The question pertains to the reporting requirements for certain retirement plans in Montana. Specifically, it addresses the threshold for filing a Form 5500 series return with the U.S. Department of Labor. Under the Employee Retirement Income Security Act of 1974 (ERISA), as applied in Montana, most private-sector employee benefit plans are required to file an annual report. However, there are exceptions for unfunded or insured plans, and for plans with fewer than 100 participants that are maintained by an employer primarily for the purpose of providing retirement benefits, if certain conditions are met. The threshold for filing the Form 5500 series is generally when the plan has 100 or more participants at the beginning of the plan year. Plans that are unfunded or fully insured are typically exempt from the annual reporting requirements, regardless of the number of participants. Therefore, a plan with 95 participants that is unfunded would not be required to file the Form 5500 series return.

The Montana Public Employees’ Retirement System (MPERS) operates under specific statutes that govern the eligibility and calculation of retirement benefits for state employees. Montana Code Annotated (MCA) Title 19, Chapter 3, outlines the framework for the retirement system. Specifically, MCA §19-3-402 details the service retirement eligibility, requiring members to have accumulated at least five years of creditable service and reached a minimum age. For members who began service on or after July 1, 2011, the age requirement is 65, or 60 if they have at least 20 years of creditable service. The calculation of the retirement benefit involves multiplying the member’s average final compensation by a service retirement factor, which is determined by the member’s years of creditable service and the plan tier. For a member who began service after July 1, 2011, and has 25 years of service and an average final compensation of \$70,000, assuming they meet the age requirement and are in a tier with a 2% multiplier per year of service, the annual retirement benefit would be calculated as follows: \(25 \text{ years} \times 2\% \text{ per year} \times \$70,000 = 50\% \times \$70,000 = \$35,000\). This calculation is a simplified illustration; actual calculations can involve complexities such as cost-of-living adjustments, early retirement reductions, and specific plan provisions. The core principle is the application of creditable service and average final compensation against a defined multiplier, all within the statutory framework established by the Montana Legislature. Understanding these foundational elements is crucial for administering and participating in the MPERS.

The scenario describes a defined benefit pension plan sponsored by a Montana-based municipal employer. The question revolves around the proper valuation of plan assets for the purpose of determining the minimum required contribution under Montana law and relevant federal regulations, particularly the Internal Revenue Code (IRC) and ERISA, which often guide state-level public pension administration. For a defined benefit plan, plan assets are typically valued at fair market value as of a specified valuation date. Montana law, like federal guidelines, generally requires that assets be valued on a consistent basis. For publicly traded securities, fair market value is readily determinable from market quotes. However, for less liquid assets such as real estate, private equity, or certain fixed income instruments, the valuation process can be more complex, requiring professional appraisals or other recognized valuation methodologies. The key principle is that the valuation must reflect the current market price or, in its absence, a reasonable estimate of what the asset would sell for on the open market. The Montana Public Employees’ Retirement System (MPERS) statutes, and administrative rules promulgated thereunder, along with guidance from the Department of Administration, would dictate the specific valuation methods and frequency. The most recent actuarial valuation date is crucial for determining the funding status and required contributions. The question asks for the appropriate valuation method for plan assets in this context. The most accurate and legally compliant method for valuing pension plan assets, particularly for publicly traded securities and generally for other assets where a market exists, is fair market value. This ensures that the pension fund’s financial health is accurately reflected. Other methods like book value or historical cost do not reflect current market conditions and would not be appropriate for determining minimum required contributions, which are based on the plan’s funded status. Therefore, fair market value, determined according to actuarial standards of practice and relevant state and federal regulations, is the correct approach.

The Montana Public Employee Retirement Administration (MPERA) oversees various retirement systems for state and local government employees. When a participating employer in Montana wishes to establish a new retirement plan or amend an existing one to include benefits beyond those mandated by statute, such as enhanced early retirement incentives or specific disability provisions not covered by the standard plans, it must adhere to a defined process. This process involves demonstrating that the proposed changes are actuarially sound and do not unduly burden the retirement system’s long-term financial stability. Specifically, MPERA requires a detailed actuarial valuation report. This report must project the future costs of the proposed benefits, assess their impact on the system’s funded status, and outline any necessary adjustments to contribution rates for both the employer and employees. Montana Code Annotated (MCA) Title 19, particularly sections concerning retirement systems, outlines the framework for plan administration and modification. While federal laws like ERISA often govern private sector plans, Montana’s public employee retirement systems are primarily governed by state statutes and MPERA’s administrative rules. The key is that any new or amended benefit must be supported by a sound actuarial basis to ensure the solvency and fairness of the retirement system for all its members. The actuarial soundness demonstration is the cornerstone of any such proposal to MPERA, ensuring compliance with the state’s commitment to its public servants’ retirement security.

