4.17.1 Retirement

A. Purpose

This policy is intended to describe the criteria for eligibility and the benefits and options for retirement from state service.

B. Persons Affected

All employees

C. Definitions

N/A

D. Policy and Procedures

  1. Eligibility for Participation in Retirement Programs
    1. All employees are required to participate in the Social Security Retirement System.
    2. A regular employee is one who is employed to work at least 20 hours per week for a period of at least four and one-half months, excluding students employed in positions which require student status as a condition for employment.
    3. In compliance with paragraph B.2. above, all eligible employees will be enrolled in the Teacher Retirement System (TRS) from the first day of employment except that any employee who is eligible to participate in the Optional Retirement Program (ORP), may initially enroll in that program if he or she is prepared to select a carrier on or before the first day of employment.
    4. Full-time faculty employees and certain full-time administrative employees are eligible to participate in the Optional Retirement Program. Eligible employees have 90 days from the date of eligibility, normally the first day of employment, to make a one-time irrevocable election to participate in the Optional Retirement Program. Failure of the employee to make the election within 90 days will disqualify him or her from future participation in the program. This disqualification will apply to any future employment with any institution of higher education in Texas.
    5. An employee who elects to participate in the Optional Retirement Program and later accepts a position in which he or she is not eligible to participate in ORP, will be required to participate in the Teacher Retirement System. Such employee will subsequently be ineligible to participate in ORP even if the employee later accepts a position in which he or she is otherwise eligible to participate in ORP. This disqualification will also apply to any future employment with any institution of higher education in Texas.
    6. An employee who elects to participate in ORP and is vested will be required to remain in ORP even if his or her position is later reclassified to one in which he or she would not be eligible for ORP.
  2. Vesting of Rights for Retirement
    1. Employees under TRS have vested rights after five years of creditable service.
    2. Employees under ORP vest after one year and a day of participation in the program.
  3. Contribution
    1. The employee's contribution rate for Social Security Retirement is 6.2% on the first $117,000 of the employee’s taxable gross salary. An additional 1.45% is taken out for Medicare, which has no maximum taxable gross, but if taxable gross salary is over $200,000, an additional 0.09% is deducted.
    2. Employees who participate in the Teacher Retirement System are required to contribute 6.7% of their gross pay each month. The State contributes on behalf of the employee 6.8% of the employee's gross pay. The contribution rates for TRS are set by the Legislature.
    3. Employees who participate in the Optional Retirement Program are required to contribute 6.65% of their gross pay each month. The State contributes on behalf of the employee 8.5% of the employee's gross pay. The contribution rates for ORP are also set by the Legislature. 
  4. Eligibility for Retirement Benefits under TRS/ORP
    1. Employees who participate in the Teacher Retirement System are eligible to retire at age 55 provided they have five years of creditable service with TRS. Retirement counseling and retirement estimates are available on request from either the Human Resources Office or from the Teacher Retirement System.
    2. Upon termination of employment, employees who participate in the Optional Retirement Program may retire at any age in accordance with the various options available under the terms of their agreement with their ORP carrier. Special consideration should be given to penalties imposed by the Federal Government for early withdrawal of ORP accounts. Most ORP carriers offer excellent counseling concerning retirement options.
  5. Withdrawal of TRS and ORP Accounts Prior to Retirement
    1. Monies contributed under either TRS or ORP are not available in any way to employees as long as they are still employed by the University.
    2. Applications for Refunds of TRS accounts are available in the Human Resources Office. Terminating employees should allow 120 days for the processing of an Application for Refund of TRS accounts.
    3. Application for withdrawal of vested ORP accounts is made directly with the carrier of the employee's ORP account. The carrier of the ORP account, however, is not authorized to issue a refund without first acquiring vesting certification from the Human Resources Office. 
    4. Withdrawal of non-vested accounts must be made through the University Human Resources Office. After the State contribution is returned to the State, the employee is refunded the balance.

E. Responsibilities

See Policy and Procedures section

F. Review

This policy shall be reviewed by Human Resources every five years or as legislation changes.

ORIGINALLY APPROVED:  12/01/2001

LAST AMENDED:  04/22/2008

REVIEWED:  AY 2014-15