
<p>Retirement insights from a Colorado PERA perspective</p>



<p></p>


A distant view shows a mountainous landscape with sloping peaks, green trees in the foreground, and a cloudy sky above.


<p class="has-medium-font-size"><a href="https://coloradosun.com/2025/05/20/colorado-aging-demographics/" target="_blank" rel="noreferrer noopener"><strong>Colorado’s Median Age is Nearing 40 — and Getting Older. Here’s What That Looks Like. | The Colorado Sun</strong></a></p>



<p>Colorado has long been one of the “youngest” states in the country as measured by median age of its population, but that’s changing as birth rates and migration into the state have declined. The Centennial State’s median age has crept up to 37.9 years old, which is still one of the lowest in the nation, but our state is now aging at the third-fastest rate.</p>



<p class="has-medium-font-size"><a href="https://www.kiplinger.com/retirement/401ks/new-bill-would-lower-age-to-contribute-to-401k-to-18-from-21" target="_blank" rel="noreferrer noopener"><strong>New Bill Would Lower Age to Contribute to 401(k)s to 18 from 21. What You Need to Know | Kiplinger</strong></a></p>



<p>Federal lawmakers have reintroduced a bill that seeks to expand access to employer-based retirement plans like 401(k)s for younger workers. The Helping Young Americans Save for Retirement Act would lower the minimum required age to 18 from 21 and make it easier for employers to offer plans to those workers.</p>



<p class="has-medium-font-size"><a href="https://www.aarp.org/health/conditions-treatments/fda-approves-alzheimers-blood-test/" target="_blank" rel="noreferrer noopener"><strong>What to Know about the First FDA-Cleared Blood Test for Alzheimer’s Disease | AARP</strong></a></p>



<p>The Food and Drug Administration has for the first time given approval to a blood test that can help diagnose Alzheimer’s disease. Diagnosing Alzheimer’s traditionally involves brain imaging and invasive procedures like lumbar punctures, so doctors hope a simple blood test will make it easier to identify the disease. &nbsp;</p>



<p class="has-medium-font-size"><a href="https://www.realsimple.com/signs-you-are-aging-well-11739429" target="_blank" rel="noreferrer noopener"><strong>5 Subtle Signs You’re Aging Well, According to Longevity Experts | Real Simple</strong></a></p>



<p>We hear a lot about aging and some of the health concerns and other issues that can arise, but how do you know you’re aging well? Here are five things that medical experts say are good signs you’re living your best life as you get older.</p>



<p><em>News You Should Know is a digest of news from publications around the nation about finance, investing, and retirement.</em></p>


News You Should Know: Colorado is Getting Older Faster


<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><a href="https://www.cbsnews.com/news/when-will-i-get-my-2025-tax-refund/" target="_blank" rel="noreferrer noopener">Will the Expected IRS Staff Cuts Delay my 2025 Tax Refund? | CBS News</a></h2>



<p>The federal government’s downsizing efforts have extended to the Internal Revenue Service, where thousands of positions are expected to be cut in the middle of the busy tax season. While most taxpayers likely won’t encounter any trouble with their returns, there may be delays for anyone who needs to reach out to the IRS for customer service.</p>



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><a href="https://www.forbes.com/sites/dandoonan/2025/03/03/the-unsung-economic-engine-retiree-pension-spending/" target="_blank" rel="noreferrer noopener">The Unsung Economic Engine: Retiree Pension Spending | Forbes</a></h2>



<p>An annual analysis from the National Institute on Retirement Security highlights the significant contributions retirees make to local and national economies. Their pension spending results in $1.5 trillion in economic output and supports 7.1 million jobs nationwide, according to NIRS. On a more local level, PERA <a href="https://www.copera.org/pera-on-the-issues/measuring-the-impact-of-4-5b-in-annual-retirement-benefits-in-colorado" target="_blank" rel="noreferrer noopener">paid $4.55 billion in benefits</a> to more than 114,000 retirees who lived in Colorado 2023, resulting in $7.1 billion in economic output and supporting more than 28,000 jobs.</p>



