Do you understand the difference between being a contributory ATRS member and being a non-contributory one? Below I’m going to explain what the difference is and why it matters to your retirement benefits. But first, I’d like to take a moment to brag on our ATRS Board of Trustees and staff.
I’m pleased to announce that the Public Pension Coordinating Council has awarded ATRS the 2024 Public Pension Standards Award for Funding and Administration. This award is given annually to public pension systems like ATRS that certify that they meet standards and best practices in the areas of funding adequacy, investments, comprehensive benefits, actuarial valuations, audits, and member communications.
At ATRS our mission is providing retirement security for Arkansas’s past, present, and future public education professionals. This award is a testament to the strong leadership provided by our ATRS Board of Trustees and to the great work of our dedicated staff to ensure a secure retirement for our more than 140,000 members.
CONTRIBUTORY V. NON-CONTRIBUTORY: WHY DOES IT MATTER?
Most of our ATRS members – about 81% -- are what we call “contributory” members. This means that 7% of their paycheck is deducted pre-tax and sent to their ATRS account. “Non-contributory” members have nothing deducted from their paycheck. This includes members who are not under contract with a public school or are contracted for less than 184 days in the school year, and who have not chosen to be contributory.
Both types of members are eligible for retirement benefits, but it pays to be contributory. If you are non-contributory, you are missing out on some valuable advantages. Although you may be getting more in your paycheck today, you could be giving up a lot more money for your future.
Why is contributory status a better deal for members? For at least four reasons:
- Contributory members receive higher monthly retirement benefits than non-contributory members. Suppose a member retires with 28 years of experience and their final average salary was $2,500 per month. If those 28 years were all non-contributory, that member would receive a monthly retirement benefit of $925. But if those 28 years were all contributory, that same member would have a monthly retirement benefit of $1,555 – nearly two-thirds more.
- That 7% contribution is pre-tax. This means that you pay less in taxes as a contributory member. If you are non-contributory, you cannot take advantage of the pre-tax deduction and will have to pay some of that 7% as taxes.
- Your contributions belong to you and cannot be taken away. If you change jobs and decide not to stay in ATRS, you have the option of withdrawing your contributions with interest. If you die before you retire, all of your contributions are paid with interest to your estate or the beneficiary you have designated with ATRS. And after retirement, any contributions remaining in your account will be paid with interest to your estate or beneficiary when you pass.
- Once you have 10 years of actual ATRS service years in the System, your estate or beneficiary is entitled to a lump-sum death benefit when you die. If those 10 years are non-contributory, that benefit is $6,667, but if those 10 years are contributory, the benefit goes up to $10,000.
Every non-contributory member has the right to choose to be contributory. If you make that choice, it will become effective on the July 1 following your election to become contributory.
To make a contributory election, contact your school’s HR or business office. Or, you can fill out and submit Form 22 to ATRS and we will start the process. And if you have any questions, please email us at info@artrs.gov or call us at (501) 682-1517. You can find more information in our Member Handbook here: https://www.artrs.gov/Publications/ATRS2425Handbook.pdf
LEGISLATIVE UPDATES
As of Monday the 13th, the Arkansas Legislature is back in session. If you would like to keep up with the Legislature’s activity as it relates to ATRS, you can sign up for the weekly email updates I will be sending out. If you subscribe, each week you will get a summary of all the legislative activity that impacts ATRS members. If you would like to receive those weekly update emails, please go to the following link and enter your email address to subscribe: https://www.artrs.gov/sign-up-for-legislative-updates
UPDATES FOR RETIREES
We recently mailed check stubs to our members who received a payment from ATRS in December. If you itemize your tax deductions, you will want to keep that check stub. It documents how much was withheld from your ATRS benefits for medical insurance premiums last year.
And in the next few weeks, if you received any payments from ATRS last year, you will be receiving an IRS Form 1099 in the mail. You can also view your 1099 Form through the member portal on our website beginning January 22. You will need this Form when you file your taxes for 2024.
If you don’t receive a 1099 Form by February 17, please let us know. You can always email us at info@artrs.gov or call us at (501) 682-1517 for assistance.
Mark White
Executive Director, ATRS
MarkW@artrs.gov
Office: (501) 621-8853
Cell: (501) 541-2057