SB 396 — Virginia Retirement System; service retirement allowance for certain judges.

An employee participating in the hybrid retirement program may also make voluntary contributions to the defined contribution component of the program of up to four percent of creditable compensation or the limit on elective deferrals pursuant to § 457(b) of the Internal Revenue Code, whichever is less.

The contribution by the employee shall be made to the appropriate deferred compensation plan established by the employee under § 51.1-602.

3.

If an employee's voluntary contributions under subdivision C 2 are less than four percent of creditable compensation, the contribution will increase by one-half of one percent, beginning on January 1, 2017, and every three years thereafter, until the employee's voluntary contributions under subdivision C 2 reach four percent of creditable compensation.

The increase will be effective beginning with the first pay period that begins in such calendar year unless the employee elects not to increase the voluntary contribution in a manner prescribed by the Board.

4.

No loans or hardship distributions shall be available from contributions made by an employee under this subsection.

5.

Disclosure of all services, fees, restrictions, and surrender penalties associated with employee voluntary contributions under subdivision C 2 shall be provided by the Board on an annual basis to an employee who does not make the election provided in subdivision G 1.

D.

1.

The amount of the service retirement allowance under the defined benefit component of the program shall be governed by § 51.1-155 for all creditable service credited prior to the effective date of the member's participation in the program.

For all other creditable service, the allowance shall equal one percent of a member's average final compensation multiplied by the amount of his creditable service while in the program.

Notwithstanding the foregoing, for judges who are (i) participating in the hybrid retirement program and (ii) at least 55 years old at the time of such appointment, the allowance shall equal 1.7 percent of the member's average final compensation multiplied by the amount of his creditable service while in the program.

For all judges who are participating in the hybrid retirement program, creditable service shall be determined as provided in § 51.1-303 and service retirement eligibility shall be determined as provided in § 51.1-305.

2.

No member shall retire for disability under the defined benefit component of the program, provided, however, that judges who are participating in the hybrid retirement program may retire for disability under §§ 51.1-307 and 51.1-308.

3.

Except as provided in subdivision 1, any employee participating in the hybrid retirement program maintained under this section shall be considered to be a person who becomes a member on or after July 1, 2010.

4.

In all other respects, administration of the defined benefit component of the program shall be governed by the provisions of Chapter 1 (§ 51.1-124.1 et seq.).

E.

With respect to any employee who elects, pursuant to subsection A, to participate in the otherwise applicable defined benefit retirement plan established by this title and administered by the Virginia Retirement System, the employer shall collect and pay all employee and employer contributions to the Virginia Retirement System for retirement and group life insurance in accordance with the provisions of Chapter 1 (§ 51.1-124.1 et seq.) for such employee.

F.

1.

The Board shall develop policies and procedures for administering the hybrid retirement program it maintains, including the establishment of guidelines for employee elections and deferrals under the program.

2.

No employee who is an active member in the hybrid retirement program maintained under this section shall also be an active member of any other optional retirement plan maintained under the of 4 provisions of Chapter 1 (§ 51.1-124.1 et seq.).

3.

If a member of the hybrid retirement program maintained under this section is at any timeIin service as an employee in a position covered for retirement purposes under the provisions of ChNpter 1 benefit payments under the hybrid retirement program maintained under this section shall be suspendedhis while so employed;

provided, however, reemployment shall have no effect on a payment under the T defined contribution component of the program if the benefit is being paid in an annuity form uRder an annuity contract purchased with the member's account balance.

4.

Any administrative fee imposed pursuant to subdivision A 13 of § 51.1-124.22 on any employer for administering and overseeing the hybrid retirement program maintained under this section shDll be charged for each employee participating in such program and shall be for costs incurred by the Virginia Notwithstanding the foregoing, the Board is authorized to collect all or a portion of such fee directly from the employee.

C 5.

The creditable compensation for any employee on whose behalf employee or employer E contributions are made into the hybrid retirement program shall not exceed the limit on compensation as adjusted by the Commissioner of the Internal Revenue Service pursuant to the transition provisions applicable to eligible participants under state and local governmental plans under § 401(a)(17) of the Internal Revenue Code as amended in 1993 and as contained in § 13212(d)(3) of the Omnibus Budget Rec6.

