General Provisions - State Teachers’ Retirement System Cash Benefit Program - CA Education

Section § 26000

This law explains that as of July 1, 1996, a Cash Balance Plan was introduced for teachers and staff working less than half-time or temporarily at employers offering this option, including schools and community colleges. These individuals aren't required to join the main retirement plan, but they can benefit from this alternative. Over time, the Cash Balance Plan and the main retirement plan merged to create a unified State Teachers’ Retirement Plan. Local education authorities can decide if their employees can participate in the Cash Balance Benefit Program under this unified plan.

The Legislature hereby finds and declares that the State Teachers’ Retirement System Cash Balance Plan was created and established on July 1, 1996, to provide a retirement plan for persons employed by an employer offering the Cash Balance Plan, excluding a community college district, to perform creditable service for less than 50 percent of the full-time equivalent for the position, or employed by a community college district offering the Cash Balance Plan to perform creditable service on a temporary basis pursuant to Section 87474, 87478, 87480, 87481, 87482, or 87482.5, or employed by an employer offering the Cash Balance Plan to perform creditable service as a substitute employee. The persons eligible for the Cash Balance Plan were excluded from mandatory membership in the State Teachers’ Retirement System Defined Benefit Plan. Both plans are administered by the Teachers’ Retirement Board. Because both plans were intended to provide for the retirement of teachers and other persons employed in connection with the public schools of this state and schools supported by this state, a merger of these two plans is now hereby made for the purpose of establishing a single retirement plan that shall be known and may be cited as the State Teachers’ Retirement Plan consisting of the different benefit programs set forth in this part and Part 13 (commencing with Section 22000). The plan shall be administered by the Teachers’ Retirement Board as set forth in this part and Part 13 (commencing with Section 22000). As a result of this merger, a Cash Balance Benefit Program will be provided under the State Teachers’ Retirement Plan and that program is set forth in this part.

The governing board of a school district, community college district, or county office of education may, by formal action, elect to provide the benefits of the Cash Balance Benefit Program under this part for their employees.

Cash Balance Plan State Teachers’ Retirement System merger retirement plan Teachers’ Retirement Board part-time employment temporary basis community college district substitute employee State Teachers’ Retirement Plan benefit programs public schools school district formal action local education authorities

(Amended by Stats. 2015, Ch. 123, Sec. 27. (AB 991) Effective January 1, 2016.)

Section § 26000.5

If an employer decides to offer retirement benefits to employees through the Cash Balance Benefit Program, they must sign an agreement with the State Teachers’ Retirement System. This agreement lays out the rules for offering the program and stays active until the employer decides to stop the program.

An employer whose governing board has elected to provide the benefits of this part for its employees pursuant to Section 26000 shall enter into an agreement with the State Teachers’ Retirement System. The agreement shall specify the terms and conditions of the employer’s formal action to provide the Cash Balance Benefit Program and shall remain in effect unless or until the employer exercises the right to discontinue the program pursuant to Chapter 17 (commencing with Section 28100).

employer agreement Cash Balance Benefit Program State Teachers’ Retirement System employee benefits retirement program program discontinuation governing board decision Section 26000 Chapter 17 Section 28100 retirement benefits formal action terms and conditions

(Amended by Stats. 2006, Ch. 655, Sec. 62. Effective January 1, 2007.)

Section § 26000.6

This law says that if an employer or employee was part of the Cash Balance Plan before a certain merger, they will automatically be considered part of the Cash Balance Benefit Program under the State Teachers’ Retirement Plan. This applies to participants, employers, and beneficiaries alike.

(a) An election by any employer to provide the benefits of the Cash Balance Plan for their employees prior to the merger described in Section 26000 shall be deemed to constitute an election to provide the Cash Balance Benefit Program under the State Teachers’ Retirement Plan.

(b) Participation in the Cash Balance Plan by any participant prior to the merger described in Section 26000 shall be deemed to constitute participation in the Cash Balance Benefit Program under the State Teachers’ Retirement Plan.

