Bottom line
The CalSTRS Defined Benefit Supplement is a separate account for Defined Benefit members. Contributions and credited interest build the balance, while the $3,500 threshold determines which payout choices are available.Key facts
- The Defined Benefit Supplement account can receive contributions from compensation earned in excess of one year of service credit and certain limited-term salary increases
- For 2026–27, the minimum interest rate credited to the Defined Benefit Supplement Program is 4.79%
- At service retirement, a balance below $3,500 must be paid as a lump sum, while a balance of $3,500 or more allows additional annuity choices
Why the supplement account exists beside the main pension
The CalSTRS Defined Benefit Supplement Program is a separate benefit structure for members of the Defined Benefit Program. It works more like an account balance than the main lifetime pension formula. Current funding comes from member contributions on compensation earned from service in excess of one year of service credit and from certain limited-term salary increases. Extra-pay assignments such as summer school, coaching or advising can therefore build a supplement balance when the compensation meets CalSTRS rules.
The distinction is important because money credited to the supplement account is not converted into additional service credit in the same way as ordinary full-time compensation. Instead, CalSTRS tracks contributions and credited interest in the separate account. The balance is vested when contributions are first credited. Members can review it on the Retirement Progress Report in myCalSTRS and should reconcile unusual extra-pay reporting before retirement.
How contributions and interest build the balance
For CalSTRS 2% at 60 members, the member contribution rate on compensation that goes to the Defined Benefit Supplement account is 8%. For CalSTRS 2% at 62 members, the rate for 2026–27 is 9%. These rates apply to the qualifying supplement compensation described by CalSTRS, not to every dollar of regular salary. If contributions exceed the applicable supplement contribution rate, CalSTRS can return excess member contributions through the employer.
The account also earns credited interest. For 2026–27, CalSTRS lists a minimum interest rate of 4.79% for the Defined Benefit Supplement Program. The board sets the rate for each plan year, and additional earnings credit may be declared when investment experience and program funding permit. Because the rate can change annually, do not project a future balance by assuming the current 4.79% rate remains fixed for every year.
How to check the account before retirement
Open the most recent Retirement Progress Report and separate the Defined Benefit Supplement balance from the projected Defined Benefit pension. Then review extra-pay assignments, service credit and contribution entries for the last school year. If coaching, summer school or another assignment appears to be missing, ask the employer how the compensation was reported to CalSTRS. A payroll stipend does not automatically guarantee that the money belongs in the supplement account.
Next, compare the projected balance with the $3,500 distribution threshold because that amount changes the available choices at retirement. A balance below the threshold is paid as a lump sum. A balance at or above the threshold can support an annuity, a lump sum or a combination that leaves at least $3,500 for the annuity portion. The account shown by CalSTRS at the benefit date controls the actual options.
Distribution choices at service retirement
At service retirement, the distribution menu depends first on the account balance. If the Defined Benefit Supplement balance is less than $3,500, CalSTRS requires a lump-sum distribution. If the balance is $3,500 or more, the member may choose a lump sum, an annuity, or a combination of the two. For a combination, at least $3,500 must remain in the account after the lump-sum portion to support the annuity election.
CalSTRS offers several annuity forms, including Member-Only and beneficiary annuities, plus a period-certain annuity. The supplement annuity is separate from the main Defined Benefit monthly retirement benefit even though both can be paid at the same time. Compare each election independently because changing the distribution form of the supplement does not rewrite the service-credit and final-compensation formula used for the main pension.
| Account position | Available choice | Important condition |
|---|---|---|
| Less than $3,500 | Lump sum | An annuity is not available at this balance |
| $3,500 or more | Lump sum | No supplement annuity remains after full payout |
| $3,500 or more | Annuity | Choose an available supplement annuity form |
| $3,500 or more | Combination | At least $3,500 must remain after the lump-sum portion |
What happens after termination instead of retirement
A member who terminates all CalSTRS-covered employment for a reason other than retirement, disability or death can become eligible for a Defined Benefit Supplement termination benefit. CalSTRS describes the termination benefit as a lump sum equal to the account balance. It is payable only after six months have elapsed following termination, and the application is canceled if the member performs creditable service again during that six-month waiting period.
