LACERA • Los Angeles County Employees Retirement Association April 2011 KEY CONTACTS LACERA Los Angeles County Employees Retirement Association 1-800-786-6464 • (626) 564-6155 FAX • lacera.com • Email: [email protected]Great West (Deferred Compensation Plans: 401(k), 457 Horizons, Pension Savings for Temp Employee) 1-800-947-0845 Key Talk or 1-800-382-8924 Glendale Office 655 N. Central, Glendale, CA 91203 • countyla.com Employee Benefits Hotline (County) (213) 388-9982 • dhr.lacounty.info CIGNA Optional Group Life Insurance (continuation) Options and Choices 1-800-842-6635 MetLife Group Variable Universal Life Insurance (continuation) Flex and Megaflex 1-800-846-0124 COBRA (County Health Insurance Plan Continuation) (213) 388-9982 Long-Term Disability and Survivor Benefits (County) (213) 738-2143 • (213) 738-2150 Sedgwick 1-800-786-8600 • sedgwickcms.com/calabasas Long-Term Care Insurance 1-800-207-9883 CALPERS 1-888-225-7377 • 655 N. Central #1400, Glendale, CA 91203 • calpers.ca.gov Medicare 1-800-633-4227 • medicare.gov Social Security Administration 1-800-772-1213 • 1-877-255-1508 • ssa.gov The closest SSA office to LACERA is located at 104 N. Mentor Avenue in Pasadena Southeast corner of Mentor and Union (2 blocks south on Mentor from LACERA)
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LACERA • Los Angeles County Employees Retirement Association
April 2011
KEY CONTACTS
LACERALos Angeles County Employees Retirement Association
CALPERS1-888-225-7377 • 655 N. Central #1400, Glendale, CA 91203 • calpers.ca.gov
Medicare1-800-633-4227 • medicare.gov
Social Security Administration1-800-772-1213 • 1-877-255-1508 • ssa.gov
The closest SSA office to LACERA is located at 104 N. Mentor Avenue in Pasadena Southeast corner of Mentor and Union (2 blocks south on Mentor from LACERA)
LACERA • Los Angeles County Employees Retirement Association
April 2011
LACERA • Los Angeles County Employees Retirement Association
April 2011
PENSIONABLE AND NON-PENSIONABLE CAFETERIA PLANSIf you were hired on or before 12/31/95, you may be eligible to include a portion of the County’s cafeteria plan contribution as pensionable earnings.
CAFETERIA PLAN HIRED PENSIONABLE AMOUNT*
CHOICES (Represented) Pensionable On or before 12/31/95 Capped at $244
Non-pensionable On or after 1/1/96 $0
OPTIONS (Represented) Pensionable On or before 12/31/95 Capped at $244
Non-pensionable On or after 1/1/96 $0
FLEX (Non-Reps) Pensionable On or before 12/31/94 Capped at $442 OR % of salary at
12/31/94, whichever is greater.
Non-pensionable On or after 1/1/95 $0
MEGAFLEX (Non-Reps) Pensionable On or before 12/31/94 Capped at $442 OR % of salary at
12/31/94, whichever is greater.
Pensionable In 1995 Capped at $244
Non-pensionable On or after 1/1/96 $0
Add the pensionable amount shown on the chart above to your final average compensation (Retirement Calculator) or gross monthly salary (Transfer Calculator or ARC Calculator).
Please contact the Employee Benefits Hotline at (213) 388-9982 to verify your cafeteria plan and the pensionable portion as of 12/31/94. The amount of the County contribution paid to employees changes periodically, and the portion that is pensionable varies according to your cafeteria plan, your hire date, and your retirement plan (Megaflex only).
*Special rules may apply if your final compensation period included any time prior to January 1, 1991.
Who is Eligible Maximum Buyback When Generally PaidOverstated Buybacks in Final Compensation
Issues
SICK BUYBACK
Non-MegaFlex Sheriff Deputies/Custody
Assistants/Probation Officers/Beach Lifeguards/
Public Defender Investigators/DA
Investigators hired before February 2000
5 days (40 hours) July or August The FAC period may only include 2 sick buybacks. Amongst those 2, only 64 hours may be included in the FAC. If, for example, a member sells 40 hours in August, 0 in January, and 40 in July, one of the 40
hours will be reduced to 24 so as not to exceed the 64
hour limit.
