Actions for New Participants

New benefits eligible employees have two options to save for retirement. All benefits eligible employees with a .5 FTE or more must elect a retirement plan, Option 1 or Option 2, within the first 30 days of their employment. The significant difference between Option 1 and Option 2 is in how you plan to save your own money for retirement. In Option 1, you agree to save your money by contributing to the Oklahoma Teachers' Retirement System (OTRS) throughout your career at OU and then get a defined benefit for the length of retirement. You can also save additional money in a Voluntary Retirement Savings Plan.

By choosing Option 2, the only available methods through which you can save your own money are the Voluntary Retirement Savings Plans. These plans yield account balances that are available during your retirement.

In both options, OU contributes money on your behalf to the OU Contributory Retirement Plan or the OU Retirement Plan, which are 401(a) Defined Contribution Plans. The amount of the contribution depends on whether you choose Option 1 or Option 2.



Your Choice: Option 1 or Option 2

New benefits eligible employees have two options to save for retirement. All benefits eligible employees with a .5 FTE or more must elect a retirement plan, Option 1 or Option 2, within the first 30 days of their employment. The significant difference between Option 1 and Option 2 is in how you plan to save your own money for retirement. In Option 1, you agree to save your money by contributing to the Oklahoma Teachers' Retirement System (OTRS) throughout your career at OU and then get a defined benefit for the length of retirement. You can also save additional money in a Voluntary Retirement Savings Plan.

By choosing Option 2, the only available methods through which you can save your own money are the Voluntary Retirement Savings Plans. These plans yield account balances that are available during your retirement. 

In both options, OU contributes money on your behalf to the OU Contributory Retirement Plan or the OU Retirement Plan, which are 401(a) Defined Contribution Plans. The amount of the contribution depends on whether you choose Option 1 or Option 2.

Deadlines

Your deadline for making a choice between Option 1 and Option 2 depends on your employee group as described in the below sections.

Salaried & Hourly Employees

Benefits eligible salaried and hourly employees can participate in Option 1 or Option 2 and must decide between these options within the first 30 days of employment eligibility. They are automatically enrolled in Option 1 after 30 days, if a choice has not been made. This is a one-time, non-reversible choice. 

Employees may begin or stop participation in the 403(b) and 457(b) Voluntary Retirement Savings Plans at any time.

Other Employees

Employees classified as student employees, academic, or medical "residents" or "post-doctoral fellows," or with any job title of scholar or fellow are not eligible for Option 1 or Option 2. 

Any employee may start or stop participation in the 403(b) and 457(b) Voluntary Retirement Savings Plan at any time. 

Option 1 is on Target!     7% + 8% = 15%

Benefits eligible employees can save 15% by combining the amount that OU contributes to a 401(a) defined contribution plan on your behalf with money that you save from your salary.

Use these plans:
 Oklahoma Teachers' Retirement System + 401(a) Defined Contribution Plan

Your Savings: If you choose Option 1, you will be enrolled in the Oklahoma Teachers' Retirement System (OTRS). You contribute 7% of your total compensation to OTRS.

OU's Contributions: The university also contributes 8% of your base salary after the first $9,000 on your behalf to a 401(a) defined contribution plan called the OU Contributory Retirement Plan. All new employees must complete a 12-month waiting period before the university's contributions begin.

NOTE
: You can save even more of your own money by enrolling in a Voluntary Retirement Savings Plan.

Oklahoma Teachers' Retirement System (OTRS)

The Oklahoma Teachers' Retirement System (OTRS) is a defined benefit plan like a pension plan. Your retirement benefits continue throughout your retirement and are calculated based on a formula instead of an account balance. See Plan Descriptions for more details.

Contributions: You contribute 7% of your total compensation.

Retirement Benefit: Your retirement benefit is calculated using a formula that considers your total service credit and your average total compensation during your five highest-paid years: (years of service credit x 2% x average total compensation for your five highest-paid years = your retirement benefit).

Contribution Start Date: Your membership and contributions to OTRS begin the first of the month following receipt of the your election agreement. If you're interested in making catch-up contributions back to your date of hire or eligibility date, you will need to contact OTRS directly.

NOTE: OU contributes 8.55% of your total compensation to the OTRS general fund for your participation. You do not receive a distribution of OU's contributions if you retire or leave OU. 

401(a) Defined Contribution Plan

The 401(a) defined contribution plan is called the OU Contributory Retirement Plan in Option 1. OU contributes to a savings investment account on your behalf. See Plan Descriptions for more details. 
 
