June 6, 2018 - Executive Director Update: ATRS Board Helps Members/ Modifies the Phase-in for T-DROP Annuitization

The ATRS Board Modifies the Phase-in for T-DROP Annuitization Formula to Help Members

The ATRS Board just reduced the impact on current T-DROP participants who plan to convert part or all of their T-DROP balance into a supplemental monthly annuity.

Due to my interaction with members at school hall meetings, the ATRS Board has tweaked the formula for annuitization of T-DROP balances at the time of retirement. For members retiring out of T-DROP and converting all or part of their T-DROP balance into a supplemental monthly benefit, now the supplemental benefit is materially higher than recently projected. The ATRS Board balanced the need to absorb new actuarial standards with the impact the 6 year phase in of the new T-DROP annuitization would cause on extra retirements from T-DROP.

Starting immediately, all T-DROP balances accrued through the end of this fiscal year (June 30, 2018) will have an assumed rate of return of 7% for the T-DROP balance annuitized at the point of retirement.  This will prevent the annuitization amount per month from flat lining or actually decreasing over the next few years. Now the amounts will still increase to be much closer to the old formula. Also for all members in T-DROP as of June 30, 2018, the minimum assumed rate of return on all balances annuitized will be no lower than 5% (instead of a 3% assumed rate becoming effective in fiscal year 2023 as had been set in the phase in period adopted on November 13, 2017).  Hopefully this change will eliminate the pressure on this group of members to retire due to benefit projections that show declining T-DROP annuitization monthly benefits. This means that if you are in T-DROP and plan to annuitize any part of your T-DROP balance when you retire, GET A NEW PROJECTION!  If you just filed to retire from T-DROP due to the new formula's impact in a few years, you can still withdraw the retirement application and have time to think about it after getting a new projection.

For example, if a T-DROP participant has $100,000 in a T-DROP account on June 30, 2018  and the member decides to annuitize 50% of the T-DROP balance when the member retires 6 years from now, then $50,000  would be annuitized (1/2 of $100,000) with a guaranteed 7% assumed rate of return.  The balance accrued after June 30, 2018 would have a guaranteed 5% rate of return instead of a 3% assumed rate on the entire balance being annuitized according to the schedule adopted on November 13, 2017. This is good news for T-DROP participants, especially those who had planned to work longer but saw little or no additional monthly benefits since the added value of the T-DROP balance was essentially offset by the lower assumed rate of return on the whole balance being annuitized. Essentially, the ATRS Board has now modified the phase-in period on the changes to the T-DROP annuitization formula.

Monthly CBA Distributions Now Available!

When retiring out of T-DROP, establishing a Cash Balance Account (CBA) is an important option to consider.  The CBA allows you to leave all or a portion of the T-DROP balance in an interest bearing cash account.  The interest rates start at 2.5% and grow to 4% over time.

In order to make the T-DROP Cash Balance Account (CBA) program more attractive to members, ATRS now allows scheduled monthly CBA distributions.  In the past you were limited to two distributions per quarter, but now you can set up a request to receive a monthly distribution of a fixed amount.  The monthly distributions will be processed at the same time as the existing benefit payroll schedule (see ATRS website for the benefit payroll schedule).  To setup a monthly CBA withdrawal, simply complete the attached CBA Monthly Distribution Request form.  All forms received at ATRS by the 10th of any month will result in monthly deposits beginning in the same month; otherwise the deposits will start the next month.  CBA withdrawal requests in addition to the scheduled monthly distributions can be made but would require executive director approval.

Stay in Touch with ATRS and View YOUR Account Information

The ATRS website allows members to have direct access to specific member account information.  Now, approximately 14,000 members have direct account access to individualized account information.  Here is the link to the instructions to sign up: www.artrs.gov/welcome.

You can also sign up to obtain these executive director updates through your private email address.  Updates are made throughout the year such as at retirement season and other times when information needs to be shared.  Now, over 16,400 people have signed up to receive this executive director update by direct email delivery.  It is always a great pleasure for ATRS staff to learn of more ways to provide information to ATRS members, employers, beneficiaries, government officials, and the public.  The ATRS Board is committed to providing a system that is member friendly and transparent.

