How VRS pays your benefit: your options

Short answer: you choose one payout option at retirement, and it's permanent. The Basic Benefit pays the most each month but stops at your death; the Survivor Option pays less so a survivor keeps a benefit; the PLOP adds a lump sum with a smaller monthly benefit; the Advance Pension Option pays more until an age you choose, then less. See survivor benefits, Social Security and taxes. See the Basic Benefit for the Plan 1 example in the calculator.

The Partial Lump-Sum Option (PLOP)

Available with the Basic Benefit or Survivor Option if you work at least one year beyond the date you first become eligible for an unreduced benefit: 12 months = 1x the annual Basic Benefit; 24 months = 1x or 2x; 36 months or more = 1x, 2x or 3x. Purchased or granted service cannot substitute for the active service. Not available with the Advance Pension Option or disability retirement, or if the reduced monthly payment would be under $50. Plan 1 Handbook p. 18, PLOP amounts chart; Employer Manual p. 9

Your monthly check is then reduced for life, by an amount VRS works out for you. Check with VRS

Paid directly: VRS withholds 20% federal and, for Virginia residents, 4% state income tax; the IRS may add a 10% penalty before age 59 1/2 (exceptions apply). It can be rolled over to an IRA, a qualified plan, or the Commonwealth of Virginia 457 / Cash Match Plan. Plan 1 Handbook p. 18, Taxes on the PLOP

With the PLOP or Survivor Option the COLA is figured on the reduced benefit; with the Basic Benefit or Advance Pension Option it is figured on the Basic Benefit. Plan 1 Handbook p. 20, Benefit Payout Options and the COLA

The Advance Pension Option

• Plan 1: Available with an unreduced benefit, or with a reduced benefit at age 55 or older and vested. Plan 1 Handbook p. 19, Advance Pension Option; Getting Ready to Retire Guide p. 11
• Plan 2: Available with an unreduced or reduced benefit (reduced: age 60 or older). Plan 2 Handbook p. 18, Advance Pension Option; Getting Ready to Retire Guide p. 11
• Hybrid: Available with an unreduced or reduced benefit (reduced: age 60 or older). Hybrid Handbook p. 21, Advance Pension Option; Getting Ready to Retire Guide p. 11

Good to know

• A married or separated member's spouse must complete the spousal acknowledgment section of the retirement application. Plan 1 Handbook p. 52, Completing Your Application
• A Plan 1 member taking 50/10 retirement may not elect the regular options; a special 50/10 joint and last-survivor option applies. Va. Code § 51.1-165(A), (B)
• The option is irrevocable, except that the Survivor Option can be changed once (survivor dies; divorce under 20 years of marriage; divorce after 20+ years and the spouse dies, remarries or consents; or the survivor's written consent plus proof of good health). A member who returns to work and retires again must choose the same option. Plan 1 Handbook p. 16-17, Benefit Payout Options; Changing the Survivor Option; Va. Code § 51.1-165(E), (F)

From the handbooks

• Payout choices: Basic Benefit, Survivor Option, Basic Benefit with PLOP, Survivor Option with PLOP, and the Advance Pension Option. Your choice is irrevocable, except for the Survivor Option changes listed below.Plan 1 Handbook p. 16, Benefit Payout Options
• Basic Benefit: the full formula amount for your lifetime only. When you die, your beneficiary gets whatever is left in your member contribution account.Plan 1 Handbook p. 16, Basic Benefit
• Survivor Option: you take a lower benefit so that a survivor gets a whole percentage you choose, from 10% to 100%, after your death. The amount depends on that percentage and both your ages.Plan 1 Handbook p. 17, Survivor Option
• You can change the Survivor Option once: if your survivor dies, if you divorce after fewer than 20 years of marriage, in some cases after a longer marriage, or with your survivor's written consent and proof of their good health.Plan 1 Handbook p. 17, Changing the Survivor Option
• PLOP example: on a $32,000 annual Basic Benefit, the lump sum can be $32,000, $64,000 or $96,000 depending on how long you worked past unreduced eligibility. Your monthly benefit is then reduced.Plan 1 Handbook p. 18, PLOP Amounts chart
• Advance Pension Option: a temporarily higher benefit until an age you choose between 62 and your Social Security normal retirement age. After that it drops permanently by the estimated Social Security amount used, but never by more than 50% of your Basic Benefit.Plan 1 Handbook p. 19, Advance Pension Option
• VRS doesn't publish Survivor Option, PLOP or Advance Pension Option factors. myVRS's Benefit Estimator shows your own amounts.Plan 1 Handbook p. 20, Use myVRS to Calculate the Best Option for You
• A married or separated member's spouse must sign the spousal acknowledgment on the retirement application.Plan 1 Handbook p. 52, Completing Your Application

Questions

Estimate your Basic Benefit → Survivor benefits