24-7-720. Lump-sum benefit — Definition.

24-7-720. Lump-sum benefit — Definition. (a)(1)(A) If prior to July 1, 2007, an active member of the Arkansas Teacher Retirement System with five (5) or more years of actual service, including actual service for the year immediately preceding the member's death, dies in employer service before retirement, then a lump sum of up to ten thousand dollars ($10,000) shall be paid to such persons as he or she shall have nominated by written designation duly executed and filed with the Board of Trustees of the Arkansas Teacher Retirement System. (B) If on or after July 1, 2007, an active member of the Arkansas Teacher Retirement System with ten (10) or more years of actual service dies in employer service before retirement, then a lump sum of up to ten thousand dollars ($10,000) shall be paid to the persons he or she has nominated by written designation executed and filed with the board. (2) If there are no designated persons who survive the member, the lump sum shall be paid to the member's estate. (b)(1) If a retired member of the system dies prior to July 1, 2007, and the retired member accrued five (5) or more years of actual service, including actual service for the year immediately preceding the member's death, then a lump sum of up to ten thousand dollars ($10,000) shall be paid to such persons as he or she shall have nominated by written designation duly executed and filed with the board. (2) If a retired member of the system dies on or after July 1, 2007, and the retired member accrued ten (10) or more years of actual service, including actual service for the year immediately preceding the member's death, then a lump sum of up to ten thousand dollars ($10,000) shall be paid to such persons as he or she shall have nominated by written designation duly executed and filed with the board. (3) If there are no designated persons who survive the member, the lump sum shall be paid to the member's estate. (c) The amount of the lump-sum payments under this section shall be set periodically and not more often than annually by rules of the board as it determines is actuarially appropriate for the system. (d)(1) For determining eligibility for the lump-sum death benefit under this section, “actual service” means service rendered in a position covered by the system. (2) “Actual service” does not include purchased or free credited service or reciprocal service. (e)(1) A benefit enhancement provided for under this section shall not be implemented if it would cause the system's unfunded actuarial accrued liabilities to exceed an eighteen-year amortization. (2) If the system's unfunded actuarial accrued liabilities exceed an eighteen-year amortization, a benefit enhancement provided for under this section shall not be implemented until the unfunded actuarial accrued liability is reduced to a level less than the standards prescribed by § 24-1-101 et seq. (f)(1) Pursuant to the board's fiduciary duty, the board shall implement this benefit provision for lump-sum payments by either making the lump-sum payments directly from the system or by purchasing a group life insurance policy for the benefit of system members. (2) A lump-sum payment under this subsection is intended to be exempt from income tax. (g) Effective July 1, 2009, a retired member of the system who retired on or before July 1, 2007, and had five (5) or more years of actual service credited in his or her account at retirement shall have the lump-sum death benefit paid upon the retired member's death under subsection (b) of this section. (h) A lump-sum payment under this section is intended to be exempt from income tax. (i) For eligibility under this section, a member is considered active for an additional fiscal year following the last fiscal year that the member renders actual service in a position reported to the system by a covered employer and the member obtains at least one-fourth (¼) year of service credit. (j)(1)(A) If a member accrues a minimum of fifteen (15) years of actual, contributory service, regardless of noncontributory service accrued in combination with the contributory service, the member shall receive the maximum lump-sum death benefit as determined by the board under this section. (B) Upon the member's death, the lump-sum death benefit shall be paid to persons the member selects by written designation executed and filed with the board. (2) The board may set a lump-sum benefit for noncontributory service as the board deems appropriate.