New Retirement Option - Two-Stage Retirement Payments

Beginning September 1, 2006, a new retirement option is available.  This option is referred to as Two-Stage Retirement Payments.  With this option, a participant or surviving spouse whose benefit payments begin at or after age 62 may elect to have the initial monthly payments based only on the portion of that participant’s benefit that is not subject to any early retirement reduction (benefits earned prior to September 1, 2005).  When the participant reaches age 65, an additional amount is added to the monthly payment.  The added benefit is based on that portion of the participant’s benefit that would be subject to an early retirement reduction if paid between age 62 and 65 (benefits earned on or after September 1, 2005).

For example, a participant retires at age 62 and has an annual benefit of $20,000 earned prior to September 1, 2005 and an annual benefit of $2,000 earned on or after September 1, 2005.  The $20,000 benefit is unreduced at age 62.  The $2,000 benefit is unreduced beginning at age 65.  The participant elects the two-stage benefit retirement payment option and at age 62 begins drawing the $20,000 benefit.  At age 65, the additional $2,000 benefit begins automatically and is added to the regular benefit payments.

Full Issue: No. 177 - August 25, 2006

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