H.B. No. 2796
AN ACT
relating to participation in, contributions to, and the benefits
and administration of retirement systems for police officers in
certain municipalities.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 6.01(f), Chapter 452 (S.B. 738), Acts of
the 72nd Legislature, Regular Session, 1991 (Article 6243n-1,
Vernon's Texas Civil Statutes), is amended to read as follows:
(f) For purposes of this section, compensation of each
noneligible member taken into account under this Act may not exceed
$200,000 [$150,000] per calendar year, indexed pursuant to Section
401(a)(17) of the Internal Revenue Code of 1986 (26 U.S.C. Section
401). The $200,000 [$150,000] limit does not apply to an eligible
member. For purposes of this subsection, an eligible member is any
individual who first became a member before January 1, 1996. For
purposes of this subsection, a noneligible member is any other
member.
SECTION 2. Section 8.01(a), Chapter 452 (S.B. 738), Acts of
the 72nd Legislature, Regular Session, 1991 (Article 6243n-1,
Vernon's Texas Civil Statutes), is amended to read as follows:
(a)(1) Deposits by the members to the police retirement
system shall be made at a rate of at least six percent of the basic
hourly earnings of each member. Deposits required to be made by
members shall be deducted from payroll. On recommendation of the
board, the Active--Contributory members may by a majority of those
voting increase the rate of member deposits above six percent to
whatever amount the board has recommended. If the deposit rate for
members has been increased to a rate above six percent, the rate may
be decreased if the board recommends the decrease, the board's
actuary approves the decrease, and a majority of the
Active--Contributory members voting on the matter approve the
decrease.
(2) The city shall contribute amounts equal to 18
percent of the basic hourly earnings of each member employed by the
city for all periods on or before September 30, 2010, subject to
additional amounts as provided by Subdivision (3) of this
subsection. The city shall contribute amounts equal to 19 percent
of the basic hourly earnings of each member employed by the city for
all periods after September 30, 2010, subject to additional amounts
as provided by Subdivision (3) of this subsection. The city council
may also authorize the city to make additional contributions to the
police retirement system in whatever amount the city council may
determine. Contributions by the city shall be made each pay period.
(3) The city shall contribute amounts in addition to
the amounts described by Subdivision (2) of this subsection as
required by Section 803.101(h), Government Code, to fund the
additional liabilities incurred by the police retirement system as
a result of participating in the proportionate retirement program.
The rate at which the city shall contribute additional amounts
under this subdivision is equal to 0.25 percent of the basic hourly
earnings of each member employed by the city for all periods from
January 4, 2009, through September 30, 2009. The rate at which the
city shall contribute additional amounts under this subdivision is
equal to 0.63 percent of the basic hourly earnings of each member
employed by the city for all periods after September 30, 2009,
subject to adjustment under Subdivision (4) of this subsection.
(4) The additional contribution rate under
Subdivision (3) of this subsection shall increase or decrease as
considered necessary by the actuary for the police retirement
system after each five-year period of participation by the system
in the proportionate retirement program in order to update the
amount necessary to fund the additional liabilities incurred by the
system as a result of participating in the proportionate retirement
program and of the consolidation of the city's public safety and
emergency management department with the police department on
January 4, 2009. The system's actuary shall perform an experience
study that shall be the basis for a contribution rate adjustment
under this subdivision. The effective date of the initial
contribution rate adjustment under this subdivision is October 1,
2015. Each later contribution rate adjustment under this
subdivision takes effect October 1 of every fifth year after the
effective date of the initial contribution rate adjustment. The
system's actuary shall present to the police retirement board the
experience study on which any contribution rate adjustment under
this subdivision is based not later than 45 days before the
effective date of the adjustment, and the city's actuary shall have
the opportunity to review and comment on the study. An adjustment
in the additional contribution rate under this subdivision may not
cause the additional contribution rate under Subdivision (3) of
this subsection to be less than zero.
