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2020 Tennessee Code
Title 8 - Public Officers and Employees
Chapter 36 - Retirement Benefits
Part 1 - General Provisions
§ 8-36-102. Limitation on Amount of Retirement Allowance
Universal Citation: TN Code § 8-36-102 (2020)
- Notwithstanding any other law to the contrary, no retirement allowance payable to any member retiring under the provisions of the consolidated retirement system or any superseded system after June 30, 1975, shall exceed the average final compensation or benefit base of such member; provided, that this section shall not be construed to prevent any increase in retirement allowance of such member in excess of the final average compensation or benefit base when such increase is in accordance with § 8-36-701.
- Notwithstanding any other law to the contrary, the member contributions paid to and retirement benefits paid from the plan shall be limited to such extent as may be necessary to conform to the requirements of § 415 of the Internal Revenue Code (26 U.S.C. § 415), for a qualified plan.
- Participation in other qualified plans: aggregation of limits.
- The limit under § 415(b) of the Internal Revenue Code (26 U.S.C. § 415(b)) with respect to any member who at any time has been a member in any other defined benefit plan as defined in § 414(j) of the Internal Revenue Code (26 U.S.C. § 414(j)), maintained by the member's employer in this plan shall apply as if the total benefits payable under all such defined benefit plans in which the member has been a member were payable from one (1) plan.
- The limit under § 415(c) of the Internal Revenue Code (26 U.S.C. § 415(c)) with respect to any member who at any time has been a member in any other defined contribution plan, as defined in § 414(i) of the Internal Revenue Code (26 U.S.C. § 414(i)), maintained by the member's employer in this plan shall apply as if the total annual additions under all such defined contribution plans in which the member has been a member were payable from one (1) plan.
- Basic § 415(b) limitation. Before January 1, 1995, a member may not receive an annual benefit that exceeds the limits specified in § 415(b) of the Internal Revenue Code (26 U.S.C. § 415(b)), subject to the applicable adjustments in that section. On and after January 1, 1995, a member may not receive an annual benefit that exceeds the dollar amount specified in § 415(b)(1)(A) of the Internal Revenue Code (26 U.S.C. § 415(b)(1)(A)), subject to the applicable adjustments in § 415(b) of the Internal Revenue Code (26 U.S.C. § 415(b)) and subject to any additional limits that may be specified in the retirement system. In no event shall a member's annual benefit payable under the plan in any limitation year be greater than the limit applicable at the annuity starting date, as increased in subsequent years pursuant to § 415(d) of the Internal Revenue Code (26 U.S.C. § 415(d)) and the regulations thereunder.
- Effect of COLA on § 415(b) testing. Effective on and after January 1, 2009, for purposes of applying the limits under § 415(b) of the Internal Revenue Code (26 U.S.C. § 415(b)) (the “limit”) to a member with no lump sum benefit, the following shall apply:
- A member's applicable limit shall be applied to the member's annual benefit in the member's first limitation year without regard to any cost-of-living adjustment under § 8-36-701;
- To the extent that the member's annual benefit equals or exceeds the limit, the member shall no longer be eligible for cost-of-living increases until such time as the benefit plus the accumulated increases are less than the limit; and
- Thereafter, in any subsequent limitation year, a member's annual benefit, including any cost-of-living increases under § 8-36-701, shall be tested under the then applicable benefit limit including any adjustment to the § 415(b)(1)(A) of the Internal Revenue Code (26 U.S.C. § 415(b)(1)(A)) dollar limit under § 415(d) of the Internal Revenue Code (26 U.S.C. § 415(d)), and the regulations thereunder.
- Section 415(c) Limitations. For purposes of applying § 415(c) of the Internal Revenue Code (26 U.S.C. § 415(c)) and for no other purpose, the definition of compensation where applicable shall be compensation as defined by Treasury Regulation § 1.415(c)-2(d)(3), or successor regulation; provided, however, that member contributions picked up under § 414(h) of the Internal Revenue Code (26 U.S.C. § 415(h)) shall not be treated as compensation. A member's compensation for purposes of this subsection (f) shall not exceed the annual limit under § 401(a)(17) of the Internal Revenue Code (26 U.S.C. § 415(f)(17)), which applies for that year. If the annual additions for any member for a plan year exceed the limitation under § 415(c) of the Internal Revenue Code (26 U.S.C. § 415(c)), the excess annual addition shall be corrected as permitted under the Employee Plans Compliance Resolution System or similar IRS correction program.
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