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Retiring with Mixed Service
Your benefits are based on the law in effect at the time of your termination from employment; thus, some information in this brochure may not apply in specific cases. This publication is meant to explain PERSI law as simply and accurately as possible. If there is any discrepancy between this publication and the law, the provisions of the law will prevail.
Congratulations on your upcoming retirement! You have worked many years to secure a rewarding retirement, and we at PERSI wish to help you make this transition as easy as possible. Right now you have a lot of information to read and important decisions to make. We urge you to read this information and all retirement forms carefully, and to take your time in deciding on your retirement option. If you have any questions, call the field office near you and we will be happy to assist you.
Retirement Eligibility
When you are eligible for retirement depends on how many months of credited service you have, your age, and the ratio of your general member and police officer/firefighter service. There are several types of retirement, each with its own eligibility requirements. The types of retirement are:
- Service Retirement
- Mixed Service Retirement
- Early Retirement, including the Rule of 80/90
- Disability Retirement
Here we cover Mixed Service Retirement only. If you would like to learn more about the other forms of retirement, please refer to your PERSI Handbook or contact a PERSI field office. Separate brochures are available covering Service, Early, and Disability Retirement.
Service Retirement:
Service Retirement Age is the age at which you may retire with an unreduced benefit. You may take service retirement if you: 1) end employment on or after reaching service retirement age, AND 2) have 60 months of credited service including six months of membership service. Note: Elected or appointed officials should contact PERSI regarding service retirement requirements.
Age Requirements:
- Age 65 for General Members
- Age 60 for Police Officer/PERSI Firefighters
- Between Age 60 - 65 for Members with mixed general and police officer/PERSI firefighter service.
Mixed Service
If you have part of your credited service as a general member and part as a police officer/PERSI firefighter, you have Mixed Service. If you have mixed service, you can determine the age at which you are eligible for early or service retirement by calculating your service retirement ratio. The service retirement ratio will also determine when you may retire with an unreduced allowance under the Rule of 80/90. Under the Rule of 80/90, if you meet minimum age requirements and your age plus years of service equals 80 for police officers/PERSI firefighters, or 90 for general members, you may retire with an unreduced benefit. See your PERSI Handbook or the brochure on early retirement for more information on the Rule of 80/90.
Service Retirement Ratio Formula
The formula to find your service retirement ratio is:
Months of service as police officer/firefighter divided by Total Months of Service = Service Retirement Ratio
Note: If you were an active police officer/PERSI firefighter member on June 30, 1985, and remain in that same position continuously until retirement, or if at the time of retirement the majority of your credited service was as a police officer/firefighter category member, you have a Service Retirement Ratio of 1.000 allowing you to use the Rule of 80 or to take early retirement at age 50 and service retirement at age 60.
Example of Service Retirement Ratio Formula
Peter worked as a police officer for 60 months, and as a general member for 300 months, for a total of 360 months of credited service. His service retirement ratio would be
60 months divided by 360 months = .16667
Using Chart 1, Peter can tell that he is eligible for early retirement at age 54, and for service retirement at age 64. Looking at Chart 2, Peter can tell that with .16667 as his service retirement ratio, his age plus years of credited service must equal 88 for him to retire early with an unreduced benefit.
Chart 1| Service Retirement Ratio | Service Retirement Age | Early Retirement Age |
|
0.000 - 0.100 |
65 |
55 |
Chart 2
| Service Retirement Ratio | Rule of 80/90 |
|
0.000 - 0.050 |
90 |
How An Allowance is Determined
A formula is used to determine your retirement benefit. The formula is made up of three factors: 1) your highest average monthly salary during a base period of 42 consecutive months, 2) your months of credited service, and 3) a multiplier (2% for general members, 2.3% for police officer/PERSI firefighter members). Note: If your date of last contribution was before July 1, 2000 your multiplier will be different .If before October 1, 1994 your base period will also be different.
If you have mixed service, your benefit is calculated with both the general member and police officer/PERSI firefighter formulas. If you retire before reaching service retirement age, and if you have not met the Rule of 80/90, early retirement reductions will apply.
Highest Average Monthly Salary During 42 Consecutive Month Base Period
X General Member Multiplier (.02)
X Months of Service as a General Member
= Annual Benefit as a General Member
Same Highest Average Monthly Salary During 42 Cons. Month Base Period
X Police/Firefighter Multiplier (.023)
X Months of Service as a Police Officer/Firefighter Member
= Annual Benefit as a Police Officer/Firefighter Member
Retirement Allowance Options
The option you choose at retirement will determine the payments you will receive for the remainder of your lifetime, as well as what your Contingent Annuitant, if any, will receive after your death. There are several options you may choose from at retirement. Each provides a different payment schedule. If you are married, your spouse must agree, in writing, to the retirement option you select.