The scenario involves a governmental entity in Montana, the “Big Sky County Public Employee Retirement System,” which is a defined benefit pension plan. The question probes the fiduciary responsibilities under the Montana Public Employees’ Retirement System (MPERS) statutes, specifically concerning investment management. Montana law, particularly Title 19 of the Montana Code Annotated (MCA), governs public employee retirement systems. While the MPERS board has discretion in investment decisions, these decisions must be made prudently and solely in the interest of the plan participants and beneficiaries. This duty of loyalty and prudence is a cornerstone of fiduciary responsibility in pension law, similar to ERISA’s standards but specific to Montana’s public sector. The core principle is that investment decisions must be for the exclusive purpose of providing benefits to members and defraying reasonable expenses of administering the plan. The board cannot engage in speculative investments or investments that primarily benefit parties other than the participants. Therefore, investing in a diversified portfolio of publicly traded securities, real estate, and alternative investments, managed by professional investment advisors, aligns with these fiduciary duties. Conversely, investing solely in volatile cryptocurrency without adequate risk assessment, or in a project that primarily benefits a specific political faction rather than the plan participants, would likely breach these duties. The scenario presented, involving a diversified investment strategy overseen by professional managers, directly reflects the prudent investor rule applicable to fiduciaries of public pension plans in Montana.

The scenario involves a Montana public employee who participated in a defined benefit pension plan. The question pertains to the legal framework governing the disbursement of pension benefits upon the employee’s separation from service prior to full vesting. Montana’s Public Employees’ Retirement System (MPERS) is governed by Title 19, Chapter 3 of the Montana Code Annotated (MCA). Specifically, MCA § 19-3-1001 outlines the conditions under which a member is entitled to a retirement benefit. If a member terminates service before meeting the age and service requirements for a retirement benefit, but has accumulated creditable service, they are typically entitled to a refund of their accumulated contributions without interest, or a deferred vested benefit if they meet certain service requirements. However, the question asks about the entitlement to a *retirement benefit*, which implies a pension payment, not merely a return of contributions. Under Montana law, a retirement benefit is generally payable only upon reaching the requisite age and service credit. Since the employee has not met these criteria, they are not entitled to a retirement benefit at the time of separation. The refund of contributions is a separate statutory right for members who terminate service before becoming vested. The concept of “vesting” in Montana pension law, as detailed in MCA § 19-3-1001, means accumulating a sufficient amount of creditable service to be eligible for a future retirement benefit, even if employment ceases. However, eligibility for the *payment* of that benefit is contingent on meeting age and service requirements. Therefore, the employee is not yet eligible for a retirement benefit.

The scenario involves a governmental entity in Montana that has established a defined benefit pension plan for its employees. The plan is funded through contributions from both the employer and the employees. Under Montana law, specifically concerning public employee retirement systems, the fiduciary responsibility for managing these pension assets rests with a designated board or entity. This fiduciary is tasked with prudently investing the plan’s assets to ensure the long-term solvency and ability to meet future pension obligations. Montana Code Annotated (MCA) Title 19, particularly chapters dealing with public employee retirement, outlines the standards of conduct and investment responsibilities for fiduciaries. These standards generally align with the prudent investor rule, requiring fiduciaries to act with the care, skill, prudence, and diligence that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims. This includes diversifying investments to minimize risk unless under the circumstances it is not prudent to do so. The question probes the core fiduciary duty of asset management within the context of Montana’s public pension system, emphasizing the legal framework governing investment decisions and the overarching goal of financial security for beneficiaries. The correct response focuses on the legal obligation to manage assets prudently and to ensure the plan’s financial sustainability, which is a fundamental tenet of public pension administration in Montana.

The scenario describes a situation where a defined benefit pension plan sponsored by a Montana employer is undergoing termination. The question revolves around the proper distribution of surplus assets. In Montana, as with federal law under ERISA, when a defined benefit plan is terminated, any residual assets remaining after all liabilities to participants and beneficiaries have been satisfied are generally not permitted to revert to the employer unless the plan specifically allows for it. The Pension Benefit Guaranty Corporation (PBGC) ensures a minimum level of retirement income for participants in defined benefit plans. However, the question specifically asks about the distribution of surplus assets beyond PBGC guarantees. According to common ERISA principles, which Montana law generally aligns with for private sector plans, surplus assets can be distributed to participants and beneficiaries. This distribution can take various forms, such as increased benefits, lump-sum payments, or contributions to individual accounts, provided the plan document permits such distributions and they are allocated equitably. Distributing surplus to the employer is only permissible if the plan explicitly states this possibility and if all plan liabilities are satisfied. The Montana Department of Revenue, while overseeing tax aspects of pension plans, does not dictate the distribution of surplus assets upon termination in this manner; rather, the plan’s terms and federal law govern this. Therefore, the most appropriate and legally sound distribution of surplus assets, absent specific plan provisions for employer reversion, is to participants and beneficiaries.

