KS
Kansas House Bill HB2619

Kansas 2023-2024 Regular Session

Kansas House Bill HB2619 Compare Versions

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11 Session of 2024
22 HOUSE BILL No. 2619
33 By Representatives Penn and K. Williams
44 1-29
55 AN ACT concerning retirement and pensions; relating to the Kansas
66 deferred retirement option program act; expanding such program
77 membership to all members of the Kansas public employees retirement
88 system; amending K.S.A. 74-4986m and 74-4986o and K.S.A. 2023
99 Supp. 74-4986l, 74-4986n and 74-4986p and repealing the existing
1010 sections.
1111 Be it enacted by the Legislature of the State of Kansas:
1212 Section 1. K.S.A. 2023 Supp. 74-4986l is hereby amended to read as
1313 follows: 74-4986l. (a) As used in this act, unless otherwise provided or the
1414 context otherwise requires:
1515 (1) "Act" means the Kansas deferred retirement option program act;
1616 (2) "board" means the board of trustees of the Kansas public
1717 employees retirement system;
1818 (3) "DROP" means the deferred retirement option program
1919 established by K.S.A. 74-4986m, and amendments thereto;
2020 (4) "DROP account" means the notional account to which is credited
2121 the monthly DROP accrual;
2222 (5) "DROP period" means the period of time that a member elects to
2323 participate in the DROP pursuant to K.S.A. 74-4986n, and amendments
2424 thereto;
2525 (6) "member" means any member of the Kansas public employees
2626 retirement system or the Kansas police and firemen's retirement system
2727 who is eligible to participate in the DROP and who elects to participate in
2828 the DROP as provided in this act;
2929 (7) "monthly DROP accrual" means the amount equal to the monthly
3030 retirement benefit that would have been payable to the member had the
3131 member terminated service and retired on the day the member elected; and
3232 (8) "system" means the Kansas public employees retirement system
3333 and the Kansas police and firemen's retirement system.
3434 (b) Unless specifically provided in this section or in this act, words
3535 and phrases used in this act mean the same as provided under the
3636 provisions of K.S.A. 74-4901 et seq. and 74-4951 et seq., and amendments
3737 thereto.
3838 Sec. 2. K.S.A. 74-4986m is hereby amended to read as follows: 74-
3939 4986m. (a) The board shall establish within the Kansas police and
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7676 firemen's retirement system a deferred retirement option program for
7777 members. The board shall administer the DROP in compliance with the
7878 federal internal revenue code and applicable treasury regulations,
7979 including, but not limited to, the incidental benefit and required minimum
8080 distribution requirements of section 401(a)(9) of the federal internal
8181 revenue code.
8282 (b) The board shall establish a DROP account for each member. Each
8383 DROP account shall be credited annually with interest as provided in this
8484 subsection. Interest may only be credited in a year in which the actual rate
8585 of return on the market value on the investments of the DROP reach the
8686 system's assumed investment rate of return. Such interest credit may not
8787 exceed 50% of the actual rate of return, and such interest credit shall not
8888 exceed 3%.
8989 Sec. 3. K.S.A. 2023 Supp. 74-4986n is hereby amended to read as
9090 follows: 74-4986n. (a) (1) A member of the Kansas police and firemen's
9191 retirement system who is appointed or employed prior to July 1, 1989, and
9292 who did not make an election pursuant to K.S.A. 74-4955a, and
9393 amendments thereto, may elect to participate in the DROP by making
9494 application in such form prescribed by the system at the attainment of age
9595 55 and the completion of 20 years of credited service or at the completion
9696 of 32 years of credited service regardless of the age of such member.
9797 (2) A member of the Kansas police and firemen's retirement system
9898 who is appointed or employed on or after July 1, 1989, or who made an
9999 election pursuant to K.S.A. 74-4955a, and amendments thereto, may elect
100100 to participate in the DROP by making application in such form prescribed
101101 by the system at the attainment of age 55 and the completion of 20 years of
102102 credited service, age 50 and the completion of 25 years of credited service
103103 or age 60 with the completion of 15 years of credited service.
