2015 KPERS Pre-Retirement. Kansas Public Employees Retirement System

Transcription

1 2015 KPERS Pre-Retirement Kansas Public Employees Retirement System

2 KPERS Contact Information Web Site: Info-line: Toll-free Local Fax: Mail: 611 S. Kansas Ave., Suite 100 Topeka KS

3 KPERS 1 Membership Employee hired before July 1, 2009 and active on July 1, 2009 Inactive vested employees (prior to July 1, 2009, vesting requirement was 10 years) Employees on military leave who return to KPERS-covered employment Employees on a leave of absence, up to 1 year, who return to KPERScovered employment Active Board of Regents who have KPERS service credit with no break in service when going from KPERS to Board of Regents

4 KPERS 2 Membership All employees first employed in covered positions on or after July 1, 2009, and before January 1, 2015 Inactive, non-vested members on or after July 1,2009 and before January 1, 2015, who returned to work in a covered position outside of the grace period Former members who withdrew their KPERS account and began membership again on or after July 1, 2009 and before January 1, 2015

5 Sources of Retirement Income

6 Type of Retirement Plan KPERS 1 and KPERS 2 are 401a Defined Benefit Contrast to a Defined Contribution Plans (personal savings plans) b 401k IRA

7 Employee Contributions Employee contributions are based on gross wages each pay period Contributions are pre-taxed for federal taxes only All employee contributions are deposited into member s account Interest is credited annually after June 30 th based on the balance of the account on December 31 st of the previous year Your retirement benefit is not based on how much money you have in your account

8 Employer Contributions The employer also makes contributions to KPERS The employer contributions are not deposited into the member s account Employer contributions go into the employer fund to help pay for the following benefits: Disability benefits Death benefits Future retirement benefits

9 Keep Your Personal Information Up To Date Use the Member Web Portal to update your: Address Phone

10 Access your KPERS Account On-Line COMMUNITY 2015 Pre-Retirement COLLEGE & TECHNICAL Seminar COLLEGE

11 On-line Account Access-

12 Legislation

13 Active Member Legislation

14 Retired Member Legislation

15 Disability versus Retirement Long term disability coverage is an employee benefit If retiring because of health reasons, please talk with your designated agent

16 Retirement Eligibility KPERS 1 KPERS 2 COMMUNITY COLLEGE & TECHNICAL COLLEGE 2015 Pre-Retirement Seminar

17 Retirement Eligibility for an Unreduced KPERS 1 KPERS 1 Age 65 with at least one year of service credit Age 62 with at least ten years of service credit Any age when your age and years of service equal 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 points at age 54

18 Retirement Eligibility for an Unreduced Benefit KPERS 2 KPERS 2 Age 65 with at least 5 years of service credit Age 60 with 30 or more years of service credit No points

19 Retirement Eligibility for a Reduced Benefit KPERS 1 Age 55 with at least ten years of service credit KPERS 2 Age 55 with at least ten years of service credit, but less than 30 years of service Between age 55 and 60 with at least 30 years of service credit (less of a reduction)

20 Calculate Retirement Benefit COMMUNITY 2015 Pre-Retirement COLLEGE & TECHNICAL Seminar COLLEGE

21 Retirement Benefit Calculation KPERS 1 Benefit Calculation Final average salary times 1.75% for years prior to January 1, 2014 plus 1.85% for years January 1, 2014 and after Equals Annual benefit Divided by 12 equals monthly benefit KPERS 2 Benefit Calculation Final average salary times 1.85% multiplier for all years of service Equals Annual benefit Divided by 12 equals monthly benefit

22 Final Average Salary COMMUNITY 2015 Pre-Retirement COLLEGE & TECHNICAL Seminar COLLEGE

23 Additional pay is the lump-sum payout of unused leave time Final Average Salary KPERS 1 Final Average Salary If hire date is prior to July 1, 1993 An average of the highest four years salary including additional pay An average of the highest three years salary without additional pay or The highest calculation will be used If hire date is on or after July 1, 1993 An average of the highest three years salary without additional pay.

