1806 - Part-time, Seasonal, and Temporary Employees Retirement Program (PST Program)
- Personnel Officers
- Personnel Transactions Staff
- Personnel Transactions Supervisors
- provides information about enrollment in the PST Program
- provides eligibility criteria for the PST Program
- provides rules for the PST Program’s distribution options and account closure
- Under the Federal Omnibus Budget Reconciliation Act of 1990, state and local government employees became subject to mandatory Social Security coverage, unless they are (1) members of a qualifying public retirement system, or (2) covered by an agreement made in accordance with Section 218 of the Social Security Act. In response to the law, the state established the Part-time, Seasonal and Temporary Employees Retirement Program (PST Program) for certain part-time, seasonal, and temporary employees of the state who are excluded from membership in a state retirement plan. The PST Program is intended to be a “Social Security replacement” plan that provides a qualifying “retirement system” for state employees who do not meet eligibility requirements for membership in a state retirement plan, in order to avoid mandatory Social Security coverage for such employees.
Employees are enrolled in the PST Program by their Human Resources (HR) Office based on eligibility criteria. Thereafter, PST Program payroll deductions must post into the employee’s PST Program account as soon as practicable, but no later than 15 business days after the paycheck was issued that reflects the withholding. HR professionals are required to follow the PST Program reporting schedule established by Savings Plus to ensure timely deduction posting.
PST Program participation is mandatory for employees who meet the eligibility requirements, unless an exclusion applies. Employees who are eligible for participation in the PST Program generally include the following employees, if excluded from membership in CalPERS:
- Part-time employees who work less than half time
- Seasonal employees
- Temporary and Permanent-Intermittent (PI) employees. Note: Temporary and PI employees are generally not excluded from CalPERS membership if:
- they work longer than six months, or
- if employed on a per diem basis, they work more than 125 days in a fiscal year (July 1 through June 30), or
- if employed on an hourly basis, they work more than 1,000 hours in a fiscal year (hours are accumulative regardless of the number of departments the employee works for).
- Half-time California State University (CSU) employees who are not yet eligible for membership in a state retirement system.
The following employees are excluded from PST Program participation:
- Employees working in multiple positions with the state at the same time and covered by a state retirement system due to a full-time position with the state. Note: this exclusion does not apply if an employee has membership in a state retirement system other than CalPERS through employment with a non-state employer.
- Example 1: an employee who works in a school district covered by California State Teachers’ Retirement System (CalSTRS), and hired in a state position that is excluded from CalPERS would be subject to the PST Program.
- Example 2: an employee who works half-time for the state in a position covered by CalSTRS and hired in a half-time position at CSU that is CalPERS-eligible would be subject to the PST Program.
- Example 3: a former state employee who was covered by CalSTRS, and left funds on deposit with CalSTRS, hired at CSU in a non- CalPERS eligible position would be subject to the PST Program.
- Employees who retired from service covered by a state retirement system and who are receiving benefits from a state retirement system or have reached normal retirement age under a state retirement system including CalPERS, CalSTRS, Legislators’ Retirement System (LRS), and Judges’ Retirement System (including the Judges’ Retirement System II Law) (JRS).
- For example, an employee who was covered by CalSTRS and is age 65, and hired in a half-time position at CSU would be excluded from PST because the employee has reached normal retirement age under CalSTRS.
- Full-time students who regularly attend classes in the institution in which they work except during school break periods of more than five weeks, including summer breaks.
- Employees hired temporarily to handle disaster emergencies, such as fires, floods, storms, earthquakes, etc.
- Election officials and election workers paid less than the annual threshold established by Federal law in a calendar year (for 2017, the threshold is $1,800).
- Persons hired through programs to relieve unemployment, such as summer youth programs.
- Authorized, nonresident aliens who have F or J visas or M teaching visas.
- Persons paid for services performed in a hospital, home or another institution in which they live.
- Casual employees who have benefits from the Health and Welfare Fund of their union.
- Self-employed persons who render services to the state and make Social Security payments on wages earned from their state contract. To request an exemption from participating in PST, the employee must submit a letter to the HR office, indicating they will pay Social Security taxes on the earnings along with a copy of their Schedule SE from their Form 1040 from the previous year.
