HOUSE BILL No. 5112 October 2, 2001, Introduced by Reps. Lipsey, Adamini, Rich Brown, Kolb, Patterson, McConico, Howell, LaSata, Faunce, Dennis, Murphy, Bernero, Richner, Spade, Middaugh, Mead, Kuipers, Drolet, George, Schauer, Gosselin and Lemmons and referred to the Committee on Appropriations. A bill to amend 1992 PA 234, entitled "The judges retirement act of 1992," by amending sections 308, 506, and 720 (MCL 38.2308, 38.2506, and 38.2670), section 506 as amended by 1999 PA 215 and section 720 as added by 1996 PA 523. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 308.(1) The right of a person to a retirement allow-2ance, to the return of accumulated contributions, to the retire-3ment allowance itself, to an optional benefit, to any other right4accrued or accruing to any member or beneficiary under this act,5and to the money belonging to the retirement system is unassigna-6ble and is not subject to execution, garnishment, attachment, the7operation of bankruptcy or insolvency law, or any other process8of law, except as otherwise provided in this act.02139'01 d ** MRM 2 1(2) The right of a member, vested former member, or a2retirant to a retirement allowance, to a deferred vested service3retirement allowance, to the return of accumulated contributions,4to the retirement allowance itself, to any optional benefit, or5to any other benefit under this act is subject to award by a6court pursuant to section 18 of chapter 84 of the Revised7Statutes of 1846, being section 552.18 of the Michigan Compiled8Laws, and to any other order of a court pertaining to alimony or9child support. The right of a member, vested former member, or a10retirant to a retirement allowance, to a deferred vested service11retirement allowance, to the return of accumulated contributions,12to the retirement allowance itself, to any optional benefit, or13to any other benefit under this act is subject to an eligible14domestic relations order under the eligible domestic relations15order act, Act No. 46 of the Public Acts of 1991, being16sections 38.1701 to 38.1711 of the Michigan Compiled Laws.17(3) If an award or order described in subsection (2)18requires the retirement system to withhold payment of a retire-19ment allowance, deferred vested service retirement allowance,20accumulated contributions, or other benefit from the person to21whom it is due or requires the retirement system to make payment22or requires the person to request that the retirement system make23payment of a retirement allowance, deferred vested service24retirement allowance, accumulated contributions, or other bene-25fit, for the purpose of meeting the person's obligations to a26spouse, former spouse, or child, as provided in subsection (2),27the withholding or payment provisions of the award or order is02139'01 d ** 3 1effective only against those amounts as they become payable to2the person receiving a retirement allowance unless otherwise pro-3vided in an eligible domestic relations order under Act No. 46 of4the Public Acts of 1991. The limitation contained in this sub-5section does not apply to the accumulated contributions of a6person who has terminated employment and who is not a vested7former member.8 (1)(4)The retirement system may offset retirement bene- 9 fits or refunds payable under this act against amounts owed to 10 the retirement system by a member, vested former member, retir- 11 ant, retirement allowance beneficiary, or refund beneficiary. 12 (2)(5)If the retirement system is required by the fed- 13 eral government pursuant to a court order to transmit a part of a 14 member's accumulated contributions to a federal agency, the serv- 15 ice credit that is covered by the payment shall be forfeited in 16 the same manner as if the employee had requested and been paid a 17 refund of the member's most recent contributions. 18 (3) THE RIGHT OF A PERSON TO A RETIREMENT ALLOWANCE, TO THE 19 RETURN OF ACCUMULATED CONTRIBUTIONS, TO AN OPTIONAL BENEFIT, TO 20 ANY OTHER RIGHT ACCRUED OR ACCRUING TO A MEMBER OR BENEFICIARY 21 UNDER THIS ACT, AND TO THE MONEY BELONGING TO THE RETIREMENT 22 SYSTEM IS SUBJECT TO THE PUBLIC EMPLOYEE RETIREMENT BENEFIT PRO- 23 TECTION ACT. 24 Sec. 506. (1) Upon application for retirement under this 25 act, a member or vested former member who meets the requirements 26 of section 501 may elect to receive a retirement allowance as a 27 straight life retirement allowance or as an optional retirement 02139'01 d ** 4 1 allowance under 1 of the payment options provided in this 2 section. The member or vested former member shall file a written 3 election with the retirement system before the effective date of 4 the retirement allowance. If a member or vested former member 5 fails to file a written election under this subsection, the 6 member or vested former member is considered to have elected the 7 straight life retirement allowance under section 503. The member 8 or vested former member shall designate in the written election a 9 retirement allowance beneficiary that shall be either the spouse, 10 brother, sister, parent, or child, including an adopted child, of 11 the member or vested former member. The amount of retirement 12 allowance under options A and B are the actuarial equivalent of 13 the amount of the straight life retirement allowance calculated 14 under section 503. The options are as follows: 15 (a) Option A. The retirement system shall pay an optional 16 retirement allowance to the retirant for life with the provision 17 that upon the retirant's death, payment of the optional retire- 18 ment allowance is continued throughout the lifetime of the 19 retirement allowance beneficiary whom the member or vested former 20 member designated in writing and filed with the retirement system 21 at the time of election of the option. 