UNOFFICIAL COPY 25 RS SB 58/GA
Page 1 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
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 25 RS SB 58/GA
Page 2 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
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
Kentucky Commission on Human Rights, or for any creditable 18
compensation paid in anticipation of settlement of an action before a 19
court of competent jurisdiction, the Personnel Board, or the Kentucky 20
Commission on Human Rights, including notices of violations of state 21
or federal wage and hour statutes or violations of state or federal 22
discrimination statutes, which shall be credited to the fiscal year during 23
which the wages were earned or should have been paid by the employer. 24
This subparagraph shall also include lump-sum payments for reinstated 25
wages pursuant to KRS 61.569, which shall be credited to the period 26
during which the wages were earned or should have been paid by the 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 3 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
employer; 1
3. Amounts which are not includable in the member's gross income by 2
virtue of the member having taken a voluntary salary reduction provided 3
for under applicable provisions of the Internal Revenue Code; and 4
4. Elective amounts for qualified transportation fringes paid or made 5
available on or after January 1, 2001, for calendar years on or after 6
January 1, 2001, that are not includable in the gross income of the 7
employee by reason of 26 U.S.C. sec. 132(f)(4); and 8
(c) Excludes: 9
1. Living allowances, expense reimbursements, lump-sum payments for 10
accrued vacation leave, and other items determined by the board; 11
2. For employees who begin participating on or after September 1, 2008, 12
lump-sum payments for compensatory time; and 13
3. Any salary or wages paid to an employee for services as a Kentucky 14
State Police school resource officer as defined by KRS 158.441; 15
(9) "Final compensation" means: 16
(a) For a member who begins participating before September 1, 2008, the 17
creditable compensation of a member during the three (3) fiscal years he or 18
she was paid at the highest average monthly rate divided by the number of 19
months of service credit during the three (3) year period, multiplied by twelve 20
(12); the three (3) years may be fractional and need not be consecutive. If the 21
number of months of service credit during the three (3) year period is less than 22
twenty-four (24), one (1) or more additional fiscal years shall be used; or 23
(b) For a member who begins participating on or after September 1, 2008, but 24
prior to January 1, 2014, the creditable compensation of the member during 25
the three (3) complete fiscal years he or she was paid at the highest average 26
monthly rate divided by three (3). Each fiscal year used to determine final 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 4 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
compensation must contain twelve (12) months of service credit. If the 1
member does not have three (3) complete fiscal years that each contain twelve 2
(12) months of service credit, then one (1) or more additional fiscal years, 3
which may contain less than twelve (12) months of service credit, shall be 4
added until the number of months in the final compensation calculation is at 5
least thirty-six (36) months; 6
(10) "Final rate of pay" means the actual rate upon which earnings of a member were 7
calculated during the twelve (12) month period immediately preceding the 8
member's effective retirement date, including employee contributions picked up 9
after August 1, 1982, pursuant to KRS 16.545(4). The rate shall be certified to the 10
system by the employer and the following equivalents shall be used to convert the 11
rate to an annual rate: two thousand eighty (2,080) hours for eight (8) hour 12
workdays, one thousand nine hundred fifty (1,950) hours for seven and one-half (7-13
1/2) hour workdays, two hundred sixty (260) days, fifty-two (52) weeks, twelve 14
(12) months, or one (1) year; 15
(11) "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
(12) "Retirement allowance" means the retirement payments to which a retired member 19
is entitled; 20
(13) "Actuarial equivalent" means a benefit of equal value when computed upon the 21
basis of actuarial tables adopted by the board. In cases of disability retirement, the 22
options authorized by KRS 61.635 shall be computed by adding ten (10) years to 23
the age of the member, unless the member has chosen the Social Security 24
adjustment option as provided for in KRS 61.635(8), in which case the member's 25
actual age shall be used. For members who began participating in the system prior 26
to January 1, 2014, no disability retirement option shall be less than the same option 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 5 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
computed under early retirement; 1
(14) "Authorized leave of absence" means any time during which a person is absent 2
from employment but retained in the status of an employee in accordance with the 3
personnel policy of the Department of Kentucky State Police; 4
(15) "Normal retirement date" means: 5
(a) For a member who begins participating before September 1, 2008, the first 6
day of the month following a member's fifty-fifth birthday, except that for 7
members over age fifty-five (55) on July 1, 1958, it shall mean January 1, 8
1959; or 9
(b) For a member who begins participating on or after September 1, 2008, the 10
first day of the month following a member's sixtieth birthday; 11
(16) "Disability retirement date" means the first day of the month following the last day 12
of paid employment; 13
(17) "Dependent child" means a child in the womb and a natural or legally adopted child 14
of the member who has neither attained age eighteen (18) nor married or who is an 15
unmarried full-time student who has not attained age twenty-two (22). Solely in the 16
cases where a member dies as a direct result of an act in line of duty as defined in 17
this section, dies as a result of a duty-related injury as defined in KRS 61.621, 18
becomes totally and permanently disabled as a direct result of an act in line of duty 19
as defined in this section, or becomes disabled as a result of a duty-related injury as 20
defined in KRS 61.621 and is eligible for the benefits provided by KRS 21
61.621(5)(a), "dependent child" also means a naturally or legally adopted disabled 22
child of the member, regardless of the child's age, if the child has been determined 23
to be eligible for federal Social Security disability benefits or is being claimed as a 24
qualifying child for tax purposes due to the child's total and permanent disability; 25
(18) "Optional allowance" means an actuarially equivalent benefit elected by the 26
member in lieu of all other benefits provided by KRS 16.505 to 16.652; 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 6 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
(19) "Act in line of duty" means: 1
(a) A single act occurring or a single thing done, which, as determined by the 2
board, was required in the performance of the duties specified in KRS 16.060; 3
(b) For employees in hazardous positions under KRS 61.592, a single act 4
occurring which was required in the performance of the principal duties of the 5
position as defined by the job description; or 6
(c) For employees participating in the State Police Retirement System and for 7
employees who are in hazardous positions under KRS 61.592, a single act of 8
violence committed against the employee that is found to be related to his or 9
her job duties, whether or not it occurs at his or her job site; 10
(20) "Early retirement date" means: 11
(a) For a member who begins participating before September 1, 2008, the 12
retirement date declared by a member who is not less than fifty (50) years of 13
age and has fifteen (15) years of service; or 14
(b) For a member who begins participating on or after September 1, 2008, but 15
prior to January 1, 2014, the retirement date declared by a member who is not 16
less than fifty (50) years of age and has fifteen (15) years of service credited 17
under KRS 16.543(1) or 61.543(1) or another state-administered retirement 18
system; 19
(21) "Member" means any officer included in the membership of the system as provided 20
under KRS 16.520 whose membership has not been terminated under KRS 61.535; 21
(22) "Regular full-time officers" means the occupants of positions as set forth in KRS 22
16.010; 23
(23) "Hazardous disability" as used in KRS 16.505 to 16.652 means a disability which 24
results in an employee's total incapacity to continue as an employee in a hazardous 25
position, but the employee is not necessarily deemed to be totally and permanently 26
disabled to engage in other occupations for remuneration or profit; 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 7 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
(24) "Current rate of pay" means the member's actual hourly, daily, weekly, biweekly, 1
monthly, or yearly rate of pay converted to an annual rate as defined in final rate of 2
pay. The rate shall be certified by the employer; 3
(25) "Beneficiary" means the person, persons, estate, trust, or trustee designated by the 4
member in accordance with KRS 61.542 or 61.705 to receive any available benefits 5
in the event of the member's death, except when used in reference to the sole 6
beneficiary of a special needs trust. As used in KRS 61.702, "beneficiary" does not 7
mean an estate, trust, or trustee; 8
(26) "Recipient" means the retired member, the person or persons designated as 9
beneficiary by the member and drawing a retirement allowance as a result of the 10
member's death, or a dependent child drawing a retirement allowance. An alternate 11
payee of a qualified domestic relations order shall not be considered a recipient, 12
except for purposes of KRS 61.623; 13
(27) "Person" means a natural person, including a sole beneficiary of a special needs 14
trust who is a single natural person designated by a member as his or her 15
beneficiary in accordance with KRS 61.542; 16
(28) "Retirement office" means the Kentucky Public Pensions Authority office building 17
in Frankfort, unless otherwise designated by the Kentucky Public Pensions 18
Authority; 19
(29) "Vested" for purposes of determining eligibility for purchasing service credit under 20
KRS 61.552 means the employee has at least forty-eight (48) months of service if 21
age sixty-five (65) or older or at least sixty (60) months of service if under the age 22
of sixty-five (65). For purposes of this subsection, "service" means service in the 23
systems administered by the Kentucky Retirement Systems and County Employees 24
Retirement Systems; 25
(30) "Last day of paid employment" means the last date employer and employee 26
contributions are required to be reported in accordance with KRS 16.543 or 61.543 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 8 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
to the retirement office in order for the employee to receive current service credit 1
for the month. Last day of paid employment does not mean a date the employee 2
receives payment for accrued leave, whether by lump sum or otherwise, if that date 3
occurs twenty-four (24) or more months after previous contributions; 4
(31) "Objective medical evidence" means reports of examinations or treatments; medical 5
signs which are anatomical, physiological, or psychological abnormalities that can 6
be observed; psychiatric signs which are medically demonstrable phenomena 7
indicating specific abnormalities of behavior, affect, thought, memory, orientation, 8
or contact with reality; or laboratory findings which are anatomical, physiological, 9
or psychological phenomena that can be shown by medically acceptable laboratory 10
diagnostic techniques, including but not limited to chemical tests, 11
electrocardiograms, electroencephalograms, X-rays, and psychological tests; 12
(32) "Fiscal year" of the system means the twelve (12) months from July 1 through the 13
following June 30, which shall also be the plan year. The "fiscal year" shall be the 14
limitation year used to determine contribution and benefit limits established by 26 15
U.S.C. sec. 415; 16
(33) "Participating" means an employee is currently earning service credit in the system 17
as provided in KRS 16.543; 18
(34) "Month" means a calendar month; 19
(35) "Membership date" means the date upon which the member began participating in 20
the system as provided by KRS 16.543; 21
(36) "Participant" means a member, as defined by subsection (21) of this section, or a 22
retired member, as defined by subsection (11) of this section; 23
(37) "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 25 RS SB 58/GA
Page 9 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
property rights to an alternate payee; 1
(38) "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
(39) "Accumulated employer credit" means the employer pay credit deposited to the 5
member's account and interest credited on such amounts as provided by KRS 6
16.583; 7
(40) "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, the 12
combined sum of the member's accumulated contributions and the member's 13
accumulated employer pay credit;[ and] 14
(41) "Monthly average pay" means: 15
(a) In the case of a member who dies as a direct result of an act in line of duty as 16
defined in this section or who dies as a result of a duty-related injury as 17
defined in KRS 61.621, the higher of the member's monthly final rate of pay 18
or the average monthly creditable compensation earned by the deceased 19
member during his or her last twelve (12) months of employment; or 20
(b) In the case where a member becomes totally and permanently disabled as a 21
direct result of an act in line of duty as defined in this section or becomes 22
disabled as a result of a duty-related injury as defined in KRS 61.621 and is 23
eligible for the benefits provided by KRS 61.621(5)(a), the higher of the 24
member's monthly final rate of pay or the average monthly creditable 25
compensation earned by the disabled member during his or her last twelve 26
(12) months of employment prior to the date the act in line of duty or duty-27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 10 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
related injury occurred; and 1
(42) "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 2. KRS 16.578 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) The member was eligible to retire under KRS 16.576, 16.577, or 16.583(6); 11
(b) The member was in active employment or on authorized leave of absence 12
with five (5) or more years of service credit and died prior to his or her normal 13
retirement date; or 14
(c) The member was not in active employment or on authorized leave of absence 15
with twelve (12) or more years of service credit and died prior to his or her 16
normal retirement date. 17
(2) If the beneficiary eligible for benefits as provided in subsection (1) of this section is 18
a single person or the sole beneficiary of a special needs trust, then the beneficiary 19
may elect to receive: 20
(a) A monthly benefit payable for the life of the beneficiary that is equal to the 21
benefit that would have been paid had the member retired immediately prior 22
to his or her date of death and elected to receive benefits payable under the 23
survivorship one hundred percent (100%) option as provided in KRS 24
