north dakota public employees retirement system...health savings account (hsa) pre-tax payroll...
TRANSCRIPT
Welcome!2019 Employer Conference
1
Reminders…
• Phones – vibrate mode
• Calls – outside the room
• Visit with vendors – not available during lunch
• NDPERS team available for questions
• Breakout sessions during the afternoon
• Follow-up survey – help us improve2
Our Goals 2019 Employer Conference
NDPERS aims to update your team on any• Legislation Changes
• Group Insurance – what’s the latest Wellness in your Organization Online Wellness Portal Transition
• Retirement PlansVoluntary Supplemental Savings Resources for your Employees: 457 Deferred Compensation
• Understand your Payroll Reporting (Breakout sessions)
• Employee Assistance Program Eligible Providers 2019 – 2021 3
NDPERS Legislative Update• Retirement Plan Update• Legislative Efforts
1
Main Retirement Plan UpdateDefined Benefit (DB) Hybrid Retirement Plan
• According to our July 1, 2018 valuation, the Main NDPERS Plan was never projected to reach 100% funding – we were projected to become insolvent in 2106
• Because of that, the Governmental Accounting Standards Board required us to use a “single discount rate” in determining the liabilities that the state and participating political subdivisions must report in their financial statements and CAFRs
• Using the single discount rate – 6.32% – to determine liabilities results in a 50% increase in those reported liabilities compared to if we were ever projected to reach 100% funding
• The additional liabilities that the state and political subdivisions have to report are causing a significantly negative effect on those financial statements, and could eventually affect bond ratings
• Accordingly, it was imperative that statutory changes were made that would get us back on the course to 100% funding
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Retirement Plan Update
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Legislative Efforts• PERS submitted five bills for Legislative consideration:
• SB 2045 – Technical Corrections Bill• SB 2046 – Retiree Health Insurance Credit (RHIC) Termination for new hires• SB 2047 – Retirement Multiplier Reduction for new hires• SB 2048 – Fourth Year of the Recovery Plan – increase contributions by 1% for
both the employee and the employer• SB 2049 – Modify the Final Average Salary Calculation
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Funding Bills
Contributions + Investment Income = Benefits + Administrative Expenses
SB 2045 – Technical Corrections• Clarifies that only vested Highway Patrol members can purchase certain service
credit• Retiree Health Insurance Credit may be used for any vision, dental, or long-term care
coverage, not only those offered by NDPERS• Provides that if PERS elects to self-insure the prescription drug coverage only, the
plan is not required to have stop loss coverage and does not need to be lower cost than a fully insured plan
• Allows employer contributions to the state’s section 457 deferred compensation program
• No actuarial impact• Passed and signed by the Governor
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SB 2046 – Retiree Health Insurance Credit (RHIC)• Maintains RHIC benefits for employees hired before January 1, 2020• Employees hired after December 31, 2019 will not receive RHIC benefits• Employer contributions (1.14%) for employees hired after December 31, 2019 are re-
directed to the NDPERS retirement plan• Consultant notes:
• RHIC Plan still remains solvent under current actuarial assumptions• Main Plan moves from becoming insolvent in 2106 to being eventually fully funded• Possibly lowers Main system unfunded liability for GASB reporting• Increases benefit for Defined Contribution Plan members• Creates benefit inequity between current and new employees• Future changes to actuarial assumptions, especially assumed rate of return, may create an
unfunded liability• Passed and signed by the Governor
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SB 2046 – Retiree Health Insurance Credit (RHIC)
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Funded Ratio
Contribution Percentage
Projections are under our previous assumed rate of return
SB 2047 – Retirement Multiplier
• Maintains same retirement multiplier (2.0%) for members first employed prior to January 1, 2020
• Members first employed after December 31, 2019 will have a 1.75% multiplier• Benefit = Final Average Salary X Years of Service X Multiplier• Removes continuity between NDPERS and NDTFFR• Creates benefit inequity between current and new employees
• Consultant Notes• Without any change, NDPERS will be insolvent in 2106• Because of the recent adoption of a new assumed rate of return, this change only
postpones the insolvency of the system. Together with SB 2046, however, the Main PERS Plan is projected to be 100% funded in 2110
• Passed and signed by the Governor8
SB 2048 – Contribution Increase- Fourth Year of Recovery Plan
• Increases the employer and employee contributions by 1.0% each under the main PERS defined benefit and defined contribution plans effective 1/1/2021
• Increases temporary employee contributions by 2% to the main PERS plan and defined contribution plan
• Completes the fourth year of the four-year recovery plan NDPERS first proposed in 2011• Legislative Assembly approved the first two years of the recovery plan in 2011 – 1.0%
increase in both employer and employee contributions for two consecutive years• Approved third year of recovery plan – an additional 1.0% employer and employee
increase – in 2013• This is the fourth year of the recovery plan
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SB 2048 – Contribution Increase- Fourth Year of Recovery Plan
• Consultant Notes:• Current contribution rate is insufficient to ever pay off the $1.1 billion unfunded actuarial
accrued liability• Under current actuarial assumptions the main PERS plan will be insolvent in 2106• With the contribution increase, under the previous actuarial assumptions the main PERS
plan would have been 100% funded in 2058; we do not have an updated projection• Increases benefits for Defined Contribution Plan members
• Passed the Senate 45-2• The House removed everything in the bill and replaced it with a mandatory study by
Legislative Management during the interim, and passed the amended bill.• The Senate defeated the bill as amended.
