When your benefits are portable, it means if you leave your job and go to work for another employer, you can transfer the value of your benefits to your new employer’s retirement plan.

Portability is generally advantageous because it makes it possible to maximize your retirement benefit by moving benefits accrued under an earlier plan to your current plan at a time in your career when your salary is likely to be higher.  There are certain conditions, however, when portability may not be advantageous, such as if you are planning to return to service under your former employer, or if it has been many years since you terminated employment with your former employer.  Portability could also result in the loss of other benefits to which you may be entitled under a former employer’s plan.

The Code of Virginia (Section 51.1-143 and 801.1) permits two defined benefit plans to enter into a reciprocal agreement to provide for portability between the plans. The agreement must specify eligibility and establish a time frame for portability to become effective. The agreement must also establish procedures for converting the value of the benefits accrued under one plan, referred to as the transferring plan, to the other plan, known as the accepting plan. The agreement must also specify how the resulting service credit may be counted.

Members who were not vested in the retirement plans of their former employers at the time they terminated, even though the employer has a reciprocal agreement with FCRS, are not eligible; nor are members who took refunds of their contributions. Individuals whose benefits are subject to attachment (for spousal or child support, for example) are also not eligible.

The present value of your retirement benefit in the transferring plan is used to determine the amount of service you can receive in the accepting plan.  Present value is determined using actuarial factors and plan assumptions.  It takes into consideration such factors as age, life expectancy and interest rates.  The reciprocal agreement specifies how the value of the benefit is determined and how this value is converted to service credit.

Newly hired employees have 18 months from the date they are hired to have service credited under portability. This is your only opportunity to choose portability. If you do not act within the 18 months, you lose your eligibility to participate.

You should consider whether your total benefit from the separate plans at retirement would be greater or less than what your FCRS benefit would be after the additional service credit is figured in. You also need to consider the effect portability may have on any other benefits you may be eligible for, such as life insurance and health insurance premium credit, any supplemental benefits or cost-of-living increases you may be eligible to receive in retirement.

Your former plan administrator will certify your eligibility and advise FCRS of the present value of your benefit, the amount of any deferred retirement benefit you may be entitled to without portability, and the effect on any other benefits you may have.  If you choose to proceed with the transfer, you will need to sign a Portability Disclosure Statement and Member Authorization form and return it to your former employer within the 18-month time frame.

The actual amount of service credit you receive may or may not equal the actual service you accumulated under your former employer’s plan. The actual amount is determined by complex actuarial tables and benefit formulas that take into consideration many factors, including your age and life expectancy, and the effect of interest rates
and cost-of-living adjustments. 

The amount of service credited through portability could be equal to or less than the actual amount of service you have with your former plan. To help you in your decision, you will be advised of the actual amount of service that can be credited to your account.

Once you sign the final form, you have 14 days (including the day the form is signed) to revoke your decision to transfer your benefit. After 14 days, your decision is irrevocable, the assets will be transferred and you will terminate all rights to benefits under your former plan.

If you are eligible for a refund of contributions under your former plan, you will remain eligible for a refund after the transfer if you terminate employment before becoming eligible to retire.  Once you have received a refund, however, all rights to a future benefit and membership in FCRS are terminated.

You pay no taxes on the value of the benefit at the time of transfer; however, when you begin receiving a retirement benefit, or if you leave your job and take a refund, you may be subject to federal and state income taxes.

No. None of the plans eligible to enter portability agreements permit the purchase of prior service by an individual who is not an active participant in the plan.