The question pertains to the application of Montana’s public employee retirement system rules, specifically concerning the calculation of creditable service for a member who has made contributions to both the Public Employees’ Retirement System (PERS) and the Teachers’ Retirement System (TRS) in Montana. When a member has service in multiple Montana public retirement systems, and later consolidates that service, the calculation of creditable service for retirement purposes is governed by specific inter-system transfer provisions. Montana Code Annotated (MCA) Title 19 outlines these provisions. For a member who has contributed to both PERS and TRS, and then chooses to consolidate their service, the creditable service is generally determined by the rules of the system from which the member is retiring. In this scenario, the member is retiring from PERS. According to MCA \(19-3-401\) and related sections governing service credit for PERS members, when service from another Montana public retirement system is transferred into PERS, the creditable service awarded is typically the actual period of service rendered, provided all statutory requirements for the transfer are met, including the repayment of any withdrawn contributions plus interest. The key principle is that the service is recognized as it was earned in the original system, but it is counted within the framework of the system from which retirement is sought. Therefore, if Ms. Albright had 10 years of service in TRS and subsequently transferred it to PERS upon becoming a PERS member, and she is now retiring from PERS, her creditable service from TRS will be counted as 10 years within the PERS system, assuming all transfer conditions were met. The explanation does not involve any mathematical calculation as the question is conceptual and focuses on the application of law.

The question pertains to the application of Montana’s specific laws regarding public employee retirement systems, particularly concerning the distinction between service retirement and disability retirement benefits under the Montana Public Employees’ Retirement System (MPERS). Montana Code Annotated (MCA) Title 19, Chapter 3, governs the Public Employees’ Retirement System. Specifically, MCA §19-3-901 outlines the conditions for service retirement, requiring a member to have at least five years of creditable service and reach a specified age. MCA §19-3-902 details disability retirement, which is granted to a member who becomes incapacitated from performing their duties as a member. The scenario presented involves a member who has met the service credit requirement but has not yet reached the age for unreduced service retirement. The member’s incapacitation is a key factor. Under MPERS, if a member is determined to be disabled and meets the service credit requirements, they are eligible for disability retirement benefits, which are calculated differently from service retirement benefits and are not subject to age-based reductions until they reach the age at which they could have claimed unreduced service retirement. The question tests the understanding of these distinct eligibility criteria and benefit types. The correct answer hinges on recognizing that the member’s incapacitation, coupled with sufficient service credit, triggers eligibility for disability retirement, not service retirement, and that the disability benefit is calculated based on the member’s disability, not their age for service retirement.

The Montana Public Employees’ Retirement System (MPERS) is governed by specific statutes that dictate how service credit is earned and how transfers from other retirement systems are handled. Montana Code Annotated (MCA) Title 19, Chapter 3, specifically addresses the Public Employees’ Retirement System. When a member transfers service credit from another Montana public retirement system, such as the Teachers’ Retirement System (TRS) or the Highway Patrol Officers’ Retirement System (HPORS), MCA §19-3-401 outlines the process and conditions. Generally, a member must have at least five years of credited service in the current system to be eligible to purchase or transfer service from another Montana public retirement system. The cost of purchasing this service is typically calculated based on the member’s contributions and the employer’s contributions for that period, plus an actuarial adjustment to account for the time value of money and the system’s funding status. This ensures that the purchasing system is not adversely affected financially by the transfer. The calculation involves determining the member’s and employer’s contributions for the transferred service, plus any required interest or actuarial adjustment as mandated by statute. For example, if an employee contributed 7% and the employer contributed 8% of their salary during the transferred period, and the actuarial adjustment factor is 1.2, the cost would be the sum of these contributions multiplied by the adjustment factor. However, the question asks about the *conditions* for eligibility for such a transfer, not the calculation of the cost itself. The fundamental requirement for purchasing or transferring service from another Montana public retirement system into MPERS, as per MCA §19-3-401, is that the member must have accumulated at least five years of creditable service in the MPERS system itself. This ensures a substantial commitment to the current system before allowing the integration of prior service from another public entity within Montana.

Montana Code Annotated (MCA) Title 19, Chapter 7, specifically addresses the Public Employees’ Retirement System (PERS). Section 19-7-301 outlines the eligibility requirements for service retirement. A member is eligible for service retirement if they have accumulated at least five years of creditable service and have attained an age that, when added to their years of creditable service, equals or exceeds 80, or if they have attained age 60 with at least five years of creditable service. In this scenario, the firefighter has 28 years of creditable service and is 55 years old. Applying the first condition, \(55 + 28 = 83\), which is greater than or equal to 80. Therefore, the firefighter meets the age and service requirement for service retirement under MCA 19-7-301. The specific type of retirement plan within PERS, such as the Hazardous Duty Retirement Plan, may have additional or modified eligibility criteria, but the question is framed around general service retirement eligibility under the PERS framework as governed by Title 19, Chapter 7. The concept being tested is the understanding of the “Rule of 80” or equivalent age and service combinations as defined in Montana’s public employee retirement law. This rule is a common feature in many pension systems designed to ensure a certain level of maturity and service before retirement benefits are fully vested and accessible. The explanation emphasizes the statutory basis for this determination, referencing the relevant Montana Code Annotated sections to provide a concrete legal framework for the answer.

