2013 Indiana Code
TITLE 5. STATE AND LOCAL ADMINISTRATION
ARTICLE 10. PUBLIC EMPLOYEE BENEFITS
CHAPTER 1.1. PUBLIC EMPLOYEES DEFERRED COMPENSATION PLANS
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IC 5-10-1.1
Chapter 1.1. Public Employees Deferred Compensation Plans
IC 5-10-1.1-0.3
Legalization of actions of school corporations to establish certain
employee savings plans
Sec. 0.3. The actions taken by a school corporation before January
1, 1988, to:
(1) establish an employee savings plan that is a defined
contribution plan qualified under Section 401(a) of the Internal
Revenue Code; and
(2) contribute amounts to the employee savings plan on behalf
of the employee, with those amounts to be credited and
allocated to the employee;
are legalized.
As added by P.L.220-2011, SEC.63.
IC 5-10-1.1-1
Nonqualified deferred compensation plans; employee savings plans
Sec. 1. The state and any political subdivision (as defined by
IC 36-1-2-13) may:
(1) agree with any employee to reduce and defer any portion of
such employee's compensation which under federal law may be
deferred under a nonqualified deferred compensation plan and
subsequently contract for, purchase, or otherwise procure
insurance and investment products appropriate for a
nonqualified deferred compensation plan (all referred to in this
chapter as "funding"), for the purpose of funding a deferred
compensation plan for such employee;
(2) if the political subdivision is a school corporation, establish
an employee savings plan that is a defined contribution plan
qualified under Section 401(a) or 403(b) of the Internal
Revenue Code, and contribute amounts to the plan on behalf of
eligible employees to be credited and allocated to an account
for each employee; and
(3) contribute amounts before January 1, 1995, and continue or
begin to contribute amounts after January 1, 1995, to a
nonqualified deferred compensation plan on behalf of eligible
employees, subject to any limits and provisions under Section
457 of the Internal Revenue Code.
(Formerly: Acts 1975, P.L.42, SEC.1.) As amended by Acts 1980,
P.L.27, SEC.1; P.L.42-1988, SEC.1; P.L.66-1995, SEC.1;
P.L.65-1995, SEC.1; P.L.15-1998, SEC.1; P.L.68-2001, SEC.1.
IC 5-10-1.1-1.5
Defined contribution plan
Sec. 1.5. (a) The state, through the budget agency, may adopt a
defined contribution plan, under Section 401(a) of the Internal
Revenue Code, for the purpose of matching all or a specified portion
of state employees' contributions to the state employees' deferred
compensation plan and for any additional purposes established by
statute.
(b) The deferred compensation committee shall be the trustee of
a plan established under subsection (a) as described in section 4 of
this chapter. A plan established under subsection (a) shall be
administered by the auditor of state as described in section 5 of this
chapter.
(c) The deferred compensation committee may approve funding
offerings for a plan established under subsection (a), which may be
the same as offerings for the state employees' deferred compensation
plan. All funds in each plan shall be separately accounted for but
may be commingled for investment purposes.
(d) Contributions to a plan established under subsection (a) are
limited to the amount of biennial appropriations the budget agency
determines are available for any such purposes. The deferred
compensation committee may use funds available under the plan to
hire or contract with qualified attorneys, financial advisers, or other
professional or administrative persons that the committee believes
are necessary or useful in the administration of the plan.
(e) A plan established under subsection (a) must include
appropriate provisions concerning the plan's day to day operation and
any other provisions that are appropriate. Notwithstanding
IC 22-2-6-2, the plan may also include provisions for the use of
automated voice response units and telephonic communications,
online activities, and other technology for participant elections,
directions, and services if the technology has sufficient capacity to
record and store the elections and directions.
(f) The state is obligated at any particular time only for the current
market value of the funding previously made to a plan established
under subsection (a).
(g) The state board of finance shall extend the plan established
under subsection (a) to any political subdivision that also elects to
use the state employees' deferred compensation plan for its
employees as authorized in section 7(b)(2) or 7(b)(3) of this chapter.
As added by P.L.195-1999, SEC.7 and P.L.273-1999, SEC.231.
Amended by P.L.184-2001, SEC.2; P.L.220-2005, SEC.1.
IC 5-10-1.1-2
Employee defined
Sec. 2. As used in this chapter, "employee" means any person,
including a person elected, appointed or under contract, receiving
compensation from the state or any political subdivision as described
in section 1 of this chapter.
(Formerly: Acts 1975, P.L.42, SEC.1.)
IC 5-10-1.1-3
Effective and operative dates
Sec. 3. A deferred compensation plan established under this
chapter exists and serves in addition to other retirement, pension and
benefit systems established by the state, or political subdivision, and
may not effect a reduction of any retirement, pension or other benefit
provided by applicable law. Any compensation deferred under such
a plan shall continue to be included as regular compensation for the
purpose of computing the retirement and pension benefits earned by
any employee.
