Membership in the Arkansas Teachers Retirement System (ATRS) is mandatory and is available to employees of Arkansas public schools and certain other state agencies, colleges and universities.
Retirement benefits are calculated based on the following criteria:
The average salary earned over the last 3 years in the retirement system
Years of service
Whether or not the member is non-contributory or contributory.
Any member of ATRS may receive an unreduced standard annuity at:
Age 60 with 5 or more years of service, or
- Any age with 28 years of service
Early retirement with reduced benefits are available at any age after 25 years of service or with minimum benefits after 10 years of service.
Salary
Salary is defined as any remuneration paid an employee on which the employer withholds Federal income tax. This includes any contributions paid by the employer on behalf of the employee, any employee contributions to tax-sheltered annuities and cafeteria plans, and any payment for unused sick leave.
Years of Service
Years of service for calculating retirement benefits is the number of years you have been employed by an ATRS employer (as described in the opening paragraph above) and can also include any years which you may decide to “purchase.” You may wish to purchase years if you we're employed by an ATRS employer, left that employment and withdrew your contributions, or if you have held other positions which would apply to the ATRS laws, such as:
- Out-of-STate Service
- Overseas Service
- Sabbatical Leave Service
- Private School Service
- Military Service
- Prior Unreported Service
Contributions - Contributory vs. Non-Contributory
ATRS has 2 types of plans: Contributory and Non-contributory. Effective July 1, 1999, all new members must contribute 6% of their salary, on a tax-deferred basis, which places them in the “contributory” category. Prior to that date, each member was given the option to contribute a portion of their salary, in addition to the amount contributed for them by their employer. If they elected to make these contributions, they are also considered “contributory.” If not, then their status was “non-contributory.”
All employees with a hire date prior to July 1, 1999 were provided with the opportunity, prior to June 30, 2000, to file for a change of status. If your status changed, then at the time of retirement, the calculation used to determine the annuity amount must consider separately the number of years for both contributory and non-contributory service.
Records of Your Account
Each year, ATRS mails a statement showing the balance of your contributions, accumulated interest, refundable balance, years of service and beneficiary designation. In a similar manner, Social Security mails statements every 3 years to all who contribute to the Social Security system.
All members of ATRS are also covered by Social Security. Both statements should be reviewed when received for errors and should then be filed with other important papers. As you approach retirement, contact ATRS to calculate the amount you will receive (on a monthly basis) from your ATRS annuity.
Annuity Options
Option 1 - Straight Life Annuity
Of the different options available to ATRS members, this one provides the largest possible monthly amount throughout your lifetime. However, no monthly benefits are paid to your beneficiary following your death. If you are in a contributory program and you die before you have drawn benefits equal to the amount of your contributions (plus interest), the difference is paid to your beneficiary in a lump sum.
Option A - 100% Survivor Annuity
The monthly payout is reduced under this option but following your death, your designated beneficiary will receive the same monthly payment for the balance of his or her lifetime.
Option B - 50% Survivor Annuity
Again, the monthly payout is reduced under this option but by a lesser amount than in Option A. Under Option B, your designated beneficiary will receive monthly payments calculated at 50% of your monthly benefits prior to death, for the balance of his or her lifetime.
Option C - 10 Years Certain Annuity
The monthly payout is also reduced but with this option, if you die prior to receiving 120 monthly payments, the remaining payments will be made to your designated beneficiary.
“Pop Up” Provision
If you elect either Option A or B and your designated beneficiary “pre-deceases” you, you can elect to have your monthly benefits “pop up” (increase) to the maximum amount payable under Option 1 for the remainder of your lifetime. Under Option C, you have the choice to either “pop up” or to designate a new beneficiary.
Member Disability and Survivor Benefits
ATRS members are covered by both disability and death benefits. Generally, disability benefits do not begin until 6 months after ATRS receives the disability application.
Your designated beneficiary is eligible for survivor benefits. Beneficiaries of both active and retired ATRS members are eligible to receive the lump sum benefit. Beneficiaries of retired members may be eligible for continued monthly benefits, in addition to the lump sum, depending on the option selected by the retiree at the time of retirement.
The lump sum benefit is $10,000 for any member with only contributory service and $6,667 for those with only non-contributory service. This is prorated for those with a combination or contributory and non-contributory service.
ATRS has developed an optional program, Teacher Deferred Retirement Option Plan (T-DROP), for members with 28 or more years of service.
To participate, members of ATRS technically “retire,” while continuing to work and draw regular income from an ATRS employer. However, during this time of working, no further credit for years of service is earned.
Instead, your regular retirement benefits are “frozen” at the point of retirement. As a T-DROP employee, each month a portion of what would have been received as a retirement annuity is deposited into that member’s special T-DROP account with ATRS.
At the time you wish to stop working entirely, you would then begin drawing your ATRS annuity. In addition, you can elect to have the funds which have accumulated in your T-DROP account either paid out monthly, in addition to the regular annuity you are receiving, or you can elect to receive these funds in a lump sum. If you receive a lump sum, these funds are no longer under the control of ATRS and instead are completely under your control, allowing you the freedom to invest these funds and maximize the interest.
Remember, the maximum time T-DROP funds earn interest from ATRS is 10 years. Therefore, you will probably only want to continue working in the T-DROP programs for at most 10 years after retirement and then retire completely, withdrawing all T-DROP funds.
In the interest of space, this is not an exhaustive study of ATRS. More details are available by contacting ATRS for additional materials or information. Please note that ATRS continues to state that their retirement counselors are not certified financial advisors. Therefore, it is wise to seek advice and planning assistance from an accountant or financial planner, such as those offered by Educators Financial Seminars, who can develop an overall plan for your financially secure retirement.