RETIREMENT CHECKLIST FOR HR OFFICES - Florida · PDF fileRETIREMENT CHECKLIST FOR HR OFFICES ... available to guide the employee through the ... office ensure that all timesheets have

State Personnel System

RETIREMENT CHECKLIST FOR HR OFFICES

A Checklist of Suggested Steps for Processing Employee Retirements

Division of Human Resource Management

Revised May 9, 2014

Note: Where appropriate, this guide references other entities (e.g., People First, Division of State Group Insurance, Division of Retirement, etc.) with which the retirement process should also be coordinated. This guide is not intended to be an exhaustive list of action steps, nor does it necessarily reflect the order in which transactions should be handled. When appropriate, the HR office should consult with the Division of Retirement, People First, or the other referenced program entities. In the event of any conflict between the information in this guide and information provided by these afore-mentioned program entities, the final authority will be the applicable program entity.

Retirement Checklist for the HR Offices

Division of Human Resource Management Page 1 5/9/2014

□ CERTIFICATION OF THE RETIREMENT APPLICATION

As the representative of the Florida Retirement System (FRS) employer, the agency Human Resource (HR) office will be required to certify, sign, and forward to the Division of Retirement (DOR) the appropriate FRS forms on which separating employees apply for their FRS Pension Plan or Investment Plan (IP) retirement benefits. The types of FRS forms needed will depend on whether the employee is a Pension Plan member who is applying for benefits under “Service”, “Disability” or “Deferred Retirement Option Program” (DROP) retirement; or an IP member and applying for Service or Disability benefits. Note: the HR office does not certify retirement applications for separating IP members who are not applying for disability benefits. Instead, these employees should request a distribution or a rollover of their money directly from the IP administrator. Therefore, IP members applying for “Service” retirement should be directed to the IP administrator for further instructions. If the HR office has questions regarding this process or their role as an employer, they may contact the Employer Assistance Line (1-866-377-2121, Option 3). → Obtaining An FRS Retirement Application The appropriate applications

(“Retirement Forms”) for Pension Plan members may be accessed from the DOR’s website http://www.frs.myflorida.com/ (under Members/Forms) and IP members retirement forms may be accessed from the http://www.myfrs.com website (under Resources/Forms).

→ Letter of Resignation to Initiate Pension Retirement It is recommended that

agencies have a policy requiring that employees give written notice of their resignation. In this letter, the employee should specify the effective date of resignation (last day for pay purposes) and whether he/she is actually retiring from the pension plan. When possible, such letters should be submitted no later than the retirement application itself. If the retirement application does not accompany this letter, the employee should be asked to submit the application as soon as possible or within the specific timeframe preferred by the agency (bearing in mind that the DOR accepts applications no more than six months in advance of the desired retirement date). Once the agency has certified the retirement application, it should be forwarded to the DOR along with any other documentation (e.g., copies of birth certificates, etc.) that the employee also needs to submit. Remember, if faxing the application and the other documentation to the DOR, it is NOT necessary to mail the original, which instead may be retained in the employee’s personnel file.

Note: When an employee is entering DROP, a termination form “DP-ELE” is post-dated to indicate the “DROP termination and resignation date” as part of the DROP application process.

Special Note for IP Members: An application to take a distribution under the IP should be submitted after the member has terminated. IP members must be terminated from all employment with FRS employers for three calendar months after the month of termination before being eligible to receive a distribution; retirement is effective the first of the month following receipt of a distribution. An exception is provided for IP members who meet the normal retirement age from the Pension Plan (or any age with either 30 or 33 years of service, depending on their hire date) and vesting requirements from the IP that allows these members to receive a one-time



distribution of up to 10 percent of their account balance after being terminated for one calendar month with the remaining balance available after the end of the three calendar months.

→ Effective Date of Retirement For Pension Plan retirement benefits and IP disability

benefits, this date is always the first day of a calendar month and cannot be any earlier than the first of the calendar month following the calendar month on which the employee terminated employment. The DOR is responsible for assigning the effective date of retirement for these members and timely submission of the retirement application is critical for ensuring that the employee secures the desired effective date. Consult with the DOR regarding the application deadline associated with specific retirement dates and the rules regarding submission of other required documentation that the employee needs to provide, in order to have his/her name added to the Retired Payroll.

