psers plan 2 handbookpsers plan 2 summary psers plan 2 is a defined benefit plan. when you meet plan...
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PSPublic Safety Employees’
W A S H I N G T O N S TAT EDepartment of Retirement Systems
PSERS Plan 2 HandbookP u b l i c S a f e t y E m p l o y e e s ’ R e t i r e m e n t S y s t e m
January 2020
Welcome to PSERS 2 PSERS Plan 2 summary 3 How to contact the Department of Retirement Systems 3 Privacy of your information 4 How your plan works 6 Planning for retirement
Milestones/ life changes
6 Becoming vested 6 Leaving public service 7 Returning to public service 7 Marriage or divorce 7 If the unexpected happens
Approaching retirement
9 Retirement planning checkup 9 Service retirement 10 Early retirement 10 Retiring as a dual member 10 Estimatingyourbenefit 11 Annuity options
Ready to retire 11 Applying for retirement online 11 Applying for retirement on paper 11 Yourbenefitoptions 12 Health insurance coverage 12 Federalbenefitlimit 12 Federaltaxonyourmonthlybenefit 12 Legal actions 13 Whenandhowyourbenefitwillbepaid
Once you retire 13 Cost-of-Living Adjustment (COLA) 13 Working after retirement 13 Benefitoverpaymentsorunderpayments 13 Changingabenefitoptionorsurvivorafteryouretire
14 Glossary of terms15 Index
Public Safety Employees' Retirement System (PSERS) — Plan 2
PSPublic Safety Employees’
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PSERS Plan 2 summary
PSERS Plan 2 is a defined benefit plan.When you meet plan requirements and retire, you are guaranteed a monthly benefitfortherestofyourlife.
Your monthly benefit will be based on your years of service while a member of PSERS Plan 2 and your compensation. This formula will be used to calculate your monthlybenefit:
2% x service credit years x Average FinalCompensation=monthlybenefit
You and your employer each contribute a percentage of your salary or wages to help fund the plan. The Pension Funding Council adopts contribution rates and periodically adjusts themtoreflecttheoverallcostoftheplan.
You are vested in the plan when you have five years of service credit. Once you are vested, you have earned therighttoafuturemonthlybenefit.Ifyou leave your job and withdraw your contributions, however, you give up your righttoabenefit.
You are eligible to retire with a full benefit at age 65 if you have at least five years of service credit and at age 60 if you have at least 10 years of PSERS service credit. Retirement before age 60 or 65 is considered an early retirement.Ifyouhaveat least 20 years of service credit and are at least age 53, you can choose to retire early, butyourbenefitmightbereduced.
If the unexpected happens — disability or death before retirement — a benefit might be available. If you become totally incapacitated and leave your job as a result, you might be eligibleforadisabilityretirementbenefit.
If you die before you retire, your spouse, registered domestic partner or minor child, if applicable, could be eligible to receive abenefitbasedonyouryearsofservice credit.
Log in to or sign up for online access to your retirement account. Trackyourcontributionsandservicecredit.Readthelatestnewsletter.Updateyourbeneficiaryinformationoremailaddress.Useyourindividualdatatoestimateyourmonthlybenefit.Andwhenyou’reready,applyforretirement.Youcangetstartedatdrs.wa.gov/oaadrs.wa.gov/oaa.
Welcome to the Public Safety Employees' Retirement System
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How to contact the Department of Retirement Systems
The Washington State Department of Retirement Systems (DRS) administers the Public Safety Employees'RetirementSystemandtheDeferredCompensationProgram(DCP).
Privacy of your informationWe are committed to protecting the privacy of your personal account information, including your Social Security number, which we use to track your account and submit requiredreportstotheIRS.Wewon'tdiscloseyourinformationtoanyoneunlesswearerequiredtodosobylaw.
If you have insurance coverage through the Washington State Health Care AuthorityWashington State Health Care Authority (PEBB or SEBB for example), we could share your information with HCA to better serve you.
Handbook summaryThishandbookisn'tacompletedescriptionofyourretirementbenefit.Stateretirementlawsgovernyourbenefit.Ifanyconflictsexistbetweentheinformationshowninthishandbookandwhatiscontainedincurrentlaw,thelawgoverns.
GlossaryTerms highlighted in bold print appear in the glossary of terms on page14.
