contributions

Section 1 establishes the definitions for all key terms used throughout Sections 1–28 of Chapter 32, the Massachusetts public employee retirement law. It defines over 60 terms including member classifications, types of deductions, compensation concepts, retirement allowance components, and system-specific vocabulary. Retirement board administrators rely on this section to correctly interpret and apply every other section in the chapter, as terms such as 'regular compensation,' 'creditable service,' and 'accumulated total deductions' appear throughout and carry precise statutory meanings.

Section 3 governs the conditions of membership in a Massachusetts contributory retirement system, covering both member-in-service and member-inactive status, how membership begins and ends, and special membership scenarios. It establishes the four group classifications (Group 1 through Group 4) that determine retirement age thresholds and benefit formulas, and specifies the criteria for assignment to each group. The section also addresses multiple-system membership, part-time and intermittent employment, leaves of absence, dual compensation situations, and the procedures for reinstatement or transfer of membership between systems.

Section 4 defines creditable service under Chapter 32 — the service credit that forms the basis of a member's retirement allowance calculation. It covers how current and prior service is credited, conditions for military service credit, leaves of absence, service with multiple governmental units, purchase of prior service, and service buybacks. The section also includes provisions for credited service during various types of leave, including unpaid leave, FMLA, and military duty, and establishes rules for members who transfer between systems or have gaps in service.

Section 5 governs superannuation (regular age-and-service) retirement under Chapter 32. It sets the eligibility conditions based on age and group classification, defines the benefit formula using a percentage-of-average-salary table multiplied by years of creditable service, and provides separate tables for employees hired before and after April 2, 2012. The section also establishes the alternative superannuation retirement benefit program for teachers (the 11% contribution tier), the 80% maximum benefit cap, special rules for veterans, and limitations imposed by Internal Revenue Code Section 415.

Section 11 governs the return of accumulated total deductions to members who are not entitled to a retirement allowance, and the distribution of those deductions to beneficiaries upon a member's death before retirement. It establishes the 60-day payment timeline, a reduced interest rate (3%) for members who leave with fewer than 120 months of service after January 1, 1984, and procedures for the IV-D child support agency to intercept refunds when a member owes child support arrears. The section also addresses dormant accounts — transferring unclaimed deductions to the Pension Reserve Fund after 10 years — and establishes the rights of claimants to recover such transferred amounts.

Section 13 governs when and how retirement allowances, annuities, and pensions are paid under Chapter 32. It establishes monthly payment schedules, pro rata rules for partial months, and authorizes direct deposit requirements. It also provides that members entitled to very small allowances (under $360/year) receive a lump-sum refund of accumulated deductions in lieu of ongoing payments, with an optional lump-sum available for allowances under $600/year upon written request.

Section 22 is the primary financing and fund structure provision for Massachusetts public retirement systems, establishing seven distinct funds within each system: the Annuity Savings Fund (member contributions), Annuity Reserve Fund (retirement annuities), Pension Fund (employer pension payments), Special Fund for Military Service Credit, Expense Fund (administration), Pension Reserve Fund (unfunded liability reserves), and the Commonwealth's Pension Liability Fund. Member contribution rates vary from 5% to 12% of regular compensation depending on entry date and employee group, with employees entering on or after July 1, 1996 contributing 9%. The section also governs the Pension Reserves Investment Trust (PRIT) Fund administered by the PRIM board, under-performing system transfer requirements, employer pickup of employee contributions, and detailed appropriation procedures for all system types.

Section 22B requires the Governor to recommend an annual appropriation to the PRIT Fund to reduce the unfunded pension liability of participating retirement systems. The recommended amount must be at least 1.3% of total appropriations for state employee salaries in the subsidiary accounts "01" and "02" for that fiscal year.

Section 22C establishes the commonwealth's mandatory funding schedule for transferring amounts to the Commonwealth's Pension Liability Fund to eliminate the state's unfunded pension liability by June 30, 2040. The Commissioner of Administration must file and update a triennial funding schedule reviewed and approved by the House and Senate Ways and Means Committees, with annual increases in the amortization component capped at 7.5%. For fiscal years 2024–2026, specific dollar amounts are fixed by statute: $4,104,583,378; $4,499,854,757; and $4,933,190,770. The section also requires an additional Governor's recommendation for an amount equal to the full normal cost and benefits paid, and authorizes an advanced funding schedule for surplus investment returns.

Section 22D allows local and county retirement systems (other than state and teachers') to voluntarily adopt a formal funding schedule designed to eliminate their unfunded actuarial liability by June 30, 2030. Systems accepting this section may receive annual pension funding grants from the Commonwealth, calculated as a share of revenue growth in state income, corporate, and sales taxes. Acceptance also triggers mandatory adoption of several benefit provisions — including 10-year vesting, supplemental dependent allowances, survivor benefits, and fitness/wellness programs — and requires annual reports to members. Acceptance is irrevocable.

Section 22F allows local and county retirement systems to revise their existing Section 22D funding schedules based on an actuarial valuation conducted as of January 1, 2009 or later, extending the unfunded liability amortization period to no later than June 30, 2040. Annual amortization increases under a revised schedule may not exceed 4%, no year's payment may be less than the prior year's payment until fully funded, and if a year's payment would exceed the prior year by more than 8%, PERAC approval is required. Systems may also use a revised schedule to increase the COLA base amount in $1,000 increments.

Section 28K governs retirement system membership for Commonwealth or political subdivision employees who take a leave of absence (full-time or part-time) to serve as a representative of an employee organization. Such employees are treated as on unpaid leave, but continue to accrue creditable service as if in active service and must continue making monthly retirement contributions at the rate they would have paid if still working. The employee retains all retirement benefits and privileges except salary during the leave. The provision for crediting service back to January 1, 1975 requires majority board vote and acceptance by the appropriate legislative body, with a certificate of acceptance filed with PERAC.

Section 39 authorizes private employers and their employees to form voluntary associations for the purpose of providing annuities, pensions, or endowments upon retirement on account of age. Both employees (contributing a percentage of wages) and employers contribute to association funds held by independent trustees. The funds may be used for retirement benefits, death benefits for pre-retirement deaths, withdrawal refunds, and administrative expenses. Such associations are exempt from insurance company regulations, and may cover employees of affiliated corporations in the same or related fields under common management.

Section 65D establishes the contributory retirement system for judges appointed on or after January 2, 1975, requiring salary deductions of 7–10% into a judges' retirement fund, providing 75% of salary upon retirement at age 65 after 15 continuous years or mandatory retirement at 70, with a judges' retirement fund to pay benefits and refunds.

Section 104 establishes two supplemental funds to pay benefits that federal tax law limits would otherwise prevent: (a) a Section 401(a)(17) Excess Fund to pay the difference between the retirement allowance that would have been paid absent the federal compensation cap and what is actually payable; and (b) a Section 415 Excess Benefit Fund to pay the difference between what would be paid without federal benefit limits and what is actually payable under those limits.

Section 105 allows members retired under sections 5 or 10 to be reinstated in a retirement system by repaying all retirement allowances received plus buyback interest; upon reinstatement they resume contributing and earn creditable service, but receive a refund of reinstatement payments (without service credit) if they separate with fewer than 5 years of reinstatement service.

Section 106 protects retirement allowances that included annual vacation leave buyout payments on which contributions were made, providing that such allowances shall not be reduced because of those contributions; it also specifies that vacation leave buyout payments qualifying as regular compensation as of May 1, 2018 continue to be treated as such for members who were in service on that date, subject to anti-spiking conditions.

This memo sets the 2025 'regular interest' rate at 0.1% for regular and additional deductions made after January 1, 1984, as required by G.L. c. 32, § 22(6)(b). The rate is derived from the average rates paid on individual savings accounts at a representative sample of at least 10 financial institutions. Boards must apply this rate to accumulated total deductions for refunds, retirements, and year-end crediting on December 31, 2025.

This memo provides the 2025 IRS compensation and benefit limits applicable to Massachusetts retirement systems under Chapter 46 of the Acts of 2002. The general IRC Section 401(a)(17) compensation limit for 2025 is $350,000, and the IRC Section 415 benefit limit for a member retiring at age 65 is $280,000 per year (reduced for retirement before age 62). These limits are indexed annually and generally affect only the highest-paid employees.

This memo establishes the 2025 cap on 'regular compensation' for members who joined a retirement system after January 1, 2011. Under Section 23 of Chapter 131 of the Acts of 2010, regular compensation for post-2011 members may not exceed 64% of the federal 401(a)(17) limit, which for 2025 results in a $224,000 cap. Boards must apply this limit when calculating contributions and retirement benefits for affected members.

PERAC distributes the 2025 repayment worksheets and cumulative interest factor sheets for calculating buybacks and make-ups under various Chapter 32 provisions. The packet includes three worksheets each for buyback interest and actuarial interest, and two pages of cumulative factors for each rate. Boards should consult PERAC Memo #23/2012 to determine whether buyback interest or actuarial interest applies for specific buyback categories under §§ 3(3), 3(4), 3(4A), 3(5), 3(6)(d), and 3(8)(b).

PERAC releases updated Member Refund and Beneficiary Refund forms, along with a revised IRS Special Tax Notice, reflecting recent federal tax changes under the SECURE and SECURE 2.0 Acts, particularly regarding pre-tax and post-tax contribution treatment for rollovers and direct payments. All boards must use these updated forms in place of prior versions, available on the PERAC website. The IRS Special Tax Notice must be individually provided to each member or beneficiary applying for a refund; electronic delivery is permitted if Treasury Regulation requirements are satisfied.

Section 26 of Chapter 9 of the Acts of 2025 (the FY2026 Budget) amends the definition of 'wages' in G.L. c. 32, § 1 to clarify that accrued sick, personal, or vacation leave constitutes regular compensation when used — except when used as a supplement to Workers' Compensation under Chapter 152. This supersedes Memo #23/2023 and means that accrued leave used to supplement PFML payments is now regular compensation effective July 1, 2025, requiring retirement deductions to be withheld from such supplemental leave payments.

This memo sets the 2024 "regular interest" rate at 0.1% for regular and additional deductions made after January 1, 1984, as required by G.L. c. 32, § 22(6)(b). The rate is derived from the average rates paid on individual savings accounts at a representative sample of at least 10 financial institutions. Boards must apply this rate to accumulated total deductions for refunds, retirements, and year-end crediting on December 31, 2024.

Chapter 141 of the Acts of 2024 (Salary Transparency Act), signed July 31, 2024, amends G.L. c. 32, § 5(2)(f) to exempt from the anti-spiking provision salary increases required under the Massachusetts Equal Pay Act (MEPA) and employer-wide "systemic wage adjustments," retroactive to July 1, 2018. Because DALA had previously ruled that MEPA increases were not exempt, some members had their retirement allowances improperly reduced. Boards must now identify affected retirees, recalculate their allowances, and pay a lump-sum correction plus correction-of-errors interest, offsetting any contributions that were previously refunded when anti-spiking was applied.

The HERO Act (Chapter 178 of the Acts of 2024), signed August 8, 2024, makes substantial changes to veterans' creditable service buybacks under Chapter 32. It replaces the old 180-day window with a new deadline of within one year of vesting (effectively 11 years of creditable service), and creates a one-year grace period — until August 8, 2025 — for active members who missed their original opportunity. Most urgently, boards must send written notice to all active members by November 6, 2024, using the sample notice attached, and must begin providing veterans' buyback information to all new members at enrollment.

