Part 3. TEACHER RETIREMENT SYSTEM OF TEXAS
The Board of Trustees (Board) of the Teacher Retirement System of Texas (TRS or system) adopts repealed §29.17, amended §29.34 and §29.40, and new §29.56 without changes to the proposed text as published in the December 15, 2006, issue of the Texas Register (31 TexReg 10084).
Currently, TRS has three different rules containing minimum distribution requirements: §§29.17, 29.34, and 29.40. Adopted new §29.56 would incorporate related material from those three existing rules and expand the content to address other minimum distribution requirements, in accordance with federal tax code requirements for a qualified plan. To bring related provisions from those other rules into new §29.56, TRS adopts the repeal of §29.17, concerning the latest date for commencement of benefits as well as the amendment of §29.34, concerning limitations and §29.40, concerning election of recalculation of benefit.
The key focus of adopted new §29.56 is to add plan provisions that would allow members and beneficiaries to select certain payment plan options only when their selections are consistent with the limitations of the federal regulations. To the extent that a payment plan or payment option would provide a form of payment not consistent with the federal limitations, including a limitation on the allowable length of a guaranteed period payment or on the percentage of a retiree's benefit payable to a non-spouse beneficiary, the payment plan or option would be unavailable to the member or beneficiary, who would be required to select a different payment plan or option.
Adopted new §29.56 also reflects the basic minimum distribution requirement that a participant in the retirement plan take distribution, or begin to take distribution, of the participant's entire interest in the plan by the required beginning date. The section describes the required beginning date as April 1 of the calendar year following the later of the calendar year in which the participant attains age 70 1/2, or the calendar year in which the participant terminates employment with a TRS-covered employer.
In addition, adopted new §29.56 reflects federal minimum distribution and rollover regulations providing that the portion of a distribution otherwise eligible for rollover that is a required minimum distribution cannot be rolled over to another eligible retirement plan, such as an Individual Retirement Arrangement (IRA). The section explains how TRS will determine the required distribution amount of a refund, a partial lump sum option (PLSO), or deferred retirement option payment plan (DROP) when the recipient is affected by the section.
Further, adopted new §29.56 conforms TRS rule provisions with federal regulations that set forth requirements for beneficiaries to take distributions from the retirement plan within specified time limits, either when a member dies before retirement or when a participant dies after retirement.
Adopted new §29.56, in compliance with federal tax code requirements, provides that the section modifies the TRS plan to the extent required to be a qualified plan under federal tax law and prevails over any inconsistent provision of the plan.
Finally, adopted new §29.56 provides that the changes to the availability of a payment option or payment plan are applicable to retirements with an effective date after December 31, 2007, or to a benefit payable as a result of the death of a participant after December 31, 2007. The adopted section reflects TRS's good faith interpretation of the requirements of federal tax law to implement the minimum distribution requirements applicable to the TRS pension plan.
Amended §29.34 concerns limitations related to the determination, manner, and timing of the payment of benefits following the death of a TRS member or retiree. The adopted amendments to this rule would delete the provision under subsection (f) of this section concerning deadlines for distributions of benefits to beneficiaries. The substance of deleted subsection (f) of this section would be transferred to adopted new §29.56. In addition, TRS adopts amendments to this rule to change the name of the section to "Events Affecting Payment" to distinguish it from the limitations relating to federal tax code requirements described primarily in Subchapter D of this chapter. TRS also adopts amendments to this rule to clarify how the 60-day period for selection of a death benefit payment plan will be determined and to provide greater flexibility in changing a selection.
Amended §29.40 concerns prompt payment of benefits to beneficiaries and the constructive election of greater benefits for eligible retirees or beneficiaries under certain law. The adopted amendments to this rule would transfer to adopted new §29.56 the provision concerning prompt distribution of benefits to a beneficiary.
Repealed §29.17 concerns the latest date a member's benefits must be distributed, or commence to be distributed, to a TRS member. Section 29.17 is adopted for repeal to avoid duplicating similar provisions in adopted new §29.56.
No comments on the proposals were received.
