61.510 Definitions for KRS 61.510 to 61.705

61.510 Definitions for KRS 61.510 to 61.705.

As used in KRS 61.510 to 61.705, unless the context otherwise requires:

(1) "System" means the Kentucky Employees Retirement System created by KRS

61.510 to 61.705;

(2) "Board" means the board of trustees of the system as provided in KRS 61.645;

(3) "Department" means any state department or board or agency participating in the

system in accordance with appropriate executive order, as provided in KRS 61.520.

For purposes of KRS 61.510 to 61.705, the members, officers, and employees of the

General Assembly and any other body, entity, or instrumentality designated by

executive order by the Governor, shall be deemed to be a department,

notwithstanding whether said body, entity, or instrumentality is an integral part of

state government;

(4) "Examiner" means the medical examiners as provided in KRS 61.665;

(5) "Employee" means the members, officers, and employees of the General Assembly

and every regular full-time, appointed or elective officer or employee of a

participating department, including the Department of Military Affairs. The term

does not include persons engaged as independent contractors, seasonal, emergency,

temporary, interim, and part-time workers. In case of any doubt, the board shall

determine if a person is an employee within the meaning of KRS 61.510 to 61.705;

(6) "Employer" means a department or any authority of a department having the power

to appoint or select an employee in the department, including the Senate and the

House of Representatives, or any other entity, the employees of which are eligible

for membership in the system pursuant to KRS 61.525;

(7) "State" means the Commonwealth of Kentucky;

(8) "Member" means any employee who is included in the membership of the system

or any former employee whose membership has not been terminated under KRS

61.535;

(9) "Service" means the total of current service and prior service as defined in this

section;

(10) "Current service" means the number of years and months of employment as an

employee, on and after July 1, 1956, except that for members, officers, and

employees of the General Assembly this date shall be January 1, 1960, for which

creditable compensation is paid and employee contributions deducted, except as

otherwise provided, and each member, officer, and employee of the General

Assembly shall be credited with a month of current service for each month he or

she serves in the position;

(11) "Prior service" means the number of years and completed months, expressed as a

fraction of a year, of employment as an employee, prior to July 1, 1956, for which

creditable compensation was paid; except that for members, officers, and

employees of the General Assembly, this date shall be January 1, 1960. An

employee shall be credited with one (1) month of prior service only in those months

he or she received compensation for at least one hundred (100) hours of work;

provided, however, that each member, officer, and employee of the General

Assembly shall be credited with a month of prior service for each month he or she

served in the position prior to January 1, 1960. Twelve (12) months of current

service in the system are required to validate prior service;

only in those months

he or she received compensation for at least one hundred (100) hours of work;

provided, however, that each member, officer, and employee of the General

Assembly shall be credited with a month of prior service for each month he or she

served in the position prior to January 1, 1960. Twelve (12) months of current

service in the system are required to validate prior service;

(12) "Accumulated contributions" at any time means the sum of all amounts deducted

from the compensation of a member and credited to his or her individual account in

the members' account, including employee contributions picked up after August 1,

1982, pursuant to KRS 61.560(4), together with interest credited, on such amounts

and any other amounts the member shall have contributed thereto, including interest

credited thereon. For members who begin participating on or after September 1,

2008, "accumulated contributions" shall not include employee contributions that are

deposited into accounts established pursuant to 26 U.S.C. sec. 401(h) within the

funds established in KRS 16.510 and 61.515, as prescribed by KRS 61.702(3)(b);

(13) "Creditable compensation":

(a) Means all salary, wages, tips to the extent the tips are reported for income tax

purposes, and fees, including payments for compensatory time, paid to the

employee as a result of services performed for the employer or for time during

which the member is on paid leave, which are includable on the member's

federal form W-2 wage and tax statement under the heading "wages, tips,

other compensation," including employee contributions picked up after

August 1, 1982, pursuant to KRS 61.560(4). For members of the General

Assembly, it shall mean all amounts which are includable on the member's

federal form W-2 wage and tax statement under the heading "wages, tips,

other compensation," including employee contributions picked up after

August 1, 1982, pursuant to KRS 6.505(4) or 61.560(4);

(b) Includes:

1. Lump-sum bonuses, severance pay, or employer-provided payments for

purchase of service credit, which shall be averaged over the employee's

total service with the system in which it is recorded if it is equal to or

greater than one thousand dollars ($1,000);

2. Cases where compensation includes maintenance and other perquisites,

but the board shall fix the value of that part of the compensation not paid

in money;

3. Lump-sum payments for creditable compensation paid as a result of an

order of a court of competent jurisdiction, the Personnel Board, or the

Kentucky Commission on Human Rights, or for any creditable

compensation paid in anticipation of settlement of an action before a

court of competent jurisdiction, the Personnel Board, or the Kentucky

Commission on Human Rights, including notices of violations of state

or federal wage and hour statutes or violations of state or federal

discrimination statutes, which shall be credited to the fiscal year during

which the wages were earned or should have been paid by the employer.

