Employer Update

What types of payments are excluded from VRS creditable compensation calculations?

Creditable compensation is equal to the portion of the employee’s annual salary earned in each month. It excludes:

• Overtime.
• Extraordinary pay.
• Bonus pay.
• Housing and moving expenses.
• Mobile device and internet costs.
• Vehicle allowances.
• Termination pay for leave.
• Non-permanent shift differentials.
• Payments of a temporary nature including but not limited to acting pay (if not permanently confirmed for the position).
• Payments for extra duties, such as pay for teachers who serve as coaches.

Also, a member’s election to defer salary to a deferred compensation plan, such as a 403(b), a 457(b) or a 125 plan, may only be included in creditable compensation if the member voluntarily elects the deferral, the deferral is not conditional or performance based, and the deferral would otherwise be included in the member’s taxable income.

Learn more

Our Creditable Compensation Job Aid and Checklist serves as a guide for reporting creditable compensation, based on the Code of Virginia. It will help you verify that you are reporting the correct current annual base salary information for employees to VRS. It also includes model contract language for executive-level positions.

If you have additional questions about creditable compensation inclusions or exclusions, reach out to your employer relationship manager.