{"data":{"id":"us-ky/krs-21.540","jurisdiction":"us-ky","citation":"KRS 21.540","heading":"Duties of board of trustees -- Qualified domestic relations orders -- Intent to","body":"conform with federal law -- Availability of information on website -- Conflicts\nof interest -- Prohibition against fees for unregulated placement agents --\nInvestment procurement policy -- Release of certain information from\naccounts of current or former legislators -- Proxy voting guidelines.\n(1) (a) Except as provided in KRS 21.550, 21.560, and subsections (3) and (7) of this\nsection, the board of trustees of the Judicial Form Retirement System shall be\ncharged with the administration of KRS 6.500 to 6.577 and 21.350 to 21.510.\n(b) The Judicial Form Retirement System shall have all powers necessary to\nadminister KRS 6.500 to 6.577 and 21.350 to 21.510 including the  power to\npromulgate all reasonable administrative regulations, pass upon questions of\neligibility and disability, make employments for services, to contract for\nfiduciary liability insurance, investment counseling, and actuarial, auditing,\nand other professional services subject to the limitations of KRS Chapters 45,\n45A, 56, and 57.\n(c) 1. The administrative expenses shall be paid out of an administrative\naccount which shall be funded by transfers of the necessary money, in\nappropriate ratio, from the fun ds provided for in KRS 21.550 and\n21.560.\n2. Authorization for all administrative expenses relating to the operations\nof the Judicial Form Retirement System shall be contained in the\nbiennial budget unit request, branch budget recommendations, and the\nfinancial plan adopted by the General Assembly pursuant to KRS\nChapter 48.\n3. The request from the Judicial Form Retirement System shall include any\nspecific administrative expenses requested by the board of trustees that\nare not otherwise specified by this subsection.\n(2) (a) A qualified domestic relations order issued by a court or administrative\nagency shall be honored by the Judicial Form Retirement System if the order\nis in compliance with the requirements established by the retirement system.\n(b) Except i n cases involving child support payments, the Judicial Form\nRetirement System may charge reasonable and necessary fees and expenses to\nthe participant and the alternate payee of a qualified domestic relations order\nfor the administration of the qualified d omestic relations order by the\nretirement system. All fees and expenses shall be established by\nadministrative regulations promulgated by the board of trustees of the\nretirement system. The qualified domestic relations order shall specify\nwhether the fees and expenses provided by this subsection shall be paid:\n1. Solely by the participant;\n2. Solely by the alternate payee; or\n3. Equally shared by the participant and alternate payee.\n(c) For purposes of this subsection, a \"qualified domestic relations order\" shall\nmean any judgment, decree, or order, including approval of a property\nsettlement agreement, that:\n1. Is issued by a court or administrative agency; and\n2. Relates to the provisio n of child support, alimony payments, or marital\nproperty rights to a spouse, former spouse, child, or other dependent of a\nmember.\n(3) Notwithstanding any other evidence of legislative intent, it is hereby declared to be\nthe controlling legislative intent  that the provisions of KRS 21.345 to 21.580 and\n6.500 to 6.577 shall conform with federal statutes or regulations and meet the\nqualification requirements under 26 U.S.C. sec. 401(a), applicable federal\nregulations, and other published guidance, and the bo ard shall have the authority to\npromulgate administrative regulations, with retroactive effect if required under\nfederal law, to conform the Legislators' Retirement Plan and the Judicial Retirement\nPlan with federal statutes and regulations and to meet the qualification requirements\nunder 26 U.S.C. sec. 401(a).\n(4) In order to improve public transparency regarding the administration of the\nLegislators' Retirement Plan and the Judicial Retirement Plan, the board of trustees\nof the Judicial Form Retirement Sy stem shall adopt a best -practices model by\nposting the following information to the system's website and shall make it\navailable to the public:\n(a) Meeting notices and agendas for all meetings of the board. Notices and\nagendas shall be posted to the system's website at least seventy-two (72) hours\nin advance of the board or committee meetings, except in the case of special\nor emergency meetings as provided by KRS 61.823;\n(b) A list of the members of the board of trustees and membership on each\ncommittee established by the board, including any investment committees;\n(c) A list of system staff and each staff's salary;\n(d) A list of the fund's professional consultants and their respective fees and\ncommissions paid by the system;\n(e) A list of the system's expenditures;\n(f) The annual financial audit of the system, which shall include but not be\nlimited to a statement of plan net assets, a statement of changes in plan net\nassets, an actuarial value of assets, a schedule of investments, a statement of\nfunded status and funding progress, and other supporting data;\n(g) All external audits;\n(h) The annual actuarial valuation report of pension and retiree health benefits of\neach retirement plan administered by the system, which shall include a\ngeneral statistical secti on and information on contributions, benefit payouts,\nand retirement plan demographic data;\n(i) All board minutes or other materials that require adoption or