2019 Pre-Retirement Seminar

3 SOURCES OF RETIREMENT INCOME Personal Savings Social Security YOUR RETIREMENT INCOME KPERS

KPERS 457 AFTER RETIREMENT Stay in KPERS 457 after retirement Retirement Specialist to help Great for retirement lump sums Sick/vacation payouts Retirement incentive 1-800-232-0024 kpers457.org Use (A) If 457 rep is NOT THERE or If 457 rep is THERE but NOT PRESENTING   Use (B) If 457 rep IS PRESENTING (A) Now for a few words about KPERS 457. KPERS 457 is the voluntary 457(b) deferred compensation savings plan for State and some local employees. Some of you have it and some may not. If you’re in the plan before retirement, you can stay in the plan after you retire. There are several benefits to staying in the plan: You may pay less in costs compared to a brokered account. We spread administrative costs over 25,000 other people, which leaves more money available to work for you. Before you make a decision, look at all of the services you’d pay for. Then decided if it’s better for you to stay in KPERS 457 or roll it into account. Another reason is that you know us. You know KPERS. And KPERS has your best interests in mind. It’s our fiduciary responsibility. KPERS 457 representatives are not commissioned sales people. They are paid a salary, and are expected to care for you and your savings….instead of selling you something. With KPERS, you know what to expect. Continue to have easy account access, so you can make investment changes 24/7 online or by phone, quick and easy Flexible payout options when you are ready to start taking your money, and you can change it at any time. There are lots of things to consider as you decide whether you’re going stay in the KPERS 457 plan or take it somewhere else. If 457 rep is NOT there But you’ll have help from KPERS 457. If you have any questions, be sure to contact KPERS 457; contact information is on this slide. If 457 rep IS there but NOT presenting If you have any questions, be sure to see (title & name) with us tonight. (B) Now for a few words about KPERS 457. KPERS 457 is the voluntary 457(b) deferred compensation savings plan for State and some local employees. Some of you have it and some may not. I have asked (name & title) with the KPERS 457 Plan to come and talk about it with you, especially what you can do with your KPERS 457 in retirement.

TYPE OF RETIREMENT PLAN KPERS is a 401(a) defined benefit plan Contrast to defined contribution plans (personal savings plans) 457(b) 403(b) 401(k) IRA

EMPLOYEE CONTRIBUTIONS 6% of pay Deducted pre-tax for federal taxes Interest credited June 30 based on balance December 31 of the previous year Balance doesn’t determine your benefit. Only important if you withdraw or die before retirement.

EMPLOYER CONTRIBUTIONS Are not deposited into your account Go into the KPERS Trust Fund for: Disability benefits Death benefits Retirement benefits

KPERS MEMBERSHIP KPERS 1 Member Employee hired before July 1, 2009, and active on July 1, 2009 KPERS 2 Member All employees first employed in covered positions on or after July 1, 2009, and before January 1, 2015

Retirement Eligibility

WHEN CAN YOU RETIRE – KPERS 1 Age 65 with 1 year Age 62 with 10 years Any age when your age and years of service equal 85 Current age 52 Current years of service + 29 Total points 81 Subtract total from 85 85 - 81 = 4 Divide by 2 4 ÷ 2 = 2 Add to current age 52 + 2 = 54  Age for 85 points

WHEN CAN YOU RETIRE – KPERS 2 Age 65 with 5 years Age 60 with 30 years No Points

EARLY RETIREMENT – KPERS 1 Age 55 with 10 years The earlier you retire, the more your benefit is reduced Age Example Reduction 62 Full benefit = $1,500/month 0% 60 Reduced benefit = $1,425/month 5% 55 Reduced benefit = $885/month 41%

EARLY RETIREMENT – KPERS 2 Age 55 with 10 years The earlier you retire, the more your benefit is reduced Smaller reduction if you retire with at least 30 years of service Age Example Reduction < 30 years Reduction > 30 years 65 Full benefit = $1,500/month 0% 60 Reduced benefit = $920/month 38.6% 55 Reduced benefit = $583/month 61.1% 18.3%

THINGS TO CONSIDER BEFORE RETIRING EARLY The earlier you retire, the more your benefit is reduced Lifetime reduction No Automatic COLA Inflation reduces your buying power over time

Benefit Calculation

BENEFIT CALCULATION KPERS 1 KPERS 2 40,000 1.75% 20 $14,000 12 $1,167 EXAMPLE Final Avg Salary x Statutory Multiplier Years of Service = Annual Benefit ÷ Months in Year Monthly Benefit 40,000 1.75% 20 $14,000 12 $1,167 1.85% 10 + $7,400 + $617 Combined (Total) $21,400 $1,784 KPERS 1: Service before January 1, 2014, is calculated at 1.75%. Service January 1, 2014, and after is calculated at 1.85%. KPERS 2 EXAMPLE Final Avg Salary x Statutory Multiplier Years of Service = Annual Benefit ÷ Months in Year Monthly Benefit 40,000 1.85% 30 $22,200 12 $1,850