The SJC's September 2024 ruling in Hartnett v. CRAB overturned PERAC's longstanding interpretation of the G.L. c. 32, § 5(2)(a) anti-spiking provision, holding that "2 consecutive years" means consecutive calendar years — not consecutive years of creditable service. As a result, members who had anti-spiking applied based on salary differences between non-consecutive calendar years (e.g., a break in service followed by a return just before retirement) were improperly penalized. Boards must identify affected retirees, recalculate their allowances to remove any improper downward adjustment, and pay the underpayment plus correction-of-errors interest, offsetting any contributions previously refunded.

Chapter 149 of the Acts of 2024 (effective October 29, 2024) creates a new enhanced accidental disability benefit under G.L. c. 32, § 7 for firefighters, police officers, EMTs, and licensed health care professionals who suffer a catastrophic, life-threatening or life-altering permanent physical injury as the direct result of an intentional violent attack with a dangerous weapon. Qualifying members receive 100% of their regular compensation (reduced to 80% upon reaching mandatory retirement age), rather than the standard 72% pension, with prescribed survivor benefits for spouses and children. Boards must include Findings of Fact with every Violent Act Injury application submitted to PERAC for the required 30-day review.

This memo announces the 2023 federal compensation and benefit limits that apply to Massachusetts public retirement systems under Chapter 46 of the Acts of 2002, which brought G.L. c. 32 into compliance with IRC requirements. The general compensation limit under IRC § 401(a)(17) for 2023 is $330,000, and the annual benefit limit under IRC § 415 is $265,000 for members retiring at age 65 (reduced for earlier retirement). These limits affect only the highest-paid employees and no board action is required beyond awareness that they are in effect.

This memo announces the 2023 regular compensation cap applicable to members who joined a retirement system after January 1, 2011, as established by Section 23 of Chapter 131 of the Acts of 2010. Because the federal IRC § 401(a)(17) limit for 2023 is $330,000 (per Memo #2/2023), the 2023 cap on regular compensation for post-2010 members is $211,200 (64% of $330,000). Boards must ensure that compensation above this threshold is excluded when calculating retirement benefits for affected members.

This memo sets the "regular interest" rate for calendar year 2023 at 0.1%, as determined by PERAC in consultation with the Commissioner of Banks based on the average rates paid on individual savings accounts at a representative sample of at least ten financial institutions, pursuant to G.L. c. 32, § 22(6)(b). This rate applies to accumulated total deductions and accrued interest for refunds and retirements credited during 2023, and to outstanding balances as of December 31, 2022 credited on that date. No action is required of boards beyond applying this rate in their calculations.

This memo addresses a change in Massachusetts Paid Family and Medical Leave (PFML) law — effective November 1, 2023 under Chapter 55 of the Acts of 2023 — which now allows employees on PFML to supplement their benefits with accrued paid leave (sick, vacation, PTO, etc.), up to the employee's Individual Average Weekly Wage. Despite this change, PERAC clarifies that neither PFML benefits nor supplemental accrued leave payments constitute "regular compensation" under Chapter 32, relying on SJC precedent from Vernava I and Vernava II, because the employee is not performing services during leave; therefore, the period of PFML with supplemental pay does not generate creditable service. No board action is required beyond ensuring that retirement benefits are not enhanced based on income received while on PFML leave.

This memo explains the implementation of Section 82 of Chapter 28 of the Acts of 2023, which gives active members who elected to stop retirement contributions at age 70 under the repealed G.L. c. 32, § 90G 3/4 a one-time opportunity to rescind that election and receive creditable service for years worked after age 70. To be eligible, members must have maintained continuous service since their election, be active as of November 29, 2023, and elect to restart contributions and make up all missed contributions plus buyback interest by January 29, 2024 (60 days from PERAC's IRS clearance date). Boards must immediately identify any qualifying active members and provide them with the necessary information and the attached application form.

This memo announces the 2022 federal compensation and benefit limits applicable to Massachusetts public retirement systems under Chapter 46 of the Acts of 2002. The general compensation limit under IRC § 401(a)(17) is $305,000 for 2022, while the § 415 benefit limit is $245,000 per year for members retiring at age 65 (reduced for retirement before age 62). These limits affect only the highest-paid employees and are indexed annually.

This memo establishes the 2022 regular compensation cap for members who joined a Massachusetts retirement system after January 1, 2011, pursuant to Section 23 of Chapter 131 of the Acts of 2010. Because the federal § 401(a)(17) compensation limit for 2022 is $305,000, the 2022 cap on regular compensation for post-2010 members is $195,200 (64% of $305,000). Boards must apply this limit when calculating retirement benefits for affected members.

This memo establishes the "regular interest" rate for calendar year 2022 at 0.1%, as determined by PERAC in consultation with the Commissioner of Banks pursuant to G.L. c. 32, § 22(6)(b). This rate applies to accumulated total deductions and accrued interest for regular and additional deductions made after January 1, 1984, and must be credited for all refunds, retirements, and outstanding year-end balances in 2022.

This memo distributes the 2022 buyback and make-up repayment worksheets and cumulative interest factor sheets for use in calculating service purchases under various provisions of G.L. c. 32. Boards must use the buyback interest or actuarial interest worksheet depending on the specific statutory subsection involved, with three repayment worksheets provided for each rate type along with cumulative interest factor sheets. Questions should be directed to John Boorack at PERAC.

Following the SJC's February 4, 2022 decision in Vernava II (Worcester Regional Retirement Board v. PERAC), this memo provides comprehensive, action-required guidance directing all retirement boards to immediately implement the ruling that supplemental payments of any kind made concurrently with Workers' Compensation benefits do not constitute "regular compensation" under any section of Chapter 32. Boards must identify all active members, inactive members, and retirees who received such supplemental payments, remove previously awarded regular compensation and creditable service for periods of concurrent Section 35 Workers' Compensation receipt, recalculate allowances, and return all deductions taken on those supplemental payments. The memo includes detailed step-by-step instructions for active members, retired members, and their beneficiaries, and notes that PERAC is pursuing legislative relief for affected retirees.

This memo provides a critical update to Memo #14 of 2022, informing boards that Section 149 of Chapter 126 of the Acts of 2022 (the FY2023 budget), signed July 28, 2022, protects all retirees who retired prior to July 1, 2022 from any reduction, modification, or recoupment of allowances due to the Vernava decisions. As a result, the instructions in Memo #14 regarding retired members and their beneficiaries are hereby superseded, and no retiree who retired before July 1, 2022 will lose their allowance, lose health insurance, or be required to reimburse the retirement system. All instructions in Memo #14 concerning active and inactive members who have not yet retired remain in full effect.

This comprehensive memo addresses the regular compensation status of vacation buyback payments following the enactment of G.L. c. 32, § 106 (Chapter 147 of the Acts of 2022) and the SJC's August 2022 decision in O'Leary v. CRAB. Under the new law, existing retirees whose allowances included vacation buyback payments are protected and their allowances will not be reduced; active members who were participating in such programs as of May 1, 2018, and whose retirement systems accepted contributions on those programs, may continue to have qualifying payments treated as regular compensation going forward. Boards are given detailed implementation instructions covering retirees, active members, and the interaction with CRAB's November 2018 partial stay order, which is now superseded.

This memo notifies boards that PERAC has filed proposed amendments to 840 CMR 3.00 (IRS Code Compliance Provisions) and 840 CMR 13.00 (Service Purchases and Buybacks) to ensure Chapter 32 plans meet IRS requirements under G.L. c. 32, § 12D. Two public hearings are scheduled via Zoom on December 15 and December 19, 2022, with written comments accepted through December 21, 2022; boards are invited to review the attached proposed amendments and submit comments to PERAC Associate General Counsel Felicia McGinniss.

Sets the 2021 "regular interest" rate on member contributions at 0.1% per G.L. c. 32, § 22(6)(b). Applies to accumulated deductions and accrued interest for refunds, retirements, and December 31, 2021 year-end balances.

Implements the SECURE Act change requiring Required Minimum Distributions at age 72 for members born after June 30, 1949. Initial distributions for those who reached 72 in 2020 are due by April 1, 2021; the old age-70½ rule continues for members who reached that age before January 1, 2020.

Transmits the updated list of public employees ineligible to join a Chapter 32 retirement system under G.L. c. 32, § 15 due to misappropriation, criminal conviction, or related offenses. Most recent additions are bolded; boards should check the list against their active members.

PFML leave under G.L. c. 175M is not creditable service and PFML payments are not regular compensation for Chapter 32 purposes. The Act applies only to municipalities and political subdivisions that adopt it by majority vote; charter school employees are always covered. Boards should treat PFML leave the same as unpaid FMLA leave when computing creditable service.

PERAC revised the Member's Application for Distribution of Accumulated Total Deductions and created a new Beneficiary Application to standardize refund procedures across all Massachusetts retirement systems and update payment options to comply with federal tax law. Both forms are available on the PERAC website under Forms.

Sets the 2020 "regular interest" rate on member contributions at 0.1%, as determined by averaging rates paid on individual savings accounts at a representative sample of financial institutions per G.L. c. 32, § 22(6)(b). This rate applies to accumulated deductions and accrued interest for refunds, retirements, and year-end balances throughout calendar year 2020.

Following the SJC's decision in Plymouth Retirement Board v. CRAB, 483 Mass. 600 (2019), establishes that service credited under G.L. c. 32, § 4(2)(b) for reserve/intermittent police and fire personnel must be paid for, and applies the "Under $5,000 Rule" to such service after July 1, 2009. Supersedes Memo #29/2016 and requires boards to audit active members and retirees to verify payment and remove any post-2009 service that no longer qualifies.

Releases updated PERAC forms across four categories — Beneficiary, Disability, Employer, and General Membership — all revised as of February 2020. New additions include a Beneficiary Selection Form (Option D) and a consolidated Regional Medical Panel Certificate replacing the prior three presumptions certificates; boards should update any links to PERAC forms on their own websites.

Supplements Memo #20/2020 to clarify that FFCRA Emergency Paid Sick Leave Act leave paid at 2/3 of regular pay (Reasons 4–6) also constitutes full creditable service and requires retirement deductions. The two-week leave period counts as full-time service; if it falls in a member's high-3 or high-5 years, the actual 2/3-rate pay received is used in the retirement allowance calculation.

Follow-up to Memo #11/2020 (Gomes/Plymouth decision) addressing three board questions: (1) detail pay counts toward the $5,000 annual compensation threshold; (2) the "same department" requirement applies only to firefighters, not police; (3) members ineligible for § 4(2)(b) service are not barred from purchasing prior service on a day-for-day basis under other provisions such as G.L. c. 32, § 3(5), depending on their employment status.

This memo publishes the 2018 federal compensation and benefit limits applicable to Massachusetts public retirement systems under Chapter 46 of the Acts of 2002. For 2018, the general compensation limit under IRC § 401(a)(17) is $275,000 and the general benefit limit under IRC § 415 is $220,000 per year for retirement at age 65 (reduced for earlier retirement). These limits are indexed annually and affect only the highest-paid employees.

This memo announces the 2018 regular compensation cap for members who joined a Massachusetts retirement system after January 1, 2011. Under Chapter 131 of the Acts of 2010, that cap is 64% of the federal § 401(a)(17) limit; since the 2018 federal limit is $275,000 (per Memo #1/2018), the 2018 state cap is $176,000. Boards must apply this limit when calculating retirement allowances for post-2010 members.

This memo distributes the 2018 worksheets for calculating buybacks and make-ups under G.L. c. 32, §§ 3 and 4, along with cumulative interest factor sheets. Boards must use these worksheets for all covered buyback and make-up calculations, and should refer to Memo #23/2012 to determine whether to apply buyback interest or actuarial interest for §§ 3(3), 3(4), 3(4A), 3(5), 3(6)(c), 3(6)(d), and 3(8)(b) transactions.

