(a) If, in response to a notice sent to the parties under §129.7 of this title (relating to Conditional Approval of Order) written notice of a contest is timely received, the domestic relations liaison shall notify in writing all other parties of the receipt of that contest.
(b) For a period of 30 days following the date of the system's receipt of notice of a contest (unless the contest is sooner withdrawn in writing by the party who gave written notice of contest), the system may proceed in accordance with this section.
  (1) BEFORE RETIREMENT. If the order relates to a participant who has not yet begun to receive service retirement or disability retirement benefit payments subject to the order when the system receives the notice of contest, the system may delay action on an application by the participant for benefits that would be subject to the order. Alternatively, the system may (but shall not be required to) process an application by and begin payments to the participant of a refund or of all or any portion of any benefits to which the participant appears entitled under the order while interpreting the division of benefits in the light most beneficial to the alternate payee under the qualified domestic relations order and state law. In determining under this paragraph whether or not to process an application and begin payments to a participant pending completion of the contest, the system may take into consideration the difficulty in dividing the benefits between the parties prior to receipt of, or in re-dividing the benefits after receipt of, a qualified domestic relations order should the contest to the order be successful. Any benefits not paid under this paragraph shall be retained by the system until they are paid under one of the remaining subsections of this section.
  (2) AFTER RETIREMENT. If the order relates to a participant who is receiving service retirement or disability retirement benefit payments when the system receives the notice of contest, and the contested order awards the alternate payee a percentage of the then-current monthly benefit payable to participant (commonly referred to as a "carve-out"), the system shall pay to the participant all or any portion of any benefits to which the participant appears entitled under the order while interpreting the division of benefits in the light most beneficial to the alternate payee under the qualified domestic relations order and state law. If the order awards the alternate payee an interest in the participant's benefits from the system other than a carve-out, the system is not required to reduce the amount to be paid to the participant until the first to occur of the events listed in subsection (c) of this section.
  (3) Any benefits not paid to the participant under this paragraph shall be retained by the system until they are paid under one of the remaining subsections of this section.
(c) Any party desiring to contest the order may, within that 30-day period, pursue action in a court of competent jurisdiction for review and clarification of the order. The system may require a certified copy of the filed pleading to pursue action on the order. In the event the system receives (within such 30-day period) notice of such a pleading or written request, the system will continue to withhold payment of benefits pursuant to subsection (b) of this section until the first to occur of:
  (1) The system's receipt of a certified copy of a subsequent order that the domestic relations liaison determines qualifies under this chapter;
  (2) The system's receipt of a certified copy of an order dismissing or denying the contest; or
  (3) The expiration of six months from the date of mailing of the notice of conditional approval under §129.7 of this title, unless the party contesting the order shows good cause for an extension beyond the six months. The party contesting the order may request extensions for good cause, while pursuing court action to contest the order, for up to 18 months from the date the domestic relations order was received. Any request for an additional extension must be received by the system prior to the expiration of the then applicable extension period. "Good cause" may include, but shall not be limited to, notice of a hearing before the court with jurisdiction over the domestic relations order. Determination of good cause for extensions and the length of any extension shall be made by the system in its sole discretion.
(d) If, within the periods set forth in subsection (c) or within any system-approved extensions, the system receives a subsequent order that complies with the requirements of this chapter for a qualified domestic relations order, the domestic relations liaison will provide notice under §129.7 of this title and the system will pay all benefits (including any that have been withheld under this chapter) pursuant to that subsequent order. In making a determination hereunder, the domestic relations liaison may (but shall not be required to) rely on the determination of the court in a clarification order meeting the requirements of this chapter for a qualified domestic relations order. If the domestic relations liaison determines and notifies the parties in writing that the subsequent order does not qualify, action on the non-qualifying subsequent order thereafter will be in accordance with the provisions of §129.9 of this title (relating to Order Appearing Not to Qualify).
(e) If the system does not receive, within the 30 days described in subsections (a)-(c) of this section, notice of such a pleading or written request being filed, or if the contest has been withdrawn in writing, then payment will be made under §129.8 of this title (relating to Payments Under Conditionally Approved Order).
(f) Upon the expiration of 18 months from the date the qualified domestic relations order was received by the system, if the contest of the qualified domestic relations order has not been resolved within that period of time, then payment will be made under §129.8 of this title.
(g) Neither the system nor any officials or employees of the system shall be liable for making any payment under this section.

Source Note: The provisions of this §129.10 adopted to be effective July 1, 2022, 47 TexReg 3272