Retirement Monitor - September 2019

<p>In this issue:</p> <p>It&#39;s All in a Day&#39;s Work; Employer Reporting Update; State Health Plan Open Enrollment set for Nov. 2-19, 2019; Breaking Down the Contribution-Based Benefit Cap; Beneficiary Updates are Easy with ORBIT; Always Download Forms From ORBIT; Employer Training Series; Know Your Roth so You Can Make the Best Decisions as You Help Your Employees Plan for Retirement; Defining the Terms;&nbsp;Kudos!; We want to Hear from You</p>

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Table of Contents

 

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Access to Employees Reported on Most Recent Contribution Report

In ORBIT, employers have access to only employee accounts if the employee was reported on the employer’s most recent contribution report. This may impact 9, 10, and 11-month employees because they would not be reported over the summer. Once the employer submits these employees on their August payrolls, they will again have access to view those accounts. During months when 9, 10, and 11-month employees are not reported, the employees can always view their own information by logging into their ORBIT account. If you have any questions during this period of inactive reporting, please feel free to contact us at oer@nctreasurer.com.

 

Screenshot of employer reporting ORBIT screenEmployer Reporting Update

In October, you will see a change when adding a new employee to your system. We have added additional fields for new employees. When entering a new employee, you will enter the employee’s social security number two times. Date of Birth field has also been added as additional validation. 

State Health Plan Open Enrollment Set for November 2-19, 2019!NC State Health Plan logo

    Are you ready? Your employees who are State Health Plan members will receive a 2020 Open Enrollment decision guide in the mail in October which will include information to help them choose the best plan for themselves and their family. 

    As appropriate, please encourage employees to visit the Plan website for a quick overview of what actions they will need to take during Open Enrollment and some upcoming opportunities to learn more. Webinars to assist active employees with Open Enrollment will be available October 30-November 15, 2019. Click here for more details!

       

       

      Graphic showing the state of NC and the words Pension Spiking and the Contribution-Based Benefit Cap

       

       

       

       

       

       

      Breaking Down the Contribution-Based Benefit Cap 

      It doesn’t affect the majority, but it is a situation you should be aware of as a possibility depending on your unique circumstances.

      The Contribution-Based Benefit Cap (CBBC) was enacted by the General Assembly in 2014 to address pension spiking. The CBBC was created to protect the North Carolina Retirement System for current and future retirees and to prevent all employers from absorbing the financial burdens of pension spiking.

      Pension spiking happens when a member’s compensation substantially increases to create a retirement benefit that is significantly greater than the employee’s contributions would fund in retirement. This applies to members with an average final compensation (AFC) of $100,000 or higher (adjusted annually for inflation). The CBBC requires an additional payment be made to North Carolina Retirement Systems that reflects the cost of the gap between what has been paid in and what will be paid out. 

      If you have an employee that is determined to be impacted by the CBBC, you will be notified, and a payment must be applied to the member’s account to close the gap on the retirement benefit shortfall. An employee hired before January 1, 2015 and retires on or after this date will have a required contribution made by the member’s last employer. 

      If you have an employee that is determined to be impacted by the CBBC and was hired on or after January 1, 2015, an additional payment is required to close the gap on what has been paid in and what will be paid out. The difference here is that the employer is not required to pay this benefit deficit. However, the employer can contribute a part or all of the cost required for an individual. If the individual and/or employer do not pay the cost needed, the individual will receive a capped monthly benefit amount in retirement. If the individual and/or employer do pay the cost needed, the individual will receive an uncapped benefit amount in retirement because they have made up for the contribution shortfall in their account.

      For more information on Pension Spiking and the CBBC, presentations, summaries and calculating estimates, please click here.

       

       

      Screenshot of ORBIT Maintain beneficiary button

      Beneficiary Updates are Easy with ORBIT

      Naming a beneficiary creates an easier path for your employees' loved ones and ensures benefits go the person or people they select. Adding or updating a beneficiary is easy through the ORBIT online account. Simply log in. Click the Maintain Beneficiaries tab and add or edit principal or contingent beneficiaries. Additions and changes are immediately reflected in the account. Please encourage your employees to review and update their beneficiary information in ORBIT whenever they have a life change event such as marriage, divorce, or death. Additional resources can be found here: https://www.myncretirement.com/beneficiaries.

