841  Retirement Plans

Approved by President
Effective Date: June 5, 2017
Responsible Division: Business and Finance
Responsible Office:  Human Resource Services
Responsible Officer:  Assistant Vice President, Human Resource Services

I. Purpose

This policy communicates the state-supported retirement programs available to employees of Middle Tennessee State University (MTSU or University).

II. Introduction

A.  MTSU offers two (2) state-supported retirement programs. The primary program, Tennessee Consolidated Retirement System (TCRS), is open to all employees of the State of Tennessee; regular non-exempt MTSU employees are provided benefits under this program. The secondary program, the Optional Retirement Program (ORP), is open to regular faculty and exempt staff employees. In addition, visiting lecturers are eligible to participate in the ORP. Regular faculty and exempt staff employees may choose to enroll in either the TCRS or the ORP.

B.  Both retirement programs, the TCRS and the ORP, have a Legacy Plan and a Hybrid Plan, and eligibility is based on date of hire. Employees hired on or before June 30, 2014 are eligible to participate in the Legacy Plan, which is a non-contributory plan. Employees hired on July 1, 2014 or later are eligible to participate in the Hybrid Plan, which is a contributory plan.

C.  All rights to retirement plan benefits for employees of MTSU are governed by the laws and regulations established by the State of Tennessee and/or the federal government. For employees participating in the ORP, employee rights to plan benefits also are governed by the ORP vendors' regulations and the contract between the employee and the ORP vendor(s).

III. Eligibility

A.  All regular full-time employees of MTSU shall be members of a state-supported retirement plan as a condition of employment, subject to eligibility provisions.

B.  For regular part-time employees, membership in a state-supported retirement plan is optional.

C.  Employees must continue to participate in a retirement plan as long as they remain in a regular status. Breaks in service, other than terminations, do not affect eligibility for participation.

D.  The following is a non-inclusive list of employees not eligible to participate in a state-supported retirement plan:

1.  Students;

2.  Temporary employees;

3.  Interns and externs;

4.  Non-U.S. citizens who do not pay Social Security or Medicare taxes.

IV. Electing a Retirement Plan

A.  An eligible employee who is not a member of the TCRS and has not accumulated creditable service thereunder as a member of a local retirement fund having rights under the TCRS, may elect membership in either the TCRS or ORP.

B.  An eligible employee who is a member of the TCRS or a local retirement fund having rights under the TCRS, and who is otherwise eligible to join the ORP, may elect to participate in the ORP in lieu of continuing contributions to, and accumulating creditable service in, the TCRS while employed at MTSU.

1.  Any employee who elects to cease membership in the TCRS and commence membership in the ORP is subject to the transfer process in this policy, which includes submitting written notice using the Election to Transfer Membership from TCRS to ORP form.

2.  As stated on the form, an employee who transfers membership from the TCRS to the ORP will thereafter be ineligible to accumulate creditable service in the TCRS during such period(s) as he/she is employed.

C.  The Notice of Election to Participate in the ORP or TCRS form shall be used by employees in designating an election. The completed form shall be kept on file by Human Resource Services.

1.  If no election is made, the employee shall be deemed to have elected the TCRS.

2.  Employees electing the ORP must complete the ORP Premium Distribution Specification Form and the application material for the selected vendor(s).

V. Contributions

A.  Employees hired on or before June 30, 2014.

1.  For employees participating in the TCRS, employer contributions are calculated on the employee’s eligible compensation amount and paid at the rate determined on a biennial basis by the actuary. Shortly after each valuation, the TCRS will notify MTSU of its new employer contribution rate and effective date.

2.  For employees participating in the ORP, employer contributions will be paid at ten percent (10%) of eligible compensation, up to the social security wage base and eleven percent (11%) of eligible compensation above the social security wage base.

