Mo. Code Regs. tit. 16 § 50-10.050

Current through Register Vol. 49, No. 23, December 2, 2024

Section 16 CSR 50-10.050 - Distribution of Accounts

PURPOSE: This rule describes the timing and form of benefit payments from the defined contribution plan.

(1) Eligibility for Payment. Generally, distribution to a Participantst of his or her vested Account shall be made no earlier than Separation from Service. However, a Participantst may request withdrawal of all or a portion of his or her Board matching account, his or her Employer matching account, and his or her rollover account before Separation from Service after attainment of age fifty-nine and a half (59 1/2). Such withdrawals shall be made first from the Participantst's rollover account, then from the vested portion of his or her Board matching account, and finally from the vested portion of his or her Employer matching account.

(2) Distribution Due to Hardship. A Participantst may request a distribution due to Hardship by submitting a request to the Board (or its designee) in such form as may be permitted by the Board (or its designee). The Board (or its designee) shall have the authority to require such evidence as it deems necessary to determine if a distribution is warranted. If an application for a distribution due to a Hardship is approved, the distribution is limited to the lesser of-

(A) An amount sufficient to meet the need; or

(B) The amount held in the Participantst's Account, including all subaccounts, to the extent the Participantst is vested in such amounts.

The amount of the need shall include any amounts necessary to pay any federal, state, or local income taxes (including withholding) or penalties reasonably anticipated to result from the distribution. The allowed distribution shall be paid in a single sum to the Participantst as soon as administratively feasible after approval of such distribution.

(3) Commencement of Distributions and Payment Options.

(A) General Rule. Distribution of a Participantst's Account under the Plan shall be made in the form elected by the Participantst, commencing as soon as administratively feasible after the Participantst's Separation from Service occurs, unless the Participantst elects to defer this payment. A Participantst may elect that the distribution of benefits be made at any time following his or her Separation from Service as long as distributions commence no later than sixty (60) days following the date on which the Participantst attains age seventy and one-half (70 1/2), or retires, if later.

(B) Notwithstanding subsection (3)(A), if the value of a Participantst's Account is one thousand dollars ($1,000) or less at the time of the Participantst's Separation from Service (without respect to any Board matching contributions or Employer matching contributions which might be allocated following the Participantst's Separation from Service), then his or her benefit under the Plan shall be distributed to the Participantst in a single sum as soon as administratively feasible following his or her Separation from Service.

(C) Employees who terminate employment and then resume employment with an Employer within thirty (30) days will not forfeit their prior service and will not be required to receive a refund of their payroll contributions.

(D) In the event a Qualified Participantst's Account is distributed upon such Participantst's Separation from Service, death, or retirement and a Board contribution or Employer matching contribution is later allocated to such Qualified Participantst's Account for any Plan Year, a subsequent distribution of such Account shall be made as soon as administratively feasible after such matching contribution allocation has been made if such Participantst is fully vested.

(E) Payment Options. A Participantst's election of a payment option must be made at least thirty (30) days prior to the date that the payment of benefits is to commence. If a timely election of a payment option is not made, benefits shall be paid in a single lump sum. Once payments have commenced, the form of payment option may not be changed.

(F) Subject to applicable law and the other provisions of this Plan, distributions may be made in accordance with one (1) of the following payment options:

1. A single lump-sum payment;

2. Installment payments for a period of years (payable on a monthly, quarterly, semiannual, or annual basis) which extends no longer than the life expectancy of the Participantst;

3. Partial lump-sum payment of a designated amount, with the balance payable in installment payments for a period of years, as described in paragraph (3)(F)2., as long as such installment payments begin prior to the end of the calendar year following the year the partial lump-sum payment was made; and

4. Annuity payments (payable on a monthly, quarterly, or annual basis) for the lifetime of the Participantst or for the lifetimes of the Participantst and Beneficiary if permitted under section 401(a)(9) of the Code.

(4) Direct Rollover Option.

(A) A distributee may elect to have an eligible rollover distribution paid directly to a single eligible retirement plan specified by the distributee. However, this election may not be made if the total eligible rollover distributions paid to the distributee from the Plan will be less than two hundred dollars ($200).

(B) A distributee may elect to divide an eligible rollover distribution so that part is paid directly to an eligible retirement plan and part is paid to the distributee. However, the part paid directly to the eligible retirement plan must total at least five hundred dollars ($500).

