Retirement Planning Seminar

Retirement Services Staff Adrienne Rollins, Senior Manager Sandra Brookins-Crudup, Retirement Specialist Kathy Martoi, Retirement Specialist Joanne Miller, Retirement Specialist Olga Rivera, Secretary 2

Types of Retirement Normal/Regular Retirement Irrevocable Letter of Retirement (ILR) DROP Early Retirement Disability Retirement Investment Plan Applies to anyone initially enrolled before 7/1/2011

Websites www.FRS.Myflorida.com FRS Pension Plan –create estimates DROP participants-see finalized DROP Accruals may need Personal Identification Number (PIN)-if you have not created a username & password before (it will be mailed to home address on record) www.MYFRS.com Investment Plan participants updated by State Board of Administration (SBA) Ernst & Young Financial Planners New Hire 5 month window 2nd choice election may need Personal Identification Number (PIN) www.OCPS.net go to Departments Retirement Services Current Employees access Retirement, Sick Leave Bank or TSA’s access website links for Bencor, SSA, FRS (Pension monthly estimates or Investment Plan)

Normal/Regular Retirement Normal retirement requires either - 30 years of FRS service regardless of age OR - Age 62 with at least 6 years of FRS service Irrevocable Letter of Retirement (ILR) - OCPS option only Must meet Normal/Regular retirement age - Not a DROP participant - Must establish future termination date - Maximum of 60 months or 5 years - Sick Leave sent to BENCOR while continuing to work - Continue to earn service credit and salary history

Pension Plan Basics Guaranteed lifetime monthly benefit Based on a formula Non-contributory system 1975-June 2011 Defined Benefit Plan No Risk to the Employee

Purchasing Years of Service in the Pension Plan Out-of-state & Federal Public Service Withdrawn or Refunded Service Leave of Absence Military Service OCPS pays the military leave of absence on behalf of the employee that occurred prior to 07/01/2011 If all or part of your military leave occurs on or after July 1, 2011, you must pay any required employee contributions, plus interest -Military Leave of Absence - must provide copy of leave form, orders and DD-214 upon return to OCPS

Service Credit July 1 through June 30 FY You receive service credit each month that you work/receive a check. Less than Complete Work Year 10 month employee (5/10 = .50) 12 month employee (5/12 = .42)

Value Per Year Regular Class Service SM Service 2.00% Age 62 or 30 years 1.60% Age 63 or 31 years 1.63% Age 64 or 32 years 1.65% Age 65 or 33 years 1.68% SM Service 2.00% Special Risk 3.00%

Basic Benefit Formula Average of HIGHEST five years of salary/earnings Years of Service x Value per Yr x AFC = Option 1 Annual Benefit at Normal Retirement Divided by 12= (Option 1) Monthly Benefit

Benefit Payment Options Choose an option at Retirement/DROP Entry: Option 1: No benefit after death Option 2: Up to ten years guaranteed to beneficiary Option 3: Benefit continues to joint annuitant Option 4: Reduced continuing benefit to survivor

Beneficiary Designation Option 1 or 2 Can be anyone (Spouse must sign SA-1 form) Option 3 or 4 Spouse or Joint Annuitant Everyone must have a beneficiary on file!

DROP Must be vested and reached normal retirement age or years Job Title Eligibility Administrators Must enter @ 30 yrs or Registered Nurses age 62 with 6 yrs to maximize PRE-K Paraprofessionals 60 months participation PRE-K Teachers Occupational Therapists Physical Therapists All Other Classified Exception-If you complete 30 yrs of service prior to age 57, you may defer until age 57 to complete 60 months of DROP. You must enter prior to age 58. If you are (K-12) Instructional/Paraprofessionals/School Psychologists, once you are eligible for DROP you may enter at any time

DROP (cont’d) DROP always begins the 1st of the month You have until the end of that month to begin participation in DROP Must establish future termination date Maximum of 60 months or 5 years 3% employee contribution stops upon DROP participation Retirement benefits “Banked” while continuing to work Earn 6.5% interest compounded monthly on benefits(prior to 07/01/2011) Effective 07/01/2011 DROP rate changed to 1.3% Effective 07/01/2011 COLA based on service years through 06/2011

DROP Payout Options Cash Payout – Pay taxes Rollover – Defer taxes Combination Cash Payout & Rollover You have 60 days from you retirement date to make a decision about your DROP money or the state makes a decision for you Keep your finalized DROP accruals showing your selected option. This is sent 6-8 weeks after you are in DROP from FRS We review this information during your DROP Exit meeting

