TMRS Administrative Rules

CHAPTER 121. PRACTICE AND PROCEDURE REGARDING CLAIMS

CHAPTER 121 PRACTICE AND PROCEDURE REGARDING CLAIMS

RULE §121.1 Definitions

  As used in rules and regulations adopted by the Board of Trustees of Texas Municipal Retirement System:

    (1) the term "Act" means Subtitle G, Title 8, Government; and

    (2) all other words, terms, and phrases as used in such rules and regulations shall have the meaning defined in the Act, unless the context plainly indicates a different meaning.

RULE §121.2 Scope of Rules

  The rules in this chapter shall govern the procedure for the institution, conduct, and determination of all claims arising under the Act. They shall not be construed so as to enlarge, diminish, modify, or alter the jurisdiction, powers, or authority of the system or the substantive rights of any person.

RULE §121.3 Filing of Documents

  All applications, petitions, complaints, replies, and other pleadings seeking to institute any claim, complaint, or other proceeding under the Act, or relating to any such proceeding then pending (other than one that has become a "contested case"), shall be filed with the director, at the offices of the system in Austin. Such instruments shall be deemed filed only when actually received, accompanied by the filing fee, if any, required by statute or by rules of the board. If a proceeding becomes a "contested case," documents shall thereafter be filed in accordance with §§121.12-21.22 of this title (relating to Contest of Application: Form and Content; Notice of Prehearing Disposition; Procedure for Obtaining Hearing of Claim Denied in Whole or in Part by Director; Hearing of Conflicting and Protested Claims; Conduct of Contested Case Hearings; Proposal for Decision; Filing of Exceptions to Proposal, Briefs, and Replies; Board Consideration and Action; Final Decisions and Orders; When Decisions Become Final; Motions for Rehearing; Rendering of Final Decision or Order; The Record).

RULE §121.4 Computation of Time

  (a) Computing time. In computing any period of time prescribed or allowed by these rules, by order of the board, or by any applicable statute, the period shall begin on the day after the act, event, or default in controversy and conclude on the last day of such computed period, unless it be a Saturday, Sunday, or legal holiday, in which event the period runs until the end of the next day that is neither a Saturday, Sunday, nor legal holiday.

  (b) Extensions. Unless otherwise provided by statute, the time for filing any application or other form may be extended by order of the director, upon written motion duly filed with the director prior to the expiration of the applicable period of time for the filing of the same, showing that there is good cause for such extension of time and that the need is not caused by the neglect, indifference, or lack of diligence of the movant. A copy of any such motion shall be served upon all other parties of record to the proceeding contemporaneously with filing the motion.

RULE §121.5 Applications for Benefits or Asserting Other Claims

  (a) General. Any person who asserts any claim to any right or benefit under the Act shall file written application with the director of the system at the office of the system in Austin.

  (b) Form, content, and signature of applications.

    (1) Official forms for applications for certain benefits. Official forms for use in applying for service retirement benefits, for disability retirement benefits, and for refund of accumulated contributions on terminations prior to retirement are available at and may be obtained without charge from the office of the director of the system, in Austin, upon written request; normally, such forms are also available at, and can be obtained from, the director of personnel of the participating city by which the member is or was employed, or (if no such office is maintained) from the officer in charge of payrolls for such city. All applications which are the subject of any official form shall contain the information, statements, and supporting documents designated in that official form, and shall conform substantially to that official form.

    (2) Contents of applications having no official form. All applications for which no official form is prescribed shall be typewritten or printed on white paper, 8-1/2 inches wide by 11 inches long, and shall contain:

        (A) The name, the Social Security number, and address of the party asserting the right or claim;

        (B) A concise statement of the facts relied on as giving rise to the right or claim asserted; and

        (C) A prayer stating the type of relief, action, or order desired by the applicant.

    (3) Applications required to be signed. All applications for retirement or for retirement benefits must be personally signed in ink by the member seeking retirement, unless there is a legal guardian of the member, in which event the application must be signed by the guardian. The original of all other applications shall be signed by the applicant or by the applicant's authorized representative. The director may require satisfactory proof of the authority of a representative to act for the member.

RULE §121.6 Time for Filing of Retirement Applications

  All applications for retirement, whether for service or for disability, must be filed not less than 30 nor more than 90 days prior to the date specified by the member as the effective date of his or her retirement; the date specified as the effective date for retirement must be the last day of a calendar month and may not be a date preceding the termination of the member's employment with the participating municipality. A member who files an application for retirement with the system on or before the effective date of retirement shall be deemed to have waived the requirement to file the application at least 30 days before the effective date of retirement. An application is filed when it is actually received at the office of the director of the system in Austin.

RULE §121.7 Supporting Documents To Be Submitted

  The director is authorized to require submission of documents reasonably related to establishment of a claimed right to benefits. These documents include but are not limited to birth certificates; marriage licenses; divorce decrees; letters of guardianship; letters testamentary or letters of administration; death certificates; relevant court orders; sworn statements of witnesses and attending physicians; autopsy reports; and sworn statements of the claimant or of others having personal knowledge of relevant facts. Except upon good cause being shown, failure to submit all required documents within four months of the date specified by the member as his or her effective retirement date will invalidate the application for retirement (service or disability) for all purposes. Thereafter, a new application must be submitted and a new retirement date chosen in accordance with §121.6 of this title (relating to Time for Filing of Retirement Applications).

RULE §121.8 Service Retirement Benefits May Be Approved by Director Without Hearing

  If the director finds from the records of the system and from the documents supporting the application, that the applicant is entitled to a service retirement benefit, the director may allow the benefit and place it into effect without further hearing, unless a contest has been filed under §121.12 of this title (relating to Contest of Application: Form and Content). All benefits approved shall be reported to the board at its next meeting for confirmation.

RULE §121.9 Disability Retirement Applications Referred to Medical Board

  Applications for disability retirement shall be referred by the director to the medical board. The medical board shall investigate all essential statements and certificates by or on behalf of the member in connection with the application for disability retirement, and shall pass upon, conduct, or cause to be conducted, all medical examinations which in its opinion are necessary to determine the cause, extent, and permanence of the member's disability. The medical board shall make and file with the director a written report of its conclusions and recommendations.

RULE §121.10 Approval Without Hearing Where Medical Board Certifies Entitlement

  If the findings and conclusions of the medical board, as stated in its report, are such as in the director's opinion entitle the member under the terms of the Act to the disability retirement benefit applied for, the director may approve the retirement, calculate the amount of the benefit, and place it into effect without further hearing. All benefits approved by the director shall be reported to the board at its next meeting for confirmation.

RULE §121.11 Summary Disposition of Other Approved Applications

  Applications for benefits under the Act not specified above, including claims for refund of contributions, may be granted by the director without formal hearing, if not contested by any party, and if the director is satisfied upon the basis of the application and supporting documents that the applicant is entitled to the action requested.

RULE §121.12 Contest of Application: Form and Content

  (a) Any party, other than the system, desiring to contest any pending application for benefits, shall file with the director a written answer, setting forth:

    (1) the name and address of the party filing such answer who shall be designated as "contestant";

    (2) the name of the party making the application or claim being contested;

    (3) a concise statement of the facts relied on by the contestant as reasons why the contested application should be denied;

    (4) any counterclaim asserted by the contestant; and

    (5) a prayer specifying the action which the contestant desires the system to take.

  (b) The answer shall be signed by the contestant, or by the contestant's duly authorized representative; and must contain a certificate showing that a true copy of the same was served upon the applicant, and the date and manner of such service.

RULE §121.13 Notice of Prehearing Disposition

  (a) If an application for benefits is approved in whole or in part without hearing, the director, by letter of notification, shall inform the applicant in writing of the action taken.

  (b) If the director determines that an application for benefits cannot be approved, the director shall send a letter of notification, informing the applicant that the claim is denied, in whole or in part, and stating the reasons therefor.

