PERAC Memo #1 - 2014: 2014 Limits under Chapter 46 of the Acts of 2002

2014 Limits under Chapter 46 of the Acts of 2002

Summary

This memo provides the annual updated federal limits under Chapter 46 of the Acts of 2002 for 2014: the IRC Section 401(a)(17) compensation limit is $260,000, and the IRC Section 415 benefit limit is $210,000 (for retirement at age 65, reduced for earlier retirement). These limits affect only the system's highest-paid members and require no action by boards beyond applying them when calculating compensation and benefits for affected members; questions should be directed to PERAC's Actuary, Jim Lamenzo.

Full Text

MEMORANDUM #01, 2014 Robert B. McCarthy M E M O R A N D U M TO: All Retirement Boards FROM: Joseph E. Connarton, Executive Director RE: 2014 Limits under Chapter 46 of the Acts of 2002 DATE: January 6, 2014 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 generally affects only the highest paid employees and will not apply to 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 2014 is $260,000. The general benefit limit for 2013 is $210,000 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.