If you elect to withdraw your retirement contributions, your VCERA membership immediately ends, as does your right to apply for a service, disability, deferred or reciprocal retirement. Therefore, please carefully consider all your options before deciding to withdraw your funds.
You can either refund or roll over your account balance into a qualified plan. Refundable contributions include the amounts you paid into VCERA, any employer-paid portion of employee contributions (if applicable), and the semiannual interest credited on those amounts.
Taxes
VCERA is required to withhold 20% of the taxable portion of any lump-sum distribution greater than $200 for federal tax purposes. The withholding will not apply if you roll over the taxable portion of the distribution to an IRA or qualified employer retirement plan willing to accept a rollover. For more information, download VCERA’s Special Tax Notice.
Disposition Form
To process your withdrawal request, you (and your spouse, if applicable) must sign a Disposition of Retirement Contributions Form and return it to VCERA before a refund of contributions will be issued. The disposition form is available in the VCERA office, but it will also be mailed to you within a few weeks of terminating employment.
If you do not make a written election on the form, you will be placed automatically in a deferred membership status and your contributions will remain on deposit with VCERA. However, you may withdraw your funds at any time by completing a disposition form.
The foregoing is not intended to be tax advice. Please consult a qualified tax professional for more information prior to requesting a withdrawal of your VCERA contributions.
On October 12, 2020, the VCERA Board of Retirement will be considering a matter of general interest and importance to VCERA members regarding the impact of the California Supreme Court Alameda decision on VCERA. You may have received an email containing two letters from the County on this topic.
On September 28th, the VCERA Board Chair appointed an ad hoc committee to address potential litigation over VCERA’s implementation of Alameda. That committee, as well as VCERA staff and fiduciary counsel will be meeting with the County and the unions and their respective counsels on Thursday, October 8th.
VCERA’s fiduciary counsel sent a letterto the counsels participating in the October 8th meeting, which addresses the various issues and objections raised by both the County and employee groups and their counsels in regard to VCERA’s proposed implementation of the Alameda ruling. We provide this letter to help answer questions you may have.
We recognize the impact this ruling and its implementation has on the VCERA membership, and we look forward to discussing these important issues with representatives of the County and employee groups. We welcome your virtual attendance at the scheduled public meeting of the Board of Retirement on October 12th, the agenda for which will be posted on the VCERA website at www.vcera.org.
On September 29, 2022, Governor Newsom vetoed Assembly Bill 826, a bill sponsored by SEIU and the County of Ventura. Had it passed, AB 826 would have allowed, under specific conditions, Legacy members’ compensation for calculating their retirement benefits (“compensation earnable) to include a larger portion of their flexible benefit credit (the amount the employer credits toward medical and other tax qualified benefits for its employees each pay period.) This benefit has been referred to as “cafeteria plan allowance” or other similar terms, but in Ventura County, it is most frequently called “flex credit”.
Because AB 826 did not become law, the portion of flex credit that cannot be received in cash may not be included in Legacy members’ compensation for retirement purposes. NOTE: For PEPRA members (those who established membership after January 1, 2013), no portion of flex credit may be pensionable so the bill would have had no effect on PEPRA members.
AB 826 was originally introduced in the 2021 legislative session, and was amended to apply only to Ventura County, but went “inactive” for the remainder of that session. The bill was amended in the 2022 session to allow the non-cashable portion of flex credit to be pensionable for Legacy members who retired prior to 2026.
Background: The Alameda Decision The veto of AB 826 was the latest in a series of events following the 2020 landmark California Supreme Court Decision, commonly referred to as the Alameda Decision. While generally Alameda clarified the pensionability of pay items such as standby pay, termination pay and certain annual leave redemptions, it also addressed in-kind benefits not payable in cash directly to the member. The Supreme Court in Alameda ruled that retirement boards do not have, and never had, the discretion to include “in-kind benefits” (i.e., cannot be received in cash directly by a member) because they do not meet the definition of “compensation.”
So while the Alameda applied to public pension systems across the state, in Ventura County, the exclusion of in-kind benefits not receivable in cash had a larger impact because Ventura County’s full flexible benefit allowance had been treated as pensionable.
