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The Plan

The SISC Defined Benefit Plan is a qualified pension plan adopted by your employer as an alternative to Social Security. Under the SISC Defined Benefit Plan there are no deductions from your paycheck for the SISC plan or to Social Security. Your employer pays the full cost of the plan. Benefits are designed to be paid out at age 65, however you can receive your benefits in cash as a full lump sum distribution after you leave employment with all participating employers or retire. There is no specified length of time you must work in order to receive benefits. You are 100% vested in any benefits you accumulate beginning on your date of participation. Because it is a qualified retirement plan, the tax deductibility of an Individual Retirement Account (IRA) may be affected in certain circumstances. We recommend that you consult a qualified tax advisor for more complete information.

Eligibility and Participation

In general, employees who are not participating in any other retirement plan of the employer, county, or state are eligible for the plan. In most cases employees who are members of, or retired from, PERS or STRS are not eligible for participation in the SISC Defined Benefit Plan. Your employer will notify you of your eligibility. Participation begins upon your date of enrollment in the plan.

If you become eligible for Public Employees' Retirement System (PERS) or State Teachers' Retirement System (STRS), your employer contributions to the SISC Defined Benefit Plan end and you enroll in PERS or STRS. The benefit accumulated under the SISC plan is not paid until you terminate employment with all participating employers with whom you earned benefits under the SISC plan and apply for benefits.

Benefits and service credit with respect to qualified military service will be provided in accordance with Code Section 414(u) of the Internal Revenue Code. If you believe you are entitled to benefits due to qualified military service, please contact the SISC office for more information.

Benefit Accumulation

You immediately begin to accumulate benefits for each hour you work upon your date of enrollment in the plan. Any benefits you accumulate are immediately vested. There is no waiting period or amount of time you must be employed by a participating employer in order to earn a “vested” right to your benefits. An annual statement of your accumulated benefits will be mailed to you each year.

Benefit Payout

Since this is a retirement plan, benefits are designed to be paid out as a monthly lifetime benefit after reaching your retirement date, age 65 or later. Monthly retirement payments will begin no later than 60 days after the close of the plan year in which retirement occurs.

You may choose to cash-out the full value of your benefits after retirement or termination of employment with all participating employers. Lump sum distributions from the plan occur once a year. The plan operates on a calendar year basis, from January 1 to December 31. Cashouts for employees who have retired or terminated effective December 31^st, and have submitted a Request for Benefit Payment form to the SISC office by January 10, will receive payment no later than 60 days after the close of the plan year in which retirement or termination occurs.

Employment Past Age 65

You are not required to retire and receive benefits once you attain age 65. You can choose to work beyond age 65 and continue to accumulate benefits under the plan. However, the plan document requires that you must begin to receive benefit payments when you reach age 70?, even if you continue to work. If the present value of your benefit is $5,000 or less, a mandatory lump sum distribution will occur. If the present value of your benefit is greater than $5,000, you will be given a one-time option of an annual lump sum payment or monthly life annuity payments.

Benefits Payable

Your annual benefit, payable as a monthly life annuity at age 65 or later, is calculated as:

1.5% of Highest Average Pay times Credited Service

Highest Average Pay is the annual average of your highest three consecutive calendar years of pay. A calendar year is a year during which you worked for a participating employer anytime from January 1 to December 31.

Credited service begins upon your date of enrollment in the plan. All employment with a participating employer is counted as credited service as long as you worked for the employer, received compensation during the calendar year, and were covered by the plan. Credited service continues until you retire, terminate or become covered under another plan. NOTE: The maximum service amount you can earn is 30 years.

If you leave all participating employers without earning three consecutive calendar years of service, your annual benefit payable is calculated as: 1.5% of Total Pay

If the present value of your benefit is $5,000 or less, a mandatory lump sum distribution is required. If the present value of your benefit is greater than $5,000, you will be given a one-time option of receiving a single lump sum payment or monthly life annuity payments beginning at age 65.

