House bill NO. 135

INTRODUCED BY M. Bertoglio

By Request of the Teachers' Retirement Board

A BILL FOR AN ACT ENTITLED: "AN ACT GENERALLY REVISING ADMINISTRATIVE PROVISIONS OF THE TEACHERS' RETIREMENT SYSTEM; ESTABLISHING INDEPENDENT CONTRACTOR STATUS; CLARIFYING DUTIES OF EMPLOYERS; REVISING THE TRANSFER OF SERVICE FROM THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM; CLARIFYING THE PURCHASE OF THE FIRST 210 HOURS OF SERVICE; REVISING THE REDEPOSIT OF CONTRIBUTIONS PREVIOUSLY WITHDRAWN FROM THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM; CLARIFYING EARNED COMPENSATION LIMITATIONS; REVISING THE GUARANTEED ANNUAL BENEFIT ADJUSTMENT; CLARIFYING THE CALCULATION OF AVERAGE FINAL COMPENSATION; CLARIFYING THE MEDICAL EXAMINATION OF A DISABILITY RETIREE; CLARIFYING PAYMENTS ON THE DEATH OF A RETIREE; AMENDING SECTIONS 19-20-208, 19-20-409, 19-20-417, 19-20-427, 19-20-715, 19-20-719, 19-20-805, 19-20-901, 19-20-903, 19-20-1001, AND 19-20-1002, MCA; AND PROVIDING EFFECTIVE DATES AND A RETROACTIVE APPLICABILITY DATE.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:

Section 1. Establishing independent contractor status. (1) (a) An individual working in a position reportable to the retirement system is presumed to be a common law employee of the employer and not an independent contractor.

(b) Until the status of an individual working in a position reportable to the retirement system is conclusively established to be that of an independent contractor, the individual must be reported to the retirement system as an active member or working retiree, as appropriate, not as an independent contractor.

(2) (a) An employer who asserts that an individual working in a position reportable to the retirement system is an independent contractor shall conclusively establish that the individual is an independent contractor and not a common law employee of the employer by:

(i) a written determination prepared by an attorney, an employment or human resources professional, or another individual who is qualified to make worker status determinations;

(ii) an order of a court of competent jurisdiction; or

(iii) internal revenue service form SS-8.

(b) (i) An individual making the determination must provide with their written determination their full name, professional designations, business name, business address, and business telephone number.

(ii) The written determination or order must comprehensively address the internal revenue service criteria related to the facts and circumstances of the specific worker in the specific position at issue and must provide a reasoned discussion of each criterion and its application to the specific facts and circumstances of the work and the position, not merely provide a conclusory statement of finding.

(iii) An independent contractor exemption certificate by the Montana department of labor and industry must meet all of the requirements of this subsection (2).

(3) Any costs incurred to conclusively establish the independent contractor status of an individual working in a position reportable to the retirement system, as specified in this section, must be the sole responsibility of the employer.

Section 2. Section 19-20-208, MCA, is amended to read:

"19-20-208. Duties and liability of employer. (1) Each employer shall:

(a) (i) each month, report the name, social security number, time worked, and gross earnings of each employed member; and

(ii) pick up the contributions of each employed member at the rate prescribed pursuant to 19-20-602 and 19-20-608; and transmit the contributions to the executive director of the retirement board;

(b) transmit to the executive director of the retirement board system the employer's contributions prescribed by 19-20-605 and 19-20-609, at the time that the employee contributions are transmitted;

(c) keep records and, as required by the retirement board system, furnish information to the board that is required in the discharge of the board's retirement system's duties, including financial, personal services, or other information or documentation requested by the retirement system to verify proper retirement system reporting and contribution remittance related to any individual hired by, working for, or paid by the employer, whether as a common law employee, an independent contractor, an employee or contractor of a third party, a volunteer, or in any other capacity;

(d) upon on the employment of a person who is required to become a member of the retirement system, inform the person of the rights and obligations relating to the retirement system;

(e) each month, report the name, social security number, time worked, and gross earnings of each retired member of the system who has been employed in a position that is reportable to the retirement system pursuant to 19-20-731;

(f) whenever applicable, inform an employee of the right to elect to participate in the university system retirement program under Title 19, chapter 21; and

(g) at the request of the retirement board system, certify the names of all persons who are eligible for membership or who are members of the retirement system.

