H.B. 194: The 401(k) Match and Program III Sick Leave
2014 Session – H.B. 194:
- Creates a “New” 401(k) matching benefit effective January 4, 2014
- Ends the accrual of sick leave as a post-retirement medical (PRM) benefit (program III)
2015 Session – H.B. 38:
- Allows a state employee to make the matching deposit into a deemed IRA, 457 or 401(k) URS savings plan effective May 12, 2015.
401(k) Match Program FAQ’s
1. How do I know if I am eligible for the 401(k) match?
Generally, you are eligible if you are already receiving retirement benefits and are not an employee who is reemployed after retirement or an employee who does not accrue leave that carries over from one year to the next. Additionally, you must be making your own contribution to a 401k, 457, Traditional IRA or Roth IRA, sponsored through Utah Retirement Systems (URS) to receive the match.
2. Does this affect my Tier I and Tier II Retirement plans?
It does not change Tier I or Tier II Retirement benefits. The 401(k) match is in addition to Tier I and II retirement benefits that you enjoy. The post-retirement medical benefit that is ending is a separate benefit from your Tier I or Tier II retirement plan (see Program III sick leave question FAQ’s below).
3. How much will be matched?
The Governor’s Office recommended that the legislature approve the 401(k) matching rate to be funded at $26 bi-weekly. This rate is effective May 14, 2015 and through fiscal year 2016.
The legislature determined the maximum amount to be matched on an annual basis. Written in the bill language, H.B. 8 limits the state match amount at $26 per pay period. The most the state will match in a year will be $676.
The legislature funded the full $26 match per pay period, or $676 for the year, an employee who contributes $676 or more during that year will receive the full $676 match, but no more. An employee who contributes $300 for the year would only receive a $300 match for the year within 401(k) regulations.
4. Is there a minimum contribution for the 401(k) match?
Yes. You could contribute as little as $1 per pay period to your 401(k), but you would only receive a matching contribution of $1 per pay period.
5. Is there a maximum I can have in my 401(k), 457 or IRA?
Yes. IRS rules and regulations state the annual contribution limit is $18,000 for the 401(k) and 457 plans. If you are age 50 or older, there is a catch-up allowance of an additional $6,000 (These rates may change every year). For the IRA’s the limit is $5,500 with the catch-up allowance of an additional $1,000.
6. Is the 401(k) match in addition to the 1.5% contribution that is paid to employees in the Retirement Tier I program?
Yes. Employees will continue to receive the 1.5% contribution, which does not require a contribution by the employee. This is identified on the pay statement as “401(k) ER Contribution” under “State Paid Benefits.”
7. How will the 401(k) Match Contribution show up on the pay statement?
The 401(k) match will be identified on the pay statement as “401(k) ER Match”, under “State Paid Benefits.”
8. Is there a certain amount of time that I must work to be able to withdraw 401(k) matching contributions?
No. The employer and the employee 401(k) matching contributions vest immediately upon deposit and can be withdrawn at any time, subject to Internal Revenue Code regulations on the withdrawal. This is different than the Tier II 401(k) contributions which have a four year vesting requirement before withdrawal.
9. I am in the Tier II retirement plan. Will I be eligible for the 401(k) match?
Yes, as long as you are a benefited employee otherwise eligible for the match (see question #1) and are contributing to a Utah Retirement Systems (URS) 401(k), 457, or IRA, your amount will be matched.
10. I am a Public Safety Employee in Tier I and do not receive the employer‐
paid 401(k) contribution. Can I participate in the 401(k) matching program?
Yes. As long as you are a benefited employee otherwise eligible for the match (see question #1) and are contributing to a URS 401(k), 457, or IRA plan, you can participate in the matching program.
11. How can I learn more about enrolling in a 401(k)?
- To make sure you take advantage of the match, log onto your URS account at www.urs.org to defer money into a 401(k), 457, Traditional or Roth IRA.
- If you have never logged in, you will need your member account number to start. Contact URS at 801 366-7720 if you do not have this number and they will help you through the process.
- Once you have logged in click on the access button for the 401(k), 457 Traditional or Roth IRA. From there choose the option “Change Contributions” to contribute at least $26 into your 401(k), 457 or IRA account.
Program III Sick Leave Benefit FAQ’s
12. What is Program III Sick Leave?
Beginning January 4, 2014, employees will begin to accrue sick leave under a new program; Program III. Program III sick leave will accrue at four (4) hours per pay period, will roll over from year to year, and will have no cap on accrual. Program III sick leave will have no value at retirement and shall be used as sick leave only. When you separate your employment with the State of Utah for any reason, Program III sick leave balances will lapse.
13. What is the difference between Program I (Pre 2006 Sick), Program II (Pre 2014 Sick) and Program III (Sick) sick leave?
Provided below is a brief explanation of the difference between the various sick leave programs. It does not include all of the details behind the programs, but is intended to provide you with an overview as you read through the additional FAQ’s in this document.
