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Introduced Version House Bill 210 History

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Key: Green = existing Code. Red = new code to be enacted
H. B. 210


(By Mr. Speaker, (Mr. Thompson) and Delegate Armstead)
[By Request of the Executive]
[Introduced June 24, 2008; referred to the
Committee on Finance.]



A BILL to amend and reenact §18-7D-2, §18-7D-5, §18-7D-6, §18-7D-7 and §18-7D-9 of the Code of West Virginia, 1931, as amended; and to amend said code by adding thereto a new section, designated §18-7D-12, all relating to the State Teachers Retirement System and the Teachers' Defined Contribution System generally; relating to the voluntary transfer of assets from the Teachers' Defined Contribution Retirement System to the State Teachers Retirement System; computing teachers' service; establishing requirements and processes for members to affirmatively elect to transfer; setting forth dates and time periods for members to affirmatively elect to transfer; setting forth dates and time periods for the transfer of certain members; providing for service credit in the State Teachers Retirement System; addressing qualified domestic relations orders; and clarifying a transferring member's eligibility to retire following transfer.

Be it enacted by the Legislature of West Virginia:
That §18-7D-2, §18-7D-5, §18-7D-6, §18-7D-7 and §18-7D-9 of the Code of West Virginia, 1931, as amended, be amended and reenacted; and that said code by amended by adding thereto a new section, designated §18-7D-12, all to read as follows:
ARTICLE 7D. VOLUNTARY TRANSFER FROM TEACHERS' DEFINED CONTRIBUTION RETIREMENT SYSTEM TO STATE TEACHERS RETIREMENT SYSTEM.

§18-7D-2. Definitions.

As used in this article, unless the context clearly requires a different meaning:
(1)
"Actively contributing member of the Teachers' Defined Contribution Retirement System" means a member of that retirement system who was actively contributing to the Teachers' Defined Contribution Retirement System on the thirty-first day of December, two thousand seven.
(2) "Actuarial Reserve" means the Actuarial Reserve Lump Sum Value of the additional service credit being purchased by a member so electing in accordance with the provisions of section six of this article.

(3) "Actuarial Reserve Adjusted Salary" means either:
(A) For a member with a full year service credit in the fiscal year ending the thirtieth day of June, two thousand seven, the member's two thousand seven fiscal year salary increased by seven percent;
(B) For a member with less than a full year service credit in the fiscal year ending the thirtieth day of June, two thousand seven, the member's two thousand seven fiscal year salary annualized to a full year based on the partial year service credit increased by seven percent; or
(C) For a member without service credit in the fiscal year ending the thirtieth day of June, two thousand seven, the member's annualized contract salary in effect on the thirty-first day of December, two thousand seven increased by seven percent, or the member's annual contract salary on the date of rehire if after the thirty-first day of December, two thousand seven.
(4) "Actuarial Reserve Benefit Date" means the first day of the month coincident with or next following the date at which the member attains the age of sixty, or the thirtieth day of June, two thousand nine, whichever is later.
(5) "Actuarial Reserve Benefit Date Factors" mean the actuarial lump sum value factors based on a life only annuity starting on the Actuarial Reserve Benefit Date applying the 1983 Group Annuity Mortality Tables on a seventy-five percent female and a twenty-five percent male blended Unisex basis and interest at seven and one-half percent.
(6) "Actuarial Reserve Discount Factor" means the annual discount factor applied for the period between the thirtieth day of June, two thousand nine and the Actuarial Reserve Benefit Date, if any. Such factor based on the State Teachers Retirement System actuarial valuation assumptions shall estimate the impact of mortality, disability, and economic factors for such discount period by application of a net four percent discount rate.
(7) "Actuarial Reserve Lump Sum Value" means a single sum amount calculated as: A benefit of two percent multiplied by the Defined Contribution Retirement System service credit being purchased multiplied by the Actuarial Reserve Adjusted Salary; such benefit multiplied by the Actuarial Reserve Benefit Date Factors to determine the lump sum value multiplied by the Actuarial Reserve Discount Factor.
(8) "Affirmatively elect to transfer" means the voluntary execution and delivery to the Consolidated Public Retirement Board, by a member of the Teachers' Defined Contribution Retirement System of a document in a form prescribed by the board that irrevocably authorizes the board to transfer the member and all the member's assets in the Teachers' Defined Contribution Retirement System to the State Teachers Retirement System: Provided, That delivery of the document to the Consolidated Public Retirement Board may be accomplished through submission of the document to the supervisor of a work site pursuant to section seven of this article: Provided, however, That any previous member of the state Teachers Retirement System who voluntarily elected to terminate his or her membership in the State Teachers Retirement System to become a member of the Teachers' Defined Contribution Retirement System and signed an irrevocable transfer request also may affirmatively elect to transfer notwithstanding the prior transfer request.
(9) "Assets" means all member contributions and employer contributions made on the member's behalf to the Defined Contribution Retirement System and earnings thereon, less any applicable fees as approved by the board: Provided, That if a member has withdrawn or cashed out any amounts, the amounts must have been repaid.
(10) "Board" means the Consolidated Public Retirement Board established in article ten-d, chapter five of this code, and its employees.