RULE §121.14 Procedure for Obtaining Hearing of Claim Denied in Whole or in Part by Director

  (a) A claimant who desires to contest the action of the director in denying, in whole or in part, the claim to any right or benefit under the Act may obtain a hearing of the claim as a "contested case" pursuant to the Administrative Procedure Act (Chapter 2001, Government Code) and the following rules, by filing a written "request for hearing of denied claim" within 60 days after the date of the director's letter of notification.

  (b) If no request under subsection (a) of this section is filed by the claimant within the 60-day period provided above, the prehearing disposition made by the director shall become final and unappealable.

RULE §121.15 Hearing of Conflicting and Protested Claims

  (a) Where a party, pursuant to §121.12 of this title (relating to Contest of Application: Form and Content) has filed an answer to a pending application, the issues presented shall be heard as a "contested case" in accordance with the provisions of the Administrative Procedure Act (Chapter 2001, Government Code) and the following rules adopted by the Board.

  (b) If different persons make claim to any benefit which the system concedes, or if a party challenges the competency or right of a member to dispose of such a benefit in accordance with the latest written designation executed by the member and filed with the system, the director may decline any decision on the issues between the opposing claimants, and file an appropriate action in a court of competent jurisdiction making opposing claimants parties and may tender payment through the court to the party adjudged entitled to it.

  (c) Upon a written request by a party or upon motion by the director or the board of trustees, the director may issue subpoenas addressed to the sheriff or any constable to require the attendance of witnesses and the production of books, records, papers, or other objects that may be appropriate for purposes of a deposition or hearing.

RULE §121.16 Conduct of Contested Case Hearings

  (a) After filing of a request for a contested case hearing pursuant to these rules, or after filing of a third-party answer under §121.12 of this title (relating to Contest of Application: Form and Content), the director shall cause the contested case to be docketed in the State Office of Administrative Hearings (SOAH), by filing with the SOAH either a "Request for Setting of Hearing" or a "Request for Assignment of Administrative Law Judge" as the Director deems appropriate, along with a certified copy of the pleadings, orders, and other relevant documents in the system's files at that time concerning the issues in dispute.

  (b) After the case has been docketed at the SOAH and an administrative law judge has been assigned, the director shall notify all parties to the proceeding of the actions taken. Thereafter, any amended pleading or any motion filed in connection with the contested case, including, but not limited to, motions for continuance, discovery, settings and other relief, shall be filed with the SOAH at its office in Austin, Texas, until such time as the proposal for a decision has been presented to the board of trustees as hereinafter provided.

  (c) At least ten days prior to hearing, the director shall give notice to all parties as required by §2001.051 of the Administrative Procedures Act (Chapter 2001, Government Code).

  (d) A hearing will be conducted by an administrative law judge assigned by the SOAH, and shall be conducted in accordance with the Administrative Procedure Act (Chapter 2001, Government Code), these rules, and the rules adopted by the SOAH. Hearings will ordinarily be conducted in Austin, unless on motion of a party for good cause shown, the hearing, or a portion thereof, is conducted elsewhere in the State of Texas; hearings will be conducted at the site designated by the SOAH.

  (e) All parties to the hearing, including the system, may be represented by counsel. All parties, including the system, may introduce testimony of witnesses, records, documents, and other evidence relevant to the claim or matter, which is the subject of the hearing. The administrative law judge shall have authority to administer oaths, examine witnesses, rule on the admissibility of evidence, recess the hearing from day to day or to a specified date, and otherwise regulate and conduct the hearing to the end that the issues may be presented with order and decorum.

  (f) The provisions of the Administrative Procedures Act (Chapter 2001, Government Code) shall govern the admissibility of evidence, but the system will take notice of any facts established by its records unless a party to the proceedings files a written protest of its validity.

RULE §121.17 Proposal for Decision

  (a) The administrative law judge who conducted the hearing, or one who has read the record, shall prepare a written proposal for decision for action by the board of trustees. The proposal for decision shall contain:

    (1) findings of fact and conclusions of law, separately stated; and

    (2) if appropriate, a proposed order.

  (b) When a proposal for decision is prepared, a copy of the proposal shall be served forthwith by the State Office of Administrative Hearings on each party or the party's attorney, if any. Unless exceptions to the proposal for decision have been filed within the time prescribed in §121.18 of this title (relating to Filing of Exceptions to Proposal, Briefs, and Replies), the proposal for decision may be adopted at any date thereafter by written order of the board.

RULE §121.18 Filing of Exceptions to Proposal, Briefs, and Replies

  (a) Any party to the proceeding may, within 20 days after date of service of a proposal for decision, file with the State Office of Administrative Hearings (SOAH) exceptions to the proposal and may submit briefs in support of such exceptions; replies to exceptions and reply briefs may be filed within 15 days after date for filing of such exceptions and briefs. A request for an extension of time within which to file exceptions, briefs, or replies may be filed with the SOAH, and the SOAH shall promptly notify the parties of its action upon such requests.

  (b) Briefs, exceptions, and replies shall be of the size and shall conform as nearly as possible to the form prescribed for applications and other pleadings.

  (c) The administrative law judge may amend the proposal for decision pursuant to exceptions, briefs, and replies to exceptions and briefs, without the proposal for decision again being served on the parties.

  (d) The administrative law judge shall submit the proposal for decision to the board of trustees, with a copy to each party.

RULE §121.19 Board Consideration and Action

  (a) The final decision in contested cases shall be made by the board of trustees, normally on the basis of a proposal for decision, of exceptions to the proposal, and briefs supporting and opposing the proposal for decision. The board, in exceptional cases, on its own motion, or on request of a party, may allow oral argument, may make its decision on the record, or may order the hearing to be conducted before the board sitting as a body.

  (b) The case will be considered by the board, normally at its next regular meeting after time has expired for filing of exceptions to the proposal for decision, or any extension of time granted for filing such exceptions, or briefs in support of or against exceptions.

RULE §121.20 Final Decisions and Orders

  All final decisions and orders of the board of trustees in contested cases shall be in writing and shall be signed by the director. The final decision shall include findings of fact and conclusions of law, separately stated. The date of rendition shall be stated in the decision or order. Parties shall be notified either personally or by mail of any decision or order. On written request, a copy of the decision or order shall be delivered or mailed to any party and to his or her attorney of record.

RULE §121.21 When Decisions Become Final

  A decision of the board of trustees is final in the absence of a timely motion for rehearing, and is final and appealable on the date of rendition of an order overruling a motion for rehearing, or on the date the motion is overruled by operation of law.

RULE §121.22 Motions for Rehearing

  A motion for rehearing is a prerequisite to judicial review. A motion for rehearing must be filed with the director within 20 days after the date of rendition of a final decision or order. Replies to a motion for rehearing must be filed with the system within 25 days after the date of rendition of the final decision or order, and system action on the motion must be taken within 45 days after the date of rendition of the final decision or order. If system action is not taken within the 45-day period, the motion for rehearing is overruled by operation of law 45 days after the date of rendition of the final decision or order. The director may by written order entered prior to the expiration of the 45-day period extend the period of time for filing the motions and replies and taking system action, except that an extension may not extend the period for system action beyond 90 days after the date of rendition of the final decision or order. In the event of an extension, the motion for rehearing is overruled by operation of law on the date fixed by the order or, in the absence of a fixed date, 90 days after the date of the final decision or order. The parties may by agreement, with the approval of the director, provide for a modification of the time provided in this section.

RULE §121.23 Rendering of Final Decision or Order

  The final decision or order shall be rendered within 60 days after the date the hearing is finally closed. In a contested case heard by an administrative law judge or judges, the hearing is considered closed on the date the board considers and acts on the proposed decision.

RULE §121.24 The Record

  (a) The record in a contested case shall include:

    (1) all applications, answers, and other pleadings, and intermediate rulings;

    (2) evidence received or considered;

    (3) a statement of matters officially noticed;

    (4) questions and offers of proof, objections, and rulings on them;

    (5) proposed findings and exceptions thereto;

    (6) any decision, opinion, or report by the officer presiding at the hearing; and

    (7) all staff memoranda or data submitted to or considered by the hearing officer or members of the agency who are involved in making the decision.

