45-21-9. Incentive payments not to be included in calculation of retirement benefits.

The following incentive payments shall not be included in earnable compensation in determining retirement benefits under Chapters 2 and 3 of Title 47:#

1. (1)

   Payments under a meritorious award program;#

2. (2)

   Recruitment payments under an incentive compensation plan;#

3. (3)

   Payments for learning new, critically needed employment skills; or#

4. (4)

   Payments made under a goal based plan.#

   1. However, these incentive payments shall be included as salary in the pay period granted and shall be subject to employee withholding taxes in that pay period. If state or federal law otherwise requires an incentive payment to be included in salary for computing a benefit, the incentive shall be deemed to have been paid, for such purpose only, annualized in equal installments prospectively over the following 12 months.

Incentive payments consisting of lump sum payments for surpassing performance expectations under subparagraph (c)(1)(C) of Code Section 45-21-2 under employee incentive compensation plans will be included in calculating earnable compensation in determining retirement benefits under Chapters 2 and 3 of Title 47.#

1. When an incentive payment will be included in salary for computing retirement benefits, the incentive shall be deemed to have been paid, for such purpose only, annualized in equal installments prospectively over the following 12 months. These incentive payments shall be included as salary in the pay period granted and shall be subject to employee withholding taxes in that pay period. If state or federal law otherwise requires an incentive payment to be included in salary for computing a benefit, the incentive shall be deemed to have been paid, for such purpose only, annualized in equal installments prospectively over the following 12 months.

Incentive payments made under a goal based plan are not prohibited by Code Sections 47-2-32 and 47-3-27.#