HB 535 - SB 510
FISCAL NOTE
Fiscal Review Committee
Tennessee General Assembly
February 20, 2025
Fiscal Analyst: Elizabeth Bransford | Email: elizabeth.bransford@capitol.tn.gov | Phone: 615-741-2564
HB 535 - SB 510
SUMMARY OF BILL: Makes various changes relative to the Tennessee Consolidated
Retirement System (TCRS). Eliminates employer contribution limits. Clarifies that payment to the
employee of withholdings, taxes, or insurance premiums do not constitute earnable compensation.
Establishes that certain public officials, including members of the General Assembly, who take
office on or after July 1, 2025, have mandatory membership in TCRS. Excludes certain officials
from mandatory membership.
Specifies methods by which TCRS may recover an overpayment of retirement benefits. Authorizes
the State Treasurer to waive the recoupment of overpayment amounts.
Requires TCRS to begin distribution of a retiree’s accumulated contributions if such retiree is not
vested, has lost membership in the retirement system, and does not apply for a retirement benefit by
the specified deadline, within 90 days after TCRS determines such distributions must be made.
Establishes a 70 percent joint and survivor benefit option a retiree may select to allow the retiree’s
designated beneficiary to receive a survivorship benefit upon the retiree’s death. Allows a retiree to
reannuitize joint and survivor retirement benefits in favor of a new spouse beneficiary.
Authorizes a TCRS member or beneficiary to rollover the member’s retirement benefit to a
SIMPLE IRA two years after the first contribution is made to the member’s SIMPLE IRA account.
FISCAL IMPACT:
NOT SIGNIFICANT
Assumptions:
• The proposed legislation makes changes to TCRS as follows:
o Eliminates the three percent and seven percent limitation on public employer
contributions for any tax deferred plan established by an employer participating in
TCRS and TCRS Hybrid plan or Alternate Defined Plan, respectively;
o Specifies that compensation paid as an offset of a tax liability or as a reimbursement
of any withholdings required by state or federal law do not constitute earnable
compensation;
o Eliminates optional membership for city and county judges, city and county
attorneys, county officials, members of the General Assembly, District Attorneys
HB 535 - SB 510 2
General, local government school board members, purchasing agents,
administrators of elections, and part-time employees;
o Clarifies that officials who have been elected, appointed, reelected, or reappointed
to a position that previously had optional membership and made an irrevocable
election not to participate in the retirement system prior to July 1, 2025 are not
required to become a member of the retirement system;
o Provides methods by which TCRS may recover benefit overpayments;
o Authorizes the State Treasurer to waive the recovery of overpayment through policy
that is consistent with fiduciary duty and federal law;
o Establishes a new 70 percent joint and survivor benefit option complying with
federal law;
o Requires TCRS to begin distribution of a retiree’s accumulated contributions if such
retiree is not vested, has lost membership in the retirement system, and does not
apply for a retirement benefit by the specified deadline, within 90 days after TCRS
determines such distributions must be made;
o Allows a retiree to reannuitize retirement benefits in favor of a new spouse
beneficiary following cancellation of a former spouse beneficiary due to divorce or
death of the beneficiary; and
o Authorizes a TCRS member or beneficiary to rollover the member’s retirement
benefit to their SIMPLE IRA two years after the first contribution has been made.
• According to TCRS, the proposed legislation is not anticipated to significantly impact
administrative costs for TCRS.
• There will be no change in the overall lump sum pension liability.
• Total employer contributions by local governments to retirement funds are not anticipated
to be significantly altered.
• Any impact to local government is estimated to be not significant.
CERTIFICATION:
The information contained herein is true and correct to the best of my knowledge.
Bojan Savic, Executive Director