1. (a) The following words and terms, when used in this section shall have the following meanings unless the context clearly indicates otherwise.

   1. (1) Proportionate retirement system--A public retirement system other than the Texas County and District Retirement System that participates in the Proportionate Retirement Program.
   2. (2) Required distribution date--March 31 of the year following the later of the year in which the member separates from service or the year in which the member attains age 70 and one-half.
   3. (3) Rule-year--A year of service credited in participating subdivisions that have adopted a rule providing for retirement eligibility when the addition of a member's years of service and years of attained age produces a sum equal to or in excess of a specific number.
   4. (4) Separates from service--The termination of employment with a subdivision participating in the System.

2. (b) General Rules:

   1. (1) A member who has separated from service with all participating subdivisions may receive a refund of the accumulated contributions in the member's individual account at any time following separation from service that is prior to the member's required distribution date.
   2. (2) A member must receive a refund of the accumulated contributions in the member's individual account or retire from the System on or before his/her required distribution date.
   3. (3) The remaining interest of a deceased retiree's benefit must continue to be distributed as rapidly as the method of distribution being used before the retiree's death.

   4. (4) The entire interest that becomes payable because of the death of a member who has a designated beneficiary as defined in regulations to Section 401(a)(9) of the Internal Revenue Code must be distributed over the life of the designated beneficiary or over a period not extending beyond the life expectancy of the designated beneficiary. A distribution under this provision after December 31, 1995, must:

      1. (A) begin not later than the last day of the calendar year following the calendar year in which the member died, if payable to a person other than the decedent's spouse; or
      2. (B) begin not later than the later of the last day of the calendar year following the year in which the member died or the last day of the calendar year in which the decedent would have attained the age of 70 and one-half, if payable to the surviving spouse, unless the surviving spouse dies before payments begin, in which case the beginning of payments may not be deferred beyond the last day of the calendar year following the calendar year in which the surviving spouse dies.
   5. (5) The entire interest that becomes payable because of the death of a member who does not have a designated beneficiary must be distributed within five years of the death of the member.
   6. (6) For a distribution made by the retirement system after December 31, 2001, the system shall apply the minimum distribution requirements of Section 401(a)(9) of the Internal Revenue Code of 1986 in accordance with the regulations under that section that were proposed on January 17, 2001, notwithstanding any other provision of law to the contrary. This provision expires on the effective date of final regulations under Section 401(a)(9) of the Internal Revenue Code of 1986 or on another date specified in guidance published by the Internal Revenue Service.

3. (c) Application:

   1. (1) A member who is eligible to retire on the basis of credited service in this System alone must receive a refund of the accumulated contributions in the member's individual account or retire on or before the member's required distribution date without regard to whether that member is an active participant in a proportionate retirement system or has credited service in a proportionate retirement system.
   2. (2) A member whose total credited service in this System and all proportionate retirement systems equals less than four years, who is not actively participating in a proportionate retirement system, and who is not eligible to retire under this System on the member's required distribution date must receive a refund of the accumulated contributions in the member's individual account on the member's required distribution date.
   3. (3) A member who has less than four rule-years of credited service, who has no credited service in a proportionate retirement system, and who is not otherwise eligible to retire at the member's required distribution date, must receive a refund of the accumulated contributions in the member's individual account on the member's required distribution date.
   4. (4) A member who has four or more rule-years of credited service in this System, who has no credited service with a proportionate retirement system and who is not otherwise eligible to retire at the member's required distribution date, must receive a refund of the accumulated contributions in the member's individual account on the member's required distribution date, or must retire with an actuarially reduced annuity on the member's required distribution date. The annuity under this provision is adjusted because of the early commencement of the benefit and is actuarially equivalent to the annuity that would otherwise be payable commencing at the member's retirement eligibility date.
   5. (5) The required distribution date for an inactive member of this System who has attained age 70 and one-half and who continues to actively participate in a proportionate retirement system is March 31 of the year following the year in which the member becomes eligible to retire on the basis of credited service in this System alone.
   6. (6) A monthly annuity payable because of the death of a member that would extend beyond the life expectancy of the designated beneficiary, or that would extend beyond five years from the date of death of the member if payable to other than a designated beneficiary, will be converted to a monthly annuity having an equivalent present value that is calculated using a 7.0% interest rate and payable over the life expectancy of the designated beneficiary or calculated using a 7.0% interest rate and payable over a 60 month period if payable to other than a designated beneficiary.

Source Note:The provisions of this §103.5 adopted to be effective December 31, 1997, 22 TexReg 12538; amended to be effective December 31, 2002, 27 TexReg 12371.