Reform FAQs (For Basic and MIP members only)

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Below are the most Frequently Asked Questions (FAQs) about the 2012 Public School Employees Retirement Reform for Basic, and MIP members only.

Click on a topic to jump to the section below. Questions may be added or revised.

Topic Sections

 

10 Most Popular Questions
Understanding the Election Process
Making your Retiree Healthcare Election
Understanding the Premium Subsidy Option
Understanding the Personal Healthcare Fund Option
Understanding the 2 Percent Match
Understanding the Deposit of Your Retiree Healthcare Contributions to your 401(k) if you elect PHF
Making your Retirement Plan Election
Understanding Options 1 and 2: Increasing Your Contributions
Understanding Option 3: Maintaining Your Current Level Of Contributions
Understanding Option 4: Stopping Your Contributions to the Pension Fund
Understanding Your Estimates in miAccount
Vesting Status
Impact on Service Credit and EDRO

 

 

Top Ten Most Popular Questions

  1. What are my choices for the healthcare election?

    Under the new law, you have a choice regarding your retiree healthcare. You can continue to contribute 3 percent of compensation to the Retiree Healthcare Fund and keep the premium subsidy benefit you currently have, or you can choose the Personal Healthcare Fund which can be used to pay healthcare expenses in retirement. Any changes to your healthcare benefit would be effective as of your transition date, which is defined as the first day of the pay period that begins on or after February 1, 2013. If you choose the Personal Healthcare Fund, you will opt-out of the premium subsidy benefit, as of the day before your transition date (defined above). You will be automatically enrolled in a 2 percent employee contribution into your 457 account as of your transition date, earning you a 2 percent employer match into a 401(k) account. You will stop paying the 3 percent contribution to the Retiree Healthcare Fund as of the the day before your transition date, and your prior contributions will be deposited into your 401(k) account administered by ING no later than your first pay date after March 1, 2013.

    Your retiree healthcare election must be made in miAccount while the election window is open. If you do not make a healthcare election, you will remain with the premium subsidy (Basic, MIP-Fixed, and MIP-Graded) or graded premium subsidy (MIP Plus).

    Revised December 14, 2012.
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  2. What are my choices for the pension election?

    Under the new law, you can voluntarily choose to increase, maintain, or stop your contributions to the pension fund. You have the following options:

    - Option 1: Under Option 1 you voluntarily elect to increase your contributions to the pension fund as noted below, and retain the 1.5 percent pension factor in your pension formula. The increased contribution would start with the first pay period beginning after February 1, 2013, and continue until they terminate public school employment.
    Basic Plan members: 4 percent contribution (currently 0 percent).
    MIP-Fixed, MIP-Graded, and MIP-Plus Plan members: a flat 7 percent contribution (currently 3.9 percent for MIP-Fixed, or graded up to 6.4 percent for MIP-Graded and MIP-Plus).

    - Option 2: Under Option 2 you voluntarily elect to increase your contribution to the retirement plan as stated in Option 1 and retain the 1.5 percent pension factor for your pension formula. The increased contribution would start with the first pay period beginning after February 1, 2013, and continue until you reach 30 years of service. If and when you reach 30 years of service, your contribution rate will return to the previous levels in place as of the pay period before the first pay period beginning after February 1, 2013, (0 percent for Basic Plan members, 3.9 percent for MIP-Fixed, and graded, up to 6.4 percent for MIP-Graded and MIP-Plus members). The pension formula for any service thereafter would include a 1.25 percent pension factor.

    - Option 3: Under Option 3 you voluntarily elect not to increase your contribution to the pension fund and maintain your current level of contribution to the pension fund. The pension formula for your years of service as of the pay period before the first pay period beginning after February 1, 2013, will include a 1.5 percent pension factor. The pension formula for any service thereafter would include a 1.25 percent pension factor.

    - Option 4: Under Option 4 you voluntarily elect no longer contribute to the pension fund. Your pension will be calculated based on your years of service and final average compensation as of the pay period before the first pay period beginning after February 1, 2013, and a 1.5 percent pension factor. You will be switched to a Defined Contribution (DC) plan as of the first pay period beginning after February 1, 2013, where you will receive a 4 percent employer contribution to a tax-deferred 401(k) account and you can choose to contribute up to the maximum amounts permitted by the IRS to your 457 account.

    Your pension election must be made in miAccount while the election window is open. If you do not make a pension election, your contribution rate will not change and your pension formula for your years of service through the pay period before the first pay period beginning after February 1, 2013, will include a 1.5 percent pension factor. The pension formula for any service thereafter will include a 1.25 percent pension factor.

    Revised December 14, 2012.
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  3. Which option is the best option?

    Everyone's circumstances are different, and what might be the best option for you may not be the best option for your coworker. When reviewing the options, take into consideration where you are in your career, what your future plans are, what other sources of health insurance coverage you may have, and what your retirement savings goals are. ORS recommends that you use the calculators in miAccount to see how each option would affect your finances now and in the future.

    Published October 23, 2012.
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  4. How does my pension plan election affect my retiree healthcare?

    Your pension election and your healthcare election are two separate things. If you elect to stay with the premium subsidy (Basic, MIP Fixed, or MIP Graded) or graded premium subsidy (MIP Plus), you'll retain your eligibility for healthcare benefits in retirement (assuming you meet age and service requirements), regardless of which retirement plan election you make.

    If you elect the Personal Healthcare Fund, you opt out of retiree healthcare benefit regardless of which retirement plan election you make. Instead you'll receive a 2 percent employer matching contribution to a state-sponsored, tax-deferred retirement account, if you contribute up to 2 percent of pay. If you elect the PHF you would not be eligible for any healthcare coverage in retirement.

    Published October 1, 2012.
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  5. If I elect to remain with the premium subsidy, continue making my 3 percent contributions and then die, what happens to my 3% healthcare contributions?

    Depending on the circumstances of your death, your beneficiary may be eligible for a refund of all, or a portion of your contributions. Let's look at different scenarios:

    1. If you die before becoming eligible for the healthcare subsidy, your beneficiary could apply to receive a refund of all of your 3 percent contributions, as long as your beneficiary is not eligible for a premium subsidy (due to a duty or nonduty death).

    2. If you retire with a Straight Life option, receive the health insurance subsidy for a period of time, and then die, the retiree health insurance premium subsidy payments would cease because your survivors would not be eligible for any health insurance benefits under the Straight Life option. If the total value of the retiree health insurance premium subsidy paid up to the date of your death is less than the total value of your 3% contributions, your beneficiary could apply for a refund of the remaining contributions.

    3. If you retire with a Survivor Option, receive the retiree health insurance premium subsidy payment for you and your eligible dependents, and then die after a period of time, your eligible dependents would continue to receive the retiree health insurance premium subsidy and be covered by the survivor option.

    Any refunds of the 3% healthcare contribution would be issued to your beneficiary in equal monthly installments over a 60 month (5 year) period as a supplemental retirement allowance

    Published October 17, 2012.
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  6. If I elect to remain with the premium subsidy, retire when I reach eligibility, then decide that I don't want or need the health insurance, can I get my 3% contribution back?

    By electing to stay with the premium subsidy and continue making the healthcare contribution until you reach eligibility and retire, you can guarantee your access to subsidized healthcare coverage in retirement. If, for whatever reason, you decide to dis-enroll in the subsidized healthcare coverage, you can always re-enroll knowing that the benefit you paid into, is waiting for you. Refunds of the 3% healthcare contribution are only issued if a member elects the Personal Healthcare Fund (Option B) or if a member elects the premium subsidy but doesn't reach eligibility, or dies before the total value of the subsidy paid equals the total value of the 3% contributions the member made. For more details see FAQ 5 (above).

    Revised October 29, 2012.
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  7. If I stay with the premium subsidy and continue making the 3 percent healthcare contributions and then lose my job, what happens?

    If you elect to stay with the premium subsidy and continue making the 3 percent contribution, and then lose your job, you may qualify for an insurance premium subsidy.

    If you began working for a Michigan public school before July 1, 2008 (Basic, MIP-Fixed and MIP-Graded plan members) and if you if you have at least 21 years of service when you terminate public school employment, your premium subsidy will be 10 percent for each year of credited service you have over 20 years, up to the maximum allowed by statute. With 21 years you get 10 percent of the full subsidy. With 25 years the subsidy increases to 50 percent.

    If you began working for a Michigan public school on or after July 1, 2008 (MIP-Plus plan members) and have at least 10 years of service, you become eligible for a graded premium subsidy if/when you are age 60. The subsidy is 30 percent after 10 years of service, with a 4 percent increase for each year thereafter, up to the maximum allowed by statute.

    If you leave public school employment and do not qualify for any premium subsidy you can request a refund of your 3 percent contributions when you reach age 60. The refunds would be issued in equal monthly installments over a 60 month (5 year) period as a supplemental retirement allowance.

    Learn more about insurance subsidy eligibility (link obsolete).

    Published September 4, 2012.
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  8. *NEW* If I elect Option 4 and switch to the DC plan, do the working after retirement rules still apply?

