24) A new-hire was entered as NOT being eligible for the ORP Supplement when, in fact, he WAS eligible. How do I correct this error?
Turning the SUPL-ELIG flag to Y on the Retirement Programs Screen 104 in Personnel Maintenance will cause the payroll calculation program to make any necessary corrections since the ORP deduction is adjusted by FYTD totals. The ACCOUNTING of any state reimbursement portion, however, must be adjusted manually since changing the flag from N to Y results in the payroll calculation program over-charging the amount due from the State (the base retirement value).
Example #1: On the Retirement Screen (104) for ORP:
ORP-SUPL Flag N
FYTD-PYMT 120.00 (2000.00 x 6%)
At this point, the above totals are correct and the accounting has been done accurately - the State may pay the entire match for the employer portion.
Example #2: When the Flag is changed to Y and another month’s salary of $1000.00 is paid, then the resulting screen will look like:
ORP-SUPL Flag Y
FYTD-PYMT 255.00 (3000.00 x 8.5%)
A problem in the accounting may be present if the base portion of the employer match is paid from a source other than where the agency or system ORP supplement is paid (in this example: from state general revenue funds).
The correct way to account for the $255.00 payment is as follows:
$255.00 (FYTD Total)
-$120.00 (Previous Employer Payment)
$135.00 (Current Payroll’s Matching Portion)
As a result of normal payroll processing:
$ 95.30 is identified as being reimbursed by State Funds (6% of $135)
$ 39.70 is identified as being covered by Local Funds (2.5% of $135)
Adding these values to those from the previous payrolls, you get the following fiscal year to date balances:
$215.30 (state paid employer match)
$ 39.70 (local paid employer match)
The State should only be paying 6% of the total match, while 2.5% of the total match should come from local funds. As is, the State would be asked to reimburse a greater portion than they should, because they are responsible for only the 6% of this month’s retirement, not the additional 2.5% for the previous 2 months that had been missed. Going back to the beginning of the employee’s earnings and calculating what the employer payment should have been to that point in the year, you derive
$180.00 (6.0% of FYTD Covered Wages $3000)
$75.00 (2.5% of FYTD Covered Wages $3000)
Thus, the state has been over-charged by $35.30 as followed:
Actual payment from Gen. Rev. $215.30
Correct State payment - $180.00
Amount of overcharge to Gen. Rev. $ 35.30
A journal entry should be made to correct the accounting by moving this $35.30 from being charged to the state to being charged to the local account that pays the local employer matching.
This page was last updated on 06/11/2010 17:15:21