Qualifying to Exempt
Individuals employed in certain positions may exempt from retirement coverage under Tier 1 or from the defined contribution (DC) vesting requirements under Tier 2. Such elections are also subject to certain timing restrictions. Please refer to the Exemption Initiation and Exemption Timeframes sections below.
Positions that qualify for exemption are identified either by statute or by the employer when a position qualifies for exemption based on the statutory requirements. All employees eligible to exempt must be certified eligible online in a position eligible to exempt.
Tier 1 elected and appointed officials must qualify for coverage by meeting monthly minimum earnings requirements and work in a position eligible to request a retirement exemption. Appointments must be recorded in an official record kept by the employer. Employers are responsible for monitoring salary to comply with regular monthly minimum earnings requirements. A Tier 1 Request for Exemption (Form MERQ-1, 2, 3 or 5) must be submitted to our office when an employee initially begins employment.
Tier 2 appointed officials must qualify for coverage, be certified as full-time by the employer, and work in a Tier 2 eligible position to request exemption from the DC four-year vesting requirements. A Tier 2 Request of Exemption (Form MERQ 12 , 13A or 13B) must be submitted to our office for each appointed official requesting exemption.
Tier 2 full-time elected officials are only eligible under the Defined Contribution Plan and are automatically exempt from the DC four-year vesting requirements.
Other employees eligible to exempt under Tier 2 must choose between the Hybrid Retirement System and the Defined Contribution Plan as their career plan election, as well as executing an exemption form, prior to the end of their election year if they wish to execute exemptions. Employees may also elect to exempt after the first year if they begin employment with a new employer in an exemption eligible position, subject to the timeframes listed below.
For all employee exemptions, in addition to filing the exemption form, contribution submissions must be properly executed to ensure that contributions are made to the appropriate retirement plan. Once contributions are submitted to a retirement plan, participation in that plan must remain in place for the exempt employee unless the employee loses eligibility for the exemption through a position change. Employees who no longer qualify to be exempt from participation in a specific retirement plan or vesting shall be returned to the participation or vesting requirements of the system in which they should be participating. An employee may not be allowed to choose whether to exempt or revoke an exemption once the employee has begun participation in a retirement plan with that employer.
Tier 1 Positions
1. Elected officials (U.C.A. § 67-22-2; § 49-13-203(4)(b)).
2. The following State of Utah employees (refer to U.C.A. § 49-13-203(4) unless otherwise noted):
i. Legislative employees. Appointed under U.C.A. § 36-12-7(3)(a) or by the Speaker of the House of Representatives, the House Minority Leader, the President of the Senate, or the Senate Minority Leader
ii. Employees of the Governor’s Office of Management & Budget
iii. Employees of the Governor’s Office of Economic Development
iv. Employees of the Commission on Criminal & Juvenile Justice
v. Employees of the Governor’s Office
vi. Employees of the State Auditor’s Office
vii. Employees of the State Treasurer’s Office
viii. Executive Department Heads
ix. Members of the Public Service Commission
x. Members of the State Tax Commission
xi. Member of a full-time or part-time board or commission
xii. Employees of the Utah Science Technology and Research Initiative created under Title 63M, Chapter 2, Utah Science and Technology and Research Governing Authority Act
xiii. Members who are permitted to make an election under U.C.A. § 49-11-406.
3. Appointed and administrative officials. Persons appointed as city managers, chief city administrators, or other persons employed by a city, town, county or other political subdivision who are not entitled to merit or civil service protection. Those who are not entitled to merit or civil service protection do not have the right to grieve certain personnel actions, such as demotions, disciplinary actions, dismissals, or transfers (U.C.A. § 49-13-203(4)(k)).
Administrative positions must meet hours worked and benefits provided eligibility requirements (see Eligibility & Certification).
4. Employees of an Interlocal Cooperative Agency. Employees of an Interlocal Cooperative Agency created under Title 11, Chapter 13, Interlocal Cooperation Act, who are engaged in specialized trades customarily provided through membership in a labor organization that provides retirement benefits to its members.
5. Full-time students, spouses of full-time students, and persons employed in a trainee relationship (U.C.A. § 49-13-203 4(a)).
6. Elected or appointed sheriffs and chiefs of police, executive director of the Department of Corrections, or Commissioner of Public Safety (U.C.A. § 49-15-203).
