University of California Retirement System (UCRS)

Transcription

1 University of California Retirement System (UCRS)

2 Objectives Understand the basics of the UC Retirement Plan Learn how retirement income is calculated and options for survivors Discover the retirement process, necessary decisions and required documents

3 UC Retirement System

4 UCRP A Defined Benefit Plan Formula based on: Age at retirement UCRP service credit Highest average plan compensation (HAPC) Payment options include: Monthly payments or Lump Sum Cashout

5 UCRP A Defined Benefit Plan Provides: Cost of Living Increases Survivor Benefits Disability Income Death payment

6 Age Factor Increases monthly between age 50 and 60 Age 55 and 0 months:.0180 Age 55 and 1 month:.0181 Age 55 and 2 months:.0182 Age 55 and 3 months:.0184 Age 60 and greater:.0250

7 Service Credit A measure of time you have participated in UCRP Earned when you receive covered compensation for an eligible appointment

8 Limits UCRP Limit 100% of HAPC 415(b) Annual dollar limit UCRP is allowed to pay to an individual in a year 415(m) Restoration Plan 401(a)(17) Amount of covered compensation that can be used in HAPC calculation UCRP entry date prior to 7/1/1994, $385,000 All others $260,000.

9 Vacation Hours With departmental approval, use prior to retirement date Value of any unused hours paid to you.

10 HAPC Highest Average Plan Compensation A member s average monthly full-time equivalent covered compensation during the 36 highest consecutive months

11 Covered Compensation Includes: Pay received for a regular and normal appointment, Base Salary Administrative stipends Shift differential Does not include (partial listing): Pay for summer session or University extension teaching Pay via Honoria, or By Agreement

12 Covered Compensation In addition Health Science Faculty: X Prime: additional salary component covered under UCRP Y Prime: additional salary component above APU Scale 3. Covered under UCRP Y: Negotiated Annual Additional Compensation. Not covered by UCRP Z: Incentive Compensation, clinical or consulting. Not covered by UCRP

13 Who is Eligible to Retire? Members who are at least age 50 and vested

14 UCRP - Income Formula Member coordinated with Social Security: Service Credit x Age Factor = Benefit % (HAPC - $133) x Benefit % = basic retirement income (HAPC is reduced by $133 in recognition of the University s contribution to Social Security)

15 Sample Calculation - Member w/social Security Age: 60 Service: 30 yrs HAPC: $3,000 Age Factor Years Percent.0250 x 30 = 75%^ Percent HAPC Monthly Income 75% x $2,867 = $2,150 ^maximum benefit percent is 100%

16 Cost-of-Living Adjustment-- Retiree COLA Based on an average of the CPI for Los Angeles & San Francisco Provides: 100% of increase up to 2% 75% of increase above 4% Maximum COLA 6% Provided each July to retirees who retired no later than July 1 of the previous year.

17 Cost-of-Living Adjustment-- Inactive COLA Must retire July 1 or later And Have at least one business day break in service prior to July 1 Is the lesser of 2% or the increase in the CPI Provides an increase in the HAPC.

18 Taxes on Retirement Income Most of the UCRP benefit is taxable income when paid except: After-tax contributions made by members prior to July 1, 1983 Service credit buybacks elected before July 1, 1997

19 Survivor Benefits Death While Eligible to Retire - DWE Postretirement Survivor Continuance PRSC Contingent Annuitant Death Benefit

20 DWE If member was eligible to retire at the time of death: Benefit calculated as if the member had elected to retire on the day after the date of death with eligible spouse or eligible domestic partner as contingent annuitant

21 Postretirement Survivor Continuance - PRSC Built in at no cost to retiree (monthly income option only): 1. Eligible spouse/domestic partner or 2. Eligible child(ren) or 3. Eligible dependent parents

22 Contingent Annuitant Lifetime monthly income after Member s death Designated at time of retirement and becomes irrevocable Separate payment from PRSC Can be anyone, including person eligible for PRSC Reduces benefit payable to Member

23 Survivor Income - Example Assumptions: Employee is 60 at retirement Coordinated with Social Security The eligible survivor is 60 Meets definition of eligible survivor.

24 Survivor Income - Example Employee PRSC CA Basic $2,150 $537 N/A Option A $1,937 $537 $1,399 Option B $2,001 $537 $976 Option C $2,035 $537 $749 Option D $2,074 N/A $1,037

25 Lump Sum Cashout An alternative to monthly retirement income, one single payment approximating the value of your lifetime monthly retirement income.

