Benefits under the Plan shall be limited in accordance with Code Section 415 and the regulations thereunder. The limitations of this section shall apply in limitation years beginning on or after July 1, 2007, except as otherwise provided herein.
(A) Definitions. For the purpose of determining the benefit limitation set forth in this section, the following terms are defined:
ANNUAL BENEFIT.
(a) A benefit that is payable annually in the form of a straight life annuity. Except as provided below, where a benefit is payable in a form other than a straight life annuity, the benefit shall be adjusted to an actuarially equivalent straight life annuity that begins at the same time as such other form of benefit and is payable on the first day of each month, before applying the limitations of this section. For a participant who has or will have distributions commencing at more than one annuity starting date, the annual benefit shall be determined as of each such annuity starting date (and shall satisfy the limitations of this section as of each such date), actuarially adjusting for past and future distributions of benefits commencing at the other annuity starting dates. For this purpose, the determination of whether a new starting date has occurred shall be made without regard to Section 1.401(a)-20, Q&A 10(d), and with regard to Section 1.415(b)-1(b)(1)(iii)(B) and (C) of the regulations.
(b) No actuarial adjustment to the benefit shall be made for (i) survivor benefits payable to a surviving spouse under a qualified joint and survivor annuity to the extent such benefits would not be payable if the participant's benefit were paid in another form; (ii) benefits that are not directly related to retirement benefits (such as a qualified disability benefit, preretirement incidental death benefits, and post-retirement medical benefits); or (iii) the inclusion in the form of benefit of an automatic benefit increase feature, provided the form of benefit is not subject to Code Section 417(e)(3) and would otherwise satisfy the limitations of this section, and the Plan provides that the amount payable under the form of benefit in any limitation year shall not exceed the limits of this section applicable at the annuity starting date, as increased in subsequent years pursuant to Code Section 415(d). For this purpose, an automatic benefit increase feature is included in a form of benefit if the form of benefit provides for automatic periodic increases to the benefits paid in that form.
(c) The determination of the annual benefit shall take into account Social Security supplements described in Code Section 411(a)(9) and benefits transferred from another defined benefit plan, other than transfers of distributable benefits pursuant to Section 1.411(d)-4, Q&A-3(c), of the regulations, but shall disregard benefits attributable to employee contributions or rollover contributions.
(d) Effective for distributions in Plan years beginning after December 31, 2003, the determination of actuarial equivalence of forms of benefit other than a straight life annuity shall be made in accordance with divisions (d)1. or (d)2. of this definition of
ANNUAL BENEFIT:
1. Benefit forms not subject to Code Section 417(e)(3). The straight life annuity that is actuarially equivalent to the participant's form of benefit shall be determined under this division 1. if the form of the participant's benefit is either (i) a nondecreasing annuity (other than a straight life annuity) payable for a period of not less than the life of the participant (or, in the case of a qualified preretirement survivor annuity, the life of the surviving spouse), or (ii) an annuity that decreases during the life of the participant merely because of (a) the death of the survivor annuitant (but only if the reduction is not below 50% of the benefit payable before the death of the survivor annuitant), or (b) the cessation or reduction of Social Security supplements or qualified disability payments (as defined in Code Section 401(a)(11)).
a. Limitation years beginning before July 1, 2007. For limitation years beginning before July 1, 2007, the actuarially equivalent straight life annuity is equal to the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the participant's form of benefit computed using whichever of the following produces the greater annual amount:
i. The interest rate and the mortality table (or other tabular factor) specified in the Plan for adjusting benefits in the same form; and
ii. A 5% interest rate assumption and the applicable mortality table for that annuity starting date.
b. Limitation years beginning on and after July 1, 2007. For limitation years beginning on and after July 1, 2007, the actuarially equivalent straight life annuity is equal to the greater of:
i. The annual amount of the straight life annuity (if any) payable to the participant under the Plan commencing at the same annuity starting date as the participant's form of benefit; and
ii. The annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the participant's form of benefit, computed using a 5% interest rate assumption and the applicable mortality table for that annuity starting date.
