§5-10-27a. Federal law maximum benefit limitations


Published: 2015

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WVC 5 - 10 - 27 A

§5-10-27a. Federal law maximum benefit limitations.

Notwithstanding any other provision of this article or state

law, the board shall administer the retirement system in compliance

with the limitations of Section 415 of the Internal Revenue Code

and regulations promulgated thereunder to the extent applicable to

governmental plans (hereafter sometimes referred to as the "415

limitation(s)" or "415 dollar limitation(s)"), so that the annual

benefit payable under this system to a member shall not exceed

those limitations. Any annual benefit payable under this system

shall be reduced or limited if necessary to an amount which does

not exceed those limitations. The extent to which any annuity or

other annual benefit payable under this retirement system shall be

reduced, as compared to the extent to which an annuity,

contributions or other benefits under any other defined benefit

plans or defined contribution plans required to be taken into

consideration under Section 415 of the Internal Revenue Code shall

be reduced, shall be proportional on a percentage basis to the

reductions made in such other plans administered by the board and

required to be so taken into consideration under Section 415,

unless a disproportionate reduction is determined by the board to

maximize the aggregate benefits payable to the member. If the

reduction is under this retirement system, the board shall advise

affected members of any additional limitation on the annuities or

other annual benefit required by this section. For purposes of the

415 limitations, the "limitation year" shall be the calendar year. The 415 limitations are incorporated herein by reference, except to

the extent the following provisions may modify the default

provisions thereunder:

(a) The annual adjustment to the 415 dollar limitations made by

Section 415(d) of the Internal Revenue Code and the regulations

thereunder shall apply for each limitation year. The annual

adjustments to the dollar limitations under Section 415(d) of the

Internal Revenue Code which become effective: (i) After a

retirant's severance from employment with the employer; or (ii)

after the annuity starting date in the case of a retirant who has

already commenced receiving benefits, will apply with respect to a

retirant's annual benefit in any limitation year. A retirant's

annual benefit payable in any limitation year from this retirement

system shall in no event be greater than the limit applicable at

the annuity starting date, as increased in subsequent years

pursuant to Section 415(d) of the Internal Revenue Code and the

regulations thereunder.

(b) For purposes of this section, the "annual benefit" means a

benefit that is payable annually in the form of a straight life

annuity. Except as provided below, where a benefit is payable in

a form other than a straight life annuity, the benefit shall be

adjusted to an actuarially equivalent straight life annuity that

begins at the same time as such other form of benefit, using

factors prescribed in the 415 limitation regulations, before

applying the 415 limitations. No actuarial adjustment to the benefit shall be made for: (1) Survivor benefits payable to a

surviving spouse under a qualified joint and survivor annuity to

the extent such benefits would not be payable if the member's

benefit were paid in another form; (2) benefits that are not

directly related to retirement benefits (such as a qualified

disability benefit, preretirement incidental death benefits, and

post-retirement medical benefits); or (3) the inclusion in the form

of benefit of an automatic benefit increase feature, provided the

form of benefit is not subject to Section 417(e)(3) of the Internal

Revenue Code and would otherwise satisfy the limitations of this

article, and the plan provides that the amount payable under the

form of benefit in any limitation year shall not exceed the limits

of this article applicable at the annuity starting date, as

increased in subsequent years pursuant to Section 415(d) of the

Internal Revenue Code. For this purpose an automatic benefit

increase feature is included in a form of benefit if the form of

benefit provides for automatic, periodic increases to the benefits

paid in that form.

(c) Adjustment for benefit forms not subject to Section

417(e)(3). -- The straight life annuity that is actuarially

equivalent to the member's form of benefit shall be determined

under this subsection if the form of the member's benefit is

either: (1) A nondecreasing annuity (other than a straight life

annuity) payable for a period of not less than the life of the

member (or, in the case of a qualified preretirement survivor annuity, the life of the surviving spouse); or (2) an annuity that

decreases during the life of the member merely because of: (i) The

death of the survivor annuitant (but only if the reduction is not

below fifty percent of the benefit payable before the death of the

survivor annuitant); or (ii) the cessation or reduction of Social

Security supplements or qualified disability payments (as defined

in Section 411(a)(9) of the Internal Revenue Code). The

actuarially equivalent straight life annuity is equal to the

greater of: (I) The annual amount of the straight life annuity (if

any) payable to the member under the plan commencing at the same

annuity starting date as the member's form of benefit; and (II) the

annual amount of the straight life annuity commencing at the same

annuity starting date that has the same actuarial present value as

the member's form of benefit, computed using a five percent

interest rate assumption and the applicable mortality table defined

in Treasury Regulation §1.417(e)-1(d)(2) (Revenue Ruling 2001-62 or

any subsequent Revenue Ruling modifying the applicable provisions

of Revenue Ruling 2001-62) for that annuity starting date.

(d) Adjustment for benefit forms subject to Section 417(e)(3).

