Chapter 7. Employee And Employer Accounts of California Education Code >> Division 1. >> Title 1. >> Part 14. >> Chapter 7.

All contributions based on salary earned by a participant, together with amounts credited under the minimum interest rate and additional earnings credit amounts, shall be treated as credits to individual accounts in the name of the participant. These accounts shall be nominal accounts used to determine the amount of retirement benefit, disability benefit, death benefit, or termination benefit of the participant or beneficiary. The participant shall have no actual individual account and shall have no claim to any particular assets of the plan or the fund.

All employee contributions and interest credited under the minimum interest rate and additional earnings credits in respect of those contributions shall be treated as credits to the participant's employee account.

All employer contributions on behalf of the participant and interest credited under the minimum interest rate and additional earnings credits in respect of those contributions shall be treated as credits to the participant's employer account.

All employee contributions shall be credited to employee accounts and all employer contributions shall be credited to employer accounts as of the first working day following the date all contributions to fully satisfy the contribution report as submitted by the employer are received by the system.

(a) Beginning June 1, 1996, prior to the Cash Balance Plan becoming effective, and prior to the beginning of each plan year thereafter, the board, by plan amendment with respect to the Cash Balance Benefit Program, shall declare the minimum interest rate for crediting employee accounts and employer accounts with respect to the Cash Balance Benefit Program during the following plan year.
  (b) All interest shall be computed at the minimum interest rate on the balance of the employee account and the employer account and shall be compounded daily.
  (c) Interest for contributions credited during that month to the respective account shall accrue at the minimum interest rate from the first working day following the date contributions are received in full by the system pursuant to Section 26603.
  (d) Interest shall not be credited to employee accounts and employer accounts that have been transferred to the Annuitant Reserve for payment of an annuity.

In the event that the total amount of investment earnings of the plan for any plan year exceeds the sum of the total amount required to credit all employee and employer accounts at the minimum interest rate for the plan year plus the administrative costs of the plan for the plan year, then following the determination by the board with respect to additions to the Gain and Loss Reserve described in subdivision (c) of Section 26202 the board may declare by means of plan amendment an additional earnings credit for the plan year with respect to the employee and employer accounts of the plan participants.

Any additional earnings credit declared shall be determined as a specified percentage increase in the closing balance of each employee account and employer account with respect to the Cash Balance Benefit Program measured as of the last day of the plan year. The additional earnings credit shall be credited to employee account and employer account balances as of the date the board declares the additional earnings credit is to be applied. The additional earnings credit shall not be credited to employee accounts and employer accounts that have been transferred to the Annuitant Reserve for payment of an annuity under the Cash Balance Benefit Program.

(a) The board may declare by means of plan amendment with respect to the Cash Balance Benefit Program an additional annuity credit applicable to annuities being paid under the Cash Balance Benefit Program.
  (b) The declaration authorized by subdivision (a) may be made only when the board by plan amendment with respect to the Cash Balance Benefit Program declares an additional earnings credit as provided in Section 26605 and if the total amount of investment earnings of the plan with respect to the Cash Balance Benefit Program for the plan year exceeds the sum of the total amount required to credit all employee and employer accounts at the minimum interest rate, the administrative costs of the plan with respect to the Cash Balance Benefit Program for the plan year, any addition to be made to the Gain and Loss Reserve under subdivision (c) of Section 26202, the total amount required to credit all employee and employer accounts in respect of the additional earnings credit so declared, and any other obligations incurred by the plan with respect to the Cash Balance Benefit Program.
  (c) Any additional annuity credit with respect to the Cash Balance Benefit Program shall be based upon the annuity of the participant or beneficiary for the plan year and shall be paid as a lump sum to the participant or beneficiary on the date specified by the board.