NOTICE OF PROPOSED UPDATE TO RETIREMENT SYSTEM IRS COMPLIANCE POLICY - Section 304

The Department of Administration, Division of Retirement and Benefits (Division), is working to update the Retirement System IRS Compliance Policy.This update is intended to maintain compliance of IRC 401(a)(31)(B) where the Secure Act 2.0 has increased involuntary cashout limits from $5,000 to $7,000. This change will affect the State of Alaska qualified retirement plans for PERS Defined Benefit Plan, PERS and TRS Defined Contribution Retirement Plans, State of Alaska SBS-AP, JRS, and NGNMRS. Secure 2.0 Law Section 401(a) b. Certain Involuntary Distributions (Sections 401(a)(31)(B) and 411(a)(11)) Section 304 of the Secure 2.0 Act permits a plan to increase its involuntary cashout limit to $7,000 (increased from $5,000) 26 USC 401: Qualified pension, profit-sharing, and stock bonus plans (31) Direct transfer of eligible rollover distributions. (B) Certain mandatory distributions. (ii) Eligible plan. For purposes of clause (i), the term "eligible plan" means a plan which provides that any nonforfeitable accrued benefit for which the present value (as determined under section 411(a)(11)) does not exceed $7,000 shall be immediately distributed to the participant. Financial Impacts The proposed updates/changes are not expected to require increased appropriation. Proposed Updates Sections to be updated or added to the Retirement System IRS Compliance Policy Public Employees Retirement System Tiers I, II, and III Defined Benefit Plan Public Employees’ Tier IV Defined Contribution Retirement Plan Teachers’ Retirement System Tiers I and II Defined Benefit Plan Teachers’ Retirement System Tier III Defined Contribution Retirement Plan Judicial Retirement System State of Alaska Supplemental Annuity Plan National Guard and Naval Militia Retirement System You may comment on the proposed update changes by submitting written comments: By Mail: Division of Retirement and Benefits P.O. Box 110203, Juneau, AK 99811-0203 By Fax: (907) 465-3086 By Email: laura.cordero@alaska.gov All comments must be received no later than 4:30 p.m. AKST on November 28, 2025. A copy of the proposed updates is available on the Division’s website. You can also request a copy by contacting laura.cordero@alaska.gov, or by mail via the address provided above. After the public comment period ends, the Division of Retirement and Benefits will adopt the proposed changes or other provisions dealing with the same subject, without further notice, or decide to take no action. If your interests could be affected, it is recommended you provide comments within the allotted time period. Written comments received are public records and are subject to public inspection. All questions will be posted to our website where we will provide responses and Frequently Asked Questions. Statutory Authority: AS 14.25.004, AS 14.25.005, AS 22.25.027, AS 39.35.004, and AS 39.35.005. The Division of Retirement and Benefits keeps a list of individuals and organizations interested in updates. Those on the list will automatically be sent a copy of all the Division of Retirement and Benefits notices of proposed updates. To be added to or removed from the list, please provide your name, and either your email address or mailing address, as you prefer, for receiving notices to:Division of Retirement and Benefits P.O. Box 110203, Juneau, AK 99811-0203