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s

353.005

PlOsrs

2002



MONTANA



SHERIFFS'

RETIREMENT SYSTEM

MEMBER HANDBOOK




JUL 2 4 2002



MONTANA STATE LIBRARY

1515 E. 6th AVE.
HELENA, MONTANA 59520

March 2002



PUBLIC EMPLOYEES' REURgMENT BOARD



MONTANA STATE LIBRARY



3 0864 1001 5329 8



state of Montana

Judy Martz, Governor

Public Employees' Retirement Board

Term
Name Statutoty Designation Location Expires

(§2-15-1009, MCA)

Terry Teichrow Active Public Employee Helena 3/31/05

President

Carole Carey Active Public Employee Ekalaka 3/31/02

Vice President

Robert Griffith At Large Helena 3/31/03

Jay Klawon Investment Management Hamilton 3/31/04

Experience

Carol Lambert At Large Hammond 3/31/06

TroyW. McGee PERS Member Helena 3/31/03

Jean Thompson Active Public Employee Billings 3/31/04

Executive Officers

Mike O'Connor Executive Director

Keith McCallum Deputy Executive Director

Kelly Jenkins General Counsel

Melanie Symons Legal Counsel

Kim Flatow Member Service Bureau Chief

Roxanne Minnehan Fiscal Service Bureau Chief

Kathy Samson DC Plans and Education Services Bureau Chief

Lucie Willson Administrative Officer




Mission Statement: The Montana Public Em-
ployee Retirement Administration (MPERA)
will efficiently provide quality benefits, educa-
tion and service to help our plan members and
beneficiaries achieve a quality retirement.



1



Contacting the MPERA

If you have any questions about the SRS, call or e-mail us or visit
our website.

Helena Office

Telephone Mailing Address O/Sce Address

1-877-275-7372 P.O. Box 200131 100 North Park Ave.

406-444-3154 Helena MT 59620-0131 Helena MT 59620

E-Mail

In most cases, if you know the name of the person you are e-
mailing, use their first initial and their last name plus @state.mt.us.
For example, Executive Director Mike O'Connor's address is mo-
[email protected]

If you don't know who to contact, e-mail our "front desk" and
we'U forward your question to the right person: [email protected]
mt.us

Web Site

For updated information and to view MPERA newsletters and
other publications visit us on the web at http://www.
discoveringmontana.com/doa/perb/perb.htm



Permission is granted to reproduce, copy or duplicate the in-
formation in this book, provided credit is given to the
MPERA.



NOTES



TABLE OF CONTENTS

Preface 6

Introduction 7



SECTION I: MEMBERSHIP



. Membership Enrollment 9

- Membership Cards

- Optional Membership

- Working Retiree Membership

- Exclusion from Membership

2. Contributions 12

- Member Contributions

- Employer Contributions

- Refund of Contributions

3. Service •••0igi4fzed-bytheHTTternet-Archiv«' ''^

- Membership Secyjce .^, , ,. ,

- Service CredlP 2010 With funding from

- Part-time ServMaontana State Library

- Personal Statement

- Purchase of Service



Section II: Benefits



1. Qualifying for Benefits 21

- Vested Members

- Active Members

- Inactive Vested Members

- Non-Vested Members

- City-County Consolidation

- Working Retiree

2. Service Retirement 24

- Normal Service Retirement

- Early Service Retirement



http://www.archive.org/det^ls/montanasheriffsr2002mont



Table of Contents (Continued)

