19-2-303. Definitions. Unless the context requires otherwise, for each of the retirement systems subject to this chapter, the following definitions apply:
(1) "Accumulated contributions" means the sum of all the regular and any additional contributions made by a member in a defined benefit plan, together with the regular interest on the contributions.
(2) "Active member" means a member who is a paid employee of an employer, is making the required contributions, and is properly reported to the board for the most current reporting period.
(3) "Actuarial cost" means the amount determined by the board in a uniform and nondiscriminatory manner to represent the present value of the benefits to be derived from the additional service to be credited based on the most recent actuarial valuation for the system and the age, years until retirement, and current salary of the member.
(4) "Actuarial equivalent" means a benefit of equal value when computed upon the basis of the mortality table and interest rate assumptions adopted by the board.
(5) "Actuarial liabilities" means the excess of the present value of all benefits payable under a defined benefit retirement plan over the present value of future normal costs in that retirement plan.
(6) "Actuary" means the actuary retained by the board in accordance with 19-2-405.
(7) "Additional contributions" means contributions made by a member of a defined benefit plan to purchase various types of optional service credit as allowed by the applicable retirement plan.
(8) "Annuity" means:
(a) in the case of a defined benefit plan, equal and fixed payments for life that are the actuarial equivalent of a lump-sum payment under a retirement plan and as such are not benefits paid by a retirement plan and are not subject to periodic or one-time increases; or
(b) in the case of the defined contribution plan, a payment of a fixed sum of money at regular intervals.
(9) "Banked holiday time" means the hours reported for work performed on a holiday that the employee may use for equivalent time off or that may be paid to the employee as specified by the employer's policy.
(10) "Benefit" means:
(a) the service retirement benefit, early retirement benefit, or disability retirement or survivorship benefit payment provided by a defined benefit retirement plan; or
(b) a payment or distribution under the defined contribution retirement plan, including a disability payment under 19-3-2141, for the exclusive benefit of a plan member or the member's beneficiary or an annuity purchased under 19-3-2124.
(11) "Board" means the public employees' retirement board provided for in 2-15-1009.
(12) "Contingent annuitant" means:
(a) under option 2 or 3 provided for in 19-3-1501, one natural person designated to receive a continuing monthly benefit after the death of a retired member; or
(b) under option 4 provided for in 19-3-1501, a natural person, charitable organization, estate, or trust that may receive a continuing monthly benefit after the death of a retired member.
(13) "Covered employment" means employment in a covered position.
(14) "Covered position" means a position in which the employee must be a member of the retirement system except as otherwise provided by law.
(15) "Defined benefit retirement plan" or "defined benefit plan" means a plan within the retirement systems provided for pursuant to 19-2-302 that is not the defined contribution retirement plan.
(16) "Defined contribution retirement plan" or "defined contribution plan" means the plan within the public employees' retirement system established in 19-3-103 that is provided for in chapter 3, part 21, of this title and that is not a defined benefit plan.
(17) "Department" means the department of administration.
(18) "Designated beneficiary" means the person, charitable organization, estate, or trust for the benefit of a natural person designated by a member or payment recipient to receive any survivorship benefits, lump-sum payments, or benefit from a retirement account upon the death of the member or payment recipient, including annuities derived from the benefits or payments.
(19) "Direct rollover" means a payment by the retirement plan to the eligible retirement plan specified by the distributee or a payment from an eligible retirement plan to the retirement plan specified by the distributee.
(20) "Disability" or "disabled" means a total inability of the member to perform the member's duties by reason of physical or mental incapacity. The disability must be incurred while the member is an active member and must be one of permanent duration or of extended and uncertain duration, as determined by the board on the basis of competent medical opinion.
(21) "Distributee" means:
(a) a member;
(b) a member's surviving spouse;
(c) a member's spouse or former spouse who is the alternate payee under a family law order as defined in 19-2-907; or
(d) effective January 1, 2007, a member's nonspouse beneficiary who is a designated beneficiary as defined by section 401(a)(9)(E) of the Internal Revenue Code, 26 U.S.C. 401(a)(9)(E).
(22) "Early retirement benefit" means the retirement benefit payable to a member following early retirement and is the actuarial equivalent of the accrued portion of the member's service retirement benefit.
(23) "Eligible retirement plan" means any of the following that accepts the distributee's eligible rollover distribution:
(a) an individual retirement account described in section 408(a) of the Internal Revenue Code, 26 U.S.C. 408(a);
(b) an individual retirement annuity described in section 408(b) of the Internal Revenue Code, 26 U.S.C. 408(b);
(c) an annuity plan described in section 403(a) of the Internal Revenue Code, 26 U.S.C. 403(a);
(d) a qualified trust described in section 401(a) of the Internal Revenue Code, 26 U.S.C. 401(a);
(e) effective January 1, 2002, an annuity contract described in section 403(b) of the Internal Revenue Code, 26 U.S.C. 403(b);
(f) effective January 1, 2002, a plan eligible under section 457(b) of the Internal Revenue Code, 26 U.S.C. 457(b), that is maintained by a state, a political subdivision of a state, or any agency or instrumentality of a state or a political subdivision of a state that agrees to separately account for amounts transferred into that plan from a plan under this title; or
(g) effective January 1, 2008, a Roth IRA described in section 408A of the Internal Revenue Code, 26 U.S.C. 408A.
