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Volume 18Number 2

January 2011

IN THIS ISSUE

1 Preparing for an Upcoming Retirement2 Investing with a 403(b) or a 457(b) as

You Near Retirement2 Healthcare in Retirement3 Receive Retirement Credit for Service

Earned Outside MCPS4 Retirement Timeline5 Attend a Retirement Informational

Session 6 2011 Defined Contribution Plan Limits6 MCPS Implements New Standards for

403(b) and 457(b) Vendors6 Accelerated Death Benefit Helps Ease

the Burden of Terminal Illness7 Medical FSA and Young Adult

Dependents7 Flexible Spending Account Reminders8 New Federal Guidelines Allow Staff to

More Accurately Identify Heritage9 This Year, Resolve to Stay Resolved

Preparing for an Upcoming RetirementWith the start of a new year, many employees who are eligible to retire may begin seriously considering and preparing for an upcoming retirement date. The Employee and Retiree Service Center (ERSC) is here to assist you in planning your retirement and to ensure that your transition from employee to retiree is smooth. This article will inform you of the top three things to consider when prepar-ing to retire. Additional information and links to retirement planning resources are offered throughout this issue.

1. Consult Retirement ExpertsERSC sponsors Retirement Informational Sessions, where ERSC retirement experts present essential information and are available to answer questions. See “Attend a Retirement Informational Session” in this issue for complete details and upcom-ing session dates. These sessions are very informative. Many people find that bring-ing a spouse or attending more than once is helpful.

In addition to attending an ERSC- sponsored session, members of the State core pension plan should also attend a State Retirement Agency (SRA) Pre-Retire-ment Planning Seminar. State seminars are day-long events and cover topics such as Social Security and health benefits, legal considerations, and financial planning. You must register to attend an SRA seminar. For more information, please visit the ERSC website. These sessions are limited in capacity, so register early.

In addition, State representatives offer personal counseling sessions for members of the State core pension plan who are planning an upcoming retirement. Coun-seling sessions are held at ERSC and must

be scheduled in advance with the SRA by calling 1-800-492-5909. For more details and to see upcoming counseling session dates, please visit the ERSC website. These sessions are very popular, so register early.

2. Obtain a Retirement EstimateERSC advises that you request a retirement estimate 9–12 months before your planned retirement date. This includes an estimate from ERSC for MCPS core and/or supple-mental plan members, as well as an esti-mate from the SRA for State core plan members. A retirement estimate is a must-have tool in preparing for your retirement, as it provides more personalized, detailed

information than your yearly retirement statement.

When you retire, you will be able to choose one of several different payment options that affect both how much you will receive and, if you choose, how much your beneficiary will receive in the event of your death. Your yearly retirement statement offers you a projection of benefits based upon the assumption that you will take the maximum benefit option, with no benefits payable to your beneficiary after your death. But a retirement estimate can help you determine which benefit option to choose by providing personalized figures based upon both your age and that of your beneficiary for each option.

Knowing this information may help you make—or confirm or even reconsider—some of your major retirement decisions. For example, you may be planning to choose a payment option that allows you to leave a portion of your pension benefit to a beneficiary, such as your spouse, after your death. But you may not realize how much this option will change your monthly retirement benefit. Your retirement esti-mate will provide details on every option so you can be better prepared to make decisions.

Allow enough time to get your estimate. Current response rates are 4 to 6 weeks for ERSC and 12 weeks for the SRA.

3. Know Important DeadlinesOnce you have consulted the experts and determined your pension payment option, you will need to consider the following important retirement deadlines:

April 1: Deadline for MCEA members to submit retirement forms for July 1 retirement

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For Your Benefit For Your Benefit

Healthcare in Retirement A great benefit of retiring from MCPS is the security that comes with knowing that you can continue your MCPS healthcare benefits into retirement. If you are plan-ning to retire in the near future, begin researching retiree health benefit options to see which one is right for you. Consider questions such as—What will be the cost of my retiree

health plan? Will I continue to cover my current

dependents? If you are moving after retirement, also

ask yourself: Does my chosen retiree health plan offer coverage in the area where my new home is located?

