Getting Ready for
Retirement: Navigating the
MTRS
Thomas F. Campbell
Director of Human Resources
October 29, 2015
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First Things First
 The Massachusetts Teacher’s Retirement System are
the experts on retiring!
 Volunteer to jot down questions I don’t know the
answer to, but will find out
 This presentation has been emailed to you with links
embedded
 I’m happy you are here!
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MTRS
 The MTRS website is an excellent source of
information as you consider retiring. Your homework is
to spend time on the MTRS website and take a look at
all of the information
 MTRS offers several training programs that you might
want to take advantage of in the future
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What We Hope to Accomplish
Today
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Help you better understand the retirement process
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Eligibility
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Notice to Needham Public Schools to be eligible for sick leave buy back
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Credible Service and the purchase of past service
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Retirement options
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When will I get my first check?
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Health Insurance
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Retirement Application
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Working after retirement
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Thinking About Retirement?
 At the end of the 2015-2016 school year, 1900
teachers are expected to retire
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2013-2014:
2014-2015:
2015-2016:
2016-2017:
2017-2018:
2018-2019:
2019-2020:
2000
2000
1900
1800
1750
1700
1600
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Your New Best Friend…
 The Massachusetts Teacher’s Retirement System (MTRS)
 The website is http://www.mass.gov/mtrs/Click on members,
then active members. Spend some time at this website.
Retiring is a process and there is lots for you to know!
 MTRS’ phone number is 617-679-6877
 Their mailing address is One Charles Park, Cambridge
02142-1206. They are across the street from the
Cheesecake Factory at the Cambridgeside Galleria. (Most
navigation tools do not recognize One Charles Park. Enter
100 CambridgeSide Place)
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The MTRS are the Experts
 “Ready for Retirement” program is a great source of
information. Offered 4-6 pm:
 Woburn 11/5; Cambridge 12/3; Hanover 11/23 and other
locations (S. Yarmouth, Auburn, Northhampton, Beverly,
Norton)
 MTRS offers group counseling which is very helpful
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Did You Know…Regular
Compensation?
 The maximum benefit you can earn in retirement from the MTRS is
80% of the average of your three highest consecutive years of
salary
 Generally speaking, stipends, extra days and longevity are
included in the average of your three highest years. The NEA
contract will dictate if this money can be included in the
calculation. If it is not in the contract, it cannot be included. The
amount of money must be listed in the contract as a stipend figure,
not hourly rate (except payment for lunch duty)
 Bonuses, sick leave buy back, expense reimbursement, tuition
reimbursement, summer school teaching or curriculum work are
not included in the calculation
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Am I Eligible to Retire?
Understanding “Vested”
 If you have 20 years of credible service
regardless of age OR
 You are at least 55 and have at least 10
years of credible service
 If you are in Retirement Plus, you need to
have 30 years of credible service, of which
20 years are teaching service with MTRS or
the Boston Retirement System (i.e. direct
payroll contribution to MTRS, not purchased
service)
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How Much Will I Get?
 Most MTRS members are interested in knowing
how much they will receive in retirement (can I get
to 80%?)
 MTRS has an estimator on their website (PC works
best)
 The MTRS is a defined benefit plan under Section
401(a) of the Internal Revenue Code
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Notice to Needham: Sick Buy
Back
 Teachers are eligible to purchase sick time if they
have work in Needham for 10 years.
 Notice must be by November 1 of the year prior to
retirement (19 months notice)
 Up to 200 days at $40 per day ($8,000). Lump
sum payment on last day teaching
 You must retire between June 30 and August 31
 Will not count in retirement calculations
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What is Credible Service?
 Credible service is time that you have worked as a teacher,
administrator or other Massachusetts public employee, for
which you paid or transferred retirement contributions to the
MTRS
 You may be able to purchase credit for prior substituting,
teaching in an out-of-state school, certain non-public school
teaching, other Massachusetts public service and active
military duty
 Purchasing past service may help you get to the maximum of
80%
 Madden Rule: If you are less than full time today and were
less than full time prior to 1990, you get full time credit for
service.
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Purchasing Service
 Types of service you may be able to purchase
(most with an 8.00% interest rate):
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Regular Massachusetts public teaching service (20 years)
Out-of-State public school teaching service (10 years)
Overseas dependent school teaching service (5 years)
Nonpublic school teaching service (10 years)
 Private school pre 1973
 Mass publically funded (4%)
Public school substituting, temporary or part-time teaching or tutoring
service (10 years)
Vocational education (3 years) (4%)
Peace Corps service (3 years) (4%)
Other Massachusetts public service
Authorized LOA or sabbatical from MA public school
Authorized LOA for military service (4 years)
Active military service in the armed forces (4%)
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Purchasing Service
 You must purchase this service before you retire.
