General Information

Consolidating Program Coverage

Consolidation of Benefits Overview

What is consolidation of benefits?

Consolidation of benefits is a process CalSTRS uses to merge benefit coverage for a person who has accrued benefits under both the Defined Benefit Program and the Cash Balance Benefit Program. 

When a member’s benefits are consolidated, CalSTRS transfers the member’s contributions and interest from the CB Benefit Program to the Defined Benefit Program and closes the member’s Cash Balance account. CalSTRS grants service credit to the member’s Defined Benefit account based on the time covered under the Cash Balance Benefit Program that is “eligible Cash Balance service.” The contributions and interest in the Cash Balance account are applied to the cost of consolidating benefit coverage. 

Who is eligible to consolidate benefits?

To be eligible, you must:

  • Currently be making contributions under the Defined Benefit Program.
  • No longer be contributing to your Cash Balance account.
  • Have eligible Cash Balance service to convert.
  • Have funds in your Cash Balance account.

What advantages are there for me if I consolidate my benefits?

By consolidating your benefit coverage, you may increase the amount of Defined Benefit Program service credit that will be used to determine your retirement benefit. In addition to increasing your monthly retirement allowance, for members under CalSTRS 2% at 60, credit for your eligible Cash Balance Benefit Program service may be used toward eligibility for benefit enhancements, such as one-year final compensation and career factor.

What is eligible Cash Balance service?

Eligible Cash Balance service is part-time employment that was covered under the Cash Balance Benefit Program. For purposes of consolidating benefit coverage, however, eligible Cash Balance service does not include overtime that, prior to July 1, 2002, was covered under the Cash Balance Benefit Program. 

My Cash Balance account contains contributions and interest from overtime, as well as rollover funds from other qualified plans. Can these funds be used to consolidate my benefit coverage?

No. If the only funds in your Cash Balance account are from overtime service performed prior to July 1, 2002, and/or rollover funds, you are not eligible to consolidate benefits. You must have eligible Cash Balance service to be eligible to consolidate benefits.

Understanding the Process

What will happen when my benefits are consolidated?

When your benefits are consolidated, CalSTRS will determine the amount of service credit that can be added to your Defined Benefit account, and will apply the contributions and interest in your Cash Balance account toward the cost of covering your eligible Cash Balance service under the Defined Benefit Program.

In many cases, Cash Balance Benefit Program contributions and interest will not cover the full cost of all eligible Cash Balance service that you performed. However, if you have contributions from overtime, or rollover funds in your Cash Balance account, those funds may also be applied to the cost of covering your eligible Cash Balance service (these funds do not convert to service credit).  

Why might my Cash Balance contributions and interest not be enough to cover the cost of my eligible Cash Balance service under the Defined Benefit Program?

The current cost to convert Cash Balance service into Defined Benefit service credit is figured on a tiered rate formula based upon your age at the time CalSTRS receives your request. Because the contribution rate for Cash Balance Benefit Program participants and employers is usually a combined 8 percent, less than half the contribution rate for the Defined Benefit Program, the contributions and interest available in the participant’s Cash Balance Benefit Program account may not cover the full cost of service credit under the Defined Benefit Program.

Can I receive credit for only the amount of service that my Cash Balance account balance will cover?

Yes. If the funds in your Cash Balance account do not cover the entire cost of your eligible Cash Balance service under the Defined Benefit Program, the service credit to be added to your Defined Benefit account can be prorated based on the funds available in your Cash Balance account.

My Cash Balance account balance is insufficient to cover the cost of my eligible Cash Balance service. Can I receive full credit under the Defined Benefit Program for the remaining Cash Balance eligible service that I performed?

You may contribute personal funds toward covering the remaining cost of your eligible Cash Balance service. To do so, you must request a separate billing. You may choose from several payment alternatives, including a lump-sum payment, payroll deduction, monthly installments over a specified period or a rollover from a qualified plan. For additional information, refer to the Purchase Additional Service Credit brochure.

Other General Information

What if the funds in my Cash Balance account exceed the amount that is necessary to cover my eligible Cash Balance service under the Defined Benefit Program?

CalSTRS must transfer all funds from your Cash Balance account when your benefits are consolidated and your account must be closed. All of your Cash Balance funds must first be applied to the consolidation of your eligible Cash Balance service under the Defined Benefit Program. After your Cash Balance funds have been applied to the cost of covering your eligible Cash Balance service, you may have CalSTRS:

  • apply any remaining funds to any outstanding debt you might have to CalSTRS that is not being paid through a tax-deferred payroll deduction; and/or
  • apply any remaining funds to the cost of other service credit that you are eligible to purchase; and/or
  • transfer the remaining funds to your Defined Benefit Supplement account.

What other types of service credit can my excess funds be used to cover?

Any remaining funds can be applied toward the cost of purchasing the following types of service credit:

  • Time from sabbatical, maternity, paternity or family care and medical leave
  • Certain military service
  • Service credit for activities such as out-of-state teaching
  • Redeposit of previously withdrawn contributions

For more information and a full explanation of the types of service credit that may be purchased, refer to the Purchase Additional Service Credit brochure.