    If you elect Option 4, your retirement benefits would be made up of two things: (1) your pension (based on years of service, final average compensation (FAC) and 1.5 percent pension factor as of the day before your transition date; and (2) your state-sponsored 401(k) and 457 accounts, which would include your 4 percent employer contributions (made to your 401(k) account), any personal contributions you made to your 457 account, and any accumulated investment earnings. Both could be affected if, after retirement, you return to work in a Michigan public school reporting unit:

    Your pension:

    - The rules for working after retirement remain in effect. These include restrictions on return to work start date, bona fide termination, and earning limits.  Click here to learn more. http://www.michigan.gov/orsschools/0,4653,7-206-36502_36516---,00.html .

    Your 401(k) and 457 accounts:

    - Your election to switch to the DC plan also stands.  This means that your employer would contribute 4 percent of compensation to your 401(k). However, rules prohibit someone from both being employed and taking a distribution from their 401(k) and 457 accounts, unless you are age 59 1/2 or above (401(k)) or age 70 1/2 or above (457).  So, if you are under the respective age and receiving a distribution when you return to work with an entity under the 401(k) or 457 (including any Michigan public school reporting unit, the Educational Achievement Authority, or the State of Michigan), the distributions would stop while you remain working.  The employer contributions to your 401(k) would count toward your earnings limitations for your pension.

    Your retiree health insurance:

    - If you elected the Premium Subsidy, your eligibility for the subsidy would fall under the rules for working after retirement.  See http://www.michigan.gov/orsschools/0,4653,7-206-36502_36516---,00.html to learn more.

    - If you elected the Personal Healthcare Fund (PHF), your 2 percent personal contributions and 2 percent employer match into the PHF would resume. Employer contributions to your PHF would also count toward your earnings limitations for your pension.



    If you are working in a Michigan public school reporting unit but being paid by a third party, the Core Service rules apply http://www.michigan.gov/documents/orsschools/R0850C_CoreServices_323525_7.pdf.  Your third party employer would not be required to make the 4 percent employer contributions to your 401(k); any distributions from your 401(k) or 457 would not be affected.

    If you are working in a reporting unit as an independent contractor, the Core Services rule applies. http://www.michigan.gov/documents/orsschools/R0850C_CoreServices_323525_7.pdf

    If you are working in a job with no affiliation to a Michigan public school reporting unit, neither your pension nor your 401(k) or 457 distributions would be affected.

    Published November 15, 2012.
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  9. How can I get help making my decision?

    While ORS staff is not in a position to offer retirement financial advice, we have provided several tools in miAccount to help you figure out which retiree healthcare and pension option is best for you. We've provided personalized estimates of what each pension option might mean for you, and calculators so you can see how adjusting the numbers might affect you.

    Be sure to review the short, recorded seminar available anytime on the Reform Tools page or sign up for one of the many reform seminars and webinars hosted by ORS. Click here to learn more.

    Also, ING provides information on retirement planning and calculators that show how investment earnings can grow over time. Go to http://stateofmi.voya.com to learn more. For further assistance, contact ING at 800-748-6128.

    Revised October 29, 2012.
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  10. What if I don't make a choice?

    If you do not make your elections in miAccount before the window closes, the default provisions of the legislation go into effect. For the healthcare election, the default is to continue the 3 percent contribution to the Retiree Healthcare Fund (Basic, MIP-Fixed and MIP-Graded) or graded premium subsidy (MIP Plus). For the retirement plan election, the default is to continue your existing level of contribution to the pension fund and take the reduced pension factor (1.25 percent) for future service as of your transition date (the first day of the pay period that begins on or after February 1, 2013).

    Revised December 14, 2012.
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FAQs by topic

Understanding the Election Process

  1. What are the election choices?

    Under Public Act 300 of 2012, Michigan Public School Employees Retirement System members who are in the Basic and MIP plans and who qualify (see below) have two choices to make during the reform election window, a retiree healthcare election and a pension election. The options under these choices are spelled out in the FAQs below.

    Any changes to a member's healthcare benefit and pension would be effective as of the member's transition date, which is defined as the first day of the pay period that begins on or after February 1, 2013.

    All elections must be made in miAccount before the election window closes at 5:00 pm, EST, Wednesday, January 9, 2013 while the election window remains open. In miAccount, you will only see the election information that pertains to you.

    Revised December 14, 2012.
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  2. How do I know if I need to make an election?

    You need to make your elections if you first became a member of the Michigan Public School Employee Retirement System before July 1, 2010 and earned any service credit in the twelve months ending September 3, 2012, and are considered a current employee of the school , or if you were on an approved professional services or military leave of absence on September 3, 2012.

    Your elections must be submitted in miAccount while the election window remains open.

    Revised October 29, 2012.
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  3. I'm on a leave of absence. How does this affect me?

    If you are a public school employee on a professional services or military leave of absence on September 3, 2012, you need to make your elections in miAccount while the election window remains open..

    If you are on any other type of leave of absence as of September 3, 2012, but you earned service credit in the 12 months ending September 3, 2012, you need to make an election by the deadline noted above.

    If you are on any other type of leave of absence as of September 3, 2012, and you did not earn any service credit in the 12 months ending September 3, 2012, you do not qualify to make any election. If and when you return to public school employment, you will retain the graded premium subsidy benefit and will continue to make the 3 percent healthcare contributions.

    Revised October 29, 2012.
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  4. I'm on layoff. Do I need to make an election?

    If you are on layoff status but you earned service credit in the 12 months ending September 3, 2012, you need to make an election by the deadline noted above. Check with your employer to see if you are considered an "active" employee or not. If so, your employer would have reported you to ORS as an "active" employee and you will have an election opportunity waiting for you when you log into miAccount. You need to make your elections in miAccount while the election window remains open..

    If your employer considers a person on "layoff" status as not an employee, then you would not have an election opportunity available to you in miAccount.

    Revised October 29, 2012.
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  5. How long do I have before I must decide?

    You must make your election(s) in miAccount while the election window remains open.

    Revised October 29, 2012.
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  6. If I change my mind can I change my election(s)?

    Yes. You can change your election by selecting the Change Your Election button in miAccount. Changes to your election(s) must be submitted in miAccount while the election window remains open.

    Whatever options you have selected as of the deadline will be considered your elections. After the deadline, your elections cannot be rescinded or changed.

    Revised October 29, 2012.
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  7. What if I miss the deadline?

    You must make your elections in miAccount while the election window remains open..

    Revised October 29, 2012.
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  8. What if I don't make a choice?

    If you do not make your elections in miAccount before the window closes, the default provisions of the legislation go into effect. For the healthcare election, the default is to continue the 3 percent contribution to the Retiree Healthcare Fund (Basic, MIP-Fixed and MIP-Graded) or graded premium subsidy (MIP Plus). For the retirement plan election, the default is to continue your existing level of contribution to the pension fund and take the reduced pension factor (1.25 percent) for future service as of your transition date (the first day of the pay period that begins on or after February 1, 2013).

    Revised December 14, 2012.
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  9. I want the default options. Why should I bother making my election(s)?

    These are important decisions that will affect your future financial security. By making your elections, you'll be able to print out a confirmation of your choices that you can keep for your records. Plus, ORS will be sending a series of reminder communications to public school employees who have not made their elections. If you make your elections, you won't receive these reminders.

    Published September 4, 2012.
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  10. How can I get help making my decision?

    While ORS staff is not in a position to offer retirement financial advice, we have provided several tools in miAccount to help you figure out which retiree healthcare and pension option is best for you. We've provided personalized estimates of what each pension option might mean for you, and calculators so you can see how adjusting the numbers might affect you.

    Be sure to review the short, recorded seminar available anytime on the Reform Tools page or sign up for one of the many reform seminars and webinars hosted by ORS. Click here to learn more.

    Also, ING provides information on retirement planning and calculators that show how investment earnings can grow over time. Go to http://stateofmi.voya.com to learn more. For further assistance, contact ING at 800-748-6128.

    Revised October 2, 2012.
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  11. I don't have internet access. Can I make my election through the mail?

    No, your election must be made online in miAccount. Your human resources office can help you make your election online, or you can log into miAccount using computers and internet access provided by your local library.

    Revised October 2, 2012.
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  12. I didn't get a letter. What do I do?

    Letters were sent to all public school members in the Basic and MIP plans who are eligible to make an election (see eligibility criteria explained above. If you do not meet these criteria, you would not have received a letter. If you do meet these criteria and did not receive a letter, odds are your contact information is not up-to-date with your employer, who provides ORS with member contact information. Notify your employer of your correct mailing address AND log into miAccount to update your contact information there as well.

    But you don't need a letter to make your election. Everything you need can be found in miAccount, including personalized estimates of what each option means to you and your family, and a Retiree Healthcare Election Decision Guide. You can also continue reviewing these FAQs and the legislative summary for additional information. If you need assistance, use the ORS Message Board for secure, online email assistance or call our customer service center at 517-322-5103 or toll-free at 800-381-5111, Monday-Friday, 8:30 a.m. - 5:00 p.m.

    Revised October 17, 2012.
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  13. Can I drive down to Lansing to get help making my election?

    Before you spend your time and money driving to Lansing, consider that ORS has given you everything you need to make your election online, saving you time and money; legislative summary, a short, recorded seminar, FAQs, calculators, and a personalized estimate are waiting for you in miAccount.

    If you need additional assistance, use our Message Board for secure, online email assistance or call our customer service center at 517-322-5103 or toll-free at 800-381-5111, Monday-Friday, 8:30 a.m. - 5:00 p.m.

