Retirement Income
Overview &
Benefit Options
Presented by Jan Hawkins
Senior Retirement Benefits Officer
Spring 2015
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Retirement Income
What Is IPERS?
The largest public retirement system in Iowa
● Members include employees of:
○ public schools, cities, counties, state government, state
universities, State Board of Regents, & other
Approximately 340,000 members
2,000 employers
108,000 retirees
$1.8 billion in benefit payments paid annually
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Retirement Income
What Is IPERS?
401(a) (defined benefit plan) under IRS codes:
● Lifetime benefits are paid based on a
formula, not on the amount of contributions.
● Formula factors
○ Age
○ Years of service
○ Highest average salary
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Retirement Income
What’s My Part?
Contributions + interest
●Contributions based on gross wages
●Current Regular class contribution rate:
○5.95% from you, the member
○8.93% from your employer
IPERS can adjust the total contribution rate by no more than
1.0 percentage point up or down, following an actuarial
valuation.
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Retirement Income
What Is “Vesting”?
Vested status is obtained after:
28 quarters (7 years) of reported wages,
or
When wages are reported in the same
calendar year age 65 or older is attained
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Retirement Income
Vesting
Entitles the member to:
○Monthly retirement or
disability benefit
○A portion of employer’s investment
if refund is taken
and
Is required for a service purchase
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Retirement Income
Benefit Formula – Years of
Service
•Each year worked earns 2% of the 60% payable for the first 30 years.
•1% for a maximum total of 65% payable for each additional year after 30.
•Early retirement reduction if before normal retirement.
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Normal Retirement Age
Retirement Income
(No Age Reduction)
Age 65
Regardless of service
Rule of 62/20
At least age 62 with
20 or more years of service
Rule of 88
Age + Years of service
= 88 or greater
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Early Retirement Age
Reduction
Retirement Income
Reduce 3% a year for portion of service
through 06/30/12
• From nearest normal retirement
eligibility (rule of 88; rule of 62/20;
age 65)
As of July 1, 2012
Reduce 6% a year thereafter
• From age 65
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Retirement Income
Maximizing Years of Service
Free credit
● Leaves of absence
○ Granted prior to July 1998
○ Requires verification from employer
● Active military duty
○ Entered military as an IPERS-covered employee and
returned to IPERS employment within one year of
discharge
○ Submission of DD214 form required
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Service Purchases
Retirement Income
Beginning 01/01/16: Purchasing will
take place only during the retirement
process.
• Increased accuracy of cost
• Reduced risk of under- or overpaying
Request an official cost quote when
you apply for retirement benefits.
• Application for Service Purchase
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Retirement Income
Service Purchase Options
Refunded IPERS service
IPERS employment not previously covered
Other public system(s) (if not eligible to draw
pension from the other system)
Active duty military/leave of absence time not
eligible for free credit
Nonqualified service (air time)
IPERS buy-up credit conversion
5-year limit
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Retirement Income
How Much Will It Cost?
Submit an Application for Service Purchase
(available at www.ipers.org).
Your service purchase cost will be
calculated.
● Official cost quotes generated only after your
Application for Retirement Benefits is on file.
● You will receive the cost per quarter and the entire
purchase cost.
Cost quotes are valid for six months.
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Retirement Income
Saving Up for a Purchase
Request a basic cost estimate anytime before
retirement.
● Application for Service Purchase
Save money in a separate retirement account
that can eventually be rolled over to IPERS for
your service purchase.
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Retirement Income
Monthly Benefit
Six monthly payment options
● Always lifetime to member
● Different death benefit provisions
IMPORTANT!
Option choice cannot be changed
once benefits are paid.
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Option Summary
Retirement Income
Always lifetime to member!
