Frequently Asked Questions
- What is a Partial Lump Sum (PLS) Payment?
- Am I eligible to choose Partial Lump Sum (PLS)?
- How much can I take as a Partial Lump Sum (PLS) payment?
- How do I choose a Partial Lump Sum (PLS)?
- How will choosing the Partial Lump Sum (PLS) affect my monthly benefit?
- How will choosing a Partial Lump Sum (PLS) affect any future benefit increases?
- How is a Partial Lump Sum (PLS) payment made?
- Is a Partial Lump Sum (PLS) payment taxable?
- Can I roll the payment over to a Roth Individual Retirement Account (IRA)?
- What are the tax consequences of a direct rollover to a Roth Individual Retirement Account (IRA)?
- What are the tax consequences of a direct rollover to a traditional Individual Retirement Account (IRA) or other qualified retirement plan?
- If I file for both a service retirement and a disability retirement, can I still choose a Partial Lump Sum (PLS) payment?
- If I retired under a service retirement and received a Partial Lump Sum (PLS) payment, can I later convert my benefit to a disability retirement?
- I’m divorced and have a Domestic Relations Order on file. Am I still eligible for Partial Lump Sum (PLS)?
- How can I decide if the Partial Lump Sum (PLS) is right for me?
- How can I get more information?
At retirement, eligible Police and Fire Retirement System (PFRS) and Employees’ Retirement System (ERS) members can choose to receive a one-time PLS payment. If you choose this option, your continuing lifetime monthly benefit will be reduced.
Police and Fire Retirement System (PFRS) members must retire after April 1, 2008. Employees’ Retirement System (ERS) members must be employed as a sheriff, undersheriff, deputy sheriff or county correction officer, with a county employer that has adopted a resolution to provide this option to its eligible employees.
In addition, ERS and PFRS members must:
- Be in a plan that allows for retirement after completing 20- or 25-years of creditable service;
- Retire under a service retirement;
- Have been eligible to retire for at least one year prior to your date of retirement.
A PLS payment is a percentage of the actuarial value of your retirement benefit at the time you retire. The percentage amounts you can choose from depend on when you retire. The chart below outlines the various percentages available to you based on the number of years you have been eligible to retire.
Years You’ve Been Eligible to Retire Available PLS Payment Options* *A percentage of the value of your retirement benefit. 1 5% 2 5 or 10% 3 5, 10 or 15% 4 5, 10, 15 or 20% 5 or more 5, 10, 15, 20 or 25%
If you are eligible for PLS, when you file for retirement, we will send you a special option election form. You can use this form to choose both the PLS and the option you want for your continuing lifetime monthly benefit. You can choose from any of the standard options for your monthly benefit.
By choosing a PLS, you will receive a reduced lifetime monthly benefit. The reduction is based on the amount of your PLS payment. Your Single Life Allowance will be reduced by the same percentage as the PLS option you have chosen. If you choose a different option, that option amount will be calculated based on your reduced Single Life Allowance.
Future cost-of-living adjustments (COLAs) will be based on the amount of your reduced benefit. The PLS payment is excluded from the COLA calculation.
A PLS distribution is made as a single payment when we finalize your retirement benefit.
Yes, it is subject to federal income tax. If you choose to have your PLS payment made directly to you, we will withhold 20 percent of the taxable amount for federal income tax. If you are less than 50 years old for Police and Fire Retirement System (PFRS) members, or 55 years old for Employees’ Retirement System (ERS) members, at the end of the calendar year in which payment is made, the payment may be subject to an additional tax of 10 percent for early distribution from a qualified retirement plan.
You can defer paying taxes if you roll the payment over to an eligible retirement account, like a traditional Individual Retirement Account (IRA) or qualified plan. For more information, please contact a tax consultant or visit the Internal Revenue Service website.
Yes. A direct rollover to a Roth IRA, a traditional IRA or other eligible plan is allowed; however, the tax consequences are different.
The payment will be subject to federal income tax in the year the payment is made. We will withhold 20 percent of the taxable amount and provide you with a 1099-R to assist you in preparing your taxes. You must file Internal Revenue Service (IRS) form 8606 with your federal income tax return.
The payment will not be subject to federal income tax in the year the payment is made; taxes will be deferred until you withdraw the funds from the IRA. No federal income tax will be withheld from the payment.
Yes. However, we will not make the PLS distribution until a disability determination is made. If you are approved for the disability benefit but choose to retire with the service retirement (or are denied for the disability), we will then pay the PLS.
Yes. However, you would be required to repay the PLS amount, plus interest, if you convert to a disability retirement.
Yes. If the Domestic Relations Order addresses the PLS, we will review the terms of the Domestic Relations Order and comply with the order. If the Domestic Relations Order does not address the PLS, the alternate payee’s share will be calculated “as if you did not choose a PLS option.” In other words, the PLS will be distributed to the member only, and the alternate payee’s share will be calculated using the full pension amount prior to the reduction for PLS. If you have any questions, you or your legal representative should email our Matrimonial Bureau at email@example.com.
You may wish to speak with a financial advisor or tax consultant to help you determine if taking a PLS payment would be right for you. For Police and Fire Retirement System (PFRS) members, our PLS calculator will show you the effect taking a PLS payment at retirement will have on your monthly benefit.
Read our brochure, Partial Lump Sum (PLS) Payment at Retirement — For Eligible Retirement System Members (VO1750), available on our website, contact our Call Center toll-free at 1-866-805-0990 or 518-474-7736 in the Albany, New York area or meet with an Information Representative at any of our consultation sites.