Massachusetts 2023-2024 Regular Session

Massachusetts Senate Bill S16 Compare Versions

Only one version of the bill is available at this time.

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3	3	840 CMR: PUBLIC EMPLOYEE RETIREMENT ADMINISTRATION
4	4	840 CMR 3.00: INTERNAL REVENUE CODE COMPLIANCE PROVISIONS
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8	8	SENATE… …………………..No. 16
9	9
10	10	The Commonwealth of Massachusetts
11	11
12	12
13	13	_______________
14	14
15	15	In the One Hundred and Nine ty-Third General Court
16	16	(2023-2024)
17	17
18	18	_______________
19	19
20	20
21	21	REPORT OF THE
22	22
23	23	PUBLIC EMPLOYEE RETIREMENT
24	24	ADMINISTRATION COMMISSION
25	25
26	26	SUBMITTING AMENDMENTS TO THE RULES
27	27	AND REGULATIONS GOVERNING RETIREMENT
28	28	OF PUBLIC EMPLOYEES IN MASSACHUSETTS
29	29	(840 CMR 3.00 and 840 CMR 13.00)
30	30
31	31
32	32
33	33
34	34
35	35
36	36
37	37	(pursuant to Section 50 of
38	38	Chapter 7 of the General Laws)
39	39
40	40
41	41
42	42
43	43
44	44
45	45	January 26, 2023
46	46
47	47
48	48	840 CMR: PUBLIC EMPLOYEE RETIREMENT ADMINISTRATION
49	49	840 CMR 3.00: INTERNAL REVENUE CODE COMPLIANCE PROVISIONS
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51	51
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53	53
54	54	840 CMR 3.00. Internal Revenue Code Compliance Provisions
55	55
56	56	REGULATORY AUTHORITY
57	57
58	58	840 CMR 3.00: M.G.L. c. 32, § 21(4).
59	59
60	60	840 CMR: PUBLIC EMPLOYEE RETIREMENT ADMINISTRATION
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63	63
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66	66
67	67	3.01. Internal Revenue Code Compliance Provisions
68	68
69	69	Effective as of January 1, 1989, any retirement system subject to M.G.L. c.
70	70	32 will satisfy the qualification requirements in Internal Revenue Code
71	71	Section 401, as applicable, as a governmental plan within the meaning of
72	72	Internal Revenue Code Section 414(d). In order to meet those requirements,
73	73	the retirement system is subject to the following provisions, notwithstanding
74	74	any other provision of Massachusetts law.
75	75
76	76	840 CMR: PUBLIC EMPLOYEE RETIREMENT ADMINISTRATION
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79	79
80	80
81	81
82	82	3.02. Internal Revenue Code Section 401(a)(1), (2)
83	83
84	84	Effective as of September 1, 1974, the assets of any retirement system
85	85	subject to M.G.L. c. 32 are held in trust and may not be used for or diverted
86	86	to any purpose other than for the exclusive benefit of the members and their
87	87	beneficiaries and for paying the retirement system's reasonable
88	88	administrative expenses.
89	89
90	90	840 CMR: PUBLIC EMPLOYEE RETIREMENT ADMINISTRATION
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93	93
94	94
95	95
96	96	3.03. Internal Revenue Code Section 401(a)(8)
97	97
98	98	Effective as of September 1, 1974, and to confirm existing procedures, any
99	99	retirement system subject to M.G.L. c. 32 will not use forfeitures that arise
100	100	for any reason, including from termination of employment or death, to
101	101	increase the benefits of any member.
102	102
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106	106
107	107
108	108
109	109	3.04. Internal Revenue Code Section 401(a)(9)
110	110
111	111	(1) Effective as of January 1, 1989, any retirement system subject to M.G.L.
112	112	c. 32 will pay all benefits in accordance with a good faith interpretation of
113	113	the requirements of Internal Revenue Code Section 401(a)(9), as applicable
114	114	to a governmental plan within the meaning of Internal Revenue Code
115	115	Section 414(d).
116	116
117	117	(2) Notwithstanding any other provision of 840 CMR 3.04(2), effective on
118	118	and after January 1, 2003, any retirement system subject to M.G.L. c. 32 is
119	119	subject to the following provisions:
120	120
121	121	(a) Members must apply for benefits by completing all required forms
122	122	and benefits must begin by the required beginning date, which is the
123	123	later of April 1
124	124	st
125	125	of the calendar year following the calendar year in
126	126	which the member reaches age 72 (70½ if the member was born before
127	127	July 1, 1949) or April 1
128	128	st
129	129	of the calendar year following the calendar year
130	130	in which the member terminates employment.
131	131
132	132	(b) The member's entire interest must be distributed over the member's
133	133	life or the lives of the member and a designated beneficiary, or over a
134	134	period not extending beyond the life expectancy of the member or of the
135	135	member and a designated beneficiary.
136	136
137	137	(c) The life expectancy of a member, the member's spouse, or the
138	138	member's beneficiary may not be recalculated after the initial
139	139	determination for purposes of determining benefits.
140	140
141	141	(d) If a member dies after the required distribution of benefits has
142	142	begun, the remaining portion of the member's interest must be
143	143	distributed at least as rapidly as under the method of distribution before
144	144	the member's death.
145	145
146	146	(e) If a member dies before required distribution of the member's
147	147	benefits has begun, the member's entire interest must be either:
148	148
149	149	1. distributed (in accordance with federal regulations) over the
150	150
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154	154
155	155
156	156	life or life expectancy of the designated beneficiary, with the
157	157	distributions beginning no later than December 31
158	158	st
159	159	of the calendar
160	160	year following the calendar year of the member's death; or
161	161
162	162	2. distributed within five years of the member's death.
163	163
164	164	(3) The amount of an annuity paid to a member's beneficiary may not
165	165	exceed the maximum determined under the incidental death benefit
166	166	requirement of Internal Revenue Code Section 401(a)(9)(G), and
167	167	effective for any annuity commencing on or after January 1, 2008, the
168	168	minimum distribution incidental benefit rule under Treasury
169	169	Regulation Section 1.401(a)(9)-6, Q&A-2.
170	170
171	171	(4) The death and disability benefits provided by the retirement system are
172	172	limited by the incidental benefit rule set forth in Internal Revenue Code
173	173	Section 401(a)(9)(G) and Treasury Regulation Section 1.401-1(b)(1)(i) or any
174	174	successor regulation thereto. As a result, the total death or disability benefits
175	175	payable may not exceed 25% of the cost for all of the members' benefits
176	176	received from the retirement system.
