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S-60 Implementation Process : Required Forms & Final Steps

S-60 Implementation Process : Required Forms & Final Steps. Diana (Donnie) McGee – MCCC VP ORP Committee Presentation – Revised 5/7/15. PENSION REFORM ACT of 2011: Section 60 – THE ORP PROVISION.

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S-60 Implementation Process : Required Forms & Final Steps

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  1. S-60 Implementation Process:Required Forms & Final Steps Diana (Donnie) McGee – MCCC VP ORP Committee Presentation – Revised 5/7/15

  2. PENSION REFORM ACT of 2011:Section 60 – THE ORP PROVISION • One-time, time-limited, opportunity for ORP participants to transfer retirement coverage to the MSERS • IRS ruling on 9/25/13 enables this legislation. • Section 60 amendment (May 2014): • Current implementation process and related timelines are established. • Interest on the cost to transfer is temporarily frozen as of 12/31/13. • Implementation began on May 1, 2014. Diana (Donnie) McGee ORP/S-60 Workshop, Revised 5/7/15

  3. Section 60 implementation Process:A 5 - 6 Step Process, with deadlines • Eligibility Package: 4/15 – 5/1/14 • Section 60 Effective Date: 5/1/14 • MSERS members, with ORP time, Effective Date 7/27/14 • Notice of Interest Form Submission: Deadlines have passed for all eligible employees. • Retirement Plan Info. Package: Sent by the Dept. of Higher Ed. (DHE) within 180 days (in progress) • Plan Election/MSERS Enrollment Forms: Returned by employees to the DHE in 180 days • Transfer of ORP assets: Completed within 90 days* • Final S-60 Cost Statement: Typically paid within 35 days *See Slide15 for a detailed sequence of events. Diana (Donnie) McGee ORP/S-60 Workshop, Revised 5/7/15

  4. Retirement plan information package: Required, Optional & special forms • Cover Letter • Statement of Service and Related Cost • Election Forms: MSERS or ORP? • MSERS Enrollment Form • GIC Form-1: for long-term disability only (optional) • ORP Group Life Insurance Conversion Form (optional) Special Forms: • TIAA-CREF “Fund Direction” Form for TIAA customers only • MSERS Retirement Application for those retiring right away or in the next 120 days.* • See also DHE’s S-60 website update (3/16/15), Section 6. *Those planning to retire before 1/1/16 should let the DHE know if you did not receive this form and indicate your retirement date. Diana (Donnie) McGee ORP/S-60 Workshop, Revised 5/7/15

  5. Retirement PackageCover Letter: Instructions and Due Date • Lists all the enclosures (the forms needed to complete the ORP to MSERS transfer process) • Provides a brief explanation as to the purpose of each form. • Notes your unique & specific due date for the submission of the MSERS Election Form. • 180 days from the mailing date of the Retirement Package • No timely receipt of the MSERS election form: participant remains in the ORP. • Emphasizes that all forms be mailed together to the DHE. Marked, edited or altered forms will not be accepted. MISSING FORMS: Email the DHE at ORP@bhe.mass.edu Diana (Donnie) McGee ORP/S-60 Workshop, Revised 5/7/15

  6. Statement of qualifying service:A cost & service Estimate • Estimates the total Qualifying Service and cost as of a specific date • Based on an employEE’s requiredcontributions, plus actuarial assumed interest (8%), compounded yearly* • ORP Qualifying Service: Interest accrual begins with the first required contribution to the ORP. • MSERS Qualifying Service: Accrual begins with the date MSERS funds transferred to the ORP. • For time spent in the MSERS immediately prior to enrolling in the ORP • Total Qualifying Service: Cost estimate includes ORP time plus MSERS participation (where appropriate) • Temporary interest accrual freeze as of 12/31/13 • Updated “bill” includes increased service since date of estimate. • Final cost increases only by the additional ORP contributions. • For questions on cost or service estimates: orpinfo@tre.state.ma.us Diana (Donnie) McGee ORP/S-60 Workshop, Revised 5/7/15

