CHAPTER 3-13C
DEPARTMENT OF LABOR AND REGULATION EMPLOYEE RETIREMENT
3-13C-1 Definitions.
3-13C-2 Actuarial equivalent--Distribution expected--Determination of amount.
3-13C-3 Compensation determined.
3-13C-4 Credited past service--Determination.
3-13C-5 Credited service--Determination.
3-13C-6 Eligible retirement plan--Determination.
3-13C-7 Eligible rollover distribution.
3-13C-8 Normal retirement date--Determination.
3-13C-9 Confidentiality of records--Exceptions.
3-13C-10 Class D members vested--Contributions not required--Participation ceases.
3-13C-11 Beneficiaries--Records.
3-13C-12 Direct rollovers--Election by distributee.
3-13C-13 Required minimum distributions--General rule.
3-13C-13.1 Required minimum distributions--Member's death after distributions begun.
3-13C-13.2 Required minimum distributions--Member's death before distributions begun.
3-13C-13.3 Required minimum distributions--Incidental benefit rule.
3-13C-13.4 Required minimum distributions--Reasonable and made in good faith.
3-13C-14 Vested accrued benefit--Distribution--Small amounts payment.
3-13C-15 Accrued benefit determined.
3-13C-16 Amount of benefit at retirement.
3-13C-17 Benefit limitation.
3-13C-18 Preretirement death benefits--Payment recipient--Conditions--Determination of amount.
3-13C-19 Death benefit after retirement determination--Payment amount determined.
3-13C-20 Vested benefits--Distribution amount determined.
3-13C-21 Retirement benefits--Optional forms.
3-13C-22 Death benefits--Optional forms.
3-13C-23 Election of benefits--Requirements.
3-13C-1 . Definitions.
Terms used in this chapter mean:
(1) "Accrued benefit," on any date, the amount of monthly retirement benefit under the normal form accrued by an active participant as of any date and payable at normal retirement date, or any later date;
(2) "Active participant," an eligible employee who is actively participating as a Class D member of the South Dakota Retirement System;
(3) "Adjustment factor," the annual cost of living adjustment determined in § 3-12C-704 ;
(4) "Alternate payee," any spouse, former spouse, child, or other dependent of a participant who is recognized by a qualified domestic relations order as having a right to receive all, or a portion of, the benefits payable as a Class D member of the South Dakota Retirement System;
(5) "Annuity contract," an annuity contract for guaranteed benefits, for the investment of contributions in separate accounts, and for the payment of benefits under the plan provided in this chapter;
(6) "Average compensation," on any given date, the average of an employee's monthly compensation for those five consecutive compensation dates, or all compensation dates if less than five, that give the highest average out of all compensation dates. The term includes compensation dates within the period beginning on the participant's entry date and ending on the date of determination. In computing average compensation, the plan must exclude compensation dates in which the employee terminates employment with the employer and compensation dates in which an employee performs no hours of service;
(7) "Beneficiary," any person named by a participant to receive any benefits when the participant dies;
(8) "Compensation date," the July first immediately before an employee's entry date and the same date of each following year in which the employee is an active participant;
(9) "Contingent participant," a person named by the participant to receive a lifetime benefit after the participant's death in accordance with a survivorship life annuity;
(10) "Dependent child," any natural born child, legally adopted child, stepchild, or foster child of the participant, if the child is unmarried, is not in the Armed Forces of any country, has not attained age nineteen or older, or age twenty-four for a child who is attending school on a full-time basis, and, before the participant’s death, was dependent upon the participant for principal support and maintenance, and, if a stepchild or foster child, resided in the participant’s household. School vacation periods during any calendar year, that interrupt but do not terminate what otherwise would have been a continuous course of study in that calendar year, must be considered a part of school attendance on a full-time basis. A dependent child may also include any child born after the participant’s death;
(11) "Designated beneficiary," the person who is designated by the participant, or the participant’s surviving spouse, as the beneficiary of the participant’s interest as a Class D member and who is the designated beneficiary under 26 U.S.C. §§ 401(a)(9) and 26 C.F.R. § 1.401(a)(9)-4;
(12) "Direct rollover," a payment by the system to the eligible retirement plan specified by the distributee;
(13) "Distributee," 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 26 U.S.C. § 414(p), are distributees with regard to the interest of the spouse or former spouse. A distributee includes the employee's or former employee's nonspouse designated beneficiary, in which case, the distribution can only be transferred to a traditional individual retirement account or Roth individual retirement account established on behalf of the nonspouse designated beneficiary and that must be treated as an inherited individual retirement account pursuant to the provisions of 26 U.S.C. § 402(c)(11);
(14) "Eligible employee," any employee of the employer whose employment commenced prior to July 1, 1980, including an employee who was on probationary status by this date, and excluding the following:
(a) An employee who is not employed on a full-time permanent status. Full-time permanent status means an employee works an average of twenty hours per week, or in the opinion of the employer, can be expected to work an average of twenty hours per week over the next year;
(b) An employee who has elected to become a Class A member of the South Dakota Retirement System on or after July 1, 1980, and before July 1, 1981; and