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SB 2048 – Contribution Increase- Fourth Year of Recovery Plan
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Projections are under our previous assumed rate of return
Combined SB 2046, 2047 and 2048
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Projections are under our previous assumed rate of return
SB 2049 – Final Average Salary Calculation• Prospectively changes the definition of “Final Average Salary” (FAS) to level salary
fluctuations resulting from different pay schedules• Changes FAS to the average of the three highest periods of twelve consecutive
months in the last 180 months• Current FAS is the average of the highest thirty-six months out of the past 180 months• Current FAS provides employees who are paid weekly or bi-weekly a higher retirement
benefit than was intended under the applicable statutes• Provides that FAS will be greater of FAS at retirement or as of December 31, 2019• Effective for members who terminate employment on or after January 1, 2020• Consultant Notes:
• No actuarial effect because currently the actuary determines liabilities using an annual salary
• The proposed change is expected to treat members similarly regardless of pay schedule• Passed and signed by the Governor
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Other Legislative Efforts • HB 1028 – makes changes in the event we self-insure the health plan – passed and
signed• HB 1374 – Requires the NDPERS Board to use a transparent Pharmacy Benefit
Manager (PBM)• HB 1419 – would have closed the Main PERS plan and required new employees to go
to the Defined Contribution plan – failed• HB 1499 – would have limited the jurisdiction of the Employee Benefits Programs
Committee – failed• SB 2227 – the Governor’s PERS funding bill – combined SBs 2046, 2047 and 2048 and
added a $265 million cash infusion – failed• HCR 3027 – Legislative Management study of opening the PERS health plan to
terminated employees – passed the Senate and House• SB 2023 – PERS Appropriations Bill – Passed with most of our funding intact 14
GROUP INSURANCE 4
Group Insurance Overview
• Insurance Plan Renewalso Health o Life o Vision
• Employer Based Wellness Program Renewal
• Health Savings Account (HSA): Pre-tax Payroll Deductions Available for High Deductible Health Plan (HDHP) Participants
• HDHP Possible Option for Political Sub-divisions5
Health Insurance PlanPlan Renewal
• Renewed with Sanford Health Plan for July 1, 2019 –June 30, 2021
• No plan design changes• Emails distributed in early
May to employers with new premiums
What’s next?Health Plan will be out to bid for July 1, 2021 biennium 6
Life Insurance Plan Plan Renewal
• Renewed with Voya Financial for July 1, 2019 – June
30, 2021
• No plan design changes
• No premium changes
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Vision Insurance PlanPlan Renewal
• Renewed with Superior
Vision for January 1, 2020 –
December 31, 2021
• No plan design changes
• No premium changes
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Upcoming Possible Renewals Insurance Plan
Dental Insurance Plan Delta Dental renewal possible for January 1, 2021 –December 31, 2022 contract period
Flexible Spending Accounts (FSA) Plan ASIFlex renewal possible for January 1, 2021 – December 31, 2022 contract period
• Medical FSA• Dependent Care FSA
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Employer Based Wellness Program2019 – 2020 Plan Year
Participating employers: 190 of 239 total employers• 109 State Agencies, University Systems & District Health Units
• 33 Counties
• 14 Schools
• 17 Cities
• 17 Political Subdivisions
• Receive 1% premium discount
• 97% of covered employees work for employers offering worksite wellness 10
Employer Based Wellness ProgramWho to Contact?
Questions about discounts and funding
• Employer Based Wellness Program (1% Premium Discount)
• Wellness Benefit Funding Program (Funding Assistance)
Rebecca Fricke at
(701) 328-3978
Wellness Program Assistance (Ideas for activities & general questions)
Sanford Health Plan Wellness Team
(844) 742-0014 11
Health Savings Account (HSA)Pre-tax Payroll Deduction Option
Option to pre-tax employee deductions to a Health Savings
Account
Requirements:
• Payrolls paid on or after August 1, 2019
• Only available to High Deductible Health Plan (HDHP) members
Information to HDHP members:
Information to impacted HDHP participants will be sent prior12
Employer Requirements1. Monitor IRS Contribution Limits
• PeopleSoft will have maximum limit amounts built-in• State employer contribution takes precedence over employee
contributions in meeting limits• For 2019, the limits are:
• Single HDHP Coverage: $3,500• Family HDHP Coverage: $7,000• Age 55+ Catchup: $1,000
• Employee responsible for requesting refund of excess contributions
2. Employer responsible for reporting all state paid & employee payroll contributions to the HSA on the employee’s W-2 tax form 13
Health Savings Account (HSA)Pre-tax Payroll Deduction Option
IRS requires employers to offer this option through their Section 125 Flexible Spending Account (FSA) Plan – commonly referred to as FlexComp by NDPERS.
