1. Your Federal Retirement System
Mary Fran San Soucie
HR Coordinator

2. Types of Retirement Systems at MSU
Teachers’ Retirement System (TRS)
TIAA-CREF
Civil Service Retirement System (CSRS) and CSRS-Offset
Federal Employees’ Retirement System (FERS)
Public Employee’s Retirement System (PERS) – typically classified employees

3. Civil Service Retirement System (CSRS)
Defined Benefit Plan
Contribution rates
Employee Employer

4. CSRS Retirement Eligibility
AGE is at least... and CREDITABLE SERVICE is at least years years years Military service can be included Unused sick leave is included

5. CSRS benefit determination
1st 5 years of service x hi-3 average salary x plus- - 2nd 5 years of service x hi-3 average salary x Remainder years of service x hi-3 average salary x 0.02

6. CSRS Monthly Benefit Options
Full annuity – nothing to survivors
Full survivor annuity
reduction of less than 10% to annuitant
55% of full survivor benefit to survivor
Partial survivor annuity
Reduction to retiree’s annuity based upon survivor annuity
Can be any amount between zero and full survivor annuity

7. CSRS Monthly annuity options
Must have some survivor annuity in order for survivor to receive federal health benefits after death of retiree
Does not have to cover health insurance premium amount

8. Federal Employees’ Retirement System (FERS)
Defined Benefit plan
Contribution rates:
Employee Employer

9. FERS Retirement Eligibility
Age Years of Service
62 5
MRA 30
MRA 10
If you retire at the MRA with at least 10, but less than 30 years of service, your benefit will be reduced by 5 percent a year for each year you are under 62, unless you have 20 years of service and your benefit starts when you reach age 60 or later.

10. FERS Retirement Eligibility Minimum Retirement Age (MRA)
If you were born Your MRA is
Before
In and 2 months
In and 4 months
In and 6 months
In and 8 months
In and 10 months
In 1953 through
In and 2 months
In and 4 months
In and 6 months
In and 8 months
In and 10 months
In 1970 and after 57

11. FERS benefit determination
Hi-3 Average Salary x 1% (1.1% if over age 62 and at least 20 years of service) x Number of years of service (Plus TSP and Social Security)

12. FERS Monthly Benefit Options
Full annuity – nothing to survivor
Full survivor annuity
10% reduction to retiree’s annuity
Survivor receives 50% of retiree’s annuity
Partial Survivor annuity
5% reduction to retiree’s annuity
Survivor receives 25% of retiree’s annuity

13. FERS Monthly annuity options
Must have some survivor annuity in order for survivor to receive federal health benefits after death of retiree
Does not have to cover health insurance premium amount

14. When to apply Three day rule
If apply last day of the month, or during the first three days of the month, annuity begins the next day.
Otherwise, begins beginning of next month.

15. What happens when you apply
We send info on to OPM
OPM uses our annuity calculation to low-ball an annuity payment, which they send to you shortly thereafter (2-3 weeks)
After a month or more, they make a final determination of your annuity, and they adjust the payment

16. Social Security and CSRS annuity
Windfall Elimination Provision (WEP)
Why?
Social Security benefits are intended to replace only a percentage of a worker’s pre-retirement earnings. The way Social Security benefit amounts are figured, lower-paid workers get a higher return than highly paid workers.
Congress passed the Windfall Elimination Provision to remove that advantage.

17. WEP
If you paid Social Security tax on 30 years of substantial earnings you are not affected by the Windfall Elimination Provision (WEP).
There is a chart that shows the maximum monthly amount your benefit can be reduced because of WEP if you have fewer than 30 years of substantial earnings.  (To calculate your WEP reduction, please use our WEP Online Calculator or download our Detailed Calculator.)

18. Websites for WEP http://www.socialsecurity.gov/retire2/wep.htm

19. What comes out of your annuity check
Taxes – can have state taxes taken out, too
Health insurance premiums (same as before retirement)
Life insurance premiums (options on this)
Preference is direct deposit – have to “opt out”

20. Federal Taxes on Annuity
“Olden days”
Only deducted taxes AFTER your contributions ran out
Olden days are over
Now
Use “Simplified Formula” to determine tax base
IRS Publication 721 (

21. Federal Health Benefits Post-ret
OPM picks up Employer Share, so no huge changes to retiree
NARFE has great publications about Medicare options (
Various Life Insurance Options
MFS works with each retiree to discuss options

22. Life insurance options after retirement
BASIC
No reduction after age 65
Big premiums upon retirement – less expensive at 65
50% reduction after age 65
Less big premiums upon retirement – less expensive at 65
At age 65, 2%/month reduction of life insurance to 50% reduction (i.e., $40,000 to $20,000)
75% reduction after age 65
Regular premiums only upon retirement – FREE after age 65!
At age 65, 2%/month reduction to 75% reduction ($40,000 to $10,000)

23. Life insurance - Optional
Plan A
reduce by 2% per month beginning the second month after you are 65 or the second month after you retire, whichever is later, until it reaches 25% of the face value ($2,500).
Premiums for Option A insurance from your annuity will be withheld through the end of the month in which you are 65, unless you elect to cancel this coverage.

