(a)

1. (1) The amount of the lump-sum death benefit may be set by a resolution or rules adopted by the Board of Trustees of the Arkansas Teacher Retirement System in an amount of up to ten thousand dollars ($10,000) per member.
2. (2) The board may adjust the amount of the lump-sum death benefit each year and, as actuarially appropriate, prorate the amount of the lump-sum benefit based on the ratio of the member’s contributory and noncontributory service credit.

(b)

1. (1) Upon a qualifying member’s death, the maximum lump-sum death benefit that the qualifying member qualifies to receive in accordance with the law, rules, and resolutions of the board applicable to the Arkansas Teacher Retirement System shall be paid in equal shares to each person designated as a beneficiary by the qualifying member in the manner required by the system.
2. (2) If the qualifying member fails to designate a beneficiary or all the designated beneficiaries predecease the qualifying member, the lump-sum death benefit shall be paid to the qualifying member’s estate.

(c)

1. (1) Pursuant to Acts 2009, No. 1323, a lump-sum death benefit distribution made after June 30, 2009, shall be tax exempt, and no federal or state income tax shall be withheld by the system.
2. (2) After June 30, 2009, a lump-sum death benefit shall not be eligible for a direct rollover.