# Title 54 — State Government

## Chapter 54-52.6 — Defined Contribution Retirement Plan

### § 54-52.6-01. Definition of terms.

As used in this chapter, unless the context otherwise requires:
1. "Board" means the public employees retirement system board.
2. "Deferred member" means an individual who elected to receive deferred vested
retirement benefits under chapter 54-52.
3. "Eligible employee", for employees who become participating members after
December 31, 2024, has the same meaning as provided under section 54-52-02.15.
For employees who elected to join the defined contribution retirement plan under this
chapter before January 1, 2025, the term includes a permanent state employee,
except an employee of the judicial branch or an employee of the board of higher
education and state institutions under the jurisdiction of the board of higher education,
who is at least eighteen years of age and who is in a position not classified by the
North Dakota human resource management services.
4. "Employee" means an individual employed by the state, whose compensation is paid
out of state funds, or funds controlled or administered by the state or paid by the
federal government through any of its executive or administrative officials.
5. "Employer" means the state of North Dakota, except the highway patrol for members
of the retirement plan created under chapter 39-03.1, or a participating political
subdivision of the state.
6. "Participating member" means an eligible employee who elects to participate in the
defined contribution retirement plan established under this chapter.
7. "Permanent employee" means a state employee whose services are not limited in
duration and who is filling an approved and regularly funded position and is employed
twenty hours or more per week and at least five months each year.
8. "Wages" and "salaries" means earnings in eligible employment under this chapter
reported as salary on a federal income tax withholding statement plus any salary
reduction or salary deferral amounts under 26 U.S.C. 125, 401(k), 403(b), 414(h), or
457. "Salary" does not include fringe benefits such as payments for unused sick leave,
personal leave, vacation leave paid in a lump sum, overtime, housing allowances,
transportation expenses, early retirement, incentive pay, severance pay, medical
insurance, workforce safety and insurance benefits, disability insurance premiums or
benefits, or salary received by a member in lieu of previously employer-provided fringe
benefits under an agreement between an employee and a participating employer.
Bonuses may be considered as salary under this section if reported pursuant to rules
adopted by the board.
### § 54-52.6-02. Election through December 31, 2024.

1. The board shall provide an opportunity for each eligible employee who is a member of
the public employees retirement system on September 30, 2001, and who has not
made a written election under this section to transfer to the defined contribution
retirement plan before October 1, 2001, to elect in writing to terminate membership in
the public employees retirement system and elect to become a participating member
under this chapter. Except as provided in section 54-52.6-03, an election made by an
eligible employee under this section is irrevocable. The board shall accept written
elections under this section from eligible employees during the period beginning on
July 1, 1999, and ending 12:01 a.m. December 14, 2001. An eligible employee who
does not make a written election or who does not file the election during the period
specified in this section continues to be a member of the public employees retirement
system. An eligible employee who makes and files a written election under this section
ceases to be a member of the public employees retirement system effective twelve
midnight December 31, 2001; becomes a participating member in the defined
contribution retirement plan under this chapter effective 12:01 a.m. January 1, 2002;
and waives all of that person's rights to a pension, annuity, retirement allowance,

insurance benefit, or any other benefit under the public employees retirement system
effective December 31, 2001. This section does not affect an individual's right to health
benefits or retiree health benefits under chapter 54-52.1. An eligible employee who is
first employed and entered upon the payroll of that person's employer after
September 30, 2001, and before January 1, 2025, may make an election to participate
in the defined contribution retirement plan established under this chapter at any time
during the first six months after the date of employment. If the board, in its sole
discretion, determines that the employee was not adequately notified of the
employee's option to participate in the defined contribution retirement plan, the board
may provide the employee a reasonable time within which to make that election, which
may extend beyond the original six-month decision window.
2. If an individual who is a deferred member of the public employees retirement system
on September 30, 2001, is re-employed before January 1, 2025, and by virtue of that
employment is again eligible for membership in the public employees retirement
system under chapter 54-52, the individual may elect in writing to remain a member of
the public employees retirement system or if eligible to participate in the defined
contribution retirement plan established under this chapter to terminate membership in
the public employees retirement system and become a participating member in the
defined contribution retirement plan established under this chapter. An election made
by a deferred member under this section is irrevocable. The board shall accept written
elections under this section from a deferred member during the period beginning on
the date of the individual's re-employment and ending upon the expiration of six
months after the date of that re-employment. If the board, in its sole discretion,
determines that the employee was not adequately notified of the employee's option to
participate in the defined contribution retirement plan, the board may provide the
employee a reasonable time within which to make that election, which may extend
beyond the original six-month decision window. A deferred member who makes and
files a written election to remain a member of the public employees retirement system
retains all rights and is subject to all conditions as a member of that retirement system.
A deferred member who does not make a written election or who does not file the
election during the period specified in this section continues to be a member of the
public employees retirement system. A deferred member who makes and files a
written election to terminate membership in the public employees retirement system
ceases to be a member of the public employees retirement system effective on the last
day of the payroll period that includes the date of the election; becomes a participating
member in the defined contribution retirement plan under this chapter effective the first
day of the payroll immediately following the date of the election; and waives all of that
person's rights to a pension, an annuity, a retirement allowance, insurance benefit, or
any other benefit under the public employees retirement system effective the last day
of the payroll that includes the date of the election. This section does not affect any
right to health benefits or retiree health benefits to which the deferred member may
otherwise be entitled.
3. An eligible employee who elects under this section to participate in the retirement plan
established under this chapter must remain a participant even if that employee returns
to the classified service or becomes employed by a political subdivision that
participates in the public employees retirement system. The contribution amount must
be as provided in this chapter, regardless of the position in which the employee is
employed. Notwithstanding the irrevocability provisions of this chapter, if a member
who elects to participate in the retirement plan established under this chapter becomes
a supreme or district court judge, becomes a member of the highway patrol, becomes
employed in a position subject to teachers' fund for retirement membership, or
becomes an employee of the board of higher education or state institution under the
jurisdiction of the board of higher education who is eligible to participate in an
alternative retirement program established under subsection 6 of section 15-10-17, the
member's status as a member of the defined contribution retirement plan is
suspended, and the member becomes a new member of the retirement plan for which

