HB346 By Representatives Greer, Fridy and Johnson (K) RFD State Government Rd 1 01-MAR-16

SYNOPSIS: Currently, members of the Retirement Systems of Alabama are allowed to make contributions to individual retirement accounts administered by the Retirement Systems of Alabama. This bill would require all new employees, beginning January 1, 2017, to contribute monthly to such individual retirement accounts and provides opt-out provisions.

A BILL TO BE ENTITLED AN ACT

Relating to individual retirement accounts; to amend Section 36-27A-5, Code of Alabama 1975, relating to contributions to individual retirement accounts administered by the Retirement Systems of Alabama to require public employees first employed by a participating employer of the Teachers’ Retirement System, Employees’ Retirement System, or Judicial Retirement Fund on or after January 1, 2017 to make contributions to such individual retirement accounts and to provide opt-out provisions.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:Section 1. Section 36-27A-5, Code of Alabama 1975, is hereby amended to read as follows:

§36-27A-5.

"(a) The PEIRAF shall be available to all public employees in the State of Alabama who are members of the Teachers' Retirement System, the Employees' Retirement System or the Judicial Retirement Fund. In addition, any employee of an employer eligible to participate in the Employees' Retirement System pursuant to the provisions of Section 36-27-6, or any public official or employee of the State of Alabama or any political subdivision thereof, shall be eligible to participate under the provisions of this chapter. Participation in this fund shall be on a strictly voluntary basis under such rules and regulations as shall be adopted by the board of control and in accordance with the provisions contained in the Internal Revenue Code as it relates to individual retirement accounts for public employees. Any person who shall become ineligible for participation in the PEIRAF due to the termination of his employment with an eligible employer may leave his contributions on account with the PEIRAF; however, no further contributions may be accepted on his account unless such person shall become reemployed by an eligible employer.

"(b)(1) All public employees in the State of Alabama who first begin employment with a participating employer of the Teachers’ Retirement System, the Employees’ Retirement System, or the Judicial Retirement Fund on or after January 1, 2017 shall be required to participate in this fund under such rules and regulations as shall be adopted by the board of control and in accordance with the provisions contained in the Internal Revenue Code as it relates to individual retirement accounts for public employees. The provisions of this subsection shall not apply to those employees participating in the Employees’ Retirement System pursuant to the provisions of Section 36-27-6.

"(2) A public employee enrolled in the fund pursuant to this subsection may opt out of the fund and withdraw without any penalty his or her contributions within 90 days after the date of the public employee's first contribution to the fund. A public employee enrolled in the fund pursuant to this subsection shall contribute each pay period the amount of ten dollars ($10) of the public employee's pre-tax includible compensation to the public employee's account in the same manner as otherwise provided for the operation of the fund.

"(3) A public employee automatically enrolled in the fund pursuant to this subsection may change the public employee's contribution as otherwise provided for by the fund.

"(4) The employer of the public employee shall provide notice in writing to a public employee automatically enrolled in the plan. The notice shall include information on the right of the public employee to opt out of the plan during the 90-day opt out period.

"(5) Participation in the fund pursuant to this subsection shall be in addition to participation in the Retirement Systems of Alabama pursuant to Chapter 18 of Title 12, Chapter 25 of Title 16, and Chapter 27 of Title 36."