RBH No. 7986
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STATE OF OKLAHOMA
1st Session of the 58th Legislature (2021)
COMMITTEE SUBSTITUTE
FOR
SENATE BILL NO. 826 By: Howard of the Senate
and
O’Donnell of the House
PROPOSED COMMITTEE SUBSTITUTE
[ firefighter retirement - deferred option plan -
specifying that certain distributions be subject to
certain law - effective date –
emergency ]
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 11 O.S. 2011, Section 49 -106.1, as
last amended by Section 3, Chapter 281, O.S.L. 2014 (11 O.S. Supp.
2020, Section 49-106.1), is amended to read as follows:
Section 49-106.1 A. In lieu of terminating employment and
accepting a service retirement pension pursuant to Sections 49 -101
and 49-106 of this title, any member of the Oklahoma Firefighters
Pension and Retirement System serving as an active firefighter in a
fire department of a participating municipality who has not less RBH No. 7986
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than twenty (20) years of creditable service, or any member of the
Oklahoma Firefighters Pension and Retirement System whose first
employment with a participating employer of the System occurs on or
after November 1, 2013, and who has not less than twenty -two (22)
years of creditable service and who is eligible to receive a service
retirement pension may elect to participate in the Oklahoma
Firefighters Deferred Option Plan and defer the receipts of benefits
in accordance with the provisions of this section.
B. For purposes of this section, creditable service shall
include service credi t reciprocally recognized pursuant to Sections
49-100.1 through 49-100.8 and Sections 49 -101, 49-101.1 and 49-101.2
of this title but for eligibility purposes only.
C. The duration of participation in the Oklahoma Firefighters
Deferred Option Plan for act ive firefighters shall not exceed five
(5) years. Participation in the Oklahoma Firefighters Deferred
Option Plan must begin the first day of a month and end on the last
day of a month. At the conclusion of a member’s participation in
the Oklahoma Firefighters Deferred Option Plan, the member shall
terminate employment with all participating municipalities as a
firefighter, and shall start receiving the member’s accrued monthly
retirement benefit from the System. Such a member may be reemployed
by a participating municipality but only in a position not covered
under the System, and receive in -service distributions of such
member’s accrued monthly retirement benefit from the System. RBH No. 7986
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D. When a member begins participation in the Oklahoma
Firefighters Deferred Option Plan, the contribution of the member
shall cease. The employer contributions shall continue to be paid
in accordance with subsection B of Section 49 -122 of this title.
Employer contributions for members who elect the Oklahoma
Firefighters Deferred Option Plan shall be credited equally to the
Oklahoma Firefighters Pension and Retirement System and to the
member’s Oklahoma Firefighters Deferred Option Plan account. The
monthly retirement benefits that would have been payable had the
member elected to cease employment and receive a service retirement
shall be paid into the member’s Oklahoma Firefighters Deferred
Option Plan account.
E. 1. A member who participates in this plan shall be eligible
to receive cost-of-living increases.
2. A member who participates in this plan shall earn interest
at a rate of two percentage points below the rate of return of the
investment portfolio of the System, but no less than the actuarial
assumed interest rate as certified by the actuary in the yearly
evaluation report of the actuary. The interest shall be credited to
the individual account balance of the member on an annual basis.
3. Effective November 1, 2013, the Oklahoma Firefighters
Deferred Option Plan account for a member whose first service with a
participating municipality of the System occurs on or after November
1, 2013, and who participates for the first time in the Oklahoma RBH No. 7986
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Firefighters Deferred Option Plan on or after November 1, 2013, and
has completed active participation in the Oklahoma Firefigh ters
Deferred Option Plan, shall earn interest at a rate equal to the
actual rate of return of the investment portfolio of the System,
less one (1) percentage point to offset administrative costs of the
System as determined by the System.
