IPERS Member Handbook

RETIREMENT

As you prepare for this significant milestone, it’s important that you understand the factors that make you eligible for IPERS retirement benefits, the steps you need to take, and when to file an application for retirement benefits. This section of the handbook covers eligibility for retirement, payment options, and Special Service members’ Level Income Payment Alternative.

Throughout this handbook, when you see the word retire, or retirement, it means begin receiving IPERS benefits.

A. Eligibility to Retire: Regular Members and Protection Occupations

You are eligible for retirement benefits if you are a vested member, no longer working for an IPERS-covered employer, and meet one of these conditions:

• You have attained the age of 55, allowing you to take an early retirement.
• You retire because of a disability and have been awarded social security disability or railroad retirement disability benefits.
• You are age 70 and still actively working for an IPERS-covered employer, which means that you may apply for IPERS retirement benefits while still employed.

Early Retirement

Your monthly retirement allowance will be reduced by 0.25 percentage point for each month that your first month of entitlement precedes the date that you would have attained normal retirement age based on your age and years of service. This early retirement adjustment does not apply if you qualify for normal or disability retirement, or if you retire under the Special Service formula.

Normal retirement age, when an early retirement adjustment no longer applies, is the earliest of these events to occur:

• Age 65
• Age 62 if you have 20 or more years of covered employment (62/20)
• When your years of service plus your age at your last birthday equals or exceeds 88 (Rule of 88)

B. Eligibility to Retire: Sheriffs and Deputies

	•	If you have less than 22 years of service and do not have a disability, you are eligible to retire at age 55.
	•	If you have 22 or more years of eligible service and retire from a sheriff or deputy sheriff position, you can retire at:
		− Age 52 effective July 1, 2006. − Age 51 effective July 1, 2007. − Age 50 effective July 1, 2008.
	•	Eligible service includes all of the following:
		− Service as a sheriff or deputy sheriff. − Service in a protection occupation.
	•	In addition, you must be a sheriff or deputy sheriff when you end IPERS-covered employment to be eligible for the Special Service retirement benefit.

C. What Steps to Take

1. Learn About Your Options and Get an Estimate of Retirement Benefits

Contact IPERS at least two years before you plan to retire. IPERS representatives will provide benefit estimates and help you apply for benefits.

When you contact IPERS, be prepared to provide your:

1. Full name.
2. Member identification number.
3. Birth date.
4. Full address.
5. Telephone number.
6. Approximate date of retirement.
7. Contingent annuitant’s date of birth. (The birth date of the contingent annuitant is required because payments under a joint and survivor annuity are based on actuarial tables that take into account both your and the contingent annuitant’s birth date.) You must indicate if your contingent annuitant is your spouse.

In return, IPERS will prepare a written estimate of the amounts available under the various benefit options and send it to you along with a retirement application form, if applicable. This estimate is provided to aid in your retirement planning and does not constitute a final calculation of your IPERS pension, nor is it binding on IPERS. The final calculation of your benefit will be completed when all wages and service credits have posted to your IPERS account.

Did you know that IPERS provides online Retirement Calculators where you can get on-the-fly benefit estimates for each retirement option offered by IPERS? So, well in advance of your actual retirement, you can begin using the calculators to get a rough idea of what your retirement benefits might be given different scenarios and benefit options.

2. Meet With an IPERS Representative

Whether you plan to visit IPERS at our office in Des Moines or meet with a representative in your area, be sure to schedule your appointment well in advance so IPERS can prepare an up-to-date estimate for you. IPERS representatives regularly meet with members in various locations around Iowa. The schedule is published in IPERS newsletters and is always available on the IPERS Web site at Training & Retirement Planning.

Prepare for your appointment by gathering necessary papers. This will help ensure that your meeting is as informative as possible. If you plan to apply for your retirement benefits during your visit, please bring:

1. Proof of your birth date.
2. Proof of your contingent annuitant’s birth date, if you are selecting Option 4 or 6.
3. Your spouse, if you are married, because the law requires your spouse’s signature on your retirement application.

