2017 Employer Workshop Workbook. Reporting Basics (Part 1)

Transcription

1 2017 Employer Workshop Workbook Reporting Basics (Part 1)

2 Table of Contents PART 1 Section 1 General Overview Section 2 Membership Section 3 Compensation Section 4 Employer Pickup Section 5 Payroll Reporting and Payments This workbook is provided to you as a training tool for use during today s workshop. It is not intended to be an authoritative document or to include all STRS Ohio reporting requirements. For complete information about STRS Ohio and reporting requirements, refer to Chapter 3307 of the Revised Code and the Administrative Code Rules. State Teachers Retirement System of Ohio 275 E. Broad St. Columbus, OH

3 General Overview Employer responsibilities As a fiscal officer for employers, you play a key role in reporting and maintaining accurate retirement information for your employees who are STRS Ohio members. The employment cycle of a member and the employer s role The diagram below details the employment cycle of a member and the employer s role in each step. Reemployed Retiree Reporting Member returns to an STRS Ohio-covered position Retirement Reporting Member chooses to retire or withdraw account Employer provides final account information to STRS Ohio STRS Ohio calculates member s final benefit New Hire Reporting Member is hired Employer notifies STRS Ohio Member selects retirement plan STRS Ohio creates member retirement account Payroll Reporting Member is compensated for service to employer Employer remits payroll reports and member and employer contributions to STRS Ohio Annual Reporting Employer provides STRS Ohio with total contributions and service credit earned during the fiscal year STRS Ohio reconciles member s retirement account and posts contributions and service credit for the fiscal year Employer Responsibilities Notify STRS Ohio of new hires and reemployed retirees Submit payroll reports and required member and employer contributions each payroll period Make corrections to member accounts if there are payroll reporting or service credit errors Notify STRS Ohio if a pickup plan has been adopted or modified Complete member requests to purchase absences and leaves or eligible service Submit completed deposit and service reports and an annual report by stated due dates to certify contributions and service credit Certify member withdrawal applications Report any changes to employer s address or individual contact information Respond to STRS Ohio requests for information in a timely manner General Overview Page 1

4 Plans offered to STRS Ohio members Once membership is established in STRS Ohio, members can choose from three different retirement plan options Defined Benefit Plan, Defined Contribution Plan or Combined Plan. Members have 180 days from their first day of paid service to select an STRS Ohio retirement plan option. The STRS Ohio Defined Benefit Plan is a retirement plan in which the benefits are defined in advance and are based on age, final average salary and years of service. The contributions are invested by STRS Ohio investment staff and external investment professionals. The STRS Ohio Defined Contribution Plan is a retirement plan in which the benefits are not defined in advance. Only member and employer contributions are defined. Members select their own investment choices and their retirement income is based on the performance of those investments. The STRS Ohio Combined Plan is a retirement plan option that combines elements of both the Defined Benefit Plan and Defined Contribution Plan. Members who select the Defined Contribution or Combined Plan are offered the opportunity to reselect their retirement plan in their fifth year of membership. The table below shows a comparison of some of the elements of the three plans. Plan Comparison Defined Benefit Plan Defined Contribution Plan Combined Plan Retirement Income Based on a calculation that uses the member s age, years of service and final average salary. Based on the amount of member and employer contributions deposited to the member s account, the performance of investment choices selected by the member and the annuity rate in effect at the time of retirement. Based on separate retirement benefits that are paid from the defined benefit and defined contribution portions of the member s account. Retirement, Survivor and Disability Benefits Member has survivor and disability benefits while teaching. Retirement, survivor and disability benefits are limited to the value of the member s account. Contributions received from the employer pay for a combination of service retirement, survivor and disability benefits. Health Care Coverage Access provided to retirees who meet the necessary qualifications currently, 15 years of service credit.* Access not available. Access provided to retirees who meet the necessary qualifications currently, 15 years of service credit.* *Twenty or more years of qualifying credit for retirements on or after Aug. 1, General Overview Page 2

5 Notes and figures General Overview Page 3

6 Notes and figures General Overview Page 4

7 Membership Who is a member of STRS Ohio? A member is an educator who currently contributes to STRS Ohio for teaching service provided in or through an Ohio public school or has an account balance with STRS Ohio. As an STRS Ohio employer, it is critical that you correctly identify and report employees who should be members of STRS Ohio. Ohio law defines STRS Ohio membership in Section of the Revised Code (R.C.). Generally, membership is required for: Any person paid from public funds and employed in the public schools under any type of contract described in Section or , R.C., in a position for which the person is required to have a license issued pursuant to Sections to , R.C. Any person employed as a teacher or faculty member in a community school or a science, technology, engineering and mathematics (STEM) school pursuant to Chapter 3314 or 3326, R.C. Any other teacher or faculty member employed in any school, college, university, institution or other agency wholly controlled and managed, or supported in whole or in part, by the state or any of its subdivisions. The educational employees of ODE. Membership is not required for any person employed by a community school operator who was withholding and paying Social Security taxes for persons employed in the school as teachers on or before Feb. 1, 2016, unless the person had contributing service with an Ohio community school within the last year. STRS Ohio has the authority to make membership determinations as set forth by Chapter 3307, R.C. New Hire/Reemployed Checklist New hire/reemployed retiree notification SSA-1945 form Reemployed retirees: Public meetings, and Public notices (If applicable, see Page 5) Membership Page 1

8 Membership is generally determined based on the position, not the person. Full-time and part-time teachers Superintendents Substitute teachers County board of developmental disabilities teachers Adult education instructors Tutors Guidance counselors Psychologists Occupational therapists and assistants Physical therapists and assistants Auxiliary services personnel (In positions that require licensure under Sections to , Revised Code) Teachers aides/paraprofessionals Bus drivers Food service personnel Custodial or maintenance personnel Technology coordinators Treasurers Business managers Secretarial or clerical personnel Latchkey employees School board members Early childhood instructors Security officers Auxiliary services personnel (In positions that do not require licensure under Sections to , Revised Code) If you are unsure whether or not an employee should be a member of STRS Ohio, please forward a job description to report@strsoh.org for review and determination. Membership Page 2

9 Are there any exceptions? There are a few exceptions where licensure of the individual member is used to determine membership. Position Coaches and athletic directors Nurses Speech-language pathologists and audiologists Preschool teachers Retirement System Membership Determination Does the individual hold a valid teaching license? Yes STRS Ohio No SERS Does the school require an ODE school nurse license? Yes STRS Ohio No SERS Did your school receive an exception from ODE under Section of the Revised Code? No STRS Ohio Yes SERS Special Education Preschool Program Head teachers STRS Ohio Itinerant teachers STRS Ohio Secondary classroom teachers or aides SERS Regular or Typical Preschool Program Head teachers SERS Itinerant teachers STRS Ohio Secondary classroom teachers or aides SERS ODE does not require that head preschool teachers in regular preschools have a professional educator license. This ODE licensing requirement is the determining factor for retirement system membership for a preschool teacher, regardless of the license an individual holds or what the school district may require. Membership Page 3

10 Are contributions required for individuals hired through independent or third-party contracts to provide services to our district? Hiring an individual to fill an STRS Ohio-covered position as an independent or third-party contractor does not necessarily relieve a public or community school for whom the individual performs services from the obligation to make contributions to STRS Ohio. The chief test in determining whether an individual is an employee or an independent contractor is the right to control the means and manner of performing the work. To assist schools with the determination of STRS Ohio membership for contracted services, a process has been developed by STRS Ohio. For complete details, please review the Contracted Services Membership Determination fact sheet at the end of this section. A copy of the Determination of STRS Ohio Membership for Contracted Services form is also included. Who is a reemployed retiree? A reemployed retiree is: Anyone receiving a retirement benefit from an Ohio public retirement system and has returned to Ohio public employment. An STRS Ohio member receiving benefits from the Defined Contribution or Combined Plans. A person hired in an STRS Ohio-covered position who retired from an Ohio public college or university and selected an alternative retirement plan (ARP). A Combined Plan member who has withdrawn the defined contribution portion of his or her account and has left the defined benefit portion of his or her account for a benefit at age 60. Retirees of federal, out-of-state or private employment are not considered reemployed retirees. Are there restrictions on reemployment? There are several restrictions retirees generally consider before becoming reemployed. Violations of any reemployment restrictions will result in the loss of benefits for the period of violation. In addition, contributions on violation earnings do not accrue interest. Instead, these are posted as penalty contributions and certification from the employer is required. A retiree cannot work with any Ohio public employer for the first two months following his or her retirement effective date. Retirees cannot volunteer in the same position from which they retired for the first two months following their retirement effective date. If a retiree violates the two-month restriction and returns to employment with his or her former employer immediately following retirement, there must be a minimum one-day break between the last day of employment as a member and the first day of employment as a reemployed retiree. This one-day break must be the last workday of the month before the service retirement date or the first workday of the retirement month. The one-day break must be a regular workday and cannot be over a weekend or holiday. Reemployment cannot begin until after the member s retirement is effective with STRS Ohio. After the first two months of retirement, a retiree can be reemployed and work an unlimited number of days in an STRS Ohio-covered position. Retirees employed at the time of retirement in positions with more than one employer covered by STRS Ohio, OPERS or SERS, who retire from the highest paying position, may continue to work with no waiting period in one or all of the lower paying or secondary positions provided they earned compensation in the secondary position for 12 consecutive months prior to and in the month of retirement. Retirees must wait two months before returning to any other public employment. Membership Page 4

