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What is a consolidation of benefits?

A consolidation of benefits is a process CalSTRS can use when a person who has benefit coverage under both the Defined Benefit Program and the Cash Balance Benefit Program, and meets eligibility requirements, to merge benefit coverage under the DB Program.

When a member’s benefits are consolidated, CalSTRS transfers the member’s contributions and interest from the CB Benefit Program to the DB Program and closes the member’s CB account. CalSTRS adds service credit to the member’s DB account based on the time covered under the CB Benefit Program that is “eligible CB service.” The contributions and interest in the CB account are applied to the cost of consolidating benefit coverage. Please refer to FAQ #4 for a definition of “eligible CB service.”

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Who is eligible to consolidate benefits?

A DB Program member who has funds in a CB account from eligible CB service may consolidate benefits if he or she is currently making contributions under the DB Program and is not contributing to his or her CB account.

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

By consolidating your benefit coverage, you may increase the amount of service credit that will be used to determine your retirement benefit. In addition to increasing your monthly retirement allowance, credit for your eligible CB Benefit Program service may be used toward eligibility for benefit enhancements, such as one-year final compensation, career factor and the longevity bonus.

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What is eligible CB service?

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

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My CB 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 CB account are from overtime service and/or rollover funds, you are not eligible to consolidate benefits. You must have eligible CB service to be eligible to consolidate benefits. Please refer to FAQ #4.

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What will happen when my benefits are consolidated?

When your benefits are consolidated, CalSTRS will determine the service credit that can be added to your DB account, and will apply the contributions and interest in your CB account toward the cost of covering your eligible CB service under the DB Program. In many cases, CB Benefit Program contributions and interest will not cover the full cost of all eligible CB service that you performed. However, if you have contributions from overtime, or rollover funds in your CB account, those funds may also be applied to the cost of covering your eligible CB service. When there are more funds in your CB account than are required to cover the cost of your eligible CB service, then you have additional options to consider. In this case, see FAQ #10.

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Why might my CB contributions and interest not be enough to cover the cost of my eligible CB service under the DB program?

The current cost to convert CB service into DB 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 CB Benefit Program participants and employers is usually 8%, approximately half the contribution rate for the DB Program, the contributions and interest available in the participant’s CB Benefit Program account may not cover the full cost of service credit under the DB Program.

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

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

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

You may contribute personal funds toward covering the remaining cost of your eligible CB service. To do so, you must request a separate billing for the cost of covering the remaining CB time. 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.

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What if the funds in my CB account exceed the amount that is necessary to cover my eligible CB service under the DB Program?

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

  1. 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
  2. apply any remaining funds to the cost of other service credit that you are eligible to purchase; and/or
  3. transfer the remaining funds to your DBS account.

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

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

  • Nonqualified service (also known as “air time”)
  • 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.

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

The funds in your CB account must first be applied to cover the cost of all eligible CB service that you have performed. If additional funds remain in your CB account after all of your eligible CB 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 DBS account.

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

There could be. The cost to purchase DB service credit depends on your highest earnable salary and the DB 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.

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

No. In order to be eligible to consolidate benefit coverage, you cannot be contributing to a CB Benefit Program account.

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

Yes. You may participate in the CB Benefit Program in the future. However, in most cases, it would be in your best interest to continue to accrue service credit under the DB Program to further increase your DB benefits.

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

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

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

No. CB funds cannot be consolidated with your DBS account if there has not been any application of CB funds to the cost of covering eligible CB service under the DB Program.

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I am already purchasing service credit under the DB Program. Can I apply the funds in my CB account to this purchase?

Under certain circumstances, yes. After your CB funds have been applied to the consolidation of your benefits, you may have CalSTRS apply any remaining CB 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.

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

In this case, your benefits have already been consolidated. If you previously purchased your eligible CB service and the funds in your CB account were not used for that purpose, CalSTRS must re-allocate your CB 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 Customer Service at 800-228-5453 for additional information.

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

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

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

No. Because you never performed any eligible CB service, there is no service to convert. However, as a DB 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.

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

Yes, if you are currently contributing to the DB Program and not to the CB Benefit Program, you may elect to consolidate your benefits.

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

Yes, if you are currently contributing to the DB Program and not to the CB Benefit Program, you could elect to consolidate your benefits.

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I understand that a CB Benefit Program participant must wait 12 months after termination of employment to receive a termination benefit. Does the 12-month waiting period apply when consolidating benefits?

No, a consolidation of benefits is different from a distribution of benefits and does not require a 12-month waiting period.

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

You must complete and submit a Request to Consolidate Benefits form. You can download the Request to Consolidate Benefits form, together with an information sheet on the process and form instructions for completing the request here. You must also complete and have each of your former CB employers sign a CB Employment Certification form; and complete and have your current employer sign the DB Employment Certification form. The entire package of necessary forms can be downloaded here. Completed forms should be mailed directly to:

CalSTRS
P.O. Box 15725, MS 20
Sacramento, CA 95851-0175

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