                                 CODE OF VIRGINIA

HYBRID RETIREMENT PROGRAM (§ 51.1-169)

A. For purposes of this section, &#8220;hybrid retirement program&#8221; or
&#8220;program&#8221; means a hybrid retirement program covering any employee in
a position covered for retirement purposes under the provisions of Chapter 1
(&#xA7; 51.1-124.1 et seq.) for retirement purposes other than the Virginia
Retirement System defined benefit retirement plan established under Chapter 1
(&#xA7; 51.1-124.1 et seq.). Persons who are participants in, or eligible to be
participants in, the retirement plans under the provisions of Chapter 2 (&#xA7;
51.1-200 et seq.), Chapter 2.1 (&#xA7; 51.1-211 et seq.), the optional
retirement plans established under &#xA7;&#xA7; 51.1-126.1, 51.1-126.3,
51.1-126.4, and 51.1-126.7, or a person eligible to earn the benefits permitted
by &#xA7; 51.1-138 shall not be eligible to participate in the hybrid retirement
program. Any person who meets the definition of &#8220;emergency medical
services personnel&#8221; in &#xA7; 32.1-111.1 or is employed as a firefighter,
or law-enforcement officer as those terms are defined in &#xA7; 15.2-1512.2 and
whose employing political subdivision has legally adopted an irrevocable
resolution as described in subdivision B 4 of &#xA7; 51.1-153 and subdivision A
3 of &#xA7; 51.1-155 shall not be eligible to participate in the hybrid
retirement program.
			The Board shall maintain the hybrid retirement program established by this
section, and any employer is authorized to make contributions under such program
for the benefit of its employees participating in such program. Every person who
is otherwise eligible to participate in the program but is not a member of a
retirement plan administered by the Virginia Retirement System the first time he
is hired or rehired on or after January 1, 2014, in a covered position, shall
participate in the hybrid retirement program established by this section.
			A person who participates in the otherwise applicable defined benefit
retirement plan established by this title and administered by the Virginia
Retirement System under this chapter may make an irrevocable election to
participate in the hybrid retirement program maintained under this section. Such
election shall be exercised no later than April 30, 2014. If an election is not
made by April 30, 2014, such employee shall be deemed to have elected not to
participate in the hybrid retirement program and shall continue to participate
in his current retirement plan.

B. Except as otherwise provided in subsection G:

   1. The employer shall make contributions to the defined benefit component of
   the program in accordance with &#xA7; 51.1-145.

   2. The employer shall make a mandatory contribution to the defined
   contribution component of the program on behalf of an employee participating
   in the program in the amount of one percent of creditable compensation, which
   shall be made to the appropriate cash match plan established for the employee
   under &#xA7; 51.1-608. In addition, the employer shall make a matching
   contribution on behalf of the employee based on the employee&#8217;s voluntary
   contributions under the defined contribution component of the program to the
   deferred compensation plan established under &#xA7; 51.1-602, up to a maximum
   of 2.5 percent of creditable compensation for the payroll period, as follows:
   (i) 100 percent of the first one percent of creditable compensation
   contributed by the employee to the defined contribution component of the
   program under subdivision C 2 for the payroll period, and (ii) 50 percent of
   the next three percent of creditable compensation contributed by the employee
   to the defined contribution component of the program under subdivision C 2 for
   the payroll period. The matching contribution by the employer shall be made to
   the appropriate cash match plan established for the employee under &#xA7;
   51.1-608.

   3. The total amount contributed by the employer under subdivision 2 shall vest
   to the employee&#8217;s benefit according to the following schedule:
   				a. Upon completion of two years of active participation, 50 percent.
   				b. Upon completion of three years of active participation, 75 percent.
   				c. Upon completion of four years of active participation, 100 percent.
   				For purposes of this subdivision, &#8220;active participation&#8221;
   includes creditable service, as defined in &#xA7; 51.1-124.3, in any
   retirement plan established by this title and administered by the Retirement
   System.
   				If an employee ceases to be a member prior to achieving 100 percent
   vesting, contributions made by an employer on behalf of the employee under
   subdivision 2 that are not vested shall be forfeited. The Board may establish
   a forfeiture account and may specify the uses of the forfeiture account.

   4. An employee may direct the investment of contributions made by an employer
   under subdivision B 2.

   5. No loans or hardship distributions shall be available from contributions
   made by an employer under subdivision B 2.

C. Except as otherwise provided in subsection G:

   1. An employee participating in the hybrid retirement program maintained under
   this section shall, pursuant to procedures established by the Board, make
   mandatory contributions on a salary reduction basis in accordance with &#xA7;
   414(h) of the Internal Revenue Code (i) to the defined benefit component of
   the program in the amount of four percent of creditable compensation in lieu
   of the amount described in subsection A of &#xA7; 51.1-144 and (ii) to the
   defined contribution component of the program in the amount of one percent of
   creditable compensation, which shall be made to the appropriate cash match
   plan established for the employee under &#xA7; 51.1-608.

