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Employer Update Archives | January 2015 A Publication for VRS Employers

Purchase of Prior Service Cost and Eligibility Periods


Your employees may be able to purchase service from previous public employment or other eligible periods of leave as service credit in their plan. See types of leave for Plan 1 and Plan 2, and the Hybrid Retirement Plan. Employees have a limited eligibility period to purchase certain types of service at a lower rate. The eligibility period begins at your employees’ first date of hire in a VRS-covered position following the period of prior service, or the date the employee returns to active employment after an eligible period of leave. If an employee changes covered employers, the eligibility period does not begin again if the employee has exceeded it. If the employee has not exceeded it, the eligibility period will remain in effect. VRS does not notify you or your employees when eligibility periods expire. You’ll want to counsel your employees upon employment about the option to purchase service and eligibility periods for the lower rate. As a reminder, employees must purchase their most recent prior service first. See cost and eligibility periods for Plan 1 and Plan 2, and the Hybrid Retirement Plan.

For more information on payment methods and to download Purchase of Prior Service Quick Facts, a handout for employees, visit the Purchase of Prior Service pages for Plan 1 and Plan 2 and the Hybrid Retirement Plan.

Roth Option Coming to Commonwealth of Virginia 457 Plan

Effective July 1, 2015, a Roth option will be available in the Commonwealth of Virginia 457 Deferred Compensation Plan. The new deferral option, which is made on an after-tax basis, will require political subdivisions and schools who offer the plan and state employers who do not report through CIPPS to update their payroll systems to allow for the deductions. Contact your payroll vendor to start planning for the Roth.

Employers will continue to use EZLink, ICMA-RC’s online plan administration tool, to manage the contribution process. ICMA-RC will offer EZLink training for the new Roth option during the first quarter of 2015. A new file layout will be available for employers who submit contributions to ICMA-RC using a batch file.

The Department of Accounts will handle payroll system updates and contribution submission changes for state employers who report through CIPPS.

Training resources, such as a revised Payroll Guide and webinars, will be available to help you prepare for the new Roth option. More information about the rollout, as well as training opportunities, will be communicated in the coming months.

Find out more about the benefits of contributing to a Roth in the December issue of Employer Update. Please note that this option will not be available for the Hybrid 457 Deferred Compensation Plan.

Voluntary Contributions Toolkit Includes Resources for Hybrid Employers, Employees

learn how to help your employees increase their voluntary contributions

VRS’ Hybrid Retirement Plan Voluntary Contributions Toolkit will help you inform hybrid plan members about the benefits of maximizing voluntary contributions to the defined contribution component of the plan. The downloadable kit contains resources to help you administer this component of the plan, a list of resources for your employees and promotional material you can distribute.

As a refresher, hybrid plan employees may elect to make voluntary contributions of 0.5 to 4.0 percent of creditable compensation to the Hybrid 457 Deferred Compensation Plan. That’s in addition to the 1 percent mandatory employee contribution to the defined contribution component of the plan. Employers are required to match an employee’s mandatory contribution and a percentage of voluntary contributions. Learn more about all hybrid plan contributions in VRS’ Understanding Hybrid Retirement Plan Contributions video for employers. Encourage your employees to watch the Hybrid Retirement Plan Features and Benefits Series, which will walk them through features of the plan.

How do employees set up their voluntary contributions?

Employees set up the voluntary deduction amounts directly with ICMA-RC by accessing their Account Log-in online at or by contacting ICMA-RC Investor Services at 1-877-327-5261 (option 1). They have until the 15th day of the month before each quarter ends to make changes to their voluntary contribution election (e.g., March 15 is the deadline for making changes that will be effective April 1).

Once an employee begins making voluntary contributions, employers will receive a notification in their quarterly Deferral Changes Report located in EZLink, ICMA-RC’s web-based system.

