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2. work
3. retirement

Plan for Tomorrow: Retirement
Topics of Discussion
 Retirement eligibility
 Retirement options
 Benefits after
retirement
 Health insurance credit
 Applying for service
retirement
 Working after retirement
Virginia Retirement System: VRS
 Virginia Retirement System
Resources
 Web Address:
www.varetire.org
 Phone Number: 1- 888-8273847
 Log in as a Member to my
VRS and have access to your
information
 Forms
 FAQs
Use myVRS to
 Identify VRS service
time
 Identify Member
Contributions
 Obtain an estimated
monthly retirement
benefit
Plan 1 and Plan 2
 Plan 1- members who began employment prior to July
1, 2010 and were vested (5 years of service) by 12/31/12
 Plan 2- members who began employment on or after
July 1, 2010
Plan 1: When Can You Retire?
Early Retirement
(Reduced Benefit)
 Age 55, with 5 years of
VRS service
 Age 50, with 10 years of
VRS service
Full Retirement
(Unreduced Benefit)
 Age 65, with 5 years of VRS
service
 Age 50, with at least 30
years of VRS service
Plan 2: When Can You Retire?
Early Retirement
(Reduced Benefit)
 Age 60, with at least 5
years of VRS service
Full Retirement
(Unreduced Benefit)
Your normal Social Security
Retirement Age, with at least
5 years of VRS service or
when your age and service
credit equal at least 90.
VRS (Defined Benefit Plan): Pension
It pays eligible members a
lifetime benefit amount
based on:
1. years of VRS service
2. age at retirement
3. and average final
compensation (AFC)
Retirement benefits are
subject to:
 IRS tax levies
 Debt to a member’s
employer
 Child support payments
 Marital property as stated
in an Approved Domestic
Relations Order (ADRO)
Average Final Compensation (AFC)
 Plan 1: The average of the 36 consecutive
months of highest creditable compensation,
wherever it appears in the member’s VRS salary
history.
 Plan 2: The average of the 60 consecutive
months of highest compensation, as a covered
employee.
 Supplements aren’t included
Purchase of Prior Service: PPS
Purchased service credit increases the retirement benefit by
increasing years of VRS service and results in a higher benefit in
the case of early retirement. The cost is either:
1. Actuarial
2. 5% of current compensable income or AFC
Types of Service Credit





Military leave
Military service
VRS Refunded service
Educational leave
Non-covered service with a
VRS employer
(i.e., substitute, hourly
employee)
 Leave for birth or adoption of a
child
 Public service (i.e., another public
school division outside of Virginia)
 Civilian service in the federal
government
 VRS Refunded service
 5% of current compensable
salary or AFC, whichever is
higher.
 No time limit to make the
purchase, but the VRS member
must be actively employed in a
VRS covered position.
Taxes on VRS Benefits
 In most cases, a retiree must pay federal and state taxes
on the retirement benefit.
 A retiree may change the withholding amount at any time
during the year.
 The value of a retiree’s basic life insurance coverage in
excess of $50,000 is subject to FICA, federal and state
income tax. The imputed income is reported each year on
a W-2 form.
 If you move to another state, you will be responsible for
paying taxes at the end of the year to that state, if
applicable.
Cost-Of-Living Adjustments:
COLA
 A retiree is eligible for a cost-of-living adjustment on July 1 of
the second calendar year after retirement e.g. Retire July 1,
2015, COLA July 1, 2017.
 The amount of the COLA is calculated based on the Consumer
Price Index-Urban.
 The maximum COLA is 5%.
Historical Look at COLAs
Year
Plan 1
Plan 2
2014
1.46
1.46
2013
2.07
2.04
2012
3.08
2.58
2011
1.28
NA
2010
0
NA
2009
3.84
NA
2008
2.8
NA
2007
3.1
NA
2006
3.2
NA
2005
2.7
NA
Beneficiary: A person who is designated as the
recipient of funds e.g. insurance policy and
member contribution funds
Life Insurance &
Optional Life
Insurance
VRS Member
Contributions
•Update your information by completing a VRS Designation
of Beneficiary form (VRS-2) and mail it to VRS.
Retirement Options
Retirement Options
Basic Benefit
Survivor
Advance Pension Option
Partial Lump Sum Option Payment (PLOP)
Survivor with PLOP
VRS Retirement Payout Options
1.