B.  Employees hired on or after July 1, 2014.

1  For employees participating in the TCRS, employer contributions are calculated on the employee’s eligible compensation amount and paid to a defined benefit plan and five percent (5%) to a defined contribution plan. The employer contribution is determined by the actuary and subject to change. The mandatory employee contribution is five percent (5%) and paid to a defined benefit plan. Employees will also be auto-enrolled into the 401(k) plan at a contribution rate of two percent (2%). The employee may opt out of the auto-enrolled 401(k) within thirty (30) days of notification of enrollment from the 401(k) vendor. The employee may also change the 401(k) contribution amount at any time. Employees shall receive up to fifty dollars ($50.00) per month match in the 401(k) if enrolled.

2.  For employees participating in the ORP, employer contributions will be paid at nine percent (9%) of compensation and the mandatory employee contribution will be five percent (5%). Employees will also be auto-enrolled into the 401(k) plan at a contribution rate of two percent (2%). The employee may opt out of the auto-enrolled 401(k) within thirty (30) days of notification of enrollment from the 401(k) vendor. The employee may also change the 401(k) contribution amount at any time. Employees shall receive up to fifty dollars ($50.00) per month match in the 401(k) if enrolled.​

For employees hired after July 1, 1996, the annual limit for employer contributions to either retirement program (TCRS or ORP) made on behalf of employees will be subject to applicable federal and state limits. Additionally, for employees participating in the ORP, there is also an annual aggregate contribution limit for contributions to the ORP and all other tax deferred programs. This limit is defined on an annual basis by the IRS.

VI. Transfers

A.  Transfers from the TCRS to the ORP.

1.  Effective April 4, 2001, T.C.A. § 8-35-403 was amended to permit an employee who is eligible to participate in the ORP, but who elected to participate in the TCRS, to transfer membership from the TCRS to the ORP. The change will be effective the first (1st)  day of the month following thirty (30) days written notice to TCRS and MTSU.

Any employee who elects to transfer funds in the ORP must execute the Election to Transfer Funds from TCRS to ORP form at least thirty (30) days prior to the payroll date in which the change is to be effective.

2.  Employees hired on or after July 1, 1981 through June 30, 2014 are non-contributory members. Contributions made by the employer are not transferable. Employees executing this action will transfer membership only since all contributions were made by the employer.

3.  Employees hired prior to July 1, 1981 (when contributions to the TCRS were paid jointly by MTSU and the employee) will transfer all employee contributions to the TCRS. The portion of the employer’s contribution made on behalf of the employee after July 1, 1981, plus any accrued interest, are fully transferable to the ORP. Only contributions made by the employee through payroll deduction, or contributions made by the employer on behalf of the employee under the non-contributory plan, are transferable. Such transfer of contributions constitutes a termination of membership in TCRS and a waiver of all rights and benefits under TCRS.

4.  Employees hired after July 1, 2014 (when contributions to the TCRS are paid jointly by MTSU and the employee) will transfer all employee contributions made to the TCRS. Contributions made by the employer are not transferable.

5.  Employees reclassified from a non-exempt to an exempt position may redirect contributions from the TCRS to the ORP.

a.  Employees with a hire date after July 1, 1981 through June 30, 2014 will transfer membership only. Employer contributions are non-transferable.

b.  Employees with a hire date prior to July 1, 1981 or after July 1, 2014 will transfer all employee contributions plus any accrued interest to the ORP. Employer contributions are non-transferable.

B.  Transfers from the ORP to the TCRS.

1.  Employees hired prior to January 1, 2005 were given a one-time opportunity to transfer membership from the ORP to the TCRS.

2.  ORP members hired after January 1, 2005 with five (5) years of full-time equivalent creditable service have a one (1)-time transfer option to change from ORP to TCRS. The cost to change is an actuarially determined contributions percentage plus 7.5%.

3.  This election to transfer from the ORP to the TCRS must be made and filed not later than the end of the calendar year following the year that five (5) years of service is achieved.

C.  Transfers within the ORP.

1.  Employees who participate in the ORP may direct employer contributions made on their behalf to one or more of the vendors designated to provide annuity contracts under the State of Tennessee ORP.

