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Oct 21, 2020, 1:57 PM By MOSERSWhat is the difference between taking a 5 year vs. a 4 year backdrop? Do you wait one year after you retire for the 4 year backdrop?
When we calculate your monthly benefit we use your final average pay (FAP) and credited service as of your BackDROP date. This is where the difference between 4 and 5 years would come into play. The 5-year milestone significance is that it is the longest BackDROP period allowed by the state statutes. It is likely that your monthly payments will be lower if you take BackDROP than they would be without BackDROP. You may be able to increase your monthly payment by not electing BackDROP or by electing a BackDROP period of 4 years rather than 5. On the other hand, if you elect a 4-year (or shorter) BackDROP period, you should expect that your lump-sum amount will go down. A MOSERS benefit counselor can provide you with estimates for all your options.
If you elect BackDROP, we will issue your lump-sum payment on the same day as your first monthly benefit payment.
Oct 7, 2020, 4:19 PM By MOSERSIs there a way to purchase 48 months of military time, where Mosers deducts the purchase amount from the Back Drop total. ???
No. You must complete any purchase of military service prior to applying for retirement. BackDROP funds are distributed after retirement. However, if you have money in your MO Deferred Comp account, as a member of MSEP or MSEP 2000, you can use those funds to purchase prior military service (exception: Roth 457 assets cannot be used to purchase service credit). You can view our Purchasing and Transferring Service Credit brochure (MSEP & MSEP 2000) for more information. If you have additional questions, feel free to contact a MOSERS benefit counselor or contact MO Deferred Comp.
Oct 6, 2020, 8:46 AM By MOSERSHi, If I choose not to receive drop back may I in the future draw money from drop back? Thank you.
No. If you retire and do not elect BackDROP, you will get your ongoing monthly benefit but there is no option for a BackDROP lump-sum payment in the future once you have retired.
You may continue working longer than 5 years beyond your normal retirement date if you wish, and still have the option of electing BackDROP at retirement.
Once eligible (members of MSEP and MSEP 2000 who work at least two years past their normal retirement eligibility date may elect BackDROP), you will make your decision about whether or not to elect BackDROP during the retirement process on your Election Form.
Aug 10, 2020, 5:48 PM By MOSERS
Next year I'll be five years into my backdrop. I'm hearing that if you work past that you'll actually lose money. True? What's the particular significance of the five-year milestone? Thank you!
The amount of a BackDROP lump sum could decrease if you were eligible to retire before age 62 but worked beyond age 62 and retired under MSEP 2000. This is due to a provision in MSEP 2000 called the Temporary Benefit. The Temporary Benefit is an amount paid to you in addition to your Base Benefit but the Temporary Benefit ends at age 62. The 5-year milestone significance is that it is the longest BackDROP period allowed by the state statutes.
Since your BackDROP lump-sum amount is 90% of what you would have received if you had been retired during the BackDROP period, it can max out at age 62 under the MSEP 2000 and begin decreasing if you work beyond age 62 (and retire under MSEP 2000).
The Temporary Benefit is not available to those who retire under MSEP, so your MSEP BackDROP lump-sum amount will not decrease if your work beyond age 62 and retire under MSEP.
You are not required to take BackDROP, regardless of how long you work beyond normal retirement eligibility, and you don’t have to notify MOSERS of any decisions about BackDROP until you retire.
The BackDROP is simply a benefit payment option that is available to eligible members. Members who are or may become eligible for BackDROP are encouraged to attend a Ready to Retire/PreRetirement Planning Seminar and/or contact a MOSERS benefit counselor to make an appointment for further explanation.
*BackDROP is available only to general state employees who are members of MSEP & MSEP 2000 and who work at least two years beyond normal retirement eligibility
I would encourage you to utilize our Comparison Calculator to look at different scenarios. Additionally, our benefit counselors would be happy to provide you with a more in-depth explanation of BackDROP, your options, and various benefit estimates under different scenarios. Contact us to schedule an appointment or virtual counseling session.