(c) Any beneficiary under the Cash Balance Plan prior to the merger described in Section 26000 shall be deemed to be a beneficiary under the Cash Balance Benefit Program under the State Teachers’ Retirement Plan.

Cash Balance Plan Cash Balance Benefit Program State Teachers’ Retirement Plan employer election employee participation beneficiary status pre-merger participants retirement benefits education retirement teacher retirement system merger provisions employer benefits participant rights program transition beneficiary rights

(Added by Stats. 1998, Ch. 1048, Sec. 13. Effective January 1, 1999.)

Section § 26001

This section explains how the Teachers’ Retirement Board oversees the retirement plan for teachers, including a specific part known as the Cash Balance Benefit Program. The plan must follow certain tax laws. The board has the authority to make changes to the plan to comply with federal regulations, adjust interest rates, calculate extra earnings, and update financial assumptions used in the plan.

The design and administration of the plan, including the Cash Balance Benefit Program, shall comply with the applicable provisions of the Internal Revenue Code and the Revenue and Taxation Code. The Teachers’ Retirement Board may amend the plan to comply with the applicable federal laws and regulations to the extent permitted by law, to establish or revise the minimum interest rate, to declare additional earnings credit, to declare additional annuity credit, and to adopt and amend actuarial assumptions for all purposes under the plan.

Teachers’ Retirement Board Cash Balance Benefit Program Internal Revenue Code Revenue and Taxation Code federal laws and regulations plan amendments interest rate additional earnings credit additional annuity credit actuarial assumptions

(Amended by Stats. 1998, Ch. 965, Sec. 229. Effective January 1, 1999.)

Section § 26002

This section states that the Teachers’ Retirement Board is responsible for managing the Cash Balance Benefit Program. They must follow specific rules and act in the best interest of the plan participants, as outlined in other parts of the law.

The Cash Balance Benefit Program shall be administered by the Teachers’ Retirement Board with all of the powers, responsibilities and duties for administration of the plan set forth in Chapter 3 (commencing with Section 22200) through Chapter 7 (commencing with Section 22375) of Part 13. In administering the plan, the board and its officers and employees of the system shall exercise their fiduciary duties set forth in Chapter 4 (commencing with Section 22250) of Part 13.

Teachers' Retirement Board Cash Balance Benefit Program fiduciary duties plan administration Part 13 Chapter 3 Chapter 7 Chapter 4 Section 22200 Section 22375 Section 22250

(Amended by Stats. 1998, Ch. 965, Sec. 230. Effective January 1, 1999.)

Section § 26002.5

If someone is registered as a domestic partner under specific sections of the Family Code, they should be treated like a spouse in certain situations, unless other specific exclusions apply.

Except as excluded in subdivision (d) of Section 26807.5 or subdivision (c) of Section 26906.5, a person who is the registered domestic partner of a member, as established pursuant to Section 297 or 299.2 of the Family Code, shall be treated in the same manner as a “spouse,” as defined in Section 26140.

domestic partner registered domestic partner spouse treatment Section 297 Section 299.2 Family Code same rights as spouse exclusions subdivision (d) subdivision (c)

(Amended by Stats. 2015, Ch. 123, Sec. 28. (AB 991) Effective January 1, 2016.)

Section § 26003

This law says that if any specific part of it is found to be invalid or can't be applied to someone, the rest of the law still stands. The valid parts will continue to be enforced. Basically, each part of the law is separate, so one bad part doesn't ruin the whole thing.

If any provision of this part or the application thereof to any person or circumstance is held invalid, that invalidity shall not affect other provisions or applications of this part that can be given effect without the invalid provision or application, and to this end the provisions of this part are severable.

severability invalid provision application to person circumstance enforcement without invalid parts separate legal clauses partial invalidity law continuity legal application preserving valid provisions

(Added by Stats. 1995, Ch. 592, Sec. 16. Effective January 1, 1996.)

Section § 26004

This section outlines rules for retirement and other benefits under a specific plan, ensuring everything aligns with federal tax code requirements. The amount you can earn and use to calculate benefits is limited by federal law, and distributions must follow certain age or employment end dates. Benefits, including retirement, disability, or death, might be given as a lump-sum payment or an ongoing annuity. If you're receiving these benefits, you can choose to have them rolled over into a different eligible retirement plan. The law also ensures the calculations are fair and standardized, rejecting employer manipulation.

