Overview of Teacher Retirement System of Texas

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1 Overview of Teacher Retirement System of Texas Tom Guerin Revised September 2011 Revised 10/21/09

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3 TRS retirement plan benefits are funded by member, state, and employer contributions to the trust fund, and by earnings on the investments of the fund. Member contributions are made on a pre tax basis, meaning that at the time you receive your salary, you do not pay federal income tax on the portion of your salary used to make the contributions. Federal income tax on the contributions is deferred until you receive a distribution from TRS. Contributions submitted to TRS prior to January 1, 1988 were non tax deferred. Member contributions due after January 1, 1988 are tax deferred. In the early fall of each year, members are provided with a Statement of Account that shows the deposits and total amount in the member s account for the fiscal year ending August 31. If you are a member employed by a public school or other educational district, regional service center, or an open enrollment charter school, you also contribute 0.65 percent of eligible compensation to TRS Care, the retirees group health benefits program. This amount is not a member contribution, is not deposited into your member contribution account, is not reflected on your Statement of Account, and is non refundable.

4 If you withdraw your account by receiving a refund, you have ended your membership in TRS. By ending your membership, you lose your service credit and forfeit any retirement benefits that you have accrued. Your account will be refunded after TRS receives both your final deposit and completed forms. Your member contributions plus the interest applied to your account would be refunded. Processing time may take up to 8 weeks, depending on when all completed forms are received by TRS. To learn more, see How to Apply for a Refund video on the TRS website.

5 If you qualify for normal age service retirement, you will receive an annuity that is not reduced due to early age. For these grandfathered members who return to membership on or after September 1, 2007, the following eligibility requirements must be met to qualify for unreduced benefits at retirement: Age 65 with five years of service credit, or Age 55 with at least twenty years of service credit and meets the Rule of 80 (combined age and years of service credit total at least 80), or Age 60 with at least five years of service and meets the Rule of 80.

6 When a member is eligible for an early age service retirement and applies to retire, the retiree is entitled to receive a payment of a lifetime monthly annuity. The annuity is calculated according to the standard annuity benefit formula in effect when the member retires but reduced for early age according to actuarial tables.

7 Beginning with the school year, a member must work or be on paid leave for a minimum of 90 days to earn a year of TRS service credit. The only exception is in the last school year before a member retires. In this case, the member will earn a year of service credit if they complete the full fall semester. If your employer s calendar does not provide for semesters, a member must work in an eligible position or receive paid leave from an eligible position for at least 90 days in order to receive a year of service credit for the school year. Example: Education Service Centers. Beginning with the school year, all TRS members will use a standardized school year of September 1 through August 31 for TRS benefit purposes. This means that TRS service credit and creditable compensation will be determined on a September 1 August 31 basis.

8 Withdrawn To purchase withdrawn service credit, the member will be required to deposit the withdrawn amount plus a fee of 8% (increased from 6%). If the service was rendered and an application for withdrawal was filed on or before 8/31/11 and the member has returned to an eligible TRS position; a member will have until August 31, 2013 to purchase the withdrawn service at the current 6% fee rate by either a lump sum payment or enter into an installment agreement. If service was rendered and withdrawn after August 31, 2011 the cost to reinstate would be using the 8% reinstatement fee. An on line bill request may be made through the TRS website. Unreported Service, Substitute Service, Out of State Service, Developmental Leave For unreported service or compensation credit (including substitute service credit) and developmental leave an eligible member may purchase credit for eligible service rendered before September 1, 2011, at the old cost, if the credit is purchased before September 1, 2013, or an installment agreement is signed and received at TRS before that date. For out ofstate service credit to be purchased at the old cost, the same deadline applies, and the out of state service must have been rendered before January 1, 2006 by a person who was a member of TRS on December 31, Military Service must have 5 years of service credit in TRS. Can purchase a maximum of 5 years. Verification with copy of military service record (for example a DD214) USERRA Service Called to active duty while employed in TRS covered position. May be purchased in addition to military service. Contact TRS about establishing service credit or compensation credit under USERRA. USERRA Service may be used to establish eligibility for retirement even if not purchased. Career Technology/Work Experience Must have 5 years of service credit in TRS, can purchase one or two years if entitled to salary step credit for eligible work experience. Certified career or technology teachers only. State Sick/Personal Leave If, on your last day of employment before retirement, you have 50 days or 400 hours of accumulated state sick or personal leave days. You must be eligible to retire without the purchase and can only purchase one year. Calculator on TRS website to determine estimated cost of purchase. Membership Waiting Period Members employed between 9/1/03 and 8/31/05.

