Current through March 20, 2024
004.01 Maximum permissible benefit
Maximum permissible benefit: the annual benefit payable under
a defined benefit plan in any limitation year shall not exceed the defined
benefit dollar limitation applicable at the annuity starting date. The "defined
benefit dollar limitation" is $195,000, as adjusted, effective January 1st of
each year, under section 415(d) of the Code in such manner as the United States
Secretary of the Treasury shall prescribe, and payable in the form of a
straight life annuity without regard to the benefit attributable to the
after-tax employee contributions (except pursuant to section 415(n) of the
Code) and to rollover contributions, and subject to the applicable adjustments
in 004.02. The defined benefit dollar limitation as adjusted under section
415(d) of the Code will apply to limitation years ending with or within the
calendar year for which the adjustment applies. If the benefit under the
defined benefit plan is other than a straight life or qualified joint and
survivor annuity, the benefit shall be adjusted to an actuarially equivalent
straight life annuity as provided in
004.01(a) or
004.02(b)below before applying the limitations of this 004.
004.01(a) For a benefit paid in a form to
which section 417(e) of the Code does not apply (monthly benefit), the
actuarially equivalent straight life annuity benefit is the greater of:
(1) the annual amount of the straight life
annuity, if any, payable under the defined benefit plan commencing at the same
annuity starting date as the form of benefit that is payable to the member
computed using the interest rate assumption and mortality table specified in
the following sections as applicable to the defined benefit plan: §§
24-701,
79-902,
81-2014;
or
(2) 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 that is payable to the
member, computed using a five percent (5%) interest assumption (or the
applicable statutory interest assumption) and the applicable mortality table
described in Treasury Regulation section
1.417(e)-1(d)(2)
that is effective for that annuity starting date.
004.01(b) For a benefit paid in a form to
which section 417(e)(3) of the Code applies (lump sum), the actuarially
equivalent straight life annuity benefit is the greater of:
(1) 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 that is payable to the member,
computed using the interest rate assumption and mortality table specified in
the following sections as applicable to the defined benefit plan: §§
24-701,
79-902,
81-2014;
(2) 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 that is payable to the member,
computed using a 5.5 percent ( 5.5%) interest rate assumption (or the
applicable statutory interest assumption) and the applicable mortality table
described in Treasury Regulation section
1.417(e)-1(d)(2)
that is effective for that annuity starting date; or
(3) 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 that is payable to the member
computed using the applicable interest rate for the distribution under Treasury
Regulation section
1.417(e)-1(d)(3)
(using the rate in effect in effect for the first day of the plan year with a
one-year stabilization period) and the applicable mortality table that is
effective for that annuity starting date under Treasury Regulation section
1.417(e)-1(d)(2),
divided by 1.05.
004.02 Adjustments to defined benefit dollar
limitation
Adjustments to defined benefit dollar limitation: The
"defined benefit dollar limitation" to be used in determining the "maximum
permissible benefit" under the defined benefit plans shall be adjusted where
required, as provided in
004.02(a) and, if
applicable, in
004.02(b) or
004.02(c)below).
004.02(a) Adjustments for less than ten (10)
years of participation. If the member has fewer than ten (10) years of
participation in a defined benefit plan, the defined benefit dollar limitation
shall be multiplied by a fraction, (i) the numerator of which is the number of
years (or part thereof, but not less than one) of participation in the plan and
(ii) the denominator of which is ten (10). The foregoing reduction required by
this 004.02(a) shall not be applicable to pre-retirement disability benefits or
pre-retirement death benefits provided by the defined benefit plan.
004.02(b) Adjustments for benefits commencing
prior to age sixty-two (62). If the benefit of a member begins prior to age 62,
the defined benefit dollar limitation applicable to the member at such earlier
age is an annual benefit payable in the form of a straight life annuity
beginning at the earlier age that is the actuarial equivalent of the defined
benefit dollar limitation applicable to the member at age 62 (adjusted under
004.02(a) above,
if required). The defined benefit dollar limitation applicable at an age prior
to age 62 is determined as the lesser of (i) the actuarial equivalent (at such
age) of the defined benefit dollar limitation (as adjusted under
004.02(a), if
required) computed using the interest rate and mortality table (or other
tabular factor) specified in the following sections of as applicable to the
defined benefit plans: §§
24-701,
79-902,
81-2014, and (ii)
the actuarial equivalent (at such age) of the defined benefit dollar limitation
(as adjusted under
004.02(a), if
required) computed using a five percent (5%) interest rate and the applicable
mortality table as defined in Treasury Regulation section
1.417(e)-1(d)(2)
that is effective for the annuity starting date. Any decrease in the defined
benefit dollar limitation determined in accordance with
004.02(b) shall
not reflect a mortality decrement if benefits are not forfeited upon the death
of the member. If any benefits are forfeited upon death, the full mortality
decrement is taken into account.
