2002 AGN AUG 06 I14 - Laserfiche WebLink

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othervvise being distributed would conform to both, then there of course would be no issue. Under recently issued IRS regulations, retirees would have the option of electing a modified distribution scheduled based on the new law. B. OPTIONAL PROVISIONS 1. Increases in Annual Dollar and Percentaqe Contribution Limits. The Amendment incorporates the higher contribution limits. 2. Catch-Uq Contributions Prior to Retirement Aqe. Under the existing law an employee can make up contributions for years in which the maximum was not funded over the three years preceding attainment of retirement age. The new law increases this amount from $15,000 per year to an amount equal to two times the annual limit. Thus, in 2002 it would be $22,000 for the year. This is the annual contribution amount and applies only to the extent of deferrals under the maximum in previous years. The IRS regulations clarified the manner in which the determination of what years constitute the last 3 years prior to retirement for purposes of this additional deferral option. Generally, the last 3 years are the years prior to the participant attaining the normal retirement age designated by the plan. This age is often the age designated by the state's basic pension plan, such as PERS, for accruing a full pension; however, the plan may adopt an alternate age. To avoid the possibility of employees losing this option because they fail to do the catch-up before the specified date, the IRS has indicated that a plan provision which permits the participant to elect his or her own alternative retirement age for purposes of determining the 3 year catch-up deferral period will be allowed. This date must fall between the PERS date and age 70. The proposed Amendment also includes language which allows the participant to designate an alternate retirement age for purposes of the Catch-up Option at Section 02-11(3). 3. Additional Elective Deferral Oqtion for Participants Aqe 50 or More. The Federal legislation created an additional deferral opportunity (separate from the Catch-up Contribution discussed above) for participants who are approaching retirement age. Employees who have attained age 50 (or will attain age 50 during the plan year) have the ability to contribute amounts to the plan in addition to the applicable annual deferral amounts. This amount is $1,000 in 2002 with scheduled increases in each succeeding year until 2006 when it reaches $5,000. Unlike the Catch-up Contribution, this deferral is available whether or not the maximum was funded in a prior year. For the last 3 years prior to retirement, the employee is then able to elect to defer either under the Catch-up Contribution or this Over 50 Option, depending upon which option would result in the larger deferral. 3