  (b) Findings of fact will be based exclusively on the evidence presented and matters officially noticed.

RULE §121.25 Proceedings for Review, Suspension, or Revocation of Disability Benefit

  (a) The director, either on the director's own motion, on recommendation of the medical board, or upon sufficient written complaint, may order any person (the "retiree") who is receiving a disability retirement benefit under §854.302 of the Act and who is less than 60 years of age:

    (1) to undergo a medical examination by one or more physicians designated by the director, at such time and place as the director by letter may order; or

    (2) to furnish answers, in writing under oath, to such questions concerning the person's present and previous employment as may be propounded by the director in writing.

  (b) If a disability retiree fails or refuses to submit to a medical examination as ordered by the director, the director shall suspend the retiree's annuity payments until the retiree submits to an examination. The director at the time of suspension shall notify the retiree of this action. If the retiree thereafter fails to make arrangements with the director, or the director's designee, for a time for such a medical examination, or fails to submit to such an examination, for a period of one year from the date of initial failure to submit to such a medical examination, the director shall order the annuity discontinued, and shall give notice of such actions to the retiree by written letter of notification.

  (c) If the retiree submits to a medical examination, the report of the examining physician(s) shall be submitted to the medical board; if the medical board certifies that the retiree is no longer mentally or physically incapacitated for the performance of duty, or is able to engage in a gainful occupation, the director may order the disability annuity discontinued and the director shall give written notice of such action to the retiree.

  (d) In the event the director finds that a disability retiree is engaged in a gainful occupation, the director may order the disability annuity discontinued, and in that event the director shall give written notice to the retiree of the director's actions.

  (e) The director shall require each person who is receiving an occupational disability benefit under §854.407 of the Act and who is less than 60 years of age to file an annual report on such form as the director prescribes concerning receipt by the retiree of income as described in §854.409(b) of the Act, along with copies of such federal tax forms as the director may designate. The director shall give notice of the requirements to the person affected, and shall fix a date by which the information is to be furnished.

  (f) In the event that a person subject to such an order fails to furnish the required information within the period specified by the director, the director shall suspend the benefit until such time as the required information is furnished, and shall notify the person of the director's actions.

  (g) In the event the director determines that the person has received income which together with the occupational disability benefit received by the person, exceeds the amount allowable under §854.408 of the Act, the director shall reduce subsequent monthly payments successively until the amounts of the overpayments have been offset. The director shall give written notice of such action to the person affected, along with the reasons therefor.

  (h) If the person affected by the director's action in discontinuing a disability retirement benefit in whole or in part desires to contest the same, the person may obtain a hearing of the issue as a "contested case" pursuant to the Administrative Procedure Act (Chapter 2001, Government Code) and these rules, by filing with the director a written "request for hearing of discontinuance of benefit" within 60 days after the date of the director's letter of notification of discontinuance. If the request for a contested case hearing is timely filed, the contested case shall be docketed, heard, and disposed of in accordance with §§121.12-121.24 of this title (relating to Contest of Application: Form and Content; Notice of Prehearing Disposition; Procedure for Obtaining Hearing of Claim Denied in Whole or in Part by Director; Hearing of Conflicting and Protested Claims; Conduct of Contested Case Hearings; Proposal for Decision; Filing of Exceptions to Proposal, Briefs, and Replies; Board Consideration and Action; Final Decisions and Orders; When Decisions Become Final; Motions for Rehearing; Rendering of Final Decision or Order; The Record). If no request for contested case hearing is filed within the 60 day period provided in this paragraph, the action of the director in discontinuing a disability benefit shall be final and unappealable.

RULE §121.26 Applicability to Pending Proceedings

  The provisions of this chapter govern all proceedings pending at their effective date, except to the extent that the director or the board of trustees shall determine that their application in a particular pending proceeding would work an injustice or is otherwise unfeasible, in which event the procedures followed before adoption of this chapter will be permitted.

RULE §121.27 Subpoenas

  (a) The issuance of subpoenas in any proceeding shall be governed by §2001.089 of the Administrative Procedure Act (Chapter 2001, Government Code). Following written request by a party or on the system's own motion, the director (or in a contested case the director or administrative law judge) may issue subpoenas addressed to the sheriff or any constable to require the attendance of witnesses and the production of books, records, papers, or other objects as may be necessary and proper for the purposes of a proceeding. The subpoena may be issued by the director, or in a contested case by the director or by the administrative law judge.

  (b) Motions for subpoenas to compel the production of books, records, papers, or other objects shall specify as nearly as may be the books, records, papers, or other objects desired and the material and relevant facts to be proven by them.

  (c) Subpoenas shall be issued by the director or administrative law judge only after showing of good cause and the deposit of sums sufficient to insure payment of expense incident to the subpoenas. Service of subpoenas and payment of witness fees shall be made in the manner prescribed in the Administrative Procedure Act.

RULE §121.28 Depositions

  The taking and use of depositions in any proceeding shall be governed by the Administrative Procedure Act (Chapter 2001, Government Code). The director is authorized to issue commissions to take depositions on his/her own motion, or on written motion of a part to the proceeding.

RULE §123.1 Actuarial Tables

  (a) Service retirement benefits shall be calculated on the basis of the UP-1984 table with an age set back of two years for retired members and an age set back of eight years for beneficiaries of retired members.

  (b) Disability retirement benefits on disability retirements shall be calculated on the basis of the UP-1984 table with an age set back of two years for disabled annuitants and an age set back of eight years for beneficiaries of disabled annuitants.

RULE §123.2 Supplemental Disability Benefits Not Reduced by Certain Increases in Base Benefit

  Where current service annuities and prior service annuities being paid to employees retired for service-connected disability are increased by the participating municipality pursuant to the §854.203 of the Act, such increase in the current service annuity and/or prior service annuity shall not operate to reduce the supplemental retirement benefit, if any, payable to such member, and such supplemental benefit shall continue to be paid in the same monthly amount as was being paid such member prior to such increase in the basic benefit amount.

RULE §123.3 Month of Credited Service and Year of Credited Service Defined

  (a) A month of credited service is any calendar month in which a member makes a required contribution, as reported to the system by the participating municipality.

  (b) A year of credited service is comprised of any 12 months of credited service, whether or not the months are consecutive.

RULE §123.4 Interest in Calculations of Benefits Based on Completed Service

  For calculations of retirement benefits, prior service credits and special prior service credits will have interest allowed on anniversaries of the participation date and not for part of a year. Updated service credits will have interest allowed on December 31 of a given year and not for a part of year.

RULE §123.5 Requirement of Spousal Consent

  (a) A vested member who is currently married may not designate a primary beneficiary other than the member's spouse or select a form of payment of a retirement or survivor annuity other than a joint-and-survivor annuity that pays benefits to the member's spouse on the death of the member, unless the member's spouse consents to the designation or selection.

  (b) The consent of a spouse required by subsection (a) of this section must be in writing and either witnessed by an officer or employee of the system or acknowledged before a notary public.

  (c) The consent required by subsection (a) of this section is not required if it is established to the satisfaction of the director that:

    (1) there is no spouse;

    (2) the spouse cannot be located;

    (3) the spouse has been judicially declared incompetent in which case the consent may be given by the guardian or other ad litem;

    (4) a duly licensed physician has determined that the spouse is not mentally capable of managing his or her own affairs, in which case the consent may be given by the member provided the member would not be disqualified to serve as guardian of the incapacitated spouse and the director is satisfied that a guardianship of the estate is not necessary;

    (5) the spouse and the member have been married for less than one year as of the date the annuity first becomes payable; or

    (6) a former spouse is entitled to receive a portion of the member's retirement benefit under a qualified domestic relations order.

  (d) For the purposes of this section, the term "joint-and-survivor annuity that pays benefits to the member's spouse on the death of the member" means a retirement annuity for the life of the member with a survivor annuity for the life of the spouse which is not less than 50% of the amount of the annuity which is payable during the joint lives of the member and the spouse, or, if the member dies before retirement, a survivor annuity for the life of the spouse which is not less than the actuarial equivalent of an annuity described by §854.104(c)(1) of the Act when the member has died before retirement.