Regular Retirement Allowance
This is a monthly benefit payable to you for your lifetime only.
Options 1 and 2 Contingent Annuitant Allowances
These options allow you to designate a Contingent Annuitant (CA) to receive a monthly allowance after your death. Most people select their spouse as their CA, however you may choose anyone you wish. With each of these options, a reduced monthly payment is made to you until your death. The amount of the reduction (compared to your regular retirement allowance) is determined by the age difference between you and your CA.
Option 1 provides your CA with the same monthly amount you had been receiving for the remainder of your CA's life. Option 2 provides your CA with 50% of the monthly amount you would have received.
Option 3 Social Security Adjustment Allowance
This is available only to those who retire before Social Security Normal Retirement Age (SSNRA). It provides an increased retirement allowance before SSNRA and a reduced allowance after SSNRA. It is paid to you for your lifetime only. SSNRA is age 65 for those born in 1937 or earlier. For those born later, SSNRA is between the ages of 65-67.
To calculate the Social Security adjustment allowance, your PERSI benefit amount is adjusted or accelerated based on the estimated amount you will receive from Social Security at SSNRA. The amount of the acceleration is based on your age at the time of retirement reduced by the number of years you are from SSNRA.
An important thing to understand about the Social Security option is that at your SSNRA, your PERSI benefit will drop - in some cases significantly. It could even drop to zero.
Retiring With Mixed Service Continued
Option 4A and 4B Social Security Adjustment with Contingent Annuitant Allowances
These options provide an increased retirement allowance before your SSNRA, and provide your Contingent Annuitant a monthly allowance after your death. Option 4A pays your CA 100% of the monthly amount you would have received for the remainder of your CA's life. Option 4B provides your CA with 50% of the monthly amount you would have received.
Again, under the Social Security options, at your SSNRA, your PERSI benefit will drop - in some cases significantly. It could even drop to zero. This drop will occur at your SSNRA whether you or your CA are receiving the benefit.
This chart illustrates the differences between the retirement options. It is for comparison only and may not reflect what your particular benefit might be. Each individual's retirement benefit is unique due to the variety of factors in the calculations.
In this example: Member is age 60, CA is 59, Member's estimated Social Security benefit is $800 a month at age 65.
| Retirement Option | Member's Monthly Amount | CA's Monthly Allowance After Member's Death |
| Regular Retirement Option 1 - 100% CA Option 2 - 50% CA Option 3 - Social Security Until Member's 65th Birthday After Member's 65th Birthday Option 4A - Social Security with 100% CA Until Member's 65th Birthday After Member's 65th Birthday Option 4B - Social Security with 50% CA Until Member's 65th Birthday After Member's 65th Birthday | $1,000 800 894 1,536 736 1,336 536 1,430 630 | $0 800 447 0 0 1,336 536 715 315 |
IMPORTANT RETIREMENT INFORMATION
"Pop Up"
If you select a retirement option with a Contingent Annuitant, and your CA dies first, your monthly payment may "pop up" or return to the regular retirement allowance. For this to happen, your date of last contribution must have been July 1, 1992 or later, and your retirement must be on or after October 1, 1992.
Contingent Annuitant vs. Beneficiary
Your named "Contingent Annuitant" (CA), usually a spouse, receives a monthly allowance for the rest of their life should you die first and if you choose retirement Option 1, 2, 4A or 4B. Your "Beneficiary" receives a lump sum payment of the contributions and interest remaining in your PERSI account if both you and your CA die before this amount has been paid out to you and/or your CA. When retiring, you may want to make sure that your CA and beneficiary are not the same person.
Changing Your Option
Prior to receiving your first check, you may change options at any time; however, once you have received your first check, you must notify PERSI in writing within five business days if you wish to change your allowance option.
You may also change options after this time if you were not married at retirement and later marry. If you marry, you may choose Option 1, 2, 4A or 4B provided you do so within one year of your marriage and designate your spouse as your Contingent Annuitant. The change does not become effective until one year after naming your CA.
Changing Your Contingent Annuitant
You may change your Contingent Annuitant only if you had named your spouse as your CA under Options 1, 2, 4A or 4B, your spouse dies and you later remarry. If you remarry, your new spouse may be named as your Contingent Annuitant if done so within one year of the marriage. The change does not become effective until one year after naming your new CA.