Employers on NDPERS FSA
• State agencies on OMB PeopleSoft and Higher Education agencies on Higher Education PeopleSofto Option availableo No further action to implement needed
• State agencies NOT on OMB PeopleSoft & District Health Units o Option availableo Modification to payroll system requiredo Notice must be provided to NDPERS when payroll system has been
configured14
Health Savings Account (HSA)Pre-tax Payroll Deduction
Employers NOT on NDPERS FlexComp
Garrison Diversion & District Health Units NOT on NDPERS
Flexible Spending Account (FSA) Plan – commonly referred
to as FlexComp by NDPERS.
o If offering, set-up appropriate payroll deduction
o Notice to be provided to NDPERS that employer offering option
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Health Savings Account (HSA)Pre-tax Payroll Deduction
HDHP Option for Political SubdivisionsPending NDPERS Board Action
a. NDPERS Board to consider allowing political subdivisions to
participate in the High Deductible Health Plan (HDHP)
b. If approved, NDPERS will administer the HDHP but will not
administer a Health Savings Account (HSA) on behalf of the
political subdivision
Political subdivision would have option to set-up their own HSA outside
of NDPERS
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HDHP Option for Political SubdivisionsHere’s how it may work
• Non-grandfathered plan
• Only option available to all employees of
the political subdivision
• Only large political subdivisions (51 or more
employees) could elect this plan per
Affordable Care Act regulations
• It would require new contract between
NDPERS and the political subdivision
• Employer would only be able to elect to
participate in the HDHP on a calendar year
basis (January 1 – December 31)
• If the employer elects to discontinue
participation in the HDHP at a later date,
the employer could only participate in the
NDPERS non-grandfathered PPO/Basic plan
• Employer could not re-join the
grandfathered PPO/Basic17
HDHP Option for Political SubdivisionsNext steps if approved
If NDPERS Board approves option,
• More information will be sent via email to political subdivisions
on the NDPERS health plan that will outline rates, participation
requirements and enrollment details
• Earliest this option would be available would be January 1, 2020
plan year and is subject to NDPERS Board action
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Questions?
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1
Dakota Wellness Program
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Exercise, sit less, move more
Get Moving at Work
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• High blood pressure• Tobacco use• Obesity• Unhealthy diet• Blood sugar levels• Stress level
Health risk factors
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Another risk factorSedentary lifestyle
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What does your typical day look like?
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Are you stuck to your chair?The average American spends more than 6 hours a day sitting.
• Increases likelihood of chronic disease
• Regular exercise does not counter prolonged sitting
• Alternating between sitting/standing or movement breaks
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Sitting damage
• Postural distortions • Inhibits lung capacity• Compresses nerves and
vascular system• Inhibits our body to use fat as fuel• Chronic disease
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Exercise is a part of your job
• Improved concentration• Sharpen memory• Faster learning• Prolonged mental stamina• Enhanced creativity• Lower stress• Elevates mood• Increases productivity• Improves interactions • Go home feeling satisfied
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If you have to sit…Recharge your body
• Proper ergonomics• At least 30 minutes of
exercise a day• Break it into 5 or 10
minutes blocks
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• Feet flat on the floor• Hips level• Neutral spine• Shoulders and ears align• Avoid looking down or to the side• Request an ergonomics assessment
SittingGood Ergonomics
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StretchingRecharge your body
Ear to shoulder
Chest / back Shoulder shrug
Back flexion
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Find balanceHow am I doing?
Excellent
>50 seconds
Good 40-50 seconds
Average
25-39 seconds
Fair 10-24 seconds
Poor <10 seconds
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Get your heart rate upSqueeze it in
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Reduce sedentary timeHow does it look for your?
• Stand while on the phone at work• Walking meetings• Use bathroom or water fountain
furthest away from your desk• Walk to a co-workers desk• Use the stairs instead of the elevator• Stand during a meeting
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Reduce sedentary timeAccountability
• Set reminders on your phone to move• Take a 1-3 minute break every hour
during the day to stand or move • Keep daily exercises posted on
your desk• Get a pedometer/fitness watch and
track steps• Aim for 10,000/day
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Ask yourself: Does this task require me to sit?
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Increasing exerciseMake it fun and easy
• Identify an activity you enjoy• Improve performance• Become part of a group• Be prepared• Make it convenient• Wear comfortable clothing
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Thank You!
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Dakota Wellness Program$250 incentive
• There are 3 ways to earn your $2501. Fitness center reimbursement2. Worksite events (vouchers)3. Online wellness portal
• Employees are required to take the annual health assessment in the wellness portal in order to redeem points or receive fitness payments
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Enhanced Online Wellness Portal
July 1, 2019
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Online Wellness PortalNew Features
• Live chat with a wellness coach
• Ask a doctor
• Resources: recipes, exercise videos, guided meditations, and several health trackers to meet your health goals
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Online Wellness PortalSame ways to earn points
• Tracking - Steps, cardio, strength, fruits/veggies, hydration, healthy snacks, and weight
• Backtracking is available• Steps can be auto-tracked by syncing a wearable device
• Sessions - Each month a new health topic is released
• Doctor Visits - Annual checkup and dental visit
• Other: If you are enrolled in Tobacco Cessation, Healthy Pregnancy, or About the Patient Diabetes Management programs, you can also earn points
23
Online Wellness PortalApp for mobile devices
• My StayWell
• Visit the Apple App or Google Play store and search for “My StayWell."
• NOTE: The My StayWellApp is NOT available on iPads/tablets.
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Dakota Wellness ProgramWellness portal transition
• If a Health Assessment was completed in 2019 before the transition, members do not need to retake a 2019 assessment to redeem points or receive a fitness center reimbursement.
• All points earned from January 1 through June 30, 2019 will be available for redemption in the online redemption center
• Access to the new wellness portal is at sanfordhealthplan.com/memberlogin, there is no need to create any new accounts to access the wellness portal
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Online Wellness PortalEngage in your health and well-being
• Enhanced wellness portal available July 1, 2019 will be available at sanfordhealthplan.com/memberlogin
• Current members who engage in the online wellness portal will be notified of the change
• Live webinars will be available for employees to attend in August to learn about the Dakota Wellness Program and enhanced portal
• Watch for a registration email to distribute to employees
• Updated FAQ and handouts to distribute to employees to engage them in their 2019 wellness benefit
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Questions?
