1. Retirement Benefits as impacted by the Voluntary Separation Program (VSP)

2. Overview There are three groups that will be covered during this seminar:
Group 1: Vested members eligible for a retirement allowance on May 1, 2015
Group 2: Vested members not eligible to retire May 1, 2015 but eligible for a future retirement allowance
Group 3: Non-vested members who are ineligible for a future monthly retirement allowance

3. Membership: Pension System
Eligibility Service
Determines when you become eligible for a benefit
500 hours worked in a fiscal year = one year of eligibility service
Creditable Service
Determines the amount of the benefit
Based on hours worked and contributions made
Eligibility service:
Eligibility determines when you can retire. Do you have 30 years of eligibility service for full service retirement? Do you have 15 years for early. Are you vested, do you have 5 years of service?
Once you work 500 hours in a fiscal year you earn one year of eligibility service.
Creditable Service:
Creditable service determines what your benefit is. Creditable service will reflect your actual time worked.
Key points
You may see a difference in your eligibility service and creditable service. For example, If you started in January of a year you will earn 1 year of eligibility service and 6 months of creditable service. If you are part time employee you will also see a difference.
(E & T) page 4

4. Membership Retirement System
Eligibility and Creditable service are the same
Earned month by month as employee contributions are received
Determines eligibility for benefits and amount of the benefit
In the retirement system you earn one type of service credit and it counts toward both eligibility service and creditable service. Every month you work and make the necessary contributions you earn a month of service credit.
(E & T, page 4)
(CORS, page 3)

5. Group 3 Non-Vested Members
Membership before 7/1/2011: Less than 5 years of eligibility service
Membership on or after 7/1/2011: Less than 10 years of eligibility service
Withdrawal of Contributions
Withdraw contributions = forfeit benefits
Withdrawn contributions may be rolled into qualified plan, IRA or annuity

6. Group 3: Withdrawal of Contributions
Must complete the following forms:
Application for Withdrawal of Accumulated Contributions (Form 5)
Trustee-To-Trustee Distribution Form (Form 193)
Only complete if you are rolling your funds over to another eligible retirement account
Acknowledgement of Special Tax Notice Form 746
Please allow 90 days to process

7. Group 1 and Group 2 Pension System Vested Benefits (Current Members as of 6/30/2011)
Five years = Vested
Service Retirement (full benefit)
Age 62 with at least 5 years of eligibility service or
30 years of eligibility service regardless of age
Early Retirement (reduced benefit)
Age 55 with at least 15 years of eligibility service
Greatest reduction is 42%
Alternate Contributory Current Members as of 6/30/11
Service Retirement
If you started working at age 24 and worked for 30 years you will be eligible to retire at age 54.
Or if you started working later in your life you are working toward the age of 62.
Early Service
Must meet both requirements, age of 55 and 15 years of service.
Reduction factor is 6% a year prior to the age of 62. The maximum reduction is 42%.
Benefit reduced 0.5% for each month (6% for each year) you retire prior to your 62nd birthday
If you are age 55 and have 29 years of service what are you going to do? By working 1 more year you will not have a reduction.
(E & T page 5)
(CORS, Begin with slide 6)

8. Group 1 and Group 2 Reformed Pension System Vested Benefits (New Members as of 7/1/2011 or later)
10 years = Vested
Service Retirement (full benefit)
Age 65 with at least 10 years of eligibility service or
Rule of 90: Age + eligibility service = 90
Early Retirement (reduced benefit)
Age 60 with at least 15 years of eligibility service
Greatest reduction is 30%
Service Retirement
For example, age 60 with 30 years of service or age 63 with 27 years of service.
Early Service
Must meet both requirements, age of 60 and 15 years of service.
Reduction factor is 6% a year prior to the age of 62. The maximum reduction is 30%.
Benefit reduced 0.5% for each month (6% for each year) you retire prior to your 65th birthday
(E & T page 2)
(CORS, Begin with slide 6)

