BERS WORDSA publication of the New York City Board of Education Retirement System

We would like to hear from you. Please send comments regarding our newsletter, or any specific concern to: The Editor, BERS WORDS, Board of Education Retirement System, 65 Court Street, Room 1603, Brooklyn, N.Y. 11201. Or E-mail your comments to Brespon@bers.nyc.gov.

Volume 18 No 2 www.nycbers.org Spring 2014

The 113th Congress and Senate Resolution, S. RES.380 dedicated April 24, 2014 as Take Our Daughters and Sons to Work Day and acknowledged its 21st anniversary celebration. Take Our Daughters and Sons to Work Day has inspired a future generation of girls and boys by helping bring them into the workplace to explore the many life choices they have.

This year, the annual Take Our Daughters and Sons to Work Day theme of “Plant a Seed, Grow a Future” suggested that an even bigger and brighter future is ahead for all our nation’s daughters and sons. It reminded our youth to be brave as they dream seemingly impossible dreams, explore new

challenges, and attain the success they have always hoped for in education, work, home, and in their communities.

BERS was pleased to participate in this event and was host to 21 children ranging from ages 5 to 15. For many children, this was their first time joining their parents for a day at the workplace. On this occasion, our “Junior Employees” who had participated in previous events, were happy to reconnect with old friends, and older children helped “mentor” their younger siblings who were new attendees. It was a successful day, and we at BERS look forward to seeing the progress of our daughters’ and sons’ development at the next event in 2015.

BERS Participates in the Annual Take Our Daughters and Sons to Work Day

Future pastry chefs hard at work.

An important part of being employed at the DOE is being fingerprinted and passing a thorough background check. The children pay rapt attention to the program during lunch.

The Personnel Manager explains office protocol to the children.

Using TDA Funds To Purchase Prior Service and Military Service

BERS Loan Insurance

As a supplement to your Social Security and Qualified Pension Plan (QPP) benefits, the TDA program is a unique way to save money on a tax-deferred basis. A prominent advantage of this program is the ability to use tax-deferred funds to purchase prior service.

If you were employed by New York City or New York State prior to joining BERS, you may be eligible to purchase that prior service and have it credited to your pension. The purchasing of prior service is important because retiree benefits are based largely on the amount of service credit a member has at the time of their retirement. Prior service differs from transferred service, as transferred service is time credited while enrolled in another retirement system.

You may pay for prior service credit by a lump sum payment, by post-tax payroll deductions, or with TDA funds. Additionally, members currently paying through post-tax payroll deductions have the option of paying the remainder of their prior service with their TDA funds.

In order to purchase prior service you must submit a completed prior service application to BERS. Upon receipt of the application,

our Prior Service Department will verify your service information and calculate the cost of prior service to be purchased. You may be eligible to transfer all or a portion of your TDA funds to purchase this pension credit. TDA funds may also be used for the purchase of military service. The TDA funds are directly rolled over on a pre-tax basis to your pension contribution fund.

The cost to purchase service in Tiers 1 and 2 is based on your present earnings. The cost to purchase prior service in Tier 4 or 6 is based on the salary you were earning at the time the service was rendered, plus 5% interest. The cost to purchase military service service in Tier 4 or 6 is based on the salary you were earning from the last 12 months before you applied.

In order to receive credit for purchased prior service, you must have at least 2 years of membership service. In order to receive credit for purchased military service, you must have at least 5 years of membership service. Payment for prior service begins only after you submit the Payment Method Election form that is sent to you by the Prior Service Department. Interest accrues on the cost of prior service at a rate of 5%.

Having loan insurance means the borrower avoids any additional debt to their estate if they die with an outstanding loan balance. All BERS loans become fully insured between 30 and 90 days after the loans are disbursed. If a member dies after receiving a fully insured BERS loan, their outstanding balance will be forgiven.

There is no cost for Tier 1 and Tier 2 loan insurance. 30 days after the loan is issued, 25% of the outstanding loan balance is insured. Half the outstanding loan balance will be insured after 60 days, and the loan becomes fully insured after 90 days.

The insurance premium for Tier 3, Tier 4, Tier 6, and Early Retirement Program loans is 0.3%. This premium is considered when calculating your repayment amount, and the rate may change based on a review of the BERS membership and mortality experience performed by the Actuary. Tier 3, Tier

4, Tier 6, and Early Retirement Program loans become fully insured 30 days after the loans are issued. TDA loan insurance premiums will be included in your regular loan repayments, at a rate of 0.4%. This loan becomes fully insured 30 days after the loan is issued.

Loan insurance is discontinued for any loan that goes into default. Any unpaid insurance incurred between the time of your last loan payment and your default will be debited against your account once the loan is liquidated. There may also be tax consequences for default loans.

