House Bill 26-1026 Introduced

A Bill for an Act

• Page 1, Line 101Concerning an expansion of plan options for the public

• Page 1, Line 102employees' retirement association.

Bill Summary

(Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://leg.colorado.gov.)

Under current law, a member of the public employees' retirement association (PERA) earns service credit for each year worked during which the member makes contributions to PERA. A member may purchase additional years of service credit for any previous period of public or private employment during which the member was not making contributions to PERA, subject to certain conditions. Sections 1 and 3 of the bill allow a member of PERA to also purchase service credit for previous periods of unemployment during which the member was 21 years old or older, subject to certain conditions. Sections 2, 3, 4, and 7 make conforming amendments.

Sections 5 and 6 require PERA's voluntary investment program to include options for an employee to make tax-deferred voluntary contributions and Roth voluntary contributions to the program and make other conforming changes.

Sections 8 and 9 require PERA employers to affiliate with PERA's deferred compensation plan and offer the plan to employees. The sections require the deferred compensation plan to include options for an employee to make pre-tax voluntary contributions and Roth voluntary contributions to the plan and make other conforming changes.

• Page 2, Line 1Be it enacted by the General Assembly of the State of Colorado:

• Page 2, Line 2SECTION 1.  In Colorado Revised Statutes, 24-51-101, add

• Page 2, Line 3(33.3), (33.5), and (37.5) as follows:

• Page 2, Line 424-51-101.  Definitions.

• Page 2, Line 5As used in this article 51, unless the context otherwise requires and

• Page 2, Line 6except as otherwise defined in part 17 of this article 51:

• Page 2, Line 7(33.3)  "Noncovered time" means time during which a

• Page 2, Line 8member was not earning service credit from the association.

• Page 2, Line 9(33.5)  "Nonqualified service" means noncovered time that

• Page 2, Line 10is nonqualified service credit pursuant to section 415 (n)(3)(C) of

• Page 2, Line 11the federal "Internal Revenue Code of 1986".

• Page 2, Line 12(37.5)  "Qualified service" meansnoncovered time that is

• Page 2, Line 13not nonqualified service creditpursuant to section 415 (n)(3)(C)

• Page 2, Line 14of the federal "Internal Revenue Code of 1986".

• Page 2, Line 15SECTION 2.  In Colorado Revised Statutes, 24-51-208, amend

• Page 2, Line 16(1) introductory portion, (1)(f), and (1)(f.5) as follows:

• Page 2, Line 1724-51-208.  Allocation of money.

• Page 2, Line 18(1)  The money of the association shall must be divided into

• Page 3, Line 1several trust funds, including, but not limited to:

• Page 3, Line 2(f)  The health care trust fund, created pursuant to the provisions

• Page 3, Line 3of section 24-51-1201 (1), which consists of a portion of the employer

• Page 3, Line 4contributions equal to one and two one-hundredths percent of member

• Page 3, Line 5salaries; a portion of the amount paid by members to purchase service

• Page 3, Line 6credit relating to noncovered employment time as determined pursuant

• Page 3, Line 7to section 24-51-505 (7); thirty percent of the amount of any reduction in

• Page 3, Line 8the employer contribution rates as determined in section 24-51-408.5 (5)

• Page 3, Line 9to amortize any overfunding in each division's trust fund; deductions of

• Page 3, Line 10premium amounts from monthly benefits of participating benefit

• Page 3, Line 11recipients; premiums paid directly to the trust fund by participating

• Page 3, Line 12benefit recipients, members, and dependents; monthly payments made by

• Page 3, Line 13employers on behalf of participating benefit recipients, members, and

• Page 3, Line 14dependents; and interest; in addition to a proportional share of investment

• Page 3, Line 15income earned thereon;

• Page 3, Line 16(f.5)  The Denver public schools division health care trust fund,

• Page 3, Line 17created pursuant to the provisions of section 24-51-1201 (2), which

• Page 3, Line 18consists of a portion of the employer contributions equal to two-tenths of

• Page 3, Line 19one percent of member salaries; a portion of the amount paid by members

• Page 3, Line 20to purchase service credit relating to noncovered employment time as

• Page 3, Line 21determined pursuant to section 24-51-505 (7); deductions of premium

• Page 3, Line 22amounts from monthly benefits of participating benefit recipients;

• Page 3, Line 23premiums paid directly to the trust fund by participating benefit

• Page 3, Line 24recipients, members, and dependents; monthly payments made by

• Page 3, Line 25employers on behalf of participating benefit recipients, members, and

• Page 3, Line 26dependents; and interest; in addition to a proportional share of investment

• Page 3, Line 27income earned thereon;

• Page 4, Line 1SECTION 3.  In Colorado Revised Statutes, 24-51-501, amend

• Page 4, Line 2(6) as follows:

• Page 4, Line 324-51-501.  Earned service credit.