To contact DRS
To contact DCP
Write Email
Website
Call
HoursVisithttp://www.drs.wa.gov http://www.drs.wa.gov http://www.drs.wa.gov http://www.drs.wa.gov http://www.drs.wa.gov http://www.drs.wa.gov
http://www.drs.wa.gov/administration/maphttp://www.drs.wa.gov/administration/maphttp://www.drs.wa.gov/administration/maphttp://www.drs.wa.gov/administration/maphttp://www.drs.wa.gov/administration/maphttp://www.drs.wa.gov/administration/maphttp://www.drs.wa.gov/administration/maphttp://www.drs.wa.gov/administration/maphttp://www.drs.wa.gov/administration/maphttp://www.drs.wa.gov/administration/map
http://www.drs.wa.gov/administration/contacthttp://www.drs.wa.gov/administration/contacthttp://www.drs.wa.gov/administration/contacthttp://www.drs.wa.gov/administration/contacthttp://www.drs.wa.gov/administration/contacthttp://www.drs.wa.gov/administration/contact
mailto:[email protected]:[email protected]:[email protected]://www.drs.wa.gov/oaa http://www.drs.wa.gov/oaa http://www.drs.wa.gov/oaa http://www.drs.wa.gov/oaa http://www.drs.wa.gov/oaa http://www.drs.wa.gov/oaa http://www.drs.wa.gov/oaa http://www.drs.wa.gov/oaahttp://www.drs.wa.gov/oaa http://www.drs.wa.gov/oaa http://www.drs.wa.gov/oaa http://www.drs.wa.gov/oaa
360.664.7000800.547.6657TTY 711
Department of Retirement SystemsPO Box 48380Olympia, WA 98504
General inquiries:[email protected]
Send a secure message through your online account: drs.wa.gov/oaa
drs.wa.gov
You can also send email through the Contact Us page on the DRS website.
Monday - Friday8 am to 5 pmPacific Time
6835 Capitol Blvd. SETumwater, WA 98501
See the DRS website for directions.
WebsiteEmailCall
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]
http://www.drs.wa.gov/savewithwahttp://www.drs.wa.gov/savewithwa http://www.drs.wa.gov/savewithwa http://www.drs.wa.gov/savewithwa
888.327.5596TTY 711Fax 866.745.5766
drs.wa.gov/savewithwa
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How your plan worksOverviewPSERS Plan 2 is a 401(a) defined benefitplan.When you retire, you will receive a monthly benefitfortherestofyourlifethatisbasedonyour years of public service and your Average Final Compensation(AFC).Eventhoughthecontributions you make help to fund the plan overall,theydon’tfactorintothemonthlybenefityoureceive.
Membership in PSERS Plan 2Ifyou’reemployedonafull-timebasisbyone of the following employers and your primary responsibility is covered under RCW 41.37.010(19)41.37.010(19),you’reeligibleforPSERSmembership:
Washington state employers
• Department of Corrections • Department of Social and Health Services • Department of Veterans Affairs • Department of Natural Resources • Parks and Recreation Commission • Gambling Commission • State Patrol • Liquor and Cannabis Board
Other employers
• Any county corrections departments • Any city corrections departments not
covered under chapter 41.28RCW41.28RCW • Any public corrections entity created
under RCW39.34.030RCW39.34.030
Membership in PSERS might be optional for someelectedorappointedofficials.Pleasecontact DRS if you are elected or appointed to theLegislatureoranotherstateelectiveoffice.Find out more at the DRS Elected or Governor-Elected or Governor-AppointedOfficialAppointedOfficialpage.
Previous membership in another Washington state public service retirement systemMembershipinanotherofWashington’spublicservice retirement systems (including the city retirement systems of Seattle, Tacoma and Spokane)canaffectyour:
• Eligibility for PSERS Plan 2 membership
• Eligibility to retire • Benefitcalculation
If you have ever been a member in another of Washington’sretirementplans,itisimportantthatyoucontactustoconfirmyoureligibilityanddiscussyourretirementoptions.
If you have earned service credit in another of thestate’spublicretirementsystems,youmaybe able to combine your PSERS service credit withcredityouearnedintheothersystem(s).For more information, read the What Is Dual What Is Dual Membership and How Does It Affect Me?Membership and How Does It Affect Me? publication.
Contributing to the planYou are required to contribute a percentage of yoursalaryorwagestoyourretirementplan.This includes overtime and tax-deferred wages, butitdoesn’tincludeseverancepayorcashpaymentsforunusedsickorvacationleave.
If you have questions about the compensation your employer reports for you, please contact youremployer.Thestate’sandyouremployer’scontributions are also based on a percentage ofyoursalaryorwages.Theyaren’tmatchingfunds, and you cannot withdraw them if you leavepublicservice.
Whenyouretire,themonthlybenefityoureceive will have been funded over time by yourcontributions,thestate’scontributions,youremployer’scontributionsandinvestmentearnings.ThePension Funding CouncilPension Funding Council adopts contribution rates and periodically adjusts themtoreflecttheoverallcostoftheplan.TheLegislaturehasthefinaldecisiononcontributionrates.
Federal law limits the amount of compensation you can pay retirement system contributions onandthatcanbeusedinyourbenefitcalculation.Theamountcanbeadjustedeachyear (see the current IRS limitIRS limit).Ifyoureachthelimitinanycalendaryear,youdon’tpaycontributions for the remainder of the year and anysalaryearnedoverthatamountisn’tusedinyourpensioncalculation.
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Earning service creditService credit is based on the number of hours you work, which your employer reports toDRS.Whenyouretire,yourservicecreditisapartofyourmonthlybenefitcalculation.
You receive one service credit month for each calendar month in which you are compensated for90ormorehoursofwork.Nomorethanone month of service credit can be earned each calendar month, even if more than one employerisreportinghoursyouwork.
