Employer News | Quarterly Newsletter | April 2019

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Spring | Volume #160

Workplace Financial Wellness Programs
Calculator Coins

Financial wellness programs have become a popular benefit offered by employers. But why?

Did you know that workers struggling with personal finances are more likely to be stressed and in poor health? A 2017 survey of individuals working in the United States revealed that 53% reported significant stress as a result of dealing with personal finances, 50% worried about having enough emergency savings for unexpected expenses, and 42% found it difficult to meet their household expenses on time each month.

These statistics should be concerning for employers, because financial issues may cause workers to be distracted and less productive. They may miss significantly more days of work and look for work opportunities elsewhere. For example, they may seek a second job or a higher wage, which could impact performance at your workplace or force you to incur the expense of hiring and training a new worker.

Here’s a great statistic: 62% of millennials say their loyalty to employers is influenced by how much they care for their financial well-being.

What does a financial wellness program consist of? As an employer, you likely have the main items—health insurance, life insurance, and retirement plan—but probably haven’t put them together. Adding other components, such as information on budget planning, debt and credit card management, and future saving to your existing benefits will complete your financial wellness package. Empower Retirement Services can help you help your employees put all the pieces together. For members of the State of Alaska Defined Contribution Retirement systems, the Alaska Supplemental Benefits Annuity Plan, or the Public Employees’ Deferred Compensation Plan, resources are available to your employees 24/7 through their online account with Empower Retirement Services, found under “My Money.” Empower also has licensed financial planning representatives that will work with members over the phone or in person to discuss how to save more for their future. Later this year, Empower will expand their services by incorporating a full-time financial planner and financial educator in Juneau who will travel to other Southeast locations. Expand your financial wellness efforts by providing your employees with these available resources. For more information, please contact your regional counselor.

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Employer On-Behalf Funding
Payroll Graphic

Fiscal Year 2019

The Division of Retirement and Benefits will apply Fiscal Year 2019 PERS and TRS employer on-behalf funding, provided by House Bill (HB) 286 (Section 2 and 25), to complete payrolls received in our office by July 15, 2019. Fiscal Year 2019 covers payrolls containing payroll end dates from July 1, 2018 to June 30, 2019. A complete payroll is defined as a payroll that has all elements needed for processing. This includes the receipt of the funds in the State of Alaska’s bank account, to include the required and correct memo if the payment is a wire or push ACH. Additionally, a complete payroll includes a signed summary and the necessary employer payroll detail needed for processing.

After the July 15, 2019 cutoff has been reached and all applicable payrolls have been processed, the Division will complete the annual on-behalf funding true-up. We anticipate emailing employer on-behalf year-end statements, that include the true-up, by mid-August 2019.

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Fiscal Year 2020 Employer Contribution Rates Available
Money Bags

The Alaska Retirement Management Board (ARMB) has established Fiscal Year 2020 (FY20) employer contribution rates for the PERS/TRS Defined Benefit (DB) and Defined Contribution Retirement (DCR) plans.

Please refer to the FY20 Employer Contribution Rates on the Division website for complete information. You can find the PERS and TRS FY20 Employer Rates under Resources on the Employer Services web page, or click here.

For questions about employer contribution rates, please contact Christina Maiquis at (907) 465-1845 or via email at christina.maiquis@alaska.gov.

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Financial Condition of the Retirement Systems
Board Chairs

Each year, the Alaska Retirement Management Board (ARMB) must report on the financial condition of the state’s retirement systems. Per Alaska Statute 37.10.220(a)(13), this report must be given to the governor, the legislature, and the individual employers participating in the state’s retirement systems.

This letter from the Commissioner of the Department of Revenue, Bruce Tangeman (also a trustee on the ARMB), directs you to the location of audited financial statements, information on performance returns on each system, asset allocations, investment guidelines, policies, and procedures, as well as monthly and year-to-date financial reports.

