Automated VRS RECON

1. Automated VRS RECON Presented by State Payroll Operations October 2014

2. Background • New VRS Modernization Rules effective Fall 2012 • Redefined Creditable Compensation • Created new effective dating and service eligibility rules • VRS introduced a new system “VNAV” and created new processing requirements for line agencies • PMIS feeds VNAV on a daily basis • VNAV applies the new rules to the transactions (new hires, salary increases, etc.) and updates the employee’s service record accordingly • Non-PMIS agencies key changes to VNAV manually

3. VNAV to CIPPS Interface • Monthly interface beginning January 2014 • Interface updates the following items: • Retirement Plan Codes • Buyback (PPS) Agreement Deductions • Hybrid Voluntary Contributions • Interface Reports: • U184 – VNAV/CIPPS Transaction Error Listing • U185 – VNAV/CIPPS Update Listing • U186 – VNAV/CIPPS Retro Transaction Listing

4. VNAV to CIPPS Interface • Things to remember: • Let VNAV populate the retirement plan code via the interface. Leave it blank until the interface occurs. • If you cannot wait for the interface, make sure you have a screen print from VNAV and set the employee up according to the retirement plan shown in VNAV. • PPS (Buyback Agreements) must be keyed into VNAV and should only come to you via interface. Do not set up Buyback Agreements from paper forms. • If you cannot wait for the interface to establish a PPS (Buyback) deduction, key from a VNAV screen print. • Interface will send 8XX transaction for missed buyback from retro salary adjustment or late entry

5. VNAV to CIPPS Interface • Hybrid employees will be initially be established without a voluntary contribution amount. Voluntary contribution elections are added on the first of the following quarter after an employee’s election. • If a Hybrid employee is contributing to Deduction 38 (Deferred Compensation) the interface will cut off Deduction 45 (Cash Match) until the employee is contributing the full 4% Voluntary Contribution. • See Payroll Bulletin 2014-05 regarding new processing when Sick Leave Payout is used to purchase service.

6. PMIS to CIPPS Interface • Remember that SP99 Contributions base is updated by PMIS to CIPPS interface for a salary change • Reports U181 and U180

7. VRS Modernization Examples • Critical that you follow those examples • New Hires – ORP Eligible Process

8. Less than 12 Month Employees • Contract Length must be correct in PMIS and CIPPS • Collections are prorated over the contract months

9. Hybrid Retirement Plan • These employees still pay a mandatory 5%, however 4% is a defined benefit plan and 1% is a defined contribution plan. • Voluntary contributions to the Hybrid Plan (Deduction 16) are counted towards the 457 Maximums along with Deduction 38 – Deferred Compensation. The goal amount works differently for these deductions and can be monitored in the “Total 401K Amount” field on H0BES. • Agencies can become responsible for missed employee deductions to the Hybrid Plan as well as the gains associated with missed employer deductions. • If Hybrid Plan deductions are taken for an employee that is not on file with ICMA (not in VNAV) the money will be returned immediately to the agency.

10. Hybrid Retirement Plan • Hybrid employees who with voluntary contributions must restart those deductions with the new agency if they transfer • They are not eligible for the deferred comp (supplemental) cash match until they start contributing again at the new agency for the full 4%.

11. Part 1: VRS Snapshot Processing • Purpose: Reconcile PMIS to VNAV. (Non PMIS agencies reconcile manual entries to VNAV). • Retrieve a HuRMan download of PMIS Annual Salaries and divide by the Employee Months and compare that amount to the Creditable Compensation values on the Snapshot File. • HR should remove service for employees who did not pay the full month and make other adjustments to the employee’s record as necessary. • Retroactive corrections can be made on the Snapshot.

12. Part 1: VRS Snapshot Processing • VRS Modernization changed the way we bill for LTD. • Prior to the changes LTD was paid based on eligibility for the plan, not participation. • Non-VSDP Participants should not be billed for LTD. If you have discrepancies – notify Employer Services at VRS. You may need to provide opt out forms or other information to support the correction in VNAV. • Ensure that LWOP employees are correct • Once you review the initial month, you only need to review changes that occurred during that subsequent months.

13. Part 1: VRS Snapshot Processing • Review the “Cancelled Records Report” and correct items before you confirm the Snapshot. • Review carefully the information presented for terminated employees. If an agency knows at the time a Snapshot is approved that a terminated employee did not pay the complete member portion for the last month, remove the service for that month ASAP. Once the dollars are refunded to the employee, the funds may not be returned to you from VRS.

