[§88-22.5]  Federal tax qualificationrequirements.  (a)  The system shall be administered in accordance with therequirements of section 401(a)(1), (2), (8), (9), (25), and (31) of theInternal Revenue Code of 1986, as amended.  Without limiting the generality ofthe foregoing and notwithstanding any provision of chapter 88 to the contrary:

(1)  Prior to the satisfaction of all liabilities withrespect to members and their beneficiaries, no part of the corpus or income ofthe system shall be used for or diverted to purposes other than for theexclusive benefit of members and their beneficiaries.  The payment ofreasonable expenses from the expense fund  for the administration of the systemin accordance with section 88-116 shall be deemed to be for the benefit ofmembers and their beneficiaries;

(2)  Benefits forfeited by a member for any reasonshall not be applied to increase the benefits a member or beneficiary wouldotherwise receive under the system;

(3)  In accordance with rules adopted by the board oftrustees, the entire interest of a member shall be distributed or distributionshall begin no later than the member's "required beginning date", asdefined in section 401(a)(9) of the Internal Revenue Code of 1986, as amended;

(4)  In accordance with rules adopted by the board oftrustees, a member or beneficiary may elect, at the time and in the mannerprescribed by the board of trustees, to have any portion of an "eligiblerollover distribution" paid in a "direct rollover" to an "eligibleretirement plan", as such terms are defined in section 401(a)(31) of theInternal Revenue Code of 1986, as amended; and

(5)  In the event of the termination of or completediscontinuance of employer contributions to the system, the rights of allmembers to benefits accrued as of the date of such termination ordiscontinuance, to the extent then funded, shall be nonforfeitable.

(b)  The board of trustees shall adopt rulesnecessary for the purposes of this section.  Rules adopted for the purposes ofthis section shall be exempt from the public notice, public hearing, andgubernatorial approval requirements of chapter 91; provided that the rulesshall be adopted at a public meeting subject to the requirements of part I ofchapter 92 and a copy of the proposed rules shall be available for publicinspection at the office of the system at least six calendar days before themeeting. [L 2004, c 182, §1]