34 Tex. Admin. Code § 29.55 - Limitation on Contributions

(a) Notwithstanding any other provision of law to the contrary, and in accordance with § 823.006, Government Code, this rule describes application of the federal limits on service purchases. TRS may refuse a request by a member to make a contribution to the retirement system for the purchase of service credit if the amount of the contribution would exceed the limits provided in § 415 of the Internal Revenue Code.

(b) A member may use an installment payment plan to the extent permitted under applicable law to avoid making a contribution in excess of the limits under §415(c) or § 415(n) of the Internal Revenue Code.

(c) Effective for permissive service credit contributions made in limitation years beginning after December 31, 1997, if a member makes one or more contributions to purchase permissive service credit under TRS, then the requirements of § 415 of the Internal Revenue Code will be treated as met only if:

(1) the requirements of § 415(b) of the Internal Revenue Code are met, determined by treating the accrued benefit derived from all such contributions as an annual benefit for purposes of §415(b) of that code; or

(2) the requirements of § 415(c) of the Internal Revenue Code are met, determined by treating all such contributions as annual additions for purposes of §415(c) of that code.

(d) For purposes of applying subsection (c)(1) of this section, the retirement system will not fail to meet the reduced limit under § 415(b)(2)(C) of the Internal Revenue Code solely by reason of this section, and for purposes of applying subsection (c)(2) of this section, the system will not fail to meet the percentage limitation under §415(c)(1)(B) of that code solely by reason of this section.

(e) For purposes of subsection (c) of this section the term "permissive service credit" means service credit:

(1) specifically authorized by state law and recognized by the retirement system for purposes of calculating a member's benefit under the system;

(2) which such member has not received under the system, prior to the purchase of such service credit; and

(3) which such member may receive only by making a voluntary additional contribution, in an amount determined under the System, which does not exceed the amount necessary to fund the benefit attributable to such service credit.

(f) Effective for permissive service credit contributions made in years beginning after December 31, 1997, such term may include service credit for periods for which there is no performance of service, and, notwithstanding subsection (e)(2) of this section, may include service credited in order to provide an increased benefit for service credit which a member is receiving under the System. Permissive service credit shall include:

(1) military service credit under § 823.302, Government Code;

(2) developmental leave service credit under § 823.402, Government Code;

(3) membership waiting period service credit under § 823.406, Government Code;

(4) substitute service credit under § 25.4 of this title (relating to Substitutes);

(5) out-of-state service credit under § 823.401, Government Code;

(6) unused leave service credit under § 823.403, Government Code;

(7) service credit for work experience by a career or technology teacher; and

(8) "additional service credit" under the service credit purchase option authorized by § 823.405, Government Code.

(g) For the retirement system to meet the requirements of subsection (c) of this section:

(1) more than five years of nonqualified service credit shall not be taken into account for purposes of subsection (c) of this section; and

(2) no nonqualified service credit shall be taken into account under subsection (c) of this section before the member has at least five years of participation under the system.

(h) For purposes of subsection (g) of this section, effective for permissive service credit contributions made in years beginning after December 31, 1997, the term "nonqualified service credit" means permissive service credit other than that allowed with respect to:

(1) service (including parental, medical, sabbatical, and similar leave) as an employee of the government of the United States, any state or political subdivision thereof, or any agency or instrumentality of any of the foregoing (other than military service or service for credit which was obtained as a result of a repayment described in § 415(k)(3) of the Internal Revenue Code);

(2) service (including parental, medical, sabbatical, and similar leave) as an employee (other than as an employee described in paragraph (1) of this subsection of an education organization described in § 170(b)(1)(A)(ii) of the Internal Revenue Code which is a public, private, or sectarian school which provides elementary or secondary education (through grade 12), or a comparable level of education, as determined under the applicable law of the jurisdiction in which the service was performed;

(3) service as an employee of an association of employees who are described in paragraph (1) of this subsection; or

(4) military service (other than qualified military service under § 414(u) of the Internal Revenue Code) recognized by TRS.

(i) In the case of service described in subsection (h)(1) - (3) of this section, such service will be nonqualified service if recognition of such service would cause a member to receive a retirement benefit for the same service under more than one plan. The Internal Revenue Code standards for qualified permissive service credit as reflected in subsection (h)(1) - (4) of this section do not expand the authorized types of service credit available to be purchased under the TRS plan.

(j) In the case of a trustee-to-trustee transfer after December 31, 2001, to which §403(b)(13)(A) or § 457(e)(17)(A) of the Internal Revenue Code applies (without regard to whether the transfer is made between plans maintained by the same employer):

(1) the limitations of subsection (g) of this section will not apply in determining whether the transfer is for the purchase of permissive service credit; and

(2) the distribution rules applicable under federal law to TRS will apply to such amounts and any benefits attributable to such amounts.

(k) For an eligible member, the limitation of § 415(c)(1) of the Internal Revenue Code shall not be applied to reduce the amount of permissive service credit which may be purchased to an amount less than the amount which was allowed to be purchased under the terms of the statutes and rules applicable to TRS as in effect on August 5, 1997. For purposes of this subsection, an eligible member is an individual who first became a member of TRS before September 1, 2000.

Notes

34 Tex. Admin. Code § 29.55

The provisions of this §29.55 adopted to be effective March 12, 2003, 28 TexReg 2105; amended to be effective March 8, 2007, 32 TexReg 1087; amended to be effective August 25, 2008, 33 TexReg 6970; amended by Texas Register, Volume 39, Number 51, December 19, 2014, TexReg 10026, eff. 12/23/2014