Massachusetts Bay Transportation Authority (MBTA) Voluntary Retirement Incentive Program (VRIP) FREQUENTLY ASKED QUESTIONS AND ANSWERS

Transcription

1 Massachusetts Bay Transportation Authority (MBTA) Voluntary Retirement Incentive Program (VRIP) FREQUENTLY ASKED QUESTIONS AND ANSWERS General FAQs 1. If the MBTA withdraws the Voluntary Retirement Incentive Program offer, will I still need to resign/retire? In the event MBTA withdraws the Voluntary Retirement Incentive Program, all resignation letters submitted during the enrollment window will be automatically rescinded. 2. The PARS paperwork uses the word resignation instead of retirement in different sections. If I sign these documents, will it impact my ability to collect retirement benefits? You should understand that the term resignation is being used interchangeably with retirement and this will not have any impact on your ability to retire from your Retirement Fund or Plan. 3. When do I have to resign from the MBTA? Under VRIP or VSIP, you are expected to resign from MBTA employment on or before November 30, 2016 and retire under your respective MBTA Retirement Fund or Plan on or before December 1, You will elect your preferred resignation date as listed below on the MBTA Letter of Resignation. The MBTA will accommodate your primary preference as selected. MBTA reserves the right to stagger and sequence separation dates to a later date (the MBTA will not select an earlier date than your first preference) as it may deem appropriate to maintain service delivery and minimize disruption to operations and the riding public. If MBTA decides to extend your separation or retirement date, your subsequent preferences will be taken into consideration. July 31, 2016 resignation date with a August 1, 2016 retirement date August 31, 2016 resignation date with a September 1, 2016 retirement date September 30, 2016 resignation date with a October 1, 2016 retirement date October 31, 2016 resignation date with a November 1, 2016 retirement date November 30, 2016 resignation date with a December 1, 2016 retirement date 4. If I sign the General Release, will I forfeit my rights to any Collectively Bargained Union awards or increases? Your signing of the General Release will not adversely impact any rights or entitlements you have otherwise accrued in accordance with the terms of an existing collective bargaining agreement (CBA).

2 5. Do I waive my rights to Workers' Compensation by signing the MBTA release? Workers' Compensation claims are not waived by signing the VRIP/VSIP Legal release. If an employee sustains an injury or illness within the course and scope of his or her employment, he/she would be entitled to exercise his/her rights to file and collect workers' compensation benefits. G.L. c. 152, 46, states explicitly that no agreement by any employee to waive his/her right to workers compensation shall be valid. Hence, employees' concern may be allayed by that fact. 6. What is the Voluntary Retirement Incentive Program (VRIP)? The VRIP is the 401(a) defined benefit incentive plan that MBTA is offering to eligible employees who meet the following eligibility requirements: 1. Be employed by MBTA as of June 6, 2016 and remain employed in good standing through the approved retirement date 2. Be retirement eligible under your respective MBTA Retirement Fund or Plan as of August 1, Resign from the MBTA effective on or before November 30, 2016 (or as determined by MBTA) 4. Retire under your respective MBTA Retirement Fund or Plan effective on December 1, Why is this program being offered at this time? The MBTA is facing serious financial challenges today, and it has significantly reduced its FY17 projected operating deficit, but more work is needed. The aim is to save $25 million in wage costs through this incentive program. New initiatives such as flexible contracting will enable further savings. However, reaching this goal is a critical step in realigning our organization with the current reality of our budget, and we want to give all eligible employees the opportunity to voluntarily retire through this program. The MBTA is considering other options, including involuntary measures, if the savings goals cannot be achieved through the VRIP program. 8. Who is PARS? PARS, Public Agency Retirement Services, is a fee-for-service third party retirement plan administration company that has been hired by MBTA to administer the VRIP. 9. Does PARS replace your MBTA Retirement Fund or Plan allowance? PARS benefits are paid in addition to whatever MBTA Retirement Fund or Plan benefits you have accrued to date. In retirement, you will receive at least two retirement checks one from the VRIP and one from the MBTA Retirement Fund or Plan. 10. What do I need to do to enroll in the VRIP? To enroll in the VRIP, you must submit the required PARS enrollment materials, MBTA Letter of Resignation and MBTA Release Agreement to PARS by the June 30, 2016 enrollment deadline.

