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Texas Teacher's Retirement System


Guest ACollins
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Guest ACollins

Does anyone know why there is a MANDATORY retirement program at Texas Universities? I worked for a University, and only planned to stay for one year. I did not want to have money taken out for a retirement plan. I had no choice. I was told "If you do not sign up for it, you will not get a paycheck". Somehow, this seems illegal. I am under the impression that there are no regulations for higher education retirement plans. Therefore, they can do whatever they want. Now that I have left that institution, I am trying to get the money back from that plan. Since they have withheld the money, I was not able to make any interest on that money, and now I will have to wait almost 4 months to get that money back from the account, also losing that interest. (Not too mention paying the 10 percent penalty). Does this seem RIDICULOUS to anyone else?

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The employer can make participation in a retirement plan a condition of employment the same as any other term or condition, e.g., # of hours, amt of pay, etc. If you didnt like mandatory participation you could have rejected the job offer. As far as taxation you can always rollover your distribution to an IRA and not pay tax. It is a great way to save for retirement.

mjb

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  • 6 months later...
Guest Peaches

If you worked for a higher education institution in the State of Texas, you had an option of the TRS or ORP (Optional Retirement Program) a 403(B) which of course is better in your situation. Due to the mobility of many higher education employees the ORP is ideal. They should have provided this information to you when you were hired.

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  • 1 year later...
Guest David Lacy

Peaches: Not everyone who works in a Texas state university is eligible for ORP. All the professors are, and most professionals are, but the groundskeeper, cafeteria workers, etc are not eligible for ORP. I am guessing ACollins is not a professor. Every professor I know says they "taught" at a university, not that they "worked" at a university.

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It does not matter how any professor wants to try and embellish the situation. If you get a W2 as do most professors, you are an employee. Employees work for employers. Any professor can profess all he/she wants, that he/she "taught", but the fact is that he/she works as an employee at the university. Because a professor says so does not make it so.

Partcipation in Texas ORP is optional, you were initially enrolled in TRS and could have stayed in TRS. You were after an eligibility period given the option to elect ORP or to stay in TRS. It was your choice. It was your responsibility to read the readily available material explaining that it was optional and the conditions. Do not blame anyone but yourself for believing that person without proof.

ORP has certain vesting provisions, which are very clearly stated. I do not know what investment you chose, but you made the choice. The surrender penalty is part of whatever investment that YOU chose. The amount of salary reduction contributions is the amount that you chose. Since you knew that you would be leaving in a few months you could very well have contributed the minimum especially since leaving in less than 1 year+1 day would forfeit any vesting of employer contributions.

It is your job to protect your own money. It is solely your responsibility to chosse wisely.

I guess there is much more to learn about higher education, isn't there?

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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GBurns:

I interpreted some of the posts differently than you did (though I cannot speak as to the accuracy of the information contained in the posts) namely:

1) David Lacy was pointing out that not all employees (for example groundskeeprs)of a university in Texas are eligible for ORP, not that a professor was trying avoid being classified as an employee.

2) ACollins makes no mention of a surrender penalty, but does refer to the 10% early distribution penalty paid to the government.

3) ACollins refers only to the mandatory retirement program rather than an option to elect ORP.

...but then again, What Do I Know?

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I did sort of mix my response to both, but I do not think that it makes any difference.

RE 1) Then what was the purpose of telling us what the professors said, if not as a differentiation between "taught" and "worked" or "teaching" vs "working"? Blue blood vs blue collar?

RE 2) I do not know of a 10% early distribution penalty payable to the government. TRS which is a 403(b) plan allows withdrawal of employee contributions +5%. But it is conditioned by the investment vehicle chose. That investment vehichle will have a surrender charge and the delay that Acollins refers to.

RE 3) I should have had 2 responses 1 to ACollins and the other to David Lacy but the real difference between the 2 responses would be the substitution of TRS for ORP in one response. Other than that, almost the same response.

The mandatory nature of TRS is similar to the mandatory nature of the retirement system of nearly every large public education system, whether K-12 or University. It is one of the first things known about employment in that sector and the public sector in general. I could not imagine anyone entering a large sysytem and not having any idea what they were doing. As a result It did not cross my mind that ACollins was having a problem with the TRS 403(b) especially since he mentioned the delay and the penalty, which are more applicable to the ORP.

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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RE 1) Then what was the purpose of telling us what the professors said, if not as a differentiation between "taught" and "worked" or "teaching" vs "working"? Blue blood vs blue collar?

As I read it, the purpose was to show why David thought the employee might be in a class of employees not eligible for the ORP.

As to the other items, I understand your responses better now. Thanks.

...but then again, What Do I Know?

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WDIK

In trying to understand your interpretation, I have re-read a few times.

It could be that David Lacy was trying to "label" (or classify) ACollins, however, it comes across to me as more of a snide remark. I say "snide" because it was not necessary to choose between professors and others, it was only necessary to choose between eligibles and non-eligibles.

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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Guest Peaceandhope

GBurns said: That investment vehichle will have a surrender charge and the delay that Acollins refers to.

