Optional Retirement Program Overview
The Optional Retirement Program is an individualized State of Texas defined contribution retirement plan in which each participant (100% full-time faculty or certain administrators only) selects mutual fund and annuity investments through various ACC authorized companies. Participants vest their rights to 100% of the employer contributions to the program after one year and one day of participation.
Upon initial employment, a full-time faculty member or administrator is automatically enrolled in TRS unless they elect to enroll in ORP. Eligible ORP employees are given 90 days from their date of eligibility to make a lifetime choice to relinquish membership in the TRS and become a participant in the ORP. New ORP-eligible employees must receive a copy of the Overview of TRS and ORP prepared by the Texas Higher Education Coordinating Board.
ORP retirement benefits are based on the actual amount contributed during employment and any returns on investment at the time of retirement. Potential retirement benefits under ORP vary by company and are subject to individual investment performance, fees and expenses, contract provisions and federal tax law.
The Rules and Regulations of the Administrative Council of the Texas Higher Education Coordinating Board, provide information about which positions are eligible, vesting, enrollment requirements, contributions and termination of participation No loans, withdrawals or rollovers (except to other ORP vendors) are permitted while employed with ACC, however, withdrawals are permitted after age 70 1/2. Employment at an ISD under TRS will revert any ORP member to a TRS status for life.
Employees who terminate and are not vested may withdraw only their funds. Employer contributions will be returned to the employer. Employees who are vested and terminate employment and do not anticipate future employment with a public institution of higher education may request a “vesting letter” from the Office of Human Resources. This will allow the employee to withdraw funds under various options; however, it is important to inquire about tax penalties that may be incurred should withdrawal of ORP funds occur prior to age 59½.
Definition of ORP Eligibility Standards
The full-time positions defined below meet eligibility standards for participation in the ORP program as set forth in ORP Standards outlined in the Rules and Regulations of the Administrative Council of the Texas Higher Education Coordinating Board. The ORP Eligibility Chart provides an outline how ORP eligibility is determined.
Positions below level 13 (as outlined in Austin Community College's Employment Procedures and Salary Schedule) do NOT meet ORP eligibility standards as set forth in the Rules and Regulations. Advertising in The Chronicle of Higher Education or conducting a national search does NOT, in and of itself, confer eligibility pursuant to legislative intent.
A member of the faculty whose duties include teaching and whose specific assignments are made for the purpose of conducting instruction as a principal activity. Titles held include professor, associate professor, assistant professor, instructor, or librarian with a degree in library science.
President, Vice President, Associate Vice President or other administrator responsible for teaching faculty if their principal activity is planning, organizing and directing the activities of faculty. Titles held include Executive Vice President, Provosts, Assistant Provosts, Deans, and Associate Deans. Other administrative positions eligible include those that normally report to the president, vice president or provost and serve as director or administrative head of a major department or budget entity. Incumbents in these positions must be appointed by the chief administrative officer of the institution or his/her delegate and must be responsible for the preparation and administration of the budget, policies, and programs of the department or entity. These positions are generally and customarily recruited by national advertising and must be at a salary rate equivalent to the rate for faculty.
An administrative or professional position that is generally and customarily recruited by national advertising. Professional position eligible for ORP shall be in nationally recognized fields which require advanced degrees and/or specialized advanced professional training. Titles held include physicians, athletic coaches, engineers, and lawyers.
Flexibility in Investments
Having a variety of types of investments (fixed, variable, mutual funds, etc.) available and the opportunity to move between them can improve your performance significantly over the years.
So long as you participate in ORP payments, you cannot surrender your ORP annuity nor borrow on it. In TSA and after retirement in ORP, however, the privilege of surrendering (cashing in) in whole or in part becomes a potentially valuable feature.
Ability to shift your program to another qualified employer or to another company is another feature of value. Some companies have high surrender charges in the early years to make transferring difficult and expensive.
Most insurance companies provide loans, however, no mutual fund offers a loan!
Guarantees against changes in the contract, including increases in costs, vary considerably from company to company. Many companies reserve the right to change features of the contract.
Texas Insurance Guaranty Association stands behind insurance fixed annuities to a very limited extent, assuming coverage of losses by insolvency of a company up to $100,000.