Texas Retirement Systems’ Legislative and Statutory Authority
The Texas Constitution allows state and local governments to create retirement systems and set basic fiduciary and governance principles regarding boards of trustees, assets and member benefits. There are 344 local retirement systems in Texas that serve more than 291,000 members and hold more than $30 billion in assets.
In 2003, the Legislature added an amendment to the Texas Constitution to ensure participants in local retirement plans were protected against any benefit reductions that would affect benefits already earned. This section prohibits local retirement plans from reducing the accrued benefits of current and former employees who would have been eligible for those benefits without any additional service. It also prohibits any reduction of retiree benefits. Local governments had one opportunity to opt-out of compliance by holding an election in May 2004. The cities of Denison, Galveston, Houston, Marshall, McAllen, Paris and Port Arthur successfully opted-out. (The amendment does not apply to the Texas County and District Retirement System or the Texas Municipal Retirement System.)
Vernon’s Civil Statures, Title 109
State law (Title 109 of the Vernon’s Civil Statures) sets the contribution rates, benefit levels, and the composition of the board of trustees for the following 12 local public pension systems:
Austin Employees’ Retirement System
Austin Fire Fighters Relief & Retirement Fund
Austin Police Retirement System
Dallas Police & Fire Pension System
El Paso Firemen’s Pension Fund
El Paso Police Pension Fund
Fort Worth Employees’ Retirement Fund
Galveston Employees’ Retirement Plan for Police
Houston Firefighter’s Relief & Retirement Fund
Houston Municipal Employees Pension System
Houston Police Officers Pension System
San Antonio Fire & Police Pension Fund
Texas Government Code, Title 8
Local retirement systems are subject to Government Code, Title 8 which outlines several rules for public retirement systems. Chapter 802 covers a retirement system’s administration of assets and outlines key fiduciary guidelines. Political entities including a junior college district, river authority water district, appraisal district, or other special purpose district that establish a local retirement system are subject to Chapter 810 of the Texas Government Code. It was adopted by the 72nd Legislature so that local jurisdictions could establish their own local retirement systems with legislative authority and currently authorizes 28 local retirement plans in Texas. Chapter 810 does not set requirements for a retirement plan’s structure and allows decisions like contribution rates or board composition to be determined by the political entity.
Frequently Asked Questions about Form 1099-R
1099-R forms will be mailed by January 31, 2013
What is a 'Form 1099-R'?
An Internal Revenue Service (IRS) form with which an individual reports his or her distributions from annuities, profit-sharing plans, retirement plans, IRAs, insurance contracts and/or pensions.
I received more than one Form 1099-R from ERS. Why?
You probably have different IRS distribution codes, which are found in Box 7, listed on each form. Different types of payments (i.e. annuity payments, resignation refund payments, PLSOs, etc.) require different IRS distribution codes. For example, IRS distribution code 4 means we made a payment due to a death. Code 7 means payment(s) were made after you turned age 59 1/2. For a list of the distribution codes, look on the back side of your 1099-R or visit www.irs.govfor more information.
Is the total net amount I received from ERS on the form?
The net amount paid to you during the year is not reported on the form. Your net payment amount is impacted by your tax withholding and other deductions, including insurance premiums and garnishments. Tax withholding deducted from your payments is reported in Box 4. Insurance premiums and garnishment deductions are after-tax deductions and are not included on the form.
What do the values in boxes 1 - 5 represent?
Box 1 = total gross amount paid to you during the year before any deductions
Box 2a = taxable amount paid to your during the year (box 1 value minus box 5 value)
Box 2b = should be blank for annuity recipients; will include an “x” if a total distribution (i.e. RAW) was issued
Box 4 = total amount of federal tax withholding deducted from your payments during the year
Box 5 = the non-taxable portion of the payments issued to you during the year. This has nothing to do with any money you may have sent to ERS during the year.
IRS Retirement Planning.pdf