3 11. What is the deadline to enroll in the VRIP? The window to submit your VRIP enrollment packet to PARS is no later than 8:00pm (ET) on Thursday, June 30, 2016 (not-postmarked). 12. If I enroll in the VRIP by the June 30, 2016 enrollment deadline, can I rescind my participation in the program after that date? If you submit your PARS enrollment forms, MBTA Letter of Resignation, and MBTA Release Agreement to PARS by the deadline date, your participation is locked in if the program goes forward for your specific employee group. If the program does not go forward for your specific employee group, all resignations are automatically rescinded. 13. Am I required to retire under the MBTA Retirement Fund or Plan? Yes, you are required to retire under your MBTA Retirement Fund or Plan. Please contact your respective MBTA Retirement Fund or Plan to get an estimate of your benefits and find out what paperwork you need to complete in order to retire. Contact information is listed in the Additional Questions section below. 14. What level of benefit is being offered to me through the VRIP? MBTA is providing a benefit equal to 20% of your Base Salary, through a 401(a) tax qualified plan. 15. What options are available to me under the VRIP? You may take your VRIP benefit as a Lump Sum option, Life only option, Joint-and- Survivor benefit option, lifetime with a 10 year guarantee, or as fixed monthly payments, ranging from 5 to 15 years. 16. Which VRIP option is the best option? All VRIP options are equal in terms of present value regardless of how you choose to take your distribution (cash or rollover). This means that it will cost MBTA the same amount of money to provide the benefit, whether you choose the lump sum or one of the options 1, 2, 3 or Therefore, there is no one best option. 17. Will the incentive be subject to federal, state, and local taxes? How will I know how much to withhold? Neither MBTA nor PARS are licensed to provide tax advice. For more information, please refer to the enclosed Special Tax Notice Regarding Plan Payments and the Tax Withholding Form (page 7) in your enrollment packet. Please note that distributions may be subject to early withdrawal penalties under certain circumstances. Please consult your financial or tax advisor to determine if the distribution will be subject to early withdrawal penalties if a direct distribution of benefit is taken (nonrollover).

4 18. Can I change my choice of option after the June 30, 2016 enrollment deadline? No, you cannot change your VRIP option choice after the enrollment deadline. 19. When will I receive my first VRIP benefit? Your first VRIP benefit is due to commence the first of the month following your retirement. August 1, 2016 retirements will commence September 1, September 1, 2016 retirements will commence October 1, October 1, 2016 retirements will commence November 1, November 1, 2016 retirements will commence December 1, December 1, 2016 retirements will commence January 1, Can I go back to work if I am a participant under the VRIP? If the VRIP is approved and you are enrolled, you will be deemed permanently separated as an employee from MBTA and will be otherwise required to comply with all applicable postemployment restrictions under Massachusetts State Ethics Law. 21. Can MBTA withdraw the VRIP offering? The program must ensure continuity of service and meet the fiscal and operational objectives of the MBTA by the June 30, 2016 enrollment deadline in order for the VRIP to go into effect. After the deadline, resignations of participants are locked in and may not be rescinded unless MBTA withdraws the program. MBTA reserves the right to withdraw the VRIP offer at its discretion to specific employee groups should the program not meet its intended goal and will notify employees on or before July 11, In the event MBTA withdraws the offer to a specific employee group, all resignation letters submitted from this group during the enrollment window will be automatically rescinded. 22. Will the VRIP be offered again? It is a one-time offering, and there is no guarantee that the program will be offered again. 23. Will there be layoffs if the VRIP program does not achieve the goals of MBTA? FAQs Regarding Eligibility Depending on the success of the incentive program, involuntary layoffs may be an option. 24. Are managers eligible? Yes, if you meet the eligibility criteria stated above. 25. Are contractors eligible? No.

5 26. If I am on leave, am I eligible to apply? Yes, if you meet the eligibility criteria stated above. 27. Are part-time employees eligible to apply? Yes, if you meet the eligibility criteria stated above. 28. How do I know if I am retirement eligible under my MBTA Retirement Fund or Plan? Below are the general eligibility requirements for retirement under the following plans. Please confirm final eligibility with your respective MBTA Retirement Fund or Plan. MBTA Retirement Fund (Main Fund) Age 65 and no minimum Years of Service; No age and 23 Years of Service; or Age 55 and 20 Years of Service MBTA Police Association Retirement Plan Age 65 and no minimum Years of Service; Age 52 and 23 Year of Service; or Age 50 and 20 Years of Service MBTA 401(a) Deferred Compensation Savings Plan & Trust Age 65 and no minimum Years of Service; or Age 55 and 20 Years of Service 29. If I have already submitted resignation or retirement paperwork, can I be considered for this incentive? FAQs Specific to Benefits The VRIP requires that you be employed by MBTA as of June 6, 2016 and remain employed in good standing through the approved retirement date. If you resigned/retired prior to June 6, 2016, you will not be eligible to participate in the VRIP. 30. Will I receive my vacation and sick leave payouts? Any and all accrued but unused vacation days and contractual sick leave entitlement will be paid out to participants in accordance with applicable law, MBTA policies, and the contractual terms of any existing collective bargaining agreements and in accordance with regular MBTA payroll practices. 31. Will I be eligible to continue my GIC health and life insurance benefits when I retire? Yes, if you have met the retirement eligibility.

