My husband is a retired police officer receiving a monthly pension. He also works a new job with an additional pension not yet received. The CSS asks the value of the pension. I am completely uncertain as to how to quantify that. Does anyone know?
I would guess that his current pension is income.
Anything not yet drawn upon…how much is on those accounts?
The income will be used, as you know. The balances won’t be…
Yes? His pension definitely counts as income but my question is how do I quantify the pension value? Is it per year, per lifetime? As the pension dies with my husband, how can there be a finite value to it?
Depending on the type, if you get an annual accounting, use that value. It’s not a question that determines FA. More soft info to show general future financial position. If you have no idea (if the job is that new,) you might just explain that in Comments.
I have never listed the value of my inchoate pension. I could die before I am old enough to claim it. The company could go bust and I might not get the full value. You have two different issues - the pension he is drawing is income and needs to be reported. The pension he is not yet collecting doesn’t have to be.
If you ask your pension provider, they will provide a statement of value. It is based on your contributions and growth in value. The CSS is not looking for the pension check amount.
The pension that he is currently collecting definitely counts as income, I’m just having trouble putting a value on it
The pension income is included as income (should be included on your tax return). The value of the pension is something different. Contact your pension provider to get it. My pension provider allows me to generate a statement online at any time, in addition to the annual statement I receive.
Imo, this issue is the pension yet to come. Not the remainder on the one being received now. The one now is only income. Just as for most of us, salary is income and future pension is a pending asset. Eg, if the pending requires vesting, it would have no value today.
Don’t inadvertently answer in a way that makes you seem wealthier than you are.
This was addressed last year: http://talk.qa.collegeconfidential.com/financial-aid-scholarships/2022252-retirement-plan-value-do-i-include-my-pension-value-if-my-employer-contributes-and-i-dont.html
Even if you are receiving benefits now, you still need to answer the value question as well as include the payments as income. If you are receiving benefits, the value should start decreasing, but there will still be a value. It is similar to listing the value of a 401k or IRA that you are drawing payments from.
Not always. ? I receive monies for my lifetime. A pittance. There is no master account that decrements. And when we did the CSS, I put in the value of DH’s fund, before distribution (he was still working, not drawing.) And for me, 0, as this was before I was made aware of an account I thought was bankrupt.
Can OP give us the exact wording of the question or its number?
If he is a new employee and not even vested, the pension probably doesn’t have any real value anyway.
Remember, vesting only applies to company contributions. If you are contributing any of your own money (normally a payroll deduction, often a fixed, non-optional deduction) it is always 100% yours, and it also contributes to the value of your pension.
As noted last year by @BelknapPoint:
“the net worth of a defined benefit plan is only reportable to the extent that employee contributions have been made. If there have been no employee contributions to the plan, then there is nothing to report.”
My assumption is that almost all Police Officers’ pensions are defined benefit plans. If it is wholly employer funded then there is no value to report. If there are employee contributions then those are reportable. Current income is always reportable.
For the new job, is it DB or DC? If DC then you should be getting a statement of current value anyway. If DB then the rule is the same as the prior job.
@twins424 We are stuck on this question as well. DH makes no contributions to his State plan, so do we then put 0?
Here is how I read it:
If you NEVER made any contributions to the DB plan, enter 0.
If you made any contributions to the DB plan, enter what ever is on your yearly statement.
*If you made any contributions to the DB plan, but are retired and now drawing the pension, enter 0
*The reason I say this is, once you are drawing, the monthly payment option you selected is usually irrevocable, and you can’t borrow against your balance anymore. If there is a actuary or tax specialist out there who knows any more, let us know. It is probably covered in ERISA. (Employee Retirement Income Security Act of 1974)