RETIREMENT COUNTDOWN - Wright State University...Partial Lump-Sum Option Plan (PLOP) •Six to 36...
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RETIREMENT COUNTDOWN TIPS FOR COMPLETING YOUR SERVICE RETIREMENT APPLICATION … AND OTHER THINGS YOU’LL WANT TO KNOW 20-548b, 11/19/E
RETIREMENT COUNTDOWN - Wright State University...Partial Lump-Sum Option Plan (PLOP) •Six to 36 times Single Life Annuity amount •Paid no earlier than 91 days after your retirement
TIPS FOR COMPLETING YOUR SERVICE RETIREMENT APPLICATION …
AND OTHER THINGS YOU’LL WANT TO KNOW
20-548b, 11/19/E
Presenter
Presentation Notes
Welcome to the STRS Ohio Retirement Countdown webinar.
Today’s Agenda
• Walk through the online Service Retirement Application– Retirement effective date– Employment after retirement– Plans of payment – Health care enrollment options
• The retirement process
Presenter
Presentation Notes
Our topics this afternoon consist of detailing what you will want to do before you complete your Service Retirement Application. We will then discuss the elements of the application, including your retirement effective date, guidelines for employment after retirement and the plan of payment selection. We will also briefly review the health care options for you and any dependents, as well as take you through the retirement process.
Before You Begin…
• Obtain or review current estimate of benefits– Online Personal Account or contact STRS Ohio
• Review expenses and reconcile with income• Verify employer requirements for separation of service
– “Paying off” balance of employment contract – Health care coverage end date– Disbursement of unused sick pay
Presenter
Presentation Notes
Completing your Service Retirement Application online is very straightforward, but there are a few things to consider prior to starting the process. First, you will want to review a current estimate of benefits. You can find any recent estimates by logging in to your Online Personal Account or by contacting STRS Ohio. You will also want to take a look at your expenses in retirement and reconcile those with your income, subsequently establishing a retirement budget. It may also be beneficial to meet with your retirement planning advisors, such as an attorney or tax consultant, to help you through this process. In addition, check with your employer as to how they plan to pay off the balance of your contract. You will also want to know when they will terminate your health care and when your sick leave balance will be disbursed.
Online Service Retirement Application
• Online Personal Account required* • Retirement application submission
– File three months before effective date– Partial payment issued if:
• Online application is received 15 days prior to retirement date
*Defined Contribution/Combined Plan participants must complete paper application
Presenter
Presentation Notes
You will also need to log in to your Online Personal Account, which you can access by visiting our website. If you are not yet registered for an online account, go to www.strsoh.org and click on “Login” in the upper right corner of the screen and then click “Register Now.” As a general rule, it is recommended you apply for service retirement three months prior to your effective date; however, it is not required. If your online Service Retirement Application is received at least 15 days prior to your effective date and you have provided complete information, STRS Ohio will issue you a partial payment monthly until your account is finalized. If you are a member of the Defined Contribution Plan or Combined Plan, you must fill out a paper application.
Section 1: Member Information
• Confirm personal account information– Name – Address – Date of birth– Phone number– Email address – Marital status
Presenter
Presentation Notes
Section 1 will ask you to confirm your personal account information, such as name, address, date of birth, etc. Remember to update your email address to one that you’ll be able to access after retirement.
Section 2: Employment and Service Credit
• Effective date of retirement may be first of month following:– Last day of teaching or other public service
Example: Date of last service — May 29; effective date of retirement — June 1 – Date you reach age and service requirements
Example: Date of 60th birthday — October 15; effective date of retirement — Nov. 1 – Date STRS Ohio certifies all purchasable service and issues a cost
statementExample: Date service certified — Dec. 20; effective date of retirement — Jan. 1
Presenter
Presentation Notes
Under Section 2 you will be asked to list your last day of employment. It is important to recognize that there is a difference between your last day of service and your service retirement effective date. Your service retirement effective date is always the first of any given month. It could be that you render your last day of service in June, thereby making July 1st your service retirement effective date. Or perhaps your 60th birthday is in October. You could then choose a November 1st effective date. Another scenario might be that you are interested in purchasing service credit. If so, your retirement date could be the first of the month following the date the credit is certified. One thing to note: the school can continue to pay you over the summer for work already completed. This means that you will continue to get paychecks through August, even though you are essentially retired and receiving a pension benefit from STRS Ohio.