RETIREMENT OVERVIEW 20
Employee Enrollment Kits/FormsAvailable Online
New Hire Kit/Forms• Mandatory Participation
Permanent employee meeting “20/20 Rule”o Must be enrolled in ESS immediatelyo Submit beneficiary form to NDPERS
• Optional Participation o Temporary employee or o Part-time employee
Notice of Transfer• Transfer of employee benefits • Document unused sick leave balances 21
Employee Separation Kits/Forms Available Online
Retirement• Application must be received and on file with NDPERS 31 days before
benefit payments begin • Unused sick leave application must be on file with NDPERS before the last
day of the month in which member leaves employment
Disability Retirement
Refund/Rollover• Off covered payroll for at least 31 days • 60-90 days processing• No RTW within 60 days
Deferred Retirement• Leave account with NDPERS• AUTO REFUND
• Less than $1,000• Less than 3 years of service (not vested)
22
SB 2045Retiree Health Insurance Credit (RHIC) Expanded
23
SB 2045 – RHIC UpdatesExpanded Option for Reimbursement Effective August 1, 2019
What after-tax insurance premiums* are eligible? (NDPERS sponsored or non-NDPERS sponsored)
• Health**• Medicare – Part B, Supplement, Part D Prescription Drug
Plans**• Dental (previously NDPERS only)• Vision (previously NDPERS only)• Long-Term Care (previously NDPERS only)
*/** reference next slide24
SB 2045 – RHIC UpdatesExpanded Option for Reimbursement Effective August 1, 2019
What premiums are not eligible?• Life Insurance • Supplemental Coverage Plans (Accident, Disability,
Cancer, etc)
*If you have an employer-sponsored health plan, premiums must be after-tax deduction from your pay check. (Pre-tax premiums are ineligible.)
**Medical sharing groups are not engaged in the business of insurance and are not regulated. Therefore, these groups are excluded as eligible insurance plans. 25
INTEREST RATE
Actuarial Investment Return Assumption Impacts Interest Rate Effective January 1, 2020
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Actuarial Investment Return Assumption Lowered from the current 7.75% to 7.50%*
Based on:• Actuarial recommendation – Gabriel Roeder Smith & Co. (GRS)• Other public sector plans• NDPERS historical returns
*Effective date is January 1, 2020
Impacts interest rate on: • Member Retirement Accounts• Service Purchase with Payment Plans 27
Interest RateMember Retirement Account
Under 71-02-01-01 (e), the interest on a member account is one-half of one percent less than the actuarial interest assumption.
This will lower the current interest rate of 7.25% to 7.00% on all member accounts. 28
Current New
Actuarial Interest Assumption(Investment Return)
7.75% 7.50%
Minus one-half of one percent Administrative Code 71-02-01-01 (e)
.50% .50%
NDPERS Interest Rate Payment on Retirement Accounts
7.25% 7.00%
Interest RateService Purchase with Payment Plans (Only)
• Under 71-02-03-02.2, if a purchase payment installment method
is used, simple interest at the actuarial rate of return must accrue
monthly on the unpaid balance.
• This will lower the simple interest cost on all open active
purchase accounts prospectively from 7.75% to 7.50% .
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SB 2046 & SB 2047
2020 Tier Defined Benefit Plan
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SB 2046 – Retiree Health Insurance CreditNew Hires Effective January 1, 2020
• Discontinues the Retiree Health Insurance Credit (RHIC) for new employees
Plans Impacted • Defined Benefit (Main) Hybrid Retirement Plan• Defined Contributions Plan• Transfers the 1.14% RHIC employer contribution to the Defined
Benefit and Defined Contribution retirement plans prospectively
Plans NOT Impacted • Public Safety Plan• Judges Plan• Highway Patrol Plan
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Current Defined Benefit Hybrid (DB) PlanHow Employee Retirement Contributions are Allocated
32
NDPERS distributes into these accounts
Your employer sends to PERS
15.26%of your gross earnings each pay period
(does not include overtime)
7%Employee Account
(Your MemberAccount Balance)
7.12%Employer Account
(General Pool of Funds)
1.14%Retiree Health Credit
Defined Benefit Hybrid (DB) Plan2020 Tier - For new hires on or after January 1, 2020
33
NDPERS distributes into these accounts
Your employer sends to PERS
15.26%of your gross earnings each pay period
(does not include overtime)
7%Employee Account
(Your MemberAccount Balance)
8.26%Employer Account
(General Pool of Funds)
0.00%Retiree Health Credit
SB 2047 – Reduction of Benefit MultiplierNew Hires Effective January 1, 2020
• Reduces the retirement benefit multiplier for new employees
• Plans Affected: • Main Defined Benefit Plan• Public Safety Plan
• Plans NOT Affected: • Judges Plan• Highway Patrol Plan
34
Defined Benefit Hybrid (DB) PlanCurrent Retirement Benefit Formula
• Final Average Salary (FAS)
• Years of Service (YOS)One month of service for each contribution
• Benefit Multiplier2.00%
35
FAS x YOS x 2% = Single Life Monthly Benefit
DB Retirement Benefit Formula 2020 Tier - For new hires on or after January 1, 2020
• Final Average Salary (FAS)
• Years of Service (YOS)One month of service for each contribution
• Benefit Multiplier1.75%
36
FAS x YOS x 1.75% = Single Life Monthly Benefit
SB 2049Final Average Salary (FAS) Calculation
37
DB Retirement Benefit FormulaFinal Average Salary (FAS) Calculation Method
What is FAS?A factor used to determine your monthly retirement benefit (pension)
