Code of Massachusetts Regulations › 840 CMR - PUBLIC EMPLOYEE RETIREMENT ADMINISTRATION COMMISSION › Title 840 CMR 3.00 - Internal Revenue Code Compliance Provisions › Section 3.05 - Internal Revenue Code Section 401(a)(17)

Current through Register 1525, July 5, 2024
(1)
			 In compliance with the provisions of M.G.L. c. 32, § 1 and in furtherance
			 of the application of the compensation limitations set forth in M.G.L. c. 32,
			 § 1, the annual compensation any retirement system subject to M.G.L c. 32
			 takes into account for any purpose, including contributions or benefits, may
			 not exceed the amount allowed by Internal Revenue Code Section 401(a)(17) as of
			 the first day of the plan year.
(2)
			 The annual compensation of each member taken into account in determining
			 benefits or contributions for any plan year beginning on January 1, 1996, and
			 prior to January 1, 2002, may not exceed $150,000, as adjusted for
			 cost-of-living increases in accordance with Internal Revenue Code Section
			 401(a)(17)(B).
(3) Effective only
			 for the 1996 plan year, the rules of Internal Revenue Code Section 414(q)(6)
			 will apply in determining the annual compensation limitation, except that a
			 member of the family group will include only the spouse of the member and any
			 lineal descendant of the member who is younger than 19 years old before the
			 close of the year. If the annual compensation of a member and his family
			 members is so limited, the annual compensation of the member and each such
			 family member will be equal to the compensation of each such individual
			 determined without regard to Internal Revenue Code Sections 401(a)(17) and
			 414(q)(6) divided by such annual compensation for all such individuals as so
			 determined and the quotient multiplied by the applicable Internal Revenue Code
			 Section 401(a)(17) limitation amount, as described in
			 840
			 CMR 3.05(1) and
			 (2).
(4) The annual compensation of each member
			 taken into account in determining benefits or contributions for any plan year
			 beginning on or after January 1, 2002, may not exceed $200,000, as adjusted for
			 cost-of-living increases in accordance with Internal Revenue Code Section
			 401(a)(17)(B).
(5) For purposes of
			 840
			 CMR 3.04(2)(e)1. through
			 (e)4., annual compensation means compensation during the fiscal year. 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. If the determination period consists of fewer than 12 months,
			 the annual compensation limit is an amount equal to the otherwise applicable
			 annual compensation limit multiplied by a fraction, the numerator of which is
			 the number of months in the short determination period, and the denominator of
			 which is 12. If the compensation for any prior determination period is taken
			 into account in determining a member's contributions or benefits for the
			 current plan year, the compensation for such prior determination period is
			 subject to the applicable annual compensation limit in effect for that prior
			 period.
(6) The limits referenced
			 in 840 CMR
			 3.04(2)(e)1. through (e)5.
			 apply only to plan years beginning on or after January 1, 1996, and only to
			 individuals who first become members in plan years beginning on and after
			 January 1, 1996. Individuals who become members before plan years beginning on
			 and after January 1, 1996, are not subject to the limits of Internal Revenue
			 Code Section 401(a)(17). Pursuant to Section 13212(d)(3)(A) of OBRA '93, the
			 annual compensation in effect under Internal Revenue Code Section 401(a)(17)
			 does not apply to any such member in any year.