S T A T E O F N E W Y O R K
________________________________________________________________________
7490
2011-2012 Regular Sessions
I N A S S E M B L Y
May 6, 2011
___________
Introduced by M. of A. JORDAN, McLAUGHLIN, MONTESANO, CROUCH, CALHOUN,
HAWLEY, LOSQUADRO -- Multi-Sponsored by -- M. of A. SAYWARD -- read
once and referred to the Committee on Governmental Employees
AN ACT to amend the retirement and social security law, in relation to
establishing a defined contribution retirement plan
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. The retirement and social security law is amended by adding
a new article 23 to read as follows:
ARTICLE 23
DEFINED CONTRIBUTION RETIREMENT PLAN
SECTION 1207. APPLICABILITY.
1208. DEFINITIONS.
1209. ESTABLISHMENT OF A DEFINED CONTRIBUTION PLAN.
1210. CONTRIBUTIONS TO THE DEFINED CONTRIBUTION PLAN.
1211. ESTABLISHMENT OF 403(B) PLAN FOR CERTAIN MEMBERS.
1212. OVERTIME FOR EXISTING MEMBERS.
1213. PAYMENTS UPON SEPARATION FROM EMPLOYMENT.
1214. TRANSFERABILITY UPON SEPARATION OF EMPLOYMENT.
1215. TRANSFERABILITY OF PRIOR TAX-DEFERRED ANNUITY INTO TRUST.
1216. INCOME TAX EXEMPTION FOR CERTAIN PAYMENTS.
1217. SEVERABILITY CLAUSE.
S 1207. APPLICABILITY. NOTWITHSTANDING ANY PROVISION OF LAW TO THE
CONTRARY, THE PROVISIONS OF THIS ARTICLE SHALL BE APPLICABLE TO ALL
EMPLOYEES IN THE NEW YORK STATE RETIREMENT SYSTEM OR NEW YORK CITY
RETIREMENT SYSTEM, AS DEFINED IN SECTION TWELVE HUNDRED EIGHT OF THIS
ARTICLE, WHO FIRST JOINED SUCH SYSTEM ON OR AFTER JANUARY FIRST, TWO
THOUSAND TWELVE. HOWEVER, THE PROVISIONS OF SECTION TWELVE HUNDRED
TWELVE OF THIS ARTICLE SHALL BE APPLICABLE TO CURRENT MEMBERS AND
EMPLOYEES WHO FIRST JOINED SUCH SYSTEM PRIOR TO JANUARY FIRST, TWO THOU-
SAND TWELVE. UNDER NO CIRCUMSTANCES SHALL AN EMPLOYEE WHO JOINS A NEW
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD09651-05-1
A. 7490 2
YORK STATE RETIREMENT SYSTEM OR A NEW YORK CITY RETIREMENT SYSTEM AFTER
JANUARY FIRST, TWO THOUSAND TWELVE, BE ELIGIBLE FOR PARTICIPATION IN A
DEFINED BENEFIT RETIREMENT PLAN, AS ESTABLISHED UNDER ARTICLE EIGHT,
ELEVEN, FOURTEEN, FIFTEEN OR TWENTY-TWO OF THIS CHAPTER, ARTICLE ELEVEN
OF THE EDUCATION LAW OR TITLE THIRTEEN OF THE ADMINISTRATIVE CODE OF THE
CITY OF NEW YORK.
S 1208. DEFINITIONS. FOR THE PURPOSES OF THIS ARTICLE THE TERMS: A.
"NEW YORK STATE RETIREMENT SYSTEM" SHALL MEAN THE NEW YORK STATE AND
LOCAL EMPLOYEES' RETIREMENT SYSTEM, NEW YORK STATE AND LOCAL POLICE AND
FIRE RETIREMENT SYSTEM, AND THE NEW YORK STATE TEACHERS' RETIREMENT
SYSTEM.
