My Choice: Retirement Savings Plan Member Handbook (for Political Subdivisions): Membership
The My Choice: Retirement Savings Plan is now offered to political subdivisions (PSDs) participating in PERF. If your employer offers employees the ability to choose between participating in the My Choice: Retirement Savings Plan or the PERF Hybrid, your participation election can be made online. Once you make an election, your decision is irrevocable. If you leave employment and later return to that same employer, your participation election stays the same. If you begin employment with a new employer, you may make a new election for that employer (if the new employer offers a choice).
You may choose to become a member of a PERF Hybrid plan, if offered. The Hybrid plan offers the PERF Defined Benefit (DB) pension. This plan offers a monthly benefit for life and an ASA. Your employer will designate which plan you will participate in by default if you do not make an election within 60 days. This default enrollment is also irrevocable.
After you begin working in a My Choice-covered position, your employer will enroll you in our system. This notifies us that you have entered into a PERF-covered position. You will have 60 days to choose a plan (the My Choice: Retirement Savings Plan or PERF Hybrid). If you do not choose within this timeframe, you will default to the PERF Hybrid plan depending on your employer. You will receive a letter in the mail to confirm your plan election.
We will open a My Choice: Retirement Savings Plan account in your name and you will formally become a member. You will receive a welcome packet to detail your membership information. The packet will include instructions on how to access your online account. Your INPRS online account will allow you to:
- choose beneficiaries,
- update your address, and
- make fund allocations for your contributions.
If you do not make contribution allocations, your contributions will default to a target date fund based on your estimated year of retirement.
When you become a member of the My Choice: Retirement Savings Plan, you immediately begin to save for your retirement. After you enroll, you can name a beneficiary. The money that is still in your account at the time of your death will go to your beneficiary.
Your beneficiary may be:
- one or more people,
- certain kinds of trusts,
- estate, or
- other legal entity, such as a charity.
If you name more than one primary or contingent beneficiary for your account, you must choose percentages for each beneficiary that will equal 100 percent.
If you do not name a beneficiary, your assets will pass to:
- a surviving spouse,
- surviving dependents, if you do not have a surviving spouse, or
- your estate, if you do not have a surviving spouse or dependents.
Your employer may pay a percentage of payroll to fund your account.
There are two types of contributions in the plan:
- a 3 percent fixed rate, and
- a variable rate.
You must meet vesting requirements to qualify for a full distribution of the variable rate contributions and earnings.
If your employer participates in the program, you may also make voluntary contributions to your account. Your employer may choose to match these contributions at 50 percent.
NOTE: Only full years of participation count toward vesting years in the plan.
Example: You work for the state for 2½ years. During that time, you are on FMLA leave for 6 months. You begin a new job in a My Choice-covered position and work there for 3½ years. During that time, you take another 6 month FMLA leave. Your total service at that point is 6 years.
FIXED AND VARIABLE CONTRIBUTIONS
State law requires that 3 percent of your gross wages (regular and overtime pay) be contributed to your account. In addition, your employer may choose how much to contribute, from 0 percent up to the normal cost of the fund (a variable rate determined by the Board of Trustees). Effective July 1, 2017 through June 30, 2018, the rate will be 3.4 percent.) You will receive contributions and earnings from the subaccount if you meet the vesting requirements below:
Vesting schedule is as follows:
- One year of participation = 20 percent
- Two years of participation = 40 percent
- Three years of participation = 60 percent
- Four years of participation = 80 percent
- Five years of participation = 100 percent
If you are employed by a local unit, known as a political subdivision (PSD), the mandatory 3 percent of gross wages may be paid by the:
- employee, or
- shared by the employer and employee.
You may be able to make additional (voluntary) contributions through payroll deduction. Your employer’s governing body must decide, by resolution, to allow additional payroll deductions. Your employer can make this decision at any time and may also choose to stop payroll deductions at any time. The maximum for all types of voluntary contributions is 10 percent of your gross wages. This is in addition to the 3 percent mandatory contribution.
Post-Tax Voluntary Contributions
When you make post-tax voluntary contributions, federal, state and Social Security taxes are withheld. Your take home pay will be reduced by the total amount contributed. Since these funds have already been taxed, they won’t be taxed again. Please note: any income or interest earned on these funds is still taxable.
You will only be allowed to make post-tax voluntary contributions if your employer agrees to deduct the amount requested. The maximum voluntary contribution is 10 percent of your gross wages. That money is sent to PERF. You can stop making voluntary post-tax contributions or change the amount deducted at any time.