Details about retiree benefits are available on the Retiree Benefits Web page and in the Retiree Benefit Summary.

Medicare and Retiree Health Care CoverageAs an MCPS retiree, your MCPS health plan coverage becomes secondary and Medicare becomes primary as soon as you become Medicare eligible.

Therefore, if you enroll in MCPS retiree benefits, you also must enroll in Medicare

Parts A and B when you first become eligible in order to continue receiving your health benefits through MCPS. You become eligible for Medicare when you turn 65 years of age or if you begin receiving disability benefits from the Social Security Administration and are beginning the 25th month of entitlement.

Prior to retirement, research the Medicare program and make sure you know how Medicare will impact your future health coverage. You can learn about Medicare on the Medicare website.

Medicare and Active Employee Health Care CoverageIf you or your spouse (or other dependent) become eligible for Medicare enrollment while you are still an active employee with MCPS and are covered under our active employee health plan, there is no need to enroll in Medicare. Medicare enrollment can be deferred until your retirement. If you are over age 65 and have been covered by active employee benefits, you will need documentation from ERSC to enroll in Medicare three months prior to your retirement.

Need More?ERSC provides several essential resources to help you plan for an upcoming retirement.

Retirement Planning Web page features information to help you plan for your retirement.

Retirement Informational Sessions and Forms Work-shops present important retire-ment information and help you plan for an upcoming retirement. Visit our website for dates and times of upcoming sessions and workshops.

Online Retirement Statement allows you access to your retire-ment information any time, from any computer via the secure Web portal myMCPS.

Understanding Your Retire-ment guides you through the retirement process and presents available benefit options.

The Mentor is a newsletter offered by the Maryland State Retirement Agency to keep active members informed of system benefits and retirement planning options.

Investing with a §403(b) or a §457(b) as You Near RetirementAs you approach retirement, you may find that you have fallen short of your invest-ment goals. If you are investing with a §403(b) and/or a §457(b) plan, you may be eligible to save more during your final years before retirement under the IRS Age 50 Catch-Up provision.

Under the catch-up provision, if you reach age 50 or older at any time during

the calendar year, then you are eligible to contribute an additional $5,500 annually to your §403(b) and/or §457(b) plan. This raises your total yearly contribution poten-tial to $22,000 for each plan, for a total maximum of $44,000 per calendar year.

For more information on the MCPS §403(b) and §457(b) plans, visit theERSC website.

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For Your Benefit

Receive Retirement Credit for Service Earned Outside MCPSYou may be eligible for service credit on your pension for time worked with other institutions. Purchasing Service and sub-mitting for credit for Military Service are two ways that you can earn service for time spent at other organizations.

Why Apply for Additional Service?Applying for or purchasing additional service credit toward your retirement can help you achieve your retirement goals. Depend-ing upon your circumstances, additional service may be the dif-ference between an early retirement and a normal retirement, or it may increase your retirement benefit. It can even allow you to retire earlier than you had anticipated.

Two ways to gain additional service credit are by applying for mil-itary service for time spent in active duty in the United States military or by purchasing service for time spent employed by the federal government; an out-of-state municipality; a nonpartici-pating Maryland municipality; or (if you are a teacher) a private, parochial, or out-of-state school.

Military Service Prior military members can receive up to five years of service credit for active duty military service on your MCPS core and/or supplemental pension plan or state pension after accruing 10 years of creditable service with MCPS. There is no cost to you to obtain military service credit. However, you may not claim this service with any other retirement or pension system, including your military pension.

You must apply for military credit and complete the required forms before retirement or resignation from MCPS. Once you have retired or resigned, no ad ditional credit may be claimed.

To obtain credited service in your MCPS pension plan for active duty military service, you must submit MCPS Form 455-18: Statement of Military Services to ERSC.

To obtain credited service in your State core pension plan for active duty military service, you must submit State Form 43: Claim of Retirement Credit for Military Service to the Maryland State Retirement Agency (SRA).

