Issue link: http://digital.copcomm.com/i/507087
ISEA Communiqué • isea.org April/May 2015 7 IPERS On January 1, 2016 Iowa Public Employees' Retirement System (IPERS) will change its rules regarding purchasing of service. Currently, and until the close of business on December 31, 2015, a vested member can purchase service anytime (during their working years or in retirement). Under the rules in place today a member can apply for a service purchase cost quote. Official cost quotes expire six months after the date they are calculated. If a member requests a cost quote on December 31, 2015, that member can act on purchasing service until it expires in six months. We recommend if you are considering requesting a cost quote to ask for it prior to the deadline of December 31, 2015. The new rules will limit the purchase of service to take place only at retirement after you have filed your application for retirement benefits when they take effect on January 1, 2016. In addition to retiring, the new rules require that members be vested by service. This requires Iowa State Education Association members to have four years of service earned before June 30, 2012 or seven years of service earned after June 30, 2012. The new rules were adopted to improve the accuracy of the service purchase costs. Under current rules, a number of variables had to be estimated and it resulted in some members being over- or under- charged for their service purchase. The new system will have all known variables and eliminate some members receiving an advantage that needed to be funded by the rest of the IPERS membership while other members overpaid for service purchases and thus that member was individually disadvantaged. There will be limits for purchased service. The IRS limits the amount of money you may use for service purchase to $53,000 in calendar year 2015. This limit does not apply when you buy back previously refunded IPERS service or when you roll over from other retirement accounts. There are limits on how many quarters of service you may purchase, depending on the type of purchase you are making. For example, the maximum amount of time not linked to any particular type of employment is limited to five years. This is referred to as air time. So, what can a member do with money they have available for service purchase until they retire? IPERS recommends keeping your money in a retirement account which will allow you to roll over to IPERS without incurring tax penalties when it is time to purchase. As noted before, the IRS limits the amount of money that you can use for purchase service unless the member makes a rollover to fund the purchase. Accounts that would qualify for a rollover include: • 401(a) and 401(c) qualified plans • IRAs and annuities • 403(b) plans • Governmental 457(b) plans What about members who are currently retired? If you are already receiving retirement benefits and are interested in purchasing IPERS service you need to request a cost quote prior to January 1, 2016. You will be able to complete your purchase before the expiration date on your cost quote. After January 1, 2016 you will not be able to purchase service if you are retired. IPERS to Change Rules Regarding Service Purchases EDUCATION IS… Experience a personal education you'll find nowhere else. NEA MEMBERS ask about your preferred tuiton rate: ADVANCEMENT less than current rates!* 15% Let NCU help YOU advance. CALL: 855.346.7491 VISIT: NCU.EDU/NEATODAY *The NEA Academy and Northcentral University have formed an education alliance to offer NEA Members who enroll as a new student the opportunity to earn a quality online bachelor's, master's, certificate or doctoral degree from Northcentral University at a preferred tuition rate that is 15% less than the current published rate. This tuition reduction offering cannot be combined with any other offer. NC180415 ISEA Government Relations Specialist Brad Hudson