Pension Protection Act Offers Tax Savings for Retired Public Safety Officers
The federal Pension Protection Act of 2006 (PPA) included a provision that permits eligible retired public safety officers to elect to exclude up to $3,000 of their retirement benefit from income if used for qualified health, dental, vision or long-term care insurance premiums. To qualify, the insurance premium must be deducted from a monthly retirement annuity and, with the agreement of the insurance provider, remitted directly to the provider. The Retirement Systems implemented this provision of the PPA in February 2007.
Premiums are classified as an after-tax deduction and the governmental plan deducting and paying the insurance premiums is not responsible for reporting the amount paid in premiums on the Internal Revenue Service (IRS) Form 1099-R issued each year to the retiree. Rather, the retiree is required to report the amount claimed as an exclusion on his IRS Form 1040. The IRS Form 1040 contains instructions for reflecting the taxable amount of benefits received from the plan.
If you are assisting a member who is a public safety officer with his retirement application, and the member has determined that his insurance provider is participating in the PPA program, please make sure the member submits the Retired Public Safety Officers’ Insurance Payment Program Deduction Form SC Employee Insurance Program (EIP) Only (Form 7700) or the Retired Public Safety Officers’ Insurance Payment Program Deduction Form Not Applicable for SC Employee Insurance Program (EIP) (Form 7701) (used for participants in insurance programs other than EIP) along with the retirement application. This form will identify the member as a public safety officer.
For retired members who have submitted Form 7700 or Form 7701 to the Retirement Systems, a separate statement is mailed each January stating the amount of qualified premiums that were deducted and paid on the member’s behalf during the previous calendar year. The statement also contains instructions on how to properly complete IRS Form 1040 to claim the tax savings.
The Retirement Systems is not required to make the determination as to whether an individual retiree is an eligible retired public safety officer. While the Retirement Systems’ staff can provide information and assistance, it is the retiree’s responsibility to determine whether he qualifies to claim the federal tax credit for his after-tax insurance premium payment deductions.
New EES Features Launched in July for Employers not on Comptroller General's Payroll System
Quarterly Employee Data and Furlough Supplements
As a result of the Financial Identity Fraud and Identity Theft Protection Act which took effect July 1, 2009, detailed employee data can no longer be provided to the South Carolina Retirement Systems via the United States Postal Service or other package delivery service on diskettes, tapes, or other paper reports. All future quarterly employee data must be uploaded electronically via the Retirement Systems’ secure Electronic Employer Services (EES) Web site at www.retirement.sc.gov/ees. Access to EES is required for each employer. If you need assistance in obtaining access to EES, please contact our office at 803-737-6800, toll free at 800-868-9002 (within SC only), or through the Customer Services link on our Web site (www.retirement.sc.gov).
Monthly and quarter-end deposit forms are available within the secure EES Web site. Please be sure to complete the appropriate form for the corresponding month or quarter as the forms are bar-coded accordingly. Simply use the “Employer Reporting” link within EES to access these forms. Click on the “Deposit Form” button for the appropriate month, enter salary and contribution amounts, and the program will perform the calculations. Once a form is completed, the form must be printed and mailed to the Retirement Systems. The green envelopes necessary for mailing the printed reports throughout the fiscal year were provided to covered employers by mail as an enclosure with the July 2009 Employer Update.
If you are a school district, higher education, or state agency employer authorized to implement a furlough program through the General Appropriations Act of 2009-2010, your furlough supplements should be uploaded through the EES Web site. There is a link entitled “Upload Furlough Supplement Data” that should be used for this purpose.
Detailed instructions regarding format requirements for employee data and supplement uploads, as well as instructional videos, are available on the EES Web site.
Retiree Return to Work Dates
All retiree return to work dates should be entered through the EES Web site. Simply use the “Employed Retirees—Return-to-Work Date Entry” link. There is an exception to this requirement for disability retirees. If you hire a member who is receiving disability benefits from the Retirement Systems, complete and mail the Notification of Employed Retiree (Form 1114) to the Retirement Systems instead of entering the return to work date via EES. If you attempt to enter a return to work date for a disability retiree via the EES link, the system will alert you. Since disability retirees are subject to an earnings limitation, the Retirement Systems retains these forms to monitor the retirees’ earnings. If a member receiving disability benefits is hired at a salary or wage equaling or exceeding the average final compensation used to determine the member’s disability benefit, that member must be re-enrolled as an active member using the Enrollment Form (Form 1100).
Important Reminder about Disability Applications
Members of the South Carolina Retirement System (SCRS) and the Police Officers Retirement System (PORS) may apply for disability retirement if they meet certain eligibility requirements, one of which is that they still be in service with an employer covered by the South Carolina Retirement Systems. “In service” means a member is in an employment relationship with a covered employer and not retired or terminated.