The Board may contract with private corporations or institutions, subject to the standards set forth in § 51.1-124.30, to provide investment products as well as any other goods and services related to the administration of the hybrid retirement program, except as provided in subsection G.

The Virginia Retirement System is hereby authorized to perform related services, including but not limited to, providing consolidated billing, individual and collective recordkeeping and accountings, and asSet purchase, control, and safekeeping.

3 G.

1.

Any political subdivision of the Commonwealth that has established a plan pursuant to 6 403(b) its employees the option to direct that voluntary contributions to the defined contribution component of the program under subdivision C 2 be made to such 403(b) plan and the corresponding employer matching contributions under subdivision B 2 be made to such 403(b) plan or the appropriate local cash match plan established under § 51.1-610.

All such voluntary contributions by an employee to such 403(b) plan shall be made on a pretax basis.

Any such political subdivision of the Commonwealth that so directs shall develop policies and procedures for administering such contributions, subject to and in accordance with applicable federal law and regulations.

The policies and procedures shall provide for the forfeiture account as provided in subdivision B 3, and automatic contribution escalation provisions as a provided in subdivision C 3, all with regard to employee voluntary contributions and corresponding employer matching contributions.

In all other respects, the political subdivision shall be subject to the provisions of the hybrid retirement program described in this section.

2.

The governing body of any political subdivision of the Commonwealth electing to allow its employees to use its 403(b) plan or a local cash match plan as described in subdivision 1 shall adopt a of its election, which shall be effective January 1, 2016, and shall remain effective for 12 months.d Thereafter, the governing body of any political subdivision of the Commonwealth may make or change its election for its employees no more often than annually by adopting a resolution on or before November 1 of each year notifying the Board of a new or changed election, which shall become effective on January 1.

3.

A person who participates in the hybrid retirement program maintained under this section may make an election to participate in the 403(b) plan established by his employer under subdivision G 1.

2016.

If an election is not made by November 30, 2015, such employee shall be deemed to have elected not to participate in the 403(b) plan established by his employer under subdivision G 1.

Thereafter, such employee may make or change his election on or before November 30 of each year by notifying his employer of a new or changed election, which shall become effective the following January 1.

If an election is not made or changed by November 30, such employee shall be deemed to have elected not to change the prior year's election.

4.

In the case of a 403(b) plan or local cash match plan administered by a political subdivision of discretion over assets in his account, the political subdivision shall not be liable for any loss resulting SB396 4 of 4 from such employee's or beneficiary's (i) investment of voluntary contributions in the political subdivision's 403(b) plan or matching contributions in the political subdivision's 403(b) plan or local cash match plan, (ii) exercise of discretion over the assets in any of his accounts, or (iii) inaction with respect to the assets in any of his accounts that results in such assets being placed in a default investment option selected by the political subdivision, provided that the investment options for the affected individual account and the particular default investment option for such individual account are selected in accordance with subsection A of § 51.1-803, applied mutatis mutandis.

Under no circumstances shall the Commonwealth, the Board, employees of the Retirement System, the Investment Advisory Committee of the Retirement System, or any other advisory committee established by the Board bear any liability with respect to any plan or individual account described in this subsection.

5.

The provisions of this subsection shall not apply to any political subdivision of the Commonwealth that has entered into an agreement with the Retirement System pursuant to § 51.1-603.1 or 51.1-611 except with regard to a 403(b) plan.

6.

Disclosure of all services, fees, restrictions, and surrender penalties associated with employee voluntary contributions under subsection G shall be provided by the political subdivision of the Commonwealth on an annual basis to an employee who makes the election provided in subdivision G 1.

Such employee shall also be provided with a side-by-side comparison of the long-term effects of generic expense ratios on his investments.

7.

The Board shall not be responsible for administration of or recordkeeping related to voluntary contributions to the defined contribution component of the program made to a 403(b) plan or the corresponding employer matching contributions made to a 403(b) plan or the appropriate local cash match plan established under § 51.1-610 that are authorized by subdivision G 1.

2.

That the provisions of this act shall become effective on July 1, 2025.

3.

That the provisions of this act amending the service retirement allowance for judges shall apply only to service earned as a judge on or after July 1, 2025.