Retirement Benefit Seminar

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Retirement Benefit Seminar

• Indiana State Teachers Retirement Fund
• Please silence your cell phone.

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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
componentsMonthly 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
• Members 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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Monthly Pension BenefitA-2 Straight Life

• Highest paying monthly pension benefit for member
• No pension benefit beyond members lifetime

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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

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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

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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.

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TRF Retirement Benefit
Part Two Annuity Savings Account
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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

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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 TRFs
  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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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

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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

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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,
  spouses 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 employers 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 [phone] or [phone]
• 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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