  7. what’s available to pay the s-60 bill?A Provider Statement overview * To estimate what you owe for the cost to transfer: • Subtract your mandatory employEE contributions (plus investment gain) from the SRB cost estimate. • Subtract any voluntary ORP assets (if you choose to use them). • The balance approximates what you owe. • For further information on determining transfer cost , see DHE’s FAQ #8. Understanding your ORP Provider statement: Fidelity, TIAA-CREF & VALIC should categorize assets in 3 ways: • REQUIRED employEE contributions, plus gain • REQUIRED employER contributions, plus gain • EmployER contributions may not be used to pay the cost to transfer. • VOLUNTARY employEE rollovers may also exist: • MSERS contributions transferred to the ORP, plus gain • Other retirement funds transferred to the ORP, plus gain *Note the rules & restrictions with TIAA locked funds (slides 16 & 17). Diana (Donnie) McGee ORP/S-60 Workshop, Revised 5/7/15

  8. MSERS Election Form:An Authorization to Transfer funds Section on “Recitals pertaining to Section 60” • Sign and date the form to request MSERS membership & authorize the transfer of all required ORP contributions. Section on “OTHER ORP ASSETS” (voluntary MSERS or other rollovers) • You may instruct the DHE to use your voluntary ORP assets to pay for any shortfall. • If the amount needed on either line is unknown, say “yes” and leave the $ amount blank. The DHE will work with employees to transfer only the amount needed to purchase service. • Any voluntary funds remaining will be held in the ORP for later use. • Sign and date this section for the transfer of voluntary assets. • This section pertains only to those who rolled over additional funds into their ORP account(MSERS or other retirement funds). Mail this along with all required forms to the DHE address (Slide 14). Diana (Donnie) McGee ORP/S-60 Workshop, Revised 5/7/15

  9. MSERS enrollment form:Authorization to Join the MSERS • To switch coverage to the MSERS, complete this enrollment form. • Respond to Section A only, Questions 1 – 5. • Sign Section A in two places to authorize: • MSERS membership (#4) and • Any nominated beneficiary (#5). • Disregard Section B. The DHE will ask a campus administrator to complete and sign this section. • Return this together with all required transfer forms, postmarked by the required due date. Diana (Donnie) McGee ORP/S-60 Workshop, Revised 5/7/15

  10. GIC Form-1 for S-60 Employees:long term disability Insurance only • Use this form for long term disability insurance only. • Do not complete this if you have already purchased GIC’s LTD insurance. • This form is optional. • Complete the top section only (all about you). • Select the “Long Term Disability” box. • Report your annual salary (next to the LTD box). • Next line: State the effective date of current annual salary. • Sign and date the form at the bottom. • Send this to the DHE with the other required forms. • The DHE will sign and deliver this form to the GIC. Diana (Donnie) McGee ORP/S-60 Workshop, Revised 5/7/15

  11. Standard Insurance Conversion Form:Optional Group Life Insurance • Group term life insurance under the ORP ends when you switch to the MSERS. • Complete this form to request more information on “converting your ORP group term life insurance policy to a policy that you would own and for which you would pay the premiums.” (DHE) • The form is simply a request to know the cost for a certain amount of coverage, “not a commitment to purchase the insurance.” (DHE) • Any such conversion is voluntary. Diana (Donnie) McGee ORP/S-60 Workshop, Revised 5/7/15

  12. Tiaa-cref direct transfer form:requirements and Guidelines * • All S-60 employees planning to transfer TIAA/CREF ORP assets to the MSERS must complete this form. • Two T/C Direct Transfer forms exist: • One for those who will retire on or before 12/31/15 • One for all other TIAA/CREF S-60 transferees • Each form authorizes the DHE to transfer T/C assets to the State Retirement Board to purchase Qualifying Service. • Sign and complete the “Employee Asset Transfer Authorization” section: • Use the guidelines provided for the completion of the MSERS Election Form. (Slide 8) *See also the rules and restrictions with TIAA locked funds (slides16 & 17 & DHE’s S-60 Web News: 3/16/15, Section 5.) Diana (Donnie) McGee ORP/S-60 Workshop, Revised 5/7/15

