TERRP 401(a)  |   403(b) TSA  |   457(b) RSP  |   457(b) FICA Alternative










About TERRP 401(a)

School Districts need creative ways to attract and retain quality teachers and other employees. One approach is through unique retirement plan options available to employees in the public sector.

Education Service Center Region 10 is pleased to sponsor TERRP - the Teacher/Employee Recruitment and Retention Program - designed to:
 

  • Enhance employees' retirement savings

  • Give financial rewards to employees helping to achieve district goals

  • Provide financial incentives to attract and retain district employees

 

Administration of TERRP

Each district has its own separate plan within the TERRP Trust. Funds are pooled for investment purposes only.

The TERRP Investment Advisory Committee directs investment of plan funds within the Trust with guidance from professional investment advisors. Region 10 will appoint members to the Investment Advisory Committee. Funds are held in the TERRP Trust for the exclusive benefit of plan participants.

Education Service Center Region 10 manages the program under contracts with:

  • AST Capital Trust to serve as the TERRP Trustee,

  • JEM Resource Partners to provide TERRP Trust Administration and plan recordkeeping services, and

  • TCG Advisors to provide design consulting on the plan and to act as an investment advisor to the TERRP IAC.

By offering a cooperative program for multiple districts, costs can be lowered for individual districts.

ESC Region 10 has reviewed and approved as to form for individual Districts the TERRP Trust, Plan, Administrative Services Agreement and Adoption Agreement.

 

What types of plans may a District offer?

TERRP gives districts some flexibility to choose types of contributions, vesting, and eligibility to suit the district's specific needs. These features are incorporated into the TERRP Adoption Agreement. The district's plan will have the following features:

Base Contribution: The District may make the following types of contributions:

  • Matching Contributions (match to employee 403(b) or 457 salary deferrals). The District then decides:

    • The Ratio of Match to employee contributions

    • Maximum Match

  • Direct Contribution without Match

Additional District Contributions: The District may make additional contributions based on:

  • Attendance

  • Campus of Service

  • Based on Performance

Vesting: An employee's trust account will vest based on one of the following schedules:

  • 100% Immediate Vesting

  • Cliff Vesting

  • Graded Vesting

This means the employee will "own" an increasing share of the account the longer he or she remains with the district. The vesting feature of the plan is designed to help retain employees. The employee's vested account balance includes the applicable percentage of the district's contributions plus the vested percentage of earnings in the account.

Use of Forfeitures:

  • Offset district contributions

  • Reallocate to participants as equal shares

Forfeitures of non-vested account funds from terminating participants can be used to offset the costs of district contributions or reallocated to increase current participants' account balances.

Eligibility:

Employees will be eligible to participate in TERRP based upon specific criteria established by the individual district.

 

Analysis/Conclusion

ESC Region 10 staff and TCG Consulting personnel will work with each District in the design and implementation of the TERRP plan to assist the district in its efforts to:

  • Attract and retain employees

  • Achieve certain fiscal and workforce management objectives

At the same time, it will encourage employees to:

  • Increase their own retirement savings to maximize employer contributions to their account.

Actual costs of dollars spent on retirement benefits are less than dollars spent on salary increases, since the contributions do not drive up other payroll-related costs. Tax deferred retirement contributions lower the taxes paid by employees while compensation increases do not.

Cost savings can be achieved through the TERRP plan by:

  • Encouraging a reduction in staff turnover and associated training costs

  • Reducing absenteeism and associated substitute costs

Other objectives can be met through a TERRP plan by:

  • Encouraging employees to stay on the job, reducing the need to fill hard-to-staff positions

  • Encouraging employees to work at and remain at hard-to-staff campuses

  • Attracting new employees to the district through enhanced retirement benefits, and

  • Providing incentives for employees to meet certain performance standards sought by the district.