B. "NEW YORK CITY RETIREMENT SYSTEM" SHALL MEAN THE NEW YORK CITY
EMPLOYEES' RETIREMENT SYSTEM, NEW YORK CITY TEACHERS' RETIREMENT SYSTEM,
NEW YORK CITY BOARD OF EDUCATION RETIREMENT SYSTEM, NEW YORK CITY POLICE
DEPARTMENT PENSION FUND, AND THE NEW YORK CITY FIRE DEPARTMENT PENSION
FUND.
C. "TRUSTEE" SHALL BE: (1) THE NEW YORK STATE COMPTROLLER FOR THE NEW
YORK STATE AND LOCAL EMPLOYEES' RETIREMENT SYSTEM OR THE NEW YORK STATE
AND LOCAL POLICE AND FIRE RETIREMENT SYSTEM;
(2) THE BOARD OF TRUSTEES FOR THE NEW YORK STATE TEACHERS' RETIREMENT
SYSTEM;
(3) THE BOARD OF TRUSTEES FOR THE NEW YORK CITY TEACHERS' RETIREMENT
SYSTEM;
(4) THE BOARD OF TRUSTEES FOR THE NEW YORK CITY RETIREMENT SYSTEM.
D. "EMPLOYEES' RETIREMENT SYSTEM" SHALL MEAN THE NEW YORK STATE AND
LOCAL EMPLOYEES' RETIREMENT SYSTEM AND THE NEW YORK CITY EMPLOYEES'
RETIREMENT SYSTEM.
E. "TEACHERS' RETIREMENT SYSTEM" SHALL MEAN THE NEW YORK STATE TEACH-
ERS' RETIREMENT SYSTEM, THE NEW YORK CITY TEACHERS' RETIREMENT SYSTEM
AND THE NEW YORK CITY BOARD OF EDUCATION RETIREMENT SYSTEM.
F. "PARTICIPATING EMPLOYER" SHALL MEAN AN EMPLOYER PARTICIPATING IN A
NEW YORK STATE RETIREMENT SYSTEM OR A NEW YORK CITY RETIREMENT SYSTEM.
G. "FINANCIAL ORGANIZATION" SHALL MEAN AN ORGANIZATION AUTHORIZED TO
DO BUSINESS IN THE STATE OF NEW YORK AND:
(1) IS AN AUTHORIZED FIDUCIARY TO ACT AS A TRUSTEE PURSUANT TO THE
PROVISIONS OF AN ACT OF CONGRESS ENTITLED "EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974" AS SUCH PROVISIONS MAY BE AMENDED FROM TIME TO
TIME, OR AN INSURANCE COMPANY; AND
(2)(A) IS LICENSED OR CHARTERED BY THE STATE INSURANCE DEPARTMENT; (B)
IS LICENSED OR CHARTERED BY THE STATE BANKING DEPARTMENT; (C) IS CHAR-
TERED BY AN AGENCY OF THE FEDERAL GOVERNMENT; (D) IS SUBJECT TO THE
JURISDICTION AND REGULATION OF THE SECURITIES AND EXCHANGE COMMISSION OF
THE FEDERAL GOVERNMENT; OR (E) IS ANY OTHER ENTITY OTHERWISE AUTHORIZED
TO ACT IN THIS STATE AS A TRUSTEE PURSUANT TO THE PROVISIONS OF AN ACT
OF CONGRESS ENTITLED "EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974"
AS SUCH PROVISIONS MAY BE AMENDED FROM TIME TO TIME.
S 1209. ESTABLISHMENT OF A DEFINED CONTRIBUTION PLAN. A. FOR EACH
EMPLOYEE WHO JOINS A NEW YORK STATE RETIREMENT SYSTEM OR A NEW YORK CITY
RETIREMENT SYSTEM ON OR AFTER JANUARY FIRST, TWO THOUSAND TWELVE, THE
TRUSTEE OF SUCH SYSTEM SHALL ESTABLISH A TRUST PURSUANT TO SECTION
457(B) OF TITLE 26 OF THE UNITED STATES CODE, PROVIDED THAT SUCH EMPLOY-
EE ELECTS TO CONTRIBUTE TO SUCH TRUST. THE TRUSTEE SHALL PROMULGATE THE
RULES AND REGULATIONS BY WHICH AN EMPLOYEE CAN ELECT TO PARTICIPATE OR
DECLINE TO PARTICIPATE IN A SECTION 457(B) PLAN, INCLUDING THE FORM BY
WHICH THE ELECTION MUST BE MADE, PROVIDED THAT THE RULES AND REGULATIONS
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REMAIN CONSISTENT WITH SECTION 457 OF THE UNITED STATES CODE AND THIS
ARTICLE.
