Chapter 3307:2-5 Defined Contribution Plans - Distributions

3307:2-5-01 Distributions.

Application for a distribution from the defined contribution program shall be in accordance with the terms and conditions specified by the plan document. In no case shall a distribution be made prior to the termination of covered employment. Calculation and payment of a distribution shall be as specified by Chapter 3307:2-5 of the Administrative Code, the plan document, and the rates, factors and conditions established by the retirement board. Application shall be on a form provided by the retirement system and shall be deemed made as of the date a complete application is received by the retirement system. A distribution made from the defined contribution plan and the combined plan's account in the defined contribution fund shall be deemed irrevocably made as of the date paid by the retirement system. Distributions from the defined benefit portion of the combined plan shall be deemed irrevocably made as outlined in paragraphs (G) and (H) of rule 3307-8-01 of the Administrative Code.

R.C. 119.032 review dates: 03/24/2014 and 03/24/2019
Promulgated Under: 111.15
Statutory Authority: 3307.80
Rule Amplifies: 3307.81
Prior Effective Dates: 7/1/01 (Emer.), 9/17/01, 6/18/09, 1/7/13 (Emer.), 3/24/13

3307:2-5-02 Distributions from the defined contribution plan.

Upon termination of teaching service, a participant in the defined contribution plan may apply for a distribution, as follows:

(A) Application may be made for withdrawal of the amount determined under the plan document and this rule.

(1) The amount payable upon withdrawal shall be paid in a lump sum, except to the extent as otherwise provided by section 3307.87 of the Revised Code and rule 3307:2-5-08 of the Administrative Code.

(2) Membership and participation in the retirement system shall terminate upon withdrawal. Any credit for periods of service paid out upon withdrawal shall be cancelled.

(3) Participation in the defined contribution plan shall resume in the event the participant thereafter returns to teaching service, except to the extent that upon the return to teaching service the participant meets the requirements specified by rule 3307:2-3-01 of the Administrative Code to qualify as a new member.

(4) Payment from an account in the defined contribution plan shall be based upon the closing net asset value as of the day an application for distribution is processed by using the investment choices made by the participant to determine the amount accumulated by reason of contributions.

(B) Application may be made for a retirement benefit by a participant who has attained at least fifty years of age, as follows:

(1) Retirement shall be effective on the first of the month following the later of termination of covered teaching service or the first application for a distribution received by the retirement system.

(2) Membership in the retirement system shall terminate as of the effective date of retirement. On and after that effective date, the participant shall be a superannuate as defined by section 3307.01 of the Revised Code as of that date.

(3) Subject to the requirements of section 3307.87 of the Revised Code and Chapter 3307:2-5 of the Administrative Code, the participant shall elect on the application to take all of the balance of the defined contribution account in a lump sum payment, or to elect a plan of payment pursuant to rule 3307:2-5-09 of the Administrative Code.

R.C. 119.032 review dates: 03/24/2014 and 03/24/2019
Promulgated Under: 111.15
Statutory Authority: 3307.80
Rule Amplifies: 3307.01 , 3307.35 , 3307.81
Prior Effective Dates: 7/1/01 (Emer.), 9/17/01, 9/17/02

3307:2-5-03 Distributions from the combined plan.

Upon termination of teaching service, a participant in the combined plan may apply for a distribution, as follows:

(A) Application may be made for withdrawal of the amounts determined under the plan document and this rule.

(1) An application to withdraw the defined benefit portion of an account will not be accepted unless application is also made to withdraw the defined contribution portion.

(2) Prior to attainment of age fifty:

(a) A participant who has terminated covered employment may leave contributions on deposit in the plan or may apply for withdrawal, but is not eligible for retirement or retirement distributions.

(b) An application to withdraw the defined contribution portion of an account will not be accepted unless application is also made to withdraw the defined benefit portion;

(c) The amounts payable upon withdrawal shall be paid in a lump sum except as otherwise provided by section 3307.87 of the Revised Code and rule 3307:2-5-08 of the Administrative Code.

(3) After attainment of age fifty:

(a) A participant in the combined plan who has established at least five years of qualifying service credit may apply to withdraw the defined contribution portion but leave the defined benefit portion on deposit to provide benefits at a future date.

(b) If a participant has established less than five years of qualifying service credit, an application to withdraw the defined contribution portion of an account will not be accepted unless an application is also made to withdraw the defined benefit portion.

