General Information

Defined Benefit Supplement Program

General Information

What is the Defined Benefit Supplement Program?

AB 1509 (Chapter 74, Statutes of 2000) established the Defined Benefit Supplement Program. The Defined Benefit Supplement Program is a hybrid cash balance plan for Defined Benefit members that provides additional savings for retirement.

Funds come from compensation earned from service in one school year in excess of one year of service credit and limited-term salary increases. From January 1, 2001, through December 31, 2010, funds came from 25 percent of your monthly CalSTRS contribution.

At retirement, disability, death or six months following termination of CalSTRS-covered employment, the funds in your account will be available to you or your beneficiary, whichever is applicable.

What is my contribution rate?

If you were a member between January 1, 2001 and December 31, 2010, you contributed 8 percent of creditable compensation earned to the CalSTRS Defined Benefit Program. Six percent of creditable compensation earned went to the CalSTRS Defined Benefit Program and 2 percent to the Defined Benefit Supplement Program account during that time period.

For example, if your monthly compensation for CalSTRS-covered service is $3,000, you contributed $240 per month to CalSTRS; $60 was allocated to your Defined Benefit Supplement Program account.

Since July 1, 2002, member and employer contributions on compensation earned for creditable service in excess of one year of service in a school year, and other compensation for CalSTRS 2% at 60 members, are credited to the Defined Benefit Supplement Program. This provision has no sunset date. See Defined Benefit Supplement Program.

How long will these contributions be allocated to my Defined Benefit Supplement Program account?

Your Defined Benefit Supplement Program account was established January 1, 2001, or when you were employed in CalSTRS-covered employment, whichever was later. The 2 percent of contributions under AB 1509 to your Defined Benefit Supplement Program account terminated January 1, 2011, and are no longer allocated to your Defined Benefit Supplement Program account.

Other types of compensation, including service in excess of one year, will continue to be paid into your Defined Benefit Supplement Program account. See Defined Benefit Supplement Program.

What happens to my money in my Defined Benefit Supplement Program account?

Your money earns interest at a guaranteed rate that is set annually by the Teachers’ Retirement Board.

Will my paycheck stub reflect my contributions to this program?

No. Your regular CalSTRS monthly contribution amount will not change or be reduced as a result of the Defined Benefit Supplement Program and your paycheck stub will look the same.

Where can I get more information about the Defined Benefit Supplement Program?

See Defined Benefit Supplement Program or Contact CalSTRS.

Do I need to take any action at this time, such as completing enrollment forms, for the Defined Benefit Supplement Program?

No. As an active member, you are automatically enrolled in the Defined Benefit Supplement Program.

Can I make voluntary contributions to my Defined Benefit Supplement Program account?

No.

Can I make a partial withdrawal of my funds from my Defined Benefit Supplement Program account?

No. You must withdraw all of the funds from your Defined Benefit Supplement Program account when you terminate CalSTRS-covered employment or receive a retirement or disability benefit from your Defined Benefit Program account.

Can I borrow against the balance in my Defined Benefit Supplement Program account?

No.

Does my employer make any contributions on my behalf to my Defined Benefit Supplement Program account as a result of AB 1509?

No.

Can I name different beneficiaries for my Defined Benefit Program and Defined Benefit Supplement Program accounts?

No. Your Defined Benefit Supplement Program beneficiary will be the same as your Defined Benefit Program designated beneficiary.

Will my Defined Benefit Supplement Program contributions affect any voluntary contributions I make to other savings programs, such as contributions to a 403(b) account?

No.

How would a divorce affect my Defined Benefit Program Program and Defined Benefit Supplement Program accounts?

Your Defined Benefit Program and Defined Benefit Supplement Program funds are separate and distinct accounts. However, both are subject to California community property laws and distribution by court order.

Can I request an estimate of my Defined Benefit Supplement Program account?

