There is a newer version of the North Dakota Century Code
2009 North Dakota Code
54 State Government
54-52.6 Defined Contribution Retirement Plan
Download pdfretirement benefits under chapter 54-52. 3. "Eligible employee" means a permanent state employee, except an employee of the
judicial branch or an employee of the board of higher education and state institutions
under the jurisdiction of the board, who is eighteen years or more of age and who is
in a position not classified by North Dakota human resource management services.
If a participating member loses permanent employee status and becomes a
temporary employee, the member may still participate in the defined contribution
retirement plan. 4. "Employee" means any person employed by the state, whose compensation is paid
out of state funds, or funds controlled or administered by the state or paid by the
federal government through any of its executive or administrative officials. 5. "Employer" means the state of North Dakota. 6. "Participating member" means an eligible employee who elects to participate in the
defined contribution retirement plan established under this chapter. 7. "Permanent employee" means a state employee whose services are not limited in
duration and who is filling an approved and regularly funded position and is
employed twenty hours or more per week and at least five months each year. 8. "Wages" and "salaries" means earnings in eligible employment under this chapter
reported as salary on a federal income tax withholding statement plus any salary
reduction or salary deferral amounts under 26 U.S.C. 125, 401(k), 403(b), 414(h), or
457. "Salary" does not include fringe benefits such as payments for unused sick
leave, personal leave, vacation leave paid in a lump sum, overtime, housing
allowances, transportation expenses, early retirement, incentive pay, severance pay,
medical insurance, workforce safety and insurance benefits, disability insurance
premiums or benefits, or salary received by a member in lieu of previously
employer-provided fringe benefits under an agreement between an employee and a
participating employer. Bonuses may be considered as salary under this section if
reported and annualized pursuant to rules adopted by the board. 54-52.6-02. Election. 1. The board shall provide an opportunity for each eligible employee who is a member
of the public employees retirement system on September 30, 2001, and who has not
made a written election under this section to transfer to the defined contribution
retirement plan before October 1, 2001, to elect in writing to terminate membership
in the public employees retirement system and elect to become a participating
member under this chapter. Except as provided in section 54-52.6-03, an election
made by an eligible employee under this section is irrevocable. The board shall
accept written elections under this section from eligible employees during the period
beginning on July 1, 1999, and ending 12:01 a.m. December 14, 2001. An eligible
employee who does not make a written election or who does not file the election
during the period specified in this section continues to be a member of the public
employees retirement system. An eligible employee who makes and files a written Page No. 1 election under this section ceases to be a member of the public employees
retirement system effective twelve midnight December 31, 2001; becomes a
participating member in the defined contribution retirement plan under this chapter
effective 12:01 a.m. January 1, 2002; and waives all of that person's rights to a
pension, annuity, retirement allowance, insurance benefit, or any other benefit under
the public employees retirement system effective December 31, 2001. This section
does not affect a person's right to health benefits or retiree health benefits under
chapter 54-52.1. An eligible employee who is first employed and entered upon the
payroll of that person's employer after September 30, 2001, may make an election
to participate in the defined contribution retirement plan established under this
chapter at any time during the first six months after the date of employment. If the
board, in its sole discretion, determines that the employee was not adequately
notified of the employee's option to participate in the defined contribution retirement
plan, the board may provide the employee a reasonable time within which to make
that election, which may extend beyond the original six-month decision window. 2. If an individual who is a deferred member of the public employees retirement system
on September 30, 2001, is reemployed and by virtue of that employment is again
eligible for membership in the public employees retirement system under chapter
54-52, the individual may elect in writing to remain a member of the public
employees retirement system or if eligible to participate in the defined contribution
retirement plan established under this chapter to terminate membership in the public
employees retirement system and become a participating member in the defined
contribution retirement plan established under this chapter. An election made by a
deferred member under this section is irrevocable. The board shall accept written
elections under this section from a deferred member during the period beginning on
the date of the individual's reemployment and ending upon the expiration of six
months after the date of that reemployment. If the board, in its sole discretion, determines that the employee was not adequately notified of the employee's option
to participate in the defined contribution retirement plan, the board may provide the
employee a reasonable time within which to make that election, which may extend
beyond the original six-month decision window. A deferred member who makes and
files a written election to remain a member of the public employees retirement
system retains all rights and is subject to all conditions as a member of that
retirement system. A deferred member who does not make a written election or
who does not file the election during the period specified in this section continues to
be a member of the public employees retirement system. A deferred member who
makes and files a written election to terminate membership in the public employees
retirement system ceases to be a member of the public employees retirement
system effective on the last day of the payroll period that includes the date of the
election; becomes a participating member in the defined contribution retirement plan
under this chapter effective the first day of the payroll immediately following the date
of the election; and waives all of that person's rights to a pension, an annuity, a
retirement allowance, insurance benefit, or any other benefit under the public
employees retirement system effective the last day of the payroll that includes the
