SCERS WEBSITE HANDBOOK NOTICE TO EMPLOYEES REGARDING INTERNAL REVENUE CODE SECTION 415 BENEFIT LIMITATIONS - Sacramento County Employees' Retirement System (SCERS)

This Notice affects your employment rights. Please carefully read the entire Notice.

If you accept employment with the County of Sacramento or any SCERS member district, you may have certain retirement rights or benefits under the retirement system (the "SYSTEM"). Notwithstanding any other provision of law, if you first become a member of the System on or after January 1, 1990, the following limitations will apply to you: (i) the retirement rights conferred upon you under the System shall be subject to the limitations on benefits contained in Section 415 of the Internal Revenue Code of 1986, as amended and in effect from time to time (the "Code"); (ii) you shall not have any retirement rights or benefits under the system that exceed the limitations contained in Section 415 of the Code; and (iii) no retirement rights or benefits under the System shall accrue to or vest in you that exceed the limitations contained in Section 415 of the Code.

Section 415 of the Code limits the amount of benefits that you may receive or accrue under a qualified retirement plan (such as the System). Under Section 415, you generally may not receive annual pension benefits that exceed the lesser of $98,064 (adjusted for inflation) or 100 percent of your average compensation for the three-year period during which you receive the greatest amount of compensation. If you begin receiving your benefits before you complete 10 years of participation in the System, the dollar limitation applicable to your benefits will be proportionately reduced. Similarly, if you begin receiving your benefits before you complete 10 years of membership service, the percentage limitation applicable to your benefits will be proportionately reduced.

If you begin receiving your benefits before you attain Social Security retirement age, the dollar limitation applicable to your benefits will be actuarially reduced to reflect the early commencement of benefits. However, if you begin receiving your benefits after you attain Social Security retirement age, the dollar limitation applicable to your benefits will be actuarially increased to reflect the late commencement date.

Section 415 contains special rules for determining the limitations applicable to benefits that are adjusted to reflect changes in the cost-of-living and that are payable in forms other than lifetime pensions. Finally, Section 415 contains special rules for determining the limitations applicable to your benefits if you participate in more than one qualified retirement plan.

Since it is a qualified retirement plan, the System is required to impose the limitations contained in Section 415 of the Code. These limitations may operate to reduce or restrict the rights and benefits otherwise payable to you under the System.

[Reprint of Human Resources Agency Notice to New Employees]

[Note: The $98,064 in paragraph 3 as of January 1, 2005 is $170,000 and is adjusted annually. Also, the 100% limit provision has been repealed.]