Friday Top Five: Retirement Related News for 3/27/15

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As many Americans have been doing, I was watching some exciting NCAA basketball recently. While I was watching the game, I noticed some interesting similarities between the basketball game and retirement planning. You may be wondering, how could two activities so different have any similarities? Well, let me explain through the four ideas I have listed below:

From Benefits Pro: Retirement getting unprecedented attention

The Insured Retirement Institute, citing action by regulators, proposed legislation in Congress and the creation of a new retirement caucus on Capitol Hill, suggested on Thursday that the nation is at a watershed moment with respect to retirement issues.

“There has never been more focus on retirement security issues in Washington, and there has never been a greater commitment from our policymakers to tackle these challenges head-on,” IRI CEO Cathy Weatherford said in addressing attendees at the association’s 2015 Marketing Summit.

From The New York Times: The Giant Retirement Community That Explains Where Americans Are Moving

The Villages, Fla., an hour northwest of Orlando, may be the only retirement community that is also the center of its own census-designated statistical area. It also holds another distinction: In 2014, its population rose more quickly than that of any other census area in the United States, climbing 5.4 percent, compared with 0.7 percent for the nation as a whole.

As it turns out, the rapid population growth in the Villages and other high-ranked places in the latest detailed population data issued by the census on Thursday tells a simple, powerful story about where the American population is heading.


STARTING IN 1967, the Missouri Local Government Employees Retirement System (LAGERS) initially served 10 units of government; it has since grown to 665 voluntary employer members—cities, counties, fire protection districts, libraries and other public service branches across Missouri.

As for the state’s workers, Executive Director Keith Hughes, in Jefferson City, says, “If an employer makes an election for participation, then all full-time employees shall participate in the plan.” The system now covers more than 33,000 active employees; 19,000-plus retirees; and roughly 8,000 deferred annuitants, “meaning they’re vested employees eligible for a benefit when they attain retirement age,” Hughes says. Retirement age for Missouri workers is 60 for general employees and 55 for firefighters and police officers.

From Plan Sponsor: ICI Measures Retirement Assets at $24.7 Trillion

An analysis from the Investment Company Institute (ICI) finds retirement assets of U.S. investors reached $24.7 trillion as of December 31, up 1.7% during the year’s final quarter and 6% from year-end 2013.

With the year-end 2014 results, retirement assets now account for approximately 36% of all household financial assets in the United States, ICI says.  

BackDROP options

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What do most retirees elect to do with backdrop funds? What are options with keeping them with the state for disbursement?
To answer your first question, 78% of the total amount of BackDROP distributions was rolled over to tax favored savings arrangements such as IRAs or the Missouri State Employees Deferred Compensation Plan as of January 2015.

State employees eligible to receive a lump-sum BackDROP payment can choose to roll that money into the State of Missouri Deferred Compensation Plan at retirement.  This option is available to all state of Missouri employees, even if they have never participated in the deferred compensation plan. Doing so is an attractive choice for many because it allows employees to consolidate the lump-sum payment with their existing retirement savings. This makes managing their savings in retirement easier and grants them continued access to the Plan’s low fees and custom investment solutions. Another popular reason to roll the lump-sum payment into the deferred compensation plan is that it allows employees to defer taxes on the payment until those assets are distributed in retirement. In 2014 alone, just under 500 state of Missouri employees rolled their BackDROP payment in to the deferred compensation plan.

We suggest you speak to a tax professional or financial advisor for advice specific to your situation and to discuss all of your options at retirement.  

Friday Top Five: Retirement Related News for 3/20/15

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From BenefitsPro: Public pension picture darkened by few states

Most state and local governments have fully funded their annual pension obligations over the past dozen or so years, with only a small number failing to do so.

That unfairly skews the overall numbers for public pensions, the National Association of State Retirement Administrators said in a report whose conclusions run counter to the popularly held belief that the public defined benefits model is in bad shape.

From Time Money: Here’s How to Tell If You’re Saving Enough for Retirement

This month's MONEY poll looks at our habits when it comes to retirement savings. Click through the gallery to see how you compare with your fellow readers.

