The State system shall pay all benefits in accordance with a good faith interpretation of the requirements of §401(a)(9) of the Internal Revenue Code, and the regulations in effect under that section, as applicable to a governmental plan within the meaning of §414(d) of the Internal Revenue Code. Each State system is subject to the following provisions: Distribution of a member's benefit shall begin by the required beginning date; The member's entire interest shall be distributed over the member's life, or the lives of the member and a beneficiary determined pursuant to the applicable provisions of the State system; If a member dies after the required distribution of benefits has begun, the remaining portion of the member's interest, if any, shall be distributed at least as rapidly as under the method of distribution before the member's death; If a member dies before the required distribution of the member's benefits has begun, the member's entire interest shall be distributed to the beneficiary, if the beneficiary can be located: Over the life of the beneficiary, with the distributions beginning not later than December 31 of the calendar year following the calendar year of the member's death, in accordance with federal regulations; or Within 5 years of the member's death; The amount of an annuity paid to a member's beneficiary may not exceed the maximum determined under the incidental death benefit requirement of §401(a)(9)(G) of the Internal Revenue Code; The death and disability benefits provided by the State system are limited by the incidental benefit rule set forth in §401(a)(9)(G) of the Internal Revenue Code and U.S. Treasury regulation 26 C.F.R. §1.401-1(b)(1)(i) (as amended), so that the total death or disability benefits payable do not exceed 25 percent of the cost for all of the members' benefits received from the State system; If a member or beneficiary cannot be located by the required beginning date, the member's or beneficiary's benefit will be initiated by the Agency and immediately shall be suspended, pending the Agency locating the member or beneficiary; and In order to maintain compliance with §401(a)(9) of the Internal Revenue Code, the provisions of State Personnel and Pensions Article, §21-402(c), Annotated Code of Maryland, shall be applied by the Agency to a member's request to change a beneficiary on and after January 1, 2006. Effective with respect to plan years beginning on and after July 1, 1996, and before July 1, 2002, the annual compensation of a plan member which exceeds $150,000, as adjusted for cost-of-living increases under §401(a)(17)(B) of the Internal Revenue Code, shall be disregarded for purposes of computing employee and employer contributions to or benefits due from, the State system. Plan Years Beginning On and After July 1, 2002. Effective with respect to plan years beginning on and after July 1, 2002, the annual compensation of a plan member which exceeds $200,000, as adjusted for cost-of-living increases in accordance with §401(a)(17)(B) of the Internal Revenue Code, 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 (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. Eligible Member. In this section, “eligible member” means, a person who first became a member of the State system prior to the plan year beginning after December 31, 1995. Pursuant to section 13212(d)(3)(A) of Omnibus Budget and Reconciliation Act of 1993, and the regulations issued under that section, eligible members are not subject to the limits of §401(a)(17) of the Internal Revenue Code, and the maximum compensation used in computing employee and employer contributions to, or benefits due from, the State system for eligible members shall be the maximum amount allowed by the State system to be so used on July 1, 1993. The limits referenced in §§A and B of this regulation apply only to years beginning after December 31, 1995, and only to individuals who first become plan members in plan years beginning on and after July 1, 1996. Notwithstanding the terms of the Annotated Code of Maryland or the Code of Maryland Regulations (COMAR), the member contributions paid to and retirement benefits paid from, the plan shall be limited as necessary to conform to the requirements of §415 of the Internal Revenue Code for a qualified pension plan. Member Limits. The annual benefit to which a member is entitled, during the limitation year (fiscal year), is limited to $160,000, as adjusted for cost-of-living increases under §415(d) of the Internal Revenue Code. For certain members, this limit is adjusted based upon the age of the member at retirement if the member retires before 62 years old. The limitation is not lowered for qualified police and firefighters as defined by the Internal Revenue Code. The limitation is not lowered for a member who retires on disability or for a death benefit. If a member selects an optional benefit form that is other than a straight life annuity, the benefit shall be adjusted to an actuarially equivalent straight life annuity for purposes of applying the limitation in §B of this regulation. If a member has fewer than 10 years of service at the time the member begins receiving a retirement benefit, the limitation in §B of this regulation is reduced by a fraction, which is the number of years of service divided by 10. After-tax employee contributions in any limitation year are limited to the lesser of 100 percent of a member's compensation, or $40,000 adjusted for cost-of-living increases pursuant to §415(d) of the Internal Revenue Code. The definition of compensation used for testing purposes shall satisfy the requirements of §415(c)(3) of the Internal Revenue Code and does not include picked-up contributions. The State system does not take into account, for limitation purposes, any repayment of contributions and earnings that were previously refunded due to a forfeiture of service under §415(k)(3) of the Internal Revenue Code. The State system does permit after-tax employee contributions for service purchase subject to §415(n) of the Internal Revenue Code. Picked-up contributions are not subject to these limits. If a member participates in more than one defined contribution plan of an employer, or more than one defined benefit plan of an employer, then the contributions to all plans and the benefits payable from all plans are aggregated for purposes of this regulation. If the limits are exceeded, then the contributions to, or the benefits payable from, the State system are considered primary. The Retirement Agency shall administer benefits with respect to the same-gender spouse of a member, former member, or retiree from a lawfully recognized marriage in the same manner as an opposite-gender spouse, including the payment of any spousal death or survivor benefits. Definitions. In this regulation, the following terms have the meanings indicated. Terms Defined. “Direct rollover” has the meaning stated in State Personnel and Pensions Article, §21-601, Annotated Code of Maryland. “Eligible rollover distribution” has the meaning stated in State Personnel and Pensions Article, §21-601, Annotated Code of Maryland. Within a reasonable period of time before making an eligible rollover distribution, the Retirement Agency shall provide the recipient with written notice regarding eligible rollover distributions as required under 26 U.S.C. §402(f) and applicable U.S. Treasury regulations. A participant shall have at least 30 days to review the Retirement Agency’s written notice under §B of this regulation and consider whether or not to have an eligible rollover distribution paid to an eligible retirement plan in a direct rollover. A participant may waive the notice period by making an affirmative election indicating whether or not the participant wishes to make a direct rollover. Rollover Election. To elect to have all or any part of an eligible rollover distribution paid to an eligible retirement plan in a direct rollover, a participant shall properly complete the appropriate form that the Retirement Agency provides and file it with the Retirement Agency. A form to request a rollover is properly completed if it is completed, dated, and signed in accordance with the form’s instructions. State Personnel and Pensions Article, §§21-110 and 21-603, Annotated Code of Maryland Effective date: July 27, 2009 (36:15 Md. R. 1167) Regulation .01B amended effective January 8, 2024 (50:26 Md. R. 1132) Regulation .04 adopted effective October 3, 2011 (38:20 Md. R. 1204) Regulation .04 amended effective November 10, 2014 (41:22 Md. R. 1320) Regulation .05 adopted effective February 11, 2019 (46:3 Md. R. 109)