Maryland State Retirement and Pension System
As an educational institution of the State of Maryland, Montgomery College has access to state-funded retirement programs that are offered to employees. During your working years, you're busy with your career, family and social life - but you also need to think about retirement. A comfortable, secure retirement requires planning. You select a retirement program when you begin employment and your election takes effect on the first of the month following receipt of your election form.
Full-time, Faculty, Administrators and Professional Staff:
These employees are able to choose between the Maryland State Pension System Plan and the Optional Retirement Plan.
Pension System for Employees and Teachers of the State of Maryland:
The Maryland State Retirement and Pension System for Teachers is a contributory plan up to the level of the current Social Security wage base. Employees are required to contribute 7% of their gross annual salary deducted over the academic year. This reduction will not be subject to federal taxes; however, it is subject to state and FICA taxes. Contributions earn interest at the rate of five percent (5%). The State contribution to the MSRPS is determined annually by the State Retirement systems Actuary. There is a ten-year minimum service requirement in order to be vested. This is a defined benefit plan.
Optional Retirement Plan (ORP):
There are two vendors to select from in the Optional Retirement Plan (ORP): Fidelity and TIAA-CREF.
Employees do not have a required contribution. The State of Maryland (or Montgomery College for certain employees) contributes 7.25% of the employee’s academic year salary to their annuity account. Benefits are vested immediately under the Optional Retirement Plan. This is a defined contribution plan.
Full-time, Support, Paraprofessional and Technical Staff:
Support staff employees are automatically enrolled as members of either the Maryland Teacher’s Pension System or the Maryland Employees’ Pension System according to state regulations. The Teacher’s Pension system requires a 7% contribution over the academic year. The reduction will not be subject to federal taxes, however, it is subject to state and FICA taxes. There is a five-year minimum service requirement in order to be vested.
Part-time employees are also eligible for retirement benefits on a prorated basis. Faculty and professional staff employees can choose between MSRPS and one of the Optional Retirement Plans. Support, Paraprofessional, and Technical Staff are automatically enrolled in MSRPS.
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Supplemental Retirement Annuities (SRA’s)
Frequently Asked Questions (FAQ) about Supplemental Retirement Annuity Plans
Part-Time Faculty and Casual Temporary Employees-SRA Information Sheet
Part-Time Faculty and Casual Temporary Employees-Agreement for Salary Reduction for TIAA-CREF 403(b) Program
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Salary Reduction Forms
Universal Salary Reduction Form
In addition to the group insurance and retirement benefits available to you as a Montgomery College employee, you also have the opportunity to participate in Supplemental Retirement Annuities (SRA) as permitted under Section 403(b) and Section 457(b) of the Internal Revenue Code. You may reduce your salary in accordance with IRS limits allowed on a pre-tax basis and the College will remit such funds to one of the SRA plans offered. You may establish a SRA contract with ING, Equitable, TIAA-CREF and/or Valic. Each plan provides a variety of fixed and variable accounts in which to invest your funds.
It is never too early to plan for retirement. No one should expect that his or her retirement income can be comprised only from an employer plan and Social Security - personal savings is absolutely necessary. You are fortunate to have a SRA program available. Generally, an employee can contribute 100% of his/her salary, up to a maximum of $17,000 per type of annuity. This limit is effective 1/1/12. If you are over age 50 or turning age 50 in 2012 you can contribute an additional $5,500 per year (for a total of $22,500) per type of annuity. The college is also offering employees an additional opportunity to save pre-tax dollars for retirement. In addition to the 403(b) products already offered, you have the opportunity to participate in a 457(b) plan. The college is offering a 457(b) plan in addition to the 403(b) plans. 457(b)’s offer employees the capability to save up to an additional $17,000 or ($22,500 if you are over age 50 or turning 50 in 2012). The contributions reduce taxable income and earnings grow tax-deferred. .
REMEMBER - these contributions are made on a pre-tax basis and the investment returns on these funds accrue tax free. You will pay taxes at the time the funds are distributed, which will likely occur during your retirement years when you are apt to be in a lower tax bracket.
TIAA-CREF, Valic, AXA Equitable and ING offer a variety of investment options which may include annuities, mutual funds, and/or money market funds. These programs offer significant tax savings while planning for retirement and the convenience of making contributions through salary reduction. The Office of Human Resources. Development, and Engagement has the necessary forms, and plan representatives will be pleased to discuss these programs in detail. Representatives can be reached at:
- ING: Jeffrey Wheeler, CRPC (703) 405-7880
- TIAA-CREF: Telephone Counseling Center (800) 842-2776
- AXA Equitable: Mark S. Purisch (301)-840-1551
- Valic: Kevin Peterson (800) 892-5558 x 87321
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Financial, Tax and Retirement Planning Websites
Below you will find links to the websites of various corporations and organizations related to financial and retirement planning. The inclusion of these site links on this page are in no way an endorsement of the services provided by these companies. Their websites are not maintained by Montgomery College and the College assumes no responsibility as to their content or accuracy. These sites are simply offered as examples of the type of large Web sites available that contain extensive financial and retirement planning information. We cannot make any claims or representations as to the accuracy, completeness or truth of any material contained on these sites.
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