2014 North Dakota Century Code Title 54 State Government Chapter 54-52.6 Defined Contribution Retirement Plan
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CHAPTER 54-52.6
DEFINED CONTRIBUTION RETIREMENT PLAN
54-52.6-01. (Effective through July 31, 2017) Definition of terms.
As used in this chapter, unless the context otherwise requires:
1. "Board" means the public employees retirement system board.
2. "Deferred member" means a person who elected to receive deferred vested retirement
benefits under chapter 54-52.
3. "Eligible employee" means a permanent state employee who elects to participate in
the retirement plan under this chapter.
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.
(Effective after July 31, 2017) Definition of terms. As used in this chapter, unless the
context otherwise requires:
1. "Board" means the public employees retirement system board.
2. "Deferred member" means a person who elected to receive deferred vested retirement
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
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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. (Effective through July 31, 2017) Election.
1. The board shall provide an opportunity for eligible employees who are new members
of the public employees retirement system under chapter 54-52 to transfer to the
defined contribution plan under this chapter pursuant to the rules and policies adopted
by the board. An election made by a member of the public employees retirement
system under chapter 54-52 to transfer to the defined contribution retirement plan
under this chapter is irrevocable. For an individual who elects to transfer membership
from the public employees retirement system under chapter 54-52 to the defined
contribution retirement plan under this chapter, the board shall transfer a lump sum
amount from the public employees retirement system fund to the participating
member's account in the defined contribution retirement plan under this chapter.
However, if the individual terminates employment prior to receiving the lump sum
transfer under this section, the election made is ineffective and the individual remains
a member of the public employees retirement system under chapter 54-52 and retains
all the rights and privileges under that chapter. This section does not affect an
individual's right to health benefits or retiree health benefits under chapter 54-52.1.
2. 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.
3. 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 amount required to be paid by a temporary employee increases by two percent
times the temporary employee's present monthly salary beginning with the monthly
reporting period of January 2012, and with an additional increase of two percent,
beginning with the monthly reporting period of January 2013, and with an additional
increase of two percent, beginning with the monthly reporting period of January 2014.
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.
4. 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.
(Effective after July 31, 2017) Election.
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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 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.
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
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right to health benefits or retiree health benefits to which the deferred member may
otherwise be entitled.
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 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.
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.
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.
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 amount required to be paid by a temporary employee increases by two percent
times the temporary employee's present monthly salary beginning with the monthly
reporting period of January 2012, and with an additional increase of two percent,
beginning with the monthly reporting period of January 2013, and with an additional
increase of two percent, beginning with the monthly reporting period of January 2014.
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
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continue to participate as a temporary employee until termination of employment or
reclassification of the temporary employee as a permanent employee.
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. (Suspended from October 1, 2013, through July 31, 2017) 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 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
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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 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.
Participating member contributions increase by one percent of the monthly salary or
wage paid to the participant beginning with the monthly reporting period of
January 2012, and with an additional increase of one percent, beginning with the
reporting period of January 2013, and with an additional increase of one percent,
beginning with the monthly reporting period of January 2014.
2. The employer shall contribute an amount equal to four and twelve-hundredths percent
of the monthly salary or wage of a participating member. Employer contributions
increase by one percent of the monthly salary or wage of a participating member
beginning with the monthly reporting period of January 2012, and with an additional
increase of one percent, beginning with the monthly reporting period of January 2013,
and with an additional increase of one percent, beginning with the monthly reporting
period of January 2014. 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.
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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 reporting its choice to the
board in writing.
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 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
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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, 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 board
shall pay the accumulated account balance of that deceased participant to the
deceased participant's refund beneficiary, if any, as provided in this subsection. If the
deceased participant designated an alternate refund beneficiary with the surviving
spouse's written consent, the board shall distribute the accumulated balance to the
named beneficiary. If the deceased participant named more than one primary
beneficiary with the surviving spouse's written consent, the board shall pay the
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accumulated account balance to the named primary beneficiaries in the percentages
designated by the deceased participant or, if the deceased participant had not
designated a percentage for the beneficiaries, in equal percentages. If one or more of
the primary beneficiaries has predeceased the deceased participant, the board shall
pay the predeceased beneficiary's share to the remaining primary beneficiaries. If any
beneficiary survives the deceased participant, yet dies before distribution of the
beneficiary's share, the beneficiary must be treated as if the beneficiary predeceased
the deceased participant. If there is no remaining primary beneficiary, the board shall
pay the accumulated account balance of that deceased participant to the contingent
beneficiaries in the same manner. If there is no remaining designated beneficiary, the
board shall pay the accumulated account balance of that deceased participant to the
deceased participant's estate. If the deceased participant had not designated an
alternate refund beneficiary or the surviving spouse is the refund beneficiary, the
surviving spouse of the deceased participant may select a form of payment as
provided in subdivision d of subsection 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 if the surviving spouse is the
sole refund beneficiary. If the surviving spouse is not the sole refund beneficiary, the
refund beneficiary may only choose a lump sum distribution of the accumulated
balance.
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 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
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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.
54-52.6-21. Internal Revenue Code compliance.
The board shall administer the plan in compliance with the following sections of the Internal
Revenue Code in effect on August 1, 2013, as they apply to governmental plans:
1. Section 415, including the defined contribution limitations under section 415(c)(1)(A)
and (B) of the Internal Revenue Code and the Treasury Regulations thereunder, which
are incorporated herein by reference.
a. In accordance with the defined contribution limitations under section 415(c) of the
Internal Revenue Code, annual additions (as defined in section 415(c)(2) of the
Internal Revenue Code) under this plan may not exceed the limitations set forth in
section 415(c)(1)(A) and (B), as adjusted under section 415(d) of the Internal
Revenue Code, effective January first of each year following a regular legislative
session.
b. If a participating member's aggregate annual additions exceed the defined
contribution limitations under section 415(c) of the Internal Revenue Code, the
member's annual additions must be reduced to the extent necessary to comply
with section 415(c) of the Internal Revenue Code and the Treasury Regulations
thereunder.
2. The minimum distribution rules under section 401(a)(9) of the Internal Revenue Code
and the regulations issued under that provision to the extent applicable to
governmental plans. Accordingly, benefits must be distributed or begin to be distributed
no later than a member's required beginning date, and the required minimum
distribution rules override any inconsistent provision of this chapter. A member's
required beginning date is April first of the calendar year following the later of the
calendar year in which the member attains age seventy and one-half or terminates
employment.
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3.
4.
5.
The annual compensation limitation under section 401(a)(17) of the Internal Revenue
Code, as adjusted for cost-of-living increases under section 401(a)(17)(B).
The rollover rules under section 401(a)(31) of the Internal Revenue Code. Accordingly,
a distributee may elect to have an eligible rollover distribution, as defined in section
402(c)(4) of the Internal Revenue Code, paid in a direct rollover to an eligible
retirement plan, as defined in section 402(c)(8)(B) of the Internal Revenue Code,
specified by the distributee.
If the plan of retirement benefits set forth in this chapter is terminated or discontinued,
the rights of all affected participating members to accrued retirement benefits under
this chapter as of the date of termination or discontinuance is nonforfeitable, to the
extent then funded.
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