State Retirement Agency
Payroll Reporting Education Project
Welcome
Presenter: Laura Gorrell
Presented: April 25, 2008
1
State Retirement Agency
Overview
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
2
State Retirement Agency
Introduction
SRA’s
Mission
To 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.
Vision
A state that provides a fully-funded retirement system that is
affordable to all participating employers and provides guaranteed
adequate disability, survivor, and retirement benefits.
3
State Retirement Agency
Introduction
State 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
State Retirement Agency
Introduction
SRA
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
State Retirement Agency
Introduction
You
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.
6
State Retirement Agency
Introduction
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)
7
State Retirement Agency
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.
8
State Retirement Agency
Introduction
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
9
State Retirement Agency
Eligibility/Enrollment
Topics:
- Who is eligible?
- Enrollment Process
- Consequences of Incomplete Enrollment
- Employers’ Responsibilities
- Common Enrollment Issues
10
State Retirement Agency
Eligibility/Enrollment
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.
11
State Retirement Agency
Eligibility/Enrollment
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?
12
State Retirement Agency
Eligibility/Enrollment
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, and
3) 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
State Retirement Agency
Eligibility/Enrollment
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.
14
State Retirement Agency
Eligibility/Enrollment
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.
15
State Retirement Agency
Eligibility/Enrollment
Who is not 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.
16
State Retirement Agency
Eligibility/Enrollment
Common Questions
1) How does the SRA define a “temporary employee”?
2) How does the SRA define a “contractual employee”?
17
State Retirement Agency
Eligibility/Enrollment
How does the SRA define “temporary employee”?
A temporary employee is an employee whose appointment
may not exceed 6 months.
18
State Retirement Agency
Eligibility/Enrollment
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
State Retirement Agency
Eligibility/Enrollment
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.
20
State Retirement Agency
Eligibility/Enrollment
Membership Enrollment Process: Easy/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.
21
State Retirement Agency
Eligibility/Enrollment
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.
22
State Retirement Agency
Eligibility/Enrollment
SRA administers many separate plans of SRPS,
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 Plan
10. Police and Fire Plans (closed eff. 1/1/2005)
23
State Retirement Agency
Eligibility/Enrollment
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.
24
State Retirement Agency
Eligibility/Enrollment
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
State Retirement Agency
Eligibility/Enrollment
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.
26
State Retirement Agency
Eligibility/Enrollment
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.
27
State Retirement Agency
Eligibility/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
28
State Retirement Agency
Eligibility/Enrollment
Common Enrollment Issues
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
Forms must be submitted upon
employment
Date)
29
State Retirement Agency
Reporting
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
30
State Retirement Agency
Reporting
Important Definitions
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
State Retirement Agency
Reporting
Important Definitions
Pay Date: Date employees actually get paid.
32
State Retirement Agency
Reporting
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.
33
State Retirement Agency
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
34
State Retirement Agency
Reporting
Important Definitions
Annual Earnable Compensation (AEC)
(aka Full-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
State Retirement Agency
Reporting
Important Definitions
Actual 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
State Retirement Agency
Reporting
Important Definitions
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 $.
37
State Retirement Agency
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.
38
State Retirement Agency
Reporting
Important Definitions
Hours 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.
39
State Retirement Agency
Reporting
Important Definitions
Standard 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
State Retirement Agency
Reporting
Common Question
How 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 fulltime employee. The “Standard Hours” reported should be the same
“Standard Hours” reported for your regular employees.
41
State Retirement Agency
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.
42
State Retirement Agency
Reporting
Important Definitions
Percentage of Time (Budgeted 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
43
State Retirement Agency
Reporting
Important Definitions
Contributory Pay Period: Any Pay Period where the
employer deducts employee contributions from the
employee’s pay.
Non-contributory Pay Period: Any Pay Period where the
employer does not deduct employee contributions from
the employee’s pay.
44
State Retirement Agency
Reporting
Important Definitions
Member 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.
45
State Retirement Agency
Reporting
Reporting 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).
46
State Retirement Agency
Reporting
Reporting 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.
