CHAPTER 1.1. PUBLIC EMPLOYEES DEFERRED COMPENSATION PLANS
IC 5-10-1.1
Chapter 1.1. Public Employees Deferred Compensation Plans
IC 5-10-1.1-1
Nonqualified deferred compensation plans; employee savings plans
Sec. 1. The state and any political subdivision (as defined byIC 36-1-2-13) may:
(1) agree with any employee to reduce and defer any portion ofsuch employee's compensation which under federal law may bedeferred under a nonqualified deferred compensation plan andsubsequently contract for, purchase, or otherwise procureinsurance and investment products appropriate for anonqualified deferred compensation plan (all referred to in thischapter as "funding"), for the purpose of funding a deferredcompensation plan for such employee;
(2) if the political subdivision is a school corporation, establishan employee savings plan that is a defined contribution planqualified under Section 401(a) or 403(b) of the InternalRevenue Code, and contribute amounts to the plan on behalf ofeligible employees to be credited and allocated to an accountfor each employee; and
(3) contribute amounts before January 1, 1995, and continue orbegin to contribute amounts after January 1, 1995, to anonqualified deferred compensation plan on behalf of eligibleemployees, subject to any limits and provisions under Section457 of the Internal Revenue Code.
(Formerly: Acts 1975, P.L.42, SEC.1.) As amended by Acts 1980,P.L.27, SEC.1; P.L.42-1988, SEC.1; P.L.66-1995, SEC.1;P.L.65-1995, SEC.1; P.L.15-1998, SEC.1; P.L.68-2001, SEC.1.
IC 5-10-1.1-1.5
Defined contribution plan
Sec. 1.5. (a) The state, through the budget agency, may adopt adefined contribution plan, under Section 401(a) of the InternalRevenue Code, for the purpose of matching all or a specified portionof state employees' contributions to the state employees' deferredcompensation plan and for any additional purposes established bystatute.
(b) The deferred compensation committee shall be the trustee ofa plan established under subsection (a) as described in section 4 ofthis chapter. A plan established under subsection (a) shall beadministered by the auditor of state as described in section 5 of thischapter.
(c) The deferred compensation committee may approve fundingofferings for a plan established under subsection (a), which may bethe same as offerings for the state employees' deferred compensationplan. All funds in each plan shall be separately accounted for butmay be commingled for investment purposes.
(d) Contributions to a plan established under subsection (a) arelimited to the amount of biennial appropriations the budget agency
determines are available for any such purposes. The deferredcompensation committee may use funds available under the plan tohire or contract with qualified attorneys, financial advisers, or otherprofessional or administrative persons that the committee believesare necessary or useful in the administration of the plan.
(e) A plan established under subsection (a) must includeappropriate provisions concerning the plan's day to day operation andany other provisions that are appropriate. NotwithstandingIC 22-2-6-2, the plan may also include provisions for the use ofautomated voice response units and telephonic communications,online activities, and other technology for participant elections,directions, and services if the technology has sufficient capacity torecord and store the elections and directions.
(f) The state is obligated at any particular time only for the currentmarket value of the funding previously made to a plan establishedunder subsection (a).
(g) The state board of finance shall extend the plan establishedunder subsection (a) to any political subdivision that also elects touse the state employees' deferred compensation plan for itsemployees as authorized in section 7(b)(2) or 7(b)(3) of this chapter.
As added by P.L.195-1999, SEC.7 and P.L.273-1999, SEC.231.Amended by P.L.184-2001, SEC.2; P.L.220-2005, SEC.1.
IC 5-10-1.1-2
Employee defined
Sec. 2. As used in this chapter, "employee" means any person,including a person elected, appointed or under contract, receivingcompensation from the state or any political subdivision as describedin section 1 of this chapter.
(Formerly: Acts 1975, P.L.42, SEC.1.)
IC 5-10-1.1-3
Effective and operative dates
Sec. 3. A deferred compensation plan established under thischapter exists and serves in addition to other retirement, pension andbenefit systems established by the state, or political subdivision, andmay not effect a reduction of any retirement, pension or other benefitprovided by applicable law. Any compensation deferred under sucha plan shall continue to be included as regular compensation for thepurpose of computing the retirement and pension benefits earned byany employee.
