Monday, March 30, 2020

 

Administration of the MERS Defined Contribution Plan Administration

Here you will find the information you need to administer your MERS Defined Benefit Plan.

Connecting Your New Hires with Their MERS Benefits

Here's what your new hires can expect when you enroll them in a MERS plan:

MERS Participant New Hire Process

Within two weeks of enrolling, new hires they will receive:

  • A welcome email introducing MERS and giving an overview of the plan(s) your new hire is enrolled in, along with immediate action items. Included in this email will be a link to the MERS New Participant resource page at mersofmich.com/life-events/new-Participant. Here, new hires can find:
    • Plan information
    • Video explaining plan features
    • Information on the benefits of a myMERS account

Important! It is highly encouraged that you submit an email address for your new hire upon enrollment in order for MERS to generate a welcome email for your new hires. If you do not include an email address, your new hires will continue to receive welcome kits via postal mail within six weeks of enrollment.

Participant Handbook

* New hires who are new to a MERS product will receive a product welcome letter.

Working in Retirement

If you have an employee that retires and later decide to return to the workplace, there are restrictions that can affect their MERS pension under certain conditions. These restrictions apply only if they become re-employed by the same employer they retired from. There are also different rules for elected officials than regular employees. There are no restrictions if they are hired anywhere other than the employer they retired from.

If the employee retires and returns to a regular (non-elected/appointed) position, the following rules apply:

  • They must complete and submit the Working in Retirement Certification form (Form F-29c), signed by both the employee and the employer, to MERS.
  • They must have a bona fide termination before returning to work, per IRS rules. Bona fide termination is defined as no formal or informal agreement to return to work prior to retirement.
  • They must have 60 days of separation.
  • They may work up to 1,000 hours in a calendar year.

If an employee retires and returns to an elected/ appointed position, the following rules apply:

  • They must complete and submit the Working in Retirement Certification form (Form F-29c), signed by both the employee and the employer, to MERS.
  • They must have a bona fide retirement before returning to work, per IRS rules. Bona fide retirement is defined as no formal or informal agreement to return to work prior to retirement.
  • If they are re-elected/appointed into the same position, they must have two years of separation.
  • If they are elected/appointed into a different position, they must have 60 days of separation.
  • They are not subject to any hour limitation.

Transferring Employees

When you have an employee transferring from one division to another, the standard structure places them into the active plan at the time of a transfer. Treating transferred employees the same will provide consistency and effortless recordkeeping during transitions. Your municipality may adopt an alternative transfer provision, through the Employer Resolution Establishing a Uniform Transfer Provision.

If the employee is currently in the MERS Defined Benefit Plan, the effects of a transfer depend on whether your municipality has the Standard Transfer Rules or has adopted the Alternative Transfer Rules:

Standard Transfer Rules
Under the Standard Transfer Rules, if an employee transfers from one division to another, they must participate in the open, active retirement plan of the new division.

Alternative Transfer Rules
If your municipality has adopted MERS Alternative Transfer Rules, the employee can choose to stay in their previous retirement plan, or join the new plan.

To retire an employee in the MERS Defined Benefit Plan:

  1. Have the employee apply for retirement online through their myMERS account, within 45-90 days of their retirement date. MERS will then send your HR contact the employer certification of termination form for completion.
  2. Follow the steps below to change their employment status to "Terminated". Once the application has been received, MERS will update the employee's status to "Retired".

To terminate an employee in the MERS Defined Benefit Plan you will need to change the employee's information in your report to us.

Monthly report:
Note: This is your normal monthly report that contains all of your employees. If you need to make a correction, see the section below on corrected reports.

  1. Log in to the MERS Employer Portal.
  2. Click "Defined Benefit Employer Portal" from the left side navigation bar.
  3. Under the "Wage Reporting" tab, Click "Prepare Report".
  4. Change status for the employee that is terminating employment to "terminated".
  5. Enter the date of separation.
  6. A final wages row will appear below the employee. The box for "Report Final Wages Next Month" is automatically checked so that they will be on next month's report for you to report final wages and payouts. If you are able to pay them all final wages and payouts during the month of termination remove the check mark. This will enable the boxes for each type of payout: Longevity, vacation,  PTO, etc.
  7. Complete the monthly report for all your employees enrolled in Defined Benefit as you normally do each month. Save and submit the report.