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><a href="https://401kspecialistmag.com/401k-millionaire-ranks-grew-27-in-2024-fidelity/" target="_blank" rel="noreferrer noopener">401(k) Millionaire Ranks Up 27% in 2024, Says Fidelity | 401k Specialist</a></h2>



<p>Retirement plan recordkeeper Fidelity says its data show a significant increase in the number of people with over a million dollars saved for retirement last year. The company noted a 27% increase in 401(k) “millionaires” over the course of 2024, most of them members of the Baby Boom generation and Generation X. On average, they’ve been saving for 26 years and contribute 17% of their income to their retirement accounts, according to Fidelity.</p>



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><a href="https://www.mcknightsseniorliving.com/news/more-older-adults-living-disability-free-lives-and-thats-extremely-encouraging-researcher-says/" target="_blank" rel="noreferrer noopener">More Older Adults Living Disability-Free Lives, and That’s ‘Extremely Encouraging,’ Researcher Says | McKnight&#8217;s Senior Living</a></h2>



<p>We know people tend to live longer than they did generations ago, and new research sheds some light on the quality of that extended lifespan. A recent analysis finds that the percentage of older Americans who say they’re living without a disability has increased in recent years—reaching 65% in 2017.</p>



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<p><em>News You Should Know is a digest of news from publications around the nation about finance, investing, and retirement.</em></p>


News You Should Know: Will IRS Staff Reductions Affect Tax Filing Season?


<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><a href="https://www.pbs.org/newshour/economy/how-the-stock-market-defied-expectations-in-2024-by-the-numbers" target="_blank" rel="noreferrer noopener">How the Stock Market Defied Expectations in 2024, by the Numbers | PBS News</a></h2>



<p>2024 was a great year for the stock market. The S&amp;P 500, for example, notched dozens of all-time records as stocks soared throughout the year. Here are more notable numbers from the market’s performance. Note that PERA’s 2024 investment performance data won’t be available until the <em>Annual Comprehensive Financial Report</em> is released in June.</p>



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><a href="https://finance.yahoo.com/personal-finance/banking/article/do-we-want-high-or-low-interest-rates-223031516.html" target="_blank" rel="noreferrer noopener">Understanding the Fed&#8217;s Rate Decisions: Do We Want High or Low Interest Rates​? | Yahoo Finance</a></h2>



<p>The past several years have been notable for the Federal Reserve’s interest rate moves—the Fed began raising its key interest rate in 2022 and it remained high through much of 2024 before the Fed began lowering the rate in September. It’s not always easy to understand the implications of these decisions, so here are some pros and cons of high and low interest rates for various financial situations.</p>



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><a href="https://www.cnbc.com/2025/01/05/how-to-maximize-your-401k-for-2025.html" target="_blank" rel="noreferrer noopener">Here&#8217;s How to Maximize Your 401(k) Plan for 2025 with Higher Limits, Bigger Catch-Up Contributions | CNBC</a></h2>



<p>If you’re saving additional money for retirement in a PERAPlus 401(k) or 457 Plan, you have the opportunity to boost your savings even more this year. The amount of money you can contribute to those plans is going up in 2025, and there’s also a new, higher catch-up contribution limit for workers who are getting closer to retirement.</p>



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><a href="https://www.investopedia.com/how-to-make-financial-resolutions-you-can-stick-to-in-2025-8762615" target="_blank" rel="noreferrer noopener">How To Make Financial Resolutions You Can Actually Stick To In 2025 | Investopedia</a></h2>



<p>It’s that time of year when many of us are setting intentions and resolutions for the new year. If you’re making money goals, here are some tips for making sure they’re realistic and achievable so you’re set up for success.</p>



<hr class="wp-block-separator has-alpha-channel-opacity"/>



<p><em>News You Should Know is a digest of news from publications around the nation about finance, investing, and retirement.</em></p>


