Benefit Restrictions—Maximum Benefits.
Oklahoma City Municipal Code § 40-84
in effect§ 40-84. - Benefit Restrictions—Maximum Benefits.
For Limitation Years prior to July 1, 2007, the limitations of Code Section 415 shall be computed in accordance with the previous provisions in § 40-84 of the System in effect at that time and to the extent applicable, Revenue Ruling 98-1 and Revenue Ruling 2001-51, except as provided below. Notwithstanding any other provisions herein, the retirement benefits payable to a participant in the System shall be subject to the limitations of Code Section 415 in accordance with the provisions of this section. The limitations of this article shall apply in limitation years beginning on or after July 1, 2007, except as otherwise provided herein. The limitation year is the calendar year.
(a) Effective for limitation years ending after December 31, 2001, when expressed as an annual retirement benefit, the amount shall not exceed the lesser of:
(1) $160,000.00, automatically adjusted under Code Section 415(d) for increases in the cost of living, as prescribed by the Secretary of the Treasury or his/her delegate, effective January 1 of each calendar year and applicable to the limitation year ending with or within such calendar year. The automatic annual adjustment of the dollar limitation in this Section 40-84(a)(1) shall apply to a participant who has had a severance from employment. The annual retirement benefit otherwise payable to a participant under the system at any time shall not exceed the maximum permissible benefit. If the benefit the participant would otherwise accrue in a limitation year would produce an annual retirement benefit in excess of the maximum permissible benefit, the benefit shall be limited (or the rate of accrual reduced) to a benefit that does not exceed the maximum permissible benefit. Effective for limitation years ending after December 31, 2011, the preceding sentence shall not apply, or
(2) for limitation years beginning prior to January 1, 1995, 100 percent of the participant's average earnings during the three consecutive calendar years during which the participant was an active participant in the system and had the highest earnings paid to him. For purposes of this paragraph, earnings for any limitation year shall be the participant's earned income, wages, salaries and fees for professional services and other amounts received for personal services actually rendered in the course of employment with the City, provided such amounts are actually paid or includable in gross income during such year. Earnings shall not include:
a. contributions by the City to a plan of deferred compensation which are not included in the gross income of the participant for the taxable year in which contributed or any distributions from a funded deferred compensation plan, and
b. other amounts which received special tax benefits or contributions made by the City (whether or not under a salary reduction agreement) towards the purchase of an annuity described in Code Section 403(b) of the Internal Revenue Code of 1986 (whether or not the amounts are actually excludable from the gross income of the participant).
(3) notwithstanding the preceding provisions of the subsection, the retirement benefits payable with respect to a participant under any defined benefit plan of the City shall be deemed not to exceed the limitation of this subsection if the retirement benefits payable with respect to such participant under such plan and under all other defined benefit plans of the City do not exceed $10,000.00 for the plan year, or for any prior plan year, and the City has not at any time maintained a defined contribution plan in which the participant participated.
(4) if a participant has less than ten years of participation in the system, the dollar limitation otherwise applicable under Paragraph (1) of this Subsection (a) shall be reduced by multiplying such limitation by a fraction, the numerator of which is the participant's number of years of participation in the system, but never less than one and the denominator of which is ten. This paragraph, to the extent required by the Secretary of the Treasury, shall be applied separately to each change in benefit structure hereunder.
(5) effective for years beginning on and after January 1, 1995, the retirement benefit allowable under Paragraph (3) of this Subsection (a) above shall be reduced by multiplying such retirement benefit by a fraction, the numerator of which is the number of such participant's years of credited service, but never less than one, and the denominator of which is ten, if the following two conditions are met:
a. the City (or a predecessor employer) has not at any time maintained a defined contribution plan in which the participant participated (for this purpose, mandatory employee contributions under a defined benefit plan, individual medical accounts under Code Section 401(h), and accounts for postretirement medical benefits established under Code Section 419A(d)(1) are not considered a separate defined contribution plan); and
b. a participant has been credited with less than ten years of credited service.
