10-09-2023 Council Meeting Packet

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4 of 58.1.23 60 EMPIRE DRIVE, SUITE 200, ST. PAUL, MN 55103-2088 1.800.652.9026 | 651.296.7460 | mnpera.org STATEWIDE VOLUNTEER FIREFIGHTER (SVF) PLAN Retirement Benefit Example 6: Partially Vested with Service at Multiple Fire Departments* • 50-year old volunteer firefighter separates from service after serving 3 years at the Green Fire Department, then 10 years at the Red Fire Department, and then 5 years at the Blue Fire Department. The Red and Blue Fire Departments participate in the SVF Plan, and the Green Fire Department does not. • The Red Fire Department’s benefit level at the time the volunteer firefighter separates from service with the Red Fire De- partment is $1,000 • The Blue Fire Department’s benefit level at the time the volunteer firefighter separates from service with the Blue Fire Department is $2,000 • The Red and Blue Fire Departments both have vesting schedules starting at 40% after 5 years of service, increasing by 4% each subsequent year until 100% vesting is reached after 20 years of service. [10 years x $1,000 x 72%] = $7,200 retirement benefit paid by the Red Fire Department [5 years x $2,000 x 92%] = $9,200 retirement benefit paid by the Blue Fire Department * The vested percentage achieved with 13 years of total service rendered between the Green (3 years) and Red (10 years) Fire De- partments is 72% according to the Red Fire Department’s vesting schedule. The vested percentage achieved with 18 years of total service rendered between the Green (3 years), Red (10 years), and Blue (5 years) Fire Departments is 92% according to the Blue Fire Department’s vesting schedule. TAXABILITY OF SVF PLAN BENEFITS Unless the SVF Plan member or survivor elects different tax treatment on their benefit application form, PERA automatically withholds applicable federal and Minnesota state income taxes from the gross, lump-sum amount of the SVF Plan benefit. PERA does not withhold income tax for any state other than Minnesota. The SVF Plan member or survivor may elect to roll their benefit over to another tax-qualified retirement account with no federal or Minnesota state taxes withheld. For additional details on how your SVF Plan retirement benefit or survivor benefit will be taxed (including the applicable tax rates), see the SVF Plan Retirement Benefit Application or SVF Plan Survivor Benefit Application. DEFERRED SVF PLAN RETIREMENT BENEFITS For firefighters who defer their retirement benefit AFTER the fire department joins the SVF Plan: No interest is earned on benefits deferred under the SVF Plan. When the firefighter eventually collects their deferred retirement benefit, the lump-sum amount is calculated as: [Years of Service x Benefit $ Level effective at time of deferral x Vested % = $ Retirement Benefit] For firefighters who defer their retirement benefit BEFORE the fire department joins the SVF Plan: If a firefighter deferred their benefit prior to the fire department joining the SVF Plan, the rules of the relief association will apply to the calculation of their benefit. In other words, PERA will calculate the firefighter’s retirement benefit according to the relief association’s vesting require- ments, benefit level, interest earnings, and retirement age applicable at the time the firefighter deferred. SUPPLEMENTAL BENEFITS In addition to a lump-sum retirement benefit, the SVF Plan provides volunteer firefighters with a one-time cash supplemental ben- efit, equivalent to that outlined in Minnesota Statutes 424A.10. PERA applies for reimbursement of these supplemental benefits from the Minnesota Department of Revenue and deposits the reimbursement into the fire department’s SVF Plan account.