Navigating STRS Ohio: What Educators Should Know Before Retiring

Navigating STRS Ohio: What Educators Should Know Before Retiring

If you’re an Ohio educator participating in the STRS Defined Contribution (DC) Plan, approaching retirement may feel very different compared to colleagues in the traditional pension. Instead of receiving a guaranteed monthly benefit for life, your income will come from the account balance you’ve built over your working years.

As you get closer to retirement, it’s important to understand what your STRS DC account can and cannot do for you, how your options work, and what to think about before you begin drawing from your savings. The earlier you understand these factors, the easier it becomes to build a retirement plan that feels intentional and comfortable.

Your STRS DC Account Is Your Retirement Benefit

With the DC Plan, your retirement benefit is simply the balance you’ve accumulated over time. This includes:

• Your contributions
  • Vested employer contributions
  • Investment returns
  • Any changes in account value as markets rise and fall

Unlike the STRS Defined Benefit (DB) Plan, your account does not include a built-in lifetime monthly payment. Your balance is your benefit, which gives you control. This sounds great, but that also means you are responsible for managing this account in a way that supports your retirement. Understanding your options is especially important as you transition into retirement.

What Happens to Your STRS DC Account When You Retire?

When you retire under STRS Ohio, you have several choices regarding your DC account balance:

1. Roll over your account to an IRA

A rollover allows you to move your balance into an IRA without paying taxes at the time of transfer. Many retirees consider this option because it provides:

1. A wider range of investment options
   b. The ability to coordinate all retirement accounts in one place (ex. a 403b)
   c. More flexibility in designing a retirement income strategy
2. Annuitize part of your balance

STRS allows you to convert some (or all) of your account into a lifetime annuity. This can create predictable monthly income, but annuitization is permanent. If you’re considering this option, it’s important to understand how it fits into your broader retirement picture.

3. Leave your balance in the STRS DC Plan

You can keep your funds in the DC Plan and begin taking withdrawals during retirement. STRS follows standard IRS rules, including required minimum distributions (RMDs) once you reach the applicable age. This option may work if you are comfortable and confident with the investment choices of the STRS plan.

Vesting Rules and Why They Matter

Your own contributions are always yours. Employer contributions, however, follow a vesting schedule.

• If you retire with full vesting, you keep the employer contributions.
  • If you retire before vesting is complete, you may not receive the entire employer portion.

If you’ve changed districts, taken time away from teaching, or are considering retiring earlier than originally planned, it’s helpful to understand where you stand with vesting before making any decisions.

Your Investment Approach Near Retirement Deserves Attention

As retirement approaches, the way your account is invested can have a meaningful impact on your experience.

Some individuals prefer to stay mostly invested in stocks because they value long-term growth. Others feel more comfortable taking steps to reduce investment risk as withdrawals get closer. There isn’t a universally right or wrong approach, what matters is recognizing that market volatility can affect your balance at the time you’ll depend on it most.

A downturn late in your career may influence how much income your account can reasonably support. On the other hand, staying too conservative for too long may limit growth during years when you are still contributing. Awareness and intentionality are key.

Taxes and Required Minimum Distributions (RMDs)

Your STRS DC account is subject to required minimum distributions once you reach the IRS-determined RMD age. These withdrawals are generally taxable and can impact your overall tax bracket in retirement.

If you roll your account into a Traditional IRA, RMDs still apply. If you are considering Roth conversions, it’s important to understand how paying taxes now may affect your long-term plan.

Knowing how RMDs interact with your other retirement income sources, including Social Security, 403(b)s, IRAs, or taxable investments, can help you build a more efficient withdrawal strategy.

How Strategic Wealth Partners May Be Able to Help

As you approach retirement, your STRS balance becomes one of the most important financial tools you have. Understanding your distribution options, tax considerations, and investment choices can help you feel more confident and prepared.

At Strategic Wealth Partners, we help educators build comprehensive retirement income strategies that incorporate their STRS savings along with 403(b)s, IRAs, and other assets. If you want guidance on how to transition from saving to spending, how to align your investments with your goals, or whether a rollover might make sense for your situation, we are here to help.

Book an appointment today to explore how your STRS savings can support the retirement you’ve earned.