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Regular Session, 2012
HOUSE BILL NO. 1048
BY REPRESENTATIVE POPE
RETIREMENT/TEACHERS: Provides for the maintenance of tax qualification status for
the Teachers' Retirement System of La.
AN ACT1
To amend and reenact R.S. 11:701(10), 761(A)(3)(b), 768(A)(2) and (B)(2)(introductory2
paragraph), and 786(A)(1) and to enact R.S. 11:785 and 927(E), relative to the3
Teachers' Retirement System of Louisiana; to provide with respect to tax-4
qualification of such system; to make certain changes to such system's provisions in5
conformity with federal tax-qualification provisions; to provide effective dates; and6
to provide for related matters.7
Notice of intention to introduce this Act has been published8
as provided by Article X, Section 29(C) of the Constitution9
of Louisiana.10
Be it enacted by the Legislature of Louisiana:11
Section 1. R.S. 11:701(10), 761(A)(3)(b), 768(A)(2) and (B)(2)(introductory12
paragraph), and 786(A)(1) are hereby amended and reenacted and R.S. 11:785 and 927(E)13
are hereby enacted to read as follows: 14
§701. Definitions15
As used in this Chapter, the following words and phrases have the meanings16
ascribed to them in this Section unless a different meaning is plainly required by the17
context:18
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(10) "Earnable compensation" means the compensation earned by a member1
during the full normal working time as a teacher. Earnable compensation shall2
include any differential wage payment, as defined by 26 U.S.C. 3401(h)(2), which3
is made by an employer to any individual performing qualified military service.4
Earnable compensation shall not include per diem, post allowances, payment in kind,5
hazardous duty pay, or any other allowance for expense authorized and incurred as6
an incident to employment, nor payments in lieu of unused sick or annual leave, nor7
retroactive salary increases unless such increase was granted by legislative act or by8
a city/parish systemwide salary increase, nor payment for discontinuation of9
contractual services, unless the payment is made on a monthly basis. If a member10
is granted an official leave and he makes contributions for the period of leave,11
"earnable compensation" earnable compensation shall not include compensation paid12
for other employment which would not have been possible without the leave. The13
board of trustees shall determine whether or not any other payments are to be14
classified as earnable compensation.15
* * *16
§761. Retirement benefits; application; eligibility requirements; effective date;17
cancellation; errors and omissions18
A.19
* * *20
(3) Any person whose first employment making him eligible for membership21
in one of the state systems occurred on or after January 1, 2011, may retire upon22
written application to the board of trustees, if at the time of application the member:23
* * *24
(b) Has twenty years of service credit at any age, exclusive of military25
service and unused annual and sick leave and military service other than qualified26
military service as provided in 26 U.S.C. 414(u) earned on or after December 12,27
1994, but any person retiring under this Subparagraph shall have his benefit,28
inclusive of military service credit and allowable unused annual and sick leave,29 HLS 12RS-1421 ENGROSSED
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actuarially reduced from the earliest age that he would normally become eligible for1
a regular retirement benefit under Subparagraph (a) of this Paragraph if he had2
continued in service to that age. Any member who elects to retire under the3
provisions of this Subparagraph shall not be eligible to participate in the Deferred4
Retirement Option Plan provided by R.S. 11:786 or the Initial Lump-Sum Benefit5
option provided by R.S. 11:783.6
* * *7
§768. Retirement allowances8
A.9
* * *10
(2) Notwithstanding the provisions of Paragraph (1) of this Subsection, any11
member who retires on or after July 1, 1997, who became a member prior to July 1,12
1999, and who has attained the age of sixty-five years and has credit for at least13
twenty years of creditable service, exclusive of military service, unused accumulated14
sick leave, and unused accumulated annual leave, and military service other than15
qualified military service as provided in 26 U.S.C. 414(u) earned on or after16
December 12, 1994, or any of these, or who has attained the age of fifty-five years17
and has credit for at least twenty-five years of creditable service, exclusive of unused18
accumulated sick leave and unused accumulated annual leave, or who has credit for19
at least thirty years of creditable service at any age, exclusive of unused accumulated20
sick leave and unused accumulated annual leave, shall receive an annual benefit21
which provides an allowance equal to two and one-half percent of his average22
earnable compensation, multiplied by the number of years of creditable service, plus23
a sum of three hundred dollars. The referenced additional sum of three hundred24
dollars shall only be applicable with respect to persons becoming members prior to25
July 1, 1986.26
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B.28
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(2) Notwithstanding the provisions of Paragraph (1) of this Subsection, any1
person who became a member on or after July 1, 1999, whose first employment2
making him eligible for membership in one of the state systems occurred on or3
before December 31, 2010, having twenty years of service credit, exclusive of4
