2004 KPERS Pre Retirement Seminar by VGC27i7

VIEWS: 6 PAGES: 55

									     Pre-Retirement System
2011Kansas Public Employees RetirementSeminar




 Making the Jump to Retirement?
                       .
Sources of Retirement Income
 What Type of Plan is KPERS?

401a Defined Benefit Plan.

Contrast to Defined Contribution Plans
 (personal savings plans).
  • 457
  • 403b
  • 401k
  • IRA
         Employee Contributions
• All contributions go into member’s
    account.
•   Interest is credited annually after June 30th
    based on the balance in your account on
    December 31st of the previous year.
•   Contributions based on gross wages
    each pay period, pre-taxed federal only.
•   Retirement benefit is not based on how
    much money is in your account.
              Employer Contributions

• Employer contributes a percentage depending
    on the needs of the retirement system.
•   Employer contributions do not go into your
    account.
•   Employer contributions go into the employer
    fund to help fund the following:
    •   Disability Benefits
    •   Death Benefits
    •   Future Retirement Benefits
             Annual Statement
• Receive in March or April
• Check Beneficiary
• Years of Service
• Final Average Salary
• Use to get Retirement Estimates
        Disability VS Retirement
• Long Term Disability Coverage is an
  Employee Benefit.

• If retiring because of health reasons talk
  with your designated agent.
          When Can You Retire?
• Retirement with unreduced benefits (Normal
 Retirement)

• Retirement with reduced benefits (Early
 retirement)
 Retiring with Unreduced Benefits (Tier 1)

• Age 65 with at least one year of service credit.
• Age 62 with at least ten years of service credit
  or

• Any age when age and years of service equal
  85 points.
  How to calculate the 85 points
Current age                52
Current years of service   29
Total points               81
Subtract total from 85      4
Divide by 2                 2
Add current age            52
85 points at age           54
        Retiring with Reduced Benefit

Age 55 with at least 10 years of service credit
•   Age 60 to 62:   Reduction .2% per month.

•   Age 55 to 60:   Reduction .6% per month.
        Early Retirement Example

An unreduced benefit at age 62 is $1,500.00.
  Age          Reduction         Amount
  62               0%          $1,500.00
  60             4.8%          $1,425.00
  55           40.8%           $ 885.00


Does not apply to members who have 85 points.
  Calculating Your Retirement Benefit

Factors used to determine retirement benefits
• Final Average Salary
• Statutory Factors 1.75%, 1% or .75%
• Years of Service
    Calculating Final Average Salary – Tier 1
Membership date before 7/1/1993
Final average salary is greater of:
• 4-year (16 quarters) average including additional compensation, or
• 3-year (12 quarters) average excluding additional compensation.
KPERS will calculate both ways and use the highest.

Membership date on or after 7/1/1993

Final average salary is greater of:
• 3-years (12 quarters) average excluding additional compensation.
Calendar year salary is used to calculate the final average salary.
  Increasing Your Retirement Benefit

Purchasing service credit (Page 6 & 7)
  • Year of Service
  • Forfeited KPERS Service
  • Military Service
  • Elected Official Service
  • In-State or Out-of-State Non-Federal Public
    Service
  • Vista Service
  • Peace Corp Service
   Cost to Purchase Service Credit
Based on actuarial factors and tables
  • Age
  • Salary
     • Current Salary
     • Prior Year Salary
     • Final Average Salary
Retirement Payment Options
      Retirement Benefit Options
• Maximum Monthly Benefit Option
• Joint-Survivor Options
• Life-Certain Options
• Partial Lump-Sum (PLSO)

When you retire, the option you choose is irrevocable.
  Calculating Maximum Monthly Benefit
Example
Member’s age: 62
Member’s years of service: 30
Member’s final average: $30,000.00

   1.Multiply final average salary              $30,000.00
       by 1.75%                                 x    1.75%
                                                    525.00
   2. Multiply answer by years of service       x        30
        This is the total annual benefit        $15,750.00
   3. Divide the answer by 12                   +       12
   4. This is total estimated monthly benefit   $ 1,312.50
 Maximum Monthly Benefit Option (Page 8)

• Lifetime monthly benefit.
• No continued monthly benefit after your death.
• Upon members death, beneficiary/ies will receive
  balance of contributions and interest not paid out.
• Total contributions and interest usually paid out in
  3 to 4 years.
• Employer fund then kicks in and pays benefit for
  member’s lifetime.
       Joint-Survivor Options (Page 8)
Provide benefit for someone after your death