(Formerly: Acts 1975, P.L.42, SEC.1.) As amended by Acts 1977,
P.L.51, SEC.1.
IC 5-10-1.1-3.5
Deferred compensation plan; automatic enrollment
Sec. 3.5. (a) This section applies to an individual who becomes an
employee of the state after June 30, 2007.
(b) Unless an employee notifies the state that the employee does
not want to enroll in the deferred compensation plan, on day
thirty-one (31) of the employee's employment:
(1) the employee is automatically enrolled in the deferred
compensation plan; and
(2) the state is authorized to begin deductions as otherwise
allowed under this chapter.
(c) The auditor of state shall provide written notice to an
employee of the provisions of this chapter. The notice provided
under this subsection must:
(1) be provided:
(A) with the employee's first paycheck; and
(B) on paper that is a color that is separate and distinct from
the color of the employee's paycheck;
(2) contain a statement concerning:
(A) the purposes of;
(B) procedures for notifying the state that the employee does
not want to enroll in;
(C) the tax consequences of; and
(D) the details of the state match for employee contribution
to;
the deferred compensation plan; and
(3) list the telephone number, electronic mail address, and other
contact information for the auditor of state, who serves as plan
administrator.
(d) This subsection applies to contributions made before July 1,
2011. Notwithstanding IC 22-2-6, except as provided by subsection
(h), the state shall deduct from an employee's compensation as a
contribution to the deferred compensation plan established by the
state under this chapter an amount equal to the maximum amount of
any match provided by the state on behalf of the employee to a
defined contribution plan established under section 1.5(a) of this
chapter.
(e) This subsection applies to contributions made after June 30,
2011, and before July 1, 2013. Notwithstanding IC 22-2-6 and except
as provided by subsection (h), during the first year an employee is
enrolled under subsection (b) in the deferred compensation plan, the
state shall deduct each pay period from the employee's compensation
as a contribution to the deferred compensation plan an amount equal
to the greater of the following:
(1) The maximum amount of any match provided by the state on
behalf of the employee to a defined contribution plan
established under section 1.5(a) of this chapter.
(2) One-half percent (0.5%) of the employee's base salary.
(f) This subsection applies to contributions made after June 30,
2013. Notwithstanding IC 22-2-6 and except as provided by
subsection (h), during the first year an employee is enrolled under
subsection (b) in the deferred compensation plan, the state shall
deduct each pay period from the employee's compensation as a
contribution to the deferred compensation plan an amount equal to
the greater of the following:
(1) The maximum amount of any match provided by the state on
behalf of the employee to a defined contribution plan
established under section 1.5(a) of this chapter.
(2) Two percent (2%) of the employee's base salary.
(g) This subsection applies to a year:
(1) after the first year in which an employee is enrolled in the
deferred compensation plan; and
(2) in which the employee does not affirmatively choose a
contribution amount under subsection (h).
The percentage of the employee's base salary used for the year in
subsection (e)(2) or (f)(2) to determine the employee's contribution
increases by one-half percent (0.5%) from the percentage determined
in the immediately preceding year. The maximum percentage of an
employee's base salary that may be deducted under this subsection is
three percent (3%). The contribution increase occurs on the
anniversary date of the employee's enrollment in the deferred
compensation plan.
(h) An employee may contribute to the deferred compensation
plan established by the state under this chapter an amount other than
the amount described in subsections (d) through (g) by affirmatively
choosing to contribute:
(1) a higher amount;
(2) a lower amount; or
(3) zero (0).
As added by P.L.234-2007, SEC.207. Amended by P.L.3-2008,
SEC.22; P.L.21-2011, SEC.1; P.L.242-2013, SEC.1.
IC 5-10-1.1-4
Deferred compensation committee; state employees' deferred
compensation plan
Sec. 4. (a) The deferred compensation committee is established.
The committee consists of five (5) persons appointed by the state
board of finance as follows:
(1) Each member of the state board of finance shall appoint one
(1) member to the committee.
(2) The remaining two (2) members:
(A) must be participants in the state employees' deferred
compensation plan;
(B) may not be employees of the members of the state board
of finance;
(C) must be from different political parties; and
(D) may not serve for more than two (2) consecutive three
(3) year terms.
(b) The deferred compensation committee may annually elect a
chairperson and a secretary.
(c) The deferred compensation committee may approve proposed
investment products for the state employees' deferred compensation
plan.
(d) All amounts deferred under the state employees' deferred
compensation plan must be put into a trust for the exclusive benefit
of plan participants, as required by Section 457(g) of the Internal
Revenue Code. The deferred compensation committee is the trustee
of the trust.
