La. Admin. Code tit. 58 § III-1513

Current through Register Vol. 50, No. 9, September 20, 2024

Section III-1513 - Distributions

A. Retirement benefits shall be payable to plan participants or their beneficiaries by the ORP providers. Subject to the provisions of the contract, retirement benefits shall be paid in the form of a lifetime income, unless the participant or beneficiary requests a trustee-to-trustee single-sum cash rollover payment between qualified plans, or payment made directly to an individual retirement account, but death benefits may be paid in the form of a single-sum cash payment paid directly to the beneficiary or estate, whichever is applicable.

B. The ORP provider shall offer ORP participants the following singe-sum cash payments:

1. direct transfers by and between OPR providers;

2. death benefits.

3. an initial benefit payable upon retirement, provided such benefit is approved by the ORP provider. The initial benefit shall not exceed an amount equal to the participant's monthly benefit, payable as a single-life annuity with no guarantees, times 36.

C. Minimum Distribution

1. For purposes of this Section, the following definitions shall apply.

Designated Beneficiary-any individual who is designated as the beneficiary under the plan and is the designated beneficiary under IRC §401(a)(9) and treasury regulations section 1 401(a)(9)-1, Q&A-4.

Eligible Designated Beneficiary-a designated beneficiary who, as of the date of the death of the participant, is:

i. the surviving spouse of the participant;

ii. a child of the participant who has not reached the age of majority within the meaning of Code Section 401(a)(9)(F);

iii. disabled within the meaning of Code Section 72(m)(7);

iv. chronically ill within the meaning of Code Section 7702B(c)(2) (except that the requirements of subparagraph (A)(i) thereof shall only be treated as met if there is a certification that, as of such date, the period of inability described in such subparagraph with respect to the individual is an indefinite one which is reasonably expected to be lengthy in nature); or

v. any other designated beneficiary who is not more than 10 years younger than the participant. Notwithstanding the preceding, a child described in Clause ii above shall cease to be an eligible designated beneficiary as of the date he or she reaches the age of majority within the meaning of Code Section 401(a)(9)(F)

Required Beginning Date-the April 1 of the calendar year following the later of:

i. the calendar year in which the participant attains age 72 (or age 70 1/2 if the participant was born before July 1, 1949); or

ii. the calendar year in which the participant retires.

(a). The participant, alternate payee, or beneficiary may elect on the applicable form whether to recalculate life expectancy (or any element of it) to the fullest extent permitted by IRC §401(a)(9)(D) If the participant, alternate payee, or beneficiary does not timely make this election, the participant, alternate payee, or beneficiary is deemed to have elected the default method specified by the applicable investment option(s), or to the extent that no method is so specified, that no recalculation shall apply with respect to any individual's life expectancy.

2. The requirements of this Section will take precedence over any inconsistent provisions of the plan. All distributions required under this Section will be determined and made in accordance with IRC §401(a)(9) and the treasury regulations under IRC §401(a)(9) Distributions to a participant and his/her beneficiaries shall only be made in accordance with the incidental death benefit requirements of IRC §401(a)(9)(G) and the treasury regulations thereunder.

3. The participant's entire interest will be distributed, or begin to be distributed, to the participant no later than the participant's required beginning date. If the participant dies before distributions begin, the participant's entire interest will be distributed, or begin to be distributed, no later than as follows.

a. If the participant's surviving spouse is the participant's sole designated beneficiary, then distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the participant died, or by December 31 of the calendar year in which the participant would have attained age 72 (or age 70 1/2 if the participant was born before July 1, 1949), if later.

b. If the participant's surviving spouse is not the participant's sole designated beneficiary, then distributions to the designated beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the participant died.

c. If there is no designated beneficiary as of September 30 of the year following the year of the participant's death, the participant's entire interest will be distributed by December 31 of the calendar year containing the fifth anniversary of the participant's death.

d. If the participant's surviving spouse is the participant's sole designated beneficiary and the surviving spouse dies after the participant but before distributions to the surviving spouse begin, this Subparagraph, rather than Subparagraph 3.a, will apply as if the surviving spouse were the participant.