(c) An employee who retired before January 1, 1987;
(15) "Employee," a person who is employed by the employer or any other employer required to be aggregated with the employer under 26 U.S.C. § 414(b), (c), (m), or (o). The term includes any person receiving differential wage payments;
(16) "Employer," the South Dakota Department of Labor and Regulation, Job Service, Reemployment Assistance formerly known as the Unemployment Insurance Division, and Office of Administrative Services;
(17) "Entry date," the date an employee first enters the plan as an active participant;
(18) "Inactive participant," a former active participant who has an accrued benefit;
(19) "Internal Revenue Code," or "Code," as defined in § 3-12C-101 ;
(20) "Involuntary termination of employment," the date a participant ceases to be an employee due to involuntary termination of employment which is against the employee's will or without the employee's consent. This term excludes for cause on the charges of misconduct and delinquency, and includes reduction in force, abolishment of a position, or liquidation of an office or agency;
(21) "Late retirement date," the first day of any month after a participant's normal retirement date and on which retirement benefits begin. If a participant continues to work for the employer after the normal retirement date, the participant's late retirement date shall be the earliest first day of the month on or after the date of severance from employment;
(22) "Leased employee," any person other than an employee of the employer who, pursuant to an agreement between the employer and any other person, has performed services for the employer on a substantially full-time basis for a period of at least one year, and the services are performed under primary direction or control by the employer. Contributions or benefits provided by the leasing organization to a leased employee, which are attributable to service performed for the employer, shall be treated as provided by the employer. A leased employee is considered an employee of the employer if:
(a) The employee previously worked for the employer, but the position was moved to the leasing organization and not terminated; and
(b) Leased employees do not constitute more than twenty percent of the employer's nonhighly compensated work force;
(23) "Mandatory distribution," a distribution to a participant that is made without the participant’s consent and is made to the participant before the participant attains the older of age sixty-two or normal retirement age;
(24) "Monthly compensation," for any compensation date, an employee's monthly compensation on that date. If an employee is not an employee on the compensation date, the employee's compensation on the employee's latest entry or reentry date, whichever applies, is treated as the employee's compensation on the compensation date;
(25) "Monthly date," each yearly date and the same day of each following month during the plan year beginning on the yearly date;
(26) "Normal form," a single life annuity with certain period, where the certain period is ten years;
(27) "Participant," either an active participant or an inactive participant;
(28) "Plan," the plan as provided in this chapter;
(29) "Plan year," a consecutive twelve-month period beginning on a yearly date and ending on the day before the next yearly date. If the yearly date changes, the result is a short plan year;
(30) "Present value," the actuarial equivalent of another benefit, expressed as a single sum amount;
(31) "Prior plan," the retirement plan of the employer before December 1, 1984;
(32) "Reentry date," the date a former active participant reenters the plan;
(33) "Required contribution account," the total of a participant's required contributions and, on and after January 1, 1990, the participant's pick-up contributions, with interest. Contributions previously paid to the participant and any interest that would have been credited on those contributions, are excluded. Interest must be credited in accordance with § 3-12C-108 . Interest must be credited on each required contribution from the end of the plan year for which it was made until the monthly date on or before the date of determination. Interest must be credited from December 1, 1984, on contributions made and interest credited;
(34) "Required contribution accrued benefit," the amount of monthly retirement benefit under the normal form accrued by an active participant as of any date and payable at the normal retirement date derived from the participant's required contributions;
(35) "Retirement date," the date a retirement benefit will begin and is a participant's early, normal, or late retirement date;
(36) "Severance from employment," notwithstanding the provisions of § 3-13C-17, an employee has ceased to be an employee. An employee does not have a severance from employment if, in connection with a change of employment, the employee's new employer maintains this plan with respect to the employee. Severance from employment must have occurred in accordance with the applicable regulations;
(37) "Spouse," a person the participant is continuously married to at least throughout the one-year period ending on the date of death;
(38) "South Dakota Retirement System," or "system," the system created in chapter 3-12C and the administrator of the plan;
(39) "Vested accrued benefit," on any date, the participant’s accrued benefit resulting from employer contributions multiplied by the participant's vesting percentage on that date, plus the participant's required contribution accrued benefit;
(40) "Yearly date," August 1, 1961, and each following August first through August 1, 1969, and each following July first;
(41) "Years of service," the total of an employee's credited service, expressed as whole years and fractional parts of a year. A period of military duty is included as service with the employer to the extent it has not already been credited.
