742-9-16 Federal tax compliance provisions.

(A) The board shall distribute the funds established in Chapter 742. of the Revised Code to participants and their beneficiaries in accordance with the provisions of such chapter. No part of the corpus or income of these funds may be used for or diverted to any purpose other than the exclusive benefit of the participants and their beneficiaries.

(B) If there is a termination of the plan described in Chapter 742. of the Revised Code or a complete discontinuance of contributions to the plan, the rights of each affected member to the benefits accrued at the date of termination or discontinuance of contributions, to the extent then funded, are non-forfeitable.

(C) Employer contribution forfeitures of a member arising from severance of employment, death, or for any other reason shall not be applied to increase the benefits any member would otherwise receive under Chapter 742. of the Revised Code in accordance with Section 401(a)(8) of the Internal Revenue Code or its successor provision and applicable regulations thereunder.

(D) Notwithstanding any provisions in OP&F rules or Chapter 742. of the Revised Code to the contrary, distributions to members and beneficiaries shall be made in accordance with Section 401(a)(9) of the Internal Revenue Code or its successor provision and applicable regulations thereunder and with the following rules.

(1) The entire interest of a member shall be distributed to such member:

(a) No later than the required beginning date; or

(b) Beginning not later than the required beginning date, in accordance with applicable regulations, over the life of such member and a designated beneficiary within the meaning of Section 401(a)(9) of the Internal Revenue Code or its successor provision.

(2) The required beginning date means April first of the calendar year following the later of:

(a) The calendar year in which the member attains age seventy and one-half years of age; or

(b) The calendar year in which the member retires.

(3) If distribution of a member’s benefit has begun pursuant to the provisions of Section 401(a)(9) of the Internal Revenue Code or its successor provision and the accompanying regulations, and the member dies, any survivor benefits will be distributed as reasonably practicable under the plan of payment selected and effective as of the date following the member’s death.

(4) If a member dies before the distribution of the member’s interest has begun pursuant to the provisions of Section 401(a)(9) of the Internal Revenue Code or its successor provision and the accompanying regulations, any remaining interest of the member will be distributed within five years after the death of such member. However, if any benefit is payable to or for the benefit of a beneficiary within the meaning of Section 401(a)(9) of the Internal Revenue Code or its successor provision, the benefit may be distributed (in accordance with applicable regulations) over the life of such beneficiary (or over a period not extending beyond the life expectancy of such beneficiary), provided that such distribution begin not later than one year after the date of the member’s death.

(5) Any death benefit amounts payable under Chapter 742. of the Revised Code must comply with the incidental death benefit requirements of Section 401(a)(9)(G) of the Internal Revenue Code or its successor provision and regulations thereunder.

(E) Whenever the amount of the benefit is to be determined on the basis of actuarial assumptions, no employer discretion will be permitted.

(F) A member who is entitled to a distribution which qualifies as an eligible rollover distribution pursuant to Sections 401(a)(31) and 402(f)(2)(A) of the Internal Revenue Code or its successor provision may request that the distribution be paid in a direct rollover to another eligible retirement plan to the extent permitted by Section 401(a)(31) of the Internal Revenue Code or its successor provision.

(G) The annual compensation of each member taken into account in determining benefit accruals in any plan year beginning after December 31, 2001 shall not exceed two hundred thousand dollars. Annual compensation means “salary,” as such term is defined in ection 742.01 of the Revised Code and rule 742-3-2 of the Administrative Code during the plan year or such other consecutive twelve month period over which salary is otherwise determined under the plan (hereinafter referred to as the “Determination Period”). In determining benefit accruals in plan years beginning after December 31, 2001, the annual compensation limit for the determination period beginning before January 1, 2002 shall be two hundred thousand dollars. The two hundred thousand dollar limit on annual compensation in this subsection (G) shall be adjusted for cost-of-living increases in accordance with Internal Revenue Code Section 401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year applies to annual “salary” for the Determination Period that begins with or within such calendar year.

(H) For purposes of the limit established by Section 415 of the Internal Revenue Code (as used in 742.37, 742.3716, 742.3717, 742.3719 or 742.39 of the Ohio Revised Code), effective January 1, 1998, compensation shall include amounts excludable from the employee’s gross income under Code Sections 125, 132(f), 402(e)(3), 402(h), 403(b), or 457.

HISTORY: Eff 6-2-02 (Emer.); 9-13-02; 1-2-03 (Emer.); 4-27-03

Rule promulgated under: RC 111.15

Rule authorized by: RC 742.10

Rule amplifies: RC 742.10

R.C. 119.032 review dates: 01/07/2003 and 04/27/2008