   • Joint and 1/2 (50%)      91% (+ -) .4%

   • Joint and 3/4 (75%)      87% (+ -) .5%

   • Joint and same (100%)    83% (+ -) .6%

Pop up feature
         Life-Certain Options (Page 9)

•    Five-Year Certain:    Benefit reduced to 98%

•    Ten-Year Certain:     Benefit reduced to 95%

•    15-Year Certain:      Benefit reduced to 88%


The life certain option begins with the member’s
  retirement date, not the member’s death date.
    Partial Lump-Sum Option (Page 9)

• Based on actuarial present value of retirement
  benefit.
• Partial lump sum can be 10, 20, 30, 40, or 50
  percent.
• Monthly retirement benefits reduced by percent
  of lump sum taken.
• A 30 percent PLSO payment will result in a
  permanent 30 percent reduction in your monthly
  benefit.
                       Apply Age Factor
  Maximum Monthly Benefit          $1,312.50
  Age/Factor from Table             x     117
  Present Actuarial Value         $153,562.50


Partial Lump-Sum Benefit         Reduced Monthly Benefit
  50%     $76,781.25                50%          $656.25
  40%     $61,425.00                60%          $787.50
  30%     $46,068.75                70%          $918.75
  20%     $30,712.50                80%         $1,050.00
  10%     $15,356.25                90%         $1,181.25
        Things You Should Consider
•   Monthly benefit is a lifetime benefit, therefore PLSO
    reduction is a lifetime reduction.

•   If your roll over your PLSO, are you able to make up
    the difference each month equal to your lifetime
    reduction?

•   If the PLSO is paid directly to you, KPERS will
    withhold 20% for federal income taxes.

•   You may also be subject to a 10% tax if you are under
    the age of 59 ½.
           Monthly Benefit Estimate
www.kpers.org
  KPERS Account Access – Personalized Estimate
  Estimate Your Benefits


KPERS 15-E – Request for Benefit Estimate form

Note: The annual statement is a helpful tool when calculating an
  estimate.
•Click on “Active Member”
•Click on “Online Account Access”
Member Web Portal Homepage




•If you have a KPERS, KP&F or Judges account,
they will be listed separately. You will then click
on the account you would like to view.

•Click on link to view or enter information
regarding your personal profile (address, etc.)
•View your beneficiaries. Click on the beneficiary
form link to complete form should you wish to
change your beneficiary.
•View information about your
account.
•Use the KPERS benefit calculator
•Check your service credit
•Check your contributions and
interest
•From the side bar, click on “Estimate
your Benefit”.
•Click on the KPERS calculator.
   View Your Annual Benefit




Divide your Annual Benefit by 12 to get your maximum monthly benefit amount.
       Choosing Your Retirement Date

•   Retirement date is the first day of the month.

•   Must be off your employer’s payroll.

•   Must be off the payroll of all participating KPERS
    employers’ on your retirement date.

•   Non-School employees can retire on the first day of any
    month.

Reminder – Years of Service Rounds
  Retirement Date for School Employees
School employees under continuing contract law

Teachers
• As early as June 1st if work under contract is completed.
• If using lump-sum add on pay – September 1.

Principals and Superintendents
• June 1st if work under contract is completed.

Non-certificated school employees
• First day of any month (same as all non-school).
      Steps in the Retirement Process
• Review the retirement options.
• Submit application for retirement 30 to 60 days
    prior to your retirement date.
• Submit proof of age (birth certificate).
• Submit proof of name change (marriage
    certificate).
•   Submit proof of age and name change
    document for joint survivor (if applicable).
• All documents may be photocopies.
         Receiving Monthly Benefits

•   Benefit paid last working day of month.

•   No Automatic COLA (Cost of Living Increase).
          Your Beneficiary
• Keep your beneficiary up-to-date.
• You may name a living person, your
  estate or trust.
• You can change beneficiaries at any time.
• You can designate a funeral home to
  receive the $4,000 death benefit.
• If a beneficiary is not named, KPERS
  must follow the line of descendants by
  Kansas law.
  Continuation of Your Life Insurance

Conversion Option

  • A whole life option to continue coverage when
   leaving employment or retiring.
  • At your own cost, but without evidence of
   insurability.
  • Individual rates are higher than group rates.
  • Conversion must take place within 31 days of
   last day on employer’s payroll.
Portability Option

