2009 Louisiana Laws TITLE 11 Consolidated public retirement :: RS 11:3685.2 Computation of retirement benefits

§3685.2.  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 computed under the provisions of R.S. 11:3685(A)(1) in effect on October 14, 1987.  However, any election made by the member after October 14, 1987, which would have had the effect of reducing such benefits, such as an election under Section 125 or 457 of the Internal Revenue Code, shall be considered as not reducing the accrued benefit.

(b)  The retirement benefit computed under the provisions of Section 415(b) of the Internal Revenue Code as if the qualified participant were not a qualified participant.

(2)  In the case of a merger or transfer of a member's assets and benefits 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 Subsection, 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 and applied without regard to Paragraph (2)(F) thereof. Such limitations shall apply to all members who are not qualified participants.

B.(1)  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 limitations provided in this Subsection.

(2)  The benefits payable with respect to a participant under any defined benefit plan shall be deemed not to exceed the limitations of Section 415(b) of the Internal Revenue Code 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.

(3)  The interest rate used for adjusting the maximum limitations of Section 415(b) of the Internal Revenue Code shall be as follows:

(a)  For benefits commencing before social security retirement age and for forms of benefits other than straight life annuity, the greater of five percent or the rate used to determine the actuarial equivalent.

(b)  For benefits commencing after social security retirement age, the lesser of five percent or the rate used to determine actuarial equivalent.

(4)  No benefit shall be considered to have exceeded the limitation provisions of this Section if the amount of the initial benefits did not exceed the limitations of Section 415(b) of the Internal Revenue Code, nor exceed any comparable provision in effect at the time of the initial payment, and the amount of any subsequent benefits payable in any year did not exceed the amount of the initial benefits, except for allowable cost-of-living adjustments.

C.(1)  The provisions of this Section shall apply if any member is covered, or has been covered, by another plan maintained by the employer, including a qualified plan or a welfare benefit plan as defined in Internal Revenue Code Section 419(e), or an individual medical account as defined by Internal Revenue Code Section 415(l)(2).

(2)  If a member is or has ever been covered under more than one defined benefit plan maintained by the employer, the sum of the members annual benefit from all such plans shall not exceed the maximum amount permissible.

(3)(a)  If the employer maintains or at any time maintained one or more qualified defined contribution plans covering any member in this system, a welfare benefit fund as defined in Internal Revenue Code Section 419(e), or an individual medical account as defined by Internal Revenue Code Section 415(l)(2), the sum of the member's defined contribution fraction and defined benefit fraction shall not exceed one percent in any limitation year and the annual benefit otherwise payable to the member under this system shall be limited in order to satisfy such limitations.  This provision shall no longer be effective for plan years beginning after December 31, 1999.

(b)(i)  The numerator of a defined benefit fraction is the sum of the member's projected annual benefits under all of the defined benefit plans, whether or not terminated or maintained by the employer.  The denominator of a defined benefit fraction is the lesser of one hundred twenty-five percent of the dollar limitation determined for the limitation year under Internal Revenue Code Section 415(b) and (d) or one hundred forty percent of the highest average compensation, including any adjustments under Internal Revenue Code Section 415(b).

(ii)  If the member was a member as of January 1, 1998, in one or more defined benefit plans or defined contribution plans, or both, maintained by the employer which were in existence on May 6, 1986, the denominator of the defined benefit fraction shall not be less than one hundred twenty-five percent of the sum of the annual benefits under such plans which the member had accrued as of the close of the last limitation year beginning before January 1, 1987, regardless of any changes in the terms and conditions of the plan after May 5, 1986; however, the provisions of this Item are applicable only if the defined benefit plans individually and in the aggregate satisfy the requirements of Internal Revenue Code Section 415 for all limitation years beginning before January 1, 1987.

(c)(i)  The numerator of a defined contribution fraction is the sum of the annual additions to the member's account under all of the defined contribution plans, whether or not terminated or maintained by the employer for the current and all prior limitation years, including the annual additions attributable to the member's nondeductible employee contributions to this plan and all other defined contribution plans maintained by the employer whether or not terminated, and the annual additions attributable to all welfare benefit funds as defined in Internal Revenue Code Section 419(e) or individual medical accounts as defined in Internal Revenue Code Section 415(l)(2) that are maintained by the employer.  The denominator of the defined contribution fraction is the sums of the maximum aggregate amounts for the current and all prior limitation years of service with the employer, regardless of whether a defined contribution plan was maintained by the employer.  The maximum aggregate amount in any limitation year is the lesser of one hundred twenty-five percent of the dollar limitation determined under Section 415(b) and (d) of the Internal Revenue Code in effect under Internal Revenue Code Section 415(c)(1)(A) or thirty-five percent of the member's compensation for such year.

(ii)  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 and shall be taken into account for purposes of determining the defined benefit fraction.

(iii)  If the employee was a member as of the first day of the first limitation year beginning after December 31, 1986, in one or more defined contribution plans maintained by the employer which were in existence on May 6, 1986, the numerator of this fraction shall be adjusted if the sum of this fraction and the defined benefit fraction would otherwise exceed one percent under the terms of this plan.  Under the adjustment, an  amount equal to the product of the excess of the sum of the fraction over one percent times the denominator of this fraction, shall be permanently subtracted from the numerator of this fraction.  The adjustment is calculated using the fractions as they would be computed as of the end of the limitation year beginning before January 1, 1987, and disregarding any changes in the terms and conditions of the plans made after May 5, 1986, but using the limitations set forth in Section 415 of the Internal Revenue Code, made applicable to the first limitation year beginning on or after January 1, 1987.

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

Acts 1998, 1st Ex. Sess., No. 97, §1, eff. May 5, 1998.