Proposed Board Rule Changes
At their February 17, 2023 meeting, the MOSERS Board of Trustees adopted:
- Board Rule 4-12, "Vesting" (for the Judicial Plan only),
- Board Rule 4-13, "Application of Chapter 104",
- Board Rule 8-4, "Eligible compensation under Internal Revenue Code 401(a)(17)", and
- Revisions to Board Rule 1-1 “Rulemaking” and Board Rule 8-2 “Compliance with Internal Revenue Code and Regulations."
All board rule changes will take effect on April 21, 2023.
PURPOSE: This rule sets forth the manner in which a Judge waives retirement benefits under Section 476.683, RSMo.
- Notwithstanding RSMo § 476.683 or any other provision of the Judicial Plans to the contrary, a member shall be 100% vested in the benefits provided under the Plan upon reaching the Plan's eligibility requirements for an unreduced retirement benefit.
- Pursuant to RSMo § 476.683, a member who becomes eligible for retirement compensation after August 13, 1988, but does not retire before reaching the stipulated age shall cease accruing service and compensation credit benefits under the Plan as of the date the member turns the stipulated age. Any service or compensation that would otherwise accrue after the Judge reached the stipulated age shall not be considered when calculating the member's retirement benefit.
4-13 Application of Chapter 104
PURPOSE: This rule clarifies that provisions in Chapter 104 necessary for compliance with the Internal Revenue Code also apply to the Judicial Plan and the Administrative Law Judge and Legal Advisor Retirement Plan.
- Unless the context clearly indicates otherwise, the provisions of Chapter 104 of the RSMo that apply to the Missouri State Employees Retirement Plan also apply to the Judicial Plans and the Administrative Law Judge and Legal Advisor Retirement Plan ("ALJ Plan").
8-4 Eligible compensation under Internal Revenue Code 401(a)(17)
PURPOSE: This rule sets forth the procedure to determine eligible compensation under Internal Revenue Code Section 401(a)(17). Unless the context clearly indicates otherwise, this rule applies to all plans administered by MOSERS.
Background: Code Section 401(a)(17) limits the maximum amount of annual compensation which may be taken into account for contributions and benefit calculations for a member in a qualified retirement plan
- For purposes of Code Section 401(a)(17), eligible compensation for the limitation year will be based upon the date the compensation was earned even if not paid until the next limitation year. No compensation shall be included in more than one limitation year.
- Code Section 401(a)(17) and the Treasury Regulations thereunder provide that if a plan determines compensation with respect to a period of time that contains fewer than twelve months, the annual compensation limit is prorated for the number of months taken into account. A member’s eligible compensation cannot exceed the compensation limit established in Code Section 401(a)(17) prorated for the number of months worked in any calendar year. Any contributions received on compensation in excess of this amount will be refunded. Any compensation reduced due to Code Section 401(a)(17) limits will be spread evenly over the months worked for benefit calculation purposes.
- As used in this rule, the term "eligible member" means a person who first became a member in the plan prior to the plan year beginning after December 31, 1995 (January 1, 1996). Pursuant to section 13212(d)(3)(A) of OBRA ‘93, and the regulations issued under that section, eligible members are not subject to the limits of Code Section 401(a)(17). The limits referenced above applies only to years beginning after December 31, 1995, and only to individuals who first become plan members in plan years beginning on and after January 1, 1996.
PURPOSE: This rule sets forth the procedures for establishing administrative rules as provided in Section 104.1063, RSMo.
- Pursuant to Section 104.1063, RSMo, the board of trustees of the Missouri State Employees' Retirement System "is authorized to promulgate rules to properly administer the system and govern its own proceedings."
- Rules may be promulgated by the board of trustees, or may be amended or repealed, in whole or in part, at any meeting of the board of trustees. Proposed rulemaking (which includes making new rules and any amendment or repeal of an existing rule) shall be posted on the system's public website for a comment period of 30 days following adoption by the board of trustees. The adopted rule shall become effective at the end of the comment period. If comments are received during the comment period, staff shall report the comments to the board of trustees at the next regularly scheduled board meeting. The board of trustees may modify the adopted rule in response to the comments. Any modifications shall be effective immediately unless the board of trustees elects to provide a comment period.
- All rules promulgated by the system that are currently in effect shall be made available on the system's public website.
- The system shall review all of its rules at least every five years.
8-2 Compliance with Internal Revenue Code and Regulations
PURPOSE: This rule sets forth the procedures for complying with applicable provisions of the Internal Revenue Code.
- Sections 104.010 and 104.1003, RSMo. require that benefits paid by the system not exceed the limitations of Internal Revenue Code Section 415.
In no event shall the annual benefit under this Plan maintained by the Employer exceed the amount specified in Code Section 415(b)(1)(A), as adjusted for any applicable increases in the cost of living in accordance with Code Section 415(d), as in effect on the last day of the Plan Year. Notwithstanding anything to the contrary in this board rule, the annual benefit, when paid in the form of a joint and survivor annuity, can be as great as that of a single life annuity for the member, not in excess of the limitations contained in the first sentence of this board rule, plus a survivor annuity at the same level for the member's spouse.
Code Section 415 is hereby incorporated by reference; provided that the repeal of Code Section 415(e), which is effective for limitation years beginning on or after July 1, 2000, shall apply only to a member whose accrued benefit increases on or after July 1, 2000. The reduced limitation for early retirement benefits shall be determined in accordance with applicable regulations using the actuarial assumptions prescribed in the Plan, except as otherwise required by Section 415(b)(2)(E) of the Code. The reduced limitation for early retirement benefits and the adjustment for any form of benefit subject to Section 417(e)(3) of the Code shall be determined in accordance with applicable regulations using the actuarial assumptions prescribed in the Plan, except as otherwise required by Section 415(b)(2)(E) of the Code. With respect to Plan Years beginning on or after July 1, 2008, the mortality table used shall be the applicable mortality table (within the meaning of Code Section 417(e)(3)(B)).
