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AN ACT relating to eligibility for benefits in the systems administered by the 1
Kentucky Public Pensions Authority. 2
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 3
Section 1. KRS 61.595 is amended to read as follows: 4
(1) Effective July 1, 1990, upon retirement at normal retirement date or subsequent 5
thereto, a Kentucky Employees Retirement System member may receive an annual 6
retirement allowance, payable monthly during his or her lifetime, which shall 7
consist of an amount equal to one and ninety-seven hundredths percent (1.97%) of 8
final compensation multiplied by the number of years of service credit, except that: 9
(a) Effective February 1, 1999, a member of the Kentucky Employees Retirement 10
System who was participating in one (1) of the state-administered retirement 11
systems as of January 1, 1998, and continues to participate through January 1, 12
1999, shall receive an annual retirement allowance, payable monthly during 13
his or her lifetime, which shall consist of an amount equal to two percent (2%) 14
of final compensation multiplied by the number of years of service credit. 15
Any Kentucky Employees Retirement System member whose effective date 16
of retirement is between February 1, 1999, and January 31, 2009, and who has 17
at least twenty (20) years of service credit in one (1) of the state-administered 18
retirement systems and who was participating in one (1) of the state-19
administered retirement systems as of January 1, 1998, and continues to 20
participate through January 1, 1999, shall receive an annual retirement 21
allowance, payable monthly during his or her lifetime, which shall consist of 22
an amount equal to two and two-tenths percent (2.2%) of final compensation 23
multiplied by the number of years of service credit. Notwithstanding the 24
provisions of KRS 61.565, the funding for this paragraph shall be provided 25
from existing funds of the retirement allowance account; 26
(b) The annual normal retirement allowance for members of the General 27 UNOFFICIAL COPY 25 RS BR 488
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Assembly, who serve during the 1974 or 1976 General Assembly, and will 1
have eight (8) years or more of total legislative service as of January 6, 1978, 2
shall not be less than two hundred forty dollars ($240) multiplied by the 3
number of years of service as a member of the General Assembly; 4
(c) For a member of the Kentucky Employees Retirement System who begins 5
participating on or after September 1, 2008, the annual retirement allowance 6
upon retirement shall be equal to: 7
1. a. One and one-tenth percent (1.1%) of final compensation for each 8
year of service if the member has earned ten (10) or less years of 9
service at retirement; 10
b. One and three-tenths percent (1.3%) of final compensation for 11
each year of service if the member has earned greater than ten (10) 12
but no more than twenty (20) years of service at retirement; 13
c. One and one-half percent (1.5%) of final compensation for each 14
year of service if the member has earned greater than twenty (20) 15
but no more than twenty-six (26) years of service at retirement; or 16
d. One and three-quarters percent (1.75%) of final compensation for 17
each year of service if the member has earned greater than twenty-18
six (26) but no more than thirty (30) years of service at retirement; 19
and 20
2. Two percent (2.0%) of final compensation for each year of service 21
earned in excess of thirty (30) years of service at retirement; 22
(d) The annual normal retirement allowance for members of the General 23
Assembly who will have fewer than eight (8) years of service as of December 24
31, 1975, shall be as prescribed in Chapter 116, section 36(1), Acts of the 25
1972 General Assembly for legislative service prior to January 1, 1974; 26
(e) Former members of the General Assembly who have eight (8) or more years 27 UNOFFICIAL COPY 25 RS BR 488
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of legislative service prior to the 1976 Regular Session are eligible for an 1
increased retirement allowance of two hundred forty dollars ($240) times the 2
years of legislative service, if the member pays to the Kentucky Employees 3
Retirement System thirty-five percent (35%) of the actuarial cost of the higher 4
benefit, as determined by the system, except that a former member with 5
sixteen (16) or more years of legislative service, or his or her beneficiary, who 6
is receiving a retirement allowance, also is eligible under this section and may 7
apply for a recomputation of his or her retirement allowance. The employer's 8
share of sixty-five percent (65%) of the computed actuarial cost shall be paid 9
from the State Treasury to the Kentucky Employees Retirement System upon 10
presentation of a properly documented claim to the Finance and 11
