Home

The Ohio Patrolmen's Benevolent Association (O.P.B.A)

Ohio Police and Fire Pension Fund

In the next month or two (depending on when you receive this article) will determine the direction of our pension fund.  Although strong we are in need of changes.  Recently we have seen the Senate pass bill 340 through swiftly expecting the House to follow.  Since that time we have seen the same dog and pony show the legislature continuously portrays while delaying the vote on important legislature.  Regardless of how we feel about the bill knowing nothing is perfect, reform is needed.  All believe and have relayed how certain parts of the bill are unfair but are willing to accept most of it; knowing that something needs to be done.
There have been some unique features implemented into SB 340 but most items included come from the initial proposals from 2011 recommendations of OP&F Board of Trustees.  One item added to the bill will give the board more authority to implement changes without legislative approval for items such as age of retirement and employee contributions.  It is important to remember that the board did not ask for this implementation and that whatever the sentiment is; the legislature is on the track to “pass the buck” and decision onto the fund.  In our best analysis they do not want to be responsible for decisions regarding our fund in the future. 

While all of these items will create change we are still attempting to implement items administratively to do our best to preserve the best we can for our fund.  We are studying the implementation of W2 reporting and calculating system as opposed to the current system we use.  This system would potentially include items that are now not currently added into our pensionable wages.  It is currently used by the Ohio Public Employees Retirement System and appears favorable for the members.  We are working constantly to improve the administrative rules for off-duty non-catastrophic disability awards.  These “off-duty” awards represent over 20% of all disability awards by the fund.  We have had other discussions about potential member favorable changes and keep in mind always that we would consider restoring benefits should economic conditions change.
I promise to keep the membership informed and offer your voice to our board should you have a concerns, questions or comments.  Although we do not know if the bill will pass or when it will be voted on; we do know that your fund will remain strong and we will do all we can to preserve it for yourself and future retirees.  I appreciate your support and please direct any questions or comments you have to me via email at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .  Take care and be safe.

Scott Huff
Trustee for the Ohio Police & Fire Pension Fund

 

Sept. 2012

Summer has passed and our 2 family days with the Cleveland Indians and Columbus Clippers were well attended. The latter, however, was on the eve of the funeral for Deputy from Delaware County Sheriff Department Detective Dan Otto who died in a tragic accident while in California. Our thoughts and prayers go out to his family, friends and department for their loss. Our Annual Golf Outing was held on July 18, 2012 at Mallard Creek and it was also well attended and a success. This outing is the only formal fundraiser for the Police Benevolent Fund to date.


The attention now turns to the pension reform bills that are proposed in Columbus and the elections this November. Justice Douglas, the CPPA and it representatives and I met with the Speaker of the House prior to the release of the pension reform study. The message that Justice Douglas and I left with the Speaker was that the legislature needs to act on the proposed changes immediately.  These changes have been almost 3 years in the making and further delay to will affect the viability and solvency of the pension systems. The OPBA expressed our reservations with the granting of authority to the pension board to make changes to the systems without legislative interaction. The links to the respective bills S.B. 340, OP & F, and S.B. 343, PERS, can be found on our website by clicking on Senate Bill Analysis for the respective bills. Testimony should have been heard by the House in August with an eventual vote hopefully before the November elections. The report on the 30 year plans for the pension systems may be viewed on the Ohio Retirement Study Council web site at http://orsc.org check under the reports section: thirty year funding plan. If you go to the Ohio Legislature website, http://www.legislature.state.oh.us/, you can check for updates on the status of these bills.

Health care is a concern as our members approach retirement and are in retirement. We have met with the Executive Director to voice concerns for OPERS proposed changes but to also educate me on the plan. Unfortunately, our health care benefits are not guaranteed in our public pension systems by statute. As stakeholders, members should voice their concerns and objections to their respective systems as well as any objections that may come from the OPBA. I have directed the members of the Executive Board that are in OPERS-LE to monitor and advise me of relevant information since I have never been a member of that system. The lack of any guarantees for health care is the reason that I have written two articles on post retirement health care plans to be negotiated into contracts. In my former department, Solon PD, we had negotiated that provision into our contract in 2005.


