State Retirement Agency

State Retirement Agency

WelcomeWelcomePresenter: Laura Gorrell

Presented: April 25, 2008

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Payroll Reporting Education Project


This recorded presentation is a result of several live presentations held throughout the State of Maryland in 2007. The purpose of these presentations was to assist staff of participating employers to report their pension payroll data on an accurate and timely basis to the Maryland State Retirement Agency. Incorporated in this recorded version are many of the common questions that were asked during the live presentations.

Agenda:* Introduction * Eligibility/Enrollment* Reporting* Adjustments

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Overview


SRA’sSRA’s

MissionTo administer the survivor, disability, and retirement benefits of the System’s participants, and to ensure that sufficient assets are available to fund the benefits when due.

VisionA state that provides a fully-funded retirement system that is affordable to all participating employers and provides guaranteed adequate disability, survivor, and retirement benefits.

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Introduction


State Retirement Agency (SRA) Administers the SRPSState Retirement Agency (SRA) Administers the SRPS Goals of SRA’s Administration of the SRPS:

- Efficiently collect the required employer and employee contributions necessary to fund the System- Prudently invest assets to optimize returns while controlling risks- Effectively communicate to participants the benefits provided by the System - Pay benefits accurately and on time

4

Introduction


SRASRA Needs… - Accurate enrollment and payroll data from employers - Timely reporting of this data in the proper formats

In Order to…- Effectively communicate to participants and accurately pay monthly benefits to retirees.

5

Introduction


YouYou Need… - Up-to-date instructions (Employer Payroll Reporting Manual)

- Clear understanding of expectations- Support for when you have questions

In Order to…- Help ensure that members receive accurate information and

retirees receive accurate payments.

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Introduction


Why this workshop?Why this workshop?

-To ensure that employers know how to properly enroll members, report payroll data and make adjustments to data when needed

-To provide a forum to discuss reporting issues common to all employers

-To strengthen the partnership between SRA and the employers

-To help prepare SRA and employers for new requirements that will become effective with future phases of SRA’s new automated

system, Maryland Pension Administration System (MPAS)

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Introduction


SRA is currently involved in a major technology project to replace its current Legacy computer system.

This first phase of this new system, Maryland Pension Administration System (MPAS), will be put into place in 2009. MPAS will ultimately impact the way SRA processes incoming payroll data from the employers, but nothing will change before 2009.

By ensuring that employers are submitting payroll data in the correct format now, any transition to MPAS requirements should be an easy and smooth process for SRA Payroll Team and the employers.

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Introduction


Project Goals:Project Goals:

* Communicate up-to-date payroll reporting

information to employers

* Improve accuracy and timeliness of enrollment and payroll data

* Provide a forum for discussion of issues related to enrollment and payroll

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Introduction


Topics:Topics:- Who is eligible?

- Enrollment Process

- Consequences of Incomplete Enrollment

- Employers’ Responsibilities

- Common Enrollment Issues

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Eligibility/Enrollment


Who is eligible to participate?Who is eligible to participate?

SRPS membership is mandatory for all employees who meet the following eligibility criteria:

- Regular, full-time employees - Regular, part-time employees who are budgeted to work at least 500 hours/year or who actually work 500 hours in a fiscal year (retroactive to the beginning of the FY)

An employee who meets these criteria cannot reject membership; they must be enrolled.

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Common Questions

1. What do I do if I have an employee that was not budgeted to work at least 500 hours in the fiscal year, but works more than what was expected and exceeds 500 hours worked?

2. What do I do if I have an employee who was budgeted to work at least 500 hours in the fiscal year, but ends up working less than less than 500 hours?

3. What do I do if a person was properly enrolled in a prior fiscal year and was working at least 500 hours, but I know going into this fiscal year that they will not work at least 500 hours?

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What do I do if I have an employee that was not budgeted to work at least 500 hours in the fiscal year, but works more than what was expected and exceeds 500 hours worked?

Since the employee was not budgeted to work at least 500 hours the employee would not have been enrolled when they began employment.

As soon as you are aware that the situation has changed (the employee’s budgeted hours have increased or the employee is expected to work or actually worked at least 500 hours) you should:

1) Enroll the employee,2) Begin reporting pension payroll data for the employee, and3) Submit Prior Period Adjustments Forms (714s) to report the

pension payroll data for the employee back to the beginning of the current fiscal year or their date of hire (if they were hired after the beginning of the

current fiscal year)13



What do I do if I have an employee who was budgeted to work at least 500 hours in the fiscal year, but ends up working less than 500 hours?

Since the employee was budgeted to work at least 500 hours the employee would have been enrolled when employment began and you would have been reporting pension payroll data from that hire date.

The fact that the employee is no longer expected to work at least 500 hours does not change their status as a member. Once a person has been enrolled in the system they remain a member regardless of the number of hours worked in a fiscal year. Simply continue to report pension payroll data for this individual.

