For members enrolled in the: DB Defined Benefit Plan DC Defined Contribution Plan CO Combined Plan

Selecting a Plan of Payment

Plans of payment available

To plan successfully for retirement, it is important to be familiar with your payment options and to consider your financial needs in retirement.

Your considerations should include:

Your health and age at retirement
The need for survivor benefits
Availability of other financial resources
Anticipated financial obligations
Reemployment opportunities
Potential Social Security benefits
Whether or not you are obligated under a court order to select a plan of payment that provides a continuing monthly benefit to a former spouse after your death

At retirement, you must select a plan of payment from among several different actuarially equivalent plans. All plans provide you with lifetime benefits but vary in the benefits provided to survivors. If you are married, review the spousal consent requirement below.

If a court order requires you to leave a continuing monthly benefit to a former spouse or spouses upon your death, you must submit a copy of the court order to STRS Ohio with your Service Retirement Application. Any amounts payable due to court orders must remain in place during the lifetime of that beneficiary.

There are three basic plans of payment and a Partial Lump-Sum Option Plan (PLOP).

Plan I — Single Life Annuity
Plan II — Joint and Survivor Annuity
Plan III — Annuity Certain
PLOP

As you read this section, it may be helpful to refer to the Service Retirement calculator which will allow you to estimate monthly benefits under the different plans of payment.

Plan I — Single Life Annuity

The Single Life Annuity plan provides maximum monthly benefits for your lifetime. This plan does not provide continuing monthly payments to a survivor.

At your death, if your total benefit payments were less than your contributions, your remaining contributions will be paid to your beneficiary. It takes approximately two to three years of retirement benefit payments to exhaust member contributions. After monthly retirement benefit payments have exceeded member contributions, nothing is payable to a beneficiary.

If you choose a Single Life Annuity plan at retirement and later marry, you may change your plan to a Joint and Survivor Annuity with your new spouse as beneficiary within the first year of your marriage. This is the only circumstance in which you may change a Single Life Annuity plan.

A copy of your marriage certificate must accompany the application to change to a Joint and Survivor Annuity. The new selection is effective on the date the application is received by STRS Ohio and the new benefit amount is paid beginning on the first of the next month.

Plan II — Joint and Survivor Annuity

Under the Joint and Survivor Annuity, you will receive a reduced lifetime monthly benefit. Upon your death, one or multiple primary beneficiaries receive lifetime monthly benefits. There are four options under this plan of payment:

Options 1, 2 and 3 apply to a single primary beneficiary (see below).
Option 4 applies to multiple primary beneficiaries (see below).

Under this plan of payment, if your primary beneficiary predeceases you and, if at your death, the total monthly benefit payments were less than your contributions, your remaining contributions will be paid to your secondary beneficiary.

Single primary beneficiary

Option 1: Upon your death, the primary beneficiary receives the same monthly benefit you received.
Option 2: Upon your death, the primary beneficiary receives one-half the monthly benefit you received.
Option 3: Upon your death, the primary beneficiary receives a specific dollar amount or percentage that you designate. The amount you designate must be at least $50 per month and cannot exceed 100% of your benefit.

If the primary beneficiary is not your spouse, the Internal Revenue Service (IRS) may limit the percentage of the benefit that you can designate to this person. Contact us for additional information on these limitations.

Under these three Joint and Survivor Annuity options, there are two basic choices.

With reversion: If you select this choice, you may revert to the Single Life Annuity plan of payment if:

Your beneficiary dies before you. A copy of the death certificate must accompany the application to revert to the Single Life Annuity plan. The effective date of the new benefit amount is the first day of the month following the beneficiary’s death.
Your marriage to the beneficiary terminates, provided that you have written consent from your former spouse or the appropriate court documentation authorizing such a change. The new selection is effective on the latter of the date the application is received by STRS Ohio or the date of divorce. The new benefit amount is paid the first of the next month.

Also, if a Joint and Survivor Annuity with reversion is selected and a non-spouse is named at retirement and you later marry, you may reselect your spouse as the new beneficiary within the first year of the date of your marriage.

Without reversion: With this choice you may never revert to a Single Life Annuity payment. Neither the plan of payment nor the primary beneficiary may be changed after retirement. You maintain this plan of payment even if your beneficiary dies or your marriage to the beneficiary terminates.

With Options 1 and 2 you can select a guarantee feature that provides benefits to a secondary beneficiary for a specific number of years from your retirement date. A guaranteed period is provided at no cost based on the age of both you and your beneficiary. You may extend the guaranteed period by taking a reduction in your monthly benefit amount. The guaranteed period may be any number of years up to an actuarially determined maximum and is selected when applying for retirement.

If both you and your primary beneficiary die before the end of the guaranteed period, a monthly benefit is paid to the secondary beneficiary for the remainder of the guaranteed period. If you name more than one secondary beneficiary, a lump-sum payment representing the present value of the remaining payments is divided equally and paid to the beneficiaries.

If the secondary beneficiary is a legal entity such as a trust, charity or church, a lump-sum payment of the present value of any remaining payments will be made.

If you or your primary beneficiary outlive the guaranteed period, benefits continue for your lifetime and the lifetime of your primary beneficiary, but the secondary beneficiary would not receive benefits.