47
Reporting
Reporting
Full-time employee working 12 months
Hours Worked:
Standard Hours:
Actual Salary:
Earnable Salary:
Contribution Rate:
Pays:
Contributory Pays:
35 per week
35 per week
$52,000
$52,000
4%
26
26
Biweekly reporting:
PPED
10/5/2007
Actual
Annual
Compensation
52000
Contribution
80.00
Hours
Hours
Worked Standard
70.0
70.0
% of
Time
00
Pay
Period
Base
Salary
2000.00
Annual
Earnable
Compensation
52000
48
Reporting
Reporting
Full-time employee working 12 months
Annual Totals:
Month
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Total:
Actual
Annual
Compensation
$52,000
$52,000
$52,000
$52,000
$52,000
$52,000
$52,000
$52,000
$52,000
$52,000
$52,000
$52,000
Contribution
$160.00
$160.00
$160.00
$160.00
$240.00
$160.00
$160.00
$160.00
$160.00
$160.00
$160.00
$240.00
$2,080.00
Hours
Hours
Worked Standard
140 .0
140.0
140 .0
140.0
140 .0
140.0
140 .0
140.0
210 .0
210.0
140 .0
140.0
140 .0
140.0
140 .0
140.0
140 .0
140.0
140 .0
140.0
140 .0
140.0
210 .0
210.0
1,820
1,820
% of
Time
00
00
00
00
00
00
00
00
00
00
00
00
Pay
Period
Base
Salary
$4,000.00
$4,000.00
$4,000.00
$4,000.00
$6,000.00
$4,000.00
$4,000.00
$4,000.00
$4,000.00
$4,000.00
$4,000.00
$6,000.00
Annual
Earnable
Compensation
$52,000
$52,000
$52,000
$52,000
$52,000
$52,000
$52,000
$52,000
$52,000
$52,000
$52,000
$52,000
49
Reporting
Reporting
Full-time teacher working 10 months and being paid over 10 months
Hours Worked:
Actual Salary:
Contribution Rate:
Pays:
30 per week
$45,000
4%
20
Standard Hours:
Earnable Salary:
30 per week
$45,000
Contributory Pays:
20
Semi-monthly reporting (July and August):
PPED
xx/x/2007
Actual
Annual
Compensation
Not reported
Contribution
Hours
Hours
Worked Standard
Pay Period
Base
Salary
Annual
Earnable
Compensation
Pay Period
% of Base
Time Salary
00
2250.00
Annual
Earnable
Compensation
45000
% of
Time
Semi-monthly reporting (September through June):
PPED
xx/x/2007
Actual
Annual
Compensation
45000
Contribution
90.00
Hours
Hours
Worked Standard
60.0
60.0
50
Reporting
Reporting
Full-time teacher working 10 months and being paid over 10 months
Annual Totals:
Month
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Total:
Actual
Annual
Compensation
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
Contribution
Hours
Hours
Worked Standard
$180.00
$180.00
$180.00
$180.00
$180.00
$180.00
$180.00
$180.00
$180.00
$180.00
$1,800.00
120 .0
120 .0
120 .0
120 .0
120 .0
120 .0
120 .0
120 .0
120 .0
120 .0
1,200
120.0
120.0
120.0
120.0
120.0
120.0
120.0
120.0
120.0
120.0
1,200
% of
Time
00
00
00
00
00
00
00
00
00
00
Pay
Period
Base
Salary
Annual
Earnable
Compensation
$4,500.00
$4,500.00
$4,500.00
$4,500.00
$4,500.00
$4,500.00
$4,500.00
$4,500.00
$4,500.00
$4,500.00
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
51
Reporting
Reporting
Full-time teacher working 10 months and being paid over 12 months
Hours Worked:
Actual Salary:
Contribution Rate:
Pays:
30 per week
$45,000
4%
24
Standard Hours:
Earnable Salary:
30 per week
$45,000
Contributory Pays:
20
Semi-monthly reporting (July and August):
PPED
xx/x/2007
Actual
Annual
Compensation
45000
Contribution
0.00
Hours
Hours
Worked Standard
0.0
0.0
% of
Time
00
Pay Period
Base
Salary
1875.00
Annual
Earnable
Compensation
45000
% of
Time
00
Pay Period
Base
Salary
1875.00
Annual
Earnable
Compensation
45000
Semi-monthly reporting (September through June):
PPED
xx/x/2007
Actual
Annual
Compensation
45000
Contribution
90.00
Hours
Hours
Worked Standard
60.0
60.0
52
Reporting
Reporting
Full-time teacher working 10 months and being paid over 12 months
Annual Totals
Month
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Total:
Actual
Annual
Compensation
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
Contribution
$0.00
$0.00
$180.00
$180.00
$180.00
$180.00
$180.00
$180.00
$180.00
$180.00
$180.00
$180.00
$1,800.00
Hours
Worked
0.0
0.0
120 .0
120 .0
