§ 135-74. Internal Revenue Code compliance.
§ 135‑74. InternalRevenue Code compliance.
(a) Notwithstanding anyother provisions of law to the contrary, compensation for any calendar yearafter 1988 in which employee or employer contributions are made and for whichannual compensation is used for computing any benefit under this Article shallnot exceed the higher of two hundred thousand dollars ($200,000) or the amountdetermined by the Commissioner of Internal Revenue as the limitation forcalendar years after 1989; provided the imposition of the limitation shall notreduce a member's benefit below the amount determined as of December 31, 1988.
Effective January 1, 1996, theannual compensation of a member taken into account for determining all benefitsprovided under this Article shall not exceed one hundred fifty thousand dollars($150,000), as adjusted pursuant to section 401(a)(17)(B) of the InternalRevenue Code and any regulations issued under the Code. However, with respectto a person who became a member of the Retirement System prior to January 1,1996, the imposition of this limitation on compensation shall not reduce theamount of compensation which may be taken into account for determining thebenefits of that member under this Article below the amount of compensationwhich would have been recognized under the provisions of this Article in effecton July 1, 1993.
Effective January 1, 2002, theannual compensation of a person, who became a member of the Retirement Systemon or after January 1, 1996, taken into account for determining all benefitsaccruing under this Article for any plan year after December 31, 2001, shallnot exceed two hundred thousand dollars ($200,000) or the amount otherwise setby the Internal Revenue Code or determined by the Commissioner of InternalRevenue as the limitation for calendar years after 2002.
(b) Notwithstanding anyother provisions of law to the contrary, the annual benefit payable on behalfof a member shall, if necessary, be reduced to the extent required by Section415(b) and with respect to calendar years commencing prior to January 1, 2000,Section 415(e) of the Internal Revenue Code, as adjusted by the Secretary ofthe Treasury or his delegate pursuant to Section 415(d) of the Code. If amember is a participant under any qualified defined contributions plan that isrequired to be taken into account for the purposes of the limitation containedin Section 415 of the Internal Revenue Code, the annual benefit payable underthis Article shall be reduced to the extent required by Section 415(e) prior tomaking any reduction under the defined contribution plan provided by theemployer. However, with respect to a member who has benefits accrued under thisArticle but whose benefit had not commenced as of December 31, 1999, thecombined plan limitation contained in Section 415(e) of the Internal RevenueCode shall not be applied to such member for calendar years commencing on orafter January 1, 2000.
(c) On and afterJanuary 1, 1989, the retirement allowance of a member who has terminatedemployment shall begin no later than the later of April 1 of the calendar yearfollowing the calendar year that the member attains 70 1/2 years of age orApril 1 of the calendar year following the calendar year in which the memberterminates employment.
(d) This subsectionapplies to distributions made on or after January 1, 1993. Notwithstanding anyother provision of the Plan to the contrary that would otherwise limit adistributee's election under this Article, a distributee may elect, at the timeand in the manner prescribed by the Plan administrator, to have any portion ofan eligible rollover distribution paid directly to an eligible retirement planspecified by the distributee in a direct rollover. Provided, an eligiblerollover distribution is any distribution of all or any portion of the balanceto the credit of the distributee, except that an eligible rollover distributiondoes not include: any distribution that is one of a series of substantiallyequal periodic payments (not less frequently than annually) made for the life(or life expectancy) of the distributee or the joint lives (or joint lifeexpectancies) of the distributee and the distributee's designated beneficiary,or for a specified period of 10 years or more; any distribution to the extentsuch distribution is required under section 401(a)(9) of the Code; and theportion of any distribution that is not includible in gross income (determinedwithout regard to the exclusion for net realized appreciation with respect toemployer securities). Effective as of January 1, 2002, and notwithstanding thepreceding sentence, a portion of a distribution shall not fail to be aneligible rollover distribution merely because the portion consists of after‑taxemployee contributions which are not includible in gross income. However, suchportion may be transferred only to an individual retirement account or annuitydescribed in Section 408(a) or (b) of the Code, or to a qualified definedcontribution plan described in Section 401(a) or 403(a) of the Code that agreesto separately account for amounts so transferred, including separatelyaccounting for the portion of such distribution which is includible in grossincome and the portion of such distribution which is not so includible.Provided, an eligible retirement plan is an individual retirement accountdescribed in section 408(a) of the Code, an individual retirement annuitydescribed in section 408(b) of the Code, an annuity plan described in section403(a) of the Code, or a qualified trust described in section 401(a) of the Code,that accepts the distributee's eligible rollover distribution. Effective on andafter January 1, 2002, an eligible retirement plan shall also mean an annuitycontract described in Section 403(b) of the Code and an eligible plan underSection 457(b) of the Code which is maintained by a state, politicalsubdivision of a state, or any agency or instrumentality of a state orpolitical subdivision of a state and which agrees to separately account foramounts transferred into such plan from this Plan. The definition of eligibleretirement plan shall also apply in the case of a distribution to survivingspouse, or to a spouse or former spouse who is the alternate payee under aqualified domestic relations order, as defined in Section 414(p) of theInternal Revenue Code, or a court‑ordered equitable distribution ofmarital property, as provided under G.S. 50‑30. Provided, a distributeeincludes an employee or former employee. Provided further, a direct rollover isa payment by the Plan to the eligible retirement plan specified by thedistributee. Effective on and after January 1, 2007, notwithstanding any otherprovision of this subsection, a nonspouse beneficiary of a deceased member mayelect, at the time and in the manner prescribed by the administrator of the Boardof Trustees of this Retirement System, to directly roll over any portion of thebeneficiary's distribution from the Retirement System; however, such rollovershall conform with the provisions of section 402(c)(11) of the Code. (1989, c. 276, s. 4; 1993,c. 531, s. 8; 1995, c. 361, s. 2; 2002‑71, s. 8; 2009‑66, s. 1(b).)