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USLF Multistate Elder and Retirement Law Handbook - Guide

Retirement Rules For State Government Employees In Michigan

Category:

Family Law - Elder Law

State:

Multi-State

Control #:

US-001HB

Format:

Instant download

Description

This Handbook provides an overview of federal laws affecting the elderly and retirement issues. Information discussed includes age discrimination in employment, elder abuse & exploitation, power of attorney & guardianship, Social Security and other retirement and pension plans, Medicare, and much more in 22 pages of materials.

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Federal career employees receive retirement benefits through either the Federal Employees Retirement System (FERS) or the Civil Service Retirement System (CSRS). Both are defined benefit, contributory retirement systems.

In tax year 2023, Michigan began a four-year phase-out of its retirement income tax. By the 2026 tax year, pensions and income from 401(k) and IRA withdrawals will be fully exempt from state income tax. In the meantime, you may qualify for tax relief depending on your age or occupation.

The SECURE 2.0 Act increases 401(k) and SIMPLE IRA catch-up contributions for people age 60-63. Starting in 2025, the maximum additional catch-up contribution will increase from $7,500 to $11,250 for individuals who are between the ages of 60 and 63. This amount will be indexed for inflation annually after 2025.

Lowering MI Costs Plan Although subject to a temporary 4-year phase-in period beginning tax year 2023, this new law essentially restores the pre-2012 retirement and pension subtraction for most taxpayers in Michigan beginning in 2026.

You will qualify for full retirement at age 60 with at least 10 years of service (YOS), or age 55 with 30 YOS. (Exception: If you are an unclassified legislative branch, executive branch, or judicial branch employee, you are vested for a full retirement benefit at age 60 with 5 YOS.)

The safe withdrawal rule is a classic in retirement planning. It maintains that you can live comfortably on your retirement savings if you withdraw 3% to 4% of the balance you had at retirement each year, adjusted for inflation.

You must work at least 5 years with the Federal Government before you are eligible for a FERS Federal Pension, and for every year you work, you will be eligible for at least 1% of your High-3 Average Salary History.

Your multiplier will be 1% unless you retire at age 62 or older with at least 20 years of service, at which point your multiplier would be 1.1% (a 10% raise!). This means that your gross pension would be $22,000 every year or about $1,833.33 every month.

Computation for Non-Disability Retirements AgeFormula Age 62 or Older at Separation With 20 or More Years of Service 1.1 percent of your high-3 average salary for each year of service1 more row

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Before you apply: Complete the Preparing to Apply for Retirement (R0870C) checklist to gather everything you'll need to complete your application. Complete and return the forms to ORS with all required documents listed in the packet.You will be directed to your Account Detail – Summary, where the Tax Elections section is located and click "Edit State Tax". The age you can start getting full SSR benefits depends on the year you were born. If you were born between 1943 and 1954, the age you get full benefits is 66. Required Documents: 1. Retired Pay Application – DD Form 2656 and DD Form 108 – (Retirement Services will aid you in the completion of this form). MERS must follow Michigan state law and prudent standards of diligence. We maintain strict oversight and management. Forms may be submitted up to 365 days in advance of the retirement date.

Retirement Rules For State Government Employees In Michigan

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