OSPS E-News ~ FW: SB1049 and Retirement Contribution Options

[Announcements from OSPS to the users of the Oregon State Payroll Application]

Hello Payroll Professionals,

On behalf of Centralized PERS Services Team (see the below email).

I also want to let you know that we will not have processes in place to address these changes until September 2020. The information below should have included the following statements:

PERS is not yet prepared to handle "voluntary contributions" mentioned below and will not be ready until late September of this year.  Without knowing how PERS will handle this contributions, OSPA is on hold for creating a process to address this.

More information can be found at the PERS SB1049 FAQs webpage here:
https://www.oregon.gov/pers/EMP/Documents/Misc-Documents/SB1049-Voluntary-Contributions-FAQs.pdf

I apologize for any confusion/anticipation this may be causing your employees.

Thank you for your patience,
Jason
(503) 373-0198 - Desk
(971) 900-7688 - Cell

From: all_state_employees-bounces at list.oregonsdc.org <all_state_employees-bounces at list.oregonsdc.org> On Behalf Of Statewide Announcements * DAS
Sent: Wednesday, July 22, 2020 10:21 AM
To: all_state_employees at state.or.us
Subject: SB1049 and Retirement Contribution Options


A message from the Department of Administrative Services, Centralized PERS Services Team



Dear State Employees,



PERS has shared a great deal of information about the changes the Oregon Legislature put in place with the passage of Senate Bill 1049<https://www.oregon.gov/pers/MEM/Pages/SB1049.aspx>. The Department of Administrative Services, Centralized PERS Services Team (CPERS) works with PERS to implement these types of changes. The purpose of this message is to clarify how SB 1049 impacts state of Oregon employees, and to provide options for employees who want to maintain the contribution to their Individual Account Program (IAP) at 6% of earnings.



Overview of SB 1049 'Member Redirect'

SB 1049 directs that beginning July 1, 2020, employees who make more than $2,500 a month will have a portion of their 6% IAP contribution redirected to a separate account called the "Employee Pension Stability Account" (EPSA). The amount redirected is different depending on member type - Tier One and Two, and OPSRP. The EPSA account will be used to help fund future monthly pension benefits for state  employees. (Reminder: There are two parts to your future PERS retirement: (1) your lifetime, monthly pension benefit; and (2) your Individual Account Program.)



The following chart shows the percentages going to the EPSA and your IAP, beginning July 1, 2020.



Member Type

Redirect to EPSA

Contribution to IAP

Total Withheld from Pay

Tier One and Two  -->

2.5%

3.5%

6%

OSPRP                      -->

.75%

5.25%

6%



Overview of SB 1049 'Voluntary Contribution'

SB 1049 gives employees who are affected by the redirect the option of making an AFTER-TAX voluntary contribution to their IAP account in the same amount going to the EPSA. This voluntary contribution is an optional choice.



Example: A Tier One or Two employee has the mandatory 6% pre-tax deduction taken from their pay, with 2.5% of it now going to the EPSA. This employee can choose to have 2.5% deducted from their pay AFTER TAX and sent to their IAP.



Alternative Options

The Oregon Savings Growth Plan (OSGP) is a good alternative employees can use to make additional contributions to their retirement, for these reasons:
*         Contributions to the Deferred Compensation Plan in OSGP are made PRE TAX.
*         Contributions to a ROTH IRA in OSGP are made AFTER TAX and are an alternative.
*         Employees can contribute an amount not limited to the amount of the EPSA  contribution.
*         Employees can enroll in the Oregon Savings Growth Plan at any time, whether or not they are affected by SB 1049.



In sending this message, DAS wants to be sure employees are well informed so they can make the best decision possible for their retirement planning. Please consult with a tax professional if you have tax-related questions.



Resources

For more information about the Oregon Savings Growth Plan, including how to enroll, please visit: https://www.oregon.gov/pers/osgp/pages/index.aspx.



For more information about SB 1049, please visit the PERS website: https://www.oregon.gov/pers/MEM/Pages/SB1049.aspx.


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