TITLE 34. PUBLIC FINANCE

PART 1. COMPTROLLER OF PUBLIC ACCOUNTS

CHAPTER 10. TRANSPARENCY

SUBCHAPTER A. ANNUAL REPORT OF FINANCIAL INFORMATION BY POLITICAL SUBDIVISION

34 TAC §§10.1 - 10.6

The Comptroller of Public Accounts adopts new §§10.1 - 10.4 concerning definitions; annual local debt report; annual local debt report form; reporting requirements; without changes to the proposed text as published in the October 13, 2017, issue of the Texas Register (42 TexReg 5648). The Comptroller of Public Accounts adopts new §10.5 and §10.6 water district alternative and comptroller procedures with changes to the proposed text as published in the October 13, 2017, issue of the Texas Register (42 TexReg 5648).The new rules will be under Title 34, Part 1, new Chapter 10, Transparency, Subchapter A, Annual Report of Financial Information by Political Subdivision. This new chapter implements the requirements of House Bill 1378, 84th Legislature, 2015, codified under Local Government Code, §140.008. The new rules establish guidelines for the format, submission and web posting and/or web linking of reporting of political subdivisions' required annual debt information, including that of certain districts described in Water Code, Chapter 49.

New §10.1 defines phrases, words and terms describing annual debt reporting for political subdivisions. New §10.2 describes the financial information required in the Annual Local Debt Report to be compiled and reported by political subdivisions in accordance with Local Government Code, §140.008. New §10.3 describes the optional reporting form to be provided by the comptroller and explains how political subdivisions may obtain the form. New §10.4 explains annual debt reporting requirements and report submission options available to political subdivisions. New §10.5 identifies alternative requirements for annual debt reporting applicable to districts as defined in Water Code, Chapter 49. New §10.6 sets forth the comptroller's duties under this subchapter, including requirements that the comptroller receive and post Annual Local Debt Reports and other submitted documents on the comptroller's website and make this information easily searchable by the public.

Written comments on proposed new rule §10.5 were received from one individual. The commenter requested that the comptroller amend subsection (a) of the rule to clarify that a "district" (rather than a "water district") is defined under the statutory provision referenced in the rule. The commenter also requested that the comptroller provide a more specific statutory citation, by replacing the reference to "Water Code, §49.001" with "Water Code, §49.001(1)". The comptroller agrees that the changes suggested by the commenter will improve the rule by providing additional clarity and specificity, and has revised §10.5(a) accordingly. For the same reasons, the comptroller has also made conforming changes to §10.5(a), §10.5(b) and §10.6(c), and adopts these rules with changes to the proposed text as described.

The comptroller has also revised §10.6(c) from the version that was proposed for public comment in order to clarify that the requirement for the comptroller to post on its website certain materials applicable to a district described under Water Code §49.001(1) applies only if the district actually submits those materials to the comptroller in accordance with §10.5. The comptroller acknowledges that a district to which §49.001(1) applies may not elect to avail itself of the reporting method described under §10.5, and may instead prefer to comply with reporting requirements generally applicable to political subdivisions as described in §10.4.

The new subchapter is adopted under Local Government Code, §140.008, Subsections (d), (e), and (h), which authorize the comptroller to adopt rules necessary for the implementation of Local Government Code, §140.008, Subsections (d), (e), (g), and (h).

The new subchapter implements Local Government Code, §140.008.

§10.5.Water District Alternative.

(a) A district as defined under Water Code, §49.001(1), complies with the requirements of this subchapter if the district submits to the comptroller via web upload on an annual basis and within 180 days of the end of the most recently completed fiscal year one of the following:

(1) an annual financial report as described by Water Code, Chapter 49, Subchapter G;

(2) an audit report as described by Water Code, Chapter 49, Subchapter G; or

(3) an affidavit of financial dormancy as described by Water Code, Chapter 49, Subchapter G.

(b) For Fiscal Year 2016 and Fiscal Year 2017, a district shall submit the information described in subsection (a) of this section by the later of 180 days after the end of the respective fiscal year or 180 days after the effective date of this rule.

