Last Update:  5-25-11

Disclaimer:  The following description of NWOSU's retirement program is intended to be easy to read and therefore is written in broad, general terms to apply to as many people as possible.  If there is a discrepancy between the information presented on this webpage and laws/contracts/policies/, the latter must take precedence.

NEW!!!!!!

Pre-retirees:  OTRS (Okla Teacher's Retirement System) recently announced new paperwork deadlines.  Since retro-active adjustments cannot be made for deadlines missed, pre-retirees should make sure they have read and fully understand...  January 2011 OTRS Memo.

Social Security

1. Social Security Tax:
• Tax Rate-6.2% each for employee and employer
• Wage Base-$106,800
2. Medicare Tax:
• Tax Rate-1.45% each for employee and employer
• All wages subject to Medicare tax

On April 7, 2000, President Clinton signed into law P.L. 106-182, the Senior Citizen's Freedom to Work Act of 2000 which eliminates the Social Security retirement earnings test in and after the month in which a person attains full retirement age. Contact Social Security for more information.

NWOSU employees nearing retirement age should research federally mandated earnings limits that will be put into place after they retire, so they will not owe money back to the Social Security Administration.  The retiring employee is responsible for timely notifying the Social Security Administration.  It is especially important for those retirees and pre-retirees nearing age 65 to watch their mail for information about Medicare enrollment. 

Medicare Part A is free and will help regular full-time employees (65 and older) with their medical bills as a secondary insurance.  While employed in a benefited position, BCBSOK will be primary coverage for this employee, and also for any dependent spouse (age 65 or older) of a regular full-time employee of any age.  This changes when the employee retires. 

Pre-retirees nearing age 65 will want to reserve Part B until they retire, since there is a monthly premium due for Part B.  There is no need to pay for a Part D plan while employed as a regular full-time employee at NWOSU.

A regular active employee, hired full-time before 7-1-09, who has worked for NWOSU at least 10 years immediately preceding the date of retirement from OTRS, can apply for an employer-paid retiree medical and life insurance benefit.  The OKHEEI group insurance coverage plan includes an excellent "medicare supplement" that comes along and supplements what Medicare pays on medical bills. 

To participate, the retiree must have both Parts A and B of Medicare in place.  (The Part B premium will be withheld from the Social Security check.).  This coverage (the "OKHEEI Sr. Supplement Plan") with UHC (United HealthCare) offers an excellent Part D option.  A company called HealthSmart collects and remits monthly premiums for OKHEEI retirees.  For more information, visit the NWOSU Insurance web page.

If resigning after at least 10 years, but not yet eligible to retire, the employee will want to ask Human Resources about "vesting"  eligibility to participate indefinitely in the university's OKHEEI group medical, dental, and vision insurance.  Otherwise, COBRA is the only option, and it is temporary--normally only 18 months.

Visit the NWOSU Insurance web page for more information.

Oklahoma Teachers' Retirement System (OTRS)

Members who have accumulated five (5) or more years of creditable service ("Service Years") in the public schools of Oklahoma (including Northwestern), on which retirement contributions have been remitted, shall be granted an indefinite extension of membership in OTRS.

I.e., their account is "vested."  Only vested employees can draw a benefit from this plan at retirement time.  However, non-vested members do not lose the contributions if and when they leave Northwestern.

The current contribution rate is 7% of "contributable salary." Contributable salary includes gross pay and employer-paid benefits (medical, vision, life, LTD, and employer "pick-up" of OTRS). The OTRS contribution is now paid entirely by NWOSU for current active members.

GOOD NEWS! 

Effective 7-1-09, NWOSU employees are no longer responsible for any part of the contributions due the System. All contributions due on contributable salary in the fiscal year will be paid by Northwestern.  This benefit saves the employee over 7% of their pay!

Prospective employees interested in regular full-time positions may want to see how much will be "picked up" by NWOSU on each month's payroll cycle.  Just open this Excel worksheet-- OTRS cost . 

Note:  The employer-paid funding deposited into your OTRS account each month typically is not taxable until withdrawn as a monthly retirement benefit or sent to a non-vested former employee.   Exiting employees will want to receive counseling from the Human Resources Director before their last day of work. 