61.635(2); 25
(b) A monthly benefit payable for the life of the beneficiary under the beneficiary 26
Social Security adjustment option as provided in KRS 61.635(9) that is the 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 11 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
actuarial equivalent to the amount computed under paragraph (a) of this 1
subsection; 2
(c) A monthly benefit payable for a period of sixty (60) months that is the 3
actuarial equivalent to the amount computed under paragraph (a) of this 4
subsection; 5
(d) A monthly benefit payable for a period of one hundred twenty (120) months 6
that is the actuarial equivalent to the amount computed under paragraph (a) of 7
this subsection; 8
(e) If the member began participating in the system prior to January 1, 2014, a 9
monthly benefit payable for: 10
1. Sixty (60) months certain; 11
2. One hundred twenty (120) months certain; 12
3. The actuarial equivalent refund; or 13
4. The Social Security adjustment option; 14
that is equivalent to the benefit the member would have been entitled to 15
receive based on his or her years of service and final compensation at the date 16
of his or her death reduced by the survivorship fifty percent (50%) factor as 17
provided for in KRS 61.635(4), then reduced by fifty percent (50%), and that 18
is the actuarial equivalent to the amount computed under paragraph (a) of this 19
subsection; or 20
(f) The higher of a refund of the member's accumulated account balance and 21
interest as described in KRS 61.625(1) or a one (1) time lump-sum payment 22
which shall be the actuarial equivalent of the amount payable under paragraph 23
(a) of this subsection for a period of sixty (60) months. 24
(3) If the beneficiary eligible for benefits as provided in subsection (1) of this section 25
are multiple beneficiaries or a trust, other than a special needs trust, then the 26
multiple beneficiaries by consensus or the trustee may elect to receive the actuarial 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 12 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
equivalent amounts payable under subsection (2)(c), (d), (e), or (f) of this section 1
using the assumption that the beneficiary's age is the same as the member's age. 2
(4) If the beneficiary eligible for benefits as provided in subsection (1) of this section is 3
the member's estate, then the beneficiary shall receive the higher of a refund of the 4
member's accumulated account balance and interest as described in KRS 61.625(1) 5
or the one (1) time lump-sum payment payable under subsection (2)(f) of this 6
section, using the assumption that the beneficiary's age is the same as the member's 7
age. 8
(5) Payments of taxable distributions made pursuant to this section shall be subject to 9
state and federal tax as appropriate. 10
Section 3. KRS 61.510 is amended to read as follows: 11
As used in KRS 61.510 to 61.705, unless the context otherwise requires: 12
(1) "System" means the Kentucky Employees Retirement System created by KRS 13
61.510 to 61.705; 14
(2) "Board" means the board of trustees of the system as provided in KRS 61.645; 15
(3) "Department" means any state department or board or agency participating in the 16
system in accordance with appropriate executive order, as provided in KRS 61.520. 17
For purposes of KRS 61.510 to 61.705, the members, officers, and employees of the 18
General Assembly and any other body, entity, or instrumentality designated by 19
executive order by the Governor, shall be deemed to be a department, 20
notwithstanding whether said body, entity, or instrumentality is an integral part of 21
state government; 22
(4) "Examiner" means the medical examiners as provided in KRS 61.665; 23
(5) "Employee" means the members, officers, and employees of the General Assembly 24
and every regular full-time, appointed or elective officer or employee of a 25
participating department, including the Department of Military Affairs. The term 26
does not include persons engaged as independent contractors, seasonal, emergency, 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 13 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
temporary, interim, and part-time workers. In case of any doubt, the board shall 1
determine if a person is an employee within the meaning of KRS 61.510 to 61.705; 2
(6) "Employer" means a department or any authority of a department having the power 3
to appoint or select an employee in the department, including the Senate and the 4
House of Representatives, or any other entity, the employees of which are eligible 5
for membership in the system pursuant to KRS 61.525; 6
(7) "State" means the Commonwealth of Kentucky; 7
(8) "Member" means any employee who is included in the membership of the system 8
or any former employee whose membership has not been terminated under KRS 9
61.535; 10
(9) "Service" means the total of current service and prior service as defined in this 11
section; 12
(10) "Current service" means the number of years and months of employment as an 13
employee, on and after July 1, 1956, except that for members, officers, and 14
employees of the General Assembly this date shall be January 1, 1960, for which 15
creditable compensation is paid and employee contributions deducted, except as 16
otherwise provided, and each member, officer, and employee of the General 17
Assembly shall be credited with a month of current service for each month he or 18
she serves in the position; 19
(11) "Prior service" means the number of years and completed months, expressed as a 20
fraction of a year, of employment as an employee, prior to July 1, 1956, for which 21
creditable compensation was paid; except that for members, officers, and 22
employees of the General Assembly, this date shall be January 1, 1960. An 23
employee shall be credited with one (1) month of prior service only in those months 24
he or she received compensation for at least one hundred (100) hours of work; 25
provided, however, that each member, officer, and employee of the General 26
Assembly shall be credited with a month of prior service for each month he or she 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 14 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
served in the position prior to January 1, 1960. Twelve (12) months of current 1
service in the system are required to validate prior service; 2
(12) "Accumulated contributions" at any time means the sum of all amounts deducted 3
from the compensation of a member and credited to his or her individual account in 4
the members' account, including employee contributions picked up after August 1, 5
1982, pursuant to KRS 61.560(4), together with interest credited, on such amounts 6
and any other amounts the member shall have contributed thereto, including interest 7
credited thereon. For members who begin participating on or after September 1, 8
2008, "accumulated contributions" shall not include employee contributions that are 9
deposited into accounts established pursuant to 26 U.S.C. sec. 401(h) within the 10
funds established in KRS 16.510 and 61.515, as prescribed by KRS 61.702(3)(b); 11
(13) "Creditable compensation": 12
(a) Means all salary, wages, tips to the extent the tips are reported for income tax 13
purposes, and fees, including payments for compensatory time, paid to the 14
employee as a result of services performed for the employer or for time during 15
which the member is on paid leave, which are includable on the member's 16
federal form W-2 wage and tax statement under the heading "wages, tips, 17
other compensation," including employee contributions picked up after 18
August 1, 1982, pursuant to KRS 61.560(4). For members of the General 19
Assembly, it shall mean all amounts which are includable on the member's 20
federal form W-2 wage and tax statement under the heading "wages, tips, 21
other compensation," including employee contributions picked up after 22
August 1, 1982, pursuant to KRS 6.505(4) or 61.560(4); 23
(b) Includes: 24
1. Lump-sum bonuses, severance pay, or employer-provided payments for 25
purchase of service credit, which shall be averaged over the employee's 26
total service with the system in which it is recorded if it is equal to or 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 15 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
greater than one thousand dollars ($1,000); 1
2. Cases where compensation includes maintenance and other perquisites, 2
but the board shall fix the value of that part of the compensation not paid 3
in money; 4
3. Lump-sum payments for creditable compensation paid as a result of an 5
order of a court of competent jurisdiction, the Personnel Board, or the 6
Kentucky Commission on Human Rights, or for any creditable 7
compensation paid in anticipation of settlement of an action before a 8
court of competent jurisdiction, the Personnel Board, or the Kentucky 9
Commission on Human Rights, including notices of violations of state 10
or federal wage and hour statutes or violations of state or federal 11
discrimination statutes, which shall be credited to the fiscal year during 12
which the wages were earned or should have been paid by the employer. 13
This subparagraph shall also include lump-sum payments for reinstated 14
wages pursuant to KRS 61.569, which shall be credited to the period 15
during which the wages were earned or should have been paid by the 16
employer; 17
4. Amounts which are not includable in the member's gross income by 18
virtue of the member having taken a voluntary salary reduction provided 19
for under applicable provisions of the Internal Revenue Code; and 20
5. Elective amounts for qualified transportation fringes paid or made 21
available on or after January 1, 2001, for calendar years on or after 22
January 1, 2001, that are not includable in the gross income of the 23
employee by reason of 26 U.S.C. sec. 132(f)(4); and 24
(c) Excludes: 25
1. Living allowances, expense reimbursements, lump-sum payments for 26
accrued vacation leave, and other items determined by the board; 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 16 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
2. For employees who begin participating on or after September 1, 2008, 1
lump-sum payments for compensatory time; 2
3. For employees who begin participating on or after August 1, 2016, 3
nominal fees paid for services as a volunteer; and 4
4. Any salary or wages paid to an employee for services as a Kentucky 5
State Police school resource officer as defined by KRS 158.441; 6
(14) "Final compensation" of a member means: 7
(a) For a member who begins participating before September 1, 2008, who is 8
employed in a nonhazardous position, the creditable compensation of the 9
member during the five (5) fiscal years he or she was paid at the highest 10
average monthly rate divided by the number of months of service credit 11
during that five (5) year period multiplied by twelve (12). The five (5) years 12
may be fractional and need not be consecutive. If the number of months of 13
service credit during the five (5) year period is less than forty-eight (48), one 14
(1) or more additional fiscal years shall be used; 15
(b) For a member who is employed in a nonhazardous position, whose effective 16
retirement date is between August 1, 2001, and January 1, 2009, and whose 17
total service credit is at least twenty-seven (27) years and whose age and years 18
of service total at least seventy-five (75), final compensation means the 19
creditable compensation of the member during the three (3) fiscal years the 20
member was paid at the highest average monthly rate divided by the number 21
of months of service credit during that three (3) years period multiplied by 22
twelve (12). The three (3) years may be fractional and need not be 23
consecutive. If the number of months of service credit during the three (3) 24
year period is less than twenty-four (24), one (1) or more additional fiscal 25
years shall be used. Notwithstanding the provision of KRS 61.565, the 26
funding for this paragraph shall be provided from existing funds of the 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 17 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
retirement allowance; 1
(c) For a member who begins participating before September 1, 2008, who is 2
employed in a hazardous position, as provided in KRS 61.592, the creditable 3
compensation of the member during the three (3) fiscal years he or she was 4
paid at the highest average monthly rate divided by the number of months of 5
service credit during that three (3) year period multiplied by twelve (12). The 6
three (3) years may be fractional and need not be consecutive. If the number 7
of months of service credit during the three (3) year period is less than twenty-8
four (24), one (1) or more additional fiscal years shall be used; 9
(d) For a member who begins participating on or after September 1, 2008, but 10
prior to January 1, 2014, who is employed in a nonhazardous position, the 11
creditable compensation of the member during the five (5) complete fiscal 12
years immediately preceding retirement divided by five (5). Each fiscal year 13
used to determine final compensation must contain twelve (12) months of 14
service credit. If the member does not have five (5) complete fiscal years that 15
each contain twelve (12) months of service credit, then one (1) or more 16
additional fiscal years, which may contain less than twelve (12) months of 17
service credit, shall be added until the number of months in the final 18
compensation calculation is at least sixty (60) months; or 19
(e) For a member who begins participating on or after September 1, 2008, but 20
prior to January 1, 2014, who is employed in a hazardous position as provided 21
in KRS 61.592, the creditable compensation of the member during the three 22
(3) complete fiscal years he or she was paid at the highest average monthly 23
rate divided by three (3). Each fiscal year used to determine final 24
compensation must contain twelve (12) months of service credit. If the 25
member does not have three (3) complete fiscal years that each contain twelve 26
(12) months of service credit, then one (1) or more additional fiscal years, 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 18 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
which may contain less than twelve (12) months of service credit, shall be 1
added until the number of months in the final compensation calculation is at 2
least thirty-six (36) months; 3
(15) "Final rate of pay" means the actual rate upon which earnings of an employee were 4
calculated during the twelve (12) month period immediately preceding the 5
member's effective retirement date, including employee contributions picked up 6
after August 1, 1982, pursuant to KRS 61.560(4). The rate shall be certified to the 7
system by the employer and the following equivalents shall be used to convert the 8
rate to an annual rate: two thousand eighty (2,080) hours for eight (8) hour 9
workdays, nineteen hundred fifty (1,950) hours for seven and one-half (7-1/2) hour 10
workdays, two hundred sixty (260) days, fifty-two (52) weeks, twelve (12) months, 11
one (1) year; 12
(16) "Retirement allowance" means the retirement payments to which a member is 13
entitled; 14
(17) "Actuarial equivalent" means a benefit of equal value when computed upon the 15
basis of the actuarial tables that are adopted by the board. In cases of disability 16
retirement, the options authorized by KRS 61.635 shall be computed by adding ten 17
