If you are terminated or retired from CTC, or if you are just thinking about terminating or retiring from CTC, here is some information you need to consider when planning your pension distribution:

AFTER-TAX VS PRE-TAX:  All of your employee contributions in your “QPP” and/or “SPP” account are AFTER-TAX (the tax has already been paid). All of the employer contributions, and all of the accumulated earnings, are PRE-TAX or “tax deferred” (the tax has not yet been paid).

UNDER AGE 55:  If you are under the age of 55 years when you terminate/retire, and you decide to take all of your funds as a “cash distribution”, the IRS will impose a 10% “Early Withdrawal Penalty” on the pre-tax portion of your distribution. In order to avoid that penalty, you can rollover the pre-tax portion to one of the retirement vehicles listed below.

BALANCE UNDER $5,000:  If your account balance is under $5,000, we are required to distribute the balance to you as soon as practical. If you do not take distribution of your funds within a reasonable time, an involuntary distribution may be made.

DISTRIBUTION OPTIONS ARE AS FOLLOWS:  

1. You may leave your funds in QPP and/or SPP (if the balance is over $5,000).
2. You can take a full or partial cash distribution.
3. You can rollover your funds to another plan or financial instrument.
4. You can establish a periodic distribution plan (contact VALIC for more information). 

ROLLOVER OPTIONS: Your funds can be directly rolled over into any of the following plans/vehicles:

1. A Traditional Retirement IRA (not a tax-deductible IRA)
2. Another 401(a) plan
3. A 403(a) or 403(b) plan
4. A 401(k) plan
5. A 457 plan
6. A TSP (Thrift Savings Plan)
7. A Roth IRA (please consult your tax advisor regarding special considerations for Roth IRAs)

Note re Rollovers:  All QPP and SPP accounts contain both after-tax dollars and pre-tax dollars.  The after-tax dollars represent your employee contributions.  The pre-tax dollars are the vested employer contributions, plus the accumulated interest, dividends and earnings. 

If you wish, you can request a "complete rollover", in which all of your after-tax dollars and all of your pre-tax dollars are rolled over directly to another tax-deferred vehicle.   

You can also request a "split rollover".  In a "split rollover", all of your after-tax dollars are "split off" and sent directly to you, and at the same time all of your pre-tax dollars are rolled directly to another tax-deferred vehicle.

When you decide between a "complete rollover" and a "split rollover", you indicate your choice in Section 4 ("Special Instructions") of the VALIC rollover form.   

DISTRIBUTION FORMS:  There are three types of distribution request forms most commonly used by VALIC, depending on your circumstances:

1. FOR CASH DISTRIBUTIONS:   If you decide to take your money as a direct cash distribution, please use either the "CTC QPP Cash Distribution Form" or the "CTC SPP Cash Distribution Form", depending on which plan you participate in.  You can print the forms out in Section 5 below.

2. FOR ROLLOVERS:   If you decide to take your distribution as a rollover to another investment plan/vehicle, please use the "CTC QPP or SPP Rollover Form" below. If you have both QPP and SPP, you will need to use two forms.

3. FOR PARTICIPANTS OVER 70 1/2 YEARS OF AGE:  If you are over the age of 70 ½ and you want a cash distribution, please use either the "CTC QPP Required Minimum Dist Form" or the "CTC SPP Required Minimum Dist Form" below.  If you are over the age of 70 ½ and you want to do a rollover or a "split distribution",  please use the "CTC QPP or SPP Rollover Form" below.

Note:  There are also forms for setting up "periodic distributions". These distributions are a little more complicated. If you are interested in that type of arrangement, please contact VALIC so that one of their representatives can talk to you about the most current "periodic distribution" rules.

These forms can be obtained in the following ways:  

(1) Print the forms from this web page (see Section 5 below), or

(2) Email us at Pension.Plan@ctcd.edu and we will send you the forms.

Why do we like for you to print your forms from our web page? That's because VALIC occasionally revises or updates those forms, and we post those revised or updated forms on our web page. If you print your forms from the web page, that will insure that you have the most recent, most useful form.

WHERE TO MAIL YOUR DISTRIBUTION FORMS:  Mail your distribution request forms directly to VALIC at the address listed on the last page of the form, which is: 

  VALIC Document Control

   P O Box 15648

   Amarillo, TX  79105-5648 

BEFORE YOU SEND YOUR DISTRIBUTION FORM TO VALIC, YOU MUST CHECK TO MAKE SURE THAT YOU HAVE BEEN OFFICIALLY TERMINATED FROM CTC.  YOUR FORM CANNOT BE PROCESSED BY VALIC UNTIL YOU HAVE BEEN OFFICIALLY TERMINATED FROM CTC.  YOU CAN FIND OUT MORE ABOUT THIS PROCESS IN THE PARAGRAPHS BELOW.

DO YOU NEED HELP COMPLETING YOUR FORMS?  You will need to write your pension account numbers on your distribution request forms.  You can find those account numbers on your VALIC quarterly statement, or you can get them by calling the VALIC Client Care Center at 1-800-448-2542. If you are unable to use the VALIC toll-free number, please call 1-281-878-7400.

