Retirement Benefits
as impacted by the
Voluntary Separation Program (VSP)
1
Overview
There are three groups that will be covered during this seminar:
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Group 1: Vested members eligible for a
retirement allowance on May 1, 2015
Group 2: Vested members not eligible to
retire May 1, 2015 but eligible for a future
retirement allowance
Group 3: Non-vested members who are
ineligible for a future monthly retirement
allowance
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Membership:
Pension System
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Eligibility Service
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Determines when you become eligible for a
benefit
500 hours worked in a fiscal year = one year
of eligibility service
Creditable Service
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Determines the amount of the benefit
Based on hours worked and contributions
made
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Maryland State Retirement and Pension System
Membership
Retirement System
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Eligibility and Creditable service are the
same
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Earned month by month as employee
contributions are received
Determines eligibility for benefits and amount
of the benefit
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Maryland State Retirement and Pension System
Group 3
Non-Vested Members
Membership before 7/1/2011: Less than 5 years of eligibility service
Membership on or after 7/1/2011: Less than 10 years of eligibility service
Withdrawal of Contributions
■
Withdraw contributions = forfeit benefits
■
Withdrawn contributions may be rolled into
qualified plan, IRA or annuity
5
Group 3: Withdrawal of Contributions
Must complete the following forms:
■ Application for Withdrawal of Accumulated
Contributions (Form 5)
■ Trustee-To-Trustee Distribution Form (Form
193)
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Only complete if you are rolling your funds over
to another eligible retirement account
Acknowledgement of Special Tax Notice
Form 746
Please allow 90 days to process
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Maryland State Retirement and Pension System
Group 1 and Group 2
Pension System Vested Benefits
(Current Members as of 6/30/2011)
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Five years = Vested
Service Retirement (full benefit)
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Age 62 with at least 5 years of eligibility service or
30 years of eligibility service regardless of age
Early Retirement (reduced benefit)
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Age 55 with at least 15 years of eligibility service
Greatest reduction is 42%
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Maryland State Retirement and Pension System
Group 1 and Group 2
Reformed Pension System Vested Benefits
(New Members as of 7/1/2011 or later)
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10 years = Vested
Service Retirement (full benefit)
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Age 65 with at least 10 years of eligibility service
or
Rule of 90: Age + eligibility service = 90
Early Retirement (reduced benefit)
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Age 60 with at least 15 years of eligibility service
Greatest reduction is 30%
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Maryland State Retirement and Pension System
Eligibility Requirements
Retirement System
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Service Retirement (full benefit)
Age 60 or
■ 30 years of service regardless of age
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Early Retirement (reduced benefit)
25 years of service regardless of age
■ Greatest reduction is 30%
■
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Maryland State Retirement and Pension System
Group 2
Vested Benefits
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Keep your last Personal Statement of Benefits
(PSB)
Inform Retirement Agency of address changes
Contact the Retirement Agency when you become
eligible
Keep beneficiaries current
■ Survivors’ payment prior to retirement will
consist of vested member’s accumulated
contributions
10
Inside Your PSB
$
1,744
VESTED BENEFITS: If you are a member of the system as of June 30, 2011 and you have at least five
years of eligibility service, you are vested. If you became a member on or after July 1, 2011 and are under
the Reformed provisions, you are vested when you have at least 10 years of eligibility service.
If vested, you have earned the right to receive a monthly benefit when you reach your plan's normal
retirement age, even if you are not working at that time. The vested benefit shown is calculated as if you
had stopped work as of June 30, 2014. To determine the normal retirement age for your plan, please refer
to your plan's handbook on our website at sra.maryland.gov for this information. In some plans, you may
be eligible to collect a reduced early service benefit prior to your normal retirement age. Withdrawal of your
contributions will cause you to forfeit your vested benefit.
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Maryland State Retirement and Pension System
Military Credit
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Prior to Membership
Must have 10 years of creditable service
Eligible for a maximum of 5 years of service
During Membership
File Form 46 prior to leaving active employment
File Form 43, Claim of Retirement Credit for
Military Service for credit upon returning to work
Eligible for a maximum of 5 years of service
File Form 43, Claim of Retirement Credit for Military
Service along with proper military documentation
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Maryland State Retirement and Pension System
Service Purchase
Normal Cost
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Missed contributions plus interest to date of
purchase
Purchase at any time while active on payroll
or on SRA Approved Leave of Absence
(Form 46)
Submit Form 26 Request to Purchase
Previous Service
Example:
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SRA Approved Leave of Absence (Same
System)
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Maryland State Retirement and Pension System
Group 1: Service Purchase
Full Cost
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You pay the cost to fund the benefit your
additional purchased service will provide.
Minimum of 1 month & Maximum of 10 years
Active members within 12 months of
retirement submit Form 26 and Form 9 to
purchase service credit
Examples:
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Federal Government
Public, Private, or Parochial School Teaching
Municipal Employment
Prior State service for which you are not receiving
credit
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Maryland State Retirement and Pension System
Purchase of Service
Members may use funds from 457(b),
403(b), 401(k) or IRA for purchasing
service credit. Member must
complete Form SRA-192 prior to
retirement.
