UNOFFICIAL COPY 24 RS BR 1084
Page 1 of 64
XXXX 2/1/2024 5:30 PM Jacketed
AN ACT relating to designating a special needs trust to receive state-administered 1
retirement benefits. 2
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 3
Section 1. KRS 16.505 is amended to read as follows: 4
As used in KRS 16.505 to 16.652, unless the context otherwise requires: 5
(1) "System" means the State Police Retirement System created by KRS 16.505 to 6
16.652; 7
(2) "Board" means the board of trustees of the Kentucky Retirement Systems; 8
(3) "Employer" or "State Police" means the Department of Kentucky State Police, or its 9
successor; 10
(4) "Current service" means the number of years and completed months of employment 11
as an employee subsequent to July 1, 1958, for which creditable compensation was 12
paid by the employer and employee contributions deducted except as otherwise 13
provided; 14
(5) "Prior service" means the number of years and completed months of employment as 15
an employee prior to July 1, 1958, for which creditable compensation was paid to 16
the employee by the Commonwealth. Twelve (12) months of current service in the 17
system are required to validate prior service; 18
(6) "Service" means the total of current service and prior service; 19
(7) "Accumulated contributions" at any time means the sum of all amounts deducted 20
from the compensation of a member and credited to his or her individual account in 21
the member's account, including employee contributions picked up after August 1, 22
1982, pursuant to KRS 16.545(4), together with interest credited on such amounts 23
as provided in KRS 16.505 to 16.652, and any other amounts the member shall 24
have contributed, including interest credited. For members who begin participating 25
on or after September 1, 2008, "accumulated contributions" shall not include 26
employee contributions that are deposited into accounts established pursuant to 26 27 UNOFFICIAL COPY 24 RS BR 1084
Page 2 of 64
XXXX 2/1/2024 5:30 PM Jacketed
U.S.C. sec. 401(h) within the funds established in KRS 16.510 and 61.515, as 1
prescribed by KRS 61.702(3)(b); 2
(8) "Creditable compensation": 3
(a) Except as provided by paragraph (b) or (c) of this subsection, means all salary 4
and wages, including payments for compensatory time, paid to the employee 5
as a result of services performed for the employer or for time during which the 6
member is on paid leave, which are includable on the member's federal form 7
W-2 wage and tax statement under the heading "wages, tips, other 8
compensation," including employee contributions picked up after August 1, 9
1982, pursuant to KRS 16.545(4); 10
(b) Includes: 11
1. Lump-sum bonuses, severance pay, or employer-provided payments for 12
purchase of service credit, which shall be averaged over the employee's 13
total service with the system in which it is recorded if it is equal to or 14
greater than one thousand dollars ($1,000); 15
2. Lump-sum payments for creditable compensation paid as a result of an 16
order of a court of competent jurisdiction, the Personnel Board, or the 17
Commission on Human Rights, or for any creditable compensation paid 18
in anticipation of settlement of an action before a court of competent 19
jurisdiction, the Personnel Board, or the Commission on Human Rights, 20
including notices of violations of state or federal wage and hour statutes 21
or violations of state or federal discrimination statutes, which shall be 22
credited to the fiscal year during which the wages were earned or should 23
have been paid by the employer. This subparagraph shall also include 24
lump-sum payments for reinstated wages pursuant to KRS 61.569, 25
which shall be credited to the period during which the wages were 26
earned or should have been paid by the employer; 27 UNOFFICIAL COPY 24 RS BR 1084
Page 3 of 64
XXXX 2/1/2024 5:30 PM Jacketed
3. Amounts which are not includable in the member's gross income by 1
virtue of the member having taken a voluntary salary reduction provided 2
for under applicable provisions of the Internal Revenue Code; and 3
4. Elective amounts for qualified transportation fringes paid or made 4
available on or after January 1, 2001, for calendar years on or after 5
January 1, 2001, that are not includable in the gross income of the 6
employee by reason of 26 U.S.C. sec. 132(f)(4); and 7
(c) Excludes: 8
1. Living allowances, expense reimbursements, lump-sum payments for 9
accrued vacation leave, and other items determined by the board; 10
2. For employees who begin participating on or after September 1, 2008, 11
lump-sum payments for compensatory time; and 12
3. Any salary or wages paid to an employee for services as a Kentucky 13
State Police school resource officer as defined by KRS 158.441; 14
(9) "Final compensation" means: 15
(a) For a member who begins participating before September 1, 2008, the 16
creditable compensation of a member during the three (3) fiscal years he or 17
she was paid at the highest average monthly rate divided by the number of 18
months of service credit during the three (3) year period, multiplied by twelve 19
(12); the three (3) years may be fractional and need not be consecutive. If the 20
number of months of service credit during the three (3) year period is less than 21
twenty-four (24), one (1) or more additional fiscal years shall be used; or 22
(b) For a member who begins participating on or after September 1, 2008, but 23
prior to January 1, 2014, the creditable compensation of the member during 24
the three (3) complete fiscal years he or she was paid at the highest average 25
monthly rate divided by three (3). Each fiscal year used to determine final 26
compensation must contain twelve (12) months of service credit. If the 27 UNOFFICIAL COPY 24 RS BR 1084
Page 4 of 64
XXXX 2/1/2024 5:30 PM Jacketed
member does not have three (3) complete fiscal years that each contain twelve 1
(12) months of service credit, then one (1) or more additional fiscal years, 2
which may contain less than twelve (12) months of service credit, shall be 3
added until the number of months in the final compensation calculation is at 4
least thirty-six (36) months; 5
(10) "Final rate of pay" means the actual rate upon which earnings of a member were 6
calculated during the twelve (12) month period immediately preceding the 7
member's effective retirement date, including employee contributions picked up 8
after August 1, 1982, pursuant to KRS 16.545(4). The rate shall be certified to the 9
system by the employer and the following equivalents shall be used to convert the 10
rate to an annual rate: two thousand eighty (2,080) hours for eight (8) hour 11
workdays, one thousand nine hundred fifty (1,950) hours for seven and one-half (7-12
1/2) hour workdays, two hundred sixty (260) days, fifty-two (52) weeks, twelve 13
(12) months, or one (1) year; 14
(11) "Retired member" means any former member receiving a retirement allowance or 15
any former member who has filed the necessary documents for retirement benefits 16
and is no longer contributing to the retirement system; 17
(12) "Retirement allowance" means the retirement payments to which a retired member 18
is entitled; 19
(13) "Actuarial equivalent" means a benefit of equal value when computed upon the 20
basis of actuarial tables adopted by the board. In cases of disability retirement, the 21
options authorized by KRS 61.635 shall be computed by adding ten (10) years to 22
the age of the member, unless the member has chosen the Social Security 23
adjustment option as provided for in KRS 61.635(8), in which case the member's 24
actual age shall be used. For members who began participating in the system prior 25
to January 1, 2014, no disability retirement option shall be less than the same option 26
computed under early retirement; 27 UNOFFICIAL COPY 24 RS BR 1084
Page 5 of 64
XXXX 2/1/2024 5:30 PM Jacketed
(14) "Authorized leave of absence" means any time during which a person is absent 1
from employment but retained in the status of an employee in accordance with the 2
personnel policy of the Department of Kentucky State Police; 3
(15) "Normal retirement date" means: 4
(a) For a member who begins participating before September 1, 2008, the first 5
day of the month following a member's fifty-fifth birthday, except that for 6
members over age fifty-five (55) on July 1, 1958, it shall mean January 1, 7
1959; or 8
(b) For a member who begins participating on or after September 1, 2008, the 9
first day of the month following a member's sixtieth birthday; 10
(16) "Disability retirement date" means the first day of the month following the last day 11
of paid employment; 12
(17) "Dependent child" means a child in the womb and a natural or legally adopted child 13
of the member who has neither attained age eighteen (18) nor married or who is an 14
unmarried full-time student who has not attained age twenty-two (22). Solely in the 15
cases where a member dies as a direct result of an act in line of duty as defined in 16
this section, dies as a result of a duty-related injury as defined in KRS 61.621, 17
becomes totally and permanently disabled as a direct result of an act in line of duty 18
as defined in this section, or becomes disabled as a result of a duty-related injury as 19
defined in KRS 61.621 and is eligible for the benefits provided by KRS 20
61.621(5)(a), "dependent child" also means a naturally or legally adopted disabled 21
child of the member, regardless of the child's age, if the child has been determined 22
to be eligible for federal Social Security disability benefits or is being claimed as a 23
qualifying child for tax purposes due to the child's total and permanent disability; 24
(18) "Optional allowance" means an actuarially equivalent benefit elected by the 25
member in lieu of all other benefits provided by KRS 16.505 to 16.652; 26
(19) "Act in line of duty" means: 27 UNOFFICIAL COPY 24 RS BR 1084
Page 6 of 64
XXXX 2/1/2024 5:30 PM Jacketed
(a) A single act occurring or a single thing done, which, as determined by the 1
board, was required in the performance of the duties specified in KRS 16.060; 2
(b) For employees in hazardous positions under KRS 61.592, a single act 3
occurring which was required in the performance of the principal duties of the 4
position as defined by the job description; or 5
(c) For employees participating in the State Police Retirement System and for 6
employees who are in hazardous positions under KRS 61.592, a single act of 7
violence committed against the employee that is found to be related to his or 8
her job duties, whether or not it occurs at his or her job site; 9
(20) "Early retirement date" means: 10
(a) For a member who begins participating before September 1, 2008, the 11
retirement date declared by a member who is not less than fifty (50) years of 12
age and has fifteen (15) years of service; or 13
(b) For a member who begins participating on or after September 1, 2008, but 14
prior to January 1, 2014, the retirement date declared by a member who is not 15
less than fifty (50) years of age and has fifteen (15) years of service credited 16
under KRS 16.543(1) or 61.543(1) or another state-administered retirement 17
system; 18
(21) "Member" means any officer included in the membership of the system as provided 19
under KRS 16.520 whose membership has not been terminated under KRS 61.535; 20
(22) "Regular full-time officers" means the occupants of positions as set forth in KRS 21
16.010; 22
(23) "Hazardous disability" as used in KRS 16.505 to 16.652 means a disability which 23
results in an employee's total incapacity to continue as an employee in a hazardous 24
position, but the employee is not necessarily deemed to be totally and permanently 25
disabled to engage in other occupations for remuneration or profit; 26
(24) "Current rate of pay" means the member's actual hourly, daily, weekly, biweekly, 27 UNOFFICIAL COPY 24 RS BR 1084
Page 7 of 64
XXXX 2/1/2024 5:30 PM Jacketed
monthly, or yearly rate of pay converted to an annual rate as defined in final rate of 1
pay. The rate shall be certified by the employer; 2
(25) "Beneficiary" means the person, persons, estate, trust, or trustee designated by the 3
member in accordance with KRS 61.542 or 61.705 to receive any available benefits 4
in the event of the member's death, except when used in reference to the sole 5
beneficiary of a special needs trust. As used in KRS 61.702, "beneficiary" does not 6
mean an estate, trust, or trustee; 7
(26) "Recipient" means the retired member, the person or persons designated as 8
beneficiary by the member and drawing a retirement allowance as a result of the 9
member's death, or a dependent child drawing a retirement allowance. An alternate 10
payee of a qualified domestic relations order shall not be considered a recipient, 11
except for purposes of KRS 61.623; 12
(27) "Person" means a natural person, including a sole beneficiary of a special needs 13
trust who is a single natural person designated by a member as his or her 14
beneficiary in accordance with KRS 61.542; 15
(28) "Retirement office" means the Kentucky Public Pensions Authority office building 16
in Frankfort, unless otherwise designated by the Kentucky Public Pensions 17
Authority; 18
(29) "Vested" for purposes of determining eligibility for purchasing service credit under 19
KRS 61.552 means the employee has at least forty-eight (48) months of service if 20
age sixty-five (65) or older or at least sixty (60) months of service if under the age 21
of sixty-five (65). For purposes of this subsection, "service" means service in the 22
systems administered by the Kentucky Retirement Systems and County Employees 23
Retirement Systems; 24
(30) "Last day of paid employment" means the last date employer and employee 25
contributions are required to be reported in accordance with KRS 16.543 or 61.543 26
to the retirement office in order for the employee to receive current service credit 27 UNOFFICIAL COPY 24 RS BR 1084
Page 8 of 64
XXXX 2/1/2024 5:30 PM Jacketed
for the month. Last day of paid employment does not mean a date the employee 1
receives payment for accrued leave, whether by lump sum or otherwise, if that date 2
occurs twenty-four (24) or more months after previous contributions; 3
(31) "Objective medical evidence" means reports of examinations or treatments; medical 4
signs which are anatomical, physiological, or psychological abnormalities that can 5
be observed; psychiatric signs which are medically demonstrable phenomena 6
indicating specific abnormalities of behavior, affect, thought, memory, orientation, 7
or contact with reality; or laboratory findings which are anatomical, physiological, 8
or psychological phenomena that can be shown by medically acceptable laboratory 9
diagnostic techniques, including but not limited to chemical tests, 10
electrocardiograms, electroencephalograms, X-rays, and psychological tests; 11
(32) "Fiscal year" of the system means the twelve (12) months from July 1 through the 12
following June 30, which shall also be the plan year. The "fiscal year" shall be the 13
limitation year used to determine contribution and benefit limits established by 26 14
U.S.C. sec. 415; 15
(33) "Participating" means an employee is currently earning service credit in the system 16
as provided in KRS 16.543; 17
(34) "Month" means a calendar month; 18
(35) "Membership date" means the date upon which the member began participating in 19
the system as provided by KRS 16.543; 20
(36) "Participant" means a member, as defined by subsection (21) of this section, or a 21
retired member, as defined by subsection (11) of this section; 22
(37) "Qualified domestic relations order" means any judgment, decree, or order, 23
including approval of a property settlement agreement, that: 24
(a) Is issued by a court or administrative agency; and 25
(b) Relates to the provision of child support, alimony payments, or marital 26