that member's new position is eligible. The member's account balance remains in the
defined contribution retirement plan, but no new contributions may be made to that
account. The member's service credit and salary history that were forfeited as a result
of the member's transfer to the defined contribution retirement plan remain forfeited,
and service credit accumulation in the new retirement plan begins from the first day of
employment in the new position. If the member later returns to employment that is
eligible for the defined contribution retirement plan, the member's suspension must be
terminated, the member again becomes a member of the defined contribution
retirement plan, and the member's account resumes accepting contributions. At the
member's option, and pursuant to rules adopted by the board, the member may
transfer any available balance as determined by the provisions of the alternate
retirement plan into the member's account under this chapter.
4. After consultation with its actuary, the board shall determine the method by which a
participating member or deferred member may make a written election under this
section. If the participating member or deferred member is married at the time of the
election, the election is not effective unless the election is signed by the individual's
spouse. However, the board may waive this requirement if the spouse's signature
cannot be obtained because of extenuating circumstances.
5. If the board receives notification from the internal revenue service that this section or
any portion of this section will cause the public employees retirement system or the
retirement plan established under this chapter to be disqualified for tax purposes under
the Internal Revenue Code, then the portion that will cause the disqualification does
not apply.
6. A participating member under this section who becomes a temporary employee may
still participate in the defined contribution retirement plan upon filing an election with
the board within one hundred eighty days of transferring to temporary employee
status. The participating member may not become a member of the defined benefit
plan as a temporary employee.
a. The temporary employee electing to participate in the defined contribution
retirement plan shall pay into the plan as provided under section 54-52.6-09.6.
b. An employer may not pay the temporary employee's contributions.
c. A temporary employee may continue to participate as a temporary employee until
termination of employment or reclassification of the temporary employee as a
permanent employee.
7. A former participating member under this section who has accepted a retirement
distribution pursuant to section 54-52.6-13 and who subsequently becomes employed
by an entity different from the employer with which the member was employed at the
time the member retired but which does participate in any state-sponsored retirement
plan may, before re-enrolling in the defined contribution retirement plan, elect to
permanently waive future participation in the defined contribution retirement plan,
whatever plan in which the new employing entity participates, and the retiree health
program and maintain that member's retirement status. Neither the member nor the
employer are required to make any future retirement contributions on behalf of that
employee.
8. After December 31, 2024, an eligible employee is no longer allowed to elect
participation under this section.
### § 54-52.6-02.1. Participation in defined contribution retirement plan.

1. Except as otherwise provided under section 54-52-02.5 or 54-52-02.15 or this chapter,
effective January 1, 2025, an eligible employee who is first enrolled shall participate in
the defined contribution retirement plan under this chapter.
2. A temporary employee may elect to participate in the defined contribution retirement
plan as provided under section 54-52.6-09.6.
3. A county elected official may elect to participate in the defined contribution retirement
plan as provided under section 54-52-02.11.

4. A nonstate appointed official shall participate in the defined contribution retirement plan
as provided under section 54-52-02.12.
### § 54-52.6-02.2. Election after December 31, 2024 - Additional employer contribution.