11 There are no restrictions on federal, out-of-state or private employment. However, employment in an STRS Ohio-covered position through a temporary or private agency may be considered reemployment and subject to restrictions. Is there anything else to consider when rehiring a retiree? Public notice and public meeting requirements Section , R.C., mandates that employers proposing to continue the employment of a person in a position that is customarily filled by a vote of a board or commission, or rehire a person as a reemployed retiree to the same position he or she held before retiring, must comply with the following guidelines: No less than 60 days before the employment of a reemployed retiree is to begin, the board must give public notice that the person is or will be retired and is seeking employment with the employer. Between 15 and 30 days before the employment of a reemployed retiree is to begin, the board must hold a public meeting on the issue of the person being employed. Employers are asked to certify that these requirements have been met on the reemployed retiree notification. Questions about the public meeting and notice requirements should be directed to your district's legal counsel. How do I notify STRS Ohio of new members and reemployed retirees? Required forms Once you have hired an individual to an STRS Ohio-covered position, you must notify STRS Ohio of his or her employment within 10 business days of the member s first date on payroll. The first date on payroll is defined as the first date the teacher worked. STRS Ohio needs this information to establish the employee s membership in the system and to send plan option information to that individual. Once membership is established in STRS Ohio, a member can choose from three different retirement plan options Defined Benefit Plan, Defined Contribution Plan or Combined Plan. A new STRS Ohio member has 180 days from his or her first day of paid service to select an STRS Ohio retirement plan option. Even if the individual is a reemployed retiree, you still need to notify STRS Ohio of his or her reemployment. STRS Ohio requires the following information be submitted upon employment. 1. New hire or reemployed retiree notification This notification may be submitted online via ESS or an electronic file sent via secure file upload on the employer website. Do not send paper copies. However, a Member Information form (see Page 6) is available on the website for employers to collect new hire and reemployed retiree demographic data required for the notification process. See the Education & Training section of the website for brief tutorials on completing new hire and reemployed retiree notifications in ESS. If you are submitting the notifications via electronic file, record layout formats can be found on the website under Publications or Secure File Upload. 2. The SSA-1945 form Since this federal form (see Page 7) requires a member s signature, you will need to mail, scan or fax a completed copy to STRS Ohio at STRS Ohio prefers the form be scanned and uploaded via secure file upload on the employer website. Please refer to the directions page at the end of this section for step by step instructions. For our members protection, please do not scanned copies to STRS Ohio. Membership Page 5

12 MEMBER INFORMATION Please complete the information below and return to your employer within 10 days of your first workday. Section 1 Employee Information Social Security no. Name Birth date Male Female Address City, state, ZIP code First date on payroll with this employer (Retired employees should indicate first day worked with this employer after retirement date.) Are you currently receiving a monthly retirement benefit from an Ohio public employer or an alternative retirement plan (ARP)? Yes No If yes, please complete Section 2. Section 2 Retired Employee Only complete if you are receiving a monthly retirement benefit from an Ohio public employer or an ARP. Retirement date Type of retirement benefit: Service retirement Disability ARP Which retirement system pays your monthly retirement benefit? STRS State Teachers Retirement System of Ohio OPERS Ohio Public Employees Retirement System SERS School Employees Retirement System of Ohio OP&F Ohio Police & Fire Pension Fund SHP Highway Patrol Retirement System CRS City of Cincinnati Retirement System ARP Alternative Retirement Plan (option only for college and university retirees) School Use Only College and university employers: Is this employee eligible for an ARP? Yes No , 6/16/1 Membership Page 6

13 Social Security Administration Statement Concerning Your Employment in a Job Not Covered by Social Security Employee Name Employer Name Employee ID# Employer ID# Your earnings from this job are not covered under Social Security. When you retire, or if you become disabled, you may receive a pension based on earnings from this job. If you do, and you are also entitled to a benefit from Social Security based on either your own work or the work of your husband or wife, or former husband or wife, your pension may affect the amount of the Social Security benefit you receive. Your Medicare benefits, however, will not be affected. Under the Social Security law, there are two ways your Social Security benefit amount may be affected. Windfall Elimination Provision Under the Windfall Elimination Provision, your Social Security retirement or disability benefit is figured using a modified formula when you are also entitled to a pension from a job where you did not pay Social Security tax. As a result, you will receive a lower Social Security benefit than if you were not entitled to a pension from this job. For example, if you are age 62 in 2013, the maximum monthly reduction in your Social Security benefit as a result of this provision is $ This amount is updated annually. This provision reduces, but does not totally eliminate, your Social Security benefit. For additional information, please refer to Social Security Publication, Windfall Elimination Provision. Government Pension Offset Provision Under the Government Pension Offset Provision, any Social Security spouse or widow(er) benefit to which you become entitled will be offset if you also receive a Federal, State or local government pension based on work where you did not pay Social Security tax. The offset reduces the amount of your Social Security spouse or widow(er) benefit by two-thirds of the amount of your pension. For example, if you get a monthly pension of $600 based on earnings that are not covered under Social Security, two-thirds of that amount, $400, is used to offset your Social Security spouse or widow(er) benefit. If you are eligible for a $500 widow(er) benefit, you will receive $100 per month from Social Security ($500 - $400=$100). Even if your pension is high enough to totally offset your spouse or widow(er) Social Security benefit, you are still eligible for Medicare at age 65. For additional information, please refer to Social Security Publication, Government Pension Offset. For More Information Social Security publications and additional information, including information about exceptions to each provision, are available at You may also call toll free , or for the deaf or hard of hearing call the TTY number , or contact your local Social Security office. I certify that I have received Form SSA-1945 that contains information about the possible effects of the Windfall Elimination Provision and the Government Pension Offset Provision on my potential future Social Security Benefits. Signature of Employee Date Form SSA-1945 ( ) Destroy Prior Editions SSA-1945 form Membership Page 7

14 What if I forget to send new hire or reemployed retiree notifications to STRS Ohio? If for some reason you have not provided STRS Ohio with a new hire or reemployed retiree notification, you will receive a new hire 30-day report that lists all members for whom notification forms have not been received. Reports should be reviewed for possible errors such as an incorrect Social Security number. A sample report is below. Employer: 9599 MEGHAN MELBOURNE 09/05/17 OHIO LOCAL SCHOOLS 1234 MARKET ST ANYTOWN, OH Please submit online via ESS a new hire notification and/or reemployed retiree notification to STRS Ohio for each employee listed below as soon as possible. Each of these employees has appeared on at least one payroll report from your school. Employers must send this information for all employees who are employed in an STRS Ohio-covered position within 10 business days of their first date on payroll. You can submit the new hire and reemployed retiree notifications via the secure area of the employer website ( or by submitting a properly formatted electronic file. If you have any questions about how to submit this information or about why it is needed, please call the Employer Reporting Department toll-free at SSN NAME FIRST PAY DATE FORM REQUESTED XXXXX6789 TAMMY TUCKER 08/21/2017 NEW HIRE XXXXX3219 GILBERT SULLIVAN 07/24/2017 NEW HIRE XXXXX8912 OLIVER O NEAL 07/31/2017 REEMPLOYED RETIREE XXXXX4321 GEORGE BURNS 07/24/2017 NEW HIRE New hire 30-day report Membership Page 8

15 Do I need to include reemployed retirees on my annual report? Yes, you will need to include reemployed retiree contributions on the annual report. The member type column should be marked with an R. Reemployed retirees do not earn service credit. Are reemployed retirees eligible for health care coverage through STRS Ohio? Coverage under the STRS Ohio Health Care Program is limited for non-medicare enrollees employed in public or private positions. Employed enrollees are eligible only for secondary coverage through STRS Ohio s Basic Plan if they: 1. Are eligible for medical and prescription drug coverage through their employer, or 2. Hold a position for which other similarly situated employees are eligible for medical and prescription drug coverage at the same cost as full-time employees. Note: Similarly situated employee is based on position (e.g., teacher or administrator) and equivalent employment status (e.g., part time or full time), not retirement status. The rule applies to all employed enrollees who are not eligible for Medicare, regardless of hire date or type of employment. Please refer to the fact sheet at the end of this section for more details. Members with questions about eligibility for STRS Ohio health care coverage should be directed to contact the STRS Ohio Member Services Center toll-free at Membership Page 9

