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Member News Archives | February 2015 A Publication for VRS Members

VRS Director Robert Schultze Resigns; Bishop Named Acting Director

Robert SchultzeThe Virginia Retirement System Board of Trustees has accepted the resignation of VRS Director Robert P. Schultze. Schultze left VRS this month to become President and CEO of ICMA-Retirement Corporation, a leading provider of public-sector retirement plans and related services dedicated to helping public-sector employees build retirement security.

During his tenure at VRS, Schultze focused on modernizing the agency’s computer systems and improving service to the more than 600,000 members, retirees and beneficiaries. In addition, he guided VRS through pension reform and was instrumental in efforts to increase funding for the plan. Projects undertaken by him will continue to improve technology and the development of customer-facing tools to help members better understand and apply for benefits.

“Bob has overseen VRS during a period of rapid change and transition, and has maintained stability while bringing about significant improvements to and transformation of the plan,” said VRS Board of Trustees Chairman Diana F. Cantor. “He is recognized as an authority in pension administration and the implementation of complex new Governmental Accounting Standards Board pension accounting rules. The commonwealth has benefited greatly from his knowledge and expertise. We are grateful for his leadership and dedication and wish him the best in this new phase of his career.”  Read the press release on Schultze.

Patricia S. BishopThe Board of Trustees will retain a consultant in the near future to assist with a national search for a new director. In the interim, the board has named Patricia S. Bishop acting director, effective February 17. Bishop, who has served the commonwealth for more than 20 years, joined VRS in 2008 and has served as deputy director since 2011, overseeing implementation of benefit policy and processing, retirement counseling, call center services, training and education services and insurance programs.  Read the press release on Bishop.

Three Steps to Protecting Your Financial Health in Retirement

You want good physical health during retirement, of course, but financial health is almost as important. Here are three steps to take now to make a financially healthy retirement more likely.

  1. Make saving automatic. The Hybrid Retirement Plan, the Commonwealth of Virginia 457 Deferred Compensation Plan and many 403(b) plans allow you to save through automatic deduction every pay period. Even if you start with a small amount of voluntary contributions, maybe $25 a pay period, it adds up and you can increase the amount at any time. Also, income taxes on your contributions to these plans are deferred until withdrawn.
  2. Let your employer help you save. Many of the deferred compensation plans, including the Hybrid Retirement Plan and the 457 Deferred Compensation Plan, offer a cash-match plan. Your employer matches a portion of your contributions to these plans, increasing your savings even more.
  3. Keep tabs on your progress. Your myVRS account gives you the tools to keep track of your saving and assess how close you are to meeting your goals. If you are in Plan 1 or Plan 2, your Member Benefit Profile (MBP), a yearly benefit summary, gives the amount currently in your VRS member account, your years of service, projected retirement date and benefit amount, and group life and optional life insurance coverage, if you participate.

Get Ready for America Saves Week, February 23 – 28

america saves weekIf the past couple of months of holiday spending and New Year frugality have led you to rethink your spending habits, here’s one more step to take toward financial health – celebrate America Saves Week, February 23-28.
Seize the opportunity to concentrate on taking charge of your expenses, reducing your debt and increasing your savings for retirement. VRS is happy to help you celebrate with free online presentations, webinars, classroom sessions and seminars to increase your saving savvy:

Money Matters for Virginians
These online courses on financial basics, such as banking, investments, financial planning and home finances, can improve your financial awareness.

Are You on Track?
Available as an online presentation or classroom session, Are You on Track? is for new and current members in Plan 1 and Plan 2. It provides you with details on your VRS membership and how to plan and save for retirement.

Retirement Education Seminar I
This is an expert-led seminar developed by VRS that provides advice on planning for retirement, mid- and long-range financial planning, estate planning and legal readiness.

Get specific. Use your own projected investment earnings and retirement benefit account in the Retirement Planner in myVRS to estimate your retirement income and needs. If you are in Plan 1or Plan 2, you can use different years of service and retirement ages to come up with projected benefit amounts through the myVRS Benefit Estimator.

VRS Selects New Provider for VSDP and VLDP

VRS has selected Reed Group as the third-party administrator for the Virginia Sickness and Disability Program (VSDP) and the Virginia Local Disability Program (VLDP). This will require a conversion from UNUM to Reed Group. The conversion for VSDP will become effective May 1, 2015, and for VLDP, July 1, 2015. Benefit provisions for both plans will remain the same. Any short-term disability claims incurred before these dates will remain with Unum until the claim moves to long-term disability.  At that time, the claim will transition to Reed Group.  VRS will be providing more information on this change in the next few months.