    If you do decide to drive to Lansing, know the following service limitations:
    -- The ORS Walk-In Center is available M-F, from 8:30 a.m. until 5:00 p.m.
    -- ORS cannot tell you which choice to make.
    -- ORS cannot make or print copies of documents for you.
    -- ORS cannot notarize documents.
    -- ORS will have a very limited number of computers available for you to use to make your election.
    -- You must have a valid email address to register in miAccount so that you can make your elections online; ORS cannot set up an email address for you. Know your email address and register for miAccount before visiting ORS.


    Revised October 29, 2012.
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  14. I'm retiring before February 1, 2013. What do I do?

    You still need to make an election. The changes in the legislation take effect on February 1, 2013, so if you are retiring before then, it doesn't change anything for you. But, on the chance that you might change your retirement plans, we'd want to make sure that you have the retiree healthcare benefits and pension plan you prefer.

    Revised December 7, 2012
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  15. There's a restraining order against the reform legislation. Do I still need to make an election?

    On November 29, 2012, the court ruled that the public school reform was constitutional except for the length of the election window, which under PA 300 of 2012, closed on October 26th, 2012. On December 14, 2012, Governor Snyder signed into law Public Act 359 of 2012 which extends the election window until 5:00 pm, EST, Wednesday, January 9, 2013. Click here to learn more.

    Members are encouraged to log into miAccount to learn more about their choices for their retirement healthcare and their retirement plan and to make their elections in miAccount before the window closes on January 9, 2013.

    Revised December 14, 2012
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  16. What are the ramifications to my pension beneficiary if I make a change?

    Under the pension election, each option will have a different impact on your resources in retirement. Review the personalized estimates for each option presented to you in miAccount, and plan carefully. The pension formula for any service that is calculated at a reduced pension factor (1.25) will result in a reduced pension payment for service performed after February 1, 2013 (Option 3) or after you reach attainment (Option 2). If you elect to stop your contributions to the pension fund, freeze your pension, and move to a Defined Contribution account (Option 4), you'll want to consider contributing as much as you can to that account. Use the online calculators to project how the employer contribution and your savings might grow in a DC account.

    Under the healthcare election, if you choose to stay with the premium subsidy benefit or graded premium subsidy and meet age and service requirements, your eligible dependents could qualify for retiree healthcare coverage based on the level of subsidy you qualify for, and assuming you select a survivor option at retirement. If you elect the Personal Healthcare Fund, you opt out of the premium subsidy benefit and neither you nor your dependents would be eligible for any retiree healthcare coverage from the state. However, assuming you met age and service requirements, you would have access to the employer contributions and related earnings to your Personal Healthcare Fund account, in addition to your own contributions and related earnings. In the event of your death, any funds in this account would transfer to your beneficiary or your estate.

    Revised December 7, 2012
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Making Your Retiree Healthcare Election

  1. What are my choices?

    Under the new law, you have a choice regarding your retiree healthcare. You can continue to contribute 3 percent of compensation to the Retiree Healthcare Fund and keep the premium subsidy benefit you currently have, or you can choose the Personal Healthcare Fund which can be used to pay healthcare expenses in retirement.

    Any changes to your healthcare benefit would be effective as of your transition date, which is defined as the first day of the pay period that begins on or after February 1, 2013.

    If you choose the Personal Healthcare Fund, you will opt-out of the premium subsidy benefit, as of the day before your transition date (defined above). You will be automatically enrolled in a 2 percent employee contribution into a 457 account as of your transition date, earning you a 2 percent employer match into a 401(k) account; these state-sponsored retirement accounts are administered by ING. You will stop paying the 3 percent contribution to the Retiree Healthcare Fund as of the day before your transition date and your prior contributions will be deposited into your state-sponsored 401(k) account administered by ING. See Understanding the Deposit of Your Retiree Healthcare Contributions to your 401(k) question 2 (below) for details on how the funds will be deposited into your 401(k) account.

    Your retiree healthcare election must be made in miAccount while the election window is open. If you do not make a healthcare election, you will remain with the premium subsidy (Basic, MIP-Fixed, and MIP-Graded) or graded premium subsidy (MIP Plus).

    Revised February 21, 2013
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  2. Which option is the best option?

    Everyone's circumstances are different, and what might be the best option for you may not be the best option for your coworker. When reviewing the options, take into consideration where you are in your career, what your future plans are, what other sources of health insurance coverage you may have, and what your retirement savings goals are. ORS recommends that you use the calculators in miAccount to see how each option would affect your finances now and in the future.

    Published October 23, 2012.
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  3. The Court of Appeals struck down the 3 percent healthcare contribution. Do I still need to make an election?

    Yes. The state is reviewing the recent decision of the Michigan Court of Appeals regarding the 3% public school employee contribution to the Retiree Health Care. While the state is determining the next course of action, ORS is instructing Michigan public school employers to continue withholding the 3 percent contribution.

    It is unlikely that the issue will be resolved before the statutory deadline for choosing your retirement healthcare plan (January 9, 2013). ORS must implement Public Act 300 of 2012 as written. Basic, MIP-Fixed and MIP-Graded plan members who do not make an election will retain the premium subsidy and continue to contribute the 3 percent of compensation toward retiree healthcare. MIP-Plus members who do not make an election will retain the graded premium subsidy where they accrue credit towards insurance premiums in retirement, and will continue to contribute 3 percent of compensation toward retiree health care. If you elect the Personal Healthcare Fund, you will stop paying the 3 percent contribution to the Retiree Healthcare Fund as of the day before your transition date and your prior contributions will be deposited into your state-sponsored 401(k) account administered by ING. See Understanding the Deposit of Your Retiree Healthcare Contributions to your 401(k) question 2 (below) for details on how the funds will be deposited into your 401(k) account.

    Revised February 21, 2013
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Understanding the Premium Subsidy Option

  1. What is the current premium subsidy?

    The state offers varying premium subsidies to retired public school employees, depending on when the employee first became a member of the Michigan Public School Employees Retirement System, as well as other factors. For members who first worked before July 1, 2008, (Basic, MIP-Fixed, and MIP-Graded plan members) the subsidy is the maximum allowed by statute. Members who first worked on or after July 1, 2008, (MIP-Plus plan members) have a graded premium subsidy based on career length where they accrue credit towards their insurance premiums in retirement, not to exceed the maximum allowable by statute. (The legislation sets the maximum subsidy at 80 percent beginning January 1, 2013; 90 percent for those Medicare eligible and enrolled in the insurances as of that date.) To see which subsidy might apply to you in retirement, visit http://www.michigan.gov/orsschools/0,1607,7-206-36504_36533_48173---,00.html (link obsolete).

    If you elect to remain with the premium subsidy, you will continue to contribute 3 percent of compensation to the Retiree Healthcare Fund.

    Published September 4, 2012.
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  2. Why would I want to stay with the premium subsidy benefit?

    The premium subsidy benefit is a good choice for some people, depending on their career and retirement plans, health and longevity expectations, and other personal factors. We can't give advice, but can give you tools that will help you project the costs and benefits.

    Published September 4, 2012.
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  3. If I stay with the premium subsidy and continue making the 3 percent healthcare contributions and then lose my job, what happens?

    If you elect to stay with the premium subsidy and continue making the 3 percent contribution, and then lose your job, you may qualify for an insurance premium subsidy.

    If you began working for a Michigan public school before July 1, 2008 (Basic, MIP-Fixed and MIP-Graded plan members) and if you have at least 21 years of service when you terminate public school employment, your premium subsidy will be 10 percent for each year of credited service you have over 20 years, up to the maximum allowed by statute. With 21 years you get 10 percent of the full subsidy. With 25 years the subsidy increases to 50 percent.

    If you began working for a Michigan public school on or after July 1, 2008 (MIP-Plus plan members) and have at least 10 years of service, you become eligible for a graded premium subsidy if/when you are age 60. The subsidy is 30 percent after 10 years of service, with a 4 percent increase for each year thereafter, up to the maximum allowed by statute.

    If you leave public school employment and do not qualify for any premium subsidy you can request a refund of your 3 percent contributions when you reach age 60. The refunds would be issued in equal monthly installments over a 60 month (5 year) period as a supplemental retirement allowance.

    Learn more about insurance subsidy eligibility (link obsolete).

    Revised September 26, 2012.
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  4. If I stay with the premium subsidy benefit and continue making the 3 percent healthcare contributions, leave my job and then come back, what happens?

    If you make the election to stay with the premium subsidy, leave school employment and then later return to school employment, you will retain your election choice, in this example the premium subsidy (Basic, MIP-Fixed, and MIP-Graded), or the graded premium subsidy (MIP-Plus), and you will continue to contribute 3 percent toward retiree healthcare and earn years of service credit towards insurance eligibility, provided you did not request a refund of your contributions.

    Published September 4, 2012.
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  5. If I stay with the premium subsidy and then become disabled, what happens?

    If you stay with the premium subsidy, the benefits for duty and non-duty disability do not change. The state will pay the maximum health insurance premium subsidy allowed by statute for an approved duty or non-duty disability.

    Learn more about the current disability benefits offered Michigan public school employees at http://www.michigan.gov/orsschools/0,4653,7-206-36522---,00.html.

    Published September 4, 2012.
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  6. If I stay in the premium subsidy and then die, what happens?

    The death benefits under the premium subsidy benefit do not change. Whether and what benefits are payable to your survivors depends, in part, on if your death occurs while you are active, deferred, or retired. Review the information provided in Your Retirement Plan: A Member Handbook for Michigan's Public School Employees (link removed, obsolete 12/31/17).

