Texas 2009 - 81st Regular

Texas Senate Bill SB2322 Compare Versions

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1	1	By: Duncan S.B. No. 2322
2	2
3	3
4	4	A BILL TO BE ENTITLED
5	5	AN ACT
6	6	relating to plan provisions required for maintaining retirement
7	7	plan qualification for the Teacher Retirement System of Texas.
8	8	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	9	SECTION 1. Section 822.201, Government Code, is amended to
10	10	read as follows:
11	11	Sec. 822.201. (a) Unless otherwise provided by this
12	12	subtitle, compensation subject to report and deduction for member
13	13	contributions and to credit in benefit computations is:
14	14	(1) beginning with the 1981-82 school year, only a
15	15	member's salary and wages for service, less any amounts excluded by
16	16	rules of the board of trustees adopted pursuant to Section 825.110;
17	17	and
18	18	(2) in school years before the 1981-82 school year,
19	19	all compensation for service that was or should have been reported
20	20	under laws and rules governing the retirement system when the
21	21	compensation was paid but excluding compensation greater than
22	22	$25,000 for a school year beginning after August 31, 1969, but
23	23	before September 1, 1979, and compensation greater than $8,400 for
24	24	a school year beginning before September 1, 1969.
25	25	(b) "Salary and wages" as used in Subsection (a) means:
26	26	(1) normal periodic payments of money for service the
27	27	right to which accrues on a regular basis in proportion to the
28	28	service performed;
29	29	(2) amounts by which the member's salary is reduced
30	30	under a salary reduction agreement authorized by Chapter 610;
31	31	(3) amounts that would otherwise qualify as salary and
32	32	wages under Subdivision (1) but are not received directly by the
33	33	member pursuant to a good faith, voluntary written salary reduction
34	34	agreement in order to finance payments to a deferred compensation
35	35	or tax sheltered annuity program specifically authorized by state
36	36	law or to finance benefit options under a cafeteria plan qualifying
37	37	under Section 125 of the Internal Revenue Code of 1986, if:
38	38	(A) the program or benefit options are made
39	39	available to all employees of the employer; and
40	40	(B) the benefit options in the cafeteria plan are
41	41	limited to one or more options that provide deferred compensation,
42	42	group health and disability insurance, group term life insurance,
43	43	dependent care assistance programs, or group legal services plans;
44	44	(4) performance pay awarded to an employee by a school
45	45	district as part of a total compensation plan approved by the board
46	46	of trustees of the district and meeting the requirements of
47	47	Subsection (e);
48	48	(5) the benefit replacement pay a person earns under
49	49	Subchapter H, Chapter 659, except as provided by Subsection (c);
50	50	(6) stipends paid to teachers in accordance with
51	51	Section 21.410, 21.411, 21.412, or 21.413, Education Code;
52	52	(7) amounts by which the member's salary is reduced or
53	53	that are deducted from the member's salary as authorized by
54	54	Subchapter J, Chapter 659;
55	55	(8) a merit salary increase made under Section 51.962,
56	56	Education Code;
57	57	(9) amounts received under the relevant parts of the
58	58	awards for student achievement program under Subchapter N, Chapter
59	59	21, Education Code, the educator excellence awards program under
60	60	Subchapter O, Chapter 21, Education Code, or a mentoring program
61	61	under Section 21.458, Education Code, that authorized compensation
62	62	for service;
63	63	(10) salary amounts designated as health care
64	64	supplementation by an employee under Subchapter D, Chapter 22,
65	65	Education Code[.]; and
66	66	(11) beginning January 1, 2009, to the extent required
67	67	by Sections 3401(h) and 414(u)(2), Internal Revenue Code of 1986,
68	68	differential wage payments received by an individual from an
69	69	employer while the individual is performing qualified military
70	70	service (as defined in chapter 43 of title 38, United State Code).
71	71	The individual shall be treated as employed by that employer and the
72	72	differential wage payment shall be treated as earned compensation.
73	73	The retirement system is authorized to determine how contributions
74	74	attributable to such differential wage payments shall be made.
75	75	This provision shall be applied to all similarly situated
76	76	individuals in a reasonably equivalent manner.