Employment After Retirement
• Two-month wait for position covered by:– STRS Ohio– Ohio Public Employees Retirement System– School Employees Retirement System– City of Cincinnati Retirement System– Ohio Police & Fire Pension Fund– Highway Patrol Retirement System
• May work for any Ohio public employer after two months
Presenter
Presentation Notes
Another reason your retirement effective date is so important is because there are rules to follow if you are returning to work. During the first two months of retirement, you will lose your pension benefit for any month in which you work for a new Ohio public employer or return to your highest paying employer. This includes substitute teaching. Those of you who choose May 31st as your last day of service, even though school isn’t out until June, need to be sure you are not volunteering for field day as this can actually violate the reemployment rules. Suffice it to say, if the other teachers are being paid to be there, you should NOT be there. After two months, you may work in any public position in Ohio as long as contributions are made to the appropriate retirement system.
Other Ohio Public Service Credit
• Current or past member of:– Ohio Public Employees Retirement System (OPERS)– School Employees Retirement System (SERS)– City of Cincinnati Retirement System– Ohio Police & Fire Pension Fund– Highway Patrol Retirement System
• OPERS, SERS and STRS Ohio accounts combined– Notify STRS Ohio to retire independently
Presenter
Presentation Notes
If you already have credit with one of the other public retirement systems or plan on purchasing credit with them, STRS Ohio needs to know so that we may coordinate your retirement benefits with them. Your account with the other system will automatically be combined with your STRS Ohio account at the time of your retirement. However, members have the option to withdraw their OPERS or SERS account and retire independently with STRS Ohio. If you retire independently, you will need to notify STRS Ohio of your intent in writing.
Purchasable Service Credit
• Certification and a cost statement issued before retirement date
• Must be paid in full three months following retirement effective date
• Speak with an STRS Ohio benefits counselor
Presenter
Presentation Notes
You may not have credit with another public retirement system in Ohio, but you might have some service credit that you’re looking to purchase. If so, make sure you notify STRS Ohio of your intent. Any credit that you intend to purchase must be certified and a cost statement issued before your retirement date. You would then have three months following your effective date to complete the purchase. Be sure to speak to an STRS Ohio benefits counselor before purchasing service credit. To help you estimate the cost of purchasing service credit, a calculator is available on the STRS Ohio website.
Section 3: Plan of Payment
Presenter
Presentation Notes
You will come to a point in the application (Section 3) where we ask how you would like your retirement monies paid out; so let’s go ahead and take a look at an example. All of the plans pay the retiree for life. Choosing a plan is really about how much you would want to leave to others after your death and for how long you would want to leave the benefit.
Understanding Your Plan of Payment
Presenter
Presentation Notes
Let’s start with Roman numeral one, Single Life Annuity. Selecting this plan of payment will pay the retiree for life, but does not leave a continuing monthly benefit to a beneficiary. You will still be asked to name a beneficiary in the event that you pass away before all of the money that YOU contributed has been paid. If you are single at retirement and later marry, you may reselect your plan of payment during the first 12 months of your marriage.
Understanding Your Plan of Payment
Presenter
Presentation Notes
Roman numeral two is the Joint and Survivor Annuity option. With this plan, the retiree is paid for life, but upon the retiree’s death, the named primary beneficiary starts to receive the benefit and will continue to do so for his or her lifetime. A retiree may select to leave a primary beneficiary anywhere from $50/month up to 100% of the retiree’s own benefit. The estimate shows examples of the same amount, 1/2 and 1/3. These amounts are automatically printed for you on any estimate, but they are only suggestions. In addition to deciding the amount to leave, you will also need to look at the option of reversion. This allows you to revert to the Single Life Annuity in the event your primary beneficiary predeceases you or there is a termination of marriage. In the case of divorce, written consent from the former spouse or appropriate court documentation would be required to revert to Single Life Annuity. You also have the option of guaranteeing a certain number of years to a secondary beneficiary in the event that both you and the primary beneficiary die before the guaranteed number of years is paid out. By selecting a guarantee option, you would never have the option of reverting to the Single Life Annuity should the beneficiary predecease you. Another option you may notice is plan 4 under the Joint and Survivor Annuity options. This option allows you to leave a lifetime monthly benefit to more than one person. For example, maybe you want to leave 20% to your spouse AND to both of your children. You can do that here. Be careful that you know how doing this will affect the dollar amount you take home. If this is an option that you are considering and you have not yet had an estimate showing the effect it has on your benefit, we certainly urge you to get one.