(6) a.
the limitations specified in this Section 40-84 shall apply to a straight life annuity with no ancillary benefits and to an annuity that constitutes a qualified joint and survivor annuity, provided payment begins between ages 62 and 65. If payment is in a different form, the amount thereof shall be adjusted to be the actuarial equivalent of a single-life annuity that begins at the same time as such other form of benefit and that is payable on the first day of each month before the limitations of this Section 40-84 are applied to such adjusted amount. For a participant who has or will have distributions commencing at more than one annuity starting date, the annual retirement benefit shall be determined as of each such annuity starting date (and shall satisfy the limitations of this Section 40-84 as of each such date), actuarially adjusting for past and future distributions of benefits commencing at the other annuity starting dates. For this purpose, the determination of whether a new starting date has occurred shall be made without regard to Section 1.401(a)-20, Q&A 10(d), and with regard to Section 1.415(b)-1(b)(1)(iii)(B) and (C) of the Income Tax Regulations.
No actuarial adjustment to the retirement benefit shall be made for other benefits not directly related to retirement benefits (such as preretirement incidental death benefits, and postretirement medical benefits) and for the inclusion in the form of benefit of an automatic benefit increase feature, provided the form of benefit is not subject to Code Section 417(e)(3) and would otherwise satisfy the limitations of this Section 40-84, and the System provides that the amount payable under the form of benefit in any limitation year shall not exceed the limits of this Section 40-84 applicable at the annuity starting date, as increased in subsequent years pursuant to Code Section 415(d). For this purpose, an automatic benefit increase feature is included in a form of benefit if the form of benefit provides for automatic, periodic increases to the benefits paid in that form.
The determination of the annual retirement benefit shall take into account social security supplements described in Code Section 411(a)(9) and benefits transferred from another defined benefit plan, other than transfers of distributable benefits pursuant Section 1.411(d)-4, Q&A-3(c), of the Income Tax Regulations, but shall disregard benefits attributable to employee contributions or rollover contributions.
Effective for distributions in plan years beginning after December 31, 2003, the determination of actuarial equivalence of forms of benefit other than a straight life annuity shall be made in accordance with 1. or 2. of this Subparagraph a.
1. Benefit forms not subject to Code Section 417(e)(3): The straight life annuity that is actuarially equivalent to the participant's form of benefit shall be determined under this 1. of Paragraph (6) of Subsection (a) if the form of the participant's benefit is either:
(A) a nondecreasing annuity (other than a straight life annuity) payable for a period of not less than the life of the participant (or, in the case of a qualified pre-retirement survivor annuity, the life of the surviving spouse), or
(B) an annuity that decreases during the life of the participant merely because of:
(i) the death of the survivor annuitant (but only if the reduction is not below 50 percent of the benefit payable before the death of the survivor annuitant), or
(ii) the cessation or reduction of Social Security supplements or qualified disability payments (as defined in Code Section 411(a)(9)).
(C) limitation years beginning before July 1, 2007. For limitation years beginning before July 1, 2007, the actuarially equivalent straight life annuity is equal to the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the Participant's form of benefit computed using whichever of the following produces the greater annual amount:
(i) the interest rate specified in Section 40-51(1) of the System and the mortality table (or other tabular factor) specified in Section 40-51(1) of the System for adjusting benefits in the same form; and
(ii) a five percent interest rate assumption and the applicable mortality table described in Revenue Ruling 2001-62 for that annuity starting date.
