105 KAR 1:140. Contribution reporting.

      RELATES TO: KRS 16.505-16.652, 61.510-61.705, 78.510-78.852, 26 U.S.C. 401(a)(17)

      STATUTORY AUTHORITY: KRS 61.560, 61.645(9)(f), 61.675, 61.685, 78.545(24), 78.610, 78.615

      NECESSITY, FUNCTION, AND CONFORMITY: Employers participating in the Kentucky Employees Retirement System, County Employees Retirement System and State Police Retirement System are required to report creditable compensation and contributions to the retirement systems and other information that the Board of Trustees may require. 26 U.S.C. 401(a)(17) places a limit on the amount of creditable compensation on which contributions may be made. This administrative regulation sets out the reporting requirements for all participating agencies.

      Section 1. (1) Each employer shall report the creditable compensation and contributions of its employees at least once per month on the Form 3, Summary of Wages Earned, or by diskette or tape in the electronic format "KRSPAY" or other electronic format acceptable to the retirement system. Each employer who reports on diskette or tape may report on a semimonthly basis. Each employer shall report only the creditable compensation earned during the period for which the report is prepared and shall report only the employee and employer contributions on the basis of this creditable compensation.

      (2) Creditable compensation for a lump-sum bonus, severance pay, or an employer-provided payment for purchase of service credit shall be made in accordance with the provisions of KRS 16.505(8), 61.510(13), or 78.510(13). Total service shall include all service credit earned as of the date of the report or purchase.

      (3)(a) Effective July 1, 1996, the creditable compensation on which contributions are reported shall not exceed the maximum annual compensation limit contained in 26 U.S.C. 401(a)(17). The retirement system shall notify employers of the maximum annual compensation limit. Each employer shall report contributions on all creditable compensation up to the maximum annual limit. Once an employee's creditable compensation has reached the maximum annual limit, the employer shall continue to report the employee's creditable compensation but shall not report any further employer or employee contributions on the employee's creditable compensation. If excess contributions are erroneously reported, the retirement system shall refund the excess contributions to the employer for distribution to the employee after making payroll deductions in accordance with federal and state law.

      (b) A participating member whose creditable compensation has exceeded the maximum annual compensation limit contained in 26 U.S.C. 401(a)(17) in years prior to the fiscal year beginning July 1, 2002, and who has filed a notification of retirement may pay contributions for the creditable compensation over the maximum annual compensation limit for the years used to determine the member’s final compensation for purposes of retirement if the excess creditable compensation is within the maximum annual compensation limit applicable in 2002-2003. Upon receipt of employee contributions, the retirement systems shall bill the employer for the employer contributions on the excess creditable compensation and the employer shall remit the employer contributions to the retirement systems. The excess shall only be included in retirement calculations if both the employee and employer have paid their respective contributions.

      Section 2. If creditable compensation in excess of actual compensation is reported, the employer shall request a refund of the excess employer and employee contributions. The retirement system shall remit the excess employer and employee contributions to the employer in the form of checks made payable to the employer. The employer shall distribute the employee's contributions to the employee if the amount is due the employee after making payroll deductions in accordance with federal and state law.

      Section 3. If creditable compensation is reported that is less than actual creditable compensation paid to the employee by the employer, the employer shall report the deficiency by pay period to the retirement system along with the employer and employee contributions owed as a result of the deficiency. The employer may report the additional creditable compensation by letter or other form which shall include:

      (1) The Social Security number, name and gross creditable compensation of the employee by pay period.

      (2) The total employer and employee contributions required on the additional creditable compensation and the computation of both amounts.

      (3) The signature of the individual authorized by the agency to report contributions to the retirement system.

      Section 4. If an expense allowance is paid to a county official by the state, the state shall withhold the employee contributions applicable to the amount and remit it to the retirement system on behalf of the county. The county shall report the employer contributions on the Form 3-E, Expense Allowances Quarterly Report.

      Section 5. An employer may change the name or address of an employee by submitting a letter or personnel document effecting the change signed by a personnel or payroll official.

      Section 6. Each employer shall provide to the retirement system, upon request and in the form prescribed by the retirement system, information relating to all employee wages, employment status or other employment related information. Upon request, each employer shall make all relevant records related to its employees available to the retirement system during regular working hours.

      Section 7. Incorporation by Reference. (1) The following material is incorporated by reference:

      (a) "Form 3, Summary of Wages Earned, June 1991", Kentucky Retirement Systems; and

      (b) "Form 3-E, Expense Allowances Quarterly Report, July 1991", Kentucky Retirement Systems.

      (2) This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Kentucky Retirement Systems, Perimeter Park West, 1260 Louisville Road, Frankfort, Kentucky 40601-6124, Monday through Friday, 8 a.m. to 4:30 p.m. (18 Ky.R. 922; Am. 1321; eff. 11-8-91; 21 Ky.R. 1517; eff. 2-8-95; 22 Ky.R. 1871; eff. 6-6-96; 31 Ky.R. 382; 699; eff. 11-5-04.)