    Published September 4, 2012.
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  7. If I stay with the premium subsidy and then go on Medicare when I reach 65, can my spouse and dependents stay in the plan?

    Yes, and you'll stay in the plan, too. When you become eligible for Medicare, your state subsidy percentage remains the same. The amount you pay each month will be recalculated to reflect your new Medicare Advantage premium amount. Medicare will become your primary insurance provider, and your spouse and eligible dependents would still be covered under the provider you identify for them. Go to http://www.michigan.gov/documents/R072C_128095_7.pdf to see the current rates, providers and coverage details negotiated for public school retirees and their dependents.

    Published September 4, 2012.
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  8. My spouse and I are both public school employees. If I elect to remain with the premium subsidy and my spouse elects the Personal Healthcare Fund, then when we both retire, could I choose to cover my spouse as a dependent under my insurance?

    The law currently allows spouses to be covered under a retiree's insurance. If you'd like your spouse to continue to be covered after your death, be sure to choose a Survivor Option at retirement (as opposed to a Straight Life calculation). Learn more at www.michigan.gov/orsschools/0,4653,7-206-36504_36507_37362---,00.html .

    Revised October 5, 2012.
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  9. If I elect to remain with the premium subsidy, continue making my 3 percent contributions and then die, what happens to my 3% healthcare contributions?

    Depending on the circumstances of your death, your beneficiary may be eligible for a refund of all, or a portion of your contributions. Let's look at different scenarios:

    1. If you die before becoming eligible for the healthcare subsidy, your beneficiary could apply to receive a refund of all of your 3 percent contributions, as long as your beneficiary is not eligible for a premium subsidy (due to a duty or nonduty death).

    2. If you retire with a Straight Life option, receive the health insurance subsidy for a period of time, and then die, the retiree health insurance premium subsidy payments would cease because your survivors would not be eligible for any health insurance benefits under the Straight Life option. If the total value of the retiree health insurance premium subsidy paid up to the date of your death is less than the total value of your 3% contributions, your beneficiary could apply for a refund of the remaining contributions.

    3. If you retire with a Survivor Option, receive the retiree health insurance premium subsidy payment for you and your eligible dependents, and then die after a period of time, your eligible dependents would continue to receive the retiree health insurance premium subsidy and be covered by the survivor option.

    Any refunds of the 3% healthcare contribution would be issued to your beneficiary in equal monthly installments over a 60 month (5 year) period as a supplemental retirement allowance

    Published October 17, 2012.
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  10. If I elect to remain with the premium subsidy, retire when I reach eligibility, then decide that I don't want or need the health insurance, can I get my 3% contribution back?

    By electing to stay with the premium subsidy and continue making the healthcare contribution until you reach eligibility and retire, you can guarantee your access to subsidized healthcare coverage in retirement. If, for whatever reason, you decide to dis-enroll in the subsidized healthcare coverage, you can always re-enroll knowing that the benefit you paid into, is waiting for you. Refunds of the 3% healthcare contribution are only issued if a member elects the Personal Healthcare Fund (Option B) or if a member elects the premium subsidy but doesn't reach eligibility, or dies before the total value of the subsidy paid equals the total value of the 3% contributions the member made. For more details see FAQ 9 (above).

    Published October 17, 2012.
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  11. Suppose my spouse and I both decide to stay with the premium subsidy. When we retire, my spouse would be covered under my insurance. Can we get a refund on my spouse's 3% contribution then?

    If both you and your spouse elected to stay with the premium subsidy, you can request a refund of your spouse's 3% contributions after his/her death.

    If you had selected a Survivor Option at retirement and you died first, your spouse would be covered as a survivor. If and when your spouse dies, if there are no other eligible dependents, your spouse's survivors can request a refund of your spouse's 3% contributions.

    If you elected a Straight Life option at retirement, and died first, your spouse could request a refund if the total value of the retiree health insurance premium subsidy paid up to the date of your death is less than the total value of your 3% contributions. Under the Straight Life option, your spouse would not be covered under your insurance, but, assuming your spouse met eligibility requirements, he/she would be covered under his/her own benefits. If and when your spouse dies, if there are no other eligible dependents, your spouse's survivors could request a refund if the total value of the retiree health insurance premium subsidy paid up to the date of your spouse's death is less than the total value of your spouse's 3% contributions.

    Published November 9, 2012.
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Understanding the Personal Healthcare Fund Option

  1. What is the Personal Healthcare Fund?

    The Personal Healthcare Fund is a portable, tax-deferred fund that you can use for paying healthcare and other expenses in retirement.

    If you elect the Personal Healthcare Fund, you voluntarily opt out of the premium subsidy. You will stop contributing 3 percent of compensation to the Retiree Healthcare Fund as of the day before your transition date, and any contributions you have made to that fund will be deposited into a tax-deferred, 401(k) account. In addition, you will be automatically enrolled in a 2 percent employee contribution into a 457 account as of your transition date, earning you a 2 percent employer match into a 401(k) account.

    Published September 4, 2012.
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  2. Why would I want to elect the Personal Healthcare Fund?

    The Personal Healthcare Fund is a good choice for some people, depending on their career and retirement plans, health and longevity expectations, and other personal factors.

    Published September 4, 2012.
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  3. Are there vesting requirements for the Personal Healthcare Fund?

    Yes. You are immediately vested in your contributions and related earnings to your healthcare savings in your 457 account. You are 50 percent in your employer's matching contributions after the equivalent of 2 years of full time service, 75 percent after 3 years of service, and 100 percent after 4 years of service. Your vesting for your employer's contributions begins with your first day of work, so all of your Michigan Public School Employees Retirement System service counts towards your vesting in the Personal Healthcare Fund.

    Revised September 26, 2012.
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  4. If I elect the Personal Healthcare Fund and then lose my job after February 1, 2013, what happens?

    Depending on your years of service at the time you leave public school employment (see vesting requirements above), you would receive the vested employer contributions that have been made to your 401(k) account thus far, along with related earnings. You retain your own personal contributions and earnings.

    If you later return to public school employment, you would resume the 2 percent contribution and employer match into a Personal Healthcare Fund. You would not be able to recoup any employer match and earnings lost because you did not meet vesting requirements, but you would continue to earn years of service toward the vesting requirements for future employer match and earnings.

    Revised December 14, 2012.
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  5. If I elect the Personal Healthcare Fund, leave my job and then come back, what happens?

    If you elect the Personal Healthcare Fund, leave and later return to public school employment, you would resume the 2 percent contribution and employer match into a Personal Healthcare Fund. You would also continue to earn years of service toward the vesting requirements for future employer match and earnings, noted above. However, you would not be able to recoup any employer match and earnings you may have lost if and when you left before meeting vesting requirements.

    Published September 4, 2012.
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  6. If I elect the Personal Healthcare Fund and then become disabled, do I get any insurance coverage?

    If you elect the Personal Healthcare Fund and then become disabled for any reason, you would not be eligible for any employer funded health insurance premium subsidy.

    Published September 4, 2012.
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  7. If I elect the Personal Healthcare Fund and then die, do my dependents get any insurance coverage?

    If you elect the Personal Healthcare Fund and then die because of an injury or illness resulting from your job activities (a duty-related death), the state will pay the maximum health premium allowed by statute for your spouse and health benefit dependents. Your spouse's insurance subsidy may continue until his or her death; your health benefit dependents' insurance subsidy may continue until their eligibility ends (through marriage, age, or other event).

    Upon eligibility for the duty-death benefit, the 2 percent employer matching contributions and related earnings in your 401(k) account will be forfeited and the state will pay for the subsidy payments. Your beneficiaries would receive your 2 percent contributions and related earnings in your 457 account.

    If you elect the Personal Healthcare Fund and suffer a nonduty-related death, your health benefit dependents would not be eligible to participate in any employer funded insurances. If you met vesting requirements at the time of your death (see vesting requirements above), your beneficiaries would receive the employer matching 2 percent contributions and related earnings in your 401(k) account. Your beneficiaries would receive your 2 percent contributions and related earnings in your 457 account.

    Published September 4, 2012.
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  8. My spouse and I are both public school employees. If I elect the Personal Healthcare Fund and my spouse elects to remain with the premium subsidy, then can my spouse cover me under their premium subsidy insurance when he/she retires?

    The law currently allows spouses to be covered under a retiree's insurance, so yes, your spouse can include you as a dependent on the insurance. If your spouse would like to ensure that your insurances continue after his/her death, your spouse must be sure to choose a Survivor Option at retirement (as opposed to a Straight Life calculation). Learn more at www.michigan.gov/orsschools/0,4653,7-206-36504_36507_37362---,00.html .

    Revised October 5, 2012.
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  9. My spouse and I are both public school employees. If I elect the Personal Healthcare Fund and my spouse elects to remain with the premium subsidy and if my spouse names me as 50% survivor to his/her pension, will I be eligible for his/her insurance subsidy when they die, or will I only get a 50% subsidy?

    According to current law, if a member selects the 50%, 75% or 100% Survivor Pension when they retire, their beneficiaries would retain the insurance coverage offered by the state and based on eligibility requirements.

