Addendum to Reform Alert #42: Understanding Open Member Billing Statements and TDP Agreements

January 24, 2013

 

Addendum to Reform Alert #42: Understanding Open Member Billing Statements and TDP Agreements

 

On January 9, 2013, ORS sent a letter to all members with open Member Billing Statements informing them that, depending on their retirement plan election during the recent MPSERS reform, their Billing Statement may expire earlier than the date indicated on the statement.  A copy of the letter can be found on the Employer Information web site under 2012 Retirement Reform – Member Communications.  This was also explained to employers in Reform Alert #42. These members may be coming to you requesting additional information or to initiate payment of their service credit purchase. You can use the information provided below and the Reform FAQs on Service Credit to understand the situation and to assist your employees.

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Public school employees who wish to purchase service credit must first obtain a Member Billing Statement from ORS. Members can log in to miAccount or contact ORS to request the statement. The Member Billing Statement outlines the type of service the member may be eligible to purchase, the amount of service, the cost, and the due date. Although it is called a billing statement, the member is not obligated to buy the service credit. The cost of the purchase may be determined by an actuarial calculation based on the member’s current years of service and age as of the day the statement was requested; therefore, the cost calculated for the member is only good until the expiration date shown on the statement.

 

A Member Billing Statement is considered “open” until one of the following has occurred:

• The member pays for the service credit in full, either through direct payment or a Plan to Plan transfer.

• The member makes arrangements to pay for the credit through a Tax Deferred Payment (TDP) agreement. TDP is a program where eligible employees can purchase service credit with tax-deferred payments deducted from their wages. The amount authorized for deduction from an employee’s paycheck is not subject to income tax until he or she begins taking distributions, usually at retirement. A TDP agreement form must be completed and signed by both the member and his or her employer.

  • Just a reminder, that when you are setting up a new TDP agreement for your employee, ORS recommends that you wait two full pay periods before taking the first deduction. This allows time for ORS to process the new agreement, and can help prevent pretax deductions being taken in error. More information about TDP agreements can be found in the Reporting Instruction Manual under Section 10: Tax-Deferred Payment Plan.

• The expiration date on the bill has passed. If this happens and the member still wishes to purchase service credit, he or she much request a new Member Billing Statement from ORS, which will have updated cost information.

 Also know that:

• This situation does not impact members with existing TDP agreements, which remain in effect and are irrevocable. 

• TDP agreements signed on or before January 31, 2013 are valid, regardless of which retirement plan the member elected.