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BOARD OF TRUSTEES OF THE INDIANA PUBLIC RETIREMENT SYSTEM

Resolution No. 2012-9-01


Adopting rules related to the administration of the System as described herein.

WHEREAS, the Indiana Public Retirement System exists to provide retirement benefits to its members, their survivors, and beneficiaries;

WHEREAS, the Board of Trustees of the Indiana Public Retirement System, by statute, administers the funds listed in IC 5-10.5-2-2;

WHEREAS, the Board of Trustees, pursuant to IC 5-10.5-4-2, may establish and amend rules and regulations for the administration of the funds without adopting a rule under Indiana Code 4-22-2; and

WHEREAS, the Board of Trustees of the Indiana Public Retirement System wishes to adopt, amend, and/or repeal certain rules contained or to be contained in the Indiana Administrative Code related to the administration of the Fund as described herein;

NOW THEREFORE, BE IT RESOLVED by the Board of Trustees of the Indiana Public Retirement System that:

SECTION 1. 35 IAC 1.2-5-5 IS AMENDED TO READ AS FOLLOWS:

35 IAC 1.2-5-5 "Basic salary" or "compensation" defined
Authority: IC 5-10.5-4-2

Sec. 5. (a) Subject to subsection subsections (b) and (c), "basic salary" or "compensation" means all compensation that is included as gross income as reported on the member's W-2 for covered service by a covered employer, plus the amounts stated in IC 5-10.2-4-3 that are not paid directly to the member.

(b) Compensation of not more than two thousand dollars ($2,000) pursuant to and in accordance with IC 5-10.2-4-3(e) may be used in the total annual compensation from which the average of the annual compensation is determined.

(c) "Basic salary" does not include investment incentive bonus compensation paid under an investment incentive bonus plan established by the INPRS board, and no contributions are to be paid on such compensation.

(c) (d) A member's basic salary or annual compensation must be certified by an official of the employing unit who has knowledge of and access to the records as set forth in IC 5-10.3-7-11. A member may not certify his or her basic salary or annual compensation. (Board of Trustees of the Indiana Public Retirement System; 35 IAC 1.2-5-5; filed Dec 20, 1988, 1:00 p.m.: 12 IR 1082; readopted filed Dec 2, 2001, 12:35 p.m.: 25 IR 1265; adopted Nov 9, 2007: 20071205-IR-035070818ONA; adopted Nov 19, 2010: 20101208-IR-035100722ONA; adopted Sep 14, 2012: 20120926-IR-035120542ONA)

SECTION 2. 35 IAC 1.2-8-5 IS ADDED TO READ AS FOLLOWS:

35 IAC 1.2-8-5 Actuarial rules
Authority: IC 5-10.3
Affected: IC 5-10.3

Sec. 5. Two (2) forms of benefit payments are considered to be actuarially equivalent if the expected present value of future payments are the same. For PERF, the expected present value is calculated based on a seven and one-half percent (7.50%) interest rate and the 1984 Uninsured Pensioners Unisex Mortality Table (UP84) set back two (2) years. (Board of Trustees of the Indiana Public Retirement System; 35 IAC 1.2-8-5; adopted Sep 14, 2012: 20120926-IR-035120542ONA)

SECTION 3. 35 IAC 1.3-10 IS ADDED TO READ AS FOLLOWS:

Rule 10. Assumptions

35 IAC 1.3-10-1 Actuarial rules
Affected: IC 5-10.3

Sec. 1. Two (2) forms of benefit payments are considered to be actuarially equivalent if the expected present value of future payments are the same. For PERF, the expected present value is calculated based on a seven and one-half percent (7.50%) interest rate and the 1984 Uninsured Pensioners Unisex Mortality Table (UP84) set back two (2) years. (Board of Trustees of the Indiana Public Retirement System; 35 IAC 1.3-10-1; adopted Sep 14, 2012: 20120926-IR-035120542ONA)

SECTION 4. 35 IAC 14-2-10 IS AMENDED TO READ AS FOLLOWS:

35 IAC 14-2-10 Definition of compensation
Authority: IC 5-10.5-4-2

Sec. 10. (a) Subject to subsection subsections (b) and (c), "basic salary" or "annual compensation" means all compensation that is included as gross income as reported on the member's W-2 for covered service by a covered employer, plus the amounts stated in IC 5-10.2-4-3 that are not paid directly to the member.