§10.6.Comptroller Procedures.

(a) The comptroller shall receive the Annual Local Debt Report from political subdivisions (to include municipalities with a population of less than 15,000 and counties with a population of less than 35,000) electing to provide such information under §10.4(a)(1) of this title (relating to Reporting Requirements).

(b) The comptroller shall post each Annual Local Debt Report on the annual local debt reporting section of the comptroller's Internet website, making each political subdivision's report easily located via a search function.

(c) The comptroller shall post on the annual local debt reporting section of its Internet website, if submitted by a district as defined under Water Code, §49.001(1): an annual financial report, an affidavit of financial dormancy, or an audit report.

(d) The comptroller is committed to making its website and all electronic and information resources accessible to persons with disabilities by applying principles of accessibility and usability design to its information collection and publication practices. Accordingly, the comptroller may require documents submitted to it under this section to comply with the accessibility standards and specifications described in 1 TAC Chapters 206 and 213.

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 December 14, 2017.

TRD-201705153

Lita Gonzalez

General Counsel

Comptroller of Public Accounts

Effective date: January 3, 2018

Proposal publication date: October 13, 2017

For further information, please call: (512) 475-2220


PART 3. TEACHER RETIREMENT SYSTEM OF TEXAS

CHAPTER 29. BENEFITS

SUBCHAPTER H. FORFEITURES OF ACCRUED BENEFITS

34 TAC §29.90, §29.91

The Teacher Retirement System of Texas (TRS) adopts new §29.90, concerning forfeiture of certain benefits due to criminal offense, and §29.91, concerning restoring benefits after a conviction is overturned. The new rules are adopted without changes to the proposed text as published in the November 10, 2017, issue of the Texas Register (42 TexReg 6339).

The adopted new rules implement legislation enacted by the 85th Legislature (Regular Session, 2017). Adopted new §29.90 addresses Senate Bill 7, which requires that if a defendant who is or was an employee of a public primary or secondary school is convicted of a qualifying felony of which the victim is a student, the defendant forfeits the right to receive any service retirement benefits payable on that person's behalf by TRS. Adopted new §29.91 addresses a requirement in the same bill providing that benefits must be restored to the defendant when the conviction is overturned on appeal or the defendant meets the requirements for innocence under §103.001(a)(2), Civil Practice and Remedies Code. The requirements of the bill take effect on the effective date of the adopted rules. Senate Bill 7 requires the Board of Trustees to adopt rules necessary to implement the new section of the law, §824.009, Government Code, no later than December 31, 2017.

Senate Bill 7 added §824.009, Government Code, to the TRS plan terms. The new statute addresses when a person who is a member or retiree of TRS forfeits the right to receive service retirement benefits by being convicted of a felony under the following sections of the Penal Code: §21.02, concerning continuous sexual abuse of young child or children; §21.12, concerning improper relationship between educator and student; §22.011, concerning sexual assault; or §22.021, concerning aggravated sexual assault, of which a student is the victim and the crime occurred while the defendant was employed by a TRS-covered employer. The adopted new rules detail how TRS will comply with the new statute.

Adopted new §29.90, concerning the forfeiture of certain benefits due to a criminal offense, requires that, upon receipt of notice of judgment from a state or federal district court, a district attorney or U.S. Attorney, or the defendant's employer that includes the information required for TRS to determine that the defendant's benefits are forfeited under §824.009, TRS will terminate the distribution of monthly service retirement benefits to the defendant if the defendant has retired and refund the balance of accumulated contributions in the member's account at the time of retirement or refund the balance of accumulated contributions in the member account to the defendant if he/she has not retired. Because the statute requires that benefits payable to an alternate payee under certain domestic relations orders are not affected by the defendant's ineligibility to receive a retirement annuity, the adopted new rule addresses how TRS will ensure that the alternate payee receives the benefits due under certain qualified domestic relations order (QDRO).

