Employers' Pensions and Benefits Administration Manual (EPBAM)

 

 

Table of Contents

Search

EPBAM Home Page 

 

 

Shortcuts

Information by Pension System

Background

Pension System Funding

PERS
LRS
Workers' Compensation Judges Part
Prosecutors Part
LEOs

TPAF

PFRS

SPRS

JRS

ABP

Other Funds

Help Page

Recent Developments

Accessing Division Services

Employee Benefits Statements

 

Information by Employer Task

Enrollments

Purchases

Loans

Retirements

Group Life Insurance

Death Claims

Withdrawals

 

Defined Contribution Plans

ACTS

NJSEDC

SACT

ABP

 

State Health Benefits Program

COBRA

HIPAA

 

Related Government Programs

Tax$ave (Sect 125)
POP
UMSA
DCSA

SSA Agreement

UI/TDI

Long Term Care

 

Employer Financial Services

Reporting Contributions

Employee Contributions

Employer Payments

ABP Administration

TEPS

Workers' Compensation

 

Supporting Documents

Certifying Officer Memos

Member Handbooks

Fact Sheets

SHBP Manuals

Annual Reports

Forms Index
(Forms & Applications)

 

Enrolling in the
Defined Contribution Retirement Program (DCRP)



TABLE OF CONTENTS

  Enrollment Information

bluearrow

Required Employer Training, Enrollment Procedures  

bulleta

DCRP Membership Eligibility  

bulleta

Enrolling DCRP Members  

bulleta

DCRP Administration and Oversight  

bulleta

Employer Contribution Rate  

bulleta

Member Contribution Rate  

bulleta

 

Model Resolution or Ordinance for Determining Positions Eligible for the DCRP

 

bulleta

Submitting Contributions Using the Online Retirement Center for Plan Sponsors  

bulleta

Enrollment/Membership Information for Elected and Appointed Officials  
 
  Elected Officials
 
 
  Appointed Officials
 

bulleta

Enrollment/Membership Information for Eligible PERS,TPAF, PFRS, or SPRS Members  

bulleta

Enrollment/Membership Information for Employees Ineligible for PERS/TPAF Membership (Below Minimum Salary Requirements or Work Hours)  

bulleta

Waiving DCRP Participation - PERS and TPAF Members Eligible for DCRP Membership  

bulleta

Group Life Insurance  

bulleta

Long-term Disability Coverage  

bulleta

Vesting - Elected and Appointed Officials  

bulleta

Vesting - Eligible PERS/TPAF Members  

bulleta

DCRP Eligibility Status Changes  

bulleta

Administrative Services Provider Contact Information  

bulleta

Additional DCRP Information  

bulleta

Withdrawal from the DCRP  

bulleta

Retirement from the DCRP  
  Publications and Forms

bulleta

Fact Sheet 79, Defined Contribution Retirement Program (PERS, TPAF, PFRS, and SPRS Members)  

bulleta

Fact Sheet 80, Defined Contribution Retirement Program (Elected/Appointed Officials)  

bulleta

Fact Sheet 82, Defined Contribution Retirement Program (DCRP) if Ineligible for PERS or TPAF

 

bulleta

NJ DCRP Enrollment Application  

arrow

ABP/DCRP Designation of Beneficiary Form  

bulleta

NJ DCRP Waiver of Retirement Program Participation for Employees Enrolled in the PERS or TPAF  

bulleta

Election to Participate in the DCRP for PERS or TPAF Employees Who Previously Waived DCRP Enrollment  

bulleta

NJ DCRP Transmittal of Local Government Ordinance or Resolution  

bulleta

August 2007 Certifying Officer Letter - "Chapter 92, P.L. 2007 and Chapter 103, P.L. 2007, Pension Changes for PERS, TPAF, and DCRP"  

bulleta

March 2008 Certifying Officer Letter, "Defined Contribution Retirement Program (DCRP) Enrollment Guidelines" - for Elected or Appointed Officials  