RULE §123.6 Retirement Benefit Calculation

Any person retiring on or after December 31, 2006, whose average updated service compensation would be computed as described in §853.402(g), Government Code, would be based on less than 36 months of contributions and would be more than 120 percent of the person's average updated service compensation if it had been computed as described in §853.402(b), Government Code shall be conclusively deemed to receive a benefit that is unconstitutional and shall not receive a retirement benefit based on that average. The person may elect to instead receive a benefit in which the updated service credit is computed using an average updated service compensation that is no more than 120 percent of the person's average updated service compensation computed as described in §853.402(b), Government Code.

RULE §123.7 Authority to Make Actuarial Changes

(a) After considering the results of the actuarial experience study performed by the retirement system's actuary or at such other times as necessary, the Board of trustees may adopt changes to the actuarial cost method, actuarial assumptions and mortality tables by Board resolution. The Board resolution shall specify the first actuarial valuation and plan year affected by the changes.

(b) If as the result of actuarial changes, including, but not limited to, changes in actuarial cost methods or actuarial assumptions, a municipality's contribution rate increases by more than one-half of one percent, the Board may, after consultation with the retirement system's actuary, take one or both of the following actions:

(1) phase in the increase in contribution rate for the municipality over a reasonable period of time; or
(2) increase the period for amortizing the municipality's unfunded actuarial accrued liabilities up to thirty years.

(c) A municipality may decline to phase in the increase in its contribution rate or increase its amortization period as set out in subsection (b) of this section by notifying the retirement system in writing.

(d) The Board of trustees, after consultation with the retirement system's actuary, may change the period for amortizing a municipality's unfunded actuarial accrued liabilities from an open period to a closed period. The Board of trustees may also decrease the amortization period. The Board of trustees may, but is not required to, set different amortization periods for unfunded actuarial accrued liabilities arising from different types of benefit enhancements and ladder the amortization of the liabilities.

 

RULE §123.8 Updated Service Credit Calculations

(a) In calculating the average updated service compensation used in the Updated Service Credit calculation, the highest and lowest deposits in the thirty-six (36) month period being used shall be disregarded, and the average updated service compensation shall be computed based on the remaining thirty-four (34) deposits.

(b) This rule is effective January 1, 2008.

RULE §125.1 Optional Vesting Must Include All Departments

  A participating municipality which adopts an optional vesting provision must include all participating departments. A composite participation date is optional but recommended.

RULE §125.2 Composite Participating Date Requires Council Action

  Adoption of a single composite participating date for a city with two or more participating dates must be at the election of and by council action.

RULE §125.3 Actuary Determines Contribution Rates

  The maximum rate of contributions for a city with two or more members' contribution rates shall be calculated and determined by the system's actuary.

RULE §125.4 Effect of Adopting Composite Participating Date

  A city which elects to adopt a composite participating date will be treated as if a single department for determining amortization periods and normal and prior service contribution rates; but accumulated prior service credits will be based on actual participating dates and periods of current service.

RULE §125.5 When Composite Participating Date Must Be Adopted

  A composite participating date must be elected by a city if contributions from one department are to be used to support the obligations of another department.

RULE §125.6 Limitations on Buy-Back Ordinances

Ordinances of participating municipalities agreeing to underwrite and assume the obligations rising out of the granting of creditable service §853.003 of the Act, to persons who had terminated a previous membership, shall be limited to persons in the employment of the consenting municipality at the date specified in the ordinance, which date shall not be subsequent to the effective date of the ordinance.

RULE §125.7 Optional Additional Contributions to Municipal Accumulation Fund

(a) Effective January 1, 2008, a municipality may make deposits in excess of its actuarially required contribution to its account in the Municipal Accumulation Fund. The deposit may be in the form of a lump sum payment or periodic payments. All funds deposited in a municipality's account in the Municipal Accumulation Fund are held in trust by the retirement system and cannot be returned to the municipality.

(b) The retirement system retains the right to not accept a payment if, in the opinion of the director, acceptance of the payment would result in an unreasonable administrative or investment burden. A decision by the director to not accept a contribution may be appealed to the Board of trustees.

(c) A contribution made in accordance with this section is not subject to the maximum contribution rules under §855.407 and §855.501 of the Act.

(d) The retirement system may adopt reasonable policies and procedures to administer this section.

RULE §127.1 Procedures for Release of Board Records

  (a) The director is the custodian of records of the Texas Municipal Retirement System. Certain information in the custody of the retirement system concerning an individual member, retiree, annuitant or beneficiary is confidential under §855.115, Government Code, and may not be disclosed except as provided in that section.

  (b) The director shall appoint a staff member to coordinate release of records of the retirement system that are subject to request as public information under the provisions of the public information law, Chapter 552 of the Government Code. This staff member will certify to the authenticity of copies of board records.

  (c) Information regarding release of these records will be prominently posted and will contain basic information regarding the rights of the requester, the responsibilities of a governmental body and the procedures for inspecting or obtaining copies of public information.

  (d) Each request for information must be made in writing.

  (e) The following is a summary of fees for providing copies of public information:

    (1) Standard paper copy--$0.10 per page.

    (2) Nonstandard-size copy:

        (A) Diskette--$1.00 each;

        (B) Zip Diskette -- $5.00 each;

        (C) Writeable CD -- $1.50 each;

        (D) VHS videocassette -- $2.50 each;

        (E) Audiocassette--$1.00 each;

        (F) Oversized paper copy--$0.50 each; and

        (G) Other--Actual cost.

        (3) Personnel charge:

        (A) Programming personnel--$26 per hour; and

        (B) Other personnel--$15 per hour.

    (4) Overhead charge--20% of personnel charge.

    (5) Microfiche or microfilm charge:

        (A) Paper copy--$0.10 per page; and

        (B) Fiche or film copy--Actual cost.

    (6) Remote document retrieval charge--Actual cost.

    (7) Computer resource charge:

        (A) Client/Server--$2.20 per hour; and

        (B) PC or LAN--$1.00 per hour.

    (8) Miscellaneous supplies--Actual cost.

    (9) Postage and shipping charge--Actual cost.

    (10) Photographs--Actual cost.

    (11) Other costs--Actual cost.

    (12) Outsourced/Contracted Services--Actual cost.

    (13) No Sales Tax--No Sales Tax shall be applied to copies of public information.

  (f) Any member of the legislature shall not be charged for one copy of a record while performing his/her duties. Additionally, if it is determined by the director that providing certain records benefits the general public, fees will not be required for these records.

  (g) All funds collected from releasing copies of records shall be credited to the expense fund under the administration of the board.

RULE §127.2 Payment to Beneficiaries of Decedents

  Payment of benefits by the system as a result of the death of any one member or annuitant shall not be made to more than three different persons or entities in addition to any persons entitled to a portion of the benefit under a qualified domestic relations order that the system has approved under Chapter 129 of this title (relating to Domestic Relations Orders). Whenever payment would otherwise be made to more persons than allowed under this section, the system shall pay the benefit to the estate of the decedent unless those persons entitled to the benefit agree in writing in a document approved by the director on some other method of payment that complies with this section.

RULE §127.3 Conformity with Internal Revenue Code: Preservation of Benefits

  Pursuant to the authority of the board of trustees to act under the Act, and in accordance with the amendments to Section 415 of the Internal Revenue Code as set forth in Public Law 104-188, the annual benefit payable under the shall not be reduced under §854.007 of the Act except in conformity with those limitations on the payment of benefits set forth in the Internal Revenue Code as that Code applies from time to time to the Texas Municipal Retirement System.

RULE §127.4 Credited Service under the Uniformed Services Employment and Reemployment Rights Act

  (a) Definitions.

