Current through March 20, 2024
Authority: IC 5-10.5-4-2
Affected: IC 5-10.2-2-1.5; IC 5-10.4; IC 5-10.5
Sec. 1.
(a)
Notwithstanding any other provisions to the contrary, pursuant to IC
5-10.2-2-1.5(7), the member contributions paid to and retirement benefits paid
from the plan shall be limited to such extent as may be necessary to conform to
the requirements of Section 415 of the Internal Revenue Code for a qualified
governmental pension plan. For purposes of these limitations, the limitation
year shall be the fiscal year.
(b)
The 415(b) limit with respect to any member who at any time has been a member
in any other defined benefit plan as defined in Section 414(j) of the Internal
Revenue Code maintained by the member's employer in this plan shall apply as if
the total benefits payable under all such defined benefit plans in which the
member has been a member were payable from one (1) plan.
(c) The 415(c) limit with respect to any
member who at any time has been a member in any other defined contribution plan
as defined in Section 414(i) of the Internal Revenue Code maintained by the
member's employer in this plan shall apply as if the total annual additions
under all such defined contribution plans in which the member has been a member
were payable from one (1) plan.
(d)
Before July 1, 1995, a member may not receive an annual benefit that exceeds
the limits specified in Section 415(b) of the Internal Revenue Code, subject to
the applicable adjustments in that section. On and after July 1, 1995, a member
may not receive an annual benefit that exceeds the dollar amount specified in
Section 415(b)(1)(A) of the Internal Revenue Code, subject to the applicable
adjustments in Section 415(b) of the Internal Revenue Code and subject to any
additional limits that may be specified in the retirement system. In no event
shall a member's benefit payable under the plan in any limitation year be
greater than the limit applicable at the annuity starting date, as increased in
subsequent years pursuant to Section 415(d) of the Internal Revenue Code and
the regulations thereunder.
(e) For
purposes of Section 415(b) of the Internal Revenue Code, the "annual benefit"
means a benefit payable annually in the form of a straight life annuity (with
no ancillary benefits) without regard to the benefit attributable to after-tax
employee contributions (except pursuant to Section 415(n) of the Internal
Revenue Code) and to rollover contributions (as defined in Section 415(b)(2)(A)
of the Internal Revenue Code). The "benefit attributable" shall be determined
in accordance with Treasury Regulations.
(f) If the benefit under the plan is other
than the form specified in subsection (e), then the benefit shall be adjusted
so that it is the equivalent of the annual benefit, using factors prescribed in
Treasury Regulations.
(1) If the form of
benefit without regard to the automatic benefit increase feature is not a
straight life annuity or a qualified joint and survivor annuity, then the
preceding sentence is applied by either reducing the Section 415(b) of the
Internal Revenue Code limit applicable at the annuity starting date or
adjusting the form of benefit to an actuarially equivalent amount (determined
using the assumptions specified in Treasury Regulation Section
1.415(b)-1(c)(2)(ii)) that takes into account the additional benefits under the
form of benefit as follows:
(2) For
a benefit paid in a form to which Section 417(e)(3) of the Internal Revenue
Code does not apply (a monthly benefit), the actuarially equivalent straight
life annuity benefit that is the greater of (or the reduced limit applicable at
the annuity starting date which is the lesser of when adjusted in accordance
with the following assumptions):
(A) the
annual amount of the straight life annuity (if any) payable to the member under
the plan commencing at the same annuity starting date as the form of benefit to
the member; or
(B) the annual
amount of the straight life annuity commencing at the same annuity starting
date that has the same actuarial present value as the form of benefit payable
to the member, computed using a five percent (5%) interest assumption (or the
applicable statutory interest assumption) and:
(i) for years prior to January 1, 2009, the
applicable mortality tables described in Treasury Regulation Section
1.417(e)-1(d)(2) (Revenue Ruling 2001-62 or any subsequent revenue ruling