News You Should Know: The 2024 Stock Market by the Numbers


<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><a href="https://thehill.com/homenews/5013493-social-security-bill-senate/" target="_blank" rel="noreferrer noopener" class="broken_link">Social Security Reform Bill Awaits Senate Vote Amid Uncertainty | The Hill</a></h2>



<p>The Social Security Fairness Act, a federal bill that would repeal Social Security’s Windfall Elimination Provision and Government Pension Offset, passed the U.S. House in November. The bill is now awaiting action in the Senate, where its fate is increasingly uncertain with just days left for lawmakers to pass legislation before a new Congress begins.</p>



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><a href="https://www.investopedia.com/lost-track-of-your-old-401-k-accounts-a-new-service-could-help-recover-the-money-8749171" target="_blank" rel="noreferrer noopener">Lost Track Of Your Old 401(k) Accounts? A New Service Could Help Recover The Money | Investopedia</a></h2>



<p>The U.S. Department of Labor is getting ready to launch a database to help workers find old retirement accounts. The so-called retirement savings lost and found aims to make sure workers can find and access their 401(k) savings when they switch jobs rather than leaving that money behind. The database should be up and running by the end of the year.</p>



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><a href="https://www.fastcompany.com/91236800/retirement-saving-spending-psychology" target="_blank" rel="noreferrer noopener" class="broken_link">Retirement Saving and Spending Can Be Complicated. Here&#8217;s What Psychology Says | Fast Company</a></h2>



<p>When making the transition from regular, full-time work into retirement, many people find themselves struggling to move from a saving mindset to a spending mindset. While every person’s situation is different, principles of psychology can help explain why that transition can be so difficult.</p>



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><a href="https://www.kiplinger.com/personal-finance/ways-to-maximize-your-end-of-year-philanthropy" target="_blank" rel="noreferrer noopener">Five Ways to Maximize Your End-of-Year Philanthropy | Kiplinger</a></h2>



<p>The end of the year is a popular time to give money to various causes. If you’re thinking of giving this holiday season, here are some things to keep in mind to ensure your donation makes an impact.</p>



<hr class="wp-block-separator has-alpha-channel-opacity"/>



<p><em>News You Should Know is a digest of news from publications around the nation about finance, investing, and retirement.</em></p>


News You Should Know: WEP/GPO Bill’s Fate Uncertain in Final Days of Congress


<p>The new year is mere weeks away. To make sure taxpayers are informed and prepared, the IRS announced inflation adjustments for many tax provisions in 2025, including marginal tax brackets and retirement account contributions.</p>



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size"><strong>Retirement plan contribution limits</strong></h2>



<p>The IRS announced higher contribution limits for 401(k), 403(b) and 457 plans next year.</p>



<p>The maximum amount a worker can contribute to those plans is $23,500 in tax year 2025, an increase of $500. The catch-up contribution limit for most plan participants age 50 and older remains unchanged at $7,500.</p>



<p>Beginning in 2025, some older workers can make additional catch-up contributions. As part of the SECURE 2.0 Act, plan participants who are between the ages of 60 and 63 can make catch-up contributions totaling up to $11,250 in tax year 2025.</p>



<p><a href="https://www.copera.org/retirees/peraplus-401-k-457-plans" target="_blank" rel="noreferrer noopener">Learn more about PERAPlus 401(k)/457 Plans</a></p>



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size">HSA/FSA contribution limits</h2>



<p>The amount of money workers can contribute to medical savings accounts also will increase in 2025.</p>



<ul>
<li><strong>HSA:</strong> Individuals enrolled in a high deductible health plan (HDHP) with a health savings account (HSA) will be able to contribute up to $4,300, and those with family coverage will be able to save a maximum of $8,550.</li>



<li><strong>FSA:</strong> For workers who don’t have an HDHP with an HSA and instead use a flexible spending account (FSA), the maximum contribution for 2025 is $3,300. For plans that allow unused balances to roll over, the maximum amount that can be rolled over will increase to $660.</li>
</ul>



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size">2025 tax rates</h2>



<p>Below are updated marginal tax rates for single taxpayers and married couples filing jointly. Visit <a href="https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2025">the IRS website</a> for more tax tables and additional details.</p>