date of the election. This section does not affect any right to health benefits or
retiree health benefits to which the deferred member may otherwise be entitled. 3. An eligible employee who elects to participate in the retirement plan established
under this chapter must remain a participant even if that employee returns to the
classified service or becomes employed by a political subdivision that participates in
the public employees retirement system. The contribution amount must be as provided in this chapter, regardless of the position in which the employee is
employed. Notwithstanding the irrevocability provisions of this chapter, if a member
who elects to participate in the retirement plan established under this chapter
becomes a supreme or district court judge, becomes a member of the highway
patrol, becomes employed in a position subject to teachers' fund for retirement
membership, or becomes an employee of the board of higher education or state
institution under the jurisdiction of the board who is eligible to participate in an Page No. 2 alternative retirement program established under subsection 6 of section 15-10-17,
the member's status as a member of the defined contribution retirement plan is
suspended, and the member becomes a new member of the retirement plan for
which that member's new position is eligible. The member's account balance remains in the defined contribution retirement plan, but no new contributions may be
made to that account. The member's service credit and salary history that were
forfeited as a result of the member's transfer to the defined contribution retirement
plan remain forfeited, and service credit accumulation in the new retirement plan
begins from the first day of employment in the new position. If the member later
returns to employment that is eligible for the defined contribution plan, the member's
suspension must be terminated, the member again becomes a member of the
defined contribution retirement plan, and the member's account resumes accepting
contributions. At the member's option, and pursuant to rules adopted by the board,
the member may transfer any available balance as determined by the provisions of
the alternate retirement plan into the member's account under this chapter. 4. After consultation with its actuary, the board shall determine the method by which a
participating member or deferred member may make a written election under this
section. If the participating member or deferred member is married at the time of the
election, the election is not effective unless the election is signed by the individual's
spouse. However, the board may waive this requirement if the spouse's signature
cannot be obtained because of extenuating circumstances. 5. If the board receives notification from the internal revenue service that this section or
any portion of this section will cause the public employees retirement system or the
retirement plan established under this chapter to be disqualified for tax purposes
under the Internal Revenue Code, then the portion that will cause the disqualification
does not apply. 6. A participating member who becomes a temporary employee may still participate in
the defined contribution retirement plan upon filing an election with the board within
one hundred eighty days of transferring to temporary employee status. The participating member may not become a member of the defined benefit plan as a
temporary employee. The temporary employee electing to participate in the defined
contribution retirement plan shall pay monthly to the fund an amount equal to eight
and twelve-hundredths percent times the temporary employee's present monthly
salary. The temporary employee shall also pay the required monthly contribution to
the retiree health benefit fund established under section 54-52.1-03.2. This contribution must be recorded as a member contribution pursuant to section
54-52.1-03.2. An employer may not pay the temporary employee's contributions. A
temporary employee may continue to participate as a temporary employee until
termination of employment or reclassification of the temporary employee as a
permanent employee. 7. A former participating member who has accepted a retirement distribution pursuant
to section 54-52.6-13 and who subsequently becomes employed by an entity
different from the employer with which the member was employed at the time the
member retired but which does participate in any state-sponsored retirement plan
may, before reenrolling in the defined contribution retirement plan, elect to
permanently waive future participation in the defined contribution retirement plan,
whatever plan in which the new employing entity participates, and the retiree health
program and maintain that member's retirement status. Neither the member nor the
employer are required to make any future retirement contributions on behalf of that
employee. 54-52.6-03. Transfer of accumulated fund balances. For an individual who elects to terminate membership in the public employees retirement system under chapter 54-52, the
board shall transfer a lump sum amount from the retirement fund to the participating member's
account in the defined contribution retirement plan under this chapter. However, if the individual Page No. 3 terminates employment prior to receiving the lump sum transfer under this section, the election
made under section 54-52.6-02 is ineffective and the individual remains a member of the public
employees retirement system under chapter 54-52 and retains all the rights and benefits
provided under that chapter. The board shall calculate the amount to be transferred for persons
employed before October 1, 2001, using the two following formulas, and shall transfer the greater
of the two amounts obtained: 1. The actuarial present value of the individual's accumulated benefit obligation under
the public employees retirement system based on the assumption that the individual
will retire under the earliest applicable normal retirement age, plus interest from
January 1, 2001, to the date of transfer, at the rate of one-half of one percent less
than the actuarial interest assumption at the time of the election; or 2. The actual employer contribution made, less vested employer contributions made
pursuant to section 54-52-11.1, plus compound interest at the rate of one-half of one
percent less than the actuarial interest assumption at the time of the election plus
the employee account balance. The board shall calculate the amount to be transferred for persons employed after
September 30, 2001, using only the formula contained in subsection 2. 54-52.6-04. Administration. The board shall administer the defined contribution retirement plan established under this chapter and the board or vendors contracted for by the
board shall invest the assets of the plan. The board is the fiduciary and the trustee of the plan.