Administration Cabinet. If any member with sixteen (16) or more years of 12
legislative service previously applied for and is receiving a retirement 13
allowance, he or she may reapply and his or her retirement allowance shall be 14
recomputed in accordance with this paragraph, and he or she shall thereafter 15
be paid in accordance with the option selected by him or her at the time of the 16
reapplication; and 17
(f) The annual normal retirement allowance for a member with ten (10) or more 18
years of service, in the Kentucky Employees Retirement System, at least one 19
(1) of which is current service, shall not be less than five hundred twelve 20
dollars ($512). 21
(2) (a) Upon service retirement prior to normal retirement date, a member may 22
receive an annual retirement allowance payable monthly during his or her 23
lifetime which shall be determined in the same manner as for retirement at his 24
or her normal retirement date with years of service and final compensation 25
being determined as of the date of his or her actual retirement, but the amount 26
of the retirement allowance so determined shall be reduced at an amount 27 UNOFFICIAL COPY 25 RS BR 488
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determined by the board's actuary to reflect the earlier commencement of 1
benefits. 2
(b) A member of the Kentucky Employees Retirement System who begins 3
participating before September 1, 2008, who has: 4
1. Twenty-seven (27) or more years of service credit, at least fifteen (15) 5
of which are current service, may retire with no reduction in the 6
retirement allowance;[. A member who begins participating before 7
September 1, 2008, who has] 8
2. Earned vested service credit in a retirement system, other than the 9
Teachers' Retirement System, sponsored by a Kentucky institution of 10
higher education, the Council on Postsecondary Education, or the 11
Higher Education Assistance Authority, may count the vested service 12
toward attaining the necessary years of service credit as provided in 13
KRS 61.559(2)(c) and (d) to qualify for a retirement allowance. The 14
credit from a Kentucky institution of higher education, the Council on 15
Postsecondary Education, or the Higher Education Assistance Authority 16
established by this subparagraph shall not be used toward the minimum 17
fifteen (15) years of current service required by KRS 61.559(2)(c) and 18
(d) or to calculate his or her retirement allowance pursuant to this 19
section; and 20
3. Employment that provides services for Kentucky River Community 21
Care in a regular full-time position, regardless of whether the member 22
was employed directly by Kentucky River Community Care or 23
indirectly through a third-party entity, in which the member did not 24
participate in the Kentucky Employees Retirement System for the 25
period of employment, may count the employment as service toward 26
attaining the necessary years of service credit as provided in KRS 27 UNOFFICIAL COPY 25 RS BR 488
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61.559(2)(c) and (d) to qualify for a retirement allowance. The credit 1
for employment from Kentucky River Community Care established by 2
this subparagraph shall not be used toward the minimum fifteen (15) 3
years of current service required by KRS 61.559(2)(c) and (d) or to 4
calculate his or her retirement allowance pursuant to this section, 5
unless at a later date the employment with Kentucky River Community 6
Care is determined to have been eligible for participation in the 7
Kentucky Employees Retirement System and the employee and 8
employer pay the required costs to establish service in the system for 9
the period of employment. 10
The provisions of this paragraph shall not be construed to limit the use of 11
Teachers' Retirement System credit pursuant to KRS 61.680(2)(a). 12
(c) A member of the Kentucky Employees Retirement System who begins 13
participating on or after September 1, 2008, may retire with no reduction in 14
benefits if the member is fifty-seven (57) years of age or older and has an age 15
and years of service total of at least eighty-seven (87) years. The years of 16
service used to determine eligibility for an unreduced retirement allowance 17
under this paragraph shall only include years of service credited under KRS 18
16.543(1), 61.543(1), or 78.615(1) or another state-administered retirement 19
system. 20
(3) Subsections (1) and (2) of this section shall not apply to members who begin 21
participating in the system on or after January 1, 2014. Members who begin 22
participating in the system on or after January 1, 2014, shall receive the retirement 23
benefits prescribed by KRS 61.597. 24
Section 2. KRS 61.552 is amended to read as follows: 25
(1) Called to Active Duty Military Service. An employee of an employer participating 26
in the system who is called to active military duty in the Armed Forces of the 27 UNOFFICIAL COPY 25 RS BR 488
