The state retirement system of Maryland consists of seven different retirement plans to cover the multiple types of state employees. Before we dive deep into the intricacies of each system, take the time to brush up on pensions. If you would value some extra help navigating the complex pension system, SmartAsset’s financial advisor matching tool can help pair you with advisors in your area who will best meet your needs.
Types of Retirement Systems in Maryland
Maryland has a solid variety of retirement systems for its nearly 200,000 public employees, with seven distinct offerings across all different public employments. The benefits and retirement requirements that accompany these plans depend on what the position entails. According to its State of Maryland Retirement and Pension System Handbook, whether a Maryland resident works as a state and municipal employee, an educator, law enforcement personnel, a judge, a legislator, or another public employee, the state promises security in retirement. Here are the primary plans.
|Maryland Retirement Systems|
|Plan Title||Eligible Employees|
|Employees’ and Teachers’ Retirement System||State and participating municipal employees and personnel of Maryland public schools, public libraries and affiliated State universities and colleges who were enrolled prior to January 1, 1980 and who have elected to remain a member of the Retirement System.|
|State Police Retirement System||Permanent, full-time sworn officers and cadets of the Maryland State Police.|
|Law Enforcement Officers’ Pension System|| |
|Correctional Officers’ Retirement System|| |
|Judges’ Retirement System|| |
|Legislative Plan||All members of the Maryland General Assembly.|
|Optional Retirement Plan||All are eligible, but benefits may vary based on a set of qualifications.|
The retirement plans the Maryland retirement system offers are dedicated to public employees who are divided into two groups. First, there’s the the State Retirement Plan, under which the first six systems fall. Second, there’s the Optional Retirement Plan, which is separate and follows another set of rules. We break them down further below:
Overview of Maryland’s Main Retirement Systems
Employees’ and Teachers’ Retirement System – This is the largest of the State Retirement Plan System (SRPS) sub-plans. As such, it applies to most general employees. In particular, it targets teachers at public schools and universities in the state of Maryland. The ETRS specifically covers state and participating municipal employees and personnel of Maryland public schools, public libraries and affiliated state universities and colleges who enrolled prior to January 1, 1980. In addition they must have elected to remain a member of the Maryland retirement system.
State Police Retirement System – The SPRS branch of SRPS is for the permanent, full-time sworn officers and cadets of the Maryland State Police. The State Police Retirement System began in 1949. And since then, it has been a reliable source of retirement safety for its cadets and uniformed cops. This plan includes extensive benefit programs should its workers die on the job or encounter injuries.
Law Enforcement Officers’ Pension System – The LEOPS program casts the widest net of any of the employee plans. It covers dozens of employee types. That demonstrates its commitment to protecting the hardworking people with general title “officer” in Maryland. Its handbook detailing how to sign up, and how to reap the most benefits, spans nearly 60 pages.
Correctional Officers’ Retirement System – Correctional Officers make up a large cut of the public employee system in Maryland, due to a large correctional facility within state lines. As a result, the correctional Officers’ Retirement System is an expansive asset in the State Retirement System and plan. People who work in these correctional facilities, in a wide variety of roles must enroll in this system.
Judges’ Retirement System – This system is for members of the state and federal court for Maryland. Working as a judge or chancellor in this respect is often a lengthy career term. So the benefits for this job are quite competitive. In fact, they are among the best in the state.
Legislative Plan – Plain and simple, this plan is for members of the state legislature and offers a handful of benefits in exchange for decades of public service. The longer you’ve been an employee, the greater you can expect this benefit to be.
Retirement Taxes in Maryland
On a federal level, you do not pay taxes on your pension plan contributions don’t. That means it’s a tax-deferred account. But there’s a catch: you pay taxes on any payments you take directly from your pension once you retire. On the bright side, you will have the chance to decide whether you would prefer to have these funds withheld from each pension check. As an alternative, you can make estimated tax payments.
Many factors will influence exactly how much money in taxes Uncle Sam will take from your account. Of course, they’re hard to predict. But luckily the government routinely does most of those calculations for you and will give you a refund (or charge the dividends) at year’s end. Retirement plans, like many of Mississippi’s, include a , which goes from your pension plan to a different, tax-deferred retirement account. Finally, if you instead have a Roth IRA, you’ll instead pay taxes up-front. But many of your distributions will be tax-free.
As detailed in our thorough Maryland Retirement Tax Friendliness Guide, the state of Maryland is moderately tax-friendly toward retirees. It does not tax Social Security or retirement account withdrawals. Maryland taxes wages at the normal rates. The marginal state tax rate is 4.75%. Finally, public pension income is partially taxed, and private pension income is fully taxed.
Current Financial Health of the Maryland Retirement System
The current state of the Maryland retirement system, drawing from its 2017 report, is thriving. It has seen a steep percentage increase in benefits for those on its retirement plans. The Maryland retirement system also boasts a pronounced uptick in value and income for such public works jobs. Most significantly, the number of enrolled workers in the program is nearly at a huge benchmark of 200,000.
Tips for a Successful Retirement
- Devising a list of financial goals you’d like to meet before you reach retirement age is the best way to ensure that you’re not over-saving. This will make it easier to decide where you want to end up financially, which can make retirement more attainable.
- Even with all the benefits of a pension, retirement can nonetheless prove difficult to prepare for. Help from a financial advisor might be the best way to get your ducks in a row. SmartAsset’s financial advisor matching tool can set you up with skilled financial advisors in your area who can best meet your needs.
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