Since this person would be a part-time employee you may need to change some of the data being reported to us (covered later), but the data should continue to be reported. Based upon this data the SRA will calculate the member’s service and eligibility credit earned at the end of each fiscal year.

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What do I do if a person was properly enrolled in a prior fiscal years and was working at least 500 hours, but I know going into this fiscal year that they will not work at least 500 hours?

This question is similar to the previous question and the same answer applies:

Once an employee has been properly enrolled as a member in the system based upon their position being budgeted to work at least 500 hours they remain a member and should continue to have pension payroll data reported

for future years even when they are no longer budgeted or expected to work at least 500 hours. SRA will prorate their service credit based on actual hours

worked in the fiscal year.

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Who is Who is not not eligible to participate?eligible to participate?

SRPS membership is not available for the following types of employees:

- Temporary employees

- Contractual employees

A temporary or contractual employee cannot elect membership.

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Common QuestionsCommon Questions

1) How does the SRA define a “temporary employee”?

2) How does the SRA define a “contractual employee”?

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How does the SRA define “temporary employee”?

A temporary employee is an employee whose appointment may not exceed 6 months.

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How does the SRA define “contractual employee”?

The SRA uses the definition of contractual in §13-101 of the State Personnel and Pensions Article of the Annotated Code of Maryland which defines a “contractual employee” as an individual:

(1) who, under a written Agreement, provides temporary personal services for pay;

(2) who is not employed in a budgeted positions; and(3) who has an employer-employee relationship with this employer in which the

employer:(i) furnishes necessary tools and a place to work(ii) has the right to control and direct the details, means, and results of the

performance of the services; and(iii) has the right to discharge the individual from employment. 19



When should an eligible employee be enrolled?When should an eligible employee be enrolled?

Eligible employees should be enrolled as soon as they begin employment.

There is no waiting/probationary period for enrollment into SRPS for eligible

employees.

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MembershipMembership EnrollmentEnrollment Process:Process: Easy/StraightforwardEasy/Straightforward For each eligible employee, the employer must provide the following three documents so that SRA can properly enroll the member:

1) Completed Application for Membership (Form 001) form

2) Completed and notarized Designation of Beneficiary (Form 004) form

3) Copy of valid proof of birth date.

Important Update: House Bill 472/Senate Bill 375 of the 2008 General Sessions will result in the assessment of fees to employers for each employee who is not properly enrolled.


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What is considered valid proof of birth date?What is considered valid proof of birth date?

For US citizens, a copy of valid proof of birth date document includes any one of the following:

- Unexpired driver’s license - Maryland Identification card- Birth Certificate - Adoption record- United States passport - Naturalization Records

- Census record from United States Bureau of the Census - Military documentation from any branch of the United States Armed Forces - Hospital birth record, certified by the custodian of record

- Statement of age card from the county health department or US Bureau of Vital Statistics

For non US citizens, Resident Alien Registration Receipt Card

Please make sure that on any copy of valid proof of birth date document that the date of birth is clearly visible and readable.


SRA administers many separate plans of SRPS, SRA administers many separate plans of SRPS, including:including: 1. Teachers’ Retirement System (closed eff. 1/1/1980)

2. Employees’ Retirement System (closed eff. 1/1/1980) 3. Correctional Officers Retirement System 4. State Police Retirement System 5. Judge’s Retirement System 6. Law Enforcement Officers’ Pension System 7. Teachers’ Pension System 8. Employees’ Pension System

9. Legislative Plan10. Police and Fire Plans (closed eff. 1/1/2005)

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Who determines which plan a member is enrolled?Who determines which plan a member is enrolled?

SRA will determine in which plan the member is eligible to enroll. The

decision is in based upon: the employer, the position (job description/title),

and past membership history of the employee in SRPS.

SRA uses the information on the Application of Membership form to make this

determination.

In some cases, SRA may contact the employer for more information before

determining the correct plan for the employee.

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Common Question

Why does the SRA sometimes request that I submit a copy of the employee’s Job Description after I have already sent in the Application for Membership form and indicated the employee’s job title?

The SRA primarily asks for a copy of an employee’s Job Description when trying to determine whether an employee should be enrolled in the Teacher’s Pension System.

This is an important fiscal issue for the State of Maryland since the State pays the employer’s costs for teachers and the SRA is responsible for ensuring that only teachers are enrolled in the Teacher’s Pension System.

To reduce the likelihood that the SRA will need to ask for the employee’s Job Description be as specific as possible when writing the job title, for example “Elementary School Math Teacher” instead of “Teacher”. 25



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What happens if payroll data is reported for an employee who has not been properly enrolled in SRPS?

The employee is placed in Automatic Enrollment (AE) status.

Payroll data is still accumulated under the employee’s Social Security number, but the employee is not a member of the SRPS.

