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.
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:
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.
-
The first column will show either
"SA" representing contributions to
regular SACT, or "TS" representing contributions
to the SACT-Tax Sheltered.
-
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.
-
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)
= |
- 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.
- 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 to pensions.nj@treas.state.nj.us 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.
- The employee
must remit to their employer
the full dollar amount of back deductions owed.
- 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.
- 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.
- 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.