You receive half a service credit if you work fewerthan90hoursbutatleast70hours.You receive one quarter a service credit for any calendar month in which you receive compensation for fewer than 70 hours in a calendarmonth.
Designating your beneficiaryThe beneficiary information you give DRS tells us the person(s) you want to receive your remainingbenefit,ifany,afteryourdeath.Youcansubmitorupdateyourbeneficiaryinformation at any time before retirement in your online retirement accountonline retirement account.Signupfororlogintoyouraccount.ThenselectMy Account > View/Edit (beside Beneficiary).Youhavethe option of submitting a paper BeneficiaryBeneficiaryDesignationDesignationforminsteadifyouprefer.
Ifyoudon’tsubmitthisinformation,anybenefitsduewillbepaidtoyoursurvivingspouseorminorchild.Ifyoudon’thaveasurviving spouse or minor child, we will pay yourestate.
Besuretoreviewyourbeneficiarydesignationperiodically and update it in your online retirement account if you need to make a change.Ifyoumarry,divorceorhaveanothersignificantchangeinyourlife,besuretoupdateyourbeneficiarydesignationbecausethese life events might invalidate your previous choices.
State-registered domestic partners, according to RCW26.60.010RCW26.60.010, have the same survivor and deathbenefitsasmarriedspouses.ContacttheSecretaryofState’sOfficeSecretaryofState’sOffice if you have questions aboutdomesticpartnerships.
When you will be vestedOnceyouhaveatleastfiveyearsofservice credit in PSERS, you have a vested right to a retirementbenefit.
IfyouleavePSERSemploymentbeforeyou’reeligible to retire, you can choose to either leave your contributions in the plan, where they will continue to earn interest, or you can withdraw yourcontributions.
If you decide to withdraw your contributions, you give up your right to a future PSERS retirementbenefit.See“Returningtopublicservice”onpage7tofindoutmoreaboutre-establishingyourbenefitrightsincertaincircumstances.
When you will be eligible to retireYou are eligible to retire at age 65 if you have atleastfiveyearsofservice credit.Youareeligible to retire at age 60 if you have at least 10yearsofPSERSservicecredit.
Options to retire earlier are available (see “Earlyretirement”onpage10),butyourbenefitwillbereducedtoreflectthatyouwillbereceivingitoveralongerperiodoftime.Toretire early, you must be at least 53 and have 20ormoreyearsofservicecredit.
How your monthly benefit will be calculatedYourbenefitisdeterminedbyyourservice credityearsandcompensation.Whenyouretire, this formula will be used to calculate yourbenefit:
2% x service credit years x AFC = monthlybenefit
Average Final Compensation (AFC) is the average of your 60 consecutive highest paid servicecreditmonths.Anyseverancepayorlump sum payment for unused sick leave or vacation/annualleaveisnotincluded.
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Example Usingtheformula
If you retire at age 65 with 32 years of service credit and a monthly Average Final Compensation of $5,000, your monthly benefitis$3,200,calculatedasfollows:
2% x 32 x $5,000 = $3,200
Planning for retirementEven though retirement might seem far away, planning for it now is one of the best things youcandoforyourselfandyourfamily.
Yourmonthlybenefitwillbeanimportantpart of your income in retirement, but it is justaportionofwhatyouwillneed.Howdoyou begin developing your personal plan for retirement? First, estimate how much money youwillneed.Thatcanvarybasedonfactorsthatinclude:
• Theretirementlifestyleyou’llwant • Your health • Whetheryou’llcarrydebtintoretirement • Your life expectancy
Next, estimate how much money you will receive from all sources, such as Social Security, personal savings and other employer pension plans.Whenyoucomparethisnumberwithwhat you think you will need, you can adjust yoursavingsplanaccordingly.
Manytoolscanhelpyouwithyourplanning.Here are some on the DRS websiteDRS website:
• Live webinarsLive webinars are available to attend online.TopicsincludePlan2,Plan3,plan choice, the Deferred Compensation Program (DCP), distributions from Plan 3, investment basics and Social Security basics.
• Retirement seminars are available to attendinperson.Youcanalsowatchseminarswhenit’sconvenientforyouonthe DRS Retirement SeminarsRetirement Seminarswebpage.Topics include Plan 1, Plan 2, Plan 3, DCP, Social Security and health care options,
andtheVoluntaryEmployees’BeneficiaryAssociation(VEBA).
• Thebenefitestimatorwithinyouronline online accountaccount can calculate your monthly benefitbasedonavarietyofscenarios(for example, different retirement dates) usingyouractualaccountdata.Ifyouhaven’talreadyregisteredforthisservice,ittakesjustafewminutestodoso.
• The Deferred Compensation ProgramDeferred Compensation Program (DCP) is a special type of savings program that helps you invest for the retirement lifestyleyouwanttoachieve.Unliketraditional savings accounts, DCP is tax-deferred.Thatmeansitlowersyourtaxable income while you are working and it delays payments of income on your investments until you withdraw your funds.Contributionsareautomaticallydeducted from your paycheck, so saving iseasy.Youcanstartwithaslittleas$30permonth.Youcanalsoletyourcontributions grow with percentage deductions.