120 .0
120 .0
120 .0
120 .0
120 .0
120 .0
120 .0
120 .0
1,200
Hours
Standard
0.0
0.0
120.0
120.0
120.0
120.0
120.0
120.0
120.0
120.0
120.0
120.0
1,200
% of
Time
00
00
00
00
00
00
00
00
00
00
00
00
Pay
Period
Base
Salary
$3,750.00
$3,750.00
$3,750.00
$3,750.00
$3,750.00
$3,750.00
$3,750.00
$3,750.00
$3,750.00
$3,750.00
$3,750.00
$3,750.00
Annual
Earnable
Compensation
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
$45,000
53
State Retirement Agency
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.
54
State Retirement Agency
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.
55
State Retirement Agency
Reporting
Reporting 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.
56
State Retirement Agency
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.
57
State Retirement Agency
Reporting
Reporting for Part-time Employees
Example A
Part-time Employee Using the SRA Budget Method
Example B
Part-time Employee with a 25% Decrease in Budgeted
Hours Using the SRA Budget Method
58
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
Contribution Rate:
4%
Pays:
26
Contributory 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)
59
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
Contribution Rate:
4%
Pays:
26
Contributory 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
60
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
Contribution Rate:
4%
Pays:
26
Contributory Pays:
26
Step 1: Determine the Part Time Percentage = 40%
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
61
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
Contribution Rate:
4%
Pays:
26
Contributory Pays:
26
Step 1:
Step 2:
Step 3:
Step 4:
Determine the Part Time Percentage = 40%
Determine Full Time Equivalent (FTE) Compensation = $31,200
Determine Actual Annual Compensation = $12,480
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
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
Contribution Rate: 4%
Pays: 26
Contributory Pays: 26
Step 1:
Step 2:
Step 3:
Step 4:
Step 5:
Determine the Part Time Percentage = 40%
Determine Full Time Equivalent (FTE) Compensation = $31,200
Determine Actual Annual Compensation = $12,480
Determine Contributions Due each Pay Period = $19.20
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
Annual
PPED
Compensation
10/5/2007 12480
Contribution
19.20
Hours
Hours
Worked Standard
32.0
80.0
Pay Period
Base
Time Salary
40 480.00
Annual
Earnable
Compensation
31200
63
Reporting
Reporting
Part-time employee using the SRA Budget Method: Example A
Annual Totals:
Month
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Total:
Actual
Annual
Compensation
$12,480
$12,480
$12,480
$12,480
$12,480
$12,480
$12,480
$12,480
$12,480
$12,480
$12,480
$12,480
Contribution
$38.40
$38.40
$38.40
$38.40
$57.60
$38.40
$38.40
$38.40
$38.40
$38.40
$38.40
$57.60
$499.20
Hours
Worked
64.0
60.0
66.0
64.0
92.0
68.0
70.0
60.0
64.0
64.0
62.0
96.0
830
Hours
Standard
160.0
160.0
160.0
160.0
240.0
160.0
160.0
160.0
160.0
160.0
160.0
240.0
2,080
% of
Time
40
40
40
40
40
40
40
40
40
40
40
40
Pay
Period
Base
Salary
$960.00
$900.00
$990.00
$960.00
$1,380.00
$1,020.00
$1,050.00
$900.00
$960.00
$960.00
$930.00
$1,440.00
Annual
Earnable
Compensation
$31,200
$31,200
$31,200
$31,200
$31,200
$31,200
$31,200
$31,200
$31,200
$31,200
$31,200
$31,200
64
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)
Annual Earnable Compensation (FTE Salary): $15.00 per hour
Contribution Rate:
4%
Pays:
26
Contributory 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)
65
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)
Annual Earnable Compensation (FTE Salary): $15.00 per hour
Contribution Rate:
4%
Pays:
26
Contributory Pays:
26
Step 1: Determine the Part Time Percentage = 30%
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
Budgeted Hours:
624 (12 hours per week)
Standard Full-time Hours:
