When to retire?

Posted on
Is it better to retire after the first of the year for tax purposes or would it make much of a difference to retire in November? Someone told me it's better to go after the first of the year.
There are many different factors to consider when deciding when to retire with taxes being just one of them. MOSERS can provide you with different benefit estimates so you can compare your options but, ultimately, the decision about the “best” time will depend on your individual circumstances.

As it pertains to taxes, if you are eligible for BackDROP and elect it at retirement, you will be taxed on the lump-sum cash payment for the year you receive it if you don’t roll it over to a tax-deferred, qualified retirement account. The later in the year it is, the more taxable income you may have (from your employment plus BackDROP plus any other sources). Having a large spike in income in one year could result in you paying a higher percentage in taxes that year.

See our Special Tax Notice Brochure for information. In particular, if you are younger than age 59½ and don’t roll over your BackDROP distribution, you may also have to pay a 10% additional income tax on early distributions. If you elect a rollover (into the MO Deferred Comp Plan, for example) and defer the taxes, the time of year of your retirement doesn’t matter for tax purposes.

We encourage you to consult with a professional tax adviser before making your retirement decisions.
You may also be interested in a related topic on potentially utilizing the cafeteria plan to save taxes on medical insurance premiums during the remainder of the year in which you retire.

You may also be interested in a related topic on potentially utilizing the cafeteria plan to save taxes on medical insurance premiums during the remainder of the year in which you retire. 

Retiree COLAs?

Posted on
When will retirees receive their COLAs?
COLAs are payable on the anniversary of your retirement date (for most retirees). The exceptions are:

  1. Retirees who converted from MSEP to MSEP 2000 during the conversion window in 2000 will have COLAs payable in July.
  2. Retirees who elected a BackDROP will have COLAs payable on the anniversary of the BackDROP date.

You can read more in the article we posted on our website when we announced the COLA rate in January:

Vested Employee Returning to State Employment

Posted on
When I left employment in 2014, I was vested in the 2000 MSEP plan. If I return to state employment in the future, will I still be eligible for retirement under the 2000 MSEP plan with 80 and out? Or will I have to retire under 2011 MSEP with 90 and out? I have been told both, so I need clarification. Thank you.
If you were first employed in a MOSERS (or MPERS) benefit-eligible position on or after July 1, 2000 but prior to January 1, 2011, you would most likely be a member of the MSEP 2000.  If you returned to state employment as a member of MSEP 2000, the Rule of 80 (also known as “80 & Out”) would be one way you could reach normal retirement eligibility. The other way would be when you reach age 62 and have at least 5 years of service.

To retire under the “Rule of 80,” in MSEP 2000, you must:

  1. Be at least age 48, and
  2. Your age and service must equal 80 or more, and 
  3. You must be actively employed.

 In other words, a terminated-vested member of the MSEP 2000 is not eligible for the “Rule of 80.”

For more information about plan membership and retirement eligibility, see the  Which Plan am I in? section of our website. You can check your plan membership and when you are eligible to retire by logging in to your Member Homepage, clicking on Estimates, then Estimate Your Retirement Benefit.  The website will reflect your current status so be aware that your eligibility for retirement as a terminated vested member may be different than it would be if you returned to work as an actively employed member because you would begin accruing additional service.  Alternatively, you may contact a MOSERS benefit counselor by phone at (800) 827-1063 to discuss your specific situation and your options.

Death Before Retirement & Survivor Benefits

Posted on
I am a former state employee, who was vested when I left state employment. If I die before I begin receiving my pension benefit, will my spouse be eligible to receive it? Or will MOSERS get to keep my pension? If my spouse is eligible to receive my pension benefit, how does that happen, when will my spouse be eligible to get it (age 62? 65? Immediately upon my death?), and for how many years (10, 20, lifetime?)? Thank you. 
Thank you for your questions. Let’s address each one individually:

  1. If you die BEFORE you begin receiving your MOSERS pension benefit, will your spouse be eligible to receive it?  Yes, if you are a general state employee, married, vested in MOSERS, and die before you retire with MOSERS, your eligible surviving spouse will receive survivor benefits. The monthly benefit for your spouse will be based on the benefit you have accrued as of your date of death and calculated according to the Joint & 100% Survivor Option. If there is no eligible spouse, a survivor benefit may be paid to your natural or legally adopted child(ren) who are younger than age 21. This benefit is dependent on the law in effect at the time of your termination. If there is more than one eligible child, the benefit will be divided equally among them. The survivor benefit for each child will stop when the child becomes age 21 (unless a child is totally disabled and you terminated service with the state on or after 8/28/2001). If you die without any eligible beneficiaries, no retirement benefits are paid.
  2. HOW would your spouse begin receiving benefits from MOSERS? Your eligible surviving spouse can find information on our website and should contact a MOSERS benefit counselor for guidance through the process. We will provide your spouse with a customized Application for Survivor Benefits which he or she must complete and return along with any other necessary documentation. Information about your MOSERS benefits is contained in your Benefit Statement which all active, terminated-vested, and retired members can find by logging in to their MOSERS Member Homepage
  3. WHEN will your spouse begin receiving benefits from MOSERS? Benefit payments can begin the month following your date of death as long as the application and any necessary documents (such as a death certificate) have been submitted, and all legal requirements have been met. 
  4. HOW LONG will your spouse receive MOSERS pension benefits? The survivor benefit will be paid monthly for the remainder of your spouse's lifetime. 
All of the above information applies if you die BEFORE you begin receiving your MOSERS pension benefit. Members often have similar questions about death AFTER retirement. A key feature of your MOSERS defined benefit (DB) pension plan is that it can provide financial security for your eligible survivor(s) as well. During the retirement process, you will make elections to determine if any potential survivor benefits will be paid to anyone after your death or not. We hope you find this information helpful.