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United States shall be credited in accordance with 38 U.S.C. sec. 4318 with service 1
credit, creditable compensation, and in the case of employees participating in the 2
hybrid cash balance plan, employee contributions, employer credits, and interest 3
credits, for a period of active military duty of up to six (6) years, provided: 4
(a) The employee was called to active military duty in the Armed Forces of the 5
United States: 6
1. After the employee's membership date in the system and provided the 7
employee was on leave of absence from the employer and did not 8
withdraw his or her accumulated account balance; or 9
2. Prior to the employee's membership date in the system and the date the 10
employee terminated employment with his or her employer; 11
(b) The employee entered active military service within three (3) months of his or 12
her last day of paid employment; 13
(c) The employee's discharge military service was terminated in a manner other 14
than as described in 38 U.S.C. sec. 4304; 15
(d) The employee returns to work with an employer participating in the system 16
within two (2) years after completion of the period of active military duty, or 17
upon the subsequent termination of any total disability which existed at the 18
expiration of the two (2) years after discharge; and 19
(e) For an employee whose membership date is on or after January 1, 2014, who 20
is participating in the hybrid cash balance plan under KRS 16.583, 61.597, 21
78.5512, or 78.5516, the employee pays the employee contributions on the 22
credited compensation as provided under KRS 16.543, 61.543, and 78.615. 23
For periods of active military duty that meet the requirements of this subsection, the 24
employer shall pay the employer contributions payable under KRS 61.565, 61.702, 25
78.5536, and 78.635. 26
(2) (a) Omitted Service. Any person who is entitled to service credit for employment 27 UNOFFICIAL COPY 25 RS BR 488
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which was not reported by the employer in accordance with KRS 16.543, 1
61.543, or 78.615 may obtain credit for the service subject to the provisions of 2
this subsection. 3
(b) Provided the person pays for the omitted service with within six (6) months of 4
notification by the system, the cost of the service shall be equal to the 5
employee contributions that would have been paid if the person had been 6
correctly reported in accordance with KRS 16.543, 61.543, or 78.615. 7
(c) Any employee participating in one (1) of the state-administered retirement 8
systems entitled to service credit under paragraph (a) of this subsection who 9
has not repaid the employee contributions due within six (6) months of 10
notification by the system may purchase the credit after the six (6) months by 11
paying to the system the employee contributions plus interest at the actuarially 12
assumed rate from the date of initial notification under paragraph (b) of this 13
subsection. 14
(d) Omitted service purchased under this subsection shall: 15
1. Be considered service credited under KRS 16.543(1), 61.543(1), or 16
78.615(1) for purposes of determining eligibility for retirement benefits 17
under KRS 78.510 to 78.852; and 18
2. Not be credited to the member's account until the employer 19
contributions due and any interest or penalties on the delinquent 20
employer contributions for the period of omitted service are received by 21
the system. 22
(e) Employees who begin participating on or after January 1, 2014, in the hybrid 23
cash balance plan provided by KRS 16.583 or 61.597 or 78.5512 or 78.5516 24
shall, upon payment of the employee and employer contributions due under 25
this subsection, have their accumulated account balance increased by the 26
employee contributions, employer pay credits, and interest credits that would 27 UNOFFICIAL COPY 25 RS BR 488
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have been credited to their member's account if the contributions had been 1
paid on time. 2
(f) Contributions payable by the employer under this subsection for omitted 3
service shall be considered delinquent from the date the employee should 4
have been reported and received service credit in accordance with KRS 5
16.543, 61.543, and 78.615. 6
(3) (a) Recontribution of a Refund. Any employee participating in one (1) of the 7
state-administered retirement systems who has been refunded his or her 8
accumulated account balance under the provisions of KRS 61.625, thereby 9
losing service credit in the system, may regain the credit by paying to the 10
system the amount or amounts refunded by the system with interest at a rate 11
determined by the board. Service purchased under this subsection on or after 12
January 1, 2014, shall not be used to determine the member's membership 13
date in the systems. 14
(b) Recontribution of a refund purchased under this subsection shall not be used 15
