TMRS Basics 2007 Annual Training Seminar 2007, Texas Municipal Retirement System.
Retirement Benefits Topics • About TMRS • Membership • Account balance • Refund • Retirement
What is TMRS? • A statewide retirement system providing benefits to city employees • 821 cities • 132,927 employees • 30,089 retirees* * As of December 31, 2006
Texas Participating Retirement Systems • Texas Municipal Retirement System • Texas County and District Retirement System • Teacher Retirement System of Texas • Employees Retirement System of Texas • Judicial Retirement System of Texas • City of Austin Employees Retirement System
What Makes TMRS Different? • Most other systems provide the same plan across the state. • Defined Benefit Plan • TMRS provides each city with their own plan. • Over 821 different plans
Joining TMRS • Cities elect to join TMRS • Cities choose from a menu of retirement plan provisions Every city has its own unique plan!
Mandatory Enrollment • Employees must join TMRS if they are employed in a permanent, full-time position that normally requires 1,000 hours of work in a year. • City determines eligibility based on the 1,000-hour rule. • Seasonal or temporary employees and volunteer firefighters are NOT eligible.
Account entirely in member’s name Similar to savings account Protected by law—NO ONE CAN TOUCH IT!! Member’s Personal Account
How Much Goes in a Member’s Personal Account? • City Council adopts one of three levels: 5, 6, or 7% • Payroll deduction based on gross compensation • Tax-deferred • All employees in a city participate at the same level
Payroll deduction 1 deposit = 1 month service Interest Approved annually by TMRS Board of Trustees Paid every December 31 Compounding interest How Does Member’s Money Grow? Two sources of income:
Does the City PutMoney in Member Accounts? • City money is paid only at retirement • Member only receives city money when retiring NO! Each city has its own TMRS account.
How Much Does the City Match? • Three levels of match • 1 1 • 1.5 1 • 2 1 • Applied toward total account balance • City Council chooses level
How Can Member Get to Money? Option 1: QUIT and Request Refund • Forfeit right to future retirement benefit • Receive only member’s money — NO CITY MONEY!!
Does Member Have to Refund? NO! • If member is not vested • 5-year window • If member is vested, money can be left until retirement
What Is Vesting? • Vesting with TMRS means the member has worked enough years to retire at some time in the future. • In most TMRS cities, employees are vested when they have 5 years of service. • Vesting does not mean the employee owns the city’s matching funds.
How Else Can Member’s Money Be Paid? Option 2: Death • Beneficiary receives refund; OR • Monthly payment if member was vested
How Else Can MemberGet to Money? • Option 3: Retire • Only way to receive City’s matching funds!
When Can a Member Retire? Depends on which option your city has chosen: • Age 60 with 5 years of service, or age 60 with 10 years of service • 20 years of service at any age, or 25 years of service at any age
The Member’s Retirement Date… • There is no best time of year to retire. • Prorated interest on accounts • Retirement date must be the last calendar day of the month. • Retirement payments begin the last day of the month following retirement date.
Monthly Payment Plans 7 Payment Plans • All plans pay an annuity for retiree’s lifetime • All plans ensure return of member’s accumulated deposits and interest • All plans are equal in value
Calculated on member’s life only No survivor benefits The highest monthly option Retiree Life Only Option
Survivor Lifetime Options Monthly payments for member and beneficiary’s lifetimes • Retiree Life – 100% Survivor Benefits • Retiree Life – 75% Survivor Benefits • Retiree Life – 50% Survivor Benefits Note: Only 1 beneficiary may be named under these options
‘Pop-Up’ Provision If a retiree… • Has selected a survivor lifetime option AND • Beneficiary dies before retiree Then – monthly payments increase to Retiree Life Only option
Guaranteed Term Options Guarantee payments for member’s life, but only for fixed number of years for beneficiary after retirement • Retiree Life – 5-year guarantee • Retiree Life – 10-year guarantee • Retiree Life – 15-year guarantee Note: Up to 3 beneficiaries may be named with these options
Partial Lump-Sum Distribution • Members may choose partial lump-sum distribution (PLSD) when they retire!
Do PLSD Payments Reduce Monthly Payments? • Yes – but city’s matching is not reduced! 75% cap Member $ City $
PLSD and Taxes • PLSD payments are income • 20% withheld unless rolled over • 10% penalty if under 59½ • Exception for retiree age 55 or older! • Taxable $ can be rolled over (all or part)
Cost of Living Increases • Optional provision — Must be approved by city • Cost of living increases are given only to retirees • Amount is based on Consumer Price Index
Applying for Occupational Disability Retirement • Employee may apply anytime. • Retirement date must be last day of calendar month after all deposits received at TMRS.
How is Eligibility for Occupational Disability Retirement Determined? • No minimum length of service or age required to be eligible. • The cause of disability does not have to be job-related. • The TMRS Medical Board must find that: • The member is mentally or physically incapacitated from performing the duties of his or her occupation; and • The incapacity is considered to be permanent
What Forms Need to Be Completed? Review Occupational Disability Forms checklist: • Application for Occupational Disability Retirement • Selection of Retirement Plan • City Statement • Member’s Statement • Physician’s Statement • Selection of Partial Lump Sum Distribution • Member must be eligible for service retirement to receive a PLSD. • Electronic direct deposit authorization • Proof of birth for employee. • Proof of birth for beneficiary, if applicable. • Name Certification (if names on proof of birth and TMRS records do not match) • Withholding election form (W4-P)
Other TMRS Provisions • Supplemental Death Benefit • Service credits • Restricted Prior Service Credit • Military credit • Special purchases • Buy-back • Proportionate buy-back
Questions & Answers HOW TO CONTACT TMRS: Toll-free: 800-924-8677 Web: www.TMRS.com E-mail: firstname.lastname@example.org