(a) Pursuant to the authority of the board of trustees to act under the Act, and in accordance with the amendments to §415 of the Internal Revenue Code as set forth in Public Law 104-188, the annual benefit payable under the Act shall not be reduced under §854.007 of the Act except in conformity with those limitations on the payment of benefits set forth in the Internal Revenue Code as that Code applies from time to time to the Texas Municipal Retirement System.
(b) Effective for limitation years beginning on or after January 1, 2010, the following paragraphs (1) - (5) of this subsection shall apply:
  (1) The defined benefit payable to a member of the system shall not exceed the applicable limits under Internal Revenue Code §415(b), as periodically adjusted by the Secretary of the Treasury pursuant to Internal Revenue Code §415(d). This limit adjustment shall also apply to a member who has had a severance from employment or, if earlier, an annuity starting date. Benefits that are subject to Internal Revenue Code §415(b) shall comply with the foregoing limit in each year during which payments are made. The foregoing limit shall be adjusted pursuant to the requirements of Internal Revenue Code §415(b)(2)(C) and (D) relating to the commencement of benefits at a date prior to age 62 or after age 65, subject to other applicable rules under Internal Revenue Code §415.
  (2) No adjustment shall be required to a benefit subject to an automatic benefit increase feature described in Treasury Regulation §1.415(b)-1(c)(5).
  (3) To the extent that Internal Revenue Code §415 and the Treasury Regulations thereunder require that an interest rate under Internal Revenue Code §417(e) apply, the applicable stability period shall be one calendar year beginning January 1, and the look-back month shall be the fourth full calendar month preceding the first day of the stability period (September).
  (4) If a member is, or has ever been, a participant in another qualified defined benefit plan (without regard to whether the plan has been terminated) maintained by the member's employer, as determined pursuant to Internal Revenue Code §§414(b), 414(c), and 415, the sum of the participant's benefits payable annually in the form of a straight life annuity from all such plans may not exceed the limit described in paragraph (1) of this subsection. Where the member's employer-provided benefits under all such defined benefit plans (determined as of the same age) would exceed the limit described in paragraph (1) of this subsection applicable at that age, the benefits accrued under all such other plans shall be reduced first in order to avoid exceeding the limit and shall be reduced under the system only to the extent that the reduction under such other plans is insufficient to avoid exceeding the limit.
  (5) The defined benefit payable to a member of the system plan shall be determined in accordance with the requirements of Internal Revenue Code §415(b) and the Treasury Regulations thereunder. The limitation year is the calendar year.

Source Note: The provisions of this §127.3 adopted to be effective August 1, 2023, 48 TexReg 4124