Once you have retired and collected your pension, there are a few work restrictions you need to be aware of if you are returning to employment through a public school district or a state employer. First, annuities must have a valid termination of employment and be separated from WRS employment for at least 75 calendar days before they can return to WRS-covered employment. If an annuity does not go apart for at least 75 days, the retirement will be considered invalid. If you are re-employed and meet current WRS qualification standards (working 880 hours per rolling calendar year or a FTE 0.67 position), your annuity will be suspended until you retire.
If you are re-employed and you work less than 880 hours / .67 FTE jobs in your new position, what happens to your annuity depends on when you were first employed in a WRS position:
If you first started working at WRS before July 1, 2011, and you return to work for a WRS employer in a position that is at least one-third full-time, you can choose to continue or stop your annuity.
If you first started working under WRS on or after July 1, 2011, and you return to work for a WRS employer in a position less than 880 hours / 0.67 FTE, you may not become a participating employee . Your annuity continues.
When you work and pay social security taxes, you earn “credits” toward social security benefits. You must use 40 points (10 years of work) to be eligible to receive social security. Your social security benefit is based on how much you have earned during your working career. Higher lifetime earnings result in higher benefits. If there were some years you did not work or had a low income, your unemployment benefit amount may be lower than if you had worked permanently.
You can start collecting your social security benefit already at the age of 62. Depending on your date of birth, your full retirement age may be between 66 and 67 years. If you start your social security before your full retirement age, your monthly benefit will be reduced. In addition, a delay in your benefits after your full retirement age will increase your monthly benefit. For example, if you start receiving your benefit at 62, your monthly benefit will be 70% of your full social benefit; or, if you start receiving your benefit at the age of 70, your monthly benefit will be 124% of your full social benefit.
You can use Social Security’s online retirement assessment to get instant and personal estimates of retirement benefits to help you plan your retirement. For more information, visit the calculator at www.socialsecurity.gov/estimator.
Social benefits may be subject to federal tax laws, depending on your annual income. In addition, some states require state taxation of your social security benefit. Fortunately, if you live in Wisconsin, you will not be subject to state taxes on your Social Security benefits. You may want to talk to your tax advisor to determine how much federal (and / or state) tax should be withheld from your Social Security benefit.
You can work while receiving social security benefits (or survivors). Doing so may be of greater benefit to you in the future. Every year, Social Security reviews the records of all working social security recipients. If your earnings for the previous year are higher than one of the years used to calculate your pension benefit, Social Security will recalculate your benefit amount and pay the increase retroactively to January of the year following that you earned the money. If you are younger than full retirement age and earn more than the annual earnings limit, your earnings may reduce your benefit amount.
If you are under full retirement age for the full year, Social Security will deduct $ 1 from your benefit payments for every $ 2 you earn above the annual limit. For 2018, this limit is $ 17,040.
In the year you reach full retirement age, Social Security will deduct $ 1 in benefits for every $ 3 you earn over another limit. In 2018, the limit on your earnings is $ 45,360, but Social Security will only count earnings before the month you reach your full retirement age.
When you reach full retirement age:
From the month you reach full retirement age, your earnings will no longer reduce your benefits, no matter how much you earn.
Social security will recalculate your benefit amount to omit the months in which they reduced or withheld benefits due to your excess earnings.
Pension savings schemes (403b, 401k, IRA)
You will consider other income options when you retire. There are many different retirement plans you may have contributed to throughout your career: 403bs through school districts, 401ks through private employers or IRAs through your personal savings.
Through MMSD, you may have contributed to a 403b plan. You are not required to withdraw money from your 403 (b) account when you retire. You can leave money in your 403 (b) account and they will continue to accumulate until you withdraw them or transfer them later. Note: your contributions to your 403b plan end upon retirement from MMSD.
