RBS No. 1886
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ENGROSSED SENATE
BILL NO. 826 By: Howard of the Senate
and
O’Donnell of the House
An Act relating to firefighter retirement; amending
11 O.S. 2011, Section 49 -106.1, as last amend ed by
Section 3, Chapter 281, O.S.L. 2014 (11 O.S. Supp.
2020, Section 49-106.1), which relates to the
deferred option plan; specifying that certain
distributions be subject to certain law; requiring
interest of certain plan be distributed; specifying
methods of distribution; specifying methods of
distribution if certain election is not made;
providing that certain amount be reduced by certain
withdrawals from account; providing that only one
distribution be made per calendar year; and
specifying when certain distribution be made.
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, Chap ter 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 Retireme nt System serving as an active firefighter in a
fire department of a participating municipality who has not less
than twenty (20) years of creditable service, or any member of the RBS No. 1886
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Oklahoma Firefighters Pens ion 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 be nefits
in accordance with the provisions of this section.
B. For purposes of this section, creditable service shall
include service credit reciproca lly 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 active firefig hters shall not exceed five
(5) years. Participat ion 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 Defe rred 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 m unicipality but only in a position not covered
under the System, and receive in -service distributions of su ch
member’s accrued monthly retirement benefit from the System. RBS No. 1886
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D. When a member begins participation in the Oklahoma
Firefighters Deferred Option P lan, 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 retur n 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 ac tuary. 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 municipa lity of the System occurs on or after Novemb er
1, 2013, and who participates for the firs t time in the Oklahoma RBS No. 1886
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Firefighters Deferred Option Plan on or after November 1, 2013, and
has completed active participation in the Oklahoma Firefighters
Deferred Option Plan, shall earn interest at a rate equa l to the
actual rate of return of the investm ent 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 rec eive, at the option of the
member, a lump-sum payment from the account equal to the payme nts 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 consequen ce of, the performance of his or her duty
as to prevent the effective performance of his or her dutie s 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 here in to
the contrary, commencement of distributions under t he 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 mu nicipality of the
System occurs on or after November 1, 2 013, and who participates for RBS No. 1886
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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 l ater 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 m ember.
G. Upon the effective date of this act and for ea ch 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 as a
payment or transfer to an eligible retirement plan pursuant to the
provisions of Section 49-106.3 of this title. Failure to make an
election of either a direct lump sum payment or directed 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 re tirement 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
member attains the later of age 62 or the member ’s normal retirement
date; or RBS No. 1886
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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 Internal Rev enue Code of 1986, as amended.
The amount of mandatory distributio n 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 member. If such member was receiving, or
eligible to receive, an in -line-of-duty disability pension a t 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
the surviving spouse of the member, the surviving spouse shall
receive his or her portion of the account balance of the member RBS No. 1886
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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 subsectio n 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 befo re the member
elects to participate in the O klahoma 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 subsect ion, and the date
the member terminates empl oyment with all
participating municipalities as an active firefighter,
c. “earlier attained credited service ” means the credited
service earned by a member as of the back drop date,
and RBS No. 1886
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d. “deferred benefit balan ce” means all monthly
retirement benefits th at would have been payable had
the member elected to ceas e 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 fr om the back drop date to the
termination date, with inter est based on how the
benefit would have accumulated on a compound an nual
basis as if the member had participated in the
Oklahoma Firefighters Deferred Opti on Plan pursuant to
subsections A, B, C, D, E and F of this section from
the back drop date to the te rmination date; and
2. At the termination date, the monthly pension benefit shall
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 m ember 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. The provisions RBS No. 1886
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of subsections B, C, E, F and G H of this section shall apply to
this subsection. A member sh all not participate in the Oklahoma
Firefighters Deferred Option Plan pursuant to thi s subsection if the
member has elected to pa rticipate 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 Oklaho ma 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 elec ts 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 a ssumed interest rate
as certified by the actuary in the yearly evaluation
report of the actuary,
c. “monthly adjustment am ount” means the difference
between the monthly pension pr ior to the back drop
election and the adjusted monthly pension due to the
back drop election, RBS No. 1886
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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 the
interest on the deferred benefit balance from the
pension commencement da te 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 Firefighters Pension and Retirement System whose
first employment with a particip ating employer of the System occurs
on or after November 1, 2013, and such member has more than twent y-
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 particip ate 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 spo use 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
make any such election within ninety (90) days from the date of the
member’s death. If on or after June 4, 2007, su ch election is made, RBS No. 1886
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the monthly pension such surviving s pouse 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 Opti on Plan. The surviving spouse
may only make this electio n if the member has not previously elected
to participate in the Oklahoma Firefig hters Deferred Option Plan.
For purposes of this election, the surviving spouse must have been
married to the firefig hter 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 Okl ahoma Firefighters Pension and
Retirement System whose first employment wi th a participating
employer of the System oc curs 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 disabilit y monthly pension pursuant to Section
49-109 of this title on or after June 4, 2007, such member shal l 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 disability RBS No. 1886
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retirement, provided such election is made within two (2) years from
the date of the member ’s disability retirement. The disability
monthly pension such member is receiving, or entitle d to receive,
shall be adjusted in accordance with the pr ovisions of subsection H
I of this section to account for the member ’s participation in the
Oklahoma Firefighters Deferred Option Plan. The deferred benef it
balance such member is entitled to receiv e shall be reduced by the
back drop pension adjustment am ount 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 i s greater than Zero Dollars ($0.00).
The member may only make this election if the member has not
previously elected to participate in the Ok lahoma Firefighters
Deferred Option Plan.
4. If a member has more tha n 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 occur s 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 file d a
grievance for wrongful termination occurring on or after June 4,
2007, or is not a member of a collective bargaining organization as
a firefighter, is involuntarily terminated and is seeking to h ave
his or her position as a firefighter reinstated throu gh a legal RBS No. 1886
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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 Firef ighters
Deferred Option Plan in accordance with subsectio n 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 me mber and, if the
member’s case pertaining to the member ’s termination is on appeal to
a court of competent jurisdiction, within such period 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 s uch member is
entitled to receive shall be r educed by the back drop pension
adjustment amount and inc reased by the deferred benefit balance
adjustment amount. The member may only make a bac k drop election if
the deferred benefit balance after the adjustme nt described in this
paragraph is greater th an Zero Dollars ($0.00). The member may only
make this election if the member has not previously elected to
participate in the Oklahoma Firefight ers Deferred Option Plan.
5. Subparagraphs d and e of paragraph 1 and paragraphs 3 and 4
of this subsection a re effective June 4, 2007, provided the Internal
Revenue Service issues a favorable determination letter for the RBS No. 1886
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System which includes the provisi ons of such subparagraphs and
paragraphs without modification or a s 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 not issue su ch a determination letter which
includes the provisions of such su bparagraphs 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 subp aragraphs d and e of paragraph 1 and
paragraphs 3 and 4 of this su bsection shall be repealed effective
June 4, 2007.
Passed the Senate the 9th day of March, 2021.
Presiding Officer of the Senate
Passed the House of Representatives the ____ day of __________,
2021.
Presiding Officer of the House
of Representatives