    (1) Eligible Member--An employee of a participating municipality who is or would be considered to be employed in a position eligible for membership but who leaves employment with that municipality to perform service in the uniformed services; whose employer was notified of the obligation or intention of the employee to perform service in the uniformed services; who is released or discharged from such service on or after December 12, 1994, under honorable conditions; whose cumulative period of service in the uniformed services with respect to that participating municipality does not exceed five years not including periods excluded under 38 USC §1412(c); who applies for reemployment with that participating municipality within 90 days of release or discharge from the uniformed services, or after recovery from an illness or injury incurred in, or aggravated during, the performance of service in the uniformed services (but such recovery period does not exceed two years); and who is reemployed by the participating municipality.

    (2) Uniformed Services--The Armed Forces of the United States of America; the Army National Guard and the Air National Guard when engaged in active duty for training, inactive duty training, or full-time National Guard duty; the commissioned corps of the Public Health Service; and any other category of persons designated by the President in time of war or emergency.

    (3) Service in the Uniformed Services--The performance of duty on a voluntary or involuntary basis in a uniformed service under competent authority and includes active duty, active duty for training, initial active duty for training, inactive duty training, full-time National Guard duty, and a period for which an employee is absent from a position of employment for the purpose of an examination of to determine the fitness of the employee to perform such duty.

    (4) Participating Municipality--A municipality as defined in §851.001(9) of the Act (including entities having the status of a municipality under Government Code, §852.005 of the Act) that is participating in the Texas Municipal Retirement System at the time the eligible member leaves employment with the municipality to perform service in the uniformed services; or a municipality that is not participating in the System at the time the employee leaves employment with the municipality to perform service in the uniformed services but commences participating during the period of the employee's performance of duty in a uniformed service.

  (b) Certification of Eligibility by Participating Municipality. An eligible member will be credited with current service in accordance with the Uniformed Services Employment and Reemployment Rights Act (the USERRA) (38 USC §4301 et seq.) upon certification by the participating municipality on forms provided by the system:

    (1) that the eligible member's reemployment application is timely;

    (2) That the eligible member has not exceeded the service limitations set forth in the USERRA;

    (3) that the eligible member was not released or discharged from the uniformed service under other than honorable conditions;

    (4) the period in which the eligible member performed service in the uniformed services;

    (5) that the eligible member did not receive service credit for the period of uniformed service;

    (6) the estimated compensation that the eligible member would have received from the municipality but for the period of service in the uniformed services; and

    (7) the eligible member's date of reemployment.

  (c) Crediting of Current Service under the USERRA.

    (1) An eligible member shall be credited with one month of current service credit for each month or part of a month in which:

        (A) the eligible member performed service in the uniformed services; and

        (B) a person who begins military service prior to the 16th day of a calendar month, or terminates military service after the 15th day of a calendar month is considered to have served a full month; and

        (C) the participating municipality participated in the system.

    (2) On or before the last day of the fifth calendar year following the year in which the eligible member was reemployed, the eligible member may, but is not required to, deposit with the system any or all employee contributions that would have been deposited to his/her individual account for each period during which he/she performed service in the uniformed services if the eligible member had been employed with the participating municipality during the period of uniformed service. Deposits under this provision are subject to the following rules:

        (A) The total deposits may not exceed the amount the eligible member would have been required to contribute had the eligible member remained continuously employed by the participating municipality throughout the period of service in the uniformed services.

        (B) The compensation upon which allowable deposits will be calculated is the estimated compensation that the eligible member would have received from the municipality but for the period of service in the uniformed services.

        (C) For purposes of determining the amount of current service credit and allowable monetary credit, months of uniformed service and estimated compensation shall be calculated from the later of the date the eligible member entered uniformed service or the date the participating municipality commenced participation in the system.

        (D) Within the allowable period for making deposits and subject to the maximum total amount of deposits, an eligible member may make deposits at any time and in any amount.

        (E) Deposits must be paid directly to the system by the eligible member, will be treated as after-tax contributions, and may not be returned until the member terminates from all covered employment in this system.

        (F) Deposits will be allocated prospective interest only, and in the same manner as interest is allocated on member contributions to individual accounts.

        (G) Deposits, when received by the system, shall be credited to the eligible person's individual account and shall be considered to be contributions attributable to the months of uniformed service performed beginning with the earliest month of uniformed service.

        (H) For vesting and funding purposes, current service credit, and any monetary credit arising from voluntary deposits, shall be considered as having been earned through service with the reemploying municipality and as having been credited during the period of uniformed service.

        (I) An eligible member receiving service credit for a specific month pursuant to §853.506 may not receive service credit for the same month under any other provision of the Act.

RULE §127.6 Acceptance of Rollovers and Transfers

  (a) The system may accept the funds described in subsections (b) and (c) of this section, subject to the restrictions of this section.

  (b) If permitted under and subject to the provisions of federal law, the system may accept an eligible rollover distribution from another eligible retirement plan in payment of all or a portion of any deposit a member is permitted under applicable law to make with the system for service credit.

    (1) An "eligible rollover distribution" is any distribution of all or any portion of the balance to the credit of the member from an eligible retirement plan. An eligible rollover distribution does not include the following:

      (A) 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 member or the joint lives (or joint life expectancies) of the member and the member's designated beneficiary, or for a specified period of ten years or more;

      (B) any distribution to the extent such distribution is required under Internal Revenue Code §401(a)(9);

      (C) any distribution which is made upon hardship of the member; or

      (D) the portion of any distribution that is not includible in gross income.

    (2) An "eligible retirement plan" is any program defined in Internal Revenue Code §401(a)(31) and §402(c)(8)(B), from which the member has a right to an eligible rollover distribution, as follows:

      (A) an individual retirement account under Internal Revenue Code §408(a);

      (B) an individual retirement annuity under Internal Revenue Code §408(b) (other than an endowment contract);

      (C) a qualified trust;

      (D) an annuity plan under Internal Revenue Code §403(a);

      (E) an eligible deferred compensation plan under Internal Revenue Code §457(b) which is maintained by an eligible employer under Internal Revenue Code §457(e)(1)(A); and

      (F) an annuity contract under Internal Revenue Code §403(b).

  (c) If permitted under and subject to the provisions of federal law, the system may accept a direct trustee-to-trustee transfer of funds from a plan described under §403(b) or §457(b) of the Internal Revenue Code in payment of all or a portion of any deposit a member is permitted to make with the system for service credit.

  (d) In order to authorize the rollover or transfer of funds described in this section, a member shall provide or cause to be provided to the system information sufficient for the system to reasonably conclude that the contribution is a valid rollover or direct trustee-to-trustee transfer as permitted under federal tax law. If the system later determines that a contribution was an invalid rollover or direct trustee-to-trustee transfer or otherwise not permitted under federal tax law, the system may take any action appropriate or required by the Internal Revenue Code or regulations issued thereunder, including return of the invalid contribution and, if applicable, any earnings attributed thereto to the member within a reasonable time after the determination and cancellation of any credit purchased with the returned amounts.

  (e) The system shall construe and administer this section in a manner such that the plan will be considered a qualified plan under §401(a) of the Internal Revenue Code of 1986, (United States Code, Title 26, §401).

RULE §127.7 Rollovers of Plan Distributions

  (a) A distributee may elect, at the time and in the manner prescribed by the Board of Trustees, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover.

  (b) The terms "eligible rollover distribution" and eligible retirement plan" are defined as follows:

    (1) 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 the following:

      (A) 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 (10) years or more;

      (B) any distribution to the extent such distribution is required under Internal Revenue Code §401(a)(9);

      (C) the portion of any distribution that is not includible in gross income.

    (2) An "eligible retirement plan" should include:

      (A) an individual retirement account described in Internal Revenue Code §408(a);

      (B) an individual retirement annuity described in Internal Revenue Code §408(b);

      (C) an annuity plan described in Internal Revenue Code §403(a);

      (D) a qualified trust described in Internal Revenue Code §401(a) that accepts the distributee's eligible rollover distribution;

      (E) an annuity contract described in Internal Revenue Code §403(b); or

      (F) an eligible plan under Internal Revenue Code §457(b), 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.

    (3) The definition of eligible retirement plan also shall apply in the case of a distribution 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 Internal Revenue Code §414(p).