Questions regarding retirement may be directed to the Human Resources Office in Herod Hall at the Alva Campus, or to the Oklahoma Teachers' Retirement System:

Supplemental Retirement Plan

NOTICE TO INTERESTED PARTIES

The Supplemental Retirement Plan is a part of the retirement program at Northwestern, but it only applies to those employees meeting all the following requirements:

• were hired to regular full-time positions and were members of Oklahoma Teachers' Retirement System (OTRS) before July 1, 1995, at one of the six Regional universities (NWOSU, NSU, ECU, UCO, SWOSU, SOSU) governed by the Regional University System of Oklahoma.
• have maintained continuous, regular full-time employment with the Regional universities
• are eligible to receive and elect to receive a retirement benefit from the Oklahoma Teachers' Retirement System
• if hired before July 1, 1987, must have at least ten (10) years of service
• if hired after June 30, 1987, and before July 1, 1995, must have at least fifteen (15) years of service

When a qualifying employee decides to retire, he or she should contact the NWOSU Human Resources Office at 580-327-8530 for an official Supplemental Retirement Plan calculation under both Method One and Method Two.  The larger of the two amounts will be paid to the qualifying retiree as a monthly annuity. 

The Method One formula for a possible monthly benefit is: 

1. one-half (1/2) of Average Monthly Salary (as supported by official Letters of Appointment)
2. less the monthly Teachers' Retirement Maximum Life Option Annuity (as supported by official benefit calculation from OTRS)
3. times the Employee's number of Service Years (maximum:  25 if most recent date of regular full-time employment was before 7-1-87; maximum:  30 if most recent date of regular full-time employment was on or after 7-1-87 and before 7-1-95)
4. divided by 25 or 30 as the case may be (see 3.)
5. times OTRS Age Equivalent Factor.  (see Q&A below about retiring early)

The Method Two formula for a possible monthly benefit is: 

1. 2.4% times the Employee's Service Years (maximum:  30)
2. times the Employee's Average Annual Base Salary (as supported by official Letters of Appointment)
3. less the annual Teachers' Retirement Maximum Life Option Annuity (as supported by official benefit calculation from OTRS)
4. times OTRS Age Equivalent Factor
5. divided by twelve (12).  (see Q&A below about retiring early)

NOTE:  fractions of different fiscal years cannot be combined in the benefit calculation.

Disclaimer:  The official Regional University System of Oklahoma 401a SRA group contract with TIAA-CREF takes precedence over this description should any conflict arise.  Employees should contact the Human Resources Office in Herod Hall at 580-327-8530 for definitions of above terminology.

Retirement Insurance Program

NWOSU employees who resign before they are eligible to retire, generally do not qualify for the employer-paid retiree insurance program.  However, if a regular, full-time, benefited employee has at least 10 years OTRS Oklahoma Service before resigning from NWOSU, he/she will want to contact NWOSU Human Resources and ask about "vesting" the insurance coverage.

By paying the premiums as a "vested member," they can keep the medical, dental, and/or vision coverage they had in place when they resigned. As long as timely application is made and premiums are paid promptly, the member can participate in the OKHEEI insurance plan indefinitely, as the policy currently provides.
 

NEW:  Persons new to RUSO employment after June 30, 2009, do not qualify for the employer-paid retiree insurance program.  Persons hired before July 1, 2009, before considering a break in employment, should make sure they understand how such a break may impact this valuable benefit.  Contact the Human Resources Director at 580-327-8530 for more information.

A:  OTRS is a "defined benefit" retirement plan, as opposed to a "defined contribution" plan.  The latter plan's future benefits are dependent on investment earnings.  I.e., DC plans are usually set up with stocks and bonds investments, and therefore subject to stock market fluctuations.  OTRS is a type of pension plan in which a specified monthly benefit at retirement is pre-determined by a formula based on the employee's wage history, tenure of service, and age, rather than investment returns.  Unless a member reaches "vestment," there is no guaranteed monthly income benefit due at retirement age.  It takes 5 Oklahoma OTRS-recognized Service Years to be vested.

Q: When can I retire from Northwestern?

A: You must have at least 5 years of Oklahoma Teachers' Retirement service credit (as defined by OTRS) to retire. OTRS members may retire with unreduced benefits at age 62 with 5 or more Oklahoma service years, or when age and total service equals 80 (referred to as the "Rule of 80"). Members joining OTRS after June 30, 1992, must have a combination of 90 (the "Rule of 90") or be age 62 to retire with unreduced benefits.  This is a brief description of the OTRS Rules and Laws.  If any discrepancy exists, the Rules and Laws take precedence.  Call 1-877-738-6365 for more information.   

Q: Can OTRS members retire early and get monthly benefits?

A: Yes, reduced benefits are available beginning at age 55, for members who do not yet qualify for the Rule of 80 or 90, but have 5 or more years of Oklahoma service. The benefit reduction is applied according to the following "Age Reduction Factors" schedule:

   

Age	Percent
55	61.89
56	65.95
57	70.38
58	75.23
59	80.00
60	86.66
61	93.33
62	100.00

Q:  What happens to my OTRS retirement if I am disabled and unable to work?

