CalPERS UpdatesPublished: January 15, 2013
The Public Employee Pension Reform Act of 2012 (Assembly Bill 340), signed by the governor on Sept. 12, went into effective Jan. 1. While there are many components of this bill here are some highlights:
1. Post-Retirement Employment – Requires a 180-day “sit-out” period before a retiree can return to work, with certain exceptions.
2. Definition of New Member – Defined as an individual who becomes a member of any public retirement system for the first time on or after Jan. 1, and who was not a member of any other public retirement system prior to that date.
3. Retirement Contributions for Newly Hired – Employees will be responsible for contributing 50 percent of the pension contribution rate calculated by CalPERS that is used to fund the employee’s retirement benefit (current employees contribute 5 percent of their adjusted salary). The employer will pay the remaining 50 percent.
4. New Retirement Formulas – Added new defined benefit retirement formulas (i.e., Misc. Tier 1: 2 percent @ age 62) for new employees hired on or after Jan. 1, which are subject to a new Final Compensation period of a “consecutive” 36 months, subject to a cap.
5. Cap on Compensation – Limits amount of compensation used to calculate the CalPERS retirement benefit, equal to the Social Security wage index limit ($113,700 for 2013). This amount is adjusted annually based on the Consumer Price Index.
6. Service Credit Purchase (“Airtime”) – Eliminates purchase of non-qualified service (commonly referred to as “Airtime,” “non-qualified Service,” and “ARSC”).
Additional information can be found on the Systemwide Human Resources website under What’s New. Questions may be directed to Benefits Services at 562/985-2381, or CalPERS at 888/225-7377.
2013 Tax Year Update of Internal Revenue Code (IRC) Limits that Impact Retirement Plans
The Internal Revenue Code (IRC) limits for Tax Sheltered Annuity contributions for 2013 (402(g), 457(e)(15)) will increase; “catch-up” contribution (414(v)) limits will remain the same for 2013. A summary of the IRC limits is listed below:
• 402(g) elective deferral limit for 401(k) and 403(b) plans $17,500.
• 457(e)(15) contribution limit for 457 plans $17,500.
• 415(c) “percentage of compensation limit” – 100 percent of adjusted gross salary up to $51,000.
• 414(v) age-based (50) catch-up contribution limit $5,500.
Information about these plans can be found on the Benefits Services Retirement Savings website. Questions about the new limits may be directed to Benefits Services at 562/985-2381 or email@example.com
Expiration of the Employee Social Security Tax Rate Reduction (Middle Class Tax Relief and Job Creation Act of 2012)
The Middle Class Tax Relief and Job Creation Act of 2012 (Tax Relief Act of 2012) signed into law on Feb. 22, 2012 extended the reduction in the Social Security tax rate paid by employees for wages through Dec. 31. Since the law expired on Dec. 31, the Social Security tax rate for both employees and employers returned to its 6.2 percent rate effective Jan. 1, resulting in a reduction in net pay.
Questions may be directed to Benefits Services at 562/985-2381 or firstname.lastname@example.org.
Age Eligibility for the Fee Waiver and Reduction Program Extended Up to Age 25 for Dependent Children
Effective Dec. 1, 2012, the California State University (CSU) Fee Waiver and Reduction Program is extended to qualified dependent children of Executive (M98), Management Personnel Plan (MPP) (M80), Confidential (C99) and Faculty (R03) employees up to age 25.
Questions may be directed to the Berta Hanson, fee waiver coordinator at 562/985-8716.
Reminder: 2012 W-2 Statements
The State Controller’s Office (SCO) will be mailing your 2012 W-2 to your current mailing address in January. Because the address the SCO uses for this mailing is the one you have listed in MyCSULB, it is critical that your mailing address is current in MyCSULB to assure you receive this important document. If you have any questions, contact Payroll Services at 562/985-4164 or email@example.com.