ARTICLE
4
RELATING TO FICA
ALTERNATE RETIREMENT PLAN
SECTION 1. Section 36-7-2 of the General Laws in Chapter
36-7 entitled "Federal Old-
Age and Survivors'
Insurance" is hereby amended to read as follows:
36-7-2. Definitions.
-- For the purposes of sections 36-7-1 – 36-7-31, 36-7-33.1, and
36-
7-35, the following terms shall have the meanings
indicated unless different meanings are clearly
expressed or required by the context:
(1) "Agency of the
state" shall mean:
(i)
All departments, divisions, agencies, and instrumentalities of the state which
are not
juristic entities, legally separate and distinct from the
state;
(ii) Civilian employees
of the
(iii) Any
instrumentality of the state such as fire districts, water districts, water
authorities, sewer commissions and authorities, housing
authorities, or other instrumentality of
the state which are a juristic entity and legally
separate and distinct from the state and if the
employees of the instrumentality are not by virtue of their
relation to juristic entity employees of
the state. Without limiting the generality of the
foregoing, examples of those agencies would be
the
district commission, and other like instrumentalities of the
state.
(2) "City or
town" shall mean:
(i)
Any city or town of the state of
agency, board, commission, or bureau thereof;
(ii) Any instrumentality
of a city or town which is a juristic entity and legally separate
and distinct from the city or town and if its employees
are not by virtue of their relation to the
juristic entity employees of the city or town; or
(iii) Any
instrumentality of two or more citizens and/or towns which is a juristic entity
as
provided in subdivision (ii) hereof.
(3) "IRC"
shall mean the Internal Revenue Code of 1986, as amended.
(3)(4)
"Coverage group" shall mean:
(i)
All employees of the state other than those engaged in performing service in
connection with a proprietary function;
(ii) All employees of a
city or town other than those engaged in performing service in
connection with a single proprietary function;
(iii) All employees of
the state engaged in performing service in connection with a single
proprietary function;
(iv)
All employees of an agency of the state;
(v) All employees of a
city or town of the state engaged in performing service in
connection with a single proprietary function. If under the
preceding sentence an employee would
be included in more than one coverage group by reason of
the fact that he or she performs service
in connection with two (2) or more proprietary functions
or in connection with both a proprietary
function and a nonproprietary function, he or she shall be
included in only one coverage group.
The determination of the coverage group in which the
employee shall be included shall be made
in such manner as may be specified in the agreement.
Members of retirement systems shall
constitute separate coverage groups as provided in section
36-7-10.
(4)(5)
"Employee" shall mean any officer or employee of any city, town, or
agency of the
state receiving salaries or wages for employment.
(5)(6)
"Employment" shall mean any service performed by an employee for
wages as a
member of a coverage group as herein defined, including
service of an emergency nature, service
in any class or classes of elective positions and
service in part-time positions, but excluding the
following:
(i)
Service in a position the compensation for which is on a fee basis;
(ii) Service performed
by election officials or election workers for calendar year 2003 in
which the remuneration paid for that service is less than
one thousand two hundred fifty dollars
($1,250), and for each calendar year after 2003 in
which the remuneration paid is less than the
adjusted amount in accordance with section 218(c)(8)(B) of the
Social Security Act;
(iii) Service which
under the federal Social Security Act may not be included in an
agreement between the state and the secretary entered into
under this chapter;
(iv) Service
which, in the absence of an agreement entered into under sections 36-7-1 –
36-7-31, would constitute
"employment" as defined in the federal Social Security Act. Service
which under the federal Social Security Act may be included
in an agreement only upon
certification by the governor in accordance with section 218(d)(3)
of the federal Social Security
Act, 42 U.S.C. section 418(d)(3),
shall be included in the term "employment" if and when the
governor issues, with respect to that service, a certificate
to the secretary, pursuant to section 36-
7-19.
(B) Notwithstanding any
of the foregoing, if pursuant to section 141 of P.L. 92-603, 42
U.S.C. section 418, the state agreement with the
federal government referred to in section 36-7-3
is modified appropriately at any time prior to January
1, 1974, the term "employment" with
respect to any coverage group specified in the modification
shall, effective after the effective date
specified in the modification, include services in designated
part-time positions but not services
performed in the employ of a school, college, or university by
a student who is enrolled and
regularly attending classes at that school, college, or
university.
(7) "FARP"
shall mean the FICA Alternative Retirement Income Security Program as
described in section 36-7-33.1.