FINAL AVERAGE SALARY (FAS) – KPERS 1 Hire date before July 1, 1993 (includes non-school members in their year of service waiting for membership) Average of highest four years (16 quarters) salary including additional pay Average of highest three years (12 quarters) salary without additional pay Highest calculation used Hire date on or after July 1, 1993 Additional pay is lump-sum payout of unused sick leave & vacation pay

FINAL AVERAGE SALARY (FAS) – KPERS 2 Average of highest five years (20 quarters) of salary without additional pay Additional pay is lump-sum payout of unused sick leave & vacation pay

Choosing Your Retirement Date

CHOOSING YOUR RETIREMENT DATE All Non-Licensed (classified) Retirement date = first day of any month Must be off payroll

Benefit Options Maximum Monthly Joint-Survivor Life-Certain Partial Lump-Sum

MAXIMUM MONTHLY BENEFIT OPTION Monthly benefit for life Beneficiary receives any remaining contributions No continued monthly benefit

JOINT-SURVIVOR BENEFIT OPTIONS KPERS 1 Member’s Benefit 50% 91% (+ /– .4%) 75% 87% (+ /- .5%) 100% 83% (+ /- .6%) KPERS 2 -- Based on actuarial tables Pop-up Feature --If joint survivor dies before you, benefit increases to Maximum Monthly Can name only one joint survivor and cannot change

LIFE-CERTAIN BENEFIT OPTIONS If you die within a guaranteed period of time, beneficiary receives benefit for rest of the guaranteed period KPERS 1 Any Age 5-year Life-Certain 98% 10-year Life-Certain 95% 15-year Life-Certain 88% KPERS 2 Age 60 5-year Life-Certain 99.8% 10-year Life-Certain 99.4% 15-year Life-Certain 96.5% Reduction factors based on actuarial tables Change beneficiaries anytime and name any number of beneficiaries to share benefit

PARTIAL LUMP-SUM OPTION Based on the actuarial present value of your lifetime retirement benefit, not your account balance. KPERS 1 can be 10, 20, 30, 40, or 50% KPERS 2 can be 10, 20, or 30% Monthly retirement benefits are reduced by the same percentage of the partial lump-sum option taken. 2017 Pre-Retirement Seminar

Your Online Account

KEEP YOUR INFO UP-TO-DATE Use your online account to update: Address Phone Email After retirement: Tax withholding

ONLINE ACCOUNT ACCESS

LOGIN

ONLINE ACCOUNT HOME PAGE YOUR ACCOUNT ONLINE ACCOUNT HOME PAGE

ACCOUNT SUMMARY – Active Member

ACCOUNT SUMMARY – Retired Member

Calculate an Estimate

BENEFIT CALCULATOR

BENEFIT CALCULATOR

BENEFIT CALCULATOR

Generic Benefit Calculators

KPERS-15E BENEFIT ESTIMATE REQUEST FORM

The Retirement Process

STEPS TO TAKE Pick your best retirement date Choose a payment option Submit application at least 30 days before retirement date Provide age and name change documents

RECEIVING MONTHLY BENEFIT PAYMENTS Direct deposit form (KPERS-15B) Paid on last working day of month Get notice of changes, but no regular payment notice Payment summary online

BENEFITS WILL BE HERE See Page 5 of Seminar Booklet KPERS prefunded during your career Contributions and investment earnings now for when you retire

BENEFITS WILL BE HERE Over $19 billion in assets and growing Long-term funding shortfall Keep funding needs in front of the Legislature We’re your fiduciary

RETIREE DEATH BENEFIT $4,000 death benefit Taxable for federal tax, but not Kansas taxes Person, estate, trust or funeral establishment Beneficiary responsible for taxes No death benefit for joint annuitant

KEEP BENEFICIARY UP-TO-DATE Time to review beneficiaries - Marriage - Birth/adoption - Divorce - Death - Retirement Change beneficiaries any time

CONTINUING LIFE INSURANCE Conversion – Basic & Optional Whole-life option No health questions Higher rates, builds cash value Within 60 days of last day on payroll

CONTINUING LIFE INSURANCE Portability – Basic & Optional Term insurance option Must port some member coverage to port spouse coverage No health questions Under age 80 and actively at work Coverage reduces to 65% at age 65 Coverage ends at age 100 Within 60 days of last day on payroll