3. Disability Retirement 26

- Disability Benefit

- Disability Reviews

- Disability Benefit Cancellation



Section III: Payment Options |

1. Option 1 27

2. Option 2 28

3. Option 3 28

4. Option 4 29

5. Changes to Options 30

6. Sample Calculations 31



Section IV: Additional Information



1



1. Death Benefits 34

- Beneficiaries

- Death Benefit Claim - Active or Inactive Member

- Account Balance - Retired Member

- Death Prior to Retirement

2. Benefit Increases 36

- GABA

- Eligibility for GABA Benefits

- Effective Date of GABA Benefits

3. Taxes on Benefits 38

- Tax Statements

- Taxes on Refunds

4. Assignment of Benefits 40

- Family Law Order

5. For More Information 41

Glossary of Terms 42



Preface

This Sheriffs' Retirement System Member Handbook is a general summary
of the benefits provided by the Montana Sheriffs' Retirement System
(SRS). It is intended to give you a general idea of your benefits and to
acquaint you with the SRS. Every effort has been made to ensure the
contents agree with the law and rules. The law and its interpretation
can change, so this handbook may be out-of-date a few years after it is
published. This handbook is not a final source of the law and rules. IT
SHOULD NOT BE TAKEN AS FINAL LEGAL AUTHORITY.
Information in this handbook is based on 2001 law. Benefits are
based on the law in effect at the time of your termination from
employment; thus, some information found here may not apply in
specific cases. If this handbook differs with law or rules as the Board
interprets them, the law or rules will apply. This handbook replaces all
previous SRS member handbooks.

Montana Code

The law govermng the SRS may be found in Tide 19, Chapters 2 and
7, Montana Code Annotated (MCA). MCA is available on line at:
http://www.leg.state.mt.us/services/legal/laws.htm. References to
the pertinent sections of MCA and Administrative Rules of Montana
(ARM) are provided in parenthesis throughout this publication.

Overview

• You are eligible to retire and receive a service retirement benefit if
you have completed 20 years of membership service at any age.

• The SRS provides disability retirement benefits and survivor bene-
fits, if eligible.

• You and your employer both contribute toward your future retire-
ment benefits.

• You may withdraw only your contributions plus interest if you
leave SRS-covered employment before retirement.

• If you withdraw your contributions before retirement, you lose
your right to any fumre retirement benefit.



I



Introduction

Retirement Security for our Members Since 1974

The Sheriffs' Retirement System (SRS) is a public pension plan for
all Montana sheriffs hired after July 1, 1974 and Department of
Justice investigators hired after July 1, 1993. In 1974, the Legislature
created the SRS to grant a retirement, disability, or death benefit to
plan members and their beneficiaries. As of June 30, 2001,
membership of the SRS consisted of the following:

SRS Membership

Number of participating employers 56

Active plan members 623

Inactive plan members entided to
but not yet receiving benefits or a refund:

Vested 26

Non-vested 147

Retirees and beneficiaries receiving benefits:

Service Retirements 218

Disability Retirements 30

Survivor Benefits 14

The Public Employees' Retirement Board (PERB) is an
independent, seven-member board, appointed by the Governor to
administer the SRS and seven other retirement systems. The Mon-
tana Public Employee Retirement Administration (MPERA) does
the day-to-day work. This handbook uses the terms "we," "us," the
MPERA, and Board interchangeably.

Money that you pay into the SRS earns interest and helps pay for
your benefits. At the MPERA, we keep track of your money in your
own account and credit your account with interest. We combine
the funds from all accounts in a trust fund, which the Board of
Investments invests. Income earned from investing the trust fund



goes back into the fund. Only the Board may authorize payment
from the trust fund. Current law limits payments to benefits and
refunds for members or their survivors. In addition, the Board
must pay administrative expenses from the investment earnings.
(§19-2-408 and 19-2-505, MCA)

Every two years, an actuary must evaluate the trust fund's
capability to pay the benefits earned by members. Based on the
fund's strength and the actuary's advice, the Board may initiate po-
tential increases in benefits. Benefits are set by law, and only the
Legislature may change them. Before each legislative session, the
Board will review the sufficiency of the benefits and advise the
Legislature. (§19-2-405, MCA)

SRS is a defined benefit retirement system. The benefits you
receive at retirement are based on your years of service and your
Highest Average Compensation (HA.C) rather than the amount of
money you contribute and the interest which accrues to your
account.



SECTION I: MEMBERSHIP



J!



Membership is mandatory for an elected or appointed county
sheriff or undersheriff; an appointed, lawfully trained, appro-
priately salaried, and regularly acting deputy sheriff; and a criminal
or gambling investigator of the Department of Justice. (§ 19-7-301,
MCA)

Membership Enrollment

Membership enrollment is required for aU SRS-covered jobs.
Information on enrollment, working retiree membership, and
exclusion from membership follows.