property rights to an alternate payee; 27 UNOFFICIAL COPY 24 RS BR 1084
Page 9 of 64
XXXX 2/1/2024 5:30 PM Jacketed
(38) "Alternate payee" means a spouse, former spouse, child, or other dependent of a 1
participant, who is designated to be paid retirement benefits in a qualified domestic 2
relations order; 3
(39) "Accumulated employer credit" means the employer pay credit deposited to the 4
member's account and interest credited on such amounts as provided by KRS 5
16.583; 6
(40) "Accumulated account balance" means: 7
(a) For members who began participating in the system prior to January 1, 2014, 8
the member's accumulated contributions; or 9
(b) For members who began participating in the system on or after January 1, 10
2014, in the hybrid cash balance plan as provided by KRS 16.583, the 11
combined sum of the member's accumulated contributions and the member's 12
accumulated employer pay credit;[ and] 13
(41) "Monthly average pay" means: 14
(a) In the case of a member who dies as a direct result of an act in line of duty as 15
defined in this section or who dies as a result of a duty-related injury as 16
defined in KRS 61.621, the higher of the member's monthly final rate of pay 17
or the average monthly creditable compensation earned by the deceased 18
member during his or her last twelve (12) months of employment; or 19
(b) In the case where a member becomes totally and permanently disabled as a 20
direct result of an act in line of duty as defined in this section or becomes 21
disabled as a result of a duty-related injury as defined in KRS 61.621 and is 22
eligible for the benefits provided by KRS 61.621(5)(a), the higher of the 23
member's monthly final rate of pay or the average monthly creditable 24
compensation earned by the disabled member during his or her last twelve 25
(12) months of employment prior to the date the act in line of duty or duty-26
related injury occurred; and 27 UNOFFICIAL COPY 24 RS BR 1084
Page 10 of 64
XXXX 2/1/2024 5:30 PM Jacketed
(42) "Special needs trust" means a trust described in 42 U.S.C. sec 1396p(d)(4)(A). 1
Any reference to a trust includes a special needs trust, unless the context 2
otherwise requires. 3
Section 2. KRS 16.578 is amended to read as follows: 4
(1) If a member dies prior to the first day of the month in which the member would 5
have received his or her first retirement allowance, the member's beneficiary shall 6
be eligible for the benefits provided by this section if the member had on file a 7
written designation of a beneficiary with the retirement office as provided by KRS 8
61.542 and the member met the following conditions at the date of his or her death: 9
(a) The member was eligible to retire under KRS 16.576, 16.577, or 16.583(6); 10
(b) The member was in active employment or on authorized leave of absence 11
with five (5) or more years of service credit and died prior to his or her normal 12
retirement date; or 13
(c) The member was not in active employment or on authorized leave of absence 14
with twelve (12) or more years of service credit and died prior to his or her 15
normal retirement date. 16
(2) If the beneficiary eligible for benefits as provided in subsection (1) of this section is 17
a single person or the sole beneficiary of a special needs trust, then the beneficiary 18
may elect to receive: 19
(a) A monthly benefit payable for the life of the beneficiary that is equal to the 20
benefit that would have been paid had the member retired immediately prior 21
to his or her date of death and elected to receive benefits payable under the 22
survivorship one hundred percent (100%) option as provided in KRS 23
61.635(2); 24
(b) A monthly benefit payable for the life of the beneficiary under the beneficiary 25
Social Security adjustment option as provided in KRS 61.635(9) that is the 26
actuarial equivalent to the amount computed under paragraph (a) of this 27 UNOFFICIAL COPY 24 RS BR 1084
Page 11 of 64
XXXX 2/1/2024 5:30 PM Jacketed
subsection; 1
(c) A monthly benefit payable for a period of sixty (60) months that is the 2
actuarial equivalent to the amount computed under paragraph (a) of this 3
subsection; 4
(d) A monthly benefit payable for a period of one hundred twenty (120) months 5
that is the actuarial equivalent to the amount computed under paragraph (a) of 6
this subsection; 7
(e) If the member began participating in the system prior to January 1, 2014, a 8
monthly benefit payable for: 9
1. Sixty (60) months certain; 10
2. One hundred twenty (120) months certain; 11
3. The actuarial equivalent refund; or 12
4. The Social Security adjustment option; 13
that is equivalent to the benefit the member would have been entitled to 14
receive based on his or her years of service and final compensation at the date 15
of his or her death reduced by the survivorship fifty percent (50%) factor as 16
provided for in KRS 61.635(4), then reduced by fifty percent (50%), and that 17
is the actuarial equivalent to the amount computed under paragraph (a) of this 18
subsection; or 19
(f) The higher of a refund of the member's accumulated account balance and 20
interest as described in KRS 61.625(1) or a one (1) time lump-sum payment 21
which shall be the actuarial equivalent of the amount payable under paragraph 22
(a) of this subsection for a period of sixty (60) months. 23
(3) If the beneficiary eligible for benefits as provided in subsection (1) of this section 24
are multiple beneficiaries or a trust, other than a special needs trust, then the 25
multiple beneficiaries by consensus or the trustee may elect to receive the actuarial 26
equivalent amounts payable under subsection (2)(c), (d), (e), or (f) of this section 27 UNOFFICIAL COPY 24 RS BR 1084
Page 12 of 64
XXXX 2/1/2024 5:30 PM Jacketed
using the assumption that the beneficiary's age is the same as the member's age. 1
(4) If the beneficiary eligible for benefits as provided in subsection (1) of this section is 2
the member's estate, then the beneficiary shall receive the higher of a refund of the 3
member's accumulated account balance and interest as described in KRS 61.625(1) 4
or the one (1) time lump-sum payment payable under subsection (2)(f) of this 5
section, using the assumption that the beneficiary's age is the same as the member's 6
age. 7
(5) Payments of taxable distributions made pursuant to this section shall be subject to 8
state and federal tax as appropriate. 9
Section 3. KRS 61.510 is amended to read as follows: 10
As used in KRS 61.510 to 61.705, unless the context otherwise requires: 11
(1) "System" means the Kentucky Employees Retirement System created by KRS 12
61.510 to 61.705; 13
(2) "Board" means the board of trustees of the system as provided in KRS 61.645; 14
(3) "Department" means any state department or board or agency participating in the 15
system in accordance with appropriate executive order, as provided in KRS 61.520. 16
For purposes of KRS 61.510 to 61.705, the members, officers, and employees of the 17
General Assembly and any other body, entity, or instrumentality designated by 18
executive order by the Governor, shall be deemed to be a department, 19
notwithstanding whether said body, entity, or instrumentality is an integral part of 20
state government; 21
(4) "Examiner" means the medical examiners as provided in KRS 61.665; 22
(5) "Employee" means the members, officers, and employees of the General Assembly 23
and every regular full-time, appointed or elective officer or employee of a 24
participating department, including the Department of Military Affairs. The term 25
does not include persons engaged as independent contractors, seasonal, emergency, 26
temporary, interim, and part-time workers. In case of any doubt, the board shall 27 UNOFFICIAL COPY 24 RS BR 1084
Page 13 of 64
XXXX 2/1/2024 5:30 PM Jacketed
determine if a person is an employee within the meaning of KRS 61.510 to 61.705; 1
(6) "Employer" means a department or any authority of a department having the power 2
to appoint or select an employee in the department, including the Senate and the 3
House of Representatives, or any other entity, the employees of which are eligible 4
for membership in the system pursuant to KRS 61.525; 5
(7) "State" means the Commonwealth of Kentucky; 6
(8) "Member" means any employee who is included in the membership of the system 7
or any former employee whose membership has not been terminated under KRS 8
61.535; 9
(9) "Service" means the total of current service and prior service as defined in this 10
section; 11
(10) "Current service" means the number of years and months of employment as an 12
employee, on and after July 1, 1956, except that for members, officers, and 13
employees of the General Assembly this date shall be January 1, 1960, for which 14
creditable compensation is paid and employee contributions deducted, except as 15
otherwise provided, and each member, officer, and employee of the General 16
Assembly shall be credited with a month of current service for each month he 17
serves in the position; 18
(11) "Prior service" means the number of years and completed months, expressed as a 19
fraction of a year, of employment as an employee, prior to July 1, 1956, for which 20
creditable compensation was paid; except that for members, officers, and 21
employees of the General Assembly, this date shall be January 1, 1960. An 22
employee shall be credited with one (1) month of prior service only in those months 23
he received compensation for at least one hundred (100) hours of work; provided, 24
however, that each member, officer, and employee of the General Assembly shall 25
be credited with a month of prior service for each month he served in the position 26
prior to January 1, 1960. Twelve (12) months of current service in the system are 27 UNOFFICIAL COPY 24 RS BR 1084
Page 14 of 64
XXXX 2/1/2024 5:30 PM Jacketed
required to validate prior service; 1
(12) "Accumulated contributions" at any time means the sum of all amounts deducted 2
from the compensation of a member and credited to his individual account in the 3
members' account, including employee contributions picked up after August 1, 4
1982, pursuant to KRS 61.560(4), together with interest credited, on such amounts 5
and any other amounts the member shall have contributed thereto, including interest 6
credited thereon. For members who begin participating on or after September 1, 7
2008, "accumulated contributions" shall not include employee contributions that are 8
deposited into accounts established pursuant to 26 U.S.C. sec. 401(h) within the 9
funds established in KRS 16.510 and 61.515, as prescribed by KRS 61.702(3)(b); 10
(13) "Creditable compensation": 11
(a) Means all salary, wages, tips to the extent the tips are reported for income tax 12
purposes, and fees, including payments for compensatory time, paid to the 13
employee as a result of services performed for the employer or for time during 14
which the member is on paid leave, which are includable on the member's 15
federal form W-2 wage and tax statement under the heading "wages, tips, 16
other compensation," including employee contributions picked up after 17
August 1, 1982, pursuant to KRS 61.560(4). For members of the General 18
Assembly, it shall mean all amounts which are includable on the member's 19
federal form W-2 wage and tax statement under the heading "wages, tips, 20
other compensation," including employee contributions picked up after 21
August 1, 1982, pursuant to KRS 6.505(4) or 61.560(4); 22
(b) Includes: 23
1. Lump-sum bonuses, severance pay, or employer-provided payments for 24
purchase of service credit, which shall be averaged over the employee's 25
total service with the system in which it is recorded if it is equal to or 26
greater than one thousand dollars ($1,000); 27 UNOFFICIAL COPY 24 RS BR 1084
Page 15 of 64
XXXX 2/1/2024 5:30 PM Jacketed
2. Cases where compensation includes maintenance and other perquisites, 1
but the board shall fix the value of that part of the compensation not paid 2
in money; 3
3. Lump-sum payments for creditable compensation paid as a result of an 4
order of a court of competent jurisdiction, the Personnel Board, or the 5
Commission on Human Rights, or for any creditable compensation paid 6
in anticipation of settlement of an action before a court of competent 7
jurisdiction, the Personnel Board, or the Commission on Human Rights, 8
including notices of violations of state or federal wage and hour statutes 9
or violations of state or federal discrimination statutes, which shall be 10
credited to the fiscal year during which the wages were earned or should 11
have been paid by the employer. This subparagraph shall also include 12
lump-sum payments for reinstated wages pursuant to KRS 61.569, 13
which shall be credited to the period during which the wages were 14
earned or should have been paid by the employer; 15
4. Amounts which are not includable in the member's gross income by 16
virtue of the member having taken a voluntary salary reduction provided 17
for under applicable provisions of the Internal Revenue Code; and 18
5. Elective amounts for qualified transportation fringes paid or made 19
available on or after January 1, 2001, for calendar years on or after 20
January 1, 2001, that are not includable in the gross income of the 21
employee by reason of 26 U.S.C. sec. 132(f)(4); and 22
(c) Excludes: 23
1. Living allowances, expense reimbursements, lump-sum payments for 24
accrued vacation leave, and other items determined by the board; 25
2. For employees who begin participating on or after September 1, 2008, 26
lump-sum payments for compensatory time; 27 UNOFFICIAL COPY 24 RS BR 1084
Page 16 of 64
XXXX 2/1/2024 5:30 PM Jacketed
3. For employees who begin participating on or after August 1, 2016, 1
nominal fees paid for services as a volunteer; and 2
4. Any salary or wages paid to an employee for services as a Kentucky 3
State Police school resource officer as defined by KRS 158.441; 4
(14) "Final compensation" of a member means: 5
(a) For a member who begins participating before September 1, 2008, who is 6
employed in a nonhazardous position, the creditable compensation of the 7
member during the five (5) fiscal years he or she was paid at the highest 8
average monthly rate divided by the number of months of service credit 9
during that five (5) year period multiplied by twelve (12). The five (5) years 10
may be fractional and need not be consecutive. If the number of months of 11
service credit during the five (5) year period is less than forty-eight (48), one 12
(1) or more additional fiscal years shall be used; 13
(b) For a member who is employed in a nonhazardous position, whose effective 14
retirement date is between August 1, 2001, and January 1, 2009, and whose 15
total service credit is at least twenty-seven (27) years and whose age and years 16
of service total at least seventy-five (75), final compensation means the 17
creditable compensation of the member during the three (3) fiscal years the 18
member was paid at the highest average monthly rate divided by the number 19
of months of service credit during that three (3) years period multiplied by 20
twelve (12). The three (3) years may be fractional and need not be 21
consecutive. If the number of months of service credit during the three (3) 22
year period is less than twenty-four (24), one (1) or more additional fiscal 23
years shall be used. Notwithstanding the provision of KRS 61.565, the 24
funding for this paragraph shall be provided from existing funds of the 25
retirement allowance; 26
(c) For a member who begins participating before September 1, 2008, who is 27 UNOFFICIAL COPY 24 RS BR 1084
Page 17 of 64
XXXX 2/1/2024 5:30 PM Jacketed
employed in a hazardous position, as provided in KRS 61.592, the creditable 1
compensation of the member during the three (3) fiscal years he or she was 2
paid at the highest average monthly rate divided by the number of months of 3