The supplement termination benefit is separate from a refund decision in the main Defined Benefit Program, although the processes can be connected when a member requests a refund. Taking money out can affect future retirement planning, and Defined Benefit Supplement funds that were refunded cannot later be redeposited into the supplement account. Confirm the account status with CalSTRS before treating a termination distribution as reversible.
How disability and survivor events use the supplement balance
If a member becomes eligible for a CalSTRS disability benefit, the Defined Benefit Supplement balance also becomes payable. A balance below $3,500 is paid as a lump sum; at $3,500 or more, additional payment choices can apply depending on the benefit election. The supplement therefore remains part of the member’s retirement assets even when the trigger is disability rather than service retirement.
If a member dies before retirement, the supplement balance is used for a survivor benefit. CalSTRS states that when the amount available for each designated recipient reaches the applicable $3,500 threshold, the recipient can have additional distribution choices; below the threshold, the payment is a lump sum. Keep beneficiary designations current and review them alongside the main pension elections because the supplement account has its own payout mechanics.
Before you make a decision
- Review the Defined Benefit Supplement balance on your most recent Retirement Progress Report.
- Match extra-pay assignments with employer contribution reporting to identify missing or excess contributions.
- Use the current 2026–27 contribution and interest rates only for the periods to which they apply.
- Compare the projected balance with the $3,500 threshold before choosing a retirement distribution form.
- Review beneficiary and disability payout rules together with your main CalSTRS retirement elections.
- Confirm the final account balance and payout choices in myCalSTRS before submitting a distribution election.
Frequently asked questions
What is the CalSTRS Defined Benefit Supplement account?
It is a separate account-based benefit for CalSTRS Defined Benefit members. Contributions can come from qualifying compensation earned in excess of one year of service credit and certain limited-term salary increases, and the account earns credited interest. It is paid separately from the main pension formula at retirement or another qualifying event.
What is the CalSTRS Defined Benefit Supplement interest rate for 2026–27?
CalSTRS lists the 2026–27 minimum interest rate for the Defined Benefit Supplement Program as 4.79%. The rate is set for the plan year and can change in later years. Additional earnings credit may be possible under program rules, so use the posted CalSTRS balance rather than projecting a fixed rate indefinitely.
What happens if my Defined Benefit Supplement is under $3,500?
At service retirement, a Defined Benefit Supplement balance below $3,500 must be paid as a lump sum. If the balance is $3,500 or more, CalSTRS allows a lump sum, an annuity or a combination subject to the remaining-balance rule. The actual balance on the benefit date determines the available choices.
Can I take part of the CalSTRS supplement as cash and annuitize the rest?
Yes when the account is large enough. CalSTRS allows a combination of lump sum and annuity if at least $3,500 remains in the Defined Benefit Supplement account after the lump-sum payment. Review the estimate because the annuity amount depends on the remaining balance and the annuity form selected.
Can I withdraw the Defined Benefit Supplement after leaving teaching?
A termination benefit can be available after you leave all CalSTRS-covered employment for a qualifying reason and six months have elapsed. If you return to creditable service during that six-month period, the termination-benefit application is canceled. A paid Defined Benefit Supplement termination benefit cannot later be redeposited into that account.
Official sources
Sources were reviewed on September 1, 2026. Rules and member records maintained by the retirement system control.
CalSTRS — Funding your Defined Benefit Supplement accountOfficial source ↗CalSTRS — Accessing your fundsOfficial source ↗CalSTRS — Interest ratesOfficial source ↗This article provides general educational information. It is not a benefit determination or financial, tax, or legal advice. Confirm account-specific information with the retirement system.