Part 6.
TEXAS MUNICIPAL RETIREMENT SYSTEM
Chapter 127.
MISCELLANEOUS RULES
34 TAC §127.7, §127.8
The Texas Municipal Retirement System adopts on an emergency
basis a new §127.7, concerning rollovers of plan distributions, and a
new §127.8, that addresses the amount of compensation taken into account
in determining a person's retirement benefit.
Section 127.7 is adopted to specify the types of retirement plans and Individual
Retirement Accounts that members receiving plan distributions from the Texas
Municipal Retirement System are allowed to use for rollover purposes.
Section 127.8 is adopted to specify the amount of compensation that can
be taken into account in determining a person's retirement benefit and places
certain restrictions on members depending on plan entry dates.
The new rules are adopted on an emergency basis to enable the Texas Municipal
Retirement System to properly process plan distributions and to properly account
for a member's compensation all in accordance with the Economic Growth and
Tax Relief Act of 2001, Public Law 107-16 (June 7, 2001). The Texas Municipal
Retirement System finds that the requirements of state law (specifically those
found in Texas Government Code, §855.607) require the adoption of these
new sections on fewer than thirty days notice.
These new rules are simultaneously being submitted to the
Texas Register
as proposed rules.
These new rules are adopted on an emergency basis pursuant to
Texas Government Code, §855.102, which provides the Board of Trustees
of the Texas Municipal Retirement System with the authority to adopt rules
as necessary or desirable for the efficient administration of the system.
The new rules are also adopted pursuant to Texas Government Code, §855.607,
which authorizes the Board of Trustees of the Texas Municipal Retirement System
to adopt rules necessary for the plan to be a qualified plan. Finally, the
new rules are adopted pursuant to Texas Government Code, §2001.034, which
provides for the adoption of administrative rules on an emergency basis.
§127.7.Rollovers of Plan Distributions
(a)
A distributee may elect, at the time and in the manner
prescribed by the Board of Trustees, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by the
distributee in a direct rollover.
(b)
The terms "eligible rollover distribution" and "eligible
retirement plan" are defined as follows:
(1)
An "eligible rollover distribution" is any distribution
of all or any portion of the balance to the credit of the distributee, except
that an eligible rollover distribution does not include the following:
(A)
any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for the life
(or life expectancy) of the distributee or the joint lives (or joint life
expectancies) of the distributee and the distributee's designated beneficiary,
or for a specified period of ten (10) years or more;
(B)
any distribution to the extent such distribution is required
under Internal Revenue Code §401(a)(9);
(C)
the portion of any distribution that is not includible
in gross income.
(2)
An "eligible retirement plan" should include:
(A)
an individual retirement account described in Internal
Revenue Code §408(a);
(B)
an individual retirement annuity described in Internal
Revenue Code §408(b);
(C)
an annuity plan described in Internal Revenue Code §403(a);
(D)
a qualified trust described in Internal Revenue Code §401(a)
that accepts the distributee's eligible rollover distribution;
(E)
an annuity contract described in Internal Revenue Code §403(b);
or
(F)
an eligible plan under Internal Revenue Code §457(b),
which is maintained by a state, political subdivision of a state, or any agency
or instrumentality of a state or political subdivision of a state and which
agrees to separately account for amounts transferred into such plan from this
plan.
(3)
The definition of eligible retirement plan also shall apply
in the case of a distribution to a surviving spouse, or to a spouse or former
spouse who is the alternate payee under a qualified domestic relations order
as defined in Internal Revenue Code §414(p).
(4)
A "distributee" includes an employee or former employee.
In addition, the employee's or former employee's surviving spouse and the
employee's or former employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in Internal Revenue
Code §414(p), are distributees with regard to the interest of the spouse
or former spouse.
(5)
A "direct rollover" is a payment by the plan to the eligible
retirement plan specified by the distributee.
(c)
Notwithstanding anything in this section to the contrary,
a portion of a distribution shall not fail to be an eligible rollover distribution
merely because the portion consists of after-tax contributions which are not
includible in gross income. However, such portion may be paid only to an individual
retirement account or annuity described in Internal Revenue Code §§408(a)
or (b), or to a qualified defined contribution plan described in Internal
Revenue Code §§401(a) or 403(a) that agrees to separately account
for amounts so transferred, including separate accounting for the portion
of such distribution which is includible in gross income and the portion of
such distribution which is not so includible.
§127.8.Plan Limitations
Effective January 1, 1996, for individuals who first became members
of the system on or after January 1, 1996, the amount of compensation used
to determine the retirement benefit of a member must not exceed the amount
of compensation permitted to be taken into account under the plan and Internal
Revenue Code §401(a)(17) as then in effect and as amended, indexed in
the same manner and for the same periods as provided by that section. The
limits under Internal Revenue Code §401(a)(17) shall not apply to individuals
who first became members of the system before January 1, 1996.
This agency hereby certifies that the emergency adoption
has been reviewed by legal counsel and found to be within the agency's legal
authority to adopt.
Filed with the Office of
the Secretary of State on December 30, 2002.
TRD-200208574
Gary W. Anderson
Executive Director
Texas Municipal Retirement System
Effective Date: December 30, 2002
Expiration Date: April 29, 2003
For further information, please call: (512) 225-3715
Chapter 129.
DOMESTIC RELATIONS ORDERS