Employers' Pensions and Benefits Administration Manual (EPBAM)
   

 

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The Report of Contributions


Contents

A Sample Report of Contributions (ROC)

Column 1

Projected Salary for Next Quarter

Column 2

Name and Membership Number

Column 3

10/12 Month Member

Column 4

Accumulated Base Salary

Column 5

Months of Service

Column 6

Base Salary subject to Contributions

Column 7

Full Rate %

Column 8

Normal Pension Contribution

Column 9

Back Deductions

Column 10

Total Normal Pension Contribution and Back Deductions

Column 11

Loan Deductions

Column 12

Total Arrears and/or Purchases

Column 13

Contributory Group Life Insurance

Column 14

Supplemental Annuity
Payroll Guidelines for Tax-Deferred Contributions

Column 15

Remarks

Blocks A-K

Page Totals and Grand Totals

 

 

 

Miscellaneous Information

  The Certifying Officer
  Changes to the ROC
  Address and Telephone Changes
  Reporting Due Date
  Signature of Certifying Officer
  Cash Remittances
  Remittance of SACT Tax Sheltered Money
  Changing Banking Information for TEPS
  TEPS Enhancements
  Quarterly Transmittal Summary Reconciliation
  Leaves of Absence/Termination of Employment
  Military Service and the Maximum Rate of Interest on Debts Incurred before Military Service (PERS, TPAF, PFRS, SPRS and JRS)
  Retroactive Salary
  Maximum Pensionable Salary (Annual Compensation Limits)
  Reporting or Certifying Salaries at Retirement
  Reporting Retroactive Salary AFTER Retirement
  "Revised" VS. "Corrected" Certifications
  Reporting Base Salary For Part-time Hourly Employees
  Mandatory Pensions Contributions Relating to Section 414(h) of the Internal Revenue Code
  Penny Breakage
  Base Salary, Quarterly Reporting
  Member Shortages and Overages
  Lump Sum Payments of Back Deductions
  Report of Salary Change
 

Members Receiving Workers' Compensation

 

 


Sample Report of Contributions (ROC)

Click on an area of interest and you will be
linked to specific directions for completing the ROC.

Hit the "Back" button on your browser to return.

 


 

 

 

 

 

 

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Columnar Explanation of the Quarterly Report of Contributions

Projected Salary for Next Quarter (Column 1)

The column headed "Projected Salary for Next Quarter" (Column 1) is used to provide this Division with changes to base salaries that will affect your next Quarterly Report. When you insert figures in Column 1, your next Report will have the corrected salary printed in the "Base Salary Subject to Contributions This Quarter" column, Column 6; the corresponding contributions due will be calculated on this salary. 

Effective use of the "Projected Salary for Next Quarter" column will help you avoid numerous changes to your next Report of Contributions. You should insert figures in Column 1 only when the following quarter's base salary will change from the base salary being reported for the current quarter. 

If your employees received a salary increase that is retroactive to a prior quarter, please refer to the section, "Retroactive Salary Increases."

The projected figure must always be a full quarter's base salary. If a member is not entitled to three months of service in a quarter, that change to base salary must be made in the "Remarks" column of the Report of Contributions and not in Column 1 of the Report.

Even though you may provide updated salary information in Column 1, when a change is made to the line item of a member, an appropriate explanation must be provided in the "Remarks" column.

Name and Membership Number (Column 2)

The name field lists members in alphabetical order by last name. Some names may be shortened because the total name field is limited to 14 characters. 

The membership number, shown under each person's name, is assigned to the member when enrolled in the retirement system. 

For multiple members, the member's multiple letter will be printed to the right of the membership number in this column. 

In the Police and Firemen's Retirement System, the letter "P" for policeman or "F" for fireman will be printed in this column to the right of the membership number.

10/12 Month Member (Column 3)

This column shows either "10" or "12", indicating if the member is paid on a 10- or 12-months per year basis. 

A 10-month employee is presumed to earn one-tenth of the annual base salary in each of the months September to June, inclusive. 

A 10-month member who is on a "Summer Payment Plan," whereby part of each pay is placed into an Escrow Account to be available for payment to the member during the following July and August, must still be reported as a 10-month employee. 

One-tenth of the contractual salary for each month from September of one year through June of the following year should be shown on the Report of Contributions

For example, the monthly calculation for a 10-month member who is on the
"Summer Payment Plan" (September 2000 through June 2001) is as follows: 

 

For ROC Purposes

For Payroll Purposes

Contractual Salary

$24,000

$24,000

Number of Months

10

12

Monthly Base Salary

$2,400

$2,000

Note that the "Summer Payment Plan" actual payroll salary payments made in July and August 2000 of $2,000 each should not be reported on the third quarter 2000 ROC. 

The total base salary for each quarter to be reported in Column 6 of the ROC is as follows:

3rd Quarter 2000

4th Quarter 2000

1st Quarter 2001

2nd Quarter 2001

$2,400

$7,200

 $7,200

$7,200 

Even though only one month's salary is reported in the
third quarter 2000, the member receives three months of service credit.

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Accumulated Base Salary (Column 4)

This column reflects the accumulated base salary reported for prior quarters in the calendar year. For example, the third quarter ROC accumulated base salary would be the sum of the base salaries reported on the 1st and 2nd Quarterly Reports. Similarly, the 1st Quarterly Report will report zero accumulated contributions for all members.

Months of Service (Column 5)

This column should reflect the number of months during which the member has made contributions during the quarter being reported. 

The Division of Pensions and Benefits will only credit a member's account for FULL months of service and base salary. For example: if a member works 2-1/2 months in a quarter and earns sufficient money to pay the full third monthly pension contribution, the employer is required to withhold and report the full quarterly amount due for base wage, pension contributions and contributory insurance (if applicable). In this example, three months of service and base wages would be reported. 

