A. In general. Notwithstanding anything herein to the contrary, effective for limitation years beginning on or after January 1, 1995, the annual benefit (attributable to City contributions and pickup contributions treated as City contributions) with respect to a member payable under the plan and all other defined benefit plans of the City, when expressed in the form of a straight life annuity, shall not exceed the "maximum permissible benefit." Effective for limitation years beginning on or after January 1, 2008, in no case shall any amount accrue in a limitation year, with respect to a member under the plan or all other deferred benefits plans of the City, that would exceed the maximum permissible benefit. For purposes of this section, the member's maximum permissible benefit shall equal the dollar limit prescribed in Section 415(b)(1)(A) of the Code ($195,000 in 2011) or such other amount as may be prescribed under regulations issued by the U.S. Secretary of the Treasury under Section 415(d) of the Code, adjusted in accordance with Subsections B, C and D, below. In addition, the "annual additions," as defined in Section 415(c)(2) of the Code, made by or on behalf of any member attributable to member contributions to the plan other than pickup contributions treated as City contributions, together with any annual additions, to any Code Section 401(a) qualified defined contribution plan maintained by the City shall not exceed the maximum amount determined under Section 415(c)(1) of the Code for any limitation year as adjusted under Section 415(d) of the Code and applicable guidance. Solely for purposes of determining the maximum annual addition prescribed in Section 415(c) of the Code, "compensation" means a member's wages as defined in Section 3401(a) of the Code and all other payments of compensation to the member from the City for which the City is required to furnish the member a written statement under Sections 6041(d) and 6051(a)(3) of the Code. Compensation shall be determined without regard to any rules that limit the compensation included in wages based on the nature or location of the employment or the services performed. Compensation shall include any amount which would otherwise be deemed compensation under this definition but for the fact that it is subject to a salary reduction agreement under any plan described in Section 457(b), 132(f), or 125 of the Code. Solely for this purpose, compensation also includes regular compensation received after such member's severance from employment [as defined in Treas. Reg. § 1.415(a)-1(f)(5) (but not severance payments)]; provided that payment of such compensation is made by the later of 2 1/2 months after the member's severance from employment or the end of the calendar year that includes the member's severance from employment; and provided, further, that in order for these postseverance payments to be considered compensation for this purpose, these amounts may only consist of the following (which would otherwise constitute compensation): i) regular compensation for services during the member's regular working hours, or compensation for service outside the member's regular work hours (such as overtime or shift differential), commission, bonuses, or similar payments, if such payment would have been paid to the member prior to severance from employment if the member had continued in employment with the City; ii) payment for unused, accrued, bona fide sick, vacation or other leave (but only if the member would have been able to use the leave if employment had continued); and iii) for plan years beginning on or after January 1, 2009, payments to members who do not currently perform services for the City by reason of qualified military service [as that term is defined in Section 414(u)(l) of the Code] to the extent those payments do not exceed the amounts the individual would have received if the individual had continued to perform services for the City rather than entering qualified military service. Other types of payments paid to the member after severance from employment shall not be considered compensation for this purpose, even if paid within the time frame described above. In no event, however, shall compensation for this purpose include any amounts not permitted to be included under Section 415 of the Code.
B. Adjustment to the maximum permissible benefit. Adjustments shall be made to the maximum permissible benefit in accordance with Subsection B(1), (2) or (3) below:
(1) If a member's benefit is payable in any form other than a straight life annuity, the determination as to whether the limitation of this section has been satisfied shall be made by adjusting such benefit to the form of a straight life annuity beginning when the payment of benefits begins. The adjustment described in the preceding sentence shall be made in the manner prescribed by the U.S. Secretary of the Treasury, such that the equivalent annual benefit would be the greater of: 1) the equivalent annual benefit computed using 7% interest rate and GAM83 mortality table; and 2) the equivalent annual benefit computed using an interest assumption of 5% (for distributions made during plan years beginning in 2004 or 2005, 5.5%) and the mortality table prescribed by the U.S. Secretary of the Treasury under Section 415(b)(2)(E)(v) of the Code. Notwithstanding the preceding sentence, effective for plan years beginning after 2005, for purposes of determining whether any benefit payable as a lump sum satisfies the limitation of this section, the adjustment described in the preceding sentence shall be made in the manner prescribed by the U.S. Secretary of the Treasury, such that the equivalent annual benefit would be the greatest of: 1) the equivalent annual benefit computed using the interest rate and mortality table specified in the plan for actuarial equivalence for the particular form of benefit payable; 2) the equivalent annual benefit computed using an interest rate assumption of 5.5% and the mortality table prescribed by the U.S. Secretary of the Treasury under Section 415(b)(2)(E)(v) of the Code; and 3) the equivalent annual benefit computed using the interest rate specified in Section 417(c)(3) of the Code and the mortality table prescribed by the U.S. Secretary of the Treasury under Section 415(b)(2)(E)(v) of the Code divided by 1.05. However, for the purposes of such adjustment, any ancillary benefit that is not directly related to retirement income benefits and that portion of any joint and survivor annuity that is actuarially equivalent to the default form of payment benefit payable to a married member shall not be taken into account.
(2) Actuarial equivalent prior to age 62.
