Loading
The Oregon Administrative Rules contain OARs filed through March 15, 2014
 
QUESTIONS ABOUT THE CONTENT OR MEANING OF THIS AGENCY'S RULES?
CLICK HERE TO ACCESS RULES COORDINATOR CONTACT INFORMATION

 

OREGON PUBLIC EMPLOYEES RETIREMENT SYSTEM

 

DIVISION 5

ADMINISTRATION

459-005-0001

Definitions, Generally

The words and phrases used in chapter 459, Oregon Administrative Rules, have the same meaning given them in ORS 238.005 to 238.750. Specific and additional terms used in chapter 459 generally are defined as follows unless context of a particular division or rule within this chapter requires otherwise:

(1) “Ad hoc” means one-time for a specific purpose, case, or situation without consideration of a broader application.

(2) “After-tax” contributions means:

(a) Member contributions required or permitted by ORS 238.200 or 238.515, which a participating employer has not elected to “pick up,” assume or pay in accordance with ORS 238.205 and 238.515(b). “After-tax” contributions are included in the member’s taxable income for purposes of state or federal income taxation at the time paid to PERS. “After-tax” contributions are included in computing FAS and in computing the employer’s contributions paid to PERS.

(b) Payments made by a member to PERS for the purchase of additional benefits.

(3) “Before-tax” contributions means member contributions required or permitted by ORS 238.200 or 238.515, which a participating employer has elected to “pick up,” assume or pay in accordance with ORS 238.205 and 238.515(b). “Before-tax” contributions are not included in the member’s taxable income for purposes of state or federal income taxation at the time paid to PERS. “Before-tax” contributions are included in:

(a) Computing final average salary; and

(b) Computing the employer’s contributions paid to PERS if the employer has elected to “pick up” the member contributions.

(4) “Calendar month” means the Julian Calendar beginning with the first calendar day of a month through the last calendar day of that month.

(5) “Casual worker” means an individual engaged for incidental, occasional, irregular, or unscheduled intervals or for a period of less than six consecutive calendar months.

(6) “Contributions” means any contributions required or permitted pursuant to ORS 238.200 or 238.515.

(7) “Differential wage payment” means a payment made on or after January 1, 2009:

(a) By an employer to a member with respect to any period during which the member is performing service in the uniformed services, as defined in USERRA, while on active duty for a period of more than 30 consecutive days; and

(b) That represents all or a portion of the wages the member would have received from the employer if the member were performing service for the employer.

(8) “Effective date of withdrawal” means the later of:

(a) The first day of the calendar month in which PERS receives the last completed document required from a member who requested a withdrawal; or

(b) The first day of the second calendar month following the calendar month in which the member terminated employment with all participating employers and all employers in a controlled group with a participating employer.

(9) “Effective retirement date” means:

(a) For service retirements, the date described in OAR 459-013-0260; or

(b) For disability retirements, the date described in OAR 459-015-0001.

(10) “Elected official” means an individual who is a public official holding an elective office or an appointive office with a fixed term for the state or for a political subdivision of the state who has elected to participate in PERS pursuant to ORS 238.015(5).

(11) “Emergency worker” means an individual engaged in case of emergency, including fire, storm, earthquake, or flood.

(12) “Employee” has the same meaning as provided in ORS 238.005 and shall be determined in accordance with OAR 459-010-0030.

(a) For the purposes of ORS 238.005 to 238.750 the term “employee” includes public officers whether elected or appointed for a fixed term.

(b) The term “employee” does not include:

(A) A member of the governing board of a political subdivision unless the individual qualifies for membership under ORS 238.015.

(B) An individual who performs services for a public employer as a contractor in an independently established business or as an employee of that contractor in accordance with OAR 459-010-0030.

(c) An individual providing volunteer service to a public employer without compensation for hours of service as a volunteer, except for volunteer firefighters who establish membership in accordance with ORS 238.015(6).

(13) “Employer contribution account” means a record of employer contributions to the Fund, as required by ORS 238.225(1), and investment earnings attributable to those contributions, that the Board has credited to the account after deducting amounts required or permitted by ORS Chapter 238.

(14) “Employment” is compensated service to a participating employer as an employee whose:

(a) Period or periods of employment includes only the actual hours of compensated service with a participating employer as an employee; and

(b) Compensated service includes, but is not limited to, paid vacation, paid sick leave, or other paid leave.

(15) “Estimate” means a projection of benefits prepared by staff of a service or disability retirement allowance, a death or a refund payment. An estimate is not a guarantee or promise of actual benefits that eventually may become due and payable, and PERS is not bound by any estimates it provides. (ORS 238.455(6))

(16) “FAS” and “final average salary” have the same meaning as provided in:

(a) ORS 238.005 for all PERS Tier One members;

(b) ORS 238.435(2) for all PERS Tier Two members who are not employed by a local government as defined in ORS 174.116;

(c) ORS 238.435(4) for all PERS Tier Two members who are employed by a local government as defined in ORS 174.116; or

(d) ORS 238.535(2) for judge members of PERS for service as a judge.

(17) “General service member” means membership in PERS as other than a judge member, a police officer, a firefighter, or a legislator.

(18) “Good cause” means a cause beyond the reasonable control of an individual. “Good cause” exists when it is established by satisfactory evidence that factors or circumstances are beyond the reasonable control of a rational and prudent individual of normal sensitivity, exercising ordinary common sense.

(19) “Independent contractor” means an individual or business entity that is not subject to the direction and control of the employing entity as determined in accordance with OAR 459-010-0032.

(20) “Judge member” has the same meaning as provided in ORS 238.500(3). For purposes of this chapter, active, inactive, and retired membership of a judge member shall have the same meaning as provided in ORS 238.005.

(21) “Legislator” means an individual elected or appointed to the Oregon Legislative Assembly who has elected to participate in PERS for their legislative service.

(22) “Member cost” means after-tax member contributions and payments made by or on behalf of a member to purchase additional benefits.

(23) “Participating employer” means a public employer who has one or more employees who are active members of PERS.

(24) “PERS” and “system” have the same meaning as the Public Employees Retirement System in ORS 238.600.

(25) “Qualifying position” has the same meaning as provided in ORS 238.005.

(26) “Regular account” means the account established under ORS 238.250 for each active and inactive member who has made contributions to the Fund or the account of an alternate payee of such a member.

(27) “Salary” has the same meaning as provided in ORS 238.005.

(a) “Salary” includes a differential wage payment, as defined in this rule.

(b) For a Tier One member, a lump sum payment for accrued vacation pay is considered salary:

(A) In determining employee and employer contributions.

(B) In determining final average salary for the purpose of calculating PERS benefits.

(c) For a Tier Two member, a lump sum payment for accrued vacation pay:

(A) Is considered salary in determining employee and employer contributions.

(B) Is not considered salary in determining final average salary for the purpose of calculating PERS benefits.

(28) “Seasonal worker” means an individual whose engagement is characterized as recurring for defined periods that are natural divisions of the employer’s business cycle or services.

(29) “Staff” means the employees of the Public Employees Retirement System as provided for in ORS 238.645.

(30) “Tier One member” means a member who established membership in the system before January 1, 1996, as defined in ORS 238.430(2).

(31) “Tier Two member” means a member who established membership in the system on or after January 1, 1996, in accordance with ORS 238.430.

(32) “USERRA” means the federal Uniformed Services Employment and Reemployment Rights Act of 1994, 38 U.S.C. 4301-4334, as in effect on the effective date of this rule.

(33) “Vacation pay” means a lump sum payment for accrued leave in a Vacation Leave Program provided by a public employer which grants a period of exemption from work for rest and relaxation with pay, and does not include:

(a) Sick leave programs;

(b) Programs allowing the accumulation of compensatory time, holiday pay or other special leaves unless the public employer’s governing body indicates by resolution, ordinance, or other legislative process, that such leave is intended to serve as additional vacation leave; and

(c) Other programs, such as a Personal Time Off (PTO) plan, which are a combination of vacation, sick, bereavement, personal and other leaves of pay as defined and described by a public employer unless the employer has a written policy that clearly indicates the percentage of the plan that represents vacation leave. If the employer’s PTO has a cash option, the employer must report to PERS the amount of any lump sum pay-off for the percentage that represents vacation leave.

(34) “Variable account” and “member variable account” mean the account in the Variable Annuity Account established under ORS 238.260(2) for each active and inactive member who has elected to have amounts paid or transferred into the Variable Annuity Account.

(35) “Variable Annuity Account” means the account established in ORS 238.260(2).

(36)(a) “Volunteer” means an individual who performs a service for a public employer, and who receives no compensation for the service performed.

(b) The term “volunteer” does not include an individual whose compensation received from the same public employer for similar service within the same calendar year exceeds the reasonable market value for such service.

(37) “Year” means any period of 12 consecutive calendar months.

Stat. Auth.: ORS 238.650
Stats. Implemented: ORS 238
Hist.: PERS 2-1998, f. & cert. ef. 3-16-98; PERS 3-2003(Temp), f. 6-13-03, cert. ef. 7-1-03 thru 12-26-03; PERS 12-2003, f. & cert. ef. 11-14-03; PERS 14-2003, f. & cert. ef. 11-20-03; PERS 15-2003, f. & cert. ef. 12-15-03; PERS 9-2004(Temp), f. 4-15-04 cert. ef. 5-21-04 thru 7-1-04; PERS 15-2004, f. & cert. ef. 6-15-04; PERS 19-2005, f. 11-1-05, cert. ef. 1-1-06; PERS 4-2006, f. & cert. ef. 4-5-06; PERS 1-2009, f. & cert. ef. 2-12-09; PERS 3-2010, f. & cert. ef. 5-28-10; PERS 1-2012, f. & cert. ef. 2-1-12

459-005-0005

Amendments to Retirement Law

(1) Any changes in benefit calculation or any benefit enhancement established by legislative amendment that affects the Public Employees Retirement System shall apply to members or their beneficiaries, or alternate payees or their beneficiaries, whose effective date of benefits is on or after the effective date of the amendment, unless otherwise specifically provided by law.

(2) Any increase in service or disability retirement benefits, to or on account of any person who has retired as a member of the system, established by amendment to law affecting the Public Employees Retirement System shall apply to either retired members or their beneficiaries, or alternate payees or their beneficiaries, as of the first of the calendar month following the effective date of such amendment, unless otherwise specifically provided by law.

Stat. Auth.: ORS 238.650
Stats. Implemented: ORS 238.005 - ORS 238.585
Hist.: PER 8, f. 12-15-55; PERS 1-1996, f. & cert. ef. 3-26-96; Renumbered from 459-010-0085; PERS 11-1998, f. & cert. ef. 12-17-98

459-005-0010

Public Employees Retirement Fund, A Trust

(1) The purpose of ORS 238.660 is to ensure that the Public Employees Retirement Fund (PERF) is for the exclusive benefit of PERS members and the members' beneficiaries. If any other provision of an OAR imposes a requirement upon the PERF contrary to ORS 238.660, 238.660 and this rule shall prevail and be the controlling factor for any Board or staff action.

(2) Pursuant to ORS 238.660, the PERF is a trust fund, separate and distinct, for the sole and exclusive use of the members and their beneficiaries as set forth in ORS 238.005 to 238.750 and 237.950 to 237.980, unless otherwise specifically provided by law. All moneys, regardless of source, paid into the PERF, are to be used exclusively for the purposes set forth in ORS 238.005 to 238.750 and 237.950 to 237.980, unless otherwise specifically provided by law. All moneys and income earned thereon shall remain in the PERF except:

(a) As otherwise provided in ORS 238.005 to 238.750 and 237.950 to 237.980; or

(b) For any laws of the State of Oregon specifically authorizing the investment of moneys from the PERF for the purposes enhancing the value of the PERF.

