SECTION 302.2. Benefit Distributions

(a) In this section:

(1) "Code" means the Internal Revenue Code of 1986, as amended.

(2) "§401(a)(9) requirements" means the requirements under §401(a)(9) of the code and Treasury Regulations §1.401(a)(9)-1 through §1.401(a)(9)-9.

(b) The annual benefit based on the service of a member may not exceed the amount permitted by the code and related regulations for the appropriate year, including, without limitation, §415(b) of the code. If the aggregated benefit otherwise payable under the pension system and any other defined benefit plan maintained by a political subdivision that has contributed to the fund on behalf of the member would otherwise exceed the benefits allowable under federal law, the reduction in benefits must first be applied to the extent possible from the other plan, and only after those reductions, from the fund.

(c) A retirement annuity or benefits to a qualified beneficiary under the pension system may not begin after the deadlines provided under the code and related regulations, including, without limitation, the deadlines provided by subsection (d) of this section.

(d) All distributions under the fund must at all times comply with and conform to the §401(a)(9) requirements, and any distribution required under the incidental death benefits requirements of §401(a) of the code will be treated as a distribution under the §401(a)(9) requirements. This subsection overrides any distribution options inconsistent with the §401(a)(9) requirements. The pension system shall develop procedures to ensure that distributions comply with the §401(a)(9) requirements, including the requirement that a member's entire interest under the pension system will be distributed, or begin to be distributed, to the member no later than April 1 of the year after the later of the year in which the member ceases performing qualified service for a participating department or with respect to a member who attains age 70-1/2 on or before December 31, 2019, the year in which the member attains age 70-1/2, or with respect to a member who attains age 70-1/2 after December 31, 2019, the year in which the member attains age 72.

(e) If the annual compensation of a member is ever taken into account for any purpose of the fund, that annual compensation may not exceed the limit in effect under §401(a)(17) of the code, as periodically adjusted in accordance with guidelines provided by the United States Secretary of the Treasury.

Source Note: The provisions of this §302.2 adopted to be effective October 2, 2005, 30 TexReg 6060; amended to be effective July 21, 2009, 34 TexReg 4741; amended to be effective October 18, 2015, 40 TexReg 7099; amended to be effective December 31, 2019, 44 TexReg 8332; amended to be effective July 5, 2020, 45 TexReg 4527