Employer Update

In less than a year’s time, employers will begin managing payroll withholding for the defined contribution component of the Hybrid Retirement Plan separately from the defined benefit component.

Separating the defined benefit and defined contribution rates will streamline employer workflows, reduce payroll processing errors and ease reconciliations for overpayments and underpayments.

Now is the time to ensure your budgeting, payroll and defined contribution reporting processes are ready for rate separation.

Map Out Changes to Your Payroll Process

Starting July 1, 2024, every time you run payroll, you should withhold defined contributions from hybrid plan members’ paychecks.

You will administer the hybrid defined contribution component and defined benefit component as separate, independent plans and submit separate payments for:

• The defined benefit contributions to VRS each month (fixed rate for all plans).
• The defined contribution amount to MissionSquare Retirement each pay period (variable, based on individual employees’ voluntary elections).

Depending on the structure of your payroll system, you may need to remove the link between the defined benefit and defined contribution amounts. If you contract with a third-party payroll administrator, you should begin discussions now about any needed programming changes. If your IT department maintains your payroll system, you also will want to discuss this change with them now.

It’s also a good idea to address any existing payment reconciliation issues in your system and stay current leading up to the transition in July 2024.

Get Answers to Your Questions

Use the Hybrid Rate Separation Intake Form to submit your questions about any aspect related to this change in process. Our team remains committed to supporting employers throughout the implementation, including responding to key questions about impacts of the change to payroll withholding and reconciliation.

The Hybrid Retirement Plan Rate Separation webpage is your go-to source for information, including:

• Your Questions Answered.
• Which aspects of hybrid plan administration will change, and which won’t.
• Steps you can take now to be ready for the transition.

Look for an email from VRS later this month with further details about rate separation and how to prepare for changes to your payroll and reporting processes.