177	177
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181	181
182	182
183	183
184	184	3.05. Internal Revenue Code Section 401(a)(17)
185	185
186	186	(1) In compliance with the provisions of M.G.L. c. 32, § 1 and in furtherance
187	187	of the application of the compensation limitations set forth in M.G.L. c. 32, §
188	188	1, the annual compensation any retirement system subject to M.G.L c. 32
189	189	takes into account for any purpose, including contributions or benefits, may
190	190	not exceed the amount allowed by Internal Revenue Code Section 401(a)(17)
191	191	as of the first day of the plan year.
192	192
193	193	(2) The annual compensation of each member taken into account in
194	194	determining benefits or contributions for any plan year beginning on
195	195	January 1, 1996, and prior to January 1, 2002, may not exceed $150,000, as
196	196	adjusted for cost-of-living increases in accordance with Internal Revenue
197	197	Code Section 401(a)(17)(B).
198	198
199	199	(3) Effective only for the 1996 plan year, the rules of Internal Revenue Code
200	200	Section 414(q)(6) will apply in determining the annual compensation
201	201	limitation, except that a member of the family group will include only the
202	202	spouse of the member and any lineal descendant of the member who has not
203	203	attained age 19 before the close of the year. If the annual compensation of a
204	204	member and his family members is so limited, the annual compensation of
205	205	the member and each such family member will be equal to the compensation
206	206	of each such individual determined without regard to Internal Revenue Code
207	207	Sections 401(a)(17) and 414(q)(6) divided by such annual compensation for
208	208	all such individuals as so determined and the quotient multiplied by the
209	209	applicable Internal Revenue Code Section 401(a)(17) limitation amount, as
210	210	described in 840 CMR 3.05(1) and (2).
211	211
212	212	(4) The annual compensation of each member taken into account in
213	213	determining benefits or contributions for any plan year beginning on or after
214	214	January 1, 2002, may not exceed $200,000, as adjusted for cost-of-living
215	215	increases in accordance with Internal Revenue Code Section 401(a)(17)(B).
216	216
217	217	(5) For purposes of 840 CMR 3.04(2)(e)1. through (e)4., annual
218	218	compensation means compensation during the fiscal year. The cost-of-living
219	219	adjustment in effect for a calendar year applies to annual compensation for
220	220	the determination period that begins with or within such calendar year. If
221	221	the determination period consists of fewer than 12 months, the annual
222	222
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226	226
227	227
228	228	compensation limit is an amount equal to the otherwise applicable annual
229	229	compensation limit multiplied by a fraction, the numerator of which is the
230	230	number of months in the short determination period, and the denominator
231	231	of which is 12. If the compensation for any prior determination period is
232	232	taken into account in determining a member's contributions or benefits for
233	233	the current plan year, the compensation for such prior determination period
234	234	is subject to the applicable annual compensation limit in effect for that prior
235	235	period.
236	236
237	237	(6) The limits referenced in 840 CMR 3.04(2)(e)1. through (e)5. apply only
238	238	to plan years beginning on or after January 1, 1996, and only to individuals
239	239	who first become members in plan years beginning on and after January 1,
240	240	1996. Individuals who become members before plan years beginning on and
241	241	after January 1, 1996, are not subject to the limits of Internal Revenue Code
242	242	Section 401(a)(17). Pursuant to Section 13212(d)(3)(A) of OBRA '93, the
243	243	annual compensation in effect under Internal Revenue Code Section
244	244	401(a)(17) does not apply to any such member in any year.
245	245
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249	249
250	250
251	251
252	252	3.06. Internal Revenue Code Section 401(a)(25)
253	253
254	254	Effective as of January 1, 1985, any retirement system subject to M.G.L. c.
255	255	32 will determine the amount of any benefit that is determined on the basis of
256	256	actuarial assumptions using assumptions adopted by PERAC; such benefits
257	257	will not be subject to employer discretion.
258	258
259	259	840 CMR: PUBLIC EMPLOYEE RETIREMENT ADMINISTRATION
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262	262
263	263
264	264
265	265	3.07. Internal Revenue Code Section 401(a)(31)
266	266
267	267	840 CMR 3.07 applies to distributions made on or after January 1, 1993 by a
268	268	retirement system subject to M.G.L. c. 32, provided that any regulations
269	269	adopted by a retirement board that applied the rules of Code Section
270	270	401(a)(31) to distributions from its system shall be deemed to apply in lieu
271	271	of 840 CMR 3.07. Notwithstanding any contrary provision or retirement law
272	272	that would otherwise limit a distributee's election under 840 CMR 3.07, a
273	273	distributee may elect, at the time and in the manner prescribed by the
274	274	retirement board, to have any portion of an eligible rollover distribution paid
275	275	directly to an eligible retirement plan specified by the distributee in a direct
276	276	rollover.
277	277
278	278	(1) Eligible Rollover Distribution: An eligible rollover distribution is any
279	279	distribution of all or any portion of the balance to the credit of the
280	280	distributee, except that an eligible rollover distribution does not include: any
281	281	distribution that is one of a series of substantially equal periodic payments
282	282	(not less frequently than annually) made for the life (or the life expectancy)
283	283	of the distributee or the joint lives (or joint life expectancies) of the
284	284	distributee and the distributee's designated beneficiary, or for a specified
285	285	period of ten years or more; any distribution to the extent such distribution
286	286	is required under Internal Revenue Code Section 401(a)(9); the portion of
287	287	any distribution that is not includible in gross income; and any other
288	288	distribution that is reasonably expected to total less than $200 during the
289	289	year. Effective January 1, 2002, a portion of a distribution will not fail to be
290	290	an eligible rollover distribution merely because the portion consists of after-
291	291	tax employee contributions that are not includible in gross income.
292	292	However, such portion may be transferred only:
293	293
294	294	(a) to an individual retirement account or annuity described in
295	295	Internal Revenue Code Section 408(a) or (b), or to a qualified defined
296	296	contribution plan described in Internal Revenue Code Section 401(a)
297	297	that agrees to separately account for amounts so transferred (and
298	298	earnings thereon), including separately accounting for the portion of
299	299	the distribution that is includible in gross income and the portion of
300	300	the distribution that is not so includible;
301	301
302	302
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306	306
307	307
308	308	(b) on or after January 1, 2007, to a qualified defined benefit plan
309	309	described in Internal Revenue Code Section 401(a) or to an annuity
310	310	contract described in Internal Revenue Code Section 403(b), that agrees
311	311	to separately account for amounts so transferred (and earnings thereon),
312	312	including separately accounting for the portion of the distribution that is
313	313	includible in gross income and the portion of the distribution that is not
314	314	so includible; or
315	315
316	316	(c) on or after January 1, 2008, to a Roth IRA described in Internal
317	317	Revenue Code Section 408A.