Understanding Your Plan of Payment
Presenter
Presentation Notes
Roman numeral three is the Annuity Certain plan of payment. This comes with an option that guarantees the account will be paid out for a set number of years. For example, a 10-year guarantee will still pay the retiree for life, but if the retiree dies after five years, the primary beneficiary would receive the benefit for the remaining five years. This benefit cannot be changed once you select it. You may change the beneficiary, but the number of guaranteed years and the plan itself cannot be changed.
Partial Lump-Sum Option Plan (PLOP)
• Six to 36 times Single Life Annuity amount• Paid no earlier than 91 days after your retirement date or the
date your retirement benefit is finalized, whichever is later• Special tax provisions may apply
– Payments directly to you — 20% federal tax– May be subject to 10% early withdrawal penalty– Any portion not rolled over to qualified plan (e.g., IRA) subject to
federal and state income tax
Presenter
Presentation Notes
After choosing your plan of payment, you will also have the option of selecting a Partial Lump-Sum Option Plan, otherwise known as PLOP. Monthly benefits still begin with your retirement date and are payable for life, but they are reduced to reflect the amount taken in a partial lump sum. A PLOP is paid no earlier than 91 days after your retirement date. Keep in mind that you can choose a PLOP payment in conjunction with any of the plans of payment discussed previously. It’s also important to understand the tax provisions or implications when taking a PLOP. Federal tax laws require a 20% tax withholding on lump-sum payments paid directly to you. This affects anyone who has the PLOP paid directly to their bank account. You may also be subject to a 10% early withdrawal penalty. This penalty does not apply if you receive the lump sum after you reach age 59-1/2 or if you separate from service and have taken payment in or after the year in which you turned age 55. A PLOP payment paid directly to you is subject to Ohio state income tax if you reside in Ohio. If you live in another state, it may be subject to taxes as required by that state. One way to avoid immediate taxes on a PLOP payment is to have it paid to a qualified retirement plan. This is considered a rollover. The partial lump sum will be transferred to the bank account you listed for your monthly direct deposit unless you elect to roll over the PLOP payment to an IRA, an eligible employer plan or another qualified plan. Qualified plans are IRS approved plans like a 401(k), 403(b) or 457(b) governmental plan. STRS Ohio is considered a 401(a) plan. You will receive a special tax notice in the mail with additional information about rolling over your PLOP payment to another qualified plan. If you want to roll over your lump-sum option payment, you must check with your receiving plan administrator to verify the plan will accept a rollover from 401(a) retirement plans.
Spousal Consent
• Spousal consent:– Plan of payment leaving less than one-half to your spouse– Partial Lump-Sum Option Plan (PLOP) selected– Plan selected with primary beneficiary other than spouse
• Spousal consent form available to print from online application
Presenter
Presentation Notes
If you are married and choose to take a PLOP payment when you retire, spousal consent will be required. It will also be required if you take a Single Life Annuity plan of payment, a Joint and Survivor Annuity with less than half payable to your spouse, or an Annuity Certain. The consent must be notarized, so make sure your spouse doesn’t sign the document without being in the presence of a notary. If spousal consent is needed, but not completed, the retiree will default to the Joint and Survivor Annuity option with half to beneficiary and no PLOP will be paid. If you choose an option that requires spousal consent, a copy of the required form will be available for you to print after you have submitted your online application.
Death Benefit Lump-Sum Payment
• $1,000 STRS Ohio-funded death benefit – Paid to beneficiary designated on your Service Retirement Application
• Additional $1,000 or $2,000 available for purchase– At retirement or age 65– Premium deducted from benefit payment
Presenter
Presentation Notes
We talked earlier about naming one or more beneficiaries for your plan of payment. But there is another benefit that will require naming a beneficiary. STRS Ohio will pay a $1,000 death benefit to a beneficiary of your choosing at the time of your death. The initial $1,000 is funded by STRS Ohio; however, you can increase it by an additional one or two thousand dollars by paying a small premium, which is deducted from your monthly benefit payment. You will have the opportunity to select the additional death benefit amount at the time of your retirement or again at age 65.
