The County-funded and administered Replacement Benefit (RB) Plan is set up to pay retirees affected by Internal Revenue Code Section 415(b) the total gross amount of the benefit to which they are entitled, according to the provisions of their respective bti体育 retirement plans.
Section 415(b) limits the amount an individual can receive from a defined benefit plan such as bti体育鈥檚 each year. Benefit limits mandated by Internal Revenue Code Section 415(b) apply to all plans but only affect a small percentage of retired members.
Section 415(b) applies to legacy members in General Plans B through E and Safety Plan B. Plan A members with membership dates prior to January 1, 1990 are exempt from Section 415(b) limits, except in some instances where a domestic partner is treated as a spouse.
How the Plan Works
bti体育鈥檚 actuaries conduct annual testing to identify individuals with bti体育 retirement benefits that will exceed the Section 415(b) limit. When the actuaries identify an affected retiree, bti体育 sends the individual a Replacement Benefit Plan Package containing County forms to complete and return. When it receives the completed paperwork, bti体育 forwards it to the County Auditor-Controller鈥檚 office for RB Plan processing.
bti体育 pays affected retirees the maximum amount of their monthly benefit permitted under Section 415(b), and the difference is paid through the County-funded and administered Replacement Benefit Plan (RB Plan). Each month, those affected receive the total gross amount of the benefit to which they are entitled according to the provisions of their respective bti体育 retirement plans.
Retirees impacted by Section 415(b) receive two separate payments each month, one from bti体育 and one from the County RB Plan. The RB Plan payments are issued by the County on the 30th of the month, and include a deduction for the Health Insurance Tax (HIT). The total gross amount of the retiree鈥檚 benefit remains unchanged. bti体育 income and taxes are reported on a 1099-R while the County reports the RBP income and taxes on a separate document.
For questions regarding your bti体育 retirement plan and the County鈥檚 RB Plan, contact us to speak with a retirement benefits specialist.