Office Of Benefits and Retirement Services

November 2018

Prince William County Public Schools

Deborah Sparks, Director of Benefits & Retirement Services

Kristin Brittigan, Benefits Specialist – Retirement Services

Virginia Retirement System (VRS)

Stephanie Barkalow, Member Education and Outreach Counselor

Lincoln Financial

Steve Singer, Retirement Consultant

Kathleen Fox, Retirement Consultant

Michael Knapp, Retirement Consultant

Ernest Massenberg II, Retirement Consultant

Haleh Nikmaram, Retirement Consultant

Liliana Zarate, Retirement Consultant

PWCS Benefits Available to Retirees

• Virginia Retirement System (VRS)

• Lincoln Financial

• Retiree Health Insurance

• Sick Leave Conversion

• Retirement Opportunity Program (ROP)

• Sick and Annual Leave Payout

Retirement:

Are You Ready?

What does it mean to be a member of VRS?

Plan Membership

VRS Plan 1 – your membership date is before July 1, 2010 and you were vested as of January 1, 2013

VRS Plan 2 – your membership date is before July 1, 2010 and you weren’t vested as of January 1, 2013 or your membership date is on or after July 1, 2010

Retirement Formula

Plan 2

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VRS Plan 1 – Retirement Eligibility

Reduced

55 with at least five years of service

50 with at least 10 years of service

Unreduced

65 with at least five years of service

50 with at least 30 years of service

VRS Plan 2 – Retirement Eligibility

Reduced

Unreduced

60 with at least five years of service

Age + Service Credit = 90

Social Security Normal Retirement Age with five years of service

Purchase of Prior Service

As your service increases, your benefit increases

Types of Service

Refunded Service

Unlimited Limited

No-Cost Military Leave

48 months combined total

Public Service

Certain Periods of

FMLA Leave

Leave for Birth,

Adoption or Death of a

Child

Educational Leave

Federal Service

Non-Covered Service with

a VRS-Participating

Employer

Limited

48 months aside from previous types of limited service

Prior Military Service

Cost to Purchase Prior Service

After 2 year cost window

Within 2-Year Window After 2-Year Window Refunded Service

Approximate Normal Cost

(set percentage of salary based on your Plan

status)

Actuarial Equivalent Rate (the cost in today’s dollars to fund

the difference to your future retirement benefit, whether it

means an increased benefit or an earlier retirement eligibility date)

Amount of Original Refund paid back,

plus 7% interest compounded annually between date of initial payment and date of

purchase

Payment Options

Purchase Payment Agreements

Lump-sum

Combination

What are my retirement options?

Defined Benefit Payout Options

Basic Benefit Survivor Option

Advance Pension Option Partial Lump-sum Option Payment

Basic Benefit

This is the highest consistent benefit

Payable to the member only

Do you have a spouse with a retirement plan?

Do you still have dependents that would need to be provided for?

Survivor Option

Reduced monthly benefit to member in order to provide a monthly benefit to a survivor after the member’s death

The greater the age difference, the greater the reduction

Can choose between 10% - 100%

It is the only payout option that can be changed after retirement.

Partial Lump-sum Option Payment

Equal to 1, 2 or 3 times the annual retirement benefit(after physically working beyond unreduced retirement for both age

and service based on your Plan)

Monthly benefit would be reduced to account for the lump-sum payment

Purchased service does not count towards working past unreduced eligibility

If the PLOP is paid directly to you, consider the immediate tax implications - option to rollover payment to defer taxes

Advance Pension Option

The APO temporarily increases the VRS retirement benefit to an age you select to have the increase stop (between age 62 and your

Normal Social Security Retirement Age, based on year of birth)

This is a stand-alone payout option – cannot be combined with Survivor Option or PLOP

Cannot choose this payout option if you’re a Plan 1 member retiring early under the 50/10 provision

To run an estimate for this payout option, please follow the instructions in the Benefit Payout Options heading of the VRS

Member section (www.varetire.org)

myVRS

myVRS

myVRS Financial Wellness

Financial Wellness is available on the VRS website now!

myVRS will offer additional content later this year.

What else do I need to think about for retirement?

Defined Contribution Plans

Consider catch-up provisions

Research rollover options

Research distribution options

Take advantage of any potential cash match available

457 and 403(b) Plans are available through Lincoln Financial Group. Consultants are available for office hours:Contact Jill Argueta at (703) 791-8927 to schedule an appointment.

