Additional Impacting Factors
COLA
California law mandates that each year, prior to April 1, the Board of Retirement will determine whether there has been an increase or decrease in the cost of living, as reflected in the Bureau of Labor Statistics Consumer Price Index (CPI) for All Urban Consumers in the Los Angeles-Long Beach-Anaheim area.
If the CPI has increased, the Board grants a cost-of-living adjustment (COLA) increase for monthly retirement allowances and continuing benefits to survivors and beneficiaries. The maximum allowable annual increase for Plan A is 3.0 percent; for Plans B and C the maximum allowable is 2.0 percent.
In the event the CPI has decreased, it is possible for the Board to apply a COLA decrease. However, in the event a cost-of-living decrease is ever required, it may not reduce a member鈥檚 allowance to an amount less than the allowance received at the time of retirement. Therefore, only past COLA increases could ever be subject to a decrease.
Social Security
The County withdrew its employees from the federal Social Security program on December 31, 1982. You may be entitled to a Social Security benefit upon retirement based on your County service prior to January 1983 and/or your work at other jobs where you contributed to Social Security. However, be aware in some cases Social Security can affect your bti体育 retirement allowance and vice versa.
Plan A, B, or C members will have their bti体育 retirement allowance reduced by a fixed dollar amount for each year of County service prior to 1983 that was covered by Social Security.
The Windfall Elimination Provision and the Government Pension Offset are federal laws that impact Social Security benefits for some individuals receiving government pensions.
Windfall Elimination Provision
The Windfall Elimination Provision (WEP) reduces the Social Security benefit for retired and disabled workers receiving government pensions from employment not covered by Social Security. Basically, the Social Security Administration uses a different (less favorable) formula to calculate a worker鈥檚 benefit under the WEP than it does to calculate the benefit of a worker who is not affected by the WEP.
The WEP formula includes a sliding scale based on the length of your Social Security-covered employment. If you have 30 or more years of 鈥渟ubstantial earnings鈥 under Social Security, you are fully exempt from the WEP.
Government Pension Offset
The Government Pension Offset (GPO) affects spouses, widows, and widowers. Under the GPO, if you receive a bti体育 pension (based on work when you did not pay Social Security taxes), your Social Security spouse鈥檚, widow鈥檚, or widower鈥檚 benefits may be reduced by an amount equal to two-thirds of your bti体育 pension.
For more information and specifics of how the GPO and the WEP may apply to your individual situation, contact the Social Security Administration at 800-772-1213.
Pension Advance Option
The Pension Advance Option is designed to equalize a member鈥檚 bti体育 income prior to age 62 with the combined bti体育 and Social Security income the member will receive after age 62.
Under this option, bti体育 adds a percentage of the member鈥檚 Social Security benefit (based on the estimate that appears on the member鈥檚 Social Security statement) to the member鈥檚 bti体育 retirement allowance until he or she reaches age 62. At 62, the full Social Security estimate is subtracted from the allowance.
Important Note: To elect the Pension Advance Option, you must present your Social Security statement when you retire. Due to differences between estimated and actual Social Security benefit amounts and reductions resulting from WEP or GPO, the combined income members receive under this option is often less than they received prior to age 62.
Eligibility Requirements
- Service retirement prior to age 62
- Submit a Social Security statement of benefits to verify eligibility
- Elect one of the following:
- Unmodified Option
- Option 1
If you are considering the Pension Advance Option, we recommend you call 800-786-6464 to consult with a bti体育 Retirement Benefits Specialist prior to making your decision.
Taxability
Your bti体育 retirement allowance is subject to both federal and California state income tax.* Withholding tax is based on the gross amount of your service retirement allowance.** You may elect to have federal or state tax withheld from your retirement allowance at whatever rate you choose 鈥 or to have no tax withheld 鈥 by submitting a W-4P/DE-4P Tax Withholding Form to bti体育.
The IRS requires bti体育 to automatically withhold federal income tax at the married and claiming three exemptions rate from:
- Individuals without a W-4P tax form on file with bti体育
- Individuals who provide a P.O. Box as their home address
- U.S. citizens and resident aliens living outside of the United States
* Certain exceptions may apply.
** In compliance with federal law, California income tax is not withheld from your retirement allowance if you reside outside of California. bti体育 does not withhold taxes for states other than California.
Dissolution of Marriage (Divorce)
Active and Retired Members
If your marriage is dissolved, you must contact bti体育 promptly to update your records.
