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From the TRS Vault – Retirement Application Process Revisited

(intro music) Hi this is Everett Crockett and welcome to TRS  Your Retirement In Focus. Applications for 
summer retirements are in full swing. Typically   at this stage, most retirees have decided 
under which of our seven retirement plans they will retire. Yet, there still may be 
some of you who have not made your decision. Today we will present information and plan   descriptions for all seven 
of TRS' retirement plans. Hopefully, you will find this information 
helpful as you draw closer to your retirement.   Also, one very important thing to keep in 
mind, is that due to the large volume of   retirements in the summer and at the end 
of each school year, the deadlines for   summer retirements are as follows.

For June 
retirements, the deadline is March 31st.   For July retirements, the deadline is April 30th. 
And for August retirements, the deadline is May   31st. Now without further ado, we will now 
present information on TRS' retirement plans. (music) On the road to retirement, one of 
the most important decisions you can make is who will receive the benefits of your 
retirement account beyond your lifetime. With   Teachers Retirement System of Georgia, your 
beneficiaries are not decided by documents   like wills, divorce decrees, or marriage 
certificates. Rather, they're determined   only by the beneficiary information on file at TRS 
when you pass away. Therefore, it's critical that   you designate at least one primary beneficiary 
and one secondary. As well as routinely update   your TRS beneficiaries to reflect significant 
life changes such as divorce, marriage, birth,   and death. Reminder, beneficiary designation 
completed with HR does not transfer over to TRS,   this includes changes during open enrollment. 
Also, keep in mind, that if you don't have the   right person or persons on file, it can lead to 
costly legal problems and unnecessary frustration.   Likewise, if you are the beneficiary on 
file at the time of a retiree's death,   it is imperative that you notify TRS as soon as 

That's why it's so important that you   designate your beneficiaries now. The good 
news, it's easy to do. Simply log into your TRS   account and visit the designate beneficiaries 
section to complete the form. And as always,   we're here to help you along the way. So 
here's to good planning and to the road ahead. Today we'll be focusing on the various retirement 
plans offered by TRS. Each of us are different;   even twins are different in some way or 
another. As we approach our retirement,   there's a lot that we need to think about. Like, 
what is the best retirement plan for me? Did you   know that TRS offers seven different retirement 
plans? One of those plans are more than likely   most beneficial for you and me as we make our way 
to our date of retirement.

Today I'll share some   information and details about each of those 
plans so that both you and I are better informed   of our retirement plan options. Before I get 
started, I want to be sure that you are clear   on the fact that no one from TRS can tell 
you or me, or advise you or me, on what plan   is best for us. We have to make that choice 
for ourselves.

But one thing that TRS can do,   is give us some things to think about as we think 
about which plan we will ultimately choose. It   may not be a bad idea to have pen and paper, or a 
tablet, or whatever you like to use to take notes   at your disposal. Before we chose our retirement 
plan, there are definitely some things we need to   think about. Here are just a few. What do we want 
our lifestyle to be like after we retire? Do we   want to keep up the same comforts, pleasures, and 
standards that we enjoyed when we were working?   Some of the best financial planners say that if 
we do, we're going to need at least 80 percent of   our pre-retirement income.

As I stated earlier, 
each of us are different. So I would imagine,   that the actual percentage would be different as 
well based on our individual retirement goals. But   one thing that is likely true for each of us, is 
that our TRS benefit alone, will not provide us   with 80 percent of our pre-retirement income. So, 
what do we do? How will we offset that shortage?   Will we be able to depend on social security? 
If not, maybe we will be able to take advantage   of our personal savings and investments to help 
cover the shortage of our 80 percent. Something   else to consider is, what are the needs and 
expectations of our family and loved-ones?   Would they suffer financially if a retiree passes 
away and their pension incomes stopped? If so,   maybe we should think about selecting a plan that 
leaves a monthly benefit to beneficiaries.