(b) Unless otherwise required by law, a licensed teacher employed by a school corporation as a teacher and who under a standard teacher contract or separate contract is also employed to provide extracurricular student activities, those activities being generally described as voluntary activities sponsored by the school, for student involvement in public performances, contests, athletic competitions, demonstrations, displays, and club activities, is performing covered employment and compensation for such employment is included as basic salary.

(c) "Basic salary" does not include investment incentive bonus compensation paid under an investment incentive bonus plan established by the INPRS board, and no contributions are to be paid on such compensation.

(c) (d) Compensation of not more than two thousand dollars ($2,000) pursuant to and in accordance with IC 5-10.2-4-3(e) may be used in the total annual compensation from which the average of the annual compensation is determined.

(d) (e) A member's basic salary or annual compensation must be certified by an official of the employing unit who has knowledge of and access to the records. A member may not certify his or her basic salary or annual compensation. (Board of Trustees of the Indiana Public Retirement System; 35 IAC 14-2-10; filed Oct 5, 1992, 5:00 p.m.: 16 IR 705; filed Jul 26, 2000, 2:48 p.m.: 23 IR 3089; readopted filed Dec 3, 2001, 11:02 a.m.: 25 IR 1731; filed Apr 8, 2004, 3:23 p.m.: 27 IR 2496; adopted Mar 27, 2007: 20070404-IR-550070200ONA; adopted Nov 19, 2008: 20081126-IR-550080887ONA; adopted Dec 16, 2009: 20100106-IR-50090990ONA; adopted Jun 29, 2012: 20120718-IR-035120397ONA; adopted Sep 14, 2012: 20120926-IR-035120542ONA) NOTE: Transferred from the Board of Trustees of the Indiana State Teachers' Retirement Fund (550 IAC 2-2-7) to the Board of Trustees of the Indiana Public Retirement System (35 IAC 14-2-10) by P.L.23-2011, SECTION 22, effective July 1, 2011.

SECTION 5. 35 IAC 14-2-16 IS ADDED TO READ AS FOLLOWS:

35 IAC 14-2-16 Actuarial rule
Authority: IC 5-10.4
Affected: IC 5-10.4

Sec. 16. Two (2) forms of benefit payments are considered to be actuarially equivalent if the expected present value of future payments are the same. For TRF, the expected present value is calculated based on a seven and one-half percent (7.50%) interest rate and a forty percent (40%) to sixty percent (60%) unisex blend of the 1983 Group Annuity Male Mortality table set back three (3) years forty percent (40%) and the 1983 Group Annuity Male Mortality table set back seven (7) years sixty percent (60%). (Board of Trustees of the Indiana Public Retirement System; 35 IAC 14-2-16; adopted Sep 14, 2012: 20120926-IR-035120542ONA)

SECTION 6. 35 IAC 20 IS ADDED TO READ AS FOLLOWS:

ARTICLE 20. 401(H) MEDICAL BENEFITS ACCOUNTS

Rule 1. Plan Rules

35 IAC 20-1-1 Plan coverage
Authority: IC 5-10.5-4-2
Affected: IC 5-10.3-8-14

Sec. 1. These rules shall cover all state employees who are members of the Public Employees' Retirement Fund (PERF). (Board of Trustees of the Indiana Public Retirement System; 35 IAC 20-1-1; adopted Sep 14, 2012: 20120926-IR-035120542ONA)