Contribution Balance

Posted on
For someone on the MSEP 2011 plan, is there a way to see the current balance of the 4% benefits withheld for retirement? If someone is planning on leaving before retirement eligibility it would be helpful to view the balance before making termination plans.
Yes, if you log into your MOSERS Member Homepage at www.mosers.org by clicking on the blue Member Login button, you can view a Contribution Calculator. It shows your current balance, based on the latest payroll information sent from your employer.

If you terminate employment from a MOSERS-covered position you may request a refund of your contributions including credited interest. However, you are not required to withdraw your contributions when you leave. If you are vested, MOSERS will continue to pay interest until you either withdraw the funds, reach normal retirement eligibility or die. If you think you might return to MOSERS-covered service, carefully consider your options because by receiving a refund, you forfeit all your credited service and future rights to receive benefits from the system. For vested members, this means forfeiting a lifetime monthly benefit at retirement age.

To see all of your options after leaving state employment, please see the Member Contributions brochure on our website.

Deferred Comp Early Withdrawal Penalty for Beneficiary?

Posted on
I am retired and I am 60. My wife is 56 yrs old, not a state employee, and is the beneficiary of my deferred compensation account. If I were to die, would she be subject to the 10% federal penalty for withdrawing money before 59 1/2 from my deferred comp fund?
No, as your widow, she would have penalty-free access to your pre-tax savings in the 457 plan prior to her attaining the age of 59½.

As a participant in MO Deferred Comp, you have penalty-free access to your pre-tax savings in the 457 plan prior to age 59½ as long as you are separated from state service. This great benefit carries over to your beneficiary as well. Keep in mind, a 10% penalty will apply to distributions from any employer contributions and earnings in a 401(a) account or rollover dollars (such as BackDROP) from other qualified accounts withdrawn prior to age 59½ by you or your surviving beneficiary(ies).

You may also be interested to know, that you can keep your money in the deferred comp plan throughout your retirement. Furthermore, you are not required to start withdrawing your savings until you reach age 70½. If you pass away before this time, or even after you begin taking Required Minimum Distributions (RMDs), your beneficiary has several options for when they are required to meet the annual withdraw amount. Visit the IRS’ website for more detailed information on RMDs. Beneficiaries of a deceased MO Deferred Comp participant must complete the Beneficiary Account Setup and Withdrawal Packet to create an  account and initiate withdrawals from the plan. When you or your beneficiary are ready to start taking distributions, the deferred comp plan offers several automatic and manual payment options to help you easily access your retirement savings. The Distributions Options Guide goes over these payment options in more detail.

Remember, it’s crucial that you annually review and update your beneficiary information with MO Deferred Comp, as well as with MOSERS. Keep in mind, you can designate contingent beneficiaries for circumstances when a primary beneficiary precedes you in death. To review your deferred comp beneficiary information, log on to Account Access and navigate to the Personal Information page under the Manage My Account tab.

For more information, visit www.modeferredcomp.org or contact a participant services representative at (800) 392-0925.

Preventing Identity Theft

Posted on
I was just notified by my doctor's office that their system was breached by a hacker and that my personal information may have been stolen.
How can I make sure the hackers don't try to get my pension check?
To protect our members’ personal information, MOSERS follows best practices and industry guidelines regarding the handling of and access to member data and we routinely participate in security audits to ensure we keep up with technology. That being said, identity theft and data breaches are a real threat so we encourage our members to be vigilant and active in taking steps to protect themselves, too.

You should routinely change your password if you log in to your Member Homepage on the MOSERS website. From www.mosers.org, simply click on the blue Member Login button, then follow the instructions. Also, we recommend that you routinely change your password on any other sites that require one. As part of our security protocol, we send an email to you (at the email address we have on file for you) anytime your account is accessed. If you receive such an email and have not just logged on to your Member Homepage, please notify us immediately.

Alternatively, you may call us, ask to speak with a benefit counselor, and request that your MOSERS online account be locked.  This will prevent you and anyone else from accessing your information online. If you call MOSERS, the benefit counselor will ask questions to verify your identity. 
Here are some additional security tips from an article on our website: 

We hope you find this information helpful.