Guide to Retirement - Hired 2010 or later

Congratulations on your upcoming retirement from Penn State! Penn State Employee Benefits would like to provide you with the most current information for a smooth transition into retirement and outline your benefits that you may retain upon your retirement.

Retirement Process:

  • Six months to one year from your planned retirement date, attend a Preparing for Retirement presentation.
  • Consult with your retirement plan vendor, TIAA or SERS, regarding your upcoming plans to retire.
  • Call HR Services or submit an Inquiry through the WorkLion portal to confirm your eligibility to retire per Policy HR54, if hired prior to January 1, 2010.
  • Notify your supervisor and/or local HR unit of your intent to retire so your unit can initiate the electronic retirement process in a timely fashion.
  • Utilize the Penn State Retirement Process to ensure that your personal information is updated in Workday and you have reviewed your current benefits that will be available into retirement.
  • Review your Retirement Healthcare Savings Plan and Contact Information with TIAA
  • Evaluate and decide about your healthcare options

Retirement Resources

Retiree Kit

Non Medicare Eligible Info

Medicare Eligible Info

Additional Resources

Active employees, can utilize Penn State's Employee Assistance Program, SupportLinc, to help review your specific options. Retired employees can access SupportLinc for 120 days after retirement.

If you are retiring at the age of 65 ½ or older AND enrolled in the Lion Advantage Plan

If you are currently enrolled in the Lion Advantage plan with the Health Savings Account, plan to retire within the next year, and are age 65 ½ or older, please read and take action as needed regarding a conflict between IRS regulations and Medicare requirements. 

An explanation of the issue and the solution is outlined below:

Issue: Anyone age 65 ½ or older who is enrolled in a qualified high-deductible health plan (Lion Advantage plan) with a Health Savings Account (HSA), who retires and enrolls in Medicare Part A, will experience a Medicare-required “look-back period” of 6 months. That “look-back period” overlaps with the timeframe during which you may have had either or both employer and employee contributions made to your HSA. IRS regulations state that an individual cannot receive or contribute to an HSA if covered by Medicare or any other health care insurance. If the individual were to be audited by the IRS, taxes and penalties could apply to the amount contributed to the HSA.

The proposed solution: In order to avoid potential tax issues, you want to STOP YOUR HSA CONTRIBUTIONS so that you have 6 months of NO contributions before you FILE FOR MEDICARE. For example, if you are retiring as of December 31 of any given year, you need to stop your contributions beginning with the June payroll of that same year. In order to move into the University-sponsored Medicare plan after you retire, you must first enroll in Medicare parts A and B.  Therefore, you must “file” for Medicare during the month of your retirement, which is December in this example. Social Security uses the filing date in December as part of the look-back period, which means you need to have NO HSA contributions from June – November.    

Please log into Workday through the Worklion portal to stop, start, or change your HSA contributions.  Any questions relating to Medicare guidelines, please contact your local Social Security office or your tax advisor.

Tuition Discount

Tuition discounts for retirees and their eligible dependents continue into retirement. For additional information please visit the Retiree Tuition Discount page.

For additional information or questions regarding retirement, please contact HR Services at 814-865-1473 or log an inquiry via the WorkLion portal.

Frequently Asked Questions

When I decide to retire, how do I initiate the process? 

We recommend that you notify your Human Resources Department of your intent to retire first. These discussions should take place about 2 - 3 months prior to your expected retirement date, or as soon as you know you plan to retire.

What if an employee is not ready to retire completely?

Policy HR29: Voluntary Phased Retirement Program highlights eligibility requirements and the procedure for phasing into retirement.

Will I have enough income to retire?

Before you decide to retire, you should contact your retirement plan administrator. If you participate in the State Employee’s Retirement System (SERS), you can contact them at 1-800-633-5461. If you participate in TIAA, you can contact them at 1-866-842-2173. Your plan administrator can provide assistance to prepare you for retirement by taking into account a variety of factors including your age, number of years of service, and savings.

We realize that many facing retirement underestimate their net retirement income by overlooking the fact that items currently deducted from the paycheck will no longer be withheld in retirement. Taking these withholding items into account can significantly increase your projected spendable income. For instance, in retirement, you will no longer have Social Security and Medicare taxes withheld from your retirement checks. These two taxes amount to roughly 8% on income up to $106,800 annually, and 1.6% on incomes above that.

In addition, you also will not have unemployment insurance, long-term disability, parking, and likely life insurance withheld from your retirement checks. Another big deduction that will not occur with a retirement check is your SERS or TIAA monthly contribution, depending on which retirement plan you participate in. In Pennsylvania, retirees do not pay either state or local income tax on retirement income.

Will I receive a payment for my accumulated vacation or sick time?

Currently, Penn State's practice is to pay all unused vacation/sick out in the same month as the final paycheck.

Sick time is paid out in accordance with University policy HR34.

Deductions taken from a vacation and/or sick time payoff are limited to taxes only. However, if you are enrolled in a supplemental retirement program, or have other charity deductions (i.e. United Way), you will have a deduction taken from the final check. If you do not want these deductions, you will need to complete the appropriate paperwork to stop deductions.

Checks will be automatically deposited into your account that is set up currently with the payroll office.

What happens to my Flexible Spending Account (FSA) after retirement?

Contributions to flexible spending accounts end at your retirement date; however, you are eligible for reimbursement for any expenses that were incurred on or before your retirement date. You have 90 days from the date of retirement to submit receipts for reimbursement.

Questions about the flexible spending account should be directed to HealthEquity, who is our FSA administrator, at 1-866-346-5800. You can also manage your FSA online via My HealthEquity.

What happens to my Health Savings Account (HSA) after retirement?

The funds in the HSA are employees to keep for future eligible expenses. All questions regarding using HSA money after retirement should be directed to. Health Equity at (866) 346-5800.

How do I update my address with Penn State after retirement?

Contract HR Services at 1-814-865-1473 or use WorkLion to send an inquiry. You will also need to contact retirement vendors and other vendors directly to make any demographic changes directly with them.

How do I change my beneficiary designation for the life insurance policy I maintain with Penn State as a retired technical service employee?

Changes to beneficiaries can be made anytime by contacting HR Services at 1-814-865-1473. Once the applicable information is obtained for your request, a Penn State Employee Benefits representative will provide you with the correct form for changing your beneficiary.