Appendix_7.1_RFP_31786-00186%20Retirement%20Plan%20Guides.pdf

For the best experience, open this PDF portfolio in

Acrobat X or Adobe Reader X, or later.

Get Adobe Reader Now!

http://www.adobe.com/go/reader

A program of the Tennessee Treasury Department | David H. Lillard, Jr., Treasurer

RetireReadyTN is the state’s retirement program, combining the strengths of a defined benefit plan provided by the Tennessee Consolidated Retirement System (TCRS); deferred compensation plans offered by Empower Retirement, TIAA, and Voya; and retirement readiness education. We strive to empower public employees to take actionable steps toward preparing for the future.

Faculty and staff first hired after July 1, 2014 that are exempt from the Fair Labor Standards Act must choose between membership in TCRS and the Hybrid Optional Retirement Program (ORP) upon their first day of employment. Information regarding membership in TCRS can be found in the guide: Hybrid Retirement Plan Information for General State & Higher Education Employees hired on or after July 1, 2014.

• The ORP is a 401(a) deferred compensation plan. The amount a member has available in retirement is based on contributions plus any accumulated earnings to the member’s account.

• The Hybrid ORP requires fixed member and employer contribution amounts that are set in State law. Hybrid ORP members are also automatically enrolled into the State of Tennessee 401(k) plan.1 Contributions to the 401(k) are eligible for a dollar-to-dollar match up to $50 each month.

• ORP members may select their investment options for both the ORP and the 401(k) plan based on their individual goals, risk tolerance, and timeline.

• Members are immediately vested in all member and employer contributions to the ORP and the 401(k). Upon terminating employment or retiring, an employee may leave account balances in the ORP and 401(k) plans, rollover over to another qualified plan, or begin taking distributions.2

• ORP members may elect to transfer membership to TCRS upon attainment of 5 years of creditable service. The decision to transfer from the ORP to TCRS is irrevocable.

Hybrid Optional Retirement Program (ORP) Information for Higher Education Employees hired on or after July 1, 2014

1 The IRS limits the maximum amount of compensation that may be recognized for retirement purposes. Annual limits are published at irs.gov.

2 If the member withdraws money from the ORP or 401(k) account balance prior to age 59 ½, they may be subject to an early distribution tax.

3 Employer 401(k) contributions are pre-tax only.

About the Hybrid ORP

Contributions to the Hybrid ORP Your retirement is funded by contributions from both the State of Tennessee and you, the member. Contributions to the ORP are deducted pre-tax. Employee contributions to the 401(k) plan may be made on a pre-tax or after-tax (Roth) basis.3

Contributions to the Hybrid ORP

Employer Member Total

ORP 9% 5% 14%

401(k) 0% 2%4 2%

TOTAL 9% 7% 16%

Revised 01.2025

Retirement Readiness Education In addition to retirement plans, RetireReadyTN offers retirement readiness education and retirement counseling to all members.

Members can meet with a retirement plan advisor for assistance with retirement planning or to discuss other financial planning needs. These services are provided to members at no additional fee.

For more information about retirement readiness education with each vendor and to schedule a meeting with a plan advisor, please contact the vendors directly or visit RetireReadyTN.gov > For Higher Education Employees.

Designate a Beneficiary One of the most important decisions a member can make is to designate a beneficiary(s). Designations for your ORP and 401(k) accounts are made separately. Situations such as marriage, divorce, remarriage, or death do not automatically change a designated beneficiary(s). Members should update ORP and 401(k) beneficiaries by visiting the appropriate plan sponsor’s website.

Additional Resources

Visit www.RetireReadyTN.gov @RetireReadyTN

For more plan information, please refer to the Higher Education Decision Guide.

4 The employee’s contribution to the 401(k) plan may be modified at any time. If the employee was auto enrolled in the plan, the employee has a 90-day window to opt out of the 401(k) plan and obtain a refund of the 2% employee contribution. New members will receive notice on how to opt out and or change their contribution amount. Members may also go online to make any changes to their accounts at RetireReadyTN.gov. Contributions are subject to Internal Revenue Service (IRS) limitations, which can be found at irs.gov.

The information in this document is general in nature and may be subject to change without notice. In the event of a conflict between this guide and plan documents, the plan documents will take precedence. Additionally, the value of an ORP or 401(k) account will fluctuate and it is possible for the value to be less than what was contributed. The risks associated with investing are numerous, and as with any investment, it is possible to lose money. The state of Tennessee and its employees are not authorized to provide legal, financial or tax advice. For legal and tax advice concerning your situation you should consult your personal legal, tax or other advisers.

