Plan Book E for General Members

Reciprocity

Reciprocity is a special relationship that exists between LACERA and certain public retirement systems in California. It is designed to protect retirement benefits when public service employees transfer to other public service jobs within a specified time. Under reciprocity there is no transfer of funds or service credit between reciprocal systems.

Reciprocal systems include, but are not limited to the other 19 county retirement systems in California governed by CERL, the California Public Employees Retirement System (CalPERS), systems with reciprocal agreements with CalPERS, the California State Teachers Retirement System (CalSTRS), and the Judges Retirement System I and II (JRS).

Requirements for establishing reciprocity:

• You must become a member of a reciprocal agency within six months after terminating from LACERA, or vice versa.
• Your employment at one public agency must terminate before employment at the next public agency begins. Overlapping service, including vacation or sick time, may disqualify you for reciprocity.
• You must apply, in writing, for retirement from each system separately and retire from each system concurrently (on the same day).

Establishing reciprocity provides the following advantages:*

• If you elect a contributory plan, your contribution rate in the new system may be based on your entry age into the first system.
• Your years of service earned under each system may be combined and applied to retirement requirements for vesting and years of service credit.
• When calculating your retirement allowance, each system may use your highest final compensation, regardless of under which system it was earned.

Under reciprocity, each system will provide you with a separate benefit payment, based on your age and years of service credit in that system.

Terminating Service

If you leave County service for any reason prior to retirement, your future eligibility for retirement benefits depends on your vesting status.

Members who meet the minimum retirement eligibility requirements must begin taking required minimum distributions (RMDs) from their LACERA retirement plan once they reach the applicable age.

Federal legislation determines the RMD age threshold, which is subject to change. See Required Minimum Distributions for the current RMD age.

If you are vested and leave County service:

• You automatically become a deferred member.
• Once you meet the minimum requirements, you become eligible for retirement.
• You must apply to retire before you reach the applicable RMD start date.

If you are not vested and leave County service:

• You will be eligible for a modest retirement benefit if you terminate your County service after reaching age 70, with any amount of service credit.
• You will become a deferred member if you establish reciprocity and accrue at least 10 years of combined County and reciprocal service credit.
• You will not be eligible for a benefit if neither of the conditions described above apply to you.
• If you are eligible for a benefit, you must apply to retire before you reach the applicable RMD start date.

Whether vested or not, you may establish reciprocity if you leave County service and:

• Enter employment with a reciprocal agency within six months of leaving County service.

Required Minimum Distributions

Internal Revenue Code (IRC) § 401(a)(9) requires individuals who are eligible to receive a retirement benefit from LACERA to begin taking required minimum distributions (RMDs) from their LACERA retirement plan once they reach the applicable age.

For individuals who are no longer active (working) members of LACERA or a reciprocal retirement system, the RMD beginning date is April 1 of the calendar year after they reach the applicable RMD age.

Federal legislation determines the RMD age threshold, which is subject to change. See Required Minimum Distributions for the current RMD age(s).

Active LACERA and reciprocal members who continue to work after reaching the applicable RMD age are not subject to RMDs until April 1 of the calendar year following their employment termination date.

The method of the distribution depends on the member’s retirement eligibility status. In accordance with IRC requirements and applicable retirement law, this means those individuals must either elect to retire or to withdraw their accumulated contributions.

Since Plan E is a noncontributory plan, LACERA must begin paying a retirement allowance to a Plan E member who:

• Reaches the RMD age
• Accrues 10 or more years of service credit (including eligible reciprocal service), or terminates County service after reaching age 70 with any amount of service credit

If a member meeting the above conditions fails to apply for a retirement allowance and elect a Retirement Option, LACERA will calculate and pay a monthly retirement allowance based on the Unmodified Option.

• LACERA must notify an eligible member or former member two years before their RMD age that they are eligible to apply for a retirement allowance

If you are a member who may be subject to the RMD, make sure that LACERA has your current contact information, either by contacting us or updating your profile on My LACERA.)

Restoring to a Prior Plan

In most situations, Plan E members are not eligible to restore membership in a prior contributory plan. However, certain Plan E members who were not properly informed about restorations and who meet the following specific criteria are permitted to restore:

• Terminated from a contributory plan
• Withdrew their contributions
• Subsequently returned to County service prior to July 1, 1991 and fulfilled either of the following conditions:
  • Elected Plan E, or
  • Returned to a different contributory plan and later transferred to Plan E

To be eligible, your LACERA record must contain no evidence you were notified of the opportunity to restore membership in your prior contributory plan by redepositing your contributions and interest. Each claim will be considered on a case-by-case basis.