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Pensions and Benefits
RULE CHANGES
2012
Proposed Rules Public Notices Adoptions

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The Division of Pensions and Benefits posts proposed rules, new rules, amended rules, and readoptions of existing rules on this Web site to inform members, retirants, employers and other interested parties.

Proposed rules are first published in the New Jersey Register, a bi-weekly publication prepared by the Office of Administrative Law. The Division then posts, on this site, summaries of the proposed rules. After adoption, a rule becomes part of the New Jersey Administrative Code.

If you would like to learn more regarding a proposed rule, the numbers in the parentheses before the proposed rule refer to the volume and page number in which the entire proposal is found in the Register. N.J.A.C. refers to the New Jersey Administrative Code, and the numbers identify the title and specific chapter citations.

View the New Jersey Register and New Jersey Administrative Code online.

Proposed changes are either in bold print or are underlined. Deletions are bracketed [so].


Public Notices

There are no Public Notices for 2012 at this time.


Proposed Rules

Proposed Readoption of Specially Adopted New Rules: N.J.A.C. 17:6, Proposed Amendments: N.J.A.C. 17:6-2.1 and 5.8. - March 5, 2012

Proposed Amendment: N.J.A.C. 17:1-3.10 - May 7, 2012

Proposed Amendment: N.J.A.C. 17:1-1.12 - May 7, 2012

Readoption of Specially Adopted New Rules: N.J.A.C. 17:6, Adopted Amendments: N.J.A.C. 17:6-2.1 and 5.8 - July 2, 2012


Adoptions

Final Adoption: N.J.A.C. 17:5, Cite at 44 N.J.R. 507(c), State Police Retirement System (SPRS) - February 21, 2012

Special Adopted New Rules: N.J.A.C. 17:1-17, Cite at 44 N.J.R. 1157(a), General Administration, Compliance with Internal Revenue Code - April 2, 2012

Adopted Amendment: N.J.A.C. 17:1-3.10, Cite as 44 N.J.R. 2062(b), General Administration, Peacetime Military Service; Service Credit - August 6, 2012

Adopted Amendment: N.J.A.C. 17:1-1.12, Cite as 44 N.J.R. 2062(a), General Administration, Domestic Relations Orders - August 6 , 2012

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PROPOSED RULES


TREASURY — GENERAL
DIVISION OF PENSIONS AND BENEFITS

44 N.J.R. 559(a)

Proposed Readoption of Specially Adopted New Rules: N.J.A.C. 17:6

Proposed Amendments: N.J.A.C. 17:6-2.1 and 5.8

Click here to view Interested Persons Statement

Defined Contribution Retirement Program
 
Authorized By: Andrew P. Sidamon-Eristoff, State Treasurer.
 
Authority: N.J.S.A. 43:15C-1.
 
Calendar Reference: See Summary below for explanation of exception to calendar requirement.
 
Proposal Number: PRN 2012-041.
 
Submit comments by May 4, 2012 to:
   Susanne Culliton, Assistant Director
   Division of Pensions and Benefits
   PO Box 295
   Trenton, NJ 08625-0295

 
The agency proposal follows:
 
Summary

The Board of the Defined Contribution Retirement Program ("DCRP" or "Program") established by N.J.S.A. 43:15C-4 is responsible for reviewing the administrative rules within N.J.A.C. 17:6. When the Board becomes aware of a change in the laws or a court decision that could affect the DCRP, the administrative rules are reviewed and, if changes therein are mandated, steps are taken to propose changes to those rules to conform to the new statutes or court decision. Additionally, the rules are periodically reviewed by the Division of Pensions and Benefits staff to determine if the current rules require clarification, whenever practicable, so that they are consistent with the Internal Revenue Code as applicable to governmental plans.

The Board proposes to readopt the specially adopted new rules at N.J.A.C. 17:6, which expire on January 25, 2012 with the amendments discussed below. The specially adopted new rules proposed for readoption with amendments, affect the administration, enrollment, insurance, and death benefits, membership, investments, and retirement aspects of the plan. Pursuant to N.J.S.A. 52:14B-5.1c(2), by filing this notice of proposal with the Office of Administrative Law on or before January 25, 2012, the expiration date of N.J.A.C. 17:6 is extended to 180 days to July 23, 2012.

Members, participating employers, retirees, and survivors of retirees rely on the efficient operation of the retirement program to administer retirement benefits and to provide the information they need regarding the individual accounts. The Defined Contribution Retirement Program legislation originally became effective July 1, 2007 with the enactment of P.L. 2007, c. 92, as later amended by P.L. 2007, c. 103, P.L. 2008, c. 89, and P.L. 2010, c. 1. The Defined Contribution Retirement Program rules were adopted as a special adoption of new rules effective January 25, 2011. The following is a discussion of the specially adopted new rules proposed for readoption with amendments.

Subchapter 1, Establishment of Program, remains unchanged.

Subchapter 2, Definitions, is proposed for readoption with an amendment proposed to the definition of "severance." In this definition, the phrase "or expectation" is added to clarify that the participant shall knowingly not have obligation or expectation upon termination of employment to return to work after the date of severance with that employer.

Subchapter 3, Defined Contribution Retirement Program Board, remains unchanged.

Subchapter 4, Participation in the Retirement Plan, remains unchanged.

Subchapter 5, Contributions to the Retirement Plan, contains amendments to one section as follows. At N.J.A.C. 17:6-5.8, Plan to satisfy limit on annual additions, paragraph (a)1 is proposed for amendment to include the increase in the limit of the annual addition as required under IRC § 415(c) to $ 50,000 in calendar year 2012, $ 49,000 in calendar years 2009 through 2011, and $ 46,000 in calendar year 2008. This paragraph originally just stated a base amount and "as adjusted," but will now include the prior annual additions. Paragraph (a)2 remains unchanged. Subsections (b) through (i) would remain unchanged. Subsection (j) is proposed for amendment to include that the current compensation limit for each participant shall not exceed the applicable limit established by IRC § 401(a)(17). For plan year 2012 this limit is $ 250,000, for plan years 2009 through 2011 this limit was $ 245,000, and for plan year 2008 this limit was $ 230,000.

Subchapter 6, Investments and Investment Direction, remains unchanged.

Subchapter 7, Vesting and Forfeiture, remains unchanged.

Subchapter 8, Beneficiary, remains unchanged.

Subchapter 9, Qualified Domestic Relations Order, remains unchanged.

Subchapter 10, No Loan or Early Distribution, remains unchanged.

Subchapter 11, Distributions and Minimum Distribution Requirements, remains unchanged.

Subchapter 12, Accounts, remains unchanged.

Subchapter 13, Rollovers, remains unchanged.

Subchapter 14, Administration of Distributions, remains unchanged.

Subchapter 15, Plan Administration, remains unchanged.

Subchapter 16, General Provisions, remains unchanged.

Subchapter 17, Defined Contribution Retirement Program Group Life Insurance Plan, remains unchanged.

Subchapter 18, Defined Contribution Retirement Program Group Disability Benefit Plan, remains unchanged.

Subchapter 19, Amendment, remains unchanged.

Subchapter 20, Construction, remains unchanged.

As the Board has provided a 60-day comment period on this notice of proposal, this notice is excepted from the rulemaking calendar requirement pursuant to N.J.A.C. 1:30-3.3(a)5.
 
Social Impact

The rules involving the Defined Contribution Retirement Program benefit the members, retirees, beneficiaries, and participating employers of the Program. The members, participating employers, retirees, and survivors of retirees rely on the efficient operation of the Program to provide them with both a retirement benefit and information needed regarding their individual accounts. The members rely upon the predictability of the rules, which guide the administration of their benefits and the stability of the Program. The protections and guarantees that these rules afford its members mandate their continued existence.

The proposed amendments to the rules are to keep a historical record of the annual limits established by the Internal Revenue Code. These changes will be updated in the Administrative Code at the time of any future proposed amendments, or at the latest, during future proposed readoptions. In addition, as case law develops over time, it may become necessary to amend and/or repeal rules, which have become either moot or partially unenforceable. The Division recognizes that there is a general societal interest in making sure a public retirement program is well run and available to its members.
 
Economic Impact

The specially adopted new rules proposed for readoption with amendments will not present any economic impact on the public; the rules represent a continuation of current provisions within the limitations placed upon all qualified retirement programs under Federal law and are regulatory requirements under the related statutory provisions. The rules as amended, do not impose any additional recordkeeping or other administrative requirements, and will serve to preserve the efficient administration and operation of the DCRP. The rules will enable the Division to provide for benefits in a manner that meets the statutory and contractual requirements.

The current procedures as set forth in N.J.A.C. 17:6 have proven to be effective in the proper administration of the DCRP. Without the administrative rules to provide for the efficient operation of the Program, financial disparities may result.

Employees enrolled in the Public Employees' Retirement System or the Teachers' Pension and Annuity Fund after July 1, 2007, or enrolled in the Police and Firemen's Retirement System or the State Police Retirement System after May 21, 2010, are subject to maximum compensation limits for pension contributions. The maximum compensation is based on the annual maximum wage for Social Security and is subject to change at the start of each calendar year. Therefore, an eligible employee who earns in excess of the annual maximum wage will be enrolled in the DCRP, and any attendant economic impact would be as a result of the enabling legislation and not the rules themselves. The additional income will be available in retirement based on contributions from salary above the maximum compensation limit invested in the DCRP.

The Division will continue to monitor the impact of these rules through research and review of new legislation. The Division is not aware of any provisions in these rules that would impose any hardship or costs on the members of the DCRP or on the public in general.
 
Federal Standards Statement

A Federal standards analysis is not required for the specially adopted new rules proposed for readoption with amendments because N.J.S.A. 43:15C-1 governs the subject of this rulemaking. The following Federal requirements affect the subject of this rulemaking: IRC §§ 401(a) et seq., 29 § U.S.C. 1002(32) and IRC § 414(d). The DCRP is a plan intended to be a tax-qualified defined contribution pension plan and is further intended to be a governmental plan. Thus, the rules must be in compliance with the Federal requirements and/or standards.
 