7.5 percent of the employee’s pretax wages are deducted and deposited into a PST Program account with Savings Plus. PST Program accounts do not receive employer contributions or matching funds. The account balance consists of employee contributions and attributable earnings or losses.
Savings Plus invests PST Program deductions in the Short Term Investment Fund-PST which seeks to maximize total return consistent with capital preservation.
Savings Plus produces PST account statements twice per year (February and August). Employees may choose to view PST statements electronically by creating a user ID and profile on savingsplusnow.com or receive paper statements in the mail.
Plan Limit Coordination
The PST Program is subject to Internal Revenue Code section 457(b). This means that, if the employee becomes eligible to contribute to a 457(b) Plan (either with Savings Plus or another employer) in the same calendar year the employee participated in the PST Program, the normal contribution limit that applies to the 457(b) Plan for that year must be reduced by the amount the employee contributed to the PST Program in that year.
Retirement Eligibility Changes
HR professionals must discontinue PST Program deductions if employees participating in the PST Program become eligible for CalPERS, JRS, LRS, or CalSTRS retirement benefits as a result of their state employment.
Separated employees are eligible to take a total distribution from their PST Program account after 90 days from the last transaction in their PST Program account. Payments are reported to the Internal Revenue Service (IRS) as ordinary income.
A change in an employee’s retirement system eligibility is not a qualified distributable event under IRS regulations. This means that employees covered by the PST Program who become eligible for coverage under a state retirement system are not eligible to take a distribution from their PST account prior to separation, but they are eligible to begin contributing to the Savings Plus 401(k) or 457(b) Plan and may do so by enrolling in either Plan online. As described above, HR professionals must discontinue PST Program deductions when a PST participant becomes eligible for CalPERS, JRS, LRS or CalSTRS. 75 days after a PST participant becomes eligible for CalPERS, JRS, LRS, or CalSTRS, Savings Plus transfers the entire PST Program account balance to a 457(b) Plan account. If the employee already has a 457(b) Plan account with Savings Plus, Savings Plus will transfer the entire PST account balance to the existing account. If the employee does not have an existing 457(b) Plan account, Savings Plus will automatically establish one on behalf of the employee and transfer the entire PST account balance. Savings Plus will notify the employee about the transfer and provide information about how to begin contributing to the newly established 457(b) Plan account.
Savings Plus charges each PST Program employee’s department an administrative fee based on the amount necessary to offset the recordkeeping and administrative costs associated with the PST Program. The amount of the fee is reviewed annually.
If a PST Program account remains inactive for 36 months or more, Savings Plus will:
- send a check for the amount of the account balance to the address on file for the PST Program participant, if the account balance is less than $1,000 or
- transfer the account balance to the State Controller's Office's (SCO) Division of Unclaimed Property, if the account balance is $1,000 or more. Once this happens, the employee must submit a claim form to the SCO to get the money back.
The PST Program is a mandatory program and there is no enrollment application. However, when PST Program participants obtain membership in a pension plan, they may enroll in the 401(k) and/or 457(b) Plan online at www.savingsplusnow.com.
- 457(b) Plan Document
- California Administrative Code, title 2, section 599.945.4
- Government Code sections 19999.2 to 19999.21
- Internal Revenue Code section 457(b)
- Internal Revenue Code section 3121(b)(7)(F)
- IRS Webpage for Internal Revenue Code Section 457(b) Plans
- Omnibus Budget Reconciliation Act (OBRA) of 1990
- Treasury Regulation section 31.3121(b)(7)-2
- PST Program Fact Sheet: PST Program Fact Sheet
- PML 2001-047: PML 2001-047 - 10/25/2001 - Part-Time, Seasonal, Temporary Employee Retirement Plan Fee Increase
- PML 2004-074: PML 2004-074 - 12/30/2004 - Changes to Part-time, Seasonal, and Temporary (PST) Retirement Program
- PML 2005-023: PML 2005-023 - 8/1/2005 - Part-time, Seasonal, and Temporary (PST) Employees Retirement Program Statements
- www.savingsplusnow.com: Savings Plus Website
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