In This Edition
This issue of Member News focuses on events that may affect your benefits and what you can do to prepare. Being informed and prepared can make change easier.
Start your new life on time: A retirement readiness checklist
Planning to retire this year? The transition to retirement life is much easier when your benefit arrives when expected. Submitting your application on time with correct and complete information keeps the retirement process on schedule.
60-120 Days Before Your Retirement Date
Apply for retirement.
If you have eligible prior service and want this service applied to your benefit calculation, submit an Application for Purchase of Prior Service Credit (VRS-26).
If you are covered under the Virginia Sickness and Disability Program (VSDP) and want to continue your VSDP long-term care coverage into retirement, you must submit the Authorization of Coverage Retention for the Long Term Care Plan (VRS-170) and the Protection Against Unintentional Lapse of Long Term Care (VRS-171) within 60 days of your retirement date.
If you participate in the Optional Group Life Insurance Program and you want to continue or convert your coverage upon retirement, submit the Retiree Optional Life Continuation (VRS-39R).
If you are a state employee, submit the State Health Benefits Enrollment Form for Retirees, Survivors and VSDP/LTD Participants with your retirement application, whether you are electing or waiving coverage in the State Retiree Health Benefits Program. If you elect coverage, you must apply within 31 days of your retirement date.
Complete a Request for Health Insurance Credit (VRS-45) if you are eligible for the health insurance credit.
If you participate in VSDP and want to convert your disability credits to service credit at retirement, complete the VSDP Conversion of Disability Credits (VRS-5A).
Right After You Retire
VRS will send you a one-time authentication code in the mail shortly after you retire, which you use to create your myVRS retiree online account. To protect the security of your myVRS retiree account, you must register for myVRS even if you already were registered as an active member.
If you are enrolled in the COV Voluntary Group Long Term Care Insurance Program, you can continue your coverage by paying the premiums directly to the insurer. If you are not participating in the program when you retire, you can apply as a retiree, provided you are under age 80. Your employer is not required to have elected the program. For more information, visit Genworth Life or call 1-866-859-6060.
For more information on preparing for retirement, see the Getting Ready to Retire Guide.
Benefit coverage in retirement
Many of your benefits continue when you retire:
If you have basic coverage under the VRS Group Life Insurance Program, a death benefit and an accelerated death benefit option will continue after you retire. Additional benefits for accidental death and dismemberment end upon retirement.
If you have optional group life insurance coverage, you may continue a portion of your coverage after you retire, provided you (as well as your spouse and dependent children, if enrolled) were continuously covered during the 60 months preceding your retirement date.
Are you a state employee? You are eligible to enroll yourself as well as a spouse and dependent children in the State Health Benefits Enrollment Form for Retirees, Survivors and VSDP/LTD Participants with your retirement application or within 31 days of your retirement date, whether you are waiving or electing coverage.
Retiring from long-term disability under the Virginia Sickness and Disability Program (VSDP)? Submit a State Health Benefits Enrollment form to continue health insurance into retirement.
If you are a state employee covered under the VSDP Long-Term Care Plan, you may continue your coverage after retirement, but you must pay the premiums.
If you are enrolled in the Commonwealth of Virginia (COV) Voluntary Group Long Term Care Insurance Program, you can continue your coverage by paying the premiums directly to Genworth Life, the insurer for the program.
If you are an employee of a school division or a political subdivision, contact your human resource office about health insurance coverage if you leave employment.
Your family and your benefits
Marriage, divorce and children change everything, and usually call for changes to your benefits:
If you are in the VRS Group Life Insurance Program, consider adding coverage through the Optional Group Life Insurance Program if you marry or have children. Optional group life insurance provides benefits for natural and accidental death or dismemberment. Choose one, two, three or four times your salary, up to a maximum of $700,000 for yourself and up to half the maximum amount of coverage you select for yourself, not to exceed $350,000, for your spouse. For dependent children who are at least 15 days old, choose $10,000, $20,000 or $30,000, depending on the coverage option you select for yourself.