→ Retiree Checklist In the course of acknowledging an employee’s resignation for

purposes of retirement, it is recommended that the employee be provided information or a checklist of activities and other considerations pertinent to transition from the active payroll to retiree status. For example, any steps that the employee should take to get retirement estimates and financial planning, continue, convert, or cancel post-tax insurance policies, defer terminal leave payouts, update contact information, contact the Social Security Administration (SSA) about benefits, and to enroll in Medicare, if eligible, etc. Additionally, it is recommended that the employee be referred to the http://www.frs.myflorida.com/ or http://www.myfrs.com website as applicable, where a variety of FRS information is available to guide the employee through the process of applying and receiving FRS benefits. (See “Pension Plan Retirement Checklist” and “Investment Plan Retirement Checklist” under “Retirees”.)

□ CERTIFICATION OF LEAVES OF ABSENCE OR PERIODS OF WORKERS’

COMPENSATION FOR PURPOSES OF ESTABLISHING RETIREMENT CREDIT

In certain cases, employees under the Pension Plan are eligible to add service credit by purchasing certain approved leaves of absence. If so, the HR office may need to research the employee’s record and certify the dates of the leave on the appropriate form (Form FR-28), which is available on the DOR’s website at http://www.frs.myflorida.com/). Likewise, periods of eligible Workers’ Compensation must be certified on Form WC-1, also available on this website. For information on the reporting and payment requirements for leave periods or Workers’ Compensation, contact the DOR.

□ FINAL SALARY CERTIFICATION FOR PENSION PLAN MEMBERS

A certification of the employee’s last four months of salary (including terminal leave payments) for retiring Pension Plan members or Investment Plan members retiring under Disability Retirement, must be submitted to the DOR no later than the 5th of the month in which the employee’s retirement is effective. Form FC-1 is available on-line at http://www.frs.myflorida.com/. (Because this form is submitted for DROP participants when they first enter DROP, it does not need to be completed when an employee is terminating from DROP.)



□ CERTIFICATION OF TERMINAL LEAVE PAYMENTS TO THE SSA

On occasion, the SSA may request that the agency provide information regarding all earnings (including terminal leave payments) received during the calendar year in which the employee both retired from the state and began collecting Social Security benefits. The employee and/or the SSA may contact the HR office and request that a form be completed for this purpose. The HR office may be asked to verify how many hours of annual and sick leave were paid and what portion of these hours were accrued in the same calendar year as the terminal payments.

□ CERTIFICATION OF MEDICAL COVERAGE AS REQUIRED TO COLLECT THE HEALTH

INSURANCE SUBSIDY BENEFIT

The DOR requires that, before eligible retirees start receiving the monthly Health Insurance Subsidy (HIS) benefit, they must first submit a completed application Form HIS-1 for Pension Plan members or HIS-IP and HIS-IP-2 for IP members certifying they have qualifying coverage. Pension Plan retirees are mailed employee Form HIS-1 in the “Retiree Packet” that the DOR sends to the employee after his/her name has been added to the Retired Payroll. IP retirees are responsible for downloading the HIS application form and submitting certification of insurance coverage to the DOR.

If the employee is continuing health insurance under the state group insurance program, the form(s) should be initiated by the employee and routed according to the instructions on the form(s). Completed forms are mailed to the Retired Payroll Section, PO Box 3090, Tallahassee, FL 32315-3090 (for Pension Plan members) or Division of Retirement, P O Box 9000, Tallahassee, FL 32315-9000 (for IP members). DOR will certify the employee’s coverage. If the employee is enrolled as a dependent of the spouse, the spouse’s name and People First identification number should be noted on the form so that DOR can access the appropriate record). If the employee is enrolled in or plans to enroll in any health insurance plan other than the state group insurance program (for example, a private insurance company, Medicare, or military health insurance), then the employee should send the HIS-1 or HIS-IP-2 form to the carrier of that plan for completion (and NOT the People First Service Center). If the employee is covered by Medicare or military health insurance, then a copy of the Medicare card or military ID and TRICARE card should be attached to the HIS application. The employee is responsible for submitting the completed HIS-1 or HIS-IP-2 form and any attachments to the DOR. (If it is sent to the HR office, forward it to the DOR as soon as possible).

□ FLEXIBLE SPENDING MEDICAL REIMBURSEMENT ACCOUNT (MRA) OPTIONS

The “MRA Options When Employment Ends” Form gives employees several options for handling participation in the medical reimbursement account if terminating employment during the plan year. Employees may obtain this form by logging into People First at https://peoplefirst.myflorida.com/logon.htm, clicking on the “Benefits Materials” icon under the “Health & Insurance” tab and then selecting “FSA/HSA Plan Forms” from the drop-down menu.



