RETIREMENT PLANNING 2017 RETIREMENT PLANNING 2011 Mary Kay Sankey Staff Benefits Manager UW-Stout Human Resources _______________________________________________________________ University of Wisconsin-Stout

OBJECTIVES WRS Information/Tools & Resources WRS Annual Statement of Benefits WRS Calculation Methods WRS Estimate Calculator Demo WRS Annuity Options Sick Leave Conversion Post-Retirement Insurance TSA/DC Retirement Process Timelines Answer Questions

ETF WEBSITE/RESOURCES http://etf.wi.gov Road to Retirement Online Video Appointment (same info members seek from an in-person explanation of retirement materials) Applying for Your Retirement Benefit Calculating Your Retirement Benefits Choosing an Annuity Option How to Retire Information for Retirees How Variable Participation in the Variable Trust Affects your WRS Benefits Buying Creditable Service How Part-Time Employment Affects your WRS Benefits Tax Liability on WRS Benefits Additional Contributions Military Service

WRS BENEFITS Retirement Benefit (Vesting Requirement after 7/1/2011) Separation Benefit (not vested or requesting benefit prior to age 55, 50 if Protective category) Disability Benefits Death Benefit Active In-Active HUGE difference

BENEFICIARY DESIGNATION Not paid according to will WRS and State Group Life Death Benefits are always paid according to the most recent Beneficiary Designation on file with ETF There are separate beneficiary forms for each UW Life Insurance plan, your TSA & WDC If no designation is on file there is a Statutory Standard Sequence that applies Beneficiary forms available online MAKE SURE YOUR BENEFICIARY DESIGNATIONS ARE ALWAYS UP-TO-DATE

FURLOUGH WRS Benefits were NOT impacted by Furlough! 2009 Wisconsin Act 28 required employers to report your salary, retirement contributions and creditable service as if the furlough did not occur

WRS ANNUAL STATEMENT of Benefits Dated January 1 of each year, normally available in UW Portal (Benefit Information Section, Statements tab) mid-late April Verify account information: Service Salary WRS Beneficiary(ies)/Death Benefit Info Report Discrepancies to Employer/AskHR Use information for calculating WRS estimates

WHEN CAN I RETIRE? A retirement benefit is available to vested * WRS employees after you terminate employment and have reached age 55 (50 for participants with some protective category service). Retirement benefits are based on both employee and employer contributions, and are usually paid as a monthly annuity payable to you for LIFE. Participants who first began WRS employment after 1989 and terminated employment before April 24, 1998 must have some WRS creditable service in five calendar years. Participants who first began WRS employment on or after July 1, 2011 must have five years of WRS creditable service Participants who are not vested may only receive a separation benefit

WHAT IS AN ANNUITY? An annuity is a Wisconsin Retirement System (WRS) benefit paid monthly A person who receives a monthly benefit is called an Annuitant WRS annuities are paid to participants for LIFE* *except for an Additional Contributions annuity certain

( 2017 Amounts - indexed annually) ANNUITY THRESHOLDS Lump Sum Payment: Less than $196 per month Lump Sum or Annuity: $195 - $400 per month Annuity Only: $401 and over per month ( 2017 Amounts - indexed annually) Note: If you select a lump sum payment, any Additional Contributions will be included in your payment.

TWO CALCULATION METHODS Formula Calculation Money Purchase Calculation Interest Crediting has MAJOR Impact You are automatically paid under the calculation method that provides the largest monthly annuity

FORMULA CALCULATION Final Average Salary (monthly average of 3 highest years -- calendar year for University Staff, fiscal year for FASLI employees) X Formula Factor(s): Pre-2000 Service Post-1999 Service General: .01765 .016 Protective: .02165 .020 X WRS Creditable Service X Age Reduction Factor, if applicable = Monthly “Annuitant’s Life Only” Amount (Max = 70% of FAS, general/65% FAS, protective) Amount then Adjusted for Variable Participation

NO AGE REDUCTION/ FULL RETIREMENT BENEFIT Age 57 (or older) with 30 years of WRS creditable service OR Age 65 Applies to formula calculation only!

