Retirement Benefit SeminarIndiana State Teachers’ Retirement Fund

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Overview

• TRF Retirement Benefit • Retirement Payment Options• TRF Resources: Web Site &

Appointments

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Pension Benefit Normal Retirement Eligibility

• Age 65+ with 10+ years of service• Age 60+ with 15+ years of service• Ages 55 to 59 when age added to years of

service totals at least 85 (Rule of 85)

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Reduced Pension BenefitEarly Retirement Eligibility

• Age 50 to 59 with 15+ years of service• Age 50 – Early Retirement Factor = 44%

• Member will receive 44% benefit for life

• Age 59 – Early Retirement Factor = 89%

• Member will receive 89% benefit for life

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Pension Benefit Calculation: Years of Service

• Fiscal Year: July 1 to June 30• 120+ days = 1.0 year• 60 to 119 days = 0.5 year• 10 years of qualifying Indiana service =

fully vested in pension

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Pension Benefit Calculation: What counts as service?

• Regular Indiana teaching service• Some substitute teaching situations in Indiana• School board approved leaves of absence from

an Indiana school• Public Employees’ Retirement Fund (PERF)

service• Military service credit• Private school service in Indiana (purchased)• Out-of-state service (sometimes purchased)• Additional years purchased

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Your Teachers’ Retirement Fund (TRF) retirement benefit consists of two

separate components:

Monthly Pension Benefit+ Annuity Savings Account

Your TRF Retirement Benefit

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TRF Retirement Benefit

Your TRF Retirement Benefit has two parts:• Monthly Pension Benefit• Annuity Savings Account (ASA)

Optional third part:• Rollover Savings Account (RSA)

Reminder: the IRS considers your total TRF retirement benefit as taxable income

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Decisions to be Made When Applying for a Retirement Benefit

• Choose one of six options for your Monthly Pension Benefit

• Choose one of seven options for your Annuity Savings Account (ASA)

• Choose one of five options for your Rollover Savings Account (RSA)

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TRF Retirement Benefit

Part One: Monthly Pension Benefit

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Monthly Pension BenefitCalculation Factors

• Average Annual Compensation• Average of five highest years of salary

earned for covered service• Benefit Multiplier: 1.1% (.011)• Years of Service

• Service credit earned or purchased• Member’s Age at Retirement• Retirement Option Selection

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Monthly Pension Benefit

• Benefit Formula:• Average salary x 1.1% x years of service

(A-1 Option)

• Example: • Age 55 • 30 years of service• Salary average (5 highest years): $60,000

• Annual pension income based on formula:$60,000 x 1.1% x 30 = $19,800

($1,650/month)

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Monthly Pension Benefit Overview Six Options

• Three Limited Beneficiary Options• A-1• A-2• A-3

• Three Survivor Options• B-1• B-2• B-3

• Social Security Integration • In conjunction with options above if under age

62

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• Highest paying monthly pension benefit for member

• No pension benefit beyond member’s lifetime

Monthly Pension BenefitA-2: Straight Life

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• Both A-1 and A-3 offer: • Lifetime monthly pension benefit for member• 5-year guarantee for beneficiaries of monthly

pension benefit• Only A-3 offers:

• Guaranteed balance recovery of ASA; available only with ASA 1 or ASA 7 election

Monthly Pension BenefitA-1 and A-3 Options: 5-Year Certain & Life

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• B-1 100% Survivor Benefit• B-2 66-2/3% Survivor Benefit• B-3 50% Survivor Benefit• Upon death of member, appropriate

percentage paid to named survivor

Monthly Pension BenefitSurvivor Options

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Your choice of survivor and pension option cannot be changed unless the

following circumstances exist:• Survivor pre-deceases member • Some divorce situations• Member marries after retirement• Member must notify TRF and complete appropriate

paperwork. Change is effective when all required forms are completed.

Monthly Pension BenefitSurvivor Exceptions

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TRF Retirement Benefit

Part Two: Annuity Savings Account

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Annuity Savings Account

What is it?