(Retroactive application - See note)
1. As used in this section, "eligible employee" means a permanent employee of a state
entity that as of January 1, 2025, receives budgetary approval from the legislative
assembly, who on December 31, 2024, is a participating member of the public
employees retirement system main system plan under chapter 54-52, who has been a
participating member under chapter 54-52 for no more than five years, and who is at
least eighteen years of age.
2. The board shall provide a three-month election period, from January 1, 2025, through
March 31, 2025, for an eligible employee to transfer to the defined contribution plan
under this chapter pursuant to the rules and policies adopted by the board.
a. An election under this section made by a member of the public employees
retirement system under chapter 54-52 to transfer to the defined contribution
retirement plan under this chapter is irrevocable.
b. For an eligible employee who elects to transfer from the public employees
retirement system under chapter 54-52 to the defined contribution retirement plan
under this chapter, the board shall transfer a lump sum amount from the public
employees retirement system fund to the member's account in the defined
contribution retirement plan under this chapter. However, if the eligible employee
terminates employment before receiving the lump sum transfer under this section,
the election made is ineffective and the eligible employee remains a member of
the public employees retirement system under chapter 54-52 and retains all the
rights and privileges under that chapter.
c. The board shall calculate the lump sum amount to be transferred based on the
actuarial present value of the eligible employee's accumulated benefit obligation
under the public employees retirement system based on the assumption the
eligible employee will retire under the earlier applicable normal retirement age,
plus interest from January 1, 2025, to the date of transfer, at the rate of one-half
of one percent less than the actuarial interest assumption at the time of the
election.
d. This section does not affect an eligible individual's right to health benefits under
chapter 54-52.1.
3. The state employer of an eligible employee who elects under this section to participate
in the defined contribution retirement plan under this chapter shall pay an additional
annual contribution of three thousand three hundred and thirty-three dollars for up to
three years. Under this subsection, the employer shall pay the additional contribution
each year the eligible employee continues permanent employment with the state,
beginning January 2026, and extending no further than January 2028.
4. If the board receives notification from the internal revenue service that this section or
any portion of this section will cause the public employees retirement system or the
retirement plan established under this chapter to be disqualified for tax purposes under
the Internal Revenue Code, that portion that will cause the disqualification does not
apply.
### § 54-52.6-03. Transfer of accumulated fund balances.

1. For an individual who elects under section 54-52.6-02 to terminate membership in the
public employees retirement system under chapter 54-52, the board shall transfer a
lump sum amount from the retirement fund to the participating member's account in
the defined contribution retirement plan under this chapter. However, if the individual
terminates employment before receiving the lump sum transfer under this section, the
election made under section 54-52.6-02 is ineffective and the individual remains a
member of the public employees retirement system under chapter 54-52 and retains
all the rights and benefits provided under that chapter. The board shall calculate the

amount to be transferred for persons employed before October 1, 2001, using the two
following formulas, and shall transfer the greater of the two amounts obtained:
a. The actuarial present value of the individual's accumulated benefit obligation
under the public employees retirement system based on the assumption that the
individual will retire under the earliest applicable normal retirement age, plus
interest from January 1, 2001, to the date of transfer, at the rate of one-half of one
percent less than the actuarial interest assumption at the time of the election; or
b. The actual employer contribution made, less vested employer contributions made
pursuant to section 54-52-11.1, plus compound interest at the rate of one-half of
one percent less than the actuarial interest assumption at the time of the election
plus the employee account balance.
2. The board shall calculate the amount to be transferred for persons employed after
September 30, 2001, and before January 1, 2025, using only the formula contained in
subdivision b of subsection 1.
### § 54-52.6-03.1. Changes to election.

1. In this section the term "participating member" is limited in application to a participating
member who elected to participate in the defined contribution retirement plan
established under this chapter as an active employee of a participating employer, is an
actively participating member of the defined contribution plan as of July 1, 2015, and is
an active employee with a participating employer on the date an election is made
under this section. The term does not include a participant who is not actively
employed with a participating employer on the date of transfer of the funds under this
section, has taken a distribution from the defined contribution plan, is retired, is no
longer actively employed with a participating employer, or who is a member who has a
qualified domestic relations order or other court order on the member's account.
2. Notwithstanding any other provision of law, the board shall provide an opportunity for
each participating member to elect in writing to terminate membership in the defined
contribution retirement plan under this chapter and to elect to become a participating
member in the public employees retirement system under chapter 54-52.
3. The board shall establish a three-calendar-month election period beginning not later
than February 1, 2016. A participating member who does not make a written election
or who does not file the election with the North Dakota public employees retirement
system office during the period specified in this section continues to be a member of
the defined contribution plan. A participating member who makes and files a written
election with the North Dakota public employees retirement system office under this
section ceases to be a member of the defined contribution plan upon receipt by the
public employees retirement system of the accumulated fund balance of the member's
defined contribution plan under this chapter and waives all rights to that employee's
accumulated fund balance under the defined contribution plan. If the executive director
of the North Dakota public employees retirement system determines a participating
member was not adequately notified of the option to make an election under this
section, the executive director may provide that participating member a reasonable
time, not to exceed three months, within which to make that election.
4. The public employees retirement system shall credit the transferring employee with the
service credit and salary history reflected on the public employees retirement system's
electronic database.
5. The board shall determine the method by which a participating member may make a
written election under this section. If the participating member is married at the time of
the election, the election is not effective unless the election is signed by the individual's
spouse. However, the executive director of the North Dakota public employees
retirement system may waive this spousal signature requirement if the spouse's
signature cannot be obtained because of extenuating circumstances.
6. For a participating member who elects to terminate membership in the defined
contribution plan under this section, the board shall transfer that member's
accumulated fund balance, less any rollovers from other plans made into the defined

