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Volume 19Number 2

January 2012

IN THIS ISSUE1 Ready... Set... Retire!2 Retirement Timeline3 Did You Spend Time Working

Outside MCPS? You May Be Eligible for Retirement Credit

3 Investing with a 403(b) or a 457(b) as You Near Retirement

4 Medicare and Your Future Retiree Benefits

4 IRS Announces New Limits for Defined Contribution Plans

4 Don’t Forget: Submit 2011 FSA Claims by Deadline or Risk Losing Your Balances!

5 Sick Leave: Peace of Mind + Piece of Pocketbook = Your Leave’s True Value

6 New Year, New Information? Make Sure Everything Is Up to Date

6 You are Invited! Celebrate the Success of MCPS on the Move and Work It Circuit

7 Direct Deposit on Human Resources Online: Making Direct Deposit Even More Convenient

7 New Look for MCPS Form 430-1

Ready... Set... R E T I R E ! Members of the State core pension plan also should attend a State Retirement Agency (SRA) Pre-Retirement Planning Semi-nar. State seminars are day-long events and cover topics such as Social Security and health benefits, legal considerations, and financial planning. You must register to attend an SRA seminar. For more information, please visit the ERSC website. These sessions are limited in capacity, so register early.

In addition, State representatives offer personal counseling sessions for members of the State core plan who are planning an imminent retirement. Counseling sessions are held at ERSC and must be scheduled in advance with the SRA by calling 1-800-492-5909. For more details and to see upcoming counseling session dates, please visit the ERSC website. These also are very popular, so register early.

2. G E T S E T —Obtain a Retirement EstimateA retirement estimate is a must-have tool

in preparing for your retirement, as it pro-vides more personalized, detailed informa-tion than your yearly retirement statement. You should request a retirement estimate 9–12 months before your planned retire-ment date. This includes an estimate from ERSC for MCPS county core and/or supple-ment plan members, as well as an estimate from the SRA for State core plan members.

When you retire, you will be able to choose one of several different payment options that affect both how much you will receive and, if you choose, how much your beneficiary will receive in the event of your death. A retirement estimate can help you determine which benefit option to choose by providing personalized figures based on your age and your beneficiary’s age for each option, something your annual retirement benefit statement does not provide.

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

Are you thinking of retiring this July 1? The Employee and Retiree Service Center (ERSC) is here to assist you in planning your retirement and ensure that your tran-sition from employee to retiree is smooth. This issue of For Your Benefit offers retire-ment planning resources throughout. In addition, here are the top three actions to take to prepare for your retirement.

1. G E T R E A D Y —Consult Retirement ExpertsERSC retirement experts present essen-

tial information and are available to answer questions during Retirement Informational Sessions. Many people find that bringing a spouse or attending more than once is helpful. Registration is not required.

After you have made the decision to retire, you also may want to attend a Forms Workshop, where ERSC staff offers a review of the necessary retirement forms and help-ful hints to help you complete them.

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

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ERSC Retirement Informational SessionsDate TimeThursday, February 2, 2012 4:30–6:30 p.m.Thursday, March 8, 2012 4:30–6:30 p.m.Wednesday, April 4, 2012 4:30–6:30 p.m.

ERSC Retirement Forms WorkshopsDate TimeWednesday, February 22, 2012 4:30–6:30 p.m.Monday, March 19, 2012 5:00–7:00 p.m.Tuesday, April 17, 2012 4:30–6:30 p.m.

For Your Benefit

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

3. G O ! Meet Important DeadlinesOnce you have consulted the experts

and determined your pension payment option, you will need to consider the fol-lowing important retirement deadlines:

■ April 1: Deadline for MCEA members to submit retirement forms for July 1 retirement date and be eligible for payment of 30 percent of available sick leave. Visit the ERSC website for additional information. ■ 90 days prior to your

retirement date: Final deadline for purchasing addi-tional retirement credit. See “Receive Retirement Credit for Service Earned Outside MCPS” in this issue for more details about purchasing service. ■ One month prior to your

retirement date: Deadline for submitting all retirement forms to ERSC. For non-MCEA mem-bers who are planning to retire on July 1, all paperwork must be submitted to ERSC by June 1. Visit the ERSC Forms webpage to download your retirement application forms.