  • NOTE: If a member does not earn sufficient net salary to pay a full month's pension contribution and contributory insurance (if applicable), DO NOT REMIT A PORTION OR PARTIAL PAYMENT. In such cases, the partial amount should be refunded directly to the member, the member should not be reported for that month, and no service will be credited for that month.

  • REMEMBER: full payment is required in order for the Division of Pensions and Benefits to properly credit the member's account. PARTIAL PAYMENTS FOR SERVICE CREDIT CANNOT BE ACCEPTED. 

A number of employers properly change the ROC for base salary, pension contributions and contributory insurance but fail to change the months of service. Please remember there is always a direct correlation between base salary and months of service. 

In all cases, a change in months of service and base salary will require a corresponding change to pension contributions. 

A 10-month member who is reported for the month of September on the 3rd quarter report, will receive three months of pension service credit.

For new enrollees and transfers, the number of months in Column 5 represents the total months from the date all deductions are scheduled to begin to the end of the calendar quarter in which the member was certified for deductions.

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Base Salary Subject to Contributions This Quarter (Column 6)

The definition of "base salary" is as follows:

"The compensation of a member subject to pension and group life insurance contributions and creditable for retirement and death benefits in the system shall be limited to base salary, and shall not include extra compensation. For the purposes of this section:

1. "Base salary" means the annual compensation of a member, plus the value of maintenance, if applicable, in accordance with contracts, ordinances, resolutions or other established salary policies of the member's employer for all employees in the same position, or all employees covered by the same collective bargaining agreement, which is paid in regular, periodic installments in accordance with the payroll cycle of the employer.

Please note that in the case of TPAF members, a 2001 adopted repeal and new rule (N.J.A.C. 17:3-4.1) clarifies the meaning of creditable compensation for the purpose of calculating employee contributions to the TPAF, and for determining benefits under the TPAF:

  • Compensation for pension purposes does not include bonuses, overtime pay, adjustments in anticipation of retirement, and other types of payment not included in base salary;
  • However, compensation for teaching a sixth period is creditable compensation, as long as it is reported in regular periodic installments in accordance with the payroll cycle of the employer.
  • Compensation received by employees who are required, as part of their regular positions, to work additional days in the summer months is also regarded as creditable compensation.

2. "Extra compensation" means individual salary adjustments which are granted primarily in anticipation of a member's retirement or as additional remuneration for performing temporary duties beyond the regular workday or work year. Forms of compensation that have been identified as extra compensation include, but are not limited to:

  • Overtime;

  • Pay for extra work, duty or service beyond the normal workday, work year (for 10 month employees) or normal duty assignment;

  • Bonuses;

  • Lump sum payments for longevity, holiday pay, vacation, compensatory time, accumulated sick leave, or any other purpose;

  • Any compensation which the employee or employer has the option of including in base salary;

  • Give-backs, trade-ins, waivers, or voluntary returns of accumulated sick leave, holiday pay, vacation, overtime, compensatory time, or any other payment or benefit in return for an increase in base salary;

  • Individual retroactive salary adjustments where no sufficient justification is provided that the adjustment was granted primarily for a reason other than retirement;

  • Individual adjustments to place a member at the maximum of his or her salary range in the final year of service where no sufficient justification is provided that the adjustment was granted primarily for a reason other than retirement;

  • Increments or adjustments granted for retirement credit;

  • Increments or adjustments in recognition of the member's forthcoming retirement;

  • Any form of compensation which is not included in the base salary of all employees in the same position or covered by the same collective bargaining agreement who are members of the retirement system and who receive the compensation;

  • Retroactive increments or adjustments made at or near the end of a member's service, unless the adjustment was the result of an across-the-board adjustment for all similarly situated personnel; and

  • Any form of compensation which is not included in a member's base salary during some of the member's service and is included in the member's base salary upon attainment of a specified number of years of service." (NJ Administrative Code 17:2-4.1)

The reported base salary is the salary on which pension deductions are reported and, if applicable, contributory life insurance premiums and SACT deductions are taken.  Whenever base salary changes during a quarter, the printed amount on the ROC should be changed to reflect the correct base wages for the quarter. Do not change base salary (Column 6) for a partial month absence.

For assistance in calculating base salary for part-time employees, see "Reporting Base Salary for Part-time Hourly Employees."

For assistance in reporting retroactive pay increases in salary, see "Retroactive Salary".

Salary Reported and Payroll Deductions for a Member Taking a Leave of Absence with Pay (Sabbaticals, etc.)

When a member takes a leave of absence with pay (e.g., a sabbatical), and the member's pay during the leave of absence period is 50% or more of base salary, the employer must still report the member's full base salary and service credit on the Report of Contributions, not the member's actual pay for the leave of absence period (N.J.A.C. 17:3-4.2). The employer must also take certified payroll deductions for employee pension liabilities, such as loans, arrears, and back deductions, based on the full base salary.

Defined Benefit Plans and Pensionable Salary Limits

Under Chapter 113, P.L. 1997, the amount of compensation (salary) on which member contributions and benefits are based may not exceed the compensation limitation of section 401(a)(17) of the federal Internal Revenue Code, for the following "qualified" defined benefit plans: the PERS, TPAF, JRS, SPRS, and PFRS. In other words, salary earned by members of these funds in excess of this compensation limitation is not pensionable; that is, it may not be used in determining member contributions and benefits.

In 2008, the federal maximum pensionable salary rose to $230,000.

For 2004, the pensionable salary limit was $205,000; the annual compensation limit for 2005 increased to $210,000; in 2006, the federal maximum pensionable salary rose to $220,000. In 2007, it was $225,000.