(24) "Eligible rollover distribution":
(a) means any distribution of all or any portion of the balance from a retirement plan to the credit of the distributee, as provided in 19-2-1011;
(b) effective January 1, 2002, includes a distribution to a surviving spouse or to a spouse or former spouse who is an alternate payee under a domestic relations order, as defined in section 414(p) of the Internal Revenue Code, 26 U.S.C. 414(p).
(25) "Employee" means a person who is employed by an employer in any capacity and whose salary is being paid by the employer or a person for whom an interlocal governmental entity is responsible for paying retirement contributions pursuant to 7-11-105.
(26) "Employer" means a governmental agency participating in a retirement system enumerated in 19-2-302 on behalf of its eligible employees. The term includes an interlocal governmental entity identified as responsible for paying retirement contributions pursuant to 7-11-105.
(27) "Essential elements of the position" means fundamental job duties. An element may be considered essential because of but not limited to the following factors:
(a) the position exists to perform the element;
(b) there are a limited number of employees to perform the element; or
(c) the element is highly specialized.
(28) "Excess earnings" means the difference, if any, between reported compensation and the limits provided in 19-2-1005(2) used to calculate a member's highest average compensation or final average compensation.
(29) "Fiscal year" means a plan year, which is any year commencing with July 1 and ending the following June 30.
(30) "Inactive member" means a member who terminates service and does not retire or take a refund of the member's accumulated contributions.
(31) "Internal Revenue Code" has the meaning provided in 15-30-2101.
(32) "Member" means either:
(a) a person with accumulated contributions and service credited with a defined benefit retirement plan or receiving a retirement benefit on account of the person's previous service credited in a retirement system; or
(b) a person with a retirement account in the defined contribution plan.
(33) "Membership service" means the periods of service that are used to determine eligibility for retirement or other benefits.
(34) (a) "Normal cost" or "future normal cost" means an amount calculated under an actuarial cost method required to fund accruing benefits for members of a defined benefit retirement plan during any year in the future.
(b) Normal cost does not include any portion of the supplemental costs of a retirement plan.
(35) "Normal retirement age" means the age at which a member is eligible to immediately receive a retirement benefit based on the member's age or both age and length of service, as specified under the member's retirement system, without disability and without an actuarial or similar reduction in the benefit.
(36) "Pension" means benefit payments for life derived from contributions to a retirement plan made from state- or employer-controlled funds.
(37) "Pension trust fund" means a fund established to hold the contributions, income, and assets of a retirement system or plan in public trust.
(38) "Plan choice rate" means the amount of the employer contribution as a percentage of payroll covered by the defined contribution plan members that is allocated to the public employees' retirement system's defined benefit plan pursuant to 19-3-2117 to actuarially fund the unfunded liabilities and the normal cost rate changes in a defined benefit plan resulting from member selection of the defined contribution plan.
(39) "Regular contributions" means contributions required from members under a retirement plan.
(40) "Regular interest" means interest at rates set from time to time by the board.
(41) "Retirement" or "retired" means the status of a member who has:
(a) terminated from service; and
(b) received and accepted a retirement benefit from a retirement plan.
(42) "Retirement account" means an individual account within the defined contribution retirement plan for the deposit of employer and member contributions and other assets for the exclusive benefit of a member of the defined contribution plan or the member's beneficiary.
(43) "Retirement benefit" means:
(a) in the case of a defined benefit plan, the periodic benefit payable as a result of service retirement, early retirement, or disability retirement under a defined benefit plan of a retirement system. With respect to a defined benefit plan, the term does not mean an annuity.
(b) in the case of the defined contribution plan, a benefit as defined in subsection (10)(b).
(44) "Retirement plan" or "plan" means either a defined benefit plan or a defined contribution plan under one of the public employee retirement systems enumerated in 19-2-302.
(45) "Retirement system" or "system" means one of the public employee retirement systems enumerated in 19-2-302.
(46) "Service" means employment of an employee in a position covered by a retirement system.
(47) "Service credit" means the periods of time for which the required contributions have been made to a retirement plan and that are used to calculate retirement benefits or survivorship benefits under a defined benefit retirement plan.
(48) "Service retirement benefit" means the retirement benefit that the member may receive at normal retirement age.