7. Fire chief of a regularly constituted fire department (U.C.A. § 49-16-203(1)).
8. Governors or legislators (U.C.A. § 49-19-403).
Tier 2 Positions
1. Elected officials (U.C.A. § 67-22-2).
2. The following State of Utah employees (refer to U.C.A. § 49-22-205(1) unless otherwise noted):
i. Legislative employees. Appointed under U.C.A. § 36-12-7(3)(a) or by the Speaker of the House of Representatives, the House Minority Leader, the President of the Senate, or the Senate Minority Leader
ii. Employees of the Governor’s Office of Management & Budget
iii. Employees of the Governor’s Office of Economic Development
iv. Employees of the Commission on Criminal & Juvenile Justice
v. Employees of the Governor’s Office
vi. Employees of the State Auditor’s Office
vii. Employees of the State Treasurer’s Office
viii. Executive Department Heads
ix. Members of the Public Service Commission
x. Members of the State Tax Commission
xi. Member of a full-time or part-time board or commission
xii. Employees of the Utah Science Technology and Research Initiative created under Title 63M, Chapter 2, Utah Science and Technology and Research Governing Authority Act.
xiii. Members who are permitted to make an election under U.C.A. § 49-11-406.
3. Employees of an Interlocal Cooperative Agency. Employees of an Interlocal Cooperative Agency created under Title 11, Chapter 13, Interlocal Cooperation Act, who are engaged in specialized trades customarily provided through membership in a labor organization that provides retirement benefits to its members (U.C.A. § 49-22-205(1)).
4. Appointed and administrative officials. Persons appointed as city managers, chief city administrators, or other persons employed by a city, town, county or other political subdivision who are not entitled to merit or civil service protection. Those who are not entitled to merit or civil service protection do not have the right to grieve certain personnel actions, such as demotions, disciplinary actions, dismissals, or transfers (U.C.A. § 49-22-205(1)).
Administrative positions must meet hours worked and benefits provided eligibility requirements (see Eligibility & Certification).
5. Elected or appointed sheriffs and chiefs of police, the chief of any fire department or district. (U.C.A. § 49-23-203(1)).
The maximum number of appointed or administrative positions a city, town, county or political subdivision may designate as eligible for exemption is 50 positions or a number equal to 10% of its retirement-eligible employees, whichever is less. The total number of positions eligible for exemption between both retirement system tiers will be used to determine exemption compliance. Every city, town, county or political subdivision is entitled to a minimum of one employee position eligible for exemption. Employers may determine which positions among those qualifying for exemption will be included on their exemption plan up to the limits allowed under law.
Members receiving a monthly retirement allowance from URS are considered retirees and may not exempt. Retired members must comply with the Postretirement Reemployment Restrictions Act, Utah Code Title 49, Chapter 11, Part 12. Refer to the Post-Retirement Employment section for more information.
Only full-time elected officials (except Sheriffs) under Tier 2 are automatically placed into an exempt status. All other exemptions must be initiated by the employee by filing the appropriate exemption form with the Office when the employee initially begins employment with the employer, as described below. Employers cannot make the election to exempt for the employee or default them into an exempt status.
Employee exemption elections are subject to certain timing restrictions. Generally, employee exemptions may only be made when the employee initially begins employment with the employer. For a new Tier 2 employee, participation does not occur, and the election to exempt can be made until the end of the first year election period. Once an employee has participated with any plan of the employer, employees are prohibited from making a participation election, including to elect exemption or revoke an exemption, throughout the duration of their employment with that employer, regardless of position changes, promotions, or a termination and rehire.
Service Accrual
Employees don’t accrue service credit towards a defined benefit retirement during the period of exemption.
An exempt employee may not elect to revoke or cancel any exemption. However, for a new Tier 2 employee, participation does not occur, and the election to exempt can be revoked until the end of the first year election period. For all other employees, the election to exempt becomes effective immediately. Once the exemption election has been made and the plan participation has begun, the employee must remain in that plan for the duration of the employee’s employment with that employer unless an employee changes positions to one that is not eligible to exempt. Employees who are in a position that no longer qualifies for exemption from specific coverage or vesting shall be returned to the participation or vesting requirements of the system in which they should be participating. In Tier 2, this is based on their career election. Such employees cannot be provided a retirement system participation choice at the time of a position change.
