Monthly Archives: March 2016

How Full-Time and Part-Time Service Credit Works

Service credit plays a vital part in your pension calculation and your eligibility for other NYSLRS benefits. As a NYSLRS member, you earn service credit by working for an employer who participates with the Retirement System. All your paid public employment is creditable. If you work full-time or part-time, you’re earning service credit, just at different rates.

Earning Service Credit When You Work Full-Time

Earning Service CreditWhen you work on a full-time, continuous basis, we’ll calculate your service credit from your date of employment up until the date you leave paid employment. For most full-time workers, you’d earn a year of service credit for working a total of 260 work days in a year. For a full-time 12-month employee, a total of 260 work days constitutes a full year. For our members who work for school districts, a full time 10-month academic year can be 180 work days. (If you work in an educational setting, we’ll cover more about that in a future blog post.) Also, you wouldn’t earn service credit during leaves of absence without pay or for any period of time you’re not receiving salary.

Earning Service Credit When You Work Part-Time

Your service credit is prorated if you work part-time. Part-time employment is credited as the lesser of:

the number of days worked ÷ 260 days

or

your reported annual salary ÷ (the State’s hourly minimum wage × 2,000)

Or you can think of it like this: let’s say you only worked 130 days in a year. If a year’s worth of service credit is earned for working 260 days full-time, you’d earn half a year (0.5) of service credit for your part-time work.

Check Your Member Annual Statement

From May to July, we’ll send out this year’s Member Annual Statements. For most members, your statement will show how much service credit you’ve earned over the past fiscal year (April 1, 2015 – March 31, 2016). It will also show your total service credit as of March 31, 2016. Make sure to look it over to see how much service credit you’ve earned over your career.

For more detailed information about service credit, please refer to your specific retirement plan publication.

Overtime and Limits for Tier 5 and 6 Members

We base your NYSLRS pension on your years of credited service and your final average salary (FAS). FAS is the average of the wages you earned during 36 consecutive months (60 consecutive months for Tier 6 members) when your earnings were highest. The calculation of your FAS can include overtime pay that you’ve earned during the FAS period.

Tier 5 and Tier 6 members have limits on how much overtime can be included in their FAS calculation. Overtime pay that exceeds these limits cannot be used in a Tier 5 or 6 member’s FAS calculation.  Therefore, members and employers are not required to make pension contributions on overtime pay that exceeds the annual limit.

Your employer should not report any overtime pay in excess of this cap to NYSLRS as it cannot be used in a member’s final average salary calculation. Each year, NYSLRS publishes the maximum overtime pay that should be reported and reminds employers not to report overtime earnings that exceed the limit.

Tier 5 Overtime Limits

The overtime limit for Tier 5 began in 2010 at $15,000 and increases each calendar year by three percent. This year, the overtime limit for ERS Tier 5 members is $17,910.78. In 2017, the overtime limit for ERS Tier 5 members will be $18,448.11. For PFRS Tier 5 members, overtime is limited to 15 percent of a member’s regular earnings.

Tier 5 & 6 overtime limits

Tier 6 Overtime Limits

For ERS Tier 6 members, the overtime limit is based on the State’s fiscal year (April 1 – March 31). From April 1, 2015 – March 31, 2016, the overtime limit for ERS Tier 6 members is $15,608. From April 1, 2016 – March 31, 2017, that limit will increase to $15,721. The fiscal year limit is adjusted for inflation based on the annual Consumer Price Index (CPI). The overtime limit for PFRS Tier 6 members is limited to 15 percent of a member’s regular earnings.

Please visit our website if you have questions about Tier 5 overtime limits or Tier 6 overtime limits.

Taxes and Your NYSLRS Retirement Benefit

Your NYSLRS retirement benefit isn’t subject to New York State or local taxes, but it is subject to federal income tax. Before you retire, take some time to think about how taxes could affect your retirement planning.

Will Your Pension Get Taxed in Another State?

While New York State won’t tax your NYSLRS retirement benefit, other states might. If you’re thinking of moving after retirement, you’ll need to consider the tax laws of the state you move to. The Retired Public Employees Association keeps a list of which states tax pension income on their website. And remember, if you do move, we’ll need your updated mailing address for our records.

Federal Tax Withholding Status for Your Pension

taxesAfter you’ve filed for retirement, we’ll reply back to you with a confirmation letter and some forms. One of these forms will be a W-4P form (Withholding Certificate for Pension or Annuity Payments). You’ll need to fill out this form to choose the amount you want withheld from your benefit each month for federal taxes. You can choose the withholding tax status that suits you, and you can change it any time afterward by completing a new W-4P form.

If you’re not sure how much you’ll need withheld for federal taxes, consider meeting with a tax professional to assist you before submitting the form. We also offer a federal tax withholding calculator on our website to help you plan.

Getting Your 1099-R

Once you start receiving your pension benefit, we’ll send you a 1099-R form for federal income tax filing purposes. A 1099-R form lists the distributions you’ll receive from your NYSLRS pension. We mail 1099-Rs out each year by January 31, so make sure we have your correct mailing address on file. This is especially important if you plan on moving in retirement.

We also feature an interactive 1099-R tutorial on our website. It can be a helpful tool to look at the first time you receive your 1099-R.

For more about taxes and your pension, please read our Tax Information About Your Pension FAQs.

NYSLRS’ Disability Benefit: What You Should Know

Meeting filing requirements and submitting medical documents are key

A disabling condition can happen to anyone at any time. As a member of the NYSLRS, you may be eligible for a disability retirement if you become disabled and unable to work.Applying for a NYSLRS Disability Benefit

Disability benefits are based on your tier and retirement plan. The eligibility and filing requirements can vary too. Most members with 10 or more years of service credit can apply for an ordinary (non-job-related) disability benefit, and in some circumstances, your employer can file for you. If you become disabled due to a job-related accident, there’s no minimum service required.

If you decide to file for a disability retirement, please remember to keep the following in mind:

Meet Our Filing Requirements

You can file your disability retirement application while:

  • You are still on your employer’s payroll, or
  • As soon as possible after you stop receiving your salary.

You can find a list of all the disability retirement applications on our website. You can also read about the filing requirements in your retirement plan publication.

Make Sure We Have Your Medical Documentation

If your application meets the filing requirements, we will request medical reports from the doctors and treatment facilities you listed on your application. We may also ask you to make an appointment, paid for by NYSLRS, with one or more independent medical examiners whose specialty relates to your disability.

A medical or administrative review board will then make a determination about your eligibility.

If you aren’t approved for a disability retirement, you may request an administrative hearing and redetermination within four months from the date of denial. This gives you an opportunity to provide more evidence to support your request for disability benefits.

Because of the multiple steps that can be involved in the process, these cases typically take longer than regular retirement cases. So, since it may take some time to process your application, we encourage you to file the application while you are still on the payroll. This can help minimize any financial hardship you may encounter during the time it takes to process your application.

For more information about the disability retirement process or how to file, read our publication, Life Changes: Applying for Disability Retirement (VO1802).