Contributions: When you choose Option 1 with OTRS, OU contributes 8% of your base pay over $9,000 to the 401(a) defined contribution plan called the OU Contributory Retirement Plan. You do not contribute to this plan.

Retirement Benefit: You direct the investment of your account. The amount you receive at retirement depends on how much has accumulated in your account over the years you have participated in the plan.

Contribution Start Date: Your participation in this plan becomes effective and university contributions begin on the first day of the month following completion of the required forms.

Advantages & Disadvantages of Option 1

Your participation in OTRS is the biggest difference between Option 1 and Option 2. Because OTRS provides a benefit using a formula, your benefit under this plan is stable and will not change based on the plan’s investment returns. It is a lifetime benefit once you are eligible to retire. However, if you change employers, it is not as portable as some other types of retirement arrangements.

If you're a salaried employee, your contributions to OTRS continue throughout your career at OU and cannot be stopped. Everyone's personal situation is different and some people find this continuous, required savings an advantage while others may see it as a disadvantage. Consider discussing your choices with a personal financial planner. 

You're on Your Way with Option 2!    9% + x%

Benefits eligible employees can save 15% by combining the amount that OU contributes to a 401(a) defined contribution plan on your behalf with money that you save from your salary.

Use these plans: 401(a) Defined Contribution Plan + Voluntary Retirement Savings Plan

If you're not participating in Oklahoma Teachers' Retirement System (OTRS), then you're not automatically saving any of your own money for retirement.

OU's Contributions: If you're benefits eligible, the university contributes 9% of your base salary on your behalf to a 401(a) defined contribution plan. If you're salaried, that plan is the OU Retirement Plan and, if you're hourly, that plan is the OU Contributory Retirement Plan.  All new employees must complete a 12-month waiting period before the university's contributions begin.

Your Savings: You can move toward the 15% savings target by adding your savings to OU's contributions through a Voluntary Retirement Savings Plan.

401(a) Defined Contribution Plan

Option 2 includes university contributions to a 401(a) defined contribution plan. If you're salaried, that plan is the OU Retirement Plan and, if you're hourly, that plan is the OU Contributory Retirement Plan. In this plan, OU contributes to an investment savings account on your behalf. 

Contributions: OU contributes 9% of your base pay to the 401(a) defined contribution plan. You do not contribute to this plan. 

Retirement Benefit: You direct the investment of your account. The amount you receive at retirement depends on how much has accumulated in your account over the years you have participated in the plan.

Contribution Start Date: If you choose Option 2, the plan becomes effective and university contributions begin on the first day of the month following completion of the required forms.

NOTE: The 401(a) defined contribution plan does not accept employee contributions. You should consider adding to your retirement savings by making contributions to the Voluntary Retirement Savings Plans.

Advantages & Disadvantages of Option 2

Remember, the best way to be ready for retirement is to combine savings put aside from your paycheck with the contributions OU makes to your retirement. Aim for saving an equivalent of 15% of your annual salary.

Unlike in Option 1 with OTRS, you're not automatically saving any of your own money for retirement in Option 2. But, it's still recommended that you do. You can save money from your paycheck by enrolling in a Voluntary Retirement Savings Plan. 

The benefits you will receive upon retirement depend on how much money has accumulated in your account—based on OU’s contributions and your account’s investment returns— at the time you retire. This is an investment account that is affected by variations in the stock market.

If you leave OU, this savings is portable and you are entitled to take the value of your account if you are vested.

 

 

1. Which option helps you be most ready for retirement?

It’s recommended that you save at least the equivalent of 15% of your salary to be most ready for retirement. When you choose Option 1, you’re saving 15% from the start with OU’s contributions to a 401(a) defined contribution plan (8% of your base pay over $9,000) and your contributions to OTRS (7% of your total compensation).

In Option 2, you’re only saving 9% of your base pay through OU’s contributions to a 401(a) defined contribution plan. If you choose Option 2, it’s recommended that you also save your own money in a Voluntary Retirement Savings Plan. 

2. Are you able to make ongoing contributions to OTRS?

In Option 1, you commit to retirement readiness by making ongoing contributions to OTRS. These contributions cannot be changed or stopped. Consider this long-term commitment to being ready for retirement when you're reviewing Option 1. 

While it is not required in Option 2, it is highly recommended that you also save your own money. You can do this in a Voluntary Retirement Savings Plan. You can start, stop, and change the amount of contribution to a Voluntary Retirement Savings Plan at any time. 

