Retirement Ready Webinar Series, Pt. 3 December 14, 2017

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Retirement Ready Webinar Series, Part 2 The following topics were discussed yesterday: Purchases & transfers of service credit Retirement Options Leave credit Types of retirement offered Deferred Retirement Option Plan (DROP) Initial Lump-Sum Benefit (ILSB) Other TRSL benefits *Recording will be available online at www.TRSL.org.

Today’s Agenda The retirement application process How TRSL pays your benefits Documentation needed Community property Tax liabilities Returning to work in TRSL-covered positions TRSL and Social Security

How do I apply to retire? There are two ways you can apply for retirement: Apply online through your Member Access account at www.trsl.org/memberaccess Submit the following forms: Application for Service Retirement, ILSB, or DROP (Form 11) Direct Deposit of Benefits (Form 15D) NOTE: Members applying for DROP do not submit the Form 15D at time of entering DROP.

How do I apply to retire? You can submit your retirement application as early as six months before your desired date of retirement or DROP beginning date: You will need to complete all purchases, transfers, and/or reciprocals of service credit before the effective date of retirement or entering DROP. You will also need to submit all required identification documents.

How do I apply to retire? TRSL recommends you coordinate your retirement or DROP beginning date with your employer. Your employer will verify your service credit and sick leave. Some information cannot be submitted by your employer until after your last day of work. Your retirement can only be canceled if a benefit payment has not been negotiated (includes direct deposit).

Applying through Member Access Select “Apply for Retirement” from the “My Retirement” drop-down menu.

Applying through Member Access Information for you and your spouse will automatically load from your account, but you will be able to make changes, if necessary.

The estimated affidavit This is where you choose your retirement option. The affidavit must be notarized and have no alterations. If retiring under Service or ILSB, return within 30 days of receipt. If entering DROP, return within 90 days of receipt. TEACHER, IMA

How TRSL pays your benefits Benefits for a month are paid on the first of that month. Your first benefit payment will be a paper check; subsequent payments will be direct deposited. For Service and ILSB there is a 30-day waiting period. This period begins on your retirement date. However, we must have your estimated affidavit as well as your direct deposit form to determine your benefit. You will receive estimated benefits as first payments. This partial benefit will continue monthly until TRSL finalizes your benefit. (For DROP participants: The estimated benefit is your DROP deposit amount plus your after-DROP estimated benefit, if applicable.)

How TRSL pays your benefits You will receive a retroactive payment once your final benefit is calculated. “Retro” payments include difference between your estimated checks and your final monthly benefit. Your final benefit calculation will include any remaining sick leave that converts to service credit.

Things to do now Register for Member Access. Submit copies of important documents: Social security cards (member and beneficiary/ies) Birth certificates (member and beneficiary) Legal documents (including divorce decrees, judgment of separation, and/or community property settlements) Update address. Update beneficiary/ies. Get a retirement estimate… use Member Access or submit Form 10

Community property Most payments or benefits received from TRSL are considered community property: Regular retirement benefits Refunds or contributions DROP or ILSB withdrawals Death benefits The court system ultimately determines which funds or payments are considered community property. TRSL will not pay benefits to an ex-spouse without court documentation.

IRS Tax liabilities Your retirement benefit: Exempt from Louisiana state income tax (not automatic, must file to receive exemption) Subject to federal income tax DROP withdrawals paid directly by TRSL: May be subject to federal mandatory tax withholding

Returning to work after retirement After retirement, you can return to work in a position eligible for TRSL membership. The return-to-work laws do not prohibit you from returning to work. If you are rehired in a position eligible for TRSL membership, the laws do specify what will happen to your TRSL retirement benefits and whether TRSL contributions are due. If you are rehired in a position not eligible for TRSL membership, you are not subject to any TRSL return-to-work laws.

Retired teacher vs. Retired member If you are rehired in a position eligible for TRSL membership, you will be classified in one of the following categories: “Retired Teacher” “Retired Member” Pays contributions to TRSL Receive a monthly benefit after fulfilling applicable waiting period* Does not pay contributions to TRSL Does not receive monthly benefit during period of re-employment *All retirees returning to work are subject to a 12- or 36-month waiting period, as applicable, which starts on the date of retirement and continues for the duration of re-employment or the lapse of the waiting period, whichever occurs first.

Recent changes to RTW law Required waiting period: Criteria for 12 months & 36 months 12 months Individuals who retired before July 1, 2017 Individuals who retired on or after July 1, 2017 and have advanced degrees in speech therapy, speech pathology, or audiology Individuals who retired on or after July 1, 2017 and whose retirement benefit was not actuarially reduced or was not calculated at an accrual rate of less than 2.5% 36  months Individuals who retired on or after July 1, 2017 and whose retirement benefit was actuarially reduced or was calculated at an accrual rate of less than 2.5%. Plan B members who retire on or after July 1, 2017. New This chart is a visual representation of the 12 month & 36 month required waiting period. (go to slide) If retiree returns before the end of the 12 or 36-month waiting period, TRSL will suspend the benefit for the duration of the employment or the lapse of the 12 or 36-month waiting period, whichever occurs first.

TRSL and Social Security Louisiana does not pay into Social Security for the majority of its public employees. However, you may still be eligible for Social Security through other employment or through your spouse’s employment. The type of Social Security benefit you are eligible for determines which offset provision applies to you. Your TRSL benefit is not reduced.

