December 2010
TO:
Certifying Officers - Teachers’ Pension and Annuity Fund, Public
Employees’ Retirement System, and Police and Firemen’s Retirement
System
FROM:
Joseph Zisa, Manager 1, Fiscal Resources
SUBJECT:
Report of Contributions, 4th Quarter 2010 (October 1st to December
31st)
This memorandum has pertinent information concerning the completion of your Report
of Contributions (ROC). Please read this memorandum before you make any changes
to the ROC.
Should you have any questions or need assistance in completing the Report, please
refer to www.state.nj.us/treasury/pensions/epbam/finance/roc.htm
New - For Employers Who Receive ‘Stop Deductions’ Certifications for Members
If you receive a ‘stop deduction’ certification for a member who is on the IROC, you must
stop reporting deductions as of the date reflected on the certification. This certification
was produced as a result of the employee’s concurrent service with another employer
which, as a result of reforms contained in Chapter 1, P.L. 2010, makes employment with
your jurisdiction no longer eligible for pension service. Please adjust the member’s
months of service and base salary, if applicable, and select “terminated” from the drop
down box as the reason for the change.
IROC Reporting For Multiple Members
Chapter 1, P.L. 2010, requires that an employee enrolled after May 21, 2010, be eligible
for PERS or TPAF Tier 4 membership based upon only one position and requires the
retirement system to designate the position providing the higher or highest
compensation for the member from among any concurrently held positions. This
position will be used as the basis for eligibility for membership, service credit, the
compensation base for pension contributions, and for other pension calculations.
For current PERS or TPAF Tier 1, Tier 2, or Tier 3 multiple members, all concurrent
positions held without a break in service from May 21, 2010, will continue to qualify for
service credit and the compensation base for pension contributions and calculation of
benefits. However, provisions of Chapter 1, P.L. 2010, require that any new
concurrently held position begun after May 21, 2010, will not qualify for service credit or
the compensation base for pension contributions and calculation of retirement for any
PERS or TPAF multiple member. Current multiple employer relationships will be
terminated following any “break in service” not supported by an employer approved
leave of absence (LOA). For this purpose a “break in service” is being defined for
employment with any municipality, county, board of education or authority as any one
month period without service while not on an approved LOA. The Division may require
New Jersey Is An Equal Opportunity Employer
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Printed on Recycled and Recyclable Paper
Report of Contributions, 4th Quarter 2010
December 2010
Page 2
recertification of these employment relationships following a break in service with an
approved leave of absence. As a result, you may be asked to provide additional
information before being able to add a multiple member back to your report of
contributions following an approved LOA.
Deadline for Filing the Report of Contributions
The Division has been updating member accounts as early as four weeks following the
close of the calendar quarter. But to do so we need the support of all our employers.
Therefore, all reports are due by January 7, 2011. Should your report not be
received by the close of business on January 21, 2011, may not be used to update
member accounts and interest penalties will begin to accrue.
Delays in receiving reports affect the timeliness of the Division providing services to ALL
pension plan members, not just your employees and retirees. Unfortunately, we
continue to experience delays associated with employer late reporting.
When you receive your quarterly ROC, you should review it immediately. If you think
you will have a problem in meeting the filing deadline, or if there is anything you do not
understand, contact the Audit/Billing Section at (609) 292-3630. Normally, reporting
inquiries can be resolved with a telephone call. If other arrangements need to be made
to assist you in the completion of your ROC, the sooner you communicate that fact to the
Division the better for everyone involved.
Closure Of The Prosecutors Part Of The PERS
Chapter 1, P.L. 2010, closes the Prosecutors Part of the PERS to new members.
Prosecutors taking office after May 21, 2010, will be enrolled as “regular” Tier 4
members of the PERS — except that a county prosecutor who is appointed by the
Governor with the advice and consent of the Senate will be enrolled in the DCRP (or
regular PERS if a Tier 1 member continuously since July 1, 2007).
Prosecutors who were enrolled in the Prosecutors Part of the PERS between its opening
in 2001 and its closure on May 21, 2010, will be permitted to continue as members of the
Prosecutors Part and receive Prosecutors Part benefits, provided that they continue in
eligible Prosecutors Part service.
PERS & TPAF Tier 3 - Minimum Annual Base Salary
As a result of Chapter 89, P.L. 2008, the Director of the Division of Pensions and
Benefits shall adjust each year the minimum annual base salary for participation in the
Teachers’ Pension and Annuity Fund (TPAF) and the Public Employees’ Retirement
System (PERS) for those members in Tier 3 service (Tier 3 service covers those
individuals eligible to enroll in TPAF or PERS on or after November 2, 2008). The
adjustment is made annually in accordance with changes in the Consumer Price Index,
pursuant to N.J.A.C. 17:3-2.1(g) for TPAF membership and N.J.A.C. 17:2-2.1(c) for
PERS membership.