<p>Note that since these changes are for tax year 2025, they will generally apply to tax returns filed in 2026; <a href="https://www.copera.org/pera-on-the-issues/updated-tax-brackets-contribution-limits-other-changes-for-2024">2024 tax rates</a> will apply to returns filed in 2025.</p>



<ul>
<li><strong>37%</strong> for incomes over $626,350 ($751,600 for married couples filing jointly)</li>



<li><strong>35%</strong> for incomes over $250,525 ($501,050 for married couples filing jointly)</li>



<li><strong>32%</strong> for incomes over $197,300 ($394,600 for married couples filing jointly)</li>



<li><strong>24%</strong> for incomes over $103,350 ($206,700 for married couples filing jointly)</li>



<li><strong>22%</strong> for incomes over $48,475 ($96,950 for married couples filing jointly)</li>



<li><strong>12%</strong> for incomes over $11,925 ($23,850 for married couples filing jointly)</li>



<li><strong>10%</strong> for incomes $11,925 or less ($23,850 or less for married couples filing jointly)</li>
</ul>



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size">Standard deduction</h2>



<p>In addition to updated tax rates, the IRS announced increases to the standard deduction for tax year 2025:</p>



<ul>
<li><strong>Single taxpayers and married couples filing separately</strong>: $15,000 ($400 increase)</li>



<li><strong>Heads of household:</strong> $22,500 ($600 increase)</li>



<li><strong>Married couples filing jointly:</strong> $30,000 ($800 increase)</li>
</ul>



<p></p>



<p>Taxpayers who are 65 or older can take an additional standard deduction, which is also adjusted for inflation. For tax year 2025, that amount is $2,000 for single filers and $1,600 for others.</p>



<p>Visit <a href="https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2025" target="_blank" rel="noreferrer noopener">the IRS website</a> for more adjustments to tax provisions in 2025.</p>



<h2 style="color:#000000;" class="wp-block-heading has-black-color has-text-color has-medium-font-size">PERA benefits and taxes</h2>



<p>Colorado PERA benefits are subject to federal income tax, as well as applicable state and local taxes. PERA retirees who would like to update their tax withholding can do so by&nbsp;<a href="https://www.copera.org/member-login-registration" target="_blank" rel="noreferrer noopener">logging in</a>&nbsp;to their secure member account or completing a paper Form W-4P.</p>



<p>Retirees and benefit recipients can expect to receive their 1099-R tax forms for tax year 2024 in January 2025.</p>



<p>Learn more at&nbsp;<a href="https://www.copera.org/taxes-on-benefits" target="_blank" rel="noreferrer noopener">copera.org/taxes-on-benefits</a>.</p>


Updated Tax Brackets, Contribution Limits and More to Know for 2025


<p>The Internal Revenue Service (IRS) announced inflation adjustments for many tax provisions in 2024, including higher contribution limits for various types of accounts and updated tax brackets.</p>



<h2 class="wp-block-heading">Retirement account contribution limits</h2>



<p>The IRS <a href="https://www.irs.gov/newsroom/401k-limit-increases-to-23000-for-2024-ira-limit-rises-to-7000" target="_blank" rel="noreferrer noopener">increased contribution limits</a> for individual retirement accounts (IRAs), as well as 401(k), 403(b), and most 457 plans.</p>



<p>The maximum amount a worker can contribute to 401(k)/403(b)/457 plans is $23,000 in 2024, an increase of $500. The IRA contribution limit also increased $500 to $7,000. Catch-up contribution limits remain unchanged in 2024.</p>



<h2 class="wp-block-heading">HSA &amp; FSA contribution limits</h2>



<p>The amount workers can contribute to medical savings accounts will also increase in 2024.</p>



<p>Individuals enrolled in a high deductible health plan (HDHP) with a health savings account (HSA) will be able to contribute up to $4,150 and those with family coverage will be able to save a maximum of $8,300.</p>