contribution plan, to the public employees retirement system under chapter 54-52. If
funds are transferred from the defined contribution plan to the defined benefit plan
under an election made under this section, the board shall record this transfer to the
defined benefit plan as employee and employer contributions in the same manner as
transferred by the defined contribution provider. If a participating member has a
separate account attributable to rollover contributions to the defined contribution plan
pursuant to section 54-52.6-09.1, the participating member shall make an election to
receive a distribution of the entire amount held in the rollover account at the time of
transfer.
7. A participating member who elects a transfer under this section is entitled to vested
employer contribution amounts under section 54-52-11.1 prospectively from the date of
transfer. A participating member who elects a transfer under this section must be
assessed and required to pay monthly to the defined benefit plan an additional
employee contribution of an additional two percent of the monthly salary or wages paid
to the member.
### § 54-52.6-04. Administration.

The board shall administer the defined contribution retirement plan established under this
chapter and the board or vendors contracted for by the board shall invest the assets of the plan.
The board is the fiduciary and the trustee of the plan. The board has the exclusive authority and
responsibility to employ or contract with personnel and for services that the board determines
necessary for the proper administration of and investment of assets of the plan, including
managerial, professional, legal, clerical, technical, and administrative personnel or services.
### § 54-52.6-05. Direction of investments.

1. Each participating member shall direct the investment of the individual's accumulated
employer and employee contributions and earnings to one or more investment choices
within available categories of investment provided by the board.
2. The board shall provide an investment menu of investment options. In establishing the
investment options, the board shall:
a. Include predetermined investment portfolio options constructed to reflect different
risk profiles that automatically reallocate and rebalance contributions as a
participating member ages.
b. Allow a participating member to construct an investment portfolio using some or
all of the investment options.
3. The board shall provide a diversified menu of investment solutions and lifetime annuity
options that may include in-plan and out-of-plan options, either fixed, variable, or a
combination of both. In selecting an annuity provider the board shall comply with
section 54-52.6-05.1.
### § 54-52.6-05.1. Annuity provider - Qualifications.

1. The board shall select one or more annuity providers to provide the annuity options
under this chapter.
2. In selecting an annuity provider under this section, the board shall:
a. Determine whether the annuity provider and the provider's subsidiaries and
affiliates have appropriate financial strength and stability at the time of selection
and during the term of contract with the board.
(1) The board may require the provider to provide the board with written
representation:
(a) The provider is in compliance with title 26.1.
(b) The provider at the time of selection is and for each of the preceding
seven years was in compliance and good standing with the insurance
commissioner of the provider's domiciliary state and the provider is not
operating under an order of rehabilitation or liquidation.

(c) The provider maintains and has maintained reserves that satisfy the
statutory requirements of each state in which the provider does
business.
(2) The board may require a provider selected by the board to provide annuities
under this chapter to notify the board of a change of circumstances resulting
in the provider failing to meet any of the requirements under paragraph 1.
(3) The board must have determined the provider has a claims paying ability
rating that meets standards adopted by the board.
b. Determine whether the annuity provider is able to provide contracted rights and
benefits to a participating member.
c. Determine whether the costs, including fees and commissions, of the annuity
options in relation to the benefits and product features of the annuity options are
reasonable.
d. Determine whether the administrative services to be provided under the annuity
option are appropriate. At a minimum the administrative services must include
periodic reports to the board.
e. Determine whether the annuity provider is experienced in paying lifetime
retirement income through annuities offered to public employee defined
contribution retirement plans.
f. Determine whether the annuity provider offers a menu of annuity options that
meet the following conditions:
(1) The annuity options are suitable for participating members and
beneficiaries.
(2) The contract terms and income benefits are clearly stated, based on
reasonable assumptions.
(3) The menu of annuity options offers a range of lifetime income options.
(4) If an annuity is a variable annuity, the annuity offers a fixed account option
along with a variable option.
g. Determine whether the annuity provider offers objective and participant-specific
education and tools to help a participating member understand the appropriate
use of annuities as a long-term retirement savings vehicle.
### § 54-52.6-06. Administrative expenses - Continuing appropriation.

Participating members shall pay the administrative expenses of the plan in a manner
determined by the board. The board, or vendors contracted for by the board, may charge
reasonable administrative expenses and deduct those expenses from a participating member's
account in the defined contribution retirement plan established under this chapter. The board
may also pay the administrative expenses of the plan from fines and fees collected from
vendors in a manner determined by the board. The board shall place vendor fines and fees and
any money deducted from participating members' accounts in an administrative expenses
account with the state treasurer. The board may use funds from the payroll clearing account
established pursuant to section 54-52.3-03 to pay for consulting expenses. All moneys in the
payroll clearing account, not otherwise appropriated, or so much of the moneys as may be
necessary, are appropriated to the board on a continuing basis for the purpose of retaining a
consultant as required for the administration of this chapter.
### § 54-52.6-07. Participation in other plans.

