STATE EMPLOYEES
RETIREMENT COMMISSION
COMPTROLLER'S SEAL STATE OF CONNECTICUT 55 ELM STREET
HARTFORD, CONNECTICUT
06106-1775
TELEPHONE: (860) 702-3480
TELEFAX:(860) 702-3489
MEDICAL EXAMINING BOARD
for DISABILITY RETIREMENT
HEALTH CARE COST
CONTAINMENT COMMITTEE
STATE OF CONNECTICUT
RETIREMENT AND BENEFIT SERVICES DIVISION
OFFICE OF THE STATE COMPTROLLER

RETIREMENT & BENEFIT SERVICES DIVISION MEMORANDUM

January 26, 2004

TO THE HEADS OF ALL STATE AGENCIES

ATTENTION: All Personnel and Payroll Officers
SUBJECT: Alternate Retirement Program (ARP) - Revisions to the Cash Withdrawal and Small Sum Policies

I. INTRODUCTION

The purpose of this memorandum is to discuss the revisions to the Alternate Retirement Program's (ARP) cash withdrawal policy and the small sum policy (formerly referred to as the repurchase policy). The new enrollment procedures that should be used effective immediately for new and reemployed ARP members are also discussed herein.

II. ARP CASH WITHDRAWALS

While the ARP is designed to provide eligible participants (and their spouse/annuitant, if elected) with lifetime retirement income, a cash withdrawal feature was added in July 1997 as an additional payment choice for retiring members of the ARP. The cash withdrawal is selected in lieu of lifetime payments (if eligible) or in conjunction with the receipt of lifetime income. Cash withdrawals are available on amounts that have not already been annuitized.

The initial cash withdrawal option, outlined in the Retirement & Benefit Services Division Memorandum dated July 1,1997, was available to ARP members who terminated their service on and after attaining (1) age fifty-five (55) with a minimum of ten (10) years of participation in the ARP based on Connecticut State employment or (2) age sixty-two (62) with at least five (5) but less than ten (10) years of Connecticut ARP participation.

Effective January 1, 2004, the eligibility requirements for cash withdrawal were changed. The revised cash withdrawal option is available to ARP members at age fifty-five (55) or older provided they participated in the ARP for five (5) years or more as of their termination of Connecticut State employment.

For example, if a member separates from state service at age 45 with seven (7) years of participation in the ARP, such member will be eligible to elect the cash withdrawal option at age 55 or older; if the member is 55 or older with at least five (5) years of ARP participation at termination of state service, such member would be immediately eligible to elect the cash withdrawal option.

The Retirement & Benefit Services Division will audit and correct, if necessary, service credit calculations compiled by the ARP member's employing agency to ensure eligibility for cash withdrawal.

Cash withdrawals are governed by applicable provisions of the State of Connecticut and TIAA-CREF, the company that underwrites the ARP.

- For Group Retirement Annuity (GRA) contracts (ARP contracts generally issued on and after July 1, 1992) cash withdrawals from the TIAA Traditional Account are available in a lump sum only within 120 days after the later of termination of state employment and the date the participant attains age 55 and are subject to a 2.5% surrender charge. If the member is age 55 or older at termination, the 120 day window begins the day after the member's termination date; if the member is under age 55 at termination, the 120 day window begins the day after the member's 55th birthday. If the member does not apply during the applicable 120 day window period, a cash withdrawal from the TIAA Traditional Account will then be available in ten (10) annual installments. Cash withdrawals from the CREF Accounts and the TIAA Real Estate Account are available at any time after the later of termination of state employment and attaining age 55 and are not subject to any surrender charges.

- For Retirement Annuity (RA) contracts (ARP contracts generally issued prior to July 1, 1992) cash withdrawals from the TIAA Traditional Account are available in ten (10) annual installments after the later of termination of state employment and the date the participant attains age 55. Lump sum withdrawals from the CREF Accounts and the TIAA Real Estate Account are available at any time after the later of termination of state employment and the date the participant attains age 55.