From Forbes: Social Security Q&A: Can My Husband Collect both Retirement and Divorced Survivor's Benefits?

Social Security may be your largest or one of your largest assets. How you manage it, by deciding which benefits to collect and when, can make an absolutely huge difference to your lifetime benefits. And those with the highest past covered earnings have the most to gain from maximizing their Social Security.

I’ve been answering questions and writing columns about Social Security each week for the past two years on PBS NEWSHOUR’s website. The editors at Forbes asked me to post a Q&A each day from those columns. To see all my columns, please go to my software company’s site,, and click More Press below the WSJ quote.

Today’s question asks if, after remarriage past age 60, it’s possible to collect both a retirement benefit and a divorced survivor’s benefit at age 79. The answer reviews benefits available for those who remarry after 60 and notes some provisions that limit the benefits available in this case.

From BenefitsPro: Financial anxiety afflicting most Americans

Financial anxiety – including an unsettled feeling about not doing enough to prepare for retirement – could be crippling the nation’s workforce, according to a survey from State Street Global Advisors.

Student loans, mortgages and health care costs were acknowledged as taking an emotional toll on 60 percent of the respondents surveyed. Thirty-seven percent admitted financial stress was causing their productivity to suffer.

From SanDiego Source: Don't be afraid of saving for retirement

Go back about 40 years ago and “The Exorcist” was scaring moviegoers across the United States. 1974 was also the year Congress approved a simple plan to help people prepare for their golden years: the Individual Retirement Account.

People are scared today not by the movie but the challenge to save and invest enough to get them through their golden years.

BackDROP Information

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Where can I find info about working into my backdrop?
If your question is, “Do I need to fill out a form or notify anyone when I start working into my BackDROP period?”  The answer is no.  You just keep working. You don’t need to notify MOSERS of any decisions about BackDROP until you retire. You must work at least two years beyond when you are first eligible for normal retirement to be eligible for BackDROP. BackDROP provides a lump-sum payment in addition to your ongoing monthly benefit payment in retirement.
MOSERS has many different resources to find out more about BackDROP.* Besides the member handbook, there is a BackDROP page with links to many resources on our website, including the BackDROP brochure. We have also answered many  Rumor Central questions, which you can search on our blog by clicking on Categories and then selecting BackDROP. You can review your own retirement benefit estimates that compare your retirement eligibility dates with and without BackDROP. You can request this from a benefit counselor by calling (800) 827-1063, or generate your own by logging into your secure Member Homepage and going to the Estimates option.

BackDROP is one of the benefits addressed in our PreRetirement Planning seminars, which are conducted around the state for members of the MSEP and MSEP 2000. View the 2015 schedule, and log in to register for a location in your area. You will also receive a benefit estimate by attending a PreRetirement seminar, and you can specify when you register that you would like the estimates to include BackDROP.

* Note: The BackDROP is available to general state employees in the MSEP and the MSEP 2000.

Health Insurance Retirement Incentive

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I heard a rumor there was legislation proposed that would offer 5-years of health insurance coverage to state employee to promote early retirement - Is this true? If so, what is the status of that proposal?
House Bill 1134 has been proposed which would subsidize retiree health care premiums for certain state employees (except current or former members of the general assembly or statewide elected officials) who retire on or after March 1, 2015 but no later than November 1, 2015.

As it is currently written, the proposed legislation applies to employees who are eligible for normal retirement (not early retirement). It also limits the state’s ability to rehire for the positions that will be vacated by retirements except for Truman State University, Lincoln University, or any educational institution listed in Section 174.020.

On March 18 this billed was referred to the Select Committee on Financial Institutions and Taxation. As of 3/19/15, a hearing has not yet been scheduled and the bill is not on the House calendar. You can find copies of all versions of the bills, as well as actions and hearings, on the Missouri General Assembly's website.

You may also track all retirement legislation for public employee retirement plans at the Joint Committee on Public Employee Retirement website. 

