La. Admin. Code tit. 32 § VII-101

Current through Register Vol. 50, No. 9, September 20, 2024

Section VII-101 - Definitions

Account Balance-

1. the bookkeeping account maintained with respect to each participant which reflects the value of the deferred compensation credited to the participant, including:

a. the participant's total amount deferred;

b. the earnings or loss of the fund (net of fund expenses) allocable to the participant;

c. any transfers for the participant's benefit; and

d. any distribution made to the participant or the participant's beneficiary:

i. if a participant has more than one beneficiary at the time of the participant's death, then each beneficiary's share of the account balance shall be treated as a separate account for each beneficiary;

2. the account balance includes:

a. any account established under §505 for rollover contributions and plan-to-plan transfers made for a participant;

b. the account established for a beneficiary after a participant's death; and

c. any account or accounts established for an alternate payee [as defined in Code §414(p)(8)].

Administrator or Plan Administrator-the person, persons or entity appointed by the Louisiana Deferred Compensation Commission to administer the plan pursuant to LAC 32:VII.103.A, if any.

Age 50 or Older Catch-Up-the deferred amount described pursuant to LAC 32:VII.303.C.

Alternate Payee-the spouse, former spouse, child or other dependent of a participant who has acquired an interest in the participant's account pursuant to a Qualified Domestic Relations Order (QDRO) pursuant to §1503 Alternate payees shall be treated as beneficiaries for all purposes under the plan except that alternate payees shall be allowed to request a distribution of all or a portion of their account balance at any time, subject to the terms of the QDRO.

Beneficiary-the person, persons or entities designated by a participant pursuant to §301. A.5 who is entitled to receive benefits under the plan after the death of a participant.

Commission-the Louisiana Deferred Compensation Commission, as established in accordance with R.S. 42:1302, which shall be comprised of the state treasurer, the commissioner of administration, the commissioner of insurance, the commissioner of financial institutions (or their designees), and three participant members (elected by the participants).

Compensation-all payments paid by the employer to an employee or independent contractor as remuneration for services rendered, including salaries and fees, and, to the extent permitted by treasury regulations or other similar guidance, accrued vacation and sick leave pay paid within 2 and 1/2 months of participant's severance from employment so long as the employee would have been able to use the leave if employment had continued.

Custodial Account-the account established with a bank or trust company meeting the provisions of Internal Revenue Code (IRC) §401(f), that the commission has elected to satisfy the trust requirement of IRC §457(g) by setting aside plan assets in a custodial account.

Custodian-the bank or trust company or other person, if any selected by the commission to hold plan assets in a custodial account in accordance with regulations pursuant to IRC §457(g)

Deferred Compensation-the amount of compensation not yet earned, which the participant and the commission mutually agree, shall be deferred.

Designated Roth Account-a separate account maintained by the plan in accordance with IRC §402A and the regulations thereunder for accepting designated Roth contributions. A designated Roth contribution is an elective deferral that would otherwise be excludable from gross income but that has been designated by the participant who elects the deferral as not being so excludable, or an existing account which is converted to a designated Roth account in compliance with the Internal Revenue Code.

Employee-any individual who is employed by the employer, either as a common law employee or an independent contractor, including elected or appointed individuals providing personal services to the employer. Any employee who is included in a unit of employees covered by a collective bargaining agreement that does not specifically provide for participation in the plan shall be excluded.

Eligible Designated Beneficiary-a participant's surviving spouse or child who has not reached the age of majority, a disabled or chronically ill person, or a person not more than ten years younger than the participant.

Includible Compensation-an employee's actual wages in Box 1 of Form W-2 for a year for services to the employer, but subject to a maximum of $200,000 [or such higher maximum as may apply under Code §401(a)(17)] and increased (up to the dollar maximum) by any compensation reduction election under Code §§125, 132(f), 401(k), 403(b), or 457(b) [for purposes of the limitation set forth in §303 A, compensation for services performed for the employer as defined in IRC §457(e)(5)].

Independent Contractor-an individual (not a corporation, partnership, or other entity), who is receiving compensation for services rendered to or on behalf of the employer in accordance with a contract between such individual and the employer.

Interest or Interest in Deferred Compensation-under the plan, the aggregate of:

1. a participant's deferred compensation for his or her entire period of participation in the plan; and

2. the earnings or losses allocable to such amount. Such interest represents an accounting entry only and does not constitute an ownership interest, right or title in the assets so invested.

Investment Product-any form of investment designated by the commission for the purpose of receiving funds under the plan.

IRC-the Internal Revenue Code of 1986, as amended, or any future United States Internal Revenue law. References herein to specific section numbers shall be deemed to include treasury regulations thereunder and Internal Revenue Service guidance thereunder and to corresponding provisions of any future United States internal revenue law. All citations to sections of the Code are to such sections as they may from time to time be amended or renumbered.

Limited Catch-Up-the deferred amount described in LAC 32:VII.305.A.

Non-Elective Employer Contribution-any contribution made by an employer for the participant with respect to which the participant does not have the choice to receive the contribution in cash or property. Such term may also include an employer matching contribution.

Normal Retirement Age-

1. the age designated by a participant, which age shall be between:

a. the earliest date on which such participant is entitled to retire under the public retirement system of which that participant is a member without actuarial reduction in his or her benefit; and

b. age 70 1/2, provided, however, that if a participant continues in the employ of the employer beyond 70 1/2, normal retirement age means the age at which the participant severs employment;

2. if the participant is not a member of a defined benefit plan in any public retirement system, the participant's normal retirement age may not be earlier than age 65, and may not be later than age 70 1/2. A special rule shall apply to qualified police or firefighters under the plan, if any. Any qualified police or firefighter, as defined under §415(b)(2)(H)(ii)(I), who is participating in the plan may choose a normal retirement age that is not earlier than age 40 nor later than age 70 1/2;

3. if a participant continues to be employed by employer after attaining age 70 1/2, not having previously elected an alternate normal retirement age, the participant's alternate normal retirement age shall not be later than the mandatory retirement age, if any, established by the employer, or the age at which the participant actually severs employment with the employer if the employer has no mandatory retirement age.