Program I (Pre 2006 Sick) – With this program, sick leave hours accrued by employees were capped on January 1, 2006 and identified as “Pre 2006 Sick” on your pay statement. Upon retirement, 25% of the sick leave balance will be contributed to the employee’s 401(k) plan. The remaining 75% can be used to purchase the State’s portion of medical insurance at the rate of eight hours for one month coverage at the same coverage the retiree had upon retirement if the employee is under the age of 65. Employees are still responsible for their portion of the premium. Once the retiree reaches age 65, coverage for a younger spouse is available by using 8 hours of sick or converted sick leave until the spouse reaches age 65. Dependent coverage is not available once the retiree reaches age 65.
Program II (Pre 2014 Sick) – With this program, sick leave has been accruing since January 1, 2006 and is identified as “Pre 2014 Sick” after January 4, 2014 on your pay statement. Upon retirement 25% of the sick leave balance is contributed to the employee’s 401(k) plan. The other 75% is contributed pre-tax to a Health Reimbursement Account (HRA) to be used for out-of-pocket medical expenses. The amount contributed to the HRA is calculated by multiplying the employee’s final rate of pay or the average rate of pay of state employees who retired in the previous year, whichever is greater, by the number of hours of sick leave. The accrual of these hours will end January 3, 2014.
Program III (Sick) – Beginning January 4, 2014, employees will begin accruing hours in Program III (Sick). Unlike Program I (Pre 2006 Sick) and Program II (Pre 2014 Sick) hours, Program III (Sick) sick leave hours can only be used as sick leave. These hours have no value toward post-retirement benefits and will lapse when an employee leaves employment for any reason. In Program III (Sick), employees will receive the same leave accrual rate of 4 hours per pay period. There will be no cap on the accrual of this sick leave. It will roll over from year to year. Program III will be identified as “Sick” on the pay statement after January 4, 2014.
14. What happens to sick leave if I separate (except retirement) employment with the State of Utah?
Unless an employee retires from the State of Utah, an employee separating from State service forfeit’s any unused sick leave without compensation. Employees who rehire with the State within one year of separation will have forfeited sick leave reinstated as Program III sick leave. (DHRM rule R477-7-4(8)(b). IF separation was due to a RIF, then hours will be reinstated to programs accrued prior to the RIF. (DHRM rule R477-7-4(8)(a))
15. What will happen to my existing Program II (Pre 2014 Sick) sick leave balances?
After January 3, 2014, existing sick leave balances under Program II (Pre 2014 Sick) will be frozen. There will be no additional accrual of sick leave into Program II (Pre 2014 Sick). The balances that are in place on January 4, 2014 will still be available for use as sick leave and will be honored at retirement as a post-retirement medical benefit.
16. Will the rules regarding my use of sick leave change?
No. Management may grant sick leave for health/dental care, maternity, or absence from duty because of illness, injury or disability. Please refer to DHRM rule R477-7-4.
17. How will my sick leave show up on my bi-weekly pay statement?
Program II Sick leave balances that will be ending on January 3, 2014 will show up as “Pre 2014 Sick.” New Program III sick leave balances will show up as “Sick” under the leave balances section of your pay statement.
18. How shall I code sick leave on my timesheet after January 3, 2014?
Entering sick leave on your timesheet will work in a similar way to the current process for recording sick leave. Sick leave codes S, SD, SF, and SI will be available for you to use when the need arises. Program III (Sick) sick leave will be the default when using one of these codes and will be automatically deducted.
If you have a need to use either Program I (Pre 2006 Sick) or Program II (Pre 2014 Sick) sick leave, the Division of Finance requires you to fill out a form to make unused sick leave available for paid absences. This form will release those Program I (Pre 2006 Sick) and II (Pre 2014 Sick) sick leave balances for use. The form will have check boxes to designate the program of sick leave that you would like to use, and the amount of sick leave you would like to release.
The form as required by the Division of Finance should be faxed or e-mailed to ERIC payroll (ERICpayroll@utah.gov or 385-465-6054 or to your agency payroll staff if ERIC does not process your agency’s payroll. They will then move sick leave hours in the payroll system from your Program I (Pre 2006 Sick) or Program II (Pre 2014 Sick) accounts. This form is required because Program I (Pre 2006 Sick) and II (Pre 2014 Sick) sick leave provide benefits upon retirement and are protected from unintentional use.
19. Will there be a Program III Converted Sick Leave?
No, there will be no Program III Converted Sick Leave. The Converted Sick Leave program ended on January 3, 2014.
20. Who can I call if I have questions regarding the new Program III sick leave benefit and the 401(k) match?
If you have questions about this information or need additional information, please contact the Employee Resource Information Center (ERIC) at (801) 957-9390 or click here to submit your question electronically to a live Human Resource representative.