PART 5. TEXAS COUNTY AND DISTRICT RETIREMENT SYSTEM
CHAPTER 103. CALCULATIONS OR TYPES OF BENEFITS
The Texas County and District Retirement System (TCDRS) proposes an amendment to §103.5, concerning compliance by governmental plans with the benefit distribution requirements under the Internal Revenue Code (IRC). Because of considerations specific to governmental plans and their operations, rather than strict conformance with the interpretation of the mandatory distribution requirement of IRC §401(a)(9) propounded by the IRS through its rules and regulations, §823 of the Pension Protection Act of 2006 instructed the IRS to issue regulations under which, for all years to which IRC §401(a)(9) applies, a governmental plan shall be treated as having complied with IRC §401(a)(9) if such plan complies with a reasonable, good-faith interpretation of that section. The proposed amendment articulates this standard. The proposed amendment makes no changes to the amount of benefits distributed.
Gene Glass, Director of the Texas County and District Retirement System, has determined that for the first five-year period the rule is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the rule.
Mr. Glass has also determined that for each year of the first five years the rule is in effect the public benefit anticipated as a result of administering the rule will be the distribution of benefits in a manner that complies with the TCDRS Act and satisfies federal law. There will be no costs to small or micro businesses. There are no anticipated economic costs to persons who are required to comply with the rule as proposed.
Comments on the proposed amendment may be submitted to Gene Glass, Director, Texas County and District Retirement System, P.O. Box 2034, Austin, TX 78768-2034.
The amendment is proposed under the Government Code, §845.102, which provides the board of trustees with the authority to adopt rules necessary or desirable for efficient administration of the system.
The Government Code, §841.010, is affected by this proposed amendment.
§103.5.Benefit Distribution Requirements.
(a) The following words and terms, when used in this section shall have the following meanings unless the context clearly indicates otherwise.
(1) Proportionate retirement system--A public retirement system other than the Texas County and District Retirement System (TCDRS) that participates in the Proportionate Retirement Program.
(2) (No change.)
(3) Separates from service--The termination of employment
with a subdivision participating in the TCDRS [Texas
County and District Retirement System ('TCDRS')].
(b) General Rules:
(1) - (5) (No change.)
(6) For a distribution made by the retirement system
to which §401(a)(9) of the Internal Revenue Code applies [
after December 31, 2001], the system shall apply the minimum
distribution requirements of §401(a)(9) of the Internal Revenue
Code of 1986 in a manner that complies [accordance]
with a reasonable good faith interpretation of §401(a)(9) [
the regulations under that section].
(c) (No change.)
This agency hereby certifies that the proposal 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 May 11, 2009.
TRD-200901806
Gene Glass
Director
Texas County and District Retirement System
Earliest possible date of adoption: June 21, 2009
For further information, please call: (512) 637-3230
The Texas County and District Retirement System (TCDRS) proposes an amendment to §107.3, concerning direct rollovers and trustee-to-trustee transfers of single sum benefit distributions to members, surviving spouses, alternate payees, and beneficiaries. The proposed amendment defines the eligible distributees who may elect a transfer and the eligible plans to which the single sum distributions may be directly transferred by TCDRS in accordance with the election. The rule as proposed reflects the options available to distributees under the Internal Revenue Code for deferring taxes on these single sum distributions by electing a direct transfer to an eligible plan. The proposed amendment makes no changes to the amount of benefits distributed.
Gene Glass, Director of the Texas County and District Retirement System, has determined that for the first five-year period the rule is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the rule.
Mr. Glass has also determined that for each year of the first five years the rule is in effect the public benefit anticipated as a result of administering the rule will be the opportunity of eligible distributees to protect the distribution and preserve its tax deferred status until such future time as the distributee determines. There will be no costs to small businesses. There are no anticipated economic costs to persons who are required to comply with the rule as proposed.
Comments on the proposed amendment may be submitted to Gene Glass, Texas County and District Retirement System, P.O. Box 2034, Austin, TX 78768-2034.
The rule is proposed under the Government Code, §845.102, which provides the board of trustees with the authority to adopt rules necessary or desirable for efficient administration of TCDRS.
The Government Code, §842.108(c), is affected by this proposed rule.
§107.3.Direct Rollovers and Trustee-to-Trustee Transfers.
(a) The retirement system may establish procedures for the acceptance of an eligible rollover distribution, including a direct trustee-to-trustee transfer, from an eligible retirement plan for the payment of any portion of the deposit a member is permitted to make for the purchase of types of credit in the retirement system, except that the system may not accept the distribution if the system is to separately account for the amounts.
(b) Effective January 1, 1993, a distributee may elect, at the time and in the manner prescribed by the system, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover.
(c) Definitions:
(1) Eligible Rollover Distribution--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:
(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 10 years or more;
(B) any distribution to the extent such distribution is required under §401(a)(9) of the Internal Revenue Code of 1986; and
(C) the portion of any distribution that is not includable in gross income.
