Sec. 6.20.  ERRONEOUS PAYMENTS OR OVERPAYMENTS.  (a)  If the pension system pays money to any person not entitled to the payment, whether by reason of an error of the pension system as to entitlement to or the amount of a benefit or otherwise, or an act or error of some other person, including the recipient of the payment, the recipient of the payment holds the funds to which the recipient was not entitled in constructive trust for the pension system and those funds are subject to demand by the pension system at any time.
(b)  The recipient of an erroneous payment from the pension system shall repay to the pension system all funds associated with the erroneous payment.
(c)  Subject to Subsection (e) of this section, the board may by rule adopt a procedure to enable the pension system to offset the future benefit or other payments of a recipient described by this section.  In addition, the board may take any additional action, including the bringing of a lawsuit, the board considers necessary to recover an erroneous payment the pension system is entitled to under this section.
(d)  If the pension system determines that a person is entitled to additional benefits as a result of an error made by the pension system, the pension system shall promptly pay the additional benefits owed.
(e)  The board's correction procedures must comply with the Internal Revenue Service's Employee Plans Compliance Resolution System and Revenue Procedure 2016-51, including subsequent guidance.
PART 6A. EQUITABLE ADJUSTMENTS

Sec. 6A.01.  EQUITABLE ADJUSTMENTS TO BENEFITS.  (a)  Subject to this section and notwithstanding any other provision of this article, the board by at least a two-thirds vote of all trustees may consider and adopt rules requiring the equitable return of funds paid to or credited to the benefit of a member or pensioner under this article before September 1, 2017, to the extent the funds exceeded reasonable amounts that should be paid or credited given the circumstances of the pension system at the time the payment or credit was made, including the return of excessive interest credited to a member's DROP account and excessive adjustments made under Section 6.12 of this article.
(b)  For purposes of Subsection (a) of this section, "reasonable amounts" includes the amounts that would have been paid or credited:
(1)  if the interest rate applied in determining a benefit, including the interest rate applied to a DROP account, equaled the actual, audited rate of return of the plan at the time the interest was credited to the account; or
(2)  if the percentage increase applied under Section 6.12 of this article equaled the percentage increase, if any, in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) most recently published by the Bureau of Labor Statistics of the United States Department of Labor and used by the United States Social Security Administration to provide a cost-of-living adjustment for social security benefit payments payable beginning in January of the next year.
Sec. 6A.02.  ADJUDICATION OF CERTAIN CHALLENGES.  (a)  The Texas Supreme Court has exclusive and original jurisdiction over a challenge to the constitutionality under the Texas Constitution of Section 6A.01 of this article.  An action under this section is authorized to the full extent permitted by Section 3, Article V, Texas Constitution.  The Texas Supreme Court may issue any injunctive, declaratory, or equitable relief the court deems appropriate or necessary to effectuate the court's mandamus jurisdiction in connection with a challenge under this section.
(b)  Any action brought under this section must be filed not later than the 90th day after the date the board adopts a rule under Section 6A.01 of this article.
(c)  If an action brought under this section is timely filed, the board may not enforce or otherwise administer any rules adopted pursuant to Section 6A.01 of this article during the pendency of the action.
PART 8. TREATMENT UNDER FEDERAL AND STATE LAW

Sec. 8.01.  QUALIFICATION UNDER FEDERAL TAX LAW.  (a)  The plans within the pension system and the assets of the fund are intended to qualify as a governmental plan under Sections 401 and 414(d) of the code, be exempt from federal income taxes under Section 501(a) of the code, and conform at all times to applicable requirements of law, regulations, and orders of duly constituted federal governmental authorities.  Accordingly, if any provision of this article is subject to more than one construction, one of which will permit the qualification of a plan that is within the pension system, that construction that will permit the plan to qualify and conform will prevail.
(b)  The plans within the pension system as well as the assets of the fund shall be maintained for the exclusive benefit of members and their beneficiaries.  At no time before the termination of all the plans within the pension system and the satisfaction of all liabilities with respect to members and their beneficiaries under all plans shall any part of the principal or interest from the assets of the fund be used for or diverted to purposes other than the exclusive benefit of the members and beneficiaries.
(c)  Notwithstanding any other provisions of this article, the annual benefit provided with respect to any member in any limitation year may not exceed the amount permitted by Section 415(b) of the code for the limitation year, and the sum of the member contributions and all other annual additions for any limitation year may not exceed the amount permitted under Section 415(c) of the code for the limitation year.  If the aggregated annual benefit or aggregated annual additions under any qualified plans created under this article and any other defined benefit plan or plans maintained by the city would otherwise exceed the limitations of Section 415 of the code, the required reductions in benefits or contributions shall first be made to the extent possible from the other plan or plans.  The limitations referenced in this subsection shall be adjusted annually in accordance with Section 415(d) of the code and any adjustment to benefits applies to the benefits of active and terminated members and applies without regard to whether a terminated member is a pensioner.
(c-1)  Notwithstanding anything contained in this section to the contrary, the limitations, adjustments, and other requirements prescribed by this section shall at all times be computed in the manner most favorable to the affected members, to the extent permitted by guidelines issued by the Internal Revenue Service.  If any provision of Section 415 of the code is repealed or is not enforced by the Internal Revenue Service, that provision may not reduce the benefits of any member after the effective date of the repeal of the provision or during the period in which the provision is not enforced.
(c-2)  Any benefit reductions that are required to be made under this section shall be applied to reduce the monthly benefit that would otherwise have been payable to the member, unless the value of the member's DROP account accrued under Section 6.14 of this article exceeds the amount that may be paid under this section.  If the value of the DROP account exceeds the value of the payments that may be made under this section, the member shall receive a lump-sum payment from the account of the maximum amount that may be paid under this section and the payment shall permanently reduce the benefits the member would otherwise have been entitled to receive under the combined pension plan.