35 IAC 20-1-2 Definitions
Authority: IC 5-10.5-4-2

Sec. 2. As used in this rule:
(1) "Medical expenses" means expenses incurred by a retired employee, the retired employee's spouse, or the retired employee's dependent for medical care as defined in the Internal Revenue Code, Section 213(d), and which are not compensated for by insurance or otherwise.
(2) "PERF 401(h) Account" means an individual account established for each retired employee for whom leave is required to be converted under section 3 of this rule, which account is administered by the PERF 401(h) Accounts Team of the Indiana Public Retirement System and the balances of which may be used solely for the payment or reimbursement of medical expenses of retired employees, their spouses, and their dependents. The PERF 401(h) Account shall consist of the contributions to the account and all earnings on the deposits under section 6 of this rule, reduced by medical expenses paid or reimbursed from the PERF 401(h) Account and administrative costs allocable to the account.
(3) "Retired employee" means a former state employee who is eligible for and has applied to receive a normal, unreduced retirement benefit from the Public Employees' Retirement Fund as described in Indiana Code 5-10.2-4-1 contemporaneously with the former state employee's last day of service.
(4) "Dependent" means a dependent of the retired employee as defined in Internal Revenue Code (IRC), Section 152 without regard to subsections (b)(1), (b)(2), and (d)(1)(B). The term dependent also includes a retired employee's child (as defined in IRC Section 152(f)(1) who as of the end of a calendar year has not attained age twenty-seven (27). In the case of the retired employee's death, an individual shall remain a dependent under these rules until the individual reaches the age limitation (and does not fulfill the disability exception) set forth in IRC Section 152.
(Board of Trustees of the Indiana Public Retirement System; 35 IAC 20-1-2; adopted Sep 14, 2012: 20120926-IR-035120542ONA)

35 IAC 20-1-3 Conversion
Authority: IC 5-10.5-4-2
Affected: IC 5-10.3-8-14

Sec. 3. Upon termination of employment, the unused vacation leave of a retired employee, if any, but in any case not more than thirty (30) days (two hundred twenty-five (225) hours), shall be converted to a credit to the retired employee's PERF 401(h) Account pursuant to section 4 of this rule. Sick leave, special sick leave, personal leave, and compensatory time off are not eligible for conversion. (Board of Trustees of the Indiana Public Retirement System; 35 IAC 20-1-3; adopted Sep 14, 2012: 20120926-IR-035120542ONA)


35 IAC 20-1-4 Vacation leave valuation
Authority: IC 5-10.5-4-2
Affected: IC 5-10.3-8-14

Sec. 4. For purposes of conversion, the value of vacation leave is determined as follows:
STEP ONE: Divide the employee's regular biweekly salary, as of the conversion date, by seventy-five (75).
STEP TWO: Multiply the quotient determined in STEP ONE by the number of hours to be converted.
(Board of Trustees of the Indiana  Public  Retirement  System;  35  IAC 20-1-4; adopted Sep 14, 2012: 20120926-IR-035120542ONA)

35 IAC 20-1-5 Vesting
Authority: IC 5-10.5-4-2
Affected: IC 5-10.3-8-14

Sec. 5. All deposits into the employee's PERF 401(h) Account shall vest upon retirement under the Public Employees' Retirement Fund, subject to forfeiture under section 10 of this rule. (Board of Trustees of the Indiana Public Retirement System; 35 IAC 20-1-5; adopted Sep 14, 2012: 20120926-IR-035120542ONA)

35 IAC 20-1-6 Investment
Authority: IC 5-10.5-4-2
Affected: IC 5-10.3-8-14

Sec. 6. All amounts converted as provided in section 3 of this rule with respect to a retired employee will be credited to a PERF 401(h) Account, which shall earn interest at a short-term money market fund rate. (Board of Trustees of the Indiana Public Retirement System; 35 IAC 20-1-6; adopted Sep 14, 2012: 20120926-IR-035120542ONA)

35 IAC 20-1-7 Benefits
Authority: IC 5-10.5-4-2
Affected: IC 5-10.3-8-14

Sec. 7. The balance in a retired employee's PERF 401(h) Account may be used to pay or reimburse the retired employee or the spouse or dependent of the retired employee for medical expenses. Such payment or reimbursement will be made as soon as administratively feasible following a claim therefore [sic, therefor]. No benefits will be paid from a PERF 401(h) Account on or after the date the balance in the account has been reduced to zero (0). (Board of Trustees of the Indiana Public Retirement System; 35 IAC 20-1-7; adopted Sep 14, 2012: 20120926-IR-035120542ONA)

35 IAC 20-1-8 Death of retired employee or eligible employee
Authority: IC 5-10.5-4-2
Affected: IC 5-10.3-8-14

Sec. 8. In the event of the death of a retired employee, such employee's PERF 401(h) Account may be used to pay or reimburse the retired employee's spouse or dependents for the medical expenses of the retired employee's spouse or dependents. In the event of the death of a state employee who is eligible for a normal, unreduced retirement benefit from the Public Employees' Retirement Fund, but had not yet applied for retirement, such employee's PERF 401(h) Account may be used to pay or reimburse the retired employee's spouse or dependents for the medical expenses of the retired employee's spouse or dependents. (Board of Trustees of the Indiana Public Retirement System; 35 IAC 20-1-8; adopted Sep 14, 2012: 20120926-IR-035120542ONA)