2. Benefit forms subject to Code Section 417(e)(3). The straight life annuity that is actuarially equivalent to the participant's form of benefit shall be determined under this division 2. if the form of the participant's benefit is other than a benefit form described in division 1. above. In this case, the actuarially equivalent straight life annuity shall be determined as follows:
a. Annuity starting date in Plan years beginning after 2005. If the annuity starting date of the participant's benefit occurs during a Plan year beginning after 2005, the actuarially equivalent straight life annuity is equal to the greatest of:
i. The annual amount of the straight life annuity commending at the same annuity starting date that has the same actuarial present value as the participant's form of benefit, computed using the interest rate and the mortality table (or other tabular factor) specified in the Plan for adjusting benefits in the same form;
ii. The annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the participant's form of benefit, computed using a 5.5% interest rate assumption and the applicable mortality table; and
iii. The annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the participant's form of benefit, computed using the applicable interest rate and the applicable mortality table, divided by 1.05.
However, for an employer that is an eligible employer as defined in Code Section 408(p)(2)(C)(i), the actuarially equivalent straight life annuity is equal to the greater of divisions i. or ii. above.
b. Annuity starting date in Plan years beginning in 2004 and 2005. If the annuity starting date of the participant's form of benefit is in a Plan year beginning in 2004 or 2005, the actuarially equivalent straight life annuity is equal to the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the participant's form of benefit, computed using whichever of the following produces the greater annual amount:
i. The interest rate and the mortality table (or other tabular factor) specified in the Plan for adjusting benefits in the same form; and
ii. A 5.5% interest rate assumption and the applicable mortality table. If the annuity starting date of the participant's benefit is on or after the first day of the first Plan year beginning in 2004 and before December 31, 2004, the application of this division (d)2.b. shall not cause the amount payable under the participant’s form of benefit to be less than the benefit calculated under the Plan taking into account the limitations of this section, except that the actuarially equivalent straight life annuity is equal to the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the participant's form of benefit, computed using whichever of the following produces the greatest annual amount:
iii. The interest rate and the mortality table (or other tabular factor) specified in the Plan for adjusting benefits in the same form (as provided under the terms of the Plan in effect as of the date of distribution);
iv. The applicable interest rate and the applicable mortality table (as provided under the terms of the Plan in effect as of the date of distribution); and
v. The applicable interest rate (as in effect on the last day of the last Plan year beginning before January 1, 2004, under the provisions of the Plan then adopted and in effect) and the applicable mortality table.
DEFINED BENEFIT DOLLAR LIMITATION. Effective for limitation years ending after December 31, 2001, $160,000, automatically adjusted under Code Section 415(d), effective January 1 of each year, as published in the Internal Revenue Bulletin, and payable in the form of a straight life annuity. The new limitation shall apply to limitation years ending with or within the calendar year of the date of the adjustment, but a participant's benefits shall not reflect the adjusted limit prior to January 1 of that
calendar year. The automatic annual adjustment of the defined benefit dollar limitation under Code Section 415(d) shall not apply to participants who have had a severance from employment.
EMPLOYER. The employer that adopts this Plan, and all members of a controlled group of corporations (as defined in Code Section 414(b), as modified by Code Section 415(h)), all commonly controlled trades or businesses (as defined in Code Section 414(c), as modified, except in the case of a brother-sister group of trades or businesses under common control, by Code Section 415(h)), or affiliated service groups (as defined in Code Section 414(m)) of which the adopting employer is a part, and any other entity required to be aggregated with the employer pursuant to Code Section 414(o).
