TRS or ORP asked 1 month ago

I am new faculty in Lamar. I am on a tenure track and planning to stay here atleast next 6 years. However if I get a good offer from other universities I may leave. What do you recommend for me TRS or ORP

1 Answers
Devin Carroll answered 1 month ago

I’m glad you’re asking the question! So many new employees make this decision without the consideration it merits. I get it…the first few weeks on a new job are very busy. However, you have one chance to get this right because it is an irrevocable decision!

I wrote about this in my article Choosing The Best Option: Optional Retirement Plan (ORP) or Teacher’s Retirement System.

In this article I give a big warning and here it is again. You’ve never needed to be more careful of conflicted advice than when making this important decision!

Your employee benefits office is not going to give you specific advice on choosing between the two. This leaves you with one suggestion for help on this decision – your authorized ORP representative. This “ORP representative” is usually an investment or insurance salesperson. They get paid only if you choose to enroll in ORP instead of TRS. Still expect unbiased advice? You shouldn’t.

Check out the article and let me know if I can be of further assistance.

atate1 replied 2 weeks ago

HI! I have a very similar question. I read the article you recommended. The example in there was for teachers who worked 30 years in the system. What if I’m not planning to stay that long — possibly under five years (so not even vesting) or like the original poster, for 6 – 10 years.

Devin Carroll replied 1 week ago

If you have a good reason to believe that vesting (and an eventual pension) will never occur, it opens up the options. In this case, you no longer have to compare the pension payment with the ORP savings, you are simply comparing “which plan would have more assets?”

This is dependent on your state’s rules. If you take a lump sum distribution from your pension plan, do you take your contributions plus interest? If so, how much is the interest amount? How does that compare that what you think you’d make on your own in the ORP?