(11) "Date of transfer" means, in the event that sixty-five percent or more of the actively contributing members of the Defined Contribution Retirement System affirmatively elect to transfer to the State Teachers Retirement System within the period provided in section seven of this article, the first day of July, two thousand eight: Provided, That for any member whose election to transfer was received by the board after the twelfth day of May, two thousand eight, but on or before the twentieth day of May, two thousand eight, "date of transfer" means the first day of August, two thousand eight.
(12) "Defined Contribution Retirement System" means the Teachers' Defined Contribution Retirement System established in article seven-b of this chapter.
(13) "Member" means any person who has an account balance standing to his or her credit in the Teachers' Defined Contribution Retirement System.
(14) "Salary" means:
(A) For a member contributing to the Defined Contribution Retirement System during the two thousand seven fiscal year, the actual salary earned for the two thousand seven fiscal year divided by the employment service earned in the two thousand seven fiscal year.
(B) For a member not contributing to the Defined Contribution Retirement System during the two thousand seven fiscal year, the contract salary on the date of rehire.
(15) "State Teachers Retirement System" means the State Teachers Retirement System established in article seven-a of this chapter.
§18-7D-5. Conversion of assets from Defined Contribution Retirement System to State Teachers Retirement System; contributions; loans.

(a) If at least sixty-five percent of actively contributing members of the Teachers' Defined Contribution Retirement System affirmatively elect to transfer to the State Teachers Retirement System within the period provided in section seven of this article, then the Consolidated Public Retirement Board shall transfer the members and all properties held in the Teachers' Defined Contribution Retirement System's Trust Fund in trust for those members who affirmatively elected to do so during that period to the State Teachers Retirement System, effective on the first day of July, two thousand eight: Provided, That the board shall, for any member whose election to transfer was received by the board after the twelfth day of May, two thousand eight, but on or before the twentieth day of May, two thousand eight, effectuate the transfer as provided in this subsection on the first day of August, two thousand eight.
(b) The board shall make available to each member a loan for the purpose of paying all or part of the Actuarial Reserve, or if available in accordance with the provisions of subsection (d), section six of this article, the one and one-half percent contribution for service in the Teachers' Defined Contribution System to receive additional service credit in the State Teachers Retirement System for service in the Teachers' Defined Contribution Retirement System pursuant to section six of this article. The loan shall be offered in accordance with the provisions of section thirty-four, article seven-a of this chapter.
(1) Notwithstanding any provision of this code, rule or policy of the board to the contrary, the interest rate on any loan may not exceed seven and one-half percent per annum. The total amount borrowed may not exceed forty thousand dollars: Provided, That the loan may not exceed the limitations of the Internal Revenue Code Section 72(p).
(2) In the event a loan made pursuant to this section is used to pay the Actuarial Reserve or the one and one-half percent contribution, as the case may be, the board shall make any necessary adjustments at the time the loan is made.
(3) The board shall make this loan available until the thirtieth day of June, two thousand nine.
(c) The board shall develop and institute a payroll deduction program for repayment of the loan established in this section.
(d) If at least sixty-five percent of actively contributing members of the Teachers' Defined Contribution Retirement System affirmatively elect to transfer to the State Teachers Retirement System within the period provided in section seven of this article:
(1) As of the first day of July, two thousand eight, or the first day of August, two thousand eight, as the case may be, the transferred members' contribution rate becomes six percent of his or her salary or wages; and
(2) All transferred members who work one hour or more and who make a contribution into the State Teachers Retirement System on or after the first day of July, two thousand eight, are governed by the provisions of article seven-a of this chapter, subject to the provisions of this article.
(e) Subject to the provisions of subdivision (1) of this subsection, if a member has withdrawn or cashed out part of his or her assets, that member will not receive credit for those moneys cashed out or withdrawn. The board shall make a determination as to the amount of credit a member loses based on the periods of time and the amounts he or she has withdrawn or cashed out, which shall be expressed as a loss of service credit.
(1) A member may repay those amounts he or she previously cashed out or withdrew, along with interest as determined by the board, and receive the same credit as if the withdrawal or cash-out never occurred. To receive full credit for the cashed-out or withdrawn amounts being repaid to the State Teachers Retirement System, the member also shall pay the actuarial reserve, or the one and one-half percent contribution, as the case may be, pursuant to section six of this article.
(2) The loan provided in this section is not available to members to repay previously cashed out or withdrawn moneys.
(3) If the repayment occurs five or more years following the cash-out or withdrawal, the member also shall repay any forfeited employer contribution account balance along with interest determined by the board.
(f) Notwithstanding any provision of subsection (e) to the contrary, if a member has cashed out or withdrawn any of his or her assets after the last day of June, two thousand three, and that member chooses to repurchase that service after the thirtieth day of June, two thousand eight, the member shall repay the previously distributed amounts and any applicable interest to the State Teachers Retirement System.