modifying the applicable provisions of Revenue Ruling 2001-62); and
(ii) for years after December 31, 2008, the
applicable mortality tables described in Section 417(e)(3)(B) of the Internal
Revenue Code (Notice 2008-85 or any subsequent Internal Revenue Service
guidance implementing Section 417(e)(3)(B) of the Internal Revenue Code);
or
(3) For a
benefit paid in a form to which Section 417(e)(3) of the Internal Revenue Code
applies (a lump-sum benefit), the actuarially equivalent straight life annuity
benefit that is the greatest of (or the reduced Section 415(b) of the Internal
Revenue Code limit applicable at the annuity starting date which is the least
of when adjusted in accordance with the following assumptions):
(A) the annual amount of the straight life
annuity commencing at the annuity starting date that has the same actuarial
present value as the particular form of benefit payable, computed using the
interest rate and mortality table, or tabular factor, specified in the plan for
actuarial experience;
(B) the
annual amount of the straight life annuity commencing at the annuity starting
date that has the same actuarial present value as the particular form of
benefit payable, computed using a five-point-five percent (5.5%) interest
assumption (or the applicable statutory interest assumption) and:
(i) for years prior to January 1, 2009, the
applicable mortality table for the distribution under Treasury Regulation
Section 1.417(e)-1(d)(2) (the mortality table specified in Revenue Ruling
2001-62 or any subsequent revenue ruling modifying the applicable provisions of
Revenue Ruling 2001-62); and
(ii)
for years after December 31, 2008, the applicable mortality tables described in
Section 417(e)(3)(B) of the Internal Revenue Code (Notice 2008-85 or any
subsequent Internal Revenue Service guidance implementing Section 417(e)(3)(B)
of the Internal Revenue Code); or
(C) the annual amount of the straight life
annuity commencing at the annuity starting date that has the same actuarial
present value as the particular form of benefit payable (computed using the
applicable interest rate for the distribution under Treasury Regulation Section
1.417(e)-1(d)(3) (the thirty (30) year treasury rate (prior to July 1, 2007,
using the rate in effect for the month prior to retirement, and on and after
July 1, 2007, using the rate in effect for the first day of the plan year with
a one (1) year stabilization period)) and:
(i)
for years prior to January 1, 2009, the applicable mortality tables for the
distribution under Treasury Regulation Section 1.417(e)-1(d)(2) (the mortality
table specified in Revenue Ruling 2001-62 or any subsequent revenue ruling
modifying the applicable provisions of Revenue Ruling 2001-62); and
(ii) for years after December 31, 2008, the
applicable mortality tables described in Section 417(e)(3)(B) of the Internal
Revenue Code (Notice 2008-85 or any subsequent Internal Revenue Service
guidance implementing Section 417(e)(3)(B) of the Internal Revenue Code),
divided by one and five-hundredths (1.05).
(g) For purposes of this section,
the following benefits shall not be taken into account in applying these
limits:
(1) Any ancillary benefit which is not
directly related to retirement income benefits.
(2) That portion of any joint and survivor
annuity that constitutes a qualified joint and survivor annuity.
(3) Any other benefit not required under
Section 415(b)(2) of the Internal Revenue Code and Treasury Regulations
thereunder to be taken into account for purposes of the limitation of Section
415(b)(1) of the Internal Revenue Code.
(h) In the event the member's retirement
benefits become payable before age sixty-two (62), the limit prescribed by this
section shall be reduced in accordance with treasury regulations pursuant to
the provisions of Section 415(b) of the Internal Revenue Code, so that such
limit (as so reduced) equals an annual straight life benefit (when such
retirement income benefit begins) which is equivalent to a one hundred sixty
thousand dollar ($160,000) (as adjusted) annual benefit beginning at age
sixty-two (62).
(1) In the event the member's
benefit is based on at least fifteen (15) years of military service, the
adjustments provided for in subsection (a) shall not apply.
(2) The reductions provided for in subsection
(a) shall not be applicable to preretirement disability benefits or
preretirement death benefits.