FORMERLY AFFILIATED PLAN. A plan that, immediately prior to the cessation of affiliation, was actually maintained by the employer and immediately after the cessation of affiliation, is not actually maintained by the employer. For this purpose, cessation of affiliation means the event that causes an entity to no longer be considered the employer, such as the sale of a member of a controlled group of corporations, as defined in Code Section 414(b), as modified by Code Section 415(h), to an unrelated corporation, or that causes a plan to not actually be maintained by the employer, such as a transfer of plan sponsorship outside a controlled group.
LIMITATION YEAR. The consecutive 12-month period ending on the last day of each Plan year, including corresponding consecutive 12-month periods before the effective date of the Plan. All qualified plans maintained by the employer must use the same limitation year. If the limitation year is other than a calendar year, execution of this Plan (or any amendment to this Plan changing the limitation year) constitutes the employer's adoption of a written resolution electing the limitation year. If the limitation year is amended to a different consecutive 12-month period, the new limitation year must begin on a date within the limitation year in which the amendment is made.
MAXIMUM PERMISSIBLE BENEFIT. The defined benefit dollar limitation (adjusted where required, as provided below).
(a) Adjustment for less than ten years of participation.
1. If the participant has less than ten years of participation in the Plan, the defined benefit dollar limitation shall be multiplied by a fraction, (i) the numerator of which is the number of years of participation (or part thereof, but not less than one year) in the Plan, and (ii) the denominator of which is ten.
2. The adjustments of this division (a) shall not apply to survivor and disability benefits as provided in Code Section 415(b)(2)(I).
(b) Adjustment of defined benefit dollar limitation for benefit commencement before age 62 or after age 65. Effective for benefits commencing in limitation years ending after December 31, 2001, the defined benefit dollar limitation shall be adjusted if the annuity starting date of the participant's benefit is before age 62 or after age 65. If the annuity starting date is before age 62, the defined benefit dollar limitation shall be adjusted under division (b)1. below, as modified by division (b)3. below. If the annuity starting date is after age 65, the defined benefit dollar limitation shall be adjusted under division (b)2. below, as modified by division (b)3. below.
1. Adjustment of defined benefit dollar limitation for benefit commencement before age 62:
a. Limitation years beginning before July 1, 2007. If the annuity starting date for the participant's benefit is prior to age 62 and occurs in a limitation year beginning before July 1, 2007, the defined benefit dollar limitation for the participant's annuity starting date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the participant's annuity starting date that is the actuarial equivalent of the defined benefit dollar limitation (adjusted under division (a) above for years of participation less than ten, if required) with actuarial equivalence computed using whichever of the following produces the smaller annual amount: (i) the interest rate and the mortality table (or other tabular factor) specified in the Plan for purposes of determining actuarial equivalence for early retirement benefits; or (ii) a 5% interest rate assumption and the applicable mortality table. To the extent the Plan does not specify an interest rate and mortality table (or other tabular factor) or for ages for which no tabular factor is specified, a 5% interest rate and the applicable mortality table shall be used to determine actuarial equivalence.
b. Limitation years beginning on or after July 1, 2007.
i. Plan does not have immediately commencing straight life annuity payable at both age 62 and the age of benefit commencement. If the annuity starting date for the participant's benefit is prior to age 62 and occurs in a limitation year beginning on or after July 1, 2007, and the Plan does not have an immediately commencing straight life annuity payable at both age 62 and the age of benefit commencement, the defined benefit dollar limitation for the participant's annuity starting date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the participant's annuity starting date that is the actuarial equivalent of the defined benefit dollar limitation (adjusted under division (a) above for years of participation less than ten, if required) with actuarial equivalence computed using a 5% interest rate assumption and the applicable mortality table for the annuity starting date (and expressing the participant's age based on completed calendar months as of the annuity starting date).
