Texas Administrative Code › Title 34 - PUBLIC FINANCE › Part 5 - TEXAS COUNTY AND DISTRICT RETIREMENT SYSTEM › Chapter 107 - MISCELLANEOUS RULES › Section 107.4 - Bona Fide Termination of Employment

Current through Reg. 49, No. 28; July 12, 2024
(a)
				Distributions without a bona fide termination of employment are prohibited
				under Texas Government Code, §
									842.110(a)
				and (b). A distribution of benefits to a
				member before there has been a bona fide termination of employment under Texas
				Government Code, §
									842.110(a)
				is an in-service distribution and an operational error which could lead to a
				plan disqualification under the Internal Revenue Code and results in the
				assessment of taxes, back taxes, interest and penalties against the subdivision
				and its participants.
(b) The term
				"employment" under Texas Government Code §
									842.110(a)
				includes service as an employee and service as an appointed or elected
				official.
(c) A person who is
				employed by, or holds an elected or appointed position or office in, a
				subdivision is in active employment and is not separated from service for
				purposes of retirement eligibility and is not eligible to receive a
				distribution of benefits with respect to the subdivision before a complete and
				bona fide termination of employment occurs. A member who has experienced a bona
				fide termination of employment is an inactive member.
(d) Whether a termination of employment is a
				bona fide termination is dependent on the facts and circumstances surrounding
				the termination.
(e) With respect
				to employees of a subdivision, a termination is not a bona fide termination if
				there has not been a complete termination and severance of the
				employer-employee relationship. Failure to strictly follow the employer's
				termination policies, practices, processes and procedures regularly followed by
				the employer suggests that the termination was not bona fide.
(f) A termination is not a bona fide
				termination merely because the period of separation of employment from the
				employer, or separation from service from elected or appointed office, is
				greater than one calendar month. The statutory requirement of a break in
				service of at least one calendar month is a further limitation upon the
				eligibility of a reemployed person to have received a distribution and is in
				addition to, and not in lieu of, the requirement that the termination of
				employment must be a bona fide termination of employment.
(g) Notwithstanding strict adherence to the
				employer's regular employment termination polices, practices, processes and
				procedures or any other facts and circumstances, a termination is not a bona
				fide termination of employment if at the time of termination there is an
				expectation, understanding or agreement, whether express or implied, between
				the employer or employee, or an agent of either, that the termination is or
				will be temporary or that the person will be rehired in the future, whether
				such rehire is:
(1) for the same position or
				a different position;
(2) at a
				greater, lesser, or equivalent level of compensation;
(3) in the same or any other division or
				department of the employer;
(4) as
				a full-time, part-time or temporary employee; or
(5) as an independent contractor performing
				essentially the same services that the individual was performing as an
				employee.