Retirement planning frequently asked questions
Public Employees' Retirement System (PERS) Plan 3
- I plan to retire in two years. What should I do to prepare and when should I do it?
- When am I considered retired?
- When can I withdraw my defined contribution funds from my Plan 3 account?
- I'm close to retiring. Can I increase the amount I contribute to my DCP account?
- How long will my benefit last?
- Once I retire, when will I get my first benefit check?
- What kinds of deductions can be taken from my benefit?
- When am I eligible to receive a benefit?
- When I retire, what will my monthly benefit be and how will it be calculated?
- How do I calculate my Average Final Compensation (AFC)?
- When I cash out my annual leave or roll it over, will the cash out be included in my benefit calculation?
- If I retire before my employment contract is settled, how will that affect my benefit?
- How do I decide which benefit option to choose?
- Do I need to make an appointment with a benefits counselor at DRS or can I start the retirement process over the phone?
- I received a letter that says you have my application. When will I hear from you again?
- I plan to move out of the country (or state) after retirement. Are there any special considerations I should be aware of?
- Can service credit I earned in another state be used to qualify for retirement?
- How does membership in another system affect my retirement?
I plan to retire in two years. What should I do to prepare and when should I do it?
It's never too early to begin preparing and we're here to help. Be sure to take a look at our checklist of retirement planning steps that includes not only the "what," but also the "when."
When am I considered retired?
You're considered retired once you begin receiving a retirement benefit. This is usually the first of the month after the month you've separated from employment.
If you separate from employment, but wait to start drawing a benefit, you'll be considered retired once you do begin receiving it.
When can I withdraw my defined contribution funds from my Plan 3 account?
Once you're no longer working in a position that is covered by PERS, you can withdraw your contributions at any time. Federal income taxes and penalties may apply, so you may want to check with a tax advisor before requesting a withdrawal.
You can also leave your contributions in your Plan 3 account, where your account value will continue to be based on the performance of your investments. Learn more about your options by calling ICMA-RC at 1-888-711-8773 or reading our booklet Plan 3 Request for Payment of Defined Contribution Funds, available online or from your payroll or personnel officer.
I'm close to retiring. Can I increase the amount I contribute to my DCP account?
There are two catch-up options you can use to defer additional money to your DCP account. For details, call us at 1-888-327-5596 and select option 2.
How long will my benefit last?
As a Plan 3 member, you have a two-part retirement benefit. The defined benefit portion, funded by your employer, guarantees you a benefit for your lifetime and, if you choose a survivor option, for the lifetime of your survivor. The defined contribution portion, funded by your contributions, provides a benefit that is based on investment performance.
Once you separate from your employer, you can choose how you would like to receive the defined contribution portion. The option you choose determines how long you will receive payments.
To learn more about your options for receiving your defined contributions, register for a one-hour Withdrawing from Plan 3 Seminar or contact a Plan 3 representative toll-free at 1-888-711-8773. Your options are also described online in the Plan 3 Request for Payment of Defined Contribution Funds booklet.
Once I retire, when will I get my first benefit check?
You should receive your first benefit payment by the last working day of the month you retire, or a few days after. For example, if you retire on March 1 and the last working day of the month is March 31, you should receive your payment (by check or direct deposit to your bank account ) by March 31 or shortly after. See When am I considered retired?
If you've arranged for direct deposit, your first payment may be mailed to your bank. All payments after that will be electronically transferred to your account.
We're only able to send your check to one bank account. If you would like your payment deposited in two accounts, be sure to arrange with your bank for an automatic transfer of funds.
What kinds of deductions can be taken from my benefit?
Deductions to your retirement benefit check can include:
- Income tax authorized by the withholding form you submit with your retirement application
- Health insurance premiums
- Life insurance premiums
- Combined Fund Drive contributions
- Dues for retiree organizations
- Any other approved deductions
The good news is – some of the payroll deductions you currently see (Social Security, Medicare) will not be taken from your retirement benefit.
When am I eligible to receive a benefit?
Plan 3 Defined Benefit provides a retirement benefit at age 65 or older with at least five years of service credit if:
- 12 months were earned after age 44, or
- 5 years of service were established in Plan 2 prior to transferring to Plan 3 and prior to June 1, 2003 (PERS members), September 1, 2000 (SERS members), July 1, 1996 (TRS members)
- Age 65 with at least 10 years of service credit if you do not meet the above criteria.
- Age 55 or older with at least 10 years of service credit. Your benefit will be reduced if you are under age 65. There is less of a reduction if you have 30 or more years of service credit.*
*Plan 2 and Plan 3 provide an unreduced defined benefit at age 62 for members who were hired before May 1, 2013 and retire with 30 or more years of service credit. This benefit provision is part of legislation which ended gain sharing. If a court decides the repeal of gain sharing is invalid, the early retirement rules that were in place before the passage of the new law will apply.