In some cases, you can only purchase the service
while an active member of MTRS
 There are loads of restrictions for the purchase of
all services (i.e. the service must have occurred
prior to a certain date, if you contributed to another
retirement system (other than social security, etc.)
 Completing all of the requirements to purchase
service can take a very long time…start early!
 You can purchase service with a rollover ot
trust-to-trust transfer from a 403(b) or IRA
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Purchasing Service
 The cost of purchasing past service is based upon
the percent of contribution that was in effect at the
time you performed the service (plus 8.25%
interest)
 Your contribution rate is...
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Before January 1, 1975 - 5%
January 1, 1975 through December 1, 1983 - 7%
January 1, 1984 through June 30, 1996 - 8%
July 1, 1996 through June 30, 2001 - 9%
July 1, 2001 or after (automatically enrolled in
RetirementPlus) 11%
 All RetirementPlus participants - 11%
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The Three Retirement
Options
 Option A - Maximum benefit, no survivor benefit
 Option B - Approximately 1% less than option A. Survivor will get
lump sum payment of what remains in your annuity savings account
(see the 4th bullet!)
 Option C - Approximately 9-11% less than option A. Survivor will get
two-thirds of your monthly benefits (survivor must be member’s
parent, child, sibling, spouse or former spouse who has not remarried)
(See the next bullet!)
 Did you know…your annuity savings account pays approximately
20% of your retirement benefit and the pension fund pays 80%? Your
annuity will be depleted in 10-12 years
 Think about this and do the math for options B and C: Is it more
cost effective to take option A and buy a term life insurance policy?
Consult your financial advisor!
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Sample Math on the Options
 If you have made an average of $90,000 and retire at 80%, your
pension check will be $72,000/year
 Option B is about 1% less or $720/year. This option allows you
to give the balance of your annuity to a survivor. The balance
depletes about 20% a year and will be gone in 10-12 years. Can
you buy a $250,000 term (10 year?) life insurance policy for less
than $720/year?
 Option C is trickier: 9-11% less than option A (or more!),
beneficiary receives two-thirds of your pension until they die.
 In the example above, 11% less is $7,920/year
 Your beneficiary would get $47,520 a year (two-thirds less than your pension
amount) for their lifetime. If they live 20 years beyond you, they would earn
$950,400. Can you buy a $1 million, 20 year term life insurance policy for less
than $158,400? ($7,920 x 20).
 But don’t listen to me! I’m only trying to get you to think and work
with your financial advisor!
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When Will You Get Your First
Check?
 Up two months after you retire, but likely sooner. Some
have reported no waiting for their first check. The first
check is payable in July. Your check will be a direct
deposit
 You should plan accordingly and have a small amount
set aside in case your first check is delayed
 Cost of living (COLA’s) are given when the legislation
votes an increase. The percent is based on $13,000,
not your entire retirement amount ($390)
 At least every two years, you must prove you are alive notarized Benefit Verification Form will be sent to you
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Taxes
 There will be no State taxes paid on your
retirement benefits
 There will be federal taxes withheld based upon
the simplified method. Since January 1988, all
money sent to MTRS is pre-tax dollars. Prior to
January of 1988, money is after tax dollars
 Visit the website:
http://www.mass.gov/mtrs/benefit-recipientsretirees-and-survivors/taxation-of-your-benefit/
 If you are moving out of state, check with that
states’ DOR as they may have a state tax
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Health Benefits
 You will continue in your current insurance program,
and the town will continue to make their share of the
payments
 Your portion can be deducted from your retirement
check
 Your coverage could be different as a retiree. Contact
Chuck Murphy-Romboletti at Town hall (ext. 295) for
more information
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The Application
 18 page application on the MTRS website You
should start early…lots of paper to collect and
people to see!
 The earliest you can submit your application to
MRTS is January 1
 If you are earning a stipend, please give us part II
after we have made all the payments for that stipend
 The member must submit an original birth
certificate or notarized copy. If you elect option
C, your beneficiary must include one as well.
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Working After Retirement
 You have limitations for any Massachusetts public sector employment.
(You have no restrictions on any private sector or Federal
employment)
 Cannot exceed 960 hours in a calendar year (January - December)
 60 day waiting period for the same employer unless you are earning
the maximum (80%) or age 62 or older for the same employer. No
waiting period for a new employer
 Earnings: You cannot earn more than the difference between what
you would have earned if you did not retire, and your retirement
earnings. After one full January-December of being retired, you can
add $15,000 to that number
 You can opt to freeze your retirement and therefore no earnings
limitations, but MTRS won’t pay your premium as you won’t have a
retirement check
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Working After Retirement
 Example:
 Robin Smith retired from a teaching position that paid
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her $75,000
Robin would be earning $78,750 if she did not retire
Robin’s annual MTRS pension is $60,000
Robin’s allowable earnings is $18,750
After Robin has been retired for 12 months, her
allowable earnings would be $33,750
 If Robin chose option C, she would be able to
earn more as her pension would be less
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Critical Shortage
 You can return to teaching in a critical shortage
approved by DESE without financial or other
restrictions. The district hiring you must apply for the
waiver
 Retirement Plus folks cannot work for two years under
a critical shortage. You can come back earlier than 2
years, but subject to the 960 hours and financial limit
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FAQ’s
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Q: Can I purchase time that I was on a leave of absence for maternity leave?