Jul 21, 2020, 2:00 PM By MOSERSSince I am in backdrop currently, I am very curious about the possibility of 70 and out and the medical premium being paid for or reduce to entice early retirement. Is there any basis to these rumors. It would save the State a lot of money long tern and make some seasoned employees retire early. Do we know anything but a rumor?
No, we are not aware of any legislative proposals related to these rumors. MOSERS administers retirement benefits but we do not have the authority to change plan provisions. Any retirement incentive, such as paying retiree medical insurance or changing retirement eligibility rules, would require legislative authorization. There were no retirement incentives that passed during the recent legislative session, which ended May 15. Any time the Missouri General Assembly is in session, you can follow any bills affecting MOSERS on our Legislation page. If the Governor were to call a special session of the General Assembly having to do with the state employee benefits that we administer, we will post that information on our website. Otherwise, the General Assembly will meet again in January 2021.
RETIREMENT ELIGIBLILITY REQUIREMENTS
- Age 65 + 5 years of service
- Age 60 + 15 years of service
- “Rule of 80” – (at least age 48) when age + years of service = 80 or more
- Age 62 + 5 years of service
- “Rule of 80” – (at least age 48) when age + years of service = 80 or more
- Age 67 + 5 years of service
- “Rule of 90” – (at least age 55) when age + years of service = 90 or more at time of termination
May 1, 2020, 1:07 PM By MOSERS
We have received many questions regarding this topic and have posted them below.
I am a state employee with nearly 21 years of service with approximately 7 years remaining, with this unprecedented damage to the economy and the likely subsequent budget shortfalls is there currently any consideration for incentives or might there be for current state employees to leave service early? I wasn’t sure whom to direct this question to but thought it might be within your sections purview.
Due to the COVID-19 pandemic, revenues have fallen and the State Legislature is looking for ways to trim the State budget. One such way is to reduce the number of State employees. Has there been suggestions to incentivize eligible state employees to retire by offering to pay health insurance at the active employee rate until they reach Medicare eligibility?
I have heard there is going to be another buyout/early retirement package offered like there was a number of years ago to help with the state's budget shortfall due to COVID-19. Any truth to that?
During the Governor's press conference he mentioned the possibility of offering an early retirement incentive as part of the effort to balance the budget. Is there any information available on this yet?
An early retirement incentive and/or another buyout would require legislative authorization. We are not aware of any legislative proposals that have been offered at this time to provide either for general state employees. You can follow any bills affecting MOSERS on our Legislation page. May 15, 2020 is the last day of the current legislative session.
Apr 24, 2020, 4:40 PM By MOSERSThe rumor is that MOSERS will cut my backdrop and possibly even monthly payments because the State of Missouri will go bankrupt by 1 July 2020. Therefore, I should retire before 1 July 2020 to get my full backdrop. If I wait until my planned retirement in May 2021, the backdrop will surely be gone. Is this rumor true in whole or part? Should I retire before 1 July 2020 to play it safe?
First, thank you for your many years of service. Your MOSERS pension benefits, including both your monthly benefit and the BackDROP lump-sum option, are all based on state law. The amount of your monthly benefit is calculated using a formula based on your salary and service. It will not go up or down with the financial markets. Any changes to state employee benefits would require a legislative change by the General Assembly and would be vetted through that process. We are not aware of efforts by lawmakers to make such changes. When any changes are made to benefits, they typically affect future employees, not existing employees.
Feb 20, 2020, 10:53 AM By MOSERSI will reach my 80 and out at age 52. Is there any penalties for retirement before age 55 once i meet the 80 and out requirements. I will have 27 years of service at 52.
No, there are no IRS tax penalties for taking your MOSERS monthly pension benefit prior to age 55.
If you are eligible for and elect BackDROP, you have three options for your BackDROP lump-sum payment. Before you make any decisions, we strongly recommend that you read the Special Tax Notice to ensure you understand the tax implications of your choice. We also encourage you to consult a tax professional. If you’d like to learn more about the tax advantages of rolling the lump sum over to a qualified employer plan, like MO Deferred Comp, read Thinking About the BackDROP?
