2006 Louisiana Laws - RS 11:444 — Computation of retirement benefit

§444.  Computation of retirement benefit

A.(1)(a)  A member who retires effective on or after July 1, 1973, shall receive a maximum retirement allowance equal to two and one-half percent of average compensation, as determined under R.S. 11:231, for every year of creditable service, plus three hundred dollars.

(b)  The additional sum of three hundred dollars referenced in Subparagraph (a) of this Paragraph shall only apply to a person who became a member prior to July 1, 1986.

(2)(a)  Public safety service employees as those employees are referred to as "member" or "members" in R.S. 11:601(B) shall receive a retirement allowance computed in accordance with R.S. 11:602.

(b)  Peace officers, as defined by R.S. 40:2402(1)(a), employed by the Department of Public Safety and Corrections, office of state police, other than state troopers, shall receive a maximum retirement allowance equal to three and one-third percent of average compensation, as determined under R.S. 11:231, for every year of creditable service, not to exceed one hundred percent of the member's average compensation.

(3)  In computing retirement allowances, any fractional period of service shall be taken into account and a proportionate amount of such retirement allowance, annuity, or benefit shall be granted.  The retirement benefits provided pursuant to the provisions of this Chapter shall not exceed one hundred percent of the member's average compensation.

B.(1)  The normal retirement benefit of any member of the retirement system who is a qualified participant cannot exceed the greater of: the accrued benefit at retirement of the member as if such benefit were computed under R.S. 11:444(A) as in effect on October 14, 1987, or the limitation provided in R.S. 11:444(C) 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 I.R.C. §125 or I.R.C. §457, shall be considered as not reducing the accrued benefit referred to in the preceding sentence.

(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 above, 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 limitations of I.R.C. §415(b) other than the Paragraph (2)(G) thereof applied without regard to Paragraph (2)(F) thereof, which limitations are set forth in R.S. 11:444(C).  Such limitations shall apply to all members who are not qualified participants as described herein.

C.  The retirement benefit of any member of this system who is not a qualified participant, as defined in Paragraph B(2) of this Section, when expressed as an annual benefit may not exceed the lesser of either the annual benefit authorized by Section 415(d) of the United States Internal Revenue Code or one hundred percent of such member's average compensation for his highest three years.  For purposes of determining whether a member's benefit exceeds the limitations of this Subsection, 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 outlined above.

(b)  No adjustment is required for the following: Qualified joint and survivor annuity benefits; pre-retirement disability benefits; pre-retirement death benefits; and 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 retirement 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 Section 216(l) of the Social Security Act,* except that such Section shall be applied:

(a)  Without regard to the age increase factor, and

(b)  As if the early retirement age under Section 216(l)(2) of such Act* were sixty-two.

(5)  Interest assumption.  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, or

(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, or

(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 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 the first Paragraph of this Subsection (ninety thousand dollars) will be multiplied by a fraction, the numerator of which is the member's number of years of participation in the system (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 referred to in the first Paragraph of this Subsection (one hundred percent of compensation) and the dollar limitation referred to in Paragraph (9) below (ten thousand dollars) 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 of which is ten.

(7)  Annual adjustment.  The annual benefit limitation, which is based on Section 415(d) of the United States Internal Revenue Code, as 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 shall not take effect until 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.

(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 year, and

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

(10)  Average compensation.

(a)  For purposes of Subsection A, 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 Internal Revenue Code Section 414(h) or Section 125 or Section 457 or any other provision of federal law of similar effect.

(b)  For purposes of this Subsection, average compensation shall include total compensation payable by the employer and included in the employee's income for federal income tax purposes, and shall exclude amounts not includable in the member's gross income by reason of Internal Revenue Code Section 414(h).  A member's highest three years shall be the period of consecutive calendar years (not more than three) during which the member both was an active participant in the plan and had the greatest aggregate compensation from the employer.

(11)  Annual compensation limitation for determination of benefits.  Unless otherwise provided in this Chapter, the accrued benefit of each "Section 401(a)(17) employee", as that term is defined in this Subsection, shall be the greater of the following:

(a)  The employee's accrued benefit determined with respect to the benefit formula applicable for the plan year beginning on or after January 1, 1996, as applied to the employee's total years of service taken into account for purposes of benefit accruals.

(b)  The sum of:

(i)  The employee's accrued benefit as of the last day of the last plan year beginning before January 1, 1996, frozen in accordance with the provisions of Section 1.401(a)(4) through (13) of the Code of Federal Regulations.

(ii)  The employee's accrued benefit determined under the benefit formula applicable for the plan year beginning on or after January 1, 1996, as applied to the employee's years of service credited to the employee for plan years beginning on or after January 1, 1996, for purposes of benefit accruals.

(c)  For purposes of this Subsection, a "Section 401(a)(17) employee" shall mean an employee whose current accrued benefit as of a date on or after the first day of the first plan year beginning on or after January 1, 1996, is based on compensation for a year beginning prior to the first day of the first plan year beginning on or after January 1, 1996, that exceeded one hundred fifty thousand dollars.

(d)  If an employee is not a "Section 401(a)(17) employee", his accrued benefit in this system shall not be based upon compensation in excess of the annual limit provided for in Section 401(a)(17) of the United States Internal Revenue Code, as amended and revised.

Acts 1972, No. 135, §1, eff. July 26, 1972.  Amended by Acts 1973, No. 4, §1; Acts 1983, No. 674, §3; Acts 1986, No. 608, §2, eff. July 1, 1986; Acts 1988, No. 664, §1, eff. July 15, 1988; Acts 1989, No. 220, §1; Redesignated from R.S. 42:575 by Acts 1991, No. 74, §3, eff. June 25, 1991; Acts 1995, No. 1112, §1; Acts 1999, No. 42, §1, eff. May 28, 1999; Acts 2001, No. 746, §1, eff. Dec. 31, 2001; Acts 2005, No. 75, §1, eff. July 1, 2005; Acts 2006, No. 835, §1, eff. July 1, 2006.

*NOTE: SEE 42 U.S.C. §416(l).

NOTE:  See Acts 2004, No. 7, §6, providing that the Act shall not affect or change any law relative to retirement or retirement or survivor benefits of employees of the Dept. of Public Safety and Corrections.