Employer News | Quarterly Newsletter | Fall 2019

• Financial Wellness Pilot Program
• IRS Paycheck Checkup: New and Improved IRS Tax Withholding Estimator
• IRS Tax Tips for Teachers
• Streamlined Benefit Enrollment
• National Retirement Security Week
• Teachers' Retirement System and Social Security Enrollment
• Issue Date—Please Verify Upon Each Submission
• Submitting Beneficiary Designation Forms to Empower Retirement
• Names and Social Security Numbers
• Reminder to Review True-Up Records with Each Payroll Submission
• Annual Census Audits
• Full Back-outs

In previous articles we have discussed how financial wellness programs can help reduce healthcare expenditures and absenteeism rates while increasing productivity, but did you know they can also help attract and retain qualified employees? The Division of Retirement and Benefits contracted with Empower Retirement Services in 2018 to provide free financial planning services that are designed to help employees understand their finances, assess where they are in their retirement as well as their long-term goals, and more. 

This year we are pleased to announce our participation in an online pilot program with Empower Retirement Services to provide a more robust financial wellness education and assistance to plan participants. The new program can be found after you log in to Empowers website, under the tab “My Financial Path."

The Next Step Evaluator tool will help with evaluation and goals for saving for life events as well as retirement. This information is designed to help participants by focusing on each step to reach financial wellness.

We encourage you to provide information to your employees about the Financial Wellness Pilot Program. Feedback from employees who have used the new wellness program are welcomed by the Division.

The IRS encourages everyone to use the Tax Withholding Estimator to perform a quick “paycheck checkup.” This checkup is very important following the recent changes to the tax law for 2018 and beyond.

The new and improved Tax Withholding Estimator helps you identify your tax withholding to ensure you have the right amount of tax withheld from your paycheck.

Why should you consider checking your tax withholding? Doing so can help protect against having too little tax withheld and facing an unexpected tax bill or penalty at tax time next year. Or, if you prefer a bigger paycheck, checking your tax withholding can help you decide if you would like to withhold less.  

Try the Tax Withholding Estimator to perform your paycheck checkup now.

Now that fall is here and school has started, many teachers are dipping into their own pockets to buy classroom supplies. Doing this throughout the year can add up fast. Fortunately, eligible educators may be able to defray qualified expenses they paid in 2019 when they file their tax return in 2020.

Educators who work in schools may qualify to deduct up to $250 of related expenses. If two qualified educators are married and file a joint return, the amount goes up to $500. However, neither spouse can deduct more than $250 of his or her qualified expenses when they file.

Taxpayers qualify for this deduction if they:

• Teach any grade from kindergarten through twelfth grade. 
• Are a teacher, instructor, counselor, principal or aide.
• Work at least 900 hours during the school year.
• Work in a school that provides elementary or secondary education.

Qualified expenses include:

• Professional development courses.
• Books
• Supplies
• Computer equipment, including related software and services.
• Supplementary materials.
• Athletic supplies for health and physical education only.

The Division of Retirement and Benefits is working with MetLife and a new third-party administrator, BenefitFocus, to streamline benefit enrollment for the State of Alaska Voluntary Supplemental Benefits (VSB) and Group Health and Life plans. The VSB plan provides life insurance, short/long term disability, and critical illness benefits that employees can enroll in and pay for on a pre-tax basis. Moving the enrollment process over to the BenefitFocus MarketPlace will:

• Simplify benefit communication, enrollment and administration for the Alaska VSB.
• Align the VSB open enrollment period to the current health benefits open enrollment for each participating entity during the 2020 benefit year.
• Provide a suite of reports, including reports to manage employee’s payroll deductions.
• Improve and simplify the MetLife billing and payment process for each participating entity and their employees by providing:
  • Consolidated Billing: an online portal for each participating entity to pay their premiums to MetLife.
  • Direct Billing: a solution for employees to pay their MetLife premiums when they do not receive a paycheck (employees on unpaid leave of absence, retirees.)
  • Benefits Service Center: a call center at BenefitFocus providing employees with login assistance, navigation assistance, telephonic enrollment, and more.