History of Pensionable Salary Limits

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Full Rate % (Column 7)

The full or normal employee contribution rate for PERS and TPAF members is now 5.5 percent of base salary It was 5 percent of base salary, through June 30, 2007; under Chapter 92, P.L. 2007 and Chapter 103, P.L. 2007, the PERS employee contribution rate increased to 5.5 percent, according to the timetable provided in the PERS or TPAF Enrollments Section of this Manual: (a) PERS Enrollments; (b) TPAF Enrollments.

Retroactive Salary Raises after Effective Date of Member Contribution Rate Increase

Employers must apply the 5.5% member contribution rate to all salary, including retroactive salary increases paid after the effective date of the member contribution rate increase, even if earned prior to July 1, 2007.

Employers of Phase One employees (those having the 5.5% member contribution rate increase effective July 1, 2007) must apply the 5.5% member contribution rate to all salary, including retroactive salary increases paid on or after July 1, 2007, even if earned prior to July 1, 2007.

Employers of Phase Two employees (those having the 5.5% member contribution rate increase effective July 1, 2008) must apply the 5.5% member contribution rate to all salary, including retroactive salary increases paid on or after July 1, 2008, even if earned prior to July 1, 2008.

PERS and TPAF Pension Rate, Historical

Effective July 1, 1995, the full pension rate for all PERS and TPAF members was set at a flat 5% of salary. 

Temporary reductions in rate are authorized in statute and are based on the existence of surplus pension assets in the PERS and TPAF; however, statute also requires the return to the normal rate when such surplus pension assets no longer exist.

Effective January 1, 2004, the Teachers' Pension and Annuity Fund member contribution rate returned to the 5% normal contribution rate. Employers should have begun to deduct the 5% contribution amount on the first payday on or after the January 1, 2004 effective date of this change.*

*The Fiscal Year 2005 Budget Act had called for a temporary reduction in the pension contributions of TPAF members at New Jersey State colleges and universities—from 5 percent to 3 percent—for the period of July 1, 2004 through December 31, 2004, but effective January 1, 2005, this rate had returned to the full 5 percent.

Effective July 1, 2004, the PERS member contribution rate for PERS members who are State employees reverted to the full rate of 5 percent of base salary. At that time employers should have begun to deduct the 5 percent member contribution rate on the first payday on or after the July 1, 2004 effective date.

Effective January 1, 2005, the member contribution rate for local employees in the PERS also returned to the normal rate of 5 percent.

The State Treasurer is authorized to make or continue similar reductions in the contribution rates in the future provided proper conditions exist.

Member contribution rates through July 1, 2007 for all other PERS members are listed below:

PERS Proscutors Part Members
7.5%
PERS Workers' Compensation Judges Part Members
5.5%*
Legislators
5.5%**

*Effective June 8, 2007, in accordance with Chapter 92, P.L. 2007, the Workers' Compensation Judges (WCJ) Part of the Public Employees' Retirement System (PERS) was closed to new membership. Members who were enrolled in the WCJ Part of the PERS (those employed by the Division of Workers' Compensation of the Department of Labor as Workers' Compensation Judges, see titles listed ) prior to June 8, 2007 will continue to be offered special retirement benefits through their membership in the WCJ Part of the PERS; they will see an increase in their member contribution rate to 5.5%.

Those who are appointed to a Workers' Compensation Judge title at Division of Workers' Compensation of the Department of Labor on or after July 1, 2007, including:

  • Chief Judge
  • Administrative Supervisory Judge
  • Supervisory Judge
  • Judge of Compensation

will be enrolled in the Defined Contribution Retirement Program (DCRP), a new plan established for "Elected and appointed officials" under the provisions of Chapter 92, P.L. 2007.

**Those elected as a legislator on or after July 1, 2007, will also be enrolled in the new Defined Contribution Retirement Program (DCRP), established for "elected and appointed officials" under the provisions of Chapter 92, P.L. 2007.

  • PFRS members contribute at the full pension rate of 8.5% (.085) of base salary.

Normal Pension Contribution (Column 8)

The normal pension contribution is the mandatory regular deduction for the cost of current service credit. For members of the TPAF, PERS, and PFRS the pension contribution is computed by multiplying the base salary in Column 6 times the contribution rate in force. 

For members of the PERS, base salary is multiplied by 5.50% (0.055), since the full PERS employee contribution rate of 5.5 percent of base salary is now in effect.

For members of TPAF, base salary is multiplied by 5.50% (0.055), since the full or normal employee contribution rate of 5.5 percent of base salary is now in effect.

The State Treasurer has the right under the current law to make temporary reductions in rate. Between 1998 and 2004, temporary reductions in both the PERS and TPAF employee contribution rate had been in effect. For specific information about these temporary reductions, click here.

For members of the PFRS, the pension contribution is computed by multiplying the base salary in Column 6 times 8.5% (.085). 

Normal pension contributions are subject to the provision of the Internal Revenue Code (IRC) Section 414(h). For a discussion of IRC Section 414(h) and its affect on pensions, see the "Mandatory Pension Contributions Relating to Section 414(h) of the Internal Revenue Code."

Back Deductions (Column 9)

Back deductions are mandatory pension contributions subject to IRC Section 414(h). They are the pension obligations owed from the date of enrollment or transfer to the date deductions are certified to begin. The "No. Pmts." represents the number of outstanding back deductions due as of the beginning of the calendar quarter. The "Amount" is the value of back deductions scheduled to be paid for the quarter in accordance with the Certification of Payroll Deductions. BACK DEDUCTIONS MUST BE PAID EXACTLY AS CERTIFIED, or the entire back deduction may be paid in a lump sum with appropriate comments in the "Remarks" column of the ROC. For a discussion of the payment back deductions in full, see Lump Sum Payments of Back Deductions.

Back deductions are calculated on the member's current annual salary, regardless of when the member is enrolled. If back deductions are owed for a time period exceeding 12 months, 8.25% interest is added.

