§ 5–723.01. Maximum amount of benefits and contributions.

(a) Benefits and contributions under the provisions of this subchapter shall not be computed with reference to any compensation that exceeds that maximum dollar amount permitted by section 401(a)(17) of the Internal Revenue Code, as adjusted for increases in the cost of living. This provision shall apply only with respect to an individual who first receives benefits under [this subchapter]* on or after October 1, 2002.

(b) Notwithstanding foregoing provisions of this subchapter to the contrary, benefits under this subchapter are subject to the limitations imposed by section 415 of the Internal Revenue Code, as adjusted from time to time and, to that end, effective for limitation years beginning on or after January 1, 2008:

(1)(A) To the extent necessary to prevent disqualification under section 415 of the Internal Revenue Code, and subject to the remainder of this subsection, the maximum monthly benefit to which any member may be entitled in any limitation year with respect to his or her accrued retirement benefit, as adjusted from time to time pursuant to § 5-718 (the “maximum benefit”), shall not exceed the defined benefit dollar limit (adjusted as provided in this subsection). In addition to the foregoing, to the extent necessary to prevent disqualification under section 415 of the Internal Revenue Code, and subject to the remainder of this subsection, the maximum annual additions for any limitation year shall be equal to the lesser of:

(i) The dollar limit on annual additions; or

(ii) 100% of the member’s remuneration.

(B) The defined benefit dollar limit and the dollar limit on annual additions shall be adjusted, effective January 1 of each year, under section 415(d) of the Internal Revenue Code in a manner prescribed by the Secretary of the Treasury. The dollar limit as adjusted under section 415(d) of the Internal Revenue Code shall apply to limitation years ending with or within the calendar year for which the adjustment applies, but a member’s benefits shall not reflect the adjusted limit before January 1 of that calendar year. To the extent that the monthly benefit payable to a member who has reached the member’s termination date is limited by the application of this subsection, the limit shall be adjusted to reflect subsequent adjustments made in accordance with section 415(d) of the Internal Revenue Code of 1986, but the adjusted limit shall apply only to benefits payable on or after January 1 of the calendar year for which the adjustment applies.

(2) Benefits shall be actuarially adjusted based upon the defined benefit dollar limit, as follows:

(A) There shall be an adjustment for benefits payable in a form other than a straight life annuity as follows:

(i) If a monthly benefit is payable in a form other than a straight life annuity, before applying the defined benefit dollar limit, the benefit shall be adjusted in the manner described in sub-subparagraphs (ii) or (iii) of this subparagraph, to the actuarially equivalent straight life annuity that begins at the same time. No actuarial adjustment to the benefit shall be made for:

(I) Benefits that are not directly related to retirement benefits, such as a qualified disability benefit, preretirement incidental death benefits, and postretirement medical benefits; or

(II) In the case of a form of benefit not subject to section 417(e)(3) of the Internal Revenue Code of 1986, the inclusion of a feature under which a benefit increases automatically to the extent permitted to reflect cost-of-living adjustments and the increase, if any, in the defined benefit dollar limit under section 415(d) of the Internal Revenue Code of 1986.

(ii) If the benefit of a member is paid in a form not subject to section 417(e) of the Internal Revenue Code, the actuarially equivalent straight life annuity, without regard to cost-of-living adjustments described in this subsection, is equal to the greater of:

(I) The annual amount of the straight life annuity, if any, payable to the member commencing at the same time; or

(II) The annual amount of the straight life annuity commencing at the same time that has the same actuarial present value as the member’s form of benefit, computed using a 5% interest rate and the applicable mortality designated by the Secretary of the Treasury from time to time pursuant to section 417(e)(3) of the Internal Revenue Code of 1986.

(iii) If the benefit of a member is paid in a form subject to section 417(e) of the Internal Revenue Code of 1986, the actuarially equivalent straight life annuity is equal to the greatest of:

(I) The annual amount of the straight life annuity having a commencement date that has the same actuarial present value as the member’s form of benefit, computed using the interest rate and mortality table or other tabular factor specified in the definition of actuarial equivalent for adjusting benefits in the same form;

(II) The annual amount of the straight life annuity commencing at the time that has the same actuarial present value as the member’s form of benefit, computed using a 5.5% interest rate assumption and the applicable mortality table designated by the Secretary of the Treasury from time to time pursuant to section 417(e)(3) of the Internal Revenue Code of 1986; or

(III) The annual amount of the straight life annuity commencing at the same time that has the same actuarial present value as the member’s form of benefit, computed using the applicable interest rate and the applicable mortality table designated by the Secretary of the Treasury from time to time pursuant to section 417(e)(3) of the Internal Revenue Code of 1986, divided by 1.05.

(iv) For the purposes of this subparagraph, whether a form of benefit is subject to section 417(e) of the Internal Revenue Code is determined without regard to the status of this subchapter as a governmental plan as described in section 414(d) of the Internal Revenue Code of 1986.