Purchasing Service During the 12 months preceding re tirement, you may be able to purchase additional service under various categories. Additional service must be purchased at least 90 days prior to retirement.

You may purchase a mini mum of one month, and a maximum of 10 years, if you were previously em ployed by one of the following: Federal government Out-of-state municipality Nonparticipating Maryland municipality Private, parochial, or out-of-state school (for teachers only)

You pay the full cost of pur chased service. The cost depends on age, final salary, and the amount of service you wish to purchase. Typically, purchas ing service is expensive.

In addition, previous service may be purchased for periods of the follow ing types of qualified approved leave: Personal illness Professional leave Academic leave Adoption leave Maternity/paternity leave Government-sponsored or subsidized employment Service in a professional or employee organization

If you are on a paid qualified leave of absence, contributions are paid during the time of leave and you earn service credit. If you are on an unpaid qualified leave of absence, you can purchase service for the period of leave after returning to work.

You do not have to wait until the time of retirement to purchase credit for periods of approved leave. Purchasing leave of absence time is less costly when it is purchased immediately after returning to work.

It is extremely important to file all required paperwork during an approved leave of absence. This ensures that you are eligible to pur-chase service credit for the period of leave and the active employee pension death benefit will remain in effect during the period of leave. You must pay any contri butions missed during the approved leave (plus interest) to be eligible for retirement credit.

To purchase service toward your MCPS core and/or supplemental pension plan, you must submit ERSC Form 421: Request to Purchase Service to ERSC at least 90 days prior to your retirement.

To purchase service toward your State core pension plan, you must submit State Form 26: Request to Purchase Previous Service to the SRA, as indicated by form instructions.

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For Your Benefit

 9–12 monthsCheck your annual retirement statement. Read Understanding Your Retirement. Attend an informational session. Request an estimate of retirement benefits from MCPS and, if applicable, the State Retirement Agency.Apply to purchase any eligible service and/or military service credit. (See “Receive Retirement Credit for Service Earned Outside MCPS" in this issue.)Prepare your retirement budget.

6 monthsRead the Retiree Benefit Summary for retiree benefit options.Discuss your benefit payment options with your family and/or financial advisor.

 

3 monthsAttend a Forms Workshop.Download your retirement application forms.   Member of the State Core Pension Plan Member of the MCPS Core Pension PlanDetermine your federal and state withholding amount. Consult with

your tax advisor for assistance.If eligible, contact the Social Security Administration to file for Social Security benefits and enroll in Medicare Parts A and B if you and/or

your spouse are 65 or older.

1–2 monthsSend in your retirement forms. All forms must be received by ERSC

at least 30 days prior to your retirement date. This includes forms to direct your final leave payment to your 403(b) and/or 457(b) accounts.

For a more detailed list of actions, visit the ERSC Retirement Planning Web page.

Retirement Timeline

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For Your Benefit

Attend a Retirement Informational Session Retirement Informational Sessions

Date Time

Thursday, February 10, 2011 4:30–6:30 p.m.

Tuesday, March 1, 2011 4:30–6:30 p.m.

Wednesday, March 9, 2011 4:30–6:30 p.m.

Wednesday, April 6, 2011 4:30–6:30 p.m.

Retirement Forms Workshops

Date Time

Wednesday, February 23, 2011 4:30–6:30 p.m.

Monday, March 21, 2011 4:30–6:30 p.m.

Thursday, April 14, 2011 4:30–6:30 p.m.

If you are considering retiring within the next two years, attend an ERSC Retire-ment Informational Session. During these sessions, ERSC staff members discuss the retirement timeline, eligibil-ity, benefit formulas, leave payoff, and more. They are available to answer your retirement questions.

Since individual retirement counseling appointments at ERSC are not available, ERSC holds Retirement Informational Sessions to help you prepare and give you a chance to ask those pressing retirement questions. Once you have attended an Informational Session, you will have the tools you need to make a successful transition to retirement.

After you have made the decision to retire, you also may want to attend a Forms Workshop, where ERSC staff offers a review of the necessary retirement forms and helpful hints to assist you in completing them.

