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Partial Lump Sum (PLS) Payment at Retirement — For Eligible Retirement System Members

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What is a Partial Lump Sum (PLS) Payment?

A Partial Lump Sum (PLS) distribution is a single payment equal to a percentage of the initial value of your retirement benefit, depending on your eligibility and the percentage you elect. It is paid to you when we finalize your retirement benefit. If you choose to receive a PLS payment, your lifetime monthly benefit will be permanently reduced. You cannot change your mind once 30 days after the end of your retirement month have elapsed and you cannot repay the lump sum amount in the future to increase your monthly service retirement benefit. Future cost-of-living adjustments (COLAs) will be based on the amount of your reduced lifetime benefit. The lump sum payment is excluded from the COLA calculation.

You may be eligible for a PLS distribution of your retirement benefit at the time you retire. This benefit is available to certain New York State and Local Police and Fire Retirement System (PFRS) members, Chapter 735 (Laws of 2006), effective April 1, 2008, and certain New York State and Local Employees’ Retirement System (ERS) members, Chapter 13 (Laws of 2014), effective July 22, 2014.

Eligibility for PFRS Members

To be eligible to choose a PLS payment, you must be a member of the Police and Fire Retirement System and:

  • Covered by a plan that allows for retirement after 20 or 25 years of creditable service, regardless of age;
  • Eligible to retire with a service retirement benefit for at least one year prior to your date of retirement;
  • Retire after April 1, 2008;
  • Retire with a service retirement (not a disability retirement). If you receive a PLS payment under a service retirement benefit and later convert to a disability retirement, you must repay it, possibly with significant negative tax consequences.

Note: If your retirement benefit is to be distributed according to the provisions of a Domestic Relations Order, we must review the court order and make a determination regarding payment of this benefit.

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Eligibility for ERS Members

To be eligible to choose a PLS payment, you must be a member of the Employees’ Retirement System, your county employer must adopt a resolution to provide this option to its eligible employees and you must be:

  • Employed as a sheriff, undersheriff, deputy sheriff or county correction officer;
  • Covered by a plan that allows for retirement after 20 or 25 years of creditable service, regardless of age;
  • Eligible to retire with a service retirement benefit for at least one year prior to your date of retirement.

In addition, you must:

  • Retire after your county elects this option; and
  • Retire with a service retirement (not a disability retirement). If you receive a PLS payment under a service retirement benefit and later convert to a disability retirement, you must repay it, possibly with significant negative tax consequences.

Note: If your retirement benefit is to be distributed according to the provisions of a Domestic Relations Order, we must review the court order and make a determination regarding payment of this benefit.

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PLS Payment Amounts

A PLS payment is a percentage of the actuarial value of your retirement benefit at the time you retire. The chart below outlines the various percentages available to you based on the number of years you have been eligible to retire. 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.

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%

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Receiving Your PLS Payment

You can have the PLS payment made to you or you can have all or any portion paid in a direct rollover to an Individual Retirement Annuity (IRA) (traditional or Roth) or other eligible plan that accepts rollovers.

If you choose to have a PLS payment made directly to you:

  • The payment will be subject to federal income tax in the year the payment is made and a tax form 1099-R will be issued the following January.
  • We will withhold 20 percent of the taxable amount for federal income taxes.
  • If you are less than 50 years old (55 years old for 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.
  • A rollover to a traditional or Roth IRA is still possible if completed within 60 days of receiving payment.

If you choose a direct rollover to a traditional IRA or other eligible plan:

  • The payment will not be subject to federal income tax in the year the payment is made. A tax form 1099-R will be issued the following January showing that this distribution is not taxable.
  • Taxes will be deferred until you withdraw the funds from the IRA or other eligible plan.
  • No federal income tax will be withheld from the payment.

If you choose a direct rollover to a Roth IRA:

  • The payment will be subject to federal income tax in the year the payment is made and a tax form 1099-R will be issued the following January.
  • You may elect to have federal income tax of 20 percent withheld from the payment.

You may wish to contact a tax advisor to determine if a PLS is right for you.

