An Act To Amend the Laws Relating to the Treatment of Maine State Retirement System Contributions for Terminated Members
Maine Legislature, Session 123, LD 0871
Committee: Labor
Sponsors: CLARK, STRIMLING, BURNS, DRISCOLL, JACKSON, THOMAS, TUTTLE, DOW, SULLIVAN
Amends: 3 MRSA §805, 3 MRSA §805-A, 3 MRSA §805-B, 4 MRSA §1203, 4 MRSA §1305, 4 MRSA §1305-A, 4 MRSA §1305-B, 5 MRSA §17054, 5 MRSA §17705, 5 MRSA §17706, 5 MRSA §17851-A, 5 MRSA §17953, 5 MRSA §18252-A, 5 MRSA §18306-A, 5 MRSA §18307, 5 MRSA §18307-A, 5 MRSA §18553

Legislative Document 
No. 871 
H.P.660 
House of Representatives, February 23, 2007 
An Act To Amend the Laws Relating to the Treatment of Maine 
State Retirement System Contributions for Terminated Members 
Submitted by the Maine State Retirement System pursuant to Joint Rule 204. 
Reference to the Committee on Labor suggested and ordered printed. 
Presented by Representative CLARK of Millinocket. 
Cosponsored by Senator STRIMLING of Cumberland and 
Ir/~frl.~ 
MILLICENT M. MacFARLAND 
Clerk 
Representatives: BURNS of Berwick, DRISCOLL of Westbrook, JACKSON of Allagash, 
THOMAS of Ripley, TUTTLE of Sanford, Senators: DOW of Lincoln, SULLIVAN of York. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 3 MRS A §703, sub-§2, as enacted by PL 1991, c. 746, § 1 and as affected 
by § 10, is amended to read: 
2. 
Accumulated contributions available for child support. 
A member's 
accumulated contributions, which are refundable under section 805 sections 805-A and 
805-B, are available to satisfy a child support obligation that is otherwise enforceable by 
execution, garnishment, attachment, assignment or other process; and 
Sec. 2. 3 MRSA §805, as amended by PL 1997, c. 651, § 1, is repealed. 
Sec. 3. 3 MRSA §805-A is enacted to read: 
§805-A. Refund of accumulated contributions 
1. Conditions for refund. If the service of any member has terminated, except by 
death or by retirement under this chapter, the member must be paid the amount of the 
member's accumulated contributions under the following conditions: 
A. 
The member must have properly applied for a refund of accumulated 
contributions; 
B. Payment must be made after termination of service and not less than 22 days nor 
more than 60 days after receipt of the application and receipt of the last payroll upon 
which the name of the member appears; 
C. An application for refund is void if the member filing the application returns to 
membership in any retirement plan administered by the Maine State Retirement 
System before issuance of the payment; and 
D. 
Only accumulated contributions made by the member or picked up by the 
employer may be refunded to that member under this subsection. 
Sec. 4. 3 MRSA §805-B is enacted to read: 
§805-B. Inactive accounts 
1. Conditions for refund. The retirement system may make an automatic refund of 
contributions to a member who has not properly applied for a refund as provided in 
section 805-A and who has terminated service, except by death or by retirement under 
this chapter, and who has not met the minimum creditable service requirement for 
eligibility to receive a service retirement benefit at the applicable age under the following 
conditions: 
A. The member account in the retirement system has been inactive for 3 or more 
years; 
B. 
Only accumulated contributions made by the member or picked up by the 
employer may be refunded to that member under this subsection; and 
C. A member who receives an automatic refund under this subsection may, within 30 
days of the issuance of the refund, return the full refunded amount to the retirement 
system. 
Upon receipt, the retirement system shall restore the accumulated 
contributions to the member's credit. 
Sec. 5. 4 MRSA §1203, sub-§2, as enacted by PL 1991, c. 746, §2 and as 
affected by § 1 0, is amended to read: 
2. 
Accumulated contributions available for child support. 
A member's 
accumulated contributions, which are refundable under section 1305 sections 1305-A and 
1305-B, are available to satisfy a child support obligation that is otherwise enforceable by 
execution, garnishment, attachment, assignment or other process; and 
Sec. 6. 4 MRSA §1305, as amended by PL 1997, c. 651, §2, is repealed. 