  13. MSERS Retirement Application:The Sequence of Events The State Ret. Board (SRB) application is included if you identified a retirement date that is within 2 months of the end of your 180 day election period. • Complete this form, using the date you will end employment as your retirement date. • Return this to the DHE who will forward this to the SRB after your last payroll contribution to the ORP. • For Deferred or New Retirees: • The DHE sends this application to the SRB within 2 weeks of receiving your MSERS Election Form. • The SRB typically calculates a monthly retirement income after the ORP Qualifying Service and any additional creditable service have been purchased. Diana (Donnie) McGee ORP/S-60 Workshop, Revised 5/7/15

  14. The Final MSERS Election Step:Submission of the MSERS Forms • Copy and mail all appropriate forms from the Post Office, certified, with return receipt required, to: Optional Retirement Program – Election Form MA Department of Higher Education. Room 625 11 Beacon St., Boston, MA 02108 • Retiring this year: Return the completed forms ASAP. • Mail this package with a postmark date of no later than the specific return date printed on your Cover Letter. • Use the enclosed, addressed envelope, if possible. Diana (Donnie) McGee ORP/S-60 Workshop, Revised 5/7/15

  15. DHE Receives your MSERS Election form:What happens next? * • MSERS Membership Application is processed. • Employee’s payroll contributions are directed to the MSERS. • State Retirement Board (SRB) updates the cost and service figures and reports them to the DHE. • The “larger of” language in S-60 (excluding voluntary ORP funds) determines the final cost. (See DHE FAQ #8.) • DHE transfers the authorized ORP assets to the MSERS and State Pension Fund to pay what’s owed. (90 days) • SRB reports any balance due to the new MSERS member. (35 days to remit payment) • A remaining balance may be paid via a payroll deduction plan or by other occasional lump sum payments. • Remaining service will be purchased, as is appropriate. *See DHE’s Website FAQ (#10 and #13). Diana (Donnie) McGee ORP/S-60 Workshop, Revised 5/7/15

  16. What if you own TIAA Traditional funds?Payout restrictions & related notes * Two TIAA products are “locked” with clear payout restrictions: • Group Retirement Annuity: 9 year, 1 month payout • Retirement Choice Annuity: paid out in 84 monthly installments (7 years) To unlock these funds to pay the cost to purchase service: • Contact your TIAA Rep. to set up a Transfer Payout Annuity (TPA) or Systematic Withdrawal (SWAT). • Unlocked installments can later purchase remaining service over time or be used to pay down a payroll deduction “loan.” • Note: A payroll deduction plan is not required to purchase remaining service. • To minimize cost, consider timing when transferring TPA or SWAT installments to the SRB to purchase more service or reduce the loan principal. (DHE) *Note the exceptions to these guidelines(next slide). *See DHE’s Website FAQ (#10, #12 & #13) and Slide 18. Diana (Donnie) McGee ORP/S-60 Workshop, Revised 5/7/15

  17. More on the use of TIAA-CReF funds:Liquidity caveats & regulations * • A Transfer Payout Annuity (TPA) can be initiated only on sums of $10,000 or more. • Assets held in a TPA may not be liquidated, except via installments over time (not even for those retiring before 1/1/16). • Any sum under $5,000 may be liquidated immediately. • Any sum of $5,000 – $9,999 will remain in the ORP, as assets owned by the participant. For those retiring prior to 1/1/16, a full lump sum liquidation is allowed, with no exit fee. (TPA and SWAT assets are excluded.) • All TIAA-CREF customers must complete a T/C Direct Form. • CREFF & TIAA Real Estate assets are fully liquid/useable. *DHE’s FAQ #12 and S-60 Web News: 3/16/15, Section 6 Diana (Donnie) McGee ORP/S-60 Workshop, Revised 5/7/15

