Intro to CalSTRS Flashcards

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Questions and Answers

What does STRS stand for?

State Teacher Retirement System

What is Cal-STRS?

A Defined Benefit Pension for certificated employees in the California education system

What is a defined benefit plan?

It is a plan in which an employer promises a monthly benefit on retirement that is calculated with a formula rather than on an individual's investment returns.

What does certificated mean as it relates to CalSTRS?

A certificated teacher has received a certificate in a specified subject area. Signup and view all the answers

What is the formula STRS uses to calculate a teacher's Member Only option?

Service Credit x Age Factor Percent x Final Compensation = Member Only Benefit Signup and view all the answers

How is Final Compensation determined for teachers with more than 25 years of service?

Their highest 12 consecutive months of average earnable compensation will be considered for the formula. Signup and view all the answers

How is Final Compensation determined by STRS for plan members with fewer than 25 years of service credit?

It is based on the highest average earnable compensation during any period of 36 consecutive months of paid employment covered by CalSTRS. Signup and view all the answers

What items, as it relates to final compensation, cannot be used to qualify for the necessary 25 years?

Unused sick leave in excess of two-tenths of one year, non-qualified service credit, retirement incentive credit. Signup and view all the answers

What is the Member Only Option in CalSTRS?

The maximum lifetime benefit payable to a teacher, leaving no monthly income to a beneficiary. Signup and view all the answers

What percent of CalSTRS 2% at 60 members' paychecks are sent to STRS?

9.2 percent Signup and view all the answers

What percent of CalSTRS 2% at 62 members' paychecks are sent to STRS?

8.15 percent Signup and view all the answers

How are STRS contributions treated with respect to income taxes during deferral?

There are no income taxes paid on the amount contributed by STRS members as they are considered pre-tax contributions. Signup and view all the answers

What is the maximum Age Factor Percent that can be applied in the CalSTRS formula?

2.4% Signup and view all the answers

At what age do CalSTRS 2% at 60 members hit 2.4% for teachers hired before January 1, 2013?

Age 63 Signup and view all the answers

At what age do CalSTRS 2% at 62 members hit 2.4% for teachers hired after January 1, 2013?

Age 65 Signup and view all the answers

By when do STRS members need to have been employed in order to be eligible for the Career Factor Bonus that increases the age factor percent by 0.2%?

December 31, 2012 Signup and view all the answers

What other factors besides age can affect the Age Factor Percent?

The Career Factor Bonus Signup and view all the answers

Explain the Career Factor Bonus.

The Career Bonus adds an extra 0.2% (two-tenths) to the Age Factor Percent for any teacher with thirty or more years of service at retirement. Signup and view all the answers

How does unused sick leave affect the teacher's pension?

The unused sick leave can be applied toward Years of Service. Signup and view all the answers

What is the formula for calculating how many Years of Service will be added due to unused sick leave?

Number of sick days divided by number of school days. Signup and view all the answers

How do you determine the number of school days there are in a school year?

The amount is determined by individual school districts. Agents must call to find out in each case. Signup and view all the answers

Study Notes

CalSTRS Overview

STRS stands for State Teacher Retirement System.
CalSTRS is a Defined Benefit Pension plan intended for certificated employees within the California education system.

Defined Benefit Plan

A defined benefit plan guarantees a fixed monthly benefit upon retirement based on a formula, not individual investment returns.

Certificated Employees

A certificated teacher has earned a credential in a specific subject area.

Benefit Calculation Formula

The formula for calculating the Member Only benefit is: Service Credit x Age Factor Percent x Final Compensation.

Final Compensation Determination

For members with 25+ years of service credit, the highest average compensation during the 12 consecutive months is used for calculating final compensation.
Members with fewer than 25 years will have final compensation based on the highest average earnable compensation over any 36 consecutive months. CalSTRS will review records from the past 15 years automatically.

Qualification for Service Credit

Unused sick leave beyond two-tenths of a year, non-qualified service credits, and retirement incentive credits cannot be included to qualify for the necessary 25 years of service.

Member Only Option

This is the highest lifetime benefit for a teacher, which does not provide ongoing income to beneficiaries after the member's death.

Contribution Rates

CalSTRS 2% at 60 members contribute 9.2% of their paycheck, with an expected increase to 10.25% in the following fiscal year.
CalSTRS 2% at 62 members must contribute 50% of the normal cost, with current rates at 8.15%, anticipating an increase to 8.56% and 9.205% in the upcoming years.

Tax Treatment of Contributions

Contributions made by STRS members are treated as pre-tax, meaning no income taxes are paid on them during the deferral period.

Age Factor Percent

The maximum Age Factor Percent applicable is 2.4%.

Age Milestones for Age Factor Percent

CalSTRS 2% at 60 members reach 2.4% at age 63, while 2% at 62 members achieve this at age 65.

Career Factor Bonus

Members must be employed by December 31, 2012, to qualify for a Career Factor Bonus, which enhances the age factor percent by 0.2%.
The Career Factor Bonus applies an additional 0.2% to the Age Factor Percent for teachers with over 30 years of service at retirement.

Unused Sick Leave

Unused sick leave can count towards a teacher's Years of Service, enhancing pension benefits.
The formula to calculate additional Years of Service from unused sick leave is: Number of sick days ÷ Number of school days.

School Year Days

The total number of school days in a year is determined by individual school districts, and specific inquiry is necessary for accurate information.

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Description

Test your knowledge of the California State Teacher Retirement System (CalSTRS) with these flashcards. Learn important terms and definitions related to this defined benefit pension plan for educators. Perfect for those preparing for retirement or wanting to understand their benefits.