   2. An employee participating in the hybrid retirement program may also make
   voluntary contributions to the defined contribution component of the program
   of up to four percent of creditable compensation or the limit on elective
   deferrals pursuant to &#xA7; 457(b) of the Internal Revenue Code, whichever is
   less. The contribution by the employee shall be made to the appropriate
   deferred compensation plan established by the employee under &#xA7; 51.1-602.

   3. If an employee&#8217;s voluntary contributions under subdivision C 2 are
   less than four percent of creditable compensation, the contribution will
   increase by one-half of one percent, beginning on January 1, 2017, and every
   three years thereafter, until the employee&#8217;s voluntary contributions
   under subdivision C 2 reach four percent of creditable compensation. The
   increase will be effective beginning with the first pay period that begins in
   such calendar year unless the employee elects not to increase the voluntary
   contribution in a manner prescribed by the Board.

   4. No loans or hardship distributions shall be available from contributions
   made by an employee under this subsection.

   5. Disclosure of all services, fees, restrictions, and surrender penalties
   associated with employee voluntary contributions under subdivision C 2 shall
   be provided by the Board on an annual basis to an employee who does not make
   the election provided in subdivision G 1.

D. 1.  The amount of the service retirement allowance under the defined benefit
component of the program shall be governed by § 51.1-155 for all creditable
service credited prior to the effective date of the member&#8217;s participation
in the program. For all other creditable service, the allowance shall equal one
percent of a member&#8217;s average final compensation multiplied by the amount
of his creditable service while in the program.

   2. No member shall retire for disability under the defined benefit component
   of the program.

   3. Except as provided in subdivision 1, any employee participating in the
   hybrid retirement program maintained under this section shall be considered to
   be a person who becomes a member on or after July 1, 2010.

   4. In all other respects, administration of the defined benefit component of
   the program shall be governed by the provisions of Chapter 1 (&#xA7;
   51.1-124.1 et seq.).

E. With respect to any employee who elects, pursuant to subsection A, to
participate in the otherwise applicable defined benefit retirement plan
established by this title and administered by the Virginia Retirement System,
the employer shall collect and pay all employee and employer contributions to
the Virginia Retirement System for retirement and group life insurance in
accordance with the provisions of Chapter 1 (&#xA7; 51.1-124.1 et seq.) for such
employee.

F. 1.  The Board shall develop policies and procedures for administering the
hybrid retirement program it maintains, including the establishment of
guidelines for employee elections and deferrals under the program.

   2. No employee who is an active member in the hybrid retirement program
   maintained under this section shall also be an active member of any other
   optional retirement plan maintained under the provisions of Chapter 1 (&#xA7;
   51.1-124.1 et seq.).

   3. If a member of the hybrid retirement program maintained under this section
   is at any time in service as an employee in a position covered for retirement
   purposes under the provisions of Chapter 1 (&#xA7; 51.1-124.1 et seq.), 2
   (&#xA7; 51.1-200 et seq.), 2.1 (&#xA7; 51.1-211 et seq.), or 3 (&#xA7;
   51.1-300 et seq.), his benefit payments under the hybrid retirement program
   maintained under this section shall be suspended while so employed; provided,
   however, reemployment shall have no effect on a payment under the defined
   contribution component of the program if the benefit is being paid in an
   annuity form under an annuity contract purchased with the member&#8217;s
   account balance.

   4. Any administrative fee imposed pursuant to subdivision A 13 of &#xA7;
   51.1-124.22 on any employer for administering and overseeing the hybrid
   retirement program maintained under this section shall be charged for each
   employee participating in such program and shall be for costs incurred by the
   Virginia Retirement System that are directly related to the administration and
   oversight of such program. Notwithstanding the foregoing, the Board is
   authorized to collect all or a portion of such fee directly from the employee.

   5. The creditable compensation for any employee on whose behalf employee or
   employer contributions are made into the hybrid retirement program shall not
   exceed the limit on compensation as adjusted by the Commissioner of the
   Internal Revenue Service pursuant to the transition provisions applicable to
   eligible participants under state and local governmental plans under &#xA7;
   401(a)(17) of the Internal Revenue Code as amended in 1993 and as contained in
   &#xA7; 13212(d)(3) of the Omnibus Budget Reconciliation Act of 1993 (P.L.
   103-66).

   6. The Board may contract with private corporations or institutions, subject
   to the standards set forth in &#xA7; 51.1-124.30, to provide investment
   products as well as any other goods and services related to the administration
   of the hybrid retirement program, except as provided in subsection G. The
   Virginia Retirement System is hereby authorized to perform related services,
   including but not limited to, providing consolidated billing, individual and
   collective recordkeeping and accountings, and asset purchase, control, and
   safekeeping.