Currently (until December 31, 2019)The average of your highest 36 salaries during the last 180 months worked
Upcoming (after January 1, 2020)
The higher of • average of your highest 36 salaries calculated on December 31, 2019• or the average of the three highest 12-month consecutive periods 38
FAS x Years of Service x Multiplier = Monthly Retirement Benefit
Reason for change in the FAS calculation methodPayroll Cycles Matter
Weekly / Bi-weekly Seasonal
• Months without earnings
are excluded
39
• Bi-weekly schedule has two
months/year with three
paychecks
Salary fluctuation resulting from different pay schedules are smoothed
with the upcoming FAS calculation method effective 1/1/2020
What’s the impact to new retirees?After December 31, 2019
Members in these NDPERS Retirement Plans: • Defined Benefit (Main)• Public Safety • Judges• Highway Patrol
• Ensures greater consistency in benefits being paid to all retirees
• Members retiring after December 31, 2019 are “grandfathered”
FAS will not be lower than the FAS entitled to as of 12.31.2019
40
Impact to Membership Examples
41
Likely Not Impacted Likely Impacted
Members that retire or terminate employment prior to December 31, 2019 as FAS is not expected to change
Members terminating or retiring after December 31, 2019 but FAS will not be lower than the FAS entitled to as of December 31, 2019
Members paid monthly or semimonthly as FAS is not expected to change
Members who turn in weekly timesheets (paid on a weekly or bi-weekly basis) but FAS will not be lower than the FAS entitled to as of December 31, 2019 Temporary or seasonal members (even if paid monthly or semimonthly) as FAS calculation may be higher
Summary – FAS Change
• Compares new FAS calculation to FAS calculated under old
methodology as of December 31, 2019, whichever is higher
• Limits the impact to members retiring in the short-term –
“grandfathering” members
• Prevents a decrease in the FAS and monthly accrued benefit
• Member Self Service (MSS) will allow members to compare
retiring now to delayed retirement date FAS – this fall 42
NDPERS Home Page
43
PERSLink Member Self Service
Online Portal
Mobile App
44
View/update benefit plans & personal profileRetirement benefit estimatesService purchase estimates
Member Self Service (MSS) Login
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Step 1
46
Step 2
Benefit Estimates through MSS
Step 3: Enter Retirement Date Enter Annual Percent Salary Increase (optional)
47
48
Step 4: Add Pending Service Purchases
Step 5: Results
49
This example may not be interpreted as a personal calculation
Questions?
50
On-site services from TIAA for:North Dakota Public Employees Retirement System & North Dakota University System
Agenda
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We want to help you answer the following questions What is the NDPERS 457(b) Deferred Compensation Plan?
What are the NDUS 403(b) Tax-Deferred Annuity & 457(B) Deferred Compensation Programs
What are the advantages of participation? What are the on-site services provided by TIAA’s financial consultants?
Employer Sponsored Retirement Plans
53
North Dakota Public Employee Retirement System – NDPERS
Primary Retirement Plan: (Mandatory Contributions) Defined Benefit Pension Plan (NDPERS)
or
Defined Contribution Retirement Plan (TIAA)
Supplemental Plan: (Voluntary Contributions) 457(b) Deferred Compensation Plan
– NDPERS Companion Plan (through TIAA)– Choose from 8 other approved Investment Providers
Employer Sponsored Retirement Plans
54
North Dakota University System – NDUS
Primary Retirement Plan: (Mandatory Contributions) Defined Benefit Pension Plan (NDPERS)
or
Defined Contribution Retirement Plan (TIAA)
Supplemental Plan: (Voluntary Contributions) 403(b) Tax-Deferred Annuity Plan
and/or (an employee can contribution to both plans if desired) 457(b) Deferred Compensation Plan
What is the 457(b) Deferred Compensation Plan? What is the 403(b) Tax-Deferred Annuity Plan?
Designed as a compliment to a Defined Benefit Pension Plan or a Defined Contribution Retirement Plan: 457(b) Deferred Compensation Plan: A voluntary,
supplemental retirement plan for eligible employees of participating governmental agencies.
403(b) Tax-Deferred Annuity Plan: A voluntary, supplemental retirement plan for eligible employees of non-profit 501(c)(3) organizations, such as NDUS schools.
Both plans offer an opportunity to supplement retirement savings with pre-tax contributions and tax-deferred growth on investments!
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Contribution Limits for the 457(b) and 403(b) Plans
The maximum regular annual contribution: In 2019, the maximum contribution
is less than 100% of compensationor $19,000.1
You may change your contribution amount at any time or suspend contributions and start again at alater date.
1. Adjusted for cost-of-living in subsequent years.
56
457(b) Additional Contribution Options
57
Catch-up Contributions
If you are close to retirement or over age 50, you may be able to contribute more than the regular contribution limit. There are two catch-up options available: 50+ Catch-up – Participants age 50 or older may contribute the maximum
annual limit ($19,000) plus an additional $6,000 for a total of $25,000.1or
3-year Catch-up: Participant within 3 years of normal retirement date may contribute the regular maximum annual limit plus missed contributions from the previous years up to $38,000 in 20191. An employee must apply for this option to determine if they are eligible for this catch-up contribution.
