As a PERA member, you already have the financial security that your PERA retirement benefit will provide. For most members, though, the PERA retirement benefit they receive is not a 100% replacement for their pre-retirement income stream. That's why it's imperative that you plan to save additional funds to supplement your income in retirement.
The PERAPlus 401(k) and 457 plans are a great way to save money (and lower your current taxable income). Below are nine things you might not know about your PERAPlus account and how it can work for you.
Free advice. Not sure how much you should be saving to meet your retirement goals? The Personal Online Advisor is an easy-to-use interactive system that helps you decide how to invest your money within the asset class options. You can import information from your PERA defined benefit (DB) or defined contribution (DC) account, as well as more than 70 partner organizations. Best of all, you can use it for no additional charge. Pretty nifty.
Low fees. There's only a $1 per month participant fee, and on top of that, the PERAdvantage funds’ total fees are extremely competitive and transparent.
Access to a diverse mix of funds. The PERAdvantage funds include funds that seek to reach a targeted retirement date; therefore, they automatically diversify using a selection of underlying assets. Also available are six diversified asset class investment funds. For an additional fee, you can access the self-directed brokerage, which allows for expanded investment choices beyond the PERAdvantage funds.
Access to your money in the event of an emergency. Are you hesitant to defer as much to your 401(k) or 457 account as you could because you're worried about needing the money for an emergency? Both the PERAPlus 401(k) and 457 plans have hardship/unforeseen emergency provisions that allow you to access your money if and when you need it. Additionally, you can take up to two loans from each plan. No need to let concerns about the unknown stop you from contributing now.
Max your tax-deferring options. The PERAPlus 401(k) and 457 plan allow you to contribute up to $18,500 (for 2018) to each plan. That means you can contribute up to $37,000 total this year toward your retirement. Every dollar that you contribute to these plans before December 31 will reduce your taxable income for 2018. If you're age 50 or older, you may be eligible for additional catch-up contributions.
Use your money to purchase service credit. Thinking about purchasing service credit? Both the PERAPlus 401(k) and 457 plans allow you to transfer funds from your account to use for service credit purchases. This is a great way to use tax-deferred funds to pay off a service credit purchase. (Note, though, that Roth 401(k) contributions cannot be used to purchase service credit.)
Withdraw without penalty as early as age 55. If you retire from PERA in the year you turn age 55, you can start taking distributions from your PERAPlus account without the early withdrawal penalty (regular taxes will apply).
Professional investment help. If you prefer to take a hands-off approach to your account, the Professional Account Manager might be a good tool for you. For an additional fee, a professional advisor will design a personalized plan for you, rebalance your account, regularly monitor your account, and make adjustments as needed. Call VOYA for a no-obligation retirement assessment.
Rollovers accepted! If you have a 401(k), 403(b), 457(b), or other qualified retirement account sitting around from an old job, roll it into your PERAPlus 401(k) or 457 account so you can manage all of your money in one place. This is an option available to you even if you're PERA retiree or inactive member.
PERA provides its members diverse retirement saving options in addition to their defined benefit plan. As we discussed in our blog covering the "retirement stool" concept, it's important to take advantage of each retirement saving "leg" available to you in order to ensure a secure and comfortable retirement.