How to Report Retirees Returning to Work

June 25, 2013

How to Report Retirees Returning to Work

Recent legislative changes now require all reporting units to report wages and pay the Unfunded Actuarial Accrued Liability (UAAL) on retirees and former qualified participants of the Michigan Public School Employees’ Retirement System (MPSERS) who return to work and meet certain conditions. This is effective as of December 27, 2012.  In addition, reporting units must now collect and remit employee and employer contributions to the Defined Contribution (DC) plan for former qualified participants who return to public school employment. A retiree who elected the DC plan under the recent retirement reform, may then, be both a retiree and a former qualified participant. If that retiree returns to work either directly for your reporting unit, or indirectly through a 3^rd party administrator, you are required to report wages, pay the UAAL and collect and remit employee and employer contributions as necessary.  

Follow these steps to comply with the new requirements:

Step 1: Identify retirees

·         Beginning July 1, 2013 the Member Benefit Plan screen should be used to verify retiree status for employees in question. Prior to July 1^st, please contact the Web Reporting unit for verification. Contact the retiree to determine their retirement effective date. (The retiree can find this information by logging into miAccount.)  

If you have questions about their retirement status or retirement effective date, contact ORS Web Reporting at ORS_Web_Reporting@michigan.gov .

Step 2: Determine if the UAAL is Due Based on Position Worked

The Pension UAAL and Health UAAL are charged for retirees who are:

·         Working directly for a reporting unit in a critical shortage position including school improvement facilitator, instructional coach, or as a substitute teacher.

·         Working for a third party administrator as a substitute teacher, instructional coach, or school improvement facilitator. 

·         Former qualified participants of the Defined Contribution plan hired directly by the reporting unit working in any position.  Refer to the Employer Action Guide for further details. You will need to report the UAAL of 20.96% on the DTL2 record. Payment of the UAAL contribution is made to the Contributions & TDP receipt type.

Retiree positions not designated by PA 464 but considered reportable per PA 300 must still be reported using the Retiree wage codes (9003, 9004, 9005) for any retirees hired directly by your reporting unit.

Step 3: Determine if the DC Employee and Employer Contributions are Required

If the retiree elected to become a participant of the Defined Contribution Plan prior to retirement, a DTL4 will be required. Wages and hours for the retiree who was hired directly by your reporting unit should be reported on a DTL2 with a Direct Hire class code (9033, 9034, 9035) unless the position is defined as  Critical Shortage in which case class code 9013, 9014,or 9015 should be used. Their election may have been for the Defined Contribution retirement plan, or for the Personal Healthcare Fund (PHF), or both. The Reporting Unit is required to pay the mandatory 4% employer contribution to their 401(k) retirement account (if elected) and/or collect, report and remit both the employee contribution (2% default) and employer match (2%) for the Personal Healthcare Fund (if elected). You will need to report the employee and employer contributions on the DTL4 record. Payment for the DC employee and employer DC contributions is made to the DC Contributions receipt type. A retiree may contact ING at (800) 748-6128 or online at www.mipensionplus.org to change their contribution percentages.  A list of Critical Shortage Positions is available on the Michigan Department of Education’s website. Refer to the Contribution Rate tables for further details on reporting.

If a retiree reported with a 3^rd Party class code (9023, 9024, 9025) elected DC prior to retirement, no DC contributions are required and no DTL 4 record is necessary.

Refer to the Employer Action Guide for further details. 

Step 4:  Determine What Records Need to be Submitted or Adjusted

Look back through your reports to the first pay period that began after 12/27/2012 (the effective date of PA 464) and see if the retiree’s wages have already been reported. 

·         If the wages have not been reported: report them as positive adjustments back to your first payroll calendar that has a begin date on or after 12/27/2012.  Be sure to use the new class codes noted below. Use wage code 75 for the positive adjustment DTL2 record.

·         If the wages have been reported: check to see if the proper class codes were used. Depending on their retirement effective date, the 9003, 9004 or 9005 class codes may still apply and no changes are needed.

o   If their wages were reported but the class code needs to be changed, you’ll need to submit negative adjustment DTL2 records for the originally posted wages (use wage code 76) and then, after the negative adjustments have posted, submit positive adjustment DTL2 records using wage code 75 and the new class codes listed below.  Refer to the Reporting Instruction Manual and online tutorials for instructions on making negative adjustments. 

Step 5: Submit Required Reports and Payments by September 1, 2013.

For complete instructions on how to report to ORS, please refer to our online Reporting Instruction Manual or view our online tutorials.

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New Class Codes for Reporting Retirees and Qualified Participants

ORS has reclassified the three existing retiree class codes and established new class codes for retirees and former qualified participants. Use these codes when reporting or making adjustments on retirees or qualified participants:

Retiree Class Code	Class Code Status	DTL1	DTL2	DTL4
9003 Retiree Teacher 9004 Retiree Admin 9005 Retiree Other	Existing	Required with 1st pay or for demographic changes	Required	Not required
9013 Critical Shortage Retiree teacher 9014 Critical Shortage Retiree Admin 9015 Critical Shortage Retiree Other	New	Required with 1st pay or for demographic changes	Required	Required for qualified participants
9023 3rd Party Retiree Teacher 9024 3rd Party Retiree Admin 9025 3rd Party Retiree Other	New	Required with 1st pay or for demographic changes	Required	Not required
9033 Non CS/ Direct Hire Retiree Teacher 9034 Non CS/ Direct Hire Retiree Admin 9035 Non CS/ Direct Hire Retiree Other	New	Required with 1st pay or for demographic changes	Required	Required for qualified participants

 

Please see the Reporting Instruction Manual, Section 13.01 Employment Class Codes and Definitions if you need more information.