irc compliance

840 CMR 3.00 incorporates federal Internal Revenue Code qualification requirements into Massachusetts public retirement systems, ensuring they maintain their status as governmental qualified plans under IRC § 401. The regulation addresses requirements including the exclusive benefit rule (IRC § 401(a)(1),(2)), forfeiture restrictions, required minimum distributions (IRC § 401(a)(9)), annual compensation limits (IRC § 401(a)(17)), and rollover provisions. These provisions became effective January 1, 1989, and apply to all Chapter 32 retirement systems regardless of other Massachusetts law, including the compensation cap of $200,000 (adjusted for cost-of-living) for members who joined on or after January 1, 2002, and 64% of that cap for members joining after January 1, 2011.

840 CMR 13.00 implements the expanded tax-deferred rollover opportunities created by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), allowing public employees to purchase creditable service using assets held in other tax-deferred retirement plans. Retirement boards may accept Eligible Rollover Distributions paid directly to the system (Direct Rollovers) from qualifying plans including IRAs, qualified plans under IRC § 401(a), eligible 457(b) plans, and annuity contracts under IRC § 403(b). The regulation defines key terms including Direct Rollover, Eligible Retirement Plan, and Eligible Rollover Distribution, and clarifies the types of distributions that do not qualify for rollover treatment.