As a Defined Contribution Plan member, you are eligible for retirement benefits the first day of the month following the latter of:
- Month in which you become age 50;
- Last day of actual employment in an STRS Ohio-covered position; or
- Month in which you apply.
Defined Contribution Plan participants have several payment options available to them when they end their Ohio teaching career. See below for more information.
Single Life Annuity, Joint & Survivor Annuity or Annuity Certain
To plan successfully for retirement, it is important to be familiar with your payment options and to consider your financial needs in retirement.
Your considerations should include:
- Your health and age at retirement (you must be at least age 50 to be eligible to retire)
- The need for survivor benefits
- Availability of other financial resources
- Anticipated financial obligations
- Reemployment opportunities
- Potential Social Security benefits
- Whether or not you are obligated under a court order to select a plan of payment that provides a continuing monthly benefit to a former spouse after your death
If you elect to annuitize your defined contribution account balance at retirement, you will select a plan of payment from among several different actuarially equivalent plans. All plans provide you with lifetime benefits but vary in the benefits provided to survivors. If you are married, please review the spousal consent requirement.
If a court order requires you to leave a continuing monthly benefit to a former spouse or spouses upon your death, you must submit a copy of the court order to STRS Ohio with your Service Retirement Application. Any amounts payable due to court orders must remain in place during the lifetime of that beneficiary.
Under an annuity plan, your monthly benefit is based on life expectancy factors and the amount you annuitize. There are three basic plans of payment:
- Plan I — Single Life Annuity
- Plan II — Joint and Survivor Annuity
- Plan III — Annuity Certain
Plan I — Single Life Annuity
The Single Life Annuity plan provides maximum monthly benefits for your lifetime. This plan does not provide any payment to a survivor upon your death. Upon electing a Single Life Annuity, your defined contribution account balance is converted to a lifetime annuity. There is no refundable amount even if the total annuity payments are less than the defined contribution account balance that was converted to an annuity.
If you choose a Single Life Annuity plan at retirement and later marry, you may change your plan to a Joint and Survivor Annuity with your new spouse as beneficiary within the first year of your marriage. This is the only circumstance in which you may change a Single Life Annuity plan.
A copy of your marriage certificate must accompany the application to change to a Joint and Survivor Annuity. The new selection is effective on the date the application is received by STRS Ohio and the new benefit amount is paid the first of the next month.
Plan II — Joint and Survivor Annuity
Under the Joint and Survivor Annuity, you will receive a reduced lifetime monthly benefit. Upon your death, one or multiple primary beneficiaries receive lifetime monthly benefits. There are four options under this plan of payment.
- Options 1, 2 and 3 apply to a single primary beneficiary.
- Option 4 applies to multiple primary beneficiaries.
Upon electing a Joint and Survivor Annuity, your defined contribution account balance is converted to a lifetime annuity for you and your primary beneficiary(ies). There is no refundable amount even if the total annuity payments are less than the defined contribution account balance that was converted to an annuity.
Single Primary Beneficiary
- Option 1: Upon your death, the primary beneficiary receives the same monthly benefit you received.
- Option 2: Upon your death, the primary beneficiary receives one-half the monthly benefit you received.
- Option 3: Upon your death, the primary beneficiary receives a specific dollar amount or percentage that you designate. The amount you designate must be at least $50 per month and cannot exceed 100% of your benefit.
If the primary beneficiary is not your spouse, the Internal Revenue Service may limit the percentage of the benefit that you can designate to this person. Contact STRS Ohio for additional information on these limitations.
Under these three Joint and Survivor Annuity options, there are two basic choices.
With reversion: If you select this choice, you may revert to the Single Life Annuity plan of payment if:
- Your beneficiary dies before you. A copy of the death certificate must accompany the application to revert to the Single Life Annuity plan. The effective date of the new benefit amount is the first day of the month following the beneficiary’s death.
- Your marriage to the beneficiary terminates, provided that you have written consent from your former spouse or the appropriate court documentation authorizing such a change. The new selection is effective on the latter of the date the application is received by STRS Ohio or the date of divorce. The new benefit amount is paid the first of the next month.
Also, if a Joint and Survivor Annuity with reversion is selected and a non-spouse is named at retirement and you later marry, you may reselect your spouse as the new beneficiary within the first year of your marriage.
Without reversion: With this choice you may never revert to a Single Life Annuity payment. Neither the plan of payment nor the primary beneficiary may be changed after retirement. You maintain this plan of payment even if your beneficiary dies or your marriage to the beneficiary terminates.
With Options 1 and 2 you can select a guarantee feature that provides benefits to a secondary beneficiary for a specific number of years from your retirement date. A guaranteed period is provided at no cost based on the age of both you and your beneficiary. You may extend the guaranteed period by taking a reduction in your monthly benefit amount. The guaranteed period may be any number of years up to an actuarially determined maximum and is selected when applying for retirement.
If both you and your primary beneficiary die before the end of the guaranteed period, a monthly benefit is paid to the secondary beneficiary for the remainder of the guaranteed period. If you name more than one secondary beneficiary, a lump-sum payment representing the present value of the remaining payments is divided equally and paid to the beneficiaries.
