Q&A IPERS-covered wages: Lump-sum payments

Q.  Do I report payments for paid time off (PTO), vacation, or sick leave as IPERS-covered wages?
A.  It depends.
Include payments that replace salary for regular work hours in the employee’s IPERS-covered wages.

Example of covered wages:
An employee’s last day in the workplace was two weeks before the employee’s termination date. The employee used 80 hours of accrued vacation to continue receiving a salary and benefits during the final two weeks before termination. The 80 hours of vacation pay is IPERS-covered.

Do not include lump-sum payouts of unused PTO, vacation, or sick leave made during or at the end of employment.

Example of noncovered wages:
An employee’s last day at work was also the employee’s termination date. The last paycheck included an added amount for 80 hours of unused vacation. The payment for 80 hours of vacation is not IPERS-covered.

Q.  Should I handle compensatory time the same way I do vacation time?
A.  No. Although IPERS-covered wages include compensatory time, whether paid as time off or as a cash lump sum, the lump-sum payments over 240 hours per employee per year are not covered.

Q.  Should I report early retirement incentive payments as IPERS-covered wages?
A.  No. IPERS-covered wages do not include early retirement incentives, whether paid as a lump sum or in installments.

Q.  Is a severance payment to a terminated employee covered?
A.  No. IPERS-covered wages do not include payments for dismissal or severance from employment, whether paid as a lump sum or in installments.

Q.  Are payments for bonuses reported as IPERS-covered wages?
A.  IPERS-covered wages include bonuses, except recruitment bonuses, paid before July 1, 2008. No bonuses paid on or after July 1, 2008, are IPERS-covered wages. See the summary of 2008 law changes for more information.

Other questions?

Phone
515-281-0020 or 1-800-622-3849
7:30 a.m.–5 p.m., Monday–Friday
Ask for a member of the Employer Relations Bureau.
Mail
Iowa Public Employees’
Retirement System
P.O. Box 9117
Des Moines, IA 50306-9117
Fax
515-281-0053
Web site
www.ipers.org
E-mail
employerrelations@ipers.org