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USERRA Administration

Background
USERRA Eligibility
Notice of Rights
Election Period
Processing USERRA with No Employee Make-up Contributions
Processing USERRA with Employee Make-up Contributions
Payroll System Administration (Employee Contributions)
Stopping and Restarting Employee Make-up Contributions
Tax Reporting

Background

The Uniformed Services Employment and Reemployment Rights Act (USERRA) provides employment and benefit protections for employees who are called to active military service and return to their employer when they are released from duty. These protections apply to employees who are away on active duty for less than five years.

Under USERRA, employers sponsoring contributory defined contribution plans, like the Optional Retirement Program (ORP), must make up the Employer Plan Contributions that were missed while the employee was away on active duty. The Commonwealth will make up the missed "Employer" contributions as soon as the employee returns to their job and their eligibility for the make-up contribution is confirmed.

Remittance of the Employer Plan Contributions ensures crediting of Months of Participation in the ORP, which are credited toward the service requirement for post-employment benefits.

The Commonwealth does not require employees to make up their Employee Plan Contributions in order to receive the Employer Plan Contributions. However, returning veterans may voluntarily make up their past contributions.

All make-up contributions are based on compensation that the returning employee would have earned if they had not been activated for military service. This includes merit and regularly scheduled pay increases that were missed.

The make-up contributions are subject to the applicable limits that would have applied during the Limitation Year for which the contributions are being made up. The immediate make-up of Employer Plan Contributions may hinder an employee making up their own contributions in the first year they are making up their own missed contributions.

USERRA Eligibility

ORP Participants who are called to active military duty and then return to their jobs must meet the following requirements to be eligible to make up contributions missed while they were away:

  1. Employment/Participation: The Participant must have been employed by the Commonwealth for at least 90 days immediately prior to their activation to qualified military duty, and they must have participated in the ORP for at least six months.
  2. Honorable Discharge: The Participant must be released from their qualified military duty with an honorable discharge.
  3. Reemployment: The Participant must be either reemployed or available for employment in accordance with this schedule:
    • If their service time was less than 31 days, they must be reemployed (or available for employment) within one day after their discharge;
    • If their service time was more than 31 but less than 180 days, they must be reemployed (or available for employment) within 14 days after their discharge;
    • If their service time was 180 days or more, they must be reemployed (or available for employment) within 90 days after their discharge.

NOTE: Forms available under the following sections (except the Excel Worksheet) are PDFs that may be completed online and then printed for signing. The forms cannot be saved with information you insert.

Notice of Rights

You must provide the USERRA Participant Notice & Election Form (.PDF) to returning veterans within 10 business days of their return to work. The Notice provides information about USERRA rights and the Participant’s opportunity to make up their past contributions.

You must complete the "Calendar Year" information required at the end of the form. This information will be helpful to the employee when deciding whether or not to make up past Employee Plan Contributions. Moreover, this will be the basis for the Plan Administrator to calculate the amount of Employer Plan Contributions to make up.

Remember that “Compensation” means that amount that the Participant would have earned if they had not been away on active military duty, including merit and scheduled pay raises.

Election Period

Returning veterans must report their election to either make up or not make up their past contributions within 60 calendar days of their return to work. This means the submission to the Campus Administrator of the completed Notice of Rights.

Processing USERRA with No Employee Make-up Contributions

If the returning veteran elects not to make up their past Employee Plan Contributions, the Campus Administrator must:

  1. Send the participant’s (original) signed “Notice & Election” form to the Plan Administrator (keep a copy of the form for your files);
  2. Complete the BA USERRA Report (Download in Excel format) and send it to the Plan Administrator via email; and
  3. Expect to hear from the Plan Administrator concerning the tax reporting of the amount of Employer Plan Contributions remitted on behalf of the participant near the end of the calendar year.

