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Hitting the Highlights of Track A and Track B

Retirement may seem like a long way off. But retirement planning is important no matter what your age. And, you have a special opportunity -- right now -- to choose the approach that you believe will work best for you in the long run.

To make your election, first you need to understand what options are available. OU
offers two different retirement plan tracks. Here are basic descriptions of each track.

Track A

 Track B
Track A consists of two parts. If you elect Track A, you will participate in both parts. Track B consists of only one part.
  • Defined Contribution Plan (DCP) 401(a)

OU contributes 8% of your base pay over $9,000. You do not contribute. You direct the investment of your account. The amount you receive at retirement depends on how much has accumulated in your account over the years you have participated in the plan. If you elect Track A, the DCP becomes effective and university contributions begin on the first day of the month following completion of the required forms.

  • Oklahoma Teachers' Retirement System (OTRS)

This is a defined benefit plan. You will contribute mandatory contributions of 7% of your Total Compensation. OU contributes 7.55% of your Total Compensation. Keep in mind that OTRS is a defined benefit so you earn retirement benefits based on a formula. You cannot receive a distribution of OU's contributions if you retire or leave OU.

Your retirement benefit is calculated using a formula that considers your total service credit and your average Total Compensation during your five highest-paid years (Years of service credit x 2% x average Total Compensation for your five highest-paid years = your retirement benefit).

Membership begins on your date of hire. After you submit your election to participate in Track A, both you and OU make contributions to OTRS retroactive to your date of hire. To avoid having catch-up payroll deductions, it is important to make your election as soon as possible -- preferably within 30 days.

 
  • Salaried Employees: The Optional Retirement Plan (ORP) 401(a)

OR

  • Hourly Employees: The Defined Contribution Plan (DCP) 401(a)

OU contributes 9% of your base pay. You do not contribute. You direct the investment of your account. The benefits you receive at retirement depend entirely on the amount of contributions made to the plan on your behalf and the investment returns on the account.

Track B does not accept employee contributions, you should consider adding to your retirement by making contributions to either of the Voluntary Retirement Plans.

If you elect Track B as a salaried employee under age 45, the plan becomes effective and university contributions begin on the first day of the month following completion of the required forms.

Advantages and Disadvantages of Track A

Because OTRS provides a benefit using a formula, your benefit under this plan will not change based on the plan’s investment returns. It is a life-time benefit upon eligibility to retire. However, if you change employers, it is not as portable as some other types of retirement arrangements. Also, some employees do not choose OTRS because of the mandatory employee contributions. OTRS requires that you and OU make contributions from your date of hire. So if you elect Track A after your first month, you will make catch-up contributions calculated retroactive to your hire date.

Advantages and Disadvantages of Track B

All contributions to this plan are made by OU. It does not require (or even allow) employee contributions. But you can choose to make contributions to the Voluntary Retirement Plans in addition to your participation in Track B. The benefits you will receive upon retirement depend on how much money has accumulated in your account—based on OU’s contributions and your account’s investment returns— at the time you retire. If you leave OU, you are entitled to take the value of your account if you are vested.