{"data":{"id":"us-ky/krs-61.523","jurisdiction":"us-ky","citation":"KRS 61.523","heading":"Cessation of participation by employer in retirement system and","body":"establishment of a governmental plan -- Effects of on employees and employers\n-- No legislative determination that employer ceasing to participate is a\n\"governmental agency.\"\nThe following shall apply if an employer ceases participation in the Kentucky Employees\nRetirement System or the County Employees Retirement System under KRS 61.522 and,\nafter ceasing participation, establishes an alternative retirement plan as required by KRS\n61.522, which is a governmental plan within the meaning of 26 U.S.C. sec. 414(d) that\nprovides for mandatory employee contributions:\n(1) Each employee of the employer participating in the governmental plan shall\ncontribute a fixed percentage of compensati on for each pay period he or she\nreceives compensation. The fixed percentage of compensation provided by this\nsubsection shall:\n(a) Be established in a written plan document by the board of directors or other\ngoverning body of the employer for specific classes of employees;\n(b) Comply with subsections (2) to (4) of this section; and\n(c) Only be changed by the board of directors or other governing body of the\nemployer prospectively, provided the written plan document established by\nparagraph (a) of this subsection is amended to reflect the change;\n(2) The employer shall cause to be deducted from the compensation of each employee\nthe contribution rate specified by subsection (1) of this section;\n(3) The deductions provided by this section shall be made notwith standing that the\nminimum compensation provided by law for any employee shall be reduced\nthereby. Every employee shall be deemed to consent and agree to the deductions\nmade as provided by this section, and payment of salary or compensation less these\ndeductions shall be a full and complete discharge of all claims for services rendered\nby the person during the period covered by such payment, except as to benefits\npayable under the plans established by the employer that are covered by this section;\n(4) Each e mployer shall, solely for the purpose of compliance with 26 U.S.C. sec.\n414(h), pick up the employee contributions required by this section and the\ncontributions so picked up shall be treated as employer contributions in determining\ntax treatment under the  United States Internal Revenue Code and KRS 141.010,\nexcept for purposes of the Federal Insurance Contributions Act. The picked -up\nemployee contribution shall:\n(a) Be in lieu of employee contributions;\n(b) Not be included as gross income of the employee u ntil such time as the\ncontributions are distributed or made available to the employee; and\n(c) Be paid by the employer from the same source of funds which is used to pay\ncompensation to the employee.\nThe employee shall not be permitted to opt -out of the p icked-up employee\ncontributions, to receive the picked -up employee contributions directly instead of\nhaving them paid by the employer to the retirement plan, or to have any other cash\nor deferred election right to the picked -up contributions within the mea ning of 26\nC.F.R. sec. 1.401(k)-1(a)(3); and\n(5) The provisions of this section shall not be construed to be a determination or\nopinion by the Kentucky General Assembly as to whether or not an employer who\nceases participation in the Kentucky Employees Ret irement System or the County\nEmployees Retirement System under KRS 61.522 is a governmental agency for\npurposes of establishing a governmental plan within the meaning of 26 U.S.C. sec.\n414(d).","path":["KRS Chapter 61"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=47375","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:49:15Z","sha256":"789da33c9ed65edafc74e6047ba2782dd1f5b931a61919145bcf90038994e41e","source_id":"us-ky","stale":false,"prev":"us-ky/krs-61.522","next":"us-ky/krs-61.525"},"notice":"GroundRules: Original legal text. Not legal advice."}