(4) Regardless of age or when the withdrawal payment was made, in the event a participant who has received a payment under paragraph (A) of this rule subsequently returns to teaching service:

(a) The member shall participate in the combined plan if the withdrawal payment was made under paragraph (A)(1), (A)(2) or (A)(3)(b) of this rule, unless the participant meets the requirements specified by rule 3307:2-3-01 of the Administrative Code to qualify as a new member.

(b) The participant shall be a superannuate as defined by section 3307.01 of the Revised Code if the withdrawal payment was made under paragraph (A)(3)(a) of this rule.

(5) Payment from the defined contribution portion of an account in the combined plan shall be based upon the closing net asset value as of the day an application for distribution is processed by using the investment choices made by the participant to determine the amount accumulated by reason of contributions.

(B) A participant who has terminated covered employment and attained at least fifty years of age may apply for a retirement payment of the defined contribution portion of the account, whether or not the participant is eligible and applying for a benefit under the defined benefit portion of the account. If the participant has established less than five years of qualifying service credit, an application to receive a retirement payment of the defined contribution portion of an account will not be accepted unless application is also made to withdraw the defined benefit portion.

(1) Benefits shall commence the later of the first of the month following the termination of covered employment, the first of the month following receipt of an application for payment under paragraph (B) of this rule, or the retirement date, which shall be a first of a month, specified on the application received for payment under paragraph (B) of this rule. Active membership in the retirement system shall terminate as of that date and the participant shall on and after that date be a superannuate as defined by section 3307.01 of the Revised Code.

(2) Benefits are subject to the requirements of section 3307.87 of the Revised Code and Chapter 3307:2-5 of the Administrative Code. The participant shall elect on the application form to annuitize such balance.

(3) The minimum monthly benefit amount shall be one hundred dollars.

(C) Application for retirement under the defined benefit portion of an account may be made by a participant who has terminated covered employment and who meets the defined benefit age and service eligibility requirements specified by the plan document, whether or not the participant is applying for a distribution of the defined contribution portion of the account, provided:

(1) Benefits shall commence as of the effective date specified by the application, which shall in no case be earlier than the first of the month following the last day of covered employment.

(2) Membership shall terminate as of the effective date of retirement and the participant shall thereafter be a superannuate as defined by section 3307.01 of the Revised Code.

(3) The minimum monthly benefit amount shall be one hundred dollars.

(D) A participant who has attained age fifty, has at least five years of qualifying service credit and who has elected either to take a withdrawal of the defined contribution portion of the account pursuant to paragraph (A)(3)(a) of this rule or to receive a monthly retirement benefit from the defined contribution portion of the account pursuant to paragraph (B) of this rule may apply to withdraw the defined benefit portion of the account any time prior to receiving a monthly retirement benefit under the defined benefit portion of the account.

(E) Retirement shall be effective on the earlier of the dates benefits or payments commence under paragraph (A)(3)(a), (B)(1) or (C)(1) of this rule.

Effective: 06/12/2014
R.C. 119.032 review dates: 03/24/2014 and 06/01/2019
Promulgated Under: 111.15
Statutory Authority: 3307.80
Rule Amplifies: 3307.01 , 3307.35 , 3307.81
Prior Effective Dates: 7/1/01 (Emer.), 9/17/01, 9/17/02, 7/16/04, 6/18/09, 7/1/13 (Emer.), 9/9/13

3307:2-5-06 Annuitization of defined contribution amounts.

(A) A defined contribution program participant who has terminated covered employment and applies for distribution after attainment of age fifty may choose to annuitize an account in the defined contribution plan or the defined contribution portion of the combined plan by applying for a monthly payment for the lifetime of the participant, provided:

(1) The minimum monthly amount shall be one hundred dollars.

(2) Application for an annuity must be made on a form provided by and filed with the retirement system.

(3) The monthly amount granted shall be determined under annuity rates and factors adopted and periodically adjusted by the retirement board after review by an independent actuary appointed by the board and applied to the amount accumulated by a participant.

(4) A participant may elect to receive an annuity in the amount determined under paragraph (C) of this rule for life or may instead elect to receive an actuarially equivalent benefit in a lesser amount for the lifetime of the participant but continuing after the participant's death to a beneficiary under any plan of payment specified by rule 3307:2-5-09 of the Administrative Code.

