KRS 67A.320: Pension fund -- Picked-up employee contributions -- Repeal of

ordinances established for creation or maintenance of pension fund --

Liquidation and distribution of residual assets -- Report.

(1) Any urban-county government in which there existed a municipality which had

in effect an employees' pension fund prior to its merger into the urban-county

form of government shall provide by comprehensive plan or ordinance for the

maintenance of the pension fund for those employees covered by the pension

fund, and shall in each case provide for the payment to the pension fund in

each month of the sum necessary to maintain the fund in accordance with the

actuarial principles established by the actuarial studies described in this

section, and may assess monthly the amount or percent of the salary of the

employees as determined on a fair actuarial basis, and in any case not in

excess of nine percent (9%) of the monthly salary of each employee unless a

higher rate was charged prior to the merger of governments, in which case the

higher rate may be charged, the assessment to be deducted from the

employees' salaries or picked up pursuant to subsection (2) of this section and

paid in cash into the pension fund. Within six (6) months after the effective date

of the urban-county form of government, or within six (6) months after June 21,

1974, whichever shall be later, the trustees of the board shall, at the expense

of the pension fund, provide for the performance of an actuarial valuation,

which shall be completed within six (6) months thereafter, and shall describe

the amounts necessary to be contributed by the urban-county government or

other sources to fund on an actuarially sound basis the benefits promised or

described in the fund, including any payments required to bring the fund to an

actuarially sound position if it was not so at the time of the performance of the

valuation. The legislative body shall determine a reasonable period over which

additional funding, if any, shall be made, which period shall not exceed thirty

(30) years. A similar valuation shall be arranged by the board at the cost of the

urban-county government at least once in every three (3) year to five (5) year

period thereafter as prescribed by KRS 65.156. If the fund created by this

section is extended to cover employees not described in the first sentence of

this section, the actuarial valuation shall determine the required payments

necessary to keep the expanded fund on an actuarially sound basis, and the

urban-county government shall maintain the fund, and shall assess against the

additional covered employees the same monthly contribution as required for

other government employees.

(2) The urban-county government shall, solely for the purpose of compliance with

Section 414(h) of the United States Internal Revenue Code, pick up the

employee contributions required by this section for all compensation earned

after August 1, 1982, and the contributions picked up shall be treated as

employer contributions in determining tax treatment under the United States

Internal Revenue Code and KRS 141.010. However, the urban-county

government shall continue to withhold federal and state income taxes based

upon these contributions and hold them in a separate account until the Internal

Revenue Service or the federal courts rule that, pursuant to Section 414(h) of

the United States Internal Revenue Code, these contributions shall not be

included as gross income of the employee until such time as the contributions

are distributed or made available to the employee. The picked-up employee

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

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

contribution shall be in lieu of an employee contribution. The urban-county

government shall pay these picked-up employee contributions from the same

source of funds which is used to pay earnings to the employee. The employee

shall have no option to receive the contributed amounts directly instead of

having them paid by the urban-county government to the fund. Employee

contributions picked up after August 1, 1982, shall be treated for all purposes

of this section in the same manner and to the same extent as employee

contributions made prior to August 1, 1982.

(3) The pick up of employee contributions by the employer shall not be construed

to reduce the final salary or the average salary upon which the employee

retirement benefit is based.

(4) There is hereby created a board for the existing employees' pension fund and

trustees of that board. Trustees from the pension fund board shall consist of

the mayor, four (4) members of the legislative body of the urban-county

government selected by the legislative body, the secretary of the Finance and

Administration Cabinet, the director of the Division of Personnel, and three (3)

civil service employees or retirees to be elected to the board by those

employees and retirees covered by the employees' pension fund. If no

employee, retiree, or beneficiary is able or willing to serve on the board

resulting in one (1) or more vacancies of the three (3) elected positions, any

such vacancy shall be filled by appointment by the mayor subject to the

approval of the legislative body. In the event that there is no position in the

urban-county government denominated secretary of the Finance and

Administration Cabinet and/or director of the Division of Personnel, the

appointed office of the urban-county government exercising the functions most

closely resembling such office shall serve as trustee.

(5) Temporary employees appointed without examination shall not be compelled

to contribute to any pension fund and shall not be eligible to benefits.

(6) In no year shall the contribution by the urban-county government to the

pension fund, in the manner provided in this section, be less than the total

amount assessed upon and deducted from the salary of the employees.

(7) The trustees of the pension fund shall, at least once every three (3) months,

report in writing to the mayor the receipts, expenditures, and financial status of

the pension fund, stating the places of deposit of funds, or the character of

investments made, and the mayor shall cause copies of the report to be posted

in at least three (3) places where urban-county employees frequent and report.

(8) If the urban-county government issues the appropriate order allowing

participation in the County Employees Retirement System alternate

participation plan pursuant to KRS 78.530(3) and 78.531(2), the urban-county

government shall have the right to use assets in the local pension fund, other

than assets necessary to pay benefits to the remaining active members of the

local pension fund and to retirees and their survivors as determined by

actuarial valuation and other than assets payable to the County Employees

Retirement System pursuant to KRS 78.531(2), to assist in the payment of both

the employee's and employer's costs of alternate participation pursuant to KRS

78.530(3)(d).

(9) If all liabilities to all individuals entitled to benefits from the employees' pension

fund have been satisfied, any ordinances established for creation or

maintenance of the fund may be repealed by the majority vote of the duly

elected members of the entire legislative body of the urban-county government.

If repealed, the fund's board of trustees shall, within sixty (60) days of repeal,

proceed with the liquidation of any residual assets of the fund. All residual

assets liquidated pursuant to this subsection shall be distributed by the board

of trustees to the urban-county government's general fund which shall then

contribute the entire distribution received into the policemen's and firefighters'

retirement fund as a supplemental contribution, so long as the return of assets

complies with federal and state law governing the distribution of assets. The

supplemental contribution provided to the policemen's and firefighters'

retirement fund under this subsection shall be in addition to the contributions

required by KRS 67A.360 to 67A.690 and shall not be used to offset any other

contributions required to be paid to the fund under the provisions of KRS

67A.360 to 67A.690. Within thirty (30) days following the distribution of residual

assets, the board of trustees of the fund shall as its last act file a complete

report with the legislative body of the urban-county government of the actions

taken to terminate the fund and liquidate residual assets of the fund. Upon

completion of the provisions specified by this subsection, the provisions of KRS

67A.320 to 67A.330 as it relates to the employees' pension fund shall be void.