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Staff Changes: Active Payroll
Woman Shaking Hands

Please welcome Traci Walther as our new Active Payroll Supervisor. Traci holds a Masters degree in Business Administration and is eager to jump in and learn the ropes of her new position.

Traci replaces Erika Burkhouse, who has accepted another position within the Division of Retirement and Benefits. Erika has made a big impact on the Active Payroll section and is greatly missed, but we’re excited that she has stayed with the Division.

Please continue to direct inquiries through your payroll contact or to doa.drb.activepayroll@alaska.gov.

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2018 PERS and TRS CAFR Available Online
CAFR Header

The 2018 Comprehensive Annual Financial Reports (CAFR) and the financial statements for the PERS and TRS are available online. To request a hard copy, please call (907) 465-5711.

PERS Publications

TRS Publications

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GASB 68 & GASB 75
Man writing report

PERS and TRS Net Pension and Other Postemployment (OPEB) Liability Allocation Schedules—Report as of June 30, 2018.

The PERS and TRS GASB 68 and 75 reports are available online at the Division’s GASB webpage.

Questions? Please contact Christina Maiquis at (907) 465-1845 or via email at christina.maiquis@alaska.gov.

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Employer Monthly Telephonic

In January 2019 we introduced the Employer Monthly Telephonic Conference. This is an opportunity for employers to ask questions and express concerns about anything PERS, TRS, SBS, DCP, and SSA related. This gave the Division the opportunity to provide information that pertained to the PERS or TRS, as well as anything that might affect these plans.

In March we had six employer representatives call in and five speakers from the Division present; Kathy Lea, Teresa Kesey, Melanie Helmick, Roberto Aceveda, and Dawn Bonnett. Some of the topics addressed in this employer meeting were the new DCRP distribution options, IRS scams, the true-up process, beneficiary forms and employer services update.

Follow up information from the previous month’s telephonic on PERS and TRS members being laid off, as well as forfeiture notice information was provided. We also discussed how current budgetary restrictions have eliminated our ability to travel. Despite this, we have other helpful communication tools like videos, WebEx, and telephonic appointments to aid employers.

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Employer Toolkit for Political Subdivisions and School Districts

We are beta testing the new Employer Toolkit this month. Employers can utilize the toolkit to help point Defined Contribution Retirement plan members in the right direction at any time in their career. The toolkit will contain information to help guide members down the path to their individual financial goals. It will have a new hire checklist for the employer to utilize. It will indicate what plans their employer participates in and provide clarity to new members on what plans are mandatory, such as the Public Employees’ or Teachers’ Retirement Systems (PERS or TRS), and what plans are optional, such as the Deferred Compensation Plan (DCP) or Voluntary Supplemental Benefits (VSB). The toolkit will also contain more direction, guidance, and plan information that is easy to use and understand.

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TRS 2019 Year End Reporting

As the end of the school year approaches, it is time to revisit the year-end reporting procedures for the Teachers’ Retirement System (TRS). It is important that the year-end reports are submitted timely and each member’s school year contributions and salaries are correct in the TRS.

Per AS 14.25.065(a) and AS 14.25.370(a), all TRS members ending their contract-working requirements during May or June must have their final contract-payroll withholding reported to TRS no later than July 15, 2019, regardless of the contract payment length.

This includes TRS members whose contracts call for a:

  • Nine-month work schedule (ending in May) with a payment schedule of 9 months.
  • Nine-month work schedule (ending in May) with a payment schedule of 12 months.
  • Ten-month work schedule (ending in June) with a payment schedule of 10 months.
  • Ten-month work schedule (ending in June) with a payment schedule of 12 months.
  • Fractional school-year schedule (ending in May or June) with a payment schedule that includes June, July, and August.

Please make every effort to prepare and send in the TRS year-end reports and payroll files as soon as possible.

