HB 3347 calls for several minor modifications to plan provisions required for maintaining retirement plan qualification with the Internal Revenue Service for the Teacher Retirement System of Texas (TRS); including benefit eligibilities while performing qualified military service and rollover distribution rules. The provisions of the bill, to be effective September 1, 2009, include the following:

• Expands the definition of “Salary and wages” beginning on January 1, 2009 to include differential wage payments received by an individual from an employer while the individual is performing qualified military service. 

• Specifies that effective with respect to deaths occurring on or after January 1, 2007, while a member is performing qualified military service, the designated beneficiary of a member is eligible to receive any additional benefits that the retirement system would provide if the member had resumed employment and then died. 

• Provides details regarding the types of accounts allowed to receive rollover distribution transfers.

• Expands the list of eligible retirement plans to include the following:
  • A plan eligible under Section 457(b), Internal Revenue Code of 1986
  • An annuity contract described in Section 403(b), Internal Revenue Code of 1986
  • A Roth IRA described in Section 408A, Internal Revenue Code of 1986

• Revises the definition of “Distributee” to include a person’s spouse or former spouse who is the alternate payee under a qualified domestic relations order.  Also, effective January 1, 2007, a distributee includes a nonspouse beneficiary who is a designated beneficiary of the member or retiree under the retirement system and who is not the surviving spouse or alternate payee of the member or retiree.

According to the analysis prepared by the TRS actuarial consultants, the changes in the bill would have no material impact to the actuarial liabilities of TRS.

The analysis and calculations are based on the member data of TRS as of August 31, 2008, the actuarial value of assets updated as of February 28, 2009, and the actuarial assumptions and methods in use as of August 31, 2008 for valuing the actuarial condition of TRS.  Finally, this analysis is based on all other provisions of TRS in effect as of August 31, 2008.

SOURCES:

Actuarial Analysis by W. Michael Carter, FSA, Lewis Ward, Joseph P. Newton, FSA, Gabriel Roeder Smith & Company, Consultants and Actuaries, March 23, 2009.

Actuarial Review by Mr. Martin McCaulay, Deputy Executive Director/Actuary, Pension Review Board, March 24, 2009