L.A. County Replacement Benefit (RB) Plan
The following may affect certain highly compensated LACERA members, excluding members in General Plan G and Safety Plan C. (Plan A is exempt from Section 415(b) limits.)
Section 415(b) of the Internal Revenue Code limits the amount an individual can receive from a defined benefit plan (such as LACERA’s) each year. Limits imposed by Section 415(b) apply only to the employer-paid portion of LACERA retirement benefits and are based on income and age thresholds.
ALL LACERA RETIREES WILL RECEIVE THEIR PROMISED BENEFITS
It’s important to understand all LACERA retirees, including the highly compensated, will receive the full amount of their promised benefit.
LACERA will pay affected retirees the maximum amount of their monthly benefit that is permitted under Section 415(b); the difference will be paid through the County-funded and administered Replacement Benefit Plan (RB Plan). Each month, those affected will receive the total gross amount of the benefit to which they are entitled according to the provisions of their respective LACERA retirement plans.
Retirees impacted by Section 415(b) will receive two separate checks (or direct deposits) each month, one from LACERA and one from the County RB Plan. The RB Plan payments are issued by the County on the 30th of the month. The total gross amount of the retiree’s benefit remains unchanged.
ABOUT SECTION 415(b)
According to Section 415(b), the annual maximum benefit limit for 2017 is $215,000. That amount is based on a retirement age between 62 and 65; generally, the limit is lower for members who retire under age 62 and higher for members who retire after age 65. However, the benefits of retired employees of sheriff’s and fire departments with at least 15 years of service credit and recipients of survivor and disability allowances are not age-adjusted; they are tested against the full 415(b) dollar limit.
Abbreviated Table of Section 415(b) Limits for 2017
Limit increases each month a member ages
Click to Display Table
A, B, C, D*
*General members or Safety members not meeting the IRS definition of "safety member."
**Safety members meeting the IRS definition of "safety member."
RB PLAN: THE PROCESS
Our actuaries conduct annual testing to identify individuals with LACERA retirement benefits that will exceed the Section 415(b) limit. When the actuaries identify an affected retiree, LACERA sends the individual a Replacement Benefit Plan Package containing County forms to complete and return. When it receives the completed paperwork, LACERA forwards it to the County Auditor-Controller’s office for RB Plan processing.
For questions regarding your LACERA Retirement Plan and the County’s RB Plan, call 800-786-6464 to speak with a LACERA Retirement Benefits Specialist.