3 days (24 hours) January or February
56-hour Firefighters1 1/2 shifts (36 hours) July or August The FAC period may only
include 2 sick buybacks (72 hour max)1 1/2 shifts (36 hours) January or February
5 1/2 shifts (132 hours) January or February 132 hours maximum
Non-MegaFlex Participants (except 56-hour
Firefighters)11 days (88 hours)
Unusual for anyone other than a Firefighter to reach the maximum
-
MegaFlex Participants Not eligible - -
NON-ELECTIVE LEAVEOnly available to MegaFlex
Participants 10 days (80 hours) January or February 80 hours maximum
LACERA • Los Angeles County Employees Retirement Association
December 2011
TAX ConsiderATions: ConsulT your TAX Advisors before you ACT
Monthly before-Tax Payroll deductions that can lower your taxable income:
Plan contributions (A, b, C, d):• Pre-determined contribution percentage based on entry age
• General member: 30-year cancellation, if pre-03/07/1973 membership date• Safety member: 30-year cancellation
• E to D transfer• Contribution percentage based on entry age or prospective transfer age
Payments on service credit purchase and plan transfer contracts (pre-tax):
• The shorter the contract period, the higher the monthly payment amount
deferred Compensation Plan contributions (457 Horizons, 401(k)) through Great- West:
• You decide the contribution percentage and may change it any time:• Maximum per year -- $17,000 (2012) • If 50 and older ------- $22,500 (2012)• Catch-up provision -- $34,000 (2012) Horizons only• The limits above for Horizons include the County match.
• No more regular contributions after retirement.
Termination Pay is TaxableFor information regarding strategies for deferring tax on termination pay, call Great-West (Glendale Office) at 1-800-382-8924.
Consult with professional advisors regarding legal, tax, and/or medical matters: LACERA does not offer legal, tax, or medical advice.
LACERA • Los Angeles County Employees Retirement Association
April 2011
SOCIAL SECURITYIf you paid into Social Security prior to becoming a member of LACERA, you should contact the Social Security Administration to find out if their records are accurate and up to date. We also suggest you find out what you can expect from Social Security and how this source of income will fit into your retirement plans. The County withdrew from the Federal Social Security program in December 1982.
LACERA Rules:Plan A, B, C, and D (General)LACERA retirement allowances will be slightly reduced by a fixed dollar amount for each year of service that was covered by Social Security while employed by the County prior to 1983.
Plan E (General)As a member of Plan E, a percentage of your estimated Social Security benefit will be subtracted from your retirement allowance, based on the total number of years and months of County service covered by Social Security while employed by the County prior to 1983.
If you retire at or after age 62, you may voluntarily provide evidence of your actual Social Security benefit to LACERA within 6 months after retirement. LACERA will use the actual benefit to recompute your retirement allowance.
Otherwise, LACERA will use the actuarial tables to compute your Social Security benefit offset and your retirement allowance.
Government Pension Rules: (GPO and WEP)If you worked in a job that was not covered under Social Security, e.g., some federal, state, or local government employment, the pension you receive based on that work may reduce your Social Security benefits. Your benefit can be reduced under one of two provisions.
Government Pension OffsetThe Government Pension Offset (GPO) affects spouses, widows, and widowers. Under the GPO, if you receive a LACERA pension (based on work when you did not pay Social Security taxes), your Social Security spouse’s, widow’s, or widower’s benefits may be reduced by an amount equal to two-thirds of your LACERA pension.
Windfall Elimination ProvisionThe Windfall Elimination Provision (WEP) reduces the Social Security benefit for retired and disabled workers receiving government pensions from employment not covered by Social Security. Basically, the Social Security Administration uses a different (less favorable) formula to calculate a worker’s benefit under the WEP than it does to calculate the benefit of a worker who is not affected by the WEP.
The “normal” Social Security benefit formula separates a worker’s average monthly earnings into three segments, and multiplies each by a different percentage. The WEP modifies the percentage by which the first segment is multiplied. This results in you receiving a lower Social Security benefit than you would have received were you not entitled to a LACERA pension.
