94-411 C.M.R. ch. 412
SUMMARY: This Chapter establishes a limit on the amount of a member's compensation that may be taken into account when computing employee and employer contributions to or benefits due from a retirement program pursuant to Internal Revenue Code Section 401(a)(17).
1. Annual Compensation. "Annual compensation" means compensation during the plan year or the determination period.
2. Code. "Code" means the Internal Revenue Code of 1986, as amended.
3. Determination Period. "Determination period" means a consecutive 12-month period over which compensation is determined under the plan.
4. Eligible Member. "Eligible member" means a person who first became a member of a retirement program administered by the Maine Public Employees Retirement System prior to July 1, 1996.
5. Plan year. "Plan year" is the fiscal year commencing July 1.
1. Effective with respect to plan years beginning on and after July 1, 1996, and before July 1, 2002, the annual compensation of a member that exceeds $150,000 (as adjusted for cost-of-living increases under Code Section 401(a)(17)(B)) shall be disregarded for purposes of computing employee and employer contributions to or benefits due from the retirement program for any plan year. Effective only for the plan year beginning July 1, 1996, in determining the compensation of an employee eligible for consideration under this provision, the rules of Code Section 414(g)(6) shall apply, except that in applying such rules, the term "family" shall include only the spouse of the member and any lineal descendants of the employee who have not attained age 19 before the close of the year.
2. Effective with respect to plan years beginning on and after July 1, 2002, the annual compensation of a member that exceeds $200,000 (as adjusted for cost-of-living increases under Code Section 401(a)(17)(B)) may not be taken into account in determining benefits or contributions due for any plan year. A. The cost-of-living adjustment in effect for a calendar year applies to annual compensation for the determination period that begins with or within such calendar year. B. If the determination period consists of fewer than 12 months, the annual
compensation limit is an amount equal to the otherwise applicable annual compensation limit multiplied by a fraction, the numerator of which is the number of months in the short determination period, and the denominator of which is 12.
C. If the compensation for any prior determination period is taken into account in determining a member's contributions or benefits for the current plan year, the compensation for such prior determination period is subject to the applicable annual compensation limit in effect for that prior period.
3. Pursuant to section 13212(d)(3)(a) of the Omnibus Budget Reconciliation Act of 1993 (OBRA '93), and the regulations issued under that section, eligible members are not subject to the limits of Code Section 401(a)(17), and the maximum compensation used in computing employee and employer contributions to or benefits due from the retirement program for eligible members shall be the maximum amount allowed by the retirement program to be so used on July 1, 1993. The limits referenced in subsections (1) and (2) above apply only to plan years beginning on and after July 1, 1996, and only to individuals who first become members in plan years beginning on and after July 1, 1996.
STATUTORY AUTHORITY 5 MRSA Section 17103(4)
EFFECTIVE DATE:
February 14, 2010 – filing 2010-35