PERF Hybrid Plan Member Handbook: Receiving Benefits Before Retiring
Leaving PERF-covered employment requires you to make important decisions regarding your retirement savings. This section explains the issues you will need to consider if you leave a covered position and separate from service.
If you have worked for approximately 10 years in any combination of PERF- or TRF-covered positions and have not received an annual PERF statement, you should check with PERF to see if you are, or are close to, being vested.
Withdrawing Your Annuity Savings Account (ASA)
You may withdraw the balance of your ASA (in the form of a distribution or rollover to another qualified retirement plan) if you are no longer in a PERF-covered position.
These withdrawal amounts consist of:
- The 3 percent mandatory contributions;
- Any voluntary contributions (if applicable); and
- All interest and earnings credited to your account.
If you continue uninterrupted employment in any capacity (full-time or part-time) in any agency or department of your current employer — regardless of whether your new position is covered under PERF or not — you will not be considered separated from service. If you are re-employed in a PERF-covered position within 30 days from the date of termination, you are not eligible for a distribution.
If you are vested and have separated employment in a covered position for at least 30 days, you may withdraw your ASA and retain your pension benefit. If you are eligible for a reduced pension benefit, and have separated from employment, you may withdraw your ASA without forfeiting your pension benefit. If you are eligible for a full retirement, you may not withdraw the ASA component without fully retiring.
Payment Options
When you apply for an ASA distribution, you must choose how to receive the payment. You must select one payment option for the taxable portion and one payment for the non-taxable portion.
| Members who elect to withdraw their ASAs at retirement will remain invested according to their pre-retirement investment allocations until their ASA is paid out at the time PERF processes their retirement. Members who elect to annuitize their ASAs at retirement will have the balance of their ASA put into a fixed value account set at the same rate as the Guaranteed Fund. This happens not more than 30 days prior to the member’s retirement date or processing of the member’s retirement application. Members who elect to defer their ASA at retirement will have the balance of their ASA invested according to their pre-retirement investment allocation. |
The tax status of your mandatory ASA contributions depends on whether or not taxes were withheld on them before the contributions were made to PERF. The employer-paid portion of the mandatory contributions are pre-tax. Portions deducted from a member’s wages after taxes are deducted post-tax.
Taxable Portion - Direct Rollover
You may elect to have all or part of the taxable portion of your ASA paid in the form of a direct rollover into an eligible 401(a), 403(b) or governmental 457(b) plan, or Traditional or Roth IRA, which has provisions allowing it to accept the rollover on your behalf.
Except in the case of a Roth IRA, this option defers any taxes you owe on your ASA balance.
If you choose to roll over only part of the taxable amount, the portion not rolled over is paid directly to you (less the mandatory 20 percent withholding for federal income tax).
If you choose to take a rollover distribution and do not complete the rollover by the 60th day following the day on which you receive the distribution, your distribution may be subject to taxes and/or penalties unless you qualify for a waiver. Please consult your tax professional for waiver qualifications.
Taxable Portion - Paid Directly to the Member
You may elect to have the total amount of the taxable portion of your ASA (less the mandatory 20 percent withholding for federal income tax) paid directly to you.
Non-Taxable Portion - Direct Rollover
You may elect to have all or part of the non-taxable portion of your ASA paid in the form of a direct rollover into an eligible qualified plan, 403(b) plan, or Traditional or Roth IRA, which has provisions allowing it to accept the rollover on your behalf. If you choose to roll over only part of the non-taxable amount, the portion not rolled over is paid directly to you.
Non-Taxable Portion - Paid Directly to the Member
You may elect to have the total amount of the non-taxable portion of your ASA paid directly to you.
You will receive a 1099-R by Jan. 31 of the year after you receive your distribution. By law, this is the latest date 1099-Rs can be mailed.
PERF will withhold 20 percent from your distribution of the pre-tax portion paid to you or to your surviving spouse whether or not the IRS levies a 10 percent penalty. Adjustments may be made for payments made to survivors under special circumstances.
Tax Penalty – Early Withdrawal of ASA
You may be subject to an additional 10 percent federal tax penalty on your ASA if you have not reached the age of 59 1/2 at the time of your distribution.