Subchapter A. RETIREMENT
Statutory Authority: The repeal of §29.17 is adopted under the following statutes: §825.102, Government Code, which authorizes the Board to adopt rules for the administration of the funds of the retirement system and for the transaction of the business of the Board and §825.506, Government Code, which authorizes the Board to adopt rules that modify the plan to the extent necessary for the retirement system's benefit plan to be a qualified plan and which authorizes the Board to administer the minimum distribution requirements of §401(a)(9) of the Internal Revenue Code of 1986 (26 U.S.C. §401(a)(9)).
Cross-reference to Statute: No other code, article, or statute is affected by this adopted repeal.
This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on April 13, 2007.
TRD-200701399
Ronnie G. Jung
Executive Director
Teacher Retirement System of Texas
Effective date: May 3, 2007
Proposal publication date: December 15, 2006
For further information, please call: (512) 542-6438
Statutory Authority: The amendments to §29.34 are adopted under the following statutes: §824.402, Government Code, which authorizes the Board to prescribe by rule the manner of payment of death benefits under §824.402; §825.102, Government Code, which authorizes the Board to adopt rules for eligibility of membership, the administration of the funds of the retirement system, and for the transaction of the business of the Board; and §825.506, Government Code, which authorizes the Board to adopt rules that modify the plan to the extent necessary for the retirement system to be a qualified plan and which authorizes the Board to administer the minimum distribution requirements of §401(a)(9) of the Internal Revenue Code of 1986 (26 U.S.C. §401(a)(9)).
Cross-reference to Statute: The adopted amendments affect Chapter 824, Government Code.
This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on April 13, 2007.
TRD-200701400
Ronnie G. Jung
Executive Director
Teacher Retirement System of Texas
Effective date: May 3, 2007
Proposal publication date: December 15, 2006
For further information, please call: (512) 542-6438
Statutory Authority: The amendments to §29.40 are adopted under the following statutes: §825.102, Government Code, which authorizes the Board to adopt rules for the administration of the funds of the retirement system and for the transaction of the business of the Board; and §825.506, Government Code, which authorizes the Board to adopt rules that modify the plan to the extent necessary for the retirement system to be a qualified plan and which authorizes the Board to administer the minimum distribution requirements of §401(a)(9) of the Internal Revenue Code of 1986 (26 U.S.C. §401(a)(9)).
Cross-reference to Statute: The adopted amendments affect Chapter 824, Government Code.
This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on April 13, 2007.
TRD-200701401
Ronnie G. Jung
Executive Director
Teacher Retirement System of Texas
Effective date: May 3, 2007
Proposal publication date: December 15, 2006
For further information, please call: (512) 542-6438
Statutory Authority: New §29.56 is adopted under §825.506, Government Code, which: (i) requires that the provisions of the TRS retirement plan be construed and administered in a manner that the plan will be considered a qualified plan under §401(a) of the Internal Revenue Code of 1986 (26 U.S.C. §401); (ii) authorizes the Board to adopt rules that modify the plan to the extent necessary for the retirement system to be a qualified plan, with rules adopted by the Board to be considered part of the plan; (iii) requires that the system administer the plan in a manner that satisfies the required minimum distribution provisions of §401(a)(9), Internal Revenue Code of 1986; and (iv) authorizes the Board to adopt rules to administer the distribution requirements. The new section also is adopted under §825.102, Government Code, which authorizes the Board to adopt rules for the administration of the funds of the retirement system and the transaction of the business of the Board.
Cross-reference to Statute: New §29.56 implements §825.506, Government Code, and affects the following Government Code sections: §822.005, providing for withdrawal of contributions; §824.002, relating to the effective date of retirement; Chapter 824, Subchapter B, relating to beneficiaries; Subchapter C, relating to service retirement benefits; Subchapter D, relating to disability retirement benefits; Subchapter E, relating to member death benefits; Subchapter F, relating to retiree death benefits; Subchapter I, relating to the deferred retirement option plan; and §825.509, relating to direct rollovers.
This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on April 13, 2007.
TRD-200701402
Ronnie G. Jung
Executive Director
Teacher Retirement System of Texas
Effective date: May 3, 2007
Proposal publication date: December 15, 2006
For further information, please call: (512) 542-6438