in determining a retirement allowance until the member has accrued at least 16
six (6) months of service credit in a state-administered retirement system, 17
excluding the service purchased under this subsection. If the member does not 18
accrue at least six (6) months of service credit in a state-administered 19
retirement system, excluding service purchased under this subsection, then the 20
payment plus interest as provided in KRS 16.560, 61.575, or 78.640 shall be 21
refunded upon retirement, death, or written request following termination of 22
employment. The service requirement shall be waived if the member dies or 23
becomes disabled as provided for by KRS 16.582, 61.600, 61.621, 78.5522, or 24
78.5524. 25
(4) (a) Summer Months. Any employee participating in one (1) of the state-26
administered retirement systems who is or has been employed by a school 27 UNOFFICIAL COPY 25 RS BR 488
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board or community action agency participating in the County Employees 1
Retirement System or a state-operated school under KRS Chapter 167 or an 2
institution of higher learning participating in the Kentucky Employees 3
Retirement System, who receives service credit for less than twelve (12) 4
months each year, may purchase the additional months of service credit 5
needed to total one (1) year of service credit, except the amount purchased for 6
any specific year shall not exceed three (3) months. 7
(b) The cost of the summer months service credit shall be determined by the 8
formula established by subsection (10) of this section and may be purchased 9
by the employee, or the employer on behalf of the employee, or the cost may 10
be paid by both the employer and employee in which case the employer and 11
employee shall each pay fifty percent (50%) of the cost. Service credit shall 12
not be credited to the member's account until both the employer's and 13
employee's payment are received by the system. 14
(c) If the employee has purchased service credit under this subsection based on 15
months reported by the employer for the fiscal year, and an audit of the 16
employee's account reduces the number of months of service credit for which 17
the employee is eligible to no fewer than nine (9) months, the employee shall 18
retain credit for the months purchased unless the employee is ineligible for 19
any service in the fiscal year. The employee shall be eligible to purchase the 20
additional months under this subsection to total one (1) year. 21
(d) This subsection shall not apply to members who began participating in the 22
County Employees Retirement System on or after January 1, 2014. 23
(5) Vested Service Purchases. Any employee who began participating in the County 24
Employees Retirement System, the Kentucky Employees Retirement System, or the 25
State Police Retirement System prior to January 1, 2014, who is vested may 26
purchase service credit for: 27 UNOFFICIAL COPY 25 RS BR 488
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(a) Past service. "Past service" means periods of employment: 1
1. Between July 1, 1956, in the case of the Kentucky Employees 2
Retirement System, or July 1, 1958, in the case of the County 3
Employees Retirement System, and the effective date of participation by 4
the employer; or 5
2. With a public agency that did not participate in the Kentucky Employees 6
Retirement System but would have been eligible to participate under 7
KRS 61.520 or a political subdivision that did not participate in the 8
County Employees Retirement System but would have been eligible to 9
participate under KRS 78.530, provided the public agency or political 10
subdivision has merged with or been taken over by a participating 11
employer; 12
(b) State university service, provided the university does not participate in a state-13
administered retirement system and the university service being purchased 14
was in a nonteaching position that did not participate in a defined benefit 15
retirement program; 16
(c) 1. Up to ten (10) years of out-of-state service. "Out-of-state" means service 17
credited to a state or local government-administered public defined 18
benefit plan in another state that is not a defined benefit plan for 19
teachers. 20
2. Up to ten (10) years of out-of-state hazardous service. "Out-of-state 21
hazardous service" means service in a regular full-time position that was 22
credited to a defined benefit retirement plan administered by a state or 23
local government in another state, if the service could be certified as 24
hazardous pursuant to KRS 61.592 or 78.5520, as applicable. The 25
employee may purchase out-of-state hazardous service under this 26
subparagraph provided the employee is vested to receive benefits from 27 UNOFFICIAL COPY 25 RS BR 488
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the State Police Retirement System or hazardous duty benefits from the 1