service credit during that three (3) year period multiplied by twelve (12). The 4
three (3) years may be fractional and need not be consecutive. If the number 5
of months of service credit during the three (3) year period is less than twenty-6
four (24), one (1) or more additional fiscal years shall be used; 7
(d) For a member who begins participating on or after September 1, 2008, but 8
prior to January 1, 2014, who is employed in a nonhazardous position, the 9
creditable compensation of the member during the five (5) complete fiscal 10
years immediately preceding retirement divided by five (5). Each fiscal year 11
used to determine final compensation must contain twelve (12) months of 12
service credit. If the member does not have five (5) complete fiscal years that 13
each contain twelve (12) months of service credit, then one (1) or more 14
additional fiscal years, which may contain less than twelve (12) months of 15
service credit, shall be added until the number of months in the final 16
compensation calculation is at least sixty (60) months; or 17
(e) For a member who begins participating on or after September 1, 2008, but 18
prior to January 1, 2014, who is employed in a hazardous position as provided 19
in KRS 61.592, the creditable compensation of the member during the three 20
(3) complete fiscal years he or she was paid at the highest average monthly 21
rate divided by three (3). Each fiscal year used to determine final 22
compensation must contain twelve (12) months of service credit. If the 23
member does not have three (3) complete fiscal years that each contain twelve 24
(12) months of service credit, then one (1) or more additional fiscal years, 25
which may contain less than twelve (12) months of service credit, shall be 26
added until the number of months in the final compensation calculation is at 27 UNOFFICIAL COPY 24 RS BR 1084
Page 18 of 64
XXXX 2/1/2024 5:30 PM Jacketed
least thirty-six (36) months; 1
(15) "Final rate of pay" means the actual rate upon which earnings of an employee were 2
calculated during the twelve (12) month period immediately preceding the 3
member's effective retirement date, including employee contributions picked up 4
after August 1, 1982, pursuant to KRS 61.560(4). The rate shall be certified to the 5
system by the employer and the following equivalents shall be used to convert the 6
rate to an annual rate: two thousand eighty (2,080) hours for eight (8) hour 7
workdays, nineteen hundred fifty (1,950) hours for seven and one-half (7-1/2) hour 8
workdays, two hundred sixty (260) days, fifty-two (52) weeks, twelve (12) months, 9
one (1) year; 10
(16) "Retirement allowance" means the retirement payments to which a member is 11
entitled; 12
(17) "Actuarial equivalent" means a benefit of equal value when computed upon the 13
basis of the actuarial tables that are adopted by the board. In cases of disability 14
retirement, the options authorized by KRS 61.635 shall be computed by adding ten 15
(10) years to the age of the member, unless the member has chosen the Social 16
Security adjustment option as provided for in KRS 61.635(8), in which case the 17
member's actual age shall be used. For members who began participating in the 18
system prior to January 1, 2014, no disability retirement option shall be less than 19
the same option computed under early retirement; 20
(18) "Normal retirement date" means the sixty-fifth birthday of a member, unless 21
otherwise provided in KRS 61.510 to 61.705; 22
(19) "Fiscal year" of the system means the twelve (12) months from July 1 through the 23
following June 30, which shall also be the plan year. The "fiscal year" shall be the 24
limitation year used to determine contribution and benefit limits as established by 25
26 U.S.C. sec. 415; 26
(20) "Officers and employees of the General Assembly" means the occupants of those 27 UNOFFICIAL COPY 24 RS BR 1084
Page 19 of 64
XXXX 2/1/2024 5:30 PM Jacketed
positions enumerated in KRS 6.150. The term shall also apply to assistants who 1
were employed by the General Assembly for at least one (1) regular legislative 2
session prior to July 13, 2004, who elect to participate in the retirement system, and 3
who serve for at least six (6) regular legislative sessions. Assistants hired after July 4
13, 2004, shall be designated as interim employees; 5
(21) "Regular full-time positions," as used in subsection (5) of this section, shall mean 6
all positions that average one hundred (100) or more hours per month determined 7
by using the number of months actually worked within a calendar or fiscal year, 8
including all positions except: 9
(a) Seasonal positions, which although temporary in duration, are positions which 10
coincide in duration with a particular season or seasons of the year and which 11
may recur regularly from year to year, the period of time shall not exceed nine 12
(9) months; 13
(b) Emergency positions which are positions utilized by the employer during: 14
1. An emergency as determined by the employer for a period not 15
exceeding thirty (30) working days and are nonrenewable; or 16
2. A state of emergency declared by the President of the United States or 17
the Governor of the Commonwealth of Kentucky that are created or 18
filled specifically for addressing the employer's needs during and as a 19
result of the declared emergency; 20
(c) Temporary positions which are positions of employment with a participating 21
department for a period of time not to exceed nine (9) months and are 22
nonrenewable; 23
(d) Part-time positions which are positions which may be permanent in duration, 24
but which require less than a calendar or fiscal year average of one hundred 25
(100) hours of work per month, determined by using the number of months 26
actually worked within a calendar or fiscal year, in the performance of duty; 27 UNOFFICIAL COPY 24 RS BR 1084
Page 20 of 64
XXXX 2/1/2024 5:30 PM Jacketed
and 1
(e) Interim positions which are positions established for a one-time or recurring 2
need not to exceed nine (9) months; 3
(22) "Vested" for purposes of determining eligibility for purchasing service credit under 4
KRS 61.552 means the employee has at least forty-eight (48) months of service if 5
age sixty-five (65) or older or at least sixty (60) months of service if under the age 6
of sixty-five (65). For purposes of this subsection, "service" means service in the 7
systems administered by the Kentucky Retirement Systems and County Employees 8
Retirement System; 9
(23) "Parted employer" means a department, portion of a department, board, or agency, 10
such as Outwood Hospital and School, which previously participated in the system, 11
but due to lease or other contractual arrangement is now operated by a publicly held 12
corporation or other similar organization, and therefore is no longer participating in 13
the system. The term "parted employer" shall not include a department, board, or 14
agency that ceased participation in the system pursuant to KRS 61.522; 15
(24) "Retired member" means any former member receiving a retirement allowance or 16
any former member who has filed the necessary documents for retirement benefits 17
and is no longer contributing to the retirement system; 18
(25) "Current rate of pay" means the member's actual hourly, daily, weekly, biweekly, 19
monthly, or yearly rate of pay converted to an annual rate as defined in final rate of 20
pay. The rate shall be certified by the employer; 21
(26) "Beneficiary" means the person or persons,[ or] estate,[ or] trust, or trustee 22
designated by the member in accordance with KRS 61.542 or 61.705 to receive any 23
available benefits in the event of the member's death, except when used in 24
reference to the sole beneficiary of a special needs trust. As used in KRS 61.702, 25
"beneficiary" does not mean an estate, trust, or trustee; 26
(27) "Recipient" means the retired member or the person or persons designated as 27 UNOFFICIAL COPY 24 RS BR 1084
Page 21 of 64
XXXX 2/1/2024 5:30 PM Jacketed
beneficiary by the member and drawing a retirement allowance as a result of the 1
member's death or a dependent child drawing a retirement allowance. An alternate 2
payee of a qualified domestic relations order shall not be considered a recipient, 3
except for purposes of KRS 61.623; 4
(28) "Level percentage of payroll amortization method" means a method of determining 5
the annual amortization payment on the unfunded actuarial accrued liability as 6
expressed as a percentage of payroll over a set period of years but that may be 7
converted to a dollar value for purposes of KRS 61.565(1)(d). Under this method, 8
the percentage of payroll shall be projected to remain constant for all years 9
remaining in the set period of time and the unfunded actuarially accrued liability 10
shall be projected to be fully amortized at the conclusion of the set period of years; 11
(29) "Increment" means twelve (12) months of service credit which are purchased. The 12
twelve (12) months need not be consecutive. The final increment may be less than 13
twelve (12) months; 14
(30) "Person" means a natural person, including a sole beneficiary of a special needs 15
trust who is a single natural person designated by a member as his or her 16
beneficiary in accordance with KRS 61.542; 17
(31) "Retirement office" means the Kentucky Public Pensions Authority's office 18
building in Frankfort, unless otherwise designated by the Kentucky Public Pensions 19
Authority; 20
(32) "Last day of paid employment" means the last date employer and employee 21
contributions are required to be reported in accordance with KRS 16.543, 61.543, or 22
78.615 to the retirement office in order for the employee to receive current service 23
credit for the month. Last day of paid employment does not mean a date the 24
employee receives payment for accrued leave, whether by lump sum or otherwise, 25
if that date occurs twenty-four (24) or more months after previous contributions; 26
(33) "Objective medical evidence" means reports of examinations or treatments; medical 27 UNOFFICIAL COPY 24 RS BR 1084
Page 22 of 64
XXXX 2/1/2024 5:30 PM Jacketed
signs which are anatomical, physiological, or psychological abnormalities that can 1
be observed; psychiatric signs which are medically demonstrable phenomena 2
indicating specific abnormalities of behavior, affect, thought, memory, orientation, 3
or contact with reality; or laboratory findings which are anatomical, physiological, 4
or psychological phenomena that can be shown by medically acceptable laboratory 5
diagnostic techniques, including but not limited to chemical tests, 6
electrocardiograms, electroencephalograms, X-rays, and psychological tests; 7
(34) "Participating" means an employee is currently earning service credit in the system 8
as provided in KRS 61.543; 9
(35) "Month" means a calendar month; 10
(36) "Membership date" means: 11
(a) The date upon which the member began participating in the system as 12
provided in KRS 61.543; 13
(b) For a member electing to participate in the system pursuant to KRS 14
196.167(4) or 311A.022(2) who has not previously participated in the system 15
or the Kentucky Teachers' Retirement System, the date the member began 16
participating in a defined contribution plan that meets the requirements of 26 17
U.S.C. sec. 403(b); or 18
(c) For members bound by an educational contract as a conditional employee to 19
the state of Kentucky prior to December 31, 2003, the date on which the 20
educational contract became effective; 21
(37) "Participant" means a member, as defined by subsection (8) of this section, or a 22
retired member, as defined by subsection (24) of this section; 23
(38) "Qualified domestic relations order" means any judgment, decree, or order, 24
including approval of a property settlement agreement, that: 25
(a) Is issued by a court or administrative agency; and 26
(b) Relates to the provision of child support, alimony payments, or marital 27 UNOFFICIAL COPY 24 RS BR 1084
Page 23 of 64
XXXX 2/1/2024 5:30 PM Jacketed
property rights to an alternate payee; 1
(39) "Alternate payee" means a spouse, former spouse, child, or other dependent of a 2
participant, who is designated to be paid retirement benefits in a qualified domestic 3
relations order; 4
(40) "Accumulated employer credit" mean the employer pay credit deposited to the 5
member's account and interest credited on such amounts as provided by KRS 6
16.583 and 61.597; 7
(41) "Accumulated account balance" means: 8
(a) For members who began participating in the system prior to January 1, 2014, 9
the member's accumulated contributions; or 10
(b) For members who began participating in the system on or after January 1, 11
2014, in the hybrid cash balance plan as provided by KRS 16.583 and 61.597, 12
the combined sum of the member's accumulated contributions and the 13
member's accumulated employer credit; 14
(42) "Volunteer" means an individual who: 15
(a) Freely and without pressure or coercion performs hours of service for an 16
employer participating in one (1) of the systems administered by Kentucky 17
Retirement Systems without receipt of compensation for services rendered, 18
except for reimbursement of actual expenses, payment of a nominal fee to 19
offset the costs of performing the voluntary services, or both; and 20
(b) If a retired member, does not become an employee, leased employee, or 21
independent contractor of the employer for which he or she is performing 22
volunteer services for a period of at least twelve (12) months following the 23
retired member's most recent retirement date; 24
(43) "Nominal fee" means compensation earned for services as a volunteer that does not 25
exceed five hundred dollars ($500) per month with each participating employer. 26
Compensation earned for services as a volunteer from more than one (1) 27 UNOFFICIAL COPY 24 RS BR 1084
Page 24 of 64
XXXX 2/1/2024 5:30 PM Jacketed
participating employer during a month shall not be aggregated to determine whether 1
the compensation exceeds the five hundred dollars ($500) per month maximum 2
provided by this subsection; 3
(44) "Nonhazardous position" means a position that does not meet the requirements of 4
KRS 61.592 or has not been approved by the board as a hazardous position; 5
(45) "Monthly average pay" means: 6
(a) In the case of a member who dies as a direct result of an act in line of duty as 7
defined in KRS 16.505 or who dies as a result of a duty-related injury as 8
defined in KRS 61.621, the higher of the member's monthly final rate of pay 9
or the average monthly creditable compensation earned by the deceased 10
member during his or her last twelve (12) months of employment; or 11
(b) In the case where a member becomes totally and permanently disabled as a 12
direct result of an act in line of duty as defined in KRS 16.505 or becomes 13
disabled as a result of a duty-related injury as defined in KRS 61.621 and is 14
eligible for the benefits provided by KRS 61.621(5)(a), the higher of the 15
member's monthly final rate of pay or the average monthly creditable 16
compensation earned by the disabled member during his or her last twelve 17
(12) months of employment prior to the date the act in line of duty or duty-18
related injury occurred; 19
(46) "Authority" means the Kentucky Public Pensions Authority as provided by KRS 20
61.505; 21
(47) "Executive director" means the executive director of the Kentucky Public Pensions 22
Authority;[ and] 23
(48) "Instructional staff" means the employees of a state college or university 24
participating under KRS 61.520 who are: 25
(a) Faculty; 26
(b) Staff responsible for teaching; or 27 UNOFFICIAL COPY 24 RS BR 1084
Page 25 of 64
XXXX 2/1/2024 5:30 PM Jacketed
(c) Other individuals employed in an administrative position that is eligible for 1
participation in the Teachers' Insurance and Annuity Association (TIAA) of 2
the Teachers' Retirement System; and 3