Early Retirement Reduction (5% per year) based on number of months from normal retirement age of 62 Benefit reduces to zero at age 42

Disability Retirement Must have at least 8 years of service for regular disability Must be permanently/totally disabled; unable to perform work of any kind May be in-line-of-duty (ILOD) or regular Minimum guaranteed benefit 42% for ILOD 25% for regular Vesting not required for ILOD

Disability Retirement (cont’d) Requires certification by at least 2 physicians licensed in the state of Florida Needs employer statement completed by Retirement Services State makes final determination-normally 30-45 days once all paperwork has been received by FRS

FRS Website for Pension Plan Members WWW.FRS.Myflorida.com -view estimates for retiring or -view DROP estimates/finalized accruals -updated by Florida Department of Management Services

FRS Investment Plan Enrollment of school district members began effective October 2002 Defined Contribution Plan Employee assumes the risk Lump Sum pension instead of a monthly pension check

Investment Plan Basics Vested after 1 year of service Normal retirement without possible tax penalties Age 59 ½ No DROP Program Reemployment rules discussed at distribution by FRS. The 3% employee contribution continues until you retire

FRS Retirement Plan Election FRS Resources - MyFRS Financial Guidance Line -Unbiased 1-866-446-9377 Pension or Investment Plan One time 2nd Election to switch plans Must be an active employee at the time of the election and receive service credit (paycheck) during the month you make this election!

Additional Investment Plan Info… To retire with OCPS in the Investment Plan: If initially enrolled with FRS prior to 07/01/2011, then you must have 30 years of service regardless of age or have 6 years of service and at least 59 ½ years of age If initially enrolled with FRS on or after 07/01/2011, then you must have 33 years of service regardless of age or 8 years of service and at least 59 ½ years of age

Investment Plan Website www.MYFRS.com Investment Plan participants Ernst & Young free Financial Planners New Hire 5 month window info 2nd choice election may need Personal Identification Number (PIN)-this is mailed to you from Ernst & Young (if you don’t have it call 1866-446-9377) State Board of Administration (SBA)

Please visit tables during break & end Pre-Tax Retirement Savings Plans OCPS offers 9 different 403(B) & 457 companies All Pre-Tax Retirement Savings plans with OCPS are voluntary contributions made by the employee to reduce withholding taxes 2017 – 403(B) Basic Limit is $18,000 May have additional $6,000 (if age 50 or older in the calendar year) May have additional $3,000 (if 15 or more years with current employer Total 2017 403(B) max is $27,000 2017 - 457 Basic Limit is $18,000 - May have additional $6,000 (if age 50 or older in the calendar year) Total 2017 to 457 max is $24,000 Please visit tables during break & end

TSA Consulting Group (tsacg.com) 2 – 3 Business Days for Processing

TSA Consulting Group Can print certificate in minutes

Questions & Answers B R E A K

Terminal Sick Leave Pay Percentage at Retirement An employee receives terminal pay as follows: 0-3 Years * 35% 3.01-6 Years 40% 6.01-9 Years 45% 9.01-12 50% 12.01-over 100% *Based on consecutive years of service at the time of retirement. Note: Revision to contract effective 07/01/08: If the person has worked at least five consecutive years prior to retirement, previous time at the district may be counted.

Sick Leave Payout Contributions during DROP or IRL Multiple Annual Contributions - Increasing percentage of Sick leave at end of each year of DROP 5 Year example: Year 1 20% Year 2 25% Year 3 33% Year 4 50% Year 5 100%

Bencor Special Pay Plan Tax Savings -Eliminate Social Security and Medicare Taxes -Defer Federal Income Taxes

Special Pay Comparison With BENCOR Plan $ 10,000.00 $ 0 Fed Tax Deferred $ 0 FICA Saved $ 0 Medicare Saved $ 10,000.00 Deposited Current w/o Plan $ 10,000.00 2,500.00 Fed Tax 620.00 FICA 145.00 Medicare 6,735.00 Net Pay

Plan Features Liquidity & Flexibility Safety Tax-Deferred Earnings Optional Investment Accounts Loans Probate Avoidance

Account Types General Account – Fixed Interest - Guarantee of Principal & Interest – Guaranteed by Standard Insurance Company - Stable Asset Fund Currently 1.80% for 1st quarter - No fees assessed against account - All deposits go into this account unless you choose otherwise Market Based Investment Options - 16 Mutual Fund Choices - Account Management Fees

