PERAC Memo #10 - 2012: 2012 Limits under Chapter 46 of the Acts of 2002
2012 Limits under Chapter 46 of the Acts of 2002
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PERAC Memo #10/2012 updates the Chapter 46 (2002) compensation and benefit limits under IRC §401(a)(17) and §415 for 2012: the compensation cap is $250,000 and the general benefit limit is $200,000/year at age 65 (reduced for earlier retirement). This applies only to the highest-paid members and most systems/members will be unaffected; boards should apply these updated limits when calculating affected members' allowances and contact PERAC's Actuary Jim Lamenzo with questions—no other action is required.
Full Text
MEMORANDUM #10, 2012 Gregory R. Mennis M E M O R A N D U M TO: All Retirement Boards FROM: Joseph E. Connarton, Executive Director RE: 2012 Limits under Chapter 46 of the Acts of 2002 DATE: January 18, 2012 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 general compensation limit for 2012 is $250,000. The general benefit limit for 2012 is $200,000 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.