ii. Plan has immediately commencing straight life annuity payable at both age 62 and the age of benefit commencement. If the annuity starting date for the participant's benefit is prior to age 62 and occurs in a limitation year beginning on or after July 1, 2007, and the Plan has an immediately commencing straight life annuity payable at both age 62 and the age of benefit commencement, the defined benefit dollar limitation for the participant's annuity starting date is the lesser of the limitation determined under division (b)1.b.i. above and the defined benefit dollar limitation (adjusted under division (a) above for years of participation less than ten, if required) multiplied by the ratio of the annual amount of the immediately commencing straight life annuity under the Plan at the participant's annuity starting date to the annual amount of the immediately commencing straight life annuity under the Plan at age 62, both determined without applying the limitations of this section.
c. The adjustments in this division 1. do not apply in the case of a participant who is a qualified participant (as defined in Code Section 415(b)(H)). The adjustments in this division (b)1. do not apply to survivor and disability benefits as provided in Code Section 415(b)(2)(I).
d. Notwithstanding any other provision of this division (b)1., the age adjusted defined benefit dollar limitation applicable to a participant does not decrease on account of an increase in age or the performance of additional service.
2. Adjustment of defined benefit dollar limitation for benefit commencement after age 65.
a. Limitation years beginning before July 1, 2007. If the annuity starting date for the participant's benefit is after age 65 and occurs in a limitation year beginning before July 1, 2007, the defined benefit dollar limitation for the participant's annuity starting date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the participant's annuity starting date that is the actuarial equivalent of the defined benefit dollar limitation (adjusted under division (b)1. above for years of participation less than ten, if required) with actuarial equivalence computed using whichever of the following produces the smaller annual amount: (i) the interest rate and the mortality table (or other tabular factor) specified in the Plan for purposes of determining actuarial equivalence for late retirement benefits; or (ii) a 5% interest rate assumption and the applicable mortality table.
b. Limitation years beginning on or after July 1, 2007.
i. Plan does not have immediately commencing straight life annuity payable at both age 65 and the age of benefit commencement. If the annuity starting date for the participant's benefit is after age 65 and occurs in a limitation year beginning on or after July 1, 2007, and the Plan does not have an immediately commencing straight life annuity payable at both age 65 and the age of benefit commencement, the defined benefit dollar limitation at the participant's annuity starting date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the participant's annuity starting date that is the actuarial equivalent of the defined benefit dollar limitation (adjusted under division (b)1. above for years of participation less than ten, if required) with actuarial equivalence computed using a 5% interest rate assumption and the applicable mortality table for that annuity starting date (and expressing the participant's age based on completed calendar months as of the annuity starting date).
ii. Plan has immediately commencing straight life annuity payable at both age 65 and the age of benefit commencement. If the annuity starting date for the participant's benefit is after age 65 and occurs in a limitation year beginning on or after July 1, 2007, and the Plan has an immediately commencing straight life annuity payable at both age 65 and the age of benefit commencement, the defined benefit dollar limitation at the participant's annuity starting date is the lesser of the limitation determined under division (b)2.b.i. above and the defined benefit dollar limitation (adjusted under division (b)1. above for years of participation less than ten, if required) multiplied by the ratio of the annual amount of the adjusted immediately commencing straight life annuity under the Plan at the participant's annuity starting date to the annual amount of the adjusted immediately commencing straight life annuity under the Plan at age 65, both determined without applying the limitations of this section. For this purpose, the adjusted immediately commencing straight life annuity under the Plan at the participant's annuity starting date is the annual amount of such annuity payable to the participant, computed disregarding the participant's accruals after age 65 but including actuarial adjustments even if those actuarial adjustments are used to offset accruals; and the adjusted immediately commencing straight life annuity under the Plan at age 65 is the annual amount of such annuity that would be payable under the Plan to a hypothetical participant who is age 65 and has the same accrued benefit as the participant.
