(a) General Rules and Definitions.
(1) Intent. This rule is intended to comply with a reasonable good faith interpretation of the requirements of 26 U.S.C. §401(a)(9).
(2) Plan Qualification and §401(a)(9) compliance. Pursuant to Tex. Gov't Code §825.506(a) and (c), this section modifies the TRS retirement plan to the extent necessary for the plan to be a qualified plan and comply with 26 U.S.C. §401(a)(9) and prevails over any inconsistent provision of the plan.
(3) Requirements of Treasury Regulations Incorporated. All distributions required under this section will be determined in accordance with 26 C.F.R. §§1.401(a)(9)-1 through 1.401(a)(9)-9 of the Internal Revenue Service, U.S. Department of Treasury regulations.
(4) Definition of Participant. In this section, a TRS member or TRS retiree.
(5) Definition of Designated Beneficiary. The individual who is designated as the beneficiary under applicable plan provisions and who is the designated beneficiary under 26 U.S.C. §401(a)(9) and §1.401(a)(9)-1, Q&A-4, of the Treasury regulations.
(6) Definition of Distribution Calendar Year. A calendar year for which a minimum distribution is required. For distributions beginning before a participant's death, the first distribution calendar year is the calendar year immediately preceding the calendar year that contains the participant's required beginning date. For distributions beginning after a participant's death, the first distribution calendar year is the calendar year in which distributions are required to begin pursuant to subsection (b)(2) of this section.
(7) Definition of Life Expectancy. For purposes of this rule, life expectancy means life expectancy as computed by use of the Single Life Table in §1.401(a)(9)-9 of the Treasury regulations.
(8) Definition of Required Beginning Date. The date specified in subsection (b)(1) of this section.
(b) Time and Manner of Distribution.
(1) Required Beginning Date.
(2) Death of Participant Before Distributions Begin. If a member dies before distributions begin, the member's entire interest is required to be distributed, or begin to be distributed, no later than described in subparagraphs (A) - (D) of this paragraph. For purposes of this paragraph and subsection (e) of this section, distributions are considered to begin on the member's required beginning date (or, if subparagraph (D) of this paragraph applies, the date distributions are required to begin to the surviving spouse under subparagraph (A) of this paragraph). If annuity payments irrevocably commence to the member before the member's required beginning date (or to the member's surviving spouse before the date distributions are required to begin to the surviving spouse under subparagraph (A) of this paragraph), the date distributions are considered to begin is the date distributions actually commence.
(3) Form of Distribution. As of the first distribution calendar year, distributions are required be made in accordance with subsections (c), (d), (e), (f), and (g) of this section.
(c) Determination of Amount to be Distributed Each Year.
(1) General Annuity Requirements. If the participant's interest is paid in the form of annuity distributions to the participant after retirement or to the participant's beneficiary before or after retirement of the participant, payments under the annuity will satisfy the following requirements:
(2) Amount Required to be Distributed by Required Beginning Date.
(d) Requirements For Distributions of Retirement Annuity Payments to Retiree or Beneficiary
(1) Option 1 or 5 Retirement Payment Plan With Non-spousal Beneficiary. If the participant's interest is to be distributed in the form of an Option 1 or 5 annuity and the participant designated a nonspouse beneficiary, annuity payments to the designated beneficiary after the retiree's death must not at any time exceed the applicable percentage of the annuity payment for such period that would have been payable to the retiree using the table set forth in Q&A-2 of §1.401(a)(9)-6 of the Treasury regulations. An Option 1 or 5 payment plan that would result in a payment to a designated nonspouse beneficiary above the applicable percentage shall not be available to the participant.
(2) Option 3 and 4 Retirement Payment Plans.
(e) Requirements for Minimum Distributions Where Member Dies Before Date Distributions Begin.
(1) Participant Survived by Designated Beneficiary. If the member dies before the date that distribution of his or her interest begins (as described in subsection (b)(2) of this section) and there is a designated beneficiary, the entire interest payable with respect to the member is required to be distributed, beginning no later than the time described in subparagraph (A) or (B) of subsection (b)(2) of this section, over the life of the designated beneficiary or over a period certain not exceeding:
(2) No Designated Beneficiary. If the member dies before the date distributions begin and there is no designated beneficiary as of September 30 of the year following the year of the member's death, distribution of the member's entire interest is required to be completed by December 31 of the calendar year containing the fifth anniversary of the member's death.
(3) Death of Surviving Spouse Before Distributions to Surviving Spouse Begin. If the member dies before the date distribution of his or her interest begins, the member's surviving spouse is the member's sole designated beneficiary, and the surviving spouse dies before distributions to the surviving spouse begin, this subsection will apply as if the surviving spouse were the member, except that the time by which distributions must begin will be determined without regard to subsection (b)(2)(A) of this section.
(f) Election To Apply 5-Year Rule to Distributions to Designated Beneficiaries. Notwithstanding subsection (e) of this section, if the member dies before distributions begin and there is a designated beneficiary entitled to a lump sum distribution, distribution of the lump sum to the designated beneficiary is not required to begin by the date specified in subsection (e)(1) of this section, if the member's entire interest is distributed to the designated beneficiary by December 31 of the calendar year containing the fifth anniversary of the member's death. If the member's surviving spouse is the member's sole designated beneficiary and the surviving spouse dies after the member but before distributions to either the member or the surviving spouse begin, this provision will apply as if the surviving spouse were the member.
(g) Requirements for Minimum Distributions Where Participant Dies After Distributions Begin. If a participant dies after retirement benefits have commenced, benefits must continue to be distributed to the beneficiary at least as rapidly as provided for under the option elected by the participant pursuant to §29.8 of this title (relating to Retirement Payment Plans).
(h) An eligible member who has applied for service or disability retirement and who dies on or after the retirement date will be considered to have retired and commenced distributions.
Cont'd...