Be sure to revisit your plan periodically and adjust for any changes in your professional and personallife.
Milestones/life changes
Becoming vestedWhenyouhaveatleastfiveyearsofservice credit in PSERS Plan 2, you have a vested right toaretirementbenefit.Thisisasignificantmilestoneinyourpublicservicecareer.
Leaving public serviceIf you leave PSERS employment, you can choose to either leave your contributions in
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theplanuntilyou’reeligibletoretireorwithdrawthem.TheIRSrequiresthatyoubegintakingpaymentofyourmonthlybenefitno later than age 70½, unless you are still employed.
Leaving PSERS-covered employment is the only circumstance in which you can withdraw yourcontributions.DoingsocancelsanyrightsandbenefityouhaveaccruedinPSERS.Youcan restore your contributions and re-establish yourbenefitonlyincertaincircumstances(seethenextsection).
There are tax implications to withdrawing your contributions, so you might want to contact the IRS or a tax advisor before making adecision.TheWithdrawal of Retirement Withdrawal of Retirement ContributionsContributions publication offers more detailed information.
Be sure to keep us up to date on any name or addresschanges.Alsokeepyourbeneficiary designation current, because a divorce, marriageorotherchangemightinvalidateit.
Returning to public serviceIf you leave your position, withdraw your contributions and later return to PSERS work, you might be able to restore your previous service credit.Todoso,youmustrepaythetotal amount of the contributions you withdrew plusinterestwithinfiveyearsofreturningtowork or before you retire, whichever comes first.Contactustofindoutthatamount.
A dual member, or someone who belongs to more than one retirement system, might be able to restore service credit earned in a retirementsystemotherthanPSERS.Eachtimeyoubecomeadualmember,you’llhave24months to restore service credit earned in a previousretirementsystem.
It might still be possible to purchase service creditafterthedeadlinehaspassed.However,thecostinthatcaseisconsiderablyhigher.
See Plan 2 Recovery of Withdrawn or Optional Plan 2 Recovery of Withdrawn or Optional Service Credit for PERS, SERS, TRS, PSERS and Service Credit for PERS, SERS, TRS, PSERS and LEOFFLEOFF.YoumightfindhelpfulinformationinWhat Is Dual Membership and How Does It What Is Dual Membership and How Does It Affect Me?Affect Me?
Marriage or divorceMarrying, divorcing or separating can affect yourmonthlybenefit.
Court-ordered property divisionA court-ordered property division could affect yourbenefit.Aslongastheordercomplieswith applicable laws, we will pay a monthly benefittoyourex-spouseaccordingtothedivision.ThepublicationHow Can a Property How Can a Property Division Affect My Retirement Account?Division Affect My Retirement Account? containsdetailedinformation.
Updating your beneficiaryThe beneficiary information you give DRS tells us the person(s) you want to receive your remainingbenefit,ifany,afteryourdeath.Youcansubmitorupdateyourbeneficiaryinformation at any time before retirement in your online retirement accountonline retirement account.Signupfororlogintoyouraccount.ThenselectMy Account > View/Edit (beside Beneficiary).Youhavethe option of submitting a paper BeneficiaryBeneficiaryDesignationDesignation forminstead,ifyouprefer.
If you marry or divorce before you retire, you needtoupdateyourbeneficiaryinformation,evenifyourbeneficiaryremainsthesame.It’sveryimportanttokeepituptodate.
If the unexpected happensTemporary leave from your jobYou might need to take a temporary leave fromyourjobbecauseof:
• Military service • An authorized leave of absence • A temporary disability
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If so, you might be able to obtain service credit for work time missed while you were on leave.
Service credit for military serviceIf you left your position for uniformed military service, you might be eligible to receive service creditforthatperiod.Toqualify,youmust:
• Apply for a position with the same PSERS employer within 90 days of receiving an honorable discharge
• Paythecontributionswithinfiveyearsof returning to employment or before youretire,whichevercomesfirst;contributions might not be required if your military service occurred during certain periods of war and you earned a campaign medal
If you become totally incapacitated as a result ofservingintheUnitedStatesmilitary,you(oryour surviving spouse or children, in the case of your death) can apply for military service creditwithoutreturningtoemployment.
See the Military Service CreditMilitary Service Creditpublication.
Service credit for an unpaid, authorized leave of absenceYou could be able to earn up to two years of service credit for an authorized, unpaid leave of absence.Todoso,youmust:
• Return to work in a PSERS-covered position
• Pay your contributions with interest as wellasyouremployer’scontributionswithinterest for the period of time you were on leave
Youmustcompletepaymentwithinfiveyears of returning to employment or before youretire,whichevercomesfirst.SeePlan 2 Plan 2 Recovery of Withdrawn or Optional Service Recovery of Withdrawn or Optional Service Credit for PERS, SERS, TRS, PSERS and LEOFFCredit for PERS, SERS, TRS, PSERS and LEOFF.
