§1458. Computation of retirement benefits

A.(1) This Section is intended to comply with Section 415 of the Internal Revenue Code.

(2) The normal retirement benefit of a member shall not exceed the dollar amount set forth in this Section.

(3) The board may promulgate rules in accordance with the provisions of the Administrative Procedure Act, R.S. 49:950 et seq., for purposes of compliance with Section 415 of the Internal Revenue Code which modify the requirements hereunder.

B.(1) Maximum annual benefit. The retirement benefit of any member of the retirement system and which is not attributable to the member's after-tax employee contribution, when expressed as an annual benefit may not exceed one hundred sixty thousand dollars per year, as adjusted for increases in the cost of living pursuant to Section 415 of the Internal Revenue Code. For purposes of determining whether a member's benefit exceeds this limitation, if the normal form of benefit is other than a single life annuity, such form shall be adjusted actuarially to the equivalent of a single life annuity. This single life annuity shall not exceed the maximum dollar limitation outlined in this Paragraph. No adjustment is required for qualified joint and survivor annuity benefits; pre-retirement disability benefits; or pre-retirement death benefits.

(2)(a) Adjustment if benefit begins before age sixty-two. If benefit distribution begins before age sixty-two, the actual retirement benefit shall not exceed the adjusted dollar limitation. The adjusted dollar limitation shall be the equivalent, determined in a manner consistent with reduction of benefits for early retirement under the federal Social Security Act, of one hundred sixty thousand dollars, as adjusted.

(b) Adjustment if benefit begins after age sixty-five. If benefit distribution begins after age sixty-five, the dollar limitation shall be increased to the equivalent of one hundred sixty thousand dollars beginning at social security retirement age, as adjusted for increases in the cost of living pursuant to Section 415 of the Internal Revenue Code.

(c) Repealed by Acts 2011, No. 364, §2, eff. July 1, 2011.

(d) Interest assumption. The interest rate used for adjusting the maximum limitations above shall be:

(i) For benefits commencing before age sixty-two, the greater of five percent or the rate specified under the fund.

(ii) For benefits commencing after age sixty-five, the lesser of five percent or the rate specified under the fund.

(iii) For purposes of adjusting benefits for those benefits payable in a form other than a straight life annuity, the greater of five and one-half percent, the rate specified under the fund, and the rate that provides a benefit of not more than one hundred five percent of the benefit that would be provided if the applicable interest rate under Section 417(e)(3) of the Internal Revenue Code were the rate being used.

(3) Adjustment for less than ten years of participation.

(a) If retirement benefits are payable under this retirement system to a member who has less than ten years of participation in the retirement system, the dollar limitation referred to in Paragraph (1) of this Subsection shall be multiplied by a fraction, the numerator of which is the member's number of years of participation in the system and the denominator of which is ten.

(b) If retirement benefits are payable under this retirement system to a member who has less than ten years of service with the employer, the dollar limitation referred to in Paragraph (9) of Subsection E of this Section shall be multiplied by a fraction, the numerator of which is the member's number of years of service with the employer and the denominator of which is ten.

(4) Annual adjustment. The one hundred sixty thousand dollar limitation provided in this Subsection shall be adjusted annually to the maximum dollar limits allowable as determined by the commissioner of the Internal Revenue Service under Section 415(d) of the Internal Revenue Code.

(5) Member or participant in more than one plan. If a member is a member or participant in more than one defined benefit pension plan maintained by the state, its agencies, or its political subdivisions, then such member's benefit, considered in the aggregate after taking into account the benefits provided by all such retirement plans, shall not exceed the limits provided in this Subsection.

(6) Treasury regulation applicable. That portion of the benefit designated herein which is attributable to member contributions shall be determined in accordance with Treasury Regulations §1.415-3(d)(1).

C. Total annual benefits not in excess of ten thousand dollars. Notwithstanding the provisions of Subsection B, the benefits payable with respect to a participant under any defined benefit plan shall be deemed not to exceed the limitations of this Subsection if:

(1) The retirement benefits payable with respect to such participant under such plan and under all other defined benefit plans of the employer do not exceed ten thousand dollars for the plan year, or for any prior plan year, and

(2) The employer has not at any time maintained a defined contribution plan in which the participant participated.

D. Average compensation.

(1) For purposes of R.S. 11:1422 and 1432, average compensation shall include any amounts properly considered as the regular rate of pay of the member, as defined in R.S. 11:231, and unreduced by amounts excluded from income for federal income tax purposes by reason of 26 USC 125, 132(f), 402(e)(3), 402(h)(1)(B), 403(b), 414(h), or 457, or any other provision of federal law of similar effect.

(2) In addition to other applicable limitations set forth in the plan, and notwithstanding any other provisions of the plan to the contrary, for plan years beginning on or after January 1, 1994, and before January 1, 2002, the annual compensation of each employee taken into account under the plan shall not exceed the Omnibus Budget Reconciliation Act of 1993 annual compensation limit. The Omnibus Budget Reconciliation Act of 1993 annual compensation limit is one hundred fifty thousand dollars, as adjusted by the commissioner of Internal Revenue for increases in the cost of living in accordance with Section 401(a)(17)(B) of the Internal Revenue Code. The cost-of-living adjustment in effect for a calendar year applies to any period, not exceeding twelve months, over which compensation is determined beginning in such calendar year. If a determination period consists of fewer than twelve months, the Omnibus Budget Reconciliation Act of 1993 annual compensation limit will be multiplied by a fraction, the numerator of which is the number of months in the determination period, and the denominator of which is twelve.