Sec. 7. 4 MRSA §1305-A is enacted to read: 
§1305-A. Refund of accumulated contributions 
1. Conditions for refund. If the service of any member has terminated, except by 
death or by retirement under this chapter, the member must be paid the amount of the 
member's accumulated contributions under the following conditions: 
A. 
The member must have properly applied for a refund of accumulated 
contributions; 
B. Payment must be made after termination of service and not less than 22 days nor 
more than 60 days after receipt of the application and receipt of the last payroll upon 
which the name of the member appears; 
C. An application for refund is void if the member filing the application returns to 
membership in any retirement plan administered by the Maine State Retirement 
System before issuance of the payment; and 
D. 
Only accumulated contributions made by the member or picked up by the 
employer may be refunded to that member under this subsection. 
Sec. 8. 4 MRSA §1305-B is enacted to read: 
§1305-B. Inactive accounts 
1. Conditions for refund. The retirement system may make an automatic refund of 
contributions to a member who has not properly applied for a refund as provided in 
section 1305-A and who has terminated service, except by death or by retirement under 
this chapter, and who has not met the minimum creditable service requirement for 
eligibility to receive a service retirement benefit at the applicable age under the following 
conditions: 
A. The member account in the retirement system has been inactive for 3 or more 
years; 
B. 
Only accumulated contributions made by the member or picked up by the 
employer may be refunded to that member under this subsection; and 
C. A member who receives an automatic refund under this subsection may, within 30 
days of the issuance of the refund, return the full refunded amount to the retirement 
svstem. 
Upon receipt, the retirement system shall restore the accumulated 
contributions to the member's credit. 
Sec. 9. 5 MRSA §17054, sub-§2, as amended by PL 1991, c. 746, §6 and as 
affected by § 1 0, is further amended to read: 
2. 
Accumulated contributions available for child support. 
A member's 
accumulated contributions, beffig which are refundable under sections 17705, 17706, 
18306 and 18307 17705-A, 17706-A, 18306-A and 18307 -A, are available to satisfy any 
child support obligation that is otherwise enforceable by execution, garnishment, 
attachment, assignment or other process; 
Sec. 10. 5 MRSA §17705, as amended by PL 2003, c. 630, Pt. B, §3, is repealed. 
Sec. 11. 5 MRS A §17705-A is enacted to read: 
§17705-A. Refund of accumulated contributions 
1. Conditions for refund. If the service of any member has terminated, except by 
death or by retirement under this Part, or if an optional member withdraws from the 
retirement system, the member must be paid the amount of the member's accumulated 
contributions under the following conditions: 
A. 
The member must have properly applied for a refund of accumulated 
contributions; 
B. Payment must be made after termination of service and not less than 22 days nor 
more than 60 days after receipt of the application and receipt of the last payroll upon 
which the name of the member appears; 
C. An application for refund is void if the member filing the application returns to 
membership in any retirement plan administered by the retirement system before 
issuance of the payment; 
D. 
Except when inclusion of a portion of employer contributions is required by 
paragraph E, only accumulated contributions made by the member or picked up by 
the employer may be refunded to that member under this subsection; and 
E. The amount of the refund of accumulated contributions related to a member's 
compensation for service rendered as a part-time, seasonal or temporary employee 
after December 31, 1991 must be at least equal to 7.5% of the member's 
compensation for that service plus interest as provided by section 17156. 
Sec. 12. 5 MRSA §17706, as amended'by PL 1987, c. 739, §§19 and 48, is 
repealed. 
Sec. 13. 5 MRS A §17706-A is enacted to read: 
~ 
1 
§17706-A. Inactive accounts 
1. Conditions for refund. The retirement system may make an automatic refund of 
contributions to a member who has not properly applied for a refund as provided in 
section 17705-A and who has terminated service, except by death or by retirement under 
this Part, or who as an optional member has withdrawn from the retirement system, and 
who has not met the minimum creditable service requirement for eligibility to receive a 
service retirement benefit at the applicable age under the following conditions: 
A. The member account in the retirement system has been inactive for 3 or more 
years; 
B. Except when inclusion of a portion of employer contributions is required by this 
subsection, only accumulated contributions made by the member or picked up by the 
employer may be refunded to that member under this subsection; 
C. The amount of the refund of accumulated contributions related to a member's 
compensation for service rendered as a part-time, seasonal or temporary employee 
after December 31, 1991 must be at least equal to 7.5% of the member's 
compensation for that service plus interest as provided by section 17156; and 
D. A member who receives an automatic refund under this subsection may, within 
days of the issuance of the refund, return the full refunded amount to the 
retirement system. Upon receipt, the retirement system shall restore the accumulated 
contributions to the member's credit. 