(2) Eligible Retirement Plan--An eligible retirement plan is:
(A) an individual retirement account described in §408(a) of the Internal Revenue Code of 1986;
(B) an individual retirement annuity described in §408(b) of the Internal Revenue Code of 1986;
(C) a qualified trust described in §401(a) of the Internal Revenue Code of 1986 or an annuity plan described in §403(a) of the Internal Revenue Code of 1986 that accepts the eligible rollover distribution;
(D) for distribution made on or after December 31, 2001, an annuity contract described in §403(b) of the Internal Revenue Code of 1986;
(E) for distributions made on or after December 31, 2001, an eligible plan under §457(b) of the Internal Revenue Code of 1986 which is maintained by a state, a political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state which agrees to separately account for amounts transferred into such plan from this system; and
(F) for distributions made on or after December 31, 2007, a Roth IRA described in §408A of the Internal Revenue Code of 1986;
(3) Distributee--A distributee includes a member or former member. In addition, the member's or former member's surviving spouse and the member's or former member's spouse or former spouse who is the alternate payee under a domestic relations order, as defined in §109.2 of this title (relating to Definitions), are distributees with regard to the interest of the spouse or former spouse.
(4) Direct Rollover--A direct rollover is a payment by the system to the eligible retirement plan specified by the distributee.
(d) The system shall, upon the request of a beneficiary of a deceased member who is not a distributee, within the meaning of subsection (c)(3) of this section, transfer a lump sum distribution to the trustee of an individual retirement account established under §408 of the Internal Revenue Code of 1986 in accordance with the provisions of §402(e)(11).
(e) Notwithstanding anything in this section to the contrary, a distribution shall not fail to be an eligible rollover distribution merely because a portion of the distribution 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.
(f) The retirement system shall implement this section in a manner that causes the retirement system to be considered a qualified plan under §401(a) of the Internal Revenue Code of 1986. It is the responsibility of the distributee or beneficiary to determine that the transferee plan is an eligible plan for receiving a transfer pursuant to this rule.
[(b) A distributee may elect to have
any portion of an eligible rollover distribution within the meaning
of Section 402(c)(4) of the Internal Revenue Code of 1986 paid in
a direct rollover to an eligible retirement plan within the meaning
of Section 402(c)(8)(B) of the Internal Revenue Code of 1986 specified
by the distributee.]
[(c) The retirement system shall implement
this section in a manner that causes the retirement system to be considered
a qualified plan under Section 401(a) of the Internal Revenue Code
of 1986.]
This agency hereby certifies that the proposal 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 May 11, 2009.
TRD-200901807
Gene Glass
Director
Texas County and District Retirement System
Earliest possible date of adoption: June 21, 2009
For further information, please call: (512) 637-3230
The Texas County and District Retirement System (TCDRS) proposes new §107.16, concerning the holding and managing of trust assets for the exclusive benefit of participants and their beneficiaries. The proposed rule expands on the language contained in the TCDRS Act by setting forth the requirement for qualification in its particulars and describing the limitations on the use of plan assets for anything other than the exclusive benefit of the participants and their beneficiaries. The proposed rule states in detailed language the absolute prohibition against the diversion of trust assets in violation of the qualification requirement.
Gene Glass, Director of the Texas County and District Retirement System, has determined that for the first five-year period the rule is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the rule.
Mr. Glass has also determined that for each year of the first five years the rule is in effect the public benefit anticipated as a result of administering the rule will be the assurance and commitment of the Texas County and District Retirement System that the system be, and operate as a qualified plan for the exclusive benefit of plan participants and their beneficiaries. There will be no costs to small businesses. There are no anticipated economic costs to persons who are required to comply with the rule as proposed.
Comments on the proposed rule may be submitted to Gene Glass, Director, Texas County and District Retirement System, P.O. Box 2034, Austin, TX 78768-2034.
The rule is proposed under the Government Code, §845.102, which provides the board of trustees with the authority to adopt rules necessary or desirable for efficient administration of the system.
The Government Code, §841.002, is affected by this proposed rule.
§107.16.Exclusive Purpose.
The board of trustees shall hold the assets of the system in trust for the exclusive purpose of providing benefits to participants and paying reasonable expenses of administration. It shall be impossible at any time prior to the satisfaction of all liabilities to members and beneficiaries covered by the trust, by operation of the system, by termination, by power of revocation or amendment, by the happening of any contingency, by collateral arrangement or by other means, for any part of the corpus or income of the trust, or any funds contributed thereto, to inure to the benefit of any employer or otherwise be used for or diverted to purposes other than providing benefits to members and beneficiaries and defraying reasonable expenses of administering the system.
This agency hereby certifies that the proposal 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 May 11, 2009.
TRD-200901808
Gene Glass
Director
Texas County and District Retirement System
Earliest possible date of adoption: June 21, 2009
For further information, please call: (512) 637-3230
The Texas County and District Retirement System (TCDRS) proposes an amendment to §109.12 concerning the form of distribution to the alternate payee of a benefit awarded under a Domestic Relations Order qualified by TCDRS. Under Government Code, §804.004, a public retirement system may by rule provide that in lieu of the life annuity awarded the alternate payee under a qualified domestic relations order, TCDRS may pay the alternate payee the actuarial equivalent of that benefit. Alternate Payees may rollover such distributions to an IRA or other qualified plan. Currently, the board of trustees, by rule, allows (but does not require) such distributions when the present value of the annuity does not exceed $15,000. This saves TCDRS time and expense in administering an exceedingly modest annuity for the recipient's lifetime. However, few annuities fall under such a modest limit. The proposed amendment raises that threshold to $25,000. This limit would include more annuities but still only those of very small monthly amounts. Often the alternate payee would prefer to receive a single sum rather than a small monthly payment. The board retains its sole and exclusive discretion to allow payments in this manner.
