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NO. 129. AN ACT RELATING TO A DEFINED CONTRIBUTION RETIREMENT PLAN.

(S.295)

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1. 3 V.S.A. chapter 16A is added to read:

CHAPTER 16A. DEFINED CONTRIBUTION RETIREMENT PLAN

§ 500. DEFINED CONTRIBUTION RETIREMENT PLAN

(a) The state treasurer shall offer a retirement plan for state employees who are not members of the classified system. The plan shall qualify as a defined contribution plan under the United States Internal Revenue Code, as amended. Participation in such plan shall be in lieu of the retirement plans established under chapter 16 of this title.

(b) Employees who are not members of the classified system who are first employed by the state on and after January 1, 1999 and would otherwise be members of group A, B, C, D or F of the Vermont state retirement system shall be eligible to participate in the defined contribution retirement plan.

(c) Employees who elect to participate in the defined contribution retirement plan shall contribute at the rate equivalent to the contribution rate for group F members of the Vermont state retirement system. The state shall contribute to each employee's account at the rate of seven percent of the employee's compensation for each payroll period. Employees may make additional contributions to the plan, provided that total annual contributions by an employee in any calendar year shall not exceed the maximum permitted for such plans under the United States Internal Revenue Code. Contributions shall not be subject to taxation until distribution is actually made or made available to the employee.

(d) Election to participate in the defined contribution retirement plan is irrevocable, unless the employee becomes a classified employee and elects to transfer his or her membership and the full actuarial value of the accrued benefit calculated on a cost neutral basis, to the Vermont state retirement system.

(e) An employee who elects to participate in the defined contribution retirement plan shall become vested in the plan after completion of one year and 11 months of creditableservice as a state employee.

(f) Upon retirement, employees who elect to participate in the defined contribution retirement plan shall be entitled to the same life and health insurance benefits available to members of the Vermont state retirement system.

(g) The state treasurer shall certify to the governor or governor-elect a statement of the percentage of the payroll of all participating employees sufficient to fund all operating expenses of the defined contribution retirement plan and all contributions of the state which will become due and payable during the next biennium. Contributions by the state shall be charged to the departmental appropriation from which the employees' salaries are paid and shall be included in each departmental budgetary request.

(h) The plan shall be administered by the state treasurer who shall adopt rules necessary to implement and administer the provisions of this chapter.

Sec. 2. ELECTION

(a) Any group A, B, C, D or F member of the Vermont state retirement system may elect to participate in the defined contribution plan established under chapter 16A of

Title 3, provided the employee is not a classified employee at the time of such election and the election is made on or before December 31, 1998.

(b) The procedure for election to participate in the defined contribution retirement plan shall be established by the state treasurer. The treasurer shall establish the date of election and shall provide all members of the state employees' retirement system who are eligible to participate in the plan with notice of the election together with a general written explanation of the election and its consequences, at no cost to the member.

(c) All employees electing to participate in the defined contribution retirement plan shall lose all rights to benefits as a member of the Vermont state retirement system and shall attain all rights to benefits as a member of the defined contribution retirement plan. On January 1, 1999, the state treasurer shall transfer the full actuarial value of the accrued benefit calculated on a cost neutral basis or the member's contribution plus accumulated interest, whichever is greater, as of the time of transfer, of all employees who elect to participate in the defined contribution retirement plan established under chapter 16A ofTitle 3.

(d) Election to participate in the defined contribution retirement plan is irrevocable, unless the employee becomes a classified employee and elects to transfer his or her membership and the full actuarial value of the accrued benefit, to the Vermont state retirement system.

Approved: April 23, 1998