Alaska Teachers May Have Their Pick of DB or DC Coverage

Many teachers in Alaska may have the ability to choose between defined benefit or defined contribution coverage. 

A bill is before the Alaska Senate that would expand the retirement coverage options offered under the Public Employees' Retirement System of Alaska and the teachers’ retirement system to give certain employees an opportunity to choose between the DB and DC plans those systems run. 

Senate Majority Leader Cathy Giessel (R-Anchorage) introduced the bill that would accomplish that change, SB 88, on March 1, 2023. An extended period of amendment then ensued. On Feb. 5, 2024, the measure was referred to three Senate committees: State Affairs, Labor & Commerce, and Finance. 

Eligibility

Under the bill, teachers hired after June 30, 2006 and before July 1, 2024 would be eligible to participate in a DC plan or a DB plan. Teachers who participate in a university retirement plan would not be covered by this expansion of options for retirement plan coverage. 

Reemployed Teachers

The bill also contains a provision that would allow reemployed teachers to make a one-time election to participate in the DB plan if he or she:

• became a member of the DC plan after June 30, 2006 and before July 1, 2024;
• is not employed by an employer on July 1, 2024;                                                    
• is reemployed by an employer after July 1, 2024; and                                               
• before the date of reemployment:
  • has not received a distribution of the entire balance in the teacher's individual account under the defined contribution retirement plan; or             
  • has received a rollover distribution of the entire balance in the teacher's individual account in the plan and has within 180 days of reemployment had all or part of a direct rollover distribution from an eligible retirement plan owned by the teacher paid directly into the teacher's individual account.

                                      
Such an election may be made not more than 180 days after the date of reemployment.

Irrevocable

An election made to participate in the plan would be irrevocable. 

Enrollment

On the effective date of the teacher’s election, the teacher would be enrolled as a member of the plan. The teacher's enrollment in the plan would be retroactive to the date of hire.