Documents You Should Provide:
- Judgment of Dissolution
- Domestic Relations Order (DRO) or Qualified Domestic Relations Order (QDRO)
- Notice of Entry of Final Judgment (if applicable)
You must provide bti体育 with a confirmed copy (with the court clerk鈥檚 filing date stamp and the judge鈥檚 signature) of all the pages of your Judgment of Dissolution. If the judgment states a further order is required to divide your pension, provide bti体育 copies of that document. If you are unsure about the need for additional documents, bti体育鈥檚 Legal Division will review the judgment to ascertain if an additional order is required.
Active Members
If you are an active member, failure to provide bti体育 with your dissolution documents may result in a delay of your retirement benefits.
Upon notice that a member鈥檚 benefit is subject to division, bti体育 must place a legal hold on the member鈥檚 account. A member may not withdraw his or her contributions while a legal hold is in effect. The hold will remain on the member鈥檚 account until retirement (and will appear on the member鈥檚 Annual Benefit Statement), even if bti体育 receives a court order directing payment.
Retired Members
bti体育 is bound by certain legal restrictions in paying retirement benefits when a divorce is pending. If you divorce after retirement, bti体育 may continue paying your full monthly allowance pending receipt of the documents referenced in this section.
Beneficiary Eligibility: Ex-Spouse
It鈥檚 Important to Complete a New Beneficiary Form After Your Divorce
Active Plan A, B, or C members may change their beneficiary designation at any time prior to retirement.
Upon completion of your divorce (Final Judgment), it is important you complete a new Beneficiary Designation Form. Under California law, a dissolution cancels a member鈥檚 designation of a former spouse as a beneficiary.
If You Divorce During Active Service: Naming Your Ex-Spouse as Beneficiary
- Should You Die in Active Service
bti体育 will pay applicable death benefits to your ex-spouse only if you named that individual on a bti体育 Beneficiary Designation form (or equivalent document) subsequent to your divorce or in accordance with a court order. Otherwise, bti体育 will pay applicable death benefits to your estate. Your estate is not eligible for continuing benefits. - Eligibility of Ex-Spouse as Beneficiary for Continuing Benefits After Retirement
When you decide to apply for retirement, you may elect any numbered Retirement Option and name your ex-spouse as a beneficiary. If you elect Option 2, 3, or 4, your 鈥渆x鈥 will receive a continuing benefit upon your death. If you elect Option 1, your 鈥渆x鈥 will receive a lump-sum payment of any remaining portion (not depleted during your lifetime) of your accumulated contributions.
If You Divorce After Retirement: Naming Your Ex-Spouse as Beneficiary
- If you elected the Unmodified or the Unmodified Plus Option at retirement, your ex-spouse is ineligible to receive a continuing benefit from bti体育 upon your death. In such a case, you may name a new beneficiary after you are divorced.
- Upon your death, bti体育 will pay any remaining portion of your accumulated contributions in one lump-sum payment to the beneficiary you designated after your divorce or to your estate. Neither your new beneficiary nor your estate is eligible for a continuing benefit.
- An ex-spouse is not an eligible surviving spouse and is not eligible to receive a monthly continuing benefit under the Unmodified Retirement Option, even if he or she is named as beneficiary after the divorce.
- An ex-spouse may be eligible to receive a community property portion of a lump-sum benefit, or a proportionate share of the eligible surviving spouse鈥檚 benefit, if applicable.
- If you named your spouse as a beneficiary at retirement under Option 2, 3, or 4, he or she will receive a monthly continuing benefit after your death.
Garnishment
In general, a member鈥檚 retirement allowance is not subject to garnishment or other levies except as follows:
- A court may order bti体育 to pay a portion of a member鈥檚 retirement allowance to satisfy a judgment for spousal or child support or a division of community property.
- A member鈥檚 retirement allowance is subject to a tax levy by the IRS or the California Franchise Tax Board for payment of delinquent federal or state income tax.
- If a retired member is convicted in federal court, the court may order the member to pay restitution through a federal garnishment of the member鈥檚 monthly bti体育 benefit.
Pension Forfeiture Applies to Public Employees Convicted of a Job-Related Felony
PEPRA establishes pension forfeiture, without exception, for all public employees convicted of a job-related felony.
The law calls for forfeiture of 鈥渁ll accrued rights and benefits in any public retirement system鈥 by any public employee convicted of any felony, as of the earliest date of the crime, 鈥渇or conduct arising out of or in the performance of his or her official duties, in pursuit of the office or appointment, or in connection with obtaining salary, disability retirement, service retirement, or other benefits.鈥
Your Records Are Subject to Public Disclosure
The California Supreme Court has held the public has a right to know the names and salaries of public officials and employees under the California Public Records Act (CPRA).