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  • BackDROP Decisions

    May 29, 2018, 4:06 PM By MOSERS

    I was eligible for retirement on 06/01/2017 on the 80 and out. I am just getting one year of backdrop in. Do I need to submit any paperwork advising of my intentions of working on the backdrop? 

    The answer is no. You just keep working. You don’t need to notify MOSERS of any decisions about BackDROP until you retire. If you retire online, you may make your BackDROP election when you choose your benefit payment option.

    However, you must work at least two years beyond when you are first eligible for normal retirement to be eligible for BackDROP. BackDROP provides a lump-sum payment in addition to your ongoing monthly benefit payment in retirement. MOSERS has many different resources to find out more about BackDROP. * Besides the member handbook, we also have a BackDROP page with links to many resources on our website.

    * Note: The BackDROP is available only to general state employees in the MSEP and the MSEP 2000.

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  • Sick Leave & BackDROP Period

    May 29, 2018, 4:02 PM By MOSERS

    Questions regarding sick leave. I have around 22 months of employment remaining before I reach the 80 and out. I have around 1900 hours of sick leave currently. Does sick leave still contribute towards your credible service period? If I elect to backdrop, does this apply to the backdrop period if I do not count this towards credible service? Thank you!

    Yes, you will get one month of credited service for each block of 168 hours of unused sick leave you have at retirement. While this will increase the amount of your benefit, unused sick leave cannot count toward eligibility for retirement or as part of the BackDROP period. That is, the months of unused sick leave will not make you eligible for retirement (or BackDROP) sooner, but will increase the amount of your payment once you have retired.

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  • Taxes on BackDROP

    May 9, 2018, 9:14 AM By MOSERS

    If MOSERS benefit is a “public” pension and, therefore, is not considered a salary or wage why would I have to pay taxes on the backdrop? Isn't the backdrop considered part of an employee's pension?

    Your MOSERS benefit is a public pension and, therefore, is not considered a salary or wage. It does not count towards the annual earnings limit for social security. Your BackDROP payment, however, is considered taxable income for the year in which you receive the payment unless you roll it over to a traditional IRA or another eligible employer plan, such as MO Deferred Comp. Depending upon your age, there could also be an additional 10% IRS penalty if you choose the cash payment.

    When you retire with MOSERS, you will be asked if you want to elect BackDROP* (if eligible), and, if so, how you want to receive that distribution: cash option, rollover option, or combination cash and rollover option. State employees eligible to receive a lump-sum BackDROP payment get this payment in addition to a lifetime monthly benefit payment and can choose to roll the lump sum into the MO Deferred Comp Plan at retirement. This option is available to all state of Missouri employees, even if they have never participated in the deferred compensation plan. A popular reason to roll the lump-sum payment into the deferred compensation plan is that it allows employees to defer taxes on the payment until those assets are distributed in retirement. There is a helpful publication on MO Deferred Comp’s website called Thinking About the BackDROP?

    We suggest you speak to a tax professional or financial advisor for advice specific to your situation and to discuss all of your options at retirement.  For more information about Social Security, the Social Security Administration website is www.ssa.gov or call them toll-free at (800) 772-1213.

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  • BackDROP Overview

    Mar 28, 2018, 11:16 AM By MOSERS

    What is BackDROP?

    BackDROP, or the Deferred Retirement Option Provision, gives you the option of receiving a lump-sum payment, in addition to your lifetime monthly benefit payments, at retirement. It is a benefit payment option available for general state employees in the MSEP or MSEP 2000 who work at least 2 years (or more) beyond their first normal retirement eligibility date.

    The BackDROP lump-sum is 90% of the amount that you would have been eligible to receive during your BackDROP period if you had been retired during that time. If eligible, you will select your BackDROP period during the retirement process. The maximum BackDROP period is 5 years. The length of the BackDROP period you select will determine the amount of your lump-sum payment. Generally speaking, if you elect a longer BackDROP period, your lump-sum payment will be more, but your monthly payments will be less.

    You are not required to take BackDROP, and you don’t have to notify MOSERS of any decisions about BackDROP until you retire. More information about payment options is available on the BackDROP page on our website.

    BackDROP can be complicated to understand, so MOSERS benefit counselors are available to help by phone or in person by appointment. Call (800) 827-1063 to discuss your options. Counselor can also provide you with benefit estimates, with and without the BackDROP included, so you can compare.

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  • BackDROP & Social Security

    Mar 21, 2018, 8:34 AM By MOSERS

    In looking over my Social Security application, I see that they want to know what my earnings will be in 2018. I plan to roll over my MOSERS backdrop--will the amount of my backdrop be considered earnings by the Social Security Administration? Or do I only submit my projected salary earnings for 2018?

    Your MOSERS benefit is a public pension and, therefore, is not considered a salary or wage. It does not count towards the annual earnings limit for social security. Your BackDROP payment, however, is considered taxable income for the year in which you receive the payment unless you roll it over to a traditional IRA or another eligible employer plan, such as MO Deferred Comp. Depending upon your age, there could also be an additional 10% IRS penalty if you choose the cash payment.

    When you retire with MOSERS, you will be asked if you want to elect BackDROP* (if eligible), and, if so, how you want to receive that distribution: cash option, rollover option, or combination cash and rollover option. State employees eligible to receive a lump-sum BackDROP payment get this payment in addition to a lifetime monthly benefit payment and can choose to roll the lump sum into the MO Deferred Comp Plan at retirement. This option is available to all state of Missouri employees, even if they have never participated in the deferred compensation plan. A popular reason to roll the lump-sum payment into the deferred compensation plan is that it allows employees to defer taxes on the payment until those assets are distributed in retirement. There is a helpful publication on MO Deferred Comp’s website called Thinking About the BackDROP?

    We suggest you speak to a tax professional or financial advisor for advice specific to your situation and to discuss all of your options at retirement.  For more information about Social Security, the Social Security Administration website is www.ssa.gov or call them toll-free at (800) 772-1213.

    *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.

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  • 5-Year BackDROP

    Jan 30, 2018, 2:53 PM By MOSERS

    A co-worker said they had read that if you stay past your 5 year backdrop period that your backdrop is negatively affected. Is this true?

    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.

    Since your BackDROP lump-sum amount is 90% of what you would have received if you had been retired during the BackDROP period, it maxes out at age 62 and can decrease (under the above scenario) if you work beyond age 62 under MSEP 2000.

    Since there is no Temporary Benefit in MSEP, if you retire under MSEP and elect BackDROP, the amount of your lump sum will not decrease if you work past age 62.

    We have a helpful Comparison Calculator on our website where you can compare the long-term impact of electing MSEP versus MSEP 2000, different BackDROP periods under the different plans, and various other options. Or, you can ask a MOSERS benefit counselor to provide you with various benefit estimates and Comparison Calculator results.

    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 in person or over the phone

    *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

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Disclaimer

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.