(49) "Special needs trust" means a trust described in 42 U.S.C. sec. 1396p(d)(4)(A). 4
Any reference to a trust includes a special needs trust, unless the context 5
otherwise requires. 6
Section 4. KRS 61.623 is amended to read as follows: 7
(1) A recipient who begins receiving a retirement allowance August 1, 2000, or after, 8
from the Kentucky Employees Retirement System, the County Employees 9
Retirement System, or the State Police Retirement System shall have the retirement 10
allowance paid by electronic fund transfer to a financial institution designated by 11
the recipient except as provided by subsection (5) of this section. 12
(2) When an individual becomes eligible to receive a monthly retirement allowance, the 13
retirement system shall provide an authorization for deposit of retirement payment 14
form to the recipient to have the monthly retirement allowance deposited to an 15
account in a financial institution. 16
(3) The recipient shall provide the information and authorization required for the 17
electronic transfer of funds from the State Treasurer's office to the designated 18
financial institution. 19
(4) At any time while receiving a retirement allowance, the recipient may change the 20
designated institution by completing a new authorization for deposit of retirement 21
payment form and filing the form at the retirement office in Frankfort. The last 22
authorization for deposit of retirement payment on file at the retirement office shall 23
control the electronic transfer of the recipient's retirement allowance. 24
(5) (a) A recipient may request to be paid by check issued by the State Treasurer 25
instead of by electronic transfer by completing and filing at the retirement 26
office a request for payment by check form. 27 UNOFFICIAL COPY 24 RS BR 1084
Page 26 of 64
XXXX 2/1/2024 5:30 PM Jacketed
(b) The request shall be approved if: 1
1. The recipient certifies that he or she does not currently have an account 2
with a financial institution;[ or] 3
2. The recipient's bank certifies that it does not participate in the electronic 4
funds transfer program; or 5
3. The recipient is the sole beneficiary of a special needs trust, and the 6
trustee of that trust certifies that a check may be made payable to the 7
sole beneficiary of a special needs trust. 8
(c) The retirement office shall, every five (5) years, require the recipient to certify 9
that the original conditions under which he or she requested payment by 10
check continue. If the original conditions do not exist, the recipient shall 11
complete an authorization for direct deposit of retirement payment form and 12
file it with the retirement office. 13
Section 5. KRS 61.635 is amended to read as follows: 14
(1) Each member shall have the right to elect to have his or her retirement allowance 15
payable under any one (1) of the options set forth in this section in lieu of the 16
retirement allowance otherwise payable to the member upon retirement under any 17
of the provisions of KRS 16.505 to 16.652, 61.510 to 61.705, and 78.510 to 78.852. 18
The amount of any optional retirement allowance shall be actuarially equivalent to 19
the amount of retirement allowance otherwise payable to the member. 20
(2) Survivorship one hundred percent (100%). The member may elect to receive a 21
decreased retirement allowance during his or her lifetime and have the retirement 22
allowance continued after the member's death to his or her beneficiary during the 23
lifetime of the person. 24
(3) Survivorship sixty-six and two-thirds percent (66-2/3%). The member may elect to 25
receive a decreased retirement allowance during his or her lifetime and have two-26
thirds (2/3) of the retirement allowance continue after the member's death to his or 27 UNOFFICIAL COPY 24 RS BR 1084
Page 27 of 64
XXXX 2/1/2024 5:30 PM Jacketed
her beneficiary during the lifetime of the person. 1
(4) Survivorship fifty percent (50%). The member may elect to receive a decreased 2
retirement allowance during his or her lifetime and have one-half (1/2) of the 3
retirement allowance continued after the member's death to his or her beneficiary 4
during the lifetime of the person. 5
(5) Life with ten (10) years certain. The member less than age seventy-six (76) may 6
elect to receive a monthly retirement allowance during his or her lifetime which 7
shall guarantee payments for one hundred twenty (120) months. If the member dies 8
before receiving payments for one hundred twenty (120) months, the member's 9
beneficiary shall receive the remaining payments monthly, for the duration of the 10
one hundred twenty (120) months' period. However, if the trust is designated as 11
beneficiary, the trustee of the trust may elect to receive a lump-sum payment which 12
shall be the actuarial equivalent to the remaining payments, or the trustee may elect 13
to continue the remaining monthly payments to the trust of the member. If the estate 14
is designated as beneficiary, the estate shall receive a lump-sum payment which 15
shall be the actuarial equivalent to the remaining payments. 16
(6) Life with fifteen (15) years certain. The member less than age sixty-eight (68) may 17
elect to receive a monthly retirement allowance during his or her lifetime which 18
shall guarantee payments for one hundred eighty (180) months. If the member dies 19
before receiving payments for one hundred eighty (180) months, the member's 20
beneficiary shall receive the remaining payments monthly for the duration of the 21
one hundred eighty (180) months' period. However, if the trust is designated as 22
beneficiary, the trustee of the trust may elect to receive a lump-sum payment which 23
shall be the actuarial equivalent to the remaining payments, or the trustee may elect 24
to continue the remaining payments to the trust of the member. If the estate is 25
designated as beneficiary, the estate shall receive a lump-sum payment which shall 26
be the actuarial equivalent to the remaining payments. 27 UNOFFICIAL COPY 24 RS BR 1084
Page 28 of 64
XXXX 2/1/2024 5:30 PM Jacketed
(7) Life with twenty (20) years certain. The member less than age sixty-two (62) may 1
elect to receive a monthly retirement allowance during his or her lifetime which 2
shall guarantee payments for two hundred forty (240) months. If the member dies 3
before receiving payments for two hundred forty (240) months, the member's 4
beneficiary shall receive the remaining payments for the duration of the two 5
hundred forty (240) months period. However, if the trust is beneficiary, the trustee 6
of the trust may elect to receive a lump-sum payment which shall be the actuarial 7
equivalent to the remaining payments, or the trustee may elect to continue the 8
remaining payments to the trust of the member. If the estate is designated as 9
beneficiary, the estate shall receive a lump-sum payment which shall be the 10
actuarial equivalent to the remaining payments. 11
(8) Social Security adjustment options. These options shall be available to any member 12
who has not attained age sixty-two (62) as follows: 13
(a) No survivor rights. The member may elect to receive an increased retirement 14
allowance from his or her effective retirement date through the month he or 15
she attains age sixty-two (62) at which time his or her retirement allowance 16
shall be decreased for the remainder of his or her lifetime; 17
(b) Survivor rights. The member may elect to receive an increased retirement 18
allowance from his or her effective retirement date through the month he 19
attains age sixty-two (62) based on the option payable under subsection (2) of 20
this section, if the retirement allowance shall be decreased in the month 21
following the month he or she attains age sixty-two (62), or the month 22
following the month he or she would have attained age sixty-two (62), in 23
event of the member's death, and have the retirement allowance continue after 24
the member's death to his or her beneficiary during the lifetime of the person. 25
(9) Beneficiary Social Security adjustment option. This option is available to the 26
beneficiary of a deceased member if the beneficiary, who is a person, has not 27 UNOFFICIAL COPY 24 RS BR 1084
Page 29 of 64
XXXX 2/1/2024 5:30 PM Jacketed
attained age sixty (60), and is eligible to receive Social Security payments at age 1
sixty (60). The beneficiary may elect to receive during his or her lifetime an 2
increased retirement allowance based on his or her annual benefit payable for life. 3
The payment shall begin on his or her effective retirement date and continue 4
through the month he or she attains age sixty (60) at which time his or her 5
retirement allowance shall be decreased for the remainder of his or her lifetime. 6
(10) Pop-up option. The member may elect to receive a decreased retirement allowance 7
during his or her lifetime and have the retirement allowance continued after the 8
member's death to his or her beneficiary during the lifetime of the person. If the 9
beneficiary dies prior to the member, or if the beneficiary is the member's spouse 10
and they divorce, the member's retirement allowance shall increase to the amount 11
that would have been payable as a single life annuity. 12
(11) Actuarial equivalent refund. A member who began participating in the system prior 13
to January 1, 2014, may elect to receive a one (1) time lump-sum payment which 14
shall be the actuarial equivalent of the amount payable for a period of sixty (60) 15
months under KRS 61.595 (1). 16
(12) Partial lump-sum option. 17
(a) No survivor rights. A member may elect to receive a one-time lump-sum 18
payment equal to twelve (12), twenty-four (24), thirty-six (36), forty-eight 19
(48), or sixty (60) monthly retirement allowances payable under the 20
applicable retirement formula for the system and receive a reduced monthly 21
retirement allowance payable for his or her lifetime. The lump-sum payment 22
shall be paid in the month the first monthly retirement allowance is payable. 23
(b) Survivor rights. A member may elect to receive a one-time lump-sum 24
payment equal to twelve (12), twenty-four (24), thirty-six (36), forty-eight 25
(48), or sixty (60) monthly retirement allowances payable under subsection 26
(2) of this section and receive a reduced monthly retirement allowance 27 UNOFFICIAL COPY 24 RS BR 1084
Page 30 of 64
XXXX 2/1/2024 5:30 PM Jacketed
payable for his or her lifetime. The lump-sum payment shall be paid in the 1
month the first monthly retirement allowance is payable. The reduced 2
retirement allowance shall be continued after the member's death to his or her 3
beneficiary during the lifetime of the person. 4
(c) In order to explain the partial lump-sum option to members, the Authority 5
shall: 6
1. Provide, for all retirement estimates that include the partial lump-sum 7
option, including estimates calculated by a member using an automatic 8
estimator available on the Authority's website, the additional months of 9
service a member would have to be employed in order to recoup the 10
actuarial reduction in his or her monthly retirement allowance from 11
selecting a partial lump-sum option at each payment level; and 12
2. Prepare and make available to all members and participating employers 13
in the form of a paper or electronic pamphlet or booklet a summary of 14
the partial lump-sum option, written in a manner that can be understood 15
by the average member and sufficiently accurate and comprehensive to 16
reasonably apprise them of the benefits and potential consequences, 17
including federal tax consequences, of taking a partial lump-sum option. 18
(13) The other provisions of this section notwithstanding, the beneficiary of a retired 19
member of the General Assembly shall, after the member's death, receive sixty-six 20
and two-thirds percent (66-2/3%) of the member's retirement allowance during his 21
or her lifetime if the member of the General Assembly began participating in the 22
system prior to January 1, 2014, and has elected this option and has made 23
contributions in accordance with subsection (14) of this section and of KRS 61.560. 24
The retirement allowance of the retired member of the General Assembly shall not 25
be actuarially reduced to provide for this survivor benefit. 26
(14) A member of the General Assembly who began participating in the system prior to 27 UNOFFICIAL COPY 24 RS BR 1084
Page 31 of 64
XXXX 2/1/2024 5:30 PM Jacketed
January 1, 2014, who wishes to obtain the survivorship option specified in 1
subsection (13) of this section shall so notify the Kentucky Public Pensions 2
Authority: 3
(a) Within thirty (30) days after first becoming a member of the General 4
Assembly if he or she is not a member of the General Assembly on July 15, 5
1980; or 6
(b) Within thirty (30) days after July 15, 1980, if he or she is a member of the 7
General Assembly on July 15, 1980. 8
(15) The system shall forward to members of the General Assembly a form on which a 9
member who began participating in the system prior to January 1, 2014, may elect 10
the option provided for in subsections (13) and (14) of this section. 11
(16) The options described in subsections (2), (3), (4), (8)(b), (10), (12)(b), and (13) of 12
this section shall be extended to the member only if the designated beneficiary is a 13
person, subject to the following: 14
(a) If the designated beneficiary is a person who is the sole beneficiary of a 15
special needs trust, then upon the death of the retired member or 16
beneficiary who is the sole beneficiary of a special needs trust, the trustee of 17
that trust shall notify the authority of the death of the retired member or 18
beneficiary; 19
(b) Any retirement allowance payments made to a special needs trust that are 20
not properly payable to the special needs trust shall be returned to the 21
authority and shall not be subject to claims for reimbursement from any 22
state for Medicaid benefits paid on behalf of the beneficiary of the special 23
needs trust under any Medicaid payback provision; and 24
(c) The authority may promulgate administrative regulations in accordance 25
with KRS Chapter 13A to administer this subsection. 26
Section 6. KRS 61.640 is amended to read as follows: 27 UNOFFICIAL COPY 24 RS BR 1084
Page 32 of 64
XXXX 2/1/2024 5:30 PM Jacketed
(1) If a member dies prior to the first day of the month in which the member would 1
have received his or her first retirement allowance, the member's beneficiary shall 2
be eligible for the benefits provided by this section if the member had on file a 3
written designation of a beneficiary with the retirement office as provided by KRS 4
61.542 and the member met the following conditions at the date of his or her death: 5
(a) The member was eligible to retire under KRS 61.559(2) or (3), 61.5956(5)(a) 6
or (b), or 61.597(6)(a) or (b); 7
(b) The member was in active employment or on authorized leave of absence 8
with five (5) or more years of service credit and died prior to his or her normal 9
retirement date or was normal retirement age or older and had at least four (4) 10
years of service credit; or 11
(c) The member was not in active employment or on authorized leave of absence 12
with twelve (12) or more years of service credit and died prior to his or her 13
normal retirement date. 14
(2) If the beneficiary eligible for benefits as provided in subsection (1) of this section is 15
a single person or is the sole beneficiary of a special needs trust, then the 16
beneficiary may elect to receive: 17
(a) A monthly benefit payable for the life of the beneficiary that is equal to the 18
benefit that would have been paid had the member retired immediately prior 19
to his or her date of death and elected to receive benefits payable under the 20
survivorship one hundred percent (100%) option as provided in KRS 21
61.635(2); 22
(b) A monthly benefit payable for the life of the beneficiary under the beneficiary 23