STEPS IN THE DISTRIBUTION PROCESS – HOW LONG DOES IT TAKE? Federal laws require that a person must be officially terminated/retired (both full-time and part-time) from their employer in order to request and receive a pension distribution. You must be listed as "terminated" in the VALIC system, with a CTC "term date", in order for VALIC to process your distribution.  How does that termination process start?  That process starts with the employee.  The employee must officially notify their department or site that they wish to be terminated.   The department or site might require a letter of resignation.  When your department or site has all the notification that they need, they will have you sign a “Terminating Personnel Status Form (“PSF”)”. When that “Terminating PSF” is completed and signed by you, it is sent to CTC Main Campus, where it passes through several departments that need that information. For example, it goes through the Payroll Department, and that alerts Payroll that your final paycheck (and possibly a vacation payoff) must be taken care of (you must have received every paycheck, including any vacation payoff, in order to be officially terminated). The termination process also goes through the Benefits Department, which must check on the status of your various benefits, such as insurance, etc. Once every department is finished with their wrap-up procedures, and you have been issued your final paycheck, the CTC Employment Services Department uses that “Terminating PSF” to officially terminate you. All of the procedures required to officially terminate an employee usually take from 30 to 60 days, depending on your site location. 

HOW DO YOU CHECK TO MAKE SURE YOU HAVE BEEN OFFICIALLY TERMINATED FROM CTC? 

#1:  YOU CAN CALL THE CTC EMPLOYMENT SERVICES DEPARTMENT AT 254-526-1124 OR 1-800-792-3348 EXT 1124.

#2.  YOU CAN CALL YOUR SITE AND REQUEST THAT THEY CONTACT CTC EMPLOYMENT SERVICES TO SEE IF YOUR TERMINATION PROCESS HAS BEEN COMPLETED.

Every Monday new termination dates are gathered from the CTC system and uploaded into VALIC's accounts, so that VALIC can use that information to process your distribution.  Once VALIC has your termination date, they can process your incoming distribution forms. 

The distribution process moves very quickly, ONCE YOU HAVE BEEN OFFICIALLY TRANSFERRED TO TERMINATED STATUS. If there is a delay in the process, it is usually due to the time it takes to get you officially terminated by the college. If your department or your site does not terminate you by completing the necessary “Terminating PSF”, the process will be delayed. If there are errors on your “Terminating PSF” which require a re-do, the process will be delayed. If you still have an outstanding paycheck or “vacation payoff”, the process will be delayed until those checks have been processed through our Payroll system, and any resulting pension deposits have been sent to VALIC and deposited into your pension account. Therefore, check to make sure that you have been officially terminated, before you submit your distribution request forms to VALIC.  Remember, the termination process will probably take from 30 to 60 days (depending on your location).  Do not submit your distribution forms to VALIC until you have confirmed that you have been officially terminated.  If you submit your distribution forms to VALIC before you are officially terminated, VALIC will not be able to process the forms, and they will be returned to you.

TRANSFER FROM FULL-TIME TO PART-TIME OR FROM PART-TIME TO FULL-TIME:  If your employment status changes from full-time to part-time (or from part-time to full-time), that change of status does not qualify as a termination/retirement for pension plan purposes. It is considered a change of status. In either case, the individual is still a current and active employee, and is therefore not eligible to apply for or receive a distribution of their pension plan funds. That rule applies to both "QPP" and "SPP" pension funds. In order for a termination/retirement to generate a pension distribution, it must be a bona-fide termination/retirement from both full-time and part-time employment with the employer, and there must not be any intention or agreement to return to employment with the employer after a pension distribution has been made.

BONA-FIDE RETIREMENT OR TERMINATION:   In order for a termination or retirement to generate a pension distribution, it must be a bona-fide termination or retirement from both full-time and part-time employment with the employer, and there must not be any discussion, intention or agreement to return to employment with the employer after a pension distribution has been made. Pre-existing "return to work" agreements are strictly prohibited and can possibly result in serious consequences, and can result in a "fraudulent termination" or "fraudulent retirement" and the cancellation of retirement benefits.  See IRC Section 1.409A-1(h)(1)(i) and (ii) for further information.

RETURNING TO WORK:   If you have previously worked for Central Texas College, and return to work here, when you return you may be eligible to participate in "QPP" or "SPP" again, depending on your new position, and depending on whether you met your eligibility requirements during your previous employment with the college.

VESTING:  In many pension plans, there is a “vesting requirement” connected to the “Employer Contributions”. That is the case with “QPP”. In “QPP”, you are always 100% vested in your own “Employee Contributions”, however you must meet a six-year “vesting schedule” in order to be 100% vested in the “Employer Contributions”. Your first year, you are 0% vested in the “Employer Contributions”. The second year, you are 20% vested. Then 40%, 60%, 80%, and finally, after six years, you are 100% vested in the “QPP” “Employer Contributions”.  

“SPP” does not contain a “vesting requirement”. Therefore, in SPP, you are always 100% vested in both your “Employee Contributions” and your “Employer Contributions” from your very first day in the plan.  

TYPES OF PENSION PLANS:  There are two basic types of employer-sponsored pension plans. Understanding the difference between these two types of plans may help you understand your options under our two plans.  

•  A “ Defined Benefit Plan ”: A “Defined Benefit Plan” plan is an “old-fashioned” type of plan in which an individual must meet certain age and years-of-service requirements in order to be eligible to “retire”, at which point the employer will begin to pay the retiree a monthly benefit payment. TRS is a “Defined Benefit Plan”.

•  A “ Defined Contribution Plan ”: “QPP” and “SPP” are both “Defined Contribution Plans”. This type of plan does not have most of the typical age and years-of-service requirements that the “old-fashioned” type of plan has. Instead, when individuals leaves the employer, they are simply entitled to their vested balance in their pension account. They may withdraw their balance in several ways, but there is no automatic monthly benefit payment.

IF YOU NEED ASSISTANCE:   VALIC has established a Client Care Center to help you with your distribution decisions.  They will also help you complete your distribution form, if needed.  Just call them at 1-800-448-2542 on Monday thru Friday from 7 am to 8 pm (Central US time).  You can also reach them at 281-878-7400 from 8 am to 5 pm (Central US time).