Frequently Asked Questions Regarding the Retirement Litigation (3%)
UPDATED – After a five year legal fight over the 3 percent withheld from school employees’ paychecks – a fight that may not be done if the state appeals the most recent decision in the case – we know MEA members have questions about what this means for them. So, MEA has developed this frequently asked questions document to address some of those questions to the best of our ability, with the caveat that there are still many unknowns. Stay tuned here for updates as more information becomes available, and for answers to additional questions that come up.
1. What happens if you’ve retired?
If we are ultimately successful, it is MEA’s position that all members that had monies taken out of their checks under PA 75 are owed a refund, plus interest, based on the actual amount taken. Different members may have had different amounts taken based on individual circumstances such as retirement dates, leave of absences, etc. We will also advocate for a full accounting by the state in the trial court.
2. Where is the money?
As noted above, the trial court ordered the money at issue to be placed in an interest-bearing escrow account. The account has a balance of more than $550,000,000. The money is still being held in that account.
3. If the money is ultimately returned, will it be subject to taxes?
Assuming we are successful in the Michigan Supreme Court, the trial court will likely make decisions about eligibility, payment, and methodology. The IRS will likely take the position that the returned money is wages subject to taxation. More information will be provided as we know more. MEA Legal will continue to advocate for our members to receive the quickest and largest possible refund consistent with the court decisions and the law.
4. When will I get a refund?
Unknown. Since the Governor has filed an application for leave to appeal on behalf of the defendants, it will depend on the actions/decisions of the Michigan Supreme Court. If the Supreme Court does not take up the case, or we win in the Supreme Court, the case will likely be remanded back to the trial court “which shall direct the return of the subject funds, with interest, to the relevant employees.” Any disputes regarding eligibility, payment, and methodology will be decided in the trial court. MEA Legal will continue to advocate for our members to receive the quickest and largest possible refund consistent with the court decisions and the law. It is also possible that the Supreme Court could rule against us. Under that scenario, the money in escrow would likely be remitted to the MPSERS
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