How the Virginia Retirement System Works

FT Contributor  | 

If you’re doing your best to save for retirement, you may be wondering what the difference is between a pension plan, an annuity, and a 401(k). You’re also probably wondering how much to save each month, and whether you’ll have enough to live off of during retirement. For state employees, however, the process is usually fairly simple because they qualify for retirement benefits through the state itself.

Virginia has multiple retirement systems in place for employees who work for the state government. They are provided by the Virginia Retirement System. All full-time teachers, administrative staff, and operational employees are eligible for benefits from the VRS. Members may be eligible for a variety of different plans, depending on when they were hired, their profession, and how long they’ve worked for the State of Virginia.

The amount of retirement benefits varies depending on how much you made during employment. As the Virginia minimum wage is $7.25, retirement benefits vary widely depending on your job and average income.

Types of Retirement Systems in Virginia

Virginia offers nine different retirement systems that vary depending on profession and date of hire. Some of these retirement programs are options, while others are mandatory. Plan 1 systems apply to employees who were hired or rehired before July 1, 2010 and vested in the system by January 1, 2013.

Plan 2 systems apply to employees who were hired or rehired after July 1, 2010 and/or were not vested in the system by January 1, 2013. Common occupations covered by these retirement systems include state employees, teachers, police officers, judges, school superintendents, and more.

State Employees, Teachers and General Political Subdivision Employees

State employees, teachers, and general political subdivision employees are all eligible for retirement benefits through the State of Virginia. These employees are eligible for both Plan 1 and Plan 2 options, depending on when they were hired and how long they have worked for the state.

For these employees, the main difference between the two plans is that Plan 1 calculates distributions using an average from 36 months of your highest pay, while Plan 2 calculates distributions using an average from 60 months.

State Police Officers’ Retirement System (SPORS)

State police officers are also eligible for retirement benefits. The State Police Officers’ Retirement System, also known as SPORS, issues monthly pension payments based on an average of your highest-paying months. State police officers may also be eligible for either Plan 1 or Plan 2 depending on when they were hired. Additionally, certain officers could be eligible for bonuses if they held a hazardous job during their time of service.

Political Subdivision Employees Eligible for Enhanced Hazardous Duty Coverage

This plan is similar to the benefits received by other state employees and teachers. However, employees who worked hazardous jobs are eligible for additional benefits in retirement. In general, this means that their retirement payments are multiplied by 1.85%.

Virginia Law Officers’ Retirement System (VaLORS)

The Virginia Law Officers’ Retirement System, also known as VaLORS, offers retirement benefits to law officers serving in Virginia. As with many of the other retirement plans listed, VaLORS comes with both a Plan 1 and Plan 2 option. VaLORS also provides additional benefits including life insurance, disability coverage, and long-term care benefits.

Judicial Retirement System (JRS)

The Judicial Retirement System, also known as JRS, offers Plan 1, Plan 2, and hybrid options. The hybrid plan combines elements of both Plan 1 and Plan 2. Requirements to qualify for Plan 1 or Plan 2 are based on when employees were hired and vested in the system. To qualify for the hybrid plan, employees must be appointed or elected to an original term on or after January 1, 2014.

Optional Retirement Plan for School Superintendents (ORPSS)

The Optional Retirement Plan for School Superintendents, also known as ORPSS, provides retirement benefits to school superintendents in the State of Virginia. Investment choices include mutual funds, ETFs, and individual securities. This retirement plan is optional, and employees are free to choose other options.

Optional Retirement Plan for Political Appointees (ORPPA)

The Optional Retirement Plan for Political Appointees is similar to ORPSS, and offers political appointees several options when it comes to investing. Employees can choose where to invest their funds once they have saved at least $2,500. Because this plan is optional, political appointees are free to choose other options when it comes to managing their retirement funds.

Optional Retirement Plan for Higher Education (ORP)

The Optional Retirement Plan for Higher Education, otherwise known as ORP, provides retirement benefits, long-term care benefits, and life insurance. The plan allows for military or educational leave. This plan is also optional for higher education employees.

457 Deferred Compensation Plan

The 457 Deferred Compensation Plan allows employees to make their retirement contributions either tax deferred or post-tax. In general, employees who expect their income to be higher at retirement may benefit from post-tax contributions, while employees who expect their income to be lower at retirement may benefit from tax-deferred contributions.

Virginia Retirement Taxes

In the State of Virginia, you’ll still have to pay both federal and state income taxes on your retirement income. In some cases, funds may be subject to additional taxes, such as if you decide to retire early.

State Taxes on Retirement Income

Just like regular income, retirement income is subject to Virginia state income tax. Income tax varies depending on how much you bring home each year. If you’re 65 or older and make less than $50,000, however, you may be able to deduct $12,000 on your return.

Federal Taxes on Retirement Income

Retirement income is also subject to federal income tax. You’ll pay a certain percentage of your income depending on which tax bracket you land in. Retirees have the option of having taxes withheld from their check or paying quarterly estimated taxes.

Financial Health of the Virginia Retirement System

The Virginia Retirement System ranks as the 18th largest retirement fund in the United States and the 41st largest in the world, serving over 723,000 members. The Virginia Retirement System is in good financial health, with over $77 million held in trust.

VRS Calculator & Estimator

VA Retirement calculators may help you to get a better idea of what to expect when it comes to your retirement finances. These calculators can also provide information based on different scenarios so that you’re able to compare and contrast different options.

When using a retirement calculator, it’s also a good idea to come up with a budget of what you think your expenses might be during retirement. For many people, retirement comes with less expenses, as your children are generally grown up and independent, and you may want to downsize to a smaller living space. If you expect additional costs during retirement, however, it’s a good idea to try to save up as much as possible.

Retirement Planning Tips

When it comes to retirement, it’s important to start planning as soon as possible. In order to plan for retirement, you should:

To make the most of your finances during retirement, you should:

While retirement has grown more elusive for some Americans, many are still able to save enough to enjoy their golden years work-free, or even to retire early. Saving up and planning ahead will help you ensure that retirement is enjoyable and stress-free. It’s never too early to start planning for retirement, since the earlier you start, the larger the benefits you may be eligible for in the long term.


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