26 Lump Sum Cashout Payment Options: Partial or Full Distribution Payable To Member Taxable Portion Eligible for Rollover To DCP, 403(b), 457(b), IRA, or Another Qualified Plan Nontaxable Portion (After-tax UCRP Contributions) Rollover to DCP After-Tax or Roth IRA

27 Lump Sum Cashout What You Forfeit: Survivor Benefits Basic Death Benefit Medical, Dental, Vision, Legal

28 Sample Calculation - Member w/social Security Age: 60 Service: 30 yrs HAPC: $3,000 Age Factor YearsPercent.0250 x 30 = 75% Percent HAPC Monthly Income 75% x $2,867 = $2,150 Lump Sum Cashout: $331,530

29 ucnet.universityofcalifornia.edu

30 AtYourService.ucop.edu

31 Retirement Election Process Request a Personal Retirement Profile (PRP) about 3 months in advance Apply for CalPERS or STRS retirement if applicable Review PRP / Make decisions about retirement Complete Election 2 months prior to retirement

32 Decisions Monthly income or lump sum Survivor benefits Distribution of CAP funds Federal and state income tax withholding Continuation of insurance

33 Documents Required For PRSC photocopy of: Marriage certificate or California Declaration of Domestic Partnership or UC Declaration of Domestic Partnership Birth evidence for children under age 18

34 Documents Required, cont. For Contingent Annuitant: Birth evidence o Examples: birth certificate, passport, military records, certificate of naturalization

35 Reemployment at UC After Retirement Rehire subject to policy limitations Rehired retiree must sign UCRP Retired Employee Election Form Reemployment may affect retirement income and health and welfare benefits Detailed information in the Returning to UC Employment After Retirement Factsheet

36 UCRP Additional Benefits Service Credit Buyback Disability Income Basic Death Payment Capital Accumulation Provision (CAP)

37 Service Credit Buyback Available for: Approved leave without pay Partially paid sabbatical Noncontributory plan (Plan 02) Reestablish prior UCRP membership As of May 2009, expanded timeframe to elect & additional repayment options

38 Service Credit Buyback Advantages: Helps with vesting Higher retirement income Contributes to eligibility for retiree medical and dental benefits May increase UC contribution for medical and dental For additional information see: The UCRP Buyback Booklet

39 UCRP Disability Income Member has a disability which is permanent or expected to last 12 months or longer Must be vested (5 years service credit) Receive temporary income Medical, Dental and Vision may continue

40 UCRP Death Benefit $7,500 paid upon the death of an active, inactive, disabled or retired member. OR If a UCRP member prior to October 1, 1990 (and death occurs while employed), one month s final salary plus $1,500 if greater than $7,500.

41 UCRP Death Benefit Paid to: Designated Beneficiary OR, if none First person in the order of succession defined by the plan

42 Beneficiary Person, trust or other entity you designate to receive UCRP death benefit, life insurance, balances in CAP, 401(a), 403(b) and 457(b) accounts upon your death May be changed at any time

43 Order of Succession Spouse or eligible Domestic Partner, or if none Child(ren) or, if none Parent(s) or, if none Sibling(s) or, if none Your Estate

44 Capital Accumulation Payment (CAP) Allocations in 1992, 1993, 1994, 2002, & 2003 Distribution/rollover required at retirement Taxable upon distribution Early distribution penalty may apply Account balance available on AtYourService.ucop.edu

45 CAP Distribution Options Cash distribution Rollover to: DCP 403(b) 457(b) IRA

46 UC Retirement System

47 Distribution Options: DCP, 403(b), 457(b) Distribution/rollover optional at retirement or separation if plan balance $2,000 Distribution restrictions & penalties may apply IRS defines Minimum Required Distributions (MRD)

48 Distribution Options Cash distribution: Ad Hoc/as needed Systematic withdrawal (monthly) Rollover to: IRA Another employer s plan NetBenefits.com or

49 DCP After-Tax/Rollover Voluntary after-tax contributions Contribute 100% of UC salary or $53,000 Rollovers from another employers 401(a), 401(k), 403(b) and 457(b) public plans Interest & earnings tax deferred Interest/earnings subject to early distribution penalties Distribution at any time

50 Minimum Required Distributions (MRD) Must start by April 1 of the year following age 70 ½ Are age 70 ½ or older and recently separated from UC employment Payments made by 12/31 each year thereafter until entire balance is paid

51 Minimum Required Distributions, continued MRDs not eligible for rollover Taxable income in year received; 10% federal and 1% state automatically withheld Non-compliance penalty by IRS is severe

52 403(b) Loan at Retirement Continue loan payments, or Repay in full within 90 days of retirement (required if you elect a Lump Sum Cashout) If not, then balance considered in default the outstanding loan balance is taxable income for that year (plus early withdrawal penalties may apply)

53 Additional Resources UC/HR Benefits: ucnet.universityofcalifornia.edu/ Fidelity Retirement Services: NetBenefits.com UC Treasurer s Office: RASC o o Option 8 o

54 Whatever resources of good health, character, and fortitude you bring to retirement, remember also to bring money. -Jane Bryant Quinn