Ohio Administrative Code › Title 145 - Public Employees Retirement System › Chapter 145-2 - Service Credit › Section 145-2-65 - Internal Revenue Code limitations on benefits

Current through all regulations passed and filed through July 1, 2024
(A) In addition to other limitations set
			 forth in Chapter 145. of the Revised Code, the defined benefit payable to a
			 member under the traditional pension plan or the defined benefit payable to a
			 member under the combined plan shall not exceed the applicable limits under
			 section 415(b) of the Internal Revenue Code, as periodically adjusted by the
			 secretary of the treasury under section 415(d) of the Internal Revenue Code.
			 This adjustment shall also apply to a member who has had a severance from
			 employment or, if earlier, an annuity starting date. Benefits that are subject
			 to section 415(b) of the Internal Revenue Code shall comply with the foregoing
			 limit in each year during which payments are made. The foregoing limit shall be
			 adjusted pursuant to the requirements of sections 415(b)(2)(C) and (D) of the
			 Internal Revenue Code relating to the commencement of benefits at a date prior
			 to age sixty-two or after age sixty-five, subject to other applicable rules.
			 Any member whose benefits were limited by the application of section 415 of the
			 Internal Revenue Code immediately prior to its amendment by the Economic Growth
			 and Tax Relief Reconciliation Act of 2001 shall, for limitation years ending on
			 or after July 1, 2002, have his or her benefit increased to the amount computed
			 under the applicable plan, but not in excess of the limits of section
			 415(b)(1)(A) of the Internal Revenue Code of 1986,
			 26
			 U.S.C.A. 415(b)(1)(A)
								, as amended by the Economic Growth and Tax Relief Reconciliation Act of
			 2001.
(B)
(1)
									 For purposes of this rule, "compensation" means
			 compensation as defined in section 415(c)(3) of the Internal Revenue Code and
			 section 1.415(c) -2(d)(3) of the Treasury Regulations,
			 72 Fed. Reg. 16878, April 5, 2007. In general, section 415(c)(3) of the
			 Internal Revenue Code defines compensation as all of a member's wages as
			 defined in section 3401(a) of the Internal Revenue Code for the purposes of
			 income tax withholding at the source, but determined without regard to any
			 rules that limit the remuneration included in wages based on the nature or
			 location of the employment or the services performed (such as the exception for
			 agricultural labor in section 3401(a)(2) of the Internal Revenue Code).
			 Compensation shall also include the amount of any elective deferrals, as
			 defined in section 402(g)(3) of the Internal Revenue Code; any amount
			 contributed or deferred by the employer at the election of the employee and
			 which is not includible in the gross income of the employee by reason of
			 sections 125, 132(f)(4) or 457 of the Internal Revenue Code; and effective
			 January 1, 2009, differential wage payments as defined in section 3401(h)(2) of
			 the Internal Revenue Code.
(2)
									 In addition, compensation shall include the following
			 amounts:
(a)
										
			 Regular compensation for services. Compensation shall include regular
			 compensation for services that, absent a severance from service, would have
			 been paid to the member if the member continued in employment with the
			 employer, in accordance with section 1.415(c) -2(e)(3)(ii) of the Treasury
			 Regulations, to the extent required under section 1.415(c) -2(e)(3)(i) of the
			 Treasury Regulations.
(b)
										 Payments to reservists. Compensation shall include
			 payments to a member who does not currently perform services for an employer by
			 reason of qualified military service made in accordance with the employer's
			 current policy with regard to such qualified military service, to the extent
			 these payments do not exceed the amount the individual would have received if
			 the individual had continued to perform services for the employer rather than
			 entering qualified military service, in accordance with section 1.415(c)
			 -2(e)(4) of the Treasury Regulations.
(c)
										 Back pay.
			 Compensation shall include payments of back pay within the meaning of section
			 1.415(c) -2(g)(8) of the Treasury Regulations.
(3)
									 "Compensation"
			 shall not include the following amounts:
(a)
										 Foreign
			 compensation. Compensation shall not include amounts paid as compensation to a
			 nonresident alien, as defined in section 7701(b)(l)(B) of the Internal Revenue
			 Code, who is not a member, to the extent the compensation is excludable from
			 gross income and is not effectively connected with the conduct of a trade or
			 business within the United States, in accordance with section 1.415(c)
			 -2(g)(5)(ii) of the Treasury Regulations.
(b)
										 Scheduled
			 deferred compensation payments. Compensation shall not include payments to a
			 member in accordance with a nonqualified unfunded deferred compensation plan,
			 even if such amount would have been paid at the same time if employment had
			 continued, in accordance with section 1.415(c) -2(e)(3)(iii)(B) of the Treasury
			 Regulations.
(c)
										 Disability payments. Compensation shall not include
			 amounts received on account of the member's permanent and total disability (as
			 defined in section 22(e)(3) of the Internal Revenue Code and described in
			 section 1.415(c) -2(g)(4) of the Treasury Regulations).
(d)
										 Cross-over year
			 payments. Compensation shall not include amounts earned during the limitation
			 year but not paid during that limitation year solely because of the timing of
			 pay periods and pay dates if these amounts are paid during the first few weeks
			 of the next limitation year as permitted under section 1.415(c) -2(e)(2) of the
			 Treasury Regulations.