Adopted new §29.91, concerning restoring forfeited benefits after a conviction is overturned, addresses how benefits will be restored to a person whose conviction identified in §29.90 is overturned or who meets the requirements for innocence under §103.001(a)(2), Civil Practice and Remedies Code. The new rule addresses how annuity payments that were forfeited will be restored to the member and the amount of the benefit payment if the annuities were divided based on the terms of a QDRO. It also distinguishes between annuities that were forfeited in the past and annuities that are due in the future. Annuities that were forfeited in the past must immediately be paid to the person along with interest, while annuities that are due in the future may be paid only upon repayment by the person of the accumulated contributions distributed on his/her behalf under §29.90. The new rule also addresses what benefits will be paid to certain alternate payees. Because Senate Bill 7 specifically addresses QDROs in place before September 1, 2017, and QDROs entered pursuant to §824.009, but does not address QDROs entered after September, 1 2017, but not pursuant to §824.009, there is a difference in how payments to alternate payees under the different QDROs are affected.

TRS received no comments on the adopted new rules.

New §29.90 and §29.91 are adopted under the authority of §824.009, Government Code, as added by Senate Bill 7, 85th Legislature (Regular Session), 2017, concerning certain members and annuitants ineligible for retirement annuities, and resumption or restoration of eligibility, which requires TRS to adopt rules and procedures to implement §824.009.

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 December 15, 2017.

TRD-201705210

Brian K. Guthrie

Executive Director

Teacher Retirement System of Texas

Effective date: January 4, 2018

Proposal publication date: November 10, 2017

For further information, please call: (512) 542-6506


CHAPTER 41. HEALTH CARE AND INSURANCE PROGRAMS

SUBCHAPTER A. RETIREE HEALTH CARE BENEFITS (TRS-CARE)

34 TAC §§41.1, 41.5, 41.7, 41.12

The Teacher Retirement System of Texas (TRS or system) adopts amendments to §41.1, concerning Initial Enrollment Periods for the Health Benefit Program under the Texas Public School Retired Employees Group Benefits Act (TRS-Care), §41.5, concerning Payment of Contributions, and §41.7, concerning Effective Date of Coverage. TRS also adopts new §41.12 concerning Eligibility for the Alternative Plan for Medicare-Eligible Participants. The amended rules and the new rule are adopted without changes to the proposed text as published in the November 10, 2017, issue of the Texas Register (42 TexReg 6343).

The adopted amended rules and the adopted new rule all concern TRS-Care, the health benefit program TRS administers for eligible retired public school employees and their eligible dependents. The adopted amendments to §§41.1, 41.5, and 41.7 and the adopted new §41.12 affect Chapter 1575, Insurance Code, which provides for the establishment and administration of TRS-Care.

The adopted amendments and new rule implement legislation enacted by the 85th Legislature (Regular Session, 2017).

The adopted changes to subsections (c) and (d) of §41.1 address changes to the TRS-Care plans that will take effect in early January of 2018. For the sake of consistency, the adopted changes to subsection (c) provide that the initial enrollment period for surviving spouses and surviving dependent children of a deceased retiree shall be similar to the initial enrollment periods of an eligible service retiree (under subsection (a)) and an eligible disability retiree (under subsection (b)) of this rule. The same can be said of the adopted changes to subsection (d) with regard to the proposed initial enrollment period for surviving spouses and surviving dependent children of a deceased active member. TRS-Care will continue its current practice of providing advance written notice of these initial enrollment periods to surviving spouses and surviving dependent children that are known to TRS.

The adopted changes to subsections (e) and (h) of §41.5 address upcoming changes to the TRS-Care plans that are being implemented in response to recent legislation, including House Bill 3976 (85th Legislature, Regular Session, 2017). Beginning on January 1, 2018, there will no longer be a free TRS-Care plan (i.e., TRS-Care 1) and there will no longer be two other levels of coverage; the TRS-Care 2 and TRS-Care 3 plans are being eliminated. Accordingly, failure to timely pay the full amount of a required contribution for coverage of a retiree or a surviving spouse will result in termination of coverage under TRS-Care. TRS will no longer have the option to downgrade the retiree's or surviving spouse's coverage to a free TRS-Care plan. TRS-Care will continue to work with retirees and surviving spouses over a period of months in an effort to bring their balances current before termination of coverage occurs.