B. THE TRUSTEE OF THE RETIREMENT SYSTEM SHALL ESTABLISH A LIST OF
INVESTMENT FUNDS MANAGED BY APPROVED FINANCIAL ORGANIZATIONS IN WHICH
THE EMPLOYEE CAN CHOOSE TO INVEST CONTRIBUTIONS MADE PURSUANT TO SECTION
TWELVE HUNDRED TEN OF THIS ARTICLE.
(1) THE TRUSTEE SHALL PROMULGATE THE RULES AND REGULATIONS THAT SHALL
ESTABLISH STANDARDS FOR THE SELECTION OF FINANCIAL ORGANIZATIONS,
AUTHORIZED TO DO BUSINESS IN THIS STATE, TO PARTICIPATE IN SUCH PLANS,
INCLUDING BUT NOT LIMITED TO, THE FOLLOWING CRITERIA: (A) RATES OF
COMMISSION, BROKERAGE AND OTHER FEES, ADMINISTRATIVE EXPENSES AND
RELATED SERVICE CHARGES IMPOSED BY THE FINANCIAL ORGANIZATION; (B) VARI-
ETY OF TYPES OF INVESTMENT OPPORTUNITIES OFFERED BY THE FINANCIAL ORGAN-
IZATION AND/OR AMONG THE FINANCIAL ORGANIZATIONS SELECTED AND THE ABILI-
TY TO TRANSFER AMONG SUCH OPPORTUNITIES; (C) THE STABILITY OF THE
FINANCIAL ORGANIZATION AS EVIDENCED BY EXPERIENCE, REPUTATION, ASSETS
AND HOLDINGS, ABILITY TO GUARANTEE SPECIFIC RATES OF RETURN; (D) ABILITY
TO COMPLY WITH REPORTING REQUIREMENTS TO THE COMPTROLLER AND TO PARTIC-
IPATES IN SUCH A PLAN; AND (E) SUCH OTHER FACTORS WHICH WOULD BE CONSID-
ERED BY A PRUDENT INVESTOR IN SUCH A PLAN.
(2) THE TRUSTEE SHALL PROVIDE SUCH INFORMATION ABOUT EACH APPROVED
FINANCIAL ORGANIZATION TO ALL MEMBERS FOR WHOM A TRUST IS ESTABLISHED
PURSUANT TO THIS ARTICLE UPON THE ESTABLISHMENT OF THE TRUST AND ON A
YEARLY BASIS THEREAFTER.
C. THE EMPLOYEE SHALL HAVE THE AUTHORITY TO DIRECT THE MANAGEMENT OF
ALL CONTRIBUTIONS MADE TO HIS OR HER TRUST BY ONE OR ALL OF THE FINAN-
CIAL ORGANIZATIONS APPROVED BY THE TRUSTEE OR THE EMPLOYEE CAN DESIGNATE
THE TRUSTEE TO DIRECT SUCH CONTRIBUTIONS ON BEHALF OF THE EMPLOYEE. IN
THE EVENT THE TRUSTEE IS DESIGNATED TO DIRECT CONTRIBUTIONS ON THE
EMPLOYEE'S BEHALF, SUCH INVESTMENTS SHALL BE MADE WITH THE LEVEL OF RISK
THE TRUSTEE DEEMS APPROPRIATE CONSIDERING THE EMPLOYEE'S EXPECTED AGE OF
RETIREMENT. IN THE EVENT THE EMPLOYEE DESIGNATES THE TRUSTEE TO INVEST
SUCH CONTRIBUTIONS AND FAILS TO PROVIDE AN EXPECTED AGE OF RETIREMENT,
THE TRUSTEE SHALL ASSUME THE EXPECTED RETIREMENT AGE IS SIXTY YEARS OF
AGE.