• Individual investment savings account• Mandatory contributions

• 3% of Annual Salary• Voluntary contributions

• Pre-tax or post-tax• Investment gains & losses• Immediately vested• Vested members, inactive for 90 days after

June 30, 2009, can withdraw their ASA balance without forfeiting their pension

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ASA: Pre-86 Contributions

• All contributions into the ASA prior to December 31, 1986

• Pre-86 dollars taxed prior to contribution• Pre-86 contributions accessible at retirement

without further tax penalty

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Annuity Savings Account

• Monthly Options• ASA 1: Annuity converted to lifetime monthly

payment• ASA 7: Pre-86 contributions distributed;

remaining taxable portion paid as lifetime monthly benefit

• Full Distribution• ASA 2: Full distribution (lump sum) with tax

implications

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Annuity Savings AccountRollover Options

• ASA 3: Total Rollover• Pre-86 contributions distributed to member• Taxable portion paid as a rollover to IRA/qualified

plan• ASA 4: Partial Rollover

• Pre-86 contributions distributed to member• Part of taxable portion paid as a rollover to IRA or

qualified plan• Remainder of taxable portion paid as lump sum

distribution

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Annuity Savings AccountDeferral Options

• ASA 5: Deferred distribution of entire ASA• ASA 6: Pre-86 contributions distributed to

member; taxable portion deferred

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Rollover Savings Account (RSA)

• Members may choose to create an additional savings account at TRF prior to retirement

• Roll over tax-deferred funds from IRA or other qualified retirement plans

• Control investment allocations• Elect a payment option at retirement

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Rollover Savings AccountFive Options

• RSA 1: Monthly benefit• RSA 2: Full distribution• RSA 3: Rollover to an IRA or qualified plan• RSA 4: Partial rollover to IRA or qualified plan;

remainder paid as distribution• RSA 5: Deferred distribution

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Rollover Savings AccountResearch Different Options

As retirement approaches, compare outside retirement plan payment options with TRF’s payment options.

Account balance    TRF Company X         Company Y     $60,000                  $432            $339                 $345       80,000                   576               452                    463     100,000                   720               565                    582    120,000                   864               678                    701

(Information retrieved January, 2009)

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• Available to members retiring prior to age 62

• Utilizes SSA age 62 benefit information• Increases TRF benefit until member reaches

age 62 • Decreases monthly TRF benefit at age 62

and thereafter

Pension BenefitSocial Security Integration

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• Take our earlier example: Member retires with a TRF benefit of $1,650/month

• Monthly Social Security benefit at age 62 = $1,000

• Monthly TRF benefit before age 62 = $2,188• Monthly TRF benefit at age 62 = $1,188• Combined Monthly TRF and Social Security

benefits at age 62 : $1,188 + $1,000 = $2,188

Pension BenefitSocial Security Integration

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Death Before Retirement

•Pension Benefit Eligibility• Member has at least 15 years of service• If married at least 2 years, spouse

receives a pension for life• If no qualifying spouse, dependent

children receive a pension benefit until 18 years of age

•Annuity Savings Account (ASA)

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Retirement PlanningPlease remember, TRF employees are not financial planners.

• Be aware of personal needs• Lifestyle change, health care costs, inflation,

travel• Research options available to you• Consider all sources of retirement income

• Social Security, TRF benefit, personal savings, spouse’s retirement

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Ready to Retire?

• Complete Application for Retirement Benefits, Part I and submit to TRF in a timely manner• Now available to submit online!

• Submit Application for Retirement Benefits, Part II to your employer’s payroll office

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Reemployment

• To reemploy in TRF- or PERF- covered positions:• 30-day mandatory separation from retirement

date to reemployment date • No additional service credit earned• No contributions to ASA• No earnings limitation

• To reemploy in private sector:• Employable immediately• No earnings limitation

• Subject to Social Security limitations

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TRF Benefit Appointments

• One-on-one appointment to discuss personal benefit and payment options

• Schedule approximately two years prior to anticipated retirement date• Call TRF: (888) 286-3544 or (317) 232-3860

• Benefit appointment options• Indianapolis TRF office• Phone call• TRF comes to your school

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TRF Web Sitewww.in.gov/trf

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TRF Web Site

• Register with your e-mail address as your username, and you will be emailed a personal identification number (PIN) to log in

• Can change PIN after online registration• Change contact information, investment

allocations, & view quarterly statements• Use benefit estimate calculator• Change/update beneficiaries• Print Retirement Application – or submit it online

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Teachers’ Retirement Fund

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