This memo establishes the 2018 regular interest rate at 0.1% under G.L. c. 32, § 22(6)(b), determined from the average rates paid on individual savings accounts at a representative sample of financial institutions. This rate applies to accumulated deductions for refunds and retirements during 2018 and is credited on December 31, 2018 for balances outstanding as of December 31, 2017.

This memo alerts boards that the SJC affirmed CRAB's ruling that sick leave and vacation leave taken in conjunction with Workers' Compensation payments does not constitute regular compensation. Effective immediately, boards must direct all payroll officers to stop taking retirement deductions from supplemental sick leave and vacation leave payments made to members on Workers' Compensation. A more detailed follow-up memo was forthcoming.

This memo comprehensively clarifies when retirement boards must pay interest to members/beneficiaries and when members owe interest to boards, superseding portions of Memos #43/1999 and #29/2016. Key rules: boards pay interest at the "correction of errors" rate when an error reduces a benefit (per Herrick); boards do not pay interest on refunds of excess deductions that do not affect the pension amount (per Hollstein); members who were erroneously excluded from membership must now pay the "correction of errors" interest rate on service purchases (reversing prior PERAC guidance, following DALA/CRAB decisions); and members do not pay interest on under-withheld deductions. The memo also addresses Section 4(2)(b) refunds, the Needham Bill waiver provision (§ 20(5)(c)(3)), and includes a detailed scenario chart.

This memo supersedes Memo #12/2018 and implements the SJC's Vernava decision (478 Mass. 832), which held that sick and vacation leave supplemental to Workers' Compensation is not "regular compensation" for determining the effective date of accidental disability retirement under G.L. c. 32, § 7. PERAC recommends payroll departments create a separate pay code for such supplemental payments and continue withholding deductions; if the member ultimately retires under § 7, those deductions must be refunded without interest. For already-retired members, recalculation is triggered only by a self-identification request from the retiree, and boards are cautioned that recalculation may be detrimental (not beneficial) in some cases.

This memo informs boards of the CRAB decision in O'Leary v. Lexington Retirement Board (CR-15-30), which rejected PERAC Memo #39/2012 and held that vacation buyback payments can never constitute regular compensation. Because both PERAC and the member have appealed to Superior Court, the CRAB decision is not final, and boards must continue evaluating vacation buyback plans under Memo #39 during the pendency of those appeals; no current allowances based on such payments should be recalculated in the interim. Payments for unused sick time remain excluded from regular compensation under Fair v. Middlesex County Retirement Board (2016).

This memo supersedes Memo #26/2018 and Memo #39/2012 in light of CRAB's November 6, 2018 partial stay in O'Leary v. Lexington Retirement Board. Under the partial stay: retirees who retired on or before November 6, 2018 are unaffected; active members must no longer have contributions withheld on unused vacation pay going forward (but no refunds of prior contributions pending judicial review); and members retiring on or after November 6, 2018 must have vacation buyback payments excluded from their benefit calculation, with any contributions taken on such payments refunded at retirement. PERAC confirms the Order applies to all 104 retirement boards, not just Lexington.

This memo announces the federal compensation and benefit limits applicable to Massachusetts retirement systems for 2017 under Chapter 46 of the Acts of 2002, which brought state law into compliance with IRS requirements. For 2017, the Section 401(a)(17) compensation limit is $270,000 and the Section 415 annual benefit limit is $215,000 for members retiring at age 65. These limits affect only the highest-paid employees and boards should contact PERAC's actuary with questions.

This memo announces the 2017 regular compensation cap for members who joined a retirement system after January 1, 2011, under pension reform provisions of Chapter 131 of the Acts of 2010. The cap is set at 64% of the federal IRC § 401(a)(17) limit, resulting in a maximum regular compensation of $172,800 for 2017. Boards must apply this limit when calculating contributions and benefits for post-2011 members.

This memo distributes the 2017 buyback and make-up repayment worksheets and cumulative interest factor sheets for use in calculating creditable service purchases under the various subsections of G.L. c. 32, §§ 3 and 4. The memo notes that two sets of worksheets are provided for both buyback and actuarial interest due to differing investment return assumptions, and directs boards to PERAC Memo #23/2012 for guidance on when each rate applies.

This interim memo advises boards to continue using the prior year's annuity savings account interest rate of 0.1% while PERAC awaits confirmation of the 2017 rate from the newly appointed Banking Commissioner. A separate memo will be issued once the official 2017 rate is determined.

This memo formally establishes the 2017 regular interest rate for annuity savings accounts at 0.1%, as determined in consultation with the Commissioner of Banks pursuant to G.L. c. 32, § 22(6)(b). This rate applies to accumulated total deductions and accrued interest, must be used for refunds and retirements during calendar year 2017, and must also be credited on December 31, 2017 for outstanding balances.

This memo advises that G.L. c. 32, § 90G¾, which had required members approaching age 70 to decide whether to continue making retirement contributions, was repealed effective July 1, 2017 through the FY18 budget. Going forward, no notices need to be sent to members approaching age 70 and contributions will continue on a pre-tax basis. Members who had already made an election under § 90G¾ prior to July 1, 2017 retain their prior election status.

PERAC Memo #7/2016 establishes the "regular interest" rate under G.L. c. 32, §22(6)(b) at 0.1% for calendar year 2016, based on average savings account rates from a sample of financial institutions. Boards must apply this 0.1% rate to accumulated total deductions and accrued interest when crediting interest on refunds and retirements processed during 2016, and also apply it to outstanding balances as of December 31, 2015 when crediting interest on December 31, 2016. No further action beyond correct application of this rate is required.

PERAC Memo #22/2016 addresses forfeiture of retirement allowances under G.L. c. 32, §15 for members convicted of misappropriation or related offenses, noting the varying effective dates and requirements of the statute's subsections. It transmits a partial list, compiled from DA/AG notifications, of public employees potentially subject to forfeiture. Boards must review the attached list, report any updates, discrepancies, or additions, and submit copies of all relevant investigation/hearing/decision documents since October 2002 to Kim Boisvert by September 30, 2016.

This memo (superseding Memos #22/2013, #33/2013, and #19/2014) updates guidance on crediting/buying back call firefighter service under G.L. c. 32, §4(2)(b), incorporating two new CRAB decisions (Grimes v. Malden and Gomes v. Plymouth) on buyback methodology; it clarifies that reserve/permanent-intermittent police officers and firefighters are treated the same as call firefighters. Boards must apply the revised calculation method going forward—crediting up to 5 years at no cost for uncompensated call service, and requiring payment of contributions (plus buyback interest) at the historical rate for any compensated service—when processing buybacks for members who transition from call to permanent firefighter status.

PERAC Memo #5/2015 announces that, per G.L. c. 32, §22(6)(b), the "regular interest" rate for member deductions in calendar year 2015 has been set at 0.1%, based on average savings rates from a sample of financial institutions. Boards must apply this rate to accumulated total deductions and accrued interest when crediting interest for 2015 refunds and retirements, and also credit it on outstanding balances as of December 31, 2014, on December 31, 2015.

**PERAC Memo #8/2015 – Remarriage Penalty** This memo revises PERAC's prior guidance (Memo #34/2000) on the elimination of the "remarriage penalty" in light of the Superior Court's 2014 decision in *Boston Retirement Board v. CRAB and Edith Carell*, which held that the repeal of the remarriage penalty (effective July 1, 2000) applies even to beneficiaries whose survivor benefits were terminated due to remarriage *before* that date. Boards must now recognize that eligible surviving spouses who remarried prior to July 1, 2000 may reapply and, if approved, receive benefits prospectively from the date of reapplication (not retroactively to the remarriage date), and boards should reassess any such prior denials or terminations accordingly.

PERAC Memo #12/2015 addresses CRAB's amended decision in Zavaglia v. Gloucester/Salem Retirement Boards, which clarifies when inactive members may purchase prior creditable service. While service purchases generally require active membership, CRAB identified specific statutory exceptions—including G.L. c. 32 §§3(4), 3(4A), 4(1)(q), 4(1)(r), and 3(6)(d)—covering teachers on leave, certain veterans' organization service, Peace Corps volunteers, and members reinstated after separation. Although the decision technically binds only the parties involved, PERAC recommends boards follow these guidelines for consistency when evaluating buyback requests from inactive members; no immediate mandatory action is required, but boards should apply this framework going forward.

PERAC Memorandum #08, 2014 sets the "regular interest" rate under G.L. c. 32, §22(6)(b) at 0.1% for calendar year 2014, based on average savings account rates from a sample of financial institutions. Boards must apply this 0.1% rate to accumulated total deductions and accrued interest when crediting interest for refunds and retirements processed during 2014, and also apply it on December 31, 2014 to outstanding balances as of December 31, 2013.

PERAC Memorandum #14, 2014 announces that the Commission voted to require SEC (or, where applicable, Massachusetts Secretary of State) registration as a prerequisite for issuing an Acknowledgement Letter for any proposed investment. Boards should note that they may not proceed with an investment in an entity that lacks such registration, since PERAC will withhold the Acknowledgement Letter in these circumstances; boards should therefore verify an investment manager's SEC or SOS registration status before submitting investments for approval.

This memo provides follow-up guidance to Memos #22/2013 and #33/2013 on implementing the MacAloney decision regarding creditable service buybacks for call/reserve/permanent-intermittent firefighters and police officers under G.L. c. 32, §4(2)(b). It clarifies the specific contribution rates and calculation methods boards must use when a member seeks to buy back service for: (1) time actually served and compensated as a call firefighter, (2) time on an eligibility list/roster without actual service, and (3) combinations of both. Boards should apply these calculation methodologies—using actual pay and contribution rates in effect for compensated service, and the $3,000 assumed annual salary under §85H for list/roster time—when processing any such buyback requests.

PERAC Memo #27/2014 clarifies how the August 2013 IRS Private Letter Ruling applies to benefits paid under legislative special bills (as opposed to standard Ch. 32 provisions). Boards must examine each special bill's language individually: if it explicitly references Sections 7, 9, or 100, it should be taxed accordingly (pension portion non-taxable up to 72%, annuity taxable); if it lacks such reference, boards must assess whether sufficient nexus exists to those sections to qualify for non-taxable treatment, and if not, report the benefit as "taxable amount not determined" (Box 2b of Form 1099-R). Boards taking a different reporting position should consult counsel to support that approach.

PERAC Memo #29/2014 summarizes Chapter 165 of the Acts of 2014 (FY2015 budget outside sections), which amended the dual-member provision under G.L. c. 32, §5(2)(e). The revised law excludes overlapping service of less than 60 days, excludes positions paying under $5,000/year, and limits application of dual-member benefit calculations to only the final 5 years of creditable service before retirement (and clarifies it does not apply to §6 ordinary disability benefits). Boards must apply this narrower standard when a member has worked concurrently in two systems, determining at retirement whether the dual-member rules are triggered based on the last 5 years of service, and must return/reallocate contributions accordingly when applicable.

PERAC Memo #34/2014 introduces GASB Statements 67 and 68, which establish new financial reporting (not funding) standards for public pension plans—GASB 67 for plan reporting (effective for plan years beginning after June 15, 2013) and GASB 68 for employer reporting (effective for fiscal years beginning after June 15, 2014). Boards must collaborate with actuaries, auditors, and investment consultants to ensure accurate census data, financial statements, and required schedules/disclosures (e.g., net pension liability, contribution schedules, discount rate sensitivity); PRIM will assist by supplying PRIT-related data such as money-weighted returns and asset allocation for clients invested in the PRIT Fund. No funding action is required, but boards should begin coordinating with these parties to meet the new reporting requirements on the applicable timelines.