Jobs Impact

The operation of the specially adopted new rules proposed for readoption with amendments will not result in the generation or loss of jobs. The Division of Pensions and Benefits invites any interested parties to submit any data or studies concerning the jobs impact of these rules with their written comments.
 
Agriculture Industry Impact

The specially adopted new rules proposed for readoption with amendments will not have any impact on the agriculture industry.
 
Regulatory Flexibility Statement

N.J.A.C. 17:6 only affects public employers and employees. Thus, the specially adopted new rules proposed for readoption with amendments do not impose any reporting, recordkeeping, or other compliance requirements upon small businesses, as defined under the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq. Therefore, a regulatory flexibility analysis is not required.
 
Housing Affordability Impact Analysis

The specially adopted new rules proposed for readoption with amendments will not have an impact on affordable housing in New Jersey and the rules will not evoke a change in the average costs associated with housing because the rules only apply to the administration of the DCRP.
 
Smart Growth Development Impact Analysis

The specially adopted new rules proposed for readoption with amendments will have an insignificant impact on smart growth and there is an extreme unlikelihood that the rules would evoke a change in housing production in Planning Areas 1 or 2, or within designated centers, under the State Development and Redevelopment Plan in New Jersey because the rules only apply to the administration of the DCRP.
 
Full text of the specially adopted new rules proposed for readoption may be found in the New Jersey Administrative Code at N.J.A.C. 17:6.
 
Full text of the proposed amendments follows: (additions indicated in boldface thus; deletions indicated in brackets [thus]):
 
SUBCHAPTER 2.    DEFINITIONS
 
17:6-2.1   Definitions
 
Whenever used in the Program or with respect to an applicable Plan, each of the following terms has the meaning stated below. To the extent that any term is not defined in this subchapter or otherwise by this chapter, such term has the meaning given by N.J.S.A. 43:15C-1 et seq. or by the Internal Revenue Code.
 
. . .
 
"Severance from employment" means the date the participant terminates employment with an employer with no obligation or expectation for future services to be performed for an employer by the participant. The Plan Administrator is entitled to rely upon the date of severance from employment certified by the employer.
 
. . .
 
SUBCHAPTER 5.    CONTRIBUTIONS TO THE RETIREMENT PLAN
 
17:6-5.8   Plan to satisfy limit on annual additions
 
(a) To the extent required under IRC § 415(c), in no event shall the "annual addition," as defined in this section for a participant for any Plan Year, exceed the lesser of:
 
1. $ 45,000, as adjusted ($ 50,000 in calendar year 2012, $ 49,000 in calendar years 2009 through 2011, and $ 46,000 in calendar year 2008); or
 
2. (No change.)
 
(b)-(i) (No change.)
 
(j) For purposes of this section, compensation of each participant shall not exceed the applicable limit established by IRC § 401(a)(17) as of the first day of the limitation year, as increased for the Cost of Living Adjustment [($ 245,000 for 2011)] ($ 250,000 for 2012, $ 245,000 for 2009 through 2011, and $ 230,000 for 2008). The Cost of Living Adjustment in effect for a limitation year applies to compensation for the Plan Year that begins with or within such limitation year.

 


TREASURY -- GENERAL
DIVISION OF PENSIONS AND BENEFITS

44 N.J.R. 1317(a)

Proposed Amendment: N.J.A.C. 17:1-3.10

Click here to view Interested Persons Statement

General Administration
 
Peacetime Military Service; Service Credit
 
Authorized By: Florence J. Sheppard, Acting Director, Division of Pensions and Benefits.
 
Authority: N.J.S.A. 52:14-15.1a (P.L. 1996, c. 8) and 52:18A-96 et seq.
 
Calendar Reference: See Summary below for explanation of exception to calendar requirement.
 
Proposal Number: PRN 2012-069.
 
Submit comments by July 6, 2012 to:

Susanne Culliton
Administrative Practice Officer
Division of Pensions and Benefits
PO Box 295
Trenton, NJ 08625-0295

The agency proposal follows:
 
Summary

The Division of Pensions and Benefits (Division) seeks to propose an amendment to clarify an existing requirement in the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). There has been no change in the administrative practice of the Division, the proposed amendment clarifies that in order for an employee to receive the USERRA-eligible service in the actual calculation of retirement benefits, the employee is required to remit the pension contributions for the period of time in the uniformed service. The employee shall receive the pension credit for the USERRA-eligible service by making the pension contributions that would have been required had the employee not left employment to serve in the uniformed services. In addition, the USERRA-eligible service can be used to attain the employer-paid health benefits coverage based on 25 years of service if the employer normally provides this benefit, as long as the employee purchases the USERRA-eligible service.

The purpose of this amendment is to clarify an already existing requirement and to ensure that no one is misled regarding the provisions of 38 U.S.C. §§ 4301 et seq. and the Division's administrative practice regarding USERRA-service for retirement and health benefits. Employees that pay the pension contributions associated with the USERRA-service shall have the time included in the calculation of their retirement benefits and health benefits if applicable.

It is the employer's responsibility to notify employees of the benefit protection provided by USERRA. The request for USERRA-eligible service credit should be made by the employer to the Division within 30 days of return to employment. When notified of an employee's USERRA-eligible service, the Division will notify the employee of the amount of contributions required in order that the period of military service can be used in the calculation of retirement benefits. The employee must authorize payroll deductions to the retirement systems for USERRA-eligible service to receive the pension service credit. The USERRA purchase may be paid in a lump sum or may be taken through tax-deferred payroll deductions.

If the employee does not purchase the USERRA-eligible service, then the employee's time in the uniformed services will not be used for the purposes of vesting and/or determining eligibility for retirement and health benefits.

At N.J.A.C. 17:1-3.10, Peacetime military service; service credit, subsection (a) remains unchanged. Subsection (b) is proposed for amendment to clarify that USERRA-eligible service can be used for purposes of vesting and to determine eligibility for benefits, provided the employee authorizes the purchase of the USERRA-eligible service. The employee shall receive the pension credit for the period of USERRA-eligible service by making the pension contributions that would have been required had the employee not left employment to serve in the uniformed services. Payment to the retirement system of any contributions for USERRA-eligible service is optional and voluntary on the part of the employee. Subsection (c) remains unchanged.

As the Division has provided a 60-day comment period on this notice of proposal, this notice is excepted from the rulemaking calendar requirement pursuant to N.J.A.C. 1:30-3.3(a)5.
 
Social Impact

The proposed amendment to N.J.A.C. 17:1-3.10(b) is intended to clarify the Division's administrative practice regarding USERRA-eligible service and the purchase of this service for the purposes of the retirement benefit calculation and health benefits, if the employer normally provides this benefit. The amended regulation will have a positive impact on the employees since upon return to employment, the employee will have an opportunity to purchase the USERRA-eligible service and have the service time credited to the employee's retirement account. The additional service credit will be calculated for the retirement benefit, which can provide the employee with an increased monthly retirement benefit. The Division and the State-administered retirement systems also benefit from the collection of the purchase payments.

The social benefits of this proposed amendment outweigh any negative effect that this amendment may impose on members or employers. Providing proper interpretation of the Federal law (38 U.S.C. §§ 4301 et seq.) will provide members and employers with a better understanding of the Division's administrative practice regarding USERRA. The taxpaying public may be affected by this amendment, since public monies are used to fund the benefits and they too, benefit from the proper and efficient administration of the retirement system which the rules require.
 
Economic Impact

The proposed amendment will have a positive economic impact on the various retirement systems. USERRA requires that employee contributions or lump sum payments to the retirement systems for the purchase of the eligible uniformed service credit must be deferred from Federal tax. Therefore, the payment for the purchase must be taken through payroll deductions. This ensures that payment for the additional service credit is obtained from the employer and submitted to the Division. The Division will continue to monitor the impact of the proposed amendment.
 
Federal Standards Statement

The proposed amendment is necessary as to be in compliance with Federal statutes. Specifically, the provisions of 38 U.S.C. §§ 4301 et seq., which provide benefit protection to employees who leave public employment to serve in the uniformed services. The rule was adopted to comply with USERRA and apply these Federal requirements to all the defined benefit and defined contribution retirement systems administered by the Division.
 
Jobs Impact

The operation of the proposed amendment will not result in the generation or loss of jobs. The Division invites any interested parties to submit any data or studies concerning the jobs impact of this proposed amendment along with their written comments.
 
Agriculture Industry Impact

The proposed amendment will not have any impact on the agriculture industry.
 
Regulatory Flexibility Statement

The proposed amendment affects all members of the State-administered retirement systems. It does not impose any reporting, recordkeeping, or other compliance requirements upon small businesses as defined under the Regulatory Flexibility Act at N.J.S.A. 52:14B-16 et seq. Therefore, a regulatory flexibility analysis is not required.
 
Housing Affordability Impact Analysis

The proposed amendment will not have an impact on affordable housing in New Jersey and there is an extreme unlikelihood that the rule would evoke a change in the average costs associated with housing because the rule only applies to the provisions of USERRA that apply to employees of the State-administered retirement systems.
 
Smart Growth Development Impact Analysis

The proposed amendment will not evoke a change in housing production in Planning Areas 1 or 2, or within designated centers, under the State Development and Redevelopment Plan in New Jersey because the proposed rule only applies to members that purchase USERRA-eligible service.
 
Full text of the proposal follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):
 
SUBCHAPTER 3.    ENROLLMENT, MEMBERSHIP, TRANSFERS, AND WITHDRAWALS
 
17:1-3.10   Peacetime military service; service credit
 
(a) (No change.)
 
(b) A member reemployed under this section shall be treated as not having incurred a break in service with the employer by reason of the member's period of service in the uniformed services [only for the purposes of vesting or determining eligibility for retirement and health benefits]. A member that authorizes payroll deductions or makes a lump sum payment for the USERRA-eligible service will receive the pension service credit with the State-administered retirement system. The actual calculation of retirement benefits will include the time of uniformed service. Payment to the retirement system of any contributions for USERRA-eligible service is optional and voluntary on the part of the member.
 
(c) (No change.)


