| 3 | 2 | | *LHR039* 02-16-2023 09:43:02 LHR039 |
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| 4 | 3 | | |
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| 5 | 4 | | State of Arkansas As Engrossed: H2/16/23 1 |
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| 6 | 5 | | 94th General Assembly A Bill 2 |
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| 7 | 6 | | Regular Session, 2023 HOUSE BILL 1186 3 |
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| 8 | 7 | | 4 |
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| 9 | 8 | | By: Representative A. Collins 5 |
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| 10 | 9 | | By: Senator K. Hammer 6 |
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| 11 | 10 | | 7 |
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| 12 | 11 | | For An Act To Be Entitled 8 |
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| 13 | 12 | | AN ACT TO AMEND AND UPDATE THE LAW CONCE RNING ANNUITY 9 |
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| 14 | 13 | | OPTIONS UNDER THE AR KANSAS TEACHER RETIR EMENT SYSTEM; 10 |
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| 15 | 14 | | TO ALLOW A RETIRANT TO DESIGNATE BOTH SU RVIVING 11 |
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| 16 | 15 | | SPOUSE AND DEPENDENT CHILDREN AS OPTION B ENEFICIARIES 12 |
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| 17 | 16 | | UNDER THE ARKANSAS T EACHER RETIREMENT SY STEM; TO 13 |
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| 18 | 17 | | CLARIFY WHEN A SURVI VING SPOUSE OF A DIS ABILITY 14 |
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| 19 | 18 | | RETIRANT IS ENTITLED TO BEGIN RECEIVING P AYMENTS 15 |
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| 20 | 19 | | UNDER THE ARKANSAS T EACHER RETIREMENT SY STEM; TO 16 |
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| 21 | 20 | | DECLARE AN EMERGENCY ; AND FOR OTHER PURP OSES. 17 |
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| 22 | 21 | | 18 |
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| 23 | 22 | | 19 |
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| 24 | 23 | | Subtitle 20 |
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| 25 | 24 | | TO AMEND AND UPDATE THE LAW CONCERNING 21 |
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| 26 | 25 | | ANNUITY OPTIONS UNDER THE ARKANSAS 22 |
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| 27 | 26 | | TEACHER RETIREMENT SYSTEM; AND TO DECLARE 23 |
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| 28 | 27 | | AN EMERGENCY. 24 |
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| 29 | 28 | | 25 |
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| 30 | 29 | | 26 |
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| 31 | 30 | | BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 27 |
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| 32 | 31 | | 28 |
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| 33 | 32 | | SECTION 1. Arkansas Code § 24 -7-706(a)(2), concerning a member's 29 |
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| 34 | 33 | | annuity election and criteria that must be met for a member's nominated 30 |
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| 35 | 34 | | beneficiary to receive an annuity in accordance with the Option A — 100% 31 |
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| 36 | 35 | | Survivor Annuity option under the Arkansas Teacher Retirement System, is 32 |
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| 37 | 36 | | amended to read as follows: 33 |
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| 38 | 37 | | (2) The member may nominate designate a beneficiary one (1) or 34 |
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| 39 | 38 | | more beneficiaries, in accordance with one (1) of the following options: 35 |
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| 40 | 39 | | (A) Option A — 100% Survivor Annuity. 36 As Engrossed: H2/16/23 HB1186 |
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| 41 | 40 | | |
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| 42 | 41 | | 2 02-16-2023 09:43:02 LHR039 |
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| 43 | 42 | | |
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| 44 | 43 | | |
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| 45 | 44 | | (i) Under Option A, upon the death of a retirant 1 |
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| 46 | 45 | | retiree, his or her reduced annuity shall be continued throug hout the life of 2 |
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| 47 | 46 | | and paid to such person as he or she shall have nominated as provided under 3 |
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| 48 | 47 | | subdivision (a)(4) of this subsection to the persons that he or she nominates 4 |
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| 49 | 48 | | by written designation executed and filed with the Board of Trustees of the 5 |
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| 50 | 49 | | Arkansas Teacher Retirement System before the date the first payment of his 6 |
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| 51 | 50 | | or her annuity becomes due. 7 |
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| 52 | 51 | | (ii)(a) The person designated as a beneficiary by the 8 |
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| 53 | 52 | | retirant shall be: The designated beneficiary or beneficiaries of a retiree 9 |
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| 54 | 53 | | shall be either: 10 |
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| 55 | 54 | | (1) The retiree’s spouse; 11 |
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| 56 | 55 | | (2) One (1) or more of the retiree’s 12 |
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| 57 | 56 | | children who qualify as a dependent child under subdivision (a)(2)(A)(ii)(c) 13 |
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| 58 | 57 | | of this section; or 14 |
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| 59 | 58 | | (3) Both the retiree’s spouse and one (1) 15 |
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| 60 | 59 | | or more of the retiree’s children who qualify as a dependent child under 16 |
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| 61 | 60 | | subdivision (a)(2)(A)(ii)(c) of this section. 17 |
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| 62 | 61 | | (a)(b) The retirant's spouse for not less than 18 |
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| 63 | 62 | | one (1) year immediately preceding the first payment due date; or spouse of a 19 |
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| 64 | 63 | | retiree may be designated as the retiree's beneficiary if the retiree has 20 |