To the extent permitted by Treas. Reg. §1.415(b)-1(c)(5), no adjustment shall be required to a benefit that is paid in a form that is not a straight life annuity to take into account the inclusion of an automatic benefit increase feature in such form of benefit. In no event will the amount payable in any limitation year to a member under a form of benefit with an automatic benefit increase feature be greater than the Code Section 415(b) limit applicable at the annuity starting date, as increased in subsequent years pursuant to Section 415(d) of the Code and Treas. Reg. §1.415(d)-1. In the case of a member who received any portion of his or her benefit in the form of payment that is subject to Code Section 417(e)(3), the exception provided for in this paragraph shall not apply to his or her entire benefit.
Reduction of benefits or contributions to all plans, where required to comply with this board rule, shall be accomplished by reducing the member's benefit under any defined benefit plans maintained by the employer in which he or she participated, such reduction to be made first with respect to the plan in which he or she most recently accrued benefits and thereafter in such priority as shall be determined by the system.
- Sections 104.330 and 104.1021, RSMo, require that employees shall receive creditable service and salary credit mandated by federal law under the Uniformed Services Employment and Reemployment Rights Act.
Notwithstanding any provision of the Plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with Section 414(u) of the Code. If a member dies while performing qualified military service on or after January 1, 2007, the survivors of the member are entitled to any additional benefits (other than benefit accruals relating to the period of qualified military service) provided under the Plan as if the member had resumed employment and then experienced a termination of employment on account of death. For years beginning after December 31, 2008: (a) an individual performing service in the uniformed services (as described in Section 3401(h)(2)(A) of the Code) for a period of more than 30 days receiving a differential wage payment from an employer shall be treated as an employee of such employer; and (b) the differential wage payment (as described in Section 3401(h)(2) of the Code) shall be treated as compensation.
- Sections 104.401, 104.415, and 104.1048, RSMo, require that the system comply with minimum distribution requirements in Section 401(a)(9) of the Internal Revenue Code. The system shall comply with a reasonable and good faith interpretation of Section 401(a)(9) of the Internal Revenue Code.
- Section 104.605, RSMo, allows the system to make certain rollover distributions in compliance with the Internal Revenue Code and regulations.
Adistributee may elect, at the time and in the manner prescribed by the system, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee (a "direct rollover ").
- A distributee includes an employee or former employee. In addition, the employee's or former employee's surviving spouse and the employee's or former employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Code, are distributees with regard to the interest of the spouse or former spouse.
- An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Section 401(a)(9) of the Code
;and any hardship distribution. Aportion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions which are not includible in gross income . However,such portion may be transferred only to an individual retirement account or annuity described in Section 408(a) or (b) of the Code, or effective January 1, 2007, such amount may be transferred in a direct trustee-to- trustee transferto a qualified trust described in Section 401(a) of the Code or an annuity contract described in Section 403(b) of the Code thatagrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible.
- An eligible retirement plan is an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, a Roth IRA described in Section 408A(b) of the Code (effective for distributions after December 31, 2007), an annuity plan described in Section 403(a) of the Code, or a qualified plan described in Section 401(a) of the Code, that accepts the distributee's eligible rollover distribution. An eligible retirement plan shall also mean an annuity contract described in Section 403(b) of the Code and an eligible plan under Section 457(b) of the Code which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and
which agrees to separately account for amounts transferred into such plan from this Plan.
Effective for distributions after December 31, 2009,
a non-spouse beneficiary may elect to receive his or her distribution from the Plan in the form of a direct trustee- to-trustee transfer toan eligible retirement plan in accordance withSection 402(c)(11) of the Code.
- Sections 104.320 and 104.1006, RSMo, provide the board authority to administer the system including making investments of system assets. Sections 105.915, RSMo, and 105.927 provide the board authority to designate the investments available under the plans established pursuant to Sections 105.900 to 105.927, RSMo, (the State of Missouri Deferred Compensation 457(b) Plan for Public Employees and the State of Missouri Deferred Compensation Incentive 401(a) Plan for Public Employees, hereinafter the "Deferred Compensation Plans"). Section 105.915, RSMo, provides that the assets of the Deferred Compensation Plans may be pooled solely for investment management purposes with assets of the trust established by the board's authority under Section 104.320, RSMo, For these purposes, assets of the system may be commingled with the assets of the Deferred Compensation Plans in any collective investment fund, including common and group trust funds that consist exclusively of assets of exempt pension and profit sharing trusts and individual retirement accounts, custodial accounts, retirement income accounts, governmental plans and tax-exempt trusts under the Internal Revenue Code of 1986 and Rev. Rul. 81-100, as modified by Rev. Ruls. 2004-67, 2008-40 and 2011-1. The assets so invested shall be subject to all the provisions of the instruments establishing and governing such funds. Those instruments of group trusts, including any subsequent amendments, are hereby incorporated by reference and made a part of the closed plan, MSEP 2000 plan, or (inclusively) each of the Deferred Compensation Plans, as applicable, to the extent of the system's investment therein.
- The provisions of this board rule will apply to the closed plan and the MSEP 2000 plan. The provisions of paragraph 5 of this board rule will also apply to the Deferred Compensation Plans.
You may submit written comments to MOSERS general counsel regarding these changes at any time prior to April 21, 2023. The Board will consider any comments received and has the authority to take additional action as it deems appropriate regarding these rules.