Ifyou’realawenforcementofficerandyouremployer authorizes a part-time leave of absence, you can buy part-time service credit when you return to full-time employment.
Disability before retirementIn some cases, you can obtain service credit for work time missed while you were on leave foratemporarydisability.Ifyoubecometotallyincapacitated and leave your job as a result, you might be eligible for a disability retirement benefit.
TofindoutmoreatPSERS Plan 2 DPSERS Plan 2 Disability isability BenefitsBenefitsorcallusforinformation.
Death before retirementIf you have fewer than 10 years of PSERS service credit at the time of your death, your contributions plus interest will be paid to your beneficiary.
If you have 10 or more years of service credit at the time of your death, your spouse or registered domestic partner or, if none, the guardian of your minor children can choose to receive either a lump sum payment of 100% of your contributions plus interest or a monthly benefit.Ifyoudon’thaveasurvivingspouse,partner or children, your contributions plus interestwillbepaidtoyourbeneficiaryorestate.
Themonthlybenefitwillbecalculatedasifyouhadretiredandchosena100%survivorbenefit(seeOption2onpage11inthe“Readytoretire”sectionofthishandbook).
If your surviving spouse dies while receiving thebenefit,yourminorchildrenwillreceivethebenefitthatwasbeingpaidtoyoursurvivingspouse.Thebenefitwillbedividedequallyamong the children, and each will receive their portionuntiltheyturn18.
Death as a result of an injury or occupational disease sustained during employmentIf the Department of Labor & Industries (L&I)Department of Labor & Industries (L&I) determines that your death was the result of injuries sustained during the course of employment or an occupational disease or infection that arose from your employment, your beneficiary will be entitled to a one-time, duty-relateddeathbenefit.
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In addition, your surviving spouse, partner or, if none, the guardian of your minor children will be eligible for a lump-sum payment of 100% of yourcontributionsplusinterest.
Approaching retirement
Retirement planning checkupConsider taking time to check in on your retirementplanning.Haveyouanalyzedhowmuch you will need and how much you will have in retirement? Has anything in your plan changed?Haveyoujoinedthestate’sDeferred Deferred Compensation Program (DCP)Compensation Program (DCP) or another supplemental savings program?
Thingstoconsider: • Identifyyourretirementlifestylegoals.
Will you want to travel the world or stay close to home? Different lifestyle choices canmeandifferentfinancialgoals.
• Takecareofyourhealth.Thecostofmedical care can be one of the largest expensesyouincurinretirement.Gettingregular checkups now and maintaining a healthy lifestyle can have an impact on whatthosecostswillbewhenyouretire.
• Paydowndebt.Debtlessensthemoneyyouhaveavailabletosave.Payingoffdebtwhileyou’restillgeneratingapaycheck will affect how much you have tosaveandgiveyougreaterflexibilityinretirement.
• Sign up for DCP or another similar savings vehicle.(It’snevertoolatetogetstarted.)Ifyou’realreadysavingwithDCPoranother plan, consider increasing your contributionamount.Makingevenasmallincrease can make a big difference over thelongrun.Usethecalculatorcalculator on the DCP website to see the impact different contributionamountscouldhave.Here’sanimportanttip:Ifyou’reage50orolder,the IRS allows a higher contribution limit, which enables you to save even more in yourDCPaccountifyouchoose.
These questions are key as you approach retirement:
• How much income will you need in retirement?
• Whatwillyourmonthlybenefitbe? • Howwillyourbenefitchangeifyouwork
past age 65 or you decide to retire early? • Willyouwanttoincreaseyourbenefitby
purchasing additional service credit? • What other income will you have
available to you in retirement?
Thissectioncanhelpyoufindtheanswers.Ifyouhaven’talreadysignedupforanonline accountonline account,considerdoingso.Withthisaccount,youcancalculateyourbenefitusingdifferent scenarios and your individual account information.
Service retirementYou are eligible to retire at age 65 if you have atleastfiveyearsofservice credit.Youareeligible to retire at age 60 if you have at least 10yearsofPSERSservicecredit.Thisformulawillbeusedtocalculateyourbenefit:
2% x service credit years x AFC = monthlybenefit
AFC is the average of your 60 consecutive highestpaidservicecreditmonths.Anyseverance pay or lump sum payment for unusedsickleaveorvacation/annualleaveisnotincluded.
Example Service retirement
If you retire at age 65 with 20 years of service credit and a monthly Average Final Compensation of $4,700, your monthly benefitis$1,880eachmonth,calculatedasfollows:
2%x20x$4,700=$1,880
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Ifyourmonthlybenefitislessthan$50,youcan choose to take a lump sum retirement benefit.(It’slikelythatonlyamemberwhoretires early on disability or as a dual member wouldreceivethistypeofpayment.)Ifyou receive a lump sum payment, you are consideredretiredfromPSERS.