(2) An employer that fails to timely or accurately report the employment of, time worked by, or compensation paid to a retired member as required under subsection (1)(e) is jointly and severally liable with the retired member for repayment to the retirement system of retirement benefits paid to which the member was not entitled, plus interest.

(3)(2) An employer shall submit a wage and contribution report to the retirement system every month, including for any month in which the employer does not pay compensation reportable to the retirement system."

Section 3. Section 19-20-409, MCA, is amended to read:

"19-20-409. Transfer of service credits and contributions from public employees' retirement system. (1) (a) An active member may at any time before retirement file a written application with the retirement board teachers' retirement system to purchase transfer all of the member's previous service credit in then on account with the public employees' retirement system to the teachers' retirement system if the following requirements are met:

(i) the member is eligible to withdraw from the public employees' retirement system; and

(ii) member and employer contributions are directly transferred from the public employees' retirement system to the teachers' retirement system as provided in subsections (1)(b) and (1)(c).

. The amount that must be paid to the retirement system to purchase this service under this section is the sum of subsections (2) and (3).

(2)(b) The public employees' retirement system shall transfer employer contributions to the teachers' retirement system in an amount equal to 72% of the amount paid by the of member contributions and accrued interest to be transferred as provided in subsection (1)(c).

(3)(c) The member shall pay either directly or by public employees' retirement system transferring contributions on account with the public employees' retirement system an amount equal to the member's accumulated contributions at the time that active membership was terminated, plus accrued interest. Interest must be calculated from the date of termination shall transfer member contributions to the teachers' retirement system in an amount equal to the total amount of the member's contributions then on account with the public employees' retirement system, plus all interest accrued on the member contributions from the date of deposit until the date the a transfer is received by the teachers' retirement system,. Interest must be based on the interest tables in use by the public employees' retirement system.

(d) (i) On completion of the transfer, the teachers' retirement system shall credit the member with creditable service equal to the service credit that had been on account with the public employees' retirement system, subject to limitation as provided in 19-20-401(9).

(ii) The transferred service credit must count toward vesting in a benefit with the teachers' retirement system. If, at the time of retirement, the member does not have sufficient years of membership service with the teachers' retirement system to calculate the members' average final compensation under plan terms, compensation must be credited to the period of transferred service credit necessary to calculate the member's average final compensation as provided in 19-20-805(4).

(4)(iii) A member who purchases transfers service from the public employees' retirement system in the teachers' retirement system must have completed 5 years of membership service in the teachers' retirement system to be eligible to receive creditable service pursuant to 19-20-402, 19-20-403, 19-20-404, 19-20-408, 19-20-410, or 19-20-426.

(5) The retirement board shall determine the service credits that may be transferred.

(6) If an active member who also has service credit in the public employees' retirement system before becoming a member of the teachers' retirement system dies before purchasing this service in the teachers' retirement system and if the member's service credits from both systems, when combined, entitle the member's beneficiary to a death benefit, the payment of the death benefit is the liability of the teachers' retirement system. Before payment of the death benefit, the public employees' retirement board must transfer to the teachers' retirement system the contributions necessary to purchase this service in the teachers' retirement system as provided in subsections (2) and (3).

(2) (a) The beneficiary of a member of the teachers' retirement system who dies while an active member and while also having service credit on account with the public employees' retirement system may apply to have the deceased member's service transferred from the public employees' retirement system to the teachers' retirement system if the following requirements are met:

(i) the member had not previously retired under either retirement system;

(ii) the member was not vested in a benefit with either retirement system at the time of death;

(iii) the member's creditable service following transfer will entitle the beneficiary to receive a survivor benefit from the teachers' retirement system in the form of a monthly benefit payable for the beneficiary's lifetime;

(iv) at least one eligible beneficiary will elect the lifetime benefit;

(v) each beneficiary entitled to payment on behalf of the deceased member from either retirement system prior to transfer must be an individual and must also be a beneficiary entitled to payment on behalf of the deceased member from the other retirement system; and

(vi) the transfer of service credit from the public employees' retirement system must constitute a full withdrawal of the deceased member's service credit from the public employees' retirement system.

