Making the Jump to Retirement?

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2011 Pre-Retirement Seminar Kansas Public
Employees Retirement System
Making the Jump to Retirement?
.
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Sources of Retirement Income
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What Type of Plan is KPERS?

• 401a Defined Benefit Plan.
• Contrast to Defined Contribution Plans (personal
  savings plans).
• 457
• 403b
• 401k
• IRA

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Employee Contributions

• All contributions go into members
  account.
• Interest is credited annually after June 30th
  based on the balance in your account on December
  31st of the previous year.
• Contributions based on gross wages each
  pay period, pre-taxed federal only.
• Retirement benefit is not based on how
  much money is in your
  account.

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Employer Contributions

• Employer contributes a percentage depending on
  the needs of the retirement system.
• Employer contributions do not go into your
  account.
• Employer contributions go into the employer fund
  to help fund the following
• Disability Benefits
• Death Benefits
• Future Retirement Benefits

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Annual Statement

• Receive in March or April
• Check Beneficiary
• Years of Service
• Final Average Salary
• Use to get Retirement Estimates

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Disability VS Retirement

• Long Term Disability Coverage is an Employee
  Benefit.
• If retiring because of health reasons talk with
  your designated agent.

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When Can You Retire?

• Retirement with unreduced benefits (Normal
  Retirement)
• Retirement with reduced benefits (Early
  retirement)

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Retiring with Unreduced Benefits (Tier 1)

• Age 65 with at least one year of service credit.
• Age 62 with at least ten years of service credit
  or
• Any age when age and years of service equal 85
  points.

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How to calculate the 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 52
• 85 points at age 54

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Retiring with Reduced Benefit

• Age 55 with at least 10 years of service credit
• Age 60 to 62 Reduction .2 per month.
• Age 55 to 60 Reduction .6 per month.

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Early Retirement Example

• An unreduced benefit at age 62 is 1,500.00.
• Age Reduction Amount
• 62 0 1,500.00
• 60 4.8 1,425.00
• 55 40.8 885.00
• Does not apply to members who have 85 points.

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Calculating Your Retirement Benefit

• Factors used to determine retirement benefits
• Final Average Salary
• Statutory Factors 1.75, 1 or .75
• Years of Service

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Calculating Final Average Salary Tier 1

• Membership date before 7/1/1993
• Final average salary is greater of
• 4-year (16 quarters) average including additional
  compensation, or
• 3-year (12 quarters) average excluding additional
  compensation.
• KPERS will calculate both ways and use the
  highest.
• Membership date on or after 7/1/1993
• Final average salary is greater of
• 3-years (12 quarters) average excluding
  additional compensation.
• Calendar year salary is used to calculate the
  final average salary.

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Increasing Your Retirement Benefit

• Purchasing service credit (Page 6 7)
• Year of Service
• Forfeited KPERS Service
• Military Service
• Elected Official Service
• In-State or Out-of-State Non-Federal Public
  Service
• Vista Service
• Peace Corp Service

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Cost to Purchase Service Credit

• Based on actuarial factors and tables
• Age
• Salary
• Current Salary
• Prior Year Salary
• Final Average Salary

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Retirement Payment Options
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Retirement Benefit Options

• Maximum Monthly Benefit Option
• Joint-Survivor Options
• Life-Certain Options
• Partial Lump-Sum (PLSO)
• When you retire, the option you choose is
  irrevocable.

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Calculating Maximum Monthly Benefit

• Example
• Members age 62
• Members years of service 30
• Members final average 30,000.00
• 1.Multiply final average salary 30,000.00
• by 1.75 x 1.75
• 525.00
• 2. Multiply answer by years of service x
  30
• This is the total annual benefit 15,750.00
• 3. Divide the answer by 12 12
• 4. This is total estimated monthly benefit
  1,312.50

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Maximum Monthly Benefit Option (Page 8)

• Lifetime monthly benefit.
• No continued monthly benefit after your death.
• Upon members death, beneficiary/ies will receive
  balance of contributions and interest not paid
  out.
• Total contributions and interest usually paid out
  in 3 to 4 years.
• Employer fund then kicks in and pays benefit for
  members lifetime.