(49) "Statutory beneficiary" means the surviving spouse or dependent child or children of a member of the highway patrol officers', municipal police officers', or firefighters' unified retirement system who are statutorily designated to receive benefits upon the death of the member.
(50) "Supplemental cost" means an element of the total actuarial cost of a defined benefit retirement plan arising from benefits payable for service performed prior to the inception of the retirement plan or prior to the date of contribution rate increases, changes in actuarial assumptions, actuarial losses, or failure to fund or otherwise recognize normal cost accruals or interest on supplemental costs. These costs are included in the unfunded actuarial liabilities of the retirement plan.
(51) "Survivorship benefit" means payments for life to the statutory or designated beneficiary of a deceased member who died while in service under a defined benefit retirement plan.
(52) "Termination of employment", "termination from employment", "terminated employment", "terminated from employment", "terminate employment", or "terminates employment" means that:
(a) there has been a complete severance of a covered employment relationship by the positive act of either the employee, the employer, or both; and
(b) the member is no longer receiving compensation for covered employment, other than any outstanding lump-sum payment for compensatory leave, sick leave, or annual leave.
(53) "Termination of service", "termination from service", "terminated from service", "terminated service", "terminating service", or "terminates service" means that:
(a) there has been a complete severance of a covered employment relationship by the positive act of either the employee, the employer, or both for at least 30 days;
(b) no written or verbal agreement exists between employee and employer that the employee will return to covered employment in the future;
(c) the member is no longer receiving compensation for covered employment; and
(d) the member has been paid all compensation for compensatory leave, sick leave, or annual leave to which the member was entitled. For the purposes of this subsection (53), compensation does not mean compensation as a result of a legal action, court order, or settlement to which the board was not a party.
(54) "Unfunded actuarial liabilities" or "unfunded liabilities" means the excess of a defined benefit retirement plan's actuarial liabilities at any given point in time over the value of its cash and investments on that same date.
(55) "Vested account" means an individual account within a defined contribution plan that is for the exclusive benefit of a member or the member's beneficiary. A vested account includes all contributions and the income on all contributions in each of the following accounts:
(a) the member's contribution account;
(b) the vested portion of the employer's contribution account; and
(c) the member's account for other contributions.
(56) "Vested member" or "vested" means:
(a) with respect to a defined benefit plan, except as provided in subsection (56)(b), a member or the status of a member who has at least 5 years of membership service;
(b) with respect to a member of the highway patrol officers' retirement system established in Title 19, chapter 6, who was hired on or after July 1, 2013, a member or the status of a member who has at least 10 years of membership service; or
(c) with respect to the defined contribution plan, a member or the status of a member who meets the minimum membership service requirement of 19-3-2116.
(57) "Written application" or "written election" means a written instrument, prescribed by the board or required by law, properly signed and filed with the board, that contains all required information, including documentation that the board considers necessary.
(58) "Written instrument" includes an electronic record containing an electronic signature, as defined in 30-18-102.
History: En. 68-1503 by Sec. 4, Ch. 323, L. 1973; amd. Sec. 1, Ch. 190, L. 1974; amd. Sec. 4, Ch. 132, L. 1977; amd. Sec. 8, Ch. 332, L. 1977; R.C.M. 1947, 68-1503; amd. Sec. 3, Ch. 114, L. 1979; amd. Sec. 1, Ch. 496, L. 1981; amd. Sec. 2, Ch. 282, L. 1983; amd. Sec. 1, Ch. 45, L. 1987; amd. Sec. 2, Ch. 71, L. 1989; amd. Sec. 3, Ch. 265, L. 1993; Sec. 19-3-104, MCA 1991; redes. 19-2-303 by Sec. 238, Ch. 265, L. 1993; amd. Sec. 5, Ch. 412, L. 1995; amd. Sec. 5, Ch. 370, L. 1997; amd. Secs. 4, 46(1), Ch. 58, L. 1999; amd. Sec. 5, Ch. 471, L. 1999; amd. Secs. 4, 99(1)(b), Ch. 562, L. 1999; amd. Sec. 4, Ch. 99, L. 2001; amd. Sec. 1, Ch. 149, L. 2001; amd. Sec. 3, Ch. 423, L. 2001; amd. Sec. 1, Ch. 490, L. 2001; amd. Sec. 48, Ch. 114, L. 2003; amd. Sec. 3, Ch. 429, L. 2003; amd. Sec. 1, Ch. 329, L. 2005; amd. Sec. 1, Ch. 283, L. 2009; amd. Sec. 2, Ch. 284, L. 2009; amd. Sec. 4, Ch. 99, L. 2011; amd. Sec. 1, Ch. 178, L. 2013; amd. Sec. 1, Ch. 240, L. 2013; amd. Sec. 2, Ch. 272, L. 2013; amd. Sec. 1, Ch. 386, L. 2013; amd. Sec. 1, Ch. 170, L. 2015.