    (4) 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 Internal Revenue Code §414(p), are distributees with regard to the interest of the spouse or former spouse.

    (5) A "direct rollover" is a payment by the plan to the eligible retirement plan specified by the distributee.

  (c) Notwithstanding anything in this section to the contrary, a portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax contributions which are not includible in gross income. However, such portion may be paid only to an individual retirement account or annuity described in Internal Revenue Code §§408(a) or (b), or to a qualified defined contribution plan described in Internal Revenue Code §§401(a) or 403(a) that agrees to separately account for amounts so transferred, including separate accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible.

RULE §127.8 Plan Limitations

Effective January 1, 1996, for individuals who first became members of the system on or after January 1, 1996, the amount of compensation used to determine the retirement benefit of a member must not exceed the amount of compensation permitted to be taken into account under the plan and Internal Revenue Code §401(a)(17) as then in effect and as amended, indexed in the same manner and for the same periods as provided by that section. The limits under Internal Revenue Code §401(a)(17) shall not apply to individuals who first became members of the system before January 1, 1996.

RULE §127.9 Authorization of Certain Payments in Accordance with the Pension Protection Act of 2006

(a) Effective with annuity payments that become due January 2008, the retirement system is authorized to make disbursements in accordance with Section 845 of the Pension Protection Act of 2006, Pub. L. 109-280 and related regulations.

(b) The director is authorized to adopt reasonable policies and procedures to implement and administer this section.

RULE §129.1 Purpose

  (a) The Texas Municipal Retirement System (the system) receives a substantial number and variety of domestic relations orders as that term is defined in §129.2 of this title (relating to Definitions) which purport to divide the accumulated contributions of members of the system, and/or the retirement benefits of such members, as part of divorce or other domestic relations proceedings.

  (b) Many of those orders contain provisions that would require the system to attempt to determine what effect the order is intended to have on accumulated contributions and/or retirement benefits upon the happening of certain events. The board of trustees of the system has therefore adopted the rules and procedures set forth in this chapter, in order to establish a process whereunder it can be determined if a particular domestic relations order clearly divides all benefits that may be payable under the Act, clearly advises the system as to whom benefits are to be paid and in what manner, and does not purport to require payments to be made in a manner that would conflict with the Act.

RULE §129.2 Definitions

  The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

    (1) Act--Texas Government Code, Title 8, Subtitle G, as amended.

    (2) Alternate payee--A spouse, former spouse, child, or other dependent of a member or retiree who is recognized by a domestic relations order, as having a right to receive all or a portion of the benefits payable by the system with respect to such member or retiree.

    (3) Benefits--Any of the payments or benefits described in §129.6(a) and (b) of this title (relating to Order Should Divide All Benefits).

    (4) Domestic relations liaison--A person (who may or may not be an employee of the system) who is designated by the director of the system to receive and take action concerning domestic relations orders that are sent or delivered to the system.

    (5) Domestic relations order--Any judgment, decree, or order (including one which approves a property settlement agreement) which:

        (A) relates to the provision of child support, temporary support, or marital property rights to a spouse, former spouse, child, or other dependent of a member or former member of the system; and

        (B) is made pursuant to the Family Code or any other applicable domestic relations or community property law.

    (6) Participant--A member or former member of the system who has sums of money on deposit with the system or who is or may become entitled to receive any benefit from the system based on membership in the system.

    (7) Parties--The participant and all alternate payees named in a domestic relations order.

RULE §129.3 Notice Regarding Receipt of Order

  Upon receiving a domestic relations order, the domestic relations liaison shall promptly send a notice to those persons listed in paragraphs (1) and (2) of this section, stating that the system has received the domestic relations order and that it will be acted upon by the system in accordance with the procedures set forth in this chapter. The persons who are to receive the notice are:

    (1) the participant or, if the participant is represented by an attorney (and the system has been provided with the name and address of such attorney in connection with the domestic relations order), such attorney or such other person as may be designated in writing by the participant with regard to the domestic relations order; and

    (2) all alternate payees named in the domestic relations order if their names and addresses are provided in the order; or, if an alternate payee is represented by an attorney (and the system has been provided with the name and address of such attorney in connection with the domestic relations order), to such attorney or such other person as may be designated in writing by an alternate payee with regard to the domestic relations order.

RULE §129.4 Requirements for Qualified Domestic Relations Orders

  A recital in a domestic relations order to the effect that it is a qualified domestic relations order is not sufficient to make it qualified under this chapter. To constitute an order a qualified domestic relations order under this chapter, an order must be determined, either by the system or by a court of competent jurisdiction having actual knowledge of the provisions of this chapter, to meet the requirements set forth in §129.5 of this title (relating to Contents of Domestic Relations Order) and §129.6 of this title (relating to Order Should Divide All Benefits). In making that determination, the order itself, and any clarification order entered by a court of competent jurisdiction, and any affidavits or agreements between the parties that are filed with the system may be taken into account.

RULE §129.5 Contents of Domestic Relations Order

  (a) A domestic relations order should clearly specify:

    (1) the name, taxpayer identification number, and last known address of the participant and of each alternate payee covered by the order;

    (2) the amount or percentage of the participant's benefits to be paid by the system to each such alternate payee, or the manner in which such amount or percentage is to be determined;

    (3) the number of payments or period of time to which such order applies; and

    (4) whether the order applies only to benefits under this system or, if not, to what other plans the order applies, and in what manner.

  (b) A domestic relations order does not meet the requirements of this chapter for qualified domestic relations orders if:

    (1) it purports to require the system to provide any type or form of benefit, or any option, not otherwise authorized under the Act;

    (2) it purports to require the system to make any payment of any benefit or portion thereof at a time not otherwise authorized under the Act;

    (3) it purports to require the payment of benefits to an alternate payee which are required (or purported to be required) to be paid to another alternate payee under another order previously determined by the system to be a qualified domestic relations order under this chapter (including any such order so determined on an informal basis prior to adoption of this chapter); or

    (4) it is worded in a manner that does not advise the system (taking into account the provisions of the Act, the wording of the order, and the provisions of this chapter) in clear and unambiguous language as to what portion of the benefits that otherwise might be or become payable to the participant (or to the participant's designee or estate) are to be paid to each alternate payee under the order.

RULE §129.6 Order Should Divide All Benefits

  (a) Under the Act, a participant's accumulated contributions (with interest as allowed thereon under the Act) may become payable to a participant upon terminating municipal employment and membership in the system prior to retirement, as set forth in the Act, §852.103, or may become payable to the participant's designee or estate under the Act, §854.501, in the event of the participant's death prior to retirement. A domestic relations order regarding a participant who has not yet retired should clearly state the basis upon which any portion of such sums should be payable to an alternate payee. In the event that a domestic relations order does not clearly state how interest allowed on the contributions is to be divided, it will be divided upon any payment of accumulated contributions under either the Act, §852.103, or §854.501 pro rata on the basis that the amount awarded to the alternate payee bears to the total accumulated contributions.

  (b) Under the Act, a service retirement benefit or a disability retirement benefit may become payable to the participant (and, upon the participant's death, to a designee) as set forth in the Act, §§854.101-854.105 and §§854.301-854.305. A domestic relations order regarding a participant should clearly state the basis upon which any portion of such retirement benefit should be payable to an alternate payee. (c) A supplemental death benefit may become payable under the Act, §854.603 or §854.604, upon the death of a participant who was or had been employed by certain of the municipalities participating in the system. That benefit is not the property of a participant, but rather is a benefit that is paid by the system as a result of the death of a participant. If any portion of such benefit becomes payable to an alternate payee under the express wording of a qualified domestic relations order, it will be so paid upon the death of the participant; however, if the domestic relations order does not specifically provide that some portion of that benefit is to be paid to an alternate payee, then no portion of the supplemental death benefit shall be paid otherwise than as set forth in the Act, §854.605.