SECTION 3. Section 11.01, Chapter 452 (S.B. 738), Acts of
the 72nd Legislature, Regular Session, 1991 (Article 6243n-1,
Vernon's Texas Civil Statutes), is amended to read as follows:
Sec. 11.01. LIMITATION ON PAYMENT OF BENEFITS. (a) If
the amount of any benefit payment otherwise due under this Act or
the total payments due under this Act and any other qualified
defined benefit plan maintained by this city would exceed the
limitations provided by Section 415(b) [415], Internal Revenue Code
of 1986, as amended, and the regulations adopted under that
section, the police retirement system shall reduce the amount of
the benefit paid under this Act as required to comply with that
section. If the annual additions that would otherwise be allocated
under this Act, or the total annual additions under this Act and any
other qualified plan maintained by the city would exceed the limits
under Section 415(c), Internal Revenue Code of 1986, the annual
additions under this Act shall be reduced to the extent required to
comply with Section 415(c), Internal Revenue Code of 1986.
(b) For purposes of determining if the benefits or annual
additions satisfy the limits provided by Subsection (a) of this
section, the compensation to be used is wages within the meaning of
Section 3401(a), Internal Revenue Code of 1986, plus amounts
deferred at the election of the member that would be included in
wages if not deferred under the rules of Section 402(e)(3), 125(a),
132(f)(4), 457(b), 402(h)(1)(B), or 402(k), Internal Revenue Code
of 1986. However, any rules that would limit the remuneration
included in wages based on the nature or location of the employment
or the services performed are disregarded for purposes of
determining compensation. In addition, any wages paid after a
severance from employment are not included as compensation for
purposes of this subsection unless the payment is for regular pay
as described in 26 C.F.R. Section 1.415(c)-2(e)(3)(ii) and is made
by the later of two and one-half months after the severance from
employment or the end of the calendar year that includes the date of
severance from employment. If excess annual additions are made to
any member's account despite the efforts of the board of trustees,
the amount shall be treated in accordance with 26 C.F.R. Section
1.402(g)-1(e)(2) or (3).
(c) Notwithstanding any other provision of this Act, the
applicable mortality table for purposes of adjusting a benefit due
to the limitations provided under Section 415(b)(2)(B) or (D),
Internal Revenue Code of 1986, is the table prescribed by Revenue
Ruling 2001-62.
SECTION 4. Sections 13.01(b)(2) and (3), Chapter 452 (S.B.
738), Acts of the 72nd Legislature, Regular Session, 1991 (Article
6243n-1, Vernon's Texas Civil Statutes), are amended to read as
follows:
(2) "Eligible retirement plan" means[:
[(A)] an individual retirement account described
by Section 408(a) of the Internal Revenue Code of 1986 (26 U.S.C.
Section 408), an individual retirement annuity described in Section
408(b) of the Internal Revenue Code of 1986 (26 U.S.C. Section 408),
an annuity plan described in Section 403(a) of the Internal Revenue
Code of 1986 (26 U.S.C. Section 403), [or] a qualified trust
described in Section 401(a) of the Internal Revenue Code of 1986 (26
U.S.C. Section 401), an annuity contract described by Section
403(b) of the Internal Revenue Code of 1986 (26 U.S.C. Section 403),
or an eligible plan under Section 457(b) of the Internal Revenue
Code of 1986 (26 U.S.C. Section 457), that is maintained by a state,
a political subdivision of a state, or any agency or
instrumentality of a state or political subdivision of a state that
agrees to separately account for amounts transferred from the plan,
provided that any of the vehicles described above [that] accepts
the distributee's eligible rollover distribution[; or
[(B) an individual retirement account or
individual retirement annuity, in the case of an eligible rollover
distribution to a surviving spouse]. The term applies to a
distribution to a surviving spouse or to a spouse or former spouse
who is the alternate payee under a qualified domestic relations
order within the meaning of Chapter 804, Government Code. In the
case of an eligible rollover distribution to a non-spouse
beneficiary, an eligible retirement plan includes only an
individual retirement account or individual retirement annuity
described above.
(3) "Distributee" means a member or former member, the
member's or former member's surviving spouse, [or] the member's or
former member's spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as prescribed by
Section 804.003, Government Code, or the member's or former
member's non-spouse beneficiary.
SECTION 5. This Act takes effect September 1, 2009.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 2796 was passed by the House on April
22, 2009, by the following vote: Yeas 149, Nays 0, 1 present, not
voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 2796 was passed by the Senate on May
21, 2009, by the following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor