(a) Definitions.
  (1) Eligible Member--An employee of a participating municipality who is or would be considered to be employed in a position eligible for membership but who leaves employment with that municipality to perform service in the uniformed services; whose employer was notified of the obligation or intention of the employee to perform service in the uniformed services; who is released or discharged from such service on or after December 12, 1994, under honorable conditions; whose cumulative period of service in the uniformed services with respect to that participating municipality does not exceed five years not including periods excluded under 38 USC §4312(c); who applies for reemployment with that participating municipality within 90 days of release or discharge from the uniformed services, or after recovery from an illness or injury incurred in, or aggravated during, the performance of service in the uniformed services (but such recovery period does not exceed two years); and who is reemployed by the participating municipality.
  (2) Uniformed Services--The Armed Forces of the United States of America; the Army National Guard and the Air National Guard when engaged in active duty for training, inactive duty training, or full-time National Guard duty; the commissioned corps of the Public Health Service; and any other category of persons designated by the President in time of war or national emergency.
  (3) Service in the Uniformed Services--The performance of duty on a voluntary or involuntary basis in a uniformed service under competent authority and includes active duty, active duty for training, inactive duty for training, National Guard duty under Federal statute, and a period for which an employee is absent from a position of employment for the purpose of an examination of to determine the fitness of the employee to perform such duty.
  (4) Participating Municipality--A municipality as defined in §851.001(9) of the Act (including entities having the status of a municipality under Government Code, §852.005 of the Act) that is participating in the Texas Municipal Retirement System at the time the eligible member leaves employment with the municipality to perform service in the uniformed services; or a municipality that is not participating in the System at the time the employee leaves employment with the municipality to perform service in the uniformed services but commences participating during the period of the employee's performance of duty in a uniformed service.
(b) Certification of Eligibility by Participating Municipality. An eligible member will be credited with current service in accordance with the Uniformed Services Employment and Reemployment Rights Act (the USERRA) (38 USC §4301 et seq.) upon certification by the participating municipality on forms provided by the system:
  (1) that the eligible member's reemployment application is timely;
  (2) that the eligible member has not exceeded the service limitations set forth in the USERRA;
  (3) that the eligible member was not released or discharged from the uniformed service under other than honorable conditions;
  (4) the period in which the eligible member performed service in the uniformed services;
  (5) that the eligible member did not receive service credit for the period of uniformed service;
  (6) the estimated compensation that the eligible member would have received from the municipality but for the period of service in the uniformed services; and
  (7) the eligible member's date of reemployment with the participating municipality.
(c) Crediting of Current Service under the USERRA.
  (1) An eligible member shall be credited with one month of current service credit for each month or part of a month in which:
    (A) the eligible member performed service in the uniformed services; and
    (B) a person who begins military service prior to the 16th day of a calendar month, or terminates military service after the 15th day of a calendar month is considered to have served a full month; and
    (C) the participating municipality participated in the system.
  (2) An eligible member may, but is not required to, deposit with the system any or all employee contributions that would have been deposited to his/her individual account for each period during which he/she performed service in the uniformed services if the eligible member had been employed with the participating municipality during the period of uniformed service. Deposits under this provision are subject to the following rules:
    (A) The total deposits may not exceed the amount the eligible member would have been required to contribute had the eligible member remained continuously employed by the participating municipality throughout the period of service in the uniformed services.
    (B) The compensation upon which allowable deposits will be calculated is the estimated compensation that the eligible member would have received from the participating municipality but for the period of service in the uniformed services.
    (C) For purposes of determining the amount of current service credit and allowable monetary deposits, months of uniformed service and estimated compensation shall be calculated from the later of the date the eligible member entered service in the uniformed services or the date the participating municipality commenced participation in the system.
    (D) Within the allowable period for making deposits and subject to the maximum total amount of deposits, an eligible member may make deposits at any time and in any amount.
    (E) Deposits must be paid directly to the system by the eligible member or by the rollover or transfer of funds in accordance with the provisions of §127.6 of this title (relating to the Acceptance of Rollovers and Transfers). Optional deposits made under this section shall retain the same after-tax or pre-tax characterization that the funds have when deposited and may not be returned until the member terminates from all covered employment in this system.
    (F) Deposits will be allocated prospective interest only, and in the same manner as interest is allocated on member contributions to individual accounts.
    (G) Deposits, when received by the system, shall be credited to the eligible person's individual account and shall be considered to be contributions attributable to the months of uniformed service performed beginning with the earliest month of uniformed service.
    (H) For vesting and funding purposes, current service credit, and any monetary credit arising from voluntary deposits, shall be considered as having been earned through service with the reemploying municipality and as having been credited during the period of uniformed service.
    (I) An eligible member receiving service credit for a specific month pursuant to §853.506 may not receive service credit for the same month under any other provision of the Act.
    (J) Deposits must be made during a time period starting with the date of an eligible member's reemployment with the participating municipality and continuing for up to three (3) times the length of the member's immediate past period of uniformed service, with the repayment period not to exceed five (5) years. Deposits may be made only during this period and while the member is employed with the post-service reemploying municipality.
(d) Death While on Military Leave. Effective for deaths occurring on or after January 1, 2007, if a member dies while performing qualified military service, the beneficiaries of the member are entitled to any additional benefits (other than benefit accruals relating to the period of qualified military service) provided under the Texas Municipal Retirement System tax-qualified pension plan as if the member had resumed employment and then died, in accordance with §401(a)(37) of the Internal Revenue Code. "Qualified military service" means any service in the uniformed service (as defined in Chapter 43 of Title 38 of the United States Code) by any individual if such individual is entitled to reemployment rights under such Chapter with respect to such service.
(e) Military Differential Pay. For purposes of the Texas Municipal Retirement System, prior to and on and after January 1, 2009, compensation as defined in §851.001(6) of the Act includes payments to an individual by a participating municipality who does not currently perform services for the participating municipality by reason of qualified military service as defined in subsection (d) of this section made in accordance with the participating municipality's current policy with regard to such qualified military service (hereafter referred to as "military differential pay"). For purposes of the Internal Revenue Code as it applies to the Texas Municipal Retirement System tax-qualified pension plan, effective January 1, 2009, a member receiving military differential pay shall be treated as an employee of the employer making the payment and the military differential pay shall be treated as compensation.
(f) Construction. This section is intended to comply with USERRA and Internal Revenue Code §401(a)(37) and §414(u) and shall be construed in a manner consistent with those provisions.

Source Note: The provisions of this §127.4 adopted to be effective August 1, 2023, 48 TexReg 4124