If the second beneficiary is a legal entity such as a trust, charity or church, a lump-sum payment of the present value of any remaining payments will be made.
If you or your primary beneficiary outlive the guaranteed period, benefits continue for your lifetime and the lifetime of your primary beneficiary, but the secondary beneficiary would not receive benefits.
Multiple Primary Beneficiaries
- Option 4: Members may elect to provide continuing lifetime benefits for up to four primary beneficiaries under a Joint and Survivor Annuity. You may specify percentages of your benefit or a flat dollar amount for each beneficiary; however, the total amount payable to all beneficiaries cannot exceed the amount payable to you.
For example, upon your death, one beneficiary could continue to receive 30% of your benefit, while a second could continue at 20%, and a third and fourth could continue at 10% each. Your benefit will be reduced based on the ages of the beneficiaries and the amount of the benefit provided to each beneficiary. The percentages designated to beneficiaries do not have to equal 100%.
Unless directed by a court order, you cannot provide a benefit that is less than 10% of the benefit you will receive. If a beneficiary is not your spouse, the Internal Revenue Service may limit the percentage of the benefit that you can designate to this person.
At your death, monthly benefits will be paid to the beneficiaries you designated at retirement. If a beneficiary dies before you, contact STRS Ohio to increase your monthly benefit by the amount of the reduction taken for that beneficiary. Benefit amounts payable to the other beneficiaries after your death will not change.
If you select this choice, you may change your plan of payment only if:
- One of the beneficiaries is your spouse and your marriage terminates, provided you have written consent from your former spouse or the appropriate court documentation authorizing such a change. The new selection is effective the latter of the date the application is received by STRS Ohio or the date of divorce. The new benefit amount is paid the first of the next month.
- All beneficiaries are non-spouses and you get married after retirement. Within the first year of marriage, you may reselect a plan of payment with your new spouse as beneficiary. You may retain up to three beneficiaries you selected at retirement; however, the total monthly amount payable to all beneficiaries at your death cannot exceed the monthly benefit paid to you.
Plan III — Annuity Certain
The Annuity Certain plan provides monthly benefits for your lifetime. In addition, your beneficiary receives benefits for a specific number of years from your retirement date. The guaranteed period may be any number of years up to an actuarially determined maximum.
If your death occurs before the guaranteed period ends, your beneficiary receives the same monthly benefit until the guaranteed period expires. If you name more than one person as beneficiary, a lump-sum payment, representing the present value of the remaining payments, is divided equally and paid to the beneficiaries and is selected when applying for retirement.
If the beneficiary is a legal entity such as a trust, charity or church, then a lump-sum payment of the present value of any remaining payments will be made.
If you outlive the guaranteed period, benefits continue for your lifetime but the named beneficiary would not receive benefits.
If you choose the Annuity Certain plan at retirement, you cannot reselect a different plan after retirement. However, you may name a different beneficiary for the remaining years on the guaranteed period.
Account Withdrawal (Including Rollovers to Traditional IRAs or Other Employer Plans)
Account withdrawals are paid as a lump-sum distribution, part of which may be taxable at the time of withdrawal, or may be rolled over to an IRA, or eligible employer plan or another qualified plan.
Upon termination of public employment in an STRS Ohio-covered position, members participating in the Defined Contribution Plan may elect to withdraw their account. Withdrawal of your account will cancel your STRS Ohio membership. If you are younger than age 50, a withdrawal of the entire account is the only payment option available.
Important Note for Members Who Have Selected the STRS Total Guaranteed Return Choice as an Investment Option
Members who leave teaching and elect to “withdraw” their STRS Total Guaranteed Return Choice account before the end of a five-year term will be assessed an early-term withdrawal penalty of 10% of their net asset value (NAV) on all funds that did not go to term.
See the Account Withdrawal Option for more information.
If you are married on your benefit effective date, your spouse must consent to your selection if you have chosen one of the following plans of payment:
- Plan I — Single Life Annuity
- Plan II — Joint and Survivor Annuity:
- Providing your spouse with less than one-half of the benefit, or
- Providing benefits for a non-spouse beneficiary.
- Plan III — Annuity Certain
Your spouse may consent to your selection of any of these plans by signing the spousal consent on the Service Retirement Application before a notary public.
Without spousal consent for the plans listed above, a Joint and Survivor Annuity with one-half to beneficiary with reversion will be automatically selected for you.
Spousal consent is not required if:
- You are required to elect a plan of payment pursuant to a court order and your current spouse is also a beneficiary under that plan to receive a survivor annuity of at least 50% or the remaining available survivor benefit if less.
- You are required to provide an amount to a former spouse or spouses pursuant to a court order or orders that is the maximum amount payable in a Joint and Survivor Annuity plan of payment.
Division of Property Order
Legislation effective Jan. 1, 2002, authorizes a court in the State of Ohio that grants a termination of marriage to issue a division of property order (DOPO) to STRS Ohio. A DOPO requires STRS Ohio to pay a portion of a retirement benefit or refund that is payable now, or in the future, to a member’s former spouse at the time payment is made to the member. If you have questions about how this new law relates to a termination of your marriage, please contact your attorney.