    Published September 4, 2012.
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Understanding the 2 Percent Match

  1. How does the 2 percent matching contribution for the Personal Healthcare Fund work?

    If you elect the Personal Healthcare Fund, you would be eligible for an employer match of up to 2 percent of pay to a state-sponsored tax-deferred savings account. Your contributions would go into a 457 account; your employer contributions would be placed in a 401(k) account. Both accounts will be administered by ING.

    Revised September 26, 2012.
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  2. Do I have to contribute to get the 2 percent match?

    If you elect the Personal Healthcare Fund, you will be automatically enrolled for a 2 percent contribution as of your transition date, which would be the first day of the pay period that begins on or after February 1, 2013.

    You may opt out or change the amount of your contribution. But remember that you won't get the employer match if you don't contribute first. Your employer will match up to a 2 percent contribution, so consider contributing as much as you can to get the maximum employer match.

    Revised December 14, 2012.
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  3. When will my contributions come out of my pay?

    The 2 percent contribution and the 2 percent employer match for the Personal Healthcare Fund starting with the your transition date.

    Published September 4, 2012.
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  4. I'm already contributing to a 457 account with my employer. Do I need to contribute an additional 2 percent to get the employer match for the Personal Healthcare Fund?

    Yes. Only contributions made to the state-sponsored 457 plan, administered by ING, are eligible for match. If you're contributing to a 457 administered by a different provider, those contributions do not qualify for the employer match for the PHF.

    Revised September 26, 2012.
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  5. Can I contribute more than 2% into my PHF 457 account?

    You may contribute up to the maximum amount allowable by IRS to your 457 account. For 2012, the maximum amount allowable is $17,000. Note that if you have more than one 457 account, the total of both accounts combined cannot exceed the IRS limits for the year.

    Published September 26, 2012.
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  6. I don't want to have 2 different 457 plans. Can I combine them into one?

    Yes, but remember that only contributions made to the state-sponsored 457 plan, administered by ING, are eligible for match. Contact ING at 800-748-612 if you want to roll another 457 account into your ING account.

    Published September 26, 2012.
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  7. What if I only contribute 1 percent?

    Under the Personal Healthcare Fund, whatever amount you contribute will be matched, up to the maximum allowed (2 percent).

    But really, why would you pass up getting the employer match on your salary? That's like leaving money on the table! Most plan participants will want to contribute at least 4 percent to get both the healthcare savings and the retirement plan matching contributions. Retirement-smart employees contribute even more.

    Published September 4, 2012.
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  8. What if I put in, say, $50 a pay period?

    Your contribution has to be expressed in the form of a percent of pay in order to qualify for the employer match.

    Published September 4, 2012.
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  9. Do I choose the investment option for my contributions and the employer matching contributions?

    Your 2 percent contribution and employer match will go into the Target Date Fund appropriate for your time horizon based on your birthdate and an assumed retirement age of 65. You may identify alternative funds for your investments. Contact ING at 800-748-6128 or visit https://stateofmi.voya.com to learn about investment options for your Personal Healthcare Fund contributions.

    Revised September 26, 2012.
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  10. Is the 2 percent match a Health Savings Account (HSA)?

    No. Your contribution and your employer match are not a "Health Savings Account" as recognized by the IRS. According to the IRS, an HSA is a tax-advantaged medical savings account only available to taxpayers who are enrolled in a high-deductible health plan.

    Published September 4, 2012.
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  11. Is the 2 percent match a Flexible Spending Account (FSA)?

    No. Your contribution and your employer match are not a "Flexible Spending Account" (FSA) as recognized by the IRS.

    Published September 4, 2012.
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  12. When can I access the money we (my employer and I) put into my 401(k) or 457 for healthcare?

    The IRS and plan document rules for withdrawals from a 401(k) plan are different from the rules for a 457 plan. Learn more at http://www.mipensionplus.org/publicschools/leaving_employment.html.

    Published September 4, 2012.
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Understanding the Deposit of Your Retiree Healthcare Contributions to your 401(k) if you elect PHF

  1. If I elect the Personal Healthcare Fund, my 3 percent contributions to the Retiree Healthcare Fund will be deposited into a 401(k). How much will that deposit be?

    When you log into miAccount, on the Retiree Healthcare Election screen, you'll be able to see the amount of your contributions to the Retiree Healthcare Fund as of July 31, 2012.

    Published September 4, 2012.
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  2. When will my 3 percent contributions be deposited into my 401(k)?

    If you elect the Personal Healthcare Fund, your 3 percent employee contribution to the retiree healthcare fund, which started in July, 2010, ceases as of the day before your transition date, which would be the first day of the pay period that begins on or after February 1, 2013. If you are an active Michigan public school employee who made contributions to the Retiree Healthcare Fund, the amount of the healthcare contributions you made between September 4, 2012 and your transition date, will be paid to your 401(k) account no later than your first pay date after March 1, 2013. The amount of any Retiree Healthcare Fund contributions made before September 4, 2012, are pending a Supreme Court resolution regarding PA 75 of 2010.

    Revised February 21, 2013.
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  3. Can I take the 3 percent contribution as a cash refund instead?

    No, you cannot take a cash refund. If you elect the Personal Healthcare Fund, the value of your 3 percent healthcare contributions will be deposited into your 401(k) account administered by ING. You may take distributions from your 401(k) account after terminating employment and when you reach age 59 ½, per IRS regulations.

    Revised September 26, 2012.
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  4. Can I select which account the 3 percent healthcare contribution gets deposited into?

    The contribution will go into the Target Date Fund appropriate for your time horizon based on your birthdate and an assumed retirement age of 65. You may redistribute the amount among other investment options by contacting ING at 800-748-6128.

    Published September 4, 2012.
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  5. Do vesting rules apply to this contribution?

    If you elect the Personal Healthcare Fund you would be 100 percent vested in the amount of the contribution.

    Published September 4, 2012.
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  6. Does taking the contribution mean my healthcare premium won't be paid by the retirement system when I retire?

    Yes. By electing the Personal Healthcare Fund, you will receive two contributions to your 401(k) equal in value to the total amount you contributed to the Retiree Healthcare Fund, but you forfeit your right to any subsidized retiree healthcare insurance premium offered to Michigan public school employees. See question 2 for details on the timing and amount of the deposits to your 401(k).

    Published February 21, 2013.
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  7. Will interest be applied to the 3 percent healthcare contribution deposited to my 401(k)?

    No. The amount of the contribution to your 401(k) will be based on the value of your 3 percent contributions to the Retiree Healthcare Fund only.

    Published September 4, 2012.
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  8. Will my 3 percent healthcare contribution deposit to my 401(k) be taxed?

    The contribution to your 401(k) would be considered an employer contribution and would not be subject to federal, state, or city tax, or FICA. The contributions are subject to income tax when you withdraw the funds.

    Published September 4, 2012.
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  9. Will the 3 percent contribution show up on my W-2 statement at the end of the year? If so, how will it show up?

    The contribution to your 401(k) would be considered an employer contribution and would not show up on your W-2 statement.

    Published September 4, 2012.
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  10. Can I defer the 3 percent contribution into a 401(k) or 457 that is managed by a provider different than ING?

    No.

    Published September 4, 2012.
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  11. What is the IRS contribution limit for a 401(k)? What should I do if this contribution puts me over the limit?

    The contributions to your 401(k) would be employer contributions so they would not count against the $17,500 individual limit for elective contributions in 2013 set by the IRS. They could, however, count against the overall annual limit on the 415 set by the IRS, which is $51,000 (for 2013).

    Contact ING at 800-748-6128 for advice and assistance if you think your contribution will put you over that limit.

    Published February 21, 2013.
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  12. How do I confirm the contribution is deposited in my 401(k) account?

    You can confirm that the contribution has been deposited to your 401(k) account by logging into your account at https://stateofmi.voya.com or by calling ING at 800-748-6128 between 8:00 a.m. and 8:00 p.m., weekdays.

    Published September 4, 2012.
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  13. Can I apply this retiree healthcare contribution deposit amount to my existing Tax Deferred Payment (TDP) for my service credit purchase?

    No, you cannot apply the deposit of your healthcare contribution to an existing Tax Deferred Payment.

    Published September 4, 2012.
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  14. Can I direct my retiree healthcare contribution deposit into a Flexible Spending Account (FSA)?

    No, you cannot direct your retiree healthcare contribution deposit into a Flexible Spending Account.

    Published September 4, 2012.
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  15. Can I direct my healthcare contribution deposit into a Health Savings Account (HSA)?

    No, you cannot direct your retiree healthcare contribution deposit into a Health Savings Account.

    Published September 4, 2012.
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Making Your Retirement Plan Election

  1. What are my choices?

    Under the new law, you can voluntarily choose to increase, maintain, or stop your contributions to the pension fund. Any changes to your pension would be effective as of your transition date, which is defined as the first day of the pay period that begins on or after February 1, 2013. You have the following options:

    - Option 1: Under Option 1 you voluntarily elect to increase your contributions to the pension fund as noted below, and retain the 1.5 percent pension factor in your pension formula. The increased contribution would begin as of your transition date, and continue until you terminate public school employment.
    Basic Plan members: 4 percent contribution (currently 0 percent).
    MIP-Fixed, MIP-Graded, and MIP-Plus Plan members: a flat 7 percent contribution (currently 3.9 percent for MIP-Fixed, up to 4.3 percent for MIP-Graded, or up to 6.4 percent for MIP-Plus).