TREASURY -- GENERAL
DIVISION OF PENSIONS AND BENEFITS
GENERAL ADMINISTRATION

44 N.J.R. 1316(a)

Proposed Amendment: N.J.A.C. 17:1-1.12

Click here to view Interested Persons Statement

Domestic Relations Orders
 
Authorized By: Florence J. Sheppard, Acting Director, Division of Pensions and Benefits.
 
Authority:
N.J.S.A. 52:14-15.1A (P.L. 1996, c. 8) and 52:18A-96 et seq.
 
Calendar Reference: See Summary below for explanation of exception to calendar requirement.
 
Proposal Number: PRN 2012-073.
 
Submit comments by July 6, 2012 to:

Susanne Culliton
Administrative Practice Officer
Division of Pensions and Benefits
PO Box 295
Trenton, NJ 08625-0295

The agency proposal follows:
 
Summary

The Division of Pensions and Benefits (Division) proposes an amendment to the language in N.J.A.C. 17:1-1.12(d), to clarify the Division's position regarding the execution of domestic relations orders (DRO). The Division will honor court orders for child support, alimony, and equitable distribution. Once a qualified domestic relations order is received by the Division and it meets the requirements set forth in the rule, the member's file is annotated that such a court order exists. Upon the member's retirement, the payee named on the court order will begin to receive a monthly retirement allowance. Should a member withdraw his or her pension contributions, then the payee would receive a portion of the distribution depending on the formula set forth in the court order. Should the court order or DRO require that the member name the alternate payee for an irrevocable designation of death benefits or selection of retirement option, the Division will make every effort to monitor the selections of the member. It is ultimately the responsibility of the member to be certain that the Division is provided with copies of all court orders, as well as to comply with them. In sum, the proposed amendment of subsection (d) is necessary to clarify that the court order requires that the member designate beneficiaries and option selections.

At N.J.A.C. 17:1-1.12, Domestic relations orders, subsection (d) is proposed for amendment to delete the language that an irrevocable designation remains the prerogative of the member. It is the Division's administrative practice to honor and implement court orders for child support, alimony, or equitable distribution. If the existing court order is released or a new court order is received by the Division and it authorizes payment to another payee for the designation of death benefits or selection of retirement option the existing court order becomes null and void.

As the Division has provided a 60-day comment period on this notice of proposal, this notice is excepted from the rulemaking calendar requirement pursuant to N.J.A.C. 1:30-3.3(a)5.
 
Social Impact

The proposed amendment to N.J.A.C. 17:1-1.12 will clarify the Division's administrative practice regarding the treatment of court orders for child support, alimony, or equitable distribution. The Division makes every effort to honor these court orders and the member's file is annotated that there is an existing court order before any monies are dispersed to the member and the alternate payee.

The social benefits of this proposed amendment outweigh any negative effect that this amendment may impose on members or employers. Providing the proper distribution of pension funds to the members and alternate payees saves Division resources and avoids legal ramifications. The taxpaying public may be affected by the proposed amendment, since public monies are used to fund the benefits and they too, benefit from the proper and efficient administration of the retirement system which the amendment requires.
 
Economic Impact

The proposed amendment will have a positive economic impact on the various retirement systems. It will ensure that the Division will continue to honor and properly disperse the pension monies designated by court orders for child support, alimony, or equitable distribution to the named payees. This will avoid additional legal fees to the member, alternate payees, and the pension funds. The Division will continue to monitor the impact of the proposed amendment.
 
Federal Standards Statement

The proposed amendment is necessary, so as to be compliant with court orders for child support, alimony, and equitable distribution. A Federal standards analysis is not required because N.J.S.A. 52:14-15.1a (P.L. 1996, c. 8) and 52:18A-96 et seq. govern the subject of this rulemaking and there is no Federal requirement or standard that affects the subject of this rulemaking.
 
Jobs Impact

The operation of the proposed amendment will not result in the generation or loss of jobs. The Division invites any interested parties to submit any data or studies concerning the jobs impact of this proposed amendment along with their written comments.
 
Agriculture Industry Impact

The proposed amendment will not have any impact on the agriculture industry.
 
Regulatory Flexibility Statement

The proposed amendment affects all members of the State-administered retirement systems. It does not impose any reporting, recordkeeping, or other compliance requirements upon small businesses as defined under the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq. Therefore, a regulatory flexibility analysis is not required.
 
Housing Affordability Impact Analysis

The proposed amendment will not have an impact on affordable housing in New Jersey and there is an extreme unlikelihood that the rule would evoke a change in the average costs associated with housing since the rule only applies to the execution of court orders for child support, alimony, or equitable distribution.
 
Smart Growth Development Impact Analysis

The proposed amendment will not evoke a change in housing production in Planning Areas 1 or 2, or within designated centers, under the State Development and Redevelopment Plan in New Jersey because the proposed rule only applies to the execution of court orders for child support, alimony, or equitable distribution.
 
Full text of the proposal follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):
 
SUBCHAPTER 1.    ADMINISTRATIVE PRACTICES
 
17:1-1.12   Domestic relations orders
 
(a)-(c) (No change.)
 
(d) The Division cannot guarantee the implementation of any irrevocable designation of death benefits or selection of retirement option. [Such designation or selection remains the prerogative of the member.] It is the responsibility of the member to inform the Division of the existence of any court order or domestic relations order, as well as, to comply with the contents of same.


TREASURY — GENERAL
DIVISION OF PENSIONS AND BENEFITS

44 N.J.R. 1917(a)


Readoption of Specially Adopted New Rules: N.J.A.C. 17:6

Adopted Amendments: N.J.A.C. 17:6-2.1 and 5.8

Defined Contribution Retirement Program
 
Proposed: March 5, 2012 at 44 N.J.R. 559(a).
 
Adopted: June 4, 2012 by Andrew P. Sidamon-Eristoff, State Treasurer.
 
Filed: June 8, 2012 as R.2012 d.130, without change.
 
Authority: N.J.S.A. 43:15C-1.
 
Effective Dates:  June 8, 2012, Readoption;
 
                        July 2, 2012, Amendments.
 
Expiration Date: June 8, 2019.
 
Summary of Public Comment and Agency Response:

No comments were received.
 
Federal Standards Statement

A Federal standards analysis is not required for the specially adopted new rules with amendments because N.J.S.A. 43:15C-1 governs the subject of this rulemaking. The following Federal requirements affect the subject of this rulemaking: IRC §§ 401(a) et seq., 29 § U.S.C. 1002(32), and IRC § 414(d). The Defined Contribution Retirement Plan is a plan intended to be a tax-qualified defined contribution pension plan and is further intended to be a governmental plan. Thus, the rules must be in compliance with the Federal requirements and/or standards.
 
Full text of the readopted specially adopted new rules can be found in the New Jersey Administrative Code at N.J.A.C. 17:6.
 
Full text of the adopted amendments follows:
 
SUBCHAPTER 2.    DEFINITIONS
 
17:6-2.1   Definitions
 
Whenever used in the Program or with respect to an applicable Plan, each of the following terms has the meaning stated below. To the extent that any term is not defined in this subchapter or otherwise by this chapter, such term has the meaning given by N.J.S.A. 43:15C-1 et seq. or by the Internal Revenue Code.
 
. . .
 
"Severance from employment" means the date the participant terminates employment with an employer with no obligation or expectation for future services to be performed for an employer by the participant. The Plan Administrator is entitled to rely upon the date of severance from employment certified by the employer.
 
. . .
 
SUBCHAPTER 5.    CONTRIBUTIONS TO THE RETIREMENT PLAN
 
17:6-5.8   Plan to satisfy limit on annual additions
 
(a) To the extent required under IRC § 415(c), in no event shall the "annual addition," as defined in this section for a participant for any Plan Year, exceed the lesser of:
 
1. $ 45,000, as adjusted ($ 50,000 in calendar year 2012, $ 49,000 in calendar years 2009 through 2011, and $ 46,000 in calendar year 2008); or
 
2. (No change.)
 
(b)-(i) (No change.)
 
(j) For purposes of this section, compensation of each participant shall not exceed the applicable limit established by IRC § 401(a)(17) as of the first day of the limitation year, as increased for the Cost of Living Adjustment ($ 250,000 for 2012, $ 245,000 for 2009 through 2011, and $ 230,000 for 2008). The Cost of Living Adjustment in effect for a limitation year applies to compensation for the Plan Year that begins with or within such limitation year.
 


ADOPTIONS


TREASURY — GENERAL
DIVISION OF PENSIONS AND BENEFITS
STATE POLICE RETIREMENT SYSTEM

44 N.J.R. 507(c)

Readoption with Amendments: N.J.A.C. 17:5

Adopted New Rules: N.J.A.C. 17:5-1A and 3.2

Adopted Repeal: N.J.A.C. 17:5-1.7

State Police Retirement System Rules
 
Proposed: October 3, 2011 at 43 N.J.R. 2568(a).
 
Adopted: January 24, 2012 by the State Police Retirement System Board of Trustees, Wendy Jamison, Secretary.
 
Filed: January 24, 2012 as R.2012 d.042, without change.
 
Authority: N.J.S.A. 53:5A-30h.
 
Effective Dates: January 24, 2012, Readoption;
 
                      February 21, 2012, Amendments, New Rules, and Repeal.
 
Expiration Date: January 24, 2019.
 
Summary of Public Comment and Agency Response:

No comments were received.
 
Federal Standards Statement

A Federal standards analysis is not required for the rules readopted with amendments, new rules, and a repeal because N.J.S.A. 53:5A-30h governs the subject of this rulemaking, and there are no Federal requirements or standards that affects the subject of this rulemaking, other than those mentioned below.

The adopted amendment to N.J.A.C. 17:5-3.7 will provide further clarification regarding the requirement that loans from the SPRS are subject to Federal regulation. In addition, N.J.A.C. 17:5-3.7 continues to ensure compliance with the Internal Revenue Service regulations made effective on January 1, 2002, at I.R.C. § 72(p) (2007), which requires that loan balances not exceed the lesser of 50 percent of the accumulated deductions posted to the member's account or $ 50,000.