(b) Member and employer contributions must be transferred directly from the public employees' retirement system to the teachers' retirement system as provided in subsections (1)(b) and (1)(c).

(c) (i) On completion of the transfer, the teachers' retirement system shall credit the member with creditable service equal to the service credit that had been on account with the public employees' retirement system.

(ii) If the member does not have sufficient years of membership service with the teachers' retirement system to calculate the member's average final compensation under plan terms, compensation must be credited to the period of transferred service credit necessary to calculate the member's average final compensation as provided in 19-20-805(4).

(7)(3) (a) If the teachers' retirement board system determines that an individual's membership was erroneously classified and reported to the public employees' retirement system, the public employees' retirement board system shall transfer to the teachers' retirement system the member's accumulated contributions and service, together with employer contributions plus interest.

(b) For the period of time that the employer contributions are held by the public employees' retirement system, interest paid on employer contributions transferred under this subsection (7) (3) must be calculated at the short-term investment pool rate earned by the board of investments in the fiscal year preceding the transfer request.

(c) Any employee and employer contributions due as calculated in 19-20-602, 19-20-605, 19-20-608, and 19-20-609, plus interest, are the liability of the employee and the employing entity employer where the error occurred.

(8)(4) A member who participated in the public employees' retirement system defined contribution plan provided for in Title 19, chapter 3, part 21, may purchase creditable service for the time spent as a participant in the defined contribution plan if:

(a) the member is vested in the teachers' retirement system and has completed at least 1 full year of active membership in the teachers' retirement system following the member's public employees' retirement system service;

(b) for each full year or portion of a year to be purchased pursuant to this subsection (8) (4), the member contributes the actuarial cost of the service based on the most recent valuation of the system; and

(c) the member has withdrawn the member's money in the member's public employees' retirement system defined contribution plan account or has rolled over the amount required to purchase service in accordance with this subsection (8) (4).

(9)(5) Creditable service purchased under subsection (8) (4) must be determined according to the laws and rules governing service credit in the public employees' retirement system."

Section 4. Section 19-20-417, MCA, is amended to read:

"19-20-417. Credit for substitute teaching service, teacher's aide service, or other service not reported. (1) A substitute teacher or part-time teacher's aide who did not elect membership who has filed an irrevocable election with their employer not to participate in the retirement system for the first 210 hours of service under 19-20-302 and who subsequently becomes a member within the same fiscal year must be awarded creditable service for the first 210 hours of service not reported if the member contributes the employee and employer contributions that would have been made if the member had been a member from the date of hire first date of service in that fiscal year, plus interest at the current actuarial assumed rate of investment return.

(2) A person who was employed in a capacity that would have been eligible for membership except for the fact that the person was employed for less than 30 days and who subsequently becomes an active member within the same fiscal year may purchase this service the first 30 days of service if the person member contributes the employee and employer contributions that would have been made if the person had been a member from the date of hire first date of service in that fiscal year, plus interest at the current actuarial assumed rate of investment return.

(3) If an employer fails to report a person who was eligible for membership under 19-20-302, the employee and employer shall make the contributions required by this chapter, plus interest at the current actuarial assumed rate of investment return.

(4) The contributions and interest may be made in a lump-sum payment or in installments as agreed to between the person and the board.

(5) Only one service purchase may be made by any member under subsection (1) or (2)."

Section 5. Section 19-20-427, MCA, is amended to read:

"19-20-427. Redeposit of contributions previously withdrawn. (1) Except as provided in subsection (3), in addition to the contributions required under 19-20-602 and 19-20-608, subject to the approval of the retirement board, and to the extent permitted by section 415(k)(3) of the Internal Revenue Code, a member may redeposit in the annuity savings account, by a single payment or by an increased rate of contribution, an amount equal to the accumulated contributions that the member has previously withdrawn, plus interest paid as follows:

(a) if a written application to purchase service is signed prior to July 1, 2012, at the rate the contributions would have earned had the contributions not been withdrawn; or

(b) if a written application to purchase service is signed on or after July 1, 2012, at the actuarially assumed interest rate in effect on the date the written application is signed.

