accounts specified by the participant. If no initial option
is indicated by a participant or the specifications made by the participant exceeds 100 percent to
be invested in more than one account, the executive director shall invest all contributions made
by or on behalf of a participant in the income share account. If the specifications are less than
100 percent, the executive director shall invest the remaining percentage in the income share
account. A choice of investment options is effective the first of the month following the date of
receipt of the signed written choice of options.
(c) Shares in the fixed interest account attributable to any guaranteed investment contract
as of July 1, 1994, may not be withdrawn from the fund or transferred to another account until
the guaranteed investment contract has expired, unless the participant qualifies for a benefit
payment under section 353D.07.
(d) A participant or former participant may also change the investment options selected
for all or a portion of the individual's previously purchased shares in accounts, subject to the
provisions of paragraph (c) concerning the fixed interest account. A change under this paragraph is
effective the first of the month following the date of receipt of a signed written choice of options.
(e) The change or selection of an investment option or the transfer of all or a portion of the
deceased or former participant's shares in the income share, growth share, common stock index,
bond market, international share, money market, or fixed interest accounts must not be made
following death of the participant or former participant.
    Subd. 3. Administrative expenses. The executive director of the association with the advice
and consent of the board shall annually set an amount to recover the costs of the association in
administering the public employees defined contribution plan.
History: 1987 c 372 art 5 s 5; 1988 c 453 s 11; 1988 c 709 art 5 s 34; 1990 c 570 art 8 s 6,7;
1991 c 291 art 19 s 7,11; 1991 c 341 s 38; 1992 c 432 art 2 s 40,41; 1992 c 539 s 13,14; 1993 c
307 art 4 s 49; 1994 c 465 art 3 s 57; 1994 c 604 art 1 s 14; 1998 c 390 art 2 s 8

353D.051 [Never effective]

353D.06 REPORTING.
The executive director of the public employees retirement association shall prescribe the
reporting forms required from employing units and the election forms required from participants.
Reporting forms must contain names, identification numbers, amount of contribution by and on
behalf of each participant, and such other data as is required to keep an accurate record of the
account value of each participant.
History: 1987 c 372 art 5 s 6; 1990 c 570 art 8 s 8; 1991 c 291 art 19 s 9,11

353D.07 BENEFITS.
    Subdivision 1. Type of plan; uniformity. (a) The plan is a defined contribution plan the
benefits from which are payable upon termination of service, retirement, disability, or death. The
amount of benefits is determined by the value of accumulated contributions plus a proportionate
share of investment income of the fund credited to each individual account.
(b) In the case of ambulance service personnel, eligibility standards must be uniform among
all ambulance service personnel of an ambulance service electing to participate.
    Subd. 2. Payment of benefits. Withdrawal of a benefit based on individual participant
contributions and employer contributions plus accrued investment income is payable upon the
death or termination of a participant but not at the time an individual revokes membership in the
defined contribution plan under section 353D.02. An application by or on behalf of the participant
must be filed before any payment of benefits may be made.
    Subd. 3. Form of benefit. A retirement benefit is payable in a lump sum equal to the value of
a participant's account at the date of withdrawal. As an alternative to a lump-sum distribution, the
participant may choose to have the association transfer the total account value for the purchase of
an annuity payable at a designated age to an insurance company of the participant's choice that is
licensed to do business in the state.
    Subd. 4. Disability of participant. If an active participant becomes permanently and totally
disabled as defined in section 353.01, subdivision 19, that participant may withdraw from the
account in equal monthly installments an amount, designated by the participant in increments of
$100 but not to exceed ten times the joint employer and employee contribution for the month
preceding disability. The option must be exercised by filing an application on a form prescribed
by the executive director. Payments begin on the first day of the month following the month in
which the disability occurred. Payments end when the participant's disabled status ends or the
account balance is exhausted, whichever occurs first.
    Subd. 5.MS 1987 Supp [Repealed, 1988 c 709 art 5 s 42]
    Subd. 5. Death of a participant. If an active participant dies, the total value of the account
must be paid in a lump sum to the designated beneficiary or, if none, the heirs at law of the
decedent.
History: 1987 c 372 art 5 s 7; 1988 c 709 art 5 s 35-37; 1990 c 570 art 8 s 9; 1991 c 341 s
39,40; 1992 c 432 art 2 s 42,43; 1993 c 307 art 4 s 50

353D.08 PORTABILITY.
Participating ambulance service personnel who change employment or membership among
participating ambulance services shall continue participation in the plan if termination from one
participating ambulance service and commencement in another participating ambulance service
occurs within 30 days.
History: 1987 c 372 art 5 s 8; 1988 c 709 art 5 s 38; 1990 c 570 art 8 s 10