<p>For workers who don’t have an HDHP with an HSA and instead use a flexible spending account (FSA), the maximum contribution for 2024 is $3,200. For plans that allow unused balances to roll over, the maximum amount that can be rolled over will increase to $640.</p>



<h2 class="wp-block-heading">2024 tax rates</h2>



<p>Below are <a href="https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2024" target="_blank" rel="noreferrer noopener">updated marginal tax rates</a> for single taxpayers and married couples filing jointly. See the <a href="https://www.irs.gov/irb/2023-48_IRB#REV-PROC-2023-34" target="_blank" rel="noreferrer noopener">IRS website</a> for more tax tables and additional details. Since these changes will take effect for tax year 2024, they will generally apply to tax returns filed in 2025.</p>



<ul>
<li><strong>10%</strong> for incomes of $11,600 or less ($23,200 for married couples filing jointly)</li>



<li><strong>12%</strong> for incomes over $11,600 ($23,200 for married couples filing jointly)</li>



<li><strong>22%</strong> for incomes over $47,150 ($94,300 for married couples filing jointly)</li>



<li><strong>24%</strong> for incomes over $100,525 ($201,050 for married couples filing jointly)</li>



<li><strong>32%</strong> for incomes over $191,950 ($383,900 for married couples filing jointly)</li>



<li><strong>35%</strong> for incomes over $243,725 ($487,450 for married couples filing jointly)</li>



<li><strong>37%</strong> for incomes over $609,350 ($731,200 for married couples filing jointly)</li>
</ul>



<p>In addition to updated tax rates, the IRS announced increases to the standard deduction for tax year 2024:</p>



<ul>
<li><strong>Single taxpayers and married couples filing separately:</strong> $14,600 ($750 increase)</li>



<li><strong>Heads of household:</strong> $21,900 ($1,100 increase)</li>



<li><strong>Married couples filing jointly:</strong> $29,200 ($1,500 increase)</li>
</ul>



<p>Visit the <a href="https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2024" target="_blank" rel="noreferrer noopener">IRS website</a> for more adjustments and tax changes for 2024.</p>



<h2 class="wp-block-heading">PERA benefits and taxes</h2>



<p>Colorado PERA benefits are subject to federal income tax, as well as applicable state and local taxes. PERA retirees who would like to update their tax withholding can do so by <a href="https://www.copera.org/member-login-registration" target="_blank" rel="noreferrer noopener">logging in</a> to their secure member account or completing a paper Form W-4P. Learn more information at <a href="https://www.copera.org/taxes-on-benefits" target="_blank" rel="noreferrer noopener">copera.org/taxes-on-benefits</a>.</p>


Updated Tax Brackets, Contribution Limits, Other Changes for 2024


<p>In late December, Congress passed a <a href="https://www.congress.gov/117/bills/hr2617/BILLS-117hr2617enr.pdf" target="_blank" rel="noreferrer noopener">$1.7 trillion spending bill</a> to keep the government funded through September. Included in that bill, now signed into law by President Biden, was a package of retirement-related reforms collectively known as the SECURE 2.0 Act.</p>



<p>SECURE 2.0 builds on the original SECURE Act from 2019, which aimed to improve access to retirement savings for all Americans.</p>



<p>There are nearly 100 provisions in SECURE 2.0. While most of them aren’t particular to public defined benefit plans like Colorado PERA, many of them could affect public sector workers and retirees who have money saved in a defined contribution account like a 401(k) or 457 plan.</p>



<p>Here are some of the major provisions included in the legislation and what they mean.</p>



<h2 class="wp-block-heading">Automatic enrollment in 401(k) plans</h2>



<p>One of the biggest changes resulting from SECURE 2.0 will be automatically enrolling workers in their employer’s 401(k) plan starting in 2025. Unless they opt out, eligible employees will automatically contribute at least 3 percent of each paycheck to their retirement account, and that amount will increase by 1 percent each year until it reaches at least 10 percent (but not more than 15 percent). The mandatory 401(k) auto-enrollment provision will not apply to government plans like Colorado PERA.</p>