9 TRS members who have at least three years of service credit in TRS may reinstate withdrawn ERS service credit through ERS and transfer the service according to ERS/TRS Transfer Law. Contact ERS at or to determine cost to reinstate that service. ERS members who have at least 36 months of service credit in ERS may reinstate withdrawn TRS credit with TRS and transfer the service according to ERS/TRS Transfer Law. Contact TRS to determine cost to reinstate withdrawn service. Only service that meets TRS laws and rules governing creditable service is eligible for transfer. Members with less than 3 years TRS service can purchase withdrawn ERS service for proportionate retirement purposes only. (See proportionate retirement slide)

10 A person who has active membership credit in more than one Texas public statewide retirement system may be eligible to combine all of their service credit to satisfy eligibility requirements to retire under TRS. Those wishing to retire in other systems may also be eligible to combine their TRS service credit for this purpose. While all service credit would be considered to determine eligibility for TRS service retirement benefits, the calculation of any TRS retirement benefit is based solely on TRS service credit and salaries. Retirement systems currently participating are: Teacher Retirement System of Texas Employees Retirement System of Texas Judicial Retirement System of Texas Texas Municipal i lretirement t System Texas County and District Retirement System City of Austin Employees Retirement System El Paso City Employees Pension Fund El Paso Firemen and Policemen s Pension Fund City of Austin Police Retirement t System

11 Service that is credited on or before August 31, 2005 with another Texas public retirement system and that meets all requirements to be used for retirement eligibility under the proportionate retirement program or the ERS/TRS transfer program may be considered to determine eligibility for Grandfathering status.

12 Grandfathered members may receive 90 98% of the annuity when taking early age retirement with years of service credit. Non Grandfathered members may receive as little as 47% of the annuity when taking early age retirement.

13 The calculator on the TRS website may be used to estimate your potential service retirement benefits. (does not include disability retirement)

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15 Higher Education Employees: Please contact your Benefits Administrator for Long Term Care information.

16 Name changes Active members in districts that report electronically (TRAQS) should change their name through their employers. Active members in districts that do not report electronically should provide legal documentation authorizing the name change (marriage license, divorce decree, copy of court order, etc.) and include a letter requesting the name change. Be sure to include your Social Security number on any document sent to TRS. Address changes Active members in districts that report electronically (TRAQS) should change their address through their employers. Active members in districts that do not report electronically should change their address by accessing the Change of Address Notification form (TRS 358) available on the TRS website. Beneficiary Designations As an active member of TRS, you have very valuable benefits payable to your beneficiary i or beneficiaries i i at the time of your death. To update your beneficiary/beneficiaries you should submit Designation of Beneficiary form (TRS 11) available on the TRS website and through the automated phone system.

17 Active Member Death and Survivor Benefits Lump sum equal to twice your annual salary or $80,000 whichever is less 60 monthly payments equal to your standard annuity, without reduction for age (active members with five or more years of TRS service credit) Lifetime payments equal to an Option 1 retirement plan (active members with five or more years of TRS service credit and not available to joint beneficiaries) A return of your deposits with interest $2,500 lump sum, with possible monthly benefits In addition to these five options, a lump sum of $160,000 is also available to the beneficiary of a member who is a TRS covered employee and who dies as a result of a physical assault during the performance of the employee s regular duties.

18 Automated Telephone System To obtain a Personal Identification Number Authorization form (TRS 590) please visit the TRS web site. The PIN number will allow you to hear information that is specific to your account on the automated phone system. MyTRS MyTRS is the new, improved online access portion of the TRS website. When you register for MyTRS you create your own unique User ID and password. You can use MyTRS to help plan for retirement, keep track of your personal account, and access important announcements and other communications from TRS. MyTRS is available to eligible TRS members and annuitants who have completed the registration process. TRS Connect For many TRS members, e mail has become the number one way to receive information. To respond to this member preference, TRS offers TRS Connect, so that members may receive TRS publications and announcements in a quick and convenient way. Access TRS Connect through MyTRS at the TRS web site. Benefit Counselors Benefit Counselors are available Monday through Friday from 9:00am 4:00pm for a pre scheduled individual office visit appointment. They are also available by telephone Monday through Friday from 7:00am 6:00pm.