F. A member in the plan shall receive, at the option of the
member, a lump-sum payment from the account equal to the payments to
the account or an annuity based upon the account of the member or
may elect any other method of payment if approved by the Board of
Trustees, subject to the mandatory distribution of interest
provisions in subsection G of this section and the required minimum
distributions of the Internal Revenue Code of 1986, 26 U.S.C., as
amended. If a member becomes so physically or mentally disabled
while in, or in consequence of, the performance of his or her duty
as to prevent the effective performance of his or her duties that
the State Board approves an in -line-of-duty disability pension, the
payment from the account shall be an in -line-of-duty disability
payment. Notwithstanding any other provision contained herein to
the contrary, commencement of distributions under the Oklahoma
Firefighters Deferred Option Plan shall be no later than the time as
set forth in subsection B of Section 49 -106 of this title and a. A
member whose first service with a participating municipality of the
System occurs on or after November 1, 2013, and who participates for RBH No. 7986
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the first time in the Oklahoma Firefighters Deferred Option Plan on
or after November 1, 2013, must receive a distribution of the entire
remaining balance in the member’s Oklahoma Firefighters Deferred
Option Plan account no later than April 1 of the calendar year
following the later of:
1. The calendar year in which the member reaches seventy and
one-half (70 1/2) years of age; or
2. The actual retirement date of the member.
G. Upon the effective date of this act and for each plan year
thereafter, for retired members, disabled members and surviving
spouses receiving monthly retirement benefits from the System , the
interest earned annually on the accumulated Plan B balance of the
member, as determined as of June 30 of the relevant plan year, shall
be distributed each year as a direct payment to the member or, if
applicable, the member's surviving spouse, or as a payment or
transfer to an eligible retirement plan pursuant to the provisions
of Section 49-106.3 of this title. A member's failure to make an
election of either a direct lump sum payment or direct rollover of
the interest earned for the applicable plan year shall result in:
1. An automatic rollover of the interest earned for the
applicable plan year to an individual retirement plan, consistent
with the mandatory distribution rules of Section 401(a)(31) of the
Internal Revenue Code of 1986, as amended, for any member before the RBH No. 7986
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member attains the later of age 62 or the member’s normal retirement
date; or
2. A direct lump sum distribution to the member for any other
member before he or she attains the required minimum distribution
age specified by the In ternal Revenue Code of 1986, as amended.
The amount of mandatory distribution of interest earned annually
for any plan year shall be reduced by the amount of voluntary
withdrawals from the member’s Plan B balance during the plan year.
No individual shall receive both a mandatory distribution of
interest and an IRS-required minimum distribution in the same
calendar year. In any calendar year in which the System would
otherwise distribute both a mandatory distribution of interest and
an IRS required minimum distribution to an individual, only the IRS -
required minimum distribution shall be made.
H. If a member dies while maintaining an account balance in the
plan the System shall pay to the designated recipient or recipients
of the member, or if there is no designated recipient or if the
designated recipient predeceases the member, to the spouse of the
member, or if there is no spouse or if the spouse predeceases the
member, to the estate of the member a lump -sum payment equal to the
account balance of the m ember. If such member was receiving, or
eligible to receive, an in -line-of-duty disability pension at the
time of his or her death, payment of the account balance shall be an
in-line-of-duty disability payment. If a designated recipient is RBH No. 7986
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the surviving spouse of the member, the surviving spouse shall
receive his or her portion of the account balance of the member
pursuant to subsection F of this section. The surviving spouse,
whether or not he or she is a designated recipient of the member,
may elect to receive his or her portion of the account balance of
the member in the same manner as was applicable to the member.
