VRS Hybrid Rate Separation Effective July 1st 2024

• We need a calc code for our defined contribution deduction that will calculate the creditable gross comp for that pay period, not the one that we currently have which calculates the credibitabe comp based on the annual pay divided by 12 months 
• We are using calc code 36 - REFERENCE SALARY/# PAYMENTS * PCT on all of Hybrid retirement deductions, both the Defined Benefit (DB) deductions and the Defined Contribution (DC) deductions. In July, the DC deductions will need to be calculated on the VRS eligible pay actually received each pay period.  Can you advise what changes and calc code we should make in our payroll system to meet these change requirements?
• Beginning July 1, 2024 we will need to calculate the VRS defined contributions (DC) for every payroll instead of just 24 per year. This calculation is based their regular pay for a two week period times the deduction percentage. Would I still use calculation code 36 and change the number of payrolls to 26 instead of 24? 

• Payroll
• Deduction and Benefit Master
• Virginia
• VRS Defined Contribution Reporting

Legislation passed in 2022 with a delayed effective date of July 1, 2024. 

Full details available from VRS here: https://employers.varetire.org/hybrid-rate-separation/

Overview of changes: 
Report DC contributions each pay period - Per IRS regulations, defined contribution deductions should be withheld and remitted each pay period to ensure timely investment of the member’s contributions. (Monthly remittance was permitted previously because the defined contribution rate was blended with the defined benefit rate.)

Base DC contributions on the actual amount paid in the pay period - Starting July 1, 2024, each and every time you run payroll, you should withhold defined contributions based on the employee's creditable compensation portion of their actual pay for that pay period.

Change the Calc Code in Deduction and Benefit Master for all DC deductions and process the VRS Defined Contribution Reporting after every pay period. 

Deduction Changes

DC deductions become a simple percent of deduction gross calculation. 

Before the first payroll processed with a July check date, you will need to change the deduction calc code (or create new deduction codes).

1. In the Deduction and Benefit Master program, use Calc Code to 03 - Percent from Deduction Master for the Mandatory deductions and 04 - Percent from Employee Deductions for the Voluntary deductions. 
2. From the Deduction and Benefit Master, select Exceptions and update the Payroll Exceptions as needed. 
   1. All EERP Pay codes that should not be included in VRS creditable compensation need to be defined here. 
   2. In the payroll, deduction gross represents your VRS creditable compensation amount. All pays defined as excluded in Payroll Exceptions will be excluded from the deduction gross in the payroll.

After the calc code has been changed, you will need to delete and re-add the deductions in Employee Deductions.

 There are a few options to accomplish this:

• Manually delete and re-add using the Delete and Add options in Employee Deductions.
• Global Add/Delete option in Employee Deductions
• Employee Deduction Import. 

Reporting Changes

The ICMA-RC VRS Hybrid and DC Plans Payroll Report program will be renamed to VRS Defined Contribution Reporting under (master) work ticket MUN-483842, and allow you to create a file by Check Date. 

The changes are available in the following Tyler Deploy releases:

• 10.0.1449
• 11.0.1279
• 12.0.881
• 0.1.0.0A

Use this program to create your contribuion file for each Check Date after July 1st.

Reference VRS Defined Contribution Reporting for setup and processing steps. 

Additional Resources: 

VRS Payroll Examples Spreadsheet: https://employers.varetire.org/media/shared/excel/payroll-examples-spreadsheet.xlsx

VRS Creditable Compensation Job Aid: https://employers.varetire.org/media/shared/pdf/creditable-compensation-job-aid-checklist.pdf