A: You can, but with the following restrictions: The years on maternity leave must
be prior to December 31, 1974 and you must have applied and paid for that time
before December 31, 2001
Q: I elect Option C, which allows my survivor to collect two-thirds of my
pension if I die. If I choose Option C, my benefits, while I'm living, will be
reduced 9-11% as compared to Option A which has no survivor benefit. If I
die, will my survivor collect two-thirds of entire pension, or two-thirds of my
9-11% reduced pension?
A: The survivor will get the same amount the member was getting (two-thirds of
the 9-11% reduction). By the way, the MRTS told me that the 9-11% reduction for
Option C is if you choose a person who is similar in age as the member. If the
member chooses a survivor who is considerably younger (i.e. the member's child),
then the 9-11% reduction will be more like a 20% deduction
Q: If you are not currently taking health benefits from the Town of Needham,
can you elect to do so?
A: Yes, you can elect our health insurance before or after you retire, as long as you
have 10 years working in Needham and Needham was your last job before retiring
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FAQ’s
 Q: What happens to my portion of paying health insurance premiums if my
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pension check will be delayed 2-4 months?
A: If you retire in June, your summer checks will pay September's premium. The
Town will inform MRTS that they need to double your health insurance deduction if
the checks are delayed beyond September
Q: When I turn 65, who pays for supplementary benefits?
A: If you elect to purchase Medigap, you are responsible for the premiums.
Remember that Medicare will pay for 80% of your bills, so Medigap may be a good
option for you
Q: If you have a family plan for health insurance and your spouse reaches
age 65 before your do, what happens?
A: Your spouse can stay on your insurance until you reach age 65
Q: Can I switch from my spouses insurance to Needham’s insurance during
open enrollment, even after I retire?
A: You can join Needham's plan, even after retirement. If your husband lost his
insurance, you can get Needham's insurance at any time. Otherwise, you can
switch during open enrollment in the spring
Q: How do I learn more about Medigap?
A: The Town's website has some information on Medigap at
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FAQ’s
 Q: I have never paid payroll taxes to Medicare. Am I eligible for
Medicare when I turn age 65?
 A: If you have never paid into Medicare and you are single, you can
remain (or join) the regular insurance programs offered by the Town.
If you have been married for over 10 years, you are eligible for
Medicare under your spouse. This applies even if you are divorced
from your spouse. As long as you have 10 years of marriage, you are
eligible through your (ex) spouse
 Q: If the cost of health insurance premiums increases when I'm
retired, am I subject to pay the increase just as I did when I was
working for Needham?
 A: Yes. If there are increases in the premiums after you retire, you will
pay more just as you did when you were working
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FAQ’s
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Q: As a retiree, do we start paying social security?
A: No!
Q: Will the dental plan be available after we retire?
A: Yes
Q: Does the Town pay any portion of a supplemental insurance
plan when we switch to Medicare?
 A: Yes. The Town's portion varies depending on the plan that you
choose.
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FAQ’s
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Q: Annuity: When a member retires, is the pension allocated 100% from their annuity
account first, then from the State fund when the annuity reaches $0?
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A: No, the money does not come out of their annuity account first. This is a
generalization but, when retired, the member will receive about 80% of their yearly
benefit from the state (pension fund and state appropriated assets) and about 20% of
their yearly benefit from their own annuity savings account. It usually takes about 10
years or so for their annuity savings account to spend down to $0.00. So, if a member
chooses option B they would only be able to leave money to someone if they happen to
pass away within the first ten years or so of their retirement.
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Q: Option C: A member chooses a beneficiary. If the beneficiary dies before the
member, can they select another beneficiary, or is the pop-up provision the only option?
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A: Under option C if a members beneficiary pre-deceases them, they automatically pop
up to option A and start to receive their maximum benefit from the date of their
beneficiaries death forward. They cannot choose a new beneficiary for option C. Under
Option B they can change their beneficiary at any time for any reason.
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Pension Reform
 There is much happening in the way of pension reform,
and you need to keep posted by checking for guidance
on the MTRS website
 Cap on pension for members new to MTRS on January 1, 2011
 64% of the Internal Revenue Code section 410(a)(17) which
changes year to year
 A special committee was appointed by the Governor in
2009 and made recommendations for reform
 Pension Reform
 Legislative watch
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Questions?
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