2.
3.
4.
Basic Benefit
Basic Benefit with a Survivor Option
Partial Lump Sum Option Payment (PLOP)
Partial Lump Sum Option Payment (PLOP) with a
Survivor Option
5. Advance Pension Option
VRS RETIREMENT PAYMENT:
VRS pays retirement benefits in arrears, you are paid for the prior
month, e.g. retire July 1, 2015, payment made August 1, 2015
Example Retiree – Mary
 Retirement age: 56 years, 10 months
(July 1, 2015 retirement date)
 Date of birth: 09/19/1959
 AFC: $61,654.90
 Years of Service: 30 years, 0 months
 Retiree receives $2,620.33 per month.
Retirement Benefit
Member
Contributions
[approx. 1st 36 months]
Life-Time
Benefit
Member Contributions
 Monthly contributions are
sent to VRS for each
month that a member
works in a VRS covered
position
 5% of an employee’s
creditable compensation
Upon Retirement:
 Mary’s member
contributions/interest at
retirement = $87,606.13
 Mary’s payout option (basic
benefit) = $2,620.33/month
 Her member
contributions/interest will be
depleted in about 33 months.
 VRS will begin paying her
retirement benefit from VRS’s
investments.
VRS Retirement Payout Options:
Basic Benefit
 The basic benefit is the
amount the member
receives based on average
final compensation (AFC),
years of creditable service,
and age at retirement.
 Mary would receive
$2,620.33 per month.
 The basic benefit is payable
to the member only.
 If the member dies before
receiving benefits that equal
the accumulated member
contributions plus interest,
any remaining amount of
these funds are paid to the
designated beneficiary.
Partial Lump Sum Option
Payment…PLOP
 PLOP is a one-time
payment of annual
retirement benefit paid to
the member, in addition to
a reduced monthly
retirement payment.
 The member must work beyond
full-retirement.
 The one time payout is received
about the same time as the first
VRS retirement check.
 VRS calculates the member’s
Basic Benefit, and then reduces
the benefit on an actuarially
equivalent basis to reflect the
payment of the lump-sum
distribution.
PLOP
 A member may use purchased service credit to meet
the 30 year, Full Retirement requirement, but must
work beyond full retirement, e.g. 31, 32, 33 years to
PLOP.
 The last 12, 24, or 36 months of service credit must be
earned in order to PLOP the desired 1, 2, or 3 times.
 Exp. Of Mary’s Basic Benefit $2,620
 12 x $2,620=$31,440
 24 x $2,620=$62,880
 36 x $2,620=$94,320
PLOP: Another Example
PLOP
Payment
Monthly
benefit with
PLOP
1 Year
2 Years
3 Years
$34,588.44
$69,176.88
$103,765.32
$2,677.68
$2,472.98
$2,268.29
$2,882.37
$2,882.37
$2,882.37
The retiree can
PLOP 1, 2, or 3
times
Basic Benefit
PLOP: Taxes
 The PLOP is subject to a mandatory 20% federal tax withholding
in the year it is received.
 In addition, 4% state tax is withheld if the member is a legal
resident of Virginia at the time of payment.
 If younger than age 55, the member must also pay a 10% penalty
on the amount of the lump-sum payment for early distribution
from a pension plan.
 A member may defer paying taxes, and possibly eliminate the
10% tax penalty on the PLOP, by rolling the taxable amount into
an Individual Retirement Account (IRA) or other qualified plan as
allowed by the Internal Revenue Code.
Survivor: A person who will receive a monthly
benefit should the retiree pass away
 A lifetime benefit is paid to a
second person(s), known as the
contingent annuitant, after the
member’s death.
 The member’s Basic Benefit is
actuarially reduced based upon
the ages of the:
1. member and the
2. survivor at the date of the
member’s retirement.
 A member may change the
Survivor Option if the survivor
predeceases retiree:
1. Pick a new survivor; the
retirement benefit is
recalculated
2. Convert to the Basic
Benefit
 Survivor waives right to
benefit
Survivor Option
 The member may choose to
have any whole percentage of
the monthly benefit paid to the
survivor, from 10 to 100%.
 The smaller the percentage of a
monthly benefit the member
leaves to the survivor, the
smaller the reduction to the
member’s monthly benefit.
 Payments continue until the
survivor’s death.
 The survivor may be any
individual(s) selected by the
member.