ORP Service Providers An ORP member may direct employer and member contributions to investment options provided by one or more of the record-keeping companies. There are currently two companies under contract with the state to provide services for the ORP: TIAA and Voya. The State of Tennessee 401(k) Plan is provided through a partnership with Empower Retirement. Investment options offered by each vendor and other information can be found at RetireReadyTN.gov or by calling the numbers below:

ORP:

• TIAA (800) 842-2252

• Voya (866) 776-6704, Ext. 2

State of Tennessee 401(k):

• Empower Retirement (800) 922-7772

A program of the Tennessee Treasury Department | David H. Lillard, Jr., Treasurer

• The ORP is a 401(a) deferred compensation plan. The amount a member has available in retirement is based on contributions plus any accumulated earnings to the member’s account.

• The Legacy ORP requires fixed employer contribution amounts that are set in State law. Legacy ORP members may also voluntarily participate in the State of Tennessee 401(k) plan.1 Contributions to the 401(k) are eligible for a dollar-to-dollar match up to $50 each month.

• ORP members may select their investment options for both the ORP and the 401(k) plan based on their individual goals, risk tolerance, and timeline.

• Members are immediately vested in all member and employer contributions to the ORP and the 401(k). Upon terminating employment or retiring, an employee may leave account balances in the ORP and 401(k) plans, rollover over to another plan, or begin taking distributions.2

• ORP members may elect to transfer membership to TCRS upon attainment of 5 years of creditable service.

The decision to transfer from the ORP to TCRS is irrevocable.

RetireReadyTN is the state’s retirement program, combining the strengths of a defined benefit plan provided by the Tennessee Consolidated Retirement System (TCRS);

deferred compensation plans offered by Empower Retirement, TIAA, and Voya; and retirement readiness education. We strive to empower public employees to take actionable steps toward preparing for the future.

Faculty and staff hired prior to July 1, 2014 that are exempt from the Fair Labor Standards Act must choose between membership in TCRS and the Legacy Optional Retirement Program (ORP) upon their first day of employment. Further information regarding membership in TCRS can be found in the guide: Legacy Retirement Plan Information for General State & Higher Education Employees hired before July 1, 2014.

1 The IRS limits the maximum amount of compensation that may be recognized for retirement purposes. Annual limits are published at irs.gov.

2 If the member withdraws money from the ORP or 401(k) account balance prior to age 59 ½, they may be subject to an early distribution tax.

3 Employer 401(k) contributions are pre-tax only.

About the Legacy ORP

Legacy Optional Retirement Program (ORP) Information For Higher Education Employees hired prior to July 1, 2014

Contributions to the Legacy ORP Your retirement is funded by contributions from both the State of Tennessee and you, the member. Employer contributions to the ORP are deducted pre-tax. Employee contributions to the 401(k) plan may be made on a pre-tax or after-tax (Roth) basis.3

ORP Service Providers An ORP member may direct employer and member contributions to investment options provided by one or more of the record-keeping companies. There are currently two companies under contract with the state to provide services for the ORP:

TIAA and Voya. The State of Tennessee 401(k) Plan is provided through a partnership with Empower Retirement.

Investment options offered by each vendor and other information can be found at RetireReadyTN.gov or by calling the numbers below:

ORP:

• TIAA (800) 842-2252

• Voya (866) 776-6704, Ext. 2

State of Tennessee 401(k):

• Empower Retirement (800) 922-7772

Additional Resources

Visit www.RetireReadyTN.gov @RetireReadyTN

For more plan information, please refer to the Higher Education Decision Guide.

1 The IRS limits the maximum amount of compensation that may be recognized for retirement purposes. Annual limits are published at irs.gov.

The information in this document is general in nature and may be subject to change without notice. In the event of a conflict between this guide and plan documents, the plan documents will take precedence. Additionally, the value of an ORP or 401(k) account will fluctuate and it is possible for the value to be less than what was contributed. The risks associated with investing are numerous, and as with any investment, it is possible to lose money. The state of Tennessee and its employees are not authorized to provide legal, financial or tax advice. For legal and tax advice concerning your situation you should consult your personal legal, tax or other advisers.