16 Notes and figures Membership Page 10

17 EMPLOYER FACT SHEET SERIES Determining Membership As an STRS Ohio employer, it s critical that you correctly identify and report individuals who should be members of the pension system. Ohio law defines STRS Ohio membership in Section of the Revised Code (R.C.). Generally, membership is required for: Any person paid from public funds and employed in the public schools under any type of contract described in Section or , R.C., in a position for which the person is required to have a license issued pursuant to Sections to , R.C. Any person employed as a teacher or faculty member in a community school or a science, technology, engineering and mathematics (STEM) school pursuant to Chapter 3314 or 3326, R.C. Any other teacher or faculty member employed in any school, college, university, institution or other agency wholly controlled and managed, or supported in whole or in part, by the state or any of its subdivisions. The educational employees of ODE. Positions that are covered by STRS Ohio include, but are not limited to, the following: Adult education instructors Orientation and mobility specialists Athletic directors and coaches Principals and academic administrators (who hold a valid teaching license) Psychologists Community school directors and Social workers Examples academic administrators of covered Superintendents Counselors positions. Teachers and substitute teachers Faculty members Teachers employed to work in parochial or Interpreters for the hearing impaired private schools using auxiliary funds Occupational and physical therapists Tutors Occupational and physical therapy assistants Membership is not required for any person employed by a community school operator who was withholding and paying Social Security taxes for persons employed in the school as teachers on or before Feb. 1, 2016, unless the person had contributing service with an Ohio community school within the last year. STRS Ohio has the authority to make membership determinations as set forth by Chapter 3307, R.C. If you are unsure whether or not an employee should be a member of STRS Ohio, please send an to report@strsoh.org for a determination. Please note, you may be asked to provide a job description for further review. (continued)

18 Frequently Asked Questions We have an employee who holds a teaching license. Do they automatically contribute to STRS Ohio? No. It is not the person but the position held that determines membership. If the position requires an ODE license under Sections to , R.C., or meets other criteria as outlined in this fact sheet, then STRS Ohio membership is required. The exception to this rule are coaches and athletic directors. For these positions, you need to examine whether or not the individual holds a valid teaching license. If a coach or athletic director has a valid teaching license, he or she contributes to STRS Ohio; if not, he or she contributes to the School Employees Retirement System of Ohio (SERS). We are hiring a physical therapist as an independent contractor. His salary will be paid as a purchased service, not through payroll. Is this individual considered a member of STRS Ohio? Hiring a teacher or administrator as a third-party contractor or through a temporary agency does not necessarily relieve the obligation for member and employer contributions on earnings. If the means and manner of teaching duties performed by a third-party contractor are controlled by the STRS Ohio employer, then STRS Ohio considers the individual to be a member and requires contributions to be remitted. In all cases of doubt, the Retirement Board shall determine whether a person is a teacher for STRS Ohio purposes. To request a formal determination for a contracted service provider, submit a completed Determination of STRS Ohio Membership for Contracted Services form to employer_education@strsoh.org. This form can be found under Forms then Other on the employer website. We have a group of teachers aides employed at our district. Should they be members of STRS Ohio? No. STRS Ohio membership is required for anyone in a position that requires a license pursuant to Sections through , R.C. Since licensure is not required under that section of the code for teachers aides, they would not be considered members of STRS Ohio. If we hire a substitute teacher without a teaching license, does that teacher have to contribute to STRS Ohio? Yes. STRS Ohio membership includes any individual employed with public funds in a position for which a teaching license is required. Teaching licenses, including temporary teaching licenses, are issued pursuant to Sections to , R.C. Ohio Administrative Code Section (D)(1) permits a school to employ a qualified individual with a four-year degree as a short-term substitute teacher for up to five days in a given classroom. Section , R.C., allows a school to employ a qualified individual who is not licensed, but who holds a permit under the section, to teach classes for up to 12 hours per week. Any individual teaching under either of these rules is required to make STRS Ohio contributions on teaching earnings. Our district requires our preschool teachers to be licensed individuals. Doesn t this mean STRS Ohio membership is required? Not necessarily. Regardless of whether the district requires the individual to have a license, STRS Ohio membership is generally based on whether ODE requires a license for the position. In the case of preschool teachers, head teachers in a special education preschool program are required to hold specific licensure which qualifies them for STRS Ohio membership. However, regular preschool teachers are not required to hold a license covered under STRS Ohio s section of the Revised Code and, therefore, should be members of SERS , 8/17/0 For More Information Log on to the employer website at Call the Employer Reporting Department toll-free at Send an to report@strsoh.org

19 EMPLOYER FACT SHEET SERIES Contracted Services Membership Determination and the Employer s Obligation The State Teachers Retirement Board is authorized by Chapter 3307 of the Ohio Revised Code to make membership determinations. Hiring an individual to fill an STRS Ohio-covered position as an independent or third-party contractor does not necessarily relieve a public school, community school, public university or institution ( School ) for whom the individual performs services from the obligation to make contributions to STRS Ohio. The chief test in determining whether an individual is an employee or an independent contractor is the right to control the means and manner of performing the work. In determining who has control over the means and manner of performing the work, several factors are considered, including, but not limited to, who controls the details and quality of the work; who controls the hours worked; who selects the materials, tools and personnel used; who selects how the work is performed; how is the individual paid; and are there any pertinent agreements, contracts or other documents pertaining to the work. If the School controls the means and manner of the work performed by an individual who was hired under an independent or thirdparty contract, STRS Ohio membership and contributions on the payments to the individual are required, regardless of what the parties call the relationship. STRS Ohio recognizes that some membership determinations may be difficult. To assist Schools with the determination of STRS Ohio membership for contracted services, STRS Ohio has developed the following process. To request a determination from STRS Ohio, please complete the steps below: 1. Locate a copy of the Determination of STRS Ohio Membership for Contracted Services form under Forms, then Other on the employer website at 2. The School should complete Section 1 of the form and attach a current copy of the contract between the School and the contracted service provider. 3. The contracted service provider/company should complete Section 2 of the form and attach a list of all workers performing services for the School under the contract. The list of workers should include first name, last name, position, address and last four digits of Social Security number. 4. The School should submit the form and all attachments to STRS Ohio. The preferred method of submission is to scan and all information to employer_education@strsoh.org. The information may also be sent by fax to or by mail to STRS Ohio. After STRS Ohio has received the complete information from all parties, STRS Ohio will process the request for STRS Ohio membership determination as follows: 1. STRS Ohio may contact individual workers about their working relationship. 2. STRS Ohio will review all information and determine whether the workers are STRS Ohio members for which STRS Ohio contributions are required. 3. STRS Ohio will notify the School and the contracted service provider/company of the membership determination. 4. If STRS Ohio determines that STRS Ohio membership is not required, STRS Ohio contributions should not be remitted beginning from the date of the determination forward and any STRS Ohio contributions already made on earnings during the current fiscal year will be returned to the party that remitted the payment of contributions (either the School or the contracted service provider/ company). 5. In the event an STRS Ohio member is no longer in any STRS Ohio-covered position and otherwise qualifies, the member may apply to withdraw his or her STRS Ohio account. For more information on account withdrawal, members may contact the STRS Ohio Member Services Center toll-free at If you have questions about the STRS Ohio membership determination process, please contact STRS Ohio Employer Education toll-free at Membership Page 13 (continued)

20 Frequently Asked Questions How do we report contracted service contributions to STRS Ohio? Follow these steps to ensure correct reporting: 1. Submit a new hire notification to STRS Ohio via ESS or Secure File Upload. 2. Submit a payroll adjustment each pay period via ESS if these individuals are not paid through regular payroll. Step-by-step instructions are provided in the ESS instruction booklet available on the employer website. A short tutorial video is also available in the Education & Training section of the employer website. 3. Remit the member contribution payment with the online cash remittance. Direct pay employers should also remit the 14% employer contribution at this time. For schools participating in the state foundation program, the 14% employer contribution will be included as part of the annual reconciliation process. 4. Track days worked to calculate service credit. It may be helpful to create a spreadsheet listing the days worked. 5. Include contracted individuals on the annual report. If you use an ITC for annual reporting, they are capable of merging a separate file that you create for your contracted individuals with your main file prior to submission. Contact your ITC representative for specific instructions. Approximately, how long will it take before we receive a determination? Generally, the review process takes about one month from the time all information is received , 4/16/10 For More Information Log on to the employer website at Call the Employer Reporting Department toll-free at Send an Membership to report@strsoh.org Page 14

