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Pre-retirement planning seminar Susan Hoel – Human Resources / Benefits 612-348-9075

Pre-retirement planning seminar Susan Hoel – Human Resources / Benefits 612-348-9075. Agenda. County Benefits Sue Hoel 8:00 – 10:00 a.m. Break : 10:00 – 10:15 a.m . PERA Phil Coleman 10:15– 11:30 a.m. Lunch : 11:30 a.m.– 12:30p.m.

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Pre-retirement planning seminar Susan Hoel – Human Resources / Benefits 612-348-9075

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  1. Pre-retirement planning seminar Susan Hoel – Human Resources / Benefits 612-348-9075

  2. Agenda County BenefitsSue Hoel 8:00 – 10:00 a.m. • Break: 10:00 – 10:15 a.m. PERA Phil Coleman 10:15– 11:30 a.m. • Lunch: 11:30 a.m.– 12:30p.m. Intro to Financial Planning Jason Ledermann 12:30 - 1:30 p.m. • Break: 1:30 – 1:45 p.m. Social Security/Medicare Rhonda Whitenack 1:45 – 3:00 p.m. Estate Planning Bradley Frank 3:00 – 4:00 p.m.

  3. Goals for today • Know resignation process • Understand the county’s benefit continuation policy • Be familiar with county tools to assist the retirement planning process • Become more knowledgeable about: • Several sources of income replacement: PERA, Social Security, deferred compensation • Basics of financial planning • Estate planning process

  4. The Basics of retirement • Forms to complete • Last paycheck • Severance and other payouts • PERA • Benefit continuation

  5. 1. Forms to complete • 2 county forms to complete: • Hennepin County Resignation Notice form – give to your immediate supervisor • If you are age 50 or older, Request for Benefits Eligibility Confirmation Notificationform – send to Benefits

  6. Resignation form • What should my resignation notice indicate? • Last working date – Last day you are physically at work • Termination date* – Last day on the county payroll *Must be a scheduled work day *Date used with PERA • Minimum resignation notice time • Exempt employees – 28 calendar days • Non-exempt employees – 14 calendar days

  7. If required, please attach proof to your form when you submit it.

  8. 1. Forms to complete 2 PERA forms to complete: Application for PERA Retirement Benefits – send to PERA PERA Termination Verification form – send to Benefits

  9. Fill out these lines before sending to Benefits

  10. 2. Last paycheck Pay date for which your last day on payrolloccurred Example: • Last day worked – December 22, 2014 • Termination date - Last day on payroll (including vacation time)– December 31, 2014 • Last regular paycheck – January 16, 2015

  11. 3. Severance payout • Resign in “good standing” • Give advanced written notice as required • Calculated based on leave program you retained or elected AND whether you have mandatory participation in the Health Care Savings Plan (HCSP) • Unused vacation or PTO is always paid out. Worked for the county at least 8 years to receive sick leave payout.

  12. 3. Severance payout • Vacation/sick leave • Maximum of up to 800 unused hours combined vacation/sick leave lifetime • Converted vacation leave to Paid Time Off (PTO) • Maximum of up to 800 hours of unused sick leave lifetime PLUS up to 480 hours of unused PTO • New employees selecting/receiving PTO • Maximum of up to 480 hours of unused PTO

  13. 3. Severance payout • Paid out 2 weeks after last regular paycheck • Taxable in the year received • Contact your payroll contact for severance hours previously received

  14. 3. Severance payout • Payout possibilities: • Cash – taxed at special higher rate for lump sum payments • Defer into county’s deferred compensation plan(s) – federal or state tax postponed* • Mandatory participation in Health Care Savings Plan (HCSP) * Amount you can defer dependent upon annual plan maximums from the federal government. Check with your vendor 2 months prior to termination to determine the amount you are able to defer.