Notwithstanding any other provision of law:

(a) The benefits payable to any participant or beneficiary under this part shall be subject to the limitations imposed by Section 415 of Title 26 of the United States Code.

(b) The amount of compensation that is taken into account in computing benefits under this part for a plan year shall not exceed the annual compensation limit applicable to that plan year in accordance with Section 401(a)(17) of Title 26 of the United States Code as that section read on the effective date of this section and as that section may be amended after that date. The determination of compensation for a 12-month period shall be subject to the annual compensation limit in effect for the calendar year in which the 12-month period begins. In a determination of average compensation over more than one 12-month period, the amount of compensation taken into account for each 12-month period shall be subject to the respective annual compensation limit applicable to that period.

(c) Distributions from the plan under this part shall be made in accordance with Section 401(a)(9) of Title 26 of the United States Code, including the incidental death benefit requirements of Section 401(a)(9)(G) and the regulations thereunder. The required beginning date of benefit payments that represent the entire interest of the participant shall be as follows:

(1) In the case of a lump-sum distribution of a retirement benefit, disability benefit, or termination benefit, the lump-sum payment shall be made not later than April 1 of the calendar year following the later of (A) the calendar year in which the participant attains the age at which the Internal Revenue Code of 1986 requires a distribution of benefits or (B) the calendar year in which the participant terminates all employment subject to coverage by the plan.

(2) In the case of a retirement benefit or disability benefit that is to be paid in the form of an annuity, payment of the annuity shall begin not later than April 1 of the calendar year following the later of (A) the calendar year in which the participant attains the age at which the Internal Revenue Code of 1986 requires a distribution of benefits or (B) the calendar year in which the participant terminates employment in all positions subject to coverage by the plan, with the annuity to continue over the life of the participant or the life of the participant and the participant’s option beneficiary, or over a period not to exceed the life expectancy of the participant or the life expectancy of the participant and the participant’s option beneficiary.

(3) In the case of a death benefit, distributions shall commence as follows:

(A) The normal form of the benefit or other lump-sum distribution shall be paid in accordance with Section 401(a)(9) of Title 26 of the United States Code and the regulations thereunder.

(B) Annuity payments shall commence as follows:

(i) If the spouse is the sole beneficiary, not later than December 31 of the later of the calendar year in which the participant would have attained the age at which the Internal Revenue Code of 1986 requires a distribution of benefits or the calendar year following the calendar year of the participant’s death.

(ii) If the spouse is not the sole beneficiary, not later than December 31 of the calendar year following the calendar year of the participant’s death.

(d) If a person becomes entitled to a distribution from the plan under this part that constitutes an eligible rollover distribution within the meaning of Section 401(a)(31) of Title 26 of the United States Code, the person may elect under terms and conditions established by the board to have the distribution or a portion thereof paid directly to a plan that constitutes an eligible retirement plan within the meaning of Section 401(a)(31), as specified by that person. Upon the exercise of the election by a person with respect to a distribution or a portion thereof, the distribution from the plan of the amount so designated, once distributable under the terms of the plan, shall be made in the form of a direct rollover to the eligible retirement plan so specified.

(e) The amount of any benefit from the plan under this part that is determined on the basis of actuarial assumptions shall be based on actuarial assumptions adopted by the board pursuant to Section 26213 as a plan amendment with respect to the Cash Balance Benefit Program and those assumptions shall preclude employer discretion and comply with Section 401(a)(25) of Title 26 of the United States Code.

benefits limitations lump-sum distribution annuity payments death benefits rollover distribution eligible retirement plan actuarial assumptions compensation limits retirement benefits disability benefits Section 415 IRS Code Section 401(a)(17) limits required beginning date direct rollover Cash Balance Benefit Program

(Amended by Stats. 2024, Ch. 117, Sec. 6. (AB 2770) Effective January 1, 2025.)