NPERS: LB1998 expands some employees’ eligibility but employers must update documentation and reporting

Nebraska Public Employees Retirement Systems (NPERS/ERS) auditors told school reporting agents in a webinar that changes under LB1998 make it easier for some non‑U.S. citizens to qualify for school retirement plans — but employers must actively review and retain documentation to enforce the rules. Caitlyn Glenn, an ERS auditor, said employers should re‑review files for employees previously marked ineligible because many cases may have become eligible as of March 19, 2024.

"As plan employers you must review all new hire and rehire documentation to determine their immigration status," Glenn said, listing accepted proofs of lawful presence such as a state‑issued driver’s license, state ID, U.S. passport or a foreign passport with U.S. visa. She added that when documentation expires employers should ask employees to provide updated documents.

Why it matters: under the new law, employers who fail to re‑evaluate and update records risk missing required enrollments and later having to correct contributions. Glenn warned that if an employee who should have been enrolled was not, employers must make adjustments so contributions and service credit records reflect the correct dates.

DACA and ineligibility: Glenn and other presenters reiterated that individuals with DACA status (recorded as code 33 in ERS records) remain ineligible for enrollment. Glenn said, "If the employee is code 33 … they are not eligible; it's still important even if they're not eligible that you keep that documentation on file to support why they were ineligible."

Termination and distribution timing: the webinar also covered a key LB1998 change that affects the 180‑day separation period that determines whether a terminated member may stop contributions and later take a distribution. NPERS staff said the separation start date is now the later of the member’s termination date or the date NPERS receives a valid distribution application, which can change whether a person must re‑establish the 180‑day period.

Kathy Mest Graham, a training specialist, highlighted an additional risk: required minimum distributions (RMDs). She said terminating regular employment can start an individual’s RMD clock even if the member continues to work as a substitute or volunteer, and urged employers and members to confirm statuses promptly to avoid losing lifetime benefits.

What employers should do: NPERS staff urged employers to (1) review previously ineligible employees for changes in status effective March 19, 2024; (2) keep copies of accepted immigration documents and update them when they expire; (3) maintain and submit non‑contributing member forms within 20 days of interruptions in contributions or upon termination; and (4) consult ERS/NPERS when uncertain about classification or whether a payment should be reported as compensation.

The NPERS presenters emphasized that the statute’s definitions drive enrollment decisions and that many borderline cases require case‑by‑case review. Employers were repeatedly told to contact NPERS for guidance rather than rely on informal interpretations.

The webinar materials and guidance, including lists of accepted documents and sample forms, are posted on NPERS’ website and were shared in the session's chat and Q&A. NPERS said employers with specific scenarios should submit documentation to ERS for review to determine whether compensation, bonuses or stipends must be reported for retirement purposes.

The session closed with NPERS staff offering follow‑up assistance for complex cases and reminding reporting agents that correct documentation and timely adjustments protect members’ benefits and the qualified status of the plan.