2017 Session Laws

CHAPTER 28

(HB 1017)

South Dakota Retirement system's
improved definition for compensation.


        ENTITLED, An Act to revise the definition of compensation for purposes of the South Dakota Retirement System, to provide a penalty for falsely reporting compensation, and to update references to the Internal Revenue Code.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:

    Section 1. That § 3-12-47.6 be amended to read:

    3-12-47.6. For the purposes of this chapter, the term, compensation, means gross wages paid to a member by the employer for personal services credited service rendered during the period considered as credited service for which the payment was earned. Compensation includes amounts any amount reported as wages, tips, and other compensation on the member's federal form W-2 wage and tax statement, except as otherwise excluded in this section; the any amount of member contributions made by an employer after June 30, 1984, pursuant to § 3-12-71; any amount contributed by a member to a member's individual retirement plan which that meets the requirements of section 125, 401, 403, 408, or 457 of the Internal Revenue Code; and any amount contributed to a plan described in section 125 of the Internal Revenue Code; and any amount contributed to the system pursuant to § 3-12-83.2 in accord with § 414(h)(2) of the Internal Revenue Code.

    Compensation does not include any allowance, payment, or reimbursement for travel, meals, lodging, moving, uniforms, or any other expenses expense that is incidental to an employer's business which is employment and paid or reimbursed by the employer; any lump sum payments payment for sick leave; any lump sum payments payment for annual leave; payments any payment for, or in lieu of, insurance coverage of any kind or any other employee benefit paid by an employer directly to a member or directly to a third party on behalf of an employee or an employee and dependents a member or a member and any dependent; any allowance or payment for housing or vehicles; any temporary payment paid as a lump sum or over a period of time that is not due to additional duties; any amount paid in a one-time lump sum payment or over a period of time and based on or attributable to retirement or an agreement to retire in the future; payments or results in an incentive to retire; any payment made upon dismissal or severance; any worker's compensation payments payment; and payments any payment contingent on a member terminating employment at a specified time in the future paid or payable in a lump sum or over a period of time.

    Any compensation in excess of the limits established in § 401(a)(17) of the Internal Revenue Code shall be disregarded for purposes of contributions or for benefit calculations under the system. However, the limit does not apply to compensation earned by a member if the member was employed by a participating unit before July 1, 1996.

    Section 2. That § 3-12-47.6 be amended to read:

    3-12-47.6. For the purposes of this chapter, the term, compensation, means gross wages paid to a member by the employer for personal services credited service rendered during the period considered as credited service for which the payment was earned. Compensation includes amounts any amount reported as wages, tips, and other compensation on the member's federal form W-2 wage and tax statement, except as otherwise excluded in this section; the any amount of member contributions made by an employer after June 30, 1984, pursuant to § 3-12-71; any amount contributed by a member to a member's individual retirement plan which that meets the requirements of section 125, 401, 403, 408, or 457 of the Internal Revenue Code; and any amount contributed to a plan described in section 125 of the Internal Revenue Code; and any amount contributed to the system pursuant to § 3-12-83.2 in accord with § 414(h)(2) of the Internal Revenue Code.

    Compensation does not include any allowance, payment, or reimbursement for travel, meals, lodging, moving, uniforms, or any other expenses expense that is incidental to an employer's business which is employment and paid or reimbursed by the employer; any lump sum payments payment for sick leave; any lump sum payments payment for annual leave; payments any payment for, or in lieu of, insurance coverage of any kind or any other employee benefit paid by an employer directly to a member or directly to a third party on behalf of an employee or an employee and dependents a member or a member and any dependent; any allowance or payment for housing or vehicles; any temporary payment paid as a lump sum or over a period of time that is not due to additional duties; any amount paid in a one-time lump sum payment or over a period of time and based on or attributable to retirement or an agreement to retire in the future; payments or results in an incentive to retire; any payment made upon dismissal or severance; any worker's compensation payments payment; and payments any payment contingent on a member terminating employment at a specified time in the future paid or payable in a lump sum or over a period of time.

    Any compensation in excess of the limits established in § 401(a)(17) of the Internal Revenue Code shall be disregarded for purposes of contributions or for benefit calculations under the system. However, the limit does not apply to compensation earned by a member if the member was employed by a participating unit before July 1, 1996.

    Section 3. That chapter 3-12 be amended by adding a NEW SECTION to read:

    Any compensation in excess of the limits established in § 401(a)(17) of the Internal Revenue Code shall be disregarded for purposes of contributions and benefit calculations under the system. Any benefit calculations for members subject to the limits established in § 401(a)(17) of the Internal Revenue Code but for whom the limitation on compensation did not apply before January 1, 2018, shall be based on unlimited compensation for credited service before January 1, 2018, and limited compensation for credited service as of January 1, 2018.

    Section 4. The provisions of sections 2 and 3 of this Act are effective on January 1, 2018.

    Section 5. That chapter 3-12 be amended by adding a NEW SECTION to read:

    Any person or employer who transmits a report of compensation to the system knowing that some or all of the compensation is excluded by § 3-12-47.6, is guilty of a Class 1 misdemeanor.

    Section 6. That subdivision (50) of § 3-12-47 be amended to read:

            (50)    "Internal Revenue Code," or "code," the Internal Revenue Code as in effect as of January 1, 2016 2017;


     Signed February 9, 2017
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