Annual Return of CalSTRS Excess DB/DBS Employee and Employer Contributions Instructions and Overview
Annually, the California State Teachers’ Retirement System (CalSTRS) looks at all of a member’s reported compensation after the fiscal year is over. Compensation earned by a member that is greater than one year of service credit in the Defined Benefit (DB) Program is moved by CalSTRS to the Defined Benefit Supplement (DBS) Program. This action results in “excess contributions” paid by both the employer and employee because contribution rates for the DB and DBS Programs are different. www.calstrs.com/defined-benefit-supplement-program-faq
Each October, CalSTRS returns excess employee and employer contributions to the County Office for distribution to districts and their employees. CalSTRS also sends employee adjustment data that the County Office converts for posting into Escape for each district. To see the employee transactions posted for your district and to correct any errors, follow the path and instructions below:
* HR/Payroll – Employment – Additional Contrib/Deduction * Select the “List” Tab and “Open” * Choose the “Employees” Tab to see a listing of the applicable employees with a return of excess contributions. * No further action is necessary for these transactions. * The adjustment batch has been posted as part of the upload process performed by the County. * The adjustments apply to the October Regular payroll. * Select the “Errors” Tab (if no “Errors” Tab appears, there are no errors to review). * If there are employees listed in the Errors Tab it is mostly likely because the employees are no longer active in Escape. * Adjustments for this group of employees must be manually input by the district. Input data as deduction adjustments using Deduction I.D. “STRSECEE” to return the taxable income to the applicable employees. * For assistance on inputting these adjustments, please contact Sheng Xiong sxiong@sbceo.org<mailto:sxiong@sbceo.org>.
Employee deduction adjustments use monies held in the STRS Employee Trust Fund (9980) for the return of contributions.
* If your district would like a listing of the applicable employees in an Excel file, please contact Sheng Xiong at sxiong@sbceo.org<mailto:sxiong@sbceo.org>.
Employer contributions are transferred from the STRS Employer Trust Fund (9983) and placed into each district’s general fund as a lump sum.
Return of excess deductions/contributions
* See attached 2022-23 Totals – All Districts.pdf for a list of each applicable district and their respective employee and employer excess contribution refund amounts. * Refer to Journal Entry CT 24-00450 dated 10/25/2023 for Escape districts. * The account coding is 01-0000-0-0000-0000-8699-000-0000-ADJS.
* For non-Escape districts, please refer to Journal Entry CT 24-00449 dated 10/25/2023.
For questions about the return of CalSTRS excess contributions, please contact:
Sheng Xiong sxiong@sbceo.org<mailto:sxiong@sbceo.org> Myron Porter mporter@sbceo.org<mailto:mporter@sbceo.org> CalSTRS Contributions@CalSTRS.com<mailto:Contributions@CalSTRS.com>
________________________________ Overview of Excess Employee and Employer Contributions related to the DB and DBS Programs
* Annually, CalSTRS looks at all of a member’s reported compensation after the fiscal year is over. Compensation earned by a member that is greater than one year of service credit in the DB Program is moved to the DBS Program. This action results in “excess contributions” paid by both the employer and employee because the contribution rates for the DB and DBS Programs are different. * In September, CalSTRS notifies active members that have excess contributions with an online message of Retirement Progress Report in Special Messages. Members see this information while logged into their myCalSTRS account and may also select Services, then Excess Contributions to see the report. CalSTRS informs retirees with excess contributions by letter. * In October, excess employer and employee contributions for active members are returned to the County Office for distribution to employers. Employers are responsible for returning the contributions to their employees. * After the end of each quarter, any excess contributions accumulated for members who refund, retire, receive a disability benefit, or die are returned to the County Office and transferred to the employer for disbursement. * Interest is not paid on excess contributions as CalSTRS has no legal requirement or authority to pay interest on the return of excess contributions. * Returned pre-tax contributions are taxable income in the year employees receive them regardless of when the contributions were initially paid. * If there is an adjustment that reduces a member’s excess service credit from a prior year, employer or member contributions may be due back to CalSTRS. * January 2, 2001 * Moving of contributions into the DBS Program from the DB Program began. * No adjustments to contributions were necessary because the contribution rates for the DB and DBS programs were the same. * January 1, 2001 to December 31, 2010 * One-fourth of a member’s 8% DB retirement contributions were moved into the DBS program. * January 1, 2011 to present * DBS Program receives contribution funds based on: * Earnings in excess of one year of service credit. * Special limited term payments. * See CalSTRS Employer Information Circular on Creditable Compensation Regulations Effective Jan. 1, 2015 (Volume 30; Issue 5, Dec. 10, 2014). * July 1, 2014 to June 30, 2022 * Contribution rates for the DB and DBS Programs are not the same. * This occurred with the passage of AB 1469, the CalSTRS 2014 Full Funding Plan<www.calstrs.com/plan-funding> (Ctrl + Click to connect to the link to see the plan). * More information on excess contributions can be found on the CalSTRS website. Type in “excess contributions” in the search box. * The attached CalSTRS Welcome to CalSTRS booklet, Welcome to CalSTRS 2023, page 9, provides an explanation of excess contributions to new members.
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Regards,
School Business Advisory Services Team Santa Barbara County Education Office
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