What   about your kids and grandkids? Are they employed? 
If so, we may not need to leave them a monthly   benefit. These are just a few examples of the 
kinds of questions we have to ask ourselves as   we get closer to our retirement. Now let's look 
down the road a bit. We've worked, we've invested   wisely, and we are near to retirement. We want to 
be comfortable, knowing that we have a good plan   as we journey into our retirement. For us, there's 
good news. TRS' defined benefit plan is one of the   best plans in the country. As the name implies, 
our retirement benefit is defined by a calculation   using our years of membership service, and the 
average of our highest 24 months of consecutive   salary, and a two percent multiplier. Under this 
plan, you and I assume no investment risks. Plus,   we have survivor and disability protection while 
we are active members. Also, we are guaranteed   retirement income for the rest of our lives. If we 
wanted to know how much of our high average salary   we could take home in retirement, we would simply 
multiply our years of service by two.

That is the   maximum plan formula and we'll talk more about 
that in a little bit. Under TRS' defined benefit   plan, or 401a plan, we're offered two plans 
of retirement: Plan A and Plan B. Basically,   Plan A provides a retirement benefit only to 
us, the retiree. Plan B on the other hand,   offers benefits to our beneficiaries at the time 
of death. Under Plan A and Plan B, we may also   choose to receive a partial lump-sum distribution 
(cash payment) in exchange for a reduced lifetime   retirement benefit.

For details on the 
partial lump-sum option plan, or PLOP plan,   just see the website. A great benefit of 
our TRS plan, is that what we receive from TRS is   not tied in any way to the stock market. Whether 
stocks go up or down, we can always rely on our   TRS benefit to stay the same from month to month. 
When there is inflation our benefit also includes   a cost-of-living adjustment, or a COLA, which 
makes our benefit grow from year to year. Again,   that's a great benefit. Under Georgia law, 
this benefit is guaranteed for our lifetime.   And if we deicide to take a retirement plan 
that leaves a benefit to our beneficiaries,   their benefit is also guaranteed for life. Many 
private sectors employees don't have a guaranteed   pension. As a matter of fact, many employees 
across the country who work for firms we have   all heard about are losing their defined benefit 
pension plan. Over the last ten plus years, over   25 percent of the country's Fortune 500 companies 
have either frozen, closed, or terminated their   defined pension benefit plan. What we receive from 
TRS is based on a formula that involves our length   of service and our high average salary.

TRS uses 
a very generous formula compared to other state   plans. As TRS calculates our benefit using the 
highest two consecutive years of pay; when other   states use three to five years of pay. Basically, 
the longer we work and the higher our salary is,   the more money we will receive from TRS. In a 
bit, we'll take a more detailed look at that   formula. TRS' plans can be broken into two main 
categories; those that do and those that do not   provide a monthly benefit to beneficiaries after a 
retiree passes away.

Here are the seven plans that   TRS offers. Number one, Plan A, also known as the 
maximum plan. Number two, Plan B Option 1. Neither   this plan nor Plan A offers a monthly benefit to a 
beneficiary at death. But the remaining five plans   do. Plan number three is Plan B Option 2. Plan 
four, Plan B Option 2 Pop Up. Plan five, Plan   B Option 3.

Plan six is Plan B Option 3 Pop Up. 
And last, but not least, Plan B Option 4 is the   seventh plan that TRS offers. At retirement, in 
addition to selecting Plan A, the maximum plan,   or Plan B, a survivorship plan, you and I may also 
elect to receive a one-time lump-sum distribution   in addition to our monthly retirement benefit. In 
exchange for a reduced lifetime monthly benefit,   we can elect to receive a partial lump-sum option, 
or PLOP. Our age and plan of retirement are used   to determine the reduction in our benefit. A PLOP 
distribution would be made as a single payment   at the time that our first monthly benefit 
is paid.

Based on the amount of the PLOP,   our monthly retirement benefit is then reduced 
to be the actuarial equivalent of the retirement   benefit without a lump-sum distribution. We cannot 
elect a PLOP that will reduce our monthly benefit   by 50 percent or more of the benefit we are 
eligible to receive under Plan A. Each of the   plans are based on a benefit formula comprised of 
the following. The years of creditable service,   including partial years, multiplied by two 
percent, multiplied by our high average salary   over 24 months. This, in turn, yields our basic 
monthly benefit under the Plan A, max plan. This   basic monthly benefit is then used as the basis 
for the other plans offered by TRS. Plan A, the   maximum plan, and Plan B Option 1 do not provide 
any lifetime monthly benefits to beneficiaries.   So if we don't plan to leave a monthly benefit, our choice 
becomes a lot easier as it narrows it down to two:   Plan A or Plan B Option 1. Options 2 through 4 all 
provide varying amounts of lifetime benefits to   designated beneficiary. Let's take a look at each 
plan. First up, is Plan A. This plan provides us   with the largest possible monthly lifetime benefit 
for the remainder of our life.