Early retirementAny retirement before age 60 is an early retirement.Ifyouretireearly,yourbenefitwillbereducedtoreflectthatyouwillbereceivingitoveralongerperiodoftime.Yourbenefitdepends on how much service credit you have earnedandyourage.
Reduced benefitAge 3% Reduction Factor
53 79%54 82%55 85%56 88%57 91%58 94%59 97%60 100%
Retiring as a dual memberIf you are a member of more than one Washington state retirement system, you are a dual member.Youcancombineservice credit earned in all dual member systems to become eligibleforretirement.
Inmostcases,yourmonthlybenefitwillbebased on the highest base salary you earned, regardlessofwhichsystemyouearneditin.Base salary includes your wages and overtime and can include other cash payments if those payments are included as base salary in all the retirementsystemsyouareretiringfrom.
Example Dual memberIf you retire at age 65 with three years of service credit from PSERS Plan 2 and four fromthePublicEmployees’RetirementSystem (PERS) Plan 2, you are a dual member.Withoutdualmembership,yourservicewouldn’tbeeligibleforamonthlybenefitfromeithersystem.Withdual membership, your service credit is combined,givingyouenoughtoretire.Yourbenefitiscalculatedwithservicefromthatsystemalone.Here’sthecalculation:
2% x 3 (PSERS service credit years) x Average Final Compensation (AFC) = PSERSbenefit
2% x 4 (PERS service credit years) xAFC=PERSbenefit
PSERSbenefit+PERSbenefit=total monthlybenefit
For more information, read the publication What Is Dual Membership and How Does It What Is Dual Membership and How Does It Affect Me?Affect Me?
EstimatingyourbenefitIfyouarewithinfiveyearsofretirement,weencourage you to review your online accountonline account andusetheonlinebenefitestimatortodeterminehowmuchyourbenefitmightbe.You can use this estimator at any point in your career.
If you expect to retire within the next year, contact us through your online accountonline account or call torequestawrittenestimateofyourbenefit.
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Annuity optionsAn annuity is a guaranteed income plan youpurchase.Whenretiring,PSERSPlan2members have two available annuitiesavailable annuities.
PSERS Plan annuity:Withthisannuity,theretirementbenefitincreaseyoureceiveisbased on the dollar amount you choose to purchase.Whilethereisnomaximumamount,aminimumpurchaseof$5,000isrequired.Thefunds to purchase this annuity must come from an eligible governmental plan, such as your DCPsavings.Estimatethemonthlyretirementincomeincreasethroughthe“PurchaseanAnnuity” calculator in your online accountonline account.
Service credit annuity:Thisannuityallowsyou to add up to 60 months to your service in thefinalpensioncalculation.Purchasedservicecredit does not actually increase the number ofyearsyou’veworkedandwon’thelpyouqualify for retirement, but it can make a big impactwhenitcomestoyourpensionbenefit!Estimate the monthly retirement income increase as well as the annuity cost through the “PurchasingService”calculatorinyouronline online accountaccount.
So how do you fund these annuities? Many membersusetheirDCPsavingsaccount.Formore information about these annuities, see DRS annuitiesDRS annuities.
Ready to retireApplying for retirement online To apply online, go to your online accountonline account and eithersignupfororlogintoyouraccount.
The online retirement application will display only what you need based on your retirement system,planandretirementeligibilityrules.Follow the step-by-step instructions and electronically submit the application to us whenyou’reready.
Applying for retirement on paperRequestaretirementapplicationfromus.Turnin the completed application with all required signatures and documentation, including proof of age for your survivor if you choose a SurvivorOption(seeOptions2,3and4).
Ifyou’repurchasingservice credit, complete and turn in your Request to Purchase Retirement Service Credit form with your application.
YourbenefitoptionsWhen you apply for retirement, you will choose oneofthefourbenefitoptionsshownbelow.Once you retire, you can change your option onlyinlimited,specificcircumstances,soselectcarefully.
Option 1Single LifeThis option pays the highest monthly amount of the four choices, but it is for your lifetime only.Noonewillreceiveanongoingbenefitafteryoudie.Ifyoudiebeforethebenefityouhave received equals your contributions plus interest (as of the date of your retirement), the difference will be paid in a lump sum to your designated beneficiary.
Option 2Joint and 100% survivorYourmonthlybenefitunderthisoptionislessthantheSingleLifeOption.Butafteryourdeath, your survivor will receive the same benefityouwerereceivingfortheirlifetime.
Option 3Joint and 50% survivorThis option applies a smaller reduction to yourmonthlybenefitthanOption2.After your death, your survivor will receive half the benefityouwerereceivingfortheirlifetime.
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Option 4Joint and 66.67% survivorThis option applies a smaller reduction to your benefitthanOption2andalargerreductionthanOption3.Afteryourdeath,yoursurvivorwillreceive66.67%(orroughlytwo-thirds)ofthebenefityouwerereceivingfortheirlifetime.
You must get consent in certain circumstancesIf you are married, legally separated or a registered domestic partner and do not leave asurvivoroptionforyourspouse/partner,thelawrequirestheirconsenttoyourchoice.If their notarized consent is not provided on yourretirementapplication,yourbenefitwill be calculated at Option 3 and they will be the designatedsurvivor.