Multiple primary beneficiaries

Option 4: Members may elect to provide continuing lifetime benefits for up to four primary beneficiaries under a Joint and Survivor Annuity. You may specify percentages of your benefit or a flat dollar amount for each beneficiary; however, the total payable to all beneficiaries cannot exceed the amount payable to you.

For example, upon your death, one beneficiary could continue to receive 30% of your benefit, while a second could continue at 20%, and a third and fourth could continue at 10% each. Your benefit will be reduced based on the ages of the beneficiaries and the amount of the benefit provided to each beneficiary. The percentages designated to beneficiaries do not have to equal 100%.

Unless directed by a court order, you cannot provide a benefit that is less than 10% of the benefit you will receive. If a beneficiary is not your spouse, the IRS may limit the percentage of the benefit that you can designate to this person.

At your death, monthly benefits will be paid to the beneficiaries you designated at retirement. If a beneficiary dies before you, contact us to increase your monthly benefit by the amount of the reduction taken for that beneficiary. Benefit amounts payable to the other beneficiaries after your death will not change.

If you select this choice, you may change your plan of payment only if:

One of the beneficiaries is your spouse and your marriage terminates, provided you have written consent from your former spouse or the appropriate court documentation authorizing such a change. The new selection is effective the latter of the date the application is received by STRS Ohio or the date of divorce. The new benefit amount is paid the first of the next month.
All beneficiaries are non-spouses and you get married after retirement. Within the first year of the date of your marriage, you may reselect a plan of payment with your new spouse as beneficiary. You may retain up to three beneficiaries you selected at retirement; however, the total monthly amount payable to all beneficiaries at your death cannot exceed the monthly benefit paid to you.

Plan III — Annuity Certain

The Annuity Certain plan provides monthly benefits for your lifetime. In addition, your beneficiary receives benefits for a specific number of years from your retirement date. The guaranteed period may be any number of years up to an actuarially determined maximum and is selected when applying for retirement.

If your death occurs before the guaranteed period ends, your beneficiary receives the same monthly benefit until the guaranteed period expires. If you name more than one person as beneficiary, a lump-sum payment, representing the present value of the remaining payments, is divided equally and paid to the beneficiaries.

If the beneficiary is a legal entity such as a trust, charity or church, then a lump-sum payment of the present value of any remaining payments will be made.

If you outlive the guaranteed period, benefits continue for your lifetime but the named beneficiary would not receive benefits.

If you choose the Annuity Certain plan at retirement, you cannot reselect a different plan after retirement. However, you may name a different beneficiary for the remaining years on the guaranteed period.

PLOP

The PLOP allows you to take an amount from six to 36 times the monthly Single Life Annuity benefit in a lump sum at retirement. The PLOP must be elected in $1,000 increments, unless the minimum or maximum amount is selected. Monthly benefits still begin with your retirement date and are payable for life, but they are reduced to reflect the amount taken up front in a single payment. A plan of payment for your lifetime retirement benefits — Single Life Annuity, Joint and Survivor Annuity or Annuity Certain — must be selected for determining the remainder of your lifetime benefits.

Spousal consent

If you are married on your benefit effective date, your spouse must consent to your selection if you have chosen one of the following:

Plan I — Single Life Annuity
Plan II — Joint and Survivor Annuity
- Providing your spouse with less than one-half of the benefit, or
- Providing benefits for a non-spouse beneficiary.
Plan III — Annuity Certain
PLOP
- Any plan that includes a PLOP payment.

Your spouse may consent to your selection of any of these plans by signing the spousal consent that is part of the Service Retirement Application before a notary public.

Without spousal consent, you will receive a Joint and Survivor Annuity with one-half to beneficiary (with reversion) and no PLOP payment.

Spousal consent is not required if:

You are required to elect a plan of payment pursuant to a court order and your current spouse is also a beneficiary under that plan to receive a survivor annuity of at least 50% of the remaining available survivor benefit if less.
You are required to provide an amount to a former spouse or spouses pursuant to a court order or orders that is the maximum amount payable in a Joint and Survivor Annuity plan of payment.

Changing a plan of payment after retirement

After retirement, the opportunity to select another plan of payment depends on the plan chosen at retirement. Only certain circumstances allow this opportunity, as noted below. You should keep these circumstances in mind as you select your plan of payment at retirement.

Single Life Annuity

If you choose a Single Life Annuity plan at retirement and later marry, you may change your plan to a Joint and Survivor Annuity with your new spouse as beneficiary within the first year of the date of your marriage. This is the only circumstance in which you may change a Single Life Annuity plan.

Joint and Survivor Annuity with reversion

If you select this choice, you may revert to the Single Life Annuity plan of payment if:

Your beneficiary dies before you. A copy of the death certificate must accompany the application to revert to the Single Life Annuity plan. The effective date of the new benefit amount is the first day of the month following the beneficiary’s death.
Your marriage to the beneficiary terminates, provided that you have written consent from your former spouse or the appropriate court documentation authorizing such a change. The new selection is effective on the latter of the date the application is received by STRS Ohio or the date of divorce. The new benefit amount is paid the first of the next month.

Joint and Survivor Annuity without reversion

With this choice you may never revert to a Single Life Annuity payment. Neither the plan of payment nor the primary beneficiary may be changed after retirement. You maintain this plan of payment even if your beneficiary dies or your marriage to the beneficiary terminates.