(10) years to the age of the member, unless the member has chosen the Social 18
Security adjustment option as provided for in KRS 61.635(8), in which case the 19
member's actual age shall be used. For members who began participating in the 20
system prior to January 1, 2014, no disability retirement option shall be less than 21
the same option computed under early retirement; 22
(18) "Normal retirement date" means the sixty-fifth birthday of a member, unless 23
otherwise provided in KRS 61.510 to 61.705; 24
(19) "Fiscal year" of the system means the twelve (12) months from July 1 through the 25
following June 30, which shall also be the plan year. The "fiscal year" shall be the 26
limitation year used to determine contribution and benefit limits as established by 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 19 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
26 U.S.C. sec. 415; 1
(20) "Officers and employees of the General Assembly" means the occupants of those 2
positions enumerated in KRS 6.150. The term shall also apply to assistants who 3
were employed by the General Assembly for at least one (1) regular legislative 4
session prior to July 13, 2004, who elect to participate in the retirement system, and 5
who serve for at least six (6) regular legislative sessions. Assistants hired after July 6
13, 2004, shall be designated as interim employees; 7
(21) "Regular full-time positions," as used in subsection (5) of this section, shall mean 8
all positions that average one hundred (100) or more hours per month determined 9
by using the number of months actually worked within a calendar or fiscal year, 10
including all positions except: 11
(a) Seasonal positions, which although temporary in duration, are positions which 12
coincide in duration with a particular season or seasons of the year and which 13
may recur regularly from year to year, the period of time shall not exceed nine 14
(9) months; 15
(b) Emergency positions which are positions utilized by the employer during: 16
1. An emergency as determined by the employer for a period not 17
exceeding thirty (30) working days and are nonrenewable; or 18
2. A state of emergency declared by the President of the United States or 19
the Governor of the Commonwealth of Kentucky that are created or 20
filled specifically for addressing the employer's needs during and as a 21
result of the declared emergency; 22
(c) Temporary positions which are positions of employment with a participating 23
department for a period of time not to exceed nine (9) months and are 24
nonrenewable; 25
(d) Part-time positions which are positions which may be permanent in duration, 26
but which require less than a calendar or fiscal year average of one hundred 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 20 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
(100) hours of work per month, determined by using the number of months 1
actually worked within a calendar or fiscal year, in the performance of duty; 2
and 3
(e) Interim positions which are positions established for a one-time or recurring 4
need not to exceed nine (9) months; 5
(22) "Vested" for purposes of determining eligibility for purchasing service credit under 6
KRS 61.552 means the employee has at least forty-eight (48) months of service if 7
age sixty-five (65) or older or at least sixty (60) months of service if under the age 8
of sixty-five (65). For purposes of this subsection, "service" means service in the 9
systems administered by the Kentucky Retirement Systems and County Employees 10
Retirement System; 11
(23) "Parted employer" means a department, portion of a department, board, or agency, 12
such as Outwood Hospital and School, which previously participated in the system, 13
but due to lease or other contractual arrangement is now operated by a publicly held 14
corporation or other similar organization, and therefore is no longer participating in 15
the system. The term "parted employer" shall not include a department, board, or 16
agency that ceased participation in the system pursuant to KRS 61.522; 17
(24) "Retired member" means any former member receiving a retirement allowance or 18
any former member who has filed the necessary documents for retirement benefits 19
and is no longer contributing to the retirement system; 20
(25) "Current rate of pay" means the member's actual hourly, daily, weekly, biweekly, 21
monthly, or yearly rate of pay converted to an annual rate as defined in final rate of 22
pay. The rate shall be certified by the employer; 23
(26) "Beneficiary" means the person or persons,[ or] estate,[ or] trust, or trustee 24
designated by the member in accordance with KRS 61.542 or 61.705 to receive any 25
available benefits in the event of the member's death, except when used in 26
reference to the sole beneficiary of a special needs trust. As used in KRS 61.702, 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 21 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
"beneficiary" does not mean an estate, trust, or trustee; 1
(27) "Recipient" means the retired member or the person or persons designated as 2
beneficiary by the member and drawing a retirement allowance as a result of the 3
member's death or a dependent child drawing a retirement allowance. An alternate 4
payee of a qualified domestic relations order shall not be considered a recipient, 5
except for purposes of KRS 61.623; 6
(28) "Level percentage of payroll amortization method" means a method of determining 7
the annual amortization payment on the unfunded actuarial accrued liability as 8
expressed as a percentage of payroll over a set period of years but that may be 9
converted to a dollar value for purposes of KRS 61.565(1)(d). Under this method, 10
the percentage of payroll shall be projected to remain constant for all years 11
remaining in the set period of time and the unfunded actuarially accrued liability 12
shall be projected to be fully amortized at the conclusion of the set period of years; 13
(29) "Increment" means twelve (12) months of service credit which are purchased. The 14
twelve (12) months need not be consecutive. The final increment may be less than 15
twelve (12) months; 16
(30) "Person" means a natural person, including a sole beneficiary of a special needs 17
trust who is a single natural person designated by a member as his or her 18
beneficiary in accordance with KRS 61.542; 19
(31) "Retirement office" means the Kentucky Public Pensions Authority's office 20
building in Frankfort, unless otherwise designated by the Kentucky Public Pensions 21
Authority; 22
(32) "Last day of paid employment" means the last date employer and employee 23
contributions are required to be reported in accordance with KRS 16.543, 61.543, or 24
78.615 to the retirement office in order for the employee to receive current service 25
credit for the month. Last day of paid employment does not mean a date the 26
employee receives payment for accrued leave, whether by lump sum or otherwise, 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 22 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
if that date occurs twenty-four (24) or more months after previous contributions; 1
(33) "Objective medical evidence" means reports of examinations or treatments; medical 2
signs which are anatomical, physiological, or psychological abnormalities that can 3
be observed; psychiatric signs which are medically demonstrable phenomena 4
indicating specific abnormalities of behavior, affect, thought, memory, orientation, 5
or contact with reality; or laboratory findings which are anatomical, physiological, 6
or psychological phenomena that can be shown by medically acceptable laboratory 7
diagnostic techniques, including but not limited to chemical tests, 8
electrocardiograms, electroencephalograms, X-rays, and psychological tests; 9
(34) "Participating" means an employee is currently earning service credit in the system 10
as provided in KRS 61.543; 11
(35) "Month" means a calendar month; 12
(36) "Membership date" means: 13
(a) The date upon which the member began participating in the system as 14
provided in KRS 61.543; 15
(b) For a member electing to participate in the system pursuant to KRS 16
196.167(4) or 311A.022(2) who has not previously participated in the system 17
or the Kentucky Teachers' Retirement System, the date the member began 18
participating in a defined contribution plan that meets the requirements of 26 19
U.S.C. sec. 403(b); 20
(c) For members bound by an educational contract as a conditional employee to 21
the state of Kentucky prior to December 31, 2003, the date on which the 22
educational contract became effective; or 23
(d) For a member participating in the system pursuant to KRS 31.045, the earlier 24
of the date upon which the member began participating in the system under 25
paragraph (a) of this subsection or the date the member began employment 26
with the Louisville and Jefferson County Public Defender Corporation; 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 23 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
(37) "Participant" means a member, as defined by subsection (8) of this section, or a 1
retired member, as defined by subsection (24) of this section; 2
(38) "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
(39) "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
(40) "Accumulated employer credit" mean the employer pay credit deposited to the 11
member's account and interest credited on such amounts as provided by KRS 12
16.583 and 61.597; 13
(41) "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 16.583 and 61.597, 18
the combined sum of the member's accumulated contributions and the 19
member's accumulated employer credit; 20
(42) "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 without receipt of compensation for services rendered, 24
except for reimbursement of actual expenses, payment of a nominal fee to 25
offset the costs of performing the voluntary services, or both; and 26
(b) If a retired member, does not become an employee, leased employee, or 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 24 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
independent contractor of the employer for which he or she is performing 1
volunteer services for a period of at least twelve (12) months following the 2
retired member's most recent retirement date; 3
(43) "Nominal fee" means compensation earned for services as a volunteer that does not 4
exceed five hundred dollars ($500) per month with each participating employer. 5
Compensation earned for services as a volunteer from more than one (1) 6
participating employer during a month shall not be aggregated to determine whether 7
the compensation exceeds the five hundred dollars ($500) per month maximum 8
provided by this subsection; 9
(44) "Nonhazardous position" means a position that does not meet the requirements of 10
KRS 61.592 or has not been approved by the board as a hazardous position; 11
(45) "Monthly average pay" means: 12
(a) In the case of a member who dies as a direct result of an act in line of duty as 13
defined in KRS 16.505 or who dies as a result of a duty-related injury as 14
defined in KRS 61.621, the higher of the member's monthly final rate of pay 15
or the average monthly creditable compensation earned by the deceased 16
member during his or her last twelve (12) months of employment; or 17
(b) In the case where a member becomes totally and permanently disabled as a 18
direct result of an act in line of duty as defined in KRS 16.505 or becomes 19
disabled as a result of a duty-related injury as defined in KRS 61.621 and is 20
eligible for the benefits provided by KRS 61.621(5)(a), the higher of the 21
member's monthly final rate of pay or the average monthly creditable 22
compensation earned by the disabled member during his or her last twelve 23
(12) months of employment prior to the date the act in line of duty or duty-24
related injury occurred; 25
(46) "Authority" means the Kentucky Public Pensions Authority as provided by KRS 26
61.505; 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 25 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
(47) "Executive director" means the executive director of the Kentucky Public Pensions 1
Authority; 2
(48) "Instructional staff" means the employees of a state college or university 3
participating under KRS 61.520 who are: 4
(a) Faculty; 5
(b) Staff responsible for teaching; or 6
(c) Other individuals employed in an administrative position that is eligible for 7
participation in the Teachers' Insurance and Annuity Association (TIAA) of 8
the Teachers' Retirement System; 9
(49) "Agency reporting official" means the person designated by the participating 10
employer who shall be responsible for forwarding all employer and employee 11
contributions and a record of the contributions to the System and for performing 12
other administrative duties pursuant to KRS 61.510 to 61.705;[ and] 13
(50) "Gainful employment" means work in any capacity that is or may be performed 14
with regularity and is or may be usually done for pay, whether pay is received or 15
not received, including seasonal, volunteer, part-time, and on-call work; and 16
(51) "Special needs trust" means a trust described in 42 U.S.C. sec. 1396p(d)(4)(A). 17
Any reference to a trust includes a special needs trust, unless the context 18
otherwise requires. 19
Section 4. KRS 61.623 is amended to read as follows: 20
(1) A recipient who begins receiving a retirement allowance August 1, 2000, or after, 21
from the Kentucky Employees Retirement System, the County Employees 22
Retirement System, or the State Police Retirement System shall have the retirement 23
allowance paid by electronic fund transfer to a financial institution designated by 24
the recipient except as provided by subsection (5) of this section. 25
(2) When an individual becomes eligible to receive a monthly retirement allowance, the 26
retirement system shall provide an authorization for deposit of retirement payment 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 26 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
form to the recipient to have the monthly retirement allowance deposited to an 1
account in a financial institution. 2
(3) The recipient shall provide the information and authorization required for the 3
electronic transfer of funds from the State Treasurer's office to the designated 4
financial institution. 5
(4) At any time while receiving a retirement allowance, the recipient may change the 6
designated institution by completing a new authorization for deposit of retirement 7
payment form and filing the form at the retirement office in Frankfort. The last 8
authorization for deposit of retirement payment on file at the retirement office shall 9
control the electronic transfer of the recipient's retirement allowance. 10
(5) (a) A recipient may request to be paid by check issued by the State Treasurer 11
instead of by electronic transfer by completing and filing at the retirement 12
office a request for payment by check form. 13
(b) The request shall be approved if: 14
1. The recipient certifies that he or she does not currently have an account 15
with a financial institution;[ or] 16
2. The recipient's bank certifies that it does not participate in the electronic 17
funds transfer program; or 18
3. The recipient is the sole beneficiary of a special needs trust, and the 19
trustee of that trust certifies that a check may be made payable to the 20
sole beneficiary of a special needs trust. 21
(c) The retirement office shall, every five (5) years, require the recipient to certify 22