    - Option 2: Under Option 2 you voluntarily elect to increase your contribution to the retirement plan as stated in Option 1 and retain the 1.5 percent pension factor for your pension formula. The increased contribution would begin as of your transition date, and continue until you reach 30 years of service. If and when you reach 30 years of service, your contribution rate will return to the previous levels in place before your transition date, (0 percent for Basic Plan members, 3.9 percent for MIP-Fixed, up to 4.3 percent for MIP-Graded, or up to 6.4 percent for MIP-Plus). The pension formula for any service thereafter would include a 1.25 percent pension factor.

    - Option 3: Under Option 3 you voluntarily elect not to increase your contribution to the pension fund and maintain your current level of contribution to the pension fund. The pension formula for your years of service as of the day before your transition date, will include a 1.5 percent pension factor. The pension formula for any service thereafter would include a 1.25 percent pension factor.

    - Option 4: Under Option 4 you voluntarily elect to no longer contribute to the pension fund and therefore will be switched to the DC plan for future service as of your transition date. As a DC participant you will receive a 4 percent employer contribution to a state-sponsored tax-deferred 401(k) account and can choose to contribute up to the maximum amounts permitted by the IRS to a 457 account. You would vest in employer contributions and related earnings in the 401(k) account based on the following schedule: 50% at 2 years, 75% at 3 years, and 100% at 4 years of service. You would be 100% vested in any personal contributions and related earnings in your 457 account. Upon retirement, if you meet age and service requirements (including your total years of service), you would also receive a pension (calculated based on years of service and Final Average Compensation as of your transition date and a 1.5 percent pension factor).

    Your pension election must be made in miAccount while the election window remains open. If you do not make a pension election, your contribution rate will not change and your pension formula for your years of service up to your transition date, will include a 1.5 percent pension factor. The pension formula for any service thereafter will include a 1.25 percent pension factor.

    Revised December 14, 2012.
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  2. Which option is the best option?

    Everyone's circumstances are different, and what might be the best option for you may not be the best option for your coworker. When reviewing the options, take into consideration where you are in your career, what your future plans are, what other sources of health insurance coverage you may have, and what your retirement savings goals are. ORS recommends that you use the calculators in miAccount to see how each option would affect your finances now and in the future.

    Published October 23, 2012.
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  3. I've already attained 30 years of service. What should I do?

    If you have already reached 30 years of service, Option 2 does not apply to you and you won't see that option when you make your election in miAccount. The other options would still be available to you and you'd need to make your election in miAccount while the election window is still open. Contact your financial advisor to determine which option is best for you.

    Revised October 29, 2012.
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  4. Does the new legislation change the rules regarding pension eligibility?

    No, the legislation does not change the rules for pension eligibility. To be eligible for a monthly retirement pension, you must meet minimum age and service requirements as described below: MIP: age 46 with at least 30 years of service or age 60 with 10 years of service, Basic: age 55 with at least 30 years of service or age 60 with 10 years of service.

    Some exceptions may apply; learn more at http://www.michigan.gov/orsschools/0,4653,7-206-36504_36505---,00.html.

    Published September 11, 2012.
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  5. How does my pension plan election affect my retiree healthcare?

    Your pension election and your healthcare election are two separate things. If you elect to stay with the premium subsidy (Basic, MIP Fixed, or MIP Graded) or graded premium subsidy (MIP Plus), you'll retain your eligibility for healthcare benefits in retirement (assuming you meet age and service requirements), regardless of which retirement plan election you make.

    If you elect the Personal Healthcare Fund, you opt out of retiree healthcare benefit regardless of which retirement plan election you make. Instead you'll receive a 2 percent employer matching contribution to a state-sponsored, tax-deferred retirement account, if you contribute up to 2 percent of pay. If you elect the PHF you would not be eligible for any healthcare coverage in retirement.

    Published October 1, 2012.
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Understanding Options 1 and 2: Increasing Your Contributions

  1. What happens if I decide to increase my contribution and stay with my current pension benefit?

    Your pension calculation remains unchanged, but starting with your transition date, the first pay period that begins on or after February 1, 2013, you will, in accordance with your election, increase your contribution to the pension fund:

    - Basic Plan members: 4 percent contribution (currently 0 percent).
    - MIP-Fixed, MIP-Graded, and MIP-Plus Plan members: a flat 7 percent contribution (currently 3.9 percent for MIP-Fixed, up to 4.3 percent for MIP-Graded, or up to 6.4 percent for MIP-Plus).

    This will be a pre-tax contribution.

    Revised December 14, 2012.
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  2. If I pick Option 2, how will my benefit be calculated?

    If you pick Option 2, your pension will be based on two calculations:

    1. Your Final Average Compensation (FAC) at retirement x 1.5 percent pension factor x your years of service as of the day before your attainment date, and
    2. Your Final Average Compensation (FAC) at retirement x 1.25 percent pension factor x your years of service as of your attainment date.

    The two numbers will be added together for one monthly benefit.

    (Your attainment date is the day you reach 30 years of credited service.) Transition date is defined as the first day of the pay period that begins on or after February 1, 2013.)

    Revised December 14, 2012.
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  3. If I decide to increase my contribution, is the increase counted in my 401(k) or 457 account?

    No. The increased contribution to the pension fund is separate from and does not impact any 401(k) or 457 account.

    Published September 4, 2012.
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  4. If I elect to increase my contributions to the pension fund, but then leave public school employment before I'm vested, can I get a refund on my contributions?

    Yes. If you terminate public school employment before you are vested, you can request a refund of your contributions, but it would cancel your service credit.

    Published September 4, 2012.
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  5. If I elect to increase my contributions, will they be "credited" to my account and refunded to my beneficiary in the event of my death either pre-retirement or post-retirement?

    If you elect to increase your contribution (Option 1 or Option 2) and die before retirement, your beneficiary (typically your spouse) would be eligible for a survivor pension. If you retire with a survivor option and then die, the named beneficiary would be eligible for a survivor pension. In both cases, the pension payments are partially funded by your employee contribution, so there would be no refund of those contributions since, in essence, your beneficiaries would be already receiving them. If you choose the straight life option and then die soon after retirement, there may be residual contributions on deposit. If so, these contributions would be refunded to either the named beneficiary or your estate.

    Employee contributions are always paid out first. Each month's pension payment would reduce the employee contribution total by the amount of the pension payment. Once that employee contribution total has been depleted (usually in less than two years from retirement) there would be no money left to refund.

    Published September 4, 2012.
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  6. I'm vested and elect to increase my contributions. What happens if I terminate employment and then later return to public school employment?

    If and when you return to public school employment, you would keep whichever retirement plan option you had elected.

    Published September 4, 2012.
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  7. I'm not vested and elect to increase my contributions. What happens if I terminate employment before I'm vested and then later return to public school employment?

    If and when you return to public school employment, you would keep whichever retirement plan option you had elected.

    Published September 4, 2012.
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  8. Are years of service capped at 30?

    There is no cap on years of service. Under Option 2 you would increase your contributions to the retirement plan until your attainment date (30 years of service), and your pension formula for those 30 years would include a 1.5 percent pension factor. If and when you reach 30 years of service, your contribution rate will return to the previous level in place as of the day before your transition date (currently 3.9 percent for MIP-Fixed, up to 4.3 percent for MIP-Graded, or up to 6.4 percent for MIP-Plus). and your pension formula for any years beyond 30 years of service would include a 1.25 percent pension factor.

    Published September 4, 2012.
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  9. How would my election affect the cost of living adjustment??

    The cost of living adjustment remains in place for MIP retirees who qualify. If you are a member of the MIP plan, you will receive an annual 3 percent increase of your initial monthly pension payment after your first full year of retirement. (learn more at http://www.michigan.gov/orsschools/0,4653,7-206-36502_48443---,00.html). Your pension payment will be determined by which option you select. Use the estimates and calculators provided in miAccount to compare what your monthly pension might be under each option. From there you can calculate your anticipated cost of living adjustment.

    Revised September 11, 2012.
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  10. Is my increased contribution a pre-tax contribution?

    Your employee contribution is subject to FICA, but is not currently subject to federal, state, or local income tax.

    Published September 4, 2012.
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  11. What does "attainment date" mean?

    Attainment date is defined as the final day of the pay period in which the member of the Defined Benefit (DB), or pension, plan reaches 30 years of credited service.

    Published September 4, 2012.
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  12. If I choose Option 2, what happens if I leave before I reach 30 years of service, my attainment date?

    If you are vested, you will receive whatever pension and benefits you qualify for as of the date you terminate employment. Your pension formula would be based on the 1.5 percent pension factor.

    If you are not vested when you terminate employment and later return to public school employment, you would resume the count to your 30 years of service; you would maintain the increased contribution and the 1.5 percent pension factor.

    Published September 4, 2012.
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  13. Is "retirement date" same as "attainment date"?

    No. "Attainment date" is defined as 30 years of credited service. You don't have to retire when you reach your attainment date; it just marks the point in time when your contributions would revert back to the levels in place prior to your transition date. Your pension formula would be changed to reflect a 1.25 percent pension factor for any service after your attainment date, if you choose that option.

    Published September 4, 2012.
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  14. When will I reach my attainment date?

    Go to miAccount to see your years of service to date and from there you can estimate when you will reach 30 years of service, your attainment date. Keep in mind that we are projecting your attainment date based on current information. Leaves of absence, breaks in service, and part time employment could extend your attainment date.