PERAC Memo #9/2013 establishes the "regular interest" rate for member accounts under G.L. c. 32, § 22(6)(b) at 0.1% for calendar year 2013, based on average savings account rates from a sample of financial institutions. Boards must apply this rate to accumulated total deductions and accrued interest when crediting interest for refunds and retirements processed during 2013, and must also credit it on December 31, 2013 to outstanding account balances as of December 31, 2012.

PERAC Memo #14/2013 follows up on Memos #4/2013 and #7/2013 regarding the requirement under G.L. c. 32, §3(8)(b) (as amended by Ch. 176 of the Acts of 2011) that certain buyback repayments be calculated using actuarial assumed interest rather than regular interest. It transmits the revised 2013 repayment worksheet, make-up worksheet, and cumulative interest factor sheet reflecting actuarial assumed interest rates for calculations covering buybacks under G.L. c. 32 §§3(6)(c), 3(6)(d), 3(8)(b), and related make-up provisions. Boards should begin using these updated 2013 forms immediately when calculating applicable buyback and make-up repayment amounts, and may contact John Boorack with questions.

This memo summarizes the CRAB decision in MacAloney v. Worcester Regional Retirement System, which held that G.L. c. 32, §4(2)(b)'s five-year full-time credit provision for call/reserve/permanent-intermittent firefighters and police officers does not preempt local board rules granting additional pro-rated service credit for call service beyond that initial five-year period, and that such service beyond five years, as well as prior non-membership service, remains subject to make-up payment requirements under §§3(2)(c), 3(3), 3(5), and 4(2)(c). Retirement boards must apply §4(2)(b)'s five-year full-time credit rule independently from other creditable service provisions, and should grant pro-rated credit (subject to applicable make-up payments) for any call/intermittent service extending beyond the initial five years, consistent with this now-final and binding CRAB decision.

Memorandum #32 (2013) advises boards on implementing the SJC's *Herrick v. Essex Regional Retirement Board* decision, which held that when a board's legal error in denying benefits is corrected, the member is entitled to interest on the retroactive lump-sum payment to make them actuarially whole. PERAC directs boards to adopt a consistent interest rate (suggesting the § 22(6)(b) regular interest rate or the 3% statutory refund rate) and apply it to all G.L. c. 32 § 20(5)(c)(2) adjustments going forward—covering both underpayments and overpayments (subject to waiver provisions). Boards must also pay interest retroactively to any member/beneficiary who already received a corrective adjustment and now petitions for interest on that underpayment period.

**PERAC Memorandum #33/2013** provides follow-up guidance on the CRAB *MacAloney* decision affecting buy-backs under G.L. c. 32, §4(2)(b) for call firefighters and similarly situated reserve/permanent-intermittent police and fire personnel. It clarifies that only members who were not yet retired as of June 21, 2013 must make contributions for such service going forward, and it details the calculation methodology for buy-backs—both for periods of actual compensated service (using contribution rates in effect at the time) and for periods on eligibility lists/rosters without pay (using the $3,000 statutory rate under §85H)—with buy-back interest applied only prospectively from June 21, 2013, not retroactively to the original service period. Boards should apply this methodology when processing affected members' service purchases and ensure contributions are collected consistent with this timeline.

PERAC Memorandum #34 (2013) announces the Commission's adoption of final regulations (840 CMR 3.07 and 3.10), effective November 22, 2013, implementing the federal HEART Act. These regulations require that members who died or became disabled on or after January 1, 2007 while performing qualified military service be treated as if reemployed immediately before death/disability, entitling them (or their beneficiaries) to accelerated vesting, survivor benefits, and creditable service up to the date of death or disability. Boards must proactively search their records (manually or electronically) to identify all members who died or were disabled during military leave, or who were previously denied creditable service or benefits for such leave, and contact those members or their beneficiaries to determine eligibility for additional benefits, including potential recalculation of §12(2)(d) survivor benefits or reinstatement of withdrawn deductions to qualify for disability or superannuation retirement.

PERAC Memo #05/2012 establishes the "regular interest" rate for 2012 at 0.1%, as determined under G.L. c. 32, §22(6)(b) based on average savings account rates from a sample of financial institutions. Boards must apply this 0.1% rate to accumulated total deductions and accrued interest for refunds and retirements processed during 2012, and credit it to outstanding member account balances as of December 31, 2011 on December 31, 2012.

This memo announces that PERAC's Placement Agent Policy (originally detailed in Memo #34/2011) is now in effect, requiring investment managers to file a Placement Agent Disclosure Form with both the retirement board and PERAC when responding to RFPs, negotiating contract amendments, or engaging in substantive discussions with a board. Boards must ensure this disclosure form is obtained from managers as part of any ongoing or new contract negotiations, and must incorporate the specified contract terms/remedies (e.g., fee reimbursement) into all new contracts and amendments executed on or after January 1, 2012. Administrators should review any contracts currently being negotiated or amended to confirm compliance with these disclosure and contract-term requirements.

**Summary:** This memo explains that Chapter 198 of the Acts of 2011 restores the validity of "Evergreen Clauses" in collective bargaining agreements, allowing contract terms to remain in effect beyond three years until a successor agreement is negotiated. As a result, payments that qualified as "regular compensation" under the Chapter 21 (2009) grandfather clause—and were included in a contract in effect on May 1, 2009—may continue to be treated as regular compensation (through June 30, 2012) if the underlying contract remains in effect via its stated term or an Evergreen Clause, provided the payment is for "services" rather than a "tool" (per the *O'Brien v. CRAB* decision). **Action required:** Boards should review affected collective bargaining agreements to confirm whether Evergreen Clauses apply, verify whether specific payments (e.g., clothing allowances) qualify as compensation for services versus tools, and adjust regular compensation determinations accordingly for reporting/withholding purposes through the June 30, 2012 cutoff.

This memo addresses the need for retirement boards to counsel members who are considering withdrawing their contributions, given that Chapter 176 significantly changes retirement rights and benefits for anyone who later re-enters public service and becomes a member on or after April 2, 2012 (e.g., higher minimum retirement age, new age factors, five-year salary averaging, new contribution rates, loss of §10 termination allowance). Boards should fully inform any member seeking a withdrawal of these consequences, referencing PERAC Memo #36/2011 for details, before processing the withdrawal.

This memo provides IRS-vetted guidance on correcting mistaken excess member contributions (from erroneous compensation, service purchase errors, membership errors, etc.) by issuing a lump-sum "corrective distribution" to the member. It details specific Form 1099-R reporting requirements (using Code E in Box 7) depending on whether the erroneous contributions were pre-tax or after-tax, and clarifies that such distributions are exempt from the early withdrawal penalty, FICA/FUTA, and rollover eligibility, though 10% withholding applies unless waived. Boards should adopt this reporting methodology whenever they identify and refund mistaken member contributions, ensuring proper 1099-R coding, and are encouraged to send members an explanatory letter referencing Revenue Procedure 92-93 for the use of Code E.

This memo explains that Chapter 176 simplified PERAC's investment review process: the detailed "Application for Exemption" is eliminated, and PERAC now issues an "acknowledgement of receipt" rather than an exemption/waiver for manager and consultant investments. Boards must submit specific documentation before investing with a manager or retaining a consultant—including procurement and vendor certifications, disclosure forms (placement agent, conflict of interest, compensation), prohibited investment compliance certification, consultant report certification, and individual board member certifications—and obtain PERAC's acknowledgement before proceeding, which PERAC may withhold if not in the system's best interest. Boards should also review this memo alongside related PERAC memos (#22, #15, #7/2012 and #35, #34/2011) for full context on the reform law's investment and disclosure requirements.

This memo announces new Chapter 32, §15(7), effective immediately, which bars members from receiving a retirement allowance based on salary intentionally concealed from or misreported to the relevant reporting entity; where such misconduct is found, the allowance must be calculated on the lower of the amount actually reported to that entity or to the board, with excess deductions refunded without interest. Boards should note that PERAC (the Commission) is responsible for making the formal determination of concealment/misreporting via a hearing process, and boards must contact PERAC whenever a retirement application raises concerns about unreported or misreported compensation so that an investigation can be conducted before the allowance is finalized.

This memo explains the anti-spiking provisions in Sections 14 and 18 of Chapter 176 of the Acts of 2011, which cap the regular compensation used to calculate retirement allowances for members retiring on or after April 2, 2012. Boards must review every applicable retirement calculation under both sections (as a benefit could violate either or both), and must confirm to PERAC that this anti-spiking review was performed—either through submission for approval or, for boards with waivers, via attestation. PERAC notes it is developing calculation worksheets to assist boards and will notify boards once these are available.

PERAC Memo #39/2012 clarifies the treatment of payments made when employees sell back unused vacation leave (distinct from payments for unused sick, personal, or other event-based leave, which are excluded from this analysis), superseding Memos #25/2000 and #26/2000. It directs boards to apply the two-part regular compensation threshold test—whether payments constitute base/"other base compensation" and whether they represent "services performed"—consistent with Chapter 21 of the Acts of 2009 and 840 CMR 15.03(3), and to only treat such buy-back payments as regular compensation (subject to retirement deductions) if both prongs are satisfied. Boards must review applicable collective bargaining agreements and vacation buy-back provisions to make this individualized determination for each payment arrangement, and are also reminded of their obligation under Chapter 176 of the Acts of 2011 to retain and review CBAs for Chapter 32 compliance.

PERAC Memo #49/2012 continues the Commission's review (begun in Memo #27/2012) of how Chapter 176 of the Acts of 2011 affects existing PERAC investment regulations and guidelines, providing a summary chart of the impact on each provision reviewed. It reiterates that boards must invest through PRIT or an employed investment manager consistent with the amended Chapter 32, §23 restrictions (tobacco, South Africa/Northern Ireland, no direct mortgage/collateral loan investments) and the fiduciary duty standard under §23(3); PERAC notes further guidance on hedge fund investment and indemnification is still forthcoming. No immediate board action is required beyond reviewing the attached summary and ensuring investment practices conform to the revised statutory framework.

PERAC Memo #54/2012 reminds retirement boards that all "investment service providers" (managers, consultants, custodians, trusts, proxy/litigation services, and related vendors) must file annual disclosure forms with both the board and PERAC by January 1 of each year, and as part of any RFP process, per c. 32 §23B and 840 CMR 17.04(7)-(8). Disclosures must cover compensation arrangements (paid or received, directly or indirectly) related to services provided to the board or any other client, as well as any potential conflicts of interest. Boards are asked to forward this notice to their vendors to ensure compliance and confirm required disclosures are filed on time.

This memo announces that PERAC has set the "regular interest" rate under G.L. c. 32, §22(6)(b) at 0.2% for calendar year 2011, based on average savings account rates from a sample of financial institutions. Boards must apply this 0.2% rate to accumulated total deductions and accrued interest when crediting interest for 2011 refunds and retirements, and also credit it on December 31, 2011 for outstanding balances as of December 31, 2010.

PERAC Memo #16/2011 clarifies that lump-sum payments of a deceased member's annuity account balance to a named beneficiary under G.L. c. 32, §9 (accidental death) or §100 remain taxable, despite confusion arising from a presentation at the MACRS conference. After consulting special tax counsel, PERAC confirmed there is no legal basis to treat these payments as non-taxable under IRC §104(a)(1), since they are determined by reference to the member's prior contributions. Boards should continue to treat these lump-sum annuity payments as taxable and may refer to PERAC Memo #34/1992 for further guidance; no other action is required.