H. I. In lieu of participating in the Oklahoma Firefighters
Deferred Option Plan pursuant to subsections A, B, C, D, E and F of
this section, a member may elect to participate in the Oklahoma
Firefighters Deferred Option Plan pursuant to this subsection as
follows:
1. For purposes of this subsection and subsection I J of this
section, the following definitions shall apply:
a. "back drop date" means the member's normal retirement
date or the date five (5) years before the member
elects to participate in the Oklahoma Firefighters
Deferred Option Plan, whichever date is later,
b. "termination date" means the date the member elects to
participate in the Oklahoma Firefighters Deferred
Option Plan pursuant to this subsection, and the date
the member terminates employment with all
participating municipalities as an active firefighter, RBH No. 7986
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c. "earlier attained credited service" means the credited
service earned by a member as of the back drop date,
and
d. "deferred benefit balance" means all monthly
retirement benefits that would have been payable had
the member elected to cease employment on the back
drop date and receive a service retirement from the
back drop date to the termination date, all the
member's contributions and one -half (1/2) of the
employer contributions from the back drop date to the
termination date, with interest based on how the
benefit would have accumulated on a compound annual
basis as if the member had participated in the
Oklahoma Firefighters Deferred Option Plan pursuant to
subsections A, B, C, D, E and F of this section from
the back drop date to the termination date; and
2. At the termination date, the monthly pension benefit sh all
be determined based on earlier attained credited service and on the
final average salary as of the back drop date. The member's
individual deferred option account shall be credited with an amount
equal to the deferred benefit balance, the member shall terminate
employment with all participating municipalities as a firefighter,
and shall start receiving the member's accrued monthly retirement
benefit from the System. Such a member may be reemployed by a RBH No. 7986
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participating municipality but only in a position not covered under
the System, and receive in -service distributions of such member’s
accrued monthly retirement benefit from the System. The provisions
of subsections B, C, E, F and G H of this section shall apply to
this subsection. A member shall not p articipate in the Oklahoma
Firefighters Deferred Option Plan pursuant to this subsection if the
member has elected to participate in the Oklahoma Firefighters
Deferred Option Plan pursuant to subsections A, B, C, D, E and F of
this section.
I. J. Certain surviving spouses and members shall be eligible
to participate in the Oklahoma Firefighters Deferred Option Plan
pursuant to subsection H I of this section and this subsection.
1. For purposes of this subsection, the following definitions
shall apply:
a. "back drop election date" means the date the surviving
spouse or member elects to commence participation in
the Oklahoma Firefighters Deferred Option Plan
pursuant to subsection H I of this section and this
subsection,
b. "interest" means the actuarial ass umed interest rate
as certified by the actuary in the yearly evaluation
report of the actuary,
c. "monthly adjustment amount" means the difference
between the monthly pension prior to the back drop RBH No. 7986
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election and the adjusted monthly pension due to the
back drop election,
d. "back drop pension adjustment amount" means the sum of
all the monthly adjustment amounts adjusted for
interest from the pension commencement date to the
back drop election date, and
e. "deferred benefit balance adjustment amount" means t he
interest on the deferred benefit balance from the
pension commencement date to the back drop election
date.
2. If a member who has more than twenty (20) years of
creditable service and is eligible to receive a service, or a member
of the Oklahoma Firef ighters Pension and Retirement System whose
first employment with a participating employer of the System occurs
on or after November 1, 2013, and such member has more than twenty -
two (22) years of creditable service, retirement pension dies on or
after June 4, 2007, and prior to terminating employment, the
member’s surviving spouse shall be eligible to elect to receive a
benefit determined as if the member had elected to participate in
the Oklahoma Firefighters Deferred Option Plan in accordance with
subsection H I of this section on the day immediately preceding such
member’s death. Prior to July 1, 2010, the surviving spouse must
make any such election within one (1) year from the date of the
member’s death. Effective July 1, 2010, the surviving spouse m ust RBH No. 7986
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make any such election within ninety (90) days from the date of the
member’s death. If on or after June 4, 2007, such election is made,
the monthly pension such surviving spouse is entitled to receive
shall be adjusted in accordance with the provision s of subsection H
I of this section to account for the member's participation in the
Oklahoma Firefighters Deferred Option Plan. The surviving spouse
may only make this election if the member has not previously elected
to participate in the Oklahoma Firef ighters Deferred Option Plan.
For purposes of this election, the surviving spouse must have been
married to the firefighter for the thirty (30) continuous months
preceding the firefighter’s death; provided, the surviving spouse of
a member who died while in, or as a consequence of, the performance
of the member’s duty for a participating municipality shall not be
subject to the marriage limitation for this election.
