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Saturday, November 03, 2012

If In Money We Trust

But not necessarily PERS.  The PERS Strunk/Eugene recovery is in full swing now.  I got my repayment letter while I was gone on vacation.  Both the amount owed and the repayment amount were correct (good news), but that's not the story with many people I've heard from.  We have instances of people being asked to repay more than the law compels (10%), and people asked to repay amounts they claim not to owe.  I trust that PERS will get these issues sorted out.

Unfortunately, a much larger problem remains.  The new method compels retirees to repay ONLY what they owe, not a penny more.  Since the payment amount adjusts annually with any COLA, there is no simple way for individuals to track their cumulative payments as PERS does not send out monthly statements.  Consequently, there is no easy way for an individual to determine how much he/she has repaid, much less what the remaining balance is.  Retirees have asked PERS if this information will show on the 1099R - nope; on the irregular statements - not really.  This means that although we have an obligation to repay a specific amount, PERS does not feel any obligation to provide us with a periodic statement of our residual balance.  For many people this is very disquieting.  PERS has not been a paragon of accuracy over the years, yet they expect us to believe them that they will stop the payments when all our required payments have been made.  It seems to me that PERS should be sending out annual statements of balances remaining.  It isn't as if this information isn't available.  PERS is calculating it in real time, every month, and there is no reason except the small financial hit required to send out an extra piece of paper - possibly with the 1099R - at the beginning of each year.  Supposedly, there are 20,000 retirees paying back amounts monthly under the current plan.  Suppose that the cost of adding one piece of paper to the envelope that already includes the 1099R is 20 cents (that's probably an overestimate, but), we are talking an additional $4000 per year.  Contrast that with the $164 million that PERS is supposed to be collecting.  If everyone pays up in 10 years, PERS will spend an additional $40,000 in ten years to recover $164 million.  That represents 0.002% of the amount collected.  How would that compare with a single piece of litigation to challenge PERS if an individual thinks PERS has miscollected, misapplied payments, or overcharged an individual?  This strikes me as penny wise and pound foolish.

If you think PERS should be required to send you an annual statement of the amount you've repaid and what you still owe for a mistake YOU DIDN'T MAKE, please let them know.  

7 comments:

Unknown said...

Don't know if it would be harder or more expensive, but I think PERS could provide this information along with other benefit payment information on their secure web site for retirees. This is what they are now offering instead of monthly or quarterly mailed statements. It seem they could include information on their collection activity and balance to date.
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Unknown said...

I think that every year, I'll claim that both the wife & I have completed our payback obligations. PERS can either accept our claims as completed (in which case, we're done) or prove me wrong w/ an up-to-date balance. If I stagger the claims every 6 months, I'll have a constant source of amusement. Might as well get something for what we're paying back. Enough "window retirees" doing this will either force PERS to change their policy or provide job security for a bunch of employees!

mrfearless47 said...

I don't know whether this information isn't on the web site. However, even if it is, not everyone has easy access to PERS' website, has broadband, or even a computer. Making this accessible online isn't an acceptable alternative to an annual statement of balances owed and amounts paid. If the crooked banks can do it, PERS should do it too.

Lee Bornholdt said...

After reading your November 3rd persinfo blog I decided to start a spreadsheet of my monthly PERS income in order to keep them honest. I’ve found that they’re taking out 1.84% rather than 2%. Hmmm.

Unknown said...

I did receive a statement today showing the amounts withdrawn from gross income for the past two months (not the total, nor an explanation of what the misc deduction was for).
I am sure you have had this discussion...Why is the 'overpayment"
RECOVERY subtracted from gross income. As stated before, we have already paid taxes on this money. So we are doubly taxed. The amount should be taken before taxes as an adjusted gross benefit. I don't think that the PERS recovery method is legal under IRS rules. It does not represent income, so the gross should be adjusted...not the present practice as considering the recovery amount as a misc deduction. To try an go back several years and file myriads of forms in order to adjust our tax returns for the past years is insane. Doesn't anyone in PERS have any common sense...obviously not.
I guess I could subtract it myself on my 2012-13 tax returns, highlight the line item and attach an explanation why the amount differs from the PERS 1099R amount.

PS: I did notice on my annual benefit statement that the FED TAX withholding was less the two months that the repayment deduction was made...Perhaps PERS will consider the repayment amount as Pre-tax dollars and indicate that adjusted amount on the 1099R (amount subject to taxes) Any answers?

Unknown said...

I did receive a statement today showing the amounts withdrawn from gross income for the past two months (not the total, nor an explanation of what the misc deduction was for).
I am sure you have had this discussion...Why is the 'overpayment"
RECOVERY subtracted from gross income. As stated before, we have already paid taxes on this money. So we are doubly taxed. The amount should be taken before taxes as an adjusted gross benefit. I don't think that the PERS recovery method is legal under IRS rules. It does not represent income, so the gross should be adjusted...not the present practice as considering the recovery amount as a misc deduction. To try an go back several years and file myriads of forms in order to adjust our tax returns for the past years is insane. Doesn't anyone in PERS have any common sense...obviously not.
I guess I could subtract it myself on my 2012-13 tax returns, highlight the line item and attach an explanation why the amount differs from the PERS 1099R amount.

PS: I did notice on my annual benefit statement that the FED TAX withholding was less the two months that the repayment deduction was made...Perhaps PERS will consider the repayment amount as Pre-tax dollars and indicate that adjusted amount on the 1099R (amount subject to taxes) Any answers?

mrfearless47 said...

If they took the money out as pre-tax dollars, as they should have, then PERS is NOT withholding taxes a second time. The idea of a pre-tax deduction is to remove the money BEFORE any taxes are withheld and you are only taxed on the remaining benefit. How you get money back from the first time it was withheld is an entirely different matter and you should take it up with your accountant or tax prepare.