retirement payout
When you retire, there will be many, many choices that you have to make. One of the most important decisions is how your retirement benefits will be distributed. There are several benefit plans that you will have to choose from at the time that you apply for your pension benefits. Your choice will depend on the amount of money that you want per month and if you want any of your survivors to receive any benefits after you die. This is an important choice because once you make it, you will not be able to change it. Here are the choices that you will have available to you.
The following payout options are general and each state has specific retirement payout options. You need to contact your states Teacher Retirement System for their structured payouts. Happy Retirement!

Partial Lump-Sum Option (PLOP)

With this option, you will get a lump-sum one-time payment in exchange for a reduced lifetime monthly payment. On the surface, this option sounds pretty good – get big check and still receive monthly checks. However, the monthly checks will be smaller. If you are going to consider this option, you will do yourself a big favor by talking with a financial advisor to see if this option is a good fit for you.

Maximum Benefit Plan

Just as it says, the monthly check amount is the maximum that is allowed with your retirement plan. However, upon your death, the monthly benefit checks will stop. Your beneficiaries will no longer receive benefits from your retirement.

Survivorship Plans

There are several options to choose from. With these choices the amount of your monthly benefits will be reduced in exchange for providing income to a beneficiary.

  • Option 1 – This is a possible lump-sum distribution to survivors, but no monthly benefits to the beneficiary. The amount of the lump-sum will be determined by several factors including how much you have paid in to the retirement plan.
  • Option 2 – Monthly benefit to a beneficiary. Just like it says, there will be a monthly check to your beneficiary. Your monthly benefit will be reduced if you take this option in exchange for the lifetime benefit for your beneficiary.
  • Option 2 Pop-up – Just like the regular option 2, your beneficiary will receive a lifetime benefit. However, if you pre-decease your beneficiary, they receive the amount that you were receiving at the time of your death. If you die before your beneficiary, the amount of your monthly check will increase (pop-up) to the amount that your monthly benefit would be if you selected the maximum benefit above. With this choice, you can only select 1 beneficiary.
  • Option 3 – With this option, you may name 2 or more beneficiaries and they will receive benefits on a pro-rated basis until their death. The amount of the monthly benefit will be 1/2 the amount that you were receiving at the time of your death.

At Kline’s Investment Services we understand the State of Ohio’s payout options. Each person’s financial situation is different and there is no right way to take your pension payments. At our firm we will discuss your specific needs and give you great advice on which option you should take.