Two Dozen Get Retirement Questions Answered at Workshop

Transcription

1 Two Dozen Get Retirement Questions Answered at Workshop It will be here before you know it RETIREMENT! A comfortable post-employment is possible if you plan well according to a presentation at the April 15 Retirement Workshop. In addition to basic information regarding the process for applying for a Kent County Employee Retirement Program benefit as well as current information about health benefits, a financial advisor from ICMA-RC presented helpful tips about how to approach retirement and plan well for financial security. Kent County PENSION BENEFIT FORMULA To calculate estimated benefits, average the 3 highest consecutive annual base salaries, multiply by 1.85% (2% if hired before 12/21/10), multiply by years of service to determine the estimated annual pension benefit. Divide by 12 for the estimated monthly pension benefit. EXAMPLE if hired after 12/21/2010 Say William Penn worked for Kent County for 20 years and his 3 highest consecutive annual salaries were $29,000, $30,000, and $31,000. Add up the salaries, divide by 3 and you get $30,000 as the average annual salary. Multiply the average annual salary by 1.85% and you get $555, which is then multiplied by 20 years of service. The Total Annual Pension Benefit is $11,100. The monthly benefit would be $925. EXAMPLE if hired before 12/21/2010 Say William Penn worked for Kent County for 20 years and his 3 highest consecutive annual salaries were $29,000, $30,000, and $31,000. Add up the salaries, divide by 3 and you get $30,000 as the average annual salary. Multiply the average annual salary by 2.00% and you get $600, which is then multiplied by 20 years of service. The Total Annual Pension Benefit is $12,000. The monthly benefit would be $1,000. Pension benefits are typically subject to federal & state taxes Often the biggest surprise from the pension benefit calculation is how much less it is compared to current compensation. If eligible for Social Security benefits at the time of retirement, much of the shortfall will be made up by life-long FICA contributions. You will likely still be short of the typical 80% goal necessary to maintain your current standard of living, so your savings through the County s 457 deferred compensation provider (ICMA-Retirement Corporation) is the key.

2 It is never too late to open a 457 account although you cannot contribute after you retire, since it must be payroll deducted to defer federal and state income taxes. Generally, after retirement income declines and tax brackets are lower when withdrawals are made from the 457 account. Good news, unlike a private sector 401K, the 457 account can be withdrawn before age 59½ without penalty if you are retired, but withdrawals must still be started by age 70½. Employees are always welcome to visit or call the Personnel Office at to learn about the County s pension program, the 457 deferred compensation program, or any employee benefit. (Posted 04/15/19)

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7 Considering Retirement? Kent County Levy Court employees eligible to retire in 2019 (20%) +10 more eligible in CY2020; +17 in 2021; +16 in more in 2023 (40%); +10 more in 2024 (43%) 11 of 17 current Directors & Asst. Directors can retire by employees participate in 457 deferred compensation program Retirement eligibility (out of 291 Kent County employees) % % % % %

8 Considering Retirement? Pension Eligibility Age 62 or more with 8 years of service (5 yrs if hired before 06/29/10) Age 60 or more with 15 years of service Age 55 or more with 20 years of service Any age with 30 or more years of service Pick a Date Retirement date (last day of work) should be end of a month Letter with signature requesting pension benefits begin with a date Letter should include spouse (beneficiary) name & birthdate Submit letter 90 days in advance to Personnel Office Schedule attendance at Levy Court to receive Retirement Resolution 25 or more years of service? Choose a clock at Levy Court Office Unsure when? Request a pension estimate Call or Personnel Director with possible retirement dates

9 Considering Retirement? Monthly Pension Benefit (Life no beneficiary) Average of 3 highest consecutive annual base salaries Example: $29,000 + $30,000 + $31,000 = $90,000/3 = $30,000 average Years of service multiplier: 1.85 % (2% if hired before 12/21/10) Example: 20 years X 2% = 0.4 multiplier Calculate annual & monthly benefit Example: $30,000 X 0.4 = $12,000 per year or $1,000 per month Spousal Pension Benefit By law, spouse entitled to at least a 50% share of pension Former spouse could be eligible if a QDRO in effect QDRO could require monthly portion of your pension benefit QDRO could require normal survivor pension at 50% or fixed years Or both or some other allocation

10 Considering Retirement? Survivor (beneficiary) Pension Options 100% Contingent Annuitant Beneficiary receives original equal amount monthly upon death 75% Contingent Annuitant Beneficiary receives 75% of original amount monthly upon death 50% Contingent Annuitant Beneficiary receives 50% of original amount monthly upon death 10 Year Certain & Continuous For first 10 years, upon death beneficiary receives $ for balance 5 Year Certain & Continuous For first 5 years, upon death beneficiary receives $ for balance Survivor (beneficiary) Benefits Lawful spouse can waive pension benefit with notarized signature Beneficiary cannot be changed. If predeceases you, then no benefit

11 Considering Retirement? Pension Election Forms Actuary calculates Beneficiary figures based on age & gender Benefit calculation by Actuary can take up to 3 to 4 weeks Calculations returned by Actuary Personnel Office contacts retiring employee to execute forms Retiring employee completes W-4P tax forms Complete direct deposit forms & attach Voided check Sign form (spouse only required if waiving pension rights) Pension Benefit Pension $ direct deposited on or about 1 st of each month Wells Fargo sends monthly statement & mails 1099-R Contact Personnel Office to change address or deductions

12 Considering Retirement? Last Day of Work (retirement date) PARTY! Brief supervisor/successor about any pending issues Clean out desk or locker/turn in badge & County equipment/keys Vacation & Sick Leave payouts All accrued vacation hours & compensatory time ½ sick leave accrual up to 90 days (45 full days)* Paid in final paycheck (2 weeks after retirement) Consider rollover into 457 account to avoid payroll taxes May request vacation use at discretion of department head Complete an exit interview with Personnel Office (optional) Enjoy it, you work for it!

13 Retiree Benefits - OPEB Health insurance plan currently offered at existing rates Under Age 65 retirees Premium deducted from pension check (1 month in advance) Covered spouse eligible for COBRA upon your death 36 months Medicare Supplement (DVHT PPO$0) Age 65 retirees & spouses must enroll in Part B Medicare Do NOT sign up for Part D coverage (prescriptions) Sign up 3 months before birthdate Bring Medicare card to Personnel Office & enroll in coverage Over 65, Personnel Office must sign continual coverage form Medicare is primary & supplement secondary (show both cards) Currently no cost share, dependent rate deducted from pension Covered spouse eligible for COBRA upon your death 36 months Dental insurance plan currently offered at existing rates Premium deducted from pension check (1 month in advance) Covered spouse eligible for COBRA upon your death All retiree benefits subject to change by Levy Court

14 Retiree Pension & Other Benefits $5,000 Life Insurance policy No cost to retiree Voluntary life policy is portable but not group rate eligible Before your death Keep Personnel Office informed of address changes Keep beneficiary form current with Personnel Office Tell your beneficiary about County death benefit After your death Beneficiary needs to promptly inform Personnel Office If pension check direct deposited after DOD, it will be reversed Beneficiary submits copy of death certificate Beneficiary completes life insurance claim form Check mailed to beneficiary by life insurance company Pension beneficiary completes deposit & tax forms

15 Considering Retirement Questions?