1806 - Part-time, Seasonal, and Temporary Employees Retirement Program (PST)

Category

Savings Plus

Audience List

• Personnel Officers
• Personnel Transactions Staff
• Personnel Transactions Supervisors

Synopsis

This policy

• Provides information about enrollment in the PST Program

• Provides eligibility criteria for PST employees

• Provides rules for the PST Program’s distribution options and account closure

Introduction

• 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 (PST) Employees Retirement 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.

Statement

Enrollment

Employees are enrolled in the PST Program by their Human Resources (HR) Office based on eligibility criteria. PST payroll deductions must post into the employee’s PST 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 reporting schedule established by Savings Plus to ensure timely deduction posting.

Active participants in the PST program are also eligible to enroll and contribute to the 401(k) and 457(b) Plans. The 401(k) and 457(b) Plans provide the employee an opportunity to invest a portion of their salary on both a pre-tax and Roth basis and provide the employee the flexibility to select from an array of investment options. It is easy to enroll, employees can visit savingsplusnow.com or contact the Savings Plus Solutions Center.

Eligibility Criteria

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, if excluded from membership in the California Public Employees' Retirement System (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

  • Employed on a per diem basis, they work more than 125 days in a fiscal year (July 1 through June 30), or

  • 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, is age 65, and hired in a half-time position at CSU would be excluded from the PST Program 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 on a temporary basis in case of emergencies, such as fires, floods, earthquakes, etc. This exclusion applies only to employees hired to perform work requiring immediate action to address the urgent nature of the emergency.

  • For example, an employee hired to clear hurricane debris to allow access to a hospital meets the exclusion, while an employee hired to work in the Human Resources office to assist in the emergency does not. This means that not all employees hired through the California Office of Emergency Services or under the emergency tenure blanket would meet this exclusion. Employees hired to perform services related to an emergency that do not involve immediate action in response to the emergency should not be excluded from the PST Program.

• Election officials and election workers paid less than the annual threshold established by Federal law in a calendar year (for 2017, the threshold is $1,900).

• 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 the PST Program, 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.

Contribution Rates

7.5 % of the employee’s pre-tax wages are deducted and deposited into a PST account with Savings Plus. PST accounts do not receive employer contributions or matching funds. The account balance consists of employee contributions and attributable earnings or losses. Note that operating expenses are netted out of the performance of the investments.

Investments

Savings Plus invests PST deductions in the Short-Term Investment Fund-PST (STIF-PST) which seeks to maximize total return consistent with capital preservation.

Account Statements

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 elects to contribute to a 457(b) Plan (either with Savings Plus or another employer) in the same calendar year the employee participates 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 deductions if employees participating in PST become eligible for CalPERS retirement benefits as a result of their state employment.

Account Closure

Separated employees are eligible to take a total distribution from their PST account after 90 days from the last transaction into or out of their PST 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. As described above, HR professionals must discontinue PST deductions when a PST participant becomes eligible for CalPERS. Savings Plus transfers the entire PST account balance to a 457(b) Plan account 75 days after a PST participant becomes eligible for CalPERS. 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.

Administrative Fees

Savings Plus charges each 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.

Dormant Accounts

Employee PST accounts may be considered "unclaimed" or dormant if no payroll deductions go into or out of the account for two years. Once an account becomes dormant, Savings Plus will send a check in the amount of the account balance if it is less than $1,000. If the amount is a $1,000 or more, it is transferred to the State Controller's Office (SCO), Unclaimed Property Unit after three years from being considered dormant. To claim funds, employees may call SCO at (800) 992-4647 (residents of CA) and (916) 323-2827 (out-of-state or foreign). Employees may "Search for Unclaimed Property" online at sco.ca.gov.

Application

The PST Program is a mandatory program and there is no enrollment application. However, PST participants may enroll in the 401(k) and/or 457(b) Plan online at savingsplusnow.com.

Authorities

• 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

Resources

Forms

• PST Benefit Payment Booklet: PST Benefit Payment Booklet
• PST Fact Sheet: PST Fact Sheet

PML

• 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

Web Pages

• www.savingsplusnow.com: Savings Plus Website

Authorized By

Chief Savings Plus Division
Chief
Savings Plus Division

Contact Person

Savings Plus Solutions Center
To Speak with a Customer Service Representative say "representative", or press 0
Phone: 855-616-4776
Email: AskSavingsPlus@nationwide.com

Superseded Policies

History

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