(B) There shall be an adjustment to benefits that commence before age 62 or after age 65 as follows:

(i) If the benefit of a member begins before age 62, the defined benefit dollar limit applicable to the member at the earlier age shall be an annual benefit payable in the form a straight life annuity beginning at the earlier age that is the actuarial equivalent of the defined benefit dollar limit applicable to the member at age 62 (adjusted for participation of fewer than 10 years, if applicable) computed using a 5% interest rate and the applicable mortality table designated by the Secretary of the Treasury from time to time pursuant to section 417(e)(3) of the Internal Revenue Code of 1986. However, if the benefit provided under this subchapter provides an immediately commencing straight life annuity payable at both age 62 and the age of benefit commencement, the defined benefit dollar limit is the lesser of:

(I) The limitation determined under the immediately preceding sentence; or

(II) The defined benefit dollar limit (adjusted for participation of fewer than 10 years, if applicable) multiplied by the ratio of the annual amount of the immediately commencing straight life annuity under this subchapter at the age of benefit commencement to the annual amount of the immediately commencing straight life annuity under this subchapter at age 62, both determined without applying the limitations of this section. The adjustment in this sub-subparagraph shall not apply as a result of benefits paid on account of disability under § 5-709 or § 5-710 or as a result of the death of a member under § 5-716. Notwithstanding the provisions above, a member that qualifies under section 415(b)(2(G) of the Internal Revenue Code of 1986 is not subject to the adjustment to benefits that commence before age 62.

(ii) If the benefit of a member begins after age 65, the defined benefit dollar limit applicable to the member at the later age is the annual benefit payable in the form of a straight life annuity beginning at the later age that is actuarially equivalent to the defined benefit dollar limit applicable at age 65 (adjusted for participation of fewer than 10 years, if applicable) computed using a 5% interest rate assumption and the applicable mortality table designated by the Secretary of the Treasury from time to time pursuant to section 417(e)(3) of the Internal Revenue Code. However, if the benefit provided under this subchapter provides an immediately commencing straight life annuity payable at both age 65 and the age of benefit commencement, the defined benefit dollar limit is the lesser of:

(I) The limitation determined under the immediately preceding sentence; or

(II) The defined benefit dollar limit (adjusted for participation of less than 10 years, if applicable) multiplied by the ratio of the annual amount of the adjusted immediately commencing straight life annuity under this subchapter at the age of benefit commencement to the annual amount of the adjusted immediately commencing straight life annuity under this subchapter at age 65, both determined without applying the limitations of this section. For this purpose, the adjusted immediately commencing straight life annuity under this subchapter at the age the benefit commences is the annual amount of the annuity payable to the member, computed disregarding the member’s accruals after age 65 but including any actuarial adjustments, even if those actuarial adjustments are used to offset accruals; and the adjusted immediately commencing straight life annuity under this subchapter at age 65 is the annual amount of such annuity that would be payable under this subchapter to a hypothetical member who is age 65 and has the same annuity as the member.

(iii) For the purposes of this subparagraph, no adjustment shall be made to the defined benefit dollar limit to reflect the probability of a member’s death between the commencing date and age 62, or between age 65 and the commencing date, as applicable, if benefits are not forfeited upon the death of the member before the annuity having a commencing date. To the extent that benefits are forfeited upon death before the date the benefits first commence, an adjustment shall be made. For this purpose, no forfeiture shall be treated as occurring upon the member’s death if the benefit provided under this subchapter does not charge the member for providing a qualified preretirement survivor annuity, as defined for purposes of section 415 of the Internal Revenue Code of 1986, upon the member’s death.

(3) If the member has fewer than 10 years of participation in the defined benefit portion of this subchapter, as determined under section 415 of the Internal Revenue Code of 1986 and the regulations thereunder, the defined benefit dollar limit shall be multiplied by a fraction, the numerator of which is the number of years (or part thereof) of participation under this subchapter and the denominator of which is 10. The adjustment in this paragraph shall not apply to benefits paid on account of disability under § 5-709 or § 5-710 or as a result of the death of a member under § 5-716. In the case of years of credited service credited to a member pursuant to § 5-704:

(A) The limitations contained in paragraph (1)(A)(i) of this subsection and this paragraph shall not apply to the portion of the member’s accrued retirement benefit (determined as of the annuity commencement date) that is attributable to any additional years of credited service under § 5-704 that are actuarially funded by:

(i) A transfer or rollover from the member’s account under a retirement plan qualified under section 401(a) of the Internal Revenue Code of 1986 or an eligible deferred compensation plan within the meaning of section 457(b) of the Internal Revenue Code of 1986 or from an individual retirement account; or

(ii) A direct payment.

(B) The limitations contained in paragraph (1)(A)(i) of this subsection and this paragraph shall apply to the portion of the member’s accrued retirement benefit (determined as of the annuity commencement date) that is attributable to any additional years of credited service under § 5-704 that are not actuarially funded by:

(i) A transfer or rollover from the member’s account under a retirement plan qualified under section 401(a) of the Internal Revenue Code of 1986 or an eligible deferred compensation plan within the meaning of section 457(b) of the Internal Revenue Code of 1986 or from an individual retirement account; or

(ii) A direct payment.

