Monthly Archives: December 2018

Popular Blog Posts of 2018

Before we say goodbye to 2018, let’s take a look back at a few of the year’s most popular blog posts.

most popular posts of 2018

NYSLRS Basics: Final Average Salary

For NYSLRS members, the formulas used to calculate our pension benefits are based on two main factors: service credit and final average salary. While service credit is fairly straightforward — it’s generally the years of service you’ve spent working for a participating employer — what is a final average salary (FAS)?

Will Your Retirement Age Affect Your Benefit?

Some special plans allow NYSLRS members to retire after 20 or 25 years with no pension reduction. However, most of us have a choice to make: wait until the full retirement age specified by their plans or retire as early as age 55. It’s an important decision; those who retire early may receive a permanently reduced pension benefit.

Federal Withholding and Your Pension

Retirees: While your NYSLRS pension is not taxed by New York State, it is still subject to federal income tax. If your tax bill is larger than expected, or if you’ve been getting a hefty tax refund regularly, you may want to adjust the federal withholding from your NYSLRS pension. Follow these step-by-step instructions.

NYSLRS — One Tier at a Time: ERS Tiers 3 & 4

Many Tier 3 and 4 members of the Employees’ Retirement System (ERS) are eligible to retire under the same retirement plan, so we often think about them together. According to our most recent numbers, the combined tiers make up nearly 60 percent of ERS members — by far the largest segment. Here is a quick look at the benefits these members may receive before and after retirement.

Age Milestones for Retirement Planning

Even with a defined-benefit plan like you receive through NYSLRS, retirement planning is not a one-time task. Whether you’re reviewing your NYSLRS benefits or other retirement matters (like Medicare coverage or required minimum distributions), there are important considerations at almost every age leading up to retirement — and even in the years that follow.

Now is a Good Time to Review Your Retirement Savings

Saving for retirement? Under Internal Revenue Service (IRS) rules, you’ll be allowed to contribute more to your retirement savings account during 2019.

If you’re having part of your pay deposited directly into an employer-sponsored retirement savings account, such as New York State Deferred Compensation, you’ll be able to contribute up to $19,000 next year. That’s up from $18,500 for 2018. If you’re over 50, catch-up provisions allow you to save up to $25,000. The old limit was $24,500.

Even if you’re nowhere near the contribution limit, this is good time to review your retirement savings strategy. Are you saving enough to meet your retirement goals? Can you save more in 2019? And if you aren’t saving for retirement, now’s the best time to start.

Review Your Retirement Savings

Why Save for Retirement?

Financial experts say you’ll need 70 to 80 percent of your pre-retirement income to maintain your lifestyle during retirement. Retirement savings can supplement your NYSLRS pension and Social Security, helping you reach that goal. Retirement savings can also be a hedge against inflation and a source of cash in an emergency. A healthy retirement account will give you more flexibility during retirement, helping ensure that you’ll be able to do the things you want to do.

Getting Started

For New York State employees and many other NYSLRS members, there’s an easy way to get started. If you work for a participating employer, you can join the New York State Deferred Compensation Plan. If you are a NYSLRS member but do not work for New York State, check with your employer to see if you are eligible. (Deferred Comp is not affiliated with NYSLRS.)

Once you sign up for Deferred Comp, your contributions will automatically be deducted from your paycheck and deposited into your account. You can choose from a variety of investment packages or choose your own investment strategy.

With a tax-deferred savings plan, the impact on your paycheck will be less than the amount going into your account. (Deferred Comp even has a calculator to help you estimate the impact.)

You may also eligible for a Roth account, which lets you make contributions in after-tax dollars. In exchange for paying taxes upfront, your savings grow tax-free and you pay no taxes when you withdraw the funds in retirement. This approach may be advantageous for younger workers in lower tax brackets.

Countdown to Retirement — 12 Months Out

Once you decide to retire and begin preparing, the final months leading up to your retirement date go by quickly. Previously, we discussed the steps to take when you’re 18 months away from retirement. As we continue our Countdown to Retirement series, let’s take a look at what you should be doing 12 months out.

12 Months Out

Domestic Relations Order

Pensions earned during a marriage are considered marital property. So, if you divorce, you may need to split your retirement benefit with your ex-spouse. If you agreed to such a division, or if a court ordered you to share a portion of your pension benefits with your ex-spouse, now is the time to make sure NYSLRS has a valid domestic relations order (DRO) on file:

If you have a DRO, send it to our Matrimonial Bureau, which will review it for consistency with New York State law. If your DRO isn’t complete, visit our website for a NYSLRS-developed DRO template and tips to help the review process move more quickly. We’ll need certified photocopies of the final DRO and your judgement of divorce, before we can distribute any pension benefits to an ex-spouse.

This process can take some time, which is why you want to begin 12 months before you retire.

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

Review your health insurance coverage

NYSLRS doesn’t administer health insurance benefits, but they’re an important part of a financially secure retirement. Check with your health benefits administrator to determine what coverage you’re eligible for once you retire. Now is the time to investigate private health insurance plans if you’re not eligible for post-retirement coverage or if you need to supplement it. If you are a New York State employee, you may want to review the Planning for Retirement guide from the Department of Civil Service.

countdown to retirement - 12 months out

Counting Down

Your planned retirement date is just a year away. As it gets closer, check out the rest of our Countdown to Retirement series for steps to take eight months, four to six months and one to three months before your retirement date. If you have any questions, please contact us.

Retirees: Know Your Post-Retirement Earnings Limit

Retirees: Know Your Post-Retirement Earnings LimitAs a NYSLRS retiree, you can work for a public employer after retirement and still receive your pension, but there may be limits on how much you can earn.

Public employers include New York State, municipalities in the State (cities, counties, etc.), school districts and public authorities. If you’re self-employed or work for a private employer, another state, or the federal government, you can collect your full NYSLRS pension no matter how much you earn. (However, earnings for most disability retirees are limited whether they work for a public or private employer. To find out your earnings limit, please contact us.)

Two sections of New York State Retirement and Social Security Law (RSSL) apply to NYSLRS service retirees who return to work in the public sector.

Section 212: Earnings Limit

Section 212 of the RSSL allows retirees to earn up to $30,000 per calendar year from public employment. There is generally no earnings restriction beginning in the calendar year you turn 65. (Special rules apply to elected officials.) If you are under 65 and earn more than the Section 212 limit, you must:

  • Pay back, to NYSLRS, an amount equal to the retirement benefit you received after you reached the limit. And, if you continue to work, your retirement benefit will be suspended for the remainder of the calendar year.

OR

  • Rejoin NYSLRS, in which case your retirement benefit will be suspended.

Section 211: Employer Approval

Under Section 211, the earnings limit can be waived if your prospective employer gets prior approval. (In most cases, the New York State Department of Civil Service would be the approving agency.)

Section 211 approvals apply to a fixed period, normally up to two years. Approval is not automatic; it is based on the employer’s needs and your qualifications.

Before you decide to return to work, please, please read our publication, What If I Work After Retirement? If you still have questions or concerns, please contact us.