The employee will receive an Automatic Enrollment letter which informs them that they have not been properly enrolled in SRPS.

The employee will not be provided with an annual Personal Statement of Benefit (PSB).Should the employee die, the employee’s intended beneficiary may not be paid. Instead

payment would be made to the employee’s estate.

Important Update: Beginning in FY08 the employer will be assessed fees for each AE status employee.


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Common Question

How do I know if I have any employees that are not properly enrolled and are therefore in Automatic Enrollment (AE) status?

The SRA periodically provides reports to employers identifying employees in AE status.

Additionally, you can request this information from our Data Control Division at anytime.


In Brief, Employers' Responsibility for Enrollment…In Brief, Employers' Responsibility for Enrollment… Ensure submission of…

- Application for Membership (complete, accurate, legible and signed)

- Designation of Beneficiary form (complete, legible, signed, and notarized)

- Appropriate proof of birth date

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Common Enrollment IssuesCommon Enrollment Issues

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What Is Happening What Should Happen

Waiting/probationary period before enrollment

Immediate enrollment of all eligible employees…no waiting/probation

Not enrolling all eligible employees All eligible employees must be enrolled

Not enrolling all part-time employees

All part-time employees budgeted to or who actually work at least 500 hours, must be enrolled

Non-submission of enrollment forms (Application, Beneficiary, Proof of Birth Date)

Forms must be submitted upon employment


Topics:Topics:- Important Definitions- Reporting for Full-time Employees- Reporting for Part-time Employees- Date Requirements- Formatting Requirements- Secure File Upload- Employer Pick Up Program- Common Reporting Issues

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Reporting


Important Definitions

Pay Period Ending Date (PPED)Pay Period Ending Date (PPED): Date on which the pay period ends.

Your reported payroll data should only include days up to and including the PPED.

PPED must fall in the employer’s annual payroll schedule.

Note: Pay Period Ending Dates can cross over fiscal years. For example, the State’s pay period which began on June 20, 2007 ended on July 3, 2007. This was the first PPED for the 2008 fiscal year.

31

Reporting



Pay DatePay Date: Date employees actually get paid.

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Reporting


Example of Pay Period Ending Date (PPED) and Pay Date:Example of Pay Period Ending Date (PPED) and Pay Date:

Pay periods for most state employees are bi-weekly. They begin on a Wednesday and end on a Tuesday. Employees then receive payment for this pay period on the second Wednesday after the pay period end date.

Example: The pay period that began on Wednesday, September 26th ended on Tuesday, October 9th. Employees received payment for this pay period on Wednesday, October 16th.

The Pay Period Ending Date (PPED) is 10/09/2007.

The Pay Date is 10/16/2007.

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Reporting


Three Salary Types to be reported:

1. Annual Earnable Compensation (aka Full-time Equivalent Salary)

2. Actual Annual Compensation

3. Pay Period Base Salary

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Reporting



Annual Earnable Compensation (AEC)Annual Earnable Compensation (AEC) ((aka Full-time Equivalent SalaryFull-time Equivalent Salary))

- Total budgeted salary (from the salary schedule, Grade/Step)

- For Full-time employees, the AEC equals Actual Annual Compensation

- For Part-time employees, AEC equals the amount a Full-time employee would earn in the position

- Report in full dollars only, round up or down to the nearest dollar…include no cents

Note: AEC does not Include: Overtime, shift differential, bonuses, etc.35

Reporting



Actual Annual CompensationActual Annual Compensation

For Full-time members… The annual earnable compensation (usually from Salary Schedule, e.g., Grade 10/ Step 12 = $37,716)

For Part-time members… The budgeted annual salary based on the part-time percentage. The Actual Annual Compensation should be the same from pay period to pay period unless the member received a pay increase. Note: Report in full dollars only, round up or down to the nearest dollar…include no cents. 36

Reporting



Pay Period Base Salary:Pay Period Base Salary: Actual Base Earnings for the pay period. Excludes: overtime, shift differential, bonuses, etc.

Notes: - For full-time employees, the Pay Period Base Salary should remain constant, unless on Leave w/o Pay.

- For part-time employees, Pay Period Base Salary could fluctuate depending on actual hours worked during the pay period.

- Report actual earnings including dollars and cents, do not round to nearest $.

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Reporting


Common Question

Why does the SRA need three different salary figures for each employee?

We use the three different salary figures - Annual Earnable Compensation (AEC), Actual Annual Compensation (AAC), and Pay Period Base Salary (PPBS) - for different purposes based upon the system and plan that a member is enrolled in.

AEC is used to calculate the average final salary for a member in one of our pension systems.

AAC is used to calculate the average final salary for a member in one of our retirement systems.

PPBS is used to determine when a member’s earnings have exceeded the Social Security Taxable Wage Base. In some plans members are not required to make employee contributions unless they earn more than the Social Security Taxable Wage Base.

