19-20-602. Annuity savings account — member‘s contribution. (1) The annuity savings account is an account in which the contributions for the members to provide for their retirement allowance or benefits must be accumulated in individual accounts for each member.

Terms Used In Montana Code 19-20-602

  • Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
  • Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
  • board: means the retirement system's governing board provided for in 2-15-1010. See Montana Code 19-20-101
  • Earned compensation: means , except as limited by subsections (12)(b) and (12)(c) or by 19-20-715, remuneration paid for the service of a member out of funds controlled by an employer before any pretax deductions allowed under the Internal Revenue Code are deducted. See Montana Code 19-20-101
  • Employer: means :

    (a)the state of Montana;

    (b)a public school district, as provided in 20-6-101 and 20-6-701;

    (c)the office of public instruction;

    (d)the board of public education;

    (e)an education cooperative;

    (f)the Montana school for the deaf and blind, as described in 20-8-101;

    (g)the Montana youth challenge program, as defined in 10-1-101;

    (h)a correctional facility, as defined in 41-5-103;

    (i)the Montana university system;

    (j)a community college; or

    (k)any other agency, political subdivision, or instrumentality of the state that employs a person who is designated a member of the retirement system pursuant to 19-20-302. See Montana Code 19-20-101

  • Individual: means a human being. See Montana Code 19-20-101
  • Internal Revenue Code: has the meaning provided in 15-30-2101. See Montana Code 19-20-101
  • Member: means a person who has an individual account in the annuity savings account. See Montana Code 19-20-101
  • Service: means the performance of duties that would entitle the person to active membership in the retirement system under the provisions of 19-20-302. See Montana Code 19-20-101
  • Tier one member: means a person who became a member before July 1, 2013, and who has not withdrawn the member's account balance. See Montana Code 19-20-101
  • Tier two member: means a person who became a member on or after July 1, 2013, or who, after withdrawing the member's account balance, became a member again after July 1, 2013. See Montana Code 19-20-101

(2)(a) The normal contribution rate of each tier one member is 7.15% of the member’s earned compensation.

(b)The normal contribution rate of each tier two member is 8.15% of the member’s earned compensation.

(3)Contributions under 19-20-608 and this section to the annuity savings account must be made in the following manner:

(a)Each employer, pursuant to section 414(h)(2) of the Internal Revenue Code:

(i)shall pick up and pay the contributions that would be payable by the member under this subsection (3) for service rendered after June 30, 1985;

(ii)shall pick up and pay the contributions that would be paid in the manner provided in 19-20-716; and

(iii)may pick up and pay the contributions that would be payable by the member pursuant to 19-20-415.

(b)The member’s contributions picked up by the employer must be designated for all purposes of the retirement system as the member’s contributions, except for the determination of a tax upon a distribution from the retirement system. These contributions must become part of the member’s accumulated contributions but must be accounted for separately from those previously accumulated.

(c)The member’s contributions picked up by the employer must be payable from the same source as is used to pay compensation to the member and must be included in the member’s earned compensation as defined in 19-20-101. The employer shall deduct from the member’s compensation an amount equal to the amount of the member’s contributions picked up by the employer and remit the total of the contributions to the retirement board.

(d)The deductions must be made notwithstanding that the minimum compensation provided by law for a member may be reduced by the deductions. Each member is considered to consent to the deductions prescribed by this section, and payment of salary or compensation less the deductions is a complete discharge of all claims for the services rendered by the member during the period covered by the payment, except as to the benefits provided by the retirement system.

(4)The accumulated contributions of a member withdrawn by the member or paid to the member’s estate or to the member’s designated beneficiary in event of the member’s death must be paid from the annuity savings account. Upon the retirement of a member, the member’s accumulated contributions must be transferred from the annuity savings account to the pension accumulation account.

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