    Published September 4, 2012.
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Understanding Option 3: Maintaining Your Current Level Of Contributions

  1. What happens if I decide not to increase my contribution and take the lower multiplier?

    If you elect Option 3, your current level of contribution will not change but the pension factor in your pension formula will change. Your pension formula will include a 1.5 pension factor for your years of service as of the the day before your transition date, and a 1.25 pension factor for your years of service thereafter. Your Final Average Compensation (FAC) remains the same and is calculated at retirement, the average of your highest three consecutive years of earnings (36 months) if you're a member of the MIP plan, or the highest consecutive five years of earnings (60 months) if you're a member of the Basic plan.

    Your pension will be based on two calculations if you elect Option 3:

    1. Your Final Average Compensation (FAC) at retirement x 1.5 percent x Years of Service as of the day before your transition date, and

    2. Your Final Average Compensation (FAC) at retirement x 1.25 percent x Years of Service as of your transition date.

    Revised September 26, 2012.
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  2. Does the Final Average Compensation (FAC) change if I elect to take the lower pension factor?

    No. Your Final Average Compensation (FAC) remains the same and is calculated at retirement. If you are a member of the Basic plan, your FAC is the average of your highest 5 consecutive years of earnings (60 months). If you are a member of the MIP plan, your FAC is the average of your highest three consecutive years of earnings (36 months).

    Revised September 11, 2012.
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Understanding Option 4: Stopping Your Contributions to the Pension Fund

  1. What happens if I decide to stop my contributions altogether and switch to the Defined Contribution plan?

    If you elect Option 4 you will no longer contribute to the pension fund and you will be switched to the DC plan for future service as of your transition date. As a DC participant you will receive a 4 percent employer contribution to a state-sponsored tax-deferred 401(k) account administered by ING and you can choose to contribute up to the maximum amounts permitted by the IRS to your state=sponsored 457 account, also administered by ING. You would vest in employer contributions and related earnings in your 401(k) account based on the following schedule: 50% at 2 years, 75% at 3 years, and 100% at 4 years of service. Vesting begins the day you first worked. You would be 100% vested in any personal contributions and related earnings in your 457 account. Upon retirement, if you meet age and service requirements (including your total years of service), you would also receive a pension (calculated based on years of service and Final Average Compensation as of your transition date and a 1.5 percent pension factor).

    Revised September 26, 2012.
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  2. What would I get as a DC participant?

    As a DC plan participant you would receive a 4 percent employer contribution to your 401(k) account. In addition, you would be able to make contributions to a 457 account. Both accounts will be administered by ING. Contact ING at 800-748-6128 or visit https://stateofmi.voya.com to learn about investment options in the Defined Contribution plan.

    Revised September 26, 2012.
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  3. If I switch to the DC plan for future service, what would my retirement benefit be?

    If you switch to the DC plan, your retirement benefits will be made up of two things: (1) your pension (based on years of service, final average compensation (FAC) and 1.5 percent pension factor as of the day before your transition date; and (2) your state-sponsored 401(k) and 457 accounts, which would include your 4 percent employer contributions (made to your 401(k) account), any personal contributions you made to your 457 account, and any accumulated investment earnings. Vesting rules apply.

    Published September 4, 2012.
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  4. If I switch to the DC plan, would I still have the same retirement payment options of Straight Life, Survivor, or Equated plan?

    Yes, if you are eligible for a pension you would still have all of the pension payment options available to you: Straight Life, Survivor, and Equated Plan.

    Published September 4, 2012.
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  5. If I switch to the DC plan, will I still have health insurance in retirement?

    Your pension election and your health insurance election are two separate things. If you switch to the DC plan and elect to stay with the premium subsidy (Basic, MIP Fixed, or MIP Graded) or graded premium subsidy (MIP Plus), you'll retain your eligibility for healthcare benefits in retirement (assuming you meet age and service requirements). If you switch to the DC plan and elect the Personal Healthcare Fund, you opt out of retiree healthcare benefit and instead receive a 2 percent employer matching contribution to a state-sponsored, tax-deferred retirement account, if you contribute up to 2 percent of pay. If you elect the PHF you would not be eligible for any healthcare coverage in retirement.

    Published September 26, 2012.
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  6. I already have a 401(k) and/or 457 account managed by a different provider. If I switch to the DC plan, can I roll those over to the ING account?.

    Yes. Contact ING at 800-748-6128 if you want to roll another 401(k) or 457 account into your ING account.

    Published September 26, 2012.
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  7. If I switch to the DC plan and then become disabled, do I still get a disability pension?

    If you become ill or injured on the job while you are an active member of the Michigan Public Schools Retirement System, and you can no longer work, you may qualify for duty disability pension (no vesting required). If your injury or illness is not job related, you may qualify for a nonduty disability pension (10 years of public school employment required). Any approved disability pension would be based on your service up to the date of the switch to the DC plan. Learn more at http://www.michigan.gov/orsschools/0,4653,7-206-36522---,00.html.

    Your eligibility for any disability health insurance benefits would be determined based on your retiree healthcare election. See Understanding the Premium Subsidy Benefit Q.5 and Understanding the Personal Healthcare Fund Option, Q.6.

    Published September 4, 2012.
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  8. If I switch to the DC plan and then die, do my survivors get anything?

    If you are retired at the time of your death, your pension beneficiary would receive whatever survivor pension benefit (if any) you chose at retirement (100 percent survivor pension, 75 percent, or 50 percent); your named beneficiaries would receive the payout from your account balance of the employer contributions you earned as a participant in the DC plan, and any remaining employee contributions you made.

    If you die while an active member, your survivors would receive any remaining employee contributions you made. Any payout from your account balance for employer contributions you earned as a member of the DC plan would be determined based on your years of service (50% vested at 2 years, 75% at 3 years and 100% at 4 years). In addition, if you met age and service requirements, your survivors would receive a pension based on your years of service as of the date you switched to the DC plan. Learn more about the age and service requirements for Basic plan members and for MIP members at http://www.michigan.gov/orsschools/0,4653,7-206-36450_36500---,00.html.

    Eligibility for any health insurance benefits for your survivors would be determined based on your retiree healthcare election. See Understanding the Premium Subsidy Benefit Q.6 and Understanding the Personal Healthcare Fund Option, Q.7.

    Published September 4, 2012.
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  9. Let's say I switch to the DC plan and then leave public school employment. What would happen if I were to later return to work for the schools?

    If you switch to the DC plan, leave public school employment and later return to work in a Michigan public school, you would come back in the DC plan. Any new service credit earned would be added to the service credit you had already earned for the purposes of reaching pension and retiree health insurance eligibility.

    Published September 4, 2012.
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  10. If I elect to switch to the DC plan for future service, do I have to take any actions with ING now, or at the date of the switch?

    You don't have to take any action now. If you elect Option 4 you will be automatically switched to the DC plan as of your transition date, which is the first day of the pay period beginning on or after February 1, 2013, and your employer will begin contributing 4 percent match of compensation into a 401(k) account on your behalf. The employer contribution will be initially deposited into a Target Date Fund appropriate for your time horizon based on your birthdate and an assumed retirement age of 65. Once your account is established, you may identify alternative funds for the employer contributions and any contributions you might make to a 457 account. Contact ING at 800-748-6128 or visit https://stateofmi.voya.com to learn about investment options.

    Revised December 14, 2012.
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  11. If I elect to switch over to the DC plan, what ages on the actuarial chart will be used to calculate my survivor pension?

    This remains unchanged; your survivor pension will be calculated as of your age at termination. Go to miAccount to estimate the survivor pension or for further information.

    Published September 4, 2012.
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  12. If I elect Option 4 and switch to the DC plan, do the working after retirement rules still apply?

    If you elect Option 4, your retirement benefits would be made up of two things: (1) your pension (based on years of service, final average compensation (FAC) and 1.5 percent pension factor as of the day before your transition date; and (2) your state-sponsored 401(k) and 457 accounts, which would include your 4 percent employer contributions (made to your 401(k) account), any personal contributions you made to your 457 account, and any accumulated investment earnings. Both could be affected if, after retirement, you return to work in a Michigan public school reporting unit:

    Your pension:

    - The rules for working after retirement remain in effect. These include restrictions on return to work start date, bona fide termination, and earning limits.  Click here to learn more. http://www.michigan.gov/orsschools/0,4653,7-206-36502_36516---,00.html .

    Your 401(k) and 457 accounts:

    - Your election to switch to the DC plan also stands.  This means that your employer would contribute 4 percent of compensation to your 401(k). However, rules prohibit someone from both being employed and taking a distribution from their 401(k) and 457 accounts, unless you are age 59 1/2 or above (401(k)) or age 70 1/2 or above (457).  So, if you are under the respective age and receiving a distribution when you return to work with an entity under the 401(k) or 457 (including any Michigan public school reporting unit, the Educational Achievement Authority, or the State of Michigan), the distributions would stop while you remain working.  The employer contributions to your 401(k) would count toward your earnings limitations for your pension.

    Your retiree health insurance:

    - If you elected the Premium Subsidy, your eligibility for the subsidy would fall under the rules for working after retirement.  See http://www.michigan.gov/orsschools/0,4653,7-206-36502_36516---,00.html to learn more.

    - If you elected the Personal Healthcare Fund (PHF), your 2 percent personal contributions and 2 percent employer match into the PHF would resume. Employer contributions to your PHF would also count toward your earnings limitations for your pension.



