Current through Register Vol. 63, No. 9, September 1, 2024
(1)
Applicable Law. This administrative rule shall be construed consistently with
the requirements of the Internal Revenue Code (IRC) Section 415(b) and the
Treasury regulations and Internal Revenue Service rulings and other
interpretation issued thereunder.
(2) Annual Benefit Limitation. The benefits
payable to any member for a calendar year, when expressed as an annual benefit,
shall not exceed the applicable dollar limitation for that year.
(3) Applicable Dollar Limitation. For
purposes of this rule, the "applicable dollar limitation" for each calendar
year is the limitation in effect under IRC Section 415(b)(1)(A), with the
adjustment described as follows:
(a)
Cost-of-Living Adjustments. The limitation under IRC Section 415(b)(1)(A) shall
be adjusted for cost of living in accordance with IRC Section 415(d) and
Treasury Regulation Section 1.415(a)-1(d)(3)(v)(C). The adjustment applies to
the applicable dollar limitation for years:
(A) Between separation and retirement of a member; and
(B) After the member's effective retirement
date.
(b) Reduction for
Retirement Before Age 62. Except as otherwise provided in the paragraphs (A),
(B), and (C) of this subsection, if the member's benefit begins before the
member reaches 62 years of age, the applicable dollar limitation shall be
adjusted as provided for in IRC Section 415(b)(2)(C).
(A) This reduction shall not apply to any member who has at least
15 years of creditable service as a full-time employee of a police department
or fire department which is organized and operated by the state or a political
subdivision of the state to provide police protection, firefighting services,
or emergency medical services for any area within the jurisdiction of the state
or political subdivision.
(B) This
reduction shall not apply to disability retirement allowances or death
benefits.
(C) This reduction shall
not apply to any portion of a member's annual benefit that is derived from
contributions to purchase service credit, as defined in OAR 459-005-0540,
Permissive Service Credit.
(c) Reduction for Less than 10 Years of
Membership. Except as provided in paragraphs (A) and (B) of this subsection, if
the member has less than 10 years of active membership in PERS, the applicable
dollar limitation shall be reduced as provided for under IRC Section
415(b)(5)(A).
(A) For the purposes of this
section, a member with less than one year of active membership shall be treated
as having one year of active membership.
(B) The reduction under this section shall not apply to disability
retirement allowances or death benefits.
(d) Increase for Retirement After Age 65. If
the member's benefit begins after the member reaches 65 years of age, the
applicable dollar limitation shall be increased as provided for under IRC
Section 415(b)(2)(D).
(4)
Annual Benefit. For purposes of this rule, the "annual benefit" is the benefit
payable to a member under ORS Chapter 238 and the pension program under Chapter
238A for a calendar year, excluding any benefit payable under 238.485 through
238.492, and adjusted as described in this section.
(a) Excludable Benefits. The annual benefit shall not include the
portion of the member's benefit that is attributable to:
(A) After-tax member contributions, other than member payments to
purchase permissive service credit as defined in OAR 459-005-0540, Permissive
Service Credit;
(B) Rollover
contributions, if such contributions are permitted;
(C) A transfer of assets from another
qualified retirement plan; and
(D)
Purchases of permissive service credit, as defined in OAR 459-005-0540,
Permissive Service Credit, if all of the member's payments to purchase
permissive service credit are treated as annual additions for purposes of
459-005-0545, Annual Addition Limitation, in the year
purchased.
(b) Adjustment
to Straight Life Annuity. The member's benefit shall be adjusted to an
actuarially equivalent straight life annuity beginning at the same age. For
purposes of this adjustment, the following values are not taken into account:
(A) The value of a qualified spouse joint
and survivor annuity to the extent that the value exceeds the sum of the value
of a straight life annuity beginning on the same day, and the value of any
post-retirement death benefits that would be payable even if the annuity was
not in the form of a joint survivor annuity.
(B) The value of benefits that are not directly related to
retirement benefits, such as pre-retirement disability benefits and
post-retirement medical benefits.
(C) The value of post-retirement cost of living increases, to the
extent they do not exceed the increase provided under IRC Section 415(d) and
Treasury Regulation Section 1.415(d)-1.
(5) Interest Rates. The following interest
rates shall apply for purposes of adjusting the applicable dollar limitation
under section (3) of this rule and the annual benefit under section (4) of this
rule.
(a) For purposes of reducing the
applicable dollar limitation for retirement before 62 years of age under
subsection (3)(b) of this rule, the interest rate shall be the greater of five
percent or PERS' assumed earnings rate.
(b) For purposes of determining the portion of a member's benefits
attributable to after-tax member contributions under paragraph (4)(a)(A) of
this rule, the interest rate shall be the greater of 5 percent or the PERS'
assumed earnings rate.
(c) For
purposes of adjusting the member's annual benefits under section (4) of this
rule (other than the adjustment for after-tax member contributions), the
interest rate shall be the greater of five percent or PERS' assumed earnings
rate.
(d) For purposes of
increasing the applicable dollar limitation for retirement after 65 years of
age under subsection (3)(d) of this rule, the interest rate shall be the lesser
of five percent or PERS' assumed earnings rate.
(6) Mortality Table. For purposes of
adjusting the applicable dollar limitation and annual benefit under sections
(3) and (4) of this rule, the mortality table used shall be the table
prescribed pursuant to the Internal Revenue Code.
(7) The provisions of this rule are
effective on January 1, 2004.
Statutory/Other Authority: ORS
238.630,
238.650 & 238A.125
Statutes/Other Implemented: ORS
238.005 - 238.715