Account Options Take money for cash or rollover Rollovers – In & Out Money available within 3 to 5 working days Rollovers – In & Out Change Investments Over the phone, online Loans ½ of account balance up to $50,000 (one time $100 fee) Use funds according to IRS regulations Call BENCOR Administrative Services for funds or go online to www.bencorplans.com

Bencor Special Pay Plan OUR LOCAL REPRESENTATIVES ARE: Michael Borgailo, Danny Gay, David Payne or Travis Payne 407-599-2300 407-678-4014 1-800-330-4014 1-888-258-3422

Applying For Retirement/DROP Entry Apply for retirement 1 to 3 months in advance, at least by TERMINATION date to prevent unnecessary delay, call for appt with Retirement Services. Need birth date verifications & marriage certificate for member and spouse for some options Need spousal acknowledgement, if married Designate a beneficiary (Name, SSN, DOB, Address & Phone Number)

After Retirement Benefit is subject to withholding tax - Default is married with three allowances Cost of Living Increase - Based upon years of service thru 06/2011 Health Insurance Subsidy (HIS) -Added to your monthly benefit -Not applicable during DROP -Years of Service X $5.00 Maximum Amount $150.00 Minimum Amount $ 30.00

After (cont’d) Once a benefit payment is cashed or deposited, retirement is final - Option cannot be changed - No service may be added Benefits paid monthly Direct deposit required effective 7/1/2000

Reemployment After Retirement Restrictions for the first twelve (12) months of retirement: Termination Period- Months one (1) - six (6): No work for any FRS employer, no exceptions. Reemployment Period - Months seven (7) – twelve (12): If you work for an FRS employer, you must forfeit your benefits, regardless of the position. You may volunteer after retirement and/or DROP if: -No Compensation -You do not occupy a regularly established position -Register as a volunteer through OCPS.net After one year: No restrictions No Restrictions on private employment

Renewed Membership Retirees initially reemployed in a retirement-covered position on or after July 1, 2010, are NOT eligible for renewed membership. (can not earn a second retirement)

2011 Legislative Changes DROP interest changed to 1.3% 3% employee pre-tax contributions began July 1, 2011 Renewed Membership COLA All service earned through June 2011 receives a 3% COLA Service earned July 2011 and after – 0% COLA Formula: Years of service through June 2011 divided by Years of service at retirement X 3% 20/21 X 3% = 2.86% 29/30 X 3% = 2.90%

Members Initially Enrolled on or after July 1, 2011 Vesting-8 years of creditable service Normal Retirement - Age 65 or 33 years of service before age 65 Average Final Compensation (AFC) - Average of the highest 8 fiscal years of salary

Renewed Membership (effective 07/01/2017) 2017 Legislative Changes Senate Bill 7022 Renewed Membership (effective 07/01/2017) The bill provides for renewed membership in the Investment Plan for reemployed retirees of the Investment Plan Renewed membership will be available July 1, 2017 or after (retroactive membership prior to July 1, 2017 will not be provided). The bill does not provide Pension Plan renewed membership. Renewed members will pay the 3% employee contribution rate

2017 Legislative Changes Continued.. Election Period Extended (effective January 1, 2018) The initial retirement plan election period has been extended from 5 months to 8 months following the month of hire. This is applicable to all members initially enrolled in the FRS on or after January 1, 2018. It also applies to members who were initially enrolled in the FRS prior to January 1, 2018, if they terminated employment during the initial election period without making an election and return to FRS-covered employment on or after January 1, 2018.

Please keep ALL beneficiary information updated! Insurance Benefits Coverage normally ends the last day of the month in which you separate service Upon retirement, one opportunity to continue OCPS health insurance Can continue for your lifetime by paying premiums Rates are negotiated annually and are effective October through September Insurance Benefits 407-317-3245 or CISCO 200-3245 https://www.ocps.net/departments/risk_management/insurance_benefits/retiree_insurance_benefits_handbook/ Reminder: Please keep ALL beneficiary information updated!

Office of Retirement Services 407.317.3227 Email: retirement.services@ocps.net www.ocps.net (Menu Path: Select Departments, Retirement Services, Current Employees) DISCLAIMER If questions arise as a result of this presentation or the materials provided, Chapter 121, Florida Statutes Chapter 605 Administrative Code and the Internal Revenue Code shall remain the final authorities.