4. For purposes of this Section, unless Subparagraph 3.a applies, distributions are considered to begin on the participant's required beginning date. If Subparagraph 3.a applies, distributions are considered to begin on the date distributions are required to begin to the surviving spouse under Subparagraph 3.a. If distributions under an annuity purchased from an insurance company irrevocably commence to the participant before the participant's required beginning date (or to the participant's surviving spouse) before the date distributions are required to begin to the surviving spouse under Subparagraph 3.a, the date distributions are considered to begin is the date distributions actually commence.

5. If the participant's interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of IRC §401(a)(9) and the treasury regulations thereunder.

6. If a distribution is required to begin to a beneficiary and the beneficiary has not filed a claim by the date that is 90 days before the date required by IRC §401(a)(9) (or if the ORP provider has denied a claim and an acceptable claim has not been filed before the applicable date), the ORP provider shall direct payment (or, if provided by the investment option, the ORP provider may without instruction make payment) according to the automatic payout option provided by the applicable investment option(s), or, to the extent not so provided, as a lump sum distribution.

7. If a participant has not furnished evidence of his or her spouse's date of birth, the ORP provider will use the employee's age in determining the minimum distribution period according to treasury reg. §1 401(a)(9)-5/Q&A-4(a) without regard to treasury reg. §1 401(a)(9)-5/Q&A-4(b).

8. Upon the death of a participant after December 31, 2021, the following distribution provisions shall take effect; provided, however, that such provisions shall be subject to any regulations or other guidance issued under the Setting Every Community Up for Retirement Enhancement (SECURE) Act.

a. If the participant dies before the distribution of his or her entire interest (regardless of whether any distributions had begun before the participant's death) and the participant has a designated beneficiary:

i. the entire interest shall be distributed to the designated beneficiary by December 31 of the calendar year containing the tenth anniversary of the participant's death;

ii. notwithstanding Clause a.i, if the designated beneficiary is an eligible designated beneficiary, then the participant's entire interest shall be distributed beginning no later than December 31 of the calendar year immediately following the calendar year in which the participant died, over the life of the eligible designated beneficiary or over a period not exceeding the life expectancy of the eligible designated beneficiary. If the eligible designated beneficiary is the surviving spouse, payment is not required until the later of December 31 of the calendar year immediately following the calendar year in which the participant died or December 31 of the calendar year in which the participant would have attained age 72 or age 70 1/2 if the participant was born before July 1, 1949.

iii. Upon the death of an eligible designated beneficiary before distribution of the participant's entire interest, the remainder of the entire interest shall be distributed to the beneficiary of the eligible designated beneficiary within 10 years of the eligible designated beneficiary's death.

iv. For an eligible designated beneficiary who is a minor child of the member, upon the attainment of the age of majority within the meaning of Code Section 401(a)(9)(F), the child shall cease to be an eligible designated beneficiary, and the remainder of the participant's entire interest shall be distributed to the child as a designated beneficiary within 10 years of the date that he or she attains the age of majority.

b. If the participant dies before distribution of his or her entire interest begins and the participant has no designated beneficiary, the participant's entire interest under the plan shall be distributed by December 31 of the calendar year containing the fifth anniversary of the participant's death. If the participant dies after distribution of his or her entire interest begins and the participant has no designated beneficiary, any remaining portion of the entire interest shall continue to be distributed at least as rapidly as under the method of distribution in effect at the time of the participant's death.

c. Any distribution required under the incidental death benefit requirements of Code Section 401(a) shall be treated as distributions required under Paragraph 8 of this Subsection.

D. Required Minimum Distribution Waiver of 2009

1. Notwithstanding any other provisions of this Section, a participant or beneficiary who would have been required to receive required minimum distributions for 2009 but for the enactment of IRC §401(a)(9)(H) ("2009 RMDs"), and who would have satisfied that requirement by receiving distributions that are: equal to the 2009 RMDs; or one or more payments in a series of substantially equal distributions (that include the 2009 RMDs) made at least annually and expected to last for the life (or life expectancy) of the participants designated beneficiary, or for a period of at least 10 years ("extended 2009 RMDs"), will not receive those 2009 distributions unless the participant or beneficiary elects to receive such distribution. Participants and beneficiaries described in the preceding sentence will be given the opportunity to elect to receive the distributions described in the preceding sentence. However, those participants and beneficiaries who receive required minimum distributions though the automatic payment system will continue to receive 2009 RMDs unless he or she elects not to receive the 2009 RMDs.