318	318
319	319	(2) Eligible Retirement Plan: An eligible retirement plan is:
320	320
321	321	(a) effective January 1, 2002, a plan eligible under Internal Revenue
322	322	Code Section 457(b) that is maintained by a state, political subdivision
323	323	of a state, or any agency or instrumentality of a state or political
324	324	subdivision of a state that agrees to separately account for amounts
325	325	transferred into the plan from the retirement system,
326	326
327	327	(b) an individual retirement account described in Internal Revenue
328	328	Code Section 408(a),
329	329
330	330	(c) an individual retirement annuity described in Internal Revenue
331	331	Code Section 408(b),
332	332
333	333	(d) an annuity plan described in Internal Revenue Code Section 403(a),
334	334
335	335	(e) effective January 1, 2002, an annuity contract described in
336	336	Internal Revenue Code Section 403(b),
337	337
338	338	(f) a qualified trust described in Internal Revenue Code Section
339	339	401(a), that accepts the distributee's eligible rollover distribution, or
340	340
341	341	(g) effective January 1, 2008, a Roth IRA described in Internal
342	342	Revenue Code Section 408A.
343	343
344	344	(h) effective December 19, 2015, a SIMPLE IRA described in
345	345	Internal Revenue Code Section 408(p), provided that the rollover
346	346	contribution is made after the 2-year period described in Internal
347	347
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351	351
352	352
353	353	Revenue Code Section 72(t)(6).
354	354
355	355	(3) Effective January 1, 2002, the definition of eligible rollover distribution
356	356	also includes a distribution to a surviving spouse (as defined by federal law),
357	357	or to a spouse or former spouse who is an alternate payee under a domestic
358	358	relations order, as defined in Internal Revenue Code Section 414(p).
359	359
360	360	(4) Distributee. A distributee includes an employee or former employee. It
361	361	also includes the employee's or former employee's surviving spouse and the
362	362	employee's or former employee's spouse or former spouse who is the
363	363	alternate payee under a qualified domestic relations order, as defined in
364	364	Internal Revenue Code Section 414(p). Effective January 1, 2007, it further
365	365	includes a nonspouse beneficiary who is a designated beneficiary as defined
366	366	by Internal Revenue Code Section 401(a)(9)(E). However, a nonspouse
367	367	beneficiary may rollover the distribution only to an individual retirement
368	368	account or individual retirement annuity established for the purpose of
369	369
370	370	receiving the distribution and the account or annuity will be treated as an
371	371	"inherited" individual retirement account or annuity.
372	372	(5) Direct Rollover. A direct rollover is a payment by the retirement system
373	373	to the eligible retirement plan specified by the distributee.
374	374
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380	380
381	381	3.08. Internal Revenue Code Section 415
382	382
383	383	(1) Basic 415 Limitations. Effective as of September 1, 1974, in compliance
384	384	with the provisions of M.G.L. c. 32, § 5(3)(f) and in furtherance of the
385	385	application of the compensation limitations set forth in M.G.L. c. 32, § 1,
386	386	member contributions paid to, and retirement benefits paid from, any
387	387	retirement system subject to M.G.L. c. 32 (system) shall be limited to such
388	388	extent as may be necessary to conform to the requirements of Internal
389	389	Revenue Code Section 415 for a qualified governmental pension plan.
390	390
391	391	(2) Limitation Year. For purposes of Internal Revenue Code Section 415, the
392	392	limitation year is the calendar year.
393	393
394	394	(3) Participation in Other Qualified Plans: Aggregation of Limits.
395	395
396	396	(a) The 415(b) limit with respect to any member who at any time has
397	397	been a member in any other defined benefit plan as defined in Internal
398	398	Revenue Code Section 414(j) maintained by the member's employer in
399	399	this system shall apply as if the total benefits payable under all such
400	400	defined benefit plans in which the member has been a member were
401	401	payable from one plan.
402	402
403	403	(b) The 415(c) limit with respect to any member who at any time has
404	404	been a member in any other defined contribution plan as defined in
405	405	Internal Revenue Code Section 414(i) maintained by the member's
406	406	employer in this system shall apply as if the total annual additions
407	407	under all such defined contribution plans in which the member has
408	408	been a member were payable from one plan.
409	409
410	410	(4) Basic 415(b) Limitation.
411	411
412	412	(a) Before January 1, 1995, a member may not receive an annual benefit
413	413	that exceeds the limits specified in Internal Revenue Code Section 415(b),
414	414	subject to the applicable adjustments in that section.
415	415
416	416	(b) On and after January 1, 1995, a member may not receive an annual
417	417	benefit that exceeds the dollar amount specified in Internal Revenue
418	418
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422	422
423	423
424	424	Code Section 415(b)(1)(A), subject to the applicable adjustments in
425	425	Internal Revenue Code Section 415(b) and subject to any additional
426	426	limits that may be specified in M.G.L. c. 32. In no event shall a member's
427	427	annual benefit payable in any limitation year from a plan subject to this
428	428	title be greater than the limit applicable at the annuity starting date, as
429	429	increased in subsequent years pursuant to Internal Revenue Code
430	430	Section 415(d).
431	431
432	432	(5) Definition of Annual Benefit: For purposes of Internal Revenue Code
433	433	Section 415(b), the "annual benefit" means a benefit payable annually in the
434	434	form of a straight life annuity (with no ancillary benefits) without regard to
435	435	the benefit attributable to after- tax employee contributions (except pursuant
436	436	to Internal Revenue Code Section 415(n)) and to rollover contributions (as
437	437	defined in Internal Revenue Code Section 415(b)(2)(A)). The "benefit
438	438	attributable" shall be determined in accordance with Treasury Regulations.
439	439
440	440	(6) Adjustments to Basic 415(b) Limitation for Form of Benefit . If the benefit
441	441	under the system is other than the form specified in 840 CMR 3.08(5), then
442	442	the benefit shall be adjusted so that it is the equivalent of the annual benefit,
443	443	using factors prescribed in Treasury Regulations.