(8)
"FARP-eligible employee" shall mean any part-time, seasonal, or
temporary
employee of the state of
Retirement System of
(9) "FARP
part-time employee" shall mean an employee of the state of
works twenty (20) hours or less per week, in accordance
with IRC standards.
(6)(10)
"Federal Insurance Contributions Act" or "FICA"
shall mean subchapter A of
chapter 9 of the federal Internal Revenue Code of 1939,
subchapters A and B of chapter 21 of the
federal Internal Revenue Code of 1954, and subchapters A and
B of chapter 21 of the federal
Internal Revenue Code of 1986 as those codes have been
and may from time to time be amended;
and the term "employee tax" shall mean the tax
imposed by section 1400 of the code of 1939,
section 3101 of the code of 1954, and section 3101 of the
code of 1986.
(7)(11)
"Federal Social Security Act", 42 U.S.C. section
301 et seq., shall mean the act of
congress approved August 14, 1935, officially cited as the
"Social Security Act", including any
amendments thereto, and any regulations, directives, or
requirements interpretative or
implementive thereof.
(8)(12)
"Part-time employment" shall mean any employment by those who work on
a
regularly scheduled basis regardless of hours.
(9)(13)
"Retirement board" shall mean the retirement board as provided in
chapter 8 of
this title.
(10)(14)
"Secretary", except when used in the title "secretary of the
treasury", shall mean
the secretary of health and human services and any
individual to whom the secretary of health and
human services has delegated any of his or her functions
under the federal Social Security Act, 42
U.S.C. section 301 et seq., with respect to coverage
under that act of employees of states and their
political subdivisions.
(11)(15)
"Sick pay" shall mean the amount of any payment (including any amount
paid
by an employer for insurance or annuities, or into a
fund to provide for any sick pay) made to, or
on behalf of, an employee or any of his or her
dependents under a plan or system established by
an employer which makes provision for his employees
generally (or for his or her employees
generally and their dependents) or for a class or classes of
his employees (or for a class or classes
of his employees and their dependents), on account of
sickness or accident disability.
(12)(16)
"State" shall mean the state of
(13)(17)
"Wages" or "salaries" shall mean all compensation received
by an employee for
employment as defined herein, including the cash value of all
remuneration received by an
employee in any medium other than cash, except that this term
shall not include that part of the
remuneration which, even if it were for "employment"
within the meaning of the Federal
Insurance Contributions Act, 26 U.S.C. section 3101 et
seq., would not constitute "wages" within
the meaning of that act.
SECTION 2. Chapter 36-7 of the General Laws entitled
"Federal Old-Age and Survivors'
Insurance" is hereby
amended by adding thereto the following section:
36-7-33.1. FICA
Alternative Retirement Income Security Program. --
(a) For FARP
eligible employees, the state shall establish the FICA
Alternative Retirement Income Security
Program. The FARP shall be administered in accordance with the
following provisions:
(1) IRC compliance.
The FARP shall be administered as a defined contribution plan
under section 401(a) of the IRC, and shall provide
retirement benefits as required under section
3121(b)(7)(F) of the IRC.
(2) Employee
participation in the FARP - One-Time Opt-Out Exception. With the one
exception described in (b) below, FARP-eligible employee
participation in the FARP shall be
mandatory. Each participant shall make mandatory payroll
deduction contributions to the FARP
equal to a minimum of seven and five tenths percent (7.5%)
of the employee's gross wages for
each pay period. Any payroll deduction contributions made
pursuant to the FARP shall not be
included in the computation of federal income taxes withheld
on behalf of any participant. Once
implemented, the participants, and the state on behalf of the participants,
shall not continue to
make FICA contributions. The FARP shall be administered by
the financial institution currently
administering the 401(a) plan for the state employee retirement
plan, as described in Title 36
Chapter 10.3.
(b) An otherwise
FARP-eligible employee, who is employed by the state at the time this
section takes effect, may opt to not participate in the FARP.
An employee who opts to not
participate in the FARP will continue to make FICA contributions
and the state shall continue to
make FICA contributions on behalf of the employee. An
employee who opts to not participate in
the FARP may subsequently, without penalty, choose to
participate in the FARP; provided,
however, such employee must continue to participate in the
FARP for as long as he or she is a
FARP-eligible employee.
(c) Review by state
investment commission. The state investment commission shall, from
time to time, review and evaluate the reasonableness of
the selected financial institution's fees and
the performance of the selected financial institution's
funds.
SECTION 3. This article shall take effect as of July 1,
2013.