The Oregon PERS Retirement Application for OPSRP Members
Navigating the Oregon Public Employees Retirement System (PERS) can be complex. it’s common for clients to reach out once they receive the thick manila envelope and ask for help. In this guide, we’ll break down the Oregon PERS Retirement Application for OPSRP Members step by step to make the process as simple as possible. I’ll walk you through condensing the contents of that envelope into just a few pages, ensuring a smooth submission.
This blog is for OPSRP Members ready to complete their retirement application, who are vested in the pension portion of their benefit, and who have thoroughly reviewed and decided upon their pension choice and what to do with the Individual Account Program (IAP). Feel free to read on or click below to watch a video where I walk through it.
What’s inside the Oregon PERS Retirement Application Mailing?
When you receive your Oregon PERS retirement application packet, you’ll find a plethora of documents. One of the thickest documents is the Pre-Retirement Guide, which can be a valuable resource if you’re still deciding on the type of pension or what to do with your Individual Account Program (IAP).
Pre-Retirement Guide
The Pre-Retirement Guide is a comprehensive document that provides insight into the various pension options available to you as an OPSRP member. It’s essential to thoroughly review this guide to make informed decisions about your retirement benefits. If you still have questions about how to claim your pension or what to do with your IAP, I recommend checking out my most popular blog post to date, “How to Read Your Oregon PERS Benefit Estimate,” where I walk through these topics in detail.
Everything Else
I’ll reference the other items in there through the lens of the Oregon PERS Retirement Application, because context is everything!
The Oregon PERS Retirement Application Process
Now, let’s delve into completing the Oregon PERS Retirement Application.
Page 1: Basic information, receipt of documents
The first section of the application requires you to fill out your basic information:
- Name: Ensure you’re using your legal name. If your legal last name is hyphenated, remember to use it where necessary.
- PERS ID: This information is optional, but helps expedite processing.
- Social Security Number: Even though it may feel uncomfortable, it’s crucial to fill this out, as PERS requires it.
- Effective Retirement Date: Specify the month and year.
- Citizenship Information: Pretty straightforward.
- Receipt of the Federal Tax Information Disclosure: This document summarizes the tax consequences of your decision regarding your IAP and pension amount. PERS wants to affirm you’ve received this.
Page 2: Pension option, beneficiary, verification, notarization
Pension Choice
Oregon PERS OPSRP members have five pension choices available. I highly recommend reviewing these options with your financial advisor before making a decision:
- Pension Option: Select the appropriate option for you.
- Naming a Beneficiary: Regardless of your pension choice, name a beneficiary.
Verification of Age
You need to make a copy of your driver’s license for this section. If needed, also make a copy of your spouse’s ID.
Notary Section
Heed the bold text: “Do not complete any portion of this section until you are with the notary.” If you’re working with a financial advisor, they may have a notary on staff. If not, you’ll need to head to your bank or local PO Box office.
Page 3: IAP options
Six different IAP options are available to you: a one-time rollover and five other installment choices. This is yet another space to collaborate with your financial advisor and CPA before finalizing a decision.
To make a decision here, I often start by helping my clients think through their recurring retirement income – their OPSRP pension and Social Security. We hold that up against what we think their cash flow needs will be in retirement, and their other assets. In the beginning, knowing how much money you may need in retirement can be challenging. To this end, most of my clients decide that they want choices over when and how to take out (and therefore, be taxed) on the portion of their money in the IAP rather than committing to a third source of fixed income. For them, rolling that over into another qualified (pre-tax) account.
- One-Time Lump Sum Distribution: This option allows you to distribute or roll over 100% of your account balance.
- 5-year Installment Distribution: This option allows you to distribute or roll over your account balance over five years.
- 10-year, 15-year, 20-year, Anticipated Lifespan Installment Distribution: These are only if you want to distribute your IAP account, not eligible to roll over.
Remember, the IAP money was saved pre-tax; if distributed, it will count toward ordinary income on your tax return.
Section L
For you’re one who chooses, as most of my clients do, to roll your IAP over into another qualified plan, you’ll want to part 2 of section L. That will give you the option to roll over your IAP into a Traditional IRA (nontaxable event), a Roth IRA (taxable event), your Oregon Savings Growth Plan (nontaxable event), or another deferred comp/employer plan (nontaxable event). If you choose to roll over with another employer plan, you’ll have to also complete the IAP Direct Transfer Rollover form, one of the additional pieces of paperwork you received.