The Montana Public Employees’ Retirement System (MPERS) has specific provisions regarding the calculation of retirement benefits for members. For a member retiring with a disability, the calculation of their disability retirement benefit involves determining their “disability retirement base.” This base is generally calculated as the member’s final average compensation (FAC) multiplied by their full or partial disability percentage, and then by their projected service at age 60. The FAC is typically the average of the highest 36 consecutive months of compensation. If a member has less than 10 years of service, their disability retirement base is calculated as their FAC multiplied by their total creditable service, then by a factor of 2.25% per year of service. The projected service at age 60 is the member’s current creditable service plus the service they would have earned had they continued working until age 60. For instance, if a member has 8 years of creditable service and a FAC of \$60,000, and is deemed to have a 100% disability, their disability retirement base would be calculated using the provision for members with less than 10 years of service. The projected service at age 60 is not directly used in this specific calculation for those with less than 10 years. Instead, the benefit is calculated as their FAC multiplied by their creditable service, with a 2.25% multiplier for each year. So, the annual benefit would be \$60,000 * 8 years * 0.0225 = \$10,800. However, the question asks about the “disability retirement base,” which is the foundation for the benefit. For members with less than 10 years of service and a full disability, the disability retirement base is their FAC multiplied by their creditable service and then by a factor of 2.25% per year of service. Thus, the disability retirement base is \$60,000 * 8 * 0.0225 = \$10,800. The projected service at age 60 is a factor in other disability calculations but not for this specific scenario of less than 10 years of service. The core concept tested here is the application of the specific MPERS formula for disability retirement benefits for members with less than 10 years of service.

The question revolves around the application of Montana’s specific laws governing the disclosure of pension plan information to participants, particularly concerning changes that might affect their benefits. Montana Code Annotated (MCA) Title 39, Chapter 3, Part 2, addresses wage and hour laws, and while not directly a pension statute, it establishes foundational principles for employer obligations to employees regarding compensation and benefits. More directly relevant are provisions within MCA related to public employee retirement systems, such as the Public Employees’ Retirement System (PERS) and the Teachers’ Retirement System (TRS). These systems, governed by specific MCA chapters (e.g., MCA 19-3 for PERS, MCA 19-4 for TRS), mandate certain disclosure requirements to members. When a pension plan is amended in a way that reduces accrued benefits or alters contribution requirements, Montana law, by extension of principles of fair labor practices and contractual obligations inherent in employment, requires employers to provide clear and timely notice. This notice is crucial for participants to understand the impact on their future retirement income and to make informed decisions. The specific threshold for requiring such notice is typically tied to the materiality of the change. For instance, a change that significantly impacts the calculation of a pension benefit, increases employee contributions without a commensurate increase in benefit accrual, or alters vesting schedules would generally necessitate a formal notification process. The Public Employees Labor Relations Act (PELRA), found in MCA Title 39, Chapter 34, also touches upon the rights of public employees and their representation, which can include collective bargaining over pension terms and the communication of changes. While federal laws like ERISA (Employee Retirement Income Security Act) set broad standards for private sector plans, Montana law can impose additional or more specific requirements, particularly for public sector entities or in areas not preempted by federal law. The core principle is that participants must be adequately informed of modifications that materially affect their vested or anticipated retirement benefits, allowing them to adjust their financial planning accordingly. This ensures transparency and upholds the employer’s responsibility in providing a stable retirement income.

The question concerns the application of Montana’s Public Employee Retirement Administration (PERA) law regarding disability retirement benefits for a participant who becomes disabled after leaving covered employment but before the disability benefit application is finalized. Montana Code Annotated (MCA) § 19-3-1011 outlines the conditions for disability retirement. Specifically, a member is eligible for disability retirement if they have at least five years of credited service and are determined by the board to be wholly and permanently incapable of performing the duties of their position or any other position for which they are qualified by education, training, or experience. Crucially, the disability must have occurred while the member was in covered employment or within a specified period after termination of covered employment, and the application must be filed within a certain timeframe. The key nuance here is the timing of the disability relative to the cessation of employment and the filing of the application. If the disability arises after employment ends and before the application is approved, the member must still meet the criteria that the disability arose during covered employment or within the statutory grace period, and that the application is timely. The PERA board reviews all disability applications based on medical evidence and the specific circumstances of the case. The determination of whether the disability arose during covered employment or within the permissible post-employment period is a critical factor. The law does not mandate that the disability must manifest itself to the point of inability to work during the period of active employment, but rather that the disabling condition must have its origin or be incurred during that period or a statutorily defined period thereafter, and the application process must be completed.

