Welcome to the Employees’ Retirement System and the RSA · ERS Member Handbook • The Member...

Employees’ Retirement System

Retirement Systems of Alabama

Welcome to the Employees’ Retirement System

and the RSA

2020



ERS is a Defined Benefit Plan• Participation is mandatory as a condition of

employment.• Guaranteed lifetime benefit for member• Benefit level established by law• Benefit calculated using a formula• Retirement benefits NOT dependent upon the

investment returns earned on members’ contributions

COLAs are not guaranteed!



Tier 1 Members

Regular members contribute 7.5%* of earnable

compensation

*Still 5% for many local governments

Full time, Certified Firefighters, Correctional Officers, and Law

Enforcement Officers contribute 8.5%* of earnable

compensation

*Still 6% for many local governments

10% for TroopersRSA participation is mandatory

The contribution rate changes in the law were mandatory ONLY for state agencies.



TIER 1 - Retirement Benefits

After 25 years of service credit, at any age

At age 60 with at least 10 years of service credit

OR



Sick Leave Conversion

A TIER 1 benefit only

Employer must adopt the Resolution to Allow the conversion of unused sick leave.

Convert unused sick leave toward meeting minimum service requirement for retirement eligibility.

Cannot be paid for sick leave and obtain service credit for it. It must be one or the other.



TIER 2 ERS Plan Effective for employees hired on or

after January 1, 2013

Employees enrolled in the Employees’ Retirement System (ERS) or the Teachers’ Retirement System (TRS) prior to 2013 are TIER 1.



Tier 2 Members

Regular members contribute 6% of earnable compensation

Full time, Certified Firefighters, Correctional Officers, and Law

Enforcement Officers contribute 7% of earnable compensation

RSA participation is mandatory



TIER 2 - Retirement Benefits

Regular Members: Age 62 with at least 10 years of service credit

Full-time & Certified Firefighters, and Law Enforcement Officers: Age 56 with at least 10 yearsof service credit



Act 2019-132

• Allows Local Government employers the option to offer TIER 1 benefits for its TIER 2 ERS members

• Local Government employers may elect to offer such benefits by adopting a resolution and submitting it to ERS by May 8, 2021.



Act 2019-132 for Tier 2 Members

AdoptedRetirement Eligibility:• At 25 years of service credit, or• At age 60 with at least 10 years of

service credit

Contribution Rates:• 7.5% (8.5% for Firefighters & Law

Enforcement Officers)

Not AdoptedRetirement Eligibility:• At age 62 with at least 10 years of

service credit• Firefighters & Law Enforcement

Officers at age 56 with at least 10 years of service credit

Contribution Rates:• 6.0% (7.0% for Firefighters & Law

Enforcement Officers )



Act 2019-132 for Tier 2 Members

AdoptedBonus years for Firefighters & Law Enforcement Officers• One bonus year earned for every five years

of hazardous duty.

T I E R 1 Retirement Formula• Benefit Factor: 2.0125%• Average Final Salary: Average of the

highest 3 years out of last 10 years

Sick Leave Conversion

Not AdoptedNo bonus years for Firefighters & Law Enforcement Officers

T I E R 2 Retirement Formula• Benefit Factor: 1.65%• Average Final Salary: Average of the highest

5 years out of last 10 years

No Sick Leave Conversion



ERS Service Credit

Membership Service

Service earned as an employee while making contributions to the ERS.

Purchasable Service

Withdrawn Service Military Service Out-of-State Public Service

Service transferred from the TRS or the JRF into the ERS.



Types of Service Available to Purchase• Military Service

o May purchase up to 4 years during first year or after 10 years of service

• Withdrawn Service• Previous Service

o With a city, county, town, public or quasi-public organization

• Out-of-State Service• TRS Support Personnel, Teacher Aide,

Job Corps, and Teacher Corps• Non-Participating Employer Service

Information is provided in your ERS Handbook



Yearly Statement • Every year, you will receive a statement from ERS.

In the past the statements were mailed. Now we are providing them on-line. You will need to go to our website www.rsa-al.gov and register for a Member Online Services (MOS) account.

• Check this statement carefully. If there is a discrepancy, please call the RSA and speak with a counselor.

• Always check to make sure your beneficiary information is up to date!

http://www.rsa-al.gov/



ERS Member Handbook• The Member Handbook is a

valuable resource for you.• All contact information is

printed on the inside front cover.

• Details of your retirement system are explained.

• Page 13 shows the Preretirement Death Benefit which changes with the years you work.