The adopted amendment to N.J.A.C. 17:5-4.3 will provide further clarification regarding lump sum payments and partial lump sum payments, which can include the direct rollover of tax-deferred contributions from financial plans that qualify under the terms specified under I.R.C. § 401(a)(31) (2007) of the Internal Revenue Service.
 
Full text of the readopted rules can be found in the New Jersey Administrative Code at N.J.A.C. 17:5.
 
Full text of the adopted amendments and new rules follows:
 
SUBCHAPTER 1.    ADMINISTRATION
 
17:5-1.1   Board meetings
 
The Board shall meet at the call of the chairperson and secretary at such time as may be deemed necessary by the Board.
 
17:5-1.3   Officers and committees
 
(a) (No change.)
 
(b) The Director of the Division shall appoint a qualified employee of the Division to be Secretary of the Board.
 
(c) (No change.)
 
17:5-1.5   Records
 
(a) The approved minutes of the Board are a matter of public record and may be inspected during regular business hours in the Office of the Board Secretary.
 
(b) The annual report of the System's actuary shall not be released until it has been accepted by the Board.
 
(c) Original documents, if available, shall only be viewed by appointment at the Division.
 
17:5-1.6   Appeal from board decisions
 
The following statement shall be incorporated in every written notice setting forth the Board's determination in a matter where such determination is contrary to the claim made by the claimant or the claimant's legal representative:
 
"(a) If the member disagrees with the determination of the Board, the member may appeal by submitting a written statement to the Board within 45 days after the date of written notice of the determination. The statement shall set forth in detail the reasons for the member's disagreement with the Board's determination and shall include any relevant documentation supporting the claim. If no such written statement is received within the 45-day period, the determination by the Board shall be final.
 
17:5-1.7   (Reserved)
 
SUBCHAPTER 1A.    DEFINITIONS
 
17:5-1A.1    Definitions
 
The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:
 
"Average annual compensation" means compensation received by the member during any three fiscal years of membership providing the largest possible benefit pursuant to N.J.S.A. 53:5A-3.
 
"Board of Trustees" or "Board" means the Board of Trustees of the SPRS established pursuant to N.J.S.A. 53:5A-30.
 
"Creditable service" means service rendered for which credit is allowed on the basis of contributions made by the member or the State.
 
"DCRP" means the Defined Contribution Retirement Program.
 
"Director" means the Director of the Division of Pensions and Benefits in the Department of the Treasury.
 
"Division" means the Division of Pensions and Benefits, Department of the Treasury, in the State of New Jersey.
 
"Employer" means the State of New Jersey.
 
"Final compensation" means, for employees enrolled into the SPRS on or before May 20, 2010, the average compensation received by the member in the last 12 months of creditable service preceding his or her retirement or death. Such term includes the value of the member's maintenance allowance for this same period. For employees enrolled into the SPRS on or after May 21, 2010, "final compensation" means the average annual compensation for the last three years of service, or any three fiscal years of membership that provide the largest possible benefit to the member or the member's beneficiary. Final compensation does not include extra compensation or money given in anticipation of retirement pursuant to N.J.S.A. 53:5A-3, regardless of the date of enrollment.
 
"Position" means a job title.
 
"Retirement System," "System" or "SPRS" means the State Police Retirement System of New Jersey as defined in N.J.S.A. 53:5A-4.
 
SUBCHAPTER 3.    MEMBERSHIP
 
17:5-3.1   Creditable salary
 
(a)-(c) (No change.)
 
(d) With respect to all claims for benefits, the Division shall investigate increases in compensation reported for credit which exceed reasonably anticipated annual compensation increases for members of the retirement system based upon consideration of the Consumer Price Index for the time period of the increases, the table of assumed salary increases recommended by the actuary and adopted by the Board, and the annual percentage increases of salaries as indicated in data from the Public Employment Relations Commission, or through other reliable industry sources of information regarding average annual salary increases. Those cases where a violation of the statute or rules is suspected shall be referred to the Board.
 
17:5-3.2   Enrollment after May 21, 2010; maximum compensation limit
 
(a) An employee who is enrolled into the SPRS on or after May 21, 2010, will be subject to the benefit changes as a result of N.J.S.A. 53:5A-3. A maximum compensation limit will be imposed on members of the system on or after May 21, 2010. The maximum amount will be the amount of base salary equivalent to the annual maximum wage contribution base for Social Security, pursuant to the Federal Insurance Contribution Act. A new member for whom this annual maximum will be reached in any year will become a participant of the Defined Contribution Retirement Program with regard to the remaining compensation, unless the member irrevocably elects to waive the participation. The amount of compensation over the maximum compensation will have a 5.5 percent deduction as a contribution to DCRP. When a member of the SPRS also becomes a participant in the DCRP, the life insurance and disability benefit provisions of that program will be available for that participant.
 
(b) Members enrolled in the SPRS, who also participate in the DCRP will receive service credit in their corresponding SPRS account, and will be eligible to retire under the rules of the SPRS. The salaries used in the calculation of the retirement benefits are limited to the maximum compensation amounts in effect when the salary is earned.
 
(c) An employee who is enrolled into the SPRS on or after May 21, 2010 will have the member's retirement allowance calculated on the average annual compensation received by the member during any three fiscal years of membership providing the largest possible benefit.
 
17:5-3.3   Deductions
 
(a) A full deduction shall be taken for the SPRS for any payroll period in which the member is paid a sufficient amount to make a full normal pension deduction. If wages are sufficient, deductions shall also be made for any arrears or loan deductions then in effect.
 
(b) No deductions shall be taken in any pay period in which the employee's salary is not sufficient to cover the required deductions for the SPRS.
 
(c) (No change.)
 
17:5-3.4   Minimum adjustment
 
In order to facilitate the reconciliation of a member's account, upon death no refunds or additional contributions shall be made to a member's loan and arrearages balances, if such adjustments involve the amount of $ 50.00 or less. Unresolved differences of $ 50.00 or less will be written off.
 
17:5-3.7   Loans
 
(a) Only active contributing members of the System may exercise the privilege of obtaining a loan. The member's total outstanding loan balance shall not exceed the lesser of 50 percent of the accumulated deductions posted to the member's account or $ 50,000. The loan is subject to I.R.C. § 72(p) (2007) of the Internal Revenue Code.
 
(b) The rate of interest per annum for loans from the State-administered retirement systems shall be a commercially reasonable rate as required by the Internal Revenue Code to be determined by the State Treasurer on January 1st of each calendar year. An administrative fee in an account set by the State Treasurer for each calendar year may be charged for any loan requested pursuant to N.J.S.A. 53:5A-29.
 
SUBCHAPTER 4.    PURCHASES AND ELIGIBLE SERVICE
 
17:5-4.1   Eligibility for purchase
 
(a) (No change.)
 
(b) In order to be eligible to purchase service, a member must submit a request to purchase such service and such purchase must be authorized by the member before the expiration date indicated on the purchase cost quotation letter, which quotes the terms of the purchase. If the purchase cost quotation expires prior to authorization and subsequently the member requests the purchase of such service, the purchase cost will be subject to recalculation based upon all cost factors in effect at the time of the new purchase request.
 
(c) Upon denial of a purchase, the member may subsequently resolve the basis of the denial and request the Division to resubmit the purchase request. The purchase cost will be subject to the calculation based on all cost factors in effect at the time of the resubmitted purchase request.
 
(d) The receipt of a public pension or retirement benefit is expressly conditioned upon the rendering of honorable service by a public officer or employee. Therefore, the Board shall disallow the purchase of all or a portion of former service it deems to be dishonorable in accordance with N.J.S.A. 43:1-3.
 
17:5-4.2   Optional purchases of eligible service
 
(a) The types of purchases indicated below will be calculated on the basis of the actuarial factor established for the member's age at the time of the purchase times the member's current salary:
 
1. Former SPRS membership credit: Service covered by former membership in this system will be included in the computation of retirement benefits in the same manner and value as current service. All or a portion of the service from a former membership may be included in the purchase of such service.
 
2.-3. (No change.)
 
17:5-4.3   Methods of repayment for purchase of service credit
 
(a) Methods of repayment include the following:
 
1. (No change.)
 
2. Partial lump sum; balance by additional payroll deductions;
 
3. Additional payroll deductions equal to at least one-half of the full regular pension deduction for a maximum period of 10 years;
 
4. Additional payroll deductions will include regular interest for the term of the installment; and
 
5. Lump sum payments and partial lump sum payments can include the direct rollover or transfer of tax-deferred contributions from financial plans that qualify under terms specified under I.R.C. § 401(a)(31) (2007). All payments remitted to the Division must be accompanied by a properly completed direct rollover Transfer Request for the Purchase of Service Credit form. Checks remitted to the Division without the required forms shall be returned to the member. A lump sum rollover payment for a purchase cannot exceed the lump sum cost of that purchase. Checks in an amount greater than the lump sum cost of the purchase shall be returned to the member.
 
SUBCHAPTER 5.    RETIREMENT
 
17:5-5.1   Applications
 
(a) Applications for retirement must be made on forms required by the System. Such forms must be completed in all respects and filed with the Division before the requested date of retirement. A member's retirement application becomes effective on the first of the month following receipt of the application unless a future date is requested. Applications can be filed no more than one year in advance unless filing for a deferred retirement and the member's SPRS eligible employment has ended.
 
(b) Except for a disability retirement application, in the event a member files an incomplete application, all deficiencies, except the employer certification, shall be brought to the member's attention and the member shall be required to provide the additional information within 90 days to enable processing. If there is no response within the 90-day time frame, the application will expire and the member will be required to re-file. This subsection shall not apply to information provided by the employer.
 
(c) (No change.)
 
