Employers’ Edge Now Delivers Social Security News

Social Security Newsletter Has Merged into Employer Newsletter

The Division of Retirement and Benefits Social Security Newsletter has merged into the monthly Employer Newsletter. The goal is to provide our employers with relevant federal information on a regular basis. Thank you to all of the loyal readers of the former Social Security Newsletter, we hope you enjoy this new format.

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USCIS Released a Revised Form I-9 in March

U.S. Citizenship and Immigration Services (USCIS)  released a revised Form I-9 on March 8. The new Employment Eligibility Verification Form I-9 [PDF] is now available for your immediate use. The new design and revised instructions assist employers and employees. For additional information, see the USCIS press release.

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New Social Security Administration Contact

For Alaska Governmental Employers

For all employers who have Mr. Tim Beard’s contact information faithfully saved in your address books. Tim retired from the Social Security Administration and it’s time to update your contact information.

The new governmental employer Social Security contact for Alaska is Ms. Patricia Lightholder. Ms. Lightholder works out of the Social Security office in Seattle and is familiar with Alaska. She has assisted Tim with some Alaska-related issues in the past and looks forward to working with us even more in the future. You can email Patricia directly, but we ask that you continue to CC the Audit Section with your inquiries as she settles into her new role.

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Register Now for Free E-Verify Webinars

Webinar

Do you have questions about E-Verify? The U.S. Department of Homeland Security offers live interactive webinars to answer your questions. Review the April E-Verify Webinar Schedule[PDF] to find a time that works for you.

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PERS and TRS Handbooks Available at Alaska.gov/drb

Share with Employees in the Defined Benefit Plans

PERS HandbookTRS HandbookPERS and TRS Information Handbooks are available online. Since the Division no longer prints the handbooks for distribution, it is important to share these links with employees on a regular basis. The information in the handbooks is valuable and clearly explains the PERS (Tier I, II, and III) and TRS (Tiers I and II) programs for employees.

Employees can request hard copies of the PERS or TRS Handbook via email or by calling (800) 821-2251, statewide or (907) 465-4460, in Juneau.

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Understanding the Calculation of the HRA Amount

PERS Tier IV and TRS Tier III members participate in the Health Reimbursement Arrangement Plan (HRA). The HRA is employer funded and employer contributions are placed into individual member accounts. When a member becomes eligible, they may use their HRA account to reimburse qualifying health care expenses. The HRA Plan is codified in Alaska Statute (AS) Article 5, Section 39.30.300 through 39.30.495. Some important items of the plan include:

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  1. Established for PERS/TRS members who first became a member of either plan on or after July 1, 2006, who were non-vested defined benefit members who converted to the PERS/TRS DCR Plan or who are defined benefit members working for a participating employer that only participates in the PERS/TRS DCR Plan.
  2. Allows for reimbursement of eligible medical care expenses from special purpose savings accounts established for eligible persons.
  3. Is employer funded; no member contributions allowed.
  4. The Alaska Retirement Management Board (ARMB) is the fiduciary of the fund.

Only participating PERS and TRS employers can make contributions to the HRA, and they must be made on a schedule that coincides with the employer’s payroll period. Employers have asked why they must contribute a flat dollar amount per employee rather than an amount based on a percentage of compensation.

The Division is not able to provide a percentage rate for the HRA employer cost because the Internal Revenue Code (IRC) prohibits discrimination based on salary. IRC Section 105(h) prohibits discrimination with respect to both eligibility and benefits in the HRA plan:

  • For eligibility nondiscrimination, the HRA plan cannot discriminate in favor of highly compensated individuals if the plan meets either a percentage test or a classification test. Basically, the HRA plan should not discriminate based on job description or salary.
  • For benefits nondiscrimination, all of the benefits which are provided for participants who are highly compensated individuals (and their dependents) must also be provided for all other participants (and their dependents). In this case, the HRA plan should not discriminate based on salary. What one eligible person gets in benefits, the whole group gets in benefits.

In order to be nondiscriminatory, the HRA plan was set up so that each eligible person in the plan receives the same dollar amount of benefit regardless of position, wages paid, or employer. If a calculation were based on a percentage, the eligible person who makes $1,000/month would receive a lower HRA employer contribution than the eligible person who makes $3,000/month.

AS Section 39.30.370 states that “For each member of the plan, an employer shall contribute to the Teachers’ or Public Employees’ retiree Health Reimbursement Arrangement plan trust fund an amount equal to three percent of the average annual compensation of all employees of all employers in the Teachers’ Retirement System and Public Employees’ Retirement System.” That is why the HRA amount is the same for each eligible member no matter the salary, position, or employer.

While the HRA flat dollar amount may be troublesome for the calculation of employer charges, it is a necessity to make sure all members benefit equally.

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IRS Provides Updated Withholding Guidance for 2013

The Internal Revenue Service released updated income-tax withholding tables for 2013 reflecting changes by Congress. The updated tables show the new rates in effect for 2013 and supersede the tables issued on December 31, 2012. The newly revised version of Notice 1036 [PDF] contains the percentage method income-tax withholding tables and related information that employers need to implement these changes.

In addition, employers should also begin withholding Social Security tax at the rate of 6.2 percent of wages paid following the expiration of the temporary two-percentage-point payroll tax cut in effect for 2011 and 2012.

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