Under this plan,   the contributions and interest that we made 
during our active employment are reduced monthly   from our gross benefit payment. In most cases, our 
contributions and interest will be depleted within   18 months of our retirement. However, our monthly 
benefits will continue for the remainder of our   lives. At the time of death, the monthly benefits 
stop and any declared beneficiary is not entitled   to receive a monthly benefit. If death occurs 
before a retiree has received in monthly payments,   a total amount of his or her contributions and 
interest, the remaining funds will be paid in   a lump-sum to the designated beneficiary. We may 
change our beneficiary designations at any time   under this plan of retirement. To estimate the 
monthly lifetime benefit for the maximum plan,   a retiree may calculate it for themselves by using 
the retirement formula: two percent, times the   years of creditable service, times their highest 
consecutive 24 months of membership salary.

If we   are within five years of retirement, we can login 
to our online TRS account and generate a benefit   estimate using current data from our TRS account. 
Now let's take a look at the Plan B Options. Plan   B provides a member with six survivorship options. 
Option 1 allows you to possibly leave a lump-sum   payment, but no monthly benefit to a beneficiary 
after a member's death. And Options 2 through 4   allow you to leave a continuing monthly benefit 
to a beneficiary after a member's death. If a   survivorship plan is indeed selected, the amount 
of the monthly benefit will be reduced actuarially   to allow for the lump-sum payment or monthly 
payment for life to the designated beneficiary.   The amount of the reduction in monthly benefits, 
or the cost of the option, depends on the retirees   age and the age of the specified beneficiary. 
If the chosen beneficiary is more than ten years   younger then the retiree, and not the retirees 
spouse, then the retirement benefit may be subject   to the Required Minimum Distribution rules of 
the IRS, the Internal Revenue Service.

These   rules regulate the amount of a pension that can be 
distributed to a survivor. For more information,   we can visit the website, or call the 
TRS office. The age of the beneficiary will also   influence the amount of the retirement benefit under Plan B 
Option 2, Option 2 Pop Up, and Option 4. The point   here is, the younger the beneficiary, the smaller 
the monthly benefit amount will be. This in turn   means, that the cost of the option is greater. 
One thing that must be kept in mind, is that if   one of the survivorship plans of retirement is 
selected, the beneficiaries cannot be changed   after retirement; except as specifically provided 
by law.

We can learn more about changes in plan of   retirement on the website. Now let's 
look at the Plan B Options in detail. Plan B   Option 1 allows us to possibly leave a lump-sum 
amount to a beneficiary in return for a slightly   reduced lifetime monthly benefit, from the maximum 
amount that is. Under this plan, the total of our   contributions and interest at the time of our 
retirement will be reduced each month by only   the portion of our total gross benefit. Which is 
made up of our contributions and interest. This   is routinely referred to as the CNI, at death, all 
monthly benefits will stop.

However, any remaining   contributions and interest will be refunded to 
the designated beneficiaries or the estate of   the retiree. In most cases, our contributions 
and interest will be depleted within 10 to 14   years after retirement, but our benefits will 
continue throughout our lives. With this plan,   you may change your beneficiary designation at 
any time after retirement. If the beneficiary   just so happens to be your spouse and you later 
become divorced, you can change your plan of   retirement. Plan B Option 2 will allow us 
to leave our beneficiaries a reduced monthly   lifetime benefit based on our age and the age of our 
specified beneficiaries. This option guarantees   that at death, any named beneficiary if living, 
will receive a lifetime benefit comparable to 100   percent of the benefit amount at the time of death 
in accordance with IRS regulations and the ages of   the beneficiaries.

