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Optional Retirement Program Overview

What is the Optional Retirement Program?

Who is eligible to participate?

Why do many eligible employees choose the ORP?

What is the Optional Retirement Program?

The Optional Retirement Program (ORP) is offered to employees in Texas public higher education as an alternative to the Teacher Retirement System (TRS). It was made available through legislation passed by the State of Texas in 1967. Employees eligible for the ORP must enroll within 90 days from the date of their eligibility for ORP. Eligibility for the ORP may include initial employment, job change, or re-characterization of your position. Eligibility is determined by job title and/or your position’s classification. For more information regarding eligibility in the ORP, contact your human resources benefit specialist. Your choice between ORP and TRS is irrevocable once elected.

Who is eligible to participate?

ORP eligible employees include:

A member of the faculty whose duties include teaching or research and whose specific assignments are made for the purpose of conducting instruction or research as a principal activity (or activities), and who holds the position and title of professor, associate professor, assistant professor, instructor, lecturer, or the equivalent.

An administrator responsible for teaching and research faculty, including deans, directors, associate deans, assistant deans, chairpersons, or heads of academic departments.

A professional librarian.

The Chancellor, Executive Vice Chancellor, Vice Chancellor, Assistant or Associate Vice Chancellor, President, Executive Vice President, Vice President, Assistant or Associate Vice President, or the equivalent.

Other professional staff who hold certain administrative and professional positions:

Administrative positions eligible for ORP are those that are customarily recruited by advertising in national publications such as the Chronicle of Higher Education or in newsletters of national professional associations or at the meetings of such associations; are at a salary rate equivalent to the rate for faculty at the institution; report directly to an executive officer; serve as director or other administrative head of a major department or budget entity; are appointed by the Chief Administrative Officer or his/her delegate; are responsible for the preparation and administration of the budget, policies, and programs of the department.

Professional positions eligible for ORP include those in nationally recognized fields that require advanced degrees and/or specialized professional or artistic training, experience, and achievement. These would include titles such as physicians, athletic coaches, engineers, and lawyers.

Why do many eligible employees choose the ORP?

Many eligible professionals elect the ORP because it offers substantial flexibility, including:

Investment control of your account.

Extensive menu of investment options to fit your individual needs and objectives.

Benefits of tax-deferred compounding increase the opportunity to accumulate wealth.

100% vested after one year and one day (versus 5 years with TRS)

The ORP is portable. If you terminate employment in all Texas public institutions participating in the ORP, you can take your vested account balance with you.

ORP and ING

When you choose ING for your ORP, you and your employer each contribute a certain percentage of your total compensation (the percentage determined by Texas state law) to either a 403(b)(1) variable annuity contract, issued by ING Life Insurance and Annuity Company (ILIAC), or a 403(b)(7) custodial account offered through ING Financial Advisers, LLC.

The contributions are made on a pre-tax basis -- your salary is "reduced" by the amount of your contribution, and you are not taxed on those contributions or the earnings until the money is distributed. Both your and your employer's contributions are invested according to your investment selection.

Both the 403(b)(1) variable annuity contract and the 403(b)(7) custodial account provide you with the opportunity for:

Asset building - A great way to invest for future needs and supplement your retirement income.

Tax-deferred investing - under the Internal Revenue Code, with this program your contributions and earnings on those contributions are taxed only when you begin to take distributions, at which time you may be in a lower tax bracket.*

Diversified investment options - You have the opportunity to select where your contributions are allocated.

Portability of your account

Unlimited transfers between variable investment options via Internet, phone or paper within either the 403(b)(1) variable annuity or the 403(b)(7) custodial account.

In addition, the 403(b)(1) variable annuity contract also provides:

Periodic payments for the future - Under the annuity provisions, you choose the payout option that best fits your future needs.

No surrender/withdrawal charges (fund management fees and a mortality and expense risk charge of 0.80% will apply).

The 403(b)(7) custodial account provides you with two options:

Advisory Services Option – if you would like assistance in determining how you should invest your contributions under the ORP 403(b)(7) custodial account, you can elect to work with an ING Investment Advisory Representative. Your ING Investment Advisory Representative will assist you with the enrollment paperwork, submit it to ING on your behalf, as well as provide the following services:

Work with you to develop your personalized asset allocation model and client profile – based on your risk tolerance assessment – to provide you with a recommended allocation of assets and an investment portfolio model designed to help you achieve your objectives.