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| 65 | 64 | | been married to the spouse for at least one (1) year immediately preceding 21 |
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| 66 | 65 | | the first annuity payment due date. 22 |
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| 67 | 66 | | (b)(c) A dependent child of the retirant who 23 |
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| 68 | 67 | | has been adjudged physically or mentally incapacitated by a cou rt of 24 |
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| 69 | 68 | | competent jurisdiction A child of a retiree qualifies as a dependent child 25 |
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| 70 | 69 | | and may be designated as an Option A beneficiary of the retiree if the child 26 |
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| 71 | 70 | | has been adjudged physically or mentally incapacitated by a court of 27 |
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| 72 | 71 | | competent jurisdiction ; 28 |
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| 73 | 72 | | 29 |
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| 74 | 73 | | SECTION 2. Arkansas Code § 24 -7-706(a)(2)(B), concerning the Option B 30 |
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| 75 | 74 | | — 50% Survivor Annuity option under the Arkansas Teacher Retirement System, 31 |
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| 76 | 75 | | is amended to read as follows: 32 |
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| 77 | 76 | | (B) Option B — 50% Survivor Annuity. 33 |
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| 78 | 77 | | (i) Under Option B, upon the de ath of a retirant 34 |
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| 79 | 78 | | retiree, one-half (½) of his or her reduced annuity shall be continued 35 |
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| 80 | 79 | | throughout the life of and paid to such person as he or she has nominated as 36 As Engrossed: H2/16/23 HB1186 |
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| 81 | 80 | | |
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| 82 | 81 | | 3 02-16-2023 09:43:02 LHR039 |
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| 83 | 82 | | |
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| 84 | 83 | | |
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| 85 | 84 | | provided under subdivision (a)(4) of this subsection to the persons that he 1 |
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| 86 | 85 | | or she nominates by written designation executed and filed with the board 2 |
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| 87 | 86 | | before the date the first payment of his or her annuity becomes due. 3 |
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| 88 | 87 | | (ii)(a) The person designated as a beneficiary by 4 |
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| 89 | 88 | | the retirant shall be: The designated beneficiary or beneficiaries of a 5 |
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| 90 | 89 | | retiree shall be either: 6 |
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| 91 | 90 | | (1) The retiree’s spouse; 7 |
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| 92 | 91 | | (2) One (1) or more of the retiree's 8 |
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| 93 | 92 | | children who qualify as a dependent child under subdivision (a)(2)(B)(ii)(c) 9 |
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| 94 | 93 | | of this section; or 10 |
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| 95 | 94 | | (3) Both the retiree’s spouse and one 11 |
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| 96 | 95 | | (1) or more of the retiree's children who qualify as a dependent child under 12 |
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| 97 | 96 | | subdivision (a)(2)(B)(ii)(c) of this section. 13 |
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| 98 | 97 | | (a)(b) The retirant's spouse for not less than 14 |
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| 99 | 98 | | one (1) year immediately preceding the first payment due date; or The spouse 15 |
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| 100 | 99 | | of a retiree may be designated as the retiree's beneficiary if the retiree 16 |
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| 101 | 100 | | has been married to the spouse for at least one (1) year immediately 17 |
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| 102 | 101 | | preceding the first annuity payment due date. 18 |
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| 103 | 102 | | (b)(c) A dependent child of the retirant who 19 |
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| 104 | 103 | | has been adjudged physicall y or mentally incapacitated by a court of 20 |
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| 105 | 104 | | competent jurisdiction A dependent child of a retiree may be designated as an 21 |
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| 106 | 105 | | Option B beneficiary of the retiree if the dependent child has been adjudged 22 |
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| 107 | 106 | | physically or mentally incapacitated by a court of competen t jurisdiction; or 23 |
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| 108 | 107 | | 24 |
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| 109 | 108 | | SECTION 3. Arkansas Code § 24 -7-706(a), concerning annuity options 25 |
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| 110 | 109 | | under the Arkansas Teacher Retirement System, is amended to add new 26 |
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| 111 | 110 | | subdivisions to read as follows: 27 |
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| 112 | 111 | | (4)(A)(i) Upon the death of a retiree, if both a spouse and one 28 |
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| 113 | 112 | | (1) dependent child are designated as the retiree’s Option A beneficiaries, 29 |
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| 114 | 113 | | the retiree’s reduced annuity shall be paid in equal shares to the spouse and 30 |
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| 115 | 114 | | the dependent child. 31 |
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| 116 | 115 | | (ii) Upon the death of a retiree, if both a spouse 32 |
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| 117 | 116 | | and more than one (1) dependent child are designated as the retiree’s Option 33 |
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| 118 | 117 | | A beneficiaries, the spouse shall receive fifty percent (50%) of the 34 |