Social Security adjustment option as provided in KRS 61.635(9) that is the 24
actuarial equivalent to the amount computed under paragraph (a) of this 25
subsection; 26
(c) A monthly benefit payable for a period of sixty (60) months that is the 27 UNOFFICIAL COPY 24 RS BR 1084
Page 33 of 64
XXXX 2/1/2024 5:30 PM Jacketed
actuarial equivalent to the amount computed under paragraph (a) of this 1
subsection; 2
(d) A monthly benefit payable for a period of one hundred twenty (120) months 3
that is the actuarial equivalent to the amount computed under paragraph (a) of 4
this subsection; 5
(e) If the member began participating in the system prior to January 1, 2014, a 6
monthly benefit payable for: 7
1. Sixty (60) months certain; 8
2. One hundred twenty (120) months certain; 9
3. The actuarial equivalent refund; or 10
4. The Social Security adjustment option; 11
that is equivalent to the benefit the member would have been entitled to 12
receive based on his or her years of service and final compensation at the date 13
of his or her death reduced by the survivorship fifty percent (50%) factor as 14
provided for in KRS 61.635(4), then reduced by fifty percent (50%), and that 15
is the actuarial equivalent to the amount computed under paragraph (a) of this 16
subsection; or 17
(f) The higher of a refund of the member's accumulated account balance as 18
described in KRS 61.625(1) or one (1) time lump-sum payment which shall 19
be the actuarial equivalent of the amount payable under paragraph (a) of this 20
subsection for a period of sixty (60) months. 21
(3) If the beneficiary eligible for benefits as provided by subsection (1) of this section 22
are multiple beneficiaries or a trust, other than a special needs trust, then the 23
multiple beneficiaries by consensus or the trustee may elect to receive the actuarial 24
equivalent amounts payable under subsection (2)(c), (d), (e), or (f) of this section 25
using the assumption that the beneficiary's age is the same as the member's age. 26
(4) If the beneficiary eligible for benefits as provided in subsection (1) of this section is 27 UNOFFICIAL COPY 24 RS BR 1084
Page 34 of 64
XXXX 2/1/2024 5:30 PM Jacketed
the member's estate, then the beneficiary shall receive the higher of a refund of the 1
member's accumulated account balance as described in KRS 61.625(1) or the one 2
(1) time lump-sum payment payable under subsection (2)(f) of this section, using 3
the assumption that the beneficiary's age is the same as the member's age. 4
(5) Payments of taxable distributions made pursuant to this section shall be subject to 5
state and federal income tax as appropriate. 6
Section 7. KRS 78.510 is amended to read as follows: 7
As used in KRS 78.510 to 78.852, unless the context otherwise requires: 8
(1) "System" means the County Employees Retirement System; 9
(2) "Board" means the board of trustees of the system as provided in KRS 78.782; 10
(3) "County" means any county, or nonprofit organization created and governed by a 11
county, counties, or elected county officers, sheriff and his or her employees, 12
county clerk and his or her employees, circuit clerk and his or her deputies, former 13
circuit clerks or former circuit clerk deputies, or political subdivision or 14
instrumentality, including school boards, cities, charter county governments, urban-15
county governments, consolidated local governments, or unified local governments 16
participating in the system by order appropriate to its governmental structure, as 17
provided in KRS 78.530, and if the board is willing to accept the agency, 18
organization, or corporation, the board being hereby granted the authority to 19
determine the eligibility of the agency to participate; 20
(4) "School board" means: 21
(a) Any board of education participating in the system by order appropriate to its 22
governmental structure, as provided in KRS 78.530, and if the board is willing 23
to accept the agency or corporation, the board being hereby granted the 24
authority to determine the eligibility of the agency to participate; or 25
(b) A public charter school as defined in KRS 160.1590 if the public charter 26
school satisfies the criteria set by the Internal Revenue Service to participate 27 UNOFFICIAL COPY 24 RS BR 1084
Page 35 of 64
XXXX 2/1/2024 5:30 PM Jacketed
in a governmental retirement plan; 1
(5) "Examiner" means the medical examiners as provided in KRS 61.665; 2
(6) "Employee" means every regular full-time appointed or elective officer or 3
employee of a participating county and the coroner of a participating county, 4
whether or not he or she qualifies as a regular full-time officer. The term shall not 5
include persons engaged as independent contractors, seasonal, emergency, 6
temporary, and part-time workers. In case of any doubt, the board shall determine if 7
a person is an employee within the meaning of KRS 78.510 to 78.852; 8
(7) "Employer" means a county, as defined in subsection (3) of this section, the elected 9
officials of a county, or any authority of the county having the power to appoint or 10
elect an employee to office or employment in the county; 11
(8) "Member" means any employee who is included in the membership of the system 12
or any former employee whose membership has not ceased under KRS 78.535; 13
(9) "Service" means the total of current service and prior service as defined in this 14
section; 15
(10) "Current service" means the number of years and months of employment as an 16
employee, on and after July 1, 1958, for which creditable compensation is paid and 17
employee contributions deducted, except as otherwise provided; 18
(11) "Prior service" means the number of years and completed months, expressed as a 19
fraction of a year, of employment as an employee, prior to July 1, 1958, for which 20
creditable compensation was paid. An employee shall be credited with one (1) 21
month of prior service only in those months he received compensation for at least 22
one hundred (100) hours of work. Twelve (12) months of current service in the 23
system shall be required to validate prior service; 24
(12) "Accumulated contributions" means the sum of all amounts deducted from the 25
compensation of a member and credited to his individual account in the members' 26
account, including employee contributions picked up after August 1, 1982, pursuant 27 UNOFFICIAL COPY 24 RS BR 1084
Page 36 of 64
XXXX 2/1/2024 5:30 PM Jacketed
to KRS 78.610(4), together with interest credited, on the amounts, and any other 1
amounts the member shall have contributed thereto, including interest credited 2
thereon. "Accumulated contributions" shall not include employee contributions that 3
are deposited into accounts established pursuant to 26 U.S.C. sec. 401(h) within the 4
fund established in KRS 78.520, as prescribed by KRS 78.5536(3)(b); 5
(13) "Creditable compensation": 6
(a) Except as limited by paragraph (c) of this subsection, means all salary, wages, 7
and fees, including payments for compensatory time, paid to the employee as 8
a result of services performed for the employer or for time during which the 9
member is on paid leave, which are includable on the member's federal form 10
W-2 wage and tax statement under the heading "wages, tips, other 11
compensation", including employee contributions picked up after August 1, 12
1982, pursuant to KRS 78.610(4). The creditable compensation of fee officers 13
who receive salary, fees, maintenance, or other perquisites as a result of their 14
official duties is the gross amount received decreased by the cost of salary 15
paid deputies and clerks and the cost of office supplies and other official 16
expenses; 17
(b) Includes: 18
1. Lump-sum bonuses, severance pay, or employer-provided payments for 19
purchase of service credit, which shall be averaged over the employee's 20
service with the system in which it is recorded if it is equal to or greater 21
than one thousand dollars ($1,000); 22
2. Cases where compensation includes maintenance and other perquisites, 23
but the board shall fix the value of that part of the compensation not paid 24
in money; 25
3. Lump-sum payments for creditable compensation paid as a result of an 26
order of a court of competent jurisdiction, the Personnel Board, or the 27 UNOFFICIAL COPY 24 RS BR 1084
Page 37 of 64
XXXX 2/1/2024 5:30 PM Jacketed
Commission on Human Rights, or for any creditable compensation paid 1
in anticipation of settlement of an action before a court of competent 2
jurisdiction, the Personnel Board, or the Commission on Human Rights, 3
including notices of violations of state or federal wage and hour statutes 4
or violations of state or federal discrimination statutes, which shall be 5
credited to the fiscal year during which the wages were earned or should 6
have been paid by the employer. This subparagraph shall also include 7
lump-sum payments for reinstated wages pursuant to KRS 61.569, 8
which shall be credited to the period during which the wages were 9
earned or should have been paid by the employer; 10
4. Amounts which are not includable in the member's gross income by 11
virtue of the member having taken a voluntary salary reduction provided 12
for under applicable provisions of the Internal Revenue Code; and 13
5. Elective amounts for qualified transportation fringes paid or made 14
available on or after January 1, 2001, for calendar years on or after 15
January 1, 2001, that are not includable in the gross income of the 16
employee by reason of 26 U.S.C. sec. 132(f)(4); and 17
(c) Excludes: 18
1. Living allowances, expense reimbursements, lump-sum payments for 19
accrued vacation leave, sick leave except as provided in KRS 78.616(5), 20
and other items determined by the board; 21
2. For employees who begin participating on or after September 1, 2008, 22
lump-sum payments for compensatory time; 23
3. Training incentive payments for city officers paid as set out in KRS 24
64.5277 to 64.5279; 25
4. For employees who begin participating on or after August 1, 2016, 26
nominal fees paid for services as a volunteer; and 27 UNOFFICIAL COPY 24 RS BR 1084
Page 38 of 64
XXXX 2/1/2024 5:30 PM Jacketed
5. Any salary or wages paid to an employee for services as a Kentucky 1
State Police school resource officer as defined by KRS 158.441; 2
(14) "Final compensation" means: 3
(a) For a member who begins participating before September 1, 2008, who is 4
employed in a nonhazardous position, the creditable compensation of the 5
member during the five (5) fiscal years he or she was paid at the highest 6
average monthly rate divided by the number of months of service credit 7
during that five (5) year period multiplied by twelve (12). The five (5) years 8
may be fractional and need not be consecutive. If the number of months of 9
service credit during the five (5) year period is less than forty-eight (48), one 10
(1) or more additional fiscal years shall be used; 11
(b) For a member who is employed in a nonhazardous position, whose effective 12
retirement date is between August 1, 2001, and January 1, 2009, and whose 13
total service credit is at least twenty-seven (27) years and whose age and years 14
of service total at least seventy-five (75), final compensation means the 15
creditable compensation of the member during the three (3) fiscal years the 16
member was paid at the highest average monthly rate divided by the number 17
of months of service credit during that three (3) year period multiplied by 18
twelve (12). The three (3) years may be fractional and need not be 19
consecutive. If the number of months of service credit during the three (3) 20
year period is less than twenty-four (24), one (1) or more additional fiscal 21
years shall be used; 22
(c) For a member who begins participating before September 1, 2008, who is 23
employed in a hazardous position, as provided in KRS 61.592, the creditable 24
compensation of the member during the three (3) fiscal years he or she was 25
paid at the highest average monthly rate divided by the number of months of 26
service credit during that three (3) year period multiplied by twelve (12). The 27 UNOFFICIAL COPY 24 RS BR 1084
Page 39 of 64
XXXX 2/1/2024 5:30 PM Jacketed
three (3) years may be fractional and need not be consecutive. If the number 1
of months of service credit during the three (3) year period is less than twenty-2
four (24), one (1) or more additional fiscal years, which may contain less than 3
twelve (12) months of service credit, shall be used; 4
(d) For a member who begins participating on or after September 1, 2008, but 5
prior to January 1, 2014, who is employed in a nonhazardous position, the 6
creditable compensation of the member during the five (5) complete fiscal 7
years immediately preceding retirement divided by five (5). Each fiscal year 8
used to determine final compensation must contain twelve (12) months of 9
service credit. If the member does not have five (5) complete fiscal years that 10
each contain twelve (12) months of service credit, then one (1) or more 11
additional fiscal years, which may contain less than twelve (12) months of 12
service credit, shall be added until the number of months in the final 13
compensation calculation is at least sixty (60) months; or 14
(e) For a member who begins participating on or after September 1, 2008, but 15
prior to January 1, 2014, who is employed in a hazardous position as provided 16
in KRS 61.592, the creditable compensation of the member during the three 17
(3) complete fiscal years he or she was paid at the highest average monthly 18
rate divided by three (3). Each fiscal year used to determine final 19
compensation must contain twelve (12) months of service credit. If the 20
member does not have three (3) complete fiscal years that each contain twelve 21
(12) months of service credit, then one (1) or more additional fiscal years, 22
which may contain less than twelve (12) months of service credit, shall be 23
added until the number of months in the final compensation calculation is at 24
least thirty-six (36) months; 25
(15) "Final rate of pay" means the actual rate upon which earnings of an employee were 26
calculated during the twelve (12) month period immediately preceding the 27 UNOFFICIAL COPY 24 RS BR 1084
Page 40 of 64
XXXX 2/1/2024 5:30 PM Jacketed
member's effective retirement date, and shall include employee contributions 1
picked up after August 1, 1982, pursuant to KRS 78.610(4). The rate shall be 2
certified to the system by the employer and the following equivalents shall be used 3
to convert the rate to an annual rate: two thousand eighty (2,080) hours for eight (8) 4
hour workdays, one thousand nine hundred fifty (1,950) hours for seven and one-5
half (7.5) hour workdays, two hundred sixty (260) days, fifty-two (52) weeks, 6
twelve (12) months, one (1) year; 7
(16) "Retirement allowance" means the retirement payments to which a member is 8
entitled; 9
(17) "Actuarial equivalent" means a benefit of equal value when computed upon the 10
basis of the actuarial tables adopted by the board. In cases of disability retirement, 11
the options authorized by KRS 61.635 shall be computed by adding ten (10) years 12
to the age of the member, unless the member has chosen the Social Security 13
adjustment option as provided for in KRS 61.635(8), in which case the member's 14
actual age shall be used. For members who begin participating in the system prior 15
to January 1, 2014, no disability retirement option shall be less than the same option 16
computed under early retirement; 17
(18) "Normal retirement date", unless otherwise provided in KRS 78.510 to 78.852, 18
means: 19
(a) For a member with service in a nonhazardous position, the sixty-fifth birthday 20
of a member; 21
(b) For a member with service in a hazardous position who begins participating 22
before September 1, 2008, the first day of the month following a member's 23
fifty-fifth birthday; or 24