 A member who chooses a nonspouse survivor whose age
difference is at least 11 years
cannot select a 100% survivor
option.
 If the member elects more than
one survivor, the benefit is
calculated based on the age of
the youngest and divided
equally.
Survivor Option:
100% Survivor Option- Spouse
 Retiree $2,059.58
 Spouse (date of birth
04/17/1963)
$2,059.58
(Basic Benefit $2,620.33)
40% Survivor Option- Spouse
 Retiree $2,363.01
 Spouse $945.20
(Basic Benefit $2,620.33)
Survivor Option:
50% Survivor Option with Child
 Retiree $2,145.26
 Child (date of birth
6/7/1988) $1,072.63
(Basic Benefit $2,620.33)
Advance Pension Option: APO
 The member receives a
temporarily increased
retirement allowance based on
estimated Social Security
benefits, beginning on the
effective date of retirement
and continuing to the Social
Security retirement age chosen
by the member.
 Why? Bridge the gap until
Social Security starts. Retire
before Social Security eligible
and need additional money
until eligible.
 The age the member chooses for the
benefit to reduce must be at least age
62, but no later than the member’s
normal retirement age (ages 65 to 67)
as specified under the Social Security
Act.
 The amount of Social Security benefits
are unaffected by this option.
 The member must contact a local
Social Security Administration office
to request an estimate of the benefit
payable at the age specified for the
temporary increase to end.
APO-Plan 1 & 2: Who is Eligible?
Plan 1
 Members who are least
55 years of age with 5 or
more years of service
OR
 Members who are least
50 years of age with 30
or more years of service
credit are eligible.
Plan 2
 Members who have an
unreduced retirement
benefit
OR
 Members who are least
55 years of age with 5 or
more years of service
Make a Change?
The retiree may not
change the:
 Basic Benefit,
 PLOP, and the
 Advance Pension Option
after receipt of the first
retirement check.
Sick/Vacation Days:
What happens when I retire?
Sick Leave Days Payout Options
 You must have been in a
sick leave eligible position
with RCPS for 10 years.
 Payout, you will be taxed
accordingly
 Roll over to TSA or
Deferred Compensation
 Rollover to VRS Service
Credit
 Payout is $20/day with a
maximum accrual of 180 days
 Example: Mary has 150 sick leave
days:
150 days X $20 = $3,000 (before
taxes, social security, and
Medicare)
Conversion of Sick Leave to VRS
Service Credit (Actuarial Cost)
 A member may purchase VRS service credit at actuarial equivalent
cost using payment received for accumulated unused sick leave only
at the time of an immediate retirement from the current employer.
 The amount of the sick leave payout determines the amount of sick
leave that can be purchased.
 Cost is determined
 Use the Actuarial Estimator on the VRS website to determine
the conversion cost
 Determine the value of the sick leave payout
 Between the actuarial estimator and the value of the sick leave
payout, determine the number of month(s) that can be
converted from the sick leave payout.
Sick Leave Credit Example
 Mary’s (basic benefit, $2,620.33 per month),
the cost to purchase:
 1 month of VRS service is $1,273.26; monthly basic
benefit is increased to $2,627.61
 2 months of VRS service is $2,546.52 ; monthly basic
benefit is increased to $2,634.89.
Vacation
 Maximum accrual is based on your years with RCPS:
 0- 4 years, 24 days
 5 – 9 years, 30 days
 10 years and up, 36 days.
 Employees are paid their per diem [daily] rate.
 You will be taxed accordingly.
 Rollover the payout into a Tax Sheltered Annuity and or
Deferred Compensation Account via RCPS payroll;.
 [retire 7/1/15, vacation payout 7/15/15, so change amount to
403(b) 7/1/15]
What Happens to Benefits?




Life insurance
Optional Life insurance
Health insurance
Dental insurance
Group Life Insurance
 A retired member retains basic group life insurance into
retirement for natural death only, at no cost.
 Coverage begins reducing at a rate of 25% of original
value at separation from service on January 1 of the
first full year following the date the employee is
separated from service, and
 on January 1 annually thereafter, until it reaches 25% of
its original value.