(e) The plan shall include appropriate provisions pertaining to its
day to day operation providing for methods of electing to defer
income, methods of changing the amount of income to be deferred,
and such other provisions as may be appropriate. Notwithstanding
IC 22-2-6-2, the plan may also include provisions for the use of
automated voice response units and telephonic communications,
on-line activities, and other technology for participant elections,
directions, and services if the technology has sufficient capacity to
record and store the elections and directions.
(f) The plan shall provide for the preparation and distribution,
from time to time to all eligible employees, of pamphlets describing
the plan and outlining the opportunities available to employees under
the plan.
(g) The state board of finance shall extend the plan to any political
subdivision which elects to utilize the state employees' deferred
compensation plan for its employees as authorized in section 7(b)(2)
or 7(b)(3) of this chapter.
(h) At least annually, the deferred compensation committee shall
report to the state board of finance on the status of the state
employees' deferred compensation plan, including any changes to the
plan.
(Formerly: Acts 1975, P.L.42, SEC.1.) As amended by Acts 1977,
P.L.51, SEC.2; Acts 1980, P.L.27, SEC.2; P.L.15-1998, SEC.2;
P.L.184-2001, SEC.3; P.L.220-2005, SEC.2.
IC 5-10-1.1-5
State employees' deferred compensation plan; contracts; funding,
selection by bidding; review
Sec. 5. (a) The auditor of state shall provide for the administration
of the state employees' deferred compensation plan. The auditor of
state may, at the auditor of state's option, enter into a contract or
contracts with an individual or individuals, incorporated or
unincorporated organizations or associations, the state of Indiana,
units of local government, agencies of the state or units of local
government, or a group of such persons acting in concert, for the
provision of all or part of the services involved in the administration
of the plan. Participation in the plan shall be by a specific written
agreement between each employee and the state which agreement
shall provide for the deferral of such amount of compensation as
requested by the employee. With each deferral of compensation, the
employee shall receive a memorandum of the amount by which the
employee's gross compensation is reduced by reason of the deferment
of compensation, which amount shall not be included as a part of the
employee's taxable compensation as to that period.
(b) The funding utilized under the state employees' deferred
compensation plan shall have been reviewed and selected by the
deferred compensation committee based on a competitive bidding
process as established by such specifications deemed appropriate by
the deferred compensation committee. Nothing in this section shall
be construed as requiring a limitation on the number and variety of
funding contracts which may be selected as a result of this bidding
process.
(c) In no case shall funding of the state employees' deferred
compensation plan be made except through persons or companies
authorized and duly licensed by this state and applicable federal
regulatory agencies to offer such funding programs.
(Formerly: Acts 1975, P.L.42, SEC.1.) As amended by Acts 1977,
P.L.51, SEC.3; Acts 1980, P.L.27, SEC.3; P.L.15-1998, SEC.3.
IC 5-10-1.1-6
Obligations of state or political subdivision
Sec. 6. The state or political subdivision under a deferred
compensation plan shall be obligated at any point in time solely for
the then current market value of the funding theretofore made.
(Formerly: Acts 1975, P.L.42, SEC.1.) As amended by P.L.15-1998,
SEC.4.
IC 5-10-1.1-7
Participation by political subdivisions
Sec. 7. (a) Any political subdivision (as defined in IC 36-1-2-13)
may establish for its employees a deferred compensation plan. The
plan shall be selected by the governing body of the political
subdivision, which in the case of a unit subject to IC 36-1-3 shall be
done by ordinance. Participation shall be by written agreement
between each employee and the governing body of the political
subdivision, which agreement provides for the deferral of
compensation and subsequent administration of such funds.
(b) For funding such agreements, the governing body of the
political subdivision may:
(1) designate one (1) of its agencies or departments to establish
and administer such plans and choose such funding as deemed
appropriate by the agency or department, which may include
more than one (1) funding product;
(2) extend the state employees' deferred compensation plan to
employees of the political subdivision, subject to the terms and
conditions of the state employees' deferred compensation plan
as it is established from time to time; or
(3) offer both a plan described in subdivision (1) and the plan
described in subdivision (2).
(c) This section does not limit the power or authority of any
political subdivision to establish and administer other plans deemed
appropriate by the governing bodies of such subdivisions, including
plans established under section 1(2) of this chapter.
(Formerly: Acts 1975, P.L.42, SEC.1.) As amended by Acts 1977,
P.L.51, SEC.4; Acts 1980, P.L.27, SEC.4; P.L.42-1988, SEC.2;
P.L.15-1998, SEC.5; P.L.220-2005, SEC.3; P.L.1-2006, SEC.93.