The question pertains to the fiduciary responsibilities under the Employee Retirement Income Security Act of 1974 (ERISA), which is the primary federal law governing employee benefit plans in the United States, including those in Montana. Fiduciaries have a duty to act solely in the interest of plan participants and beneficiaries and with the care, skill, prudence, and diligence that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims. This includes the duty to diversify investments unless it is prudent not to do so. The scenario describes a situation where a plan fiduciary invests a significant portion of the plan’s assets in a single, illiquid real estate development project in Montana. While diversification is a general principle, the prudence of a particular investment is judged based on the facts and circumstances at the time the investment is made. The duty of prudence is not a guarantee of investment success but requires a thorough and diligent process. In this case, the fiduciary’s decision to concentrate assets in a single, high-risk project, without demonstrating a clear and compelling rationale for why this specific investment was prudent and why diversification was not, raises serious questions about the fulfillment of their fiduciary duties. The fact that the project is located in Montana is context for the investment, but the core fiduciary issue is the lack of diversification and the assessment of prudence. The question asks about the potential legal ramifications for the fiduciary. Given the concentration of assets in a single, potentially risky investment without a clear demonstration of prudence and diversification considerations, the fiduciary faces a significant risk of breaching their fiduciary duties. Such a breach could lead to personal liability for any losses incurred by the plan as a result of the imprudent investment. Therefore, the most likely legal consequence is personal liability for losses stemming from the imprudent investment decision.

The question concerns the proper classification of a retirement plan for a business operating in Montana. Under the Employee Retirement Income Security Act of 1974 (ERISA), as applied to state-level pension and employee benefits law, a retirement plan that provides for employer contributions based on a percentage of employee compensation, with the employer bearing the investment risk and the ultimate retirement benefit not being fixed in advance, is characteristic of a defined contribution plan. Specifically, if the employer makes contributions to individual employee accounts, and the retirement benefit depends on the amount contributed and the investment performance of those accounts, this aligns with the definition of a defined contribution plan. Defined benefit plans, conversely, promise a specific benefit at retirement, typically calculated using a formula based on factors like salary history and years of service, with the employer responsible for ensuring sufficient funds are available to meet these promised benefits. Since the scenario describes employer contributions tied to employee compensation, with the employer managing the investment risk and the benefit being variable, it fits the defined contribution model. Montana law, while having its own nuances for public employee retirement systems, generally follows federal ERISA principles for private sector plans. Therefore, a plan where the employer contributes a percentage of compensation and the employee’s retirement benefit is contingent on investment performance is a defined contribution plan.

The scenario involves a governmental entity in Montana that established a defined benefit pension plan for its employees. The question probes the understanding of governmental plan accounting and reporting under GASB Statement No. 68, Accounting and Financial Reporting by Employers for Defined Benefit Pensions. Specifically, it focuses on the net pension liability (NPL) calculation, which is the difference between the total pension liability (TPL) and the fair value of plan assets. The TPL represents the present value of all projected benefit payments to be paid in the future to current and former employees for their service rendered up to the measurement date. The fair value of plan assets is the market value of investments held by the pension plan. The NPL is reported on the employer’s financial statements. In this case, the TPL is \$500 million and the fair value of plan assets is \$350 million. Therefore, the Net Pension Liability is calculated as TPL – Fair Value of Plan Assets. Net Pension Liability = \$500,000,000 – \$350,000,000 = \$150,000,000. This calculation is fundamental to understanding the employer’s obligation and financial position concerning its pension plan, as mandated by GASB 68, which aims to improve the transparency and comparability of governmental pension accounting. The specific details of the measurement date and the actuarial assumptions used to determine the TPL are crucial for this calculation, although not directly asked for in this question, they are the underlying components of the TPL itself.

The question concerns the application of Montana’s specific laws regarding the establishment and governance of public employee retirement systems, particularly when a municipality opts to create its own separate system rather than participating in the state-wide Montana Public Employees’ Retirement System (MPERS). Montana Code Annotated (MCA) Title 19 governs retirement systems. Specifically, MCA 19-3-101 et seq. outlines the MPERS, while provisions for local government retirement plans are found in other sections, often requiring adherence to certain standards to ensure actuarial soundness and fiduciary responsibility, even when independent. When a municipality establishes its own plan, it must typically demonstrate that the plan meets or exceeds the standards of existing state-administered plans in terms of funding levels, benefit adequacy, and administrative prudence to ensure the long-term financial security of its retirees. This involves detailed actuarial valuations, adherence to fiduciary duties similar to those under ERISA for private plans (though state law governs public plans), and transparent reporting. The key consideration is that the municipality assumes the full responsibility for the plan’s financial health and administration, including ensuring sufficient assets are available to meet future benefit obligations. This often necessitates a formal ordinance or resolution establishing the plan, defining its structure, contribution rates, benefit formulas, and governance. The municipality would need to appoint a board of trustees or similar body responsible for the plan’s management, investment oversight, and ensuring compliance with its own establishing documents and relevant state statutes that may impose minimum standards on all public retirement systems within Montana, regardless of their specific administrative structure. The process is not merely about creating a plan but ensuring its long-term viability and adherence to sound public finance principles.

