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1 Noteworthy News 1

2 BOARD OF TRUSTEES Don Martin, Board Chair Bob Patterson, Vice-Chair Wayne Bill Senator Jason Crowell Representative Bill Deeken Representative Ward Franz Senator Tim Green Travis Morrison Lori Neidel Commissioner Kelvin Simmons State Treasurer Clint Zweifel EXECUTIVE DIRECTOR Gary Findlay MAILING ADDRESS PO Box 209 Jefferson City, MO BUILDING LOCATION 907 Wildwood Drive Jefferson City, MO OFFICE HOURS 8:00 A.M. - 5:00 P.M. Monday - Friday PHONE (573) (800) AUTOMATED PHONE OPTIONS Deferred Compensation/MCHCP....1 Password Assistance...2 Change /mailing address...3 Benefit Counselor...4 Investments...5 Dial Employee by Name...8 Operator...0 FAX (573) MISSOURI RELAY (Voice) (800) (TTY) Noteworthy News 3 COLA Rates Look for the new COLA rate, determined using the CPI, to be announced in January. 3 Direct Deposit It s safe, easy, and trouble-free. Check out the 2011 Benefit Payment Schedule. Life Planning R Tax Forms This form lists your 2010 income provided by retirement benefits from MOSERS. 5 Public Pension Exemption Important tax information that may affect your retirement benefit. Board Corner 6 Board News MOSERS Board of Trustees Updates. Stay Connected: Retirement & You 7 Coffee Breaks Get the scoop on the latest Coffee Break dates and locations. 8 Rumor Central Go online for clear answers about your retirement, life insurance, and long-term disability benefits. Insert MOSERS Summary Annual Financial Report Your retirement system remains well funded and your promised benefits are secure. mosers@mosers.org WEBSITE Graphic Designers - Tracy Upschulte Writer/Editor - Jade Elwess RetireeNews is published quarterly by the Missouri State Employees Retirement System. To obtain an alternative format of this publication, please contact MOSERS. This publication is designed using stock photography. The photographs chosen are for illustrative purposes only; they do not imply any particular attitudes, behaviors, or actions on the part of any person who appears in the photographs.

3 Noteworthy News The CPI Determines Your 2011 COLA Rate Announcement in January For most retirees*, the annual COLA is based on the Consumer Price Index (CPI). You will find the COLA for 2011 on the MOSERS website in mid-january. The reason we cannot determine the rate yet is because the calculation is based on 80% of the percentage increase in the average CPI from one year to the next. The 2011 rate will be based on the comparison from 2009 to 2010, which is not yet completed. In the meantime, here is a reminder about how it is determined each year. What is the CPI? CPI is the Consumer Price Index, which is calculated monthly by the Federal Bureau of Labor Statistics. CPI is used to measure the rate of inflation and to show larger economic trends on a yearly basis. By law, MOSERS must use the CPI-U (Consumer Price Index for All Urban Consumers) for our calculations. The CPI-U is the most comprehensive category of consumer goods and services, including food, housing and transportation. CPI calculations are based on information from average households across the country. Your individual inflation rate may be more or less than the national average. According to Missouri state law, each January, MOSERS must compare the average CPI for the calendar year just completed (2010) to the average CPI from the prior year (2009) to determine the percentage change between the two years. Remember, per Missouri state law, you will not receive a COLA less than zero. To learn more about the CPI, the Bureau of Labor Statistics has a section of Frequently Asked Questions (FAQs) on their website at Direct Deposit It s Safe, It s Easy! Apply for direct deposit and your benefit payment will be electronically transmitted to your financial institution on the last working day of each month. Direct deposit is the recommended method for receiving your monthly benefit payment. It s safe, easy, and it s trouble-free! To apply for direct deposit, or to find out more information, log onto the secure portion of our website. If you are already receiving your retirement benefit by direct deposit, no action is required Benefit Payment Schedule January 31 February 28 March 31 April 29 July 29 August 31 September 30 October 31 * The exception to this is if you retired under MSEP, the old plan, and were hired before August 28, 1997, you will receive a minimum 4% COLA (maximum 5%) until your benefit is equal to 165% of your initial amount. This is called your COLA cap. Then, your COLA will be calculated like other retirees and will be between 0-5% each year. May 31 June 30 November 30 December 30 3

