Sec. 2. (a) Unless a member elects otherwise under this section or has elected to withdraw the member's annuity savings account under IC 5-10.2-3-6.5, the retirement benefit for each member consists of the sum of a pension provided by employer contributions plus an annuity provided by all or part of the amount credited to the member in the annuity savings account. If a member has elected to withdraw the member's annuity savings account under IC 5-10.2-3-6.5, the member's retirement benefit is equal to the pension provided by employer contributions, unless the member has transferred the creditable service earned under the public employees' retirement fund to another governmental retirement plan under IC 5-10.2-3-1(i). Regardless of a member's election under this section, contributions that are posted to a member's annuity savings account after the final date on which the member's retirement benefit is processed may be distributed to the member as determined by the rules of the board. If the distribution exceeds one thousand dollars ($1,000), the board shall obtain the member's consent as to the form of the distribution.

(b) Subject to subsections (d) and (e), if a member has not elected to withdraw the entire amount in the member's annuity savings account under IC 5-10.2-3-6.5, a member may choose at retirement or upon a disability retirement or at a later time to receive a distribution of all or part of:

(1) the amount credited to the member in the annuity savings account; or

(2) the amount equal to the member's federal income tax basis in the member's annuity savings account balance as it existed on December 31, 1986.

If the member chooses to receive the distribution under subdivision (2), the member is entitled to an annuity purchasable by the amount remaining in the member's annuity savings account after the payment under subdivision (2).

(c) Subject to subsections (d) and (e), if a member has not elected to withdraw the entire amount in the member's annuity savings account under IC 5-10.2-3-6.5, a member may choose upon retirement or upon disability retirement to begin receiving a pension provided by employer contributions and to defer receiving all or part of the amount in the member's annuity savings account. If a member chooses this option:

(1) the member's annuity savings account will continue to be invested according to the member's direction under IC 5-10.2-2-3; and

(2) the member may later choose, as of the first day of a month, or an alternate date established by the rules of the board, to receive one (1) or more distributions of all or part of:

(A) the entire amount then credited to the member in the annuity savings account; or

(B) an amount equal to the member's federal income tax basis in the member's annuity savings account balance as it existed on December 31, 1986.

If the member chooses to receive the distribution under subdivision (2), the member is entitled to an annuity purchasable by the amount remaining in the member's annuity savings account after the payments under subdivision (2). If the member does not choose to receive a distribution under this subsection, the member is entitled to an annuity purchasable by all or part of the amount in the member's annuity savings account, and the form of the annuity shall be as described in subsection (e) unless the member elects an option described in section 7(b)(1), 7(b)(2), or 7(b)(4) of this chapter. The amount to be paid under this section shall be determined in the manner described in IC 5-10.2-2-3. However, the board may by rule provide for an alternate valuation date.

(d) A member may make any combination of choices under subsections (a) through (c) over time with respect to the remaining amount credited to the member in the annuity savings account.

(e) Retirement benefits must be distributed in a manner that complies with Section 401(a)(9) of the Internal Revenue Code, as specified in IC 5-10.2-2-1.5.

As added by Acts 1977, P.L.53, SEC.2. Amended by P.L.35-1985, SEC.12; P.L.55-1989, SEC.16; P.L.59-1989, SEC.1; P.L.195-1999, SEC.15; P.L.62-2005, SEC.2; P.L.115-2008, SEC.11; P.L.115-2009, SEC.6; P.L.35-2012, SEC.42; P.L.22-2014, SEC.1; P.L.40-2017, SEC.9.