4.01.01: Gross Earnings for DC Plans
Employees with a Defined Contribution (DC) component to their retirement Plan including Pension Plus, Pension Plus 2, MIP or Basic converted to DC, straight DC, and/or the Personal Healthcare Fund (PHF) are considered qualified participants. Employer and employee DC contributions for qualified participants are calculated based on gross earnings reported on a DTL4 – DC Contribution record in the Employer Reported Wages field. In contrast, the amount reported in the Employer Reported Wages field on a DTL2 – Wage and Service record is reportable compensation. See section 4.01.00: Reportable Compensation.
Please note: reportable and nonreportable “compensation” is defined in MCL 38.1303a and only applies to active MPSERS members. For information on reporting earnings for retirees please see section 9.01: Earnings of Retirees Who Return to Work.
Gross earnings include any compensation reported on a participant's W-2 or 1099R form as earnings for services performed for the employer, including but not limited to amounts deferred or contributed to an annuity at the election of the participant. Wages for workers’ compensation, short-term disability or long-term disability are not considered gross earnings and should not be included in the Employer Reported Wage field on the DTL4 record for calculating employer and employee DC contributions. Note: Gross earnings may include more than the amount listed in Box 1 (Taxable Wages) of the employee's W-2. Additional earnings include items exempt from taxable wages.
Examples of Gross Earnings
- Longevity pay
- Cash in lieu of an excluded benefit
- Employee amounts contributed to an annuity (excluded from Box 1 of W-2)
- Employee costs to an employer-sponsored healthcare plan (excluded from Box 1 of W-2)
Example of Reporting Gross Earnings
$47,000 Taxable income reported on Box 1 of W-2
+$3,000 Pre-tax employee contributions to a tax-sheltered annuity
$50,000 Gross earnings (amount to be reported in the Employer Reported Wages field on the DTL4 record)
Last updated: 05/20/2020