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A BILL TO BE ENTITLED
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AN ACT
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relating to authorizing certain municipalities to establish |
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defined contribution plans to provide retirement benefits to |
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certain employees. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subtitle A, Title 8, Government Code, is amended |
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by adding Chapter 808 to read as follows: |
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CHAPTER 808. AUTHORITY OF CERTAIN MUNICIPALITIES TO ESTABLISH |
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DEFINED CONTRIBUTION PLANS |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 808.001. DEFINITIONS. In this chapter: |
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(1) "Defined benefit plan" means a plan provided by a |
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public retirement system that provides participants specified |
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benefit payments calculated in accordance with a formula that is |
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based on factors such as a participant's earnings history, age, and |
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years of service. |
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(2) "Defined contribution plan" and "public |
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retirement system" have the meanings assigned by Section 802.001. |
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(3) "Qualified plan" means an employee benefit plan |
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qualified under Section 401(a), Internal Revenue Code of 1986 (26 |
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U.S.C. Section 401). |
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Sec. 808.002. APPLICABILITY. This chapter applies only to: |
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(1) a public retirement system that provides benefits |
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to municipal employees under a defined benefit plan; and |
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(2) a home-rule municipality that is the sponsoring |
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authority of a public retirement system described by Subdivision |
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(1). |
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Sec. 808.003. CONFLICT OF LAW. To the extent of a conflict |
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between this chapter, including an ordinance adopted by a |
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municipality or a rule adopted by a public retirement system under |
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authority of this chapter, and any other law, this chapter |
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prevails. |
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SUBCHAPTER B. AUTHORITY TO CREATE DEFINED CONTRIBUTION PLAN |
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Sec. 808.051. ELECTION TO ESTABLISH DEFINED CONTRIBUTION |
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PLAN. (a) On receipt of a petition requesting the election signed |
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by a number of registered voters of the municipality equal to at |
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least 10 percent of the number of voters who voted in the most |
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recent election of the municipality, the governing body of a |
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municipality shall order an election to authorize the creation of a |
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defined contribution plan for newly hired municipal employees or a |
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category of newly hired municipal employees in accordance with this |
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section. |
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(b) An election ordered under this section must be held as |
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part of the next regularly scheduled general election for municipal |
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officials that is held after the date the governing body of the |
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municipality orders the election and that allows sufficient time to |
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prepare the ballot in compliance with other requirements of law. |
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(c) The ballot for an election ordered under this section |
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shall be printed to permit voting for or against the proposition: |
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"Authorizing (name of municipality) to establish by |
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ordinance a defined contribution plan for (insert "employees" or |
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the category of employees to receive benefits under the plan) |
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initially hired by the municipality on or after (insert date) as |
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provided by state law." |
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(d) An election ordered under this section must be held and |
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the returns prepared and canvassed in conformity with the Election |
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Code. |
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(e) If an election authorized under this section is held, |
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the municipality may implement the other provisions of this chapter |
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only if a majority of the votes cast at the election favor the |
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proposition. |
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Sec. 808.052. CREATION OF DEFINED CONTRIBUTION PLAN. |
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Notwithstanding any other law, including Title 109, Revised |
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Statutes, and subject to the requirements of Subchapter C, if |
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authorized by an election under Section 808.051, the governing body |
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of a municipality that is the sponsoring authority of a public |
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retirement system shall establish by ordinance a defined |
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contribution plan to be administered by the public retirement |
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system to provide benefits to newly hired municipal employees or a |
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category of newly hired municipal employees, as applicable, under |
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the plan instead of under a defined benefit plan. |
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SUBCHAPTER C. MINIMUM REQUIREMENTS FOR DEFINED CONTRIBUTION PLAN |
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Sec. 808.101. MINIMUM REQUIREMENTS. In establishing a |
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defined contribution plan under this chapter, the governing body of |
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a municipality shall ensure the plan meets the requirements of this |
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subchapter. |
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Sec. 808.102. QUALIFIED PLAN. A defined contribution plan |
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created under this section must be a qualified plan. |
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Sec. 808.103. PARTICIPATION IN DEFINED CONTRIBUTION PLAN; |
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RESUMPTION OF SERVICE. (a) In the ordinance establishing a defined |
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contribution plan under this chapter, the governing body of a |
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municipality shall designate the date by which all newly hired |
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municipal employees shall begin participation in the plan. |
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(b) A person who resumes employment with a municipality and |
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who is already eligible to participate in a defined benefit plan |
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administered by a public retirement system because of the person's |
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prior employment remains eligible to participate in the defined |
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benefit plan and is not considered a new employee for purposes of |
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required participation in a defined contribution plan established |
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under this chapter. |
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(c) Notwithstanding any other law, an employee who |
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participates in a defined contribution plan established under this |
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chapter is not eligible to, and may not participate in, the defined |
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benefit plan administered by a public retirement system. |
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Sec. 808.104. EFFECT OF EMPLOYMENT CHANGES. A person |
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participating in a defined contribution plan continues to |
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participate in the plan when the person changes employment to |
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another position included in the coverage of the public retirement |
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system. |
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Sec. 808.105. VESTING OF BENEFITS; TERMINATION OF |
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PARTICIPATION. (a) Benefits in a defined contribution plan vest in |
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a participant not later than the fifth anniversary of the date the |
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person begins to participate in the plan. |
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(b) A person terminates participation in a defined |
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contribution plan, without losing any vested benefits, by: |
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(1) death; |
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(2) retirement; or |
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(3) termination of employment in all positions |
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included in the coverage of the public retirement system. |
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(c) The benefits of a product purchased under a defined |
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contribution plan become available under the terms of the annuity |
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but not before the earlier of the date: |
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(1) the member terminates participation as provided by |
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Subsection (b); or |
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(2) the member's age and years of service in a position |
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covered by the plan equal 80. |
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Sec. 808.106. CREDITABLE SERVICE. A person may not |
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establish in the defined benefit plan administered by a public |
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retirement system credit for service performed during a period the |
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person was participating in a defined contribution plan. |
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Sec. 808.107. CONTRIBUTIONS. (a) A participant in a |
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defined contribution plan shall make contributions to the plan at |
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the same rate that a participant in a defined benefit plan |
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administered by the same public retirement system is required to |
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make for current service, and the municipality shall make |
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contributions to the defined contribution plan for each participant |
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in the defined contribution plan at the same rate as the |
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municipality is required to contribute for contributing |
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participants in the defined benefit plan administered by the same |
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public retirement system. Contributions required under this |
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subsection shall be credited to the benefit of the participant in |
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the defined contribution plan. |
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(b) A participant in a defined contribution plan and the |
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municipality shall execute an agreement under which the salary of |
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the participant is reduced by the amount of the contribution |
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required by this section. An agreement under this subsection is |
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irrevocable until the participant terminates participation in the |
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plan under Section 808.105. |
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Sec. 808.108. HEALTH BENEFITS AND OTHER COVERAGES. |
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Notwithstanding any other law, a person who participates or who is |
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eligible to participate in a defined contribution plan established |
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under this chapter is eligible for health benefits and other |
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coverages to the same extent as a person who participates in a |
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defined benefit plan administered by the same public retirement |
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system. |
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SECTION 2. This Act takes effect September 1, 2017. |