(C) The determination of the extent to which additional years of credited service under § 5-704 have been actuarially funded as of the annuity commencement date shall be determined in accordance with section 411(c) of the Internal Revenue Code of 1986 (using the actuarial assumptions thereunder), applied as if section 411(c) of the Internal Revenue Code of 1986 applied and treating the amount transferred from a plan qualified under section 401(a) of the Internal Revenue Code of 1986, the member’s account under an eligible deferred compensation plan within the meaning of section 457(b) of the Internal Revenue Code of 1986, or an individual retirement account, or the amount of the direct lump-sum payment to the Custodian of Retirement Funds, as if it were a mandatory employee contribution.

(4) In addition to the foregoing, the maximum benefit and contributions shall be reduced, and the rate of benefit accrual shall be frozen or reduced accordingly, to the extent necessary to prevent disqualification under section 415 of the Internal Revenue Code of 1986, with respect to a member who is also a participant in:

(A) Another tax-qualified retirement plan maintained by the District, including a defined benefit plan in which an individual medical benefit account as described in section 415(l) of the Internal Revenue Code of 1986 has been established for the member;

(B) A welfare plan maintained by the District in which a separate account, as described in section 419A(d) of the Internal Revenue Code of 1986, has been established to provide post-retirement medical benefits for the member; or

(C) A retirement or welfare plan, as previously mentioned, maintained by an affiliated or predecessor employer, as described in regulations under section 415 of the Internal Revenue Code of 1986, or otherwise required to be taken into account under these regulations.

(5) If a member has distributions commencing at more than one date, determined in accordance with section 415 of the Internal Revenue Code of 1986 and associated regulations, the annuity payable having this commencement date shall satisfy the limitations of this subsection as of each date, actuarially adjusting for past and future distributions of benefits commencing at the other dates that benefits commence.

(6) The application of the provisions of this subsection shall not cause the maximum permissible benefit for a member to be less than the member’s annuity under this subchapter as of the end of the last limitation year beginning before July 1, 2007 under provisions of this subchapter that were both adopted and in effect before April 5, 2007 and that satisfied the limitations under section 415 of the Internal Revenue Code of 1986 as in effect as of the end of the last limitation year beginning before July 1, 2007.

(7) To the extent that a member’s benefit is subject to provisions of section 415 of the Internal Revenue Code that have not been set forth in this subchapter, the provisions are hereby incorporated by reference and for all purposes shall be deemed a part of this subchapter.

(c) Notwithstanding any other provision to the contrary, all death benefit payments referred to in this section shall be distributed only in accordance with section 401(a)(9) of the Internal Revenue Code of 1986 and accompanying Treasury regulations, as more fully set forth in § 5-723.03.

(d) For the purposes of this section, the term:

(1) “Annual additions” means the sum of the following items credited to the member under this subchapter and any other tax-qualified retirement plan sponsored by the District for a limitation year and treated as a defined contribution plan for purposes of section 415 of the Internal Revenue Code of 1986: District contributions that are separately allocated to the member’s credit in an defined contribution plan; forfeitures; member contributions; and amounts credited after March 31, 1984 to a member’s individual medical account within the meaning of section 415(l) of the Internal Revenue Code of 1986.

(2) “Defined benefit dollar limit” means the dollar limit imposed by section 415(b)(1)(A) of the Internal Revenue Code of 1986, as adjusted pursuant to section 415(d) of the Internal Revenue Code of 1986. The defined benefit dollar limit as set forth above is the monthly amount payable in the form of a straight life annuity, beginning no earlier than age 62, except as provided in subsection (b)(2)(B)(i) of this section, and no later than age 65. In the case of a monthly amount payable in a form other than a straight life annuity, or beginning before age 62 or after age 65, the adjustments in subsection (b)(2) of this section shall apply.

(3) “Dollar limit” means the dollar limit on annual additions imposed by section 415(c)(1)(A) of the Internal Revenue Code of 1986, as adjusted pursuant to section 415(d) of the Internal Revenue Code of 1986.

(D) “Remuneration” means a member’s wages as defined in section 3401(a) of the Internal Revenue Code of 1986 and other payments of salary to the member from the District, for which the District is required to furnish the member a written statement under sections 6041(d) and 6051(a)(3) of the Internal Revenue Code of 1986. For this purpose:

(A) Remuneration shall be determined without regard to rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed.

(B) Remuneration shall include an amount that would otherwise be deemed remuneration under this definition but for the fact that it is subject to a salary reduction agreement under a plan described in sections 457(b), 132(f) or 125 of the Internal Revenue Code of 1986.

(C) Remuneration with respect to any limitation year shall in no event exceed the dollar limit specified in section 401(a)(17) of the Internal Revenue Code of 1986, as adjusted from time to time by the Secretary of the Treasury. The cost-of-living adjustment in effect for a calendar year applies to remuneration for the limitation year that begins with or within such calendar year.