July 28, 2008
Steven James
Clerk, House of Representatives
State House, Room 145
Boston, MA 02133
Dear Mr. James:
In accordance with the provisions
of Chapter 7, Section 50 of the General Laws, I am pleased on behalf of the
Public Employee Retirement Administration Commission (PERAC), to file rules and
regulations governing retirement of public employees in Massachusetts.
These regulations are a product
of an intensive process that included three public hearings, written comments
and deliberations by the members of the Commission. On March 25, 2008 the Commission voted to file the amendment to 840 CMR 10.12, 10.14, and 13.00 with
the clerks of the House of Representatives and the Senate.
The amendments to 840 CMR 10.12
and 10.14 deal with the hearing process in instances in which a disability
retiree has earnings that exceed the amount allowed by G.L. c. 32, §§ 91, 91A
or 91B. The amendments include notification requirements and outline the
participation by PERAC in the hearings.
The new language in 840 CMR 13.02
is intended to implement the provisions of Pension Protection Act of 2006. The
new language would allow Retirement Boards to accept post-tax rollovers from
defined benefit plans that are qualified under Internal Revenue Code Section
409(a). A Board is not required to accept such rollovers, but if they are
accepted, the post-tax portion must be accounted for separately.
Pursuant to the provisions of
G.L. c. 7, § 50, the clerks shall refer to the appropriate standing committee
of the general court. If the general court takes no final action relative to
the regulations within forty-five days of the date said regulations are filed
with the clerks of the House of Representatives and the Senate, the general
court not having prorogued within said forty-five days, the regulations shall
be deemed to be approved. Within fifteen days of receipt of any recommendations,
the committee shall transmit in writing to PERAC its suggestions, if any, for
modifications in recommended regulations. Within fifteen days of receipt of the
committee’s suggestions, PERAC shall resubmit the regulations to the committee,
together with any modifications made to them.
If
you have questions or need additional information, please feel free to contact
me.
Sincerely,
Joseph E. Connarton
Executive
Director
Enclosures
SECTION 10.12
840 CMR: PUBLIC EMPLOYEE RETIREMENT
ADMINISTRATION
840 CMR 10.00: STANDARD RULES FOR DISABILITY RETIREMENT
10.12: Hearing by Retirement Board
(1) Notice. The retirement board shall
give all parties at least 30 days notice of the time and place for the hearing
and of the issues involved in the hearing. If the issues cannot be fully stated
in advance of the hearing, they shall be fully stated as soon as practicable.
In all cases of delayed statements, or where subsequent amendment of the issues
is necessary, sufficient time shall be allowed after full statement or
amendment to afford all parties reasonable opportunity to prepare and present
evidence and argument respecting the issues. In the case of hearings
conducted to enforce or implement the provisions of §§ 91, 91A or 91B of
Chapter 32, the Commission shall participate at its discretion. The Commission
shall present all documents to the Board, including testimony and
documentation, and respond to questions from the Board or Hearing Officer, and
at no point will PERAC be able to cross examine the retiree.
(2) Discovery. Any party and any
authorized representative shall, at any time after a hearing has been requested
or ordered and after reasonable notice to the retirement board, be permitted to
examine and copy or photocopy, at cost and during normal business hours, any
document in the case file pertaining to the member's file or the record of the
hearing. All other discovery shall be at the discretion of the retirement
board. A request for discovery may be made by any party at any time after a
hearing has been requested or ordered.
(3) Conduct of Hearing. Hearings shall be
conducted in an informal manner that affords all parties an opportunity to
present all information and argument relevant to the proceeding.
(a) Presiding Officer.
The chairperson of the retirement board, any other member of the board acting
as chairperson, or any individual designated by the board, shall be the
presiding officer and shall assure parties the right to call and question
witnesses and introduce exhibits, and to present argument, relevant to the
proceeding. The presiding officer shall assure an orderly presentation of the
evidence and argument and that a record is made of the hearing.
(b) Continuances. The
presiding officer may change the date, time or place of the hearing on his own
motion or on the request of any party, upon due notice to all other parties and
may continue the hearing to a subsequent date to permit any party to present
additional evidence, witnesses or other materials. At any time prior to
decision, the presiding officer may reconvene the hearing for any purpose upon
ten days written notice to all parties, stating therein the purposes for
reconvening, and the date, time and place of the reconvened hearing.
(c) Oaths; Rulings; Briefs.
The presiding officer shall administer the oath or affirmation to witnesses,
shall rule upon the admissibility of evidence and upon any requests for
rulings, and may order that written briefs be submitted by the parties.