• Page 4, Line 4(6)  Service credit of DPS members prior to or on December 31,

• Page 4, Line 52009, shall be is governed by section 24-51-1710. Beginning January 1,

• Page 4, Line 62010, DPS members shall earn service credit pursuant to this section and

• Page 4, Line 7shall may purchase service credit relating to a refunded member

• Page 4, Line 8contribution account and noncovered employment time pursuant to this

• Page 4, Line 9part 5; except that purchases by DPS members that are ongoing as of

• Page 4, Line 10January 1, 2010, shall be are governed by section 24-51-1705.

• Page 4, Line 11SECTION 4.  In Colorado Revised Statutes, 24-51-505, amend

• Page 4, Line 12(1), (2), (3), (6), and (7) as follows:

• Page 4, Line 1324-51-505.  Purchase of service credit relating to noncovered

• Page 4, Line 14time.

• Page 4, Line 15(1)  A member may purchase service credit may be purchased for

• Page 4, Line 16any period of previous employment with any public or private employer

• Page 4, Line 17in the United States, its territories, or any foreign country noncovered

• Page 4, Line 18time subject to the following conditions:

• Page 4, Line 19(a)  If the service credit to be purchased is for noncovered

• Page 4, Line 20employment withan employer affiliated with the association, the member

• Page 4, Line 21must have A member may purchase service credit for qualified

• Page 4, Line 22service if the member:

• Page 4, Line 23(I)  Has at least one year of earned service credit with the

• Page 4, Line 24association at the time of the purchase; If the service credit to be

• Page 4, Line 25purchased is for previous employment with a nonaffiliated employer, the

• Page 4, Line 26member must have one year of earned service credit with the association

• Page 4, Line 27at the time of the purchase; except that, if the previous employment for

• Page 5, Line 1which the service credit is to be purchased is nonqualified service, as

• Page 5, Line 2defined in section 415 (n)(3)(C) of the federal "Internal Revenue Code of

• Page 5, Line 31986", as amended, and the member first became a member of the

• Page 5, Line 4association on or after January 1, 1999, the member must have five years

• Page 5, Line 5of earned service credit with the association at the time of the purchase.

• Page 5, Line 6and

• Page 5, Line 7(II)  Provides the association with documentation of the

• Page 5, Line 8dates of employment and a record of salary received.

• Page 5, Line 9(a.3)  A member who became a member of the association

• Page 5, Line 10before January 1, 1999, may purchase service credit for

• Page 5, Line 11nonqualified service if the member has at least one year of

• Page 5, Line 12earned service credit with the association at the time of the

• Page 5, Line 13purchase.

• Page 5, Line 14(a.5)  A member who became a member of the association on

• Page 5, Line 15or after January 1, 1999, may purchase service credit for

• Page 5, Line 16nonqualified service if the member has at least five years of

• Page 5, Line 17earned service credit with the association at the time of the

• Page 5, Line 18purchase.

• Page 5, Line 19(a.7)  A member may not purchase service credit for

• Page 5, Line 20noncovered time during which the member was not employed and

• Page 5, Line 21was under twenty-one years old. A member may purchase service

• Page 5, Line 22credit for noncovered time during which the member was

• Page 5, Line 23employed and was under twenty-one years old if the member

• Page 5, Line 24provides the association with documentation of the dates of

• Page 5, Line 25employment and a record of salary received.

• Page 5, Line 26(b)  The member must provide documentation of the dates of

• Page 5, Line 27employment and a record of salary received.

• Page 6, Line 1(c)  The A member must provide certification from any retirement

• Page 6, Line 2program covering such the member's employment that the service credit

• Page 6, Line 3to be purchased has not vested with that program, does not cause a

• Page 6, Line 4member to receive a retirement benefit for the same service

• Page 6, Line 5under more than one plan, except to the extent otherwise required by

• Page 6, Line 6federal law.

• Page 6, Line 7(2) (a)  Except as otherwise provided in paragraph (b) of this

• Page 6, Line 8subsection (2) this subsection (2), one year of service credit may be

• Page 6, Line 9purchased for each year of noncovered employment time. Any service

• Page 6, Line 10credit purchased for noncovered time during which a member

• Page 6, Line 11was employed must be determined pursuant to the provisions of section

• Page 6, Line 1224-51-501 (2) to (4) applicable to earned service credit.