that the original conditions under which he or she requested payment by 23
check continue. If the original conditions do not exist, the recipient shall 24
complete an authorization for direct deposit of retirement payment form and 25
file it with the retirement office. 26
Section 5. KRS 61.635 is amended to read as follows: 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 27 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
(1) Each member shall have the right to elect to have his or her retirement allowance 1
payable under any one (1) of the options set forth in this section in lieu of the 2
retirement allowance otherwise payable to the member upon retirement under any 3
of the provisions of KRS 16.505 to 16.652, 61.510 to 61.705, and 78.510 to 78.852. 4
The amount of any optional retirement allowance shall be actuarially equivalent to 5
the amount of retirement allowance otherwise payable to the member. 6
(2) Survivorship one hundred percent (100%). The member may elect to receive a 7
decreased retirement allowance during his or her lifetime and have the retirement 8
allowance continued after the member's death to his or her beneficiary during the 9
lifetime of the person. 10
(3) Survivorship sixty-six and two-thirds percent (66-2/3%). The member may elect to 11
receive a decreased retirement allowance during his or her lifetime and have two-12
thirds (2/3) of the retirement allowance continue after the member's death to his or 13
her beneficiary during the lifetime of the person. 14
(4) Survivorship fifty percent (50%). The member may elect to receive a decreased 15
retirement allowance during his or her lifetime and have one-half (1/2) of the 16
retirement allowance continued after the member's death to his or her beneficiary 17
during the lifetime of the person. 18
(5) Life with ten (10) years certain. The member less than age seventy-six (76) may 19
elect to receive a monthly retirement allowance during his or her lifetime which 20
shall guarantee payments for one hundred twenty (120) months. If the member dies 21
before receiving payments for one hundred twenty (120) months, the member's 22
beneficiary shall receive the remaining payments monthly, for the duration of the 23
one hundred twenty (120) months' period. However, if the trust is designated as 24
beneficiary, the trustee of the trust may elect to receive a lump-sum payment which 25
shall be the actuarial equivalent to the remaining payments, or the trustee may elect 26
to continue the remaining monthly payments to the trust of the member. If the estate 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 28 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
is designated as beneficiary, the estate shall receive a lump-sum payment which 1
shall be the actuarial equivalent to the remaining payments. 2
(6) Life with fifteen (15) years certain. The member less than age sixty-eight (68) may 3
elect to receive a monthly retirement allowance during his or her lifetime which 4
shall guarantee payments for one hundred eighty (180) months. If the member dies 5
before receiving payments for one hundred eighty (180) months, the member's 6
beneficiary shall receive the remaining payments monthly for the duration of the 7
one hundred eighty (180) months' period. However, if the trust is designated as 8
beneficiary, the trustee of the trust may elect to receive a lump-sum payment which 9
shall be the actuarial equivalent to the remaining payments, or the trustee may elect 10
to continue the remaining payments to the trust of the member. If the estate is 11
designated as beneficiary, the estate shall receive a lump-sum payment which shall 12
be the actuarial equivalent to the remaining payments. 13
(7) Life with twenty (20) years certain. The member less than age sixty-two (62) may 14
elect to receive a monthly retirement allowance during his or her lifetime which 15
shall guarantee payments for two hundred forty (240) months. If the member dies 16
before receiving payments for two hundred forty (240) months, the member's 17
beneficiary shall receive the remaining payments for the duration of the two 18
hundred forty (240) months period. However, if the trust is beneficiary, the trustee 19
of the trust may elect to receive a lump-sum payment which shall be the actuarial 20
equivalent to the remaining payments, or the trustee may elect to continue the 21
remaining payments to the trust of the member. If the estate is designated as 22
beneficiary, the estate shall receive a lump-sum payment which shall be the 23
actuarial equivalent to the remaining payments. 24
(8) Social Security adjustment options. These options shall be available to any member 25
who has not attained age sixty-two (62) as follows: 26
(a) No survivor rights. The member may elect to receive an increased retirement 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 29 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
allowance from his or her effective retirement date through the month he or 1
she attains age sixty-two (62) at which time his or her retirement allowance 2
shall be decreased for the remainder of his or her lifetime; 3
(b) Survivor rights. The member may elect to receive an increased retirement 4
allowance from his or her effective retirement date through the month he or 5
she attains age sixty-two (62) based on the option payable under subsection 6
(2) of this section, if the retirement allowance shall be decreased in the month 7
following the month he or she attains age sixty-two (62), or the month 8
following the month he or she would have attained age sixty-two (62), in 9
event of the member's death, and have the retirement allowance continue after 10
the member's death to his or her beneficiary during the lifetime of the person. 11
(9) Beneficiary Social Security adjustment option. This option is available to the 12
beneficiary of a deceased member if the beneficiary, who is a person, has not 13
attained age sixty (60), and is eligible to receive Social Security payments at age 14
sixty (60). The beneficiary may elect to receive during his or her lifetime an 15
increased retirement allowance based on his or her annual benefit payable for life. 16
The payment shall begin on his or her effective retirement date and continue 17
through the month he or she attains age sixty (60) at which time his or her 18
retirement allowance shall be decreased for the remainder of his or her lifetime. 19
(10) Pop-up option. The member may elect to receive a decreased retirement allowance 20
during his or her lifetime and have the retirement allowance continued after the 21
member's death to his or her beneficiary during the lifetime of the person. If the 22
beneficiary dies prior to the member, or if the beneficiary is the member's spouse 23
and they divorce, the member's retirement allowance shall increase to the amount 24
that would have been payable as a single life annuity. 25
(11) Actuarial equivalent refund. A member who began participating in the system prior 26
to January 1, 2014, may elect to receive a one (1) time lump-sum payment which 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 30 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
shall be the actuarial equivalent of the amount payable for a period of sixty (60) 1
months under KRS 61.595 (1). 2
(12) Partial lump-sum option. 3
(a) No survivor rights. A member may elect to receive a one-time lump-sum 4
payment equal to twelve (12), twenty-four (24), thirty-six (36), forty-eight 5
(48), or sixty (60) monthly retirement allowances payable under the 6
applicable retirement formula for the system and receive a reduced monthly 7
retirement allowance payable for his or her lifetime. The lump-sum payment 8
shall be paid in the month the first monthly retirement allowance is payable. 9
(b) Survivor rights. A member may elect to receive a one-time lump-sum 10
payment equal to twelve (12), twenty-four (24), thirty-six (36), forty-eight 11
(48), or sixty (60) monthly retirement allowances payable under subsection 12
(2) of this section and receive a reduced monthly retirement allowance 13
payable for his or her lifetime. The lump-sum payment shall be paid in the 14
month the first monthly retirement allowance is payable. The reduced 15
retirement allowance shall be continued after the member's death to his or her 16
beneficiary during the lifetime of the person. 17
(c) In order to explain the partial lump-sum option to members, the Authority 18
shall: 19
1. Provide, for all retirement estimates that include the partial lump-sum 20
option, including estimates calculated by a member using an automatic 21
estimator available on the Authority's website, the additional months of 22
service a member would have to be employed in order to recoup the 23
actuarial reduction in his or her monthly retirement allowance from 24
selecting a partial lump-sum option at each payment level; and 25
2. Prepare and make available to all members and participating employers 26
in the form of a paper or electronic pamphlet or booklet a summary of 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 31 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
the partial lump-sum option, written in a manner that can be understood 1
by the average member and sufficiently accurate and comprehensive to 2
reasonably apprise them of the benefits and potential consequences, 3
including federal tax consequences, of taking a partial lump-sum option. 4
(13) The other provisions of this section notwithstanding, the beneficiary of a retired 5
member of the General Assembly shall, after the member's death, receive sixty-six 6
and two-thirds percent (66-2/3%) of the member's retirement allowance during his 7
or her lifetime if the member of the General Assembly began participating in the 8
system prior to January 1, 2014, and has elected this option and has made 9
contributions in accordance with subsection (14) of this section and of KRS 61.560. 10
The retirement allowance of the retired member of the General Assembly shall not 11
be actuarially reduced to provide for this survivor benefit. 12
(14) A member of the General Assembly who began participating in the system prior to 13
January 1, 2014, who wishes to obtain the survivorship option specified in 14
subsection (13) of this section shall so notify the Kentucky Public Pensions 15
Authority: 16
(a) Within thirty (30) days after first becoming a member of the General 17
Assembly if he or she is not a member of the General Assembly on July 15, 18
1980; or 19
(b) Within thirty (30) days after July 15, 1980, if he or she is a member of the 20
General Assembly on July 15, 1980. 21
(15) The system shall forward to members of the General Assembly a form on which a 22
member who began participating in the system prior to January 1, 2014, may elect 23
the option provided for in subsections (13) and (14) of this section. 24
(16) The options described in subsections (2), (3), (4), (8)(b), (10), (12)(b), and (13) of 25
this section shall be extended to the member only if the designated beneficiary is a 26
person. If the beneficiary is a person who is the sole beneficiary of a special needs 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 32 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
trust, the following shall apply: 1
(a) Upon the death of the retired member or beneficiary, the trustee of that trust 2
shall notify the authority of the death of the retired member or beneficiary; 3
(b) Any retirement allowance payments made to a special needs trust that are 4
not properly payable to the special needs trust shall be returned to the 5
authority and shall not be subject to claims for reimbursement from any 6
state for Medicaid benefits paid on behalf of the beneficiary of the special 7
needs trust under any Medicaid payback provision; and 8
(c) The authority may promulgate administrative regulations in accordance 9
with KRS Chapter 13A to administer this subsection. 10
Section 6. KRS 61.640 is amended to read as follows: 11
(1) If a member dies prior to the first day of the month in which the member would 12
have received his or her first retirement allowance, the member's beneficiary shall 13
be eligible for the benefits provided by this section if the member had on file a 14
written designation of a beneficiary with the retirement office as provided by KRS 15
61.542 and the member met the following conditions at the date of his or her death: 16
(a) The member was eligible to retire under KRS 61.559(2) or (3), 61.5956(5)(a) 17
or (b), or 61.597(6)(a) or (b); 18
(b) The member was in active employment or on authorized leave of absence 19
with five (5) or more years of service credit and died prior to his or her normal 20
retirement date or was normal retirement age or older and had at least four (4) 21
years of service credit; or 22
(c) The member was not in active employment or on authorized leave of absence 23
with twelve (12) or more years of service credit and died prior to his or her 24
normal retirement date. 25
(2) If the beneficiary eligible for benefits as provided in subsection (1) of this section is 26
a single person or is the sole beneficiary of a special needs trust, then the 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 33 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
beneficiary may elect to receive: 1
(a) A monthly benefit payable for the life of the beneficiary that is equal to the 2
benefit that would have been paid had the member retired immediately prior 3
to his or her date of death and elected to receive benefits payable under the 4
survivorship one hundred percent (100%) option as provided in KRS 5
61.635(2); 6
(b) A monthly benefit payable for the life of the beneficiary under the beneficiary 7
Social Security adjustment option as provided in KRS 61.635(9) that is the 8
actuarial equivalent to the amount computed under paragraph (a) of this 9
subsection; 10
(c) A monthly benefit payable for a period of sixty (60) months that is the 11
actuarial equivalent to the amount computed under paragraph (a) of this 12
subsection; 13
(d) A monthly benefit payable for a period of one hundred twenty (120) months 14
that is the actuarial equivalent to the amount computed under paragraph (a) of 15
this subsection; 16
(e) If the member began participating in the system prior to January 1, 2014, a 17
monthly benefit payable for: 18
1. Sixty (60) months certain; 19
2. One hundred twenty (120) months certain; 20
3. The actuarial equivalent refund; or 21
4. The Social Security adjustment option; 22
that is equivalent to the benefit the member would have been entitled to 23
receive based on his or her years of service and final compensation at the date 24
of his or her death reduced by the survivorship fifty percent (50%) factor as 25
provided for in KRS 61.635(4), then reduced by fifty percent (50%), and that 26
is the actuarial equivalent to the amount computed under paragraph (a) of this 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 34 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
subsection; or 1
(f) The higher of a refund of the member's accumulated account balance as 2
described in KRS 61.625(1) or one (1) time lump-sum payment which shall 3
be the actuarial equivalent of the amount payable under paragraph (a) of this 4
subsection for a period of sixty (60) months. 5
(3) If the beneficiary eligible for benefits as provided by subsection (1) of this section 6
are multiple beneficiaries or a trust, other than a special needs trust, then the 7
multiple beneficiaries by consensus or the trustee may elect to receive the actuarial 8
equivalent amounts payable under subsection (2)(c), (d), (e), or (f) of this section 9