D. UNDER NO CIRCUMSTANCE, EXCEPT WHERE A COURT OF COMPETENT JURISDIC-
TION DETERMINES THAT THE TRUSTEE ACTED IN BAD FAITH, SHALL THE TRUSTEE
BE HELD LIABLE FOR ANY LOSSES INCURRED IN THE TRUST.
S 1210. CONTRIBUTIONS TO THE DEFINED CONTRIBUTION PLAN. A. FOR EACH
EMPLOYEE ON BEHALF OF WHOM A TRUST IS ESTABLISHED PURSUANT TO SECTION
TWELVE HUNDRED NINE OF THIS ARTICLE, THE EMPLOYER SHALL CONTRIBUTE AN
AMOUNT EQUAL TO ONE HUNDRED PERCENT OF THE EMPLOYEE'S CONTRIBUTION UP TO
THREE PERCENT OF THE EMPLOYEE'S TOTAL COMPENSATION IN THE PAY PERIOD FOR
WHICH CONTRIBUTIONS ARE BEING MADE.
B. THE EMPLOYEE CAN CHOOSE, BUT NOT BE REQUIRED, TO CONTRIBUTE UP TO
ONE HUNDRED PERCENT OF THEIR TOTAL COMPENSATION TO THE TRUST.
C. IN THE EVENT THE CONTRIBUTIONS MADE PURSUANT TO THIS SECTION WOULD
EXCEED THE LIMITATIONS IMPOSED BY SECTION 457(B) OF TITLE 26 OF THE
UNITED STATES CODE, THE EMPLOYEE'S CONTRIBUTION SHALL BE REDUCED UNTIL
THE SUM OF THE EMPLOYEE'S CONTRIBUTION AND THE EMPLOYER'S CONTRIBUTION
MEET SUCH LIMITATIONS. IN THE EVENT THE EMPLOYER'S CONTRIBUTION IS LESS
THAN THREE PERCENT OF THE EMPLOYEE'S TOTAL COMPENSATION AND THE EMPLOYEE
CONTRIBUTES TO A SECTION 403(B) TRUST PURSUANT TO SECTION TWELVE HUNDRED
ELEVEN OF THIS ARTICLE, THE DIFFERENCE BETWEEN THREE PERCENT AND THE
EMPLOYER'S CONTRIBUTION TO THE EMPLOYEE'S SECTION 457(B) TRUST SHALL BE
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CONTRIBUTED TO THE EMPLOYEE'S SECTION 403(B) TRUST, PROVIDED THAT THE
EMPLOYEE'S CONTRIBUTION EQUALS OR EXCEEDS SUCH CONTRIBUTION.
S 1211. ESTABLISHMENT OF 403(B) PLAN FOR CERTAIN MEMBERS. A. EMPLOYEES
WHO ARE MEMBERS OF A TEACHERS' RETIREMENT SYSTEM OR EMPLOYEES' RETIRE-
MENT SYSTEM MAY CHOOSE TO HAVE AN ADDITIONAL TRUST ESTABLISHED PURSUANT
TO SECTION 403(B) OF TITLE 26 OF THE UNITED STATES CODE IF THE FOLLOWING
CRITERIA ARE MET:
(1) SUCH EMPLOYEE IS ELIGIBLE FOR PARTICIPATION IN BOTH A SECTION
457(B) PLAN AND A SECTION 403(B) PLAN.
(2) THE EMPLOYER'S CONTRIBUTION TO THE SECTION 457(B) PLAN MEETS THE
MAXIMUM LIMITATIONS IMPOSED BY SECTION 457(B) OF TITLE 26 OF THE UNITED
STATES CODE, OR THE SUM OF THE EMPLOYER'S AND EMPLOYEE'S CONTRIBUTION
MEETS THE MAXIMUM LIMITATIONS IMPOSED BY THE CODE.
(3) THE EMPLOYEE FILES WRITTEN NOTIFICATION TO HIS OR HER RETIREMENT
SYSTEM IN A FORM TO BE DETERMINED BY THE TRUSTEE OF THE SYSTEM STATING
THAT HE OR SHE CHOOSES TO PARTICIPATE IN A SECTION 403(B) PLAN.
