Roth IRA & Deferred Comp

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Are retired MO state employees who have an income from part or full time employment (other than through the State of MO) permitted to open a ROTH IRA through Deferred Compensation ?  If so, how would they go about opening a ROTH IRA and what would be the annual limit for a ROTH contribution? 
No. Once you have left state employment, you can no longer make contributions to the MO Deferred Comp Plan. However, you can keep your money in deferred comp, even if you're retired or simply working outside state employment. If you leave your money in the plan, you must begin taking required minimum distributions (RMDs) in the year you turn 70 ½. By staying in the plan after you separate from service, you will enjoy:

•        Penalty-free access to your 457 savings before age 59 ½
•        Competitively priced, custom investment solutions
•        Convenient online account access
•        Dependable customer service

Keep in mind, you may lose these privileges — specifically the penalty-free access to your assets — if you roll your deferred compensation plan balance to another account type after leaving state employment.

If you have any additional questions, please feel free to contact MO Deferred Comp at 800-392-0925 or stop by our local office 3349 American Ave, Ste A, Jefferson City, MO 65109.

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BackDROP & Monthly Pension Benefit

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A question about the backdrop: does it in any way effect your pension? Is your pension reduced? Where does the backdrop money come from?
Yes, if you elect the BackDROP* at retirement, it will likely affect the amount of your monthly pension benefit. With the BackDROP, your monthly benefit will be calculated using your final average pay and creditable service as of the BackDROP date that you choose, rather than as of your actual retirement date. This typically results in a lower monthly payment (compared to what it will be if you do not elect the BackDROP). However, as a tradeoff for a lower monthly payment, you also get a lump-sum payment. The BackDROP is simply a benefit payment option that is available to qualified members.

For additional information, you can: View this BackDROP graphic, read the BackDROP brochure and a variety of Rumor Central questions on the topic, discuss your options with a MOSERS benefit counselor, and use our online Comparison Calculator to see which option might be most advantageous to you over the long-term. This short Comparison Calculator video provides an overview of how the calculator can be helpful in comparing various benefit payment options. MOSERS benefit counselors are available by phone at (800) 827-1063 or you may make an appointment to meet with a counselor in person M-F, 7:30 a.m. - 4:30 p.m., by selecting Option 1 from the main menu.

Regarding your question of where the money comes from for the BackDROP, it all comes from the MOSERS trust fund. In its simplest terms, the BackDROP provides the option to “take more money now and less later” or  “take less money now and more later”. You can see an example of the calculations in the BackDROP brochure. According to our actuaries, it is cost-neutral to the system.

*BackDROP is available only to general state employees who are members of MSEP & MSEP 2000 and who work at least two years beyond normal retirement eligibility.  

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Purchasing Military Service

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Can you buy military time at different time such as 2 years now and the remaining 2 years at a later date? Or are you required to buy it all at one time?
You must buy it all at one time, if you elect to purchase your active-duty military service. Additionally, you must purchase all that you served (total months and days) up to a maximum of four years. However, you may make payments for up to two years. Vested members of MSEP and MSEP 2000* are allowed to purchase prior active-duty military service at a subsidized rate.

We encourage anyone interested in purchasing prior active-duty military service to speak to a MOSERS benefit counselor, who can provide cost estimates. The primary timing issue for you to consider when making a service purchase is that, the longer you wait, the more it will cost. In other words, it is often to your advantage, in terms of cost, to purchase service sooner rather than later to avoid additional interest costs. See the Acquiring Service brochure for more information. Any eligible purchases must be applied for and paid for in full prior to applying for retirement. 

*Note: members of the MSEP 2011 may get automatic credit if they were employed by the state immediately prior to entering the armed forces and return to state employment within the timeframe specified by USERRA. However, purchase of prior active-duty military service credit is not available to members of MSEP 2011.

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Can Politicians Change Retiree Pay?

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Can state politicians change/reduce a retirees established retired pay? I have heard that MO retired state pay and benefits are going to be looked at it the near future.
No, members’ accrued benefits are protected by law. There are currently some proposed bills making their way through the Missouri legislature that would change vesting requirements for members of the MSEP 2011 only, but would not affect members or retirees under the MSEP or MSEP 2000. We do not know if any proposed legislation will pass or not but we will monitor all legislative proposals that may impact MOSERS and inform our members of any changes that become law. The 2017 legislative session ends on May 12, 2017.