3. Notwithstanding the other requirements of this division (b), no adjustment shall be made to the defined benefit dollar limitation to reflect the probability of a participant's death between the annuity starting date and age 62, or between age 65 and the annuity starting date, as applicable, if benefits are not forfeited upon the death of the participant prior to the annuity starting date. To the extent benefits are forfeited upon death before the annuity starting date, such an adjustment shall be made. For this purpose, no forfeiture shall be treated as occurring upon the participant's death if the Plan does not charge participants for providing a qualified joint and survivor annuity, as defined in Code Section 417(c), upon the participant's death.
(c) Minimum benefits permitted. Notwithstanding anything else in this definition to the contrary, the benefit otherwise accrued or payable to a participant under this Plan shall be deemed not to exceed the maximum permissible benefit if:
1. The retirement benefits payable for a limitation year under any form of benefit with respect to such participant under this Plan and under all other defined benefit plans (without regard to whether a plan has been terminated) ever maintained by the employer do not exceed $10,000 multiplied by a fraction, (1) the numerator of which is the participant's number of years of service (or part thereof, but not less than one year) with the employer (not to exceed ten), and (2) the denominator of which is ten; and
2. The employer (or a predecessor employer) has not at any time maintained a defined contribution plan in which the participant participated (for this purpose, mandatory employee contributions under a defined benefit plan are not considered a separate defined contribution plan).
The amount in division (c)1. above shall be equal to $10,000 when determining the minimum benefit for survivor and disability benefits as provided in Code Section 415(b)(2)(I).
PREDECESSOR EMPLOYER. With respect to a participant, a former employer if the employer maintains a plan that provides a benefit which the participant accrued while performing services for the former employer. Predecessor employer also means, with respect to a participant, a former entity that antedates the employer if, under the facts and circumstances, the employer constitutes a continuation of all or a portion of the trade or business of the former entity.
SEVERANCE FROM EMPLOYMENT. An employee has ceased to be an employee of the employer maintaining the plan.
STRAIGHT LIFE ANNUITY. An annuity payable in equal installments for the life of the participant that terminates upon the participant's death.
YEAR OF PARTICIPATION. One year (computed to fractional parts of a year) for each Plan year for which the following conditions are met:
(a) The participant is credited with continuous service for benefit accrual purposes, and
(b) The participant is included as a participant under the eligibility provisions of the Plan for at least one day of the Plan year.
If these two conditions are met, the portion of a year of participation credited to the participant shall equal the amount of accrual service credited to the participant for such Plan year. A participant who is totally and permanently disabled within the meaning of Code Section 415(c)(3)(C)(i) for a Plan year shall receive a year of participation with respect to that period. In addition, for a participant to receive a year of participation (or part thereof) for a Plan year, the Plan must be established no later than the last day of such Plan year. In no event will more than one year of participation be credited for any 12-month period.
YEAR OF SERVICE. For purposes of the definition of MAXIMUM PERMISSIBLE BENEFIT, one year (computed to fractional parts of a year) for each Plan year for which the participant is credited with continuous service for benefit accrual purposes, taking into account only service with the employer or a predecessor employer.
(B) The annual benefit otherwise payable to a participant at any time will not exceed the maximum permissible benefit.
(C) If the participant is, or has ever been, a participant in another qualified defined benefit plan (without regard to whether the plan has been terminated) maintained by the employer or a predecessor employer, the sum of the participant's annual benefits from all such plans may not exceed the maximum permissible benefit. Where the participant's employer-provided benefits under all such defined benefit plans (determined as of the same age) would exceed the maximum permissible benefit applicable at that age, the benefit shall be limited (or the rate of accrual reduced) in the plan most recently established to the extent necessary so that the sum of the participant's annual benefits from all such plan(s) does not exceed the maximum permissible benefit.
