KRS 161.677: Kentucky Teachers' Retirement System insurance trust fund.

(1) (a) The Kentucky Teachers' Retirement System insurance trust fund is hereby

created. All assets received in the trust fund shall be deemed trust funds to be

held and applied solely as provided in this section. Assets of the trust fund

shall not be used for any other purpose and shall not be used to pay the claims

of creditors or any individual, person, or employer participating in the

Kentucky Teachers' Retirement System.

(b) The trust fund is intended to be established as a trust exempt from taxation

under 26 U.S.C. sec. 115.

(2) The trust fund is created for the purpose of providing a trust separate from the funds

under KRS 161.420. Trust fund assets are dedicated for use for health benefits as

provided in KRS 161.675, and as permitted under 26 U.S.C. secs. 10 5 and 106, for

present and future eligible recipients of a retirement allowance from the Kentucky

Teachers' Retirement System.

(3) The trust fund shall be administered by the board of trustees established by KRS

161.250, and the board shall serve as truste es of the fund. The board shall manage

the assets of the fund in the same general manner in which it administers the

retirement funds, except that the asset allocation may differ and separate accounting

and financial reporting shall be maintained for the trust fund.

(4) In addition to the requirements of subsection (2) of this section, the employers

participating in the trust fund are limited to the Commonwealth, political

subdivisions of the Commonwealth, and entities whose income is exempt from

taxation under 26 U.S.C. sec. 115. No other entity may participate in the trust fund.

(5) If the trust fund is terminated, the assets in the trust fund may revert, after the

payment of all liabilities, to the participating employers as determined by the board

of trustees.

(6) The board of trustees may promulgate administrative regulations and adopt

procedures and a trust document to implement this section and take all action

necessary and appropriate to provide that the income of the trust fund shall not

diminish or expand the rights of any recipients, employees, or dependents to health

benefits.

(7) The establishment of the Kentucky Teachers' Retirement System insurance trust

fund shall not diminish or expand the rights of any recipients, employees, or

dependents to health benefits.

(8) The trust fund established under this section, at the direction of the board of

trustees, shall consist of amounts, excluding those amounts that have been deposited

to an account established pursuant to 26 U.S.C. sec. 401(h), that have been

accumulated for the purpose of providing benefits as provided in KRS 161.675,

including:

(a) Contributions required under KRS 161.550;

(b) Contributions required under KRS 161.675(4)(b); and

(c) Interest income from the investments of the fund from c ontributions received

by the fund and from income earned on those investments.