444	444
445	445	(a) If the form of benefit without regard to the automatic benefit
446	446	increase feature is not a straight life annuity or a qualified joint and
447	447	survivor annuity, then the preceding sentence is applied by either
448	448	reducing the Internal Revenue Code Section 415(b), the benefit limit
449	449	applicable at the annuity starting date or adjusting the form of benefit to
450	450	an actuarially equivalent amount (determined using the assumptions
451	451	specified in Treasury Regulation Section 1.415(b)-1(c)(2)(ii)) that takes
452	452	into account the additional benefits under the form of benefit as follows:
453	453
454	454	(b) For a retirement benefit which is payable in a form other than a
455	455	straight life annuity, and the form of benefit is not subject to Code
456	456	Section 417(e)(3) for the purposes of applying the limitation in
457	457	subsection (4), is adjusted to an actuarially equivalent straight life
458	458	annuity that equals:
459	459
460	460	1. for limitation years beginning on or after January 1, 2012,
461	461	the greater of the annual amount of the straight life annuity (if any)
462	462	payable under the plan at the same annuity starting date, and the
463	463	annual amount of a straight life annuity commencing at the same
464	464
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468	468
469	469
470	470	annuity starting date that has the same actuarial present value as the
471	471	member's form of benefit computed using an interest rate of 5% and
472	472	the applicable mortality table under § 417(e)(3) (i.e., Rev. Rul. 2001-
473	473	62) (and for years after December 31, 2008, the applicable mortality
474	474	tables described in Code Section 417(e)(3)(B) (Notice 2008-85 or
475	475	any subsequent Internal Revenue Service guidance implementing
476	476	Code Section 417(e)(3)(B)); and
477	477
478	478	2. for limitation years beginning before January 1, 2012, the
479	479	annual amount of a straight life annuity commencing at the same
480	480	annuity starting date that has the same actuarial present value as
481	481	the member's form of benefit computed using whichever of the
482	482	following produces the greater annual amount:
483	483
484	484	a. the interest rate and mortality table or other tabular
485	485	factor specified in the plan for adjusting benefits in the
486	486	same form; and
487	487	b. a 5% interest rate assumption and the applicable
488	488	mortality table (Code Section 415, Treas. Reg. 1.415(b)-
489	489	1(c)(2)).
490	490
491	491	(c) For a retirement benefit which is payable in a form other than a
492	492	straight life annuity, and the form of the benefit is subject to Code
493	493	Section 417(e)(3) the benefit for purposes of applying the limitation in
494	494	subsection (4), is adjusted to an actuarially equivalent straight life
495	495	annuity that equals:
496	496
497	497	1. if the annuity starting date is in a plan year beginning after
498	498	2005, the annual amount of the straight life annuity commencing
499	499	at the same annuity starting date that has the same actuarial
500	500	present value as the participant's form of benefit using whichever
501	501	of the following produces the greatest annual amount:
502	502
503	503	a. the interest rate and the mortality table or other tabular
504	504	factor specified in the plan for adjusting benefits in the same
505	505	form;
506	506
507	507	b. a 5.5% interest rate assumption and the applicable mortality
508	508	table; and
509	509
510	510
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514	514
515	515
516	516	c. the applicable interest rate under §417(e)(3) (effective
517	517	January 1, 2013, using the rate in effect for the second month
518	518	immediately prior to the first day of the limitation year with a
519	519	one-year stabilization period) and the applicable mortality
520	520	table, divided by 1.05 and for years after December 31, 2008,
521	521	the applicable mortality tables described in Code Section
522	522	417(e)(3)(B) (Notice 2008-85 or any subsequent Internal
523	523	Revenue Service guidance implementing Code Section
524	524	417(e)(3)(B);
525	525
526	526	(7) Benefits not Taken into Account for 415(b) Limitation. For purposes of
527	527	M.G.L. c. 32, the following benefits shall not be taken into account
528	528	in applying these limits:
529	529
530	530	(a) Any ancillary benefit which is not directly related to retirement
531	531	income benefits;
532	532
533	533	(b) That portion of any joint and survivor annuity that constitutes a
534	534	qualified joint and survivor annuity;
535	535
536	536	(c) Any other benefit not required under Internal Revenue Code
537	537	Section 415(b)(2) and Regulations thereunder to be taken into account
538	538	for purposes of the limitation of Internal Revenue Code Section
539	539	415(b)(1).
540	540
541	541	(8) Other Adjustments in 415(b) Limitation.
542	542
543	543	(a) In the event the member's retirement benefits become payable
544	544	before age 62, the benefit is limited to:
545	545
546	546	1. if the annuity starting date is in a limitation year beginning
547	547	before January 1, 2012, the annual amount of a benefit payable in the
548	548	form of a single life annuity commencing at the member's annuity
549	549	starting date that is the actuarial equivalent of the dollar limitation
550	550	determined, with actuarial equivalence computed using whichever
551	551	of the following produces the smaller annual amount:
552	552
553	553	a. the interest rate and mortality table or other tabular factor
554	554	specified in the plan for determining actuarial equivalence
555	555	for early retirement purposes; or
556	556
557	557	840 CMR: PUBLIC EMPLOYEE RETIREMENT ADMINISTRATION
558	558	840 CMR 3.00: INTERNAL REVENUE CODE COMPLIANCE PROVISIONS
559	559
560	560
561	561
562	562
563	563	b. a 5% interest rate assumption and the applicable mortality table;
564	564
565	565	2. if the annuity starting date is in a limitation year beginning
566	566	on or after January 1, 2012, and the plan does not have an
567	567	immediately commencing straight life annuity payable at both age
568	568	62 and the age of benefit commencement, the annual amount of a
569	569	benefit payable in the form of a straight life annuity commencing at
570	570	the member's annuity starting date that is the actuarial equivalent of
571	571	the dollar limitation, with actuarial equivalence computed using a
572	572	5% interest rate assumption and the applicable mortality table and
573	573	expressing the member's age based on completed calendar months as
574	574	of the annuity starting date; and
575	575
576	576	3. if the annuity starting date is in a limitation year beginning
577	577	on or after January 1, 2012, and the plan has an immediately
578	578	commencing straight life annuity payable at both age 62 and the
579	579	age of benefit commencement, the lesser of:
580	580
581	581	a. the adjusted dollar limitation determined in
582	582	accordance with 840 CMR 3.08(a)2.; and
583	583
584	584	b. the product of the dollar limitation multiplied by the
585	585	ratio of the annual amount of the immediately commencing
586	586	straight life annuity under the plan at the member's annuity
587	587	starting date to the annual amount of the immediately
588	588	commencing straight life annuity under the plan at age 62,
589	589	both determined without applying the limitations of Code
590	590	Section 415. Code Section 415; Treas. Reg. 1.415(b)-1(d).
591	591
592	592
593	593	(b) In the event the member's benefit is based on at least 15 years of
594	594	service as a full-time employee of any police or fire department or on 15
595	595	years of military service, the adjustments provided for in subsection a.
596	596	above shall not apply.
597	597
598	598	(c) The reductions provided for in 840 CMR 3.08(8)(a) shall not
599	599	be applicable to pre-retirement disability benefits or pre-retirement
600	600	death benefits.