(C) A distributee may elect a direct rollover after having received a written notice which complies with the rules of Code section 402(f). In general, payment to a distributee shall not begin until thirty (30) days after the section 402(f) notice is given. However, payment may be made sooner if the notice clearly informs the distributee of the right to a period of at least thirty (30) days to consider the decision of whether or not to make a direct rollover, and the distributee, after receiving the notice, makes an affirmative election to receive an immediate distribution. A distributee who fails to make an election in the thirty- (30-) day period shall receive the eligible rollover distribution immediately after the thirty- (30-) day period expires.

(D) For purposes of this section (4), the following terms have the meanings set forth below:

1. An "eligible rollover distribution" is any distribution or withdrawal payable under the terms of this Plan to a Participantst or Participantst's Beneficiary, which is described in Code section 402(c)(4). In general, this term includes any single-sum distribution, and any distribution which is one (1) in a series of substantially equal periodic payments made over a period of less than ten (10) years, and is less than the distributee's life expectancy. However, an eligible rollover distribution does not include the portion of any distribution which constitutes a minimum required distribution under Code section 401(a)(9) or, after December 31, 2001, any distribution due to Hardship.

2. For Plan Years beginning after December 31, 2001, "eligible retirement plan" means-

A. An individual retirement account described in Code section 408(a);

B. An individual retirement annuity described in Code section 408(b);

C. An annuity plan described in Code section 403(a);

D. A retirement plan qualified under Code section 401(a), but only if the terms of the plan permit the acceptance of rollover distributions;

E. An annuity contract described in Code section 403(b);

F. An eligible deferred compensation plan under Code section 457(b) which is maintained by a state, a political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state which agrees to separately account for amounts transferred into such plan from this Plan; and

G. Effective January 1, 2008, a Roth IRA described under Code section 408A, to the extent permitted by applicable law.

3. "Distributee" means a Participantst or the spouse of a deceased Participantst. Effective January 1, 2007, a Participantst's designated non-spouse Beneficiary may be a distributee but only with respect to an eligible retirement plan described in subparagraphs (4)(D)2.A. and B. above.

(5) Compliance with Code Section 401(a)(9). Notwithstanding anything to the contrary contained in the Plan, the entire interest of a Participantst will be distributed in accordance with a reasonable and good faith interpretation of Code section 401(a)(9) and the regulations thereunder beginning no later than the Participantst's required beginning date. The provisions of this section will apply for purposes of determining required minimum distributions in accordance with a reasonable and good faith interpretation. Notwithstanding the other provisions of this section, distributions may be made under a designation made before January 1, 1984, in accordance with section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act (TEFRA) and the provisions of the Plan that relate to section 242(b)(2) of TEFRA.

(A) If the Participantst dies before distributions begin, the Participantst's entire interest will be distributed, or begin to be distributed, no later than as follows:

1. If the Participantst's surviving spouse is the Participantst's sole designated beneficiary, then distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the Participantst died, or by December 31 of the calendar year in which the Participantst would have attained age seventy and one-half (70 1/2), if later.

2. If the Participantst's surviving spouse is not the Participantst's sole designated beneficiary, then distributions to the designated beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the Participantst died.

3. If there is no designated beneficiary as of September 30 of the year following the year of the Participantst's death, the Participantst's entire interest will be distributed by December 31 of the calendar year containing the fifth anniversary of the Participantst's death.

4. If the Participantst's surviving spouse is the Participantst's sole designated beneficiary and the surviving spouse dies after the Participantst but before distributions to the surviving spouse begin, this subsection, other than paragraph (5)(A)1., will apply as if the surviving spouse were the Participantst.

5. For purposes of this subsection, unless paragraph (5)(A)4. applies, distributions are considered to begin on the Participantst's required beginning date. If paragraph (5)(A)4. applies, distributions are considered to begin on the date distributions are required to begin to the surviving spouse under paragraph (5)(A)1. To the extent the Plan provides for distributions in the form of annuities, if distributions under an annuity purchased from an insurance company irrevocably commence to the Participantst before the Participantst's required beginning date (or to the Participantst's surviving spouse before the date distributions are required to begin to the surviving spouse under paragraph (5)(A)1.), the date distributions are considered to begin is the date distributions actually commence.

(B) Unless the Participantst's interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the required beginning date, as of the first distribution calendar year distributions will be made in accordance with subsections (5)(C) and (D). To the extent the Plan provides for distributions in the form of annuities, if the Participantst's interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of Code section 401(a)(9) and the Treasury regulations.

