§ 36-8-20 - Internal Revenue Code qualification.
SECTION 36-8-20
§ 36-8-20 Internal Revenue Codequalification. – (a) Intent. It is intended that the retirement system satisfy therequirements of § 401(a) of the Internal Revenue Code of 1986 as amendedfrom time to time, 26 U.S.C. § 401 (hereinafter referred to as the"code"), in form and operation, to the extent that those requirements apply toa governmental plan described in § 414(d) of the code, 26 U.S.C. §414. To this end, the following provisions shall be applicable, administered,and interpreted in a manner consistent with maintaining the tax qualificationof the retirement system, and shall supersede any conflicting provisions ofchapters 8 – 10 of this title, of chapter 16 of title 16, or of chapter 21of title 45.
(b) Exclusive benefit. All funds of the retirementsystems shall be held in one or more trusts, in one or more custodial accountstreated as trusts in accordance with § 401(f) of the code, or in acombination thereof. Under any trust or custodial account, it shall beimpossible at any time prior to the satisfaction of all liabilities withrespect to employees and their beneficiaries, for any part of the corpus orincome to be used for, or diverted to, purposes other than the payment ofretirement allowances and other pension benefits to employees and theirbeneficiaries. However, this requirement shall not prohibit: (1) the return ofa contribution within six (6) months after the executive director determinesthat the contribution was made by a mistake of fact; or (2) the payment ofexpenses of the retirement system in accordance with applicable law.
(c) Vesting on plan termination. In the event of thetermination (within the meaning of the code) of the retirement system, theaccrued benefits of eligible employees shall become fully and immediatelyvested but only to the extent those benefits are already funded.
(d) Forfeitures. Credits forfeited by an employeepursuant to § 36-10-8, § 16-16-31, or § 45-21-28 shall not beapplied to increase the benefits of any other employee.
(e) Required distributions. Distributions shall beginto be made not later than the employee's required beginning date as definedunder § 401(a)(9) of the code and shall be made in accordance with allother requirements of that code section.
(f) Limitation on benefits. Benefits shall not bepayable to the extent that they exceed the limitations imposed by § 415 ofthe code, 26 U.S.C. § 415, as adjusted from time to time pursuant to§ 415(d) of the code. In no event shall the member receive a retirementbenefit in any year that exceeds the limitations set forth in § 415(b).
(g) Limitation on compensation. Benefits andcontributions shall not be computed with reference to any compensation thatexceeds the maximum dollar amount permitted by § 401(a)(17) of the code asadjusted for increases in the cost-of-living. This provision shall take effectJuly 1, 1994, and shall apply only with respect to an employee who firstbecomes a member of the retirement system on or after that date.
(h) Actuarial determination. Whenever the amount ofany employee's benefit is to be determined on the basis of actuarialassumptions done by a professional actuary, those assumptions shall bespecified by resolution of the retirement board.
(i) Direct rollovers. Any individual withdrawing anydistribution from the retirement system which constitutes an "eligible rolloverdistribution" within the meaning of § 402(c) of the code, 26 U.S.C. §402, may elect, in the time and manner prescribed by the retirement board andafter receipt of proper notice, to have any portion of the distribution paiddirectly to another plan that is qualified under § 401(a) or 403(a), 26U.S.C. § 403(a), of the code, or to an individual retirement account orannuity described in § 408(a) or (b) of the code, 26 U.S.C. § 408, ina direct rollover.