Presentation is loading. Please wait.

Presentation is loading. Please wait.

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

Similar presentations


Presentation on theme: "Retirement Benefits as impacted by the Voluntary Separation Program (VSP) 1."— Presentation transcript:

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

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 2

3 Maryland State Retirement and Pension System 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

4 Maryland State Retirement and Pension System 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

5 Group 3 Non-Vested Members Withdrawal of Contributions ■ Withdraw contributions = forfeit benefits ■ Withdrawn contributions may be rolled into qualified plan, IRA or annuity 5 Membership before 7/1/2011: Less than 5 years of eligibility service Membership on or after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

6 Maryland State Retirement and Pension System 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 6

7 Maryland State Retirement and Pension System 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% 7

8 Maryland State Retirement and Pension System 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% 8

9 Maryland State Retirement and Pension System 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% 9

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 10

11 Maryland State Retirement and Pension System Inside Your PSB 11 $ 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 Maryland State Retirement and Pension System 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 ■ Eligible for a maximum of 5 years of service File Form 43, Claim of Retirement Credit for Military Service along with proper military documentation 12

13 Maryland State Retirement and Pension System 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) 13

14 Maryland State Retirement and Pension System 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 14

15 Maryland State Retirement and Pension System 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. 15

16 Maryland State Retirement and Pension System 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

17 Maryland State Retirement and Pension System 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). 17

18 Maryland State Retirement and Pension System 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. 18

19 Maryland State Retirement and Pension System 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). 19

20 Maryland State Retirement and Pension System 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 20 $ 1,860Monthly for life of retiree of which $115 is monthly return of contribution/interest $15,880Value of accumulated contributions and interest at retirement

21 Maryland State Retirement and Pension System 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 21

22 Maryland State Retirement and Pension System Dual Life Annuities 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 22 “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

23 Maryland State Retirement and Pension System 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. 23

24 Maryland State Retirement and Pension System 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”DBM’s website 24

25 Maryland State Retirement and Pension System 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 25

26 Maryland State Retirement and Pension System 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 26

27 Maryland State Retirement and Pension System Unused Sick Leave ■ 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 27

28 Maryland State Retirement and Pension System 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 28

29 Maryland State Retirement and Pension System Telephone or 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 29


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

Similar presentations


Ads by Google