CHAPTER 12
CALCULATION OF MONTHLY RETIREMENT BENEFITS
[Prior to 11/24/04, see 581—Ch 21]
495—12.1(97B) General.
	12.1(1) Formula benefit versus money purchase benefit. If a member has four or more complete years of service credit in IPERS, a monthly payment allowance will be paid in accordance with the formulas set forth in Iowa Code sections 97B.49A through 97B.49I, the applicable paragraphs of this chapter and the option the member elects pursuant to Iowa Code section 97B.51(1). IPERS shall determine on the applicable forms which designated fractions of a member’s monthly retirement allowance payable to contingent annuitants shall be provided as options under Iowa Code section 97B.51(1). Any option elected by a member under Iowa Code section 97B.51(1) must comply with the requirements of the Internal Revenue Code that apply to governmental pension plans, including but not limited to Internal Revenue Code Section 401(a)(9). If a member has less than four complete years of service credit, the benefit receivable will be computed on a money purchase basis, with reference to annuity tables used by IPERS in accordance with the member’s age and option choice.
	12.1(2) Reduction for early retirement.
	a. 	Effective July 1, 1988, through December 31, 2000, a member’s benefit formula will be reduced by .25 percent for each month the member’s retirement precedes the normal retirement date, as defined in Iowa Code section 97B.45 excluding section 97B.45(4). The following are situations in which a member is considered to be taking early retirement:
	(1)	If a member has not attained the age of 65 in the member’s first month of entitlement and has less than 20 years of service; or
	(2)	If a member has not attained the age of 62 in the month of the member’s retirement and has 20 years of service.
	b. 	Effective July 1, 1997, a member shall be eligible to receive monthly retirement benefits with no age reduction effective the first of the month in which the member’s age on the last birthday and the member’s years of service equal or exceed 88, provided that the member is at least the age of 55.
	c. 	Effective July 1, 1991, a member qualifying for early retirement due to disability under Iowa Code section 97B.50 shall not be subject to a reduction in benefits due to age.
	d. 	If a member retires with at least 20 years of service but has not attained the age of 62, the age reduction shall be calculated by deducting .25 percent per month for each month that the first month of entitlement precedes the month in which the member attains the age of 62. If a member retires with less than 20 years of service, the age reduction shall be calculated by deducting .25 percent per month for each month that the first month of entitlement precedes the month in which the member attains the age of 65.
	e. 	Effective January 1, 2001, the age reduction shall be calculated by deducting .25 percent per month for each month that the first month of entitlement precedes the earliest possible normal retirement date for that member based on the age and years of service at the member’s actual retirement.
	12.1(3) Early retirement date. A member’s early retirement date shall be the first day of the month of the fifty-fifth birthday or any following month before the normal retirement date, provided that date is after the member’s termination date.
	12.1(4) Members employed before January 1, 1976, and retiring after January 1, 1976. Members employed before January 1, 1976, and retiring after January 1, 1976, with four or more complete years of membership service shall be eligible to receive the larger of a monthly formula benefit equal to the member’s total covered wages multiplied by one-twelfth of one and fifty-seven hundredths percent, multiplied by the percentage calculated in subrule 12.1(2), if applicable, or a benefit as calculated in subrule 12.1(6).
	12.1(5) Members employed before January 1, 1976, who qualified for prior service credit. Members employed before January 1, 1976, who qualified for prior service credit shall be eligible to receive a monthly formula benefit of eight-tenths of one percent multiplied by each year of prior service multiplied by the monthly rate of the member’s total remuneration during the 12 consecutive months of prior service for which the total remuneration was the highest, disregarding any monthly rate amount in excess of $250, plus three-tenths of one percent of the monthly rate amount not in excess of $250 for each year in which accrued liability for benefit payments created by the abolished system is funded.
	12.1(6) Benefit formulas for members retiring on or after July 1, 1994.
	a. 	For each active member retiring on or after July 1, 1994, with four or more complete years of service, the monthly benefit will be equal to one-twelfth of an amount equal to 60 percent of the three-year average covered wage multiplied by a fraction of years of service.
	b. 	For all active and inactive vested members, the monthly retirement allowance shall be determined on the basis of the formula in effect on the date of the member’s retirement. If the member takes early retirement, the benefit shall be adjusted as provided in subrule 12.1(2).
	c. 	Effective July 1, 1996, through June 30, 1998, in addition to the 60 percent multiplier identified above, members who retire with years of service in excess of their “applicable years” shall have the percentage multiplier increased by 1 percent for each year in excess of their “applicable years,” not to exceed an increase of 5 percent. For regular members, “applicable years” means 30 years; for protection occupation members, “applicable years” means 25 years; for sheriffs, deputy sheriffs, and airport firefighters, “applicable years” means 22 years.