22 (b) Option B. The retirement system shall pay an optional 23 retirement allowance for life to the retirant with the provision 24 that upon the retirant's death, payment of 1/2 of the optional 25 retirement allowance is continued throughout the lifetime of the 26 retirement allowance beneficiary whom the member or vested former 02139'01 d ** 5 1 member designated in writing and filed with the retirement system 2 at the time of election of the option. 3 (2) Except as otherwise provided in this section, a retirant 4 shall not change the election of a payment option or the designa- 5 tion of a retirement allowance beneficiary under subsection (1) 6 after the retirement allowance effective date. If a retirant who 7 elected a payment option under subsection (1)(a) or (b) dies, the 8 retirement system shall pay the optional retirement allowance to 9 the option A beneficiary or option B beneficiary effective the 10 first day of the month following the retirant's death. If the 11 option A or option B beneficiary designated under this section is 12 the surviving spouse of the deceased retirant, the surviving 13 spouse may elect to receive a retirement allowance as provided in 14 section 508 in lieu of the survivor portion of the optional form 15 of payment elected by the retirant under this section. 16 (3) If the option A beneficiary or option B beneficiary pre- 17 deceases the retirant, the retirant's benefit reverts to a 18 straight life retirement allowance and the retirement system 19 shall begin payment of the straight life retirement allowance to 20 the retirant effective the first day of the month following the 21 option A or option B beneficiary's death. 22 (4) The retirement system shall provide each member or 23 vested former member who applies for retirement a written expla- 24 nation of the optional forms of payment under this section before 25 the member or vested former member retires. 26 (5) If a retirant receiving an optional retirement allowance 27 under this section is divorced from the spouse who had been 02139'01 d ** 6 1 designated the option A or option B beneficiary, the retirement 2 system shall consider the election of the optional form of pay- 3 ment option under this section void if the judgment of divorce or 4 award or order of the court, or an amended judgment of divorce or 5 award or order of the court, described insection 308THE 6 PUBLIC EMPLOYEE RETIREMENT BENEFIT PROTECTION ACT and dated after 7 June 27, 1991 provides that the election of the optional form of 8 payment option under this section is to be considered void by the 9 retirement system and the retirant provides a certified copy of 10 the judgment of divorce or award or order of the court, or an 11 amended judgment of divorce or award or order of the court, to 12 the retirement system. If the election of an optional form of 13 payment under this section is considered void by the retirement 14 system under this subsection, the retirant's retirement allowance 15 shall revert to a straight life retirement allowance, including 16 postretirement adjustments, if any, subject to an award or order 17 of the court as described insection 308THE PUBLIC EMPLOYEE 18 RETIREMENT BENEFIT PROTECTION ACT. The retirement allowance 19 shall revert to a straight life retirement allowance under this 20 subsection effective the first of the month after the date the 21 retirement system receives a certified copy of the judgment of 22 divorce or award or order of the court. This subsection does not 23 supersede a judgment of divorce or award or order of the court in 24 effect on June 27, 1991. This subsection does not require the 25 retirement system to distribute or pay retirement assets on 26 behalf of a retirant in an amount that exceeds the actuarially 02139'01 d ** 7 1 determined amount that would otherwise become payable if a 2 judgment of divorce had not been rendered. 3 (6) A member who continues active employment on or after the 4 date he or she acquires 8 years of credited service or who 5 becomes eligible for a retirement allowance as a vested former 6 member under section 501, whichever occurs first, may file a 7 written election with the retirement system to elect option A as 8 provided in subsection (1)(a). The member or vested former 9 member shall nominate a retirement allowance beneficiary in the 10 written election in the same manner as if the member or vested 11 former member were then retiring from service. If the 12 beneficiary's death or divorce from the member or vested former 13 member occurs before the effective date of the member's or vested 14 former member's retirement, the member's or vested former 15 member's election of option A and nomination of retirement allow- 16 ance beneficiary is automatically revoked and the member or 17 vested former member may again elect option A and nominate a 18 retirement allowance beneficiary at any time before the effective 19 date of