Corrected report:
If you have already submitted the monthly report and need to terminate an employee, follow these steps.

  1. Log in to the MERS Employer Portal.
  2. Click "Defined Benefit Employer Portal" from the left side navigation bar.
  3. Under the "Wage Reporting" tab, Click "Make Corrections".
  4. Click on "Correct Employee Report".
  5. Search for the participant by entering last name or SSN and clicking on "Search".
  6. Click the green box to the left of the participant.
  7. The corrected report for the individual will open. For "Backdate Termination" select the correct month and enter the day. 
  8. At the top of the report you will now see the final wages row below the month you selected. 
  9. The box for "Report Final Wages Next Month" is automatically checked so that they will be on the next month"s report for you to report final wages and payouts. If you were able to pay them all final wages and payouts during the month of termination remove the check mark. This will enable the boxes for each type of payout: Longevity, vacation, PTO, etc. If you need to report final wages in the next month leave the check mark.
  10. Save and submit the report

For employees who have two defined benefit plans from two different employers, MERS-to-MERS time will automatically be applied after one year.

Employees who would like to verify MERS-to-MERS time for inclusion in DC service should contact the MERS Service Center at 800.767.MERS (6377) or fill out and submit the MERS-to-MERS Service Verification Form (form MD-016). MERS-to-MERS time will only apply before a DC distribution is taken or a forfeiture occurs, ensuring that employers will not incur future liabilities.

The MERS Defined Benefit Plan allows participants to earn service credit for each month of eligible work. With the approval from the employer, participants can purchase service credit to help them meet early retirement eligibility or increase their pension. Unlike MERS-to-MERS or Act 88 time, purchased service credit cannot be used to reach vesting. For more information on service credit purchases or to submit a service credit purchase request on behalf of an employee, click here.

One of the most important things employees can do for themselves and their family is to name a beneficiary. Equally important is to make sure beneficiary information remains up-to-date. Employees should name their beneficiaries when filling out the DB Membership Application (Form #F-05). They can easily change their beneficiaries or update contact information in their myMERS account as needed.

There are three types of beneficiary designations: Monthly Pension Beneficiary, Primary Refund Beneficiary and Contingent Refund Beneficiary. Unless otherwise specified, the spouse is always the Monthly Pension Beneficiary and the Primary Refund Beneficiary. If the spouse chooses to waive their rights, it must be in writing by signing the spousal consent of forfeiture on the Membership Application (Form #F-05) or the DB Beneficiary Change Request Form (Form #F-21).

 

There are two types of MERS Defined Benefit Plan disability retirement: Non-duty disability and duty disability. Employees may apply for disability retirement benefits if they have incurred a total and permanent disability, or you as the employer can submit the application your employees' behalf. Terminated employees must submit an application for disability retirement within two years of their termination date.

To apply for disability benefits, the employee or employer should:

  1. Complete and submit the Application for Disability Retirement (Form 51), or by calling the MERS Service Center at 800.767.6377.
  2. Current medical records will need to be submitted to MERS with the application, including two separate Physician's Statements. If the illness or injury was a result of a work-related cause MERS will need a copy of Employer's Basic Report of Injury and all documents relating to worker's compensation. Please review the instructions on Form 51 for further details.
  3. The application and any medical documentation will be evaluated by Managed Medical Review Organization, Inc. (MMRO), MERS' disability vendor. The employee will be contacted by MMRO within 5 business days of receiving the application to discuss next steps in the disability evaluation process. The evaluation process may take up to 3 months to complete.
  4. We will notify both the employee and employer of the results once the disability evaluation is complete. If the application is approved, the employee will be eligible to apply for retirement benefits. The disability approval letter will detail next steps in order to start collecting a benefit.

For more information on disability retirement, please consult the Participant Handbook or contact our Service Center.

To view IRS-established retirement plan contribution limits and reporting data for the current year, click here (pdf).

You can change the method in which you pay your monthly invoices for open defined benefit divisions.

  • For more information, click here.
  • If you would like to change your billing method, click here to access the online form.
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Disclaimer
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).