Session of 2024
HOUSE BILL No. 2619
By Representatives Penn and K. Williams
1-29
AN ACT concerning retirement and pensions; relating to the Kansas
deferred retirement option program act; expanding such program
membership to all members of the Kansas public employees retirement
system; amending K.S.A. 74-4986m and 74-4986o and K.S.A. 2023
Supp. 74-4986l, 74-4986n and 74-4986p and repealing the existing
sections.
Be it enacted by the Legislature of the State of Kansas:
Section 1. K.S.A. 2023 Supp. 74-4986l is hereby amended to read as
follows: 74-4986l. (a) As used in this act, unless otherwise provided or the
context otherwise requires:
(1) "Act" means the Kansas deferred retirement option program act;
(2) "board" means the board of trustees of the Kansas public
employees retirement system;
(3) "DROP" means the deferred retirement option program
established by K.S.A. 74-4986m, and amendments thereto;
(4) "DROP account" means the notional account to which is credited
the monthly DROP accrual;
(5) "DROP period" means the period of time that a member elects to
participate in the DROP pursuant to K.S.A. 74-4986n, and amendments
thereto;
(6) "member" means any member of the Kansas public employees
retirement system or the Kansas police and firemen's retirement system
who is eligible to participate in the DROP and who elects to participate in
the DROP as provided in this act;
(7) "monthly DROP accrual" means the amount equal to the monthly
retirement benefit that would have been payable to the member had the
member terminated service and retired on the day the member elected; and
(8) "system" means the Kansas public employees retirement system
and the Kansas police and firemen's retirement system.
(b) Unless specifically provided in this section or in this act, words
and phrases used in this act mean the same as provided under the
provisions of K.S.A. 74-4901 et seq. and 74-4951 et seq., and amendments
thereto.
Sec. 2. K.S.A. 74-4986m is hereby amended to read as follows: 74-
4986m. (a) The board shall establish within the Kansas police and
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firemen's retirement system a deferred retirement option program for
members. The board shall administer the DROP in compliance with the
federal internal revenue code and applicable treasury regulations,
including, but not limited to, the incidental benefit and required minimum
distribution requirements of section 401(a)(9) of the federal internal
revenue code.
(b) The board shall establish a DROP account for each member. Each
DROP account shall be credited annually with interest as provided in this
subsection. Interest may only be credited in a year in which the actual rate
of return on the market value on the investments of the DROP reach the
system's assumed investment rate of return. Such interest credit may not
exceed 50% of the actual rate of return, and such interest credit shall not
exceed 3%.
Sec. 3. K.S.A. 2023 Supp. 74-4986n is hereby amended to read as
follows: 74-4986n. (a) (1) A member of the Kansas police and firemen's
retirement system who is appointed or employed prior to July 1, 1989, and
who did not make an election pursuant to K.S.A. 74-4955a, and
amendments thereto, may elect to participate in the DROP by making
application in such form prescribed by the system at the attainment of age
55 and the completion of 20 years of credited service or at the completion
of 32 years of credited service regardless of the age of such member.
(2) A member of the Kansas police and firemen's retirement system
who is appointed or employed on or after July 1, 1989, or who made an
election pursuant to K.S.A. 74-4955a, and amendments thereto, may elect
to participate in the DROP by making application in such form prescribed
by the system at the attainment of age 55 and the completion of 20 years of
credited service, age 50 and the completion of 25 years of credited service
or age 60 with the completion of 15 years of credited service.
(b) (1) Except as provided by paragraph (3), a member of the
Kansas public employees retirement system who is first employed with a
participating employer prior to July 1, 2009, may elect to participate in
the DROP by making application in such form prescribed by the system at
the attainment of:
(A) Age 65 with the completion of one year of credited service;
(B) age 62 with the completion of 10 years of credited service; or
(C) the total of the number of years of credited service and the
number of years of attained age of the member is equal to or more than
85.
(2) Except as provided by paragraph (3), a member of the Kansas
public employees retirement system who is first employed with a
participating employer on or after July 1, 2009, may elect to participate in
the DROP by making application in such form prescribed by the system at
the attainment of age:
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(A) 65 with the completion of five years of credited service; or
(B) 60 with the completion of 30 years of credited service.
(3) A member of the Kansas public employees retirement system who
is a security officer as defined in K.S.A. 74-4914a, and amendments
thereto, may elect to participate in the DROP by making application in
such form prescribed by the system at the attainment of the normal
retirement date for such security officer in accordance with K.S.A. 74-
4914c, and amendments thereto.
(c) A member shall indicate on the application the DROP period such
member wishes to participate in the DROP. A member may elect to
participate in the DROP for a minimum of three years and may not
participate for more than five years from the effective date of the election
to participate in the DROP. A member may participate in the DROP only
once. Once the application is accepted by the system, such member
becomes a DROP participant. If a member fails to participate in the DROP
for a minimum of three years, all of the member's interest credits shall be
forfeited, unless such member retires due to disability as defined in K.S.A.
74-4914e or 74-4952, and amendments thereto, or receives a long-term
disability benefit under K.S.A. 74-4927, and amendments thereto. A
member who remains in active service at the expiration of the member's
elected DROP period shall not be eligible for any additional interest
credits. A member who first elected a DROP period of less than five years
may extend, with the employer's authorization, such DROP period upon
making application to the system. The total aggregate DROP period for a
member shall be consecutive and shall not exceed five years from the
effective date of the initial election to participate in the DROP.