9. Eligibility Requirements Retirement System
Service Retirement (full benefit)
Age 60 or
30 years of service regardless of age
Early Retirement (reduced benefit)
25 years of service regardless of age
Greatest reduction is 30%
Service Retirement
Eligible at age 60 or 30 years of service.
Early Service
Must have 25 years of service.
Reduction factor is 6% a year prior to age 60 or 30 years of service, what ever benefits you the best.
Maximum is 30%
Example: If you are age 58 and had 25 years of service. You are 2 years prior to age 60 or 5 years prior to 30 years of service. Therefore the reduction factor would be 12%.
Benefit is reduced 0.5% for each month (0.6% for ten month employees) you retire prior to 30 years of service or
Benefit is reduced 0.5% for each month (6% a year) you retire prior to your 60th birthday.
(E & T, page 2)

10. Group 2 Vested Benefits
Keep your last Personal Statement of Benefits (PSB)
Inform Retirement Agency of address changes
Contact the Retirement Agency when you become eligible
Keep beneficiaries current
Survivors’ payment prior to retirement will consist of vested member’s accumulated contributions

11. Inside Your PSB
$ 1,744
VESTED BENEFITS: If you are a member of the system as of June 30, 2011 and you have at least five years of eligibility service, you are vested. If you became a member on or after July 1, 2011 and are under the Reformed provisions, you are vested when you have at least 10 years of eligibility service.
If vested, you have earned the right to receive a monthly benefit when you reach your plan's normal retirement age, even if you are not working at that time. The vested benefit shown is calculated as if you had stopped work as of June 30, To determine the normal retirement age for your plan, please refer to your plan's handbook on our website at sra.maryland.gov for this information. In some plans, you may be eligible to collect a reduced early service benefit prior to your normal retirement age. Withdrawal of your contributions will cause you to forfeit your vested benefit.

12. Military Credit Prior to Membership
Must have 10 years of creditable service
Eligible for a maximum of 5 years of service
During Membership
File Form 46 prior to leaving active employment
File Form 43, Claim of Retirement Credit for Military Service for credit upon returning to work
File Form 43, Claim of Retirement Credit for Military Service along with proper military documentation
Ask: did anybody serve in the military? Has anybody received military credit in our system?
Prior to Membership:
Must have 10 years of creditable service. Eligible for 5 years of service.
During Membership:
File Form 46 prior to leaving active employment
File for the credit once you return to work
Maximum of 5 years of service.
Key Points:
Must complete Form 43 and submit military documentation such as DD 214 or NGB 23. I have the form 43 with me.
(E & T, page 5)
(CORS, page 3)

13. Service Purchase Normal Cost
Missed contributions plus interest to date of purchase
Purchase at any time while active on payroll or on SRA Approved Leave of Absence (Form 46)
Submit Form 26 Request to Purchase Previous Service
Example:
SRA Approved Leave of Absence (Same System)
There are two types of purchase of service, normal cost and full cost.
Normal Cost
You will pay the contributions and interest missed during the period of time being purchases.
Must be active on payroll or on Approved Leave of Absence.
Complete Form 26, Request to Purchase Previous Service. I have the forms with.
Examples: SRA Approved Leave of Absence. For example, you went on maternity leave for 6 months, when you come back from the leave you can purchase that at normal cost.
Delayed enrollment: this happened back in the 70’s. You may see that your enrollment date is a couple months later than your actual start date. This could be a delayed enrollment. (you may want to mention that members in the pension system with delayed enrollment will be granted this time at no cost because it is non-contributory time.)
(E & T, page 5)
(CORS, page 4)

