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A Publication for VRS Members
February 2018 | Archives
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myVRS financial wellness

Personal Finance Just Got Personal!

Creating a solid financial future requires knowledge about budgeting, managing debt and developing a savings plan. If you’re not a financial wiz or planning genius, you can turn to VRS for a free financial wellness program focusing on the money issues most people encounter at every stage in life.

The myVRS Financial Wellness program, powered by Enrich, uses articles, videos, games, calculators, budgeting tools and customized action plans to help you pursue your financial goals and make the most of your finances and career.

Through your myVRS account, you have access to all this content, customized for you. For example, you can set personal savings goals, create and save a budget and register for mini-courses to help you increase your financial knowledge and prepare action plans. So, log into your myVRS account today and select myVRS Financial Wellness to get started.

Important PLOP Facts You Need to Know

The Partial Lump-Sum Option Payment (PLOP) is one of the benefit payout options available to you at retirement if you work at least one year beyond the date you are eligible for an unreduced retirement benefit. It’s also the option that VRS receives the most questions about.

Here are important facts to keep in mind about the PLOP:

  • To qualify for a PLOP, you must keep working as a VRS member past the date you become eligible for an unreduced retirement benefit. Once you work one, two or three years past the date you qualify for an unreduced retirement, you may choose a lump sum equal to up to three times the amount of your annual basic benefit. The amount depends on how long you work beyond becoming eligible for an unreduced retirement benefit.
  • Prior service credit, whether purchased or granted, counts toward eligibility for an unreduced retirement benefit. However, prior service credit cannot be used to qualify for the one, two or three years beyond the unreduced retirement date to become eligible for the PLOP. You must work as an active member for the one, two or three years beyond the unreduced retirement benefit to be eligible.
  • If the PLOP is paid directly to you, VRS will deduct 20 percent for federal income taxes and, if you live in Virginia, 4 percent for state income taxes on the taxable portion of the payment.
  • The IRS may impose an additional 10 percent tax penalty if the taxable portion of the PLOP is paid directly to you before age 59½, although there are exceptions to this rule.
  • You can roll over the PLOP to the Commonwealth of Virginia 457 Deferred Compensation Plan or the Virginia Cash Match Plan, an Individual Retirement Account (IRA), or another qualified savings plan and delay paying taxes until you withdraw the money from the other plan. For additional information, read the IRS 402(f) Special Tax Notice PDF Icon.
  • Taking the PLOP reduces your monthly retirement benefit.
  • Your future cost-of-living adjustments (COLA) will be based on your reduced monthly retirement benefit amount.
  • If you elect the PLOP with the basic benefit, your beneficiary will be eligible for a lump-sum payment of any funds remaining in your member contribution account upon your death. However, because the PLOP is paid from your member contribution account, there may be no balance in your account or the balance may be less than if you elected the basic benefit without the PLOP.

Words of Wisdom From Retirees Who Have Been There

Some lessons you need to learn for yourself. Other times it’s good to listen to the words of wisdom from those who have been where you are now. VRS retirees are a savvy, generous group. They have stepped away from working life and entered retirement with financial and practical wisdom. And they are happy to share what they have learned. So, if you’re in the market, here’s some free guidance from VRS retirees.

"Always prepare for the future with savings and have a plan for your next step after retirement. Be open to new ideas."Patricia Evans, retired from a public school system, currently a licensed professional counselor.

"The first day to think about retirement is the first day you go to work. Remember that your pension will be based on age and service credit, so make a plan, set a date. In addition to any amount that VRS may deduct from your paycheck, you can take further charge of your financial future by investing as much as you can afford (and then add 10 percent)." — Denice Blake and John Blackwell, retired from Fairfax County Public Schools, currently living in Arizona.

Denice adds, "You might be tempted to take your retirement contributions out if you leave your job. Unless you are absolutely positive that you will not return to the retirement system, don't take out your contributions. Realize that if you return and ultimately want to retire from the system, you will have to buy back the portion that you took out with interest, as well as the state's contribution — and it's sizable."

"The day you retire can be apprehensive — it's like getting divorced then getting remarried on the same day. Preparation is the key to reducing the apprehension."
—  L.W. "Skip" McLamb, retired from Virginia Beach Public Schools, currently writing and living in Norfolk.

"I have three passions: Tournament Poker, music and writing. I wrote a novel that was published and printed. I devote at least two hours a day to these three disciplines. The hardest part is being devoted to your passions. Pick something you like and study up on it as much as possible. Learn what you need to do to get proficient." — John Wilson, retired from Fairfax County Public Schools, currently writing and playing music in Montana.