(d) The Record. All
proceedings in connection with the hearing shall be recorded by electronic or
stenographic means and such record shall be maintained as part of the
hearing record. Transcripts or
duplicate tapes of the proceedings shall be supplied to any party, upon
request, at that party's expense. At the discretion of the presiding officer,
any party may be permitted to maintain a record so long as this does not
interfere with the conduct of the proceedings. All documents and other evidence
received shall also become part of the record.
(e) Executive Session.
Since the principal purpose of a hearing on a disability retirement application
is to discuss and evaluate the physical condition or mental health of the
member, the hearing shall be held in executive session unless the member
requests that the meeting be open. In such executive session only the
retirement board, the secretary and the retirement board's counsel, the
parties and their authorized representatives and such other persons as the
presiding officer shall deem necessary for the conduct of the hearing shall be
permitted to be present. No executive session shall be held until the
retirement board has first convened in open session for which notice has been
given, a majority of the members of the board have voted to go into executive
session and the vote of each member is recorded on a roll call vote and entered
into the minutes, the presiding officer has stated the purpose for an executive
session, and has stated before the executive session if the board will
reconvene after the executive session. The records of the hearing in executive
session shall not be made available to the public except in accordance with the
board's regulations on privacy and confidentiality and such other laws or
regulations as may be applicable to such records.
(f) Evidence.
1. General. The
retirement board need not observe the rules of evidence observed by courts but
shall observe the rules of privilege recognized by law. Evidence shall be
admitted and given probative effect only if it is the kind of evidence on which
reasonable persons are accustomed to rely in the conduct of serious affairs.
Unduly repetitious evidence may be excluded.
2. Testimony; Stipulations.
Witnesses shall testify under oath or affirmation and shall be available for
questions by all parties. If a witness cannot, as a practical matter, be
available in person the witness shall be available and testify by telephone
conference call, or by any other reasonable means ordered by the presiding
officer. Stipulations by the parties as to any fact or as to the testimony that
would be given by an absent witness may be offered and received as evidence.
3. Documentary Evidence.
Documentary evidence may be received in the form of copies or excerpts or by
incorporation by reference in the discretion of the presiding officer.
4. Taking Notice of Facts.
The retirement board may take notice of any fact which may be judicially
noticed by the courts, and any fact within the retirement board's specialized
knowledge. Parties shall be notified and afforded an opportunity to contest any
facts so noticed.
5. Evidence to be Part of
Record. All evidence, including any records, reports and documents of the
retirement board, to be considered in making a decision shall be
offered and made a part of the
record of the proceeding and the record shall at all times be open for
inspection by any party or authorized representative during business hours. The
retirement board may, with notice to all parties, require any party to submit
additional evidence for the record and shall afford parties an opportunity to
submit rebuttal evidence.
(g) Subpoenas.
1. Issuance. The
presiding officer shall, within five days of a written request of a party,
issue a subpoena requiring the attendance and testimony of a witness or the
production of any evidence including books, records, correspondence or
documents relating to any matter in question at a hearing on a disability
application.
2. Request to Vacate.
Any person subpoenaed may file a written request requesting the presiding
officer to vacate or modify the subpoena.
3. Decision on Request to
Vacate or Modify Subpoena. The presiding officer shall notify all parties
of the request to vacate or modify the subpoena and afford parties a reasonable
time to respond. The presiding officer shall grant the request to vacate or
modify the subpoena if the testimony or evidence subpoenaed does not relate
with reasonable directness to any matter at issue in the proceeding or if the
subpoena is otherwise unreasonable or oppressive.
(h) If any person fails to
comply with a properly issued subpoena, the retirement board or the party
requesting the issuance of the subpoena may petition the superior court for an
order requiring compliance.
SETION 10.12
840 CMR: PUBLIC EMPLOYEE RETIREMENT
ADMINISTRATION
840 CMR 10.00: STANDARD RULES FOR DISABILITY RETIREMENT
10.14: Annual Statement of Earnings;
Definition of Earnings From Earned Income; Refunds and Modifications Based on
Earnings Information
(1) The retirement board shall provide such
information as the Commission shall require to assist it in performing its
responsibilities pursuant to M.G.L. c. 32, §§ 91A and 91B.
(2) Upon receipt of notice from the Commission
that a disability retiree has failed to file the Annual Statement of Earnings
required by M.G.L. 32, § 91A, the retirement board shall review all information
received and shall terminate the member's rights in and to the
disability retirement allowance until the member has complied with the reporting
requirements under M.G.L. 32, § 91A. Prior to any termination of
benefits, the member shall be given a written notice and an opportunity to be
heard by the retirement board and, upon such termination or reduction of
benefits, shall have the right to appeal such action to the Contributory
Retirement Appeal Board.
