Comparison of MSEP & MSEP 2000

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What are the major differences between MSEP & MSEP 2000?
The MSEP and the MSEP 2000 have various differences including different multipliers in the formula used to calculate your monthly payment, different benefit payment options, different cost-of-living adjustments (COLA), and different eligibility criteria. To compare the provisions in each of these plans, there is a helpful document on our website: MSEP & MSEP 2000 Summary of Pension Benefit Provisions - General State Employees.  Also see the Which Plan Am I In section of our website for more information about each plan.

We have a helpful Comparison Calculator on our website where you can compare the long-term impact of electing MSEP versus MSEP 2000, different BackDROP* periods under the different plans, and various other options. The Comparison Calculator videos are helpful in demonstrating how to use this tool. Or, you can ask a MOSERS benefit counselor to provide you with various benefit estimates and Comparison Calculator results.

We also encourage you to attend a MSEP/MSEP 2000 PreRetirement Planning Seminar when you are within 5 years of eligibility. This free full-day seminar includes information on differences in the plans, benefit payment options, and BackDROP, among other topics.

Your defined benefit retirement plan through MOSERS includes a lifetime benefit, regardless of the plan or payment option you elect at retirement.

*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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Rollovers & MO Deferred Comp

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When I began employment with the State I did a 401k rollover of my previous employer. How does this effect my retirement and Backdrop ? Is it already in the "benefit estimate." ?
 A 401(k) rollover has no impact on retirement eligibility or monthly or BackDROP lump-sum payment amounts. The rollover is not shown on the “MSEP 2000 Benefit Estimate” from MOSERS. See below for more details.

First, it is important to clarify where your rollover funds are kept. As a state employee, you have both a defined-benefit pension with MOSERS and a supplemental defined contribution account with MO Deferred Comp. If you had retirement funds from a previous employer, it was rolled over into MO Deferred Comp.

The Defined Benefit (DB) Plan (MOSERS)
The DB plan is non-contributory for members employed 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. Once you are vested with MOSERS, even if you leave state employment, you will be eligible for a lifetime monthly benefit once you meet the age and all other legal requirements and retire under a MOSERS defined benefit pension plan.

The Defined Contribution (DC) Plan (MO Deferred Comp)
The MO Deferred Comp Plan is a voluntary governmental 457(b) plan designed to help employees save additional income to supplement their defined benefit pension and Social Security benefits in retirement. The deferred comp plan provides a convenient way to save extra money for retirement through payroll deduction. Unlike pension and Social Security benefits, YOU have control over how much you save in this plan throughout your career, how your dollars are invested, and how you will withdraw those savings in retirement. While voluntary, many employees find this plan crucial for accumulating additional savings that can add another layer of financial security in retirement.

Once you leave state employment, you can keep your money in deferred comp, even if you're retired or simply working outside state employment. Furthermore, you are not required to start withdrawing your savings until you reach age 70½. Keeping your money with MO Deferred Comp is a smart way to maintain access to all of the great features you enjoyed while you were working. Once retired, the deferred compensation plan provides a variety of manual and automatic payment options to help you access your hard-earned savings.

BackDROP Options
When you retire with MOSERS, you will be asked if you want to elect BackDROP* (if eligible), and, if so, how you want to receive that distribution: cash option, rollover option, or combination cash and rollover option. State employees eligible to receive a lump-sum BackDROP payment get this payment in addition to a lifetime monthly benefit payment and can choose to roll the lump sum into the MO Deferred Comp 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. 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.

On your MOSERS defined benefit plan “MSEP 2000 Benefit Estimate”, if you are eligible for BackDROP, your benefit payment amounts and options at retirement will be shown, both with and without BackDROP. We encourage you to 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.

*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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Base Benefit & COLA Cap

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Where can one find one's base benefit for the purpose of determining the 65% of base benefit when COLA's will end?
Your COLA does not end once you meet your COLA cap*—it is simply calculated differently. If you retire under the MSEP and were hired before August 28, 1997, you will receive a COLA of at least 4% each year (maximum 5%) until you reach your COLA cap. The COLA cap is when the sum of your COLAs equal 65% of your initial benefit amount. Then, your annual COLA will be equal to 80% of the percentage increase in the average Consumer Price Index (CPI) with a minimum of 0% and maximum of 5%.

Your estimated date to reach the COLA cap can be found on your annual benefit statement in the COLA section. It says “Estimated Date to Reach 65% COLA Cap….” and a date. Typically, it is around 12-13 years after you’ve retired.

*The COLA cap does not apply to MSEP 2000 members; it applies only to members of MSEP hired prior to 8/28/97, who receive a minimum 4% COLA until meeting their COLA cap.
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Optional Life Insurance Premium Changes

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President Trump gave us a tax break which was (for me) $12.92 but then my life insurance went up $17.60. Why is that?
Changes to your optional life insurance coverage or premium amount could be a result of one or more of the following factors:
(1) your annual salary as of July 2017 or your eligibility date,
(2) your age bracket as of January 1, 2018,
(3) your coverage election, or
(4) the optional life insurance rates.