The employee may elect one of the following: to use terminal leave payment for making full or partial payments (on a pre-tax basis); to make a lump sum or monthly payments (on a post-tax basis); or to terminate plan participation without making further contributions. After the employee has made their election and signed the “MRA Options When Employment Ends” Form, the HR office should complete any necessary processing, sign the form and submit it to the People First Service Center at P.O. Box 6830, Tallahassee, Florida 32314 for further processing.

□ TIMESHEET AUDITS

To facilitate payment of terminal leave, all missing timesheets will need to be identified and processed. Prior to the employee’s separation date, the employee will need to submit, and the supervisor will need to approve, any missing timesheets.

Note: The supervisor should ensure that the employee has submitted the last timesheet no later than the last day worked and that such timesheet is completed through the last day (to be) paid.

□ SEPARATION ACTION

Regardless of who is charged with acting upon and completing the “Personnel Action Request” to separate the employee (separation PAR), it is recommended that the agency HR office ensure that all timesheets have been approved and a complete audit of leave hours has been conducted after the separation PAR is actually processed (within the appropriate payroll cutoff deadline). For Pension Plan employees, the Separation Reason Type is “Retirement”. All Pension Plan employees who participate in state group insurance will automatically receive a retiree insurance package upon retirement. For IP employees, the Separation Reason Type is “Other”. This is because IP employees may not receive a retiree insurance package until People First has validated that they are retired (i.e., have received a distribution). People First will change the Separation Reason Type from “Other” to “Retirement” once DOR has sent this notification and this will trigger the retiree insurance package. Note: At the present time, People First only updates the separation type for IP retirees who meet the statutory criteria for continuing health insurance as a retiree. This means that some IP retirees (those who do not meet the statutory criteria for retiree coverage) will not have retirement reflected on their People First Action History screen even though they are retired. Special Note for Biweekly Agencies: When employees separate from service at or near the end of a calendar month, it is not uncommon for state group insurance premiums to be inadvertently prepaid for a future coverage month to which the employee is not entitled. When such overpayments occur, appropriate steps must be taken to recover the employee and/or agency refund. However, it may be possible to avoid this scenario through careful timing of when the separation PAR is processed. Specifically, the agency should act upon and complete the PAR no later than the cutoff day for the first biweekly payroll period that produces a warrant for a coverage month in which the employee is no longer eligible for a contribution.



For example, if the employee’s last day paid is December 29 (the last workday of that month), the last coverage month for which he/she is entitled to coverage as an active employee (with the corresponding State contribution) is January. The premium payment due for January will be split between the two December warrants. Therefore, to prevent deductions from any of the January warrants (which he/she will receive as payment for leftover workdays in December), the agency will have to act upon and complete the separation PAR no later than the cutoff date for the first biweekly period that produces a January warrant. Timely PAR approval will avoid a premium overpayment for February coverage. By reviewing the payroll calendar each month, it is possible to anticipate these scenarios and take appropriate steps. On the other hand, if the agency is unable to process the separation PAR prior to the appropriate payroll cutoff date, the agency can access the People First “One-Time Pay Deductions” screen to cancel the employee’s health insurance premiums and state life insurance contribution for that pay period. To use this option, the agency simply selects the employee in the “My Direct Reports” page, selects “One-Time Pay Deductions”, then creates a record as follows: 1. Select “New” 2. Enter 3109 (health insurance) or 3119 (life insurance) in the “Type” Field 3. Enter 0.00 in the Number Field 4. Select “Multiple” in the Unit Field 5. Select the appropriate pay period in the “Date” drop down box 6. Select “Save” to complete the record Note: Once a separation PAR is fully acted upon and completed (and the employee’s separation date has passed) the employee experiences a temporary loss of access to People First before an overnight run that transitions the employee from active to retiree status.

□ TRIGGERING THE RETIREE “INSURANCE” PACKET

Once a separation PAR for Pension Plan members is fully acted upon and completed (using the “Retirement” Reason Type), People First will automatically generate a retiree insurance retirement package that will be mailed to the retiree’s address saved in People First. The completed separation PAR for IP members must use the “Other” Reason Type and will generate a COBRA package. IP members may need to enroll in COBRA to bridge the coverage gap: once they take a distribution and meet normal retirement requirements, People First will mail a retiree insurance retirement package and IP members can then enroll in the health insurance as a retiree. Note: This package will be generated and mailed even if the employee has already completed the retirement paperwork in advance. Therefore, if the appropriate benefit elections have already been made by the employee, then he/she may be advised to disregard the System-generated package.

