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4.03: Nonreportable compensation

4.03: Nonreportable compensation

The following types of compensation are nonreportable on a Detail 2 - Wage and Service (DTL2) record. With some exceptions noted in the description, however, the compensation is considered part of gross earnings and should be reported on a Detail 4 - DC Contributions (DTL4) record for the Defined Contribution portion of a member benefit plan and for the Personal Healthcare Fund.

Nonreportable compensation types include but are not limited to those on the following alphabetical list:

Bonus payments
Cash in lieu of an excluded benefit
Compensation for board members
Compensation in excess of the annual IRS limit
Compensation in excess of the normal salary increase (NSI) schedule
Early retirement incentives
FICA reimbursement
Fringe benefits
In-kind compensation
Insurance premium payments
Long-term disability wages
Military leave pay
Payments to increase retirement benefits
Perfect attendance pay
Reimbursement of member contributions
Reimbursements and allowances
Retroactive wages (contract settlement)
Sabbatical leave pay
Service credit purchases made by reporting units
Termination or severance pay
Unused sick leave, vacation, or annual leave pay

See also section 4.04: Special situations for compensation types that might be nonreportable under some circumstances.

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 see section 9.01: Earnings of retirees who return to work.

Bonus payments

Bonus payments are payments to employees that are not guaranteed for payment, not associated with additional duties or merit-based activities, or not defined in the contract or union agreement. A payment is considered a bonus if it meets this definition of a bonus, whether or not your reporting unit describes it as a bonus payment.

Bonus payments are nonreportable compensation. Examples of nonreportable bonus payments include but are not limited to: signing bonuses, retention bonuses, termination incentive payments, revenue-sharing payments, and payments not documented in advance in the contract for surplus of funds or increased student enrollment. Please contact ORS if you have any questions about the reportability of a payment.

Last updated: 04/13/2022

Cash in lieu of an excluded benefit

Any type of payment made in lieu of an excluded benefit is nonreportable on a DTL2 record. For example, if a member receives payment instead of or in place of insurance premiums, that payment is nonreportable.

Last updated: 02/10/2017

Compensation for board members

Compensation for service as a reporting unit board member is not considered remuneration for services performed as a public school employee and is nonreportable on both DTL2 and DTL4 records.

Last updated: 11/04/2020

Compensation in excess of the annual IRS limit

In section 401(a)(17) of the Internal Revenue Code, the IRS imposes a calendar-year limit on reportable compensation for certain types of retirement plans, including those administered by ORS. The limit applies to employees who became members of this retirement system after Oct. 1, 1996. Compensation that exceeds this limit is nonreportable. ORS will provide updated figures here each year. 

IRS annual limits to reportable compensation

Calendar year Limit
2022 $305,000
2021 $290,000
2020 $285,000
2019 $280,000
2018 $275,000
2017 $270,000
2016 $265,000

See full Schedule of IRS Annual Limits to Reportable Compensation (2007 to present).

Last updated: 01/07/2022

Compensation in excess of the normal salary increase (NSI) schedule

As provided under section 3a (subsection 3f) of the Public School Employees Retirement Act (MCL 38.1303a), only compensation increases that fall within a normal salary schedule are reportable for retirement purposes. 

Annual increases in compensation for a particular job classification are reportable up to the NSI percentage for a given year. Compensation increases that exceed the rate in the NSI schedule are not reportable. ORS audits your employees' wages for any significant increases in salary that may be nonreportable.

This topic is explained in greater detail in section 4.05 Normal salary increases (NSI).

Last updated: 11/01/2018

Early retirement incentives

Early retirement incentive payments are nonreportable, regardless of whether paid in a lump sum or paid over a period of time for active members.

Last updated: 02/10/2017

FICA reimbursement

Payment of an amount equal to FICA contributions is nonreportable compensation on both the DTL2 and DTL4 records.

Last updated: 02/10/2017

Fringe benefits

Other fringe benefits not listed here but paid to employees by and from the funds of a reporting unit are nonreportable. See also section 4.04: Special situations: Cafeteria plans (flexible spending accounts and flexible benefit plans).