Can I apply only a portion of the funds in my Cash Balance Benefit Program account to cover the cost of my eligible Cash Balance service, and then apply remaining funds to cover the cost of other service credit, or to redeposit, or for credit to my Defined Benefit Supplement account?

The funds in your Cash Balance account must first be applied to cover the cost of all eligible Cash Balance service that you have performed. If additional funds remain in your Cash Balance account after all of your eligible Cash Balance service has been consolidated, then you may specify how you wish the remaining funds to be applied, toward the cost of other service credit, a redeposit, or transferred to your Defined Benefit Supplement account.

Is there any advantage to consolidating benefits early in my career rather than later?

There could be. The cost to purchase Defined Benefit service credit depends on your highest earnable salary and the Defined Benefit Program contribution rate. If the contribution rate and/or your earnable salary increases, the cost to purchase additional service credit could be substantially higher later in your career.

When I request a consolidation of benefit coverage, may I continue to participate in the Cash Balance Benefit Program?

No. In order to be eligible to consolidate benefit coverage, your Cash Balance account must be closed and you can no longer be contributing.

May I participate in the Cash Balance Benefit Program after consolidating my benefits?

Yes. You may elect to participate in the Cash Balance Benefit Program in the future. If so, a new account will be established. However, in most cases, it would be in your best interest to continue to accrue service credit under the Defined Benefit Program to further increase your Defined Benefit benefits.

While I was employed in a full-time position under the Defined Benefit Program, I was concurrently employed part time in a position covered under the Cash Balance Benefit Program. Is this Cash Balance service eligible for consolidation?

No. The service that was covered under the Cash Balance Benefit Program while you were employed full time under the Defined Benefit Program was considered overtime service, which cannot be consolidated.

If I am not eligible to purchase credit for other types of service under the Defined Benefit Program, can the funds in my Cash Balance account be consolidated with my Defined Benefit Supplement account?

No. Cash Balance funds cannot be consolidated with your Defined Benefit Supplement account if there has not been any application of Cash Balance funds to the cost of covering eligible Cash Balance service under the Defined Benefit Program.

Service Credit and Cash Balance Service

I am already purchasing service credit under the Defined Benefit Program. Can I apply the funds in my Cash Balance account to this purchase?

Under certain circumstances, yes. After your Cash Balance funds have been applied to the consolidation of your benefits, you may have CalSTRS apply any remaining Cash Balance funds to a purchase of service credit that is already in process, as long as you are not making payments on the service credit purchase through a tax-deferred payroll deduction.

I previously purchased my eligible Cash Balance service with personal funds, so a balance of funds still remains in my Cash Balance account. Am I eligible to have my benefits consolidated?

In this case, your benefits have already been consolidated. If you previously purchased your eligible Cash Balance service and the funds in your Cash Balance account were not used for that purpose, CalSTRS must re-allocate your Cash Balance funds. The law prohibits the same service from being covered under more than one plan, or more than one program within a plan. Contact CalSTRS for additional information.

I performed eligible Cash Balance service, but received a termination benefit and my Cash Balance account was closed. Am I eligible to have my benefits consolidated?

No. Since you do not have any funds in your Cash Balance account, there are no benefits to consolidate. However, you may purchase credit under the Defined Benefit Program for any eligible Cash Balance service you performed.

I never performed eligible Cash Balance service. I received a termination benefit and my Cash Balance account was closed. Am I eligible to have my benefits consolidated?

No. Because you never performed any eligible Cash Balance service, there is no service to convert. However, as a Defined Benefit Program member, there may be other service you are eligible to purchase. Refer to the Purchase Additional Service Credit brochure for more information about the types of service credit you may be eligible to purchase.

Can I have my benefits consolidated if I previously participated in the Cash Balance Benefit Program for service in the same position that is now covered under the Defined Benefit Program?

Yes, if you are currently contributing to the Defined Benefit Program and not to the Cash Balance Benefit Program, you may elect to consolidate your benefits.

Can I have my benefits consolidated if I am both a Cash Balance Benefit Program participant and a Defined Benefit Program member under the same employment?

Yes, if you are currently contributing to the Defined Benefit Program and not to the Cash Balance Benefit Program, you could elect to consolidate your benefits.

I understand that a Cash Balance Benefit Program participant must wait six months after termination of employment to receive a termination benefit. Does the six-month waiting period apply when consolidating benefits?

No, a consolidation of benefits is different from a distribution of benefits and does not require a six-month waiting period.

How do I make a request for consolidation of my benefits?

You must complete and submit a Request to Consolidate Benefits form, found in the Cash Balance Request to Consolidate Benefits Packet. This packet includes an information sheet on the process and form instructions for completing the request. You must also complete and have each of your former Cash Balance employers sign a Cash Balance Employment Certification form; and complete and have your current employer sign the Cash Balance Defined Benefit Employment form. The entire package of necessary forms is included in the Consolidation of Benefits Package. Completed forms should be mailed directly to:

CalSTRS
P.O. Box 15725, MS 20
Sacramento, CA 95851-0275

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