This memo announces PERAC's new Placement Agent Policy, adopted after public hearing in response to Pension Reform legislation, which requires investment managers to disclose detailed information about any placement agents used in connection with investment by Massachusetts public pension systems (compensation, agreements, qualifications, registrations, and any board/staff connections). Boards must ensure managers provide this disclosure information to both the board and PERAC before/during RFP responses, contract amendments, or substantive discussions with managers, and should expect PERAC to issue standardized forms for compliance before January 1, 2012.

PERAC Memo #36/2011 summarizes the non-governance provisions of Chapter 176 of the Acts of 2011 (Pension Reform and Benefit Modernization), covering changes to regular compensation definitions, Group 2/4 classification requirements, creditable service buyback deadlines, and an increase in the Group 1 minimum retirement age to 60 for members entering service on or after April 2, 2012. Boards must take action on several fronts: they may adopt local options (effective after February 16, 2012) to raise the minimum monthly allowance under G.L. c. 32, §12 and increase board member stipends, and they must act immediately to implement Section 55's option-change provision for certain same-sex marriage retirees given its tight implementation timeframe. Boards should also review member counseling practices in light of the new age-60 restriction and buyback deadlines taking effect April 2, 2012.

This memo announces that PERAC has set the "regular interest" rate under G.L. c. 32, §22(6)(b) at 0.3% for calendar year 2010, based on average savings rates from a sample of financial institutions. Boards must apply this 0.3% rate to accumulated total deductions and accrued interest when crediting interest for refunds and retirements processed during 2010, and also apply it to outstanding balances as of December 31, 2009, when crediting interest on December 31, 2010.

This memo clarifies implementation of the "Under $5000 Rule" (G.L. c. 32, §4(1)(o)), which excludes creditable service (but not membership) for employees earning under $5,000 annually as of July 1, 2009. Boards should consider adopting a supplemental regulation under §3(2)(d) to exclude future part-time/low-earning employees and elected officials from membership going forward, but for current members already in service, boards must continue withholding retirement deductions from their compensation even though that service will not count as creditable service, since membership status is unaffected by this statute.

This memo explains that effective July 1, 2010 (per Chapter 131 of the Acts of 2010), members who voluntarily terminate service with less than 10 years of creditable service and withdraw their contributions will have their refund interest calculated at a flat 3% rate for the entire period, replacing the prior tiered interest treatment for those with less than 5 or 10 years of service. This change applies only at the time of refund disbursement (not to interest credited while funds remain on deposit), does not affect involuntary withdrawals or members with 10+ years of service, and leaves buyback rules unchanged. Boards should use the PERAC spreadsheet/examples provided (pending an updated withdrawal application form) to manually calculate affected refunds, continue processing disbursements via Refunds to Members #5757 with interest transferred from the Pension Reserve Fund to the Annuity Savings Fund, maintain thorough documentation for potential future reemployment situations, and carefully counsel and provide written notice to members applying for refunds about how this provision affects them.

This memo announces that PERAC has set the 2009 "regular interest" rate at 0.5%, as required under G.L. c. 32, §22(6)(b), based on average savings account rates from a sample of financial institutions. Boards must apply this 0.5% rate to accumulated total deductions and accrued interest when crediting interest for 2009 refunds and retirements, and again on December 31, 2009 for outstanding balances as of December 31, 2008.

This memo clarifies that under G.L. c. 32, § 4(1)(c), retirement boards may—at their discretion, via board action—grant up to one month of creditable service for a member's unpaid furlough/leave period, regardless of how many separate leave periods occur. It also explains that if such service is granted, the member's pre-furlough regular compensation rate (per § 5(3)(b)) must be used for that period when calculating three-year average compensation, without requiring actual contributions, but only if that period falls within the averaging window. No mandatory board action is required beyond ensuring any discretionary creditable service grants and compensation calculations comply with this guidance.

This memo explains how the American Recovery and Reinvestment Act of 2009 (ARRA) affects retiree withholding: new IRS federal withholding tables took effect April 1, 2009, potentially increasing net allowances since retirement income (unlike earned income) doesn't qualify for the Making Work Pay Credit, creating a risk of under-withholding. It also describes two separate one-time $250 payments—a Social Security/Railroad Retirement payment and a Federal/State Retiree Credit (mutually exclusive)—that may apply to certain retirees. **Action required:** Boards should promptly notify the entity issuing retiree checks to implement the new withholding tables, and proactively inform retirees of the under-withholding risk, encourage them to consult a tax professional, and remind them they may file a new W-4P to adjust withholding if desired.

Memorandum #23/2009 follows up on IRS Notice 1036-P, which supplements earlier federal withholding table updates addressed in Memo #19/2009. Boards must choose between (1) continuing to use the previously implemented "February tables," or (2) adopting an additional withholding adjustment based on payment frequency, marital status, and pension amount per Notice 1036-P—reverting to the old tables is not permitted. No specific deadline is set for adopting the second option, but boards should review the attached IRS Notice and Ice Miller E-Alert and select and implement one of the two compliant approaches.

**PERAC Memorandum #24, 2009 – Summary** This memo transmits Chapter 21 of the Acts of 2009 ("Pension Reform Act"), signed June 16, 2009, and outlines its major provisions, including a new, narrower statutory definition of "regular compensation" (effective July 1, 2009, limiting it largely to base salary and excluding overtime, bonuses, buyouts, and similar payments, with limited grandfathering for collective bargaining agreements through June 30, 2012); elimination of automatic full-year creditable service credit for elected officials serving partial years (for retirements after July 1, 2009); and repeal of the ability to purchase creditable service for uncompensated positions. **Action required:** Boards should review the attached bill text, update payroll/compensation reporting practices to conform to the new regular compensation definition by the applicable effective dates, and await further PERAC guidance on implementation details.

Memorandum #37 (2009) addresses Chapter 21 of the Acts of 2009, which amended G.L. c. 32, §11(1) to require retirement boards to contact a withdrawing member's employer before releasing accumulated total deductions, to confirm whether the member owes an obligation under an employee benefit plan (e.g., a §125 cafeteria plan). If an obligation is owed, the board must withhold the refund until the employer certifies it has been satisfied—but the board may not divert or release the funds directly to the employer. Boards must update their Application for Withdrawal of Accumulated Total Deductions form (Section B) to include this employer certification, per the revised form attached to the memo.

PERAC Memorandum #41 (2009) transmits an updated CD (dated September 2009) containing fill-in PDF forms for Disability and General Membership applications, replacing the March 2009 CD. The only change is the revised "Application for Withdrawal of Accumulated Total Deductions" form (previously announced in Memo #37); all other forms remain unchanged. Boards should begin using the updated Withdrawal form and retain/distribute the new CD accordingly.

PERAC Memorandum #7 (2008) sets the "regular interest" rate under G.L. c. 32, §22(6)(b) at 0.6% for calendar year 2008, based on average savings account rates from a sample of financial institutions. Boards must apply this 0.6% rate to accumulated total deductions and accrued interest when crediting interest for 2008 refunds and retirements, and also apply it on December 31, 2008 to outstanding balances as of December 31, 2007. No further action beyond applying this rate is required.

This memo clarifies the rules governing former retirement system members who return to public employment, addressing three scenarios: buyback of previously withdrawn funds (at half the actuarial assumed interest rate) with automatic reinstatement to membership under G.L. c. 32, §3(2)(a)(iv), the two-year active service requirement before certain retirement allowances become payable again, and the process under §105 for retired members repaying benefits with interest to re-establish membership upon returning to public service. Boards should use this guidance to correctly calculate buyback amounts, apply the appropriate interest rates, and properly administer the re-establishment of membership and eligibility restrictions for returning former members and retirees; no additional filing or action beyond proper administration of these existing statutory provisions is required.

**PERAC Memorandum #22, 2008 — Summary** This memo reports the SJC's decision in *Pelonzi v. Beverly Retirement Board & CRAB* (May 21, 2008), which definitively holds that the monetary value of an employee's personal use of an employer-supplied vehicle is **not** regular compensation for retirement purposes, since the SJC characterized it as a benefit rather than compensation. This ruling supersedes prior PERAC guidance (Memoranda #3/2001, #25/2001, #41/2001, #38/2002, and #18/2006) that had directed boards to include such value as regular compensation. **Action required:** Retirement boards must return all contributions collected from members and retirees on the monetary value of personal use of employer-supplied vehicles, and must cease treating such value as regular compensation in calculating retirement allowances going forward.

PERAC Memo #7/2007 establishes the "regular interest" rate under G.L. c. 32, §22(6)(b) at 0.6% for calendar year 2007, based on the average savings account rates from a sample of financial institutions. Boards must apply this 0.6% rate to accumulated total deductions and accrued interest for refunds and retirements processed during 2007, and credit it to outstanding balances as of December 31, 2006 on December 31, 2007. No further board action is required beyond correctly applying this rate in calculations.

This memo clarifies the implementation of two local-option laws—Chapter 324 of the Acts of 1983 and Chapter 235 of the Acts of 1994—which grant creditable service to police officers and firefighters laid off in 1981-82 (or subsequently reinstated within three years) for their period of unemployment, outlining the different member buy-back cost requirements under each act and their interplay when a municipality accepted Chapter 324 before October 8, 1985. Boards should note that Chapter 235 has been accepted by eleven municipalities (listed on PERAC's website), and boards whose city/town accepted Chapter 324 of 1983 are asked to notify PERAC by letter, since the Commission has no record of which communities adopted that earlier act.

Memorandum #37/2007 explains IRC §402(l), added by the Pension Protection Act of 2006, which allows eligible retired public safety officers (those retired for disability or at normal retirement age) to exclude up to $3,000 annually from gross income for health or long-term care insurance premiums withheld directly from their retirement allowance and paid to the insurer; this exclusion is not available to survivors and must be self-reported by retirees on IRS Form 1040 (not shown on the 1099R). Boards have no mandated administrative role but should be prepared to inform members of the amounts withheld and paid to insurers, and should refer specific tax questions to members' personal tax advisors. The memo also notes PPA §829, which permits non-spouse beneficiaries to make direct trust-to-trust rollovers of inherited benefits, provided the receiving account properly identifies both the deceased member and the beneficiary.

Memorandum #45 (2007) notifies boards that Chapter 162 of the Acts of 2007 amended the Heart Law (G.L. c. 32, §94), effective November 14, 2007, extending the hypertension/heart disease disability presumption to county correctional facility employees whose duties involve care, supervision, or custody of inmates. Boards should identify members in service on or after that date (including those on qualifying paid/unpaid leave, receiving workers' comp, or using sick leave with contributions) who may now qualify for the presumption, and should request PERAC convene a Heart Law panel for any eligible member pursuing a disability retirement application based on hypertension or heart disease; no panel will be convened for members already retired as of the effective date.

**PERAC Memorandum #46, 2007** relays an Advisory Opinion from the Supervisor of Public Records (SPR 07/301) addressing whether a member's date of birth and annuity account balance are public records. The Supervisor determined that a member's date of birth may be withheld due to identity theft concerns, and that mandatory annuity contributions and credited interest are public records akin to payroll records, while voluntary additional contributions under G.L. c. 32, §22(1)(g) may be withheld. Boards should review and update their record disclosure policies to ensure consistency with this guidance.