retirement. If a member or vested former member who has 20 made an election and nominated a retirement allowance beneficiary 21 as provided in this subsection dies before the effective date of 22 his or her retirement, then the retirement allowance beneficiary 23 shall receive the retirement allowance that he or she would have 24 been entitled to receive under option A if the member or vested 25 former member had been retired on the date of the member's or 26 vested former member's death. Except as otherwise provided by 27 subsection (7), if a member or vested former member who has made 02139'01 d ** 8 1 an election under this subsection subsequently retires under this 2 act, his or her election of option A takes effect at the time of 3 retirement. The member or vested former member, before the 4 effective date of retirement, but not after the effective date of 5 retirement, may revoke his or her previous election of option A 6 and elect to receive his or her retirement allowance as a 7 straight life retirement allowance or under option B as provided 8 for in subsection (1). This subsection does not apply on and 9 after the date the settlement agreement in the case of Michigan 10 judges assn v Treasurer of the State of Michigan, case 11 no. 98-DT-72771-CV (Ed Mi), becomes of no further force or 12 effect, is rendered null and void, or is otherwise terminated. 13 (7) If a member, vested former member, retiring member, or 14 retiring vested former member is married on the effective date of 15 the retirement allowance, an election under this section, other 16 than an election of a payment option under subsection (1) naming 17 the spouse as retirement allowance beneficiary, shall not be 18 effective unless the election is signed by the spouse. However, 19 this requirement may be waived by the retirement board if the 20 signature of a spouse cannot be obtained because of extenuating 21 circumstances. As used in this subsection, "spouse" means the 22 person to whom the member, vested former member, retiring member, 23 or retiring vested former member is married on the effective date 24 of the retirement allowance. 25 Sec. 720. (1) Distributions from employer contributions 26 made pursuant to section 714(2) and (3) and earnings on those 27 employer contributions, and distributions from employee 02139'01 d ** 9 1 contributions made pursuant to section 714(3) and earnings on 2 those employee contributions, are exempt from any state, county, 3 municipal, or other local tax., and shall not be subject to4execution, garnishment, attachment, the operation of bankruptcy5or insolvency laws, or other process of law, and shall be unas-6signable except as otherwise provided in this act.7(2) The right of a qualified participant or a former quali-8fied participant, or his or her beneficiaries, to a distribution9described in subsection (1) is subject to forfeiture pursuant to10the public employee retirement benefits forfeiture act, Act11No. 350 of the Public Acts of 1994, being sections 38.2701 to1238.2705 of the Michigan Compiled Laws.13(3) The right of a qualified participant or former qualified14participant to a distribution described in subsection (1) is15subject to an award by a court pursuant to section 18 of chapter1684 of the Revised Statutes of 1846, being section 552.18 of the17Michigan Compiled Laws; an eligible domestic relations order18under the eligible domestic relations order act, Act No. 46 of19the Public Acts of 1991, being sections 38.1701 to 38.1711 of the20Michigan Compiled Laws; and to any other domestic relations order21of a court pertaining to alimony or child support.22(4) If an award or order described in subsection (3)23requires Tier 2 to withhold payment of a distribution described24in subsection (1) or requires Tier 2 to make payment or requires25the individual to request that Tier 2 make payment of a distribu-26tion described in subsection (1), for the purpose of meeting the27individual's obligations to a spouse, former spouse, or child, as02139'01 d ** 10 1provided in subsection (3), the withholding or payment provisions2of the award or order are effective only against such amounts as3they become due and payable to the individual receiving the dis-4tribution, unless otherwise provided in an eligible domestic5relations order under the eligible domestic relations order act,6Act No. 46 of the Public Acts of 1991. The limitation contained7in this subsection does not apply to the accumulated employee8contributions of a former qualified participant who has termi-9nated employment before acquiring a vested status in Tier 2 pur-10suant to this act.11 (2)(5)The state treasurer has the right of setoff to 12 recover overpayments made under this act and to satisfy any 13 claims arising from embezzlement or fraud committed by a quali- 14 fied participant, former qualified participant, refund beneficia- 15 ry, or other person who has a claim to a distribution or any 16 other benefit from Tier 2. 17 (3)(6)The state treasurer shall correct errors in the 18 records and actions in Tier 2 under this act, and shall seek to 19 recover overpayments and shall make up underpayments. 20 Enacting section 1. This amendatory act does not take 21 effect unless Senate Bill No. _____ or House Bill No. 5108 22 (request no. 02139'01 **) of the 91st Legislature is enacted into 23 law. 02139'01 d ** Final page. MRM