14. Group 1: Service Purchase Full Cost
You pay the cost to fund the benefit your additional purchased service will provide.
Minimum of 1 month & Maximum of 10 years
Active members within 12 months of retirement submit Form 26 and Form 9 to purchase service credit
Examples:
Federal Government
Public, Private, or Parochial School Teaching
Municipal Employment
Prior State service for which you are not receiving credit
Full cost purchase can typically be very expensive. We will determined what your benefit will be before the purchase and what your benefit will be after the purchase. The difference will be your cost.
Full cost purchase can only be done when you are within 12 months of retirement and you must be active on payroll to purchase service credit.
To purchase service credit you need to complete form 26, Request to Purchase Previous Service and Form 9, Application for Estimates of Service Retirement Allowance. We will send you a bill as well as estimates of your monthly benefit so you can determine if it is cost effective to purchase the service credit.
You may purchase a minimum of 1 month and a maximum of 10 years of service credit.
Examples;
Federal Government
Public, Private or Parochial School Teaching
Municipal Employment
Prior State Service, contractual
Key Points:
You must have actually worked the time in order to purchase.
The service credit must be verified by the formal employer. If it is not verified it cannot be purchased.
Factors we use to calculate
Current salary
Current years of service
Age
If purchasing service to qualify you for a benefit or get rid of a reduction factor it will cost more.
(E & T, page 5)
(CORS, page 4)

15. Purchase of Service
Members may use funds from 457(b), 403(b), 401(k) or IRA for purchasing service credit. Member must complete Form SRA-192 prior to retirement.
You may roll funds over from other retirements accounts to purchase the service.
(E & T, page 5)
(CORS, page 4)

16. Monthly Payment Option Selection
Basic Allowance (Maximum)
Largest monthly allowance
No protection to beneficiary(ies)
Benefits cease at death
Single Life Annuities
Lifetime reduced monthly benefit to retiree and may provide lump sum payment to beneficiary(ies) at retiree’s death
Dual Life Annuities
Provides a continued reduced monthly benefit to a surviving beneficiary after retiree’s death
You should submit Form 9 when you are within 1 year of retirement. I suggest that you select all of the options.
Basic Allowance has no beneficiary coverage. If you are one month into retirement and select the Basic Allowance and pass away, all your benefits will cease.
Single life annuities may provide a lump sum payment to your beneficiaries
Dual life annuities are based on your age and the age of your beneficiary
(E & T, page 11)
(CORS, page 6)

17. Single Life Annuities: Payment Option 1
Lifetime monthly benefit to retiree
Guarantees the full return of the present value of the retiree’s Basic Allowance computed at the time of retirement. If the retiree dies before receiving the full guaranteed amount, the remainder, if any, is paid in a lump-sum payment to the designated beneficiary(ies).
You can name as many beneficiaries as you want and change your beneficiaries at any time.
(E & T, page 11)
(CORS, page 6)

18. Single Life Annuities: Payment Option 1 Example
Lifetime monthly benefit to retiree
$1,785 Monthly for life of retiree
$245,000 Present Value at retirement
If you die before receiving the full guaranteed present value at the monthly rate of $1,785, your beneficiaries will be paid the balance in a lump-sum payment.
You can name as many beneficiaries as you want and change your beneficiaries at any time.
(E & T, page 11)
(CORS, page 6)

19. Single Life Annuities: Payment Option 4
Lifetime monthly benefit to retiree
Provides a return of the value of the member’s accumulated contributions (employee contributions and interest). If the retiree dies before receiving the full guaranteed amount, the remainder is paid in a single sum to the retiree’s beneficiary(ies).
You can name as many beneficiaries as you want and change your beneficiaries at any time.
(E & T, page 11)
(CORS, page 6)

20. Single Life Annuities: Payment Option 4 Example
Lifetime monthly benefit to retiree
If you die before receiving the total accumulated contributions and interest at the monthly rate of $115, your beneficiaries will be paid the balance in a lump-sum payment
$ 1,860
Monthly for life of retiree of which $115 is monthly return of contribution/interest
$15,880
Value of accumulated contributions and interest at retirement
You can name as many beneficiaries as you want and change your beneficiaries at any time.
(E & T, page 11)
(CORS, page 6)

21. Dual Life Annuities
Provides a monthly benefit throughout the life of the retiree and then provides a continued lifetime monthly benefit to a sole surviving beneficiary.
Payment Option 2
100% survivorship - Same lifetime monthly benefit to beneficiary
Payment Option 3
50% survivorship - 1/2 lifetime monthly benefit to beneficiary
Dual life annuities are based on your age and the age of your beneficiary. If you choose somebody much younger than you, your monthly benefit will be less.
(E & T, page 12)
(CORS, page 7)