2,080 (40 hours per week)
Annual Earnable Compensation (FTE Salary): $15.00 per hour
Contribution Rate:
4%
Pays:
26
Contributory Pays:
26
Step 1: Determine the Part Time Percentage = 30%
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 30%
Actual Annual Compensation = $9,360.00
67
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
Budgeted Hours:
624 (12 hours per week)
Standard Full-time Hours:
2,080 (40 hours per week)
Annual Earnable Compensation (FTE Salary): $15.00 per hour
Contribution Rate:
4%
Pays:
26
Contributory Pays:
26
Step 1:
Step 2:
Step 3:
Step 4:
Determine the Part Time Percentage = 30%
Determine Full Time Equivalent (FTE) Compensation = $31,200
Determine Actual Annual Compensation = $9,360
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)
Annual Earnable Compensation (FTE Salary): $15.00 per hour
Contribution Rate: 4%
Pays:
26
Contributory Pays: 26
Step 1:
Step 2:
Step 3:
Step 4:
Determine
Determine
Determine
Determine
the Part Time Percentage = 30%
Full Time Equivalent (FTE) Compensation = $31,200
Actual Annual Compensation = $9,360
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
Annual
PPED Compensation
2/15/2007 9360
Contribution
14.40
Pay Period
Annual
Hours
Hours
Base
Earnable
Worked Standard Time Salary
Compensation
24.0
80.0
30 360.00
31200
69
Reporting
Reporting
Part-time employee using the SRA Budget Method: Example B
Annual Totals:
Month
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Total:
Actual
Annual
Compensation
$12,480
$12,480
$12,480
$12,480
$12,480
$12,480
$12,480
$9,360
$9,360
$9,360
$9,360
$9,360
Contribution
$38.40
$38.40
$38.40
$38.40
$57.60
$38.40
$38.40
$28.80
$28.80
$28.80
$28.80
$43.20
$455.40
Hours
Worked
64.0
60.0
66.0
64.0
92.0
68.0
70.0
40.0
48.0
49.0
46.0
72.0
739
Hours
Standard
160.0
160.0
160.0
160.0
240.0
160.0
160.0
160.0
160.0
160.0
160.0
240.0
2,080
% of
Time
40
40
40
40
40
40
40
30
30
30
30
30
Pay
Period
Base
Salary
$960.00
$900.00
$990.00
$960.00
$1,380.00
$1,020.00
$1,050.00
$600.00
$720.00
$735.00
$690.00
$1,080.00
Annual
Earnable
Compensation
$31,200
$31,200
$31,200
$31,200
$31,200
$31,200
$31,200
$31,200
$31,200
$31,200
$31,200
$31,200
70
State Retirement Agency
Reporting
Payroll/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.)
71
State Retirement Agency
Reporting
Employer 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.
72
State Retirement Agency
Reporting
Payroll 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
73
State Retirement Agency
Reporting
Secure 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.
74
State Retirement Agency
Reporting
Common Payroll Reporting Issues
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 parttime 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.)
75
State Retirement Agency
Adjustments
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.
76
State Retirement Agency
Adjustments
Retroactive Salary Adjustment
Retroactive 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
State Retirement Agency
Adjustments
Contribution 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
State Retirement Agency
Adjustments
Hours 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.
79
State Retirement Agency
Adjustments
Payroll 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.
80
State Retirement Agency
Adjustments
Failure 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.
81
State Retirement Agency
Adjustments
Employers' 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.)
82
State Retirement Agency
Adjustments
Common Payroll Adjustments Issues
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 Use the date of the PPED that
data (using current pay period) needs to be adjusted, not the
current PPED date.
83
State Retirement Agency
Conclusion
Getting 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
State Retirement Agency
Conclusion
Thank you!
85