Getting ready for retirement. Your Guide to Retirement

Transcription

1 Getting ready for retirement. Your Guide to Retirement

2 Applying for retirement is easy, but your retirement decisions can be complex. We want to make sure you fully understand your retirement benefits and options before you submit your paperwork to Minnesota State Retirement System (MSRS). The purpose of this guide is to provide information about how to prepare for retirement, a summary of the process to apply for your MSRS retirement benefits, the forms you need to complete, and what happens after retirement with regard to your MSRS benefit. The information provided in this guide does not amend or overrule any applicable statute or administrative rules. In the event of a conflict, the applicable statute or administrative rule will prevail.

3 About Plans Administered by MSRS Minnesota State Retirement System (MSRS) administers multiple pension plans that provide retirement, survivor, and disability benefit coverage for Minnesota state employees as well as employees of Metropolitan Council and many non-faculty employees at the University of Minnesota and Minnesota State Colleges and Universities (MNSCU). Retirement plans include the General Plan, Correctional Plan, State Patrol Plan, Judges Plan, and Unclassified Plan. MSRS also administers these plans: Minnesota Deferred Compensation Plan (MNDCP) - a voluntary retirement savings plan available to all Minnesota public employees. For more information, please visit Health Care Savings Plan (HCSP) - a tax-free medical savings plan to be used after you leave public employment for reimbursement of out-of-pocket medical expenses. For more information, please visit Sources of Benefit Information MSRS retirement counselors are a valuable source for information and assistance regarding your benefits. They can explain plan provisions, provide you with a benefit estimate, and counsel you regarding your benefit rights and options. Here are some other sources of MSRS benefit information: Plan handbooks provide more specific information about your retirement plan features, benefit options, and how we calculate your monthly benefit. Benefit statements Website Educational seminars & workshops Plan newsletters Videos - found on under Toolbox MSRS retirement counselors are not registered investment advisors and cannot offer financial, legal or tax advice. Please consult with your financial planner, attorney and/or tax advisor as needed. MSRS Mission Statement To administer financially secure retirement plans, a tax-free health care savings plan, and a lowcost deferred compensation plan; ensure timely benefit payments; be proactive in public pension policies; and provide exemplary customer service through a one-stop shopping source. 3

4 Preparing for Retirement Retirement Checklist Retirement is in sight. By the time you are within 12 months from retirement, it is important that you have a realistic understanding of your retirement income needs and expenses, which can help you plan more effectively. Use this checklist to help guide you as you prepare for retirement. 12 months to retirement 6 months to retirement 3 months to retirement 1 month to retirement Attend an MSRS retirement seminar. Watch for seminar schedules in MSRS newsletters and online at Contact MSRS to request an estimate of your retirement benefits. If you have service with another Minnesota public pension plan (e.g., PERA or TRA) you may be eligible for additional benefits. Read about the MNDCP distribution options available at retirement. Calculate your expected Social Security income (visit Review your MSRS annual benefit statement and call MSRS if you find any discrepancies. Discuss your benefit estimate and survivor benefit options with your family and financial advisor. Prepare a retirement budget. Compare your retirement expenses against your MSRS benefit, Social Security, MNDCP, and any other retirement income (including savings) that will be available to you. Contact your employer to discuss retiree health care coverage; life insurance options; and your eligibility for severance. Ask if your severance will be paid to you or contributed to the Health Care Savings Plan (HCSP). Notify your department personnel office regarding your intention to retire. Find out when you should submit a letter of resignation. Contact your local Social Security office to file for benefits (if age 62 or older and eligible for benefits). Contact MSRS to discuss your MNDCP distribution options at retirement. Ensure that purchases/ transfers of prior service (active military service, public employment, etc.) are complete. Apply for retirement. For forms to complete, visit our website. Note: You must end all State of Minnesota employment before applying for MSRS retirement benefits. If you are eligible for retirement benefits from another Minnesota public pension plan (e.g., PERA or TRA) complete paperwork to apply for those retirement benefits. Discuss your medical insurance options with your benefits office. Contact your benefits office to see how severance (if any) will be paid. If paid to you in cash, consider contributing it to your MNDCP account. Follow-up with Social Security if you applied for benefits and have not received an acknowledgment in the mail. Review your beneficiary information on file for your MSRS retirement plan, MNDCP, and HCSP. 4

5 Contact Information When applying for retirement, MSRS is not the only administrator you will need to contact. As a Minnesota public employee, you may receive a benefit package administered by various providers. You may enroll in some or all of them. Use the list below as a guide to coordinate your benefits. Public Employees Retirement Plan (PERA) Teachers Retirement Association (TRA) If you have service with another Minnesota public employer, you may qualify for additional retirement benefits. This is called a Combined Service Annuity (CSA). PERA: or TRA: or Social Security Administration Retiree health, dental, & life insurance benefit information For information, estimates, or to apply for your benefits, contact the Social Security Administration 90 days prior to your retirement date if you are age 62 or older at retirement. Contact your agency/ department designated insurance representative regarding health, dental, and life insurance coverage. State employees: Minnesota Management & Budget (MMB) University of MN employees: Employee Benefits Office or Metropolitan Council: Benefits One Line Minnesota Deferred Compensation Plan (MNDCP) Health Care Savings Plan (HCSP) University of Minnesota tax-sheltered benefit program Contact MSRS for Plan information & payout options. Payouts cannot begin until after you leave employment or retire. Plan information & withdrawal options To speak with a retirement counselor: or Visit our website: or