14. Part II: VRS Automated Recon • After all agencies have certified the Snapshot by the 10th of a month, VRS will send an electronic file to DOA of the Snapshot amounts – this becomes your bill. • DOA compares the amount billed on the Snapshot file to the amounts collected in CIPPS. • Reports U170, U171, U172, U173 and U174 are created. • Automated IAT’s are produced for any differences between the amount billed on the Snapshot and the amount collected in CIPPS.

15. Part II: VRS Automated Recon • If you had a perfect month, you will only receive Report U174. Reports U170, U171, U172 and U713 are produced only when the dollar amounts collected in CIPPS are greater than a .05 tolerance for the amount billed on the Snapshot file. • If you receive reports U170, U171, U172 or U173 you should review the errors and make corrections immediately. If not enough funds were collected in CIPPS from the member – collect the funds due on the next available payroll. Agencies are not allowed to pay the employee’s portion of retirement.

16. Part II: VRS Automated Recon • Report U170 – Plan Related Benefits – Employer Retirement and VSDP(LTD) • Error Code 1 – Employer Retirement Amount Difference - a difference of more than .05 cents exists for this employee between the amount of Employer Retirement on the VRS Snapshot and the amount of CIPPS dollars collected during the month for deduction numbers 116 and 127 – If not enough is collected in CIPPS – correct the error by collecting on the next available payroll. If Snapshot amount was incorrect, HR may need to correct PMIS and or VNAV – the adjustment will come through on a future recon for the month that they made the correction.

17. Part II: VRS Automated Recon • Report U170 – Plan Related Benefits – Employer Retirement and VSDP(LTD) • Error Code 2 – VSDP/LTD Amount Difference - a difference of more than .05 cents exists for this employee between the amount of VSDP/LTD on the VRS Snapshot and the amount of CIPPS dollars collected during the month for deduction numbers 136 and 144. - NOTE: For the recon months of October – January, you will see multiple refunds for LTD premiums for Non-VSDP participants. This is because CIPPS was not modified for the LTD billing change until February. If the VRS Snapshot does not reflect the correct VSDP status of the employee, send an email to employer-info@varetire.org. You may need to provide Opt out forms or other information to support the request.

18. Part II: VRS Automated Recon • Report U170 – Plan Related Benefits – Employer Retirement and VSDP(LTD) • Error Code 3 – CIPPS Plan Code Error – the retirement plan code on HMCU1 in CIPPS is not appropriate for the retirement plan code presented on the VRS Snapshot. VRS is the source for retirement plan code eligibility. They will assign a retirement plan based on the employee’s job information, and membership history with VRS. Retirement plan code discrepancies could result in overpayments to the employee. Consult with HR/VRS to determine the correct plan code and correct the deductions withheld in CIPPS as necessary.

19. Part II: VRS Automated Recon • Report U170 – Plan Related Benefits – Employer Retirement and VSDP(LTD) • Error Code 4 – VSDP/LTD Deduction Code Error – the deduction number used in CIPPS on H0ZDC is not appropriate for the retirement plan code. Deduction 136 is for VRS related retirement plans. Deduction 144 is for SPORS and VALORS retirement plans. To correct this error, verify that the retirement plan code is correct on HMCU1 then rekey the retirement plan code.

20. Part II: VRS Automated Recon • Report U171 – Employer Group Life and Health Insurance (Retiree) Credit • Error Code 5 – Group Life Difference – a difference of more than .05 cents exists for this employee between the amount of Group Life on the VRS Snapshot and the amount of CIPPS dollars collected during the month for deduction number 120. Correct CIPPS if not enough money collected.

21. Part II: VRS Automated Recon • Report U171 – Employer Group Life and Health Insurance (Retiree) Credit • Error Code 6 – HIC/Retiree Credit Difference – a difference of more than .05 cents exists for this employee between the amount of HIC/Retiree Credit on the VRS Snapshot and the amount of CIPPS dollars collected during the month for deduction number 115. If not enough funds are collected, collect the additional funds needed on the next available payroll in CIPPS.

22. Part II: VRS Automated Recon • Report U172 – Employee Contributions • NOTE: Employers are not allowed to pay member retirement contributions – as a part of this reconciliation, the agency will be automatically charged if the member contributions are under withheld. Collect any member portions due on the next available payroll ASAP!