Back Deductions for Members Entering Active Military Service after Enrollment

For members of the PERS, TPAF, PFRS, SPRS and JRS who enter active military service following enrollment, purchases, loans, back deductions or other obligations to the retirement systems incurred prior to active military service shall not bear interest at a rate exceeding 6%, for the entire duration of the member's active military service. Interest in excess of 6% per year will be waived. More information about this waiver of interest is available through the link, "Military Service and the Maximum Rate of Interest on Debts Incurred before Military Service".

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Total Normal Contributions and Back Deductions (Column 10)

This is the total mandatory pension deductions due for the quarter, which is computed by adding Columns 8 and 9. 

All mandatory pension contributions are subject to the provisions of IRC Section 414(h) 

Loan Deductions (Column 11)

Loan deductions "No. Pmts." represents the number of outstanding loan payments as of the beginning of the calendar quarter.

The loan "Amount" is the loan payment scheduled to be remitted for the quarter in accordance with the "Loan Certification of Payroll Deductions".

THE REPAYMENT OF THE LOAN IS PROJECTED ON THE QUARTERLY REPORT AND SHOULD NOT BE CHANGED. The loan must be repaid in the exact monthly amount certified.

The only time the amount may be changed is in the case of a member who was absent for one or more months of the quarter and received no pay from which to take a loan deduction. In this case, the amount may be changed to one loan payment if the employee worked one month, or two loan payments if the employee worked two months in the quarter.

Columns 5 and 6 of the Quarterly Report would also have to be changed in these instances to reflect one or two months of service credit and one or two months of base salary. Pension contributions in Columns 8 and 10 and contributory insurance, if applicable, would also be affected.

An active member may, at any time, make a lump-sum payment against the total value of the loan obligation in order to terminate payroll deductions. If a member wishes to terminate a loan obligation, the Office of Client Services must be contacted (609-292-7524) in order to determine the value of the loan as of the date the member intends to forward a lump-sum payment. Each lump-sum payment must be accompanied by a "payoff letter" which the member will have obtained from the Office of Client Services.

NOTE:  When there are temporary reductions in contribution rates, the minimum deduction for loan repayments does not change. The minimum deduction for the single payment value on loans continues to be computed on 5.5% (.055) of monthly base salary for PERS and TPAF.  The minimum deduction for loans for PFRS members will be based on the full 8.5% (.085) pension rate. 

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Total Arrears and/or Purchases (Column 12)

Arrears and/or purchase payments result when a member voluntarily purchases service credit (as opposed to mandatory service) such as the purchase of temporary service, military service, out-of-state service, etc.

The "No. Pmts." represents the number of outstanding arrears payments due as of the beginning of the quarter.

The arrears "Amount" is the arrears payments to be made in accordance with the Arrears Certification of Payroll Deductions for the entire quarter.

Changes may be made only if the member is absent for one or more months during the quarter. In that case, the ROC is appropriately changed to reflect the corresponding changes for the number of months the member was actively employed. 

The provisions of IRC Section 414(h) are not applicable to voluntary purchases of service.

Again, even when there are temporary reductions in contribution rate, the minimum deduction for the purchase of service credit does not change. The minimum deduction for the single payment value on arrears and purchases will continue to be computed on 5.5% (.055) of monthly base salary for PERS and TPAF.  The minimum deduction for arrears for PFRS members will be based on the full 8.5% (.085) pension rate.

For members of the PERS, TPAF, PFRS, SPRS and JRS who enter active military service following enrollment, purchases, loans, back deductions or other obligations to the retirement systems incurred prior to active military service shall not bear interest at a rate exceeding 6%, for the entire duration of the member's active military service. Interest in excess of 6% per year will be waived. More information about this waiver of interest is available through the link, "Military Service and the Maximum Rate of Interest on Debts Incurred before Military Service". 


Contributory Insurance (Column 13)

An amount will appear in this column for each member of TPAF and PERS covered under the Contributory Group Life Insurance Program. The amount is a percentage of the base salary printed in Column 6: 

  • 0.4% (.004) for members of the TPAF, and 

  • 0.5% (.005) for members of the PERS.

PLEASE NOTE: In accordance with N.J.S.A. 18a:66-53(h), TPAF members are not required to pay contributory group life insurance premiums after attaining age 70. Such premiums must be paid by the employer. The Division bills the employer annually for premiums for TPAF members who are age 70 or older .

For new enrollees and transfers, the contributory insurance amount printed on the ROC represents all premiums due from the contributory insurance effective date (as shown on the Certification) to the end of the quarter in which the member's name first appears on the Report of Contributions.

However, in cases where an employee's enrollment has been delayed for a period of more than a year, deductions for back contributory group life insurance premiums will not be taken for more than a year's time.

Membership in the Contributory Group Life Insurance Program is compulsory for the majority of new members of PERS and TPAF for the first year. To terminate membership in this program, a member and employer must sign the Notice of Withdrawal from Contributory Group Life Insurance Form and file it with the Division of Pensions and Benefits. The completed form must be in the possession of the Division on or before the day termination is to be effective, which can only be the last day of a calendar month.

For a fuller discussion of group life insurance, click here.

Because there are tax consequences to employer paid Noncontributory Group Life Insurance coverage in excess of $50,000, some members may wish to waive this excess amount of coverage. See the section on Waiving Noncontributory GLI in excess of $50,000 for more information and to obtain the necessary forms.

Supplemental Annuity (Column 14)

Column 14 shows the type, percentage and amount (in whole dollars) allocated to the Supplemental Annuity Collective Trust (SACT).

There are three columns to this item of the Report of Contributions.

  1. The first column will show either "SA" representing contributions to regular SACT, or "TS" representing contributions to the SACT-Tax Sheltered.

  2. The second column, in which the Supplemental Annuity percentage is shown, should not be deleted or altered by the member's employer since the changes must be certified by the Division of Pensions and Benefits.