- Cash Option: This is either one lump-sum payment at retirement or three annual installments. From any amounts paid in cash, we will deduct 20% for federal income tax (as required by the IRS) and any Missouri state income tax withholding you choose. You will be responsible for any IRS early withdrawal penalties that may apply. If you terminate service before the year you reach age 55, there will be a 10% early withdrawal penalty on any payments not rolled over, unless you meet another exception to the penalty. See the Special Tax Notice brochure for more information.
- Rollover Option: We will send your tax-deferred distribution directly to a qualified employer plan.
- Combination Cash & Rollover Option: You can take a portion of the lump sum in cash (less 20% for federal income tax, as required by the IRS, and any Missouri state income tax you choose to have withheld) and roll the rest over to a qualified employer plan. You will be responsible for any IRS early withdrawal penalties that may apply.
On another note, unless you have plans for medical coverage elsewhere, you may want to consider the cost of medical insurance in the timing of your retirement. The cost of medical insurance is significantly higher for retirees than it is for active state employees. Contact your medical insurance provider for coverage and premium options. For most state employees, that is Missouri Consolidated Health Care Plan (MCHCP). If you are employed at a college, university, or the Department of Conservation, contact your human resources/employee benefits office.
Feb 8, 2019, 10:14 AM By MOSERS
I keep being told that if a person work at least 2 years backdrop pass their normal retirement, they will receive their monthly lifetime benefits, plus whatever their lump sum amount is. Is the second part of this statement true?
Yes--If you are eligible for and elect BackDROP at retirement, you will get the one-time lump-sum payment plus monthly pension benefit payments for life.
The tradeoff is that, in most cases, your monthly benefit payment will be less than it would have been if you hadn’t elected BackDROP.
The reason most people have a lower monthly benefit when they elect the BackDROP is because any service and any salary earned during your BackDROP period (up to five years) doesn’t count when we calculate your monthly benefit amount. We use your years of service and your final average pay from BEFORE your BackDROP period.
Your BackDROP lump sum will be equal to 90% of what you would have received during your BackDROP period if you had been retired during that time (based on the life income annuity amount).
Our BackDROP page, with a BackDROP graphic near the bottom, may help you visualize how it works or you can read the BackDROP brochure for more information. BackDROP can be complicated to understand, so MOSERS benefit counselors are available to help by phone or through an in-person appointment. Call (800) 827-1063 to discuss your options. Counselors can also provide you with benefit estimates with and without the BackDROP so you can compare.
Jan 31, 2019, 1:00 PM By MOSERS
I am planning to retire 01/07/2019. My question is... IF we were to receive the much talked about raise in January of 2020 would that action have any impact on my retirement/backdrop?
No, if you retired before a pay raise was given to active employees, any such increase would have no impact on you as a retiree.
If you continued working beyond January 2020, got a pay raise, and did not take BackDROP, the impact of a pay increase on your monthly retirement benefit payment would be dependent upon how long you continue working.
Remember, in calculating your monthly benefit, one factor is your Final Average Pay, which is your highest 36 consecutive months of pay. So, if you got a raise and worked a few months past 2020, the impact may be very small. If you got a raise and worked an additional 36 months, the impact would be bigger.
Any pay earned during your BackDROP period has no impact on either your monthly benefit amount or your BackDROP lump-sum amount.
But keep in mind that, by law, MOSERS retirees receive an annual cost-of-living adjustment (COLA) between 0-5%. You can find more information about the retiree COLA on our website.
You can run benefit estimates under a variety of scenarios by logging in to myMOSERS or asking a MOSERS benefit counselor to run them for you. You may find our Creating a Benefit Estimate video and our Comparison Calculator helpful in weighing your options.
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We strive to provide the most accurate information possible in our answers to Rumor Central questions. However, occasionally, laws, policies or provisions change and individual circumstances may vary. Please contact a MOSERS benefit counselor or see the handbooks in our website Library for more detailed information. If there is any difference between the information provided in this blog or on the MOSERS website and the law or policies that govern MOSERS, the law and policies will prevail. See our Privacy, Security & Legal Notices for more information.