The reference to §1575.1581, Insurance Code in §41.7(b) is adopted for deletion because recent legislation repealed that statute effective January 1, 2018.

The adopted substantive changes to §41.7(d) address upcoming changes to the TRS-Care plans that are being implemented in response to recent legislation. As noted above, beginning on January 1, 2018, there will no longer be multiple levels of coverage in TRS-Care. Therefore, the reference to "level[s]" of coverage" is no longer appropriate. Also, with upcoming eligibility requirements, the ability of surviving spouses and surviving dependent children to remain in a given plan will be subject to the applicable eligibility requirements of the given plan.

The adopted substantive changes to §41.7(h) are in response to recent legislation which, effective January 1, 2018, replaces the current Age 65 enrollment opportunity with a broader, new Age 65 enrollment opportunity. The effective date of coverage will be (1) the first day of the month following the month of the retiree's or surviving spouse's 65th birthday if the application for coverage is received before or during the month of the retiree's or surviving spouse's 65th birthday; or (2) the first day of the month following the receipt of the application if the application for coverage is received after the month of the retiree's or surviving spouse's 65th birthday but within the enrollment period.

In §41.7(i), the adopted addition of the two references to Medicare Part B is needed because, effective January 1, 2018, a participant will be eligible for the Medicare Advantage plan if the participant only has Medicare Part B. Accordingly, TRS-Care will begin adjusting the costs of coverage for participants upon receiving proof of enrollment not only in Medicare Part A but also in Medicare Part B. The re-lettering of the references to the last three subsections of §41.7 result from the adopted elimination of §41.7(j), discussed immediately below.

Current §41.7(j) is adopted for deletion because, as noted above, beginning on January 1, 2018, there will no longer be different levels of coverage (i.e., plans with reduced levels of coverage). The three existing levels of coverage, embodied in the TRS-Care 1, TRS-Care 2, and TRS-Care 3 plans, are being eliminated at the end of this current plan year.

In new, re-lettered §41.7(j), the adopted changes provide that all retirees, surviving spouses, and surviving dependent children may cancel their TRS-Care coverage by submitting an appropriate notice of cancellation form. Cancellations will be effective on the later of: (1) the first day of the month following TRS-Care's receipt of the completed notice of cancellation form; or (2) the date requested by the retiree, surviving spouse, or surviving dependent child on the completed notice of cancellation form received by TRS-Care. The removal of the "fourteen day" retroactive cancellation option will streamline TRS-Care operations without a substantial impact upon participants.

In response to recent legislation, TRS will begin offering a new "Alternative Plan" on January 1, 2018. Adopted new §41.12, entitled Eligibility for the Alternative Plan for Medicare-Eligible Participants, establishes the eligibility criteria for enrollment in this plan. An individual will be eligible to enroll in the Alternative Plan if: (1) the individual is eligible to enroll in TRS-Care; and (2) the individual is eligible for Medicare and either: (i) does not have reasonable access to a particular provider, as determined by TRS; or (ii) as of January 1, 2018, does not have Medicare Part B coverage and the individual's ability to obtain Medicare Part B coverage is cost prohibitive, as determined by TRS.

TRS received no comments on the adopted amended rules or the adopted new rule.

The amendments to §§41.1, 41.5, 41.7, and new §41.12 are adopted under the authority of §1575.052, Insurance Code, which authorizes the TRS Board of Trustees to adopt rules it considers reasonably necessary to implement and administer the TRS-Care program.

The adopted amendments to §§41.1, 41.5, 41.7, and new §41.12 affect Chapter 1575, Insurance Code, which provides for the establishment and administration of TRS-Care.

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 December 15, 2017.

