Terms used in this chapter mean: (1) "Accrued benefit," on any date, the amount of monthly retirement benefit under the normal form accrued by an active participant as of any date and payable at normal retirement date, or any later date; (2) "Active participant," an eligible employee who is actively participating as a Class D member of the South Dakota Retirement System; (3) "Adjustment factor," the annual cost of living adjustment determined in § 3-12C-704 ; (4) "Alternate payee," any spouse, former spouse, child, or other dependent of a participant who is recognized by a qualified domestic relations order as having a right to receive all, or a portion of, the benefits payable as a Class D member of the South Dakota Retirement System; (5) "Annuity contract," an annuity contract for guaranteed benefits, for the investment of contributions in separate accounts, and for the payment of benefits under the plan provided in this chapter; (6) "Average compensation," on any given date, the average of an employee's monthly compensation for those five consecutive compensation dates, or all compensation dates if less than five, that give the highest average out of all compensation dates. The term includes compensation dates within the period beginning on the participant's entry date and ending on the date of determination. In computing average compensation, the plan must exclude compensation dates in which the employee terminates employment with the employer and compensation dates in which an employee performs no hours of service; (7) "Beneficiary," any person named by a participant to receive any benefits when the participant dies; (8) "Compensation date," the July first immediately before an employee's entry date and the same date of each following year in which the employee is an active participant; (9) "Contingent participant," a person named by the participant to receive a lifetime benefit after the participant's death in accordance with a survivorship life annuity; (10) "Dependent child," any natural born child, legally adopted child, stepchild, or foster child of the participant, if the child is unmarried, is not in the Armed Forces of any country, has not attained age nineteen or older, or age twenty-four for a child who is attending school on a full-time basis, and, before the participant’s death, was dependent upon the participant for principal support and maintenance, and, if a stepchild or foster child, resided in the participant’s household. School vacation periods during any calendar year, that interrupt but do not terminate what otherwise would have been a continuous course of study in that calendar year, must be considered a part of school attendance on a full-time basis. A dependent child may also include any child born after the participant’s death; (11) "Designated beneficiary," the person who is designated by the participant, or the participant’s surviving spouse, as the beneficiary of the participant’s interest as a Class D member and who is the designated beneficiary under 26 U.S.C. §§ 401(a)(9) and 26 C.F.R. § 1.401(a)(9)-4; (12) "Direct rollover," a payment by the system to the eligible retirement plan specified by the distributee; (13) "Distributee," an employee or former employee. In addition, the employee's or former employee's surviving spouse and the employee's or former employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in 26 U.S.C. § 414(p), are distributees with regard to the interest of the spouse or former spouse. A distributee includes the employee's or former employee's nonspouse designated beneficiary, in which case, the distribution can only be transferred to a traditional individual retirement account or Roth individual retirement account established on behalf of the nonspouse designated beneficiary and that must be treated as an inherited individual retirement account pursuant to the provisions of 26 U.S.C. § 402(c)(11); (14) "Eligible employee," any employee of the employer whose employment commenced prior to July 1, 1980, including an employee who was on probationary status by this date, and excluding the following: (a) An employee who is not employed on a full-time permanent status. Full-time permanent status means an employee works an average of twenty hours per week, or in the opinion of the employer, can be expected to work an average of twenty hours per week over the next year; (b) An employee who has elected to become a Class A member of the South Dakota Retirement System on or after July 1, 1980, and before July 1, 1981; and (c) An employee who retired before January 1, 1987; (15) "Employee," a person who is employed by the employer or any other employer required to be aggregated with the employer under 26 U.S.C. § 414(b), (c), (m), or (o). The term includes any person receiving differential wage payments; (16) "Employer," the South Dakota Department of Labor and Regulation, Job Service, Reemployment Assistance formerly known as the Unemployment Insurance Division, and Office of Administrative Services; (17) "Entry date," the date an employee first enters the plan as an active participant; (18) "Inactive participant," a former active participant who has an accrued benefit; (19) "Internal Revenue Code," or "Code," as