(D) limitation Years beginning on or after July 1, 2007. For limitation years beginning on or after July 1, 2007, the actuarially equivalent straight life annuity is equal to the greater of:
(i) the annual amount of the straight life annuity (if any) payable to the Participant under the System commencing at the same annuity starting date as the Participant's form of benefit; and
(ii) the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the Participant's form of benefit, computed using a five point five percent interest rate assumption and the applicable mortality table within the meaning of Code Section 417(e)(3)(B), as described in Revenue Ruling 2007-67 (and subsequent guidance) for that annuity starting date; and
2. Benefit forms subject to Code Section 417(e)(3): The straight life annuity that is actuarially equivalent to the Participant's form of benefit shall be determined under this 2. of Subparagraph a. of Paragraph (6) of Subsection (a) if the form of the Participant's benefit is other than a benefit form described in 1. of Subparagraph a. of Paragraph (6) of Subsection (a). In this case, the actuarially equivalent straight life annuity shall be determined as follows:
(A) annuity Starting Date in a Plan Year Beginning After December 31, 2007 (Plan Years Beginning on or after January 1, 2008). If the annuity starting date of the Participant's form of benefit is in a Plan Year beginning after December 31, 2007, the actuarially equivalent straight life annuity is equal to the greatest of (i), (ii) and (iii) below:
(i) the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the Participant's form of benefit, computed using the interest rate specified in Section 40-51(1) a. of the System and the mortality table (or other tabular factor) specified in Section 40-51(1) b. of the System for adjusting benefits in the same form;
(ii) the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the Participant's form of benefit, computed using a 5.5 percent interest rate assumption and the applicable mortality table within the meaning of Code Section 417(e)(3)(B), as described in Revenue Ruling 2007-67 (and subsequent guidance) for that annuity starting date; and
(iii) the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the Participant's form of benefit, computed using:
A. the Code Section 417(e)(3) applicable interest rate which means the adjusted first, second and third segment rates applied under rules similar to the rules of Code Section 430(h)(2)(C) for the fourth calendar month preceding the Plan Year in which falls the annuity starting date for the distribution and the stability period is the successive period of one Plan Year which contains the annuity starting date for the distribution and for which the applicable interest rate remains constant, or as otherwise provided in applicable IRS guidance if the first day of the first plan year beginning after December 31, 2007, does not coincide with the first day of the applicable stability period; and
B. the applicable mortality table within the meaning of Code Section 417(e)(3)(B), as described in Revenue Ruling 2007-67 (and subsequent guidance) for that annuity starting date, divided by 1.05.
(B) annuity Starting Date in Plan Years Beginning in the January 1, 2006 or the January 1, 2007 Plan Years. If the annuity starting date of the Participant's form of benefit is in a plan year beginning in the January 1, 2006 or the January 1, 2007 Plan Years, the actuarially equivalent straight life annuity is equal to the greatest of:
(i) the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the Participant's form of benefit, computed using the interest rate specified in Section 40-51(1) of the System and the mortality table (or other tabular factor) specified in Section 40-51(1) of the System for adjusting benefits in the same form;
(ii) the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the Participant's form of benefit, computed using a 5.5 percent interest rate assumption and the applicable mortality table defined in Revenue Ruling 2001-62 (or its successor for these purposes, if applicable); and
(iii) the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the Participant's form of benefit, computed using:
A. the rate of interest on 30-year Treasury securities as specified by the Commissioner for the lookback month for the stability period specified in the System. The lookback month applicable to the stability period is the fourth calendar month preceding the first day of the stability period. The stability period is the successive period of one calendar year which contains the annuity starting date for the distribution and for which the applicable interest rate remains constant; and
B. the applicable mortality table described in Revenue Ruling 2001-62 (or its successor for these purposes, if applicable), divided by 1.05.
(C) annuity Starting Date in Plan Years Beginning in 2004 or 2005.
(i) If the annuity starting date of the Participant's form of benefit is in a plan year beginning in 2004 or 2005, the actuarially equivalent straight life annuity is equal to the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the Participant's form of benefit, computed using whichever of the following produces the greater annual amount:
A. the interest rate specified in Section 40-51(1) of the System and the mortality table (or other tabular factor) specified in Section 40-51(1) of the System for adjusting benefits in the same form; and
B. a 5.5 percent interest rate assumption and the applicable mortality table defined in Revenue Ruling 2001-62 (or its successor for these purposes, if applicable).