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| 119 | 118 | | retiree’s reduced annuity and the remaining fifty percent (50%) of the 35 |
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| 120 | 119 | | retiree’s reduced annuity shall be paid in equal shares to t he dependent 36 As Engrossed: H2/16/23 HB1186 |
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| 121 | 120 | | |
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| 122 | 121 | | 4 02-16-2023 09:43:02 LHR039 |
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| 123 | 122 | | |
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| 124 | 123 | | |
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| 125 | 124 | | children. 1 |
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| 126 | 125 | | (iii) Upon the death of a retiree, if more than one 2 |
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| 127 | 126 | | (1) dependent child is designated as the retiree's Option A beneficiary and a 3 |
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| 128 | 127 | | spouse is not designated as the retiree's Option A beneficiary, the retiree's 4 |
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| 129 | 128 | | reduced annuity shall be paid in equal shares to each dependent child 5 |
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| 130 | 129 | | designated as the retiree's Option A beneficiary. 6 |
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| 131 | 130 | | (B)(i) Upon the death of a retiree, if both a spouse and 7 |
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| 132 | 131 | | one (1) dependent child are designated as the retiree’s Option B 8 |
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| 133 | 132 | | beneficiaries, one-half (1/2) of the retiree’s reduced annuity shall be paid 9 |
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| 134 | 133 | | in equal shares to the spouse and the dependent child. 10 |
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| 135 | 134 | | (ii) Upon the death of a retiree, if both a spouse 11 |
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| 136 | 135 | | and more than one (1) dependent child are designated as the retiree’s Option 12 |
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| 137 | 136 | | B beneficiaries, the spouse shall receive fifty percent (50%) of one -half 13 |
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| 138 | 137 | | (1/2) of the retiree’s reduced annuity and the remaining fifty percent (50%) 14 |
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| 139 | 138 | | of one-half (1/2) of the retiree’s reduced annuity shall be paid in equal 15 |
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| 140 | 139 | | shares to the dependent children. 16 |
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| 141 | 140 | | (iii) Upon the death of a retiree, if more than one 17 |
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| 142 | 141 | | (1) dependent child is designated as the retiree's Option B beneficiary and a 18 |
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| 143 | 142 | | spouse is not designated as the retiree's Option B beneficiary, the retiree's 19 |
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| 144 | 143 | | reduced annuity shall be paid in equal shares to each dep endent child 20 |
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| 145 | 144 | | designated as the retiree's Option B beneficiary. 21 |
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| 146 | 145 | | (5) If both a spouse and one (1) or more dependent children are 22 |
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| 147 | 146 | | designated as the Option A or Option B beneficiaries of a retiree and annuity 23 |
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| 148 | 147 | | payments to either the spouse or one (1) or more of the dependent children 24 |
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| 149 | 148 | | have begun, the following shall apply: 25 |
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| 150 | 149 | | (A) A dependent child’s portion of the annuity shall not 26 |
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| 151 | 150 | | revert to the spouse or any other dependent children if the dependent child: 27 |
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| 152 | 151 | | (i) Predeceases the spouse or any other dependent 28 |
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| 153 | 152 | | children; or 29 |
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| 154 | 153 | | (ii) Otherwise becomes ineligible to continue 30 |
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| 155 | 154 | | receiving annuity payments; and 31 |
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| 156 | 155 | | (B) The spouse's portion of the annuity shall not revert 32 |
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| 157 | 156 | | to any dependent child if the spouse: 33 |
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| 158 | 157 | | (i) Predeceases one (1) or more dependent chi ldren; 34 |
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| 159 | 158 | | or 35 |
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| 160 | 159 | | (ii) Otherwise becomes ineligible to continue 36 As Engrossed: H2/16/23 HB1186 |
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| 161 | 160 | | |
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| 162 | 161 | | 5 02-16-2023 09:43:02 LHR039 |
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| 163 | 162 | | |
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| 164 | 163 | | |
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| 165 | 164 | | receiving annuity payments. 1 |
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| 166 | 165 | | 2 |
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| 167 | 166 | | SECTION 4. Arkansas Code § 24 -7-706(d), concerning the ability of a 3 |
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| 168 | 167 | | residue beneficiary under § 24 -7-709 to cancel the form of annuity in effect 4 |
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| 169 | 168 | | and elect Option A — 100% Survivor Annuity option under certain conditions, 5 |
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| 170 | 169 | | is amended to add additional subdivisions to read as follows: 6 |
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| 171 | 170 | | (4) A surviving spouse who is eligible to receive an annuity 7 |
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| 172 | 171 | | under this section may elect to receive a lump -sum distribution of the 8 |
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| 173 | 172 | | retiree's residue in lieu of the spousal annuity if: 9 |
