STATE EMPLOYEES
RETIREMENT COMMISSION

MEDICAL EXAMINING BOARD
For DISABILITY RETIREMENT
COMPTROLLER'S SEAL STATE OF CONNECTICUT 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 NO. 2011-01

February 22, 2011

TO THE HEADS OF ALL STATE AGENCIES

ATTENTION:   Personnel and Payroll Officers
SUBJECT:   STATE EMPLOYEES RETIREMENT SYSTEM (SERS) MAXIMUM BENEFIT LIMITATIONS

I. INTRODUCTION

As a qualified retirement plan, SERS is required to impose certain limitations required by Internal Revenue Code ("IRC") Section 415. IRC Section 415 places certain limitations on retirement benefits that may be paid to retirees. This notice is being provided to clarify the IRC Section 415 limitations.

II. INTERNAL REVENUE CODE, SECTION 415

Internal Revenue Code, Section 415(b) limits an individual's retirement benefit amount. The retirement benefit is limited to the lower of the SERS benefit calculation or the IRC, Section 415(b) limit. Under Section 415 the portion of the retirement benefit attributable to employer contributions as well as picked up employee contributions may not exceed the lesser of:

1. The limit under IRC, Section 415(b) also known as the Dollar Limit is an indexed dollar amount that is adjusted based upon the retiree's (i) calendar year of retirement, (ii) age at retirement and (iii) employment classification at retirement, or
 
2. 100% of the retiree's "compensation during his/her three highest paid consecutive calendar years of active employment".

As referenced previously, IRC, Section 415 sets forth indexed dollar amounts that are adjusted based upon the three aforementioned factors of calendar year of retirement, age at retirement and classification at time of retirement.

The table that follows lists those indexed dollar amounts for 2010 for select age groups and employment classifications:

 

Retirement Age  General Employees Police/Fire
65    $195,000    $195,000
62    195,000    195,000
60    167,566    195,000
55    117,672    195,000
50    85,004    195,000
45    62,661    195,000
40    46,868    195,000

In addition, there is a federal limitation under IRC, Section 401(a)(17) on compensation upon which employee retirement contributions can be taken and retirement benefits calculated. For 2010 employee contributions and benefits could not be based on earnable salary which exceeded $245,000. This amount remains unchanged for 2011. These limits are indexed annually.

The Division will be sending out a separate communication concerning contributions on salaries above the compensation limits.

III. CONCLUSION

It is important for SERS members to be cognizant of the circumstances under which these limits may affect their pensions. Individuals who feel they may meet or exceed the limits as discussed herein may contact the Retirement Counseling Unit at (860) 702-3490 for a determination of how IRC, Section 415(b) may affect the calculation of their retirement benefit.

Very Truly Yours,

STATE EMPLOYEES RETIREMENT COMMISSION
KEVIN LEMBO, SECRETARY EX OFFICIO

BY:

Jeanne A. Kopek, Acting Director
Retirement Services Division

JAK/CN

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