(ii) If the annuity starting date of the Participant's benefit is on or after the first day of the first plan year beginning in 2004 and before December 31, 2004, the application of this 2.(C) of Paragraph (6) of this Subsection (a) shall not cause the amount payable under the Participant's form of benefit to be less than the benefit calculated under the System, taking into account the limitations of this subsection, except that the actuarially equivalent straight life annuity is equal to the annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the Participant's form of benefit, computed using whichever of the following produces the greatest annual amount:
A. the interest rate and mortality table (or other tabular factor) specified in Section 40-51(1) of the System for adjusting benefits in the same form;
B. (I) ;hg;the rate of interest on 30-year Treasury securities as specified by the Commissioner for the lookback month for the stability period specified in the System. The lookback month applicable to the stability period is the fourth calendar month preceding the first day of the stability period. The stability period is the successive period of one calendar year which contains the annuity starting date for the distribution and for which the applicable interest rate remains constant; and
(II) the applicable mortality table is set forth in Revenue Ruling 2001-62 (or its successor for these purposes, if applicable); and
C. (I) ;hg;the rate of interest on 30-year Treasury securities as specified by the Commissioner for the lookback month for the stability period specified in the System. The lookback month applicable to the stability period is the fourth calendar month preceding the first day of the stability period. The stability period is the successive period of one calendar year which contains the annuity starting date for the distribution and for which the applicable interest rate remains constant (as in effect on the last day of the last plan year beginning before January 1, 2004, under provisions of the System then adopted and in effect); and
(II) the applicable mortality table is set forth in Revenue Ruling 2001-62 (or its successor for these purposes, if applicable).
b. Adjustment of Defined Benefit Dollar Limitation for Benefit Commencement Before Age 62. Effective for benefits commencing in limitation years ending after December 31, 2001, the dollar limitation under Paragraph (1) of this Subsection (a) shall be adjusted if the annuity starting date of the Participant's benefit is before age 62. If payment begins before the Participant attains 62 years of age, the limitation in Paragraph (1) of this Subsection (a) shall be adjusted as follows (as modified by Subparagraph d.1. of Paragraph (6) of this Subsection (a) but subject to Subparagraph d.2. of Paragraph (6) of this Subsection (a)):
1. Limitation Years Beginning Before July 1, 2007. If the annuity starting date for the Participant's benefit is prior to age 62 and occurs in a limitation year beginning before July 1, 2007, the dollar limitation for the Participant's annuity starting date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the Participant's annuity starting date that is the actuarial equivalent of the dollar limitation (adjusted under Paragraph (4) of this Subsection (a) for years of participation less than 10, if required) with actuarial equivalence computed using whichever of the following produces the smaller annual amount:
(A) the interest rate specified in Section 40-51(1) of the System and the mortality table (or other tabular factor) specified in Section 40-51(1) and Section 40-69 of the System; or
(B) a five-percent interest rate assumption and the applicable mortality table as described in Revenue Ruling 2001-62 (or its successor for these purposes, if applicable).
2. Limitation Years Beginning on or After July 1, 2007.
(A) System does not have immediately commencing straight life annuity payable at both age 62 and the age of benefit commencement. If the annuity starting date for the participant's benefit is prior to age 62 and occurs in a limitation year beginning on or after July 1, 2007, and the System does not have an immediately commencing straight life annuity payable at both age 62 and the age of benefit commencement, the dollar limitation for the participant's annuity starting date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the Participant's annuity starting date that is the actuarial equivalent of the dollar limitation (adjusted under Paragraph (4) of this Subsection (a) for years of participation less than ten, if required) with actuarial equivalence computed using a five percent interest rate assumption and the applicable mortality table within the meaning of Code Section 417(e)(3)(B), as described in Revenue Ruling 2007-67 (and subsequent guidance) (and expressing the Participant's age based on completed calendar months as of the annuity starting date).
