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Budget Summary FY2015

Outside Section 190
Data Current as of:  10/14/2014




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Optional retirement system enrollment

SECTION 190.   Chapter 176 of the acts of 2011 is hereby amended by striking out section 60 and inserting in place thereof the following section:-

Section 60. (a) Notwithstanding any general or special law to the contrary, any active member of the optional retirement system established under subsection (3) of section 40 of chapter 15A of the General Laws, or inactive member of the optional retirement system who is currently an active member of the state retirement system, or optional retirement plan enrollee on an approved leave of absence of 2 years or less shall have 1 opportunity to transfer to the state employees' retirement system, governed by chapter 32 of the General Laws, with creditable service allowed for any such time they were active participants of the optional retirement program. Any such employee choosing to transfer shall also be allowed creditable service for any years of participation or portions thereof in the state employee retirement system immediately prior to their enrollment in the optional retirement program.

(b) Eligibility for creditable service for time spent in the optional retirement program and service relinquished in the state employees' retirement system by enrollment in the optional retirement program shall be conditioned upon the payment, in 1 lump sum or in installments upon such terms as the state retirement board may provide, the larger of (i) an amount equal to the contributions the employee would have otherwise paid into the state employees' retirement system had the employee been a member, plus actuarial-assumed interest for the years spent as an actively contributing member in the optional retirement plan; or (ii) an amount equal to all assets under the optional retirement plan to the state employees' retirement system; provided, that the assets shall be credited toward the purchase of creditable service minus employer-funded assets; and provided further, that the accrual of interest for creditable service prior to January 1, 2014 established under this section shall be calculated through December 31, 2013. Optional retirement program participants electing to transfer to the state retirement system shall, upon the transfer, forfeit all benefits, rights and privileges attributable to employer-funded assets in the optional retirement program. The optional retirement program administrator shall take immediate steps to ensure that the employer-funded assets are transmitted to the Pension Reserve Fund as assets of the state employees' retirement system as a trustee-to trustee transfer. Notwithstanding this subsection, the accrual of actuarial-assumed interest shall not be applicable to any group of participants identified by the department of higher education if this section is intended to reflect the requirements of the Employee Plans Compliance Resolution System of the Internal Revenue Service.

(c) Within 180 days of the effective date of this section the state retirement board and the department of higher education shall request of the Internal Revenue Service the necessary letters of determination or ruling on whether this section may be implemented without impairing the compliance of either or both the optional retirement plan and the state employees' retirement system with the Internal Revenue Code of 1986 including, but not limited to, subsection 414(h). The state employees' retirement system shall also request a determination or ruling from the Internal Revenue Service on whether this section may be implemented, without impairing the aforementioned compliance, provided that it only applies to any employee who elected, before May 16, 2004, to participate in the optional retirement program because the option of marriage did not become available to the employee under the laws of the commonwealth prior to May 16, 2004. Subsections (a), (b) and (d) to (g), inclusive, of this section shall not take effect unless and until the Internal Revenue Service issues a favorable ruling or determination, as the case may be, which determines that the transfers described in this section will not result in non-compliance of either or both the optional retirement program and the state employees' retirement system with the Internal Revenue Code including, but not limited to, subsection 414(h).

(d) Upon a favorable ruling or determination from the Internal Revenue Service, the department of higher education shall notify active members of the optional retirement program, inactive members of the optional retirement system who are currently active members of the state retirement system and those members on an excused leave of absence of 2 years or less, of their eligibility for this 1-time transfer opportunity to the state employee retirement system. Eligible employees who choose to transfer to the state employees' retirement system shall apply for the transfer to the state retirement board within 180 days of notification by the department of higher education of their eligibility for the transfer. Any elections under this section shall apply to current active members of the optional retirement plan, inactive members of the optional retirement system who are currently active members of the state retirement system and those on an approved leave of absence of 2 years or less on the effective date of this section and shall be for 1 time. No further changes in participation, either into the state retirement plan or out of the optional retirement program, shall be permitted.

(e) Within 180 days of application for transfer to the state retirement system, the employees, subject to the rules and regulations of the state board of retirement, shall be notified by the state board of retirement of their eligibility for transfer and the cost of the transfer. If eligible, the members shall have 180 days from notification to make the transfers to the state employees' retirement system as set forth in subsection (b). Any money remaining in an optional retirement program account following the transfer of an employee to the state employees' retirement system and the complete payment for such transfer under this section shall continue to be held on behalf of the member under the optional retirement program and shall continue to be subject to the terms of the optional retirement program.

(f) If an employee has a residual account remaining in the optional retirement program under subsection (e), the employee shall continue to be a member of the optional retirement program as long as the employee has an account under the program but shall not be permitted to make further contributions and shall not be eligible for any employer contributions thereunder. The department of higher education and the state board of retirement shall take such actions that are required or appropriate to ensure that the optional retirement program and the state employees' retirement system, as hereby amended, continue to be tax-qualified plans under the Internal Revenue Code of 1986, as amended.

(g) The application of chapter 32 of the General Laws to a member of the optional retirement program who elects to transfer to the state employees' retirement system pursuant to this section and who retains membership in the state employees' retirement system thereafter shall be those provisions that were in effect on the date the employee was or would have been eligible to become a member of the state employees' retirement system as determined by the state board of retirement.

Upon the effective date of this section the public employee retirement administration commission shall perform an actuarial study relative to the potential cost to the commonwealth of implementation of this section and shall submit a report to the joint committee on public service.