STATE EMPLOYEES
RETIREMENT COMMISSION
MEDICAL EXAMINING BOARD
For DISABILITY RETIREMENT |
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55 ELM STREET
HARTFORD, CONNECTICUT
06106-1775
Telephone (860) 702-3480
Facsimile (860) 702-3489 |
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STATE OF CONNECTICUT |
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RETIREMENT SERVICES DIVISION
OFFICE OF THE STATE COMPTROLLER |
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RETIREMENT SERVICES DIVISION MEMORANDUM 2013-01
January 10, 2013
TO THE HEADS OF ALL STATE AGENCIES
ATTENTION: |
All Human Resource and Payroll Officers
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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 2013 calendar year.
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- 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.
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- Employees who became participants of the ARP prior to January 1, 1996
are not subject to the annual compensation limit in 1996 or any year
thereafter.
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- 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.
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- For calendar year 2013, the compensation limit (cap) increased from
$250,000 to $255,000.
III . ARP CONTRIBUTION LIMIT
- 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 2013 calendar year, the combined contribution limit
has been increased from, the lesser of $50,000 or 100% of the participant's
covered compensation to the lesser of $51,000 or 100% of the participant's
covered compensation.
IV . ADMINISTRATIVE PROCEDURES
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- 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.
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- 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) 702-3629.
Very truly yours,
STATE EMPLOYEES RETIREMENT COMMISSION
KEVIN LEMBO, SECRETARY EX OFFICIO
By:
Brenda K. Halpin, Director
Retirement Services Division
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