601	601
602	602
603	603	840 CMR: PUBLIC EMPLOYEE RETIREMENT ADMINISTRATION
604	604	840 CMR 3.00: INTERNAL REVENUE CODE COMPLIANCE PROVISIONS
605	605
606	606
607	607
608	608	(9) Less than Ten Years of Participation or Service Adjustment for 415(b)
609	609	Limitations. The maximum retirement benefits payable to any member who
610	610	has completed less than ten years of service shall be the amount determined
611	611	under 840 CMR 3.08(4), as adjusted under 840 CMR 3.08(6) and/or (8),
612	612	multiplied by a fraction, the numerator of which is the number of the
613	613	member's years of participation and the denominator of which is ten. The
614	614	limit under 840 CMR 3.08(10) (concerning the $10,000 limit) shall be
615	615	similarly reduced for any member who has accrued less than ten years of
616	616	service, except the fraction shall be determined with respect to years of
617	617	service instead of years of participation. The reduction provided by 840
618	618	CMR 3.08(9) cannot reduce the maximum benefit below 10% of the limit
619	619	determined without regard to this subsection. The reduction provided for in
620	620	840 CMR 3.08(9) shall not be applicable to pre-retirement disability
621	621	benefits or pre-retirement death benefits.
622	622
623	623	(10) Ten Thousand Dollar Limit. Notwithstanding the foregoing, the
624	624	retirement benefit payable with respect to a member shall be deemed not to
625	625	exceed the 415 limit if the benefits payable, with respect to such member under this system and under all other qualified defined benefit pension
626	626	plans to which the member's employer contributes, do not exceed $10,000
627	627	for the applicable limitation year and for any prior limitation year and the
628	628	employer has not any time maintained a qualified defined contribution plan in which the member participated.
629	629
630	630	(11) Effect of COLA without a Lump Sum Component on 415(b) Testing.
631	631	Effective on and after January 1, 2003, for purposes of applying the limits
632	632	under Internal Revenue Code Section 415(b) (the "Limit") to a member with
633	633	no lump sum benefit, the following will apply:
634	634
635	635	(a) a member's applicable Limit will be applied to the member's annual
636	636	benefit in the member's first limitation year without regard to any automatic cost of living adjustments;
637	637
638	638	(b) to the extent that the member's annual benefit equals or exceeds
639	639	the Limit, the member will no longer be eligible for cost of living
640	640	increases until such time as the benefit plus the accumulated increases
641	641	are less than the Limit;
642	642
643	643	(c) thereafter, in any subsequent limitation year, a member's annual
644	644
645	645
646	646	840 CMR: PUBLIC EMPLOYEE RETIREMENT ADMINISTRATION
647	647	840 CMR 3.00: INTERNAL REVENUE CODE COMPLIANCE PROVISIONS
648	648
649	649
650	650
651	651	benefit, including any automatic cost of living increases, shall be tested
652	652	under the then applicable benefit Limit including any adjustment to the
653	653	Internal Revenue Code Section 415(b)(1)(A) dollar limit under Internal
654	654	Revenue Code Section 415(d), and the Treasury Regulations thereunder.
655	655
656	656	(12) Effect of COLA with a Lump Sum Component on 415(b) Testing. On and
657	657	after January 1, 2009, with respect to a member who receives a portion of
658	658	the member's annual benefit in a lump sum, a member's applicable Limit
659	659	will be applied taking into consideration cost of living increases as required
660	660	by Internal Revenue Code Section 415(b) and applicable Treasury
661	661	Regulations.
662	662
663	663	(13) 415(c) Limitations. After-tax member contributions or other annual
664	664	additions with respect to a member may not exceed the lesser of $40,000
665	665	(as adjusted pursuant to Internal Revenue Code Section 415(d)) or 100% of
666	666	the member's compensation.
667	667
668	668	(a) Annual additions are defined to mean the sum (for any year) of
669	669	employer contributions to a defined contribution plan, member
670	670	contributions, and forfeitures credited to a member's individual account.
671	671	Member contributions are determined without regard to rollover
672	672	contributions and to picked-up employee contributions that are paid to a
673	673	defined benefit plan.
674	674
675	675	(b) For purposes of applying the 415(c) limits only and for no other
676	676	purpose, the definition of compensation where applicable will be
677	677	compensation actually paid or made available during a limitation year,
678	678	except as noted below and as permitted by Treasury Regulation Section
679	679	1.415(c)- 2, or successor regulation; provided, however, that member
680	680	contributions picked up under Internal Revenue Code Section 414(h)
681	681	shall not be treated as compensation.
682	682
683	683	(c) Unless another definition of compensation that is permitted by
684	684	Treasury Regulation Section 1.415(c)-2, or successor regulation, is
685	685	specified by a system subject to this title, compensation will be defined as
686	686	wages within the meaning of Internal Revenue Code Section 3401(a) and
687	687	all other payments of compensation to an employee by an employer for
688	688	which the employer is required to furnish the employee a written
689	689	statement under Internal Revenue Code Sections 6041(d), 6051(a)(3)
690	690	and 6052 and will be determined without regard to any rules under
691	691
692	692	840 CMR: PUBLIC EMPLOYEE RETIREMENT ADMINISTRATION
693	693	840 CMR 3.00: INTERNAL REVENUE CODE COMPLIANCE PROVISIONS
694	694
695	695
696	696
697	697	Internal Revenue Code Section 3401(a) that limit the remuneration
698	698	included in wages based on the nature or location of the employment or
699	699	the services performed (such as the exception for agricultural labor in
700	700	Internal Revenue Code Section 3401(a)(2)).
701	701
702	702	1. However, for limitation years beginning after December 31,
703	703
704	704	1997, compensation will also include amounts that would otherwise
705	705	be included in compensation but for an election under Internal
706	706	Revenue Code Section 125(a), 402(e)(3), 402(h)(1)(B), 402(k), or
707	707	457(b). For limitation years beginning after December 31, 2000,
708	708	compensation will also include any elective amounts that are not
709	709	includible in the gross income of the employee by reason of Internal
710	710	Revenue Code Section 132(f)(4).
711	711
712	712	2. For limitation years beginning on and after January 1, 2007,
713	713	compensation for the limitation year will also include compensation
714	714	paid by the later of 2% months after an employee's severance from
715	715	employment or the end of the limitation year that includes the date
716	716	of the employee's severance from employment if:
717	717
718	718	a. the payment is regular compensation for services
719	719	during the employee's regular working hours, or
720	720	compensation for services outside the employee's regular
721	721	working hours (such as overtime or shift differential),
722	722	commissions, bonuses or other similar payments, and,
723	723	absent a severance from employment, the payments would
724	724	have been paid to the employee while the employee
725	725	continued in employment with the employer; or
726	726
727	727	b. the payment is for unused accrued bona fide sick,
728	728	vacation or other leave that the employee would have been
729	729	able to use if employment had continued.