(3) The State of Oregon, any political subdivision of the State of Oregon, any municipal or public corporation, any instrumentality thereof, and any agency created by two or more political subdivisions shall have no proprietary interest in PERF or any contributions made to PERF and may not claim or reclaim any contributions other than provided for in ORS 238.660.

Stat. Auth.: ORS 238.650
Stats. Implemented: ORS 238.660
Hist.: PERS 11-1998, f. & cert.ef. 12-17-98; PERS 21-2005, f. & cert. ef. 11-1-05

459-005-0030

Payments of Sums to Persons Entitled Thereto

Retirement allowances, contribution refunds, or any other sums shall be paid directly to any one thereto entitled under the provisions of the Retirement Law, regardless of any claim maintainable against such sum thereafter in the hands of the recipient.

Stat. Auth.: ORS 238.650
Stats. Implemented: ORS 238
Hist.: PER 8, f. 12-15-55; PERS 1-1996, f. & cert. ef. 3-26-96; Renumbered from 459-010-0140

459-005-0040

Verification of Retirement Data

(1) For purposes of this rule:

(a) “Eligible member” means an active or inactive member of the system who is within two years of attaining earliest service retirement age or has attained earliest service retirement age. “Eligible member” does not include a retired member of the system, an alternate payee, or a beneficiary.

(b) “Verification” means a document provided to an eligible member by PERS pursuant to ORS 238.285.

(2)(a) PERS will determine an eligible member’s creditable service, retirement credit, final average salary, member account balance, and accumulated unused sick leave for a verification based on employment data reported to PERS by the member’s employers, as reflected in PERS’ records. Except as provided in this section, an employer may not modify an eligible member’s records after the earlier of the 30th day after PERS notifies the eligible member’s employer that a request for a verification has been submitted or the date the employer confirms the records in a manner determined by PERS.

(b) PERS may direct an employer to modify records if PERS determines modification is necessary, such as:

(A) To reconcile the member’s records before the verification is issued;

(B) To implement the resolution of a dispute under ORS 238.285(2); or

(C) To reissue a verification under subsection (4)(e) of this rule.

(c) An employer may petition PERS for an extension of the 30-day period described in subsection (a) of this section.

(A) The petition must:

(i) Be specific to an eligible member;

(ii) Specify the duration and end date of the extension requested;

(iii) Be received by PERS no later than the 21st day after notice is issued; and

(iv) Establish good cause why the extension should be granted.

(B) The PERS Executive Director or a person designated by the Director may grant or deny the request.

(C) An employer may not request more than one extension for an eligible member.

(3) For any verification provided by PERS:

(a) All data in a verification will be as of December 31 of the last calendar year before the date the verification is produced for which the Board has adopted annual earnings crediting.

(b) If an eligible member requests an additional verification, an employer may not confirm or modify, nor may a member dispute, by reason of the additional verification, data for periods before the date specified in the most recent verification.

(4) When a member who has received a verification retires for service, PERS may not use amounts less than the amounts verified to calculate the member’s retirement allowance or pension, except as permitted in ORS 238.285(3) and this section.

(a) Amounts in a verification may be adjusted if a Tier Two member restores forfeited creditable service and establishes Tier One membership in the manner described in ORS 238.430(2)(b).

(b) Amounts in a verification may be adjusted to comply with USERRA.

(c) Amounts in a verification may be adjusted to implement a judgment, administrative order, arbitration award, conciliation agreement, or settlement agreement.

(d) If, subsequent to the date specified in a verification, a member’s account is divided pursuant to ORS 238.465, the member and alternate payee accounts will be used to determine compliance with 238.285(3) and this section.

(e) If the amounts in a verification are adjusted under ORS 238.285(3) or this section, the verification will be reissued by PERS as of the date specified in the original verification.

(5) Erroneous payments or overpayments not recoverable under ORS 238.285(6) will be allocated annually by the Board.

Stat. Auth.: ORS 238.650 & 238A.450
Stats. Implemented: ORS 238.285
Hist.: PERS 11-2010, f. & cert. ef. 11-24-10; PERS 1-2013, f. & cert. ef. 1-25-13

459-005-0055

Actuarial Equivalency Factors

(1) Experience Study. The Director shall take steps to assure that the Board’s consulting actuary shall present the Experience Study required by ORS 238.605 to the Board by September 1 of each odd numbered year.

(2) Actuarial Equivalency Study. The Director shall take steps to assure, pursuant to ORS 238.630(3)(g), that the Board’s consulting actuary shall present an Actuarial Equivalency Study to the Board as soon as practicable, but no later than the December 15 next following the presentation of the Experience Study described in section (1) of this rule. Such Actuarial Equivalency Study shall review the assumptions and the actuarial factors used to:

(a) Convert account balances to monthly allowances;

(b) Convert the standard form of benefit (ORS 238.300) to elective options with various survivorship features (ORS 238.305); and

(c) Reduce service retirement allowances for early retirement (ORS 238.280).

(3) Adoption of actuarial equivalency factors.

(a) The Board shall adopt actuarial equivalency factor tables to be effective January 1 of each even numbered year.

(b) Actuarial equivalency factor tables adopted under this section shall comply with the standards set forth in OAR 459-005-0060.

(4) Calculation of retirement allowance under the Chapter 238 Program.

(a) The provisions of this section apply to any member or alternate payee with an effective date of retirement on or after July 1, 2003, except for a person who is a judge member on June 30, 2003, and who makes an election under ORS 238.565(4).

(b) PERS shall establish years of service, an account balance and final average salary as of June 30, 2003, for each person described in subsection (a) of this section. The years of service, account balance and final average salary shall be determined as provided in section 40 of chapter 67, Oregon Laws 2003 (Enrolled HB 2003).

(c) For each person described in subsection (a) of this section, the Board shall perform the following two calculations:

(A) “Regular” calculation. The Board shall calculate the retirement allowance using:

(i) The years of service, account balance and final average salary as of the effective date of retirement;

(ii) All calculations applicable to the member under ORS 238.300(2);

(iii) The optional form of retirement allowance selected by the member at retirement under ORS 238.300, 238.305, 238.320 or 238.325; and

(iv) The actuarial equivalency factor tables in effect on the effective date of retirement.

(B) “Look-back” calculation. The Board shall calculate the retirement allowance using:

(i) The years of service, account balance and final average salary described in subsection (b) of this section;

(ii) All calculations applicable to the member under ORS 238.300(2);

(iii) The optional form of retirement allowance selected by the member under ORS 238.300, 238.305, 238.320 or 238.325; and

(iv) The actuarial equivalency factor tables in effect on June 30, 2003.

(d) The retirement allowance shall be the higher of the amounts described in paragraphs (c)(A) and (c)(B) of this section, payable as of the effective date of retirement.

(5) Death benefit payments. Any monthly payments to be made to a beneficiary under ORS 238.390, 238.395 or 238.405 for a member who dies on or after May 9, 2003, shall be calculated using the actuarial equivalency factor tables that are in effect on the date that the first payment is due the beneficiary.

(6) Judge members. The actuarial equivalency factor tables in effect on June 30, 2003, shall be used to calculate the retirement allowance and surviving spouse pension of a person who is a judge member on June 30, 2003, and who makes an election under ORS 238.565(4), whether that election is made before, on or after June 30, 2003.

Stat. Auth: ORS 238.630 & 238.650
Stats. Implemented: ORS 238.605, 238.607, 238.630)
Hist.: PERS 1-1993, f. 4-14-93, cert. ef. 5-1-93; PERS 6-1996, f. 8-13-96, cert. ef. 1-1-99; PERS 5-2004, f. & cert. ef. 2-18-04; PERS 7-2009, f. & cert ef. 7-21-09

459-005-0060

Standards for the Adoption of New Actuarial Equivalency Factors

(1) When the Board adopts actuarial equivalency factors pursuant to OAR 459-005-0055(3), the Board must consider:

(a) Changes in mortality to reflect the best actuarial information on mortality available at the time that new actuarial tables are adopted; and

(b) Changes in the assumed rate adopted by the Board for the latest actuarial valuation if they are determined by the Board, in consultation with the PERS actuary, to be statistically significant.

(2) The mortality tables must be combined with respect to gender and membership classification to derive unisex actuarial equivalency factors. The blending of the mortality assumptions shall be performed by the Board's consulting actuary in accordance with generally recognized and accepted actuarial principles and practices.

Stat. Auth: ORS 238.630 & 238.650
Stats. Implemented: ORS 238.607 & 238.630
Hist.: PERS 2-2003, f. & cert. ef. 6-13-03; PERS 7-2009, f. & cert ef. 7-21-09

459-005-0100

Definitions — Member's Fiduciary

(1) "Fiduciary Document" means the court order appointing a person as the member's fiduciary or the signed power of attorney by the member appointing the member's fiduciary as their attorney-in-fact.

(2) For the purposes of OAR 459-005-0100 to 459-005-0160, the term "member" means a PERS member as defined in ORS 238.005, the beneficiary of a PERS member, an alternate payee as defined in 238.465, or the beneficiary of an alternate payee.

(3) "Member's Fiduciary" means a guardian or conservator appointed under Oregon law, any person acting as an attorney-in-fact for a member under a power of attorney, or any other person appointed by a court to assume financial responsibility with respect to a member.

Stat. Auth.: ORS 238.650
Stats. Implemented: ORS 238.005 - 238.715
Hist.: PERS 7-1996, f. & cert. ef. 11-12-96; PERS 4-1999, f.& cert. ef. 10-11-99; PERS 6-2007, f. & cert. ef. 2-21-07

459-005-0110

Fiduciary Document Requirements

(1) No person may act as a member's fiduciary with respect to PERS matters unless the Fiduciary Document naming or appointing such person(s) meets the requirements set forth in this rule.

(2) The Fiduciary Document shall be in written form and may be either on forms furnished by PERS or in a format approved by PERS. The Fiduciary Document shall contain express language appointing the member's fiduciary as guardian or conservator or otherwise to act on behalf of the member either with respect to the member's financial matters generally or with respect to the member's PERS benefits specifically.

(3) At a minimum, the Fiduciary Document must contain:

(a) The signature of the member or other authority appointing or designating the member's fiduciary.

(b) The signature and address of the member's fiduciary. This requirement can also be satisfied if the Fiduciary Document is accompanied by another document containing the signature and address of the member's fiduciary.

(4) A Fiduciary Document must be received by PERS before the member's fiduciary will be allowed to conduct any transactions on behalf of the member and must otherwise meet the requirements set forth in OAR 459-005-0110 or 459-005-0130, as applicable.

(5) If a Fiduciary Document was executed by the member over ten years prior to the date such document is filed with PERS, and there is a request to take any action by the member's fiduciary, the document will be effective with respect to PERS only if the member's fiduciary certifies to PERS, in a form which PERS in its sole discretion deems satisfactory, the continued validity of the fiduciary document.

(6) If more than one individual is named or appointed in a Fiduciary Document as the member's fiduciary, the document must stipulate whether the individuals must act together or may act separately.

Stat. Auth.: ORS 238.650
Stats. Implemented: ORS 238.005 - 238.715
Hist.: PERS 7-1996, f. & cert. ef. 11-12-96; PERS 4-1999, f. & cert. ef. 10-11-99; PERS 6-2007, f. & cert. ef. 2-21-07

459-005-0130

Termination of Member's Fiduciary

The authority granted a member's fiduciary will terminate upon the occurrence of the earliest of the following events:

(1) A written revocation is filed with PERS containing the member's signature, if the member appointed the member's fiduciary.

(2) A Fiduciary Document is filed with PERS which:

(a) Bears a date that is later than the Fiduciary Document previously filed with PERS;

(b) Complies with the requirements set forth in OAR 459-005-0110; and

(c) Names a different person as the member's fiduciary.

