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A Quick Look at the Public School Employees Retirement System


The Public School Employees’ Retirement System (PSERS) is an agency of the Commonwealth of Pennsylvania that administers the pension plan for Pennsylvania’s public school employees.

Under the Internal Revenue Service (IRS) Code, the PSERS pension plan is classified as a 401(a), governmental defined benefit plan. A defined benefit plan means that your retirement benefit is determined by a formula which includes a retirement factor, years of credited service, and the final average salary, according to PSERS’ website.

PSERS members have a pension that is split into thirds with one-third contributed from their own paycheck; one-third contributed from the school district in which the employee works; and one-third contributed from the Commonwealth.

When it comes time for a PSERS member to retire, their distributions are not subject to state or local taxes and they are given a few options:

1. They can withdraw a tax-qualified lump sum and receive lower pension payments. *

2. They can take a straight life payment for the largest monthly payment

3. They can take a form of survivor payments, either 50% or 100%, which lowers their overall monthly payment.

Members can also choose to take some combination of lump and survivor payments, if they so desire.

Taking the lump sum options may be beneficial for those who are looking for the most flexibility. Taking payments or survivor benefits should be done in concert with the members overall goals and needs, which can be found by completing a financial plan that helps to weigh the pros and cons of that decision.

As always, we suggest speaking with a financial planner for more information regarding your PSERS plan and to determine which path may be the best for you.

Please contact us at 610.709.9715 or visit our contact page:

*Changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of Raymond James & Associates we are not qualified to render advice on tax or legal matters.

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