The Cash Balance Benefit Program is a hybrid retirement program that can be an alternative to the CalSTRS Defined Benefit Program, Social Security and other retirement plans. It accumulates funds based on dollars contributed by the employee and the employer plus interest, similar to a defined contribution program.
Eligibility is determined on the basis of employment, part-time
or temporary, not on the actual hours worked. Generally,
employees and employers each contribute 4 percent of the
employee’s gross salary.
With the Cash Balance Benefit Program, your employer matches your
contribution at least dollar for dollar. Typically, you
contribute 4 percent of your salary and so does your district.
This combined contribution usually will total 8 percent.
CalSTRS is required to withhold 20 percent federal income tax on
all rollover-eligible payments distributed directly to you. If
you choose to have state income tax withheld, CalSTRS will
withhold at 10 percent of your federal withholding, or 2 percent.
You may apply for disability at any time. All creditable service
subject to coverage by the Cash Balance Benefit Program and
Defined Benefit Program must be terminated before receiving a
disability benefit. A disability benefit will become payable only
if you meet all disability benefit requirements and upon
determination by CalSTRS that you have a total and permanent
If you die before retirement, the balance of your contributions
and your employers’ contributions plus any compounded interest
and additional credits will be paid to your designated recipient.
Normal distribution is a lump-sum benefit, or your beneficiary
can choose an annuity if the balance is $3,500 or more. If you
did not designate a recipient, a lump-sum payment will be paid to
If you end all CalSTRS creditable service subject to coverage by
the Cash Balance Benefit Program and the Defined Benefit Program
for any reason other than death, disability or retirement, you
may apply for a lump-sum termination benefit.
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