Defined Contribution Plan

How Does It Work?
Perhaps the most integral component of the STRS Ohio Defined Contribution Plan is you. Your retirement income is based on the performance of investment choices you select for the contributions made by you and your employer. You may allocate your contributions among various investment options managed by STRS Ohio. Benefits such as disability protection, survivor benefits and health care coverage in retirement are your responsibility; they are not provided by STRS Ohio.

Your current contribution rate of 10% of your annual salary will go into your defined contribution account. Currently, employer contributions of 10.5% of salary will also be deposited in the defined contribution account, meaning that an amount equal to 20.5% of your salary will go directly into your account. These contribution rates 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.

What Are My Investment Choices?
If you choose the STRS Ohio Defined Contribution Plan, you may allocate your account among eight different investment choices to determine the accumulation of your account. Each option is managed by the same STRS Ohio professionals who manage the system’s defined benefit investments.  

Seven of the options represent the same diversification that is a hallmark of STRS Ohio’s total investment portfolio. They are:

• STRS Money Market
• STRS Lehman Universal Bond Index Return
• STRS Large-Cap Core Choice
• STRS Russell 1000 Index Return
• STRS Russell 2000 Index Return
• STRS REIT Choice (Real Estate)
• STRS MSCI World ex USA Index Return (International)

  STRS Ohio Investment Performance Report

You will have considerable flexibility in transferring among the choices once you make your initial allocation on the Retirement Plan Selection Form for New Members. You can also change your allocation of future contributions in these options at any time. Investment gains or losses are posted daily to your account.

Asset management fees and a $10 quarterly account fee will be deducted from investment returns of the individual options.* If you choose the STRS Ohio Defined Contribution Plan, you will discover that the administrative costs of maintaining your account are very competitive.

*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 investment option — the STRS Total Guaranteed Return Choice. This option offers a guaranteed interest rate on contributions and transfers made in a given year.

If you believe the STRS Ohio Defined Contribution Plan is a viable option for you, you will want to refer to the detailed information on allocation options in 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.

You may also view or print an online version. Click here for a PDF of the questionnaire.

Plan Features

Survivor Benefits
There are no survivor benefits, but in the event of your death, a surviving spouse may withdraw the account or continue to manage the account’s investment portfolio. All other survivors must withdraw the account.

Disability Protection
There is no disability protection, but if you become disabled, you may withdraw your account after terminating employment. At age 50, other payment options are available, but you must first terminate employment.

Service Credit Purchase
You are not eligible to purchase service credit; however, you may make contributions on salary not earned if your teaching career is interrupted by military service.

Portability
You can easily roll the assets of your Defined Contribution Plan account into an individual retirement account (IRA), an eligible employer plan or another qualified plan if you leave public employment before retirement eligibility. Your withdrawal amount will include both your contributions and your employers’, plus any investment earnings — if you have been an STRS Ohio member for at least one year. This is the only STRS Ohio plan that offers this feature. If you have been a member for less than one year, you will receive only your contributions and the earnings on those contributions.

Access to Health Insurance
Access to STRS Ohio optional health care coverage upon retirement is not provided.

Additional Considerations
Before choosing this plan, you should consider if you will be comfortable managing your retirement account, and if so, what type of investments will meet your needs — and your tolerance for risk.

Here are some basic questions to consider:

• Am I willing to make my own decisions about investment allocations?
• How long will I teach?
• Will I be comfortable with the investment gains and losses my retirement savings will experience while I’m working?
• How will I provide for survivor benefits and disability protection?

Account Withdrawal Value
Members with less than one year of membership in the STRS Ohio Defined Contribution Plan receive their contributions, plus any gains or losses on those contributions if they withdraw their account. However, after one year of membership, members receive both their contributions and allocated employer contributions, plus any gains or losses on those contributions.

STRS Total Guaranteed Return Choice
Generally in a defined contribution plan, the participant bears all investment risk for his or her account. However, with the STRS Total Guaranteed Return Choice, the risk of loss is borne by STRS Ohio, not you. If you choose this investment option, your defined contribution account will be credited with the guaranteed rate of interest, even if the underlying investments should actually decrease in value. In exchange for this protection, you must “lock-in” your contributions made during the year until the end of a five-year term. The various restrictions placed on participation in this choice are designed to minimize potential losses which, in turn, enable STRS Ohio to offer a higher guaranteed rate of interest.

In Summary
With the STRS Ohio Defined Contribution Plan, your retirement income is based on the performance of investment choices you select for the contributions made by you and your employer. You can plan for your retirement by developing an allocation strategy that balances your long-term needs with the opportunities and risks of the financial markets.

Here’s an example of how the plan is funded:

Employers contribute to STRS Ohio plans based on faculty payroll. A small portion of employer contributions is set aside to pay for the existing unfunded liability of the retirement system. The 10.5% contribution is subject to change by the Retirement Board. Members are vested in their own contributions immediately. Members become vested in employer contributions on their first anniversary of employment.

Click here to compare this plan with your other STRS Ohio retirement plan options.

Defined Benefit Plan

Combined Plan

Plan Comparison Chart

Retirement Plan Enrollment Form for Defined Contribution Plan Enrollees Eligible for Permanent Reselection

Retirement Plan Enrollment Form for Combined Plan Enrollees Eligible for Permanent Reselection