(c) For a member with service in a hazardous position who begins participating 25
on or after September 1, 2008, the first day of the month following a 26
member's sixtieth birthday; 27 UNOFFICIAL COPY 24 RS BR 1084
Page 41 of 64
XXXX 2/1/2024 5:30 PM Jacketed
(19) "Fiscal year" of the system means the twelve (12) months from July 1 through the 1
following June 30, which shall also be the plan year. The "fiscal year" shall be the 2
limitation year used to determine contribution and benefits limits as set out in 26 3
U.S.C. sec. 415; 4
(20) "Agency reporting official" means the person designated by the participating 5
employer who shall be responsible for forwarding all employer and employee 6
contributions and a record of the contributions to the system and for performing 7
other administrative duties pursuant to the provisions of KRS 78.510 to 78.852; 8
(21) "Regular full-time positions," as used in subsection (6) of this section, shall mean 9
all positions that average one hundred (100) or more hours per month, determined 10
by using the number of hours actually worked in a calendar or fiscal year, or eighty 11
(80) or more hours per month in the case of noncertified employees of school 12
boards, determined by using the number of hours actually worked in a calendar or 13
school year, unless otherwise specified, except: 14
(a) Seasonal positions, which although temporary in duration, are positions which 15
coincide in duration with a particular season or seasons of the year and that 16
may recur regularly from year to year, in which case the period of time shall 17
not exceed nine (9) months, except for employees of school boards, in which 18
case the period of time shall not exceed six (6) months; 19
(b) Emergency positions which are positions utilized by the employer during: 20
1. An emergency as determined by the employer for a period not 21
exceeding thirty (30) working days and are nonrenewable; or 22
2. A state of emergency declared by the President of the United States or 23
the Governor of the Commonwealth of Kentucky that are created or 24
filled specifically for addressing the employer's needs during and as a 25
result of the declared emergency; 26
(c) Temporary positions that are positions of employment with a participating 27 UNOFFICIAL COPY 24 RS BR 1084
Page 42 of 64
XXXX 2/1/2024 5:30 PM Jacketed
agency for a period of time not to exceed twelve (12) months and not 1
renewable; 2
(d) Probationary positions which are positions of employment with a participating 3
employer that do not exceed twelve (12) months and that are used uniformly 4
by the participating agency on new employees who would otherwise be 5
eligible for participation in the system. Probationary positions shall not be 6
renewable by the participating employer for the same employee, unless the 7
employee has not been employed with the participating employer for a period 8
of at least twelve (12) months; or 9
(e) Part-time positions that are positions that may be permanent in duration, but 10
that require less than a calendar or fiscal year average of one hundred (100) 11
hours of work per month, determined by using the number of months actually 12
worked within a calendar or fiscal year, in the performance of duty, except in 13
case of noncertified employees of school boards, the school term average shall 14
be eighty (80) hours of work per month, determined by using the number of 15
months actually worked in a calendar or school year, in the performance of 16
duty; 17
(22) "Alternate participation plan" means a method of participation in the system as 18
provided for by KRS 78.530(3); 19
(23) "Retired member" means any former member receiving a retirement allowance or 20
any former member who has on file at the retirement office the necessary 21
documents for retirement benefits and is no longer contributing to the system; 22
(24) "Current rate of pay" means the member's actual hourly, daily, weekly, biweekly, 23
monthly, or yearly rate of pay converted to an annual rate as defined in final rate of 24
pay. The rate shall be certified by the employer; 25
(25) "Beneficiary" means the person, persons, estate, trust, or trustee designated by the 26
member in accordance with KRS 61.542 or 61.705 to receive any available benefits 27 UNOFFICIAL COPY 24 RS BR 1084
Page 43 of 64
XXXX 2/1/2024 5:30 PM Jacketed
in the event of the member's death, except when used in reference to the sole 1
beneficiary of a special needs trust. As used in KRS 78.5536, beneficiary shall not 2
mean an estate, trust, or trustee; 3
(26) "Recipient" means the retired member, the person or persons designated as 4
beneficiary by the member and drawing a retirement allowance as a result of the 5
member's death, or a dependent child drawing a retirement allowance. An alternate 6
payee of a qualified domestic relations order shall not be considered a recipient, 7
except for purposes of KRS 61.623; 8
(27) "Person" means a natural person, including a sole beneficiary of a special needs 9
trust who is a single natural person designated by a member as his or her 10
beneficiary in accordance with KRS 61.542; 11
(28) "School term or year" means the twelve (12) months from July 1 through the 12
following June 30; 13
(29) "Retirement office" means the Kentucky Public Pensions Authority office building 14
in Frankfort, unless otherwise designated by the Kentucky Public Pensions 15
Authority; 16
(30) "Vested" for purposes of determining eligibility for purchasing service credit under 17
KRS 61.552 means the employee has at least forty-eight (48) months of service if 18
age sixty-five (65) or older or at least sixty (60) months of service if under the age 19
of sixty-five (65). For purposes of this subsection, "service" means service in the 20
systems administered by the Kentucky Retirement Systems and County Employees 21
Retirement System; 22
(31) "Participating" means an employee is currently earning service credit in the system 23
as provided in KRS 78.615; 24
(32) "Month" means a calendar month; 25
(33) "Membership date" means the date upon which the member began participating in 26
the system as provided in KRS 78.615; 27 UNOFFICIAL COPY 24 RS BR 1084
Page 44 of 64
XXXX 2/1/2024 5:30 PM Jacketed
(34) "Participant" means a member, as defined by subsection (8) of this section, or a 1
retired member, as defined by subsection (23) of this section; 2
(35) "Qualified domestic relations order" means any judgment, decree, or order, 3
including approval of a property settlement agreement, that: 4
(a) Is issued by a court or administrative agency; and 5
(b) Relates to the provision of child support, alimony payments, or marital 6
property rights to an alternate payee; 7
(36) "Alternate payee" means a spouse, former spouse, child, or other dependent of a 8
participant, who is designated to be paid retirement benefits in a qualified domestic 9
relations order; 10
(37) "Accumulated employer credit" means the employer pay credit deposited to the 11
member's account and interest credited on such amounts as provided by KRS 12
78.5512 and 78.5516; 13
(38) "Accumulated account balance" means: 14
(a) For members who began participating in the system prior to January 1, 2014, 15
the member's accumulated contributions; or 16
(b) For members who began participating in the system on or after January 1, 17
2014, in the hybrid cash balance plan as provided by KRS 78.5512 and 18
78.5516, the combined sum of the member's accumulated contributions and 19
the member's accumulated employer credit; 20
(39) "Volunteer" means an individual who: 21
(a) Freely and without pressure or coercion performs hours of service for an 22
employer participating in one (1) of the systems administered by Kentucky 23
Retirement Systems or the County Employees Retirement System without 24
receipt of compensation for services rendered, except for reimbursement of 25
actual expenses, payment of a nominal fee to offset the costs of performing 26
the voluntary services, or both; and 27 UNOFFICIAL COPY 24 RS BR 1084
Page 45 of 64
XXXX 2/1/2024 5:30 PM Jacketed
(b) If a retired member, does not become an employee, leased employee, or 1
independent contractor of the employer for which he or she is performing 2
volunteer services for a period of at least twelve (12) months following the 3
retired member's most recent retirement date; 4
(40) "Nominal fee" means compensation earned for services as a volunteer that does not 5
exceed five hundred dollars ($500) per month with each participating employer. 6
Compensation earned for services as a volunteer from more than one (1) 7
participating employer during a month shall not be aggregated to determine whether 8
the compensation exceeds the five hundred dollars ($500) per month maximum 9
provided by this subsection; 10
(41) "Nonhazardous position" means a position that does not meet the requirements of 11
KRS 78.5520 or has not been approved by the board as a hazardous position; 12
(42) "Hazardous position" means a position that meets the requirements of KRS 78.5520 13
and has been approved by the board as hazardous; 14
(43) "Level-percentage-of-payroll amortization method" means a method of determining 15
the annual amortization payment on the unfunded actuarial accrued liability as 16
expressed as a percentage of payroll over a set period of years. Under this method, 17
the percentage of payroll shall be projected to remain constant for all years 18
remaining in the set period and the unfunded actuarially accrued liability shall be 19
projected to be fully amortized at the conclusion of the set period; 20
(44) "Increment" means twelve (12) months of service credit which are purchased. The 21
twelve (12) months need not be consecutive. The final increment may be less than 22
twelve (12) months; 23
(45) "Last day of paid employment" means the last date employer and employee 24
contributions are required to be reported in accordance with KRS 16.543, 61.543, or 25
78.615 to the retirement office in order for the employee to receive current service 26
credit for the month. Last day of paid employment does not mean a date the 27 UNOFFICIAL COPY 24 RS BR 1084
Page 46 of 64
XXXX 2/1/2024 5:30 PM Jacketed
employee receives payment for accrued leave, whether by lump sum or otherwise, 1
if that date occurs twenty-four (24) or more months after previous contributions; 2
(46) "Objective medical evidence" means reports of examinations or treatments; medical 3
signs which are anatomical, physiological, or psychological abnormalities that can 4
be observed; psychiatric signs which are medically demonstrable phenomena 5
indicating specific abnormalities of behavior, affect, thought, memory, orientation, 6
or contact with reality; or laboratory findings which are anatomical, physiological, 7
or psychological phenomena that can be shown by medically acceptable laboratory 8
diagnostic techniques, including but not limited to chemical tests, 9
electrocardiograms, electroencephalograms, X-rays, and psychological tests; 10
(47) "Hazardous disability" as used in KRS 78.510 to 78.852 means a disability which 11
results in an employee's total incapacity to continue as an employee in a hazardous 12
position, but the employee is not necessarily deemed to be totally and permanently 13
disabled to engage in other occupations for remuneration or profit; 14
(48) "Act in line of duty" means, for employees in hazardous positions under KRS 15
78.5520: 16
(a) A single act occurring which was required in the performance of the principal 17
duties of the hazardous position as defined by the job description; or 18
(b) A single act of violence committed against the employee that is found to be 19
related to his or her job duties, whether or not it occurs at his or her job site; 20
(49) "Dependent child" means a child in the womb and a natural or legally adopted child 21
of the member who has neither attained age eighteen (18) nor married or who is an 22
unmarried full-time student who has not attained age twenty-two (22). Solely in the 23
case of a member who dies as a direct result of an act in line of duty as defined in 24
this section, dies as a result of a duty-related injury as defined in KRS 61.621, 25
becomes totally and permanently disabled as a direct result of an act in the line of 26
duty as defined in this section, or becomes disabled as a result of a duty-related 27 UNOFFICIAL COPY 24 RS BR 1084
Page 47 of 64
XXXX 2/1/2024 5:30 PM Jacketed
injury as defined in KRS 61.621 and is eligible for the benefits provided by KRS 1
61.621(5)(a), "dependent child" also means a naturally or legally adopted disabled 2
child of the member, regardless of the child's age, if the child has been determined 3
to be eligible for federal Social Security disability benefits or is being claimed as a 4
qualifying child for tax purposes due to the child's total and permanent disability; 5
(50) "Normal retirement age" means the age at which the member meets the 6
requirements for his or her normal retirement date as provided by subsection (18) of 7
this section; 8
(51) "Disability retirement date" means the first day of the month following the last day 9
of paid employment; 10
(52) "Monthly average pay" means: 11
(a) In the case of a member who dies as a direct result of an act in line of duty as 12
defined in KRS 16.505 or who dies as a result of a duty-related injury as 13
defined in KRS 61.621, the higher of the member's monthly final rate of pay 14
or the average monthly creditable compensation earned by the deceased 15
member during his or her last twelve (12) months of employment; or 16
(b) In the case where a member becomes totally and permanently disabled as a 17
direct result of an act in line of duty as defined in KRS 16.505 or becomes 18
disabled as a result of a duty-related injury as defined in KRS 61.621 and is 19
eligible for the benefits provided by KRS 61.621(5)(a), the higher of the 20
member's monthly final rate of pay or the average monthly creditable 21
compensation earned by the disabled member during his or her last twelve 22
(12) months of employment prior to the date the act in line of duty or duty-23
related injury occurred; 24
(53) "Authority" means the Kentucky Public Pensions Authority as provided by KRS 25
61.505;[ and] 26
(54) "Executive director" means the executive director of the Kentucky Public Pensions 27 UNOFFICIAL COPY 24 RS BR 1084
Page 48 of 64
XXXX 2/1/2024 5:30 PM Jacketed
Authority; and 1
(55) "Special needs trust" means a trust described in 42 U.S.C. sec. 1396p(d)(4)(A). 2
Any reference to a trust includes a special needs trust, unless the context 3
otherwise requires. 4
Section 8. KRS 78.5532 is amended to read as follows: 5
(1) If a member dies prior to the first day of the month in which the member would 6
have received his or her first retirement allowance, the member's beneficiary shall 7
be eligible for the benefits provided by this section if the member had on file a 8
written designation of a beneficiary with the retirement office as provided by KRS 9
61.542 and the member met the following conditions at the date of his or her death: 10
(a) 1. The member had service in a nonhazardous position and was eligible to 11
retire under KRS 78.5510(2) or (3) or 78.5512(6); or 12
2. The member had service in a hazardous position and was eligible to 13
retire under KRS 78.5514(2) or (3) or 78.5516(6); 14
(b) The member was in active employment or on authorized leave of absence 15
with five (5) or more years of service credit and died prior to his or her normal 16
retirement date or in the case of a nonhazardous member, was normal 17
retirement age or older and had at least four (4) years of service credit; or 18
(c) The member was not in active employment or on authorized leave of absence 19
with twelve (12) or more years of service credit and died prior to his or her 20
normal retirement date. 21
