Employer Contributions Forfeiture Credit FAQ

Each year, ORS will credit each reporting unit with employer contributions paid for former employees who did not fully vest. The credit must be used to pay future employer contributions for defined contribution (DC) and Personal Healthcare Fund (PHF).

No, the Employer Contributions Forfeiture Credit consists of DC and PHF employer contributions only. This includes employer contributions for members in the DC, DC Converted, Pension Plus, and Pension Plus 2 plans, and those who have a Personal Healthcare Fund (PHF).

Reporting units are eligible if they reported 401(k) contributions during the last school fiscal year.

ORS will evaluate each reporting unit's eligibility for the credit each year.

No, the employer contributions forfeiture credit will be distributed each year.

In early February ORS sends an email informing each reporting unit of its eligibility and if eligible, the credit amount.

The former employee's contributions are not part of this credit. Former employees are immediately entitled to their own contributions and earnings on those contributions. Therefore, the money will remain in their accounts. The credits are for employer contributions only and can only be used to cover future DC and PHF employer contributions.

If employees leave public school employment before becoming fully vested, they forfeit all or part of their employer contributions. ORS returns the forfeited employer contributions to the reporting unit as a credit each year in February. Employer contributions are vested according to the employee’s years of service. A year of service is defined as 1,020 hours in a school fiscal year.

Vesting schedule in years of service and percent vested:

• After 1 year, employees have 0% vested.
• After 2 years, employees have 50% vested.
• After 3 years, employees have 75% vested.
• After 4 years, employees have 100% vested.

Vesting means ownership. This means that employees will vest, or own, a certain percentage of the employer contributions based on their years of service. Employer contributions are vested according to the employee’s years of service. A year of service is defined as 1,020 hours in a school fiscal year.

The vesting schedule is as follows:

• After 1 year, employees have 0% vested.
• After 2 years, employees have 50% vested.
• After 3 years, employees have 75% vested.
• After 4 years, employees have 100% vested.

MPSERS forfeiture credits are to be recorded as Restricted State Revenue (Major Class Code 312, Suffix 0000), as they are used by school districts to offset the employer portion of current DC plan contribution payments. The recording of current year payroll and benefit expenditures is unaffected by these credits.

The credit is to be applied toward future DC and PHF employer contributions due. Use the job aid called How to apply Employer Contributions Forfeiture Credit to your pay cycle payment and Forfeiture Credit Calculation Tool for assistance in calculating your pay cycle payments.

No, the credit may be applied toward future DC and PHF employer contributions only, according to IRS rules.

Use the job aid called How to apply Employer Contributions Forfeiture Credit to your pay cycle payment and Forfeiture Credit Calculation Tool for assistance in calculating your pay cycle payments.

The credit can be applied towards all DC and PHF employer contributions, which include employees paid by federal grant.

Yes, the credit is intended to be applied to the eligible employer contributions as soon as it appears on the pay cycle statement.

There are no restrictions on the time it takes to exhaust the credit. It can take as many as one or multiple pay cycles to use the forfeiture credit.

Depending on the amount of the credit compared to the total employer contributions in each pay cycle, it may be exhausted immediately or can take multiple pay cycles.

You can keep track of the credit balance using the Forfeiture Credit Calculation Tool.