bulleta

March 2008 Certifying Officer Letter, "Defined Contribution Retirement Program (DCRP) Enrollment Guidelines" - for PERS or TPAF Members  

bulleta

DCRP Eligibility Status Change Verification Form  

bulleta

Local Finance Notices, DCRP, Dept. of Community Affairs  
     


The following is provided as a summary interpretation of the benefits and procedures under the Defined Contribution Retirement Program (DCRP). The DCRP is established under the provisions of Chapter 92, P.L. 2007, and Chapter 103, P.L. 2007 (N.J.S.A. 43:15C-1 et.seq.). All applicable provisions of the DCRP are contained within the enabling legislation; the plan document adopted July 2, 2007 and subsequently amended, Employee Term Life Coverage Policy and Long Term Disability Coverage Policy, whose provisions shall supersede those presented here in the event of any conflicting guidance between the documents.

General DCRP Enrollment Information

Employer Training

Effective June 19, 2011, all employers, including Certifying Officers and their immediate supervisors, are expected to complete board approved training on proper Enrollment procedures. This training will be made available over the State Web site. Additional information about this required training is available in the Certifying Officer Letter of May 26, 2011, Enrollment Certification and Training Requirements under Chapter 52, P.L. 2011.

Introduction

The Defined Contribution Retirement Program, or DCRP, established July 1, 2007, provides retirement benefits for eligible employees and their beneficiaries. The Retirement Plan is a tax-qualified defined contribution money purchase pension plan under Internal Revenue Code (IRC) § 401(a) et seq., and is a “governmental plan” within the meaning of IRC § 414(d). The Plan Administrator maintains the Retirement Plan as a plan that qualifies for favorable income tax treatment under IRC § 401(a). Assets of the Trust with respect to the Retirement Plan are used solely for the purpose of providing benefits under the Retirement Plan, and for paying the administrative expenses of the Retirement Plan.

In addition to a tax-deferred defined contribution retirement benefit, the DCRP provides eligible members with employer-provided group life insurance and group long-term disability benefits.

DCRP Administration and Oversight

The DCRP is presently administered for the Division of Pensions and Benefits by Prudential Financial. A Defined Contribution Retirement Program Board has also been established to oversee the program.

Administrative Services Provider Contact Information

Prudential Financial makes DCRP information, including information about distribution options, available on its New Jersey Defined Contribution Program Web site, at: www.prudential.com/njdcrp

DCRP employers should contact Prudential through the dedicated e-mail link for any questions they may have during the program's implementation. This will allow Prudential to monitor inquiries and responses more efficiently. The special email address established to respond to any employer questions and/or inquiries is DCRP@prudential.com  Employers should include both telephone and e-mail contact information with their inquiry.  Employers should expect a response to their e-mail within 2 business days of their inquiry.

Employers and members wishing to contact Prudential Financial by phone can use Prudential's Toll Free Phone Number: 1-866-653-2771.

DCRP Membership Eligibility

Employees who are eligible for membership in the DCRP include:

  • Employees whose service began after May 21, 2010 and who earn a salary of $5,000 or more but work less than the minimum required hours (35 hours per week for State employees or 32 hours per week for local government or State/local education employees), making them ineligible for Tier 4 enrollment in the PERS or TPAF.

*Maximum Compensation is defined as the maximum Social Security earnings amount creditable in a calendar year — the maximum earnings amount creditable in any calendar year for the computation of a Social Security benefit. For more information, please visit the Social Security Administration's Web site.

Newly elected officials (those elected on or after July 1, 2007) are to be enrolled in the DCRP ONLY and cannot enroll in the PERS (including the PERS Legislative Retirement System, closed to new members as of July 1, 2007), see below.

Newly appointed officials (those appointed on or after July 1, 2007) having no existing PERS account will be enrolled in the DCRP ONLY and cannot enroll in the PERS, see below. This includes those employees appointed as Workers' Compensation Judges on or after July 1, 2007.

For additional enrollment/membership information specific to each employee group listed above, click on the applicable link above.