How Does VRS Measure Up: Latest Benchmark Results

Ever wonder how VRS compares to other retirement systems around the country and the world?

It turns out, VRS efficiently delivers high-caliber customer service. According to Cost Effectiveness Management (CEM), a benchmarking company that studies retirement systems in the U.S. and other countries, VRS delivers quality service at a low administrative cost.

Within a group of 67 leading retirement systems in the U.S., Canada and overseas, including a peer group of 12 state retirement systems in the U.S., VRS received a service score of 82 out of 100, which compares to an average score of 80 for the peer group. The service score takes into account phone call responses, web and newsletter effectiveness and member participation in counseling and presentations. VRS has outperformed its peer group in every benchmarking comparison since 2008.

From a cost perspective, the VRS total benefit administrative cost was $69 per active member and retiree. This amount was $25 below the peer average of $94 and $58 below the all-participant average of $127.
Benchmark results

America Saves Week: Time to Plan Your Future

If, after the holiday spending spree, you’ve decided you need to focus on financial planning and saving for retirement, America Saves Week (February 26-March 3) provides the perfect opportunity to set a savings goal, make a savings plan and save automatically.

  • Monday, February 26: Save with a plan
    Savers with a plan are twice as likely to save successfully for retirement. Start your savings habit during America Saves Week. The myVRS Financial Wellness program has budgeting tools to help you get started.
  • Tuesday, February 27: Save the easy way…automatically
    It can be hard to put aside money for savings, but it’s easier when you use payroll deduction. Save automatically through the plans offered through VRS or your employer, such as the Commonwealth of Virginia 457 Deferred Compensation Plan, Hybrid 457 Deferred Compensation Plan, a 403(b) plan or other supplemental retirement plans.
  • Wednesday, February 28: Save for rainy days
    A rainy day fund is a savings account separate from your checking that you cannot access easily. Financial experts recommend caching enough money to pay for essentials for anywhere from six months to a year.
  • Thursday, March 1: Save to retire
    Saving more now will help you have enough money for a comfortable standard of living in retirement. Increase the amount you save in your Commonwealth of Virginia 457 Plan account at any time, subject to tax code and plan limits. If you are a Hybrid Retirement Plan member, increase your voluntary contribution, once a quarter or use SmartStep PDF Icon to annually increase contributions.
  • Friday, March 2: Save the extra
    Plan to save your bonuses, raises, and tax refunds to boost the amount you save consistently over a long period of time.
  • Saturday, March 3: Save as a family
    Good savings habits start at home. Whether you’re budgeting, saving, making retirement decisions or assessing workplace benefits, share your decisions with your children, whether they’re just learning about money or heading off on their own.

Take the week to try out these savings ideas and adopt the ones that will help you on your journey to retirement.

myVRS security best practices

Security Best Practice: Claim Your myVRS Account

Even if you don’t plan to use myVRS immediately, taking ownership of your online account is a smart defensive move to help protect yourself from identity theft.

VRS takes many measures every day to keep your information secure. You can help by registering for myVRS, completing the identity-verification steps and then establishing a password-protected account. Verifying your myVRS account helps prevent someone else from attempting to lay claim to the account fraudulently.

And once you log into myVRS, you’ll find a growing library of tools and resources, including the new myVRS Financial Wellness program, the myVRS Retirement Planner and the myVRS Benefit Estimator—all designed with your needs in mind.

VRS Financial Reports: Your Guides to the Numbers

In fiscal year 2017, the VRS trust fund grew to $75.1 billion, serving more than 687,000 active and retired members and beneficiaries. Find this information and more in VRS’ Popular Annual Financial Report (PAFR) PDF Icon. This eight-page report provides a summary of VRS financial, investment and statistical highlights.

If you’re looking for more in-depth information, the 2017 Comprehensive Annual Financial Report PDF Icon is also available. The annual report recaps VRS investment performance for the fiscal year ending June 30, 2017, including detailed information on investment returns, benefits and distributions. It also provides statistics on VRS participating employers, members, beneficiaries and retirees.

download it today!

VRS Defined Contribution Plans Have New Mobile App

Say you want to check your latest investment returns when you’re at the beach, or while standing in line at the grocery store or waiting for the kids at a swim meet. Now you can do that.

If you are in the Hybrid Retirement Plan, contribute to the Commonwealth of Virginia 457 Deferred Compensation Plan or other VRS defined contribution plans, be sure to download the VRS DCP mobile app to help you manage your account and learn more about investing.

You can use the mobile app to:

  • View your balance.
  • Increase your voluntary contributions to the hybrid plan.
  • Use plan calculators to help you make contribution decisions.
  • Get contact information for local defined contribution plan specialists who offer free counseling.
  • Receive text updates with TextAccess.