730	730
731	731	Any payments not described in 840 CMR 3.08(13)(c)2.are
732	732	not considered compensation if paid after severance from
733	733	employment, even if they are paid within 2½ months
734	734	following severance from employment, except for payments
735	735	to the member who does not currently perform services for
736	736
737	737	840 CMR: PUBLIC EMPLOYEE RETIREMENT ADMINISTRATION
738	738	840 CMR 3.00: INTERNAL REVENUE CODE COMPLIANCE PROVISIONS
739	739
740	740
741	741
742	742	the employer by reason of qualified military service (within
743	743	the meaning of section 414(u)(1) of the Internal Revenue
744	744	Code) to the extent these payments do not exceed the
745	745	amounts the individual would have received if the member
746	746	had continued to perform services for the employer rather
747	747	than entering qualified military service.
748	748
749	749	A member who is in qualified military service (within the
750	750	meaning of section 414(u)(1) of the Internal Revenue Code)
751	751	shall be treated as receiving compensation from the employer
752	752	during such period of qualified military service equal to:
753	753
754	754	(a) the compensation the member would have received
755	755	during such period if the member were not in qualified
756	756	military service, determined based on the rate of pay
757	757	the member would have received from the employer
758	758	but for the absence during the period of qualified
759	759	military service; or
760	760
761	761	(b) if the compensation the member would have received
762	762	during such period was not reasonably certain, the
763	763	member's average compensation from the employer
764	764	during the 12 month period immediately preceding the
765	765	qualified military service (or, if shorter, the period of
766	766	employment immediately preceding the qualified
767	767	military service).
768	768
769	769	3. Back pay, within the meaning of Treasury Regulation Section
770	770	1.415(c)- 2(g)(8), shall be treated as compensation for the
771	771	limitation year to which the back pay relates to the extent the
772	772	back pay represents wages and compensation that would
773	773	otherwise be included under this definition.
774	774
775	775	(14) Service Purchases under Internal Revenue Code Section 415(n).
776	776	Effective for permissive service credit contributions made in accordance
777	777	with the applicable provisions of M.G.L. c . 32, in limitation years beginning
778	778	after December 31, 1997, if a member makes one or more contributions to
779	779	purchase permissive service credit under a plan, then the requirements of
780	780	Internal Revenue Code Section 415(n) will be treated as met only if:
781	781
782	782	840 CMR: PUBLIC EMPLOYEE RETIREMENT ADMINISTRATION
783	783	840 CMR 3.00: INTERNAL REVENUE CODE COMPLIANCE PROVISIONS
784	784
785	785
786	786
787	787
788	788	(a) the requirements of Internal Revenue Code Section 415(b) are
789	789	met, determined by treating the accrued benefit derived from all such
790	790	contributions as an annual benefit for purposes of Internal Revenue
791	791	Code Section 415(b), or
792	792
793	793	(b) the requirements of Internal Revenue Code Section 415(c) are
794	794	met, determined by treating all such contributions as annual
795	795	additions for purposes of Internal Revenue Code Section 415(c).
796	796
797	797	(c) For purposes of applying 840 CMR 3.08(14), the system will not
798	798	fail to meet the reduced limit under Internal Revenue Code Section
799	799	415(b)(2)(C) solely by reason of 840 CMR 3.08(14) and will not fail to
800	800	meet the percentage limitation under Internal Revenue Code Section
801	801	415(c)(1)(B) solely by reason of 840 CMR 3.08(14).
802	802
803	803	(d) For purposes of 840 CMR 3.08(14) the term "permissive service
804	804	credit" means service credit:
805	805
806	806	1. recognized by the system for purposes of calculating a
807	807	member's benefit under the system;
808	808
809	809	2. which such member has not received under the system; and
810	810
811	811	3. which such member may receive only by making a voluntary
812	812	additional contribution, in an amount determined under the
813	813	system, which does not exceed the amount necessary to fund the
814	814	benefit attributable to such service credit.
815	815
816	816	Effective for permissive service credit contributions made in
817	817	limitation years beginning after December 31, 1997, such term may
818	818	include service credit for periods for which there is no
819	819	performance of service, and, notwithstanding 840 CMR
820	820	3.08(14)(d)2., may include service credited in order to provide an
821	821	increased benefit for service credit which a member is receiving
822	822	under the system.
823	823
824	824
825	825	840 CMR: PUBLIC EMPLOYEE RETIREMENT ADMINISTRATION
826	826	840 CMR 3.00: INTERNAL REVENUE CODE COMPLIANCE PROVISIONS
827	827
828	828
829	829
830	830	(e) The system will fail to meet the requirements of 840 CMR 3.08(14) if:
831	831
832	832	1. more than five years of nonqualified service credit are
833	833	taken into account for purposes of 840 CMR 3.08(14)(e); or
834	834
835	835	2. any nonqualified service credit is taken into account
836	836	under 840 CMR 3.08(14)(e)2. before the member has at
837	837	least five years of participation under the plan.
838	838
839	839	(f) For purposes of 840 CMR 3.08(14)(e), effective for permissive
840	840	service credit contributions made in limitation years beginning after
841	841	December 31, 1997, the term "nonqualified service credit" means
842	842	permissive service credit other than that allowed with respect to:
843	843
844	844	1. service (including parental, medical, sabbatical, and similar
845	845	leave) as an employee of the Government of the United States,
846	846	any State or political subdivision thereof, or any agency or
847	847	instrumentality of any of the foregoing (other than military
848	848	service or service for credit which was obtained as a result of a
849	849	repayment described in Internal Revenue Code Section
850	850	415(k)(3));
851	851
852	852	2. service (including parental, medical, sabbatical, and similar
853	853	leave) as an employee (other than as an employee described in
854	854	clause (1)) of an education organization described in Internal
855	855	Revenue Code Section 170(b)(1)(A)(ii) which is a public, private,
856	856	or sectarian school which provides elementary or secondary
857	857	education (through grade 12), or a comparable level of education,
858	858	as determined under the applicable law of the jurisdiction in
859	859	which the service was performed,
860	860
861	861	3. service as an employee of an association of employees who
862	862	are described in clause (1); or
863	863
864	864	4. military service (other than qualified military service
865	865	under Internal Revenue Code Section 414(u)) recognized by
866	866	such governmental plan.
867	867
868	868
869	869	840 CMR: PUBLIC EMPLOYEE RETIREMENT ADMINISTRATION
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871	871
872	872
873	873
874	874	In the case of service described in clause (1), (2), or (3), such service
875	875	will be nonqualified service if recognition of such service would
876	876	cause a member to receive a retirement benefit for the same service
877	877	under more than one plan.