You may prepare your year-end report(s) in the following manner: 

  • Teacher’s Service End [TSE] event date must be reported for ALL teachers at the end of the 2018-2019 school year. The date submitted should be one of the following: 
    • Last day worked, if prior to June 30, 2019; or
    • o June 30, 2019, to close the school year.
  • The year-end report may be submitted by one of the following:
    • A. Combine the reports on one payroll file using a 6/30 pay period ending date; or
    • B. Submit separate reports with pay period end dates of 6/28 for June, 6/29 for July and 6/30 for August.

If the year-end reports are combined, as explained in bullet “A” above, indicate this by writing “FINAL” in red on the Employer Summary of Contributions report form.

Please note that any payroll information received after July 15, 2019, will not be posted to the members’ accounts before the annual interest calculation; nor will it appear on the members’ 2018-2019 TRS annual statement. This could be a significant amount since many of the closing reports include three or four months of contributions and salary information for members. As a reminder, in accordance with AS 14.25.065 (b) and AS 14.25.370 (b), late fees (interest) may be assessed on normal/final payrolls submitted after July 15, 2019.

Any contributions submitted after July 15, 2019, for pay periods prior to July 1, 2019, should be reported as adjustments on your regular payrolls. These prior year adjustments could include:

  • Contributions for teachers whose summer school service is covered as an addendum to their 2018/2019 contract; or
  • Prior year corrections or additional contributions omitted or rejected from the 2018/2019 final processing of the report.

For those TRS members whose contracts require working during the summer, summer wages should be reported on July and August payroll reports using the employer match percent for the 2018-2019 school year.

This would include TRS members who have:

  • Contracts with a 12-month work schedule and payments scheduled for twelve months; or
  • Summer school teaching service that is covered under a newly written contract (separate from the school year contract); then
  • Report a STAT back to work date and a second TSE date if the teacher has a break before the normal school year starts.

Please report the following on your first payroll (pay period end (PPE) date on or after July 1, 2019) for school year (SY) 2020:

  • Return to work date (STAT record) for each teacher for the new school year;
  • Part-time teachers’ service percentage level (FTE of teacher’s SY20 contract) must be reported on their STAT record that returns them to work; and
  • Personnel Change records: address changes, marital status changes, and birth date corrections, as needed.

Please check the tier/plan for a new employee prior to reporting them as a new hire. To check on a new employee, please visit Alaska.gov/drb, Employer Services, Resources, Employer Access Login and use the “Employer Access” program.

All employer rates are available on eReporting under the Reports Tab. If there are any questions, please do not hesitate to contact our office toll-free at (800) 821-2251 or email us at  doa.drb.activepayroll@alaska.gov.

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Qualifying FICA Replacement Systems

FICA is the acronym for the Federal Insurance Contributions Act. Originally, FICA did not differentiate between Social Security and Medicare. The initial FICA rate was 1% of tax on the first $3,000 earned. In 1991, the Social Security rate and the Medicare rate was separated. Today’s combined FICA rate is 7.65%, comprised of 6.2% Social Security tax and 1.45% Medicare tax.

Mandatory Social Security coverage for state and local government employers became effective in 1991. Beginning this date, state and local government employees became subject to mandatory Social Security and Medicare coverage, unless they are members of a qualifying public retirement system or covered under a Section 218 agreement.

The qualifying public retirement system previously mentioned is more commonly known as a FICA replacement system. Qualifying FICA replacement systems are specific to the regulations related to the exclusion from mandatory coverage.

A qualifying FICA replacement system is simply a plan that has an equivalent benefit to what Social Security retirement would provide. A qualifying FICA replacement system is one that has a combined contribution rate of 7.5% or greater.

There are specific calculations to determine if a system is a qualifying FICA replacement system. For more information, please contact your State Social Security Administrator.

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Verification Requests

For PERS Defined Benefit (Tier I/II/III) member employees, expect to receive a request for verification of service asking for the following information:

  • Last day worked
  • PERS-eligible salary for 2019

A PERS member must receive credited service in the last year of employment for at least 115 days in order for that calendar payroll year salary to be used in the average monthly salary calculation for the retirement benefit calculation. If the member does not have 115 days of service credit in the last year of employment, that salary will not be used. Leave without pay (if more than 10 days) will affect the 115 days. Generally, if the member receives service credit starting January 1, the member will receive the 115 days on or around April 25 of that year. Statue reference is AS 39.35.680(4).

