Ball State University Text Box: Employee Benefits Handbook

Faculty and Professional Personnel

 

Eligible Groups: 123456789101112

 

Indiana State Teacher's Retirement Fund (TRF) 

TRF is administered by the State of Indiana.  The TRF benefit consists of two parts: an annuity and a pension.

The annuity is financed by your contributions.  The University “picks-up,” i.e. pays, your contributions in the amount of 3% of your gross pay commencing with the first day of employment or July 1, 1989, whichever is later.  These contributions are credited to your annuity account.  In addition, at retirement, the “pick-up” amount is included in the salaries used to determine final average salary for purposes of calculating your pension.  The amount of your benefit is based on the balance in your account at the time benefits commence.

The pension, the larger part of your benefit, is financed by the University.  The University contributes an amount required to provide the pension determined by TRF.  The amount of your benefit is based on the average of your five highest fiscal-year salaries and your years of service.

If you are at least 65 years of age and have at least ten years of creditable service, you are entitled to a retirement benefit.  Early retirement with a benefit is offered if you are at least 50 years of age and have at least 15 years of creditable service.

If you elect to be covered by APP, you cannot thereafter become a member of TRF.

Eligibility

Participation in TRF is required for all Faculty and Professional Personnel in Groups 1 through 10 if employed 60 days or more and who have not selected the APP.  Faculty and Professional Personnel in Groups 11 and 12 may participate if they are already an active member of TRF.

Membership

When you first become eligible for membership, you must complete an application form and designate a beneficiary.  This becomes a part of your permanent records at the Indiana State Teachers’ Retirement Fund Office which is located in Indianapolis.  An eligible employee may not be an active participant in TRF and the Alternate Pension Plan at the same time.

Your Contributions

Effective July 1, 1989, the University “picks-up” your contribution in the amount of 3% of your gross pay during any fiscal year in which you are employed.  For this purpose, gross pay means: (1) your salary paid before taxes and other deductions plus, (2) the amount that would have been paid, except for your salary reduction agreement, if any, established under Section 125 or Section 403(b), or other sections of the Internal Revenue Code.  This amount is sent to TRF and is deposited in your individual annuity account, with interest credited each year.  You will receive an annual statement from TRF of the total amount in your annuity account.

Creditable Service

Service credit is an important factor in determining the amount of retirement benefits and the age at which you can receive a benefit.  You earn one year of service credit for each fiscal year (July 1 – June 30) in which you are employed for 120 or more days of service in a TRF-covered position.  You earn one-half year of service credit if you are employed for at least 60 days but less than 120 days of service in a TRF-covered position.  In certain instances, service credit can be given for leaves of absence, for military service, for absence due to illness or disability, and for college enrollment during a regular term (not summer school).  After ten years of creditable service in Indiana, credit can be given for certain out-of-state employment.  However, all service credit is subject to verification by TRF at your retirement.

The Two Parts of Your Retirement Benefit

At retirement, assuming you have ten or more years of creditable service and are at least age 65, or have 15 or more years of creditable service and are at least age 50, you can receive a check each month from TRF.  This will be made up of an annuity based on the amount available in your individual annuity account and a pension furnished by the State of Indiana.

  • Annuity Benefit

The annuity (the smaller of the two parts) is based upon the amount of money in your annuity account, including interest, and your age of retirement.  There is no annuity benefit when you elect distribution of your total annuity savings account.  Contact the Indiana State Teachers’ Retirement Fund regarding an annuity table (Retirement Calculator).

After the first year, and annually thereafter, during the month of June, you will be given the choice as to how your retirement annuity account (contributions and accumulated interest) is to be invested for the next year.  A Request to Transfer Annuity Account form is sent to you each Spring along with Information regarding the options available.  You have the option of leaving your annuity account in the Guaranteed Fund or transferring it to an alternative investment program which consists of the Money market Fund and the Bond Fund.  If you wish to remain in the Guaranteed Fund, you will not need to complete a form; however, if you wish to transfer to an alternative investment, you must return a completed form.

