PERAC Memo #17 - 2003: 2003 limits under Chapter 46 of the Acts of 2002
2003 limits under Chapter 46 of the Acts of 2002
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This memo updates the 2003 IRS limits under Chapter 46 of the Acts of 2002, which conforms Massachusetts retirement law to federal caps on compensation used in benefit calculations (IRC §401(a)(17)) and on maximum retirement allowances (IRC §415). Both limits remain unchanged from 2002—$200,000 for compensation and $160,000 annually for benefits at age 65 (subject to adjustment for early retirement)—and affect only the highest-paid members. Boards with potentially affected members who have not already consulted PERAC should review Memo #27/2002 for detailed criteria and contact PERAC's actuary, Jim Lamenzo, with questions.
Full Text
Memorandum # 17/2003
M E M O R A N D U M TO: All Retirement Boards FROM: Joseph E. Connarton, Executive Director RE: 2003 limits under Chapter 46 of the Acts of 2002
DATE: May 29, 2003
PERAC Memos # 27/2002 and # 45/2002 briefly outlined Chapter 46 of the Acts of 2002. This law brings the Massachusetts Retirement Law into compliance with Federal Limitations on the compensation used to calculate retirement allowances and the dollar amounts of retirement allowances. This provision affects only the highest paid employees and will not apply to most retirement systems and most retirement system members.
A number of systems that have members who are or may be affected by these limitations have contacted us over the past year. We ha ve reviewed the individual circumstances for these members. For any system that has not contacted us with but has potentially affected members, please review PERAC Memo # 27/2002 which provides more detailed criteria.
The regulations regarding Section 401(a)(17) (compensation limit) and Section 415 (benefit limit) of the Internal Revenue Code are quite complex and can vary under individual circumstances. The compensation limit for 2003 is generally $200,000 (the same as the 2002 limit, however it may be higher in certain situations). The general benefit limit for 2003 is $160,000 per year for a member retiring at age 65 (the same as the 2002 limit, although this limit is generally reduced for early retirement). These limitations are indexed each year.
Please contact our actuary, Jim Lamenzo, if you have any questions.