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1. Am I required to enroll as a member of the Retirement System?

Membership in the Gloucester Contributory Retirement System is a statutory requirement for all employees who are scheduled to work 20 hours per week in a calendar year; only elected officials have the option whether to join the System or not.

2. Can I borrow money from my retirement account now and pay it back later?

No. Under state law, your retirement account has no provision for withdrawal under any circumstance.

3. Can I receive a refund of my contributions? Will I get interest on those contributions?

You may receive a refund of your total contributions if you have officially resigned your position and it is not your intent to accept another position of employment that requires membership in another Massachusetts contributory retirement system. If you voluntarily leave employment that began after January 1, 1984 and have less than 5 years of service, no interest will be refunded to you. If you have served between five and ten years, you will receive half of the interest credited to your account. If you have over ten years of service, all of the interest will be refunded to you. Also, if you are removed or discharged, you will receive interest regardless of the years of service. It is important to note that if you receive a refund or your retirement contributions, we are required to withhold 20% for your federal tax liability. Any monies contributed prior to 1/12/86 are not subject to federal taxation. However, all interest you receive from your account is subject to federal taxation. Alternatively, you can have the entire retirement account “rolled over” into a tax qualified IRA.

4. Can I make 'make-up' Payments?

If you were employed by any governmental unit within the Commonwealth and you do not have this period of employment credited in your retirement system, it may be possible to pay a make-up payment. You would be required to pay into the retirement system the amount that would have been withheld for retirement plus the accrued interest through the month of your repayment. Please have the Payroll Supervisor forward to the retirement office the payroll records for the dates of your employment, the salary paid per calendar year, the date of termination and whether you were employed on a full or part time basis. If you were part-time, we require the number of hours employed per calendar year. Once we receive all of the necessary information, a letter will be forwarded to you indicating the amount of the repayment and the due date.

5. What is the maximum retirement allowance that I can receive?

The maximum benefit you can receive is 80% of your three highest consecutive years of regular compensation.

6. What factors effect the amount of my superannuation retirement allowance?

The amount of your retirement allowance depends on: your age, your length of creditable service, the amount of your average annual rate of regular compensation, and your group classification.

7. May I be employed in the public sector after retirement?

There is no restriction on employment in the private sector. However, employment for any town, city, or county within the Commonwealth of Massachusetts or for this state is restricted once you have retired. You may be employed for only 960 hours in any calendar year. Also, the amount you earn from any such political subdivision would be limited to the difference between your gross retirement allowance and the present salary from the job which you had retired. The responsibility for monitoring post-retirement earnings is placed upon the employer and the retiree.

For disability retirees, the amount of outside income you can earn is the difference between your gross retirement allowance and the present salary for the job from which you retired, plus $5,000.

8. What about my health insurance?

Your health insurance premium may be deducted from your retirement allowance. Questions regarding your coverage should be directed to the Personnel Department at (978) 281-9742.

9. Is my retirement allowance taxable?

A portion of your retirement allowance is federally taxable. Please refer to IRS publication 575. The IRS requires that you pay 90% of the income tax that you will owe by having an amount withheld on a payroll plan or by filing an estimated quarterly tax return. If you wish, we will withhold a fixed amount of money from each retirement check you receive. You can change the amount of taxes withheld from your retirement check anytime you wish. Please notify the Board of any tax changes you might wish to make. We will ensure that you receive the appropriate form. State Income Tax Your retirement allowance is exempt from Massachusetts state taxes. When considering a move outside of the Commonwealth you should question whether or not your contributory pension will be taxed by your prospective new home state. Currently fifteen states do not tax Mass. pensions. In addition several states provide tax exemptions or exclusions for which Mass. pensions may qualify. For example, Maine offers a $6,000 pension exemption, while pensioners, 59 ½ or over, may qualify for a $20,000 exemption in New York.