2.  Once funds are on deposit with a designated company, the participant may move those funds among the different investment accounts within the ORP vendor. The participant may authorize such internal transfers by telephone or via the vendor’s website.

D.  Vesting and Creditable Service.

1.  Employees who are enrolled in the TCRS must accrue five (5) years of full-time equivalent retirement creditable service to be vested and receive a service retirement benefit. Five (5) years of full-time equivalent retirement creditable service must also be accrued to be eligible for ordinary disability retirement under the TCRS. No specific amount of creditable service is required for accidental disability under these plans.

2.  ORP benefits are vested immediately, and lifetime distributions may be started at any time after separation, subject to IRS regulations.

E.  Breaks in Service. Returning employees with an original hire date prior to July 1, 2014 have the following options available:

1.  Employees vested in the Legacy Plan (non-contributory) with a break in service may return to the Legacy Plan upon re-employment.

2.  Employees not vested in the Legacy Plan (non-contributory) with a break in service of less than seven (7) years may return to the Legacy Plan upon re-employment.

3.  Employees not vested in the Legacy Plan (non-contributory) with a break in service of seven (7) or more years must enroll in the Hybrid Plan (contributory).

F.  Eligibility to Retire.

1.  Employees hired on or before June 30, 2014 and enrolled in the TCRS or the ORP Legacy Plan.

a.  For employees participating in the TCRS, the following apply:

(1)  Service retirement. Age sixty (60) and vested or thirty (30) years of service.

(2)  Early retirement. Age fifty-five (55) and vested or twenty-five (25) years of service.

b.  For employees participating in the ORP, benefits are vested immediately and lifetime distributions may be started at any time after separation from service, subject to IRS regulations.

2.  Employees hired on or after July 1, 2014 and enrolled in the TCRS or ORP Hybrid Plan.

a.  For employees participating in the TCRS, the following apply:

(1)  Service retirement. Age sixty-five (65) and vested or Rule of 90 (age and service years total ninety [90]).

(2)  Early retirement. Age fifty-five (55) and vested.

b.  For employees participating in the ORP, benefits are vested immediately and lifetime distributions may be started at any time after separation from service, subject to IRS regulations.

c.  There is no mandatory retirement age for employees. The effective date of retirement for all employees, including faculty, is usually the day following the last day in an active pay status. Retirement dates for persons with academic year appointments will be generally December 31, May 31, June 30, or July 31; generally flex-year appointments end July 31. For persons teaching summer school, retirement will be delayed until the end of the month following completion of the assigned summer term.

3.  ​Separation from Service Prior to Retirement

a.   TCRS. For TCRS members who separate from service prior to retirement, the following options are available:

(1)  Employees who separate and accept employment at another state agency shall have membership and contributions continued at the new agency.

(2)  Employees who have achieved vested service may leave funds intact until a benefit is requested at retirement.

(3)  Employees, upon separation from service, may apply for a refund of their accumulated employee contributions and interest. Employer contributions to the defined benefit portion of the Hybrid Plan are not refundable. By obtaining a refund, he/she gives up TCRS membership and all rights and benefits in the retirement system.

b.  ORP. For ORP members who separate from service prior to retirement, the following apply:

(1)  Employees who separate and accept employment at another participating institution may choose to have membership and contributions continued at the new institution.