An Example

You are enrolled in the plan for 20 years as a part-time employee, and decide to retire at age 65. Your annual wages for the highest three consecutive calendar years are $9,000, $8,000, $7,000 and your credited service is 20 years.

Your Highest Average Pay is calculated by totaling your annual pay for the highest three consecutive calendar years and dividing the sum by three years. In this example, the calculation would look like this:

$9,000
8,000
7,000
$24,000/3 years = $8,000

Therefore Highest Average Pay is $8,000.00

The amount of your annual retirement income is calculated by multiplying your Highest Average Pay by 1.5% and your years of credited service.

1.5% of Highest Average Pay times
Credited Service
0.015 times $8,000 times 20 = $2,400

Your monthly benefit is $200 ($2,400 / 12 months). This monthly benefit would be payable as a lifetime benefit. Payments will begin the year following your retirement request. You will also be given an option for a one-time lump sum payment in lieu of monthly lifetime benefit payments.

Lump Sum Distribution

A lump sum distribution represents the full cash value of your benefit that is payable at the cash-out date. Under the plan, lump sum payments can only be made once a year. Eligible participants will receive payment no later than 60 days after the close of the plan year in which retirement or termination occurs, and a Request for Benefit Payment form has been received.

If the lump sum value of your benefit is $5,000 or less, the plan will cash-out your accumulated benefit after receipt of your signed SISC Request for Benefit Payment form.

If the lump sum value is greater than $5,000, you will be offered a one-time choice of receiving a lump sum payment, or deferring any benefit payments until age 65.

Some lump sum distributions may qualify to be rolled over into an Individual Retirement Account (IRA) or other Qualified Retirement Plan. Lump sums that are not rolled over into an IRA are subject to ordinary income tax. There is also an additional tax if the distribution occurs before you have a reached age 59?. You should consult a qualified tax advisor for more complete information

Funding

The plan is funded by your employer. You do not make any contributions. All contributions are held and invested by a Trustee appointed by the Plan Administrator.

Death Benefits

No death benefits are payable under this plan. However, if the death occurs after retirement or termination of employment, and the SISC Request for Benefit Payment form, signed by the Participant, has been received by SISC, the Participant's benefits shall be payable to the estate in a lump sum payment. The Plan Administrator may require verification of death.

Benefits accumulated for participants who pass away but did not submit a Request for Benefit Payment form will remain in the plan.

Optional Forms of Benefits

There are only two forms of payment: 1) a monthly life annuity, which can begin no earlier than age 65, or 2) a lump sum distribution. Benefits may not be paid out at any time while you are working for a participating employer, unless you have attained age 70-?.

Participating Districts

If you are employed by more than one participating employer, you will accumulate benefits based on compensation and service obtained from all employers who participate in this plan. You can only receive benefits from the plan once employment has ceased with all participating employers. Each employer will notify you if you are participating in this plan.

How To Apply for Benefits

When you terminate employment with all participating employers, it is your responsibility to fill out and send a SISC Defined Benefit Plan Request for Benefit Payment form to the SISC office in order to receive benefits. Request for Benefit Payment forms must reach the SISC office by January 10, following the year you retire or terminate. Benefits cannot be paid until the SISC office receives your signed Request for Benefit Payment form.

Plan Administrator

Every effort has been made to be as accurate as possible in communicating the highlights of this plan. All information is subject to correction if an error is discovered. In all cases, the retirement plan document governs the operation of the plan. If you have any questions, please contact the Plan Administrator at:

SISC
1300 17th Street
P.O. Box 1808
Bakersfield CA 93303-1808
(661) 636-4602 Fax: (661) 636-4063
lylavalley@kern.org

siscDefinedBenefit News

Download Request For Benefit Payment Form Download SSA-1945

The Plan

Eligibility and Participation

Benefit Accumulation

Benefit Payout

Employment Past Age 65

Benefits Payable

An Example

Lump Sum Distribution

Funding

Death Benefits

Optional Forms of Benefits

Participating Districts

How To Apply for Benefits

Plan Administrator

Download Request For Benefit Payment Form

Download SSA-1945