TITLE 34. PUBLIC FINANCE

PART 5. TEXAS COUNTY AND DISTRICT RETIREMENT SYSTEM

CHAPTER 109. DOMESTIC RELATIONS ORDERS

(Editor’s Note: Due to a typographical editing error in the proposed rulemaking notice, the word "rule" was mistakenly omitted from paragraph (9) of §109.14 as published in the October 14, 2016, issue of the Texas Register (41 TexReg 8168). For the purpose of clarity, that section is being republished in this issue as originally submitted by the Texas County and District Retirement System.)

The Texas County and District Retirement System ("TCDRS") adopts amendments to §109.2 and adopts the repeal of §109.6 concerning domestic relation orders without changes to the proposed text as published in the October 14, 2016 issue of the Texas Register (41 TexReg 8168 ). The text of the rules will not be republished. The amendments to §109.12 is adopted with changes to the proposed text as published in the October 14, 2016, issue of the Texas Register (41 TexReg 8168) and the text of the rule will be republished. As previously noted, §109.14 will be republished for the purpose of clarification.

This rulemaking implements §841.0091 of the Texas Government Code, which provides that the TCDRS Board may adopt rules to allow the TCDRS System to split a member's accrued benefit into two separate benefit accounts upon the acceptance of a qualified domestic relations order. Under the current rules, the ex-spouse of a member ("alternate payee") is linked to the member's account and may not commence a distribution unless and until the member commences a benefit or dies. Under the adopted rulemaking, a separate account is created for the alternate payee and the alternate payee may commence the benefit awarded to him independently of the action by the member.

The adopted amendment to §109.2 defines the term Vested.

The adopted repeal of §109.6 removes unnecessary language concerning the contents of a qualified domestic relations order.

The adopted amendment to §109.12 specifies when an alternate payee is eligible to receive the benefit awarded under the qualified domestic relations order and what form of benefit is available to the alternate payee. In addition, the amendment defines the rights of an alternate payee's beneficiary should the alternate payee die before commencing a benefit. The change to the amendment from the text as proposed provides that the rule applies to qualified domestic relations orders filed with the system after January 1, 2018.

The adopted amendment to §109.14 makes conforming changes as required by the new language adopted in §109.12 concerning the timing and form of the distribution to the alternate payee, and provides that all distributions must be made in accordance with federal tax law.

The Board received no comments, written or otherwise, regarding the adoption of the amendments. These amendments are effective January 1, 2018.

No other statutes, articles, or codes are affected by these adoptions.

34 TAC §109.2

The amendments are adopted under the Government Code, §804.003(n) and §841.0091, which authorize the Board of Trustees to adopt rules to implement Chapter 804 and to divide a member's accrued benefit into two separate benefits that, in combination at the time of division, are actuarially equivalent to the undivided accrued benefit.

The Government Code, §841.0091 is affected by these adopted amendments.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on April 11, 2017.

TRD-201701536

Ann McGeehan

General Counsel

Texas County and District Retirement System

Effective date: January 1, 2018

Proposal publication date: October 14, 2016

For further information, please call: (512) 637-3247


34 TAC §109.6

The repeal is adopted under the Government Code, §804.003(n) and §841.0091, which authorize the Board of Trustees to adopt rules to implement Chapter 804 and to divide a member's accrued benefit into two separate benefits that, in combination at the time of division, are actuarially equivalent to the undivided accrued benefit.

The Government Code, §841.0091 is affected by this repeal.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on April 11, 2017.

TRD-201701539

Ann McGeehan

General Counsel

Texas County and District Retirement System

Effective date: January 1, 2018

Proposal publication date: October 14, 2016

For further information, please call: (512) 637-3247


34 TAC §109.12

The amendments are adopted under the Government Code, §804.003(n) and §841.0091, which authorize the Board of Trustees to adopt rules to implement Chapter 804 and to divide a member's accrued benefit into two separate benefits that, in combination at the time of division, are actuarially equivalent to the undivided accrued benefit.

The Government Code, §841.0091 is affected by these adopted amendments.

§109.12.Payments to Alternate Payees.

(a) At any time after a qualified domestic relations order is filed and approved by the system, the alternate payee may withdraw in a lump sum the accumulated contributions attributable to the interest awarded to the alternate payee by the qualified domestic relations order.

