Monthly Archives: August 2014

Retirement Planning – Divorce and Your Pension

One aspect of retirement planning some members may not consider is how a divorce may affect their retirement benefit. In New York, retirement benefits are considered marital property and can be divided between you and your ex-spouse. While some divorced couples may choose not to divide retirement benefits, it’s important to think about what you will need to do if your pension will be affected by divorce.

Preparing for Retirement: Part Five — Divorce and Your Pension

The Preparing for Retirement 7-part video series discusses the main aspects of retirement planning to help NYSLRS members nearing retirement make good, informed decisions for the future. In Part Five – Divorce and Your Pension, you’ll hear about how if you are divorced, your ex-spouse may be entitled to part of your pension. NYSLRS needs a valid domestic relations order (DRO) on file so we can have the instructions on how your pension benefits should be divided. You’ll also learn what resources NYSLRS has available to help you construct a DRO, if needed.

Important Links for Retirement Planning

Where to Find More Retirement Planning Information

If you are close to retirement and have more questions, consider scheduling an appointment to meet with an information representative at one of NYSLRS’ consultation sites in New York State. Don’t forget to check back for the rest of the Preparing for Retirement video series, which includes retirement planning topics like:

Designating a Beneficiary: An Important Planning Decision

When you join the New York State and Local Retirement System (NYSLRS), you are asked to designate a beneficiary. This is important because your beneficiary may be eligible to receive certain benefits if you die while still working. A beneficiary can be any person you choose – it does not have to be a family member. You can also name any organization, such as a charity or religious institution, or your estate. It’s also important to review your beneficiaries regularly to reflect your current wishes.

Types of Beneficiaries

There are two types of beneficiaries: primary and contingent.

A primary beneficiary is the person who will receive any benefit payable. You can list more than one primary beneficiary. If you do, each primary beneficiary will share the benefit equally. You can also choose different percentages for each beneficiary, as long as they total 100 percent.

Example: John Doe, 50 percent; Jane Doe, 25 percent; and Mary Doe, 25 percent.

A contingent beneficiary is a possible beneficiary who will receive the benefit only if all the primary beneficiaries die before you. Multiple contingent beneficiaries will share the benefit equally, unless you choose to divide the benefit among them differently.

How Do I Designate a Beneficiary?

Even though you designated a beneficiary when you first joined NYSLRS, you can update your beneficiaries at any time while you’re still in active service. You can submit a Designation of Beneficiary form (RS5127) to change your beneficiaries. Be sure to include the names, addresses and birth dates of all the beneficiaries you wish to designate. You can name up to four primary and four contingent beneficiaries on the form. Please contact us if you want to designate more beneficiaries, as we cannot accept attachments to the form.

Be sure to sign and date the form, and have your signature notarized. The notary must include his or her date of notary expiration and should not be designated as one of your beneficiaries. We can’t accept the form if there are any alterations, including erasures or the use of correction fluid.

Remember, submitting a new form replaces any previous beneficiaries you have chosen. The changes become effective when we receive and approve your form.

Where Can I Get More Information?

You can refer to our publication, Life Changes: Why Should I Designate a Beneficiary?,for more information about designating a beneficiary. If you have any other questions, please contact us.

Deferred Compensation: Another Source of Retirement Income

Many financial experts believe that you will need at least 70 to 80 percent of your pre-retirement income to enjoy the same standard of living once you retire. A sound financial plan can include your NYSLRS pension, Social Security benefits, and personal savings, but you still may need to supplement your retirement income the longer you are retired. A deferred compensation plan can be another source of retirement income to consider when saving for retirement.

What is Deferred Compensation?

Deferred compensation is a type of plan where part of your earned income is paid back to you at a later date. The money you set aside is tax-deferred, which means you do not pay federal or State tax on it until you begin to collect it.

The New York State Deferred Compensation Plan

The New York State Deferred Compensation Plan (NYSDCP) is a voluntary retirement savings plan created for New York State employees, and employees of other participating public employers. Participants in the NYSDCP have their contributions deducted automatically from each paycheck to their deferred compensation account. They can also choose from different investment options within the plan for their account.

If you work for a local government employer, please check with your human resources office or benefit administrator to learn about deferred compensation plans.

What Does Deferred Compensation Mean For Me?

Deferring income from your paychecks may mean you have less money to spend in the short-term but, in the big picture, you’re planning ahead for your financial future. You can enroll in a deferred compensation plan even if you’re approaching retirement or if you just started working. Usually, the sooner you start saving means you’ll be better prepared for your retirement.

Of course, there are other ways to save for retirement. A good financial planner, accountant or attorney can help you develop a practical plan that best meets your needs and goals.

Countdown To Retirement: What To Do 12 Months Before Your Retirement Date

Countdown to retirement - 12 MonthsThere are important things you need to do in the final months leading up to your retirement date. Our Countdown to Retirement Series will help you remember what to do and when to do it.

Last month we discussed what you need to be concerned about when you’re 18 months away from retirement. This second post describes what you should be aware of at 12 months out, when educating yourself about pre-retirement issues could spell the difference between a process that’s stress free and one that isn’t.

Locate Proof of Birth

We must have proof of your birth date before any benefits can ever be paid to you. We’ll accept your birth certificate as proof, but we’ll also accept one of the following documents:

If you send us the original, we will return it to you. If you don’t have the original, in most cases, a photocopy of the document is acceptable.

Please provide us with your proof of birth sooner rather than later, in the event you need to contact another party for your information. Also, if you’re thinking about choosing a retirement option that provides a lifetime benefit to a beneficiary, we will need proof of your beneficiary’s birth date too.

Send Us Your DRO

According to New York law, pensions earned during the marriage are considered marital property. As a result, if you are divorced, your retirement benefit could be split between you and your ex-spouse. Please make certain we have a valid domestic relations order (DRO) on file if you agreed to or were ordered by a court to have a portion of your pension benefits paid to your ex-spouse.

If you have any questions about DROs, you can always review our Guide to Domestic Relations Orders.

Counting Down from 12 Months

Your planned retirement date is just a year away. Check back for more Countdown to Retirement posts on pre-retirement issues, reviewing other retirement income, and preparing a post-retirement budget. If you have any pre-retirement questions, please contact us.