1. TMRS Basics 2007, Texas Municipal Retirement System. 2007 Annual Training Seminar

2. Topics  About TMRS  Membership  Account balance  Refund  Retirement Retirement Benefits

3. What is TMRS?  A statewide retirement system providing benefits to city employees  821 cities  132,927 employees  30,089 retirees* * As of December 31, 2006

4. Texas Participating Retirement Systems  Texas Municipal Retirement System  Texas County and District Retirement System  Teacher Retirement System of Texas  Employees Retirement System of Texas  Judicial Retirement System of Texas  City of Austin Employees Retirement System

5. What Makes TMRS Different?  Most other systems provide the same plan across the state.  Defined Benefit Plan  TMRS provides each city with their own plan.  Over 821 different plans

6. Joining TMRS  Cities elect to join TMRS  Cities choose from a menu of retirement plan provisions Every city has its own unique plan!

7. Mandatory Enrollment  Employees must join TMRS if they are employed in a permanent, full-time position that normally requires 1,000 hours of work in a year.  City determines eligibility based on the 1,000- hour rule.  Seasonal or temporary employees and volunteer firefighters are NOT eligible.

8. Member’s Personal Account  Account entirely in member’s name  Similar to savings account  Protected by law—NO ONE CAN TOUCH IT!!

9. How Much Goes in a Member’s Personal Account?  City Council adopts one of three levels: 5, 6, or 7%  Payroll deduction based on gross compensation  Tax-deferred  All employees in a city participate at the same level

10. How Does Member’s Money Grow?  Payroll deduction  1 deposit = 1 month service  Interest  Approved annually by TMRS Board of Trustees  Paid every December 31  Compounding interest Two sources of income:

11. Does the City Put Money in Member Accounts?  City money is paid only at retirement  Member only receives city money when retiring NO! Each city has its own TMRS account.

12. How Much Does the City Match?  Three levels of match  1  1  1.5  1  2  1  Applied toward total account balance  City Council chooses level

13. Option 1: QUIT and Request Refund  Forfeit right to future retirement benefit  Receive only member’s money — NO CITY MONEY!! How Can Member Get to Money?

14. Does Member Have to Refund?  If member is not vested  5-year window  If member is vested, money can be left until retirement NO!

15. What Is Vesting?  Vesting with TMRS means the member has worked enough years to retire at some time in the future.  In most TMRS cities, employees are vested when they have 5 years of service.  Vesting does not mean the employee owns the city’s matching funds.

16. Option 2: Death  Beneficiary receives refund; OR  Monthly payment if member was vested How Else Can Member’s Money Be Paid?

17. Option 3: Retire  Only way to receive City’s matching funds! How Else Can Member Get to Money?

18. When Can a Member Retire?  Age 60 with 5 years of service, or age 60 with 10 years of service  20 years of service at any age, or 25 years of service at any age Depends on which option your city has chosen:

19. The Member’s Retirement Date…  There is no best time of year to retire.  Prorated interest on accounts  Retirement date must be the last calendar day of the month.  Retirement payments begin the last day of the month following retirement date.

20. Monthly Payment Plans 7 Payment Plans  All plans pay an annuity for retiree’s lifetime  All plans ensure return of member’s accumulated deposits and interest  All plans are equal in value

21. Retiree Life Only Option  Calculated on member’s life only  No survivor benefits  The highest monthly option

22. Survivor Lifetime Options  Retiree Life – 100% Survivor Benefits  Retiree Life – 75% Survivor Benefits  Retiree Life – 50% Survivor Benefits Monthly payments for member and beneficiary’s lifetimes Note: Only 1 beneficiary may be named under these options

23. ‘Pop-Up’ Provision If a retiree…  Has selected a survivor lifetime option AND  Beneficiary dies before retiree Then – monthly payments increase to Retiree Life Only option

24. Guaranteed Term Options  Retiree Life – 5-year guarantee  Retiree Life – 10-year guarantee  Retiree Life – 15-year guarantee Guarantee payments for member’s life, but only for fixed number of years for beneficiary after retirement Note: Up to 3 beneficiaries may be named with these options

25. Partial Lump-Sum Distribution  Members may choose partial lump-sum distribution (PLSD) when they retire!

26. Do PLSD Payments Reduce Monthly Payments?  Yes – but city’s matching is not reduced! Member $City $ 75% cap

27. PLSD and Taxes  PLSD payments are income  20% withheld unless rolled over  10% penalty if under 59½  Exception for retiree age 55 or older!  Taxable $ can be rolled over (all or part)

28. Cost of Living Increases  Optional provision — Must be approved by city  Cost of living increases are given only to retirees  Amount is based on Consumer Price Index

29. Applying for Occupational Disability Retirement  Employee may apply anytime.  Retirement date must be last day of calendar month after all deposits received at TMRS.

30. How is Eligibility for Occupational Disability Retirement Determined?  No minimum length of service or age required to be eligible.  The cause of disability does not have to be job-related.  The TMRS Medical Board must find that:  The member is mentally or physically incapacitated from performing the duties of his or her occupation; and  The incapacity is considered to be permanent

31. What Forms Need to Be Completed? Review Occupational Disability Forms checklist:  Application for Occupational Disability Retirement  Selection of Retirement Plan  City Statement  Member’s Statement  Physician’s Statement  Selection of Partial Lump Sum Distribution  Member must be eligible for service retirement to receive a PLSD.  Electronic direct deposit authorization  Proof of birth for employee.  Proof of birth for beneficiary, if applicable.  Name Certification (if names on proof of birth and TMRS records do not match)  Withholding election form (W4-P)

32. Other TMRS Provisions  Supplemental Death Benefit  Service credits  Restricted Prior Service Credit  Military credit  Special purchases  Buy-back  Proportionate buy-back

33. Questions & Answers HOW TO CONTACT TMRS: Toll-free: 800-924-8677 Web: www.TMRS.com E-mail: phonecenter@tmrs.com