TRD-201705211

Brian K. Guthrie

Executive Director

Teacher Retirement System of Texas

Effective date: January 4, 2018

Proposal publication date: November 10, 2017

For further information, please call: (512) 542-6524


PART 4. EMPLOYEES RETIREMENT SYSTEM OF TEXAS

CHAPTER 63. BOARD OF TRUSTEES

34 TAC §63.17

The Employees Retirement System of Texas (ERS) adopts an amendment to 34 Texas Administrative Code (TAC) Chapter 63, concerning Board of Trustees, §63.17 (Advisory Committees) without changes to the proposed text as published in the October 20, 2017, issue of the Texas Register (42 TexReg 5837). The amendment was approved by the ERS Board of Trustees at its December 13, 2017, meeting. This section will not be republished.

ERS adopts §63.17(c) to comply with Recommendation 2.2 of the Texas Sunset Advisory Commission (Sunset Commission) Staff Report titled "ERS should establish an advisory committee to obtain regular stakeholder and expert input on benefits."

Section 63.17 (Advisory Committees) is amended to add subsection (c) for the creation of the new Group Benefits Advisory Committee (GBAC) by the ERS Board of Trustees (Board) in accordance with the management recommendation of the Sunset Commission. Section 63.17(c) allows the Board to determine the number of members on the GBAC, the qualifications for membership, and reporting and remuneration standards for the GBAC, if any.

No comments were received on the proposed amendment.

The amendment is adopted under the Texas Insurance Code, §1551.052, which authorizes the Board to adopt rules to implement group benefits, and Texas Government Code, §815.509, which authorizes the Board to establish advisory committees as it considers necessary.

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 December 13, 2017.

TRD-201705137

Paula A. Jones

Deputy Executive Director and General Counsel

Employees Retirement System of Texas

Effective date: January 2, 2018

Proposal publication date: October 20, 2017

For further information, please call: (877) 275-4377


PART 6. TEXAS MUNICIPAL RETIREMENT SYSTEM

CHAPTER 127. MISCELLANEOUS RULES

34 TAC §127.7, §127.10

The Board of the Trustees ("Board") of the Texas Municipal Retirement System ("TMRS" or "System") adopts amendments to 34 TAC §127.7, Rollovers of Plan Distributions, and new 34 TAC §127.10, Conformity with Internal Revenue Code: Additional Provisions. Section 127.7 is adopted with changes to correct a typographical error and will be republished. New §127.10 is adopted without changes to the proposed text as published in the October 27, 2017, issue of the Texas Register (42 TexReg 5989) and will not be republished.

Upon review of the published proposed rule amendments, TMRS determined that the proposed amendment to §127.7(c), as published, contained a typographical error. In the published text, in the last sentence of §127.7(c) the phrase "Internal Revue Code §408A(b)" contained a typographical error. In the final text adopted by the TMRS Board, the word "Revue" has been corrected to read "Revenue".

In January 2016, TMRS filed an application with the Internal Revenue Service ("IRS") to obtain a current favorable Determination Letter on the terms of the TMRS plan documents, which include, but are not limited to, the statutes found in Title 8, Subtitle G, Chapters 851 through 855 of the Texas Government Code (the "TMRS Act") and the administrative rules found in TAC Title 34, Part 6, Chapters 121 through 129 (the "TMRS Rules"). The draft language of the amendment to §127.7 and new §127.10 was submitted to the IRS with the Determination Letter application and was designed to ensure compliance with applicable qualified plan document requirements under the Internal Revenue Code of 1986, as amended (the "Code"). In June 2017, the IRS issued a favorable Determination Letter to TMRS, subject to the adoption of the draft rule amendment and new rule submitted with the application.

The adopted amendment to §127.7 and new §127.10 contain provisions required by the Code and the IRS in order for TMRS to maintain the tax-qualified plan status of the System and rely on the favorable IRS Determination Letter. The adopted amendment to §127.7 modifies subsection (c) to add language specifying that certain eligible rollover distributions from TMRS can be paid in a direct trustee-to-trustee transfer to a Roth IRA. Section 127.7 contains provisions relating to the rollover of certain distributions by TMRS in accordance with Code requirements. The federal Pension Protection Act of 2006 ("PPA") amended certain Code provisions relating to rollovers, including amendments to permit plan participants to make direct rollovers to a Roth IRA. Section 127.7 was amended in 2011 to reflect the PPA amendments to rollover provisions, and TMRS has been operating in accordance with the PPA rollover provisions, but the IRS indicated it wanted §127.7 to be further amended to also expressly refer to direct trustee-to-trustee transfers to a Roth IRA.