(5) Funds to be annuitized shall be based upon the closing net asset value of the investment choices made by the participant as of the day an application for benefits is ready to be processed for payment. Payment will be made as soon as administratively practicable after receipt of a complete application.

(B) Assuming a non-spouse beneficiary has not been designated as specified in the plan document and rule 3307:2-5-07 of the Administrative Code, the surviving spouse of a defined contribution plan participant, who dies after attaining eligibility for a monthly annuity but before monthly benefits begin, may elect, in lieu of a refund of the member account, to annuitize the participant's member account by making application for a lifetime monthly annuity on a form provided by the retirement system. The monthly annuity shall not be less than one hundred dollars when computed as a one hundred percent joint survivor annuity without reversion; otherwise, a refund of the member account shall be paid.

Effective: 06/12/2014
R.C. 119.032 review dates: 03/24/2014 and 06/01/2019
Promulgated Under: 111.15
Statutory Authority: 3307.80
Rule Amplifies: 3307.81 , 3307.87
Prior Effective Dates: 7/1/2001 (Emer.), 9/17/01, 9/17/02, 6/18/09

3307:2-5-07 Beneficiaries.

(A) Subject to section 3307.87 of the Revised Code and rule 3307:2-5-08 of the Administrative Code, a participant in the defined contribution program may designate a beneficiary as specified in the plan document. Such a designation shall be in writing on a form provided by and received by the retirement system before the participant's death and the form must be completed in a manner satisfactory to the retirement system in its sole discretion. The most recent designation filed with the retirement system revokes all previous designations. The participant's marriage, termination of marriage, legal separation, withdrawal or distribution of account, or the birth of the participant's child or the participant's adoption of a child shall constitute an automatic revocation of any previous designation. A permanent election by a participant in the combined plan or defined contribution plan that results in a change from the participant's's original retirement plan selectionshall also constitute an automatic revocation of any previous designation.

(B) For beneficiary designations received pursuant to paragraph (A) of this rule where the

participant named two or more beneficiaries and specified percentages for each of the beneficiaries, the state teachers retirement system shall pay the specified percentage of a lump-sum payment to each named beneficiary if all of these conditions are met:

(1) Two or more beneficiaries were named in a valid designation.

(2) Percentages were provided for all named beneficiaries.

(3) The sum of the percentages is one hundred per cent.

If any one of these conditions is not met, the lump-sum payment will be divided equally among the beneficiaries. Should a designated beneficiary predecease the participant, those funds shall be prorated based on the remaining percentages designated and paid to the other designated beneficiaries.

(C) In the event a designation of beneficiary is not in effect upon the death of a participant prior to retirement, any beneficiaries may qualify in accordance with the terms of the plan document in the following order of precedence:

(1) Surviving spouse;

(2) Children, share and share alike;

(3) Parents, share and share alike;

(4) Estate.

(5) Person responsible for funeral expenses up to the full amount of the funeral expenses.

(D) Prior to the effective date of an application for retirement by a participant in the combined plan, the same person must be designated as a beneficiary or determined to qualify as a beneficiary as set forth in paragraph (C) of this rule in the event of the participant's death. At retirement the participant may, however, designate different beneficiaries for the defined contribution and defined benefit portions of the combined plans.

(E) If the death of a participant is caused by one of the following beneficiaries, no amount due under a plan established under section 3307.81 of the Revised Code or Chapters 3307:2-1 to 3307:2-7 of the Administrative Code shall be paid to the beneficiary in the absence of a court order to the contrary filed with the retirement system:

(1) A beneficiary who is convicted of, pleads guilty to, or is found not guilty by reason of insanity of a violation or complicity in the violation of either of the following:

(a) Section 2903.01 , 2903.02 or 2903.03 of the Revised Code;

(b) An existing or former law of any other state, the United States, or a foreign nation that is substantially equivalent to section 2903.01 , 2903.02 or 2903.03 of the Revised Code;

(2) A beneficiary who is indicted for a violation of or complicity in the violation of the sections or laws described in this rule and is adjudicated incompetent to stand trial;

(3) A beneficiary who is a juvenile is found to be a delinquent child by reason of committing an act that, if committed by an adult, would be a violation of or complicity in the violation of the sections or laws described in this rule.

