Dixie L Moody Director of Client Services Plan

Dixie L. Moody Director of Client Services Plan for Tomorrow - Today

Outline Defined Benefit Plan n Funding /Contributions to Member Account n Retirement Eligibility n Retirement Benefit Formula n Retirement Plans /Partial Lump Sum Option n Preparing for Retirement n Post Retirement Employment n Questions n 1

System Overview Defined Benefit Plan n Defined Benefit Plan 401(a) Government & Public Sector Employees n Retirement benefit is guaranteed for your lifetime; possibly the lifetime of your joint annuitant n Retirement benefit calculation based on a formula n Benefit is independent of contributions and investment returns n Plan Sponsor bears all risks: longevity, inflation, investment, etc. n 3

System Overview How Is My Retirement Funded Funding Source: Member Contributions (7% of Total Compensation) Employer Contributions Dedicated State Revenue Investment Income Account: Member Account Retirement Benefit Fund 4

Retirement Eligibility When do I qualify? 5

Retirement Eligibility When do I qualify? Rule of 80 Rule of 90 Entry Date Eligibility Prior to July 1, 1992 – October 31, 2011 Age + Service = 80 Age + Service = 90 or or Age 62 + 5 Years 6

Retirement Eligibility When Do I Qualify? Rule of 90 / Minimum Age 60 Entry Date Eligibility (with unreduced benefit) With Unreduced Benefit On or After November 1, 2011 Age + Service = 90 Minimum Age 60 Age 65 + 5 Years 7

Retirement Eligibility When Do I Qualify? Rule of 90 / Minimum Age 60 Entry Date On or After November 1, 2017 Eligibility Age + Service = 90 Minimum Age 60 (with unreduced benefit) With Unreduced Benefit Age 65 + 7 Years 8

Retirement Eligibility Under Rule of 80 or 90 n Early Retirement Ages 55 – 61 n Must be vested in System n n 5 n years of contributory Oklahoma service Reduced lifetime monthly benefit 9

Retirement Eligibility Rule of 90/Minimum Age 60 (Joined TRS after November 1, 2011) n Early Retirement Ages 60 - 64 n Must be vested in System n n 5 n or 7 Years contributory Oklahoma service Reduced lifetime monthly benefit 10

Retirement Benefit Formula How is my benefit calculated? 11

Retirement Benefit Formula How is my benefit calculated? (FAS x 2% x Yrs of Svc) n Final Average Salary n Rule of 80 n Highest n 3 Salaries Earned During Career Rule of 90 n Highest 5 Salaries Earned Consecutively During Career n Rule of 90 / Minimum Age 60 n Highest 5 Salaries Earned Consecutively During Career 12

Retirement Benefit Formula How is my benefit calculated? n Basic Formula n n Final Average Salary x 2% x Years of Service Prior to July 1, 1995 Contributions were paid on max salary of either $25, 000 or $40, 000 n Those years are capped n n Results in a Two-Tiered Benefit Calculation n Salary caps removed July 1, 1995 13

Retirement Formula Benefit Calculation Tiers Tier 1 Tier 2 (Capped Years of Service) (Uncapped Years of Service) Years Salary Base Benefit To June 30, 1995 Up to $25, 000 or $40, 000 FAS x 2% x Years of Service through June 30, 1995 Since July 1, 1995 Total Compensation FAS x 2% x Years of Service since July 1, 1995 Add capped benefit amount & uncapped benefit amount to determine total benefit. 14

Retirement Formula Benefit Calculation Tiers Years Salary Base Benefit Tier 1 Tier 2 (Years Capped Salary) Prior to July 1, 1995 (Years Uncapped Salary) After July 1, 1995 10 FAS = $40, 000 $40 K x 2% = $800 x 10 = $8, 000/12= $667 per month 20 FAS = $50, 000 $50 K x 2% = $1, 000 x 20 = $20 K/12 = $1, 667 per month $667 + $1, 667 = $2, 334 per month / $28, 008 annual benefit 15

Education Employees Service Incentive Plan (EESIP) EESIP also known as Wear-Away n Converts Capped Years of Service to Uncapped n n Must reach full retirement eligibility n Rule n of 80, 90 or Age 62 Each additional year worked beyond eligibility n Moves 2 years from Capped Salary Benefit Calculation (Tier 1) to Uncapped Salary Benefit Calculation (Tier 2) n EESIP can increase benefit significantly n Higher Ed does not qualify for EESIP 16

EESIP Calculation After Conversion of Capped Years Example: 10 Yrs Capped & 20 Yrs Uncapped Work 5 additional years = Uncapped 10 Years 35 Years Uncapped FAS $50, 000 X 2% = $1, 000 x 35 years = $35, 000 annually $2, 917 monthly ($2, 334 with salary caps in place) 17

Retirement Formula No Service Prior to July 1, 1995 FAS x 2% x Yrs of Service $50, 000 x 2% = $1000 $1, 000 x 30 yrs = $30, 000 $2, 500 per month

Retirement Plans 5 Options n Each Provides Lifetime monthly income to member n $5, 000 Death Benefit n n Payable to designated beneficiary(ies) n Not Life Insurance n Taxable Income n Please keep beneficiary designation updated 19