(2) If the beneficiary eligible for benefits as provided in subsection (1) of this section is 22
a single person or the beneficiary of a special needs trust, then the beneficiary may 23
elect to receive: 24
(a) A monthly benefit payable for the life of the beneficiary that is equal to the 25
benefit that would have been paid had the member retired immediately prior 26
to his or her date of death and elected to receive benefits payable under the 27 UNOFFICIAL COPY 24 RS BR 1084
Page 49 of 64
XXXX 2/1/2024 5:30 PM Jacketed
survivorship one hundred percent (100%) option as provided in KRS 1
61.635(2); 2
(b) A monthly benefit payable for the life of the beneficiary under the beneficiary 3
Social Security adjustment option as provided in KRS 61.635(9) that is the 4
actuarial equivalent to the amount computed under paragraph (a) of this 5
subsection; 6
(c) A monthly benefit payable for a period of sixty (60) months that is the 7
actuarial equivalent to the amount computed under paragraph (a) of this 8
subsection; 9
(d) A monthly benefit payable for a period of one hundred twenty (120) months 10
that is the actuarial equivalent to the amount computed under paragraph (a) of 11
this subsection; 12
(e) If the member began participating prior to January 1, 2014, a monthly benefit 13
payable for a period of one hundred twenty (120) months that is equivalent to 14
the benefit the member would have been entitled to receive based on his or 15
her years of service and final compensation at the date of his or her death 16
reduced by the survivorship fifty percent (50%) factor as provided for in KRS 17
61.635(4), then reduced by fifty percent (50%), and that is the actuarial 18
equivalent to the amount computed under paragraph (a) of this subsection; or 19
(f) The higher of a refund of the member's accumulated account balance as 20
described in KRS 61.625(1) or one (1) time lump-sum payment which shall 21
be the actuarial equivalent of the amount payable under paragraph (a) of this 22
subsection for a period of sixty (60) months. 23
(3) If the beneficiary eligible for benefits as provided by subsection (1) of this section 24
is multiple beneficiaries or a trust, other than a special needs trust, then the 25
multiple beneficiaries by consensus or the trustee may elect to receive the actuarial 26
equivalent amounts payable under subsection (2)(c), (d), (e), or (f) of this section 27 UNOFFICIAL COPY 24 RS BR 1084
Page 50 of 64
XXXX 2/1/2024 5:30 PM Jacketed
using the assumption that the beneficiary's age is the same as the member's age. 1
(4) If the beneficiary eligible for benefits as provided in subsection (1) of this section is 2
the member's estate, then the beneficiary shall receive the higher of a refund of the 3
member's accumulated account balance as described in KRS 61.625(1) or the one 4
(1) time lump-sum payment payable under subsection (2)(f) of this section, using 5
the assumption that the beneficiary's age is the same as the member's age. 6
(5) Payments of taxable distributions made pursuant to this section shall be subject to 7
state and federal income tax as appropriate. 8
(6) (a) The beneficiary of a member with service in a nonhazardous position who 9
dies as a result of a duty-related injury may be eligible for benefits based upon 10
the definitions, criteria, and benefits specified by KRS 61.621. 11
(b) The beneficiary of a member with service in a hazardous position who dies as 12
a direct result of an act in line of duty may be eligible for benefits from the 13
system based upon the definitions, criteria, and benefits specified by KRS 14
78.5534. 15
Section 9. KRS 161.525 is amended to read as follows: 16
(1) Upon death of a member in active contributing status at the time of death, who was 17
eligible to retire by reason of service, the spouse, if named as the primary 18
beneficiary of the member's retirement account, or in the absence of an eligible 19
spouse a legal dependent of the member, if named as the primary beneficiary, shall 20
be entitled to elect, in lieu of a refund of the member's accumulated account balance 21
or benefits provided in KRS 161.520, an annuity actuarially equivalent at the 22
attained age of the beneficiary to the annuity that would have been paid to the 23
deceased member had retirement been effective on the day immediately preceding 24
the member's death. Under the provisions of KRS 61.680, benefits shall be 25
processed as if the member retired for service. In exercising this right the spouse or 26
legal dependent shall be limited to selecting an option providing either a straight 27 UNOFFICIAL COPY 24 RS BR 1084
Page 51 of 64
XXXX 2/1/2024 5:30 PM Jacketed
life annuity with refundable balance or a term certain option. A spouse may receive 1
the annuity provided by this section at the same time as children are qualifying for 2
survivors' benefits under the provisions of KRS 161.520; however, a legal 3
dependent, other than a spouse, may not receive these payments if children have 4
qualified for benefits under that section. 5
(2) A spouse qualifying for an annuity under subsection (1) of this section may defer 6
the payments in order to reduce the actuarial discounts to be applied due to age. 7
(3) Upon death of a member in active contributing status at the time of his or her death, 8
who had a minimum of twenty-seven (27) years of service, the spouse, if named as 9
the primary beneficiary of the member's account shall be entitled to a monthly 10
minimum allowance of three hundred dollars ($300) as the basic straight life 11
annuity. This provision applies to surviving spouses of members who were 12
receiving benefit payments under KRS 161.520 as of June 30, 1986, and to 13
surviving spouses of members who die on or after July 1, 1986. 14
(4) If the surviving spouse or legal dependent eligible for a benefit under subsection 15
(1) of this section is the sole beneficiary of a special needs trust, the annuity 16
payments made under subsection (1) of this section shall be made payable to the 17
special needs trust. 18
Section 10. KRS 161.640 is amended to read as follows: 19
(1) Retirement annuities shall be payable monthly. The first payment to an annuitant 20
shall be made at the payment date at the end of one (1) full payment period after his 21
retirement and shall consist of one (1) regular monthly payment. Retirement for a 22
member receiving one (1) full year of service credit during a fiscal year shall be no 23
earlier than July 1 next following the end of such fiscal year. Notwithstanding any 24
other statutory provisions to the contrary, members filling positions that 25
customarily require twelve (12) months of service during a fiscal year cannot retire 26
prior to July 1 without a corresponding pro rata reduction in salary and service 27 UNOFFICIAL COPY 24 RS BR 1084
Page 52 of 64
XXXX 2/1/2024 5:30 PM Jacketed
credit. The board of trustees may determine which positions customarily require 1
twelve (12) months of service during a fiscal year. 2
(2) The board of trustees may enter into agreements with retired members for payroll 3
deductions when it is deemed in the best interest of the retired members and the 4
retirement system. 5
(3) (a) All new retirees, on or after July 1, 1998, shall receive their monthly annuity 6
checks by electronic fund transfer. All retiree, beneficiary, and survivor 7
monthly allowance payments, except as otherwise provided in paragraph (b) 8
or (c) of this subsection, shall be made by electronic fund transfer. Except as 9
provided in paragraph (b) or (c) of this subsection, all monthly payments shall 10
be made payable only to an account solely in the name of the retiree, 11
beneficiary, or survivor as an individual and natural person, or to a joint 12
account in the name of the retiree, beneficiary, or survivor as an individual 13
and natural person and another individual and natural person. 14
(b) If the retiree, beneficiary, or survivor is a resident of a nursing or assisted-care 15
home, monthly payments may be made to the order of the nursing or assisted-16
care home for the benefit of the retiree, beneficiary, or survivor by including 17
the retiree's, beneficiary's, or survivor's name. Monthly annuity checks so paid 18
to a nursing or assisted-care home may be sent by mail rather than electronic 19
fund transfer. 20
(c) If the retiree, beneficiary, or survivor is the sole beneficiary of a special 21
needs trust: 22
1. Monthly payments shall be made to the order of the special needs 23
trust, and checks may be sent by mail to the special needs trust for the 24
benefit of the retiree, beneficiary, or survivor; 25
2. Upon the death of the retiree, beneficiary, or survivor of a special 26
needs trust, the trustee of that trust shall notify the Teachers' 27 UNOFFICIAL COPY 24 RS BR 1084
Page 53 of 64
XXXX 2/1/2024 5:30 PM Jacketed
Retirement System; 1
3. Any payments made to a special needs trust that are not properly 2
payable to the special needs trust shall be returned to the Teachers' 3
Retirement System and shall not be subject to claims for 4
reimbursement from any state for Medicaid benefits paid on behalf of 5
the beneficiary under any Medicaid payback provision, and any 6
overpayments of retirement allowance received by the special needs 7
trust shall be repaid to the Teachers' Retirement System; and 8
4. The Teachers' Retirement System may promulgate administrative 9
regulations in accordance with KRS Chapter 13A to administer this 10
paragraph. 11
Section 11. KRS 161.700 is amended to read as follows: 12
(1) Except as otherwise provided by this section and KRS 161.655(5), the right of a 13
member to a retirement allowance and to the return of contributions, any benefit or 14
right accrued or accruing to any person under KRS 161.220 to 161.716, and the 15
money in the various funds established pursuant to KRS 161.220 to 161.716 are 16
hereby exempt from any state or municipal tax, and shall not be subject to 17
execution, garnishment, attachment, or other process, and shall not be assigned. 18
(2) Notwithstanding the provisions of subsection (1) of this section, retirement 19
allowances and other benefits accrued or accruing under KRS 161.220 to KRS 20
161.716 to a person who is the beneficiary of a special needs trust may be 21
assigned to the trustee of that special needs trust. Any retirement allowances or 22
other benefits assigned to a special needs trust under this subsection, or accrued 23
or accruing under KRS 161.220 to KRS 161.716 to a person who is the 24
beneficiary of a special needs trust, shall cease upon the death of the beneficiary 25
of the special needs trust and shall not be subject to state reimbursement for 26
Medicaid benefits paid on behalf of the beneficiary under a Medicaid payback 27 UNOFFICIAL COPY 24 RS BR 1084
Page 54 of 64
XXXX 2/1/2024 5:30 PM Jacketed
provision. 1
(3)[(2)] Notwithstanding subsection (1) of this section, retirement benefits accrued or 2
accruing to any person under this retirement system on or after January 1, 1998, 3
shall be subject to the tax imposed by KRS 141.020, to the extent provided in KRS 4
141.010 and 141.0215. 5
(4)[(3)] Retirement allowance, disability allowance, accumulated account balance, or 6
any other benefit under the retirement system shall not be classified as marital 7
property pursuant to KRS 403.190(1), except to the extent permitted under KRS 8
403.190(4). Retirement allowance, disability allowance, accumulated contributions, 9
or any other benefit under the retirement system shall not be considered as an 10
economic circumstance during the division of marital property in an action for 11
dissolution of marriage pursuant to KRS 403.190(1)(d), except to the extent 12
permitted under KRS 403.190(4). 13
(5)[(4)] Qualified domestic relations orders issued by a court or administrative agency 14
shall be honored by the retirement system if: 15
(a) The benefits payable pursuant to the order meet the requirements of a 16
qualified domestic relations order as provided by 26 U.S.C. sec. 414(p). The 17
retirement system shall follow applicable provisions of 26 U.S.C. sec. 414(p) 18
in administering qualified domestic relations orders; 19
(b) The order meets the requirements established by the retirement system and by 20
subsections (5)[(4)] to (13)[(12)] of this section. The board of trustees of the 21
retirement system shall establish the requirements, procedures, and forms 22
necessary for the administration of qualified domestic relations order by 23
promulgation of administrative regulations in accordance with KRS Chapter 24
13A; and 25
(c) The order is on the form established by the retirement system pursuant to the 26
retirement system's authority provided under paragraph (b) of this subsection. 27 UNOFFICIAL COPY 24 RS BR 1084
Page 55 of 64
XXXX 2/1/2024 5:30 PM Jacketed
(6)[(5)] A qualified domestic relations order shall not: 1
(a) Require the retirement system to take any action not authorized under state or 2
federal law; 3
(b) Require the retirement system to provide any benefit, allowance, or other 4
payment not authorized under state or federal law; 5
(c) Grant or be construed to grant the alternate payee any separate right, title, or 6
interest in or to any retirement benefit other than to receive payments from the 7
participant's account in accordance with the administrative regulations 8
promulgated by the system and as provided by subsections (5)[(4)] to 9
(13)[(12)] of this section; or 10
(d) Grant any separate interest to any person other than the participant. 11
(7)[(6)] Any qualified domestic relations order submitted to the retirement system 12
shall specify the dollar amount or percentage amount of the participant's benefit to 13
be paid to the alternate payee. In calculating the amount to be paid to the alternate 14
payee, the court or administrative agency that is responsible for issuing the order 15
shall follow the requirements set forth in the administrative regulations promulgated 16
by the board of trustees. Notwithstanding any other statute to the contrary, the 17
board shall not be required to honor a qualified domestic relations order that does 18
not follow the requirements set forth in the administrative regulations promulgated 19
by the board of trustees. 20
(8)[(7)] If the qualified domestic relations order meets the requirements established by 21
the system and by subsections (5)[(4)] to (13)[(12)] of this section, payments to the 22
alternate payee shall be distributed under the following conditions: 23
(a) If the participant is retired and is receiving a monthly retirement allowance, 24
the month following the date the retirement system receives a qualified 25
domestic relations order that complies with the administrative regulations 26
promulgated by the retirement system and subsections (5)[(4)] to (13)[(12)] of 27 UNOFFICIAL COPY 24 RS BR 1084
Page 56 of 64
XXXX 2/1/2024 5:30 PM Jacketed
this section; or 1
(b) If the participant is not retired, the month of the participant's effective 2
retirement date in which the first retirement allowance is payable to the 3
participant or the month in which the participant receives a refund of his or 4
her accumulated account balance as provided by KRS 161.470(6). 5
(9)[(8)] An alternate payee's benefits and rights under a qualified domestic relations 6
order shall terminate upon the earlier of: 7
(a) The death of the participant; 8
(b) The death of the alternate payee; or 9
(c) The termination of benefits to the participant under any provision of KRS 10
161.220 to 161.716. 11
(10)[(9)] An alternate payee shall not receive a monthly payment under a qualified 12
domestic relations order if the participant is not receiving a monthly retirement 13
allowance. 14
(11)[(10)] The cost of living adjustment provided to the participant pursuant to KRS 15
161.620 shall be divided between the participant and alternate payee in a qualified 16
domestic relations order as follows: 17
