VRS Handbook for Members - Virginia Retirement System

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Partial Lump-Sum Option Payment (PLOP) Amounts
Beneficiary Payment Under
the PLOP – If you elect the
PLOP with the Basic Benefit,
your beneficiary will be eligible
for a lump-sum payment of
your member contribution
account balance upon your
death. However, because the
PLOP is paid from your member
contribution account, there
may be no funds remaining in
your account or the balance
may be less than if you elected
the Basic Benefit without
the PLOP.
Active Service PLOP Amount Example
Beyond Unreduced
Retirement Eligibility
Based on an annual Basic
Benefit of $32,000
12 months 1 x annual Basic Benefit amount $32,000
(one-year PLOP)
24 months 1 or 2 x annual Basic Benefit amount $32,000 or $64,000
(one- or two-year PLOP)
36 months or more 1, 2 or 3 x annual Basic Benefit amount $32,000, $64,000
(one-, two- or three-year PLOP) or $96,000
Qualifying for the PLOP. Prior service credit or granted service credit counts toward
eligibility for unreduced retirement. However, to qualify for a PLOP, you must
be working as an active member beyond the date you become eligible for an
unreduced retirement benefit. Prior service credit or granted service credit cannot
substitute for this active service.
PLOP Example
On October 20, 2013, Debbie will turn age 50 and have 30 years of service credit. She would
like to retire with a PLOP. She first becomes eligible for a VRS unreduced benefit on November
1, 2013. If she works until November 1, 2014, she will qualify for a one-year PLOP. If she works
until November 1, 2015, she can elect a one- or two-year PLOP. If she works until November 1,
2016 or later, she can elect a one-, two- or three-year PLOP.
18 | www.varetire.org • 1-888-VARETIR (1-888-827-3847) Plan 1
Taxes on the PLOP. If you have the PLOP paid directly to you, VRS will deduct 20
percent for federal income taxes and, if you live in Virginia, 4 percent for state
income taxes. The IRS also may impose an additional 10 percent tax penalty for
early withdrawal of member contributions if you receive the PLOP before age
59½; there are exceptions to this rule. You can roll over the PLOP to the Virginia
Cash Match Plan if applicable, an Individual Retirement Account (IRA) or
another qualified tax-deferred savings plan. For more information, read the IRS
402(f) Special Tax Notice available at www.varetire.org; or contact a tax advisor or
the IRS toll free at 1-800-829-1040 or www.irs.gov.