(3) PERS receives notification of the death of the member.

(4) PERS receives notification that the member's fiduciary has been removed or their authority terminated by the court which originally named or granted authority to the member's fiduciary, or that action has been taken by a different court.

Stat. Auth.: ORS 238.650
Stats. Implemented: ORS 238.005 - 238.715
Hist.: PERS 7-1996, f. & cert. ef. 11-12-96; PERS 6-2007, f. & cert. ef. 2-21-07

459-005-0140

Permissible Actions Under A Fiduciary Document

(1) After receipt by PERS of a Fiduciary Document meeting the requirements set forth in OAR 459-005-0110, the member's fiduciary and the member (unless the member's fiduciary is a guardian or conservator) may execute any document required by PERS or perform any PERS related business that falls within the scope of the powers granted by the Fiduciary Document.

(2) If the power to appoint a substitute member's fiduciary is provided in the Fiduciary Document and is subsequently exercised by the member's fiduciary, such appointment must be evidenced by a written document submitted to PERS containing:

(a) The member's fiduciary's signature;

(b) An express granting of all, or whatever portion of, the powers held by the member's fiduciary that is being granted to the substitute member's fiduciary; and

(c) The signature and address of the substitute member's fiduciary.

Stat. Auth.: ORS 238.650
Stats. Implemented: ORS 238.005 - 238.715
Hist.: PERS 7-1996, f. & cert. ef. 11-12-96; PERS 6-2007, f. & cert. ef. 2-21-07

459-005-0150

Effective Date of Fiduciary Document Rules

OAR 459-005-0100 to 459-005-0140 shall be effective on the date they are adopted by the Public Employees Retirement Board (Board), and shall govern any documents submitted to PERS on or after the date these rules are adopted by the Board for the purpose of effecting the appointment of a member's fiduciary or revoking a Fiduciary Document after such date, or until amended or repealed by the Board.

Stat. Auth.: ORS 238.650
Stats. Implemented: ORS 238.005 - 238.715
Hist.: PERS 7-1996, f. & cert. ef. 11-12-96; PERS 21-2005, f. & cert. ef. 11-1-05; PERS 6-2007, f. & cert. ef. 2-21-07

459-005-0180

Incapacity of Members, Beneficiaries, and Alternate Payees

(1) Definitions. For purposes of this rule, "incapacitated" and "financially incapable" have the meanings given those terms in ORS 125.005.

(2) Presumption of capacity. Unless demonstrated otherwise in accordance with the requirements of section (3) of this rule, PERS staff shall base its determinations on the presumption that all members, beneficiaries, and alternate payees are not incapacitated or financially incapable of making benefit decisions and executing any documents related to those decisions.

(3) Process for overcoming presumption. If any party in interest challenges a staff determination in accordance with OAR 459-001-0030 through 459-001-0040 based on a claim of incapacity of a member, beneficiary, or alternate payee, PERS will reverse its previous determination only if the party presents an order or determination by a court with appropriate jurisdiction specifically directing PERS to do so, or such other relief as that court may direct.

Stat. Auth: ORS 238.650
Stats. Implemented: ORS 238.005 - ORS 238.715
Hist.: PERS 8-2003, f. & cert. ef. 7-2-03

459-005-0210

Transmittal of Reports and Documents

Except for the transmission of a remittance, a payment, a remittance advice or a payment advice as provided in OAR 459-005-0215, reports and documents sent to PERS shall be transmitted as follows:

(1) Unless otherwise provided for in this rule, reports or documents may be transmitted to PERS or the Deferred Compensation Program in person or by use of:

(a) The United States Postal Service (USPS);

(b) A private express carrier as defined in ORS 293.660(2);

(c) Telephonic facsimile communication (fax);

(d) Electronic mail through the Internet (e-mail); or

(e) By use of the PERS web site on the Internet;

(f) Other sources approved by the Director for the transmission of reports or documents.

(2) The following original documents shall be accepted by PERS or the Deferred Compensation Program only if transmitted in person, by use of USPS or by private express carrier:

(a) Contracts and Agreements pertaining to the merger or integration of other retirement systems into PERS.

(b) Any request by a member for confidential information under provisions of ORS 192.502(12).

(c) Subpoenas, garnishments, summons, and other legal documents that require service on PERS. These documents will not be accepted unless they are served in accordance with applicable law.

(3) The following standards shall be observed when transmitting any report or document to PERS or the Deferred Compensation Program by fax or e-mail. Failure to comply with these standards shall result in the PERS or the Deferred Compensation Program not accepting the report or document:

(a) The quality of the original hard copy shall be clear and dark enough to transmit legibly.

(b) Any report or document requiring signature shall be signed prior to being transmitted.

(c) Any report or document transmitted shall be on forms furnished by PERS or the Deferred Compensation Program or substitute forms previously approved by PERS or the Deferred Compensation Program, respectively.

(d) Any PERS or Deferred Compensation Program report or form shall be completed as required in PERS instructions.

(e) The entire text of the report or document must be transmitted. Both sides of any two-sided PERS or Deferred Compensation Program form are to be transmitted.

(f) For a report or document that requires accompanying documentation, all components shall be transmitted together as one transmission.

(g) The first sheet of the transmission shall indicate the number of pages being transmitted, and shall contain a telephone number to call if there are problems with the transmission.

(h) Neither the original nor any additional copies of the facsimile filings should be filed with PERS.

(i) The sender shall maintain the original of the document with the original notarization or signature affixed, as well as proof of fax transmission.

(4) PERS or the Deferred Compensation Program may require the original, or a certified copy of the original, where a question of authenticity arises.

(5) Only requests for information regarding PERS or the Deferred Compensation Program, not otherwise protected under provision of 192.502, may be transmitted by e-mail through the Internet.

Stat. Auth.: ORS 238.650
Stats. Implemented: ORS 238.005 - 238.750
Hist.: PERS 6-1999, f. & cert. ef. 11-22-99; PERS 20-2004, f. 9-22-04 cert. ef. 10-14-04; PERS 21-2005, f. & cert. ef. 11-1-05

459-005-0215

Transmittal of Remittances or Payments

(1) For the purpose of this rule:

(a) A "remittance" means the transfer of funds from a participating employer to the Public Employees Retirement Fund (PERF) which includes:

(A) The contributions of both employer and employee members required in ORS 238.200 to 238.230 used to fund PERS benefits;

(B) A PERS invoice for employee and/or employer contributions and associated late penalties;

(C) Any lump sum transfer of funds in satisfaction of an employer liability; and

(D) Other contributions to the PERF.

(b) An "employer payment" means the transfer of funds from an employer to PERS for other than the PERF which includes, but is not limited to:

(A) Contributions to the Deferred Compensation Program;

(B) Administrative fees; or

(C) Other employer liabilities.

(c) A "member payment" means the transfer of funds from a member to the PERF for the purchase of service credit in PERS, restoration of a member's account or the satisfaction of an invoice for over payment of PERS benefits, other than administrative fees associated with a purchase or invoice.

(d) A "remittance advice" means an itemized statement on PERS-approved form(s) that describes a remittance.

(e) An "employer payment advice" means an itemized statement approved by PERS that describes an employer payment.

(f) A "member-payment advice" means the copy of a PERS-prepared itemized statement of the member cost(s) for a purchase of service credit, the restoration of a member's account or an invoice for over payment of PERS benefits.

(g) An "advice document" means the document referred to in subsections (d), (e) or (f) of this section.

(2) The transmission of a remittance, an employer payment or a member payment shall be accompanied by a remittance advice or a payment advice, respectively.

(3) The transmission of a remittance, an employer payment or a member payment to PERS shall be as follows:

(a) The United State Postal Service (USPS);

(b) A private express carrier as defined in ORS 293.660(2);

(c) Other electronic funds transfer methods approved in advance by PERS.

(4) A remittance or an employer payment shall be returned to the employer and shall be subject to late penalties, when applicable, if transmitted, without the corresponding advice document.

(5) A remittance or an employer payment shall be returned to the employer and shall be subject to late penalties, when applicable, if transmitted, with or without the corresponding advice document, to any PERS office or other address not currently designated by PERS.

(6) An advice document that is not accompanied by the transfer of funds, such as a corrected or supplemental remittance advice, may be transmitted as provided in section (3) of this rule or by use of:

(a) Telephone facsimile communication (fax);

(b) Electronic mail (e-mail) through the Internet; or

(c) By use of the PERS web site on the Internet.

Stat. Auth.: ORS 238.650
Stats. Implemented: ORS 238.005 - 238.750
Hist.: PERS 6-1999, f. & cert. ef. 11-22-99; PERS 21-2005, f. & cert. ef. 11-1-05

459-005-0220

Receipt Date for Reports, Documents, Remittances, and Payments

(1) As used in this rule:

(a) "Imaged date" means the date on which a report, document, remittance, or payment is imaged and stored electronically to a dedicated network server.

(b) "Private express carrier" has the same meaning as in ORS 293.660(2).

(c) "Settlement date" means the date on which the participating Depository Financial Institution (DFI) or its correspondent is scheduled to be debited or credited by the Federal Reserve.

(2) If the due date of a report, document, remittance, or payment falls on a weekend or legal holiday, the due date is deemed to be the next business day.

(3) Any report, document, remittance, or payment required by PERS shall be deemed filed and received based on the receipt stamp affixed to the report, document, remittance, or payment when received by PERS.

(4) Any report, document, remittance, or payment that does not display a PERS receipt stamp shall be deemed filed and received on the imaged date. If the imaged date is later than the due date, the report, document, remittance, or payment shall be deemed filed and received five business days before the imaged date.

(5) Any report, document, remittance, or payment required by PERS which is lost or delayed in transmission through USPS or by a private express carrier, shall be deemed filed and received on the date it was mailed or deposited for transmittal if the sender:

(a) Can establish by evidence satisfactory to PERS, which includes but is not limited to documentation provided by USPS or the private express carrier, that the report, document, remittance, or payment was deposited in the USPS or with a private express carrier before the date due for filing, and was correctly addressed to PERS;

(b) Files with PERS a duplicate of the lost report, document, remittance, or payment, in accordance with the transmittal requirements of OAR 459-005-0210 or 459-005-0215; and

(c) Satisfies the requirements of subsections (a) and (b) of this section within 30 days after PERS notifies the sender in writing of failure to receive the report, document, remittance, or payment.

(6) An electronic funds transfer (EFT) shall be deemed received on the settlement date of the transfer. A settlement date specified by an employer for an EFT shall be no later than the due date specified by PERS for a remittance or a payment.

(7) Any report or document that PERS accepts by fax as provided in OAR 459-005-0210 or 459-005-0215 which is:

(a) Transmitted by a fax device to any office of PERS shall be deemed filed or received on the date of transmission as inscribed by the PERS fax device.

(b) Lost in transmission through a fax communication shall be deemed filed and received when originally transmitted if the sender can establish by affidavit the proof of sending and correct addressing, together with a copy of any activity report from the sender's fax device, and a duplicate of the original report or document.

(8) A fax shall be accepted on weekends and holidays as long as the fax is otherwise in compliance with due dates specified in administrative rule.

(9) Any report or document that PERS accepts by e-mail transmission as specified in OAR 459-005-0210(5) which is:

(a) Transmitted by e-mail to any office of PERS shall be deemed received as of the date PERS receives the transmission.

(b) Lost in transmission by e-mail shall be deemed filed and received when originally transmitted if the sender can establish by affidavit the proof of sending and correct addressing, together with a copy of any activity report from the sender's electronic device, and a duplicate of the original report or document.

(10) A report or document transmitted by fax or e-mail must be transmitted in accordance with the provisions of this rule and OAR 459-005-0215 and must be received by PERS before midnight on the due date.

(11) When transmitting a document or report by use of fax or e-mail, the sender bears the risk of failure of the transmission.