Sec. 14. 5 MRS A §17851-A, suh-§6, as enacted by PL 1997, c. 769, §11, is 
amended to read: 
6. 
Consequences of participation in retirement plan under section 17851, 
subsection 5-A, 6-A or 8-A. Notwithstanding any other provision of law, a member in 
the capacities specified in subsection 1 who, prior to July 1, 1998 elected the retirement 
option provided in section 17851, subsection 5-A, 6-A or 8-A is treated as follows under 
the 1998 Special Plan. 
A. 
A member who made the election at the time of first employment in a position 
covered under section 17851, subsection 5-A, 6-A and 8-A is considered to be a 
member under the 1998 Special Plan as of the date of hire. Beginning July 1, 1998, a 
member covered by this paragraph shall contribute to the retirement system or have 
pick-up contributions made at a rate of 8.65% of earnable compensation until 
completion of 25 years of creditable service and shall contribute at a rate of 7.65% 
thereafter. 
B. 
A member who was serving in a position covered under section 17851, 
subsection 5-A, 6-A or 8-A at the time of the election and who elected to participate 
in the retirement option prospectively from the time of election is considered to be a 
member under the 1998 Special Plan as of the effective date of the election. 
Beginning July 1, 1998, a member covered by this paragraph shall contribute to the 
retirement system or have pick-up contributions made at a rate of 8.65% of earnable 
compensation until completion of 25 years of creditable service and shall contribute 
at a rate of 7.65% thereafter. 
C. 
A member who was serving in a posItIOn covered under section 17851, 
subsection 5-A, 6-A or 8-A at the time of the election and who elected to participate 
in the retirement option prospectively from the time of election and also elected to 
purchase credit for service earned while serving in the same capacity before 
exercising the election is considered to be a member under the 1998 Special Plan as 
of the beginning date of the service for which credit is purchased, provided that all of 
the payments required under section 17852, subsection 5-A, 6-A or 7-A are made 
before retirement. If all the required payments are not made before retirement, that 
member is considered to be a member under the 1998 Special Plan as of the effective 
IOdate of the election. Beginning July 1, 1998, a member covered by this paragraph 
shall contribute to the retirement system or have pick-up contributions made at a rate 
of 8.65% of earnable compensation until completion of 25 years of creditable service 
and shall contribute at a rate of 7.65% thereafter. 
Employee contributions and actuarial and administrative costs paid to the retirement 
system by a member covered by this subsection may not be returned to that member, 
except that these employee contributions may be refunded to a member who terminates 
service and requests a refund under section ~ 
17705-A. 
Sec. 15. 5 MRSA §17851-A, sub-§6-A, as enacted by PL 1999, c. 493, §10, is 
amended to read: 
6-A. Consequences of participation in retirement plan under section 17851, 
subsection 12 or 13. A member in the capacities specified in subsection 1, paragraphs J 
and K who, prior to January 1, 2000, elected the retirement option provided in section 
17851, subsection 12 or 13 is treated as follows under the 1998 Special Plan. 
A. 
A member who made the election at the time of first employment in a position 
covered under section 17851, subsection 12 or 13 is considered to be a member under 
the 1998 Special Plan as of the date of hire. Beginning January 1, 2000, a member 
covered by this paragraph shall contribute to the retirement system or have pick-up 
contributions made at a rate of 8.65% of earnable compensation until completion of 
years of creditable service and shall contribute at a rate of 7.65% thereafter. 
B. 
A member who was serving in a position covered under section 17851, 
subsection 12 or 13 at the time of the election and who elected to participate in the 
retirement option prospectively from the time of election is considered to be a 
member under the 1998 Special Plan as of the effective date of the election. 
