Unofficial Information about the OBRA Retirement Plan
For MCCC DCE Unit Members
Frequently Asked Questions
- What is OBRA?
- OBRA is the mandatory employee-funded defined contribution plan for part-time, seasonal, and short-term public employees—this includes many DCE unit members.
- In Massachusetts, it is called the SMART Plan and is a 457b savings plan that automatically deposits 7.5% of pre-tax DCE earnings into the DCE member’s interest-bearing OBRA account. It also requires a small annual service fee, which as of December 2011 it is $18.48 a year, charged monthly.
- OBRA/SMART Plan is allowed by federal law in place of Social Security when an employee is not eligible for the public pensions available to longer-term Massachusetts public employees. The MCCC is working to get public retirement options for DCE members, including eligibility for public pensions.
- There is no employer contribution, and unlike a 401(k) or 403(b), the money can be distributed out at the end of any employment termwithout penalty regardless of age. The money can be withdrawn or rolled over into other retirement savings accounts (401(k)s, 403(b)s, other 457 plans, IRAs, etc.) at the end of employment. Besides death and an end to an employment term, OBRA (and 457 plans generally) have more distribution triggers than most other retirement accounts.
- For more complete and official OBRA information available online, the Massachusetts Office of State Treasurer & Receiver General put together this OBRA website. And here is a more complete brochure brochure also put out by the State Treasurer with Great-West Life & Annuity Insurance Company, the current vendor for the program (as of December 2011)
- Who MUST participate in OBRA?
- Yes. All non-benefited Massachusetts state public employees, including those who teach in DCE, must participate UNLESS
- They are also currently employed in a position that provides retirement through the Commonwealth of Massachusetts Retirement System (often referred to as the SRB). So full or part-time benefitted, employee of the Colleges do not have to participate in OBRA, even if they also teach DCE courses.
- They are SRB retirees drawing their retirement benefits. So retired day unit members teaching DCE and collecting their pensions do not have to participate in OBRA.
- Who MAY partcicpate in OBRA?
- Any state employee can have a voluntary SMART Plan, including those not required to participate in OBRA. Those who are required to participate can voluntarily contribute more to the SMART Plan. The MCCC does not advise members on whether to participate in the voluntary plan.
- Can I withdraw my contributions at the end of each semester?
- If college payroll tells you that you may not withdraw or roll the money over at the end of a term or you are instructed to send a letter of resignation, contact the MCCC Chapter leadership or the MCCC DCE Grievance Coordinator or MTA representative to the DCE unit right away for assistance. When the semester is finished adjunct faculty are no longer employed by the Commonwealth, and, therefore, are eligible to withdraw their OBRA contributions and interest. Time is of the essence because you typically cannot be back on DCE payroll when you request a distribution. This is a true problem if you are already teaching another course at the college before receiving your last paycheck for
the semester or term.
- The MCCC takes no position on whether you should withdraw your money. Withdrawing your OBRA account or rolling it into a different retirement plan is an issue to discuss with your own financial planner and/or tax advisor.
- Forms for requesting distributions are available from the SMART Plan here and from your college’s payroll office.
- Where can I find official state information on OBRA?