    If you are working in a Michigan public school reporting unit but being paid by a third party, the Core Service rules apply http://www.michigan.gov/documents/orsschools/R0850C_CoreServices_323525_7.pdf.  Your third party employer would not be required to make the 4 percent employer contributions to your 401(k); any distributions from your 401(k) or 457 would not be affected.

    If you are working in a reporting unit as an independent contractor, the Core Services rule applies. http://www.michigan.gov/documents/orsschools/R0850C_CoreServices_323525_7.pdf

    If you are working in a job with no affiliation to a Michigan public school reporting unit, neither your pension nor your 401(k) or 457 distributions would be affected.

    Published November 15, 2012.
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Understanding Your Estimates in miAccount

  1. What is included in the estimates on the election information page in miAccount?

    All of the estimates are calculated based on your Final Average Compensation (FAC) as of February 1, 2013.

    The amount of service credit used in the estimates is different for each option: Options 1 and 3 show your service credit at your earliest retirement eligibility date; Option 2 shows your service credit when you reach attainment (or 30 years of service); and Option 4 shows your projected service credit as of February 1, 2013 . Service credit includes any earned, pending, and purchased service. If you have a TDP agreement in progress, the estimates include the total amount of service you are purchasing, whether or not it has already been paid for.

    Revised December 14, 2012.
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  2. Why are the estimates for the reform different from the estimate I do in miAccount?

    The estimates you complete with the Estimate Pension tool in miAccount project your FAC out to the termination date you enter. The estimates on the election information screen use your FAC as of February 1, 2013.

    Revised December 14, 2012.
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  3. I don't see a personalized estimate when I log into miAccount. Why?

    miAccount may not calculate estimates for you if you have low service hours in your work history. You can use the miAccount Message Board to contact a customer service representative who will calculate an estimate for you based on your work history. Make sure to select Retirement Reform as the category for your message, and enter No Estimates Available in the subject.

    Published September 11, 2012.
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Vesting Status

  1. I'm not vested. If I elect Option 4 and move to the Defined Contribution plan, what happens to my vesting status?

    If you are not vested, you will continue to earn service credit towards your pension eligibility as long as you remain employed by a Michigan public school that participates in the Michigan Public School Employees Retirement System. Once you have the 10 years of service required for vesting, you would qualify for a pension benefit when you become age-eligible. Your pension amount would be based on the years of service and Final Average Compensation you had as of the date you switched to the DC plan. You would also be eligible for retiree healthcare benefits.

    Revised September 26, 2012.
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  2. What are the vesting requirements for the Defined Contribution plan?

    The vesting requirements for the DC plan (the 4 percent contribution) are as follows: after 2 years of service you are 50 percent vested in employer contributions to the 401(k); after 3 years of service - 75 percent vested, and after 4 years of service - 100 percent vested. Your own contributions to the 457 are fully owned by you at all times. Your vesting for your employer's contributions begins with your first day of work, so all of your Michigan Public School Employees Retirement System service counts towards the DC 4 year vesting schedule.

    Published September 4, 2012.
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  3. If I switch to the Defined Contribution plan, do I need to have 4 years before I'm fully vested in employer contributions?

    Yes. But all of your Michigan Public School Employees Retirement System service credit will count toward the 4 year vesting for employer contributions.

    Published September 4, 2012.
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  4. If I switch to the DC plan, would my previous military service count toward vesting?

    Yes. Up to six years of intervening military leave (which interrupts your Michigan public school service) can be used to meet the 10 year vesting requirement for a pension.

    Non-intervening military service may not be used to meet vesting requirements.

    Refer to the Military Service Credit Application (R0081C), which is also available in miAccount.

    Published September 4, 2012.
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  5. If I switch to the DC plan and keep the premium subsidy benefit, would my previous military service count toward eligibility for the benefit subsidy?

    Yes. Up to six years of intervening military leave (which interrupts your Michigan public school service) can be used to meet the eligibility requirements for the (graded) premium subsidy benefit.

    Non-intervening military service may be used to meet eligibility requirement for the (graded) premium subsidy benefit as long you purchased service credit or entered a Tax-Deferred Payment Agreement to purchase those non-intervening years before your switch to the DC plan.

    Published September 4, 2012.
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  6. If I have military service after I switch to the DC plan, would that count toward vesting?

    It depends on the type of service. Up to six years of intervening military leave (which interrupts your Michigan public school service) could be used to meet the 10 year vesting requirement for a pension (based on FAC and years of service as of the pay period before the first pay period beginning after February 1, 2013).

    Upon returning, complete the Military Service Credit (R0081C) form and return it to the Office of Retirement Services along with the appropriate documentation. You will then be given credit for the years of service, and the school employer's 4% mandatory contributions missed will be credited to your 401(k) account. The form also gives you the option of making up missed employee contributions to the Personal Healthcare Fund (if you elected that retiree healthcare option) in order to qualify for missed employer match money.

    Non-intervening military service does not count toward vesting requirements.

    Revised December 14, 2012.
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  7. If I have military service after I switch to the DC plan, and I elected the Personal Healthcare Fund, how would that work?

    If you have intervening military service after your switch to the DC plan, and you had elected the Personal Healthcare Fund, you would be able to make up missed employee contributions to the PHF in order to qualify for missed employer match money. Upon returning from a military leave of absence, complete an Application for Military Leave of Absence Credit and return it to the Office of Retirement Services along with the appropriate documentation.

    You would not be eligible to make up contributions missed during non-intervening military service.

    Published September 4, 2012.
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Impact on Service Credit and EDRO

  1. How does my election affect existing and future service credit purchase agreements?

    Existing service purchase agreements remain in place and are irrevocable. If you currently have a service purchase agreement, you will continue to pay off that purchase agreement after February 1, 2013, regardless of your pension election. The service you are purchasing under the current agreement will be counted in your service credit total and calculated at the 1.5 percent pension factor. Service purchased through a service credit agreement initiated after February 1, 2013, would be calculated based on your pension plan election:

    Option 1: Calculated at 1.5 percent pension factor

    Option 2: If initiated before your attainment date, calculated at 1.5 percent pension factor. If initiated after your attainment date, calculated at 1.25 percent pension factor

    Option 3: If initiated before February 1, 2013, calculated at 1.5 percent pension factor. If initiated on or after February 1, 2013, calculated at 1.25 percent pension factor.

    Option 4: If initiated before February 1, 2013, calculated at 1.5 percent pension factor. No new service credit purchase agreements may be initiated on or after February 1, 2013 if you elect to switch to the DC plan.

    Revised December 14, 2012.
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  2. How does my current service credit purchase affect my attainment date? (For example, I've got 28 years of service and I'm purchasing 4 additional years of service.)

    Your attainment date is based on total service credit (earned service plus purchased service). So, if you chose Option 2, then when your earned service and purchased service equal 30 years, you will have reached attainment and at that point your contribution rate will return to the previous level in place as of the day before your transition date (the first pay period beginning after February 1, 2013). (0 percent for Basic Plan members and graded up to 6.4 percent for MIP members). The pension formula for any service thereafter would include a 1.25 percent pension factor.

    You continue to purchase any years remaining on your TDP agreement and, once paid, those years will be added to your service credit total. Use miAccount to track your current service credit totals.

    Revised December 14, 2012.
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  3. I have a service credit purchase agreement (Tax Deferred Payment - TDP) in place. How is that affected if I chose Option 4, to switch to the DC plan?

    Service purchase agreements remain in place and are irrevocable, even if you switch over to the DC plan. So, if you chose Option 4, you will still be required to complete the terms of your service credit purchase agreement and, once paid, those years will be added to your total years of service and calculated at the 1.5 percent pension factor. Use miAccount to track your current service credit totals.

    Revised September 11, 2012.
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  4. I have a service purchase agreement in place. If I elect Option 3 and take the reduced pension factor, how does that affect my service purchase agreement?

    Existing service purchase agreements remain in place and are irrevocable. You will continue to pay off your service purchase agreement after February 1, 2013, regardless of your pension election. The service you are purchasing under the current agreement will be counted in your service credit total and calculated at the 1.5 percent pension factor.

    Service purchased through a service credit agreement initiated after February 1, 2013, would be calculated based on your pension plan election - in this example, it would be based on Option 3 and would be calculated at the 1.25 percent pension factor.

    Revised December 14, 2012.
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  5. I have an Eligible Domestic Relations Order (EDRO) on my pension benefit. If I switch to the DC, will this cut my ex-spouse out of my pension?

    Standing EDROs remain unchanged and in effect. However, you will need to talk with your attorney to work out any division of ownership between you and your ex-spouse for your Defined Contribution account.

    Published September 4, 2012.
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  6. I have an EDRO on file. Does my former spouse have to agree with and sign off on the option I select during the election window?

    No.

    Published September 4, 2012.
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  7. I'm in the middle of a refund repayment. How will my service be credited after the transition date?

    Refund repayments would be credited at the rate at which the original service was earned, so if the credit was earned prior to the transition date, the service credit under the repay of refund would have a 1.5% multiplier. If the credit was earned after the transition date, it would have a 1.25% multiplier.

    Published October 23, 2012.
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  8. If I elect Option 4, can I initiate a repayment of refund?

    Yes. If you are actively employed and wish to repay your refund, you may initiate repayment to reinstate your DB service.

    Published October 23, 2012, and updated January 3, 2014.
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