Retirement Estimate Employee and Retiree Service Center. Volume 17 Number 3 January 2010

Transcription

1 Volume 17 Number 3 January 2010 Where Are You on the Road to Retirement? Perhaps you are nearing retirement eligibility, or perhaps you are already eligible to retire. You re in good company; between 2009 and 2010, approximately 20% of MCPS principals will become eligible to retire, along with approximately 8% of teachers and approximately 15% of support staff. Perhaps you are just beginning to consider retirement within the next several years, or perhaps you are seriously preparing for an upcoming retirement. But are you as ready as you think you are? Use the following checklist to assess your retirement readiness and check all that apply: I know about retirement payment options, and I have decided whether or not I want to leave a portion of my retirement benefit to a beneficiary after my death. I know where I plan to live and how IN THIS ISSUE 1 Where Are You on the Road to Retirement? 2 Retirement Timeline 3 Investing With a 403(b) or a 457(b) Plan as You Near Retirement 3 Retirement Planning Resources 4 Update Your Beneficiaries 4 Budget for Summer with a Summer Savings Account 4 Claim Your Classroom Expenses at Tax Time 5 Know the Direct Deposit Facts 6 Watch Your Winter Waistline 7 Calculating Your Ideal Weight Flexible Spending Account Reminder 8 Don't Forget! Update Your Employee Information that choice will affect my lifestyle and finances in retirement. I know how I will spend my time after retirement. I have decided whether or not I plan to continue working in some capacity after retirement, and I know how that plan will impact my day-to-day life. I know what percentage of my current income it will take to achieve my desired retirement lifestyle. I know approximately what my monthly income will be in retirement from all of my earnings sources, including my social security, pension, savings, and any earnings I may have from working after retirement. That income is the same as the figure I have calculated as necessary to achieving my desired lifestyle in retirement. If applicable, I know my spouse s approximate monthly retirement income. If applicable, I know my spouse s retirement plans and post-retirement plans. I know my healthcare options after retirement, with MCPS and/or with my spouse s health plan. I know how Medicare will affect my healthcare options when I turn 65 and have researched how Medicare works with my other health coverage. Are you prepared? If you were not able to check each item on the checklist, then you have a little more research to do before you can call yourself retirement ready. Read on about two commonly overlooked items that will get you thinking about your retirement preparation. Retirement Estimate Employee and Retiree Service Center ment estimate 9 12 months before your planned retirement date. This includes an estimate from ERSC for County core and supplement plan members, as well as an estimate from the Maryland State Retirement Agency for State core plan members. (ERSC) advises that you request a retire- continued on page 2 1

2 continued from page 1 You already receive a retirement statement every year. You may wonder, how important is this retirement estimate? The answer: Very. A retirement estimate provides more personalized, detailed information than your yearly retirement statement. When you retire, you will be able to choose one of several different payment options that affect both how much you will receive and, if you choose, how much your beneficiary will receive in the event of your death. Your yearly retirement statement offers you a projection of benefits based upon the assumption that you will take the maximum benefit option with no beneficiary. But a retirement estimate can help you determine which benefit option to choose by providing personalized figures based upon your age and your beneficiary s age. Knowing this information may help you make or confirm, or even reconsider some of your major retirement decisions. For example, you may be planning to choose a payment option that allows you to leave a portion of your pension benefit to a beneficiary, such as your spouse, after your death. But you may not realize how much this option will change your monthly retirement benefit. Your retirement estimate will detail every option so you can be better prepared to make decisions. Healthcare in Retirement A great benefit of retiring from MCPS is the security that comes with knowing that you can continue your MCPS healthcare benefits into retirement. But did you know that when you become Medicareeligible, your MCPS health plan coverage becomes secondary coverage, and Medicare becomes your primary health care coverage? If you enroll in the MCPS Retiree Benefit Plan, you also must enroll in Medicare Parts A and B when you first become eligible in order to continue receiving your health benefits through MCPS. You become eligible for Medicare when you turn 65 years of age or if you begin receiving disability benefits from the Social Security Administration and are beginning the 25th month of entitlement. Prior to retirement, research the Medicare program and make sure you know how Medicare will impact your future health coverage. You can learn about Medicare on the Medicare website at Medicare and Active Employees If you or your spouse (or other dependent) become eligible for Medicare enrollment while you are still an active employee with MCPS and are covered under our active employee health plan, there is no need to enroll in Medicare. Medicare enrollment can be deferred until your retirement. Once differed, you will need documentation from ERSC to enroll in Medicare three months prior to your retirement. 6 months: Retirement Timeline 36 months: Discuss your benefit pay ment options with your family and your financial advisor Prepare your retirement budget Attend one of ERSC s Retirement Sessions and the Maryland State Retirement Agency s (SRA) Pre-retirement Planning Seminars Assess your plans and retirement readiness 9 12 months: Request estimates of retirement benefits from ERSC and SRA Apply to purchase any eligible service and/or military service credit Review your retiree health plan options (including Medicare) MCEA members: Become aware of April 1 deadline for submitting retirement forms to be eligible for payment of 30 percent of available sick leave 2