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Visit these retirement resources to learn more:

■ Understanding Your Retirement walks you through the retirement process, timeline, and pension calculation formulas.

■ Retiree Benefit Summary informs you of benefits options for retirees, including costs and enrollment process.

■ Retirement Planning webpage offers links to these and other essential resources.

Retirement Timeline 9–1 2 M O N T H S ■ Check your annual retirement statement. ■ Read Understanding Your Retirement. ■ Attend an informational session. ■ Request an estimate of retirement benefits from MCPS and, if applicable, the State Retirement Agency.

■ Apply to purchase any eligible service and/or military service credit. (See “Did You Spend Time Working Outside MCPS?” in this issue.)

■ Prepare your retirement budget.

6 M O N T H S ■ Read the Retiree Benefit Summary for retiree benefit options. ■ Discuss your benefit payment options with your family and/or financial advisor.

3 M O N T H S ■ Attend a Forms Workshop ■ Download your retirement application forms.

 Members of the State Core Pension Plan  Members of the MCPS Core Pension Plan 

■ Determine your federal and state withholding amount. Consult with your tax advisor for assistance.

■ If eligible, contact the Social Security Administration to file for Social Security benefits and enroll in Medicare Parts A and B if you and/or your spouse are 65 or older.

1–2 M O N T H S ■ Send in your retirement forms. All forms must be received by ERSC at least 30 days prior to your retirement date. This includes forms to direct your final leave pay-ment to your 403(b) and/or 457(b) accounts.

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

Understanding Your RetirementEmployees’ Retirement Pension System

REtiREmEnt BEnEfitS, PRocESS, and foRmSo c t o B E R 2 0 1 1

EMPLOYEE & RETIREE SERVICE CENTER45 W. Gude Drive, Suite 1200, Rockville, MD 20850301-517-8100www.montgomeryschoolsmd.org/departments/ersc

ROCKVILLE, MD

ROCKVILLE, MARYLANDPublished by the Department of Materials Management for the Employee and Retiree Service Center

0429.12 • EDITORIAL, GRAPHICS & PUBLISHING SERVICES • 9.11 • 2400 COPYRIGHT © 2011 MONTGOMERY COUNTY PUBLIC SCHOOLS

For Your Benefit

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D I D Y O U S P E N D T I M E W O R K I N G O U T S I D E M C P S ? You May Be Eligible for Retirement Credit You may be eligible for service credit on your pension for time worked with other institutions. Purchasing Service and sub-mitting for credit for Military Service are two ways that you can earn service toward your retirement for time spent at other organizations.

Why Apply for Additional Service?

Applying for or purchasing additional service credit toward your retirement can help you achieve your retirement goals. Depending on your circumstances, additional service may increase your retirement benefit or even allow you to retire earlier than you had anticipated.

There are two ways to gain additional service credit.

1. Apply for military service credit for time spent on active duty in the United States military.

You can receive up to five years of ser-vice credit for active duty military service on your MCPS county core and/or supple-mental pension plan or state pension after accruing 10 years of creditable service with MCPS. There is no cost to you to obtain military service credit. However, you may not claim this service with any other retire-ment or pension system, including your military pension.

You must apply for military credit and complete the required forms before retire-ment or resignation from MCPS. Once you have retired or resigned, no additional credit may be claimed.

To apply for military service toward your MCPS pension plan (core and/or sup-plement), submit MCPS Form 455-18: Statement of Military Service to ERSC.

To apply for military service credit toward your State core pension plan, submit State Form 43: Claim of Retire-ment Credit for Military Service to the Maryland State Retirement Agency.