using the assumption that the beneficiary's age is the same as the member's age. 10
(4) If the beneficiary eligible for benefits as provided in subsection (1) of this section is 11
the member's estate, then the beneficiary shall receive the higher of a refund of the 12
member's accumulated account balance as described in KRS 61.625(1) or the one 13
(1) time lump-sum payment payable under subsection (2)(f) of this section, using 14
the assumption that the beneficiary's age is the same as the member's age. 15
(5) Payments of taxable distributions made pursuant to this section shall be subject to 16
state and federal income tax as appropriate. 17
Section 7. KRS 78.510 is amended to read as follows: 18
As used in KRS 78.510 to 78.852, unless the context otherwise requires: 19
(1) "System" means the County Employees Retirement System created by KRS 78.510 20
to 78.852; 21
(2) "Board" means the board of trustees of the system as provided in KRS 78.782; 22
(3) "County" means any county, or nonprofit organization created and governed by a 23
county, counties, or elected county officers, sheriff and his or her employees, 24
county clerk and his or her employees, circuit clerk and his or her deputies, former 25
circuit clerks or former circuit clerk deputies, or political subdivision or 26
instrumentality, including school boards, cities, charter county governments, urban-27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 35 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
county governments, consolidated local governments, or unified local governments 1
participating in the system by order appropriate to its governmental structure, as 2
provided in KRS 78.530, and if the board is willing to accept the agency, 3
organization, or corporation, the board being hereby granted the authority to 4
determine the eligibility of the agency to participate; 5
(4) "School board" means: 6
(a) Any board of education participating in the system by order appropriate to its 7
governmental structure, as provided in KRS 78.530, and if the board is willing 8
to accept the agency or corporation, the board being hereby granted the 9
authority to determine the eligibility of the agency to participate; or 10
(b) A public charter school as defined in KRS 160.1590 if the public charter 11
school satisfies the criteria set by the Internal Revenue Service to participate 12
in a governmental retirement plan; 13
(5) "Examiner" means the medical examiners as provided in KRS 61.665; 14
(6) "Employee" means every regular full-time appointed or elective officer or 15
employee of a participating county and the coroner of a participating county, 16
whether or not he or she qualifies as a regular full-time officer. The term shall not 17
include persons engaged as independent contractors, seasonal, emergency, 18
temporary, and part-time workers. In case of any doubt, the board shall determine if 19
a person is an employee within the meaning of KRS 78.510 to 78.852; 20
(7) "Employer" means a county, as defined in subsection (3) of this section, the elected 21
officials of a county, or any authority of the county having the power to appoint or 22
elect an employee to office or employment in the county; 23
(8) "Member" means any employee who is included in the membership of the system 24
or any former employee whose membership has not ceased under KRS 78.535; 25
(9) "Service" means the total of current service and prior service as defined in this 26
section; 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 36 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
(10) "Current service" means the number of years and months of employment as an 1
employee, on and after July 1, 1958, for which creditable compensation is paid and 2
employee contributions deducted, except as otherwise provided; 3
(11) "Prior service" means the number of years and completed months, expressed as a 4
fraction of a year, of employment as an employee, prior to July 1, 1958, for which 5
creditable compensation was paid. An employee shall be credited with one (1) 6
month of prior service only in those months he or she received compensation for at 7
least one hundred (100) hours of work. Twelve (12) months of current service in the 8
system shall be required to validate prior service; 9
(12) "Accumulated contributions" means the sum of all amounts deducted from the 10
compensation of a member and credited to his or her individual account in the 11
members' account, including employee contributions picked up after August 1, 12
1982, pursuant to KRS 78.610(4), together with interest credited, on the amounts, 13
and any other amounts the member shall have contributed thereto, including interest 14
credited thereon. "Accumulated contributions" shall not include employee 15
contributions that are deposited into accounts established pursuant to 26 U.S.C. sec. 16
401(h) within the fund established in KRS 78.520, as prescribed by KRS 17
78.5536(3)(b); 18
(13) "Creditable compensation": 19
(a) Except as limited by paragraph (c) of this subsection, means all salary, wages, 20
and fees, including payments for compensatory time, paid to the employee as 21
a result of services performed for the employer or for time during which the 22
member is on paid leave, which are includable on the member's federal form 23
W-2 wage and tax statement under the heading "wages, tips, other 24
compensation", including employee contributions picked up after August 1, 25
1982, pursuant to KRS 78.610(4). The creditable compensation of fee officers 26
who receive salary, fees, maintenance, or other perquisites as a result of their 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 37 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
official duties is the gross amount received decreased by the cost of salary 1
paid deputies and clerks and the cost of office supplies and other official 2
expenses; 3
(b) Includes: 4
1. Lump-sum bonuses, severance pay, or employer-provided payments for 5
purchase of service credit, which shall be averaged over the employee's 6
service with the system in which it is recorded if it is equal to or greater 7
than one thousand dollars ($1,000); 8
2. Cases where compensation includes maintenance and other perquisites, 9
but the board shall fix the value of that part of the compensation not paid 10
in money; 11
3. Lump-sum payments for creditable compensation paid as a result of an 12
order of a court of competent jurisdiction, the Personnel Board, or the 13
Kentucky Commission on Human Rights, or for any creditable 14
compensation paid in anticipation of settlement of an action before a 15
court of competent jurisdiction, the Personnel Board, or the Kentucky 16
Commission on Human Rights, including notices of violations of state 17
or federal wage and hour statutes or violations of state or federal 18
discrimination statutes, which shall be credited to the fiscal year during 19
which the wages were earned or should have been paid by the employer. 20
This subparagraph shall also include lump-sum payments for reinstated 21
wages pursuant to KRS 61.569, which shall be credited to the period 22
during which the wages were earned or should have been paid by the 23
employer; 24
4. Amounts which are not includable in the member's gross income by 25
virtue of the member having taken a voluntary salary reduction provided 26
for under applicable provisions of the Internal Revenue Code; and 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 38 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
5. Elective amounts for qualified transportation fringes paid or made 1
available on or after January 1, 2001, for calendar years on or after 2
January 1, 2001, that are not includable in the gross income of the 3
employee by reason of 26 U.S.C. sec. 132(f)(4); and 4
(c) Excludes: 5
1. Living allowances, expense reimbursements, lump-sum payments for 6
accrued vacation leave, sick leave except as provided in KRS 78.616(5), 7
and other items determined by the board; 8
2. For employees who begin participating on or after September 1, 2008, 9
lump-sum payments for compensatory time; 10
3. Training incentive payments for city officers paid as set out in KRS 11
64.5277 to 64.5279; 12
4. For employees who begin participating on or after August 1, 2016, 13
nominal fees paid for services as a volunteer; and 14
5. Any salary or wages paid to an employee for services as a Kentucky 15
State Police school resource officer as defined by KRS 158.441; 16
(14) "Final compensation" means: 17
(a) For a member who begins participating before September 1, 2008, who is 18
employed in a nonhazardous position, the creditable compensation of the 19
member during the five (5) fiscal years he or she was paid at the highest 20
average monthly rate divided by the number of months of service credit 21
during that five (5) year period multiplied by twelve (12). The five (5) years 22
may be fractional and need not be consecutive. If the number of months of 23
service credit during the five (5) year period is less than forty-eight (48), one 24
(1) or more additional fiscal years shall be used; 25
(b) For a member who is employed in a nonhazardous position, whose effective 26
retirement date is between August 1, 2001, and January 1, 2009, and whose 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 39 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
total service credit is at least twenty-seven (27) years and whose age and years 1
of service total at least seventy-five (75), final compensation means the 2
creditable compensation of the member during the three (3) fiscal years the 3
member was paid at the highest average monthly rate divided by the number 4
of months of service credit during that three (3) year period multiplied by 5
twelve (12). The three (3) years may be fractional and need not be 6
consecutive. If the number of months of service credit during the three (3) 7
year period is less than twenty-four (24), one (1) or more additional fiscal 8
years shall be used; 9
(c) For a member who begins participating before September 1, 2008, who is 10
employed in a hazardous position, as provided in KRS 78.5520, the creditable 11
compensation of the member during the three (3) fiscal years he or she was 12
paid at the highest average monthly rate divided by the number of months of 13
service credit during that three (3) year period multiplied by twelve (12). The 14
three (3) years may be fractional and need not be consecutive. If the number 15
of months of service credit during the three (3) year period is less than twenty-16
four (24), one (1) or more additional fiscal years, which may contain less than 17
twelve (12) months of service credit, shall be used; 18
(d) For a member who begins participating on or after September 1, 2008, but 19
prior to January 1, 2014, who is employed in a nonhazardous position, the 20
creditable compensation of the member during the five (5) complete fiscal 21
years immediately preceding retirement divided by five (5). Each fiscal year 22
used to determine final compensation must contain twelve (12) months of 23
service credit. If the member does not have five (5) complete fiscal years that 24
each contain twelve (12) months of service credit, then one (1) or more 25
additional fiscal years, which may contain less than twelve (12) months of 26
service credit, shall be added until the number of months in the final 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 40 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
compensation calculation is at least sixty (60) months; or 1
(e) For a member who begins participating on or after September 1, 2008, but 2
prior to January 1, 2014, who is employed in a hazardous position as provided 3
in KRS 78.5520, the creditable compensation of the member during the three 4
(3) complete fiscal years he or she was paid at the highest average monthly 5
rate divided by three (3). Each fiscal year used to determine final 6
compensation must contain twelve (12) months of service credit. If the 7
member does not have three (3) complete fiscal years that each contain twelve 8
(12) months of service credit, then one (1) or more additional fiscal years, 9
which may contain less than twelve (12) months of service credit, shall be 10
added until the number of months in the final compensation calculation is at 11
least thirty-six (36) months; 12
(15) "Final rate of pay" means the actual rate upon which earnings of an employee were 13
calculated during the twelve (12) month period immediately preceding the 14
member's effective retirement date, and shall include employee contributions 15
picked up after August 1, 1982, pursuant to KRS 78.610(4). The rate shall be 16
certified to the system by the employer and the following equivalents shall be used 17
to convert the rate to an annual rate: two thousand eighty (2,080) hours for eight (8) 18
hour workdays, one thousand nine hundred fifty (1,950) hours for seven and one-19
half (7.5) hour workdays, two hundred sixty (260) days, fifty-two (52) weeks, 20
twelve (12) months, one (1) year; 21
(16) "Retirement allowance" means the retirement payments to which a member is 22
entitled; 23
(17) "Actuarial equivalent" means a benefit of equal value when computed upon the 24
basis of the actuarial tables adopted by the board. In cases of disability retirement, 25
the options authorized by KRS 61.635 shall be computed by adding ten (10) years 26
to the age of the member, unless the member has chosen the Social Security 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 41 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
adjustment option as provided for in KRS 61.635(8), in which case the member's 1
actual age shall be used. For members who begin participating in the system prior 2
to January 1, 2014, no disability retirement option shall be less than the same option 3
computed under early retirement; 4
(18) "Normal retirement date", unless otherwise provided in KRS 78.510 to 78.852, 5
means: 6
(a) For a member with service in a nonhazardous position, the sixty-fifth birthday 7
of a member; 8
(b) For a member with service in a hazardous position who begins participating 9
before September 1, 2008, the first day of the month following a member's 10
fifty-fifth birthday; or 11
(c) For a member with service in a hazardous position who begins participating 12
on or after September 1, 2008, the first day of the month following a 13
member's sixtieth birthday; 14
(19) "Fiscal year" of the system means the twelve (12) months from July 1 through the 15
following June 30, which shall also be the plan year. The "fiscal year" shall be the 16
limitation year used to determine contribution and benefits limits as set out in 26 17
U.S.C. sec. 415; 18
(20) "Agency reporting official" means the person designated by the participating 19
employer who shall be responsible for forwarding all employer and employee 20
contributions and a record of the contributions to the system and for performing 21
other administrative duties pursuant to KRS 78.510 to 78.852; 22
(21) "Regular full-time positions," as used in subsection (6) of this section, shall mean 23
all positions that average one hundred (100) or more hours per month, determined 24
by using the number of hours actually worked in a calendar or fiscal year, or eighty 25
(80) or more hours per month in the case of noncertified employees of school 26
boards, determined by using the number of hours actually worked in a calendar or 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 42 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