(d) As to an application for disability retirement, the following shall apply:
 
1. An application for a physical disability retirement must be supported by at least two medical reports, one by the member's personal or attending physician and the other may be either hospital records supporting the disability or a report from a second physician. The required documentation must be received within six months of the date of filing the disability retirement application. If it is not received, the retirement will be canceled and the member must complete a new disability application for a future retirement date;
 
2. An application for a mental health medical disability retirement must be supported by at least two medical reports, one by the member's personal or attending psychiatrist or psychologist and the other in the form of either hospital records supporting the disability or a report from a second psychiatrist or psychologist or from the member's personal or attending physician or licensed clinical social worker. The required documentation must be received within six months of the date of filing the disability application. If it is not received, the retirement will be canceled and the member must complete a new disability application for a future retirement date;
 
3. A member filing for a disability retirement shall not file a separate application for any other type of retirement, while a disability application is pending; and
 
4. If a disability retirement application is denied by the Board and the applicant qualifies for any other retirement benefit, the applicant must submit a written statement accepting the alternate retirement type. If the applicant submits the written statement within 30 days of the Board's decision, the applicant may retain the retirement date designated on the disability retirement application.
 
17:5-5.5   Outstanding loan
 
(a) Any member who has an outstanding loan balance at the time of retirement shall repay the loan balance, with interest, as follows:
 
1. (No change.)
 
2. By deductions from retirement benefit payments of the same monthly amount deducted from the member's compensation immediately preceding retirement until the loan balance, with interest, is repaid as authorized in accordance with N.J.S.A. 53:5A-29. If the member does not request repayment in full, repayment is by deductions in the same monthly amount deducted from the member's compensation immediately preceding retirement.
 
(b) (No change.)
 
17:5-5.9   Determination of final compensation
 
(a) In computing the salary upon which pension contributions were based during the member's last year of service, a total of 26 biweekly pays will be used including any retroactive salary payments which are attributable to those 26 biweekly pay periods. The total salary will be adjusted by factors supplied by the actuary to compensate for State biweekly payroll schedules. The biweekly pay periods for which no contributions were made shall not be used in the calculation.
 
(b) An employee who is enrolled on or after May 21, 2010 will have final compensation based on the average annual compensation for the last three years of service, or any three fiscal years of membership that provide the largest possible benefit to the member or the member's beneficiary.
 
SUBCHAPTER 6.    TRANSFERS
 
17:5-6.1   Interfund transfers; other State systems
 
(a) The receipt of a public pension or retirement benefit is expressly conditioned upon the rendering of honorable service by a public official or employee. Therefore, the Board of the present System shall disallow the transfer of all or a portion of prior service of any member of the System for misconduct occurring during the member's prior public service, which renders that prior service, or part thereof, dishonorable.
 
(b)-(f) (No change.)
 
(g) A member shall meet all age and physical requirements for enrollment into the SPRS before an interfund transfer into the SPRS shall take effect.


TREASURY — GENERAL
DIVISION OF PENSIONS AND BENEFITS

44 N.J.R. 1157(a)

Special Adopted New Rules: N.J.A.C. 17:1-17

General Administration

Compliance with Internal Revenue Code
 
Adopted: March 9, 2012 by Florence J. Sheppard, Acting Director, Division of Pensions and Benefits.
 
Filed: March 9, 2012 as R.2012 d.073.
 
Authority: P.L. 2011, c. 78 and N.J.S.A. 52:18A-96 et seq.
 
Effective Date: March 9, 2012.
 
Expiration Date: December 10, 2015.
 
Take notice that, in compliance with the provisions of N.J.S.A. 43:3C-18c, the Director of the Division of Pensions and Benefits in the Department of the Treasury promulgated rules implementing the provisions of N.J.S.A. 43:3C-9.1 et seq., 52:18A-108 et seq., 52:18A-170.1, and 18A:66-168.1.
 
Full text of the special adopted new rules follows:
 
SUBCHAPTER 17.    COMPLIANCE WITH INTERNAL REVENUE CODE
 
17:1-17.1   General provisions
 
(a) This subchapter applies to the following: New Jersey Public Employees' Retirement System, New Jersey Teachers' Pension and Annuity Fund, New Jersey Police and Firemen's Retirement System, New Jersey State Police Retirement System, New Jersey Judicial Retirement System, New Jersey Consolidated Police and Firemen's Pension Fund, New Jersey Prison Officers' Pension Fund, Alternate Benefit Program, and Defined Contribution Retirement Plan, which are referred to in this subchapter as the "system," "retirement system," or "retirement systems."
 
(b) The "plan year" for the retirement systems is the fiscal year commencing July 1.
 
17:1-17.2   Compliance with 26 U.S.C. § 401(a)(9) for required minimum distributions
 
(a) Pursuant to N.J.S.A. 43:3C-9.6, each retirement system shall pay all benefits in accordance with a reasonable and good faith interpretation of the requirements of 26 U.S.C. § 401(a)(9) Internal Revenue Code and the regulations in effect under that section, as applicable to a governmental plan within the meaning of 26 U.S.C. § 414(d). Each retirement system is subject to the following provisions:
 
1. If a member fails to apply for retirement benefits by the member's required beginning date as defined under N.J.S.A. 43:3C-9.6, the retirement system shall begin distribution of the monthly benefit as required by this section in the standard form.
 
2. Unless distributed in a lump sum, the member's entire interest must be distributed over the member's life or the lives of the member and a designated beneficiary, or over a period not extending beyond the life expectancy of the member or of the member and a designated beneficiary.
 
3. If a member dies after the required distribution of benefits has begun, the remaining portion of the member's interest must be distributed at least as rapidly as under the method of distribution before the member's death.
 
4. If a member dies before required distribution of the member's benefits has begun, the member's entire interest must be distributed within five years of his or her death, unless it is to be distributed in accordance with the following:
 
i. If the member's surviving spouse is the sole designated beneficiary, the member's remaining interest in the plan is distributed or begins to be distributed by December 31 of the calendar year immediately following the calendar year in which the member died or by December 31 of the calendar year in which the participant would have attained age 70 1/2, if later; or
 
ii. If the member's surviving spouse is not the sole designated beneficiary, the member's remaining interest is to be distributed over the life of the designated beneficiary or over a period not extending beyond the life expectancy of the designated beneficiary. Such distribution shall begin no later than December 31 of the calendar year immediately following the calendar year of the member's death.
 
17:1-17.3   Compliance with 26 U.S.C. § 401(a)(17) for the limitation on compensation
 
(a) Pursuant to N.J.S.A. 43:3C-9.3 and 9.4, effective with respect to plan years beginning on and after July 1, 2002, the annual compensation of a plan member that exceeds $ 200,000 (as adjusted for cost-of-living increases in accordance with 26 U.S.C. § 401(a)(17)(B) may not be taken into account in determining benefits or contributions due for any plan year. Annual compensation means compensation during the plan year or such other consecutive 12-month period over which compensation is otherwise determined under the plan, referred to as the determination period. The cost-of-living adjustment in effect for a calendar year applies to annual compensation for the determination period that begins with or within such calendar year. If the determination period consists of fewer than 12 months, the annual compensation limit is an amount equal to the otherwise applicable annual compensation limit multiplied by a fraction, the numerator of which is the number of months in the short determination period, and the denominator of which is 12. If the compensation for any prior determination period is taken into account in determining a plan member's contributions or benefits for the current plan year, the compensation for such prior determination period is subject to the applicable annual compensation limit in effect for that prior period.
 
(b) For members enrolled prior to July 1, 1996, (except members of the Defined Contribution Retirement Plan) the annual compensation limit in 26 U.S.C. 401(a)(17) shall not apply, if the employer of the member at retirement filed the necessary certification prior to July 1, 1997, with the Division of Pension and Benefits.
 
(c) The determination period under this section is the calendar year.
 
17:1-17.4   Compliance with 26 U.S.C. § 401(a)(31) for eligible rollover distributions
 
(a) Pursuant to N.J.S.A. 43:3C-20, and for purposes of compliance with 26 U.S.C. § 401(a)(31), this section applies notwithstanding any contrary provision or retirement law that would otherwise limit a distributee's election to make a rollover. A distributee may elect, at the time and in the manner prescribed by the retirement system, 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) As used in (a) above, the following terms shall have the following meanings.
 
1. "Eligible rollover distribution" means 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:
 
i. Any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life or the 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 10 years or more;
 
ii. Any distribution to the extent such distribution is required under 26 U.S.C. § 401(a)(9), the portion that is not includible in gross income;
 
iii. Any other distribution that the Federal Internal Revenue Service does not consider eligible for rollover treatment, such as certain [page=1158] corrective distributions necessary to comply with the provisions of 26 U.S.C. § 415 or any distribution that is reasonably expected to total less than $ 200.00 during the year. Effective January 1, 2002, a portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions that are not includible in gross income. However, such portion may be transferred only:
 
(1) To an individual retirement account or annuity described in 26 U.S.C. §§ 408(a) and (b) or to a qualified defined contribution plan described in 26 U.S.C. § 401(a);
 
(2) On or after January 1, 2007, to a qualified defined benefit plan described in 26 U.S.C. § 401(a) or to an annuity contract described in 26 U.S.C. § 403(b), that agrees to separately account for amounts so transferred and earnings thereon, including separately accounting for the portion of the distribution that is includible in gross income and the portion of the distribution that is not so includible; or
 
(3) On or after January 1, 2008, to a Roth IRA described in 26 U.S.C. § 408A; and
 
iv. Effective January 1, 2002, the definition of eligible rollover distribution also includes a distribution to a surviving spouse or to a spouse or former spouse who is an alternate payee under a qualified domestic relations order, as defined in 26 U.S.C. § 414(p).
 
2. "Eligible retirement plan" means any of the following that accepts the distributee's eligible rollover distribution:
 
i. An individual retirement account described in 26 U.S.C. § 408(a);
 
ii. An individual retirement annuity described in 26 U.S.C. § 408(b);
 
iii. An annuity plan described in 26 U.S.C. § 403(b);
 
iv. A qualified trust described in 26 U.S.C. § 401(a);
 
v. Effective January 1, 2002, an annuity contract described in 26 U.S.C. § 403(b);
 
vi. Effective January 1, 2002, a plan eligible under 26 U.S.C. § 457(b) that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or a political subdivision of a state that agrees to separately account for amounts transferred into that plan from the retirement system; or
 
vii. Effective January 1, 2008, a Roth IRA described in 26 U.S.C. § 408A.
 