-- The straight life annuity that is actuarially equivalent to the

member's form of benefit shall be determined under this subsection

if the form of the member's benefit is other than a benefit form

described in subsection (c) of this section. In this case, the

actuarially equivalent straight life annuity shall be determined as

follows: The actuarially equivalent straight life annuity is equal to the greatest of: (1) The annual amount of the straight life

annuity commencing at the same annuity starting date that has the

same actuarial present value as the member's form of benefit,

computed using the interest rate specified in this retirement

system and the mortality table (or other tabular factor) specified

in this retirement system for adjusting benefits in the same form;

(2) the annual amount of the straight life annuity commencing at

the same annuity starting date that has the same actuarial present

value as the member's form of benefit, computed using a five and a

half percent interest rate assumption and the applicable mortality

table defined in Treasury Regulation §1.417(e)-1(d)(2) (Revenue

Ruling 2001-62 or any subsequent Revenue Ruling modifying the

applicable provisions of Revenue Ruling 2001-62) for that annuity

starting date; and (3) the annual amount of the straight life

annuity commencing at the same annuity starting date that has the

same actuarial present value as the member's form of benefit,

computed using the applicable interest rate defined in Treasury

Regulation §1.417(e)-1(d)(3) and the applicable mortality table

defined in Treasury Regulation §1.417(e)-1(d)(2) (the mortality

table specified in Revenue Ruling 2001-62 or any subsequent Revenue

Ruling modifying the applicable provisions of Revenue Ruling

2001-62), divided by 1.05.

(e) Benefits payable prior to age sixty-two. --

(1) Except as provided in subdivisions (2) and (3) of this

subsection, if the member's retirement benefits become payable before age sixty-two, the 415 dollar limitation prescribed by this

section shall be reduced in accordance with regulations issued by

the Secretary of the Treasury pursuant to the provisions of Section

415(b) of the Internal Revenue Code, so that the limitation (as so

reduced) equals an annual straight life benefit (when the

retirement income benefit begins) which is equivalent to an annual

benefit in the amount of the applicable dollar limitation of

Section 415(b)(1)(A) of the Internal Revenue Code (as adjusted

pursuant to Section 415(d) of the Internal Revenue Code) beginning

at age sixty-two.

(2) The limitation reduction provided in subdivision (1) of

this subsection shall not apply if the member commencing retirement

benefits before age sixty-two is a qualified participant. A

qualified participant for this purpose is a participant in a

defined benefit plan maintained by a state, or any political

subdivision of a state, with respect to whom the service taken into

account in determining the amount of the benefit under the defined

benefit plan includes at least fifteen years of service: (i) As a

full-time employee of any police or fire department organized and

operated by the state or political subdivision maintaining the

defined benefit plan to provide police protection, fire-fighting

services or emergency medical services for any area within the

jurisdiction of such state or political subdivision; or (ii) as a

member of the armed forces of the United States.

(3) The limitation reduction provided in subdivision (1) of this subsection shall not be applicable to preretirement disability

benefits or preretirement death benefits.

(4) For purposes of adjusting the 415 dollar limitation for

benefit commencement before age sixty-two or after age sixty-five

(if the plan provides for such adjustment), no adjustment is made

to reflect the probability of a member's death: (i) After the

annuity starting date and before age sixty-two; or (ii) after age

sixty-five and before the annuity starting date.

(f) Adjustment when member has less than ten years of

participation. -- In the case of a member who has less than ten

years of participation in the retirement system (within the meaning

of Treasury Regulation §1.415(b)-1(g)(1)(ii)), the 415 dollar

limitation (as adjusted pursuant to Section 415(d) of the Internal

Revenue Code and subsection (e) of this section) shall be reduced

by multiplying the otherwise applicable limitation by a fraction,

the numerator of which is the number of years of participation in

the plan (or one, if greater), and the denominator of which is ten.

This adjustment shall not be applicable to preretirement disability

benefits or preretirement death benefits.

(g) The application of the provisions of this section shall

not cause the maximum annual benefit provided to a member to be

less than the member's accrued benefit as of December 31, 2008,

(the end of the limitation year that is immediately prior to the

effective date of the final regulations for this retirement system

as defined in Treasury Regulation §1.415(a)-1(g)(2)), under provisions of the retirement system that were both adopted and in

effect before April 5, 2007, provided that such provisions

satisfied the applicable requirements of statutory provisions,

regulations, and other published guidance relating to Section 415

of the Internal Revenue Code in effect as of the end of December

31, 2008, as described in Treasury Regulation §1.415(a)-1(g)(4).

If additional benefits are accrued for a member under this

retirement system after January 1, 2009, then the sum of the

benefits described under the first sentence of this subsection and

benefits accrued for a member after January 1, 2009, must satisfy

the requirements of Section 415, taking into account all applicable

requirements of the final 415 Treasury Regulations.


Note: WV Code updated with legislation passed through the 2015 Regular Session

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