Comparison of a 403(b) plan and the TexasSaver 457 Plan

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The Teacher Retirement System of Texas (TRS)

www.trs.state.tx.us
RETIREMENT CALCULATOR

Participation in the Teacher Retirement System is open to all benefits-eligible employees of the university. Rights to benefits are vested upon completion of 5 years of creditable service. Currently employees contribute 6.4% of their gross salary monthly and the state contributes 6.58% of the employee's gross salary to a state account to pay retirement benefits. Employees earn interest at a rate of 5% annually on their account balance.

Regular retirement is available at age 65 with a minimum of 5 years of participation in TRS, age 60 with a minimum of 20 years participation in TRS or age 50 with a minimum of 30 years participation in TRS. "Early retirement" with reduced benefits, is available at age 55 with a minimum of 5 years participation in TRS.

"Regular retirement" benefits under the standard annuity option are calculated as 2.3% times the number of years membership in TRS times the of the average salary for the five highest years of participation in the program.

Employees who terminate employment prior to retirement may receive a refund of their contributions plus interest earned by completing a refund application in the Benefits Section of the Human Resources Department.

Other benefits included in the TRS program for the active member is life insurance equal to twice an employee's salary to a maximum of $ 80,000 and disability income benefits. TRS has provisions for the purchase of additional service credit for time served in the military, employment in public education in another state, and the purchase of withdrawn TRS accounts.

Further information on the TRS program is available in the Benefits Section of the Human Resources Department.

The employee contributes 6.65% of their gross salary monthly and the state contributes 6.58% of the employee's gross salary to the ORP account. Employees who were employed by the State of Texas prior to September 1, 1995 should contact the Benefits Office for information on the amount of state contribution made to their account. Contributions made by the university to the optional retirement program are vested for employees after one year and one day of participation in the program. Should the employee terminate their employment in an ORP eligible position after vesting occurs, he/she may receive a refund of their contribution as well as the state matching contribution.

Participation in ORP is a one time election and must be made in writing within 90 days of the date an employee becomes eligible. Eligible employees will be enrolled in the TRS program until an election for ORP participation is made in writing. If an employee does not submit an application for ORP participation before the expiration of the 90 day election period, ORP eligibility is forfeited and the employee must remain in the Teacher Retirement System of Texas for the remainder of their employment in higher education in Texas.

Retirement benefits under the ORP is based on the account value and the age of the participant at the time of retirement. Several distribution options are available to the employee at the time of retirement.

The tax deferred annuity program or supplemental retirement annuity is offered to all benefits eligible employees. Investments are through life insurance companies and mutual fund companies licensed to do business in the State of Texas. All contributions are excluded from taxable income until distributed from the account to the employee. Contributions to a TDA are employee only. The minimum monthly contribution is $25.00. An employee can withdraw contributions from the account at separation of service or upon obtaining age 59 1/2.

Employees may enroll in a TDA at any time. However, they are allowed to change carriers only twice per year.

Employees may enroll in a deferred compensation plan which allows the employee to defer a portion of their income and deposit it with a company until the 31st day after they leave state service. Investment companies include banks, savings associations, credit unions, insurance companies, and mutual fund companies. Benefits paid to the employee or beneficiary are equal to the value of the deferred compensation account. The State's liability will never exceed the value of that account, and the State will not be liable for any losses resulting from depreciation or a loss in the value of the account. The employee must file a written distribution agreement within 50 days of separation of service with the State. In the event of death of the employee, the beneficiary must file a distribution agreement through the Benefits Office.

The mission of the benefits team is to provide excellent customer service, individualized care and innovative solutions to life’s complexities with sound benefits information. In order to accommodate the needs of the universities work force our hours of operation are Monday – Friday 7:30am-5:30pm.