3. "Distributee" means an employee or former employee. It also includes 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 26 U.S.C. § 414(p). Effective January 1, 2007, a distributee further includes a nonspouse beneficiary who is a designated beneficiary as defined by 26 U.S.C. § 401(a)(9)(E). However, a nonspouse beneficiary may only make a direct rollover to an individual retirement account or individual retirement annuity established for the purpose of receiving the distribution, and the account or annuity shall be treated as an "inherited" individual retirement account or annuity.
 
4. "Direct rollover" means a payment by the plan to the eligible retirement plan specified by the distributee.
 
17:1-17.5   Compliance with USERRA and the HEART Act
 
(a) Effective with respect to deaths occurring on or after January 1, 2007, while a member is performing qualified military service (as defined in 38 U.S.C. Chapter 43), to the extent required by 26 U.S.C. § 401(a)(37), survivors of a member in a retirement system, are entitled to any additional benefits that the system would provide if the member had resumed employment and then died, such as accelerated vesting or survivor benefits that are contingent on the member's death while employed. In any event, a deceased member's period of qualified military service must be counted for vesting purposes.
 
(b) Beginning January 1, 2009, to the extent required by 26 U.S.C. §§ 414(u)(12) and 3401(h), an individual receiving a differential wage payment as defined under 26 U.S.C. § 3401(h)(2) from an employer shall be treated as employed by that employer, and the differential wage payment shall be treated as compensation for purposes of applying the limits on annual additions under 26 U.S.C. § 415(c). This provision shall be applied to all similarly situated individuals in a reasonably equivalent manner.
 
17:1-17.6   Compliance with 26 U.S.C. § 414(p) for qualified domestic relations orders
 
Pursuant to N.J.S.A. 43:3C-9.1, if benefits are payable pursuant to a domestic relation court order that meets the requirements of a domestic relations order as defined in 26 U.S.C. § 414(p), then the applicable provisions of 26 U.S.C. § 414(p) shall be followed by the retirement system.
 
17:1-17.7   Compliance with 26 U.S.C. § 415 limitations on contributions and benefits
 
(a) The provisions of N.J.S.A. 43:3C-9.2 shall be applied as specified in this section. Except as otherwise provided in this section, this section applies to limitation years beginning on and after January 1, 2010.
 
(b) For purposes of N.J.S.A. 43:3C-9.2 and compliance with 26 U.S.C. § 415, the "limitation year" shall be the calendar year.
 
(c) The following is the basic 415(b) Limitation for the Defined Benefit Retirement Systems:
 
1. For purposes of 26 U.S.C. § 415(b), the "annual benefit" means a benefit payable annually in the form of a straight life annuity (with no ancillary benefits) without regard to the benefit attributable to after-tax employee contributions (except pursuant to 26 U.S.C. § 415(n)) and to rollover contributions (as defined in 26 U.S.C. § 415(b)(2)(A)). The "benefit attributable" shall be determined in accordance with 26 CFR 1.415(b)-1(b)2.
 
2. Before January 1, 1995, a member may not receive an annual benefit that exceeds the limits specified in 26 U.S.C. § 415(b), subject to the applicable adjustments in that section. On and after January 1, 1995, a member may not receive an annual benefit that exceeds the dollar amount specified in 26 U.S.C. § 415(b)(1)(A), subject to the applicable adjustments in 26 U.S.C. § 415(b) and subject to any additional limits that may be specified in the retirement system. In no event shall a member's benefit payable under the system in any limitation year be greater than the limit applicable at the annuity starting date, as increased in subsequent years pursuant to section 415(d) of the Federal Internal Revenue Code and the regulations there under.
 
(d) Adjustments to basic 26 U.S.C. § 415(b) limitation for form of benefit shall be as follows:
 
1. If the benefit under the system is other than the form specified in (c)1 above, then the benefit shall be adjusted so that it is the equivalent of the annual benefit, using factors prescribed in 26 CFR 1.415(b)-1(c).
 
i. If the form of benefit without regard to the automatic benefit increase feature is not a straight life annuity or a qualified joint and survivor annuity, then (d)1 above is applied by either reducing the 26 U.S.C. § 415(b) limit applicable at the annuity starting date or adjusting the form of benefit to an actuarially equivalent amount (determined using the assumptions as specified in 26 CFR 1.415(b)-1(c)(2)(ii)) that takes into account the additional benefits under the form of benefit as follows:
 
2. For a benefit paid in a form to which 26 U.S.C. § 417(e)(3) does not apply, the actuarially equivalent straight life annuity benefit that is the greater of:
 
i. The annual amount of the straight life annuity (if any) payable to the member under the system commencing at the same annuity starting date as the form of benefit to the member; or
 
ii. The annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the form of benefit payable to the member, computed using a five percent interest assumption (or the applicable statutory interest assumption) and the applicable mortality tables described in 26 U.S.C. § 417(e)(3)(B) (Notice 2008-85 or any subsequent Federal Internal Revenue Service guidance implementing 26 U.S.C. § 417(e)(3)(B)).
 
3. For a benefit paid in a form to which 26 U.S.C. § 417(e)(3) applies, the actuarially equivalent straight life annuity benefit that is the greatest of:
 
i. The annual amount of the straight life annuity commencing at the annuity starting date that has the same actuarial present value as the particular form of benefit payable, computed using the interest rate and mortality table, or tabular factor, specified in the system for actuarial experience;
 
ii. The annual amount of the straight life annuity commencing at the annuity starting date that has the same actuarial present value as the [page=1159] particular form of benefit payable, computed using a 5.5 percent interest assumption (or the applicable statutory interest assumption) and the applicable mortality tables described in 26 U.S.C. § 417(e)(3)(B) (Notice 2008-85 or any subsequent Federal Internal Revenue Service guidance implementing 26 U.S.C. § 417(e)(3)(B)); or
 
iii. The annual amount of the straight life annuity commencing at the annuity starting date that has the same actuarial present value as the particular form of benefit payable (computed using the applicable interest rate for the distribution under 26 CFR 1.417(e)-1(d)(3), using the rate in effect for the first day of the plan year with a one-year stabilization period) and the applicable mortality tables described in 26 U.S.C. § 417(e)(3)(B) (Notice 2008-85 or any subsequent Federal Internal Revenue Service guidance implementing 26 U.S.C. § 417(e)(3)(B)), divided by 1.05.
 
4. The actuary may adjust the 26 U.S.C. § 415(b) limit at the annuity starting date in accordance with (d)2 and 3 above.
 
(e) Benefits for which no adjustment of the 26 U.S.C. § 415(b) limit is required is as follows:
 
1. For purposes of this subsection, the following benefits shall not be taken into account in adjusting the limits in (d) above:
 
i. Any ancillary benefit that is not directly related to retirement income benefits;
 
ii. That portion of any joint and survivor annuity that constitutes a qualified joint and survivor annuity;
 
iii. Any other benefit not required under 26 U.S.C. § 415(b)(2) and 26 CFR 1.415(b)-1(c)(4) to be taken into account for purposes of the limitation of 26 U.S.C. § 415(b)(1).
 
(f) Other adjustments in 26 U.S.C. § 415(b) limitation shall be as follows:
 
1. In the event the member's retirement benefits become payable before age 62, the limit prescribed by this section shall be reduced in accordance with 26 CFR 1.415(b)-1(d) promulgated pursuant to 26 U.S.C. § 415(b), so that such limit (as so reduced) equals an annual straight life benefit (when such retirement income benefit begins), which is equivalent to a $ 160,000 (as adjusted) annual benefit beginning at age 62.
 
2. In the event the member's benefit is based on at least 15 years of service as a full-time employee of any police or fire department or on 15 years of military service, the adjustments provided for in (f)1 above shall not apply.
 
3. The reductions provided for in (f)1 above shall not be applicable to pre-retirement disability benefits or pre-retirement death benefits.
 
(g) Less than 10 years of participation. The maximum retirement benefits payable under this section to any member who has completed less than 10 years of participation in the retirement system shall be the amount determined under (c) above, as adjusted under (d) and/or (f) above, multiplied by a fraction, the numerator of which is the number of the member's years of participation and the denominator of which is 10. The reduction provided by this subsection cannot reduce the maximum benefit below 10 percent of the limit determined without regard to this subsection. The reduction provided for in this subsection shall not be applicable to pre-retirement disability benefits or pre-retirement death benefits.
 
(h) Ten thousand dollar limit; less than 10 years of service. Notwithstanding anything in this section to the contrary, the retirement benefit payable with respect to a member shall be deemed not to exceed the limit set forth in this subsection, if the benefits payable, with respect to such member under one system and under all other qualified defined benefit pension systems to which the member's employer contributes, do not exceed $ 10,000 for the applicable limitation year and for any prior limitation year and the employer has not at any time maintained a qualified defined contribution plan in which the member participated; provided, however, that if the member has completed less than 10 years of service with the employers in a system, the limit under this subsection shall be a reduced limit equal to $ 10,000 multiplied by a fraction, the numerator of which is the number of the member's years of service and the denominator of which is 10.
 
(i) For purposes of applying the limits under 26 U.S.C. § 415(b) (the Limit) to a member with no lump-sum benefit, the following shall apply:
 
1. A member's applicable Limit shall be applied to the member's annual benefit in the member's first limitation year without regard to any cost-of-living adjustments under the retirement system;
 
2. To the extent that the member's annual benefit equals or exceeds the Limit, the member shall no longer be eligible for cost-of-living increases until such time as the benefit plus the accumulated increases are less than the Limit; and
 
3. In any subsequent limitation year, a member's annual benefit, including any cost-of-living increases under the retirement systems, shall be tested under the then applicable benefit Limit including any adjustment to 26 U.S.C. § 415(b)(1)(A), the dollar limit under 26 U.S.C. § 415(d), and the regulations promulgated thereunder.
 