Stat. Auth.: ORS 238.650
Stats. Implemented: ORS 238, 238A Hist.: PERS 6-1999, f. & cert. ef. 11-22-99; PERS 21-2005, f. & cert. ef. 11-1-05; PERS 10-2007, f. & cert. ef. 7-26-07

459-005-0225

Requirement to Make Payments by Electronic Funds Transfer

(1) As used in this rule, the following words and phrases have the following meanings:

(a) "Public employer" has the same meaning given the term in ORS 238.005 and includes all public school districts and educational service districts.

(b) "Electronic funds transfer" has the same meaning given the term in ORS 293.525.

(c) "ACH credit" means the electronic funds transfer from the public employer's account, initiated by the public employer and cleared through the Automated Clearing House (ACH) network for deposit to PERS.

(d) "ACH debit" means the electronic funds transfer from the public employer's account, initiated by PERS and cleared through the ACH network to debit the public employer's account and credit the PERS account.

(2) Public employers are required to make all payments to PERS by means of electronic funds transfer (EFT).

(3) On a form provided by PERS, public employers shall authorize EFT payments to PERS, and submit the form to PERS by December 1, 2005.

(a) The public employer shall provide PERS with all information necessary to allow for EFT payments, including the method of EFT payment (ACH debit or ACH credit).

(b) A public employer must complete a new EFT authorization form to change the method of transfer or to update the employer's account information.

(4) ACH Debits from a public employer's account will be processed on the third business day after the statement date and be effective on the fifth business day after the statement date.

(5) Effective January 1, 2006, a penalty shall be assessed equal to one percent of payments made by means other than EFT. This penalty is in addition to any penalties incurred under ORS 238.710 and OAR 459-020-0025.

(6) The PERS Executive Director will have the discretion to waive the penalty described in section (5) of this rule. The employer must submit any such requests in writing.

Stat. Auth.: ORS 238.650
Stats. Implemented: ORS 293.525
Hist.: PERS 12-2005, f. & cert. ef. 7-5-05

459-005-0250

Recovery of Administrative Costs

(1) Estimates.

(a) Any active or inactive member within two years of eligibility for service retirement may request from PERS an estimate of service retirement benefits (estimate).

(b) PERS shall provide a member with a maximum of two estimates in a calendar year at no cost.

(c) PERS shall charge a fee of $60 for each estimate that exceeds the limit specified in subsection (b) of this section.

(d) A fee charged under subsection (c) of this section must be paid in full before receipt of the requested estimate(s). Payment must be made by check or money order payable to the Public Employees Retirement System.

(e) The provisions of subsections (a) to (d) of this section do not apply to current judge members during their term of office.

(f) A disability estimate shall be provided to a member if a completed disability application is on file with PERS. A disability estimate is provided at no charge.

(2) Verification of Retirement Data.

(a) Pursuant to section 3, chapter 1, Oregon Laws 2010 and OAR 459-005-0040, PERS shall provide one verification of retirement data at no cost.

(b) PERS shall charge a fee of $100 for each verification of retirement data provided to a member who has already received at least one verification.

(c) A verification of retirement data that is reissued pursuant to OAR 459-005-0040(4)(e) is not subject to the fee established by this section.

(d) A fee charged under subsection (b) of this section must be paid in full at the time the member submits a request for a verification of retirement data. Payment must be made by check or money order payable to the Public Employees Retirement System.

(e) This section is effective on July 1, 2011.

(3) Full cost purchases. If a member purchases retirement credit under section 2, chapter 971, Oregon Laws 1999, ORS 238.148, 238.157, 238.162, or 238.175, a fee of $145 shall be added to the cost of the purchase to cover the administrative costs incurred by PERS in processing the request.

Stat. Auth: ORS 238.650 & 238.610
Stat. Implemented: ORS 238.610, OL 2010, Ch. 1
Hist.: PERS 22-2003, f. 12-15-03 cert. ef. 1-1-04; PERS 22-2004, f. & cert. ef. 9-22-04; PERS 8-2009, f. & cert ef. 7-21-09; PERS 3-2011, f. 7 cert. ef. 6-1-11

459-005-0310

Date of Participation and Transfer of Employee Funds to the Oregon University System Optional Retirement Plan

(1) Definitions. For the purposes of this rule:

(a) “IAP account” means the member’s employee, rollover, and employer accounts in the Individual Account Program, to the extent the member is vested in those accounts under ORS 238A.320.

(b) “OPSRP Pension account” means the member’s transferable interest in the pension program under ORS 243.800(6)(d).

(c) “PERS member account” includes a “member account” as defined in ORS 238.005, an account established under ORS 238.440, and an account subject to ORS 238.095(4).

(2) The effective date of an election by an administrative or academic employee of the Oregon University System (OUS) to participate in the Optional Retirement Plan (ORP) authorized under ORS 243.800 is the first day of the month following a period of six full calendar months of employment in an administrative or academic position.

(a) Unless otherwise agreed upon, notice of the effective date of the election will be provided to PERS by OUS within 30 days of the date of the election.

(b) If the employee is a member of PERS and elects to transfer funds from PERS to the Optional Retirement Plan pursuant to ORS 243.800(6), OUS will forward to PERS a copy of the ORP election form and a written transfer request from the employee at the time of the notification required in subsection (a) of this section.

(3) If an employee who is a member of PERS requests a transfer of funds pursuant to ORS 243.800(6):

(a) PERS must transfer the funds to the ORP within the 60-day period following the later of:

(A) The effective date of the employee’s election to participate in the ORP; or

(B) The effective date of the transfer.

(b) The effective date of a transfer is the first of the month in which PERS completes reconciliation of the account to be transferred.

(c) PERS may not transfer funds to the ORP if the member is concurrently employed by a participating employer other than an institution of the Oregon University System.

Stat. Auth: ORS 238A.450, 238.650
Stats. Implemented: ORS 243.800
Hist.: PERS 3-1996, f. & cert. ef. 6-11-96; PERS 4-2005. f. & cert. ef. 1-31-05; PERS 10-2008, f. & cert. ef. 7-31-08

459-005-0350

Membership Status of Persons in Concurrent Employment Eligible to Participate in an Optional or Alternative Retirement Plan

(1) For the purpose of this rule, concurrent employment means employment with two or more different employers participating in the Public Employees Retirement System (PERS) at the same time.

(2) If a person employed by the Oregon University System or by the Oregon Health and Science University is concurrently employed by another PERS or Oregon Public Service Retirement Plan (OPSRP) participating employer, eligibility for PERS or OPSRP membership shall be based on the following:

(a) If the person elects to participate in an Optional Retirement Plan offered by the Oregon University System under ORS 243.800, or an alternative retirement plan offered by the Oregon Health and Science University under ORS 353.250, and concurrently employed with other PERS or OPSRP participating employers in a non-qualifying position(s) as defined in OAR chapter 459, the person:

(A) Shall not be eligible to establish membership in PERS or OPSRP as an employee of the Oregon University System or the Oregon Health and Science University, and

(B) Shall not be eligible to establish membership in PERS or OPSRP as an employee of the other concurrent PERS employer or employers.

(b) If the person elects to participate in an Optional Retirement Plan offered by the Oregon University System under ORS 243.800, or an alternative retirement plan offered by the Oregon Health and Science University under ORS 353.250, and concurrently employed with other PERS or OPSRP participating employers is in a qualifying position(s) as defined in OAR chapter 459, the person:

(A) Shall not be eligible to establish membership in PERS or OPSRP as an employee of the Oregon University System or the Oregon Health and Science University; and

(B) Shall establish membership in OPSRP as an employee of the other concurrent PERS or OPSRP employer or employers.

(3) A member of PERS or OPSRP who is concurrently employed and establishes PERS or OPSRP membership under the provisions of paragraph (2)(b)(B) of this rule shall not be eligible to have the member's account transferred to an Optional or an alternative Retirement Plan as described in ORS 243.800(6) and (7).

Stat. Auth: ORS 238.650
Stats. Implemented: ORS 238.015, 243.775 & 353.250(3)
Hist.: PERS 3-1996, f. & cert. ef. 6-11-96; PERS 4-2005. f. & cert. ef. 1-31-05

459-005-0370

Date of Participation and Transfer of Employee Funds to an Alternative Retirement Plan -- OHSU

(1) For the purposes of this rule:

(a) "PERS account" means the member's regular account in the Fund as defined in ORS 238.250, and the member's account in the Variable Annuity Account in the Fund as defined in ORS 238.260;

(b) "OPSRP pension account" means the member's benefit eligible for withdrawal under the provisions of ORS 238A.120; and

(c) "IAP account" means the member's accounts, to the extent the member is vested, as set forth under ORS 238A.350.

(2) If an employee elects to participate in an alternative retirement plan authorized under ORS 353.250:

a) Unless otherwise agreed upon, the effective date of an election to participate in an alternative retirement plan shall be certified by Oregon Health and Science University (OHSU) to PERS within 30 days of that effective date.

(b) If the employee is a member of PERS, and is eligible for and elects to transfer the balance of the member's PERS, OPSRP Pension, or IAP accounts to the alternative retirement plan, OHSU shall forward a copy of that election together with the certification required in subsection (a) of this section.

(c) In the event an eligible employee is disabled or deceased and an election to participate in an alternative retirement plan has not been signed by the employee, the employee shall be deemed to be an active member of PERS, if all other conditions of ORS 238.015 are met.

(3) In accordance with ORS 238A.100 and 238A.300:

(a) An employee who is serving a six-month waiting period shall establish active membership in accordance with ORS 238A.100 and 238A.300 unless PERS receives notification of an election to participate in an alternative retirement plan prior to the completion of that six-month waiting period.

(b) Notwithstanding subsection (a) of this section, if PERS receives a notification of an election to participate in an alternative retirement plan, active membership in PERS or OPSRP shall cease as of the effective date of the election.

(4) A PERS or OPSRP member electing to participate in an alternative retirement plan, authorized under ORS 353.250, and who is not concurrently an active member of PERS or OPSRP with another PERS or OPSRP participating employer, may petition PERS to have the member's PERS, OPSRP Pension, or IAP accounts transferred directly to an alternative retirement plan.

(a) A transfer of a member's account as provided in this section shall be transferred directly to the alternative retirement plan by PERS and shall not be made available to the employee while remaining in the employ of OHSU.

(b) A transfer of a member's PERS OPSRP Pension, or IAP accounts as provided in subsection (a) of this section shall not include any reserves of any PERS-participating employer.

(5) A PERS or OPSRP member electing to participate in an alternative retirement plan who has not separated from service in any position at OHSU shall be not be eligible to withdraw the member's accounts, except as provided in section (4) of this rule.

(6) A transfer of a member's PERS, OPSRP Pension, or IAP accounts to an alternative retirement plan established under provisions of ORS 353.250 shall be in compliance with all applicable Internal Revenue Code provisions and related Treasury regulation governing qualified pension plans. The transfer may occur only if the alternative retirement plan:

(a) Is a qualified plan under the Internal Revenue Code;

(b) Is capable of accepting funds transferred under provisions of section (4) of this rule without the transfer being treated as a taxable event under the Internal Revenue Code; and

(c) Is willing to accept those transfers.

(7) The date of distribution of a member's PERS or OPSRP Pension accounts to an alternative retirement plan, authorized under ORS 353.250, as provided for in section (4) of this rule shall be the later of:

(a) The first of the calendar month following the date of receipt by PERS of a copy of the election if such copy is received by PERS on or before the fifteenth of a calendar month; or

(b) The first of the second calendar month following the date of receipt by PERS of a copy of the election if such copy is received on or after the 16th of a calendar month.

(8) The date of distribution of a member's OPSRP IAP account(s) to an alternative retirement plan, authorized under ORS 353.250, as provided for in section (4) of this rule will be the date of the actual distribution.

