Taxable bonuses and cash payments paid to participants in the Public Employees Retirement Systems are considered retirement-eligible salary and should have retirement contributions remitted for them, except when there is a discretionary component to the payment as detailed in Discretionary Payments below.
Public safety and firefighter bonuses are reportable if they are performance based.
Compensation includes amounts employees authorize you, the employer, to reduce or deduct from their salaries for benefit programs. Examples are employee-paid contributions for 401(k) and 457(b) plans and deductions for flex and cafeteria plans.
Allowances or payments you pay to or on behalf of your employees for costs and expenses don’t qualify as compensation. Examples are: automobile, uniform, travel, tuition, housing, insurance, equipment, and dependent care.
Any payment by a participating employer to a member when the member has the choice to take the payment either as salary or in some other form does not qualify as compensation. An example is salary paid in lieu of an insurance premium.
Exception: Payment for sick or annual leave that does not exceed the employer’s allowable leave accrual in a single year in the Public Employees Noncontributory and Contributory Retirement System (see Cashouts section below).
Any payment by a participating employer to a member of a cash equivalent, such as a gift card, is not reportable to our office.
Cashouts of vacation leave, sick leave, and compensatory time you pay on a year-to-year basis during your fiscal year may qualify as compensation in the Public Employees Noncontributory and Contributory Retirement Systems according to the following criteria:
» You have a written policy that allows a year-to-year cashout; and
» The cashout of vacation or sick leave that does not exceed your policy for allowable leave accrual in a single year under your policy.
» The cashout of compensatory time does not exceed the time accrued during the previous 12 months.
Even when a cashout payment qualifies as compensation, you are not required to report it to our office. Reporting of qualifying cashouts is at your discretion.
Accumulated vacation leave, sick leave, compensatory time or other special payments, you pay employees that are triggered by separation of employment, do not qualify as compensation.
IRS regulations prohibit URS from accepting savings plans deposits for retirees who are receiving incentive payouts beyond their separation dates. The 403(b) plans have a provision for employers to deposit contributions for up to five years after separation.