353D.09 TAX QUALIFICATION.
The Public Employees Retirement Association shall adopt rules necessary for administration
of the plan. The proposed plan shall be formulated and adopted in accordance with applicable
restrictions and standards of the Internal Revenue Code and rulings and regulations of the Internal
Revenue Service in order to assure the tax-exempt status of the plan as a qualified pension plan.
Contributions may be accepted only after approval by the Internal Revenue Service.
History: 1987 c 372 art 5 s 9; 1990 c 570 art 8 s 11

353D.091 [Never effective]

353D.10 NOT CONSIDERED A LOCAL PLAN.
The plan is not a local governmental pension plan or fund for purposes of section 356.25.
History: 1987 c 372 art 5 s 10

353D.11 [Repealed, 1996 c 438 art 6 s 7]

353D.12 CONTRIBUTIONS FOR PRIOR ELECTED SERVICE.
    Subdivision 1. Eligibility; contributions. An elected local government official who
participates in the defined contribution plan under this chapter may make contributions to the
plan for the service as an elected public officer rendered before June 30, 1991, that was not
covered by a public or private employer contributory pension plan, including a plan administered
by the public employees retirement association under chapter 353. An elected local government
official may make contributions for prior elected service to the defined contribution plan even
if eligibility criteria for the defined benefit plan under chapter 353 were not met at the time
service was rendered. The association shall not accept contributions for prior elected service
from a former elected official after the end of the tax year in which the elected official ceases to
hold office. Employer contributions on behalf of the former elected official must be made to the
association no later than 30 days after April 15 following the end of the tax year under section 415
of the federal Internal Revenue Code, as amended. Employee contributions must be made to the
association no later than 30 days after the close of the limitation year under section 415 of the
federal Internal Revenue Code, as amended.
    Subd. 2. Amount of prior service contributions. (a) The employee purchase amount is
that amount that the participating elected local government official specifies, but combined with
subdivision 6 may not exceed in total the amount of the employee and employer contributions that
would have been payable under section 353.27, subdivisions 2, 3, and 3a, based on the actual
salary or compensation of the elected local government official from public sources during the
prior service and based on the rates in effect during the prior service, plus interest at an annual
compound rate of six percent.
(b) In any year, the purchase amount to be paid in is subject to the limitation for defined
contribution plans under section 415(c) of the federal Internal Revenue Code, as amended, or
comparable contribution limitation set forth in the federal Internal Revenue Code, and applicable
regulations and revenue rulings, remaining after subtracting the funding amounts under section
353D.03, paragraph (a), for that year.
    Subd. 3. Installment payments. The purchase amount may be made in annual installments
but may not exceed, combined with subdivision 6, in any installment the limitation set forth in
subdivision 2, paragraph (a), or in total the limitation set forth in subdivision 2, paragraph (a).
    Subd. 4. Authorized rollovers. To the extent allowed by federal law, the employee purchase
amount may be made with funds distributed from: (1) a plan qualified under section 401(a) of
the federal Internal Revenue Code, as amended; (2) an annuity qualified under section 403(a)
of the federal Internal Revenue Code, as amended; (3) an individual retirement account used
solely to receive a nontaxable rollover from that type of plan or annuity; (4) the state deferred
compensation plan authorized under section 352.96 and qualified under section 457 of the federal
Internal Revenue Code, as amended; or (5) another tax qualified plan or annuity that authorizes
rollovers. The participating elected local government official shall supply sufficient written
documentation that the transfer amounts are eligible for tax-free rollover treatment. An authorized
tax-free rollover, plus any other purchase amount payments under this section, including
subdivision 6, may not exceed the limitation in subdivision 2, paragraph (a). Notwithstanding
any provision of state law or rule to the contrary, to the extent permitted under federal law, the
employee purchase amount may be transferred from the state deferred compensation plan before
the employee terminates public employment.
    Subd. 5. Prior service and compensation documentation. The participating elected local
government official shall supply sufficient documentation of the person's prior uncredited service
and compensation for which the purchase payment is made.
    Subd. 6. Employing unit payment. The employing unit of the participating elected local
government official shall pay the amount of the employer contributions that could have been
payable under section 353.27, subdivisions 3 and 3a, based on the actual salary or compensation
of the elected local government official from public sources during the prior service, plus interest
at an annual compound rate of six percent. This amount combined with any employee purchase
amount and any contributions under section 353D.03, paragraph (a), must in any year comply
with the limitation set forth in subdivision 2, paragraph (a).
History: 1990 c 570 art 8 s 13; 1991 c 341 s 41; 1992 c 432 art 2 s 44