24. Life Insurance - Optional
Option B
Elect how many of your Option B multiples would continue in retirement and whether — at age 65 — multiples will continue at their full value or will gradually reduce to zero.
At retirement and age 65, the annuitant may elect either Full Reduction or No Reduction for each separate multiple of Option B. For example, a person with five multiples may elect No Reduction on two multiples, while the three remaining multiples reduce fully.
If you elect Full Reduction or if you separated for retirement before April 24, 1999, effective the first day of the second month after you reach age 65 or the first day of the second month after you retire, whichever is later, your Option B full-reduction multiples will reduce by 2% of the face value per month for 50 months, at which time this coverage will end.

25. Life Insurance - Optional
Option C
Elect how many of your Option B multiples would continue in retirement and whether — at age 65 — multiples will continue at their full value or will gradually reduce to zero.
At retirement and age 65, the annuitant may elect either Full Reduction or No Reduction for each separate multiple of Option B. For example, a person with five multiples may elect No Reduction on two multiples, while the three remaining multiples reduce fully.
If you elect Full Reduction or if you separated for retirement before April 24, 1999, effective the first day of the second month after you reach age 65 or the first day of the second month after you retire, whichever is later, your Option B full-reduction multiples will reduce by 2% of the face value per month for 50 months, at which time this coverage will end.

26. COLA for Retirement Annuity
To get the full COLA, a retiree or survivor annuity must have begun no later than December 31, If not, the increase is prorated under both plans. Prorated accounts receive one-twelfth of the increase for each month they received benefits. For example, if the benefit commenced November 30, 2007, the prorated COLA would be one-twelfth of the full COLA.

27. Medicare Part B Q. Do I Have to Take Part B Coverage?
A. You don't have to take Part B coverage if you don't want it, and your FEHB plan can't require you to take it. There are some advantages to enrolling in Part B:
You have the advantage of coordination of benefits (described later) between Medicare and your FEHB plan, reducing your out-of-pocket costs.
Your FEHB plan may waive its copayments, coinsurance, and deductibles for Part B services.
Some services covered under Part B might not be covered or only partially covered by your plan, such as orthopedic and prosthetic devices, durable medical equipment, home health care, and medical supplies (check your plan brochure for details).
You may go outside of the plan's network for Part B services and receive reimbursement by

28. Medicare Part B Q. How Much Does Part B Coverage Cost?
A. The standard monthly premium for Medicare Part B in 2007 increased to $93.50 from $88.50.  Effective January 1, 2007, the government started determining the Medicare Part B premium based on a person’s income.  Higher-income beneficiaries for the first time will pay a higher monthly premium than other beneficiaries, as ordered by a provision in the 2003 Medicare law.

29. Medicare Part B
Q. What Happens If I Don't Take Part B as Soon as I'm Eligible?
A. You must wait for the general enrollment period (January 1 - March 31 of each year) to enroll, and Part B coverage will begin the following July 1. Your Part B premiums will go up 10 percent for each 12 months you could have had Part B but didn't take it.
If you didn't take Part B at age 65 because you were covered under FEHB as an active employee (or you were covered under your spouse's group health insurance plan and he/she was an active employee), you may sign up for Part B (generally without increased premiums) within 8 months from the time you or your spouse stop working or are no longer covered by the group plan. You also can sign up at any time while you are covered by the group plan.

30. Helpful websites Medicare
Social Security
Other issues for Former Schedule A appointees

31. VEBA Voluntary Employees’ Beneficiary Association
Authorized by Internal Revenue Code Section 501(c)(9)
Your sick leave payout goes into your account, tax-free
You use this pre-tax account to pay for out-of-pocket medical expenses
Internal Revenue Code Section 213(d)

32. What to do with Annual Leave Payout
Can go to any of several providers’ plans for tax exemption
Aetna, MetLife, TIAA-CREF, T. Rowe Price, Valic- AIG (403(b) plans), State Deferred Comp (457 plan)
Election MUST be done prior to last day
Tax-defers annual leave payout
Can get lump sum payout – tax implications

33. Who to contact with ANY questions
Mary Fran

34. Questions?