| Attention: | All Human Resources and Payroll Officers |
|---|---|
| Subject: | Retirement Plan Election for New Higher Education Employees |
I. INTRODUCTION
The Office of the State Comptroller has been advised by legal counsel for the State Employees Retirement Commission 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). This requirement is a change to the current retirement plan election practice.
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 March 31, 2017 or later, 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 are also 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 attached 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 March 31, 2017 implementation date.
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 Retirement Division has developed a Retirement Plan Eligibility Chart as a reference guide, see attached document.
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-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:
Brenda K. Halpin, Director
Retirement Services Division
Four Attachments:
Default Retirement Elections Chart
Retirement Plan Eligibility Chart
Retirement Plan Comparison Chart
(PDF)
Condensed Retirement Plan Narrative
(PDF)
Return to Index of 2017 Retirement Division
Memoranda
Return to Index of Comptroller's Memoranda
Return to Comptroller's Home Page