PAX Centurion - Summer 2014

www.bppa.org PAX CENTURION • Summer 2014 • Page 9 Treasury Notes: David “Duke” Fitzgerald, BPPA Treasurer An option on deferred compensation A s I hope everyone in this association is aware, we have a benefit allowed to us known as deferred compensation. This is a policy designed to assist each of us so that we will be more then comfortable when we retire. God willing we all live to retire. The “normal way” in which this works is that you sign up to have a specified amount of money taken out of your check each week and have it invested by the company selected by the Commonwealth of Massachusetts who then invests it. It is very similar to having the health insurance deducted. It comes right out and you never see it. Easy and painless. I used the term, “normal way,” in which it works because that is what it is.You decide how much you think you can afford to give each week and that is what the department deducts. Now of course that amount can and will range differently for each member. A mar- ried person with two or three kids cannot afford to give as much as a single member with no children. That is just an obvious fact of life. But each of us should try and decide what we can afford and set up an account. One of the major benefits of giving to the deferred compensa- tion is that all that money comes out – before taxes. It is like it is tax exempt monies. It may not sound like much but when you are filing your taxes next winter/spring, your tax person will most likely tell you well you did because of the deferred compensation. I know mine does every year and I am no longer maxed out. I personally used to be maxed out and each time that the Com- monwealth would increase the size of the maximum annual dona- tions, I would increase my deduction to remain at the max. Well I have slipped off the last few increases and need to address that myself. There is another way of making deductions to contribute to the deferred compensation plan. In the last contract that the BPPA bargained, we were able to get an option included dealing directly to this issue. That was the last contract in which I was on the bargain- ing committee. This included language can make participating in the SMART PLAN, which is what it is also called, easier for many of our members. The language that we got included in that last bargained contract allows for members of the BPPA to have monies deducted only from their supplemental monies and go into their deferred compensation. What that means is if you believe that you cannot have any steady deduction from your check each week for 52 consecutive weeks, then you can sign up for this option. The way in which it works is you give a percentage of money that you want taken out of your detail and overtime money. That deduction will then not be taken out unless you performed some details or overtime for that pay period. In this way you will still be taking home your base check and you will be making a deduction if you performed overtime or details that week. The maximum deduction you can make annually is $17,000.00 if you are under the age of fifty. If you are over the age of fifty there is a catch up allowance of $23,000.00 and if you are again over the age of fifty you can apply for an emergency catch up allowance of $35,000.00. Now I have no idea who can afford to give that much money in a year, but it is on the books. So someone like myself who gives a steady donation weekly regardless of how much I work my give an annual deduction of say $15,000.00. Then there may be someone who signs up to have say 45% Of their supplemental monies go toward the smart plan and they may give the maximum of $17,500.00, but all between the months of April and October when the details and overtime are at the peak. Regardless of which way you choose to do this, the maximum donation by law is still $17,000.00. So if you select the route of supplemental money with- drawal, once you reach the $17,500.00 your deductions will cease from those monies. This is just an option for any member who would like to be a part of the SMART PLAN, but doesn’t feel that they can contribute during the dry months. It is just another way of giving our membership options to choose from. In the event that someone would like to sign up to begin to start participating in the SMART PLAN our representative at Great West- ern is a gentleman by the name of Zakeriah Nabulsi and his tele- phone number is 774-239-0040 and his email is zakeriah.nabulsi@ gwrs.com If you find it hard to reach Mr. Nabulsi. the main number for Great Western is 877-457-1900. I only took the time to write all of this out is I had a few con- versations with some of our newer members and when the topic of deferred compensation came up, they said that they couldn’t afford to make the weekly contribution. When I informed them about this option they responded that they were not aware that they could do it this way. That got me thinking, how many other members, both new and old were unaware of this option. It was then I decided that the Pax would be a great vehicle to provide this information. I hope that you have found this to be both informative and hopefully helpful. In closing, I would personally like to recommend that everyone try and contribute something to this SMART PLAN. I understand that we will receive our pension when we retire, but this is above and beyond that. Almost like an insurance policy for retirement. A little extra, so there will be no worrying in our golden years. I was always afraid of what retirement will be like financially. Well I received my proposed allowance that I will be getting if I continue to make my current deductions and the market remains healthy. It looks like retirement is going to be just fine. I thank everyone for taking the time to read this article and wish you all a healthy and fun summer and remind you all, let’s be careful out there. I would personally like to recommend that everyone try and contribute something to this SMART PLAN. I understand that we will receive our pension when we retire, but this is above and beyond that. Almost like an insurance policy for retirement. A little extra, so there will be no worrying in our golden years.