Section 415(b) Limits
Because SDCERS is a tax-qualified retirement plan, it must meet certain requirements of the Internal Revenue Code. Section 415(b) of the Code limits the extent to which retirement benefits may be provided with the favorable tax treatment offered by a qualified pension plan such as SDCERS. To comply with Section 415(b), SDCERS must annually test benefits paid to its members and beneficiaries. Any benefits in excess of Section 415(b) cannot be paid from the SDCERS Trust Fund. If your retirement benefit exceeds certain limits set forth by Section 415(b) of the Code, you will still receive your benefit, but the benefit must be paid from two separate sources.
How benefits that exceed Section 415(b) are paid
To pay the benefits promised to retired members, but which exceed Section 415(b) limits, the Unified Port District established a Preservation of Benefit Plan (POB Plan). The Port's POB Plan is a qualified excess benefit arrangement (QEBA) that facilitates the payment of benefits above 415(b) limits. Under IRS rules, the Port's POB Plan must be funded independently of SDCERS.
If your annual benefit will exceed Section 415(b) limits in any given year, SDCERS will contact you to explain in detail how your benefit will be distributed from the SDCERS trust fund and the Port's POB fund.
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