(d)  A member's retirement pension may not begin later than April 1 of the year after the later of the year in which the member leaves active service or the year in which the member attains age 70-1/2 and must at all times comply with the requirements of Section 401(a)(9) of the code.
(e)  Any person who receives any distribution from any plan within the pension system that is an eligible rollover distribution as defined by Section 402(f)(2)(A) of the code is entitled to have that distribution transferred directly to another eligible retirement plan as defined by Section 402(c)(8)(B) of the code of the person's choice on providing direction regarding that transfer to the executive director in accordance with procedures established by the executive director.
(e-1)  If an eligible rollover distribution described by Subsection (e) of this section is to a designated beneficiary who is not the spouse or former spouse of the member, the transfer may only be to an individual retirement account or an individual retirement annuity.
(f)  For the 2017 calendar year, the annual compensation taken into account for any purpose under the combined pension plan may not exceed $400,000 for an eligible participant or $270,000 for an ineligible participant.  For a Group A member the term "annual compensation" means the aggregate of the member's base pay.  For a Group B member the term "annual compensation" means the aggregate of the member's computation pay for any given plan year.  These dollar limits shall be adjusted from time to time in accordance with guidelines provided by the secretary of the treasury.  For purposes of this subsection, an:
(1)  "eligible participant" means any person who first became a member of the pension system before January 1, 1996; and 
(2)  "ineligible participant" means any member who is not an eligible participant.
(g)  For purposes of Subsection (h) of this section, "normal retirement age" means the earlier of:
(1)  the attainment of 50 years of age on or before September 1, 2017, and completion of at least five years of pension service;
(2)  the attainment of 58 years of age after September 1, 2017, and completion of at least five years of pension service; or
(3)  completion of 20 years of pension service. 
(h)  The retirement benefit earned by a member is nonforfeitable:
(1)  on attainment of normal retirement age, if not already nonforfeitable; or
(2)  to the extent the benefit is funded, if not already nonforfeitable, on the termination or partial termination of the combined pension plan or the complete discontinuance of city contributions to the fund.
(i)  In accordance with Section 401(a)(8) of the code, forfeitures arising under the combined pension plan may not be used to increase the benefits any member would otherwise receive under the terms of the plan.  Forfeitures may be used first to reduce administrative expenses, then to reduce required city contributions.
(j)  Subject to procedures adopted by the board, the pension system shall accept an eligible rollover distribution from another eligible retirement plan as defined by Section 402(f)(2)(B) of the code as payment of all or a portion of any payment a member is permitted to make to the pension system for past pension service credit.  The pension system shall separately account for any after-tax contributions transferred from any plan under this subsection.
Sec. 8.02.  EXCESS BENEFIT PLAN FOR POLICE OFFICERS AND FIRE FIGHTERS.  The board may by rule establish and administer a separate qualified governmental excess benefit arrangement and associated trust for the arrangement in accordance with Section 415(m) of the code.
Sec. 8.03.  EXEMPTION OF BENEFITS FROM JUDICIAL PROCESS OR ALIENATION.  (a)  A portion of the fund or benefit or amount awarded to any primary party, qualified survivor, beneficiary of a member's DROP account, excess benefit participant, or survivor of an excess benefit participant under this article may not be held, seized, taken, subjected to, or detained or levied on by virtue of any execution, attachment, garnishment, injunction, or other writ, order, or decree, or any process or proceedings issued from or by any court for the payment or satisfaction, in whole or in part, of any debt, damage, claim, demands, or judgment against any person entitled to benefits from any plan within the pension system or from the excess benefit plan.  The fund and the excess benefit plan or any claim against the fund or the excess benefit plan may not be directly or indirectly assigned or transferred, and any attempt to transfer or assign the fund or the excess benefit plan or a claim against the fund or the excess benefit plan is void.
(b)  A benefit under any plan created or existing pursuant to this article or Article 6243a is subject to division pursuant to the terms of a qualified domestic relations order.  The executive director shall determine the qualifications of a domestic relations order according to a uniform, consistent procedure approved by the board.  The total benefit payable to a primary party or to an alternate payee under a qualified domestic relations order may not actuarially exceed the benefits to which a primary party would be entitled in the absence of the qualified domestic relations order.  In calculating the alternate payee's benefits under a qualified domestic relations order, the interest rate is the rate used by the pension system's actuary in the actuarial evaluation for that year, except that the minimum interest rate for this purpose is the minimum required by Section 414 of the code.
(c)  This section does not preclude:
(1)  the payment of death benefits to a trust for certain children of a primary party pursuant to Section 6.06(n) of this article;
(2)  the withholding of federal taxes from pension benefits;
(3)  the recovery by the board of overpayments of benefits previously made to any person;
(4)  the direct deposit of benefit payments to an account in a bank, savings and loan association, credit union, or other financial institution, provided the arrangement is not an alienation;
(5)  under any policy adopted by the board and uniformly applied to voluntary arrangements entered into by a primary party or qualified survivor, any voluntary and revocable arrangement entered into by a pensioner or a qualified survivor that permits the withholding and direct payment of health care or life insurance premiums or similar payments from the monthly benefit payments; or
(6)  an assignment of the distribution from an annuitized DROP account to a third party under Section 6.14(e-3)(1) of this article.
(d)  For purposes of Subsection (c) of this section, an attachment, garnishment, levy, execution, or other legal process is not considered a voluntary arrangement.