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Reporting



Hours WorkedHours Worked Actual number of hours worked (not budgeted) during the pay period.

Excludes overtime. Cannot be greater than the Total Standard

Hours for the pay period.

Note: For part-time employees, Hours Worked may fluctuate from

pay period to pay period.

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Reporting



Standard HoursStandard Hours- Normal or regular hours for a full-time employee (equivalent

position)

- Does not include overtime

- Should not be less than the Actual Hours Worked for the pay period

Notes: * The employer sets the standard hours for employees, but they must be consistent across classifications

* SRA minimum requirements for teacher members and ten-month employees is 30 hours per week. SRA minimum requirements for twelve-month employees is 35 hours per week. 40

Reporting


Common QuestionHow should I report “Hours Worked” and “Standard Hours” for elected and appointed officials?

Elected and appointed officials are paid for the fulfillment of their office’s duties and not for working a specific number of hours.

For pension payroll reporting purposes you should report “Hours Worked” equal to “Standard Hours” – the same as reporting for a full-time employee. The “Standard Hours” reported should be the same “Standard Hours” reported for your regular employees.

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Reporting


Common Question

I have to report pension payroll data for cafeteria workers, bus drivers, and crossing guards. These employees have a maximum number of hours they can work in their position each week. For example our crossing guards work 3 hours a day so the maximum they can work per week is 15 hours. Are they considered part-time or full-time employees?

For SRA purposes they are part-time employees. Their “Hours Worked” would be reported as 15 hours per week and their “Standard Hours”, assuming they are 10 month employees, would be reported as the same as your other 10 month employees. Remember for 10 month employees the minimum “Standard Hours” allowed is 30 hours per week.

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Reporting



Percentage of TimePercentage of Time (Budgeted Ratio of TimeBudgeted Ratio of Time):

- % of budgeted time the employee is budgeted to work

- For F-T employees, fill the field w/ two zeros (00 = 100%)

- For P-T employees, fill the field with the applicable %

- % should reflect actual annual compensation ÷ annual earnable compensation

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Reporting



Contributory Pay PeriodContributory Pay Period: Any Pay Period where the employer deducts employee contributions from the employee’s pay.

Non-contributory Pay PeriodNon-contributory Pay Period: Any Pay Period where the employer does not deduct employee contributions from the employee’s pay.

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Reporting



Member ContributionMember Contribution = Actual Annual Compensation X Contribution rate

Number of contributory pay periods

- Reflect actual contribution for the pay period

- Reported in actual dollars and cents.

Note: Withhold full contribution amount for each contributory pay period regardless of hours worked.

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Reporting


Reporting for Full-time EmployeesReporting for Full-time Employees

Actual Annual Compensation = Annual Earnable Compensation

Actual hours worked includes: Leave hours (such as sick time,

annual leave, and compensatory leave).

Actual hours worked does not include: Overtime hours and data for

employees who did not work during the summer unless the member

elects to receive wage payments during the summer.

Actual hours worked is not greater than Standard hours.

Contributions should not fluctuate.

Percentage of Budgeted Time is 100% (reported as 00).

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Reporting


Reporting for Full-time EmployeesReporting for Full-time Employees

Three Examples:

Full-time employee working 12 months.

Full-time teacher working 10 mos. and being paid over 10 mos.

Full-time employee working 10 mos. and being paid over 12 mos.

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Reporting

Reporting

Full-time employee working 12 months

Hours Worked: 35 per week

Standard Hours: 35 per week

Actual Salary: $52,000

Earnable Salary: $52,000

Contribution Rate: 4%

Pays: 26

Contributory Pays: 26

Biweekly reporting: Pay

Actual Period Annual

Annual Hours Hours % of Base Earnable

PPED Compensation Contribution Worked Standard Time Salary Compensation

10/5/2007 52000 80.00 70.0 70.0 00 2000.00 52000

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Reporting

Reporting

Full-time employee working 12 months

Annual Totals: Pay



Month Compensation Contribution Worked Standard Time Salary Compensation

Jul $52,000 $160.00 140 .0 140.0 00 $4,000.00 $52,000

Aug $52,000 $160.00 140 .0 140.0 00 $4,000.00 $52,000

Sep $52,000 $160.00 140 .0 140.0 00 $4,000.00 $52,000

Oct $52,000 $160.00 140 .0 140.0 00 $4,000.00 $52,000

Nov $52,000 $240.00 210 .0 210.0 00 $6,000.00 $52,000

Dec $52,000 $160.00 140 .0 140.0 00 $4,000.00 $52,000

Jan $52,000 $160.00 140 .0 140.0 00 $4,000.00 $52,000

Feb $52,000 $160.00 140 .0 140.0 00 $4,000.00 $52,000

Mar $52,000 $160.00 140 .0 140.0 00 $4,000.00 $52,000

Apr $52,000 $160.00 140 .0 140.0 00 $4,000.00 $52,000

May $52,000 $160.00 140 .0 140.0 00 $4,000.00 $52,000

Jun $52,000 $240.00 210 .0 210.0 00 $6,000.00 $52,000

Total: $2,080.00 1,820 1,82049

Reporting

Reporting

Full-time teacher working 10 months and being paid over 10 months

Hours Worked: 30 per week Standard Hours: 30 per week

Actual Salary: $45,000 Earnable Salary: $45,000


Pays: 20 Contributory Pays: 20

Semi-monthly reporting (July and August):