Historically, the South Carolina Retirement Systems interpreted the statutory “in service” requirement to allow the Retirement Systems to accept disability retirement applications from a member if the application was received within 90 days of the member’s date of termination from employment. A decision handed down by the South Carolina Supreme Court May 12, 2008, however, clarified the interpretation of the statute and requires that a member’s disability retirement application be received by the Retirement Systems prior to termination.
Therefore, it is very important that disability applications be filed as soon as a member becomes disabled and before the member leaves covered employment. The application will be rejected if it is received at the Retirement Systems after the employment termination date.
A member may apply for disability retirement if he:
- Becomes permanently disabled before leaving covered employment,
- Is on the employer’s payroll in a paid or an approved unpaid capacity; and,
- Has five or more years of earned service credit toward retirement or is disabled as the result of an on-the-job injury.
New Retiree Direct Deposit and Tax Withholding Forms
Two new forms are now available on the Retirement Systems’ Web site. The Electronic Funds Transfer Authorization for Annuities (Form 7204) and Withholding Certificate for Monthly Annuity Payments (Form 7202) take the place of the former Automatic Deposit Authorization/Tax Withholding (Form 7202) and should be submitted when filing retirement applications for all systems.
On the former Form 7202, retirees indicated both their tax withholding elections and enrolled in direct deposit. The new Form 7202 is strictly for federal and state tax withholding designations. Please note that if a retiree designates a flat amount to be withheld from his monthly benefit, that amount will be withheld in addition to the amount computed from the corresponding Internal Revenue Service (IRS) tax tables. This is a significant change from the previous form.
Form 7204 is new and should be used to designate a bank account for direct deposit of monthly benefits via electronic funds transfer (EFT). Members now have the ability to request their benefits be deposited in up to two different bank accounts. A payee may choose to split the monthly benefit between two bank accounts based on either a percentage or a flat dollar amount. Our payroll system does not allow a payee to receive part of the monthly benefit payment via EFT and the remainder as a paper check.
Regional Retirement Seminars
The Retirement Systems wants to make sure that employees who are one year or less away from retirement have all of the information they need to make the retirement decisions that are best for them. We offer a one-day retirement seminar that will answer questions such as:
- When can I retire?
- How much will my benefit be each month?
- Will my health insurance coverage change?
- How much will my health insurance cost?
- Is it possible to retire earlier?
- What about the TERI program?
- Can I return to work after retirement?
- When can I get my 401(k) or 457 money?
- What do I do with my annual leave and/or my TERI payout?
- Will Social Security be there for me?
- How and when do I apply for retirement, Social Security, and retiree health insurance coverage?
These seminars are held throughout the year at different locations around the state. Please encourage employees who are nearing retirement to attend. Click here to view the regional retirement seminar schedule.
Presenters from the Retirement Systems, the South Carolina Deferred Compensation Program, the Social Security Administration, and the SC Budget and Control Board's Employee Insurance Program will provide information needed to successfully navigate the retirement process.
Your employees may register online for a seminar at www.retirement.sc.gov or by contacting Customer Services at 803-737-6800 or toll free at 800-868-9002 (within SC only).
Employer Training Seminars
Each month, the Retirement Systems conducts a comprehensive, one and one-half day employer training seminar for benefits administrators, payroll personnel, and human resource staff. Our Communication and Education Unit staff conducts this training in small, informal sessions that encourage group participation and welcome any questions or comments. Although the seminar is designed for beginners, new procedures and updates mandated by legislation and policy changes are also discussed. The following topics are included:
- Enrollment
- Employer Reporting
- Service Purchase
- Service and Disability Claims
- Average Final Compensation
- Refunds
- Death Claims
This seminar has been extremely popular and is ideal for new employees who will be working with these benefits and the associated procedures. The seminar is also useful in providing an overall picture of retirement benefits and procedures for managers and staff who desire refresher training. If you are scheduled to attend training but cannot attend, please contact the Retirement Systems five working days prior to the first day of your scheduled class to cancel your registration. This training is very popular and by canceling your registration early, we may contact someone else who would like to attend.
THE LANGUAGE USED IN THIS DOCUMENT DOES NOT CREATE ANY CONTRACTUAL RIGHTS OR ENTITLEMENTS AND DOES NOT CREATE A CONTRACT BETWEEN THE MEMBER AND THE SOUTH CAROLINA RETIREMENT SYSTEMS. THE SOUTH CAROLINA RETIREMENT SYSTEMS RESERVES THE RIGHT TO REVISE THE CONTENT OF THIS DOCUMENT.
If you have any questions or need additional information, please contact Customer Services at 803-737-6800, toll free at 800-868-9002 (within SC only), or at www.retirement.sc.gov.