Kentucky Employees Retirement System or the County Employees 2
Retirement System. 3
The employee must purchase out-of-state service or out-of-state hazardous 4
service in the system in which he or she is vested based solely upon the 5
service in that system; 6
(d) Active military duty, which means periods of active military duty in the 7
Armed Forces of the United States, provided: 8
1. The employee's military service was terminated in a manner other than 9
as described in 38 U.S.C. sec. 4304; and 10
2. The service has not been credited as free military service under 11
subsection (1) of this section; 12
(e) National Guard service. An employee may purchase one (1) month of service 13
for each six (6) months of service in the National Guard or the military 14
reserves of the United States. The service shall be treated as service earned 15
prior to participation in the system; 16
(f) Federal service. "Federal service" means service with the United States 17
government, that is not service in the Armed Forces; 18
(g) Seasonal, emergency, interim, probationary, or temporary employment or 19
part-time employment as provided by KRS 61.510(21) or 78.510(21) 20
averaging one hundred (100) or more hours of work per month on a calendar 21
or fiscal year basis. If the average number of hours of work is less than one 22
hundred (100) per month, the member may purchase credit for only those 23
months he or she receives creditable compensation for one hundred (100) 24
hours of work; 25
(h) Part-time employment in a noncertified position at a school board prior to the 26
1990-91 school year which averaged eighty (80) or more hours of work per 27 UNOFFICIAL COPY 25 RS BR 488
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month on a calendar or fiscal year basis. If the average number of hours of 1
work is less than eighty (80) per month, the noncertified employee of a school 2
board shall be allowed to purchase credit only for those months he or she 3
receives creditable compensation for eighty (80) hours of work; 4
(i) Any period of: 5
1. Authorized maternity leave without pay or sick leave without pay; 6
2. Unpaid leave authorized under the federal Family and Medical Leave 7
Act; 8
3. Approved educational leave; and 9
4. Agency-approved leave to work for a work-related labor organization if 10
the agency subsequently participated in the County Employees 11
Retirement System, but only if the board receives a favorable private 12
letter ruling from the United States Internal Revenue Service or a 13
favorable opinion letter from the United States Department of Labor; 14
(j) Non-participating employer service, which means periods of employment 15
with the following types of agencies provided the agency does not participate 16
in a state-administered retirement system: 17
1. A regional community services program for mental health organized and 18
operated under the provisions of KRS 210.370 to 210.480; 19
2. A community action agency created under KRS 273.405 to 273.453. 20
The service provided by this subparagraph shall be purchased in the 21
County Employees Retirement System; 22
3. An area development district created pursuant to KRS 147A.050; or 23
4. A business development corporation created pursuant to KRS 155.001 24
to 155.230, provided the system receives a favorable private letter ruling 25
from the United States Internal Revenue Service or a favorable opinion 26
letter from the United States Department of Labor; 27 UNOFFICIAL COPY 25 RS BR 488
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(k) Urban-county government service, which means employment in an urban-1
county government position that would qualify for hazardous duty coverage 2
under KRS 61.592 or 78.5520. The provisions of this paragraph shall only be 3
applicable to vested members participating in the State Police Retirement 4
System or in a hazardous position in the Kentucky Employees Retirement 5
System or the County Employees Retirement System; 6
(l) Periods of service as assistants to officers and employees of the General 7
Assembly for persons who were unable to acquire service under KRS 8
61.510(20) for service performed after January 1, 1960; 9
(m) Service as a volunteer in the Kentucky Peace Corps, created by KRS 154.1-10
720; and 11
(n) Employment with a vocational technical school in a noncertified part-time 12
position averaging eighty (80) or more hours per month, determined by using 13
the number of months actually worked within a calendar or fiscal year. The 14
service provided by this paragraph shall be purchased in the Kentucky 15
Employees Retirement System. 16
(6) (a) Non-qualified service. Provided the employee's membership date in the 17
system is prior to July 15, 2002, and provided the employee has total service 18
in all state-administered retirement systems of at least one hundred eighty 19
(180) months of service credit, the employee may purchase a combined 20