(i) The maximum retirement benefits payable
under this subsection (i) to any member who has completed less than ten (10)
years of service shall be the amount determined under subsection (d) as
adjusted under subsection (f) or (h), or both, multiplied by a fraction, the
numerator of which is the number of the member's years of service and the
denominator of which is ten (10). The reduction provided by this subsection (i)
cannot reduce the maximum benefit below ten percent (10%) of the limit
determined without regard to this subsection (i). The reduction provided for in
this subsection shall not be applicable to preretirement disability benefits or
preretirement death benefits.
(j)
Notwithstanding anything in this section to the contrary, the retirement
benefit payable with respect to a member shall be deemed not to exceed the
limit set forth in subsection (j) [this subsection] if the
benefits payable, with respect to such member under this plan and under all
other qualified defined benefit pension plans to which the member's employer
contributes, do not exceed ten thousand dollars ($10,000) for the applicable
limitation year and for any prior limitation year and the employer has not at
any time maintained a qualified defined contribution plan in which the member
participated; provided, however, that if the member has completed less than ten
(10) years of service with the employer, the limit under this subsection (j)
shall be a reduced limit equal to ten thousand dollars ($10,000) multiplied by
a fraction, the numerator of which is the number of the member's years of
service and the denominator of which is ten (10).
(k) Effective on and after July 1, 2009, for
purposes of applying the limits under Section 415(b) of the Internal Revenue
Code (the "Limit") to a member with no lump-sum benefit, the following will
apply:
(1) a member's applicable Limit will be
applied to the member's annual benefit in the member's first limitation year
without regard to any cost of living adjustments under IC 5-10.4;
(2) to the extent that the member's annual
benefit equals or exceeds the Limit, the member will no longer be eligible for
cost of living increases until such time as the benefit plus the accumulated
increases are less than the Limit; and
(3) there after, in any subsequent limitation
year, a member's annual benefit, including any cost of living increases under
IC 5-10.4, shall be tested under the then applicable benefit Limit including
any adjustment to the Section 415(b)(1)(A) of the Internal Revenue Code dollar
limit under Section 415(d) of the Internal Revenue Code, and the regulations
thereunder.
(l) On and
after July 1, 2009, with respect to a member who receives a portion of the
member's annual benefit in a lump sum, a member's applicable limit will be
applied taking into consideration cost of living increases as required by
Section 415(b) of the Internal Revenue Code and applicable Treasury
Regulations.
(m) After-tax member
contributions or other annual additions with respect to a member may not exceed
the lesser of forty thousand dollars ($40,000) (as adjusted pursuant to Section
415(d) of the Internal Revenue Code) or one hundred percent (100%) of the
member's compensation.
(1) Annual additions
are defined to mean the sum (for any year) of employer contributions to a
defined contribution plan, member contributions, and forfeitures credited to a
member's individual account. Member contributions are determined without regard
to rollover contributions and to picked up employee contributions that are paid
to a defined benefit plan.
(2) For
purposes of applying Section 415(c) of the Internal Revenue Code and for no
other purpose, the definition of compensation where applicable will be
compensation actually paid or made available during a limitation year, except
as noted below and as permitted by Treasury Regulation Section 1.415(c)-2, or
successor regulation; provided, however, that member contributions picked up
under Section 414(h) of the Internal Revenue Code shall not be treated as
compensation.
(3) Compensation will
be defined as wages within the meaning of Section 3401(a) of the Internal
Revenue Code and all other payments of compensation to an employee by an
employer for which the employer is required to furnish the employee a written
statement under Sections 6041(d), 6051(a)(3) and 6052 of the Internal Revenue
Code and will be determined without regard to any rules under Section 3401(a)
of the Internal Revenue Code that limit the remuneration included in wages
based on the nature or location of the employment or the services performed
(such as the exception for agricultural labor in Section 3401(a)(2) of the
Internal Revenue Code).