Divorce and Your Benefit Payment

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We’ve received several questions regarding divorce and your benefit payment. Here’s a breakdown of how divorce may affect your benefit payment:

Can my retirement benefit be divided if I divorce my spouse?

Yes, your retirement benefit from MOSERS may be considered “marital property.” If you were married at any time while actively employed in a MOSERS benefit-eligible position and are considering a divorce after vesting, your spouse may be legally entitled to receive a portion of your retirement benefit. Any amount up to 50% of the benefit accrued during marriage may go to your ex-spouse.  If you are not vested, you are not owed a future retirement benefit from MOSERS, and therefore there is nothing to divide.

What do I need to do to divide my benefits?

Your benefit is not automatically divided at the time of your divorce.  Here’s what we need you to do:
  1. You should discuss divorce proceedings with your attorney. Ask about your rights and options regarding marital property.
  2. Fill out our Division of Benefits (DBO) Estimate form and mail it to MOSERS or complete and submit it online.
  3. We will mail a DBO packet to you with a benefit estimate.
  4. Your attorney will need to prepare a DBO according to our sample packet and submit it to us for approval prior to your court date.
  5. Have the approved DBO signed by the appropriate parties, including the judge.
  6. Send the certified DBO to us.
As an alternative to the DBO, you may choose to divide the present value of your retirement at the time of divorce as a part of your property division. If this is your preferred route, we recommend you contact a professional who specializes in this service.

What happens if I already got divorced (prior to retiring)?

If you are already divorced, future retirement benefits may have been addressed in your divorce decree. Read through it and see. If you don’t have a copy, you may be able to get a copy from the county where the divorce took place. You may contact a MOSERS benefit counselor to discuss the matter and how it applies in your specific situation.

If your ex-spouse is entitled to a portion of your retirement benefits, their benefit payments will begin when you retire. Like your benefits, your ex’s benefits and COLAs will be based on the plan you retire under.  Your ex will not receive any formula increases, temporary benefit, or any portion of your BackDROP payment.

If you are in the MSEP 2011 and divorce before vesting, your ex may be eligible to receive a portion of your refunded contributions. You are not eligible to request a refund if your retirement benefit is subject to a division of benefit order.

What happens if I get divorced after retiring?

Your ex-spouse’s benefits will begin the month after your DBO is issued. If you get a DBO after you divorce, your ex will not receive back payments.  Upon death of either party, the DBO will automatically terminate. But if your ex dies, let us know! You may be eligible for a pop-up in your benefit.

You cannot change (even after divorce) your benefit payment option after your first benefit payment is mailed or electronically transferred by MOSERS. For example, if you elected a Joint & Survivor option upon retirement, and later get divorced, your ex-spouse is still eligible to receive benefits upon your death. You cannot designate a new retirement beneficiary. However, you can change your beneficiary on your life insurance.

What if I want more information?

You can read our Divorce & Your Retirement brochure or speak with a MOSERS benefit counselor.

Tax Rates & Deferred Compensation

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When i retire, i want to pull what i have out of my deferred comp account. I am over 59 1/2 so i shouldn't have to pay any penalty, but what tax rate will i have to pay? And, do i have the option of pulling all of my money out of my account?
All withdrawals (distributions) from the deferred compensation plan will be subject to a 20% federal tax withholding. You also have the option of withholding additional state income taxes from your distribution, although you are not required to do so. As for how much you can withdraw, you do have the ability to receive a lump sum of your entire balance with the deferred compensation plan, but we encourage savers to read over the Distribution Options Guide prior to doing so.

It's important to note that the early withdrawal penalty you mentioned in your question does not apply to your savings in a 457 savings plan like the deferred compensation plan. Generally speaking, once you separate from service, you will not pay a penalty for accessing that money, even if you were younger than 59 ½. It's also important to remember that you are not required to immediately withdraw your money from the deferred compensation plan when you retire or leave state employment. Because it is an important employee benefit that provides low-cost access to custom investment solutions, a majority of retirees choose to keep their money in the Plan throughout retirement.