• Page 6, Line 13(b)  Members A member who first became members a member on

• Page 6, Line 14or after January 1, 1999, may purchase no more than five years of service

• Page 6, Line 15credit for noncovered timeemployment that is nonqualified service. as

• Page 6, Line 16defined in section 415 (n)(3)(C) of the federal "Internal Revenue Code of

• Page 6, Line 171986", as amended

• Page 6, Line 18(c)  Members A member who initiate initiates a purchase on or

• Page 6, Line 19after November 1, 2003, may not purchase service credit that would cause

• Page 6, Line 20the total years of noncovered service time purchased during their

• Page 6, Line 21membership to exceed ten years. This limit shall not apply to members a

• Page 6, Line 22member who provide provided all required documentation of previous

• Page 6, Line 23service to the association by October 31, 2003, together with application

• Page 6, Line 24to purchase the service if the purchase is successfully completed pursuant

• Page 6, Line 25to the service credit purchase agreement resulting from said the

• Page 6, Line 26application.

• Page 6, Line 27(d)  Members A member employed by a public entity affiliated

• Page 7, Line 1with the association pursuant to section 24-51-309 may purchase service

• Page 7, Line 2credit for years employed by the entity without limit, if the purchase is

• Page 7, Line 3completed before the member terminates employment with the entity, and

• Page 7, Line 4any such purchase for years employed by the entity in excess of ten years

• Page 7, Line 5is completed or installment payments initiated within three years after the

• Page 7, Line 6date the employer affiliates with the association or November 1, 2006,

• Page 7, Line 7whichever is later, unless otherwise restricted under federal law.

• Page 7, Line 8(3)  The cost to purchase service credit for noncovered

• Page 7, Line 9employment time shall be determined by the board and shall be sufficient

• Page 7, Line 10to pay the actuarial liability associated with the purchase.

• Page 7, Line 11(6)  Service credit purchased pursuant to the provisions of this

• Page 7, Line 12section for periods of nonmembership shall noncovered time must not

• Page 7, Line 13be credited toward the earned service credit requirement for disability

• Page 7, Line 14retirement benefits or short-term disability program payments as

• Page 7, Line 15provided for in part 7 of this article article 51 or toward the earned

• Page 7, Line 16service credit requirement for survivor benefit coverage as provided for

• Page 7, Line 17in part 9 of this article article 51.

• Page 7, Line 18(7)  A portion of the amount paid by a member to purchase service

• Page 7, Line 19credit related to noncovered employment shall time must be transferred

• Page 7, Line 20paid to the health care trust fund. on the effective date of the member's

• Page 7, Line 21retirement or, in case of death prior to retirement, on the effective date of

• Page 7, Line 22the survivor benefit The amount transferred shall be one and two

• Page 7, Line 23one-hundredths percent of paid to the health care trust fund must

• Page 7, Line 24be the same percentage of the member's salary paid by the

• Page 7, Line 25employer contribution specified in section 24-51-208 (1)(f),

• Page 7, Line 26determined using the member's highest average salary at the time of the

• Page 7, Line 27purchase. with interest at the rate specified in section 24-51-101 (28)(a)

• Page 8, Line 1Any refund pursuant to section 24-51-506 (3) or (4) will be paid

• Page 8, Line 2from the member's applicable division trust fund and will not be

• Page 8, Line 3paid from the health care trust fund.

• Page 8, Line 4SECTION 5.  In Colorado Revised Statutes, 24-51-1401, amend

• Page 8, Line 5(2) and (4); and repeal (3) as follows:

• Page 8, Line 624-51-1401.  Voluntary investment program established and

• Page 8, Line 7fund created - definitions.

• Page 8, Line 8(2)  The voluntary investment program shall established

• Page 8, Line 9pursuant to this section must:

• Page 8, Line 10(a)  Be available to all members DPS members, retirees, and DPS

• Page 8, Line 11retirees; and shall employees of an employer;

• Page 8, Line 12(b)  Be in addition to any other retirement or tax-deferred

• Page 8, Line 13compensation system established by the state or its political subdivisions;

• Page 8, Line 14and

• Page 8, Line 15(c)  Include options for an employee of an employer to

• Page 8, Line 16make tax-deferred voluntary contributions and Roth

• Page 8, Line 17voluntary contributions to the voluntary investment program.