6 Applying for Your MSRS Retirement Benefits IMPORTANT! MSRS will not accept your application more than 60 days in advance of your retirement date. Application for Retirement (required) You must sign the application in the presence of a notary. If you are married, your spouse must sign the application in the presence of a notary to acknowledge the benefit option you selected. Direct Deposit Form (optional, but recommended) Monthly payments can be deposited into your bank account through direct deposit. It is the safest, fastest, and most convenient way to receive your monthly payment. Generally your benefit is sent to your financial institution the first business day of each month. If you do not want direct deposit, a paper check will be mailed to you. Withholding Certificate - W-4P (optional) A withholding certificate authorizes federal and/or Minnesota state income tax withholding from your monthly benefit. If you do not file a W-4P form, IRS regulations require MSRS to withhold federal taxes based on a filing status of married with three allowances. Minnesota state taxes will not be withheld unless you provide instructions. We can only withhold state taxes for State of Minnesota residents. Authorization for Insurance Premium Deductions (optional) The Pension Protection Act of 2006 allows certain retired and disabled public safety officers and judges to reduce taxable income by up to $3,000 annually to pay qualified insurance premiums. If you are a public safety officer, you may choose to have qualified medical, dental, or long-term care insurance premiums deducted from your retirement benefit. Birth records Payments cannot begin until you provide MSRS with a copy of your birth record. In addition, if you select a survivor option, you must provide a copy of your survivor s birth record. Please write your MSRS Account ID or Social Security number on your survivor s birth record. WHERE TO OBTAIN BIRTH RECORDS: n n If born in Minnesota: any local Registrar office or online at If born in another state: online at Your marriage certificate Divorce decree and/or domestic relations order (DRO) During a marriage dissolution proceeding, the court may decide to divide the assets of the MSRS retirement plan between the parties. If you are currently divorced, or have been divorced, you must provide MSRS with a copy of the divorce decree and/or domestic relations order (DRO) before you can collect a retirement or disability benefit, even if the assets will not be divided between the parties. For more information on how divorce may affect your benefit, please contact MSRS. 6

7 After You Retire Benefit Payments First benefit payment: You will receive your first benefit payment from MSRS about four to six weeks after your retirement date. The first benefit payment is typically higher because it includes retroactive payments back to your benefit start date. Subsequent monthly benefit payments: If you signed up for direct deposit, payments will be available in your bank account the first business day of the month. If you receive payment by check, add five business days for mailing time. Service with another Minnesota public employer: If you had service with another Minnesota public employer (for example, TRA or PERA) and are eligible for additional benefits, you will receive a separate benefit payment from that retirement fund. Please contact your other public retirement plan provider to learn how and when those benefit payments will be made. Income Tax Reporting All or most of your monthly benefit is subject to federal and state income taxes. Each January, MSRS will send you a 1099-R tax form. This form shows the total benefit payments you received during the previous year; the amount that is taxable income; and the amount withheld for federal or Minnesota state taxes, if any. Annual Benefit Increases Each January you may receive a post-retirement benefit amount increase. There could be a waiting period for your first increase, and depending on when you retired, the first increase may be prorated. You will receive a letter each December to confirm your benefit increase. Re-Employment After You Retire For many, retirement means pursuing a second career. Perhaps it is a hobby that you pursue as a paid position. Maybe it means returning to work, but working fewer hours or part-time. Your MSRS monthly benefits do not stop if you are employed by private industry, federal or local government, or a state government other than Minnesota. If you return to a position covered by MSRS, retirement deductions will not be withheld from your salary. 7

8 Greater Minnesota Offices Detroit Lakes Office 714 Lake Avenue, Suite 102 Detroit Lakes, MN Telephone: Fax: Business Hours & Days: Tuesday-Friday 8 a.m. -4:30 p.m. Appointments preferred Contact St Paul Office: 60 Empire Drive, Suite 300, St Paul, MN Telephone: Fax: Minnesota Relay: Website: info@msrs.us Business Hours: Monday Friday, 8 a.m. 4:30 p.m. Mankato Office 11 Civic Center Plaza, Suite 150 Mankato, MN Telephone: Fax: Business Hours & Days: Tuesday-Friday 8 a.m. - 4:30 p.m. Appointments preferred Duluth Office Medical Arts Building, Suite West Superior Street Duluth, MN Telephone: Fax: Business Hours & Days: Tuesday-Friday 8 a.m. - 4:30 p.m. Appointments preferred PT (7.15) 2042_1506