This subparagraph shall also include lump-sum payments for reinstated

wages pursuant to KRS 61.569, which shall be credited to the period

during which the wages were earned or should have been paid by the

employer;

4. Amounts which are not includable in the member's gross income by

virtue of the member having taken a voluntary salary reduction provided

for under applicable provisions of the Internal Revenue Code; and

5. Elective amounts for qualified transportation fringes paid or made

available on or after January 1, 2001, for calendar years on or after

January 1, 2001, that are not includable in the gross income of the

employee by reason of 26 U.S.C. sec. 132(f)(4); and

rtue of the member having taken a voluntary salary reduction provided

for under applicable provisions of the Internal Revenue Code; and

5. Elective amounts for qualified transportation fringes paid or made

available on or after January 1, 2001, for calendar years on or after

January 1, 2001, that are not includable in the gross income of the

employee by reason of 26 U.S.C. sec. 132(f)(4); and

(c) Excludes:

1. Living allowances, expense reimbursements, lump-sum payments for

accrued vacation leave, and other items determined by the board;

2. For employees who begin participating on or after September 1, 2008,

lump-sum payments for compensatory time;

3. For employees who begin participating on or after August 1, 2016,

nominal fees paid for services as a volunteer; and

4. Any salary or wages paid to an employee for services as a Kentucky

State Police school resource officer as defined by KRS 158.441;

(14) "Final compensation" of a member means:

(a) For a member who begins participating before September 1, 2008, who is

employed in a nonhazardous position, the creditable compensation of the

member during the five (5) fiscal years he or she was paid at the highest

average monthly rate divided by the number of months of service credit

during that five (5) year period multiplied by twelve (12). The five (5) years

may be fractional and need not be consecutive. If the number of months of

service credit during the five (5) year period is less than forty-eight (48), one

(1) or more additional fiscal years shall be used;

(b) For a member who is employed in a nonhazardous position, whose effective

retirement date is between August 1, 2001, and January 1, 2009, and whose

total service credit is at least twenty-seven (27) years and whose age and years

of service total at least seventy-five (75), final compensation means the

creditable compensation of the member during the three (3) fiscal years the

member was paid at the highest average monthly rate divided by the number

of months of service credit during that three (3) years period multiplied by

twelve (12). The three (3) years may be fractional and need not be

consecutive. If the number of months of service credit during the three (3)

year period is less than twenty-four (24), one (1) or more additional fiscal

years shall be used. Notwithstanding the provision of KRS 61.565, the

funding for this paragraph shall be provided from existing funds of the

retirement allowance;

(c) For a member who begins participating before September 1, 2008, who is

employed in a hazardous position, as provided in KRS 61.592, the creditable

compensation of the member during the three (3) fiscal years he or she was

paid at the highest average monthly rate divided by the number of months of

service credit during that three (3) year period multiplied by twelve (12). The

three (3) years may be fractional and need not be consecutive. If the number

of months of service credit during the three (3) year period is less than twenty-

four (24), one (1) or more additional fiscal years shall be used;