	d. 	Effective July 1, 1998, sheriffs, deputy sheriffs, and airport firefighters who retire with years of service in excess of their applicable years shall have their percentage multiplier increased by 1.5 percent for each year in excess of their applicable years, not to exceed an increase of 12 percent.
	e. 	Effective July 1, 2000, the “applicable years” and increases in the percentage multiplier for years in excess of the applicable years for protection occupation members shall be determined under Iowa Code section 97B.49B(1), as set forth in paragraph “f” below.
	f. 	For special service members covered under Iowa Code section 97B.49B, the applicable percentage and applicable years for members retiring on or after July 1, 2000, shall be determined as follows:
	(1)	For each member retiring on or after July 1, 2000, and before July 1, 2001, 60 percent plus, if applicable, an additional .25 percent for each additional quarter of eligible service beyond 24 years of service (the “applicable years”), not to exceed 6 additional percentage points;
	(2)	For each member retiring on or after July 1, 2001, and before July 1, 2002, 60 percent plus, if applicable, .25 percent for each additional quarter of eligible service beyond 23 years of service (the “applicable years”), not to exceed a total of 7 additional percentage points;
	(3)	For each member retiring on or after July 1, 2002, and before July 1, 2003, 60 percent plus, if applicable, .25 percent for each additional quarter of eligible service beyond 22 years of service (the “applicable years”), not to exceed a total of 8 additional percentage points;
	(4)	For each member retiring on or after July 1, 2003, 60 percent plus, if applicable, an additional .375 percent for each additional quarter of eligible service beyond 22 years of service (the “applicable years”), not to exceed a total of 12 additional percentage points.
	(5)	Regular service does not count as “eligible service” in determining a special service member’s applicable percentage.
	12.1(7) Average covered wages.
	a. 	“Three-year average covered wage” means a member’s covered calendar year wages averaged for the highest three years of the member’s service. However, if a member’s final quarter of a year of employment does not occur at the end of a calendar year, IPERS may determine the wages for the third year by computing the final quarter or quarters of wages to complete the year. The computed year wages shall not exceed the maximum covered wage in effect for that calendar year. Furthermore, for members whose first month of entitlement is January of 1999 or later, the computed year shall not exceed the member’s highest actual calendar year of covered wages by more than 3 percent. Effective July 1, 2007, a member’s high three-year average wage shall be the greater of (1) the member’s high three-year average covered wage based on covered wages reported through June 30, 2007; or (2) the member’s high three-year average covered wage after application of the antispiking control as described in paragraph “c” below.
For members whose first month of entitlement is January 1995 or later, a full third year will be created when the final quarter or quarters reported are combined with a computed average quarter to complete the last year. The value of this average quarter will be computed by selecting the highest covered wage year not used in the computation of the three high years and dividing the covered salary by four quarters. This value will be combined with the final quarter or quarters to complete a full calendar year. If the member’s final quarter of wages will reduce the three-year average covered wage, it can be dropped from the computation. However, if the covered wages for that quarter are dropped, the service credit for that quarter will be forfeited as well. If the final quarter is the first quarter of a calendar year, those wages must be used in order to give the member a computed year. The three-year average covered wage cannot exceed the highest maximum covered wages in effect during the member’s service.
If the three-year average covered wage of a member who retires on or after January 1, 1997, and before January 1, 2002, exceeds the limits set forth in paragraph “b” below, the longer period specified in paragraph “b” shall be substituted for the three-year averaging period described above. No quarters from the longer averaging period described in paragraph “b” shall be combined with the final quarter or quarters to complete the last year.
	b. 	For the persons retiring during the period beginning January 1, 1997, and ending December 31, 2001, the three-year average covered wage shall be computed as follows:
	(1)	For a member who retires during the calendar year beginning January 1, 1997, and whose three-year average covered wage at the time of retirement exceeds $48,000, the member’s covered wages averaged for the highest four years of the member’s service or $48,000, whichever is greater.
	(2)	For a member who retires during the calendar year beginning January 1, 1998, and whose three-year average covered wage at the time of retirement exceeds $52,000, the member’s covered wages averaged for the highest five years of the member’s service or $52,000, whichever is greater.
	(3)	For a member who retires during the calendar year beginning January 1, 1999, and whose three-year average covered wage at the time of retirement exceeds $55,000, the member’s covered wages averaged for the highest six years of the member’s service or $55,000, whichever is greater.