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News Tribune Article

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 news tribune article dated april 9, 2017 - "Schmitt promotes mosers revisions" quote from board member and state treasurer Schmitt "Missouri's troubled pension system is the single greatest threat ...long term solutions to fix the problem of our insolvent public retirement system before it's too late". from a post dated feb 7,2017 "is mosers properly funded" states the mosers board of trustees monitors all financial aspects of the plan...to stabilize plan funding and provide sustainability for the future. our long term plan is SOLID and the objective data supports that conclusion. confused - is the system a "troubled pension system with problems of a insolvent retirement system" or a system that is SOLID and secure.
The MOSERS board and staff are working to KEEP the retirement system solid and secure. The April 9 article in the News Tribune references a proposal to reduce the system’s long-term liability by offering a voluntary lump-sum payment (rather than a monthly pension) to former state employees who will be eligible for a pension benefit at some point in the future. On average, these terminated-vested members left state employment at age 38 with about 10 years of service, and they will become eligible to begin receiving a MOSERS benefit at age 62. The specific details of this potential offer must still be determined but it will be designed to reduce the system’s long-term liability.

The lump-sum proposal is in addition to other recent action taken by the MOSERS board regarding future assumptions about investment income and retiree life expectancy which will result in increased costs to the state in the short-term but keep the system on solid ground for the future. Additionally, in 2010, the Missouri Legislature changed plan provisions for all new employees hired on or after January 1, 2011. Changes include 4% contributions from employees, a later retirement age, and discontinuation of subsidized service purchases, which significantly reduce costs going forward.

Currently, the Missouri Legislature is making decisions about the FY18 budget. MOSERS submitted our budget request for FY18 as we do as part of the normal process each year. The amount determined by the actuaries and certified by our board was $393 Million. The amount the House funded is $361 Million – about $32 Million less than requested. The budget now moves to the Senate. If the Senate approves the full amount we requested, or any amount other than the amount approved by the House, the House and Senate will go to conference committee to come to agreement on the appropriation amount.

Treasurer Schmitt has emphasized how important it is for the legislature to fully fund the pension system. NOT funding MOSERS could be a threat to the state’s AAA bond rating. If the legislature decides to not fully fund MOSERS’ FY18 budget request, it will have no immediate impact on benefit payments to retirees, however, a pattern of inadequate funding certainly could have negative long-term consequences for the retirement system.

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SB 228 & Current MOSERS Retirees

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I am writing in regard to Senate Bill 228. I am concerned how this will impact current retirees, who chose the MSEP 2000 plan. I am especially concerned about what this says on page 6, line 52, #7. This would affect the COLA rate and cap it at 2% rather than the current 4%. Will this affect those of us, who are currently retired under the MSEP 2000 plan or future retirees? 
No. SB 228, in its current form, would NOT affect current retirees. It would affect only future retirees who first begin state employment on or after January 1, 2018 (see lines 1-4 on page 5). We will continue to monitor any pension-related legislation throughout the rest of the legislative session, which ends on May 12. Print Friendly and PDF

2017 Cost-of-Living-Adjustment

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Will I get a raise this year?
Yes, if you are referring to the cost-of-living-adjustment (COLA) for eligible retired members and their surviving beneficiaries. As we announced in January, the COLA for 2017 is 1.010%. This will be effective for MSEP retirees who have reached their original 65% COLA cap, or who were first hired on or after August 28th, 1997, and for members retired under MSEP 2000 regardless of date of hire.

The COLA is payable on the anniversary of your retirement date, except for:
Retirees who converted from MSEP to MSEP 2000 during the conversion window in 2000 will have COLAs payable in July
Retirees who elected a BackDROP* will have COLAs payable on the anniversary of the BackDROP date

For more information, including how the COLA rate is calculated, and a helpful video, please see the COLA page on our website.

*BackDROP is available only to general state employees who are members of MSEP & MSEP 2000 and who work at least two years beyond normal retirement eligibility. 

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IRAs and Public Pensions

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I am currently employed by the state and have the state pension plan. Am I allowed to open an IRA?
Yes, according to IRS Publication 590-A, you can open up an IRA regardless of your status in a pension plan. Keep in mind, an IRA is simply another type of personal retirement savings account like your employer sponsored retirement savings plan, MO Deferred Comp. There are many advantages to contributing to the deferred compensation plan instead of an IRA, such as:

Penalty-free Withdrawals: 457 plans, like MO Deferred Comp, have no withdrawal penalty before age 59 ½ once you’re terminated (retired or left employment) from state service. When withdrawing from an IRA before age 59 ½, you will be subject to a 10% penalty.
Tax-free Savings: Just like an IRA, MO Deferred Comp offers a ROTH option allowing you to benefit from tax-free withdrawals.
Higher Contribution Limits: The 2017 IRS contribution limits are much higher in a 457 plan versus an IRA. In an IRA (ROTH or traditional), savers are allowed to contribute $5,500 if under age of 50 and $6,500 if over age 50. While within MO Deferred Comp, savers can contribute up to $18,000 a year if they are under the age of 50, $24,000 if over the age of 50 and $36,000 if within three years of retirement during the 2017 calendar year.