(d) For a member who begins participating on or after September 1, 2008, but

prior to January 1, 2014, who is employed in a nonhazardous position, the

creditable compensation of the member during the five (5) complete fiscal

years immediately preceding retirement divided by five (5). Each fiscal year

used to determine final compensation must contain twelve (12) months of

service credit. If the member does not have five (5) complete fiscal years that

each contain twelve (12) months of service credit, then one (1) or more

additional fiscal years, which may contain less than twelve (12) months of

service credit, shall be added until the number of months in the final

compensation calculation is at least sixty (60) months; or

ion must contain twelve (12) months of

service credit. If the member does not have five (5) complete fiscal years that

each contain twelve (12) months of service credit, then one (1) or more

additional fiscal years, which may contain less than twelve (12) months of

service credit, shall be added until the number of months in the final

compensation calculation is at least sixty (60) months; or

(e) For a member who begins participating on or after September 1, 2008, but

prior to January 1, 2014, who is employed in a hazardous position as provided

in KRS 61.592, the creditable compensation of the member during the three

(3) complete fiscal years he or she was paid at the highest average monthly

rate divided by three (3). Each fiscal year used to determine final

compensation must contain twelve (12) months of service credit. If the

member does not have three (3) complete fiscal years that each contain twelve

(12) months of service credit, then one (1) or more additional fiscal years,

which may contain less than twelve (12) months of service credit, shall be

added until the number of months in the final compensation calculation is at

least thirty-six (36) months;

(15) "Final rate of pay" means the actual rate upon which earnings of an employee were

calculated during the twelve (12) month period immediately preceding the

member's effective retirement date, including employee contributions picked up

after August 1, 1982, pursuant to KRS 61.560(4). The rate shall be certified to the

system by the employer and the following equivalents shall be used to convert the

rate to an annual rate: two thousand eighty (2,080) hours for eight (8) hour

workdays, nineteen hundred fifty (1,950) hours for seven and one-half (7-1/2) hour

workdays, two hundred sixty (260) days, fifty-two (52) weeks, twelve (12) months,

one (1) year;

(16) "Retirement allowance" means the retirement payments to which a member is

entitled;

(17) "Actuarial equivalent" means a benefit of equal value when computed upon the

basis of the actuarial tables that are adopted by the board. In cases of disability

retirement, the options authorized by KRS 61.635 shall be computed by adding ten

(10) years to the age of the member, unless the member has chosen the Social

Security adjustment option as provided for in KRS 61.635(8), in which case the

member's actual age shall be used. For members who began participating in the

system prior to January 1, 2014, no disability retirement option shall be less than

the same option computed under early retirement;

(18) "Normal retirement date" means the sixty-fifth birthday of a member, unless

otherwise provided in KRS 61.510 to 61.705;

(19) "Fiscal year" of the system means the twelve (12) months from July 1 through the

following June 30, which shall also be the plan year. The "fiscal year" shall be the

limitation year used to determine contribution and benefit limits as established by

26 U.S.C. sec. 415;

(20) "Officers and employees of the General Assembly" means the occupants of those

positions enumerated in KRS 6.150. The term shall also apply to assistants who

were employed by the General Assembly for at least one (1) regular legislative

session prior to July 13, 2004, who elect to participate in the retirement system, and

who serve for at least six (6) regular legislative sessions. Assistants hired after July

13, 2004, shall be designated as interim employees;

(21) "Regular full-time positions," as used in subsection (5) of this section, shall mean

all positions that average one hundred (100) or more hours per month determined

by using the number of months actually worked within a calendar or fiscal year,

including all positions except:

(6) regular legislative sessions. Assistants hired after July

13, 2004, shall be designated as interim employees;

(21) "Regular full-time positions," as used in subsection (5) of this section, shall mean

all positions that average one hundred (100) or more hours per month determined

by using the number of months actually worked within a calendar or fiscal year,

including all positions except:

(a) Seasonal positions, which although temporary in duration, are positions which

coincide in duration with a particular season or seasons of the year and which

may recur regularly from year to year, the period of time shall not exceed nine

(9) months;

(b) Emergency positions which are positions utilized by the employer during:

1. An emergency as determined by the employer for a period not

exceeding thirty (30) working days and are nonrenewable; or

2. A state of emergency declared by the President of the United States or

the Governor of the Commonwealth of Kentucky that are created or

filled specifically for addressing the employer's needs during and as a

result of the declared emergency;

(c) Temporary positions which are positions of employment with a participating

department for a period of time not to exceed nine (9) months and are

nonrenewable;

(d) Part-time positions which are positions which may be permanent in duration,

but which require less than a calendar or fiscal year average of one hundred

(100) hours of work per month, determined by using the number of months

actually worked within a calendar or fiscal year, in the performance of duty;

and

(e) Interim positions which are positions established for a one-time or recurring

need not to exceed nine (9) months;

(22) "Vested" for purposes of determining eligibility for purchasing service credit under

KRS 61.552 means the employee has at least forty-eight (48) months of service if

age sixty-five (65) or older or at least sixty (60) months of service if under the age

of sixty-five (65). For purposes of this subsection, "service" means service in the

systems administered by the Kentucky Retirement Systems and County Employees

Retirement System;