Health Insurance

Retiree Health Insurance options are available through:

Anthem Blue Cross/Blue Shieldand

Delta Dental Premier Plans

For more information on these plans, please consult Prince William County

Schools’ Benefits Website

Email: benefits@pwcs.edu

Health Insurance Credit

Must pay a monthly health insurance premium

Must have 15 years of VRS service

Teachers and Administrative Staff: $4/year of VRS Service Credit (no maximum)

Others (Cafeteria, Bus Drivers, etc.): $1.50/year of VRS Service Credit (max is $45/month)

Basic Life Insurance

Begins to reduce at retirement

• 25% after 1st full calendar year in retirement

• Final reduction will put coverage at 25% of the original value of the

insurance

Continues at no cost

Natural and accelerated death benefit continue

Optional Life Insurance

Convert at non-group rates

or

Continue coverage at active member group rates

Must have this policy in place at least 60 consecutive months prior to retirement in order to continue the policy into retirement

This is a term policy – reduces at various points, terms at age 80

Allows you to continue to provide insurance for your dependent family members

What happens if things don’t go as planned?

Disability Options

Plan 1/Plan 2 members qualify for short-term and long-term disability benefits through Prince William County Schools

(partnered with The Standard)

This benefit replaces a portion of your income, thus helping you to meet your financial commitments if you become disabled.

Disability Retirement

If you have an illness or injury that’s likely to be permanent, you may file for VRS Disability

Retirement

Only coordinates with the Basic Benefit or the Survivor Option

Death in Service

Work Related:

Monthly benefit and refund

Non-Work Related:

Monthly benefit or refund

Return to Work

Full-time VRS-covered positionbenefit stops

Part-time position with the same employer –

break in service required

Part-time position with a different employer –

no break in service required

For teachers that are interested in reviewing the qualifications for “Critical Shortage” opportunities, please find the VRS-160 form on the VRS website (www.varetire.org).

Resources

(888) VARETIR (827-3847)8:30am – 5:00pm (M – F)

http://www.varetire.org

Prince William Co. SchoolsDepartment of Human Resources(703) 791-8050

vrs@varetire.org(General inquiries only –no account-specifics) 8:30 a.m.–4:00 p.m. (M-F)

1111 East Main Street

Richmond, VA 23219

- or –Stephanie BarkalowVRS Member Education sbarkalow@varetire.orgStay tuned for counseling opportunities in your area.

Website

Email

Phone

Local

Counsel

Eligible employees must:

• Meet the definition of a Virginia Retirement Services (VRS) retiree and have activated retirement.

• Be employed with PWCS for a minimum of ten (10) years.

• Be enrolled in PWCS’ group health insurance plan for a minimum of two (2) years prior to retirement.

• Be under Medicare eligible age (currently 65).

Participation in the Retiree Health Plan may continue until the

retiree becomes Medicare eligible or cancels health insurance.

View Regulation 545-1 for updates and full Regulation

Retiree Health Insurance

Retiree Health Insurance PlansAre The Same As Those Offered To Active Employees. Only MedicalAnd Dental Are Eligible To Be CarriedInto Retirement.

Sick Leave Exchange

Eligible retirees may be eligible to use unused sick leave to offset the cost of health insurance upon retirement.

Employees must meet the additional requirements below in addition to the requirements to participate in the Retiree Health Plan:

• Must meet the service requirements to participate in Retirement Opportunity Program (ROP)• Must have a minimum of 125 days of accrued sick leave

Retirement Opportunity Program(ROP)

• Full-time at Time of Retirement

• 17 Years of Full-time VRS Service or Service with a Accredited Education Institution

• 10 Years of Service with PWCS, with the Last 7 Being Consecutive

• Age 55 or older

• Must be in Good Standing Prior to Retirement

• Not Eligible for Disability Retirement or Full Social Security Benefits

ROP continued

• ROP participants work equivalent to twenty (20) days or 10% of their contract.

• ROP participants work the same number of hours as required for the position.Example - 250 day employee = 25 x 7.5 = 187.5 total hours

• ROP participants are paid 19% of their annual salary prior to retirement

• Maximum duration of ROP participation is seven years or until the participant reaches social security age, whichever comes first.

• ROP participants are eligible to start after a 30 day break in-service. The 30 day break in service must coincide with the normal contract period.

• Work assignments must be compatible with the participant’s training, experience and qualifications.

ROP continued

• Application for ROP must be submitted NO LATER than 30 days prior to retirement date.