====================================================

Not if the money was invested with the no-load TIAA-CREF outfit.

Joel

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Joel,

Read the posts again.

ACollins gave the parameters, he/she stated what he/she was facing not what could or might have been. He/she already has something and it is not TIAA-CREF. He/she does not have TIAA-CREF so TIAA-CREF has no relevance.

By the way, Which TIAA-CREF product that would have been available to ACollins in a Texas TRS or ORP that would have no surrender charge under age 59 1/2 ?

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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ACollins Posted: Jul 15 2002, 03:55 PM

Registered User

Posts: 1

Joined: 15-July 02

Does anyone know why there is a MANDATORY retirement program at Texas Universities? I worked for a University, and only planned to stay for one year. I did not want to have money taken out for a retirement plan. I had no choice. I was told "If you do not sign up for it, you will not get a paycheck". Somehow, this seems illegal. I am under the impression that there are no regulations for higher education retirement plans. Therefore, they can do whatever they want. Now that I have left that institution, I am trying to get the money back from that plan. Since they have withheld the money, I was not able to make any interest on that money, and now I will have to wait almost 4 months to get that money back from the account, also losing that interest. (Not too mention paying the 10 percent penalty). Does this seem RIDICULOUS to anyone else?

+++++++++++++++++++++++++++++++++++++++++++++++++++++

GB: I think it is you that needs to read once again ACollins post. He does not reveal the ORP 403(b) carrier---in fact he does not reveal if he participated in the ORP or the Defined Benefit TRS. He simply says that he contributed to "a retirement plan".

You may want to check out the TIAA website where they disclose that there are no surrender charges associated with their 403(b) annuities. This has been the case ever since they began operating in 1918.

Moreover, surrender charges have nothing do with age. It is solely a function of how long one has owned the annuity contract.

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Guest Pinstripes

GBurns Posted: Oct 19 2004, 05:41 PM

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Posts: 1,453

Joined: 13-September 99

I did sort of mix my response to both, but I do not think that it makes any difference.

RE 1) Then what was the purpose of telling us what the professors said, if not as a differentiation between "taught" and "worked" or "teaching" vs "working"? Blue blood vs blue collar?

RE 2) I do not know of a 10% early distribution penalty payable to the government. TRS which is a 403(b) plan allows withdrawal of employee contributions +5%. But it is conditioned by the investment vehicle chose. That investment vehichle will have a surrender charge and the delay that Acollins refers to.

RE 3) I should have had 2 responses 1 to ACollins and the other to David Lacy but the real difference between the 2 responses would be the substitution of TRS for ORP in one response. Other than that, almost the same response.

The mandatory nature of TRS is similar to the mandatory nature of the retirement system of nearly every large public education system, whether K-12 or University. It is one of the first things known about employment in that sector and the public sector in general. I could not imagine anyone entering a large sysytem and not having any idea what they were doing. As a result It did not cross my mind that ACollins was having a problem with the TRS 403(b) especially since he mentioned the delay and the penalty, which are more applicable to the ORP.

+++++++++++++++++++++++++++++++++++++++++++++++++++++

GB:

Please note that TRS is a Defined Benefit plan not a 403(b) as you erroneously assert. In order to sell 403(b) salary reduction only arrangements in the state of Texas a company must be certified by the TRS. The TRS itself is not one of the carriers. This list is for TRS members who qualify to contribute to a salary reduction only 403(b) arrangement. It has nothing to do with those who have elected to make the Texas Optional Retirement Program (a 403(b) Defined Contribution plan) their mandatory retirement plan to which they and their employer must contribute to. The list of certified 403(b) carriers for the ORP is not the same as the certified list maintained by the TRS. Members of the ORP may make additional salary reduction only contributions to a separate 403(b) arrangement.

Peace and Hope,

Joel

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Joel, Peace and Hope, pinstripes and any other names that I have missed,

Do I sense schizephrenia?

Rather than reply to each of your alter egos, I will make 1 reply for simplicity.

Yes, the TRS itself is not a 403(b) but a 401(a) defined benefit plan.

The issues of whether we are talking about ORP or TRS or something else was addressed by WDIK and my response to WDIK.

We really do not know what ACollins has/had and there has been no further information. So like may threads we discuss the post in general terms and very often segue to something from a responder.

No one said surrender charges were based on age although is very many annuities that is so.

TIAA-CREF uses a limited number of products in this area, a major product is their GRA. The GRA has a surrender charge. As per their website:

http://www.tiaa-cref.org/administrators/em.../term_with.html

As per TIAA-CREF if you do not take the money in 120 days and pay the 2.5% you can only take it out over the extended option which is usually FIVE (5) to NINE (9) Years.

So being no-load does not mean no surrender charge. No surrender charge does not mean that there is no penalty.

Being no-load since 1918 means nothing and if the Association of American Professors (or whatever the proper name is) had not sued successfully, participants would not have been able to cash out or even transfer or rollover. Having your money locked away from you until you reach retirement age is worse than any surrender charge. As per the lawsuit lack of access and reduced earnings were just as bad and even worse than a 100% surrender charge.