  3. The third column contains the dollar amount allocated to the Trust during the period covered by the Report. This column must be changed whenever a change in salary occurs.

The following formulas are to be used to determine the amount to be withheld:

Regular SACT  (SA) = Base Salary (Col. 6) Times Percentage (Col. 14) Equals SACT Amount (Col. 14).


Tax-Sheltered SACT (TS) =

  1. Base Salary Subject to Contributions This Quarter (Col. 6) 
    LESS Total Normal Pension and Back Deductions (Col. 10) 
    EQUALS Salary Subject to Tax Sheltered Annuity.

  2. Salary Subject to Tax Sheltered Annuity 
    TIMES Member's Tax Sheltered Annuity Percentage Rate (Col. 14) EQUALS Tax Sheltered Annuity Contribution Due (Col. 14).

When the amount is determined, it should be rounded to the nearest whole dollar. For example, if the calculation results in an amount of $0.50 or more, increase the amount to the next highest dollar. If the calculation results in an amount of $0.49 or less, drop the cents and report only the dollar amount.

SACT and Tax-Sheltered SACT page totals and grand totals must be maintained separately. The Supplemental Annuity total block is divided into two sections: block J for regular SACT and block K for Tax-Sheltered SACT.

For employers who do not utilize Centralized Payroll: all SACT monies are remitted through the TEPS system.  For information concerning using TEPS, please click here.

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General Payroll Guidelines for Tax Deferred Contributions

The Division of Pensions and Benefits recommends a payroll guideline for tax-deferred deductions. Under the Taxpayer Relief Act of 1997, the definition of 'includable compensation' for purposes of determining elective deferrals under section 403(b) has been amended to include tax-deferred contributions to a Section 125 cafeteria plan (an Unreimbursed Medical Spending Account, Dependent Care Spending Account, or Premium Option Plan, for example). This means that the income subject to 403(b) deductions will no longer be reduced by the contributions to a section 125 plan as was the practice in the past. This tax law change was effective January 1, 1998 and potentially increases the amount an employee can tax-defer each year under 403(b). Examples of 403(b) deferrals are ACTS contributions and SACT-Tax Deferred contributions.

The example below illustrates how this change in the definition of 'includable compensation' may affect 403(b) and 457 (a deferred compensation plan like New Jersey State Employees' Deferred Compensation Plan) tax deferrals. In this example, an employee with an annual salary of $40,000 and a 4.5% 414(h) mandatory pension contribution elects to set aside $1,000 in a section 125 plan, 5 to a 403(b) plan and 6% to a 457 plan.

Base Salary $40,000
 

Less Mandatory Pension - 414(h) = 4.5%

(1,800)

Adjusted Net Salary

38,200
 

Less 403(b) = 5%

(1,910)
Adjusted Net Salary 36,290
 

Less Section 125 Deductions

(1,000)
Adjusted Net Salary 35,290
 

Less 457 = 6%

(2,117)
Wages Subject to Federal Income Tax $33,173
Total Amount of Before-tax Deductions $ 6,827

Remarks (Column 15)

THIS COLUMN IS USED TO FULLY EXPLAIN THE REASON FOR AND NATURE OF ANY CHANGES MADE TO THE ROC. For example, if a member terminates employment, make any necessary corrections to the ROC and note in the "Remarks" column that the member resigned and the date employment terminated. If a member is on a leave of absence, indicate the beginning date of the leave and the specific reason for the leave. If a member has a change in base salary, Column 15 should contain the effective date of the change.

Page Totals and Grand Totals (Blocks AK)

The page and grand total blocks correspond to the columns noted. Whenever a change occurs on an individual member line item, (e.g. months of service, base salary, pension contributions, total pension contributions, back deductions, and contributory insurance) this will have a corresponding effect on the page total blocks. It will affect the grand totals of the entire report, shown on the last page of the report. Certifying Officers are reminded of the importance of cross-checking page totals and grand totals. This will ensure that the proper amount of monies is remitted, and will save time and effort of the local employer as well as the Division of Pensions and Benefits.

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MISCELLANEOUS INFORMATION

Changes to the ROC

All changes to the Report must be made in ink. Please do not use a typewriter or pencil.

Address and Telephone Number Changes

If your location has an address, telephone and/or Certifying Officer change, please notify the Office of Client Services in writing. The correct mailing address is necessary to avoid the ROC being received late or not at all.

Reporting Due Date

The Report of Contributions is due in the Division of Pensions and Benefits on the 7th day of the month following the close of the calendar quarter. For example, at the end of the second quarter, the ROC is due July 7th. If your quarterly Report and total contributions are not received in a timely manner, we cannot update the pension accounts of your employees. This may adversely affect any claim for benefits, including loan applications, filed by your employees. Also, any delay affects our scheduling in posting contributions to all members' accounts as well as the mailing of Reports of Contributions for the following quarter. Interest will be assessed, as prescribed by statute and administrative code, when monthly transmittal remittances and the Quarterly Report of Contributions are not received within fifteen days of the due dates.

Signature of Certifying Officer

The Certifying Officer is responsible for reviewing the completeness and accuracy of the ROC and cash remittances. The Certifying Officer should follow whatever procedures seem reasonable or prudent under the circumstances. Once satisfied that the control figures and cash remittance amounts are correct, the Certifying Officer must sign the report. Not every page needs to be signed. It is sufficient to sign the first and last page of the ROC.

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Cash Remittances

Through the Transmittal Electronic Payment System (TEPS), employers must submit monthly transmittal remittances of approximately 1/3 of the total quarterly amounts due. Token payments are not acceptable. The transmittal remittance for the last month of the calendar quarter (March, June, September and December), which represents the deductions due for the balance of the quarter, should be made through TEPS. The portion of the remittance for total pension deduction should reflect the sum of normal pension contributions, back deductions, loan payments, and arrears/purchase deductions. TEPS was developed for the convenience of local employers to electronically transmit pension contributions, Contributory Group Life Insurance premiums and SACT monies to the Division of Pensions and Benefits.