• Employee is encouraged to provide six (6) months notice of retirement.

• Retirement other than July 1st will result in a loss of one (1) year of ROP eligibility and participant will not be able to ROP until July 1st following their retirement.

Ceases to be eligible• Reaches age to receive full social security benefits• Completes seven years of service• Fails to perform work assignment or is no longer physically or mentally

capable of performing work• Is determined to be “ineffective” by his/her supervising manager• Participant engages in conduct in violation of School Board Policies and

Regulations

Sick Leave and Annual Leave Disbursement

• Sick leave is paid out after retirement at 10% of the employee’s daily per diem.

• Annual Leave is paid out at 100% of the employee’s daily per diem.

• Sick and Annual Leave payout is taxable.

• Sick leave may be exchanged for reduced healthcare premiums (Sick Leave Conversion) is taxable at the 10% of the employee’s daily per diem.

Payout Options (Regulation 545-1)

• Lump sum payment.

• Contribute Pre-Tax to Lincoln Financial.

• Combination of Lump Sum and Pre-Tax Contribution.

• Have you updated your beneficiaries?

• Have you set a date for retirement?

• Have you written a will?

• What is the first thing you plan to do when you retire?

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©2017 Lincoln National Corporation

Steve Singer, CFP®

Certified Financial Planner ™

Taking income from your retirement planDistribution options for near-retirees

RETIREMENT PLAN SERVICES

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Understand your options.

Learn about the distribution options that will be available when you retire.

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Your Social Security payments may influence your distribution decision.

TIP: If you apply early, your benefit starts lower and remains lower for life.

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Consider social security.

To estimate your Social Security benefit, visit ssa.gov and click on

Retirement Estimator.

You can also review your Social Security

statement by clicking on my Social Security.

To apply for Social Security retirement benefits, visit

ssa.gov/retire.

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Consider your timeline to retirement.

50 59½ 62 65 66-67 70 70½AGE

Catch-up contributions

permitted

Earliest age to withdraw retirement plan assets

without a penalty

Earliest age Social Security retirement benefit is

available (reduced amount)

Medicareeligible

Full Social Security retirement benefits available; special filing options permitted

Required Minimum Distributions Retirement

Full Social Security retirement benefit is available

(enhanced amount)

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Consider your retirement transition.

RETIREMENT

Retirement Income Planning

Investment Planning

Risk Management

Estate Planning

Assets for distribution

Pension& income program

Medicare benefits

Social Security

retirement benefits

Comprehensive retirement planning

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Consider these five financial challenges.

Longevity

1

Five Financial Challenges to Retirement Income Security

2 3 4 5

Market Volatility/

Asset Allocation

Timing/Withdrawal

Rates

Inflation/Taxes

Healthcare Costs

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Let us help.

Fortunately, you don’t have to figure this out on your own.

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TIP: Your Lincoln Financial Retirement Consultant can meet with you one-on-one to help determine which option is best for you.

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Leave your assets in your current plan.

Roll your assetsinto an IRA.

Take the cash.

1 2 3

Choose the best option.

TIP: Your Lincoln Financial Retirement Consultant can meet with you one-on-one to help determine which option is best for you.

Consider SRI.

4

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Consider leaving the money in your current plan if:

You’re happy with the investments you have

The fees are appropriate

Your plan allows it

Option 1: Leave your assets in your current plan.

You can create a systematic withdrawal plan

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Consider rolling the assets into an IRA if:

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Option 2: roll your assets into an IRA.

You want to consolidate your assets and still enjoy tax-deferred growth

You’d like more investment options

You are considering an annuity

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With an IRA, you may consider rolling your assets into an annuity if:

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Option 2: roll your assets into an IRA.

You’re concerned about outliving your retirement savings

You want to protect your savings from stock market swings

You’re willing to pay more for optional guarantee features, if necessary

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Option 3: Take the cash.

The plan administrator will automatically deduct 20% as required by law. If you’re under age 59½, you’ll also pay a 10% early withdrawal penalty

in addition to income, state and local taxes. The distribution may push you into a higher tax bracket for the year in which you take the money,

which could increase your tax burden for all income you earn that year.

Taxes can really add up.

