FRS & DROP Planning Basics Jeffrey A. Green Partner-Wealth Manager

Transcription

1 FRS & DROP Planning Basics Jeffrey A. Green Partner-Wealth Manager Listen to Now You Know Sundays 9:00am-10:00am Securities and investment advisory services are offered solely through Ameritas Investment Corp. (AIC). Member FINRA/SIPC. AIC and Estate

2 Areas of Planning Services Florida Retirement System (FRS) DROP Planning Pension Planning 401(k) Plans/457 Plans IRA's Roth & Traditional 529 Plans Mutual Funds Life Insurance Annuities Long Term Care Planning Charitable Giving Host of Now You Know Sundays 9:00am-10:00am

3 Professional Group Estate Planning Attorneys CPAs Real Estate Agents Mortgage Planners Employee Benefits/Business Consultants Senior Care/Home Health Care Planning We can refer you to these professionals who have their own offices you may work with.

4 Regular Risk Class Normal Retirement Age Either 30 Years of Service or Age 62 for Unreduced Pension Can Participate in DROP or Retire Special Risk Class Normal Retirement Age FRS Planning Basics * Either 25 Years of Service or Age 55 Need 25 years of Special Risk service to enroll in DROP w/o Reduction Can participate in DROP or Retire * From the MyFRS.com Website

5 FRS Planning Basics Different Ways to Retire Straight Pension Pension + DROP Investment Plan Lump Sum

6 FRS Planning Basics * FRS Pension Survivor Options Option 1 Highest Monthly Benefit, Based on Participant Only Option 2 Slightly Reduced Benefit, 10 Years Certain (Only 5 After DROP) Option 3 Lowest Monthly Benefit, Based on Both Lives Option 4 Slightly More Than Option 3, Reduced by 1/3 if either person dies. You need to elect your pension option before you enter DROP. * From the MyFRS.com Website

7 Pension Maximization Big Difference Over Time FRS Member Age at Retirement - 62 Pension option 1 = $4,000/month = $48,000/yr Pension Option 3 = $3,200/month = $38,400/yr Age Pension Option 1 Pension Option 3 Difference 62 $ 48,000 $ 38,400 $ 9, $ 55,645 $ 44,516 $11, $ 64,508 $ 51,606 $12, $ 74,782 $ 59,825 $14, $ 86,693 $ 69,354 $17,339 This information illustrates the 3% C.O.L.A. for FRS. These numbers are for illustrative purposes only

8 DROP Basic Elements of the Deferred Retirement Option Program* The Deferred Retirement Option Program (DROP) is a program that allows you to retire without terminating your employment for up to 5 years while your retirement benefits accumulate and earn interest compounded monthly at an effective annual rate of 1.3%. Your participation in DROP does not change your conditions of employment. When your DROP period ends, you must terminate employment. At that time, you will receive your accumulated DROP benefits and begin receiving your monthly retirement benefit (as calculated when you retired and entered DROP, plus any applicable cost-of-living increases.) * From the MyFRS.com Website

9 Years of Participation in DROP Monthly Benefit $1,500 $18,107 $ 36,995 $ 56,689 $ 77,217 $ 98,607 $2,000 $24,720 $ 49,327 $ 75,586 $102,956 $131,476 $2,500 $30,179 $ 61,658 $94,482 $128,696 $164,346 $3,000 $36,215 $ 73,990 $113,379 $154,435 $197,215 $3,500 $42,251 $ 86,322 $132,275 $180,174 $230,084 $4,000 $48,287 $ 98,654 $151,172 $205,913 $262,954 $5,000 $60,358 $123,317 $188,965 $257,392 $328,692 From MyFRS.com Website Based on Interest compounded at 1.3% annually

10 What To Do With DROP Money? When you terminate employment, the proceeds of your DROP account will be distributed to you in one of three ways By a lump sum payment By a direct rollover or By a combined partial lump sum payment and rollover

11 Investment Plan FRS Member may roll from the Pension Plan to the Investment Plan Going from a Defined Benefit Plan to a Defined Contribution Plan Income, Years of Service & a Present Value Factor Determine Amount Proceeds Pass on To a Spouse, Children, or Other Beneficiaries You Control Where Monies are Invested Less affected by changing FRS Legislation Only Federal Income Taxes Due on Distributions

12 IRA Rollover DROP, Investment Plan, 457, 401(k), 403(b), TSP, ESOP, Etc. IRA Account

13 CDs IRA Account Bond/Mutual Funds Stock/Mutual Funds Annuities

14 Roth IRA After Tax Contributions Assets Grow Tax Deferred Tax-Free Distributions (Principal and Interest) After 59½ Penalty Free/Tax Free Access to Contributions at Any Time No Mandatory Distributions at 70½ Passes on Tax Free to Beneficiaries

15 Taxation of Social Security Benefits 85% 85% $34,000 50% 50% $44,000 $25,000 0% 0% $32,000 Single Married From ssa.gov website

16 !!! Thank You For All You Do!!! We Sincerely Appreciate All of Your Hard Work and Effort. Our Goal is to Help You Find the Answers You ve Been Looking For. You Earned It, We Help You Keep It! Jeff Green & Jeff Heard The Jeff and Jeff Show Listen to Now You Know Sundays 9:00am-10:00am