1. Adjusted for cost-of-living in subsequent years.
403(b) Additional Contribution Options
58
Catch-up Contributions
If you are close to retirement or over age 50, you may be able to contribute more than the regular contribution limit. There are two catch-up options available: 50+ Catch-up:
– Participants age 50 or older may contribute the maximum annual limit ($19,000) plus an additional $6,000 for a total of $25,000.1
or 15-Year Special Catch-up:
– Participants with 15 years of employment at the same institution may be able to contribute $3,000 additionally each of their final 5 years of employment prior to retirement. However, eligibility for this catch-up contribution must be determined each year and involves identifying the historical contribution record for that employee.
1. Adjusted for cost-of-living in subsequent years.
457(b) Deferred Compensation Investment Options
59
NDPERS has identified eight (8) companies approved to provide investment services under the NDPERS deferred compensation plan as follows:
American Trust Center
AXA Equitable
Bank of North Dakota
Mass Mutual
Jackson National Life
Nationwide Life
VALIC
Waddell & Reed Financial Services
In addition to the above, the NDPERS Companion is also an option.
What is the NDPERS Companion Plan?
60
An investment option under the plan that is set up as a trust under the NDPERS Board.– The board selects and monitors the investments offered under the
Companion Plan.
The Plan has no annual account fees or sales loads.
The Companion Plan investment portfolio includes Life Cycle funds, active and passively managed funds, as well as access to a self-directed brokerage account. Funds information is available on our web site at TIAA.org/ndpers.
TIAA is the record-keeper for the Companion Plan and provides both group and individual consulting services to participants at no additional cost.
The Plan has a convenient “Expedited Enrollment” option.
What are the advantages of participating in a 457(b) or 403(b) Plan?
61
You supplement your retirement savings through voluntary tax-deferred contributions into an account in your name.
You may select the investment provider(s) of your choice from the approved list.
You are in control of selecting your account investment allocation.
You may begin or suspend participation or increase or decrease your contributions at any time.
Several options available for distribution of your account:– Lump sum– Periodic payment– Defer to a later time– Rollover to another plan
What services are available through TIAA’s financial consultants?
TIAA consultants are available to visit any NDPERS locations across the state or virtually online.
Visits can include:
Individual meetings to address questions and assist with financial planning
Group financial educational presentations
Services are available at no additional cost
Contact us to schedule a visit!
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What services are available through TIAA’s financial consultants?
63
Personalized Objective Advice – At no additional cost
Whether you need help with a retirement income strategy, recommendation on allocating your assets, or understanding the benefits of the retirement plans offered through your employer, we are prepared to offer you customizable solutions.
Our approach helps ensure you are receiving high quality objective support in planning to meet your individual needs.
This is a service that NDPERS & NDUS has established for you and your employees – please invite us to help!
What services are available through a TIAA financial consultant?
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To schedule a one-on-one session from one of our financial consultants, contact: Bismarck:
– Teresa Cobucci: [email protected]
– Jim Milleville:[email protected]
Grand Forks:– Scott Roche: [email protected]
Or you can schedule online or over the phone: Call:
– 800-732-8353 Weekdays 7a.m. – 7p.m. CT
– TIAA.org/schedulenow Online:
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(05/19)
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Break!Enjoy your lunch. Return by 1:15 pm – Vendor Fair
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UNDERSTANDING PAYROLL REPORTING
Political Subdivisions & non-PeopleSoft State Employers
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Enhancing the Member ExperienceMember Self Service (MSS)
Multi-Factor Authentication Helps protect member data and ensures accuracy of demographic information. Member must complete every 9 months.
Online Replies through MSSNDPERS may respond to members through MSS after they submit a message (ticket) through MSS.
Coming soon…Retirement Application WizardsMembers will be able to apply for retirement online – including deferral/refunds/disability/normal.
Portal Upgrade Transition to a mobile friendly and more efficient platform in Spring 2020.
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Employer Self Service (ESS)OverviewOrganization MaintenanceRegular tasks you should review• Add/terminate employees • Enroll in plans – have employees log into MSS and enroll• Leave of absence (LOA) – must be entered in ESS• Seasonal employees – update in ESS if an employee’s seasonality changes• Review and update authorized agents
Payroll Headers Think of headers as NDPERS invoices. Your organization can’t pay before the invoice (header) is ready.
o Posted status for retirement and insurance o Valid status for 457 Deferred Compensation & Purchases
Watch for adjustment reports. 3
Submit reports & payments to NDPERS
Processing Payroll
o Make sure your system rounds to 2 places.
o Agree to pay NDPERS contribution total on manual reports.
o Upload reports to pay your payroll amounts.
Debit ACH Payments (Mandatory effective 7/1/2019)
o Ensures accuracy of your organization’s payroll.
o Print remittance report for invoice backup on what is paid.
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Coming soon in ESS…Portal Upgrade Transition to a mobile friendly and more efficient platform in Spring 2020.
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Reporting ELIGIBLE Retirement Contributions 6
Clarifying what is NOT considered Wages or SalaryFringe benefits such as, but not limited to:
• Overtime or Straight Overtime
(Straight time)
• Early Retirement Incentive pay
• Severance Pay
• Shift Differential
• Lump sum payouts of unused sick
leave, personal leave, vacation or
annual leave
• Retention or Recruitment bonuses
• Workforce Safety and Insurance
Benefits
• Medical Insurance
• Oil Patch Add-on
• Disability insurance premiums or
benefits
• Salary received by employer in lieu of
previous employer-provided fringe
benefits, ex. health care.
