Duluth Teachers’ Retirement Fund Association

Plan Summary - New Plan, Tier II

Membership Eligibility:  DTRFA New Plan, Tier II Plan benefits are available to members of the DTRFA who were first hired after June 30, 1989, and have not taken a refund of those contributions.

Contributions:  Employees contribute 5.5% of covered salary.  Employer contributes 5.79% of salary.

Retirement Benefits

    Full Retirement Benefits: Age at which full Social Security retirement benefits are payable, but no higher than age 66.  (There is no Rule-of-90 in Tier II.)

    Early Retirement Benefits: Eligible at age 55 with 3 or more years of service.  There is an actuarial reduction of 5-6% per year for each year between retirement and full retirement age.

Annual Benefit Formula: 1.70% times high 5 average salary, times total years of service credit.

Vesting:  Retirement benefits vest after 3 years of credited service, or at age 65.

Disability Benefits:  Eligible after 3 years of service.  Must be totally and permanently disabled from any substantial, gainful employment.  Full benefits paid regardless of age.  Termination of employment with the school district is not required.

Survivor Benefits:

    Death Before Retirement - Refund of member contributions, plus 6% interest, to beneficiary.  If member had at least 3 years of service, a surviving spouse may elect to receive a 100% joint and survivor annuity or a term certain annuity of equivalent actuarial value.  A reduction is applied to the benefit amount based on the years of service and age of the member at time of death.  Term certain benefits are payable to dependent children if there is no spouse.

    Death After Retirement - The optional annuity elected at retirement is payable.  Options include a 50% joint and survivor annuity, a 100% joint and survivor annuity, or a life and term certain annuity for 5, 10, 15 or 20 years.

Refunds:  30 days after ceasing to render teaching service, a member may receive a refund of their contributions with 6% interest.  Refunds may be rolled into an IRA to defer current tax.

Deferred Benefits:  A vested, terminated member may leave contributions in the fund until eligible for retirement.  The annuity formula at time of termination is used.  Benefit is increased 3% per year between termination and age 55, and increased 5% per year after age 55 until benefit payments begin.

Cost of Living Adjustment:  Eligible benefit recipients receive an automatic 2% increase in their benefits each January 1.  An additional increase is allowed to the extent that 5-year annualized returns of the fund exceed the plan's assumed rate of return of 8.5%.

(This summary was last revised in July 2003)