MEDICAL EXAMINING BOARD
For DISABILITY RETIREMENT
|55 ELM STREET
Telephone (860) 702-3480
Facsimile (860) 702-3489
|STATE OF CONNECTICUT|
RETIREMENT SERVICES DIVISION
OFFICE OF THE STATE COMPTROLLER
RETIREMENT SERVICES DIVISION MEMORANDUM 2011-02
April 7, 2011
TO THE HEADS OF ALL STATE AGENCIES
|ATTENTION:||All Personnel and Payroll Officers|
|SUBJECT:||ALTERNATE RETIREMENT PROGRAM (ARP) COMPENSATION AND CONTRIBUTION LIMITS|
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 2011 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 2011, the compensation limit (cap) remains the same as the 2010 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 2011 calendar year, the combined contribution limit remains the same as, the 2010 limit, the lesser of $49,000 or 100% of the participant's covered compensation.
IV . ADMINISTRATIVE PROCEDURES
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
KEVIN LEMBO, SECRETARY EX OFFICIO
Jeanne A. Kopek, Acting Director
Retirement Services Division
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