(a) Maximum annual earnings. For plan years beginning on or after January 1, 1989 and before July 1, 1996, the annual compensation of each plan participant taken into account for determining all benefits provided under the plan for any determination period shall not include any amounts in excess of the annual compensation limit (originally $200,008.00) provided for in IRC § 401(A)(17) prior to the Omnibus Budget Reconciliation Act of 1993 and adjusted for inflation in the manner provided by IRC § 401(A)(17). For plan years beginning on or after July 1,1996, the annual compensation of each employee taken into account shall not exceed the annual compensation limit provided for in IRC § 401(A)(17), as amended by OBRA '93. This limit may be adjusted as required by federal law for qualified government plans and shall be further adjusted for inflation in the manner provided by IRC § 401(A)(17). Annual compensation means compensation during the plan year or such other consecutive 12 month period over which compensation is otherwise determined under the plan. 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.
(b) Defined benefit plans. The maximum permissible annual pension benefit with respect to any member shall be in accordance with IRC § 415(B) which provides that such annual pension benefits shall not exceed $90,000, as adjusted for inflation, pursuant to IRC § 415(B) (the “dollar limit”).
(1) Special dollar limitations. If the benefit is payable prior to age 62, the dollar limitation shall be reduced to the actuarial equivalent of a benefit commencing at age 62. In the case of any full-time public safety employee, who is a qualified participant as defined in IRC § 415(B)(2)(G), there is no reduction in the dollar limitation. If the benefit is not payable until after age 65, the dollar limitation shall be increased to the actuarial equivalent of a benefit commencing at age 65.
(2) In the case of an employee who has less than ten (10) years of participation in the plan, the dollar limitation shall be reduced 1/10 for each year of participation in accordance with IRC § 415(B)(5).
(c) Excess benefit payment. The retirement system shall not pay any benefit that would exceed the benefit limitations for governmental plans as set forth in IRC § 415 and regulations, as amended.
(d) Compensation. As defined by IRC § 415(C)(3)(D) and Treas. Reg. § 1.415-2(D)(2)(I), compensation means amounts actually paid to the employee during the limitation year, including: wages, salary, professional fees, percentage of profits, commissions, tips and bonuses paid or made available to the member during the limitation year for personal services actually rendered in the course of employment, any elective deferral, and any amount which is contributed or deferred by the employer at the election of the employee and which is not includable in the gross income of the employee by reason of IRC §§ 125, 132(F) or 457.
(Ord. 3297, passed 5-22-1995; Ord. 3592, passed 6-24-2004; Ord. 3817, passed 2-16-2012)