MnSCU Retirement Plans

1. MnSCU Retirement Plans Basic Training for Campus HR Administrators

2. Planned Modules: Module 1: Retirement Plan Concepts Module 2: Eligibility for Primary Plans Module 3: Reporting in SCUPPS Module 4: SRP: Eligibility and Coding Module 5: Forms Completion & Processing Module 6: Phased Retirement Programs Module 7: Voluntary Retirement Programs Module 8: Retirement Plan Distributions

3. TIAA-CREF Defined Contribution Plans

4. Distribution Options With TIAA-CREF • Life Annuity Options • One-life or Two-life Annuities • Cash Withdrawals • Systematic Withdrawals • TIAA-Traditional Transfer Payout Annuity • TIAA-Traditional Interest Only Payments • Minimum Distribution Option

5. Life Annuities:Income You Cannot Outlive • An arrangement that provides income payments for life. • One- and Two-Life Annuities: • One-Life Annuities provides lifetime income to the annuitant only. • Two-Life Annuities provides lifetime income to the annuitant and a second person.

6. Life Annuities - Beneficiaries • Beneficiary – an individual or organization that inherits payments following your death • Guaranteed Period* • Outlines the number of years your beneficiaries can collect income payments after your death • Guaranteed period begins when your annuity income contract is opened • Options: 10, 15 or 20 years • Beneficiary can collect payments for the remainder of the guaranteed period • Assumes you and your annuity partner die within the time frame

7. Life Annuity - Investments • Fixed or Variable Investments • Fixed – TIAA-Traditional, a guaranteed account for a stable income stream. • Standard or Graded payment options. • Variable – CREF Annuities and TIAA-Real Estate Account – NOT Mutual Funds. • Payments can fluctuate significantly each year directly related to performance.

8. Cash Withdrawals:Lump-sum or Systematic • Cash Withdrawals • Distribute according to your needs, with risk of outliving your available assets. • May allow for distribution of significant assets to beneficiaries. • Available from TIAA Traditional in 10 annual installments (Transfer Payout Annuity). • Available from the CREF Accounts, TIAA Real Estate Account, and all the Mutual Fund Options.

9. TIAA-Traditional Interest Only Payments • Receive monthly interest payments from your TIAA Traditional account • Your principal remains intact • Available for account holders who: • Are between the ages of 55 and 691/2* • Have GRA TIAA Traditional accumulations of at least $10,000 • Guidelines for receiving payments: • Receive payments for at least 12 months • May continue past 701/2 if still employed • May convert to Transfer Payout Annuity, annuity income or Minimum Distribution Option**

10. Minimum Distribution Option • IRS requires distributions to begin at age 70 ½, unless continuing to work. • First payment due April 1 of the year, following the year you attain age 70 ½. • Pays IRS Required Minimum Distribution. • Maximizes income tax deferral and preserves accumulation. • Delays deciding on lifetime income.

11. Remember… • …Eligible rollover distributions are subject to a mandatory 20% Federal withholding tax, including: • Cash withdrawals • Systematic withdrawals • TIAA Interest Only payments • Transfer Payout Annuities

12. Module 8: Retirement Plan Distributions • Questions? Thank you!

13. Teachers Retirement Association Defined Benefit Plan

14. Defined Benefit Plan Guaranteed monthly lifetime retirement benefit; survivor benefit options available Member cannot outlive benefit Benefit based on formula; usually percentage of final average pay multiplied by years of service Pre-retirement survivor death benefits Disability benefits

15. No Refund Plan • Member receives a lifetime benefit • Beneficiary does not receive a benefit

16. Guaranteed Refund Plan • Member receives a lifetime benefit • Beneficiary receives monthly payments of the remainder of the member’s TRA contributions, plus interest, less the benefits already paid to the member

17. Guaranteed Refund Plan Example Member contributions $ 50,000 Interest accumulations + $ 50,000 Total in account $ 100,000 Member collected - $ 80,000 Balance at death $ 20,000 $20,000 ÷ $2,000* = 10 months to be paid to beneficiary *Member’s original monthly benefit amount

18. 15-Years Guarantee Member receives a lifetime benefit Beneficiary receives the same monthly amount for the remaining years of the guarantee

19. Survivorship With Bounceback Member receives a lifetime benefit When the member dies, the optional joint annuitant (OJA) receives 100, 75 or 50 percent of member’s monthly payment, depending on the plan chosen. Benefit amount determined by the ages of the member and the OJA. Married members must choose a survivorship plan covering their spouse, unless spouse waives rights to this type of annuity

20. Survivorship With Bounceback (Cont.) • Designate any person(s) as an OJA • If someone other than a spouse is designated: • Spouse must waive rights to receiving a survivorship plan • May designate a Supplemental Needs Trust as recipient of a lifetime annuity benefit, if the spouse waives their rights. • IRS has restrictions on the age difference between the member and the OJA, when choosing the 100 percent or 75 percent survivorship plan. • If the OJA predeceases the member, the benefit “bounces back” to the greater No Refund Plan amount for the remainder of the member’s lifetime.

21. Six Annuity Plans Assumes member is age 59 • Annual Statements Reflect No Refund Plan Estimates Monthly Beneficiary’s Life Plan Amount Age No Refund $2,021 N/A Guaranteed Refund $2,010 N/A 15-Years Guaranteed $1,955 N/A $1,816 59 100% Survivorship with Bounceback $1,731 49 $1,899 69 $1,862 59 75% Survivorship with Bounceback $1,794 49 $1,927 69 $1,910 59 50% Survivorship with Bounceback $1,862 49 $1,955 69

22. AccelerationAge 59 as of July 1, 2010 *For this example, normal retirement age (NRA) means age 66.

23. Retiree Statistics – Annuity Fund SelectionRetirements between May 16 – September 16 2009

24. Cancel or Change Plans • You have two (2) months following your initial payment to: • Cancel an application for retirement • Choose a different annuity plan • Change the accelerated annuity option • Change your optional joint annuitant

25. Disability Benefits • Eligibility requirements • You must be vested and actively teaching or on an official leave of absence at the time your disability occurs • Must be a total and permanent disability • The application for benefits must be made within 18 months following the termination of your teaching service or leave of absence due to your disabling condition • Contact TRA if you are retiring due to health reasons • Uses the Tier II formula and high-5 average salary, with no actuarial reduction

26. Refund of Contributions • Cannot take a refund while on a leave of absence • If vested, consider deferring/delaying receiving monthly benefits until you are eligible • Retirement benefit has a greater value than a refund • To take a refund: • Apply online or contact TRA for a refund application • Apply at least 30 days after termination • Receive member contributions plus interest – employer contributions are not included • Roll over to a traditional IRA, Roth IRA or an eligible employer plan

27. Refund of Contributions (continued) • May repay refund after accumulating 2 years of allowable service credit with TRA or another state public pension fund (combined service) • Payment must be received before your effective date of retirement • Repay with interest (8.5 percent compounded annually) • You may repay using money from a 403(b) tax-sheltered annuity account, governmental 457(b) plan, a Roth IRA, a traditional IRA or another qualified plan • Partial repayment option: With 2 or more years of refunded service, you may repay 1/3 minimum

28. Module 8: Retirement Plan Distributions • Questions? Thank you!