B. AN EMPLOYEE ON WHOSE BEHALF A TRUST IS ESTABLISHED PURSUANT TO THIS
SECTION MAY CONTRIBUTE UP TO ONE HUNDRED PERCENT OF THEIR TOTAL COMPEN-
SATION, SUBJECT TO THE LIMITATIONS OF SECTION 403(B) OF TITLE 26 OF THE
UNITED STATES CODE.
C. UNDER NO CIRCUMSTANCES, EXCEPT FOR THOSE PROVIDED IN SECTION TWELVE
HUNDRED TEN OF THIS ARTICLE, SHALL AN EMPLOYER MAKE ANY CONTRIBUTIONS TO
A TRUST ESTABLISHED PURSUANT TO THIS SECTION.
D. ANY TRUST ESTABLISHED PURSUANT TO THIS SECTION SHALL OTHERWISE BE
GOVERNED PURSUANT TO THE PROVISIONS OF SECTION TWELVE HUNDRED NINE OF
THIS ARTICLE.
S 1212. OVERTIME FOR EXISTING MEMBERS. A. THE TRUSTEE OF EACH NEW YORK
STATE RETIREMENT SYSTEM AND NEW YORK CITY RETIREMENT SYSTEM SHALL ESTAB-
LISH A TRUST PURSUANT TO SECTION 457(B) OF TITLE 26 OF THE UNITED STATES
CODE FOR EACH EMPLOYEE WHO BECAME A MEMBER OF SUCH SYSTEM BEFORE JANUARY
FIRST, TWO THOUSAND TWELVE, WHO IS ELIGIBLE TO RECEIVE OVERTIME COMPEN-
SATION, AND WHO ELECTS TO CONTRIBUTE TO SUCH TRUST.
(1) THE TRUSTEE SHALL PROMULGATE THE RULES AND REGULATIONS BY WHICH AN
EMPLOYEE CAN ELECT TO PARTICIPATE OR DECLINE TO PARTICIPATE IN A SECTION
457(B) PLAN, INCLUDING THE FORM BY WHICH THE ELECTION MUST BE MADE,
PROVIDED THAT THE RULES AND REGULATIONS REMAIN CONSISTENT WITH SECTION
457 OF THE UNITED STATES CODE AND THIS ARTICLE.
(2) IN THE CASE IN WHICH AN EMPLOYEE ELECTS TO MAKE CONTRIBUTIONS, IT
SHALL BE THE RESPONSIBILITY OF THE EMPLOYER TO DETERMINE AND TO REPORT
TO THE TRUSTEE, THE AMOUNT OF SUCH EMPLOYEE'S WAGES THAT ARE PAID AS
OVERTIME COMPENSATION IN THE PAY PERIOD FOR WHICH CONTRIBUTIONS ARE
BEING MADE.
B. FOR EACH EMPLOYEE ON BEHALF OF WHOM A TRUST IS ESTABLISHED PURSUANT
TO THIS SECTION THE EMPLOYER SHALL CONTRIBUTE AN AMOUNT EQUAL TO ONE
HUNDRED PERCENT OF THE EMPLOYEE'S CONTRIBUTION UP TO THREE PERCENT OF
THE EMPLOYEE'S TOTAL OVERTIME COMPENSATION IN THE PAY PERIOD FOR WHICH
CONTRIBUTIONS ARE BEING MADE.
C. THE EMPLOYEE CAN CHOOSE, BUT NOT BE REQUIRED, TO CONTRIBUTE UP TO
ONE HUNDRED PERCENT OF THEIR TOTAL OVERTIME COMPENSATION TO THE TRUST.
D. IN THE EVENT THE CONTRIBUTIONS MADE PURSUANT TO THIS SECTION WOULD
EXCEED THE LIMITATIONS IMPOSED BY SECTION 457(B) OF TITLE 26 OF THE
UNITED STATES CODE, THE EMPLOYEE'S CONTRIBUTION SHALL BE REDUCED UNTIL
THE SUM OF THE EMPLOYEE'S CONTRIBUTION AND THE EMPLOYER'S CONTRIBUTION
MEET SUCH LIMITATIONS.
