RBS No. 386
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STATE OF OKLAHOMA
1st Session of the 59th Legislature (2023)
SENATE BILL 634 By: Montgomery
AS INTRODUCED
An Act relating to the Teachers’ Retirement System of
Oklahoma; amending 70 O.S. 2021, Section 17-105.2,
which relates to partial lump sum payments;
authorizing certain retirement benefit payment for
specific members; providing calculation for benefit
amount; updating statutory reference and language;
and providing an effecti ve date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 70 O.S. 2021, Section 17 -105.2, is
amended to read as follows:
Section 17-105.2. A. 1. A member of the Teachers’ Retirement
System of Oklahoma who is eligible to retire wi th at least thirty
(30) years of creditable service may elect to receive a partial
lump-sum payment on the date of retirement and a reduced annuity.
2. On and after the effective date of this act, a member who is
eligible to retire with at least tw enty (20) years of creditable
service may elect to receive a partial lump-sum payment on the date
of retirement and a reduced annu ity.
B. 1. The partial lump-sum payment shall be an amount equal to
the unreduced retirement benefit, which shall be referred to as the
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“Maximum Retirement Allowance” for purposes of this section, which
would have been paid over a period of twelve (12), twenty -four (24),
or thirty-six (36) months, had the lump -sum option not been elected.
2. The partial lump-sum payment made pursuant to paragraph 2 of
subsection A of this section shall be an amount equal to one -half
(1/2) of the unreduced retirement benefit, which would have been
paid over a period of twe lve (12), twenty-four (24), or thirty-six
(36) months, had the lump-sum option not been elected.
C. Once the payout amount is elected, a reduced Maximum
Retirement Allowance is then calculated using factors adopted by the
Board of Trustees based upon the System ’s actuarial expected ra te of
return and the member’s age at retirement and the payout option
(twelve (12), twenty-four (24), or thirty-six (36) months) elected.
This reduced Maximum Retirement Allowance shall also be reduced in
accordance with any retirement options the member has elected
pursuant to Section 17-105 of Title 70 of the Oklahoma Statutes this
title.
B. D. The partial lump-sum payment, pursuant to this section,
shall be paid in a check separate from the regular monthly
retirement benefit. The total amount of the partial lump -sum
payment shall be deducted from the member’s account balance
consisting of the employee contributions plus interest for purposes
of determining unused contributions remaining in the account. The
member may elect to rollover the taxable portion of the par tial
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lump-sum payment to an eligible retirement plan or individual
retirement account (IRA). The nont axable portion of the partial
lump-sum payment can be rolled over to an IRA or another qualified
retirement plan as allowed by the Internal Revenue Code a nd
regulations. This partial lump -sum payment shall be subject to
federal income tax in accordance wi th the Internal Revenue Code
Section 72 and other such Internal Revenue Code sections and
regulations as may be applicable. This partial lump -sum benefit is
subject to the same restrictions for assignment and attachment as
all other retirement benefits. The appropriate portion of the
partial lump-sum distribution will be reported to the Internal
Revenue Service (IRS) as taxable income and appropriate tax
withholdings will be withheld unless the member elects to make a
direct rollover of the taxable portio n of the funds. Should the
member have after-tax contributions, a portion of such after -tax
contributions will be allocated to the partial lump -sum payment and
to the remaining annuity on a prorata pro rata basis.
C. E. The partial lump-sum option under this sect ion may be
elected only once by a member and ma y not be elected by a retiree.
D. F. The board of trustees shall promulgate any rules
necessary for the implementation of this section .
SECTION 2. This act shall become effective November 1, 2023.
59-1-386 RD 1/18/2023 9:00:10 AM