<h2 class="wp-block-heading">Student loan matching on retirement accounts</h2>



<p>This provision is aimed at people who aren’t saving for retirement because they’re paying off student loans and can’t afford both. Beginning in 2024, employers will be allowed to match a worker’s student loan payments and deposit that money into their 401(k) or 457 plan account.</p>



<h2 class="wp-block-heading">Emergency savings accounts</h2>



<p>Many Americans lack a dedicated savings account for emergency expenses and often end up tapping into their retirement savings to pay for unexpected costs. Under this provision, employers will be able (but not required) to automatically enroll workers in an emergency savings plan, with employees contributing no more than 3 percent of their salary on a Roth basis. The first four withdrawals from the account each year will be exempt from any fees or charges solely on the basis of such withdrawals.</p>



<h2 class="wp-block-heading">Changes to required minimum distributions (RMDs)</h2>



<p>Under current law, retirees are required to start taking withdrawals (required minimum distributions, or RMDs) from retirement accounts like 401(k)s when they reach a certain age. The previous SECURE Act raised that age to 72 in 2019. SECURE 2.0 raises the age to 73 as of Jan. 1, 2023 (retirees who turned 72 in 2022 and already began taking RMDs will need to continue taking their RMDs). The RMD age will then rise to 75 in 2033. SECURE 2.0 also reduces the penalty for failing to take RMDs from 50 percent to 25 percent.</p>



<h2 class="wp-block-heading">New allowable distributions</h2>



<p>Several provisions of SECURE 2.0 lay out new circumstances under which a person can withdraw money from their retirement account(s) before they’re retired without facing a penalty. The new rules allow for penalty-free withdrawals for personal or family emergencies (one distribution up to $1,000 per year), in domestic abuse cases (the lesser of $10,000, indexed for inflation, or 50 percent of the participant’s account), to pay for long-term care insurance (up to $2,500 per year) and for terminally ill patients.</p>



<h2 class="wp-block-heading">Retirement account lost-and-found</h2>



<p>For workers who have held multiple jobs throughout their careers and left behind retirement accounts, it can be a challenge to find and claim those old accounts. It can be similarly difficult for plan administrators to find account holders who may have moved or changed names. This provision creates a nationwide database of retirement plans under the Department of Labor, allowing account holders to more easily find the contact information for plan administrators and claim their old accounts.</p>



<p>Read a more detailed section-by-section explanation of each of the provisions in <a href="https://www.help.senate.gov/imo/media/doc/secure_20sectionbysection.pdf" target="_blank" rel="noreferrer noopener">SECURE 2.0</a>.</p>


What’s in SECURE 2.0?


<p>In 2019, Congress passed sweeping legislation known as the SECURE Act that ushered in some major changes in retirement plans. One of those changes was making it easier for employer-sponsored plans like 401(k)s to offer annuities to plan participants.</p>



<p>Since then, consumer interest in annuities has grown, and 2020 <a href="https://www.fa-mag.com/news/total-annuity-sales-rose-16--last-year-to--255b-66117.html" target="_blank" rel="noreferrer noopener" class="broken_link">saw the highest annuity sales in over a decade</a>, totaling nearly $255 billion.</p>



<p>PERA now has two annuity products to offer participants in the <a href="https://www.copera.org/peraplus-401-k-457-plans" target="_blank" rel="noreferrer noopener">PERAPlus 401(k), 457</a> and DC plans.</p>



<h2 class="wp-block-heading" id="what-is-an-annuity">What is an annuity?</h2>



<p>Simply put, an annuity is a financial product that provides guaranteed, regular payments — either for a fixed amount of time or for a person’s life. PERA’s Defined Benefit (DB) plan and Social Security are both annuities that provide a lifetime retirement benefit.</p>



<p>While PERA’s DB plan offers lifetime income in retirement, workers who save on their own in a defined contribution plan like a 401(k) risk running out of savings in retirement. Annuities, which are usually available for purchase through insurance companies, can help offset this risk by converting all or a portion of a person’s account balance into regular income. Like a pension, annuities collect or “pool” assets from a large number of individuals in order to provide each person with guaranteed payments.</p>