(g) Any service in the State Teachers Retirement System a member has before the date of the transfer is not affected by the provisions of this article.
(h) The board shall take all necessary steps to see that the voluntary transfers of persons and assets authorized by this article do not affect the qualified status with the Internal Revenue Service of either retirement plan.
§18-7D-6. Service credit in State Teachers Retirement System following transfer; conversion of assets; adjustments.

(a) Any member who has affirmatively elected to transfer to the State Teachers Retirement System within the period provided in section seven of this article whose assets have been transferred from the Teachers' Defined Contribution Retirement System to the State Teachers Retirement System pursuant to the provisions of this article and who has not made any withdrawals or cash-outs from his or her assets is, depending upon the percentage of actively contributing members affirmatively electing to transfer, entitled to service credit in the State Teachers Retirement System in accordance with the provisions of subsections (c) or (d) of this section.
(b) Any such member who has made withdrawals or cash-outs will receive service credit based upon the amounts transferred. The board shall make the appropriate adjustment to the service credit the member will receive.
(c) If at least sixty-five percent but less than seventy-five percent of actively contributing members of the Teachers' Defined Contribution Retirement System affirmatively elect to transfer to the State Teachers Retirement System within the period provided in section seven of this article, for any member of the Defined Contribution Retirement System who elects to transfer to the State Teachers Retirement System, his or her service credit in the State Teachers Retirement System is determined as follows:
(1) For any member affirmatively electing to transfer, the member's State Teachers Retirement System credit shall be seventy-five percent of the member's Teachers' Defined Contribution Retirement System service credit, less any service previously withdrawn by the member or due to a qualified domestic relations order and not repaid;
(2) To receive full credit in the State Teachers Retirement System for service in the Teachers' Defined Contribution Retirement System for which assets are transferred, transferring members shall have the option to pay into the State Teachers Retirement System the Actuarial Reserve, as defined in section two of this article, by no later than the thirtieth day of June, two thousand nine.
(d) If at least seventy-five percent of actively contributing members of the Teachers' Defined Contribution Retirement System affirmatively elect to transfer to the State Teachers Retirement System within the period provided in section seven of this article, for any member of the Defined Contribution Retirement System who elects to transfer to the State Teachers Retirement System, his or her service credit in the State Teachers Retirement System is determined as follows:
(1) For any member affirmatively electing to transfer, the member's State Teachers Retirement System credit shall be seventy-five percent of the member's Teachers' Defined Contribution Retirement System service credit , less any service previously withdrawn by the member or due to a qualified domestic relations order and not repaid;
(2) To receive full credit in the State Teachers Retirement System for service in the Teachers' Defined Contribution Retirement System for which assets are transferred, members who affirmatively elected to transfer shall pay into the State Teachers Retirement System a one and one-half percent contribution by no later than the thirtieth day of June, two thousand nine. This contribution shall be calculated as one and one-half percent of the member's estimated total earnings for which assets are transferred, plus interest of four percent per annum accumulated from the date of the member's initial participation in the Defined Contribution Retirement System.
(A) For a member contributing to the Defined Contribution Retirement System at any time during the two thousand eight fiscal year and commencing membership in the State Teachers Retirement System on the first day of July, two thousand eight, or the first day of August, two thousand eight, as the case may be:
(i) The estimated total earnings shall be calculated based on the member's salary and the member's age nearest birthday on the thirtieth day of June, two thousand eight;
(ii) This calculation shall apply both an annual backward salary scale from that date for prior years' salaries and a forward salary scale for the salary for the two thousand eight fiscal year. (B) The calculations in paragraph (A) of this subdivision are based upon the salary scale assumption applied in the West Virginia Teachers Retirement System Actuarial Valuation as of the first day of July, two thousand seven, prepared for the Consolidated Public Retirement Board. This salary scale shall be applied regardless of breaks in service.
(e) All service previously transferred from the State Teachers Retirement System to the Teachers' Defined Contribution Retirement System is considered Teachers' Defined Contribution Retirement System service for the purposes of this article.
(f) Notwithstanding any provision of this code to the contrary, the retirement of a member who becomes eligible to retire after the member's assets are transferred to the State Teachers Retirement System pursuant to the provisions of this article may not commence prior to the first day of September, two thousand eight: Provided, That the Consolidated Public Retirement Board may not retire any member who is eligible to retire during the school year beginning two thousand eight during the school calendar year two thousand eight unless the member has provided a written notice to his or her county board of education by the first day of July, two thousand eight, of his or her intent to retire.
§18-7D-7. Period for affirmative election to transfer; board may contract for professional services.