Source: SL 2020, ch 13, § 8.
3-13C-2 . Actuarial equivalent--Distribution expected--Determination of amount.
For purposes of this chapter, actuarial equivalent means equality in the value of the aggregate amount expected to be received for benefits payable at different times or under different forms of distributions. For purposes of determining the amount of a distribution other than an annual benefit nondecreasing for the life of the participant or, in the case of a preretirement survivor annuity, the life of the participant’s spouse; or that decreases during the life of the participant merely because of the death of the surviving contingent participant, but only if the reduction is to a level not below fifty percent of the annual benefit payable before the death of the surviving contingent participant, or because of the cessation or reduction of Social Security supplements or qualified disability payments, actuarial equivalent shall be determined on the basis of the interest on thirty-year United States Treasury securities for the look-back month for the stability period and the 1994 Group Annuity Reserve Mortality Table. The look-back month applicable to the stability period is the second calendar month preceding the first day of the stability period. The stability period is the successive period of one calendar month containing the annuity starting date for the distribution, and for which the interest rate remains constant.
For purposes of determining benefits not described in the preceding paragraph, actuarial equivalent for benefits shall be determined on the basis of seven and one-half percent interest and the 1983 Group Annuity Mortality Table as set forth in Revenue Ruling 95-6, 1995-1 C.B. 80.
Source: SL 2020, ch 13, § 9.
3-13C-3 . Compensation determined.
For the purposes of this chapter, compensation means an employee's fixed rate of pay from the employer. Compensation includes differential wage payments. Except as provided in this section, compensation for a specified period is the compensation actually paid or made available during that period. Compensation for a plan year also includes compensation paid by the later of two and one-half months after an employee's severance from employment with the employer maintaining the plan or the end of the plan year including the date of the employee's severance from employment with the employer, if the payment is regular compensation for services during the employee's regular working hours, or compensation for services outside the employee's regular working hours, commissions, bonuses, or other similar payments, and, absent a severance from employment, the payments would have been paid to the employee while the employee continued in employment with the employer.
Any payments not described in the preceding paragraph are not considered compensation if paid after severance from employment, even if paid by the later of two and one-half months after the date of severance from employment or the end of the plan year including the date of severance from employment.
Back pay, within the meaning of 26 C.F.R. § 1.415(c)-2(g)(8), shall be treated as compensation for the plan year to which the back pay relates to the extent the back pay represents wages and compensation that otherwise would be included in this definition.
Compensation paid or made available during a specified period includes amounts that would otherwise be included in compensation, but for an election under 26 U.S.C. § 125(a), 132(f)(4), 402(e)(3), 402(h)(1)(B), 402(k), or 457(b). Compensation includes employee contributions picked-up by a governmental entity and, pursuant to 26 U.S.C. § 414(h)(2), treated as employer contributions.
The annual compensation of each participant taken into account in determining contributions and benefits for any determination period, which is the period over which compensation is determined, may not exceed the limits established in 26 U.S.C. § 401(a)(17), as adjusted for cost-of-living increases in accordance with 26 U.S.C. § 401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year applies to any determination period beginning with or within that calendar year.
Source: SL 2020, ch 13, § 10.
3-13C-4 . Credited past service--Determination.
For the purposes of this chapter, credited past service is the total of an employee's service before August 1, 1961. This total is expressed in whole years and fractional parts of a year including a complete month as a fractional part of a year. This service is credited only to an employee who became an active participant before or on August 1, 1961 or who, as of that date, had permanent status but was absent from active work and became an active participant before August 1, 1962.
