The State of Iowa offers the generous IPERS benefit to its employees. Want to learn more? Here is a quick recap.
Contributions: Currently, those who are regular members of IPERS pay 5.95% of covered wages into the IPERS system, and the employer matches with 8.93% for a total of 14.88% contribution. The contribution rate can be adjusted, either up or down, annually but no more than 1%. These contributions are tax-deferred, meaning that contributions are not taxed today, but benefits distributed in the future will be taxed at the ordinary income rates for the year in which distributions are made.
Vesting: Vesting is when you have worked for an employer long enough to be eligible to receive their contributions into a retirement plan. For IPERS, the newest rules state that those who were employed after July 1, 2012 become vested when they have completed seven years of service. For those who were employed prior to this date, check the IPERS handbook for more details.
Multiplier: The multiplier is basically the percentage of wages that will be replaced as a benefit in retirement. This multiplier ranges from 14%-65%. To be eligible for the full 65% multiplier, or the full retirement benefit available, you must have accumulated 35+ years of service. Wages are calculated in several ways, for details on how benefits are calculated, please see the complete IPERS handbook.
Normal Retirement Age: Full retirement age is when there is no longer a penalty for early retirement. If retirement is declared any time before an individual reaches full retirement age, penalties can apply. If you meet any of the three normal retirement ages listed below, the early retirement penalty would not apply. IPERS defines full retirement age as:
-65 -62 - if you have 20+ years of service -Rule of 88 – years of service + age of last birthday exceeds 88
The retirement conversation can be a complicated one, if you would like to talk more about your IPERS benefits, or have questions about IPERS benefits, contact us today to schedule a meeting.