21 DETERMINATION OF STRS OHIO MEMBERSHIP FOR CONTRACTED SERVICES Public school, community school, public university or institution for whom the worker performs services hereinafter referred to as School. Individual or company providing services to the School hereinafter referred to as Service Provider. The State Teachers Retirement Board has the authority to make membership determinations as set forth by Chapter 3307, Revised Code. Hiring an individual to fill an STRS Ohio-covered position as an independent or third-party contractor does not necessarily relieve an STRS Ohio employer s obligation to make contributions on earnings. To request an official membership determination, please complete Part 1 School and forward to the Service Provider to complete Part 2 Service Provider. Once the form has been completed in its entirety, please return the form and all requested documentation to STRS Ohio by scanning and ing to employer_education@strsoh.org. Part 1 School School name School number School representative s name Title Phone ( ) Area code 1. Attach a copy of the service agreement/contract with the Service Provider. 2. Describe in detail the services to be performed by the worker(s) or attach a job description. 3. Is a specific person(s) required to perform the services? q Yes q No 4. Who sets or regulates the hours the worker(s) is required to work? 5. Where are the services performed by the worker(s)? 6. Does the worker(s) use specific supplies or equipment? q Yes q No If yes, describe: (continued)

22 7. Who provides supplies or equipment? 8. How does the worker(s) receive assignments? 9. Who determines the methods by which the assignments are performed? 10. If substitutes or assistants are needed, who hires them? 11. Does the School evaluate the worker(s)? q Yes q No If yes, attach any related documents. 12. Does the School provide training for the worker(s)? q Yes q No If yes, describe: 13. How is the worker(s) paid? q Hourly q Weekly q Monthly q Other: 14. Does the School provide any fringe benefits to the worker(s) (e.g., health insurance, sick or vacation time)? q Yes q No If yes, describe: 15. Have the services to be performed by the worker(s) been performed previously by an employee of the School? q Yes q No 16. Are other employees of the School performing similar work to the services to be performed by the worker(s)? q Yes q No 17. Has the worker(s) ever performed these services as the School s employee? q Yes q No 18. Does the School have the right to discharge the worker(s) at will and without cause? q Yes q No I certify that I am an authorized signer of the School and that the above information is true and correct. School representative s signature Date

23 Part 2 Service Provider Service Provider name Service Provider representative s name Title Address Phone ( ) Area code Period of applicable engagement: From To 1. Does the Service Provider currently provide or plan to provide services for any other STRS Ohio Schools while providing services for this School? q Yes q No If yes, please list: 2. Does the Service Provider currently perform substantially similar service to other business entities not listed above? q Yes q No If yes, please list: 3. Does the Service Provider advertise its services? q Yes q No 4. Does the Service Provider have an investment in facilities or tools used to perform the services? q Yes q No If yes, describe: 5. Does or will the Service Provider have unreimbursed business expenses as a result of providing the services? q Yes q No If yes, describe: 6. Can the Service Provider make a profit or loss by providing the services? q Yes q No 7. Who has the right to control, supervise or direct the worker(s) performing the services? 8. Attach a list of the workers who are providing services to the School. The list of workers should include first name, last name, position, address and last four digits of Social Security number. Workers may be contacted with questions regarding their working relationship. I certify that I am an authorized signer of the Service Provider and that the above information is true and correct. Service Provider representative s signature Date , 7/16/0

24 How to submit SSA-1945 forms via secure file upload 1. Scan copies of the completed forms and save to your computer as a PDF. 2. Go to 3. Click on Secure File Upload. 4. On the Secure File Upload screen, enter your four-digit STRS Ohio employer number in the first box. 5. Click on the "Click to Upload" button. 6. Your computer files should appear. 7. Locate the file you saved on your computer. 8. Highlight the file and click "Open." 9. A message telling you the upload was successful followed by the name of the file submitted will display. Membership Page 19

25 Notes and figures Membership Page 20

26 EMPLOYER FACT SHEET SERIES Understanding Health Insurance Rules for Reemployed Retirees The federal Affordable Care Act (ACA) contains health insurance responsibilities for employers. ACA provisions can be difficult to understand, making it challenging to distinguish responsibility between employers and STRS Ohio. The following information and flow chart provide clarification on these responsibilities. In general, the ACA requires employers with 50 or more full-time employees to offer minimum essential coverage to full-time workers. The fact that STRS Ohio offers health care coverage to reemployed retirees does not alter an employer s obligation under the ACA to extend coverage to its employees, including individuals who retired under STRS Ohio, another public entity or a private employer. While employment contracts and collective bargaining agreements are unique, the rules for determining whether STRS Ohio provides primary or secondary health care coverage for reemployed retirees are defined by Ohio law. Under Administrative Code Rule 3307: , reemployed retirees qualify for only secondary health care coverage from STRS Ohio if they: Are eligible for health insurance through their employer; or Hold a position for which other similarly situated employees are eligible for health insurance at the same cost as full-time employees. Note: The determination of similarly situated employee is based on position and employment status (part time/full time), not retirement status. The rule applies to all reemployed retirees who are not eligible for Medicare, regardless of hire date or type of employment. Also, the rule applies when the employer plan provides both medical and prescription drug coverage. If eligibility or cost for employer insurance is based on retirement status, the retiree is eligible for only secondary coverage from STRS Ohio. Primary coverage would need to be obtained from the employer or another plan. Is the reemployed retiree eligible for Medicare (age 65 or older)? No Does the employer offer health insurance to other similarly situated* employees? No Yes Yes STRS Ohio offers primary coverage. Does the health insurance include medical and prescription coverage? Yes No STRS Ohio offers primary coverage. Is health insurance offered at the same cost as full-time employees? No Yes STRS Ohio offers secondary coverage. *Similarly situated employee is based on position and employment status (part time/full time), not retirement status. (continued)

27 Frequently Asked Questions Can reemployed retirees obtain health insurance from STRS Ohio? Yes. Benefit recipients who continue working after retirement have access to STRS Ohio health care coverage if eligibility guidelines are met. However, primary coverage may not be available for reemployed retirees without Medicare. If only secondary coverage is available from STRS Ohio, primary coverage would need to be obtained from the employer or another plan. How is eligibility for primary or secondary health insurance determined? STRS Ohio determines eligibility for health insurance on an individual basis. If the reemployed retiree is not eligible for Medicare, we consider two factors: (1) is the retiree eligible for health insurance through their employer; and (2) does the retiree hold a position for which other similarly situated employees are eligible for health insurance at the same cost as full-time employees? If the answer to either question is yes, then the retiree is eligible for only secondary coverage from STRS Ohio. When comparing employees, what does similarly situated employee mean? Similarly situated employee means comparable position (e.g., teacher or administrator) and equivalent employment status (e.g., part time or full time). Retirement status is not a factor in determining similarly situated employees. If a reemployed retiree is excluded from the employer health plan, is primary insurance available from STRS Ohio? Not necessarily. Exclusion from the employer plan does not automatically qualify a reemployed retiree for primary coverage from STRS Ohio. If other similarly situated employees are offered health insurance at the same cost as full-time employees, the retiree would be eligible for only secondary STRS Ohio coverage. For example, an STRS Ohio retiree employed as a full-time teacher is excluded from the employer health plan by the collective bargaining agreement. The agreement between the board and the union provides that all full-time teachers are entitled to health insurance. However, a provision of the agreement prohibits a reemployed retiree from participating in the employer health plan. In this case, the retiree would be eligible for only secondary coverage from STRS Ohio since other similarly situated employees (full-time teachers) are eligible for health insurance through the employer. The collective bargaining agreement s treatment of reemployed retirees is irrelevant since the comparison is to other full-time teachers. What happens if a reemployed retiree is required to pay more for employer insurance due to being a retiree? If, based on retirement status, a reemployed retiree is required to pay more for employer insurance than other similarly situated employees, then the retiree would be eligible for only secondary coverage from STRS Ohio. For instance, an STRS Ohio retiree employed as a full-time administrator is eligible for the same health insurance as other administrators. However, the collective bargaining agreement stipulates the reemployed retiree must pay a higher percentage of the health insurance premium than full-time administrators who are not retirees. In this scenario, the retiree would be eligible for only secondary coverage from STRS Ohio since other similarly situated employees (full-time administrators) are eligible for health insurance through the employer. The collective bargaining agreement s treatment of reemployed retirees is irrelevant since the comparison is to other full-time administrators. Is primary insurance available if similarly situated employees pay a higher premium than full-time employees? Yes. A reemployed retiree would be eligible for primary insurance from STRS Ohio if similarly situated employees pay a higher premium than full-time employees for employer health insurance. For example, an STRS Ohio retiree is employed as a part-time teacher. Part-time teachers pay 60% of the premium, compared to full-time teachers who pay 20%. However, the collective bargaining agreement between the board and the teachers union provides that a reemployed retiree is not eligible for employer health insurance. In this situation, the retiree would be eligible for primary coverage from STRS Ohio since the retiree is in a position for which other similarly situated employees (part-time teachers) are not eligible for coverage at the cost available to full-time employees. It is irrelevant how the agreement treats reemployed retirees. The relevant fact is this teacher is employed on a part-time basis and other part-time teachers (regardless of retirement status) are not eligible for health insurance at the cost available to full-time employees , 6/16/10 For More Information Log on to the employer website at Call the Employer Reporting Department toll-free at Send an to report@strsoh.org

