PERAC Memo #2 - 2021: 2021 Limits under Chapter 46 of the Acts of 2002
2021 Limits under Chapter 46 of the Acts of 2002
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Sets the 2021 IRC Section 401(a)(17) compensation limit at $290,000 and the Section 415 annual benefit limit at $230,000 (at age 65, reduced before age 62) per Chapter 46 of the Acts of 2002. Applies only to the highest-paid members whose compensation or benefit would otherwise exceed the federal caps.
Full Text
Memorandum Memorandum #02: 2021 Limits under Chapter 46 of the Acts of 2002 Date: 01/11/2021 Referenced Sources: PERAC Website PERAC Memo #02, 2021
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TO: All Retirement Boards
FROM: John W. Parsons, Esq., Executive Director
RE: 2021 Limits under Chapter 46 of the Acts of 2002
DATE: January 8, 2021
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 2021 is $290,000. The general benefit limit for 2021 is $230,000 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 John Boorack if you have any questions.