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Participation

All full-time state employees are required to participate in the state's retirement system as a condition of employment.

Certain part-time employees have the option of participating.

Once an employee elects to participate in the ORP, that election is irrevocable except for a one-time window to transfer upon attaining five years of service, but less than six years. 

This information is intended to provide a general introduction to some of the provisions applicable to participants in Tennessee's Optional Retirement Program. This information is subject to legislative change and judicial interpretation. It does not supersede nor restrict procedures or authority established under state statute. The provisions of the Optional Retirement Program and the Tennessee Consolidated Retirement System are set forth in Chapters 34-37 of Title 8 of Tennessee Code Annotated. Participants in the Optional Retirement Program may be subject to additional conditions established by the annuity contract(s) they select.

Starting early has its advantages

Mandatory Enrollment in the Plans and University Mandatory Matching Contributions

Employee Hired Prior to July 1, 2014

  • The ORP is a "defined contribution" retirement plan, which means that the amount of any future benefit will be determined by the member's account balance. 
  • Employer contributions are credited to each ORP member's account during service to a Tennessee higher education institution. The employer contributes 10% of gross salary covered by Social Security and 11% of salary in excess of the Social Security Wage Base.

Employee Hired After July 1, 2014

The institutions will make contributions to the plan as follows:

  • By the participant: 5.00%
  • Plan contributions credited to member's account by the institution: 9.00%
  • Total: 14.00%               
Vesting

An ORP participant attains vesting rights immediately. A vested member is one who has accrued a right to a retirement benefit upon termination of service.

Accessing your money 

Withdrawals restrictions

Withdrawals may be made upon severance from employment. Generally, a maximum of 20% of your Fixed-Interest Option account balance will be available for in-service transfers to another investment option each year.

Withdrawals before age 59½ may be subject to federal restrictions and a 10% federal early withdrawal tax penalty. Withdrawals are not subject to the 10% federal early withdrawal tax penalty if you are age 55 or older when you sever from employment. Early withdrawals for total disability or demise of account owner do not incur a penalty. 
 

Distribution options

You have a choice of payout options. For example, you can:

  • Purchase an annuity to receive regular income payments
  • Leave funds on deposit
  • Take systematic withdrawals
  • Take partial withdrawals
  • Take a lump-sum distribution

State of Tennessee statutes require that at least 50% of cash accumulation in any Tennessee Optional Retirement account must be taken in the form of a lifetime benefit.

Important considerations before deciding to move funds either into or out of an AIG Retirement Services account
There are many things to consider. For starters, you will want to carefully review and compare your existing account and the new account, including: fees and charges; guarantees and benefits; and, any limitations under either of the accounts. Also, you will want to know whether a surrender of your current account could result in charges. Your financial professional can help you review these and other important considerations.

Loans

Loans are not permitted in the Tennessee ORP plan.