IRC Section 415 Benefit Limitation Relief Application and Payment Adjustments

The 2023 Consolidated Appropriations Act included provisions, known as SECURE 2.0, that have impacts to retirement plans. The passage of this legislation provides limited relief for the impact of limitations on benefits payable from a tax-qualified pension plan like the Retirement Security (RS) Plan.

As a result of NRECA’s efforts on Capitol Hill, this legislation amends IRC Section 415 with a special provision for employees of rural electric cooperatives, clarifying that the “100% of average compensation” limitation no longer applies to certain non-highly compensated cooperative employees.

Relief now automatically applied
NRECA has completed the systems update that incorporates this legislative relief for RS Plan benefit estimates and payments produced on or after July 27, 2023. This means benefit estimates or payments processed for eligible RS Plan participants after this date will automatically reflect the relief from the IRC Section 415 average compensation limitation for certain non-highly compensated individuals in the RS Plan.

Benefit payment adjustments coming in August
The legislation also allows NRECA to “look back” and review RS Plan benefit payments commencing on or after January 1, 2022, and retroactively apply this relief to any eligible benefit payments. Primary benefits administrators at co-ops with individuals who retired or quasi-retired with benefit payments eligible for this relief will receive an email with additional details in mid-August. Impacted participants will receive a letter shortly thereafter from NRECA outlining the additional benefit amount owed to them.

Questions
A summary of the legislative relief is available by viewing the recording of the webinar on this topic hosted in March. Questions should be directed to your co-op’s field representative.