(a) A member who has separated from employment with a participating subdivision may submit an application to withdraw the member’s accumulated contributions attributable to service with that subdivision. A withdrawal cancels the person‘s service credit attributable to service with that subdivision on the date the retirement system makes payment of any portion of the member’s accumulated contributions.
(b) Except for a membership terminated under prior law or in accordance with Section 842.109(b), interest is computed on the balance in the member’s individual account in the employees saving fund on January 1 of the year of withdrawal through the month before the month in which the withdrawal occurs.

(c) If a person eligible to receive a withdrawal or another non-periodic distribution elects to have all or a portion of the distribution paid directly to an eligible retirement plan and specifies the plan to which the distribution is to be paid on forms approved by the board of trustees, the retirement system shall make the payment in the form of a direct trustee-to-trustee transfer but is under no obligation to determine whether the other plan in fact is an eligible retirement plan for that purpose.
(d) Notwithstanding Subsection (c), the board of trustees shall adopt rules to administer this section as necessary to maintain the retirement system as a qualified plan under Section 401(a) of the Internal Revenue Code of 1986. The rules may include the adoption of definitions and limitations relating to distributions, eligible recipients, and eligible retirement plans.