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Important Information to Consider Regarding IAP Distribution
If you retire from or withdraw your IAP account before age 59½, the distribution may be subject to a 10 percent penalty by the IRS. You should seek the advice of a qualified tax professional regarding your individual situation.
What is the Individual Account Program (IAP)?
The IAP is a defined contribution retirement program for all active Tier One, Tier Two, and OPSRP members.
If you are a Tier One or Tier Two member, you retained your existing Tier One or Tier Two regular and variable accounts, but as of January 1, 2004, no additional member contributions have been placed into those accounts. Instead, your 6 percent member contribution is now placed in your IAP account.
When you retire as a PERS Tier One, Tier Two, or OPSRP member, you can either withdraw your IAP account or apply for IAP retirement depending on your age. However, you are not required to take any action on your IAP when you retire until you reach age of 70½.
Contributions
Effective January 1, 2004, 6 percent of your salary has been placed in your IAP account. The IAP can have earnings or losses, and administrative fees are deducted from the fund’s earnings as part of the annual crediting process. You are automatically vested in your IAP account when your account is established.
Earnings
Earnings are credited annually to your account. This allows PERS to work with your employer to ensure your contributions are accurate and complete before allocating earnings on a year-end balance basis so you are not adversely affected by posting delays or corrections.
At Retirement
There are several important factors to consider when deciding whether to apply for distribution from your account or to defer distribution beyond your Tier One, Tier Two, or OPSRP retirement:
- IAP accounts are credited with investment earnings and losses annually and will continue to be subject to loss exposure until you remove the funds.
- IAP accounts have no guaranteed rate of return.
- IAP accounts are invested in a broad mix of asset classes.
We suggest you consider whether this type of investment risk is one you are comfortable bearing.
You have the option to roll over your IAP account into a traditional IRA, an eligible employer plan, a 457 deferred compensation plan, the Oregon Savings Growth Plan, or other qualified plan.
At retirement, you can receive your IAP account balance as a lump-sum payment; in installments over a 5-, 10-, 15-, or 20-year period; or over your anticipated life span.
If you are also a Tier One or Tier Two member, your IAP benefits are in addition to any other PERS retirement benefit(s) you are entitled to receive.
If you are retired and you die before all installment payments are completed, your beneficiary is entitled to receive the remaining installment payments or may choose to receive the remaining amount in a lump-sum payment.
To continue to IAP Retirement forms click here.
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