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| 174 | 173 | | (A) The retiree did not designate one (1) or more 10 |
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| 175 | 174 | | dependent children as a beneficiary; and 11 |
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| 176 | 175 | | (B) The surviving spouse files a written waiver of his or 12 |
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| 177 | 176 | | her right to the spousal annuity with the system. 13 |
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| 178 | 177 | | (5) If a residue beneficiary elects the Option A — 100% Survivor 14 |
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| 179 | 178 | | Annuity under this subsection and is the surviving spouse of a disability 15 |
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| 180 | 179 | | retiree, the same procedures used under § 24 -7-710 to determine when an 16 |
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| 181 | 180 | | active member’s surviving spouse is entitled to begin receiving benefit 17 |
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| 182 | 181 | | payments shall be used to determine when the residue beneficiary is entitled 18 |
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| 183 | 182 | | to begin receiving benefit payments. 19 |
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| 184 | 183 | | 20 |
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| 185 | 184 | | SECTION 5. Arkansas Code § 24 -7-706, concerning annuity options, is 21 |
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| 186 | 185 | | amended to add an additional su bsection to read as follows: 22 |
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| 187 | 186 | | (g) A retiree's effective retirement date and the date when survivor 23 |
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| 188 | 187 | | benefits under this section are payable shall be determined by the law in 24 |
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| 189 | 188 | | effect at the time of the retiree's death. 25 |
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| 190 | 189 | | 26 |
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| 191 | 190 | | SECTION 6. EMERGENCY CLAUSE. It is found and determined by the 27 |
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| 192 | 191 | | General Assembly of the State of Arkansas that the operations of a state 28 |
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| 193 | 192 | | public retirement system are complex; that the Arkansas Teacher Retirement 29 |
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| 194 | 193 | | System must be able to meet the needs of its members as anticipated by the 30 |
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| 195 | 194 | | General Assembly; that certain provisions of the Arkansas Teacher Retirement 31 |
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| 196 | 195 | | System Act need revision and updating to bring them into conformance with 32 |
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| 197 | 196 | | sound public pension policy and actuarial requirements; that the current 33 |
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| 198 | 197 | | provisions of the Arkansas Teacher Re tirement System Act do not allow a 34 |
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| 199 | 198 | | retirant to provide for both his or her surviving spouse and dependent 35 |
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| 200 | 199 | | children in the event of the retirant ’s death by designating both his or her 36 As Engrossed: H2/16/23 HB1186 |
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| 201 | 200 | | |
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| 202 | 201 | | 6 02-16-2023 09:43:02 LHR039 |
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| 203 | 202 | | |
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| 204 | 203 | | |
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| 205 | 204 | | surviving spouse and dependent children as option beneficiaries; that the 1 |
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| 206 | 205 | | current provisions of the Arkansas Teacher Retirement System Act do not 2 |
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| 207 | 206 | | clearly address when the surviving spouse of a disability retirant is 3 |
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| 208 | 207 | | entitled to begin receiving benefit payments; that the revisions and updates 4 |
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| 209 | 208 | | are of great importance to members o f the Arkansas Teacher Retirement System 5 |
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| 210 | 209 | | and to other citizens of the State of Arkansas; that the Arkansas Teacher 6 |
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| 211 | 210 | | Retirement System operates on a fiscal year of July 1 to June 30; that a July 7 |
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| 212 | 211 | | 1, 2023, effective date is necessary to allow the provisions wi thin this act 8 |
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| 213 | 212 | | to begin on the first day of the fiscal year to provide for the proper 9 |
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| 214 | 213 | | administration of the procedures referenced in this act; that the updates and 10 |
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| 215 | 214 | | revisions to the Arkansas Teacher Retirement System Act are of great 11 |
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| 216 | 215 | | importance for actuarial purposes and for the improvement and protection of 12 |
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| 217 | 216 | | member benefits under the Arkansas Teacher Retirement System; and that this 13 |
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| 218 | 217 | | act is necessary in order to maintain an orderly system of benefits for the 14 |
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| 219 | 218 | | members of the Arkansas Teacher Retirement System. Therefore, an emergency 15 |
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| 220 | 219 | | is declared to exist, and this act being necessary for the preservation of 16 |
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| 221 | 220 | | the public peace, health, and safety shall become effective on July 1, 2023. 17 |
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| 222 | 221 | | 18 |
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| 223 | 222 | | /s/A. Collins 19 |
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| 224 | 223 | | 20 |
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| 225 | 224 | | 21 |
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