(a) The board shall provide the members of the Teachers' Defined Contribution Retirement System an opportunity to voluntarily execute and deliver to the Consolidated Public Retirement Board, or its designee, a written document in a form prescribed by the board that irrevocably authorizes the board to transfer the member and all the member's assets in the Teachers' Defined Contribution Retirement System to the State Teachers Retirement System in accordance with the provisions of this article.
(b) If at least sixty-five percent of actively contributing members of the Teachers' Defined Contribution Retirement System affirmatively elect to transfer to the State Teachers Retirement System:
(1) The Consolidated Public Retirement Board shall, for each member who affirmatively elected to transfer as provided in this section, transfer the assets held in the Teachers' Defined Contribution Retirement System's Trust Fund in trust for that member to the State Teachers Retirement System on the first day of July, two thousand eight: Provided, That the board shall, for each member whose election to transfer was received by the board after the twelfth day of May, two thousand eight, but on or before the twentieth day of May, two thousand eight, transfer the assets of such member as provided in this subdivision on the first day of August, two thousand eight;
(2) On the first day of July, two thousand eight, or the first day of August, two thousand eight, as the case may be, each member who so elected becomes a member of the State Teachers Retirement System and after working one or more hours and contributing to the State Teachers Retirement System is entitled to the benefits of the State Teachers Retirement System; and
(3) Each such member is governed by the provisions of the State Teachers Retirement System subject to the provisions of this article.
(c) If fewer than sixty-five percent of actively contributing members of the Teachers' Defined Contribution Retirement System affirmatively elect to transfer to the State Teachers Retirement System, the transfers described in this section shall not occur.
(d) Any person who has one dollar or more in assets in the Teachers' Defined Contribution Retirement System on the last day of December, two thousand seven, may and is eligible to affirmatively elect to transfer to the State Teachers Retirement System as provided in this section. For purposes of this article:
(1) The tabulation of the percentage required for transfer as required in this article shall only include documents affirmatively electing to transfer submitted under the provisions of this subsection by those who are actively contributing members of the Teachers' Defined Contribution Retirement System as that term is defined in section two of this article; and
(2) Notwithstanding the opportunity to submit documents affirmatively electing to transfer extended by this article to members other than those who are actively contributing members of the Teachers' Defined Contribution Retirement System, there shall be no duty or other obligation on the part of the board to provide any education, information or notice regarding matters contained in this article to members who are not actively contributing members of the Teachers' Defined Contribution Retirement System regarding any matter described in this article, nor any right on the part of those other members to receive the same.
(e) Notwithstanding any other provision of this code to the contrary, the board may do all things necessary and convenient to maintain the Teachers' Defined Contribution Retirement System and the State Teachers Retirement System during the transitional period and may retain the services of the professionals it considers necessary to do so. The board may also retain the services of professionals necessary to:
(1) Assist in the preparation of educational materials;
(2) Assist in the educational process;
(3) Assist in the process for submission of the documents whereby members may affirmatively elect to transfer; and
(4) Ensure compliance with all relevant state and federal laws.
(f) Due to the time constraints inherent in the initial processes established for the submission of documents affirmatively electing to transfer set forth in this article in specific, and due to the nature of the professional services required by the Consolidated Public Retirement Board in general, the provisions of article three, chapter five-a of this code, do not apply to any materials, contracts for any actuarial services, investment services, legal services or other professional services authorized under the provisions of this article and the provisions of article six, chapter twenty-nine do not apply to any employment of or contracting for personnel by the board for the purposes of implementing the provisions of this article.