Section 4: Payment Information
• Direct deposit required for monthly benefits– First banking business day of the month – Checking, savings or investment account
• Your name must be on the account designated for direct deposit
Presenter
Presentation Notes
We told you at the beginning of the webinar that you will need a couple of things handy before you start the online application process — your bank account information being one of them. That’s because STRS Ohio requires direct deposit for your monthly benefit payment. Payments are made once a month on the first banking day of the month. You may have your check deposited to a savings, investment or checking account as long as your name is on the designated account. But remember, your entire payment needs to be deposited to one account.
Tax Withholding
• Federal income tax– Withheld unless you specify otherwise
• If not withheld, you’re responsible for filing quarterly estimates
• State tax – Retirement benefits are subject to Ohio income tax (Ohio residents)– Cannot withhold for other states
• Check tax liability in state where you reside
Presenter
Presentation Notes
Because your monthly benefit is taxable, we will ask how you would like to withhold both federal and state taxes. You can certainly request that we withhold nothing, but that will not release you from your obligation to pay the tax. For the first year of retirement, most retirees withhold tax the same way they did while they were teaching. If you need to withhold more, you may indicate that as well. You are not required to pay Ohio state tax if you do not reside in the state of Ohio. STRS Ohio will only withhold Ohio state tax, so if you need to pay another state’s tax, you will need to do that on your own. Federal and state tax tables are sent with all estimates. If you need a copy, just contact STRS Ohio and we will be happy to send you one.
Section 5: Health Care Coverage
• Must have 15 years of qualifying service credit to purchase health care, dental or vision coverage*
• Premiums based on years of service credit, Medicare status and plan
• May enroll after monthly benefits begin:– Termination of other coverage– Medicare enrollment– Open enrollment
*Members who retire on or after Aug. 1, 2023, must have at least 20 years of service credit
Presenter
Presentation Notes
Another very important part of the application process is health care. Section 5 will require a response regardless of your intent to enroll in the STRS Ohio Health Care Program. So let’s take a look at both eligibility requirements and the plans available. Members need 15 years of service credit to qualify for access to health care in retirement. Once you attain 15 years, your premium is based on whole years of service credit (up to 30) and the plan you select. All plans offered by STRS Ohio include hospital, medical and prescription drug coverage. Monthly premium costs and coverage features may differ in each plan. Also keep in mind that you may enroll in the STRS Ohio health care plan at any point in the future upon termination of other coverage, at the time of Medicare enrollment or during open enrollment each year.
Plan Options
• Without Medicare– Medical Mutual Basic Plan– Aetna Basic Plan
• Non-Ohio residents only– AultCare PPO* – Paramount Health Care*
*These plans are available in select areas/ZIP codes
Presenter
Presentation Notes
You will be eligible for certain plans based on your Medicare status and ZIP code of your residence. Our national plans, for those under age 65 and not yet eligible for Medicare, are the Medical Mutual Basic Plan and Aetna Basic Plan. The Medical Mutual Basic Plan is available to all Ohio residents, whereas the Aetna Basic Plan is available to those who live outside Ohio. AultCare and Paramount are our regional plans. AultCare is only available to those living in the greater Akron/Canton area, while Paramount is for those of you living in the greater Toledo area.
Plan Options
• With Medicare Parts A & B or Part B-only– Aetna Medicare Plan– Medical Mutual Basic Plan– AultCare PPO*– AultCare PrimeTime Health Plan HMO-POS*– Paramount Elite*
*These plans are available in select areas/ZIP codes
Presenter
Presentation Notes
If you are over the age of 65 and have Medicare Parts A & B or Part B-only, you are eligible for the Aetna Medicare Plan. This is a Medicare Advantage plan offered as a group plan through STRS Ohio. You also have the options of the Medical Mutual Basic Plan or one of the regional plans if available in your area.
Individual Enrollment Option
• Medicare-eligible individuals can choose Aetna Medicare Plan while non-Medicare family members remain in the Medical Mutual Basic Plan or Aetna Basic Plan (non-Ohio residents)
• All non-Medicare enrollees must enroll in the same plan
Presenter
Presentation Notes
STRS Ohio offers an individual enrollment option. In other words, those individuals in your family who are Medicare-eligible can choose the Aetna Medicare Plan while non-Medicare family members can remain in the Medical Mutual Basic Plan. Please note that all non-Medicare enrollees must enroll in the same plan. This is not an option for families in AultCare or Paramount.