Life Insurance Example
 Mary’s annual salary is $58,829, rounded
to $59,000
 Natural death benefit is $118,000
Date
7/1/15
7/1/15 to 12/31/16
1/1/17 (after 1 calendar year of retirement)
1/1/18 (after 2 calendar years of retirement)
1/1/19 until death
Value
$118,000
$118,000
$88,500
$59,000
$29,500
Optional Life Insurance
 Continued under retiree optional life continuation
provisions, or
 Converted to an individual policy. (Employees must
exercise continuation or conversion right within 31 days of
the end of the month in which retirement occurs.)
 Optional life insurance amounts and corresponding
maximum begin to reduce at age 65 and all insurance
terminates at age 80.
When will current benefits end
after I retire?
July 1 or August 1
retirement date
 Benefits end August
31st (This is because
your annual premium is
deducted from your 10
monthly paychecks.)
Retirement during the
school year
 Benefits cease at the end
of the month of your
retirement.
Medical Coverage
 Due to the inability to offer affordable rates with UnitedHealthcare, the district
has entered into a partnership with a private health insurance exchange called
eHealth.
 eHealth has been offering online options for more than 15 years and has over
180 name brand insurers nationwide. Using this website, you can shop for
health coverage in your area.
 eHealth link: http://www.ehealthinsurance.com/partner/?allid=Wil41661.
 Retirees can also COBRA current coverage for up to 18 months. An additional
option is the public insurance exchange established as part of President
Obama’s Affordable Health Care act.
The eHealth Option
 eHealth is your total coverage solution. eHealth has an A+ rating from the Better Business Bureau and
was ranked by Change Sciences as the health insurance marketplace with the highest consumer usability.
But why enroll in 2015 health insurance coverage through eHealth rather than a government insurance
exchange this open enrollment season? Here are four reasons:
 eHealth makes it simple to shop for coverage and enroll in the plan of your choice. With more
than fifteen years of expertise, eHealth understands how consumers like you want to shop for
health insurance.
 eHealth offers a broader range of coverage options. eHealth is your best source for selection,
representing over 180 brand-name insurers nationwide.
 eHealth provides personal advice and ongoing advocacy. eHealth’s licensed agents make all
the difference when it comes to your long-term satisfaction. Even after you enroll, eHealth can
continue to serve as your advocate with the insurance company, if any problems arise.
 eHealth is a total coverage marketplace. There’s more to “coverage” than just health insurance
which is what government exchanges are mostly limited to. By contrast, at eHealth you can also
find dental and vision insurance, as well as products like short-term insurance, travel insurance,
and accident or critical illness insurance. eHealth has all you need to craft a total coverage
package for yourself or your family.
COBRA Medical Insurance
 Retirees may COBRA medical
coverage for up to 18 months or
until age 65 (or Medicare eligible)
 Coverage runs from January 1 to
December 31
 Premiums are paid to the Payroll
Office in 12 monthly payments or
in an annual lump sum
 COBRA participants will be sent an
Open Enrollment Package,
annually.
 Please notify the Payroll Office of
any changes in your address
Medical Insurance COBRA Rates for
2015 -- 12 Monthly Payments
Traditional Plan
HRA Plan
HDHP/HSA
Individual
$804.80
$459.43
$282.04
Individual +
One Child
$1,156.90
$660.42
$405.01
Individual +
Spouse
$1,609.72
$918.89
$563.52
Family
$1,991.17
$1,136.66
$697.06
Enhanced Vision COBRA Rates for
2015 -- 12 Monthly Payments
Individual Coverage
$7.91
Individual + One Child
$14.04
Individual + Spouse
$13.41
Family
$20.32
COBRA Dental Insurance
Retirees are eligible to COBRA group
dental coverage for 18 months
following retirement.



Premiums are paid to the Payroll
Office in 12 monthly payments or in
an annual lump sum
COBRA participants will be sent an
Open Enrollment Package, annually.
Please notify the Payroll Office of
any changes in your address
Dental COBRA Rates for 2015
12 Monthly Payments
Low Plan
High Plan
Individual
$31.83
$48.82
Individual +
One Child
$51.21
$78.30
Individual +
Spouse
$51.21
$78.30
Family
$85.23
$130.31
Health Insurance Credit : HIC

Eligibility: possess a minimum of
15 years of credible service with
VRS. And be enrolled and paying
a health/dental insurance/vision
insurance premium
The program is a benefit
designed to assist eligible
retirees with the cost:




health insurance
dental insurance and
vision insurance coverage
What plans qualify?