The WEP formula includes a sliding scale based on the length of your Social Security-covered employment. If you have 30 or more years of “substantial earnings” under Social Security, you are fully exempt from the WEP. For more information, visit the Online Calculator (WEP Version) at ssa.gov.
SOCIAL SECURITY — PLAN A, B, C, D The County of Los Angeles withdrew its employees from the federal Social Security program in December 1982. Your LACERA retirement allowance will be reduced by a fixed dollar amount for each year of service that was covered by Social Security while employed by the County prior to 1983.
Example: Plan A members retiring at age 60 with 10 years of Social Security coverage as a County employee would have their retirement allowance reduced by $28.50 based on the chart. (10 times $2.85 = $28.50)
Retirement Allowance Reduction Amounts For Members In Plans A, B, C, & D Covered By Social Security
SOCIAL SECURITY - PLAN E The County of Los Angeles withdrew its employees from the federal Social Security program in December 1982.
As a member of Plan E, a percentage of your estimated Social Security benefit will be subtracted from your retirement allowance, based on the total number of years and months of County service covered by Social Security.
If you retire after age 62, you may voluntarily provide evidence of your actual Social Security benefit to LACERA within 6 months after retirement. LACERA will use the actual benefit to recompute your retirement allowance. Otherwise, LACERA will use the actuarial tables to compute your Social Security benefit offset and your retirement allowance.
Consult with professional advisors regarding legal, tax, and/or medical matters: LACERA does not offer legal, tax, or medical advice.
*Note: “YOS” means years of service covered by Social Security as a County employee.
LACERA • Los Angeles County Employees Retirement Association
December 2011
MediCAre
2012 Part b Premium Amounts for Persons with Higher income levelsMost Medicare beneficiaries will pay a standard premium of $99.90 (single party) or $199.80 (two parties) for Part B in 2012. Beneficiaries who currently have the Social Security Administration (SSA) withhold their Part B premium and have incomes above $85,000 or ($170,000 or more for joint filers) are responsible for a larger portion of the estimated total cost of Part B benefit coverage.
Social Security will use the income reported two years ago on your IRS income tax return to determine your premium (if unavailable, SSA will use income from three years ago). For example, the income reported on your 2010 tax return will be used to determine your monthly Part B premium in 2012. If your income has decreased since 2010, you can request to have the income from a more recent tax year used to determine your premium; however, you must meet certain criteria.
should i sign up for Medicare Part A and b if i am still working?Even if you keep working after you turn 65, you should sign up for Medicare Part A. If you have health coverage through your employer or union, Part A may still help pay some of the costs not covered by your group health plan. Call the Social Security Administration at 1-800-772-1213 to sign up.
However, you may want to wait to sign up for Medicare Part B if you or your spouse are working and have group health coverage through your or your spouse’s employer or union.
You would have to pay the monthly Medicare Part B premium, and the Medicare Part B benefits may be of limited value to you as long as the group health plan is the primary payer of your medical bills.
i want to add Part b to my Medicare. When can i do that?You can sign up for Medicare Part B:
1) When you first enroll in Medicare (your Initial Enrollment Period). Your Initial Enrollment Period starts three months before you turn age 65 and lasts for seven months.
2) January 1 - March 31 of each year (your General Enrollment Period). If you enroll in Part B during a General Enrollment Period, it will be effective July 1 of the year in which you apply. Your Medicare Part B premium may go up 10 percent for each 12-month period that you could have had Medicare Part B, but did not take it.
3) If you didn’t take Medicare Part B when you were first eligible because you or your spouse were working and had group health plan coverage through your or your spouse’s employer or union, you can sign up for Medicare Part B during a Special Enrollment Period.
You can sign up:• anytime you are still covered by the employer or union group health plan through your or your
spouse’s current or active employment, or• during the eight months following the month the employer or union group health plan coverage
ends, or• when the employment ends (whichever is first).
This material was created by Medicare and is reprinted from SSA Publication No. 05-10536 (available on socialsecurity.gov) for the convenience of LACERA members. LACERA does not administrate Medicare.
For questions, call 1-800-Medicare (1-800-633-4227).