RULE §129.7 Conditional Approval of Order

  If, upon receipt of a domestic relations order, the domestic relations liaison is of the opinion that it complies in all ways with the requirements for a qualified domestic relations order hereunder, the domestic relations liaison shall so state in the notice to be sent under §129.3 of this title (relating to Notice Regarding Receipt of Order). In that event, the notice shall also state that the system will thereafter pay the sums payable under the order in the manner set forth in the order, unless any of the parties notifies the system in writing, within two weeks (and such additional time as may be allowed by the System upon good cause being shown) from the date of mailing of the notice, that they are contesting the order.

RULE §129.8 Payments under Conditionally Approved Order

  (a) If, upon receipt of a domestic relations order, the domestic relations liaison conditionally approves that order, the system may (but shall not be required to) commence making payments pursuant to that order.

  (b) If, within the period of time set forth in the notice from the domestic relations liaison, either party notifies the system in writing that they are contesting the order, no payments shall thereafter be made except in accordance with §129.10 of this title (relating to Procedures for Determination--Contested Order).

  (c) If conditional approval of an order is given by the domestic relations liaison under this section, and the system does not receive written notice of any contest of that determination within the period specified, the order shall be deemed to be a qualified domestic relations order hereunder, and the system will make payment in accordance therewith.

  (d) Neither the system nor any officials of the system shall be liable to any person for making payment pursuant to an order under this section.

RULE §129.9 Order Appearing Not To Qualify

  (a) If, upon receipt of a domestic relations order, the domestic relations liaison is of the opinion that the order does not comply in all ways with the requirements for a qualified domestic relations order hereunder, the domestic relations liaison shall so state (in the notice to be sent under §129.3 of this title (relating to Notice Regarding Receipt of Order)) and notify the parties that unless they commence action within 90 days to bring the order into compliance with the provisions of this chapter relating to qualified domestic relations orders, the order will be determined not to be a qualified domestic relations order. If 60 days have elapsed and neither party has submitted documentation to the system reflecting that action has been commenced to bring the order into compliance, the domestic relations liaison will remind each party by first class mail that unless documentation has been submitted to the system showing that action has been commenced before the expiration of the 90 day period the order will be determined not to be a qualified domestic relations order and the system will pay to the participant any sums that have been withheld up to that date, and shall thereafter make payment of benefits as if no order had been received by the system.

  (b) If the domestic relations liaison has made an initial determination under this section that the order does not appear to qualify, the system nonetheless may (but shall not be required to) pay to the participant all or any portion of any benefits to which the participant appears entitled under the order. Any benefits not paid under this subsection shall be retained by the system until they are paid under one of the remaining subsections of this section.

  (c) In the event that, in the opinion of the domestic relations liaison, the order is subsequently brought into compliance with the requirements of this chapter for qualified domestic relations orders, the domestic relations liaison shall so notify the parties in writing, and the system will thereafter pay the sums payable under the order in the manner set forth in the order, unless such order is subsequently set aside or modified by a court of competent jurisdiction.

  (d) In the event that neither party has timely commenced action in accordance with subsection (a) of this section and the domestic relations liaison determines that the order has not been brought into compliance with the requirements of this chapter for qualified domestic relations orders, the order is not a qualified domestic relations order. The domestic relations liaison shall so notify the parties in writing, and the system will pay to the participant any sums that have been withheld hereunder after the expiration of six months from the notice under §129.3 of this title (relating to Notice Regarding Receipt of Order) was mailed (provided that upon good cause being shown prior to the expiration of such six-month period, the time for bringing the order into compliance may be extended for up to two additional six-month periods), and shall thereafter make payment of benefits as if no order had been received.

  (e) Upon receipt of a subsequent order that the domestic relations liaison determines qualifies under this chapter, the system will make payment as therein described.

  (f) Upon the expiration of 18 months from the date the domestic relations order was received, if the issue of whether or not the order is a qualified domestic relations order has not been resolved within that period of time, the system will pay to the participant all sums that have been withheld hereunder up to that date, and shall thereafter make payment of benefits as if no order had been received by the system.

  (g) Neither the system nor any officials to the system shall be liable for making any payment under this section.

RULE §129.10 Procedures for Determination--Contested Order

  (a) If, in response to a notice sent to the parties under §129.7 of this title (relating to Conditional Approval of Order) written notice of a contest is timely received, the domestic relations liaison shall in writing notify all other parties of the receipt of that contest, and shall request the assistance of all parties in insuring that the order is in compliance, or is brought into compliance with the provisions of this chapter relating to qualified domestic relations orders.

  (b) For a period of 90 days following the system's receipt of notice of a contest, the system will not make any payment to either the participant or the alternate payee under the contested order unless the contest is sooner withdrawn in writing by the party who gave written notice of contest.

  (c) Any party desiring to contest the order may, within that 90-day period, apply to the courts for a clarification order, and, in the event that the system receives (within such 90-day period) notice of such a motion being filed, the system will continue to withhold payment of benefits until the first to occur of:

    (1) The system's receipt of a certified copy of a subsequent order that the domestic relations liaison determines qualifies under this chapter; or

    (2) The expiration of six months from the date of mailing of the notice of conditional approval under §129.7 of this title provided that for good cause shown prior to the expiration of the six-month period, the time for withholding payment of benefits may be extended for up to two additional six-month periods.

  (d) If, within the six-month period set forth in subsection (c)(2) of this section (including any extensions for good cause, the system receives a subsequent order under §129.11 of this title (relating to Procedure for Obtaining Formal Hearing), the system will pay all benefits (including any that have been withheld under this chapter) pursuant to that subsequent order, unless the domestic relations liaison notifies the parties in writing that the order does not qualify under this chapter. In making a determination hereunder, the domestic relations liaison may (but shall not be required to) rely on the determination of the court in a clarification order meeting the requirements of §129.4 of this title (relating to Requirements for Qualified Domestic Relations Orders). If the domestic relations liaison notifies the parties in writing that the subsequent order does not qualify, action on the order thereafter will be in accordance with the provisions of §129.9 of this title (relating to Order Appearing Not to Qualify).

  (e) If the system does not receive (within the 90 days described in subsections (a)-(c) of this section) notice of such a motion being filed, or if the contest has been withdrawn in writing, then payment will be made under §129.8 of this title (relating to Payments Under Conditionally Approved Order) if the domestic relations liaison conditionally approved the order, or further action on the order shall be under §129.9 of this title if the domestic relations liaison made an initial determination that the order does not qualify under this chapter.

  (f) Upon the expiration of 18 months from the date the domestic relations order was received, if the issue of whether or not the order is a qualified domestic relations order has not been resolved within that period of time, the system will pay to the participant all sums that have been withheld hereunder up to that date, and shall thereafter make payment of benefits as if no order had been received by the system. (g) Neither the system nor any officials to the system shall be liable for making any payment under this section.

RULE §129.11 Procedure for Obtaining Formal Hearing

  (a) If the domestic relations liaison has determined that an order does not qualify under this chapter, and either party desires to challenge that determination, the party desiring to make such a challenge shall have 30 days from the date of the domestic relations liaison's letter of notification within which to file with the director a written demand for a hearing. After receipt of such demand, the director shall set the matter for hearing and shall mail written notice to all parties of the date and place of hearing.

  (b) All such hearings, and the action thereon, shall be in accordance with §§121.16-121.24 of this title (relating to Conduct of Contested Case Hearings; Proposal for Decisions; Filing of Exceptions to Proposal, Briefs, and Replies; Final Decisions and Orders; When Decisions Become Final; Motions for Rehearing; Rendering a Final Decision or Order; and the Record).

RULE §129.12 Payments to Alternate Payees

  (a) In the event that the participant terminates membership in the system and applies for a refund of the participant's accumulated deposits and interest, the system will make a lump-sum payment to the alternate payee if the domestic relations order so provides and the order has been determined to be a qualified domestic relations order.

