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Retirement Systems of Alabama (RSA) includes the Employees Retirement System (ERS), the Teachers’ Retirement System (TRS), which provides benefits to qualified persons employed by state-supported educational institutions; the Public Education Employees’ Health Plan (PEEHP), which provides health insurance benefits for active and retired education employees; the RSA-1 Deferred Compensation Plan, which is an Internal Revenue Code Section 457 deferred compensation plan; and the Judicial Retirement Fund (JRF), which is a defined benefit plan qualified under Section 401(a) of the Internal Revenue Code.
Members with any service prior to January 1, 2013, are classified as Tier 1 participants. Members hired on or after January 1, 2013, are classified as Tier 2 participants.
The ERS was established in 1945 to provide benefits to state employees, state police, and on an elective basis, to qualified persons of cities, towns, and quasi-public organizations. A defined benefit plan provides the employee with a specific benefit at retirement by calculating the retirement benefit based on a formula. Benefits are payable monthly for the lifetime of the member, possibly continuing for the lifetime of his or her beneficiary.
Office Location: Retirement Systems of Alabama 201 South Union Street Montgomery, Alabama 36104 Mailing Address: P. O. Box 302150 Montgomery, Alabama 36130-2150 Phone: 877-517-0020 Website: https://www.rsa-al.gov/
Alabama Retirement Systems QDRO Checklist
Alabama State Retirement Systems Website
Q. Must a spouse share his or her RSA benefits in a divorce?
A. Depending on the divorce decree, a spouse may be awarded a portion of the pension benefits.
A. Participation in the ERS is mandatory if a person is employed in a position eligible for coverage in a non- temporary capacity on at least a one-half time basis earning at least the federal minimum wage. Once enrolled, the member must continue participation until employment is terminated. Active members of the Teachers’ Retirement System (TRS) are not eligible for ERS participation. Certain officials who meet the above requirements and are elected to office after the adoption of a Constitutional Amendment authorizing participation in the ERS are required to participate. Temporary employees with a specific termination date not exceeding one year are ineligible. However, temporary employees employed longer than one year must begin participation in the ERS at the beginning of the second consecutive year of employment. The member will be given the opportunity to purchase the first year of temporary employment.
Certain officials who meet the above requirements and are elected to office after the adoption of a Constitutional Amendment authorizing participation in the ERS are required to participate.
Temporary employees with a specific termination date not exceeding one year are ineligible. However, temporary employees employed longer than one year must begin participation in the ERS at the beginning of the second consecutive year of employment. The member will be given the opportunity to purchase the first year of temporary employment.
A. A member’s retirement benefit is calculated based on a retirement formula. The benefit is based on factors including 1) the average final salary, which is the average of the highest three fiscal years (October - September) out of the last 10 fiscal years the member made contributions (partial years are included when calculating the average final salary); 2) the years and months of creditable service, which is the total amount of creditable service to include membership service, prior service, purchased service, and transfer service; and a 3) benefit factor, which is the current benefit factor, as established by the Alabama Legislature 2.0125.
A. Vesting means the member has earned enough service credit to be eligible for a lifetime retirement benefit. Members have a vested status in the ERS after accumulating 10 years of creditable service. Members cannot convert unused sick leave to retirement credit in order to meet the minimum 10 years of service required for vesting.
A. Participants are new beneficiaries under two conditions. They are 1) if the named beneficiary dies before the retired member; or 2) the participant and the beneficiary divorce. There will be a recalculation of the benefit amount for the retired member and replacement beneficiary. The replacement beneficiary must be in place for at least two years for the monthly survivor benefits to become effective. If the retired member dies within this two-year period, only a pro-rata payment for the portion of the month the retiree was alive will be paid to the beneficiary.
There will be a recalculation of the benefit amount for the retired member and replacement beneficiary. The replacement beneficiary must be in place for at least two years for the monthly survivor benefits to become effective. If the retired member dies within this two-year period, only a pro-rata payment for the portion of the month the retiree was alive will be paid to the beneficiary.