The National Association of Police Organizations held its Annual Convention the last week of July. Invitations had been extended to both Presidential campaigns. Vice President Joseph R. Biden Jr. addressed the convention; however, there was no response from the presumed Republican Presidential candidate, Governor Romney, or any representative from the Republican Party. The endorsement was unanimous for President Obama. I realize that personally there may be reservations with this but Governor Romney has stated he favors defined contribution pensions over our defined benefit programs. Governor Romney also stated his unwillingness to support expansion of collective bargaining rights. Executive Secretary Tom Austin has a separate article with the endorsements to date of candidates from Ohio. Justice Terrence O’Donnell, Justice Robert R.Cupp and Justice Yvette McGee Brown who appear on the front cover were endorsed by the OPBA for the Ohio Supreme Court.

Other speakers at the convention included Director Bernard Melekian of COPS U.S. Department of Justice who spoke on the COPS program and from the U.S. Department of Justice; Thomas Abt, Chief of Staff; Office of Justice Programs spoke on the Public Safety Officers Benefit Act, PSOB. There was a pledge by Mr. Abt to reduce the delays in the granting of benefits to the families requesting them. NAPO has worked with member organizations to assist them in receiving the benefits for families from their organizations in obtaining benefits that may be delayed from PSOB.  NAPO has argued that benefits from PSOB should not be tied to officers wearing their bulletproof vests if purchased through the assistance of the federal government.  There is more information in the articles from the NAPO July Washington Report on PSOB and COPS funding.



The next General Membership meeting in October will be held in the Toledo area.  The remaining Board of Directors meeting in November and General Membership meeting in December will be in North Royalton. The movement of the General Membership meetings will continue to rotate throughout the State of Ohio to afford our departments throughout the state a chance to attend meetings.


 

Saving for College? Does a Roth IRA or 529 plan fit the bill?

Saving for College? Does a Roth IRA or 529 plan fit the bill?
A Roth IRA can be used as a retirement planning tool and an education funding tool.

Parents who want to save money for their own retirement and save money for their children's college expenses have many complicated and competing choices.  One of the most basic, but most important, decisions is where to invest the money.  For example, parents who want to protect their savings from taxes can choose among 529 college savings accounts and Roth IRAs.  Both types of accounts require investors to contribute after-tax money.  However, many people do not realize that both 529 plans AND Roth IRAs allow tax-free withdrawals of contributions for children's college expenses.  But there are many key differences, including state tax liabilities, limits on who can use them, financial aid ramifications, and investing options.

Contributions to both Roth IRAs and 529 Plans are not deductible for Federal Income Taxes, but 529 contributions may be partially deductible at the State level. Contributions to an Ohio 529 plan of up to $2,000 per beneficiary per year (any filing status) are deductible in computing Ohio taxable income, with an unlimited carry-forward of excess contributions.  The withdrawals of the contributions from both accounts are tax free.  The earnings or profits spent on college tuition come out of the 529 plan tax free; in the Roth IRA, if you are under 59½ and haven't waited five years since contributing, the earnings may be taxable.  If thinking about using the funds for education expenses other than college, i.e.,  private high school, the 529 plan might not be the best bet.

Another nuance between the two plans involves your ability to contribute to each plan.  The 529 plan has very high annual contribution rates and contributions are not limited by your income level.  Contributions to a Roth IRA are limited by your income to the point where those with higher incomes may even be phased out and unable to make any contributions.  The annual Roth IRA contribution rate for 2012 for those less than age 50 is $5,000 per parent.  Those age 50 and over are eligible for an additional $1,000 per year contribution.   A definite benefit for police officers is that contributions to a Roth IRA are not offset by any deferrals to your 457(b) deferred compensation plan.  If you fall within the income guidelines, you can contribute to both. 

