Highlights from LASERS Presentation at RSEA Meetings

If you were unable to join us at a meeting, here are a few facts from our presentation that may be of interest to you:

  • LASERS is financially sound with $12.5 billion in actuarial value of assets;
  • If you move your DROP or IBO funds out of LASERS or EMPOWER Retirement to another investor, which is your absolute right, you waive your Louisiana state income tax exemption on those funds; you cannot move the funds back to LASERS or the Self-Directed Plan (SDP);
  • Regarding your privacy, LASERS DOES NOT make member lists available to insurance companies or any other commercial entities. If a company represents itself as being affiliated with LASERS, report it to our Phone Center at 1.800.256.3000. LASERS will not call you to set up a meeting in your home;
  • A general cost-of-living adjustment (COLA) is not expected this year because sufficient funds are not available in the Experience Account. This account was legislatively established so that excess investment earnings could fund COLAs.

If you have any questions about your LASERS retirement, please contact us through AskLASERS, or call us for assistance. 

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Frequently Asked Questions

Over the past 10 years, LASERS paid out over $11 billion in benefits, but has only $12.5 billion in assets. Are we going broke?

Over that same period, LASERS brought in over $17 billion through investment earnings and contributions. We are not paying out more than we bring in. Through the benefits you receive, you make a strong economic impact for Louisiana.

Why is the Deferred Retirement Option Plan (DROP) interest so low when the stock market is flourishing?

LASERS currently invests 23% of the plan in the US stock market. We do not invest a large portion of our fund in the stock market because of its volatility. The rise in the S&P 500 has been highly unusual in the most recent decade. However, in the prior decade, the returns of the S&P 500 were poor, providing negative returns to investors. While the S&P was performing poorly, LASERS return over that same 10-year period was a positive 3.3%. The dramatic market fluctuations over the past few weeks demonstrate the volatility of this market. LASERS is a long-term investor and is committed to a broadly diversified portfolio to maximize return while minimizing risk. We invest domestically and internationally, in both public and private markets. We believe that the plan is well positioned to meet its long-term goals and objectives.

How are DROP interest rates determined for accounts held at LASERS?

If you entered DROP based on a retirement eligibility date prior to January 1, 2004, you may still have your DROP account held at LASERS. Those accounts earn interest based on the investment returns earned by LASERS, but those returns are “smoothed” over a five year period. This smoothed earnings rate is then subtracted by 0.50% (for administrative expenses) to determine the interest credited to the members’ DROP accounts.

“Smoothing” mitigates volatility in the short-term market fluctuations. Gains and losses are recognized in twenty percent increments over a five year period, subject to corridor limits which avoid outlying returns. Typically, the amount of a gain or loss is recognized 20% in the first year, 40% in the second year, 60% in the third year, and 80% in the fourth year.

Are online withdrawals allowed from DROP accounts?

LASERS does not currently allow withdrawals to be made online from DROP accounts. It is a feature being explored for the future.

You can visit our website and obtain the necessary form to complete for a DROP withdrawal. On the LASERS website, go to Forms at the top of the screen, Select Member Forms; under DROP/IBO choose the form 09-03 Request for Withdrawal from DROP-IBO. The completed form may be faxed to 225-935-2856 or mailed to P. O. Box 44213, Baton Rouge, LA 70804.

Online withdrawals are allowed from Empower Retirement accounts. Contact Empower directly to withdraw your self-directed DROP or IBO money.

What employment options are allowed for retirees?

Working in private industry or a government position not eligible for LASERS does not impact your LASERS benefit.

Working as a rehired retiree in a LASERS eligible position generally requires you to choose an option: (1) continue to receive your retirement benefit and earn up to 50% of your annual benefit or (2) suspend your retirement benefit and have no limit on earnings. Your hiring agency must submit a form indicating your option choice within 45 days after you return to work.

For the exceptions to the rule about choosing an option and more details see the Re-employed Retirees chapter of the Member’s Guide to Retirement.

How are Pay Change Notices reflected?

When the dollar amount of your gross or net benefit changes, LASERS will mail you a retirement payment stub noting the new amount. Any item that has changed is noted with an “*”. Details to compare the new amount to the old amount are available online through the self-service portal. Go to “Account” and then “Benefit Payment History” to select the payment that was changed.

What is the significance of Box 5 on Form 1099-R?

The amount in Box 5 of the 1099-R is the difference between Box 1, “Gross Distribution” and Box 2a “Taxable Amount.” It equals after-tax employee contributions that are recovered tax free during the tax year. After-tax employee contributions are often used when a member purchases service.

When are 1099-Rs available?

1099-Rs are mailed by LASERS each year by January 31, as required by IRS regulations. The 60,000 or so 1099s generated by LASERS each year are the result of extensive testing and verification, which takes significant staff hours. Given our staffing levels it would be difficult to mail 1099s much earlier than January 31.

1099-Rs are available online through the self-service portal at the same time they are mailed. Navigate to “Documents” and then “View Tax Documents” to view and print your 1099-R.

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