3 Investing with a 403(b) or a 457(b) Plan as You Near Retirement As you approach retirement, you may find that you ve fallen short of your investment goals. If you are investing with a 403(b) and/or a 457(b) plan, you may be eligible to save more during your final years before retirement under the IRS Age 50 Catch-up Provision. Under the Catch-up Provision, if you reach age 50 or older at any time during the calendar year, then you are eligible to contribute an additional $5,500 annually to your 403(b) and/or 457(b) plan. This raises your total yearly contribution potential to $22,000 for each plan, for a total maximum of $44,000 per calendar year. For more information on the MCPS 403(b) and 457(b) plans, visit mcps.yourplan.info. Retirement Planning Resources Need more information? ERSC is here to help you plan for an upcoming retirement. Retirement Sessions and Forms Workshops present important retirement information and help you plan for an upcoming retirement. To see the dates of upcoming ERSC sessions and forms workshops, visit our website at org/departments/ersc/retirement_workshops.shtm. Online Retirement Statement allows you access to your retirement information at any time from any computer via the secure Web portal mymcps. Retirement Planning Web page features information to help you plan for your retirement. Available at Understanding Your Retirement guides you through the retirement process and presents available benefit options. This booklet is available at retirement sessions and on our Retirement Planning Web page. The Mentor is a newsletter offered by the Maryland State Retirement Agency to keep active members informed of system benefits and retirement planning options. Access it on our Retirement Planning Web page. 3 months: Download retirement forms from ERSC s Retirement Planning Web page Determine your federal and state withholding amount (consult with your tax advisor) Contact the Social Security Administration to apply for Medicare Parts A and B if you or your spouse are 65 years old or older. Contact the Social Security Administration if you are ready to commence your social security and are age 62 or older. Review your 403(b) and 457(b) plan options 1 2 months: Submit all retirement forms to ERSC Submit salary deferral form(s) to direct leave payout to your 403(b) and/or 457(b) account For a more detailed list of actions, see ERSC s Understanding Your Retirement and the State Retirement Agency s fall 2009 issue of The Mentor. Retirement 3

4 Update Your Beneficiaries The start of a new year is a good time to take stock of your named beneficiaries for all of your employee benefits, including your life insurance policy(ies), 403(b) plan, 457(b) plan, and pension. Ask yourself: Has anything happened over the course of 2009 that changed my wishes? Do I need to adjust my beneficiaries? While ERSC is the first stop for your beneficiary paperwork, we are not able to report or confirm the beneficiaries on your existing plans. If your decisions are in question, submit a new beneficiary form to be certain that your wishes are in line with your beneficiary records. To change your basic employee term life insurance beneficiaries: Submit MCPS Form : Employee Benefit Plan Enrollment. Indicate your desire to change your beneficiaries in Section II and indicate your changes in Section VII of this form. To change your optional employee term life insurance beneficiaries: Submit ERSC Form 401: Optional Employee Term Life Insurance. Indicate your desire to change your beneficiaries in Section II and indicate your changes in Section III of this form. To change your 403(b) or 457(b) plan beneficiaries: Contact your vendor. If you do not know how to contact your vendor: Visit mcps.yourplan.info Click on the Vendors tab. Select your vendor from the list to see information on updating your beneficiaries. To change your pension plan beneficiaries: MCPS Core and/or Supplement pension plan Submit MCPS Form 455-5: Designation of Beneficiary/Beneficiaries. State Retirement and Pension System of Maryland Submit State Form MSR004. All forms are available on the ERSC website at departments/ersc/. Budget for Summer with a Summer Savings Account MCPS has worked closely with the Montgomery County Teachers Federal Credit Union (MCT) to offer the MCT Summer Pay program. This program has transitioned from the former Summer Pay program run by MCPS. The MCT Summer Pay program offers the opportunity to set aside a portion of your pay during the school year to be distributed to you during the summer months. This program not only helps you budget for the summer months, but also enables you to earn interest on your money and create a fund for summer fun whether you are a 10- or 12-month employee. If you are one of the 3,800 MCPS employees who have already established a summer pay account with MCT, your funds will be distributed from your summer pay account on July 2, 16, and 30, and on August 13 and 27, Haven t established an account yet? If you have not yet made arrangements for your summer finances, it isn t too late to consider opening a savings account to get you through those summer months or to provide you with some extra summer spending money. MCT is the only financial institution to which MCPS can directly deposit a flat amount of your pay. To take advantage of this convenient option, you must first establish a summer pay savings account with MCT. For more information on opening a summer pay account, visit the MCT website: summer_pay. After establishing your summer pay account, you will need to notify MCPS of how much to deposit. Submit MCPS Form : Direct Deposit Authorization and indicate how much of your pay you would like to have deposited into your summer pay account. Keep in mind that it takes two full pay periods before direct deposit changes take effect. (For more information, see Know the Direct Deposit Facts in this issue.) You will need to plan for this time when you are budgeting how much to save for the summer months. Not an MCT Customer? MCT is the only financial institution to offer a summer pay account based on MCPS pay dates. However, if you are a customer of another financial institution and you wish to save for the summer months or other events, your financial institution can route a portion of your pay to a savings account after your total pay has been deposited. Contact your financial institution to learn what options may be available. Claim Your Classroom Expenses at Tax Time Are you a teacher, instructor, counselor, principal, or paraeducator who works at least 900 hours during the school year? If so, you are eligible to deduct from your taxes up to $250 of any unreimbursed expenses you have incurred for books, supplies, computer equipment (including related software and services), other equipment, and supplementary materials that you use in the classroom. For more details, visit the IRS website at 4