Participant-an individual who is eligible to defer compensation under the plan, and has executed an effective deferral authorization. Participant also includes an employee or independent contractor who has severance from employment but has not received a complete distribution of his or her interest in deferred compensation under the plan.

Participation Agreement-the agreement executed and filed by an individual who is eligible to defer compensation under the plan, and has executed an effective deferral authorization.

Pay Period-a regular accounting period designated by the employer for the purpose of measuring and paying compensation earned by an employee or independent contractor.

Plan-the State of Louisiana Public Employees Deferred Compensation Plan established by this document and any applicable amendment.

Plan Year-the calendar year.

Qualified Domestic Relations Order or QDRO-as specified in LAC 32:VII.1503.B.

Qualified Military Service-any service in the uniformed service (as defined in Chapter 43 of Title 38 of the United States Code as in effect as of December 12, 1994) by any individual if such individual is entitled to reemployment rights under such Chapter with respect to such service.

Required Beginning Date-for participants who reach age 73 on or after January 1, 2023, but before January 1, 2033, the required beginning date is April 1 of the calendar year following the calendar year in which the participant reaches age 73. For participants who reach age 74 on or after January 1, 2033, the required beginning date is April 1 of the calendar year following the calendar year in which the participant reaches age 75.

Section 3121 Participant-an individual who is using the Plan as a retirement system providing FICA replacement benefits pursuant to IRC §3121(b)(7)(F) and the regulations thereunder.

Separation from Service or Separates from Service-

1. with respect to an employee, the permanent severance of the employment relationship with the employer on account of such employee's:

a. retirement;

b. discharge by the employer;

c. resignation;

d. layoff; or

e. in the case of an employee who is an appointed or elected officer, the earlier of:

i. the taking of the oath of office of such officer's successor; or

ii. the cessation of the receipt of compensation

2. if an employee incurs a break in service for a period of less than 30 days or transfers among various Louisiana governmental entities, such break or transfer shall not be considered a separation from service;

3. with respect to an independent contractor, separation from service means that the expiration of all contracts pursuant to services performed for or on behalf of the employer.

Severance from Employment or Severs Employment-

1. the date the employee dies, retires, or otherwise has a severance from employment with the employer, as determined by the administrator (and taking into account guidance issued under the Code). An employee whose employment is interrupted by qualified military service under Code §414(u) shall be deemed severed from employment until such time as he or she is reemployed following the term of duty. A participant shall be deemed to have severed employment with the employer for purposes of this plan when both parties consider the employment relationship to have terminated and neither party anticipates any future employment of the participant by the employer. In the case of a participant who is an independent contractor, severance from employment shall be deemed to have occurred when:

a. the participant's contract for services has completely expired and terminated;

b. there is no foreseeable possibility that the employer shall renew the contract or enter into a new contract for services to be performed by the participant; and

c. it is not anticipated that the participant shall become an employee of the employer;

2. with respect to an employee, the permanent severance of the employment relationship with the employer on account of such employee's:

a. retirement;

b. discharge by the employer;

c. resignation;

d. layoff; or

e. in the case of an employee who is an appointed or elected officer, the earlier of:

i. the taking of the oath of office of such officer's successor; or

ii. the cessation of the receipt of compensation;

3. if an employee incurs a break in service for a period of less than 30 days or transfers among various Louisiana governmental entities, such break or transfer shall not be considered a severance from employment.

Total Amount Deferred-with respect to each participant, the sum of all compensation deferred under the plan (plus investment gains and/or losses thereon, including amounts determined with reference to life insurance policies) calculated in accordance with the method designated in the participant's participation agreement(s) under which such compensation was deferred and any subsequent election(s) to change methods, less the amount of any expenses or distributions authorized by this plan.

Trustee-the commission or such other person, persons or entity selected by the commission who agrees to act as trustee. This term also refers to the person holding the assets of any custodial account or holding any annuity contract described in LAC 32:VII.317.

Unforeseeable Emergency -

1. severe financial hardship of a participant or beneficiary resulting from:

a. an illness or accident of the participant or beneficiary, the participant's or beneficiary's spouse, or the participant's or beneficiary's dependent (as defined in IRC §152, and without regard to IRC §152(b)(1), (b)(2), and (d)(1)(B));

b. loss of the participant's or beneficiary's property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by homeowner's insurance, such as damage that is the result of a natural disaster); or

c. other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of participant or beneficiary;

2. the definition of unforeseeable emergency does not include either the purchase of a home or the payment of college tuition;

3. The definition of unforeseeable emergency includes, but is not limited to, the following:

a. payment of mortgage payments or rent due to imminent foreclosure of or eviction from the participant's or beneficiary's primary residence;

b. the need to pay for medical expenses, including non-refundable deductibles, as well as for the cost of prescription drug medication; and

c. the need to pay for funeral expenses of a spouse or dependent (as defined above) of a participant or beneficiary.

La. Admin. Code tit. 32, § VII-101

Promulgated by the Department of the Treasury, Deferred Compensation Commission, LR 24:1962 (October 1998), amended LR 28:1494 (June 2002), LR 32:118 (January 2006), LR 37:1617 (June 2011), LR 40:2281 (November 2014), Amended LR 501011 (7/1/2024).

AUTHORITY NOTE: Promulgated in accordance with IRC §457 and R.S. 42: 1301-1308.