(a) Termination of service.--A participant who terminates State service shall be eligible to withdraw the vested
accumulated total defined contributions standing to the participant's credit in the
participant's individual investment account or a lesser amount as the participant
may request. Payment shall be made in a lump sum unless the board has established other forms
of distribution in the plan document. A participant who withdraws his vested accumulated total defined contributions shall
no longer be a participant in the plan, notwithstanding that the former State employee
may continue to be a member of the system or may have contracted to receive an annuity
or other form of payment from a provider retained by the board for such purposes.
(b) Required distributions.--All payments under this section shall start and be made in compliance with the minimum
distribution requirements and incidental death benefit rules of IRC § 401(a)(9). The board shall take any action and make any distributions it may determine are
necessary to comply with those requirements.
(d) Prohibited distributions.--A State employee must be terminated from all positions that result in either membership
in the system or participation in the plan to be eligible to receive a distribution. No distribution shall be allowed that would be an in-service distribution prohibited
by the IRC.
(e) Loans.--Loans or other distributions, including hardship or unforeseeable emergency distributions,
from the plan to State employees who have not terminated State service are not permitted,
except as required by law.
(f) Small individual investment accounts.--A participant who terminates State service and whose vested accumulated total defined
contributions are below the threshold established by law as of the date of termination
of service may be paid the vested accumulated total defined contributions in a lump
sum as provided in IRC § 401(a)(31).
(g) Option to purchase annuity.--Except as prohibited by the IRC or as otherwise provided in this part, a participant
who is eligible and elects to receive a distribution or vested accumulated employer
defined contributions may purchase an annuity with that distribution from an annuity
provider contracted by the board under section 5808(c) (relating to death benefits)
and under such conditions as provided in the plan document. The conditions may include that the board is authorized to make the distribution
directly to the annuity provider.
FindLaw Codes may not reflect the most recent version of the law in your jurisdiction. Please verify the status of the code you are researching with the state legislature or via Westlaw before relying on it for your legal needs.
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