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Choosing a PLS Payment

When you file for retirement, if you are eligible for a PLS payment, we will send you a special Option Election Form so you can choose a PLS percentage as well as the standard option for your monthly benefit. This form must be filed with us by the end of the month in which you retire.

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How Much Will I Receive?

You can estimate your lump sum payment amount by following these steps:

  1. Determine your Single Life Allowance Option (Option 0) benefit, generally at least 50 percent of your final average salary (FAS). For a more accurate estimate, you can contact our Call Center and request a Benefit Projection. Or, if you are a PFRS member, you can use our Benefit Projection Calculator to help you determine your Option 0 benefit.
  2. Find your age at retirement on the chart below (round to the nearest age) and determine your Lump Sum Factor. If your age is not on the chart, please contact our Call Center or PFRS members can use our benefit projection calculator.
  3. Multiply:
    Option 0 Benefit (Step 1) × Lump Sum Factor (Step 2) × 5, 10, 15, 20 or 25 percent = the PLS Amount
  4. Calculate your reduced continuing lifetime Single Life Allowance (Option 0) benefit.
    If You Select a PLS Payment of Multiply Your Original Option 0 Benefit by
    5% 95%
    10% 90%
    15% 85%
    20% 80%
    25% 75%

Example:

Age at Retirement: 49 years, seven months

Retirement Plan: Section 384-d or Article 14-B, Section 552 (Benefit equals 50 percent of FAS with 20 years of creditable service.)

FAS: $60,000

Date of Retirement: February 28, 2015

Date First Eligible to Retire: February 28, 2010

  1. Determine the Option 0 Benefit: $60,000 (FAS) × 50% = $30,000
  2. Find the Lump Sum Factor on the chart: Rounded Age at Retirement = 50, Lump Sum Factor = 12.146
  3. Determine PLS Payment Amount:
    Original Single Life Allowance (Option 0) × Lump Sum Factor × Percentage of Retirement Benefit Value = PLS Payment Amount
    $30,000 × 12.146 × 5% = $18,219
    $30,000 × 12.146 × 10% = $36,438
    $30,000 × 12.146 × 15% = $54,657
    $30,000 × 12.146 × 20% = $72,876
    $30,000 × 12.146 × 25% = $91,095
  4. Determine reduced Annual Single Life Allowance:
    PLS Payment Option Original Single Life Allowance (Option 0) × Percentage of Remaining Benefit = Reduced Annual Single Life Allowance
    5% $30,000 × 95% = $28,500
    10% $30,000 × 90% = $27,000
    15% $30,000 × 85% = $25,500
    20% $30,000 × 80% = $24,000
    25% $30,000 × 75% = $22,500

You do not need to choose the reduced Option 0 as your option. You may choose from any of the standard options. The amount of each standard option will be based on the reduced Option 0 amount.

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Lump Sum Factor Chart

Lump Sum Factors effective April 1, 2014 – March 31, 2015.

Age at Retirement Lump Sum Factor
40 12.981
41 12.919
42 12.851
43 12.777
44 12.698
45 12.613
46 12.522
47 12.441
48 12.349
49 12.250
50 12.146
51 12.043
52 11.943
53 11.843
54 11.737
55 11.616
56 11.480
57 11.338
58 11.188
59 11.028
60 10.857
61 10.675
62 10.483

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For More Information

  • Read our PLS Frequently Asked Questions which you may find helpful. PFRS members can also use our Benefit Projection Calculator to help you decide if a Partial Lump Sum Payment Option is right for you.
  • Email us.
  • Contact our Call Center toll-free at 1-866-805-0990 or 518-474-7736 in the Albany, New York area.
  • Fax us at 518-402-4433.
  • Make an appointment to meet with an Information Representative at any of our consultation sites throughout the State. A list of our locations is available from your employer, our website or our Call Center.
  • Write to us at:

    New York State and Local Retirement System

    110 State Street

    Albany, New York 12244-0001.

VO1750 (Rev. 12/14) © 2014 New York State and Local Retirement System

This publication provides a general summary of membership benefits, rights and responsibilities, and is not a substitute for any New York State or federal law. For specific information about your benefits, please contact us.

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