24 Final Average Salary KPERS 2 Final Average Salary The average of the highest five years salary without additional pay

25 Purchasing Service Credit COMMUNITY 2015 Pre-Retirement COLLEGE & TECHNICAL Seminar COLLEGE

26 Why Purchase Service Credit Increase years of service Increase lifetime retirement benefit

27 Types of Service Available to Purchase Year of Service Forfeited KPERS service Military Elected official Out-of-state teaching (cannot be from a private school) In-State or out-of-state non-federal public service Forfeited (Board of Regents) service Vista or Peace Corp service Waiting period for Regents plan eligibility

28 Cost and Methods of Payment Cost is based on age and salary at time of purchase Payroll Deduction Method Payroll deduction over a period of time (pre-tax) Lump-Sum Method Rollover or a trustee-to-trustee transfer from another retirement plan Personal check, money order or Discover Card (after tax) Purchase must be applied for and paid for before your last day on your employer s payroll

29 The Purchase Process Contact the designated agent with your employer If service is eligible to purchase, complete an application to purchase service credit The Retirement System will send a letter letting you know when your purchase will begin for payroll deduction or the cost for a lump-sum purchase Service credit will be added to your years of service when the purchase is complete

30 Retirement Payment Options Maximum Monthly Benefit Joint & Survivor Life Certain Partial Lump-Sum Option selection is irrevocable after retirement COMMUNITY 2015 Pre-Retirement COLLEGE & TECHNICAL Seminar COLLEGE

31 Calculating the Maximum Monthly Benefit Example: Member s age: 60 Member s years of service: 30 Member s final average: $30, Multiply final average salary $30, by 1.75% (or 1.85%) x 1.75% Multiply answer by years of service x This is the total annual benefit $15, Divide the answer by This is total estimated monthly benefit $ 1,312.50

32 Maximum Monthly Benefit Option Member will receive a monthly benefit for their lifetime After member s death, the beneficiary will receive the balance of any remaining money that the member contributed to KPERS There is no continued monthly benefit after the member s death

33 Joint Survivor Retirement Options Provide monthly benefit for someone after your death KPERS 1 Calculations Joint and 1/2 (50%) 91% (+ -).4% Joint and 3/4 (75%) 87% (+ -).5% Joint and same (100%) 83% (+ -).6% KPERS 2 reduction factors are different. Pop up feature

34 Life-Certain Retirement Options KPERS 1 Calculations Five-Year Life-Certain 98% Ten-Year Life-Certain 95% Fifteen-Year Life-Certain 88% Reduction Factors for Tier 2 are different The life certain option begins with the member s retirement date, not the member s death date.

35 Partial Lump-Sum Option Based on actuarial present value of retirement benefit, not the member s account balance. KPERS 1 PLSO can be 10, 20, 30, 40, or 50 percent. KPERS 2 PLSO can be 10, 20, or 30 percent. Monthly retirement benefits reduced by the same percentage of the lump sum taken.

36 Things You Should Consider Monthly benefit is a lifetime benefit, therefore PLSO reduction is a lifetime reduction. If you 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% penalty if you are under the age of 59 ½.

37 How to Calculate an Estimate Member Web Portal KPERS-15E COMMUNITY 2015 Pre-Retirement COLLEGE & TECHNICAL Seminar COLLEGE

38 Calculate an Estimate Member Web Portal COMMUNITY 2015 Pre-Retirement COLLEGE & TECHNICAL Seminar COLLEGE

39 Member Web Portal

40 20.75 years years 2.00 years years Legislation

41 Retirement Estimate 03/01/2014 1/1/ /01/2014 Retirement Employer Workshop 2014

42 Retirement Estimate Retirement Employer Workshop 2014

43 Calculate an Estimate Retirement Benefit Estimate Request Form - 15E COMMUNITY 2015 Pre-Retirement COLLEGE & TECHNICAL Seminar COLLEGE