The Guaranteed Fund guarantees both the value of your annuity account and interest.  If you elect the Money Market Fund or the Bond Fund, the value of your annuity account could rise or fall with the market; it is not guaranteed by the State as is the Guaranteed Fund.  Once you have transferred from the Guaranteed Fund to an alternative fund, you may not transfer back into the Guaranteed Fund but may transfer only between the alternative funds.

  • Pension Benefit

The pension is paid from State funds.  Currently, the formula (set by law) is as follows:

1.1% of the average of your highest five full fiscal year salaries (salaries include the employer “pick-up” commencing on or after July 1, 1989) multiplied by your creditable service.  This amount will be your annual state-financed pension if you retire at age 65 and select the A-1 Option.  See the following Paragraph: Retirement Options Available.

Severance pay (up to a maximum of $2,000) is included in the calculation of pension benefits under TRF when averaging the annual salary of the highest five full fiscal years.

The total annual TRF Retirement Benefit is the sum of your annuity and your pension.

Example of Benefit

“X” selected the Regular Form of Retirement (A-1) and is retiring at age 66 (Normal Retirement Date) after 20 years of creditable service.  “X’s” average salary, including the “pick-up,” for the highest five full fiscal years is $25,000.  Contributions, and interest, credited to “X’s” annuity account total $10,000.

Annuity:

Multiply $10,000 x .1075 (buying factor

$10.75 per $100 according to annuity

table)

$1,075
Pension:
Multiply 1.1% x $25,000 = $275
Multiply $275 x 20 years = $5,500 5,500

Annual TRF Benefit

$6,575

(Monthly TRF Retirement Benefit is $547.92)

In addition, “X” is eligible to receive Social Security benefits and the Supplement to TRF retirement benefits.

Vested Status

Vested status means that you have ten or more years of creditable service under TRF.  If you have attained vested status, you will be entitled to benefits when you meet the age and service requirements for retirement.

If you terminate employment before becoming eligible for benefits (having at least ten but less than 15 years of creditable service), you will maintain vested rights only if your funds are not withdrawn.  In this situation, your funds will earn yearly interest until you receive either a retirement benefit or a refund of those contributions and accumulated interest.

When Retirement Benefits Begin

If you retire at age 65 with at least ten years of creditable service, you qualify for regular benefits.

If you retire prior to age 65 and you have at least 15 years of creditable service, you may at your option receive reduced benefits as early as age 50.  The following paragraphs describe how the pension and annuity benefits are reduced.

  • Pension Benefit

If you are at least age 60 and have 15 years of service at  retirement or if your years of service and age at retirement when added together total at least 85 and you are at least 55 years of age, there is no reduction of your pension benefit.

Otherwise, your pension will be reduced since payments begin earlier and are spread over a longer period of time.  The following table shows how the pension benefit is reduced according to your age:

59….89.0%        55….69.0%        51….49.0%

58….84.0%        54….64.0%        50….44.0%

57….79.0%        53….59.0%

56….74.0%        52….54.0%

 

  • Annuity Benefit

In addition, the annuity benefit will also be paid over a greater period; therefore, the monthly annuity benefit will be reduced accordingly.

If you have at least ten but less than 15 years of creditable service, you may retire early; however, your retirement benefits will begin the first day of the month following your 65th birthday.

Retirement Options Available

Your choice of a retirement option is an important decision in planning your retirement.  There are two types of options: (1) one life options which pay you a lifetime income; and, (2) survivor options which pay you a lifetime income and, if your survivor (spouse or other named co-survivor) lives longer than you, the survivor continues to receive an income for life.  The amount continuing to the survivor depends on the specific option you select.

In addition, the Approximate Equalization with Primary Social Security Benefit Option (A-4) may be combined with either the one life or survivor options.

Every benefit is actuarially equivalent to every other benefit.  This means that it is a benefit of equal value as determined actuarially by taking into account your life expectancy and, where applicable, your co-survivor’s.