2. Purchase service credit for time spent employed by the federal government; an out-of-state munici-pality; a nonparticipating Maryland municipality; or (if you are a teacher) a private, parochial, or out-of-state school.

You may purchase a minimum of one month, up to a maximum of 10 years, if you were previously employed by one of the following:

■ Federal government ■ Out-of-state municipality ■ Nonparticipating Maryland municipality

■ Private, parochial, or out-of-state school (teaching only)

This service must be purchased at least 90 days prior to retirement. You pay the full cost of purchased service. The cost depends on age, final salary, and the amount of service you wish to purchase. Typically, purchasing service is expensive.

In addition, previous service may be purchased for periods of the following types of qualified approved leave:

■ Personal illness ■ Professional leave ■ Academic leave ■ Adoption leave ■ Maternity/paternity leave ■ Government-sponsored or subsidized employment

■ Service in a professional or employee organization

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

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

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

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

To purchase service toward your State core pension plan, you must submit State Form 26: Request to Purchase Previous Service to the Maryland State Retirement Agency, as indicated in the form’s instructions.

I N V E S T I N G with a 403(b) or a 457(b) as You Near RetirementAs you approach retirement, you may find that you have fallen short of your investment goals. If you are investing with a 403(b) and/or a 457(b) plan, you may be eligible to save more during your final years before retirement under the IRS Age 50 Catch-up Provision.

Under the catch-up provision, if you reach age 50 or older at any time during the calendar year, then you are eligible to contribute an additional $5,500 annu-ally to your 403(b) and/or 457(b) plan. This raises your total yearly contribution potential to $22,500 for each plan, for a total maximum of $45,000 per calendar year.

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

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M E D I C A R E A N D Y O U R F U T U R E R E T I R E E B E N E F I T SWhen you retire, Medicare becomes an important part of your retiree medical plans.Will you and/or your spouse (or covered dependent) be Medicare-eligible at the time of your retirement? If you plan to enroll in the MCPS retiree health plan, then you and/or your spouse must be enrolled in Medicare Parts A and B as of your retirement date.

As a current MCPS employee, you and/or your covered dependents may have deferred enrollment in Medicare because you were covered by an active employee medical plan. However, as a retiree, you are required to carry Medicare Parts A and B as soon as you are eligible in order to maintain medical benefits through MCPS. After retirement,

Medicare will be your primary medical coverage and your MCPS retiree medical plan will be your secondary medical coverage.

The Employee and Retiree Service Center (ERSC) must receive a copy of your Medicare card with Parts A and B 30 days before your retirement date. That means that if you are Medicare-eligible, you must contact the Social Security Administration at least three months prior to your retire-ment to enroll in Medicare Parts A and B.

Additional information about Medicare enrollment and your MCPS retiree health benefits can be found in the Retiree Benefit Summary.

Who is Medicare-eligible? You are eligible for Medicare if you— ■ are age 65 (or over if you have been employed and covered by an active group health plan), or

■ receive disability benefits from the Social Security Administration and are beginning the 25th month of entitlement, or

■ have End-Stage Renal Disease (ESRD).

I R S A N N O U N C E S New Limits for Defined Contribution PlansThe Internal Revenue Service (IRS) has announced that the 2012 contribution limit for 403(b) and 457(b) plans will be $17,000 for each plan, up from $16,500 in 2011. The Age 50 Catch-up Provision will remain in effect with unchanged limits. Under the provision, any participant who is at least 50 years of age by the end of the calendar year may contribute an additional $5,500 to each plan. If you are an employee who is at least 50 years of age, that means that in 2012 you may contribute a total of $22,500 to each plan.

Download forms now: ■ Download the 403(b) Salary Reduction Agreement to update your 403(b) plan contributions.

■ Download the 457(b) Salary Deferral Agreement to update your 457(b) plan contributions.