(B) System has immediately commencing straight life annuity payable at both age 62 and the age of benefit commencement. If the annuity starting date for the participant's benefit is prior to age 62 and occurs in a limitation year beginning on or after July 1, 2007, and the System has an immediately commencing straight life annuity payable at both age 62 and the age of benefit commencement, the dollar limitation for the Participant's annuity starting date is the lesser of the limitation determined under the immediately preceding Subsection (A) and the dollar limitation (adjusted under Paragraph (4) of this Subsection (a) for years of participation less than 10, if required) multiplied by the ratio of the annual amount of the immediately commencing straight life annuity under the System at the participant's annuity starting date to the annual amount of the immediately commencing straight life annuity under the System at age 62, both determined without applying the limitations of this Subsection (B).
(C) Notwithstanding any other provision of this Subparagraph b. of Paragraph (6) of Subsection (a), the age-adjusted dollar limit applicable to a Participant shall not decrease on account of an increase in age or the performance of additional services.
c. Adjustment for defined benefit dollar limitation for benefit commencement after age 65. Effective for benefits commencing in limitation years ending after December 31, 2001, the dollar limitation under Paragraph (1) of this Subsection (a) shall be adjusted if the annuity starting date of the participant's benefit is after age 65. If payment begins after the participant reaches 65 years of age, the limitation in Paragraph (1) of this Subsection (a) shall be adjusted as follows (as modified by Subparagraph d.1. of Paragraph (6) of this Subsection (a)):
1. Limitation years beginning before July 1, 2007. If the annuity starting date for the participant's benefit is after age 65 and occurs in a limitation year beginning before July 1, 2007, the dollar limitation for the participant's annuity starting date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the participant's annuity starting date that is the actuarial equivalent of the dollar limitation (adjusted under Paragraph (4) of this Subsection (a) for years of participation less than ten, if required) with actuarial equivalence computed using whichever of the following produces the smaller annual amount:
(A) the interest rate specified in Section 40-51(1) of the System and the mortality table (or other tabular factor) specified in Section 40-51(1) of the System; or
(B) a 5-percent interest rate assumption and the applicable mortality table as described in Revenue Ruling 2001-62 (or its successor for these purposes, if applicable).
2. Limitation years beginning on or after July 1, 2007.
(A) The System does not have immediately commencing straight life annuity payable at both age 65 and the age of benefit commencement. If the annuity starting date for the Participant's benefit is after age 65 and occurs in a limitation year beginning on or after July 1, 2007, and the System does not have an immediately commencing straight life annuity payable at both age 65 and the age of benefit commencement, the dollar limitation at the participant's annuity starting date is the annual amount of a benefit payable in the form of a straight life annuity commencing at the Participant's annuity starting date that is the actuarial equivalent of the dollar limitation (adjusted under Paragraph (4) of this Subsection (a) for years of participation less than ten, if required), with actuarial equivalence computed using a five percent interest rate assumption and the applicable mortality table within the meaning of Code Section 417(e)(3)(B), as described in Revenue Ruling 2007-67 (and subsequent guidance) (and expressing the participant's age based on completed calendar months as of the annuity starting date).
(B) The System has immediately commencing straight life annuity payable at both age 65 and the age of benefit commencement. If the annuity starting date for the participant's benefit is after age 65 and occurs in a limitation year beginning on or after July 1, 2007, and the System has an immediately commencing straight life annuity payable at both age 65 and the age of benefit commencement, the dollar limitation at the participant's annuity starting date is the lesser of the limitation determined under the immediately preceding paragraph above and the dollar limitation (adjusted under Paragraph (4) of this Subsection (a) for years of participation less than ten, if required) multiplied by the ratio of the annual amount of the adjusted immediately commencing straight life annuity under the System at the participant's annuity starting date to the annual amount of the adjusted immediately commencing straight life annuity under the System at age 65, both determined without applying the limitations of this subsection. For this purpose, the adjusted immediately commencing straight life annuity under the System at the participant's annuity starting date is the annual amount of such annuity payable to the participant, computed disregarding the participant's accruals after age 65 but including actuarial adjustments even if those actuarial adjustments are used to offset accruals; and the adjusted immediately commencing straight life annuity under the System at age 65 is the annual amount of such annuity that would be payable under the System to a hypothetical participant who is age 65 and has the same accrued benefit as the participant.
d. 1.