• Page 8, Line 18(3)  The board is hereby authorized to offer participation in the

• Page 8, Line 19voluntary investment program to all employees of employers that are

• Page 8, Line 20affiliated with the association, regardless of whether those employees are

• Page 8, Line 21members or retirees.

• Page 8, Line 22(4)  For purposes of this part 14, members and retirees shall

• Page 8, Line 23include DPS members and DPS retirees the term "member" includes

• Page 8, Line 24a DPS member and the term "retiree" includes a DPS retiree.

• Page 8, Line 25SECTION 6.  In Colorado Revised Statutes, 24-51-1402, amend

• Page 8, Line 26(1), (3), and (4); and repeal (2) as follows:

• Page 8, Line 2724-51-1402.  Contributions to the voluntary investment

• Page 9, Line 1program.

• Page 9, Line 2(1)  An eligible employee pursuant to section 24-51-1401 of an

• Page 9, Line 3employer may participate in the voluntary investment program

• Page 9, Line 4authorized in section 24-51-1401 by authorizing his or her their

• Page 9, Line 5employer as defined in section 24-51-101 (20), to contribute an amount

• Page 9, Line 6by payroll deduction in lieu of receiving such amount as salary or pay.

• Page 9, Line 7The amount of such contribution by a participant shall be is subject to any

• Page 9, Line 8limitations established by federal law. These voluntary contributions, in

• Page 9, Line 9addition to investment earnings, shall be exempt from federal and state

• Page 9, Line 10income taxes until the ultimate distribution of such contributions has been

• Page 9, Line 11made to the participant, member, former member, or beneficiary.

• Page 9, Line 12(2)  The board may, at its discretion, allow participants in the

• Page 9, Line 13voluntary investment program to elect to make after-tax voluntary

• Page 9, Line 14contributions to the voluntary investment program by payroll deduction.

• Page 9, Line 15Investment earnings on such contributions are exempt from federal and

• Page 9, Line 16state income taxes until the ultimate distribution of such contributions has

• Page 9, Line 17been made to the participant, member, former member, or beneficiary.

• Page 9, Line 18(3)  All voluntary contributions by a participating member shall or

• Page 9, Line 19retiree must be included in the salary of such member the member or

• Page 9, Line 20retiree for the purpose of calculating member, working retiree, and

• Page 9, Line 21employer contributions pursuant to the provisions of section 24-51-401.

• Page 9, Line 22The member contribution provisions of section 24-51-401 and the

• Page 9, Line 23matching employer contribution provisions of section 24-51-408.5 shall

• Page 9, Line 24not apply to any voluntary contribution made by a retiree.

• Page 9, Line 25(4)  The employer shall deliver all voluntary contributions to the

• Page 9, Line 26voluntary investment program via the association, or the service

• Page 9, Line 27provider designated by the association, if applicable, within five days

• Page 10, Line 1after the date that the participants are paid and consistent with the

• Page 10, Line 2provisions of section 24-51-401 (1.7)(c) and (1.7)(d).

• Page 10, Line 3SECTION 7.  In Colorado Revised Statutes, 24-51-1506, amend

• Page 10, Line 4(2) as follows:

• Page 10, Line 524-51-1506.  Additional choices within first five years.

• Page 10, Line 6(2)  A member who elects to join the defined benefit plan pursuant

• Page 10, Line 7to subsection (1) of this section may, upon meeting the requirements of

• Page 10, Line 8section 24-51-505, purchase service credit for the period of employment

• Page 10, Line 9covered by the defined contribution plan. The cost to purchase such

• Page 10, Line 10service shall be is the same as the cost determined by the board for the

• Page 10, Line 11purchase of noncovered employment time. The member may elect to have

• Page 10, Line 12any portion of the member's account paid from the defined contribution

• Page 10, Line 13plan to the defined benefit plan to facilitate the purchase of service credit

• Page 10, Line 14through a direct rollover in accordance with section 401 (a)(31) of the

• Page 10, Line 15federal "Internal Revenue Code of 1986". as amended The member may

• Page 10, Line 16not be vested in the defined contribution plan upon purchasing service

• Page 10, Line 17credit for employment that was covered by the defined contribution plan.

• Page 10, Line 18SECTION 8.  In Colorado Revised Statutes, amend 24-51-1602

• Page 10, Line 19as follows:

• Page 10, Line 2024-51-1602.  Affiliation with the deferred compensation plan.

