Teachers’ and State Employees’ Retirement System (TSERS ...

1 Teachers and State Employees Retirement System (TSERS) Retirement PlanningRevised July 2017 Welcome Please silence all cell phones DisclaimerNC Total Retirement Plans Include TSERS 401(a)Defined Benefit Plan amount you receive at Retirement based on a defined formula to calculate guaranteed monthly lifetime Retirement benefits (not based on your or your employer s contributions)NC 401(k), NC 457, NC 403(b)Defined Contribution Plans amount you receive at Retirement depends on the amount you have accumulated in your plan account (your personal contributions, plus any employer contributions, and investment earnings) NC Total Retirement Plans Solution for Retirement Readiness Manyfinancialexpertssuggestthatretireesw illneed80%ofpre-retirementincome Yo uparticipateinoneofthemostsecureandrespo nsiblymanageddefinedbenefitplansin thenation- TSERS Yo ualsohavethepotentialtosaveadditionalfun dsbyparticipatingin thedefinedcontributionplans.

2 NC401(k),NC457,andNC403(b) Theseplans,alongwithyourSocialSecurity,a repartoftheTotalRetirementPlanssolutiont hatmayhelpyouachieveasecurefinancialfutu reanda morecomfortableretirement Retirement Readiness Check & Update RIC Beneficiaries Rollovers Age 50 catch-up Enroll in DB Plan Retirement Readiness Access ABS Check for GAP Check & Update RIC Beneficiaries Rollovers Age 50 catch-up Service Credits Retirement Readiness Access ABS, GAP check Check & Update RIC Social Security Beneficiaries Calculate Benefits Rollovers Age 50 catch-up Expected Retirement Date One-time Contributions Payment Options Retiree Guaranteed RefundNearing RetirementMid-CareerNew EmployeeRetirement EligibilityService Retirement Eligibility (Unreduced Benefits)Age 65with 5yearsof membership serviceTSERSAge 60and 25yearsof creditable serviceAGESERVICE30yearsat any ageService Retirement Eligibility (Unreduced Benefits)TSERS LEOAge 55with 5years of serviceAGECREDITABLE SERVICE30yearsat any ageEarly Retirement Eligibility (Reduced Benefits)AGESERVICE60with 5years of membership service50with 20years of creditable serviceTSERSAGE50with 15years of creditable serviceTSERS LEOSERVICED efined Benefit FormulaAverage Final Compensation$50,000 Accrual Years of Service30$27,300 Per year$2,275 Per month12 Note.

3 Reduction factors apply for early retirementsDefined Benefit Formula4 Highest yearsof salaryBonus Leave PayoutsLongevity PayoutsVacation PayoutsTo t a l 4 AVERAGE FINAL COMPENSATION (AFC)AFC Calculation Example 12-Month employee July 2017 RetirementYear20172016201520142013 MonthsJan-JuneJan-DecJan-DecJan-DecJuly- DecAmount of Service6/12 Full YearFull YearFull Year6/12 Gross Salary$35, $49, $46, $43, $21, $195, 4 AFC = $ 48, Calculation Example 10-Month employee July 2017 RetirementYear20172016201520142013 MonthsJan-MayJan-DecJan-DecJan-DecAug-De cAmount of Service5/10 Full YearFull YearFull Year5/10 Gross Salary$38, $49, $46, $43, $18, $195, 4 AFC = $ 48, ServiceCreditable Service Total of All ServiceContributing membership service Set by State law Condition of regular employment6%grossCreditable Service Total of All ServiceNoncontributing Service time for which member receives Retirement credit 6% not withheldExamples.

4 Short-term, extended short-term and long-term disabilityCreditable Service Total of All Service Military service under free provision (free for member; employer pays employee and employer contributions) Eligible service purchased Unused sick leave as allowed by lawService Purchase CategoriesFor detailed information about service purchases, refer to:Or contact either your Human Resources Department or the NC Retirement Systems can use pre-tax funds from an eligible IRA or eligible Retirement plan such as a 401(k) or 457, as a rollover to purchase service. ORBIT Credit Purchasing Forms Page Your Retirement HandbookUnused Sick Leave at Retirementdays ofaccrued sickleave20=month ofcreditableservice1 Unused sick leave converted from excess vacation countsUnused Sick Leave at RetirementYears + certifiedsick ofcreditableserviceExampleUnused Sick Leave at 1 Example 2121hoursworked= Sick LeaveCanbe used to complete:30years of service25years of service after age 6020years of service after age 50 Earned Sick LeaveCannotbe used to meet the minimums for: Deferred benefit Survivor s alternate benefit Disability Retirement 5-year eligibility for Retirement and health coverageOptionsOption 2 Assumptions.