If you were married at the time you retired, named your spouse as Contingent Annuitant and later divorced, you cannot change your CA, even if you or your ex-spouse remarry.
Deferring Retirement
If you are no longer working for a PERSI employer, and are of age to begin collecting a retirement allowance, but are not yet 65 (60 for police/PERSI firefighter members), you may choose to defer collecting your allowance until some later date, but not past age 65 (60 police/fire). Deferring will enable you to minimize reductions for early retirement and receive a larger monthly benefit. If you have a retiree medical plan with your employer, you may want to talk to your employer or the insurance carrier before deferring retirement as you may not be able to defer your retiree medical insurance coverage.
If you are still working and contributing to PERSI at age 65 (60 police/fire), you are not required to retire at that time. You may continue working and earning additional retirement income for as long as you want.
Employment After Retirement
You may work as much as you want outside of PERSI-covered employment. If you return to work for a PERSI employer and normally work 20 hours or more per week for five or more consecutive months, you will not be entitled to your PERSI allowance while so employed. You will be required to resume contributions and will earn additional benefits.
You may continue to receive your PERSI benefits if you work less than 20 hours per week or less than five consecutive months for a PERSI employer. Teachers may continue to receive PERSI benefits if you work less than one-half contract or less than 20 hours per week. NOTE: The IRS does have regulations that could affect you if you retire and return to work for the same employer. Proposed 1996 legislation may require a 90 day break in service if returning to work for the same employer after retirement.
Death After Retirement
If you choose a Regular Allowance or Option 3, which are paid for your lifetime only, and have not yet received all of your employee contributions and interest when you die, the balance remaining in your PERSI account will be paid to your beneficiary. If you choose Option 1, 2, 4A or 4B, your Contingent Annuitant will receive a lifetime monthly allowance beginning the month following your death. If both you and your Contingent Annuitant die before your contributions and interest have been paid out, the balance will be paid to your beneficiary.
PERSI should be notified as quickly as possible after the death of a retiree, and any monthly benefit payments received after the month of the death must be returned even if a Contingent Annuitant was named. Your CA must complete some forms before receiving benefits.
Cost of Living Allowances
The Retirement Board sets a Cost of Living Allowance (COLA), to be to be effective March 1 each year. The COLA is subject to amendment or rejection by the State Legislature. The COLA is tied to the Consumer Price Index (CPI) and may not exceed the CPI or 6%, whichever is less, but must always be at least 1%. The COLA is also tied to the growth in the fund's assets. The Retirement Board cannot grant a discretionary COLA unless the fund's assets exceed its liabilities, including the cost of the COLA.
During your first year of retirement, you are granted a COLA only for the months retired during that year. (1/12 of the COLA for each month you were retired.) Example: If the COLA granted your first year was 4%, and you retired September 1, you would receive a 2% COLA that year because you had only been retired for six months between September 1 and March 1. After the first year, you will be granted the full COLA each year.
Taxes
At retirement you should complete an IRS withholding form (W-4P). Unless you specify "no withholding" on the form or choose a specific marital status and number of exemptions, the federal income tax on your monthly benefit will be withheld at the rate appropriate for a married person with three exemptions. If you do not complete the form, your withholdings will also be at the rate of married with three exemptions.
IRS Publication 575 discusses pension income tax liabilities. We suggest that you read this publication or review it with a tax specialist.
Taxes have already been withheld from PERSI contributions you made prior to July 1, 1983. A percentage of your monthly retirement allowance will not be taxable if you contributed to PERSI prior to that date.
Each January, PERSI will send you a 1099-R notice. This is a statement of the gross allowance paid to you and taxes withheld for the past year. You will also receive notification each time the net amount of your benefit changes.
Retirement Checklist
Six Months to One Year Before Retirement
Check with Social Security regarding your Medicare enrollment (parts A & B), and to get a Social Security benefit estimate. Your Social Security estimate will be necessary for PERSI to estimate retirement Options 3, 4A and 4B.
Two to Six Months Before Retirement
If you have not already done so, contact your PERSI field office to receive a benefit estimate. This will give you an idea of what your monthly check will be and what your options are. Send PERSI a copy of your Social Security card and birth certificate. If you select an option with a Contingent Annuitant benefit, you must also send a copy of your Contingent Annuitant's Social Security card and birth certificate.