Provide you with one on one enrollment assistance – including reviewing the asset classes and funds available for your contributions.

Monitor your portfolio and provide guidance to help you execute trades, rebalance your assets, and ensure that your portfolio continues to reflect your asset allocation, risk tolerance and investment requirements.

Provide you with a quarterly portfolio evaluation.

There is an advisory fee of 1.00% payable to ING Financial Advisers, LLC on all assets in the 403(b)(7) custodial account charged under this option. The fee is charged quarterly, in arrears. Should you terminate your contract or advisory agreement during a quarter, the fee charged will be pro-rated.

To speak to an ING Investment Advisory Representative about the Advisory Service Option, please contact us.

Direct Option – you enroll in the ORP 403(b)(7) directly through on-line enrollment available through this website. You will choose how to invest your contributions to the ORP 403(b)(7) custodial account. Click here for enrollment information.

Note that if you choose to enroll in the ORP 403(b)(1) annuity contract or the ORP 403(b)(7) custodial account after September 1, 2006, you will be enrolling in a new contract or custodial account. Please click here for information about the new contract and custodial account.

Variable annuities and mutual funds offered through a retirement plan are intended as long-term investments designed for retirement purposes. Withdrawals taken from either the 403(b)(1) variable annuity or the 403(b)(7) custodial account prior to age 59½ may be subject to a 10% federal penalty tax. Money distributed will be taxed as ordinary income in the year the money is received. Account values fluctuate with market conditions, and when surrendered the principal may be worth more or less than its original amount invested. Annuities may be subject to additional fees and expenses to which other tax-qualified funding vehicles may not be subject. An annuity does not provide any additional tax deferral benefit, as tax deferral is provided by the plan. However, an annuity does provide other features and benefits, such as lifetime income payments and death benefits, which may be valuable to you.

CONTRIBUTIONS

You and your employer each contribute a certain percentage of your total compensation to the program. Your salary is then "reduced" by the amount of your contribution (currently 6.65%), which along with the employer's contribution (currently 6%-8.5%), is sent to ING and invested according to your instructions. The amounts reduced are the same amounts that would have been deducted under TRS.

WITHDRAWALS

Under the provisions of Texas law, you may not withdraw funds from the ORP except upon the earlier of your termination of participation or attainment of age 70½. You terminate participation by death, retirement (including disability retirement), or termination of employment in all Texas public institutions of higher education. If you are eligible to take a distribution, you may also be subject to a 10% federal premature distribution penalty tax.

If you have terminated participation or attained age 70½ and wish to withdraw funds (including taking out a loan), you must provide us with a letter from your employer confirming your termination and/or vesting status.

DISTRIBUTIONS

Under the ORP 403(b)(1) group variable annuity, when you retire, ING provides a wide variety of payout options (subject to your plan provisions) including:

Full or partial withdrawal (may be subject to federal withholding and possible tax penalties).

Systematic payout options.

Payments guaranteed for your lifetime or for a specified period. Guarantees are based on the claims-paying ability of ING Life Insurance and Annuity Company.

Rollover to an IRA, or another eligible retirement plan.

If you die before you retire, your beneficiary may elect to receive the value of your account or select one of several settlement options, subject to IRS minimum distribution rules. For the 403(b) contract only, a guaranteed death benefit is available. If the beneficiary requests a lump sum payment or an annuity payout option within six months of the participant's death, the death benefit is guaranteed to be greater of: a) the account value minus any outstanding loan balances, or b) total contributions, subject to your contractmade to your account minus any loans, withdrawals or annuitizations. Guarantee based on the claims paying ability of ING Life Insurance and Annuity Company.

Under the 403(b)(7) custodial account, there are no systematic payouts, guaranteed lifetime or guaranteed specified period payment options available. When you retire, you may request:

Request a full or partial withdrawal (may be subject to federal withholding and possible tax penalties).

Utilize the funds to purchase a single premium immediate annuity.

Rollover to an IRA or another eligible retirement plan.

You should consider the investment objectives, risks, charges, and expenses of the variable product and its underlying fund options; or mutual funds offered through a retirement plan, carefully before investing. The prospectuses/prospectus summaries/information booklets contain this and other information, and can be obtained by contacting your local representative. Please read the information carefully before investing.

Insurance products issued by ING Life Insurance and Annuity Company. Financial planning and securities offered through ING Financial Advisers, LLC (member SIPC), One Orange Way, Windsor, CT 06095-4774, or other broker/dealers with which it has a selling agreement.