1. Who can participate in this plan?
Any employee of any public agency that provides the plan.
2. What is a public agency?
A State, County, City, Community College District, School District, “Special District”, etc.
3. What is the Joint Powers function?
The Joint Powers is responsible for Plan design, implementation and administration.
4. What is a rollover?
- A rollover is a direct Plan to Plan transfer without going through your hands. Rollovers were authorized by the
Economic Growth and Tax Relief Reconciliation Act (tax reform) of 2001. Rollovers may also be between your
IRA and an employer’s plan as well as visa versa, and are entirely voluntary.
- There is no limit on the amount you can rollover however, per IRS rules, only the lesser of 25% of the amount
you rollover or $41,000* can be credited to your Health Care account. The amount over $41,000* or 25% is
credited into your “pension” account. (*indexed).
You would have to rollover $164,000 or more.
- If we were to assume you retired at the time of the rollover and immediately started paying $600.00 per month
for health insurance, assuming your account was earning 5% interest and health insurance costs increased 9%
every year, your account would be depleted in about 5 1/2 years. Paying these same expenses in after tax
dollars would deplete that amount in approx. 3 years.
- “deferred compensation” plan?
Yes, providing you have not deferred the annual maximum you may contribute your “leave payoff” into your
“deferred compensation” up to the annual maximum deferral amount, providing you do that while you are still
employed and make that election at least one month prior to termination of employment. You must still be
employed at the time of the actual deferral per IRS regulations.*
*(annual maximum deferrals age 50+: 2004 = $16,000, 2005 =$18,000, 2006 =$20,000)
- A health care provider can be an Insurance company, former employer, current employer, HMO, PPO, Union
Plan, etc.
- Health care premiums are paid quarterly to your health care provider, or as reimbursement back to you. Most
any provider can be paid directly from your account except CalPERS, but you can be reimbursed for the
CalPERS Health Plan deduction from your CalPERS Pension. Reimbursements to you can also cover the cost of
Medicare. In essence your account can be reimbursing you for Medicare as well as paying your supplemental
health care insurance at the same time.
Your health care account can also be used to pay for QUALIFIED long term care insurance for you and any
eligible dependents. If you are covered by the CalPERS LTC program you account can pay CalPERS directly.
All plans CalPERS presently provides are QUALIFIED. There are LTC plans in addition to CalPERS that are
QUALIFIED. (meet IRS guidelines).
- No, benefits are paid only upon an invoice or bill from your health insurance providers, or documented
reimbursement request from you.
- The funds in your retirement account can be paid on a guaranteed annuity basis over your life expectancy, over
a time period certain, over the life expectancy of you and your spouse, with/without a COLA etc., etc.; OR after
one year following the rollover you may make a lump sum withdrawal to yourself or to your own IRA account. You
must begin distributions from your pension account no later than age 70 ½.
- Funds rolled over from a 457 deferred compensation plan into the “retirement account” within the Joint Powers
Plan may be subject to a 10% early withdrawal penalty if withdrawn prior to age 591/2, unless taken in
substantially equal payments over five or more years.
- Your health care account in invested in a fixed income only with no downside risk. The current minimum interest
crediting rate is 3%. Your retirement account (75%+ portion) provides for a number of options as outlined in
question 14 above.
