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 2014-02

February 24, 2014

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 2014 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 2014, the compensation limit (cap) increased from $255,000 to $260,000.

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 2014 calendar year, the combined contribution limit has been increased from, the lesser of $51,000 or 100% of the participant's covered compensation to the lesser of $52,000 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
KEVIN LEMBO, SECRETARY EX OFFICIO

By:

Brenda K. Halpin, Director
Retirement Services Division

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