Notwithstanding the other requirements of Subparagraphs b. and c. of Paragraph (6) of this Subsection (a), no adjustment shall be made to the dollar limitation to reflect the probability of a Participant's death between the annuity starting date and age 62, or between age 65 and the annuity starting date, as applicable, if benefits are not forfeited upon the death of the Participant prior to the annuity starting date. To the extent benefits are forfeited upon death before the annuity starting date, such an adjustment shall be made. For this purpose, no forfeiture shall be treated as occurring upon the participant's death if the System does not charge Participants for providing a qualified preretirement survivor annuity, as defined in Code Section 417(c), upon the Participant's death.
2. Notwithstanding any other provision to the contrary, for limitation years beginning on or after January 1, 1997, if payment begins before the participant reaches age 62, the reductions in the limitations in Subparagraph b. of Paragraph (6) of this Subsection (a) shall not apply to a participant who is a qualified participant as defined in Code Section 415(b)(2)(H).
(7) in no event shall the maximum annual accrued retirement benefit of a participant allowable under this Section 40-84 be less than the annual amount of such accrued retirement benefit, including early pension and qualified joint and survivor annuity amounts, duly accrued by the participant as of the last day of the limitation year beginning in 1982, or the last day of the limitation year beginning in 1986, whichever is greater, disregarding any plan changes or cost-of-living adjustments occurring after July 1, 1982, as to the 1982 accrued amount, and May 5, 1986, as to the 1986 accrued amount.
(8) for limitation years beginning on or after January 1, 1995, Paragraphs (4), (5) and (6) of this Subsection (a), shall not apply to the benefit paid under the System as a result of the Participant becoming disabled or amounts received by the surviving spouse under a qualified joint and survivor annuity to the extent such benefits would not be payable if the Participant's benefit were paid in another form, beneficiaries, or estate of the Participant as a result of his/her death.
(b) Defined benefit and defined contribution plans. This Subsection (b) shall not apply to limitation years beginning on or after January 1, 2000. For limitation years beginning prior to January 1, 2000, the combined limit rules of Code Section 415(e) shall apply.
(c) In applying all limitations contained in this section, all defined contribution plans of the City, whether or not terminated, will be considered a single plan, and all defined benefit plans of the City whether or not terminated, will be considered a single plan.
(d) In the case of any repayment of the total amount withdrawn pursuant to Section 40-75(b), to the System for the establishment of prior service credits, any such repayments shall not be taken into account for the purposes of this section.
(e) Effective January 1, 1998, if a participant purchases service credit under Section 40-75 which qualifies as "permissive service credit" pursuant to Code Section 415(n), the limitations of Code Section 415 may be met by either:
(1) treating the accrued benefit derived from such contributions as an annual benefit under Section 40.84 below, or
(2) treating all such contributions as annual additions for purposes of Code Section 415(c).
(Ord. No. 21916, § 2, 2-12-02; Ord. No. 22103, § 2, 12-17-02; Ord. No. 22890, § 1, 12-13-05; Ord. No. 23758, § 2, 12-9-08, eff. 1-1-09; Ord. No. 24002, § 2, 1-5-10; Ord. No. 24056, § 2, 4-27-10; Ord. No. 24375, § 1, 11-22-11, eff. 12-31-11; Ord. No. 24801, § 1, 12-31-13)
Source: City of Oklahoma City, Municipal Code and City Charter (Municode Library, library.municode.com)URL: https://library.municode.com/ok/oklahoma_city/codes/code_of_ordinances?nodeId=OKMUCO2020_CH40PERESY_ARTIIIPERE_DIV1EMREPR_PTBGEPR_S40-84BEREAXBEFetched: 10/28/2026