Your spouse must show consent by signing your application for retirement benefits. IPERS can waive this requirement only if you cannot locate a missing spouse. In this instance, you may begin receiving benefits without the usual spousal consent if you submit a sworn statement that, after reasonable efforts, your spouse cannot be located. IPERS is held harmless in acting upon your sworn statement if the missing spouse later comes forward.

IPERS cannot waive the spousal signature requirement if your spouse’s location is known but your spouse is uncooperative. In this case, you may have to use the courts to obtain the signature.

D. When to Apply for Benefits

Remember, your retirement benefits do not begin automatically! You must file a completed application with IPERS to begin the process for your retirement. Benefits cannot commence any earlier than the month your completed application is received by the IPERS office. All incomplete applications will be returned. An application for retirement benefits is not final until it has been reviewed and approved by IPERS. It is your responsibility to file timely.

1. Before You Terminate Employment

As you approach retirement, you should contact IPERS yearly for updated information. Even if you have received prior estimates, you should request an updated estimate and an application six months before retirement. A completed application should be submitted at least 60 days in advance of retirement to allow sufficient processing time.

2. After You Terminate Employment

If you terminated employment with your covered employer and are eligible to begin benefits, but you did not file a benefit application in advance of termination, your entitlement to benefit payments may be limited. You must file your benefit application timely so that benefit payments will not be forfeited.

3. Retroactive Payments

If you are eligible for IPERS disability benefits, you may be eligible for retroactive benefits.

4. Mandatory Distributions

For all members who have not filed their retirement applications by the required beginning date, IPERS will begin making mandatory distributions (paying monthly benefits) under Option 2, or pay an actuarial equivalent lump-sum payment (AE) if available. The Internal Revenue Code requires the following:

1. If you are no longer employed by an IPERS-covered employer, you must begin receiving mandatory minimum distributions on or before April 1 of the calendar year following the calendar year you attain age 70½.
2. If you continue to be employed by an IPERS-covered employer after you reach age 70½, you must begin receiving mandatory minimum distributions on or before April 1 of the calendar year following the calendar year you terminate such employment.

If you do not receive a distribution according to these guidelines, you may be subject to a 50 percent federal excise tax on the amount you should have received.

E. Option Choices

You may choose monthly benefit payments under one of six options that differ according to the death benefits provided. You select an option when you file an application for retirement benefits. You may not change your option once your first benefit check is issued. It is important that you become familiar with the differences in the six options so that you can make the choice that best suits you. Even though IPERS does not provide financial planning counseling, IPERS can explain the various options to you, and provide you an estimate for each option to help you decide.

As a member, no matter which option you choose, monthly benefits are paid for your life. Payments after your death are as follows:

View enlarged version of table in a new window.

F. Level Income Payment Alternative for Special Service Members Only

Special Service members (sheriffs, deputies, members in protection occupations) may use the Level Payment Option for retirement Options 1 through 5. By using the Level Payment Option, a Special Service member may have a relatively level income before and after age 62 when combining IPERS with social security benefits.

If you use the Level Payment Option, you will receive higher IPERS benefits before age 62. When you reach age 62, your monthly retirement benefit is permanently reduced by an amount determined by IPERS’ actuary. The higher benefit payable before age 62 and the permanent reduction after 62 are calculated to be actuarially equivalent to the benefit otherwise payable to you.

The payment amount is determined when you retire and is not recomputed based on your actual social security benefit. If you use this option, you are required to obtain an estimate of your “age 62” social security retirement allowance and provide it to IPERS 60 days before your first IPERS payment.

The following are examples used to illustrate how the Level Payment Option works.

G. Recalculation of Benefits

Your monthly benefit may begin before your employer reports your final covered wages to IPERS. The initial calculation of your benefit will include all covered wages posted as of that date. When your final covered wages have been reported, audited, and posted to your IPERS account, your benefit is automatically recalculated using the original benefit formula and age factors. If your benefit increases, IPERS will pay the increase retroactively to the first month of entitlement.

H. Actuarial Equivalent (AE) Lump-Sum Benefit Payment

If you are a vested member and entitled to receive a benefit, but your benefit would be less than $50 per month under Option 2, IPERS will pay your retirement benefit as an actuarial equivalent (AE) lump sum. The lump sum will equal the accumulated contributions from you and your employer.