(C) During the Participantst's lifetime, the minimum amount that will be distributed for each distribution calendar year is the lesser of-

1. The quotient obtained by dividing the Participantst's account balance by the distribution period in the Uniform Lifetime Table set forth in section 1.401(a)(9)-9 of the Treasury regulations, using the Participantst's age as of the Participantst's birthday in the distribution calendar year; or

2. If the Participantst's sole designated beneficiary for the distribution calendar year is the Participantst's spouse, the quotient obtained by dividing the Participantst's account balance by the number in the Joint and Last Survivor Table set forth in section 1.401(a)(9)-9 of the Treasury regulations, using the Participantst's and spouse's attained ages as of the Participantst's and spouse's birthdays in the distribution calendar year;

3. Required minimum distributions will be determined beginning with the first distribution calendar year and up to and including the distribution calendar year that includes the Participantst's date of death.

(D) If the Participantst dies on or after the date distributions begin and there is a designated beneficiary, the minimum amount that will be distributed for each distribution calendar year after the year of the Participantst's death is the quotient obtained by dividing the Participantst's account balance by the longer of the remaining life expectancy of the Participantst or the remaining life expectancy of the Participantst's designated Beneficiary, determined as follows:

1. The Participantst's remaining life expectancy is calculated using the age of the Participantst in the year of death, reduced by one (1) for each subsequent year;

2. If the Participantst's surviving spouse is the Participantst's sole designated beneficiary, the remaining life expectancy of the surviving spouse is calculated for each distribution calendar year after the year of the Participantst's death using the surviving spouse's age as of the spouse's birthday in that year. For distribution calendar years after the year of the surviving spouse's death, the remaining life expectancy of the surviving spouse is calculated using the age of the surviving spouse as of the spouse's birthday in the calendar year of the spouse's death, reduced by one (1) for each subsequent calendar year;

3. If the Participantst's surviving spouse is not the Participantst's sole designated beneficiary, the designated beneficiary's remaining life expectancy is calculated using the age of the beneficiary in the year following the year of the Participantst's death, reduced by one (1) for each subsequent year; and

4. If the Participantst dies on or after the date distributions begin and there is no designated beneficiary as of September 30 of the year after the year of the Participantst's death, the minimum amount that will be distributed for each distribution calendar year after the year of the Participantst's death is the quotient obtained by dividing the Participantst's account balance by the Participantst's remaining life expectancy calculated using the age of the Participantst in the year of death, reduced by one (1) for each subsequent year.

(E) If the Participantst dies before the date distributions begin and there is a designated beneficiary, the minimum amount that will be distributed for each distribution calendar year after the year of the Participantst's death is the quotient obtained by dividing the Participantst's account balance by the remaining life expectancy of the Participantst's designated beneficiary, determined as provided in subsection (5)(D). If the Participantst dies before the date distributions begin and there is no designated beneficiary as of September 30 of the year following the year of the Participantst's death, distribution of the Participantst's entire interest will be completed by December 31 of the calendar year containing the fifth anniversary of the Participantst's death. If the Participantst dies before the date distributions begin, the Participantst's surviving spouse is the Participantst's sole designated beneficiary, and the surviving spouse dies before distributions are required to begin to the surviving spouse under paragraph (5)(A)1., this section will apply as if the surviving spouse were the Participantst.

(F) The following definitions shall apply for purposes of this section:

1. Designated beneficiary shall mean the individual who is designated as the beneficiary under the terms of the Plan and is the designated beneficiary under Code section 401(a)(9) and section 1.401(a)(9)-1, Q&A-4 of the Treasury regulations;

2. A distribution calendar year is a calendar year for which a minimum distribution is required. For distributions beginning before the Participantst's death, the first distribution calendar year is the calendar year immediately preceding the calendar year which contains the Participantst's required beginning date. For distributions beginning after the Participantst's death, the first distribution calendar year is the calendar year in which distributions are required to begin under subsection (5)(A). The required minimum distribution for the Participantst's first distribution calendar year will be made on or before the Participantst's required beginning date. The required minimum distribution for other distribution calendar years, including the required minimum distribution for the distribution calendar year in which the Participantst's required beginning date occurs, will be made on or before December 31 of that distribution calendar year;

3. Life expectancy means an individual's life expectancy as computed by use of the Single Life Table in section 1.401(a)(9)-9 of the Treasury regulations;

4. The Participantst's account balance is the account balance as of the last valuation date in the calendar year immediately preceding the distribution calendar year (valuation calendar year) increased by the amount of any contributions made and allocated or forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date. The account balance for the valuation calendar year includes any amounts rolled over or transferred to the Plan either in the valuation calendar year or in the distribution calendar year if distributed or transferred in the valuation calendar year; and

5. The Participantst's required beginning date is the April 1 of the calendar year following the later of a) the calendar year in which the Participantst attains age seventy and one-half (70 1/2), or b) the calendar year in which the Participantst retires.