MOSERS Optional Life Insurance Rates effective January 1, 2018.
Age
Monthly Premium per $1,000 of Coverage
Under 35
0.08
35-39
0.10
40-44
0.16
45-49
0.24
50-54
0.43
55-59
0.76
60-64
1.18
65-69
1.90
70 & Over
3.33
Many of our members saw their optional life insurance premiums decrease this year, depending on which age bracket they were in as of January 2018. 
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Saver's Tax Credit

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A friend under tier 2011 wants to know if their 4% contribution towards retirement is eligible for the federal saver's tax credit. Some places on the web seem to call the employee contribution a 457 (deferred comp) plan. No where else is it referred to by any plan name (IRA, 403B, 401K) that would clarify what it is. To make it more confusing, the contribution is in box 14 of their W-2 with code EE after it. If it was in box 12, code EE would mean it was a 457 plan and would be saver's credit eligible, but there is no definition of what this means in box 14. Did they make a mistake?
No, the 4% employee contributions made by members of the MSEP 2011 or the Judicial Plan 2011 to MOSERS do not qualify for the retirement Savers Credit because these contributions are mandatory contributions. The MOSERS defined benefit plan is classified as a qualified retirement plan. However, only voluntary contributions to a qualified retirement plan are eligible for the retirement savers credit. The 4% contributions are made on a pre-tax basis and used to help pay the cost of future retirement benefits. On the W-2 form, contributions to the MOSERS defined benefit plan should be listed in Box 14, but there are no standard codes to indicate the type of contribution. It is optional for the employer to report these contributions on the W-2.

The MO Deferred Comp Plan is a voluntary governmental 457(b) plan designed to help employees save additional income to supplement their defined benefit pension and social security benefits in retirement. The deferred compensation plan provides a convenient way to save extra money for retirement through payroll deduction. Voluntary contributions to MO Deferred Comp, or another governmental 457(b) plan, are eligible for the Saver’s Credit. Keep in mind, the credit is for low- to moderate-income taxpayers and calculated using their adjusted gross income (AGI) and filing status. Learn more about the Saver’s Credit on the IRS website. On the W-2 form, contributions to MO Deferred Comp, a 457(b) plan, are listed in Box 12. A code of G indicates a 457(b) plan and a code of EE indicates designated Roth contributions under a governmental section 457(b) plan.

Please see the instructions for IRS Form 8880 for more information concerning this credit.

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Buyout Program

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Will Mosers be offering another buyout option in the future, like in 5-10 years? What's the projection for that, if so. I had not been vested long and I didn't feel comfortable considering that option given in 2017 but it did make me curious as to how often that option occurs. Please advise.
We are not aware of any efforts to offer another buyout option. The Missouri Legislature authorized the MOSERS Board of Trustees to offer the recent Buyout Program under SB 62 with that authorization expiring May 31, 2018. This was a one-time program. If MOSERS were to offer another buyout program in the future, it would require legislative approval.

For the members who did not elect the buyout option, we will contact you when you are within 120 days of early (reduced) retirement eligibility with information on the retirement application process. If you don’t elect early retirement, we will contact you again 120 days prior to when you are first eligible for normal (unreduced) retirement benefits from MOSERS.

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Missouri Merit System

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I have heard that the merit system might be in jeopardy. For the merit system was ended, would that impact employee's retirement that are eligible for retirement but have not yet retired?
Until we know if or how the merit system may be changed, MOSERS cannot say how your retirement benefits may be affected, if at all.

Any changes to any retirement provisions must go through the legislative process and be signed into law by the Governor.  We will monitor all legislation affecting MOSERS and inform our members of any changes that become law. The 2018 legislative session ends on May 18th. You can follow our legislative webpage for more information.

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Taxes & Retiree Pension Benefits

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Tax reform, how does this impact a retiree benefit? Have you changed the calculators to match the appropriate tax brackets as they will be now? 
The tax reform bill that was recently passed appears to change some federal income tax brackets (the rates/percentage), including the income level ranges that fall within the brackets. Pensions continue to be considered taxable income at the federal level (unless contributions were made after-tax), so we suggest you discuss whether the federal tax changes will affect you with your tax professional.

Changes (if any) to the amount of your MOSERS benefit payment will be implemented beginning with your February payment (issued on February 28, 2018).

To the best of our knowledge, state taxation of Missouri public pensions won’t be affected by this bill. As a reminder, we included an article in our winter issue of RetireeNews about the Missouri public pension exemption.

You should have received your 1099-R tax form with information you will need to file your tax returns for 2017. If you prefer an electronic copy of your 1099-R or if you find you need a replacement copy of it, simply log in to your Member Homepage and you will find it listed under Personal Information.

Yes – we have updated the Federal Tax Calculator on our website. If you decide you want to change either your state or federal tax deductions from your monthly pension benefit, you may do so at any time. Simply submit a new Substitute W-4P form available on the Retiree Forms page of our website for you to print and mail in, or log in to your MOSERS Member Homepage and submit this form electronically.

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