All Informational Sessions and Forms Workshops are held in the Carver Educa-tional Services Center auditorium, located at 850 Hungerford Drive, Rockville, Maryland 20850. See the chart for dates and times of upcoming events. Be sure to check the ERSC website prior to attend-ing an event, as dates and times are sub-ject to change.

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For Your Benefit

2011 Defined Contribution Plan Limits The Internal Revenue Service (IRS) has announced that 2011 contribution limits to §403(b) and §457(b) plans will remain unchanged from the 2010 contribution limits.

§403(b) Plans Employees may elect to contribute up to $16,500 to a §403(b) tax sheltered savings plan in 2011. This limit is unchanged from the 2010 deferral limit amount.

Employees who are at least 50 years old by December 31, 2011, also are eligible to take advantage of the Age 50 Catch-Up pro-visions. The special catch-up provision allows age-eligible participants to contribute an additional $5,500 to a §403(b) account in 2011 for a total potential savings amount of $22,000 with a §403(b) plan.

§457(b) Plans The §457(b) elective deferral limit for 2011 is $16,500, which also is unchanged from the 2010 deferral limit amount.

The §457(b) plan also includes an Age 50 Catch-Up provision. Employees who are at least 50 years old by December 31, 2011, may contribute an additional $5,500 to a §457(b) account in 2011, for a total potential savings amount of $22,000 to a §457(b) plan.

Employees are eligible to contribute to either a §403(b) or a §457(b) plan or may choose to contribute to both. This ability doubles the amount of tax-deferred retire-ment savings you potentially can set aside. For more information about §403(b) and §457(b) plans, please visit our website.

MCPS Implements New Standards for §403(b) and §457(b) VendorsMontgomery County Public Schools (MCPS) routinely reevaluates §403(b) and §457(b) plan vendors to make sure employees have access to the most com-petitive investment options, fees, and ser-vices. In response to employee feedback, MCPS used the current reevaluation to establish new standards for vendors that provide expanded/less-restrictive invest-ment options to our employees. As we all experience tight financial times, these standards are more important than ever to protect and grow your savings—now and in the future.

As a result of new standards, you will now be able to do the following : Move all money from one company to

another company without the frustration of transfer restrictions and costs.

Enjoy reduced investment-related fees from a number of companies.

If you are already saving for retirement with a §403(b) and/or §457(b) plan, you should have received information directly from your current vendor detailing the changes that these new standards may bring to your account. Contact your vendor or financial representative to review these changes and complete any necessary paperwork to ensure there are no disrup-tions to your account(s).

Important information for employees contributing to a fixed account

A number of vendors no longer offer fixed account investments. If you have been contributing to one of these investments, please carefully review information provided by your vendor as you may need to select an alternative investment option for contributions as of January 1, 2011.

Accelerated Death Benefit Helps Ease the Burden of Terminal IllnessEffective January 1, 2011, MCPS life insurance plans written through Pru-dential offer an accelerated death benefit to ease the burden for those employees who may be dealing with a terminal illness. An accelerated death benefit will provide a payment of up to 75 percent of your life insur-ance benefit if your life expectancy is 12 months or less, and the payment can be used for any purpose. Any remaining life insurance benefits will be paid to your beneficiary after your death. Accelerated death benefits are available for both basic and optional employee life insurance plans.

Employees considering this option should understand that this payment may be considered taxable income and should seek advice from a per-sonal tax advisor and/or an attorney before using this benefit.

Please visit the ERSC website for additional information.

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For Your Benefit

Medical FSA and Young Adult Dependents

Benefit Coverage

Dependents eligible for plan coverage until…

Incur expenses reimbursable from your medical FSA until…

Submit medical FSA claims by…

Medical End of the month dependent turns age 26

End of the month dependent turns age 26

April 30 of the following calendar year

Prescription End of the month dependent turns age 26

End of the month dependent turns age 26

April 30 of the following calendar year

Dental September 30 following dependent’s 23rd birthday

September 30 following dependent’s 23rd birthday

April 30 of the following calendar year

Vision September 30 following dependent’s 23rd birthday

September 30 following dependent’s 23rd birthday

April 30 of the following calendar year

Flexible Spending Account RemindersUse or Lose your 2010 FSA BalancesIf you are one of the many employees who had a flexible spending account (FSA) in 2010, then it is time for you to review your account and make plans to use any remaining balances before March 15, 2011.

