If you work three years past normal retirement, you can choose a one-time, Partial Lump Sum Option (PLSO) payment at retirement with reduced lifetime benefits. The reduction is based on the amount of the payment and your age at retirement.
Most, or all, of a PLSO payment is considered taxable income by the IRS. PEERS is required by the IRS to withhold 20% for federal taxes. You may defer the tax liability by rolling the PLSO payment to a qualified retirement account. Learn more about PLSO Tax Liability »
You are eligible for PLSO if you:
- Are at least age 63 with eight or more years of service
- Have 33 or more years of service
- Qualify for Rule of 86 (when your age plus your years of service equals 86 or more)
You can choose a lump-sum payment equal to 12, 24 or 36 times your Single Life
benefit (one, two or three years' worth of monthly benefits).
One-time, lump-sum payment at retirement:
Your lifetime monthly benefit amount is reduced to offset the PLSO payment you receive at retirement.
PLSO-reduced monthly benefits:
PLSO Reduction Factors are set by law and are subject to change. They are based on the number of months used to calculate your lump-sum payment and your age at retirement.
Why Choose PLSO?
We have heard from many PEERS members who have voiced concerns that financial advisors, private insurance companies and retirement planners are pressuring them to elect PLSO when they retire. They are encouraged to invest the funds elsewhere or use the lump-sum amount to purchase insurance policies that will provide protection in the form of an annuity for the member’s spouse or loved one.
PEERS does not take a position for or against a member choosing PLSO at retirement. Since your monthly benefit is actuarially reduced to offset the payment of the PLSO amount, you are actually “paying” for the right to receive part of your PEERS benefit up front in a lump sum. In addition, the decision to do so may include many personal reasons PEERS is unaware of (paying off medical bills, leaving an inheritance, building a nest egg, etc.). The list can be endless and only you can decide the importance of each factor.