AGE REDUCTION FACTOR Based on Age and WRS Creditable Service Age 55 with 10 years of service…….64.8% Age 55 with 25 years of service……84.0% Age 55 with 30 years of service…….90.4% Age 57 with 10 years of service……..74.4% Age 57 with 25 years of service……..95.2% Age 57 with 30 years of service……..100%

WAYS TO INCREASE CREDITABLE SERVICE Military Service Credit -- need DD-214 (one year of WRS service for each 5 years of active military prior to 1974/max = 4 yrs) Purchase Forfeited Service (termed and withdrew $) Forfeited Service Calculator Available on ETF website Purchase Qualifying Service: University Staff employees who began WRS employment prior to 1973, first six months was not under WRS Purchase other government service – very costly Work longer

MONEY PURCHASE CALCULATION Total WRS Account Value X Money Purchase Factor (Actuarial Factor based on Age) No Limits on Monthly Amount - Interest Crediting Major Impact 2016 Effective Interest Rates: 7.9% Core, 10.0% Variable

CHOOSING AN ANNUITY OPTION Seven options available (and Accelerated if under age 62) All options are payable for your LIFETIME The option you select determines the death benefit available, if any The different options are designed to accommodate individual needs/situations

ANNUITY OPTIONS Annuitants Life Only Life Annuity – 60 Payments Guaranteed Life Annuity – 180 Payments Guaranteed Joint Survivor Annuity Continued at 75% (pop-up) Joint Survivor Annuity Continued at 100% (pop-up) Joint Survivor Annuity Payments Reduced 25% Joint Survivor Annuity 100%, Combined with 180 Payments Guaranteed Important to know the Difference between Beneficiary and Named Survivor

ACCELERATED PAYMENTS Available if under age 62 WRS pays a higher amount prior to age 62 WRS reduces at age 62 automatically Social Security available at age 62 -- if/when electing to begin SS payments, you apply directly with SSA Allows more level retirement income Accelerated Payment Calculator on ETF Website

CONSIDERTIONS WHEN CHOOSING ANNUITY OPTION Do you need to provide for a beneficiary(ies) or survivor? Names Survivor’s Age Life Expectancy – yours and your Named Survivor or beneficiary(ies) Retirement Income Investments, other pensions Other Work Social Security Taxes Life Insurance Your Assets/Liabilities

TIMING OF RETIREMENT You can retire anytime Consider which Calculation method is higher and what is projected interest crediting? Most FASLI Retire end of May (AY) or July (Annual). Most University Staff in January. If formula calculation is higher Last fiscal year is usually highest earnings period Paid holiday(s) – July 4, Annual AS/LI Dec/Jan Holidays University Staff Personal Holidays not Pro-Rated Paid leave (other than sick leave) earned is paid out as lump-sum, with approval can be used to extend retire date Vacation is given up front but prorated based on retire date State Adjusted Continuous Service Date/Max SL Match Benefits paid through month of last day on payroll

PAID LEAVE Personal Holidays are not pro-rated Vacation is given up front in assuming you will work the entire calendar or fiscal year. If you retire prior to the end of the calendar year (University Staff) or fiscal year (Annual AS/LI) vacation is pro-rated FASLI: Jen Schermitzler, schermitzlerj@uwstout.edu All FASLI leave reports must be in to certify sick leave and payout any used leave University Staff: Annette Koleno, kolenoa@uwstout.edu

TAXES/NET MONTHLY ANNUITY Taxable Benefit -- almost entire Annuity Amount Investment In Contract = Part You Paid - Section 3 Annual Statement is the Non-taxable portion Indicate Withholding on Retirement Application State Taxes based on State of Residency Not subject to Social Security/Medicare Taxes State Group Life Premium EE coverage, if 65 or under Health Insurance Premium – No ER Contribution, sick leave or directly from annuity check, if large enough

WILL MY RETIREMENT BENEFIT AMOUNT CHANGE? CORE Core dividend applied on each year on May 1st- pro-rated first year Can increase or decrease but will not decrease less than original CORE benefit amount VARIABLE Variable adjustment is applied to the variable portion each year on May 1 Can increase or decrease – more volatile – no guarantee on variable If increase based on dividend assessment is less than 1%, no dividends are assessed.

