49-22-303 - Defined contribution benefit established -- Contribution by employer and employee -- Vesting of contributions -- Plans to be separate -- Tax-qualified status of plans.
49-22-303. Defined contribution benefit established -- Contribution by employerand employee -- Vesting of contributions -- Plans to be separate -- Tax-qualified status ofplans.
(1) (a) A participating employer shall make a nonelective contribution on behalf of eachregular full-time employee who is a member of this system in an amount equal to 10% minus thecontribution rate paid by the employer pursuant to Subsection 49-22-301(2)(a) of the member'scompensation to a defined contribution plan qualified under Section 401(k) of the InternalRevenue Code which:
(i) is sponsored by the board; and
(ii) has been grandfathered under Section 1116 of the Federal Tax Reform Act of 1986.
(b) The member may make additional payments to:
(i) the qualified 401(k) plan which receives the employer contribution described in thisSubsection (1); or
(ii) at the member's option, another defined contribution plan established by theparticipating employer.
(2) (a) The total amount contributed by the participating employer under Subsection(1)(a) vests to the member's benefit after four years of employment from the date of employment.
(b) The total amount contributed by the member under Subsection (1)(b) vests to themember's benefit immediately and is nonforfeitable.
(3) (a) Contributions made by a participating employer under Subsection (1)(a) shall beinvested in a default option selected by the board until the member is vested in accordance withSubsection (2)(a).
(b) A member may direct the investment of contributions made by a participatingemployer under Subsection (1)(a) only after the contributions have vested in accordance withSubsection (2)(a).
(c) A member may direct the investment of contributions made by the member underSubsection (1)(b).
(4) No loans shall be available from contributions made by a participating employerunder Subsection (1)(a).
(5) No hardship distributions shall be available from contributions made by aparticipating employer under Subsection (1)(a).
(6) (a) Except as provided in Subsection (6)(b), if a member terminates employment witha participating employer prior to the vesting period described in Subsection (2)(a), allcontributions made by a participating employer on behalf of the member under Subsection (1)(a)are subject to forfeiture.
(b) If a member who terminates employment with a participating employer prior to thevesting period described in Subsection (2)(a) subsequently enters employment with the same oranother participating employer within 10 years of the termination date of the previousemployment:
(i) all contributions made by the previous participating employer on behalf of themember shall be reinstated upon the member's completion of the vesting period under Subsection(2)(a); and
(ii) the length of time that the member worked with the previous employer shall beincluded in determining whether the member has completed the vesting period under Subsection(2)(a).
(c) The board shall establish a forfeiture account and shall specify the uses of theforfeiture account, which may include an offset against employer contributions made under thissection.
(7) The board may request from any other qualified 401(k) plan under Subsection (1) or(2) any relevant information pertaining to the maintenance of its tax qualification under theInternal Revenue Code.
(8) The board may take any action which in its judgment is necessary to maintain thetax-qualified status of its 401(k) defined contribution plan under federal law.
Enacted by Chapter 266, 2010 General Session