However, credited past service is modified as follows:
(1) Service during a period in which an employee is receiving or is entitled to receive a Federal Civil Service Retirement Pension is excluded;
(2) Service during a period in which an employee has made contributions to the Federal Civil Service Retirement System and the contributions had not been withdrawn before August 1, 1961, or application for withdrawal of the contributions is not made by the employee within thirty days after the employer receives certification from the United States Civil Service Commission that the employee currently has contributions in the Federal Civil Service Retirement System, is excluded; unless contributions to fund the Past Service benefit otherwise available to the employee are made available from funds other than funds granted by Title III of the Federal Social Security Act;
(3) Service accrued for a plan year in which an employee was not an eligible employee is excluded;
(4) A period of military duty shall be included as service with the employer to the extent it has not already been credited. The service is considered to be service as an eligible employee only if an employee was an eligible employee on the day immediately preceding the period of military duty; and
(5) Other service included:
(a) Indefinite leave of absence granted under Presidential Executive Order 8990, dated December 23, 1941, including any services performed for the United States Employment Service or the War Manpower Commission from January 1, 1942, to November 15, 1946, inclusive, and including any leave for Military Service granted by either the United States Employment Service or the War Manpower Commission, with or without pay; and
(b) All other approved leaves.
Source: SL 2020, ch 13, § 11.
3-13C-5 . Credited service--Determination.
For purposes of this chapter, credited service is the sum of credited past service before August 1, 1961 and the total of the employee's continuous service with the employer on and after August 1, 1961, expressed in whole years and fractional parts of a year including a complete month as a fractional part of a year.
However, credited service is modified as follows:
(1) Service while an employee was not an active participant or an active participant under the prior plan is excluded;
(2) Service while an employee failed or refused to make a contribution required under the plan or prior plan is excluded. This provision also applies to an employee's service while contributions were not made because the employee failed or refused to complete a written agreement to make the contributions;
(3) A period of military duty shall be included as service with the employer to the extent it has not already been credited. The service is considered to be service as an eligible employee only if an employee was an eligible employee on the day immediately preceding the period of military duty; and
(4) Unused accumulated annual leave and unused accumulated sick leave, and special military service credit, if any, shall be included as service with the employer to the extent it has not already been credited.
Source: SL 2020, ch 13, § 12.
3-13C-6 . Eligible retirement plan--Determination.
For purposes of this chapter, an eligible retirement plan is an eligible plan under 26 U.S.C. § 457(b) maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and that agrees to separately account for amounts transferred into that plan from this plan, a traditional individual retirement account, a Roth individual retirement account, an annuity plan described in 26 U.S.C. § 403(a), an annuity contract described in 26 U.S.C. § 403(b), or a qualified plan described in 26 U.S.C. § 401(a), accepting the distributee's eligible rollover distribution. The definition of eligible retirement plan also applies if a distribution is made to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in 26 U.S.C. § 414(p).
Source: SL 2020, ch 13, § 13.
3-13C-7 . Eligible rollover distribution.
For purposes of this chapter, an eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except an eligible rollover distribution does not include:
(1) Any distribution of a series of substantially equal periodic payments, not less frequently than annually, made for the life expectancy of the distributee or the joint life expectancies of the distributee and the distributee's designated beneficiary, or for a specified period of ten years or more;
(2) Any distribution to the extent the distribution is required under 26 U.S.C. § 401(a)(9);
(3) The portion of any other distribution not includible in gross income determined without regard to the exclusion for net unrealized appreciation with respect to employer securities; and
(4) Any other distribution reasonably expected to total less than two hundred dollars during a year.
A portion of a distribution does not fail to be an eligible rollover distribution because the portion consists of after-tax employee contributions that are not includible in gross income. The portion may be transferred only to a traditional individual retirement account or annuity described in 26 U.S.C. § 408(a) or (b), a Roth individual retirement account or annuity described in 26 U.S.C. § 408A, or a qualified defined contribution, defined benefit, or annuity plan described in 26 U.S.C. § 401(a) or 403(a) or to an annuity described in 26 U.S.C. § 403(b), if the plan or contract agrees to separately account for amounts so transferred including interest thereon, while separately accounting for the portion of the distribution which is includible in gross income and the portion of the distribution which is not so includible.
Source: SL 2020, ch 13, § 14.
3-13C-8 . Normal retirement date--Determination.
For purposes of this chapter, normal retirement date is the earliest first day of the month on or after the earliest of the date the employee:
(1) Attains age sixty-five;
(2) Attains age sixty-two and has completed ten years of credited service;
(3) Attains age sixty and has completed twenty years of credited service; or
(4) Attains age fifty-five and has completed thirty years of credited service.
