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Indiana Public Retirement System

Indiana Public Retirement System (INPRS) > My Fund > Teachers > TRF Member Handbook: Annuity Savings Accounts TRF Member Handbook: Annuity Savings Accounts

Your Annuity Savings Account (ASA) has money set aside for you. This money is to be used after you retire. The funds in this account come from money your employer put in, and/or money you put in, and money earned from investing your account.

Here is a list of transactions for your ASA:

  • mandatory contributions,
  • voluntary contributions (pre- and post-tax), and
  • investment profits and losses.

Mandatory Contributions

By Indiana law, you must put 3 percent of your yearly salary into your ASA. Your employer may make this payment. If so, it is known as an “employer pick-up.” This money is pre-tax.

Voluntary Contributions

You can make extra payments into your ASA. This is known as a “voluntary contribution.” You can put the money in pre-tax or post-tax. You can only pay up to 10 percent of your yearly salary. If you want to make extra payments to your ASA, talk to your employer’s payroll staff.

Voluntary Pre-Tax Contributions

  • “Pre-tax” means you have the money taken out of your paycheck before taxes are applied.
  • These taxes include federal and state tax.
  • You still pay Social Security taxes.
  • You cannot stop making extra payments. You also cannot change how much you put into your ASA.
  • Example: Say you leave your job:
    • If you come back to the same employer, you must keep making the same payments.
    • If you get a job in a TRF-covered position with a new employer, you can decide if you want to still make extra payments. And, you will need to choose the amount.

To qualify for voluntary pre-tax contributions:

  • Your employer must decide to be a part of this plan.
  • You must have at least five years of service credit in a covered position.
  • You must send in a payroll deduction authorization form to INPRS

NOTE: You have two years to decide if you want to make extra payments in your ASA pre-tax. The two years start on September 1 after you have earned five years of service.

Voluntary Post-Tax Contributions

  • You can also make extra payments into your ASA post-tax. This means your federal, state and Social Security taxes have already been withheld.
  • If your employer allows, you can stop making extra payments. Or, you can change the amount you pay into your ASA.
  • Call us at (888) 286-3544 for more information.

Investment Election Options for an ASA

You can decide how you want your ASA to be invested. There are seven options:

  • Fixed Income Fund
  • Guaranteed Fund
  • Inflation-Linked Fixed Income Fund
  • International Equity Fund
  • Large Cap Equity Index Fund
  • Small/Mid Cap Equity Fund
  • Target Date Funds

We have “Fund Fact Sheets” to give you more information on each of the funds. You can find them here.

NOTE: If you’re new to TRF, you must choose how you want your ASA invested. If you don’t, your ASA election option will default to a target date fund. The target date fund will be based on your age.

Target Date Funds

The goal of a target date fund is to be a “one-stop shop” for you. You choose a fund based on when you plan to retire (or withdraw your money).

It’s important to ask yourself three things:

  1. What is my "risk tolerance?" This term means how comfortable you are with the account value rising and falling with the markets.
  2. What is my age? Younger members may be able to take on more market risk since stock losses can be made up over time. Members closer to retirement may want to invest in more stable value investments that provide regular income.
  3. What is my “portfolio diversification?” This concept means spreading your money among different types of investments to reduce overall risk.

Please keep in mind that INPRS is unable to provide investment advice. You may want to talk to a trusted financial advisor or review Investing 101 on this website.

ASA Allocation Changes

You can change the amount of money you invest in each fund. The amount must be at least 1 percent of your total balance. You can change it daily.

Quarterly Member Statements

Each quarter, you will receive a statement about your ASA. The total will include any investment gains or losses and any investment fees.

Your statement will be posted online. Log on to your member account here. You may request to have a paper statement mailed to your home.

  1. Login to your account,
  2. Click on the “Personal Information” tab,
  3. Click on “Communications,”
  4. Choose “E-mail Address” and then “Communications Preferences.”

Or, you can send in the ASA Quarterly Member Statement Opt-In form. Mail it to INPRS at the address on the form.

Beneficiary Designation

It is important to keep the information on your beneficiary up-to-date. Your beneficiary is the person who will receive money after you pass away. This decision must be made by you prior to your death. If you do not name a beneficiary for your ASA, INPRS will pay it to your estate when you pass away.

You can name more than one beneficiary. You choose what percent of your balance will go to each person when you pass away. You would then have “primary” and “secondary” beneficiaries. If your primary dies before you, you may want to choose a new primary. However, if you do not, then the money would go to your secondary beneficiaries.

NOTE: By law,[1] INPRS must pay your ASA money to your beneficiary. No other court orders, levies, or agreements can override your decision.

ASA Options at Retirement

When you retire, you choose what you want to do with your Annuity Savings Account (ASA). You have the following options. Please note: We value the amount you have in your ASA one day after your retirement application is received.

Monthly ASA

Your Annuity Savings Account (ASA) will be valued the day after receipt of your application. If your application is received after 4 p.m., your ASA will be valued the next business day. It will be transferred to a Fixed Value Fund in order to minimize loss while your request is processed. However, you may transfer your monies between investment options at any time before we receive your application. You may transfer monies by phone or online.

Withdraw Non-Taxable Portion/Monthly ASA

With this ASA option you withdraw the non-taxable portion of your ASA as it existed on Dec. 31, 1986. The remainder of your ASA will be paid as a monthly benefit. Your monthly pension will be combined for a higher monthly benefit payment.

Direct Rollover

You may choose to have the entire taxable portion of your ASA rolled over to a Qualified Retirement Plan. The after-tax (tax basis) will be paid directly to you. The amount will equal the after-tax (tax basis) balance of your ASA as it existed on Dec. 31, 1986.

