34 TAC §127.6
The Texas Municipal Retirement System adopts on an emergency
basis new §127.6, regarding acceptance of eligible rollover distributions
or trustee to trustee transfers from other retirement plans as payment for
system service credit. This new section is simultaneously proposed for permanent
adoption in the proposed section of this issue of the
Texas Register
.
The new section is adopted to specify the types of plans from which the
Texas Municipal Retirement System may accept funds as payments when a member
is otherwise eligible to establish service credit in the Texas Municipal Retirement
System.
The new section is adopted on an emergency basis to enable the
Texas Municipal Retirement System to properly process member requests for
purchase of eligible service credit in accordance with the Economic Growth
and Tax Relief Act of 2001, Public Law 107-16 (June 7, 2001) which expanded
the ability to rollover or transfer funds from one type of retirement plan
to another, effective January 1, 2002. The Texas Municipal Retirement System
finds that requirements of state law (specifically those found in Texas Government
Code, § 855.607) requires the adoption of this new section on fewer than
thirty days notice.
The new section is adopted on an emergency basis pursuant to Government
Code, Chapter 855, §855.102, which provides the Board of Trustees of
the Texas Municipal Retirement System with the authority to adopt rules necessary
or desirable for the efficient administration of the system. The new section
is also adopted pursuant to Government Code, Chapter 855, §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.
§127.6. Acceptance of Rollovers and Transfers.
(a)
The system may accept the funds described in subsections
(b) and (c) of this section, subject to the restrictions of this section.
(b)
If permitted under and subject to the provisions of federal
law, the system may accept an eligible rollover distribution from another
eligible retirement plan in payment of all or a portion of any deposit a member
is permitted under applicable law to make with the system for service credit.
(1)
An "eligible rollover distribution" is any distribution
of all or any portion of the balance to the credit of the member from an eligible
retirement plan. 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 member or the joint lives (or joint life expectancies)
of the member and the member's designated beneficiary, or for a specified
period of ten years or more;
(B)
any distribution to the extent such distribution is required
under Internal Revenue Code §401(a)(9);
(C)
any distribution which is made upon hardship of the member;
or
(D)
the portion of any distribution that is not includible
in gross income.
(2)
An "eligible retirement plan" is any program defined in
Internal Revenue Code §401(a)(31) and §402(c)(8)(B), from which
the member has a right to an eligible rollover distribution, as follows:
(A)
an individual retirement account under Internal Revenue
Code §408(a);
(B)
an individual retirement annuity under Internal Revenue
Code §408(b) (other than an endowment contract);
(C)
a qualified trust;
(D)
an annuity plan under Internal Revenue Code §403(a);
(E)
an eligible deferred compensation plan under Internal Revenue
Code §457(b) which is maintained by an eligible employer under Internal
Revenue Code §457(e)(1)(A); and
(F)
an annuity contract under Internal Revenue Code §403(b).
(c)
If permitted under and subject to the provisions of federal
law, the system may accept a direct trustee-to-trustee transfer of funds from
a plan described under §403(b) or §457(b) of the Internal Revenue
Code in payment of all or a portion of any deposit a member is permitted to
make with the system for service credit.
(d)
In order to authorize the rollover or transfer of funds
described in this section, a member shall provide or cause to be provided
to the system information sufficient for the system to reasonably conclude
that the contribution is a valid rollover or direct trustee-to-trustee transfer
as permitted under federal tax law. If the system later determines that a
contribution was an invalid rollover or direct trustee-to-trustee transfer
or otherwise not permitted under federal tax law, the system may take any
action appropriate or required by the Internal Revenue Code or regulations
issued thereunder, including return of the invalid contribution and, if applicable,
any earnings attributed thereto to the member within a reasonable time after
the determination and cancellation of any credit purchased with the returned
amounts.
(e)
The system shall construe and administer this section in
a manner such that the plan will be considered a qualified plan under §401(a)
of the Internal Revenue Code of 1986, (United States Code, Title 26, §401).
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 January 25, 2002.
TRD-200200486
Gary W. Anderson
Executive Director
Texas Municipal Retirement System
Effective Date: January 25, 2002
Expiration Date: March 11, 2002
For further information, please call: (512) 225-3714