(23) "Parted employer" means a department, portion of a department, board, or agency,

such as Outwood Hospital and School, which previously participated in the system,

but due to lease or other contractual arrangement is now operated by a publicly held

corporation or other similar organization, and therefore is no longer participating in

the system. The term "parted employer" shall not include a department, board, or

agency that ceased participation in the system pursuant to KRS 61.522;

(24) "Retired member" means any former member receiving a retirement allowance or

any former member who has filed the necessary documents for retirement benefits

and is no longer contributing to the retirement system;

(25) "Current rate of pay" means the member's actual hourly, daily, weekly, biweekly,

monthly, or yearly rate of pay converted to an annual rate as defined in final rate of

pay. The rate shall be certified by the employer;

(26) "Beneficiary" means the person or persons or estate or trust or trustee designated by

the member in accordance with KRS 61.542 or 61.705 to receive any available

benefits in the event of the member's death. As used in KRS 61.702, "beneficiary"

does not mean an estate, trust, or trustee;

(27) "Recipient" means the retired member or the person or persons designated as

beneficiary by the member and drawing a retirement allowance as a result of the

member's death or a dependent child drawing a retirement allowance. An alternate

payee of a qualified domestic relations order shall not be considered a recipient,

except for purposes of KRS 61.623;

mean an estate, trust, or trustee;

(27) "Recipient" means the retired member or the person or persons designated as

beneficiary by the member and drawing a retirement allowance as a result of the

member's death or a dependent child drawing a retirement allowance. An alternate

payee of a qualified domestic relations order shall not be considered a recipient,

except for purposes of KRS 61.623;

(28) "Level percentage of payroll amortization method" means a method of determining

the annual amortization payment on the unfunded actuarial accrued liability as

expressed as a percentage of payroll over a set period of years but that may be

converted to a dollar value for purposes of KRS 61.565(1)(d). Under this method,

the percentage of payroll shall be projected to remain constant for all years

remaining in the set period of time and the unfunded actuarially accrued liability

shall be projected to be fully amortized at the conclusion of the set period of years;

(29) "Increment" means twelve (12) months of service credit which are purchased. The

twelve (12) months need not be consecutive. The final increment may be less than

twelve (12) months;

(30) "Person" means a natural person;

(31) "Retirement office" means the Kentucky Public Pensions Authority's office

building in Frankfort, unless otherwise designated by the Kentucky Public Pensions

Authority;

(32) "Last day of paid employment" means the last date employer and employee

contributions are required to be reported in accordance with KRS 16.543, 61.543, or

78.615 to the retirement office in order for the employee to receive current service

credit for the month. Last day of paid employment does not mean a date the

employee receives payment for accrued leave, whether by lump sum or otherwise,

if that date occurs twenty-four (24) or more months after previous contributions;

(33) "Objective medical evidence" means reports of examinations or treatments; medical

signs which are anatomical, physiological, or psychological abnormalities that can

be observed; psychiatric signs which are medically demonstrable phenomena

indicating specific abnormalities of behavior, affect, thought, memory, orientation,

or contact with reality; or laboratory findings which are anatomical, physiological,

or psychological phenomena that can be shown by medically acceptable laboratory

diagnostic techniques, including but not limited to chemical tests,

electrocardiograms, electroencephalograms, X-rays, and psychological tests;

(34) "Participating" means an employee is currently earning service credit in the system

as provided in KRS 61.543;

(35) "Month" means a calendar month;

(36) "Membership date" means:

(a) The date upon which the member began participating in the system as

provided in KRS 61.543;

(b) For a member electing to participate in the system pursuant to KRS

196.167(4) or 311A.022(2) who has not previously participated in the system

or the Kentucky Teachers' Retirement System, the date the member began

participating in a defined contribution plan that meets the requirements of 26

U.S.C. sec. 403(b);

(c) For members bound by an educational contract as a conditional employee to

the state of Kentucky prior to December 31, 2003, the date on which the

educational contract became effective; or

(d) For a member participating in the system pursuant to KRS 31.045, the earlier

of the date upon which the member began participating in the system under

paragraph (a) of this subsection or the date the member began employment

with the Louisville and Jefferson County Public Defender Corporation;