Retirement Plans n Maximum Plan n Lifetime Benefit for Member n Single Life Annuity n Highest Monthly Benefit Amount n Member Account balance reduced each month by monthly benefit payment n Any Balance in Member Account upon member’s death is paid to Beneficiary(ies) or Estate n Account balance generally exhausted after 2 years 20

Retirement Plans n Retirement Option 1 n Lifetime Benefit for Member n 99. 0% of Maximum Benefit n Slower use of Member Account to pay benefits n Any Balance in Member Account upon member’s death is paid to Beneficiary(ies) or Estate n Account balance generally exhausted after 10 years 21

Retirement Plans n Retirement Option 2 n Lifetime Benefit for Member n Member designates Joint Annuitant at retirement n Must be spouse or someone who is within 10 years of age n 100% n Survivor Annuity After Member’s death Joint Annuitant continues to receive same benefit as Member n 85%-95% of Maximum Benefit n Pop-up Provision 22

Retirement Plans n Retirement Option 3 n Lifetime Benefit for Member n Member designates Joint Annuitant at retirement n 50% Survivor Annuity n After Member’s death Joint Annuitant continues to receive one-half (50%) the Member’s benefit n 91%-97% of Maximum Benefit n Pop-up Provision 23

Retirement Plans n Retirement Option 4 n Lifetime Benefit for Member n Single Life Annuity / 10 Year Term Certain n Guarantees Member’s full benefit for 120 months n If Member dies within 120 month of retirement, Beneficiary continues to receive the Member’s full benefit until the 120 th month after retirement n 96%-99% of Maximum Benefit 24

Partial Lump Sum Option (PLSO) n To Qualify: n n Allows Member to Elect Lump Sum n n Must have 30 Years of Service Equal to 12, 24, or 36 months of Retirement Benefit Payments Reduces the Monthly Retirement Benefit associated with the 5 Retirement Plans n Reduction based on Age and PLSO option 25

Preparing for Retirement https: //www. ok. gov/TRS 26

Preparing for Retirement 27

Preparing for Retirement q Step 1 – PIV (Pre-Retirement Information Verification) q The Following Information is Required q Your name and complete mailing address q Your Social Security Number q Proof of Birth for Joint Annuitant (if necessary) q Marriage License q Requested Retirement Date q 120 Unused Sick Days (Verification Required) q Must be received no later than 90 days before requested retirement date 28

Preparing for Retirement n Unused Sick Leave Days at Retirement 120 days verified = 1 year of service credit n Anything less than 120 days = fractional year of service credit n n Example: n 60 days / 120 days = 0. 50 year of service credit 29

Preparing for Retirement n Audit Year of Service n Salaries n Contributions n n Retirement Projection n n Not within 12 months of eligibility Application to Retire n Within 12 months of eligibility 30

Preparing for Retirement Projection 31

Preparing for Retirement Application to Retire 32

Preparing for Retirement q Complete the Application to Retire q Decide which Retirement Plan is best for you q Sign and Date q Return to the Oklahoma Teachers Retirement System no later than 60 days before your effective retirement date (state law) q Schedule an in-house or phone consultation 33

Preparing for Retirement q Final Retirement Contract q After receipt of Application to Retire, a Final Retirement Contract will be mailed q Sign, date and have it notarized q Return the Contract at least 30 days prior to your retirement 34

Preparing for Retirement q Retirement Timelines q Retirement Timeline Example – July 1 Submit PIV April 1 Submit Application to Retire Submit Contract Effective Retirement Date First Retirement Check May 1 June 1 July 1 Aug 1 35

Preparing for Retirement q Step 5 – Relax and Enjoy a Well Earned Retirement 36

Post-Retirement Employment n Earnings Limits apply to Oklahoma Teachers Retirement System Contributory Employment: Oklahoma Public Schools (K-12 & Higher Ed) n Other Reporting Entities n n Oklahoma State Department of Education n Oklahoma Regents for Higher Education n Oklahoma Teachers Retirement System n Must be Retired for at least 60 Calendar 37

Post-Retirement Employment n If Retired Less than 36 Months: n Prior to Age 62 n May Earn the Lesser of $18, 240 SSA Limits or One -half of Final Average Salary n Age 62 to and over n May Earn the Lesser of $30, 000 or One-half of Final Average Salary Earnings are Pro-rated first & last year n If Retired More than 36 Months: n n No Earnings Limit 38

Noteworthy n Health Insurance (EGID – OMES or Employer) n www. ok. gov/sib n TRS pays supplement of $100 - $105 n 10 years of service n Keep Employer Insurance n Member Portal (www. ok. gov/TRS) n Log on today! n Account Balance n Years of Service n Salary History 39

My. TRS MEMBER PORTAL 40, 000 Registered Access member portal through TRS link: https: //www. ok. gov/TRS

Noteworthy n We have moved! n Physical Address 301 NW 63 rd- Suite 500 Oklahoma City, OK 73116 n Mailing Address P. O. Box 53524 Oklahoma City, OK 73152 n (405) 521 -2387 / (800) 738 -6365 41

Question & Answer I will do my very best to address all of your questions. n www. ok. gov/trs n n Related Topics n PIV Form n Retirement Presentations n Member Portal – My OTRS 42