Modified Adjusted Gross Income (MAGI) Part b Monthly Premium
Individuals with a MAGI of $85,000 or lessMarried couples with a MAGI of $170,000 or less 2012 standard premium=$99.90
Individuals with a MAGI above $85,000 up to $107,000Married couples with a MAGI above $170,000 up to $214,000
Standard premium + $40.00
Individuals with a MAGI above $107,000 up to $160,000Married couples with a MAGI above $214,000 up to $320,000
Standard premium + $99.90
Individuals with a MAGI above $160,000 up to $214,000Married couples with a MAGI above $320,000 up to $428,000
Standard premium + $159.80
Individuals with a MAGI above $214,000Married couples with a MAGI above $428,000 Standard premium + $219.80
The standard Part B premium for 2012 is $99.90. If you are single and filed an individual tax return, or married and filed a joint tax return, the following chart will apply:
Modified Adjusted Gross Income (MAGI) Part b Monthly Premium
Individuals with a MAGI of $85,000 or less 2012 standard premium=$99.90
Individuals with a MAGI above $85,000 up to $129,000 Standard premium + $159.80
Individuals with a MAGI above $129,000 Standard premium + $219.80
If you are married and lived with your spouse at some time during the taxable year, but filed a separate tax return, the following chart will apply:
LACERA • Los Angeles County Employees Retirement Association
December 2011
MaxiMuM Monthly aMount your Benefit May Be reduced Because of
the Windfall eliMination Provision (WeP)*
eligibility year
years of substantial earnings20 or less 21 22 23 24 25 26 27 28 29 30
Consult with professional advisors regarding legal, tax, and/or medical matters; LACERA does not offer legal, tax, or medical advice.
*Important: The maximum amount may be overstated. The WEP reduction is limited to one-half of your pension from non-covered employment.
Windfall eliMination Provision
your social security retirement or disability benefits may be reducedIfyouworkforanemployerwhodoesnotwithholdSocialSecuritytaxesfromyoursalary,suchasagovernmentagencyoranemployerinanothercountry,thepensionyougetbasedonthatworkmayreduceyourSocialSecuritybenefits.
When your benefits may be affectedTheWindfallEliminationProvisionprimarilyaffectsyouifyouearnedapensioninanyjobwhereyoudidnotpaySocialSecuritytaxesandyoualsoworkedinotherjobslongenoughtoqualifyforaSocialSecurityretirementordisabilitybenefit.
Why a different formula is usedSocialSecuritybenefitsareintendedtoreplaceonlyapercentageofaworker’spre-retirementearnings.ThewaySocialSecuritybenefitamountsarefigured,lower-paidworkersgetahigherreturnthanhighlypaidworkers.Forexample,lower-paidworkerscouldgetaSocialSecuritybenefitthatequalsabout55percentoftheirpre-retirementearnings.Theaveragereplacementrateforhighlypaidworkersisabout25percent.
how does it work?SocialSecuritybenefitsarebasedontheworker’saveragemonthlyearningsadjustedforinflation.Weseparateyouraverageearningsintothreeamountsandmultiplytheamountsusingthreefactors.Forexample,foraworkerwhoturns62in2011,thefirst$749ofaveragemonthlyearningsismultipliedby90percent;thenext$3,768by32percent;andtheremainderby15percent.Thesumofthethreeamountsequalsthetotalmonthlypaymentamount.
The90percentfactorisreducedinthemodifiedformulaandphasedinforworkerswhoreachedage62orbecamedisabledbetween1986and1989.Forthosewhoreach62orbecamedisabledin1990orlater,the90percent factor is reduced to 40 percent.
TheWindfallEliminationProvisiondoesnotapplytosurvivorsbenefits.However,benefitsmaybereducedforwidowsorwidowersbecauseofanotherprovisionofthelaw.AskforGovernmentPensionOffset(PublicationNo.05-10007). ... and a guaranteeIfyougetarelativelylowpension,youareprotected.ThereductioninyourSocialSecuritybenefitcannotbemorethanone-halfoftheamountofyourpensionthatisbasedonearningsafter1956onwhichyoudidnotpaySocialSecuritytaxes. contacting social securityOurwebsiteisavaluableresourceforinformationaboutallofSocialSecurity’sprograms.Thereareanumberofthingsyoucandoonline.
Consult with professional advisors regarding legal, tax, and/or medical matters; LACERA does not offer legal, tax, or medical advice.
