La. Admin. Code tit. 58 § XXI-101

Current through Register Vol. 50, No. 11, November 20, 2024

Section XXI-101 - Compensation

A. Definitions. As provided under R.S. 11:1581(5), effective for limitation years beginning on or after July 1, 2007, compensation is hereby defined as follows.

Compensation3/4the regular pay of the member, not including any overtime or bonuses.

DARS3/4the District Attorneys Retirement System, as set forth in R.S. 11:1581 through 1702 and this Part.

IRC §415 Compensation3/4wages, tips and other compensation required to be reported under §6041 of the Internal Revenue Code (IRC) (wages, tips and other compensation box on IRS Form W-2), during the calendar year of the plan (the plan year or determination period).

B. Exclusions from Compensation. Compensation shall not include:

1. any amounts that are not includible in IRC §415 compensation;

2. employer contributions to a plan of deferred compensation to the extent contributions are not included in gross income of the employee for the taxable year in which contributed, or on behalf of an employee to a simplified employee pension plan and any distributions form a plan of deferred compensation;

3. amounts realized from the exe rcise of a nonqualified stock option, or when restricted stock (or property) held by an employee becomes freely transferable or is no longer subject to a substantial risk of forfeitures;

4. amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option;

5. other amounts that receive special tax benefits, or contributions made by an employer (whether or not under a salary reduction agreement) towards the purchase of a IRC §403(b) annuity contract (whether or not the contributions are excludible from the gross income of the employee); and

6. pre-tax amounts contributed by the employee to an IRC §125 cafeteria plan.

C. Determination of IRC §415 Compensation. IRC §415 compensation must be determined without regard to any rules under IRC §3401(a) that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in IRC §3401(a)(2)).

1. For plan years beginning on and after January 1, 2001:

a. IRC §415 compensation shall include elective amounts that are not includible in the gross income of the employee under IRC §§125, 132(f)(4), 402(e)(3), 402(h), 403(b) or 457.

2. For any plan year beginning after December 31, 2001:

a. IRC §415 compensation shall not exceed the maximum amount of compensation permitted to be taken into account under IRC §401(a)(17), $200,000 adjusted for the cost of living increases in accordance with IRC §401(a)(17)(B).

i. The cost-of-living adjustment in effect for a calendar year applies to annual compensation for the determination period that begins with or within such calendar year.

3. If a determination period consists of fewer than 12 months, as a result of a change in plan year or in the year of the termination of the plan.

a. The IRC §415 compensation limit is an amount equal to the otherwise applicable IRC §415 compensation limit multiplied by a fraction, the numerator of which is the number of months in the short determination period, and the denominator of which is 12.

4. If IRC §415 compensation for any prior determination period is taken into account in determining a participants benefit for the current plan year, the IRC §415 compensation for such prior determination period is subject to the applicable IRC §415 compensation limit in effect for that prior period.

D. IRC §415 Compensation Paid After Severance from Employment

1. Adjusted Compensation. IRC §415 compensation shall be adjusted for the following types of compensation paid after a participant's severance from employment with the employer maintaining the plan (or any other entity that is treated as the employer pursuant to IRC §414(b), (c), (m) or (o)). However, amounts described in Paragraphs 2- 8 of this Subsection may only be included in IRC §415 compensation to the extent such amounts are paid by the later of 2 1/2 months after severance from employment or by the end of the limitation year that includes the date of such severance from employment. Any other payment of compensation paid after severance from employment that is not described in the following types of compensation is not considered IRC §415 compensation within the meaning of IRC §415(c)(3), even if payment is made within the time period specified above.

2. Regular Pay. IRC §415 compensation shall include regular pay after severance from employment if:

a. the payment is regular compensation for services during the participant's regular working hours, or compensation for services outside the participant's regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar payments; and

b. the payment would have been paid to the participant prior to a severance from employment if the participant had continued in employment with the employer.

3. Leave Cashouts. Leave cashouts shall be included in IRC §415 compensation if:

a. those amounts would have been included in the definition of IRC §415 compensation if they were paid prior to the participant's severance from employment; and

b. the amounts are payment for unused accrued bona fide sick, vacation, or other leave, but only if:

i. the participant would have been able to use the leave if employment had continued.

4. Deferred Compensation. IRC §415 compensation will include deferred compensation if the compensation would have been included in the definition of IRC §415 compensation and if:

a. it had been paid prior to the participant's severance from employment; and

b. the compensation is received pursuant to a nonqualified unfunded deferred compensation plan, but only if:

i. the payment would have been paid at the same time if the participant had continued in employment with the employer and only to the extent that the payment is includible in the participant's gross income.

5. Qualified Military Service. IRC §415 compensation does not include payments to an individual who does not currently perform services for the employer by reason of qualified military service (as that term is used in IRC §414(u)(1)) to the extent those payments do not exceed the amounts the individual would have received if the individual had continued to perform services for the employer rather than entering qualified military service.

6. Permanently and Totally Disabled. IRC §415 compensation does not include compensation paid to a participant who is permanently and totally disabled (as defined in IRC §22(e)(3)).

7. Amounts Earned but not Paid. IRC §415 compensation for a limitation year shall not include amounts earned but not paid during the limitation year solely because of the timing of pay periods and pay dates.

8. Lost Wages. Payments awarded by an administrative agency or court or pursuant to a bona fide agreement by an employer to compensate an employee for lost wages are IRC §415 compensation for the limitation year to which the back pay relates, but only to the extent such payments represent wages and compensation that would otherwise be included in IRC §415 compensation.

E. Limitation Year

1. The limitation year:

a. shall be the calendar year;

b. is the period that is used to apply the limitations of IRC §415.

2. The limitation year may only be changed by amendment to DARS. Furthermore, if DARS is terminated effective as of a date other than the last day of DARSs limitation year, then DARS is treated as if DARS had been amended to change its limitation year.

La. Admin. Code tit. 58, § XXI-101

Promulgated by the Board of Trustees of the District Attorneys Retirement System, LR 41:2311 (November 2015).

AUTHORITY NOTE: Promulgated in accordance with R.S. 11:1588(A), R.S. 11:1581(5)(b), and R.S. 49:950 et seq.