maximum total of five (5) years of service credit, known as non-qualified 21
service, which is not otherwise purchasable under any of the provisions of 22
KRS 16.505 to 16.652, 61.510 to 61.705, or 78.510 to 78.852. 23
(b) The service purchased under this paragraph shall not be used in determining a 24
retirement allowance until the member has accrued at least two hundred forty 25
(240) months of service, excluding service purchased under this subsection. If 26
the member does not accrue at least two hundred forty (240) months of 27 UNOFFICIAL COPY 25 RS BR 488
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service, excluding service purchased under this subsection, upon retirement, 1
death, or written request following termination, the payment, plus interest as 2
provided in KRS 16.560, 61.575, or 78.640, as applicable, shall be refunded. 3
(c) Months of employment in a full-time position that provides services for 4
Kentucky River Community Care, regardless of whether the member was 5
employed directly by Kentucky River Community Care or indirectly through 6
a third-party entity, in which the member did not participate in the Kentucky 7
Employees Retirement System for the period of employment, may count 8
toward attaining the necessary two hundred forty (240) months of service 9
required by paragraph (b) of this subsection. 10
(7) For purposes of service purchased under subsections (2) to (6) of this section: 11
(a) Except for subsection (6) of this section, the service must qualify as regular 12
full-time as provided by KRS 61.510 and 78.510; 13
(b) No service credit may be purchased for periods already credited to the system 14
or another public defined benefit retirement fund, including non-qualified 15
service purchased in another state-administered retirement system; 16
(c) Except as provided by paragraph (a)2.a. of subsection (9) of this section, the 17
employee payment for service purchases shall not be picked up, as described 18
in KRS 16.545(4), 61.560(4), or 78.610(4), by the employer; 19
(d) Except for service purchased under subsection (2) or (3) of this section, 20
service purchases made pursuant to this section may be purchased by the 21
entire amount of service available or by increments. Service purchases made 22
pursuant to subsections (2) and (3) of this section shall only be purchased by 23
the entire amount of service available; and 24
(e) Service purchases as provided by subsections (5)(b), (d) to (f), and (j)1. and 25
(6) of this section may be purchased in any system in which the member has 26
service credit. 27 UNOFFICIAL COPY 25 RS BR 488
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(8) (a) Employer purchase of past service. Any employer participating in the system 1
may purchase service credit, between July 1, 1956, in the case of the 2
Kentucky Employees Retirement System, or July 1, 1958, in the case of the 3
County Employees Retirement System, and the participation date of the 4
employer, for present employees of the county or department who have 5
elected coverage under KRS 61.525(2) or 78.540(1), provided the employee 6
began participating in the system prior to January 1, 2014. 7
(b) A Kentucky Employees Retirement System employer shall pay the cost of the 8
service credit within the fiscal year the election is made to purchase the 9
service credit. A County Employees Retirement System employer may 10
purchase the service, with interest at the rate actuarially assumed by the board, 11
over a period not to exceed ten (10) years. 12
(c) If an employer elects to purchase service under the provisions of this 13
subsection, any present employee who would be eligible to receive service 14
credit under the provisions of this subsection and has purchased service credit 15
under subsection (5)(a) of this section shall have his or her payment for the 16
service credit refunded with interest at the rate paid under KRS 61.575 or 17
78.640. 18
(d) Any payments made by an employer under this subsection shall be deposited 19
to the retirement allowance account of the system and these funds shall not be 20
considered accumulated contributions of the individual members. 21
(9) (a) An employee participating in the system may purchase service credit under 22
any of the provisions of KRS 16.505 to 16.652, 61.510 to 61.705, or 78.510 to 23
78.852 for which he or she is eligible to purchase, or as otherwise required by 24
38 U.S.C. ch. 43, by: 25
1. Making a lump-sum payment on a before-tax basis as provided in 26
subparagraph 3. of this paragraph, or on an after-tax basis if the 27 UNOFFICIAL COPY 25 RS BR 488
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employee is purchasing service credit under subsection (1) or (3) of this 1
section, service available pursuant to 38 U.S.C. ch. 43 not otherwise 2
provided for in this section, or grandfathered service as defined in 3
paragraph (b) of this subsection; 4