In addition to retirement plans, RetireReadyTN offers retirement readiness education and retirement counseling to all members. Members can meet with a retirement plan advisor for assistance with retirement planning or to discuss other financial planning needs. These services are provided to members at no additional fee. For more information about retirement readiness education with each vendor and to schedule a meeting with a plan advisor, please contact the vendors directly or visit RetireReadyTN.gov > For Higher Education Employees.

Designate a Beneficiary One of the most important decisions a member can make is to designate a beneficiary(s). Designations for your ORP and 401(k) accounts are made separately. Situations such as marriage, divorce, remarriage, or death do not automatically change a designated beneficiary(s). Members should update ORP and 401(k) beneficiaries by visiting the appropriate plan sponsor’s website.

Employer contributions are equal to 10 percent of earnable compensation up to the Social Security wage base and 11 percent of earnable compensation above the Social Security wage base up to the IRS limits.1

Contributions to the Legacy ORP continued

Legacy Retirement Plan for State and Higher Education Employees

Legacy Member Guide

David H. Lillard, Jr., State Treasurer Jamie Wayman, Director of TCRS

11 /2024

A program of the Tennessee Treasury Department

INTRODUCTION

RetireReadyTN is administered by the Tennessee Department of Treasury. It combines the strengths of a defined benefit plan provided by the Tennessee Consolidated Retirement System (TCRS), the State of Tennessee 401(k) plan through services provided by Great-West Life & Annuity Insurance Company (“Empower Retirement” or “Empower”), and retirement readiness education.

Full-time state employees and certain higher education employees hired prior to July 1, 2014 are members of the TCRS Defined Benefit Legacy Plan (“Legacy Plan”) as a condition of employment unless the employee lost membership in the Legacy Plan. Membership also includes part-time state and higher education employees who elected to participate in the Legacy Plan prior to July 1, 2014, unless those part-time employees lost membership in the Legacy Plan as described below. Higher education employees who are exempt from the Fair Labor Standards Act may have elected membership in the Legacy ORP in lieu of the Legacy Plan. For information on the ORP, please see the Higher Education Employees page at RetireReadyTN.gov.

An employee loses membership in the Legacy Plan by taking a refund of the employee’s accumulated contributions from TCRS, or by not being vested and having a gap in TCRS covered employment for more than seven consecutive years.

A former Legacy Plan member who lost membership and is rehired as a state or higher education employee on July 1, 2014 or later will only be eligible for the Hybrid Retirement Plan for State Employees and Teachers (“Hybrid Plan”). For information on the Hybrid Plan, please consult the Hybrid Retirement Plan for State Employees and Teachers Member Guide which can be found under Forms and Guides at RetireReadyTN.gov.

Note: This document provides a general overview of the Legacy Plan as it relates to state and higher education employees (collectively referred to as “state employees” elsewhere in this document). There are separate documents that cover the Legacy Plan for K-12 public school teachers and benefits for political subdivision employees. Additionally, supplements to this document exist describing the different vesting, retirement eligibility, and benefit formula for Legacy Plan members who are:

• Members of the General Assembly

• State judges; and

• Public Safety Officers

Any member who gained membership in TCRS prior to June 30, 1976, should contact RetireReadyTN at (800) 922-7772 for information specific to your plan.

These documents, and forms referenced in this document, can be found under Forms and Guides at RetireReadyTN.gov.

THE LEGACY PLAN OVERVIEW

The Legacy Plan is a defined benefit plan administered by TCRS. A Legacy Plan member who has met the vesting requirements will receive a retirement benefit that will consist of a calculated monthly payment from TCRS. TCRS provides lifetime retirement, survivor, and disability benefits for its members. After meeting the five-year vesting requirement, a member becomes eligible to receive a monthly retirement benefit upon reaching the age and/or service requirement to begin benefits. The benefit is based on the member’s years of creditable service and earnable compensation. If a member leaves covered employment before becoming vested, the member will lose membership in TCRS if the member takes a refund of his or her accumulated contributions from TCRS or if the member is absent from covered employment for more than seven consecutive years, whichever occurs first. If a member leaves covered employment after becoming vested, the member may retain his or her TCRS membership until retirement by leaving the member’s contributions in TCRS.