(F) If a beneficiary cannot be located or fails to submit the appropriate application within ninety days of notification of available benefits, the rights of that beneficiary shall be deemed waived and the next beneficiary in succession shall be entitled to payment. Any payment made to a beneficiary as determined by the retirement system shall be a full discharge and release to the system from any future claims.

Effective: 06/12/2014
R.C. 119.032 review dates: 03/24/2014 and 06/01/2019
Promulgated Under: 111.15
Statutory Authority: 3307.80
Rule Amplifies: 3307.81 , 3307.87
Prior Effective Dates: 7/1/01 (Emer.), 9/17/01, 8/9/07, 6/18/09, 1/7/13
(Emer.), 3/24/13, 7/1/13 (Emer.), 9/9/13

3307:2-5-08 Spousal consent.

The following rule is adopted to implement section 3307.87 of the Revised Code:

(A) If a defined contribution program participant who has terminated covered employment is married and is at least age fifty at the time of application for withdrawal of a balance of five thousand dollars or more, consent of the spouse shall be required under the circumstances and subject to the exceptions specified by section 3307.87 of the Revised Code.

(B) If a defined contribution program participant is married at the time of the application for a retirement benefit as specified by these rules and the terms of the plan document, the consent of the spouse shall be required for the participant to select any form of payment, benefit or plan of payment that is not of a joint and survivor annuity with at least fifty per cent continuing for the lifetime of the spouse upon the death of the participant.

(C) The designation of a beneficiary other than the spouse by a participant married at the time of designation shall be subject to the consent of the spouse.

(D) The defined contribution portion of the combined plan and the defined benefit portion of that plan shall be subject to separate requirements of spousal consent.

(E) The foregoing requirements shall not apply if a spouse cannot be located or for any other reason specified by rule 3307:1-5-02 or 3307:1-12-01 of the Administrative Code.

Effective: 06/12/2014
R.C. 119.032 review dates: 03/24/2014 and 06/01/2019
Promulgated Under: 111.15
Statutory Authority: 3307.80
Rule Amplifies: 3307.81 , 3307.87
Prior Effective Dates: 7/1/01 (Emer.), 9/17/01, 9/17/02, 6/18/09

3307:2-5-09 Plans of payment.

(A) A defined contribution program participant granted a retirement benefit upon attainment of a minimum age of fifty and termination of covered employment may elect to accept in lieu of a lump-sum payment of the member account, a monthly benefit in accordance with the terms and conditions of the plan document under any of the plans of payment available for defined benefit members under the terms of rule 3307:1-5-02 of the Administrative Code and section 3307.60 of the Revised Code, except for a lump-sum payment made under division (B) of section 3307.60 of the Revised Code. A plan of payment selected may be changed or reselected only as therein provided. If the participant elects to annuitize such payment, no change may be made in the plan of payment selected for such annuity after the fifteenth day of the month of the first regular benefit payment. Regular benefits begin once a final benefit, as defined by paragraph (F) of rule 3307:1-1-01 of the Administrative Code, is paid.

(B) A combined plan participant granted a retirement benefit under the defined benefit portion of the account may elect to accept in lieu of a lump-sum payment, a monthly benefit in accordance with the terms and conditions of the plan document under any of the plans of payment available for defined benefit members under the terms of section 3307.60 of the Revised Code and rule 3307:1-5-02 of the Administrative Code. A plan of payment selected may be changed or reselected only as therein provided. Selection of a plan of payment shall become final as set forth in paragraph (G) of rule 3307-8-01 of the Administrative Code.

Effective: 06/12/2014
R.C. 119.032 review dates: 03/24/2014 and 06/01/2019
Promulgated Under: 111.15
Statutory Authority: 3307.80
Rule Amplifies: 3307.81
Prior Effective Dates: 7/1/01 (Emer.), 9/17/01, 9/17/02, 6/18/09

3307:2-5-10 Rollovers distributed.

Direct rollover distributions may be paid by the retirement system as specified by section 6.7 of the plan document and subject to the same procedures as specified by paragraph (A) of rule 3307:1-12-01 of the Administrative Code.

R.C. 119.032 review dates: 03/24/2014 and 03/24/2019
Promulgated Under: 111.15
Statutory Authority: 3307.80
Rule Amplifies: 3307.81 , 3307.812
Prior Effective Dates: 7/1/01 (Emer.), 9/17/01, 7/1/02 (Emer.), 9/17/02, 6/18/09 (rescind and replace)