Two Months Before Retirement
Complete the retirement application and related forms. If you meet with a PERSI Retirement Specialist, bring your spouse with you, as both your signatures must be notarized. Each PERSI office has a Notary Public - please call to set up an appointment. If you mail your application, your signature and your spouse's must be notarized.
All forms should be submitted to PERSI 45 days before your planned retirement date. Be sure to include additional materials as needed (i.e. copies of Social Security cards, birth certificates, Medicare cards; voided bank deposit slip, etc.).
One Month Before Retirement
Tell your employer the date you plan to retire. Your employer must send PERSI a "Notice of Separation" RS-109 form by the end of the month prior to your retirement. Your retirement application cannot be processed until PERSI receives this notice.
If you are an employee in a state agency or an eligible school district, ask your payroll clerk to advise PERSI of the cash value of your unused sick leave. If you are a school employee, ask your payroll clerk for a retiree health insurance form. If you are a state employee, you will be given a Retiree Insurance Benefits Request form with your retirement application package from PERSI.
FORMS
Forms you may need to complete when applying for retirement:
Application for Retirement RS 121
Allows you to select a retirement allowance and, if you wish, to name a Contingent Annuitant to receive a monthly allowance following your death.Retiree Insurance Benefits Request
(For state and school employees who qualify only) Allows you to continue coverage in the group medical plan.State Tax Withholding Certificate RS 322 (Optional)
Allows you to withhold Idaho state income taxes from your monthly allowance.Federal Tax Withholding Certificate W-4P (Optional)
Allows you to withhold federal income taxes from your monthly allowance.Direct Deposit Authorization RS 448 (Optional)
Allows you to deposit your monthly allowance directly into your financial institution. Funds are deposited more quickly than with paper checks and you have the added security that electronic transfer provides. A voided deposit slip is required.Beneficiary Designation RS 115 (Optional)
If you have not updated your PERSI Beneficiary Designation in some time and have experienced major life changes (marriage, divorce, death in the family, etc.), you may wish to select a new beneficiary to receive any possible death benefit.Notice of Separation RS-109
Your employer must complete this form for PERSI to process your retirement.
In addition, you will need to provide the items below to finalize your retirement:
Photocopy of your Birth Certificate (or acceptable substitute)
Photocopy of your Social Security Card
Photocopy of your Contingent Annuitant's Birth Certificate (or acceptable substitute) Required if you select a Contingent Annuitant.
Photocopy of your Contingent Annuitant's Social Security Card
Required if you select a Contingent Annuitant.Photocopies of your Medicare A and B Cards
(School and State employees only) Necessary if you elect to continue coverage in the group medical plan and have Medicare.vAn Estimate of Your Social Security Benefit from Social Security
Required if you are considering Retirement Allowance Options 3, 4A or 4B.A Voided Deposit Slip from your Financial Institution
Required if you choose to have your monthly allowance deposited directly in your financial institution.
TIPS AND SPECIAL INFORMATION
Terminate After the 15th of Any Month
In most cases, it is best to separate from service (quit work) after the 15th of the month, but before the first of the next month. This way you will receive a month of membership service credit for that last month.
Your Check is Paid the First of Every Month
Generally, your retirement allowance is payable the first day of each calendar month. When you retire from active service, the allowance will be payable from the first of the month following the month you ended employment. For example, if you quit June 15th, and therefore retire July 1, you will receive your first check around the first of August for the months of July and August. Then September's check will be for September, and so on.
The first check is generally for two months and will have two months' worth of withholdings. This means that more taxes than normal may be withheld on this check because the payment is for a higher amount. If you elect to have taxes withheld in a flat dollar amount each month, your first check, even if it is for two month's worth of payments, will have just one month's worth of withholdings.
The second payment will be accompanied by a remittance advice notice which will itemize withholdings. If you receive a check, the remittance advice information will be on your paystub. If you are on Direct Deposit, you will receive just the notice - your payment will be deposited automatically. After this initial notice, you will receive remittance advice only when there is a change in the amount of your net benefit (for COLAs, etc.).
Award Letter
After you retire, you will receive a Statement of Award letter with your first benefit payment. This letter tells you your gross monthly retirement allowance and indicates tax withholdings.
Direct Deposit Changes
If you change banks, contact PERSI for a new Direct Deposit form. Return this with a deposit slip from your new bank. Changes must be filed by the 5th of the month to ensure deposit in your new bank by the first of the next month.
Change of Address
If you move, let PERSI know, even if you have Direct Deposit. A change of address must be provided in writing, and should include your name, Social Security number, the date and your signature.
If you have questions, please contact the PERSI Answer Center.
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