Administrative Regulation Update

Recently, changes were made to Kentucky Administrative Regulation Chapter 105 section 1:140. 105 KAR 1:140 sets forth participating employers’ administrative duties regarding reporting service credit, creditable compensation, and submitting contributions to Kentucky Retirement Systems (“KRS”). The new provisions and substantive changes may be located in Sections 1, 7, and 8. These changes preempt any conflicting information you may have received during last year’s Employer Training Conferences.
105 KAR 1:140 Section 1(7) provides the procedures for employers to correct a situation where they have not withheld the correct amount of contributions. KRS will notify the employer of the additional amount of contributions due from an employee which the employer will then withhold from the employee’s compensation and send to KRS. If the employee is no longer employed by the employer, then KRS will refund all the employee contributions paid to the employer who will then process the contributions through its payroll withholding applicable taxes. The employee may later purchase this service as omitted service.
105 KAR 1:140 Section 1(9) establishes the guidelines for classifications of employees in non-participating positions. Violations of this subsection will result in the employee being eligible for omitted service if the employee worked or averaged over 100 hours per month.
Subsection (9)(a) provides that an employer in KERS or CERS shall not classify an employee in more than one non-participating position in a fiscal year. However, employers in CERS can change an employee from a seasonal, emergency or part-time position to a probationary position.
Subsection (9)(b) provides that a KERS or CERS cannot change an employee from full-time to seasonal, temporary, or interim in the same fiscal year.
Subsection (9)(c) makes guidelines regarding seasonal employees including that the job duties must only be able to be performed during a specific season of the year (for example, lifeguards) and that there must be a specific break in employment before a person may be re-hired as a seasonal employee.
Sections 7 and 8 are new provisions of 105 KAR 1:140, relating to the “Pension Spiking” provisions established by KRS 61.598, which require the retiring employees last employer to pay for increases in salary greater than 10% during the employees last five years of service, unless those increases were due to a bona fide promotion or career advancement. Section 7 sets forth the procedures for employers to request a pre-determination from KRS if change in position or hiring of an employee is a bona fide promotion or career advancement. Section 8 establishes the procedures utilized to determine if a pension spike has occurred following a member’s retirement and establishes the procedures for the last employer to request an administrative hearing regarding KRS’ determination whether a particular promotion or hiring was a bona fide promotion or career advancement.
This article is only a brief summary of the amendments to the regulation. Please be advised that this summary is intended for general informational purposes only and should not be relied upon as a legal advice regarding the legislative meaning, purpose, intent, application or administration of a particular statutory change. If you have questions or concerns regarding the impact of a particular piece of legislation, please contact the Legislative Research Commission or a qualified attorney. 105 KAR 1:140 may be found on the Legislative Research Commission website:​