Exception for SACT-Tax Sheltered

According to recent legislation, Chapter 247, Public Law of 1999, approved October 15, 1999, all amounts payable on IRC 403(b) accounts must be transmitted and credited as of the fifth business day after the date on which the employee is paid for that pay period. This will hold for all 403(b) plans whether administered by the Division of Pensions and Benefits (SACT) or a plan administered by the local employer. All SACT-Tax Sheltered contributions must be submitted by TEPS on a timely basis dependent upon your payroll schedule, rather than the regular monthly payment schedule used in the past.

Changing Banking Information for TEPS

Notice of Changes for TEPS should be submitted to the Division of Pensions and Benefits on or after the date that the new checking account becomes effective. Every "Notice of Change" is "prenoted" to ensure that the Division has the correct banking information.

You will only be contacted by a Division representative if the new banking information fails the prenote. Prenoting takes ten business days.

It is recommended that you resume using TEPS 12 - 15 business days from the date you submitted the form.

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TEPS Enhancements

As of September 1, 1999, employers are allowed to pay Transmittal Shortage Statements through TEPS. The Division sends Transmittal Shortage Statements when the sum of the transmittal remittances does not equal the due figure on the quarterly Report of Contributions. Transmittal Shortage Statement payments can only be paid through TEPS. Checks received for payment of transmittal shortages will be returned. If you have questions related to TEPS, contact the TEPS Help line at (888) 835-3345 or fax your inquiries to the Audit/Billing Section at (609) 633-1708.

Quarterly Transmittal Summary Reconciliations

The ROC is submitted quarterly and monies due are remitted monthly. The quarterly transmittal summary form is only submitted at the end of a quarter and will assist you in reconciling and determining the proper remittance amount. Instructions for its completion are on the back of the form. The main point to remember is that the quarterly liability for pension contributions, contributory insurance, supplemental annuity and tax-sheltered annuity are determined by completing the Quarterly Report of Contributions (ROC). From the ROC due figures, cash remittances for the first and second months of the quarter are subtracted, resulting in the balance due.

The Certifying Officer must sign the ROC and the Transmittal Summary.

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Leave of Absence/Termination of Employment

If a member goes on leave of absence or terminates employment (but does not terminate membership in the system) and returns to the same employer within two years, the member's name, membership number and complete line entry should be written on the ROC with an appropriate statement in the "Remarks" column. If a member goes on leave of absence or terminates employment (but not pension membership) and returns to work with a different employer within two years, a Report of Transfer form must be submitted for the member and deductions will not begin until a Certification of Payroll Deductions is received.

NOTE: An employee's membership will not end two years after his/her last contribution if he/she is granted an official leave of absence (the two-year period begins at the end of the leave of absence).

If a member of the PERS, TPAF, PFRS, SPRS and JRS takes a leave of absence to enter active military service following enrollment, the member's purchases, loans, back deductions or other obligations to the retirement systems incurred prior to active military service shall not bear interest at a rate exceeding 6%, for the entire duration of the member's active military service. Interest in excess of 6% per year will be waived. More information about this waiver of interest is available through the link, "Military Service and the Maximum Rate of Interest on Debts Incurred before Military Service".

Retroactive Salary

As a result of the implementation of Chapter 103, PL 2007, and the establishment of maximum compensation limits for certain members of the Public Employees’ Retirement System (PERS) and the Teachers’ Pension and Annuity Fund (TPAF), the Division of Pension and Benefits has determined that retroactive salary increases can no longer be reported through the Internet-based Report of Contributions (IROC) if they affect reporting periods prior to the current reporting quarter. This reporting change is effective with the first calendar quarter report for the period covering January 1 through March 31, 2009.

Although only the PERS and TPAF are affected by Chapter 103, P.L. 2007, the reports for the Police and Firemen’s Retirement System (PFRS) through the IROC may not include retroactive salary increases. The Division believes that the benefits provided as a result of segregating the reporting of retroactive salary payment data from normal, quarterly salary data will benefit all retirement programs.

At the current time the Division is developing a new mechanism for the future reporting of retroactive salary increases through the Internet.  Employers who are affected by this reporting change and are making retroactive salary payments to their employees in the 1st quarter of 2009 for periods prior to January 1, 2009, or will be making retroactive salary payments before our new report of retroactive salaries is developed, should contact the Division of Pensions and Benefits, at (609) 777-2115, for reporting instructions, or send an e-mail message with “Retro Salary” in the subject line.

In addition, please do not attempt to submit pension or contributory insurance deductions resulting from the retroactive salary payments through TEPS. This includes employers utilizing the Report of Salary Change.

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Reporting or Certifying Salaries at Retirement

All data requested on the Certification of Service and Final Salary should be completed.

Any question left unanswered (like Workers' Compensation or suspension) will only delay the Retirement Bureau in processing the retirement until the local employer responds in writing.

Section 8 of the form, Certification of Service and Final Salary - Retirement for PERS, TPAF, and PFRS asks for the base salary subject to pension fund contributions paid for the last full year of service. Please show the contractual base salary the member earned and the number of months at each salary.

If a member received a retroactive salary increase in the last year of service, report the member's monthly base salary in this section as of the effective date of the salary increase - that is, as though the increase became effective as scheduled by the terms of the contract.

Section 10 is used to explain any retroactive salary increases and their effective dates.

In Section 11, enter the full, contractual salary as earned in each quarter. These figures would reflect the same information that has been or will be reported on the Quarterly Report of Contributions. Remember, the more information you provide, the better the Division of Pensions and Benefits can serve the retiring member.