Your Plan 3 handbook contains more specific information.
When I retire, what will my monthly benefit be and how will it be calculated?
You can use our online service to estimate your benefit or, if you are within two years of retirement, please call us at (360) 664-7000 or 1-800-547-6657 to request a written estimate. Here is the formula we will use to calculate your monthly benefit:
1 percent x Average Final Compensation x Service Credit Years x Early Retirement Factor (if applicable) = Monthly Benefit
Members sometimes think there is a cap on the amount of service credit used in Plan 3 benefit calculations. There is not. All of your service credit will be used in the calculation.
How do I calculate my Average Final Compensation (AFC)?
Average your monthly salary from the highest-paid 60 consecutive months in which you earned service credit, no matter when that is in your career. Your AFC does not include severance pay, such as lump-sum payments for deferred sick leave, vacation, or annual leave.
When I cash out my annual leave or roll it over, will the cash out be included in my benefit calculation?
Cash outs are not included in your benefit calculation.
If I retire before my employment contract is settled, how will that affect my benefit?
We will calculate your benefit based on the initial information we receive from your employer. Once final information is reported to us, your benefit will be recalculated and, if appropriate, we will make a one-time payment that is retroactive to your original retirement date. Please allow several weeks after your employer reports any additional salary for this recalculation to be completed.
How do I decide which benefit option to choose?
Each option has both benefits and consequences you will need to evaluate. Before making a decision, it's a good idea to consult a licensed tax advisor, estate planner, or financial planner who specializes in retirement law and planning.
You'll want to consider the following:
- What is your target "income replacement" (the income you'll need to maintain your standard of living) amount?
- Will you have other retirement income?
- If you are married, do you have life insurance for yourself and/or your spouse?
- Can you live on less than the maximum retirement benefit?
- What is your health status and life expectancy?
- How much of an age difference is there between you and your spouse? (If your spouse is younger than you and you select a survivor option, the greater the age difference, the more your benefit is reduced.)
- What will your health care costs be after retirement?
- Do you expect any lifestyle changes that will affect how much income you need?
- What is the status of your short-term and long-term debt?
- Will you continue to support any dependents after retirement (such as children or elderly parents)?
Do I need to make an appointment with a benefits counselor at DRS or can I start the retirement process over the phone?
We're always glad to meet and help you in person, but there's no requirement to come in and talk with a Retirement Services Analyst (RSA). You can easily start the retirement process over the phone and complete it through the mail.
If you prefer to talk with an RSA in person, just call us for an appointment. It works best if you first request an estimate and retirement packet and have enough time to look it over before making an appointment. That will give your RSA specific information to go over with you and also ensure your questions are answered.
You can reach us at (360) 664-7000 or toll free (outside the Olympia area) 1-800-547-6657. Here are directions and a map to DRS.
I received a letter that says you have my application. When will I hear from you again?
During the month of your retirement, we will send you a letter with the amount of your benefit and the date you can expect to receive your first payment. Any time you have questions, be sure to call.
I plan to move out of the country (or state) after retirement. Are there any special considerations I should be aware of?
Here are a few things to consider when moving outside the country or state:
Washington does not have a state income tax, but some states do. If you move to one of these states, be sure to check into the tax obligations for your retirement benefit.
Your health insurance coverage may be affected. To find out if it is, contact the insurance plan you intend to be covered by when you retire.
Direct deposits can only be made to banks within the United States. If you're moving outside the country, be sure to find a bank that can process electronic deposits within the U.S.
Can service credit I earned in another state be used to qualify for retirement?
Your retirement system does not accept service credit from other states.
How does membership in another system affect my retirement?
If you're an active member in any of the retirement systems listed below and you once belonged to another of these systems, you may be eligible for benefits as a "dual member."
- Public Employees' Retirement System (PERS) Plans 1, 2 and 3
- Teachers' Retirement System (TRS) Plans 1, 2 and 3
- School Employees' Retirement System (SERS) Plans 2 and 3
- Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF) Plan 2
- Washington State Patrol Retirement System (WSPRS) Plans 1 and 2
- Public Safety Employees' Retirement System (PSERS) Plan 2
- City Retirement Systems for Seattle, Spokane and Tacoma
- State-wide City Employees' Retirement System (SCERS)
There are three advantages to being a dual member:
- You can restore service credit you withdrew from a dual member system.
- You can combine service credit to help you become eligible for service retirement.
- You can use your highest "base salary" in a dual member system to calculate your service retirement benefit in other dual member systems.
To find out more about retiring as a dual member, see What is dual membership and how does it affect me?
If you were a member of SCERS, please call us at (360) 664-7000 or 1-800-547-6657 for information about dual membership with SCERS.