Introduction
Under Chapter 113, P.L.
1997, the amount of compensation (salary) used to determine member
contributions and benefits, for the State-administered
pension systems listed below, may not exceed the compensation
limitation of section 401(a)(17) of the federal Internal Revenue
Code. This compensation (salary) limitation is adjusted annually,
based upon cost of living increases.
In other words, under
the provisions of the Internal Revenue Code, Section 401(a)(17),
for the "qualified" defined benefit
plans listed below [401(a)(2)], the current federal ceiling
on pensionable salary ($225,000 in 2007) applies to the
base salaries of members of these pension plans. Salary earned
by a member in excess of this amount is not pensionable; that
is, it may not be used in determining member contributions and
benefits.
The
chart below shows the pensionable salary limits in effect from
1998 to the present.
State-administered
Retirement Sytems to Which the Limits Apply
The pensionable salary
limits apply for members of the following State-administered pension
funds:
- Teachers' Pension and Annuity
Fund
- Judicial Retirement System
- Public Employees' Retirement System
- Police and Firemen's Pension Fund
- State Police Retirement System
Pensionable Salary Limits from
1998 to the Present
The chart below shows the pensionable
salary limits in effect for each year, beginning with the year
1998.
|
Pensionable
Salary Limits under Chapter 113, P.L. 1997 |
|
Year |
Salary
Limit |
|
1998 |
$160,000 |
|
1999 |
$160,000 |
|
2000 |
$170,000 |
|
2001 |
$170,000 |
|
2002 |
$200,000 |
|
2003 |
$200,000 |
|
2004 |
$205,000 |
|
2005 |
$210,000 |
|
2006 |
$220,000 |
2007 |
$225,000 |
2008 |
$230,000 |
Pensionable Salary Limit for 2008
In October of 2007, the IRS announced
that annual compensation limit for 2008 would increase from $225,000
to $230,000. This pensionable salary limit will apply to members
of the State-administered pension funds listed
above.
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