Teacher Retirement System (TRS)
The TRS plan is a traditional defined benefit state retirement program in which investment risks are generally absorbed by the state. Contributions go into a large trust fund that is managed by knowledgeable professionals with a prudent, yet successful, investment strategy. This type of plan provides stability and does not require any investment decisions by individual members. Service credit is earned on the basis of required minimum service in a school year, and members also may be eligible to purchase additional service credit (e.g., military service or out-of-state public school service). Retirement benefits are based on statutory formulas.
Additional specific plan information such as retirement eligibility benefits, disability benefits and death and survivor benefits can be found by visiting the following Web sites: www.trs.state.tx.us and www.thecb.state.tx.us.
TRS members who do not desire a retirement benefit may withdraw their employee contributions plus five percent interest upon termination of employment, but state contributions remain with TRS.
Optional Retirement Program (ORP)
ORP is an individualized defined contribution plan in which each participant selects from a variety of investments offered by several companies (authorized by TTUS) through annuity contracts or mutual fund investments. Because participants manage their own personal investment accounts, ORP entails more individual risk and responsibility than that associated with TRS membership. Benefits are a direct result of the amounts contributed and any net return on the investments selected by each participant.
Upon termination from Texas public higher education, ORP participants with more than one year of participation retain control over all investments (both employee and state contributions). Participants who terminate with one year or less of initial participation forfeit state contributions made during that period of employment. Post-termination distributions are determined by individual contract provisions, federal income tax law, and personal preference. Contracts may provide for complete or period withdrawals, or annuity income for a specified number of years or life.
ORP has no provisions for death and disability benefits similar to those provided by TRS. Administrative costs are paid by the participant through varying fees, "loads" and/or amount of interest paid.
ORP-eligible employees are provided only one opportunity during their entire career in Texas public higher education to select between these two distinct types of plans, and the choice can directly affect financial resources at retirement. Therefore, new or prospective ORP-eligible employees should carefully consider the advantages and disadvantages of each plan in light of personal circumstances. Factors to consider include: age, current and anticipated salary in future years, expected length of employment in Texas, previous retirement program participation, current and anticipated financial position, and, if ORP is selected, willingness to take the risks and responsibilities of managing one's own retirement investments.
New or prospective ORP-eligible employees should obtain specific information from:
- The Human Resources Employee Services Center
- TRS Website
- The university's authorized ORP company representatives and their respective Web sites
- An Overview of TRS and ORP on this Web site
- Other information sources such as colleagues, personal financial advisors, financial market news, and insurance company rating services
Income Tax Sheltered Programs
In addition to participation in the TRS or ORP programs, employees of Texas Tech are eligible to set aside additional amounts of salary, up to certain limits, without paying current income tax on those amounts. This income tax deferment is available under the Tax Sheltered Annuity Program and the Deferred Compensation Program. Participation in these programs is voluntary, and employees may elect to participate in either or both programs. These programs are offered as a supplement to the retirement benefits provided by the TRS or ORP programs.
Tax Deferred Account Program
The Tax Deferred Account Program is available to employees on an optional basis. Under the Tax Deferred Account Program, employees may enter into an agreement with Texas Tech to reduce current earnings, up to specified limits, and apply the proceeds of such reduction to the purchase of fixed annuity, variable annuity, custodial, non-custodial, or mutual fund accounts with vendors approved by Texas Tech.
For additional information about the Tax Sheltered / Deferred Annuity Program, see TTU OP 70.09 Tax Deferred Account Program.
Texa$aver Deferred Compensation Program
The Texa$aver Deferred Compensation Program (IRC 457) is available to employees on an optional basis. Under the Texa$aver program, employees may enter into an agreement with the state to reduce current earnings, up to specified limits, and apply the proceeds of such reductions to the purchase of investment products approved by the Employees Retirement System (ERS), the plan administrator. Employee deferrals and investment income become the property of the state of Texas until these funds are actually distributed to the employee.
For additional information about the Texa$aver deferred compensation program, visit the Texa$aver website link at www.texasaver.com.