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lump sum payment

LUMP SUM PAYMENT FORM CAN BE FOUND HERE.

Over the last few years, there has been legislation that changed the definition of compensation.  Generally, “compensation” means the recurring remuneration (salary or wage) paid to a member by a participating public employer.  However, in some cases lump-sum or bonus payments are now eligible compensation.  While some lump-sum or bonus payments may be permitted, lump sum payments for unused leave (ex:  vacation, holiday, sick, etc.) paid to employees who are terminating employment are never eligible compensation. 

One of the most common questions that our Reporting Unit receives involves determining if a lump-sum or bonus payment is eligible.  To help employers distinguish between eligible and ineligible lump-sum payments, we provided a summary in the chart below. To notify APERS of these payments, employers must submit the Notice of Bonus or Lump Sum Payment form to APERS with the respective monthly report. 

Lump-Sum and Bonus Chart
Employees of
Eligible
Ineligible
Clarification
State X  
  • Career Services Recognition Payments
  • Merit Increase Payments
County X  
  • Must be approved by the Quorum Court
Municipal X  
  • Must be provided for in the annual budget
Public School X  
  • Contract payouts only
Non-State   X  

 Ineligible Lump Sum Payments

While certain lump sum payments are eligible, employers may never report lump sum payments for unused leave (ex: vacation, holiday, sick, etc.) that they pay due to employees terminating employment.

Eligible Lump Sum Payments
Employers can report lump sum payments for county or municipal employees. The maximum amount of the bonus or lump sum payment that APERS can consider as compensation in the last year of an employee’s employment is limited to the lesser of:
Five percent (5%) of the current year’s salary or:
The amount of the bonus or lump sum payment the employee received during the previous year of employment.

Reporting an Eligible Lump Sum Payment
When employees receive a lump sum payment that is eligible to be reported to the system, employers and contributory employees must pay their respective contributions to APERS for the lump sum payment.  The employer must remit the contributions for the lump sum payment with the regular payroll remittance and include the payment in the earnings amount on the monthly report.

In addition, employers must advise APERS when they report a bonus or lump sum payment in an employee’s salary.  To notify APERS of these payments, employers must submit the Notice of Bonus or Lump Sum Payment form to APERS with the respective monthly report. 

LUMP SUM PAYMENT FORM CAN BE FOUND HERE.

Additional Guidelines
Listed below are additional guidelines for reporting lump sum payments for county and municipal employees.

County Employees
Enabling Legislation:          Act 616 of 2009
Type of Payment:                 A bonus or lump-sum payment under ACA 14-14-1206 (a). 

ACA 14-14-1206 (a) states that the quorum court of each county shall, by ordinance, fix the compensation of all county employees, including a bonus or lump sum payment.  In accordance with this section, an employer can report a lump sum payment if the quorum court of the county approved the payment.

Municipal Employees
Enabling Legislation:          Act 616 of 2009
Type of Payment:                 A bonus or lump-sum payment under ACA 14-42-308 (a). 

ACA 14-42-308 (a) states that the governing body of each municipality must prepare, approve, and publish a proposed budget of operational expenditures for the forthcoming year.  In accordance with this section, an employer can report a lump sum payment if the governing body of the municipality provided for the payment in its annual budget.

LUMP SUM PAYMENT FORM CAN BE FOUND HERE.