5 Know the Direct Deposit Facts The convenient nature of having your pay deposited directly into your bank account means that you rarely have to consider how direct deposit works. Yet understanding how direct deposit works is important if you need to make changes to your account or your direct deposit instructions. Did You Know? Direct deposit changes are not immediate. Changes to your direct deposit require at least two full pay periods to take effect. If you are changing accounts, this means it may be 2 3 actual pay periods before your pay is deposited into your new account. This time is due to a necessary verification process called prenotification. Prenotification verifies your account information with your banking institution in these three steps: 1. ERSC processes your MCPS Form : Direct Deposit Authorization and enters the account information you have provided into the payroll system. 2. On the next pay date, ERSC s automated payroll system sends a prenote, a test deposit of zero dollars, to the routing number and account number you have provided. This zero dollar deposit allows ERSC to verify that the account you have provided is functional and will accept funds. 3. If the test deposit is accepted, then the ERSC payroll system updates your account status to reflect that prenotification was successful. On the following pay date, your pay will be directly deposited to that account. Making a change to your direct deposit. To make a change to your direct deposit, submit MCPS Form : Direct Deposit Authorization. If you are sending your funds to a new account, wait until you have received a direct deposit to this account before closing your old account. The direct deposit of funds to your new account is your assurance that prenotification has been successful. While your new account undergoes prenotification, you will receive a paper check. If you do not notify ERSC of a closed account, then you will encounter a delay in receiving your next pay advice. If the automated payroll system is not updated and funds are sent to a closed account, it takes between 5 and 10 business days after the pay date for the ERSC payroll system to be notified of the failure to deposit your funds, to receive those funds back from your financial institution, and to issue you a paper check. Please note that the return of funds from your closed account is not governed by MCPS; it is contingent upon that account being in good standing with your financial institution. Didn t receive your direct deposit? If you were expecting a direct deposit that you have not received in your new account, it could be due to several reasons: 1. The prenotification process is not complete. Remember, it takes 2 3 pay periods for the prenotification process to be completed before funds can be deposited into a new account. If you think that you should have received a direct deposit, check the pay date calendar to make sure you have allotted the proper amount of time for your account to be verified. The pay date calendar is available on the ERSC website at ersc/pay_schedules.shtm. 2. The prenotification process uncovers an error with the account. Rarely, the prenotification process will alert your financial institution of an error, and they will contact us directly with a change to your account number or routing number. In this case, your direct deposit will have to undergo the prenotification process again, which will extend the time that it takes to receive your pay directly in your new account. 3. You have provided incorrect account information. If there is an error with the account information you have provided, the prenotification process cannot be completed. Verify with your financial institution that the account and routing numbers you have provided are accurate. If your account is with Montgomery County Teachers Federal Credit Union, your account number is not your MCPS employee ID, a common employee mistake when completing direct deposit paperwork. 5