(2) The redeposit must be made in accordance with 19-20-415.

(3) A member may not redeposit contributions previously withdrawn under this chapter after retirement benefit payments to the member have started, even if the member returns to active member status.

(4) Except as provided in subsection (3), in addition to the contributions required under 19-20-602 and 19-20-908, subject to the approval of the retirement board, and to the extent permitted by section 415(k)(3) of the Internal Revenue Code, an active member may purchase service credit previously accrued and withdrawn from the Montana public employees' retirement system by redeposit directly to the teachers' retirement system, subject to the following:

(a) the member is not an active member or an inactive member of the public employees' retirement system;

(b) the member has not previously used or transferred the same period of service withdrawn from the public employees' retirement system to purchase service in any other public retirement system;

(i) The member shall remit member contributions in an amount equal to the sum of the accumulated contributions that were refunded to the individual at the individual's last termination of membership in the public employees' retirement system plus interest at the actuarially assumed interest rate of the teachers' retirement system in effect on the date the written application is signed. Interest must be calculated from the date of refund from the public employees' retirement system until paid in full to the teachers' retirement system.

(ii) The public employees' retirement system shall transfer employer contributions to the teachers' retirement system in an amount equal to 72% of the member contributions and interest payable by the member as provided in subsection (4)(c)(i).

(d) a member who purchases service from the public employees' retirement system in the teachers' retirement system must have completed 5 years of membership service in the teachers' retirement system to be eligible to receive creditable service pursuant to 19-20-402, 19-20-403, 19-20-404, 19-20-408, 19-20-410, or 19-20-426."

Section 6. Section 19-20-715, MCA, is amended to read:

"19-20-715. Earned compensation -- limitations. (1) Compensation in excess of the limitations set forth in section 401(a)(17) of the Internal Revenue Code as adjusted for cost-of-living increases must be disregarded for individuals who are not eligible employees. The limitation on compensation for eligible employees may not be less than the amount that was allowed to be taken into account under this chapter on July 1, 1993. For the purposes of this section, an eligible employee is an individual who was a member in the retirement system prior to July 1, 1996. Any changes in the maximum limits under section 401(a)(17) of the Internal Revenue Code must be applied prospectively.

(2) (a) The earned compensation reported in each year that is used to make up the average final compensation may not be greater than 110% of the previous year's reported earned compensation, not including increases that result from movement on the employer's adopted salary matrix.

(b) Earned compensation in excess of the amount specified in subsection (2)(a) is considered termination pay and must be included in the calculation of average final compensation as provided in 19-20- 716 (1)(b)."

Section 7. Section 19-20-719, MCA, is amended to read:

"19-20-719. Guaranteed annual benefit adjustment -- rulemaking. (1) On January 1 of each year, the retirement allowance payable to each tier one member or benefit recipient of a tier one member who is eligible under subsection (3) must be increased by 1.5%.the amount provided in either subsection (1)(a) or (1)(b) as follows:

(a) if the most recent actuarial valuation of the retirement system shows that retirement system liabilities are less than 90% funded, 0.5%; or

(b) if the most recent actuarial valuation of the retirement system shows that retirement system liabilities are at least 90% funded and the provision of the increase is not projected to cause the system's liabilities to be less than 85% funded, an amount greater than 0.5% but no more than 1.5%, as set by the retirement board.

(2) On January 1 of each year, the retirement allowance payable to each tier two member or benefit recipient of a tier two member who is eligible under subsection (3) must be increased by the amount provided in either subsection (2)(a) or (2)(b) as follows:, if the most recent actuarial valuation of the retirement system shows that retirement system liabilities are at least 90% funded and the provision of the increase is not projected to cause the system's liabilities to be less than 85% funded, be increased by an amount equal to or greater than 0.5% but no more than 1.5%, as set by the retirement board.

(a) if the most recent actuarial valuation of the retirement system shows that retirement system liabilities are less than 90% funded, 0.5%; or

(3) A benefit recipient is eligible for and must receive the annual benefit adjustment provided for in this section if at least 36 monthly retirement benefit payments have been made prior to January 1 of the year in which the adjustment is to be made."

