AN ACT
RELATING TO EDUCATIONAL RETIREMENT;
AMENDING THE EDUCATIONAL RETIREMENT ACT TO ALLOW PROVISIONAL MEMBERS TO ACQUIRE
EARNED SERVICE CREDIT FOR CERTAIN PERIODS OF EMPLOYMENT.
BE IT ENACTED BY THE LEGISLATURE OF
THE STATE OF NEW MEXICO:
Section 1. Section 22-11-17 NMSA 1978 (being Laws 1967,
Chapter 16, Section 141, as amended) is amended to read:
"22-11-17. PROVISIONAL MEMBERSHIP.--
A. A provisional member shall be covered by the
provisions of the Educational Retirement Act but shall have the option to
exempt himself from its coverage. A
provisional member exempting himself from the provisions of the Educational
Retirement Act shall not be entitled to the benefits or coverage under any
other state retirement program except as otherwise provided in this
section. This section shall not affect
any rights a provisional member may have under the provisions of the federal
Social Security Act. This option to
exempt must be exercised within one year of employment according to the
regulations adopted by the board. Any
provisional member exempting himself pursuant to this section shall be entitled
to a refund of any contributions made pursuant to the Educational Retirement
Act prior to the exercise of the exemption.
B. A provisional member not exempt from the
coverage of the Educational Retirement Act shall have the right to earned
service-credit for periods of employment subsequent to July 1, 1957 and prior
to July 1, 1961, provided that all contributions at the rates in effect during
that period of employment are paid. If a
provisional member chooses to make the contributions for that period, the local
administrative unit employing a member during that period shall pay the
employer's contribution at the rate in effect during that period of
employment. Contributions prior to July
1, 1961 by both the provisional member and the local administrative unit shall
bear interest at the rate of three percent a year from July 1, 1961 until paid.
C. A provisional member exempt from the coverage
of the provisions of the Educational Retirement Act shall have the right to
revoke the exemption at any time; however, within the first two weeks following
the beginning of each school year, such provisional member shall be informed by
the local administrative unit in writing of his right to revoke the exemption
and shall sign a statement to the effect that he does or does not wish to
revoke the exemption. A copy of such
statement shall be kept in the personnel file of the provisional member.
D. A provisional member who revokes the
exemption from coverage may, at any time before June 30, 2006, acquire earned
service credit for periods of employment during which the exemption or
exemptions were in force if both the member contributions and the local
administrative unit contributions, at the rates in effect during the periods of
employment and applied to the earnings of the member during those periods, are
paid to the fund, together with interest at the actuarial rate set by the
board. The contributions shall be paid
in the following manner:
(1) both the member contributions and the local
administrative unit contributions, together with interest, shall be paid by the
member; or
(2) if the member tenders payment of the member
contributions, with interest, the local administrative unit by whom the member
was employed may, but shall not be obligated to, pay the local administrative
unit contributions, with interest.
E. A provisional member employed by the board,
the department of education, the New Mexico school for the deaf, the northern
New Mexico state school, the New Mexico school for the visually handicapped,
the New Mexico girls' school, the New Mexico boys' school or the Los Lunas
medical center shall have the option of qualifying for coverage under either
the Educational Retirement Act or the public employees retirement association
of New Mexico. This option shall be exercised
by filing a written election with both the educational retirement director and
the executive secretary of the public employees retirement association of New
Mexico. This election shall be made
within six months after employment and shall be irrevocable regardless of
subsequent employment or reemployment in any administrative unit enumerated in
this subsection. Until this election is
made, the provisional member shall be covered and shall be required to make
contributions under the Educational Retirement Act."
Section 2. Section 22-11-21.3 NMSA 1978 (being Laws
1998, Chapter 38, Section 1) is amended to read:
"22-11-21.3. PICK UP--ROLLOVER.--
A. Commencing on July 1, 1998, each local
administrative unit may, solely for the purpose of compliance with Section
414(h) of the Internal Revenue Code of 1986, pick up, for the purposes
specified in that section, member contributions permitted by Subsection D of
Section 22-11-17 NMSA 1978; Subsection C of Section 22-11-33 NMSA 1978; or
Paragraph (4) of Subsection A of Section 22-11-34 NMSA 1978. Member contributions picked up under the
provisions of this subsection shall be treated as local administrative unit
contributions for purposes of determining income tax obligations under the Internal
Revenue Code of 1986; however, such picked-up member contributions shall be
included in the determination of the member's gross annual salary for all other
purposes under federal and state laws.
Member contributions picked up under this section shall continue to be
designated member contributions for all purposes of the Educational Retirement
Act and shall be considered as part of the member's annual salary for purposes
of determining the amount of the member's contribution. The provisions of this section are voluntary,
and the member shall have no option concerning the pick up to receive the
contributed amounts directly instead of having them paid by the local
administrative unit to the fund. The
contribution may be paid through the local administrative unit's payroll
deduction.
B. Commencing July 1, 1998, the board may accept
rollover contributions from other retirement funds solely for and subject to
the restrictions set forth in Section 22-11-17 NMSA 1978 and Subsection B of
Section 22-11-34 NMSA 1978 and the applicable restrictions set forth in the
Internal Revenue Code of 1986 for pension plan qualification."
HB 657
Page 4