(1) Pursuant to 19-2-1010 , MCA, the public employees' retirement board (board) must administer the retirement systems under its purview "in a manner required to satisfy the applicable qualification requirements for a qualified governmental plan, as provided in the internal revenue code." The board has received favorable determination letters from the internal revenue service indicating that the retirement systems it administers have met this requirement and are qualified governmental plans under Internal Revenue Code (IRC) sections 401(a) and 414(d) .

(2) The board's primary objective is to maintain the qualified status of the retirement systems it administers. In order to meet this objective, the board must comply with the IRC when determining what constitutes compensation.