7.21.00: DC Contributions

 

With legislative changes to the Michigan Public School Employees Retirement System in 2010, 2012 and 2017, Defined Contribution (DC) retirement plan elements have been added to what was previously a Defined Benefit retirement program. See section 6.01.00 History of the Benefit Plans for more detail.

DC Contributions are made as follows:

  • Members who first worked for MPSERS between July 1, 2010 and January 31, 2018 are members of the Pension Plus* benefit plan. See Section 6.01.05.
  • Members who first work on or after February 1, 2018, may elect the Pension Plus 2* plan (see Section 6.01.12) or default to the DC plan.
  • Members who first worked September 4, 2012 or after also receive a DC based Personal Healthcare Fund (PHF).
  • Pension Plus members who first worked September 4, 2012 or later were also given an option to elect a 100% Defined Contribution plan in place of the Pension Plus plan.
  • In 2012, Basic and MIP members were offered a one-time election to participate in the Defined Contribution plan and/or a Personal Healthcare Fund.

*Both the Pension Plus and Pension Plus 2 plans combine a Defined Benefit (DB) component and a Defined Contribution (DC) component. 

For the DB portion of the Pension Plus plan and Pension Plus 2 plan, the employer must withhold a percentage of each member’s compensation from each paycheck after deducting social security tax (FICA) and Medicare tax, but before deducting federal, state, and local income taxes.

The DC portion of the Pension Plus plan, Pension Plus 2 plan, any 100% DC plan, and the Personal Healthcare Fund (PHF) require the employer to withhold mandatory member contribution rates upon first being reported or after first electing the DC option or PHF. Contribution percentages are determined by the type of member benefit plan and health care plan and calculated based on gross earnings. Gross earnings include any compensation reported on the member'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 employee. Wages for workers' compensation, short-term disability and long-term disability are not considered gross earnings for DC purposes.

Once an account has been established at the third-party administrator (Voya, formerly known as ING) for a member in the Pension Plus, Pension Plus 2, or Defined Contribution benefit plan, and for those who have the PHF, the member may increase or decrease his or her mandatory DC contribution or may opt out of the plans by changing his deduction to 0%. A change in the member contribution amount may result in a change to the employer contribution percentage as well. For all members with a PHF the first 2% of DC contributions must go into the PHF and must be matched 100% by the employer. The percentage and dollar amounts must be reported on a DTL4 record in the Member and Employer PHF Contributions $ and % fields. Any member contributions over 2% are reported in the Member and Employer DC fields on the DTL4 record and matched at 50% up to 1% for Pension Plus plan members and up to 3% for DC members. It is only after a member opts out of the DC plan entirely that a reporting unit can stop withholding and reporting DC employer and employee deductions; however, DTL4 records are still required to be submitted with every payroll to report gross wages.

The DC Feedback File link on the Employer Reporting website provides the reporting unit with updates on member deduction changes or opt outs. See section 7.21.06: DC Feedback File for information. See section 7.21.01: How to Report DC Contributions on a Detail 4 Record, for instructions.

Last updated: 03/09/2021