77	77	(c) Excluded from salary and wages are:
78	78	(1) expense payments;
79	79	(2) allowances;
80	80	(3) payments for unused vacation or sick leave;
81	81	(4) maintenance or other nonmonetary compensation;
82	82	(5) fringe benefits;
83	83	(6) deferred compensation other than as provided by
84	84	Subsection (b)(3);
85	85	(7) compensation that is not made pursuant to a valid
86	86	employment agreement;
87	87	(8) payments received by an employee in a school year
88	88	that exceed $5,000 for teaching a driver education and traffic
89	89	safety course that is conducted outside regular classroom hours;
90	90	(9) the benefit replacement pay a person earns as a
91	91	result of a payment made under Subchapter B or C, Chapter 661;
92	92	(10) any amount received by an employee under:
93	93	(A) former Article 3.50-8, Insurance Code;
94	94	(B) former Chapter 1580, Insurance Code;
95	95	(C) Subchapter D, Chapter 22, Education Code, as
96	96	that subchapter existed January 1, 2006; or
97	97	(D) Rider 9, Page III-39, Chapter 1330, Acts of
98	98	the 78th Legislature, Regular Session, 2003 (the General
99	99	Appropriations Act); and
100	100	(11) any compensation not described in Subsection (b).
101	101	(d) For a person who first becomes a member of the
102	102	retirement system after August 31, 1996, the person's annual
103	103	compensation for purposes of the retirement system may not exceed
104	104	the limit imposed by Section 401(a)(17) of the Internal Revenue
105	105	Code of 1986 (26 U.S.C. Section 401(a)(17)), as adjusted by the
106	106	commissioner of internal revenue for cost-of-living increases in
107	107	accordance with that provision. This limit does not apply to a
108	108	person who first became a member of the retirement system before
109	109	September 1, 1996.
110	110	(e) For purposes of Subsection (b)(4), a total compensation
111	111	plan must:
112	112	(1) describe all elements of compensation received by
113	113	or available to all employees of the employer;
114	114	(2) provide for the availability of at least one type
115	115	of performance pay to classroom teachers employed by the employer;
116	116	(3) identify each type of performance pay, the
117	117	performance criteria for each type of performance pay, and the
118	118	classes of employees eligible for each type of performance pay;
119	119	(4) contain sufficient information concerning the
120	120	plan to ascertain the amount of each qualifying employee's pay
121	121	under the plan;
122	122	(5) contain performance criteria for earning
123	123	performance pay that preclude the exercise of discretion for
124	124	awarding the pay on any basis other than an evaluation of employee
125	125	or group performance or availability of funding; and
126	126	(6) satisfy any other requirements adopted by the
127	127	retirement system.
128	128	SECTION 2. Section 824.403, Government Code, is amended to
129	129	read as follows:
130	130	Sec. 824.403. (a) Except as provided by Section 824.401,
131	131	the designated beneficiary of a member who dies while absent from
132	132	service is eligible to receive:
133	133	(1) the same benefits payable under Section 824.402 or
134	134	824.404 if the member's absence from service was:
135	135	(A) because of sickness, accident, or other cause
136	136	the board of trustees determines involuntary;
137	137	(B) in furtherance of the objectives or welfare
138	138	of the public school system; or
139	139	(C) during a time when the member was eligible to
140	140	retire or would become eligible without further service before the
141	141	fifth anniversary of the member's last day of service as a member;
142	142	or
143	143	(2) an amount equal to the accumulated contributions
144	144	in the member's individual account in the member savings account,
145	145	if the member's absence from service does not satisfy a requirement
146	146	of Subdivision (1).
147	147	(b) Effective with respect to deaths occurring on or after
148	148	January 1, 2007, while a member is performing qualified military
149	149	service (as defined in chapter 43 of title 38, United State Code),
150	150	to the extent required by Section 401(a)(37), Internal Revenue Code
151	151	of 1986, the designated beneficiary of a member is eligible to
152	152	receive any additional benefits that the retirement system would
153	153	provide if the member had resumed employment and then died.
154	154	SECTION 3. Section 825.509, Government Code, is amended to
155	155	read as follows:
156	156	Sec. 825.509. (a) This section applies to distributions
157	157	made on or after January 1, 1993. Notwithstanding any law governing
158	158	the retirement system that would otherwise limit a distributee's
159	159	election under this section, a distributee may elect, at the time
160	160	and in the manner prescribed by the executive director or the
161	161	executive director's designee, to have any portion of an eligible
162	162	rollover distribution from the retirement system paid directly to
163	163	an eligible retirement plan specified by the distributee in a
164	164	direct rollover.