A. 7490 5
E. ANY TRUST ESTABLISHED PURSUANT TO THIS SECTION SHALL OTHERWISE BE
GOVERNED ACCORDING TO THE PROVISIONS OF SECTION TWELVE HUNDRED NINE OF
THIS ARTICLE.
F. UNDER NO CIRCUMSTANCES SHALL OVERTIME COMPENSATION, FOR SERVICES
PERFORMED BY AN EMPLOYEE ON OR AFTER THE EFFECTIVE DATE OF THIS SECTION,
BE REPORTABLE AS WAGES TO THE TRUSTEE OF SUCH SYSTEM FOR THE PURPOSE OF
DETERMINING AN EMPLOYEE'S CONTRIBUTION TO THEIR DEFINED BENEFIT PLAN OR
FOR THE INCLUSION OF SUCH WAGES IN THE COMPUTATION OF THE EMPLOYEE'S
FINAL AVERAGE SALARY OR FINAL COMPENSATION FOR DETERMINING SUCH EMPLOY-
EE'S PENSION BENEFIT.
S 1213. PAYMENTS UPON SEPARATION FROM EMPLOYMENT. A. UPON THE SEPA-
RATION FROM EMPLOYMENT OF AN EMPLOYEE FOR WHOM A TRUST IS ESTABLISHED,
ONE HUNDRED AND THREE PERCENT OF THE CURRENT VALUE OF ALL ACCRUED VACA-
TION TIME SHALL BE CONTRIBUTED BY THE EMPLOYER INTO A TRUST ESTABLISHED
ON BEHALF OF THE EMPLOYEE, PROVIDED THAT THE TOTAL AMOUNT OF ACCRUED
VACATION TIME IS NOT TO EXCEED THIRTY DAYS. SUCH CONTRIBUTIONS SHALL BE
SUBJECT TO THE LIMITATIONS IMPOSED BY SECTION 457(B) OF TITLE 26 OF THE
UNITED STATES CODE, AND IN THE CASE OF AN EMPLOYEE FOR WHOM AN ADDI-
TIONAL TRUST IS ESTABLISHED PURSUANT TO SECTION TWELVE HUNDRED ELEVEN OF
THIS ARTICLE, SUCH CONTRIBUTION SHALL BE SUBJECT TO THE LIMITATIONS
IMPOSED BY SECTION 403(B) OF TITLE 26 OF THE UNITED STATES CODE.
B. AN EMPLOYEE MAY CHOOSE TO RECEIVE A LUMP-SUM PAYMENT OF ACCRUED
VACATION TIME OR ANY PROPORTION OF ACCRUED VACATION TIME OWED TO THE
EMPLOYEE PURSUANT TO SUBDIVISION A OF THIS SECTION IN LIEU OF A CONTRIB-
UTION OF THE VALUE OF SUCH TIME TO THE TRUST ESTABLISHED ON BEHALF OF
THE EMPLOYEE. SUCH OPTION IS TO BE CHOSEN BY WRITTEN AFFIRMATION TO THE
EMPLOYER. IN THE EVENT THE EMPLOYEE DOES NOT PROVIDE SUCH AFFIRMATION,
THE PAYMENT OF ACCRUED VACATION TIME SHALL BE MADE PURSUANT TO SUBDIVI-
SION A OF THIS SECTION.
C. FOR AN EMPLOYEE WHO RE-ENTERS PUBLIC EMPLOYMENT AFTER HAVING
RECEIVED PAYMENTS OR CONTRIBUTIONS UNDER THIS SECTION, ANY FUTURE
PAYMENT OR CONTRIBUTION MADE UNDER THIS SECTION SHALL BE REDUCED BY ONE
HUNDRED PERCENT OF ALL PAYMENTS OR CONTRIBUTIONS PREVIOUSLY RECEIVED. IN
THE EVENT THAT PRIOR PAYMENTS OR CONTRIBUTIONS EQUAL OR EXCEED THE
AMOUNT OF ANY SUBSEQUENT PAYMENT OR CONTRIBUTION THE EMPLOYEE SHALL BE
INELIGIBLE FOR A PAYMENT OR CONTRIBUTION UNDER THIS SECTION.