(a) If the benefit of a member who is not a "qualified participant," as defined in Section 415(b)(2)(H) of the Code, begins before he or she reaches age 62 (other than on account of becoming disabled by reason of personal injuries or sickness or death), the maximum permissible benefit shall be adjusted in accordance with Section 415(b) of the Code, to an amount (beginning when the payment of benefits begins) that is actuarially equivalent to an annual benefit equal to the maximum permissible benefit determined under Subsection A [adjusted through the limitation year when payment of benefits begins for increases in the cost of living in accordance with Section 415(d) of the Code] beginning at age 62.
[1] For limitation years beginning before July 1, 2007, the defined benefit dollar limitation applicable at an age prior to age 62 is determined as the lesser of: a) the actuarial equivalent (at such age) of the defined benefit dollar limitation computed using a five-percent interest rate and the Unisex UP-84 Mortality Table; and b) the actuarial equivalent (at such age) of the maximum permissible benefit computed using a five-percent interest rate and the applicable mortality table prescribed by the U.S. Secretary of the Treasury under Section 415(b)(2)(E)(v) of the Code.
[2] For limitation years beginning on or after July 1, 2007, the defined benefit dollar limitation applicable at an age prior to age 62 is determined as the lesser of: a) the actuarial equivalent (at such age) of the defined benefit dollar limitation computed using a five-percent interest rate and the applicable mortality table within the meaning of Section 417(e)(3)(B) of the Code (and expressing the member's age based on completed calendar months as of the annuity starting date); and b) the defined benefit dollar limitation multiplied by the ratio of the annual amount of the immediately commencing straight life annuity under the plan at the member'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 Section 415 of the Code.
[3] For limitation years beginning prior to 2002, the reduction shall not reduce the maximum permissible benefit below $75,000 if the benefit begins at or after age 55, or, if the benefit begins before age 55 the equivalent of the seventy-five-thousand-dollar-limit for age 55.
(b) Any decrease in the maximum permissible benefit made in accordance with this subsection shall not reflect a mortality decrement.
(3) Actuarial equivalent after age 65.
(a) If the benefit of a member begins after he or she reaches age 65 the maximum permissible benefit of Subsection A shall be increased in accordance with Section 415(b) of the Code and the regulations thereunder to an amount (beginning when the payment of benefits begins) that is actuarially equivalent to an annual benefit equal to the maximum permissible benefit of Subsection A [adjusted through the limitation year when payment of benefits begins for increases in the cost of living in accordance with Section 415(d) of the Code] beginning at age 65.
[1] For limitation years beginning before July 1, 2007, the actuarial equivalent of the maximum permissible benefit applicable at an age after age 65 is the lesser of: a) the actuarial equivalent (at such age) of the maximum permissible benefit computed using a five-percent interest rate and the unisex UP-84 mortality table; and b) the actuarial equivalent (at such age) of the maximum permissible benefit computed using a five-percent interest rate assumption and the applicable mortality table prescribed by the U.S. Secretary of the Treasury under Section 415(b)(2)(E)(v) of the Code.
[2] For limitation years beginning on or after July 1, 2007, the actuarial equivalent of the maximum permissible benefit applicable at an age after age 65 is the lesser of: a) the actuarial equivalent (at such age) of the maximum permissible benefit using a five-percent interest rate and the applicable mortality table within the meaning of Section 417(e)(3)(B) of the Code (and expressing the member's age based on completed calendar months as of the annuity starting date); and b) the maximum permissible benefit multiplied by the ratio of the annual amount of the immediately commencing straight life annuity payable to the member, computed disregarding the member's accruals after age 65 but including any actuarial adjustments even if those adjustments are applied to offset accruals, to the annual amount of the straight life annuity that would be payable under the plan to a hypothetical member who is 65 years old and has the same accrued benefit (with no actuarial increases for commencement after age 65 as the member receiving the distribution (determined disregarding the member's accruals after age 65 and without applying the rules of Section 415 of the Code).
(b) For purposes of both Subsection B(3)(a)[1] and [2] above, mortality between age 65 and the annuity starting date shall be ignored.
C. Lowest limitation of maximum permissible benefit. Except as provided in Subsection D hereof, the maximum permissible benefit shall never be deemed to be an amount which is less than $10,000, provided the member is not, and has never been, a member in any Code Section 401(a) qualified defined contribution plan of the employer.
D. Maximum permissible benefit applicable to certain members who have less than 10 years of participation service with the City. The maximum permissible benefit applicable to any member, other than a retiree receiving disability benefits by reasons of personal injuries or sickness or beneficiaries, survivors, or the estate of a member, who has less than 10 years of participation service with the City shall be equal to the lesser of the maximum permissible benefit or $10,000 multiplied by a fraction, the numerator of which is the number of the member's years (or part thereof) of participation service in the plan as of and including the current limitation year, and the denominator of which is 10.
E. Limitation of accrued benefit if annual benefit exceeds maximum permissible benefit. If the member's annual benefit exceeds the maximum permissible benefit after the application of the appropriate factors, such member's accrued benefit shall be limited to an amount which produces an annual benefit equal to the maximum permissible benefit, adjusted, where applicable, as set forth in this section.
F. For purposes of this section, "participation service" means an accrual computation period for which the following conditions are met: A) the member is credited with at least the period of service for benefit accrual purposes, required hereunder in order to accrue a benefit for the accrual computation period; and B) the member is included in the plan for at least one day of the accrual computation period. If these two conditions are met, participation service credited to the member hereunder shall equal the amount of benefit accrual service credited to the member for such accrual computation period.