(2)  All funds contributed by another state institution and/or MTSU, and funds contributed by the employee prior to July 1, 1981 and after July 1, 2014, remain intact and continue to accrue interest and dividends until retirement. An exception may apply for employees who have separated from service and have a de minimis amount less than fifteen thousand dollars ($15,000.00) in total accumulations in the ORP. Depending upon ORP company regulations, such employees may be eligible for a lump sum distribution, a rollover to an Individual Retirement Account, or a rollover to another qualified retirement plan as specified in Section 401(a) of the Internal Revenue Code. Verification of an aggregate current balance of less than fifteen thousand dollars ($15,000.00) for de minimis distributions shall be provided by the participant in the form of current quarterly statement(s). Both forms must be returned to the vendor(s) in order for the lump sum distribution to be processed

(3)  If a participant has separated from service and is receiving social security disability benefits from the Social Security Administration due to the participant’s disability, the participant may, upon his/her written request, receive a lump sum distribution from the participant’s account(s) each year. The following shall apply:

(a)  The aggregate total of each annual distribution from all of the participant’s accounts shall not exceed twenty-five thousand dollars ($25,000.00).

(b)  Each annual distribution shall be made in any manner permitted by the vendor(s) holding the accounts but only upon receipt by the state institution and/or MTSU of documentation confirming the participant’s continued receipt of social security disability benefits. Once the participant attains the age requirement for receipt of old age and survivors benefits under Title II of the Federal Social Security Act, the participant shall no longer be required to provide such documentation in order to receive an annual distribution.

(c)  Distribution of contributions shall require the completion of forms for the participant’s vendor(s).

(d)  Verification of contributions and separation from service information shall be provided by the last employer.

 c.  Re-employment of Retirees.

(1)  Re-employment of retirees, who are receiving retirement benefits from the TCRS or the ORP, is monitored through the State Retirement System. Retirees must have a break in service for a minimum of sixty (60) days, unless an exception has been applied for and approved. All re-employed retirees must participate in Social Security.

(2)  When a retiree is re-employed, he/she will be required to complete the appropriate form. TCRS retirees must complete the Temporary Employment Report form, and MTSU shall submit the form to the TCRS. ORP retirees must complete the Optional Retirement Program (ORP) Part-time Re-employment Certification/Waiver form for MTSU’s files. New forms for re-employed TCRS and ORP retirees must be completed for each twelve (12)-month period and certify the following requirements have been met:

(a)  Retirees may be re-employed without a loss of retirement income up to, but no longer than, one hundred twenty (120) working days, or the equivalent nine hundred (900) hours, within the twelve (12)-month period immediately following the date of re-employment.

(b)  Retirees may be re-employed in a teaching position without loss of retirement income for a maximum of eighteen (18) semester hours (twenty-four [24] quarter hours), providing the total salary paid to any such retiree for teaching during the twelve (12)-month period does not exceed his or her pro rata share of the average salary being paid at MTSU for the academic discipline concerned.

(c)  A disability retiree may return to work for any state employer without loss of retirement benefits provided he/she does not earn more than the substantial gainful activity amount determined each calendar year by Social Security in the twelve (12)-month period from the date of re-employment and does not exceed one hundred twenty (120) working days, or the equivalent nine hundred (900) hours.

(d)  The entire compensation payable to the retiree for such work is not more than sixty percent (60%) of the annual full-time salary received by the member in the year immediately prior to retirement. This limit on salary increases by five percent (5%) for each year since the member’s retirement.

(3)  Temporary Employment. Retirees are generally re-employed as temporary employees and are limited to nine hundred (900) hours of work in a twelve (12)-month period.

(4)  Regular Full-time Employment. Retirees who are re-employed with an expected duration of twelve (12)-months or more must participate in retirement and must agree to waive any retirement benefits received from a State of Tennessee supported retirement plan during the period of regular employment.

(5)  Regular Part-time Employment. Retirees who are re-employed as regular part-time have the option to participate in a retirement plan. If the part-time employee chooses to participate in a retirement plan, any retirement benefits from a State of Tennessee supported plan must be waived during the period of regular employment.

​​Forms:

Election to Transfer Membership from TCRS to ORP

Notice of Election to Participate in the ORP or TCRS form

ORP Premium Distribution Specification Form

Temporary Employment Report

Optional Retirement Program (ORP) Part-time Re-employment Certification/Waiver

Revisions: none.

Last Reviewed: March 2022.

References: T.C.A. § 8-35-403.