Section 8. Section 19-20-805, MCA, is amended to read:

"19-20-805. Calculation of average final compensation. (1) Except as limited by this section, average final compensation is calculated by averaging the earned compensation paid to:

(a) a tier one member in 3 consecutive fiscal years of full-time service that yields the highest average; or

(b) a tier two member in 5 consecutive fiscal years of full-time service that yields the highest average.

(2) (a) The earned compensation of a tier one member who retires under 19-20-802, 19-20-804, or 19-20-902 and has less than 3 consecutive years of full-time service during the 5 years immediately preceding the member's termination is the compensation that the member would have earned in the 3 years used to calculate average final compensation had the member's part-time service during the 5 years preceding termination been full-time service.

(b) The earned compensation of a tier two member who retires under 19-20-802, 19-20-804, or 19-20-902 and has less than 5 consecutive years of full-time service during the 7 years immediately preceding the member's termination is the compensation that the member would have earned in the 5 years used to calculate average final compensation had the member's part-time service during the 7 years preceding termination been full-time service.

(3) To determine the compensation that the member would have earned under subsection (2), the compensation reported must be divided by the part-time service credited to the member's account.

(4) (a) Subject to subsection (4)(b), if a member has transferred service from the public employees' retirement system as provided under 19-20-409 and does not have 3 consecutive years of full-time service if a tier one member or 5 consecutive years of full-time service if a tier two member reported to the teachers' retirement system, the member's average final compensation must be calculated as follows:

(i) if the member's part-time service credit in the public employees' retirement system plus the member's part-time service credit in the teachers' retirement system equals 1 year in any of the fiscal years used in determining average final compensation, then the member's annual salary for that fiscal year must be the member's salary as a member of the public employees' retirement system plus the member's salary as a member of the teachers' retirement system; or

(ii) if the member's part-time service credit in the public employees' retirement system plus the member's part-time service credit in the teachers' retirement system equals less than 1 year in any of the fiscal years used to determine average final compensation, then the member's part-time salary as a member of the public employees' retirement system plus the member's part-time salary as a member of the teachers' retirement system must be divided by the sum of the member's part-time teachers' retirement system service credit and the member's part-time public employees' retirement system service credit.

(b) Compensation reported to the public employees' retirement system used to calculate average final compensation must be adjusted to exclude any compensation that would be considered termination pay under this chapter.

(5) (a) The earned compensation reported in each year that is used to calculate the average final compensation may not be greater than 110% of the earned compensation for the next prior year of service reported to the teachers' retirement system. This limitation does not apply to an increase that results from movement on the employer's adopted salary matrix but does apply to an increase that results from additions to or adjustments of the employer's salary matrix or initial implementation of a salary matrix.

(b) Earned compensation in excess of the amount specified in subsection (5)(a) must be included in the calculation of average final compensation in the same manner as termination pay option 2 as provided in 19-20-716(1)(b)."

Section 9. Section 19-20-901, MCA, is amended to read:

"19-20-901. Eligibility for disability retirement -- determination by board. (1) Except as provided in subsection (5), upon the application of a member or of the member's employer for a disability retirement allowance, any member who has 5 or more years of creditable service and who has become disabled while being an active member may be retired by the retirement board the month immediately following the month in which employment is terminated.

(2) In order for a member to be eligible for disability retirement, the retirement board or its representative shall certify that the member is mentally or physically incapacitated for the further performance of the member's duties, that the incapacity is likely to be permanent, and that the member should be retired. The board's representative shall report to the board the representative's findings and any action taken by the representative, and the action must be presented to the board for approval by the board.

(3) In making a determination under subsection (2), the retirement board or its representative may:

(a) order examinations by a physician, psychologist, or vocational rehabilitation counselor, or any other health care provider or other professional determined by the retirement board to be qualified, competent, and necessary to assist the board in making the disability determination;

(b) conduct hearings, administer oaths and affirmations, take depositions, and certify to official acts; and

(c) issue subpoenas to compel the attendance of witnesses and the production of books, papers, correspondence, memorandums, and other records considered necessary as evidence in connection with a claim for disability retirement. The subpoenas issued under this subsection (3)(c) are enforceable as provided in 2-4-104.

