86.1580. Optional distribution under partial lump-sum option plan, when--death before retirement, effect of. - Missouri Statutes

Optional distribution under partial lump-sum option plan,when--death before retirement, effect of.

86.1580. 1. Any member in active service entitled to commence apension under section 86.1540 may elect an optional distribution under thepartial lump sum option plan provided in this section if the member:

(1) Notifies the retirement system in writing of the member'sretirement date at least ninety days in advance thereof and requests anexplanation of the member's rights under this section; and

(2) Notifies the retirement system of the member's election hereunderat least thirty days in advance of the retirement date.

Following receipt of an initial notice of a member's retirement date andrequest for an explanation, the retirement system shall, at least sixtydays in advance of such retirement date, provide the member a writtenexplanation of such member's rights under this section and an estimate ofthe amount by which the member's regular monthly base pension would bereduced in the event of the member's election of any of the optionsavailable to the member under this section.

2. (1) A member entitled to make an election under this section mayelect to receive a lump sum distribution with the member's initial monthlypension payment under section 86.1540, subject to all the terms of thissection. The member may elect the amount of the member's lump sumdistribution from one, but not more than one, of the following options forwhich the member qualifies:

(a) A member having one or more years of creditable service after themember's eligible retirement date may elect a lump sum amount equal totwelve times the initial monthly base pension the member would receive ifno election were made under this section;

(b) A member having two or more years of creditable service after themember's eligible retirement date may elect a lump sum amount equal totwenty-four times the initial monthly base pension the member would receiveif no election were made under this section; or

(c) A member having three or more years of creditable service afterthe member's eligible retirement date may elect a lump sum amount equal tothirty-six times the initial monthly base pension the member would receiveif no election were made under this section.

For purposes of this section, "eligible retirement date" for a member shallmean the earliest date on which the member could elect to retire and beentitled to receive a pension under section 86.1540.

(2) When a member makes an election to receive a lump sumdistribution under this section, the base pension that the member wouldhave received in the absence of an election shall be reduced on anactuarially equivalent basis to reflect the payment of the lump sumdistribution, and the reduced base pension shall be the member's basepension thereafter for all purposes relating to base pension amounts undersections 86.1310 to 86.1640, unless the member has also elected an optionalbenefit permitted under subsection 3 of section 86.1540.

(3) If a member electing a lump sum distribution under this sectionhas elected the optional benefit permitted under subsection 3 of section86.1540, the calculation of the member's pension shall be made in thefollowing order:

(a) The amount of the member's normal pension under subdivision (1)of subsection 1 of section 86.1540 shall be reduced if applicable by anyreductions required under subsection 2 of section 86.1540;

(b) The amount of the pension as determined under paragraph (a) ofthis subdivision shall be reduced to the actuarially equivalent amount toproduce the optional form of benefit described in subdivision (1) ofsubsection 3 of section 86.1540;

(c) The amount of reduced pension as determined under paragraph (b)of this subdivision shall be further reduced as required to produce anactuarially equivalent benefit in the form of the lump sum distributionoption elected under this section and a remaining monthly annuity whichshall be paid on the basis that the initial annuity for the member'sspouse, if such spouse survives the member, shall be the same as the amountbeing paid the member on this annuity at the member's death, and, subjectto cost-of-living adjustments thereafter declared on the spouse's basepension under section 86.1590, shall be paid to such surviving spouse forthe lifetime of such spouse without regard to remarriage.

3. An election under this section to receive a lump sum distributionand reduced monthly base pension shall be void if the member dies beforeretirement, in which case amounts due a surviving spouse or otherbeneficiary of the member shall be determined without regard to suchelection.

(L. 2005 H.B. 323)