Actual Pay Period Annual



xx/x/2007 Not reported

Semi-monthly reporting (September through June):




xx/x/2007 45000 90.00 60.0 60.0 00 2250.00 45000 50

Reporting

Reporting


Annual Totals: Pay




Jul

Aug

Sep $45,000 $180.00 120 .0 120.0 00 $4,500.00 $45,000

Oct $45,000 $180.00 120 .0 120.0 00 $4,500.00 $45,000

Nov $45,000 $180.00 120 .0 120.0 00 $4,500.00 $45,000

Dec $45,000 $180.00 120 .0 120.0 00 $4,500.00 $45,000

Jan $45,000 $180.00 120 .0 120.0 00 $4,500.00 $45,000

Feb $45,000 $180.00 120 .0 120.0 00 $4,500.00 $45,000

Mar $45,000 $180.00 120 .0 120.0 00 $4,500.00 $45,000

Apr $45,000 $180.00 120 .0 120.0 00 $4,500.00 $45,000

May $45,000 $180.00 120 .0 120.0 00 $4,500.00 $45,000

Jun $45,000 $180.00 120 .0 120.0 00 $4,500.00 $45,000

Total: $1,800.00 1,200 1,20051

Reporting

Reporting


Hours Worked: 30 per week Standard Hours: 30 per week

Actual Salary: $45,000 Earnable Salary: $45,000

Contribution Rate: 4% Pays: 24 Contributory Pays: 20

Semi-monthly reporting (July and August):




xx/x/2007 45000 0.00 0.0 0.0 00 1875.00 45000

Semi-monthly reporting (September through June):




xx/x/2007 45000 90.00 60.0 60.0 00 1875.00 45000 52

Reporting

Reporting


Annual Totals Pay




Jul $45,000 $0.00 0.0 0.0 00 $3,750.00 $45,000

Aug $45,000 $0.00 0.0 0.0 00 $3,750.00 $45,000

Sep $45,000 $180.00 120 .0 120.0 00 $3,750.00 $45,000

Oct $45,000 $180.00 120 .0 120.0 00 $3,750.00 $45,000

Nov $45,000 $180.00 120 .0 120.0 00 $3,750.00 $45,000

Dec $45,000 $180.00 120 .0 120.0 00 $3,750.00 $45,000

Jan $45,000 $180.00 120 .0 120.0 00 $3,750.00 $45,000

Feb $45,000 $180.00 120 .0 120.0 00 $3,750.00 $45,000

Mar $45,000 $180.00 120 .0 120.0 00 $3,750.00 $45,000

Apr $45,000 $180.00 120 .0 120.0 00 $3,750.00 $45,000

May $45,000 $180.00 120 .0 120.0 00 $3,750.00 $45,000

Jun $45,000 $180.00 120 .0 120.0 00 $3,750.00 $45,000

Total: $1,800.00 1,200 1,20053

Reporting


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Reporting

Common Question

How do I report pension payroll data for employees on active duty military service?

No pension payroll data should be reported for active duty military personnel. This is true even if you are paying their full or partial salary to them during their absence.

The employee should complete the Notification of Entry on Active Duty Military Service section of the Application to be Placed on a Qualifying Leave of Absence (Form 046). When the employee returns to employment you should reinstate pension payroll data reporting and have the employee complete a Claim of Military Credit for Military Service (Form 043). The employee will be granted credit for the period of military service at no cost to the employee.


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Reporting

Common Question

How do I report pension payroll data for employees receiving Workers’ Compensation?

No pension payroll data should be reported for an employee receiving a Workers’ Compensation award even if you as the employer are paying a supplemental amount to bring the employee’s compensation up to its full, normal amount.

The employee should complete the an Application to be Placed on a Qualifying Leave of Absence (Form 046), marking ‘Personal Illness’ as the type of leave. When the employee returns to normal employment you should reinstate pension payroll data reporting and have the employee complete a Request to Purchase Service (Form 026) to purchase credit for the term of the leave.

The one exception to the above rule is when the employee continues to receive their regular salary as payment for sick leave. In this case, normal pension payroll data reporting should be continued.


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Reporting

Reporting for Part-time Employees: Budget MethodReporting for Part-time Employees: Budget Method

Reporting of payroll related to p/t employees is simplified by following SRA’s Budget Method. Five Steps in the Budget Method:

1) Determine PT %--Budgeted (expected) Hours / Standard Hours for f/t employee

2) Determine FTE comp--What would a FT employee, in this same position, earn?

