| Q1: |
How do I participate? |
| A1: |
Contact the Pension System
office for a packet that explains Retiree DROP for Pensioners. The explanation,
application, beneficiary form, authorization, and tax information
will be included.
|
| Q2: |
After enrollment, when will deferrals begin? |
| A2: |
Generally, deferrals will begin for the month in which the System receives your application. If your application is received after the pension payroll for the month has been processed, your deferral will begin the next month.
|
| Q3: |
Is there a minimum length
of time to participate? |
| A3: |
Yes, one month.
|
| Q4: |
If I want to join later
and not now, can I? |
| A4: |
Yes. You can join Retiree DROP any time before age
70 1/2.
|
| Q5: |
Do I have to defer my entire monthly benefit amount? |
| A5: |
No. You can defer all or just a part of your monthly benefit into your Retiree DROP account. |
| Q6: |
How can I get money out of my Retiree DROP account? |
| A6: |
You can take money from your Retiree DROP account in one of several ways.
1. A lump sum distribution of your entire account balance.
2. A partial lump sum ($1,000 minimum) at any time.
3. An installment amount added monthly to your regular monthly benefit payment.
(Checks for lump sum distributions are generally issued on Friday, if the request is received by close of business Tuesday.) |
| Q7: |
Can I change my mind after I join DROP? |
| A7: |
Yes. You can stop or restart your deferral or change the amount you defer at any time before age 70 1/2. |
| Q8: |
If I defer all of my benefit into Retiree DROP, can I elect to have my health insurance premium deducted from the deferral? |
| A8: |
Yes. The System will deduct for your health insurance premium before making the deferral of the remainder of your benefit into your DROP account. By electing to have your premiums deducted from your deferral, the first $3,000 of the amount deducted reduces your taxable income. If you can choose to “self-pay”, that is, authorize the System to debit your checking account for the premiums, you lose the tax break. |
| Q9: |
Is there a maximum length of time that I can defer my benefit? |
| A9: |
Yes. The deferral can continue until age 70 1/2. At that time, as required by the Internal Revenue Code, you must begin to receive your regular monthly benefit and commence distribution from your DROP account over your life expectancy in accordance with IRS rules. |
| Q10: |
Is interest credited to my DROP account? If so, how? |
| A10: |
Interest is credited to your Retiree DROP account, compounded daily. |
| Q11: |
Is the interest rate guaranteed? |
| A11: |
Yes. Under current law, the interest rate can be not less than 8% and not more than 10% and will vary no more that 0.25% from one year to the next. The Board approves the interest rate each year effective October 1st . The rate is the arithmetic average of the System's annual investment return for the previous ten years, as determined by the System's actuary.
|
| Q12: |
If I am in the Supplemental
Plan, will participation in DROP affect my Supplemental Plan benefit? |
| A12: |
No
|
| Q13: |
How can I get more information? |
| A13: |
You may call the Pension
System office and either speak with a Benefits Counselor or arrange
to come in for an appointment. |