military service and unused annual and sick leave and military service other than5
qualified military service as provided in 26 U.S.C. 414(u) earned on or after6
December 12, 1994, but who is less than sixty years of age, may retire but he shall7
have his maximum benefit inclusive of military service credit and allowable unused8
annual and sick leave actuarially reduced from the earlier of the following:9
* * *10
§785. Compliance with certain federal and state provisions relating to qualified11
military service 12
A. Notwithstanding any other provision of law to the contrary, effective13
December 12, 1994, contributions, benefits, and service credit in this system with14
respect to qualified military service shall be governed by the Uniformed Services15
Employment and Reemployment Rights Act of 1994, 26 U.S.C. 414(u), and Part VI16
of Chapter 2 of Title 29 of the Louisiana Revised Statutes of 1950.17
B. Effective January 1, 2007, 26 U.S.C. 401(a)(37), as enacted by the Heroes18
Earnings Assistance and Relief Tax Act of 2008, is hereby adopted as part of the19
retirement system law.20
C. Effective January 1, 2009, 26 U.S.C. 3401(h)(2), as enacted by the Heroes21
Earnings Assistance and Relief Tax Act of 2008, is hereby adopted as part of the22
retirement system law.23
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§786. Deferred Retirement Option Plan25
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A.(1) In lieu of terminating employment and accepting a retirement27
allowance, any member of this system whose first employment making him eligible28
for membership in one of the state retirement systems occurred on or before29 HLS 12RS-1421 ENGROSSED
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December 31, 2010, and who is not covered by R.S. 11:801 and who has thirty years1
of service credit at any age, twenty-five years of service credit and is at least age2
fifty-five, or has twenty years of service credit exclusive of military service other3
than qualified military service as provided in 26 U.S.C. 414(u) earned on or after4
December 12, 1994, and is at least age sixty-five may elect to participate in the5
Deferred Retirement Option Plan. A member with ten years of service credit6
exclusive of military service other than qualified military service as provided in 267
U.S.C. 414(u) earned on or after December 12, 1994, and who is at least age sixty8
may elect to participate in the plan, but all benefits payable at any time shall only be9
calculated using a two percent benefit formula.10
* * *11
§927. Contributions12
* * *13
E. Effective January 1, 2009, to the extent required by 26 U.S.C. 414(u)(12),14
any differential wage payment, as defined by 26 U.S.C. 3401(h)(2), of which is made15
by any employer to any individual performing qualified military service shall be16
treated as earnable compensation for purposes of applying the limits on annual17
additions under 26 U.S.C. 415(c), and any participant of the optional retirement plan18
shall be treated as an employee of the employer making such payment.19
Section 2. This Act shall become effective on July 1, 2012; if vetoed by the governor20
and subsequently approved by the legislature, this Act shall become effective on July 1,21
2012, or on the day following such approval by the legislature, whichever is later.22
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Pope HB No. 1048
Abstract: Relative to the Teachers' Retirement System of La. (TRSL), makes certain
changes to such system's provisions in conformity with federal tax-qualification
provisions. HLS 12RS-1421 ENGROSSED
HB NO. 1048
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Present federal law (Internal Revenue Code §401 et seq.) contains certain requirements
which must be met in order for governmental and nongovernmental retirement plans to attain
and maintain "tax-qualified" status.
Present federal law (the Uniformed Services Employment and Reemployment Rights Act
(USERRA)) provides relative to reemployment rights and retirement benefits of retirement
system members performing qualified military service.
Present state law (R.S. 29:401 et seq.) adopts and supplements USERRA.
Present federal law (Internal Revenue Code §414(u)) requires a retirement plan to comply
with USERRA in order to maintain its tax-qualified status.
Proposed law adopts the provisions of present federal law (IRS Code and USERRA) and
present state law into TRSL's laws, relative to contributions, benefits, and service credit.
Present federal law (the Heroes Earnings Assistance and Relief Tax Act (HEART)) requires
a tax-qualified retirement plan to comply with several additional requirements with respect
to retirement system members performing qualified military service:
(1)Death Benefits - for purposes of death benefits, if a member dies while performing
qualified military service, the plan shall treat such member as having died during
covered employment with the retirement plan.
(2)Differential Wage Payment - for any member performing qualified military service
who received differential wage payments from his employer (the portion of wages
that the employee would be receiving if he were still employed), such payments shall
be treated as compensation for purposes of testing contribution limits under federal
law.
Proposed law conforms provisions of TRSL law to provisions of HEART for tax
qualification purposes.
Effective July 1, 2012.
(Amends 11:701(10), 761(A)(3)(b), 768(A)(2) and (B)(2)(intro. para.), and 786(A)(1); Adds
R.S. 11:785 and 927(E))