This material was created by the Social Security Administration (SSA) and is reprinted from socialsecurity.gov for the convenience of LACERA members. LACERA does not administrate the Windfall Elimination Provision.
For questions, call SSA at 1-800-772-1213.
LACERA • Los Angeles County Employees Retirement Association
UnmodifiedThe Unmodified Option is the most popular, since it offers the highest possible benefit over your lifetime. Itpaysyouthefullamountofthemonthlybenefittowhichyouareentitledbasedonyourageatretirement,amountofservicecredit,andfinalcompensation.(TheUnmodifiedOptionexhauststhecontributionsofacontributorymemberratherquickly,butstillprovidesalifelongallowance.)UnderthisOption,if your eligible surviving spouse or domestic partner or minor child dies before you, youmaychangeyourbeneficiaryafterretirement.*However,uponyourdeath,yournewbeneficiarywouldonlyreceivea$5,000lump-sumdeath/burialbenefit,alongwithanyremainingportionofyouraccumulatedcontributions.(Youmaynameadifferentbeneficiarytoreceivethe$5,000lump-sumdeath/burialbenefit.SeeDeath/BurialBenefitsectionfordetails.)
Unmodified+PlusThisOptionlimitsthepaymentofacontinuingallowancetoaneligiblespouse,domesticpartner,orminorchild(ren).Survivorpaymentsstopuponthedeathofyoursurvivor.Youcannotchangeyourbeneficiaryafterretirement. If your beneficiary dies before you,thereductiontoyourretirementallowanceremainsineffect.
Plan A, B, C, or DUnder this customizable Option, you can designate the percentage of your monthly allowance — between 66 and 100 percent — that your eligible surviving spouse, domestic partner, or minor child(ren) will receive upon your death.*Tofundyoursurvivor’sallowance,yourmonthlyallowanceisreducedduringyourlifetime.Thereductioniscalculatedusinganactuarialequivalenttocoverthecostdifferencebetween66and100percent.Thereisnolump-sumdistributionofanyremainingcontributionsprovided to your survivor.
Plan E UnderUnmodified+PlusinPlanE,youcandesignateyoursurvivortoreceivebetween56and100percentofyourmonthlyallowance.Thereductiontoyourallowanceduringyourlifetimeiscalculatedtocoverthecostdifferencebetween56and100percent.
Other Retirement OptionsYoumaycustomizeyourretirementallowancebyelectingoneofthenumberedRetirementOptions:Option1(notavailableunderPlanE),2,3,or4.TheseOptionsallowyoutoreduceyourretirementallowanceduringyourlifetimetoprovidecontinuingsurvivorbenefitstooneormorenamedbeneficiariesuponyour
*Minor child eligibility applies only in situations where there is no surviving spouse or domestic partner; additional restrictions apply.
Option 1: Thisisalump-sum benefit underwhichyoureceiveaslightlyreducedUnmodifiedRetirementAllowanceduringyourlifetime.Ifyoudiebeforereceivingthecontributionsyoupaidintothefund,thebalanceofyouraccumulatedcontributionsispaidinalumpsumtoyournamedbeneficiaryorestate.(Onaverage,contributionsaredepletedover7-10years.)OnlyOption1allowsfullflexibilitytochangeyourbeneficiarydesignationafteryouretire.ThisoptionisnotavailabletoPlanEmembers.If your beneficiary dies before you,thereductiontoyourretirementallowanceremainsineffect.However,youmaynameanotherbeneficiarytoreceivetheOption1lump-sumpayment.Thisoptiondoes not provide a continuing survivor allowance.
Option 2: IfyouelectOption2, you will receive a reduced Unmodified Retirement Allowance during your lifetime.Thereductionwillbecalculatedbasedonyourageatretirementandtheageofyourbeneficiary.Uponyourdeath,yournamedbeneficiarywillreceive100percentofyourreducedallowance. If your beneficiary dies before you,thereductiontoyourretirementallowanceremainsineffect.Youcannotnameanotherbeneficiarytoreceivethepreviousbeneficiary’sportionofyourmonthlyallowance.
