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A BILL TO BE ENTITLED
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AN ACT
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relating to plan qualification provisions for the Teacher |
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Retirement System of Texas. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 822.201, Government Code, is amended by |
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amending Subsection (b) and adding Subsection (b-1) to read as |
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follows: |
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(b) "Salary and wages" as used in Subsection (a) means: |
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(1) normal periodic payments of money for service the |
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right to which accrues on a regular basis in proportion to the |
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service performed; |
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(2) amounts by which the member's salary is reduced |
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under a salary reduction agreement authorized by Chapter 610; |
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(3) amounts that would otherwise qualify as salary and |
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wages under Subdivision (1) but are not received directly by the |
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member pursuant to a good faith, voluntary written salary reduction |
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agreement in order to finance payments to a deferred compensation |
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or tax sheltered annuity program specifically authorized by state |
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law or to finance benefit options under a cafeteria plan qualifying |
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under Section 125 of the Internal Revenue Code of 1986, if: |
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(A) the program or benefit options are made |
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available to all employees of the employer; and |
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(B) the benefit options in the cafeteria plan are |
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limited to one or more options that provide deferred compensation, |
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group health and disability insurance, group term life insurance, |
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dependent care assistance programs, or group legal services plans; |
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(4) performance pay awarded to an employee by a school |
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district as part of a total compensation plan approved by the board |
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of trustees of the district and meeting the requirements of |
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Subsection (e); |
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(5) the benefit replacement pay a person earns under |
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Subchapter H, Chapter 659, except as provided by Subsection (c); |
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(6) stipends paid to teachers in accordance with |
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Section 21.410, 21.411, 21.412, or 21.413, Education Code; |
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(7) amounts by which the member's salary is reduced or |
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that are deducted from the member's salary as authorized by |
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Subchapter J, Chapter 659; |
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(8) a merit salary increase made under Section 51.962, |
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Education Code; |
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(9) amounts received under the relevant parts of the |
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awards for student achievement program under Subchapter N, Chapter |
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21, Education Code, the educator excellence awards program under |
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Subchapter O, Chapter 21, Education Code, or a mentoring program |
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under Section 21.458, Education Code, that authorized compensation |
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for service; [and] |
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(10) salary amounts designated as health care |
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supplementation by an employee under Subchapter D, Chapter 22, |
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Education Code; and |
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(11) to the extent required by Sections 3401(h) and |
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414(u)(2), Internal Revenue Code of 1986, differential wage |
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payments received by an individual from an employer on or after |
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January 1, 2009, while the individual is performing qualified |
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military service as defined by Section 414(u), Internal Revenue |
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Code of 1986. |
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(b-1) An individual receiving wages to which Subsection |
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(b)(11) applies is considered employed by the employer for purposes |
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of this section, and the differential wage payment is considered |
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earned compensation. The retirement system shall determine how |
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contributions attributable to differential wage payments are made. |
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SECTION 2. Section 824.403, Government Code, is amended to |
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read as follows: |
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Sec. 824.403. BENEFITS ON DEATH OF INACTIVE MEMBER. (a) |
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Except as provided by Section 824.401, the designated beneficiary |
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of a member who dies while absent from service is eligible to |
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receive: |
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(1) the same benefits payable under Section 824.402 or |
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824.404 if the member's absence from service was: |
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(A) because of sickness, accident, or other cause |
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the board of trustees determines involuntary; |
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(B) in furtherance of the objectives or welfare |
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of the public school system; or |
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(C) during a time when the member was eligible to |
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retire or would become eligible without further service before the |
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fifth anniversary of the member's last day of service as a member; |
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or |
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(2) an amount equal to the accumulated contributions |
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in the member's individual account in the member savings account, |
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if the member's absence from service does not satisfy a requirement |
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of Subdivision (1). |
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(b) To the extent required by Section 401(a)(37), Internal |
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Revenue Code of 1986, the designated beneficiary of a member who |
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died on or after January 1, 2007, while the member was performing |
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qualified military service as defined by Section 414(u), Internal |
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Revenue Code of 1986, is eligible to receive additional benefits to |
