1. (a) The maximum benefit otherwise permitted under §29.51 of this title (relating to Plan Limitations on Retirement Benefits) is subject to the following adjustments.

   1. (1) If the annual benefit begins before the member attains age 62, the Internal Revenue Code §415(b)(1)(A) limitation, as adjusted, shall be reduced in a manner prescribed by the secretary of the treasury. For plan years ending before January 1, 2002, that adjustment may not reduce the member's annual benefit below $75,000, if the member's benefit begins after age 55, or the actuarial equivalent of $75,000 beginning at age 55 if benefits begin before age 55. The preceding sentence will not apply to plan years ending after December 31, 2001.
   2. (2) If the annual benefit begins after the member attains age 65, the Internal Revenue Code §415(b)(1)(A) limitation, as adjusted, will be increased so that it is the actuarial equivalent of the Internal Revenue Code §415(b)(1)(A) limitation at age 65.
   3. (3) The portion of a member's benefit that is attributable to the member's own contributions (other than picked-up contributions) is not part of the annual benefit subject to the limitations of §29.51. Instead, the amount of those member contributions is treated as an annual addition to a qualified defined contribution plan maintained by the employer.
2. (b) The dollar limitation on annual benefits provided by §29.51, but not the $75,000 limitation provided by subsection (a) of this section, shall be adjusted annually as provided by §415(d) of the Code and the regulations prescribed by the secretary of the treasury to reflect cost of living adjustments. The adjusted limitation is effective for TRS benefits for the TRS plan year that begins on or after the earliest allowable effective date of the changes under federal regulations.
3. (c) The limitation provided by §29.51 for a member who has separated from service with a vested right to a pension shall be adjusted annually as provided by §415(d) of the Code and the regulations prescribed by the secretary of the treasury.

4. (d) The following interest rate assumptions shall be used in computing the limitations under §29.51.

   1. (1) For the purpose of determining the portion of the annual benefit that is attributable to member contributions, the factors described in §411(c)(2)(B) and (C) of the Code and the regulations thereunder shall be used even though §411 of the Code does not otherwise apply to the retirement system.
   2. (2) For the purpose of adjusting the annual benefit to a straight life annuity, the interest rate assumption is 5.0%, unless a different rate is required by the secretary of the treasury.
   3. (3) For the purpose of adjusting the Internal Revenue Code §415(b)(1)(A) limitation after a member attains age 65, the interest rate assumption is 5.0%, unless a different rate is required by the secretary of the treasury, and the mortality decrement shall be ignored to the extent that a forfeiture does not occur at death.
5. (e) An adjustment under §415(d) of the Code may not be taken into account before the year for which that adjustment first takes effect. No adjustment is required for the value of qualified joint and survivor annuity benefits, preretirement disability or death benefits, post retirement medical benefits, or post retirement cost-of-living increases made in accordance with §415(d) of the Code and §1.415-3(c) of the Income Tax Regulations.

6. (f) This plan may still pay an annual benefit to any member in excess of the member's maximum annual benefit otherwise allowed if:

   1. (1) the annual benefit derived from the employer's contributions under all defined benefit plans of the employer subject to the limitations of §25.51 and §415 of the Code does not in the aggregate exceed $10,000 for the plan year or for any prior plan year; and
   2. (2) the member has not at any time participated in a defined contribution plan maintained by the employer. For purposes of this subsection, member contributions to the plan are not considered a separate defined contribution plan maintained by the employer.
7. (g) If a member has fewer than ten years of actual membership service credit in the plan at the time the member begins to receive benefits under the plan, the Internal Revenue Code §415(b)(1)(A) limitation, as adjusted, shall be reduced by multiplying the limitation by a fraction in which the numerator is the number of years of service credit and the denominator is 10; provided, however, that the fraction may not be less than one-tenth. If the member has fewer than ten years of employment with the employer, the $10,000 limitation of subsection (f) of this section shall be reduced in the same manner as provided in the preceding sentence, except the numerator shall be the number of actual years of employment with the employer rather than number of years of service credit.

Source Note:The provisions of this §29.52 adopted to be effective June 1, 1995, 20 TexReg 3734; amended to be effective March 12, 2003, 28 TexReg 2105; amended to be effective March 8, 2007, 32 TexReg 1087.