165	165	(b) An eligible rollover distribution under this section is
166	166	any distribution of all or a portion of the balance to the credit of
167	167	the distributee, other than:
168	168	(1) a distribution that is one of a series of
169	169	substantially equal periodic payments made not less frequently than
170	170	annually for:
171	171	(A) the life or life expectancy of the
172	172	distributee;
173	173	(B) the joint lives or joint life expectancies of
174	174	the distributee and the distributee's designated beneficiary; or
175	175	(C) a specified period of 10 years or more;
176	176	(2) a distribution to the extent the distribution is
177	177	required under Section 401(a)(9), Internal Revenue Code of 1986; or
178	178	(3) the portion of a distribution that is not
179	179	includable in gross income for federal income tax purposes.
180	180	Effective January 1, 2002, a portion of a distribution will not fail
181	181	to be an eligible rollover distribution merely because the portion
182	182	consists of after-tax employee contributions that are not
183	183	includable in gross income. However, such portion may be
184	184	transferred only to an individual retirement account or annuity
185	185	described in Section 408(a) or (b), Internal Revenue Code of 1986,
186	186	or to a qualified defined contribution plan described in Section
187	187	401(a), Internal Revenue Code of 1986, or to a qualified plan
188	188	described in Section 403(a), Internal Revenue Code of 1986, or on or
189	189	after January 1, 2007, to a qualified defined benefit plan
190	190	described in Section 401(a), Internal Revenue Code of 1986, or to an
191	191	annuity contract described in Section 403(b), Internal Revenue Code
192	192	of 1986, that agrees to separately account for amounts so
193	193	transferred (and earnings thereon), including separately
194	194	accounting for the portion of the distribution that is includable
195	195	in gross income and the portion of the distribution that is not so
196	196	includable.
197	197	(c) An eligible retirement plan under this section is:
198	198	(1) an individual retirement account described by
199	199	Section 408(a), Internal Revenue Code of 1986[,];
200	200	(2) an individual retirement annuity described by
201	201	Section 408(b), Internal Revenue Code of 1986[,];
202	202	(3) an annuity plan described by Section 403(a),
203	203	Internal Revenue Code of 1986[, or];
204	204	(4) a qualified trust described by Section 401(a),
205	205	Internal Revenue Code of 1986, that accepts the distributee's
206	206	eligible rollover distribution[.];
207	207	(5) effective January 1, 2002, a plan eligible under
208	208	Section 457(b), Internal Revenue Code of 1986, that is maintained
209	209	by a state, political subdivision of a state, or any agency or
210	210	instrumentality of a state or political subdivision of a state that
211	211	agrees to separately account for amounts transferred into the plan
212	212	from the retirement system;
213	213	(6) effective January 1, 2002, an annuity contract
214	214	described in Section 403(b), Internal Revenue Code of 1986; or
215	215	(7) effective January 1, 2008, a Roth IRA described in
216	216	Section 408A, Internal Revenue Code of 1986. [However, in the case
217	217	of an eligible rollover distribution to a surviving spouse, an
218	218	eligible retirement plan under this section is an individual
219	219	retirement account or individual retirement annuity.]
220	220	(d) In this section:
221	221	(1) "Direct rollover" means a payment by the
222	222	retirement system to the eligible retirement plan specified by a
223	223	distributee.
224	224	(2) "Distributee" means a person who receives an
225	225	eligible rollover distribution from the retirement system and
226	226	includes an employee or former employee and, regarding the interest
227	227	of an employee or former employee, the person's surviving spouse or
228	228	the person's spouse or former spouse who is the alternate payee[.]
229	229	under a qualified domestic relations order, as defined in Section
230	230	414(p), Internal Revenue Code of 1986. Effective January 1, 2007, a
231	231	distributee further includes a nonspouse beneficiary who is a
232	232	designated beneficiary as defined by Section 401(a)(9)(E),
233	233	Internal Revenue Code of 1986, of the member or retiree under the
234	234	retirement system and who is not the surviving spouse or alternate
235	235	payee of the member or retiree. A direct trustee-to-trustee
236	236	transfer on behalf of a nonspouse beneficiary shall be treated as an
237	237	eligible rollover distribution. However, a nonspouse beneficiary
238	238	may rollover the distribution only to an individual retirement
239	239	account or individual retirement annuity established for the
240	240	purpose of receiving the distribution, the account or annuity will
241	241	be treated as an "inherited" individual retirement account or
242	242	annuity, and Section 401(a)(9)(B), Internal Revenue Code of 1986,
243	243	other than clause (iv) thereof, shall apply to such plan. To the
244	244	extent provided in rules provided by the U.S. Secretary of
245	245	Treasury, a trust maintained for the benefit of one or more
246	246	designated beneficiaries shall be treated in the same manner as a
247	247	designated beneficiary.
248	248	SECTION 4. This Act takes effect September 1, 2009.