Flex credit is the annual dollar amount contributed by the County to the cafeteria/flexible benefits plan, and credited toward the medical premium deductions that correspond with the employee’s medical and qualified benefit choices. For most employees, this credit does not cover the cost of their premiums, though for some it may. If the flex credit amount exceeds the amount of deducted premium or qualified benefit cost, the employee receives the balance in cash. For employees who opt out of medical insurance altogether, such as when they are already covered on a spouse’s policy, they still cannot receive the entire flex credit amount in cash; the County mandates that an “opt out” fee be deducted from the employee’s flex credit so only the remaining balance is received in cash. The maximum any member could receive in cash is the “employee-only” flex credit minus the lessor of the opt out fee or the lowest priced healthcare plan.
To illustrate, below shows the maximum amount of flex credit that members covered under the County’s Management Resolution were/are provided, and what portion may be received in cash. (Amounts may vary based on bargaining unit.)
YEAR
Flex CreditAllowance
Opt-Out Fee(Non-cashable portion)
CashablePortion
2020
$447
$300.09
$146.91
2021
$472
$333.95
$138.05
2022
$497
$334.75
$162.25
Put simply, had AB 826 passed, it would have allowed VCERA Legacy members who retired on or before December 31, 2025, to include the entire flex credit allowance amount in their compensation used to calculate retirement benefits. So for 2022, in addition to the already-includable $162.25 portion, they would also have included the $334.75 portion. But given the veto of AB 826, only the cashable portion of flex credit is includable for Legacy members.
Next Steps Though the Alameda was issued in July 2020, the VCERA Board of Retirement has delayed excluding the non-cashable portion of flex credit for Legacy members, awaiting the outcome of AB 826. Now that the veto has occurred, the Board of Retirement will turn its attention back to implementation of that exclusion.
At its October 24, 2022, business meeting, the VCERA Board of Retirement voted 4-3 to delay the exclusion of the non-cashable portion of flex credit from compensation earnable for Legacy members, and to revisit the item at its first Business meeting in April of 2023.
On April 10, 2023, VCERA mailed a letter to its entire membership regarding the Alameda Decision’s anticipated impact on different categories of members. The correspondence also summarized the court ruling and notified members about the Board of Retirement’s meeting of April 17, 2023, where the Board was presented with a proposed Resolution to implement the “Alameda Exclusions.” The Board also considered a proposed modification to its original October 12, 2020, Resolution that addressed the “PEPRA Exclusions.” Both Resolutions were approved by the Board of Retirement at its April 17, 2023, meeting.
Pay codes are used by employers to identify and classify types of pay remitted to employees. Some types of pay are includable in retirement earnings,* as determined by CERL and the Board of Retirement, and some are not. In the Alameda Decision, the California Supreme Court clarified for county retirement systems which categories of pay are excluded from a member’s retirement earnings.
The attachments below contain charts reflecting the pensionability of your employer’s pay codes before and after the Alameda Decision:
The two files labeled “Impacted Pay Codes” list the pay types that were previously included in retirement earnings but that are now (i.e., post-Alameda) included to a limited degree or excluded altogether.
The two files labeled “All Other Pay Codes” list pay items that, in general, did not see a change in their pensionability due to the Alameda Decision.**
Because the charts are categorized by membership type, and a majority of the members impacted by the Alameda Decision are Legacy members, it is important to first identify yourself as a Legacy or PEPRA member. If you have questions about a particular pay code, please contact your Human Resources or Payroll representative. If you have questions about the pensionability of a specific pay code that are not answered by these charts, please contact VCERA.
(The “COV” files apply to employees of the County of Ventura, Ventura County Superior Court, Ventura Air Pollution Control District, and VCERA.)
* Retirement earnings are known as “pensionable compensation” for PEPRA members and as “compensation earnable” for Legacy members.
** However, a portion of the pay codes in these lists may not be pensionable if they correspond to payments for services rendered outside of normal working hours (also referred to as “situational pay codes”).
On April 17, 2023, the VCERA Board of Retirement adopted two Resolutions regarding the Alameda Decision, each affecting different groups of VCERA members.
