My Choice: Retirement Savings Plan Member Handbook: Membership
As a new full-time employee of the state of Indiana, you are eligible for membership in the My Choice: Retirement Savings Plan. Your plan election can be made in writing or online. Your election must be filed with the board on a board-prescribed form. Once you make an election, your decision is final. If you leave employment with the state and return at a later date, you must continue membership in the plan.
You may choose to become a member of a PERF Hybrid plan. The Hybrid plan offers the PERF Defined Benefit (DB) pension. This plan offers a monthly benefit for life and an ASA. If you do not choose the My Choice: Retirement Savings Plan within 60 days of your hire date, you will become a member of the PERF Hybrid plan.
You will qualify for membership in the My Choice: Retirement Savings Plan when your position is:
- full time, and you are a first time PERF-covered employee of the state of Indiana,
- not covered by another public retirement or pension plan (except Social Security* or the Prosecuting Attorneys’ Retirement Fund) as established by IC 33-39-7-9,
- There are some statutory limits for membership in the fund. See IC 5-10.3-7 for more information.
If you’re a new state of Indiana employee entering into PERF-covered employment, you will be able to choose membership in either the Hybrid or My Choice: Retirement Savings Plan.
After you begin working in a My Choice-covered position, your employer will enroll you in our system. This notifies us that you have entered into a PERF-covered position. You will have 60 days to choose a plan (the My Choice: Retirement Savings Plan or PERF Hybrid). If you do not choose within this timeframe, you will default to the PERF Hybrid plan. You will receive a letter in the mail to confirm your plan election.
We will open a My Choice: Retirement Savings Plan account in your name and you will formally become a member. You will receive a welcome packet to detail your membership information. The packet will include a PIN number with instructions on how to access your online account. This is where you will make your election. A passcode will be mailed to you. Your INPRS online account will allow you to:
- choose beneficiaries,
- update your address, and
- make fund allocations for your contributions.
If you do not make contribution allocations, your contributions will default to a target date fund based on your estimated year of retirement.
When you become a member you immediately begin to save for your retirement. After you enroll, you can name a beneficiary. The money that is in your account at the time of your death will go to your beneficiary.
Your beneficiary may be:
- one or more people,
- certain kinds of trusts,
- estate, or
- other legal entity, such as a charity.
If you name more than one primary or contingent beneficiary, you must choose a percentage that each beneficiary will receive.
If you do not name a beneficiary, your assets will go to:
- a surviving spouse,
- surviving dependents, if you do not have a surviving spouse, or
- your estate, if you do not have a surviving spouse or dependents.
Your employer pays a percentage of payroll to fund your future benefits. These funds are not paid into your account.
There are two types of contributions in the My Choice: Retirement Savings Plan that are paid by the employer:
- a 3 percent fixed rate, and
- a variable rate.
You must meet vesting requirements (full years of participation) to qualify for a full distribution of the variable rate contributions and earnings.
NOTE: You can earn partial years of vesting time and combine them to receive a full year of credit.
Example: You work for the state for 2½ years. During that time, you are on FMLA leave for 6 months. You begin a new job in a My Choice-covered position. You work there for 3½ years. During that time, you take another 6 month FMLA leave. Your total service at that point is 6 years.
FIXED AND VARIABLE CONTRIBUTIONS
State law requires that 3 percent of your gross wages (regular and overtime pay) must be contributed to fund your My Choice: Retirement Savings Plan. Your employer makes contributions to a subaccount. This account receives a variable rate that is determined by the Board of Trustees. (Effective July 1, 2017 through June 30, 2018, the My Choice: Retirement Savings Plan employer contribution rate will be 3.4 percent.) You will receive contributions and earnings from the subaccount if you meet the vesting requirements below:
Vesting schedule is as follows:
- One year of participation = 20 percent
- Two years of participation = 40 percent
- Three years of participation = 60 percent
- Four years of participation = 80 percent
- Five years of participation = 100 percent
The 3 percent is paid by your employer before taxes are calculated on your wages if you are a:
- new state of Indiana employee entering into PERF-covered employment,
- quasi-governmental agency, or
- a university.
If you are not vested when you withdraw funds, the non-taxable amount is paid to you in a lump sum. You can also rollover the non-taxable amount in some cases. If you are vested when you withdraw funds, IRS regulations state that part of your non-taxable benefit must be recovered over the life of the annuity. A portion will remain non-taxable until your entire post-tax voluntary contribution is recovered.
You may be able to make additional (voluntary) contributions through payroll deduction. Your employer’s governing body must decide, by resolution, to allow additional payroll deductions. Your employer can make this decision at any time and may also choose to stop payroll deductions at any time. The maximum for all types of voluntary contributions is 10 percent of your gross wages. This is in addition to the 3 percent mandatory contribution.
Post-Tax Voluntary Contributions
When you make post-tax voluntary contributions, federal, state and Social Security taxes are withheld. Your take home pay will be reduced by the total amount contributed. Since these funds have already been taxed, they won’t be taxed again. Please note: any income or interest earned on these funds is still taxable.
If you are not vested when you receive the funds, the non-taxable benefit will be paid directly to you in a lump sum. In some cases, you can roll over the non-taxable amount.