Again, you can open a traditional IRA as long as you (or, if you file a joint return, your spouse) received a taxable income during the year and you are not ag 70 ½ by the end of the year. However, you may not be able to deduct all of your contributions if you or your spouse are covered by an employer sponsored retirement plan. For 2017, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified Adjusted Gross Income (AGI) is:

More than $99,000 but less than $119,000 for a married couple filing a joint return or a qualifying widow(er),
More than $62,000 but less than $72,000 for a single individual or head of household, or
Less than $10,000 for a married individual filing a separate return.

For more information, please see Publication 590-A for other restrictions concerning traditional IRA and also Roth IRA contributions. https://www.irs.gov/pub/irs-pdf/p590a.pdf.

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Need a New 1099-R?

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I’ve lost my 1099. Can I get a copy from this website?

Yes. From www.mosers.org, click the blue Member Login button. On your Member Homepage, under Personal Information, you’ll find your 1099-R tax form. You can print it and/or save it to your computer for future reference.

If you have not logged in since before September 2016, you will need to set up a MOSERS Online ID in order to access your Member Homepage. Here’s a link to our quick how-to video: Member Login Tutorial.

IMPORTANT:  To help protect the security of your personal information, in order to create an Online ID, you MUST have a valid email address already on file with MOSERS. If you don’t, please call our benefits staff to assist you at (573) 632-6100 or (800) 827-1063.

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Life Insurance After Retirement

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I have basic and optional life insurance through MOSERS. After I retire will the state still provide me with life insurance, and at what cost to me?
Yes. At retirement, if you retire within 60 days of leaving state employment, the state will continue to pay for $5,000 of basic life insurance coverage for your lifetime. You have 60 days from the date of retirement to make an election to port or convert the remaining basic life insurance to an individual policy through Standard Insurance Company if you meet eligibility requirements.
Additionally, at retirement, you may elect to continue purchasing any amount of MOSERS optional life insurance coverage from $1,000 up to a maximum of $60,000 (in increments of $500). However, the amount of coverage you carry into retirement cannot exceed the amount you carried while actively employed. You have 60 days from the end of the month in which you leave state employment to make an election to convert any remaining optional life insurance to an individual policy through Standard Insurance Company if you meet eligibility requirements.
Also, if you retire under the “Rule of 80” (MSEP 2000), or “Rule of 90” (MSEP 2011), you may retain all of your optional life insurance coverage until age 62. At age 62, your coverage will automatically reduce to a maximum of $60,000.
If you terminate optional life insurance coverage through MOSERS at retirement (or did not have any), it cannot be reinstated or added after retirement. So, if you want to have optional life insurance coverage after retirement, don’t wait until the last minute to purchase it as an active employee. Depending on your individual medical circumstances, the approval process could take weeks or months.
To calculate your monthly and annual premiums, there is a convenient Optional Life Insurance calculator on MOSERS’ website. Click on Members, then Calculators.
Please see the Life Insurance Handbook for more information.

*MOSERS life insurance is not available to employees of the Department of Conservation or colleges/universities except for Lincoln University and State Technical College of Missouri. Those employers provide different employer-sponsored benefits.
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Refund After Termination?

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What happens to the money in your retirement fund if you start a new career before retiring? Can you still collect it?
Yes, you may still be able to collect it, but your options and the details of how depend on which plan you belong to, if you are vested or not, and if you take a refund of your member contributions or not if you are a member of MSEP 2011.

If you are vested with MOSERS (you have at least 5 years of service in MSEP or MSEP 2000 or at least 10 years in MSEP 2011) and then leave state employment, you will be eligible for a lifetime monthly benefit which will begin once you meet the age and all other legal requirements and retire under a MOSERS defined benefit pension plan. This provides financial security because, with a defined benefit pension plan, you can’t “outlive your money”. Here are more details:

•         If you are a member of MSEP 2011, you pay contributions to help fund the system. Upon termination of employment, you may request a refund of your contributions* or you may leave your contributions with MOSERS.

o   By receiving a refund of contributions, you forfeit all your credited service and any future rights to receive benefits from the system, but you get a check equal to the amount of contributions you made plus any interest.

o   If you leave your contributions with MOSERS and later return to a MOSERS or MPERS benefit-eligible position, after 12 continuous months of service, you will begin adding to your previous service and working toward a possible future pension benefit. (Contributions from a terminated vested member of MSEP 2011 will continue to accrue interest annually until the member is eligible for normal retirement or withdraws the contributions. Contributions from a terminated non-vested member will not accrue interest.)

•         If you are a  member of MSEP or MSEP 2000, your employer pays the necessary contributions into our system so that you may draw a future retirement benefit. Since those members do not pay these contributions, they are not eligible for a refund.

* Please Note - By receiving a refund, terminated MSEP 2011 members forfeit all their credited service and any future rights to receive any retirement and long-term disability benefits, and rights to coverage through Missouri Consolidated Health Care Plan (MCHCP) other than as a dependent under provisions of COBRA.

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