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Maryland State Retirement and Pension System
Monthly Payment Option Selection
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Basic Allowance (Maximum)
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Single Life Annuities
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Largest monthly allowance
No protection to beneficiary(ies)
Benefits cease at death
Lifetime reduced monthly benefit to retiree and may
provide lump sum payment to beneficiary(ies) at
retiree’s death
Dual Life Annuities
■
Provides a continued reduced monthly benefit to a
surviving beneficiary after retiree’s death
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Maryland State Retirement and Pension System
Single Life Annuities:
Payment Option 1
Lifetime monthly benefit to retiree
Guarantees the full return of the present
value of the retiree’s Basic Allowance
computed at the time of retirement. If
the retiree dies before receiving the full
guaranteed amount, the remainder, if
any, is paid in a lump-sum payment to
the designated beneficiary(ies).
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Maryland State Retirement and Pension System
Single Life Annuities:
Payment Option 1
Example
Lifetime monthly benefit to retiree
$1,785 Monthly for life of retiree
$245,000 Present Value at retirement
If you die before receiving the full guaranteed
present value at the monthly rate of $1,785,
your beneficiaries will be paid the balance in
a lump-sum payment.
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Maryland State Retirement and Pension System
Single Life Annuities:
Payment Option 4
Lifetime monthly benefit to retiree
Provides a return of the value of the
member’s accumulated contributions
(employee contributions and interest). If
the retiree dies before receiving the full
guaranteed amount, the remainder is
paid in a single sum to the retiree’s
beneficiary(ies).
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Maryland State Retirement and Pension System
Single Life Annuities:
Payment Option 4
Example
Lifetime monthly benefit to retiree
$ 1,860 Monthly for life of retiree of which $115 is
monthly return of contribution/interest
$15,880 Value of accumulated contributions and
interest at retirement
If you die before receiving the total
accumulated contributions and interest at the
monthly rate of $115, your beneficiaries will be
paid the balance in a lump-sum payment
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Maryland State Retirement and Pension System
Dual Life Annuities
Provides a monthly benefit throughout
the life of the retiree and then provides
a continued lifetime monthly benefit to
a sole surviving beneficiary.
Payment Option 2
■
100% survivorship - Same lifetime monthly
benefit to beneficiary
Payment Option 3
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50% survivorship - 1/2 lifetime monthly
benefit to beneficiary
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Maryland State Retirement and Pension System
Dual Life Annuities
“Pop-Up” provision - If beneficiary dies before
the retiree, the retiree’s monthly benefit
“pops-up” to the Basic Allowance unless the
retiree renames another beneficiary
Payment Option 5
■
100% survivorship (with “pop-up” provision) - Same
lifetime monthly benefit to beneficiary
Payment Option 6
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50% survivorship (with “pop-up” provision) - 1/2
lifetime monthly benefit to beneficiary
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Maryland State Retirement and Pension System
Options 2 and 5 Restrictions
Naming a Beneficiary
You may not designate a beneficiary
who is more than 10 years younger
than you unless the beneficiary is your
spouse or your disabled child.
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Maryland State Retirement and Pension System
If Considering Retirement…
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Review UNAUDITED Projection of
Benefits Allowance
Complete VSP Form 9 Application for an
Estimate of Service Retirement Allowance
All VSP retirement form must be
downloaded from DBM’s website as they
are specially coded “VSP”
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Maryland State Retirement and Pension System
Necessary VSP Retirement Forms
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Form 13-23 Application for Service Retirement
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Form 85 Direct Deposit Form
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Form 127 Reemployment After Retirement
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Form 766 Federal & Maryland State Tax Withholding
Request
Forms must be downloaded from DBM’s website as
they are specially coded
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Maryland State Retirement and Pension System
Unused Sick Leave
Must have a retirement date of
5/1/2015
■ Increases monthly benefit
■ May not be used to qualify for a
benefit
■ Amount of days certified by
employer at time of retirement
■
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Maryland State Retirement and Pension System
Unused Sick Leave
22 days of unused sick leave
equals one month
■ If 11 or more days remain, an
additional month is credited
■ Maximum of 15 sick days per
year of service may be credited
■
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Maryland State Retirement and Pension System
Information Regarding VSP
All questions regarding VSP should be directed
to one of the following resources
■ DBM website at www.dbm.maryland.gov
■ DBM call 410-767-6831 or
toll free 1-855-500-4661
■ VSP Administrator at
vsp.administrator@maryland.gov
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Maryland State Retirement and Pension System
Telephone
410-625-5555 or
toll-free 1-800-492-5909
Mail/Office Visits
Maryland State Retirement Agency
120 East Baltimore St., 14th Fl.
Baltimore, MD 21202-6700
Internet Web Site
www.sra.maryland.gov
E-Mail
sra@sra.state.md.us
Information
The Mentor
Personal Statement of Benefits
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Maryland State Retirement and Pension System