The board has the exclusive authority and responsibility to employ or contract with personnel and
for services that the board determines necessary for the proper administration of and investment
of assets of the plan, including managerial, professional, legal, clerical, technical, and
administrative personnel or services. 54-52.6-05. Direction of investments. Each participating member shall direct the investment of the individual's accumulated employer and employee contributions and earnings to
one or more investment choices within available categories of investment provided by the board. 54-52.6-06. Administrative expenses - Continuing appropriation. The administrative expenses of the plan must be paid by the participating members in a manner determined by the
board. The board or vendors contracted for by the board may charge reasonable administrative
expenses and deduct those expenses from a participating member's account in the defined
contribution retirement plan established under this chapter. The board shall place any money
deducted in an administrative expenses account with the state treasurer. The board may also
use funds from the payroll clearing account established pursuant to section 54-52.3-03 to pay for
consulting expenses. All moneys in the payroll clearing account, not otherwise appropriated, or
so much of the moneys as may be necessary, are appropriated to the board on a continuing
basis for the purpose of retaining a consultant as required for the administration of this chapter. 54-52.6-07. Participation in other plans. A participating member may not participate in any other public sector retirement benefits plan for simultaneous service rendered to the same
public sector employer. However, this section does not prohibit a participating member from
participating in a retirement plan established by this state or other public sector employer under
the federal Internal Revenue Code. 54-52.6-08. Credit of transfers. The board shall promptly credit the plan account of a participating member who makes an election under this chapter to terminate membership in the
public employees retirement system under chapter 54-52 with any amount transferred from the
public employees retirement system. 54-52.6-09. Contributions - Penalty. 1. Each participating member shall contribute monthly four percent of the monthly
salary or wage paid to the participant, and this assessment must be deducted from Page No. 4 the participant's salary in equal monthly installments commencing with the first
month of participation in the defined contribution retirement plan established under
this chapter. 2. The employer shall contribute an amount equal to four and twelve-hundredths
percent of the monthly salary or wage of a participating member. If the employee's
contribution is paid by the employer under subsection 3, the employer shall
contribute, in addition, an amount equal to the required employee's contribution.
The employer shall pay monthly such contribution into the participating member's
account from its funds appropriated for payroll and salary or any other funds
available for such purposes. If the employer fails to pay the contributions monthly, it
is subject to a civil penalty of fifty dollars and, as interest, one percent of the amount
due for each month of delay or fraction thereof after the payment became due. 3. Each employer, at its option, may pay the employee contributions required by this
section for all compensation earned after December 31, 1999. The amount paid
must be paid by the employer in lieu of contributions by the employee. If the employer decides not to pay the contributions, the amount that would have been
paid will continue to be deducted from the employee's compensation. If contributions are paid by the employer, they must be treated as employer
contributions in determining tax treatment under this code and the federal Internal
Revenue Code. Contributions paid by the employer may not be included as gross
income of the employee in determining tax treatment under this code and the federal
Internal Revenue Code until they are distributed or made available. The employer
shall pay these employee contributions from the same source of funds used in
paying compensation to the employee. The employer shall pay these contributions
by effecting an equal cash reduction in the gross salary of the employee or by an
offset against future salary increases or by a combination of a reduction in gross
salary and offset against future salary increases. Employee contributions paid by
the employer must be treated for the purposes of this chapter in the same manner
and to the same extent as employee contributions made before the date on which
employee contributions were assumed by the employer. An employer shall exercise
its option under this subsection by December 1, 1999, and shall report its choice to
the board in writing. The option chosen may not be revoked for the remainder of the
biennium. Thereafter, the option choice must be forwarded to the board, in writing,
by June fifteenth of each odd-numbered year. 54-52.6-09.1. Acceptance of rollovers. The plan may allow a participating member to transfer or rollover funds from other qualified plans into the member's account under rules
adopted by the board. 54-52.6-09.2. Additional employer contributions. Additional lump sum contributions by an employer to a participating member's defined contribution retirement plan account may be
made if the participating member has not retired and has not received a retirement benefit under
this chapter. Contributions may be made in an amount actuarially equivalent to the amounts
determined pursuant to chapter 54-52 as follows: 1. For the conversion of sick leave pursuant to section 54-52-27 if the participating
member has four or more years of service. 2. The equivalent of up to five years of service credit unrelated to any other eligible
service as provided in subsection 5 of section 54-52-29 if the participating member
has twenty-five or more years of service. 54-52.6-09.3. Contributions for military service. Repealed by S.L. 2005, ch. 531, § 20. 54-52.6-09.4. Military service under the Uniformed Services Employment and Reemployment Rights Act - Member retirement credit. A member reemployed under the Page No. 5 Uniformed Services Employment and Reemployment Rights Act of 1994, as amended [Pub. L.