However, if you plan to withdraw the amount – and you retire before the age of 55 – you will have to pay ordinary income tax, plus a fine of 10% of the amount for at least five years or until you turn 591⁄2 (whichever is longer) ). If you are 55 years or older when you retire, you can choose to withdraw some or all of your funds in a lump sum.
When you turn 70 1⁄2, you are required to start withdrawing money from your account. There is a required minimum distribution that you must take annually, which is based on your age and your spouse’s age. If you fail to take the correct distribution for a year, you will be charged a 50% non-deductible excise duty. Most plan administrators provide automatic calculation and distribution of RMDs annually.
You may want to roll over part (or all) of your 403 (b), such as a traditional IRA, a Roth IRA, so you have easier access to your funds, different and more varied investment opportunities, or better money management during your retirement for several years.
TERP (Teacher Emeritus Retirement Program)
TERP is available to employees in the Teacher Unit whose age + year of service = at least 75 years (or years of service of at least 30 years). In addition, if you are currently working part-time, you must have worked at least one year full-time in the previous 10 years prior to retirement.
You will also continue to receive TERP if you return as a temporary employee or return as a regular employee. Please note: TERP benefits must start immediately after retirement (this cannot be suspended).
You have 2 options for how TERP can be used. Please note that TERP cannot be transferred to your pension insurance account to pay for future insurance premiums.
TERP can be taxed and deposited directly monthly into your check and / or savings account. This option is useful if the cash flow is important to you and / or you do not continue MMSD’s insurance services immediately after retirement.
TERP can be used to pay for your monthly family or single health and dental insurance premiums. This option allows you to take insurance premiums from your TERP payment before tax, corresponding to your current payslips, which extends the period the insurance is paid by MMSD. Any remaining income after insurance premiums are paid will be taxed and then directly deposited into your check / savings account.
You will have the option of choosing option 1 or option 2 during your pension process and annually thereafter while receiving TERP. Your choice remains in effect throughout the calendar year and is not subject to change.
The benefit is paid directly by MMSD monthly, 12 months a year. The direct deposit will be made on the 1st day of each month. Your TERP benefit is calculated by taking 19% of your highest base contract:
|Example of calculation of annual TERP benefit|
|Highest base contract||$ 70,000|
|Annual TERP benefit before tax||$ 13,300|
|# months per year||÷ 12|
|Monthly TERP benefit per. treasure||$ 1,108.33|
TERP is taxable income that begins September 1 after your retirement date and continues for 3 years (36 months). As you can see in the example above, your tax framework for your TERP benefit will be different from the one you are in as a current employee (since the tax class calculation is based only on your TERP earnings and nothing else). Usually, TERP payments fall below the lowest tax framework, therefore state and federal taxes are not withheld. It may be a good idea to talk to a tax advisor to determine if you need to change your tax deductions for your TERP payments. You will receive a W-2 in January for your TERP income.
ARP (Administrator Retirement Program)
The ARP 403b one-time payment is available to employees of the administrator and professional instruction units whose age + administrator / PR-I year of employment = at least 70. To be eligible for ARP, the administrator / PR-I must be employed for at least 12 years and contributed a minimum of $ 50 per. payslip in a 403b for at least 5 years.
The one-off payment is divided into two equal contributions, one in July of the pension year and the other in January of the year after retirement. The size of the payment varies based on the year of service and the year contributing to the plan. An individualized calculation of the payment will be given to the eligible resigning administrator / PR-I.
If you receive ARP, keep your 403b account active and open through the 2nd contribution. You will be asked to fill out a form confirming your account information (including the name, account number and deposit details of the 403b plan) before making any contributions. This request for information will be sent to your home.
Please note that there is a non-compete clause with ARP that does not require another K-12 employment during the period in which the one-time payment is paid.
In addition to the income listed above, you may have other sources of income that you want to consider, such as previous pension plans, social security schemes for survivors’ pensions outside the state, or even a part-time job. It is recommended that you talk to a financial planner about your total income and budget needs.