The IRS allows PERF to accept voluntary contributions on a pre-tax basis.
You should carefully consider all the conditions and impacts of pre-tax contributions. You will be restricted from making changes later.
The conditions that apply to pre-tax contributions include:
- Your employer must be part of this program.
- You must have five years of service credit in PERF.
- The maximum voluntary contribution is 10 percent of your gross wages. This is in addition to the 3 percent mandatory contribution.
- After you reach five years of PERF-covered service, you have two years from August 31 to choose a pre-tax contribution. This contribution cannot be more than 10 percent of your gross wages.
- As long as you work for the same employer in a PERF-covered position, you cannot change or stop the pre-tax percentage that you contribute.
- If you end service and later return to the same employer, your pre-tax contribution must be reinstated.
- If you work for a different PERF employer, and do not take a distribution, you can make a new pre-tax contribution decision. Your new employer must participate in this option.
- Your employer can choose to stop pre-tax contributions. This decision will allow you to stop making them.
In addition, your employer may choose to match 0 percent or 50 percent of your additional voluntary contributions.
More details on this option are available here.
You can only withdraw funds from your account when you end employment from a covered position. You must fully end employment for at least 30 days. If you are no longer in a PERF-covered position but are still employed with the same employer, you do not qualify to take a distribution, unless you have reached age 62. Employment on a part-time basis is not considered ending employment. YOU CANNOT TAKE A LOAN AGAINST YOUR MY CHOICE: RETIREMENT SAVINGS PLAN ACCOUNT.
SELF-DIRECTED INVESTMENT OPTIONS
The My Choice: Retirement Savings Plan allows you to manage your retirement benefits with self-directed investment options. You may decide how to invest the 3 percent contributions posted to your account and choose any one or more of the eight funds available through PERF:
- Money Market Fund
- Fixed Income Fund
- Inflation-Linked Fixed Income Fund
- International Equity Fund
- Large Cap Equity Index Fund
- Small/Mid Cap Equity Fund
- Stable Value Fund
- Target Date Funds
You may select from these options for the first time when you enroll in PERF.
You can also log in to your online account to make your investment choices. If you don’t have a computer, call (888) 286-3544 Monday through Friday from 8 a.m. to 8 p.m. EST, to speak to a customer service representative.
If you don’t make these choices, all contributions will automatically be invested in a target date fund. The goal of a target-date fund is to be a "one-stop shop" for you. Target date funds consider the year in which you plan to retire in order to provide appropriate risk diversification.
At first, all of your contributions will go to a Target Date Fund until you choose the My Choice: Retirement Savings Plan or PERF Hybrid Plan, if you have the option to choose. You will be able to view the daily value of your money in your My Choice: Retirement Savings Plan. You will also be able to make changes to your investment allocations on a daily basis.
You have the option of investing part of your account (present balance and future contributions) into any or all of the investment options using at least 1 percent increments. You can invest your current contributions and new contributions separately. This means you can direct your current and future contributions. You may also leave the current balances alone and direct your future contributions only.
Rollover Savings Accounts (RSAs) into PERF
You can deposit non-taxable funds rolled over from any of the following:
- a qualified plan described in IRS Section 401(a), 403 (a), 401(k), an annuity contract or account described in Section 403(b).
- an eligible plan maintained by a state or political subdivision of a state, or an agency or instrumentality of a state or political subdivision of a state under IRS Section 457(b).
- a Traditional Individual Retirement Account (IRA) described in IRS Section 408(a) or 408(b).
- a traditional or conduit IRA.
If you have rollover accounts with PERF Hybrid and the My Choice: Retirement Savings Account, INPRS must keep the accounts separate.
You may change investment elections on all rollover accounts. You have the right to transfer or allocate rollover balances.
You may request investment election changes when you speak with a customer service representative (CSR). You may also make changes on our website. Confirmation statements will be sent to you when you make an investment election change on the web or with a CSR.
You may have separate investment elections for the plan and rollovers. Elections can be made on the rollover contribution form. The RSA funds may be invested in any of the current investment options. They may be 100 percent withdrawn at any time prior to retirement. When you take a distribution from your My Choice: Retirement Savings Plan account, rollover funds may be combined with your account.
IRS guidelines require that you complete your rollover no longer than 60 days after the date on the distribution check.
Any amounts that are not rolled over within 60 days will not qualify for tax-free rollover treatment, unless you have obtained a waiver from the IRS (see the IRS website for information about waivers). Please consult your tax professional if you have questions.
Section Two: Your My Choice Benefits