878	878
879	879	(g) In the case of a trustee -to-trustee transfer after December 31, 2001,
880	880	to which Internal Revenue Code Section 403(b)(13)(A) or Internal
881	881	Revenue Code Section 457(e)(17)(A) applies (without regard to whether
882	882	the transfer is made between plans maintained by the same employer):
883	883
884	884	1. the limitations of 840 CMR 3.08(14)(e) will not
885	885	apply in determining whether the transfer is for the
886	886	purchase of permissive service credit; and
887	887	2. the distribution rules applicable under federal law to
888	888	the system will apply to such amounts and any benefits
889	889	attributable to such amounts.
890	890
891	891	(h) For an eligible member, the limitation of Internal Revenue Code
892	892	Section 415(c)(1) shall not be applied to reduce the amount of
893	893	permissive service credit which may be purchased to an amount less
894	894	than the amount which was allowed to be purchased under the terms of
895	895	the system as in effect on August 5, 1997. For purposes of this
896	896	paragraph an eligible member is an individual who first became a
897	897	member in the plan before January 1, 1998.
898	898
899	899	(15) Modification of Contributions for 415(c) and 415(n) Purposes .
900	900	Notwithstanding any other provision of law to the contrary, the system may
901	901	modify a request by a member to make a contribution under M.G.L. c. 32 if
902	902	the amount of the contribution would exceed the limits provided in Internal
903	903	Revenue Code Section 415 by using the following methods:
904	904
905	905	(a) If the law requires a lump sum payment for the purchase of service
906	906	credit, the system may establish a periodic payment plan for the
907	907	member to avoid a contribution in excess of the limits under Internal
908	908	Revenue Code Section 415(c) or 415(n).
909	909
910	910	(b) If payment pursuant to 840 CMR 3.08(15)(a) will not avoid a
911	911	contribution in excess of the limits imposed by Internal Revenue Code
912	912	Section 415(c) or 415(n), the system may either reduce the member's
913	913
914	914	840 CMR: PUBLIC EMPLOYEE RETIREMENT ADMINISTRATION
915	915	840 CMR 3.00: INTERNAL REVENUE CODE COMPLIANCE PROVISIONS
916	916
917	917
918	918
919	919	contribution to an amount within the limits of those sections or refuse
920	920	the member's contribution.
921	921
922	922	(16) Repayments of Cashouts. Any repayment of contributions (including
923	923	interest thereon) to the system with respect to an amount previously
924	924	refunded upon a forfeiture of service credit under the system or another
925	925	governmental plan maintained by the State or a local government within the
926	926	State shall not be taken into account for purposes of Internal Revenue Code
927	927	Section 415, in accordance with applicable Treasury Regulations.
928	928
929	929	(17) Reduction of Benefits Priority. Reduction of benefits and/or
930	930	contributions to all plans, where required, shall be accomplished by first
931	931	reducing the member's benefit under any defined benefit plans in which the
932	932	member participated, such reduction to be made first with respect to the
933	933	plan in which the member most recently accrued benefits and thereafter in
934	934	such priority as shall be determined by the plan and the plan administrator
935	935	of such other plans, and next, by reducing or allocating excess forfeitures for
936	936	defined contribution plans in which the member participated, such
937	937	reduction to be made first with respect to the plan in which the member
938	938	most recently accrued benefits and thereafter in such priority as shall be
939	939	established by the plan and the plan administrator for such other plans
940	940	provided, however, that necessary reductions may be made in a different
941	941	manner and priority pursuant to the agreement of the plan and the plan
942	942	administrator of all other plans covering such member.
943	943
944	944	(18) Amendment. Nothing contained in 840 CMR 3.08 will limit the
945	945	Legislature from modifying benefits to the extent such modifications are
946	946	permissible by applicable state and federal law.
947	947
948	948	840 CMR: PUBLIC EMPLOYEE RETIREMENT ADMINISTRATION
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950	950
951	951
952	952
953	953
954	954	3.09. Internal Revenue Code Section 503(b)
955	955
956	956	Effective as of January 1, 1989, a retirement board subject to M.G.L. c. 32
957	957	may not engage in a transaction prohibited by Internal Revenue Code
958	958	Section 503(b).
959	959
960	960	840 CMR: PUBLIC EMPLOYEE RETIREMENT ADMINISTRATION
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962	962
963	963
964	964
965	965	3.10. Internal Revenue Code Sections 414(u), 401(a)(37) and the
966	966	HEART Act
967	967
968	968	(1) Effective December 12, 1994, notwithstanding any other provision of
969	969	retirement system law, contributions, benefits and service credit with
970	970	respect to qualified military service are governed by Internal Revenue Code
971	971	Section 414(u) and the Uniformed Services Employment and Reemployment
972	972	Rights Act of 1994.
973	973
974	974	(2) Mandatory Provision. Effective with respect to deaths occurring on or
975	975	after January 1, 2007, while a member is performing qualified military
976	976	service (as defined in 38 USC c. 43), to the extent required by Internal
977	977	Revenue Code Section 401(a)(37), survivors of a member in a State or local
978	978	retirement or pension system, are entitled to any additional benefits that the
979	979	system would provide if the member had resumed employment and then
980	980	died, such as accelerated vesting or survivor benefits that are contingent on
981	981	the member's death while employed. In any event, a deceased member's
982	982	period of qualified military service must be counted for vesting purposes.
983	983
984	984	(3) Optional Provision. Effective with respect to deaths and disabilities (as
985	985	determined under M.G.L. c. 32, § 6) occurring on or after July 1, 2007, while
986	986	a member is performing qualified military service (as defined in 38 USC c.
987	987	43), to the extent permitted by Internal Revenue Code Section 414(u)(9), for benefit accrual purposes and for vesting purposes, the member will be
988	988	treated as having earned years of service for the period of qualified military
989	989	service, having returned to employment on the day before the death or
990	990	disability (as determined under M.G.L. c. 32, § 6), and then having
991	991	terminated on the date of death or disability (as determined under M.G.L. c.
992	992	32, § 6). 840 CMR 3.10(3) shall be applied to all similarly situated
993	993	individuals in a reasonably equivalent manner.
994	994
995	995	(4) Mandatory Provision for 415(c) Language. Beginning January 1, 2009, to
996	996	the extent required by Internal Revenue Code Section 414(u)(12), an
997	997	individual receiving differential wage payments (as defined under Internal Revenue Code Section 3401(h)(2)) from an employer shall be treated as
998	998	employed by that employer, and the differential wage payment shall be
999	999	treated as compensation for purposes of applying the limits on annual
1000	1000	additions under Internal Revenue Code Section 415(c). 840 CMR 3.10(4)
1001	1001	shall be applied to all similarly situated individuals in a reasonably
1002	1002	equivalent manner.