(D) The application of the provisions of this section shall not cause the maximum permissible benefit for any participant to be less than the participant's accrued benefit under all the defined benefit plans of the employer or a predecessor employer as of the end of the last limitation year beginning before July 1, 2007 under the provisions of the plans that were both adopted and in effect before April 5, 2007. The preceding sentence applies only if the provisions of such defined benefit plans that were both adopted and in effect before April 5, 2007 satisfied the applicable requirements of statutory provisions, regulations, and other published guidance relating to Code Section 415 in effect as of the end of the last limitation year beginning before July 1, 2007, as described in section 1.415(a)-1 (g)(4) of the regulations.
(E) The limitations of this section shall be determined and applied taking into account the rules in division (F) below.
(F) Other rules.
(1) Benefits under terminated plans. If a defined benefit plan maintained by the employer has terminated with sufficient assets for the payment of benefit liabilities of all plan participants and a participant in the plan has not yet commenced benefits under the plan, the benefits provided pursuant to the annuities purchased to provide the participant's benefits under the terminated plan at each possible annuity starting date shall be taken into account in applying the limitations of this section. If there are not sufficient assets for the payment of all participants' benefit liabilities, the benefits taken into account shall be the benefits that are actually provided to the participant under the terminated plan.
(2) Benefits transferred from the plan. If a participant's benefits under a defined benefit plan maintained by the employer are transferred to another defined benefit plan maintained by the employer and the transfer is not a transfer of distributable benefits pursuant to section 1.411(d)-4, Q&A-3(c) of the regulations, the transferred benefits are not treated as being provided under the transferor plan (but are taken into account as benefits provided under the transferee plan). If a participant's benefits under a defined benefit plan maintained by the employer are transferred to another defined benefit plan that is not maintained by the employer and the transfer is not a transfer of distributable benefits pursuant to section 1.411(d)-4, Q&A-3(c), of the regulations, the transferred benefits are treated by the employer's plan as if such benefits were provided under annuities purchased to provide benefits under a plan maintained by the employer that terminated immediately prior to the transfer with sufficient assets to pay all participants' benefit liabilities under the plan. If a participant's benefits under a defined benefit plan maintained by the employer are transferred to another defined benefit plan in a transfer of distributable benefits pursuant to section 1.411(d)-4, Q&A-3(c), of the regulations, the amount transferred is treated as a benefit paid from the transferor plan.
(3) Formerly affiliated plans of the employer. A formerly affiliated plan of the employer shall be treated as a plan maintained by the employer, but the formerly affiliated plan shall be treated as if it had terminated immediately prior to the cessation of affiliation with sufficient assets to pay participants' benefit liabilities under the plan and had purchased annuities to provide benefits.
(4) Plans of a predecessor employer. If the employer maintains a defined benefit plan that provides benefits accrued by a participant while performing services for a predecessor employer, the participant's benefits under a plan maintained by a predecessor employer shall be treated as provided under a plan maintained by the employer. However, for this purpose, the plan of the predecessor employer shall be treated as if it had terminated immediately prior to the event giving rise to the predecessor employer relationship with sufficient assets to pay participants' benefit liabilities under the plan, and had purchased annuities to provide benefits; the employer and the predecessor employer shall be treated as if they were a single employer immediately prior to such event and as unrelated employers immediately after the event; and if the event giving rise to the predecessor relationship is a benefit transfer, the transferred benefits shall be excluded in determining the benefits provided under the plan of the predecessor employer.
(5) Special rules. The limitations of this section shall be determined and applied taking into account the rules in section 1.415(f)-1(d), (e), and (h) of the regulations.
(6) Aggregation with multiemployer plans.
(a) If the employer maintains a multiemployer plan, as defined in Code Section 414(f), and the multiemployer plan so provides, only the benefits under the multiemployer plan that are provided by the employer shall be treated as benefits provided under a plan maintained by the employer for purposes of this section.
(b) Effective for limitation years ending after December 31, 2001, a multiemployer plan shall be disregarded for purposes of division (a) of the
MAXIMUM PERMISSIBLE BENEFIT definition in this section to a plan which is not a multiemployer plan. (Ord. 1806, passed 1-7-15)