HB 1201 State and Local Retirement and Pension Systems – Assignment of Benefits to Trust for Disabled Individuals received an unfavorable report from the House Appropriations Committee. The Senate crossfile, SB 403, has not moved out of its committee. The bill provided that a retiree or beneficiary of a county or State retirement may have their retirement allowance assigned to a special needs trust established for their benefit.

MACo opposed the legislation, citing concerns with the new financial and administrative burdens the bill presented, including the need for outside legal counsel.

Sixteen of Maryland’s twenty-four county governments administer their own retirement systems either for general employees or selectively for law enforcement and correctional officers. Under this bill, those counties could be required to pay a certain retirement allowance into a supplemental needs trust for a disabled retiree or beneficiary if requested and verified by the retirement plan administrator. As drafted, the bill requires counties to adopt a new definition for disabled and administer a new process for assignment of benefits. These changes complicate retirement plan administration and create new financial and administrative burdens, including the need for outside legal counsel.

The State Retirement and Pension System Board of Trustees also opposed the legislation, stating that,

The board’s opposition is primarily due to its concerns that as [the bill] is currently drafted, it may violate certain requirements of the Internal Revenue Code (IRC) which could in turn raise issues regarding the System’s tax qualified status.

For more information, see the bill text, the bill information page, the fiscal note, and opposition testimony to the bill and its crossfile, SB 403, from MACo and the State Retirement and Pension System Board of Trustees.