A participant shall receive a portion of the participant’s benefit that is equal to the difference between the amount of that participant’s monthly retirement benefit paid under the system and the amount that would have been payable to the participant from the system in that month if not for the reduction due to the application of section 415(b) of the Internal Revenue Code, limited by the following conditions:

(1) For any retirement benefit that begins before the member attains age sixty-two, the maximum total benefit payable is equal to the Internal Revenue Code’s applicable benefit limit for the calendar year for a retirement at age sixty-two to sixty-five, as if the reduction for retirement before age sixty-two was not applied. Specifically, the qualified benefit preservation arrangement shall pay the amount that exceeds the Internal Revenue Code’s benefit limit as actuarially reduced for commencement before age sixty-two but may only pay a benefit up to the applicable benefit limit under section 415(b) of the Internal Revenue Code for the calendar year unreduced for early commencement. When the participant’s benefit from the qualified benefit preservation arrangement is combined with the participant’s benefit from the system, the participant’s total benefit may not exceed the applicable benefit limit under section 415(b) of the Internal Revenue Code for the calendar year, unreduced for early commencement;

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(2) For any retirement benefit that begins after age sixty-five, the maximum total benefit payable is equal to the Internal Revenue Code’s applicable benefit limit for a retirement at age sixty-two to sixty-five, inclusive, as if the limit was actuarially increased for a retirement at the participant’s retirement age, up to age seventy, and the qualified benefit preservation arrangement shall pay the amount that exceeds the code’s benefit limit for retirement at age sixty-two to sixty-five, inclusive. When the participant’s benefit from the qualified benefit preservation arrangement is combined with the participant’s benefit from the system, the participant’s total benefit may not exceed the applicable benefit limit under section 415(b) of the Internal Revenue Code for the calendar year, actuarially increased to the participant’s age at retirement, up to age seventy.

For purposes of the benefits payable from the qualified benefit preservation arrangement, if a participant receives an annual incentive payment based on performance, the incentive payment will be treated as paid in the same calendar quarter of each year considered in the computation of final average compensation. If an annual incentive payment is paid in different calendar quarters in the years considered in the computation of final average compensation, the annual incentive payment will be treated as if it was consistently paid in the fourth calendar quarter.

The benefit payable from the qualified benefit preservation arrangement is limited to the amount that, if combined with the participant’s benefit from the system, does not exceed the amount that would have been payable to the participant from the system in that month if not for the reduction due to the application of section 415(b) of the Internal Revenue Code as adjusted in accordance with section 415(d)(1)(A) of the Internal Revenue Code.

The qualified benefit preservation arrangement shall be computed and is payable under the same terms, at the same time, and to the same person as the related benefit payable under the system. A participant may not elect to defer the receipt of any part of the payment due under the qualified benefit preservation arrangement.

Source: SL 2020, ch 14, § 5.