4 Life Planning CONTACT INFORMATION Internal Revenue Service (IRS) Phone: (800) Website: Missouri Department of Revenue Phone: (573) Website: Regional State Tax Offices Cape Girardeau Phone: (573) Jefferson City Phone: (573) Joplin Phone: (417) Kansas City Phone: (816) Springfield Phone: (417) St. Joseph Phone: (816) St. Louis Phone: (314) R BUILDING BLOCKS Understanding This Important Tax Document In late January, MOSERS will mail your 1099-R form. This form lists your 2010 income provided by retirement benefits from MOSERS. You will need this form to file your income tax return. The 1099-R provides the following information for the 2010 calendar year: Total gross distribution (the gross amount you received from MOSERS in 2010) Total taxable amount Taxes withheld In addition to the above required information, MOSERS will list your medical, vision and dental premium deductions. (Contact your insurance provider for more complete information on the deductions from your MOSERS benefits). You will also be able to access your 1099-R form on MOSERS website after they have been mailed if you need a replacement copy. If you have questions regarding this information, we suggest you contact your tax advisor. Special Note for Eligible Public Safety Officers Since the 2007 tax year, there has been an insurance premium exclusion for certain retired public safety officers. They may offset qualifying medical premiums (up to $3,000) by reducing the taxable amount by the premiums and writing PSO next to that amount when they file their federal tax returns. It is always best to seek advice from a tax advisor and/or read the instructions from the IRS since the tax law and instructions can change from year to year. IMPORTANT SECTIONS OF YOUR 1099-R 1 The total amount paid to you by MOSERS for the calendar year. 2a The portion of your total benefit received during the calendar year that should be considered taxable income. 4 The total amount of federal income tax withheld during the year. 5 The portion of service purchase excluded from taxable amount, if applicable. 7 Code identifying the type of benefit being paid - retirement, disability, beneficiary, etc. Codes are listed on the back of form. 9b Balance of service purchase, if applicable, to be received tax free in future years. 10 The total amount of Missouri State income tax withheld during the year. 4

5 Life Planning Changes to Retirement Benefit Exemptions In July 2009, Governor Nixon signed House Bill 82 affecting income tax exemptions for certain retirement benefits, including social security and military retirement income. This bill became effective August 28, What has changed: The legislation specifies that the ceiling of the pension subtraction from Missouri adjusted gross income is the maximum social security benefit available of $32,500 for tax years beginning January 1, For each subsequent tax year, the amount will increase by the percentage increase in the federal Consumer Price Index (CPI). It removes the requirement that a taxpayer be at least 62 years of age to be eligible for the publicly funded retirement benefit income tax exemption. It authorizes, beginning January 1, 2010, an income tax deduction from a taxpayer s Missouri adjusted gross income of 15 percent of any military retirement income, regardless of age or income. This deduction rate will increase by 15 percentage points annually until January 1, 2016, when it is fully phased in and all of the military retirement income will be deductible. Visit for more information about social security. If you have questions about your specific tax circumstances, consult your tax advisor or accountant. Information in this article is from the Missouri General Assembly website. Public Pension Exemption Taxes and Your Retirement For tax year 2010, married couples with Missouri adjusted gross income less than $100,000 and single individuals with Missouri adjusted gross income less than $85,000, may deduct the greater of $6,000 or 65% of their public retirement benefit, to the extent the amounts are included in their federal adjusted gross income. The total public pension exemption is limited to the maximum social security benefit of each spouse. The deductible percentage of your public retirement benefits will increase until A breakdown of the yearly percentage can be found in the chart below. Year % Deducted 50% 65% 80% 100% In order to be eligible for the full deduction, your Missouri adjusted gross income must fall within certain income limitations. If your income exceeds the limitation, you may qualify for a partial exemption. The amount of your exemption must be reduced by the amount that your income exceeds the limitation. The limitation is based on your filing status and income (less taxable social security benefits) as listed below: Up to $85,000 Single, Head of Household, or Qualifying Widow(er) Up to $100,000 Married, filing jointly Up to $85,000 Married, filing separately MOSERS recommends you contact the Department of Revenue or a qualified tax advisor for additional information or answers to your specific questions about the public pension exemption. Please be aware that your MOSERS retirement benefits are subject to federal income tax, and Missouri state income tax if you reside in Missouri. You should assess your tax situation each year. Life events such as marriage, divorce, or change in dependents may impact the amount you wish to have withheld. You may change your withholding election at any time during the year by submitting a Substitute W-4P form to MOSERS. The amount of withholdings you elect does not change your tax liability. The information included in this article is MOSERS summary assessment of various income tax laws. In the event of a conflict, the pertinent law prevails. 5