If you are rolling over, you’ll need to guide PERS on how to make the check for your IAP payable. Often, this will be the name of your custodian, FBO, your name, and the account number. E.g., Charles Schwab, FBO Your Name, Acct #123456789. That check will be mailed to your address about 120 days after your effective retirement date, and you’ll need to forward it along to your custodian once received.
W4R Lump Sum Withholding
If you choose to take your IAP as a lump sum, you’ll need to fill out this form. It’s important to note that this option usually incurs significant tax consequences, which is one reason why I don’t see many clients choose this option.
Page 3: Beneficiary designations for your IAP
If you’re rolling over your IAP as discussed above, this will kick in just in the period of time between your completing this application and when the check is cut (usually within 120 days as mentioned above). If you choose one of the installment options; obviously, this information will be on file for longer and therefore, more useful.
Either way, you need to specify the beneficiary designation you want.
Standard beneficiary designation:
- Your spouse, if legally married at the time of death. If not married, then to
- Your child* or children in equal shares. If any of your children are deceased, their portion is equally divided between their children who are alive at the time of your death. If all of your children predecease you, the benefit will be awarded to your grandchildren living at the time of your death, in equal shares. If no children or grandchildren survive you, then to
- Your mother and father in equal shares, or to the survivor. If neither survives you, then to
- Your brothers and sisters in equal shares, and the share of any brother or sister who does not survive you, to their children living at the time of your death in equal shares. If none of your brothers or sisters survive you, to the children of your brothers and sisters living at the time of your death in equal shares. If neither your siblings nor their children survive you, then to
- Your estate *Natural-born and adopted children are considered “children” even if you selected the standard designation before or after their adoption or birth. If your children are adopted by someone else, they are not considered your “children” under the standard designation. If you wish to name the adopted-out children as your beneficiary, use the specific designation part of this form.*Direct excerpt from the Oregon Public Service Retirement Plan (OPSRP) Pension Program and Individual Account Program (IAP) Retirement Application.
Specific beneficiary designation:
If you don’t want this flow, you’ll want to click ‘specific’ and complete the fields as requested.
A signature on the bottom of this page, and you’ve completed the application. But, you’re not done yet. There are a few more forms that you may need to complete.
Additional Forms
Though the application itself is condensed to just four pages, there are a couple of other documents that may need to be sent along with it:
1. Domestic Authorization Agreement for Automatic Deposits (everyone needs to complete)
This form determines how your pension is distributed. It sets up a line of communication between PERS and your bank to receive the deposit. You’ll need to attach a voided check if the transfer is going into a checking account and requires your signature (and your spouse’s, if applicable).
2. Federal and State Withholding (everyone needs to complete)
This form helps PERS understand how much tax withholding you’d like applied to your OPSRP pension. I often see clients choose to have PERS withhold the standard amount, then fine-tune tax payments with their advisor/CPA through estimated quarterly payments, or adjusting that withholding over time. Again, taxes and cash flow in the first few years of retirement is often a moving target.
3. Direct Transfer Rollover Acceptance Form (only if rolling over to another employer plan)
If you’re rolling your IAP over to another employer plan (other than Oregon Savings Growth Plan), you’ll need to have that plan complete this form.
4. W-4R OPSRP Lump Sum Withholding (only if foregoing lifetime pension and taking a lump sum of your OPSRP)
This form is only used if you plan to forego your OPSRP pension altogether and instead take a lump sum.
Conclusion
Completing your Oregon PERS Retirement Application might seem daunting, especially with the thick packet you receive. I hope this post helps you navigate it easily, highlighting the most important forms to ensure a smooth transition to retirement.
If you’re finding it challenging to navigate the complexities of the Oregon PERS retirement application, remember I’m here to help. As a CFP® and CTS™ with over a decade of helping client families navigate Oregon PERS, I can assist you in making informed decisions regarding your retirement. Let’s work together to ensure you make the best choices for your unique situation.
Your retirement is an essential milestone in your life, and it’s crucial to ensure everything is in order. Following the steps outlined in this guide, you can confidently complete your Oregon PERS Retirement Application.