If you choose to take the non-taxable portion of your ASA, those funds could include voluntary post-tax contributions.

Partial Rollover/Partial Withdrawal

You may receive a portion of the taxable portion of your ASA as a direct rollover to a Qualified Retirement Plan. The portion that is not rolled over will be paid directly to you. The amount will equal the after-tax (tax basis) balance of your ASA as it existed on Dec. 31, 1986.

If you choose to take the non-taxable portion of your ASA, those funds could include voluntary post-tax contributions.

Full Withdrawal

When you withdraw your entire ASA, you may have your ASA paid directly to you.

Full Deferment

You may leave your ASA invested with TRF. If you do this, you delay distribution of your ASA balance. IRS regulations require distributions by April 1 of the calendar year after you turn age 70 1/2. Your funds remain invested according to your directions until you choose to receive them. At a later date, you may choose one of the other options listed.

Partial Deferment/Withdraw Non-Taxable

You may choose to receive an amount equal to your after-tax (tax basis) of your ASA as it existed on Dec. 31, 1986. You may delay distribution of the remainder of your ASA until a later date. IRS regulations require distributions by April 1 of the calendar year after you turn age 70 1/2.

With this option, we would pay you the money in your account from before Dec. 31, 1986. Again, you have already paid the tax on that money.

Social Security Integration

If you retire between ages 50 and 62, you may combine the TRF monthly pension benefit with your estimated Social Security benefits. INPRS pays a larger monthly benefit before age 62. The payment may be greatly reduced or terminated at age 62. Your estimated monthly Social Security payment determines if your INPRS payment will be reduced or terminated. INPRS does not work in conjunction with Social Security. This selection will not impact the benefit received from Social Security.

Payments to a Trust

You may choose to have your monthly pension benefit paid to a “revocable trust.”  A revocable trust is one that gives you the right to access trust funds at any time without any condition.

By law, we must have a copy of what is called the “trust instrument.” Or, we need a sworn affidavit identifying the trust. Please be sure to notify INPRS if things change with your trust. This could be terms, conditions, or to whom you want the trust to be paid. You will need to give us a copy of the new, amended trust instrument.

Withdrawal of Your ASA Balance

If you are no longer in a TRF-covered position and you are not receiving a retirement pension benefit or a disability retirement benefit, you can withdraw your ASA balance.

You can withdraw money from your ASA if:

  1. You do not plan to return to a TRF- or PERF-covered position.
  2. You left your TRF- or PERF-covered position more than 30 days ago.
  3. You buy creditable service in another governmental retirement plan. You must be vested for this option.

Getting Your Money

To withdraw money out of your ASA, you can log in to your account. Or, you can call (888) 286-3544. We are available Monday through Friday from 8 a.m. to 8 p.m. EST.

If you leave a TRF-covered position before you have 10 years of qualified service, your membership in the fund will be automatically suspended five years after you leave that position. If you do not withdraw your money, it reverts back to the employer reserve.

If you return to a position covered by TRF or PERF, the balance that was moved to the employer reserve will be credited back to your ASA. At any time, you or your beneficiary can withdraw the balance in your account. However, once credited to TRF, no more interest or investment earnings will accrue to your account.

If you are employed in a PERF-covered position, you will not be able to withdraw your funds from your TRF ASA.

If you have $1,000 or less in your Annuity Savings Account (ASA), INPRS can, by law, suspend your membership after only two years of leaving your TRF-covered position. You will be sent the balance of your ASA.

Note to members who are qualified for a reduced pension benefit. As of July 1, 2011, you may still withdraw your ASA, even if you have not worked for more than 30 days in a covered position. You will not forfeit your pension and you will not have to take a reduced retirement.

Penalties

If you take money out of your ASA before you retire, you will pay a required 20 percent federal tax. If you are under age 59 ½, you may also have to pay a 10 percent tax penalty.

You will not pay federal taxes if you roll over money to an IRA or other qualified retirement plan. For more information, see the Taxes section.

Buying Service in another Plan

You can take money out of your ASA to buy service credit in another government retirement plan. You may only withdraw the exact amount. The money must be paid as a “trustee-to-trustee” transfer to the other governmental plan. This means INPRS would transfer the funds to the other government plan. You would not receive a cash payment.

If you should return to a TRF-covered position, you would need to buy back the service credit from the other government plan to have it count toward your retirement.

Taxes

How you choose to withdraw from your ASA can greatly affect your taxes. We urge you to talk to a tax advisor. We can explain your options, but cannot offer tax advice. Below are some facts you and your advisor should know.

The required 3 percent in contributions are not taxed. You will have to pay taxes on it when you retire or take money out of your ASA. Any extra money you put in your ASA pre-tax will also have to be taxed.

Money added to your ASA after taxes is your “tax basis.” When you retire, you do not need to pay any more taxes on this money. We report this money to the IRS. You receive an IRS Form 1099-R each year.

If you chose to withdraw all of your ASA when you retire, there are IRS rules that will apply to you. The IRS requires that some of the money you have in your account post-tax must be paid to you as part of your monthly pension benefit.

  • If the money in your account is from before Dec. 31, 1986, you will receive the entire amount when you retire. You have already paid taxes on this amount.
  • If you had post 1986 contributions, some of those contributions will be recovered in your withdrawal payment.
  • Your ASA and pension benefit are not separate accounts. If you added post-tax money into your ASA, you will recover the remainder of that money over a period of time as part of your monthly pension payment. [2]

[1] Indiana Code 5-10.4-4-10

[2] As required by the IRS.

TRF Member Handbook: Rollover Savings Account