D. SUBDIVISIONS A, B AND C OF THIS SECTION SHALL NOT APPLY TO ANY
EMPLOYEE FOR WHOM A TRUST IS ESTABLISHED PURSUANT TO SECTION TWELVE
HUNDRED TWELVE OF THE ARTICLE.
E. UNDER NO CIRCUMSTANCE SHALL AN EMPLOYEE BE ELIGIBLE FOR COMPEN-
SATION OR FOR A CONTRIBUTION TOWARDS ANY TRUST FOR ANY ACCRUED TIME THAT
IS NOT AUTHORIZED BY THIS SECTION.
S 1214. TRANSFERABILITY UPON SEPARATION OF EMPLOYMENT. A. UPON THE
SEPARATION OF EMPLOYMENT WITH A PARTICIPATING EMPLOYER, AN EMPLOYEE FOR
WHOM A TRUST IS ESTABLISHED SHALL BE PERMITTED TO TRANSFER THE ASSETS OF
THEIR TRUST IN ANY MANNER CONSISTENT WITH SECTION 457(B) OF TITLE 26 OF
THE UNITED STATES CODE, OR IN THE CASE OF A TRUST ESTABLISHED PURSUANT
TO SECTION TWELVE HUNDRED ELEVEN OF THIS ARTICLE, ANY MANNER CONSISTENT
WITH SECTION 403(B) OF TITLE 26 OF THE UNITED STATES CODE. THE TRUSTEE
OF THE RETIREMENT SYSTEM OF WHICH THE EMPLOYEE IS A MEMBER SHALL PROMUL-
GATE THE RULES AND REGULATIONS GOVERNING THE TRANSFER OF SUCH ASSETS.
B. UPON THE TRANSFER OF SUCH ASSETS TO ANY PERSON OR TRUST THAT IS NOT
GOVERNED BY THE PROVISIONS OF THIS ARTICLE ANY OBLIGATIONS OF THE TRUS-
TEE TO THE EMPLOYEE SHALL CEASE.
S 1215. TRANSFERABILITY OF PRIOR TAX-DEFERRED ANNUITY INTO TRUST. THE
TRUSTEE OF THE RETIREMENT SYSTEM SHALL ACCEPT INTO A TRUST ESTABLISHED
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PURSUANT TO THIS ARTICLE ALL ASSETS OF A TAX-DEFERRED ANNUITY ESTAB-
LISHED BY A PRIOR NON-PARTICIPATING EMPLOYER UPON THE ELECTION OF THE
EMPLOYEE, PROVIDED THAT SUCH TRANSFER REMAINS CONSISTENT WITH SECTION
457(B) OF TITLE 26 OF THE UNITED STATES CODE OR IN THE CASE OF A TRUST
ESTABLISHED PURSUANT TO SECTION TWELVE HUNDRED ELEVEN OF THIS ARTICLE,
SUCH TRANSFER REMAINS CONSISTENT WITH SECTION 403(B) OF TITLE 26 OF THE
UNITED STATES CODE.
A. AN EMPLOYEE SHALL ONLY BE PERMITTED TO MAKE A TRANSFER OF ASSETS
UNDER THIS SECTION ONCE DURING EACH PERIOD OF EMPLOYMENT WITH A PARTIC-
IPATING EMPLOYER.
B. THE TRUSTEE OF THE RETIREMENT SYSTEM OF WHICH THE EMPLOYEE IS A
MEMBER SHALL PROMULGATE THE RULES AND REGULATIONS GOVERNING THE TRANSFER
OF SUCH ASSETS.
