HB-5241, As Passed House, November 30, 2010

SUBSTITUTE FOR

HOUSE BILL NO. 5241

A bill to amend 1986 PA 182, entitled

"State police retirement act of 1986,"

by amending section 3 (MCL 38.1603), as amended by 2008 PA 366.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 3. (1) "Banked leave time program" means the part B

annual leave hours within the state's annual and sick leave program

approved by a ruling of the internal revenue service on September

5, 2003, in which a pay reduction or other concessions are applied

to a member in exchange for additional part B annual leave hours.

(2) "Credited service" means the sum of the prior service and

membership service credited to a member's account.

(3) "Deferred member" means a member who separates from

service with entitlement to a deferred retirement allowance as

provided in section 30, but who is not a retirant.

(4) "Department" means the department of management and

budget.

(5) "Direct rollover" means a payment by the retirement system

to the eligible retirement plan specified by the distributee.

(6) "Distributee" includes a member or deferred member.

Distributee also includes the member's or deferred member's

surviving spouse or the member's or deferred member's spouse or

former spouse under an eligible domestic relations order, with

regard to the interest of the spouse or former spouse.

(7) "DROP participant" means an officer who participates in

the deferred retirement option plan established in section 24a.

(8) Beginning January 1, 2002, except as otherwise provided in

this subsection, "eligible retirement plan" means 1 or more of the

following:

(a) An individual retirement account described in section

408(a) of the internal revenue code, 26 USC 408.

(b) An individual retirement annuity described in section

408(b) of the internal revenue code, 26 USC 408.

internal revenue code, 26 USC 403.

(d) A qualified trust described in section 401(a) of the

internal revenue code, 26 USC 401.

(e) An annuity contract described in section 403(b) of the

internal revenue code, 26 USC 403.

(f) An eligible plan under section 457(b) of the internal

revenue code, 26 USC 457, which is maintained by a state, political

subdivision of a state, or an agency or instrumentality of a state

or political subdivision of a state and which agrees to separately

account for amounts transferred into the eligible plan under

section 457(b) of the internal revenue code, 26 USC 457, from this

retirement system, that accepts the distributee's eligible rollover

distribution.

(g) Beginning January 1, 2008, a Roth individual retirement

account as described in section 408A of the internal revenue code,

26 USC 408A, subject to the rules that apply to rollovers from a

traditional individual retirement account to a Roth individual

retirement account.

(9) Beginning January 1, 2007, "eligible rollover

distribution" means a distribution of all or any portion of the

balance to the credit of the distributee. Eligible rollover

distribution does not include any of the following:

(a) A distribution made for the life or life expectancy of the

distributee or the joint lives or joint life expectancies of the

distributee and the distributee's designated beneficiary.

(b) A distribution for a specified period of 10 years or more.

required under section 401(a)(9) of the internal revenue code, 26

USC 401.

(d) The portion of any distribution that is not includable in

federal gross income, except to the extent such portion of the

distribution is paid to either of the following:

(i) An individual retirement account or annuity described in

section 408(a) or 408(b) of the internal revenue code, 26 USC 408.

(ii) A qualified plan described in section 401(a) of the

internal revenue code, 26 USC 401, or an annuity contract described

in section 403(b) of the internal revenue code, 26 USC 403, and the

plan providers agree to separately account for the amounts paid,

including any portion of the distribution that is includable in

federal gross income, and the portion of the distribution which is

not so includable.

(10) "Final average compensation" means the average annual

salary for the last 2 years of service with the department of state

police for which the member was compensated as defined in

subsection (13). In the case of a nonclassified member of the

department holding the rank of colonel, final average compensation

means the same average annual salary as that computed for the

highest salaried classified member of the department, or at the

average annual salary for the last 2 years of service with the

department of state police for which the member was compensated,

whichever is greater. Average annual salary includes only the

following compensation items:

(a) Regular salary paid for the last 2 years of service,

including, but not limited to, that salary that is deferred

pursuant to a state deferred compensation program.

(b) Overtime, shift differential, and shift differential

overtime paid for the last 2 years of service.

service, including compensatory time and emergency response

compensation.

(d) Up to a maximum of 240 hours of accumulated annual leave,

paid at the time of retirement separation excluding part B annual

leave hours paid at the time of retirement separation.

(e) Deferred hours under Plan B of the fiscal years ending

September 30, 1981, and September 30, 1982, that are paid at the

time of retirement separation.

(f) Longevity pay equal to 2 full years.

(g) Bomb squad pay paid for the last 2 years of service.

(h) Post 29 freeway premium paid for the last 2 years of

service.

(i) On-call pay paid for the last 2 years of service.

(j) Beginning October 1, 2003, the value of any unpaid

furlough hours or the value of any unpaid hours exchanged for part

B annual leave hours, calculated at the member's then-current

hourly rate or rates of pay, for a period during which a member is

participating in the banked leave time program.

(k) Beginning May 1, 2009, the value of temporary layoff

hours. As used in this subdivision, "temporary layoff hours" means

hours attributable to the layoff of a member if the layoff does not

exceed 1 month and has a fixed, predetermined, and announced recall

date.

(11) "Furlough hours" means unworked hours incurred in

conjunction with the banked leave time program.

(12) "Internal revenue code" means the United States internal

revenue code of 1986.

(13) "Last 2 years of service" means the 2-year period

immediately preceding the member's last day of service or that

period of 2 consecutive years of service with the department of

state police immediately preceding the date the duty disability

occurred according to the medical examinations conducted pursuant