(A) However, for
limitation years beginning after December 31, 1997, compensation will also
include amounts that would otherwise be included in compensation but for an
election under Section 125(a), 402(e)(3), 402(h)(1)(B), 402(k), or 457(b) of
the Internal Revenue Code. For limitation years beginning after December 31,
2000, compensation shall also include any elective amounts that are not
includible in the gross income of the member by reason of Section 132(f)(4) of
the Internal Revenue Code.
(B) For
limitation years beginning on and after July 1, 2009, compensation for the
limitation year shall also include compensation paid by the later of two and
one-half (2 1/2) months after a member's severance from employment or the end
of the limitation year that includes the date of the member's severance from
employment if:
(i) the payment is regular
compensation for services during the member's regular working hours, or
compensation for services outside the member's regular working hours (such as
overtime or shift differential), commissions, bonuses or other similar
payments, and, absent a severance from employment, the payments would have been
paid to the member while the member continued in employment with the employer;
or
(ii) the payment is for unused
accrued bona fide sick, vacation, or other leave that the member would have
been able to use if employment had continued. However, compensation under
subsection (m)(3)(B) this clause which is received from the employer in
contemplation of the member's retirement, including severance pay, termination
pay, retirement bonus, or commutation of unused sick leave or personal leave,
shall be limited to no more than two thousand dollars ($2,000);
(iii) payments pursuant to a nonqualified
unfunded deferred compensation plan, but only if the payments would have been
paid to the member at the same time if the member had continued employment with
the employer and only to the extent that the payment is includible in the
member's gross income. Any payments not described in this clause are not
considered compensation if paid after severance from employment, even if they
are paid within two and one-half (2 1/2) months following severance from
employment, except for payments to the individual who does not currently
perform services for the employer by reason of qualified military service
(within the meaning of Section 414(u)(1) of the Internal Revenue Code) to the
extent these payments do not exceed the amounts the individual would have
received if the individual had continued to perform services for the employer
rather than entering qualified military service. An employee who is in
qualified military service (within the meaning of Section 414(u)(1) of the
Internal Revenue Code) shall be treated as receiving compensation from the
employer during such period of qualified military service equal to the
compensation the employee would have received during such period if the
employee were not in qualified military service, determined based on the rate
of pay the employee would have received from the employer but for the absence
during the period of qualified military service, or, if the compensation the
employee would have received during such period was not reasonably certain, the
employee's average compensation from the employer during the twelve (12) month
period immediately preceding the qualified military service (or, if shorter,
the period of employment immediately preceding the qualified military
service).
(C) Back pay,
within the meaning of Treasury Regulation Section 1.415(c)-2(g)(8), shall be
treated as compensation for the limitation year to which the back pay relates
to the extent the back pay represents wages and compensation that would
otherwise be included under this definition.
(4) For limitation years beginning on or
after July 1, 2009, a member's compensation for purposes of subsection (m) this
subsection shall not exceed the annual limit under Section 401(a)(17) of the
Internal Revenue Code.
(n) Any repayment of contributions (including
interest thereon) to the plan with respect to an amount previously refunded
upon a forfeiture of service credit under the plan or another governmental plan
maintained by the retirement system shall not be taken into account for
purposes of Section 415 of the Internal Revenue Code, in accordance with
applicable treasury regulations.
(o) Reduction of benefits and/or
contributions to all plans, where required, shall be accomplished by first
reducing the member's benefit under any defined benefit plans in which the
member participated, such reduction to be made first with respect to the plan
in which the member most recently accrued benefits and thereafter in such
priority as shall be determined by the plan and the plan administrator of such
other plans, and next, by reducing or allocating excess forfeitures for defined
contribution plans in which the member participated, such reduction to be made
first with respect to the plan in which the member most recently accrued
benefits and thereafter in such priority as shall be established by the plan
and the plan administrator for such other plans provided, however, that
necessary reductions may be made in a different manner and priority pursuant to
the agreement of the plan and the plan administrator of all other plans
covering such member.