28 Compensation What is considered compensation for retirement purposes? Compensation is defined under Section , R.C., as salary, wages and other earnings paid to a member, including amounts paid for a supplemental contract. Members are required to contribute a percentage of earned compensation for teaching services, including supplemental and summer earnings. Employers must withhold the correct contribution amounts at the rate in effect at the time the compensation was earned from STRS Ohio members salary payments and remit to STRS Ohio within five business days of each pay date. The current member contribution rate is 14% and the employer contribution rate is 14%. It is important to understand what qualifies as compensation for STRS Ohio. If compensation is generally earned by reason of employment, then contributions must be remitted. For example, longevity pay, performance-related bonuses and retention bonuses are included in compensation. However, compensation earned for other reasons, such as an agreement to retire or paid in lieu of insurance, is not considered compensation for retirement purposes. Compensation Checklist Is compensation earned by reason of employment? Review list of exclusions Do not remit contributions on items specifically excluded as compensation Send all grievances or settlement agreements to STRS Ohio for review before sending contributions Ensure contributions are withheld at the member contribution rate in effect for the fiscal year in which the compensation was earned Contribution Rates Effective Member Employer July 1, % 14% July 1, % 14% July 1, % 14% July 1, % 14% July 1, % 14% Compensation Page 1

29 What is not compensation? The following types of payments are specifically excluded from compensation for retirement purposes: Payments for accrued but unused sick, vacation and personal leave, including payments for perfect attendance. Vacation pay concurrent with other periods for which compensation is paid. Amounts paid to provide insurance coverage or cash payments in lieu of providing insurance, including payments for Medicare. Payments based on retirement. Retroactive increases not paid in accordance with uniform criteria applicable to all members. Payments for services not actually rendered. Car allowances and cell phone stipends. Reimbursed job-related expenses such as moving, travel or costs related to professional development. Severance pay. Earnings exceeding limits under Section 401 of the Internal Revenue Code. Limits vary based on the year membership began and plan participation. (See the Employers Manual for more detail.) Payment under Section , R.C., made by employers to teachers called to active military duty. Do not deduct retirement contributions from payments on the items listed above. If contributions are made on any item specifically excluded from compensation as listed above, contributions will be returned and employers will be required to make report corrections. Payments resulting from a grievance or legal settlement may not qualify as compensation. A copy of the grievance or settlement should be provided to your employer education coordinator at employer_education@strsoh.org for review and determination, prior to submitting contributions. Compensation Page 2

30 EMPLOYER FACT SHEET SERIES Compensation What Qualifies for Retirement Contributions Part of your responsibility as an STRS Ohio reporting employer is to remit retirement contributions to STRS Ohio on qualifying compensation paid to your STRS Ohio-covered employees. To comply with this requirement, you need to know what types of compensation should have retirement contributions deducted and compensation payments that are excluded from contributions. STRS Ohio understands that there are many different types of payments made to your employees. As a result, sometimes questions arise regarding whether a payment qualifies as compensation for retirement purposes. For purposes of STRS Ohio contributions, compensation is defined in Section of the Revised Code as all salary, wages and other earnings, including compensation paid in accordance with supplemental contracts. Although the legal definition of compensation is broad, the law is very specific regarding the types of payments that do not qualify as compensation for retirement purposes. The following list should help you identify which types of payments are excluded from retirement contributions: Payments excluded from contributions. Payments for accrued but unused sick, vacation or personal leave, including payments for perfect attendance. Vacation pay covering concurrent periods for which other salary or compensation is paid. Amounts paid to provide insurance coverage of any type, and cash payments in lieu of providing insurance coverage, including payments for Medicare. Incidental benefits such as lodging, food, laundry, parking or services furnished by the employer; use of the employer s property or equipment; or reimbursed job-related expenses such as housing, moving, travel or costs related to professional development. Anything of value that is based on retirement or an agreement to retire, including early contract completion. Payments made by the employer in exchange for a member s waiver of a right to receive any payment, amount or benefit. Retroactive increases that are not paid in accordance with uniform criteria applicable to all STRS Ohio members who are employed by the employer. Payments for services not actually rendered. Payments that exceed the annual compensation limits for plans qualified under Section 401 of the Internal Revenue Code. Do not deduct retirement contributions from payments on the items listed above. Payments resulting from a grievance or legal settlement may not qualify as compensation. A copy of the grievance or settlement should be forwarded to employer_education@strsoh.org for review prior to remitting contributions. If you need assistance in determining whether or not contributions should be remitted on specific payments, please contact STRS Ohio. (continued)

31 Frequently Asked Questions Are bonuses, such as merit, longevity, sign-on or retention considered compensation for STRS Ohio purposes? Bonuses are generally considered compensation for STRS Ohio purposes, as long as they are earned by reason of employment. However, if any bonus is attributable to retirement, paid in lieu of items not considered STRS Ohio compensation or retroactive, the bonus payment may be excluded from compensation. At our school, employees who do not participate in the school s health care plan receive an extra payment. Is this considered compensation? No. Payments made in lieu of insurance or payments made to provide insurance of any kind are not considered compensation for retirement purposes. If our school offers an incentive payment to individuals who are eligible to retire, should retirement contributions be deducted from that payment? No. Any payment made as an incentive to retire or as an agreement to retire does not qualify as compensation for retirement purposes. Should retirement contributions be deducted from settlement payments? All settlements must be reviewed by STRS Ohio before remitting contributions on these types of payments. Please submit a copy of the agreement for review to employer_education@strsoh.org before submitting contributions. If the settlement is based on punitive damages rather than compensation for actual work performed, then STRS Ohio cannot accept contributions on the payment. Are tax-sheltered annuities considered compensation? Annuities paid on behalf of members are considered compensation for STRS Ohio purposes if they are part of the employee s compensation for services and are not excluded for some other reason, such as an annuity in lieu of insurance benefits. These annuity payments should be treated as supplemental compensation, and contributions must be remitted to STRS Ohio for the fiscal year in which annuity payments are made to the member. Are retroactive increases considered compensation for STRS Ohio purposes? In general, retroactive increases are not subject to STRS Ohio contributions. However, retroactive increases may be subject to STRS Ohio contributions if the increases are granted to: All teachers; All administrators; or A superintendent, provided all teachers also received the retroactive increase , 8/17/0 For More Information Log on to the employer website at Call the Employer Reporting Department toll-free at Send an to report@strsoh.org

32 Employer Pickup What is employer pickup? The term pickup is used to describe the process of withholding member contributions on a pretax basis. In 1983, the IRS issued an opinion that allowed member contributions to STRS Ohio to be withheld on a tax-deferred basis. To withhold member contributions on a tax-deferred basis, employers must adopt a pickup plan. If a district does not have a pickup plan in place, then contributions must be withheld on an after-tax basis. While your district s pickup plans may have been modified throughout the years, nearly every employer has a pickup plan in place today. When an employer adopts a pickup plan to withhold contributions on a pretax basis, the Internal Revenue Code specifies the following conditions for employer pickup of retirement contributions: 1. The employer must specify that contributions, although designated as member contributions, are being paid by the employer in lieu of the member; and 2. The member must not be given the option of choosing to receive the amounts directly instead of having them paid by the employer to STRS Ohio. The IRS has also issued a private-letter ruling that states pickup may not be effective for contributions made before the date of the school board resolution implementing the plan. Pickup plans cannot be retroactive. The authority for employer pickup is the Internal Revenue Code. There are no Ohio laws or Administrative Code Rules governing this program. If a pickup plan is adopted, when is the member taxed? Any tax-deferred or picked-up contributions are not subject to federal and state taxes during the current year, but are subject to taxation when received as a benefit or at the time of account distribution. Employer Pickup Checklist To confirm current pickup plans in place, send an request to report@strsoh.org If adopting or modifying a pickup plan, submit: Notification for Employer Pickup of Employee Contributions form, and Board resolution or action Total contribution percentage indicated on form should not exceed the member contribution rate in effect for the fiscal year Check the Yes box on the form if the pickup plan type is fringe benefit included in compensation (pickup-onpickup). Check No for all other plan types When using the sample board resolution language provided on Page 6, ensure you are only using the language for the type of plan being adopted. (The sample shows language for all three types of plans) Ensure contributions are calculated correctly (use the online calculator for pickup-onpickup plans) Watch the on-demand webinar, Understanding Employer Pickup, on our website Employer Pickup Page 1