  15. Deferred Compensation • Hennepin County 457 Plans • Fidelity • ING • MSRS – State Plan • Severance pay deferral • Postpone payment of federal and state taxes* • May elect to direct all or a portion into deferred compensation, as allowed by annual plan maximums and vendor calculation *Federal and state tax will be assessed on the total amount of FICA and Medicare tax charged.

  16. Deferred Compensation –Severance pay deferral If you have an account: • Contact your vendor • How much currently deferring • Amount of severance payout – remember, you will pay FICA and Medicare tax, plus federal and state tax on that amount • Calculation of maximum amount • Contact Cheryl Arntson at 612-348-7767 with amount to defer

  17. Deferred Compensation –Severance pay deferral If you don’t have an account • Open an account just for severance payout – go to Checklist for instructions • Subject to plan maximums • No need to designate a payout date • Do not close account until all monies have been paid out • Contact Cheryl Arntson at 612-348-7767 with amount to defer

  18. Deferred Compensation –After termination • Required minimum payout at age 70 1/2 • Pay out options • Work with vendor • Withdrawal paperwork

  19. Things to remember • You can typically use vacation or PTO when retiring; check with your supervisor/ manager first for approval • When you are using vacation or PTO you are still earning vacation or PTO • You are still “active” in the APEX system • You cannotrun out sick time

  20. 3. Severance payout questions Will my severance include unused compensatory time? • If you are an exempt, non-organized employee – No • If you are non-exempt – You will receive a separate check • If you are covered by a union contract – It is subject to the terms and conditions of the contract What about deferred holiday time and banked Special Leave? • All employees receive, but in a separate check from severance. Payment sent at same time as severance payment.

  21. Severance payout– scenario 1 • John Doe – 60 years old, 30 years of service. John has never left county employment. Vacation 275 hours Sick 482 hours TOTAL 757hours Maximum paid out is 800hours lifetime Severance - 757 x $20/hour = $15,140

  22. Severance payout- scenario 2 Vacation 275 hours Sick 776 hours TOTAL 1051 hours Maximum paid out is 800 hours lifetime Convert to PTO Sick - Frozen 776 hours Maximum paid out is 800hours lifetime PTO (Vacation hours) 275 hours Maximum paid out is 480 hours Severance - 1051 x $20/hour = $21,020

  23. Severance payout- scenario 3 Vacation 275 hours Sick 1045 hours TOTAL 1320 hours Maximum paid out is 800 hours lifetime Convert to PTO Sick - Frozen 1045 hours Maximum paid out is 800hours lifetime PTO (Vacation hours) 275 hours Maximum paid out is 480 hours Joe loses 245 hours Severance - 1075 x $20/hour = $21,500

  24. How to convert to PTO

  25. Convert to PTO Sick leave hour balance Newly earned hours each pay period County will pay up to 800 hours lifetime severance

  26. Convert to PTO PTO Vacation hours All newly earned hours each pay period County will pay up to 480 hours

  27. Stability pay • Lump sum payment made to permanent employees with at least 5 years of benefits eligible ( i.e. 20 hours per week or more) service • Paid if eligible to receive annuity benefits under a county-approved retirement program (e.g., PERA) • Pro-rated for time worked • Taxed at higher special rate for lump sum payments; PERA is taken • Cannot be deferred • Paid out 2 weeks after last regular paycheck

  28. After retirement pay outs *Federal and state tax will be assessed on the total amount of FICA and Medicare tax charged.

  29. Health Care Savings Plan (HCSP) • Public employer-sponsored program • Money goes in pre-tax and comes out pre-tax • Use to payeligible post-employment medical expenses and/or health insurance premiums • Administered by Minnesota State Retirement System (MSRS)

  30. Health Care Savings Plan (HCSP) • Not every employee has. If you don’t have it, you can’t get it. • You cannot contribute additional funds to your HCSP • While working • After leaving county employment unless you go to work for another public sector employer offering the HCSP • Not an Health Savings Account (HAS)

  31. Last paycheck Pay date in which your last day on payroll occurred Example: • Last day worked – December 22, 2014 • Termination date - Last day on payroll (including vacation time)– December 31, 2014 • Last regular paycheck – January 16, 2015 • Severance and other pay outs – January 30, 2015

  32. Important to know - APEX

  33. 4. PERA • Apply for retirement benefits directly with PERA • Forward PERA’s Termination Verification Form to Benefits for completion For specific assistance, contact PERA directly.