Health insurance coverageAsk your employer if you will be eligible for health insurance coverage through the PublicEmployeesBenefitsBoard(PEBB)PublicEmployeesBenefitsBoard(PEBB) once youretire.YoucanalsocalltheHealthCareAuthorityat800-200-1004orvisit www.hca.wa.govwww.hca.wa.gov.
If you qualify for continuing coverage, you must meet strict timelines to apply or request adeferral.IfyouarenotentitledtoPEBBcoverage, you might be eligible for health insuranceyouremployerprovides.Formoreinformation,consultyouremployer.
FederalbenefitlimitWhenyouretire,yourbenefitcouldbelimitedifitexceedsthefederallyallowedamount.Itcanbeadjustedannuallyforinflation(seethecurrentIRSlimits).MembershiredbeforeJan.1,1990,havedifferentlimits.Whenweprocessyourbenefitestimate,wewillnotifyyouifyourbenefitexceedsthelimit.
Few retirement system members should be impactedbythislimit.Ifyouthinkitcouldimpactyou,callusforadditionalinformation.
FederaltaxonyourmonthlybenefitMost,ifnotall,ofyourbenefitwillbesubjecttofederalincometax.Theonlyexceptionwillbe any portion that was taxed before it was contributed.Whenyouretire,wewillletyouknow if any portion of your contributions has alreadybeentaxed.
Since most public employers deduct contributionsbeforetaxes,it’slikelyyourentireretirementbenefitwillbetaxable.
At retirement, you must complete and submit a federal W-4P formW-4P form to let us know how much ofyourbenefitshouldbewithheldfortaxes.Ifyoudon’t,IRSrulesrequirewithholdingas if you are married and claiming three exemptions.Youcanadjustyourwithholdingamount at any time during retirement by completing a new W-4P formW-4P form.
For each tax year you receive a retirement benefit,wewillprovideyouwitha1099-Rformto use in preparing your tax return (see the 1099-R guide1099-R guide).TheseformsareusuallymailedattheendofJanuaryforthepreviousyear.The information is also available through your online accountonline account.
It is your responsibility to declare the proper amountoftaxableincomeonyourtaxreturn.
Legal actionsIngeneral,yourmonthlybenefitisnotsubjecttoassignmentorattachment.However,itcould be subject to court and administrative orders issued under federal law or for spousal maintenanceandchildsupport.Youcanfindmore information in the publication Can Legal Can Legal Action Affect My Retirement Account?Action Affect My Retirement Account?
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Whenandhowyourbenefitwill be paidAfteryouretire,yourretirementbenefitwillbe paid at the end of each month and directly depositedinyourfinancialinstitutionaccount.You must enter your banking information in your online retirement accountonline retirement account or complete the Direct Deposit AuthorizationDirect Deposit Authorization form as part ofyourretirementapplication.
Ifyouneedtochangeyourfinancialinstitutiononceyou’vestartedyourretirement,justupdate your information in your online account orsendusanewauthorizationform.Inrarecases, if you are unable to receive payment by direct deposit, payment will be mailed at the endofeachmonth.
Once you retireCost-of-Living Adjustment (COLA)OnJuly1ofeveryyearfollowingyourfirstfullyearofretirement,yourmonthlybenefitwillbe adjusted to a maximum of 3% per year, as determined by the Consumer Price IndexConsumer Price Index.
Working after retirementIf you return to public service in Washington stateafteryouretire,yourbenefitcouldbeaffected, depending on the position and numberofhoursyouwork.
In certain circumstances, you might be required to become a member of, and pay contributions to, another retirement system.Youmightbeable to work limited hours with no impact to yourbenefit.
If you think you might be returning to work afterretirement,callustoseeifyourbenefitwillbeaffected.Considerreviewingthe
Thinking About Working After Retirement?Thinking About Working After Retirement? publication.
Benefitoverpaymentsor underpaymentsIf you ever receive an overpayment of your monthlybenefit,youarerequiredtorepayit.Ifwediscoveryourbenefithasbeenunderpaid,we will correct the error and award you a retroactivepayment,ifapplicable.
Changingabenefitoptionor survivor after you retireOnce you retire, you may change your benefitoptionorsurvivor in the following circumstancesonly:
• If you designate someone other than your spouse to receive your survivor benefit,youcanchangetoanOption1(nosurvivor)benefitatanytimeafterretirement.
• If you choose a Survivor Option (Option 2, 3 or 4) and your designated survivor diesbeforeyoudo,yourmonthlybenefitcan be adjusted to the higher Option 1 paymentlevel.Besuretonotifyustobeginthischange.
• If you marry or remarry after retirement and remain married for at least one year, you might be able to change your benefitoptionandprovideasurvivorbenefitforyournewspouse.Toqualifyfor this opportunity, you must request the change during your second year of marriage.Contactusforestimatesonhowthiswillaffectyourmonthlybenefit.Also, be aware that this opportunity might not be available if a court-ordered property division has impacted your benefit.