22. Dual Life Annuities Payment Option 5 Payment Option 6
“Pop-Up” provision - If beneficiary dies before the retiree, the retiree’s monthly benefit “pops-up” to the Basic Allowance unless the retiree renames another beneficiary
Payment Option 5
100% survivorship (with “pop-up” provision) - Same lifetime monthly benefit to beneficiary
Payment Option 6
50% survivorship (with “pop-up” provision) - 1/2 lifetime monthly benefit to beneficiary
Pop-Up provision means: if your beneficiary passes away before you do your monthly benefit will pop-up to the Basic Allowance.
With the Dual Life annuities you can change your beneficiary, however your monthly benefit will be recalculated based on your current age and the age of your new beneficiary. This could lower your monthly benefit.
(E & T, page 12)
(CORS, page 7)

23. Options 2 and 5 Restrictions Naming a Beneficiary
You may not designate a beneficiary who is more than 10 years younger than you unless the beneficiary is your spouse or your disabled child.
Key Points:
Under options 2 and 5 you cannot name a beneficiary who is more than 10 years younger than you unless it is a spouse or disabled child.
Things to think about when choosing an option:
How much money do you need to live off
Do you need to provide beneficiary coverage
Health benefits,
For state employees, for a spouse to have continued health care coverage, you must select an option 2, 3, 5 or 6 and name spouse as beneficiary, PGU’s should discuss with their employer.
You should base your decision based on your needs and your families needs. Do not base your decision based on what your co-worker selected.
In order to make a informed decision you must get estimates of your retirement, Form 9.
(E & T, page 12)
(CORS, page 7)

24. If Considering Retirement…
Review Unaudited Projection of Benefits Allowance
Complete VSP Form 9 Application for an Estimate of Service Retirement Allowance
All VSP retirement form must be downloaded from DBM’s website as they are specially coded “VSP”

25. Necessary VSP Retirement Forms
Form Application for Service Retirement
Form 85 Direct Deposit Form
Form 127 Reemployment After Retirement
Form 766 Federal & Maryland State Tax Withholding Request
Forms must be downloaded from DBM’s website as they are specially coded
Form 13: this is where you will select your retirement date, must be the first of the month. You will also select your option. If you are choosing an option 2, 3, 5, or 6 you must turn in a copy of your beneficiary’s Proof of Birth
Form 85: it is mandatory to have direct deposit. You must complete this form because you will no longer get paid by central payroll or your employer, you are being paid by State Retirement.
Form 766: yes, your pension is taxable. May want to talk to a tax consultant. Visit the IRS and State Comptrollers web site. We will only withhold taxes for the State of Maryland. Check with the state you may be living in to see if your pension is taxable.
Form 127: will briefly discuss with the next slide
Health Benefits: we do not have this form.
Forms should be submitted days prior to your retirement. You must submit forms through your employer, Retirement Coordinator.
(E & T, page 13)
(CORS, page 8)

26. Must have a retirement date of 5/1/2015 Increases monthly benefit
Unused Sick Leave
Must have a retirement date of
5/1/2015
Increases monthly benefit
May not be used to qualify for a benefit
Amount of days certified by employer at time of retirement
Note: if they are following along in their book to turn
(E & T, page 16-17)
(CORS, page 10-11)

27. 22 days of unused sick leave equals one month
If 11 or more days remain, an additional month is credited
Maximum of 15 sick days per year of service may be credited
Note: if they are following along in their book to turn
(E & T, page 16-17)
(CORS, page 10-11)

28. Information Regarding VSP
All questions regarding VSP should be directed to one of the following resources
DBM website at
DBM call or
toll free
VSP Administrator at

29. Telephone 410-625-5555 or Mail/Office Visits Internet Web Site E-Mail
toll-free
Mail/Office Visits
Maryland State Retirement Agency
120 East Baltimore St., 14th Fl.
Baltimore, MD
Internet Web Site
Information
The Mentor Personal Statement of Benefits
Skipped checklist is on pages:
(E & T, page 19-20)
(CORS, page 13-14)
Sources of information is on pages
(E & T, page 21)
(CORS, page 15)