Alabama § 45-49A-63.172 - Limitation Concerning Highly Compensated Employees or Highly Compensated Former Employees.

§ 45-49A-63.172. Limitation Concerning Highly Compensated Employees or Highly Compensated Former Employees.

(a) This section shall apply (i) in the event the plan is terminated, to any member who is a highly compensated employee of the city and (ii) in any other event, to any member who is one of the 25 highly compensated employees of the city with the greatest compensation in any plan year. The amount of the annual payments to any one of the members to whom this section applies shall not be greater than an amount equal to the annual payments that would be made on behalf of the member during the year under a single life annuity that is of equivalent actuarial value to the member’s benefit.

(b) If, (i) after payment of the benefit to any one of the members to whom this section applies, the value of plan assets equals or exceeds 110 percent of the value of current liabilities, as that term is defined in Section 412(1)(7) of the code, of the plan, (ii) the value of the benefit of any one of the members to whom this section applies is less than one percent of the value of current liabilities of the plan, or (iii) the value of the benefit payable to a member to whom this section applies does not exceed three thousand five hundred dollars ($3,500), subsection (a) will not be applicable to the payment of benefits to such member.

(c) Notwithstanding subsection (a), in the event the plan is terminated, the restrictions of this section shall not be applicable if the benefit payable to any highly compensated employee is limited to a benefit that is nondiscriminatory under Section 401(a)(4) of the code.

(d) If it should subsequently be determined by statute, court decision acquiesced in by the Commissioner of Internal Revenue, or ruling by the Commissioner of Internal Revenue, that this section is no longer necessary to qualify the plan under the code, this section shall be ineffective without the necessity of further amendment to the plan.