CHAPTER 192
S.P. 132 - L.D. 411
An Act to Bring Certain State Retirement Laws into Compliance with Federal Laws
Emergency preamble. Whereas, Acts of the Legislature do not become effective until 90 days after adjournment unless enacted as emergencies; and
Whereas, the federal Small Business Protection Act of 1996 amended the law regarding treatment of assets and income of deferred compensation plans for state and local employees under the United States Internal Revenue Code, Section 457 making state law inconsistent with the federal law; and
Whereas, immediate amendment of current state law is necessary to permit state and local governments to convert the provisions of existing deferred compensation plans for employees and to establish new plans consistent with federal law; and
Whereas, in the judgment of the Legislature, these facts create an emergency within the meaning of the Constitution of Maine and require the following legislation as immediately necessary for the preservation of the public peace, health and safety; now, therefore,
Be it enacted by the People of the State of Maine as follows:
Sec. 1. 5 MRSA §888, as repealed and replaced by PL 1973, c. 788, §16-A, is amended to read:
Any compensation or portion of compensation reduced by an employee in conjunction with a deferred compensation program shall remain as a general, unpledged asset of the State, county, city, town or other political subdivision until such time as the deferred compensation program covering such employee calls for distribution and any earnings or income thereon must be held in trust for the exclusive benefit of that participant and that participant's beneficiary as provided in the United States Internal Revenue Code, Section 457. For purposes of this section, custodial accounts, annuity contracts and other contracts described in the United States Internal Revenue Code, Section 457(g) must be treated as trusts. Any compensation or portion of compensation reduced shall must be considered in calculating any employee benefits and it shall be is subject to any withholding imposed on such the employee. Any compensation or portion of compensation reduced shall is not be subject to any income taxation until distribution is actually made to the employee.
Emergency clause. In view of the emergency cited in the preamble, this Act takes effect when approved.
Effective May 15, 1997.
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