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Benefit Limitations - Internal Revenue Code - Section 415(b), Retirement Code Section 5702(c)

SERS members’ benefits are calculated as illustrated in this handbook. However, two statutory provisions, the Internal Revenue Code Section 415(b) and the Retirement Code Section 5702(c), could limit your retirement benefit.

Act 2001-9 (Act 9) explicitly made IRC Section 415(b) benefit limits applicable to SERS retirement benefits effective on or after May 17, 2001; however, you will not receive less than you would have if Act 9 had not been enacted. The Section 415(b) limit is reviewed annually by the IRS and is adjusted for inflation in $5,000 increments. In 2013 the limit is $205,000. The limit will be adjusted downward if you retire before age 62 and upward if you retire after age 70.

Your Section 415(b) limitation will be adjusted upward to account for your previously taxed contributions and interest on those contributions, and for certain service credit purchases. Conversely, your limitation will be adjusted downward to account for certain retirement option selections, including withdrawing your Accumulated Deductions, if permitted. Your limitation will be adjusted downward unless you select the MSLA or a joint and survivor Annuity and name your spouse as your Designated Survivor.

Additionally, Section 5702(c) of the Retirement Code limits your Annuity to 100 percent of your highest 12 months of earnings. The present value of the Annuity in excess of the Section 5702(c) limits may be preserved as a Death Benefit, subject to certain IRS restrictions.



Last published: 01/08/2013 03:56 PM