Membership Cards

New employees must complete a membership card upon starting
work in a job covered by the SRS. Your payroll clerk should
provide you with this card on your first day of work. Complete the
card and return it to the clerk who will send it to us. Membership
may not be discontinued until employment as a sheriff or
investigator is terminated. (ARM 2.43.402)

The MPERA wiU not pay a benefit or refund unless you have a
membership card on file with us. A membership card is a vital
record; you must keep it up-to-date. Update the card whenever
any of the information on the card changes. To update your
information, complete a new card and give it to your payroU clerk.
The payroU clerk must send it to us. Marriage, divorce, births of
children, and death of a beneficiary are reasons to update your
card.

Optional Membership

A sheriff who was a member of the Public Employees'
Retirement System (PERS) on July 1, 1974, or an investigator who



was a member of the PERS on July 1, 1993, has the option to
remain with the PERS or may join the SRS at any time before re-
tirement.

A member of the PERS who begins employment in a SRS-covered
position on or after March 21, 2001, may remain in the PERS or
may become a member of the SRS. This election must be made
within 30 days after beginning employment in the SRS-eligible po-
sition. (§19-7-301, MCA)

A member of the Municipal Police Officers' Retirement System
(MPORS) who begins employment in a SRS-covered position fol-
lowing a city-county consolidation or after March 21, 2001, may
remain in the MPORS or may become a member of the SRS. This
election must be made within 30 days after beginning employment
in the SRS-eligible position. (§ 19-7-801, MCA)



Working Retiree Membership

A retired member may work for a limited time in a SRS-covered
position without becoming an active member. Current law
imposes limits on working retirees. Tf they exceed the limits, their
benefit may be reduced. Every month each employer must report
all working retirees to the MPERA. The report must account for
each retiree's total paid hours and total wages. Retirees must also
report the same information; their signature on the employer's
report will serve as their report. See page 23 for more details
about working retirees. (§ 19-7-1101, MCA)

NOTE :

A retiree must have been retired for at least 30 days and

received one benefit check before accepting a SRS-covered

job.

Working retirees may elect to end retirement and become active
members. To become active members, they need to complete a
membership card and have their payroll clerk send the card to us.

10



upon notification, we will stop paying a benefit to a retired
member who becomes an active member. When these members
are ready to retire again, they must notify the MPERA and we will
calculate a new benefit inclusive of the additional service.

Exclusion from Membership

Only those professional law enforcement officers listed on page 9
may become members of the SRS. Other sheriffs department staff
members are not eligible for membership in SRS. Jailers, matrons,
dispatchers, communications officers, clerks, janitors, inmates, and
special deputy sheriffs are not eligible to become members of the
SRS.



11



2. Contributions

Contributions to the SRS come from you and your employer. The
following is an explanation of contributions to the SRS and what is
expected of you and your employer.

Member Contributions

AU members must pay part of their gross pay to the SRS. The
current contribution rate is 9.245%. Your employer will withhold
this money from your gross pay and send it to us. We will credit
your contribution to your individual account. (§ 19-7-403, MCA)

Interest : Your SRS account earns interest and we add it to your
account each month. Currently, the interest rate is 5%,
compounded annually. Each year the Board sets the rate based on
trends and interest rates earned by short term U.S. Treasury notes
and bills.

The interest credited to your account will not affect the
amount of your monthly retirement benefit. The monthly
benefit is set by a statutory formula (see page 24). If you end your
SRS-covered employment and leave your money on account, it
will continue to collect interest. If you take a lump sum refund in-
stead of a monthly benefit, you will also receive the interest cred-
ited to your account.

Tax-Deferred : Since July 1985, the money you contribute to the
SRS is tax-deferred. The interest your account earns has always
been tax-deferred. This means you don't pay state and federal
taxes until you receive the money as a benefit or refund. Any
money you paid to the SRS before July 1985 was taxed. In other
words, you paid the taxes before you paid the money to the SRS.
If you have taxed money in your account when you retire or take a
lump sum refund, then some of your refund or monthly benefit
wiU be tax exempt.



