Indiana State Teachers' Retirement Fund

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.[1]

The Benefit

The TRF benefit consists of two parts: the monthly pension benefit and the Annuity Savings Account (ASA).[3]

The monthly 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.[2]

The Annuity Savings Account (ASA) is made up of voluntary and mandatory contributions, as well as investment earnings, and is figured on the balance 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.[2]

A TRF member may also create a Rollover Savings Account by transferring funds from an individual retirement account (IRA) or other Qualified Retirement Plan into TRF.[3]

Retirement

Planning for Retirement
TRF offers one-on-one benefit appointments where members can meet with a benefit specialist to review a benefit estimate and ask any questions about the retirement process. Although any member is welcome to schedule an appointment, it is especially encouraged for those who are within two years of retirement. Appointments may be held in our Indianapolis office or over the phone.

Payment Options
When members retire, they must select one of the six alternatives for the distribution of the monthly pension benefit portion of their retirement. Members may also choose to select the Social Security Integration option with any of the six listed options.[4]

Pension Benefit Option	Description
A-1	The member will receive a lifetime monthly benefit. If the member dies before receiving five years of benefit payments, the member's designated beneficiary will receive the remainder of the five years of payments.
A-2	The member will receive a lifetime monthly benefit. Should you choose either the ASA 1 or ASA 7 option, the A-2 comes with a minimum amount provision that insures the member or beneficiary will receive a benefit at least equal to the Annuity Savings Account (ASA) balance at the time of retirement.
A-3	The member will receive a lifetime monthly benefit. In the event the member dies before receiving five years of payments, the beneficiary will receive the remainder of the five years of guaranteed pension payments. The Annuity Savings Account (ASA) is reduced with each monthly benefit paid; if the member dies before reducing this balance to $0.00, the beneficiary will receive a single payment of the amount remaining. This pension option is only available with the ASA 1 or ASA 7.
B-1	The member will be paid a lifetime monthly benefit. Upon the death of the member, a guarantee is in place to ensure that the designated, qualified survivor will receive 100% of the member's monthly benefit for the remainder of the survivor's life.
B-2	The member will be paid a lifetime monthly benefit. Upon the death of the member, a guarantee is in place to ensure that the designated, qualified survivor will receive 66​^2⁄3% of the member's monthly benefit for the remainder of the survivor's life.
B-3	The member will be paid a lifetime monthly benefit. Upon the death of the member, a guarantee is in place to ensure that the designated, qualified survivor will receive 50% of the member's monthly benefit for the remainder of the survivor's life.
Social Security Integration	Members retiring between the ages of 50 and 62 may integrate their TRF benefit with their Social Security benefit. TRF pays a larger monthly benefit before age 62. However, benefit payments may be greatly reduced or terminated at age 62, depending on the member's estimated monthly Social Security disbursement. As TRF does not work in conjunction with Social Security, this selection will NOT affect the amount of your benefit received from Social Security.

When members retire, they must select one of the seven options for the distribution of their ASA.[5]

ASA Option	Description
ASA 1	The member will receive the total amount of the member's ASA paid as a monthly benefit. This will allow the member to receive a higher monthly benefit payment. A minimum amount provision insures an amount equal to the Annuity Savings Account (ASA) balance at the time of retirement will be paid either to the member or beneficiary.
ASA 2	The member will have the total amount of the member's ASA, less mandatory Federal Income Tax Withholding, paid directly to the member.
ASA 3	The member will have ALL of the taxable portion of the member's 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 the member's behalf. A distribution of an amount equal to the tax basis (after-tax contribution) in the member's ASA as it existed on December 31, 1986 will be paid directly to the member.
ASA 4	The member will have PART of the taxable portion of the member's 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. A distribution of an amount equal to the tax basis (after-tax contribution) in the member's ASA as it existed on December 31, 1986 will be paid directly to the member. Additionally, the part of the taxable portion of the distribution not directly rolled over (less mandatory Federal Income Tax Withholding) will be paid directly to the member.
ASA 5	The member will defer distribution of the member's ASA until a later date. The member's account will continue to be invested with TRF under the same guidelines applicable to an ASA. Members may change ASA allocations quarterly.
ASA 6	The member will receive a distribution of an amount equal to the tax basis (after-tax contribution) in the member's ASA balance as it existed on December 31, 1986 and will defer distribution of the remainder of the ASA until a later date. The member's account will continue to be invested with TRF under the same guidelines applicable to an ASA. Members may change allocations quarterly.
ASA 7	The member will receive a distribution of an amount equal to the tax basis (after-tax contribution) in the ASA balance as it existed on December 31, 1986. The remainder of the ASA will be paid as a monthly benefit. This option combines the monthly pension with the remainder of the ASA so the member may receive a higher monthly benefit payment. A minimum amount provision insures an amount equal to the Annuity Savings Account (ASA) balance at the time of retirement will be paid either to the member or beneficiary.

Minimum Amount Provision
The minimum amount provision is relevant to certain monthly pension benefit and ASA distribution options. The minimum amount provision is in place to guarantee that a member or that member's beneficiary will receive benefit payments that total at least the balance of the member's Annuity Savings Account (ASA) at the time of retirement. If a member does not receive this minimum amount in combined annuity and pension payments during his or her lifetime, the member's beneficiary can claim the remaining amount due. For example, if a member has $100,000 in her ASA at the time of retirement, this member's total benefits (combined annuity and pension payments) must equal $100,000 or the member's beneficiary may claim the difference.

Disability Retirement
If a member with five or more years of service in a TRF-covered position becomes disabled while an active teacher, the member may be eligible for a classroom or retirement disability benefit.[2]

Age 70 Benefits
A member who is age 70 or older with 20 or more years of service may continue to receive pension payments and continue to be employed in a covered position. In this situation, there is no required separation from service period and no earnings limitation. For any TRF member who continues employment while receiving monthly pension benefits, no employer share contributions are made to TRF and no supplemental pension is earned.[2]

References

1. TRF Early Career Newsletter
2. 2008 TRF Member Handbook
3. TRF "Understanding Your Retirement Benefit" brochure
4. Pension Benefit Options, http://www.in.gov/trf/2364.htm
5. ASA Alternatives, http://www.in.gov/trf/2333.htm