HOUSE BILL 981022
BY REPRESENTATIVES Tucker, K. Alexander, G. Berry, Dean, George, June, Miller, Nichol, Saliman, and Mace;
also SENATORS Reeves, B. Alexander, Feeley,
Powers, and Tebedo.
CONCERNING REVISIONS TO THE STATUTORY PROVISIONS
GOVERNING FIRE AND POLICE PENSION PLANS FOR PURPOSES OF COMPLIANCE
WITH THE QUALIFIED PLAN REQUIREMENTS OF THE FEDERAL INTERNAL REVENUE
CODE.
Be it enacted by the General Assembly of the State
of Colorado:
SECTION 1. Part
11 of article 30 of title 31, Colorado Revised Statutes, is amended
BY THE ADDITION OF A NEW SECTION to read:
31301133. Qualification
requirements internal revenue code.
(1) AS USED IN THIS SECTION, "INTERNAL REVENUE
CODE" MEANS THE FEDERAL "INTERNAL REVENUE CODE OF 1954",
AS IN EFFECT ON SEPTEMBER 1, 1974, AS APPLICABLE TO GOVERNMENTAL
PLANS, OR, TO THE EXTENT NOT INCONSISTENT, THE FEDERAL "INTERNAL
REVENUE CODE OF 1986", AS AMENDED AND IN EFFECT ON JANUARY
1, 1989.
(2) ANY VOLUNTEER FIREFIGHTER PENSION
PLAN ESTABLISHED BY THIS PART 11 TO PROVIDE RETIREMENT BENEFITS
FOR VOLUNTEER FIREFIGHTERS SHALL SATISFY THE QUALIFICATION REQUIREMENTS
SPECIFIED IN SECTION 401 OF THE INTERNAL REVENUE CODE, AS APPLICABLE
TO GOVERNMENTAL PLANS. IN ORDER TO MEET THOSE REQUIREMENTS, SUCH
PLANS ARE SUBJECT TO THE FOLLOWING PROVISIONS, NOTWITHSTANDING
ANY OTHER PROVISION OF THIS PART 11:
(a) THE BOARD SHALL DISTRIBUTE THE CORPUS
AND INCOME OF THE PENSION PLAN TO MEMBERS AND THEIR BENEFICIARIES
IN ACCORDANCE WITH THIS PART 11 AND THE RULES ADOPTED BY THE BOARD.
(b) NO PART OF THE CORPUS OR INCOME OF
THE PENSION PLAN MAY BE USED FOR OR DIVERTED TO ANY PURPOSE OTHER
THAN THAT OF PROVIDING BENEFITS TO PARTICIPANTS AND THEIR BENEFICIARIES
AND DEFRAYING REASONABLE EXPENSES OF ADMINISTERING THE PENSION
PLAN.
(c) FORFEITURES ARISING FROM SEVERANCE
OF EMPLOYMENT, DEATH, OR ANY OTHER REASON MAY NOT BE APPLIED TO
INCREASE THE BENEFITS ANY MEMBER WOULD OTHERWISE RECEIVE UNDER
THIS PART 11.
(d) IF THE PENSION PLAN IS TERMINATED,
OR IF ALL CONTRIBUTIONS TO THE PENSION PLAN ARE PERMANENTLY DISCONTINUED,
THE RIGHTS OF EACH AFFECTED MEMBER TO THE BENEFITS ACCRUED AT
THE DATE OF THE TERMINATION OR DISCONTINUANCE, TO THE EXTENT THEN
FUNDED, ARE NONFORFEITABLE.
(e) UPON ATTAINING THE ELIGIBILITY REQUIREMENTS
FOR A BENEFIT, A MEMBER SHALL BE FULLY VESTED IN THE BENEFITS
SUCH MEMBER HAS ACCRUED.
(f) ALL BENEFITS PAID FROM THE PENSION
PLAN SHALL BE DISTRIBUTED IN ACCORDANCE WITH THE REQUIREMENTS
OF SECTION 401 (a) (9) OF THE INTERNAL REVENUE CODE AND THE REGULATIONS
PROMULGATED UNDER THAT SECTION. IN ORDER TO MEET THOSE REQUIREMENTS,
THE PENSION PLAN IS SUBJECT TO THE FOLLOWING PROVISIONS:
(I) THE LIFE EXPECTANCY OF A MEMBER, THE
MEMBER'S SPOUSE, OR THE MEMBER'S BENEFICIARY SHALL NOT BE RECALCULATED
AFTER THE INITIAL DETERMINATION OF THE AMOUNT OF BENEFITS THAT
ARE PAYABLE.
