Richmond VA > Retirement > Retirement Terms

Last Updated: 2012-05-22

1099-R

End-of-year tax statement provided to retirees and beneficiaries who received designated distributions of $10 or more from profit sharing or retirement plans, any individual retirement arrangements (IRAs), annuities, pensions, insurance contracts, survivor income benefit plans, permanent and total disability payments under life insurance contracts, charitable gift annuities, reportable disability payments, etc. during the tax year. Death benefit payments made by employers that are not made as part of a pension, profit sharing, or retirement plan are also reported on 1099-Rs

Asset Allocation

An investment strategy that aims to balance risk and reward by apportioning a portfolio’s assets according to an individual’s goals, risk tolerance and investment horizon

ACH (Automated Clearing House)

An electronic network for financial transactions in the United States of America. The National Automated Clearing House Association and Federal Reserve provide oversight for this network.

Average Final Compensation

The average annual creditable compensation of a member during the 36 consecutive months of creditable service in which such compensation was at its greatest amount or during the entire period of the member’s creditable service if less than 36 months.

Board of Trustees

The governing body of the Richmond Retirement System.

COBRA (Consolidated Omnibus Budget Reconciliation Act)

A federal act that gives employees and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances, such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102 % of the cost to the plan.

Compensable Disability

Disability due to a job related injury that is ruled to require compensation to the employee.

Consumer Price Index

An inflationary indicator (also known as the cost-of-living index) that measures the change in the cost of a fixed basket of products and services, including housing, electricity, food, and transportation.

Contingent Beneficiary

The person or legal entity who receives benefits from a benefactor in the event of the benefactor’s death if the primary beneficiary predeceases the contingent beneficiary.

Cost-of-Living-Adjustment (COLA)

An adjustment in benefit payments to offset a change in purchasing power, as measured by the Consumer Price Index. These adjustments are made at the discretion of the Richmond City Council.

Creditable Compensation

The base compensation payable to an eligible employee working full-time, plus shift differentials, bonuses, severance pay, and educational incentive pay but excluding overtime pay, imputed income under section 79 of the Internal Revenue Code, and lump sum payment for unused sick leave.

Creditable Service

The member’s total service as an eligible employee of the City of Richmond or Richmond Behavioral Health Authority whether or not continuous, exclusive of any separate period of service of less than nine months in duration, that will be used to determine eligibility for retirement from the Richmond Retirement System. Creditable service does not include periods during which the member is on leave without pay and has not made the required member contributions, as well as any service in which a contribution was required if the contribution account has been distributed.

Death Benefits

A one time $1,000 payment due to the designated beneficiary (ies) of members hired before June 13, 1988 upon the member’s death.

Deferred Compensation Plan (457)

Tax deferred retirement savings plan that allows employees to contribute a portion of their pay to self directed retirement investments.

Deferred Retirement

Retirement which is applied for by former employees after leaving City of Richmond service.

Defined Benefit Plan

A type of pension plan in which an employer promises a specified monthly benefit on retirement that is predetermined by a formula based on the employee’s average final compensation, creditable service and age, rather than depending on investment returns.

Defined Contribution Plan

A type of retirement plan in which the employer’s annual contribution is specified. Individual accounts are set up for participants and benefits are based on the amounts credited to these accounts (through employer contributions) plus any investment earnings on the money in the account. Only employer contributions to the account are guaranteed, not the future benefits.

Dependent

A person who relies on someone else for financial support.

Direct Deposit

The electronic distribution of payments directly into bank accounts through the Automated Clearing House.

DROP (Deferred Retirement Option Program)

An optional program open to Sworn Police and Fire members participating in the Defined Benefit Plan that allows for a member to continue working for the City of Richmond in retirement for up to 5 years. Pension payments will be held by the Richmond Retirement System during this period and paid to the member in a lump-sum at the end of the period.

Early Service Retirement

A retirement prior to normal retirement age that is based on age and/or service and not on a disability or death.

Eligible Employee

An employee of a participating employer who is regularly employed on a full-time basis, except elected officials and members of the judicial retirement system.

Enhanced Defined Benefit Plan Option

An option of the Defined Benefit Plan that members can elect upon employment that offers extra retirement benefits in return for higher member contributions.