5 Member s Age = 49, Beneficiary Age = 51 AFC = $50, Service = 30 yearsEstimated SS@62 = $1,200 Option 3 Option 4 Option 6-2 Option 6-3 MaxOptionRetireeBeneficiaryMaximum$2, $ $2, $2, $2, $1, toage62 Afterage62$2, $1, $ Pop-up$2, $2, Pop-up$2, $1, Option ChangesRetirees cannot change payment option or designated beneficiary once the first Retirement check is cashedExceptions: Divorce from spouse Return to employment as a TSERS contributing member for at least 3 years Death of spouse redesignationof spouse provision under Options 2 or 3 within 90 days of remarriageRetirement Benefit Payment OptionSelection of a monthly payment option is a personal decisionConsider yoursituation Popular choices made by others should not influence your decisionDeath BenefitsSurvivor s Alternate BenefitIFdie while inactive serviceOR180days since last day of serviceAND only1eligible beneficiarySurvivor s Alternate BenefitAGESERVICE60with5years of membership service20years ofcreditable serviceBeneficiarychoosesORLifetimeBenef itReturn of ContributionSurvivor s Alternate Benefit (LEOs)

6 AGESERVICE55with5years of membership service20years ofcreditable serviceBeneficiarychoosesORLifetimeBenef itReturn of Contribution50with15years of creditable serviceActive employee Death BenefitsSALARYY ears25K50 KRetiree Death Benefits If survivor option chosen (Option 2, 3, 6-2, or 6-3), benefit begins to beneficiary Active Death Benefit continues for 180 daysRetiree Death BenefitsGuaranteed RefundIs a complete refund of all remaining contributions made by the memberContributory Death Benefit (CDB) for Retired MembersIs payable to your designated beneficiary(ies), spouse or estateElection must occur within 60 days of Retirement dateInitiating RetirementInitiating RetirementMember and employer complete Form 6 Mail information 120 to 90 days prior to Retirement date to RSDRSD mails acknowledgement letter, and Form 170 & 333 forms to memberRSD reviews eligibility, service, and salary60-90days after receipt of application, RSD mails 6E, 290, & 336 forms to memberMember chooses payment option and submits 6E to RSD123456 Retirement Process Reminders Retirements are always effective 1stday of the month Application must be signed and dated at least one day, but no more than 120 days ahead of Retirement date Processed in the order received First benefit payment is always mailed Payday is the 25thof each month December deposit usually on the 20thof the monthHealth Coverage and Optional InsuranceDental, Vision.

7 And Identity Theft Benefits Enrollment is optional Retirees pay full cost Premiums will be deducted from monthly Retirement benefitPierce Insurance Health CoverageTo learn more about the options available to you, call the State Health Plan at 855-859-0966 or visit the plan s website at Transfer BenefitOptional Transfer Benefit Available to retiring TSERS members with NC 401(k) or NC 457 accounts May transfer all or portion of NC 401(k)/457 funds to TSERS Receive separate monthly lifetime benefits based on the amount of transfer After-tax Roth contributions are non-transferableOptional Transfer Benefit Transfers are a one-time irrevocable election One-time $100 administrative fee Submit Form 319oNo more than 120days before transfer date oNo later than 15thday of month preceding transferLEOs Transfer BenefitLaw enforcement officers (LEOs) vested by 6/30/2010, have the option to transfer under a previously-established plan specifically for LEOs.

8 Please contact the Retirement Systems Division at 877-NCSECURE for more Transfer Benefit Additional Information State Employees Credit UnionoVisit Prudential RetirementoVisit North Carolina Retirement SystemsoVisit IncomeTaxThe taxable portion of the monthly Retirement benefit consists of: Contributions made on a pre-taxed basis after July 1, 1982 Additional service credit purchase with pre-taxed dollars after January 1, 2003 All interest accrued prior to retirementFederal Income TaxThe Retirement System withholds federal tax based on: The taxable portion of the benefit The filing status (married, single) The number of allowances claimed (0, 1, 2, etc.)North Carolina Income TaxBenefit exempt from North Carolina income tax8/12/19898/13/1989 Benefit notexempt from North Carolina income taxVested DateTax DocumentationForm 1099-R mailed by RSDbefore January 31 Changing Tax Withholdings In ORBIT Or complete Form 290Re-employmentSix-Month Wait Required A return to work in which you perform any type of work for any employer that participates in TSERS will generally cause revocation of benefitsRe-employment after 6-month as a contributing member of under an earnings restriction (earnable allowance)

9 Pre-existing agreements for post- Retirement employment are as a contributing member of TSERS After six-month break in service, member may suspend Retirement and become reemployed as a TSERS contributing member Retirement benefit payment will be stopped the first day of the month following under an Earnings Restriction (after six-month waiting period)Part-time, interim, temporary, contractual, or any other basis that does notrequire membership in TSERS50%of compensation during the 12 months before Retirement $32,2602017 amount*The Earnable Allowance increases yearly based on national Consumer Price IndexPenalty for Exceeding Earnable AllowanceStoppedOn the 1stday of the month following the monthin which the retiree has exceeded the earnable allowanceState Health Plan coverage is stopped the 1stday of the month following suspension of Retirement paymentsPenalty for Exceeding Earnable AllowanceStarts AgainBenefit payment is started again on January 1stof the year after the benefit is stoppedState Health Plan coverage is started again on February 1stof the year after the benefit is stoppedResourcesPresentation title and date62 Presentation title and date63 Presentation title and date64 How to Contact the Retirement SystemsPhone.

10 Toll Free 1-877-NCSECURE (627-3287)Fraud and Abuse Hotline visits are scheduled by appointment and the Department of State Treasurer are located at:3200 Atlantic Avenue, Raleigh, NC 27604Be sure to call before you stop by to confirm appointment location and directions: 877-NCSECURE (877-627-3287) Retirement Planning Conference Survey Give us your feedback on this Retirement planning conference Complete the survey at: This web-based survey only requires a few minutes of your time Survey responses are completely confidential Your opinion plays an important role in the development and delivery of enriched training sessions Thank you in advance for your feedback