2. Notwithstanding any other provisions of the plan, and solely for purposes of applying the rollover provisions of the plan, 2009 RMDs [amounts that would have been required minimum distributions for 2009 but for the enactment of IRC §401(a)(9)(H)] and extended 2009 RMDs (one or more payments in a series of substantially equal distributions (that include the 2009 RMDs) made at least annually and expected to last for the life (or life expectancy) of the participants designated beneficiary, or for a period of at least 10 years), will be treated as eligible rollover distributions.

E. Claim for Distribution

1. Any distribution shall be paid only upon a claim made on the applicable form, and submission of additional information requested by the ORP provider, including but not limited to:

a. if the distribution is made, appropriate evidence that the participant has a severance from employment;

b. if the distribution is an eligible rollover distribution, the distributee's instruction as to whether the distribution (or a portion of the distribution) is to be paid directly to an eligible retirement plan, and if any amount is to be paid directly to an eligible retirement plan, the name and address of the trustee or administrator of that eligible retirement plan together with any other information that the plan administrator, ORP provider, or the eligible retirement plan administrator reasonably requests pursuant to treas. reg. §1 401(a)(31)-1;

c. if the distribution is made on account of the participant's death, appropriate evidence of the participant's death;

d. whenever required by the ORP provider, the date-of-birth of any distributee as relevant to the distribution;

e. if the account consists of more than one investment option, the order in which any investment options are to be charged or redeemed to pay the distribution; and

f any other evidence or information that the ORP provider finds is relevant to administer a provision of the plan in the participant's or beneficiary's and the distributee's circumstances.

F. Required Minimum Distribution Waiver of 2020

1. Notwithstanding any other provisions of this section, for 2020, the minimum distribution requirements will be satisfied as provided in this section, as determined by the provider responsible for the participant's or beneficiary's required minimum distribution.

2. A participant or beneficiary who would have been required to receive required minimum distributions in 2020 (or paid in 2021 for the 2020 calendar year for a participant with a required beginning date of April 2, 2021) but for the enactment of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, IRC 401(a)(9)(I) (2020 RMDs), and who would have satisfied that requirement by receiving distributions that are either equal to the 2020 RMDs or one or more payments in a series of substantially equal distributions (that include the 2020 RMDs) made at least annually and expected to last for the life (or life expectancy) of the participant, the joint lives (or joint life expectancy) of the participant and the participant's designated beneficiary, or for a period of at least 10 years (extended 2020 RMDs) will not receive those distributions for 2020 unless the participant or beneficiary chooses to receive such distributions. Participants and beneficiaries described in the preceding sentence will be given the opportunity to elect to receive the distributions described in the preceding sentence. However, those participants and beneficiaries who receive required minimum distributions through the automatic payment system will continue to receive 2020 RMDs unless he or she elects not to receive the 2020 RMDs.

3. A participant or beneficiary who would have been required to receive a 2020 RMD, and who would have satisfied that requirement by receiving distributions that are equal to the 2020 RMDs or extended 2020 RMDs, will receive this distribution unless the participant or beneficiary chooses not to receive such distributions. Participants and beneficiaries described in the preceding sentence will be given the opportunity to elect to stop receiving the distribution described in the preceding sentence.

4. For purposes of the direct rollover provisions of the Plan, 2020 RMDs and extended 2020 RMDs shall also be treated as eligible rollover distributions in 2020.

La. Admin. Code tit. 58, § III-1513

Promulgated by the Department of the Treasury, Board of Trustees of the Teachers' Retirement System of Louisiana, LR 402275 (11/1/2014), Amended LR 471902 (12/1/2021).

AUTHORITY NOTE: Promulgated in accordance with R.S. 11:921-929.