(p) Effective
for permissive service credit contributions made in limitation years beginning
after December 31, 1997, if a member makes one (1) or more contributions to
purchase permissive service credit under the plan, then the requirements of
Section 415(n) of the Internal Revenue Code will be treated as met only if:
(1) the requirements of Section 415(b) of the
Internal Revenue Code are met, determined by treating the accrued benefit
derived from all such contributions as an annual benefit for purposes of
Section 415(b) of the Internal Revenue Code; or
(2) the requirements of Section 415(c) of the
Internal Revenue Code are met, determined by treating all such contributions as
annual additions for purposes of Section 415(c) of the Internal Revenue
Code.
(3) For purposes of applying
this section, the system will not fail to meet the reduced limit under Section
415(b)(2)(C) of the Internal Revenue Code solely by reason of this subdivision
and will not fail to meet the percentage limitation under Section 415(c)(1)(B)
of the Internal Revenue Code solely by reason of this section.
(4) For purposes of this section, the term
"permissive service credit" means service credit:
(A) recognized by the system for purposes of
calculating a member's benefit under the system;
(B) which such member has not received under
the system; and
(C) which such
member may receive only by making a voluntary additional contribution, in an
amount determined under the system, which does not exceed the amount necessary
to fund the benefit attributable to such service credit.
(D) Effective for permissive service credit
contributions made in limitation years beginning after December 31, 1997, such
term may include service credit for periods for which there is no performance
of service, and, notwithstanding clause (B), may include service credited in
order to provide an increased benefit for service credit which a member is
receiving under the system.
(5) The system will fail to meet the
requirements of this section if:
(A) more than
five (5) years of nonqualified service credit are taken into account for
purposes of this clause; or
(B) any
nonqualified service credit is taken into account under this section before the
member has at least five (5) years of participation under the system.
(6) For purposes of subdivision
(5), effective for permissive service credit contributions made in limitation
years beginning after December 31, 1997, the term "nonqualified service credit"
means permissive service credit other than that allowed with respect to:
(A) service (including parental, medical,
sabbatical, and similar leave) as an employee of the government of the United
States, any state or political subdivision thereof, or any agency or
instrumentality of any of the foregoing (other than military service or service
for credit which was obtained as a result of a repayment described in Section
415(k)(3) of the Internal Revenue Code);
(B) service (including parental, medical,
sabbatical, and similar leave) as an employee (other than as an employee
described in clause (A)) of an education organization described in Section
170(b)(1)(A)(ii) of the Internal Revenue Code which is a public, private, or
sectarian school which provides elementary or secondary education (through
grade 12), or a comparable level of education, as determined under the
applicable law of the jurisdiction in which the service was
performed;
(C) service as an
employee of an association of employees who are described in clause (A);
or
(D) military service (other than
qualified military service under Section 414(u) of the Internal Revenue Code)
recognized by the system.
(E) In
the case of service described in clause (A), (B), or (C), such service will be
nonqualified service if recognition of such service would cause a member to
receive a retirement benefit for the same service under more than one (1)
plan.
(7) In the case of
a trustee-to-trustee transfer after December 31, 2001, to which Section
403(b)(13)(A) of the Internal Revenue Code or Section 457(e)(17)(A) of the
Internal Revenue Code applies (without regard to whether the transfer is made
between plans maintained by the same employer):
(A) the limitations of subdivision (5) will
not apply in determining whether the transfer is for the purchase of permissive
service credit; and
(B) the
distribution rules applicable under federal law to the system will apply to
such amounts and any benefits attributable to such amounts.
(8) For an eligible member, the
limitation of Section 415(c)(1) of the Internal Revenue Code shall not be
applied to reduce the amount of permissive service credit which may be
purchased to an amount less than the amount which was allowed to be purchased
under the terms of a plan as in effect on August 5, 1997. For purposes of this
subdivision, an eligible member is an individual who first became a member in
the system before July 1, 1999.
Transferred from the Board of Trustees of the Indiana State
Teachers' Retirement Fund ( 550 IAC 4.5-1-1 ) to the Board of Trustees of the
Indiana Public Retirement System ( 35 IAC 16-1-1 ) by P.L. 23-2011, SECTION 22,
effective July 1, 2011.