Form 1099-Rs reporting the 2022 retirement earnings of retirees and other VCERA payees will be mailed by January 31, 2022. The 1099-Rs are available in Member Portal accounts. Members are encouraged to consult a qualified tax preparer with questions about their 2022 taxable income.
For information regarding income tax, please click here.
The Internal Revenue Service (IRS) revised the federal tax withholding form W-4P in 2022. VCERA had a temporary grace period but will begin using the revised 2023 version of Form W-4P on January 1, 2023.
If you plan to change your tax withholding at the end of 2022 or beginning of 2023, you will need to use the right form as described below:
Refer to IRS Publication 15-T available at www.irs.gov for more information about the redesigned federal tax withholding form. You may also obtain a copy of Internal Revenue Service Publication 575 (“Pension and Annuity Income”) or visit www.irs.gov for more information on the taxation of your retirement benefit.
VCERA cannot provide you with tax advice regarding the taxation of your retirement benefit or federal or state tax withholding. If you have questions, please consult with a professional tax advisor.
The 2023 cost-of-living adjustment (COLA) for eligible retirees, beneficiaries and other payees with a retirement date of April 1, 2023 or earlier will be reflected in retirement benefit payments on April 28, 2023:
COLA increases under Board of Retirement Regulation are automatic under the terms of the Regulation and applicable labor agreement, and require no additional Board approval.
The COLA awarded to Safety retirees and General Tier 1 retirees is based on the year-over-year change (as of December) in the Bureau of Labor Statistics’ Consumer Price Index (CPI) for the Los Angeles-Long Beach-Anaheim region. If the CPI change, after being rounded to the nearest half percent, is more than the 3.0% COLA maximum, the excess will be “banked” and applied to a COLA in a future year when the annual CPI change is less than 3.0%. The regional CPI change from December 2021 to December 2022 was 5.0%.
The COLA awarded to General Tier 2 and Tier 8 retirees previously represented by SEIU is a fixed 2.0%. This percentage is not subject to CPI changes and only applies to “SEIU service” rendered on or after March 16, 2003 (for retirements on or after March 13, 2005).
If you would like to learn more about VCERA’s annual COLAs, click here or contact VCERA.
On April 19, 2021, the Board of Retirement approved to ratify staff determination on pay codes impacted by the October 12, 2020, Resolution regarding Alameda implementation for compensation earnable and pensionable compensation.
The attached list of pay codes reflects those used for the pay items that are not pensionable under the Resolution’s criteria.
On July 26, 2021, the VCERA Board of Retirement adopted a Resolution regarding the flexible credit benefit amount that may be included in compensation earnable for “Legacy” members (hired before January 1, 2013).
Prior to the 2020 Plan Year, the County of Ventura’s flex credit benefit was provided in the same amount to all eligible employees within each bargaining unit. However, beginning January 1, 2020, employees In many bargaining groups were offered a “three-tiered” flex credit based on the number of dependents they were covering.
SEIU Example
Calendar Year | Flex Credit ( EE Only) | Flex Credit ( EE + 1) | Flex Credit (EE + Family) |
|---|---|---|---|
| 2019 | $447 | ||
| 2020 | $447 | $522 | $547 |
| 2021 | $472 | $572 | $642 |
The July 26 Resolution limits the portion of the flex benefit amount that is pensionable for Legacy members to the employee-only amount to ensure that all members in the same group or class within each bargaining unit have the same amount reported as compensation earnable (and will pay the same amount of retirement contributions), regardless of their personal circumstances. As a reminder, none of the flex credit is pensionable for PEPRA members.
While the tiered approach to flex credit began in 2020, action to limit the pensionable amount to the employee-only tier was delayed by VCERA following the landmark California Supreme Court “Alameda Decision.” This ruling addressed the pensionability of several categories of compensation, one of which was in-kind benefits such as flex credit. The Alameda ruling said that a retirement board does not have the discretion to include in compensation earnable in-kind benefits, which are benefits that cannot be received in cash. In October of 2020, the Board of Retirement adopted a Resolution to implement Alameda, opting to defer any exclusion of flex credit (paragraphs 3, 6 & 9 of the Resolution) and to pursue a declaratory relief action in Court to determine if exclusion of the non-cashable portion of flex credit was mandatory. The County demurred on the flex credit cause of action, asserting that there was no justiciable controversy because the Board had not taken action to exclude. The Court sustained that demurrer without leave to amend.
While the declaratory relief filing was progressing, both the County and the Service Employees International Union (SEIU) made efforts to pursue legislation designed to allow full inclusion of flex credit in Ventura County. An SEIU-sponsored bill, AB 826, is currently in the California legislature.
AB 826 does not address the recent unequal tiered approach of flex, so the Resolution adopted on July 26, 2021, limits the portion of that flex benefit amount that is pensionable for Legacy members to the employee-only amount to ensure that all in the same group or class within each bargaining unit receive the same amount toward their pensions, regardless of how many dependents they have elected to cover through the health care options provided in the County’s Flexible Benefit Plan. This is consistent with the underlying concept of compensation earnable, which is intended to reflect payment for work-related services.
If AB 826 does not pass, the Board will again consider the pensionability of non-cashable flex credit.
To view the July 26 Resolution, click here.
On October 12, 2020, the VCERA Board of Retirement adopted a Resolution (Redline Version and Clean version), implementing the California Supreme Court’s July 30, 2020, ruling in ALAMEDA COUNTY DEPUTY SHERIFF’S ASSN. v. ALAMEDA COUNTY EMPLOYEES’ RETIREMENT ASSN.
In Alameda, the Court addressed two types of exclusions from “compensation earnable”, the amount used to calculate legacy members’ retirement benefits.
The Resolution includes both types of exclusions. However, for the time being, the Board directed only implementation of the exclusions in the first category. The second category (dealing with flex credit) was not implemented at this time. Rather, the Board took action to seek “declaratory relief” from the courts, in coordination with various stakeholders and their counsels.
PEPRA EXCLUSIONS
Because the Board adopted the first category of exclusions, VCERA will immediately begin excluding those pay codes from compensation earnable. Members who retire or receive benefit estimates will not see those pay types reflected in their final average compensation (FAC) calculation.
ALAMEDA EXCLUSIONS (Flex Credit)
The most impactful exclusions are the ones the Board did not yet adopt; therefore, VCERA will continue to include these items in retirement benefit calculations for new retirees until further action is taken. Benefit estimates will reflect exclusion of pay components in both categories. However, because future action may exclude flex credit, and that exclusion would be retroactive for any who retired after the date of the Alameda ruling, those retirees who retired on July 30, 2020, or after would be subject to future recalculations of benefit payments and repayment of the portion of their retirement benefits attributable to flex credit. More information will be provided as it becomes available. Visit our Alameda Decision Information page for updates.
