STATE EMPLOYEES RETIREMENT COMMISSION MEDICAL EXAMINING BOARD For DISABILITY RETIREMENT		55 ELM STREET HARTFORD, CONNECTICUT 06106-1775 Telephone (860) 702-3480 Facsimile (860) 702-3489
	STATE OF CONNECTICUT
	RETIREMENT SERVICES DIVISION OFFICE OF THE STATE COMPTROLLER

RETIREMENT SERVICES DIVISION MEMORANDUM 2010-01

January 25, 2010

TO THE HEADS OF ALL STATE AGENCIES

I . INTRODUCTION

The Internal Revenue Code (IRC) establishes limits on retirement plan benefits and contributions. The Internal Revenue Service (IRS) has announced the compensation and contribution limits which will affect the Alternate Retirement Program (ARP) for the 2010 calendar year.

 

The purpose of this memorandum is to provide agencies with (1) the revised annual compensation limit under IRC, Section 401(a)(17), (2) the revised contribution limit under IRC, Section 415(c) and (3) the required administrative procedures to ensure proper compliance.

II . ARP COMPENSATION LIMIT

Retirement & Benefit Services Division Memorandum entitled "Alternate Retirement Program (ARP) Contribution Limits", dated June 18, 1997, introduced a compensation limit under the IRC, Section 401(a)(17). Specifically, this limit, also referred to as a 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 Budget Reconciliation Act of 1993 (OBRA 93).

 

Employees who became participants of the ARP prior to January 1, 1996 are not subject to the OBRA 1993 annual compensation limit in 1996 or any year thereafter.

 

Employees who became participants in the ARP on and after January 1, 1996 are subject to the compensation limit as adjusted by the Commissioner of the IRS for increases in the cost of living in accordance with Section 401(a)(17) of the IRC.

 

For calendar year 2010, the compensation limit (cap) remains the same as the 2009 limit, $245,000.

III . ARP CONTRIBUTION LIMIT

The IRC, Section 415 imposes an annual dollar limit on combined employer and employee contributions to the ARP. All ARP participants are subject to this contribution limit regardless of when their participation in the ARP commenced. For the 2010 calendar year, the combined contribution limit remains the same as, the 2009 limit, the lesser of $49,000 or 100% of the participant's covered compensation.

IV . ADMINISTRATIVE PROCEDURES

1. It is the obligation of each agency payroll department to ensure compliance with the compensation limit for affected ARP participants and the contribution limit for all ARP participants.

2. The agency payroll department must stop contributions to the ARP when either the compensation limit or contribution limit is met. The agency must resume the required contributions with the first payroll check dated in the next calendar year.

V . CONCLUSION

The Retirement Services Division will keep agencies informed of the maximum compensation and contribution limits for ARP participants. Any questions concerning this memorandum may be directed to the Division's Miscellaneous Retirement Systems Unit, at (860) 702-3508.

Very truly yours,

STATE EMPLOYEES RETIREMENT COMMISSION
NANCY WYMAN, SECRETARY EX OFFICIO

By:

Mark E. Ojakian, Deputy Comptroller and Acting Director
Retirement Services Division

MO: JS

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