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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.
Nov 29, 2018, 10:43 AM By MOSERS
My Pension is based on my best 36 months earnings. Wages during my 5 year BackDrop period are excluded. What if my best 36 months are after I complete my 5 year BackDrop period?
Any pay earned after your BackDROP date (the beginning of your BackDROP period) does not count - it is excluded - when we calculate your monthly retirement benefit. We will look at your entire pay history in your MOSERS-covered employment prior to your BackDROP period to find your highest 36 consecutive months of pay and use that to calculate your monthly benefit.
Remember, your BackDROP period, whether it is a 2-year or 5-year period, will always be immediately prior to your retirement date. That means, you wouldn’t continue to be employed in a MOSERS benefit-eligible position after your BackDROP period.
This is one of the factors to consider when making your elections about BackDROP. You can run benefit estimates under a variety of scenarios by logging in to myMOSERS or contact a MOSERS benefit counselor to run them for you. You may find our Creating a Benefit Estimate video and our Comparison Calculator video 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.