In any case you still have not shown where no load out performs load. In fact 1 of your posts showed that load did not affect performance. But as usual you never have any supporting facts.

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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GB: Your insulting remarks are noted and highly objectionable. Such behavior does not lend itself to a civil discourse. Please refrain from such future behavior.

Your remarks about "TIAA-CREF" surrender charges has to do with only the TIAA Traditional Annuity contracts that are used by participating institutions for their primary retirement plan. The participating institution is not compelled to use that product. The CREF variable annuity accounts have no surrender charges for both the primary plan and the salary reduction plan.

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No insult was meant, but I was pointing out your questionable practice of using multiple names within the same thread, giving the appearance that of more opinions. That I find insulting, as a reader and poster to this Forum. What were you trying to do? Get more support for your own self? Populate the Forum? It is as near to schizophrenia as you can get to argue with or hold a detailed conversation with yourself.

The surrender charges have to do with the Traditional Annuity contract it has to do with their Group Retirement Annuities of which the Traditional is 1. The reference to Group Retirement Annuities is even in bold print on the link. There are other pages within their website that give further information, but are not needed for this discussion. ALL that is needed was that link to show that regardlwess of what you say and think TIAA-CREF itself states that they do have products that have surrender charges. These products are no load products. Only 1 example is needed to show that using your selected provider, a no load investment can have a surrender charge.

Do you yet get it? TIAA-CREF itself says that at least 1 of their no load products has a surrender charge so no load does not mean no surrender charge.

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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No insult was meant, but I was pointing out your questionable practice of using multiple names within the same thread, giving the appearance that of more opinions. That I find insulting, as a reader and poster to this Forum. What were you trying to do? Get more support for your own self? Populate the Forum? It is as near to schizophrenia as you can get to argue with or hold a detailed conversation with yourself.

The surrender charges have to do with the Traditional Annuity contract it has to do with their Group Retirement Annuities of which the Traditional is 1. The reference to Group Retirement Annuities is even in bold print on the link. There are other pages within their website that give further information, but are not needed for this discussion. ALL that is needed was that link to show that regardlwess of what you say and think TIAA-CREF itself states that they do have products that have surrender charges. These products are no load products. Only 1 example is needed to show that using your selected provider, a no load investment can have a surrender charge.

Do you yet get it? TIAA-CREF itself says that at least 1 of their no load products has a surrender charge so no load does not mean no surrender charge.

===============================================

"No insult was meant" But you could not leave it at that. Instead of asking me like a gentleman for my reasons for using different names you peppered me with three accusatory and insulting questions ending with your assertion that I am near schizo because I am holding a detailed conversation with myself. And yet you say "no insult was meant"? Give us a break! You need to take a deep breath and a long walk.

Now I will give you the reason for the multiple names. I used different computers the last couple of days and could not log on using my usual name. So rather than wait until I got back to my own computer I registered with another name. But I always tried to sign off as "Joel L. Frank". If I did not, it was an oversight but in no way was I attempting to stuff the ballot box as you in your mean spirited way accuse me of.

In my view no-load includes no surrender charges. Most observers still consider TIAA-CREF to be a no-load provider because only one of its many funds, the Traditional Annuity sold under their Group Retirement Annuity contracts is subject to a surrender charge. All of their other investment options are pure no-load. I have been told by their rep that an institution can use the Traditional Annuity without the GRA for its primary plan and then the Traditional Annuity would not be subject to the surrender charge.

I welcome your reply but only if you promise to be civil and respectful.

Peace and Hope,

Joel L. Frank

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"In my view no-load includes no surrender charges" ?? Are you now setting standards and definitions?

"Most observers still consider TIAA-CREF to be a no-load provider " It does not matter what anyone thinks, the facts and TIAA speak for themselves. No load can have surrender charges. No sales load does not mean no surrender charge. So says TIAA, your selected provider, and nothing you or any observer think can change the fact that at least 1 current no load from TIAA does have a surrender charge. In the past there were many more, but that is beside the point.

The issue is closed since TIAA says that they do have a no load with surrender charge.

mbozek,

To which LS or to which post are you referring?

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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Guest redwoods

"In my view no-load includes no surrender charges" ?? Are you now setting standards and definitions?

====================================================

There you go again with your disrespectful sarcastic remarks---why can't you control yourself and be a gentleman?

My definition comes from the industry:

Definition from investorwords.com of a no-load fund:

"A mutual fund which doesn't impose a sales or redemption charge, selling and redeeming its shares at net asset value. opposite of load fund." So TIAA should not label its Traditional Annuities that are subject to a surrender charge as no-load.

Peace,

Joel L. Frank

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Gentlemen,

Somewhat unusual, but if Joel L. Frank chooses to use multiple pseudonym's, that should not inhibit discussion. However, let's please stop the negative comments, which seem to be related to a disagreement over apples and oranges. If definitions and/or terminology are at issue, let's get them clarified. Then we can get back to productive discourse. Thanks.

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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Joel,

Let me here make a public apology for having dumped on you. I should not have done so, not only because it was of no real consequence that you used multiple names, but also this was neither the place nor time.

George

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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