Additional Savings Opportunities

As an added benefit, the State of Tennessee offers state employees the ability to save through both a 401(k) plan and 457(b) plan on a voluntary basis. State employees are eligible for an employer match of $1 match for every $1 contributed to the State of Tennessee 401 (k) plan each month, up to $50. The 401(k) and 457(b) plans allow the member to invest in investment options of his or her choice that are offered by the plan. A member is immediately vested in the 401(k) and 457(b) and can decide how the contributions should be invested given individual goals, risk tolerance, and timeline. The amount a member receives in retirement from his or her 401(k) and 457(b) accounts is based on the amount saved, plus any accumulated earnings from investments. The 401(k) and 457(b) plans have the same investment options.

The 401(k)/457(b) Plan Comparison guide found on RetireReadyTN.gov provides further information about the differences between the 401(k) and 457(b) plans.

The Tennessee Department of Treasury administers the 401(k) and 457(b) plans through a contract with Empower Retirement.

In addition to retirement plans, RetireReadyTN offers retirement readiness education and retirement counseling to all members. Members can meet with local RetireReadyTN retirement plan advisors for assistance in understanding their TCRS and 401(k)/457(b) retirement plans, retirement planning, or other financial planning needs. These services are provided to members at no additional fee. To find your local representative and schedule a one-on-one or group meeting, please visit RetireReadyTN.gov.

CONTRIBUTIONS TO THE LEGACY PLAN

Effective July 1, 1981, TCRS became noncontributory for most state employees, which means that the State assumed the employee contributions to TCRS on behalf of those employees of up to five percent (5%) of the employees’ earnable compensation. For any member who has a membership date prior to July 1, 1981 and who was employed in a covered position on June 30, 1981, these employer-assumed employee contributions are credited to the member’s retirement account balance. State employees who became members of TCRS after July 1, 1981 do not contribute to the Legacy Plan and do not have an account balance with TCRS.

In addition to contributing the employer-assumed employee contributions, the State (as the employer) makes a contribution to TCRS for all Legacy Plan members at a rate each year as approved by the TCRS Board of Trustees, based on an actuarial valuation. These employer contributions fund the monthly retirement benefits for state employees and are not refundable to the employer or the member.

Retirement benefits may be subject to income tax at the time of distribution.

Vesting

A member becomes vested in TCRS upon completing five years (60 months) of creditable service to a TCRS covered employer. If a member who has not completed five years of creditable service leaves covered employment for a period of more than seven years, he or she will lose membership in TCRS. If a member was contributory, member contributions and interest will remain available for refund. An individual who has lost membership can reestablish lost years of TCRS membership upon reentering covered employment, and the individual will enter the retirement plan available at the time of rehire.

Elements of the Benefit Calculation

TCRS provides a lifetime monthly benefit as determined by a formula specified in state law. The formula for computing a monthly retirement benefit consists of a member’s Average Final Compensation (AFC), years of creditable service, and the benefit accrual factor, which are described below.

Average Final Compensation (AFC)

The AFC is the average of the member’s five highest consecutive years (60 consecutive months) of earnable compensation. The federal government limits the maximum amount of compensation that may be recognized by a defined benefit plan. Limits can be found at IRS.gov.1

Creditable Service

Creditable Service means membership service under the Legacy Plan plus any other periods of public service credited by TCRS. Service credit may be accrued for service as a state employee, higher education employee, a public school teacher in Tennessee, or a full-time employee of a participating Tennessee local government. In addition, a member may be entitled to establish credit for other types of service. The types of service that may be established include the following:

• Previously withdrawn service;

• Military service which interrupted the member’s public employment;

• Peacetime military service rendered at any time from October 15, 1940 through May 7, 1975;

• Educational leave of absence which interrupted the member’s employment; and

• Unused accumulated sick leave at retirement.

To establish prior and/or missing service, the member must complete the appropriate application for Additional Retirement Credit. Please note that only the member may apply for prior and/or missing service, including military credit, and must submit the appropriate documentation required by TCRS. If the retirement credit requires payment to establish, a member may pay for such service through personal check in a lump sum, or through a rollover from another qualified plan, such as the State 401(k) plan.

Purchasing service through a rollover requires a completed Application for Acceptance of Rollover Funds.

Depending on the type of service being established, a member may be able to purchase the service through installment payments. Some types of service may be established without charge, while others require payment of contributions and interest. If you would like additional information on establishing prior service, contact TCRS at TCRS.CustomerSupport@tn.gov or (800) 922-7772. For additional information on transferring funds specifically from the State 401(k) plan, please see the section below entitled Using 401(k) Funds to Purchase Prior Service in TCRS.

