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TFFR Member Handbook (continued)

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Glossary of Terms

Account Value
The total amount a teacher pays to TFFR including interest earned. This amount can be refunded once a teacher leaves TFFR employment.

Air Time
Up to five years of service credit can be purchased once a teacher has five years of teaching service in TFFR. Once purchased, air time will be added to the teacher’s total service and used in the Rule of 85/90 calculations and in the calculation of benefits.

Beneficiary
Person(s) designated to receive a benefit payable in the event a member dies.

Bonus
An amount paid to a member in addition to regular contract salary which does not increase the member's base rate of pay, is not expected to recur or continue in future fiscal years or is not expected to be a permanent salary increase. A bonus is not considered eligible retirement salary and is not subject to payment of member and employer contributions.

Bonuses include, but are not limited to, the following:

  • Recruitment or contract signing payments defined in North Dakota Century Code section 15.1-09-33.1.
  • Retention, experience, or service related payments.
  • Early retirement incentive payments, severance payments, or other payments conditioned on or made in anticipation of a member's retirement or termination.
  • Payments made to recognize or reward a member's accomplishments or service.
  • Other special or irregular payments which the board determines to be bonuses using criteria and documentation described in North Dakota Administrative Code section 82-04-02-01.

Contract
Any written agreement with a school board including letters of appointment and school board minutes.

Contributions (Employer)
An amount paid by the employer which is equal to 10.75% of the retirement salary a member earns during a fiscal year (July 1 - June 30). Employer contributions are not refundable to the member. Effective July 1, 2014 employer contribution rate will increase to 12.75%.

Contributions (Member)
An amount equal to 9.75% of the retirement salary earned by a member during a fiscal year (July 1 - June 30) to help finance the various TFFR benefits available. Effective July 1, 2014 member contribution rate will increase to 11.75%.

Taxed Member Contributions
Member contributions withheld from a teacher’s check and taxed in the year withheld. The member contributions are deducted from a teacher’s check after taxes have been calculated.

Tax-Deferred Member Contributions
Member contributions withheld from a teacher’s check or that are paid by the employer, and not taxed in the current year. These contributions will be taxed when the teacher starts receiving a monthly retirement check or receives a refund.

Dual Member
A TFFR member that also has service reported to the North Dakota Public Employees Retirement System (NDPERS) or the Highway Patrol Retirement System (HPRS).

FAS
Final Average Salary calculated using the average of the highest three salaries for Tier 1 members and the highest five salaries for Tier 2 members. Final average salary is a key component in determining the monthly retirement benefit.

Fiscal Year
The accounting period from July 1 through June 30.

Grandfathered Member Status
Legislated in 2011, Tier 1 employees who are within 10 years of normal retirement eligibility as of June 30, 2013 were grandfathered under current retirement eligibility provisions in effect prior to July 2013. Non-grandfathered Tier 1 employees and all Tier 2 employees are affected by the unreduced and reduced retirement changes effective July 1, 2013. See Tier definitions for additional information.

In-Staff Substitute Teacher
A licensed contracted teacher who performs substitute teaching duties for the contracting district. These duties are reportable to TFFR.

Qualified Domestic Relations Order (QDRO)
A court order relating to the division of TFFR benefits in divorce cases.

Refund
A lump sum withdrawal of the member contributions plus interest.

Retirement Salary
A teacher’s reportable contract/additional TFFR salary plus member contributions paid by employer as a salary supplement, if any.

Rule of 85
When age plus years of service equals 85 or more.

Rule of 90
When age plus years of service equals 90 or more.

Salary (Contract/Additional)
A member’s eligible earnings in employment for teaching, supervisory, administrative, and extracurricular services during a school year.

Service Credit
Each year a teacher will earn retirement service credit to use in the calculation of benefits. The employer reports a teacher’s compensated hours at the end of each school year. 700 compensated hours equals one year of service credit. A teacher cannot receive more than one year of service credit each fiscal year. If a teacher works less than 700 hours, the teacher will earn a fraction of a year.

Section 414(h)
The section of the Internal Revenue Code that deals with the federal tax treatment of member contributions.

Special Teachers
Licensed special education teachers, guidance counselors, speech therapists, social workers, psychologists, librarians, audio-visual or media coordinator, technology coordinators, and other staff members licensed by the Education Standards and Practices Board provided they are under contract with a school district.

Teacher (Member)
All persons currently licensed to teach in North Dakota by the Education Standards and Practices Board and contractually employed (including third party agreements) in teaching, supervisory, administrative, or extracurricular services. All public school teachers are required to be members of TFFR.

Teachers include:

  • Superintendents
  • Assistant superintendents
  • Licensed business managers
  • Special teachers
  • County superintendents
  • Assistant county superintendents
  • Principals
  • Assistant principals
  • Other persons in positions outline in state status

Tier 1
All active, inactive, and retired members with TFFR service credit on file on July 1, 2008.

Tier 1 Grandfathered Member
Tier 1 employee who was vested (3 years of service credit) and at least age 55 OR had the Rule of 65 or greater (age + service) on 6/30/13 will be grandfathered under retirement eligibility provisions in affect prior to July 1, 2013 (i.e. Rule of 85 and 6% early retirement reduction factor). A reduced retirement benefit can begin at age 55 with an early retirement reduction factor of 6% per year from the earlier of Rule of 85 or age 65.

Tier 1 Non-grandfathered Member
All other Tier 1 members who did not qualify for grandfathering as of June 30, 2013. A Tier 1 non-grandfathered member will be eligible for unreduced retirement at minimum age 60 and the Rule of 90 or greater, OR age 65 for those members who do not reach the Rule of 90. A reduced retirement benefit can begin at age 55 with an early retirement reduction factor of 8% per year from the earlier age of 60/Rule of 90 or age 65.

Tier 2 non-grandfathered Member
All new members and returning refunded members who are employed on or after July 1, 2008. A Tier 2 non-grandfathered member will be eligible for unreducted retirement at minimum age 60 and the Rule of 90 or greater, OR age 65 for those members who do not reach the Rule of 90. A reduced retirement benefit can begin at age 55 with an early retirement reduction factor of 8% per year from the earlier of age 60 / Rule of 90 or age of 65.

Vested Member
The retirement plan status attained when a teacher has earned three years of service credit - Tier 1 member or five years of service credit -Tier 2 member. If vested, a member is entitled to a monthly lifetime retirement benefit once they leave teaching and are eligible for benefits. If a teacher leaves employment and is not vested, the teacher will only be eligible for a lump sum refund of the teacher’s account value.


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