The scenario involves the Montana Public Employees’ Retirement System (MPERS) and a member who has elected to purchase service credit for a period of non-contributing employment. The key legislation governing this is Montana Code Annotated (MCA) Title 19, Chapter 3, which outlines the provisions for service credit purchase. Specifically, MCA §19-3-501 and related sections detail the methods for purchasing service. When a member purchases service credit for prior non-contributing service, the cost is typically calculated based on the member’s contribution rate at the time of purchase multiplied by the salary earned during the period of service, plus an actuarial adjustment to account for the time value of money and the increased liability to the system. In this case, the calculation involves determining the actuarial cost. MPERS uses actuarial assumptions to determine the present value of future benefits associated with the purchased service. The cost is the actuarial present value of the additional benefit attributable to the service credit. For a non-contributing period, the cost is generally the full actuarial cost, which is the amount required to fully fund the benefit associated with that service, without any subsidy from the employer or the system’s general assets. This actuarial cost is determined by the MPERS actuary based on factors such as the member’s age, projected salary increases, and life expectancy, as well as investment return assumptions. Therefore, the cost to purchase the service credit is the actuarial cost as determined by the MPERS actuary, reflecting the full funding requirement for that additional benefit.

The question concerns the application of Montana’s specific laws regarding public employee retirement systems, particularly concerning the definition of “creditable service” for a teacher employed by a school district within the state. Montana Code Annotated (MCA) Title 19, Chapter 3, governs the Teachers’ Retirement System. Specifically, MCA § 19-3-401 defines creditable service. This statute outlines what types of service qualify. Generally, it includes service as a teacher, administrator, or other professional employee of a Montana public school or university. It also addresses prior service purchased or transferred from other Montana public retirement systems, and certain periods of leave. The scenario describes a teacher who has service with a private school in California and then moves to Montana to teach in a public school. Montana’s system, like many state-specific systems, primarily recognizes service rendered within Montana’s public education framework or service that can be legally transferred or purchased according to specific statutory provisions. Service rendered in a private capacity in another state, without a reciprocal agreement or specific purchase provision within Montana law, typically does not count as creditable service for the Montana Teachers’ Retirement System. The key is that the service must be recognized by the Montana Teachers’ Retirement System as per MCA § 19-3-401 and related statutes. Since the California service was with a private institution and there is no indication of a specific Montana law allowing for its purchase or transfer into the Montana system, it would not be considered creditable service. Therefore, only the service rendered as a teacher for the Montana public school district is creditable. The calculation is straightforward: Creditable Service = Service in Montana Public School = 15 years.

The core principle being tested here is the fiduciary duty under ERISA, specifically as it applies to plan asset management and the duty of loyalty. When a plan sponsor establishes a defined contribution plan, such as a 401(k), and offers employer stock as an investment option, the plan fiduciaries have a heightened responsibility. They must act solely in the interest of the plan participants and beneficiaries and with the care, skill, prudence, and diligence that a prudent person acting in a like capacity and familiar with such matters would use. This includes a duty to monitor the investments offered. If a fiduciary has the power to control or manage the plan’s assets, they must ensure that the investments are prudent. In the context of employer stock, this means that the stock must be a prudent investment, and the fiduciary must not be swayed by the employer’s interests over the participants’ interests. The Department of Labor’s regulations and court interpretations, particularly concerning ESOPs and employer stock, emphasize that fiduciaries must conduct an independent investigation of the stock’s value and suitability. Simply offering the stock because it is available or because the employer desires it is insufficient. The fiduciary must have a reasonable basis to believe that the fair market value of the stock is at least equal to the price being paid. If the plan sponsor’s financial health is demonstrably declining, and this decline is not adequately reflected in the stock price, a prudent fiduciary would be compelled to investigate and potentially remove the stock as an investment option to protect participants’ retirement savings. Failure to do so, especially when aware of adverse information not yet priced into the stock, would likely constitute a breach of fiduciary duty. The Montana Pension and Employee Benefits Law often mirrors federal standards like ERISA, particularly for private sector plans, ensuring a consistent level of protection for plan participants. The scenario describes a situation where the plan sponsor’s financial distress is known, yet the stock is still offered at a price that may not reflect its true, diminished value. A fiduciary’s obligation is to the plan beneficiaries, not the employer’s desire to prop up its stock price. Therefore, a prudent fiduciary would be obligated to divest or at least thoroughly re-evaluate the prudence of holding the employer stock under these circumstances.

The scenario presented involves a defined benefit pension plan sponsored by a Montana-based private sector employer. The question hinges on the application of the Employee Retirement Income Security Act of 1974 (ERISA) and its implications for plan administration and participant rights, specifically concerning the reporting of plan status to participants. Under ERISA Section 105 (29 U.S.C. § 1025), participants and beneficiaries are entitled to receive a statement of their vested accrued benefit and the percentage of the accrued benefit provided by the plan. This statement must be provided upon written request, but no more than once in any 12-month period. The statute also mandates that this information be provided automatically at least once every three years for defined benefit plans, or annually for defined contribution plans, unless certain conditions are met (e.g., a summary annual report is provided). Given that the plan is a defined benefit plan and the participant is requesting their benefit statement for the first time in a year, the employer is obligated to provide this information. The specific content of the statement, as outlined in ERISA, includes the total accrued benefit and the vested portion of that benefit, expressed in a form the participant can understand. The employer’s failure to provide this information within the statutory timeframe would constitute a violation. Therefore, the employer must furnish the participant with a statement detailing their vested accrued benefit.