Social Security benefits Spouse’s or widow(er)’s benefit: Paid to spouses or surviving spouses who did not work long enough to earn their own SS benefit or whose earned benefit is less than the pensioner’s benefit Earned benefit: Paid to individuals who worked at other jobs, paying SS taxes long enough to earn a SS benefit

Offset Provisions Government Pension Offset (GPO) – 1982 Windfall Elimination Provision (WEP) – 1985

Government Pension Offset (GPO) Social Security benefits are reduced by two-thirds of your government pension (TRSL benefit). The law requires that a person’s benefit as a spouse or widow/widower be offset dollar for dollar by the amount of his/her own retirement benefit.

Exceptions to GPO offset: GPO does not affect you if you meet one of the following exceptions: Were eligible to retire from your non-covered employment on or before November 30, 1982. Were eligible to retire from your TRSL-covered employment before July 1, 1983 and you were receiving 50% of your support from your spouse at that time. Are a member of TRSL Plan B (school food service workers who also pay SS taxes). You withdrew your contributions to TRSL.

GPO example (total offset) EXAMPLE: Your spouse’s Social Security (SS) benefit is $1,200. Before GPO Offset After GPO Offset Your TRSL benefit $ 900 Your SS spousal pension $ 600 Your TOTAL SS & TRSL benefit $1,500 Your TRSL benefit $ 900 Your SS spousal pension $ 600 GPO offset: 2/3 of TRSL benefit - $ 600 Your SS spousal pension after GPO offset Your TOTAL SS & TRSL benefit (TRSL only) $ 900

GPO example (partial offset) EXAMPLE: Your spouse’s Social Security (SS) benefit is $1,200. Before GPO Offset After GPO Offset Your TRSL benefit $ 600 Your SS spousal pension Your TOTAL SS & TRSL benefit $1,200 Your TRSL benefit $ 600 Your SS spousal pension GPO offset: 2/3 of TRSL benefit - $ 400 Your SS spousal pension after GPO offset $ 200 Your TOTAL SS & TRSL benefit ($200 SS + $600 TRSL) $ 800

Windfall Elimination Provision (WEP) Reduces your own SS benefit if you receive a government pension Uses a modified formula to compute SS benefit, based on average monthly earnings adjusted for inflation Does not entirely eliminate SS benefit

Exceptions to WEP offset: WEP does not affect you if you meet one of the following exceptions: Have at least 30 full years of “substantial” earnings in a job where you paid Social Security taxes. Were eligible to retire from your TRSL-covered employment by December 31, 1985. Were age 62 or acquired a disability before 1986. Are a member of TRSL Plan B (school food service workers who also pay SS taxes).

WEP substantial earnings Years Substantial earnings 1937-1954 $ 900 1955-1958 $ 1,050 1959-1965 $ 1,200 1966-1967 $ 1,650 1968-1971 $ 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 $ 5,500 1982 $ 6,075 1983 $ 6,675 Years Substantial earnings 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 1996 $ 11,625 1997 $ 12,150 1998 $ 12,675 1999 $ 13,425 2000 $ 14,175 Years Substantial earnings 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 $ 19,000 2012 $ 20,475 2013 $ 21,075 2014 $ 21,750 2015 $ 22,050 2016 2017 $ 23,625

Formula for determining WEP WEP formula First $885* of earnings is multiplied by a factor between 40% to 90%. (Percentage depends on the number of years of substantial earnings.) Next, up to $5,336* of earnings is multiplied by 32%. Finally, the remainder is multiplied by 15%. * Dollar amounts are subject to change each year. Important: The WEP reduction is limited to ½ of your TRSL monthly benefit.

Determination of percentage Years of substantial earnings Percentage 30 or more 90% 29 85% 28 80% 27 75% 26 70% 25 65% 24 60% 23 55% 22 50% 21 45% 20 or fewer 40%

$1,000 monthly average Social Security benefit WEP example $1,000 monthly average Social Security benefit Social Security with government pension $885 × 40% = $354 $115 × 32% = $36.80 SS pension = $390.80 39% of benefit Important: The WEP reduction is limited to ½ of your TRSL monthly benefit.

TRSL & Social Security YES, it’s possible to draw both TRSL and Social Security in retirement. The provisions of the Social Security Administration reduce the benefits provided by SS. TRSL benefits are not reduced. For detailed information about your Social Security benefit, please contact the Social Security Administration. Website: www.ssa.gov Toll-free: 1-800-772-1213 (Mon - Fri, 7 am - 7 pm) Contact your nearest SS office

Summary TRSL recommends you coordinate your retirement or DROP beginning date with your employer. You can submit your retirement application as early as six months before your desired date of retirement or DROP beginning date. If you return to work in a TRSL-covered position, you are subject to TRSL return-to-work laws. If you are rehired in a position not eligible for TRSL membership, you are not subject to any TRSL return-to-work laws. Since Louisiana does not pay into SS for the majority of its public employees, your SS benefit may be reduced upon your TRSL retirement. Your TRSL benefit will not be reduced.

Online access to your TRSL account Member Access is a secure website where you have all the tools you need to plan for retirement: View service credit, contributions and beneficiary designations Create a benefit estimate Update your name or address Apply for retirement Create your account today!

www.TRSL.org Find it online… Forms Brochures Newsletters & More!

Things to do now Register for Member Access. Submit copies of important documents: Social security cards (member and beneficiary/ies) Birth certificates (member and beneficiary) Legal documents (including divorce decrees, judgment of separation, and/or community property settlements) Update address. Update beneficiary/ies. Get a retirement estimate… submit Form 10 or on Member Access

Questions?

We are here for you! Local phone:(225) 925-6446 Toll free (outside Baton Rouge): 1-877-ASK-TRSL (1-877-275-8775) Website: www.TRSL.org Email: web.master@trsl.org Like us on Facebook! Follow us on Twitter!