12



Purchase of Service: To purchase refunded or other types of
optional service, you may contribute amounts beyond your regular
contributions. These additional payments are tax-deferred if you
authorize payment by payroll deduction contract. If these
contributions are not made through payroll deduction, they are not
tax-deferred. You will receive interest on service purchase
payments at the same rate you receive interest on your regular
contributions. All interest paid to a member's account is tax-
deferred. (§19-2-704, MCA)

Employer Contributions

Your employer also contributes to the trust fund. Each month the
employer contributes 9.535% of their total SRS-covered payroll to
the pension trust fund. Employer contributions are not refundable
and provide "pooled" funds for retirement, disability, and death
benefits. (§ 19-7-404, MCA)

Refund of Contributions

Vested members who end SRS-covered employment may leave
their money on account; it will continue to earn interest. Alterna-
tively, they may receive a refund of the money in their account.

To request a refund, you must complete an application, which
your employer will supply. The application has two parts, one for
the member, and one for the employer. You must complete the
member section, then give it to your employer. Your employer will
complete the application and send it to us. (§19-2-602, MCA)

NOTE:

If you have been inactive for more than 3 months, you may
contact us direcdy to apply for a refund.

Ptocessing Refund : We cannot process your refund before your
employer sends us the application and the final payroll
information. This process may take 6 to 8 weeks from the date you

13



get your last paycheck. Extending your last day of work into a new
pay period or month may increase the processing time.

If, after receiving a refund, you accept a SRS-covered job, you will
again become a member. We will consider you a new member
without credit for the refunded service. You may purchase the
refunded service to reinstate it for credit. For more details see
Purchase of Service, on page 18. (§19-2-603, MCA)

If you are not a vested member (less than 5 years of
membership service) at the time you terminate service, and you
have less than $5,000 in accumulated contributions (your contribu-
tions plus interest), you must request a lump sum refund. You may
also make a written application to have your eligible contributions
rolled over to a qualified retirement plan. Inactive non-vested
members who have more than $5,000 in accumulated contribu-
tions may leave their money on account and it will continue to
earn interest. However, they are eligible only for a refund of the
member's accumulated contributions and will have no right to any
form of SRS benefit. (§ 19-2-602, MCA )

NOTE :

If you receive your refund direcdy, the IRS requires us to withhold
20% for tax purposes. The IRS may also charge you an additional
10% penalty for early withdrawal. For more information, see
Taxes on Refunds, on page 38.



14



I



3. Service

The amount of time you work and contribute to the SRS affects
the amount of your retirement benefit. The monthly benefit you
receive will depend on the number of years you work in a SRS-
covered job, whether you work fuU- or part-time, and your
purchase of additional service.

Membership Service

We use membership service to determine if you are eligible for
vesting, retirement, or other SRS benefits. You earn one month
membership service for any month you contribute to the SRS, re-
gardless of the number of hours you work. You earn membership
service for all periods of service during which you make contribu-
tions to the system.

If eligible, you may purchase service that wiU count as membership
service. (See Purchase of Service, on page 18.) Retirees may not
earn membership service, nor may they buy service. Your total
retirement membership service may not match service for other
employee benefits, such as the rate at which you earn annual leave.
Service for different benefits may vary because the laws and rules
that apply are different. (§19-2-303, 19-2-702, MCA)

Vesting

When you have five years of membership service, you have a
"vested" right to a retirement benefit if you meet the other eligibil-
ity requirements. (See page 24, Service Retirement.) Even if your
SRS-covered employment ends, you have the right to a future
benefit, when eligible, if you are a vested member. If you withdraw
your contributions, you give up your right to retirement benefits.

Example: A member becomes vested after earning five member-
ship service years (60 membership service months). If you leave
SRS-covered employment at age 37 with nine membership service

15



years, and you do not withdraw your contributions, you may re-
ceive a monthly benefit when you are eligible for retirement.

Service Credit

Your service credit affects the amount of your retirement benefit.
You earn one month service credit for each month of full-time
service. Full-time service means your employer paid you for at
least 160 hours of work during that month. You may not get credit
for more than one month even if you work more than 1 60 hours
during a month. If you work less than 160 hours during any
month, you will receive proportional service credit. For example, if
you worked 80 hours during a given month, you would earn 0.5
months of service credit. However, for that same month you will
earn one month of membership service. (§19-2-701, MCA)

Your service credit years at retirement will be calculated by divid-
ing service credit months by 12.