3) Determine Actual Annual Compensation--FTE compensation x PT %

4) Determine contributions due per Pay Period--(AAC x contribution rate) / # of contributory pays

5) Report the same PT Percentage, AEC (aka Full-time Equivalent Salary), AAC, Standard Hours, and Contributions for each pay period, even though you report the no. of hrs. actually worked

Note: There should be no fluctuation in this reporting unless there is a significant and sustained change of at least 10% in hours worked.


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Reporting

Common Question

What is the definition of a significant and sustained change?

A significant change is defined as a change of at least 10% in “Hours Worked”.

A sustained change is defined as a change that is expected to be a long term or permanent change.

For example if you have an employee who is expected to pick up extra hours for the next two weeks because a co-worker is on vacation, you would not re-calculate the variable part-time pension payroll data elements. However, if the same employee is expected to pick up extra hours because a co-worker is going out on maternity leave for three months, then you would re-calculate the variable part-time pension payroll data elements.


Reporting for Part-time EmployeesReporting for Part-time Employees

Example A

Part-time Employee Using the SRA Part-time Employee Using the SRA Budget MethodBudget Method

Example B

Part-time Employee with a Part-time Employee with a 25% Decrease in Budgeted 25% Decrease in Budgeted HoursHours Using the SRA Using the SRA Budget MethodBudget Method

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Reporting

Reporting

SRA Budget Method for reporting part-time employees: Example A

Budgeted Hours: 832 (16 hours per week)

Standard Full-time Hours: 2,080 (40 hours per week)

Annual Earnable Compensation (FTE Salary): $15.00 per hour


Pays: 26


Step 1: Determine the Part Time Percentage.

Part Time Percentage = Budgeted Hours ÷ Standard Full-time Hours

Part Time Percentage = 16 hours per week budgeted ÷ 40 hours per week standard

Part Time Percentage = 40% (.40)

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Reporting

Reporting






Pays: 26


Step 1: Determine the Part Time Percentage = 40%

Step 2: Determine Full Time Equivalent (FTE) Compensation

FTE Compensation = Hourly Rate x Standard Full-time Hours x number of Pays

FTE Compensation = $15.00 per hour x 80 hours per pay x 26 pays

FTE Compensation = $31,200

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Reporting

Reporting






Pays: 26



Step 2: Determine Full Time Equivalent (FTE) Compensation = $31,200

Step 3: Determine Actual Annual Compensation

Actual Annual Compensation = FTE Compensation x Part Time Percentage

Actual Annual Compensation = $31,200 x 40%

Actual Annual Compensation = $12,480.00

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Reporting

Reporting






Pays: 26




Step 3: Determine Actual Annual Compensation = $12,480

Step 4: Determine Contributions Due each Pay Period

Contributions Due each Pay Period = (Actual Annual Compensation x Contribution Rate) /

number of Contributory pays

Contributions Due each Pay Period = ($12,480 x 4%) / 26

Contributions Due each Pay Period = $19.20 62

Reporting

Reporting


Budgeted Hours: 832 (16 hours per week) Standard Full-time Hours: 2,080 (40 hours per week)







Step 4: Determine Contributions Due each Pay Period = $19.20

Step 5: Report the same % of Time Worked, FTE and Actual Annual Compensation, Standard

Hours, and Contribution each pay period, even though you report the number of hours

actually worked and the base pay actually paid.

Actual Pay Period Annual Annual Hours Hours Base Earnable


10/5/2007 12480 19.20 32.0 80.0 40 480.00 31200

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Reporting

Reporting

Part-time employee using the SRA Budget Method: Example A

Annual Totals:

Pay




Jul $12,480 $38.40 64.0 160.0 40 $960.00 $31,200

Aug $12,480 $38.40 60.0 160.0 40 $900.00 $31,200

Sep $12,480 $38.40 66.0 160.0 40 $990.00 $31,200

Oct $12,480 $38.40 64.0 160.0 40 $960.00 $31,200

Nov $12,480 $57.60 92.0 240.0 40 $1,380.00 $31,200

Dec $12,480 $38.40 68.0 160.0 40 $1,020.00 $31,200

Jan $12,480 $38.40 70.0 160.0 40 $1,050.00 $31,200

Feb $12,480 $38.40 60.0 160.0 40 $900.00 $31,200

Mar $12,480 $38.40 64.0 160.0 40 $960.00 $31,200

Apr $12,480 $38.40 64.0 160.0 40 $960.00 $31,200

May $12,480 $38.40 62.0 160.0 40 $930.00 $31,200

Jun $12,480 $57.60 96.0 240.0 40 $1,440.00 $31,200

Total: $499.20 830 2,08064

Reporting

Reporting

SRA Budget Method for reporting part-time employees with a 25% decrease in budgeted hours effective with the first payroll of February: Example B





Pays: 26


Step 1: Determine the Part Time Percentage.

