DA Memo – May 4, 2010

Topics in This E-mail

1. DA Memos by E-mail and on the Web
2. Previous KPERS Membership and Tier 1 vs Tier 2
3. All Enrollments Through Portal Beginning June 1
4. All Verification Letters (V-letters) Through Portal Beginning June 1
5. Providing End Dates When Employees Leave
6. Furloughs and the Effect on KPERS Benefits
7. What Compensation to Include in Contributions
8. IRS Compensation Limits for Contributions
9. Military Leave and Contributions
10. Workers’ Compensation
11. Working After Retirement Reminders

1.  DA Memos by E-mail and on the web

Just a reminder, DA Memos are now only by e-mail. You will not receive a paper copy in the mail. Memos are available at www.kpers.org/damemos.htm, archived since 2001.

2.  Previous KPERS Membership and Tier 1 vs. Tier 2

Previous membership does not automatically make a person Tier 1. Vesting, grace periods and previous termination date could affect tier status.  Side by Side Tier Matrix

*when outside of grace periods

When you submit enrollments using the portal, tier status will be available in the system the next day if there are no errors.

3.   All Enrollments Through Portal Beginning June 1

It’s important to complete an enrollment as soon as possible when an employee starts employment. This helps establish membership tier and contributions.

Effective June 1, 2010, all enrollments must be completed through the employer web portal. Please do not send paper Report of Member status forms (KPERS-1) after June 1.

Remember to periodically check “Enrollments” on the portal for K-1s not submitted. Login to the web portal. Click “Enrollment” on site menu.  Select “No” on the “Submitted” drop down list. Click “Search” button.

4.   All Verification of Most Recent Contributions – Retirement Letters (V-letters) Through Portal Beginning June 1

Effective June 1, 2010, all v-letters must be completed through the employer web portal. Please do not send paper after June 1.

Click “Certification” on site menu. Select “No” on the “Submitted” drop down list. Click “Search” button.

5.   Providing End Dates When Employees Leave

It is important to provide end dates as soon as possible when employees leave employment. This helps establish their membership tier if they are re-employed.

The end date should be the last date an employee earned compensation.

Click “Employees” on Site Menu. Search for employee and open record. Click “Submit End Date” link.

• Enter end date
• Select reason code
• Save record
• Submit to KPERS

If you submit an incorrect end date, the employer portal won’t allow you to submit another end date for the same person. Please contact KPERS to fix it.

To enter an end date for an employee already on a leave of absence, on military leave or in a non-covered position, use reason code “Termination.”

6.   Furloughs and the Effect on KPERS Benefits

All Employees:  KPERS benefits are based on final average salary and years of service. Service credit is based on quarters. Limited furloughs affecting service credit is unlikely.

However, furloughs may impact a member’s FAS calculation. A member’s FAS at retirement is based on the highest three, four or five years of pay (depending on membership date) over a member’s career.

If an employee is furloughed, his or her FAS may be lower than expected. Salary is also the basis for death and disability benefits.

With furloughs, breaks in service need to be considered. If a furlough lasts more than ten consecutive work days, it is considered a break in service. Please contact KPERS if this situation affects an employee.

State Employees:  A bill is in the legislature that would protect KPERS benefits for some state employees during furloughs. The bill’s current language covers employees with 20 or more years of service. It would be retroactive to January 1, 2010, and sunset in 2013. It does not include furloughs before January 1, 2010.

Employers would make the employer and employee KPERS contributions on any salary reduction if the reduction affects FAS. Contributions would be made at the time of the affected event (retirement, disability, death). If legislation is signed into law, KPERS will provide details about implementation.

7.  What Compensation to Include in Contributions

Generally, withhold employer and employee contributions from gross compensation before any deductions or reductions.

Compensation means, except as otherwise provided, all salary, wages and other remuneration payable to an employee for personal services performed for the employer.

But for a few exceptions, (e.g., long-term disability, some military leave), KPERS contributions must be linked to actual participating service or paid leave. Contributions need to have service tied to them.

*Severance: Payment by an employer to an employee beyond his wages on termination of employment.

8.   IRS Compensation Limits for Contributions

The Internal Revenue Service sets a contribution limit based on annual earnings and hire date. Do not send contributions for any earnings over the annual limit.

9.   Military Leave and Contributions

Once an employee has left regular payroll due to military leave, code the employee on military leave.  Do not deduct KPERS contributions from payments (longevity, holiday, bonus, etc.) due the employee while on military leave.  Begin deducting KPERS contributions as soon as the employee returns to work and is on the regular payroll.

Once the employee returns to work, complete a web portal enrollment (KPERS-1). Submit military documents (DD 214) to KPERS to determine if service credit can be granted to the employee for the military leave.

10.   Workers’ Compensation

As long as a member is receiving a full day of pay based on the following, KPERS considers the member on the payroll.

• Regular pay
• Sick leave
• Vacation/annual leave
• Any combination of above

Once the member is no longer receiving a full day of pay and has been off the payroll for ten days or more, the member will be considered no longer on the payroll for KPERS purposes. Enter an end date for this employee and use “leave of absence” as the reason code.

The member may continue to receive workers’ compensation pay or small accumulated payments for sick leave and vacation/annual leave, but do not deduct KPERS contributions from these payments. He or she does not earn participating service credit.

11.   Working After Retirement Reminders

All KPERS retirees must wait 60 days to go back to work for any KPERS employer. KP&F must wait 30 days. Judges have no waiting period. When you hire any retiree, use the retiree enrollment section of the employer web portal to enroll them. Remember to select “Plan 6” when entering your employer number on the login page.

Non-School Employers
When KPERS retirees return to work for a different non-school employer, generally the employer makes contributions if the position is covered by KPERS benefits. “Working After Retirement” contributions are remitted by payroll period just like regular employer contributions, but at a special rate. Late payment penalties also apply.

School Employers
Beginning in 2009, licensed school professionals can retire before June 30.

Legislation lifted the $20,000 earnings limit for three years for some licensed school members returning to work for the same employer. Member must retire with “full” retirement. The earnings limit goes back into effect July 1, 2012. For more information http://www.kpers.org/damemos060309_school.htm.

The Board of Education developed a list for licensed positions included in the exemption. Registered nurses are on the list. Licensed nurse practitioners are not on the list.  The exemption reflects the position requirement, not the employee. If a position requires an RN, the person in the position is eligible for the exemption if he or she meets the other requirements. If the position requires a licensed nurse practitioner, the person in the position is not eligible for the exemption, even if he or she is a registered nurse.

New legislation in 2009 also called for additional employer reporting, and in some cases, additional contributions. This includes reporting and contributions for employees hired through third-party entities. Please see the chart at http://www.kpers.org/damemos060309_schoolupdate.html for details about contributions.

Questions?

• Toll-free, 1-888-275-5737
• In Topeka, 296-6166
• E-mail, employers@kpers.org