	(4)	For a member who retires on or after January 1, 2000, but before January 1, 2001, and whose three-year average covered wage at the time of retirement exceeds $65,000, the member’s covered wages averaged for the highest six years of the member’s service or $65,000, whichever is greater. For the calendar year beginning January 1, 2001, the six-year wage averaging trigger shall be increased to $75,000.
	(5)	Effective January 1, 2002, the computation of average covered wages shall be as provided in paragraph 12.1(7)“a.”
For purposes of paragraph 12.1(7)“b,” the highest years of the member’s service shall be determined using calendar years and may be determined using one computed year. The computed year shall be calculated in the manner and subject to the restrictions provided in paragraph 12.1(7)“a.”
	c. 	Antispiking limit on the growth of a member’s high three-year average.
	(1)	Selection of the control year shall give highest priority to calendar years of wages in which there are four quarters of service credit for wages on file not used in the high three-year average wage calculation. For example, if the member receives $20,000 of wages for a calendar year with four quarters of service credit for wages, and the member also has received $30,000 of wages for a calendar year with three quarters of service credit for wages, the control year selection process shall give preference to the calendar year with $20,000 of reported wages.
	(2)	If there is a calendar year of covered wages outside the high three-year average wage calculation that has four quarters, but the covered wages for that year are less than the covered wages for the fourth highest calendar year of covered wages, and that fourth highest calendar year of covered wages does not have four quarters of service credit for wages, the control year will be the lowest of the high three calendar years of wages with service credits for wages in all four quarters being used in the high three-year average wage calculation.
	(3)	“Service credit for wages” means service credit recorded for:
	1.	Quarters in which the member receives covered wages from covered employment.
	2.	Quarters in which the member is credited with covered wages due to a military leave.
	3.	Quarters in which the member would have had covered wages but for the application of the IRS covered wage limitations.
	4.	Quarters in which an employee of a nine-month institution receives service credit for a qualifying leave of absence under 495—subrule 7.1(2).
	5.	Quarters in which a legislator, legislative employee, or elected official receives service credit for employment.
	(4)	If none of the calendar years of wages that fall outside of the high three-year average wage calculation have service credit for wages reported in all four quarters, the control year will then be the lowest of the high three calendar years of wages with service credit for wages in all four quarters being used in the high three-year average wage calculation.
	(5)	If none of the wage years used in the high three-year average wage calculation have service credits for wages reported in all four quarters, the control year will then revert to the highest calendar year of wages not included in the high three-year average wage calculation, regardless of whether there are fewer than four quarters with service credits for wages on file.
	(6)	For high three-year average wage calculations that utilize the computed year, the control year may be the calendar year from which the “average quarters” used in the computed year are drawn. However, the control year cannot be the computed year, as the computed year will never be a calendar year with service credit for wages in all four quarters.
495—12.2(97B) Initial benefit determination.
	12.2(1) The initial monthly benefit for the retired member will be calculated utilizing the wages that have been reported as of the member’s retirement and subject to the requirements of subrule 12.1(7). When the final quarter(s) of wages is reported for the retired member, a recalculation of benefits will be performed by IPERS to redetermine the member’s benefit amount. In cases where the recalculation determines that the benefit will be changed, the adjustment in benefits will be made retroactive to the first month of entitlement. The wages for the “computed year” shall not exceed the highest covered wage ceiling in effect during the member’s period of employment.
	12.2(2) In cases where the member’s final quarter’s wages have been reported to IPERS prior to retirement, the original benefit will be calculated utilizing all available wages.
	12.2(3) The Option 1 death benefit amount cannot exceed the member’s investment and cannot lower the member’s benefit below the minimum distribution required by federal law.
495—12.3(97B) Minimum benefits. Effective January 1, 1997, those members and beneficiaries of members who retired prior to July 1, 1990, and who upon retirement had years of service equal to or greater than 10, will receive a minimum benefit as follows.
	12.3(1) The minimum benefit is $200 per month for those members with 10 years of service who retired under Option 2. The minimum shall increase by $10 per year or $2.50 per each additional quarter of service to a maximum benefit of $400 per month for members with 30 years of service. No increase is payable for years in excess of 30. The minimum benefit will be adjusted by a percentage that reflects option choices other than Option 2, and a percentage that reflects any applicable early retirement penalty.
	12.3(2) In determining minimum benefits under this rule, IPERS shall use only the years of service the member had at first month of entitlement (FME). Reemployment periods and service purchases completed after FME shall not be used to determine eligibility.