One Life Options

Regular Form of Retirement (A-1)—Under this option, the benefit is payable to you as long as you live; however, if you die before you have received retirement benefits for 60 months, the fund will pay to your beneficiary or estate the present value of the remainder of the 60 months of benefits as a lump sum payment.

Straight Life Without Death Benefit (A-2)—Under this option, you will receive benefits as long as you live; however, upon your death, the monthly benefit stops, regardless of the length of time you receive payments.  This option pays the highest monthly benefit.

Modified Cash Refund Annuity (A-3)—This option is not available if you elect distribution of your total annuity savings account.  Your benefit is made up of two parts: (1) the pension (State’s share) calculated on a formula by law, and (2) the annuity purchased with your annuity savings account balance in the fund.  This option provides for payment of the pension portion unchanged from the A-1 Option and a 60-month guarantee period; however, the annuity portion is reduced to provide a guarantee that your total accumulation in the fund is received.  Upon your death, the balance, if any, of the 60-month guarantee on the pension would be due the designated beneficiary as well as any excess of your annuity savings account balance at the time of retirement.

Survivor Options

100% Survivorship Option (B-1)—Under this option you may elect to receive reduced benefits while you live; after you die, the same benefit will be paid to your co-survivor for the remainder of his or her life.  Nothing is payable after the death of both you and your co-survivor.

66.2/3% Survivorship Option (B-2)—This option is similar to the B-1 option but your check will be greater.  So long as your co-survivor lives after your death, monthly benefits will continue but will be equal to only two-thirds of the amount you received monthly while living.  Nothing is payable after the death of both you and your co-survivor.

50% Survivorship Option (B-3)—This option is similar to the B-1 option but your check will be greater.  So long as your co-survivor lives after your death, monthly benefits will continue but will be equal to only one-half of the amount you received monthly while living.  Nothing is payable after the death of both you and your co-survivor.

Approximate Equalization With Primary Social Security Benefit Options (A-4)

This option is available only to those who retire prior to the youngest age of eligibility for a Social Security benefit and who have sufficient quarters of coverage to qualify for Social Security benefits at youngest age of eligibility.  It provides an approximately level retirement income from the date of retirement and must be combined with one of the preceding six options.

If you select this option (Option A-4) and a one life option, your benefits will be increased prior to your age of eligibility for Social Security benefits and then decreased when you reach the earliest age of eligibility for Social Security benefits.  In very few instances, your benefit could be reduced to zero at this time.  The amount used to estimate you’re a-4 entitlement may be more or less than your actual entitlement from Social Security at age 62.  Regardless of the amount you actually qualify for under Social Security at age 62, or whether you decide to delay applying for Social Security, the Fund will reduce your benefit at age 62 by the estimated amount used in calculating your benefit.  If you select Option A-4, you are not required to apply for Social Security at age 62.

If you select this option and a survivor option, your survivor’s benefit is also subject to a reduction at the time you would have attained age 62.

It is your responsibility to make application for Social Security benefits.  Notification to the Social Security Office should be made approximately three months in advance of the time you expect benefits to commence. 

Annuity Account Options Available

In addition to designating a retirement option, you must also select an annuity option.  You may elect to receive the annuity savings account balance as follows:

Option 1: as an annuity in a monthly retirement benefit;

Option 2: as a lump sum distribution of the entire amount credited to you in the annuity savings account; or,

Option 3: as a lump sum distribution of an amount equal to your federal tax basis (after-tax contributions) in your annuity savings account as it existed on December 31, 1986 and receive the balance of the account as an annuity.

If you choose to receive the lump sum payment under Option 2, you will not be entitled to an annuity as part of the retirement.  If you choose to receive the lump sum payment under Option 3, you will be entitled to an annuity based on the amount remaining in the annuity savings account after the lump sum payment of the federal tax basis amount as of December 31, 1986.

Benefits to Survivors

If your death occurs after retirement, the options you select on the Election of Benefits Form will determine how your account is settled in the event of your death.

If your death occurs before retirement, the benefit available to your eligible survivors is affected by your years of creditable service as described in the following paragraphs.