G. 1.  Any political subdivision of the Commonwealth that has established a plan
pursuant to § 403(b) of the Internal Revenue Code of 1986, as amended (a
&#8220;403(b) plan&#8221;), may, at its option, elect to allow its employees the
option to direct that voluntary contributions to the defined contribution
component of the program under subdivision C 2 be made to such 403(b) plan and
the corresponding employer matching contributions under subdivision B 2 be made
to such 403(b) plan or the appropriate local cash match plan established under
§ 51.1-610. All such voluntary contributions by an employee to such 403(b) plan
shall be made on a pretax basis. Any such political subdivision of the
Commonwealth that so directs shall develop policies and procedures for
administering such contributions, subject to and in accordance with applicable
federal law and regulations. The policies and procedures shall provide for the
administration of vesting provisions as provided in subdivision B 3, the
establishment of and uses for a forfeiture account as provided in subdivision B
3, and automatic contribution escalation provisions as provided in subdivision C
3, all with regard to employee voluntary contributions and corresponding
employer matching contributions.
			In all other respects, the political subdivision shall be subject to the
provisions of the hybrid retirement program described in this section.

   2. The governing body of any political subdivision of the Commonwealth
   electing to allow its employees to use its 403(b) plan or a local cash match
   plan as described in subdivision 1 shall adopt a resolution on or before
   November 1, 2015, and submit such resolution to the Board to notify the Board
   of its election, which shall be effective January 1, 2016, and shall remain
   effective for 12 months. Thereafter, the governing body of any political
   subdivision of the Commonwealth may make or change its election for its
   employees no more often than annually by adopting a resolution on or before
   November 1 of each year notifying the Board of a new or changed election,
   which shall become effective on January 1.

   3. A person who participates in the hybrid retirement program maintained under
   this section may make an election to participate in the 403(b) plan
   established by his employer under subdivision G 1. Such election shall be
   exercised no later than November 30, 2015, and shall be effective January 1,
   2016. If an election is not made by November 30, 2015, such employee shall be
   deemed to have elected not to participate in the 403(b) plan established by
   his employer under subdivision G 1. Thereafter, such employee may make or
   change his election on or before November 30 of each year by notifying his
   employer of a new or changed election, which shall become effective the
   following January 1. If an election is not made or changed by November 30,
   such employee shall be deemed to have elected not to change the prior
   year&#8217;s election.

   4. In the case of a 403(b) plan or local cash match plan administered by a
   political subdivision of the Commonwealth that provides individual accounts
   permitting an employee or beneficiary to exercise discretion over assets in
   his account, the political subdivision shall not be liable for any loss
   resulting from such employee&#8217;s or beneficiary&#8217;s (i) investment of
   voluntary contributions in the political subdivision&#8217;s 403(b) plan or
   matching contributions in the political subdivision&#8217;s 403(b) plan or
   local cash match plan, (ii) exercise of discretion over the assets in any of
   his accounts, or (iii) inaction with respect to the assets in any of his
   accounts that results in such assets being placed in a default investment
   option selected by the political subdivision, provided that the investment
   options for the affected individual account and the particular default
   investment option for such individual account are selected in accordance with
   subsection A of &#xA7; 51.1-803, applied mutatis mutandis. Under no
   circumstances shall the Commonwealth, the Board, employees of the Retirement
   System, the Investment Advisory Committee of the Retirement System, or any
   other advisory committee established by the Board bear any liability with
   respect to any plan or individual account described in this subsection.

   5. The provisions of this subsection shall not apply to any political
   subdivision of the Commonwealth that has entered into an agreement with the
   Retirement System pursuant to &#xA7; 51.1-603.1 or 51.1-611 except with regard
   to a 403(b) plan.

   6. Disclosure of all services, fees, restrictions, and surrender penalties
   associated with employee voluntary contributions under subsection G shall be
   provided by the political subdivision of the Commonwealth on an annual basis
   to an employee who makes the election provided in subdivision G 1. Such
   employee shall also be provided with a side-by-side comparison of the
   long-term effects of generic expense ratios on his investments.

   7. The Board shall not be responsible for administration of or recordkeeping
   related to voluntary contributions to the defined contribution component of
   the program made to a 403(b) plan or the corresponding employer matching
   contributions made to a 403(b) plan or the appropriate local cash match plan
   established under &#xA7; 51.1-610 that are authorized by subdivision G 1.

   8. The Board shall develop policies and procedures for administering the
   provisions of this subsection.

HISTORY: 2012, cc. 701, 823; 2013, cc. 456, 666; 2014, c. 356; 2015, cc. 502,
503, 538, 539, 660; 2016, cc. 263, 280; 2025, c. 508.