Executor of the Estate

A legal term referring to a person named by a maker of a will to carry out the directions of the will.

Fiscal Year

The accounting period for which annual financial statements are regularly prepared. The Richmond Retirement System’s fiscal year begins on July 1st and ends on June 30th.

Former Employee

Employees with vested rights to the Defined Benefit Plan who leave City service prior to applying for retirement.

General Member

A member who is not classified as a sworn police officer or firefighter.

Income Verification

A document provided by the RRS to a retiree that verifies the value of pension benefits.

HELPS (Heathcare Enhancement for Local Public Safety) Exclusion

A provision of the Pension Protection Act of 2006 that allows Public Safety Officers, eligible for an unreduced benefit or disability benefit, to exclude $3,000 pre-tax annually from their pension for healthcare premiums.

HMO (Health Maintenance Organization)

A type of managed care organization that provides a form of health care coverage that is fulfilled through hospitals, doctors, and other providers with which the HMO has a contract.

Member

Any eligible employee or former eligible employee who is currently or shall in the future be recognized as having membership in the system.

Normal Retirement Date

The first day of the month following the 65th birthday of a general employee or 60th birthday of a sworn public safety member.

Ordinary Disability

Disability due to a non-job related injury or sickness.

Payment in arrears

A term describing payments made after a service has been provided.

Pension

An arrangement by which the Richmond Retirement System provides eligible employees an income after termination of employment with the City of Richmond when they are no longer earning regular income.

Portability

A reciprocal agreement between the Richmond Retirement System, Virginia Retirement System, Newport News Employee Retirement Fund and Norfolk Employee Retirement System which permits members to transfer their vested service credit for the purposes of determining retirement benefits.

POA (Power of Attorney)

A written authorization to act on someone else’s behalf in a legal or business matter. The person authorizing the other to act is known as the principal and the one authorized is know as the agent.

The power of attorney authorization is only valid until the principal passes away, and is voided upon the death of the principal.

POS (Point of Service)

A managed care health insurance system that allows members to elect a primary care physician from the system’s network. These types of plans offer lower medical costs in return for reduced member choice.

PPO (Preferred Provider Organization)

A managed care organization of medical doctors, hospitals, and other health care providers who have covenanted with an insurer or a third-party administrator to provide health care at reduced rates to the insurer’s or administrator’s clients.

Pre-Note

The process of verifying a bank account and routing number for direct deposit of pension payments

Pre-Paid

Refers to service paid for in advance; including dental insurance with the Richmond Retirement System.

Primary Beneficiary

The person or legal entity who receives benefits from the death of a benefactor in the event of the benefactor’s death.

Public Safety Member

A member who is classified as a sworn police officer or firefighter.

Purchase of Prior Service

Purchasing certified creditable service from the retirement system of the Commonwealth of Virginia or other state or of a political subdivision for purposes of determining retirement benefits in the Richmond Retirement System.

Retirement Allowance

A regular pension allowance not including a cost-of-living-adjustment.

Service

Service as an employee for which compensation is paid by a participating employer. Service as an employee shall not be recognized in more than one retirement system simultaneously for the same position.

Service Retirement

A retirement that occurs at or after a member’s normal retirement date.

Spouse

A partner in a marriage.

VA-4P

Commonwealth of Virginia tax form used by retirees and beneficiaries living in Virginia and receiving pension benefits to notify the Richmond Retirement System of the amount of state income tax to withhold from pension payments

Vested

The point at which members of the RRS have earned the right to receive a pension benefit. A member is vested after completing five years of creditable service.

W-4P

IRS tax form used by retirees and beneficiaries receiving pension benefits to notify the Richmond Retirement System of the amount of federal income tax to withhold from pension payments.

Contact Information:

Richmond Retirement System
City of Richmond
730 E. Broad Street, Suite 900
Richmond, VA
23219 USA
Retirement
Phone: (804)646-5958
Fax: (804)646-5299

Toll-Free (Outside Central Virginia): (888)288-2781
Office Hours: By Appointment Only
Monday - Friday
8:00 a.m. - 5:00 p.m.
Walk-in Visits:
Monday - Friday
10:00 a.m. - 12:00 p.m.
and 1:00 p.m. - 3:00 p.m.

More Contact Information

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