6 Watch Your Winter Waistline According to the Centers for Disease Control and Prevention (CDC), our society has become obesogenic or characterized by environments that promote increased food intake, nonhealthful foods, and physical inactivity. During winter months, when darkness and cold weather often damper our motivation for outside activity and holiday celebrations have had us indulging in high-calorie treats, this statement is all the more true. This combination of holiday indulgence and lack of physical activity can quickly lead to unwanted pounds. Research increasingly shows that those unwanted holiday pounds are downright dangerous, posing serious risks to your longterm health. According to the National Institutes of Health, weighing too much puts you at risk for a host of illnesses and ailments. Overweight and obesity are known risk factors for: diabetes coronary heart disease high blood cholesterol stroke hypertension gallbladder disease osteoarthritis (degeneration of cartilage and bone of joints) sleep apnea and other breathing problems some forms of cancer (breast, colorectal, endometrial, and kidney) Obesity is also associated with: hirsutism (presence of excess body and facial hair) stress incontinence (urine leakage caused by weak pelvic floor muscles) psychological disorders, such as depression increased surgical risk increased mortality The new year offers a perfect time to evaluate your wellness goals. Use this time to reflect upon those holiday indulgences and think about any adjustments you may have to make to get yourself back on track to achieving or maintaining a healthy weight and avoiding the dangers of being overweight or obese. Achieving or maintaining a healthy weight is about more than looks; it s about your longterm health. Achieving or Maintaining a Healthy Weight The United States Department of Agriculture (USDA) suggests five steps to achieving or maintaining a healthy weight. 1. Keep track: Track your food intake and physical activity. Check your weight weekly. 2. Get moving! Physical activity can help you reach and keep a healthier weight. 3. Learn what to eat from each food group. 4. Focus on how much you eat. Watch your portion sizes! 5. Choose nutrient-dense forms of foods. These foods are packed with nutrients, but low in extras that just add calories. For more information on these recommendations, visit the USDA s Steps to a Healthier Weight Web page at stepstoahealthierweight.html. 6

7 Calculating Your Ideal Weight Each of us is built differently, so how can we tell if we are at our ideal or healthy weight? Health professionals suggest calculating your Body Mass Index, or BMI, as one way to tell whether or not you are currently at a healthy weight. BMI is an indicator of fat composition for most people. However, it is not a direct measurement of fat, and therefore is not a diagnosis by itself. BMI can give you a broad idea of whether or not your weight is in a healthy range. Your health care provider can help you interpret your BMI number and make suggestions about your personal situation. To calculate your BMI, first multiply your height (in inches) by itself. Divide this product into your weight (in pounds). Multiply the quotient by the conversion factor of 703. [Your Weight (in pounds) (Your height in inches) 2 ] X 703 Now compare your BMI to the Centers for Disease Control and Prevention guidelines for underweight, healthy, and overweight BMIs: BMI Weight Status Below 18.5 Underweight Normal Overweight 30.0 and Above Obese Losing or gaining weight in order to reach your normal or healthy weight range is a matter of adjusting your caloric intake and physical activity. Weight maintenance, according to the National Institutes of Health (NIH), must entail burning the same amount of calories as you consume. Weight loss, then, means burning more calories than you consume. Talk to your health care provider about healthy approaches to weight management. She or he can help you interpret your BMI and find a weight range that is ideal for you, as well as a weight management program that will work best for your particular situation. 7

8 2009 Flexible Spending Account Reminder If you are one of the many employees who had a Flexible Spending Account (FSA) in 2009, then it s time for you to review your account and make plans to use any remaining balances before March 15, Qualifying expenses from your medical and/or dependent care FSAs incurred between January 1, 2009, and March 15, 2010, may be reimbursed from your 2009 plan election. Any remaining 2009 balances after March 15, 2010, will be forfeited. All 2009 plan-year FSA claims must be submitted by April 30, For additional information about FSAs or to download a form for filing an FSA claim, visit our website at and click on Benefits and Forms. To review your account, visit the SHPS/Carewise Health website at Don t Forget! Update Your Employee Information As you re reflecting on the events of 2009, don t forget about your employee information. Have you moved to a new address over the past year, or have you made other changes to your contact information? Would you prefer that your phone number of record be your cell phone? Make sure that the information on file with the Employee and Retiree Service Center is up to date. That way, you won t miss any important employee notifications. To update your address, phone number of record, or other personal information, please submit MCPS Form 445-1: Change in Personal Information, available on our website. Happy New Year! is published quarterly by Montgomery County Public Schools Employee and Retiree Service Center 7361 Calhoun Place, Suite 190 Rockville, Maryland phone: ERSC@mcpsmd.org Larry A. Bowers Chief Operating Officer Susanne G. DeGraba Chief Financial Officer Richard C. Johnstone Director, Benefits Strategy and Vendor Relations Jessica A. Arnold Communications Specialist and Editor EDITORIAL, GRAPHICS & PUBLISHING SERVICES K