The adopted new §127.10 contains provisions that clarify and provide that: (i) TMRS is a governmental plan within the definition of Code §414(d); (ii) as a governmental plan, TMRS is subject to the Code's pre-ERISA vesting rules; (iii) for purposes of the TMRS Act, employees include a participating municipality's common law employees but exclude leased employees under Code §414(n); (iv) contributions made to TMRS may be returned only in very limited circumstances allowed by the Code and applicable regulations; (v) buybacks under the TMRS Act will comply with Code §415(k)(3) and its regulations, and any "permissive service credit" (as defined in Code) purchases will comply with Code §415(n) and its regulations; (vi) TMRS will comply with Code §401(a)(31)(B), relating to the automatic rollover of certain mandatory distributions; and (vii) the Section includes specific cross-references to Code §401(a)(9) and §401(a)(9)(G) and TMRS's ability, as a governmental plan, to rely on a reasonable and good faith interpretation of Code §401(a)(9).

The adopted amendment of 34 TAC §127.7 and the adopted new §127.10 implement the authority granted to the Board in Texas Government Code §§855.102, 852.103, 854.003, and 855.607, as described below. Pursuant to Texas Government Code §855.607, rules adopted by the Board relating to plan qualification issues are considered part of the plan.

Summary of comments: No comments were received.

Statutory Authority: The adopted amendment and new rule implement the authority granted under the following provisions of the TMRS Act: (i) Texas Government Code §855.102, which allows the Board to adopt rules it finds necessary or desirable for the efficient administration of the System; (ii) Texas Government Code §852.103, which authorizes the Board to adopt rules to implement §852.103 as it relates rollover distributions permitted under the Internal Revenue Code; (iii) Texas Government Code §854.003, which authorizes the Board to adopt rules it determines necessary to comply with the distribution requirements of Internal Revenue Code §401(a)(9); and (iv) Texas Government Code §855.607, which authorizes the Board to adopt rules that modify the plan to the extent the Board considers necessary for the System to be a qualified plan.

Cross-reference to Statutes: Texas Government Code, Chapters 852, 854, and 855

§127.7.Rollovers of Plan Distributions.

(a) A distributee may elect, at the time and in the manner prescribed by the Board of Trustees, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover.

(b) The terms "eligible rollover distribution" and "eligible retirement plan" are defined as follows:

(1) An "eligible rollover distribution" is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include the following:

(A) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of ten (10) years or more;

(B) any distribution to the extent such distribution is required under §401(a)(9) of the Internal Revenue Code of 1986, as amended from time to time (the "Internal Revenue Code"); or

(C) the portion of any distribution that is not includible in gross income.

(2) An "eligible retirement plan" includes:

(A) an individual retirement account described in Internal Revenue Code §408(a);

(B) an individual retirement annuity described in Internal Revenue Code §408(b);

(C) an annuity plan described in Internal Revenue Code §403(a);

(D) a qualified trust described in Internal Revenue Code §401(a) that accepts the distributee's eligible rollover distribution;

(E) an annuity contract described in Internal Revenue Code §403(b);

(F) an eligible plan under Internal Revenue Code §457(b), which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this plan; or

(G) for distributions made after December 31, 2007, a Roth IRA as described in Internal Revenue Code §408A(b).

(3) The definition of eligible retirement plan also shall apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relations order as defined in Internal Revenue Code §414(p).

(4) A "distributee" includes an employee or former employee. In addition, the employee's or former employee's surviving spouse and the employee's or former employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Internal Revenue Code §414(p), are distributees with regard to the interest of the spouse or former spouse.