3. How flexible do you need your retirement savings account to be?

In Option 1, you will receive a lifetime benefit from OTRS that is independent of any account balance. You cannot withdraw money from OTRS unless you no longer work at OU or another OTRS-participating institution.

If you’re saving your own money through a Voluntary Retirement Savings Plan, you can make withdrawals under certain circumstances.

4. How old are you today?

Generally, for older employees, a defined benefit pension plan such as OTRS in Option 1 builds benefit value faster than a defined contribution plan alone like in Option 2. However, there are many complex issues to consider, such as the age you plan to retire and your life expectancy at retirement. Consider discussing your options with a personal financial planner.

5. What is your comfort level with making investment choices?

In Option 1, OTRS combines your contributions with the contributions from all other members and invests them. You do not direct investments in the OTRS plan. Instead of having an account balance that may fluctuate with variations in the stock market when you retire, OTRS guarantees a defined benefit amount for your lifetime. 

In the Voluntary Retirement Savings Plans and the 401(a) defined contribution plans in Option 1 or Option 2, you direct the investment of your accounts and the amount you have for retirement depends on the investment choices you make during your career and your account balance.

6. What other sources of retirement income will you have?

If you choose Option 2 and fail to save any of your own money for retirement, you will be less ready for retirement than if you chose Option 1. Your 401(a) defined contribution plan account balance combined with Social Security and your general personal savings may not be enough for you to live as you wish to in retirement. It is highly recommended that you save your own money for retirement, whether you choose Option 1 or Option 2. 

7. Do you intend to stay at OU only a short period of time?

If you anticipate having many different employers over your career or you do not expect to stay with OU at least seven years, you would want to look more closely at Option 2 because it is more portable to other employers and it has a shorter vesting period.

However, if you continue to participate in OTRS or another Oklahoma state retirement program after you leave OU, your participation in Option 1 may be credited or transferred.

8. If you left OU before retiring and were vested in OTRS (for example, at age 50), would you be willing to keep your money in OTRS so that you could collect a retirement benefit later?

If you do not take a distribution of your OTRS contributions, you become a non -participating member. At retirement age (age set by OTRS), you will be entitled to collect retirement benefits based on the benefit you had accrued under OTRS during your years of service with OU. 

9. Did you participate in OTRS with another institution or have you ever been a participant in any other Oklahoma state retirement programs?

The longer you are in OTRS or another Oklahoma state retirement program, the better choice it becomes. OTRS is designed primarily to reward long-service employees. Your service credit may transfer to other Oklahoma state retirement programs.

10. Will you have sources of retirement income other than the benefits you earn while you are at OU?

For example, if you are unmarried and would not have the cushion of a second retirement income in your home, you may feel more secure choosing Option 1 because you can more easily predict the retirement benefit it will provide. Consider discussing your choices with a personal financial planner.

11. Are you working for OU on a research grant or other short-term project?

If you do not anticipate staying with OU long enough to become vested in OTRS, it may be better for you to choose Option 2 and also save your own money in a Voluntary Retirement Savings Plan. NOTE: You must have three years of service credit to become vested in the 401(a) defined contribution plan.

Documents

Retirement Enrollment Forms
These forms are used to enroll in OU's retirement plans.
OTRS- OKLAHOMA TEACHERS RETIREMENT SYSTEM PERSONAL DATA & BENEFICIARY FORM
Campus: Norman, OUHSC, Tulsa
Description: Teachers' Retirement System of Oklahoma Personal Data and Beneficiary Form Description: If you are enrolling or already enrolled in the Oklahoma Teachers' Retirement System (OTRS), download the Personal Data Form on the OTRS website to designate or update a beneficiary.
OTRS_SB683 NORMAN DISTRICT TEACHERS' RETIREMENT SYSTEM OF OKLAHOMA OPTIONAL (HOURLY) EMPLOYEE ELECTION FORM
Campus: Norman, Tulsa
Description: OTRS_SB683 Norman District Teachers' Retirement System of Oklahoma Optional (Hourly) Employee Election Form
OTRS_SB683 OUHSC DISTRICT TEACHERS' RETIREMENT SYSTEM OF OKLAHOMA OPTIONAL (HOURLY) EMPLOYEE ELECTION FORM
Campus: OUHSC, Tulsa
Description: OTRS_SB683 OUHSC District Teachers' Retirement System of Oklahoma Optional (Hourly) Employee Election Form
RETIREMENT ELECTION FORM - SALARIED EMPLOYEES
Campus: Norman, OUHSC, Tulsa
Description: Salaried benefits eligible employees should use this form to elect Option 1 or Option 2 for their retirement program.