Stat. Auth.: ORS 238.650
Stats. Implemented: ORS 238.015 & 353.250(3)
Hist.: PERS 5-1998, f. & cert. ef. 5-22-98; PERS 2-1999, f. & cert. ef. 5-13-99; PERS 4-2005. f. & cert. ef. 1-31-05

459-005-0400

General Applicability of Attorney General’s Model Public Contract Rules

(1) When PERS has independent statutory authority to contract, and the Public Contracting Code does not apply, PERS adopts the following Attorney General’s Model Public Contract Rules to govern its contracting activity:

(a) OAR chapter 137, division 46 — General Provisions Related to Public Contracting: 137-046-0100, 137-046-0110, 137-046-0200, 137-046-0252, and 137-046-0400 through 137-046-0480; and

(b) OAR chapter 137, division 47 — Public Procurements for Goods or Services: 137-047-0100, 137-047-0260 through 137-047-0670, 137-047-0700 through 137-047-0760 (excluding provisions governing judicial review), and 137-047-0800. Judicial review of decisions relating to any protest is governed by the Oregon Administrative Procedures Act, ORS Chapter 183.

(2) For PERS’ purposes, references in the Model Public Contract Rules to the Director of the Oregon Department of Administrative Services shall be applied as references to the PERS Executive Director.

(3) Model Public Contract rules other than those identified in section (1) of this rule do not apply to PERS.

Stat. Auth.: ORS 238.650, 238A.450 & 279A.065
Stats. Implemented: ORS 279A & 279B
Hist.: PERS 13-2012, f. & cert. ef. 12-5-12

459-005-0506

Plan Compliance with Federal Statutes and Regulations

(1) The purpose of administrative rules OAR 459-005-0500 to 459-005-0799 is to assure compliance with applicable federal statutes and regulations for governmental retirement plans qualified under the Internal Revenue Code (IRC) Section 401(a), and to implement ORS Chapters 238 and 238A by establishing limits on contributions and benefits under the Public Employees Retirement System (PERS).

(2) Definitions in general for OAR 459-005-0500 to 459-005-0799:

(a) "Member" shall have the same meaning as provided in ORS 238.005 with respect to members covered by ORS Chapter 238 and as provided in ORS 238A.005 with respect to members covered by ORS Chapter 238A.

(b) "Employment" means service as an employee as defined in OAR 459-005-0001(12).

(c) "Board" shall have the same meaning as provided in ORS 238.005.

(d) "PERS" shall have the same meaning as provided in OAR 459-005-0001(24).

(e) "Defined contribution plan (DC)" means a plan which provides for an individual account for each participant and for benefits based solely on the amount contributed to the participant's account, and any income, expenses, gains and losses, and any forfeitures of accounts of other participants which may be allocated to such participant's account. For purposes of IRC Section 414(k), the individual account program under ORS Chapter 238A shall be treated as a DC plan for the purposes of IRC Sections 72(d) and 415.

(f) "Defined benefit plan (DB)" means a plan which is not a defined contribution plan. For purposes of IRC Section 414(k), the pension programs under ORS Chapters 238 and 238A shall be treated as part of a defined benefit plan for purposes of IRC Sections 72(d) and 415.

(3) The provisions of this rule are effective on January 1, 2004.

Stat. Auth.: ORS 238.630(3)(h), 238.305 & 238.650
Stats. Implemented: ORS 238
Hist.: PERS 5-1999, f. & cert. ef. 11-15-99; PERS 31-2004(Temp), f. & cert. ef. 12-15-04 thru 6-1-05; PERS 8-2005, f. & cert. ef. 2-22-05

459-005-0525

Ceiling on Compensation for Purposes of Contributions and Benefits

(1) The purpose of this rule is to assure compliance of the Public Employees Retirement System (PERS) with Internal Revenue Code (IRC) Section 401(a)(17) relating to the limitation on annual compensation allowable for determining contribution and benefits under ORS Chapters 238 and 238A.

(2) Definitions:

(a) “Annual compensation” means “salary,” as defined in ORS 238.005 and 238.205 with respect to Chapter 238 and in 238A.005 with respect to Chapter 238A paid to the member during a calendar year or other 12-month period, as specified in this rule.

(b) “Eligible participant” means a person who first becomes a member of PERS before January 1, 1996.

(c) “Employer” means a “public employer” as defined in ORS 238.005, for the purposes of this rule as it applies to Chapter 238. For the purposes of this rule as it applies to Chapter 238A, an “employer” means a “participating public employer” as defined in 238A.005.

(d) “Noneligible participant” means a person who first becomes a member of PERS after December 31, 1995.

(e) “Participant” means an active or inactive member of PERS.

(3) For eligible participants, the limit set forth in IRC Section 401(a)(17) shall not apply for purposes of determining the amount of employee or employer contributions that may be paid into PERS, and for purposes of determining benefits due under ORS Chapters 238 and 238A. The limit on annual compensation for eligible participants shall be no less than the amount which was allowed to be taken into account for purposes of determining contributions or benefits under former ORS 237.001 to 237.315 as in effect on July 1, 1993.

(4) For noneligible participants, the annual compensation taken into account for purposes of determining contributions or benefits under ORS Chapters 238 and 238A shall be measured on a calendar year basis, and shall not exceed $260,000 per calendar year beginning in 2014.

(a) The limitation on annual compensation will be indexed by cost-of-living adjustments in subsequent years as provided in IRC Section 401(a)(17)(B).

(b) A noneligible participant employed by two or more agencies or instrumentalities of a PERS participating employer in a calendar year, whether concurrently or consecutively, shall have all compensation paid by the employer combined for determining the allowable annual compensation under this rule.

(c) PERS participating employers shall monitor annual compensation and contributions to assure that reports and remitting are within the limits established by this rule and IRC Section 401(a)(17).

(5) For a noneligible participant, Final Average Salary under ORS 238.005 with respect to Chapter 238 and under 238A.130 with respect to Chapter 238A shall be calculated based on the amount of compensation that is allowed to be taken into account under this rule.

(6) Notwithstanding sections (4) and (5) of this rule, if the Final Average Salary as defined in ORS 238.005 with respect to Chapter 238 and as defined in 238A.130 with respect to Chapter 238A is used in computing a noneligible participant’s retirement benefits, the annual compensation shall be based on compensation paid in a 12-month period beginning with the earliest calendar month used in determining the 36 months of salary paid. For each 12-month period, annual compensation shall not exceed the amount of compensation that is allowable under this rule for the calendar year in which the 12-month period begins.

(7) With respect to ORS Chapter 238, creditable service, as defined in 238.005, shall be given for each month that an active member is paid salary or wages and allowable contributions have been remitted to PERS, or would be remitted but for the annual compensation limit in IRC Section 401(a)(17). With respect to Chapter 238A, retirement credit as determined in 238A.140, shall be given for each month that an active member is paid salary or wages and allowable contributions have been remitted to PERS, or would be remitted but for the annual compensation limit in IRC Section 401(a)(17).

(8) The provisions of this rule are effective on January 1, 2004.

Stat. Auth.: ORS 238.630, 238.650, 238A.370 & 238A.450
Stats. Implemented: ORS 238 & 238A
Hist.: PERS 4-1995, f. 11-14-95, cert. ef. 12-1-95; PERS 5-1999, f. & cert. ef. 11-15-99; PERS 11-2002, f. & cert. ef. 7-17-02; PERS 31-2004(Temp), f. & cert. ef. 12-15-04 thru 6-1-05; PERS 8-2005, f. & cert. ef. 2-22-05; PERS 19-2005, f. 11-1-05, cert. ef. 1-1-06; PERS 14-2008, f. & cert. ef. 11-26-08; PERS 1-2012, f. & cert. ef. 2-1-12; PERS 3-2013, f. & cert. ef. 3-29-13; PERS 3-2014, f. & cert. ef. 1-31-14

459-005-0530

Limitation for Employers with Multiple Retirement Plans -- for Contributions and Distributions Before January 1, 2000

(1) Defined Benefit Plans. For purposes of OAR 459-005-0535, Annual Benefit Limitation and, before January 1, 2000, for purposes of section (3) of this rule, all defined benefit plans of an employer, including plans that have been terminated, shall be treated as one defined benefit plan.

(2) Defined Contribution Plans. For purposes of OAR 459-005-0545, Annual Addition Limitation and, before January 1, 2000, for purposes of section (3) of this rule, all defined contribution plans of an employer, including plans that have been terminated, shall be treated as one defined contribution plan.

(3) Combined Plan Limitation. If any member also participates in a defined contribution plan maintained by the same employer, the sum of the defined benefit plan fraction and the defined contribution plan fraction for any calendar year before the 2000 calendar year shall not exceed 1.0.

(a) Defined Benefit Plan Fraction. For purpose of this section, the defined benefit fraction is a fraction with the following numerator and denominator:

(A) The numerator is the member's projected annual benefit under the plan, determined as of the close of the year.

(B) The denominator is the lesser of the following amounts:

(i) The product of 1.25, multiplied by the applicable dollar limitation for the calendar year, as defined in OAR 459-005-0535, Annual Benefit Limitation; or

(ii) Before January 1, 1995, the product of 1.4 multiplied by the member's 100 percent (100%) of compensation limitation under IRC Section 415(b)(1)(B) for the calendar year.

(b) The Defined Contribution Plan Fraction. For purposes of this section, the defined contribution plan fraction is a fraction with the following numerator and denominator:

(A) The numerator is the sum of the annual additions to the member's account as of the close of the calendar year; and

(B) The denominator is the sum of the lesser of the following amounts determined for the calendar year and for each prior calendar year of service with the employer:

(i) The product of 1.25, multiplied by the dollar limitation in effect under IRC Section 415(c)(1)(A) for that calendar year; or

(ii) The product of 1.4, multiplied by the member's 25 percent (25%) of compensation limitation under IRC Section 415(c)(1)(B) for the calendar year.

(4) Employer. For purposes of the limitations in this rule, OAR 459-005-0535, Annual Benefit Limitation, and OAR 459-005-0545, Annual Addition Limitation, all employers required to be aggregated under IRC Section 414(b) or (c), as modified by IRC Section 415(h), shall be treated as a single employer.

(5) Reduction in Benefit to Comply With Limitations. If benefits or contributions under another retirement plan, when combined with the benefits under PERS, exceed the limitations in this rule, the benefits under PERS shall be reduced to the extent of the excess and the benefits or contributions under the other plan shall stand.

(6) Retroactive Application. Except as otherwise provide in this rule, this rule shall be applied retroactively to January 1, 1987.

Stat. Auth.: ORS 238.630 & ORS 238.650
Stats. Implemented: ORS 238.005 - ORS 238.715
Hist.: PERS 5-1999, f. & cert. ef. 11-15-99

459-005-0535

Annual Benefit Limitation

(1) Applicable Law. This administrative rule shall be construed consistently with the requirements of the Internal Revenue Code (IRC) Section 415(b) and the Treasury regulations and Internal Revenue Service rulings and other interpretation issued thereunder.

(2) Annual Benefit Limitation. The benefits payable to any member for a calendar year, when expressed as an annual benefit, shall not exceed the applicable dollar limitation for that year.

(3) Applicable Dollar Limitation. For purposes of this rule, the "applicable dollar limitation" for each calendar year is the limitation in effect under IRC Section 415(b)(1)(A), with the adjustment described as follows:

(a) Cost-of-Living Adjustments. The limitation under IRC Section 415(b)(1)(A) shall be adjusted for cost of living in accordance with IRC Section 415(d).

(b) Reduction for Retirement Before Age 62. Except as otherwise provided in the paragraphs (A), (B), and (C) of this subsection, if the member's benefit begins before the member reaches 62 years of age, the applicable dollar limitation shall be adjusted as provided for in IRC Section 415(b)(2)(C).

