The following words and terms, when used in the sections under this undesignated head, shall have the following meanings, unless the context clearly indicates otherwise.

1. (1) Annual additions--The sum of the following amounts credited to a member's account under any defined contribution plan maintained by the employer for the plan year:

   1. (A) employer contributions;
   2. (B) member contributions, including member contributions to a qualified defined benefit plan but not including rollover contributions from a plan maintained by an entity other than the employer;
   3. (C) forfeitures; and
   4. (D) amounts allocated after March 31, 1984, to an individual medical benefit account, as defined in §415(1)(2) of the Code, that is part of a pension or annuity plan maintained by the employer. Annual additions do not include amounts described in §415(1)(2) of the Code for the purpose of computing the percentage limitation described in §415(c)(1)(B) of the Code. For any plan year beginning before January 1, 1987, only that portion of the member contributions equal to the lesser of those member contributions in excess of 6.0% of annual compensation or one-half of the member's contributions to any qualified plan maintained by the employer is treated as annual additions.
2. (2) Annual benefit--A benefit payable annually in the form of a straight life annuity (ignoring that portion of any joint and survivor annuity which constitutes a qualified joint and survivor annuity, as defined in §417 of the Code) with no ancillary or incidental benefits or rollover contributions and exclusive of any portion of the benefit derived from member contributions or other contributions that are treated as a separate defined contribution plan under §417 of the Code (but inclusive of any such contributions that are picked up by the employer pursuant to §414(h)(2) of the Code, or that otherwise are not treated as a separate defined contribution plan). If the benefit is payable in any other form, the determination as to whether the limitation described in §29.51 of this title (relating to Plan Limitations on Retirement Benefits) has been satisfied shall be made by adjusting such benefit so that it is actuarially equivalent to the annual benefit described in this section in accordance with the regulations issued by the secretary of the treasury.
3. (3) Annual compensation--All wages within the meaning of §3401(a) of the Code relating to income tax withholding at source, but determined without regard to any rules that limit the remuneration included in wages based on the nature or location of the services performed and without regard to whether such wages are treated as compensation under any other provision of this chapter.
4. (4) Code--The Internal Revenue Code of 1986, as amended.

5. (5) Defined benefit plan fraction--For any plan year, a fraction in which:

   1. (A) the numerator is the projected annual benefit of a member, determined as of the close of the plan year pursuant to §1.415-7(b)(3) of the Income Tax Regulations; and

   2. (B) the denominator is the lesser of:

      1. (i) the product of 1.25 and the maximum dollar limitation prescribed by §29.51(a)(1) of this title (relating to Plan Limitations on Retirement Benefits), as adjusted, for the plan year; or
      2. (ii) the product of 1.4 and the amount that may be taken into account under §29.51(a)(2) of this title (relating to Plan Limitations on Retirement Benefits) for the plan year. The annual additions may not be recomputed for plan years beginning before January 1, 1987, to treat all employee contributions as annual additions.
6. (6) Defined contribution plan--A plan described in §414(i) of the Code and solely for purposes of this head, employee contributions to any other qualified plan maintained by the employer, other than any picked-up contributions.

7. (7) Defined contribution plan fraction--For any plan year, a fraction in which:

   1. (A) the numerator is the sum of the annual additions to the member's account as of the close of the plan year; and

   2. (B) the denominator is the sum of the lesser of the following amounts determined for the plan year and each prior plan year of employment with the employer:

      1. (i) the product of 1.25 and the dollar limitation in effect under §415(c)(1)(A) of the Code for the plan year, determined without regard to §415(c)(6) of the Code; or
      2. (ii) the product of 1.4 and the amount that may be taken into account under §415(c)(1)(B) of the Code for the plan year. The annual additions may not be recomputed for plan years beginning before January 1, 1987, to treat all employee contributions as annual additions.
8. (8) Employer--The agents, agencies or political subdivisions of the State responsible for education, including the governing board of any school district created under the laws of the State, any county school board, the board of trustees, the State Board of Education, the Central Education Agency, the board of regents of any college or university, or any other legally constituted board or agency of any public school.
9. (9) Member contributions--Those mandatory contributions within the meaning of the Code, §411(c)(2)(C), but not any contributions picked up by the employer within the meaning of §414(h)(2) of the Code.
10. (10) Plan year--The plan's accounting year beginning on September 1 of each year and ending on the following August 31.

Source Note:The provisions of this §29.50 adopted to be effective April 20, 1988, 13 TexReg 1672; amended to be effective June 1, 1995, 20 TexReg 3734.