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Mark Your Calendar: Hybrid Plan Auto-Escalation Dates
The next Hybrid Retirement Plan auto-escalation will take place in January 2023, effective with the first payroll that month.
Designed to help members maximize their retirement savings, auto-escalation automatically increases members’ voluntary contribution amount to their Hybrid 457 Deferred Compensation Plan by 0.5% until it reaches the maximum of 4%.
Auto-escalation is quickly approaching. Take note of these important dates to ensure you and your hybrid plan members are prepared.
| Dates | Actions |
|---|---|
| September 1 | Members who are not already contributing 4% in voluntary contributions and who started work on or before September 1, 2022, are eligible for auto-escalation of 0.5%. |
| September 9 | Deadline to enter new hires into myVRS Navigator to ensure they are included in auto-escalation. |
| September 16 - December 15 | Opt-out period for members who do not wish to save more for retirement. Voluntary contribution changes during this time override the auto-escalation increase. Members will receive an educational postcard at their homes in early October. |
| December 16 | Download the fourth quarter Deferrals Changes Report from EZLink and implement the deduction changes in your payroll system before your first January payroll cycle. |
| January 2023 | Once you confirm the December snapshot in myVRS Navigator, generate the January snapshot and reconcile the new voluntary contribution amounts to your first January payroll to ensure the amounts being withheld match the amounts on the snapshot. Remit contributions to MissionSquare following your regular payroll schedule. Delayed implementation of the increased voluntary contributions may result in penalties to the employer. |
Set up a batch file now to make auto-escalation processing easier.
Submitting contributions for VRS defined contribution plans does not have to be a time-consuming, manual process. Switch to a batch payroll file now to save yourself time and reduce reporting errors. The switch from manual to batch payroll processing can be done in three easy steps:
- Request the batch layout from your MissionSquare Retirement Employer Support Team by email or by calling 877-327-5261 (option 3).
- Test your batch file processing.
- Submit your first production file!
Why now? You need to prepare for the Hybrid Retirement Plan’s auto-escalation feature, which will automatically increase contributions by 0.5% for eligible members in January 2023, unless they opt out. If you employ more than 25 hybrid plan members, using a batch file will reduce the manual updates to the voluntary contribution and employer match amounts on your contribution submission.
It typically takes MissionSquare 5 to 10 business days to facilitate a switch to batch payroll processing. However, it may take more time and planning for your payroll vendor to implement. By making the change now, you will ensure smoother payroll processing in January, when members’ voluntary contributions increase.
Questions?
Refer to the Auto-Escalation Employer Guidefor next steps and other details about the process.
Contact the MissionSquare Defined Contribution Plans Support Team at 877-327-5261 (option 3) or visit the Hybrid Retirement Plan Resource Center for Employers.
For questions about the VRS snapshot or enrollments, contact the VRS Hybrid Support Team at 855-291-2285.