DCRP Eligibility Status Changes

In cases where a DCRP member's status for DCRP membership changes, through loss of eligiblity, termination of employment, leave of absence, or a return from a leave of absence, his or her employer must submit a DCRP Eligibility Status Change Verification Form.

Employer Contribution Rate

The DCRP employer contribution rate has been set at three percent of base salary.*

  • For State or local officials elected or appointed on or after July 1, 2007 who are eligible for membership in the DCRP, State and local government employers will contribute three percent of the employee’s base salary to the program. See elected and appointed officials below.
  • For employees enrolled in the PERS and TPAF on or after July 1, 2007 and employees enrolled in the PFRS and SPRS after May 21, 2010, who earn a salary in excess of established "maximum compensation" limits and do not waive enrollment in the DCRP, employers will contribute three percent of the amount of employee base salary over the maximum compensation to the program. See below.
  • For employees ineligible for the PERS and TPAF on or after July 1, 2007 who earn a salary of $5,000 or more, employers will contribute three percent of the amount of employee’s base salary to the program.

* Base salary means the annual compensation of a member, plus the value of maintenance, if applicable, in accordance with contracts, ordinances, resolutions or other established salary policies of the member's employer for all employees in the same position, or all employees covered by the same collective bargaining agreement, which is paid in regular, periodic installments in accordance with the payroll cycle of the employer. Overtime, bonuses, and lump sum payments for longevity, holiday pay, vacation, compensatory time, or accumulated sick leave are NOT included as base salary.

Member Contribution Rate

Each employer picks up employee contributions for all base salary paid with respect to enrolled participants. The employee contributions so picked up are treated as employer contributions pursuant to IRC § 414(h)(2).The employer pays the picked up contributions directly to the DCRP, instead of paying such amounts to the participants, and such contributions are paid from the same funds that are used in paying salaries to participants. Such contributions, although designated as employee contributions, are paid by the employer in lieu of contributions by participants. Participants may not elect to receive such contributions directly instead of having them paid by the employer to the DCRP.  Employee contributions so picked up are treated for all purposes of the DCRP and State law, other than federal tax law, in the same manner as employer contributions made without a pick up.

By law (Chapter 103, P.L. 2007), the DCRP member contribution rate is set at 5.5 percent.

  • State or local officials elected or appointed on or after July 1, 2007 who are eligible for membership in the DCRP will contribute 5.5 percent of their base salary to the program. See elected and appointed officials below.
  • Employees enrolled in the PERS and TPAF on or after July 1, 2007 and employees enrolled in the PFRS and SPRS who earn a salary in excess of established "maximum compensation" limits and do not waive enrollment in the DCRP will contribute 5.5 percent of the amount of their salary over the maximum compensation to the program. See below.
  • Employees ineligible for PERS/TPAF earning over $5,000.

The employer deducts member contributions from the applicable salary (base salary for elected and appointed officials, amount of salary over the maximum allowable compensation for eligible PERS and TPAF members who do not waive enrollment in the DCRP). These contributions, along with the employer contributions, are put into the DCRP participant's tax-deferred investment account established with the DCRP's administrative services provider, Prudential Financial. Participants are allowed to allocate their contributions and the contributions of their employer into the investment choices determined by the DCRP Board.

Submitting Contributions Using the Online Retirement Center for Plan Sponsors

Employers must submit contributions using Prudential's Online Retirement Center for Plan Sponsors. The procedure for submitting contributions in this manner is outlined in the presentation available through this link:

Submitting Contributions Using the Online Retirement Center for Plan Sponsors.

Group Life Insurance

DCRP members are covered by employer-paid life insurance, payable to their designated beneficiaries in the amount of 1½ times the annual base salary on which DCRP contributions were based.

Example 1: For an appointed official earning an annual base salary of $60,000, the employer-paid group life insurance amount would be:

1.5 (1½) X $60,000 = $90,000

payable to the DCRP member's designated beneficiaries.