When applying for financial aid, the treatment of both accounts when calculating the Expected Family Contribution (EFC) is treated entirely different.  A Roth IRA does not enter into the calculation of the EFC; a 529 does. Effective with the 2009-10 academic year, the value of all 529 college savings plans, prepaid tuition plans and Coverdell education savings accounts owned by a parent or by the parent’s dependent children must be reported as a parent asset on the FAFSA.  For this reason, many consider a Roth IRA to be the better planning tool when trying to maximize financial aid.  Parental assets are assessed at a maximum 5.64% rate in determining the student's Expected Family Contribution (EFC).

The surprise for many parents is the potential financial-aid penalty of using a Roth IRA: The entire IRA distribution, taxable or not, must be included in base-year income on the student's federal financial-aid application for the following year.  This can reduce the amount of future need-based financial aid. Qualified distributions from a 529 do not count as income or a resource for future calculations.

When we have a client open a 529 plan, we always suggest they let other family members know that at gift giving time other family members can contribute to the college funding of the intended beneficiary. That is definitely one drawback with using a Roth IRA for education funding; others are less likely to contribute to your Roth IRA.

Before deciding between using a Roth IRA or a 529 Plan as a college funding tool, you want to understand all of the details: how you put money in, how you take money out, and how the ins and outs are treated for tax and financial aid calculations.  If you have questions on whether a Roth IRA or a 529 plan is best for you, give Lineweaver Financial Group a call 216.520.1711, and we’d be happy to provide complimentary advice based on your situation. 

Lineweaver Financial Group
9035 Sweet Valley Drive
Valley View, OH 44125
216.520.1711
www.lineweaver.net
Securities offered through Sigma Financial Corporation. Member FINRA/SIPC

 

Remember in November


Since we publish only four times a year this is the last chance before November elections to remind everyone who their friends are. Last year we fought a bruising battle to keep collective bargaining rights in the face of republican efforts to gut your rights.

Ohio was not unique, however.  Similar battles played out with less success in places like Wisconsin, for example, where nearly all public employees lost their collective bargaining rights.  It used to be that the republican party’s hatred for government was directed at the federal government. That same hatred is now being directed at all levels of government.  Here is a newsflash for our members:  YOU ARE THE GOVERNMENT!
Please recall that the State of Ohio balanced its budget on the backs of the cities and counties.  Sales tax revenue that used to go to local government has been slashed each year of Governor Kasich’s administration and such revenues will soon be reduced to nothing.  Likewise, in another giveaway to the wealthy, inheritance taxes are being eliminated which further squeezes local government financing. So even though the State is projecting a $500 MILLION budget surplus, Kasich and the GOP are proposing more giveaways to the rich but no restored funding for local government.

Although the private sector economy continues to improve, the government-haters continue to squeeze local governments.  Even though we’re not seeing as many layoffs and furlough days as in the recent past, the local governments continue to squeeze our members.  As officers retire they are not being replaced so we see shrinkage through attrition.  Training budgets are being cut to the bone.  Some employers are now refusing to replace ballistic vests.  I know of departments where the officers are using their own money to replace things like windshield wipers on city cruisers.    All of these problems can be traced directly to republican policies that favor the rich and screw the working men and women.

Across the country we are seeing police pensions being gutted by the government-haters.  Manpower is being reduced to dangerous levels and all the while the fat keep getting fatter.  The next big attack to watch for is so-called “right to work” legislation.  Proponents of right to work claim that it creates a business-friendly environment that attracts new jobs.  If that were true then states like Alabama would have low unemployment and poverty rates but we know that isn’t the case.  Right to work is about union-busting, period.

The government-haters will tell you what you want to hear to get your vote and then they turn around and try to screw you.   It is high time to stop voting for the government-haters and start voting for government supporters.