(II) IF A MEMBER DIES BEFORE THE DISTRIBUTION
OF THE MEMBER'S BENEFITS HAS BEGUN, DISTRIBUTIONS TO BENEFICIARIES
MUST BEGIN NO LATER THAN DECEMBER 31 OF THE CALENDAR YEAR IMMEDIATELY
FOLLOWING THE CALENDAR YEAR IN WHICH THE MEMBER DIED.
(III) THE AMOUNT OF AN ANNUITY PAID TO A MEMBER'S BENEFICIARY MAY NOT EXCEED THE MAXIMUM DETERMINED UNDER THE INCIDENTAL DEATH BENEFIT REQUIREMENT OF THE INTERNAL REVENUE CODE.
(g) BENEFITS PAID UNDER ANY PENSION PLAN
MAY NOT EXCEED THE LIMITATIONS SPECIFIED BY SECTION 415 OF THE
INTERNAL REVENUE CODE, INCLUDING THE SPECIAL RULE UNDER SECTION
415 (b) (10) OF THE INTERNAL REVENUE CODE.
(h) THE COMPENSATION TAKEN INTO ACCOUNT
UNDER THIS PART 11 MAY NOT EXCEED THE APPLICABLE AMOUNT UNDER
SECTION 401 (a) (17) OF THE INTERNAL REVENUE CODE.
(i) ANY DISTRIBUTEE WHO IS ENTITLED TO
AN ELIGIBLE ROLLOVER DISTRIBUTION, AS DEFINED IN SECTION 402 (c)
(4) OF THE INTERNAL REVENUE CODE, FROM THE STATEWIDE PENSION PLAN
ON AND AFTER JANUARY 1, 1993, MAY ELECT TO HAVE THE PORTION OF
SUCH DISTRIBUTION THAT WOULD OTHERWISE BE INCLUDED IN THE GROSS
INCOME OF THE DISTRIBUTEE FOR FEDERAL INCOME TAX PURPOSES TRANSFERRED
DIRECTLY TO AN ELIGIBLE RETIREMENT PLAN, AS DEFINED IN SECTION
402 (c) (8) (B) OF THE INTERNAL REVENUE CODE, DESIGNATED BY THE
DISTRIBUTEE.
SECTION 2. 3130.5212
(8), Colorado Revised Statutes, is amended, and the said 3130.5212
is further amended BY THE ADDITION OF THE FOLLOWING NEW SUBSECTIONS,
to read:
3130.5212. Qualification
requirements internal revenue code.
(8) Any distributee who is entitled to an eligible
rollover distribution, as defined in section 402 (c) (4) of the
internal revenue code, from the pension fund on or after January
1, 1993, may elect to have the portion of such distribution that
would otherwise be included in the gross income of the distributee
for federal income tax purposes transferred directly to an eligible
retirement plan, as defined in section
402 (a) (5) (E) (iv) SECTION 402
(c) (8) (B) of the internal revenue code, designated by the distributee.
(9) ALL BENEFITS PAID FROM AN OLD HIRE
PENSION FUND SHALL BE DISTRIBUTED IN ACCORDANCE WITH THE REQUIREMENTS
OF SECTION 401 (a) (9) OF THE INTERNAL REVENUE CODE AND THE REGULATIONS
PROMULGATED UNDER THAT SECTION. IN ORDER TO MEET THOSE REQUIREMENTS,
AN OLD HIRE PENSION FUND IS SUBJECT TO THE FOLLOWING PROVISIONS:
(a) THE LIFE EXPECTANCY OF AN OLD HIRE
MEMBER, THE MEMBER'S SPOUSE, OR THE MEMBER'S BENEFICIARY SHALL
NOT BE RECALCULATED AFTER THE INITIAL DETERMINATION OF THE AMOUNT
OF BENEFITS THAT ARE PAYABLE.
(b) IF AN OLD HIRE MEMBER DIES BEFORE
THE DISTRIBUTION OF THE MEMBER'S BENEFITS HAS BEGUN, DISTRIBUTIONS
TO BENEFICIARIES MUST BEGIN NO LATER THAN DECEMBER 31 OF THE CALENDAR
YEAR IMMEDIATELY FOLLOWING THE CALENDAR YEAR IN WHICH THE MEMBER
DIED.