(a) If the order specifies the alternate payee is to receive a percentage of the 18
participant's benefit, then the cost of living adjustment shall be divided 19
between the participant and the alternate payee based upon the percentage of 20
the total benefit each is receiving upon the participant's retirement or upon the 21
date the order is approved by the retirement system, whichever is later; or 22
(b) If the order specifies that the alternate payee is to receive a set dollar amount 23
of the participant's benefit, then the order shall specify that: 24
1. The cost of living adjustment shall be divided between the participant 25
and the alternate payee based upon the percentage of the total benefit 26
each is receiving upon the participant's retirement or upon the date the 27 UNOFFICIAL COPY 24 RS BR 1084
Page 57 of 64
XXXX 2/1/2024 5:30 PM Jacketed
order is approved by the retirement system, whichever is later; or 1
2. The alternate payee shall receive no cost of living adjustment. 2
If the order does not specify the division of the cost of living adjustment as 3
required by this paragraph, then no cost of living adjustment shall be payable 4
to the alternate payee. If no cost of living adjustment is provided to the 5
alternate payee, then the participant shall receive the full cost of living 6
adjustment he or she would have received if the order had not been applied to 7
the participant's account. 8
(12)[(11)] Except in cases involving child support payments, the retirement system may 9
charge reasonable and necessary fees and expenses to the recipient and the alternate 10
payee of a qualified domestic relations order for the administration of the qualified 11
domestic relations order by retirement system. All fees and expenses shall be 12
established by the administrative regulations promulgated by the board of trustees 13
of the retirement system. The qualified domestic relations order shall specify 14
whether the fees and expenses provided by this subsection shall be paid: 15
(a) Solely by the participant; 16
(b) Solely by the alternate payee; or 17
(c) Equally shared by the participant and alternate payee. 18
(13)[(12)] The retirement system shall honor a qualified domestic relations order issued 19
prior to July 15, 2010, for prospective benefit payments if the order or an amended 20
version of the order meets the requirements established by this section and the 21
administrative regulations promulgated by the retirement system. The order shall 22
not apply to benefit payments issued by the retirement system prior to the date the 23
order was approved by the retirement system. 24
Section 12. KRS 21.420 is amended to read as follows: 25
(1) After the death of a member who began participating in the Judicial Retirement 26
Plan prior to January 1, 2014, who at the time of his or her death was receiving a 27 UNOFFICIAL COPY 24 RS BR 1084
Page 58 of 64
XXXX 2/1/2024 5:30 PM Jacketed
service retirement allowance (other than an actuarially reduced allowance under 1
subsection (3) of KRS 21.400), or was receiving a disability retirement allowance, 2
his or her surviving spouse is entitled to receive during his or her lifetime a 3
monthly allowance equal to one-half (1/2) of that he or she was receiving. 4
(2) (a) If a member who began participating in the Judicial Retirement Plan prior to 5
January 1, 2014, dies before retirement and before reaching normal retirement 6
age, without regard to length of service, his or her surviving spouse is entitled 7
to receive during his or her lifetime a monthly allowance equal to one-half 8
(1/2) of the monthly allowance the member would have received commencing 9
at his or her normal retirement date if he or she had continued in service until 10
that date and had then retired, computed however on the basis of his or her 11
final compensation at time of death. 12
(b) If a member who began participating in the Judicial Retirement Plan prior to 13
January 1, 2014, dies before retirement and after reaching normal retirement 14
age, his or her surviving spouse is entitled to receive during his or her 15
lifetime a monthly allowance equal to one-half (1/2) of the monthly allowance 16
the member would have been entitled to, on the basis of his or her years of 17
service, had he or she retired on the date of his death. 18
(3) If a member who began participating in the Judicial Retirement Plan prior to 19
January 1, 2014, dies after retirement and was at the time of his or her death 20
receiving an actuarially reduced allowance under subsection (3) of KRS 21.400, or 21
was not at the time of his or her death receiving a retirement allowance but had 22
acquired the vested right under subsection (2) of KRS 21.400 to have received an 23
allowance upon reaching normal retirement age, his or her surviving spouse is 24
entitled to receive during his or her lifetime a monthly allowance equal to one-half 25
(1/2) of the monthly allowance the member would have received when he or she 26
reached normal retirement age. 27 UNOFFICIAL COPY 24 RS BR 1084
Page 59 of 64
XXXX 2/1/2024 5:30 PM Jacketed
(4) A member, or a retiree who began participating in the plan prior to January 1, 2014, 1
who has not commenced drawing retirement benefits pursuant to KRS 21.400, and 2
who dies without a spouse or eligible children entitled to survivor's benefits, may 3
designate a beneficiary who shall receive the accumulated contributions of the 4
member. A member, or a retiree who began participating in the plan on or after 5
January 1, 2014, who has not commenced drawing retirement benefits pursuant to 6
KRS 21.402, who dies without a spouse or eligible children entitled to survivor's 7
benefits, may designate a beneficiary who shall receive the accumulated account 8
balance of the member. A trust, including a special needs trust, may be designated 9
as a beneficiary. Absent a designation by the member or retiree, the accumulated 10
contributions or accumulated account balance, as applicable based upon the 11
member's participation date, shall be paid to the member's estate. 12
(5) A member who began participating in the plan prior to January 1, 2014, who 13
commences drawing retirement benefits pursuant to KRS 21.400 or 21.410, and 14
who dies without a spouse or eligible children entitled to survivor's benefits and 15
before the benefits received by the member equal the accumulated contributions of 16
the member, may designate a beneficiary who shall receive the balance of the 17
accumulated contributions of the member. A member who began participating in 18
the plan on or after January 1, 2014, who commences drawing retirement benefits 19
pursuant to KRS 21.402 or 21.410, and who dies without a spouse or eligible 20
children entitled to survivor's benefits and before the benefits received by the 21
member equal the accumulated account balance of the member, may designate a 22
beneficiary who shall receive the balance of the accumulated account balance of the 23
member. A trust, including a special needs trust, may be designated as a 24
beneficiary. Any benefits received shall be deducted from the accumulated 25
contributions or accumulated account balance. Absent a designation by the member, 26
the balance of the accumulated contributions or accumulated account balance, as 27 UNOFFICIAL COPY 24 RS BR 1084
Page 60 of 64
XXXX 2/1/2024 5:30 PM Jacketed
applicable based upon the member's participation date, shall be paid to the 1
member's estate. 2
(6) A member who begins participating in the Judicial Retirement Plan prior to January 3
1, 2014, may designate a beneficiary who shall receive the balance of the 4
accumulated contributions of the member, in the event survivor's benefits are being 5
paid pursuant to subsection (1), (2), or (3) of this section, and the survivor dies prior 6
to receiving benefits equal to the member's contributions. In this event, the 7
provisions of subsection (5) of this section shall apply as to offset and payment. 8
(7) A member who begins participating in the Judicial Retirement Plan prior to January 9
1, 2014, may, prior to the drawing of benefits, elect in writing to the executive 10
secretary of the Judicial Form Retirement System, to take an optional retirement 11
allowance which shall be actuarially equivalent to the amount of retirement 12
allowance otherwise payable to the member and the member's spouse. If the 13
member dies after retirement, the option chosen shall prevail over the provisions of 14
subsections (1) and (3) of this section. If the member dies prior to retirement, the 15
option chosen shall prevail over the provisions of subsection (2) of this section. The 16
options shall include: 17
(a) Survivorship one hundred percent (100%). The member may elect to receive a 18
decreased retirement allowance during the member's lifetime and have the 19
retirement allowance continued after death to the spouse during the lifetime of 20
the spouse. 21
(b) Survivorship sixty-six and two-thirds percent (66 2/3%). The member may 22
elect to receive a decreased retirement allowance during the member's lifetime 23
and have two-thirds (2/3) of the retirement allowance continue after death to 24
the spouse during the lifetime of the spouse. 25
If a retiree, living or deceased, chose either of the optional retirement benefit 26
allowances specified in paragraphs (a) or (b) of this subsection from July 15, 1994, 27 UNOFFICIAL COPY 24 RS BR 1084
Page 61 of 64
XXXX 2/1/2024 5:30 PM Jacketed
to July 15, 1998, the optional allowance shall be adjusted accordingly, and the new 1
benefit shall commence August 1, 1998. Each recipient of benefits from the plan, 2
who retired from July 15, 1994, to July 15, 1998, shall have a one-time opportunity 3
to select an optional retirement allowance. The election by the recipient shall be 4
prior to August 1, 1998, at which time the new benefit shall commence. The option 5
chosen shall prevail, subsections (1), (2), and (3) of this section notwithstanding. 6
(8) For a member who begins participating in the Judicial Retirement Plan on or after 7
January 1, 2014: 8
(a) If the member dies prior to drawing a retirement allowance, then the surviving 9
spouse may elect to: 10
1. Take a refund of the member's accumulated account balance or 11
accumulated contributions as provided by KRS 21.402; or 12
2. If the member had at least five (5) years of service in the plan at the time 13
of his or her death, have the member's accumulated account balance 14
annuitized into a monthly benefit payable for life that is equal to the 15
benefit that would have been paid had the member retired immediately 16
prior to his or her date of death and elected to receive benefits payable 17
under the survivorship one hundred percent (100%) option as provided 18
by paragraph (b)1. of this subsection. 19
In lieu of the benefits provided by this paragraph to the surviving spouse, the 20
member may elect to have the benefits payable under this paragraph paid to 21
an individual dependent child by completing the forms provided prescribed by 22
the Judicial Form Retirement System. If no surviving spouse or dependent 23
children are eligible to receive benefits, then the provisions of subsection (4) 24
of this section shall apply to the member. 25
(b) If a member dies on or after the date the member begins drawing a retirement 26
allowance, the benefits payable to the surviving spouse shall be based upon 27 UNOFFICIAL COPY 24 RS BR 1084
Page 62 of 64
XXXX 2/1/2024 5:30 PM Jacketed
whether or not the member elects prior to retirement to receive an optional 1
retirement allowance. The election shall be in writing on the forms prescribed 2
by the Judicial Form Retirement System and shall be actuarially equivalent to 3
the amount of retirement allowance otherwise payable to the member. The 4
optional retirement allowances shall include: 5
1. Survivorship one hundred percent (100%). The member may elect to 6
receive a decreased retirement allowance during the member's lifetime 7
and have the retirement allowance continued after death to the spouse 8
during the lifetime of the spouse; 9
2. Survivorship sixty-six and two-thirds percent (66-2/3%). The member 10
may elect to receive a decreased retirement allowance during the 11
member's lifetime and have two-thirds (2/3) of the retirement allowance 12
continue after death to the spouse during the lifetime of the spouse; or 13
3. Survivorship fifty percent (50%). The member may elect to receive a 14
decreased retirement allowance during the member's lifetime and have 15
one-half (1/2) of the retirement allowance continue after death to the 16
spouse during the lifetime of the spouse. 17
In lieu of the benefits provided by this paragraph to the surviving spouse, the 18
member may elect prior to retirement to have the benefits payable under this 19
paragraph paid to an individual dependent child or to a special needs trust by 20
completing the forms provided by the Judicial Form Retirement System. If no 21
surviving spouse or dependent children are eligible to receive benefits, then 22
the provisions of subsection (5) of this section shall apply to the member. 23
(c) For purposes of this section a "dependent child" shall mean a child who is less 24
than twenty-one (21) years of age or a disabled child who is eligible for Social 25
Security disability benefits. 26
(9) (a) As used in this section, "special needs trust" means a trust described in 42 27 UNOFFICIAL COPY 24 RS BR 1084
Page 63 of 64
XXXX 2/1/2024 5:30 PM Jacketed
U.S.C. sec. 1396p(d)(4)(A). 1
(b) In any circumstances in which a surviving spouse would be entitled to any 2
allowance under this section, the monthly allowance that the surviving 3
spouse was receiving or is entitled to receive may be paid to a special needs 4
trust for the benefit of the surviving spouse. 5
Section 13. KRS 21.425 is amended to read as follows: 6
(1) In any circumstances in which a surviving spouse would be entitled to any 7
allowance under KRS 21.420, but there is no surviving spouse or the surviving 8
spouse subsequently dies, and there is a surviving child or children of the member 9
under the age of twenty-one (21), or there is a disabled child or children, the 10
monthly allowance that the surviving spouse would have received or was receiving 11
shall be continued, as follows: 12
(a) If the member does not have a disabled child or children, the benefit shall 13
continue until there are no children remaining under the age of twenty-one 14
(21); or 15
(b) If the member has a disabled child or children, the benefit shall continue until 16
the death of the last remaining disabled child. 17
(2) A member may designate his or her child or children under the age of twenty-one 18
(21), or his or her disabled child or children, or a special needs trust as defined by 19
subsection (9) of Section 12 of this Act for the benefit of the disabled child, to 20
receive the death benefit payable under KRS 21.420 instead of his or her spouse, or 21
he or she may designate that his or her spouse shall receive a percentage of the 22
death benefit, and his or her child or children under the age of twenty-one (21), or 23
his or her disabled child or children, or a special needs trust as defined by 24
subsection (9) of Section 12 of this Act for the benefit of a disabled child, shall 25
receive the remainder. The member making such a choice shall designate his or her 26
beneficiary or beneficiaries in writing to the manager of the Judicial Form 27 UNOFFICIAL COPY 24 RS BR 1084
Page 64 of 64
XXXX 2/1/2024 5:30 PM Jacketed
Retirement System on a form provided by the manager. 1
(3) For purposes of this section, "disabled" means an individual determined by the 2
Social Security Administration to be entitled to total disability benefits. 3
(4) Subsections (1) to (3) of this section shall not apply to a member who begins 4
participating in the Judicial Retirement Plan on or after January 1, 2014. 5