	12.3(3) The adjusted minimum benefit amount shall be determined using the option and early retirement adjustment factors set forth below.
	a. 	The option adjustment factor is determined as follows:

 	Option 1	.94	 	
 	Option 2	1.00	 	
 	Option 3	1.00	 	
 	Option 4 (100%)	.87	 	
 	Option 4 (50%)	.93	 	
 	Option 4 (25%)	.97	 	
 	Option 5	.97	 	
	b. 	The early retirement adjustment factor is determined as follows:
	(1)	There is no early retirement adjustment if the member’s age at first month of entitlement equals or exceeds 65, or if the member’s age at first month of entitlement is at least 62 and the member had 30 or more years of service.
	(2)	The early retirement adjustment for a member having 30 years of service whose first month of entitlement occurred before the member attained age 62 is .25 percent per month for each month the first month of entitlement precedes the member’s sixty-second birthday.
	(3)	The early retirement adjustment for a member having less than 30 years of service whose first month of entitlement occurred before the member attained age 65 is .25 percent per month for each month the first month of entitlement precedes the member’s sixty-fifth birthday.
	(4)	IPERS shall calculate the early retirement adjustment factor to be used in subrule 12.3(4) as follows:

100%	-	early retirement adjustment percentage	=	early retirement adjustment factor	
	(5)	The early retirement adjustment shall not be applied to situations in which the member’s retirement was due to a disability that qualifies under Iowa Code section 97B.50 or 97B.50(2).
	12.3(4) IPERS shall use the following formula to calculate the adjusted minimum benefit:

unadjusted minimum benefit	×	option adjustment factor	×	early retirement adjustment factor	=	adjusted
minimum benefit	
	12.3(5) IPERS shall compare the member’s current benefit to the adjusted benefit determined as provided in subrules 12.3(3) and 12.3(4). If the member’s current benefit is greater than or equal to the adjusted minimum benefit, no change shall be made. Otherwise, the member shall receive the adjusted minimum benefit.
	12.3(6) Effective January 1, 1999, the monthly allowance of certain retired members and their beneficiaries, including those whose monthly allowance was increased by the operation of subrules 12.3(3) to 12.3(5), shall be increased. If the member retired from the system before July 1, 1986, the monthly allowance currently being received by the member or the member’s beneficiary shall be increased by 15 percent. If the member retired from the system on or after July 1, 1986, and before July 1, 1990, the monthly allowance currently being received by the member or the member’s beneficiary shall be increased by 7 percent.
495—12.4(97B) Hybrid formula for members with more than one type of service credit.
	12.4(1) Eligibility. Effective July 1, 1996, members having both regular and special service (as defined in Iowa Code section 97B.1A(22)) shall receive the greater of the benefit amount calculated under this subrule or the benefit amount calculated under the applicable nonhybrid benefit formula.
	a. 	Members who have a combined total of 16 quarters of service may utilize the hybrid formula.
	b. 	The following classes of members are not eligible for the hybrid formula:
	(1)	Members who have only regular service credit.
	(2)	Members who have 22 years of special service credit.
	(3)	Members who have 30 years of regular service.
	(4)	Members with less than 16 total quarters of service.
	12.4(2) Assumptions. IPERS shall utilize the following assumptions in calculating benefits under this rule.
	a. 	The member’s three-year average covered wage shall be determined in the same manner as it is determined for the nonhybrid formula.
	b. 	Increases in the benefit formula under this rule shall be determined as provided under Iowa Code section 97B.49D. The percentage multiplier shall only be increased for total years of service over 30.
	c. 	Years of service shall be utilized as follows:
	(1)	Quarters which have two or more occupation class codes shall be credited as the class that has the highest reported wage for said quarter. A member shall not receive more than one quarter of credit for any calendar quarter, even though more than one type of service credit is recorded for that quarter.
	(2)	Quarters shall not be treated as special service quarters unless the applicable employer and employee contributions have been made.
	12.4(3) Years of service fraction not to exceed one.
	a. 	In no event shall a member’s years of service fraction under the hybrid formula exceed, in the aggregate, one.
	b. 	If the years of service fraction does, in the aggregate, exceed one, the member’s quarters of service credit shall be reduced until the member’s years of service fraction equals, in the aggregate, one.
	c. 	Service credit shall first be subtracted from the member’s regular service credit and, if necessary, shall next be subtracted from the member’s special service credit.
	12.4(4) Age reduction. The portion of the member’s benefit calculated under this rule that is based on the member’s regular service shall be subject to a reduction for early retirement. In calculating the age reduction to be applied to the portion of the member’s benefit based on the member’s regular service, the system shall use all quarters of service credit, including both regular and special service quarters.