104104 (b) (1) Except as provided by paragraph (3), a member of the
105105 Kansas public employees retirement system who is first employed with a
106106 participating employer prior to July 1, 2009, may elect to participate in
107107 the DROP by making application in such form prescribed by the system at
108108 the attainment of:
109109 (A) Age 65 with the completion of one year of credited service;
110110 (B) age 62 with the completion of 10 years of credited service; or
111111 (C) the total of the number of years of credited service and the
112112 number of years of attained age of the member is equal to or more than
113113 85.
114114 (2) Except as provided by paragraph (3), a member of the Kansas
115115 public employees retirement system who is first employed with a
116116 participating employer on or after July 1, 2009, may elect to participate in
117117 the DROP by making application in such form prescribed by the system at
118118 the attainment of age:
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162162 (A) 65 with the completion of five years of credited service; or
163163 (B) 60 with the completion of 30 years of credited service.
164164 (3) A member of the Kansas public employees retirement system who
165165 is a security officer as defined in K.S.A. 74-4914a, and amendments
166166 thereto, may elect to participate in the DROP by making application in
167167 such form prescribed by the system at the attainment of the normal
168168 retirement date for such security officer in accordance with K.S.A. 74-
169169 4914c, and amendments thereto. 
170170 (c) A member shall indicate on the application the DROP period such
171171 member wishes to participate in the DROP. A member may elect to
172172 participate in the DROP for a minimum of three years and may not
173173 participate for more than five years from the effective date of the election
174174 to participate in the DROP. A member may participate in the DROP only
175175 once. Once the application is accepted by the system, such member
176176 becomes a DROP participant. If a member fails to participate in the DROP
177177 for a minimum of three years, all of the member's interest credits shall be
178178 forfeited, unless such member retires due to disability as defined in K.S.A.
179179 74-4914e or 74-4952, and amendments thereto, or receives a long-term
180180 disability benefit under K.S.A. 74-4927, and amendments thereto. A
181181 member who remains in active service at the expiration of the member's
182182 elected DROP period shall not be eligible for any additional interest
183183 credits. A member who first elected a DROP period of less than five years
184184 may extend, with the employer's authorization, such DROP period upon
185185 making application to the system. The total aggregate DROP period for a
186186 member shall be consecutive and shall not exceed five years from the
187187 effective date of the initial election to participate in the DROP.
188188 (c)(d) A member who makes an election under this section shall
189189 continue in the active service under the Kansas police and firemen's
190190 retirement system but shall not earn service credit under K.S.A. 74-4951 et
191191 seq., and amendments thereto, after the election's effective date. On and
192192 after the effective date of the member's election to participate, such
193193 member is ineligible to purchase service credit under K.S.A. 74-4901 et
194194 seq., and amendments thereto.
195195 (d)(e) Participation in the DROP by a member does not guarantee
196196 continued employment. During a member's participation in the DROP,
197197 employer contributions under K.S.A. 74-4920 or 74-4967, and
198198 amendments thereto, and member contributions under K.S.A. 74-4919, 74-
199199 4965, 74-49,210 or 74-49,305, and amendments thereto, shall be made to
200200 the retirement system. No member or employer contributions shall be
201201 applied to a member's DROP account.
202202 Sec. 4. K.S.A. 74-4986o is hereby amended to read as follows: 74-
203203 4986o. (a) (1) For each DROP member, the board shall calculate a monthly
204204 DROP accrual. The system shall determine the DROP member's retirement
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248248 benefit under K.S.A. 74-4915, 74-4958 or, 74-4958a, 74-49,205, 74-
249249 49,311 and 74-49,313, and amendments thereto.
250250 (2) Except as provided in paragraph (3), in determining the
251251 retirement benefit, the system shall use the member's total service credit
252252 and final average salary as of the last day of the employer's payroll period
253253 immediately prior to the effective date of the member's election to
254254 participate in the DROP.
