Cost-of-living adjustments

(1) In general The Secretary shall adjust annually— (A) the $160,000 amount in subsection (b)(1)(A), (B) in the case of a participant who is separated from service, the amount taken into account under subsection (b)(1)(B), and (C) the $40,000 amount in subsection (c)(1)(A), for increases in the cost-of-living in accordance with regulations prescribed by the Secretary.

(2) Method The regulations prescribed under paragraph (1) shall provide for— (A) an adjustment with respect to any calendar year based on the increase in the applicable index for the calendar quarter ending September 30 of the preceding calendar year over such index for the base period, and (B) adjustment procedures which are similar to the procedures used to adjust benefit amounts under section 215(i)(2)(A) of the Social Security Act.

(3) Base period For purposes of paragraph (2)— (A) $160,000 amount The base period taken into account for purposes of paragraph (1)(A) is the calendar quarter beginning July 1, 2001 . (B) Separations after December 31, 1994 The base period taken into account for purposes of paragraph (1)(B) with respect to individuals separating from service with the employer after December 31, 1994 , is the calendar quarter beginning July 1 of the calendar year preceding the calendar year in which such separation occurs. (C) Separations before January 1, 1995 The base period taken into account for purposes of paragraph (1)(B) with respect to individuals separating from service with the employer before January 1, 1995 , is the calendar quarter beginning October 1 of the calendar year preceding the calendar year in which such separation occurs. (D) $40,000 amount The base period taken into account for purposes of paragraph (1)(C) is the calendar quarter beginning July 1, 2001 .

(4) Rounding (A) $160,000 amount Any increase under subparagraph (A) of paragraph (1) which is not a multiple of $5,000 shall be rounded to the next lowest multiple of $5,000. This subparagraph shall also apply for purposes of any provision of this title that provides for adjustments in accordance with the method contained in this subsection, except to the extent provided in such provision. (B) $40,000 amount Any increase under subparagraph (C) of paragraph (1) which is not a multiple of $1,000 shall be rounded to the next lowest multiple of $1,000.