Changes to Existing Law

A member who is a retiree receiving a benefit from the system, or, if the member5 is deceased, the member's surviving spouse who is receiving a benefit from the system and is6 a beneficiary of the funds subject to this section, may become a supplemental pension7 participant by direct rollover of pretax funds held by the member in a variable retirement8 account or in either or both of the plans created in chapters 3-13 and 3-13A into the fund. Any9 rollover shall be in compliance with the provisions of § 401(a)(31) of the Internal Revenue Code10 and shall be recorded in the participant's supplemental pension contract record. All of a11 participant's funds rolled into the fund shall be expended in full as the single premium for a12 supplemental pension contract. No single premium may be less than ten thousand dollars. A13 supplemental pension contract goes into effect when a participant signs the supplemental14 pension contract. The initial monthly supplemental pension benefit is payable the first day of15 the first month after the contract goes into effect. Payment of any prior and current supplemental16 pension benefits shall be made within two months after the contract is in effect.

Each group of retirement system members who are vested or are currently14 contributing or employers as set out in § 3-12-48 shall elect their its own trustee or trustees in15 a separate election. The trustees board shall promulgate rules and regulations, pursuant to16 chapter 1-26, to carry out the elections. The regular term of office of a trustee shall be is four17 years with three terms expiring and expires on June thirtieth of each year and two additional terms to expire on June thirtieth every fourth year. The appointees of the Governor shall serve19 at the pleasure of the Governor. The term of the representative appointee of the Investment20 Council shall be one year and the representative shall be appointed by serve at the pleasure of the Investment Council. Unless a trustee has resigned, is deemed to have resigned pursuant to § 3-12-53, or has died, the trustee shall continue to serve until the trustee's successor has been designated and has qualified. Except for appointees of the Governor and Investment Council,24 - 4 -HB 1011 upon the death or resignation of a trustee, the board shall appoint a successor. The successor trustee shall fill the position immediately and serve until the June thirtieth that is no less than three but no more than four years after taking office.

If an employee any trustee ceases to be a member, or any nonemployee elected trustee no longer serves in the capacity that qualified the trustee for membership on the Board of Trustees board, the trustee is considered to have resigned from the board, and the board shall select a replacement trustee to serve for the remainder of the term on June thirtieth of the following calendar year. The vacancy created by the resignation shall be filled through the annual election process. However, if the vacancy is not filled through the annual election process, the board shall fill the vacancy by appointment. The person elected or appointed shall serve a four-year term regardless of the time remaining in the term of the trustee who ceased serving in the qualifying capacity. The provisions of this section do not apply to any trustee who, on January 1, 2019, is no longer serving in the capacity that qualified the trustee.

A full-time elective officer if he is newly-elected official, who is a permanent full- time employee of a participating unit and not a contributing member of the system at the date the participating unit enters the system or on July 1, 1974, and is not otherwise excluded, may13 elect to become a member, provided, however, his. However, the official shall make the election when the official is first eligible to participate in the system, and the official's election is 100 copies were printed on recycled paper by the South DakotaLegislative Research Council at a cost of $.167 per page.v Insertions into existing statutes are indicated by underscores.Deletions from existing statutes are indicated by overstrikes. - 2 -HB 1011 irrevocable for as long as the official is an elected official. If the official is a current contributing member or has previously contributed to the system, the elected official shall participate in the system. The official's credited service shall be is limited to service for which contributions were are made.

A member who terminates public service has left covered employment may6 withdraw the sum of the member's accumulated contributions upon notarized application to the7 system. A member who withdraws the member's accumulated contributions pursuant to this8 section forfeits all credited service and benefits provided in this chapter. The right to withdraw accumulated contributions ceases if the member returns to covered employment with a participating unit.

A member taking a leave of absence authorized by his the member's employer may13 receive credited service during such the leave if employee and employer contributions are made14 to the system during such the leave by or on behalf of the employee. Such The contributions15 shall be at the rates in effect during such the leave and shall be based on the member's rate of16 compensation immediately prior to such the leave. Such If a member's rate of compensation causes the member's compensation for the calendar year to exceed the maximum taxable amount for social security, the contributions shall include the additional contribution pursuant to § 3-12- 91.1. The contributions shall be transmitted to the system at least monthly. For purposes of20 calculation of benefits, the member shall be considered to have received compensation during21 the period of such the leave at the rate used to calculate the contributions made during such the leave. If contributions are not made during such the leave, the member may receive credited23 service for such the leave by making contributions, or having contributions made on his the24 - 3 -HB 1011 member's behalf, contributions as provided in § 3-12-83.

The board may establish an automatic enrollment feature within the plan by rules19 promulgated pursuant to chapter 1-26 and § 3-13-54. Any automatic enrollment feature20 established by the board shall include: (1)A provision that automatic enrollment shall apply to newly-employed members hired22 after a specified future date, any state employees not participating in contributing to the deferred compensation plan as of June 30, 2019, and employees of any other24 - 5 -HB 1011 automatic enrollment unit that elects automatic enrollment for its employees not1 participating in contributing to the deferred compensation plan; (2)A provision that automatic enrollment shall apply only to the employees of those3 participating units that choose the automatic enrollment feature for the unit's4 employees; (3)A provision that automatic enrollment may not require more than an established6 maximum contribution per month per automatically-enrolled participant; (4)A provision that a participant who is automatically enrolled shall have as long as8 ninety days after the start of employment to discontinue participation in the plan; (5)A provision that an automatically-enrolled participant who discontinues participation10 in the plan within ninety days of enrollment shall receive a refund of the participant's11 account within thirty days after discontinuing participation; (6)A provision that the state investment officer shall select a default investment fund to13 receive contributions by any automatically-enrolled participant who does not choose14 an investment alternative to receive the participant's contributions; (7)A provision authorizing participating units and the system to make contributions to16 the plan for the benefit of participants; (8)A provision that the plan shall adhere to notice requirements to automatically- enrolled participants in accord with Internal Revenue Service Rulings 98-30 and19 2000-8; (9)A provision that automatic enrollment does not require advance authorization by a21 participant, which is hereby deemed to be an exception to the provisions of any state22 law requiring employee authorization for a payroll deduction or any similar ordinance23 of a local participating unit; and24 - 6 -HB 1011 (10)A provision that the amount of compensation deferred by an automatically-enrolled1 participant shall automatically increase by a specified amount each year unless the2 participant elects not to participate in automatic escalation or elects to defer a3 different amount than specified. If a participant discontinues participation pursuant to subdivision (4), that act is a permissive5 withdrawal pursuant to § 414(w) of the Internal Revenue Code.