Both VSDP and VLDP provide income protection if you can’t work because of a non-work related or work-related disability.

The Basics of Purchasing Prior Service Credit

You may be able to enhance your VRS retirement benefit by purchasing prior service credit, such as refunded service, credit for educational leave, military service, leave for the birth or adoption of a child or credit for part-time or public service. Purchased service counts toward the time you need to become vested and your eligibility for the health insurance credit. It also may increase your benefit or allow you to qualify for retirement at an earlier date. You may be eligible to purchase these types of service.

The eligibility period and the cost for purchasing the service depends on when you buy it, with different time limits for Plan 1, Plan 2 and for Hybrid Retirement Plan participants. You must purchase the service credit before you retire, while you are an active member. If you are purchasing more than one period of service, you must purchase the most recent period first.

If you are interested in purchasing prior service, start with the member handbook for your plan and contact your human resource office.

Commonwealth of Virginia 457 Plan to Offer Roth 457 Option

Starting July 1, 2015, the Commonwealth of Virginia 457 Deferred Compensation Plan will offer participants a Roth contribution option. Participants will be able to designate a portion, or all, of their 457 Plan contributions as Roth contributions.

Roth Contribution Benefits

Roth deferrals are made on an after-tax basis. The deferrals and associated earnings can be withdrawn tax-free in retirement if the requirements for a qualified distribution are met. Participants will be able to designate a portion, or all, of their contributions for the Roth treatment. See the 457 plan contribution limits for 2015, which include both pre- and post-tax contributions.

In addition to potentially tax-free distributions in retirement, members who make Roth contributions to a 457 plan can take advantage of the following benefits:

  • Higher after-tax contribution limits than Roth IRAs: 457 plans allow for greater after-tax savings.
  • Eligibility at all income levels: Unlike Roth IRAs, everyone with earned income is eligible to make Roth contributions to their employer’s 457 plan.
  • Tax planning: Having both pre-tax assets and Roth assets available in retirement can be a valuable benefit, allowing participants to choose the source of funds most advantageous to their situation at the time of the distribution.

Watch for additional information on the Roth 457 option in an upcoming issue of the Focus newsletter for members.

2014 VRS Annual Financial Report Available Online

The VRS 2014 Comprehensive Annual Financial Report is now available. The annual report summarizes VRS investment performance during the most recent fiscal year and includes information on investment returns, benefits and distributions. It also features statistics on employers, members and retirees.

Commonwealth of Virginia 457 Plan Contribution Limits Set for 2015

Now you can save more in your tax-deferred account. The Internal Revenue Service (IRS) increased 2015 limits on the amounts you can contribute to tax-deferred savings plans, such as the Commonwealth of Virginia 457 Deferred Compensation Plan.

Your basic contribution limit

The yearly limit if you are under age 50 increased to $18,000.

Age 50+ Catch-Up

If you are age 50 and older, you can contribute an additional amount over the basic contribution limit to the Commonwealth of Virginia 457 Deferred Compensation Plan. This limit increased to $6,000, for a total of $24,000.

Standard Catch Up

If you are within three years of your normal retirement age, you may contribute twice the annual limit of $18,000, or the annual limit of $18,000 plus the amount of the limit that you did not contribute in previous years, whichever is less. You cannot use the Age 50+ Catch-Up and the Standard Catch-Up in the same calendar year.

Virginia General Assembly 2015 Session Underway in Richmond

The 2015 General Assembly convened January 14 and continues through February 28.The General Assembly is considering several pieces of legislation that could affect VRS. Follow the progress of bills and look for a summary of VRS-related legislation in the April issue of Member News.

FAQ: I’m Covered by the Hybrid Retirement Plan – How Can I Find Out More About the Plan?

You can find most of the information you need about your Hybrid Retirement Plan right at your fingertips:

The Hybrid Retirement Plan website gives you information about plan provisions, mandatory and voluntary contributions, benefits, investment options and performance, the forms you may need and educational materials.

The Hybrid Retirement Plan Handbook for Members provides details about your plan, its benefits and investment options.

The Hybrid Retirement Plan Features and Benefits Video Series is an overview of the plan and includes a description of how contributions and investments are handled, an explanation of benefits and retirement eligibility.

Investment Videos provide information about your choosing your investment path and your investment options.

As a Hybrid Retirement Plan participant, you can register for a group seminar or a one-on-one consultation. Or you can register for a live webinar to learn about the Hybrid Retirement Plan.