1Additional information about annual compensation limits and cost-of-living adjustments regarding retirement plans can be found at www.IRS.gov.

Benefit Accrual Factor

Tennessee state law provides a benefit accrual factor for the Legacy Plan equal to 1.5% of AFC for each year of creditable service.

Benefit Improvement

Tennessee state law provides that a state employee Legacy Plan member’s base benefit is increased by 5%.

This increase applies to monthly retirement, disability, and death benefits, but it does not apply to lump-sum distributions.

Maximum Benefit Accrual

Under Tennessee state law, the maximum annual base benefit payable at retirement (under either service or early service retirement) is limited to 94.5% of the member’s AFC.

Member Annual Statements and Benefit Estimates

TCRS will prepare a Member Annual Statement each year of active employment. The statement will show the salaries and amount of service credit reported to TCRS, the amount of member contributions, the TCRS beneficiary designation, and estimates of the TCRS benefits the member could receive at retirement. TCRS will send a notice to the member’s employer when statements are available online at Member Self-Service at MyTCRS.gov.tn. It is important to review your Member Annual Statement each year to ensure your service and salary have been correctly reported to TCRS.

Members within three years of retirement may request a benefit estimate by contacting RetireReadyTN at (800) 922-7772. Your benefit estimate will be calculated based on the projected retirement date you provide, and the service and salary information reported by your TCRS-covered employer(s). The benefit estimate will contain an estimate of the monthly benefit amount payable and to you and to your named beneficiary upon your death under each payment plan option.

Member Annual Statements and Benefit Estimates are not binding on TCRS, do not constitute a guarantee of benefits, are subject to final verification by TCRS prior to payment of benefits, and plan provisions will prevail. Your benefit calculated at retirement may be different due to employer information, assumptions used, or an error. Please review this information carefully and promptly report any discrepancies to TCRS.

TCRS Retirement Benefits

A vested member is eligible to receive a lifetime monthly retirement benefit from TCRS upon reaching either service retirement eligibility or early service retirement eligibility. Retirement benefits may be subject to income tax at the time of distribution. Eligibility requirements for service retirement and early service retirement are described below.

Service Retirement – A vested member who has 30 years of creditable service or is at least age 60, is eligible for an unreduced service retirement benefit. The unreduced service retirement benefit payable to a member is 1.5% of the member’s AFC, multiplied by the number of years of creditable service, and the social security integration level applicable at time of retirement. Social security integration is described below.

The following example shows the formula used for computing an unreduced TCRS retirement benefit for a member who is 60 years old retiring with an AFC of $50,000 and 30 years of creditable service.

This example assumes the member selects the Member Only Option described in the Descriptions of Benefit Payment Plans at Retirement section below.

In this example, TCRS service retirement benefits replace 47% of the member’s AFC after 30 years of service.

Early Retirement – A vested member who is at least age 55 or has 25 years of creditable service is eligible to start receiving Early Retirement benefits before reaching Service Retirement eligibility. An Early Retirement benefit is permanently reduced based on the years of creditable service accrued and the number of months the retirement date precedes Service Retirement eligibility.

In this example, TCRS early retirement benefits replace 30% of the member’s AFC after 25 years of service.

Accrual Factor 0.015

AFC

$50,000

Years of x x = $22,500

$1,875

1.05 $1,968.75

Five Percent Improvement Monthly TCRS Benefit x x x

= $14,250

$1,188

$1,246.88

Early Reduction Factor (100% - 24%)

.76

Alternate Service Retirement Calculations – Benefits for Members whose average final compensation exceeds certain income levels or who retire after age 65, may be subject to alternate calculations as described below.

x x

Minimum Early Benefit %

= $3,990

$332.50 .55

$182.88

$192.02

Early Reduction Factor (100% - 24%)

.76

0.0025

$100,000.00

4,600.00

= $45,345

$3,778.75

$3,967.69

$1,500.00 11.50

$1,511.50 x

1 (AFC - SSIL); $100,000 - $95,400=$4,600

Members remaining in service after age 65 – Legacy Plan members, who joined TCRS prior to June 30, 2011, and remain in service past age 65, will receive a retirement benefit equal to the greater of the service retirement benefit or an actuarially adjusted benefit assuming the member had retired at age 65.

