Simplifying Hybrid Plan Administration
VRS will simplify the way employer contributions are calculated and paid for the Hybrid Retirement Plan , beginning July 1, 2024. Employers will manage payroll withholding for the defined contribution component independently from the defined benefit component . There is no impact on current hybrid plan members. VRS will be providing information and support to employers as you prepare for the separation of rates.
Hybrid Rate Separation Intake Form
Please submit your questions about the process.
Your Questions Answered
Read VRS responses to employers’ questions about the process.
Is taking defined contributions 26 times a year versus the current 24 times a year optional or mandatory when the legislation goes into effect?
You do not need to change your payroll schedule; however, you should review how often you currently withhold defined contributions for Hybrid Retirement Plan members. Starting July 1, 2024, each and every time you run payroll, you should withhold defined contributions from hybrid plan members’ creditable compensation .
If I report my teachers in 10-month contracts over 10 months, but I pay them over 12 months, do I need to start withholding and submitting defined contributions during their off-contract months?
Yes, you should withhold and submit defined contributions for hybrid plan members from every paycheck. If you pay a teacher over 12 months, you will withhold and submit defined contributions from each of those months.
How will we reconcile our DC contributions if the information will no longer be available on the VRS snapshot?
Good news—with rate separation, there will no longer be a need to reconcile defined contributions for hybrid plan members with the monthly VRS snapshot. That’s because the expected hybrid contribution amount will no longer appear on the VRS snapshot. Instead, the employer will submit contributions for the defined contribution component directly to MissionSquare Retirement. Defined contributions will simply be a percentage of creditable compensation for each pay period the employee receives a paycheck.
To prevent reconciliation issues with MissionSquare, employers should review hybrid member contributions each pay period to ensure that the percentages withheld are accurate and include the mandatory 1% from the employee, along with any voluntary contributions elected by the employee. In addition, you also should ensure that employer contributions, including the mandatory 1%, and any match to members’ voluntary contributions are also paid timely.
Note Historical defined contribution component amounts will continue to be visible in myVRS Navigator for all snapshots that occurred before July 2024 and also maintained in the member’s historical record.
Impact On Employees
What is the impact to employees due to this change?
The hybrid rate separation will be mostly seamless for employees. Employers will deduct employee contributions for the defined contribution component of the hybrid plan from every paycheck, a practice already familiar to most hybrid plan members. There will be no changes to contribution amounts unless the member changes the percentage of voluntary contributions. For new hires, mandatory deductions may begin sooner than they would today, leading to quicker investment of contributions.