Under the Arkansas Teacher Retirement System law, you may choose to retire under Option 1 (Straight Life Annuity) or one of the three benefit options: A, B, or C. These options differ in the annuity amount paid to you and benefits payable to someone else after your death.
PLEASE NOTE: Within one (1) year of your effective retirement date, you may elect to cancel your annuity election made at the time of retirement and elect another option. The election to change your annuity option will be retroactive to the effective date of retirement and you will repay, including interest, the difference between the amount of your original annuity and the new annuity determined by your selection of another option.
The Straight Life Annuity is based on the following formula:
Of all four options, Option 1 (Straight Life Annuity) provides the maximum monthly benefit payment throughout your lifetime. Under this option, no monthly benefits will be payable to your beneficiary after your death. Upon your death, all monthly benefits cease and any applicable lump sum death benefit or residual accumulated member contributions will be paid to the designated beneficiary. (See Your Beneficiaries for more information of designating beneficiaries.) In most instances, a member who has been retired for eighteen (18) months has no residual balance left, and only the death benefit, if applicable, will be paid.
If you selected Option 1 (Straight Life Annuity) and die within one (1) year of your effective retirement date, your surviving spouse, if designated as the residue beneficiary and married to you for at least one (1) year immediately preceding your effective date of benefits, may elect to cancel the Straight Life Annuity and elect Option A – 100% Survivor Annuity.
A retiree receiving a Straight Life Annuity who was married to his or her spouse less than one (1) year upon his or her effective retirement date OR marries after retirement may elect to cancel this single lifetime benefit to elect Option A or B, providing continuous lifetime benefits to his/her spouse. The member must make the election to change the Option selection no later than six (6) months after completing one (1) full year of marriage.
Under this option you will receive a reduced benefit payment (Straight Life Annuity is reduced by a predetermined formula developed by ATRS actuaries) throughout your lifetime. For example, if both member & spouse are age 60, the reduction is approximately 18%. Upon your death, 100% of your monthly Option A benefit will be paid to the designated option beneficiary for the balance of his or her lifetime. Your option beneficiary may be one or both of the following:
1. Your spouse, married to you at least one year immediately preceding the effective date of benefits;
2. A dependent child who has been ruled physically or mentally incapacitated by a court of competent jurisdiction.
Option A Example: The member elects an Option A benefit and has a monthly benefit of $2,500. If the retiree dies, the Option A beneficiary receives approximately $2,500 each month for the rest of his or her lifetime with an annual 3% COLA added each July 1.
Important Option A – "Pop Up" Provision
The death of the designated beneficiary, divorce, or other marriage dissolution following retirement shall, at your written election (contact ATRS for applicable form), cancel any option plan elected at retirement to provide continuing lifetime benefits (Option A) to such spouse or beneficiary and return you to your single lifetime benefit, Option 1 (Straight Life Annuity), for the remainder of your lifetime. If the designated beneficiary is an incapacitated child and emancipation occurs through a court order, marriage, or death, the retiree may elect to return to Option 1(Straight Life Annuity).
Under Option B, you will receive a reduced benefit payment (Straight Life Annuity is reduced by a predetermined formula developed by ATRS actuaries) throughout your lifetime. For example, if both member and spouse are age 60, the reduction is approximately 10%. Upon your death, 50% of your monthly Option B benefit will be paid to the designated option beneficiary for the balance of his or her lifetime.
Your designated beneficiary may be one or both of the following:
1. Your spouse, married to you not less than one year immediately preceding the effective date of benefits;
2. A dependent child who has been ruled physically or mentally incapacitated by a court of competent jurisdiction.
Option B Example: The member elects an Option B benefit and has a monthly benefit of $2,500. If the retiree dies, the Option B beneficiary receives approximately $1,250 each month for the rest of his or her lifetime with an annual 3% COLA added each July 1.
Important Option B – "Pop Up" Provision
The death of the designated beneficiary, divorce, or other marriage dissolution following retirement shall, at your written election (contact ATRS for applicable form), cancel any option plan elected at retirement to provide continuing lifetime benefits (Option B) to such spouse or beneficiary and return you to your single lifetime benefit (Option 1 – Straight Life Annuity) for the remainder of your lifetime. If the designated beneficiary is an incapacitated child and emancipation occurs through a court order, marriage, or death, the retiree may elect to return to Option 1 (Straight Life Annuity).
Under Option C, ATRS guarantees that at least 120 benefit payments will be made. The retiree will receive reduced benefits for that 120 months, and then "pops-up" to a Straight Life Annuity (SLA) on the 121st month and draws a SLA benefit for the remainder of his or her life. For example, if member is age 60, the reduction is approximately 4%. If the retiree dies before receiving one hundred twenty (120) monthly benefit payments, the payments shall be continued for the remainder of the original 120 month period and be paid to the Option C beneficiary named by the retiree. Effective the month following completion of 120 payments to the retiree, the retiree's monthly benefit shall return to the "Straight Life Annuity" and the Option C beneficiary no longer has rights to the retiree's benefit. The Option C beneficiary does not have to be a relative. The Option C beneficiary can be a person or any entity that has a tax payer identification number (TIN), such as a church or charity.
Important Option C – "Pop Up" Provision
If you select Option C, and your beneficiary predeceases you, you can elect your monthly benefit payments to "pop up" to the maximum amount payable under Option 1, Straight Life Annuity, for the remainder of your lifetime OR you may designate a new beneficiary or beneficiaries.
For more information on retirement, see Retirement FAQs.
Contact ATRS at (501) 682-1517 or info@artrs.gov to request the appropriate forms or for more information.