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Teacher Retirement and Investment Benefits

Resources available at this link: https://sites.google.com/bcsc.k12.in.us/bcscretirement/

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Goals

  • Understand your retirement and investment benefits
  • Increase participation in retirement and investment benefits
  • Understand “to-do” list for your retirement and investment benefits

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Your State Retirement

Indiana Public Retirement System

  • Known as TRF
  • BCSC contributes 8.5% of your salary to INPRS each payroll
  • Two buckets:
    • 5.5% pays the ongoing retirement costs of retiree pensions
      • Your teacher pension upon retirement
      • A $36,000 annual pension = ~ $540,000 in savings
    • 3% Defined Contribution
      • This is your $ to invest in the options INPRS provides
      • Available upon retirement

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Your State Retirement

Indiana Public Retirement System

Your To-Do List for TRF/INPRS

  • Select your plan - traditional hybrid or mychoice
  • Create your online account www.MyINPRSRetirement.org
  • Intentionally select investment choices that are right for you.
    • Look for “Expense Ratio”, returns, and risk.
    • Talk to an advisor about election strategy.
  • Check your beneficiaries.
  • Sign up for the TRF Newsletter at the main INPRS page.
  • Update investments and beneficiaries once/year (Black Friday).
  • Leave it alone!

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What questions do you have about Teacher Retirement?

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Your BCSC Investment Benefits

403(b)

  • Employee pre-tax contribution deducted from your check
  • Equitable
  • Can make changes quarterly
  • 100% vested immediately

401(a)

  • BCSC matches your 403(b) contribution up to a max of 3% of your contract salary (including referendum)
  • Equitable
  • 100% vested after 5 years of service

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Your BCSC Investment Benefits

Rollovers and Transfers

  • Both are permitted
  • Work with your Equitable advisor
  • Check for surrender charges from your previous vendor

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Your BCSC Investment Benefits

  • Employees can access these funds:
    • Age 59 ½ or older
    • Upon retirement from BCSC
    • Upon termination of employment with BCSC
  • No loans or hardship withdrawals

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Your BCSC Investment Benefits

  • Currently more than 600 of the ~720 teachers participate
  • Goal 100%
  • If you don’t participate, you are forgoing a 3% salary bonus

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Your BCSC Investment Benefits

Assuming a $39,065 starting salary at age 22, 2% annual salary increase, 403(b) contribution of 3%, and 7% annual return:

  • Start contributing at age 22 and contribute $73,375...
    • Value at age 62: $690,719
  • Wait to contribute until age 30 and contribute $63,317...
    • Value at age 62: $435,079

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Your BCSC Investment Benefits

Your To-Do List for 403(b)/401(a)

  • Participate (at least 3%)
  • Register and create an online account with Equitable.
  • Intentionally select investment choices that are right for you.
    • Look for “Expenses”, returns, and risk.
    • Talk to an advisor about election strategy.
  • Check your beneficiaries.
  • Increase your contributions, update info, investments, and beneficiaries once/year (Black Friday).
  • Leave it alone!

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What questions do you have about your 403(b)/401(a) plan?

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Sick/Personal Day Buyback

  • BCSC purchases your days above 180 each year for $43/day
  • Funds are deposited into a VEBA account (tax free)
  • MidAmerica is the vendor for the BCSC VEBA
  • Funds can be used for health-related expenses upon retirement
    • Includes health premiums!
  • Upon retirement, the bank of up to 180 days are purchased at $11.12 per day and paid through payroll.

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Three VEBA Scenarios

At age 62, a teacher who started teaching at age 22 wants to consider retirement, but needs to pay health premiums until qualifying for medicare at age 65...

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VEBA Scenario: Teacher A

  • She used 10 sick/personal days per year
  • Her VEBA account has $12,277.02
  • Today, that covers less than one year of family premiums
  • She must continue working for three more years

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VEBA Scenario: Teacher B

  • She used 5 sick/personal days per year
  • Her VEBA account has $42,170.85
  • Today, that covers almost three years of family premiums
  • She must continue working for another year

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VEBA Scenario: Teacher C

  • She used 0 sick/personal days per year
  • Her VEBA account has $79,004.53
  • She can pay for all three years of family premiums
  • Plus has enough to pay for Medicare supplement for year 1
  • She retires at 62
  • Oh, yes...and she earned the $300 perfect attendance incentive each year, invested it in the 403(b), and now has and additional ~$82,000 in that account!

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What questions do you have about the VEBA excess days buyback?

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Health Savings Account - HSA

For employees in a high-deductible health plan:

  • Salary deductions can be contributed to an HSA
  • Funds are tax free upon deposit and withdrawal (for health-related expenses)
  • CENTRA is our HSA vendor
  • Funds do carry over in your account
  • IRS contribution limits apply (currently $3,600/$7,200)

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What questions do you have about the Health Savings Account?

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529 College Savings Account

Payroll deduction available

  • Save for a dependent or friend or yourself
  • Minimum $10 per pay
  • 20% tax credit up to $1,000 annually

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Resources

  • BCSC website https://sites.google.com/bcsc.k12.in.us/bcscretirement/
  • INPRS newsletters
  • Your Equitable advisor
  • Heather Downin (HSA, VEBA, 529)
  • Regular benefit workshops

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Principles to Remember

  • Invest early and as much as possible
  • Select investments with low fees and expense ratios, appropriate risk
  • Create your online accounts
  • Login each year, update your info, beneficiaries, etc. (save passwords)
  • Increase your 403(b) investment each year, regardless of the amount
  • Leave it alone

Do you need another reason to participate?

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$200