For purposes of determining the normal retirement date, credited service does not include unused accumulated annual or sick leave. The normal retirement date shall be the date the employee's retirement benefit begins if the employee has ceased to be an employee on that date and the retirement benefit has not already begun. Unless otherwise provided in this plan, a participant's retirement benefits shall begin on the participant's normal retirement date if the participant has had a severance from employment on that date.
Source: SL 2020, ch 13, § 15.
3-13C-9 . Confidentiality of records--Exceptions.
Any information contained in any record pertaining to a member governed by this chapter is confidential and shall be used for the sole purpose of carrying into effect the provisions of this chapter. Any record containing the information is not open to inspection by any person or entity except the member, the board, the employees of the system, or the member's employer. The information and records may be released to the member or with the member's consent. The information and records may also be released pursuant to a court order or subpoena.
Source: SL 2020, ch 13, § 16.
3-13C-10 . Class D members vested--Contributions not required--Participation ceases.
All Class D members of the South Dakota Retirement System as of July 1, 2020, are considered vested.
No contributions by Class D members are required on or after January 1, 1990.
A participant, whether active or inactive, shall cease to be a participant on the earlier of the following:
(1) The date of the participant's death; or
(2) The date the participant receives a single sum distribution in lieu of all of the benefits under the plan.
An inactive participant shall also cease to be a participant on the earliest date on which the participant is not entitled to a deferred monthly income.
Source: SL 2020, ch 13, § 17.
3-13C-11 . Beneficiaries--Records.
Each participant may name a beneficiary to receive any death benefit due for participation in the plan, other than any income payable to a contingent. The participant may change any beneficiary from time to time. The participant's beneficiary designation and any change of beneficiary shall be subject to the provisions of § 3-13C-13.
It is the responsibility of the participant to give written notice to the system of the name of the beneficiary on a form furnished for this purpose. The system shall maintain a record of each participant's beneficiary designation before the participant's retirement date.
If there is no beneficiary named or surviving when a participant dies, the participant's beneficiary shall be the participant's surviving spouse, or if there is no surviving spouse, the executor or administrator of the participant's estate.
Source: SL 2020, ch 13, § 18.
3-13C-12 . Direct rollovers--Election by distributee.
Notwithstanding any provision of the plan to the contrary limiting a distributee's election under this section, a distributee 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 in a direct rollover.
In the event of a mandatory distribution of an eligible rollover distribution greater than one thousand dollars in accordance with § 3-13C-14, if the participant does not elect to have the distribution paid directly to an eligible retirement plan specified by the participant in a direct rollover or to receive the distribution directly, the system shall pay the distribution in a direct rollover to an individual retirement plan designated by the system.
In the event of any other eligible rollover distribution to a distributee in accordance with § 3-13C-13, if the distributee does not elect to have the distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover or to receive the distribution directly, the system shall pay the distribution to the distributee.
Source: SL 2020, ch 13, § 19.
3-13C-13. Required minimum distributions--General rule.
The system shall pay all benefits in accordance with a good faith interpretation of the requirements in § 401(a)(9) of the Internal Revenue Code and the regulations in effect under that section, as applicable to a governmental plan within the meaning of § 414(d) of the Internal Revenue Code.
The member's entire interest must be distributed, or begin to be distributed, by the required beginning date, which is April first of the calendar year following the later of:
(1) The calendar year in which the member reaches the applicable age, which is determined as follows:
(a) If the member was born before July 1, 1949, the applicable age is seventy and one-half;
(b) If the member attained age seventy-two before January 1, 2023, the applicable age is seventy-two;
(c) If the member attains age seventy-two after December 31, 2022, the applicable age is seventy-three; or
(d) Effective January 1, 2033, applicable age shall have the meaning set forth in § 401(a)(9)(C)(v) of the Internal Revenue Code; or
(2) The calendar year in which the member retires and separates from service with the member's employer.
A member or beneficiary eligible for benefits must apply for benefits in order to commence distribution of benefits. The system, pursuant to a qualified domestic relations order, may establish separate benefits for a member and alternate payee.
Source: SL 2020, ch 13, § 20; SL 2021, ch 28, § 20; SL 2024, ch 21, § 5.
3-13C-13.1. Required minimum distributions--Member's death after distributions begun.
If a member dies after the required distribution of benefits has begun, the remaining portion of the member's interest shall be distributed at least as rapidly as under the same method of distribution before the member's death.
Source: SL 2021, ch 28, § 21.
3-13C-13.2. Required minimum distributions--Member's death before distributions begun.
