Five-Year Plan Reselection Period is Now Open for Eligible Members
Defined Contribution Plan and Combined Plan participants who are in their fifth year of service and eligible for their permanent plan election will soon receive retirement plan reselection materials in the mail. If you are now eligible to reselect your plan, you must return the retirement plan enrollment form by June 1, 2018 (plan choices become effective on July 1, 2018). Below, SmartTALK answers some common questions about the reselection period.
Who is eligible to reselect their retirement plan?
The reselection window is open to Defined Contribution Plan or Combined Plan participants who are in their fifth year of STRS Ohio membership. You are eligible if you enrolled as a new member between July 1, 2013, and June 30, 2014. If you were hired after this period, you will be notified when you are eligible for plan reselection during your fifth year of membership.
What retirement plan choices are available?
Plan options include the STRS Ohio Defined Benefit Plan, the Defined Contribution Plan and the Combined Plan.
Do I have to change plans?
No, however, you must complete an enrollment form to indicate your plan selection. Eligible members who do not make a choice during the reselection period must remain in their current plan for as long as they are STRS Ohio members.
What happens to my defined contribution account if I change plans?
The answer depends on your current plan and the plan you now select as your permanent plan. If you select the Defined Benefit Plan, your current defined contribution account will be closed and you will no longer have an account to manage. Instead, a defined benefit account will be created for you, based on your years of service as if you originally enrolled in the Defined Benefit Plan.
However, if you now select either the Defined Contribution Plan or the Combined Plan as your permanent plan, you will still have a defined contribution account to manage. The STRS Ohio Retirement Plan Reselection Options brochure that you will receive in the mail covers these options in greater detail.
Will I have another chance to reselect my retirement plan?
No – this is a one-time opportunity to change plans. The decision you make now is permanent, and the plan you choose will be your retirement plan for as long as you are an STRS Ohio member. The deadline for your permanent reselection is June 1, 2018. If STRS Ohio does not receive your enrollment form by the June 1, 2018, deadline, you must remain in your current plan – in accordance with Ohio law.
What if I don’t receive my reselection packet in the mail or if I have more questions?
STRS Ohio will be happy to assist you with this important decision. Just call our Member Services Center toll-free at 888‑227‑7877, and we will answer your questions and provide you with the information you need.
Annual Report Update
Due to a production delay, STRS Ohio’s 2017 Defined Contribution Investments Annual Report is mailing later than expected. Watch for your copy to arrive soon. The report will also be available online. The report features a profile and performance summary for each STRS Ohio allocation choice, as well as analysis of economic activity from fiscal year 2017.
Interest Rates Rise
The U.S. Federal Reserve increased the benchmark lending rate by 0.25% in December. At her final press conference as chair of the Federal Reserve Board, Janet Yellen said the committee expects the labor market to remain strong. With this in mind, the Federal Reserve projects three more interest rate hikes in 2018. When the fed rate increases, costs to borrow money — including the interest rate charged on credit card balances — are expected to increase. Now may be a good time to consider paying down outstanding credit card balances or to consolidate debt into one fixed interest rate loan.
Investment Choice Profile
This Quarter’s SmartTALK Profiles the STRS Large-Cap Choice.
The STRS Large-Cap Core Choice invests in U.S.-based equities — typically larger companies across a wide spectrum of industries. Stock selection generally comes from large-cap companies selected from the Russell 1000 Index. The focus is on investing in the best stocks from within each industry group. This choice emphasizes fundamental research, valuation and long-term growth prospects in the decision-making process.
Companies in the information technology, financials, health care, consumer discretionary and industrials sectors make up about 75% of the holdings. Top holdings by company include Apple Inc., Exxon Mobil Corp., Microsoft Corp., Alphabet Inc. and PepsiCo Inc. Intermediate and long-term performance figures for this and all allocation choices are provided on the Investment Performance Report.
How much should I be saving to pay for health care when I retire?
Your health care costs in retirement will depend on many factors — including at what age you plan to retire, your general health, what type of health care coverage you plan to enroll in and the pace of health care inflation. Even though it’s hard to estimate, health care is likely to be a major expense, so it’s a good idea to start saving early. AARP offers a health care costs calculator on its website that provides a general estimate that you might find useful in your planning, including steps you can take now to prepare for these costs.