school year, unless otherwise specified, except: 1
(a) Seasonal positions, which although temporary in duration, are positions which 2
coincide in duration with a particular season or seasons of the year and that 3
may recur regularly from year to year, in which case the period of time shall 4
not exceed nine (9) months, except for employees of school boards, in which 5
case the period of time shall not exceed six (6) months; 6
(b) Emergency positions which are positions utilized by the employer during: 7
1. An emergency as determined by the employer for a period not 8
exceeding thirty (30) working days and are nonrenewable; or 9
2. A state of emergency declared by the President of the United States or 10
the Governor of the Commonwealth of Kentucky that are created or 11
filled specifically for addressing the employer's needs during and as a 12
result of the declared emergency; 13
(c) Temporary positions that are positions of employment with a participating 14
agency for a period of time not to exceed twelve (12) months and not 15
renewable; 16
(d) Probationary positions which are positions of employment with a participating 17
employer that do not exceed twelve (12) months and that are used uniformly 18
by the participating agency on new employees who would otherwise be 19
eligible for participation in the system. Probationary positions shall not be 20
renewable by the participating employer for the same employee, unless the 21
employee has not been employed with the participating employer for a period 22
of at least twelve (12) months; or 23
(e) Part-time positions that are positions that may be permanent in duration, but 24
that require less than a calendar or fiscal year average of one hundred (100) 25
hours of work per month, determined by using the number of months actually 26
worked within a calendar or fiscal year, in the performance of duty, except in 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 43 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
case of noncertified employees of school boards, the school term average shall 1
be eighty (80) hours of work per month, determined by using the number of 2
months actually worked in a calendar or school year, in the performance of 3
duty; 4
(22) "Alternate participation plan" means a method of participation in the system as 5
provided for by KRS 78.530(3); 6
(23) "Retired member" means any former member receiving a retirement allowance or 7
any former member who has on file at the retirement office the necessary 8
documents for retirement benefits and is no longer contributing to the system; 9
(24) "Current rate of pay" means the member's actual hourly, daily, weekly, biweekly, 10
monthly, or yearly rate of pay converted to an annual rate as defined in final rate of 11
pay. The rate shall be certified by the employer; 12
(25) "Beneficiary" means the person, persons, estate, trust, or trustee designated by the 13
member in accordance with KRS 61.542 or 61.705 to receive any available benefits 14
in the event of the member's death, except when used in reference to the sole 15
beneficiary of a special needs trust. As used in KRS 78.5536, beneficiary shall not 16
mean an estate, trust, or trustee; 17
(26) "Recipient" means the retired member, the person or persons designated as 18
beneficiary by the member and drawing a retirement allowance as a result of the 19
member's death, or a dependent child drawing a retirement allowance. An alternate 20
payee of a qualified domestic relations order shall not be considered a recipient, 21
except for purposes of KRS 61.623; 22
(27) "Person" means a natural person, including a sole beneficiary of a special needs 23
trust who is a single natural person designated by a member as his or her 24
beneficiary in accordance with KRS 61.542; 25
(28) "School term or year" means the twelve (12) months from July 1 through the 26
following June 30; 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 44 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
(29) "Retirement office" means the Kentucky Public Pensions Authority office building 1
in Frankfort, unless otherwise designated by the Kentucky Public Pensions 2
Authority; 3
(30) "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
(31) "Participating" means an employee is currently earning service credit in the system 10
as provided in KRS 78.615; 11
(32) "Month" means a calendar month; 12
(33) "Membership date" means the date upon which the member began participating in 13
the system as provided in KRS 78.615; 14
(34) "Participant" means a member, as defined by subsection (8) of this section, or a 15
retired member, as defined by subsection (23) of this section; 16
(35) "Qualified domestic relations order" means any judgment, decree, or order, 17
including approval of a property settlement agreement, that: 18
(a) Is issued by a court or administrative agency; and 19
(b) Relates to the provision of child support, alimony payments, or marital 20
property rights to an alternate payee; 21
(36) "Alternate payee" means a spouse, former spouse, child, or other dependent of a 22
participant, who is designated to be paid retirement benefits in a qualified domestic 23
relations order; 24
(37) "Accumulated employer credit" means the employer pay credit deposited to the 25
member's account and interest credited on such amounts as provided by KRS 26
78.5512 and 78.5516; 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 45 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
(38) "Accumulated account balance" means: 1
(a) For members who began participating in the system prior to January 1, 2014, 2
the member's accumulated contributions; or 3
(b) For members who began participating in the system on or after January 1, 4
2014, in the hybrid cash balance plan as provided by KRS 78.5512 and 5
78.5516, the combined sum of the member's accumulated contributions and 6
the member's accumulated employer credit; 7
(39) "Volunteer" means an individual who: 8
(a) Freely and without pressure or coercion performs hours of service for an 9
employer participating in one (1) of the systems administered by Kentucky 10
Retirement Systems or the County Employees Retirement System without 11
receipt of compensation for services rendered, except for reimbursement of 12
actual expenses, payment of a nominal fee to offset the costs of performing 13
the voluntary services, or both; and 14
(b) If a retired member, does not become an employee, leased employee, or 15
independent contractor of the employer for which he or she is performing 16
volunteer services for a period of at least twelve (12) months following the 17
retired member's most recent retirement date; 18
(40) "Nominal fee" means compensation earned for services as a volunteer that does not 19
exceed five hundred dollars ($500) per month with each participating employer. 20
Compensation earned for services as a volunteer from more than one (1) 21
participating employer during a month shall not be aggregated to determine whether 22
the compensation exceeds the five hundred dollars ($500) per month maximum 23
provided by this subsection; 24
(41) "Nonhazardous position" means a position that does not meet the requirements of 25
KRS 78.5520 or has not been approved by the board as a hazardous position; 26
(42) "Hazardous position" means a position that meets the requirements of KRS 78.5520 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 46 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
and has been approved by the board as hazardous; 1
(43) "Level-percentage-of-payroll amortization method" means a method of determining 2
the annual amortization payment on the unfunded actuarial accrued liability as 3
expressed as a percentage of payroll over a set period of years. Under this method, 4
the percentage of payroll shall be projected to remain constant for all years 5
remaining in the set period and the unfunded actuarially accrued liability shall be 6
projected to be fully amortized at the conclusion of the set period; 7
(44) "Increment" means twelve (12) months of service credit which are purchased. The 8
twelve (12) months need not be consecutive. The final increment may be less than 9
twelve (12) months; 10
(45) "Last day of paid employment" means the last date employer and employee 11
contributions are required to be reported in accordance with KRS 16.543, 61.543, or 12
78.615 to the retirement office in order for the employee to receive current service 13
credit for the month. Last day of paid employment does not mean a date the 14
employee receives payment for accrued leave, whether by lump sum or otherwise, 15
if that date occurs twenty-four (24) or more months after previous contributions; 16
(46) "Objective medical evidence" means reports of examinations or treatments; medical 17
signs which are anatomical, physiological, or psychological abnormalities that can 18
be observed; psychiatric signs which are medically demonstrable phenomena 19
indicating specific abnormalities of behavior, affect, thought, memory, orientation, 20
or contact with reality; or laboratory findings which are anatomical, physiological, 21
or psychological phenomena that can be shown by medically acceptable laboratory 22
diagnostic techniques, including but not limited to chemical tests, 23
electrocardiograms, electroencephalograms, X-rays, and psychological tests; 24
(47) "Hazardous disability" as used in KRS 78.510 to 78.852 means a disability which 25
results in an employee's total incapacity to continue as an employee in a hazardous 26
position, but the employee is not necessarily deemed to be totally and permanently 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 47 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
disabled to engage in other occupations for remuneration or profit; 1
(48) "Act in line of duty" means, for employees in hazardous positions under KRS 2
78.5520: 3
(a) A single act occurring which was required in the performance of the principal 4
duties of the hazardous position as defined by the job description; or 5
(b) A single act of violence committed against the employee that is found to be 6
related to his or her job duties, whether or not it occurs at his or her job site; 7
(49) "Dependent child" means a child in the womb and a natural or legally adopted child 8
of the member who has neither attained age eighteen (18) nor married or who is an 9
unmarried full-time student who has not attained age twenty-two (22). Solely in the 10
case of a member who dies as a direct result of an act in line of duty as defined in 11
this section, dies as a result of a duty-related injury as defined in KRS 61.621, 12
becomes totally and permanently disabled as a direct result of an act in the line of 13
duty as defined in this section, or becomes disabled as a result of a duty-related 14
injury as defined in KRS 61.621 and is eligible for the benefits provided by KRS 15
61.621(5)(a), "dependent child" also means a naturally or legally adopted disabled 16
child of the member, regardless of the child's age, if the child has been determined 17
to be eligible for federal Social Security disability benefits or is being claimed as a 18
qualifying child for tax purposes due to the child's total and permanent disability; 19
(50) "Normal retirement age" means the age at which the member meets the 20
requirements for his or her normal retirement date as provided by subsection (18) of 21
this section; 22
(51) "Disability retirement date" means the first day of the month following the last day 23
of paid employment; 24
(52) "Monthly average pay" means: 25
(a) In the case of a member who dies as a direct result of an act in line of duty as 26
defined in KRS 16.505 or who dies as a result of a duty-related injury as 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 48 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
defined in KRS 61.621, the higher of the member's monthly final rate of pay 1
or the average monthly creditable compensation earned by the deceased 2
member during his or her last twelve (12) months of employment; or 3
(b) In the case where a member becomes totally and permanently disabled as a 4
direct result of an act in line of duty as defined in KRS 16.505 or becomes 5
disabled as a result of a duty-related injury as defined in KRS 61.621 and is 6
eligible for the benefits provided by KRS 61.621(5)(a), the higher of the 7
member's monthly final rate of pay or the average monthly creditable 8
compensation earned by the disabled member during his or her last twelve 9
(12) months of employment prior to the date the act in line of duty or duty-10
related injury occurred; 11
(53) "Authority" means the Kentucky Public Pensions Authority as provided by KRS 12
61.505; 13
(54) "Executive director" means the executive director of the Kentucky Public Pensions 14
Authority;[ and] 15
(55) "Gainful employment" means work in any capacity that is or may be performed 16
with regularity and is or may be usually done for pay, whether pay is received or 17
not received, including seasonal, volunteer, part-time, and on-call work; and 18
(56) "Special needs trust" means a trust described in 42 U.S.C. sec. 1396p(d)(4)(A). 19
Any reference to a trust includes a special needs trust, unless the context 20
otherwise requires. 21
Section 8. KRS 78.5532 is amended to read as follows: 22
(1) If a member dies prior to the first day of the month in which the member would 23
have received his or her first retirement allowance, the member's beneficiary shall 24
be eligible for the benefits provided by this section if the member had on file a 25
written designation of a beneficiary with the retirement office as provided by KRS 26
61.542 and the member met the following conditions at the date of his or her death: 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 49 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
(a) 1. The member had service in a nonhazardous position and was eligible to 1
retire under KRS 78.5510(2) or (3) or 78.5512(6); or 2
2. The member had service in a hazardous position and was eligible to 3
retire under KRS 78.5514(2) or (3) or 78.5516(6); 4
(b) The member was in active employment or on authorized leave of absence 5
with five (5) or more years of service credit and died prior to his or her normal 6
retirement date or in the case of a nonhazardous member, was normal 7
retirement age or older and had at least four (4) years of service credit; or 8
(c) The member was not in active employment or on authorized leave of absence 9
with twelve (12) or more years of service credit and died prior to his or her 10
normal retirement date. 11
(2) If the beneficiary eligible for benefits as provided in subsection (1) of this section is 12
a single person or the beneficiary of a special needs trust, then the beneficiary may 13
elect to receive: 14
(a) A monthly benefit payable for the life of the beneficiary that is equal to the 15
benefit that would have been paid had the member retired immediately prior 16
to his or her date of death and elected to receive benefits payable under the 17
survivorship one hundred percent (100%) option as provided in KRS 18
61.635(2); 19
(b) A monthly benefit payable for the life of the beneficiary under the beneficiary 20
Social Security adjustment option as provided in KRS 61.635(9) that is the 21
actuarial equivalent to the amount computed under paragraph (a) of this 22
subsection; 23
(c) A monthly benefit payable for a period of sixty (60) months that is the 24
actuarial equivalent to the amount computed under paragraph (a) of this 25
subsection; 26
