S.B. No. 1954
AN ACT
relating to participation in and contributions to the optional
retirement program for certain employees of institutions of higher
education.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 830.102, Government Code, is amended by
amending Subsection (c) and adding Subsections (c-1) and (c-2) to
read as follows:
(c) Except as provided by Subsections (c-1) and (c-2), a [A]
person who becomes eligible to participate in the optional
retirement program after the date the program becomes available at
the person's place of employment must elect to participate before
the 91st day after becoming eligible.
(c-1) A person who becomes eligible to participate in the
optional retirement program and is notified by the person's
employer of the opportunity to participate in the program after the
first day and before the 91st day after the date the person becomes
eligible must elect to participate in the program before the later
of:
(1) the 91st day after the date the person becomes
eligible; or
(2) the 31st day after the date the person receives
notice of the opportunity to participate in the program.
(c-2) A person who becomes eligible to participate in the
optional retirement program and is notified by the person's
employer of the opportunity to participate in the program on or
after the 91st day after the date the person becomes eligible must
be notified by the employer before the 151st day after the date the
person becomes eligible. The person must elect to participate in
the program before the later of:
(1) the 151st day after the date the person becomes
eligible; or
(2) the 31st day after the date the person receives
notice of the opportunity to participate in the program.
SECTION 2. Subchapter B, Chapter 830, Government Code, is
amended by adding Section 830.108 to read as follows:
Sec. 830.108. CORRECTION OF CERTAIN REPORTING ERRORS.
(a) For purposes of this section, an employer submits a member
contribution to the retirement system on behalf of a person in error
if the person:
(1) previously elected to participate in the optional
retirement program;
(2) participated in the program for at least one year;
and
(3) is or was employed by an institution of higher
education in a position normally covered by the retirement system
and is or was at the time of that employment not eligible for
membership in the retirement system under Section 830.106.
(b) If an employer commits an error described by Subsection
(a) and the person on whose behalf the member contribution is
erroneously made is a participant in the optional retirement
program:
(1) the person's participation in the program shall be
immediately restored; and
(2) in accordance with this section and as soon as
practicable, funds shall be deposited in the person's participant
account in the program or otherwise remitted to the person.
(c) Subject to Subsection (d), on discovery of an error
described by this section, the retirement system shall, on
certification by an employer that the employer committed the error:
(1) make a direct trustee-to-trustee transfer to the
trustee of the optional retirement program for deposit in the
person's participant account in an amount equal to the participant
contribution that would have been paid for the benefit of the person
to the program under Section 830.201 during the period in which
member contributions were submitted to the retirement system in
error, plus an amount representing earnings on the member
contribution at the assumed rate of return provided by Subsection
(g);
(2) credit the employer through the retirement
system's employer reporting system an amount equal to the amount of
any employer contributions made under Section 825.4041, 825.406,
825.407, or 825.4071 in error on compensation paid to the person;
and
(3) remit to the person:
(A) the amount of any member contribution made to
the retirement system in error that exceeds the amount of the
participant contribution that would have been paid for the benefit
of the person to the program during the period in which member
contributions were submitted to the retirement system in error;
(B) the amount of any member contribution made to
the retirement system in error that was made on an after-tax basis
and that the retirement system could not transfer via a direct
trustee-to-trustee transfer under applicable provisions of the
Internal Revenue Code, including regulations adopted under the
Internal Revenue Code, or under the terms of the program
established by the employer; and
(C) any amount paid by the person to the
retirement system to purchase or reinstate service credit during
the period the person was not eligible for membership in the
retirement system, including any administrative, reinstatement,
and installment fees paid in connection with the purchase.
(d) A transfer described by Subsection (c) may not include
the amount of any member contribution made to the retirement system
in error that:
(1) exceeds the amount of the participant contribution
that would have been paid for the benefit of the person to the
optional retirement program under Section 830.201; or
(2) was made on an after-tax basis unless the plan
document for each employer program:
(A) permits the employer program to receive
direct trustee-to-trustee transfers of after-tax amounts; and
(B) provides that the trustee of the employer
program agrees to separately account for amounts transferred and
earnings on amounts transferred, including accounting for the
portion of the distribution that is includable in gross income and
the portion of the distribution that is not includable in gross
income.
(e) On certification by an employer that the employer
committed an error described by this section, the comptroller shall
transfer to or credit the employer an amount equal to the state
contribution that would have been paid for the benefit of the person
under Section 830.201 plus an amount representing earnings on the
state contribution at the assumed rate of return provided by
Subsection (g).
(f) An employer that commits an error described by this
section shall deposit in the person's participant account in the
program:
(1) in accordance with Subsection (c), the amount of
the employer contribution that would have been paid for the benefit
of the person as a participant under Section 830.201 and under any
other law, rule, or employer policy;
(2) an amount representing earnings on the employer
contribution at the assumed rate of return determined by the
employer in accordance with applicable Internal Revenue Code
correction requirements; and
(3) an amount equal to the state contribution that
would have been paid for the benefit of the person under Section
830.201 plus the amount representing earnings credited to the
employer under Subsection (e).
(g) The assumed rate of return is earned monthly and
computed at the rate of four percent per year. Except as provided
by this subsection, the amount of earnings based on the assumed rate
of return is credited annually at the end of each 12-month period.
The first 12-month period begins with the month the first deposit
was submitted in error. The amount of assumed earnings is prorated
to the month of payment.
(h) Amounts paid, transferred, or credited under this
section are reduced by any amount required to be withheld by law or
court order.
SECTION 3. Section 830.108, Government Code, as added by
this Act, applies to a member contribution submitted in error as
provided by that section and maintained by a retirement system,
regardless of whether the contribution was submitted before, on, or
after the effective date of this Act.
SECTION 4. This Act takes effect September 1, 2017.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1954 passed the Senate on
April 19, 2017, by the following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1954 passed the House on
May 17, 2017, by the following vote: Yeas 140, Nays 0, two
present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor