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A Publication for VRS Employers
December 2017 | Archives
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Your Turn to Ask Your Turn to Ask: Are local elected officials reported for benefits?

VRS Board Accepts Actuary’s Recommended Contribution Rates for Political Subdivisions

At its November 16 meeting, the VRS Board of Trustees accepted employer contribution rates for the next biennium, as recommended by the VRS plan actuary for the 589 participating political subdivisions.

Political subdivision plans are not in a cost-sharing pool, so the contribution rates are calculated based on the assets and liabilities of each individual participating employer. Although each plan has its own contribution rate based on its unique plan experience, overall, the employer contribution rates are expected to decrease for just over half of the participating employers. Others generally will see modest increases due to the assumption changes that were incorporated during this rate-setting valuation period.

  • For political subdivisions offering enhanced benefits for hazardous duty employees, the average employer contribution rate is 10.6 percent of covered payroll, down from 10.7 percent.
  • For localities not offering enhanced benefits, the average employer rate is 7.6 percent of covered payroll, down from 8.2 percent.

The funded status for most political subdivision employers improved. Local plans had an aggregate funded status of 88 percent on an actuarial basis for the fiscal year ending June 30, 2017, compared to the 85.9 percent average funded status as of June 30, 2016.

  • 570 of 589 political subdivision plans, approximately 97 percent, are funded at 70 percent or higher.
  • 538 of the plans are funded at 80 percent or higher.
  • 218 are fully funded at 100 percent or more.

In early 2018, VRS will mail actuarial reports, including the retirement contribution rate, to all political subdivisions, along with rates for other benefit programs. The new rates are effective for fiscal years 2019 and 2020, beginning July 1, 2018, and ending June 30, 2020.

See the November Employer Update for state and teacher employer contribution rates.
 


What's New in myVRS?

Members Unlock Exclusive Financial Wellness Content

Personal finance just got personal! VRS members who log into their myVRS accounts now have access to personalized and expanded content from the myVRS Financial Wellness program, powered by Enrich.

Encourage employees to access resources tailored to their needs: Using myVRS, members can delve into financial education resources tailored to their personal profiles, set personal goals and save financial plans. Members also will receive content recommendations, based on their retirement plan and age. Calculators, educational games and mini-courses focus on a variety of topics, including:

  • Managing debt
  • Home and real estate
  • Saving for goals
  • Credit cards
  • Insurance
  • Taxes

VRS is providing these resources to help members grow their knowledge and confidence in making day-to-day financial decisions, which will, in turn, aid them in preparing for retirement.

Higher Ed, Political Appointees Now Elect Retirement Plan Online

New employees who are eligible for the VRS Optional Retirement Plan for Higher Education (ORPHE) or the Optional Retirement Plan for Political Appointees (ORPPA) will elect their retirement plan online through their myVRS account.

How does it work in myVRS and myVRS Navigator? Direct your newly hired ORP-eligible employees to register for their online myVRS accounts, where they can compare retirement plan options and choose their plan. Higher education employees who elect the ORP also will choose their plan provider online.

When ORPHE- or ORPPA-eligible employees elect their plans in myVRS, employers will acknowledge the elections have been reviewed and are correct in myVRS Navigator and the appropriate deductions have been set up in payroll. For more details, refer to the November Employer Update.

 

VRS Sets New Purchase of Prior Service Rates

At its November meeting, the VRS Board of Trustees approved new rates to purchase prior service at approximate normal cost, effective January 1, 2018.

View the new rates for:

Purchases from most categories of service will be at approximate normal cost during a two-year window, beginning upon employment in a VRS-covered position or the date the member returns to active employment after an eligible period of leave. After two years, the cost increases to an actuarial equivalent cost.

The cost to purchase refunded service remains unchanged, using the current rate of 7 percent interest compounded annually.

What is approximate normal cost? The average cost of one year of VRS service credit. The cost is based on a percentage of an employee’s creditable compensation or average final compensation at the time of purchase, whichever is higher.

What is actuarial equivalent cost? The amount of money needed in today’s dollars to pay for the total value of the increase in an employee’s future retirement benefit or earlier retirement eligibility date resulting from purchasing prior service.

 

Are You Using the Correct Versions of VRS Forms?

Before you complete and send a form to VRS, take a quick moment to look at the revision date in the lower left-hand corner. If you downloaded the form some time ago and photocopy it when you need it, chances are the form is not current. VRS frequently updates its forms. To ensure faster processing of retirement and other forms, be sure to use the latest fillable VRS forms on the website.

VRS accepts faxes of all forms: Fax them to 804-786-9718. If you are on a deadline when faxing a document, please call or email to alert VRS of its pending arrival. Also, it’s helpful to use a cover sheet, particularly if you are sending the fax to a specific VRS staff member.

ICMA-RC forms sport a new look: Member forms required by ICMA-RC for the Hybrid Retirement Plan, Commonwealth of Virginia 457 Deferred Compensation Plan and optional retirement plans now feature the DCP (defined contribution plan) logo to distinguish them from VRS forms. Remember to send all DCP member and employer forms to ICMA-RC only.

The latest versions of ICMA-RC forms can be accessed online:

Your security matters: VRS does not accept forms via email, which is not considered a secure form of communication.

 

Commonwealth of Virginia 457 Plan Contribution Limits Will Increase to $18,500

The Internal Revenue Service announced that the dollar amounts participants may contribute to tax-deferred savings plans, such as the Commonwealth of Virginia 457 Deferred Compensation Plan, will increase for tax year 2018.

Commonwealth of Virginia 457 Deferred
Compensation Plan Contribution Limits
2018
Annual deferral limit for participants younger than 50 $18,500
Pre-retirement Standard Catch-Up
(not to exceed participant’s catch-up credit)
$18,500
($37,000 total)
Age 50+ Catch-Up Limit $6,000
($24,500 total)
 

How to change contributions: To increase Commonwealth of Virginia 457 Plan contributions effective the first pay period of 2018, participants should log into their online account or call 1-VRS-DCPLAN1 (1-877-327-5261) by 4 p.m. December 29.

Participants cannot use the Age 50+ Catch-Up and the Standard Catch-Up in the same calendar year. For more information on the Age 50+ Catch-Up, Standard Catch-Up, military leave make-up, one-time deferrals or investment options, refer participants to the Contributions section of the Commonwealth of Virginia 457 Deferred Compensation Plan website.

For Hybrid Retirement Plan members who also are eligible to participate in the Commonwealth 457 Plan, the annual limit applies to combined contributions they make to the Hybrid 457 Deferred Compensation Plan and the Commonwealth 457 Plan. Members wishing to contribute the maximum amount should plan accordingly. Once the limit is reached, all contributions to the Hybrid 457 and Commonwealth 457 plans should cease. Should a member participate in both a 457 plan and a 403(b) plan, the annual limit would apply individually to each of those plans.

IRS increases annual compensation limits for creditable compensation: The Internal Revenue Code (IRC) Section 401(a)(17) PDF Icon annual compensation limits for 2018 are:

  • Employees with membership dates before April 9, 1996: $405,000
  • Employees with membership dates on or after April 9, 1996: $275,000

Income over the amounts provided cannot be considered part of an employee’s creditable compensation in VRS retirement plans. Creditable compensation is an employee’s annual salary not including overtime pay, payment of a temporary nature or payments for extra duties such as pay for teachers who provide coaching or act as an adviser for special activities.

If an employee’s annual salary exceeds the 401(a)(17) compensation limit, myVRS Navigator automatically calculates creditable compensation and contributions using the limit. Employers should report the employee’s actual salary. Do not withhold the member contribution on the excess salary from the employee. Instead, pay it to the employee as wages. Other VRS benefits, such as life insurance, are based on the full, uncapped annual salary.

 

Political Subdivisions: Contact VRS if Planning to Elect Hazardous Duty Coverage

If you are considering adding enhanced hazardous duty benefits for your employees beginning July 1, 2018, contact VRS now to begin the process. Because this benefit requires an actuarial study, it takes approximately four to six months to complete the process before the coverage can become effective.

For more information, contact ZaeAnne Allen, employer coverage coordinator, at zallen@varetire.org or 804-775-3514.

 

Voluntary Contribution Deadline Is December 15: Encourage Hybrid Plan Members to Save More

Hybrid Retirement Plan members may voluntarily contribute up to 4 percent of their creditable compensation each month to the defined contribution component of their retirement plan. They may increase their voluntary contribution elections on a quarterly basis. The next quarterly deadline is December 15 at 4 p.m.

Please encourage employees to take advantage of this opportunity to maximize retirement savings. It’s quick and easy! They’ll just need to log into their hybrid plan account, click View Account for the Hybrid 457 Deferred Compensation Plan, then select Contributions and click on Change My Contribution Amount. Or, they can call ICMA-RC Investor Services at 1-877-327-5261 (select option 1). A new online calculator helps hybrid plan members see the impact of voluntary contributions and other deductions on their paychecks.

Looking for ideas to promote voluntary contributions? Download the voluntary contributions toolkit to engage, communicate with and educate your hybrid plan employees.

Take time to review your Snapshot: Accurate reporting of contributions to the defined contribution component of the hybrid plan is essential each pay period. As a best practice, take time to review your Snapshot each month to ensure you are withholding the correct amount from each employee’s paycheck.

The Creating EZLink Contribution Submissions Online webinar covers the full process, from creating an initial file through submission. If you need additional assistance, contact the ICMA-RC Defined Contribution Plans Employer Support Team at 1-877-327-5261 (select option 3).

 

VLDP, VSDP December Webinars: Helping Employees Resume Work With Accommodations

ReedGroup, VRS’ third-party administrator for the Virginia Local Disability Program (VLDP) and the Virginia Sickness and Disability Program (VSDP), will present "Partnering for Effective RTW (return-to-work)," a webinar series (access code: 925 863 036) on Wednesday, December 13. Nurse case managers and vocational rehabilitation specialists will address employers’ questions about return-to-work issues for each program.

  • The VSDP webinar will run from 10-11 a.m.
  • The VLDP webinar will run from 1:30-2:30 p.m.

 You also can join the webinar by phone:

 

LODA Training Now Available in Commonwealth of Virginia Learning Center

Employers are required by law to train employees who are eligible for Line of Duty Act (LODA) benefits. The first training must happen within 30 days of being hired and then every two years thereafter. The LODA Overview for Participants satisfies this training requirement. You can direct individual employees to www.valoda.org to view the recorded presentation.

For employers that have access to the Commonwealth of Virginia Learning Center, participants also may access the LODA training there. Use the search term "LODA Overview" to locate the course. Employees must log in to access the training.

 

 

  Announcements

Annual MBPs Provide a Checkup on Retirement Planning: Member Benefit Profiles for 2017 are now available to Plan 1 and Plan 2 members in their myVRS accounts. The MBP is a member’s annual benefit statement, which is based on information reported by an employer to VRS as of June 30. It provides information on the member’s account balance, retirement eligibility and eligibility for other benefits, such as group life insurance and the health insurance credit.

Keep Your EZ Link Account Up to Date: To ensure you get important communications from ICMA-RC, keep your EZLink account information up to date, especially email addresses. Be sure to log in periodically. Your account will be deactivated after 12 months of inactivity.

Enhanced EZ Link Dashboard: You may have noticed some changes to your employer dashboard in EZLink. In addition to the default main dashboard, six function-specific dashboards have been added to help streamline the features a plan administrator accesses regularly, such as contributions, enrollments and investments.

New to administering VRS benefits? Regardless of your title, if you help administer any of the VRS benefits provided to employees and are new to your position, we want to hear from you. Take a few minutes to introduce yourself to VRS. Our team can give you the tools and expertise you need as you get up to speed on all things VRS.

Order VRS Publications.

 

  Employer Training & Events

Classroom and webinar courses are posted on the VRS website as they are scheduled. Other e-learning modules are available through VRS University in the Virginia Learning Center.

Current Training

 

  Member Education & Events

Classroom and webinar courses are posted on the VRS website as they are scheduled. Plan 1 and Plan 2 members may register from our Education and Counseling pages for new offerings.

Several hybrid plan educational resources are available. Hybrid plan members can register for a group seminar or a one-on-one consultation to learn more about the hybrid plan defined benefit and defined contribution components as well as other VRS benefits. Hybrid plan seminars are available in various regions across Virginia.

For members who have recently retired or those close to retirement, VRS offers its Living in Retirement workshops at various locations throughout the state.

 

Financial Reporting

Be sure to bookmark the employers’ Financial Reporting section, where you can find resources and links to assist with financial reporting related to VRS-administered benefit plans. In addition, you will now find a new section with fiscal year-end reporting reminders.

 

Your Turn to Ask Your Turn to Ask

Q: Are local elected officials reported for benefits?

Only certain constitutional officers and their employees are eligible for VRS benefits, including:

  • Treasurers
  • Commissioners of the Revenue
  • Attorneys for the Commonwealth
  • Clerks of circuit court
  • Sheriffs

For these elected officials who are covered under VRS, begin reporting them when their respective term of office begins. Likewise, stop reporting an official whose term of office ends, unless the individual otherwise resumes VRS-covered service in a different position with your employer.

Other local elected officials, such as mayors, county supervisors, county board members and town council members, are not eligible for VRS benefits, including group life insurance. If you have inadvertently reported any of these officials to VRS for coverage, please contact your employer representative to discuss next steps.

 

Have a question?

Email the Employer Support Team or contact your Employer Representative.

Important Email Notice: Do not send personal or confidential information, such as a Social Security number, by email. VRS will send only non-confidential replies.

Copyright © 2017 Virginia Retirement System

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