FINAL BILL REPORT

HB 1559

                                  C 117 L 88

BYRepresentatives Sayan and Grimm; by request of Department of Retirement Systems

Providing for termination of membership in the teachers' retirement system.

House Committe on Ways & Means/Appropriations

Senate Committee on Ways & Means

SYNOPSIS AS ENACTED

BACKGROUND:

When Plan II of the Teachers' Retirement System (TRS) was enacted in 1977 no provision was made for termination of membership from the system.  While withdrawal of contributions terminates benefits, it does not terminate membership.  As a consequence, a Plan II member who separates from service and withdraws his or her contributions and later returns to substitute teaching must make contributions because of continued membership in the plan.

Legislation enacted in 1986 provided that employee or employer contributions are not required for any month in which service credit is not earned.  Substitute teachers who do not earn service credit may withdraw any contribution made for the month.  This creates a cycle of contributions and withdrawals.

Under the Federal Tax Reform Act of 1986 a 10 percent tax penalty is levied on most refunds made to an employee who is under age 59 1/2.

To establish membership in TRS Plan I a minimum of 90 days or the equivalent of 90 days of employment during a fiscal year is required.

SUMMARY:

Teachers' Retirement System Plan II membership is terminated when a member has separated from service and contributions are withdrawn.  Former members may reestablish membership under the criteria used to establish Plan I membership.

VOTES ON FINAL PASSAGE:

      House 97   0

      Senate    49     0

EFFECTIVE:July 1, 1988