Md. Code Regs. 22.07.02.01

Current through Register Vol. 52, No. 1, January 10, 2025

Section 22.07.02.01 - Compliance with the Internal Revenue Code, 26 U.S.C Section 401(a)(9) for Required Minimum Distributions

A. The State system shall pay all benefits in accordance with a good faith interpretation of the requirements of § 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.

B. Each State system is subject to the following provisions:

(1) Distribution of a member's benefit shall begin by the required beginning date;

(2) The member's entire interest shall be distributed over the member's life, or the lives of the member and a beneficiary determined pursuant to the applicable provisions of the State system;

(3) If a member dies after the required distribution of benefits has begun, the remaining portion of the member's interest, if any, shall be distributed at least as rapidly as under the method of distribution before the member's death;

(4) If a member dies before the required distribution of the member's benefits has begun, the member's entire interest shall be distributed to the beneficiary, if the beneficiary can be located:

(a) Over the life of the beneficiary, with the distributions beginning not later than December 31 of the calendar year following the calendar year of the member's death, in accordance with federal regulations; or

(b) Within 5 years of the member's death;

(5) The amount of an annuity paid to a member's beneficiary may not exceed the maximum determined under the incidental death benefit requirement of § 401(a)(9)(G) of the Internal Revenue Code;

(6) The death and disability benefits provided by the State system are limited by the incidental benefit rule set forth in § 401(a)(9)(G) of the Internal Revenue Code and U.S. Treasury regulation 26 C.F.R. § 1.401- 1(b)(1)(i) (as amended), so that the total death or disability benefits payable do not exceed 25 percent of the cost for all of the members' benefits received from the State system;

(7) If a member or beneficiary cannot be located by the required beginning date, the member's or beneficiary's benefit will be initiated by the Agency and immediately shall be suspended, pending the Agency locating the member or beneficiary; and

(8) In order to maintain compliance with § 401(a)(9) of the Internal Revenue Code, the provisions of State Personnel and Pensions Article, § 21-402(c), Annotated Code of Maryland, shall be applied by the Agency to a member's request to change a beneficiary on and after January 1, 2006.

Md. Code Regs. 22.07.02.01

Regulation .01 amended effective 50:26 Md. R. 1132, eff. 1/8/2024