38-775

38-775. Required distributions; definitions

A. This section applies for purposes of determining required minimum
distributions for calendar years beginning on and after January 1, 2006. In applying the
requirements of this section, the following operational provisions govern:

1. Except as provided in the following sentence, the requirements of this section
take precedence over any inconsistent provisions of this article. The rules of this
section shall not restrict any form, calculation, adjustment or payment of benefit
provided under this article in effect on April 17, 2002, if the form, calculation,
adjustment or payment of benefit satisfied section 401(a)(9) of the internal revenue code
based on a reasonable and good faith interpretation of that section.

2. All distributions required under this section shall be determined and made
pursuant to section 401(a)(9) of the internal revenue code and the regulations that are
issued under that section by the United States secretary of the treasury.

3. Notwithstanding this section, other than paragraph 2 of this subsection,
distributions may be made under a designation made before January 1, 1984, pursuant to
section 242(b)(2) of the tax equity and fiscal responsibility act of 1982 (P.L. 97-248)
and the provisions of this article that relate to that section.

B. The member's entire interest shall be distributed, or begin to be distributed,
to the member no later than the member's required beginning date.

C. If the member dies before distributions begin, the member's entire interest
shall be distributed, or begin to be distributed, no later than as follows:

1. If the member's surviving spouse is the member's sole designated beneficiary,
except as provided in paragraph 6 of this subsection, distributions to the surviving
spouse shall begin 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 member
would have attained seventy and one-half years of age, if later.

2. If the member's surviving spouse is not the member's sole designated
beneficiary, except as provided in paragraph 6 of this subsection, distributions to the
designated beneficiary shall begin by December 31 of the calendar year immediately
following the calendar year in which the member died.

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

4. If the member's surviving spouse is the member's sole designated beneficiary and
the surviving spouse dies after the member but before distributions to the surviving
spouse begin, this subsection, other than paragraph 1 of this subsection, applies as if
the surviving spouse were the member.

5. For purposes of this subsection and subsection G, distributions are considered
to begin on the member's required beginning date or, if paragraph 4 of this subsection
applies, the date distributions are required to begin to the surviving spouse under
paragraph 1 of this subsection. If annuity payments irrevocably commence to the member
before the member's required beginning date, or to the member's surviving spouse before
the date distributions are required to begin to the surviving spouse under paragraph 1 of
this subsection, the date distributions are considered to begin is the date distributions
actually commence.

6. If the member dies before distributions begin and there is a designated
beneficiary, distribution to the designated beneficiary is not required to begin by the
date prescribed in paragraph 1 or 2 of this subsection as long as the member's entire
interest will be distributed to the designated beneficiary by December 31 of the calendar
year containing the fifth anniversary of the member's death. If the member's surviving
spouse is the member's sole designated beneficiary and the surviving spouse dies after
the member but before distributions to either the member or the surviving spouse begin,
this paragraph applies as if the surviving spouse were the member.

D. Unless the member's interest is distributed in the form of an annuity purchased
from an insurance company or in a single sum on or before the required beginning date, as
of the first distribution, calendar year distributions shall be made pursuant to
subsections E, F and G. If the member's interest is distributed in the form of an annuity
purchased from an insurance company, distributions shall be made pursuant to the
requirements of section 401(a)(9) of the internal revenue code and the regulations that
are issued under that section by the United States secretary of the treasury. Any part of
the member's interest that is in the form of an individual account described in section
414(k) of the internal revenue code shall be distributed in a manner satisfying the
requirements of section 401(a)(9) of the internal revenue code and the regulations that
are issued under that section by the United States secretary of the treasury that apply
to individual accounts.

E. The following provisions govern the determination of the amount to be
distributed each calendar year:

1. If the member's interest is paid in the form of annuity distributions, payments
under the annuity shall satisfy the following requirements:

(a) The annuity distributions shall be paid in periodic payments made at intervals
not longer than one year.

(b) The distribution period shall be over a life or lives or over a period certain
not longer than the period described in subsection F or G.

(c) Once payments have begun over a period certain, the period certain shall not be
changed even if the period certain is shorter than the maximum permitted.

(d) Payments shall either be nonincreasing or increase only as follows:

(i) By an annual percentage increase that does not exceed the annual percentage
increase in a cost-of-living index that is based on prices of all items and issued by the
bureau of labor statistics.

(ii) To the extent of the reduction in the amount of the member's payments to
provide for a survivor benefit on death, but only if the beneficiary whose life was being
used to determine the distribution period described in subsection F dies or is no longer
the member's beneficiary pursuant to a qualified domestic relations order within the
meaning of section 414(p) of the internal revenue code.

(iii) To provide cash refunds of employee contributions on the member's death.

(iv) To pay increased benefits that result from a plan amendment.