Example 2: If a PERS or TPAF member enrolled in the DCRP is earning an annual base salary of $115,000, and the maximum compensation for that year is $110,100 (2012), the employer-paid group life insurance benefit through the DCRP would be:

1.5 X ($115,000 - $110,100) = 1.5 X $4,900 = $7,350

payable to the DCRP member's designated beneficiaries.

The DCRP group life insurance coverage is available without a medical examination to members under the age of 60. Newly enrolled members 60 years of age or older must undergo a medical examination to qualify.

Group Life Insurance Coverage in Retirement

Group life insurance coverage under the DCRP reduces to 3/16 of the annual base salary on which DCRP contributions were based at retirement. Group life insurance in retirement is available to:

  • Members age 60 or older who have completed 10 years of participation in the DCRP, and;
  • Members of any age who have completed 25 years of DCRP participation,

AS LONG AS the member has been an active employee in the twelve months immediately preceding the initial receipt of a retirement annuity payment.

Group Life Insurance Coverage - Leave of Absence - Personal Illness

DCRP group life insurance coverage will continue for up to two years for a DCRP member on an approved leave of absence without pay for personal illness.

Waiving Noncontributory Group Life Insurance Coverage over $50,000

The Internal Revenue Service classifies all life insurance coverage over $50,000 as a fringe benefit subject to taxation. The amount of the life insurance coverage is not taxable, but the premium required to pay for the life insurance coverage is taxable. Members can elect to waive insurance coverage over $50,000 at any time. For more information on this topic, see Fact Sheet #22, Waiver of Noncontributory Group Life Insurance over $50,000.

Group Life Insurance Conversion (For Elected and Appointed Officials ONLY)

Other than the retired insurance benefit described above, life insurance coverage under the DCRP ceases 31 days after termination of employment. During the 31-day period following termination of employment, a member may convert existing group life insurance coverage (less any amount of coverage carried over into retirement) into an individual whole life policy, without medical examination. For more information, see Fact Sheet #13, Conversion of Life Insurance.

Long Term Disability Coverage

Members are eligible for employer-paid long-term disability insurance coverage after one year of participation in the DCRP.

Eligibility for the actual disability benefit begins after six consecutive months of total disability due to an occupational or nonoccupational condition.

The member must be unable to perform any and every duty pertaining to his or her occupation in order to be considered totally disabled due to sickness or accidental bodily injury. The member need not be confined to home, but must be under a doctor's regular care.

If totally disabled, the member is eligible to receive a regular monthly benefit up to 60 percent of the base salary on which DCRP contributions were based during the 12 months preceding the onset of the disability. While disabled, the member's and the employer's mandatory contributions are automatically credited to the member's retirement account.

This monthly benefit is offset by any other periodic benefit the member may be receiving, such as Workers' Compensation, short-term disability, or Social Security Disability.

Eighteen months after the onset of long-term disability eligibility, the member must be unable to engage in any gainful occupation for which he/she is reasonably suited by education, training, or experience. Total disability is not considered to exist if the member is gainfully employed, incarcerated, or if the disability resulted from an act of war, or was intentionally self-inflicted.

Long-term disability benefits will be paid as long as the member remains disabled or until the member attains age 70. Should the member begin receiving payments under the retirement annuity, these benefits terminate.

DCRP Enrollment Information for Elected and Appointed Officials

State or local officials who are elected or appointed on or after July 1, 2007 are eligible for enrollment in the DCRP as of the starting date in the elected or appointed office. Additional enrollment conditions apply, as outlined below: Elected Officials; Appointed Officials.

Enrolling Employees in the DCRP

It is the employer's responsibility to enroll employees who are eligible for DCRP membership as elected or appointed officials in a timely fashion. This task can be accomplished in one of two ways:

  • By submitting a fully completed NJ DCRP Enrollment Application to the Division of Pensions and Benefits;
  • By using the online "DCRP Enrollment" program application, available through the Employer Pensions and Benefits Information Connection, or EPIC.

