In This Edition

1. Workforce Transition Act: Benefits for Involuntarily Separated State Employees
2. VRS Still Needs Your Pick-Up Plan Resolution
3. Employer Meetings: What to Expect During Defined Contribution Plans Transition
4. 457 Plan Deferral Limits Increase in 2009
5. VRS to Administer Voluntary Long-Term Care Program
6. VRS Wins Award for 457 Plan Automatic Enrollment
7. Your Turn to Ask

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Workforce Transition Act: Benefits for Involuntarily Separated State Employees

The Workforce Transition Act (WTA) provides benefits for eligible state employees who are laid off from their jobs. Layoffs must be due to budget reduction, agency reorganization, workforce downsizing or other cause not related to job performance or misconduct. The WTA provides a cash severance benefit or retirement options for employees who meet the eligibility requirements.

Find updated WTA information on the VRS Web site, including benefit eligibility, eligible employees and a WTA Retirement Checklist for employers.

Workforce Transition Act Transitional Severance Benefits
WTA Employer Checklist (62kb)

VRS Still Needs Your Pick-Up Plan Resolution

Local government or school board employers who have not sent VRS an employer pick-up plan resolution need to do as soon as possible.

VRS mailed a letter to local governments and school boards in July outlining the requirements for employer pick-up plans and requesting employers to return the passed resolutions to VRS by September 30, 2008. VRS received needed resolutions from approximately 70 percent of covered employers and we thank them for their timely attention to this matter.

The majority of school boards needed to send in both the 414(h) resolution for employer pre-tax pick up of the 5 percent VRS member contribution, as well as the resolution for pre-tax purchase of prior service. Most political subdivisions needed to re-affirm pre-tax pick up of member contributions. A pre-tax pick-up of the 5 percent member contribution occurs whether the employer pays the contribution or deducts it on a pre-tax basis from the member’s pay.

Even though your governing body may have enacted such resolutions in the past, you must reaffirm your current practice of picking up member contributions and/or offering purchase of prior service on a pre-tax basis.

Internal Revenue Service (IRS) Ruling 2006-43 requires employers to have formal authorization for their pick-up plans by January 1, 2009. State agencies are already in compliance.

Failure to submit a resolution to VRS could reverse the favorable tax treatment of your employees’ member contributions. This could result in significant additional multi-year reporting and record keeping burdens on employers, as well as additional tax liabilities for employees.

If you have any questions, please contact Employer Coverage Coordinator Ben Howard at 1-888-827-3847, ext. 6686 or e-mail bhoward@varetire.org.

Employer Meetings: What to Expect During Defined Contribution Plans Transition

The contract with Great-West Retirement Services, the record keeper for the Commonwealth of Virginia Deferred Compensation Plan, Cash Match Plan, Optional Retirement Plan for School Superintendents and Supplemental Retirement Plan, expires December 31, 2008. Effective January 1, 2009, ING will take over as the new record keeper for the plans.

ING will hold informational meetings in Richmond on November 12 for employers to learn about transition plans and upcoming events. Three meetings will be held at 8:30 a.m., 12:30 p.m. and 3:00 p.m. at:

Omni Richmond Hotel
100 South 12th Street, Richmond
Shenandoah J Room

In addition, ING will hold a series of webinars on the following dates:

• Thursday, November 13
  • 10:00 a.m.: CIPPS-reporting State Agency HR and Payroll
  • 1:00 p.m.: Political Subdivisions and Decentralized State Agency HR and Payroll
• Friday, November 14
  • 10:00 a.m.: CIPPS-reporting State Agency HR and Payroll
  • 1:00 p.m.: CIPPS-reporting State Agency HR and Payroll

To view a webinar, all you need is a computer with a high-speed internet connection and a phone. On the day of the webinar:

1. Go to https://www.livemeeting.com/cc/ing/join
2. Enter the Meeting ID: 6JJK9M
3. Enter the Entry Code: 7xc@{>B
4. To access the audio portion, call 1-866-445-7018 and enter 3465852288.

Registration for the meetings and webinars is not required. If you’re unable to attend, recordings of the webinars will be available at www.varetire.org.

Participants and employees interested in participating can learn about the defined contribution plans and the transition through a series of information meetings in late November and December.

The transition to ING will happen seamlessly for you and participants in the plans. Participants will not have to take any action as a result of the transition to a new record keeper and the current investment options will remain the same. Account balances will transfer to ING automatically. Fees for investment management services also will stay the same.

To transition the plan accounts, ING will require a period during which participants may not make changes to their accounts, from December 18, 2008 until January 5, 2009. Although participants cannot make changes to their accounts during this time, they can view their accounts online at www.vadcp.com or talk to a service representative.

Watch for more information about the transition and upcoming meetings on the VRS Web site at www.varetire.org under the new Defined Contribution Plans tab.

457 Plan Deferral Limits Increase in 2009

The Internal Revenue Service (IRS) announced an increase in the annual deferral limit for the Commonwealth of Virginia 457 Deferred Compensation Plan. For 2009, the limit is increased from $15,500 to $16,500. Educators with access to both the 457 Plan and a 403(b) plan may contribute up to $16,500 to each plan.

Participants, age 50 and older, have an Age 50+ Catch-Up provision that allows them to contribute an amount above the IRS annual limit of $16,500. The additional Age 50+ Catch Up amount for 2009 is $5,500.

When a participant is close to retirement, the plan allows a contribution of an additional amount, the Standard Catch-Up, during each of the three consecutive calendar years before the designated normal retirement age. The annual contribution limit for participants using the Standard Catch-Up in 2009 is $33,000.

The Age 50+ Catch-Up and the Standard Catch-Up cannot be used in the same year. Participants wishing to use the Standard Catch-Up must complete a Normal Retirement Age Election form, a Catch-Up Credit Worksheet and a Payroll Authorization Form. View All 82kb.

VRS to Administer Voluntary Long-Term Care Program

The VRS Board of Trustees approved the transfer of the voluntary long-term care insurance program from the Department of Human Resource Management (DHRM) to VRS, effective November 1. Senate Bill 353 passed by the 2008 General Assembly session authorized this transfer.

This voluntary program gives eligible employees the opportunity to purchase long-term care coverage for themselves and eligible family members.

Long-term care helps pay for services not covered by other health plans or Medicare, lessening the burden on personal financial resources. Covered services include nursing home care, assisted living facility care, hospice care, at-home services and community-based care.

VRS will administer the program with the current provider, Aetna, without change through the end of the current contract in 2009.

Long-Term Care Program Moves to VRS.

VRS Wins Award for 457 Plan Automatic Enrollment

VRS won an Award of Distinction in Plan Design and Administration Leadership from the National Association of Government Defined Contribution Administrators (NAGDCA). The award recognizes implementation of automatic enrollment in the Commonwealth of Virginia 457 Deferred Compensation plan (457 Plan) for new salaried state employees.

Virginia’s plan is currently one of only three state-sponsored deferred compensation plans to have implemented automatic enrollment. About 3,200 newly hired or rehired state employees have been enrolled in the 457 Plan since implementation of automatic enrollment. Only 8 percent of eligible employees have opted-out of participation; 35 percent have self-enrolled rather than wait for their automatic deferrals to begin.