(G) A Participantst or Beneficiary who would have been required to receive required minimum distributions for 2009 but for the enactment of section 401(a)(9)(H) of the Code (2009 RMDs), and who would have satisfied that requirement by receiving distributions that are 1) equal to the 2009 RMDs or 2) one (1) or more payments in a series of substantially equal distributions (that include the 2009 RMDs) made at least annually and expected to last for the life (or life expectancy) of the Participantst, the joint lives (or joint life expectancy) of the Participantst and the Participantst's designated Beneficiary, or for a period of at least ten (10) years, will receive those distributions for 2009 unless the Participantst or Beneficiary chooses not to receive such distributions. Participantsts and Beneficiaries described in the preceding sentence will be given the opportunity to elect to stop receiving the distributions described in the preceding sentence. Solely for purposes of applying the direct rollover provisions of the Plan, 2009 RMDs will be treated as eligible rollover distributions.

(6) Return of Mistaken Payments. Notwithstanding anything to the contrary, a Participantst or Beneficiary is entitled to only those benefits provided by the Plan and promptly shall return any payment, or portion thereof, made by mistake of fact or law. The Board may offset the future benefits of any recipient who refuses to return an erroneous payment, in addition to pursuing any other remedies provided by law.

(7) Forfeitures. If a Participantst has a Separation from Service and is not vested in his or her Board matching account and Employer matching account, he/she shall forfeit the non-vested portion of the Board matching account and Employer matching account upon the Separation from Service.

(A) The forfeiture of a Participantst's Board matching account shall be applied to reduce Board matching contributions for the Plan Year in which distribution occurs.

(B) The forfeiture of a Participantst's Employer matching account shall be applied to reduce Employer matching contributions by the Employer to which such Employer matching account is attributable for the Plan Year in which distribution occurs. If any such Employer has not elected to make matching contributions for such Plan Year, such forfeiture shall be allocated pro rata to Qualified Participantsts (as defined in 16 CSR 50-10.030(3) ) employed by that Employer based on their contributions to the 457 Plan for that Plan Year.

(8) Lost Participantsts. Notwithstanding any other provision of the Plan, if it is not possible to make payment because the Board cannot locate the Participantst after making reasonable efforts to so do, a retroactive payment may be made as soon as administratively feasible after the date on which the Participantst is located.

(A) If the Board is unable to locate any person entitled to receive distribution from an Account hereunder, such Account shall be forfeited; the seed account, Board matching account, and rollover account shall be used to reduce Board matching contributions; and the Employer matching account shall be used to reduce to Employer matching contributions by the Employer to which it is attributable on the date two (2) years after the date the Board sends by certified mail a notice concerning the benefits to such person at his or her last known address (or determines that there is no last known address).

(B) If an Account is forfeited under this Section and a person otherwise entitled to the Account subsequently files a claim with the Board during any Plan Year, before any allocations for such Plan Year are made, the Account will be restored to the amount which was forfeited without regard to any earnings or losses that would have been allocated. Such restoration shall first be taken out of forfeitures which have not been allocated and if such forfeitures are insufficient to restore such person's account balance, restoration shall be made by an Employer contribution to the Plan.

16 CSR 50-10.050

AUTHORITY: section 50.1250, RSMo Supp. 2012, and section 50.1260, RSMo 2000.* Original rule filed May 9, 2000, effective Jan. 30, 2001. Amended: Filed April 25, 2002, effective Nov. 30, 2002. Amended: Filed Aug. 24, 2004, effective March 30, 2005. Amended: Filed April 27, 2005, effective Oct. 30, 2005. Amended: Filed Nov. 10, 2005, effective May 30, 2006. Amended: Filed Aug. 14, 2006, effective March 30, 2007. Amended: Filed Sept. 8, 2008, effective March 30, 2009. Amended: Filed March 31, 2009, effective Sept. 30, 2009. Amended: Filed Jan. 25, 2010, effective July 30, 2010. Amended: Filed Sept. 5, 2012, effective March 30, 2013.

*Original authority: 50.1250, RSMo 1999, amended 2001, 2004, 2007 and 50.1260, RSMo 1999.