A participating member may not participate in any other public sector retirement benefits
plan for simultaneous service rendered to the same public sector employer. However, this
section does not prohibit a participating member from participating in a retirement plan
established by this state or other public sector employer under the federal Internal Revenue
Code.

### § 54-52.6-08. Credit of transfers.

The board promptly shall credit the plan account of a participating member who makes an
election under section 54-52.6-02 to terminate membership in the public employees retirement
system under chapter 54-52 with any amount transferred from the public employees retirement
system.
### § 54-52.6-09. Contributions - Penalty.

1. a. A participating member who first joined the defined contribution retirement plan
before January 1, 2025, and an employee who elects to participate in the defined
contribution plan under section 54-52.6-02.2, shall contribute monthly seven
percent of the monthly salary or wage paid to the participant.
b. A participating member who first joined the defined contribution retirement plan
after December 31, 2024, except for an employee who elects to participate in the
defined contribution plan under section 54-52.6-02.2, shall contribute monthly
four percent of the monthly salary or wage paid to the participant. In addition, the
participating member may elect to contribute monthly up to an additional three
percent of the monthly salary or wage paid to the participant.
c. This assessment must be deducted from the participant's salary in equal monthly
installments commencing with the first month of participation in the defined
contribution retirement plan established under this chapter.
2. a. For a participating member who first joined the defined contribution retirement
plan before January 1, 2025, and for an employee who elects to participate in the
defined contribution plan under section 54-52.6-02.2, the employer shall
contribute an amount equal to seven and twelve-hundredths percent of the
monthly salary or wage of the participating member.
b. For a participating member who first joined the defined contribution retirement
plan after December 31, 2024, except for an employee who elects to participate
in the defined contribution plan under section 54-52.6-02.2, the employer shall
contribute an amount equal to four and twelve-hundredths percent of the monthly
salary or wage of a participating member, plus up to an additional three percent
as an employer matching contribution calculated based on the participating
member's election under subdivision b of subsection 1.
c. For a participating member first enrolled after December 31, 2019, the employer
contribution includes an additional increase of one and fourteen-hundredths
percent.
d. If the employee's contribution is paid by the employer under subsection 3, the
employer shall contribute, in addition, an amount equal to the required
employee's contribution. Monthly, the employer shall pay such contribution into
the participating member's account from the employer's funds appropriated for
payroll and salary or any other funds available for such purposes.
e. If the employer fails to pay the contributions monthly, or fails to otherwise comply
with the board's established wage reporting or payroll reporting process
requirements, the employer is subject to a civil penalty of fifty dollars and, as
interest, one percent of the amount due for each month of delay or fraction of a
month after the payment became due. In lieu of assessing a civil penalty or one
percent per month, or both, interest at the actuarial rate of return may be
assessed for each month the contributions are delinquent. If contributions are
paid within ninety days of the date the contributions became due, penalty and
interest to be paid on delinquent contributions may be waived.
3. Each employer, at its option, may pay the employee contributions required by this
section for all compensation earned after December 31, 1999. The amount paid must
be paid by the employer in lieu of contributions by the employee. If the employer
decides not to pay the contributions, the amount that would have been paid will
continue to be deducted from the employee's compensation. If contributions are paid
by the employer, they must be treated as employer contributions in determining tax
treatment under this code and the federal Internal Revenue Code. Contributions paid

by the employer may not be included as gross income of the employee in determining
tax treatment under this code and the federal Internal Revenue Code until they are
distributed or made available. The employer shall pay these employee contributions
from the same source of funds used in paying compensation to the employee. The
employer shall pay these contributions by effecting an equal cash reduction in the
gross salary of the employee or by an offset against future salary increases or by a
combination of a reduction in gross salary and offset against future salary increases.
Employee contributions paid by the employer must be treated for the purposes of this
chapter in the same manner and to the same extent as employee contributions made
before the date on which employee contributions were assumed by the employer. An
employer shall exercise its option under this subsection by reporting its choice to the
board in writing.
### § 54-52.6-09.1. Acceptance of rollovers.

The plan may allow a participating member to transfer or rollover funds from other qualified
plans into the member's account under rules adopted by the board.
### § 54-52.6-09.2. Additional employer contributions.

Additional lump sum contributions by an employer to a participating member's defined
contribution retirement plan account may be made if the participating member has not retired
and has not received a retirement benefit under this chapter. Contributions may be made in an
amount actuarially equivalent to the amounts determined pursuant to chapter 54-52 as follows:
1. For the conversion of sick leave pursuant to section 54-52-27 if the participating
member has four or more years of service.
2. The equivalent of up to five years of service credit unrelated to any other eligible
service as provided in subsection 5 of section 54-52-29 if the participating member has
twenty-five or more years of service.
### § 54-52.6-09.3. Contributions for military service.

