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Tuesday, December 11, 2018

Administrative and Policy Change Log

Here you will see a list of Admin and Policy changes.

12

Posting Date: December 12, 2017

Action required: Potentially

What: Some municipalities with the MERS Health Care Savings Program may be inaccurately administering the leave conversion provision of their plan

Key Date(s): It is recommended that municipalities inaccurately administering this provision correct their actions immediately to avoid IRS-accessed penalties.

Impacted audiences: Municipalities with a MERS Health Care Savings Program

Key information:

As your partner in retirement, we want to ensure your Health Care Savings Program (HCSP) plan is in compliance with IRS guidelines.

Upon adoption of HCSP, you may have elected to offer a mandatory leave conversion provision for one or more division(s). Leave conversions are all or a portion of unused leave payouts that are contributed annually or at separation of employment.

In order for your plan to maintain its tax-qualified status, contributions must be mandatory. Employees cannot choose how they receive their leave conversion. However, each division may define its own payout option. If you are currently offering a lump sum amount for leave conversions as an optional benefit to your employees, it is recommended that you immediately stop. Administering your plan in this manner violates the tax-free nature of the program and may require those contributions to be taxable income reported on an individual's W-2 form.

If you are seeking a flexible option that allows your employees to choose how they receive leave conversions, consider amending your HCSP agreement and utilizing the MERS 457 Program.

Resources available: Click to View

For more information, contact: Your MERS Benefit Plan Coordinator – 800.767.6377 (MERS)

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The information contained in this Web site is being made available as a public service. The information is not intended to constitute legal or investment advice, or to replace official versions of that information. Benefit Estimates or Service Credit Purchase estimates requested through this Web site are not official descriptions of any benefits, and do not represent a promise by MERS to provide any benefit(s) to any person(s). No one can detrimentally rely upon the information provided in, or requested through this Web site. MERS reserves the right to correct any errors, and presents this information without warranties, express or implied, regarding the information?s accuracy, timeliness or completeness. If you believe the information is inaccurate, out-of-date, or incomplete, or if you have problems accessing or reading the information, please call MERS at 800.767.MERS (6377).