Okla. Stat. tit. 70, § 70-17-105.2: Partial lump-sum payment and reduced annuity

A. A member who is eligible to retire with at least thirty (30)

years of creditable service may elect to receive a partial lump-sum

payment on the date of retirement and a reduced annuity. The

partial lump-sum payment shall be an amount equal to the unreduced

retirement benefit, which shall be referred to as the “Maximum

Retirement Allowance” for purposes of this section, which would have

been paid over a period of twelve (12), twenty-four (24) or thirty-

six (36) months, had the lump-sum option not been elected. Once the

payout amount is elected, a reduced Maximum Retirement Allowance is

then calculated using factors adopted by the Board of Trustees based

upon the System’s actuarial expected rate of return and the member’s

age at retirement and the payout option (twelve (12), twenty-four

(24), or thirty-six (36) months) elected. This reduced Maximum

Retirement Allowance shall also be reduced in accordance with any

retirement options the member has elected pursuant to Section 17-105

of Title 70 of the Oklahoma Statutes.

B. The partial lump-sum payment, pursuant to this section,

shall be paid in a check separate from the regular monthly

retirement benefit. The total amount of the partial lump-sum

payment shall be deducted from the member’s account balance

consisting of the employee contributions plus interest for purposes

of determining unused contributions remaining in the account. The

member may elect to rollover the taxable portion of the partial

lump-sum payment to an eligible retirement plan or individual

retirement account (IRA). The nontaxable portion of the partial

lump-sum payment can be rolled over to an IRA or another qualified

retirement plan as allowed by the Internal Revenue Code and

regulations. This partial lump-sum payment shall be subject to

federal income tax in accordance with the Internal Revenue Code

Section 72 and other such Internal Revenue Code sections and

regulations as may be applicable. This partial lump-sum benefit is

subject to the same restrictions for assignment and attachment as

all other retirement benefits. The appropriate portion of the

partial lump-sum distribution will be reported to the Internal

Revenue Service (IRS) as taxable income and appropriate tax

withholdings will be withheld unless the member elects to make a

direct rollover of the taxable portion of the funds. Should the

member have after-tax contributions, a portion of such after-tax

contributions will be allocated to the partial lump-sum payment and

to the remaining annuity on a prorata basis.

C. The partial lump-sum option under this section may be

elected only once by a member and may not be elected by a retiree.

D. The board of trustees shall promulgate any rules necessary

for the implementation of this section.