(c) THE AMOUNT OF AN ANNUITY PAID TO AN
OLD HIRE MEMBER'S BENEFICIARY MAY NOT EXCEED THE MAXIMUM DETERMINED
UNDER THE INCIDENTAL DEATH BENEFIT REQUIREMENT OF THE INTERNAL
REVENUE CODE.
(10) NOTWITHSTANDING ANY PROVISION OF
AN OLD HIRE PENSION PLAN TO THE CONTRARY, CONTRIBUTIONS, BENEFITS,
AND SERVICE CREDIT WITH RESPECT TO SERVICE IN THE UNIFORMED SERVICES
OF THE UNITED STATES SHALL BE PROVIDED IN ACCORDANCE WITH SECTION
414 (u) OF THE INTERNAL REVENUE CODE.
SECTION 3. 3131102
(5), Colorado Revised Statutes, is amended to read:
3131102. Definitions. As
used in this article, unless the context otherwise requires:
(5) "Money purchase plan" OR
"MONEY PURCHASE PENSION PLAN" means a program
RETIREMENT PLAN under which: member
and employer contributions are accumulated with interest to purchase
a benefit at retirement. The benefit amount is determined by
actuarially converting the accumulated sum in a member's retirement
account into a monthly benefit based on uniform actuarial assumptions
approved by the board for such plans. The term does not include
a plan that provides for minimum benefits or other defined benefits.
(a) THE EMPLOYER HAS A FIXED OBLIGATION
TO MAKE AN ANNUAL CONTRIBUTION TO THE PLAN;
(b) THE PLAN PROVIDES FOR AN INDIVIDUAL
ACCOUNT FOR EACH MEMBER; AND
(c) THE MEMBER'S BENEFITS ARE BASED SOLELY
ON THE AMOUNT CONTRIBUTED TO THE MEMBER'S ACCOUNT AND ANY INCOME,
EXPENSES, GAINS, AND LOSSES ALLOCATED TO THE MEMBER'S ACCOUNT.
SECTION 4. 3131409 (2) (f), (2) (i), and (2) (j), Colorado Revised Statutes, are amended, and the said 3131409 (2) is further amended BY THE ADDITION OF A NEW PARAGRAPH, to read:
3131409. Qualification
requirements internal revenue code.
(2) The statewide defined benefit plan established
by this part 4 to provide retirement benefits for members hired
on or after April 8, 1978, shall satisfy the qualification requirements
specified in section 401 of the internal revenue code, as applicable
to governmental plans. In order to meet those requirements, the
statewide defined benefit plan is subject to the following provisions,
notwithstanding any other provision of this part 4:
(f) The board
may not determine eligibility for benefits, compute rates of contribution,
or compute benefits of members or beneficiaries in a manner that
discriminates in favor of members who are considered officers,
supervisors, or highly compensated, as prohibited under section
401 (a) (4) of the internal revenue code.
(i) The board
may not engage in a transaction prohibited by section 503 (b)
of the internal revenue code.
(j) Any distributee who is entitled to
an eligible rollover distribution, as defined in section 402 (c)
(4) of the internal revenue code, from the statewide pension plan
on and after January 1, 1993, may elect to have the portion of
such distribution that would otherwise be included in the gross
income of the distributee for federal income tax purposes transferred
directly to an eligible retirement plan, as defined in section
402 (a) (5) (E) (iv) SECTION 402
(c) (8) (B) of the internal revenue code, designated by the distributee.
(k) UPON ATTAINING THE ELIGIBILITY REQUIREMENTS
FOR A BENEFIT, A MEMBER SHALL BE FULLY VESTED IN THE BENEFITS
SUCH MEMBER HAS ACCRUED.
SECTION 5. Safety
clause. The general assembly hereby finds,
determines, and declares that this act is necessary for the immediate
preservation of the public peace, health, and safety.
____________________________ ____________________________
Charles E. Berry Tom Norton
SPEAKER OF THE HOUSE PRESIDENT OF
OF REPRESENTATIVES THE SENATE
____________________________ ____________________________
Judith M. Rodrigue Patricia K. Dicks
CHIEF CLERK OF THE HOUSE ASSISTANT SECRETARY OF
OF REPRESENTATIVES THE SENATE
APPROVED________________________________________
_________________________________________
Roy Romer
GOVERNOR OF THE STATE
OF COLORADO
Created: 3/18/98 Updated: 3/18/98