(g) The submission of the documents whereby members may affirmatively elect to transfer may be held through any method the board determines is in the best interest of the members: Provided, That for members of the Teachers' Defined Contribution Retirement System, the submission of the documents whereby those members elect to transfer shall be pursuant to the procedure established by the Consolidated Public Retirement Board set forth in subsection (j) of this section.
(h) The period for submission of the documents whereby members may affirmatively elect to transfer shall begin not later than the first day of April, two thousand eight. The board shall ascertain the results of the submissions not later than the last day of May, two thousand eight. The board shall certify the results of the submissions to the Governor, the Legislature and the members not later than the fifth day of June, two thousand eight.
(i) The submission period terminates and elections to transfer may not be accepted from a member after the twelfth day of May, two thousand eight, subject to the following:
(1) If elections to transfer are permitted through the mail, any submission postmarked later than the twelfth day of May, two thousand eight, is void and may not be counted: Provided, That notwithstanding the provisions of this subdivision, any submission received by the board on or before the twentieth day of May, two thousand eight shall be counted;
(2) If elections to transfer are delivered to a supervisor on selection day or on or before the ninth day of May, two thousand eight, any submission postmarked or deposited with a commercial carrier later than the thirteenth day of May, two thousand eight, is void and may not be counted: Provided, That notwithstanding the provisions of this subdivision, any submission received by the board on or before the twentieth day of May, two thousand eight shall be counted: Provided, however, That delivery by mail must be by certified mail, return receipt requested or delivery by commercial courier that requires written confirmation by the board of delivery;
(3) The fifth day of May, two thousand eight, is selection day upon which each county board and superintendent shall provide an opportunity in each school within the county for members of the Teachers' Defined Contribution System to affirmatively elect to transfer.
(j) The Consolidated Public Retirement Board shall collaborate with the state superintendent, the Chancellor for Higher Education and the Chancellor for Community and Technical College Education to establish a procedure whereby all actively contributing members of the Teachers' Defined Contribution Retirement System may deliver to the Consolidated Public Retirement Board or its designee the written document authorizing transfer through a supervisor at each work site where any contributing member of the Defined Contribution Retirement System is employed. The procedure shall include at least the following:
(1) The supervisor at each work site is responsible for collecting the written documents authorizing the transfer from all actively contributing members of the Teachers' Defined Contribution Retirement System employed at the work site who choose to submit the written document. The supervisor shall record the receipt of all written documents authorizing transfer, shall direct the member submitting the written document to initial a receipt log and shall issue a receipt to the member submitting the written document.
(2) On and after the sixth day of May, two thousand eight, but on or before the ninth day of May, two thousand eight, the supervisor at the work site shall make reasonable efforts to contact verbally and in writing all actively contributing members of the Teachers' Defined Contribution Retirement System employed at the work site that have not submitted their written documents as of that date to remind those members of the upcoming deadline for submitting their written document authorizing transfer: Provided, That failure of the supervisor to make contact with any of those members shall not be a basis for a cause of action to allow a member to transfer after the period provided in this section or for any other cause of action.
(3) The supervisor at each work site shall forward all of the written documents to the Consolidated Public Retirement Board, or its designee, through certified mail, or delivery by commercial courier that requires written confirmation by the board of delivery, no later than the thirteenth day of May, two thousand eight: Provided, That notwithstanding the provisions of this subdivision, any submission received by the board on or before the twentieth day of May, two thousand eight, shall be counted. The work site supervisor shall inform the Consolidated Public Retirement Board of all of the written documents received each day so that the board, or its designee, can record which members of the Teachers' Defined Contribution Retirement System have submitted their written documents authorizing transfer pursuant to subsection (k) of this section.