Processing USERRA with Employee Make-up Contributions

If the returning veteran elects to make up their past Employee Plan Contributions, the Campus Administrator must:

  1. Determine the total amount of Employee Plan Contributions to be made up, using the BA USERRA Report (Download in Excel format) as a guide;
  2. Calculate the amount of make-up contribution to be remitted from the Participant’s pay for each pay period during the make-up period, with the maximum make-up period being up to three times the amount of time that the Participant was on active duty, not to exceed five years;
  3. Report this information to the Participant using the USERRA Confirm and Change Form (.PDF); and
  4. Upon Participant approval of the make-up amounts and schedule of pay periods, forward the calculation of the amount and the Participant’s approval to the Plan Administrator, keeping copies for the campus' files.

Payroll System Administration (Employee Contributions)

In cases where a returning veteran elects to make up their past Employee Plan Contributions, Campus Administrators must update their respective payroll system as follows:

Note for All Payroll Systems

Considering the projected nature of the final pay period (possibly five years in the future), Campus Administrators may find that their system will not accept an entry because it exceeds the dates currently in the system’s calendar function. It may be necessary to reset the amounts from time to time, following the annual updates of the payroll calendar function.

HR/CMS (State Universities and Community Colleges)

  1. Enter the amount of the Participant’s make-up contributions under Plan Type 83.
  2. Enter the make-up contribution amount as the “Voluntary Amount.” 
  3. The HR/CMS 8.0 “Job Aid” for this field is entitled, “Enter Extra Retirement.”
  4. Use the appropriate “Pension Plan” for the participant’s Provider:
    • Fidelity: OREXF1
    • Lincoln: OREXL1
    • TIAA-CREF: OREXT1
    • VALIC: OREXV1

University of Massachusetts Payroll System

  1. Enter the amount of the Participant’s make-up contributions in Deduction Code RTEXBU (Extra Ret ORP Military Pre Tax). The same logic that links the Retirement 2% deduction code to the appropriate ORP Provider will be used to link this deduction code to the appropriate ORP Provider.
  2. The campus opens a CSR with UITS to request the deduction code RTEXBU be added to the appropriate Benefit Program, providing the Employee id, Record Number and Benefit Program.
  3. Notify the UMP Treasurer’s Office that the campus will begin processing, providing Employee Name, ID, Record Number, Make-up Period and Amounts.
  4. PS Data Entry Employee level data entry based on amount and timeframe to be repaid: Go/Administer Workforce/Maintain Payroll Data/ Use/ General Deduction Data
  5. Deduction Code RTEXBU
    Effective Date Pay Period Begin Date
    Deduction Calc Routine Flat
    Deduction End Date As calculated
    Flat/Addl Amount Biweekly, as calculated
    Goal Amount Total Amount to be paid over the make-up period
  6. Each pay period, run the public query “PY_ALL_RTEXBU” to ensure no other employees have been assigned this deduction code in error.

Stopping and Restarting Employee Make-up Contributions

Participants may stop and restart their make-up contributions at any time. However, they must provide at least 15 calendar days notice to their Campus Administrator in each case. Additionally, they cannot extend their make-up period beyond the longest time allowed under USERRA.

Notice to stop and restart

The Campus Administrator must provide the USERRA Confirm and Change Form (.PDF) to any Participant who has elected to make up past contributions whenever the employee asks about either stopping or restarting their make-up. They can use this form to direct the institution to either start or stop their make-up contributions.

Participants must return the signed form not less than 15 calendar days before the change becomes effective. The Campus Administrator must send the new form to the Plan Administrator immediately.

Tax Reporting

Make-up contributions under USERRA must be reported to the Internal Revenue Service (IRS) each year when these contributions are made. The reporting must provide a breakdown of the contributions by source (i.e., Employer; Employee) and the year(s) being made up. The IRS provides two methods for tax reporting: either on Form W-2 (box 14) or by special notice to accompany the employee’s Form W-2.

State Universities and Community Colleges

The Plan Administrator will prepare and mail a letter to the Participant in which the required information is presented. The Plan Administrator will send a copy of the letter to the Campus Administrator for their records.

University of Massachusetts campuses

Campus Administrators should coordinate their reporting efforts with UMass Treasurer’s Office.

 

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