Please take note that, pursuant to these provisions, the Division of Pensions and
Benefits is making no change to the annual base salary for participation in the TPAF and
PERS from $7,700. This minimum annual base salary continues in effective through
January 1, 2011.
Employees who fall below the minimum annual base salary amount in any calendar year
may be eligible to participate in the Defined Contribution Retirement Program. Please
Report of Contributions, 4th Quarter 2010
December 2010
Page 3
review Fact Sheet #82, Defined Contribution Retirement Program (DCRP) If Ineligible for
PERS or TPAF, for additional information.
PERS & TPAF Tiers 2 & 3 - Maximum Compensation
Chapter 103, P.L. of 2007, provides that new members of PERS and TPAF are subject
to a maximum compensation limit for PERS or TPAF pension contributions and benefits.
The maximum compensation is based on the annual maximum wage for Social Security.
Note: The PERS and TPAF maximum compensation limit does not apply to
employees who were already members of the PERS or TPAF prior to July 1, 2007.
For calendar year 2010, the annual maximum wage for Social Security is $106,800
and is subject to change at the start of each calendar year. Therefore, a new employee
enrolled in the PERS or TPAF on or after July 1, 2007, who earns in excess of $106,800
before the end of 2010 will have his or her TPAF or PERS base salary capped – limiting
the amount used to calculate benefits and contributions to TPAF or PERS for pension or
contributory insurance. These individuals with earnings over the Social Security
maximum wage base are also eligible for benefits under the Defined Contribution
Retirement Program (DCRP). DCRP plan materials, enrollment forms, and other
program information are available at www.state.nj.us/treasury/pensions/dcrp1.shtml
Note: Until reporting procedures are developed for PERS and TPAF members’
who exceed the social security maximum of $106,800 for 2010, continue to report
the pension and contributory insurance (if applicable) for the excess salary as you
did in the past. The Division will forward the pension contributions to the DCRP
carrier. Excess contributory insurance payments will be refunded to the
employee.
PFRS – Maximum Compensation
Chapter 1, P.L. 2010, provides that new members eligible to enroll in the Police and
Firemen’s Retirement System on or after May 21, 2010 are subject to a maximum
compensation limit for PFRS contributions and benefit. The maximum compensation is
based on the annual maximum wage for Social Security.
Note: Until reporting procedures are developed for PFRS members’ who exceed
the social security maximum of $106,800 for 2010, continue to report the pension
and contributory insurance for the excess salary as you have in the past. The
Division will forward the pension contributions to the DCRP carrier. Any excess
pension and contributory insurance payments will be refunded to the employee.
Reporting of Retroactive Salary Increases
As a result of the establishment of maximum compensation limits for certain members of
the Public Employees’ Retirement System (PERS), the Teachers’ Pension and Annuity
Fund (TPAF) and the Police and Firemen’s Retirement System (PFRS), 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.
Report of Contributions, 4th Quarter 2010
December 2010
Page 4
Procedures for Reporting of Retroactive Salary
The current procedures in place to allow employers to report retroactive salary increases
are as follows:
Once the new contract is received by the Division of Pension and Benefits and
reviewed, a spreadsheet will be sent to the employer. This spreadsheet will
contain all data submitted for each member for the period of the retroactive salary
adjustment. The employer must then supply the new base salary for each quarter
affected for members receiving a retroactive salary adjustment. The total
additional pension and contributory insurance contribution due will appear at the
top of the spreadsheet page. Please submit a check for the necessary
contributions, payable to the retirement system, and return the spreadsheet via email to the sending party at the Division of Pensions and Benefits.
Addition to IROC
Due to the implementation of Chapter 103, P.L. 2007, Chapter 89, P.L. 2008, and
Chapter 1, P.L 2010, a new column has been added to the IROC to identify any
members affected by these laws. The column heading is “TIER”. Chapter 103, P.L.
2007, members will be identified as Tier 2; Chapter 89, P.L. 2008, members will be
identified as Tier 3; and Chapter 1, P.L.2010, members will be identified as Tier 4.
Tiers Defined for the TPAF and the PERS.
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Tier 1: Member who were enrolled prior to July 1, 2007
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Tier 2: Members who were eligible to enroll on or after July 1, 2007 and prior to
November 2, 2008 pursuant to the provisions of Chapter 103, P.L. 2007
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Tier 3: Members who were eligible to enroll on or after November 2, 2008
pursuant to the provisions of Chapter 89, P.L. 2010.
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Tier 4: Members who were eligible to enroll on or after May 21, 2010 pursuant to
the provisions of Chapter 1, P.L. 2010.
