PERAC Memo #36 - 2010: Proposed Amendment to Internal Revenue Code Compliance Provisions

Proposed Amendment to Internal Revenue Code Compliance Provisions

Summary

This memo announces IRS-required technical amendments to PERAC regulation 840 CMR 3.08, which governs actuarial assumptions used in applying the IRC Section 415(b) benefit limit; the changes are non-substantive and needed to secure the IRS's favorable determination letter for the Massachusetts Retirement Systems. No board action is required beyond optional review of the draft amendment (posted on PERAC's website) and, if desired, submission of public comments or attendance at the October 20, 2010 hearing.

Full Text

MEMORANDUM #36, 2010 M E M O R A N D U M TO: All Retirement Boards FROM: Joseph E. Connarton, Executive Director RE: Proposed Amendment to Internal Revenue Code Compliance Provisions DATE: October 4, 2010 In 2009 the Public Employee Retirement Administration Commission (?PERAC?) promulgated regulations to bring the Massachusetts Retirement Systems into compliance with the relevant Internal Revenue Code Requirements. The Internal Revenue Service has completed its review of the Systems and has issued a favorable determination letter that is conditioned on an amendment to one of the regulations (840 CMR 3.08). The technical amendments that were required by the IRS make slight changes to the PERAC regulation regarding application of the limit under Code Section 415(b). This IRS provision places a limit on the amount of the benefit that may be paid by a qualified retirement plan. These amendments relate to the actuarial assumptions used to determine the appropriate benefit limit, depending on the payment option and age of the member. The amendments do not make any substantive changes to the prior language that was adopted by the Commission, but simply reflect technical language changes that were preferred by the IRS reviewing agent. A draft of the proposed amendment to 840 CMR 3.08 has been posted on the PERAC web site. If you are unable to access the posting and print it, please contact Susan F. Childs, (617) 666-4446 Extension 907 to request a hard copy. A hearing on the amendment will be held on Wednesday, October 20, 2010 in the PERAC Training Room from 1:00 to 3:00 p.m. Public comments will be accepted through October 20, 2010. Directions to the hearing can be obtained at: