PERAC Memo #2 - 2016: 2016 Limits under Chapter 46 of the Acts of 2002
2016 Limits under Chapter 46 of the Acts of 2002
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PERAC Memo #2/2016 updates the IRS Chapter 46 (2002) compensation and benefit limits for 2016: the IRC §401(a)(17) compensation cap is $265,000, and the IRC §415 annual benefit limit is $210,000 for a member retiring at age 65 (reduced for earlier retirement ages). These limits, which are indexed annually, primarily affect higher-paid members; boards need only apply the updated figures when calculating benefits for affected members and may contact PERAC Actuary Jim Lamenzo with questions—no further action is required.
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PERAC MEMO # 2/2016
M E M O R A N D U M TO: All Retirement Boards FROM: Joseph E. Connarton, Executive Director RE: 2016 Limits under Chapter 46 of the Acts of 2002
DATE: January 8, 2016
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 2016 is $265,000. The general benefit limit for 2016 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.