Please be aware that local employers are expected to submit the Certification of Service and Final Salary as soon as possible after the Application for Retirement has been sent by the member. The Division of Pensions and Benefits requires three or four months to process, calculate, obtain board approval and authorize payment for a retired member. If the local employers wait to send the Certification of Service and Final Salary until after the member has been removed from the payroll, it will delay the entire process, including the issue of the member's first retirement allowance check.

Reporting Retroactive Salary after Retirement

If a member receives a retroactive salary adjustment after retirement, Do not write the member's name on the ROC.

Complete a new Certification of Service and Final Salary and indicate that it is a retroactive adjustment after retirement by writing on the top of the Certification, "Revised Due to Retro."

Deduct the pension contributions and contributory insurance, if applicable, from the retroactive check and remit the amount on behalf of the member to: Division of Pensions and Benefits, Attn.: Audit/Billing Section, PO Box 295, Trenton, New Jersey 08625-0295.

The "Revised Due to Retro" Certification need not be completed in its entirety. Employee name, membership number, employer, employer's telephone number, Social Security number and date service terminated should be completed. Section 8 may be left blank.

Section 10 should state the date and amount of the retroactive check, and the amount of the pension contribution. In addition, you should include the time period the retroactive salary adjustment covers and the adjusted annual contractual salary.

Section 11 should indicate the amount of the pension contribution from the retroactive salary payment. Finally, the Certifying Officer must sign and date the form.

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"Revised" vs "Corrected" Certifications

The Division of Pensions and Benefits would like local employers to differentiate between revised and corrected Certifications. Revised certifications due to retroactive increases are explained above. However, a corrected Certification due to an error in reporting or a typographical error should be marked "Corrected" on the top of the form. Please write directly on the Certification specifying which item(s) is being corrected.

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Reporting Base Salary for Part-time Hourly and On-call Employees—PERS

The Public Employees' Retirement System's Board of Trustees adopted a rule change (for NJAC 17:2-4.7) that became effective on January 1, 2000. The amendment requires reporting districts to use the actual creditable salary earned by employees, not estimated salary, for part-time hourly, on-call and per diem employees, who do not have an annual contractual base salary.

The enrollment criteria for part-time hourly, on-call, and per diem employees remains unchanged. However, once membership is established, an employee must only meet the $1,500 minimum salary regulation to continue membership; the number of hours worked in a month or a year is no longer applicable. This provides greater equity in granting service credit. A member is entitled to a month of service as long as the actual creditable salary being reported exceeds the monthly minimum for enrollment In other words, when a 10-month member has a monthly reportable salary exceeding $150 (one-tenth of $1,500), the member should be reported for that month. Similarly, $125 (one-twelfth of $1,500) is the minimum monthly reportable salary for a 12-month member. If the member does not make $1,500 in the current calendar year, and is not expected to make $1,500 in the following year, that employee is no longer eligible for the retirement system.

The new rule eliminates much of the guesswork that has been, but should not be, involved in the reporting of salaries. The rule ensures that pension contributions are based on actual earnings and service, not an estimate of earnings. Perhaps more importantly, it is fairer to members in that they get what they earned, i.e., both in terms of a pension benefit as well as their regular paychecks. Your employees do not lose any portion of their check by paying pension contributions for hours not worked and salary not earned when they work fewer hours than estimated.

It may facilitate the completion of your quarterly Report for the Division of Pensions and Benefits to list your part time, on call and per diem members on a separate bureau. To have the members on your Report listed separately, please send your written request to: Robert Morley, Audit/Billing Section, Division of Pensions and Benefits, PO Box 295, Trenton, NJ 08625-0295. With your request, include a listing of the members to be put on the separate bureau. This listing must provide the member's membership number, last name, and first name.

In lieu of a manually prepared list, you can identify the members by sending a copy of your most recently filed quarterly Report and highlight the members for the separate bureau.

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Mandatory Pension Contributions Relating to Section 414(h) of the Internal Revenue Code

Legislation effective January 1, 1987 stated that under Section 414(h) of the Internal Revenue Code, mandatory pension contributions reduce the member's gross wages for federal income tax.

The mandatory deductions are normal pension contributions and back deductions. Loan repayment, arrears and/or purchases are not mandatory contributions and do not affect an employee's gross wage for federal income tax purposes.

Only mandatory pension contributions made for a period of time on or after the implementation date (January 1, 1987) are subject to the 414(h) provision.

Section 414(h) does not affect Social Security tax liability or gross taxable wages subject to New Jersey State income tax.

If an account requires an adjustment (for example as a result of litigation or a payroll error), the additional mandatory pension contributions to be billed or refunded are subject to Section 414(h) only if the adjustment or part of the adjustment is applicable to a period on or after January 1, 1987. The fact that the additional salary due the member was paid on or after January 1, 1987 is not significant. The determining factor is the period covered by the adjustment. Therefore, mandatory pension contributions due as a result of an adjustment for a period prior to January 1, 1987 are not subject to Section 414(h).

Penny Breakage

As a result of computation differences, the total deduction from a member's salary may differ from the quarterly printed amount by a few pennies. It may be possible to eliminate penny discrepancies by discussing these differences with your data processing personnel. Hopefully, this dialogue may lead to a solution.

It is requested that you do not change the ROC if the printed deduction differs from the payroll deduction by a few cents for individual members. Remit the printed amount. The overall difference will have a wash effect and the total amount will be minimal.

Normally an accounting system provides for an over-and-under account for this type of adjustment.

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Base Salary, Quarterly Reporting

Whether an employer pays employees weekly, biweekly or quarterly, base salaries must be reported on the Quarterly Report of Contributions and pension deductions must be computed on the basis of a "quarterly" salary.

For locations that pay on a biweekly basis, it is suggested that pension deductions, computed on the quarterly salary, be deducted from the employee's pay on only six biweekly payrolls in the quarter and that no pension deductions be made on the seventh biweekly payroll that falls in any calendar quarter.