(A) This reduction shall not apply to any member who has at least 15 years of creditable service as a full-time employee of a police department or fire department which is organized and operated by the state or a political subdivision of the state to provide police protection, firefighting services, or emergency medical services for any area within the jurisdiction of the state or political subdivision.

(B) This reduction shall not apply to disability retirement allowances or death benefits.

(C) This reduction shall not apply to any portion of a member's annual benefit that is derived from contributions to purchase service credit, as defined in OAR 459-005-0540, Permissive Service Credit.

(c) Reduction for Less than 10 Years of Membership. Except as provided in paragraphs (A) and (B) of this subsection, if the member has less than 10 years of active membership in PERS, the applicable dollar limitation shall be reduced as provided for under IRC Section 415(b)(5)(A).

(A) For the purposes of this section, a member with less than one year of active membership shall be treated as having one year of active membership.

(B) The reduction under this section shall not apply to disability retirement allowances or death benefits.

(d) Increase for Retirement After Age 65. If the member's benefit begins after the member reaches 65 years of age, the applicable dollar limitation shall be increased as provided for under IRC Section 415(b)(2)(D).

(4) Annual Benefit. For purposes of this rule, the "annual benefit" is the benefit payable to a member under ORS Chapter 238 and the pension program under Chapter 238A for a calendar year, excluding any benefit payable under 238.485 through 238.492, and adjusted as described in this section.

(a) Excludable Benefits. The annual benefit shall not include the portion of the member's benefit that is attributable to:

(A) After-tax member contributions, other than member payments to purchase permissive service credit as defined in OAR 459-005-0540, Permissive Service Credit;

(B) Rollover contributions, if such contributions are permitted;

(C) A transfer of assets from another qualified retirement plan; and

(D) Purchases of permissive service credit, as defined in OAR 459-005-0540, Permissive Service Credit, if all of the member's payments to purchase permissive service credit are treated as annual additions for purposes of 459-005-0545, Annual Addition Limitation, in the year purchased.

(b) Adjustment to Straight Life Annuity. The member's benefit shall be adjusted to an actuarially equivalent straight life annuity beginning at the same age. For purposes of this adjustment, the following values are not taken into account:

(A) The value of a qualified spouse joint and survivor annuity to the extent that the value exceeds the sum of the value of a straight life annuity beginning on the same day, and the value of any post-retirement death benefits that would be payable even if the annuity was not in the form of a joint survivor annuity.

(B) The value of benefits that are not directly related to retirement benefits, such as pre-retirement disability benefits and post-retirement medical benefits.

(C) The value of post-retirement cost of living increases, to the extent they do not exceed the increase provided under IRC Section 415(d) and Treasury Regulation Section 1.415(d)-1.

(5) Interest Rates. The following interest rates shall apply for purposes of adjusting the applicable dollar limitation under section (3) of this rule and the annual benefit under section (4) of this rule.

(a) For purposes of reducing the applicable dollar limitation for retirement before 62 years of age under subsection (3)(b) of this rule, the interest rate shall be the greater of five percent or PERS' assumed earnings rate.

(b) For purposes of determining the portion of a member's benefits attributable to after-tax member contributions under paragraph (4)(a)(A) of this rule, the interest rate shall be the greater of 5 percent or the PERS' assumed earnings rate.

(c) For purposes of adjusting the member's annual benefits under section (4) of this rule (other than the adjustment for after-tax member contributions), the interest rate shall be the greater of five percent or PERS' assumed earnings rate.

(d) For purposes of increasing the applicable dollar limitation for retirement after 65 years of age under subsection (3)(d) of this rule, the interest rate shall be the lesser of five percent or PERS' assumed earnings rate.

(6) Mortality Table. For purposes of adjusting the applicable dollar limitation and annual benefit under sections (3) and (4) of this rule, the mortality table used shall be the table prescribed pursuant to the Internal Revenue Code.

(7) The provisions of this rule are effective on January 1, 2004.

Stat. Auth.: ORS 238.630, 238.650 & 238A.125
Stats. Implemented: ORS 238.005 - 238.715
Hist.: PERS 5-1999, f. & cert. ef. 11-15-99; PERS 3-2000, f. & cert. ef. 3-10-00; PERS 11-2002, f. & cert. ef. 7-17-02; PERS 31-2004(Temp), f. & cert. ef. 12-15-04 thru 6-1-05; PERS 8-2005, f. & cert. ef. 2-22-05; PERS 14-2008, f. & cert. ef. 11-26-08

459-005-0540

Permissive Service Credit

(1) General Rule. If a member makes one or more after-tax contributions to PERS to purchase permissive service credit, then all such contributions by the member must satisfy one of the following limitations:

(a) The annual benefit limitation under OAR 459-005-0535, Annual Benefit Limitation, determined by treating the accrued benefit derived from all of the member's contributions to purchase permissive service credit as part of the member's annual benefit; or

(b) The annual addition limitation under OAR 459-005-0545, Annual Addition Limitation, determined by treating all of the member's contributions to purchase permissive service credit annual additions.

(2) Definition of Permissive Service Credit. "Permissive service credit" means service credit that satisfies the requirements in subsection (a) of this section and is not excluded under subsection (b) of this section.

(a) Permissive service credit generally means service credit that:

(A) Is recognized by PERS as the retirement credit for purposes of calculating a member's benefits;

(B) Has not previously been credited to the member; and

(C) Is credited to the member only if the member makes a voluntary additional contribution in an amount calculated under the terms of the plan, which does not exceed the amount necessary to fund the benefit attributable to the purchased service credit.

(b) Notwithstanding subsection (a) of this section, "permissive service credit" does not include:

(A) Previously forfeited service that is reinstated under ORS 238.105 or 238.115;

(B) Periods of military service that are purchased under ORS 238.156; or

(C) Periods of nonqualified service that do not satisfy the requirements in section (3) of this rule.

(3) Nonqualified Service. Nonqualified service purchased by a member shall be treated as permissive service credit only if the member purchases no more than five years of nonqualified service, and the member has at least five years of active membership before purchasing the nonqualified service. For this purpose, "nonqualified service" means any service other than the following:

(a) Military service (other than military service purchased under ORS 238.156);

(b) Service as an employee with one of the following employers, provided that the employee does not receive a retirement benefit from the same service under another plan:

(A) A governmental employer;

(B) A public, private, or sectarian school that provides elementary or secondary education; or

(C) An association of governmental employees.

(4) Retroactive Application. The provisions of this rule shall be applied retroactively to January 1, 1998.

Stat. Auth.: ORS 238.630 & ORS 238.650
Stats. Implemented: ORS 238.005 - ORS 238.715
Hist.: PERS 5-1999, f. & cert. ef. 11-15-99

459-005-0545

Annual Addition Limitation

(1) Applicable Law. This administrative rule shall be construed consistently with the requirements of the Internal Revenue Code (IRC) Section 415(c) and the Treasury regulations and Internal Revenue Service rulings and other interpretations issued thereunder.

(2) Annual Addition Limitation. Except as otherwise provided in this rule, a member’s annual additions to PERS for any calendar year after 2013 may not exceed $52,000 (as adjusted under IRC Section 415(d)).

(3) Annual Additions. For purposes of this rule, the term “annual additions” has the same meaning as under IRC Section 415(c)(2).

(4) Permissive Service Credit. The following special rules shall apply with respect to purchases of permissive service credit, as defined in OAR 459-005-0540, Permissive Service Credit:

(a) If a member’s after-tax contributions to purchase permissive service credit are included in the member’s annual additions under section (3) of this rule, the member shall not be treated as exceeding the limitation under section (2) of this rule solely because of the inclusion of such contributions.

(b) With respect to any eligible participant, the annual addition limitation in section (2) of this rule shall not be applied to reduce the amount of permissive service credit to an amount less than the amount that could be purchased under the terms of the plan as in effect on August 5, 1997. As used in this subsection, the term “eligible participant” includes any individual who became an active member before January 1, 2000.

(5) Purchase of Service in the Armed Forces Under ORS 238.156 or 238A.150. If a member makes a payment to PERS to purchase retirement credit for service in the Armed Forces pursuant to 238.156(3)(c) or 238A.150 and the service is covered under Internal Revenue Code Section 414(u), the following special rules shall apply for purposes of applying the annual addition limitation in section (2) of this rule:

(a) The payment shall be treated as an annual addition for the calendar year to which it relates;

(b) The payment shall not be treated as an annual addition for the calendar year in which it is made; and

(c) The member shall be treated as having received the following amount of compensation for the period of service in the Armed Forces to which the payment relates:

(A) The amount of compensation the member would have received from a participating employer had the member not been in the Armed Forces; or

(B) If the amount in paragraph (A) of this subsection is not reasonably certain, the member’s average compensation from the participating employer during the 12-month period immediately preceding the period of service in the Armed Forces (or, if shorter, the period of employment immediately preceding the period of service in the Armed Forces).

(6) The provisions of this rule are effective on January 1, 2004.

Stat. Auth.: ORS 238.630, 238.650, 238A.370 & 238A.450
Stats. Implemented: ORS 238.005 - 238.715, 238A.370
Hist.: PERS 5-1999, f. & cert. ef. 11-15-99; PERS 11-2002, f. & cert. ef. 7-17-02; PERS 31-2004(Temp), f. & cert. ef. 12-15-04 thru 6-1-05; PERS 8-2005, f. & cert. ef. 2-22-05; PERS 14-2008, f. & cert. ef. 11-26-08; PERS 1-2012, f. & cert. ef. 2-1-12; PERS 3-2013, f. & cert. ef. 3-29-13; PERS 3-2014, f. & cert. ef. 1-31-14

459-005-0560

Required Minimum Distributions, Generally

(1) Applicable Law. Distributions under the Public Employees Retirement System (PERS) shall be made in accordance with Internal Revenue Code (IRC) Section 401(a)(9), including IRC Section 401(a)(9)(G), and the Treasury Regulations and Internal Revenue Service rulings and other interpretations issued thereunder, including Treasury Regulation Sections 1.401(a)(9)-1 through 1.401(a)(9)-9. The provisions of this administrative rule and any other statute or administrative rule reflecting the required minimum distribution requirements of IRC Section 401(a)(9) shall override any distribution options that are inconsistent with IRC Section 401(a)(9).

(2) Distributions to Members. Each member's entire benefit under PERS shall be distributed to the member, beginning no later than the required beginning date, over the member's lifetime (or the joint lives of the member and a designated beneficiary), or over a period not extending beyond the member's life expectancy (or the joint life expectancies of the member and a designated beneficiary).

(a) Required Beginning Date. For purposes of this section, the "required beginning date" is April 1 of the calendar year after the later of the following:

(A) The calendar year in which the member reaches age 70 1/2; or

(B) The calendar year in which the member retires.

(b) Designated Beneficiary. For purposes of this section, a "designated beneficiary" means any individual designated as a beneficiary by the member. If the member designates a trust as a beneficiary, the individual beneficiaries of the trust shall be treated as designated beneficiaries if the trust satisfies the requirements set forth in Treasury Regulation Section 1.401(a)(9)-4.

(c) Calculation of Life Expectancies. For purposes of this section and Chapter 238 benefits and the Pension Program, which are part of the DB component of PERS, life expectancies shall not be recalculated after the initial determination, unless otherwise required by Treasury Regulation Section 1.401(a)(9)-5, Q&A-4 and Q&A-5. For purposes of this section and the Individual Account Program, life expectancies shall be recalculated but no more frequently than annually, unless otherwise required by Treasury Regulation Section 1.401(a)(9)-5, Q&A-5.

