HF 2979

as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to retirement; modifying the definition of 
  1.3             "compensation" for purposes of limitations on public 
  1.4             employment retirement annuities; amending Minnesota 
  1.5             Statutes 1999 Supplement, section 356.61. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 1999 Supplement, section 
  1.8   356.61, is amended to read: 
  1.9      356.61 [LIMITATION ON PUBLIC EMPLOYEE RETIREMENT 
  1.10  ANNUITIES.] 
  1.11     Notwithstanding any provision of law, bylaws, articles of 
  1.12  incorporation, retirement and disability allowance plan 
  1.13  agreements or retirement plan contracts to the contrary, no 
  1.14  person who has pension or retirement coverage by a public 
  1.15  pension plan is entitled to receive a monthly retirement annuity 
  1.16  or disability benefit which, at the time of commencement of the 
  1.17  retirement annuity or disability benefit, exceeds 1/12 of the 
  1.18  amount of the annual benefit permitted by the terms of section 
  1.19  415 of the Internal Revenue Code with respect to a participant 
  1.20  in a plan qualified under section 401(a) of the Internal Revenue 
  1.21  Code, as amended through December 31, 1982.  
  1.22     The benefit limitation is to be determined on the date the 
  1.23  benefit is initially payable or on the date the employee 
  1.24  terminated employment, if earlier.  The benefit limitation on 
  1.25  any date is the benefit limitation for the limitation year in 
  2.1   which the date occurs.  The limitations apply only to the annual 
  2.2   benefit which is derived from employer contributions.  Mandatory 
  2.3   and voluntary employee contributions, if any, are treated as a 
  2.4   separate defined contribution plan maintained by the employer 
  2.5   which is subject to the limitations placed on annual additions 
  2.6   to defined contribution plans.  
  2.7      The maximum annual benefit for any limitation year is the 
  2.8   lesser of (1) or (2) below:  
  2.9      (1) A dollar limitation of $90,000, adjusted as of January 
  2.10  1 of each calendar year to the dollar limitation as determined 
  2.11  for that year by the commissioner of Internal Revenue.  The 
  2.12  amount determined for any year will apply to limitation years 
  2.13  ending with or within that calendar year.  
  2.14     (2) A compensation limitation of 100 percent of the average 
  2.15  of compensation paid or made available to the participant by the 
  2.16  employer during those three consecutive calendar years of 
  2.17  employment, or actual number of consecutive calendar years of 
  2.18  employment if employed less than three consecutive years, which 
  2.19  give the highest average.  Compensation means any compensation 
  2.20  which is includable in the employee's gross income, plus any 
  2.21  elective deferral as defined in section 402(g)(3) of the federal 
  2.22  Internal Revenue Code of 1986, as amended through May 15, 1999, 
  2.23  and any amount which was contributed or deferred by the employer 
  2.24  at the election of the employee and which is not includable in 
  2.25  the gross income of the employee by reason of section 125 or 457 
  2.26  of the federal Internal Revenue Code plus any mandatory employee 
  2.27  contribution to the pension plan provided by the employer.  
  2.28     A benefit is deemed not to exceed the maximum benefit 
  2.29  limitation if: 
  2.30     (1) the retirement benefits payable under the plan and 
  2.31  under any other defined benefit plans of the employer do not 
  2.32  exceed the $10,000 limit set in section 415(b)(4) of the 
  2.33  Internal Revenue Code for the plan year, or for any prior plan 
  2.34  year, and 
  2.35     (2) the employer has not at any time maintained a defined 
  2.36  contribution plan in which the employee participated.  
  3.1      A public pension plan is any Minnesota public pension plan 
  3.2   or fund which provides pension or retirement coverage for public 
  3.3   employees other than volunteer firefighters, including any plan 
  3.4   or fund enumerated in sections 356.20, subdivision 2, or 356.30, 
  3.5   subdivision 3, any local police or firefighter's relief 
  3.6   association to which section 69.77 applies, or any retirement or 
  3.7   pension plan or fund, including a supplemental retirement plan 
  3.8   or fund, established, maintained or supported by any 
  3.9   governmental subdivision or public body whose revenues are 
  3.10  derived from taxation, fees, assessments or from other public 
  3.11  sources.  
  3.12     The figure for the monthly retirement annuity or disability 
  3.13  benefit to be used for the calculation of this limitation must 
  3.14  not include any reduction or adjustment required for retirement 
  3.15  prior to the normal retirement age or required for the election 
  3.16  of an optional annuity.  
  3.17     If the figure for the monthly retirement annuity or 
  3.18  disability benefit exceeds the limit contained in this section, 
  3.19  the annuity or benefit payable must be reduced appropriately.  
  3.20     The managing board of each public pension plan from which a 
  3.21  retirement annuity or disability benefit is payable shall, at 
  3.22  the time that the retirement annuity or disability benefit 
  3.23  commences, contact all other public pension plans to determine 
  3.24  whether or not the recipient of the retirement annuity or 
  3.25  disability benefit is also receiving or is entitled to receive a 
  3.26  retirement annuity or disability benefit from any other public 
  3.27  pension plan.  If a person is entitled to receive or is 
  3.28  receiving a retirement annuity or disability benefit from more 
  3.29  than one public pension plan, all retirement annuities or 
  3.30  disability benefits from all public pension plans must be 
  3.31  totaled in determining whether or not the limitation applies.  A 
  3.32  reduction in the amount of the retirement annuity or disability 
  3.33  benefit required under this section is made by the public 
  3.34  pension plan which provided retirement coverage for the most 
  3.35  recent period of service.