1003	1003
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1006	1006
1007	1007
1008	1008
1009	1009	3.11 Internal Revenue Code Section 411(e)
1010	1010
1011	1011	Effective as of September 1, 1974, in addition to any protection provided
1012	1012	by this ordinance and Massachusetts law:
1013	1013
1014	1014	(1) A member will be 100% vested in all Plan benefits upon attainment of the
1015	1015	Plan's age and service requirements for the Plan's normal retirement
1016	1016	benefit; and
1017	1017
1018	1018	(2) A member will be 100% vested in all Plan benefits, to the extent funded,
1019	1019	if the Plan is terminated or experiences a complete discontinuance of
1020	1020	employer contributions.
1021	1021
1022	1022
1023	1023	3.12 Electronic Transactions
1024	1024
1025	1025	In those circumstances where a written election or consent is not required by a
1026	1026	retirement system or the Internal Revenue Code, an oral, electronic, or telephonic
1027	1027	form in lieu of or in addition to a written form may be
1028	1028
1029	1029
1030	1030
1031	1031
1032	1032
1033	1033
1034	1034
1035	1035
1036	1036
1037	1037
1038	1038
1039	1039
1040	1040
1041	1041
1042	1042
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1071	1071
1072	1072
1073	1073	840 CMR: PUBLIC EMPLOYEE RETIREMENT ADMINISTRATION
1074	1074	840 CMR 13.00. ROLLOVERS FOR SERVICE PURCHASES AND
1075	1075	BUYBACKS
1076	1076
1077	1077
1078	1078	840 CMR 13.00: Rollovers for Service Purchases and Buybacks
1079	1079
1080	1080	REGULATORY AUTHORITY
1081	1081
1082	1082	M.G.L. c. 7, § 50,
1083	1083	M.G.L. c. 32, § 21. 840 CMR: PUBLIC EMPLOYEE RETIREMENT ADMINISTRATION
1084	1084	840 CMR 13.00 ROLLOVERS FOR SERVICE PURCHASES AND BUYBACKS
1085	1085
1086	1086
1087	1087	13.01. Acceptance of Pre-Tax Rollovers from "Eligible
1088	1088	Retirement Plans"
1089	1089
1090	1090	The following provisions are intended to enable public employees in
1091	1091	Massachusetts to take advantage of the expanded tax -deferred roll-over
1092	1092	opportunities permitting the purchase of creditable service from assets held in
1093	1093	other tax-deferred retirement plans.
1094	1094
1095	1095	(1) A Retirement Board may accept any portion of an Eligible Rollover
1096	1096	Distribution in payment of all or a portion of a member's purchase of service
1097	1097	credit or service buybacks pursuant to M.G.L. c. 32, §§1 through 28 and §
1098	1098	105. A Retirement Board may accept an Eligible Rollover Distribution paid
1099	1099	directly to the system in a Direct Rollover. Rollovers from other permissible
1100	1100	sources will be allowed to the extent permitted by law, subject to any
1101	1101	conditions, proofs, or acceptance the Retirement Board deems appropriate.
1102	1102
1103	1103	(2) The following definitions shall apply to 840 CMR 13.01:
1104	1104
1105	1105	Direct Rollover is a payment from an Eligible Retirement Plan
1106	1106	specified by the member and made directly to the Retirement System.
1107	1107
1108	1108	Eligible Retirement Plan is any program defined in Code Sections
1109	1109	401(a)(31) and 402(c)(8)(B), from which the member has a right to an
1110	1110	Eligible Rollover Distribution, as follows:
1111	1111
1112	1112	(a) an individual retirement account under Code Section 408(a);
1113	1113
1114	1114	(b) an individual retirement annuity under Code Section 408(b)
1115	1115	(other than an endowment contract);
1116	1116
1117	1117	(c) a qualified plan under Code Sections 401(a) or 403(a);
1118	1118
1119	1119	(d) an eligible deferred compensation plan under Code Section
1120	1120	457(b) which is maintained by a state, a political subdivision of a
1121	1121	state, or any agency or instrumentality of a state or a political
1122	1122	subdivision of a state;
1123	1123
1124	1124	(e) an annuity contract under Code Section 403(b); and
1125	1125
1126	1126	(f) a SIMPLE IRA, provided that the rollover contribution is made after 840 CMR: PUBLIC EMPLOYEE RETIREMENT ADMINISTRATION
1127	1127	840 CMR 13.00 ROLLOVERS FOR SERVICE PURCHASES AND BUYBACKS
1128	1128
1129	1129
1130	1130	the two-year period beginning on the date the distributee first
1131	1131	participated in any qualified salary reduction arrangement maintained by
1132	1132	the distributee’s employer under Code § 408(p)(2), as described in Code §
1133	1133	72(t)(6).
1134	1134
1135	1135	Eligible Rollover Distribution is any distribution of all or any portion of
1136	1136	the balance to the credit of the member from an Eligible Retirement
1137	1137
1138	1138	Plan. An Eligible Rollover Distribution does not include:
1139	1139
1140	1140	(a) any distribution that is one of a series of substantially equal
1141	1141	periodic payments (not less frequently than annually) made for the
1142	1142	life (or life expectancy) of the member or the joint lives (or joint life
1143	1143	expectancies) of the member and the member's designated
1144	1144	beneficiary, or for a specified period of ten years or more;
1145	1145
1146	1146	(b) any distribution to the extent such distribution is required
1147	1147	under Section 401(a)(9) of the Internal Revenue Code ("Code");
1148	1148
1149	1149	(c) any distribution which is made upon hardship of the member; or
1150	1150
1151	1151	(d) the portion of any distribution that is not includible in gross income. 840 CMR: PUBLIC EMPLOYEE RETIREMENT ADMINISTRATION
1152	1152	840 CMR 13.00 ROLLOVERS FOR SERVICE PURCHASES AND BUYBACKS
1153	1153
1154	1154
1155	1155	13.02. Acceptance of After-Tax Rollovers from "Qualified
1156	1156	Defined Benefit Retirement Plans"
1157	1157
1158	1158	840 CMR 13.02 is intended to implement the provisions of § 822 of the
1159	1159	Pension Protection Act of 2006 (PPA) and to enable public employees
1160	1160	in Massachusetts to roll-over after-tax amounts from other defined
1161	1161	benefit retirement plans qualified pursuant to Code § 401(a) if the
1162	1162	Massachusetts retirement system accepts such rollovers.
1163	1163
1164	1164	A Retirement Board may accept direct rollovers of after-tax funds from
1165	1165	a qualified defined benefit plan (Code § 401(a) or § 403(b)). If such
1166	1166	rollovers are permitted, the after-tax amounts must be accounted for
1167	1167	separately.
1168	1168	Retirement Boards are not required to accept such transfers.
1169	1169
1170	1170