The scenario involves a governmental entity in Montana that established a defined benefit pension plan for its employees. The key legal framework governing such plans, particularly in terms of fiduciary duties and participant rights, is the Employee Retirement Income Security Act of 1974 (ERISA), even for governmental plans which are generally exempt from ERISA’s reporting and disclosure requirements, but still operate under state law principles that often mirror ERISA’s fiduciary standards. Montana law, like many states, has specific statutes addressing public employee retirement systems. For a governmental plan, the determination of whether a participant is considered “vested” for pension benefits is typically governed by the terms of the plan document itself, which must comply with any applicable state statutes. Vesting refers to the employee’s non-forfeitable right to receive pension benefits. In Montana, the Public Employees’ Retirement System (PERS) is the primary system for state and local government employees. Under Montana law, specifically the Montana Code Annotated (MCA) Title 19, Chapter 3, regarding PERS, an employee typically gains a non-forfeitable right to a pension after completing a specified period of creditable service. For example, under MCA § 19-3-701, a member who retires after completing at least five years of creditable service is entitled to a retirement annuity. This five-year service requirement is a common vesting period for defined benefit plans. Therefore, an employee with ten years of service would have satisfied the vesting requirement. The question asks about the legal basis for determining this non-forfeitable right. While ERISA sets a federal standard, governmental plans in Montana are primarily governed by state law, which outlines the specific vesting schedules and conditions. The plan document, in conjunction with the relevant Montana statutes, dictates the precise terms of vesting. The concept of “equitable estoppel” could be relevant if the employer made representations that led the employee to believe they had vested rights, but the primary legal basis is the statutory and plan-document requirements. “Constructive trust” is a remedy for unjust enrichment, not the basis for determining vesting itself. “Waiver” would imply the employee giving up a known right, which is the opposite of establishing a vested right. Thus, the most accurate legal basis for determining the non-forfeitable right to a pension in this context is the plan’s adherence to Montana’s statutory vesting requirements and the specific provisions within the plan document itself, which are rooted in state law.

The scenario involves a defined benefit pension plan sponsored by a Montana-based employer, “Big Sky Industries.” The plan’s funding method is crucial for determining compliance with ERISA and Montana’s specific regulations. The question asks about the appropriate actuarial cost method for a plan with a stable workforce and predictable benefit accruals. While several actuarial cost methods exist, such as the Entry Age Normal, Unit Credit, and Aggregate methods, the Projected Unit Credit (PUC) method is often favored for its ability to smooth funding requirements and align costs with the benefits earned by employees each year. The PUC method projects the benefit expected to be earned by each participant in the future and then allocates the total projected benefit to the cost units (typically years of service). For a stable workforce with predictable benefit accruals, the PUC method provides a consistent and manageable funding pattern, reflecting the benefit earned in each year of service. Other methods might be less suitable; for instance, the Aggregate method can lead to significant fluctuations in contributions based on demographic changes, and the Unit Credit method might front-load costs more heavily in earlier years of service. The key is that the chosen method must be actuarially sound and consistently applied, but the PUC method’s characteristics align well with the described workforce stability.

The scenario describes a situation involving a deferred compensation plan for a public employee in Montana. The question hinges on understanding the ERISA Section 4(b) exemption for governmental plans. Governmental plans, as defined in Internal Revenue Code Section 414(d), are generally exempt from ERISA’s reporting, disclosure, fiduciary, and participation/vesting requirements. This exemption applies to plans established or maintained by a state, a political subdivision of a state, or an agency or instrumentality of any of the foregoing. Montana, being a state, and its public entities fall under this definition. Therefore, a deferred compensation plan sponsored by a Montana municipal government for its employees would be considered a governmental plan and thus exempt from most of ERISA’s provisions. The Montana Public Employees’ Retirement System (MPERS) is a state-administered retirement system, and plans established under its umbrella or by its constituent governmental entities are governmental plans. The core concept being tested is the specific exemption provided by ERISA for governmental plans, distinguishing them from plans subject to ERISA’s comprehensive regulatory framework. This exemption is a fundamental aspect of understanding the regulatory landscape for public sector employee benefits in the United States.