Not saving with a 403(b) or 457(b) plan yet? Such defined contribution plans allow you to defer taxation on your current

income by saving for retirement with pre-tax dollars, and deferring taxation on your income and earnings until you withdraw the money. Once you establish a 403(b) and/or 457(b) plan account, you choose how much to contribute, and your contributions are taken directly from your pay and deposited into your retirement savings plan account. You choose where to invest your money from among nine MCPS-approved vendors.

Learn more about 403(b) and 457(b) plans and research the available vendors on our webpage.

D O N ’ T F O R G E T : Submit 2011 FSA Claims By Deadline or Risk Losing Your Balances! If you are one of the many employees who had a flexible spending account (FSA) in 2011, then it is time for you to review your account and make plans to use any remaining balances before March 15, 2012.

Qualifying expenses from your medical and/or dependent care FSAs incurred between January 1, 2011, and March 15, 2012, may be reimbursed from your 2011 plan election. Any remaining 2011 balances will be forfeited. All 2011 plan-year FSA claims must be submitted by April 30, 2012.

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

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S I C K L E AV E : Peace of Mind + Piece of Pocketbook = Your Leave’s True Value For full-time MCPS employees, sick leave is accrued at the rate of one day for each month you are assigned to work. For most 10-month employees, that equals 10 days of sick leave each year. Sure, you know sick leave is a good thing to have. And if you have ever conversed with friends or family members outside of MCPS, or even done more formal research, you also know that MCPS offers a generous amount of sick leave. But do you know the true value of your sick leave?

Peace of MindThe peace of mind that paid sick leave

can bring should not be underestimated. All employees are eligible to use their sick leave for an illness for themselves or for an immediate family member—a child or spouse, for instance, or even a sibling or parent. This type of policy makes the pre-carious act of balancing work and family a little easier by removing the financial worry over how to handle an illness in your family, whether it is routine, like an ear infection, or something more serious that may take several weeks of recovery.

Many employees also choose to take part in their association’s sick leave bank. In return for contributing a set amount of sick leave to the association’s bank, an employee faced with a serious illness can apply to the bank to assist with pay once his/her own sick leave has been exhausted.

In an instance of serious illness, during which you are unable to work for an extended time period, the sick leave bank provides a financial safety net for you and your family. Each association governs its sick leave bank in its own way, and each associa-tion’s bank has its own plan maximums. Contact your association for more details.

To further help you achieve that elusive balance, sick leave can even be used for medical or dental appointments that sim-ply cannot be scheduled during your off-time. All of this combines to help relieve the stress of taking necessary time off to manage your and your family’s health and well-being.

Piece of PocketbookIn addition to the peace of mind that

your sick leave safety net can bring, your sick leave also has monetary value. When you do not need to use your sick leave, you help your coworkers and students who would otherwise miss your contributions if you were not present. However, saving your sick leave not only helps your stu-dents and colleagues, but it helps your finances, too, by increasing the tangible financial value of your leave.

Top 5 ways your sick leave benefits you financially:

1. When you do not use your sick leave, it accumulates from year to year on an

unlimited basis, giving you a real financial incentive to save your leave.

2. When you retire from MCPS, your unused, earned sick leave can help you qualify for up to two years of additional credited service toward retirement. This means a larger future pension.

3. If you retire from MCPS or if you are vested when you resign, you are given a payment for a percentage of the value of your unused, earned sick leave. The payment—either 25 or 30 percent, depending on your situation and association—is made at your final salary rate. What does this mean for you? Sick leave you have earned early in your career is eventually paid out to you at a higher value.

4. Time spent out of work on paid sick leave counts toward retirement ser-vice. To receive credit for unpaid leave (personal illness or child care leave for birth or adoption), you must submit an application form and pay all missed pension contributions plus interest.

5. Members of the Service Employees International Union (SEIU) are rewarded for perfect attendance. If you are a member of SEIU and you do not use any sick leave for one year, you may apply to receive a payment worth one third of your unused, earned sick leave for that year.