Yes, when the funds in your Defined Benefit Supplement Program account equal or exceed $3,500. You can find your Defined Benefit Supplement Program account balance on your Retirement Progress Report, available on myCalSTRS.

See the Member Handbook for more information.

Does my benefit effective date need to be the same for both my Defined Benefit Program and Defined Benefit Supplement Program accounts?

Yes.

Is this money taxed when I take it out?

Yes. These funds may be subject to state and federal taxes unless you roll the account balance over to another qualified plan. You may wish to consult your tax advisor.

Service Retirement

As a result of AB 1509, will my monthly retirement benefits under the Defined Benefit Program change?

No. Your monthly Defined Benefit Program retirement payment is based on a formula that includes your final compensation, years of service credit and a factor based on your age at retirement. It is not based on the funds in either your Defined Benefit Program or Defined Benefit Supplement Program account.

What happens to my Defined Benefit Supplement Program account when I retire?

At retirement you will elect how to receive your Defined Benefit Supplement Program funds. If you retire with a balance in your Defined Benefit Supplement Program account of less than $3,500, you must take a lump-sum distribution. If the balance in your Defined Benefit Supplement Program account is $3,500 or more, you must choose one of the following:

  • A lump-sum distribution
  • An annuity
  • A combination of lump-sum distribution and annuity

Disability Benefits

As a result of my Defined Benefit Supplement Program account, will my monthly disability benefits under the Defined Benefit Program change?

No. Your monthly Defined Benefit Program disability payment is based on a formula that is not affected by the funds in either your Defined Benefit Program or Defined Benefit Supplement Program accounts.

What happens to my Defined Benefit Supplement Program funds if I become disabled before I retire?

Provided that the amount in your Defined Benefit Supplement Program account is at least $3,500 you can elect to receive either a lump-sum distribution or a monthly annuity. If the amount in your Defined Benefit Supplement Program account is less than $3,500, you must take a lump-sum distribution.

Annuity Choices

What are my annuity choices?

Choices for a Member-Only Benefit

The Member-Only Benefit offers the following payment choices:

  • Lump-Sum Payment
  • Member-Only Annuity
  • Period-Certain Annuity
  • Combination of Lump-Sum Payment and Annuity

Choices for a Modified Benefit

If you elect the Modified Benefit, you have the following payment choices:

  • Lump-Sum Payment
  • 100% Beneficiary Annuity
  • 75% Beneficiary Annuity
  • 50% Beneficiary Annuity
  • Period-Certain Annuity
  • Combination of Lump-Sum Payment and Annuity

Additional information about these choices is available in the Member Handbook.

What is a Member-Only Annuity?

A lifetime monthly payment. Any balance remaining upon your death will be paid to your one-time death benefit recipients.

What is a 100% Beneficiary Annuity?

A monthly payment for your lifetime and the lifetime of your annuity beneficiary. One hundred percent of your monthly annuity amount will be paid to your annuity beneficiary upon your death. If your beneficiary dies before you, your benefit will rise to the Member-Only Annuity amount.

What is a 75% Beneficiary Annuity?

A monthly payment for your lifetime and the lifetime of your annuity beneficiary. Seventy-five percent of your monthly annuity amount will be paid to your annuity beneficiary upon your death. If your beneficiary dies before you, your benefit will rise to the Member-Only Annuity amount.

What is a 50% Beneficiary Annuity?

A monthly payment for your lifetime and the lifetime of your annuity beneficiary. Fifty percent of your monthly annuity amount will be paid to your annuity beneficiary upon your death. If your beneficiary dies before you, your benefit will rise to the Member-Only Annuity amount.

What is a Period-Certain Annuity?

A monthly payment made for any number of years from three to 10. The amount you receive is based on the number of years over which the annuity is paid—the fewer the years, the higher the amount payable. If you die before the annuity period ends, the remaining payments will be paid to your one-time death benefit recipients.

What is a Combination of Lump-Sum Payment and Annuity?