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Joint-Survivor Options (Page 8)

• Provide benefit for someone after your death
• Joint and 1/2 (50) 91 ( -) .4
• Joint and 3/4 (75) 87 ( -) .5
• Joint and same (100) 83 ( -) .6
• Pop up feature

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Life-Certain Options (Page 9)

• Five-Year Certain Benefit reduced to 98
• Ten-Year Certain Benefit reduced to 95
• 15-Year Certain Benefit reduced to 88
• The life certain option begins with the members
  retirement date, not the members death date.

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Partial Lump-Sum Option (Page 9)

• Based on actuarial present value of retirement
  benefit.
• Partial lump sum can be 10, 20, 30, 40, or 50
  percent.
• Monthly retirement benefits reduced by percent of
  lump sum taken.
• A 30 percent PLSO payment will result in a
  permanent 30 percent reduction in your monthly
  benefit.

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Apply Age Factor

• Maximum Monthly Benefit
  1,312.50
• Age/Factor from Table x 117
• Present Actuarial Value
  153,562.50
• Partial Lump-Sum Benefit Reduced Monthly Benefit
• 50 76,781.25 50
  656.25
• 40 61,425.00 60
  787.50
• 30 46,068.75 70
  918.75
• 20 30,712.50 80
  1,050.00
• 10 15,356.25 90
  1,181.25

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Things You Should Consider

• Monthly benefit is a lifetime benefit, therefore
  PLSO reduction is a lifetime reduction.
• If your 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 tax if you are
  under the age of 59 ½.

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Monthly Benefit Estimate

• www.kpers.org
• KPERS Account Access Personalized Estimate
• Estimate Your Benefits
• KPERS 15-E Request for Benefit Estimate form
• Note The annual statement is a helpful tool
  when calculating an estimate.

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• Click on Active Member
• Click on Online Account Access

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Member Web Portal Homepage

• If you have a KPERS, KPF or Judges account, they
  will be listed separately. You will then click
  on the account you would like to view.
• Click on link to view or enter information
  regarding your personal profile (address, etc.)
• View your beneficiaries. Click on the
  beneficiary form link to complete form should you
  wish to change your beneficiary.

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• View information about your account.
• Use the KPERS benefit calculator
• Check your service credit
• Check your contributions and interest

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View Annual Statements

• Click on the Annual Statements link.
• Members may view annual statements by year

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Benefit Calculator

• Click on the Benefit Calculator link.
• You may view estimates you have already completed
  or
• You can click on the New button and create a
  new estimate.
• Each estimate will be saved, or you may delete
  the estimate.

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• From the side bar, click on Estimate your
  Benefit.
• Click on the KPERS calculator.

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View Your Annual Benefit
Divide your Annual Benefit by 12 to get your
maximum monthly benefit amount.
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Choosing Your Retirement Date

• Retirement date is the first day of the month.
• Must be off your employers payroll.
• Must be off the payroll of all participating
  KPERS employers on your retirement date.
• Non-School employees can retire on the first day
  of any month.
• Reminder Years of Service Rounds

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Retirement Date for School Employees

• School employees under continuing contract law
• Teachers
• As early as June 1st if work under contract is
  completed.
• If using lump-sum add on pay September 1.
• Principals and Superintendents
• June 1st if work under contract is completed.
• Non-certificated school employees
• First day of any month (same as all non-school).

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Steps in the Retirement Process

• Review the retirement options.
• Submit application for retirement 30 to 60 days
  prior to your retirement date.
• Submit proof of age (birth certificate).
• Submit proof of name change (marriage
  certificate).
• Submit proof of age and name change document for
  joint survivor (if applicable).
• All documents may be photocopies.

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Receiving Monthly Benefits

• Benefit paid last working day of month.
• No Automatic COLA (Cost of Living Increase).