defined in § 3-12C-101 ; (20) "Involuntary termination of employment," the date a participant ceases to be an employee due to involuntary termination of employment which is against the employee's will or without the employee's consent. This term excludes for cause on the charges of misconduct and delinquency, and includes reduction in force, abolishment of a position, or liquidation of an office or agency; (21) "Late retirement date," the first day of any month after a participant's normal retirement date and on which retirement benefits begin. If a participant continues to work for the employer after the normal retirement date, the participant's late retirement date shall be the earliest first day of the month on or after the date of severance from employment; (22) "Leased employee," any person other than an employee of the employer who, pursuant to an agreement between the employer and any other person, has performed services for the employer on a substantially full-time basis for a period of at least one year, and the services are performed under primary direction or control by the employer. Contributions or benefits provided by the leasing organization to a leased employee, which are attributable to service performed for the employer, shall be treated as provided by the employer. A leased employee is considered an employee of the employer if: (a) The employee previously worked for the employer, but the position was moved to the leasing organization and not terminated; and (b) Leased employees do not constitute more than twenty percent of the employer's nonhighly compensated work force; (23) "Mandatory distribution," a distribution to a participant that is made without the participant’s consent and is made to the participant before the participant attains the older of age sixty-two or normal retirement age; (24) "Monthly compensation," for any compensation date, an employee's monthly compensation on that date. If an employee is not an employee on the compensation date, the employee's compensation on the employee's latest entry or reentry date, whichever applies, is treated as the employee's compensation on the compensation date; (25) "Monthly date," each yearly date and the same day of each following month during the plan year beginning on the yearly date; (26) "Normal form," a single life annuity with certain period, where the certain period is ten years; (27) "Participant," either an active participant or an inactive participant; (28) "Plan," the plan as provided in this chapter; (29) "Plan year," a consecutive twelve-month period beginning on a yearly date and ending on the day before the next yearly date. If the yearly date changes, the result is a short plan year; (30) "Present value," the actuarial equivalent of another benefit, expressed as a single sum amount; (31) "Prior plan," the retirement plan of the employer before December 1, 1984; (32) "Reentry date," the date a former active participant reenters the plan; (33) "Required contribution account," the total of a participant's required contributions and, on and after January 1, 1990, the participant's pick-up contributions, with interest. Contributions previously paid to the participant and any interest that would have been credited on those contributions, are excluded. Interest must be credited in accordance with § 3-12C-108 . Interest must be credited on each required contribution from the end of the plan year for which it was made until the monthly date on or before the date of determination. Interest must be credited from December 1, 1984, on contributions made and interest credited; (34) "Required contribution accrued benefit," the amount of monthly retirement benefit under the normal form accrued by an active participant as of any date and payable at the normal retirement date derived from the participant's required contributions; (35) "Retirement date," the date a retirement benefit will begin and is a participant's early, normal, or late retirement date; (36) "Severance from employment," notwithstanding the provisions of § 3-13C-17, an employee has ceased to be an employee. An employee does not have a severance from employment if, in connection with a change of employment, the employee's new employer maintains this plan with respect to the employee. Severance from employment must have occurred in accordance with the applicable regulations; (37) "Spouse," a person the participant is continuously married to at least throughout the one-year period ending on the date of death; (38) "South Dakota Retirement System," or "system," the system created in chapter 3-12C and the administrator of the plan; (39) "Vested accrued benefit," on any date, the participant’s accrued benefit resulting from employer contributions multiplied by the participant's vesting percentage on that date, plus the participant's required contribution accrued benefit; (40) "Yearly date," August 1, 1961, and each following August first through August 1, 1969, and each following July first; (41) "Years of service," the total of an employee's credited service, expressed as whole years and fractional parts of a year. A period of military duty is included as service with the employer to the extent it has not already been credited.