Gene Glass, Director of the Texas County and District Retirement System, has determined that for the first five-year period the rule is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the rule.
Mr. Glass has also determined that for each year of the first five years the rule is in effect the public benefit anticipated as a result of administering the rule will be the savings to TCDRS in administering very small annuities. There will be no costs to small businesses. There are no anticipated economic costs to persons who are required to comply with the rule as proposed.
Comments on the proposed amendment may be submitted to Gene Glass, Director, Texas County and District Retirement System, P.O. Box 2034, Austin, TX 78768-2034.
The rule is proposed under the Government Code, §845.102, which provides the board of trustees with the authority to adopt rules necessary or desirable for efficient administration of TCDRS.
The Government Code, §804.004, is affected by this proposed rule.
§109.12.Payments to Alternate Payees.
(a) In the event that an eligible participant or surviving beneficiary of an eligible participant applies for a withdrawal of the participant's accumulated contributions after the date that a domestic relations order is received by the system, the system will make a lump-sum payment to the alternate payee if the domestic relations order so provides and the order has been determined to be a qualified domestic relations order.
(b) In the event that the participant or the participant's beneficiary begins receiving an annuity after the date that a qualified domestic relations order is received by the system, and the order provides for a division of the annuity in that event, the benefit payable to the alternate payee will be an annuity payable monthly during the lifetime of the alternate payee, which annuity is the actuarial equivalent of the portion of the participant's benefit that was awarded to the alternate payee under the domestic relations order.
(c) Subsection (b) of this section will apply to all domestic relations orders approved in accordance with this chapter after January 1, 1990, and to such domestic relations orders approved prior to that date as are construed to provide for such an annuity.
(d) If a qualified domestic relations order is received by the system after the participant begins receiving a retirement annuity under which the alternate payee is not the designated beneficiary-annuitant, the benefit awarded to the alternate payee may be paid as a portion of each payment, if, as, and when a payment is made under the retirement benefit to the retiree or the retiree's beneficiary. Payments to the alternate payee cease at the earliest of:
(1) The month in which the alternate payee dies;
(2) The month in which the final payment under the retirement benefit is made to the retiree or the retiree's beneficiary; or
(3) The month in which the alternate payee has cumulatively received all amounts awarded under the qualified domestic relations order.
(e) If a person's membership in the system has terminated, and under the terms of a qualified domestic relations order, an alternate payee would be entitled to receive a portion of the benefit that would be payable to the former member, or the former member's beneficiary, and if a valid application for the benefit has not been filed with the system within 60 days from the date the system mails notice of membership termination in accordance with Government Code, §845.505 so that payment can be made to the alternate payee, the director may commence payment of the benefit that would be payable to the alternate payee if the person entitled to apply for the former member's benefit had filed an application for a retirement annuity. If the person entitled to apply for the former member's benefit would be entitled to only the accumulated contributions of the former member, the alternate payee will receive the amount that would be payable to the alternate payee if the person had filed an application for withdrawal of accumulated contributions.
(f) In accordance with Government Code, §804.004, and in lieu of a life annuity described in §844.006(d) of that code or in subsection (b) or subsection (e) of this section that would otherwise be payable to an alternate payee under a qualified domestic relations order, the system is authorized, but not required, to make a single lump-sum payment to the alternate payee in an amount that is the actuarial equivalent of such life annuity if:
(1) The actuarially equivalent amount is not more
than $25,000; or [$10,000 or less;]
[(2) The actuarially equivalent
amount is $15,000 or less and the alternate payee has consented to
the distribution in the form of a single lump-sum payment; or]
(2) [(3)] At the time the monthly
annuity payments would commence, the alternate payee has directed
that payment of the monthly annuity is to be delivered outside of
the United States and any possession of the United States. The determination
of whether to pay an amount authorized by this subsection in lieu
of the interest awarded by the qualified domestic relations order
is at the sole and exclusive discretion of the system.
(g) The mortality assumption for alternate payees for determining the actuarial equivalent of a benefit payable to an alternate payee shall be the same as the mortality assumption for beneficiaries as set forth in §103.1(a) of this title (relating to Actuarial Tables) with regard to service retirements.
(h) Except as provided in subsection (e) of this section, no payment shall be made by the system to an alternate payee before the time that the participant or the participant's beneficiary files a valid application for a refund or a retirement annuity.
This agency hereby certifies that the proposal 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 May 11, 2009.
TRD-200901809
Gene Glass
Director
Texas County and District Retirement System
Earliest possible date of adoption: June 21, 2009
For further information, please call: (512) 637-3230