10-month employee retiring after 30 years of service with MCPS Final average salary: $80,821.85

Annual pension benefit with no sick leave $41,100.37Annual pension benefit with sick leave (6 months-credit)* $42,070.24Annual difference $ 969.87

That $969.87 grows each year that there is an increased cost-of-living adjustment (COLA). Over 30 years of retirement, with a maximum

3 percent annual COLA, that $929.87 turns into $46,141.96

Total differential during 30 years of retirement $46,141.96PLUS the cash value of sick leave payoff at retirement** + $11,488.68

Total benefit from unused sick leave $57,630.64

Need more proof? Here is an example of how saving

your sick leave can give you extra money in your pocketbook:

In this example, saving sick leave meant an additional $57,630.64 for this employee to use in retirement! Saving your sick leave could be akin to lining your pockets for retirement!

* Assumes 970 hours of sick leave for a 6-month credit

** Sick leave payoff based on final year salary of $82,436 for 970 hours paid at 30 percent

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New Year, N E W I N F O R M AT I O N ? Make Sure Everything Is Up to DateMake sure your employee information is up to date so you can receive important notifications and the beneficiaries for your pension plan and other benefits are in line with your wishes.

Update Your Personal Information ■ To update your address, phone number of record, or other

personal information, please submit MCPS Form 445-1: Change in Personal Information to ERSC.

Update Your Banking InformationIf you have changed bank accounts or wish to enroll in or

change your summer pay savings with Montgomery County Teachers Federal Credit Union (MCT), you now may make your change using direct deposit on Human Resources Online (HRO). When you use HRO to make your direct deposit change, you will receive e-mail confirmations that allow you to track the progress of your request.

■ Log into HRO If you are unable to submit your change using HRO, you may instead submit MCPS Form 280-31: Direct Deposit Authorization.

Update Your BeneficiariesWhile ERSC is the first stop for much of your beneficiary

paperwork, we are not able to report or confirm the beneficiaries on your existing plans. If your decisions are in question, submit a new beneficiary form to be certain that your beneficiary records are in line with your wishes.

To change your basic employee term life insurance beneficiaries:

■ Submit MCPS Form 455-20: Employee Benefit Plan Enrollment.

Indicate your desire to change your beneficiaries in Section II and indicate your changes in Section VII of this form.

To change your optional employee life insurance beneficiaries:

■ Submit MCPS Form 450-1: Optional Employee Term Life Insurance.

Indicate your desire to change your beneficiaries in Part II and indicate your changes in Part III.

To change your 403(b) or 457(b) plan beneficiaries: ■ Contact your vendor.

If you do not know how to contact your vendor: ■ Visit http://mcps.yourplan.info ■ Click on the “Vendors” tab.

Select your vendor from the list to see information on updating your beneficiaries.

To change your pension plan beneficiaries: ■ MCPS Core and/or Supplement pension plan:

Submit MCPS Form 455-5: Designation of Beneficiary/Beneficiaries ■ State Retirement and Pension System of Maryland:

Submit State Form MSR004.

S TA F F M E M B E R S C E L E B R AT E the Success of MCPS on the Move and Work It CircuitThe MCPS on the Move and Work It Circuit fitness competitions, sponsored by the MCPS employee wellness program Well Aware, were a resounding success. The competitions, which ran for 12 weeks and ended on December 23, provided incentives for employees across MCPS to increase their physical activity. Employees participated from across the organization and across the county—offices, schools, and all MCPS locations. They have walked, run, biked, and Zumbaed their way through the competitions as individuals and as members of teams.

Well Aware held an awards ceremony to celebrate staff successes and award prizes on Tuesday, January 24, 2012, at Rockville High School. In addition to grand prizes, overall prizes for MCPS on the Move and Spirit Award winners from across the organization were honored.

Maria Corredor, who won the overall MCPS on the Move prize for highest individual activity, said, “It was really nice to hear the different experiences from the contestants at the ceremony. It was a great way to create camaraderie among coworkers, too.”

