SECTION 15 DEFINED CONTRIBUTION AND SECTION 16 COMBINED PLANS

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1 SECTION 15 DEFINED CONTRIBUTION AND SECTION 16 COMBINED PLANS Contents DEFINED CONTRIBUTION AND COMBINED PLANS...1 Eligibility...1 Defined Contribution Plan...1 Combined Plan...2 Defined Contribution and Combined Plan Differences...3 Employers Manual Section 15 Contents (6/16)

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3 DEFINED CONTRIBUTION AND COMBINED PLANS ELIGIBILITY New members may choose the Defined Benefit, Defined Contribution or Combined Plan (see Section 1, Page 7). New members have 180 days from their first date of paid service to select a plan. If a selection is not made, the member defaults to the Defined Benefit Plan. Members selecting the Defined Contribution or Combined Plan have another opportunity to remain in the plan they have selected or transfer to a different plan before completing their fifth year of membership. DEFINED CONTRIBUTION PLAN The Defined Contribution Plan offers a retirement income based on the performance of investment choices the member selects for member and employer contributions. Participating members may allocate these contributions among various investment options managed by STRS Ohio. Members currently contribute 14% of annual gross earnings to the defined contribution account, while employers currently contribute an additional 9.53%, meaning that the equivalent of 23.53% of a member s salary goes directly into the defined contribution account. The remaining 4.47% employer contributions are used to pay off STRS Ohio s unfunded liability. Withdrawal Members may withdraw the value of their accounts upon termination of employment. Account withdrawal amounts consist of member contributions plus any gains or losses on those contributions. Withdrawal amounts will also include the employer portion of the account (consisting of the employer contributions plus any gains or losses), according to the following vesting schedule: If membership began before July 1, 2013, the member is 100% vested in the employer portion of the account after one year of membership. If membership began on or after July 1, 2013, the member is vested in 20% of the employer portion of the account for each full year of membership. The withdrawal amount may be reduced by fees or early withdrawal penalties. (See Section 8 for details.) Retirement benefits Members are eligible to receive an annuity from their account balance upon termination of employment after age 50. The monthly benefit is calculated based on contributions plus investment earnings annuitized over the member s lifetime. Disability and survivor benefits If a member becomes disabled, he or she may withdraw the defined contribution account after terminating employment. In the event of a member s death, a surviving spouse may withdraw the account. Health care Defined Contribution Plan members do not have access to health care through the STRS Ohio Health Care Program. Employers Manual Section 15 Page 1 (6/17)

4 COMBINED PLAN The Combined Plan includes features of the Defined Benefit and the Defined Contribution Plans. Members currently contribute 14% of annual gross earnings, with 12% deposited to the defined contribution portion of the account and the remaining 2% is used to fund the defined benefit portion of the account. Current employer contributions of 14% of salary are used to fund a defined benefit portion of the plan. Participating members may allocate their contributions in the defined contribution account among various investment options managed by STRS Ohio. The defined benefit portion of the plan funds a combination of service retirement, disability and survivor benefits. Access to health care coverage is also available at retirement to eligible retirees. Withdrawal Members may withdraw their accounts upon termination of all STRS Ohio-covered service. If members withdraw their accounts before age 50, they must withdraw both the defined benefit and defined contribution portions of their accounts. At age 50 or after, they may withdraw the defined contribution portion upon termination of employment and leave the defined benefit portion on account for a benefit at age 60. Members may withdraw the defined benefit portion only if they are also withdrawing the defined contribution portion. A member s withdrawal amount may be affected by fees and early withdrawal penalties. (See Section 8 for details.) Retirement benefits At age 50 or after, members are eligible to receive an annuity from their defined contribution account. The contributions plus any gains or losses are annuitized over the member s lifetime. The defined benefit portion provides a monthly benefit for members at age 60 who have at least 5.00 years of service credit. The benefit is equal to 1% of final average salary (FAS) for every year of service credit. No cost-of-living adjustments are provided. Disability benefits If a member becomes disabled, he or she has the option of receiving disability benefits under the disability allowance program (see Section 13). All contributions and earnings from both portions of the account are surrendered to fund the disability benefits. At age 65, the disability allowance converts to a service retirement benefit. Survivor benefits In the event of a member s death, survivors have the option of receiving dependent-, service- or retirement-based benefits. All contributions and earnings from both portions of the account are surrendered to fund the benefits. Survivors also have the option to withdraw the defined contribution and defined benefit portions of the Combined Plan account. Health care Combined Plan members who elect monthly retirement benefits are eligible for the same health care plan options provided under the Defined Benefit Plan. In addition, disability recipients and survivors will be eligible for the same health care plan options provided under the Defined Benefit Plan. Section 15 Page 2 (6/16) State Teachers Retirement System of Ohio

5 DEFINED CONTRIBUTION AND COMBINED PLAN DIFFERENCES Because of the nature of the Defined Contribution and Combined Plans, several unique characteristics apply to these plans: Members with contributions in OPERS and SERS cannot combine these accounts for a joint benefit with their STRS Ohio Defined Contribution or Combined Plan account. Members in the Defined Contribution and Combined Plans are only eligible to purchase service credit for Ohio teaching service interrupted by military service. Members in the Combined Plan are eligible to purchase leaves of absence. Members can view the Retirement Plan Options Video in the Videos section of the member website for additional differences between the Defined Benefit, Defined Contribution and Combined Plans. Employers Manual Section 15 Page 3 (6/17)

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