(3) At the board meeting immediately following
the receipt of notice from the Commission that a disability retiree has had
earnings in excess of the amount allowed by M.G.L. 32, § 91A, the board shall
request the member to refund the retirement allowance for that year or a
portion thereof equal to such excess, as the case may be. Initial notice of a
request for refund shall include the calculation on which the request is based
and shall state that the member may, within 15 days, file a written request for
a hearing to show cause why the disability retirement allowances should not be
suspended or terminated or why no refund is due. A copy of such initial
notice shall also be sent to the Commission. If a retiree files a request
for hearing, such hearing shall be held within 45days of such request
for hearing and shall be conducted pursuant to the provisions of 840 CMR
10.12. The board shall notify the member of its decision, including a final
request for refund, if any, within 30 days of the hearing. If the member is to
be required to refund an amount to the board, the notice of the board’s
decision shall include notification that the member’s allowance shall be
withheld until the refund is made. The member shall also be notified that if
the refund is not made, payment of the retirement allowance shall be resumed
only when the amounts withheld are sufficient to pay the amount of the refund.
A copy of M.G.L. c. 32, § 16(4) shall be included with the notice of decision
and, upon request, the retirement board shall advise and assist the applicant
or retired member, as the case may be, in the filing of an appeal. A copy of
this notification shall also be sent ot the Commission.
(4) The term “earnings from earned income” as
used in G.L. c. 32, § 91A shall mean income that implies some labor, management
or supervision in the production thereof, not income derived from ownership of
property. For purposes of G.L. c. 32, § 91A, if an individual operates a business
for profit, individually or through an agent, that individual does not have the
option of classifying such income as dividends as opposed to wages. Profits
derived from the operation of a business through some labor, management or
supervision of such profits are earned income, regardless of how a retiree
categorized such income for income tax or other purposes.
840 CMR 13.00: ROLLOVERS FOR SERVICE PURCHASES AND
BUYBACKS
13.01:
Acceptance of Pre-tax Rollovers from "Eligible Retirement Plans"
The following
provisions are intended to implement the provisions of the Economic Growth and
Tax Relief Reconciliation Act of 2001 (EGTRRA) and to enable public employees
in Massachusetts to take advantage of the expanded tax-deferred roll-over
opportunities permitting the purchase of creditable service from assets held in
other tax-deferred retirement plans.
(1) A
Retirement Board may accept any portion of an Eligible Rollover Distribution in
payment of all or a portion of a member's purchase of service credit or service
buybacks pursuant to M.G.L. c.32, §§ I through 28. A Retirement Board may
accept an Eligible Rollover Distribution paid directly to the system in a
Direct Rollover. Rollovers from other permissible sources will be allowed to
the extent permitted by law, subject to any conditions, proofs, or acceptance
the Retirement Board deems appropriate.
(2) The
following definitions shall apply to 840 CMR 13.01:
Direct
Rollover is a payment from an Eligible Retirement Plan specified by the member
and made directly to the Retirement System. Eligible Retirement Plan is any
program defined in Code Sections 401(a)(31) and 402(c)(8)(B), from which the
member has a right to an Eligible Rollover Distribution, as follows:
(a)
an individual retirement account under Code Section 408(a)
(b)
an individual retirement annuity under Code Section 408(b) (other than an
endowment contract);
(c)
a qualified plan under Code Sections 401(a) or 403(a)
(d)
an eligible deferred compensation plan under Code Section 457(b) which is maintained
by a state, a political subdivision of a state, or any agency or
instrumentality of a state or a political subdivision of a state; and
(e)
an annuity contract under Code Section 403(b).
Eligible
Rollover Distribution is any distribution of all or any portion of the balance
to the credit of the member from an Eligible Retirement Plan. An Eligible
Rollover
Distribution
does not include:
(a)
any distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or life
expectancy) of the member or the joint lives (or joint life expectancies) of
the member and the members designated beneficiary, or for a specified period of
ten years or more;
(b)
any distribution to the extent such distribution is required under Section
401(a)(9) of the Internal Revenue Code (“Code”);
(c)
any distribution which is made upon hardship of the member; or
(d)
the portion of any distribution that is not includible in gross income.
13.02:
Acceptance of After-tax Rollovers from "Qualified Defined Benefit Retirement
Plans"
This
provision is intended to implement the provisions of section 822 of the Pension
Protection Act of 2006 (PPA) and to enable public employees in Massachusetts to
roll-over after-tax amounts from other defined benefit retirement plans
qualified pursuant to Code Sections 401(a) if the Massachusetts
retirement system accepts such rollovers.
A
Retirement Board may accept direct rollovers of after-tax funds from a qualified defined benefit plan [Code Sections
401(a)]. If such rollovers are permitted, the after-tax
amounts must be accounted for separately. Retirement Boards are not required
to accept such transfers.
REGULATORY
AUTHORITY
840 CMR 13.00 M.G.L. c. 7, § 50, c. 32, § 21.
