Sync Your Calendars With VRS Defined Contribution Plans
The next 16 months mark a period of significant change for VRS defined contribution plans with the goal of improving services for members and streamlining administrative steps for employers.
Next summer, VRS simplifies the way employer contributions are calculated and paid for the Hybrid Retirement Plan, with employers managing payroll withholding for the defined contribution component independently from the defined benefit component.
Six months later, VRS will begin 2025 with a new record keeper for its defined contribution plans.
Further changes could come in 2025 and beyond, with federal SECURE Act 2.0 provisions aimed at boosting retirement savings. VRS continues to evaluate options to benefit members.
Through it all, VRS will provide information and support to employers to guide you through with ease.
July 2024: Hybrid Plan Rate Separation
Beginning July 1, 2024, employers will administer the Hybrid Retirement Plan defined contribution component more like a traditional defined contribution plan.
The change follows legislation passed in 2022, with a delayed effective date to allow time for employers to update payroll systems, if necessary, and to make other required changes in how you report defined contributions for hybrid plan members. The change also coincides with the normal rate-setting schedule for employer defined benefit contributions over the next biennium.
Separating the defined benefit and defined contribution rates will streamline workflow, reduce payroll processing errors and ease reconciliations for overpayments and underpayments.
VRS will support employers throughout the implementation process. The Hybrid Retirement Plan Rate Separation webpage is your go-to source for information, including:
- A newly added section of “Your Questions Answered.”
- Legislation overview and how it may affect your budgeting forecasts.
- Which aspects of hybrid plan administration will change and which won’t.
- Steps you can take now to plan for the transition.
- Have questions? Submit them through our online form.
January 2025: New Record Keeper
The VRS Board of Trustees has named Voya Financial to serve as the third-party record keeper for the VRS defined contribution plans (DCP) beginning January 1, 2025.
Voya will assume record-keeping responsibilities for VRS-sponsored defined contribution plans including the Commonwealth of Virginia 457 Deferred Compensation Plan, the Virginia Cash Match Plan 401(a), the defined contribution component of the Hybrid Retirement Plan as well as three optional retirement plans available through VRS.
Monthly hybrid plan voluntary contribution elections: Coinciding with the change to a new defined contribution plan record keeper, VRS will begin allowing hybrid plan members to change their voluntary contribution elections monthly instead of quarterly. The shift to monthly elections will allow for quicker investment of member contributions.
2025 and Beyond: SECURE 2.0 Act
VRS continues to evaluate potential changes to defined contribution plan administration related to this sprawling piece of federal legislation. The legislation affects many aspects of plan administration and includes mandatory and optional provisions that range in effective date, from immediate to 2027.