<p>There are many types of annuities with a variety of features, but PERA, through its partner Empower, is able to offer two types of annuities for participants in the PERAPlus 401(k), 457 and DC plans: A single premium fixed immediate annuity and Qualified Longevity Annuity Contracts (QLACs).</p>



<h3 class="wp-block-heading" id="single-premium-fixed-immediate-annuity">Single premium fixed immediate annuity</h3>



<p>Empower’s parent company Great-West Life &amp; and Annuity Insurance Company offers a <a href="https://www.copera.org/pera-offering-new-lifetime-income-options-to-dc-plan-participants" target="_blank" rel="noreferrer noopener" class="broken_link">single premium fixed immediate annuity</a> through the PERAdvantage Capital Preservation Fund within the PERAPlus 401(k)/457 and DC plans. This allows participants to use all or a portion of their account balance to make a one-time purchase that immediately converts to guaranteed payments. The participant can choose the frequency of the payments as well as how long they’ll continue.</p>



<p>This annuity can be a good option for plan participants who are entering retirement and are ready to start receiving income right away.</p>



<h3 class="wp-block-heading" id="qlac-marketplace">QLAC marketplace</h3>



<p>Plan participants who want to wait until later in retirement to begin collecting payments can take advantage of the <a href="https://www.blueprintincome.com/copera/" target="_blank" rel="noreferrer noopener">Qualified Longevity Annuity Contract (QLAC) marketplace</a> offered by Blueprint Income.</p>



<p>While an immediate annuity provides income right away, a QLAC is a deferred annuity that is designed to begin providing income after age 72, and as late as 85. QLACs are exempt from IRS required minimum distribution (RMD) rules, so they can be a good option for retirees who wish to reduce their RMDs and taxes between the ages of 72 and 85.</p>



<p>Blueprint Income facilitates the rollover of the purchase amount from the participant’s retirement account into the annuity option the participant chooses.</p>



<p>Both annuity options provide retirees the ability to turn their savings into reliable income, and both offer joint annuity options, which can provide income to a surviving spouse. While an annuity might not be the right fit for everyone, it can be a helpful tool in planning for one’s golden years.</p>



<p>For more information on these annuity options, visit <a href="https://coperaplus.org" target="_blank" rel="noreferrer noopener">coperaplus.org</a>.</p>


PERA Offering New Lifetime Income Options to DC Plan Participants


<p>A <a href="https://www.nirsonline.org/reports/betterbang3/" target="_blank" rel="noreferrer noopener">recent study</a> from the National Institute on Retirement Security found that defined benefit (DB) pensions like Colorado PERA’s continue to offer substantial cost savings over defined contribution (DC) accounts like 401(k)s.</p>



<p>The research affirms NIRS’s findings from 2008 and 2014 that DB plans can provide retirement benefits at about half the cost (49 percent) of the typical DC plan.</p>



<p>The cost savings come from key differences in how DB and DC plans work, the authors state. In particular, they highlight the following three advantages of DB plans:</p>



<ul>
<li><strong>Longevity risk-pooling:</strong> Defined benefit plans cover a large number of people, with each person’s benefits coming from the same trust fund. For that reason, DB plans only have to accumulate enough money to fund benefits for the average life expectancy of the group. An individual in a defined contribution plan, on the other hand, has to accumulate enough funds to cover their expenses for the rest of their life, including the possibility of living longer than their life expectancy. That means a DC account needs to have a higher balance at retirement in order to provide the same level of benefits as the DB plan.</li>



<li><strong>Maintenance of portfolio diversification</strong>: Individuals in DC plans are typically encouraged to shift their portfolio to a more conservative, or lower-risk, mix of investments as they get older to protect their balance from drops in the stock market. A DB plan, with its shared trust fund, can maintain a well-balanced portfolio over the long term and weather short-term risks in the stock market, ultimately earning higher returns.</li>