  34. PERA Phased Retirement Option (PRO) • Must be age 62 and in Basic or Coordinated Plans • Must reduce work hours a minimum of 25% • Must be on PRO status prior to or the 1st of the month you begin to receive your PERA pension • Sunsets June 30, 2014 • If on PRO status as of that date, can continue participation for up to 5 year maximum

  35. PERA Phased Retirement Option • Remember: • Your department decides if they want to participate or not. Contract is with your department. • PERA PRO form is online – go to PERA’s website –www.mnpera.org • You must track your hours • If standard hours in APEX are 20 or more per week, still eligible for county medical, dental and life insurance. No STD or LTD.

  36. Last paycheck Pay date in which your last day on payroll occurred Example: • Last day worked – December 20, 2013 • Termination date - Last day on payroll (including vacation time)– December 31, 2013 • Last regular paycheck – January 17, 2014 • Severance and other pay outs – January 31, 2014 PERA check – January 15, 2014

  37. 1% Supplemental Plan • You must be totally off the county payroll to receive and severance must be paid. Funds available 30-45 days after severance is issued. • Contact MSRS at msrs.state.mn.us

  38. 1% Supplemental Plan • Two options after retiring: • Apply for redemption • Lump sum • Partial payments • Maximum payout period 5 years • Taxable portion =county’s contribution and interest earnings in the year in which it is received. Cannot be rolled over to an IRA. • Leave 1% plan account intact

  39. 5. Benefits continuation • You may continue these benefits if enrolled prior to retirement date: • Health • Dental • Life insurance • Basic life insurance • Supplemental life insurance • Dependent life insurance • Health Care Expense Account – Flexible Spending Account (FSA)

  40. 5. Benefits continuation • Health, dental, life insurance • Coverage ends the last day of the month of your last day on payroll. You are paying for the current month’s premium. • Note: If you have health and/or dental coverage, the plan administrator will send you letter indicating your coverage has terminated as an “Active” employee. • Health Care Expense Account (HCEA) • Program ends on your last day on payroll

  41. Benefits continuation questions What if I continue to work past age 65 for Hennepin County? • Your benefits are the same of any other active employee. • You can choose notto sign up for Medicare Parts A and B without penalty. • When you do retire, the county will verify your coverage on our plan for Social Security. Bring the Employer Information form to Benefits for completion.

  42. Benefits continuation questions What if my covered spouse turns age 65 while I am covered by the county? • Both employee/retiree and over age 65 spouse can be covered on the county active plan • Covered spouse does not need to purchase Part B until employee retires andis 65 andis no longer eligible to be on the county active plan • OR Your covered spouse can enroll in the Hennepin County HealthPartners Freedom Plan (contact Benefits) or another Medicare supplement. You must fill out a Family Status Change form and provide proof in order to drop coverage mid-year.

  43. Benefits continuation question I am over age 65 when I retire • Coverage ends on the last day of the month you retire/terminate • You are no longer eligible to stay on the county medical plan (PreferredOne) • Apply for Parts A and B of Medicare, if not currently enrolled, 3 months prior to termination date • You can enroll in the county-sponsored HealthPartners Freedom Plan

  44. Applying for Part B of Medicare – Send form to Benefits for completion

  45. Early Retiree Health Insurance Program (ERHIP) – Category A • County contribution toward employee onlycoverage as though you are still working • Program is approved annually by the Board • You must be of under age 65, have specified length of service with the county and satisfy 1of the 3 requirements • Requirement 1 – age and years of service

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