33 What are pickup plan types and recognized member groups? There are currently three types of employer pickup that employers are authorized to adopt: 1. Salary reduction pickup, 2. Fringe benefit pickup not included in compensation, and 3. Fringe benefit pickup included in compensation, which is also known as pickup-on-pickup. For more detail on each plan type, please see the charts on Page 3. When a pickup plan is adopted, employers must be specific about the type of pickup plan and the member group to which the plan applies. All members are classified as part of a recognized group. Generally, a specific pickup plan is adopted for an entire group of members. The recognized member groups are: 1. Superintendents, 2. Administrators, and 3. Teachers. What is the process for notifying STRS Ohio if a pickup plan is adopted or revised? Once a pickup plan is adopted, a completed Notification for Employer Pickup of Employee Contributions form must be sent to STRS Ohio at report@strsoh.org along with a certified copy of the applicable board resolution or action. A sample Notification for Employer Pickup of Employee Contributions form and sample board resolution are on Pages 5 and 6. The board resolution authorizing a pickup plan must include: rate of pickup, plan type, member groups covered and the effective date. Anytime a revision is made to an employer pickup plan, STRS Ohio must be notified. This includes a revision to your plans due to a change in member contribution rate. The procedure for notifying STRS Ohio for a change in pickup plan is the same as the initial process described above. Do we have to offer the same pickup plan to all members of a recognized group? No. The type and percentage of pickup can vary within a group as long as the total percentage of all pickup plans is the same for each member within that group. For example, if the board adopts a fringe benefit pickup not included in compensation plan for all administrators, it is possible that the employer can pay the full amount of fringe benefit member contributions for a high school principal, and pay only a portion of a junior high principal s fringe benefit member contributions, such as 5% fringe benefit pickup and the remaining percentage as salary reduction pickup. In a case like this, please provide STRS Ohio with documentation, such as the employee contracts, that clearly indicates the pickup amounts for that individual. Employer Pickup Page 2

34 Comparing types of pickup plans Plan Types: Salary Reduction Pickup Fringe Benefit Pickup Not Included in Compensation Fringe Benefit Pickup Included in Compensation (Pickup-on- Pickup) How does it work? Member s salary reduced by the amount of member contributions and employer remits pretax Employer agrees to pay member s pretax contributions Employer agrees to pay member s pretax contributions and considers the payment as compensation for retirement purposes Who funds member contributions? Member Employer funds all or a portion Employer funds all or a portion What's the benefit to the member? Reduced gross income for state and federal tax purposes Further compensates employee without reducing gross income for tax purposes Further compensates employee without reducing gross income for tax purposes and increases income for retirement purposes Groups?* Teachers Administrators Superintendents/Administrators * While any group or individual can have any type of pickup plan, generally districts tend to grant these types of pickup to the identified groups of employees. Comparing pickup plan types by the dollar Plan Types: Salary Reduction Pickup Fringe Benefit Pickup Not Included in Compensation Fringe Benefit Pickup Included in Compensation (Pickup-on-Pickup) Base contract amount $50,000 $50,000 $50,000 Member contribution due ($50,000 x 14%) $7,000 $7,000 $7,000 + (14% of $7,000) Taxable state & federal income $43,000 $50,000 $50,000 Compensation for STRS Ohio purposes $50,000 $50,000 $57,000 Employer Pickup Page 3

35 What financial impact does a pickup plan have on a district and a member? It depends on the type of pickup plan the district adopts. The table below shows the difference between the plans and how they affect the member and the district. For the salary reduction pickup and the fringe benefit pickup not included in compensation plans, the member s compensation for retirement purposes is the same as the contract salary. However, in the fringe benefit pickup included in compensation (pickup-on-pickup) plan, the contract salary is being increased by the member contribution amount to determine the member s compensation for retirement purposes. The employer contribution (14%) is calculated on the amount of compensation for retirement purposes. In the case of fringe benefit not included in compensation the employer is paying the member share agreed upon (full or partial) and the employer share to STRS Ohio. With fringe benefit included in compensation the employer is paying both the member and employer contributions but with additional contributions as a result of inflating the member s salary for retirement purposes. Plan Types: Salary Reduction Pickup Fringe Benefit Pickup Not Included in Compensation Fringe Benefit Pickup Included in Compensation (Pickup-on-Pickup) Base contract amount $70,000 $70,000 $70,000 Compensation for STRS Ohio purposes $70,000 $70,000 $79,800 Member contribution due (14%) $9,800 $9,800 $11,172 Employer contribution due (14%) $9,800 $9,800 $11,172 Total contributions due from employer $9,800 $19,600 $22,344 Why would a district grant a fringe benefit pickup plan? A fringe benefit pickup plan is a way to further compensate an employee. If a district wants to provide additional monetary compensation to an employee without increasing the base contract amount, one option is to adopt a fringe benefit pickup plan. Example: Your board granted all employees a salary reduction pickup plan, but beginning July 1, 2017, wishes to change that to a full pickup-onpickup plan for your superintendent. This not only increases the amount of compensation that the superintendent receives in his take home pay, but also increases his income for retirement purposes. A properly completed Notification for Employer Pickup of Employee Contributions form for modifying the superintendent s pickup plan is on Page 5. What tools are available to assist me with pickup questions? STRS Ohio has a variety of resources to assist you with understanding and calculating employer pickup properly. See the Employer Pickup fact sheet at the end of this section. On our website, use the pickup-on-pickup calculator to ensure the correct amount of contributions for individuals is being remitted to STRS Ohio. The calculator offers the option to calculate full or split pickup-on-pickup contributions due. There is also an on-demand webinar, Understanding Employer Pickup, located under Education & Training. In addition, see the frequently asked questions on employer pickup under FAQs. Employer Pickup Page 4

36 State Teachers Retirement System of Ohio 275 East Broad Street Columbus, OH (fax) NOTIFICATION FOR EMPLOYER PICKUP OF EMPLOYEE CONTRIBUTIONS This notification must be filed with STRS Ohio when an employer elects to pick up all or a portion of the required employee contributions stipulated in Section , Revised Code, or when an existing employer pickup plan is amended. Important: A copy of the agreement or board action authorizing the pickup must be submitted with this notification. Employer Ohio Local Schools Employer no Address 1234 Market St. City Anytown ZIP code Franklin Effective date of pickup is July 1, 2017 Employee group covered: School District College/University q X Superintendent q President q Administrator q Administrative faculty q Teacher q Teaching faculty Employee contributions for earned compensation required under Section , R.C., will be accounted for as follows: Employee Contributions Salary reduction pickup... Pickup paid by employer in addition to regular contract salary... Is this amount included in compensation for retirement purposes? Total STRS Ohio contributions required under Section , R.C... % 0 % 14 X q Yes q No % 14 I understand this notification will remain in effect until a notice of change or termination is filed with STRS Ohio. I also understand all of the guidelines listed on the reverse side of this notification have been met or acknowledged. Signed Jim Smith Date 6/15/17 Title Treasurer , 3/17/0 Notification for Employer Pickup of Employee Contributions form Employer Pickup Page 5

37 State Teachers Retirement System of Ohio 275 East Broad Street Columbus, OH (fax) SAMPLE BOARD RESOLUTION TO AUTHORIZE EMPLOYER PICKUP OF EMPLOYEE CONTRIBUTIONS Adoption of Pickup Be it resolved, effective (prospective date), the (employer board name) agrees to pick up the total amount of employee contributions required by Section , Revised Code, to be contributed by (group name and specific class of employees) to STRS Ohio. (Employer board name) is permitted to pick up employee contributions pursuant to Section , Revised Code, and Section 414(h)(2) of the Internal Revenue Code. These picked-up contributions, although designated as employee contributions, are being paid by the (employer board name) in lieu of employee contributions and (Salary reduction) shall be treated as mandatory salary reduction from the contract salary otherwise payable to the employee. or (Fringe benefit) shall be paid by the board as a fringe benefit in addition to the contract salary otherwise payable to the employee. These contributions shall not be treated as additional compensation for retirement purposes. or (Fringe benefit included in compensation) shall be paid by the board as a fringe benefit in addition to the contract salary otherwise payable to the employee. These contributions shall be treated as additional compensation and included in salary for retirement purposes. Employees in the (group) may not opt out of the picked-up contributions or elect to receive the contributed amounts directly instead of having them picked up by the (employer board name) and paid to STRS Ohio. This sample resolution is provided for your convenience and does not constitute tax or legal advice. Although we have attempted to provide accurate information, STRS Ohio cannot guarantee tax results in any way or be held responsible for any loss incurred as a result of the use of this information. Contact your tax advisor or legal counsel for specific information about how this information might affect your situation , 3/17/0

