South Carolina § 9-8-260 - Compliance with Internal Revenue Code Section 401(a)(9).

§ 9-8-260. Compliance with Internal Revenue Code Section 401(a)(9).

(A) Effective as of January 1, 1989, the system shall pay all benefits in accordance with the requirements of Section 401(a)(9) of the Internal Revenue Code, including the incidental death benefit requirement in Section 401(a)(9)(G), and the applicable Treasury Regulations and Internal Revenue Service Rulings and other interpretations issued thereunder, including Treasury Regulations Sections 1.401(a)(9)-2 through 1.401(a)(9)-9. The provisions of this section shall override any distribution options that are inconsistent with Section 401(a)(9) of the Internal Revenue Code to the extent that those distribution options are not grandfathered under Treasury Regulation Section 1.401(a)(9)-6, Q&A-16.

(B) Each member's entire benefit shall be distributed to the member, beginning no later than the required beginning date, over the member's lifetime or the joint lives of the member and a designated beneficiary, or over a period not extending beyond the member's life expectancy or the joint life expectancies of the member and a designated beneficiary. If a member fails to apply for retirement benefits by his required beginning date, the board shall begin distributing the benefit as required by this chapter:

(1) For purposes of this section, the "required beginning date" is April first of the calendar year after the later of the following:

(a) the calendar year in which the member reaches age seventy and one-half years of age; or

(b) the calendar year in which the member retires.

(2) For purposes of this section, a "designated beneficiary" means any individual designated as a co-beneficiary by the member under this chapter. If the member designates a trust as a co-beneficiary, the individual beneficiaries of the trust shall be treated as designated beneficiaries if the trust satisfies the requirement set forth in Treasury Regulation Section 1.401(a)(9)-3.

(3) Payment of retirement benefits, for those members who are eligible to receive retirement benefits and who have not applied for such pursuant to the provisions of this chapter, and who continue membership after attaining seventy and one-half years of age, shall commence on the effective date of retirement.

(C) If a retired member dies after benefit payments have begun or are required to begin under subsection (B) of this section, any survivor benefits shall be distributed at least as rapidly as under the distribution method being used at the member's death.

(D) If an active or inactive member dies before benefit payments have begun or are required to begin under subsection (B) of this section, any death benefits shall be distributed by December thirty-first of the calendar year that contains the fifth anniversary of the member's death. However, the five-year rule shall not apply to any death benefit that is payable to a member's designated beneficiary, if:

(1) the benefit is distributed over the designated beneficiary's lifetime or over a period not extending beyond the designated beneficiary's life expectancy; and

(2) the distributions begin no later than December thirty-first of the calendar year that contains the first anniversary of the member's death.

HISTORY: 2008 Act No. 311, SECTION 17, eff June 4, 2008.