Well Aware will offer a new fitness challenge this spring. The challenge, called Walk This Way, will aim to get staff members walking 10,000 steps a day. Watch the wellness website to learn more.

For Your Benefit

Larry A. BowersChief Operating Officer

Susanne G. DeGrabaChief Financial Officer

Richard C. Johnstone

Director, Benefits Strategy and Vendor Relations

Jessica A. ArnoldCommunications Specialist and Editor

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

45 W. Gude Drive, Suite 1200 Rockville, Maryland 20850

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

1067.12 • EDITORIAL, GRAPHICS & PUBLISHING SERVICES

DIRECT DEPOSIT on Human Resources Online: Making Direct Deposit Even More ConvenientDirect deposit makes payday easy—there is no need to keep track of a paper check or run to the bank to cash or deposit your pay. Your money is simply deposited to the financial institution of your choice on payday.

Now direct deposit is even easier! You now are able to sign up for direct deposit or make a change to your account(s) any time by logging into Human Resources Online (HRO) with your MCPS username and password. Once logged into HRO, you will see your current direct deposit infor-mation, and you can simply follow the on-screen instructions to enroll in or make changes to your account(s). You will receive confirmations at each step of the process to ensure you have entered your information correctly.

You also will receive confirmation e-mails to your MCPS Outlook account that you can verify and save for your records. These e-mails not only will confirm your direct deposit choices, but also will inform you of how long the change will take to pro-cess. No more submitting paper forms, sending in a voided check, and waiting to see what happens. With online direct deposit, you have the convenience of updat-ing your information any time and staying informed each step of the way.

Try direct deposit on HRO today! What about prenotification?

If you have made a change to your direct deposit account(s) in the past, then

you may be familiar with the term “preno-tification.” Prenotification is a term for the process the payroll system uses to verify that an account at a financial institution exists and can receive a direct deposit.

While the online feature changes the way you submit your direct deposit infor-mation, it does not change the length of time it takes to complete prenotification. When you make a change to your direct deposit on HRO, it will take up to three pay periods for the change to take effect.

■ There are two steps to prenotification:1. On the next pay date, the MCPS pay-

roll system sends a “prenote,” a test deposit of zero dollars, to the routing number and account number you have provided. This zero dollar deposit allows MCPS to verify that the account you have provided is func-tional and will accept funds. For this pay date, you will receive a paper check at your location. Substitute teachers, temporary employees, and certain members of the Department of Transportation will receive a paper check at their home address.

2. If the test deposit is accepted, your pay will be deposited directly to that account on the following pay date. If there is a problem with the test deposit, a staff member from the Employee and Retiree Service Center will contact you. You will know that your account has completed prenoti-fication successfully when your pay is

deposited directly to your new account. This entire process can take up to three pay periods.

You will receive two e-mail confirma-tions: one when your direct deposit infor-mation is received and one when the prenotification process begins. These e-mails will assist you in understanding the process and tracking the progress of your change or enrollment.

Need additional help with direct deposit on HRO?For help logging into HRO: ■ For assistance with your MCPS pass-word, visit myID.

■ For assistance with your MCPS user-name or other technical trouble, call the MCPS Help Desk at 301-517-5800.

■ For help using direct deposit on HRO, click here for the Help Guide, a print-able PDF with step-by-step instructions for using the online feature.

For additional information about direct deposit, visit the Direct Deposit webpage.

New Look for MCPS Form 430-1MCPS Form 430-1: Leave Request, which employees must submit to take leave for longer than five days, has been significantly changed. The form is now divided into clearer sections to help guide employees through the information they need to supply about taking leave and additional documents they may need to submit with their leave request.

With the redesign of the form, essential information and actions are now located on both sides of the form. If you have a need to submit this form, be sure you com-plete and submit both sides.

Want to know more? You can find information about taking leave on the ERSC Leave Information

webpage.

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