This memo notifies retirement boards that PERAC has set the "regular interest" rate for 2006 at 0.6%, as determined under G.L. c. 32, §22(6)(b) in consultation with the Commissioner of Banks. Boards must apply this rate to accumulated total deductions and accrued interest for refunds and retirements processed during 2006, and credit it to outstanding balances as of December 31, 2005 on December 31, 2006.

This memo announces a proposed amendment to 840 CMR 15.03, filed with the Legislature on January 31, 2006, clarifying that ad hoc/temporary payments (such as salary augmentation or enhancement plans) generally do not count as regular compensation for contribution or retirement allowance purposes, though a grandfathering provision preserves current treatment for existing contracts (and their successors) that meet G.L. c. 32 requirements. The regulation is not yet in effect—it is subject to a 45-day legislative review period—so boards should note the pending change but need not take action until it is finalized.

This memo notifies boards that Chapter 77 of the Acts of 2005 extends the Military Pay Act (Chapter 137 of the Acts of 2003) authorization period from September 11, 2005 to September 11, 2008, allowing counties, cities, and towns that adopt the Act to continue paying employees on military leave the difference between base salary and military pay. Boards should note that in municipalities adopting this provision, this salary differential is regular compensation subject to retirement deductions, with creditable service and deduction details as previously outlined in PERAC Memorandum #39/2001. No new board action is required beyond continuing to apply these rules where the local option has been adopted.

This memo informs boards that PERAC's pension governance reform bill (H. 4939) did not achieve final passage before the 2005-2006 legislative session ended, and that PERAC intends to likely refile similar legislation in the 2007-2008 session. It also details the collaborative process with MACRS and legislative leadership, noting concessions PERAC made to the bill, while addressing and rebutting criticism that mischaracterized PERAC's motives as centralizing control over local boards. No immediate action is required of boards, though administrators should be aware that similar reform legislation may be reintroduced in the next session.

This memo addresses concerns raised by retirement boards about rising costs and vendor changes in software/IT applications, noting PERAC endorses no specific product or vendor. Boards upgrading with their current vendor need not competitively bid, but those seeking new vendors or better pricing are encouraged to use a competitive RFI/RFP process to evaluate options and pricing. No mandatory action is required, but boards should clearly define their system needs and are encouraged to share experiences with peer boards.

This memo notifies retirement boards that PERAC has set the "regular interest" rate under G.L. c. 32, §22(6)(b) at 0.6% for calendar year 2005, based on average savings rates from a sample of financial institutions. Boards must apply this 0.6% rate to accumulated total deductions and accrued interest when crediting interest for 2005 refunds and retirements, and also apply it on December 31, 2005 to outstanding balances as of December 31, 2004.

This memo updates boards on the status of PERAC's pending 2001 IRS private letter ruling request, which would allow pre-tax payroll deductions for creditable service buybacks system-wide. Until the ruling is issued, only the Teachers' and Boston Retirement Systems (which received their own prior rulings) may process such buybacks pre-tax; all other boards must continue processing service purchase deductions on a post-tax basis (mandatory contributions and certain rollovers remain pre-tax as before). No action is required beyond continuing current post-tax practice pending further guidance.

**Memorandum 24/2005** clarifies how local retirement boards should handle RetirementPlus contributions when a teacher transfers from the TRS or BRS to a local system. The TRS/BRS will transfer the member's full account but will identify the "excess" contributions (above the normal rate) on the transfer memo; local boards must retain these excess contributions if the member retires with 30+ years of creditable service, refund them (with regular interest) if the member retires with less than 30 years and participation was optional, but may not refund them if RetirementPlus participation was mandatory (members hired after July 1, 2001). Boards should apply this framework when processing transfers-in of RetirementPlus members and can direct questions to PERAC or TRS General Counsel.

This memo summarizes the federal district court ruling in *Wheeler v. United States*, which held that when a member retires for superannuation and is later granted retroactive accidental disability retirement, the superannuation payments already received remain taxable as originally classified—they are not retroactively reclassified as non-taxable disability payments. Only the subsequent lump-sum retroactive payment and ongoing accidental disability allowance (calculated without reference to age, service, or contributions) qualify as non-taxable workers' compensation-type payments. The memo requires no action from boards but offers to provide a copy of the case for reference, useful for advising members on the tax treatment of retroactive disability awards.

This memo announces that PERAC has set the 2004 "regular interest" rate at 0.6%, as determined in consultation with the Commissioner of Banks per G.L. c. 32, §22(6)(b). Boards must apply this rate to accumulated total deductions and accrued interest for refunds and retirements processed during 2004, and credit it to outstanding balances as of December 31, 2003 on December 31, 2004. No further action is required beyond correctly implementing this rate in interest calculations.

This memo summarizes FY05 State Budget provisions affecting G.L. c. 32, including: (1) an expanded public records exemption now shielding all public employees' (not just public safety) home addresses/phone numbers, requiring boards to apply the prior public safety protocol universally; (2) new statutory requirements for the Attorney General/District Attorneys and employers to notify PERAC and boards of member indictments, suspensions, and convictions, requiring boards to monitor such cases and act under G.L. c. 32, §15 once notified; and (3) new definitions ("accumulated assumed actuarial deductions" and "actuarial assumed interest") added to §1, the latter of which affects the interest rate applied when reinstating retirees to membership. Boards must update their public records practices, establish monitoring procedures for indictment/conviction notices, and apply the new actuarial assumed interest rate where relevant; no action is needed yet on the "accumulated assumed actuarial deductions" definition pending further legislative action.

This memo notifies boards that Chapters 279 and 280 of the Acts of 2004 change the cost calculation for certain creditable service buybacks (under G.L. c. 32, §§ 3(2)(a)(vii), 3(3), 3(4), 3(4A), 3(5), 3(6)(c), 3(6)(d), and 3(8)(b)), effective July 1, 2005, requiring "buyback interest" (half the actuarial assumed rate) instead of regular interest, and "accumulated buyback deductions" rather than accumulated regular deductions for §§ 3(4), 3(4A), and 3(5) purchases. No immediate board action is required beyond awareness, as PERAC will issue updated forms and further guidance before the effective date; note that a related bill affecting §4 buyback costs was not enacted.

This memo outlines the termination retirement allowances available under G.L. c. 32, §10(1) and §10(2)(a), explaining eligibility criteria (e.g., 20+ years of service with involuntary separation, or 30+ years with resignation before age 55) and how allowances are calculated, including age-factor reductions and Group 2/4 special provisions. It also reiterates PERAC's mandatory review and certification process (per §21(1)(d)) for all termination retirement allowance grants, requiring boards to submit the Employer's Certification and Termination Retirement Transmittal forms (from Memo #33/2002) with each application, which PERAC will act on within 30 days.

This memo notifies boards that PERAC, per G.L. c. 32, §22(6)(b), has set the 2003 "regular interest" rate at 1.0%, based on average savings rates from a sample of financial institutions. Boards must apply this 1.0% rate to accumulated total deductions and accrued interest when crediting interest on 2003 refunds and retirements, and must also credit it to outstanding balances as of December 31, 2002 on December 31, 2003.

PERAC Memorandum #9/2003 transmits the updated Buyback and Repayment Worksheet and instructions for calculating member buybacks and repayments for calendar year 2003, including the annual factor table used to compute accrued interest by year of service. Boards should use this worksheet (also to be posted on PERAC's website) for all 2003 buyback/repayment calculations, contacting John Boorack with any questions; no other action is required beyond adopting the updated figures.

This memo clarifies how furloughs (unpaid leave) affect creditable service and regular compensation under G.L. c. 32, §§ 4(1)(c) and 5(3)(b): boards may, at their discretion, grant up to one month of creditable service per furlough period (regardless of how many separate unpaid leave periods occur), and if such service is granted, the member's pre-furlough regular compensation rate is used for that period in the three-year average calculation—even without actual contributions—but only if that period falls within the averaging window. No mandatory action is required; boards should simply apply this discretionary authority consistently when addressing furlough-related creditable service and compensation determinations.

This memo clarifies that the required 9% pension cost recovery on federal grant employee payroll may be treated as an advance payment toward, and used to offset, the system's annual appropriation under its approved actuarial funding schedule, since these employees are already included in the actuarial valuation. Boards using the 9% recovery as an offset must carefully document this practice for audit purposes; boards that failed to collect the 9% but still met their full funding appropriation are not considered to have a funding shortfall, though they were technically non-compliant with federal grant requirements.

This memo clarifies that, despite the general prohibition on collecting retirement contributions from retirees (per Memo #38/2002), boards must collect retirement deductions on retroactive salary/wages paid to a member after retirement when that pay results from a retroactive contract settlement covering the member's active employment period, since such amounts count as regular compensation. Boards are required to recalculate the retirement allowances of any affected retirees to reflect this additional compensation and pay any resulting increased benefits retroactive to the member's retirement date.

This memo addresses two CRAB decisions holding that the value of personal use of an employer-supplied motor vehicle is not regular compensation for retirement purposes, contrary to PERAC's prior position. Boards must immediately stop collecting contributions on such vehicle-use value and stop paying any portion of retirement allowances attributable to it, recalculating allowances as needed—but should not attempt to collect prior overpayments or refund prior contributions until litigation is finally resolved.

This memo announces the revision of nine PERAC general membership and disability forms and the introduction of two new ones (a Beneficiary Change Form for Option B deaths after retirement, and a Pre-Tax Rollover Acknowledgement Form). Boards should begin using the attached paper versions immediately, pending posting of fillable online templates on PERAC's website within two weeks. Notably, members retiring or withdrawing accumulated deductions, along with employers, must now supply additional information to help boards apply G.L. c. 32, §15.

This memo notifies boards of Chapter 137 of the Acts of 2003, which permits counties, cities, and towns (upon local legislative approval) to pay employees on military leave for national guard/reserve service the difference between their base salary and military pay, effective through September 11, 2005. Where a municipality adopts this provision, that salary differential is regular compensation subject to retirement deductions, and boards should refer to Memorandum #39/2001 for guidance on creditable service and contribution treatment. No board action is required unless the local jurisdiction adopts the provision, in which case the board must apply proper retirement deductions to the supplemental pay.

PERAC Memorandum #2/2002 establishes the "regular interest" rate for 2002 at 1.4%, as determined under G.L. c. 32, §22(6)(b) based on average rates from a sample of financial institutions. Boards must apply this 1.4% rate to accumulated total deductions and interest (for deductions made on or after January 1, 1946) when crediting interest for refunds and retirements processed during 2002, and on outstanding balances as of December 31, 2001, credited as of December 31, 2002.

PERAC Memorandum #6/2002 provides a supplemental buyback worksheet, to be used alongside the worksheet issued in Memo #5/2002, specifically for calculating the cost of purchasing prior creditable service for which no contributions were ever made. Boards should use this additional form when processing such buybacks for calendar year 2002; no other action is required, and questions can be directed to Jim Lamenzo at PERAC.

This memo announces emergency regulation 840 CMR 15.05, effective under EGTRRA, which authorizes retirement boards to accept direct pre-tax roll-overs from eligible retirement plans (457, 408(a), 401(a)/(c), and 403(b) plans) to fund members' purchases of creditable service; it does not create any new service-purchase eligibility. Boards must advise members to consult a tax professional regarding potential state tax implications and must maintain records tracking the source/destination of such roll-overs for accurate reporting on the 2002 Annual Statement.

PERAC has revised the Application for Withdrawal of Accumulated Total Deductions, consolidating the previous two "Member and Witness Signature" blocks into a single signature block appearing after the Non-Taxable segment on Page 3, to eliminate member confusion regarding sign-off on payment method and tax distribution choices. Boards should begin using this revised form (dated April 2002), available on PERAC's website under General Membership Forms, and instruct members that pages 1–3 must be completed with signature required on page 3.

