Retirement Related News for 11/20/2015

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From KOMU: Missouri insulated from nationwide teacher shortage by pension program

In an age where a nationwide teacher shortage is well-documented, many believe Missouri’s public school teacher retirement benefits have become quite the draw.

But, others are drawing a target on the system.

Kathy Steinhoff, a Hickman High School math teacher, who has been in the district for 28 years said, “It is the best kept secret even within the profession because, for most teachers, it doesn’t come on their radar until they’re teaching for about 25 years.”

Steve Yoakum, Executive Director for The Public School Retirement System of Missouri or PSRS, said other states are certainly paying attention.

From The Missouri Times: Pension Committee Proceeds Despite Lack of Quorum, Increased Security

The Joint Committee on Public Employment Retirement met Wednesday under two unusual circumstances. The committee did not reach a quorum, and an extra officer patrolled outside House Hearing Room 4, representing heightened security from Capitol Police.

Yesterday, Rep. Mike Leara, the committee chair, asked for increased security after Sen. Kurt Schaefer, R-Columbia, received a death threat on his office voicemail.

Leara said the move was more about making sure the enhanced media presence at a usually quiet committee did not bring out anyone seeking… well, enhanced media presence.

From Forbes: Three Secure Holiday Shopping Moves

You’re going to get annoyed this holiday season dealing with new chip-card readers, now making their way into stores. I know I have. It will take time before they perfect this technology.

In the meantime, there are some solid ways to avoid going into debt or being defrauded this time of year. You have to focus on savings instead of spending. You may not get the best deals on Black Friday or even Cyber Monday.

While the new chip readers are designed to reduce or eliminate point-of-purchase fraud — paying inside a store — there will still be ways thieves can get at your credit card information. You can protect yourself by using online encrypted sites that are certified by third parties for their security.

From PLANSPONSOR: Millennials Face Obstacles to Retirement Saving

An unwillingness to sacrifice things they believe add to their present quality of life is one of them.

Millennials face a unique set of obstacles when saving for retirement, says a new study by Schwab Retirement Plan Services.

Every generation has its reasons not to save for retirement. For Millennials, more than any other, an unwillingness to sacrifice things they believe add to their present quality of life—and crushing student debt—top the list. Schwab’s research echoes other studies of Millennial savings behavior, which find that they’re confused about the process, or squeezed by student loans, and generally need more financial education and support.

Millennials face several obstacles to meeting their retirement savings goals, which disproportionately affect this group more than any other. Moreover, although this younger generation believes they would benefit from help, they are using professional investment advice far less than their older counterparts. Forty-four percent are not saving more because they want to treat themselves to things like occasional dinners out and vacations, more than Gen Xers (34%) and Boomers (29%).

From BenefitsPRO: Spending Patterns Change in Retirement--But Not Always How You'd Think

While on average households spend less money in retirement, not all households do so—and they don’t all change their spending in the same ways.

That’s according to new research from the Employee Benefit Research Institute, which found that while households’ average spending in retirement falls during the first two years, almost half (45.9 percent) of retired households actually spent more than they did just before retirement.

Making retirement savings last may be easier in these 10 most tax-friendly states for retirees.

That spending does decline over time, the research found, and by the sixth year of retirement, only a third (33.4 percent) spend more than they did preretirement.

Retirement Related News for 11/13/2015

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From LifeHealthPRO: Aging In America

One day, while flitting about on earth, the Greek goddess, Eos, met and fell in love with a mortal. Eos went to her father, Zeus, and said, “please, Father, give Tithonus immortality.”

“Are you sure that’s what you want?” Zeus responded.

“Yes, Father, more than anything.”

Like any father with a beloved daughter (goddess or not), Zeus bowed to her beauty and did as he was told, granting Tithonus immortality. Only there was one snag in the arrangement — Eos never asked for eternal youth along with immortality. Over the centuries, Tithonus, unable to die, but with a withered and crumbling body, lived on. Eos, blessed with eternal youth, watched her beloved age and wither, his bones reduced to dust, yet he lived on — he lived on and on and on, well beyond what anyone would consider an enviable quality of life.

Gerontologist and aging expert Ken Dychtwald loves to tell that mythical tale, the story a perfect metaphor to describe our aging population and the modern world’s God-like ability to keep people alive.

“On the first day of the 20th century,” says Dychtwald. “the average life expectancy was 47. As the century closed, it was 78. Today, it’s approaching 80 and continuing to rise.”

From The Kansas City Star: Former Missouri Lawmaker Ray Salva Says Federal Conviction Shouldn’t Affect His State Pension

Former Missouri lawmaker Ray Salva, a convicted felon, is locked in a legal dispute with the state of Missouri over whether he qualifies for a state pension.