Part Time Percentage = Budgeted Hours ÷ Standard Full-time Hours

Part Time Percentage = 12 hours per week budgeted ÷ 40 hours per week standard

Part Time Percentage = 30% (.30)

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Reporting

Reporting

SRA Budget Method for reporting part-time employees with a 25% decrease in budgeted hours effective with the first payroll of February: Example B





Pays: 26



Step 2: Determine Full Time Equivalent (FTE) Compensation

FTE Compensation = Hourly Rate x Standard Full-time Hours x number of Pays

FTE Compensation = $15.00 per hour x 80 hours per pay x 26 pays

FTE Compensation = $31,200

66

Reporting

Reporting

SRA Budget Method for reporting part-time employees with a 25% decrease in budgeted hours effective with the first payroll of February : Example B





Pays: 26




Step 3: Determine Actual Annual Compensation

Actual Annual Compensation = FTE Compensation x Part Time Percentage

Actual Annual Compensation = $31,200 x 30%

Actual Annual Compensation = $9,360.00

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Reporting

Reporting

SRA Budget Method for reporting part-time employees with a 25% decrease in hours effective with the first payroll of February : Example B





Pays: 26





Step 4: Determine Contributions Due each Pay Period

Contributions Due each Pay Period = (Actual Annual Compensation x Contribution Rate) /

number of Contributory pays

Contributions Due each Pay Period = ($9,360 x 4%) / 26

Contributions Due each Pay Period = $14.40 68

Reporting

Reporting

SRA Budget Method for reporting part-time employees with a 25% decrease in budgeted hours effective with the first payroll of February : Example B

Budgeted Hours: 624 (12 hours per week) Standard Full-time Hours: 2,080 (40 hours per week)







Step 4: Determine Contributions Due each Pay Period = $14.40

Step 5: Report the same % of Time Worked, Annual Earnable Compensation, Actual Annual Compensation, Standard Hours, and Contribution each pay period, even though you report the number of hours actually worked and the base pay actually paid.

Actual Pay Period Annual Annual Hours Hours Base Earnable


2/15/2007 9360 14.40 24.0 80.0 30 360.00 31200

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Reporting

Reporting

Part-time employee using the SRA Budget Method: Example B

Annual Totals:

Pay




Jul $12,480 $38.40 64.0 160.0 40 $960.00 $31,200

Aug $12,480 $38.40 60.0 160.0 40 $900.00 $31,200

Sep $12,480 $38.40 66.0 160.0 40 $990.00 $31,200

Oct $12,480 $38.40 64.0 160.0 40 $960.00 $31,200

Nov $12,480 $57.60 92.0 240.0 40 $1,380.00 $31,200

Dec $12,480 $38.40 68.0 160.0 40 $1,020.00 $31,200

Jan $12,480 $38.40 70.0 160.0 40 $1,050.00 $31,200

Feb $9,360 $28.80 40.0 160.0 30 $600.00 $31,200

Mar $9,360 $28.80 48.0 160.0 30 $720.00 $31,200

Apr $9,360 $28.80 49.0 160.0 30 $735.00 $31,200

May $9,360 $28.80 46.0 160.0 30 $690.00 $31,200

Jun $9,360 $43.20 72.0 240.0 30 $1,080.00 $31,200

Total: $455.40 739 2,08070

Reporting


Payroll/Contribution Reporting Date RequirementsPayroll/Contribution Reporting Date Requirements

* Submit payroll data to SRA no later than five business days after the pay date.

* Remit employee contributions to SRA no later than the pay date.

(Note: SRA is mandated to assess penalties and interest against employers for late reporting of payroll or late remission of contributions.)

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Reporting


Employer Pick-up ProgramEmployer Pick-up Program

Many employers participate in the “employer pick-up program” under the Internal Revenue Code.

Under this program, employee contributions are treated as pre-tax contributions for federal income tax purposes. Employee contributions are still subject to Maryland income tax during employment.

Participation in the employer pick-up program is not automatic. Employers must request to participate in the employer pick-up program and be approved by SRA’s Board of Trustees. Prior to approval by the Board of Trustees, employers cannot treat employee contributions as pre-tax for federal tax purposes.

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Reporting


Payroll Reporting Formatting RequirementsPayroll Reporting Formatting Requirements

- Refer to the Employer Payroll Reporting Manual for formatting requirements.

And submit…

- Remittance Reconciliation Form

- Revenue Control Transmittal form

- Prior Payroll Period Adjustment form

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Reporting


Secure File UploadSecure File Upload

Introduced in 2006, Secure File Upload gives employers a new method for transmission of payroll data to SRA.

Secure File Upload replaces the need for employers to mail tapes or diskettes to SRA to report their payroll data.

