STATE EMPLOYEES RETIREMENT COMMISSION MEDICAL EXAMINING BOARD For DISABILITY RETIREMENT		55 ELM STREET HARTFORD, CONNECTICUT 06106-1775 Telephone (860) 702-3480 Facsimile (860) 702-3489
	STATE OF CONNECTICUT
	RETIREMENT SERVICES DIVISION OFFICE OF THE STATE COMPTROLLER

RETIREMENT SERVICES DIVISION MEMORANDUM NO. 2011-04

August 9, 2011

TO THE HEADS OF ALL STATE AGENCIES

I. INTRODUCTION

Pursuant to the provisions of Chapter 66 of the Connecticut General Statutes, as amended by the SEBAC V collective bargaining agreement effective July 1, 1997, mandatory retirement plan contributions required of members of the State Employees Retirement System (SERS) Tier I, Tier II Hazardous duty and Tier IIA retirement plans and the Alternate Retirement Program (ARP) are picked up by the employer under Internal Revenue Code (IRC), Section 414(h) on a pre-tax basis.

Also pursuant to the IRC, the return of such contributions withheld from an employee's earnings incorrectly is not categorized as a distribution of monies from a retirement plan rather it is a return of earnings withheld in error. Consequently such monies should be returned to an employee through a check issued through the state payroll system.

Historically, incorrectly deducted SERS or ARP retirement plan contributions were returned to the affected employee by the Retirement Services Division (Division) through a separate refund check issued by the Division. The Division then manually requested that an adjustment to the employee?s W2 be made by the Comptroller's Payroll Services Division to properly reflect this refund as a return of earnings withheld in error.

Earlier this year and with the assistance of the Payroll Services Division, the Division created an automated process by which these monies are returned to affected employees through the state payroll system.

II. PROCEDURES

When an agency detects an error in an employee's retirement plan contribution deduction, they should take the following action:

• correct the employee's current CORE-CT payroll records if necessary;
• and notify the Division?s Data Base Unit in writing at the address on this letterhead or by email at osc.databaseunit@po.state.ct.us  of the error. This notification should include the check date with which the employee?s payroll retirement contribution coding and deductions have been corrected.

The Division will verify that the error has been corrected and audit the employee's contribution records. The Division will then provide the Payroll Services Division with the amount of monies to be returned to the affected employee. The Payroll Services Division will enter these monies as a credit in the affected employee's deductions. The credits will be identified with CORE deduction codes ADJSRF for SERS contributions and ADJARF for contributions from the Alternate Retirement Program (ARP). Agencies will begin seeing these adjustments immediately. Please note that these deduction codes are for Comptroller's Payroll Services Division use only.

III. CONCLUSION

Any questions regarding these procedures should be addressed to Elizabeth Hendrickson, Supervisor of the Division?s Data Base Unit, at 860-702-3517. Specific questions regarding ARP membership and contributions should be referred to Jim Schnell, the Division's ARP Coordinator, at 860-702-3508.

Very truly yours,

STATE EMPLOYEES RETIREMENT COMMISSION
KEVIN LEMBO, SECRETARY EX OFFICIO

BY:

Jeanne A. Kopek
Acting Division Director
Retirement Services Division

JAK/EMH/eh

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