Last updated: 02/10/2017

In-kind compensation

Effective Jan. 1, 2000, remuneration not paid in money (in-kind compensation) is not reportable on a DTL2 record. In March 1997 the retirement board adopted this policy, which says, "As of January 1, 2000, if part of a member's remuneration is not paid in money, such remuneration shall not be considered compensation reportable to the retirement system (ORS) unless specifically provided for in statute."

Last updated: 02/10/2017

Insurance premium payments

Insurance premium payments, including hospitalization insurance and life insurance payments, paid by a reporting unit are nonreportable. Cash in lieu of insurance premium payments is also nonreportable.

Last updated: 02/10/2017

Long-term disability wages

Long-term disability (LTD) wages, as defined by your reporting unit, is nonreportable on both the DTL2 and DTL4 records. No portion of LTD wages should be reported to ORS.

Last updated: 02/01/2018

Military leave pay

Wages paid by the U.S. government as well as differential wages paid by the reporting unit to employees while on active duty military leave are nonreportable. The member may be eligible to purchase the military leave service at a later date. For more information see Active Duty Military Service on the member website.

Last updated: 02/10/2017

Payments to increase retirement benefits

Any payments made for the specific purpose of increasing the final average compensation in the pension formula are nonreportable.

Last updated: 02/10/2017

Perfect attendance pay

While attaining perfect attendance is an objective, it is not associated with performing additional service or measurable duties specifically related to the achievement of a particular goal. Employees are compensated to work and perform services each day. Therefore, receiving a perfect attendance payment in addition to regular pay, when no additional duties or services have been performed, is consistent with the definition of a bonus payment. Neither bonus payments nor perfect attendance pay are reportable.

Last updated: 02/10/2017

Reimbursement of member contributions

Any payment deemed a reimbursement for retirement contributions is nonreportable on both the DTL2 record and the DTL4 record, if the payment was made based on a member contract executed after May 30, 2007. Contracts executed prior to May 30, 2007, containing such payment must be available for ORS to review to determine if it is reportable.

Any payment deemed a reimbursement for healthcare contributions or contributions to the Personal Healthcare Fund is nonreportable on both the DTL2 and DTL4 records.

Last updated: 02/01/2018

Reimbursements and allowances

Any payments paid either directly or indirectly to cover actual or anticipated expenses associated with a normal cost of employment (for example, mileage or travel, cell phone expenses, training, etc.) are nonreportable. This includes both reimbursements for actual expenses incurred and allowances for anticipated expenses.

Reimbursements are nonreportable on DTL4 records, but allowances are reportable on DTL4 records.

Note: The retirement board may require a sworn affidavit from the member that final compensation does not include remuneration paid either directly or indirectly for actual or anticipated expenses.

Last updated: 02/10/2017

Retroactive wages (contract settlement)

Retroactive wages are wages paid retroactively to a group of employees as the result of a contract settlement. ORS no longer expects retroactive pay adjustments for contracts settled after June 8, 2011, as a result of Public Act 54 of 2011, which prohibits the payment of retroactive wages for labor contracts that have expired.

For unexpired contracts settled before June 8, 2011, retroactive wages were reportable. The section describing reportable retroactive wages in more detail is archived in section 15.06. If a member's account needs positive or negative adjustments for retroactive wages earned before that date, see section 7.05.07: Adjusting DTL2 records - overview.

Last updated: 02/10/2017

Sabbatical leave pay

Wages paid while on sabbatical leave are nonreportable.

Last updated: 09/29/2017

Service credit purchases made by employers

Money the reporting unit uses to purchase service credit on behalf of an employee is nonreportable.

Last updated: 02/10/2017

Termination or severance pay

Any payments made specifically because an employee is terminating employment are nonreportable.

Last updated: 02/10/2017

Unused sick leave, vacation, or annual leave pay

If sick leave, annual leave, or vacation pay is earned but not used before the employee terminates or retires, the employer may pay the employee for the unused leave or vacation. Any payments for unused sick leave, vacation, or annual leave are nonreportable.

Last updated: 02/10/2017