Choose Your Plan
The Benefits-eligible faculty and staff are eligible for the Teacher Retirement System of Texas (TRS). Certain administrative and faculty positions are eligible to choose the Optional Retirement Program (ORP) in lieu of TRS. In addition to these mandatory plans, all benefits-eligible employees may contribute to a TDA (Tax Deferred Account) which can significantly reduce taxes and help save for retirement.
Optional Retirement Program (ORP)
In ORP, you and Texas Tech University each contribute to ORP each pay period. You contribute 6.65% of your pay to ORP on a before-tax basis. Texas Tech University currently contributes 6.6% of your pay. These contributions go into an individual account, and upon retirement, you decide how to utilize your account balance. Participants vest after one year and one day of ORP participation. ORP is a defined contribution plan with benefits based upon individual investment decisions.
ORP is an alternate mandatory retirement program in which qualified employees, generally faculty and higher-level administrators, may choose to participate as an alternative to TRS. Choosing ORP is an irrevocable decision in the state of Texas and you must remain in ORP as long as you continue state employment.
Teacher Retirement System (TRS)
TRS is a mandatory retirement program in which all benefit-eligible employees are automatically enrolled unless they qualify for, and elect to participate in, the Optional Retirement Program. As of September 1, 2021, you contribute 8.0% of your pay to TRS on a before-tax basis and Texas Tech University contributes 7.75% of your pay. You do not pay federal income tax on these contributions; however, your retirement benefit will be taxable when you receive it. This is a defined benefit plan which enables you to receive a lifetime annuity upon retirement based on a set formula.
You have full ownership of your contributions to TRS and can withdraw them when you leave TRS-covered employment. After five years of plan participation, you become vested, which means you have a right to plan benefits when you retire if you have not withdrawn your contributions. For more information on retiring with TRS, see the Retirement Programs booklet or visit TRS online at www.trs.texas. gov.
Tax-Deferred Account (TDA)
All benefits-eligible employees can participate in a pre-tax (Traditional) or post-tax (Roth) 403(b) plan through payroll deduction. Participation is voluntary and enrollment is any time of the year. Investments are from employee contributions only. Annual contribution limits are defined by IRS code. The Supplemental 403(b) Tax-Deferred Account allows employees to accumulate investment funds through salary reductions, thereby deferring the payment of income tax on contributions until a future time. Upon retirement, you decide how to utilize your account balance.