The Internal Revenue Service (IRS) limits compensation applied to PERA Defined Benefit Plans (DBPs) and contributions made to the Public Employees Defined Contribution Plan (Public Employees DCP). The limits are defined in section 415 of the Internal Revenue Code (IRC) and are adjusted annually.
Although federal compensation and contribution limits affect only a small number of PERA-covered employees, employers and PERA are required to monitor DBP PERA-eligible salary and Public Employees DCP retirement contributions to ensure IRS compliance.
2026 IRS Compensation Limits: DBP Members
IRC § 401(a)(17) limits compensation that is subject to retirement withholding for defined benefit plan members. Coordinated, Correctional, or Police & Fire members may be impacted by the 2026 annual compensation limits.
These limits depend on when an individual first contributed to a Minnesota public retirement plan. Employers and PERA must evaluate PERA-eligible salary each pay period.
First Contribution to a Minnesota Public Retirement Plan
Members who first began contributing to a Minnesota public retirement plan before July 1, 1995 have different pay period limits based on the annual limit of $535,000. The higher limit applies to all individuals whose first contribution was before July 1995, even if they had a break in service and PERA membership.
2026 IRS Contribution Limits: Public Employees DCP Members
IRC § 415(c)(1)(A) limits annual employee and employer contributions made on behalf of an individual who participates in a qualified Public Employees Defined Contribution Plan. The federal contribution limit for calendar year 2026 is $72,000 and includes both employer and employee Public Employees DCP contributions.
For each Public Employees DCP member, the employer must monitor annual employee and employer contributions and discontinue contributions if the 2026 federal limit of $72,000 has been reached.
Excess Salary or Contributions
If PERA determines an employer reported compensation or contributions that exceed the 2026 IRS compensation and contribution limits, employers will be contacted to coordinate an adjustment or refund.