Chapter 46 of the Acts of 2002 aligns Massachusetts retirement law with federal IRC limits on compensation used in calculating retirement allowances (e.g., the $200,000 cap for 2002 under 26 U.S.C. §401(a)(17)), and applies to members joining on or after February 28, 2002 regardless of pay level. Action is required only for boards whose membership includes highly compensated employees exceeding these federal limits—such boards should contact PERAC for assistance adopting and administering the Act's excess benefit provisions; most systems and members will be unaffected.

This memo addresses a Superior Court ruling reversing PERAC's prior position on school nurse transfers to MTRS: a local board's §3(8)(c) liability now ends only when accumulated deductions are actually transferred to MTRS, not when the transfer should have occurred. Boards that transferred school nurses who subsequently retired may need to recalculate/adjust the §3(8)(c) amounts owed, and boards should also use this as a prompt to verify that all eligible school nurses have been properly transferred to MTRS per the guidelines in Memorandum #24/1999.

This memo advises that, per tax counsel's opinion, IRC §415(c) prohibits retirement boards from accepting any post-retirement contributions, since retirees have no compensation to which contributions can be tied—an issue that arose from questions about taxing personal use of employer-supplied vehicles as regular compensation. Boards must immediately stop accepting contributions from retirees and refund (without interest) any post-retirement contributions collected for personal vehicle use, while still crediting the appropriate regular compensation and recalculating retirement allowances accordingly. For active members, boards must work with employers to identify personal vehicle use, value it using the PERAC lease table, and collect any required make-up contributions (which cannot be waived, though interest applies only if paid in installments).

This memo addresses the forfeiture provisions of G.L. c. 32, § 15, which strip members/retirees of retirement allowances or accumulated deductions upon conviction of misappropriation or related offenses, as upheld in MacLean v. State Board of Retirement. Boards must immediately comply with the enclosed Temporary Order to Protect the Systems by reviewing § 15's varying effective dates and requirements, initiating forfeiture proceedings under §§ 15(2) and 16(1) whenever a member or retiree is identified as potentially subject to forfeiture (regardless of retirement status or the source of the information), and consulting legal counsel before acting on retirement or withdrawal applications for anyone facing related charges or convictions.

PERAC Memo #3/2001 clarifies that the taxable value of an employee's personal use of an employer-provided vehicle, as reported on the employee's W-2 under IRS rules, constitutes regular compensation subject to retirement deductions. Vehicles exempt from IRS fringe benefit taxation (e.g., clearly marked police/fire vehicles, garbage trucks, tractors, flatbeds, and certain unmarked police vehicles used for law enforcement duties) do not generate regular compensation, since no value is added to the W-2. Boards must obtain a copy of the employee's W-2 to verify any taxable vehicle-use amount and collect retirement deductions on that verified regular compensation.

PERAC Memo #7/2001 announces that the "regular interest" rate under G.L. c. 32, §22(6)(b) for calendar year 2001 has been set at 1.9%, based on average savings account rates from a sample of financial institutions. Boards must apply this rate to accumulated total deductions and interest (for balances dated on or after January 1, 1946) when crediting interest on refunds and retirements processed during 2001, and on outstanding balances as of December 31, 2000, credited December 31, 2001.

This memo informs boards that PERAC voted to seek an IRS ruling allowing elective buy-back payments (for purchasing creditable service) to be treated as pre-tax contributions, similar to mandatory contributions and the recent private rulings obtained by the Teachers' and Boston Retirement Systems. Since those existing IRS rulings apply only to the requesting boards and cannot be relied upon by others, no board may treat elective buy-backs as pre-tax until PERAC obtains its own ruling. No action is required at this time; boards should await further notice from PERAC once the IRS ruling is issued.

This memo revises PERAC Memo #3/2001 by clarifying that personal use of tax-exempt vehicles (e.g., police/fire vehicles, unmarked law enforcement vehicles, garbage trucks) can count as regular compensation—valued at $1.50 per one-way commute (up to 249 days) or, for unlimited personal use, the IRS annual lease value based on fair market value, with the member responsible for supporting documentation. Members must pay retirement deductions on this value before it counts as regular compensation, and this policy applies prospectively only (not to those already retired). Boards should obtain from all governmental units in their system a list of members with personal use of employer-supplied vehicles and ensure retirement deductions are collected on the value of that use going forward.

PERAC Memo #28/2001 provides guidelines for retirement boards on how to handle back pay awards resulting from Civil Service Commission or court-ordered settlements involving wrongful termination or failure to reinstate an employee. It outlines a five-step process boards must follow: determining the covered period and creditable service, calculating the regular compensation the member would have earned, accounting for any mitigation earnings, requiring repayment of any retirement allowance received during the award period, and collecting retirement contributions on the full regular compensation amount. Boards should apply these steps when evaluating such settlements, though the memo is guidance only and does not endorse the settlements themselves.

PERAC Memo #39/2001 explains that under the federal USERRA statute, members called to active military duty must retain member-in-service status regardless of the length of their leave and must receive full creditable service for their period of military service, notwithstanding G.L. c. 32's usual one-year limit on unpaid leaves. Boards must ensure the employer (Commonwealth or political subdivision) makes the corresponding retirement contributions on behalf of these members and must include this information in the annual data submitted to PERAC's Actuary under G.L. c. 32, §22(7) for pension fund appropriation purposes.

This memo clarifies that the value of personal use of employer-owned/leased vehicles must be treated as regular compensation for retirement purposes whenever reported as income on a member's W-2. It further explains IRS rules under §1.274-5T(k) governing when personal use of certain vehicles—particularly clearly marked police/fire vehicles and unmarked law enforcement vehicles—may be exempt from federal taxation and thus not reflected on a W-2, but stresses that tax-exempt status is determined by the employer under federal rules, not by the board or PERAC. Boards should apply these standards when determining regular compensation and should contact PERAC individually regarding personal use of any other non-W-2 employer vehicles not covered by this guidance.

This memo notifies boards that EGTRRA expanded permissible rollover destinations for member Annuity Savings Account withdrawals (traditional IRAs, qualified employer plans, annuity contracts, and certain governmental deferred compensation plans) and allows rollover of both taxable and non-taxable portions, effective for distributions paid on or after January 1, 2002. Boards must use the attached revised Application for Withdrawal of Accumulated Total Deductions form and Special Tax Notice for all withdrawals/refunds paid on or after that date; note that rollovers into retirement systems for service purchases and pre-tax buy-back withholding are not yet available pending PERAC regulations and an IRS ruling, respectively.

PERAC Memo #1/2000 announces proposed amendments to 840 CMR (including revisions to the disclosure/privacy rules under 840 CMR 6.00) filed with the Secretary of State, along with a schedule of four public hearings held between January 14–21, 2000 in Springfield, Plymouth, Somerville, and Boston. Boards are encouraged, though not required, to attend or submit written comments on the proposed regulations to PERAC by the February 4, 2000 deadline. No mandatory board action is required beyond optional participation in the comment process.

This memo announces that PERAC has set the "regular interest" rate for calendar year 2000 at 2.1%, as determined under Section 22(6)(b) of Chapter 32 in consultation with the Commissioner of Banks. Boards must apply this 2.1% rate to accumulated total deductions and interest (for balances dating back to January 1, 1946), crediting it for refunds and retirements processed during 2000 and on outstanding balances as of December 31, 1999, to be credited December 31, 2000.

PERAC Memo #24/2000 transmits the 15th annual PERAC report on the Massachusetts Contributory Retirement Systems for calendar year 1999, covering financial, investment, actuarial, and administrative data for each system, along with new disability retiree return-to-service statistics and a roster of investment managers/consultants by board. No specific action is required of boards; the memo is informational, and boards should direct financial/actuarial questions to Robert Dennis or Jim Lamenzo, and other questions to Frank Valeri.

PERAC Memo #27/2000 announces the Governor's signing of Chapter 123 of the Acts of 2000 (effective September 28, 2000), which removes age limitations in G.L. c. 32 that violated the federal ADEA/OWBPA. Key changes eliminate the maximum age concept for non-public safety employees, remove age restrictions on return of accumulated deductions, Section 10 allowances, and ordinary disability retirement applications. Boards should review these changes and update their administrative practices accordingly, as no member will face age-based denial of these benefits (except public safety employees, who retain maximum age provisions).

This memo explains new G.L. c. 32, §20(5)(c) provisions (from FY2001 budget legislation) allowing retirement boards, upon a member/beneficiary's request, to waive repayment of certain overpayments or contribution shortfalls, provided the error persisted over a year, was not caused by member-provided misinformation, and the member had no knowledge/reason to suspect the error. Boards may waive remaining balances on active repayment plans or future annuity reductions, but cannot refund amounts already repaid or completed repayments. No action is required unless a board receives such a waiver request, in which case it must investigate and apply these criteria before voting.

PERAC Memo #40/2000 directs retirement boards to implement the EEOC v. Commonwealth settlement addressing age discrimination found in the former accidental disability retirement provisions of G.L. c. 32, §7(1) (the maximum age limits and "3/2" rule). Boards must search records to identify all individuals who, since October 16, 1992, began receiving a superannuation allowance, received a refund of contributions, or ceased contributing but retained funds on deposit, compile a list of these "potentially eligible individuals" (with limited allowable exclusions), and submit the list(s) to PERAC by November 4, 2000; boards excluding certain individuals must also prepare and submit a separate "excluded list" with supporting details for EEOC review.

PERAC Memo #5/1999 establishes the "regular interest" rate for 1999 at 2.2%, as determined under Section 22(6)(b) of Chapter 32 based on average savings rates from a sample of financial institutions. Boards must apply this 2.2% rate to accumulated total deductions (post-1/1/1946) for refunds and retirements processed during 1999, and credit it to outstanding balances as of December 31, 1998, on December 31, 1999.

PERAC Memo #10/1999 transmits the 1998 Annual Statement forms, due back to PERAC by May 1, 1999, and notes that boards must first submit December cashbooks and preclosing trial balances by February 21, 1999 to ensure accounts are current. It details this year's changes—board member term expiration dates, new pooled fund ledger categorizations, separation of realized/unrealized gains on Schedule 5, and formatting requirements—and outlines the required steps for completing interest calculations (Annuity Savings, Military, and Annuity Reserve Funds), zeroing the Expense Fund, and completing investment schedules, including updated appendix items (plan description, accounting policies, and three years of actuarial funding data plus the latest approved funding schedule).

This memo provides updated contact information (address and phone) for DOR's Retirement Board Payment Intercept Program. Boards must continue to contact this office to check for child support liens before processing any member's request for a return of Annuity Savings Fund contributions, directing questions to Attorney Dolores O'Neill.

This memo clarifies the Teachers' Retirement Board's four-part eligibility test for school nurses seeking membership in the Massachusetts Teachers' Retirement System (contractual employment, at least half-time service, state certification or waiver, and certification as a condition of employment). Boards must identify all members serving as school nurses and have them submit Enrollment Forms to their payroll offices for eligibility review; if approved, accumulated deductions will be transferred to the Teachers' Retirement Board, and ineligible nurses will be notified with appeal rights.

This memo addresses the Cavanaugh v. MTAERB and CRAB Superior Court ruling, which requires that the correction of contribution rates for dual members (established in Woburn v. Crocker and PERAC Memo #11/1995) be applied retroactively to each member's original enrollment date, rather than only prospectively from February 3, 1995. Boards must review records to identify dual members active before February 3, 1995 who overpaid contributions due to dual membership status—these are the same individuals whose rates were adjusted in 1995—and issue refunds (without interest) for the excess contributions collected between their dual-membership start date and February 3, 1995.