KPERS does not provide health insurance coverage Contact your personnel office

FEDERAL AND STATE INCOME TAXES Federal: taxable Kansas: not taxable You already paid state taxes while working Other states? Check with that state Change federal withholding anytime online 1099-R tax form each January

1099-R FORM

SOCIAL SECURITY KPERS will not affect Social Security Social Security will not affect KPERS Social Security Administration: 1-800-772-1213

Working After Retirement 2017 Pre-Retirement Seminar

No Pre Arrangements Prearrangements not allowed (written or verbal) Working after Retirement No Prearrangement Prearrangements not allowed (written or verbal) Anytime before KPERS retirement date OR During the 60-or 180 day waiting period* Why follow the rules? Penalties for employer and retiree KPERS’ “Qualified Status” with IRS could be jeopardized Definition of Prearrangement SB 168 Section 2, subsection (9) “…facts and circumstances of the situation indicate that the employer and employee reasonably anticipated that further services would be performed after the employee’s retirement.”

Repay benefits paid while working after retirement Penalty for retiree Working after Retirement Prearrangement Penalty (Retiree) Penalty for retiree Benefit suspended starting month retiree returned to work, ending 6 months after ending employment Repay benefits paid while working after retirement Employee certifies on the Application for Retirement Benefits that he has made no prearrangement to return to work for any KPERS employer.

Penalty for employer Penalty for employer Working after Retirement No Prearrangement (Employer) Penalty for employer Pays all IRS-associated costs Pays costs of legal defense Pays costs for collecting repayment from the employee School’s “appointing authority” (superintendent*) must certify on the KPERS-15RE form that no prearrangements were made. *If retiree is being hired as superintendent, the president of school board must sign.

Employer Contributions Working after Retirement – Earnings Limit & Employer Compensation Retiree Working In Covered Positions Non-Covered No grandfather or great-grandfather status No hardship exemption Earnings Limit No earnings limit Employer Contributions Statutory rate (12.01%) on first $25,000 30% on earnings over $25,000 No contributions Waiting Periods Retire before age 62 (180 days) Retire on or after age 62 (60 days) effective January 1, 2018

RETIREMENT CHECKLIST (Page 4) Find out when you’re eligible Calculate an estimate Review payment options Submit application Review life insurance Determine tax withholding Confirm Social Security Review health insurance needs Review your other retirement plans and savings

RETIREMENT INFORMATION CENTER HOME Page - I want to Find - Select (When to Retire)

CONTACT INFO KPERS (Page 6) Social Security KPERS 457 Email: kpers@kpers.org Website: ssa.gov Email: kpers457@kpers.org Toll-free: 1-888-275-5737 Toll-free: 1-800-772-1213 Toll-free: 1-800-232-0024 Topeka: 785-296-6166 Topeka: 1-888-327-1271 Topeka: 785-414-3600

KPERS 457 AFTER RETIREMENT Stay in KPERS 457 after retirement Retirement Specialist to help Great for retirement lump sums Sick/vacation payouts Retirement incentive 1-800-232-0024 kpers457.org Use (A) If 457 rep is NOT THERE or If 457 rep is THERE but NOT PRESENTING   Use (B) If 457 rep IS PRESENTING (A) Now for a few words about KPERS 457. KPERS 457 is the voluntary 457(b) deferred compensation savings plan for State and some local employees. Some of you have it and some may not. If you’re in the plan before retirement, you can stay in the plan after you retire. There are several benefits to staying in the plan: You may pay less in costs compared to a brokered account. We spread administrative costs over 25,000 other people, which leaves more money available to work for you. Before you make a decision, look at all of the services you’d pay for. Then decided if it’s better for you to stay in KPERS 457 or roll it into account. Another reason is that you know us. You know KPERS. And KPERS has your best interests in mind. It’s our fiduciary responsibility. KPERS 457 representatives are not commissioned sales people. They are paid a salary, and are expected to care for you and your savings….instead of selling you something. With KPERS, you know what to expect. Continue to have easy account access, so you can make investment changes 24/7 online or by phone, quick and easy Flexible payout options when you are ready to start taking your money, and you can change it at any time. There are lots of things to consider as you decide whether you’re going stay in the KPERS 457 plan or take it somewhere else. If 457 rep is NOT there But you’ll have help from KPERS 457. If you have any questions, be sure to contact KPERS 457; contact information is on this slide. If 457 rep IS there but NOT presenting If you have any questions, be sure to see (title & name) with us tonight. (B) Now for a few words about KPERS 457. KPERS 457 is the voluntary 457(b) deferred compensation savings plan for State and some local employees. Some of you have it and some may not. I have asked (name & title) with the KPERS 457 Plan to come and talk about it with you, especially what you can do with your KPERS 457 in retirement.

Thank You for attending