PLSO Benefits

In exchange for a lifetime actuarial reduction of a monthly benefit, eligible members can elect a one-time Partial Lump Sum Option (PLSO) payment. Eligibility criteria for PLSO are as follows:

You have a minimum of 33 years of credit, or

You are at least age 63 with a minimum of eight years of credit, or

Your age plus your years of credit equals 86 or more (Rule of 86)

If you choose PLSO, you still must choose a monthly payment plan (Single Life, Joint-and-Survivor, or Term-Certain) explained in the section of your Member Handbook entitled, "Payment Plans."

If you are qualified for PLSO, your PLSO amount is determined by multiplying your Option 1-Single Life monthly benefit amount by 12, 24 or 36.

In addition to your lump sum payment, you also receive reduced lifetime monthly benefits. This reduction is an actuarial calculation that reflects the value of the lump sum distribution you receive and your age. For more information on your approximate PLSO adjusted monthly benefit amount, call us or use our benefit estimate calculator.

Use Worksheet 3 in your Member Handbook to calculate estimated PLSO benefits.

Please keep in mind that the taxable portion of a PLSO distribution will be subject to the mandatory 20% federal withholding by PSRS if it is not rolled over into an IRA or other qualified retirement plan. In addition, if payment is received after separation from service and you do not reach age 55 within a year from the date you separate from your employer, an additional federal 10% early withdrawal excise tax will apply. See the section of your Member Handbook entitled, "Income Taxes" for more information regarding taxes on PLSO payments.

PSRS cannot offer you tax advice. However, we strongly suggest that you consult a tax professional and/or a financial planner before making a final decision regarding the Partial Lump Sum Option.

Because lump sum payments made when selecting PLSO can be large, we have heard from many PSRS members who have voiced concerns that financial advisors, private insurance companies and retirement planners are pressuring them to elect PLSO when they retire and invest the funds elsewhere or use the lump sum amount to purchase insurance policies that will provide protection in the form of an annuity for the member’s spouse or loved one.

PSRS does not take a position for or against a member electing PLSO at retirement. Since your monthly benefit is actuarially reduced to offset the payment of the PLSO amount, you are actually “paying” for the right to receive part of your PSRS benefit up front in a lump sum. In addition, the decision to do so may include many personal reasons PSRS is unaware of (paying off medical bills, leaving an inheritance, building a nest egg, etc.) The list can be endless and only you can decide the importance of each factor.