Only salary and service established as of age 65 is included in the alternate calculation. This alternate calculation only applies to those whose date of membership is prior to July 1, 2011. To better understand how alternate calculation could impact your benefit, we encourage to request a benefit estimate by calling

(800) 922-7772.

Survivor Benefits When a Member Dies Prior to Retirement

One of the most important decisions a member makes when becoming a member of TCRS is naming a beneficiary. When selecting a beneficiary, a member should consider the TCRS survivor benefit provisions in light of his or her circumstances. It is very important that TCRS beneficiary designations are kept current throughout the member’s career. Situations such as marriage, divorce, remarriage, or birth of a child do not automatically change a designated beneficiary. Prior to retirement, a member may change his or her TCRS beneficiary at any time by using the Member Self-Service online portal at MyTCRS.tn.gov. Please note that the member must designate a beneficiary for both the TCRS benefit and the 401(k) or 457(b) account separately. Information on how to designate a beneficiary can be found at RetireReadyTN.gov.

If a member dies prior to retirement, the selected beneficiary may be entitled to survivor benefits. The type of benefit payable to the beneficiary would be determined by the member’s age, creditable service, employment status, and relationship between the member and the named beneficiary. Any annuity benefits payable may be reduced by the early retirement reduction factor and/or the appropriate option factor.

To understand the survivor benefits that may be available to be paid, please see the guide, Selecting a Beneficiary, found under Forms and Guides at RetireReadyTN.gov.

TCRS Refunds Following Separation

Upon separation from service, a member may apply for a refund of the member’s contributions and interest from TCRS. A member whose total service is non-contributory will not have any member contributions credited to his or her account; therefore, he or she will not be eligible for a refund of member contributions. Employer contributions to TCRS are not refundable. Depending on the amount of service, a member may be eligible for a retirement benefit upon meeting the age requirements.

By obtaining a refund, the member loses membership in TCRS and forfeits all rights and benefits from TCRS.

Before a refund can be processed, a member must file a completed Application for Refund with TCRS.

20% of the taxable portion will be withheld for federal income tax. A member can request additional withholding by completing a W-4R form with their refund application.

Disability Benefits

A member who is not eligible for service retirement, but who can no longer engage in any type of substantial gainful employment due to a total and permanent medically determinable disability, may be entitled to disability benefits. The member must submit an Application for Disability Benefits and furnish objective medical records that conclusively document the claim. A disability retiree is subject to an annual medical re-evaluation and to an annual review of earnings until age 60. TCRS provides coverage for two kinds of disability: ordinary disability and job-related accidental disability.

Ordinary Disability Benefits are equal to 90% of the service retirement benefit that would have been payable to the member.

For anyone becoming a Legacy Plan member before July 1, 1997, accidental disability benefits are equal to 52.5% of the member’s AFC. Once the member reaches age 62 or begins receiving a social security benefit, the yearly benefit from TCRS will be reduced to 34.96% of the member’s AFC. The member is required to apply for social security. If the member does not apply for social security, TCRS benefits will be paid at a lower rate. For anyone becoming a Legacy Plan member after June 30, 1997, accidental disability benefits are equal to 90% of the service retirement benefit that would have been payable to the member. The member is not required to apply for social security.

For more information about Disability Benefits from TCRS, visit Forms and Guides at RetireReadyTN.gov.

Applying for TCRS Benefits

Before retirement or disability benefits can begin, the member must complete an application and submit it to TCRS. To apply for retirement, a member should complete the online retirement form in Member Self- Service at MyTCRS.tn.gov. To avoid loss of benefits, members are encouraged to apply for retirement as soon as they are eligible to receive benefits. TCRS can only pay benefits retroactive to the member’s date of retirement, but not to exceed 150 days prior to TCRS’ receipt of the application. Before submitting an application, members should be certain that they have enough months of service to retire.

At retirement, the member may select the Member Only Option, also referred to as the Regular Maximum Plan, which provides the maximum benefit calculated by the benefit formula payable to the member for life, or a reduced monthly benefit pursuant to one of the Joint and Survivor Plans described below. The Joint and Survivor Plans allow the beneficiary to receive a monthly benefit for the beneficiary’s lifetime after the member’s death.

Members within three years of retirement are encouraged to meet with their local RetireReadyTN plan advisor for comprehensive retirement counseling. To find your local representative and schedule a one-on-one or group meeting, please visit the Retirement Readiness Education section at RetireReadyTN.gov.