The scenario presented involves a governmental entity in Montana that has established a defined benefit pension plan for its employees. A key aspect of managing such plans is ensuring compliance with federal and state regulations, particularly concerning funding and reporting. The question probes the participant’s understanding of the legal framework governing public employee retirement systems in Montana, specifically focusing on the role of the Montana Public Employees’ Retirement System (MPERS). MPERS is the primary administrator for many public retirement plans in the state. Under Montana law, specifically provisions related to public retirement systems, governmental employers are responsible for the funding of their pension obligations. The Montana Constitution, Article III, Section 7, and various statutes within Title 19 of the Montana Code Annotated (MCA), outline the fiduciary duties and responsibilities of entities managing public pension funds. These statutes mandate actuarial valuations to determine the plan’s funded status and required contributions. The employer’s obligation is to make contributions sufficient to meet the plan’s liabilities as determined by these actuarial reports. Failure to do so can lead to underfunding, which carries legal and financial implications. The question tests the understanding that the governmental employer, not the individual employees or a separate private entity without a direct contractual or statutory relationship, bears the primary legal responsibility for ensuring the pension plan remains adequately funded according to actuarial requirements and state law. The specific legal duty arises from the employer’s role in establishing and maintaining the retirement system, as codified in Montana’s public employee retirement laws.

The scenario presented involves the Montana Public Employees’ Retirement System (MPERS) and the application of specific statutes governing disability retirement. Under Montana Code Annotated (MCA) §19-3-1015, a member of the Public Employees’ Retirement System (PERS) who becomes incapacitated for duty as a result of a medical condition or injury, and who is not eligible for service retirement, may be granted a disability retirement. The statute specifies that the incapacitation must be permanent and that the member must be unable to perform the duties of their position or any other available position within the same department or agency. In this case, Ms. Albright, a state employee in Montana, has a diagnosed degenerative spinal condition. Her physician has certified that she is permanently unable to perform her duties as a records clerk and also any other clerical positions within the Montana Department of Revenue. She has been employed for 12 years and is 52 years old, meaning she is not yet eligible for regular service retirement, which typically requires a certain age and years of service. The critical factor is the physician’s certification of permanent incapacitation and the inability to perform her current role or any other suitable role within her department, as evidenced by the inability to perform other clerical positions. This aligns directly with the criteria outlined in MCA §19-3-1015 for a disability retirement allowance. The law does not require that she be unable to perform *any* job in the state, but rather within her department or agency, or a comparable position. Her physician’s statement covers this scope. Therefore, Ms. Albright would be eligible to apply for and, if approved by the retirement board based on the medical evidence and statutory criteria, receive a disability retirement allowance under the Montana PERS. The calculation of the disability allowance itself would follow specific formulas outlined in MCA §19-3-1017, typically based on her years of service and average final compensation, but the question focuses solely on eligibility.

The scenario involves a governmental entity in Montana, specifically a county, sponsoring a defined benefit pension plan for its employees. The question hinges on understanding the fiduciary responsibilities associated with managing such a plan under Montana law and relevant federal guidelines. Montana Code Annotated (MCA) Title 19, specifically the Public Employees’ Retirement System (PERS) provisions, outlines the framework for public employee retirement plans. While MCA does not directly mandate the use of specific investment vehicles like mutual funds or ETFs for all public pension plans, it establishes that fiduciaries must act with the care, skill, prudence, and diligence that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. This is often referred to as the “prudent person rule” or “prudent investor rule,” which is a cornerstone of fiduciary duty in pension management, drawing parallels with federal ERISA standards for private plans, though Montana’s public plans operate under state statutes. The selection of investment vehicles must align with the plan’s investment policy, which itself must be prudently developed and implemented, considering diversification, risk tolerance, and return objectives. The county’s investment committee, acting as fiduciaries, must ensure that any investment, whether in a mutual fund, ETF, or individual securities, is made with the requisite care and for the sole purpose of providing benefits to participants and defraying the reasonable expenses of administering the plan. The absence of a specific prohibition against mutual funds or ETFs means their use is permissible, provided the fiduciary standards are met. Therefore, the most accurate assessment is that the committee can utilize these vehicles if they are prudent and suitable for the plan’s objectives, which is the core of fiduciary responsibility.

The Montana Public Employees’ Retirement System (MPERS) is governed by specific statutes and administrative rules. When a member of MPERS leaves service before meeting the age and service requirements for retirement, they are generally entitled to a refund of their accumulated contributions, plus any accumulated interest. The Montana Code Annotated (MCA) outlines the provisions for such refunds. Specifically, MCA Section 19-3-701 details the refund of contributions for members who terminate service. This section mandates that a member who is not entitled to a retirement benefit upon termination of employment is eligible for a refund of their contributions, including any interest earned thereon, as provided by law. The interest credited to member accounts is determined by MPERS investment performance and is subject to statutory limits and MPERS board policy. While the exact interest rate can fluctuate, the principle is that the member receives their contributions back with accrued interest. The concept of vesting is crucial here; a member must meet certain service credit requirements to be eligible for a retirement benefit, but a refund of contributions is generally available upon termination regardless of vesting status, provided they are not yet eligible for retirement benefits. The specific amount of interest is calculated based on the MPERS actuarial assumptions and the member’s account history. For the purpose of this question, we assume a standard refund process as per MCA 19-3-701, which focuses on the return of contributions with accrued interest, without specifying a particular interest rate as that is subject to MPERS’s operational policies and actuarial valuations. The question tests the understanding of the fundamental right to a refund of contributions and accrued interest upon separation from service before retirement eligibility under Montana law.