       

      If you need forms, go to ORBIT each time for most recent forms

      The Retirement Systems updates our forms on a regular basis. Sometimes these forms are changed to reflect legislative changes; sometimes because our process has changed. If you log into ORBIT and print a form once logged in, YOUR information is associated with that form through the barcode and it will read as such when scanned into our system. Even if you remove your information and type or write your employee’s information into the form, the barcode will scan as a form for you. It’s better for the employee to log in and get the prepopulated forms themselves.

      When you or your employees need forms, please remember to go to ORBIT and download the most recent version of the form. Many times, outdated forms are rejected or returned to the employer or employee because the new form was not used and different information is needed, causing additional work and time lost.

       

       

      Graphic showing Employer Certification Series

      The Retirement Systems Division is offering a series of employer trainings for Human Resource Personnel, employees assisting in retirement related matters and employees responsible for ORBIT Payroll Reporting. Training sessions are held in our office or via a simulcast webinar. Attend only the training you need or attend the entire series and receive a certificate from the NC Retirement Systems.

      A full list of the Teachers' and State Employers and Local Governmental Employers training sessions can be found on the Employer Training page of our website. Do you have a lot of staff that should be trained? Email us at employertraining@nctreasurer.com if you are interested in hosting an employer training at your location.

       

       

      Graphic showing To Roth or not to Roth

       

       

       

       

       

       

      Know your Roth

      So you can make the best decisions as you help your employees plan for retirement

      We have a better grasp on the pre-tax dollars that go into a traditional pre-tax retirement fund, but what is the mystery surrounding the Roth 401(k). A Roth 401(k) is a different type of contribution to a retirement plan and involves after-tax contributions and tax-free future income (on contributions, earnings will still be taxed). Many people choose to diversify their retirement portfolio, opting for a mix of pre-tax and tax-free income in retirement.

      These are the questions your employees should ask themselves as they put together their retirement plan:

           Do you want a tax break? Now? Later? Both?

      To help with the decision-making process, we have an interactive Roth Calculator that provides information for your employees as they are making plans.

      To Roth or Not To Roth? That is the question!

      Defining the TermsMagnifying glass and booik

      Membership service: Membership service refers to the amount of time you have been a member of one of the North Carolina Retirement Systems. Membership is automatic for eligible; you don’t have to “enroll.”

      Vesting: Vesting is when you have reached a minimum number of years of membership service to be eligible to apply at a later date for a lifetime monthly retirement benefit from the North Carolina Retirement Systems. If you are vested and you leave employment with a state or local employer, you are still eligible to receive a monthly retirement benefit, provided you do not withdraw your contributions.

      Withdrawn Service a/k/a Refund of Contributions: If an employee leaves employment with a state or local government employer and receives a refund of their contributions:

      • Employees will only receive their contributions, plus four percent compounded annually 
      • The Retirement Systems cannot refund earlier than 60 days after the employee has left employment, by law
      • Employees will lose their retirement service credit
      • Employees will forfeit the rights to all benefits associated with the service for that time period, including medical coverage through the State Health Plan, if applicable

       

      Graphic showing ad for NC ABLE webinar being held on Nov. 4

       

      Kudos!

      Kudos to the City of High Point, Town of Youngsville, and the Town of Oakboro

       

       

      Graphic showing different topics on blocks being stacked with text: We Want to Hear From You

      With the wide variety of employers across the state of North Carolina, we recognize the broad interests and needs of our employer community. We are enhancing The Monitor to ensure each issue has something for everyone. Our goal is to provide the information, highlights and resources that benefit you and your role in supporting the employees that serve North Carolina. So, the question is: What is missing? What other topics would you like to see covered in The Monitor? Your input and needs will drive the content so The Monitor can be a better resource for all employers. Simply reply to the email you received with the link to the Monitor or send an email to chris.frazier@nctreasurer.com to give us your suggestions!

       

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