Annuity Benefit

  • When Beneficiary is Eligible for Pension Benefits

If a surviving spouse or dependent is also eligible to receive the monthly pension benefit, the beneficiary may elect to receive the annuity savings balance as an annuity in a monthly retirement benefit or a lump sum distribution of the entire amount credited to you in the annuity savings account.

If there is a designated beneficiary other than a surviving spouse or surviving dependent who is entitled to a monthly pension benefit, then that person receives a lump sum payment of the annuity savings account and the surviving spouse or surviving dependent is entitled to a monthly pension benefit only.  This applies even if the surviving spouse or surviving dependent is designated along with the other designated beneficiaries.

  • When Beneficiary is not Eligible for Pension Benefits

Your designated beneficiary or estate is entitled to a lump sum refund consisting of (1) the contributions made by you and by the University on your behalf to your annuity account, and (2) the interest that has been credited to your annuity savings account.

Pension Benefit

If you die before retirement and have 15 or more years of creditable service, your surviving spouse of two or more years at the time of your death will receive a monthly pension benefit from the state’s pension portion of your account.  There is no benefit for a spouse of less than two years.

If there is no eligible surviving spouse and there is a surviving dependent, the dependent is eligible to receive a monthly pension benefit until the attainment of age 18 or death, whichever is earlier.  However, if a dependent is permanently and totally disabled (using disability guidelines established by the Social Security Administration) at the date of attaining age 18, the monthly benefit is payable until the date the dependent is no longer disabled (using disability guidelines established by the Social Security Administration) or dies, whichever is earlier.  In case of multiple surviving dependents, considering the dependents attained ages, an equal dollar amount shall be determined as the monthly benefit to be paid each dependent.

Note regarding inactive members: In order for a pension benefit to be provided to the eligible surviving spouse or the surviving dependent, an inactive member who did not make application for the pension benefit must, at the time of death, be both service and age eligible for the benefit.

No pension benefit is available for a beneficiary other than your spouse or dependent beneficiary.

Survivor benefits are reduced by any regular disability benefits paid to you before death.  Claims for survivor benefits on the account of a deceased member must be made within three years of date of death.

Regardless of the options you selected, your eligible survivors are guaranteed a minimum amount.  The minimum amount is either:

  • The entire amount credited to your annuity account at retirement, or

  • If benefits have been paid, the entire amount credited to your account at retirement less benefits paid to you or your survivors.

>>For the most current, detailed information about death benefits, contact the Indiana State Teachers’ Retirement Fund Office in Indianapolis.

Beneficiaries

It is important to keep the beneficiary designation up to date.

Disability Benefits

If you have five or more years of service credit and become disabled while in Indiana services, you may apply for disability benefit.  There are two types of disability benefit:

  • Regular Disability Benefit

This requires approval by the Fund Physician and benefits are $125 per month plus $5 for each year of service credit over five years.  Re-examination is required as specified by the Fund Physician until age 65.  You must be out of service for a continuous period of six months without pay before disability will be paid and no teaching service may be rendered while receiving the benefit.

In the event of your death, all lump sum death settlements/survivors benefits are reduced by any regular disability benefits paid to you before death.

  • Disability Retirement Benefit

This benefit requires that the disability occur after June 30, 1984, and proof of qualification for Social Security disability be furnished.  Social Security disability must be effective back to the time you left Indiana service in order to qualify for TRF disability retirement.  The disability retirement benefit is computed the same as a regular retirement benefit without reduction for early retirement and you may elect benefit under any of the retirement options.  The benefit may not be less than $100 per month.  Verification as to continued disability from Social Security is required once each year until attaining age 65.

If You Leave the University

You cannot withdraw contributions to your annuity account and interest in your annuity account as long as you are employed in any position covered by this fund or by any other of the Indiana State Retirement Funds.  You can withdraw these amounts only if you are no longer employed in a covered position, are not eligible for monthly benefits, and notify the Indiana State Teachers’ Retirement Fund Office of your intent.

>>Contact the Payroll and Employee Benefits Office for additional information.