National Retirement Security Week (NRSW) is October 20 through 26, 2019. This is a week dedicated to bringing awareness to the importance of saving for retirement. Just as you would for a dream vacation, planning and preparation for retirement can go a long way to setting yourself up for a great experience.

This is a great time to encourage employees to reflect on preparations for their retirement goals and evaluate where they are along the road to reaching those goals. It doesn’t matter where you are in your career, there are things you can do today in order to improve tomorrow!

The Division of Retirement and Benefits and Empower Retirement invite you to take advantage of the educational events and seminars being presented in your area, especially during NRSW. If there isn’t an event in your area, don’t sweat it! Employees can take advantage of a Financial Readiness Review at no-cost by reaching out to Empower Retirement.

Feel free to share the following information regarding financial readiness reviews or preparations for retirement at various stages of your employees’ careers.

• Division of Retirement and Benefits
  • Seminars
• Financial Readiness Reviews
  • Meet Your Representatives
  • Empower Retirement
• Videos
  • Early Career
  • Mid-Career
  • Late Career
  • 2019 NRSW Empower
  • Your Whole Journey NRSW

In 1935, the Social Security Act was signed into law by Franklin D. Roosevelt. It wasn’t until 1937 that social security taxes were collected for the first time. Funding for social security was established in Internal Revenue Code as the Federal Insurance Contributions Act (FICA).

The original Social Security Act applied to private employees only. State and local government employees were not subject to social security taxes because of unresolved legal questions regarding the federal government’s authority to impose taxes on state and local governments.    

The Social Security Act was amended in 1951, adding Section 218. Section 218 made social security enrollment voluntary for state and local government employers. States across America passed legislation to voluntarily enroll their employees in social security and created master Section 218 agreements with the Social Security Administration.

Effective January 1, 1951, the Territory of Alaska signed their master Section 218 agreement with the Social Security Administration and the State of Alaska and its political subdivisions could enroll their employees in social security voluntarily. However, existing retirement systems were excluded from coverage, including the Alaska Territorial Teachers' Retirement System and the City of Anchorage Police and Fireman retirement system.

Many existing Alaska territorial contracts transferred to the State of Alaska in 1959 when it was admitted to the Union as the 49th state. This included the Section 218 contract with the Social Security Administration and the Alaska Territorial Teachers Retirement System, which later became the Teachers Retirement System (TRS) we know today.

In 1955, the Social Security Administration amended the Social Security Act to allow members of excluded systems the choice to vote for social security coverage. In order for TRS members to vote, the TRS employers had to request a referendum be held.

Social Security coverage can only be extended to groups of employees under Alaska’s master Section 218 agreement—absolute coverage groups or retirement system coverage groups.

In 1958, the University of Alaska held a referendum for TRS employees. The referendum passed and TRS employees were enrolled in social security. To date, the University is the only TRS employer in the State to hold a social security vote for its TRS employees.

From 1951 to 1983, states and their political subdivisions could enter into and dissolve the Section 218 agreement and modifications at will. But in 1979, the Social Security Administration gave notice that State Section 218 agreements and modifications thereof could no longer be dissolved after April 20, 1983.

The State of Alaska dissolved its Section 218 agreement effective December 31, 1979. The University of Alaska dissolved its modifications to the State’s master Section 218 agreement December 31, 1981.

In 1991, the Social Security Administration amended Section 210 of the Social Security Act to require social security coverage for all state and local government employees who were not already members of a retirement system, and who are not covered by Section 218 agreements or modifications thereof. The amendment created mandatory state and local government employers.

Takeaways:

• The State of Alaska's Section 218 agreement allows the state and state political subdivisions to voluntarily enroll their employees in social security. These employers are termed voluntary employers.
  