(4) The retirement board may secure and pay reasonable compensation for professional services and advice that the board determines necessary to carry out the purposes of this part.

(5) (a) A tier two member is not eligible for disability retirement if the member is or will be eligible for service retirement on or before the member's date of termination.

(b) A disability retirement application filed by a member who is ineligible for disability retirement under subsection (5)(a) will be processed as an application for a service retirement allowance."

Section 10. Section 19-20-903, MCA, is amended to read:

"19-20-903. Medical examination of disability retiree. (1) Once each year during the first 5 years following the retirement of a member on a disability retirement allowance and once in every 3-year period thereafter afterward, the retirement board may require a disability benefit recipient who has not yet attained the age of 60 to undergo a medical examination by a physician, psychologist, or any other health care provider or other professional determined by the retirement board to be qualified, competent, and necessary to assist the board in making the disability determination or physicians designated by the retirement board. The examination must be made at the place of residence of the benefit recipient or other place mutually agreed upon on. Based on the examination, the board shall determine whether the disabled member is unable, by reason of physical or mental incapacity, to perform the essential elements of the position held by the member when the member retired. If the board determines that the member is not incapacitated, the member's retirement benefit must be canceled. If the member disagrees with the board's determination, the member may request the board to reconsider its action. The request for reconsideration must be made in writing within 60 days after the receipt of the notice of the status change.

(2) A member whose disability retirement benefit is canceled because the board has determined that the member is no longer incapacitated must be given preference by the member's former employer for the position held at the time of retirement or for a comparable position that becomes available within 1 year of cancellation of the disability retirement. The member may agree to accept an offer of employment by an employer. Employment in any capacity by an employer terminates any right granted by this section. The fact that the former employee was retired on disability may not prejudice any right to reinstatement to duty that the former employee may have or claim to have. This section does not affect any requirement for the former employee to meet or to be able to meet professional certification and licensing standards unrelated to the previous disability, otherwise necessary for reinstatement to duty.

(3) If a disability benefit recipient who has not yet attained the age of 60 refuses to submit to a medical examination as required in subsection (1), the recipient's allowance may be discontinued until withdrawal of the refusal. If a refusal continues for 1 year, all rights in and to a disability pension may be revoked by the retirement board."

Section 11. Section 19-20-1001, MCA, is amended to read:

"19-20-1001. Payments upon death of member prior to retirement. (1) If a member dies before retirement:

(a) except as provided in subsection (2), a lump-sum refund of the member's account balance must be paid to the member's eligible beneficiary or beneficiaries;

(b) if the deceased member was vested and was an active member in the retirement system within 1 year before the member's death, the eligible beneficiaries receiving a refund under subsection (1)(a) or a retirement allowance under subsection (2) are entitled to receive in equal shares a $500 lump-sum death benefit; and

(c) subject to 19-20-1009, the sum of $200 a month must be paid to each minor child of the deceased member until the child reaches 18 years of age.

(2) (a) In lieu of the refund provided for in subsection (1)(a), if the deceased member was vested, an eligible designated beneficiary who is an individual may elect to receive the beneficiary's interest as a retirement allowance for the beneficiary's lifetime. The retirement allowance must be determined as prescribed in 19-20-804, without reference to 19-20-715(2)(a) 19-20-805(5)(a), in the same manner as if the member elected the option A joint and survivor annuity optional allowance provided for in 19-20-702(2).

(b) The effective date of the retirement allowance provided for in subsection (2)(a) is the earlier of:

(i) the first of the month following the date of death; or

(ii) the effective date of the member's retirement, as acknowledged in writing by the retirement system before the member's death.

(c) (i) If more than one eligible beneficiary elects to receive a retirement allowance, each is entitled to an equal share of the benefit.

(ii) In the event that all eligible beneficiaries who elected a retirement allowance die, the member's account balance, if any, will be paid out to the alternate beneficiary of the last surviving eligible beneficiary who elected a retirement allowance under subsection (2)(a)."