Also under this plan, it is 
allowable to designate multiple beneficiaries   to receive a lifetime monthly benefit and or 
to specify the percentage to be paid to each   beneficiary. If two or more beneficiaries are 
designated, and one dies before the retiree,   the percentage of available benefits selected for 
the remaining beneficiaries will not be adjusted.   If the Plan B Option 2 plan beneficiaries die before 
the retiree, the monthly benefit will remain   under Option 2. Unless, the retiree is eligible to 
change the plan of retirement and or beneficiaries   as provided by law. We can see the changes in 
plan of retirement on the website for   further clarification. The Plan B Option 2 Pop Up 
offers a reduced monthly lifetime benefit based on   our age and the age of our beneficiaries. This is 
just like Plan B Option 2. If you as the retiree,   die before your beneficiary, your beneficiary will 
receive a lifetime benefit equal to the amount   you were receiving at the date of your death. 
On the other hand, if your beneficiary passes   away before you do, then your monthly benefit 
will increase to the original maximum plan amount.

Plus,   all increases awarded to you during retirement. 
Unlike Plan Option 2 however, under this option,   you may only designate one beneficiary. Plan B 
Option 3 offers a reduced monthly lifetime benefit   based on your age and the age of your beneficiary. 
Under this plan, at the time of a retiree's death,   any named beneficiaries if living, will receive 
a lifetime benefit comparable to 50 percent of   your benefit amount at the time of your death in 
accordance with IRS regulations and the ages of   your beneficiaries. You can also designate 
multiple beneficiaries to receive lifetime   monthly benefits and specify the percentage 
to be paid to each beneficiary.

If two or more   beneficiaries are designated, and one passes away 
before the retiree, the percentage of available   benefits that were selected for the remaining 
beneficiaries will not be adjusted. If all the   beneficiaries predecease the retiree, then the 
monthly benefit will remain under Option 3. Unless,   the retiree is eligible to change the plan of 
retirement and or the beneficiaries as outlined   in the changes in plan retirement information. 
Which can be found again where? Of course,   on the website. The Plan B Option 3 
Pop Up offers a reduced monthly lifetime benefit   based on your age and the age of whom, your 
beneficiaries. If you predecease your beneficiary,   your beneficiary will receive a lifetime 
benefit equal to 50 percent of the amount you   were receiving at the date of your death.

If your 
beneficiary, on the other hand, predeceases you, your monthly benefit   will increase to the original maximum plan 
amount. Plus, all increases awarded to you during   retirement. Under this option, you may only 
designate one beneficiary. Last, but not least,   we have Plan B Option 4. The beneficiary benefits 
you specify under this plan cannot cause the   monthly benefit to be reduced below 50 percent of 
the maximum benefit available to the retiree. If   multiple beneficiaries are designated, and one or 
more beneficiaries pass away before the retiree,   then the dollar amounts or the percentages are 
not adjusted for the remaining beneficiaries.   Beneficiaries also receive a pro-rated share of 
any cost-of-living increases you receive up to   the date of death. Monthly benefits under 
Option 4 are also calculated actuarially   using an amount of the survivor's benefit 
specified by the member. TRS will calculate   the benefits under Option 4 and provide an 
estimate of the monthly benefit upon request.   So as you can see TRS has several plans, 
each unique in it's benefit to a retiree.   Isn't it pretty evident that we have some very 
important decisions to make? As we progress our   way down our path, inching our way to retirement, 
absolutely! So now that you are aware of the   various plans and options, what should you do 
next? What should we do next? Well, TRS recommends   that you consider the following.

Start thinking 
about what option is best for you and your family.   Go to and generate your own benefit 
estimate in your TRS account. And be sure to check   out our online members' guide, under the newsroom 
link, and click on publications. Once there,   scroll down to the bottom of the page. You can 
also ask TRS for a benefit estimate when you   are within five years of your retirement date. 
Schedule a one-on-one counseling session within   two years of retirement, in our Atlanta office 
or via our website in your county school system.   As always, if you have questions, concerns, 
or feedback, you can reach out to us either via the   podcast or you can contact the Atlanta office. 
Thank you once again for joining us. Be sure to   tune in again for the next episode of TRS Your 
Retirement In Focus. Stay safe and stay smart. (outro music).

As found on YouTube

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