(5) A "direct rollover" is a payment by the plan to the eligible retirement plan specified by the distributee.

(c) Notwithstanding anything in this section to the contrary, a portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax contributions which are not includible in gross income. However, such portion may be paid only in a direct trustee-to-trustee transfer to an individual retirement account or annuity described in Internal Revenue Code §§408(a) or (b), or to a qualified defined contribution plan described in Internal Revenue Code §401(a) or an Internal Revenue Code §403(b) annuity contract that, in each case, agrees to separately account for amounts so transferred, and the earnings on these amounts, including separate accounting for the portion of such distribution which was includible in gross income (if not for the rollover exclusion) and the portion of such distribution which was not includible in income (determined without regard to the rollover exclusion). Without limiting the foregoing, for distributions made after December 31, 2006, such portion may be also be paid in a direct trustee-to-trustee transfer to any type of qualified plan described in Internal Revenue Code §401(a) (whether or not a defined contribution plan) that agrees to separately account for amounts so transferred, and the earnings on these amounts, including separate accounting for the portion of such distribution which was includible in gross income (if not for the rollover exclusion) and the portion of such distribution which was not includible in income (determined without regard to the rollover exclusion). Without limiting the foregoing, for distributions made after December 31, 2007, a portion of a distribution shall not fail to be an eligible rollover distribution merely because it is paid in a direct trustee-to-trustee transfer to a Roth IRA as described in Internal Revenue Code §408A(b).

(d) Rollovers by Nonspouse Beneficiaries. Effective for distributions on or after January 1, 2010, a member's beneficiary who is not the surviving spouse of the deceased member may elect to have an eligible rollover distribution paid directly to an eligible retirement plan that is an inherited individual retirement account described in Internal Revenue Code §408(d)(3)(C) to the extent permitted by Internal Revenue Code §402(c)(11).

(e) The Board, the system and its employees and agents are not responsible for assuring that the distributee is eligible to make a rollover or for the tax consequences of any such rollover.

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 December 18, 2017.

TRD-201705231

David Gavia

Executive Director

Texas Municipal Retirement System

Effective date: January 7, 2018

Proposal publication date: October 27, 2017

For further information, please call: (512) 225-3754


PART 11. TEXAS EMERGENCY SERVICES RETIREMENT SYSTEM

CHAPTER 302. GENERAL PROVISIONS RELATING TO THE TEXAS EMERGENCY SERVICES RETIREMENT SYSTEM

34 TAC §302.5

The State Board of Trustees (Board) of Texas Emergency Services Retirement System (System) adopts amendments to §302.5, relating to Corrections of Errors without changes to the proposed text as published in the September 29, 2017, issue of the Texas Register (42 TexReg 5240).

The amended section is adopted to protect system benefits earned by volunteer firefighters and ems personnel. The adopted amendment requires departments to correct errors that have affected the enrollment and qualified service of members, streamlines the process of correcting errors, and includes the process of payment of past due contributions and any applicable interest.

The Board received one public comment on the amended section that supported the amendments to §302.5.

The amendments are adopted under the statutory authority of Title 8, Government Code, Subtitle H, Texas Emergency Services Retirement System, §863.005, which allows the Board to create System rules to determine the costs of contributions past due and their accrued interest charges.

No other statutes, articles, or codes are affected by this adoption.

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 December 11, 2017.

TRD-201705057

Kevin Deiters

Executive Director

Texas Emergency Services Retirement System

Effective date: December 31, 2017

Proposal publication date: September 29, 2017

For further information, please call: (512) 936-3372


34 TAC §302.6

The State Board of Trustees (Board) of Texas Emergency Services Retirement System (System) adopts the repeal of §302.6, relating to Charge for Certain Contributions Past Due, without changes to the proposed text as published in the September 29, 2017, issue of the Texas Register (42 TexReg 5241).

§302.6 is repealed to streamline the rules regarding the correction of errors and the subsequent past due contributions, including interest charges.

The Board did not receive public comment regarding the repeal of §302.6.