A:  Regretfully, some employees must leave employment early due to disability.  If the disabled employee has ten (10) years service with Oklahoma Teachers' Retirement, (s)he can apply for disability income by calling their toll-free number, 1-877-738-6365 and asking for the necessary paperwork.  The OTRS Medical Board relies on physicians' statements when making a determination.  The Human Resources Director assists a disabled employee in filing a claim for disability with OTRS, but the employee is responsible for filing a disability claim with the Social Security Administration.

Q: How do I request retirement income and how early do I begin the process?

A: There are 7 Steps to the paperwork process, beginning with contacting NWOSU Human Resources, Room 101 of Herod Hall on the Alva Campus, ph. 580-327-8530. You may wish to view the Road to Retirement presentation.

Q: Will my unused sick leave days count toward service years when I retire from Northwestern?

A: If you have at least 120 days of unused sick leave at the time of retirement, as verified by all OTRS employers, you may receive another full year service credit.  Call OTRS at 1-877-738-6365 for details as they apply to your situation and for forms to present to employers for sick leave verification.

Q: Once I decide to retire, how much money can I receive monthly from OTRS?

A: Monthly OTRS benefits are usually determined by multiplying a member's Final Average Salary (which includes employer-paid benefit payments) times 2% times total number of service years and dividing by 12. For those who joined OTRS before July 1, 1992, F.A.S. is the average of the three (3) highest years on which contributions have been made to OTRS. If you joined after June 30, 1992, they will use the five (5) highest consecutive years of compensation.  In the calculation, service years before July 1, 1995 stand alone.  The final total benefit combines pre- fy 95/96 years with subsequent years.  Compensation prior to 7-1-95 is capped at $40,000, unless the member signed an agreement to cap at $25,000.

Q: Are there any additional ways I can contribute to my retirement by payroll withholding?

A: You may elect to send pre-tax dollars to a "403(b) tax-deferred annuity." Amounts set aside in this manner, along with all earnings and dividends, are tax-deferred until withdrawn.  If interested, ask Human Resources for a Lincoln Financial Group packet, fill out the enclosed Enrollment Form and return to Human Resources, Room 101 in Herod Hall, Alva Campus.  The change will take place on the next available payroll.  Regular full-time and non-student part-time employees are eligible to participate in this voluntary retirement program.  Call 580-327-8530 for more information.

A:  You might be interested in contributing to a 457(b) retirement account with TIAA-CREF.  Call 580-327-8530 for more details.

Q: What happens if I leave Northwestern before I'm "vested" (before I have contributed on 5 years of Oklahoma Service) with Teacher's Retirement?

A: All the money that you have paid into Teacher's Retirement and that the University has paid into your account is yours to withdraw or "roll over" into another tax-deferred account, such as an IRA. You may leave the money in your account, but unless you work and contribute in another job with Teacher's Retirement within five (5) years, they will send the contributions to you automatically and close your account. 

The employer-paid contributions to TIAA-CREF's Retirement Annuity (R.A. program discontinued after 6-30-04) are different:  At retirement time, you may want to leave the money in the account and let it work for you. You are not required to make withdrawals until you reach age 70 1/2. At that age, the IRS requires you to make minimum distribution withdrawals or face a stiff penalty. When leaving NWOSU, members under 70 1/2 years of age can "roll over" their TIAA-CREF contributions into an IRA or some other tax-deferred account to delay taxation.

Q:  Is there a compensation limit for OTRS?

A:  Yes.  Once a member's Contributable Salary (gross plus employer-paid fringe benefits) reaches $230,000 in FY 08-09, all contributions stop until July 1, 2009.  The limit will be $245,000 for FY 09-10.  July 1, 2010, another maximum will be put in place by the IRS for FY 10-11.

Questions should be directed to:

NWOSU Human Resources Office (Herod Hall, Room 101)
709 Oklahoma Boulevard
Alva, Oklahoma 73717
Phone: 580-327-8530 or 580-327-8531

Affirmative Action Statement

This institution, in compliance with Title VI and Title VII of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972, sections 503 and 504 of the Rehabilitation Act of 1973, the Americans with Disabilities Act Amendments Act of 2008, and other applicable federal laws and regulations, and to the extent required by law, does not discriminate on the basis of race, color, national origin, sex, age, religion, genetic information, physical or mental disability, or status as a veteran in any of its policies, practices, or procedures.  This includes, but is not limited to, admissions, employment, financial aid, and educational services.  Inquiries concerning the application of these programs should be made to Brad Franz, Vice President for Student Affairs and Enrollment Management, Northwestern Oklahoma State University, 709 Oklahoma Boulevard, Alva, OK 73717, (580) 327-8415. 

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