(j) Service purchases under 26 U.S.C. § 415(n) shall be treated as follows:
 
1. Effective for permissive service credit contributions made in limitation years beginning after December 31, 1997, if a member makes one or more contributions to purchase permissive service credit under the plan, then the requirements of 26 U.S.C. § 415(n) shall be treated as met only if:
 
i. The requirements of 26 U.S.C. § 415(b) are met, determined by treating the accrued benefit derived from all such contributions as an annual benefit for purposes of 26 U.S.C. § 415(b); or
 
ii. The requirements of 26 U.S.C. § 415(c) are met, determined by treating all such contributions as annual additions for purposes of 26 U.S.C. § 415(c).
 
2. The system shall not fail to meet the reduced limit under 26 U.S.C. § 415(b)(2)(C) solely by reason of this section and shall not fail to meet the percentage limitation under 26 U.S.C. § 415(c)(1)(B).
 
3. Effective for permissive service credit contributions made in limitation years beginning after December 31, 1997, such term may include service credit for periods for which there is no performance of service, and, notwithstanding (j)1ii above, may include service credited in order to provide an increased benefit for service credit that a member is receiving under the system.
 
4. For purposes of this subsection the term "permissive service credit" means service credit:
 
i. Recognized by the system for purposes of calculating a member's benefit under the system;
 
ii. Which such member has not received under the system; and
 
iii. Which such member may receive only by making a voluntary additional contribution, in an amount determined under the system, which does not exceed the amount necessary to fund the benefit attributable to such service credit.
 
5. The system shall fail to meet the requirements of this section if:
 
i. More than five years of nonqualified service credit are taken into account for purposes of this subsection; or
 
ii. Any nonqualified service credit is taken into account under this subsection before the member has at least five years of participation under the system.
 
6. For purposes of (j)5 above, effective for permissive service credit contributions made in limitation years beginning after December 31, 1997, the term "nonqualified service credit" means permissive service credit other than that allowed with respect to:
 
i. Service (including parental, medical, sabbatical, and similar leave) as an employee of the Government of the United States, any state or political subdivision thereof, or any agency or instrumentality of any of the foregoing (other than military service or service for credit that was obtained as a result of a repayment described in 26 U.S.C. § 415(k)(3);
 
ii. Service (including parental, medical, sabbatical, and similar leave) as an employee (other than as an employee described in (j)6i above) of an education organization described in 26 U.S.C. § 170(b)(1)(A)(ii), which is a public, private, or sectarian school that provides elementary or secondary education through grade 12, or a comparable level of education, as determined under the applicable law of the jurisdiction in which the service was performed;
 
iii. Service as an employee of an association of employees who are described in (j)6i above; or
 
iv. Military service other than qualified military service under 26 U.S.C. § 414(u) recognized by the system. In the case of service described in (j)6i, ii, or, iii above, such service shall be nonqualified [page=1160] service if recognition of such service would cause a member to receive a retirement benefit for the same service under more than one plan.
 
7. In the case of a trustee-to-trustee transfer after December 31, 2001, to which 26 U.S.C. §§ 403(b)(13)(A) or 457(e)(17)(A) applies without regard to whether the transfer is made between plans maintained by the same employer:
 
i. The limitations of (j)5 above shall not apply in determining whether the transfer is for the purchase of permissive service credit; and
 
ii. The distribution rules applicable under Federal law to the system shall apply to such amounts and any benefits attributable to such amounts.
 
8. For an eligible member, the limitation of 26 U.S.C. § 415(c)(1) shall not be applied to reduce the amount of permissive service credit that may be purchased to an amount less than the amount that was allowed to be purchased under the terms of a retirement system as in effect on August 5, 1997. For purposes of this paragraph an eligible member is an individual who first became a member in the system before January 1, 1998.
 
(k) Modification of contributions for 26 U.S.C. §§ 415(c) and 415(n) purposes. Notwithstanding any other provision of law to the contrary, the system may modify a request by a member to make a contribution to the system if the amount of the contribution would exceed the limits provided in 26 U.S.C. § 415 by using the following methods:
 
1. If the law requires a lump-sum payment for the purchase of service credit, the system may establish a periodic payment plan for the member to avoid a contribution in excess of the limits under 26 U.S.C. §§ 415(c) or 415(n).
 
2. If payment pursuant to (k)1 above shall not avoid a contribution in excess of the limits imposed by 26 U.S.C. §§ 415(c) or 415(n), the system may either reduce the member's contribution to an amount within the limits of those sections or refuse the member's contribution.
 
(l) Repayments of cash outs. Any repayment of contributions, including interest thereon, to the plan with respect to an amount previously refunded upon a forfeiture of service credit under the plan or another governmental plan maintained by the retirement system shall not be taken into account for purposes of 26 U.S.C. § 415, in accordance with 26 CFR 1.415(b)-1(b)(3)(iii).
 
(m) For participation in other qualified plans, the aggregation of qualified plan limits shall be as follows:
 
1. The 415(b) limit with respect to any member who at any time has been a member in more than one defined benefit system as defined in 26 U.S.C. § 414(j) maintained by the member's employer shall apply as if the total benefits payable under all such defined benefit systems in which the member has been a member were payable from one plan.
 
2. The 415(c) limit with respect to any member who at any time has been a member in more than one defined contribution plan as defined in 26 U.S.C. § 414(i) maintained by the member's employer shall apply as if the total annual additions under all such defined contribution plans in which the member has been a member were payable from one plan.
 
(n) Reduction of benefits priority. For defined benefit systems, reduction of benefits to all systems, where required, shall be accomplished by first reducing the member's benefit with respect to the system in which the member most recently accrued benefits and thereafter in such priority as shall be determined by the system and the plan administrator of such other systems. For defined contribution plans, reduction of contributions to all plans shall be accomplished first with respect to the plan in which the member most recently accrued benefits and thereafter in such priority as shall be established by the plan and the plan administrator for such other plans.
 
(o) 26 U.S.C. § 415(c) limitations on contributions and other additions. After-tax member contributions or other annual additions with respect to a member may not exceed the lesser of $ 40,000 as adjusted pursuant to 26 U.S.C. § 415(d) or 100 percent of the member's compensation.
 
1. Annual additions, as used in this subsection, are defined to mean the sum for any year of employer contributions to a defined contribution plan, all member contributions to a defined contribution plan, post-tax member contributions to a defined benefit plan, and forfeitures credited to a member's individual account. Member contributions are determined without regard to rollover contributions and to picked-up employee contributions that are paid to a defined benefit plan.
 
2. For purposes of applying 26 U.S.C. § 415(c) and for no other purpose, the definition of compensation where applicable shall be compensation actually paid or made available during a limitation year, and as permitted by 26 CFR 1.415(c)-2, or successor regulation; provided, however, that member contributions picked up under 26 U.S.C. § 414(h) is not be treated as compensation.
 
3. "Compensation," as used in this subsection, shall be defined as wages within the meaning of 26 U.S.C. § 3401(a) and all other payments of compensation to an employee by an employer for which the employer is required to furnish the employee a written statement under 26 U.S.C. §§ 6041(d), 6051(a)(3), and 6052 and shall be determined without regard to any regulations under 26 U.S.C. § 3401(a) that limit the remuneration included in wages based on the nature or location of the employment or the services performed. The following limitation years apply:
 
i. For limitation years beginning after December 31, 1997, compensation shall also include amounts that would otherwise be included in compensation but for an election under 26 U.S.C. §§ 125(a), 402(e)(3), 402(h)(1)(B), 402(k), or 457(b). For limitation years beginning after December 31, 2000, compensation shall also include any elective amounts that are not includible in the gross income of the member by reason of 26 U.S.C. § 132(f)(4).
 
ii. For limitation years beginning on and after January 1, 2010, compensation for the limitation year shall also include compensation paid by the later of two-and-a-half months after a member's severance from employment or the end of the limitation year that includes the date of the member's severance from employment if:
 
(1) The payment is regular compensation for services during the member's regular working hours, or compensation for services outside the member's regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar payments, and, absent a severance from employment, the payments would have been paid to the member while the member continued in employment with the employer;
 
(2) The payment is for unused accrued bona fide sick, vacation, or other leave that the member would have been able to use if employment had continued; or
 
(3) Payments pursuant to a nonqualified unfunded deferred compensation plan, but only if the payments would have been paid to the member at the same time if the member had continued employment with the employer and only to the extent that the payment is includible in the member's gross income.
 
(A) Any payments not described in this subparagraph are not considered compensation if paid after severance from employment, even if they are paid within two-and-a-half months following severance from employment, except for payments to the individual who does not currently perform services for the employer by reason of qualified military service within the meaning of 26 U.S.C. § 414(u)(1) to the extent these payments do not exceed the amounts the individual would have received if the individual had continued to perform services for the employer rather than entering qualified military service.
 
(B) An employee who is in qualified military service within the meaning of 26 U.S.C. § 414(u)(1) shall be treated as receiving compensation from the employer during such period of qualified military service equal to:
 
(I) The compensation the employee would have received during such period if the employee were not in qualified military service, determined based on the rate of pay the employee would have received from the employer but for the absence during the period of qualified military service.
 
(II) If the compensation the employee would have received during such period was not reasonably certain, the employee's average compensation from the employer during the 12-month period immediately preceding the qualified military service or, if shorter, the period of employment immediately preceding the qualified military service.
 
(III) Back pay, within the meaning of 26 CFR 1.415(c)-2(g)(8), shall be treated as compensation for the limitation year to which the back pay relates to the extent the back pay represents wages and compensation that would otherwise be included under this definition.
 
[page=1161] (4) If the annual additions for any member for a plan year exceed the limitation under 26 U.S.C. § 415(c), the excess annual addition shall be corrected as permitted under the Employee Plans Compliance Resolution System or similar IRS correction program.
 
(5) For limitation years beginning on or after January 1, 2010, a member's compensation for purposes of this subsection shall not exceed the annual limit under 26 U.S.C. § 401(a)(17).
 