• Amounts contributed by the employer
to a qualified Section 125 cafeteria
plan (Flex Comp), 401K, 403B, 414(H)
or 457 plan
• Housing allowance or Transportation
expenses
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Your report should be in Posted statusHIT the DEBIT ACH button to initiate payment overnight
How to FIX report in Review?
1. Check your details to see if any are in Review.
If so, click on Review to view Errors/Warnings and to
analyze the employee’s information.
2. Review your Uploaded Totals for Wages or Contributions.
Your total does not match NDPERS. 8
Monthly Retirement ReportsNext Steps
Most Common Reporting Errors
1. Reporting change or variance in salary amount
2. Contributions and wages are listed as zero
3. Contributions are reported for an LOA period
4. Trying to include an adjustment in the regular report
5. Employee’s information does not exist or is incorrect
6. Uploading the report more than once
7. Submitting a late report 9
How to report salary variances?
What is a salary amount change or variance?The wages increased significantly from previous report.
How to FIX it?Add a comment. 1. Explain in detail the reason for the increase in wages
• What it is for,
• When it should be applied and
• How much to each reporting month?
2. Click SAVE,
3. Inform NDPERS to suppress the warning. Do not ignore the detail.
Ignoring DELETES the wages and contributions. 10
How come there is a zero?
Contributions and wages must not be null or zeroWages or contributions were not received for the member or they are in the wrong reporting bucket.
How to FIX it? Check your payroll records and contact NDPERS to correct.
It’s true: Member has ZERO wages this month!1. Add a comment explaining this. 2. SAVE the comment.3. Click the Ignore button.
This is the only case where you would ignore a detail! 11
Any tips to report Leave of Absence (LOA)?
Contributions are reported for an LOA period.
Is the member still on LOA?YES! Add notes in the comment box explaining why there are wages.
Has the member returned from the LOA? YES!
• Enter the return date in ESS in the comment box.• NDPERS will update the records, suppress the warning, and post
the detail.
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How can I provide adjustments?
Did your report already post?Any adjustments must be reported on an adjusting report.
Examples of adjustments• Negative adjustments• Bonus/Retro wages • Missed wages
13Annualize(spread over 12 months)
Eligible bonuses
I did not receive an ESS error messageFinal Tip
The wages posted without an error in the wrong month!
• Create an adjusting report to correct the error OR
• Contact NDPERS
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How to correct member’s information?
Defining “Employment does not exist”
• Employee name does not match our records. Name change due to a significant life event such as marriage or divorce.
• SSN may have been transposed.• Employee’s Retirement and Beneficiary forms have not been
received by NDPERS or • Employee has not been set up in ESS, which creates the PERSLink ID.
How to FIX it?1. Employee must submit the Retirement and Beneficiary forms.2. Employer must setup employee in ESS.3. NDPERS will post the details. 15
Has my organization uploaded the report already?
ESS error message Employer report already exists for the combination Person/Org
What does this error mean?• The entire report may have been uploaded twice by accident.• An adjustment may have been included on a regular report for a
member already on that report.
How to FIX it?Adjustment needs to be moved to a separate adjusting report.
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We did not report on timeReports and its payments are due the 15th of the month following the reporting month.
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Report or detail was not posted timely
Interest has been accessed
Report will not post automatically
NDPERS will need to post the report manually
How to write a great comment?Real employer examples
Wages include a performance bonus of $500.00 Please annualize from June 2016-May 2017. (12 months)
Member was on unpaid leave from March 27- April 17 Resulting in a lower reported wage in April 2017. May’s report should be back to the normal reporting wage.
Wages include a retro wage increase of $750.00 that was not approved by the board until this month and was effective 1/1/17. Please allocate the wages. $150 each month for January – May 2017.
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More inspirationWriting great comments
Wages are high in May because they include missed wages for April 2017. Please move $3,200.00 from May to April 2017. Correct wage for May 2017 should be $3,625.00.
Member came in and worked for 2 days, but is still out on a maternity LOA.
Member is an hourly employee and worked less hours last month.
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How does it look in ESS?Let’s explore
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457 Deferred Compensation
Quick reminder… what is it?• Voluntary, supplemental
retirement savings program • Increase employees’ personal
savings for retirement • Reduce employees current
taxable income by pre-taxing the payroll deduction
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When do employees pay the taxes?
• Generally at retirement when members withdraw money
• Taxed as ordinary income
Revisiting employee eligibility457 Deferred Compensation
• Employees of the State of North Dakota • Employees of participating political subdivisions• Full- time employees either need to be full-time or• Part-time permanent employees meeting the 20/20 rule
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Temporary employees and independent contractors are NOT eligible to participate.
How can employees enroll?
Employees can enroll, adjust, suspend the contribution anytime through:
• MSS • Completing the Companion Plan (TIAA) Quick Enrollment (SFN
54362)• Completing the 457 Deferred Compensation Plan Enrollment (SFN
3803) to select another eligible providerSelected provider will assist in completing the required forms to open an account.
IRS regulations require employees to make the deferral election in the month prior to when the wages are earned.
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Eligible Contributions457 Deferred Compensation
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Minimum$25 per month
MaximumThe lesser of: 2019 Annual IRS Limit
$19,000/year
OR
100% of Taxable Compensation
Special Eligible Contributions457 Deferred Compensation
Lump Sum Payments Accrued annual leave Unused sick leave Back pay
Catch-Up Contributions Age 50+ Annual Catch-up: $25,000 (SFN 3803) Regular 3-year Catch-up: $38,000 (SFN 51501 & 3803) 3 consecutive calendar years
(prior to year of “normal” retirement) One time only – NDPERS approved
Cannot exceed annual IRS limits28
Benefit Enrollment ReportUnderstand the importance
What the purpose of this report?Generate the report timely to capture new enrollments and changes in contribution amounts including election updates made by the employee on MSS.