Qualifying expenses from your medical and/or dependent care FSAs incurred between January 1, 2010, and March 15, 2011, may be reimbursed from your 2010 plan election. Any remaining 2010 bal-ances after March 15, 2011, will be for-feited. All 2010 plan-year FSA claims must be submitted by April 30, 2011.

For additional information about FSAs or to download a form for filing an FSA claim, visit our website. To review your account, visit the SHPS/Carewise Health (SHPS) website.

Eligible Medical Expenses Over-the-counter drugs (other than insulin) are no longer eligible for reimbursement through your medical flexible spending account (FSA) as of January 1, 2011, unless they are prescribed. To learn more, please read this important information.

The Affordable Care Act has extended medical and prescription benefit coverage to young adult dependents up to age 26. However, it did not affect young adult dependents’ eligibility for vision or dental coverage. Young adults remain eligible for vision and dental benefit coverage until September 30 following their 23rd birthday.

Employees were able to reenroll young adult dependents in medical and prescrip-tion plans during this year’s Open Enroll-ment, for coverage effective January 1, 2011. Now that your young adult is cov-ered, you may be wondering which of your young adult’s expenses may be reimbursed from your medical flexible spending account (FSA).

Medical and prescription expenses may be reimbursed from your medical FSA, including items such as doctors’ visits and prescription co-pays. Eligible medical and prescription expenses for young adult dependents may be incurred up to the end of the month in which your young adult reaches age 26.

Dental and vision expenses are only eli-gible for reimbursement from your medical FSA while your young adult dependent

remains eligible for coverage on your dental and vision benefit plans. Examples of reim-bursable dental and vision expenses include items such as dental visit co-pays, orth-odontia, eye exams, or eyeglasses. You may be reimbursed from your medical FSA for dental and vision expenses incurred until September 30 following your young adult dependent’s 23rd birthday. After that time,

the dental and vision expenses for your young adult dependents are not reimburs-able from your medical FSA.

Although expenses must be incurred by the end of the month in which your depen-dent turns age 26 or by September 30 fol-lowing his or her 23rd birthday, you have until April 30 of the following calendar year to submit your claims for reimbursement.

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For Your Benefit

New Federal Guidelines Allow Staff to More Accurately Identify Heritage:Update Your Information January 18–February 18 The federal government has developed a new way to report ethnicity and race in order to provide a more accurate picture of the nation’s diversity. Most important, these changes will allow our MCPS community to accurately report the diversity in which we take so much pride. In the fall of 2008, families of all students were asked to complete a brief form to update their children’s ethnicity and race information. This year, employees will have an opportunity to update their ethnicity and race information.

New guidelines include—The use of a two-part question that

allows for more accurate reflection of ethnic heritageThe term “Hispanic” has been changed

to “Hispanic or Latino”The racial category “Asian or Pacific

Islander” has been separated into two

Why is ERSC collecting this information?The Employee and Retiree Service Center (ERSC) collects data regarding employee race and ethnicity in order to meet federal and state reporting requirements. The data with the new ethnicity and race categories will be used in the same manner that racial/ethnic data are used currently. The new catego-ries will replace the existing categories for use in all state- and federally-sponsored statistical data collections that include data on ethnicity or race. Since only you know your family’s ethnic and racial composition, please help us report our true diversity by taking a few moments to submit updated information. Learn more by visiting the ERSC website.

new categories—“Asian” and “Native Hawaiian or Pacific Islander” The ability to select one or more races

from the five racial groupsBetween January 18 and February 18, 2011, MCPS will offer staff the chance to update their ethnicity and race(s) using the new guidelines. Make sure your heritage is reflected in your employee information by taking advantage of this opportunity to update your information. Log into Human Resources Online (HRO) now through February 18. Log in using your MCPS username and pass-word, the same one you use to check your MCPS Outlook e-mail. You will be taken to a short online form that will allow you to update your information. When you’ve completed the form, you’ll receive an e-mail confirming the selections you have made. If you do not update your informa-tion, ERSC will use existing data.