Salva, 68, pleaded guilty in 2013 to a federal charge of illegally receiving Social Security payments while working as a state legislator. Missouri says the state’s constitution bars pension payments to public officials convicted of felonies, so it cut off his pension and has now asked a judge to order Salva to repay nearly $30,000 he has already received.

But Salva says he is entitled to the pension because his guilty plea came more than two years after he left the legislature. The constitutional prohibition on pension payments to felons only applies to convictions that take place while a public official is actually in office, he argues.

From Time: How To Solve America’s Retirement Crisis

Economist Teresa Ghilarducci knows firsthand how passionate Americans can be about their retirement dreams. In 2008, after she suggested Congress let workers trade in their 401(k) retirement accounts for annuities, talk-radio hosts accused her of trying to kill the 401(k). She got death threats.

She wasn’t deterred, though, from her decades-long crusade, via research and advocacy, to improve retirement security. Now teaching at the New School in New York City, she has, among other duties, served on the advisory board of the Pension Benefit Guaranty Corp. and been a trustee of the Indiana state employees’ retirement fund. Ghilarducci calls retirement the most important financial issue facing both families and governments. “Everybody knows that they will get old,” she says, “and everybody fears not having enough.” She offers solutions in her latest book, How to Retire With Enough Money, and How to Know What Enough Is. Read on for her proposals and practical advice.

From The St. Joe Channel: SJSD Receives New Federal Subpoena

The St. Joseph School District has received a new federal subpoena as the FBI continues its investigation into the district.

The district announced Tuesday that it received a subpoena Monday night to produce records from the St. Joseph School District to the United States District Court for the Western District of Missouri.

"This was really out of the blue and unbeknownst to us," said Superintendent Robert Newhart, during a news conference at district headquarters Tuesday afternoon.

Newhart said they received the subpoena during their Board of Education meeting Monday evening.

Many were hoping that the FBI was nearing the end of what has become a 19 month investigation. It began in April 2014 after an audit by the Missouri State Auditor's Office revealed a stipend system that paid out anywhere from $25-40 million dating back to 2000.

From Forbes: Social Security Q&A: How Can I Maximize Benefits Under the New Rules?

Social Security may be one of your largest assets. What and when you collect will make a huge difference to your lifetime benefits.

Today’s Social Security column explores twelve secrets to get the highest benefits now that Social Security’s rules have changed and answers other questions.

The 2015 Budget dramatically changed Social Security claiming options. ​Every day I get a host of emails from the victims of these changes. Most are like my 64-year-old secretary, who I wrote about last week, who, thanks to Congress and the President, lost her ability at age 66 to do three things: a) get a child benefit for her severely disabled child, b) a get spousal benefit for her non-working husband who has had to stay home and care for their child for years, and c) file for her retirement benefit, immediately suspend it and wait until 70 to collect her highest possible retirement benefit.

Federal Taxes & Temporary Benefit

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Do you pay Federal and State taxes on both the retirement and temporary benefit? Is there a calculator that would help to give an approximation on what the taxes could amount to?
Yes, retirement benefits, which may include the temporary benefit, are considered taxable income for individual tax purposes. Missouri income tax and federal income tax can be withheld from your monthly retirement payments.

MOSERS will withhold state taxes only for Missouri residents. If you aren’t a Missouri resident in retirement, we recommend you contact the appropriate state and local tax authorities to determine the taxability of your MOSERS benefit.

At retirement, you may specify your federal and state tax withholding preferences by completing a Substitute W4-P form, which you can do by logging into your secure Member Homepage on MOSERS’ website. MOSERS has a federal tax calculator on our website to help estimate your withholdings:

In a recent RetireeNews article we described the public pension exemption. Depending on a variety of factors (including, but not limited to, income, filing status, and age) you may be able to deduct some or all of your public retirement benefit on your Missouri tax return, to the extent the amounts are included in your federal adjusted gross income. MOSERS recommends you contact the Department of Revenue or a qualified tax advisor for additional information or answers to your specific questions about the public pension exemption.

Cafeteria Plan & Final Average Pay

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I will be retiring in 3 years (1-1-19). I usually participate in the Cafeteria Plan at $2400/yr. By doing this does it decrease my monthly retirement and if so by about how much? I'm trying to figure out if the Cafeteria savings is worth the change in benefits.
No. Participation in the cafeteria plan does not decrease your MOSERS benefit. Your MOSERS benefit is calculated using the following formula:

Final Average Pay x Credited Service x Multiplier = Monthly Benefit Payment

Your question pertains to final average pay (FAP). FAP is arrived at by finding the average of your highest 36 full consecutive months of pay. We use your GROSS pay, that is, before taxes, health insurance, cafeteria plan, etc., so contributions to the cafeteria plan do not reduce your MOSERS benefit. You may wish to contact the Social Security Administration and find out from them if cafeteria plan contributions may impact your future Social Security benefit. 