	12.4(5) Calculations. A member’s benefit under the hybrid formula shall be the sum of the following:
	a. 	The applicable percentage multiplier divided by 22 times the years of special service credit times the member’s high three-year average covered wage, plus
	b. 	The applicable percentage multiplier divided by 30 times the years of regular service credit (if any) times the member’s high three-year average covered wage minus the applicable wage reduction (if any).
If the sum of the percentages obtained exceeds the applicable percentage multiplier for that member, the percentage obtained above for each class of service shall be subject to reduction so that the total shall not exceed the member’s applicable percentage multiplier in the order specified in paragraph 12.4(3)“c” of this subrule.
495—12.5(97B) Money purchase benefits.
	12.5(1) For each vested member retiring with less than four complete years of service, a monthly annuity shall be determined by applying the total reserve as of the effective retirement date (plus any retirement dividends standing to the member’s credit on December 31, 1966) to the annuity tables in use by the system according to the member’s age (or member’s and contingent annuitant’s ages, if applicable). If the member’s retirement occurs before January 1, 1995, IPERS’ revised 6.5 percent tables shall be used. If the member’s retirement occurs after December 31, 1994, IPERS’ 6.75 percent tables shall be used.
	12.5(2) For each vested member for whom the present value of future benefits under Option 2 is less than the member reserve as of the effective retirement date, a monthly annuity shall be determined by applying the member reserve to the annuity tables in use by the system according to the member’s age (or member’s and contingent annuitant’s ages, if applicable). If the member’s retirement occurs before January 1, 1995, IPERS’ revised 6.5 percent tables shall be used. If the member’s retirement occurs after December 31, 1994, IPERS’ 6.75 percent tables shall be used.
	12.5(3) For calculations under subrule 12.5(1), the term “total reserve” means the total of the member’s investment and the employer’s investment as of the effective retirement date, plus any retirement dividends standing to the member’s credit as of December 31, 1966. For calculations under subrule 12.5(2), the term “member reserve” means the member’s total investment, excluding all other amounts standing to the member’s credit.
	12.5(4) For calculations under subrule 12.5(1), Options 2, 3, 4, 5 and 6 shall be calculated by dividing the member’s total reserve by the applicable Option 2, 3, 4, 5 or 6 annuity factor taken from the system’s tables to determine the monthly amount. For calculations under subrule 12.5(2), Options 2, 3, 4, 5 and 6 shall be calculated by dividing the member reserve by the applicable Option 2, 3, 4, 5 or 6 annuity factor taken from the system’s tables to determine the monthly amount.
	12.5(5) For Option 1, the cost per $1,000 of death benefit shall be determined according to the system’s tables. That cost shall be subtracted from the Option 3 monthly amount to determine the Option 1 monthly benefit amount. The Option 1 death benefit amount shall be reduced as necessary so that the Option 1 monthly benefit amount is not less than one-half of the Option 2 monthly benefit amount.
	12.5(6) If the member has prior service (service prior to July 4, 1953), the Option 2 benefit amount calculated under subrules 12.5(1) and 12.5(2) shall be calculated by determining the amount of the member’s Option 2 benefit based on the member’s prior service and the applicable plan formula, plus the amount of the member’s Option 2 benefit based on the member’s membership service as determined under this rule. The Option 2 benefit amount based on prior service shall be adjusted for early retirement.
495—12.6(97B) Recalculation for a member aged 70. A member remaining in covered employment after attaining the age of 70 years may receive a retirement allowance without terminating the covered employment. A member who is in covered employment, attains the age of 70 and begins receiving a retirement allowance must terminate all covered employment before the member’s retirement allowance can be recalculated to take into account service after the member’s original FME. The termination of employment must be a true severance lasting at least 30 days. The formula to be used in recalculating such a member’s retirement allowance depends on the date of the member’s FME and the member’s termination date, as follows:
If the member is receiving a retirement allowance with an FME prior to July 1, 2000, and terminates covered employment on or after January 1, 2000, the member’s retirement formula for recalculation purposes shall be the formula in effect at the time of the member’s termination from covered employment or, if later, the date the member applies for a recalculation.
In all other cases, the recalculation for a member aged 70 who retires while actively employed shall use the retirement formula in effect at the time of the member’s FME.
Payments under this rule shall begin no earlier than the month following the month of termination, upon IPERS’ receipt of a member’s application for recalculation.
