# State Personnel and Pensions (GSP)

## Title 31. Participating Governmental Units

### Subtitle 3. Withdrawal by a Participating Governmental Unit

#### Section 31-301

(a) In this subtitle the following words have the meanings indicated.

(b) "Employees' system" has the meaning stated in Sec. 31-101 of this title.

(c) "Legislative body" has the meaning stated in Sec. 31-101 of this title.

(d) "Local pension system" means a retirement or pension system established by the legislative body of an eligible governmental unit that is a qualified plan under Sec. 401(a) of the Internal Revenue Code and provides a defined benefit to its participants.

(e) "State system" has the meaning stated in Sec. 20-101(pp) of this article.

(f) "Withdrawal date" means the date that a withdrawal by a participating governmental unit from a State system takes effect.

#### Section 31-302

(a) Subject to subsection (b) of this section, the legislative body of a participating governmental unit may withdraw from participation in a State system and transfer to a local pension system or another State system any of the following groups of employees of the governmental unit who consent to the withdrawal, and who qualify for membership in the State system or local pension system:

  (1) all employees of the participating governmental unit;

  (2) fire fighters;

  (3) law enforcement personnel;

  (4) detention center officers; or

  (5) subject to the approval of the Board of Trustees, a homogeneous unit of at least 10 employees.

(b) A participating governmental unit may withdraw from participation in a State system only if:

  (1) the new State system or local pension system of the participating governmental unit requires member contributions at the same rate as the member contribution rate applicable to employees of the participating governmental unit in the State system from which the participating governmental unit is withdrawing; or

  (2) the participating governmental unit:

    (i) does not provide for the employer pickup of member contributions to the current State system of the participating governmental unit within the meaning of Sec. 414(h)(2) of the Internal Revenue Code; and

    (ii) certifies that it will not become an approved employer under Sec. 21-313 of this article on or after the effective date of participation in the new State system or local pension system.

#### Section 31-303

A withdrawal and transfer under Sec. 31-302 of this subtitle takes effect at the end of the State's fiscal year.

#### Section 31-304

If a participating governmental unit withdraws from a State system, the accumulated contributions of the withdrawn employees shall be transferred on the withdrawal date to the administrative board of the local pension system or new State system and credited to the account of those employees.

#### Section 31-305

(a) As of the effective date of withdrawal of a participating governmental unit, the Board of Trustees shall transfer to the administrative board of the local pension system or new State system the portion of the assets that are allocable to the withdrawn employees as determined under Sec. 21-305.5, Sec. 21-305.6, Sec. 21-306, Sec. 21-306.1, or Sec. 21-306.2 of this article.

(b) The administrative board of the local pension system or new State system shall hold the transferred assets in trust to provide retirement benefits for the withdrawn employees.

#### Section 31-306

A participating governmental unit shall pay all administrative costs involved in the withdrawal or reentry if the participating governmental unit:

(1) withdraws all or some of its employees from a State system; or

(2) elects to participate in a State system for employees who were previously withdrawn.

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Md. Code Ann., State Pers. & Pens. (as displayed at mgaleg.maryland.gov, October 16, 2026)