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Preparing for Retirement

Preparing for Retirement. Teachers Retirement Association A Minnesota Public Pension Fund. 60 Empire Drive, Suite 400 St. Paul, Minnesota 55103-4000 MinnesotaTRA.org Facebook.com/ MinnesotaTRA Twitter.com/ MinnesotaTRA info@MinnesotaTRA.org. TRA is a Defined Benefit Plan.

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Preparing for Retirement

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  1. Preparing for Retirement Teachers Retirement Association A Minnesota Public Pension Fund 60 Empire Drive, Suite 400 St. Paul, Minnesota 55103-4000 MinnesotaTRA.org Facebook.com/MinnesotaTRA Twitter.com/MinnesotaTRA info@MinnesotaTRA.org

  2. TRA is a Defined Benefit Plan

  3. Contribution Rates Rates are set by state statute 2010 legislation increased member and employer contribution rates by 0.5 percent annually over a four-year period beginning July 1, 2011.

  4. TRA Web Site www.minnesotatra.org • Members may view their TRA account online by choosing “MyTRA Login.” • The “online logo” will be displayed throughout this presentation indicating information you can access from your online account. • View the “Online Account Instructions”

  5. Online Member Account Active members • Address change • Benefit estimates utilize member account data, or can be customized • Retirement • Survivor • Applications • Retirement • Refund • Forms • Beneficiary • Release of information • View • Personal statement of pension benefits • Leave of absence history • Account value letter (generate) • Account information and service credit • Account history • Schedule • Individual counseling session • Group workshop

  6. Online Member Account (continued) Benefit recipients • Address change • Edit account information • Direct deposit • Current and future tax withholding • View • Payment detail • ELSA annual statement • 1099-R form • Payment History • Applications • Earnings Limitation Savings Account (ELSA) Refund • Forms • Beneficiary (No Refund, Guaranteed Refund or 15-Year Guaranteed Plans only) • Beneficiary (ELSA account) • Release of Information • ELSA Account Value Letter • Income Verification Letter for Lender

  7. Beneficiary Designation • Who is listed as your beneficiary? • Single member beneficiary designation options • Married member beneficiary designation options • Important to keep your beneficiary designation up-to-date • Survivor benefit calculator and beneficiary forms available by viewing your online member account

  8. Eligibility for Retirement • Age 55, minimum of 3 years of service • If employed before July 1, 1989: • Any age with at least 30 years of service • Rule of 90 = age + years of service (includes partial years for age and service)

  9. Minnesota Public Pension Funds Funds that fall under the Combined Service Annuity Laws • St. Paul Teachers Retirement Fund Association (SPTRFA) • Duluth Teachers Retirement Fund Association (DTRFA) • Minnesota State Retirement System (MSRS) • State Employees Retirement Fund • Legislators’ Retirement Plan • Correctional Employees Retirement Program • Unclassified Employees Retirement Plan • State Patrol Retirement Fund • Judges Retirement Fund • Elective State Officers’ Retirement Plan • Public Employees Retirement Association (PERA) • Public Employees Retirement Fund • Public Employees Police and Fire Fund • Public Employees Local Government • Correctional Service Retirement Plan • Minneapolis Employees Retirement Fund (2010 legislation, now a division of PERA)

  10. Repayment of Refunds • 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

  11. High-5 Average Annual Salary % Factor Annual based on years Lifetime Benefit x = of service and (Life No Refund) age TRA High-5 Formula

  12. High-5 Average Annual Salary • Salary associated with highest five consecutive years of formula service credit • May not include more than the equivalent of 60 months of earned salary • “TRA-eligible salary” means compensation before deductions for deferred compensation, supplemental retirement plans, or other voluntary salary reduction programs. • Employer-paid fringe benefits, severance payments, etc. are not TRA-eligible salary • No TRA deductions taken • Not included in High-5 average annual salary

  13. Sample Estimate Estimates provided are for planning purposes. Upon retirement, TRA will make actual calculations based on a final audit of your Teachers Retirement Association records and not on the basis of this statement. Periodically, by law, the TRA benefit structure may change, which may affect your final monthly benefit.

  14. Annuity Plans • No Refund • Guaranteed Refund • 15 Years Guaranteed • 100% Survivorship with Bounceback • 75% Survivorship with Bounceback • 50% Survivorship with Bounceback If you are married, you must choose a survivorship plan covering your spouse, unless your spouse waives rights to this type of annuity.

  15. Example of Annuity Plan Payouts Annual Statements Reflect No Refund Plan Estimates Assumes member is age 59

  16. Retiree StatisticsAnnuity Plan Selection Retirements for Fiscal Year 2012(July 1, 2011 – June 30, 2012)

  17. AccelerationAge 59 as of July 1, 2010 Amounts shown reflect maximum acceleration; less than maximum acceleration is also an option. *For this example, normal retirement age (NRA) means age 66.

  18. Social Security www.ssa.gov/retire2/retirechart.htm

  19. When to Apply for Retirement

  20. Termination Date • Your termination date is an important date! It is used to establish and calculate your retirement benefits. • Termination date or “termination of teaching service" is the date you withdraw from active teaching service by resignation or the termination of your teaching contract by the district. • If that date changes (snow days, summer teaching, etc.), contact TRA.

  21. Effective Date of Retirement • Effective date of retirement is latest of: • The day after termination of teaching • Receipt of application if you apply more than six months after termination • Date designated within six months of termination • July 1 for administrators and principals • If under age 62, there cannot be a written contract in effect to return to teaching service, if over age 62, copy of written contract must be provided. • If death occurs prior to effective date, active member survivor benefits are payable • Payment: 1st business day of each month

  22. 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 • Your initial benefit payment will be based on an estimate. If necessary, a retroactive adjustment will be made to subsequent payments based on final data.

  23. Earnings After Retirement Earnings limitation applies only if resuming TRA-covered service For members under full retirement age (age 66) = $46,000 Prorated if retired a portion of the year Earnings limit is based on salary earned in a fiscal year (July 1 – June 30) Over full retirement age: No limit on earnings $1.00 for every $2.00 over the limitation goes into a savings account Request refund one year after the last deferred amount was redirected to your savings account. No interest paid on the account after January 1, 2011. All or a portion of the payment may be rolled over to a qualified plan

  24. Post-Retirement Increases 2010 Legislation • Current law provides that beginning January 1, 2013, annual post-retirement increases will be 2.0 percent, provided members have been retired for 18 months. • Also, current law provides that once market value funding ratio reaches 90 percent, increase will be restored to 2.5 percent.

  25. Other Retirement Concerns Social Security Medical insurance Tax-sheltered annuities Psychologically ready

  26. Contact Information Name Phone # Toll Free # Web Site Teachers Retirement Association 651-296-2409 800-657-3669 www.minnesotatra.org MN State Retirement System 651-296-2761 800-657-5757 www.msrs.state.mn.us Public Employees Retirement Assn. 651-296-7460 800-652-9026 www.mnpera.org Duluth TRFA 218-722-2894 www.dtrfa.org St. Paul TRFA 651-642-2550 www.sptrfa.org Education Minnesota 651-227-9541 800-652-9073 www.educationminnesota.org Internal Revenue Service 800-829-1040 www.irs.gov MN Department of Revenue 651-296-3781 www.taxes.state.mn.us Nat’l Council on Teacher Retirement 916-394-2075 www.nctr.org Retiree Health Plan System 612-692-7962 800-829-5601 www.mmb.state.mn.us/ peip/28-ins-peip Social Security Administration 800-772-1213 www.ssa.gov

  27. Thank you for Attending

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