A. A member may provide a benefit for a beneficiary by selecting one of the following options. They are the maximum benefit, which is the highest monthly benefit to a retiring member of the ERS. This benefit is a lifetime benefit paid to the retiree on a monthly basis. At the death of the retiree, all monthly benefits cease. The designated beneficiary(ies) will only receive a one-time pro-rated monthly benefit covering the days of the month that the retiree was still living. Option 1 The monthly benefit under Option 1 is slightly less than the Maximum. This benefit is a lifetime benefit paid to the retiree on a monthly basis. If the retiree dies prior to receiving annuity payments exceeding his or her account balance, the remaining annuity balance will be paid to the designated beneficiary(ies). The annuity balance, if any, is the amount of unused contributions and interest remaining in the retiree’s account. Option 2 (100% Survivor Benefit) Option 2 allows the retiree to receive a reduced benefit over the life of the retiree in return for allowing the designated beneficiary (only one beneficiary may be designated) to receive the same lifetime benefit after the retiree’s death. The benefits are based on the variance in age between the retiree and the beneficiary. Once the member retires, he or she cannot change their beneficiary unless the beneficiary predeceases the retiree or if the retiree and the beneficiary divorce. See Replacement Beneficiary. Option 3 (50% Survivor Benefit) Option 3 allows the retiree to receive a reduced benefit over the life of the retiree in return for allowing the designated beneficiary (only one beneficiary may be designated) to receive one-half the retiree benefit over the beneficiary’s lifetime after the retiree’s death. The benefits are based on the variance in age between the retiree and the beneficiary. Once the member retires, he or she cannot change their beneficiary unless the beneficiary predeceases the retiree or if the retiree and the beneficiary divorce. Option 4 Members may elect to receive a monthly benefit actuarially equivalent to the regular retirement benefit and must meet the ERS’ actuarial assumptions. The monthly benefit paid to the beneficiary cannot exceed the limits determined by federal taxation laws. The ERS Board of Control must approve this option.
Option 1 The monthly benefit under Option 1 is slightly less than the Maximum. This benefit is a lifetime benefit paid to the retiree on a monthly basis. If the retiree dies prior to receiving annuity payments exceeding his or her account balance, the remaining annuity balance will be paid to the designated beneficiary(ies). The annuity balance, if any, is the amount of unused contributions and interest remaining in the retiree’s account.
Option 2 (100% Survivor Benefit) Option 2 allows the retiree to receive a reduced benefit over the life of the retiree in return for allowing the designated beneficiary (only one beneficiary may be designated) to receive the same lifetime benefit after the retiree’s death. The benefits are based on the variance in age between the retiree and the beneficiary. Once the member retires, he or she cannot change their beneficiary unless the beneficiary predeceases the retiree or if the retiree and the beneficiary divorce. See Replacement Beneficiary.
Option 3 (50% Survivor Benefit) Option 3 allows the retiree to receive a reduced benefit over the life of the retiree in return for allowing the designated beneficiary (only one beneficiary may be designated) to receive one-half the retiree benefit over the beneficiary’s lifetime after the retiree’s death. The benefits are based on the variance in age between the retiree and the beneficiary. Once the member retires, he or she cannot change their beneficiary unless the beneficiary predeceases the retiree or if the retiree and the beneficiary divorce.
Option 4 Members may elect to receive a monthly benefit actuarially equivalent to the regular retirement benefit and must meet the ERS’ actuarial assumptions. The monthly benefit paid to the beneficiary cannot exceed the limits determined by federal taxation laws. The ERS Board of Control must approve this option.
A. If a participant selects Option 2, 3 or 4 at the time of retirement, he or she cannot change their beneficiary unless the beneficiary predeceases the retiree or if the retiree and the beneficiary divorce.