You can also get helpful ATRS information on the ATRS Facebook page under the name of Arkansas Teacher Retirement System.  Over 4,500 Facebook users get updates via the ATRS Facebook page.  Go to the Facebook page and "like" ATRS to get daily updates.  I try to go to the Facebook page every day to post information and answer member questions about ATRS.  In addition, if you use Twitter, you can join over 920 others by following events at ATRS and issues of interest on the ATRS Twitter page.  Remember that ATRS is here to serve you!  If you have questions, email me or call.

Respectfully,

George Hopkins

(501) 682-1820 Office
(501) 318-5998 Cell
georgeh@artrs.gov

List of Attachments:

1. CBA Monthly Distribution Request Form

 

May 24, 2018 - Executive Director Update: ATRS will be Open Memorial Day

The deadline to be a July 1st retiree or a new T-DROP participant is rapidly approaching. On July 1st, many ATRS members will enter a new phase of life as a retiree or a T-DROP participant. If your plans are set to make this change on July 1st, please do not miss the deadline. ATRS is again opening its doors on Memorial Day, for you to call ATRS or have an in person counseling session at ATRS.

For the 10th year in a row, ATRS has had several staff members volunteer to work to serve members on Memorial Day.  This year, Memorial Day is on Monday, May 28, 2017.  The office hours will be from 8:00 a.m. until 4:30 p.m.  Please know that ATRS staff is willing and ready to serve and help you by a telephone call or an in office visit if you wish.  I have again provided some summaries on retirement and T-DROP.  If you are fairly confident that you will be calling or making an in person visit, sending an email or calling 501-682-1517 can help ensure ATRS has your information prepared and ready for your counseling session. However, walk ins or calls are always welcome.

May 31, 2018 is the deadline to enter the T-DROP plan for the 2018-2019 fiscal year. If you miss the T-DROP deadline, then the next time to enter T-DROP is July 1, 2019, with a May 31, 2019 deadline.  If T-DROP is what you intend to begin on July 1, 2018, please don't miss the May 31, 2018 deadline.

Most school employees retire on a July 1st.  That means if you intend to stop work after the 2017-2018 fiscal year and retire, ATRS must have your retirement application in by May 31, 2018, in order for you to be a July 1, 2018 retiree.

Both retirement applications and T-DROP applications may be delivered to ATRS by:

• fax at 501-682-2359;
• as a scanned document attached to an email to info@artrs.gov; or
• by personal delivery to the ATRS office at 1400 West Third Street, Little Rock, AR; or
• by courier such as Federal Express (there is no delivery of Federal Express and other courier services on weekends) ; or
• by the U. S. Postal Service. ATRS will treat the postmark date as the date of receipt by ATRS, so please make sure the postmark date is stamped legibly so it can be read.

ATRS must have actual possession of the application by May 31, 2018 in order to become a July 1, 2018, retiree or T-DROP participant.

IMPORTANT: Please call ATRS at 501-682-1517 locally or 1-800-666-2877 toll free to confirm receipt of your retirement application or T-DROP application, regardless of the type of delivery.

ATRS Employers: Please send this executive director update email to all your staff via a broadcast email to all employees.

The ATRS website allows members to have direct access to specific member account information.  Now, approximately 13,000 members have direct account access to individualized account information.  Here is the link to the instructions to sign up: www.artrs.gov/welcome.

You can also sign up to obtain these executive director updates through your private email address.  Updates are made throughout the year such as at retirement season and other times when information needs to be shared.  Now, over 16,400 people have signed up to receive this executive director update by direct email delivery.  It is always a great pleasure for ATRS staff to learn of more ways to provide information to ATRS members, employers, beneficiaries, government officials, and the public.  The ATRS Board is committed to providing a system that is member friendly and transparent.

You can also get helpful ATRS information on the ATRS Facebook page under the name of Arkansas Teacher Retirement System.  Over 4,200 Facebook users get updates via the ATRS Facebook page.  Go to the Facebook page and "like" ATRS to get daily updates.  I try to go to the Facebook page every day to post information and answer member questions about ATRS.  In addition, if you use Twitter, you can join over 880 others by following events at ATRS and issues of interest on the ATRS Twitter page.  Remember that ATRS is here to serve you!  If you have questions, email me or call.

Respectfully,

George Hopkins

(501) 682-1820 Office
(501) 318-5998 Cell
georgeh@artrs.gov

List of Attachments:

1. Retirement Planner

2. Retirement FAQ

3. T-DROP FAQ