(d) A monthly benefit payable for a period of one hundred twenty (120) months 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 50 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
that is the actuarial equivalent to the amount computed under paragraph (a) of 1
this subsection; 2
(e) If the member began participating prior to January 1, 2014, a monthly benefit 3
payable for a period of one hundred twenty (120) months that is equivalent to 4
the benefit the member would have been entitled to receive based on his or 5
her years of service and final compensation at the date of his or her death 6
reduced by the survivorship fifty percent (50%) factor as provided for in KRS 7
61.635(4), then reduced by fifty percent (50%), and that is the actuarial 8
equivalent to the amount computed under paragraph (a) of this subsection; or 9
(f) The higher of a refund of the member's accumulated account balance as 10
described in KRS 61.625(1) or one (1) time lump-sum payment which shall 11
be the actuarial equivalent of the amount payable under paragraph (a) of this 12
subsection for a period of sixty (60) months. 13
(3) If the beneficiary eligible for benefits as provided by subsection (1) of this section 14
is multiple beneficiaries or a trust, other than a special needs trust, then the 15
multiple beneficiaries by consensus or the trustee may elect to receive the actuarial 16
equivalent amounts payable under subsection (2)(c), (d), (e), or (f) of this section 17
using the assumption that the beneficiary's age is the same as the member's age. 18
(4) If the beneficiary eligible for benefits as provided in subsection (1) of this section is 19
the member's estate, then the beneficiary shall receive the higher of a refund of the 20
member's accumulated account balance as described in KRS 61.625(1) or the one 21
(1) time lump-sum payment payable under subsection (2)(f) of this section, using 22
the assumption that the beneficiary's age is the same as the member's age. 23
(5) Payments of taxable distributions made pursuant to this section shall be subject to 24
state and federal income tax as appropriate. 25
(6) (a) The beneficiary of a member with service in a nonhazardous position who 26
dies as a result of a duty-related injury may be eligible for benefits based upon 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 51 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
the definitions, criteria, and benefits specified by KRS 61.621. 1
(b) The beneficiary of a member with service in a hazardous position who dies as 2
a direct result of an act in line of duty may be eligible for benefits from the 3
system based upon the definitions, criteria, and benefits specified by KRS 4
78.5534. 5
Section 9. KRS 161.525 is amended to read as follows: 6
(1) Upon death of a member in active contributing status at the time of death, who was 7
eligible to retire by reason of service, the spouse, if named as the primary 8
beneficiary of the member's retirement account, or in the absence of an eligible 9
spouse a legal dependent of the member, if named as the primary beneficiary, shall 10
be entitled to elect, in lieu of a refund of the member's accumulated account balance 11
or benefits provided in KRS 161.520, an annuity actuarially equivalent at the 12
attained age of the beneficiary to the annuity that would have been paid to the 13
deceased member had retirement been effective on the day immediately preceding 14
the member's death. Under the provisions of KRS 61.680, benefits shall be 15
processed as if the member retired for service. In exercising this right the spouse or 16
legal dependent shall be limited to selecting an option providing either a straight 17
life annuity with refundable balance or a term certain option. A spouse may receive 18
the annuity provided by this section at the same time as children are qualifying for 19
survivors' benefits under the provisions of KRS 161.520; however, a legal 20
dependent, other than a spouse, may not receive these payments if children have 21
qualified for benefits under that section. 22
(2) A spouse qualifying for an annuity under subsection (1) of this section may defer 23
the payments in order to reduce the actuarial discounts to be applied due to age. 24
(3) Upon death of a member in active contributing status at the time of his or her death, 25
who had a minimum of twenty-seven (27) years of service, the spouse, if named as 26
the primary beneficiary of the member's account shall be entitled to a monthly 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 52 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
minimum allowance of three hundred dollars ($300) as the basic straight life 1
annuity. This provision applies to surviving spouses of members who were 2
receiving benefit payments under KRS 161.520 as of June 30, 1986, and to 3
surviving spouses of members who die on or after July 1, 1986. 4
(4) If the surviving spouse or legal dependent eligible for a benefit under subsection 5
(1) of this section is the sole beneficiary of a special needs trust, the annuity 6
payments made under subsection (1) of this section shall be made payable to the 7
special needs trust. 8
Section 10. KRS 161.640 is amended to read as follows: 9
(1) Retirement annuities shall be payable monthly. The first payment to an annuitant 10
shall be made at the payment date at the end of one (1) full payment period after his 11
retirement and shall consist of one (1) regular monthly payment. Retirement for a 12
member receiving one (1) full year of service credit during a fiscal year shall be no 13
earlier than July 1 next following the end of such fiscal year. Notwithstanding any 14
other statutory provisions to the contrary, members filling positions that 15
customarily require twelve (12) months of service during a fiscal year cannot retire 16
prior to July 1 without a corresponding pro rata reduction in salary and service 17
credit. The board of trustees may determine which positions customarily require 18
twelve (12) months of service during a fiscal year. 19
(2) The board of trustees may enter into agreements with retired members for payroll 20
deductions when it is deemed in the best interest of the retired members and the 21
retirement system. 22
(3) (a) All new retirees, on or after July 1, 1998, shall receive their monthly annuity 23
checks by electronic fund transfer. All retiree, beneficiary, and survivor 24
monthly allowance payments, except as otherwise provided in paragraph (b) 25
or (c) of this subsection, shall be made by electronic fund transfer. Except as 26
provided in paragraph (b) or (c) of this subsection, all monthly payments shall 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 53 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
be made payable only to an account solely in the name of the retiree, 1
beneficiary, or survivor as an individual and natural person, or to a joint 2
account in the name of the retiree, beneficiary, or survivor as an individual 3
and natural person and another individual and natural person. 4
(b) If the retiree, beneficiary, or survivor is a resident of a nursing or assisted-care 5
home, monthly payments may be made to the order of the nursing or assisted-6
care home for the benefit of the retiree, beneficiary, or survivor by including 7
the retiree's, beneficiary's, or survivor's name. Monthly annuity checks so paid 8
to a nursing or assisted-care home may be sent by mail rather than electronic 9
fund transfer. 10
(c) If the retiree, beneficiary, or survivor is the sole beneficiary of a special 11
needs trust: 12
1. Monthly payments shall be made to the order of the special needs 13
trust, and checks may be sent by mail to the special needs trust for the 14
benefit of the retiree, beneficiary, or survivor; 15
2. Upon the death of the retiree, beneficiary, or survivor of a special 16
needs trust, the trustee of that trust shall notify the Teachers' 17
Retirement System; 18
3. Any payments made to a special needs trust that are not properly 19
payable to the special needs trust shall be returned to the Teachers' 20
Retirement System and shall not be subject to claims for 21
reimbursement from any state for Medicaid benefits paid on behalf of 22
the beneficiary under any Medicaid payback provision, and any 23
overpayments of retirement allowance received by the special needs 24
trust shall be repaid to the Teachers' Retirement System; and 25
4. The Teachers' Retirement System may promulgate administrative 26
regulations in accordance with KRS Chapter 13A to administer this 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 54 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
paragraph. 1
Section 11. KRS 161.700 is amended to read as follows: 2
(1) Except as otherwise provided by this section and KRS 161.655(5), the right of a 3
member to a retirement allowance and to the return of contributions, any benefit or 4
right accrued or accruing to any person under KRS 161.220 to 161.716, and the 5
money in the various funds established pursuant to KRS 161.220 to 161.716 are 6
hereby exempt from any state or municipal tax, and shall not be subject to 7
execution, garnishment, attachment, or other process, and shall not be assigned. 8
(2) Notwithstanding the provisions of subsection (1) of this section, retirement 9
allowances and other benefits accrued or accruing under KRS 161.220 to 161.716 10
to a person who is the beneficiary of a special needs trust may be assigned to the 11
trustee of that special needs trust. Any retirement allowances or other benefits 12
assigned to a special needs trust under this subsection, or accrued or accruing 13
under KRS 161.220 to 161.716 to a person who is the beneficiary of a special 14
needs trust, shall cease upon the death of the beneficiary of the special needs 15
trust and shall not be subject to state reimbursement for Medicaid benefits paid 16
on behalf of the beneficiary under a Medicaid payback provision. 17
(3)[(2)] Notwithstanding subsection (1) of this section, retirement benefits accrued or 18
accruing to any person under this retirement system on or after January 1, 1998, 19
shall be subject to the tax imposed by KRS 141.020, to the extent provided in KRS 20
141.010 and 141.0215. 21
(4)[(3)] Retirement allowance, disability allowance, accumulated account balance, or 22
any other benefit under the retirement system shall not be classified as marital 23
property pursuant to KRS 403.190(1), except to the extent permitted under KRS 24
403.190(4). Retirement allowance, disability allowance, accumulated contributions, 25
or any other benefit under the retirement system shall not be considered as an 26
economic circumstance during the division of marital property in an action for 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 55 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
dissolution of marriage pursuant to KRS 403.190(1)(d), except to the extent 1
permitted under KRS 403.190(4). 2
(5)[(4)] Qualified domestic relations orders issued by a court or administrative agency 3
shall be honored by the retirement system if: 4
(a) The benefits payable pursuant to the order meet the requirements of a 5
qualified domestic relations order as provided by 26 U.S.C. sec. 414(p). The 6
retirement system shall follow applicable provisions of 26 U.S.C. sec. 414(p) 7
in administering qualified domestic relations orders; 8
(b) The order meets the requirements established by the retirement system and by 9
subsections (5)[(4)] to (13)[(12)] of this section. The board of trustees of the 10
retirement system shall establish the requirements, procedures, and forms 11
necessary for the administration of qualified domestic relations order by 12
promulgation of administrative regulations in accordance with KRS Chapter 13
13A; and 14
(c) The order is on the form established by the retirement system pursuant to the 15
retirement system's authority provided under paragraph (b) of this subsection. 16
(6)[(5)] A qualified domestic relations order shall not: 17
(a) Require the retirement system to take any action not authorized under state or 18
federal law; 19
(b) Require the retirement system to provide any benefit, allowance, or other 20
payment not authorized under state or federal law; 21
(c) Grant or be construed to grant the alternate payee any separate right, title, or 22
interest in or to any retirement benefit other than to receive payments from the 23
participant's account in accordance with the administrative regulations 24
promulgated by the system and as provided by subsections (5)[(4)] to 25
(13)[(12)] of this section; or 26
(d) Grant any separate interest to any person other than the participant. 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 56 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
(7)[(6)] Any qualified domestic relations order submitted to the retirement system 1
shall specify the dollar amount or percentage amount of the participant's benefit to 2
be paid to the alternate payee. In calculating the amount to be paid to the alternate 3
payee, the court or administrative agency that is responsible for issuing the order 4
shall follow the requirements set forth in the administrative regulations promulgated 5
by the board of trustees. Notwithstanding any other statute to the contrary, the 6
board shall not be required to honor a qualified domestic relations order that does 7
not follow the requirements set forth in the administrative regulations promulgated 8
by the board of trustees. 9
(8)[(7)] If the qualified domestic relations order meets the requirements established by 10
the system and by subsections (5)[(4)] to (13)[(12)] of this section, payments to the 11
alternate payee shall be distributed under the following conditions: 12
(a) If the participant is retired and is receiving a monthly retirement allowance, 13
the month following the date the retirement system receives a qualified 14
domestic relations order that complies with the administrative regulations 15
promulgated by the retirement system and subsections (5)[(4)] to (13)[(12)] of 16
this section; or 17
(b) If the participant is not retired, the month of the participant's effective 18
retirement date in which the first retirement allowance is payable to the 19
participant or the month in which the participant receives a refund of his or 20
her accumulated account balance as provided by KRS 161.470(6). 21
(9)[(8)] An alternate payee's benefits and rights under a qualified domestic relations 22
order shall terminate upon the earlier of: 23
(a) The death of the participant; 24
(b) The death of the alternate payee; or 25
(c) The termination of benefits to the participant under any provision of KRS 26
161.220 to 161.716. 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 57 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
(10)[(9)] An alternate payee shall not receive a monthly payment under a qualified 1
domestic relations order if the participant is not receiving a monthly retirement 2
allowance. 3
(11)[(10)] The cost of living adjustment provided to the participant pursuant to KRS 4
161.620 shall be divided between the participant and alternate payee in a qualified 5
domestic relations order as follows: 6
(a) If the order specifies the alternate payee is to receive a percentage of the 7
participant's benefit, then the cost of living adjustment shall be divided 8
between the participant and the alternate payee based upon the percentage of 9
the total benefit each is receiving upon the participant's retirement or upon the 10
date the order is approved by the retirement system, whichever is later; or 11