 Medicare Part B or Part D
 Employer-sponsored plans.
 Dental, vision, and
prescription drug plans;
and
 Any plan that provides a
broad range of medically
necessary services.
HIC: How Much is the Credit?
 $4.00 per year of VRS service
(amount set by the General
Assembly)
 Exp.: 15 years of Service x
4=$60.00 per month
 The credit applies only to the
retiree’s portion of the premium
and cannot exceed the amount of
the health insurance premium paid.
 The health insurance credit is added
to your VRS monthly retirement
benefit as a non-taxable
reimbursement.
How do I apply?
 The VRS Health Insurance Credit
form VRS-45 form is included in
the retirement packet.
 Thereafter, an updated form
needs to be completed and
submitted to VRS as your
insurance premium(s) change.
Service Retirement
 Retirement applications must be received at least 3 to 4 months
before, but not more than 5 months, prior to the effective date
of retirement. This is to ensure receipt of the first retirement
payment on the first of the month, following the retirement
date.
 For those retiring at the end of this school year, VRS will not
accept application materials dated prior to 3/1/15.
 Please allow an additional 2 weeks for the application to be
processed by Benefits and Payroll.
Service Retirement:
When do I get paid?
 Retirement benefits are paid on
the 1st of the month for the prior
month.
 Or benefits are paid on the last
working day of the preceding
month, if the 1st falls on a holiday
or weekend.
 The direct deposit schedule is
available for viewing on the VRS
website, under the Retiree tab.
Service Retirement Date
 Retirement dates are
always on the 1st of the
month.
 Note: Your termination
date is the last day you
worked or used leave.
Working After Retirement
 RCPS
 Critical shortage
areas
 Another VRS covered
employer
 Private sector
 Substituting
Working After Retirement: Bona fide
Break in Service
 If you wish to work for RCPS, VRS requires a bona fide break in
service of at least 30 days during a period in which you normally
are contracted to work.
 Summer months don’t count as a break for 10-month employees.
September would be the break in service returning October 1.
 The retiree is off the payroll for 30 days,
this means, no
 Summer school
 Anything in which a paycheck is generated by RCPS
Working After Retirement:
Critical Shortage Areas
 A retiree may teach, serve as a principal or assistant principal in a
designated critical shortage position [temporary and designated
for that school year only] and continue to receive retirement
benefits provided:
 It is certified by the Virginia Board of Education
 Has a break in service of at least 12 consecutive months…not
working in any full-time, part-time or temporary position with any
VRS-participating employer
 Has not retired with a reduced VRS benefit under an early
retirement incentive program (ERIP) and
 Has not taken a refund of member contributions and interest or
deferred retirement.
Working After Retirement:
SY 14-15 Top 10 Critical Shortage Areas
1. Special Education
2. Elementary Education (PreK-6)
3. Middle Education, Grades 6-8
4. Career and Technical Education
5. Mathematics, Grades 6-12 (including Algebra I)
6. School Counselor (PreK-12)
7. Foreign languages (PreK-12)
8. Health and Physical Education (PreK-12)
9. English
10. History and Social Sciences
Un-retiring: Working for a
VRS Covered Employer
 If you accept a VRS covered position, you have to notify
that employer that you are retired from VRS. Once the
employer reports you to VRS, your retirement benefits will
stop and your member contributions will begin again.
 VRS covered employers include:




State government
Public school divisions
Most city/county governments
Public colleges/universities
Working After Retirement:
Private Sector
 After service retirement, VRS retirees may accept
employment in the private sector.
 This employment will not affect your VRS benefits.
Working After Retirement: Substituting
Source 4 Teachers
 You must apply online to
Source4Teachers : go to
Source4Teachers.com.
 If you wish to speak to someone you
may contact:
 Lauren Wardach, Area Manager, 540488-2749,
lwardach@source4teachers.com
I’m ready to retire, now what?
 Contact Nancy Brett for a retirement package or to set up
an appointment:
 E-mail nbrett@rcps.info or 853-2728
 Allow 30 minutes to an hour for appointment.
 You may bring a family member.
 Submit request to retire (Request for Termination of
Employment form, in retirement folder) by Monday,
February 16, 2015.
 Retirement paperwork cannot be completed more than 5
months in advance but needs to be submitted to VRS if
possible, by 4/1/15 to ensure a timely first payment.
Questions