2. Entering into an agreement to purchase service credit through an 5
installment purchase of service agreement with the systems as provided 6
by paragraph (c) of this subsection: 7
a. On a before-tax basis in which the service is purchased pursuant to 8
the employer pick-up provisions in 26 U.S.C. sec. 414(h)(2); or 9
b. On an after-tax basis if the employee is purchasing service credit 10
under subsection (1) or (3) of this section, service available 11
pursuant to 38 U.S.C. ch. 43 not otherwise provided for in this 12
section, or grandfathered service as defined in paragraph (b) of this 13
subsection; or 14
3. Transferring funds to the system through a direct trustee-to-trustee 15
transfer as permitted under the applicable sections of the Internal 16
Revenue Code and any regulations or rulings issued thereunder, through 17
a direct rollover as contemplated by and permitted under 26 U.S.C. sec. 18
401(a)(31) and any regulations or rulings issued thereunder, or through a 19
rollover of funds pursuant to and permitted under the rules specified in 20
26 U.S.C. secs. 402(c) and 408(d)(3). The system shall accept the 21
transfer or rollover to the extent permitted under the rules specified in 22
the applicable provisions of the Internal Revenue Code and any 23
regulations and rulings issued thereunder. 24
(b) For purposes of this subsection, "grandfathered service" means service 25
purchases for which a member, whose membership date in the system is prior 26
to July 1, 1999, is eligible to purchase under KRS 16.505 to 16.652, 61.510 to 27 UNOFFICIAL COPY 25 RS BR 488
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61.705, or 78.510 to 78.852, that were available for all members of the system 1
to purchase on August 5, 1997. 2
(c) 1. For service purchased under a before-tax or after-tax installment 3
purchase of service agreement as provided by paragraph (a)2. of this 4
subsection, the cost of the service shall be computed in the same manner 5
as for a lump-sum payment which shall be the principal, except that 6
interest compounded annually at the actuarial rate in effect at the time 7
the member elects to make the purchase shall be added for the period 8
that the installments are to be made. 9
2. Multiple service purchases may be combined under a single installment 10
agreement, except that no employee may make more than one (1) 11
installment purchase at the same time. 12
3. For after-tax installment purchase of service agreements, the employee 13
may elect to stop the installment payments by notifying the system; may 14
have the installment purchase recalculated to add one (1) or more 15
additional service purchases; or may pay by lump sum the remaining 16
principal or a portion of the remaining principal. 17
4. Before-tax installment purchase of service agreements shall be 18
irrevocable, and the employee shall not be able to stop installment 19
payments or to pay off the remaining balance of the purchase of service 20
agreement, except upon termination of employment or death. 21
5. One (1) year of installment payments shall be made for each one 22
thousand dollars ($1,000) or any part thereof of the total cost, except 23
that the total period allowed for installments shall not be less than one 24
(1) year and shall not exceed five (5) years. 25
6. The employee shall pay the installments by payroll deduction for after-26
tax purchase of service agreements, and the employer shall pick up 27 UNOFFICIAL COPY 25 RS BR 488
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installments for before-tax purchase of service agreements. Upon 1
notification by the system, the employer shall report the installment 2
payments monthly continuously over each twelve (12) month period at 3
the same time as, but separate from, regular employee contributions on 4
the forms or by the computer format specified by the board. 5
7. The system shall determine how much of the total cost represents 6
payment for one (1) month of the service to be purchased and shall 7
credit one (1) month of service to the member's account each time this 8
amount has been paid. The first service credited shall represent the first 9
calendar month of the service to be purchased and each succeeding 10
month of service credit shall represent the succeeding months of that 11
service. 12
8. If the employee utilizing an installment purchase of service agreement 13
dies, retires, does not continue employment in a position required to 14
participate in the system, or elects to stop an after-tax installment 15
purchase of service agreement, the member, or in the case of death, the 16
beneficiary, shall have sixty (60) days to pay the remaining principal or 17
a portion of the remaining principal of the installment purchase of 18
service agreement by lump sum, subject to the restrictions of paragraph 19
(a)1. of this subsection, or by transfer of funds under paragraph (a)3. of 20
