The South Dakota Retirement System created the Supplemental Pension Benefit (SPB) as a companion benefit to the SDRS Supplemental Retirement Plan (SRP), also referred to as the 457 plan, and the SDRS Special Pay Plan (SPP). The SPB became effective July 1, 2008. The Supplemental Pension Benefit is a financial process that can be used to provide additional financial security during retirement through guaranteed lifetime monthly benefit payments, with guaranteed cost-of-living adjustments. Survivor benefits are available depending on your marital status at the time the SPB is established.
Any SDRS member is eligible to participate in the SPB program if they:
- have terminated employment, and
- are currently receiving an SDRS monthly retirement benefit, and
- have at least $10,000 in their Supplemental Retirement Plan or Special Pay Plan, or in a combination of both.
A member who has retired and has returned to SDRS covered employment will not be allowed to purchase a SPB while employed because IRS law will not allow the transfer of §457 funds unless the member is in termination status.
The Supplemental Pension Benefit program has been designed to provide members with an opportunity to enhance their primary SDRS retirement benefit by allowing them to convert funds from their SRP and/or SPP savings plans to establish an additional lifetime benefit. As only one SPB conversion per retiree, per lifetime is allowed by law, it is important to note that the SPB is an optional benefit and can be elected at any time during the member’s retirement. There is no requirement that a member must exercise the SPB option at any specific time, if at all, but it is irrevocable once exercised.
SDRS has established a calculator to help determine the cost versus the benefit of participating in the Supplemental Pension Benefit program. The calculator is a planning tool that a member can use to estimate the amount of an SPB monthly benefit based on the amount of money transferred from their SRP and/or SPP account. Members are cautioned to make sure they have additional savings before committing any or all of their SRP/SPP funds to this program.
Click here to go the SPB Calculator