Section 12. Section 19-20-1002, MCA, is amended to read:

"19-20-1002. Payments upon on death of retiree. (1) In the event of the death of a retired member:

(a) a lump-sum death benefit of $500 is payable to the joint annuitant or in equal shares to the deceased retiree's eligible beneficiary or beneficiaries receiving benefits under either subsection (2), (3), or (4) and is in addition to those benefits or, if there is no continuing benefit payable, to the deceased retiree's designated or alternate beneficiary; and

(b) subject to 19-20-1009, the sum of $200 a month must be paid to each minor child of the deceased retiree until the child reaches 18 years of age.

(2) If the member was receiving a normal form retirement allowance, a lump-sum refund of the member's account balance, if any, must be paid to the eligible beneficiary or beneficiaries in equal shares.

(3) If the member was receiving a joint and survivor annuity optional retirement allowance:

(a) monthly benefits must continue to be paid to the joint annuitant; or

(b) if there is no surviving joint annuitant, a lump-sum refund of the member's account balance, if any, must be paid to the member's alternate beneficiary or beneficiaries in equal shares.

(4) If the retired member was receiving a 10-year or 20-year period certain retirement allowance, until the period has expired:

(a) if the eligible beneficiary is one or more individuals, the monthly benefits must continue to be paid to the eligible beneficiary or beneficiaries in equal shares. If there is more than one eligible beneficiary, upon the death of one eligible beneficiary, the benefit amount payable to the deceased beneficiary must be redistributed in equal shares to the surviving eligible beneficiaries. If all eligible beneficiaries die before the period has expired, a lump-sum amount actuarially determined to be the present value of all monthly benefits remaining to be paid over the period must be paid to the alternate beneficiary of the last surviving eligible beneficiary.

(b) if the eligible beneficiary is the deceased retiree's estate or trust, a lump-sum amount actuarially determined to be the present value of all monthly benefits remaining to be paid over the period must be paid to the eligible beneficiary.

(5) (a) Not including any minor child benefit of $200 a month payable under subsection (1)(b), if the only amount remaining payable on the account of a deceased retiree is the $500 death benefit and there are multiple individuals who are eligible designated or alternate beneficiaries to share in the $500 death benefit, any of the potential beneficiaries must be considered to have fully and irrevocably renounced their rights and interest to a share of the $500 death benefit when the following criteria are met:

(i) the retirement system is unable to identify or locate the individual;

(ii) if identified and located, the retirement system mailed notice of the beneficiary interest and required application materials to be completed and returned by the individual on two occasions at least 30 days apart and the individual failed to complete and return the required application materials to be received by the retirement system within 30 days of the second mailing by the retirement system;

(iii) at least one eligible beneficiary has completed and returned the required application materials to the retirement system;

(iv) at least 180 days has passed following the death of the retiree and, if required application materials were sent to the individual as described in subsection (5)(a)(ii), at least 30 days has passed since the date of the second mailing by the retirement system; and

(v) the retirement system has not received actual notice of formal or informal probate of the deceased retiree's estate.

(b) Any portion of the $500 death benefit may not be distributed until the total benefit can be distributed. The share of the $500 death benefit that would have been payable to a potential beneficiary considered to have renounced their interest under this provision must be distributed in equal shares to an eligible beneficiary who has been identified and located and who has completed and returned the required application materials. Distribution of the $500 death benefit to an eligible beneficiary is satisfaction in full of the retirement system's obligation for distribution of the $500 death benefit.

(c) This subsection (5) does not require the retirement system to distribute the $500 death benefit strictly within the timeframe specified or prohibit the retirement system from providing any additional process the retirement system believes to be reasonable and appropriate to identify, locate, and obtain required application materials from an eligible beneficiary."

Section 13. Codification instruction. [Section 1] is intended to be codified as an integral part of Title 19, chapter 20, part 3, and the provisions of Title 19, chapter 20, part 3, apply to [section 1].

Section 14. Effective dates. (1) Except as provided in subsection (2), [this act] is effective July 1, 2023.

(2) [Sections 1, 3, and 5] are effective July 1, 2024.

Section 15. Retroactive applicability. [Section 7] applies retroactively, within the meaning of 1-2-109, to all guaranteed annual benefit adjustment increases on or after July 1, 2013.