□ TRIGGERING TRANSITION FROM EMPLOYEE TO RETIREE COVERAGE

The employee must submit completed paperwork or call the Service Center to continue state group insurance coverage as a retiree. Upon receipt of the retiree’s forms or phone call, the Service Center will check to see if the PAR has been acted upon/completed. If so, the Pension Plan employee’s retiree elections will be processed immediately. However, if the



PAR has not been completed, the forms and/or further action will be maintained in a pending status for five workdays until the PAR is acted upon. If the PAR is not completed within five workdays, the Service Center will contact the retiree and notify him/her to resubmit paperwork upon completion of the PAR. IP members will be considered retired when People First receives notification from the IP administrator that the first distribution has been made. IP members may wish to notify People First when they receive a distribution.

□ TRIGGERING THE INCLUSION OF THE EMPLOYEE ON THE FILE TO THE DIVISION OF

RETIREMENT (FOR DEDUCTION OF RETIREE PREMIUMS FROM THE MONTHLY RETIREMENT CHECK)

Because IP retirees receive retirement benefits from their respective plan provider(s) and not the DOR, they may not participate in payroll deduction of retiree insurance premiums. It will be necessary for such employees to directly pay their monthly premiums to the Service Center. The Service Center will advise these retirees of their monthly deadline and provide payment coupons. For Pension Plan retirees, if the amount of their monthly pension is adequate to cover their premium costs, they can call People First to have payroll deductions taken from their retirement benefit. Prior to calling People First, the former employee must be coded as a retiree in People First and their data must have been transmitted to the DOR. Currently, the rules of the state group insurance program do not allow deductions to start sooner than the second month of retiree coverage. (The former employee will have already paid for the first month of retiree coverage by personal check or money order in conjunction with having initiated the retiree enrollment process.)

□ ADDRESS UPDATES

It is important to ensure that the employee’s correct/updated home address is in People First, to facilitate delivery of the appropriate insurance package and the last W-2 (annual wage and tax statement sent at the end of the calendar year to employees who receive a paper W-2). HR office staff with the “A", “H”, and "X" security roles have the ability to update terminated employees home addresses in the system. Employees have 30 days from their last date employed to update their home address in the system.

□ CERTIFICATION OF TERMINATION FROM DROP

In anticipation of a DROP participant terminating employment from DROP and, by extension, the agency, a DP-TERM Form must be completed, signed by the HR office, and submitted to the DOR. The appropriate prepopulated version of the form is not available on the Internet. If the employee works until the original DROP termination date (the end date entered in People First, pursuant to the DP-ELE Form, Notice of Election to Participate in DROP and Resignation of Employment), the DOR will automatically mail it to the employee approximately 90 days prior to the last day of employment along with a DP-PAYT – Selected Payout Method form. However, if the employee will be terminating earlier than originally planned, the employee or the HR office should notify the DROP Termination Unit as soon as possible by telephone at 850-487-4856 or email [email protected].



□ PROCESSING TERMINAL LEAVE PAYMENTS

Terminal leave payments should be processed through People First whenever possible. In cases where this is not possible (e.g., special compensatory leave in excess of 240 hours or payments made into deferred compensation), the payment can be processed through the On-Demand System of the State Payroll System. If a retiree chooses to continue an MRA, the deduction should take place from this payment using the On-Demand System.

□ TERMINAL LEAVE PAYMENTS TO DEFERRED COMPENSATION

If an employee has elected to invest their terminal leave payments in the Deferred Compensation Plan, the HR office should ask the employee for a copy of the Deferral from Special Supplemental Pay Form that the employee receives from his/her investment provider. When processing these terminal leave payments through the On-Demand System, the agency should use the appropriate code to indicate that it is a tax deferred transaction. Bear in mind, the Bureau of State Payrolls has to receive additional documentation directly from the Deferred Compensation Office before these types of payments are actually processed.

□ COMPLETION OF FINANCIAL DISCLOSURE FORMS

Employees who are required to file an annual Financial Disclosure Statement with the Ethics Commission must file a Final Statement of Financial Interests for the current year within 60 days after their employment terminates. Refer employees to www.ethics.state.fl.us for forms and filing instructions.

□ COMPLIANCE WITH FRS REEMPLOYMENT LAWS

FRS retirees (both Pension and IP) should be aware of the FRS laws that restrict re-employment with FRS covered employers during certain defined periods. As an FRS employer, agencies also need to understand the mutual penalties of hiring an FRS retiree who is not yet eligible for reemployment (see “Reemployment of Florida Retirement System Retirees in the State Personnel System” program guideline).

DMS/HRM 5/9/14 Originally Issued 10/15/08

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RETIREMENT CHECKLIST FOR HR OFFICES - Florida · PDF fileRETIREMENT CHECKLIST FOR HR OFFICES ... available to guide the employee through the ... office ensure that all timesheets have