38 Notes and figures Employer Pickup Page 7

39 Notes and figures Employer Pickup Page 8

40 EMPLOYER FACT SHEET SERIES Employer Pickup Individual employers may choose to pick up member retirement contributions as a means of deferring federal and state income taxes on these amounts. In 1983, the Internal Revenue Service issued an opinion authorizing member contributions to STRS Ohio to be tax deferred. The authority for employer pickup is the Internal Revenue Code. There are no Ohio laws or Administrative Code Rules governing this program. Section 414(h)(2) of the Internal Revenue Code specifies the following conditions for employer pickup of retirement contributions: 1. The employer must specify that contributions, although designated as employee contributions, are being paid by the employer in lieu of the employee; and 2. The employee must not be given the option of choosing to receive the amounts directly instead of having them paid by the employer to the pension plan. The IRS has also issued a private-letter ruling that states pickup may not be effective for contributions made before the date of the school board resolution implementing the plan. In other words, pickup plans cannot be retroactive. There are currently three forms of employer pickup that employers are authorized to adopt. 1. Salary reduction: Under this form of employer pickup, individual members salaries are reduced by the amount of member retirement contributions. The employer then pays the contributions. This form of pickup does not require any additional cash to be paid by the employer. The member receives the benefit of reduced gross income for state and federal tax purposes. For example, if the employer has a salary reduction pickup plan in place and a full-time educator has a $40,000 contract, then: Contract salary and earnings for STRS Ohio purposes... $40,000 Member contributions (currently 14%)... 5,600 Taxable federal and state income... $34, Fringe benefit pickup not included in compensation: As a way to further compensate employees without increasing their gross income, some employers may choose to pay all or a portion of the member contributions. Under this form of pickup, members receive the benefit of the employer paying all or part of their member contributions without salary reduction, thus keeping their gross salary at the same amount. For example, if the employer has a fringe benefit pickup not included in compensation plan in place and a full-time educator has a $40,000 contract, and the employer agrees to pay the entire share of member contributions, then: Contract salary and earnings for STRS Ohio purposes... $40,000 Member contributions paid by employer (currently 14%)...$ 5,600 Taxable federal and state income... $40, Fringe benefit pickup included in compensation (pickup-on-pickup): Similar to the pickup outlined in number two above, this form of pickup not only allows the employer to pay all or part of the member contributions, but also includes those amounts in the member s salary for STRS Ohio retirement purposes. For example, if the employer has a fringe benefit pickup included in compensation plan in place and a full-time educator has a $40,000 contract (with no additional earnings), and the employer agrees to pay the entire share of member contributions, then: Contract salary and taxable federal and state income... $40,000 Member contributions paid by employer (currently 14%)... +$ 5,600 Compensation for STRS Ohio purposes... $45,600 Total member contributions due to STRS Ohio paid by employer ($45,600 x 14%)... $ 6,384 Employer Pickup Page 9 (continued)

41 Frequently Asked Questions How do I notify STRS Ohio that our board has adopted or modified a pickup plan? Employers are required to send the following documentation to STRS Ohio anytime a pickup plan is adopted or modified: 1. Notification for Employer Pickup of Employee Contributions form; and 2. A certified copy of the applicable school board resolution or action. This resolution must include the rate of pickup, plan type, member groups covered by the plan and effective date. The procedure and required forms are the same for plan adoptions and modifications. The notification form and sample board resolutions for each type of pickup can be found on our website at www. strsoh.org/employer under Forms. Do we have to offer the same type of pickup plan to all employees within the same group? No. The type and percentage of pickup can vary within a group as long as the total percentage of all pickup plans is the same for each member within that group. For example, if the board adopts a fringe benefit pickup not included in compensation plan for all administrators, it is possible that the employer can pay the full amount of fringe benefit member contributions for a high school principal, and pay only a portion of a junior high principal s fringe benefit member contributions, such as 5% fringe benefit pickup and the remaining percentage as salary reduction pickup. In a case like this, please provide STRS Ohio with documentation, such as the employees contracts, that clearly indicates the pickup amounts per individual. Can a school adopt a retroactive pickup plan? No. A pickup plan must be implemented by a board resolution before contributions are considered as part of the pickup plan. If pickup plans allow for pretax deductions for member contributions, when are these monies taxed? These contribution amounts become taxable when received by the individual in the form of a refund or retirement benefits. Employers should contact tax authorities to determine the effect of employer pickup on city or local income taxes. Isn t pickup-on-pickup (fringe benefit included in compensation) actually 15.96% for the full member contribution amount? No. Under Section of the Revised Code, member contribution amounts are set by the State Teachers Retirement Board, but cur rently may not exceed 14% without legislative approval. When calculating pickup-on-pickup, employers are actually contri buting 14% on the salary amount, as well as 14% on the contribution amount added to salary (because it is included in compensation). For example, if a member is employed on a full-time contract for $45,000 (with no additional earnings) and the employer has adopted a full fringe benefit pickup included in compensation plan, then the calculation is as follows: Contract salary... $45,000 Member contributions paid by employer (14% of contract salary) ,300 Compensation for STRS Ohio purposes... $51,300 Total member contributions due to STRS Ohio paid by employer ($51,300 x 14%)... $7,182 As in the example provided, employers often prefer to calculate pickup-on-pickup using the contract salary instead of total compensation for STRS Ohio purposes. If this is the case, then your payroll system must be programmed with 15.96% as the adjusted rate for a full 14% pickup-on-pickup plan. Are any resources available to help me calculate pickup-on-pickup? Yes. A pickup-on-pickup calculator is available in the Calculators section of the employer website. This online tool has the capability to properly calculate pickup-on-pickup for full and partial (split) pickup plans c, 1/17/10 For More Information Log on to the employer website at Call the Employer Reporting Department toll-free at Send Employer an to Pickup report@strsoh.org Page 10

42 Payroll Reporting and Payments Payroll reports Payroll reports are required electronic listings of member contributions by each individual member. These reports are sent to STRS Ohio at the same time contribution payments are made. Once received, payroll reports are reconciled to contribution amounts and posted to appropriate member accounts. Payroll reports are not considered complete until full payment of contributions is received. All contributions for STRS Ohio members and reemployed retirees must be reported and paid to STRS Ohio within five business days of each pay date. Penalties and interest up to $2,000 per occurrence will be assessed for late reports or payments. Payroll reports must include the following information: Employer number, Pay date, Member Social Security number, Member name, Tax-deferred member contribution amounts, After-tax member contribution amounts (if any), and Accrued indicator (July and August only). Understanding accrued contributions Accrued contributions are contributions on compensation that is earned by June 30 of the fiscal year, but not paid until July and August of the next fiscal year. In other words, if an educator is paid through the summer (in July and August) for work performed during the school year, then contributions on those payments are considered accrued. Payroll Reporting Checklist Send payroll report Remit member contribution payment Remit employer contribution payment if not enrolled in the state foundation program Submit cash remittance if required Accrued contributions marked (July and August only) Checklist for Account Corrections Payroll report adjustment submitted Send additional contributions or take credit against payment Submit backposting (if correcting a prior fiscal year) Payroll Reporting and Payments Page 1

43 07/15/2017 OHIO LOCAL SCHOOLS 07/01/ /15/2017 Accrued Indicator Y Y Y Payroll work report screen For example, if your July 7 pay is payment for time worked June 17 30, then those contributions should be marked as accrued contributions on your payroll report. Correctly reporting accrued contributions is critical for STRS Ohio to properly pay benefits to members. Due to the change in contribution rate over the past few years, it is of utmost importance that contributions are correctly accounted for in the fiscal year in which they are earned or corrections that must be made will be more complex. Contributions can only be considered accrued if payment is made in July or August for prior year earnings. For example, payment made in October for work done in June is not considered accrued contributions but a correction to a prior fiscal year annual report. To make a correction, a backposting must be submitted in ESS (see Page 4 for more detail). Submitting payroll reports Payroll reports must be submitted to STRS Ohio using one of the following methods: Sending an electronic file via secure file upload on the employer website (see website for required file record layout); or Online via ESS. If STRS Ohio has your address on file as a payroll reporting contact, you will receive an confirmation when your payroll report has been received. Options for remitting payments Employers have three options for making payments to STRS Ohio. Direct debit The preferred method to remit contribution payments is via direct debit. To submit a payment through direct debit: 1. Log in to Employer Self Service (ESS) using your user name and password. 2. Click on Make a Payment in the Application Menu. For step-by-step instructions on bank account setup and making direct debit payments, see our ESS Instructions or watch the on-demand webinar on the employer website. Note: Only treasurers and main contacts have been granted access to set up account information. If you prefer payroll personnel enter this information, the district treasurer or CFO should send an to report@strsoh.org requesting authorization to the direct debit system be granted to that individual. Checks While STRS Ohio encourages the use of an electronic payment method, contributions may also be paid by check. Since payment must be received by STRS Ohio no later than five business days after each pay date, remember to allow extra time for the U.S. Postal Service to deliver the check payment. Please be sure to include your four-digit STRS Ohio employer number on the check. Payroll Reporting and Payments Page 2