For more information on BERS loan insurance, please visit the web site at https://www.nycbers.org/UI/Pubs.aspx. If you have any questions regarding a BERS loan, you may also call (718) 935-4160 for assistance.

Tier 6 members are required to make contributions to BERS for their pension plan. All contributions made through payroll deductions are made before federal taxes are taken out of their paychecks. This means that employee contributions are currently not included as part of gross income for federal tax purposes, but instead will be subject to federal taxes when benefits are paid out in retirement, or if and when there is a refund of these contributions. In addition to making employee contributions to BERS, members are required to pay Social Security and Medicare (FICA) taxes.

The rate of contribution for Tier 6 members will be determined by the following schedule:

Annual wages Basic member contributions

$45,000 or less 3%

greater than $45,000 up to $55,000 3.5%

greater than $55,000 up to $75,000 4.5%

greater than $75,000 up to $100,000 5.75%

over $100,000 6%

Participants in the Automotive and Special Officer programs are required to make additional contributions over and above the regular contributions. These additional contributions are outlined below.

The 50/25 Early Retirement – Automotive Program: Beyond your regular employee contributions to BERS, you are required to make additional member contributions at a rate of 4.83% under the Automotive program.

Additional contributions are kept in the AMC account, separate from regular employee contributions in the MCAF account. Usually, just like regular contributions, the additional contributions are made through payroll deductions before federal taxes are taken out of paychecks. (Pensions will be subject to federal taxes when benefits are paid, or additional contributions will be subject to federal taxes if and when members receive a refund of these contributions.) And like regular contributions, additional contributions do not incur current New York City (if applicable) and State income taxes.

Automotive program contributions are credited with an interest rate, as of this printing, of 5%.

The 25/Out Early Retirement – Special Officers Program: Beyond regular employee contributions to BERS, members are required to make additional member contributions at a rate of 6.25% under the Special Officers Program.

Additional contributions are kept in the Special Officers account, separate from regular employee contributions in the MCAF account. Usually, just like regular contributions, additional contributions are made through payroll deductions before federal taxes and are taken out of paychecks. (Pensions will be subject to federal taxes when benefits are paid, or additional contributions will be subject to federal taxes if and when members receive a refund of these contributions.) Also, like regular contributions, your additional contributions do not incur current New York City (if applicable) and State income taxes.

Special Officers contributions are credited with an interest rate, as of this printing, of 5%.

Tier 6 Member Contributions

BERS Contact InformationBERS is open during regular business hours Monday through Friday, 8:30am to 5pm and on various public holidays between the hours of 9am to 5pm. Please call to schedule an appointment to ensure that we can address your most pressing concerns during your visit.

If you have a question about your member account or benefits, please contact us using the following telephone numbers:

Within the NYC area (718) 935-5400

Outside the NYC area (800) 843-5575

Appointments (718) 935-3965

Counselors (718) 935-5484

Enrollment (718) 935-4114

Loans (718) 935-4160

Prior Service (718) 935-4150

Retirees (718) 935-5445

TDA (718) 935-4115

Transfers/Withdrawals/Refunds (718) 935-4123

New York City Board of Education Retirement System65 Court Street, Room 1603Brooklyn, New York 11201(718) 935-5400www.nycbers.org

Printed in the USA on recycled paper.

Questions and Answers

Board of Trustees

Christine Bailey, Executive Director

Milady Baez Fred Baptiste

T. Elzora Cleveland Joseph D’Amico

Deborah Dillingham

Carmen FariñaNorm Fruchter Vanessa Leung

Kamillah Payne-Hanks Lori Podvesker Robert Powell

Robert Reffkin Roberto Soto-CarriónMilagros Rodriguez

Laura Zingmond Miguelina Zorrilla-Aristy

Q. My children are ages five and eleven years old and I would like to name them as my beneficiaries. Will they be able to get the monies if anything should happen to me while they are at this young age?

A. If you would like to name your minor children as beneficiaries of your pension benefits, it is important to remember that minors cannot control funds. To ensure that your minor children inherit your pension funds, you must appoint a guardian who will oversee the management of their assets while they are young. Please attach a notarized letter indicating the guardian you wish to appoint to your Designation of Beneficiary form. Note that this designation of guardian will govern only the disposition of your BERS death benefit; it will not determine the person who will have custody of your child/children after your die.

If you prefer that your minor children receive the funds over a period of time, it might be best to establish a Trust so the funds can be managed in accordance with your wishes by a responsible trustee of your choosing. Please seek legal and financial advice when setting up a Trust.

Be sure to make your wishes known to BERS by filing an up to date Designation of Beneficiary form for your QPP benefits and a separate TDA Designation of Beneficiary form (if applicable). BERS will always distribute your retirement benefits based on the most current beneficiary information on file, whether or not it matches your will or wishes at the time of your death. If you do not have any beneficiary designation forms on file at BERS, your benefits will be distributed to your estate.