As your family changes, you will want to update your beneficiary designation. Your beneficiary is eligible for a lump-sum payment of the funds in your member contribution account and any life insurance benefits you may have upon your death. To update your beneficiary for your member account and life insurance, complete the Designation of Beneficiary (VRS-2). Keep a copy of the designation for your records. If you participate in the Commonwealth of Virginia 457 Deferred Compensation Plan, you can name a beneficiary for your 457 account and your cash match account, if applicable, online through the Beneficiary Designation 457(b)/401(a).
If you divorce, your retirement benefit may be regarded as marital property in a property settlement. The Code of Virginia authorizes VRS to make a direct payment, once you begin to receive retirement benefits or request a refund, to a former spouse if he or she is awarded part of your benefit by the court. If you had coverage for your spouse under optional life insurance, the coverage ends if you and your spouse divorce.
For more information, see your plan's handbook.
457 Plan News – Changes to DCP contribution limits
457 Plan Contribution Limits for 2012
The Internal Revenue Service (IRS) announced new increased contribution limits on the amounts participants may contribute to tax-deferred savings plans, such as the Commonwealth's 457 Deferred Compensation Plan:
2012 Contribution Limits
|Regular annual limit for participants younger than age 50||$17,000|
|Total including Age 50+ Catch-Up||$22,500|
|Total including Standard Catch-Up (not to exceed participant's catch-up credit)||$34,000|
Standard Catch Up
During each of the three calendar years before your normal retirement age, you may contribute up to twice the regular IRS contribution limit or the amount of your Standard Catch-Up credit, whichever is less. The Standard Catch-Up credit is the amount you did not contribute, or, if you did contribute, did not contribute to the maximum allowed in previous years. You can use the Standard Catch-Up worksheet to determine your credit amount or call toll free 1-VRS-DC-PLAN1 (1-877-327-5261) for assistance.
Age 50+ Catch-Up
If you are age 50 and older, you may contribute an additional amount over the regular IRS contribution limit to the 457 Plan. You cannot use the Age 50+ Catch-Up and the Standard Catch-Up in the same calendar year.
Military Leave Make-Up
If you leave your positions for military service, you will not be able to contribute to the 457 Plan, unless you continue to receive compensation from which contributions can be made.
If you return to salaried or wage employment with an employer offering the plan, you may contribute the amount of deferrals you were unable to make during your period of military leave. If applicable, you will receive the employer cash match on these make-up contributions.
Featured FAQ: How is my retirement benefit calculated?
If you retire with an unreduced retirement benefit, the amount is based on a percentage of your average final compensation multiplied by your total years of service credit.
Here is an example of how the unreduced Basic Benefit is calculated:
|Average Final Compensation||$42,000.00|
|x 1.7%||x .017*|
|x Years of Service Credit||x 30|
|Annual Benefit Amount||$21,420.00|
|÷ 12 months||÷ 12|
|Monthly benefit amount before
taxes and other deductions
* If you are a member of SPORS or VaLORS, or you work in a political subdivision position eligible for enhanced hazardous duty coverage, your retirement multiplier may be different. Contact your human resource office or call VRS toll free at 1-888-VARETIR (1-888-827-3847) for assistance.
Want to calculate your benefit at retirement?
If you are in Plan 1, go to myVRS to use the Benefit Estimator to create an estimate, then, for a more detailed picture, use that benefit estimate and other key information in the Retirement Planner. If you are in Plan 2, contact your human resource office or VRS for assistance.
If you retire with a reduced benefit, a reduction factor or factors, based on your age and service credit at the time of retirement, will be applied to your unreduced Basic Benefit calculation.
If you retire with the Survivor Option, a Partial Lump-Sum Option Payment (PLOP) or the Advance Pension Option, a reduction factor for the option you elect will be applied to your Basic Benefit amount.