Some members are not affected at all. For example, those who retired from VCERA prior to January 1, 2013, will not see any change in their retirement benefits as a result of the Alameda Decision.
Generally speaking, members who joined VCERA prior to January 1, 2013 are “Legacy” members, and those who joined on or after January 1, 2013 are “PEPRA” members. Nearly all of the changes required by Alameda only impact Legacy members. (A limited group of PEPRA members may be impacted if they received payment for services rendered outside of normal working hours.)
PEPRA Exclusions
Alameda Exclusions
Payments for 1) services rendered outside of normal working hours, such as standby pay, call-back pay and shift differentials on overtime; and 2) leave redemptions (vacation buydowns) in excess of what is both earned and payable in each 12-month period.
In-kind benefits not paid in cash that the employee is not able to elect to receive directly in cash, such as 1) leave donations and 2) flex credits in excess of amounts that the employee can receive in unrestricted cash.
Resolution 1 – The “Alameda Exclusions Resolution”
The first Resolution implemented Alameda Exclusions, which are in-kind, non-cashable benefits, such as: 1) leave donations and 2) flex credits in excess of amounts that the employee can receive in unrestricted cash. The “Alameda Exclusions Resolution” affects members who retired, or will retire, on or after July 30, 2020 (i.e., the date of the Alameda Decision) and earned any of the Alameda Exclusion pay items back to the beginning of their VCERA membership. All affected members (retired, active and deferred) with those pay items have overpaid retirement contributions to VCERA through payroll on those items.
Active and deferred members will receive refunds of any overpaid contributions, with an additional 7.9% annual rate interest, compounded, with the option to receive the refunds as either direct payments or rollovers, where applicable.
Retired members who retired on or after July 30, 2020, have been overpaid monthly retirement benefits if non-pensionable earnings were included in their Final Average Compensation (FAC). The Resolution states that, if the total of the monthly benefits that VCERA overpaid such retirees* exceeds the total of the retirement contributions* those retirees paid to VCERA before retirement, then VCERA will not recoup the net overpaid retirement benefits from retirees. Conversely, if the total of the overpaid retirement contributions* exceeds the total amount of overpaid retirement benefits,* the net difference will be refunded to the retiree.
(*with 7.9% annual compound interest applied)
Resolution 2 – The “PEPRA Exclusions Resolution”
The second Resolution is a supplement and modification to a Resolution that was adopted by the Board on October 12, 2020. The original Resolution applied to both Alameda and PEPRA Exclusions. At the time of adoption, the Board deferred action on paragraphs 3, 6, and 9 of that Resolution in regard to the in-kind, non-cashable portion of flex credits. The flex credits are now addressed in the new Alameda Exclusions Resolution adopted on April 17, 2023.
The supplemental “PEPRA Exclusions Resolution” affects members who retired on or after January 1, 2013, (i.e., the effective date of PEPRA) and who also earned and contributed on any pay items that are PEPRA Exclusions back to January 1, 2013. PEPRA Exclusions include:
Services rendered outside of normal working hours, such as standby pay, call-back pay and shift differentials on overtime; and
Leave redemptions (vacation buydowns) in excess of what is both earned and payable in each 12-month period.
Active and deferred members will receive refunds of any overpaid contributions, with an additional 7.9% annual rate interest, compounded, with the option to receive those refunds as either direct payments or rollovers where applicable.
Retired members who retired on or after January 1, 2013, have been overpaid monthly retirement benefits if non-pensionable earnings were included in their Final Average Compensation (FAC). The supplemental Resolution states that, if the total of the monthly benefits that VCERA overpaid such retirees* exceeds the total of the retirement contributions* those retirees paid to VCERA on such non-pensionable earnings from January 1, 2013, forward, VCERA will not recoup net overpaid retirement benefits from retirees. Conversely, if the total of the overpaid retirement contributions* exceeds the total amount of overpaid monthly retirement benefits,* the net difference will be refunded to the retiree.
(*with 7.9% annual compound interest applied)
Alameda Implementation Plan
To carry out the Board’s direction on these matters, VCERA will develop a comprehensive Alameda Implementation Plan that will be shared with the Board, stakeholders, and members in the near future.