New Disability Program Vendor Selected

VRS has selected Reed Group as the third-party administrator for the Virginia Sickness and Disability Program effective May 1, 2015, and the Virginia Local Disability Program effective July 1, 2015. Beginning this winter, you will receive information about training opportunities and how this change will benefit you and your employees. Benefit provisions for both plans will remain the same.

Defined Contribution Plans Publications Available to Order

Various Defined Contribution Plans publications (print and digital) are available to order or download through EZLink, the online system provided by ICMA-RC, the record keeper for the Defined Contribution Plans. Log into EZLink, hover over the Manage the Plan menu and select the Forms and Publications Center tab. Finally, select Request Publications. You’ll find forms, fund profiles and educational material, such as features and highlights brochures, for the following plans:

  • Commonwealth of Virginia 457 Deferred Compensation Plan
  • Virginia Cash Match Plan 401(a)
  • Optional Retirement Plan (ORP) for Political Appointees
  • ORP for School Superintendents
  • Virginia Supplemental Retirement Plan
  • Hybrid 401(a) Cash Match Plan
  • Hybrid 457 Deferred Compensation Plan

You also can order by calling ICMA-RC’s employer support team at 1-VRS-DC-Plan1 (1-877-327-5261).

Retirees to Receive 1099-R

VRS will mail 1099-Rs to retirees by the end of January. Retirees will file this form with their 2014 federal and state tax returns. Retirees who have imputed income, which is the cost of group life insurance in excess of $50,000, will receive a W-2 from VRS. The W-2 shows the amount of imputed income and FICA taxes (Social Security and Medicare) withheld.

Work-related disability retirees will not receive a 1099-R. These retirees will receive an annual income verification letter by the end of January for record-filing purposes.

For more information, see IRS Form 1099-R.

myVRS Navigator

Contact VRS to Begin Batch Certification Process

Batch reporting allows you to submit multiple files at once and reduces the need to manually enter information in myVRS Navigator.

If you are interested in becoming a certified batch submitter, email by Friday, January 30 with the subject line Batch Submission Request to receive additional instructions regarding the two-step certification process. VRS will follow up with your Batch Submitter and Batch Corrections agent. From March 2 to 27, employers will complete the certification process by submitting data in myVRS Navigator by batch.

If you have questions, contact VRS toll-free at 1-888-VARETIR (1-888-827-3847). 

New myVRS Navigator Training Demos Released

VRS has released additional training demos in the five new myVRS Navigator courses. View the myVRS Navigator Training Course Catalog to see the demos and process guides available within the following courses:

  • Introduction to myVRS Navigator
  • Enroll and Maintain Employees
  • Managing Contacts
  • Purchase of Prior Service
  • Contribution Confirmation and Payment Scheduling

Courses are available in myVRS University located in the Commonwealth of Virginia Knowledge Center. You can search for the courses by entering myVRS Employer Training Curriculum or VRS-E in the search box in the Knowledge Center.

In 2012, VRS provided 16 courses designed to introduce employers to myVRS Navigator functions. These courses have been consolidated into five courses to streamline information and make it easy for you to locate the processes you need. Each course includes an overview and demonstrations that will show you how to complete the tasks in myVRS Navigator.

Your Turn to Ask

Q: How are the 2015 457 plan limits applied to employees with more than one 457 account?

If an employee has more than one 457 plan account, contributions to all accounts cannot exceed the annual limits set by the Internal Revenue Service. For example, an employee in the Hybrid Retirement Plan contributing voluntary contributions to the Hybrid 457 Deferred Compensation Plan also participates in the Commonwealth of Virginia 457 Deferred Compensation Plan. The employee’s contributions to both accounts cannot exceed the annual contribution limit total.

VRS provides guidance on tracking these contributions for your Hybrid Retirement Plan members in the Payroll Guide for CIPPS-reporting state agenciesand the Payroll Guide for political subdivisions, school divisions and non-CIPPS reporting state agencies.

Have a question?

Email the Employer Support Team or contact your Employer Representative.

Important Email Notice: Do not send personal or confidential information, such as a Social Security number, by email. VRS will send only non-confidential replies.