17:1-17.8   Normal retirement age for the Public Employees' Retirement System
 
(a) In addition to any other vesting provided by State law and in accordance with Internal Revenue Service guidance, a member's benefit is nonforfeitable upon attainment of the normal retirement age, which is as follows:
 
1. For PERS General:
 
i. Age 60 for persons who become members before November 2, 2008 (Tier 1 and Tier 2);
 
ii. Age 62 for persons who become members on or after November 2, 2008 (Tier 3 and tier 4); and
 
iii. Age 65 for persons who become members on or after June 28, 2011;
 
2. For Law Enforcement Officers, age 55;
 
3. For Prosecutors, age 55;
 
4. For Legislators, age 60;
 
5. For Workers Compensation judges, age 60; and
 
6. For Veterans, age 55 (age 60 for persons who are members on January 2, 1955).
 
17:1-17.9   Normal retirement age for the Teachers' Pension and Annuity Fund
 
(a) In addition to any other vesting provided by State law and in accordance with Internal Revenue Service guidance, a member's benefit is nonforfeitable upon attainment of the normal retirement age, which is as follows:
 
1. Age 60 for persons who become members before November 2, 2008 (Tier 1 and Tier 2);
 
2. Age 62 for persons who become members on or after November 2, 2008 (Tier 3 and Tier 4); or
 
3. Age 65 for persons who become members on or after June 28, 2011.
 
17:1-17.10   Normal retirement age for the Police and Firemen's Retirement System
 
In addition to any other vesting provided by State law and in accordance with Internal Revenue Service guidance, a member's benefit is nonforfeitable upon attainment of age 55, which is the normal retirement age under the retirement system.
 
17:1-17.11   Normal retirement age for the State Police Retirement System
 
In addition to any other vesting provided by State law and in accordance with Internal Revenue Service guidance, a member's benefit is nonforfeitable upon attainment of age 55, which is the normal retirement age under the retirement system.
 
17:1-17.12   Normal retirement age for the Judicial Retirement System
 
In addition to any other vesting provided by State law and in accordance with Internal Revenue Service guidance, a member's benefit is nonforfeitable upon attainment of age 60, which is the normal retirement age under the retirement system.
 
17:1-17.13   Actuarial factors for the various retirement systems
 
(a) The table of annuity values and option factors for use in calculating benefits for the applicable retirement system, as required by State law, shall be the tables prepared by the actuary at the direction of the board of trustees and adopted by the board of trustees by resolution, in accordance with N.J.S.A. 43:3C-13.
 
(b) The "Table of Annuity Values and Option Factors October, 2005" for the Public Employees' Retirement System of New Jersey and the Teachers' Pension and Annuity Fund of New Jersey is incorporated herein by reference, and is applicable to the New Jersey Public Employees' Retirement System, the New Jersey Teachers' Pension and Annuity Fund, and the New Jersey Judicial Retirement System. The table is available by contacting the Division of Pensions and Benefits at P.O. Box 295, Trenton, NJ 08625-0295.
 
17:1-17.14   Retiree reemployment
 
(a) Definitions. For purposes of this section, the following words and terms shall have the following meanings:
 
1. "Defined benefit plans" means the following: Public Employees' Retirement System, Teachers' Pension and Annuity Fund, Police and Firemen's Retirement System, State Police Retirement System, Judicial Retirement System, Prison Officers' Pension Fund, and Consolidated Police and Firemen's Pension Fund.
 
2. "Bona fide severance from employment" means a complete termination of the employee's employment relationship with the employer for a period of at least 180 days. The following does not constitute a complete termination of the employee's relationship with the employer:
 
i. Employment or reemployment in a part-time position;
 
ii. Employment or reemployment in a position that is not covered by the Defined Benefit Plan;
 
iii. A change in title;
 
iv. Employment or reemployment as a contract employee, a leased employee, or an independent contractor; or
 
v. Termination of employment with a pre-arranged agreement for reemployment.
 
Federal Internal Revenue Service factors shall be used as guidance in determining whether an employment relationship exists. A mandatory retirement shall be treated as a bona fide severance from employment.
 
(b) Qualified plan status. In accordance with the N.J.S.A. 43:3C-18, the defined benefit plans are established as qualified governmental defined benefit plans in accordance with Internal Revenue Code Sections 401(a) and 414(d), or such other provision of the Federal Internal Revenue Code as applicable, regulations of the United States Department of the Treasury, and other guidance of the Federal Internal Revenue Service.
 
(c) Requirement for a bona fide severance from employment. In order to maintain qualified plan status, as set forth in (b) above, Federal law requires that a defined benefit plan pay retirement benefits to a member only when there is bona fide severance from employment unless both of the following conditions are met:
 
1. The member has attained normal retirement age under the defined benefit plan; and
 
2. A defined benefit plan provides for the distribution without a bona fide severance from employment (also referred to as an "in-service distribution"). As of March 9, 2012, none of the defined benefit plans provide for an in-service distribution. The Federal law requirement does not apply to disability benefits.
 
(d) In order to demonstrate that there has been a bona fide severance from employment in compliance with Federal law, each member and the member's employer shall certify as part of the application for a retirement benefit that the member has had a bona fide severance from employment with the employer as of specific date and that there is no pre-arranged agreement for that member to be reemployed by the employer as an employee, a contract employee, a leased employee, or an independent contractor. The certification shall be made under penalties of perjury.
 
(e) Investigation. In order to comply with Federal law, if an employee who has applied and commenced a retirement benefit is reemployed by the same employer (as used in this subsection, this term shall include the agencies of a single employer) within fewer than 180 days after the specified date of termination, the Division may, but is not required to, do the following:
 
1. Require the employee and employer to again certify that there was no prearranged agreement for the reemployment; and
 
2. Investigate the circumstances of the reemployment to determine if there was, in fact a bona fide severance from employment.
 
(f) If after investigation in (e) above, the Division determines that there was not a bona fide severance from employment, the Division may revoke the retirement of the member and require the repayment of benefits in order to protect the qualified status of the defined benefit plans in accordance with (b) above.
 
[page=1162] (g) As required by Federal law, the Division shall issue a Form 1099-R with respect to any retired member who receives a taxable distribution from the defined benefit plans. In order to fulfill its obligations under Federal law with respect to the defined benefit plans, the Division must identify those retired members who may be subject to a premature distribution penalty (10 percent of the taxable amount of the benefit) because they have not attained age 59 1/2. In the case of a retired member who returns to employment with the same employer (as defined in (e) above) within the 180-day period specified in (e) above, and if the retired member has not attained age 59 1/2 during the time that some or all of distributions were made from the defined benefit plans, the Division shall code the Form l099-R to indicate that the distribution is an "Early Distribution" and that no known exception from the penalty applies.
 
17:1-17.15   Defense of Marriage Act
 
For purposes of interpreting the New Jersey statutes and Administrative Code provisions that apply to the retirement systems, the term "spouse" shall be interpreted in accordance with the Federal Defense of Marriage Act to the extent required by that law and guidance issued by the Internal Revenue Service.


TREASURY — GENERAL
DIVISION OF PENSIONS AND BENEFITS

44 N.J.R. 2062(b)

Adopted Amendment: N.J.A.C. 17:1-3.10

General Administration
 
Peacetime Military Service; Service Credit
 
Proposed: May 7, 2012 at 44 N.J.R. 1317(a).
 
Adopted: July 11, 2012 by Florence J. Sheppard, Acting Director, Division of Pensions and Benefits.
 
Filed: July 11, 2012 as R.2012 d.142, without change.
 
Authority: N.J.S.A. 52:14-15.1a (P.L. 1996, c. 8) and 52:18A-96 et seq.
 
Effective Date: August 6, 2012.
 
Expiration Date: December 10, 2015.
 
Summary of Public Comment and Agency Response:

No comments were received.
 
Federal Standards Statement

The adopted amendment is necessary as to be in compliance with Federal statutes, specifically, the provisions of 38 U.S.C. §§ 4301 et seq., which provide benefit protection to employees who leave public employment to serve in the uniformed services. The rule was adopted to comply with Uniformed Services Employment and Reemployment Rights Act of 1994 and apply these Federal requirements to all the defined benefit and defined contribution retirement systems administered by the Division.
 
Full text of the adoption follows:
 
SUBCHAPTER 3.    ENROLLMENT, MEMBERSHIP, TRANSFERS, AND WITHDRAWALS
 
17:1-3.10   Peacetime military service; service credit
 
(a) (No change.)
 
(b) A member reemployed under this section shall be treated as not having incurred a break in service with the employer by reason of the member's period of service in the uniformed services. A member that authorizes payroll deductions or makes a lump sum payment for the USERRA-eligible service will receive the pension service credit with the State-administered retirement system. The actual calculation of retirement benefits will include the time of uniformed service. Payment to the retirement system of any contributions for USERRA-eligible service is optional and voluntary on the part of the member.
 
(c) (No change.)


TREASURY GENERAL
DIVISION OF PENSIONS AND BENEFITS

44 N.J.R. 2062(a)

Adopted Amendment: N.J.A.C. 17:1-1.12

General Administration

Domestic Relations Orders

Proposed: May 7, 2012 at 44 N.J.R. 1316(a).

Adopted: July 11, 2012 by Florence J. Sheppard, Acting Director, Division of Pensions and Benefits.

Filed: July 11, 2012 as R.2012 d.143, without change.

Authority: N.J.S.A. 52:14-15.1a (P.L. 1996, c. 8) and 52:18A-96 et seq.

Effective Date: August 6, 2012.

Expiration Date: December 10, 2015.

Summary of Public Comment and Agency Response:

No comments were received.

Federal Standards Statement

The adopted amendment is necessary, so as to be compliant with court orders for child support, alimony, and equitable distribution. A Federal standards analysis is not required because N.J.S.A. 52:14-15.1a (P.L. 1996, c. 8) and 52:18A-96 et seq. govern the subject of this rulemaking and there is no Federal requirement or standard that affects the subject of this rulemaking.

Full text of the adoption follows:

SUBCHAPTER 1.  ADMINISTRATIVE PRACTICES

17:1-1.12   Domestic relations orders

(a)-(c) (No change.)

(d) The Division cannot guarantee the implementation of any irrevocable designation of death benefits or selection of retirement option. It isthe responsibility of the member to inform the Division of the existence of any court order or domestic relations order, as well as, to comply with the contents of same.

 
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