Taxation of Retirement Benefits
Federal Income Tax
Beginning with the first payment, STRS Ohio retirement benefits are taxable. STRS Ohio will withhold federal taxes from your benefits unless you direct otherwise. If federal taxes are not withheld, you will be responsible for filing federal quarterly estimates.
If you paid taxes on some of your contributions, a small percentage of your benefit will be tax-free until your taxed contributions are exhausted. For example, if you paid taxes on $25,000 of contributions and the IRS determines these contributions are to be spread over 25 years, $1,000 of your retirement benefits will be tax-free for the first 25 years of your retirement. Information regarding any amount excludable from tax will be sent to you after your retirement account is finalized and will be reflected on your 1099-R form.
Ohio Income Tax
The taxable portion of a retirement benefit is subject to Ohio income tax for Ohio residents. On request, we will withhold Ohio income taxes.
Income Tax — Other States
If you are a resident of another state, your state tax liability is governed by the laws in that state. STRS Ohio cannot withhold tax for states other than Ohio.
Local or Municipal Taxes
STRS Ohio retirement benefits are exempt from local or municipal taxes in Ohio.
School District Income Tax
STRS Ohio retirement benefits may be subject to local school district income taxes in Ohio. Some districts in Ohio have a provision where the school district income tax applies to earned income only. School district income taxes are not withheld by STRS Ohio unless the benefit is affected by a Qualified Excess Benefit Arrangement (QEBA). STRS Ohio informs members who are affected by a QEBA.
Following the end of the calendar year, benefit recipients who have not opted out of receiving paper copies will be mailed a 1099-R form for monthly benefits showing annual gross benefits and taxable amount as computed by STRS Ohio. This form is also made available in your Online Personal Account.
For more details about taxation of benefits, contact the Internal Revenue Service, the Ohio Department of Taxation or a qualified tax consultant. STRS Ohio cannot provide tax advice.
Important Tax Considerations for Lump-Sum Withdrawals
If you choose to withdraw your STRS Ohio account, there are important tax implications.
If you choose to have your withdrawal paid directly to you:
- Your payment will be taxed in the year it is issued.
- STRS Ohio will withhold federal tax at a rate of 20%.
- If you receive the payment before age 59-1/2, you may have to pay a 10% tax penalty for an early withdrawal.
You may roll over your withdrawal amount to an eligible retirement account that will accept your rollover and:
- Your payment will not be taxed in the current year and no income tax will be withheld.
- The funds rolled over will be taxed when removed from the account to which they were deposited.
There are other tax implications if you withdraw your STRS Ohio account. Review our Account Withdrawal brochure and consult a professional tax advisor for more information. STRS Ohio cannot provide tax advice.
Note: Beginning in the year you reach age 72 or terminate employment, whichever is later, a certain portion of your payment cannot be rolled over because it is a “required minimum payment” that must be paid to you. STRS Ohio can tell you if your payment includes amounts that cannot be rolled over.
How to Apply for Service Retirement Benefits
To apply for service retirement, complete and submit a Service Retirement Application using your Online Personal Account. To access the application, log in to your Online Personal Account, select “Member Information” from the top menu and then select “Apply for Service Retirement” under Useful Links. To register for or log in to your online account, click here. The application offers step-by-step instructions, can be completed at your own pace and allows you to view and print a summary of your selections. You can also save your progress and return later to complete and submit the application, allowing you to make changes prior to submitting.
The application should be completed at least three months, but no more than 12 months, before your retirement date. Your employer will be notified of your retirement the latter of when you submit your application or two months before your retirement date. If your fully completed application is received by STRS Ohio at least 30 days before your retirement date, STRS Ohio may issue a benefit payment on your retirement date. Please see “Payment of Benefits.”
Your benefit is final on your effective date of retirement. At this time, your account is cashed out and you cannot change your decision to begin taking your benefit.
STRS Ohio recommends the following guidelines be used when applying for retirement:
Six to 12 Months Before Retirement
- Schedule a benefits counseling appointment.
- Request a recalculation of your service retirement estimate.
- Schedule meetings with your personal retirement planning advisors.
- View the Retirement Benefits presentation.
Three to 12 Months Before Retirement
- Read the Service Retirement and Plans of Payment brochure.
- Complete and submit a Service Retirement Application.
- Finalize plans to complete deposits on military service.
- Review STRS Ohio reemployment guidelines.
- Notify your employer of your intent to retire.
For additional information, or if you have questions, contact STRS Ohio via email or toll-free at 888‑227‑7877. Email submissions on this site are unsecured. Please only include your name, the last four digits of your Social Security number or STRS Ohio account number with your message.
How to Apply for Survivor & Disability Benefits
Survivor and Disability benefits in the Defined Contribution Plan are limited to the value of the member’s account. Members who become disabled before age 50 may elect to withdraw their account. Members may elect to apply for monthly service retirement benefits at age 50 or later.
Survivors of Defined Contribution Plan members should contact STRS Ohio toll-free at 888‑227‑7877 to review account withdrawal or spousal management options.