ANNUITY ADJUSTMENTS 2009-2016 YEAR CORE VARIABLE 2016 2.0% 4.0% 2015 .5% -5.0% (Loss) 2014 2.9% 2013 4.7% 25.0% 2012 -9.6% (Loss) 9.0% 2011 -7.0% (Loss) 2010 -1.2% (Loss) 11.0% 2009 -1.3% (Loss) 22.0% 2008 -2.1% (Loss) -42.0% (Loss)

CAN I ENROLL IN VARIABLE ? Complete an Election to Participate in the Variable Trust Fund form (ET-2356) Form available in Human Resources or on web Effective January 1, following ETF’s receipt of form Participants in variable have 50% of future WRS contributions deposited in the Variable Fund 50% of contributions will continue to be deposited in the Core Fund

CAN I CANCEL VARIABLE PARTICIPATION? Complete an Election to Cancel Variable Participation form (ET-2313) Form available in HR or ETF website Choose how you would like to opt out Conditionally Unconditionally Never allowed to opt back in to Variable

CALCULATE YOUR RETIREMENT BENEFIT Calculate your WRS Benefit on the ETF website: http://etf.wi.gov/ Click on the “Calculators” button on the toolbar on the left (WRS, Variable Excess/Deficiency, Forfeited Service, Accelerated Payment, Link to SSA) WRS Calculator Demonstration

Disability Benefits Two different types of disability plans available based on WRS begin date Must meet creditable service requirements Must be totally and permanently disabled Must not have reached normal retirement age Must not be gainfully employed 2 Physicians must certify total disability Contact HR or ETF with Questions

BENEFITS UPON RETIREMENT Insurance benefits through active employment end the end of the month in which retirement occurs Retirees receive a letter from HR advising of options for continuation/conversion along with the appropriate paperwork for the continuation/conversion HR completes Accumulated Leave Certification FASLI employees make sure all leave reports have been completed Review MyUW Portal information and save or print documents you wish to keep, no access after retired

HEALTH INSURANCE Retiree pays full premium cost Converted Sick Leave Credits pay premiums until exhausted available to spouse/DP/dependent child(ren) upon death of annuitant if family plan is in effect Can be escrowed if you have comparable coverage After credits are exhausted, premium taken from annuity check if large enough, otherwise health plan bills retiree –CANCEL coverage if you don’t want it to continue Annual It’s Your Choice Open Enrollment Opportunity Premium reduces when retiree/spouse/DP are eligible for Medicare, age 65 or disability. Must apply for Medicare B when first eligible if retired Change Plans - move from area 3 or more months

SICK LEAVE CONVERSION Highest Rate X Hours of Sick Leave including supplemental hours, if eligible UW System Sick Leave Calculator: https://www.wisconsin.edu/ohrwd/benefits/sle/

SUPPLEMENTAL SICK LEAVE Must have 15 years of State Adjusted Continuous Service Will match up to 52 hours for each year, 1– 24 Will match up to 104 hours for each year 25 + 500 hours restored for catastrophic illness If 500 hours are used within 3 years of retirement for one catastrophic illness Restored hours are not matched Sick Leave Conversion Credit Program Brochure: http://etf.wi.gov/publications/et4132.pdf

SUPPLEMENTAL SL MAX MATCH Full Years of STATE Adjusted Continuous Service Maximum Match 15 years 780 hours 20 years 1040 hours 24 years 1248 hours 25 years 1352 hours 30 years 1872 hours

STATE GROUP LIFE INSURANCE (WI Public Employers Group Life, Securian) Will automatically continue upon retirement if retiree was covered under WRS prior to 1/1/1990 or were covered by SGL in at least 5 calendar years after 1989 and are eligible for an immediate annuity, premium taken from retirement check No premium after age 65 if retired Death benefit decreases 75% of Basic Coverage while age 65 50% of Basic Coverage age 66 and older Possible to convert to pay health insurance premiums and long-term care premiums after age 66, if sick leave credits are exhausted. Accelerated Death Benefit.

OTHER BENEFITS SGL Spouse and Dependent Can be converted - substantial premium increase Income Continuation Ins Coverage ends on retirement date Flexible Spending Accounts Make arrangements for year of retirement. Cannot be taken from annuity checks. Health Savings Account Contributions end, service fee $3 per month Individual & Family Life Ins Can convert to individual policy – substantial premium increase AD& D Continue at group rates, coverage decreases on sliding scale at 70 UW Employees Inc. Can convert to individual policy - substantial premium increase UIA Life Ins – FASLI Only Can continue at group rate, plus $2 administrative service fee Dental Wisconsin Can continue at group rates EPIC Benefits+ Can continue at retiree group rate VSP Vision Insurance

BENEFICIARY DESIGNATION(S) ALWAYS KEEP BENEFICIARY DESIGNATIONS UP-TO-DATE Wisconsin Retirement System Life Insurance Plans (different forms for each plan) TSA/DC

