It’s very important for employers to understand what types of earnings qualify as compensation under Utah retirement laws. Refer to the Compensation Table, or contact our office at 801-366-7318 or 800-753-7318, for answers to questions on what types of payments qualify as compensation for use in reporting contributions to our office.
The final average salary used to determine monthly retirement benefits is based on eligible compensation paid to employees and reported to our office. A monthly retirement allowance is calculated according to the definition of “final average salary” as defined in the various URS retirement systems. For more information about final average salary in each retirement system, refer to the Highlights brochures on our website or available from our office.
URS Defined Benefit Retirement Plan: Which Cash outs Count as Compensation and Which Don’t?
When determining compensation subject to defined benefit retirement plan contributions for the Public Employees Noncontributory and Contributory Retirement Systems, a clear distinction exists between annual cash outs and cash outs paid upon separation.
Cash outs of vacation leave, sick leave, or compensatory (comp) time paid on a year-to-year basis, during the fiscal year, may be used as compensation for retirement according to the following criteria.
» The employer has a written policy allowing for a year-to-year cash out; and
» The cash out represents amounts of leave accrued in a single year under that policy.
Any payments upon separation, including accumulated vacation leave, sick leave, compensatory time, or any other special payments don’t qualify as compensation on which to calculate contributions for the defined benefit retirement plan.
Allowances or payments to members for costs or expenses paid by an employer, including automobile, uniform, travel, tuition, housing, insurance, equipment, and dependent care costs, don’t qualify as compensation.
Retirement contributions should not be paid on any allowance or payment an employee receives for costs or expenses relating to automobile use. This means any amount paid on a regular basis for an employee to use his or her own vehicle or the employer’s vehicle in the course of conducting business, any expense allowance created for purposes of paying for vehicle expenses, or reimbursement for mileage, etc., is not includable as salary for the URS Defined Benefit Retirement Plan. Please contact our office if you have any questions.