35 IAC 20-1-9 Limitations
Authority: IC 5-10.5-4-2

Sec. 9. This rule does not create any additional rights to compensation for accrued but unused leave or to any additional benefits under the Public Employees' Retirement Fund beyond those rights expressly granted herein. If a terminating state employee does not retire with normal, unreduced retirement benefits from PERF contemporaneously with employment termination, the employee does not receive the benefit of these rules and instead is limited to the conversion rules under IC 5-10-1.1-7.5, 31 IAC 1-9-3, 31 IAC 2-11-3, and 31 IAC 4-4-1. If a retired employee returns to service as a state employee (as defined in IC 5-10.3-7-1(d)) the individual will no longer be considered retired and will only have access to their PERF 401(h) account upon retirement from reemployment. Such individual will not receive additional leave conversion under these rules at the time of such subsequent retirement(s). (Board of Trustees of the Indiana Public Retirement System; 35 IAC 20-1-9; adopted Sep 14, 2012: 20120926-IR-035120542ONA)

35 IAC 20-1-10 Forfeitures
Authority: IC 5-10.5-4-2
Affected: IC 5-10.3-8-14

Sec. 10. Any amount remaining in a retired employee's PERF 401(h) Account will be forfeited upon the death of the last to die of the retired employee or the retired employee's spouse or when the retired employee's dependents are no longer dependents under section 2(d) of this rule. Any forfeiture of a PERF 401(h) Account will be used to reduce state contributions and cannot be used to fund retirement benefits. If the Public Employees' Retirement Fund is terminated, any amounts remaining in PERF 401(h) Accounts shall revert back to the state. (Board of Trustees of the Indiana Public Retirement System; 35 IAC 20-1-10; adopted Sep 14, 2012: 20120926-IR-035120542ONA)

35 IAC 20-1-11 Restrictions
Authority: IC 5-10.5-4-2
Affected: IC 5-10.3-8-14

Sec. 11. The provisions of this rule are subject to any restrictions imposed by the Internal Revenue Service on the Public Employees' Retirement Fund. The provisions of Indiana Code 5-10.3-8-14 and these rules will be implemented one hundred eighty (180) days following receipt of such letter or as soon thereafter as is administratively feasible but not later than one (1) year after the date of such letter and will apply to retired employees who terminate employment with the state on or after the implementation date. (Board of Trustees of the Indiana Public Retirement System; 35 IAC 20-1-11; adopted Sep 14, 2012: 20120926-IR-035120542ONA)

Authority: IC 5-10.5-4-2
Affected: IC 5-10.3-8-14

Sec. 12. The PERF 401(h) Accounts administered by the PERF 401(h) accounts team will be designated as a "health care component" of PERF pursuant to 45 CFR 164.105 and 164.504(b) and will comply with the "privacy regulations" and the "security regulations" found at 45 CFR Parts 160 and 164, as they may be amended from time to time, issued under the Health Insurance Portability and Accountability Act of 1996, governing the use and disclosure of protected health information and electronic protected health information. (Board of Trustees of the Indiana Public Retirement System; 35 IAC 20-1-12; adopted Sep 14, 2012: 20120926-IR-035120542ONA)

35 IAC 20-1-13 Purpose
Authority: IC 5-10.5-4-2
Affected: IC 5-10.3-8-14

Sec. 13. It will be impossible, at any time prior to the satisfaction of all liabilities under the PERF 401(h) Accounts, for any part of the PERF 401(h) Accounts to be used for or diverted to any purposes other than providing the benefits specified in IC 5-10.3-8-14. (Board of Trustees of the Indiana Public Retirement System; 35 IAC 20-1-13; adopted Sep 14, 2012: 20120926-IR-035120542ONA)

DATED: September 14, 2012
Greg Hahn,
Vice-Chairman of the Board of Trustees
Indiana Public Retirement System

Resolution adopted by 6 affirmative, 0 negative votes.

Posted: 09/26/2012 by Legislative Services Agency

DIN: 20120926-IR-035120542ONA
Composed: Aug 22,2014 4:10:53AM EDT
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