(b) If the order specifies that the alternate payee is to receive a set dollar amount 12
of the participant's benefit, then the order shall specify that: 13
1. The cost of living adjustment shall be divided between the participant 14
and the alternate payee based upon the percentage of the total benefit 15
each is receiving upon the participant's retirement or upon the date the 16
order is approved by the retirement system, whichever is later; or 17
2. The alternate payee shall receive no cost of living adjustment. 18
If the order does not specify the division of the cost of living adjustment as 19
required by this paragraph, then no cost of living adjustment shall be payable 20
to the alternate payee. If no cost of living adjustment is provided to the 21
alternate payee, then the participant shall receive the full cost of living 22
adjustment he or she would have received if the order had not been applied to 23
the participant's account. 24
(12)[(11)] Except in cases involving child support payments, the retirement system may 25
charge reasonable and necessary fees and expenses to the recipient and the alternate 26
payee of a qualified domestic relations order for the administration of the qualified 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 58 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
domestic relations order by retirement system. All fees and expenses shall be 1
established by the administrative regulations promulgated by the board of trustees 2
of the retirement system. The qualified domestic relations order shall specify 3
whether the fees and expenses provided by this subsection shall be paid: 4
(a) Solely by the participant; 5
(b) Solely by the alternate payee; or 6
(c) Equally shared by the participant and alternate payee. 7
(13)[(12)] The retirement system shall honor a qualified domestic relations order issued 8
prior to July 15, 2010, for prospective benefit payments if the order or an amended 9
version of the order meets the requirements established by this section and the 10
administrative regulations promulgated by the retirement system. The order shall 11
not apply to benefit payments issued by the retirement system prior to the date the 12
order was approved by the retirement system. 13
Section 12. KRS 21.420 is amended to read as follows: 14
(1) After the death of a member who began participating in the Judicial Retirement 15
Plan prior to January 1, 2014, who at the time of his or her death was receiving a 16
service retirement allowance (other than an actuarially reduced allowance under 17
subsection (3) of KRS 21.400), or was receiving a disability retirement allowance, 18
his or her surviving spouse is entitled to receive during his or her lifetime a 19
monthly allowance equal to one-half (1/2) of that he or she was receiving. 20
(2) (a) If a member who began participating in the Judicial Retirement Plan prior to 21
January 1, 2014, dies before retirement and before reaching normal retirement 22
age, without regard to length of service, his or her surviving spouse is entitled 23
to receive during his or her lifetime a monthly allowance equal to one-half 24
(1/2) of the monthly allowance the member would have received commencing 25
at his or her normal retirement date if he or she had continued in service until 26
that date and had then retired, computed however on the basis of his or her 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 59 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
final compensation at time of death. 1
(b) If a member who began participating in the Judicial Retirement Plan prior to 2
January 1, 2014, dies before retirement and after reaching normal retirement 3
age, his or her surviving spouse is entitled to receive during his or her 4
lifetime a monthly allowance equal to one-half (1/2) of the monthly allowance 5
the member would have been entitled to, on the basis of his or her years of 6
service, had he or she retired on the date of his death. 7
(3) If a member who began participating in the Judicial Retirement Plan prior to 8
January 1, 2014, dies after retirement and was at the time of his or her death 9
receiving an actuarially reduced allowance under subsection (3) of KRS 21.400, or 10
was not at the time of his or her death receiving a retirement allowance but had 11
acquired the vested right under subsection (2) of KRS 21.400 to have received an 12
allowance upon reaching normal retirement age, his or her surviving spouse is 13
entitled to receive during his or her lifetime a monthly allowance equal to one-half 14
(1/2) of the monthly allowance the member would have received when he or she 15
reached normal retirement age. 16
(4) A member, or a retiree who began participating in the plan prior to January 1, 2014, 17
who has not commenced drawing retirement benefits pursuant to KRS 21.400, and 18
who dies without a spouse or eligible children entitled to survivor's benefits, may 19
designate a beneficiary who shall receive the accumulated contributions of the 20
member. A member, or a retiree who began participating in the plan on or after 21
January 1, 2014, who has not commenced drawing retirement benefits pursuant to 22
KRS 21.402, who dies without a spouse or eligible children entitled to survivor's 23
benefits, may designate a beneficiary who shall receive the accumulated account 24
balance of the member. A trust, including a special needs trust, may be designated 25
as a beneficiary. Absent a designation by the member or retiree, the accumulated 26
contributions or accumulated account balance, as applicable based upon the 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 60 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
member's participation date, shall be paid to the member's estate. 1
(5) A member who began participating in the plan prior to January 1, 2014, who 2
commences drawing retirement benefits pursuant to KRS 21.400 or 21.410, and 3
who dies without a spouse or eligible children entitled to survivor's benefits and 4
before the benefits received by the member equal the accumulated contributions of 5
the member, may designate a beneficiary who shall receive the balance of the 6
accumulated contributions of the member. A member who began participating in 7
the plan on or after January 1, 2014, who commences drawing retirement benefits 8
pursuant to KRS 21.402 or 21.410, and who dies without a spouse or eligible 9
children entitled to survivor's benefits and before the benefits received by the 10
member equal the accumulated account balance of the member, may designate a 11
beneficiary who shall receive the balance of the accumulated account balance of the 12
member. A trust, including a special needs trust, may be designated as a 13
beneficiary. Any benefits received shall be deducted from the accumulated 14
contributions or accumulated account balance. Absent a designation by the member, 15
the balance of the accumulated contributions or accumulated account balance, as 16
applicable based upon the member's participation date, shall be paid to the 17
member's estate. 18
(6) A member who begins participating in the Judicial Retirement Plan prior to January 19
1, 2014, may designate a beneficiary who shall receive the balance of the 20
accumulated contributions of the member, in the event survivor's benefits are being 21
paid pursuant to subsection (1), (2), or (3) of this section, and the survivor dies prior 22
to receiving benefits equal to the member's contributions. In this event, the 23
provisions of subsection (5) of this section shall apply as to offset and payment. 24
(7) A member who begins participating in the Judicial Retirement Plan prior to January 25
1, 2014, may, prior to the drawing of benefits, elect in writing to the executive 26
secretary of the Judicial Form Retirement System, to take an optional retirement 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 61 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
allowance which shall be actuarially equivalent to the amount of retirement 1
allowance otherwise payable to the member and the member's spouse. If the 2
member dies after retirement, the option chosen shall prevail over the provisions of 3
subsections (1) and (3) of this section. If the member dies prior to retirement, the 4
option chosen shall prevail over the provisions of subsection (2) of this section. The 5
options shall include: 6
(a) Survivorship one hundred percent (100%). The member may elect to receive a 7
decreased retirement allowance during the member's lifetime and have the 8
retirement allowance continued after death to the spouse during the lifetime of 9
the spouse. 10
(b) Survivorship sixty-six and two-thirds percent (66 2/3%). The member may 11
elect to receive a decreased retirement allowance during the member's lifetime 12
and have two-thirds (2/3) of the retirement allowance continue after death to 13
the spouse during the lifetime of the spouse. 14
If a retiree, living or deceased, chose either of the optional retirement benefit 15
allowances specified in paragraphs (a) or (b) of this subsection from July 15, 1994, 16
to July 15, 1998, the optional allowance shall be adjusted accordingly, and the new 17
benefit shall commence August 1, 1998. Each recipient of benefits from the plan, 18
who retired from July 15, 1994, to July 15, 1998, shall have a one-time opportunity 19
to select an optional retirement allowance. The election by the recipient shall be 20
prior to August 1, 1998, at which time the new benefit shall commence. The option 21
chosen shall prevail, subsections (1), (2), and (3) of this section notwithstanding. 22
(8) For a member who begins participating in the Judicial Retirement Plan on or after 23
January 1, 2014: 24
(a) If the member dies prior to drawing a retirement allowance, then the surviving 25
spouse may elect to: 26
1. Take a refund of the member's accumulated account balance or 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 62 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
accumulated contributions as provided by KRS 21.402; or 1
2. If the member had at least five (5) years of service in the plan at the time 2
of his or her death, have the member's accumulated account balance 3
annuitized into a monthly benefit payable for life that is equal to the 4
benefit that would have been paid had the member retired immediately 5
prior to his or her date of death and elected to receive benefits payable 6
under the survivorship one hundred percent (100%) option as provided 7
by paragraph (b)1. of this subsection. 8
In lieu of the benefits provided by this paragraph to the surviving spouse, the 9
member may elect to have the benefits payable under this paragraph paid to 10
an individual dependent child by completing the forms provided prescribed by 11
the Judicial Form Retirement System. If no surviving spouse or dependent 12
children are eligible to receive benefits, then the provisions of subsection (4) 13
of this section shall apply to the member. 14
(b) If a member dies on or after the date the member begins drawing a retirement 15
allowance, the benefits payable to the surviving spouse shall be based upon 16
whether or not the member elects prior to retirement to receive an optional 17
retirement allowance. The election shall be in writing on the forms prescribed 18
by the Judicial Form Retirement System and shall be actuarially equivalent to 19
the amount of retirement allowance otherwise payable to the member. The 20
optional retirement allowances shall include: 21
1. Survivorship one hundred percent (100%). The member may elect to 22
receive a decreased retirement allowance during the member's lifetime 23
and have the retirement allowance continued after death to the spouse 24
during the lifetime of the spouse; 25
2. Survivorship sixty-six and two-thirds percent (66-2/3%). The member 26
may elect to receive a decreased retirement allowance during the 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 63 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
member's lifetime and have two-thirds (2/3) of the retirement allowance 1
continue after death to the spouse during the lifetime of the spouse; or 2
3. Survivorship fifty percent (50%). The member may elect to receive a 3
decreased retirement allowance during the member's lifetime and have 4
one-half (1/2) of the retirement allowance continue after death to the 5
spouse during the lifetime of the spouse. 6
In lieu of the benefits provided by this paragraph to the surviving spouse, the 7
member may elect prior to retirement to have the benefits payable under this 8
paragraph paid to an individual dependent child or to a special needs trust by 9
completing the forms provided by the Judicial Form Retirement System. If no 10
surviving spouse or dependent children are eligible to receive benefits, then 11
the provisions of subsection (5) of this section shall apply to the member. 12
(c) For purposes of this section a "dependent child" shall mean a child who is less 13
than twenty-one (21) years of age or a disabled child who is eligible for Social 14
Security disability benefits. 15
(9) (a) As used in this section, "special needs trust" means a trust described in 42 16
U.S.C. sec. 1396p(d)(4)(A). 17
(b) In any circumstances in which a surviving spouse would be entitled to any 18
allowance under this section, the monthly allowance that the surviving 19
spouse was receiving or is entitled to receive may be paid to a special needs 20
trust for the benefit of the surviving spouse. 21
Section 13. KRS 21.425 is amended to read as follows: 22
(1) In any circumstances in which a surviving spouse would be entitled to any 23
allowance under KRS 21.420, but there is no surviving spouse or the surviving 24
spouse subsequently dies, and there is a surviving child or children of the member 25
under the age of twenty-one (21), or there is a disabled child or children, the 26
monthly allowance that the surviving spouse would have received or was receiving 27 UNOFFICIAL COPY 25 RS SB 58/GA
Page 64 of 64
SB005810.100 - 938 - XXXX 3/5/2025 3:59 PM GA
shall be continued, as follows: 1
(a) If the member does not have a disabled child or children, the benefit shall 2
continue until there are no children remaining under the age of twenty-one 3
(21); or 4
(b) If the member has a disabled child or children, the benefit shall continue until 5
the death of the last remaining disabled child. 6
(2) A member may designate his or her child or children under the age of twenty-one 7
(21), or his or her disabled child or children, or a special needs trust as defined by 8
subsection (9) of Section 12 of this Act for the benefit of the disabled child, to 9
receive the death benefit payable under KRS 21.420 instead of his or her spouse, or 10
he or she may designate that his or her spouse shall receive a percentage of the 11
death benefit, and his or her child or children under the age of twenty-one (21), or 12
his or her disabled child or children, or a special needs trust as defined by 13
subsection (9) of Section 12 of this Act for the benefit of a disabled child, shall 14
receive the remainder. The member making such a choice shall designate his or her 15
beneficiary or beneficiaries in writing to the manager of the Judicial Form 16
Retirement System on a form provided by the manager. 17
(3) For purposes of this section, "disabled" means an individual determined by the 18
Social Security Administration to be entitled to total disability benefits. 19
(4) Subsections (1) to (3) of this section shall not apply to a member who begins 20
participating in the Judicial Retirement Plan on or after January 1, 2014. 21