N.Y. Education Law § 399: Special annuity and custodial account programs authorized

§ 399. Special annuity and custodial account programs authorized. 1.

An employer is hereby authorized to establish by resolution special

annuity and custodial account programs which shall provide for the

purchase of contracts or establishment of custodial accounts providing

retirement and death benefits for or on behalf of employees electing to

enter into an agreement with such employer providing for a reduction of

annual salary for the purpose of purchasing such contracts or for making

contributions to such custodial accounts.

2. Where the employer has established a special annuity and/or

custodial account program authorized by this article, any employee may

enter into an agreement with his employer for the reduction of his

salary which is earned after the effective date of such agreement and

for contributions to the purchase of an annuity contract or to a

custodial account for such employee by his employer in an amount equal

to the reduction in salary so agreed on. The employer shall purchase the

annuity contract or make contributions to the custodial account for such

employee entering into such an agreement from the insurer or custodian

designated pursuant to subdivision four of this section. Such annuity

contract shall be issued to, and become the property of, such employee

whose rights therein shall be non-forfeitable except for failure to pay

future premiums or such custodial account shall be established on behalf

of such employee whose rights therein are non-forfeitable. Neither the

state, or a political subdivision thereof, nor an employer shall be a

party to any annuity contract purchased or custodial account established

in whole or in part with payments pursuant to said agreement, and no

retirement, death or other benefit shall be payable by the state, or

political subdivision thereof, or by an employer under such agreement or

such annuity contract or custodial account.

3. Subject to approval and filing, as hereinafter provided by the

comptroller, any such agreement shall specify the amount of such

reduction, and the effective date thereof, and shall be binding and

irrevocable as to both parties thereto during the continuation of such

employee's employment with the employer; provided, however, that such

agreement may be terminated in accordance with university guidelines

upon notice in writing by either party. Such termination shall take

effect at the beginning of the payroll period the first day of which is

nearest to the thirtieth day following the day on which such

notification of termination was (i) received by the employer, in the

event such termination is initiated by the employee, or (ii) sent to the

employee in the event such termination is initiated by the employer.

4. The board of trustees of state university with respect to the state

university and the community colleges, and the board of trustees of the

city university with respect to employees of the city university of New

York, shall designate the insurer or insurers from which such annuity

contracts or in the case of custodial accounts, the company or companies

from whom regulated investment company shares shall be purchased. In

making such designation, due consideration shall be given to (a) the

nature and extent of the rights and benefits to be provided by contracts

for such special annuity or custodial account for employees and their

beneficiaries, (b) the relation of such rights and benefits to the

amount of contributions to be made for such contracts, (c) the

suitability of such rights and benefits to the needs and interests of

employees, and to the interests of employers in the employment and

retention of employees, and (d) the authority and ability of the

designated insurer or insurers or designated company or companies to

provide rights and benefits under such contracts or custodial accounts.

5. The board of trustees of state university, with respect to the

state university and the community colleges, and the board of trustees

of the city of New York with respect to the city university, are hereby

authorized to provide for the administration of a program for the

purchase of such special annuities or establishment of custodial

accounts, and to perform or authorize the performance of such functions

as may be necessary for such purpose in accordance with this section.

6. No agreement for reduction of salary as authorized by this section

or any termination thereof shall become effective until approved by and

filed with the comptroller. Upon such approval and filing the

comptroller shall reduce an employee's salary pursuant to said agreement

and pay an amount equal to the amount agreed upon for such salary

reduction as an employer contribution to the designated insurer or

insurers or designated custodian or custodians. Notwithstanding the

reductions of salary authorized by this article, (i) the amount of

employer and employee contributions otherwise required on behalf of an

employee electing the optional retirement program pursuant to articles

eight-B or one hundred twenty-five-A of this chapter, as the case may

be, shall continue to be made on the basis of the salary of such

employee without regard to such reduction, or (ii) in the event a member

of a public retirement system in this state agrees to a reduction of his

salary in accordance with this subdivision, such agreement shall not

cause him to lose any benefits under such public retirement system to

which he would be otherwise entitled had he not agreed to reduce his

salary for the purpose of having a special annuity purchased or

contributions to a custodial account made on his behalf, and any

required employer and employee contributions shall continue to be made

on the basis of the salary of such employee without regard to such

reduction. Any survivor's benefit payable pursuant to the civil service

law shall be based upon the salary of such employee without regard to

the reduction authorized by this article.

7. Any payroll deduction, other than income tax withholdings as

required by law, which may be required or authorized pursuant to law,

contract, agreement, or any other instrument, the amount of which is

determined in relation to an employee's earnings, shall be based on the

salary of such employee without regard to reduction thereof pursuant to

any agreement authorized by this article.

8. An employee agreeing to have his salary reduced in accordance with

this article shall be paid an amount equal to his salary less the amount

of the reduction pursuant to such agreement and any deductions

authorized by law, such amount to be paid in equal installments in

accordance with the payroll procedure otherwise appropriate.

9. Payments for contracts providing for a special annuity or custodial

account shall be made by the comptroller to the designated insurer or

insurers or designated custodians out of moneys otherwise available in

accordance with law for salaries of the employees for whom such

annuities are purchased or contributions to such custodial accounts are

made.

10. Nothing contained in this section shall impair or prevent any

agreements which have heretofore, or may hereafter be, entered into

between Alfred university and any employee of the state college of

ceramics under the management and control of Alfred university as the

representative of the state university trustees, or between Cornell

university and any employee of the state colleges of agriculture, home

economics, veterinary medicine or industrial and labor relations, the

state agricultural experiment station at Geneva, or any other

institution or agency under the management and control of Cornell

university as representative of the state university trustees for

reduction of the basic annual salary of any such employee as otherwise

fixed by or pursuant to law and purchase of a special annuity or

contribution to a custodial account on his behalf. In the case of any

such employee whose salary is paid directly to him by the state, the

comptroller is hereby authorized to reduce his salary in accordance with

any such agreement as certified on the appropriate payroll and upon the

audit and warrant of the comptroller the amount of any such reduction

shall be paid to Alfred university or Cornell university, as the case

may be, out of moneys appropriated and otherwise available for the

payment of such employee's salary, for the purchase by such university

of a special annuity or contribution to a custodial account for such

employee. No agreement for reduction of salary and purchase of a special

annuity or contribution to a custodial account by any employee to whom

this subdivision is applicable shall cause him to lose any benefits to

which he would otherwise be entitled by reason of membership in the New

York state and local employees' retirement system and any required

employer and employee contributions to such system shall continue to be

made on the basis of the salary of such employee without regard to such

reduction. In the case of any such employee electing the optional

retirement program the amount of employer and employee contributions

otherwise required shall continue to be made on the basis of the salary

of such employee without regard to such reduction. Any survivor's

benefit payable pursuant to the civil service law shall be based on the

salary of any employee to whom this subdivision is applicable without

regard to his agreement for reduction thereof. Subdivisions seven and

eight of this section shall apply to employees to whom this subdivision

is applicable who enter into agreements for reduction of salary and

purchase of special annuities or contribution to a custodial account.