CSHB 2283, to be effective September 1, 2009, would provide the following changes:

·         Allow the Employees Retirement System (ERS) to establish a qualified Roth contribution program in accordance with Section 402A, Internal Revenue Code of 1986, under which a state employee may designate all or a portion of the employee's contribution under a 401(k) plan as a Roth contribution at the time the contribution is made.

·         Establish a program in accordance with the applicable federal law under which an employee may designate all or a portion of the employee's contribution under a 457 plan as a Roth contribution at the time the contribution is made.

• Designate all or a portion of the employee ’s contribution as a Roth contribution subject to the availability of a Roth contribution program under Section 609.5021.

• Allows ERS to make matching contributions to a 401(k) plan on behalf of employees participating in the plan in an amount specified in an appropriation.  ERS can only make a matching contribution if the retirement system:

1.       Receives amounts sufficient to cover normal cost

2.       Maintains a funded ratio equal to or greater than 90 percent

Under Section 609.5026, which would be added by the bill, the matching contributions to the defined contribution plan would only be allowed if the contributions to the defined benefit plan were sufficient to cover the normal cost and maintain a funded ratio of equal to or greater than 90 percent.  The matching contributions under section 609.5026 must come from a separate legislative appropriation.  The current contributions to the system are not sufficient to cover the normal cost, so matching contributions to the defined contribution plan would not be allowed currently. 

The bill, if enacted, will not have a significant actuarial effect because it does not propose to change the funding or obligations of any public retirement system.