rumor-central-header

Hearing Rumors? Not sure your co-worker has it right?

Rumor Central has the answers! Submit your question or just browse our blog to separate facts from fiction.


  • Reduced Benefit

    Mar 17, 2020, 4:16 PM By MOSERS

    I am in MSEP11 and have vested.  I may leave service at 65, but not retire until my normal retire age of 67.  Will I still receive a reduced benefit?

    No, your benefit will not be subject to reduction if you are vested, leave service, then retire at age 67. (The reduction you are referring to is for “early retirement” and is a reduction of ½ of 1% (.005) off your base benefit for each month your age is younger than normal retirement.)

    However, if you continue working until you are 67, then your benefit would ultimately be higher because you would have more service. When you apply for retirement, your base benefit will be calculated using a formula that takes into account your final average pay and your credited service. For a more in-depth look at which option may be best for you, we encourage you to use our Comparison Calculator to compare various scenarios over time or contact one of our benefit counselors.

    Benefit counselors are available:

    Monday - Friday
    8:00 am - 12:00 pm
    1:00 pm - 4:30 pm

    Contact Us:

    (800) 827-1063 toll-free
    (573) 632-6100 in Jefferson City

    Print Friendly and PDF
  • 80 & Out

    Feb 20, 2020, 10:53 AM By MOSERS
    I 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.

    Print Friendly and PDF

Topics

Archive

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.