   •   A term insurance option to continue coverage when
       leaving employment or retiring.
   •   At member’s cost, but without evidence of
       insurability.
   •   Must be under age 70 and actively at work the day
       before leaving employment (can not be off work due
       to sickness or injury).
   •   Coverage reduces to 65% at age 65, all coverage
       terminates at age 70.
   •   Portability must take place within 31 days of last day
       on employer’s payroll.
               Retiree Death Benefit
•   The retiree death benefit is $4,000.
•   The death benefit is payable with all options.
•   Is not payable on the death of a joint annuitant.
•   Is not taxable for Kansas income tax.
•   Is taxable for federal income tax.
•   Retired members may name a funeral establishment
    to receive the $4,000 death benefit. (Retiree will still
    need to designate a primary beneficiary.)
                Health Insurance

•   KPERS does not provide health insurance coverage
    for retirees.
•   K.S.A. 12-5040 states that members who have been
    employed with their employer for ten years or more
    can remain in their current health plan by paying the
    entire premium themselves.
•   KPERS does not administer this statute.
•   Contact your personnel office for information on
    continuing health insurance coverage.
          Federal & State Income Taxes
•   Monthly benefit is subject to federal taxes.
•   Part of monthly benefit may not be subject to Federal taxes
    if:
     • Member made contributions to KPERS prior to July 1984.
     • Member paid for a purchase of service credit with a
        personal check.
•   Monthly benefit is not subject to state taxes for State of
    Kansas residents.
•   Submit a W-4P form at time of retirement and KPERS will
    withhold taxes from retirement check.
•   A new W-4P form may be submitted to our office anytime.
•   A 1099-R tax form sent out in January of each year.
1099-R Forms
Working After Retirement
          Waiting Period Before Returning to Work

• There is a 60 day waiting period before returning to
  work for any KPERS employer (there is not a waiting
  period if you return to work for a non-KPERS employer-
  church, department store, etc.)

• The 60 days is from KPERS retirement date, not from
  member’s last day on payroll.
   l Retirement date is June 1.
   l Retiree cannot return to work until August 1.




Note: Retiree cannot contribute to KPERS after retiring
          Working After Retirement
            Non-School & School Non-Licensed

Returning to work for the same KPERS employer
  • $20,000 calendar year earnings limitation in any
    position (covered or non-covered).

Returning to work for a different KPERS employer
  • No earnings limitations – employer pays actuarial
    rate if retiree is employed in a KPERS covered
    position.
Changes for Licensed School Employees
•   “Licensed” school employees can now retire as early
    as June 1st only if all work on contract has been
    completed.

•   Employee must still wait until end of contract to use
    add-on pay.

•   Effective July 1, 2009 through July 1, 2012, the
    $20,000 earnings limit removed for licensed school
    employees that return to work for the same employer.
Definition of Licensed School Employee
•   Educator (Teachers, administrators)
•   Audiologist
•   Speech Pathologist
•   Occupational Therapist
•   Physical Therapist
•   Social Worker
•   Registered Nurse
•   Dietician
•   Licensed Professional Counselor
•   Licensed Clinical Professional Counselor
•   Psychologist
•   Orientation and Mobility Instructor
          Working After Retirement
            (School Licensed Position)
Same Employer

   Retired with a Full/Normal Retirement
     • No earnings limitation – Employer pays Actuarial rate.
   Early Retirement
     • $20,000 earnings limitation – No actuarial payment
        required.

Different Employer
   • No earnings limitation - covered or non-covered position.
   • Employer pays the working after retirement rate.
       KPERS and Social Security
• All KPERS members pay into Social Security.
• KPERS benefit will not affect Social Security
  benefit.

• Social Security benefit will not affect KPERS
  benefit.

• For questions regarding Social Security, you may
  call 1-800-772-1213.
                Retirement Checklist
   Attend a Pre-Retirement Seminar.
   Find out when you are eligible to retire.
   Calculate a retirement estimate.
   Review the different options available to you.
   Complete an application for retirement benefits
    (KPERS-15).
   Review life insurance.
   Determine tax withholding.
   Confirm Social Security benefits. (contact Social Security office)
   Determine health insurance needs. (contact your employer)
   Review your other retirement plans and savings.
            KPERS Contact Information

•   Website: www.kpers.org
•   InfoLine: Toll-free 1-888-275-5737
              Local (785) 296-6166
•   E-mail:    kpers@kpers.org
•   Fax:       (785) 296-6638
•   Mail:      611 S. Kansas Ave., Suite 100
               Topeka, KS 66603-3803
Thank You For Attending
Kansas Public Employees Retirement System

								
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