Indiana State Teachers' Retirement Fund
Overview
The Indiana State Teachers’ Retirement Fund (TRF) was created by the Indiana General Assembly in 1921. Today, TRF manages and distributes the retirement benefit of educators in all public schools, as well as some charter schools and universities, throughout Indiana. Headed by a governor-appointed executive director, as well as a six-member Board of Trustees, TRF aims to prudently manage the Fund in accordance with fiduciary standards, provide quality benefits, and deliver a high level of service to TRF members while demonstrating responsibility to citizens of the State.[1]
The TRF Member
All legally qualified teachers who are regularly employed in the public school system of Indiana or in qualified positions at certain state institutions, as well as all TRF employees, must be members of TRF. Some legally-qualified State employees and employers are eligible for optional enrollment. A legally qualified substitute teacher may be a member of TRF upon completion of one year of service (defined as 120 days in one fiscal year or 60 days in each of any two fiscal years).[2]
As of June 30, 2008, TRF had over 150,000 active, inactive, and retired members and beneficiaries and managed approximately 8.6 billion dollars in assets.[3]
The Benefit
The TRF benefit consists of two parts: the pension benefit and the Annuity Savings Account (ASA).[4]
The pension benefit is determined by salary history, years of service, age, and the retirement option selected. TRF members become vested in the pension benefit after 10 years of qualified Indiana service. Members may purchase service credit for military service, out-of-state teaching, and qualified leaves of absence.[5]
The ASA is made up of voluntary and mandatory contributions, as well as investment earnings, and is figured on the value at the time of retirement and the payment option selected. TRF members allocate their ASA contributions among different investment options offered by TRF, each with a specified level of risk.[6]
A TRF member may also create a Rollover Account by transferring funds from an individual retirement account (IRA) or Qualified Retirement Plan into TRF.[7]
Retirement Payment Options
When members retire, they must select one of the six alternatives for the distribution of the pension portion of their retirement benefit. Members may also choose to select the "Social Security Integration" option with any of the six listed options.[8]
| Pension Benefit Option | Description |
|---|---|
| Regular Form of Retirement | A member will receive a monthly benefit for life. If the member dies before receiving benefits for five years, his/her designated beneficiary will receive either his/her monthly benefit for the remainder of those five years or the present value of those remaining payments in a lump sum. |
| Straight Life Without a Guaranteed Period | A member will receive a monthly benefit for life, but there are no payments due to anyone after the member's death. |
| Modified Cash Refund Annuity | This option is available for those members who elect ASA1 or ASA7 with respect to their individual ASA. A member will receive a monthly benefit for life. This benefit will be based on the member's age, salary, and service (employer pension amount) and the amount of money in the member's ASA. If the member dies before receiving benefits for five years, his/her beneficiary will receive either a monthly benefit (the employer pension amount only) for the remainder of those five years, or the present value of those remaining payments in a lump sum. Also upon the member's death (whether the member dies before or after receiving five years of benefits), the designated beneficiary will receive a single payment of the amount remaining in the member's ASA. The ASA balance is reduced with each monthly benefit paid. Thus, if the member dies after the account has been reduced to zero, there will be no ASA distribution to the designated beneficiary. |
| 100% Survivorship | A member will be paid a monthly benefit for life. After the member's death, the same monthly benefit will be paid to the member's co-survivor for their life. |
| 66 2/3% Survivorship | A member will be paid a monthly benefit for life. After the member's death, a monthly benefit in the amount of two-thirds of the member's benefit will be paid to the member's co-survivor for their life. |
| 50% Survivorship | A member will be paid a monthly benefit for life. After the member's death, a monthly benefit in the amount of one-half of the member's benefit will be paid to the member's co-survivor for their life. |
| Social Security Integration | Members retiring between the ages of 50 and 62 may integrate their TRF benefit with their Social Security benefit. The Fund pays a larger monthly benefit before age 62. However, at age 62, the Fund's benefit will be greatly reduced or terminated depending on the member's estimated monthly benefit at age 62 from Social Security. |
When members retire, they must select one of the seven options for the distribution of their ASA.[9]
| ASA Option | Description |
|---|---|
| ASA 1 | A member will receive the total amount of his/her ASA paid as a monthly benefit. The member will not receive any distribution from his/her ASA other than this monthly benefit. |
| ASA 2 | A member will have the total amount of his/her ASA, less the mandatory withholding for federal income tax, paid directly to him. |
| ASA 3 | A member will have all of the taxable portion of his/her ASA paid in the form of a direct rollover to an Individual Retirement Account or a Qualified Retirement Plan that has provisions allowing it to accept the rollover on his/her behalf. The non-taxable portion will be paid directly to the member. |
| ASA 4 | This option may be selected only if the member wants a partial rollover amount of at least $500. A member will have a part of the taxable portion of his/her ASA paid in the form of a direct rollover to an Individual Retirement Account or a Qualified Retirement Plan that has provisions allowing it to accept the rollover. The non-taxable portion will be paid directly to the member. Also, the "part" of the taxable portion of the distribution that is not directly rolled over, less the mandatory withholding for federal income tax, will be paid directly to the member. |
| ASA 5 | A member will defer distribution of his/her ASA until a later date. The member's account will continue to be invested with the Fund under the same guidelines applicable to an ASA. |
| ASA 6 | A member may elect to withdraw their non-taxable contributions and leave their taxable contributions invested in the retirement fund for distribution at a later time. |
| ASA 7 | A member will receive a distribution of an amount equal to his/her tax basis (after-tax contribution) in his/her ASA balance as it existed on December 31, 1986 and will receive the balance of the account as a monthly benefit. |
- ^ TRF Early Career Newsletter, http://www.in.gov/trf/files/EarlyCareerApril2009.pdf
- ^ Member Handbook 2008, http://www.in.gov/trf/files/Member_Handbook_2008.pdf
- ^ TRF Early Career Newsletter, http://www.in.gov/trf/files/EarlyCareerApril2009.pdf
- ^ TRF "Understanding Your Retirement Benefit" brochure
- ^ 2008 Member Handbook, http://www.in.gov/trf/files/Member_Handbook_2008.pdf
- ^ 2008 TRF Member Handbook, http://www.in.gov/trf/files/Member_Handbook_2008.pdf
- ^ TRF "Understanding Your Retirement Benefit" brochure
- ^ Pension Benefit Options, http://www.in.gov/trf/2364.htm
- ^ ASA Alternatives, http://www.in.gov/trf/2333.htm