Repealed by S.L. 2005, ch. 531, § 20.
### § 54-52.6-09.4. Military service under the Uniformed Services Employment and

Reemployment Rights Act - Member retirement credit.
A member reemployed under the Uniformed Services Employment and Reemployment
Rights Act of 1994, as amended [Pub. L. 103-353; 108 Stat. 3150; 38 U.S.C. 4301-4333], is
entitled to receive retirement credit for the period of qualified military service. The required
contribution for the credit, including payment for retiree health benefits, must be made in the
same manner and by the same party as would have been made had the employee been
continuously employed. If the salary the member would have received during the period of
service is not reasonably certain, the member's average rate of compensation during the
twelve-month period immediately preceding the member's period of service or, if shorter, the
period of employment immediately preceding that period, times the number of months of credit
being purchased must be used. Employees must be allowed up to three times the period of
military service or five years, whichever is less, to make any required payments. This provision
applies to all qualifying periods of military service since October 1, 1994. Effective for years after
December 31, 2008, compensation for purposes of Internal Revenue Code section 415
[26 U.S.C. 415], as amended, includes military differential wage payments, as defined in
Internal Revenue Code section 3401(h) [26 U.S.C. 3401(h)], as amended. Any payments made
by the member to receive qualifying credit inconsistent with this provision must be refunded.
Employees shall make application to the employer for credit and provide a DD Form 214 to
verify service. After December 31, 2006, if a participating member dies while performing
qualified military service, as defined in section 414(u)(5) of the Internal Revenue Code
[26 U.S.C. 414(u)(5)], as amended, the deceased member's beneficiaries are entitled to any
death benefits, other than credit for years of service for purposes of benefits, which would have
been provided under the plan if the participating member had resumed employment and then

terminated employment on account of death. The period of that member's qualified military
service is treated as vesting service under the plan.
### § 54-52.6-09.5. Employer contribution for defined benefit plan.

In addition to the employer contribution under section 54-52.6-09, a state employer that
receives budgetary approval from the legislative assembly shall contribute to the defined benefit
retirement plan under chapter 54-52, an amount equal to the contribution rate calculated under
section 54-52-06 less the amount of the required employer contribution under sections
employee's wages, the employer shall use state funds to pay this additional contribution.
### § 54-52.6-09.6. Participation by temporary employees.

A temporary employee may elect, within one hundred eighty days of beginning employment,
to participate in the defined contribution retirement plan under this chapter. Monthly, the
temporary employee shall contribute an amount equal to nine and twenty-six hundredths
percent times the temporary employee's present monthly salary, and may elect to contribute up
to an additional six percent. An employer may not pay the temporary employee's contribution. A
temporary employee may continue to participate as a temporary employee until termination of
employment or reclassification of the temporary employee as a permanent employee.
### § 54-52.6-10. Vesting.

1. A participating member is immediately one hundred percent vested in that member's
contributions made to that member's account under this chapter. A participating
member vests in the employer contributions made on that member's behalf to an
account under this chapter according to the following schedule:
a. Upon completion of two years of service, fifty percent.
b. Upon completion of three years of service, seventy-five percent.
c. Upon completion of four years of service, one hundred percent.
2. A participating member also becomes one hundred percent vested in the employer
contributions upon reaching age sixty-five. A participating member who was a member
or deferred member of the public employees retirement system under chapter 54-52
who makes an election to participate in the defined contribution retirement plan under
section 54-52.6-02 or 54-52.6-02.2 must be credited with the years of service accrued
under the public employees retirement system on the effective date of participation in
the defined contribution retirement plan for the purpose of meeting vesting
requirements for benefits under this section. Any forfeiture as a result of the failure of a
participating member to vest in the employer contribution must be deposited in the
administrative expenses account.
### § 54-52.6-11. Refund beneficiaries.

A participating or former participating member may nominate one or more individuals as a
refund beneficiary by filing written notice of nomination with the board. If the participating
member or former participating member is married at the time of the nomination and the
participant's spouse is not the refund beneficiary for one hundred percent of the account, the
nomination is not effective unless the nomination is signed by the participant's spouse.
However, the board may waive this requirement if the spouse's signature cannot be obtained
because of extenuating circumstances.
### § 54-52.6-12. Qualified domestic relations orders.