6 32. When will my insurance coverage end? Your insurance coverage will continue through the last day of the month following your departure date. For example, if your departure date is anytime in August, your insurance coverage will end on September 30 th. 33. Am I eligible for insurance coverage upon separation? You may elect COBRA to temporarily continue your group health care and dental coverage, each at full cost plus an administration charge of 2%, for a total of 18 months. You may convert to a non-group health insurance policy with your current plan carrier. You may be eligible for the Commonwealth Health Connector health coverage. Please contact the Health Connector Authority at (877) for enrollment information. For more information, please contact the Group Insurance Commission (GIC) at (617) or visit: How will I pay the premiums for my health and/or life insurance coverage after I retire? Premiums will be deducted from your monthly pension. 35. What coverage will I lose when I retire? Long Term Disability will no longer be offered. Health Care Spending Account (HCSA) and the Dependent Care Assistance Program (DCAP) are for active MBTA employees only. For more information about these benefits, please contact Donna Loughlin at the MBTA at (617) May I change health plans when I retire? Yes. You may change health plans at retirement. The GIC must receive the form 1A within 60 days of the retirement. Thereafter you may change plans only during annual enrollment, if you move outside of your plan's service area or if you become eligible for Medicare (at which point you must enroll in a GIC Medicare Plan). Annual enrollment changes are effective the following July What is Medicare? Medicare is a federal health insurance program for retirees age 65 or older and certain disabled people. Medicare Part A covers inpatient hospital care, some skilled nursing facility care and hospice care. Medicare Part B covers physician care, diagnostic x-rays and lab tests, and durable medical equipment. Medicare Part D is a federal prescription drug program.

7 38. I have GIC health coverage; when must I enroll in Medicare Part A and Part B? If retiring, and you or your covered spouse is age 65 or over, the family member(s) age 65 or over should apply for Medicare Part A and Part B up to a month before your retirement. You and/or your spouse age 65 or over will receive a Medicare enrollment package from the GIC approximately four to six weeks after the GIC is notified by your GIC Coordinator of your retirement. Be sure to respond to the GIC by the due date noted in the package. 39. What happens to my deferred compensation (SMART Plan) account? To discuss your options, please contact Great West at How will employee contributions to the State s SMART plan be impacted by the VRIP? Defined contribution plans, such as the SMART plan, are not impacted by the VRIP, which is a defined benefit plan. These are separate plans under the IRS code. This means that annual contributions, catch-up contributions or any contributions made by employees into their SMART plans are not limited or coordinated in any way by the VRIP. The SMART plan IRS contribution total limits are not affected by the VRIP benefit in any way. The VRIP benefit can be rolled over into the SMART plan, if the SMART accepts rollovers. Rollovers are not considered contributions under SMART plan IRS contribution limits. FAQs Specific to Unemployment Benefits 41. Will I still be eligible for unemployment? Eligibility is determined by the Massachusetts Department of Unemployment Assistance (DUA). In addition to programs offered by the DUA, MassDOT University will provide resume, interview and computer skills workshops for VRIP program participants. Information concerning these workshops will be made available to program participants in future communications. MassDOT University can be contacted at MassDOTUniversity@mbta.com. 42. What is the current status of Unemployment coverage in MA? Additional Questions Contact DUA for details (in state: ; out of state: ). 43. If I have a question concerning my MBTA Retirement Fund or Plan, how can I reach them? MBTA Retirement Fund One Washington Mall, 4th Floor Boston, MA Website: Phone: (617) or (800) Fax: (617)

8 ( continuation of #43. If I have a question concerning my MBTA Retirement Fund or Plan, how can I reach them?) MBTA Police Association Retirement Plan Sidney L. Chase, Executive Director/Secretary P.O. Box 2215 Hyannis, MA mbtaparp@aol.com Phone: (508) Fax: (508) MBTA 401(a) Deferred Compensation Savings Plan & Trust Karl Nord, Plan Administrator 10 Park Plaza, Room 8450 Boston, MA knord@mbta.com Phone: (617) Fax: (617) If I have further questions about the VRIP, how can I contact PARS? Please contact the PARS Plan Support Department at (800) or by at plansupport@pars.org with any questions. In order to better support you during the enrollment window, the PARS Plan Support Department will extend its hours of operation until June 30 th : Monday through Friday 6:00am (PT) 5:00pm (PT) 9:00am (ET) 8:00pm (ET) Saturday 6:00am (PT) 2:00pm (PT) 9:00am (ET) 5:00pm (ET) Following the June 30 th enrollment deadline, our normal business hours will resume: Monday through Friday 8:30am (PT) 5:00pm (PT) 11:30am (ET) 8:00pm (ET) Voice messages and s sent outside of our hours of operation will be responded to during hours of operation within 24 hours. Neither MBTA nor PARS, Public Agency Retirement Services, offers tax, accounting or legal advice. Please consult your own tax, accounting or legal advisors for information on the consequences of your resignation. Please consult your MBTA Retirement Fund or Plan for official calculations of your MBTA retirement allowance.