<li><strong>Lower fees and professional management</strong>: Because of the pooled nature of DB plans, the fees for managing investments are shared by the group and are lower than the typical DC plan, in which each individual pays fees on their account. In addition, DB plan investment managers have a fiduciary duty — they must make decisions to ensure the longevity of the fund — while individual investors in DC plans may not have the expertise to make the right decisions.</li>
</ul>



<p>Simply put, a person saving for retirement in a DC plan needs to save more money than the typical DB plan. Overall, the authors conclude that it is about twice as expensive to save for retirement under a DC plan like a 401(k) than it is with a DB pension plan.</p>



<p>Both DB and DC plans have their advantages, and Colorado PERA offers both, with some members having the ability to choose whichever plans works best for them. PERA offers all of its members a hybrid defined benefit plan that gives members increased flexibility and additional options, whether through a monthly lifetime benefit or complete portability to another retirement plan. PERA members can also supplement their retirement savings with a <a href="https://www.copera.org/peraplus-401-k-457-plans" target="_blank" rel="noreferrer noopener">401(k) or 457 plan</a>. </p>



<p>It’s a powerful retirement tool that adapts to the many different paths people take in public service: whether working part-time or full-time, whether planning on a long tenure or a short one, and whether near retirement or far from it. Learn more about PERA’s <a href="https://www.copera.org/welcome-pera-members/new-members/new-members-in-the-defined-benefit-plan" target="_blank" rel="noreferrer noopener">defined benefit plan</a>.</p>


Study: Defined Benefit Pensions Continue to Be More Cost-Effective Than 401(k)s


<p>The PERAPlus 401(k)/457 plans and the Defined Contribution (DC) Plan — collectively known as Capital Accumulation Plans — have become an important part of PERA, with more than $5.5 billion invested as of Dec. 31, 2020.</p>



<p>There are some important changes coming to the CAPs in the coming months, including increased contribution limits and a new recordkeeper. Continue reading for an overview of these changes and what they mean for plan participants heading into 2022.</p>



<h2 class="wp-block-heading"><strong>New co</strong>n<strong>tribution limits</strong></h2>



<p>Earlier this month, the Internal Revenue Service announced <a href="https://www.irs.gov/newsroom/irs-announces-401k-limit-increases-to-20500" target="_blank" rel="noreferrer noopener">updated contribution limits</a> for 401(k) and 457 plans for 2022. Participants will be able to contribute up to $20,500 into a 401(k) or 457 plan next year, up from $19,500 in 2020 and 2021.</p>



<p>The IRS said the catch-up contribution limit for participants who are 50 and over will remain unchanged at $6,500, making for a contribution limit of $27,000 in each type of plan for that age group.</p>



<h2 class="wp-block-heading">PERAPlus and DC plans moving to Empower</h2>



<p>In March, the PERA Board <a href="https://www.copera.org/what-to-know-about-peraplus-401k-457-dc-plans-in-2022" target="_blank" rel="noreferrer noopener" class="broken_link">selected Empower Retirement as the new recordkeeper</a> for the PERAPlus 401(k)/457 and DC plans, replacing Voya Financial. That transition will take place in late November and early December.</p>



<p>Greenwood Village-based Empower is one of the largest retirement providers in the country, with significant experience administering large public plans like PERA. The Board selected Empower based on its experience, customer service, mobile-friendly technology tools, and its modern approach to communicating with members.</p>



<p>With the transition to Empower, plan participants will have access to:</p>



<ul>
<li>Expanded call center hours</li>



<li>A robust technology platform, including Empower’s website and mobile app</li>



<li>Financial wellness tools</li>



<li>Retirement planning tools, including personalized, one-on-one financial advice at no additional cost</li>
</ul>



<p>The PERAdvantage funds available for investments in the 401(k)/457 and DC plans will not change — account balances will transfer to the same funds within Empower.</p>



<p>For more information on the Empower transition, including key dates, fees and more, visit <a href="http://coperaplus.org" target="_blank" rel="noreferrer noopener">coperaplus.org</a>.</p>


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