(Formerly: Acts 1975, P.L.42, SEC.1.) As amended by Acts 1977,P.L.51, SEC.1.
IC 5-10-1.1-3.5
Deferred compensation plan; automatic enrollment
Sec. 3.5. (a) This section applies to an individual who becomes anemployee of the state after June 30, 2007.
(b) Unless an employee notifies the state that the employee doesnot want to enroll in the deferred compensation plan, on day
thirty-one (31) of the employee's employment:
(1) the employee is automatically enrolled in the deferredcompensation plan; and
(2) the state is authorized to begin deductions as otherwiseallowed under this chapter.
(c) The auditor of state shall provide written notice to anemployee of the provisions of this chapter. The notice providedunder this subsection must:
(1) be provided:
(A) with the employee's first paycheck; and
(B) on paper that is a color that is separate and distinct fromthe color of the employee's paycheck;
(2) contain a statement concerning:
(A) the purposes of;
(B) procedures for notifying the state that the employee doesnot want to enroll in;
(C) the tax consequences of; and
(D) the details of the state match for employee contributionto;
the deferred compensation plan; and
(3) list the telephone number, electronic mail address, and othercontact information for the auditor of state, who serves as planadministrator.
(d) Notwithstanding IC 22-2-6, except as provided by subsection(c), the state shall deduct from an employee's compensation as acontribution to the deferred compensation plan established by thestate under this chapter an amount equal to the maximum amount ofany match provided by the state on behalf of the employee to adefined contribution plan established under section 1.5(a) of thischapter.
(e) An employee may contribute to the deferred compensationplan established by the state under this chapter an amount other thanthe amount described in subsection (d) by affirmatively choosing tocontribute:
(1) a higher amount;
(2) a lower amount; or
(3) zero (0).
As added by P.L.234-2007, SEC.207. Amended by P.L.3-2008,SEC.22.
IC 5-10-1.1-4
Deferred compensation committee; state employees' deferredcompensation plan
Sec. 4. (a) The deferred compensation committee is established.The committee consists of five (5) persons appointed by the stateboard of finance as follows:
(1) Each member of the state board of finance shall appoint one(1) member to the committee.
(2) The remaining two (2) members:
(A) must be participants in the state employees' deferred
compensation plan;
(B) may not be employees of the members of the state boardof finance;
(C) must be from different political parties; and
(D) may not serve for more than two (2) consecutive three(3) year terms.
(b) The deferred compensation committee may annually elect achairperson and a secretary.
(c) The deferred compensation committee may approve proposedinvestment products for the state employees' deferred compensationplan.
(d) All amounts deferred under the state employees' deferredcompensation plan must be put into a trust for the exclusive benefitof plan participants, as required by Section 457(g) of the InternalRevenue Code. The deferred compensation committee is the trusteeof the trust.
(e) The plan shall include appropriate provisions pertaining to itsday to day operation providing for methods of electing to deferincome, methods of changing the amount of income to be deferred,and such other provisions as may be appropriate. NotwithstandingIC 22-2-6-2, the plan may also include provisions for the use ofautomated voice response units and telephonic communications,on-line activities, and other technology for participant elections,directions, and services if the technology has sufficient capacity torecord and store the elections and directions.
(f) The plan shall provide for the preparation and distribution,from time to time to all eligible employees, of pamphlets describingthe plan and outlining the opportunities available to employees underthe plan.
(g) The state board of finance shall extend the plan to any politicalsubdivision which elects to utilize the state employees' deferredcompensation plan for its employees as authorized in section 7(b)(2)or 7(b)(3) of this chapter.
(h) At least annually, the deferred compensation committee shallreport to the state board of finance on the status of the stateemployees' deferred compensation plan, including any changes to theplan.
(Formerly: Acts 1975, P.L.42, SEC.1.) As amended by Acts 1977,P.L.51, SEC.2; Acts 1980, P.L.27, SEC.2; P.L.15-1998, SEC.2;P.L.184-2001, SEC.3; P.L.220-2005, SEC.2.
