STRS Ohio Combined Plan Retirement

How the Combined Plan Splits at Retirement

The STRS Ohio Combined Plan has two distinct pieces: a defined benefit (DB) component and a defined contribution (DC) component. At retirement, each piece follows its own rules, its own timeline, and its own point of no return.

The DB portion uses a 1% multiplier per year of service applied to your Final Average Salary — half the 2.2% rate that pure DB Plan members receive. The DC portion is a self-directed investment account managed through Nationwide Retirement Solutions (NRS). You contributed a portion of your salary to this account throughout your career, invested it across the available fund lineup, and now you decide what to do with the balance.

Combined Plan members must file separate retirement processes for the DB and DC portions. The DB side works like any STRS Ohio pension application — you select a Plan of Payment, choose whether to take a PLOP, and handle spousal consent if applicable. The DC side gives you fundamentally different choices.

DC Account Options at Retirement

When you retire from the Combined Plan, your defined contribution account offers three paths:

Annuitization through STRS Ohio converts your DC balance into a monthly payment for life. STRS Ohio calculates the annuity amount based on your account balance, your age, and actuarial factors. The critical detail most members miss: once you annuitize your DC balance, no residual account balance is refundable to your beneficiaries upon your death. The money converts into a lifetime income stream that ends when you (or your designated survivor, depending on the plan of payment) die.

Rollover to an external account lets you transfer the DC balance to a traditional IRA, 403(b), or another eligible retirement plan. This preserves your control over the money, keeps it growing tax-deferred, and allows you to name beneficiaries who inherit the remaining balance.

Lump-sum distribution pays out the DC balance directly to you. This triggers immediate federal income tax withholding at 20%, plus potential state taxes and an IRS 10% early withdrawal penalty if you have not yet reached age 59½ (or age 55 in the year of separation from service).

The Split Irreversibility Trap

Combined Plan members face two different irreversibility deadlines — and confusing them can lock you into decisions you did not intend.

The defined contribution elections become final on your retirement effective date. Once that date passes, you cannot change whether you annuitized, rolled over, or took a lump-sum distribution of your DC account.

The defined benefit Plan of Payment selection remains editable until the 15th day of the month of your first regular pension payment. This gives you a brief window to adjust your DB-side choices — switching between Single Life, Joint and Survivor, or Annuity Certain — but only if you act before that 15th-day cutoff.

This split means a Combined Plan member who retires on July 1 locks in their DC decision immediately but has until roughly mid-August to finalize the DB plan of payment. Filing your application early gives you time to think through both decisions independently instead of making them under deadline pressure.

Eligibility Thresholds for Combined Plan Members

Combined Plan eligibility differs from pure DB. To annuitize the DB portion, you must reach age 60 with at least 5 years of service credit. The DC portion becomes accessible at age 50 following termination of employment — a lower bar that gives Combined Plan members earlier access to at least part of their retirement savings.

For service retirements effective on or after Aug. 1, 2023, STRS Ohio health care requires at least 20 years of total service credit. The minimum is 15 years for retirements effective Jan. 1, 2004, through July 1, 2023; before Jan. 1, 2004, there is no minimum for coverage, but 15 years are required for a subsidy.

Making the Annuitization Decision

The annuitization question is the highest-stakes choice Combined Plan members face. Converting your DC balance to a monthly annuity through STRS Ohio provides guaranteed income you cannot outlive. It permanently surrenders the DC account balance, so no residual account balance passes to heirs; survivor payments depend on the option you elect. You cannot reverse the conversion.

Compare the STRS annuity rate against what a commercial immediate annuity would pay for the same lump sum. Factor in your health, your spouse's financial situation, and whether you have other assets (a 403(b), Social Security credits from private-sector work, a spouse's pension) that already provide guaranteed monthly income.

The STRS Ohio Retirement Guide includes a DC annuitization worksheet that walks through this comparison with your actual numbers — accounting for the tax treatment of each option, the loss of beneficiary inheritance under annuitization, and how the DB and DC pieces interact when combined into a single retirement income plan.

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