KTRS/ORP Comparison
For employees in positions requiring a minimum of a Bachelor's Degree
Y ou have a choice in selecting one of four retirement plans. These are the traditional Kentucky Teachers’ Retirement System (KTRS) or one of three Optional Retirement Plans (ORP’S). The three optional retirement plans are ING, TIAA-CREF and VALIC.
If you select the KTRS, your contribution will be 7.16% of your gross pay. The University will contribute 14.84% of your gross pay and this money will be forwarded to the KTRS. For ative members hired prior to 07/01/2008, your contribution will be 6.33% of your gross pay and the University will contribute 14.01 %. You become vested, i.e., entitled to a retirement annuity after five years of service. Your KTRS contribution is a pre-tax contribution and the amount is exempt from Federal, State and Social Security taxes. Your contribution is subject to the Morehead city tax of 1.5% and Rowan Count tax of 1%. If you leave MSU employment with less than five years of credited service, you have the options of 1) rolling over your account balance into an Individual Retirement Account (IRA) or another qualified retirement plan, 2) accepting a refund of your contributions or 3) leaving your account balance in the KTRS. If you take a refund, it will be subject to a 10% federal excise tax if you are under the age of 59 ½ and 20% of your refund will be withheld (in escrow) for federal income tax since this money has not yet been taxed. The KTRS is a Defined Benefit Plan, which means your annual retirement annuity is based upon your high three or five years of salary depending upon your total length of service. Participation in the KTRS provides monthly survivor benefits, a $2,000 death benefit for active members, $3,000 for retirees, long term disability (LTD) benefits after five years of service and medical insurance for retirees.
If you select one of the optional retirement plans, your contribution will be 6.33% of your gross pay. The University will contribute 8.74% of your gross pay to the annuity company of your choice, and this money (both your contribution and the MSU contribution) will be forwarded to that annuity company. The University will submit the remaining 5.27% of its 14.01% contribution to the KTRS. This contribution is required by state statute and is applied to the plan’s accrued liability to offset losses resulting from your non-participation in the KTRS. This mandated amount is determined each year and therefore is subject to change. With any of the ORP’s, you become immediately vested, which means, upon termination of employment, you retain your 6.33% contribution and the 8.74% university contribution. With the ORP’s your contributions are exempt from Federal and State taxes. They are, however, subject to Social Security tax, Morehead city tax of 1.5% and Rowan County tax of 1%. With the ORP’s, your investment options are greater, depending upon the degree of risk you are willing to take in making your investments. Also, with the ORP’s there are management and administrative fees that you will be required to pay and there are no survivor, death, or LTD benefits and no medical insurance upon retirement.
Since your IRREVOCABLE decision on these retirement options will directly effect your paycheck, it is imperative that you make a decision as soon as practicable so you can receive your first paycheck on a timely basis. If you have any questions, we will be glad to assist you. Please stop by the Office of Human Resources or telephone 606-783-2097 e-mail Angela Thompson, a.thompson@moreheadstate.edu.
Comparisons Between Kentucky Teacherss' Retirement System (KTRS) and Optional Retirement Plan (ORP's)
Effective July 1, 2010
|
Retirement
Options for
Faculty and
Professional
Staff
|
Eligibilty |
Employee
Contribution
Rate |
University
Contribution
Rate |
Death
Benefits |
Medical
Coverage
When
Retired |
Disability
Benefits
(After 5
years
service) |
Survivors
Benefits
(monthly) |
Kentucky Teachers' Retirement System
For actve members
hired prior to 07/01/2008
|
Faculty and
Executive
Admin.,
Managerial or
Professional
Positions |
6.33%
|
14.01%
|
Yes
$2,000 for
active
employee
$3,000 for
retired
employee |
Yes
|
Yes, also
can accrue
up to six
months of
sick leave
toward
retirement |
Immediately |
Kentucky Teachers' Retirement System
For new members effectve 07/01/2008
or after |
Faculty and
Excecutive
Admin.,
Managerial or
Professional
Possistions |
6.33%
|
14.01%
|
Yes
$2,000 for
employees
$3,000 for
retired
employees
|
|
|
|
TIAA-CREF
ORP |
Faculty and
Executive,
Admin.,
Managerial
or
Professional
Positions |
6.33%
|
8.74%*
|
No
|
No
|
No
|
No
|
VALIC -
ORP |
Faculty and
Executive
Admin.,
Managerial or
Professional
Positions |
6.33%
|
8.74%*
|
No
|
No
|
No
|
No
|
ING -
ORP |
Faculty and
Executive
Admin.,
Managerial or
Professional
Positions |
6.33%
|
8.74%*
|
No
|
No
|
No
|
No
|
Voluntary
Tax
Deferred
Annuity
Plans, 403(b), 457, 401k |
All
Employees |
Voluntary,
up to
statutory
limits |
None
|
No
|
No
|
No
|
No
|
*University is mandated by law to submit 5.67% of its 14.01% retirement contribution to the KTRS on all employees selecting an Optional Retirement Plan. This does not entitle the ORP participant to any KTRS benefits, but is a payment to reduce the unfunded liability of KTRS.
**Regular full-time employees are allowed to make pre-tax payroll deductions to any of the University’s approved 403 (b) plans up to the statutory limit.
