Legislators' Member Handbook: The Defined Benefit Plan
The Defined Benefit Plan guarantees a lifetime monthly benefit to employees who meet eligibility requirements. This plan applies only to legislators who were members of the General Assembly on April 30, 1989, and chose to participate. Employer contributions and their investment earnings fund the Defined Benefit Plan. The following section explains your rights and responsibilities as a member of this plan.
Eligibility Requirements
Vested Status
You are vested in the Defined Benefit Plan once you have earned 10 years of service credit as a member of the General Assembly. You are eligible to receive the retirement benefit when you separate from service and meet the conditions for eligibility.
Normal Retirement With Unreduced Benefits
In order to receive full retirement benefits, members may not receive salary from the state for work in any capacity, and may not receive or may not have previously received a reduced monthly benefit under this plan. Members who meet the eligibility requirements are entitled to a lifetime monthly retirement benefit if they have terminated service as a member of the General Assembly and:
- Are at least age 65 and have 10 years or more of creditable service as a member of the General Assembly (or meet the requirements for disability benefits under this plan); or
- Are at least age 60 and have at least 15 years of service as a member of the General Assembly; or
- Are at least age 55 and your years of service as a member of the General Assembly plus your years of age equal at least 85.
Early Retirement With a Reduced Pension Benefit
The Plan also provides a reduced monthly benefit for life to qualified members. If you wish to retire early, your pension benefit will be reduced by a formula based on your age if you are at least age 55 as long as you:
- Have terminated service in the General Assembly;
- Are not receiving, nor are entitled to receive, a salary from the State for work in any capacity and;
- Have achieved vested status, or 10 years of creditable service in the General Assembly.
Returning to Service in the General Assembly
If you are receiving retirement benefits under the Plan and you return to the General Assembly, your retirement benefits will stop. Upon your subsequent retirement or death, the benefit will be recalculated on an actuarial basis taking into account:
- Benefit payments previously received, and
- The date of the subsequent termination of employment as a member of the General Assembly.
Retiring from the Plan
Retirement Date
By law, if you are eligible to receive pension benefits and wait to submit a retirement application, INPRS can only pay up to six months of retroactive benefits.
Calculating Your Benefits
If you meet the conditions for unreduced retirement benefits described above, your monthly retirement benefit is the lesser of:
- Forty dollars multiplied by the total years of service as a member of the General Assembly before Nov. 8, 1989; or
- The highest consecutive three-year average annual salary of the participant attributable to the participant's service as a legislator, as reported on the participant's W-2 federal income tax withholding statement and determined without regard to any salary reduction agreement established under Section 125 of the Internal Revenue Code, at the date the participant's service as a member of the General Assembly is terminated, divided by twelve (12).
When applying for benefits, make sure you complete the tax withholding forms.
You will also qualify for Social Security benefits. After retirement, Social Security is the largest source of income for most elderly Americans. More information on Social Security benefits is available online at http://www.ssa.gov/.
Benefit Overpayment or Underpayment
Errors may occur when determining benefits provided by the Legislators' Retirement System. This could be due to incorrect or incomplete data or for other reasons. If such an error is discovered, INPRS reserves the right to correct the error at any time, including after you take a distribution of your account balance. If you receive an overpayment as a result of any error, you will be notified of the amount and will be required to repay it to INPRS. If you have an underpayment you will receive an additional payment from INPRS.
Disability Benefits
If you become disabled while in active service as a member of the General Assembly, you may receive a disability benefit if you:
- Have at least five years of creditable service as a member of the General Assembly,
- Have qualified for Social Security disability benefits, or disability benefits under the federal service system, and have furnished proof of your qualification to INPRS, and
- Have your continued disability verified by INPRS at least one time each year until you reach the age of 65.
The disability benefit will continue as long as the disability exists. The disability benefit is computed as though you were eligible for a retirement benefit at age 65.
Benefits may not be provided for a disability resulting from an intentionally self-inflicted injury or attempted suicide while sane or insane, or resulting from the commission or attempted commission of a felony.
Survivor Benefits
If you die while receiving benefits under the Legislators’ Retirement System, your surviving spouse is entitled to receive a survivor’s benefit if you had completed 10 years of creditable service as a member of the General Assembly, regardless of your age or had a permanent disability and were receiving benefits.
Spouse
Your surviving spouse is entitled to 50 percent of (1) the amount you were receiving at the time of death, or (2) the amount of retirement benefit you would have been entitled to receive at age 55 or your date of death, whichever is later. If your spouse would have qualified for a benefit, but your spouse does not survive you, upon your death your dependent child is entitled to the same benefit your spouse would have received.
Dependent Child
If your surviving spouse dies while receiving the survivor benefit and a dependent child of both the surviving spouse and the deceased participant survives, your dependent child will receive that same benefit. If there is more than one dependent child, the dependent children will share the monthly benefit equally. Each dependent child will receive this benefit until the age of 18 or during the entire period of the mental or physical disability using disability guidelines established by the Social Security Administration, whichever period is longer.
Income Taxes
Taxation of Monthly Installments
All of the monthly benefit payable from the Defined Benefit plan is taxable income. The Plan will report the taxable income associated with your benefits to you each year on a Form 1099-R.
Tax Notice
The taxation rules are complex, so if you need additional information, you should obtain IRS Publication 575; or, if you need further assistance, you should contact your local IRS office or a tax consultant.
The Administrative Review Process
Appeals of the Legislators' Retirement System initial determination will be heard by an Administrative Law Judge in compliance with the Indiana Administrative Orders and Procedures Act IC 4-21.5.
You must have standing as a party or a right to intervention to request administrative review. The steps of administrative review are http://www.in.gov/inprs/adminreview.htm.
The appeal process will allow for additional evidence to be presented by all parties. The Administrative Law Judge will submit findings to INPRS. INPRS will review the findings of the Administrative Law Judge and issue a final determination.
All parties will be advised of the final determination.
Every attempt has been made to verify that the information in this handbook is correct and up-to-date. Published content does not constitute legal advice. If a conflict arises between information contained in this publication and the law, the applicable law shall apply.