Employers will realize a time and cost savings by using Secure File Upload and it helps maintain the security and confidentiality of sensitive payroll data.

Contact Tanya Williams at SRA to change your reporting method.

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Reporting


Common Payroll Reporting Issues

75

Reporting

What IS Happening What Should Happen

Incorrect reporting of part-time employees

Employers should use SRA’s Budget Method to report part-time employees

Incorrect reporting of salary changes

When an employee’s salary changes, all salary fields must reflect the change

Incorrect reporting of employees who have been converted from part-time to full-time employees

When an employee’s status changes from part-time to full-time (or vice versa), all payroll fields must reflect this change in status

Payments do not reconcile to payroll data

Reconcile payments to payroll data prior to submission to SRA. (Be sure to include any/all adjustment amounts.)


Adjustments to payroll pension data may be necessary to correct current or previously reported payroll data. The most common types of retirement payroll adjustments are:

1) Retroactive Salary Adjustment 2) Contribution Adjustment 3) Hours Worked/Standard Hours Adjustment 4) Payroll Cancellation Adjustment 5) Failure to Report Pension Payroll Data

Please note that detailed information and examples of proper reporting for Adjustments can be found under the “Employer” tab on the Maryland State Retirement Agency’s website.

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Adjustments


Retroactive Salary AdjustmentRetroactive Salary AdjustmentRetroactive salary adjustments cover situations where an employee’s salary has been increased or decreased retroactively to a previous date. An adjustment is required if the correct salary was not accurately reported in previous pay periods.

As member contributions are based upon the reported salary, salary changes also require an adjustment to a payroll remittance depending upon the plan requirements of the affected member or members.

Incorrect salary information can impact the Agency’s calculation of a member’s average final salary and ultimately impact the benefits that are paid out after retirement.

77

Adjustments


Contribution AdjustmentContribution Adjustment

A contribution adjustment may be required due to a reporting error or salary adjustment.

In instances where the reported contribution amount was incorrect (over or understated), you should correct the amount of the reported retirement contribution and make the necessary adjustment on the next remittance.

Incorrect reporting of contributions could lead to a member having a contribution deficiency on their account which would result in a reduced benefit at retirement unless it is corrected or paid.

78

Adjustments


Hours Worked/Standard Hours AdjustmentHours Worked/Standard Hours Adjustment

Incorrect reporting or Hours Worked or Standard Hours may have a significant impact on the member’s service credit earned.

In the Pension Systems, creditable and eligibility service are awarded based upon Hours Worked and Standard Hours reported.

Therefore, if it is determined that an employer incorrectly reported payroll hours, an adjustment is required.

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Adjustments


Payroll Cancellation AdjustmentPayroll Cancellation Adjustment

Due to timing differences, there may be instances where an employer

must submit a payroll cancellation adjustment via a Prior Period Payroll Adjustment Form (SRA-714) in order to delete previously reported data.

The payroll cancellation adjustment differs from other payroll adjustments in that the cancellation deletes the entire pay period data. Therefore, it’s not just a correction to prior reported payroll data, but more of a deletion of that data, as if it were never reported.

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Adjustments


Failure to Report Payroll DataFailure to Report Payroll Data Failure to report payroll data falls into two categories:

1. A new employee who has never been enrolled in the system and has

not had payroll data reported

2. An employee who is enrolled, but has not had all payroll data reported.

In instances where a new employee has never been enrolled, you must ensure that all forms necessary for proper enrollment are completed and submitted.

In both instances you must ensure that the employee is added to the payroll data prospectively and go back to the date of employment, and provide all payroll using the Prior Period Payroll Adjustment form.

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Adjustments


Employers' Responsibility for AdjustmentsEmployers' Responsibility for Adjustments

- When making adjustments, ensure that you provide the proper documentation. (See the Prior Period Payroll Adjustment and Remittance Reconciliation forms.)

- If you are doing a large volume of retroactive changes to members’ accounts, please contact our Payroll Manager. (Large numbers of changes require electronic transactions.)

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Adjustments


Common Payroll Adjustments Issues

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Adjustments

What IS Happening What Should Happen

Submitting the Prior Payroll Adjustment form (714) with incomplete data

Complete all required fields on the 714.

No explanation of the reason for the 714

Provide explanation for the change on the 714 (e.g., retro salary increase)

Using incorrect PPED to correct data (using current pay period)

Use the date of the PPED that needs to be adjusted, not the current PPED date.


Getting HelpGetting Help Staff of the Maryland State Retirement Agency are available to help you with any questions regarding accurate and timely reporting of pension payroll data.

Anytime you have a questions please refer to the ”Contact List” of the Employer Payroll Reporting Manual and give us a call or send us an email.

Together we can ensure that every member gets the proper credit and benefit for their employment.

84

Conclusion


Thank you!

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Conclusion

State Retirement Agency

Documents

Transcript of State Retirement Agency