PERAC Memo #1 - 2013: 2013 Limits under Chapter 46 of the Acts of 2002

2013 Limits under Chapter 46 of the Acts of 2002

Summary

PERAC Memo #1/2013 provides the annual IRS Section 401(a)(17) and Section 415 limits for 2013, setting the compensation limit used to calculate retirement allowances at $255,000 and the general annual benefit limit at $205,000 for retirement at age 65 (reduced for earlier retirement ages). These limits, as indexed annually under Chapter 46 of the Acts of 2002, apply only to a system's highest-paid members, so boards need only apply them when calculating benefits for those affected employees, with questions directed to PERAC's Actuary.

Full Text

PERAC MEMO # 1/2013

M E M O R A N D U M TO: All Retirement Boards FROM: Joseph E. Connarton, Executive Director RE: 2013 Limits under Chapter 46 of the Acts of 2002

DATE: January 4 , 2013

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 2013 is $255,000. The general benefit limit for 201 3 is $205,000 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.