  18. How to Pay the final S-60 Bill:A variety of options* After the transfer of ORP assets, pay the balance due with: • Smart Plan Assets, 403(b) Elective Deferral Savings Plan Assets; OBRA assets • IRAs, 401(k) assets and other 457 (b) plans (A rollover is required first.) • Single sum payments from personal assets • Payroll deduction payment plan (6 months to 5 years) • Any combination of the above Or buy remaining service at a later date (via the TIAA installments unlocked by a TPA or SWAT). DHE suggests: When using lump sum transfers to pay down a payroll “loan” or to purchase more service, wait until the transfer amount equals the balance due to reduce the overall cost. *See DHE’s S-60 Website FAQ (#10 and #13). *See MTA’s ORP/S-60 web toolkit for loan information (Slide 20). Diana (Donnie) McGee ORP/S-60 Workshop, Revised 5/7/15

  19. Purchasing “other Service”the possibilities and Parameters For “Other Service” purchases, the participant must: • Join the MSERS, • Purchase all S-60 qualifying service, and • Fully vest in the MSERS (10 years of Full-time Equivalent Employment) “03” Contract Service: Adjunct Teaching & Professional Work • For non benefited work prior to being hired full-time; no gaps in service; hired FT for a very similar position • Up to 4 years of service credit allowed • Interest charged at the buyback rate of 4 percent • Takes months to complete (Begin the process now.) Out of state teaching: member must be in a teaching position; this may require extensive documentation. Visit the SRB website for a related ORP/S-60 advisory: http://www.mass.gov/treasury/docs/retirement/orp-advisory-may-2014.pdf Diana (Donnie) McGee ORP/S-60 Workshop, Revised 5/7/15

  20. QUESTIONSon the S-60 Process:Review resources Before you ask! • For the DHE’s detailed ORP FAQ on the S-60 process: http://www.mass.edu/forfacstaff/orp/section60faqs.asp#q9 • For DHE updates on the S-60 implementation: http://www.mass.edu/forfacstaff/orp/section60.asp • For MTA’s comprehensive ORP Toolkit: http://www.massteacher.org/issues_and_action/ongoing_issues/orp.aspx • For questions on service or cost estimates, contact the Retirement Board: orpinfo@tre.state.ma.us • For questions on forms, the transfer of assets, or the use of TIAA funds: ORP@bhe.mass.edu • For MTA member questions that remain unanswered: ORP@massteacher.org Diana (Donnie) McGee ORP/S-60 Workshop, Revised 5/7/15

  21. To better plan for your RetirementConsider these resources • Go to DHE’s ORP website for participants: http://www.mass.edu/foremployees/orp/orp.asp • Key features of the two retirement plans are outlined. • Section 60 Pension Reform link has Updates and Q & A document. • Review the Benefit Guide to MSERS: www.mass.gov/treasury/docs/retirement/retguide.pdf • Note the MA SRB retirement percentage charts. • Meet with financial/retirement experts. • Meet with an MTA retirement consultant. • Note: Social Security Offsets apply to employees in both plans: http://www.socialsecurity.gov/gpo-wep/ Diana (Donnie) McGee ORP/S-60 Workshop, Revised 5/7/15

  22. S-60 Implementation Process:PowerPoint Disclaimer: • The information in this document is designed for educational purposes only, to provide general information based on the current law and implementation policies of the Department of Higher Ed (DHE) and the State Retirement Board (SRB). • This is not intended to be legal advice. The principles discussed herein do not necessarily apply to all specific fact situations. Changes in the law and its implementation after the date this information was published may affect its accuracy. Sources for this PowerPoint: the ORP S/60 statute, the DHE’s S-60 FAQ and website updates, and the State Retirement Board’s website Diana (Donnie) McGee ORP/S-60 Workshop, Revised 5/7/15

  23. Thanks TO so Many players in this (now) 9 year ORP journey! • MA Community College Council (MCCC) • MCCC’s ORP Ad Hoc Committee (statewide representation from all Public Higher Education sectors) • MCCC’s Strategic Action Committee • MTA leadership, MTA Legal & Governmental Divisions • Department of Higher Education & ORP Administration • State Retirement Board Thanks to the ORP participants who told their stories and the activists who led the charge! Diana (Donnie) McGee ORP/S-60 Workshop, Revised 5/7/15

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