This memo requests final Year 2000 (Y2K) readiness verification from retirement boards, including documentation of both internal system compliance and confirmation from key business partners (municipalities, custodial banks, investment managers, and payroll/service providers). Boards must complete and return the Retirement Board Application Matrix and submit any Y2K Readiness Disclosure letters not previously provided, to Paul Laliberte at PERAC by November 15, 1999.

**PERAC Memo #43/1999** clarifies the methodology for withholding the additional 2% contribution required under G.L. c. 32, §1 on regular compensation paid at an annual rate exceeding $30,000, applicable to members who joined or rejoined the system on or after January 1, 1979. It explains that the 2% is applied per pay period based on the annualized rate of pay (not actual annual earnings), provides formulas and examples for weekly, biweekly, and monthly payrolls, and addresses treatment of non-recurring payments and retroactive salary adjustments. **Action required:** Boards should forward this memo to all payroll staff and vendors responsible for withholding calculations to ensure the 2% surcharge is applied correctly and consistently based on per-period compensation rates.

PERAC Memo #1/1998 sets the "regular interest" rate for 1998 at 2.4%, as determined under Section 22(6)(b) of Chapter 32 based on average savings account rates from a sample of financial institutions. Boards must apply this 2.4% rate to accumulated total deductions (post-1946) when crediting interest for 1998 refunds and retirements, and on outstanding member balances as of December 31, 1997, with interest credited as of December 31, 1998. No further action beyond correct rate application is required.

PERAC Memo #3/1998 transmits the annual worksheets and interest factor tables retirement boards use to calculate buyback and repayment amounts (for refunded contributions being restored to service credit) for calendar year 1998. It provides the year-by-year interest factors, calculation instructions, and formulas needed to compute amounts owed as of 12/31/97 and repayment totals through 1998. No board action is required beyond using these updated worksheets/factors when processing member buybacks and repayments during 1998; boards may contact Jim Waldman with questions.

PERAC Memo #4/1998 transmits the 1997 Annual Statement forms and instructs boards to submit December cashbooks and preclosing trial balances by January 21, 1998, and to complete and return the full Annual Statement package—including the new GASB-related appendix, actuarial information, and most recently approved funding schedule—by May 1, 1998. It also details specific formatting and reporting changes for 1997 (e.g., new market value asset line, revised ledger accounts, membership schedule changes, and paper size requirements), and notes that a PERAC auditor will contact each board to provide technical assistance.

PERAC Memo #13/1998 transmits proposed regulations (840 CMR 10.00) establishing standard rules and procedures for disability retirement proceedings, including applications, medical panel examinations, hearings, rehabilitation, and modification of allowances. Boards are encouraged to review the draft regulations and may attend one of three scheduled public hearings (April 2, 6, or 9, 1998) to comment; written comments will also be accepted through April 20, 1998, but no immediate compliance action is required until final regulations are issued.

This memo addresses Chapter 64 of the Acts of 1998, which requires retirement boards to notify DOR before making initial payments/distributions to members so DOR can check for child support arrears, comply with related liens, income withholding orders, and assignments, and file annual member data reports with DOR by March 1st. Boards should be aware that member information related to child support is strictly confidential (with penalties for disclosure), should consult local child support enforcement units to understand the process, and should comply with DOR-initiated requests on individual cases now—though full notice/payment-restriction procedures need not be implemented until DOR finalizes its administrative processes, at which point PERAC will provide further guidance and training.

PERAC Memo #42/1998 requests that all retirement boards complete and return the attached appropriation data questionnaire—covering FY99/FY00 pension appropriations, pension payroll figures, Section 3(8)(c)/7(4)(b) reimbursements, and COLA reimbursement data—so PERAC can calculate each system's required FY00 appropriation under G.L. c. 32, §22D or §22(6A)(b). Boards must submit the completed questionnaire, along with the underlying actuarial report if not previously provided, no later than October 31, 1998. Failure to submit accurate or timely data will result in PERAC using conservative estimated assumptions, potentially causing significant increases in the board's required appropriation.

PERAC Memo #52/1998 addresses the CRAB-affirmed decision in Templeton v. Plymouth County Retirement Board, which establishes that a member who took a refund upon leaving service and later returned does not regain prior membership rights, even after buying back that prior creditable service. Consequently, when such a member elects to purchase military service credit under Chapter 71 of the Acts of 1996, boards must calculate the buyback cost using the salary earned when the member most recently re-established membership, not the earlier salary from before the refund. Boards should apply this salary standard going forward in all military buyback calculations involving members who previously took refunds.

This memo transmits CRAB's final decision in McFarland v. State Board of Retirement, which holds that a member who transfers between retirement systems must have military service purchased under Chapter 71 of the Acts of 1996 based on 10% of the salary earned when the member first entered the initial system, not their current system. Boards must apply this standard going forward for eligible transferred members purchasing military service credit. However, boards should note that members who withdrew their accumulated deductions and later returned to service must base their military service buyback on 10% of compensation at re-entry, even if they also repurchase prior service.

PERAC Memo #4/1997 announces that the "regular interest" rate for calendar year 1997, as determined under Section 22(6)(b) of Chapter 32, has been set at 2.5%. Boards must apply this rate to accumulated total deductions and interest made on or after January 1, 1946, crediting it on refunds and retirements processed during 1997 and on outstanding balances as of December 31, 1996, to be credited on December 31, 1997.

PERAC Memo #14/1997 revises prior guidance on the Chapter 71 (1996) 10% military service buy-back for veterans who took a refund and later re-entered membership. The Commission now holds that members who repurchase their prior service may buy back military service based on 10% of their salary at initial entry into the system, rather than 10% of salary at re-entry, and are entitled to a refund of the difference if they were overcharged. Boards must identify affected members who overpaid under the prior rule and issue refunds, while members who have not yet completed repurchase of prior service must finish that buy-back before qualifying for the earlier-salary military service rate.

PERAC Memo #29/1997 reminds boards that a member's contribution rate must be based on the date of actual enrollment in the retirement system, not the date employment began, per the McIntire decision and subsequent DALA/CRAB rulings. Boards are required to verify employer-provided contribution rate data against enrollment dates, correct any errors going forward (collecting make-up contributions without interest for underpayments, refunding overpayments), and treat this verification as an ongoing process for all new hires.

PERAC Memo #31/1997 requests that all retirement boards complete and return the attached appropriation questionnaire by October 31, 1997, providing FY98/FY99 appropriation figures, pension payroll data, reimbursement amounts, and COLA information needed to calculate FY99 appropriations under G.L. c. 32, §22D or §22(6A)(b). Boards must ensure the data is accurate and complete, since PERAC will otherwise use conservative estimates that could result in significantly higher required appropriations. No other action is needed beyond timely, accurate submission of the questionnaire (and the underlying actuarial report, if not already provided).

PERAC Memo #35/1997 transmits an initial draft of proposed revisions to the 840 CMR 1.00 investment regulations, updated to reflect PERAC's thirteen years of oversight experience and intended to improve process efficiency. This is a preliminary, non-exhaustive draft that will be reviewed by the Massachusetts Public Pension Advisory Council before the formal rulemaking process (further comment periods and public hearing) begins. No formal action is required of boards at this time; PERAC is simply requesting that boards review the draft and submit comments or raise unaddressed concerns.

PERAC Memo #36/1997 clarifies that under G.L. c. 32, §8(2)(b), a disability retiree who is reinstated to active service is entitled to have restored the creditable service accrued prior to disability retirement, plus receive creditable service for the period during which he or she received a disability allowance—without having to make up member contributions for that period. The memo notes this guidance is limited to creditable service and does not address civil service seniority rights. Boards should apply this creditable service treatment when processing reinstatements of disability retirees but need not take any further action beyond ensuring compliance with this interpretation.

PERAC Memo #45/1997 transmits draft regulations (840 CMR 10.00) establishing standard, uniform rules and procedures governing ordinary and accidental disability retirement proceedings, medical panel examinations, re-examinations, rehabilitation, and related matters. Boards are not required to take formal action at this stage, but are encouraged to attend one of three MPPAC input sessions (Plymouth, Worcester, or Boston in December 1997/January 1998) to review the draft and provide comments before the regulations are finalized.

This memo transmits PERAC's statutorily-required 1997 report on the costs and actuarial liabilities associated with COLA benefits under Chapter 17 of the Acts of 1997, which reformed the COLA process (allowing systems to grant increases up to the CPI or 3%, whichever is less). It explains that Chapter 17 requires local systems to accept Section 103 provisions—via retirement board vote plus approval by the local legislative body—before a system's members can receive an annual COLA, and notes that PERAC will provide the CPI report to accepting systems each April 1. No immediate action is required beyond boards reviewing their system's cost data and considering whether to pursue local acceptance of Section 103.

PERAC Memo #53/1997 announces that the Commission has finalized draft revisions to 840 CMR (the investment regulations governing fiduciary duty, prohibited holdings, and investment standards for public pension systems) and is filing them with the Secretary of State as part of the formal promulgation process. Two public hearings will be held (February 4 and 6, 1998) with a written comment period open through February 20, 1998. Boards should review the enclosed draft regulations and are encouraged, though not required, to submit comments or attend the hearings to ensure their concerns are considered before final adoption.

840 CMR 3.00 incorporates federal Internal Revenue Code qualification requirements into Massachusetts public retirement systems, ensuring they maintain their status as governmental qualified plans under IRC § 401. The regulation addresses requirements including the exclusive benefit rule (IRC § 401(a)(1),(2)), forfeiture restrictions, required minimum distributions (IRC § 401(a)(9)), annual compensation limits (IRC § 401(a)(17)), and rollover provisions. These provisions became effective January 1, 1989, and apply to all Chapter 32 retirement systems regardless of other Massachusetts law, including the compensation cap of $200,000 (adjusted for cost-of-living) for members who joined on or after January 1, 2002, and 64% of that cap for members joining after January 1, 2011.

840 CMR 8.00, which governed the applicability of the $30,000 salary cap on regular compensation for pension contribution and benefit calculation purposes, was repealed effective March 29, 2024. The salary cap provisions it covered have since been superseded by the broader compensation limits established under M.G.L. c. 32, § 1 and the IRC § 401(a)(17) limitations addressed in 840 CMR 3.00. Boards should no longer rely on this regulation and should consult current law and PERAC guidance on compensation limits.

840 CMR 13.00 implements the expanded tax-deferred rollover opportunities created by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), allowing public employees to purchase creditable service using assets held in other tax-deferred retirement plans. Retirement boards may accept Eligible Rollover Distributions paid directly to the system (Direct Rollovers) from qualifying plans including IRAs, qualified plans under IRC § 401(a), eligible 457(b) plans, and annuity contracts under IRC § 403(b). The regulation defines key terms including Direct Rollover, Eligible Retirement Plan, and Eligible Rollover Distribution, and clarifies the types of distributions that do not qualify for rollover treatment.

840 CMR 15.00 is an omnibus regulation covering several administrative requirements for retirement boards. Boards must require all members and beneficiaries receiving benefits to file attestations of continued eligibility at least every two years, and must withhold benefits from those who fail to comply. The regulation also governs the purchase of creditable service, both prior membership service and non-membership service, including the order in which multiple purchase types must be completed. Additional sections address regular compensation definitions, benefit calculation factors, and the use of board credit and debit cards. Boards may satisfy the attestation requirement through semi-annual third-party data matching in lieu of individual attestations.