To sign up for EPIC, follow the steps outlined on the "EPIC Registration Information" page of the Division of Pensions and Benefits Web site, at www.state.nj.us/treasury/pensions/epicintro.htm

For help with any of the EPIC applications available online, please refer to the "EPIC User's Guide" at www.state.nj.us/treasury/pensions/epickit.htm You may also call the Employer Education Unit at (609) 292-7524 or send an e-mail to: pensions.nj@treas.state.nj.us

Once enrollment occurs, member contributions are deducted from salary and put into the DCRP participant's tax-deferred investment account established with Prudential. Employer contributions are also made at the time salary is paid and are placed into the DCRP participant's tax-deferred investment account.

If you need help with the submittal of contributions to the tax-deferred investment accounts of the DCRP participants at your employing location, please refer to the PDF version of the presentation, Submitting Employer Contributions Using the Online Retirement Center for Plan Sponsors.

DCRP Enrollment Eligibility for Elected Officials

Newly elected officials1 (those elected on or after July 1, 2007) are to be enrolled in the DCRP ONLY and cannot enroll in the PERS, including the PERS Legislative Retirement System (PERS LRS).

Elected officials must also earn at least $5,000 annually to be eligible for enrollment in the DCRP.

Elected officials who are already enrolled in the PERS prior to July 1, 2007, based on an elected office (including PERS LRS members), will remain in PERS while serving in that elected office.

For a retired member of another State-administered retirement system who is elected to public office on or after July 1, 2007, enrollment in the DCRP is optional:

  • If the newly elected official declines enrollment in the DCRP, he or she will continue to receive the retirement benefit from the former employment while drawing a salary from the elected official position; however, the elected official will not be eligible for the benefits associated with DCRP membership, either during or upon completion of service.
  • If the newly elected official chooses to become a member of the DCRP, the retirement benefit from the former employment is suspended, and the official is enrolled in the DCRP. The employer would deduct member contributions from the elected official's salary, and make employer contributions, for the duration of the elected service. Upon termination of the elected service, the retirement benefit from the former employment would be reinstated, and the official would also be eligible for a retirement benefit through his or her DCRP membership.

1An elected official is any individual who holds a State or local (county, municipal, etc.) elected public office.

DCRP Enrollment Eligibility for Appointed Officials

An appointed State or local official2 with no existing PERS member account whose appointment occurs on or after July 1, 2007 will be enrolled in the DCRP ONLY, and may not enroll in the PERS.

However, an appointed State or local official who was enrolled in the PERS prior to July 1, 2007 will remain in the PERS while serving in the appointed position, regardless of the date of appointment.

Similarly, if an employee is enrolled in the PERS prior to July 1, 2007, and is appointed to a DCRP-eligible position on or after July 1, 2007, the newly appointed official will remain a PERS member while in the appointed position.

An appointed official serving in a position that is otherwise eligible for membership in the TPAF, PFRS, SPRS, or JRS will not be enrolled in the DCRP. In these instances application should be made to enroll in that other retirement system regardless of any former retirement system affiliations.

A Model Resolution or Ordinance for Determining Positions Eligible for the DCRP is provided at this link for governing bodies of counties, municipalities, and other local entities, to use in determining the eligibility of appointed positions for enrollment in the DCRP.

Note: Appointed titles that are ineligible for DCRP participation (see Chapter 92, P.L. 2007): Certified Health Officer, Tax Assessor, Tax Collector, Municipal Planner, Chief Financial Officer, Registered Municipal Clerk, Construction Code Official, Licensed Uniform Subcode Inspector, Qualified Purchasing Agent, or Principal Public Works Manager.

2A State appointee is any individual appointed by the Governor, including those requiring the advice and consent of the Senate. A local appointee is any individual appointed by the Governor, including those requiring the advice and consent of the Senate; or an individual appointed in a similar manner by the governing body of a local public entity (county, municipality, etc.).