Affected members will be contacted with more specific individual information as soon as administratively possible after those calculations are performed. They will also be notified of their calculated amounts, and potential options for ways to receive any funds due to them, prior to VCERA making any future benefit adjustments or issuing any refunds. Affected members will also have an opportunity to administratively appeal any claimed errors with respect to such calculations.
At the upcoming March 27, 2023, VCERA Board of Retirement meeting, at 10:00 a.m. Time Certain, the Board will be reviewing a proposed Resolution to implement the exclusion of in-kind benefits per the California Supreme Court’s July 30, 2020, ruling in ALAMEDA COUNTY DEPUTY SHERIFF’S ASSN. v. ALAMEDA COUNTY EMPLOYEES’ RETIREMENT ASSN. The Resolution defines what portion of allowances received under the County’s flexible benefits program may be included in compensation earnable for “Legacy” members (hired before January 1, 2013) if the Resolution is later adopted at the April 17, 2023, meeting.
Historically, for each bargaining unit (i.e. union), the County has provided a Flexible Credit Allowance to all employees in each unit, and deducted an Opt-Out Fee for those employees who chose to opt out of the County-provided medical coverage. More recently (starting in December 2022), some of the units adopted a new Opt-Out Allowance structure. Under this new structure, employees who opt out of health benefits do not receive a Flexible Credit Allowance nor are they charged an Opt-Out Fee; instead they receive an Opt-Out Allowance. The Resolution addresses what portion is pensionable under each of these structures.
These changes would be effective for any Legacy member who retires on or after July 30, 2020.
Stakeholders and members are encouraged to listen in and/or review the materials linked here for a preview of the history and anticipated discussion. VCERA’s fiduciary counsel will be present to review the Resolution in detail with the Board of retirement.
The advance agenda item materials:
Review and Discussion of Proposed Resolution to Implement Changes to Compensation Earnable Resolution in Compliance with the California Supreme Court Decision, Alameda County Sheriff’s Assoc. Et Al., v. Alameda County Employees’ Retirement Assn., Et Al (2020) 9 Cal.5th 1032 (“Alameda”) Following Governor Newsom Veto of Assembly Bill 826, in Advance of Anticipated Action on April 17, 2023.
At the March 27, 2023, Board of Retirement meeting, the Board reviewed the pending proposed Resolution Regarding Correction of Pensionability of Benefits under County of Ventura’s Flexible Benefits Program (“Flex Credit Resolution”) in advance of its formal consideration on April 17, 2023. (Links to the materials reviewed by the Board are available below.) The Resolution is to bring VCERA into compliance with the Alameda Decision (“Alameda”), which was issued by the California Supreme Court on July 30, 2020, regarding the pensionability of in-kind benefits that cannot be received in cash. (The Board of Retirement previously adopted a Resolution on October 12, 2020, to exclude the other areas addressed by Alameda, such as stand-by, callback, and other payments for service outside normal working hours.)
If adopted, the Flex Credit Resolution will exclude the non-cashable portion of the County’s Flexible Benefit Allowance from compensation earnable for Legacy members*. The Resolution addresses the pensionability of the flexible benefit credit for both the historical structure and the new structure recently adopted by the County of Ventura.
The PDFs below were developed to assist the Board and VCERA members to better understand the potential impact of this exclusion, and how members can estimate the calculation difference for themselves.
VCERA staff is working to expand communication efforts to both active and retired members in the coming weeks to promote better understanding of the Alameda Decision and its impact.
* General members in Tier 1 and Tier 2 and Safety members in Tier 1 who joined VCERA prior to January 1, 2013 or who were eligible for a Legacy plan due to reciprocity.
It has come to VCERA’s attention that the Ventura County Deputy Sheriffs’ Association (VCDSA) recently released a pension calculator application to its members. VCERA disclaims the accuracy of this pension calculator, as none of the calculations generated by this pension calculator have been tested, reviewed or verified by VCERA. An estimate produced by the VCDSA or any other pension calculator does not create any right to receive benefits under VCERA.
For an official retirement benefit estimate, please complete and submit an official request form to VCERA.
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.