(d) Limitations on Benefit Changes. A retired member who has had a required beginning date shall not change a beneficiary designation, benefit option election, or any other designation or election except as permitted under Treasury Regulation Sections 1.401(a)(9)-4 and 1.401(a)(9)-6.

(e) Limitations on Conversion of Joint Annuity to Single Life Annuity Following Divorce. A retired member who has had a required beginning date may elect to convert a joint and survivor annuity under Option 2A or 3A under Chapter 238 to a single life annuity by reason of the member's divorce from the joint annuitant, subject to the provisions of Treasury Regulation Section 1.401(a)(9)-6. This section applies to ORS Chapter 238 benefits notwithstanding ORS 238.305(5) and 238.325(3).

(f) Limitations on Survivor Annuity Elections. Except as otherwise required by a domestic relation order under ORS 238.465, if a member elects a 100 percent (100%) joint and survivor annuity (Option 2 or 2A under ORS 238.305(1) and under 238A.190(1)(a)) and designates a nonspouse beneficiary who is more than ten years younger than the member as calculated under Treasury Regulation Section 1.401(a)(9)-6, Q&A-2, the benefit shall be actuarially adjusted to provide for a reduced survivor annuity benefit to the extent necessary to comply with federal requirements for qualified retirement plans.

(g) Limitation on Period-Certain Annuity Election (Chapter 238 only). If a member elects a 15-year certain option (Option 4 under ORS 238.305(1)), and attains age 85 or older during the calendar year in which the benefits commence, the benefit shall be actuarially adjusted to provide for a shorter payout period to the extent necessary to comply with federal requirement for qualified retirement plans.

(h) Limitation on Selection of IAP Benefit Options. Benefit payment options selected under the Individual Account Program shall be considered as payment options under a DC plan and must comply with the requirements of Treasury Regulation Section 1.401(a)(9)-5.

(3) Distributions to Beneficiaries of Retired Members. If a retired member dies after annuity benefit payments have begun under Chapter 238 or the Pension Program or other benefit payments are required to begin under section (2) of this rule, any death benefits shall be distributed at least as rapidly as under the distribution method being used at the member's death.

(4) Distributions to Beneficiaries of Active and Inactive Members. If an active or inactive member dies before annuity payments have begun under Chapter 238 or the Pension Program or other benefit payments are required to begin under section (2) of this rule, any death benefits shall be distributed by December 31 of the calendar year that contains the fifth anniversary of the member's death, except as provided in the following:

(a) Distributions to Designated Beneficiaries. The five-year rule shall not apply to any death benefit that is payable to a member's designated beneficiary, if:

(A) The benefit is distributed over the designated beneficiary's lifetime or over a period not extending beyond the designated beneficiary's life expectancy; and

(B) The distributions begin no later than December 31 of the calendar year that contains the first anniversary of the member's death.

(b) Distributions to Spouse Designated Beneficiaries. Notwithstanding subsection (a) of this section, if the designated beneficiary is the member's surviving spouse as defined by the Internal Revenue Code:

(A) The commencement of distributions under subsection (a)(B) of this section may be delayed until December 31 of the calendar year in which the member would have reached age 70 1/2; and

(B) If the surviving spouse dies after the member's death but before the distributions to the spouse have begun, the rules of this section shall apply to any death benefit payable to any contingent beneficiary as if the spouse were the member. Notwithstanding the foregoing, however, this subsection shall not apply to any death benefit payable to a surviving spouse of the deceased member's surviving spouse.

(5) The provisions of this rule are effective on January 1, 2003.

Stat. Auth.: ORS 238.630, 238.650, 238A.130, 238A.170 & 238A.410
Stats. Implemented: ORS 238.005 - 238.715
Hist.: PERS 5-1999, f. & cert. ef. 11-15-99; PERS 31-2004(Temp), f. & cert. ef. 12-15-04 thru 6-1-05; PERS 8-2005, f. & cert. ef. 2-22-05; PERS 21-2005, f. & cert. ef. 11-1-05

459-005-0580

Trustee-to-Trustee Transfers

(1) For purposes of this rule, “trustee-to-trustee transfer” means a transfer of funds from an eligible retirement plan to PERS for the purpose of obtaining restoration of forfeited creditable service or purchasing retirement credit pursuant to ORS 238.222.

(2)(a) Except as provided in subsection (c) of this section, PERS must receive the trustee-to-trustee transfer within the time period established in the particular statute for restoration of creditable service or obtaining retirement credit included in ORS 238.222(1).

(b) A trustee-to-trustee transfer received by PERS outside the time period determined under subsection (a) of this section for the transfer will be returned to the eligible retirement plan from which the transfer was received.

(c) If the cost of restoration of creditable service or obtaining retirement credit is adjusted and PERS determines that the amount required is greater than the amount originally received, a trustee-to-trustee transfer may be made to remit the additional amount required.

(d) Nothing in ORS 238.222 or this rule shall be construed to provide an extension of time for restoration of forfeited creditable service or obtaining retirement credit outside the time permitted under the relevant statutes.

(3) If PERS receives a trustee-to-trustee transfer and determines that all or a portion of the transfer may not be accepted by PERS and must be returned, PERS will transfer the amount back to the eligible retirement plan from which the transfer was received.

(4) The provisions of this rule are effective on September 1, 2011.

Stat. Auth.: ORS 238.222 & 238.650
Stats. Implemented: ORS 238.222 and section 2, Chapter 971, Oregon Laws 1999
Hist.: PERS 2-2011, f. & cert. ef. 6-1-11

459-005-0590

General Provisions and Applicability Date -- Direct Rollovers

(1) OAR 459-005-0590 to 459-005-0599 apply to direct rollover distributions made on or after January 1, 1993.

(2) Notwithstanding any provision to the contrary in ORS Chapters 238 or 238A or any administrative rule of the Public Employees Retirement Board other than OAR 459-005-0590 to 459-005-0599, a distributee may elect, in accordance with OAR 459-005-0599, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover.

(3) The direct rollover rule OAR 459-005-0590 to 459-005-0599 shall be interpreted and administered in accordance with Code Section 401(a)(31) and any applicable regulations and administrative rulings thereunder.

(4) The provisions of this rule are effective on January 1, 2004.

Stat. Auth.: ORS 238.650 & 238A.430
Stats. Implemented: ORS 238.005 - 238.715
Hist.: PERS 11-1998, f. & cert. ef. 12-17-98; PERS 31-2004(Temp), f. & cert. ef. 12-15-04 thru 6-1-05; PERS 8-2005, f. & cert. ef. 2-22-05

459-005-0591

Definitions — Direct Rollovers

As used in OAR 459-005-0590 to 459-005-0599 the following words and phrases shall have the following meanings:

(1) "Code" means the Internal Revenue Code of 1986, as amended.

(2) A "direct rollover" means the payment of an eligible rollover distribution by PERS to an eligible retirement plan specified by the distributee.

(3) A "distributee" includes a PERS member, the surviving spouse of a deceased PERS member, a non-spouse beneficiary of the member that is a designated beneficiary under Code Section 402(c)(11), and the current or former spouse of a PERS member who is the alternate payee under a domestic relations order that satisfies the requirements of ORS 238.465 and the rules adopted thereunder.

(4) An "eligible retirement plan" means any one of the following:

(a) An individual retirement account or annuity described in Code Section 408(a) or (b), including a Roth IRA as described in Code Section 408A;

(b) An annuity plan described in Code Section 403(a) that accepts the distributee's eligible rollover distribution;

(c) A qualified trust described in Code Section 401(a) that accepts the distributee's eligible rollover distribution;

(d) An eligible deferred compensation plan described in Code Section 457(b) which is maintained by an eligible employer described in Code Section 457(e)(1)(A) and accepts the distributee's eligible rollover distribution.

(e) An annuity contract described in Code Section 403(b) that accepts the distributee's eligible rollover distribution.

(f) For the purposes of ORS 237.650(3), the individual employee account maintained for a member under the Individual Account Program as set forth under ORS 238A.350(2); and

(g) For the purposes of ORS 237.655(2), the state deferred compensation program.

(5) An "eligible rollover distribution" means any distribution of all or any portion of a distributee's PERS benefit, except that an eligible rollover distribution shall not include:

(a) Any distribution that is one of a series of substantially equal periodic payment made no less frequently than annually for the life (or life expectancy) of the distributee or the joint lives (or life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of ten years or more;

(b) Any distribution to the extent that it is a required or minimum distribution under Code Section 401(a)(9).

(6) A "recipient plan" means an eligible retirement plan that is designated by a distributee to receive a direct rollover.

(7) The provisions of this rule are effective on January 1, 2008.

Stat. Auth.: ORS 238.650 & 238A.450
Stats. Implemented: ORS 238 & 238A
Hist.: PERS 11-1998, f. & cert. ef. 12-17-98; PERS 1-2002(Temp), f. & cert. ef. 1-11-02 thru 6-28-02; PERS 3-2002, f. & cert. ef. 3-26-02; PERS 31-2004(Temp), f. & cert. ef. 12-15-04 thru 6-1-05; PERS 3-2005, f. & cert. ef 1-31-05; PERS 8-2005, f. & cert. ef. 2-22-05; PERS 5-2007(Temp), f. & cert. ef. 2-16-07 thru 8-14-07; PERS 9-2007, f. & cert. ef. 7-26-07; PERS 8-2008(Temp), f. & cert. ef. 5-21-08 thru 11-10-08; PERS 11-2008, f. & cert. ef. 7-31-08

459-005-0595

Limitations — Direct Rollovers

(1) Notwithstanding any provision to the contrary in OAR 459-005-0590 to 459-005-0599, a distributee's right to elect a direct rollover is subject to the following limitations:

(a) A distributee may elect to have an eligible rollover distribution paid in a direct rollover to only one eligible retirement plan.

(b) A distributee may elect a direct rollover only when his or her eligible rollover distribution(s) during a calendar year is reasonably expected to total $200 or more.

(c) A distributee may elect to have part of an eligible rollover distribution be paid directly to the distributee, and to have part of the distribution paid as a direct rollover only if the member elects to have at least $500 transferred to the eligible retirement plan.

(2)(a) The provisions of subsection (1)(a) apply to any portion of a distribution, including after-tax employee contributions that are not includible in gross income.

(b) Any portion of a distribution that consists of after-tax employee contributions that are not includible in gross income may be transferred only to:

(A) An individual retirement account or annuity described in Code Section 408(a) or (b), including a Roth IRA; or

(B) An annuity contract described in Code Section 403(b) or a qualified defined contribution or defined benefit plan that agrees to separately account for the amounts transferred, including separate accounting for the pre-tax and post-tax amounts.

(c) The amount transferred shall be treated as consisting first of the portion of the distribution that is includible in gross income, determined without regard to Code Section 402(c)(1).

(3) The provisions of this rule are effective on January 1, 2008.

Stat. Auth.: ORS 238.650 & 238A.450
Stats. Implemented: ORS 238 & 238A
Hist.: PERS 11-1998, f. & cert. ef. 12-17-98; PERS 31-2004(Temp), f. & cert. ef. 12-15-04 thru 6-1-05; PERS 8-2005, f. & cert. ef. 2-22-05; PERS 5-2007(Temp), f. & cert. ef. 2-16-07 thru 8-14-07; PERS 9-2007, f. & cert. ef. 7-26-07; PERS 8-2008(Temp), f. & cert. ef. 5-21-08 thru 11-10-08; PERS 11-2008, f. & cert. ef. 7-31-08

459-005-0599

Election Procedures — Direct Rollovers

(1) PERS staff shall provide each distributee with a written explanation of the direct rollover rules for any eligible distribution, as required by Code Section 402(f). In addition to the general explanation required by Code Section 402(f), the written explanation shall include the following information:

(a) A statement that the distributee has the right to consider the decision of whether or not to elect a direct rollover for at least 30 days after the notice is provided;

(b) An explanation of the default rule set forth in section (5) of this rule; and

(c) An explanation of the notice and election rules for periodic payments that are eligible rollover distributions.