If a member dies before required distribution of the member's benefits has begun, the member's interest shall be distributed as follows:
(1) If the member has a surviving spouse, the surviving spouse shall receive benefits over the life of the surviving spouse beginning as soon as administratively possible and effective the month after the member's death; or
(2) If the member has no surviving spouse, the member's remaining interest shall be distributed in a lump sum payment to the designated beneficiary within five years from the date of the member's death.
Source: SL 2021, ch 28, § 22.
3-13C-13.3. Required minimum distributions--Incidental benefit rule.
The death and disability benefits provided by the system are limited by the incidental benefit rule set forth in § 401(a)(9)(G) of the Internal Revenue Code and Treasury Regulation § 1.401-1(b)(1)(i). As a result, the total death or disability benefits payable may not exceed twenty-five percent of the cost for all of the member's benefits received from the system.
Source: SL 2021, ch 28, § 23.
3-13C-13.4. Required minimum distributions--Reasonable and made in good faith.
Notwithstanding the other provisions of §§ 3-13C-13 to 3-13C-13.3, inclusive, or the provisions of United States Treasury regulations, benefit options may continue so long as the option satisfies § 401(a)(9) of the Internal Revenue Code based on a reasonable and good faith interpretation of that section.
Source: SL 2021, ch 28, § 24.
3-13C-14 . Vested accrued benefit--Distribution--Small amounts payment.
If the present value of the participant's vested accrued benefit does not exceed five thousand dollars, and the participant has not started retirement benefits with respect to any portion of the vested accrued benefit, the present value of the participant's entire vested accrued benefit shall be distributed as of the earliest of the participant's retirement date or the date of severance from employment for any reason other than death. For purposes of this section, if the present value of the participant's vested accrued benefit is zero, the participant shall be deemed to have received a distribution of the present value. This is a small amounts payment. The small amounts payment is in full settlement of all benefits otherwise payable.
If a participant has a severance from employment for any reason other than death or retirement and does not elect to have a small amounts payment paid directly to an eligible retirement plan specified by the participant in a direct rollover or to receive the distribution directly and the present value of the participant's vested accrued benefit is greater than one thousand dollars, a mandatory distribution will be made in accordance with § 3-13C-12 . If the present value of the participant's vested accrued benefit is one thousand dollars or less, the present value of the participant's entire vested accrued benefit shall be paid directly to the participant.
If the present value of the preretirement spouse and dependent child death benefit or the certain period death benefit as provided in § 3-13C-18 does not exceed five thousand dollars on the date of the participant's death, the present value of the preretirement spouse and dependent child death benefit or the certain period death benefit shall be distributed as of the date the participant dies. If the single sum death benefit payable to a beneficiary does not exceed five thousand dollars, on the date of the participant’s death, the death benefit shall be distributed in a single sum as of the date the participant dies. This is a small amounts payment.
A small amounts payment is in full settlement of the death benefit otherwise payable. No other small amounts payments may be made.
Source: SL 2020, ch 13, § 21.
3-13C-15 . Accrued benefit determined.
An active participant's monthly accrued benefit as of any date, subject to the modifications below, will be equal to the product of (1) and (2) as follows:
(1) An amount equal to two percent of average compensation; and
(2) Credited service on such date.
An active participant's monthly accrued benefit may not be less than the amount of the participant's monthly retirement benefit accrued as of December 11, 1984.
After all other modifications have been applied, an active participant's monthly accrued benefit shall be reduced by the amount of deferred monthly retirement benefit under the normal form beginning on the normal retirement date in lieu of which the participant has received a single sum payment under the plan. The participant's accrued benefit resulting from employer contributions is equal to the participant's total accrued benefit reduced by the required contribution accrued benefit.
Source: SL 2020, ch 13, § 22.
3-13C-16 . Amount of benefit at retirement.
The amount of retirement benefits to be provided under the normal form for an active participant on the participant's retirement date is:
(1) On the participant's normal retirement date, the amount is equal to the participant's accrued benefit on that date;
(2) On the participant's early retirement date, the amount is equal to the participant's accrued benefit on that date, reduced by one-sixth of one percent for each month the participant's early retirement date precedes the participant's normal retirement date; or
(3) On the participant's late retirement date, the amount is equal to the participant's accrued benefit on the late retirement date.
In any event, an active participant's retirement benefit under the normal form on the participant's retirement date may not be less than the greater of the participant's required contribution accrued benefit on the participant's retirement date, reduced in the same manner as the participant's accrued benefit is reduced at early retirement date if the participant's retirement date is an early retirement date, or the monthly benefit under the normal form that is the actuarial equivalent of the participant's required contribution account on that date.