  (b) In the event that the participant (or the participant's designated beneficiary or estate) begins receiving an annuity after the date that a qualified domestic relations order is received by the system, and the order provides for a division of the annuity in that event, the payment to the alternate payee will be a monthly allowance payable during the lifetime of the alternate payee, which payment is the actuarial equivalent of the portion of the participant's benefit that was awarded to the alternate payee under the domestic relations order. The mortality assumption for alternate payees for determining the payment to the alternate payee shall be the same as the mortality assumption for the beneficiaries as set forth in §123.1(a) of this title (relating to Actuarial Tables) with regard to service retirements and as set forth in §123.1(b) of this title with regard to disability retirements.

  (c) Subsection (b) of this section will apply to all domestic relations orders approved in accordance with this chapter after September 9, 1989, and to such domestic relations orders approved prior to that date as are construed to provide for such an annuity.

  (d) In the event that the total reserves upon which an annuity (otherwise payable to an alternate payee under a qualified domestic relations order) would be calculated are $10,000 or less, then the system is authorized to make a single lump-sum payment to the alternate payee in the amount of those reserves instead of paying an annuity to the alternate payee. No such payment shall be made by the system until such point in time as the system begins paying an annuity to the participant or the participant's designated beneficiary, surviving spouse, or estate.

  (e) The suspension of a disability retirement benefit under the Act does not suspend payment of a benefit to an alternate payee under a qualified domestic relations order.

RULE §129.13 Form of Qualified Domestic Relations Order

  (a) The following form has been pre-approved by the retirement system as meeting the requirements of this title for a qualified order. A qualified domestic relations order in substantially the following form incorporates by reference the definitions set forth in this section and the provisions set forth in §129.14 of this title (relating to Provisions Incorporated by Reference).

This Order is intended to meet the requirements for a "qualified domestic relations order" relating to the TEXAS MUNICIPAL RETIREMENT SYSTEM, hereinafter called the "Plan". This Order is an integral part of the Decree of Divorce signed on (DATE OF DIVORCE DECREE). In compliance with those requirements the following is specified:

1. This qualified domestic relations order assigns a portion of the benefits payable under the Plan to (NAME OF ALTERNATE PAYEE) in recognition of (HIS/HER) marital rights in (NAME OF PARTICIPANT)'s benefits payable under the Plan.

2. Participant in the Plan is (NAME OF PARTICIPANT), whose last known mailing address is (PARTICIPANT'S ADDRESS), whose birth date is (BIRTH DATE), and whose Social Security Number is (NUMBER).

3. Alternate Payee is (NAME OF ALTERNATE PAYEE), whose last known mailing address is (ALTERNATE PAYEE'S ADDRESS), whose birth date is (BIRTH DATE), and whose Social Security Number is (NUMBER). Participant and Alternate Payee became married on (DATE OF MARRIAGE).

4. A portion of any benefit payable with respect to Participant which Participant, or Participant's designated beneficiary, surviving spouse, or estate may become entitled to receive from the Plan, by way of a return of accumulated contributions or by way of any annuity that may become payable as a result of Participant's participation in the Plan is hereby awarded to Alternate Payee, such portion to be determined by multiplying (FRACTION) by the Community Property Ratio based on (select and complete one of the following): ____ accumulated contributions between the following dates: _______________ and _______________. ____ total creditable service between the following dates: _______________ and _______________.

5. The provisions of 34 Texas Administrative Code, §129.13 and §129.14 are incorporated herein by reference. SIGNED this _____ day of _______________, _____. ______________________________ JUDGE PRESIDING

  (b) It is the responsibility of the parties to insert the correct information in the pre-approved form at those places marked by parentheses enclosing capital letters, and to provide the system with a certified copy of the order after it has been entered.

  (c) The term "community property ratio" as used in the pre-approved form shall mean the ratio that contributions and interest deposited to Participant's individual account with the retirement system between the dates shown bears to Participant's total contributions and interest at time of retirement or withdrawal of accumulated contributions if "accumulated contributions" is shown in the order to be the basis for division.

  (d) The term "community property ratio" as used in the pre-approved form shall mean the ratio that Participant's credited service between the dates shown bears to Participant's total credited service at time of retirement or withdrawal of accumulated contributions if "total credited service" is shown in the order to be the basis for division.

  (e) The order shall not be considered qualified unless it clearly reflects which of the ratios described above is intended to be used in computing the division of benefits.

  (f) The fraction inserted in paragraph 4 of the pre-approved form customarily would be one-half; however, nothing in this section shall preclude the parties inserting any fraction that is intended to control the division of the benefit.

  (g) The dates inserted in paragraph 4 of the pre-approved form customarily would be the dates the marriage began and ended; however, nothing in this section shall preclude the parties inserting any dates that are intended to control the division of the benefit.

RULE §129.14 Provisions Incorporated by Reference

  An order on the form set forth in §129.13 of this title (relating to Form of Qualified Domestic Relations Order) expressly incorporates all of the following by reference:

    (1) The order shall not be interpreted in any way to require the Plan to provide any type or form of benefit or any option not otherwise provided under the Plan.

    (2) The order shall not be interpreted in any way to require the Plan to provide increased benefits determined on the basis of actuarial value.

    (3) The order shall not be interpreted in any way to require the Plan to pay any benefits to an/any Alternate Payee named in the order which are required to be paid to another alternate payee under another order previously determined to be a qualified domestic relations order.

    (4) The order shall not be interpreted in any way to require the payment of benefits to Alternate Payee before the retirement of Participant, the distribution of a withdrawal of contributions to Participant as authorized by the statutes governing the Plan, or other distribution to Participant required by law.

    (5) If the Plan provides for a reduced benefit upon "early retirement", the order shall be interpreted to require that, in the event of Participant's retirement before normal retirement age, the benefits payable to Alternate Payee shall be reduced in a proportionate amount.

    (6) The order shall not be interpreted to require the designation of a particular person as the recipient of benefits in the event of Participant's death, or to require the selection of a particular benefit payment plan or option.

    (7) In the event that, after the date of the order, the amount of any benefit otherwise payable to Participant is increased as a result of amendments to the law governing the Plan, Alternate Payee shall receive a proportionate part of such increase unless such an order would disqualify the order under the rules the Plan has adopted with regard to qualified domestic relations orders.

    (8) In the event that, after the date of the order, the amount of any benefit otherwise payable to Participant is reduced by law, the portion of benefits payable to Alternate Payee shall be reduced in a proportionate amount.

    (9) If, as a result of Participant's death after the date of the order, a payment is made by the Plan to Participant's estate, surviving spouse, or designated beneficiaries, which payment does not relate in any way to Participant's length of employment or accumulated contributions with the Plan, but rather is purely a death benefit payable as a result of employment or retired status at the time of death, no portion of such payment is community property, and Alternate Payee shall have no interest in such death benefit.

    (10) If the board of trustees of the Plan has by rule provided that, in lieu of paying an alternate payee the interest awarded by a qualified domestic relations order, the Plan may pay the alternate payee an amount that is the actuarial equivalent of

        (A) An annuity payable in equal monthly installments for the life of the alternate payee, or

        (B) A lump sum, then and in that event the Plan is authorized to make such a payment under the order.

    (11) All payments to Alternate Payee under the order shall terminate upon Alternate Payee's death or at such earlier date as may be required as a result of the retirement option selected by Participant.

    (12) All benefits payable under the Plan, other than those payable under paragraph 4 of the order to Alternate Payee, shall be payable to Participant in such manner and form as Participant may elect in his/her sole and undivided discretion, subject only to Plan requirements.

    (13) Alternate Payee is ORDERED to report any retirement payments received on any applicable income tax return, and to promptly notify the Plan of any changes in Alternate Payee's mailing address. The Plan is authorized to issue a Form 1099R on any direct payment made to Alternate Payee.

    (14) Participant is designated a constructive trustee for receiving any retirement benefits under the Plan that are due to Alternate Payee but paid to Participant. Participant is ORDERED to pay the benefit defined in this paragraph directly to Alternate Payee within three days after receipt by Participant. All payments made directly to Alternate Payee by the Plan shall be a credit against this order.

    (15) The Court retains jurisdiction to amend the order so that it will constitute a qualified domestic relations order under the Plan even though all other matters incident to this action or proceeding have been fully and finally adjudicated.