If you have coverage questions about your new employees, consult the Employer Handbook or call the Employer Help Desk.
The information below helps answer common questions reporting officials have when a new hire begins employment.
Employees of Fewer than Six Months
Employers may file wage adjustments to recoup contributions for a permanent employee terminated before working six months. However, employers cannot file wage adjustments for temporary employees who qualified for coverage and subsequently left before working six months.
IPERS must verify both the employment status and length of service before approving wage adjustments. To help with this verification, please update a terminated member’s employment record in I-Que (View /Update Member Information section) with the termination date and last paid date. Please note, the hired date should be the actual date of hire and not the date of qualification for IPERS’ coverage.
Be sure your W-2 statements reflect the correct amount in each box, as required by the IRS. Box 1 and box 16 indicate the federal and state taxable amounts the employee must claim as income. IPERS contributions are a pretax deduction that reduces the total income an employee must claim. Make sure your W-2s reflect this reduced amount. For example, an employee earned gross wages of $42,000. They are a Regular member and must contribute 6.29%. Because this employee is an IPERS’ member, you must mark the Retirement Plan box (box 13). You may state the member’s amount of IPERS contributed in box 14.
- Employers often ask how to treat lump-sum compensation paid at the end of employment. The following clarification can help you determine if the payments are IPERS-covered wages:
- Lump-sum payouts of unused vacation or sick leave made during or at the end of service are not IPERS-covered wages. Payments made for vacation time or as salary to replace regular work hours are IPERS-covered wages.
- Non-IPERS-covered wage example: An employee worked until his or her termination date. The employee received 32 hours of unused vacation on the last paycheck. The wages paid for the 32 hours of vacation are not IPERS-covered.
- IPERS-covered wages example: An employee’s termination date is February 28. The employee used accrued vacation time starting February 14 to receive a salary through February 28. These payments are IPERS-covered wages.
- Do not report vacation time and compensatory time the same way.
- IPERS-covered wages include payments for compensatory time taken instead of regular work or paid as a lump sum. Lump-sum payments for compensatory time should not exceed 240 hours per employee, per year.
- Payments made in addition to an employee’s normal wage as an early retirement incentive are not IPERS-covered wages. This applies whether paid in a lump sum or installments.
- Payments made on dismissal or severance from employment are not IPERS-covered wages. This applies whether paid in a lump sum or installments.
What to do When an Employee Leaves
When an employee terminates employment (because of retirement or for any other reason), log this on your I-Que monthly wage report for the month the employee receives his or her last paycheck. Make sure to provide the final date of employment as well as the date of the employee’s last paycheck. These dates affect refunds, rollovers and how benefits are calculated and awarded. If you forget to include the dates in your monthly wage report, submit them separately. You can do that either by the View/Update Member Information link on your I-Que home page, or by completing the Member Employment Information Update form.
Beneficiary Designation Process
Employers are no longer required to provide new hires with the Beneficiary Designation form. Once the employer reports wages for a new employee, IPERS will send the member a welcome packet with the following information:
- Member ID
- My Account login
- How to designate a beneficiary information
This new, streamlined process encourages members to become more familiar with IPERS.