Changing Banking Information For TEPS
On or after the date that the new checking account becomes effective, a Notice of
Changes for TEPS should be faxed to (866) 568-2495 or mailed to:
New Jersey Department of Treasury
Division of Pensions and Benefits
PO Box 9581
Trenton NJ 08650-9581
Please call the TEPS Helpline (888) 835-3345 if you have any questions regarding the
status of your change or if you have any questions regarding your password or the
status of your transmittal payment.
Report of Contributions, 4th Quarter 2010
December 2010
Page 5
Retirement Plan Limits for 2011
The IRS has announced the cost-of-living adjustments (COLAs) for retirement plans.
Many of the limits applicable to pension, and other retirement plans, are unchanged from
2010 to 2011 but are noted here for your reference.
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Annual compensation limit. The maximum amount of annual compensation that
can be taken into account for the purpose of determining benefits and
contributions under Code Sec. 401(a)(17) is unchanged and remains at
$245,000. Retirement plans administered by the Division of Pensions and
Benefits affected by this change include the Teachers' Pension and Annuity Fund
(TPAF), the Public Employees' Retirement System (PERS), the Police and
Firemen's Retirement System (PFRS), the Supplemental Annuity Collective Trust
(SACT), the Alternate Benefit Program (ABP), the Additional Contributions TaxSheltered (ACTS) program, the Deferred Compensation Retirement Program
(DCRP) and the New Jersey State Employees Deferred Compensation Plan.
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Chapter 113, P.L. 1997. N.J.S.A. 43:3C-9.3 & 43:3C-9.4 permits higher annual
compensation limits for members of TPAF, PERS, PFRS and ABP enrolled prior
to July 1, 1996, if, prior to July 1, 1997, the employer certified to the Division
Director that the employer will pay the additional cost for not applying the lower
Code Sec. 401(a)(17) Annual Compensation Limit to these members. If you are
such an employer, you may report pensionable salary in excess of the Code Sec.
401(a)(17) limits mentioned earlier for those employees in the affected class up
to the higher limit permitted for members of TPAF, PERS, PFRS and ABP
enrolled prior to July 1, 1996, under the provisions of Chapter 113, P.L. 1997, is
unchanged and remains at $360,000 for 2011.
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Defined contribution plans. The limitation on the annual additions to a
participant's defined contribution account under Code Sec. 415(c)(1)(A) is
unchanged and remains at the lesser of $49,000 or 100% of the participant's
compensation. Annual additions are the sum for any year of all employer and
employee contributions to the defined contribution plan. For purposes of
applying the limitations all defined contribution plans of an employer are to be
treated as one defined contribution plan. Defined contribution plans include an
employee annuity plan described in and an annuity contract described in section
403(b). Defined contribution plans administered by the Division of Pensions and
Benefits affected by this change include the SACT, DCRP, ABP and ACTS
programs and the New Jersey State Employees Deferred Compensation Plan.
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Elective deferrals. The limitation under Code Sec. 402(g)(1) on the exclusion for
elective deferrals described in Code Sec. 402(g)(3) is unchanged and remains at
the lesser of $16,500 or 100% of the participant's compensation. Defined
contribution plans administered by the Division of Pensions and Benefits affected
by this change include the SACT, DCRP, ABP and ACTS programs.
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Deferred compensation plans. The limit on deferrals under Code Sec. 457(e)(15)
concerning deferred compensation plans of state and local governments and taxexempt organizations is unchanged and remains at the lesser of $16,500 or
100% of the participant's compensation. The deferred compensation plan
administered by the Division of Pensions and Benefits affected by this change is
the New Jersey State Employees Deferred Compensation Plan and is available
Report of Contributions, 4th Quarter 2010
December 2010
Page 6
to Employees of the State and other State chartered commissions, authorities
and boards. Other governmental employers in the State my offer similar, selfadministered programs.
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Catch-up contributions. The dollar limit under Code Sec. 414(v)(2)(B)(i) for catchup contributions to an applicable employer plan other than a plan described in
Code Sec. 401(k)(11) or Code Sec. 408(p) for individuals aged 50 or over is
unchanged and remains at $5,500. Defined contribution plans administered by
the Division of Pensions and Benefits affected by this change include the SACT,
ABP and ACTS programs.
Lower compensation limits are in place for TPAF and PERS Tier 2 and Tier 3 members
enrolled on or after July 1, 2007. These members’ annual base salary is limited and
may not exceed the amount of the Social Security Taxable Wage Base. The Social
Security Taxable Wage Base and the compensation limit for TPAF and PERS Tier 2 and
Tier 3 members is unchanged and remains at $106,800 for 2011. Please refer to
Chapter 103, P.L. 2007 for details.