RETIREMENT SERVICES DIVISION MEMORANDUM 2017-04

September 14, 2017

TO THE HEADS OF ALL STATE AGENCIES

Attention:    All Human Resources and Payroll Officers
Subject:    Retirement Plan Election for New Higher Education Employees

I. INTRODUCTION

The purpose of this memorandum is to assist agency personnel within Higher Education by providing information concerning the enrollment of their new employees during the on-going implementation of the 2017 SEBAC agreement between the State Employees Bargaining Agent Coalition and the State of Connecticut which itself provides for the implementation of the new State Employees Retirement System (SERS) Tier IV plan. Agencies should also remember that under the Internal Revenue Code (IRC) Section 414(h)(2) and based on Rev. Ruling 2006-43 all new higher education state employees must make an irrevocable election to participate in an applicable retirement plan offered by the employer, the State of Connecticut, no later than their first day of employment (i.e. date of hire).

II. ASSISTING NEW HIRES IN ELECTING A RETIREMENT PLAN

Each higher education agency must include the form CO-931h - Designation of Retirement System-Tier-Plan Beneficiary with the new hire package to all individuals being provided with an offer and/or appointment letter for an effective date of July 31, 2017, we strongly recommend that the letter to the new hire state that the retirement plan choice is irrevocable. A revised CO-931h form will be available under the Retirement Services Division forms on the State Comptroller's website shortly. The new hire package should include the Retirement Plan Comparison Chart, and the Condensed Retirement Plan Narrative For New Employees which are attached to this memorandum and will also be available on the State Comptroller's website. To assist our office in compliance with this requirement, higher education agencies must return the completed form CO-931h immediately to our office for processing without delay.

III. DEFAULT ELECTIONS

If the new employee fails to make a voluntary irrevocable retirement plan election by the first day of employment then the employee will automatically be defaulted into the applicable State Employee Retirement Plan depending on the respective bargaining unit as agreed upon through the collective bargaining process and is shown on the default chart. The automatic default is irrevocable.

The Office of the State Comptroller is currently working with the staff at Core-CT to make the necessary programming changes to coincide with the effective date of implementation.

IV. RETIREMENT PLAN ELIGIBILITY

In an effort to assist higher education state agencies with the appropriate retirement plan placement for new hires and rehires the Division had developed a Retirement Plan Eligibility Chart as a reference guide.

V. AGENCY PAYROLL STAFF RESPONSIBILITY

It is imperative that the agency payroll staff ensure that the new employee is appropriately coded in a retirement plan, either the retirement plan of the employee's choice or the default retirement plan. The proper retirement plan contributions must be deducted from the employee's first paycheck. Compliance with this requirement will assist the Division with the collection of all mandatory contributions for higher education employees.

VI. CONCLUSION

It is our expectation that this information will be distributed to all of your applicable business units that participate in the hiring of new employees. All new hiring packets are to include the OSC form CO-931h Designation of Retirement System -Tier-Plan and new form CO-999 Designation of Beneficiary and the Retirement Plan Comparison Chart to assist higher education new hires in determining the proper retirement plan that best meets the needs of the employee. It is important that each new hire understands the election of a retirement plan is an irrevocable decision.

All applicable Summary Plan Descriptions (SPD's) on the State Comptroller website will be updated soon to include this new language.

The Retirement Services Division staff is available to assist your office with this new requirement and any questions should be directed to the Customer Service Center at 860-702-3480 or by email to osc.rsd@ct.gov  . We appreciate your efforts in assisting our office with this change due to an Internal Revenue Code (IRC) requirement.

Very truly yours,
STATE EMPLOYEES RETIREMENT COMMISSION

KEVIN LEMBO, SECRETARY EX OFFICIO

BY:

P. Martha Carlson, Deputy Comptroller & Interim Director
Retirement Services Division

Attachments:
Retirement Plan Comparison Chart
Condensed Retirement Plan Narrative For New Employees
Retirement Plan Eligibility Chart
 

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