• If you re-enter PSERS membership and earn 24 months of uninterrupted service credit, you can select a different Survivor Optionwhenyouretireagain.
PS
14drs.wa.gov
Glossary of termsAverage Final Compensation (AFC): The monthly average of your 60 consecutive highest paidservicecreditmonths.YourAverageFinalCompensation is used in determining your monthlybenefit.
Beneficiary: The person(s), estate, organization or trustyouhavedesignatedtoreceiveanybenefitpayableuponyourdeath.YourbeneficiarymusthaveafederaltaxidentificationnumberoraSocialSecuritynumber.
Cost-of-Living Adjustment (COLA): OnJuly1ofeveryyearfollowingyourfirstfullyearofretirement,yourmonthlybenefitwillbeadjustedtoreflectthepercentage change in the Consumer Price Index — to a maximum of 3%peryear.
Defined benefit: A retirement plan in which yourbenefitisbasedonaformula rather than an accountbalance.Theformulaprovidesamonthly benefit based on your years of service and your Average Final Compensation.
Domestic partner: In a registered domestic partnership, both individuals have met the state’slegalrequirementsandregisteredtheirpartnershipwiththeSecretaryofState’sOfficeoranotherjurisdiction.ContacttheSecretaryofState’sOfficeifyouhavequestionsabouttherequirements. Registered domestic partners have thesamesurvivoranddeathbenefitsasmarriedspouses.However,differencescouldoccurinhowtaxesarehandledatthefederallevel.
Dual member: You are a dual member if you have established membership in more than one Washington state retirement system, including First Class City Retirement Systems for Seattle, Spokane and Tacoma, but excluding Plan 1 of theLawEnforcementOfficers'andFireFighters'Retirement System.
Early retirement: Retiringbeforeage60.
Membership status: The status of your retirement membership.Thiscanbe:
• Active, which means you are currently employed in a position covered by one of the state retirement systems
• Inactive, which means you no longer are actively contributing to the state retirement system and have not withdrawn your contributions after leaving employment (which might leave you eligible to receive a benefitonceyoureachretirementage)
• Withdrawn, which means you were employed in a position covered by one of the state retirement systems and you withdrew your contributions after leaving employment
Reduced benefit: AbenefitthathasbeendecreasedbyafactorprovidedbytheOfficeoftheStateActuary.A benefit is reduced in two situations: when you retire early or you retire and select a Survivor Option (which paysabenefittoyour survivor after your death).
Service credit: The credit you receive each month for working in a position covered by one of the stateretirementsystems.Servicecreditisusedtodetermine your eligibility for retirement and your benefitamount.
Survivor: The individual you choose — when picking Option 2, 3 or 4 at retirement — to receive benefitpaymentsafteryourdeath.
System/plan: The retirement system and plan in whichyouareamember.
Vested: You have earned the right to receive a retirementbenefitonceyoureachaneligibleage.
AApplying for retirement, 11Approaching retirement, 9Authorized leave of
absence, 7Average Final
Compensation, 2, 5, 9, 10
BBecoming vested, 6Beneficiary,5,7,11Benefitcalculation,2,4Benefitoptions,11,13
CChangingabenefitoptionor
survivor after you retire, 13Compensation, 2, 4, 5Contribution rate, 2, 4Contributions,2,4,5,8,11,13Cost-of-Living Adjustment
(COLA), 13, 14
DDeath,2,7,8,8,11,14Deferred Compensation
Program (DCP), 3, 9Definedbenefit,4,14Designating your beneficiary,5Disability, 2, 7, 10Divorce, 7Domesticpartner,2,5,814Dual member, 7, 10, 14
EEarly retirement, 2, 5, 10, 14Earning service credit, 5Eligible to retire, 2, 5, 7, 9Estimatingyourbenefit,10
FFederalbenefitlimit,12Federal tax, 12Formula, 2, 5, 9, 14
GGlossary of terms, 14
HHealth insurance coverage, 12How to contact DRS, 3How your plan works, 4
IIf the unexpected happens, 7
LLeaving public service, 6Legal actions, 12Life changes, 6
MMarriage, 7, 13Milestones, 6Military service, 7
OOnce you retire, 11, 12, 13Online account, 6, 9Overpayments, 13
PPlan summary, 2Planning for retirement, 6, 11Privacy of your
information, 3Property division, 7, 13PublicEmployeesBenefitsBoard
(PEBB), 3, 12Purchasing additional service
credit, 11
RReady to retire, 11, 14Retirement planning
checkup, 9Retiring as a dual member,10Returning to public service, 7
SSeminar, 11Servicecredit,2,5,6,8,
9, 10, 11, 13, 14Service retirement, 9Survivor,5,8,11,11,13,14
TTemporary disability, 7
UUnderpayments,13Updatingyourplanfor
retirement, 11
VVested, 2, 5, 6, 14
WWhenandhowyourbenefitwill
be paid, 13Withdraw, 2, 4, 7Working after retirement, 13
Index
PSERS2HB1/20