S 1216. INCOME TAX EXEMPTION FOR CERTAIN PAYMENTS. A. NO PAYMENT MADE
FROM A TAX-DEFERRED ANNUITY TO A RETIREE PREVIOUSLY EMPLOYED FOR AT
LEAST FIVE YEARS WITH A PARTICIPATING EMPLOYER OR PARTICIPATING EMPLOY-
ERS SHALL BE CONSIDERED TAXABLE INCOME FOR THE PURPOSES OF ARTICLE TWEN-
TY-TWO OF THE TAX LAW, PROVIDED THAT SUCH PAYMENT IS MADE FROM CONTRIB-
UTIONS AND INTEREST ON CONTRIBUTIONS MADE PURSUANT TO SECTIONS TWELVE
HUNDRED TEN, TWELVE HUNDRED ELEVEN AND TWELVE HUNDRED TWELVE OF THIS
ARTICLE AND THAT SUCH PAYMENT IS MADE ON OR AFTER THE EMPLOYEE REACHES
SIXTY YEARS OF AGE.
B. IN THE EVENT A RETIREE'S TAX DEFERRED ANNUITY CONTAINS CONTRIB-
UTIONS MADE DURING PERIODS OF EMPLOYMENT WITH EMPLOYERS NOT PART OF A
PARTICIPATING RETIREMENT SYSTEM THE ACTUARY OF THE PARTICIPATING RETIRE-
MENT SYSTEM IN WHICH THE EMPLOYEE LAST PARTICIPATED SHALL DETERMINE THE
PROPORTION OF ASSETS IN THE RETIREE'S ANNUITY THAT ARE SUBJECT TO THE
PROVISIONS OF SUBDIVISION A OF THIS SECTION. SUCH DETERMINATION SHALL BE
MADE ON THE ACTUAL PROPORTION OF ASSETS AND INTEREST ON ASSETS THAT CAN
BE ATTRIBUTED TO CONTRIBUTIONS MADE BY THE EMPLOYEE AND THE EMPLOYER
DURING PERIODS OF EMPLOYMENT WITH A PARTICIPATING EMPLOYER.
S 1217. SEVERABILITY CLAUSE. IF ANY CLAUSE, SENTENCE, PARAGRAPH OR
PART OF THIS ARTICLE OR THE APPLICATION THEREOF TO ANY PERSON OR CIRCUM-
STANCES, SHALL, FOR ANY REASON, BE ADJUDGED BY A COURT OF COMPETENT
JURISDICTION TO BE INVALID, SUCH JUDGMENT SHALL NOT AFFECT, IMPAIR OR
INVALIDATE THE REMAINDER OF THIS ARTICLE.
S 2. This act shall take effect immediately, provided, however, that
section 1212 of the retirement and social security law, as added by
section one of this act, shall take effect on the sixtieth day after it
shall have become a law.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
This bill would change the retirement plan coverage for future members
of public retirement systems by requiring that they and their employers
each contribute 3% of the members' annual compensation into a defined
contribution plan pursuant to Section 457-b on the Internal Revenue
Code. Members would be allowed to contribute up to the limit provided in
Internal Revenue Code Section 457(b), which is currently $16,500.
Members must select whether the funds will be invested by the Trustee or
by an approved financial organization selected from a list of approved
investment funds provided by the Trustee.
For current members in the defined benefit plan, this bill would also
require that overtime pay be excluded from the definition of wages.
If this becomes law, the overtime provision of this bill is likely to
face a constitutional challenge based upon the guarantee that a current
member's benefits may not be diminished.
A. 7490 7
If this bill is enacted, insofar as it would affect the New York State
and Local Employees' Retirement System (ERS) and the New York State and
Local Police and Fire Retirement System (PFRS), there would be decreases
in the average long term expected annual contribution rate for future
members of approximately 6.4% and 15.0% of payroll for ERS and PFRS,
respectively.
If this bill withstands any constitutional challenges regarding the
inclusion of overtime pay in the definition of wages, there would be
further decreases in the average long term expected annual contribution
rates for current members of approximately 0.1% and 0.7% of payroll for
ERS and PFRS, respectively.
Finally, there would be significant administrative costs to implement
and maintain the defined contribution plan. The legislation does not
identify who will pay these costs.
This estimate, dated April 26, 2011, and intended for use only during
the 2011 Legislative Session, is Fiscal Note No. 2011-152, prepared by
the Actuary for the ERS and the PFRS.