161.420 Funds and accounts of retirement system.

1,559 words·~7 min read·/ky/chapter-161/161-420

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

All of the assets of the retirement system are for the exclusive purpose of providing benefits to members and annuitants and defraying reasonable expenses of administering the system. The board of trustees shall be the trustee of all funds of the system and shall have full power and responsibility for administering the funds. All the assets of the retirement system shall be credited according to the purpose for which they are held to one

(1)of the following funds:

(1)The expense fund shall consist of the funds set aside from year to year by the board

of trustees to defray the expenses of the administration of the retirement system.

Each fiscal year an amount not greater than four percent (4%) of the dividends and

interest income earned from investments during the immediate past fiscal year shall

be set aside into the expense fund or expended for the administration of the

retirement system;

(a)The teachers' savings fund shall consist of:

1. The contributions paid by members of the retirement system into this

fund and regular interest assigned by the board of trustees from the

guarantee fund; and

2. For individuals who become members of the Teachers' Retirement

System on or after January 1, 2022, who are participating in the

supplemental benefit component, the employer contributions paid into

the supplemental benefit component and regular interest on those

contributions as provided by KRS 161.635 and 161.636 that is assigned

by the board of trustees from the guarantee fund.

For individuals who become members on or after January 1, 2022, the system

shall account for funds in the teachers' savings fund attributable to the

nonuniversity members foundational benefit component, nonuniversity

members supplemental benefit component, university members foundational

benefit component, and university members supplemental benefit component.

(b)A member may not borrow any amount of his or her accumulated account

balance in the teachers' savings fund, or any regular interest earned thereon.

(c)The accumulated contributions or accumulated account balance of a member

which are returned to him or her upon his or her withdrawal or paid to his or

her estate or designated beneficiary in the event of his or her death shall be

paid from the teachers' savings fund.

(d)Any accumulated account balance in the teachers' savings fund forfeited by a

failure of a teacher or his or her estate to claim these contributions shall be

transferred from this fund to the guarantee fund.

(e)Except as provided by paragraph

(f)of this subsection, the accumulated

account balance of a member in the teachers' savings fund shall be transferred

from this fund to the allowance reserve fund in the event of retirement by

reason of service or disability.

(f)For an individual who becomes a member of the Teachers' Retirement System

on or after January 1, 2022, who is participating in the supplemental benefit

component who elects to annuitize his or her accumulated account balance in

the supplemental benefit component as prescribed by KRS 161.635(5)(a) or

(b)or 161.636(5)(a) or (b), the member's accumulated account balance in the

supplemental benefit component shall be transferred from this fund to the

allowance reserve fund;

(3)The state accumulation fund shall consist of funds paid by employers and

appropriated by the state for the purpose of providing pension annuities and

survivor benefits, including any sums appropriated for meeting unfunded liabilities

of pension annuities and any sums that are directed to pay down the unfunded

liabilities of pension annuities as provided in KRS 161.552, together with regular

interest assigned by the board of trustees from the guarantee fund. At the time of

retirement or death of a member there shall be transferred from the state

accumulation fund to the allowance reserve fund an amount which together with the

sum transferred from the teachers' savings fund will be sufficient to provide the

member a retirement allowance and provide for benefits under KRS 161.520 and

161.525. There shall also be transferred from the state accumulation fund to the

teachers' savings fund, the amount needed to fund the mandatory employer

contributions required by KRS 161.635 and 161.636;

(4)The allowance reserve fund shall be the fund from which shall be paid all

retirement allowances and benefits provided under KRS 161.520 and 161.525. In

addition, whenever a change in the status of a member results in an obligation on

this fund, there shall be transferred to this fund from the teachers' savings fund and

the state accumulation fund, the amounts as may be held in those funds for the

account or benefit of the member;

(a)The medical insurance fund, which is an account established according to 26

U.S.C. sec. 401(h), shall consist of amounts accumulated for the purpose of

providing benefits as provided in KRS 161.675, including:

1. The member contributions required by KRS 161.540(1)(a)2., (b)2.,

2. The employer contribution required by KRS 161.550(1)(a)2., (b)2.,

3. State appropriations as set forth in KRS 161.550(2), unless the

contributions are made to a trust fund under 26 U.S.C. sec. 115

established by the board for this purpose; and

4. Interest income from the investments of the fund from contributions

received by the fund under subparagraphs 1. to 3. of this paragraph, and

from income earned on those investments.

