Optional Retirement Plan (ORP)

The ORP is an optional defined contribution plan under Internal Revenue Code 401(a). It is an alternative retirement plan provided by a private carrier for academic and unclassified employees of Louisiana colleges, universities, and community colleges. The ORP is available to employees of the Board of Regents, University of Louisiana System Board of Trustees, Board of Supervisors of Louisiana State University and Agricultural and Mechanical College, Board of Supervisors of Southern University and Agricultural and Mechanical College, or their successors, Louisiana Community and Technical Colleges Board of Supervisors, and any other constitutionally established board that manages institutions of higher education.

Eligibility to participate in the ORP is determined by job classification. It is not based on years of service or salary level. The ORP, available since 1990, currently offers the following providers: ING Financial Services, Teachers Insurance and Annuity Association-College Retirement Equity Fund (TIAA-CREF), and VALIC. Contracts with these providers expire June 30, 2010. Links to the carrier websites are provided below.

An ORP account is owned by the member. There is no waiting period to join the ORP. The member’s contribution is eight percent of salary, less a 0.1 percent administrative fee to the Teachers’ Retirement System of Louisiana (TRSL). The employer’s contribution, which changes annually based upon actuarial normal cost calculations, has historically been between five and seven percent of salary. These contributions—the net employee contribution of 7.9 percent plus the employer contribution—are invested by the designated ORP carrier in the options chosen by the member. The performance of the member’s investments determines the retirement benefit due. Projections of possible benefits are provided, but not guaranteed, by the ORP carriers.

TRSL or ORP: Which one?

You should look at your career expectations carefully and realistically before deciding whether to enroll as a member of TRSL or as a member of the ORP. To help you make the decision, we have included a Comparison of Benefit Features below and an ORP Comparison Calculator that will give you an idea what your benefits would be with TRSL or ORP. The calculator estimates depend entirely on projected data that you enter.

If you are reasonably sure you won't continue in your current position, or don't plan to remain in Louisiana for at least 5 years, then the ORP may be a good idea because it would be portable to most other U.S. colleges and universities.

However, if you plan to continue teaching or working in Louisiana--at a public college, university, community college, technical college, school, or at a state or local government agency--TRSL is probably the best choice.

If you aren't sure where your career will take you, TRSL may still be the best choice. With five years of service credit, you can leave your contributions with TRSL and at age 60 begin receiving a benefit based on 12.5% of your highest three-year average compensation.

Also, if you join TRSL, you have five years in which to change your mind and transfer the employee portion of your retirement contributions into the ORP. The employer portion of your existing contributions remains with TRSL.

The decision to join the ORP is irrevocable. You cannot change your mind later and join TRSL. If you change to another employer that reports to TRSL, you must stay in the ORP.

Look carefully at the "Comparison of Benefit Features" and examples below. Along with the comparison calculator, these tools are designed to help you make the best choice for you and your family. If you are interested in the ORP, your personnel office can provide more information.

If you decide to enroll in the ORP, you will need to complete the TRSL Application for Optional Retirement Plan or Change of Carrier (Form 16). As noted above, enrollment in the ORP is a one-time, irrevocable decision; you cannot later rejoin TRSL.