Death of a Member Prior to Retirement Tier 1Member Age Years of Service Credit Preretirement Death Benefit

Ineligible to RetireUnder 60

or60 and older

Between 1 and 25

Between 1 and 10

Member contributions, total interest earned, plus an amountequal to the member’s salary for the prior fiscal year (October 1 -September 30)

Any age Less than 1 year, death was job-related

Member contributions, total interest earned, plus an amount equal to the member’s salary at time of death

Any age Less than 1 year, death was not job-related

Member contributions, total interest earned, plus an amount matching the contributions and interest but limited to a maximum of $5,000

Eligible to Retire or 25 Years of ServiceAny age

or60 and older

25 or more

10 or more

Choice of:1. Option 3 monthly benefit (50% of member’s retirement benefit)to the spouse or beneficiary (this choice is not available for multiple beneficiaries)

Or2. Member contributions, total interest earned, plus an amountequal to the member’s salary for the prior fiscal year (October 1 - September 30)



Death of a Member Prior to Retirement Tier 2Member Age Years of Service Credit Preretirement Death Benefit

Ineligible to RetireUnder age 62

or62 and older Between 1 and 10

Member contributions, total interest earned, plus an amountequal to the member’s salary for the prior fiscal year (October 1 -September 30)

Any age Less than 1 year, death was job-related

Member contributions, total interest earned, plus an amount equal to the member’s salary at time of death

Any age Less than 1 year, death was not job-related

Member contributions, total interest earned, plus an amount matching the contributions and interest but limited to a maximum of $5,000

Eligible to Retire62 and older

Age 56 forFLC

10 or more Choice of:1. Option 3 monthly benefit (50% of member’s retirement benefit)to the spouse or beneficiary (this choice is not available for multiple beneficiaries)

Or2. Member contributions, total interest earned, plus an amountequal to the member’s salary for the prior fiscal year (October 1 - September 30)



Becoming Vested• When a member has 10 years in the system, he or

she is vested.

• Being vested qualifies you for a monthly retirement check once you reach age 60 under Tier 1 or age 62 (56 for FLC and State Police) under Tier 2, even if you have not worked for the state of Alabama in a while.



Disability Benefits• Must have 10 years (vested) in the system• Must be in service or on official leave of absence• The RSA Medical Board must determine the

member to be permanently incapacitated.• Disability benefits are calculated identically to

benefits for service retirement.



How Will My Retirement Benefit Be Calculated?

Average Final

Salary*

Years & Months of

Service

Benefit Factor

(.020125)12

Maximum Monthly Benefit

*The average of the highest THREE years of salary out of the last 10 years the member made contributions.

Refer to your Member Handbook, page 22, for examples of maximum benefit amounts.

Tier 1



How Will My Retirement Benefit Be Calculated?

Average Final

Salary*

Years & Months of

Service

Benefit Factor (.0165)

12

Maximum Monthly Benefit

*The average of the highest FIVE years of salary out of the last 10 years the member made contributions.

Refer to your Member Handbook, page 18, for examples of maximum benefit amounts.

Tier 2



Retirement Benefit ChoicesThis choice is only made at time of retirement:• Maximum Monthly Benefit• Option 1• Option 2• Option 3

Under each of these plans, the member will receive a benefit for life.



Maximum Monthly Benefit• Largest available monthly

benefit

• Benefits cease completely at time of retiree’s death

• Designated beneficiary(ies) receive a one-time prorated monthly benefit covering the days of the month the retiree was still living



Option I• Monthly benefit slightly less than maximum monthly

benefit• Lifetime benefit for retiree on a monthly basis

If retiree dies prior to receiving annuity payments exceeding his or her account balance, the remaining balance will be paid to the designated beneficiary(ies).



Option II

100% Survivor Benefit• Reduced monthly benefit over lifetime of retiree• Benefits based on ages of retiree and beneficiary

Only 1 beneficiary may be designated to receive the same lifetime benefit after the retiree’s death.

No changes of beneficiary (to receive a monthly benefit) are allowed after retirement, unless beneficiary predeceases retiree or a divorce between retiree and beneficiary.

See Replacement Beneficiary information



Option III

50% Survivor Benefit• Reduced monthly benefit over lifetime of retiree• Benefits based on ages of retiree and beneficiary

Only 1 beneficiary may be designated to receive one-half of the retiree’s benefit after the retiree’s death.

No changes of beneficiary (to receive a monthly benefit) are allowed after retirement, unless beneficiary predeceases retiree or a divorce between retiree and beneficiary.

See Replacement Beneficiary information



Partial Lump Sum Option Plan(PLOP)• In exchange for a permanently reduced lifetime monthly

benefit, the member may elect to receive a partial lump sum payment at the start of retirement.

• Payment amount is one month up to 24 months of the MAXIMUM MONTHLY BENEFIT (increments of $1,000).

• Payment is subject to 20% withholding for federal income taxes.• Not eligible with RSA Disability Retirement.