103-353; 108 Stat. 3150; 38 U.S.C. 4301-4333], is entitled to receive retirement credit for the
period of qualified military service. The required contribution for the credit, including payment for
retiree health benefits, must be made in the same manner and by the same party as would have
been made had the employee been continuously employed. If the salary the member would
have received during the period of service is not reasonably certain, the member's average rate
of compensation during the twelve-month period immediately preceding the member's period of
service or, if shorter, the period of employment immediately preceding that period, times the
number of months of credit being purchased must be used. Employees must be allowed up to
three times the period of military service or five years, whichever is less, to make any required
payments. This provision applies to all qualifying periods of military service since October 1,
1994. Any payments made by the member to receive qualifying credit inconsistent with this
provision must be refunded. Employees shall make application to the employer for credit and
provide a DD Form 214 to verify service. 54-52.6-10. Vesting. A participating member is immediately one hundred percent vested in that member's contributions made to that member's account under this chapter. A
participating member vests in the employer contributions made on that member's behalf to an
account under this chapter according to the following schedule: 1. Upon completion of two years of service, fifty percent. 2. Upon completion of three years of service, seventy-five percent. 3. Upon completion of four years of service, one hundred percent. A participating member also becomes one hundred percent vested in the employer contributions
upon reaching age sixty-five. A participating member who was a member or deferred member of
the public employees retirement system under chapter 54-52 who makes an election to
participate in the defined contribution retirement plan pursuant to this chapter must be credited
with the years of service accrued under the public employees retirement system on the effective
date of participation in the defined contribution retirement plan for the purpose of meeting vesting
requirements for benefits under this section. Any forfeiture as a result of the failure of a participating member to vest in the employer contribution must be deposited in the administrative
expenses account. 54-52.6-11. Refund beneficiaries. A participating or former participating member may nominate one or more individuals as a refund beneficiary by filing written notice of nomination
with the board. If the participating member or former participating member is married at the time
of the nomination and the participant's spouse is not the refund beneficiary for one hundred
percent of the account, the nomination is not effective unless the nomination is signed by the
participant's spouse. However, the board may waive this requirement if the spouse's signature
cannot be obtained because of extenuating circumstances. 54-52.6-12. Qualified domestic relations orders. 1. The board or a vendor contracted for by the board shall apportion a participating
member's account in the defined contribution retirement plan under this chapter in
accordance with the applicable requirements of any qualified domestic relations
order. The board shall review a domestic relations order submitted to it to determine
if the domestic relations order is qualified under this section and under rules adopted
by the board for determining the qualified status of domestic relations orders,
administering distributions, and apportioning accounts under the qualified orders.
