KRS § 161.540 — KY Code / Title XIII / Chapter 161 / Section 161.540
161.540 Members' contributions -- Picked-up contributions
Status: in_force

161.540 Members' contributions -- Picked-up contributions.

(1) (a) Each individual who becomes a contributing nonuniversity member prior to

January 1, 2022, shall contribute to the retirement system twelve and eight

hundred fifty-five thousandths percent (12.855%) of annual compensation, of

which:

1. Nine and one hundred five thousandths percent (9.105%) of annual

compensation shall be used to fund pension benefits; and

2. Three and three-quarters percent (3.75%) of annual compensation shall

be used to fund retiree health benefits.

(b) Each individual who becomes a contributing university member prior to

January 1, 2022, shall contribute to the retirement system ten and four-tenths

percent (10.4%) of annual compensation, of which:

1. Seven and six hundred twenty-five thousandths percent (7.625%) of

annual compensation shall be used to fund pension benefits; and

2. Two and seven hundred seventy-five thousandths percent (2.775%) of

annual compensation shall be used to fund retiree health benefits.

(c) Each individual who becomes a contributing nonuniversity member on or

after January 1, 2022, shall contribute to the retirement system fourteen and

three-quarters percent (14.75%) of annual compensation, of which:

1. Nine percent (9%) of annual compensation shall be used to fund pension

benefits in the foundational benefit component as described by KRS

161.633. The contribution provided by this subparagraph shall not be

used to fund the supplemental benefit account as provided by KRS

161.635;

2. Two percent (2%) of annual compensation shall fund the required

employee contribution in the supplemental benefit component in KRS

161.635, except that the board may direct these contributions on a

prospective basis into the pension and life insurance funds to contain

costs of the foundational benefit component within the provisions of

KRS 161.633; and

3. Three and three-quarters percent (3.75%) of annual compensation shall

be used to fund retiree health benefits.

(d) Each individual who becomes a contributing university member on or after

January 1, 2022, shall contribute to the retirement system nine and seven

hundred seventy-five thousandths percent (9.775%) of annual compensation,

of which:

1. Five percent (5%) of annual compensation shall be used to fund pension

benefits in the foundational benefit component as described by KRS

161.634. The contribution provided by this subparagraph shall not be

used to fund the supplemental benefit account as provided by KRS

161.636;

2. Two percent (2%) of annual compensation shall fund the required

employee contribution in the supplemental benefit component in KRS

161.636, except that the board may direct these contributions on a

prospective basis into the pension and life insurance funds to contain

costs of the foundational benefit component within the provisions of

KRS 161.634; and

3. Two and seven hundred and seventy-five thousandths percent (2.775%)

of annual compensation shall be used to fund retiree health benefits.

(e) When the funds established to actuarially fund pension annuities and the

medical insurance fund established under KRS 161.420 become fully funded

as determined by the annual actuarial valuation, the board of trustees shall

recommend to the General Assembly that the contributions required under

paragraph (a)2., (b)2., (c)3., or (d)3. of this subsection shall, in an actuarially

accountable manner, be either decreased, suspended, or eliminated.

(f) Payments authorized by statute that are made to retiring members, who

became members of the system before July 1, 2008, for not more than sixty

(60) days of unused accrued annual leave shall, subject to KRS 161.220(10),

be considered as part of the member's annual compensation, and shall be used

only for the member's final year of active service. Notwithstanding the

provisions of this subsection or any other statute to the contrary, for

retirement calculation purposes, members may only be credited for payment

of annual leave under the following conditions:

1. Payment by an employer for annual leave shall be equally available to

all members serving under contracts requiring the same number of

worked days and greater; and

2. At least two (2) members of the employer shall receive payment for

annual leave.

(g) The contribution of members shall not exceed the applicable percentages on

annual compensation as set forth in this section or as where otherwise limited

by statute. When a member retires, if it is determined that he or she has made

contributions on a salary in excess of the amount to be included for the

purpose of calculating his or her final average salary, any excess contribution

shall be refunded in a lump sum to the member's employer for distribution to

the member.

(2) Each public board, institution, or agency listed in KRS 161.220(4) shall, solely for

the purpose of compliance with Section 414(h) of the United States Internal

Revenue Code, pick up the member contributions required by this section for all

compensation earned after August 1, 1982, and the contributions so picked up shall

be treated as employer contributions in determining tax treatment under the United

States Internal Revenue Code and KRS 141.010. The picked-up member

contribution shall satisfy all obligations to the retirement system satisfied prior to

August 1, 1982, by the member contribution, and the picked-up member

contribution shall be in lieu of a member contribution. Each employer shall pay

these picked-up member contributions from the same source of funds which is used

to pay earnings to the member. The member shall have no option to receive the

contributed amounts directly instead of having them paid by the employer to the

system. Member contributions picked-up after August 1, 1982, shall be treated for

all purposes of KRS 161.220 to 161.714 in the same manner and to the same extent

as member contributions made prior to August 1, 1982.