ratification by\nthe board of trustees or committees of the board. The items listed in this\nparagraph shall be posted within seventy -two (72) hours of adoption or\nratification by the board or committees;\n(j) All bylaws, policies, or procedures adopted or ratified by the board of trustees\nor by committees of the board;\n(k) The summary plan description for each plan administered by the system;\n(l) A document or a link to documents containing an unofficial copy of the\nstatutes governing the plans administered by the Judicial Form Retirement\nSystem;\n(m) Investment information, including all investment holdin gs in aggregate, fees,\nand commissions for each fund administered by the board, which shall be\nupdated on a quarterly basis for fiscal years beginning on or after July 1,\n2017. The system shall request from all managers, partnerships, and any other\navailable sources all information regarding fees and commissions and shall,\nbased on the requested information received:\n1. Disclose the dollar value of fees and commissions paid to each\nindividual manager or partnership;\n2. Disclose the dollar value of any profi t sharing, carried interest, or any\nother partnership incentive arrangements, partnership agreements, or\nany other partnership expenses received by or paid to each manager or\npartnership; and\n3. As applicable, report each fee or commission by manager or pa rtnership\nconsistent with standards established by the Institutional Limited\nPartners Association (ILPA).\nIn addition to the requirements of this paragraph, the system shall also\ndisclose the name and address of all individual underlying managers or\npartners in any fund of funds in which system assets are invested;\n(n) An update of net investment returns, asset allocations, and the performance of\nthe funds against benchmarks adopted by the board for each fund, for each\nasset class administered by the board , and for each manager over a historical\nperiod. The update shall be posted on a quarterly basis for fiscal years\nbeginning on or after July 1, 2017;\n(o) All contracts or offering documents for services, goods, or property purchased\nor utilized by the syst em. Notwithstanding KRS 61.878, all contracts,\nincluding investment contracts, shall be subject to review by the board, the\nAuditor of Public Accounts, and the Government Contract Review Committee\nestablished pursuant to KRS 45A.705. If any public record c ontains material\nwhich is not excepted under KRS 61.878, the system shall separate the\nexcepted material by removal, segregation, or redaction, and make the\nnonexcepted material available for examination;\n(p) Information regarding the system's financial and actuarial condition that is\neasily understood by the members, retired members, and the public; and\n(q) All proxy vote reports as provided by subsection (9) of this section.\nNothing in this subsection shall require or compel the Judicial Form Retirement\nSystem to disclose information specific to the account of an individual member of\nthe Legislators' Retirement Plan or the Judicial Retirement Plan.\n(5) No trustee or employee of the board shall:\n(a) Have any interest, direct or indirect, in the gains or profits of any investment\nor transaction made by the board, provided that the provisions of this\nparagraph shall not prohibit a member or retiree of one (1) of the retirement\nplans administered by the system from serving as a trustee;\n(b) Directly or indirectly, for himself or herself or as an agent, use the assets of\nthe system, except to make current and necessary payments authorized by the\nboard;\n(c) Become an endorser, surety, or obligor for moneys loaned by or borrowed\nfrom the board;\n(d) Have a contract or agreement with the retirement system, individually or\nthrough a business owned by the trustee or the employee;\n(e) Use his or her official position with the retirement system to obtain a financial\ngain or benefit or advantage for himself or herself or a family member;\n(f) Use confidential information acquired during his or her tenure with the\nsystems to further his or her own economic interests or that of another person;\nor\n(g) Hold outside employment with,  or accept compensation from, any person or\nbusiness with which he or she has involvement as part of his or her official\nposition with the system. The provisions of this paragraph shall not prohibit:\n1. A trustee from serving as a judge or member of the Ge neral Assembly;\nor\n2. A trustee from serving on the board if the compensation is de minimus\nand incidental to the trustee's outside employment. If the compensation\nis more than de minimus, the trustee shall disclose the amount of the\ncompensation to the ot her trustees and recuse himself or herself from\nany matters involving hiring or retaining a person or a business from\nwhom more than de minimus amounts are received by the trustee. For\npurposes of this section, \"de minimus\" means an insignificant amount\nthat does not raise a reasonable question as to the trustee's objectivity.\n(6) Notwithstanding any other provision of KRS 6.500 to 6.577 and 21.345 to 21.580\nto the contrary, no funds of the Legislators' Retirement Plan or the Judicial\nRetirement Plan, inclu ding fees and commissions paid to an investment manager,\nprivate fund, or company issuing securities, who manages systems assets, shall be\nused to pay fees and commissions to placement agents. For purposes of this\nsubsection, \"placement agent\" means a thir d-party individual, who is not an\nemployee, or firm, wholly or partially owned by the entity being hired, who solicits\ninvestments on behalf of an investment manager, private fund, or company issuing\nsecurities.