IC 5-10-1.1-5
State employees' deferred compensation plan; contracts; funding,selection by bidding; review
Sec. 5. (a) The auditor of state shall provide for the administrationof the state employees' deferred compensation plan. The auditor ofstate may, at the auditor of state's option, enter into a contract orcontracts with an individual or individuals, incorporated orunincorporated organizations or associations, the state of Indiana,units of local government, agencies of the state or units of local
government, or a group of such persons acting in concert, for theprovision of all or part of the services involved in the administrationof the plan. Participation in the plan shall be by a specific writtenagreement between each employee and the state which agreementshall provide for the deferral of such amount of compensation asrequested by the employee. With each deferral of compensation, theemployee shall receive a memorandum of the amount by which theemployee's gross compensation is reduced by reason of the defermentof compensation, which amount shall not be included as a part of theemployee's taxable compensation as to that period.
(b) The funding utilized under the state employees' deferredcompensation plan shall have been reviewed and selected by thedeferred compensation committee based on a competitive biddingprocess as established by such specifications deemed appropriate bythe deferred compensation committee. Nothing in this section shallbe construed as requiring a limitation on the number and variety offunding contracts which may be selected as a result of this biddingprocess.
(c) In no case shall funding of the state employees' deferredcompensation plan be made except through persons or companiesauthorized and duly licensed by this state and applicable federalregulatory agencies to offer such funding programs.
(Formerly: Acts 1975, P.L.42, SEC.1.) As amended by Acts 1977,P.L.51, SEC.3; Acts 1980, P.L.27, SEC.3; P.L.15-1998, SEC.3.
IC 5-10-1.1-6
Obligations of state or political subdivision
Sec. 6. The state or political subdivision under a deferredcompensation plan shall be obligated at any point in time solely forthe then current market value of the funding theretofore made.
(Formerly: Acts 1975, P.L.42, SEC.1.) As amended by P.L.15-1998,SEC.4.
IC 5-10-1.1-7
Participation by political subdivisions
Sec. 7. (a) Any political subdivision (as defined in IC 36-1-2-13)may establish for its employees a deferred compensation plan. Theplan shall be selected by the governing body of the politicalsubdivision, which in the case of a unit subject to IC 36-1-3 shall bedone by ordinance. Participation shall be by written agreementbetween each employee and the governing body of the politicalsubdivision, which agreement provides for the deferral ofcompensation and subsequent administration of such funds.
(b) For funding such agreements, the governing body of thepolitical subdivision may:
(1) designate one (1) of its agencies or departments to establishand administer such plans and choose such funding as deemedappropriate by the agency or department, which may includemore than one (1) funding product;
(2) extend the state employees' deferred compensation plan to
employees of the political subdivision, subject to the terms andconditions of the state employees' deferred compensation planas it is established from time to time; or
(3) offer both a plan described in subdivision (1) and the plandescribed in subdivision (2).
(c) This section does not limit the power or authority of anypolitical subdivision to establish and administer other plans deemedappropriate by the governing bodies of such subdivisions, includingplans established under section 1(2) of this chapter.
(Formerly: Acts 1975, P.L.42, SEC.1.) As amended by Acts 1977,P.L.51, SEC.4; Acts 1980, P.L.27, SEC.4; P.L.42-1988, SEC.2;P.L.15-1998, SEC.5; P.L.220-2005, SEC.3; P.L.1-2006, SEC.93.
IC 5-10-1.1-7.3
Matching funds
Sec. 7.3. (a) Any political subdivision (as defined in IC 36-1-2-13)that elects to use the state employees' deferred compensation plan forits employees as authorized in section 7(b)(2) or 7(b)(3) of thischapter also may elect to participate in the state's definedcontribution plan established by section 1.5 of this chapter for thepurpose of matching all or a specified portion of the politicalsubdivision's employees' contributions to the deferred compensationplan.
(b) Participation in the state's defined contribution plan describedin subsection (a) shall be authorized by the governing body of thepolitical subdivision, which in the case of a unit subject to IC 36-1-3shall be done by ordinance.
