Senate Bill S5728

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  5728--A
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                              March 17, 2021
                                ___________
 
 Introduced by Sen. GOUNARDES -- read twice and ordered printed, and when
   printed  to  be  committed  to  the Committee on Cities 1 -- committee
   discharged, bill amended, ordered reprinted as amended and recommitted
   to said committee
 
 AN ACT to amend the administrative code of the  city  of  New  York,  in
   relation  to  the  tax-deferred  annuity  program of the New York city
   teachers' retirement system
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Paragraph  2  of  subdivision  g of section 13-582 of the
 administrative code of the city of New York, as added by chapter 677  of
 the laws of 2003, is amended to read as follows:
   2.  Notwithstanding  any other provision of this chapter, any rules or
 regulations adopted by the retirement board, or any other provisions  of
 law  to  the  contrary, the beneficiary of a deceased participant in the
 tax-deferred annuity program who had not, prior to  his  or  her  death,
 selected an option governing the manner in which his or her tax-deferred
 account  would  be  payable  to  his or her beneficiary, may, subject to
 paragraphs three, four, and five of this  subdivision,  elect,  at  such
 time  and in such manner as determined by the retirement board, to defer
 the distribution to him  or  her  from  the  participant's  tax-deferred
 account to the extent permitted by, and in a manner consistent with, the
 provisions  of section 403(b) of the Internal Revenue Code and the regu-
 lations promulgated pursuant to such section.   PROVIDED,  HOWEVER,  THE
 BENEFICIARY  OF  A DECEASED PARTICIPANT WHO DIES ON OR AFTER JULY FIRST,
 TWO THOUSAND TWENTY-ONE SHALL NOT BE ALLOWED TO ESTABLISH A TAX-DEFERRED
 ACCOUNT AS PROVIDED IN THIS SUBDIVISION.
   § 2. This act shall take effect immediately.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   SUMMARY OF BILL: This proposed legislation (see Appendix), would amend

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD10516-02-1
              

 S. 5728--A                          2
 
   Section 13-582 of the Administrative Code of  the  City  of  New  York
 (ACCNY),  to  end allowing for beneficiaries of deceased participants in
 the Tax-Deferred Annuity (TDA) Program of the New  York  City  Teachers'
 Retirement  System  (TRS),  who  die on or after July 1, 2021, to create
 their  own  TDA  account.  Authorization for TDA beneficiaries to create
 accounts was originally enacted pursuant to Chapter 677 of the  Laws  of
 2003.
   Effective Date: Upon enactment.
   IMPACT  ON  BENEFITS:  Currently,  upon  the death of a TRS member who
 participated in the TRS TDA Program and had a  TDA  account  balance,  a
 beneficiary  is  permitted,  under  certain  circumstances, to defer the
 distribution of such TDA account balances.
   The proposed legislation would require beneficiaries  to  either  roll
 over  or  take  a  full  distribution of the TDA account balance, unless
 payment by way of an annuitization  of  the  balance  is  permitted  and
 elected.
   FINANCIAL  IMPACT- SUMMARY: The enactment of this proposed legislation
 is expected to have minimal to no impact on employer contributions.  TDA
 beneficiaries  are  only  entitled  to  invest in the variable funds and
 administrative costs are paid for by participants. Therefore, the enact-
 ment of this proposed legislation would not  be  expected  to  have  any
 material impact on the assets or liabilities of TRS.
   RISK  AND  UNCERTAINTY: The costs presented in this Fiscal Note depend
 highly on the realization of the actuarial assumptions used, as well  as
 certain  demographic characteristics of TRS, and other exogenous factors
 such as investment, contribution, and other risks. If actual  experience
 deviates  from actuarial assumptions, the actual costs could differ from
 those presented herein. Costs are also dependent on the actuarial  meth-
 ods  used,  and  therefore  different  actuarial  methods  could produce
 different results. Quantifying these risks is beyond the scope  of  this
 Fiscal Note.
   Not measured in this Fiscal Note are the following:
   * The potential increase in annuitization of TDA account balances.
   *  The  initial,  additional  administrative  costs  to  implement the
 proposed legislation.
   STATEMENT OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief  Actu-
 ary  for,  and  independent of, the New York City Retirement Systems and
 Pension Funds. I am a Fellow of the Society of  Actuaries,  an  Enrolled
 Actuary under the Employee Retirement Income and Security Act of 1974, a
 Member of the American Academy of Actuaries, and a Fellow of the Confer-
 ence  of Consulting Actuaries. I meet the Qualification Standards of the
 American Academy of Actuaries to render the actuarial opinion  contained
 herein.   To the best of my knowledge, the results contained herein have
 been prepared in accordance with generally accepted actuarial principles
 and procedures and with the Actuarial Standards of  Practice  issued  by
 the Actuarial Standards Board.
   FISCAL  NOTE  IDENTIFICATION:  This Fiscal Note 2021-17 dated April 2,
 2021 was prepared by the Chief Actuary for the New York  City  Teachers'
 Retirement  System.  This  estimate  is intended for use only during the
 2021 Legislative Session.