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RE: Important Information For ARP Participants
You are receiving this letter because you were employed prior to July 1, 2011 and were participating in the Alternative Retirement Plan (ARP) on July 1, 2011. This letter explains an opportunity for you to make a one-time irrevocable option to transfer from ARP to the new State Employees Retirement System (SERS) Hybrid Plan based on the 2011 SEBAC Agreement (Agreement) which became effective July 1, 2011. The SERS Hybrid Plan is a defined benefit plan with a "cash out" option intended to be qualified under section 401(a) of the Internal Revenue Code.
The Agreement provides ARP participants employed prior to July 1, 2011 with a one-time irrevocable option to transfer from ARP to the new SERS Hybrid Plan. Under this option ARP participants will be required to pay the full actuarial cost of any prior Connecticut State service they choose to purchase upon joining the Hybrid Plan. The benefit which the employee will receive from the Hybrid Plan will be the same as that payable under the SERS Tier II or Tier IIA retirement plan dependent upon the individual's date of employment; members on-going contributions will be 5% of compensation (pre-tax) to the Hybrid Plan for members whose original date of hire is on or after July 1, 1997; for members whose original date of hire is prior to July 1, 1997 on-going contributions will be 3% of compensation (pre-tax) to the Hybrid Plan plus 2% of compensation (pre-tax) to the ARP.
You are eligible to participate if you are a current, active ARP participant and were employed prior to July 1, 2011 or if you were an ARP participant employed prior to July 1, 2011 who was actively employed on July 1, 2011 and retired or terminated state service with vested benefits subsequent to that date and prior to July 1, 2012. Terminated, vested or retired ARP participants must apply by September 1, 2012 to take advantage of this opportunity.
The "window" for active ARP participants to choose to transfer from ARP to the Hybrid Plan will be open until 90 days following a ruling by the Internal Revenue Service (IRS) on the SEBAC ARP Grievance (SAG) Award. Information concerning the SAG Award is available on the Office of the State Comptroller's (OSC) website, www.osc.ct.gov. Employees are NOT required to transfer to the Hybrid Plan but if you are interested in transferring you may do so now or wait until the ruling has been received from the IRS on the SAG Award. You will be provided notice from our office following the receipt of information from the IRS.
Interested employees should obtain an estimate of the cost to purchase credit for their prior ARP service to the Hybrid Plan by using the cost estimator available on the OSC website, under the Employee Resources Section at www.osc.ct.gov/stemploy/htm.
Employees will be required to transfer all of their ARP funds, including those on deposit with TIAA-CREF, to the ING Stable Value Account to purchase the service credit.
If you are interested in making this one-time irrevocable option, please obtain and complete a CO-994 SEBAC 2011 Option to Transfer from the Alternate Retirement Program to the State Employee Retirement System Hybrid Plan form on the OSC website and return it to the OSC - Retirement Services Division, Miscellaneous Retirement Systems Unit, 55 Elm St., Hartford, CT 06106. If you have TIAA Fixed Traditional Account funds, also known as encumbered funds, you must also complete Form CO-995 ARP Encumbered Funds Form and take the necessary action to begin transferring these monies to the ING stable value account. Once we receive your paperwork making this election it cannot be revoked for any reason.
We understand that this may be a difficult decision and we have provided the following tools to assist you with making this one-time irrevocable change: the plan provisions of the SERS Hybrid Plan Document, a comparison chart outlining both plans and the cost estimator to determine the cost to purchase credit for your prior ARP service to the Hybrid Plan. All of this information is available on the OSC website under the Employee Resources Section at www.osc.ct.gov/stemploy/htm.
If you wish to remain in ARP you may also obtain Form CO-994 SEBAC 2011 Option to Transfer from the Alternate Retirement Program to the State Employee Retirement System Hybrid Plan on the OSC website and complete sections I, II and V. This will certify that you have made a choice to waive your right to transfer to the SERS Hybrid Plan which is irrevocable. This option will require that throughout your entire employment with the State of Connecticut you will remain in ARP until and unless retirement plan provisions, as outlined on the OSC website, under Mandatory Retirement Plan Options for State Teachers and Professional Staff Members in Higher Education, require a change.
Questions regarding this matter may be directed as follows: OSC.RSD@po.state.ct.us or to the OSC Retirement Services Division, Miscellaneous Retirement Systems Unit at (860) 702-3508.
The considerations for deciding between ARP and the new SERS Hybrid Plan are very complex. It is imperative that you clearly understand the two plans and evaluate which is best for you before making an irrevocable election.
STATE EMPLOYEES RETIREMENT COMMISSION
KEVIN LEMBO, SECRETARY EX OFFICIO
Brenda K. Halpin, Director
Retirement Services Division
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