Option 3:ThisOptionpays you a reduced Unmodified Retirement Allowance during your lifetime; upon yourdeathyour named beneficiary receives 50 percent of your reduced allowance as a monthly continuance. Bothyourageatretirementandtheageofyourbeneficiaryareusedtocalculatetheamount of your reduced allowance.If your beneficiary dies before you, thereductiontoyourretirementallowanceremainsineffect.Youcannotnameanotherbeneficiarytoreceivethepreviousbeneficiary’sportionofyourmonthlyallowance.
Option 4: PerhapsthemostflexibleoftheRetirementOptions,Option4allows you to name one or more beneficiaries to receive a fixed percentage of the reduced Unmodified Retirement Allowance youreceiveduringyourlifetime.Ifyouprefer,youmaydesignateasetdollaramount,ratherthanafixedpercentage,asamonthlycontinuanceforoneormoreofyourbeneficiaries.Thereductiontoyourallowanceiscalculatedusingyourageatretirementandtheageofyourbeneficiaries.If one of your beneficiaries dies before you,thereductiontoyourretirementallowanceremainsineffect. You cannotnameanotherbeneficiarytoreceivethepreviousbeneficiary’sportionofyourmonthlyallowance.
*Person with Insurable Interest:According to California law, every person has an insurable interest in the life and health of:
• Himself [herself] • Any person on whom he [or she] depends wholly or in part for education or support• Any person under a legal obligation to him [her] for:
• payment of money • property or services of which death or illness might delay or prevent the performance
• Any person upon whose life any estate or interest vested in him [her] depends
Required Documents You Must SubmitWhen you apply for retirement, you must submit your completed:
•Your original certifiedmarriagecertificateorCertificateofRegisteredDomesticPartnership•Yourbeneficiary’soriginal certifiedbirthcertificate(forUnmodified+PlusorOptions2,3,or4)•Yourdependentchild’soriginal certifiedbirthcertificateifhe/shewillbecoveredunderyourLACERA-administeredhealthinsurance
Changing Your Mind after RetirementIfyouwishtochangeyourRetirementOption,youmaydosobeforeyourfirstretirementcheckhasbeenpaid.Atimelyrequestmustbemadeinwriting.Thereafter,youwillnotbeabletochangeyourRetirementOption.
Important Note:ToelectthePensionAdvanceOption,youmustpresentyourSocialSecurityStatementwhenyouretire.DuetodifferencesbetweenestimatedandactualSocialSecuritybenefitamountsandotherreductionsthatmayapplyunderfederallaw,the combined income members receive under this option is often less than they received prior to age 62.
Eligibility Requirements for Pension Advance Option•Serviceretirementpriortoage62•SubmitaSocialSecuritystatementofbenefitstoverifyeligibility•Electoneofthefollowing:
•UnmodifiedOption•Option1
If you are considering the Pension Advance Option, we recommend you call 1-800-786-6464 to consult with a LACERA Retirement Benefits Specialist prior to making your decision.
Consult with professional advisors regarding legal, tax, and/or medical matters; LACERA does not offer legal, tax, or medical advice.
$3,500
$3,300
$3,000
$2,800
$2,500
62
AGE
BEN
EFIT
PENSION ADVANCE OPTION
Unmodified Option = $3,000 Pension Advance before age 62 = $3,300Pension Advance after age 62 = $2,800SocialSecurityatage62=$500
UnmodifiedOption
PensionAdvance $2,800+$500=$3,300
$3,000+$500=$3,500
year substantial earnings1937-54 $ 900
1955-58 1,050
1959-65 1,200
1966-67 1,650
1968-71 1,950
1972 2,250
1973 2,700
1974 3,300
1975 3,525
1976 3,825
1977 4,125
1978 4,425
1979 4,725
1980 5,100
1981 5,550
1982 6,075
1983 6,675
1984 7,050
1985 7,425
1986 7,875
1987 8,175
1988 8,400
1989 8,925
1990 9,525
1991 9,900
1992 10,350
1993 10,725
1994 11,250
1995 11,325
year substantial earnings1996 11,625
1997 12,150
1998 12,675
1999 13,425
2000 14,175
2001 14,925
2002 15,750
2003 16,125
2004 16,275
2005 16,725
2006 17,475
2007 18,150
2008 18,975
2009 - 2011 19,800
Source: http://www.socialsecurity.gov/pubs/10045.html. Reflects latest figures available as of December 27, 2011.