1. The board or a vendor contracted for by the board shall apportion a participating
member's account in the defined contribution retirement plan under this chapter in
accordance with the applicable requirements of any qualified domestic relations order.
The board shall review a domestic relations order submitted to it to determine if the
domestic relations order is qualified under this section and under rules adopted by the
board for determining the qualified status of domestic relations orders, administering

distributions, and apportioning accounts under the qualified orders. Upon
determination of the domestic relations order as qualified, the board shall notify the
participating member, the named alternate payee, and the vendor, if applicable, of its
receipt of the qualified domestic relations order.
2. A "qualified domestic relations order" for purposes of this section means any judgment,
decree, or order, including approval of a property settlement agreement, which relates
to the provision of child support, spousal support, or marital property rights to a
spouse, former spouse, child, or other dependent of a participating member, is made
pursuant to a North Dakota domestic relations law, which creates or recognizes the
existence of an alternate payee's right to, or assigns to an alternate payee the right to,
receive all or a part of a participating member's account in the defined contribution
retirement plan under this chapter. A qualified domestic relations order may not require
the board to provide any type or form of benefit, or any option, not otherwise allowed
under this chapter. However, a qualified domestic relations order may require
distribution from an account in the defined contribution retirement plan under this
chapter notwithstanding that the participating member has not terminated eligible
employment. A qualified domestic relations order must specify:
a. The name and last-known mailing address of the participating member and the
name and the mailing address of each alternate payee covered by the order;
b. The amount or percentage of the participating member's account to be paid to
each alternate payee;
c. The number of payments or period to which the order applies; and
d. Each retirement plan to which the order applies.
### § 54-52.6-13. Distributions.

1. A participating member is eligible to receive distribution of that individual's
accumulated balance in the plan upon becoming a former participating member.
2. Upon the death of a participating member or former participating member, the board
shall pay the accumulated account balance of that deceased participant to the
deceased participant's refund beneficiary, if any, as provided in this subsection. If the
deceased participant designated an alternate refund beneficiary with the surviving
spouse's written consent, the board shall distribute the accumulated balance to the
named beneficiary. If the deceased participant named more than one primary
beneficiary with the surviving spouse's written consent, the board shall pay the
accumulated account balance to the named primary beneficiaries in the percentages
designated by the deceased participant or, if the deceased participant had not
designated a percentage for the beneficiaries, in equal percentages. If one or more of
the primary beneficiaries has predeceased the deceased participant, the board shall
pay the predeceased beneficiary's share to the remaining primary beneficiaries. If any
beneficiary survives the deceased participant, yet dies before distribution of the
beneficiary's share, the beneficiary must be treated as if the beneficiary predeceased
the deceased participant. If there is no remaining primary beneficiary, the board shall
pay the accumulated account balance of that deceased participant to the contingent
beneficiaries in the same manner. If there is no remaining designated beneficiary, the
board shall pay the accumulated account balance of that deceased participant to the
deceased participant's estate. If the deceased participant had not designated an
alternate refund beneficiary or the surviving spouse is the refund beneficiary, the
surviving spouse of the deceased participant may select a form of payment as
provided in subdivision d of subsection 3.
3. a. A former participating member may elect one or a combination of several of the
following methods of distribution of the accumulated balance:
(1) A lump sum distribution to the recipient.
(2) A lump sum direct rollover to another qualified plan, to the extent allowed by
federal law.
(3) Periodic distributions, including annuities, as authorized by the board.

(4) No current distribution, in which case the accumulated balance must remain
in the plan until the former participating member or refund beneficiary elects
a method or methods of distribution under this section, to the extent allowed
by federal law.
b. A surviving spouse beneficiary may elect one or a combination of several of the
methods of distribution provided in paragraph 1, 2, or 3 of subdivision a if the
surviving spouse is the sole refund beneficiary. If the surviving spouse is not the
sole refund beneficiary, the refund beneficiary may only choose a lump sum
distribution of the accumulated balance.
4. If the former participating member's vested account balance is less than one thousand
dollars, the board automatically shall refund the member's vested account balance
upon termination of employment. The member may waive the refund if the member
submits a written statement to the board, within one hundred twenty days after
termination, requesting that the member's vested account balance remain in the plan.
### § 54-52.6-14. Disability benefits.

The board shall allow distribution of the participating member's vested account balance if
the board determines that the participating member has become totally and permanently
disabled. If approved, the disabled member has the same distribution options as provided in
subdivisions a and c of subsection 3 of section 54-52.6-13. However, if the member chooses the
periodic distribution option, the member may only receive distributions for as long as the
disability continues and the member submits the necessary documentation and undergoes
medical testing required by the board, or for as long as the member participates in a
rehabilitation program required by the board, or both. If the board determines that a member no
longer meets the eligibility definition, the board shall discontinue the disability retirement benefit.
### § 54-52.6-15. Board to provide information.