495—12.7(97B) Level payment choice for special service members. A level payment choice is created effective July 1, 2002. IPERS shall implement the level payment choice by preparing factors to convert nonhybrid IPERS Options 1, 2, 3, 4, and 5 to the level payment choice. The new benefit feature applies solely to special service members, and any reference to members in this rule shall only apply to special service members.
	12.7(1) Conversion rights window. A special service member who qualifies for a July 2002 or later first month of entitlement (FME) may elect to retire under the regular IPERS Option 1, 2, 3, 4 or 5, and later have the member’s option converted to the level payment choice. Retroactive adjustments in monthly amounts and death benefits, without interest, shall be provided.
In order to qualify for the conversion and retroactive payments, the member must request the level payment choice in writing no later than six months after the member’s first monthly payment. If the member is married, the member’s spouse must also consent to the requested change. Election of conversion to the level payment choice shall be irrevocable upon receipt of the first payment under the level payment choice.
A member who has retired under Iowa Code section 97B.49D or under IPERS Option 6 on or after July 1, 2002, and who wishes to receive benefits under this rule may revoke the member’s initial election and choose IPERS Option 1, 2, 3, 4, or 5 to be paid as a level payment choice. The conversion to the level payment choice under this subrule is mandatory and irrevocable.
The conversion rights granted in this subrule shall not apply to members whose FME is January 2003 and later. Those members must select the level payment choice at the time they submit an IPERS retirement application.
	12.7(2) Member’s social security retirement amount. Calculations of a member’s level payment choice shall be based on the member’s social security retirement amount at age 62 as verified by Social Security Administration statements provided by the member. No adjustments shall be made if subsequent social security statements indicate an increase in the age 62 social security retirement amount. Verification of the social security benefits shall not precede the member’s first month of entitlement by more than 12 months.
	12.7(3) Death benefit assumptions. In preparing level payment choice factors, IPERS shall assume:
	a. 	For IPERS Options 1 and 2, death benefits under those options shall not be reduced as a result of a member’s attaining the age of 62 and having the member’s monthly allowance reduced under this rule.
	b. 	For IPERS Options 4 and 5, IPERS shall assume that the contingent annuitant’s or beneficiary’s monthly payments and death benefits, if any, prior to the date the member attains, or would have attained, age 62 shall be based on the amount that was payable to the member for periods before the member attains, or would have attained, age 62. Beginning with the month that the member attains, or would have attained, age 62, a contingent annuitant’s or beneficiary’s monthly payments and death benefits, except death benefits under IPERS Options 1 and 2, shall be based on the reduced amount that would have been payable to the member in the month after the month that the member attained age 62.
	12.7(4) Favorable experience dividends. An eligible member’s or beneficiary’s favorable experience dividend, if any, shall be based on the member’s or beneficiary’s level payment choice monthly amount as of the preceding December 31.
	12.7(5) Prohibitions. The following special service members shall be prohibited from receiving benefits under this rule:
	a. 	Those who retire under Iowa Code section 97B.49D.
	b. 	Those who retire under Option 6.
	c. 	Those who request a level payment amount that reflects less than a full offset for the social security retirement amount at age 62.
	d. 	Those reemployed in covered employment and subsequently retiring, for the period of reemployment. A member who has elected the level payment choice shall have retirement benefits calculated solely for the period of reemployment, except for vesting credit.
	12.7(6) Limit on reductions. For a member who has substantial noncovered employment, the application of the level payment choice factors shall not reduce the monthly amount payable to a member at age 62 to less than 50 percent of the monthly amount that would have been payable under IPERS Option 2. Accordingly, payments before age 62 to such members shall be reduced in the same manner, with the corresponding adjustments made to death benefits.
495—12.8(97B) Reemployment of retired members.
	12.8(1) Effective July 1, 1998, the monthly benefit payments for a member under the age of 65 who has a bona fide retirement and is then reemployed in covered employment shall be reduced by 50 cents for each dollar the member earns in excess of the annual limit. Effective July 1, 2002, this reduction is not required until the member earns the amount of remuneration permitted for a calendar year for a person under the age of 65 before a reduction in federal social security retirement benefits is required, or earns $30,000, whichever is greater. The foregoing reduction shall apply only to IPERS benefits payable for the applicable year that the member has reemployment earnings and after the earnings limit has been reached. Said reductions shall be applied as provided in subrule 12.8(2).
Effective January 1, 1991, this earnings limitation does not apply to covered employment as an elected official. A member aged 65 or older who has completed at least four full calendar months of bona fide retirement and is later reemployed in covered employment shall not be subject to any wage-earning disqualification.