44 1. All checks should be mailed to the STRS Ohio lockbox at the following address: Cash Remittance STRS Ohio P.O. Box Cincinnati, OH Checks sent to STRS Ohio via overnight, certified mail or any other delivery method requiring a signature from the recipient of the check should be mailed to the following address: 09/15/2017 Ohio Local Schools Jane Doe 149,000 Fifth Third Bank Wholesale Lockbox M.D. 1MOC1Q Box Kingsley Drive Cincinnati, OH Send STRS Ohio information about the contribution payment using one of the following methods: Submit an online cash remittance via the employer website; or Mail a completed Cash Remittance form (available on the employer website) to the lockbox address or fax to STRS Ohio at The check and form may be mailed together. Cash Remittance 4 4 Sept. 15, 2017 Sept. 15, 2017 Sept. 15, 2016 $149,000 Ohio Local Schools $70,000 $70,000 4 $9,000 Cash remittance screens Payroll Reporting and Payments Page 3

45 ACH credit or wire transfer To submit a payment through ACH credit or wire transfer: 1. Contact your bank to initiate payment. 2. Provide your bank with the STRS Ohio bank routing number ( ) and the bank account number ( ). STRS Ohio uses Fifth Third Bank in Cincinnati. Be sure to include XX followed by your four-digit STRS Ohio employer number in the description line of the transaction. 3. Send STRS Ohio information about the contribution payment using one of the following methods: Submit an online cash remittance via the employer website; or Mail or fax a completed Cash Remittance form (available on our website) to STRS Ohio at How do I make adjustments or corrections to member accounts? Unforeseen events often occur that will require an adjustment or correction to be made to a member s account through payroll reporting. Correcting a payroll report can be done in a few simple steps. To make a correction for a prior fiscal year, a backposting must be submitted. A backposting is an adjustment for work performed in a prior fiscal year. A backposting informs STRS Ohio of the amount of member contributions to be moved to a prior fiscal year and which fiscal year. Interest on backpostings will be charged, unless the correction and payment are completed within 60 days of the end of the fiscal year. The flow chart on the fact sheet at the end of this section outlines steps required to correct a member s account. In addition, brief tutorials can be found in the Education & Training section of the employer website. How are employer contributions reported and paid? Employer contribution amounts should not be included in payroll reports. STRS Ohio calculates employer contributions due directly from the member contribution amounts reported. Payment of employer contributions is remitted: 1. Through the state foundation program, or 2. Direct pay. State foundation program employers City, local, exempted village and community schools are required to participate in the state foundation program. STRS Ohio receives estimated payments from the Ohio Department of Education settlement funds. These payments fund the employer contributions. Employers are required to provide an estimated payroll figure for the coming year in September. STRS Ohio performs reconciliation annually in December. At this time, if there is a shortage, employers will be billed for the additional contributions due. If there is an overage, your school will receive a credit toward next year s employer contributions. Direct pay employers Educational Service Centers, Joint Vocational Schools and local county boards of developmental disabilities are direct pay employers. Employer contributions must be remitted at the same time member contributions are paid. Payroll Reporting and Payments Page 4

46 Why did I receive a Statement of Open Transactions from STRS Ohio? STRS Ohio mails a monthly Statement of Open Transactions to employers with outstanding payments and/or credits on record with STRS Ohio. You will receive a statement only if you have open transactions on your account. The statement is not an invoice. Instead, it is intended to provide information about contributions and interest due, as well as unapplied payments. For an explanation of each part of the statement see Page 6. Please review the transactions listed and contact the STRS Ohio Employer Reporting Department toll-free at with questions. (If you recently remitted payment for any transaction listed, please disregard that item.) State Teachers Retirement System of Ohio 275 East Broad Street Columbus, OH /06/ /06/2016 MEGAN MELBO Employer Code: 9599 MEGAN MELBOURNE, PAYROLL OHIO MERLOTT LOCAL CITY SCHOOLS 123 P.O. MARKET BOX 2551 ST. ANYTOWN, SUNSHINE, OH STATEMENT OF OPEN TRANSACTIONS AS OF 03/31/2017 Transaction Date Reference No. Transaction Description Due Date Amount 10/12/ Backposting interest 11/11/2016 $ /01/ PSC employer cost-brown C 01/03/2017 $4, /15/ Penalty for late payroll reporting 03/01/2017 $ /01/ Monthly PSC deductions due 03/01/2017 $7, /03/ Payroll-reported contributions due 04/01/2017 $1, /31/ Payment received not yet applied ($15,300.15) Total Due: ($559.28) Please note this is not an invoice, but is a statement of open transactions as of March 31, Please call us toll-free at if you have questions. Payroll Reporting and Payments Page 5

47 State Teachers Retirement System of Ohio 275 East Broad Street Columbus, OH UNDERSTANDING YOUR STATEMENT OF OPEN TRANSACTIONS STRS Ohio provides a monthly Statement of Open Transactions to employers with outstanding payments and/or credits on record with STRS Ohio. You will receive a statement only if you have open transactions on your account. The statement is not an invoice. Instead, it is intended to provide information about contributions and interest due, as well as unapplied payments. Please review the transactions listed and contact the STRS Ohio Employer Reporting Department toll-free at with questions. (If you recently remitted payment for any transaction listed, please disregard that item.) ➊ Employer Code: Your STRS Ohio employer number. ➋ Statement of Open Transactions as of [Date]: The statement includes payments received or due as of the date listed. ➌ Transaction Date: Depending on the type of transaction, this date may be the date a report or payment was received or the date the employer cost statement or invoice was issued. ➍ Reference No.: A unique number assigned to every transaction. You may be asked to provide this number for reference when contacting STRS Ohio. ➎ Transaction Description: A brief description of the open transaction, which may include any of the following: Backposting interest: Interest due on payment of contributions that were earned in a prior fiscal year, but paid in the current fiscal year. 04/07/ /06/ /06/2016 MEGAN MELBO State Teachers Retirement System of Ohio MEGAN MELBOURNE, PAYROLL OHIO MERLOTT LOCAL CITY SCHOOLS 123 P.O. MARKET BOX 2551 ST. ANYTOWN, SUNSHINE, OH Employer Code: 9599 STATEMENT OF OPEN TRANSACTIONS AS OF 03/31/2016 ➌ ➍ ➎ ➏ ➐ Transaction Reference Transaction Due Amount Transaction Date Reference No. Description Transaction Date Due Amount Date No. Description Date 10/12/ /14/ Backposting interest Backposting interest 11/11/ /13/2015 $ $ /01/ /06/ PSC employer cost-brown C Foundation deduction shortage 01/03/ /15/2015 $4, $11, /15/ /01/ Penalty for late payroll reporting PSC employer cost-brown C 03/01/ /30/2016 $ $4, /15/ /01/ Monthly Penalty for PSC late deductions payroll reporting due 03/01/ /01/2016 $7, $ /01/ /03/ Payroll-reported Monthly PSC deductions contributions due due 04/01/ /01/2016 $1, $7, /04/ /31/ Payment Payroll-reported received contributions not yet applied due 04/01/2015 ($15,300.15) $1, /29/ Payment received not yet applied Total Due: ($559.28) ($15,300.15) Total Due: $10, Please note this is not an invoice, but is a statement of open transactions as of March 31, Please Foundation deduction shortage: Please call us note toll-free this is at not an invoice, if but you is have a statement questions. of open transactions as of March 31, Please call us toll-free at if you have questions. Employer contribution amount due because STRS Ohio did not receive the expected deductions from state foundation settlements. Monthly PSC deductions due: Member contributions due for the monthly purchase of service credit through payroll deductions. Payment received not yet applied: Unapplied payment received by STRS Ohio. Generally, payments are not applied if the corresponding cash remittance, payroll report or purchase service credit report was not received. Payroll-reported contributions due: If the amount is positive (owed), it is for a payroll report submitted to STRS Ohio. It could be the full amount of the payroll report or a partial amount for which payment was not received. If the amount is negative (credit), it is for a payroll report submitted as a correction for an overpayment made to STRS Ohio. PSC employer cost: Employer cost associated with service credit purchased by a member. ➏ Due Date: The date payment was or will be due to STRS Ohio. (Note: It is not unusual for PSC employer costs to be due on a future date.) ➐ Amount: Payment due or credit on your account. ➊ ➊ 275 East Broad Street Columbus, OH ➋ ➋ ➌ STATEMENT OF OF OPEN TRANSACTIONS AS AS OF OF 03/31/ /31/2016 ➍ ➎ ➏ ➐ , 1/16/10 Payroll Reporting and Payments Page 6

48 Notes and figures Payroll Reporting and Payments Page 7

49 Notes and figures Payroll Reporting and Payments Page 8