Beginning January 1, 2000, a member covered by this paragraph shall contribute to 
the retirement system or have pick-up contributions made at a rate of 8.65% of 
earnable compensation until completion of 25 years of creditable service and shall 
contribute at a rate of 7.65% thereafter. 
C. 
A member who was serving in a position covered under section 17851, 
subsection 12 or 13 at the time of the election and who elected to participate in the 
retirement option prospectively from the time of election and also elected to purchase 
credit for service earned while serving in the same capacity before exercising the 
election is considered to be a member under the 1998 Special Plan as of the 
beginning date of the service for which credit is purchased, provided that all of the 
payments required under section 17852, subsection 12 or 13 are made before 
retirement. If all the required payments are not made before retirement, that member 
is considered to be a member under the 1998 Special Plan as of the etTective date of 
the election. Beginning January 1, 2000, for employees identified in subsection 1, 
paragraphs J and K, a member covered by this paragraph shall contribute to the 
retirement system or have pick-up contributions made at a rate of 8.65% of earnable 
compensation until completion of 25 years of creditable service and shall contribute 
at a rate of 7.65% thereafter. 
Employee contributions and actuarial and administrative costs paid to the retirement 
system by a member covered by this subsection may not be returned to that member, 
except that these employee contributions may be refunded to a member who terminates 
service and requests a refund under section ~ 
17705-A. 
Sec. 16. 5 MRSA §17953, sub-§l, as amended by PL 1991, c. 619, §10 and as 
affected by § 18, is further amended to read: 
1. Refund of contributions. The amount of the qualifying member's accumulated 
contributions, as determined under section ~ 
17705-A, is paid: 
A. 
To the qualifying member's designated beneficiary, if any; 
B. 
If the qualifying member is not survived by a designated beneficiary, to the first 
listed of the following relatives alive at the qualifying member's death: 
(1) Surviving spouse; 
(2) Child or children, regardless of age, sharing equally among themselves; or 
(3) The older parent; or 
C. 
To the qualifying member's estate. 
Sec. 17. 5 MRS A §18252, sub-§2, as amended by PL 2003, c. 630, Pt. A, §4, is 
further amended to read: 
2. 
Employee who is participating member. 
A person who is a partICIpating 
member of the retirement system may elect to cease contributions to the system and, at 
that person's discretion, may withdraw accumulated contributions in accordance with 
section ~ 
18306-A. 
Sec. 18. 5 MRSA §18252-A, sub-§l, ~A, as amended by PL 2003, c. 630, Pt. A, 
§5, is further amended to read: 
A. 
A person hired by a participating local district, or rehired following a break in 
service, after the date on which the employer provides a plan under section 18252-B 
must elect at the time of hiring or rehiring whether to be a member under the 
retirement system or to be covered under a plan provided by the employer under 
section 18252-B. 
(1) If the person elects to be a member under the retirement system, the election 
is effective as of the date of hire or rehire. 
(a) A person who elects to be a member of the retirement system may later 
elect to be covered under a plan provided by the employer under section 
18252-B. 
The person who so elects may, at that person's discretion, 
withdraw accumulated contributions in accordance with section +&J.Ge 
18306-A. 
(b) A person who elects under division (a) to be covered under a plan 
provided by the employer under section 18252-B may later elect to again 
become a member under the retirement system, unless to so elect would have 
the effect of requiring the employer, without the employer's agreement, to 
make an employer contribution to both the retirement system and the plan 
provided by the employer under section 18252-B. 
(c) A person who elects under division (b) to again become a member of the 
retirement system may, in accordance with section 18305-A, purchase 
service credit for the period during which the person elected not to be a 
member of the retirement system. 
The person may, in accordance with 
section 18304, repay contributions withdrawn under division (a) and may, as 
permitted under other relevant retirement system law, rule and policy, repay 
other refunded contributions. 
(d) A person who, having elected to again become a member under the 
retirement system under division (c), later elects again not to be a member 
may not thereafter become a member under the retirement system while 
employed by the same participating local district. 
(2) A person who elects to be covered under a plan provided by the employer 
under section 18252-B may later elect to become a member under the retirement 
system. 
(a) Membership service credit for a person joining the retirement system 
under this subparagraph begins as of the effective date of first contributions 
or pick-up contributions to the retirement system following that person's 
election under this subparagraph. 