For TRS Defined Benefit (Tier I/II) member employees, expect to receive a request for verification of service asking for the following information:

  • Days worked in the current school year
  • Full contract salary for the current school year
  • Full contract salary for any school year where member worked less than 172, but more than or equal to 115 days.
  • Full contract salary for school year were member worked less than 100% contract

A TRS member must have worked at least 115 days (two-thirds) in a school year for that year’s salary to be used in the average base salary calculation for the retirement benefit calculation. If the member has worked at least two-thirds of the school year, the full contract salary will be used in the average base salary calculation. The employer will receive a verification request for the full contract salary for any school year the member has worked at least 115 days in. Statute reference is AS.14.25.220(5).

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Compensation and Bonus

The question one must ask is, “Was the payment earned for services rendered?”

Non-taxed contributions for the following are included:

  • Salary that was earned during calendar year, not what was paid
  • Public Employees' Retirement System (PERS) if the verified salary is for 1987 or later
  • State of Alaska Supplemental Benefits System (SBS)
  • Employer-sponsored deferred compensation or supplemental benefit (tax shelter) plans

Exclude payments for:

  • Unused sick leave or annual leave (including lump sum payments, donations or cash-ins)
  • Retroactive wages that were earned in another year
  • Severance pay or other separation bonuses 
  • Per diem or expense allowances 
  • Workers' compensation
  • Retirement or welfare benefits
  • Cost-of-living differentials if the employee was first hired under the PERS after December 31, 1986, unless the employee has received a comparable differential during at least 50% of their credited service

Bonuses received in the last year of employment that are contingent on termination would not be included as compensation.

If you have any questions regarding bonuses or compensation, please contact your regional counselor:

DRB Regional Counselor: Lisa Templeton, lisa.templeton@alaska.gov

Fairbanks, State
DRB Regional Counselor: Brandon Roomsburg, brandon.roomsburg@alaska.gov

Fairbanks, Schools/University
DRB Regional Counselor: Natasha Golovatiuk, natasha.golovatiuk@alaska.gov

Mat-Su Valley
DRB Regional Counselor: Mark Rosier, mark.rosier@alaska.gov

DRB Regional Counselor: Dawn Bonnett, dawn.bonnett@alaska.gov

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ACTION NEEDED: True-up Available in eReporting
Magnifying Glass

The Division posts true-up adjustments daily in eReporting. The true-up adjustments correct for over and/or under-reporting of the following contributions: 

  • DCR Employer match (ER);
  • DCR Occupational Death & Disability (ODD);
  • DCR Retiree Medical Plan (RMP);
  • DCR Health Reimbursement Arrangement (HRA); and
  • Defined Benefits Unfunded Liability (DBUL).

In eReporting, true-up adjustments are viewable by selecting the Reports tab, then True Up, followed by selecting the year from Year drop-down box. Select General PDF file and/or General Excel Spreadsheet. Both reports are valuable in determining nature of the true-up adjustment.

True-up adjustments are based on records received by the employer, review the report(s) carefully to ensure there aren’t any discrepancies. In order to take the adjustments against a payroll, select the Trueups tab, and select the applicable fiscal Year from the drop-down box. Click the box next to each adjustment individually or click on the Select All button, then click on Generate Adjustments for Selected.

At this point, the adjustment(s) will populate on the Adjustments tab as an adjustment against the payroll.

It’s important to note that some employers may have over-payments that exceed the total amount due on the payroll. Please make sure that the total amount due on the payroll does not result in a negative balance.

We recommend that employers complete true-ups through Fiscal Year 2018 by mid-May. After May 15, the Division will automatically process all true-ups through Fiscal Year 2018 against the employers’ over/short account. If you have any questions regarding the true-up process, please connect with your payroll contact.

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