PERAC Memo #9 - 2008: 2008 Limits under Chapter 46 of the Acts of 2002

2008 Limits under Chapter 46 of the Acts of 2002

Summary

This memo provides the 2008 IRS-indexed limits under Chapter 46 of the Acts of 2002: the compensation cap is $230,000 ($345,000 for members who joined prior to 12/31/95), and the benefit limit is $185,000/year for retirement at age 65 (reduced for earlier retirement). These limits affect only the highest-paid members and most systems/members will not be impacted; boards should apply these figures when calculating affected members' retirement allowances and contact PERAC's actuary with questions.

Full Text

MEMORANDUM #9, 2008 M E M O R A N D U M TO: All Retirement Boards FROM: Joseph.Connarton, Executive Director RE: 2008 Limits under Chapter 46 of the Acts of 2002 DATE: January 28, 2008 Prior PERAC Memos (# 27/2002, # 45/2002, and #17/2003) briefly outlined Chapter 46 of the Acts of 2002. This law brought 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. 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 2008 is generally $230,000 ($345,000 if a current member became a member prior to 12/31/95). The general benefit limit for 2008 is $185,000 per year for a member retiring at age 65 although this limit is generally reduced for retirement prior to age 62. These limitations are indexed each year. Please contact our Actuary, Jim Lamenzo, if you have any questions.