(b) The alternate payee may commence a life annuity calculated in accordance with the terms of the plan and based on the interest awarded to such alternate payee at such time when the participant:

(1) is eligible to retire;

(2) commences a disability retirement;

(3) dies and was eligible for a survivor death benefit under §844.407 of the Government Code; or

(4) has attained the age at which the participant would have been eligible to retire, if the participant withdrew his or her account and was vested at the time of withdrawal.

(c) An alternate payee may commence an annuity under subsection (b)(1) of this section even if the participant has not retired or under subsection (b)(4) even if the participant is not eligible for an annuity benefit.

(d) If the participant dies before commencing a benefit, and the participant was eligible for a survivor annuity under §844.407 of the Government Code, then the alternate payee may commence an annuity under subsection (b)(3) or withdraw the accumulated contributions awarded under the qualified domestic relations order.

(e) If the participant dies before commencing a benefit, and the participant was not eligible for a survivor annuity death benefit under §844.407 of the Government Code, then the alternate payee may withdraw the accumulated contributions associated with the interest awarded under the qualified domestic relations order.

(f) The alternate payee must commence a distribution when the participant attains age 70 1/2 or when the alternate payee attains age 70 1/2, whichever is earlier. If the participant is still a depositing member and not vested, then the alternate payee is not required to commence an annuity or take a withdrawal. If the participant is vested when a mandatory distribution is required, the alternate payee is eligible for an annuity benefit.

(g) If the alternate payee dies before commencing a benefit, and the participant is eligible for a survivor annuity benefit under §844.407 of the Government Code or has commenced a disability retirement, then the alternate payee's beneficiary must commence a survivor annuity pursuant to §844.407 that is actuarially equivalent to the deceased alternate payee's benefit awarded under the qualified domestic relations order.

(h) If the alternate payee dies before commencing a benefit and the participant is not eligible for a survivor benefit under §844.407 of the Government Code, then the alternate payee's beneficiary is eligible for a benefit equal to the accumulated contributions awarded to the alternate payee at the time of the alternate payee's death.

(i) If the alternate payee dies after commencing a life annuity, then the alternate payee's beneficiary may be eligible for a lump sum payment equal to the difference of the aggregate annuity payments made to the alternate payee, less the accumulated contributions associated with the interest awarded to the alternate payee, if any.

(j) Subsections (a) and (b) of this section will apply to all domestic relations orders approved in accordance with this chapter after January 1, 2018, and to such domestic relations orders approved prior to that date as are construed to provide for such an annuity or withdrawal.

(k) If a qualified domestic relations order is received by the system after the participant begins receiving a retirement annuity, the system shall divide the annuity into two single life annuities; one payable to the alternate payee and the other payable to the participant in accordance with the order and the rules of the plan. The system shall compute the two single life annuities by determining the actuarial present value of participant's current annuity as of the date that the system has approved the order, and creating an annuity payable to the alternate payee based on the actuarial present value of participant's current annuity awarded under the order to the alternate payee and creating a second life annuity payable to participant based on the remaining actuarial present value of participant's current annuity. Payments to the participant and to the alternate payee cease upon their respective deaths.

(l) If a qualified domestic relations order is received by the system after the participant begins receiving a retirement annuity under which participant chose a dual life option, or a guaranteed term option and the term has not expired, and designated a person other than the alternate payee as beneficiary, then the system, in computing the two single life annuities to be paid to the participant and alternate payee respectively, shall first calculate the actuarial present value of the participant's current annuity that is not attributable to the beneficiary as of the date that the system has approved the order. The interest of the beneficiary in the participant's current retirement annuity will not be affected by the division of benefits. The actuarial present value of the participant's current annuity that is not attributed to the beneficiary is then divided into two single life annuities. The single life annuity payable to alternate payee is based on the actuarial present value of participant's current annuity not attributable to the beneficiary awarded under the order to the alternate payee, and the participant's single life annuity is computed based on the remaining actuarial present value of participant's current annuity not attributable to the beneficiary.

(m) The mortality assumption for alternate payees for determining the actuarial equivalent of a benefit payable to an alternate payee shall be the same as the mortality assumption for beneficiaries as set forth in §103.1 of this title (relating to Actuarial Tables) with regard to service retirements.

(n) If participant's employer grants a cost of living adjustment pursuant to the terms of the plan, and if the alternate payee has commenced an annuity, then the alternate payee is eligible to receive a cost of living adjustment to his or her annuity.