DESCRIPTIONS OF BENEFIT PAYMENT PLANS AT RETIREMENT

Single Life Annuity Plans:

Single life annuity plans are options offered to the member upon retirement that will provide a monthly benefit ceasing at the member’s death. With either of these options, any remaining balance of accumulated member contributions and interest will be paid to the surviving designated beneficiary or beneficiaries in a lump sum in the event of your death. If the payment issued in the member’s month of death is returned to TCRS by the member’s financial institution, the designated beneficiary or beneficiaries may be eligible to receive it. Otherwise, no payment will be made to the designated beneficiary of a deceased member who has chosen a Single Life Annuity Option. The designated beneficiary may be your Estate.

TCRS offers two Single Life Annuity Options:

Member Only Option: A maximum monthly benefit payable for the member’s lifetime with all benefits ceasing at the member’s death.

Social Security Leveling Option: A member may convert his or her monthly retirement benefit into an increased benefit payable prior to the date the member attains age 62 and is eligible to draw Social Security Benefits. The increase in the benefit is a portion of the amount the member would be eligible to receive from Social Security at age 62. The monthly benefit would then be reduced at age 62 for the remainder of the member’s life, ceasing at death. The reduction would be equal to the full amount the member is eligible to receive from Social Security at age 62.

Joint and Survivor Plans:

TCRS offers four types of Joint and Survivor Plans. The relationship to the member and the age of their beneficiary(s) determine the available options and the amount of the monthly retirement benefit. If a member designates their spouse, they can select any of the four options, regardless of the age difference.

If the member is not married to the designated beneficiary, referred to as a “non-spouse” beneficiary by the Internal Revenue Service, then the available Joint and Survivorship options will differ based on the adjusted age difference between the member and their designated beneficiary(s). The IRS limits survivorship benefits paid to non-spouse beneficiaries if the adjusted age difference between the member and the designated beneficiary is 11 years or more.

The adjusted age difference is calculated using the ages the member and the beneficiary will turn in the year the member retires from TCRS-covered employment and begins drawing a retirement benefit.

If multiple beneficiaries are selected, the calculations will use the age of the youngest beneficiary. For members aged 70 or older, the actual age difference between the member and benficiary is used. For members under age 70 the following formula is used to calculate the adjusted age difference: (Member’s Age - Beneficiary’s Age) - (70 - Member’s Age).

Members can only choose one benefit payment option at retirement. If a member selects multiple beneficia-ries, including a spouse and a non-spouse with an adjusted age difference of 11 years or more, they can only select the eligible Joint and Survivor options that applies to all designated beneficiaries.

Confirming Retirement Benefits

Once the retirement application has been fully processed by TCRS, the member will receive notice of the selected benefit option. At that time, if the member elected a Joint and Survivorship Plan Option and would like to make any change to the benefit option selection, the member must do so within 60 days of the date of the Retirement Notice Letter by submitting a Change of Benefit Payment Plan form. Any change in option selection may result in an overpayment or an underpayment of benefits. If the change results in an overpayment of benefits, the option change will not become effective until the member repays the overpaid amount. The member will not be permitted to change the benefit option or the member’s designated beneficiary after the 60-day period. However, a retiree may change his or her beneficiary after the 60-day period upon death of or divorce from the beneficiary, but the retiree’s benefit will not increase and the newly elected beneficiary will only be entitled to any remaining accumulated member contributions upon the retiree’s death. A retiree who selects the Member Only Option may at a later day change his or her beneficiary and may further change to a Joint and Survivorship Plan Option by repaying the difference in benefits.

TCRS can only pay retirement benefits to which the member or his or her designated beneficiary is entitled, and TCRS is required by law to recover any overpayments. Therefore, it is important that a member or his or her designated beneficiary contact the retirement program immediately if he or she notes a discrepancy or has questions regarding the monthly benefit amount.

Cost-of-Living Adjustments After Retirement

Any retired member who has received monthly retirement benefits for at least 12 full months on July 1 of each year is eligible to receive an increase in his or her retirement allowance if there is an increase in the Consumer Price Index of at least 0.5% for the preceding calendar year.

The amount of the increase will be 1% if the increase in the Consumer Price Index is between 0.5% and 0.99%. If the increase in the Consumer Price Index is 1% or more in any year, retired members will receive an amount equal to the increase in the Consumer Price Index, but not to exceed 3%. Cost-of-living adjustments are compounded each year. Adjustments appear in the July monthly retirement benefit payment.

