Kentucky Administrative Regulations › Title 102 - TEACHERS' RETIREMENT SYSTEM › Chapter 1 - General Rules › Section 102 KAR 1:225 - General compliance with federal tax laws

Current through Register Vol. 51, No. 1, July 1, 2024
RELATES TO:
				KRS
				161.716,
				161.600,
				161.470,
				26 C.F.R., 26 C.F.R. 401(a)(7),(8), (25),
				26 U.S.C. 414(d),
				(p), (u),
				26 U.S.C.
				401(a),
				414(d),
				414(p),
				414(u),
				503(b),
				3401(h),
				38 U.S.C.
				4301-4335
NECESSITY, FUNCTION AND CONFORMITY:
				KRS
				161.310(1) requires the
				board of trustees to promulgate administrative regulations for the
				administration of the funds of the retirement system and for the transaction of
				business.
				KRS
				161.716 requires the board of trustees to
				promulgate administrative regulations as are necessary to remove any conflicts
				with federal laws and to protect the interests of the members and survivors of
				the members of the retirement system. Kentucky Teachers' Retirement System
				shall administer the Retirement System as a qualified defined benefit plan
				pursuant to
				26 U.S.C.
				401(a) and
				26 U.S.C.
				414(d) of the Internal
				Revenue Code, 26 U.S.C., 26 C.F.R., and such other Internal Revenue Code
				Sections as applicable. This administrative regulation establishes Kentucky
				Teachers' Retirement System's compliance with
				26 U.S.C.
				401(a) and
				503(b)
				in order for the Kentucky Teachers' Retirement System to maintain its tax
				qualified status as a public defined benefit plan. This administrative
				regulation also includes provisions intended to comply with the Heroes Earnings
				Assistance and Relief Tax Act of 2008, "HEART Act". This administrative
				regulation adds provisions that have been required as part of the determination
				letter process regarding vested benefits.
Section
			 1. Compliance with
			 26 U.S.C.
			 401(a)(7) and (8) for
			 Vesting and Forfeitures.
(1) A plan member
			 shall be 100 percent vested in the member's accumulated contributions at all
			 times.
(2)
(a) In conformity with
			 26 U.S.C.
			 401(a)(8), a forfeiture of
			 benefits by a member or former member of the plan shall not be used to pay
			 benefit increases.
(b) Forfeitures
			 shall be used to reduce employer contributions.
(3) Upon termination or partial termination
			 of the Kentucky Teachers' Retirement System, or the complete discontinuance of
			 contributions, a member shall have a nonforfeitable interest in his accrued
			 benefit to the extent funded.
(4)
			 In order to comply with Internal Revenue Service interpretations, subject to
			 the provisions of
			 KRS
			 161.470, a member shall have a nonforfeitable
			 interest in his accrued benefit at attainment of age sixty (60) with the
			 completion of five (5) years of service.
(5) Subject to the provisions of
			 KRS
			 161.470, a member who completes at least five
			 (5) years of service and terminates employment shall be vested in his accrued
			 benefit and shall be entitled to that benefit upon the attainment of normal
			 retirement age, which is age sixty (60), unless the member withdraws his
			 accumulated contributions.