23. Part II: VRS Automated Recon • Report U172 – Employee Contributions • Error Code 7 – Buyback Difference – a difference of more than .05 cents exists for this employee between the amount of Buyback (Service Purchase) on the VRS Snapshot and the amount of CIPPS dollars collected during the month for deductions 17, 18, 43, and 44. • NOTE – New Service Purchase agreements will be entered in VNAV by the PPS Processor at the line agency. These will update in CIPPS through the VNAV to CIPPS interface.

24. Part II: VRS Automated Recon • Report U172 – Employee Contributions • NOTE: New Procedure for entering Buyback Agreements • Employee receives a letter from VRS notifying them of the amount they can purchase. • Employee will work with Benefits Administrator to complete the newly revised Form VRS-26E. This form does not get sent to VRS – it is merely documentation for the line agency to use to key into VNAV. • The PPS processor (VNAV) uses the VRS-26E to enter the agreement in VNAV. VNAV will send a transaction to CIPPS via the VNAV to CIPPS interface.

25. Part II: VRS Automated Recon • Report U172 – Employee Contributions • Error Code 8 – Employee (Member) Contributions Difference – a difference of more than .05 cents exists for this employee between the amount of member contributions on the VRS Snapshot and the amount of CIPPS dollars collected during the month for deduction number 12. • If an employee terminates/transfers mid month – we must collect the member’s portion from their last available paycheck – if we missed the last payment – see VRS Modernization Working Example Y

26. Part II: VRS Automated Recon • Report U172 – Employee Contributions • Error Code 9 – Pretax Indicator Error – the CIPPS deduction number used to collect the Buyback (Service Purchase) amount is not appropriate according to the VRS Snapshot pretax indicator. This means that the deduction number you are using for the Buyback amount is not consistent for what VNAV has as the employee’s selection. Deductions 17 and 18 are post tax deductions, deductions 43 and 44 are pre tax deductions. Refer to the employee’s agreement to determine which system is correct and adjust the system accordingly. If CIPPS is incorrect, this will require adjustments to the employee’s tax record and possibly a W-2C if the problem existed in previous calendar years.

27. Part II: VRS Automated Recon • Report U173 – CIPPS Activity for Employees Not on VRS Monthly Snapshot File • Exceptions are displayed on this report if there are CIPPS dollars and the employee was not on the VRS Snapshot for that month. • Example – Employee terminates in April, but one of the paychecks issued was incorrect so a special pay was issued. The void did not process until the month of April. On the April Recon, the overpayment is credited back to the agency for the third paycheck. On the May Recon, the employee is not charged on the Snapshot but there is CIPPS money because the void is processed. This will charge the agency for void and reconcile the employee’s record over the two months.

28. Part II: VRS Automated Recon • Report U174 – VRS Billing Summary • If you have a perfect month – this is the only report you will receive. It summarizes the amounts billed by organization code and the amount of money collected in CIPPS. • Non-billed CIPPS Activity - the summary of what was presented on Report U173. • Billed VRS Activity – the summary of the billing and CIPPS amounts for Retirement (Employee/Employer), LTD, Group Life, Retiree Credit and the automated IAT’s generated. Detail for automated IAT’s shown on U170, U171, U172

29. Part II: VRS Automated Recon • Helpful Hints • Correct errors as soon as possible to avoid repeating errors each month. • Reconcile the VNAV Snapshot Creditable Compensation to a HuRMan download initially, and then reconcile your exceptions each month • Retirement Plan code is determined at VRS after employee is added to VNAV. • USE THE VRS MODERNIZATION WORKING EXAMPLES ON OUR WEBSITE!!!

30. Part III: Agency Default GLI • The Automated VRS Reconciliation produces CREDIT and DEBIT IAT’s to the Agency Default GLI coding. • Use a spreadsheet to track the charges/credits each month. Some charges/credits will automatically wash if an adjustment is made in subsequent months. Some charges/credits will need an ATV to clear the Agency Default Coding. For example, the LTD credits returned for Non-VSDP participants will need to be cleared via an ATV. • DOA has a spreadsheet that can be used

31. Part III: Agency Default GLI • Amounts on U174 are should be visible on CARS 401 Report in the week that the Recon is processed. Note “Automated VRS Recon”.