Staying Invested
When you leave covered employment, you may leave your ASA invested with PERF. You may continue to invest in any of the eight available options, and will continue to receive a quarterly statement. However, if you are not vested, investments in the Guaranteed Fund or any of the other seven self-directed investment funds will only be credited with interest, gains and losses for a period of 10 years, after which, no further interest, gains and losses will be credited. An exception to this 10-year rule exists when you leave PERF-covered employment but remain with the same employer in a full-time position. In this case, interest, gains and losses will be credited on funds for up to 45 years.
| Notice: If you are not vested when you leave PERF-covered employment, investments in the Guaranteed Fund or any of the other seven self-directed investment funds, will only be credited with interest, gains and losses for a period of 10 years, after which, no further interest, gains and losses will be earned. |
Death of a Member
When a member dies, PERF must be notified in order to make payments to the appropriate beneficiaries in a timely manner. PERF needs a copy of the death certificate in order to process any distributions of ASA balances or survivor benefits that might be available. Employers may inform PERF of a member’s death; however, the death certificate is still required. Employers do not always provide member death notification.
The ASA will be distributed to the beneficiary or beneficiaries you named on the your Membership Record or in your most recent change of beneficiary.
Properly completed beneficiary changes received after the date of death may be accepted provided there has not already been a death benefit distribution.
If a member designates more than one primary beneficiary, and a primary beneficiary predeceases the member, and the member does not complete a new beneficiary designation form, the remaining primary beneficiaries will receive an apportioned pro rata share based upon the remaining primary beneficiaries’ allocated percentages of the deceased primary beneficiary’s portion.
For example, member X designates three primary beneficiaries as follows: Ann - 60 percent, Bob - 30 percent, and Carl - 10 percent. Ann predeceases member X, and member X does not submit a new beneficiary form. Member X had $10,000 in her ASA at the time of her death. Ann’s 60 percent share will be divided between Bob and Carl as follows: Bob - $4,500 and Carl - $1,500. The total amount that Bob will receive from member X’s ASA is $7,500. The total amount that Carl will receive from member X’s ASA is $2,500.
| If you call with information about a member’s death, please leave your name, relationship to the member, and telephone number, as we may need to contact you for further information. A death can also be reported by simply sending the death certificate to PERF by mail or fax. |
Survivor Benefits Before Retirement
A PERF survivor benefit was created by the Indiana Legislature for the benefit of survivors of PERF members. Your surviving spouse or surviving dependent(s) may be entitled to survivor benefits.
If you:
- have 10 or more years of creditable service, under certain circumstances, and die while in active service, or
- if you would have been eligible to receive retirement or disability benefits but died while out of service and before applying for them, your surviving dependent(s) may be entitled to survivor benefits.
If you meet these conditions and you have been married for at least two years before your death, then your spouse qualifies for a monthly survivor benefit for life. If there is no eligible surviving spouse, your survivor benefit is divided between all surviving dependents who are younger than 18 (or older if the dependent[s] is permanently disabled). If you have neither an eligible surviving spouse nor surviving dependents, then no survivor benefit will be paid.
This benefit is separate and distinct from any benefit created by your ASA.
Failure to inform PERF of beneficiary changes could result in payment being made to a previously named beneficiary who is no longer your choice to receive your ASA balance upon your death. The Application for Change of Beneficiary is available online here. For beneficiary changes, please complete the form and mail or fax it to PERF, or make the change via PERF Online.
Disability Benefits
If you become disabled, PERF will provide disability benefits if you:
- Have five or more years of creditable service under PERF before the termination of salary, employer provided income protection benefits, leave under the Family and Medical Leave Act (FMLA), or worker’s compensation benefits; and
- Are determined by the Social Security Administration to be disabled, and are receiving salary or employer-provided income protection benefits, or are on leave under FMLA as of the onset date established by the Social Security Administration (SSA).
- Timing of the disability onset date as established by SSA before termination of the employer/employee relationship is critical. Please contact PERF if you have any questions about establishing eligibility for disability benefits.
Notice: PERF CANNOT process your disability application without a copy of your Social Security award letter with the onset date.
| Direct Deposit Direct deposit is the preferred method to distribute benefit payments. On the same day each month, the amount of your payment will be deposited directly into the account you specify. You will receive an annual notice of deposits. Your money cannot be lost or stolen, and there are no delays due to mishandled mail or incorrect addresses. Please contact PERF at (888) 526-1687 to request a form be mailed to you, or download it here. |