Pay period start date vs Pay check date• The pay period start date reflected on the report is NOT the
pay check date.• Contributions should not be withheld prior to the date listed.
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Benefit Enrollment ReportEnhancements to make it easier
1. Differentiates regular contributions and lump sum payouts
for annual/sick leave.
2. If employees that are no longer employed, withdraw their
funds those no longer appear on the report.
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Your payroll cycle mattersMonthly, semi-monthly, bi-weekly
Monthly or semi-monthly payroll cycleEnter the pay period start date effective the 1st day of the month and amount that will be deducted per pay period.
Bi-weekly payroll cycleEnter the pay period start date correlating with the first day of the pay period (not the 1st of the month) and amount that will be deducted per pay period.
Employees paid bi-weekly but the employer reports monthlyUse the first day of the month and the combined amount withheld from each pay check.
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Report is in “Review”Determine the reason and fix it
Error can either be at the report level or the detail level.
• Detail level: Correct first.• Report level: Contributions reported and NDPERS calculated contributions
do not match.
Calculated amount will update automatically if changes are made to the detail.
Add comments and SAVE.32
Most common errors and fixes457 Deferred Compensation Reporting
Deduction began too soonThe start date is always the pay period start date, not the paycheck date.
Employers reporting monthly Withhold for pay period April 1st – 31st paid May 1st.
Employers reporting semi-monthly Withhold for pay period April 1st – 15th paid April 15th
Employers reporting bi-weekly Pay period cannot begin before the start date provided on the benefit enrollment report. This deduction would not be permitted for a pay period beginning in March. 33
Let’s view examples457 Deferred Compensation ReportingDeduction began too soonThe start date is the pay period start date.
Employers reporting monthly Withhold $400.00 for pay period January 1st – 31st paid July 3rd. Prior to the January pay period, $200.00 should be withheld.
Employers reporting semi-monthly Withhold $400.00 for pay period January 1st – 15th paid January 15th. Prior to the January pay period start date, $200.00 should be withheld.
Employers reporting bi-weekly The pay period cannot begin before the start date provided on the benefit enrollment report. This deduction would not be permitted for a pay period beginning in December.
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Enrolling employeesOther 457/403(b)
Employer must use the “Enroll in other 457/403(b)”
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Deferred Comp ReportOther 457/403(b)
• Other changes (increases/decreases) are captured when the file is uploaded or changes are made within the template when creating the Deferred Comp Report.
• EXCEPTION The only time the change will not be captured is if the report is already created and then the amount is changed. How to FIX it?Utilize the “Enroll in other 457/403(b)” option to update their contribution amount.
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Confirm accuracy of contributions amountsOther 457/403(b)
• Ensure the total contributions reported match the payment that will be sent to the provider.
• If it isn’t reported correctly, then the employees’ benefit of additional funds through the Portability Enhancement Provision (PEP) are not accounted for accurately.
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Missed Contributions457 Deferred Compensation
NDPERS will contact you if a contribution is not reported based on the employees’ election.
How to FIX it?Follow up with your employee
• Start the deduction going forward.• Do a one time makeup contribution for the amount missed for
the current calendar year only.NDPERS needs the employee’s consent in writing, preferably email.
How was the contribution missed?Generally, this is missed on the benefit enrollment report and not entered into payroll. 38
Group InsuranceHow the Insurance Billing Works
Did you know?• Insurance billings are all driven by enrollment
• Employees have 31 days to enroll after hire or qualifying event
• Regular insurance billings are available on ESS the 2nd working day of the
month and payment is due by the 15th
What are your responsibilities?• Billings should be reviewed and posted by the Authorized Agent. If they are
not posted by the 18th of the month, NDPERS will post them.
• Adjustments are created and posted by NDPERS (only) when an enrollment
takes place after regular billing has passed.39
Enrollment ChangesGroup Insurance• If enrollment changes are made before the billing is posted,
the billing will correct the next time the report is opened and reloaded• The reload process looks for any enrollment changes since the
report was created or last reload• If changes to the billing are needed, it is best to take care of this
before the billing is posted
• If an enrollment is added or changed after the billing is posted, an adjustment will be created• Adjustments with a positive balance are a balance due, so
payment will need to be made• Adjustments with a credit balance will apply to any unpaid report
or a future report 40
Enrollment ChangesGroup Insurance
Enrollment was added or changed after the billing is posted
Adjustment will be created
• Positive balance means a
balance due
Make payment timely
• Credit balance means the
additional funds will apply to
an unpaid or future report 41
How to find adjustments?Group InsuranceOn Dashboard
Search
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Employer ResourcesAvailable through ESS and NDPERS website
• ESS Training Material
• Employer Guide
• Payroll Reporting Decision Tree
• Clarification of Eligible Retirement Contributions Excluding
Overtime Earnings (Memo 2017-4)
• Update in Written Agreement Definition – Eligible Retirement
Contributions (Memo 2017-5)
• Payroll Reporting – Avoid Common Mistakes that can affect
your Employees Retirement (Memo: 2016-1) 43
Questions?
• ESS
Message us
• Call
(701)328-390044
THANK YOUFor joining us at the NDPERS Employer Conference and investing your time and resources to understand your NDPERS benefits!
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