this subsection, except that payment by the member shall be filed with 21
the system prior to the member's effective retirement date. If the 22
member or beneficiary does not pay the remaining cost, the system shall 23
refund to the member or the beneficiary the payment, payments, or 24
portion of a payment that does not represent a full month of service 25
purchased, except as provided by subsection (6) of this section. 26
9. If the employer does not report installment payments on an employee 27 UNOFFICIAL COPY 25 RS BR 488
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for sixty (60) days for an after-tax installment purchase of service 1
agreement, except in the case of employees on military leave or sick 2
leave without pay, the installment purchase shall cease and the system 3
shall refund to the employee the payment, payments, or portion of a 4
payment that does not represent a full month of service purchased. 5
10. Installment payments of employees on military leave or sick leave 6
without pay shall be suspended during the period of leave and shall 7
resume without recalculation upon the employee's return from leave. 8
11. If payments have ceased under subparagraph 8. or 9. of this paragraph 9
and the member later becomes a participating employee in the County 10
Employees Retirement System, Kentucky Employees Retirement 11
System, or State Police Retirement System, the employee may complete 12
the adjusted original installment purchase by lump sum or installment 13
payments, subject to the restrictions of this subsection. If the employee 14
elects to renew the installment purchase, the cost of the remaining 15
service shall be recalculated in accordance with subsection (10) of this 16
section. 17
(d) Member payments, including interest, properly received pursuant to this 18
subsection, shall be deposited to the member's account and considered as 19
accumulated contributions of the individual member. 20
(10) (a) The cost of purchasing service credit under any provision of this section, 21
except as provided by subsections (1) to (3) of this section, shall be 22
determined by multiplying the higher of the employee's current rate of pay, 23
final rate of pay, or final compensation as of the end of the month in which 24
the purchase is made times the actuarial factor times the number of years of 25
service being purchased. The actuarial factor used to determine the cost of 26
purchasing service credit shall assume the earliest date the member may retire 27 UNOFFICIAL COPY 25 RS BR 488
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without a reduction in benefits and the cost-of-living adjustments provided to 1
members upon retirement. 2
(b) Service purchased on or after August 1, 2004, under the provisions of KRS 3
16.505 to 16.652, 61.510 to 61.705, or 78.510 to 78.852, except for service 4
purchased under subsections (1) to (3) of this section or service purchased as 5
described by paragraph (d) of this subsection, shall not be used to determine 6
eligibility for or the amount of the monthly insurance contribution under KRS 7
61.702 or 78.5536. 8
(c) For a member whose membership date is on or after August 1, 2004, service 9
purchased under the provisions of KRS 16.505 to 16.652, 61.510 to 61.705, or 10
78.510 to 78.852, except for service purchased under subsections (1) to (3) of 11
this section or service purchased as described by paragraph (d) of this 12
subsection: 13
1. Shall not be used to determine eligibility for a retirement allowance 14
under disability retirement, early retirement, normal retirement, or upon 15
death of the member under any of the provisions of KRS 16.505 to 16
16.652, 61.510 to 61.705, or 78.510 to 78.852; and 17
2. Shall only be used to determine the amount of the retirement allowance 18
of a member who is eligible for a retirement allowance under disability, 19
early retirement, normal retirement, or upon death of the member under 20
any of the provisions of KRS 16.505 to 16.652, 61.510 to 61.705, or 21
78.510 to 78.852, based on service earned as a participating employee. 22
(d) Paragraphs (b) and (c) of this subsection shall not apply to a member who was 23
bound by an educational contract as a conditional employee to the state of 24
Kentucky prior to December 31, 2003, regardless of membership date in the 25
system. Educational leave, seasonal service, or any other qualified service 26
purchased by a member with this classification under this section shall be 27 UNOFFICIAL COPY 25 RS BR 488
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used to determine eligibility for benefits, membership dates, and the amount 1
of benefit for: 2
1. A retirement allowance under disability retirement, early retirement, 3
normal retirement, or death under any of the provisions of KRS 16.505 4
to 16.652, 61.510 to 61.705, and 78.510 to 78.852; and 5
2. The monthly insurance contribution under KRS 61.702 or 78.5536. 6