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Retirement Benefit Seminar

Retirement Benefit Seminar. Indiana State Teachers’ Retirement Fund Please silence your cell phone. Overview . TRF Retirement Benefit Retirement Payment Options TRF Resources: Web Site & Appointments. Pension Benefit Normal Retirement Eligibility. Age 65+ with 10+ years of service

Samuel
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Retirement Benefit Seminar

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  1. Retirement Benefit Seminar Indiana State Teachers’ Retirement Fund Please silence your cell phone.

  2. Overview • TRF Retirement Benefit • Retirement Payment Options • TRF Resources: Web Site & Appointments

  3. 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)

  4. 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

  5. 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

  6. 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

  7. Your Teachers’ Retirement Fund (TRF) retirement benefit consists of two separate components:Monthly Pension Benefit+ Annuity Savings Account Your TRF Retirement Benefit

  8. 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

  9. 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)

  10. TRF Retirement Benefit Part One: Monthly Pension Benefit

  11. 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

  12. 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)

  13. 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

  14. Monthly Pension BenefitA-2: Straight Life • Highest paying monthly pension benefit for member • No pension benefit beyond member’s lifetime

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

  16. Monthly Pension BenefitSurvivor Options • 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

  17. Monthly Pension BenefitSurvivor Exceptions 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.

  18. TRF Retirement Benefit Part Two: Annuity Savings Account

  19. Annuity Savings AccountWhat 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

  20. 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

  21. 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

  22. 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

  23. Annuity Savings AccountDeferral Options • ASA 5: Deferred distribution of entire ASA • ASA 6: Pre-86 contributions distributed to member; taxable portion deferred

  24. 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

  25. 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

  26. Rollover Savings AccountResearch Different Options As retirement approaches, compare outside retirement plan payment options with TRF’s payment options. Account balanceTRFCompany XCompany 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)

  27. Pension BenefitSocial Security Integration • 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

  28. Pension BenefitSocial Security Integration • 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

  29. 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)

  30. 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

  31. 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

  32. 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

  33. 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

  34. TRF Web Sitewww.in.gov/trf

  35. 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

  36. Teachers’ Retirement Fund We are here to serve you! Any questions? Please complete our survey. Your comments help us serve you more effectively.

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