Benefit Payout Options

The Basic Benefit is based on your age at retirement, total years of service credit and average final compensation. Average final compensation is the average of the 36 consecutive months of highest compensation in your history of VRS-covered employment.

The amount of the benefit is calculated using a formula that factors in your average final compensation, total service credit and a retirement multiplier. The Basic Benefit does not provide a continuation of a benefit to a survivor. You can elect this option with the Partial Lump-Sum Option Payment (PLOP).

With this option, you elect to receive a lower monthly benefit during your lifetime so that your survivor can receive a monthly benefit after your death. You name your survivor when you apply for retirement. You can elect this option with the Partial Lump-Sum Option Payment (PLOP).

You may choose a whole percentage, between 10 percent and 100 percent, of your benefit to go to your survivor. Your benefit amount is based on this percentage, your age and the age of your survivor at retirement.

Note: Internal Revenue Service regulations limit the percent that may go to a non-spouse survivor.

You may revert to the Basic Benefit or name a new survivor if:

• Your survivor dies.
• Your survivor is your spouse and you divorce with fewer than 20 years of marriage.
• Your survivor is your spouse, you divorce after 20 or more years of marriage and your survivor either dies, remarries or consents in writing to a change in the benefit.
• You provide VRS a written consent from your survivor giving up claim to a benefit along with proof of your survivor’s good health.

Note: If VRS has an Approved Domestic Relations Order (ADRO) on file, your benefit must be paid as directed by the ADRO.

If you work at least one year beyond the date you are eligible for an unreduced retirement benefit, you may elect to receive a one-time Partial Lump-Sum Option Payment (PLOP). This option reduces your monthly benefit in order to provide you a lump sum payment at your retirement. You can elect this option with the Basic Benefit or Survivor Option.

You may elect up to three times the amount of your annual benefit. The amount depends on how long you work beyond your eligibility for an unreduced retirement as shown in the following table:

Partial Lump Sum Option (PLOP) Payment Amounts

Earned Service Beyond Unreduced Retirement Eligibility Date	PLOP Payment Amount	Example PLOP Payment Amount (Annual Benefit Amount = $32,000)
12 months	1 x annual Basic Benefit Amount	$32,000
24 months	1 or 2 x annual Basic Benefit Amount	$32,000 or $64,000
36 months or more	1, 2, or 3 x annual Basic Benefit Amount	$32,000, $64,000 or $96,000

Taxes and Rollovers

The PLOP is subject to federal income tax of 20 percent and, if you live in Virginia, state income tax of 4 percent. You are not taxed on any portion of the PLOP on which you already paid taxes. You may defer taxes by rolling over the taxable amount of the PLOP to the Virginia Cash Match Plan, an Individual Retirement Account (IRA) or other qualified tax-deferred savings plan. For additional information, read the IRS 402(f) Special Tax Notice 46kb, contact your tax advisor or contact the Internal Revenue Service at www.irs.gov.

Qualifying for the PLOP

You must be actively employed during the period beyond your unreduced retirement eligibility date to qualify for the PLOP. Purchased service credit or granted service credit may not be used to qualify for the PLOP.

Your eligibility for the PLOP is based on the date you first become eligible for an unreduced retirement benefit. Examples:

Example One

When you joined VRS, you were eligible for unreduced retirement at age 55 with 30 years of service credit (55/30). On July 1, 2008, when you were age 51 with 30 years of service credit, you changed to a position providing unreduced retirement at age 50 with 30 years of service credit (50/30). You want to retire on July 1, 2009 when you will be age 52 and have 31 years of service credit. Are you eligible for a PLOP?

Yes. You first became eligible for an unreduced retirement on July 1, 2008, when you moved from the 55/30 plan to the 50/30 plan. Therefore, you will qualify for a one-year PLOP on July 1, 2009.

Example Two

Effective July 1, 2008, state law changed to provide all VRS-covered deputy sheriffs with enhanced coverage for hazardous duty. This coverage provides for unreduced retirement at age 50 with 25 years of service credit (50/25). You are a deputy sheriff who, before the law changed, was eligible for unreduced retirement at age 50 with 30 years of service credit (50/30). You are now age 51 with 26 years of service credit and want to retire with a PLOP. Are you eligible?

Not yet. When you changed to the 50/25 plan, you became eligible for an unreduced retirement benefit on July 1, 2008. You have to work at least one year beyond your unreduced retirement eligibility date to qualify for a PLOP.

With this option, you elect to temporarily increase your monthly benefit. The temporary increase in your benefit begins when you retire. It continues until an age you choose between age 62 and the age you are entitled to full Social Security benefits. At that point, your VRS benefit is permanently reduced.

To calculate this option, VRS adds a percentage of your estimated monthly Social Security benefit to your monthly VRS benefit to arrive at your increased benefit amount. The amount of the percentage is based on several factors including your age when you retire and the age you want your increased benefit to permanently reduce.

Your benefit is reduced by the amount of your estimated full Social Security benefit. However, it will never be reduced by more than 50 percent of the Basic Benefit amount.

This option does not affect the amount of your Social Security benefit. You also may draw your Social Security whenever you are eligible for it, regardless of the age you choose for your VRS benefit to reduce. Neither the temporary increase nor permanent reduction in your VRS benefit will change.

The Advance Pension Option does not provide a continuation of a benefit to a survivor. You cannot elect the Advance Pension Option with other benefit options.

This option is available if you are retiring under VRS with an unreduced benefit. If you are a member of the State Police Officers’ Retirement System or the Virginia Law Officers’ Retirement System, you may elect this option under unreduced or reduced retirement. Other members retiring under VRS or at age 55 with at least five years of service credit also may elect this option.

You must provide VRS a copy of your Personal Earnings and Benefit Estimate Statement (PEBES) from the Social Security Administration. The estimate must be less than 12 months old, assume you will have no future earnings after leaving your VRS-covered position and be based on your Social Security earnings record. Request this statement by completing Form SSA-7004 which is available at your local Social Security Administration office, by calling the Social Security Administration toll free at 1-800-772-1213 or by visiting www.ssa.gov.