(o) Notwithstanding any other provision of this chapter, all distributions made under this chapter must be determined and made in accordance with §401(a) of the Internal Revenue Code, including but not limited to §401(a)(9); and §415.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on April 11, 2017.

TRD-201701537

Ann McGeehan

General Counsel

Texas County and District Retirement System

Effective date: January 1, 2018

Proposal publication date: October 14, 2016

For further information, please call: (512) 637-3247


34 TAC §109.14

The amendments are adopted under the Government Code, §804.003(n) and §841.0091, which authorize the Board of Trustees to adopt rules to implement Chapter 804 and to divide a member's accrued benefit into two separate benefits that, in combination at the time of division, are actuarially equivalent to the undivided accrued benefit.

The Government Code, §841.0091 is affected by these adopted amendments.

§109.14.Provisions Incorporated by Reference.

An order on the form set forth in §109.13 of this title (relating to Form of Qualified Domestic Relations Order) expressly incorporates all of the following by reference.

(1) The order shall not be interpreted in any way to require the Plan to provide any type or form of benefit or any option not otherwise provided under the Plan.

(2) The order shall not be interpreted in any way to require the Plan to provide increased benefits determined on the basis of actuarial value.

(3) The order shall not be interpreted in any way to require the Plan to pay any benefits to an/any Alternate Payee named in the order which are required to be paid to another alternate payee under another order previously determined to be a qualified domestic relations order.

(4) If the Plan provides for a reduced benefit upon "early retirement," the order shall be interpreted to require that, in the event of Participant's retirement before normal retirement age, the benefits payable to Alternate Payee shall be reduced in a proportionate amount.

(5) The order shall not be interpreted to require the designation of a particular person as the recipient of benefits in the event of Participant's death, or to require the selection of a particular benefit payment plan or option.

(6) In the event that, after the date of the order, the amount of any benefit otherwise payable to Participant is increased as a result of amendments to the law governing the Plan, Alternate Payee shall receive a proportionate part of such increase unless such an order would disqualify the order under the rules the Plan has adopted with regard to qualified domestic relations orders.

(7) In the event that, after the date of the order, the amount of any benefit otherwise payable to Participant is reduced by law, the portion of benefits payable to Alternate Payee shall be reduced in a proportionate amount.

(8) If, as a result of Participant's death after the date of the order, a payment is made by the Plan to Participant's estate, surviving spouse, or designated beneficiaries, which payment does not relate in any way to Participant's length of employment or accumulated contributions with the Plan, but rather is purely a death benefit payable as a result of employment or retired status at the time of death, no portion of such payment is community property, and Alternate Payee shall have no interest in such death benefit.

(9) If the board of trustees of the Plan has by rule provided that, in lieu of paying an alternate payee the interest awarded by a qualified domestic relations order, the Plan may pay the alternate payee an amount that is the actuarial equivalent of an annuity payable in equal monthly installments for the life of the alternate payee, or a lump sum, then and in that event the Plan is authorized to make such a payment under the order.

(10) All payments to Alternate Payee under the order shall terminate upon Alternate Payee's death, and Alternate Payee's beneficiary may be entitled to a benefit under §109.12.

(11) All benefits payable under the Plan, other than those payable to Alternate Payee as provided in a qualified domestic order, shall be payable to Participant in such manner and form as Participant may elect in his/her sole and undivided discretion, subject only to Plan requirements.

(12) Alternate Payee must report any retirement payments received on any applicable income tax return, and must promptly notify the Plan of any changes in Alternate Payee's mailing address. The Plan is authorized to issue a Form 1099R on any direct payment made to Alternate Payee.

(13) Participant is designated a constructive trustee for receiving any retirement benefits under the Plan that are due to Alternate Payee but paid to Participant. Participant must pay the benefit defined in this paragraph directly to Alternate Payee within three days after receipt by Participant. All payments made directly to Alternate Payee by the Plan shall be a credit against this order.

(14) The Court retains jurisdiction to amend the order so that it will constitute a qualified domestic relations order under the Plan even though all other matters incident to this action or proceeding have been fully and finally adjudicated.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on April 11, 2017.

TRD-201701538

Ann McGeehan

General Counsel

Texas County and District Retirement System

Effective date: January 1, 2018

Proposal publication date: October 14, 2016

For further information, please call: (512) 637-3247