Sick Leave & Retirement

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Is it true that I can retire sooner if I have sick time and vacation time that I don't want to cash in. I am retiring on April 1, 2016. But if I could retire sooner by using the time I have on the books I would. 
No. While your unused sick leave can* increase the amount of your monthly benefit, it cannot be used to determine eligibility for retirement or BackDROP (if eligible). You will receive one month of credited service for every 168 hours of unused sick leave reported to MOSERS by your employer once you have terminated your employment with the state. Since credited service is one part of the formula used to calculate your benefit, the more service you have; the higher your monthly payment will be.
Your unused vacation/annual leave has no impact on your MOSERS benefits. You should discuss your employer’s policy regarding payment to you for any unused annual leave with a knowledgeable person in your HR office.
We receive many questions about sick leave on Rumor Central, so you may want to read our previous answers for more information:

*For sick leave to count as credited service:

–– You must be eligible to retire on date of termination.
MSEP 2000
–– You do not have to be eligible to retire on date of termination.

2016 Legislation

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Will the HB 1134 be resubmitted for a vote during year 2016?
During the January – May 2015 legislative session, HB 1134 was proposed to subsidize retiree health care premiums for certain state employees.
The next legislative session begins January 6, 2016 with pre-filing of bills beginning December 1.  At this time, we do not know what legislation may be proposed.
 To track pension related proposals, you may be interested in accessing the Legislative Status Report maintained by the Joint Committee on Public Employee Retirement (JCPER) at  which is updated daily once bills are pre-filed.

Designating Retirement Beneficiaries

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Since I have no spouse and my children are over 21 can I withdrawal all the money I contributed over the years, without a fee or penalty, and invest somewhere else where I can be sure my children will receive the money when I die and it will not go to the state? 
MOSERS administers both defined benefit (DB) and defined contribution (DC) retirement plans. It is unclear which you are asking about, so we will respond about both.

The Defined Benefit (DB) Plan
The DB plan is non-contributory for members hired before January 1, 2011. As such a member, you do not pay money toward your DB plan. Your employer pays the necessary contributions to MOSERS while you are actively employed so that you may receive a future monthly retirement benefit and potential survivor benefits. Since you do not pay contributions, you are not eligible to withdraw funds from the retirement system. You do not have a separate account, rather the state’s annual contribution toward your benefit is pooled with investment returns and employee contributions (from members first employed on or after 1/1/2011) to fund the retirement system.

At retirement, you will elect a benefit payment option that determines whether or not a benefit will be paid to anyone after your death. Since you are single, one of the options you may wish to consider is life income with a set number of guaranteed payments. This allows you to name a beneficiary or beneficiaries to receive any remaining payments if you do not live long enough to collect the minimum guaranteed amount. Your monthly payment will be reduced in order to provide this potential survivor benefit. However, you will receive a payment each month for YOUR life, even if you live beyond the guarantee period. No survivor payments will be paid if you have received ALL payments in the guaranteed period (other than the final payment due at the end of the month in which you die).

For example, if you elect Life Income with 120 Guaranteed Payments (10 years), but die after collecting only 60 monthly payments (5 years after you retire), MOSERS will pay the remaining 60 monthly payments to the beneficiary(ies) you named.

It is true that as a member of MSEP or MSEP 2000, if you die PRIOR to retirement, with no eligible spouse or minor children, no DB retirement benefits are payable on your behalf. (Survivors of members first hired on or after 1/1/2011 will either receive monthly survivor benefits or a refund of contributions plus any interest, depending upon various factors.)

Please see our website to determine which plan you are in, find more information in your retirement handbook, or contact a benefit counselor to discuss all your options.

On a related issue, we encourage you to make sure your life insurance beneficiaries are current (if you have life insurance with MOSERS) so proceeds will be paid according to your wishes.

The Defined Contribution (DC) Plan
As for any money you’ve contributed to the State of Missouri Deferred Compensation Plan (the DC plan), you can keep those dollars invested in the Plan after you leave state employment. In order for your savings to be transferred to your children after you die, you must designate beneficiaries for your account. You can do this by logging on to your account at, clicking on My Profile in the left menu, then Beneficiaries. You can also call the Plan at 800-392-0925 to make your designations over the phone. The dollars you contribute to the deferred compensation plan are yours and will remain invested until you withdraw them. As a general plan guideline, you cannot access your savings in the deferred compensation plan until after separation from state employment. Those distribution guidelines differ when your beneficiaries assume control of your savings after your death. We encourage you to carefully read the Distribution Options Guide for more information.