Tax InformationERS retirement benefits are not subject to: Alabama State Income Tax F ICA (Social Security & Medicare) ERS retirement contribution

ERS retirement benefits are subject to: Federal Income Tax

All retirees receive a form 1099-R every January



Post-Retirement Employment

An ERS retiree may continue to receive full benefits while employed with an ERS or a TRS agency so long as the following conditions are both met:

1. Retiree is not employed or under contract as permanent, full-time… Must be employed in a part-time capacity.

2. Retiree’s salary cannot exceed the limitation on earnings and the limits are subject to change each year based upon the Consumer Price Index.

For 2020, the limit is $32,000.00.



AN ELIGIBLE 457 DEFERRED COMPENSATION PLAN

THE RSA-1 PLAN

SAVE MORE FOR RETIREMENT



Retirement Income

• Aim to replace most of your pre-retirement salary with:

• Your ERS Retirement Benefit

• Social Security• Personal Savings Plan like

RSA-1



Saving With RSA-1

• Voluntarily defer a portion of your pre-tax income –each pay period – to save more for Retirement.

• Invest the deferred salary in RSA-1 allowing it to grow tax-deferred.

• Save on income taxes while saving for Retirement!



Investment Options 1. Bond Fund

• Majority Corporate & Governmental Bonds

2. Stock Fund• S&P 500 Index Fund

3. Short Term Investment Fund• Mix of securities, U.S. Treasury bills and notes



Changing Investment Options

Members and beneficiaries may choose to:• Invest among the three funds.

• Change investment options (permitted once every 90 days).

• Invest future RSA-1 deferrals differently than how an existing account balance is invested.



RSA-1 Investment Funds

Dr. Bronner & the RSA Investment staff decide the composition of the investment funds for the RSA-1PLAN…

… the same expert team who handles your ERS retirement funds!



No investment fees No membership fees No administrative fees

No transaction fees

No commission fees

• All the money you deferand all investmentearnings are placed intoyour account andinvested by RSA-1.

• Remember: We are Public Employees just like you!

RSA-1 Has No Fees!



Contributions - Minimums & Maximums

• No minimum contribution. It could be just $25 per pay period!

• The maximum contributions for 2020 are:• $19,500/ year if under age 50.• $26,000/ year if age 50 or older.• $39,000/ year if you are eligible and participating in “Catch Up.”



Deferring Payout for Annual and/or Sick Leave

If paid for unused annual leave and/or sick leave at termination of employment, you may defer some or all of the payout into RSA-1.



Availability of RSA-1 Funds

1. Separation of service, regardless of age• Retirement• Termination of Employment

OR

2. Unforeseeable Emergency as defined by the U.S. Treasury

OR

3. At age 72, if still employed.



Distributions

• Lump Sum

• Partial Lump Sum

• Equal Monthly or Annual Payments

• Delay distribution until a future date• (no later than April 1st following the calendar year you

reach age 72)



Another RSA-1 Benefit

Purchase permissible service credit using moneyfrom your RSA-1 account!

• Withdrawn Service

• Military Service

• Out-of-State Public Service



Transfers From Other Plans

• Transfers from other 457 plans to RSA-1 are allowable. Soon we will also allow transfers from Thrift Savings Plan (TSP) accounts.

• Establish your RSA-1 account prior to the transfer.

• You may invest your transferred monies independently of any previous or future deferrals into RSA-1.



Enrolling in The RSA-1 Plan is Easy!

• Enroll at any time - no open enrollment period. • Change deferral amount at any time in accordance with

employer policies.

Enrollment forms are found in the RSA-1 Handbook:1. Enrollment Form 2. Beneficiary Designation 3. Investment Option Election 4. Authorization-to-Defer (Give to Payroll)



Keeping Track of Your RSA-1 Account

• Easy-to-read statements are posted quarterly to your Member Online Services (MOS) Account.

• Investment funds returns are posted monthly on the RSA website.



RSA Educational ProgramsRSA offers educational programs or seminars throughout the state. Check the RSA website or ask your HR office about the schedules and registration forms. These programs are very beneficial. 1. Early to Mid-Career Seminars are half-day programs

for those who do not qualify for the Retirement Preparation Seminar.

2. Retirement Preparation Seminars are for employees who are within 5 years of retirement eligibility.

3. Individual Counseling Appointments are twenty minute, one-on-one appointments with our retirement experts.



Get more informat ion on ERS or RSA-1 and log in to your account by v i s i t ing our webs i te :

w w w.rsa-a l . gov

Phone: (877) 517-0020

ERS Emai l : ers info@rsa-a l . gov

RSA-1 E-mail: rsa1 info@rsa-a l . gov

http://www.rsa-al.gov/

mailto:[email protected]

mailto:[email protected]

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Welcome to the Employees’ Retirement System and the RSA · ERS Member Handbook • The Member...

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