Member contributions are considered contributions for retirement purposes. The employer has the responsibility to deduct member defined benefit (DB), defined contribution (DC), and healthcare contributions and remit them directly to ORS. For IRS purposes, the contributions are considered as paid by the employer. Since the IRS treats these payments as employer contributions, they are excluded from the employees' wages for tax purposes. In order for your employees to participate in a MPSERS retirement plan on a tax-deferred basis, your reporting unit signed a resolution that states the reporting unit will "pick up" the employee contributions. That is, your reporting unit agrees to deduct and remit the required contributions to ORS, and agrees that employees will not have the opportunity to opt out and receive the contributions directly.
For DB member contributions, the employer must withhold a percentage of each member's reportable compensation from each paycheck after deducting Social Security tax (FICA) and Medicare tax, but before deducting federal, state, and local income taxes. Reportable compensation is defined in section 4.01: Compensation types: reportable, nonreportable, and special situations.
The DC plan, Personal Healthcare Fund (PHF), and the DC component of the Pension Plus plan and Pension Plus 2 plans require the employer to withhold the default member DC contributions upon first being reported. Members may increase or decrease their DC contributions by contacting Voya Financial, who administers the State of Michigan 401(k) and 457 Plans. Contributions are calculated based on the employee's gross wages from each paycheck after deducting Social Security tax (FICA) and Medicare tax, but before deducting federal, state, and local income taxes. Gross wages are defined in section 4.02: Reportable compensation. Member DC and PHF contributions are invested in the State of Michigan 457 Plan.
The member defined benefit (DB) contribution rate must be applied to all reportable compensation. Report DB contributions on a DTL2 record.
Member DB contribution rates depend on the member's benefit plan.
Member DB contributions (excluding healthcare contributions)
|
Plan |
Who is in it? |
School FY Wages |
Member Rate |
|
Basic |
Members who first worked before Jan. 1, 1990 and elected to remain in the Basic plan during various election periods |
All |
N/A |
|
Basic 4% |
Basic members who elected this plan, effective Feb. 1, 2013 |
All |
4.0% |
|
MIP Fixed |
Member Investment Plan (MIP) elected between Jan. 1, 1987, and Dec. 31, 1989, or Basic plan members electing MIP through the 1991 MIP Window Oct. 1, 1991, through Dec. 31 1992, or 1999 MIP Window enrollees |
All |
3.9% |
|
MIP Graded |
New employees after Jan. 1, 1990, or returning employees not working from Jan. 1, 1987, through Dec. 31, 1989 |
First $5,000.00 |
3.0% |
|
$5,000.01 - $15,000.00 |
3.6% |
||
|
Over $15,000.00 |
4.3% |
||
|
MIP Plus |
Employees who first worked July 1, 2008, through June 30, 2010 |
First $5,000.00 |
3.0% |
|
$5,000.01 - $15,000.00 |
3.6% |
||
|
Over $15,000.00 |
6.4% |
||
|
MIP 7% |
MIP employees who elected this plan, effective Feb. 1, 2013 |
All |
7.0% |
|
Pension Plus |
Employees who first worked July 1, 2010, through Sept. 3, 2012 |
First $5,000.00 |
3.0% |
|
$5,000.01 - $15,000.00 |
3.6% |
||
|
Over $15,000.00 |
6.4% |
||
|
Pension Plus 2 with PHF |
New employees who first work on or after Feb. 1, 2018 |
All |
6.2% (Rate is subject to change each fiscal year.) |
The MIP Graded, MIP Plus, and Pension Plus rates begin at 3% each July 1. On this day, the wages on which the contribution rate is based restart at zero. Consider only wages paid at your reporting unit when calculating contributions based on graded rates, even if the employee works at multiple reporting units.
Member DC contributions start at a mandatory rate depending on the benefit plan. Contribution rates for employees who change employers must start at the mandatory rate with the new employer regardless of the contribution rate in place with the previous employer. Once a reporting unit has reported the new employee on a DTL4 record, the employee may contact Voya Financial to change their contribution rate. A rate change by the employee may affect the employer match rate. The table below displays the mandatory rates for the benefit plans.
Member DC contributions
|
Plan |
Plan election |
Member DC % rate |
|
Pension Plus 2 |
Employees who first worked on or after Feb. 1, 2018 |
2.0%* |
|
Pension Plus |
Employees who first worked July 1, 2010, through Sept. 3, 2012 |
|
|
Pension Plus with Personal Healthcare Fund (PHF) |
Employees who first worked between Sept. 4, 2012, and Jan. 31, 2018 |
|
|
Defined Contribution |
Pension Plus members or Pension Plus with PHF members who first worked Sept. 4, 2012, or later who elect straight DC |
3.0%* |
|
MIP DC Converted |
MIP members who elected to go straight DC effective Feb. 1, 2013 |
Optional* |
|
Basic DC Converted |
Basic members who elected to go straight DC effective Feb. 1, 2013 |
Optional* |
*Important: For all employees with PHF the first 2% of DC contributions must go into the PHF and must be matched 100% by the employer.
Last updated: 02/01/2018