Upon determination of the domestic relations order as qualified, the board shall
notify the participating member, the named alternate payee, and the vendor, if
applicable, of its receipt of the qualified domestic relations order. 2. A "qualified domestic relations order" for purposes of this section means any
judgment, decree, or order, including approval of a property settlement agreement, Page No. 6 which relates to the provision of child support, spousal support, or marital property
rights to a spouse, former spouse, child, or other dependent of a participating
member, is made pursuant to a North Dakota domestic relations law, which creates
or recognizes the existence of an alternate payee's right to, or assigns to an
alternate payee the right to, receive all or a part of a participating member's account
in the defined contribution retirement plan under this chapter. A qualified domestic
relations order may not require the board to provide any type or form of benefit, or
any option, not otherwise allowed under this chapter. However, a qualified domestic
relations order may require distribution from an account in the defined contribution
retirement plan under this chapter notwithstanding that the participating member has
not terminated eligible employment. A qualified domestic relations order must specify: a. The name and last-known mailing address of the participating member and the
name and the mailing address of each alternate payee covered by the order; b. The amount or percentage of the participating member's account to be paid to
each alternate payee; c. The number of payments or period to which the order applies; and d. Each retirement plan to which the order applies. 54-52.6-13. Distributions. 1. A participating member is eligible to receive distribution of that person's accumulated
balance in the plan upon becoming a former participating member. 2. Upon the death of a participating member or former participating member, the
accumulated balance of that deceased participant is considered to belong to the
refund beneficiary, if any, of that deceased participant. If a valid nomination of refund beneficiary is not on file with the board, the board, in a lump sum distribution,
shall distribute the accumulated balance to a legal representative, if any, of the
deceased participant or, if there is no legal representative, to the deceased
participant's estate. 3. A former participating member may elect one or a combination of several of the
following methods of distribution of the accumulated balance: a. A lump sum distribution to the recipient. b. A lump sum direct rollover to another qualified plan, to the extent allowed by
federal law. c. Periodic distributions, as authorized by the board. d. No current distribution, in which case the accumulated balance must remain in
the plan until the former participating member or refund beneficiary elects a
method or methods of distribution under this section, to the extent allowed by
federal law. A surviving spouse beneficiary may elect one or a combination of several of the
methods of distribution provided in subdivisions a, b, or c. A beneficiary who is not
the surviving spouse may only choose a lump sum distribution of the accumulated
balance. 4. If the former participating member's vested account balance is less than one
thousand dollars, the board shall automatically refund the member's vested account
balance upon termination of employment. The member may waive the refund if the Page No. 7 member submits a written statement to the board, within one hundred twenty days
after termination, requesting that the member's vested account balance remain in
the plan. 54-52.6-14. Disability benefits. The board shall allow distribution of the participating member's vested account balance if the board determines that the participating member has
become totally and permanently disabled. If approved, the disabled member has the same distribution options as provided in subdivisions a and c of subsection 3 of section 54-52.6-13.
However, if the member chooses the periodic distribution option, the member may only receive
distributions for as long as the disability continues and the member submits the necessary
documentation and undergoes medical testing required by the board, or for as long as the
member participates in a rehabilitation program required by the board, or both. If the board
determines that a member no longer meets the eligibility definition, the board shall discontinue
the disability retirement benefit. 54-52.6-15. Board to provide information. The board shall provide information to employees who are eligible to elect to become participating members under this chapter. The
information must include at a minimum the employee's current account balance, the assumption
of investment risk under a defined contribution retirement plan, administrative and investment
costs, coordination of benefits information, and a comparison of projected retirement benefits
under the public employees retirement system under chapter 54-52 and the retirement plan
established under this chapter. Notwithstanding any other provision of law, the board is not liable
for any election or investment decision made by an employee based upon information provided
to an employee under this chapter. 54-52.6-16. State income tax deductions. For the purposes of state income tax, the assessment imposed by this chapter on the employee must be treated in accordance with
existing state statutes on state income tax. 54-52.6-17. Exemption from state premium tax. Premiums, consideration for annuities, and membership fees are exempt from premium taxes payable pursuant to section
26.1-03-17. 54-52.6-18. Savings clause. If the board determines that any section of this chapter does not comply with applicable federal statutes or rules, the board shall adopt appropriate
terminology with respect to that section as will comply with those federal statutes or rules. Any
plan modifications made by the board pursuant to this section are effective until the effective date
of any measure enacted by the legislative assembly providing the necessary amendments to this
chapter to ensure compliance with the federal statutes or rules. 54-52.6-19. Overpayments. The board has the right of setoff to recover overpayments made under this chapter and to satisfy any claims arising from embezzlement or fraud committed
by a participating member, deferred member, refund beneficiary, or other person who has a
claim to a distribution or any other benefit from a plan governed by this chapter. 54-52.6-20. Correction of records. The board shall correct errors in the records and actions in plans under this chapter and shall seek to recover overpayments and shall seek to
collect underpayments. Page No. 8 Document Outline chapter 54-52.6 defined contribution retirement plan
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