(2) Except as otherwise provided in sections (4) and (6) of this rule, an eligible rollover distribution shall not be paid, either to the distributee or to a recipient plan, less than 30 days or more than 180 days after the distributee has been provided with the written explanation described in section (1) of this rule.

(3)(a) Any direct rollover election shall be in writing and must be signed by the distributee or by his or her authorized representative pursuant to a valid power of attorney as described in OAR 459-005-0100 to 459-005-0140. The direct rollover election may be on forms furnished by PERS, or on forms submitted by recipient plan which shall include:

(A) Distributee's full name;

(B) Distributee's social security number;

(C) Percentage of amount eligible for transfer (whole percent), or the dollar amount (in whole dollars);

(D) The distributee's account number with recipient plan, if available;

(E) Name and complete mailing address of recipient plan; and

(F) If the distributee is a non-spouse beneficiary of the member, the title of the recipient IRA account.

(b) The election shall include or be accompanied by a statement by the recipient plan's plan administrator that the plan will accept the direct rollover for the benefit of the distributee, including whether or not the recipient plan will accept, and account for separately, after-tax dollars.

(4) If a distributee affirmatively elects a distribution after having received the written election described in section (1) of this rule, PERS may make the distribution even if the initial 30-day period described in section (2) of this rule has not expired.

(5) If a distributee fails to affirmatively elect to make or not to make a direct rollover within at least 30 and no more than 180 days after notice is provided as described in section (1) of this rule, PERS shall pay the eligible rollover distribution directly to the distributee.

(6) Any series of payments that are eligible rollover distributions shall be governed by the provisions of sections (1), (2), (3), (4), and (5) of this rule for each payment made.

(7) For the purposes of this rule, "effective date of payment" means:

(a) The date inscribed on check or warrant; or

(b) The date of an electronic transfer/transaction to the recipient plan.

(8) The provisions of this rule are effective on January 1, 2007.

Stat. Auth.: ORS 238.650 & 238A.4500
Stats. Implemented: ORS 238, 238A
Hist.: PERS 11-1998, f. & cert. ef. 12-17-98; PERS 21-2005, f. & cert. ef. 11-1-05; PERS 5-2007(Temp), f. & cert. ef. 2-16-07 thru 8-14-07; PERS 9-2007, f. & cert. ef. 7-26-07

459-005-0600

Precedence for Reductions or Deductions of Benefit Payment

(1) The order of priority for reductions of or deductions from a benefit payment is as follows:

(a) Adjustment for an overpayment or erroneous payment of benefit;

(b) Withholding for federal and state income taxes, and other current taxes;

(c) Withholding for premium payment of a PERS sponsored health insurance plan;

(d) Withholding in response to support liens in accordance with ORS 238.445;

(e) Withholding in response to Internal Revenue Service (IRS) liens;

(f) Adjustment due to a divorce decree or other court order;

(g) Other voluntary withholdings authorized by the Board and elected by the member or beneficiary of the member.

(2) The adjustments for recovery of improperly made overpayments or erroneous payments take precedence over other reductions or deductions.

Stat. Auth.: ORS 238.715(9) & ORS 238.650
Stats. Implemented: ORS 238.005 - ORS 238.715
Hist.: PERS 14-1998, f. & cert. ef. 12-17-98

459-005-0610

Recovery of Overpayments

(1) Authority and Purpose. In accordance with ORS 238.715, this rule sets forth the criteria and process for the recovery of overpayments and erroneous payments made by PERS. It is the policy of the Board to implement wherever possible, and if cost effective, a full recovery of all overpayments and erroneous payments. Staff shall attempt recovery of overpayments and erroneous payments in the most efficient method available and in the least amount of time possible.

(2) For the purposes of this rule:

(a) Erroneous payment” means any payment that has been made from the Public Employees Retirement Fund in error, including a payment to a payee that is not entitled to receive the payment.

(b) “Good cause” means a cause beyond the reasonable control of the person. “Good cause” exists when it is established by satisfactory evidence that factors or circumstances are beyond the reasonable control of a rational and prudent person of normal sensitivity, exercising ordinary common sense.

(c) “Lump-sum payment” means any one-time distribution or payment made under ORS Chapters 238 or 238A, or any other law directing PERS to make a payment, including a retroactive adjustment, that is not scheduled to be paid to or on behalf of a payee on a regular monthly basis.

(d) “Monthly payment” means any gross pension, annuity, service or disability retirement allowance, death benefit, or other benefit under ORS Chapter 238 or 238A that is paid monthly to or on behalf of a payee.

(e) “Overpayment” refers to an amount that is in excess of the amount a payee is entitled to under ORS Chapters 238 and 238A.

(f) “Payee” means:

(A) A member, a trust established by the member, or the member’s estate;

(B) A member’s beneficiary, a trust established by the member’s beneficiary, or the estate of the member’s beneficiary;

(C) An alternate payee, as defined in OAR 459-045-0001(2), a trust established by an alternate payee, or the estate of an alternate payee;

(D) The beneficiary of an alternate payee, a trust established by the beneficiary of an alternate payee, or the estate of the beneficiary of an alternate payee; or

(E) Any other recipient of a benefit payment by PERS.

(3) In addition to the notice of an overpayment or erroneous payment to a payee required by ORS 238.715(4), PERS shall also send an explanation of the overpayment or erroneous payment; whether the Board asserts a right to assess interest, penalties and costs of collection; and a description of the manner in which the payee may appeal the determinations reflected in the explanation, if applicable.

(4) In determining the amounts owed by a payee and setting a repayment schedule under sections (5) or (6) of this rule, PERS shall reduce the amount owed by any lump-sum payment then owed by PERS to that payee. If the payee should subsequently become entitled to any lump sum payment, it shall be applied against the amounts then owed by that payee. PERS, in its discretion, may revise the repayment schedule or continue on the established schedule until the remaining amounts owed are fully repaid.

(5) The following list includes possible methods for PERS to recover an overpayment under an agreement with the payee. These methods are listed in order of preference. Unless otherwise ordered by the Board, PERS Staff is granted the discretion to select the method deemed most likely to effect a full recovery:

(a) A repayment of all amounts owed in a single payment.

(b) A deduction of a percentage or fixed dollar amount, to be agreed upon between the payee and PERS, from future monthly payments for a period not to exceed two years that will fully repay the amounts owed.

(c) A fixed monthly dollar amount to be agreed upon between the payee and PERS that will fully repay the amounts owed.

(d) A deduction of a percentage or fixed dollar amount from future monthly payments, to be agreed upon between the payee and PERS, for a specified period greater than two years that will fully repay the amounts owed if PERS deems that a longer repayment period is warranted by the payee’s personal financial circumstances.

(6) If the payee does not agree to one of the recovery methods under section (5) of this rule, PERS shall use one or more of the following methods to effect a full recovery of any overpayment or erroneous payment:

(a) Deducting not more than 10 percent from current and future monthly payments to a payee until the full amounts owed are recovered.

(b) Making an actuarially determined reduction, not to exceed 10 percent, to current and future payments from PERS calculated to repay the full amount of the overpayment or erroneous payment during the period in which monthly payments will be made to the payee.

(c) Seeking recovery of the overpayment or erroneous payment by using any remedy available to the Board under applicable law.

(d) Engaging the services of outside collection agencies.

(7) If a recovery method has to be selected under section (6) and the overpayment is caused solely by the actions of PERS or a participating public employer, PERS will select a method which imposes the least economic hardship on the member while allowing for a reasonably prudent recovery of the overpayment.

(8) The base or original benefit payment used to calculate cost-of-living adjustments, ad hoc increases, or other benefit increases shall not be altered by an actuarial reduction provided for in subsection (6)(b) of this rule.

(9) In the event that PERS determines that an overpayment or erroneous payment was not caused by PERS or by the actions of a participating public employer, PERS may include within the amounts owed by the payee:

(a) All costs incurred by PERS in recovering the overpayment or erroneous payment, including attorney fees, and fees assessed by an outside collection agency; and

(b) Interest in an amount equal to one percent per month on the balance of the overpayment or erroneous payment until that payment is fully recovered.

(10) The Board authorizes the Director, or the Director’s designee, to waive:

(a) The interest and costs of collection associated with the recovery of an overpayment or erroneous payment for good cause shown; and

(b) The recovery of any overpayment or erroneous payment if the total amount of overpayments or erroneous payments is less than $50.

(11) Recovery of an overpayment or erroneous payment shall not be effected if PERS has not initiated recovery of those payments within six years after the date the overpayment or erroneous payment was made. PERS initiates recovery on the date it mails the notification required by ORS 238.715(4).

(12) The recovery of an overpayment or an erroneous payment shall take precedence over other deductions or reductions as set forth in OAR 459-005-0600.

Stat. Auth.:ORS 238.715(9), 238.630 & 238.650
Stats. Implemented: ORS 238.715
Hist.: PERS 14-1998, f. & cert. ef. 12-17-98; PERS 2-2006, f. & cert. ef. 2-1-06; PERS 10-2013, f. & cert. ef. 11-22-13

459-005-0615

Minimum Retroactive Payment

PERS may not issue a retroactive payment for underpaid monthly benefits or lump sum distributions if the total amount of the underpayment is less than $5.

Stat. Auth.: ORS 238.650 and 238A.450
Stats. Implemented: ORS 238.601
Hist.: PERS 4-2012, f. & cert. ef. 3-28-12

459-005-0620

Uncollectible Debt Owed to PERS

Any debt, including interest, penalties, or any portion of the debt, may be considered to be uncollectible when the debtor has no money or other thing of value owing or held by PERS that has not been credited to the debt, and it is reasonable to conclude, after all reasonable efforts to collect the debt have been made, that one or more of the following is true:

(1) The debtor does not and will not for the foreseeable future own or have the right to own assets from which PERS could collect the debt.

(2) It is reasonably estimated that the cost of collecting the debt would equal or exceed the amount of the debt.

(3) The debtor is deceased, and there are no assets in the debtor’s estate from which PERS could collect the debt.

(4) The debtor is a corporation or a limited liability company that is not and for the foreseeable future will not be engaged in any income-producing activity, and there are no assets from which PERS could collect the debt.

(5) The debt has previously been discharged in bankruptcy.

(6) The debtor’s estate is subject to a pending bankruptcy proceeding in which it is reasonable to conclude that the debt will be discharged and that PERS will receive none or an insubstantial share of the assets of the bankruptcy estate.

(7) PERS is and will be for the foreseeable future unable to collect from the debtor or from anyone owing the debtor money or holding assets of or from the debtor.

(8) PERS is unable to locate the debtor despite having made reasonable efforts to do so.

(9) The debt has been liquidated by reduction to a court judgment, administrative order or distraint warrant, which has subsequently expired.

Stat. Auth.: ORS 238.650, 293.240 & 238A.450
Stats. Implemented: ORS 293.240(2)
Hist.: PERS 9-2011(Temp), f. & cert. ef. 11-23-11 thru 5-20-12; PERS 1-2012, f. & cert. ef. 2-1-12

The official copy of an Oregon Administrative Rule is contained in the Administrative Order filed at the Archives Division, 800 Summer St. NE, Salem, Oregon 97310. Any discrepancies with the published version are satisfied in favor of the Administrative Order. The Oregon Administrative Rules and the Oregon Bulletin are copyrighted by the Oregon Secretary of State. Terms and Conditions of Use

Oregon Secretary of State • 136 State Capitol • Salem, OR 97310-0722
Phone: (503) 986-1523 • Fax: (503) 986-1616 • oregon.sos@state.or.us

© 2013 State of Oregon All Rights Reserved​