2006 Louisiana Laws - RS 11:2220.2 — Computation of retirement benefits

§2220.2.  Computation of retirement benefits

A.(1)  The normal retirement benefit of any member of the retirement system who is a qualified participant cannot exceed the greater of:

(a)  The accrued benefit at retirement of the member as if such benefit were computed under R.S. 11:2220(A) as in effect on October 14, 1987.  

(b)  The limitation provided in Subsection B of this Section as if the qualified participant were not a qualified participant.  Any election made by the member after October 14, 1987, which would have had the effect of reducing such benefit, such as an election under Section 125 or 457 of the Internal Revenue Code, shall be considered as not reducing the accrued benefit referred to in this Paragraph.  

(2)  "Qualified participant" shall mean a member of the system who first became a member before January 1, 1990.  In the case of the merger of, or transfer of assets and benefits of a member or members from another plan maintained by an employer which joins this system, the accrued benefit under such predecessor plan shall be the accrued benefit referred to in Paragraph (1) of this Section, and the member shall be considered a qualified participant if his participation in such predecessor or merged plan commenced on or before January 1, 1990.  

(3)  All employers contributing to the system on behalf of their employees, and all employers who may join the system, as a condition of such joining, shall elect, and such election is hereby implemented, to have the limitation of Section 415(b) of the Internal Revenue Code other than Paragraph (2)(G) thereof applied without regard to Paragraph (2)(F) thereof, which limitations are set forth in Subsection B of this Section.  Such limitations shall apply to all members who are not qualified participants as described herein.  

B.  The annual retirement benefit of any member of the retirement system who is not a qualified participant, as defined by Paragraph (2) of Subsection A of this Section, and which is not attributable to the member's after-tax employee contribution, cannot exceed the lesser of ninety thousand dollars or one hundred percent of such member's average compensation.  For purposes of determining whether a member's benefit exceeds those limitations, the following shall apply:

(1)  Adjustment if benefit not single life annuity.  

(a)  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 or percent limitations contained in this Subsection.  

(b)  No adjustment is required for the following:

(i)  Qualified joint and survivor annuity benefits.  

(ii)  Pre-retirement disability benefits.  

(iii)  Pre-retirement death benefits.  

(iv)  Post-retirement medical benefits.  

(2)  Adjustment if benefit commences before social security retirement age.  If benefit distribution commences before social security retirement age, the actual retirement benefit shall not exceed the lesser of one hundred percent of the member's average compensation or 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 Social Security Act, of ninety thousand dollars commencing at social security retirement age.  For purposes of this adjustment, survivor benefits, that portion of a joint and survivor annuity which is the survivor benefit, and any other ancillary benefits shall not be taken into account.  

(3)  Adjustment if benefit commences after social security retirement age.  If benefit distribution commences after social security age, the dollar limitation shall be increased to the equivalent of ninety thousand dollars commencing at social security retirement age.  

(4)  Social security retirement age defined.  For purposes of this Subsection, the term "social security retirement age" means the age used as the retirement age under 42 U.S.C. 416(1) of the Social Security Act, except that such Section shall be applied:

(a)  Without regard to the age increase factor.  

(b)  As if the early retirement age under Section 216(1) and (2) of the Social Security Act were sixty-two.  

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

(a)  For benefits commencing before social security retirement age and for forms of benefit other than straight life annuity, the greater of:

(i)  Five percent.  

(ii)  The rate used to determine actuarial equivalence for other purposes of this retirement system.  

(b)  For benefits commencing after social security retirement age, the lesser of:

(i)  Five percent.  

(ii)  The rate used to determine actuarial equivalence for other purposes under this retirement system.  

(6)  Adjustment for less than ten years of participation or service.  

(a)  If retirement system benefits are payable under this retirement system to a member who has less than ten years of participation in the retirement system, the ninety thousand dollar limitation will be multiplied by a fraction, the numerator of which is the member's number of years of participation in the system, but not greater than ten, 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 percentage limitation, i.e., one hundred percent of compensation, and the ten thousand dollar limitation provided in Subparagraph (9) of this Subsection, will be multiplied by a fraction, the numerator of which is the member's number of years of service with the employer, not greater than ten, and the denominator which is ten.  

(7)  Annual adjustment.  The ninety thousand dollar limitation provided in this Subsection shall be adjusted annually to the maximum dollar limits allowable by the secretary of the Treasury of the United States under Section 415(d) of the Internal Revenue Code, such adjustments to take effect on the first day of each fiscal year following December 31, 1987.  The adjustment shall not exceed the adjustment in effect for the calendar year in which the fiscal year of the system begins.  The adjusted earlier limitation is applicable to employees who are members of the system and to members who have retired or otherwise terminate their service under the system with a nonforfeitable right to accrued benefits, regardless of whether they have actually begun to receive benefits.  This system shall be considered specifically to provide for such post-retirement adjustments.  For any limitation year beginning after separation from service occurs, the annual adjustment factor is a fraction, the numerator of which is the adjusted dollar limitation for the limitation year in which the compensation limitation is being adjusted and the denominator of which is adjusted dollar limitation for the limitation year in which the member separated from service.  No adjustment shall be permitted with respect to post October 14, 1987 limitations.  

(8)  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.  

(9)  Total annual benefits not in excess of ten thousand dollars.  Notwithstanding the preceding provisions of this Subsection, 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:

(a)  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 years.  

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

(10)  Average compensation.  For purposes of this Subsection the term "average compensation" shall mean the average compensation earned by a member for the period of three consecutive years during which the member was an active member of the retirement system and had the greatest aggregate compensation from the employer.  "Compensation" shall mean the total compensation reportable by the state of Louisiana, its agencies, or its political subdivisions as income to the member for the year.  Compensation shall not include deferred compensation which is not reportable as income in the current year.  Average compensation shall specifically exclude amounts not includable in the member's gross income for federal tax purposes by reason of Internal Revenue Code Sections 125 and 414(h) and any other provision of federal law; such amounts shall not be excluded, however, for any other purposes of this Title.  

(11)  Limitation.  No benefit shall be considered to exceed the provisions of this Subsection if, at the time the payment of such benefit commenced, the limitations of this Subsection or its equivalent as in effect at the time or the commencement of such payments were not exceeded by such initial benefit and if, at any later date, the amount of benefit payable in any year does not exceed the amount of such initial benefit, adjusted by the aggregate annual cost-of-living adjustments allowable for pension benefits in pay status for all years subsequent to the year benefit payments commenced.  

Acts 1992, No. 262, §1.