Defined Contribution & Combined Plan Reselection Option
Combined Plan
How Does It Work?
The STRS Ohio Combined Plan includes features of the Defined Benefit and the Defined Contribution Plans. Your current contribution of 10% of annual salary goes into a defined contribution account. However, employer contributions go into a defined benefit portion of the plan to pay for a combination of service retirement, disability and survivor benefits and access to retiree health care coverage.* Contribution rates and eligibility for health care are established by the State Teachers Retirement Board and are subject to change.
If you have credit in the Ohio Public Employees Retirement System or the School Employees Retirement System, selecting this plan may affect your future benefits from these systems. Please call toll-free 1-888-227-7877 for more information.
*Coverage under the STRS Ohio Health Care Program is not guaranteed. STRS Ohio hopes to continue the program indefinitely, but reserves the right to change or discontinue all or part of the program for all or a class of eligible enrollees.
What Are My Investment Choices?
A portion of your retirement income will be created through the performance of investment choices you select for your contributions. You will make your allocation decisions and use the same tools to oversee your account as STRS Ohio Defined Contribution Plan participants, such as the Investment Options Guide included in your plan selection packet. You have the same STRS Ohio-managed investment options available to you as in the Defined Contribution Plan. Asset management fees and a $10 quarterly account fee will be deducted from investment returns of the individual options.* They are:
Asset management fees and a $10 quarterly account fee will be deducted from investment returns of the individual options.*
* Inactive members with an account balance of less than $5,000 are subject to a $10 per month fee. (“Inactive” is defined as not having any member or employer contributions applied to an account for more than 120 days.) A member will not be charged the quarterly account fee if a low balance fee was charged during the quarter.
STRS Ohio also offers an eighth allocation option — the STRS Total Guaranteed Return Choice. This option offers a guaranteed interest rate on contributions and transfers made in a given year. In exchange for this protection against any possible negative returns, participants must “lock-in” their contributions and transfers made during the year until the end of a five-year term.
If you believe the STRS Ohio Combined Plan is a viable option for you, you will want to refer to the Investment Options Guide included in your plan selection packet. It contains a one-page profile of each investment choice including investment objectives, top holdings and annual fees. Also included is a questionnaire that can help you determine your investor profile. By completing this questionnaire, you will:
Identify your time horizon. This is the period you have to invest for retirement.
Assess your risk tolerance. All investments are affected by risk. In general, the greater potential for higher returns, the greater the risk.
Some of these benefits become available after 1-1/2 years of service credit; others are available after five years of service credit.
Survivor Benefits
Under the Combined Plan, you are eligible for survivor benefits with 1-1/2 years of contributing service credit. Benefits range from 25% to 60% of final average salary. Survivors receiving this benefit have access to optional health care coverage* through STRS Ohio. All contributions and earnings in your defined contribution account and the defined benefit portion of the plan will be used to fund this benefit. Therefore, your survivors will not have a defined contribution account to oversee. Survivors will also have the option of withdrawing your entire account in lieu of receiving a benefit.
Disability Protection
With five years of contributing service credit, you are eligible for disability protection. You may receive monthly benefits ranging from 45% to 60% of your final average salary and have access to optional health care coverage* through STRS Ohio. If you become disabled, all contributions and earnings in your defined contribution account and the defined benefit portion of the plan are used to fund this benefit; therefore, you will no longer have a defined contribution account to oversee. At age 65, the disability allowance converts to a service retirement benefit that provides 2.2% of your final average salary for each year of service. In lieu of disability benefits, you may withdraw your account.
Service Credit Purchase
You may be eligible to purchase credit for teaching interrupted by military service and leaves of absence.
Portability
You can easily roll the assets of your Combined Plan into an individual retirement account (IRA), an eligible employer plan or another qualified plan if you leave STRS Ohio-covered employment before retirement eligibility, or you may withdraw your account value. At age 50 or later, you may also just withdraw the defined contribution portion and leave the defined benefit portion to fund a service retirement benefit at age 60.
*Coverage under the STRS Ohio Health Care Program is not guaranteed. STRS Ohio hopes to continue the program indefinitely, but reserves the right to change or discontinue all or part of the program for all or a class of eligible enrollees.
Benefits While Retired
Retirement Income
You are eligible for benefits at age 60 with at least five years of service credit. You will receive 1% of your final average salary for each year of service from the defined benefit portion of your account. No annual cost-of-living adjustments are provided with this benefit. Upon retirement, you may begin earlier distributions from your defined contribution account at age 50.
Access to Optional Health Insurance*
Starting at age 60, you and your eligible dependents will have access to optional health care coverage at the same premium schedule used for Defined Benefit Plan participants, if you have at least 15 years of service credit. Optional dental and vision plans are also available. Contribution rates and eligibility for health care are established by the Retirement Board and are subject to change.
*Coverage under the STRS Ohio Health Care Program is not guaranteed. STRS Ohio hopes to continue the program indefinitely, but reserves the right to change or discontinue all or part of the program for all or a class of eligible enrollees.
In Summary
Participation in the STRS Ohio Combined Plan provides you a monthly benefit in retirement similar to, but less than, the Defined Benefit Plan. It also gives you control of your contributions as with the Defined Contribution Plan. In short, the Combined Plan offers the security of the Defined Benefit Plan with the flexibility and choice of the Defined Contribution Plan.