(c) Contributions by a political subdivision to the state's definedcontribution plan described in subsection (a) for the purpose ofmatching all or a specified portion of employee contributions arelimited to the amount of appropriations made each year for thatpurpose.
(d) The political subdivision is obligated at any particular timeonly for the current market value of the funding previously made tothe state's defined contribution plan described in subsection (a).
(e) This section does not limit the power or authority of anypolitical subdivision to establish and administer any other plansconsidered appropriate by the governing body of the politicalsubdivision, including plans established under section 1(2) of thischapter.
As added by P.L.184-2001, SEC.4. Amended by P.L.220-2005,SEC.4.
IC 5-10-1.1-7.5
Unused excess accrued leave
Sec. 7.5. (a) As used in this section, "state agency" means thefollowing:
(1) An authority, a board, a branch, a commission, a committee,a department, a division, or other instrumentality of stategovernment. (2) A separate corporate body politic that adopts the plandescribed in subsection (b).
(3) State elected officials and their office staff.
(4) The legislative services agency.
(5) Legislative staff eligible to participate in the stateemployees' deferred compensation plan established by section1 of this chapter.
However, the term does not include a state educational institution ora political subdivision.
(b) The deferred compensation committee shall adopt provisionsin a defined contribution plan, under Sections 401(a) and 414(d) ofthe Internal Revenue Code, for the purpose of converting unusedexcess accrued leave to a monetary contribution for employees of astate agency. These provisions may be part of the plan and trustestablished under section 1.5(a) of this chapter.
(c) The deferred compensation committee is the trustee of the plandescribed in subsection (b). The plan must be a qualified plan, asdetermined by the Internal Revenue Service.
(d) The state personnel department shall adopt rules underIC 4-22-2 that it considers appropriate or necessary to implement thissection. The rules adopted by the state personnel department underthis section must:
(1) be consistent with the plan described in subsection (b);
(2) include provisions concerning:
(A) the type and amount of leave that may be converted to amonetary contribution;
(B) the conversion formula for valuing any leave that isconverted;
(C) the manner of employee selection of leave conversion;and
(D) the vesting schedule for any leave that is converted; and
(3) apply to all state agencies.
(e) The rules adopted by the state personnel department undersubsection (d) specifying the conversion formula must provide for aconversion rate under which the amount contributed on behalf of aparticipating employee for a day of leave that is converted under thissection is equal to at least sixty percent (60%) of the employee'sdaily pay as of the date the leave is converted.
(f) The deferred compensation committee may adopt thefollowing:
(1) Plan provisions governing:
(A) the investment of accounts in the plan; and
(B) the accounting for converted leave.
(2) Any other plan provisions that are necessary or appropriatefor operation of the plan.
(g) The plan described in subsection (b) may be implemented onlyif the deferred compensation committee has received from theInternal Revenue Service any rulings or determination letters that thecommittee considers necessary or appropriate.
(h) To the extent allowed by: (1) the Internal Revenue Code; and
(2) rules adopted by:
(A) the state personnel department under this section; and
(B) the board of trustees of the public employees' retirementfund under IC 5-10.3-8-14;
an employee of a state agency may convert unused excess accruedleave to a monetary contribution under this section and underIC 5-10.3-8-14.
As added by P.L.184-2001, SEC.5. Amended by P.L.220-2005,SEC.5; P.L.2-2007, SEC.80.
IC 5-10-1.1-8
Supplemental effect of chapter
Sec. 8. This chapter shall be supplemental and in addition to allother laws. The powers and duties herein given to the state and itspolitical subdivisions shall be in addition to those given by any otherlaw and shall not be subject to the limitations set out therein.
(Formerly: Acts 1975, P.L.42, SEC.1.)
IC 5-10-1.1-9
Amounts to be held for exclusive benefit of participants andbeneficiaries
Sec. 9. All amounts held under any deferred compensation planestablished under this chapter must be held for the exclusive benefitof participants of the plan and their beneficiaries, as required bySection 457(g) of the Internal Revenue Code.
As added by P.L.15-1998, SEC.6.