(b) A person who joins the retirement system under this subparagraph may, 
in accordance with section 18305-A, purchase service credit for the period 
during which the person elected not to be a member of the retirement system. 
(c) A person who, having elected to become a member under the retirement 
system under this subparagraph, later elects again not to be a member may, at 
the employee's discretion, withdraw accumulated contributions in accordance 
with applicable requirements of law and rule and retirement system 
procedures and may not thereafter become a member under the retirement 
system while employed by the same participating local district. 
Sec. 19. 5 MRSA §18252-A, sub-§I, ~B, as amended by PL 2003, c. 630, Pt. A, 
§5, is further amended to read: 
B. 
An employee of the participating local district who is a member under the 
retirement system on the date on which the employer provides a plan under section 
18252-B may elect to remain a member under the retirement system or to become 
covered under a plan provided by the employer under section 18252-B. 
i 
/ 
"-
I 1 
(1) If that person elects not to remain a member, the election is effective as of 
the first day of the month in which no contributions or pick-up contributions are 
made to the retirement system by that person. A person who elects not to remain 
a member may, at that person's discretion, withdraw accumulated contributions in 
accordance with section ~ 
18306-A. 
(2) A person who elects not to remain a member under the retirement system 
may later elect to again become a member. 
(a) Membership service credit for a person who elects to again become a 
member under the retirement system under this subparagraph begins as of the 
effective date of the first contributions or pick-up contributions to the 
retirement system following that person's election under this subparagraph. 
(b) A person who rejoins the retirement system under this subparagraph 
may, in accordance with section 18305-A, purchase service credit for the 
period during which that person elected not to be a member of the retirement 
system. 
The person may, in accordance with section 18304, repay 
contributions refunded under subparagraph (1), unless to so elect would have 
the effect of requiring the employer, without the employer's agreement, to 
make an employer contribution to both the retirement system and the plan 
provided by the employer under section 18252-B. 
(c) A person who, having elected to again become a member under the 
retirement system under this subparagraph, later elects again not to be a 
member may, at that person's discretion, withdraw accumulated contributions 
in accordance with section ~ 
18306-A and may not thereafter become a 
member under the retirement system while employed by the same 
participating local district. 
Sec. 20. 5 MRS A §18306, as amended by PL 2003, c. 630, Pt. A, § 11, is repealed. 
Sec. 21. 5 MRSA §18306-A is enacted to read: 
§18306-A. Refund of accumulated contributions 
1. Conditions for refund. If the service of any member has terminated, except by 
death or by retirement under this Part, or if an optional member withdraws from the 
retirement system, or if an employee of a district that withdraws from participation under 
section 18203 wishes to have accumulated contributions refunded, the member or 
employee must be paid the amount of the member's accumulated contributions under the 
following conditions: 
A. 
The member must have properly applied for a refund of accumulated 
contributions; 
B. Payment must be made after termination of service and not less than 22 days nor 
more than 60 days after receipt of the application and receipt of the last payroll upon 
which the name of the member appears; 
C. An application for refund is void if the member filing the application returns to 
membership in any retirement plan administered by the retirement system before 
issuance of the payment; 
D. 
Except when inclusion of a portion of employer contributions is required by 
subsection 5, only accumulated contributions made by the member or picked up by 
the employer may be refunded to that member under this section; and 
E. The amount of the refund of accumulated contributions related to a member's 
compensation for service rendered as a part-time, seasonal or temporary employee 
after December 31, 1991 must be at least equal to 7.5% of the member's 
compensation for that service plus interest as provided by section 17156. 
Sec. 22. 5 MRSA §18307, as amended by PL 1987, c. 739, §§37 and 48, IS 
repealed. 
