Teacher and Employee Retention (TERI) Program
Active members of SCRS who are eligible for service retirement may elect to participate in the Teacher and Employee Retiree Incentive program (TERI). TERI allows you to retire and begin accumulating your retirement annuity on a deferred basis without terminating employment. You must enroll at the time of retirement.
By participating in TERI, you may defer receipt of your retirement annuity for up to 60 months. Your monthly retirement annuity is accumulated in your TERI account. No interest is paid on annuity benefits accumulated in your TERI account. Retiree cost-of-living adjustments are applied to a TERI participant’s monthly annuity in the same manner in which other retirees receive such adjustments.
You may participate in TERI only once. If you retired previously and received a service or a disability retirement annuity under SCRS, you are not eligible to participate in the TERI program. However, disability retirees who have been restored to active service and repaid all benefits they received are eligible to participate in the TERI program.
During your TERI period, you are covered under the group life insurance program (if your employer has the coverage) as a contributing retiree and the group life insurance benefit is equal to one year’s salary, but you are not eligible for disability retirement.
If you die while participating in TERI, in addition to any group life insurance benefits, the total amount of your annuity accumulated in your TERI account will be distributed to the beneficiary designated for your retirement annuity. A surviving spouse who is designated as beneficiary may elect to roll over the taxable portion of the TERI balance into an Individual Retirement Account (IRA), a 401(k) plan, a 401(a) eligible plan, a 403(b) plan, or a 457 plan. However, a non-spousal beneficiary may elect to roll over the taxable portion of the TERI balance into an IRA.
At the end of your TERI period, you must terminate employment. Confirmation of your actual termination date is required from your employer. You may then receive the balance in your TERI account through either a taxable, single-sum distribution payable directly to you or through a tax-deferred rollover into a qualified retirement plan. Any distribution paid directly to you is subject to ordinary federal and state income taxes and may be subject to an additional 10 percent federal penalty for early withdrawal. Under the federal Pension Protection Act of 2006 (PPA), the 10 percent withdrawal penalty is waived for public safety employees over age 50 and military reservists and national guardsmen who are called to active duty for at least 180 days.
If you plan to return to work for a covered employer after your TERI period ends, you must consult your employer regarding the employer’s employment severance and return-to-work policy. Your TERI period will count toward the requirement that you be retired for at least 15 consecutive calendar days before returning to work for a covered employer. You are not guaranteed employment; a covered employer decides whether or not to hire you after your TERI period has ended. Regardless of your TERI retirement date, if you return to work after your TERI participation has ended, you will pay working retiree contributions like active members.
TERI Participants with Retirement Dates on or after July 1, 2005
The following guidelines apply to TERI participants with retirement dates on or after July 1, 2005.
Contribution Rates
During your TERI period you will pay the same pre-tax contribution rate as active members for the duration of your TERI period; however, you will not earn service credit or interest on your account.
Unused Annual Leave and Your AFC
The first several annuity benefits posted to your TERI account will be based on information received up to that point because your account is considered to be in an estimated status.
After your employer submits your final earnable compensation information, retirement contributions for your 12 highest consecutive quarters of earnable compensation will be audited. Your average final compensation may be adjusted accordingly after the audit and to include unused sick leave only. This is called finalized without annual leave status. Your account will remain in this status for the duration of your TERI period.
Upon termination of employment at the end of your TERI participation, your annuity will be recalculated to include payment for up to 45 days of unused annual leave paid at termination. This is post-finalized status with annual leave.