	12.8(2) Beginning on or after July 1, 1996, the retirement allowance of a member subject to reduction pursuant to subrule 12.8(1) shall be reduced as follows:
	a. 	A member’s monthly retirement allowance in the following calendar year shall be reduced by the excess amounts earned in the preceding year divided by the number of months remaining in the following calendar year after the excess amount has been determined. A member may elect to make repayment of the overpayments received in lieu of having the member’s monthly benefit reduced. Elections to make installment payments must be accompanied by a repayment agreement signed by the member and IPERS. If the monthly amount to be deducted exceeds a member’s monthly retirement allowance, the member’s monthly allowance shall be withheld in its entirety until the overpayment is recovered. If a member dies and the full amount of overpayments determined under this subrule has not been repaid, the remaining amounts shall be deducted from the payments to be made, if any, to the member’s designated beneficiary or contingent annuitant. If the member has selected an option under which there are no remaining amounts to be paid, or the remaining amounts are insufficient, the unrecovered amounts shall be a charge on the member’s estate.
	b. 	Employers shall be required to complete IPERS wage reporting forms for reemployed individuals which shall reflect the prior year’s wage payments on a month-to-month basis. These reports shall be used by IPERS to determine the amount which must be recovered to offset overpayments in the prior calendar year due to reemployment wages.
	c. 	A member may elect in writing to have the member’s monthly retirement allowance suspended in the month in which the member’s remuneration exceeds the amount of remuneration permitted under this rule in lieu of receiving a reduced retirement allowance under paragraph “a” of this subrule. If the member’s retirement allowance is not suspended timely, the overpayment will be recovered pursuant to paragraph “a” of this subrule. The member’s retirement allowance shall remain suspended until the earlier of January of the following calendar year or the member’s termination of covered employment. The member’s election shall remain binding until revoked in writing. Effective July 1, 2007, “remuneration” shall include those amounts as described in 495—subrule 6.3(13).
	12.8(3) A member who is reemployed in covered employment after retirement may, after again retiring from employment, request a recomputation of benefits. The member’s retirement benefit shall be increased if possible by the addition of a second annuity, which is based on years of reemployment service, reemployment covered wages and the benefit formula in place at the time of the recomputation. A maximum of 30 years of service is creditable to an individual retired member. If a member’s combined years of service exceed 30, a member’s initial annuity may be reduced by a fraction of the years in excess of 30 divided by 30. The second retirement benefit will be treated as a separate annuity by IPERS. Any contributions that cannot be used in the recomputation of benefits shall be refunded to the employee and the employer.
Effective July 1, 1998, a member who is reemployed in covered employment after retirement may, after again terminating employment for at least one full calendar month, elect to receive a refund of the employee and employer contributions made during the period of reemployment in lieu of a second annuity. If a member requests a refund in lieu of a second annuity, the related service credit shall be forfeited.
Effective July 1, 2007, employer contributions described in 495—subrule 6.3(13) shall constitute “remuneration” for purposes of applying the reemployment earnings limit and determining reductions in the member’s monthly benefits but shall not be considered covered wages for IPERS benefits calculations.
	12.8(4) In recomputing a retired member’s monthly benefit, IPERS shall use the following assumptions.
	a. 	The member cannot change the option or beneficiary with respect to the reemployment period.
	b. 	If the reemployment period is less than 4 years, the money purchase formula shall be used to compute the benefit amount.
	c. 	If the reemployment period is 4 or more years, the benefit formula in effect as of the first month of entitlement (FME) for the reemployment period shall be used. If the FME is July 1998 or later, and the member has more than 30 years of service, including both original and reemployment service, the percentage multiplier for the reemployment period only will be at the applicable percentage (up to 65 percent) for the total years of service.
	d. 	If a period of reemployment would increase the monthly benefit a member is entitled to receive, the member may elect between the increase and a refund of the employee and employer contributions without regard to reemployment FME.
	e. 	If a member previously elected IPERS Option 1, is eligible for an increase in the Option 1 monthly benefits, and elects to receive the increase in the member’s monthly benefits, the member’s Option 1 death benefit shall also be increased if the investment is at least $1,000. The amount of the increase shall be at least the same percentage of the maximum death benefit permitted with respect to the reemployment as the percentage of the maximum death benefit elected at the member’s original retirement. In determining the increase in Option 1 death benefits, IPERS shall round up to the nearest $1,000. For example, if a member’s investment for a period of reemployment is $1,900 and the member elected at the member’s original retirement to receive 50 percent of the Option 1 maximum death benefit, the death benefit attributable to the reemployment shall be $1,000 (50 percent times $1,900, rounded up to the nearest $1,000). Notwithstanding the foregoing, if the member’s investment for the period of reemployment is less than $1,000, the benefit formula for a member who originally elected new IPERS Option 1 shall be calculated under IPERS Option 3.
