| (a) In general. Upon request, the plan administrator or TPA shall authorize the distribution of a participant's deferrals and investment income in accordance with the applicable distribution agreement so long as: (1) the participant has attained age 70.5; (2) the participant has died; (3) the participant's employment with the state of Texas has terminated other than through death; (4) the participant has complied with subsection (l) of this section relating to the one-time election of distribution that does not exceed the dollar limit under Code §457(e)(9); (5) the participant elects to have any portion of his or her account balance transferred to a tax-qualified governmental defined benefit plan (as defined in §414(d) of the Code) in the same state or another state that provides for the acceptance of plan-to-plan transfers with respect to the participant; or (6) the participant elects a transfer to be made if the transfer is either for the purchase of permissible service credit (as defined in §415(n)(3) of the Code and as amended by the Pension Protection Act of 2006) under the receiving governmental defined benefit plan, or if the transfer is for a repayment to which §415 of the Code does not apply by reason of §415(k)(3) of the Code. (b) Definitions. (1) In subsections (m) - (o) of this section, the term "participant's deferrals and investment income" means the cash value of the participant's deferrals and investment income after considering all surrender charges, costs of insurance, forfeitures, and other similar charges. (2) In this section, a beneficiary or secondary beneficiary "survives" another person only if the beneficiary or secondary beneficiary is alive on the day after the person's death. (c) Content of a distribution agreement. (1) A distribution agreement must contain but shall not be limited to: (A) identifying information concerning the participant, including the date of birth and social security number of the participant; (B) the name of the prior plan vendor or revised plan vendor covered by the agreement; (C) the type of qualified investment product from which distributions will be made, including policy/certificate/or account number; (D) the date on which the participant separated from service, attained age 70.5, or died, whichever is applicable; (E) the beginning date of the distributions; (F) the type of distribution; (G) the amount to be distributed during each time period or the method for calculating the amount to be distributed during each time period; and (H) beneficiary information, including date of birth(s) and social security number(s). (2) The person filing the distribution agreement must attach a properly executed Form W-4P to the agreement. (3) A distribution agreement must be consistent with the distribution options available for the qualified investment product covered by the agreement. The prior plan vendor agent/representative signature on the distribution agreement signifies that the distribution option is available and can be implemented as requested. (d) Commencement of distributions. Notwithstanding anything in a distribution agreement: (1) the earliest a participant or beneficiary may begin receiving a distribution is the 51st day after the occurrence that entitles the participant or beneficiary to the distribution, except this paragraph does not apply to an emergency withdrawal or a one-time election distribution; and (2) A participant must begin receiving a distribution by the later of: (A) April 1st of the year following the calendar year in which the participant attains age 70.5; or (B) April 1st of the year following the year in which the participant retires or otherwise has a separation from employment. (e) Filing of distribution agreements by participants. (1) This subsection applies when a participant becomes entitled to a distribution because: (A) the participant has attained age 70.5; or (B) the participant's employment with the state of Texas has terminated other than through death. (2) A participant must file a single distribution agreement for all qualified investment products in which the participant's deferrals are invested. (3) Notwithstanding anything to the contrary in this subsection, a participant who has not separated from service and who has reached age 70.5 may file a distribution agreement if the participant wants to begin distributions. If distributions commence in the calendar year following the later of the calendar year in which the participant attains age 70.5 or the calendar year in which the separation from employment occurs, the distribution must be equal to the annual installment payment for the year, determined under the Uniform Lifetime Table of the Income Tax Regulations for the participant's age regarding types of distributions. This must also be paid before the end of the calendar year of commencement of distributions. (4) Notwithstanding any other plan provision, amounts deferred by a former participant of the plan not yet payable or made available to such participant may be transferred to another eligible plan of which the former participant has become a participant, if: (A) the plan receiving such amounts provides for its acceptance; and (B) a participant separates from service with the participant's agency and accepts employment with another entity maintaining an eligible deferred compensation plan. (5) A participant or a beneficiary of a participant who previously filed an irrevocable distribution election under the prior plan or under the revised plan may change that distribution election or cancel that distribution election by notifying the plan administrator. Such notification must be in writing on a distribution agreement form and received by the plan administrator at least 30 days prior to the scheduled distribution date. (6) A participant may request a trustee-to-trustee transfer of assets from the prior plan or the revised plan to a governmental defined benefit plan in the same state or another state for the purchase of permissible service credit (as defined in the Code §414(d) and (p) and Code §415(n)(3)(A), as amended by the Pension Protection Act of 2006) under such plan or a repayment to which Code §415 does not apply by reason of subsection (k)(3) thereof. The participant may elect to have any portion of the account balance transferred to a governmental defined benefit plan. (7) Upon receipt of a certified copy of a qualified domestic relations order, a certified copy of a judgment, decree or order (including approval of a property settlement agreement) that relates to the provision of child support, alimony payments, or the marital property rights of a spouse or former spouse, child, alternate payee, or other dependent of a participant, and same is made pursuant to the domestic relations law of any state, then the amount of the participant's account balance shall be paid in the manner and to the person or persons so directed in the domestic relations order. Such payment shall be made without regard to whether the participant is eligible for a distribution of benefits under the plan. The plan administrator or TPA shall establish reasonable procedures for determining the status of any such decree or order and for effectuating distribution pursuant to the domestic relations order. (§414(p) of the Code and §1.457-10(c) of the Income Tax Regulations). (8) At a participant's, surviving spouse's, or beneficiary(s) request, the plan administrator may process a trustee-to-trustee transfer of an eligible rollover distribution upon receipt of appropriate instructions from the receiving plan. If a beneficiary is a non-spouse, the non-spouse may request a rollover to an inherited IRA. (f) Minimum distributions during the life of a participant. (1) This subsection applies to distributions to a participant during the life of the participant, notwithstanding anything to the contrary in the participant's distribution agreement. (2) The amount distributed to the participant must be calculated so that the distributions: (A) will be distributed over a period not exceeding the life expectancy of the participant as set forth in the Uniform Lifetime Table of the Income Tax Regulations for the participant's age on the participant's birthday for that year or the life expectancy of the participant and the participant's named beneficiary; (B) will satisfy the minimum distribution requirements of the Code §457(d)(2), §401(a)(9), and associated statutes and regulations; and Cont'd... |