(b)All claims for benefits under KRS 161.675 shall be paid from this fund or

from any trust fund under 26 U.S.C. sec. 115 as established by the board for

this purpose. Any amounts deposited to the fund that are not required to meet

current costs shall be maintained as a reserve in the fund for these benefits.

The board shall take the necessary and appropriate steps, including

promulgating administrative regulations and procedures to maintain the status

of the medical insurance fund as an account subject to 26 U.S.C. sec. 401(h);

(6)The guarantee fund shall be maintained to facilitate the crediting of uniform interest

on the amounts of the other funds, except the expense fund, to finance operating

expenses directly related to investment management services, and to provide a

contingent fund out of which special requirements of any of the other funds may be

covered. All income, interest, and dividends derived from the authorized deposits

and investments shall be paid into the guarantee fund. Any funds received from

gifts and bequests, which the board is hereby authorized to accept and expend

without limitation in a manner either expressed by the donor or deemed to be in the

best interest of the membership, shall be credited to the guarantee fund. Any funds

transferred from the teachers' savings fund by reason of lack of claimant or because

of a surplus in any fund and any other moneys whose disposition is not otherwise

provided for, shall also be credited to the guarantee fund. The interest allowed by

the board of trustees to each of the other funds shall be paid to these funds from the

guarantee fund. Any deficit occurring in any fund that would not be automatically

covered shall be met by the payments from the guarantee fund to that fund;

(7)The school employee annuity fund shall consist of those funds voluntarily

contributed under the provisions of Section 403(b) of the Internal Revenue Code by

a member of the Teachers' Retirement System with accounts that existed on or after

July 1, 1996. The contributions shall not be picked up as provided in KRS

161.540(2). Separate member accounts shall be maintained for each member. The

board of trustees may promulgate administrative regulations in accordance with

KRS Chapter 13A to manage this program;

(8)The supplemental retirement benefit fund shall consist of those funds contributed

by the employer for the purpose of constituting a qualified government excess

benefit plan as described in Section 415 of the Internal Revenue Code for accounts

that existed on or after July 1, 1996. The board of trustees shall promulgate

administrative regulations in accordance with KRS Chapter 13A to administer this

program;

(9)The life insurance benefit fund shall consist of amounts accumulated for the

purpose of providing benefits provided under KRS 161.655. The board of trustees

may allocate to this fund a percentage of the employer and state contributions as

provided under KRS 161.550. The allocation to this fund will be in an amount that

the actuary determines necessary to fund the obligation of providing the benefits

provided under KRS 161.655; and

(10)The stabilization reserve account shall consist of amounts in two

(2)separate

accounts:

(a)One

(1)that includes employer contributions as provided by KRS

161.550(1)(d)1. and 2. that exceeds the combined actuarially required

employer contribution for the foundational benefit component and the

mandatory employer contribution to the supplemental benefit component as

provided by KRS 161.633 and 161.635 for those individuals who become

nonuniversity members on or after January 1, 2022; and

(b)One

(1)that includes employer contributions as provided by KRS

161.550(1)(e)1. and 2. that exceeds the combined actuarially required

employer contribution for the foundational benefit component and the

mandatory employer contribution to the supplemental benefit component as

provided by KRS 161.634 and 161.636 for those individuals who become

university members on or after January 1, 2022. Notwithstanding any other statute to the contrary, funds in these accounts shall only be used to pay off the unfunded liability of the pension and life insurance funds.