Benefit Adjustments Due to the Alameda Decision
LACERA will soon begin the process of adjusting accounts for legacy members (members in General Plans A, B, C, D, or E, or Safety Plans A or B) who were paid standby pay on or after January 1, 2013. This includes accounts for members who have since retired.
These adjustments are due to the July 30, 2020 California Supreme Court decision in the case of Alameda County Deputy Sheriff’s Assoc. v. Alameda County Employees' Retirement Association (aka the “Alameda Decision”), in which the court upheld changes in the Public Employees’ Pension Reform Act (PEPRA), even for legacy members. (For more background on the case, see Alameda Case Update for LACERA Legacy Members.)
Subsequent to the decision, LACERA was required to review pay items that had previously been considered compensation earnable. One item, standby pay, was deemed non-pensionable and is now being excluded from retirement calculations. LACERA has already identified those members whose accounts have been affected and will be sending out notifications about the recalculation of their benefits.
Overpayment of Benefits
With standby pay excluded from retirement calculations and deductions, some retired members may have both overpaid their contributions while active and received an overpayment of their monthly benefit in retirement. This overpayment is due to the removal of standby pay which causes a decrease in the member’s final average compensation (FAC), and which determines the member’s monthly benefit. In these cases, the refunded excess contributions will be used to offset the overpaid retirement benefits. However, if there is still a remaining balance after the contributions and interest owed have been applied to the overpaid retirement benefits, there will be a balance due payable to LACERA. If this applies to you, you will have the option to pay the balance due in full, or you can make monthly payments with financing interest applied over the term of the contract at a monthly rate of 7 percent as determined by the Board of Retirement.
Refunds for Overpayment of Contributions
Some adjustments may result in a refund if the excess contributions exceed the overpaid retirement benefits. As the fiduciary of the retirement fund, LACERA must return overpaid retirement contributions. For inactive/deferred or retired members, a check, less applicable taxes, will be mailed to the current address on file.
Rollover Option
If you are an Alameda-affected member with a refund of $200 or more, you will have the option to request a direct rollover of your lump-sum payment. A special form is provided below, as well as a Special Tax Notice providing general rollover information.
Lump-Sum Distribution Election Form for Excess Retirement Contributions: Alameda Decision
To conduct a direct rollover, you will need to do the following:
- Do not cash your check from LACERA.
- Complete all sections of the rollover form and mail it to LACERA along with your refund check within 30 days. Once LACERA receives these items, LACERA will issue a rollover check to you (about 15 days after the receipt of the original check). The check will be made out to the financial institution you designate for the benefit of (FBO) your name.
- Deposit the rollover check with your financial institution to complete the rollover.
Please note: If LACERA receives this form and check after the 30-day deadline, LACERA will reject the rollover request and return the funds to you.
Refunds Less than $200
If your refund check is less than $200, it is not eligible to roll over from LACERA, but you may be able to execute a 60-day rollover. Refer to the Special Tax Notice for details. If you are interested in a 60-day rollover, check with a financial or tax advisor. LACERA does not provide advice on the 60-day rollover process.