You will only be allowed to make post-tax voluntary contributions if your employer agrees to deduct the amount requested. The maximum voluntary contribution is 10 percent of your gross wages. That money is sent to PERF. You can stop making voluntary post-tax contributions or change the amount deducted at any time.
The IRS allows PERF to accept voluntary contributions on a pre-tax basis.
You should carefully consider all the conditions and impacts of pre-tax contributions. You will be restricted from making changes later.
The conditions that apply to pre-tax contributions include:
- Your employer must be part of this program.
- You must have five years of service credit in PERF.
- The maximum voluntary contribution is 10 percent of your gross wages. This is in addition to the 3 percent mandatory contribution.
- After you reach five years of PERF-covered service, you have two years from August 31 to choose a pre-tax contribution. This contribution cannot be more than 10 percent of your gross wages.
- As long as you work for the same employer in a PERF-covered position, you cannot change or stop the pre-tax percentage that you contribute.
- If you end service and later return to the same employer, your pre-tax contribution must be reinstated.
- If you work for a different PERF employer, and do not take a distribution, you can make a new pre-tax contribution decision. Your new employer must participate in this option.
- Your employer can choose to stop pre-tax contributions. This decision will allow you to stop making them.
More details on this option are available here.
You can only withdraw funds from your My Choice: Retirement Savings Account when you end employment from a covered position. You must fully end employment for at least 30 days or retire. If you are no longer in a PERF- or TRF-covered position but are still employed with the same employer, you do not qualify to take a distribution. If you are age 62, you may retire or take a distribution. You must completely end employment with your employer. Employment on a part-time basis is not considered ending employment. YOU CANNOT TAKE A LOAN AGAINST YOUR MY CHOICE: RETIREMENT SAVINGS PLAN.
Self-Directed Investment Options
The My Choice: Retirement Savings Plan allows you to manage your retirement benefits with self-directed investment options. You may decide how to invest the 3 percent contributions posted to your account and choose any one or more of the eight funds available through PERF:
- Money Market Fund
- Fixed Income Fund
- Inflation-Linked Fixed Income Fund
- International Equity Fund
- Large Cap Equity Index Fund
- Small/Mid Cap Equity Fund
- Stable Value Fund
- Target Date Funds
You may select from these options for the first time when you enroll in PERF.
You can also log in to your online account to make your investment choices. If you don’t have a computer, call (888) 286-3544 Monday through Friday from 8 a.m. to 8 p.m. EST, to speak to a customer service representative.
If you don’t make these choices, all contributions will automatically be invested in a target date fund. The goal of a target-date fund is to be a "one-stop shop" for you. Target date funds consider the year in which you plan to retire in order to provide appropriate risk diversification.
At first, all of your contributions will go to a Target Date Fund until you choose the My Choice: Retirement Savings Plan or PERF Hybrid Plan. You will be able to view the daily value of your money in your account. You will also be able to make changes to your investment allocations daily.
You have the option of investing part of your account (present balance and future contributions) into any or all of the investment options. You must use at least 1 percent increments. You can invest your current contributions and new contributions separately. This means you can direct your current and future contributions. You may also leave the current balances alone and direct your future contributions only.
Rollover Savings Accounts (RSAs) into PERF
You can deposit taxable or non-taxable funds rolled over from any of the following:
- a qualified plan described in IRS Section 401(a), 403 (a), 401(k), an annuity contract or account described in Section 403(b).
- an eligible plan maintained by a state or political subdivision of a state, or an agency or instrumentality of a state or political subdivision of a state under IRS Section 457(b).
- a Traditional Individual Retirement Account (IRA) described in IRS Section 408(a) or 408(b).
- a traditional or conduit IRA.
If you have rollover accounts with PERF Hybrid and My Choice: Retirement Savings Plans, INPRS must keep the accounts separate. The rollover accounts may only be combined if you roll one account into the other.
You may change investment elections on all rollover accounts. You have the right to transfer or allocate rollover balances.
You may request investment election changes when you speak with a customer service representative (CSR) or make changes on our website. Confirmation statements will be sent to you when you make an investment election change on the web or with a CSR.
You may have separate investment elections for the plan and rollovers. Elections can be made on the rollover contribution form. The RSA funds may be invested in any of the current investment options except the Stable Value Fund. They may be 100 percent withdrawn at any time prior to retirement. At retirement, these funds may be combined with your My Choice: Retirement Savings Plan as part of your total benefit.
IRS guidelines require that you complete your rollover within 60 days of receiving the distribution from your traditional IRA or employer’s plan. The IRS may waive the 60-day requirement where failure to do so would be against equity or good conscience. Examples could include:
- in the event of a casualty disaster*, or
- other event beyond your reasonable control.
If you do not have a waiver, any amounts that are not rolled over within 60 days will not qualify for tax-free rollover treatment. Checks must be received five business days before the 60-day limit. Please consult your tax professional if you have questions.
*Casualty disaster – a loss that can result from damage, destruction or loss of your property. This would include loss from any sudden, unexpected or unusual event as:
- a flood,
- earthquake or
- volcanic eruption.
A casualty does not include normal wear and tear or progressive deterioration.
Section Two: Your My Choice Benefits