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TELEPHONE: (860) 702-3480
|MEDICAL EXAMINING BOARD
for DISABILITY RETIREMENT
|HEALTH CARE COST
|STATE OF CONNECTICUT
RETIREMENT AND BENEFIT SERVICES DIVISION
OFFICE OF THE STATE COMPTROLLER
RETIREMENT & BENEFIT SERVICES DIVISION MEMORANDUM
February 1, 2001
TO THE HEAD OF ALL STATE AGENCIES
|ATTENTION:||All Personnel and Payroll Officers|
|SUBJECT:||ALTERNATE RETIREMENT PROGRAM (ARP) CONTRIBUTION LIMITS|
I . INTRODUCTION
Retirement & Benefit Services Division Memorandum entitled "Alternate Retirement Program (ARP) Contribution Limits", dated June 18, 1997, discussed a contribution limit under the Internal Revenue Code Section 401(a)(17). Specifically, this limit, also referred to as cap, was placed on the amount of annual compensation which may be taken into account for purposes of calculating pension contributions as a result of revisions made by the Omnibus Reconciliation Act of 1993 (OBRA 93).
The purpose of this memorandum is to (1) provide agencies with the revised annual compensation limit, (2) confirm the contribution limit under Internal Code Section 415(c) and (3) restate the required administrative procedure to ensure proper compliance.
II . IMPACT OF OBRA 1993 ON THE ARP
Employees who became participants of the ARP prior to January 1, 1996 will not be subject to the OBRA 1993 annual compensation limit in 1996 or any year thereafter.
For calendar year 2001, the compensation limit (cap) will remain at $170,000.
III . SECTION 415 GENERAL LIMIT
Regardless of whether employees became participants in the ARP before or after 1996, they will continue to be subject to the General Limit on contributions imposed by Section 415(c) of the Internal Revenue Code. For the 2001 calendar year, the General Limit will increase from $30,000 to the lesser of $35,000 or 25% of the participant's covered compensation. The $35,000 limit on contributions is subject to adjustments in future years by the Commissioner of the Internal Revenue Service for increases in the cost of living in accordance with Section 415(d) of the Internal Revenue Code.
IV . ADMINISTRATIVE PROCEDURES
V . CONCLUSION
The Retirement & Benefit Services Division will keep agencies informed of any future increases in the maximum compensation limit to be used for ARP pension contribution purposes as well as in the Section 415 General Limit. Questions concerning this memorandum may be directed to James Schnell, ARP Coordinator, at (860) 702-3508.
Very truly yours,
STATE EMPLOYEES RETIREMENT COMMISSION
NANCY WYMAN, SECRETARY EX OFFICIO
Steven Weinberger, Director
Retirement & Benefit Services Division
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