Source: SL 2020, ch 13, § 23.
3-13C-17 . Benefit limitation.
Annual benefits payable under the plan may not exceed the amount provided in 26 U.S.C. § 415 and are payable in accordance with § 3-12C-711 .
Source: SL 2020, ch 13, § 24.
3-13C-18 . Preretirement death benefits--Payment recipient--Conditions--Determination of amount.
If a participant dies before retirement benefits start, monthly payments shall be made to the surviving spouse or, if there is no surviving spouse, to the dependent child's principal support if the following provisions are met:
(1) The participant is survived by a spouse to whom the participant was continuously married throughout the one-year period ending on the date of this death;
(2) The participant is survived by a dependent child on the date of death; and
(3) The participant had not ceased to be an employee, dependent child, or beneficiary.
The amount of payments to the surviving spouse with a dependent child are equal to fifty-five percent of the amount of monthly retirement benefit expected to become payable upon attaining age sixty, assuming the participant's employment continues, and monthly compensation remains unchanged.
For each dependent child of the participant with a surviving spouse, the amount of payments is equal to the least of: sixty percent of the participant's average compensation on the date of death, divided by the number of dependent children; seventy-five dollars; or two hundred twenty-five dollars, divided by the number of dependent children.
The payments to a dependent child are in addition to the payments made to the surviving spouse.
For each dependent child of a participant who does not have a spouse on the date of death, the amount of payments is equal to the least of: seventy-five percent of the participant's average compensation on the date of death, divided by the number of dependent children; ninety dollars; or two hundred seventy dollars, divided by the number of dependent children.
In addition, a single-sum benefit equal to the participant's required contribution account on the date of death shall be payable to the participant's beneficiary.
The death benefits shall begin on the first day of the month after the participant dies and shall continue until the later of the date the surviving spouse dies, or the date there no longer is a dependent child.
If the surviving spouse remarries before the attainment of age sixty, no further monthly payments shall be made after the first day of the month immediately preceding the date of the spouse's remarriage.
Benefits payable to the dependent children of a participant who did not have a spouse on the date of death shall be assumed to continue until the date the youngest dependent child attains age twenty-two.
If the participant is not survived by a spouse, dependent child, or beneficiary, the death benefit shall be the preservation of retirement option death benefit. This death benefit is the death benefit payable to the participant's beneficiary or contingent participant if the participant's retirement date had occurred on the date of death. The optional form of distribution elected in accordance with § 3-13C-23 before the participant's death is the form in effect for determining the death benefit. Any death benefit payable shall be subject to the provisions of § 3-13C-13 .
The distribution of death benefits shall be subject to the provisions of § 3-13C-14 .
Source: SL 2020, ch 13, § 25.
3-13C-19 . Death benefit after retirement determination--Payment amount determined.
Any death benefit after a participant's retirement will be determined by the form of retirement benefit in effect on that date. If the participant has a dependent child on the date of death after retirement date, payments shall be made as follows:
(1) For each dependent child of the participant with a surviving spouse, the amount of payments is equal to the least of:
(a) Sixty percent of the participant's average compensation on the date of death, divided by the number of dependent children;
(b) Seventy-five dollars; or
(c) Two hundred twenty-five dollars, divided by the number of dependent children.
The payments to a dependent child are in addition to the payments made to the surviving spouse; and
(2) For each dependent child of a participant who does not have a spouse on the date of death, the amount of payments is equal to the least of:
(a) Seventy-five percent of the participant's average compensation on the date of death, divided by the number of dependent children;
(b) Ninety dollars; or
(c) Two hundred seventy dollars, divided by the number of dependent children.
Source: SL 2020, ch 13, § 26.
3-13C-20 . Vested benefits--Distribution amount determined.
Any distribution of vested benefits shall be a retirement benefit and subject to § 3-13C-14 . A participant who becomes an inactive participant before retirement or death is entitled to one of the following vested benefits, whichever is applicable:
(1) A deferred monthly retirement benefit under the normal form to begin on the participant's normal retirement date equal to the sum of (a) and (b):
(a) On and after June 30, 1999, the amount of monthly benefit which could be provided on the participant's normal retirement date on the normal form by the participant's required contribution account, based on the rates described in the definition of actuarial equivalent; and
(b) The product of (i) and (ii):
(i) The excess of the participant's accrued benefit on the day before becoming an inactive participant over the amount determined under (a); and
(ii) The participant's vesting percentage on the date of severance from employment; or
(2) A deferred monthly retirement benefit under the normal form to begin on the participant's late retirement date determined as follows:
(a) For a participant who became an inactive participant on or before normal retirement date, an amount equal to the amount under subdivision (1); and
(b) For a participant who became an inactive participant after normal retirement date, an amount equal to the participant's accrued benefit on the day before becoming an inactive participant.
