A 401(a) is a retirement savings plan that allows accumulation of tax-advantaged funds for retirement with contributions coming from the employer, the employee or both. Employers may match a fixed percentage of employee contributions or contribute without a required employee contribution. Since this plan type is often used as an incentive, vesting schedules for funds are often associated with it.
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What is the TERRP plan?

In September 2001, Education Service Center Region 10 established the Teacher/Employee Recruitment and Retention Program (“TERRP”) for employer educational organizations in Texas. This plan is a part of the Retirement Asset Management Services (RAMS) program.  This supplementary retirement program is designed to:

Encourage employees to increase their retirement savings.
Reward employees for helping improve employer attendance and student performance.
Provide financial incentives to encourage employees to stay with the organization employer.
Encourage achievement of other organization goals.

How does the TERRP plan work?

An employer will make contributions on the employees’ behalf to a TERRP account established for each participating employee. The ’employer’s contributions to an employee’s account are based on a certain formula. This may include a match of the employee’s own contributions to the employer’s 457 or 403(b) plan (“Tax-Deferred Annuity Plan”). The employer’s plan can also be established with a formula that offers employer contributions based on attendance, school site, student performance and other criteria established by the employer within the design features available.

Is there an enrollment process?

Participants are automatically enrolled in the TERRP program if they meet the eligibility criteria in the plan. No individual enrollment paperwork is necessary.

How much does an employer contribute to an employee’s account?

Contribution rates and formulas vary with each employer. TERRP allows employers to make a direct contribution on either a fixed dollar or a percentage of salary basis. It allows for match contributions of employee voluntary contributions to 457 or 403(b) plans based on a dollar ratio basis or as a percentage. Additional contributions may be made to certain plan participants if they meet other plan requirements.

Who is eligible for a match contribution?

An employee is only eligible for a “match” contribution from the employer if the employee contributes to a 457 and/or a 403(b) plan. Not all Employers, however, offer a match. Check the Employer’s Summary Plan Description (SPD) to see if a match is offered. If a match is offered, the SPD will provide information on eligibility to participate and the matching formula.

Can an employee make voluntary contributions to the TERRP plan?

No, only employer contributions are permitted to TERRP.

How are contributions invested?

Educational Service Center Region 10 has appointed an Investment Advisory Committee to make investment decisions. The Investment Advisory Committee will utilize professional investment advisory services from TCG Advisors, LP in managing Trust assets.

What are TERRP benefits?

TERRP is a “defined contribution” plan or an “individual account plan” that provides for an individual account for each participant and benefits are based solely on the amount contributed to a participant’s account plus any investment earnings (and may include forfeitures of accounts of other non-vested participants).

When does an employee become eligible to receive the account balance?

An employee is eligible to receive his/her vested account balance upon separation from employment with the employer due to voluntary or involuntary termination, retirement, death or disability.

What is a vested account balance?

Vesting is an employee’s right to receive a benefit upon termination from service. It refers to the percent ownership an employee has of his/her account balance should the employee separate from the employer as of today’s date and is tied the his/her years of service with that employer.  100% vesting means the employee is entitled to the full account balance upon termination.  Employers have different vesting schedules adopted under their plan rules; refer to the SPD on the RAMS website for greater detail on the specific plan.

How can a participant find out what his/her account balance is?

Participants will receive periodic statements. Employees can also call a toll-free number for account information or access the Region 10 RAMS website to view their account balance. 

How does an employee receive an account balance once eligible to receive a distribution from the plan?

For the TERRP administrator to begin processing the distribution of an employee’s account balance, an authorization from the employer to distribute the account balance will be needed.  Employers can authorize the administrator to automatically process distributions when notification of the employee’s separation from employment occurs.

What are the distribution options?

An eligible participant may receive a lump sum distribution, transfer the account balance to another tax-qualified plan, or roll it over into an Individual Retirement Account (IRA).

How can a participant defer taxation on distributions?

A lump sum distribution of an account will be subject to taxation, including excise taxes with termination of employment prior to the age of 59½ or retirement prior to age 55. A participant can defer taxation by rolling over the distribution into an IRA or transferring it to another tax-deferred retirement plan.

How can a participant designate or change a beneficiary?

If the participant is married and designating the spouse as beneficiary or single, the participant may go online to the Region 10 RAMS website to designate his/her beneficiary. Otherwise, the participant will need to complete a TERRP Designation of Beneficiary Form, available by calling the toll-free TERRP phone number. If no beneficiary is designated, the participant’s spouse will be the automatic beneficiary if the participant is married and the participant’s estate if he or she is not married. Contingent beneficiaries may be designated online also.

How can I find out more information about TERRP?

For more information on TERRP, you may contact the TERRP Third Party Administrator, TCG Administrators, toll-free at: (800) 943-9179 or email at: 401a@tcgservices.com.