Sec. 23. 5 MRSA §18307-A is enacted to read: 
§18307-A. Inactive accounts 
1. Conditions for refund. The retirement system may make an automatic refund of 
contributions to a member who has not properly applied for a refund as provided in 
section 18306-A and who has terminated service, except by death or by retirement under 
this Part, or who as an optional member has withdrawn from the retirement system, and 
who has not met the minimum creditable service requirement for eligibility to receive a 
service retirement benefit at the applicable age under the following conditions: 
A. The member account in the retirement system has been inactive for 3 or more 
years; 
B. Except when inclusion of a portion of employer contributions is required by this 
subsection, only accumulated contributions made by the member or picked up by the 
employer may be refunded to that member under this subsection; 
C. The amount of the refund of accumulated contributions related to a member's 
compensation for service rendered as a part-time, seasonal or temporary employee 
after December 31, 1991 must be at least equal to 7.5% of the member's 
compensation for that service plus interest as provided by section 17156; and 
D. A member who receives an automatic refund under this subsection may, within 
days of the issuance of the refund, return the full refunded amount to the 
retirement system. Upon receipt, the retirement system shall restore the accumulated 
contributions to the member's credit. 
Sec. 24. 5 MRSA §18553, sub-§l, as amended by PL 1991, c. 619, §17 and as 
affected by § 18, is further amended to read: 
1. Refund of contributions. The amount of the qualifying member's accumulated 
contributions, as determined under section -l-&W6 18306-A, is paid: 
A. 
To the qualifying member's designated beneficiary, if any; 
, 
• 
B. 
If the qualifying member is not survived by a designated beneficiary, to the first 
listed of the following relatives, if any are alive at the qualifying member's death: 
(1) Surviving spouse; 
(2) Child or children, regardless of age, sharing equally among themselves; and 
(3) The older parent; or 
C. 
To the qualifying member's estate. 
Sec. 25. 20-A MRS A §12722, sub-§3, as amended by PL 2001, c. 442, §4, is 
further amended to read: 
3. Maine State Retirement System members. An eligible person who becomes a 
participant in the defined contribution plan offered by the board of trustees and who is a 
member of the Maine State Retirement System at the time participation in the defined 
contribution plan begins may apply for a refund of accumulated contributions from the 
Maine State Retirement System pursuant to Title 5, section ~ 
l7705-A, except that 
any such person who has less than the number of years of creditable service required to 
be eligible for a Maine State Retirement System benefit as of the date specified in the 
notification in subsection 2, paragraph A or the date of hire pursuant to subsection 2, 
paragraph B shall apply for a refund of accumulated contributions. Participation in the 
defined contribution plan offered by the board of trustees pursuant to this section is 
considered a tennination of service for purposes of Title 5, section ~ 
7705-A as of 
the date specified in the notification in subsection 2, paragraph A or the date of hire 
pursuant to subsection 2, paragraph B, except that, if an application is made for refund of 
accumulated contributions under an election pursuant to subsection 2, paragraph A, 
payment must be made no later than 90 days after receipt of the application by the Maine 
State Retirement System. Service rendered while a participant in the defined contribution 
plan offered by the board of trustees does not constitute service for a Maine State 
Retirement System member who does not withdraw contributions from the Maine State 
Retirement System nor is the member considered to be in service for purposes of Title 5, 
chapter 423, subchapter ¥}, articles 3-A, 4 and 5. 
Sec. 26. 
Inactive accounts; transition. 
For a member of the Maine State 
Retirement System who has been inactive for at least 10 years as of the effective date of 
this Act and whose member contributions, not including accumulated interest, are less 
than $100, the retirement system may transfer those contributions from the member's 
account to the Retirement Allowance Fund. 
The provisions of the Maine Revised 
Statutes, Title 5, section 17706, subsections 1 and 2 and section 18307, subsections 1 and 
as repealed continue to apply to a member whose contributions are transferred under 
this transitional provision. The same provisions apply to members of the Maine Judicial 
Retirement System and the Maine Legislative Retirement System whose contributions are 
transferred under this transitional provision. 
SUMMARY 
This bill repeals the current statutory provisions governing the refund of accumulated 
contributions to members and the treatment of accumulated contributions for tenninated 
Page IO - 123LRI040(Ol)-1 
members and replaces those provisions. The replacement language is substantively the 
same for terminated members who apply for a refund of accumulated contributions. For 
nonvested terminated members, the bill permits the Maine State Retirement System to 
make an automatic refund of accumulated contributions to the member and permits the 
member to reinstate membership upon the return of automatically refunded accumulated 
contributions. The bill also contains transitional language to assist the retirement system 
in its effort to improve the quality of member data. 
Page II - 123LRI040(Ol)-1