3. If a member has more than twenty (20) years of creditable
service, or a member of the O klahoma Firefighters Pension and
Retirement System whose first employment with a participating
employer of the System occurs on or after November 1, 2013, and such
member has more than twenty -two (22) years of creditable service and
is eligible to receive a service retirement pension, and is eligible
for a retirement for disability monthly pension pursuant to Section
49-109 of this title on or after June 4, 2007, such member shall be
eligible to elect to receive a benefit determined as if the member
had elected to participate in the Oklahoma Firefighters Deferred RBH No. 7986
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Option Plan, in accordance with subsection H I of this section, on
the day immediately preceding the date of the member’s disability
retirement, provided such election is made within two (2) years f rom
the date of the member’s disability retirement. The disability
monthly pension such member is receiving, or entitled to receive,
shall be adjusted in accordance with the provisions of subsection H
I of this section to account for the member’s particip ation in the
Oklahoma Firefighters Deferred Option Plan. The deferred benefit
balance such member is entitled to receive shall be reduced by the
back drop pension adjustment amount and increased by the deferred
benefit balance adjustment amount. The memb er may only make a back
drop election if the deferred benefit balance after the adjustment
described in this paragraph is greater than Zero Dollars ($0.00).
The member may only make this election if the member has not
previously elected to participate in the Oklahoma Firefighters
Deferred Option Plan.
4. If a member has more than twenty (20) years of creditable
service, or a member of the Oklahoma Firefighters Pension and
Retirement System whose first employment with a participating
employer of the System occurs on or after November 1, 2013, and such
member has more than twenty -two (22) years of creditable service and
is eligible to receive a service retirement pension, and filed a
grievance for wrongful termination occurring on or after June 4,
2007, or is not a member of a collective bargaining organization as RBH No. 7986
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a firefighter, is involuntarily terminated and is seeking to have
his or her position as a firefighter reinstated through a legal
process, but is not reinstated as an active member, such member
shall be eligible to elect to receive a benefit determined as if the
member had elected to participate in the Oklahoma Firefighters
Deferred Option Plan in accordance with subsection H I of this
section on the day immediately preceding the date of the member’s
termination. Such election must be made within two (2) years from
the date of the member’s termination as an active member and, if the
member’s case pertaining to the member’s termination is on appeal to
a court of competent jurisdiction, within such per iod set by the
State Board in its sole discretion. The monthly pension such member
is receiving, or entitled to receive, shall be adjusted in
accordance with the provisions of subsection H I of this section to
account for the member’s participation in the Oklahoma Firefighters
Deferred Option Plan. The deferred benefit balance such member is
entitled to receive shall be reduced by the back drop pension
adjustment amount and increased by the deferred benefit balance
adjustment amount. The member may only make a back drop election if
the deferred benefit balance after the adjustment described in this
paragraph is greater than Zero Dollars ($0.00). The member may only
make this election if the member has not previously elected to
participate in the Oklahoma Firefighters Deferred Option Plan. RBH No. 7986
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5. Subparagraphs d and e of paragraph 1 and paragraphs 3 and 4
of this subsection are effective June 4, 2007, provided the Internal
Revenue Service issues a favorable determination letter for the
System which includes t he provisions of such subparagraphs and
paragraphs without modification or as modified to conform to any
changes required by the Internal Revenue Service as part of its
determination letter review process. In the event the Internal
Revenue Service does no t issue such a determination letter which
includes the provisions of such subparagraphs or paragraphs without
modification or as modified to conform to any changes required by
the Internal Revenue Service as part of its determination letter
review process, then subparagraphs d and e of paragraph 1 and
paragraphs 3 and 4 of this subsection shall be repealed effective
June 4, 2007.
SECTION 2. This act shall become effective July 1, 2021.
SECTION 3. It being immediately necessary for the preservation
of the public peace, health or safety, an emergency is hereby
declared to exist, by reason whereof this act shall take effect and
be in full force from and after its passage and approval.
58-1-8076 LRB 04/06/21