Workers' Compensation Judges

Under Chapter 92, P.L. 2007, the Workers' Compensation Judges Part of the PERS (WCJ Part of the PERS) was closed to new members. As appointed officials, Workers' Compensation Judges whose appointment takes effect on or after July 1, 2007 must enroll in the Defined Contribution Retirement Program.

Workers' Compensation Judges appointed before July 1, 2007 will remain in the Workers' Compensation Judges Part of the PERS. To view the special retirement benefits for those who remain members of the WCJ Part of the PERS, click here.

Employer Contribution Rate: Elected and Appointed Officials

Under the DCRP, State and local government employers will contribute 3 percent of the employee’s base salary to a tax-deferred investment account established with Prudential Financial, which jointly administers the DCRP with the Division of Pensions and Benefits.

Member Contribution Rate: Elected and Appointed Officials

When enrolled in the DCRP, the elected or appointed official contributes 5.5 percent of base salary to a tax-deferred investment account established with Prudential Financial, which jointly administers the DCRP with the Division of Pensions and Benefits.

Salary Requirements

Minimum Salary Requirement: A newly elected or appointed official must earn a minimum base salary of $5,000 to be eligible to participate in the DCRP.

Vesting, Elected and Appointed Officials

Vesting in the DCRP occurs immediately for any newly elected or appointed official with either:

  • An existing DCRP account; or
  • Active or vested membership in another State-administered retirement system.

A newly elected or appointed official who does not qualify for immediate vesting in the DCRP will have the member and employer contributions in their account held in a delayed vesting status for the first year of membership. Full vesting occurs at the start of their second year of membership.

If, however, the member is ineligible to continue membership for a second year (e.g., an appointed official serving a one-year term), he or she may apply for a refund of the employee contributions. Employer contributions already made, including any investment gain or loss, will revert back to a forfeiture account for the employing location.  For more information, e-mail the Prudential Contribution Processing team at prudential_contribution@prudential.com.

DCRP Enrollment for Eligible PERS, TPAF, PFRS, and SPRS Members

Eligible employees who are enrolled in the PERS or TPAF on or after July 1, 2007* are also enrolled in the DCRP when their annual salary exceeds the maximum compensation limit for PERS or TPAF pension contributions (annual maximum wage contribution base for Social Security pursuant to the Federal Insurance Contributions Act).

Eligible employees who are enrolled in the PFRS or SPRS after May 21, 2010** are also enrolled in the DCRP when their annual salary exceeds the maximum compensation limit for PFRS and SPRS pension contributions (annual maximum wage contribution base for Social Security pursuant to the Federal Insurance Contributions Act).

This may occur either:

  • Upon enrollment into the PERS, TPAF, PFRS, and SPRS when an annual base salary that will exceed the maximum compensation is reported on the Enrollment Application; or

  • When a PERS, TPAF, PFRS, or SPRS member’s annual salary is increased to where it will exceed the maximum compensation and it is reported by the employer to the Division of Pensions and Benefits (either by directly contacting the Division, or when submitted on the Quarterly Report of Contributions).

*Those enrolled in the PERS or TPAF on or after July 1, 2007 are designated as having "Tier 2, Tier 3, or Tier 4 " membership. PERS or TPAF members enrolled prior to July 1, 2007 are designated as having "Tier 1 " membership. A PERS or TPAF member with "Tier 1 " membership is ineligible for enrollment in the DCRP.

**Those enrolled in the PFRS or SPRS after May 21, 2010 are designated as having "Tier 2" membership. PFRS or SPRS members enrolled prior to July 1, 2007 are designated as having "Tier 1 " membership. A PFRS or SPRS member with "Tier 1 " membership is ineligible for enrollment in the DCRP.

PERS, TPAF, SPRS, and PFRS members who are eligible for their DCRP membership though their enrollment date (Tier designation) and through their salary surpassing the maximum compensation limit, have the option of waiving participation in the DCRP, see below.

