In This Edition

1. 2010 Legislative Wrap Up
2. Modernization Webinar Recording Now Available
3. Avoid Delays: Employees Should Apply for July Retirement Now
4. Member News Changing to E-Newsletter Format
5. Understanding 457 Contribution Changes and One-Time Deferrals
6. Back to Basics: Understanding VRS Funds
7. Life Insurance Claims Available by Direct Deposit
8. Your Turn to Ask

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2010 Legislative Wrap Up

The General Assembly adopted several benefit plan changes for current and future VRS members during the 2010 General Assembly session. All bills and budget measures are subject to amendments by Gov. Bob McDonnell during the reconvened session on April 21. Read the VRS 2010 Legislative Summary 363kb.

Modernization Webinar Recording Now Available

In February VRS presented Modernization: Enrollment and Employer Reporting 162kb, the second in a series of Modernization webinars for employers. The recorded version of this webinar is now available for you to view at your convenience. It covers the goals of the Modernization program, key dates for the project, changes to enrollment and employer reporting and data elements you’ll submit to VRS.

The recorded version of the first webinar in this series, Introduction to Modernization 103kb, also is available.

Avoid Delays: Employees Should Apply for July Retirement Now

July is the busiest month for retirement applications, so remind your employees to act now in preparation for their retirement this summer. Employees should send applications to VRS at least 60 days, but no more than four months, before the date they wish to retire.

Tips

• Encourage your employees to visit Retirement Readiness for education and other resources on planning for retirement.
• Through their secure online myVRS accounts, your employees can use the Benefit Estimator and Retirement Planner to create different benefit scenarios and estimate their income and expenses upon retirement.
• Use the Service Retirement Checklist 349kb to counsel employees about the retirement process.
• Because forms change, have your employees download the latest Service Retirement Forms. These forms are fillable, too.
• Help your employees get their retirement benefit on time by checking all forms for completeness, signatures and required documents.

Member News Changing to E-Newsletter Format

After the spring 2010 issue, VRS will publish Member News as an electronic newsletter. The newsletter will be published three times a year on the third Tuesday of August, January and May. The first electronic issue will be available August 17.

How It Works

After the spring issue you will receive an e-mail with a link to the newsletter on the VRS website and a list of the main headlines. You can forward the e-mail and link to your employees or post the link on your internal website. The e-mail will include an alternate, short URL address so that if you publish a printed internal newsletter, you can include this address in your communication.

The e-Member News will be in the same format as Employer Update. That means your employees will be able to link directly to other Web content such as benefit descriptions, member education schedules and registration links, forms and publications. It also will have a print-friendly option for you to print a copy for employees who do not have access to a computer at work or home.

Advantages of e-Member News

VRS is changing to the electronic newsletter format to reduce printing and mailing costs and to provide interactivity within the VRS website for your employees. We also hope you will find forwarding an e-Member News link easier than dealing with paper copies. If you have satellite operations, you also should be able to save the additional cost and logistics of redistributing newsletters to these offices.

Your employees will learn more about the electronic newsletter in the spring 2010 issue of Member News. Over the summer, you’ll also receive a reminder that e-Member News is coming in August.

Understanding 457 Contribution Changes and One-Time Deferrals

Participants in the Commonwealth of Virginia 457 Deferred Compensation Plan may change the amount of their contribution at anytime subject to Internal Revenue Service (IRS) annual limits. Changes are effective on the first available pay date after the month a change is received by ING. The first available pay date depends on how early in your pay cycle an employee submits a request.

Participants who leave or retire from employment may contribute payments for unused annual or sick leave, if eligible, or other types of compensation to their 457 plan account. The participant must submit a completed and signed 457 Plan Payroll Authorization Form – One-Time Deferral 80kb to your payroll office before his or her last day of employment but no later than one month before the month the termination pay is paid into the participant’s account. One-time deferrals count toward the contribution limits for the year in which they are posted to the participant’s account. Send termination payments by the end of the year in which the participant’s last day of employment occurred or within two and one-half months, if later, to the participant’s plan account.

For additional information, see Leaving Employment: Deferred Compensation and Cash Match Plan Pointers 380kb.

Employer Resources

Check the Resource Center for VRS Employers for information on the 457 plan as well as the optional retirement plans and the Virginia Supplemental Retirement Plan. Register for one of the regional education meetings 42kb scheduled through April. Or, give your regional representative a call to schedule an on-site visit convenient to you and your employees. Representatives will meet with your group or individual employees. For more information, call toll free 1-VRS-DC-PLAN1 (1-877-327-5261). Select Option 2 from the main menu to reach the Virginia Service Center. Please call 30 to 60 days in advance of when you would like an ING representative to come to your location.

Back to Basics: Understanding VRS Funds

The VRS retirement plan is a defined benefit plan. A defined benefit plan provides a lifetime monthly benefit based on an employee’s age, total service credit and average final compensation at retirement. The benefit is funded from member and employer contributions and investment income. VRS holds these funds in a trust protected by the Constitution of Virginia. This trust may be used only to pay benefits for VRS members, retirees and beneficiaries.

Employees or their employers contribute 5 percent of employees’ compensation each month to VRS. This contribution is held in the employee’s member contribution account. The account accrues 4 percent interest, which is compounded annually on the balance as of the previous June 30. Employers make a separate contribution to VRS, which is held in the employer’s retirement allowance account. The rate is determined by the VRS actuary and is based on factors such as the number of employees eligible for benefits, the number of retired employees, employee salaries, ages and mortality rates.

Contributions are invested to fund future benefits. Approximately 32 percent of the average retirement benefit is funded by member and employer contributions and the remainder by investment earnings.

When an employee retires, his or her retirement benefit is paid first from the member contribution account. If an employee elects the Partial Lump-Sum Option Payment (PLOP), the lump sum also is paid from the member contribution account. Once these funds are paid out, the retirement benefit is funded from employer contributions and investment earnings.

Employees who leave covered employment before retirement are eligible for a refund of their member contributions and interest. Employees are not eligible for a refund of the separate employer contribution. Refunds cancel VRS membership and eligibility for any future benefits. Note that under legislation passed by the General Assembly, employees who take a refund and return to covered employment after July 1, 2010, will be rehired under new retirement plan provisions. More information about these provisions will be available on the VRS website in the next few months.

Employees have the option to leave their member contributions and interest with VRS and become a deferred member. Employees who are vested may be eligible for a future retirement benefit if they meet the age and service requirements for their plan.

Encourage your employees to log into myVRS to view their current member contribution account balance as well as earliest unreduced and reduced retirement eligibility dates and estimated benefit amounts. They also can download their annual Member Benefit Profile (MBP) from myVRS. The MBP for 2010 will be available in late August.

Life Insurance Claims Available by Direct Deposit

Minnesota Life now offers beneficiaries the option to receive payments of life insurance benefits through direct deposit. Beneficiaries can indicate their preference for direct deposit when completing the Beneficiary Statement 100kb. Account information such as the bank routing number and account number must be included on this form. Members, covered spouses and dependents who are approved for an accelerated benefit or an accidental dismemberment benefit also may have their claim payment deposited electronically. Direct deposit of life insurance payments is a timely, safe and convenient way for loved ones to receive benefit payments.