44 KPERS-15E Benefit Estimate Request form Legislation

45 Retirement Date COMMUNITY 2015 Pre-Retirement COLLEGE & TECHNICAL Seminar COLLEGE

46 Choosing your Retirement Date KPERS (Non-School) and Classified (Non-licensed) School Employees The retirement date is the first day of any month Member must be off the payroll of all KPERS employers on the retirement date

47 Choosing your Retirement Date Licensed (certified) School employees under Continuing Contract Law Teachers As early as June 1 st if work under the contract is completed. Principals and Superintendents -As early as June 1 st if work under the contract is completed. (If using lump-sum add on pay first of the month after the end of their continuing contract)

48 The Retirement Process COMMUNITY 2015 Pre-Retirement COLLEGE & TECHNICAL Seminar COLLEGE

49 Steps in the Retirement Process Determine your best retirement date Review and choose a KPERS retirement option Submit the retirement application (KPERS-15) at least 30 days before the retirement date. (Member must apply; retirement does not start automatically) Provide proof of age and name change. (This is also required for the joint annuitant, if applicable)

50 Receiving Monthly Benefit Payments The retirement application packet includes a bank form for direct deposit (KPERS-15B) The retirement benefit will be direct deposited in your checking or savings account Direct deposits are made on the last working day of each month You will receive notice of any changes, but you will not receive a payment notice in the mail each month

51 Retiree Death Benefit KPERS retirees have a $4,000 death benefit The $4,000 death benefit is taxable for federal income tax but not Kansas income tax Member can choose a person, estate or a trust. The beneficiary will pay the taxes on the death benefit. Member may name a funeral establishment to receive the $4,000 death benefit to avoid federal income tax to a beneficiary Not payable on the death of a joint survivor.

52 Important to Keep Beneficiary Up-to-Date Review the designation whenever there is a significant life event, such as Marriage Divorce Retirement Birth or adoption Death May name a living person, estate or trust Can change beneficiaries at any time If a beneficiary is not named, KPERS must follow the line of descendants by Kansas law.

53 Continuing 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 Higher rates Conversion must take place within 31 days of last day on employer s payroll

54 Portability must take place within 31 days of last day on employer s payroll Continuing your Life Insurance Portability Option A term insurance option to continue coverage when leaving employment or retirement At your own cost, but without evidence of insurability Must be under 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 and all coverage terminates at age 70

55 Health Insurance KPERS does not provide health insurance coverage for KPERS retirees K.S.A 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

56 Federal and State Income Taxes Most, if not all, of your monthly benefit will be subject to federal income Monthly benefit is not subject to state income tax if a resident of the State of Kansas Submit a W-4P to have federal taxes withheld from your retirement benefit Federal withholding can be changed at anytime A 1099-R tax form is sent to your home address in January of each year

57 Copy of 1099-R Tax Form 2014 John Doe 123 Main Anywhere, KS 67123

58 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

59 Working after Retirement Per Legislation Passed by 2015 Legislature Effective July 1, 2016 COMMUNITY 2015 Pre-Retirement COLLEGE & TECHNICAL Seminar COLLEGE

60 60-Day Waiting Period 60 day waiting period before returning to work for any KPERS employer The 60 day waiting period begins with the KPERS retirement date If the retiree returns to work after retirement with a KPERS employer, the retiree does not make contributions to KPERS.

61 Returning to Work after Retirement Non-school & School Returning to work for the same KPERS employer $25,000 per calendar year earnings limitation in a covered or non-covered position. The employer must pay the working after retirement actuarial rate on any compensation paid to retiree. Returning to work for a different KPERS employer Same as above

62 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. Determine health insurance needs Review your other retirement plans and savings

63 Thank You For Attending Kansas Public Employees Retirement System