OPTION 1
Guaranteed death benefit in $1,000 increments
OPTION 2
Death benefit only if balance of investment remains
OPTION 3
No death benefit
OPTION 4
Dual life annuity
OPTION 5
Guaranteed 10 year monthly benefit payments
OPTION 6
Dual life annuity with pop-up feature for member
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Retirement Income
Pre-Retirement Death Benefits
Designated sole beneficiary of vested member can
elect lump sum payment or lifetime monthly benefit
(provided monthly benefit is $50 or more). If member
not vested at death, beneficiary only eligible for lump
sum payment.
If designated beneficiary is more than one individual
or entity, death benefit can only be paid in lump sum
payment. Federal law now allows multiple
beneficiaries to rollover lump sum payments.
If no beneficiary has been designated, lump sum
payment made to the estate.
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Important Facts to Remember!
Retirement Income
Working any time in a month makes you ineligible
for benefits that month.
You can get a paycheck in the same month you
start IPERS payments.
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Retirement Income
Getting Monthly Benefits Started
Must terminate employment unless age 70
Must be age 55 or older
● Unless vested and eligible for IPERS disability
benefits, first month of entitlement is month following
the month you terminate employment
Must submit completed application
Benefits paid the last business day of month
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Retirement Income
Taxes
Benefit payments are subject to federal and state
income tax
● You can request that the tax can be withheld from
monthly benefit payment
1099R mailed each January
For detailed tax information, contact the IRS for
publication 575 or consult a tax advisor
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Retirement Income
Reemployment
Must have a bona fide retirement.
It’s your responsibility to contact IPERS if you are
returning to an IPERS-covered position.
● It’s possible that returning to an IPERS-covered position
will affect your benefit.
Know the Social Security earning limits
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Retirement Income
Bona Fide Retirement
To qualify for a bona fide retirement, you
must:
End all service with covered employers,
including non-covered service.
File an IPERS benefit application.
Stay out of all employment with a covered
employer for one month.
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Retirement Income
Reemployment Guidelines
Applies to IPERS-covered employment only
$30,000 earnings limit under age 65 (benefits
reduced 50 cents for each dollar earned over the
limit)
No earnings limit after age 65
Benefits recomputed upon termination
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Retirement Income
When to Contact IPERS
3–5 years from possible retirement for estimates
5–6 months from retirement to obtain application
packet
At termination, if before age 55 for additional
options
If a disability occurs
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Contact us:
Retirement Income
The purpose of this presentation is to give you a brief overview of
IPERS and upcoming law changes.
For detailed information on your account:
Call toll free 1-800-622-3849 or locally at 515-281-0020 Phones are
answered by Retirement Benefit Officers from 7:30 am to 5:00 pm
Monday through Friday, excluding holidays.
Website: www.ipers.org
• E-mail requests: info@ipers.org
• Retirement calculators
• Handbook
• Newsletters
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Retirement Income
Thank You!
Presented by Jan Hawkins
Senior Retirement Benefits Officer
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Neither Nationwide® nor any of its representatives give legal or tax advice.
Information provided by Retirement Specialists is for educational purposes only
and is not intended as investment advice.
Nationwide Retirement Solutions, Inc. and Nationwide Life Insurance Company
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©2012 Nationwide Retirement Solutions Inc. All rights reserved.
NRM-6817AO.4 (12/12)
Retirement Income
retirement income
Retirement Income
Social
Security
Pension
Personal
Savings
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Retirement Income
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Retirement Income
*Retirement Savings Rule of Thumb,
www.debt.org/retirement/how-much-do-i-need-to-save/,
accessed Dec. 3, 2012
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Retirement Income
Qualified retirement plans, deferred compensation plans and individual
retirement accounts are all different, including fees and when you can
access funds. Withdrawals may be subject to surrender charges, other
fees and/or a 10% tax penalty if withdrawn before age 59½.
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Retirement Income
70%
of retirees
expect to keep
working in
retirement
27%
of retirees
actually do
Source: 2012 RCS Fact Sheet #2, EBRI, March 2012
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