	f. 	A retired reemployed member whose reemployment FME precedes July 1998 shall not be eligible to receive the employer contributions made available to retired reemployed members under Iowa Code section 97B.48A(4) effective July 1, 1998.
	g. 	A retired reemployed member who requests a return of the employee and employer contributions made during a period of reemployment cannot repay the distribution and have the service credit for the period of reemployment restored.
	h. 	If a retired reemployed member selected IPERS Option 5 at retirement, and after the period of reemployment requests an increase in the member’s monthly allowance, at death all remaining guaranteed payments with respect to both periods of employment shall be paid in a commuted lump sum.
	i. 	If a retired reemployed member selected IPERS Option 2 (or old IPERS Option 1) at retirement, and after the period of reemployment requests an increase in the member’s monthly allowance, at death the member’s monthly payments following the increase shall be prorated between the member’s two annuities to determine the amount of the member’s remaining accumulated contributions that may be paid as a death benefit.
	j. 	A retired reemployed member who has attained the age of 70 may take an actuarial equivalent (AE) payment. However, such a member must terminate covered employment for at least 30 days before taking an additional AE payment.
	12.8(5) Mandatory distribution of active wages. If a retired reemployed member whose annual benefit would be increased by less than $600 does not request a second annuity or a lump sum payment of reemployment accruals by the end of the fourth quarter after the last quarter in which the member had covered wages, IPERS shall proceed to pay the member the applicable lump sum amount. The member shall have 60 days after the postmark date of the mandatory payment to return the payment and restore the member’s account.
495—12.9(97B) Actuarial equivalent (AE) payments.
	12.9(1) If a member aged 55 or older requests an estimate of benefits which results in a monthly benefit amount under Option 2 of less than $50, the member shall receive, under Iowa Code section 97B.48(1), a lump sum actuarial equivalent (AE) payment in lieu of a monthly benefit. Once the AE payment has been paid to the member, the member shall not be entitled to any further benefits based on the contributions included in the AE payment and the employment period represented thereby. If the member later returns to covered employment, any future benefits the member accrues shall be based solely on the new employment period. If an estimate of benefits based on the new employment period again results in any one of the options having a monthly benefit amount of less than $50, the member may again elect to receive an AE payment.
	12.9(2) If a member, upon attaining the age of 70 or later, requests a retirement allowance without terminating employment and the member’s monthly benefit amount under Option 2 is less than $50, the member shall receive an AE payment based on the member’s employment up to, but not including, the quarter in which the application is filed. When the member subsequently terminates covered employment, any benefits due to the member will be based only on the period of employment not used in computing the AE paid when the member first applied for a retirement allowance. If an estimate of benefits based on the later period of employment again results in a monthly benefit amount under Option 2 of less than $50, the member shall receive another AE payment. However, a member who elects to receive an AE payment upon or after attaining age 70 without terminating employment may not elect to receive additional AE payments unless the member terminates all covered employment for at least one full calendar month.
	12.9(3) An AE payment under this rule shall be equal to the sum of the member’s and employer’s accumulated contributions and the retirement dividends standing to the member’s credit before December 31, 1966.
495—12.10(97B) Conforming rules for lump-sum payments. Effective January 1, 2007, IPERS may, notwithstanding certain provisions of Iowa Code section 97B.53B enacted in order to comply with prior rollover provisions of the Internal Revenue Code, utilize forms and procedures affording payees of lump-sum distributions with broader rollover rights as permitted under the applicable roll-over provisions of the Internal Revenue Code as amended subsequent to the enactment of Iowa Code section 97B.53B.
These rules are intended to implement Iowa Code sections 97B.1A, 97B.1A(24), 97B.15, 97B.25, 97B.45, 97B.47 to 97B.48A, 97B.49A to 97B.49I, 97B.51, and 97B.53B.
[Filed 11/5/04, Notice 9/15/04—published 11/24/04, effective 12/29/04]
[Filed 12/1/05, Notice 10/26/05—published 12/21/05, effective 1/25/06]
[Filed 4/7/06, Notice 3/1/06—published 4/26/06, effective 5/31/06]
[Filed 11/3/06, Notice 9/27/06—published 11/22/06, effective 12/27/06]
[Filed 5/3/07, Notice 3/28/07—published 5/23/07, effective 6/27/07]
[Filed 8/10/07, Notice 7/4/07—published 8/29/07, effective 10/3/07]