(37) "Participant" means a member, as defined by subsection (8) of this section, or a

retired member, as defined by subsection (24) of this section;

(38) "Qualified domestic relations order" means any judgment, decree, or order,

including approval of a property settlement agreement, that:

(a) Is issued by a court or administrative agency; and

and Jefferson County Public Defender Corporation;

(37) "Participant" means a member, as defined by subsection (8) of this section, or a

retired member, as defined by subsection (24) of this section;

(38) "Qualified domestic relations order" means any judgment, decree, or order,

including approval of a property settlement agreement, that:

(a) Is issued by a court or administrative agency; and

(b) Relates to the provision of child support, alimony payments, or marital

property rights to an alternate payee;

(39) "Alternate payee" means a spouse, former spouse, child, or other dependent of a

participant, who is designated to be paid retirement benefits in a qualified domestic

relations order;

(40) "Accumulated employer credit" mean the employer pay credit deposited to the

member's account and interest credited on such amounts as provided by KRS

16.583 and 61.597;

(41) "Accumulated account balance" means:

(a) For members who began participating in the system prior to January 1, 2014,

the member's accumulated contributions; or

(b) For members who began participating in the system on or after January 1,

2014, in the hybrid cash balance plan as provided by KRS 16.583 and 61.597,

the combined sum of the member's accumulated contributions and the

member's accumulated employer credit;

(42) "Volunteer" means an individual who:

(a) Freely and without pressure or coercion performs hours of service for an

employer participating in one (1) of the systems administered by Kentucky

Retirement Systems without receipt of compensation for services rendered,

except for reimbursement of actual expenses, payment of a nominal fee to

offset the costs of performing the voluntary services, or both; and

(b) If a retired member, does not become an employee, leased employee, or

independent contractor of the employer for which he or she is performing

volunteer services for a period of at least twelve (12) months following the

retired member's most recent retirement date;

(43) "Nominal fee" means compensation earned for services as a volunteer that does not

exceed five hundred dollars ($500) per month with each participating employer.

Compensation earned for services as a volunteer from more than one (1)

participating employer during a month shall not be aggregated to determine whether

the compensation exceeds the five hundred dollars ($500) per month maximum

provided by this subsection;

(44) "Nonhazardous position" means a position that does not meet the requirements of

KRS 61.592 or has not been approved by the board as a hazardous position;

(45) "Monthly average pay" means:

(a) In the case of a member who dies as a direct result of an act in line of duty as

defined in KRS 16.505 or who dies as a result of a duty-related injury as

defined in KRS 61.621, the higher of the member's monthly final rate of pay

or the average monthly creditable compensation earned by the deceased

member during his or her last twelve (12) months of employment; or

(b) In the case where a member becomes totally and permanently disabled as a

direct result of an act in line of duty as defined in KRS 16.505 or becomes

disabled as a result of a duty-related injury as defined in KRS 61.621 and is

eligible for the benefits provided by KRS 61.621(5)(a), the higher of the

member's monthly final rate of pay or the average monthly creditable

compensation earned by the disabled member during his or her last twelve

(12) months of employment prior to the date the act in line of duty or duty-

related injury occurred;

(46) "Authority" means the Kentucky Public Pensions Authority as provided by KRS

61.505;

(47) "Executive director" means the executive director of the Kentucky Public Pensions

Authority;

(48) "Instructional staff" means the employees of a state college or university

participating under KRS 61.520 who are:

(a) Faculty;

(b) Staff responsible for teaching; or

r duty-

related injury occurred;

(46) "Authority" means the Kentucky Public Pensions Authority as provided by KRS

61.505;

(47) "Executive director" means the executive director of the Kentucky Public Pensions

Authority;

(48) "Instructional staff" means the employees of a state college or university

participating under KRS 61.520 who are:

(a) Faculty;

(b) Staff responsible for teaching; or

(c) Other individuals employed in an administrative position that is eligible for

participation in the Teachers' Insurance and Annuity Association (TIAA) of

the Teachers' Retirement System;

(49) "Agency reporting official" means the person designated by the participating

employer who shall be responsible for forwarding all employer and employee

contributions and a record of the contributions to the system and for performing

other administrative duties pursuant to KRS 61.510 to 61.705; and

(50) "Gainful employment" means work in any capacity that is or may be performed

with regularity and is or may be usually done for pay, whether pay is received or

not received, including seasonal, volunteer, part-time, and on-call work.