  
• TRS members are not eligible for social security enrollment under voluntary Section 218 agreements because they were excluded out of the original agreement and their employer hasn’t extended the option to them to vote for social security enrollment.
  
  
• The 1991 amendment to Section 210 of the Social Security Act created mandatory social security. These employers are termed mandatory employers.
  
  
• The State of Alaska and all State political subdivisions are either voluntary or mandatory social security employers.
  
  
• Section 218 social security coverage can only be extended by coverage group—either an absolute coverage group or a retirement system coverage group.

Submitting Beneficiary Designation Forms to Empower Retirement

Defined Contribution Retirement Plan (DCR) Beneficiary Designation forms must be submitted directly to Empower Retirement, not to the Division of Retirement and Benefits. A new employee must wait until their first payroll has processed with Retirement and Benefits or until they have received their welcome flyer/postcard from Empower Retirement before setting up their beneficiary designations online or submitting a hard copy form. Empower will reject all forms until the employee has an account established with them. 

Submitting beneficiary forms online is Empower Retirement’s preferred method. The employee should create an account with Empower Retirement. This is the most efficient process and helps reduce the chance of errors. If assistance is needed, you can reach Empower at (800) 232-0859.

If submitting the beneficiary designation online is not an option, please mail or fax the completed form to Empower. Hard copy Beneficiary Designation forms should not be submitted to Empower until 15 days after the employee’s first payroll has been submitted to Retirement and Benefits.   

Should the employee require a paper form, please contact Empower Retirement or your designated Retirement and Benefits Active Payroll contact for the most up-to-date form. A separate Beneficiary Designation form must be submitted for each plan (PERS, TRS, SBS and DCP) in which the employee is a member. Each plan has its own form with the plan number located in the upper right-hand corner.

Please note that all Defined Benefit (DB) beneficiary forms should submitted to the Division of Retirement and Benefits.

Names and Social Security Numbers

The Division relies on employers to properly report names and Social Security numbers. An employee name and Social Security number must match the Social Security Administrations database. Additional information regarding names and social security numbers can be found on the Social Security Administration's website. 

Although not required for verifying an employee’s identification, it is highly recommended that employers maintain a copy of an employee’s Social Security card. This is especially relevant to employees who have an account with Empower, as Empower is requesting a copy of a member’s Social Security card if there are discrepancies in an employees’ Taxpayer Identification Number (TIN). Empower checks an employee’s TIN furnished by the employer against the name/TIN combination contained in the Internal Revenue Service database.

Reminder to Review True-Up Records with Each Payroll Submission

The Division calculates DCR true-up adjustments daily and provides them 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).

Please review the true-up report with each payroll submission. All true-up records for each year listed must be adjusted with each payroll submission even if it is a net zero adjustment. The true-up will allocate the contributions to the proper money type.

Get in touch with your payroll contact if you have any questions regarding the true-up process or specific true-up records in eReporting.

The Division’s auditors, KPMG, are nearly finished with this year’s employer GASB 68 and 75 census audits. The frequency of the census audits is based on the employer size and can occur every year, every five years, or every ten years. The Division’s external auditor chooses employers for a census audit around July of each year. Employers will receive a notification that they’ve been selected and should expect to provide PERS and TRS related data to the external auditors within a specific timeframe. For questions regarding the census data audit and additional details about the requirements, please see the sample letter from the Division as well as the AICPA whitepaper.

To aid you in preparation for this process, it’s important for employers to keep detailed records of their transmissions to the Division and to ensure those transmissions reconcile with the employer payroll records. If you have questions related to the transmission and records, please contact your payroll contact. 

Employers are reminded to inform their Division payroll contact before performing a full back-out of an employee’s contribution. This is critical when it comes to the PERS DCR, TRS DCR, and SBS plans as fees and losses may have incurred that cause the account balance to be less than the back-out. 

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