My Choice: Retirement Savings Plan Member Handbook for Local Government Employees: Retiring from the Plan
CALCULATING YOUR PLAN BENEFITS
You become 100 percent vested when you have five years of service. For normal retirement this is age 62 plus five years of participation. Full vesting also occurs if you die in the line of duty.
- One year = 20 percent
- Two years = 40 percent
- Three years = 60 percent
- Four years = 80 percent
- Five years = 100 percent
YEARS OF PARTICIPATION
Only full years of participation count toward vesting in the employer contributions. For example, if you work four years and 10 months you would receive 80 percent of the employer share (variable) portion. You need to review your service time before separating from service.
You may think of the last day you work or the last day you were on payroll as your retirement date, but INPRS uses an “effective date” for retirement benefits. The effective date of your retirement is the first day of the month after your last day in pay status.
EXAMPLE: Your last day in pay status is Aug. 2. Your effective date of retirement is Sept. 1.
My Choice: Retirement Savings Plan Payment Methods
If you meet age and years of participation requirements and you have at least $15,000 in your My Choice: Retirement Savings Plan account balance, you may annuitize it. Your rollover account may be used in the calculation of the minimum account balance. That is, you may take this money as a lifetime monthly annuity payment. You can also choose to receive a distribution of the funds when you retire from the My Choice plan or wait to receive your money until a later date.
Your My Choice: Retirement Savings Plan will be paid out the same day if submitted priot to 4 p.m. on thr Retirement Application Center. If your application is received after 4 p.m., it will be paid the next business day.
Beginning Jan. 1, 2018, INPRS will no longer be among your choices of annuity providers at retirement. However, we have partnered with MetLife to offer annuities at competitive rates. With the transition to MetLife not only will you still have the ability to purchase a lifetime income annuity with all your INPRS defined contribution (DC) account assets, but also just a portion of those assets.
Who is impacted?
If your retirement date is Jan. 1, 2018 or later, INPRS will no longer be among your choices of annuity providers. Please visit the MetLife Retirement Income Center to get an annuity estimate. If you do not wish to annuitize your retirement funds, you are not impacted.
For more information go to the Annuity Information page, here.
Beneficiary Benefit Details
This includes the mandatory 3 percent and any voluntary contributions, any rollover savings account contributions, the vested portion of the employer share (variable) contributions and any earnings. The beneficiaries may elect to have the account paid as a:
- lump sum,
- direct rollover to another eligible retirement plan, or
- an annuity if the account balance is at least $15,000 and the beneficiary or spouse is at least age 62.
If you do not list any beneficiaries, or if your beneficiaries precede you in death, the account will be paid to your surviving spouse, dependents or estate.
If you die in the line of duty while in service but you are not fully vested in the employer share (variable) contributions, the account is deemed fully vested. This means your designated beneficiaries will receive 100 percent of all amounts in your account.
If you fail to inform PERF of beneficiary changes, it may mean payment will be made to someone who is no longer your choice to receive your balance. Make the change via your online account.
Disability Benefit Details
INPRS considers your onset date to have occurred while serving in a covered position if the onset date is while you were:
- receiving salary (your onset date must be prior to your last paycheck date);
- receiving employer-provided income protection benefits;
- on leave under the FMLA; or
- off work receiving worker’s compensation benefits
Please contact INPRS if you have any questions about establishing eligibility for disability benefits.
NOTICE: INPRS CANNOT process your disability application without a copy of your Social Security award letter with the onset date.
To the extent that you are vested with a minimum account balance of $15,000, you may elect to have a withdrawal paid as:
- a lump sum,
- a direct rollover to an eligible retirement plan, or
- as a monthly annuity.
If you have met the Social Security disability requirement, you may request a distribution online. You may also speak to a Customer Service Representative.
If you are not vested, all voluntary distributions for disability and rollover withdrawals require 100 percent of the available amount to be withdrawn. If you are vested in the plan, you may elect to withdraw all or part of this account
You must submit your elections using the online retirement application. You can access the retirement application by downloading it here or by calling (844) GO-INPRS.
Payments are made using direct deposit. On the same day each month, your payment will be deposited directly into the account you choose. You will receive a yearly notice of deposits. Your money cannot be lost or stolen. There are no delays due to mishandled mail or incorrect addresses. Please contact us at (844) GO-INPRS to request a form be mailed to you, or download it here.
Separation from Service
You can withdraw the balance of your account and receive a lump sum distribution or roll the funds to another qualified retirement plan if you are no longer working in a My Choice-covered position. If you re-employ in a My Choice-covered position within 30 days, any distribution is void. You may be required to pay back the distribution, plus interest. You should notify INPRS immediately if you become re-employed within a 30-day period.
If your account balance is more than $1,000 ($1000.01 or more) and you do not request a distribution, payment will be deferred until March of the year after you turn 70½. At that time, a Required Minimum Distribution (RMD) will be processed. Rules about the RMD take precedence over any of the automatic cashout or rules regarding suspension.
If you have more than $1,000 or more than one year of service, your account balance will remain in the My Choice: Retirement Savings Plan. Your money will remain in the account until you elect a final distribution, partial withdrawal, or until a minimum distribution payment is required. If your account balance falls below the required minimum balance to remain in the plan, you will receive the money in a lump sum.
If you are vested with a balance, your distribution options are:
- a lump sum (with or without a rollover),
- a direct rollover to another eligible plan, or
- a monthly annuity if you are age 62 with five years of participation and have an account balance of at least $15,000.
TAXATION ON YOUR MY CHOICE: RETIREMENT SAVINGS PLAN (applicable to all active accounts on Jan. 1, 2018 and thereafter)
Your choice about how to distribute your Defined Contribution (DC) account can have important tax implications, and we urge you to consult with a tax advisor. PERF can explain your options but cannot offer tax advice. The information below will help you and your advisors with federal tax rules as they apply to PERF benefits.
Contributions to your DC made with after-tax dollars are referred to as “cost basis.” Mandatory contributions paid by your employer were not taxed when they were paid so they don’t create “cost basis.” At retirement, any after-tax contribution (your cost basis) is reported by PERF as non-taxable on the IRS Form 1099-R. The 1099-R is issued to retired members and the IRS. It is important to note that your cost basis is recovered under very specific IRS rules. You can choose to receive a total withdrawal of your ASA when you begin receiving your monthly retirement benefit. This will include your total cost basis that is included in your DC.
If INPRS receives contributions after you have requested a final distribution and the total account balance has been paid, INPRS will accept the contribution and pay another distribution using your previous distribution instructions. However, if these contributions are less than $1,000, the distribution will be paid directly to you in a lump sum.
Leave Your My Choice: Retirement Savings Plan Invested: If you end employment, you may choose to leave your funds invested with PERF. Based on IRS regulations, you must begin distribution at age 70 1/2. Your funds will remain invested according to your directions until you elect to receive your funds.
INPRS is required to withhold income taxes on distributions. INPRS must withhold 20 percent for federal taxes from all distributions made directly to you. Make sure to complete the tax withholding forms when you apply for benefits.
Applying for Retirement Distribution
When you are ready to apply for a distribution, select Member Login to access your online account. Submitting your application online is quick and easy.
Section Six: After Retirement