\n(7) All contracts for the investment or mana gement of assets of the system shall not be\nsubject to KRS Chapters 45, 45A, 56, and 57. Instead, the board shall conduct the\nfollowing process to develop and adopt an investment procurement policy with\nwhich all prospective contracts for the investment or  management of assets of the\nsystem shall comply:\n(a) On or before July 1, 2017, the board shall consult with the secretary of the\nFinance and Administration Cabinet or his or her designee to develop an\ninvestment procurement policy, which shall be written  to meet best practices\nin investment management procurement;\n(b) Thirty (30) days prior to adoption, the board shall tender the preliminary\ninvestment procurement policy to the secretary of the Finance and\nAdministration Cabinet or his or her designee for review and comment;\n(c) Upon receipt of comments from the secretary of the Finance and\nAdministration Cabinet or his or her designee, the board shall choose to adopt\nor not adopt any recommended changes;\n(d) Upon adoption, the board shall tender the final investment procurement policy\nto the secretary of the Finance and Administration Cabinet or his or her\ndesignee;\n(e) No later than thirty (30) days after receipt of the investment procurement\npolicy, the secretary or his or her designee shall certify whet her the board's\ninvestment procurement policy meets or does not meet best practices for\ninvestment management procurement; and\n(f) Any amendments to the investment procurement policy shall adhere to the\nrequirements set forth by paragraphs (b) to (e) of this subsection.\n(8) (a) 1. Upon request by any person, the Judicial Form Retirement System shall\nrelease the following information from the accounts of any member or\nretiree of the Legislators' Retirement Plan or the Judicial Retirement\nPlan, if the member or retiree is a current or former officeholder in the\nKentucky General Assembly:\na. The first and last name of the member or retiree;\nb. The plan or plans in which the member has an account or from\nwhich the retiree is receiving a monthly retirement allowance;\nc. The status of the member or retiree, including but not limited to\nwhether he or she is a contributing to the plans but has not retired,\nor a retiree drawing a monthly retirement allowance;\nd. If the individual is a retiree, the monthly retirement allowance  that\nhe or she was receiving at the end of the most recently completed\nfiscal year; and\ne. If the individual is a member who has not yet retired, the estimated\nmonthly retirement allowance that he or she is eligible to receive\non the first date he or she would be eligible for an unreduced\nretirement allowance, using his or her service credit, final\ncompensation, and accumulated account balance at the end of the\nmost recently completed fiscal year.\n2. No information shall be disclosed under this paragraph f rom an account\nthat is paying benefits to a beneficiary due to the death of a member or\nretiree.\n(b) The release of information under paragraph (a) of this subsection shall not\nconstitute a violation of the Open Records Act, KRS 61.870 to 61.884.\n(9) (a) The board shall adopt:\n1. Written proxy voting guidelines which are consistent with the fiduciary\nduties and other requirements of KRS 21.450; or\n2. The proxy voting guidelines of a sole investment manager under\ncontract with the board to act as a fiduciary  in compliance with the\nduties and other requirements of KRS 21.450.\n(b) The board shall not adopt the recommendations of a proxy adviser or proxy\nvoting service and shall not allow such proxy adviser or proxy voting service\nto vote on its behalf, unless t he proxy adviser or proxy voting service\nacknowledges in writing and accepts under contract its duties under KRS\n21.450 and commits to follow the board -adopted proxy voting guidelines\nwhen voting the system's shares in order to comply with the board's fidu ciary\nduties and other responsibilities under this section and KRS 21.450.\n(c) All shares held by or on behalf of the system, and which the system is entitled\nto vote under state, federal, or common laws, shall be voted according to the\nproxy voting guidel ines adopted by the board and subject to the fiduciary\nduties and other requirements of this section by:\n1. The board or investment committee of the board who are fiduciaries\nhaving the authority to make investments under KRS 21.450; or\n2. A proxy adviser,  proxy voting service, or sole investment manager that\nacknowledges in writing and accepts under contract its duties under\nKRS 21.450 and commits to follow the proxy voting guidelines adopted\nby the board when voting the system's shares in order to comply with\nthe board's fiduciary duties and other responsibilities under this section.\n(d) All proxy votes shall be reported at least quarterly to the board. For each vote,\nthe report shall provide:\n1. The vote caption;\n2. The date of the vote;\n3. The company's name;\n4. The vote cast for the system;\n5. The recommendation of the company's management; and\n6. If applicable, the recommendation of the proxy adviser or proxy voting\nservice.","path":["KRS Chapter 21"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=53914","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:48:41Z","sha256":"12ff6c4faa23062af9690d65dfbfb12b4116af92701bc073738409725fd4e755","source_id":"us-ky","stale":false,"prev":"us-ky/krs-21.530","next":"us-ky/krs-21.550"},"notice":"GroundRules: Original legal text. Not legal advice."}