Section 127.10 - Conformity with Internal Revenue Code(a) The system is a governmental plan within the meaning of §414(d) of the Internal Revenue Code of 1986, as amended from time to time (the "Internal Revenue Code").(b) The rights of members to benefits accrued, to the extent funded, will become vested to the extent required by, and upon the events set forth in, Treasury Regulation §1.401-6(a)(1).(c) The term "employee," as defined in §851.001(8) of the Act, shall be limited to common law employees of a municipality, and shall exclude leased employees within the meaning of Internal Revenue Code §414(n).(d) With respect to §851.002 of the Act, and notwithstanding any provision of the system to the contrary, reversions will be permitted only to the extent allowed under the Internal Revenue Code and any related guidance thereunder, including, but not limited to, a contribution made because of a good faith mistake of fact that is returned within one year of the date the contribution was made as permitted under Revenue Ruling 91-4, or as permitted by subsequent guidance.(e) Repayments of previously paid out benefits, including the reestablishment of credit under §853.003 of the Act, shall comply with Internal Revenue Code §415(k)(3) and any Treasury Regulations thereunder. For purchases of permissive service credit that are described in Internal Revenue Code §415(n), including any such purchases under Chapter 853 of the Act, the provisions of Internal Revenue Code §415(n) and any Treasury Regulations thereunder shall apply, including the provisions of Internal Revenue Code §415(n)(3)(B) that, except as provided in Internal Revenue Code §415(n)(3)(D): (1) no more than five years of nonqualified service credit within the meaning of Internal Revenue Code §415(n)(3)(C) may be taken into account under Internal Revenue Code §415(n); and(2) no nonqualified service credit within the meaning of Internal Revenue Code §415(n)(3)(C) may be taken into account under Internal Revenue Code §415(n) before a member has at least five years of participation in the system.(f) Notwithstanding any provision of the system to the contrary, the system shall comply with Internal Revenue Code §401(a)(31)(B) and applicable Treasury Regulations thereunder.34 Tex. Admin. Code § 127.10
Adopted by Texas Register, Volume 42, Number 52, December 29, 2017, TexReg 7721, eff. 1/7/2018; Adopted by Texas Register, Volume 48, Number 30, July 28, 2023, TexReg 4125, eff. 8/1/2023