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Your Beneficiary

• Keep your beneficiary up-to-date.
• You may name a living person, your estate or
  trust.
• You can change beneficiaries at any time.
• You can designate a funeral home to receive the
  4,000 death benefit.
• If a beneficiary is not named, KPERS must follow
  the line of descendants by Kansas law.

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Continuation of 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.
• Individual rates are higher than group rates.
• Conversion must take place within 31 days of last
  day on employers payroll.

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• Portability Option
• A term insurance option to continue coverage when
  leaving employment or retiring.
• At members cost, but without evidence of
  insurability.
• Must be under age 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, all coverage
  terminates at age 70.
• Portability must take place within 31 days of
  last day on employers payroll.

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Retiree Death Benefit

• The retiree death benefit is 4,000.
• The death benefit is payable with all options.
• Is not payable on the death of a joint annuitant.
• Is not taxable for Kansas income tax.
• Is taxable for federal income tax.
• Retired members may name a funeral establishment
  to receive the 4,000 death benefit. (Retiree
  will still need to designate a primary
  beneficiary.)

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Health Insurance

• KPERS does not provide health insurance coverage
  for retirees.
• K.S.A. 12-5040 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.

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Federal State Income Taxes

• Monthly benefit is subject to federal taxes.
• Part of monthly benefit may not be subject to
  Federal taxes if
• Member made contributions to KPERS prior to July
  1984.
• Member paid for a purchase of service credit with
  a personal check.
• Monthly benefit is not subject to state taxes for
  State of Kansas residents.
• Submit a W-4P form at time of retirement and
  KPERS will withhold taxes from retirement check.
• A new W-4P form may be submitted to our office
  anytime.
• A 1099-R tax form sent out in January of each
  year.

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1099-R Forms
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Working After Retirement
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Waiting Period Before Returning to Work

• There is a 60 day waiting period before returning
  to work for any KPERS employer (there is not a
  waiting period if you return to work for a
  non-KPERS employer- church, department store,
  etc.)
• The 60 days is from KPERS retirement date, not
  from members last day on payroll.
• Retirement date is June 1.
• Retiree cannot return to work until August 1.
• Note Retiree cannot contribute to KPERS after
  retiring

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Working After Retirement Non-School School
Non-Licensed

• Returning to work for the same KPERS employer
• 20,000 calendar year earnings limitation in any
  position (covered or non-covered).
• Returning to work for a different KPERS employer
• No earnings limitations employer pays actuarial
  rate if retiree is employed in a KPERS covered
  position.

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Changes for Licensed School Employees

• Licensed school employees can now retire as
  early as June 1st only if all work on contract
  has been completed.
• Employee must still wait until end of contract to
  use add-on pay.
• Effective July 1, 2009 through July 1, 2012, the
  20,000 earnings limit removed for licensed
  school employees that return to work for the same
  employer.

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Definition of Licensed School Employee

• Educator (Teachers, administrators)
• Audiologist
• Speech Pathologist
• Occupational Therapist
• Physical Therapist
• Social Worker
• Registered Nurse
• Dietician
• Licensed Professional Counselor
• Licensed Clinical Professional Counselor
• Psychologist
• Orientation and Mobility Instructor

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Working After Retirement (School Licensed
Position)

• Same Employer
• Retired with a Full/Normal Retirement
• No earnings limitation Employer pays Actuarial
  rate.
• Early Retirement
• 20,000 earnings limitation No actuarial
  payment required.
• Different Employer
• No earnings limitation - covered or non-covered
  position.
• Employer pays the working after retirement rate.

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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 1-800-772-1213.

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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. (contact
  Social Security office)
• ? Determine health insurance needs. (contact your
  employer)
• ? Review your other retirement plans and savings.

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KPERS Contact Information

• Website www.kpers.org
• InfoLine Toll-free 1-888-275-5737 Local (785)
  296-6166
• E-mail kpers_at_kpers.org
• Fax [phone]
• Mail 611 S. Kansas Ave., Suite 100 Topeka, KS
  66603-3803

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Thank You For Attending Kansas Public Employees
Retirement System