Ohio Retirement System

The retirement system of Ohio is in good shape, especially after experiencing a major financial boost entering 2017. Whereas many states will convolute its offerings by having many base and supplemental programs, Ohio keeps things simple and logical.

SmartAsset’s free matching tool can pair you up with as many as three financial advisors in your area, if you feel that you want some professional help in fleshing out your retirement plans beyond just pensions.

Types of Retirement Systems in Ohio

At some level, the Ohio Public Employees Retirement System covers the entirety of the local and state workers in Ohio. However, for certain employees, there are complementary systems that are designed to further specialize benefits for specific types of employment.

– Nearly any non-teacher who works in a school for the State Department of Education, like bus drivers, custodians, aides, secretaries and more – Those who complete daily service for such a school, even if they are not paid by the school

Ohio Retirement Systems

Overview of Ohio’s Retirement Systems

Ohio Public Employees Retirement System – OPERS essentially governs everything that goes on within Ohio’s public retirement sect, and there are three different plans you can choose from: a traditional pension plan, a member-directed plan and a combined plan.

• Traditional pension plan: Formula-based benefit system centered around years of service and final average salary
• Member-directed plan: Participants are given the chance to invest their own assets for retirement
• Combined plan: Meshes the perks of defined benefit and defined contribution plans, allowing you to make your own investment decisions, but contributions are pre-decided

Police & Fire Pension Fund – Aside from handling the pensions of eligible employees, this fund also extends perks to its members. These include optional health care plans, not only for retirees but beneficiaries too, and survivor benefits.

State Teachers Retirement System – Within this system, participants can choose between a defined benefit plan, defined contribution plan and combined plan, similar to the Ohio Public Employees Retirement System. This level of customization is rarely seen in other states, especially when you take into account that most higher education staff can also pick an alternative retirement plan (ARP).

School Employees Retirement System – As a defined benefit plan, this retirement system is largely predetermined when you enter it. More specifically, this means that what you and your employer must contribute is dictated by law. Your other benefits will vary, though, such as disability and survivor benefits.

Highway Patrol Retirement System – The HPRS only comes in a defined benefit variation, with retirement distributions being decided by your final average salary, applicable service credit and a pension factor. It also comes paired with annual cost-of-living adjustments, multiple payment options and survivor and disability benefits.

Retirement Taxes in Ohio

Federal

Whatever is paid towards your retirement is typically tax-deferred by the federal government. This means that while you will not be subject to the federal income tax immediately, you will be charged down the road because these funds will become your main source of income. You can choose to pay these taxes via withholdings from your distributions, or you can make quarterly estimated tax payments.

It’s fairly common for individuals who are publicly employed to have a separate retirement account, such as a 401(k), IRA or other option. If this fits your situation, you can have the payments from your public retirement fund rolled over into your second account. Although the federal income tax is unavoidable, this will further defer it until you pull the money from the account.

Any type of Roth retirement account is not included in this though, as they are after-tax accounts. So if you own any style of Roth account, be prepared to pay taxes at the time of your rollover.

State

Similar to many states, Ohio charges a state income tax on any earnings taken from both a public and private retirement account. If you receive more than $8,000, a $200 tax credit is available, with another $50 credit reserved for residents 65 and older who have an adjusted gross income of less than $100,000.

Current Financial Health of the Ohio Retirement System

The size of the Ohio retirement system ballooned by nearly $11 billion from 2016 to 2017. Although the system was by no means in disarray or strife, this has obviously done wonders for its overall health. Much of this growth is due to the state investing mostly in fixed income. That’s a reasonably safe investment choice. However, it also has a fair amount of money set in private, domestic and international equities, real estate and other securities.

Tips to Retire Successfully

• While you might think you’re prepared for retirement, it’s tough to know if you’ve really saved enough. Analyzing the retirement savings of the average American can be a huge help. That’s because it offers an insight into where you should stand depending on where you are in life.
• If you feel your retirement savings are lacking in relation to when you’d like to retire, you should consult a financial advisor. If you don’t have a financial advisor yet, finding one doesn’t have to be hard. SmartAsset’s free matching tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now

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