A lump-sum payment and one of the annuities. To elect this choice, you must have $3,500 or more remaining in your Defined Benefit Supplement account after your lump-sum payment.

Can I request an estimate of my Defined Benefit Supplement Program annuity?

Yes, when your Defined Benefit Supplement Program account balance is equal to or exceeds $3,500. 

When can I make my annuity choice?

At the time you file a service retirement or disability benefit application, you will also make your Defined Benefit Supplement Program distribution choice. You must either choose a lump-sum distribution or select an annuity or a combination of both.

If I Terminate CalSTRS-covered Employment

Am I required to take the Defined Benefit Supplement Program termination benefit if I leave CalSTRS-covered employment?

If you leave CalSTRS-covered employment and withdraw the funds from your Defined Benefit Program account, you are required to take the Defined Benefit Supplement Program termination benefit which will close out your Defined Benefit Supplement Program account.

If you leave CalSTRS-covered employment and do not withdraw funds from your Defined Benefit Program account, you may leave your Defined Benefit Supplement Program funds on account. Your funds will continue to accrue interest as long as they remain on deposit.

If I terminate employment, when can I get my Defined Benefit Supplement Program funds?

If after termination of employment you have not performed creditable service for six months and you have received a refund of your Defined Benefit Program account, CalSTRS will refund your Defined Benefit Supplement Program account.

If I terminate employment and take my Defined Benefit Supplement Program termination benefit and later return to membership, can I redeposit these funds?

No. Although you can redeposit previously refunded funds into your Defined Benefit Program account, funds from your Defined Benefit Supplement Program account cannot be redeposited.

If I terminate employment and take my Defined Benefit Supplement Program termination benefit and return to CalSTRS membership before six months have elapsed, will the termination benefit be issued?

No. If you return to membership and Defined Benefit Supplement Program contributions are received within the six-month period, your application for a Defined Benefit Supplement Program termination benefit will be canceled.

In the Event of Death

What happens to my Defined Benefit Supplement Program funds if I die before I retire?

Provided that the amount in your Defined Benefit Supplement Program account is at least $3,500, named beneficiaries can elect to receive either a lump-sum distribution or a monthly annuity. If the amount in your Defined Benefit Supplement Program account is less than $3,500, named beneficiaries must take a lump-sum distribution.

What happens to my Defined Benefit Supplement Program funds if I die after I retire?

If you elected a lump-sum distribution from your Defined Benefit Supplement Program account at the time of your retirement or disability, no further Defined Benefit Supplement Program benefit is payable. If you elected a monthly annuity, any further distribution of funds is based on the type of annuity selected.

As a result of AB 1509, will my survivors’ monthly family payment under the Defined Benefit Program change?

No. Your survivors’ monthly family payment or surviving spouse payment is based on a formula that is not affected by the funds in either your Defined Benefit Program or Defined Benefit Supplement Program accounts.

In the event of my death, what happens if I elected the Member-Only Annuity?

Any balance remaining upon your death will be paid to your one-time death benefit recipients.

In the event of my death, what happens if I elected the 100% Beneficiary Annuity?

One hundred percent of your monthly annuity amount will be paid to your
annuity beneficiary upon your death.

In the event of my death, what happens if I elected the 75% Beneficiary Annuity?

Seventy-five percent of your monthly annuity amount will be paid to your annuity beneficiary upon your death.

In the event of my death, what happens if I elected the 50% Beneficiary Annuity?

Fifty percent of your monthly annuity amount will be paid to your annuity
beneficiary upon your death.

In the event of my death, what happens if I elected the Period-Certain Annuity?

If you die before the annuity period ends, the remaining payments will be paid to your one-time death benefit recipients.

Tax Considerations

Are my contributions to my Defined Benefit Supplement Program account tax deferred?

Yes, as long as your employer does not tax your retirement contributions when your salary is paid.

Is the interest on my Defined Benefit Supplement Program account tax deferred?

Yes.

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