Comparison of Benefit Features
TRSL	Optional Retirement Plan (ORP)
Defined benefit plan: Monthly pension determined by years of service and highest 3-year average annual salary times 2.5%.	Defined contribution plan: Monthly annuity determined by employer and member contributions and investment return on those contributions.
Contributions do not determine benefits. Employee payroll contribution is 8% of salary. Total employer contribution is the same as for the Optional Retirement Plan.	Contributions determine benefits. Employee payroll contribution is 8% of salary. The employer’s contribution, which is also added to the ORP account, has historically been between 5% and 7%.
Lifetime benefit. No matter how long you live, the retirement benefit will continue.	Lifetime benefit based on amount accumulated in contributions account.
Lifetime benefit payable after 20 years of service or 5 years of service at age 60.	Lifetime benefit based on accumulated contributions; payable at the member's option, after termination of ORP participation.
Guaranteed by the state of Louisiana.	Guaranteed by the solvency of the carrier.
Refund of employee contributions upon request at termination of employment.	Partial lump-sum payout possible at time of retirement. Also rollover of all or part of the funds to an IRA or qualified plan may be done after termination of ORP participation.
An ORP-eligible member has five years after joining TRSL for the first time to decide to change to an ORP.	ORP members can't change their minds and join TRSL. The decision to join ORP is irrevocable.
If you have five years of service credit and die, survivor benefits are provided for your spouse and minor children.	Upon your death, the amount of the ORP account is paid out in a lump sum or as an annuity.
If you have five years of service credit and become disabled, you will receive disability benefits from TRSL for life.	Lifetime benefit based on accumulated contributions; payable at your option, after termination of ORP participation. No other disability benefits are included.
Transferrable to other Louisiana public schools, colleges and universities, vocational technical institutes, and many state agencies.	Portable to most colleges and universities in the United States.
TRSL controls/monitors the plan investments, which include your contributions, and bears the risk.	You control your investments and bear the risk. (See ORP carrier's brochure.)

Comparison examples

1. A TRSL member begins working at age 23 and works for 30 years. She dies at 90 and makes 7% a year on investments after retiring at age 53. She receives 3% annual salary increases. She must make 8.35% every year on her ORP investment while she works in order to take home a benefit equal to what her TRSL benefit would have been. And she must not have the misfortune to die later than age 90.

2. Same as above, except the member begins working at age 30 and retires after 25 years at age 55. In this case, she must make 9.4% on her ORP investment every year she works and must die by age 90 in order to achieve the same benfit as she would get from TRSL.

3. Same as above, but the member begins work at age 40 and works 20 years to age 60. In that case, she would have to make 10.7% every year on her ORP investment and live no longer than age 90 in order to take home a benefit equal to what her TRSL Regular Plan benefit would have been.

4. Same as above, but the member begins work at age 50 and works until retirement at age 60. In this case, she would have to make 19% every year on her ORP investment and die by age 90 in order to equal the TRSL Regular Plan benefit.

5. Same as above, except the member begins work at age 55 and retires at age 60. In this case, she would have to make 35% every year on her ORP investment and die by 90 in order to equal the TRSL Regular Plan benefit.

Payment Options

ORP account balances may be rolled over to another IRS qualified retirement plan or to an IRA(s) at any time after termination of employment. Also, a one time, lump-sum payment of up to 36-months of your annuity is available from the ORP account at the time of retirement in addition to a lifetime annuity. If the up-front lump sum is chosen, lifetime benefits would be reduced accordingly (LSA-R.S. 11:929B).

Where do I send my rollover requests?
Rollover requests should be sent to TRSL’s plan administrator for approval. Please send your entire application to:
Teachers’ Retirement System of Louisiana
ORP Department
8401 United Plaza Blvd., 3rd Floor
Baton Rouge, LA 70809-7017

Once your request has been approved and signed by the plan administrator, TRSL will forward it to your ORP carrier.

How can I find out if my rollover has been approved by the plan administrator?
To find out if your request has been approved by the plan administrator, please contact TRSL at 225-925-6446 or toll-free (outside the Baton Rouge area) at 1-877-ASK-TRSL (1-877-275-8775).

How can I find out if my LAORP 401(a) funds have been rolled over?
To check the status of your rollover, please contact your ORP carrier.

What types of plans can I roll my LAORP 401(a) account balance into?
An ORP member may rollover a LAORP 401(a) account balance to a qualified retirement plan or to an IRA after termination of employment from any Louisiana public education institution or TRSL reporting agency. Information about establishing a qualified plan can be obtained by contacting your banking institution or ORP carrier.

Can I get a cash distribution of my LAORP 401(a) funds?
No. LAORP cannot be distributed as a cash distribution, or made payable to a participant or as a single lump sum. Exceptions exist for survivor benefits.

To make sure rollovers are processed in a timely manner:
· Complete all sections of the rollover request.
· Be sure to sign and date the application.
· Provide the qualifying plan’s mailing information.
· Include your contact information.