Virginia Retirement Sytem Home Page Member News
Member News Archives | May 2015 A Publication for VRS Members

2015 Legislative Summary

2015 Legislative SummaryDuring the 2015 legislative session, the Virginia General Assembly passed several bills that affect VRS members. For more information, see the 2015 Legislative Summary.

Purchase of Prior Service Provisions to Change in 2017

Never miss a chance to improve your retirement assets. If you have periods of leave or prior service that you can purchase, you may want to do so soon. This year, the General Assembly passed legislation that will change purchase of prior service provisions beginning January 1, 2017. The changes will simplify costs to purchase service for all members and ensure that the purchase cost more closely reflects the actual cost of providing the benefit in retirement.

These changes may increase the cost of purchasing service credit for some members and there will be limits on the number of months eligible for purchase for some types of service. In addition:

  • Members will no longer need to purchase the most recent service first
  • The changes standardize all PPS rules for Plan 1, Plan 2 and the Hybrid Retirement Plan
  • Purchases from most categories of service will be at approximate normal cost during a two-year window; then cost increases to actuarial equivalent cost
  • Allows for purchase of service under one-year contracts even outside of the window
  • Certain FMLA leave periods added to eligible service category
  • Member may purchase a maximum of 48 total months of prior service (except for refunded and military service).

Look for further information in future issues of Member News.

Find out if you are eligible to purchase prior service.

Thinking About Retiring? There’s a Webinar for That

Thinking About Retiring? There's a Webinar for ThatRetirement Planning doesn’t have to be hard. VRS helps make it as easy as possible with presentations and webinars that cover every stage of retirement planning.

Are You on Track? - Plan 1 and Plan 2 members increase their knowledge of VRS membership benefits and the importance of retirement planning. Topics covered include an overview of VRS benefits and optional programs, purchase of prior service and member resources such as myVRS.

Are You Ready to Retire? - Plan 1 and Plan 2 members who are within five years of retirement are walked through important retirement decisions, such as when to retire and how to select a benefit payout option. Other topics include using myVRS as a retirement planning tool and benefits after retirement.

Your Next Steps - Plan 1 and Plan 2 members who are less than 12 months from retirement are guided through the retirement application process. Topics covered include a timeline of action items, an overview of the required forms, post retirement considerations (such as taxes and COLA) and your VRS resources after retirement.

Hybrid Retirement Plan members have their own series of presentations covering benefits and investment opportunities in the hybrid plan:

Features and Benefits Series - This video series introduces the Hybrid Retirement Plan. It describes how contributions and investments are handled and explains benefits and retirement eligibility.

Defined Contribution Learning Opportunities and Investment Videos - These webinars, presentations and videos explore money management, investment options and other benefits.

What Exactly Is the Roth 457?

What Exactly Is the Roth 457?Effective July 1, you will be able to choose a Roth contribution option if you participate in the Commonwealth of Virginia 457 Deferred Compensation Plan.

Roth contributions are after-tax contributions to your Commonwealth of Virginia 457 Plan. When you withdraw the Roth contributions and any associated earnings, they are tax free, as long as you are at least age 59 ½, permanently disabled, or the assets are being paid to your beneficiaries following your death and it has been five years since January 1 of the year you made your first Roth contribution.

What are the advantages of making Roth 457 contributions?

  • Higher after-tax contribution limits than Roth IRAs: The Commonwealth of Virginia 457 Plan allows for greater after-tax savings, up to the annual 457 contribution limits.
  • Eligibility at all income levels: Unlike Roth IRAs, everyone with earned income is eligible to make Roth contributions to the 457 plan.
  • Tax planning: Having both pre-tax assets and Roth after-tax assets available in retirement allows you to choose the source of funds most advantageous to your tax situation at the time of the distribution.

Beginning July 1, you will be able to set up Roth contributions by logging into Account Access or calling Investor Services at 1-877-327-5261.

The Roth option is not available for the Hybrid 457 Deferred Compensation Plan.

Transition Begins to New Disability Program Provider

Transition Begins to New Disability Program ProviderVRS has selected Reed Group as the third-party administrator for the Virginia Sickness and Disability Program (VSDP) and the Virginia Local Disability Program (VLDP). The transition from Unum to Reed Group was effective for VSDP on May 1 and will be effective for VLDP on July 1. Benefit provisions for both plans will remain the same with no action required by current participants.

Long-term disability claims submitted before the transition will automatically transfer to Reed Group on the conversion date. Short-term disability claims with a date of disability before the transition will remain with Unum. If the claim moves to long-term disability, it will transition to Reed Group. Short-term disability claims with a date of disability after the transition dates should be filed with Reed Group. Please contact your Human Resources office for help with filing a claim with Reed Group.

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

Here’s What Happens if You Leave Employment and Defer Retirement

You have a choice. If you leave covered employment before retirement, you can take a refund of your member contributions and interest, or leave your member contributions in VRS and become a deferred member. Taking a refund ends your VRS membership and eligibility for any future benefits.

If you leave your defined benefit member contribution account with VRS, you will become a deferred member. What are the advantages of becoming a deferred member?

  • If you are vested, you may be eligible for a future VRS retirement benefit when you meet the age and service requirements for retirement.
  • If you return to covered employment, member contributions and the service credit you earn upon reemployment will be added to your member record.
  • You keep your access to myVRS and can view information from your defined benefit member record and plan for retirement online.
  • If you are a Plan 1 or Plan 2 deferred member, you receive a Member Benefit Profile (MBP), your annual online benefits statement.
  • If you are a Hybrid Retirement Plan member you may keep your defined contribution account or take a distribution without affecting your deferred member status.
  • If you are a hybrid member and are keeping your defined contribution account balance, you may manage your account through Account Access at www.varetire.org/hybrid.

Find out more about leaving employment and deferred membership for Plan 1 and Plan 2 members and for Hybrid members.

Protecting Your Family With Optional Life Insurance Coverage

Protecting Your Family With Optional Life Insurance CoverageYou may sleep better at night if you know your family has added protection. If you are covered under the VRS Group Life Insurance Program, you may purchase additional coverage for yourself through the Optional Group Life Insurance Program. With the optional coverage, you can also provide coverage for your spouse and dependent children. Optional group life insurance provides benefits for natural and accidental death or dismemberment. You pay the premiums through payroll deduction.

You can select one of four options to cover yourself, up to $750,000. Coverage is guaranteed if you enroll in the program within 31 days from your employment date or a qualifying event. You also can cover your spouse for up to half the maximum amount of your coverage, up to $375,000 and cover each dependent child who is at least 15 days old for $10,000, $20,000 or $30,000. Find out more.

Hybrid Retirement Plan Members: Take Advantage of Your Saving Opportunity

You can sacrifice a little to save a lot. Pass up the doughnut shop a couple times a week. Cook dinner at home occasionally on the weekends instead of going out. And do you really need another pair of black shoes? Take that extra money and invest in the future.

If you’re a Hybrid Retirement Plan member, you have until June 15 to increase the amount of your voluntary contributions for the next quarter, which goes into effect July 1. You can change your voluntary contribution election once a quarter.

You can increase your voluntary contributions in 0.5 percent increments, up to 4 percent of your creditable compensation. Your employer matches the first 1 percent of your voluntary contribution with a 1 percent contribution and matches each additional 0.5 percent increase with a 0.25 percent contribution. This is in addition to the 1 percent mandatory employee contribution to the defined contribution component of the plan. Your employer matches your contribution and a percentage of voluntary contributions.

To increase the amount of your voluntary contributions, go to www.varetire.org/hybrid and log into Account Access, or call Investor Services at 1-877-327-5261 and select option 1.