Dental and Vision Coverage
• Separate from medical plan coverage• Delta Dental and Vision Service Plan (VSP)
– May enroll in one or both plans– Benefit recipient must be enrolled to enroll a spouse/eligible dependent– Enrollment is required for balance of contract period: Effective date
through Dec. 31, 2020• Future enrollment based on two-year contract
Presenter
Presentation Notes
STRS Ohio also offers dental coverage through Delta Dental and vision coverage through Vision Service Plan. You may enroll in one or both plans. Each of these plans carries a two-year contract as well as premiums that are separate from the medical coverage costs. If you enroll at retirement, you are committed to remaining in the program until the end of the current two-year contract period. You will be given an opportunity during open enrollment to cancel your coverage. Or, if you decide not to enroll at retirement, you may enroll during the next open-enrollment opportunity or with a qualifying event. A benefit recipient must be enrolled in order for a spouse and/or eligible dependent �to enroll. Enrollment is based on a two-year contract period and that current two-year contract will run through December 31, 2020. At the end of the contract, coverage can either be terminated or continued for an additional two years.
Section 6: Submit Application
• Summary of Service Retirement Application– Copy will be saved in your records
• After submitting application– Any changes must be made in writing – May delay processing and payment of benefit
Presenter
Presentation Notes
After you’ve completed Sections 1–5, it’s time to review and submit your application. As mentioned earlier, a Summary of Service Retirement Application document will be saved in your records under the Documents section of your Online Personal Account. If you need to make any changes to the application after it has been submitted, our office must receive it in writing. Keep in mind, any changes could delay the processing and payment of your benefit.
Service Retirement Process
• Service Retirement Application received by STRS Ohio– Confirmation sent to member
• Employer(s) contacted• OPERS/SERS contacted• Check status of your application through your Online Personal
Account
Presenter
Presentation Notes
So what happens once the application is submitted? STRS Ohio will send confirmation that we received your application. If any additional information is needed, our office will contact you immediately. Once everything is complete, we will contact your employer to request final-year information. It’s not unusual for employers to wait until school is out to complete all the paperwork. If you have service time with OPERS or SERS (or both), we will request final information from them as well. Following submission, you may check the status of your application by logging in to your Online Personal Account.
Service Retirement Process• Partial payment issued while account pending
– If online application is received 15 days prior to retirement date
• Required information received and retirement benefit finalized
• Catch-up payment– Represents months underpaid– May be issued on any day of the month– Payments taxed at 22% withholding
Presenter
Presentation Notes
Earlier in the presentation we briefly mentioned the requirements for receiving partial payments during the start of your retirement. For greater clarity, if your online Service Retirement Application is received at least 15 days prior to your effective date and you have provided complete information, we will issue you a partial payment monthly until your account is finalized. The deadline for a paper application is 30 days before your effective date. Most retirees receive at least three partial payments. A partial check usually represents about 80–90% of the actual benefit amount. It will have your monthly deductions taken out as well. Once all of the required information is received and your account is finalized, a catch-up payment will be issued that represents the months that you were underpaid due to the partial payments. This check can be issued on any day of the month, not just the first banking day. It’s also very important to note that catch-up checks have a mandatory tax withholding of 22%. The next check you receive will be a regular benefit payment issued to you on the first banking day of each month.
Making Changes
• Must be submitted in writing and received by STRS Ohio by 15th of the month following first regular benefit payment:
– Retirement effective date– Plan of payment– PLOP payment amount – Account PLOP payment is deposited to– Decision to purchase service credit
Presenter
Presentation Notes
The first regular benefit payment is important because: You may only make a change to your retirement effective date, plan of payment, PLOP payment amount, the account to which your PLOP payment is being deposited or a decision to purchase service credit by the 15th of the month following receipt of your first regular benefit payment. This needs to be in writing and in our office by the 15th.
After retirement, you can stay in touch with STRS Ohio by reading the benefit recipient newsletter. You can also attend educational programs we offer for retired members. These programs focus on topics such as Medicare, health care open enrollment and other topics pertinent to retired STRS Ohio members. All members with an email address on file will receive eUPDATE, the email news service. You’ll receive timely updates delivered to your inbox about Retirement Board actions and other news and information affecting STRS Ohio members. And as always, any questions can be answered by calling STRS Ohio toll-free at 888-227-7877.
Conclusion and Questions
Presenter
Presentation Notes
This concludes the webinar. Thank you for participating today. If you have further questions that were not addressed, feel free to contact us directly by calling toll-free 888-227-7877 or emailing us at [email protected].