(c)(d) A member who makes an election under this section shall
continue in the active service under the Kansas police and firemen's
retirement system but shall not earn service credit under K.S.A. 74-4951 et
seq., and amendments thereto, after the election's effective date. On and
after the effective date of the member's election to participate, such
member is ineligible to purchase service credit under K.S.A. 74-4901 et
seq., and amendments thereto.
(d)(e) Participation in the DROP by a member does not guarantee
continued employment. During a member's participation in the DROP,
employer contributions under K.S.A. 74-4920 or 74-4967, and
amendments thereto, and member contributions under K.S.A. 74-4919, 74-
4965, 74-49,210 or 74-49,305, and amendments thereto, shall be made to
the retirement system. No member or employer contributions shall be
applied to a member's DROP account.
Sec. 4. K.S.A. 74-4986o is hereby amended to read as follows: 74-
4986o. (a) (1) For each DROP member, the board shall calculate a monthly
DROP accrual. The system shall determine the DROP member's retirement
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benefit under K.S.A. 74-4915, 74-4958 or, 74-4958a, 74-49,205, 74-
49,311 and 74-49,313, and amendments thereto.
(2) Except as provided in paragraph (3), in determining the
retirement benefit, the system shall use the member's total service credit
and final average salary as of the last day of the employer's payroll period
immediately prior to the effective date of the member's election to
participate in the DROP.
(3) A member of the Kansas public employees retirement system act
of 2015 shall have such member's retirement benefit determined in the
manner prescribed in K.S.A. 74-49,311 and 74-49,313, and amendments
thereto, as of the last day of the employer's payroll period immediately
prior to the effective date of the member's election to participate in the
DROP.
(4) Before entering the DROP, a member may elect to have such
member's retirement benefit determined under one of the options provided
in K.S.A. 74-4918, 74-4964 or 74-4964a, and amendments thereto, in lieu
of having it determined in the form stated in K.S.A. 74-4915, 74-4958 or,
74-4958a, 74-49,205, 74-49,311 or 74-49,313, and amendments thereto,
except such member may not elect the lump sum payment option. During
the DROP period, an amount equal to the monthly DROP accrual shall be
credited to the member's DROP account. The calculation of the monthly
DROP accrual will be calculated using the member's age and, if the
member elected a joint and survivor option, the age of the beneficiary as of
the calendar year which contains the beginning of the DROP period. The
monthly DROP accrual shall comply with the requirements of section
401(a)(9) of the federal internal revenue code and treasury regulation §
1.401(a)9-6, Q&A-2(c).
(b) A member shall not receive a monthly retirement benefit, as
calculated pursuant to K.S.A. 74-4958 or 74-4958a, and amendments
thereto, until termination of such member's DROP participation and
commencement of retirement. A DROP member shall not have any claim
to any funds in such member's DROP account until such member retires at
the termination of such member's DROP participation. Upon terminating
DROP participation, a member is entitled to such member's retirement
benefit, including any postretirement benefit adjustment for which the
member is eligible and any change in the retirement benefit resulting from
the recalculation of the member's final average salary as provided in
subsection (c).
(c) A member may have such member's final average salary
recalculated at the time of retirement to include any payments of the
member's accumulated sick and annual leave compensation made at
retirement. If the member's recalculated final average salary is higher than
the final average salary used in calculating the member's monthly DROP
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accrual, the retirement benefit shall be based on the recalculated final
average salary.
(d) An amount equal to the difference between the member's monthly
DROP accrual and the monthly retirement benefit calculated under
subsection (c), if any, times the number of months the member participated
in the DROP, shall be credited as a lump sum to the member's DROP
account at termination of participation and commencement of retirement.
No interest shall be credited to such lump sum credit.
(e) If a member who selected a joint and survivor retirement benefit
option dies during the DROP period, the joint survivor benefit shall be
calculated as provided in subsection (c) and any lump sum credit that
would have been payable to the member under subsection (d) shall be
applied prior to distribution of the DROP account to the member's
beneficiary as provided in K.S.A. 74-4986p(b), and amendments thereto.
Sec. 5. K.S.A. 2023 Supp. 74-4986p is hereby amended to read as
follows: 74-4986p. (a) A member's participation in the DROP ceases on
the occurrence of the earliest of the following:
(1) Termination of the member's active service with a participating
employer of the system;
(2) the last day of the member's elected DROP period that begins on
the effective date of the member's election to participate in the DROP;
(3) retirement due to disability as defined in K.S.A. 74-4914e or 74-
4952, and amendments thereto; or
(4) payment of a long-term disability benefit under K.S.A. 74-4927,
and amendments thereto; or
(5) the member's death.
(b) If a member dies before taking a distribution from such member's
DROP account, the member's designated beneficiary shall receive a lump-
sum payment equal to the member's DROP account balance, including any
lump sum credited as provided in K.S.A. 74-4986o(d), and amendments
thereto. If the DROP member has not named a beneficiary for such
member's DROP account, the amount in the DROP account shall be paid
to the beneficiary of the member's retirement benefit.
Sec. 6. K.S.A. 74-4986m and 74-4986o and K.S.A. 2023 Supp. 74-
4986l, 74-4986n and 74-4986p are hereby repealed.
Sec. 7. This act shall take effect and be in force from and after its
publication in the statute book.
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