EMPLOYMENT AFTER RETIREMENT Must be a good faith termination WI Act 20 effective for employees with termination date July 1, 2013 and after: May return to employment after a 75-day break in Service Automatic Suspension of annuity upon returning to work for a WRS participating employer in which the participant is expected to work at least two-thirds of full-time UW-Stout has Annuitant Administrative Procedure 037 – Post Retirement Employment May work for another employer -- Will not affect your WRS annuity May affect your social security These laws/procedures may change! No Benefits as Re-hired Annuitant, except FSA and TSA/DC

TSA/DC If retired, disbursements may begin at age 55 Disbursements may be delayed, but no later than age 70-1/2 Tax-Deferred Disbursements are fully taxable Contact your TSA Company or DC for more information and options Can enroll anytime while actively employed

2017 TSA/DC Limits (Separate Limits) ANNUAL MAXIMUM AGE 50 AND OVER MAXIMUM TRUE CATCH UP (based on UW service/contributions) $18,000 $24,000 $3,000 more

WHAT NEXT? Plan for Retirement Ask questions, keep informed Sources of additional information: Human Resources Department of Employee Trust Funds Social Security Administration Financial Advisor/Accountant/Attorney All inquires are CONFIDENTIAL

WHAT NEXT, (Continued) Order WRS estimates 6-12 months before expected retirement date, under no obligation to retire (Form on HR website or contact ETF) Retirement Paperwork can be mailed back to ETF 90 days prior to actual retirement date Formal resignation letter must be turned Two week notice is required, department would like as much notice as possible Check with Social Security Always keep Beneficiary(ies) Designations Up-to-Date

RETIREMENT PAYMENTS Paid on 1st of Month for prior month (paid June 1 for May) Receive payment mailer showing earnings Last Month, This Month, Next Month Once amounts are the same you will not receive mailer until there is a change Paid on Estimated basis for 6-12 Months, will receive notification of Final Calculation (retro adjustment) Direct Deposit Required Currently no WRS payment information available online

HELP UW-Stout, Human Resources Department of Employee Trust Funds Mary Kay Sankey, Staff Benefits Manager sankeym@uwstout.edu (715) 232-2439 Department of Employee Trust Funds Toll free: (877)533-5020 website: http://etf.wi.gov Social Security Administration Toll-Free: (800)772-1213 website: www.ssa.gov

INFORMATIONAL BROCHURES Additional Contributions http://etf.wi.gov/publications/et2123.pdf Applying for Your Retirement Benefit http://etf.wi.gov/publications/et4106.pdf Buying Creditable Service http://etf.wi.gov/publications/et4121.pdf Calculating Your Retirement Benefit http://etf.wi.gov/publications/et4107.pdf

INFORMATIONAL BROCHURES, CONT Choosing an Annuity Option http://etf.wi.gov/publications/et4117.pdf How Divorce Can Affect your WRS Benefits http://etf.wi.gov/publications/et4925.pdf How Participation in the Variable Trust Fund Affects Your WRS Benefits http://etf.wi.gov/publications/et4930.pdf

INFORMATIONAL BROCHURES CONT Information for Retirees http://etf.wi.gov/publications/et4116.pdf Military Service Credit http://etf.wi.gov/publications/et4122.htm Sick Leave Conversion Credit Program http://etf.wi.gov/publications/et4132.pdf Tax Liability on WRS Benefits http://etf.wi.gov/publications/et4125.pdf

INFORMATIONAL BROCHURES CONT 1985-2014 WRS Credited Effective Rates & Corresponding Dividends/Adjustments http://www.swib.state.wi.us/returns_history.pdf Tax Sheltered Annuity 403(b) Program http://www.uwsa.edu/ohrwd/benefits/ret/tsa/ Wisconsin Deferred Compensation http://www.uwsa.edu/ohrwd/benefits/ret/wdc/

BENEFICIARY FORMS WRS & State Group Life (WI Public Employers Group Life) http://etf.wi.gov/publications/et2320.pdf WRS Alternate Beneficiary Form Accidental Death & Dismemberment http://www.uwsa.edu/ohrwd/benefits/life/add/bendes.pdf EPIC http://www.uwsa.edu/ohrwd/benefits/med/epic/ Individual & Family Group Life http://www.uwsa.edu/ohrwd/benefits/life/if/bendes.pdf UW Employee’s Inc http://www.uwsa.edu/ohrwd/benefits/life/uwei/ University Insurance Association (UIA) FASLI Only http://www.uwsa.edu/ohrwd/benefits/life/uia/bendes.pdf TSA/Deferred Comp Contact Vendor

?? QUESTIONS ?? THANK YOU!