(3) For plan years beginning on or after January 1, 2002, the annual compensation limitation shall not exceed two hundred thousand dollars, as adjusted for cost-of-living increases under Section 401(a)(17)(B) of the Internal Revenue Code. If compensation for an earlier period is taken into account in determining an employee's benefits accruing in the current plan year, the compensation for the earlier period shall be subject to the compensation limit for the current year.

E. The provisions of this Section shall apply if any member is covered, or has ever been covered, by another plan maintained by the employer, including a qualified plan, or a welfare benefit fund, as defined in Section 419(e) of the Internal Revenue Code, or an individual medical account, as defined in Section 415(l)(2) of the Internal Revenue Code, which provides an annual addition as described in Paragraph (4) of this Subsection.

(1) If a member is, or has ever been, covered under more than one defined benefit plan maintained by the employer, the sum of the member's annual benefits from all such plans shall not exceed the maximum permissible amount set forth in Subsection D of this Section.

(2) If the employer maintains one or more qualified defined contribution plans covering a member of the fund, the amount allocated as an annual addition to a member shall not exceed the defined contribution dollar limitation. The board may promulgate rules in accordance with the provisions of the Administrative Procedure Act, R.S. 49:950 et seq., that determine how such aggregation shall take place, what portion of the fund shall be considered a defined contribution plan, and what benefits generated by member contributions shall be considered attributable to a defined contribution plan.

(3)(a) "Defined contribution dollar limitation" shall mean forty thousand dollars as adjusted for cost-of-living increases provided in Section 415(d) of the Internal Revenue Code.

(b) If a member is, or ever has been covered under more than one defined contribution plan maintained by the employer, the sum of the member's annual additions to all such plans for each limitation year shall not exceed the maximum permissible amount.

(c) The annual addition for any limitation year beginning before January 1, 1987, shall not be recomputed to treat all employee contributions as annual additions.

(4) "Annual additions" of a member for the limitation year shall mean the sum of the following amounts credited to a member's account for the limitation year:

(a) Employer contributions.

(b) Employee contributions.

(c) Forfeitures.

(d) Amounts allocated to an individual medical account, as defined in Section 415(l)(2) of the Internal Revenue Code, which is a part of a pension or annuity plan maintained by the employer, are treated as annual additions to a defined contribution plan. Additionally, amounts derived from contributions paid or accrued after December 31, 1985, in taxable years ending after such date, which are attributable to post-retirement medical benefits allocated to the separated account of a key employee, as defined in Section 419A(d)(3) of the Internal Revenue Code, or under a welfare benefit fund, as defined in Section 419(e) of the Internal Revenue Code, maintained by the employer, are treated as annual additions to a defined contribution plan.

(e) The employee contribution shall be deemed to be a defined contribution plan. If a member has made nondeductible employee contributions pursuant to the provisions of this system, the amount of such contributions shall be treated as an annual addition to a qualified defined contribution plan, for purposes of this Section.

(5) The amount of annual additions which may be credited to the member's account for any limitation year shall not exceed the maximum permissible amount. Contributions and benefits under any other plan of the employer, to the extent that an adjustment is required to satisfy the requirements of this Section in the aggregate, shall be limited or reduced to the extent necessary to satisfy such requirement without reducing accrued benefits; however, only after such other plans have been modified shall the benefits and contributions under this plan be reduced. As soon as it is administratively feasible after the end of the limitation year, the maximum permissible amount for the limitation year shall be determined on the basis of the member's actual compensation for the limitation year. If there is an excess amount, the excess shall be disposed of as follows:

(a) Any nondeductible voluntary employee contribution to the extent it would reduce the excess amount shall be returned to the member.

(b) If, after the application of Subparagraph (a) of this Paragraph, an excess amount still exists, then any nondeductible mandatory contribution to the extent it would reduce the excess amount shall be returned to the member.

(c) For a limitation year beginning on or after July 1, 2007, excess amounts allocated to a member shall be corrected through the Employee Plans Compliance Resolution System or such other method permitted by the secretary of the treasury.

(d), (e) Repealed by Acts 2011, No. 364, §2, eff. July 1, 2011.

(6) "Excess amount" of a member for a limitation year shall mean the excess of the member's annual additions for the limitation year over the maximum permissible amount.

(7) The "limitation year" shall be the calendar year, or the twelve consecutive month period elected by the employer hereunder.

(8)(a) The "maximum permissible amount" for a member for a limitation year shall be the maximum annual addition that may be contributed or allocated to a member's account under the plan for any limitation year and shall not exceed the lesser of:

(i) The defined contribution dollar limitation.

(ii) One hundred percent of the member's compensation for the limitation year.

(b) The compensation limitation provided for in Item (a)(ii) of this Paragraph shall not apply to any contribution for medical benefits within the meaning of Section 401(h) or 419A(f)(2) of the Internal Revenue Code, which is otherwise treated as an annual addition pursuant to Section 415(l) or Section 419A(d)(2) of the Internal Revenue Code.

Acts 1997, No. 691, §1, eff. July 1, 1997; Acts 2004, No. 794, §1; Acts 2011, No. 364, §§1, 2, eff. July 1, 2011.