255255 (3) A member of the Kansas public employees retirement system act
256256 of 2015 shall have such member's retirement benefit determined in the
257257 manner prescribed in K.S.A. 74-49,311 and 74-49,313, and amendments
258258 thereto, as of the last day of the employer's payroll period immediately
259259 prior to the effective date of the member's election to participate in the
260260 DROP.
261261 (4) Before entering the DROP, a member may elect to have such
262262 member's retirement benefit determined under one of the options provided
263263 in K.S.A. 74-4918, 74-4964 or 74-4964a, and amendments thereto, in lieu
264264 of having it determined in the form stated in K.S.A. 74-4915, 74-4958 or,
265265 74-4958a, 74-49,205, 74-49,311 or 74-49,313, and amendments thereto,
266266 except such member may not elect the lump sum payment option. During
267267 the DROP period, an amount equal to the monthly DROP accrual shall be
268268 credited to the member's DROP account. The calculation of the monthly
269269 DROP accrual will be calculated using the member's age and, if the
270270 member elected a joint and survivor option, the age of the beneficiary as of
271271 the calendar year which contains the beginning of the DROP period. The
272272 monthly DROP accrual shall comply with the requirements of section
273273 401(a)(9) of the federal internal revenue code and treasury regulation §
274274 1.401(a)9-6, Q&A-2(c).
275275 (b) A member shall not receive a monthly retirement benefit, as
276276 calculated pursuant to K.S.A. 74-4958 or 74-4958a, and amendments
277277 thereto, until termination of such member's DROP participation and
278278 commencement of retirement. A DROP member shall not have any claim
279279 to any funds in such member's DROP account until such member retires at
280280 the termination of such member's DROP participation. Upon terminating
281281 DROP participation, a member is entitled to such member's retirement
282282 benefit, including any postretirement benefit adjustment for which the
283283 member is eligible and any change in the retirement benefit resulting from
284284 the recalculation of the member's final average salary as provided in
285285 subsection (c).
286286 (c) A member may have such member's final average salary
287287 recalculated at the time of retirement to include any payments of the
288288 member's accumulated sick and annual leave compensation made at
289289 retirement. If the member's recalculated final average salary is higher than
290290 the final average salary used in calculating the member's monthly DROP
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334334 accrual, the retirement benefit shall be based on the recalculated final
335335 average salary.
336336 (d) An amount equal to the difference between the member's monthly
337337 DROP accrual and the monthly retirement benefit calculated under
338338 subsection (c), if any, times the number of months the member participated
339339 in the DROP, shall be credited as a lump sum to the member's DROP
340340 account at termination of participation and commencement of retirement.
341341 No interest shall be credited to such lump sum credit.
342342 (e) If a member who selected a joint and survivor retirement benefit
343343 option dies during the DROP period, the joint survivor benefit shall be
344344 calculated as provided in subsection (c) and any lump sum credit that
345345 would have been payable to the member under subsection (d) shall be
346346 applied prior to distribution of the DROP account to the member's
347347 beneficiary as provided in K.S.A. 74-4986p(b), and amendments thereto.
348348 Sec. 5. K.S.A. 2023 Supp. 74-4986p is hereby amended to read as
349349 follows: 74-4986p. (a) A member's participation in the DROP ceases on
350350 the occurrence of the earliest of the following:
351351 (1) Termination of the member's active service with a participating
352352 employer of the system;
353353 (2) the last day of the member's elected DROP period that begins on
354354 the effective date of the member's election to participate in the DROP;
355355 (3) retirement due to disability as defined in K.S.A. 74-4914e or 74-
356356 4952, and amendments thereto; or
357357 (4) payment of a long-term disability benefit under K.S.A. 74-4927,
358358 and amendments thereto; or
359359 (5) the member's death.
360360 (b) If a member dies before taking a distribution from such member's
361361 DROP account, the member's designated beneficiary shall receive a lump-
362362 sum payment equal to the member's DROP account balance, including any
363363 lump sum credited as provided in K.S.A. 74-4986o(d), and amendments
364364 thereto. If the DROP member has not named a beneficiary for such
365365 member's DROP account, the amount in the DROP account shall be paid
366366 to the beneficiary of the member's retirement benefit.
367367 Sec. 6. K.S.A. 74-4986m and 74-4986o and K.S.A. 2023 Supp. 74-
368368 4986l, 74-4986n and 74-4986p are hereby repealed.
369369 Sec. 7. This act shall take effect and be in force from and after its
370370 publication in the statute book.
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