004.02(c) Adjustments for benefits commencing
after age sixty-five (65). If the benefit of a member begins after the member
attains age 65, the defined benefit dollar limitation applicable to the member
at the later age is the annual benefit payable in the form of a straight life
annuity beginning at the later age that is actuarially equivalent to the
defined benefit dollar limitation applicable to the member at age 65 (adjusted
under
004.02(a) above,
if required). The actuarial equivalent of the defined benefit dollar limitation
applicable at an age after age 65 is determined as (i) the lesser of the
actuarial equivalent (at such age) of the defined benefit dollar limitation (as
adjusted under
004.02(a), if
required) computed using the interest rate and mortality table (or other
tabular factor) specified in the following sections as applicable to the
defined benefit plans: §§
24-701,
79-902,
81-2014
and (ii) the actuarial equivalent (at such age) of the defined benefit dollar
limitation computed using a five percent (5%) interest rate assumption and the
applicable mortality table as defined in Treasury Regulation section
1.417(e)-1(d)(2)
that is effective for the annuity starting date. For these purposes, mortality
between age 65 and the age at which benefits commence shall be
ignored.
004.03 Benefit
Increases
Benefit Increases: Benefit increases resulting from the
increase in the limitations of section 415(b) of the Code shall be provided to
all current and former members (with benefits limited by section 415(b)) who
have an accrued benefit under the defined benefit plans immediately prior to
the effective date of this section (other than an accrued benefit resulting
from a benefit increase solely as a result of the increases in limitations
under section 415(b)).
004.04 Minimum benefit
Minimum benefit: Notwithstanding anything in this section to
the contrary, the benefit otherwise accrued or payable to a member by a defined
benefit plan will be deemed to not exceed the "maximum permissible benefit"
if:
004.04(a) the benefit payable for
a limitation year under any form of benefit with respect to the member under
all defined benefit plans does not exceed $10,000 multiplied by the a fraction
(i) the numerator of which is the number of years (or part thereof, but not
less than one) of service with the employer and (ii) the denominator of which
is ten (10); and
004.04(b) the
employer has not at any time maintained a defined contribution plan in which
the member participated (not considering mandatory employee 5. contributions
under a defined benefit plan, individual medical accounts under section 401(h)
of the Code or postretirement medical benefits under section 419A(d)(1) of the
Code as a separate defined contribution plan).
004.05 Increase in Compensation Limit for
Members hired on or after July 1, 1996
004.05(a) Increase in limit. The annual
compensation of each member hired on or after July 1, 1996 taken into account
in determining benefit accruals in any plan year beginning after December 31,
2010 shall not exceed $245,000. Annual compensation means compensation during
the plan year or such other consecutive twelve (12) month period over which
compensation is otherwise determined under the plan (the determination period).
For purposes of determining benefit accruals in a plan year beginning after
December 31, 2010, compensation for any prior determination period shall be
limited as provided by the employer in the adoption agreement.
004.05(b) Cost-of-living adjustment. The
$245,000 limit on annual compensation in paragraph 004.04(a)shall be adjusted
for cost-of-living increases in accordance with section 401(a)(17)(B) of the
Code. The cost-of-living adjustment in effect for a calendar year applies to
annual compensation for the determination period that begins with or within
such calendar year.
004.06 Increase in Compensation Limit for
Members hired on or before June 30, 1996
004.06(a) The annual compensation of each
member hired on or before June 30, 1996 taken into account in determining
benefit accruals in any plan year beginning after December 31, 2001, shall not
exceed the amount which was allowed to be taken into account under the
retirement plans as in effect on July 1, 1993, shall not exceed $360,000.
Annual compensation means compensation during the plan year or such other
consecutive twelve (12) month period over which compensation is otherwise
determined under the plan (the determination period). For purposes of
determining benefit accruals in a plan year beginning after December 31, 2001,
compensation for any prior determination period shall be limited as provided by
the employer in the adoption agreement.
004.06(b) Cost-of-living adjustment; The
limit set forth in paragraph (a) on annual compensation shall be adjusted for
cost-of-living increases in accordance with section 401(a)(17)(B) of the Code.
The cost-of-living adjustment in effect for a calendar year applies to annual
compensation for the determination period that begins with or within such
calendar year.
004.07
Compensation Limit for Prior Determination Periods
Compensation Limit for Prior Determination Periods: In
determining benefit accruals in plan years beginning after December 31, 2010,
the annual compensation limit in paragraph (a) of Section 004.04, Increase in
Compensation Limit, for determination periods beginning before January 1, 2011,
shall be $245,000.