Get started today by downloading the VRS DCP mobile app in Google Play or the App Store.

*Google Play and the Google Play logo are trademarks of Google LLC.
Apple and the Apple logo are trademarks of Apple Inc., registered in the U.S. and other countries.
App Store is a service mark of Apple Inc., registered in the U.S. and other countries.


VRS Trust Fund Sees Improvement in Funded Status

The funded status of VRS pension plans continues to improve, thanks to several initiatives in recent years.

For the 2017 fiscal year, the funded status of the plans ended as follows:

State 75.3 percent
Teacher 72.6 percent
Political Subdivisions 88.0 percent*

To improve the plans’ financial health, plan design changes began with VRS Plan 2, followed by the Hybrid Retirement Plan, which introduced risk sharing for members through its defined contribution component. These changes lowered the future cost of benefits.

Additionally, the governor and General Assembly accelerated repayment of 2010-2012 deferred contributions for the teacher and state plans by infusing $193 million into the teacher plan in 2015 and retiring the balance of the state plans in 2016, with a $189 million payment.

Repaying the state deferred contributions early saved $26.5 million in interest payments over the next six years and paying the $193 million into the teacher plan means that employers will contribute approximately $34 million less over the next six years.

The governor and General Assembly also committed to fully fund the actuarially required contribution rates by the 2019-2020 biennium with a plan to fully fund rates for statewide retirement plans in 2017 and for the teacher plan in 2018. Paying the actuarially determined contribution rates avoids adding additional liabilities related to unfunded contributions, and is estimated to reduce future contributions by $232 million over the next 20 years.

Since 2012, VRS state and teacher plans have experienced a 10 percent improvement in funded status and political subdivisions, in aggregate, have seen a 15 percent improvement.

FAQ: What Issues May Affect VRS Members in 2018?


Virginia General Assembly in Session

The 2018 Virginia General Assembly convened January 10 for a scheduled 60-day session. The General Assembly is considering several pieces of legislation that could affect VRS. Follow the progress of bills on the VRS Legislation page and look for a summary of VRS-related legislation in the May issue of Member News.

New Purchase of Prior Service Rates

VRS has set new rates for purchase of prior service at approximate normal cost:

Approximate normal cost is the average cost of one year of VRS service credit. You can purchase service at this rate during a two-year window, beginning upon employment in a VRS-covered position or the date you return to employment after an eligible period of leave. After two years, the cost increases to an actuarial equivalent cost, which is the amount of money needed in today’s dollars to pay for the total value of the increase in your future retirement benefit or earlier retirement eligibility date resulting from purchasing prior service.

The cost to purchase refunded service is not changing and remains at the current rate of 7 percent interest compounded annually.

Prior service credit counts toward the five years needed to become vested and eligibility for retirement and the health insurance credit. You may be able to purchase service from previous public employment, active duty military service, an eligible period of leave or VRS refunded service as service credit in your plan.

457 Plan Contribution Limits Increase

In 2018, you can save more through your 457 account. The Internal Revenue Service (IRS) increased the limits on the amounts you can contribute to plans such as the Commonwealth of Virginia 457 Deferred Compensation Plan.

If you are a Hybrid Retirement Plan member who participates in the Commonwealth of Virginia 457 Plan, the annual limit applies to your combined contributions to the Hybrid 457 Deferred Compensation Plan and the Commonwealth’s 457 Plan. Once the limit is reached all contributions stop, including the hybrid voluntary contribution and corresponding employer match, if the limit is reached before the end of the calendar year. Any Roth after-tax or pre-tax contributions made to the Commonwealth of Virginia 457 Plan also count toward the same limit.

Your basic contribution limit
The yearly limit if you are under age 50 increased to $18,500.

Age 50+ Catch-Up
If you are age 50 and older, you can contribute an additional amount over the basic contribution limit to the Commonwealth of Virginia 457 Plan. This limit increased to $6,000, for a total of $24,500.

Standard Catch Up
If you are within three years of your normal retirement age, you may contribute twice the annual limit of $18,500, or the annual limit of $18,500 plus the amount of the limit that you did not contribute in previous years, whichever is less. You cannot use the Age 50+ Catch-Up and the Standard Catch-Up in the same calendar year. To increase your Commonwealth of Virginia 457 Plan contributions, log into your online account or call 1-VRS-DCPLAN1 (1-877-327-5261).

Member Education Icon  Member Education

Classroom and webinar courses are posted on the VRS website as they are scheduled. Register from our Education and Counseling pages.

Retirement Planning
Copyright © 2018 Virginia Retirement System

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