Transfers

An employee who transfers into the PERS or TPAF on or after July 1, 2007 will not be subject to the maximum compensation limits or DCRP enrollment if the employee was a member of the PERS or TPAF on or before June 30, 2007 and any of the conditions listed below apply; likewise, an employee who transfers into the PFRS or SPRS after May 21, 2010 will not be subject to the maximum compensation limits or DCRP enrollment if the employee was a member of the PFRS or SPRS on or before May 21, 2010 and any of the conditions listed below apply:

  • The member is transferring to a PERS, TPAF, PFRS, or SPRS eligible position without a break in service; or
  • Any break in service is 24 months or less from the date of the last PERS, TPAF, PFRS, or SPRS pension contribution and the account has not been withdrawn; or
  • Any break in service is 24 months or less from the end of an approved leave of absence; or
  • The member is returning from a break in service that was the result of an involuntary layoff or reduction in force and the return is within 10 years of the date of the last PERS, TPAF, PFRS, or SPRS pension contribution and the account has not been withdrawn.

If a member transfers into the PERS or TPAF on or after July 1, 2007 from another pension system (PFRS, SPRS, or JRS), or the member transfers into the PFRS or SPRS from another pension system after May 21, 2010; or the transfer occurs after a break in service that falls beyond the 24-month or 10-year exceptions described above, the member will be subject to the maximum compensation rules and DCRP enrollment.

Employer Contribution Rate

Under the DCRP, State and local government employers will contribute 3 percent of the amount of employee salary over the maximum compensation limit to the DCRP.

Member Contribution Rate

Through payroll deductions made by the employer, the member will contribute 5.5 percent of his or her eligible compensation (the amount of the DCRP member's salary over the maximum compensation limit) to the DCRP.

Maximum Compensation Limits for PERS, TPAF, PFRS, or SPRS Pension Contributions: DCRP Enrollment

For calendar year 2012, the annual maximum wage (maximum compensation limit for PERS or TPAF pension contributions) is $110,100. This limit is subject to change at the start of each calendar year. Employees who are enrolled in the PERS and TPAF on or after July 1, 2007 or who are enrolled in in the PFRS or SPRS after May 21, 2010, AND who earn salary in excess of the annual maximum wage, will be enrolled in the DCRP — in addition to the PERS, TPAF, PFRS, or SPRS (respectively) — unless they waive enrollment in the DCRP.

The maximum compensation limit is based on the annual maximum wage for Social Security.

MAXIMUM COMPENSATION LIMITS

2012

$110,100

2011

$106,800

2010

$106,800

2009

$106,800

2008

$102,000

2007

$97,500

PLEASE NOTE: The Social Security maximum wage DOES NOT apply to employees who were already members of the PERS or TPAF prior to July 1, 2007 or employees who were already members of the PFRS or SPRS on or before May 21, 2010 (Tier 1 members); these members are also not eligible for enrollment in the DCRP.

IRS Limits on Annual Contributions for Retirement Plan Benefits

IRC Sec. 401(a)(17) limits the amount of annual contributions that may be used to determine retirement plan benefits. For calendar year 2012, the annual pensionable salary limit is $250,000. This is also subject to change each calendar year.

Thus, for PERS and TPAF members enrolled in the DCRP on or after July 1, 2007, or PFRS or SPRS members enrolled in the DCRP after May 21, 2010, the employee's eligible DCRP compensation is the amount of salary that exceeds the annual maximum wage for pension contributions, up to the IRC 401(a)(17) limit.

An employee contribution of 5.5 percent will be deducted from the employee's eligible compensation and invested in the DCRP. The employer contributes an additional 3 percent to the DCRP based on that employee's eligible DCRP compensation.