If you take your savings in cash, you will:

Pay taxes (and maybe penalties) nowLose out on tax-deferral and

compounding interest

$50,000 Starting account balance

-$10,000 Standard tax: 20%

-$5,000 Early withdrawal penalty: 10% (if you’re under age 59½)

-$5,500 Federal tax bracket: 31% (estimate)

-$2,500 State and local taxes: 5% (estimate)

$27,000 Ending account balance

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Sample Income Base: 65-year-old participant

Option 4: SRI provides guaranteed monthly income

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The details on SRI

* Percentage will vary based on certain factors including the applicable Guaranteed Annual Income Rate, single or joint life election and age when withdrawals begin.

Guaranteed lifetime income

• Lincoln guarantees participants 5% of the Income Base for life.*

Protection from market declines

• Lincoln Secured Retirement Incomesm gives you protection from down markets through the annual reset of your Income Base.

Participation in rising markets

• Lincoln Secured Retirement Income provides a way to participate in rising markets through the annual reset of your Income Base.

Spousal benefits• With a ½ percent decrease in the annual payout rate, you

can convert your single coverage to a joint policy.

Access to account at any time

• Lincoln Secured Retirement Income acts like any other fund in your lineup — you can access it at any time.

Reasonable cost• Lincoln’s rate of 1.39% is institutionally priced and highly

competitive relative to retail markets.

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Wondering how long your income will last? Use our online tools to find out.

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Use online tools.

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Don’t go it alone.

You only retire once. Let us help you maximize your income in retirement.

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Important disclosures

Lincoln Secured Retirement IncomeSM solutions are offered as a group variable annuity. Amounts contributed to the annuity contract are invested in the LVIP Global Moderate Allocation Managed Risk Fund, a fund of funds with a balanced allocation. The guarantee is provided by a contract between the client/plan sponsor and Lincoln National Life Insurance Company that provides a plan participant with guaranteed annual retirement income.

The LVIP Manage Risk Profile Fund is not guaranteed or insured by Lincoln or any other insurance company or entity, and shareholders may experience losses. The risk management strategy used by this fund is separate and distinct from any annuity or insurance contract rider or features.

Lincoln Financial Group® affiliates, their distributors, and their respective employees, representatives, and/or insurance agents do not provide tax, accounting, or legal advice. Please consult your own independent advisor as to any tax, accounting, or legal statements made herein.

A group variable annuity is a long-term investment product designed particularly for retirement purposes. Group annuities contain both investment and insurance components and have fees and expenses, including administrative and advisory fees. The annuity’s value fluctuates with the market value of the underlying investment option, and all assets accumulate tax-deferred. Withdrawals may carry tax consequences, including possible tax penalties.

This material is provided by The Lincoln National Life Insurance Company, Fort Wayne, IN, and, in New York, Lincoln Life & Annuity Company of New York, Syracuse, NY, and their applicable affiliates (collectively referred to as “Lincoln”). This material is intended for general use with the public. Lincoln does not provide investment advice, and this material is not intended to provide investment advice. Lincoln has financial interests that are served by the sale of Lincoln programs, products and services.

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Important disclosures

Investors are advised to consider the investment objectives, risks, and charges and expenses of the group variable annuity and its underlying investment option carefully before investing. The applicable variable annuity prospectus contains this and other important information about the variable annuity and its underlying investment option. Please call 888-868-2583 for a free prospectus. Read it carefully before investing or sending money. Products and features are subject to state availability.

Lincoln Secured Retirement IncomeSM group variable annuity contracts (contract form AN-701 and state variations) are issued by The Lincoln National Life Insurance Company, Fort Wayne, IN, and distributed by Lincoln Financial Distributors, Inc., a broker-dealer. The Lincoln National Life Insurance Company does not solicit business in the state of New York, nor is it authorized to do so.

All contract guarantees, including those for guaranteed income, or annuity payout rates, are subject to the claims-paying ability of the issuing insurance company. They are not backed by the broker-dealer or insurance agency from which this annuity is purchased, or any affiliates of those entities other than the issuing company affiliates, and none makes any representations or guarantees regarding the claims-paying ability of the issuer.

There is no additional tax-deferral benefit for an annuity contract purchased in an IRA or other tax-qualified plan.

Ibbotson Associates, Inc. (Ibbotson) is a registered investment advisor and a wholly owned subsidiary of Morningstar, Inc. Neither Ibbotson nor Morningstar are affiliated with the Lincoln Financial Group. The Ibbotson name is a registered mark of Morningstar, Inc. Ibbotson Associates, Inc., 22 W. Washington Street, Chicago, IL 60602.

Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates. Affiliates are separatelyresponsible for their own financial and contractual obligations.

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