2023 Texas Statutes › Vernon's Civil Statutes › Title 109 - Pensions › Article 6243o. Police and Fire Fighter Retirement System in Municipalities of 750,000 to 1,000,000 › Article 5. Member Benefits › Section 5.10. Coordination With Federal Law

Sec. 5.10. COORDINATION WITH FEDERAL LAW.    (a)  A member or beneficiary of a member of the fund may not accrue a service retirement annuity, disability retirement annuity, death benefit, whether death occurs in the line of duty or otherwise, or any other benefit under this Act in excess of the benefit limits applicable to the fund under Section 415 of the code.  The board shall reduce the amount of any benefit that exceeds those limits by the amount of the excess.  If the total benefits under this fund and the benefits and contributions to which any member is entitled under any other qualified defined benefit plan maintained by the municipality that employs the member would otherwise exceed the applicable limits under Section 415 of the code, the benefits the member would otherwise receive from the fund shall be reduced to the extent necessary to enable the benefits to comply with Section 415 of the code.
(b)  A distributee may elect, at the time and in the manner prescribed by the board, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover.
(b-1)  For purposes of this subsection and Subsection (b) of this section:
(1)  "Direct rollover" means a payment by the fund to the eligible retirement plan specified by a distributee.
(2)  "Distributee" means a member or former member.  The term includes a member's or former member's surviving spouse or designated beneficiary and a member's or former member's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined by Section 414(p) of the code, with regard to the interest of the spouse or former spouse.
(3)  "Eligible retirement plan" means:
(A)  an individual retirement account described by Section 408(a) of the code;
(B)  an individual retirement annuity described by Section 408(b) of the code;
(C)  a qualified annuity plan described by Section 403(a) of the code;
(D)  a qualified trust described by Section 401(a) of the code;
(E)  an eligible deferred compensation plan described by Section 457(b) of the code that is maintained by an eligible employer described by Section 457(e)(1)(A) of the code;
(F)  an annuity contract described by Section 403(b) of the code that accepts the distributee's eligible rollover distribution; or
(G)  in the case of an eligible rollover distribution to a designated beneficiary who is not the surviving spouse, or the spouse or former spouse under a qualified domestic relations order, an individual retirement account or individual retirement annuity only.
(4)  "Eligible rollover distribution" means a distribution of all or any portion of the balance to the credit of the distributee.  The term does not include:
(A)  a distribution that is one of a series of substantially equal periodic payments, paid not less frequently than once a year, made over the life or life expectancy of the distributee or the joint lives or joint life expectancies of the distributee and the distributee's designated beneficiary;
(B)  a series of payments for a specified period of 10 years or more;
(C)  a distribution to the extent the distribution is required under Section 401(a)(9) of the code; or
(D)  the portion of a distribution that is not includable in gross income, unless the distributee directs that the eligible rollover distribution be transferred directly to a qualified trust that is part of a defined contribution plan that agrees to separately account for the portion that is includable in gross income and the portion that is not or to an individual retirement account or individual annuity.
(c)  The total salary taken into account for any purpose under this Act may not exceed the annual compensation limitation under Section 401(a)(17) of the code, effective January 1, 2017, which is $405,000 for an eligible member or $270,000 for an ineligible member.  For purposes of this subsection, an eligible member is any employee who first became a member before 1996 and an ineligible member is any other member.  The dollar limits shall be adjusted annually for cost-of-living increases as provided by Section 401(a)(17) of the code.
(d)  Accrued benefits under this Act become 100 percent vested for a member on the earlier of:
(1)  the date the member attains normal retirement age;
(2)  the earlier termination or partial termination of the pension plan created by this Act, if it affects the member; or
(3)  the complete discontinuance of contributions by the municipality to the fund.
(d-1)  For purposes of Subsection (d)(1) of this section, "normal retirement age" means the age at which a member is entitled to receive a service retirement benefit without reduction because of age.
(e) Amounts representing forfeited nonvested benefits of terminated members may not be used to increase benefits payable from the fund but may be used to reduce contributions for future plan years.
(f)  Distribution of benefits must:
(1)  begin not later than April 1 of the year following the later of the calendar year in which the member:
(A)  becomes 70-1/2 years of age; or
(B)  retires; and
(2)  otherwise conform to Section 401(a)(9) of the code and the regulations adopted under that section of the code, including regulations governing the incidental death benefit distribution requirements.
(g) If the amount of any benefit is to be determined on the basis of actuarial assumptions that are not otherwise specifically set forth for that purpose in this Act, the actuarial assumptions to be used are those earnings and mortality assumptions being used on the date of the determination by the fund's actuary and approved by the board.  The actuarial assumptions being used at any particular time shall be attached as an addendum to a copy of this Act and treated for all purposes as a part of this Act.  The actuarial assumptions may be changed by the fund's actuary at any time if approved by the board, but a change in actuarial assumptions may not result in any decrease in benefits accrued as of the effective date of the change.
(h) This section applies to any benefit regardless of when accrued.
(i) The board may adopt rules to administer this section.  A rule adopted by the board under this subsection is final and binding.
(j)  Notwithstanding any other provision of this Act, the limitations on benefits imposed by Section 415 of the code and Subsection (a) of this section must be adjusted each year to the extent permitted by cost-of-living increases announced by the secretary of the treasury under Section 415(d) of the code and applicable law.  A cost-of-living increase described by this subsection applies to members who have terminated employment, including members who have begun receiving benefits before the effective date of the increase, and any benefits previously denied.  Benefits paid to make up for benefits previously denied are considered the delayed payment of benefits earned before retirement and not extra compensation earned after retirement.
(k) The board by rule shall implement this Act in a manner that preserves the tax qualification of the fund under the code and may revise any provision or program to the extent necessary to retain tax qualification.
(l) In this section, "qualified plan" has the meaning assigned by Section 8.02 of this Act.