Example 1: A PERS employee earns an annual salary of $120,000 in 2012. His or her DCRP contributions will be based on the amount of salary in excess of $110,100:

$120,000 - $110,100 = $9,900 Member's Eligible DCRP Compensation

Example 2: A TPAF employee earns an annual salary of $250,000 in 2012. His or her DCRP contributions will be based on the amount of salary in excess of $110,100, but under the maximum pensionable salary amount of $250,000:

$250,000 - $110,100 = $139,900 Eligible DCRP Compensation

PERS, TPAF, PFRS or SPRS Service Credit

PERS, TPAF, PFRS, or SPRS members who also participate in the DCRP will receive service credit in their corresponding PERS, TPAF, PFRS, or SPRS account (respectively), and will be eligible to retire under the rules of the PERS, TPAF, PFRS, or SPRS (respectively) — with the final salary used to determine benefits at retirement limited to the maximum compensation amounts in effect when the salary is earned.  At retirement, additional income will be available to the member based on the investment in the DCRP.

When a TPAF, PERS, PFRS, or SPRS member also becomes a participant in the Defined Contribution Program, the group life insurance and long term disability benefit provisions of that program will be available to that participant.

Waiving DCRP Participation: PERS, TPAF, PFRS, or SPRS Members - Required Form

PERS and TPAF members enrolled on or after July 1, 2007 who are eligible for DCRP participation upon reaching the annual maximum wage contribution base for Social Security pursuant to the Federal Insurance Contributions Act ($110,100 in 2012), may elect to waive participation in the DCRP.

Likewise, PFRS and SPRS members enrolled after May 21, 2010 who are eligible for DCRP participation upon reaching the annual maximum wage contribution base for Social Security pursuant to the Federal Insurance Contributions Act ($110,100 in 2012), may elect to waive participation in the DCRP

A member who chooses to waive DCRP participation must complete and submit the form, New Jersey DCRP Waiver of Retirement Program Participation for Employees Enrolled in the PERS, TPAF, PFRS, or SPRS within 30 days of the date the member becomes eligible for DCRP participation.

DCRP Enrollment When Ineligible for PERS or TPAF Enrollment (Salary below Minimum Salary Requirement OR Work Hours below new Minimum Hours per Week Requirement)

An employee who otherwise qualifies for PERS or TPAF membership (Tier 2, Tier 3, or Tier 4 members only), but does not meet the minimum salary requirement ($7,800 in 2012, subject to change), or the minimum number of hours worked per week (35 hours per week for State employment/32 hours per week for local employment) is eligible for enrollment in the DCRP provided that his or her base salary is at least $5,000 annually.

Vesting in the DCRP: Eligible PERS, TPAF, PFRS and SPRS Members Electing to Enroll in the DCRP

PERS, TPAF, PFRS, and SPRS members who participate in the DCRP are immediately vested in the DCRP, with a right to a benefit at retirement based on both employee and employer contributions.

Such members who also participate in the DCRP will still receive service credit in their corresponding PERS, TPAF, PFRS, and SPRS account, and will be eligible to retire under the rules of the PERS, TPAF, PFRS, or SPRS — with the salary used to determine benefits at retirement limited tothe maximum compensation amounts in effect when the salary is earned.  At retirement, additional income will be available to the member based on the DCRP investments.

Additional Defined Contribution Retirement Program Information

The Division of Pensions and Benefits provides information about the Defined Contribution Retirement Program, or DCRP, via the following fact sheets:

Both fact sheets are available to members on the Division's Web site, at www.state.nj.us/treasury/pensions

The following Certifying Officer Letters provide additional guidance for employers enrolling DCRP members:

The following Local Finance Notices from the Department of Community Affairs provide additional DCRP information.

Withdrawal from DCRP

Withdrawal occurs when a non-vested DCRP member separates from covered employment and submits a request to Prudential for a withdrawal of contributions. Only the member’s contributions are available for withdrawal — employer contributions are forfeited. After a withdrawal, the individual is eligible for reenrollment in the DCRP, or enrollment in another New Jersey State-administered retirement system, upon a return to covered employment.

BACK TO TOP

BACK TO HOME PAGE



division (internet use only): p&b home | SHBP home | forms and publications | seminars | contact the division
pension funds : PERS | TPAF | PFRS | SPRS | JRS | ABP | other funds | search
Last Updated: July 22, 2013