1| STATE OF OKLAHOMA | | | 2| 1st Session of the 59th Legislature (2023) | | | 3|SENATE BILL 634 By: Montgomery | | | 4| | | | 5| AS INTRODUCED | | | 6| An Act relating to the Teachers' Retirement System of | | Oklahoma; amending 70 O.S. 2021, Section 17-105.2, | 7| which relates to partial lump sum payments; | | authorizing certain retirement benefit payment for | 8| specific members; providing calculation for benefit | | amount; updating statutory reference and language; | 9| and providing an effective date. | | | 10| | | | 11| | | | 12|BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA: | | | 13| SECTION 1. AMENDATORY 70 O.S. 2021, Section 17-105.2, is | | | 14|amended to read as follows: | | | 15| Section 17-105.2. A. 1. A member of the Teachers' Retirement | | | 16|System of Oklahoma who is eligible to retire with at least thirty | | | 17|(30) years of creditable service may elect to receive a partial | | | 18|lump-sum payment on the date of retirement and a reduced annuity. | | | 19| 2. On and after the effective date of this act, a member who is | | | 20|eligible to retire with at least twenty (20) years of creditable | | | 21|service may elect to receive a partial lump-sum payment on the date | | | 22|of retirement and a reduced annuity. | | | 23| B. 1. The partial lump-sum payment shall be an amount equal to | | | 24|the unreduced retirement benefit, which shall be referred to as the | | | Req. No. 386 Page 1 ___________________________________________________________________________
1|"Maximum Retirement Allowance" for purposes of this section, which | | | 2|would have been paid over a period of twelve (12), twenty-four (24), | | | 3|or thirty-six (36) months, had the lump-sum option not been elected. | | | 4| 2. The partial lump-sum payment made pursuant to paragraph 2 of | | | 5|subsection A of this section shall be an amount equal to one-half | | | 6|(1/2) of the unreduced retirement benefit, which would have been | | | 7|paid over a period of twelve (12), twenty-four (24), or thirty-six | | | 8|(36) months, had the lump-sum option not been elected. | | | 9| C. Once the payout amount is elected, a reduced Maximum | | | 10|Retirement Allowance is then calculated using factors adopted by the | | | 11|Board of Trustees based upon the System's actuarial expected rate of | | | 12|return and the member's age at retirement and the payout option | | | 13|(twelve (12), twenty-four (24), or thirty-six (36) months) elected. | | | 14|This reduced Maximum Retirement Allowance shall also be reduced in | | | 15|accordance with any retirement options the member has elected | | | 16|pursuant to Section 17-105 ofTitle 70 of the Oklahoma Statutesthis | | | 17|title. | | | 18|B.D. The partial lump-sum payment, pursuant to this section, | | | 19|shall be paid in a check separate from the regular monthly | | | 20|retirement benefit. The total amount of the partial lump-sum | | | 21|payment shall be deducted from the member's account balance | | | 22|consisting of the employee contributions plus interest for purposes | | | 23|of determining unused contributions remaining in the account. The | | | 24|member may elect to rollover the taxable portion of the partial | | | Req. No. 386 Page 2 ___________________________________________________________________________
1|lump-sum payment to an eligible retirement plan or individual | | | 2|retirement account (IRA). The nontaxable portion of the partial | | | 3|lump-sum payment can be rolled over to an IRA or another qualified | | | 4|retirement plan as allowed by the Internal Revenue Code and | | | 5|regulations. This partial lump-sum payment shall be subject to | | | 6|federal income tax in accordance with the Internal Revenue Code | | | 7|Section 72 and other such Internal Revenue Code sections and | | | 8|regulations as may be applicable. This partial lump-sum benefit is | | | 9|subject to the same restrictions for assignment and attachment as | | | 10|all other retirement benefits. The appropriate portion of the | | | 11|partial lump-sum distribution will be reported to the Internal | | | 12|Revenue Service (IRS) as taxable income and appropriate tax | | | 13|withholdings will be withheld unless the member elects to make a | | | 14|direct rollover of the taxable portion of the funds. Should the | | | 15|member have after-tax contributions, a portion of such after-tax | | | 16|contributions will be allocated to the partial lump-sum payment and | | | 17|to the remaining annuity on aproratapro rata basis. | | | 18|C.E. The partial lump-sum option under this section may be | | | 19|elected only once by a member and may not be elected by a retiree. | | | 20|D.F. The board of trustees shall promulgate any rules | | | 21|necessary for the implementation of this section. | | | 22| SECTION 2. This act shall become effective November 1, 2023. | | | 23| | | | 24| 59-1-386 RD 1/18/2023 10:20:24 AM | | | Req. No. 386 Page 3