§302.6 is repealed under the statutory authority of Title 8, Government Code, Subtitle H, Texas Emergency Services Retirement System, §863.005, which allows the Board to create System rules to determine the costs of contributions past due and their accrued interest charges.

No other statutes, articles, or codes are affected by this adoption.

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 December 11, 2017.

TRD-201705058

Kevin Deiters

Executive Director

Texas Emergency Services Retirement System

Effective date: December 31, 2017

Proposal publication date: September 29, 2017

For further information, please call: (512) 936-3372


34 TAC §302.8

The State Board of Trustees (Board) of Texas Emergency Services Retirement System (System) adopts amendments to §302.8, relating to Qualified Service, without changes to the proposed text as published in the September 29, 2017, issue of the Texas Register (42 TexReg 5241).

The amended section is adopted to correct an error in the reference to statute.

The Board did not receive public comment regarding the adoption of proposed amendments to §302.8.

The amendments to §302.8 are adopted under the statutory authority of Title 8, Government Code, Subtitle H, Texas Emergency Services Retirement System, §864.001, which requires the Board to create System rules regarding qualified service.

No other statutes, articles, or codes are affected by this adoption.

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 December 11, 2017.

TRD-201705060

Kevin Deiters

Executive Director

Texas Emergency Services Retirement System

Effective date: December 31, 2017

Proposal publication date: September 29, 2017

For further information, please call: (512) 936-3372


CHAPTER 308. BENEFITS FROM THE TEXAS EMERGENCY SERVICES RETIREMENT SYSTEM

34 TAC §308.2

The State Board of Trustees (Board) of the Texas Emergency Services Retirement System (System) adopts amendments to §308.2, regarding Claim and Appeal Procedures without changes to the proposed text as published in the September 29, 2017, issue of the Texas Register (42 TexReg 5242).

The amended section is adopted to correct an error and conform §308.2 with Title 8, Texas Government Code, Subsection H, Texas Emergency Services Retirement System, §864.016(a). The adoption of the amended section reduces delay in the payment of retirement checks to retired firefighters and first responders that occur when local boards fail to meet and decide a retirement claim pursuant to the statutory requirement of 16 days.

The Board received one public comment on the amended section which agreed with the proposal of amendments to §308.2. The Board adopts amendments to §308.2 without changes to the language proposed in the Texas Register.

The amendments to §308.2 are adopted under the statutory authority of Title 8, Texas Government Code, Subsection H, Texas Emergency Services Retirement System, §864.014(a) which outlines the Claim and Appeal Procedure.

No other statutes, articles or codes are affected by this adoption.

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 December 11, 2017.

TRD-201705061

Kevin Deiters

Executive Director

Texas Emergency Services Retirement System

Effective date: December 31, 2017

Proposal publication date: September 29, 2017

For further information, please call: (512) 936-3372


CHAPTER 310. ADMINISTRATION OF THE TEXAS EMERGENCY SERVICES RETIREMENT SYSTEM

34 TAC §310.12

The State Board of Trustees (Board) of the Texas Emergency Services Retirement System (System) adopts new §310.12, concerning Access to Information about Members, Annuitants, and Beneficiaries without changes to the proposed text as published in the September 29, 2017, issue of the Texas Register (42 TexReg 5243).

New §310.12 is adopted to establish specific requirements that the System and local pension boards must meet before individuals are granted access to confidential information. The new rule also mandates that local pension boards review the System's security policy annually, and to implement processes that protect confidential information.

No comments were received regarding the adoption of this rule.

The new §310.12 is adopted under the statutory authority of Title 8, Texas Government Code, Subsection H, Texas Emergency Services Retirement System, §865.019, regarding Confidentiality of Information about Members, Annuitants, and Beneficiaries.

No other statutes, articles, or codes are affects by this adoption.

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 December 11, 2017.

TRD-201705063

Kevin Deiters

Executive Director

Texas Emergency Services Retirement System

Effective date: December 31, 2017

Proposal publication date: September 29, 2017

For further information, please call: (512) 936-3372