• Page 10, Line 21(1)  An employee is not eligible to participate in the deferred

• Page 10, Line 22compensation plan authorized in section 24-51-1601 unless his or her

• Page 10, Line 23employer is affiliated with such plan.

• Page 10, Line 24(2)  An Each employer as defined in section 24-51-101 (20), may

• Page 10, Line 25shall affiliate with the deferred compensation plan. by making

• Page 10, Line 26application to the association. All applications shall be subject to approval

• Page 10, Line 27by the association. Upon affiliation, employees of the employer are

• Page 11, Line 1eligible to begin deferring salary to the deferred compensation plan.

• Page 11, Line 2(2.5)  The deferred compensation plan established

• Page 11, Line 3pursuant to section 24-51-1601 must:

• Page 11, Line 4(a)  Be in addition to any other retirement or tax-deferred

• Page 11, Line 5compensation system established by the state or its political

• Page 11, Line 6subdivisions; and

• Page 11, Line 7(b)  Include options for an employee to make pre-tax

• Page 11, Line 8voluntary contributions and Roth voluntary contributions to

• Page 11, Line 9the deferred compensation plan.

• Page 11, Line 10(3)  Notwithstanding subsection (2) of this section, all

• Page 11, Line 11employers that are affiliated with the deferred compensation plan prior to

• Page 11, Line 12July 1, 2009, including entities that are not affiliated employers of the

• Page 11, Line 13association, as employer is defined in section 24-51-101 (20), shall

• Page 11, Line 14remain affiliated and shall not have to apply to the association pursuant

• Page 11, Line 15to subsection (2) of this section with the deferred compensation

• Page 11, Line 16plan.

• Page 11, Line 17(4)  Any employee who is employed by an entity that is affiliated

• Page 11, Line 18with the deferred compensation plan shall be is entitled to participate in

• Page 11, Line 19the plan regardless of whether that individual employee is a member or

• Page 11, Line 20retiree of the association.

• Page 11, Line 21SECTION 9.  In Colorado Revised Statutes, 24-51-1603, amend

• Page 11, Line 22(1), (2), and (3) as follows:

• Page 11, Line 2324-51-1603.  Contributions to the deferred compensation plan.

• Page 11, Line 24(1)  An employee of an employer affiliated with the deferred

• Page 11, Line 25compensation plan pursuant to section 24-51-1602 (2) or (3) may

• Page 11, Line 26participate in the deferred compensation plan authorized in section

• Page 11, Line 2724-51-1601 by electing with his or her their employer to defer receipt of

• Page 12, Line 1salary by specifying an amount contributed by payroll deduction. The

• Page 12, Line 2amount of such deferral by the employee shall be is subject to any

• Page 12, Line 3limitations established by federal law. The amount deferred, including

• Page 12, Line 4investment earnings, shall be exempt from federal and state income taxes

• Page 12, Line 5until the ultimate distribution of such contributions has been made to the

• Page 12, Line 6participant, former participant, or beneficiary.

• Page 12, Line 7(2)  All voluntary deferrals by a participating member shall or

• Page 12, Line 8retiree must be included in the salary of such member the member or

• Page 12, Line 9retiree in accordance with section 24-51-101 (42) for the purpose of

• Page 12, Line 10calculating member, working retiree, and employer contributions

• Page 12, Line 11pursuant to the provisions of section 24-51-401. The member contribution

• Page 12, Line 12provisions of section 24-51-401 shall not apply to any deferral made by

• Page 12, Line 13a retiree.

• Page 12, Line 14(3)  Consistent with the provisions of section 24-51-401 (1.7)(c)

• Page 12, Line 15and (1.7)(d), the an employer shall deliver all deferred compensation

• Page 12, Line 16contributions to the trust fund via the association or the service

• Page 12, Line 17provider designated by the association, if applicable, within five days

• Page 12, Line 18after the date the employees are paid.

• Page 12, Line 19SECTION 10.  Act subject to petition - effective date. This act

• Page 12, Line 20takes effect January 1, 2027; except that, if a referendum petition is filed

• Page 12, Line 21pursuant to section 1 (3) of article V of the state constitution against this

• Page 12, Line 22act or an item, section, or part of this act within the ninety-day period

• Page 12, Line 23after final adjournment of the general assembly, then the act, item,

• Page 12, Line 24section, or part will not take effect unless approved by the people at the

• Page 12, Line 25general election to be held in November 2026 and, in such case, will take

• Page 12, Line 26effect January 1, 2027, or on the date of the official declaration of the

• Page 12, Line 27vote thereon by the governor, whichever is later.