Potential Loss of Benefits due to Conviction

Any member who is convicted in state or federal court of a felony arising out of the member’s employment or official capacity will be prohibited from receiving benefits. This prohibition applies to anyone joining TCRS after July 1, 1982 who is convicted of such a felony in a Tennessee state court as well as anyone joining on or after May 31, 1993 who is convicted of such a felony in any state or federal court. Persons elected or reelected after February 14, 2006 to a public office in the State of Tennessee consent and agree to the forfeiture of their retirement benefits from TCRS upon conviction in a state or federal court of a felony arising out of their official capacity regardless of the date the elected official became a member of TCRS. If the conviction is later overturned and the member is acquitted or is granted a full pardon, the member will be restored to all rights, privileges and benefits as if the conviction never occurred.

Any person convicted of a felony as provided above may elect, within six months of the person’s conviction, to have a monthly retirement benefit paid to whomever that person had designated as beneficiary at the time of that person’s conviction. However, the beneficiary must have been that person’s spouse or child at the time of that person’s conviction. The benefits will be payable to the beneficiary upon the person’s death provided all other eligibility requirements applicable to a beneficiary have been met. The amount of the benefits will equal the retirement benefit which would have been payable had the person retired under the Joint and Survivor Plan selected.

ADDITIONAL SAVINGS OPPORTUNITIES FOR LEGACY PLAN MEMBERS

401(k) Deferred Compensation Plan

Legacy members are also eligible to participate on a voluntary basis in the State 401(k) deferred compensation plan. The 401(k) plan is a deferred compensation plan that allows members to contribute to and choose among the investment options offered by the plan. At retirement or separation from service, the member is eligible to withdraw the accumulated balance in the member’s 401(k) plan. The amount a member has available in retirement from their 401(k) account is based on the amount saved, plus any accumulated earnings from investments. The State of Tennessee offers the 401(k) through a contract with Great-West Life & Annuity Insurance Company (“Empower Retirement” or “Empower”).

If a member chooses to participate in the 401(k) plan, then the member may choose the amount to contribute and designate whether contributions are pre-tax or after-tax (Roth) contributions. Elective contributions to the 401(k) may be made up to the IRS limit. State employees are eligible for an employer match of $1 match for every $1 contributed to the State of Tennessee 401 (k) plan each month, up to $50.

A member is immediately vested in the 401(k) and can decide how the contributions should be invested given individual goals, risk tolerance, and timeline.A member may cancel or adjust (increase or decrease) the member’s contributions, change the tax treatment of elective contributions and change investment options at any time by accessing the member’s account at www.RetireReadyTN.gov or by calling (800) 922-7772.

457(b) Deferred Compensation Plan

As an added benefit, the State of Tennessee offers a 457(b) plan for additional retirement savings. The 457(b) plan has the same investment options as the 401(k) plan. The 457(b) plans does not share a contribution limit with the 401(k) plan, so members may contribute up to the maximum contribution limit in each plan. Therefore, members may place the maximum contribution levels in both plans (Refer to Maximum Contribution Levels below). For additional information about the State 457(b) plan, please see the 401(k)/457(b) Plan Comparison and the 457(b) Plan Features and Highlights, or call (800) 922-7772.

401(k) Investment Options

There are a variety of investment options for the 401(k) plan, enabling the member to decide how his or her money should be invested given individual goals, risk tolerance, and timeline. Details about the investment options can be found at RetireReadyTN.gov.

Administrative Costs – Shows the administrative costs associated with each investment option.

Allocation of Contributions to Investment Products

Each member selects the investment option or options to which any contributions are to be directed.

A member may change investment options at any time by calling (800) 922-7772 or by accessing the member’s account at RetireReadyTN.gov.

401(k) Program Administration

Empower Retirement provides comprehensive deferred compensation plan administration, record keeping, and financial educational services for the 401(k) plan. Empower also provides intermediary services between the program and the investment providers and does not directly hold or invest contributions.

Contributions are promptly transferred to the authorized investment providers. Although the program aggregates all member accounts for investment purposes, Empower maintains separate accounting of the investments held and transactions in each 401(k) member account.

Members pay the administrative costs for the program through an annualized fee that is a percentage of member…