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the same extent as if the member had resumed employment and been |
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employed at the time of death. |
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SECTION 3. Section 825.509, Government Code, is amended by |
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adding Subsections (b-1), (e), and (f) and amending Subsections (c) |
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and (d) to read as follows: |
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(b-1) Notwithstanding Subsection (b)(3), with respect to a |
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distribution made on or after January 1, 2002, an otherwise |
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eligible portion of a rollover distribution that consists of |
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after-tax employee contributions not includable in gross income is |
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an eligible rollover distribution for purposes of this section. |
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The eligible portion may be transferred only: |
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(1) to an individual retirement account or annuity |
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described by Section 408(a) or (b), Internal Revenue Code of 1986; |
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(2) to a qualified plan described by Section 403(a), |
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Internal Revenue Code of 1986; |
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(3) for distributions occurring on or after January 1, |
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2007, to a qualified plan described by Section 401(a), Internal |
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Revenue Code of 1986; or |
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(4) to an annuity contract described by Section |
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403(b), Internal Revenue Code of 1986, that agrees to separately |
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account for amounts transferred and earnings on amounts |
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transferred, including for the portion of the distribution that is |
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includable in gross income and the portion of the distribution that |
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is not includable in gross income. |
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(c) An eligible retirement plan under this section |
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includes: |
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(1) [is] an individual retirement account described |
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by Section 408(a), Internal Revenue Code of 1986; |
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(2) [,] an individual retirement annuity described by |
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Section 408(b), Internal Revenue Code of 1986; |
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(3) [,] an annuity plan described by Section 403(a), |
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Internal Revenue Code of 1986; |
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(4) [, or] a qualified trust described by Section |
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401(a), Internal Revenue Code of 1986, that accepts the |
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distributee's eligible rollover distribution; |
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(5) with respect to a distribution made on or after |
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January 1, 2002, a plan eligible under Section 457(b), Internal |
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Revenue Code of 1986, that is maintained by a state, a political |
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subdivision of a state, or an agency or instrumentality of a state |
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or political subdivision of a state that agrees to separately |
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account for amounts transferred into the plan from the retirement |
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system; |
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(6) with respect to a distribution made on or after |
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January 1, 2002, an annuity contract described by Section 403(b), |
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Internal Revenue Code of 1986; or |
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(7) with respect to a distribution made on or after |
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January 1, 2008, a Roth IRA described by Section 408A, Internal |
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Revenue Code of 1986. [However, in the case of an eligible rollover
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distribution to a surviving spouse, an eligible retirement plan
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under this section is an individual retirement account or
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individual retirement annuity.] |
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(d) In this section: |
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(1) "Direct rollover" means a payment by the |
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retirement system to the eligible retirement plan specified by a |
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distributee. |
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(2) "Distributee" means a person who receives an |
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eligible rollover distribution from the retirement system and |
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includes an employee or former employee and, regarding the interest |
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of an employee or former employee, the person's surviving spouse or |
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former spouse who is the alternate payee under a qualified domestic |
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relations order, as defined by Section 414(p), Internal Revenue |
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Code of 1986. With respect to a distribution made on or after |
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January 1, 2007, a distributee includes a beneficiary who: |
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(A) is a designated beneficiary, as defined by |
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Section 401(a)(9)(E), Internal Revenue Code of 1986, of an employee |
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or former employee; and |
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(B) is not the spouse, surviving spouse, or |
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alternate payee of an employee or former employee. |
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(e) A direct trustee-to-trustee transfer on behalf of a |
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distributee beneficiary who is not a spouse is an eligible rollover |
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distribution. A distributee beneficiary who is not a spouse may |
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roll over the distribution only to an individual retirement account |
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or individual retirement annuity that: |
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(1) is established for the purpose of receiving the |
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distribution; and |
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(2) is considered an inherited account or annuity to |
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which Section 401(a)(9)(B), Internal Revenue Code of 1986, applies, |
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except for Section 401(a)(9)(B)(iv). |
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(f) To the extent provided by federal law, a trust |
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maintained for the benefit of one or more designated beneficiaries |
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shall be treated in the same manner as a trust maintained for a |
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designated beneficiary. |
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SECTION 4. This Act takes effect September 1, 2009. |