2. The amount that must be distributed on or before the member's required beginning
date or, if the member dies before distributions begin, the date distributions are
required to begin under subsection C, paragraph 1 or 2, is the payment that is required
for one payment interval. The second payment need not be made until the end of the next
payment interval even if that payment interval ends in the next calendar year. Payment
intervals are the periods for which payments are received, such as bimonthly, monthly,
semiannually or annually. All of the member's benefit accruals as of the last day of the
first distribution calendar year shall be included in the calculation of the amount of
the annuity payments for payment intervals ending on or after the member's required
beginning date.

3. Any additional benefits accruing to the member in a calendar year after the
first distribution calendar year shall be distributed beginning with the first payment
interval ending in the calendar year immediately following the calendar year in which the
amount accrues.

F. The following provisions govern annuity distributions that commence during a
member's lifetime:

1. If the member's interest is being distributed in the form of a joint and
survivor annuity for the joint lives of the member and a nonspouse beneficiary, annuity
payments to be made on or after the member's required beginning date to the designated
beneficiary after the member's death must not at any time exceed the applicable
percentage of the annuity payment for the period that would have been payable to the
member using the table set forth in question and answer number 2 of section 1.401(a)(9)-6
of the regulations issued by the United States secretary of the treasury. If the form of
distribution combines a joint and survivor annuity for the joint lives of the member and
a nonspouse beneficiary and a period certain annuity, the requirement in the preceding
sentence applies to annuity payments to be made to the designated beneficiary after the
expiration of the period certain.

2. Unless the member's spouse is the sole designated beneficiary and the form of
distribution is a period certain and no life annuity, the period certain for an annuity
distribution commencing during the member's lifetime may not exceed the applicable
distribution period for the member under the uniform lifetime table prescribed in section
1.401(a)(9)-9 of the regulations issued by the United States secretary of the treasury
for the calendar year that contains the annuity starting date. If the annuity starting
date precedes the year in which the member reaches seventy years of age, the applicable
distribution period for the member is the distribution period for seventy years of age
under the uniform lifetime table set forth in section 1.401(a)(9)-9 of the regulations
issued by the United States secretary of the treasury plus the excess of seventy over the
age of the member as of the member's birthday in the year that contains the annuity
starting date. If the member's spouse is the member's sole designated beneficiary and the
form of distribution is a period certain and no life annuity, the period certain may not
exceed the longer of the member's applicable distribution period, as determined under
this paragraph, or the joint life and last survivor expectancy of the member and the
member's spouse as determined under the joint and last survivor table prescribed in
section 1.401(a)(9)-9 of the regulations issued by the United States secretary of the
treasury, using the member's and spouse's attained ages as of the member's and spouse's
birthdays in the calendar year that contains the annuity starting date.

G. The following provisions govern minimum distributions if a member dies before
the date distributions begin:

1. Except as provided in subsection C, paragraph 6, if the member dies before the
date distribution of the member's interest begins and there is a designated beneficiary,
the member's entire interest shall be distributed, beginning no later than the time
prescribed in subsection C, paragraph 1 or 2, over the life of the designated beneficiary
or over a period certain not exceeding either of the following:

(a) Unless the annuity starting date is before the first distribution calendar
year, the life expectancy of the designated beneficiary determined using the
beneficiary's age as of the beneficiary's birthday in the calendar year immediately
following the calendar year of the member's death.

(b) If the annuity starting date is before the first distribution calendar year,
the life expectancy of the designated beneficiary determined using the beneficiary's age
as of the beneficiary's birthday in the calendar year that contains the annuity starting
date.

2. If the member dies before the date distributions begin and there is no
designated beneficiary as of September 30 of the year following the year of the member's
death, distribution of the member's entire interest shall be completed by December 31 of
the calendar year containing the fifth anniversary of the member's death.

3. If the member dies before the date distribution of the member's interest begins,
the member's surviving spouse is the member's sole designated beneficiary and the
surviving spouse dies before distributions to the surviving spouse begin, this subsection
applies as if the surviving spouse were the member, except that the time by which
distributions must begin shall be determined without regard to subsection C, paragraph 1.

H. For the purposes of this section:

1. "Designated beneficiary" means the individual who is designated as the member's
beneficiary to receive benefits under this article and is the designated beneficiary
under section 401(a)(9) of the internal revenue code and question and answer number 1 of
section 1.401(a)(9)-4 of the regulations issued by the United States secretary of the
treasury.

2. "Distribution calendar year" means a calendar year for which a minimum
distribution is required. For distributions beginning before the member's death, the
first distribution calendar year is the calendar year immediately preceding the calendar
year that contains the member's required beginning date. For distributions beginning
after the member's death, the first distribution calendar year is the calendar year in
which distributions are required to begin pursuant to subsection C.

3. "Life expectancy" means life expectancy as computed by use of the single life
table in section 1.401(a)(9)-9 of the regulations issued by the United States secretary
of the treasury.

4. "Required beginning date" means the date payment of a member's benefits shall
commence, which shall not be later than the April 1 following the calendar year in which
the member attains seventy and one-half years of age or the calendar year in which the
member terminates employment, whichever occurs later.