Taking a cash withdrawal may have tax implications; the participant should check with his/her tax advisor before making this decision. Specific questions concerning the availability of cash withdrawals should be addressed to TIAA-CREF or to the Retirement & Benefit Services Division.

III. SMALL SUM POLICY

Effective January 1, 2004 the repurchase policy will be referred to as the small sum policy. The repurchase policy provided a return of a portion of the accumulations in the GRA contracts of terminated ARP members provided such contracts were less than five (5) years old. On and after January 2, 2004, the small sum policy provides for the return of a portion of the accumulations in the GRA contracts of terminated ARP members provided the members participated in the ARP for less than five (5) years.

As with the repurchase policy, under the small sum policy the terminated members may receive the portion of the accumulations that are attributable to their contributions plus any investment earnings. The portion of the accumulations that are attributable to the state's contributions will be returned to the state.

Additionally, a withdrawal from the TIAA Traditional account is available only within 120 days of the member's termination from state employment and is subject to a 2.5% surrender charge. If the TIAA Traditional accumulation attributable to member contributions is $2,000.00 or less, the member may be able to withdraw the entire amount after the 120 day window. Withdrawals from the CREF accounts and the TIAA Real Estate account are available at any time and are not subject to any surrender charges.

The Retirement & Benefit Services Division will audit and correct, if necessary, service credit calculations compiled by the ARP member's employing agency to ensure eligibility for the small sum withdrawal. 

IV. ENROLLMENT

As a result of these changes and a subsequent endorsement to the TIAA-CREF contracts used to fund the State of Connecticut ARP, it will no longer be necessary to utilize Delayed Vesting contracts.

All benefits will be fully and immediately vested in accordance with the terms of the contractual provisions of TIAA-CREF and the State of Connecticut.

Therefore, all new and rehired employees who elect to participate in the ARP should complete the enrollment form for a standard Group Retirement Annuity certificate identified by number G10.1.3N (3/01), also referred to as the Standard GRA Non-ERISA enrollment form (6/01). If an employee wishes to enroll in the ARP and the 403(b) program at the same time, the Standard GRA/GSRA (Non-ERISA) enrollment form (2/03), number M0034.0N (01/01), should be used for ease of administration. 

V.SPECIAL NOTE REGARDING STATE-SPONSORED RETIREE HEALTH PLAN ELIGIBILITY REQUIREMENTS FOR RETIRED ARP PARTICIPANTS

It is important to note that the requirements for retiring ARP members to be eligible for the state-sponsored retiree health coverage have not changed as a result of the revisions to the cash withdrawal policy discussed herein. It is also important that ARP members be apprised of the separate and distinct requirements (including different service credit thresholds) needed for retiree health coverage entitlement.

Please refer to Section III of the Retirement & Benefit Services Division Memorandum dated July 1, 1997 for this very specific information. Section III also provides information on how different ARP pension arrangements affect the ability of surviving dependents to continue the state-sponsored retiree health coverage following the death of the ARP retiree.

VI. CONCLUSION

TIAA-CREF will notify all Connecticut ARP members of the revisions to the cash withdrawal and small sum policies by letter this month. 

TIAA-CREF does not provide information on the service, age, or annuity arrangements needed to secure coverage under the state retirement health plans for the ARP member and/or the surviving eligible dependents upon the death of the participant. Therefore it is imperative that Agency Personnel/Payroll Officers provide such information to all prospective ARP "retirees".

ARP participants contemplating retirement should also be encouraged to attend periodic seminars and counseling sessions conducted by TIAA-CREF.

Questions concerning this memorandum may be directed to Jim Schnell, Coordinator of the ARP, at (860)702-3508. Additionally, inquiries regarding cash withdrawals and other ARP payment options may be addressed to TIAA-CREF at 1-888-842-7782 or to Pam McNulty, Director of TIAA-CREF's Connecticut Office, at (866)842-2051, Extension 2401.

Very truly yours,

STATE EMPLOYEES RETIREMENT COMMISSION
NANCY WYMAN, SECRETARY EX OFFICIO

BY:

Steven Weinberger, Director
Retirement & Benefit Services Division

SW/LD/me

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