Subject to federal law, a select group of State officials and employees listed under U.C.A. § 49-11-406 may make an irrevocable election to transfer the calculated defined benefit balances of their accounts into a 401(k) account under their names. As opposed to other exemption elections, which may only be made prior to participation in a retirement plan, this election may be made at the time of bona fide termination of employment while in a qualifying position with the participating employer as an alternate form of benefit distribution.
This election forfeits all rights to any service benefit that has accrued under the defined benefit system at the time of the transfer. In the future, if an employee who has previously executed this election becomes employed in a position covered by URS retirement benefits, they would only be eligible to be a member of a Tier 2 or later-enacted system or plan, as applicable at the time of their future employment date.
To exercise this exempt transfer, the employee must submit a State of Utah Select Exempt Transfer (Form MERQ-SE) to our office. State of Utah agency representatives may call 801-366-7318 or 800-753-7318 to request this form.
Individuals who exempt from retirement coverage may later purchase service credit for the exempted time if the requirements to do so are met. These service credit purchase requirements include that the member again becomes an active member with URS, has an existing record of four or more years of eligible service credit with our office, and our office is provided with certification that any benefits accrued in an alternate retirement plan have been forfeited for the purchase period. As described above, an employee may not elect to return to URS while employed by the same employer after participating in another retirement plan. This is a service purchase and not a contribution adjustment. Refer to the Purchasing Service section.
Contribution files must include gross earnings (not retirement salary or contributions) for Tier 1 exempt employees. Employers must report contributions for Tier 2 participants to the Hybrid Retirement System until the employer is notified by URS.
Employees who exempt are not eligible for a refund of member contributions, because they have not separated from employment; however, they may request a direct transfer of member contributions, if any, to a qualified defined contribution plan administered by our office. Contact our Retirement Benefits Department (801-366-7770 or 800-695-4877) for more information.
1. Determine if the employee is eligible to exempt from Tier 1 retirement coverage, including whether the employee was previously employed with the employer and if so, with which retirement system or plan they participated during that employment.
2. Certify the employee online.
3. Print the appropriate Tier 1 exemption form and fill in Section A and give it to the employee to complete and sign (Forms are available under the Forms tab in the Employers section of our website, login required).
4. The employee needs to return the form to the employer.
5. Keep a copy for your records and forward the original to our office.
6. Add the position to your annual Exemption Plan, where applicable.
7. Exemption form submission to our office and contribution submission to the correct retirement plan must be executed properly for the exemption to be valid. Once contributions are submitted to a retirement plan, participation in that plan must remain in place for the exempt employee unless the employee changes positions and no longer qualifies to exempt from specific coverage or vesting, in which case they shall be returned to the participation or vesting requirements of the system in which they should be participating.
8. Follow reporting instructions in this guide.
1. Determine if the employee is eligible to exempt from Tier 2 four-year vesting, and meets all requirements, including whether the employee was previously employed with the employer and if so, with which retirement system or plan they participated during that employment.
2. Certify the employee online.
3. Print the appropriate Tier 2 exemption form and fill in Section A and give it to the employee to complete and sign. (Forms are available under the Forms tab in the Employers section of our website, login required.)
4. Keep a copy for your records and forward the original to our office.
5. Add the position to your annual Exemption Plan, where applicable.
6. Exemption form submission to our office and contribution submission to the correct retirement plan must be executed properly for the exemption to be valid. Tier 2 employees have one year from their initial eligibility date in this retirement system to make a system election and exemption election.
7. Exemption form submission to our office and contribution submission to the correct retirement plan must be executed properly for the exemption to be valid. Once contributions are submitted to a retirement plan, participation in that plan must remain in place for the exempt employee unless the employee changes positions and no longer qualifies to exempt from specific coverage or vesting, in which case they shall be returned to the participation or vesting requirements of the system in which they should be participating, based on their career election.
8. Follow all reporting instructions in this guide. For Tier 2 employees within their initial year of eligibility in the retirement system, it is appropriate to report contributions under the Hybrid Retirement System for the first year.
9. Note: Either as part of or in addition to the exemption form, the employee must also make their career election between the Hybrid Retirement System and the Defined Contribution Plan during the first year of employment. This can be done on the exemption form itself, or online through the member portal.
U.C.A. § 36-12-7(3)(a)
U.C.A. §§ 49-11-406; 49-13-203; 49-15-203; 49-16-203(1); 49-19-403; 49-22-205; 49-23-203;
U.C.A. § 67-22-2
Resolution 2019-04 Rules Regarding Employee Retirement Participation Elections