(a) Adjustment if fewer than 10 years. Effective for limitation years ending after December 31, 2001, if a member has fewer than 10 years of participation in the plan, then the defined benefit dollar limitation of Section 45-37-123.131(a) shall be multiplied by a fraction, the numerator of which is the number of years, or part thereof, of participation in the plan, and the denominator of which is 10. However, in no event shall such fraction be less than one-tenth. Notwithstanding the foregoing, no adjustment shall be made to the defined benefit dollar limitation for a distribution on account of a member becoming disabled by reason of personal injuries or sickness, or as a result of the death of a member. For purposes of this subsection, a year of participation means each accrual computation period for which the following conditions are met: The member is credited with a period of service for benefit accrual purposes, required under the terms of the plan in order to accrue a benefit for the accrual computation period, and the member is included as a member under the eligibility provisions of the plan for at least one day of the accrual computation period. If these two conditions are met, the portion of a year of participation credited to the member shall equal the amount of benefit accrual service credited to the member for such accrual computation period. A member who is permanently and totally disabled within the meaning of § 415(c)(3)(C)(i), Internal Revenue Code, for an accrual computation period shall receive a year of participation with respect to the period. In no event shall more than one year of participation be credited for any 12-month period.
(b) Adjustment of defined benefit dollar limitation for commencement before age 62. Effective for benefits commencing in limitation years ending after December 31, 2001, the defined benefit dollar limitation shall be adjusted if the annuity starting date of the member’s benefit is before age 62.
(1) LIMITATION YEARS BEGINNING BEFORE JULY 1, 2007. If the annuity starting date for the member’s benefit is prior to age 62 and occurs in a limitation year beginning before July 1, 2007, the defined benefit dollar limitation for the member’s annuity starting date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the member’s annuity starting date that is the actuarial equivalent of the defined benefit dollar limitation with actuarial equivalence computed using whichever of the following produces the smaller annual amount: The applicable interest rate and applicable mortality table, or other tabular factor, as defined in § 417(e)(3), Internal Revenue Code; or a five percent interest rate assumption and the applicable mortality table as defined in § 417(e)(3), Internal Revenue Code.
(2) LIMITATION YEARS BEGINNING ON OR AFTER JULY 1, 2007.
a. Plan Does Not Have Immediately Commencing Straight Life Annuity Payable at Both Age 62 and the Age of Benefit Commencement. If the annuity starting date for the member’s benefit is prior to age 62 and occurs in a limitation year beginning on or after July 1, 2007, and the plan does not have an immediately commencing straight life annuity payable at both age 62 and the age of benefit commencement, the defined benefit dollar limitation for the member’s annuity starting date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the member’s annuity starting date that is the actuarial equivalent of the defined benefit dollar limitation with actuarial equivalence computed using a five percent interest rate assumption and the applicable mortality table under Treasury Regulation § 1.417(e)-1(d)(2), or the applicable mortality table as required by law, that is effective for that annuity starting date, and expressing the member’s age based on completed calendar months as of the annuity starting date.
(2) BENEFIT FORMS SUBJECT TO § 417(e)(3) INTERNAL REVENUE CODE. The straight life annuity that is actuarially equivalent to the member’s form of benefit shall be determined under this subdivision if the form of the member’s benefit is other than a benefit form described in subdivision (1). In this case, the actuarially equivalent straight life annuity shall be determined as follows:
a. Annuity Starting Date in Plan Years Beginning After 2005. If the annuity starting date of the member’s form of benefit is in a plan year beginning after 2005, 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 assumptions, as defined in subdivision (3) of Section 45-37-123.01;
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 one-half percent interest rate assumption and the applicable mortality table for the distribution under Treasury Regulation § 1.417(e)-1(d)(2), or the applicable mortality table as required by law; or
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 for the distribution under Treasury Regulation § 1.417(e)-1(d)(3), or the applicable interest rate as required by law, and the applicable mortality table for the distribution under Treasury Regulation § 1.417(e)-1(d)(2), or the applicable mortality table as required by law, divided by 1.05.
b. Annuity Starting Date in Plan Years Beginning in 2004 or 2005. If the annuity starting date of the member’s form of benefit is in a plan year beginning in 2004 or 2005, the actuarially equivalent straight life annuity is equal to 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 whichever of the following produces the greater annual amount:
1. The applicable interest rate and applicable mortality table, or other tabular factor, as defined in § 417(e)(3), Internal Revenue Code, for adjusting benefits in the same form; or
2. A five and one-half percent interest rate assumption and the applicable mortality table for the distribution under Treasury Regulation § 1.417(e)-1(d)(2), or the applicable mortality table as required by law.
(d) For purposes of Section 45-37-123.130 and subsection (b), no adjustments under § 415(d), Internal Revenue Code, shall be taken into account before the limitation year for which such adjustment first takes effect.
(e) For purposes of Section 45-37-123.130, no actuarial adjustment to the benefit is required for the value of a qualified joint and survivor annuity, ancillary benefits that are not directly related to retirement benefits, such as a qualified disability benefit, preretirement death benefits, and postretirement medical benefits, and the value of postretirement cost-of-living increases made in accordance with § 415(d), Internal Revenue Code, and Treasury Regulation § 1.415–3(c)(2)(iii). The annual benefit does not include any benefits attributable to employee contributions or rollover contributions, or the assets transferred from a qualified plan that was not maintained by the county.
Last modified: May 3, 2021