1. The board shall provide information to employees who are eligible under section
chapter. The information must include at a minimum the employee's current account
balance, the assumption of investment risk under a defined contribution retirement
plan, administrative and investment costs, coordination of benefits information, and a
comparison of projected retirement benefits under the public employees retirement
system under chapter 54-52 and the retirement plan established under this chapter.
2. The board, or the board's vendor, shall provide to participating members:
a. Enrollment information that includes benefits of the defined contribution
retirement plan, investment options available, the assumption of risk, and
administrative and investment costs.
b. Ongoing investment and retirement income planning, including education on how
to set, measure, and adjust income and saving goals based on desired retirement
income and financial objectives, actual behavior, and changing circumstances.
c. Retirement income education, including distribution options available and in-plan
annuitization options.
d. Advice and guidance information, tools, and services primarily focused on
long-term planning and investing and life events that potentially influence and
impact retirement savings.
3. Notwithstanding any other provision of law, the board is not liable for any election or
investment decision made by an employee based upon information provided to an
employee under this chapter.
### § 54-52.6-16. State income tax deductions.

For the purposes of state income tax, the assessment imposed by this chapter on the
employee must be treated in accordance with existing state statutes on state income tax.

### § 54-52.6-17. Exemption from state premium tax.

Premiums, consideration for annuities, and membership fees are exempt from premium
taxes payable pursuant to section 26.1-03-17.
### § 54-52.6-18. Savings clause.

If the board determines that any section of this chapter does not comply with applicable
federal statutes or rules, the board shall adopt appropriate terminology with respect to that
section as will comply with those federal statutes or rules. Any plan modifications made by the
board pursuant to this section are effective until the effective date of any measure enacted by
the legislative assembly providing the necessary amendments to this chapter to ensure
compliance with the federal statutes or rules.
### § 54-52.6-19. Overpayments.

The board has the right of setoff to recover overpayments made under this chapter and to
satisfy any claims arising from embezzlement or fraud committed by a participating member,
deferred member under this chapter, refund beneficiary, or other person that has a claim to a
distribution or any other benefit from a plan governed by this chapter.
### § 54-52.6-20. Correction of records.

The board shall correct errors in the records and actions in plans under this chapter and
shall seek to recover overpayments and shall seek to collect underpayments.
### § 54-52.6-21. Internal Revenue Code compliance.

The board shall administer the plan in compliance with the following sections of the Internal
Revenue Code, as amended, as they apply to governmental plans:
1. Section 415, including the defined contribution limitations under section 415(c)(1)(A)
and (B) of the Internal Revenue Code and the Treasury Regulations thereunder, which
are incorporated herein by reference.
a. In accordance with the defined contribution limitations under section 415(c) of the
Internal Revenue Code, annual additions (as defined in section 415(c)(2) of the
Internal Revenue Code) under this plan may not exceed the limitations set forth in
section 415(c)(1)(A) and (B), as adjusted under section 415(d) of the Internal
Revenue Code, effective January first of each year following a regular legislative
session.
b. If a participating member's aggregate annual additions exceed the defined
contribution limitations under section 415(c) of the Internal Revenue Code, the
member's annual additions must be reduced to the extent necessary to comply
with section 415(c) of the Internal Revenue Code and the Treasury Regulations
thereunder.
2. The minimum distribution rules under section 401(a)(9) of the Internal Revenue Code
and the regulations issued under that provision to the extent applicable to
governmental plans. Accordingly, benefits must be distributed or begin to be distributed
no later than a member's required beginning date, and the required minimum
distribution rules override any inconsistent provision of this chapter. For a member who
attains age seventy and one-half before January 1, 2020, the member's required
beginning date is April first of the calendar year following the later of the calendar year
in which the member attains age seventy and one-half or terminates employment. For
a member who attains age seventy and one-half after December 31, 2019, the
member's required beginning date is April first of the calendar year following the later
of the calendar year in which the member attains age seventy-two or terminates
employment.
3. The annual compensation limitation under section 401(a)(17) of the Internal Revenue
Code, as adjusted for cost-of-living increases under section 401(a)(17)(B).
4. The rollover rules under section 401(a)(31) of the Internal Revenue Code. Accordingly,
a distributee may elect to have an eligible rollover distribution, as defined in section

402(c)(4) of the Internal Revenue Code, paid in a direct rollover to an eligible
retirement plan, as defined in section 402(c)(8)(B) of the Internal Revenue Code,
specified by the distributee.
5. If the plan of retirement benefits set forth in this chapter is terminated or discontinued,
the rights of all affected participating members to accrued retirement benefits under
this chapter as of the date of termination or discontinuance is nonforfeitable, to the
extent then funded.
### § 54-52.6-22. Report to employee benefits programs committee.

Annually, the board shall provide a report to the employee benefits programs committee on
the status of the defined contribution retirement plan under this chapter.
### § 54-52.6-23. Savings clause - Plan modification.

If the board determines any section of this chapter does not comply with applicable federal
statutes or rules, the board shall adopt appropriate terminology with respect to that section as
will comply with those federal statutes or rules, subject to the approval of the employee benefits
programs committee. Any plan modifications made by the board pursuant to this section are
effective until the effective date of any measure enacted by the legislative assembly providing
the necessary amendments to this chapter to ensure compliance with the federal statutes or
rules.