6 Board Corner Board Certifies Contribution Rate for Fiscal Year 2012 Prudent Board Action Addresses Present and Future Obligations On September 16, 2010, the MOSERS board certified 13.97% as the percentage of state payroll to be contributed for fiscal year 2012, beginning July 1, 2011, to the retirement trust fund. Pensions Support Missouri and Local Economies The money the state contributes to the retirement system supports the state and local economies. Nearly 90% of MOSERS retirees and their dependents remain in Missouri, spending retirement dollars on housing and goods and services here. Each $1 paid in benefits has $1.46 in economic impact according to a report by the National Institute on Retirement Security. Retirement Plan Remains a Defined Benefit Plan for State Employees As a result of changes made by the legislature during the 2010 Special Session, normal retirement eligibility will be age 67 for general state employees hired for the first time on or after January 1, 2011, in a benefit-eligible position, and they will contribute 4% of pay toward the cost of their retirement benefits. These changes will help to preserve the defined benefit culture for state employees. Like current state employees, new hires will participate in a defined benefit (DB) plan. A DB plan is a retirement benefit plan sponsored by your employer that pays a benefit defined by the plan based on length of service and final average salary. Retirement eligibility is based on an employee s age and years of service. The retirement benefit is permanent and is guaranteed, rather than being directly dependent on investment returns, as is the case with individual account defined contribution plans where the contribution is defined by the plan. Pension Policies Have A Long-Term Impact MOSERS has a solid track record of excellent investment returns, outstanding customer service and efficient administration. The measured action taken by its board ensures that MOSERS will remain well funded. New Board Members Beginning January 2011, newly elected board members Marty Drewel and Laura Davis Jackson, will assume their positions on MOSERS Board of Trustees. On November 15, 2010, Governor Nixon appointed Lori Neidel to MOSERS board. Neidel replaces David Steelman as one of the governor s appointees. Marty Drewel Laura Davis Jackson Marty Drewel has been a state employee for 29 years and currently serves as the Assistant Director for Budget in the Office of Administration, Division of Budget and Planning. Throughout his career with the state, his job responsibilities have been related to government finance and budgeting. He has a Master s Degree in Public Administration from the University of Missouri, a Bachelor s Degree in Accounting from Lincoln University, and is a Certified Government Financial Manager. Laura Davis Jackson has been a state employee for 23 years and currently serves as an Eligibility Specialist for the Department of Social Services. Her career with the Department of Social Services has been filled with active participation on committees, work groups, and special projects. She is currently Vice President of Communications Workers of America (CWA) Local 6355, the union representing employees in the Department of Social Services and the Department of Health and Senior Services. Lori Neidel is the founder of a law practice that provides compliance and regulatory affairs counsel for the financial industry. She advises broker-dealers and investment advisers in matters of compliance, and represents financial professionals in regulatory investigations and proceedings. A graduate of the St. Louis University School of Law, Neidel has earned the Certified Regulatory and Compliance Professional Designation. Lori Neidel 6

7 Retirement & You Here s the SCOOP Take a Break from the Daily Grind and Enroll Today! MOSERS, in association with our Retiree Connection group, will continue hosting post retirement Coffee Breaks for fiscal year These Coffee Breaks allow us to reach out to our retirees, give you a chance to have face-to-face communication with MOSERS staff, and provide you with the opportunity to interact with other state retirees in your area. How to Enroll in a Coffee Break You must login to the secure member website to enroll in a coffee break. After logging in, click on the Coffee Break link in the left menu beneath the Seminar Enrollment header. The enrollment program will walk you through the rest of the process. If you cannot enroll online or have questions about your Coffee Break enrollment, call (800) , extension 6194 or maggier@mosers.org. We hope to see you soon! Schedule for Spring 2011 March 29 Jefferson City MOSERS 907 Wildwood Dr. April 26 Jefferson City MOSERS 907 Wildwood Dr. Topics for Spring 2011 Missouri Area Agency on Aging services MOSERS Pensionomics 2011 Missouri Consolidated Health Care Plan (MCHCP) changes for retirees* * This session is held last, so you may choose to leave if you do not have health insurance through MCHCP. April 5 Independence (KC Area) Metropolitan Community College - Blue River Campus East 78 Highway April 14 Columbia Boone County Historical Society Museum 3801 Ponderosa St. May 4 Macon United Methodist Church 208 Pearl St. May 18 Chillicothe The Grand River Inn US Highway 36 & 65 Coffee Breaks begin at 9:30 a.m. and should conclude around noon. Complimentary refreshments will be provided. 7

8 PO Box 209 Jefferson City MO PRSRT STD U.S. Postage PAID Jefferson City, MO Permit No. 327 RetireeNews Newsletter Retirement & You Answers Aren t Found by Standing at the Water Cooler... They re Online at Rumor Central Are you getting our notifications? You may login to your secure member homepage and change your preferences anytime you want. Heard a rumor or have a question about retirement, life insurance, or long-term disability? For accurate information and answers to all your questions visit our archive at Search by date or by topic labels (on the righthand side of the page). Can t find the answer you re looking for? Submit your question to MOSERS. It s completely anonymous. Go to: Scroll down or click on Submit a Question Complete the online form and click Submit