Example: Suppose you were hired April 1, 1982 and you work
full-time until June 30, 2002, when you will retire. Your months of
service credit would be calculated as follows:



Period






Months


April 1982 - December 1982




9.0


January 1983 -


■ December 2001


■L


228.0 ||[|^m


January 2002


- June 2002




6.0


TOTAL






243.0



243 months divided by 12 months = 20.25 years of service credit
20.25 would be the factor used to calculate your service retirement
benefit, (see page 24)



16



Part-time Service

Upon retirement, the MPERA will adjust either your service credit
or Highest Average Compensation (HAC) if you work part-time.
We will adjust one or the other to prevent a double reduction of
your benefit. If you retire with a full-time salary, then we will not
adjust your part-time service credits to calculate your benefit. You
will not see the adjustment until retirement.

Personal Statement

Each August the MPERA will send you a statement with
information concerning your retirement account. Carefully review
the statement to verify that all the information is correct. If you
have corrections or changes to any of the personal information or
questions concerning account information as it appears in your
statement, please submit them to the MPERA in writing.

If you have part-time service, the total service reported in your
statement may seem wrong. The service reflects the service
reported by your employer. When your employer reports you
worked less than 160 hours, the system gives you less than one
month of service credit. As noted above, we will make adjustments
for part-time service when you retire. We adjust your service to
prevent a double reduction of your benefit for part-time service.
However, if you work fuU-time somewhere else, then your HAC
may be based on that fuU-time service. When your HAC is based
on full-time service, we don't adjust your part-time service.

NOTE :

We wiU correct mistakes in your account or service when we
identify them, or at least before your benefit is final. Mistakes will
not bind the MPERA to pay a benefit for which you are not
eligible. If you think the service credit on your statement is wrong,
please inform us in writing. Provide specific information, including
your current address.



17



Purchase of Service

Eligible members may purchase various types of retirement
ser\4ce. Contact us for complete details about your eligibility. A
written request to initiate the cost statement is required.
More detailed information follows.

Request a Cost Statement : To purchase service, you must
request a cost statement. You must first write to us and provide
the following information: your full name (including any
former names), a current address, Social Security Number,
and the type of service you wish to purchase. You should also
send us any documents that relate to the service. Your former
employer can usually provide you copies of relevant documents.
We will review the request and send you a cost statement for pur-
chasing any service for which you are eligible. (ARM 2.43.428)

You must pay the lump-sum cost or start monthly payments
within 30 days. After 30 days, the cost statement is not valid and
you must contact us for an updated cost statement. Only the
MPERA can give you a cost statement. A cost statement from any
other source may not be used.

Payment for Purchase : You may pay for a service purchase in
one lump-sum, or you may make monthly payments. Active
members can make monthly payments by tax-deferred payroll
deduction. Inactive vested members, members not paid monthly,
or members who wish to self-pay, may send payments direcdy to
the MPERA. (These payments are not tax-deferred.) If you fail to
make a regular monthly payment, you give up the right to make
any more payments. Your service purchase wiU be prorated.

We will track your monthly payments in an additional contribution
account until you complete the service purchase contract. Then we
will transfer the money to your regular account and credit your
account with the service. (§ 19-2-704, MCA)



Vested members may purchase most types of service at any time
before retirement. Be aware that any delay may increase the cost
because of added interest or higher salaries. Members must
complete all service purchases before they retire.

Types of Service Which May Be Purchased :

1. Refund: If you received a refund for previous service, you may
buy this refunded service. Refunded service means you terminated
your job, and the MPERA paid you the contributions and interest
in your account. To buy the refund, you must repay the
contributions and interest you received as a refund. You must also
pay the interest the refund would have earned if you had left it on
deposit. (§ 19-2-602, MCA, and ARM 2.43.420 and 2.43.422 )

2. Montana Public Service: Members may also purchase
service refunded from other Montana statewide retirement
systems. If the member is an inactive member of another system,
the service and contributions may be transferred direcdy into the
SRS. Contact us in writing for eligibility and a cost statement. (§ 19-
7-802, MCA; ARM 2.43.420 and 2.43.422)

3. Other Montana Public Service: A member may purchase
service credit for other fuU-time pubHc service performed for the
state or a political subdivision, if the service is not credited in any
other retirement system. (§ 19-7-802, MCA)


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