2018 Louisiana Laws
Revised Statutes
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. The annual retirement benefit of any member of the plan who is not a qualified participant, as defined by Paragraph (A)(2) 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 outlined in this Section.
(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 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 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 42 U.S.C. §416 were sixty-two.
(5) 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.
(6) Adjustment for less than ten years of participation or service.
(a) If retirement benefits are payable under this plan to a member who has less than ten years of participation in the plan, the dollar limitation referred to in the Introductory Paragraph of this Subsection shall be multiplied by a fraction, the numerator of which is the member's number of years of participation in the plan, not greater than ten, and the denominator of which is ten.
(b) If retirement benefits are payable under this plan to a member who has less than ten years of service with the employer, the percentage limitation referred to in the Introductory Paragraph of this Subsection and the dollar limitation referred to in Paragraph (9) of this Subsection shall 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 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 plan and to members who have retired or otherwise terminated their service under the plan 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 the 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) 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.
(9) 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.
(10) 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. The board of trustees shall make no actuarial adjustment under this Section by reason of the member's retirement after normal retirement age.
D. The board of trustees shall adopt rules for the administration of the limits provided in this Section and the limitations under Section 415 of the Internal Revenue Code including adjustments in the annual dollar limitation to reflect any cost-of-living adjustments authorized by the Internal Revenue Code.
E.(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.
Acts 1998, 1st Ex. Sess., No. 97, §1, eff. May 5, 1998; Acts 2011, No. 399, §1, eff. July 1, 2011; Acts 2014, No. 648, §2, eff. July 1, 2015.
