Archives - 103rd Legislature

The proposed legislation would revise the provisions to repay a refund and change the eligibility requirements for the 12-month preretirement service purchase.

Under current statute, the cost to repay a refund is calculated using the original amount of the refund plus regular interest provided the member submits application within three years of reemployment. Refund repayments three or more years after reemployment are calculated using the original amount of the refund plus the actuarial assumed rate of return.

LB1042 removes the refund plus regular interest based purchase.

All refund repayments will be calculated using the refund plus the actuarial assumed rate of return (as of the date of repayment) and must be submitted within five years after returning to employment. Requests to repay a refund will be allowed on a one-time basis. Members must be actively employed and participating in the plan in order to repay a refund. All refund repayments must be completed within five years of reemployment or prior to termination. Service credit will be restored in proportion to the amount repaid.

Members currently employed and participating in the plan will have an extended time frame to submit a one-time application for repayment. These applications must be received within six years from the effective date of the bill, and repayment completed within six years from the effective date of the bill or prior to termination. The repayment will be calculated using the original amount of the refund plus the actuarial assumed rate of return.

In addition, the bill clarifies individuals reemployed on or after July 1, 2013 who were previously participating under Tier 1 provisions and took a refund, will return to plan participation under Tier 2 status. These members may return to Tier 1 status only after repaying the refund in full thereby restoring all Tier 1 service credit.

The bill would also require individuals who initially join the plan on or after July 1, 2014, to acquire a minimum of ten years of service credit prior to purchasing additional years of service under the 12-month preretirement service purchase.

Provisions of LB1042 took effect on April 17.

This bill proposes to exempt Social Security and certain retirement benefits from Nebraska State income tax.

Beginning January 1, 2013, when filing Nebraska State income tax, federal adjusted gross income shall be modified to exclude one dollar of retirement income for every one dollar of non-retirement income. This exclusion shall be limited to $60,000 dollars for taxpayers filing a married filing joint return and $30,000 dollars for taxpayers filing any other return.

For taxpayers filing a married joint return, if their federal adjusted gross income exceeds $120,000, the $60,000 exclusion shall be reduced by one dollar for every one dollar over the $120,000 threshold. For taxpayers filing any other return, if their federal adjusted gross income exceeds $60,000, the $30,000 exclusion shall be reduced by one dollar for every one dollar over the $60,000 threshold.

Non-retirement income means income other than retirement income that is included in the taxpayer's federal adjusted gross income and is earned in Nebraska. Non-retirement income excludes investment income.

Retirement income means any of the following amounts received which are included in the taxpayer's federal adjusted gross income:

• Amounts received as benefits under the federal Social Security Act.
• Amounts received as a retirement benefit under a retirement plan qualified under section 401(a) or 403(a) of the Internal Revenue Code.
• Amounts received as a retirement benefit from the retirement systems provided for in the Class V School Employees Retirement Act, the County Employees Retirement Act, the Judges Retirement Act, the Nebraska State Patrol Retirement Act, the School Employees Retirement Act, the State Employees Retirement Act, the United States civil service retirement system, and the United States military employee retirement system.

• Final average monthly compensation shall be determined using compensation during the five twelve-month periods of service in which compensation was the greatest, divided by sixty.
Cost of living adjustments shall be capped at one percent. The 60% purchasing power language is removed.

• Final average monthly compensation would be determined using compensation during the five twelve-month periods of service in which compensation was the greatest, divided by sixty.
• Cost of living adjustments would be capped at one percent. The 75% purchasing power language is removed.

• The bill creates an additional "supplemental retirement plan" for Patrol members. Both the employer and plan members contribute an additional 7.65% of member compensation to the supplemental plan.
• The bill incorporates prior retirement age language from the prior defined benefit plan for Patrol members including mandatory termination at age 60.