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For Your Benefit

This Year, Resolve to Stay ResolvedAnyone who has made a New Year’s reso-lution knows how easily it can be broken. Why? A resolution is a decision, but it is not an action. If you want to make a life change, you need to take the next step to turn your resolution into action with a goal and a plan.

Achieving goals is a process that requires practice. It takes at least 28 days to form a habit, so be patient and learn how to set goals appropriately. Here are some tips to help you stay resolved:

Be specific about your goals by develop-ing a concrete action plan. Decide upon the steps needed to achieve your goal and set deadlines for each step. Plan specific dates and activities along the way. For example, rather than saying you will start exercising this year, make a plan to walk 30 minutes on January 1. Schedule all activities into your calendar.

Make your goals easy to measure—and then measure them. Make sure to write everything down in order to chart your progress.

Hold yourself accountable. Sign a per-sonal contract and post it in a place where you will see it every day. Have someone who supports your efforts sign the contract too. Having social support is vital to the long-term success of habit change.

Be positive. Rather than saying “I will stop eating junk food,” use positive wording such as “I will make healthy food choices.”

Set yourself up for achievement. Evaluate your goals to ensure they are within your reach. Consider your schedule, finances, and any other relevant factors.

Believe in yourself, keep your chin up, and keep a positive attitude about your progress. Be flexible and forgive yourself if you slip up. Pick up where you left off and try again—your hard work will pay off. Reward yourself for every achievement. Reaching a goal takes a lot of practice, hard work, and determination. Celebrate and be proud of the efforts you have made.

Weight-loss resolutions that successful losers swear by :1. Write down what you are eating. This encourages mindful eating. The more you think, the less and better you eat.

2. Make an effort to eat low-fat foods. Nine of 10 weight-loss masters indicated that the mainstays of their diets are low-fat foods such as fruits, vegetables, and whole grains. They also pay attention to calories, having learned that a low-fat label is not a license to overindulge.

3. Exercise. There’s no question that exer-cise is part of the equation for most people who lose weight and keep it off. One study of participants in the National Weight Control Registry revealed that weight-loss masters burned off an average of 400 calories a day by exercising. They were consistent with their exercise, fitting it into their schedules no matter what. It becomes akin to putting on a seat belt or brushing your teeth. It’s a habit, and it doesn’t feel right when it is skipped.

4. Watch portion sizes. Weight loss masters don’t deny themselves their favorite foods, but they do watch portions. Keeping highly tempting foods out of their homes is help-ful. Instead, they might save a favorite dessert for a restaurant meal, where the portion size is controlled. If the masters slip and eat in a way they had not intended, they don’t let a lapse become a relapse!

Larry A. BowersChief Operating Officer

Susanne G. DeGrabaChief Financial Officer

Richard C. Johnstone

Director, Benefits Strategy and Vendor Relations

Jessica A. ArnoldCommunications Specialist and Editor

is published quarterly by Montgomery County Public Schools Employee and Retiree Service Center

7361 Calhoun Place, Suite 190 Rockville, Maryland 20855-2787

phone: 301-517-8100 e-mail: ERSC@mcpsmd.org

0799.11 • EDITORIAL, GRAPHICS & PUBLISHING SERVICES

date and be eligible for payment of 30 per-cent of available sick leave. Visit the ERSC website for additional information.

90 days prior to your retirement date: Final deadline for purchasing additional retirement credit. See Receive Retirement Credit for Service Earned Outside MCPS in this issue for more details about purchasing service.

One month prior to your retire-ment date: Deadline for submitting all retirement forms to ERSC. Visit the ERSC Forms Web page to download your retirement application forms.

An abbreviated retirement timeline is offered in this issue. For a complete list of necessary actions, please visit the ERSC website.

Preparing for an Upcoming Retirement...continued from page 1