IC 5-10-1.1-7.3
Matching funds
Sec. 7.3. (a) Any political subdivision (as defined in IC 36-1-2-13)
that elects to use the state employees' deferred compensation plan for
its employees as authorized in section 7(b)(2) or 7(b)(3) of this
chapter also may elect to participate in the state's defined
contribution plan established by section 1.5 of this chapter for the
purpose of matching all or a specified portion of the political
subdivision's employees' contributions to the deferred compensation
plan.
(b) Participation in the state's defined contribution plan described
in subsection (a) shall be authorized by the governing body of the
political subdivision, which in the case of a unit subject to IC 36-1-3
shall be done by ordinance.
(c) Contributions by a political subdivision to the state's defined
contribution plan described in subsection (a) for the purpose of
matching all or a specified portion of employee contributions are
limited to the amount of appropriations made each year for that
purpose.
(d) The political subdivision is obligated at any particular time
only for the current market value of the funding previously made to
the state's defined contribution plan described in subsection (a).
(e) This section does not limit the power or authority of any
political subdivision to establish and administer any other plans
considered appropriate by the governing body of the political
subdivision, including plans established under section 1(2) of this
chapter.
As added by P.L.184-2001, SEC.4. Amended by P.L.220-2005,
SEC.4.
IC 5-10-1.1-7.5
Unused excess accrued leave
Sec. 7.5. (a) As used in this section, "state agency" means the
following:
(1) An authority, a board, a branch, a commission, a committee,
a department, a division, or other instrumentality of state
government.
(2) A separate corporate body politic that adopts the plan
described in subsection (b).
(3) State elected officials and their office staff.
(4) The legislative services agency.
(5) Legislative staff eligible to participate in the state
employees' deferred compensation plan established by section
1 of this chapter.
However, the term does not include a state educational institution or
a political subdivision.
(b) The deferred compensation committee shall adopt provisions
in a defined contribution plan, under Sections 401(a) and 414(d) of
the Internal Revenue Code, for the purpose of converting unused
excess accrued leave to a monetary contribution for employees of a
state agency. These provisions may be part of the plan and trust
established under section 1.5(a) of this chapter.
(c) The deferred compensation committee is the trustee of the plan
described in subsection (b). The plan must be a qualified plan, as
determined by the Internal Revenue Service.
(d) The state personnel department shall adopt rules under
IC 4-22-2 that it considers appropriate or necessary to implement this
section. The rules adopted by the state personnel department under
this section must:
(1) be consistent with the plan described in subsection (b);
(2) include provisions concerning:
(A) the type and amount of leave that may be converted to a
monetary contribution;
(B) the conversion formula for valuing any leave that is
converted;
(C) the manner of employee selection of leave conversion;
and
(D) the vesting schedule for any leave that is converted; and
(3) apply to all state agencies.
(e) The rules adopted by the state personnel department under
subsection (d) specifying the conversion formula must provide for a
conversion rate under which the amount contributed on behalf of a
participating employee for a day of leave that is converted under this
section is equal to at least sixty percent (60%) of the employee's
daily pay as of the date the leave is converted.
(f) The deferred compensation committee may adopt the
following:
(1) Plan provisions governing:
(A) the investment of accounts in the plan; and
(B) the accounting for converted leave.
(2) Any other plan provisions that are necessary or appropriate
for operation of the plan.
(g) The plan described in subsection (b) may be implemented only
if the deferred compensation committee has received from the
Internal Revenue Service any rulings or determination letters that the
committee considers necessary or appropriate.
(h) To the extent allowed by:
(1) the Internal Revenue Code; and
(2) rules adopted by:
(A) the state personnel department under this section; and
(B) the board of trustees of the Indiana public retirement
system under IC 5-10.3-8-14;
an employee of a state agency may convert unused excess accrued
leave to a monetary contribution under this section and under
IC 5-10.3-8-14.
As added by P.L.184-2001, SEC.5. Amended by P.L.220-2005,
SEC.5; P.L.2-2007, SEC.80; P.L.35-2012, SEC.21.
IC 5-10-1.1-8
Supplemental effect of chapter
Sec. 8. This chapter shall be supplemental and in addition to all
other laws. The powers and duties herein given to the state and its
political subdivisions shall be in addition to those given by any other
law and shall not be subject to the limitations set out therein.
(Formerly: Acts 1975, P.L.42, SEC.1.)
IC 5-10-1.1-9
Amounts to be held for exclusive benefit of participants and
beneficiaries
Sec. 9. All amounts held under any deferred compensation plan
established under this chapter must be held for the exclusive benefit
of participants of the plan and their beneficiaries, as required by
Section 457(g) of the Internal Revenue Code.
As added by P.L.15-1998, SEC.6.
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