Member Shortages and Overages

Occasionally, for various reasons, an employer may not make the correct amount of pension and/or contributory life insurance deductions. However, the employer submits the Report of Contributions knowing that an overpayment or underpayment exists. This should be avoided. In order to avoid unnecessary refund checks and shortage statements, it is suggested that local employers schedule their payroll deductions so that the correct deductions have been made and remitted in accordance with the base salary reported.

Member shortages and overages of previous quarters should not be included on the ROC as a means of adjusting payroll information previously submitted.

Do not pay member shortages via the transmittal remittance. Shortages will be billed by the Division of Pensions and Benefits, and must be paid by separate check together with the Statement of Shortage form. The Statement of Shortage form will indicate if the additional pension contributions being billed or the pension contributions being refunded are subject to Section 414(h) provision. If the adjustment is subject to the 414(h) provision, it is the responsibility of the employer to make the proper adjustment on the payroll records to ensure the member receives a correct W-2 form. Overages will be refunded by the Division.

Note: All pension contributions billed or refunded that correct a period prior to January 1, 1987 are not subject to the 414(h) provision. The fact that the actual adjustment occurred after January 1, 1987 is not significant. Contributions due for loans, arrears and/or purchases are never subject to 414(h) treatment.

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Lump Sum Payments of Back Deductions

Members have the option of paying a back deduction obligation through a lump sum payment, rather than having this obligation deducted from their monthly or biweekly paycheck, see below. When members choose to pay the back deductions owed in full, that is, make a lump sum back deduction payment, it is important that their employer comply with the following procedure.

  1. The employee must remit to their employer the full dollar amount of back deductions owed.
  2. The employer then includes the total dollar amount of member lump-sum back deductions as part of the "Total Pension Deductions" on the next TEPS (Transmittal Electronic Payment System) remittance.
  3. When the employer receives the Report of Contributions, the employer must change the printed back deduction figure on the Report to include any member lump-sum back deduction payments.
  4. Column 10, "Total Normal Pension Contributions and Back Deductions" must equal the sum of Column 8, "Normal Pension Contributions" and Column 9, "Back Deductions," in order for the Report to be correct.

Because of IRS rules that apply, checks received directly from members to pay back deductions in full cannot be accepted by the Division of Pensions and Benefits. This payment must be remitted through the employer.

When Members Choose to Make a Lump Sum Back Deduction Payments

The Certification of Payroll Deductions issued at the time of a member's enrollment indicates his or her payroll deduction schedule for member pension contributions, etc., as well as for any back deductions owed. It also provides the cash discount value for the back deduction balance--the lump sum amount, with any interest, payable by the member for total back deduction amount owed. (Back deductions owed for a time period exceeding 12 months may accrue interest, as explained above.)

The member must pay the cash discount value to his or her employer prior to the date on which payroll deductions are scheduled to begin, in order for the cash discount value quoted on the Certification of Payroll Deductions to be in effect.

Written Requests for the Cash Discount Value of an Arrears Obligation

When a member wishes to pay a back deduction obligation, with interest, after payroll deductions have begun, the member must make a request, in writing, for an "arrears payoff quotation" letter for the cash discount value of the remaining balance of the back deduction. The member must then make payment of the cash discount value of the back deduction balance quoted, by the date specified in the letter, to his or her employer, in order to fulfill his or her arrears obligation.

According to New Jersey Administrative Code [N.J.A.C. 17:1-4.1(b)], members may make only one request for the cash discount value of outstanding arrears, such as back deductions, (or a purchase quotation for previous service) in a calendar year.

For additional information about member lump-sum back deduction payments, click here.

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Report of Salary Change

The Report of Salary Change form can be a very useful and time saving tool for the employer when a large number of employees receive a salary change.

If a majority of an employer's members receive a salary change, the Report of Salary Change form should be used. When the employer provides the Division of Pensions and Benefits with timely Report of Salary Change, the employer will receive the next Quarterly Report of Contributions with the new base salaries printed and used to compute the corresponding deductions. In that way, the employer will only have to adjust the Quarterly Report for exceptions such as leaves of absence, terminations or returning members (assuming no additional changes to base salary).

The Division of Pensions and Benefits annually provides a Report of Salary Change to the employer based on the following schedule:

 

PERS Non-boards of Education for 1st Quarter Projection

 

PERS Boards of Education for 3rd Quarter Projection

 

TPAF for 3rd Quarter Projection

 

PFRS for 1st Quarter Projection

The report lists the employer's name and location number, employee membership number, employee name, method of payment (10 or 12 months) and a space for the employer to insert quarterly base salary for the upcoming quarter. The figure submitted on the Report of Salary Change should be the base salary subject to pension contributions that you want to appear on the Quarterly Report of Contributions in Column 6.

An employer can obtain a Report of Salary Change for any quarter by contacting the Audit/Billing Section of the Division. A Report of Salary Change may be filed with the Division of Pensions and Benefits during any quarter of the calendar year. For example, it can be used to indicate contract changes as soon as they are known.

File the Report of Salary Change with the Division of Pensions and Benefits on or before the 10th day of the 2nd month of the quarter to assure the salary change is received in time for the upcoming Quarterly Report of Contributions. If the Report is not received by the Division in time, the employer must manually change the ROC for each member involved.

If an employer does not need to use the Report of Salary Change when it is received, the employer should save it for use in a future quarter. When used in a future quarter, the employer should change the heading to indicate the correct quarter for which the projections are being submitted.

Members should not be added to the Report of Salary Change.

In lieu of a Report of Salary Change, the employer may photocopy Columns 1 through 6 of the last ROC and block out the data appearing within Column 6. Write in the new quarterly base salary subject to pension contributions in Column 6. Clearly label, at the top of the form, that this is to be used as a salary projection and the quarter to which it pertains.


 

 

 

 

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Last Updated: March 25, 2013