Plan Book A/B for Safety 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 leave your contributions on deposit with LACERA while your employment is covered by a reciprocal retirement system, or vice versa.
• 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:*

• 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 leave County service with their contributions on deposit 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 with your retirement contributions on deposit with LACERA:

• You automatically become a deferred member.
• Your contributions will continue to earn interest.
• Once you meet the minimum age requirement, you become eligible for retirement.
• You must apply to retire or withdraw your contributions before you reach the applicable RMD start date.

If you are not vested and leave County service with your retirement contributions on deposit with LACERA:

• Your contributions will continue to earn interest.
• You will be eligible for a modest retirement benefit at age 70. Contact LACERA three months prior to your 70th birthday and we will calculate the exact amount of any benefit you may be due.
• You may withdraw your accumulated contributions and interest at any time, but note that by doing so, you will forfeit all rights to future benefits from LACERA, including disability and healthcare benefits.
• You must apply to retire or withdraw your contributions before you reach the applicable RMD start date.

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

• Leave your contributions on deposit with LACERA, and
• Enter employment with a reciprocal agency within six months of leaving County service.

If you withdraw your accumulated contributions from LACERA:

Such a withdrawal terminates your membership and forfeits any and all rights to future retirement benefits from LACERA, including disability and healthcare benefits.

If you withdraw, you may elect to either:

• Have LACERA issue a payment directly to you (minus 20 percent mandatory federal withholding tax and any applicable California state tax*), or
• If you are under the RMD age, defer taxes on the funds by rolling them over to an IRA or other tax-qualified plan.

Once the year in which you reach your RMD age arrives, a small portion of your contributions will be considered RMDs and will not be eligible for rollover. LACERA will issue a payment to you minus applicable mandatory federal withholding tax and any applicable California state tax.

Required Minimum Distribution

Internal Revenue Code (IRC) § 401(a)(9) requires individuals who leave County service with their contributions on deposit 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.

LACERA must begin paying a retirement allowance to a member who:

• Reaches the RMD age
• Left County service with their accumulated contributions on deposit with LACERA

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.

Note: Rather than apply for retirement, a member may elect to withdraw their accumulated contributions. By taking such action, however, the member terminates their membership and forfeits all rights to future retirement benefits from LACERA, including disability and healthcare benefits.

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 or a refund of accumulated contributions. If the member cannot be located, all of their accumulated contributions will be deposited in the Member Reserve Account.

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.)

Returning to Service*

A deferred safety member who returns to County employment working three-quarter time or more in a safety position is automatically reinstated in his former Plan. The returning member retains his or her service credit.

A deferred general member who returns to County employment working three-quarter time or more in a safety position is automatically placed in the safety plan that was in effect at the time he or she initially became a general member. A member who does this assumes dual membership status.

A deferred member who returns to a permanent position of less than three-quarter time may file a written election to return to active membership. The written election must specify whether the member also chooses to purchase service credit for any County service not previously credited prior to the date of his or her election. The purchase may begin at any time prior to the member's effective date of retirement. The election to return to active membership is irrevocable; active membership will remain in effect until the member terminates service.

The contribution rate for a member returning from deferred status is based on the entry age in effect at the time of the member’s most recent election of deferred status.

*Rules also apply to returning members who entered a reciprocal retirement system after terminating County service.

Restoring to a Prior Plan

A safety member who previously terminated service, subsequently withdrew his or her accumulated contributions, and later returns to County service may restore to his or her previous Plan, provided all his or her withdrawn contributions are redeposited, along with the interest those contributions would have earned had they been left on deposit.

The member will default to Safety Plan C upon returning to service with the same employer. Once restoration is complete, the member's prior service credit is restored and membership in the prior plan continues as if unbroken. The returning member will be credited for any excess contributions made prior to completion of the restoration, plus interest. A contribution rate based on the member's nearest age at the time of reentry into LACERA will apply.

Restoration for Reciprocal Safety Members

Certain current or former safety members whose principal duties consist(ed) of active law enforcement or firefighting may be eligible to redeposit contributions they had previously withdrawn from LACERA or a reciprocal retirement system, even if the time between systems exceeded six months. The redeposit (in the first system) restores membership in the individual's previous LACERA or reciprocal system's (whichever is the first system) retirement plan.

Eligibility Requirements for Reciprocal Safety Member Restoration:

• Must be an active member of LACERA (or the reciprocal retirement system) at the time of the redeposit.
• Must be employed by a law enforcement agency or fire department.
• Principal duties must consist of active law enforcement or firefighting, either presently or while a member of the reciprocal system.

Specifications of reciprocity may vary according to the requirements of each system.

Dual Status

Dual status refers to a member who has accrued service credit both as a general member and a safety member. This occurs when a general member changes job classifications and becomes eligible for safety membership, or vice versa.

At retirement, members with dual status receive a combined retirement allowance based on service credit earned in each category of membership. Separate general and safety benefit amounts are calculated and added together to determine the member’s total retirement allowance.

Double Account

A member who has earned service credit in a contributory plan and in Plan E maintains a double account with LACERA. Double accounts are established when a member has earned both:

• Service credit in a contributory plan
• A minimum of 10 years of service credit in Plan E

Eligibility to retire from each Plan is determined independently, based on the requirements of each Plan. Service credit earned in one Plan cannot be used to meet the requirements of the other Plan.

If a member with a double account is eligible to retire for service from Plan A or B, but has not met the minimum age requirement for Plan E, he or she may retire from Plan A or B.* Plan E retirement benefits automatically become effective on the date of the member’s 55th birthday.

*The total amount of service credit accrued under all LACERA plans counts toward the County retiree healthcare subsidy; certain eligibility rules apply. See Paying for Coverage.

Transferring to Plan E

Safety members may not transfer to non-contributory Plan E.