(4) For the purposes of this subdivision, the principal of a school with any of grades prekindergarten through twelve is the work site supervisor. For the purposes of this subdivision, for any work site under the jurisdiction of the Higher Education Policy Commission or the West Virginia Council for Community and Technical College Education, the human resource administrator or other designee may be considered the work site supervisor. In any case where the person who is the work site supervisor is in question, the state board, the Chancellor for Higher Education or the Chancellor for Community and Technical College Education, whichever entity has jurisdiction over the work site, shall designate the supervisor.
(5) The state board, the Chancellor for Higher Education and the Chancellor for Community and Technical College Education shall ascertain the names of all work site supervisors under their jurisdiction and transmit a list of the names of the work site supervisors to the Consolidated Public Retirement Board on or before the thirty-first day of March, two thousand eight.
(k) The Consolidated Public Retirement Board, or its designee, shall record the receipt of all written documents authorizing the transfer so that it knows the percentage of contributing members of the Teachers' Defined Contribution Retirement System that have submitted the written documents by work site and by county.
§18-7D-9. Qualified domestic relations orders.
Any transferring member having a qualified domestic relations order against his or her defined contribution account is allowed to repurchase service in the State Teachers Retirement System. The member shall repay any moneys previously distributed to the alternate payee along with the interest as set by the board. To receive full credit for the previous distribution to the alternate payee pursuant to a qualified domestic relations order being repaid to the State Teachers Retirement System, the member shall also pay the Actuarial Reserve, or the one and one-half percent contribution, as the case may be, pursuant to section six of this article. The member shall repay by the last day of June, two thousand fourteen. The provisions of this section are void and of no effect if there is no transfer from the Teachers' Defined Contribution Retirement System to the State Teachers Retirement System. An alternate payee is not, solely as a result of that status, a member of either the Teachers' Defined Contribution Retirement System or the State Teachers Retirement System for any purpose under the provisions of this article and no interest held by the alternate payee is transferred to the State Teachers Retirement System pursuant thereto.
§18-7D-12. Transferees' eligibility to retire.
(a) For purposes of determining a transferring member's eligibility for retirement in accordance with section twenty-five, article seven-a of this chapter, any member who has affirmatively elected to transfer to the State Teachers Retirement System pursuant to the provisions of this article shall be fully credited for his or her years of service in the Teachers' Defined Contribution Retirement System: Provided, That the calculation of any transferring member's service credit in the State Teachers' Retirement System following the transfer shall be determined in accordance with the provisions of section six of this article.
(b) For purposes of this section, "years of service" shall mean all years as a member of the Teachers' Defined Contribution Retirement System and, in addition thereto, credits for any prior service, if any: Provided, That service previously withdrawn by a member may not be included in "years of service" unless repaid.
NOTE: The purpose of this bill is to provide for the voluntary transfer of assets from the Teachers' Defined Contribution Retirement System ("TDC") to the State Teachers Retirement System ("TRS"); to provide technical clarification regarding the deadline for a transferring member to pay the one and one-half percent contribution necessary to obtain additional service credit; to clarify a transferring member's eligibility to retire following transfer; and to extend the deadline for the CPRB's receipt of members election to transfer.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.

§18-7D-12 is new, therefore, strike-throughs and underscoring have been omitted.

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