The deferred retirement benefit for the participant on the participant's retirement date may not be less than the monthly benefit equal to the actuarial equivalent of the required contribution account on that date.
The amount of payment under any form other than the normal form shall be determined in accordance with § 3-13C-21.
The participant may receive the participant's required contribution account in a single sum payment at any time after severance from employment and before the participant's retirement date, provided the participant has not again become an employee. If the amount is not payable in accordance with § 3-13C-14 , it will be distributed only if the participant so elects. The participant's election shall be subject to the requirements in § 3-13C-23. The payment shall be in lieu of the required contribution accrued benefit.
If the participant dies before retiring, death benefits shall be distributed in accordance with § 3-13C-18 .
Source: SL 2020, ch 13, § 27.
3-13C-21 . Retirement benefits--Optional forms.
The optional forms of retirement benefits are the following:
(1) A straight life annuity;
(2) A single life annuity with a certain period of ten, fifteen, or twenty years;
(3) A single life annuity with modified cash refund of the participant’s required contribution account;
(4) A survivorship life annuity equal to the participant's monthly retirement benefit, reduced by two and one-half percent of the amount of the benefit not exceeding three hundred dollars plus ten percent of the amount by which the benefit exceeds three hundred dollars, with survivorship percentages of fifty or seventy-five percent; and
(5) A Social Security adjustment option based on the normal form and adjusted in a manner so when added to the primary insurance benefits under Title II of the Federal Social Security Act in effect on the participant's retirement date will provide, as nearly as practicable, a uniform series of payments before and after attaining Social Security retirement age. This option is effective only for a participant whose retirement date occurs before the participant attains Social Security retirement age.
Social Security retirement age means, on any date, the age at which full Social Security benefits become payable as determined by the Social Security table in effect on that date.
The benefit payable under any optional form available under this section, other than the normal form, shall be the actuarial equivalent of the benefit otherwise payable to the participant under the normal form on the participant's retirement date. If the participant's retirement date is before the participant's normal retirement date, the benefit payable under any optional form other than a nondecreasing annuity payable for a period of not less than the life of the participant or an annuity decreasing during the life of the participant because of either the death of the survivor contingent participant but only if the reduction is not below fifty percent of the benefit payable before the death of the survivor contingent participant or the cessation or reduction of Social Security supplements or qualified disability payments as defined in 26 U.S.C. § 401(a)(11), may not be less than the actuarial equivalent of the benefit otherwise payable to the participant under the normal form on the participant's normal retirement date.
The election of an optional form is subject to the provisions of §§ 3-13C-13 and 3-13C-23.
Retirement benefits are nontransferable.
Source: SL 2020, ch 13, § 28.
3-13C-22 . Death benefits--Optional forms.
The optional forms of death benefit are any of the optional forms of retirement benefit stated in § 3-13C-21 that are not survivorship life annuities. The election of an optional form is subject to the provisions of §§ 3-13C-13 and 3-13C-23.
Source: SL 2020, ch 13, § 29.
3-13C-23 . Election of benefits--Requirements.
The participant, beneficiary, or spouse shall make any election in writing. The system may require the person to complete and sign any necessary documents as to the provisions made.
A participant may elect a beneficiary or contingent participant and may elect to have retirement benefits distributed under the provisions of § 3-13C-21 .
A participant may elect a beneficiary for any single sum death benefits and may elect to have the death benefits distributed in accordance with §§ 3-13C-18 and 3-13C-19 . If the participant has not elected an optional form of distribution for the death benefit payable to the beneficiary, the beneficiary may elect the form of distribution in like manner as a participant.
The participant, beneficiary, or spouse may make an election at any time during the election period. The participant, beneficiary, or spouse may revoke the election made or make a new election at any time and any number of times during the election period as follows:
(1) A participant may make an election as to retirement benefits at any time before the retirement benefits start date; and
(2) A participant may make an election as to death benefits at any time before the death of the participant. The spouse's election period begins on the date the participant dies and ends on the date benefits begin. The beneficiary's election period begins on the date the participant dies and ends on the date benefits begin.
Source: SL 2020, ch 13, § 30.
